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On Monday, the United Kingdom's coalition government announced sweeping measures to cut its budget deficit, the second worst in the EU.
UK lawmakers should be applauded for addressing their government's funding gap, and not just pushing it onto their children, like the United States has done. One of the measures introduced by Prime Minister David Cameron was an increase in Value Added Tax -- a federal sales tax -- from 17.5 percent to 20 percent. It is time for the United States to follow suit.
Once upon a time, during the era of taxation without representation and a different kind of Tea Party, following the UK was heresy. But the United States is now facing three systemic, growing, 21st century challenges: a huge deficit, high unemployment and climate change. Leaders from Des Moines to DC are asking how they can provide necessary services without raising taxes, get more people working again, and get the energy they need without succumbing to King Coal or crapping all over the Gulf of Mexico.
There is a way out of this. Why not tax consumption, instead of production?
In the US, we are taxed by the federal government for what we earn, at a rate between 15 percent (top 50 percent of incomes) and 26 percent (top 1 percent of incomes). For those of you who like working hard, only to start actually earning money for yourself on Tuesday around lunchtime, read no further.
For the rest of us, let's entertain the glory of the Stuff Tax.
The More You Want, the More You Pay
There is no reason we should tax employment, work or production. The concept is a perversity that punishes the addition of value to society.
In contrast, a Stuff Tax would do exactly that: Tax the consumption of stuff. You would take home the lion's share of your paycheck each month. Consume nothing? Pay no taxes. Want to buy a snowmobile or a Ducati? Pay the tax.
Here is how it could work:
- Income taxes greatly reduced or abolished.
- Employment taxes greatly reduced or abolished.
- All products and services, with the exception of food, public transportation, some clothing and shelter (property/ rent) include a 20 percent federal government-levied tax.
We say we value work and entrepreneurship, and yet we tax them. As a nation we have not historically valued consumption, yet we encourage it. We do this because we have always done this, but there are other ways to raise funds for essential services and close the deficit, which was $1.67 trillion in 2009 (a threefold increase from 2008).
www.FairTax.org
I like the "Fair Tax". It saves us lots of money by abolishing the IRS bureaucracy, saves us lots of time and money spent on filling out our taxes and related paperwork, gets rid of all the special interest loop holes, taxes imported goods just as much as US made (unlike income/employment/corporate taxes), and is simple. It is NOT regressive because all the taxes paid up to the poverty line are refunded upfront. Its biggest problem is that all the DC lobbyists hate it because most of them would become unemployed.
Check it out:
http://www.fairtax.org/site/PageServer?pagename=about_main
From One Pocket to the Other
An idealistic solution with several obvious fundamental flaws.
Our government is no more thrifty than our citizens. Giving more tax money to a less-than-frugal government doesn't seem sensible. Perhaps we should tax the government's spending!
Are you talking about
Are you talking about something akin to a "sin tax" like taxes on tobacco products - the idea being that people will be requre, to pay higher taxes on products whose production or use contribute to climate change, and that therefore they will be less likely to purchase or use these products.
Cigarettes have been taxed highly for years and people still smoke.
It is a good idea
It is similar to the Fair Tax, that has been proposed (and made famous during the GOP 2008 presidential primaries by Gov. Huckabee).
It is a wonderful idea whose
It is a wonderful idea whose time is long overdue.
As for the colonist's disingenuous claims of "taxation without representation", they simply did not want to pay taxes period, regardless of representation. Two thirds of the colonists were either pro-British or neutral at the start of the war.
What if there had been no revolution? There would have instead been one enourmous British North America. There would have been no war of 1812. The British ended slavery in 1834, so there would have been no civil war. The "Americans" would have entered "The Great War" along with the rest of the empire in 1914 and would have contributed to an earlier conclusion.
The enlightment would have continued unabated and we would have been like Canada. Imagine how horrible that would have been!
A Transaction Tax
Why not go all the way. This is a proposal I've been sending out to various sites. Comments are welcome.
A TRANSACTION TAX
Why not a single, easily administered, non-regressive tax?
It can be done, and undoubtedly will be done. The question, really, is when?
The Federal Government could replace its entire system of taxation with a levy on all transfers of value. The actual percentage rate would be quite small—one percent or less—because all transactions would be subject to this tax.*
There would be no income tax, no import taxes, no other federal taxes of any kind (and this could be the first step in the elimination of all taxes—state and local as well as federal).
The tax would be levied on stock purchases and dividend distributions; wages; inheritances; retail and wholesale purchases; interest; property purchases, etc. In other words, any time there is a transfer of value, the federal tax would be applied to the amount of the transfer.
Apportionment of federal revenues would then be made to the states and local governments on the basis of population, and inversely to the amount of local taxes levied. Those state and local governments with higher taxes would receive less federal revenue. State and local governments would gain the most by not levying any taxes and therefore not incurring collection costs.
Collection would be simplified, since it would work like the collection of existing excise, sales and value-added taxes. The only way individuals or corporations could legally avoid the tax would be by not spending, or in any way using, any wealth in their possession. And there would be an additional advantage to the tax. The smaller the transaction, the less temptation there would be to avoid paying the tax, while the larger the transaction, the more difficult it would be to avoid paying it.
The tax would be non-regressive in that there would be no tax shelters, no deductions, no loopholes. Under a barter system, this form of taxation would be difficult, though not impossible. In a cash economy it becomes much easier to enforce. In a cyber-based economy, collection would be easily computerized and would be virtually automatic.
*EXCEPTION: For obvious reasons, an exception and the ONLY exception to the “transfer of value” rule would be the tax collection, itself.