National debt limit

[disneysteve]

Originally Posted by snafu

Extrapolating that to all other goods and services would likely reduce consumption

I think that is probably true but that isn't necessarily a bad thing in the long run.

Anytime you distance the consumer from the actual cost of the product, you create problems.

For example, how many times does a patient tell me they want a certain test or procedure or medicine because it doesn't cost them anything to get it. Their insurance pays the bill. If the patient had to pay, even partially, for that service, they would think twice before getting it done.

I think the same would be true of consumer goods. Right now, we all have very little control over how much we pay in taxes. With a consumption tax, we would have a great deal of control. If we want to pay less in taxes, we can adjust our buying accordingly. I think that would be a good incentive to live a simpler life. That would impact the economy initially but over time, I think it would be a good thing - less waste, less sprawl, less debt, etc.

[snafu]

Perhaps a better example is one offered by Shane C. Have the sale of cigarettes in New York state been affected since taxes were increased substantively? Is the tobacco industry as powerful a force as it was when their principals swore there was no evidence smoking was detrimental to health? Have the number of people working at all levels in the tobacco industry been reduced?

Yes there are other factors. I've wondered if McD type foods or sweet soda were taxed at 25%, would type II diabetes or obesity figures decrease?

[disneysteve]

Originally Posted by snafu

Have the sale of cigarettes in New York state been affected since taxes were increased substantively? Is the tobacco industry as powerful a force as it was when their principals swore there was no evidence smoking was detrimental to health?

That is a good example. Smoking has decreased dramatically in this country over the years as more and more was learned about the dangers of smoking and as the cost has risen. The highest percentage of smokers is among the poor and many of them can no longer afford to smoke like they used to. Plus, thanks to smoking bans, there are fewer and fewer places where you can smoke indoors. That has also helped a lot.

As for taxing junk food, I'm sure that would help, too. The McD Dollar menu is a terrible creation. It encourages people, again especially the poor, to buy cheap crap instead of a decent meal.

[maat55]

Originally Posted by shanecurran

This is a poor example for a few reasons. One problem is that taxes would be levied on all goods, so that consumption would not be affected in the ways you have described.

Products already have hidden/embedded taxes built in. A consumption tax would eliminate those taxes and replace them with a transparent tax. The Fair Tax research has determined that goods and services, on average, have 22% embedded taxes. This is why it offers a 23% tax(inclusive to replace inclusive hidden taxes) to replace the current system which is cumbersome and costly to manage.

[disneysteve]

Originally Posted by maat55

Products already have hidden/embedded taxes built in. A consumption tax would eliminate those taxes and replace them with a transparent tax. The Fair Tax research has determined that goods and services, on average, have 22% embedded taxes. This is why it offers a 23% tax(inclusive to replace inclusive hidden taxes) to replace the current system which is cumbersome and costly to manage.

How would it replace embedded taxes, though? The manufacturer would then be paying the 23% tax on the raw materials to make the product which would then have the 23% tax paid by the final buyer. Or would things bought in that manner, like raw materials to make another product, not be taxed?

[maat55]

Originally Posted by disneysteve

How would it replace embedded taxes, though? The manufacturer would then be paying the 23% tax on the raw materials to make the product which would then have the 23% tax paid by the final buyer. Or would things bought in that manner, like raw materials to make another product, not be taxed?

The Fair Tax only taxes at the retail level. It eliminates all production taxes.