Reply #111: Students have more expenses than income....

[AP]

...which is why they're going into debt.

Of course there's no tax on a loan (and there's not tax on tuition, unless I'm grossly mistaken -- some states do tax some services). The place you're losing me is where you got the impression that that's what I was talking about.

Here's what I was talking about:

The debt you get into that I'm talking about is a purchase on your credit card. That purchase will have a HUGE tax component in your world. If you're already at break even or below, you're going to see your debt jump up just from the sales tax. And then you're going to have to pay interest on that. So if the sales tax is 26%, and your credit card charges you 20% interest, and you can't pay off your card for a year, you're actually paying 31.2% on that item thanks to the tax (and part of that is bank profit).

By the way, you get a child tax credit, which addresses your concern about large families.

You say income levels don't distinguish haves and have nots. (Actually, there's no better measure.) But even if, for the sake of argument, it weren't, consumption levels as a percentage of income has an even lower correlation to wealth. In fact, consumption as a % of income probably tends to have an inverse relationship to financial comfort. People are rich because they spend a fraction of what they make (and a lot of that is one things that maintain or increase value). Poor people are poor because they spend just about everything they make (and sometimes more). Taxing consumption lightens the burden for the rich and increases the burden on the poor.

Once again, if you make 500k a year, and spend 250K on taxable goods. You'd have to have a 60-70% sales tax to make up for the lost income tax revenue. Or, say you only have 15% federal sales tax on consumption, a million dollar earner would have to spend 1.5 million just to generate the same tax revenue. Do you expect them to do that?