Income Tax vs. Consumption Tax
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- Опубліковано 14 кві 2010
- ... I stand corrected -- Honk Kong first imposed an income tax in 1947. It has a top rate of 16%, a high personal exemption, and capital gains, dividends, and interest income are not taxed! Certainly not as good as no income tax at all, but a much better system then the one we have here!
also check me out on / peterschiff and / schiffforsenate
1. While income tax only punishes people trying to better themselves, sales tax punishes everyone more equally.
2. There are many super rich people who do not work because they don't have to. No income means they don't pay taxes. But everyone spends money, so they would be forced to pay a sales tax.
3. Illegals, drug dealers, and "under the table" workers would all suddenly have to pay taxes.
Those 3 reasons alone make this seem like a much better method of taxation for America.
don't forget Illegals, drug dealers pay consume tax today
jiang ji Not federally, so that's irrelevant. An illegal working under the table living in Delaware pays no income tax or sales tax.
then shorten the period people have to wait to become American and they will get required to pay
a federal sales tax is the way
Delaware has no sales taxes?
"The power to tax, is the power to destroy" - John Marshall, Chief Justice of the United States Supreme Court
I love this guy and I live in Canada!
I always favored the sales tax instead of the income tax for the reasons Peter stated
Thanks Peter for sharing your wisdom.
I hope we see the dissolution of the IRS in my lifetime.
Congratulations on 400K subscribers! You've almost as many subscribers as the population of Belize.
@moxenrider You need to have a knowledge of economics to understand that argument. He is basically saying that if those accountants weren't wasting their time dealing with tax codes, they would be able to work in other fields of the economy that actually create wealth.
In nebraska we had a senator or governor suggest to replace income and property tax with consumption tax recently, I read it in my local newspaper a few months ago, I think it's a great idea, we need a president that will push for this cause in a way it would make stuff like homeownership cheaper, (and where I live homeownership is already much cheaper than renting) although homeownership may not be for everyone but it should be an option
Wow this needs to go to TRUMP
"One thing he could be doing with it, is donating it to charity". That's a bit of a leap, don't you think? He's saving it. Which is a good thing. Maybe we can move from being a mass consumer nation to a savings nation. Less inflation, certainly.
As always, Peter hits the Nail on the Head !!! Thank God he is so articulate!
Another superb video. Thanks again, Peter.
OMG! I have never heard it put any better than that. Everybody should hear this. I have never heard so much common sense uttered in such a short time. Bravo!!!
sharing with all my facebook friends! Great word, Schiff! Keep it coming!
Hey Schiff, Sweden here ;)
I like your opinion and it reminds me of a discussion I had with a fellow accountant a few years back where he just as you proposed a sole consumption tax. I pointed out that people will be able to buy things outside of the country and not pay tax. Here in Sweden we've got very high taxes but that's not the main issue, as an example I take the booze tax, people drive from Sweden to Germany (~800km) just to buy booze there to avoid the tax. How would you avoid it?
@EdgeRetro
Monopolies only occur for an extended time when govt coercive power is used to sustain it. Austrian economics addresses this issue rather thoroughly.
A compensation tax can be set up anonymously, where a company simply pays, for example, 10% of all compensation to the U.S. Treasury. That would allow a nation to maintain a low rate consumption tax and low rate compensation tax. Lower rate taxes face less evasion, avoidance, lobbying, deductions, and under-the-table payments, and can generate the requisite revenue on lower rates. So two 10% taxes would bring in about as much revenue as a single 23% Fair Tax or 28% income/profits tax.
This is in the top 3, must watch Peter Schiff videos. Up there with the mortgage bankers speech. He is probably the best we have right now in terms of free market advocates that explain economic principles well.
In addition, his father was imprisoned for going after the income tax. So what he's doing right now shows real courage.
Very good Sir. THIS is what you do best!
Americans are so lucky to have Peter. I wish Thailand had someone like you.
Nice Vlog Mr. Schiff. Your explanation of the person earning 1 million was spot on.
@fluff125 I said "relative" buying power meaning a rich person could have a hundred dollars taken away from them and still be okay while a poor person could have ten dollars taken away and still be okay. I know where you're coming from with the local government argument but it's basically a moot point because I was talking about "government" and "taxes" in a general sense; not about whether things should be done locally or if they're being done well. I agree with some of your points though.
That was one of the best video-blogs I have seen from you in a long time. I think a lot of european countries implement the same tax-setup, for the benefit of not only europeans, but globally, because it would raise the general buyingpower of the individual, and less money needed to be printed out of thin air, as its dont today most places
Great video and information. Thank u greatly!
It's makes me sad that politicians will never accept ideas like this.
Are you happy that we're voting on this
Thanks for the knowledge
Peter Schiff is advocating a tax is a good thing. His career as a politician is shaping up nicely.
Now this is a great platform and policy with a real and viable solution. Go Peter!
Brilliant! How can it be that Peter is the only one who sees the economic landscape clearly?
