posted on Aug, 7 2015 @ 03:30 PM
originally posted by: Khaleesi
Huckabee had a few good lines. He caught my attention with his idea of a consumption tax. Not sure if it would work and I'd be interested to hear more
thoughts on that idea.
The problem with a consumption tax is it discourages spending. People try to avoid the tax by spending less and instead saving for the future. That
leads to lower tax revenues the following year, which creates a need to raise the tax, which then further lowers spending. Beyond the basics, a lot
of the money simply goes untaxed. This creates a need for a very low budget but very little of the budget can actually be cut right now. Out of our
current budget, assuming we're willing to cut defense in half, 72% of it is mandatory spending that we cannot cut either by necessity or by law. If
we were to fully cut all infrastructure spending, nasa, education, energy, agriculture, justice, and many others we only drop the budget by just over
1/4 which leaves us with needing too much revenue for a consumption tax to work, and we haven't even gotten into the territory of trying to raise
additional revenue to pay down the debt.
Even with spending cuts, any reasonable tax plan needs to raise revenues from 3 trillion to closer to 4 trillion per year. We can phrase that however
we want but the bottom line is that the government needs to be taking 33% more money. When talking consumption taxes, nothing short of 75% would even
come close to accomplishing that, and it would probably need to be even higher than that.
edit on 7-8-2015 by Aazadan because: (no reason