Reply #61: I disagree.

[AP]

The government passes laws which effect people different ways. Some people win, some people lose. The people who benfit from the rules are the people who make the most money in that system and should be expected to give a little more back.

And I repeat: there's simple math involved too. Wealth is not JUST a f(x) of getting one more dollar. It's a f(x) of how many dollars you already have. The purpose having tax bands is that you get people who have more dollars to pay at a rate which reflects the fact that they already have a lot of dollars. The point is to burden them as roughly as equivalently as someone with few dollars.

I think people who spend 25K and make 20K may be able to cut out some discretionary spending, but it's silly to say they're spending money on things they shouldn't spend money on. OK, so some people don't really understand the math of compound interest, but people generally don't go into debt unless they have really compelling reasons. People spend lots of money educating themselves. They expected a job on the other end of it that would pay off the debt. That's not really happening these days. People spend a lot of money on their cars. Most cities have crappy public transportation, (or crappy schools where there is public transportation) so it's hard to cut that discretionary spending out of your budget. What about health care? That's a real sinkhole for people's earnings. What are you going to do? Die?

Another thing: I didn NOT assume the rich wouldn't spend. (You assumed I said that. But I think it was a knee jerk response, because that's what sales tax propoents alwasy say.) Once again. The rich are rich because they don't spend as much as they earn. Say a person makes 1 million bucks a year. Right now, we generally expect that person to spend about 300,000 in taxes for that income. (In reality, the income tax burden on a person making that kind of money is more like 180,000 because people making that kind of money don't get it from earnings, but from other sources of income that are easy to shelter or taxed at lower rates). Well, to get that person to pay that much in federal sales tax, you have to have them spend 2 million dollars a year -- which they obviously aren't going to do. And the fact is, most rich people don't spend money on discretionary items that have zero asset value, like poor people do.

A rich person buys a watch, they buy a rolex, which then becomes an asset. You could probably sell it in a couple years for a profit which would partially or entirely offset your tax burden. A poor person buys a watch and it's a timex or a casio. That watch is useless in 5 years and you have to buy another one. The poor person doesn't recoup their sales tax. Same with cars. Rich people buy cars that hold their value. Poor people buy cars that lose half their value in the first year.

A person making 25K a year would pay sales tax on items that become worth nothing very quickly. A rich person, even if he or she (borrowed as much as they made) and spent ALL their money in a year might not even spend $15K on items that do not appreciate in value.

You can't exclude taxes on debt. Just the act of buying on credit creats a tax on wealth you never received. You could give people a tax credit for their debt, I guess, but then you would have turned the entire tax code into a subsidy for the profits of credit card companies. You might as well just disolve the government and tell people to deposit half their paychecks into their credit card company bank accounts.

Now, I totally agree that it's important to reward people who save, but that's not what a national sales tax does. It rewards people who are rich. Poor people would never be able to save enough to become rich because the entire tax burden would be shifted down on to them.