Reply #9: Summarized: [View All]

[punpirate]

1) As others have mentioned, it's highly regressive. Tax burden shifts to the lower echelons of taxpayers, since the bottom 60% or so of wage earners have to spend most of their income to live and get to work.

2) Would effectively eliminate taxes on the very wealthy and corporations, and on dividends and capital gains.

3) In the most proposed range of taxation (24-25%), proceeds from such a tax would present a serious shortfall, and at present spending levels, would only cover interest on the debt and defense/intelligence spending. Therefore it's also intended to drastically shrink the size of the rest of the government.

4) Since a significant portion of consumer spending is put on credit cards, a goodly amount of these taxes would be instantly converted to debt.

5) And, as others have mentioned, it would drastically curtail spending of disposable income. While in one sense, that's good--the overall US savings rate is near zero and we could use an increase in that--but in another, it's quite bad--fully two-thirds of US GDP is consumer spending.

6) It's not a solution to taxation problems. If we really wanted to solve the problems of chronic large deficits and bring more stability to the economy, we'd go back to a rate structure for income and capital gains similar to that in effect in the `60s and eliminate the egregiously large subsidies and tax breaks for corporations. That would both simplify the tax code and provide some fairness to the income-to-taxation ratio. But, that won't happen with legislators elected on the strength of donations from corporations and the wealthy.