RE: Bill Gate's Solution to Income Inequality
November 11, 2014 at 4:30 pm
(This post was last modified: November 11, 2014 at 4:57 pm by Heywood.)
(November 11, 2014 at 1:11 am)Jenny A Wrote: I see three problems with a consumption tax. The first has been beaten into the ground in the first few posts and that is that it would be an extremely regressive tax. That could be fixed with an extremely large initial deduction. The second problem is that not all spending uses up resources. Music downloads and other electronic entertainments use essentially no resources. Ditto money spent of physical therapy, and other services. But a consumption tax as proposed in the OP is supposed to preserve environmental resources. As such it a blunt instrument. Targeted sales or use taxes would do a much better job of curbing consumption of resources if the is the goal. Third, taxes on goods and services always has a negative effect on the economy because it slows buying.
1. Income taxes are inherently regressive as well. That is why we grant exemptions and make them progressive. The consumption tax as proposed in the OP would grant exemptions and be progressive. As you point out the regressive nature of consumption tax is as easily corrected as is the regressive nature of income taxes. I don't see concern number one as being a good reason to be opposed to a consumption tax
2. The consumption tax as proposed in the OP is not designed to conserve environmental resources as you suggest. Its purpose is to address the inequality in consumption of the rich versus the poor. It does this by taxing the rich who consume more less than the poor who consume less. I think this is the more meaningful metric. As Gates points out...if rich are to feel guilty, it should be because they have so much more stuff and not because the have more 0s in a book.
3. This is the concern I am worried about the most. Do we want to create a system where the wealthy are less inclined to engage in the trade of goods and services? Clearly when a wealthy family spends 2 million dollars to improve their home they benefit....but so do all the contractors and laborers hired to do the work.
At the end of the day I have to question this. What difference does it really make if the government takes it bite from the income side or consumption side. In the example in the OP the family of 4 making $50,000 a year had a $1500 tax liability. Basically they could buy $1500 less in goods and services because of the consumption tax...but then if an income tax left them with a $1500 tax liability....the results would be exactly the same.....they could buy $1500 less in goods and services than if the tax did not exist in the first place.
(November 11, 2014 at 12:15 am)whateverist Wrote: Oh I can understand why he would say we shouldn't be concerned with it. I'll bet he'd like that. What I don't understand is why so many peons like you support the 1%. Hoping to get a couple of choice morsels from the table?
If we consider the set of the world's population.....I am a 1 percenter. People who have about the same amount of wealth as I do...who rail against the 1 percenters....are cherry picking the set they use in order to bury their head in the sand regarding their true situation.
