Reply #292: Numbers [View All]

[jwnparadise]

First, I need to start with a disclaimer that I did not attend Harvard as the researchers for this did, so bear with me.

In 2001, the only numbers I could find, taxable income was 4.22 trillion. In that same year consumption was 8.54 trillion. So the consumption base is more than twice taxable income.

By 2003 consumption had grown to 8.6 trillion(an amazing fact considering 9-11 after affects and 2 wars, Americans are serious consumers) while the government collected 1.67 trillion (corporate,payroll,estate and gift) in taxes. If you divide the taxes by consumption you get 19%. Which is where you hear proponents of flat income taxes spout 20% tax rates. Flat taxes are regressive IMO and I do not advocate their adoption becuase they do not include the pre-bate which is what makes the fairtax progressive.

The additional 4%(from 19 to 23%) covers the pre-bate and shores up Social Security.

Seems to make sense to me.