@GohanMH1 Wherever people find new efficiencies (for example we create new electrical devices that use less energy or we build cars that use less gas), the people fill in this new niche with new demand. So in case of devices that need less energy it does not mean that we use less energy. It means that we start using excess energy in a new different way.
Same with money. If there is more money in investments, it means more can be spent on creating new innovative things, this moves progress.
@JETZcorp
I completely agree with the addition of the the states and local governing are independent and not owned or subsidized.
Doss Consumption Tax apply if said person invests their money overseas or buys product internationally to avoid said tax? The more money you have the more available resources you have to take full advantage of any loop holes. It is the same concept of why I will wait to fill up my gas tank either in New Jersey or Delaware instead of Connecticut. I have the time and means to do so. However, those on the lower pay spectrum are restricted to always investing 100% of their money back into the local system. The richer you are the less restricted you are because money does provide more options.
Just do a 25% VAT which applies on everything so consumption and Incomes and with an UBI to simulate a progressive income tax. There are still deductions, but just one Tax. So at least a little bit of improvement.
Interesting. Cause I have to pay local VAT here in Denmark when I purchase a product from the US. Though I don't know if US sales taxes apply simultaneously.
Great video, superb explanation of our view. Don't forget all the labor and paperwork that goes in to W4 at the hiring process and W2 from the employer prospective. They need more time for Sarbanes Oxley paperwork.
@riversdirect2
Well I took the budget of our traffic department and divided it with the GDP. The number is near 1%. I assume it would be very similar in US.
@peapodsss
many basic necessities would be exempted, such as food etc.
You're one of my heroes.
How do we go about changing our Tax System? How do we abolish the IRS? How do we begin the process? How do we bring the Consumption Tax into reality?
You can use the same argument for consumption tax, as if you place a consumption tax on goods people will buy less, thus businesses will get less money, then employees will be made redundant and causing unemployment.
The thing is at least the income tax is progressive, whereas a consumption tax is regressive. Even if basic goods are exempt studies show that the poorest still pay a higher portions of their income to sales taxes than the richest.
Sales taxes plus tariffs would be enough to support a small and vigorous government. That coupled with a decrease in expenditures and a balanced budget would mean HUGE economic growth. 1% unemployment and 5% gdp annual growth if we eliminate corporate income tax as well.
@trinomialtree So I've come into this discussion at the end apparently. What is your stance again? Please explain to me what you suggest is your ideal government taxation method. I'd just like to know where you're coming from.
With a consumption tax, you have to save more money to pay for the increase in price when you're done investing, so there's no difference whether you put away $5k for 5 years then pay $5K in sales tax from the $25K, or whether you earn $5k and pay $1K over 5 years because in the end you still only have a net of $20K and you payed the gov $5K. The only difference is paying the tax in increments or lump sum.
The problems with the income tax that were mention are primarily the fault of an extremely complicated tax code and they could be fixed by simplifying it.
It is almost spooky how much I agree with Peter Schiff. Every time he broaches a new subject I have not yet heard him address, he seems to mirror my own thinking. But he often does it so much more articulately. And he certainly has a greater understanding of the details. A pity more people are not listening.
@whyohwhy815 I was kinda thinking that too. Maybe a slowdown in economic expansion is a fair tradeoff for a moral tax system though.
I like your style, sir.
@christo930 Who says the elimination of the income tax would equal elimination of social safety nets? Most of it is used for war and the military industrial complex anyway.
Although I think the safety nets in question are inefficient (and bankrupt) and should also go, these would be the last things I eliminate because people are dependent on them.
I've never heard that crime assertion before.
Very well put!
What if I buy a product from another country and import it into the United States? I assume sales tax would apply to this item as well, right?
Schiff's remarks are always on the mark.
Excellent Video!
You go Peter 👍🏻🥳. I was watching another video right before yours and there was this guy that was railing against the consumption tax and he wanted status quo the way things are and I was thinking he must be into some kind of accounting firm that's profiting off of this whole giant mess and sure enough I went to his channel and he was a tax accountant. There's so many people benefiting off of this tax feeding troft that it's going to be very hard to overturn it.
@JETZcorp
The government is already a corporation. (1871) and they don't serve us, our 'person' serves them (13th & 14th amendments) who in turn serve the banks - Statute law is akin to corporate policy.
@Spideynw The poverty rate is determined by saying what % of the American people live below a certain income level. They also take into consideration if a person is retired, but owns his home outright so that he can live better despite a reduced income because he is spending less on rent, and other similar situations. It's funny that you would say it doesn't sound very empirical to you, without you even knowing what it is or how it's determined.
@shivan2418 How's that? Do drug dealers in your area keep records, have accountants, and have a storefront and do all their business above the table? I agree with everything Peter is saying here but I have never gotten the connection that drug dealers will somehow pay tax with a consumption tax. Please explain.
For an individual, the argument of taxing consumption, excluding basic necessities, make sense. Along these lines, how to small businesses and corporates get taxed?
