It’s progressive. I spend $10,000 and pay my 50%, so $5,000. You spend $12.50 on bread and cheese and pay your 50%, so just $6.25
Where do you find that number?
Only thing I can find shows about $14 trillion in consumer spending, but not sure what the difference is here.
I fiound a figure of about 120 million household units and an average expenditure of about $66,000 per year and then rounded up to the next trillion as the figures were a couple of years old. But it seems to be inconsistent with the aggregate of 14-15 trillion which seems high for 330,000,000 people (over 40.000 per person).,
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It passed on Monday on a straight party line vote. Yes, it is DOA in the Senate as a stand alone bill.
I will bet that it gets attached to some “must pass” piece of legislation – the bill to raise the debt limit if not before then.
It’s a sad day for America when one of our two parties is openly backing tax evaders.
That’s paywalled. It sounds awful (rescinding the increase in funding) but not nearly as bad as the one I said I hoped was DOA: one that would eliminate the income tax and the IRS.
don’t look in here
Even though you weren’t supposed to look in here it’s even more important that you not click this link:
http://pdf.fivefilters.org/makepdf.php?v=2.6&url=https%3A%2F%2Fwww.nytimes.com%2F2023%2F01%2F09%2Fus%2Fpolitics%2Fhouse-republicans-irs-funding.html%3FsearchResultPosition%3D1&api_key=&mode=multi-story&output=pdf&template=A4&images=1&date=1&sub=&title=Your+Personal+Newspaper&order=desc&date_start=&submit=Create
Grover
You turned the page!!!
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I expect you got the $66k from the Consumer Expenditure Survey.
Here’s an older paper that speculates on why the CES is lower than the Personal Consumption Expenditures in the NIPA tables. https://www.nber.org/system/files/working_papers/w19589/w19589.pdf
I glanced at it. They are talking about under representation of high income households. The CES relies on voluntary record keeping. I’ll bet Zuckerberg doesn’t volunteer. They also mention personal consumption expenditures by people who don’t live independently and therefore are missed by the CES.
And, I think the PCE covers services provided by Non Profit Institutions Servings Households in excess of charges (e.g. the difference between college spending and college tuition).
There are probably more issues.
But, that leads to a good discussion regarding a consumption tax. Will we set it up so the richest people really pay, or will they buy their yachts in Bermuda and register them there?
And, will nursing homes and colleges pay consumption tax on everything they buy, or will we give them a pass? How about soup kitchens? And, will we charge the consumption tax on medical expenses? How about college tuition or a computer I bought for my college work?
And, it we start making rules to cover all these odd situations, how big will the tax agency need to be?
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My mistake. I saw “House” and “IRS” and thought they were talking about funding.
Here’s a non-paywalled version of the funding story:
The FairTax vote will be interesting. I believe this is the bill:
https://www.congress.gov/bill/117th-congress/house-bill/25/text?r=96&s=1#toc-H1268FEE532144384B5A58955D94CBC21
I’m pretty sure that enforcing it would require lots of federal employees.
It could easily provide a huge incentive to buy/sell outside of the scope of whatever agency is tasked with monitoring. So, more crypto exchange, cash-only, etc.
Or, when buying a yacht, you create a corporation in a no-sales tax country, have the company buy the yacht there, have the corporation lease it to you for $1 a year, plus consumption tax. Viola. Then, when you get out-yachted, sell the yacht to a lesser person’s corporation and you buy a bigger yacht.
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\textcolor{red}{\text{Why would we need federal employees for that?}}
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Is there still a requirement that some Congressional office evaluates bill for their effect on the deficit?
That’s the thing. And there’s already special carve-outs for things like gasoline and alcohol, so I assume we would either replace those taxes or ??? How is that being accounted for in both the current-state and alternate numbers?
Most states do not stick a sales tax on things like food (with considerable variation from one state to the next for what counts as “food”) and Rx medication, along with the aforementioned medical services.
Probably, but the rules they are required to follow are so incredibly idiotic as to render their calculations worse than pointless. They are downright misleading (through no fault of the folks doing the calculations).
CBO, I think.
The standard flat deduction (“rebate”) is expected to take care of the tax on essentials, so carve-out/exceptions, and the definitions therein, are not necessary.
I would be OK with additional taxes on “sin” products or services that lead to higher health expenses or hospital visits.
Yes, I was thinking CBO. And I agree that the fault in the calculations would be stupid rules, not the people doing them. I was not aware that the calculations are worse than pointless. I will be curious to see if the conclusion from the rules is that a 23% sales tax, with some rebates, will replace all the income tax and all the payroll taxes being eliminated.
These are carve-outs for higher taxes though, not lower.
They are forbidden from assuming that there will be any change in consumer behavior as a result of the change in tax law.
Here’s a dumb illustrative example.
There are roughly 10 billion packs of cigarettes sold annually in the United States, 20 cigarettes per pack.
Suppose that Congress authorized a tax of $1,000 per pack of 20 cigarettes sold. Packs of 19 or 21 cigarettes are not subject to the $1,000 tax.
CBO is legally required to say “guess what?!?! This tax will generate $10 trillion of annual revenue and the National debt will be paid off in 3 years!!!”
Obviously that is not what will happen. Cigarette manufacturers will start selling packs of 19 cigarettes and the tax will actually generate $0 of revenue, not $10 trillion each year. A tiny bit different!
Yep, that example would be worse than pointless.
The problem is putting numbers on the change in behaviors. I think it’s best to assume zero as the base case. If you want to do some “dynamic” calculations, pick more than one set of numbers and don’t give any one of them special prominence.
And, I’d say that the static case is valuable in most cases. Congresspeople don’t normally submit bills with $1,000 taxes on a pack of cigarettes.
You did warn them.
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