Sunday, July 29, 2007

Another Quote that Makes Me Smile

"In my view, the tax system will always be taxing the wrong activity as long as it taxes income. Instead, the tax should be on consumption.
When you earn income, you can either spend it on consumption, save it, or give it to charity. The latter two should not generate taxes."

Courtesy of Arnold Kling.


archduke f. f. said...

So Kling basically wants a tax that affects the poor disproportionately? What percent of their income do the rich spend vs. what the poor spend? I'm fairly poor, which means that I spend approximately 70% of my take home pay throughout the course of the year on necessities, another 20% on inessential items such as entertainment, leaving me with 10% for savings. Do you think a rich person, someone in the upper income bracket, spends even close to that percentage? Taxation on consumption is amazingly regressive, since the poor spend a disproportionate percentage of their income when compared to the rich.

As to the objection that I would have more money if I didn't have to pay income taxes at all, that extra percentage would be going to paying off student loans, which, in this system, would be much larger, since college would be taxed as well.

There are many plans out there for a new kind of taxation, but I don't think the regressive consumption tax would help in the least.

xtrachromosomeconservative said...

There is a thing, it's called an exemption. Voila. Problem solved.

archduke f. f. said...

Which means you exempt the poor, then we're back to where we started, with the rich complaining that they get unfairly taxed whereas the poor get exemptions?