Quote:
Originally posted by Greedy,Greedy,Greedy
A consumption tax can have progressive rates, but will that make it a progressive tax?
Those with low income AND less wealth clearly have the least ability to pay. Yet, once they get over the exemption amount, they will pay 15% on virtually all their income and all their wealth (the two being virtually coterminous). At the same time, Bill Gates will consume a paltry couple of million a year, pay his 35% tax on that, but (absent other taxes) pay only a tiny fraction of either his income or his wealth.
So, the question is really how do we define progressive? Different formulas can be used, but at the end of the day what I (and I think Wonk) is most interested in is the taxpayers overall ability to pay, and thus a denominator in the progressive equation based on some measure of income and/or wealth.
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To make up the tax revenue, the tax rate on consumption over $40k a year would be considerably higher than 35%.
Which is what might make this totally unpalatable to the rich.
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