@adamsmith86 I am a european, running my own company, and what you just wrote have absolutely nothing to do with a consumption based tax, vat or anything else taxrelated for that matter
The reason people dont want to produce in spain or greece, is the cost of running a company due to emplyment/labor rules.
Thnx again Mr. Schiff
Great post!
Amazing! Yes, when you enjoy your consumption, the tax is the exchange for that enjoyment.
@GohanMH1
When does that ever happen?
Realizing that we are always going to be overtaxed, I'm optimistic about the National Vat tax, over time I hope it will be a foot hold to change the current system. It will also take us towards a less progress and also more long term financial psychology.
@fluff125 have you heard the expression "You have to spend money to make money?" It's like that in the US.
@GuardofLiberty Assuming of course, your figures are correct.
great points!
Excellent
@shivan2418 Got it. Thanks for the clarification. It does make perfect sense.
welcome back
Very much agree. I would suggest one alternative however. I think even better than a Consumption Tax (or at least a high one) is a Usury Tax. Our entire monetary system is based on debt. As small ~1% tax on all debts would cover a large portion of the revenue the federal government requires.
how would this remove the need of accountants? Doesn't a sales tax have the same effect as the income tax for people selling the product?
Yes, but income tax has progressive rates, deductions, write offs, exemptions, tax credits, single and joint filing, the list goes on. Its very complicated. Sales tax is just calculate the percentage based on your sales figures. If you have a decent POS and inventory system, it could be mostly automated.
smart man. our country needs you, thanks
What if a person hoards the money. Saves it off shore?
@christo930 There are other things like what % of income is spent on necessities and the like, but income level is the biggest thing.
Can't dispute the logic. It would be interesting to see counter points to the fundamental theses of consumption tax as outlined by Schiff...
Peter, if you were in charge, what % would you have the consumption tax at?
come to australia, we have a huge income tax and a 10% consumption tax on just about everything. i wonder ehat the government do with it
@GohanMH1 That's the best thing they could do. Saved money provides capital for entrepreneurs which creates jobs.
@leemil4 Privacy protection is a good point to bring up but we already surrender our credit card numbers to businesses every time we use them. But perhaps the businesses wouldn't have to have access to our social security numbers though. Eventually the cards could be equipped with magnetic stripes and the numbers could be encrypted within the stripe. Plus, like I said, the system would be voluntary. Most people would just be paying the full tax. And I think food should still be tax exempt.
Great video
@CorpseCallosum Of course. I fully agree.
Peter, I can not wait till the day that I can hear you on the floor of the Senate educating all those mislead individuals.
@rezek71 that depends completely on politics and if there is any profound change in society. If we continue to allow free trade w/ corporate interests garnishing the major share of benefits from it while allowing/ forcing developing countries to invest in financial instruments and paper promises to keep their currency undervalued it is a bad assumption that a corporation will invest in a country that is democratic, unpredictable, or has no consumers to buy goods.
Wow.. Amazing video!
@mechanicalengineer3 around 1.8 mil...
Peter schiff is always so spot on whenever he opens his mouth. its crazy how often somebody can speak sense, meanwhile we have idiots like bernie sanders and cortez who havent said a smart thing their entire life.
@christo930 ah, a so called "poverty" rate. What is that exactly and how is it determined? It does not sound very empirical to me.
13years later makes even more sense
why not tax everyone at a flat rate? therefore its all relative and fair right?
more fair yes...…………….but still forced taxation ……………………..sales taxes are voluntary in many cases
Does this abolish net income for businesses?
You could eliminate the IRS. How much would that save?
@51674
Yep - if one wants their freedom, then they're going to have to stop being a dependent.
Would this tax hit poor harder who spend more of their income on basic necessities?
From the description box : A much better system THAN not "then" the one we have now.
@bhs08dyn
True, but as Ron Paul says, inflation IS a tax.
the word tax has been used so many times, in so many arrangements I think I am having an anxiety attack lol...terrifying..thanks for the post.
As a preface to my comment, I do tax reporting for a large (bailed out) bank as well as prepare individual returns. I am 100% in favor of a consumption tax (minus food). Preparing taxes, especially for the complex partnership structures I work with, is the biggest waste of time and money I can think of. Even if it killed my industry, I'm still in favor of abolishing the tax code we already have. That should count for something. Good luck Peter.
@pcuimac
Since the income tax goes almost entirely to pay off the debt generated by the federal reserve the answer is yes.
I'd say even 1% of the national income would be sufficient to build roads and infrastructure.
@Simple4RON
I Agree. The consumption tax would need to be 20% or higher which will more than likely create a black market. In theory, it''s a great idea, but in practice I'm afraid it wouldn't work.
Taxes aren't the problem anyway, people's expectations of government is the problem. When you expect a cradle to grave government, you should expect to pay taxes. When people get back to the orginal meaning of government (Written in the constitution), only then will taxes go down significantly.
Holy cow; you just won me over from the flat tax.