While a consumption tax is slightly better than income tax, it's still a piss poor option. First, you have the (same) moral problems with the Government's right to tax, as it's an infringement on property rights (property rights include the right to exchange property... with a consumption tax, the exchange of property won't be legal unless the Government gives you permission, and you pay a fee to gain that permission. That isn't a right, that's extortion).

It's also open to as many loopholes as income tax. Lobbyists will be trying to get their products classed as "neccessities", activists will be trying to get certain taxes raised higher (for environment, health, "protecting our children", etc. reasons). The system will inevitably be geared to suit the exact same people that the current system is geared towards.

Ultimately, what a consumption tax leads to is MORE Government control over your life. It destroys property rights, and allows for the Government to control the prices of the things it doesn't like, and reduce the prices of the things its friend's like.

Yeah I agree with you there. Consumption taxes are probably a better way of evening things out anyways. Put higher taxes on luxury goods like cars, electronics and alcohol but keep taxes extremely low (or none at all) on things like food and medicine. I'll have to take a look at that book you mentioned.

What do you think about Milton Friedman's negative income tax idea? I don't know if you've heard of that or not. In a nutshell it would be a flat tax rate across the board, but the other element is that everyone in the country would be re-embured a set amount each year.

So say the flat tax rate is 20%, and the re-embursement is $10,000 (just numbers I pulled out my ass) it would work out like so:

- If you make $100,000 you would pay $20,000 in taxes but be re-embursed $10,000 so you end up with $90,000

- If you make $60,000 you would pay $12,000 in taxes but be re-embursed $10,000 and end up with $58,000

- If you only make $20,000 you pay just $4,000 in taxes and are given $10,000 so it benefits you and you wind up with a net $26,000. 

Of course I just pulled those numbers out my ass, so different figures would actually be used...but you should get the idea. I think it's a great idea. And the amount each person is granted (the $10,000 figure I used) would replace things like welfare, employment insurance, etc. into one set amount each year. Plus a flat tax rate that every person in the country pays is a great idea. 

Great point. That's exactly what we don't want. 

What about all the taxes GE had to pay to make that profit? (There are taxes for hiring people, owning property, importing goods, etc.).

And what do you think they do with that $5.1bn? They either invest it, where they have to pay all those taxes I've highlighted above. Or they pay it to their shareholders. The shareholders, depending on their jurisdiction, will have to various taxes on that money - capital gains, income, sales (when they buy stuff).

Well from pure capitalistic perspective there should not be any taxes (i'll have to check Adam Smith's book again). Individuals and businesses will provide the services we need. SInce that is not the case and everyone in the world (mostly everyone) is running a giant national debt. Eliminating taxes from corportations would make the situation much more worse. 

I am assuming other corporations should not be paying taxes either as they re-invest some of the profits, pay dividends and employees they hire pay personal income taxes. United States is running a debt of $15.5 trillion dollars and Britain just crossed $1 trillion. These are massive numbers compared compared to their relative GDP. For example http://www.debtbombshell.com/ the interest britain paid in 2010 is more than their entire military budged. 

As for the american side of things. Just looking at this debt clock should make anyone's head spin (its design is pretty creepy) http://www.usdebtclock.org/. So yea. Somehow this has to go down or the entire modern society finances go crazy. Thus the corportations need to take responsibility and governments need to grow some balls to tax them and close the loopholes. If we didn't have these problems are were starting from scratch than yes don't make microsoft, GE, Apple pay any taxes. 

Thanks :)

For what it's worth, the "GE didn't pay any taxes" story seems to be largely fabricated.

http://finance.fortune.cnn.com/2011/11/17/new-york-times-tax-story-mistake/

They paid less taxes though for sure, because you can push foward losses into future quarters.   They took such a beating in 2008, they've gotten a tax discount for a few years now.

Still.  Corporate taxes should be put at something like a flat 19% with no deductions.  The current system just favors some companies while tons of othes are forced to pay at 35%  Which is ridiculiously high compaired to most of the rest of the world. 

And you still sit on a debt time bomb, that isn't resolved.  America will be looking at having to get off the world stage the way it had, get its house and order, and is likely facing austerity AND increased taxes to pay off the debt it has.  Taxes will have to go up, but it is a matter on whom.  One can say, "Wow, nearly 50% don't pay income taxes, so we need to have some skin in the game for everyone".  Well, not sure how you get that to fly and then argue that taxes on the upper end needs to remain where it is, or be lower.

There is a reality here, and it is that taxes are just one part of people's lives.  One can't say the net sum of everything is taxes rates.  Economically, there needs to be the generation of real goods and services in need, that generate sufficient income for people, so they can buy more.  One can argue to do more manufacturing, but manufacturing is declining globally, as a portion of the population employed, just as it happened with agriculture. 

What is needed is real answers, or you are looking at problems.  It is only class warfare, if there is a class being hammered and another class getting away with a lot more.  Idea is to look at what can be done that is meaningful, and stop with this BS about tax rates.  Simplify the tax code, figure out what priorities are, and let the country sort it out on its own.  And try to prevent those who can least afford it, to take the brunt of it.  Probably it would make sense also to have capital gains be at the same rate as other sources of income.

And the short, if people aren't getting ahead, but see an elite class doing better and better, do expect people to not be happy with the system that is producing it.

The top 1% control over 40% of the nation's wealth/assets and paid only 40% of the total American tax bill is a kick in the teeth to working Middle Americans struggling to make ends meet.

The Bush tax cuts did not do much in regards to creating jobs inside America for working Middle Americans. Bush cuts helped send more jobs offshore as big corporations owned and controlled by the top 1% maximised their profits and increased their personal fortunes. Tax loopholes within the system allow the super rich and large corporations to dodge paying a fairer share in tax.

Again... your ignoring the fact that one class isn't getting hammered.  Your own article said Middle Class incomes rose.  Just not as high as rich incomes... and that's ignoring the fact that they were studying it as a percent and not actually seeing if many middle class ended up moving into the upper class. 

Which again... seeing the data distribution (Higher wages, but thresholds dropping to join said groups.)  Makes such a case EXTREMELY prbabale.

In otherwords, your misquoting an article that is misquoting a study.

I believe a tax on assets/personal net fortunes would be a much fairer way of taxation than personal income taxes. Too many tax loopholes exist in the current taxation system. Taxable incomes can be reported as being much lower, tax offsets, income splitting with spouse allow people to report much lower taxable incomes.