Income Taxes Vs Consumption Taxes?

Would you rather pay Taxes on the income you earn? Or pay high tariff prices on the junk that China sends us?

I would rather pay consumption taxes.

How would you propose to use consumption taxes to fund Social Security and Medicare?

GDP of the US is $28 Trillion/year give or take a few billion. Federal government spent about $6.7 Trillion in fiscal 2023. So, a 25% tax on everything you buy just to fund the federal government, let alone the State and local ones.

You're talking about having to plunk down $15-20K in taxes on a $40K vehicle at the time of purchase, or $600 on a $1500 refrigerator. I'm not sure you could make that work in this day and age. Maybe if we'd never gone down the income tax road to begin with, but abandoning the system we have for a system that uses a consumption tax now would devastate the economy IMNTBHO.

You would only pay consumption taxes on imported items.

FredHayek wrote: You would only pay consumption taxes on imported items.

Isn't that the majority of what we buy? The good news is that Americans would look for American products to buy, but would it also cause a supply and demand problem that would increase the costs of those products as well? I guess we could start our own sweat shops and employ the millions of people Biden invited in.

I am at the stage in my life where I am sick of clutter. Try to make sure everything I buy will be consumed in a few months. Anything that lowers the amount of substandard crap China sends us is a good thing.

FredHayek wrote: You would only pay consumption taxes on imported items.

You mentioned eliminating income taxes, which represent 54% of the federal government's general revenue and 50% of the revenue for Social Security and Medicare.

You are going to replace all of this revenue with a tax on imported items to eliminate the income taxes levied by the federal government?

And what constitutes a "domestic" manufactured car? What percentage of the parts would be allowed to be included in the vehicle that are manufactured outside the States without it being an import subject to taxation. If the vehicle is assembled on US soil using foreign parts, is it a "domestic" vehicle not subject to the tax or an "imported" vehicle?

How about the reverse? If the vehicle is assembled in Canada using US manufactured parts, is it a "foreign" vehicle or a "domestic" one?

Like it or not, the goal of Roosevelt's UN has been achieved. All of the nations are intertwined financially . . . free trade stops wars, remember? There will never, ever, again be anything manufactured in these United States that doesn't require or include foreign sourced materials, that's just the reality in which we live.

You are right. No way Democrats allow income taxes to go away.
But the states that have no state income tax are gaining residents.

And the States with no income taxes are generally States which seek to limit government to the greatest extent possible, not expand the reach of the government to the greatest extent possible.

And that, Fred, is the difference. When your world view is that it is the government's job to take care of people, you need a revenue source to fund that charity operation. The only reliable source of revenue is from taxing income. People cut back on purchases during hard times, so sales taxes, use taxes, also fall. That's why the State government here in Colorado is looking to raise taxes where they currently exist and find new taxes to levy on other items.

The 6.5% tax on firearms and ammunition is a good example. By levying this tax to raise revenue to fund specific areas ("gun violence prevention"), existing revenue that was being spent to fund the operations of those areas may now be diverted to fund additional charity outreach (low cost housing). You aren't going to see the State outlay for "gun violence prevention" prior to the tax continue, no, the revenue from this tax will be used for that purpose and the current funds used elsewhere. And, when "gun violence prevention" needs more revenue, why, simply go to the people and ask for a raise to the tax, along with a de-Bruceing provision which will allow you to keep all the excess revenue from the earlier tax and you've essentially eliminated one of the general fund budget items in perpetuity.