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View Diary: Killing Sacred Liberal Cows, or What Economists Think About the Economy (105 comments)

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  •  Consumption taxes are regressive. (7+ / 0-)

    If you consume the vast majority of your income, say $40,000, you will be taxed at whatever the rate is on all of that.  At 8% you would pay $2400 in taxes if you spend $30,000 on transactions subject to the tax.  That's an effective rate of 6%

    Now take a person making $250,000.  Even if they spend $100,000, more than three times the amount of money, on transactions subject to the tax, paying 8000 dollars in tax, that is still only 3.2% effective tax rate, almost half the rate of someone making $40,000.

    But more to the point, eliminating income taxes would gut the federal treasury and cripple our ability to support programs like SS and Medicare.  That is, and always has been, the goal of those who favor eliminating income taxes or going to a flat tax.

    •  Great point! (0+ / 0-)

      You make a great point about the consumption tax in general and the income tax as support for SS and Medicare.

      So my question to you is: how did five different economists all decide to favor such an idea about the consumption tax?  Do all economists want to get rid of SS and Medicare, or only these five?

      This article coming from NPR was short on a lot of details, but did stress that every economist on the panel agreed a consumption tax needed to be progressive in nature

      "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

      by Hugh Jim Bissell on Thu Nov 15, 2012 at 12:24:08 PM PST

      [ Parent ]

      •  There are plenty of economists around (1+ / 0-)
        Recommended by:
        FishOutofWater

        these days who are fool enough to think it would be a keen idea to wrest control of all of that Social Security money and put into the market instead.  They obviously learned nothing from the 2007/2008 collapse which would have had an even more significant impact were it not for Social Security checks remaining stable income for seniors unlike their pensions and other invested retirement funds that were severely compromised.

      •  I heard this story too... (0+ / 0-)

        and even the "left of center" economist was obviously not terribly left of center.  It struck me as a markedly right-of-center group of economists.  Probably another lame attempt by the NPR editors to create "balance."

        There are plenty of respected economists who support the notion of a progressive income tax, foremost among them a guy named Paul Krugman.  You might have heard of him - Princeton economist, Nobel Prize Laureate, prominent columnist for the NYT.  There's also Joseph Stiglitz, another Nobel laureate.

        Obviously not all economists want to get rid of SS and Medicare, but I can guarantee you that anyone who calls themselves a "centrist" -code for "moderate conservative," a libertarian or a radical free-marketer WOULD support the idea of axing all those programs.  So the composition of their panel was obviously stacked to the right.

    •  Only flat rate consumption taxes. (0+ / 0-)

      What they're proposing, I believe, is a variable rate based on how much you've spent that year.  The more you spend, the higher the rate goes.  The poor only ever pay the low rate, since they can only expend limited amounts of money in a given year.

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