Obviously, I'm going to have to dumb this down for you. Wealthy people spend a lower percentage of their income. That's obvious by the fact the reason they are wealthy is because they didn't spend all their money on consumption. Is that easy enough to follow?
You should be an expert at dumbing things down. Yes, there are a lot of obvious things we can bring up here... it's obvious the rich keep getting richer, and the poor remain poor. This is because rich people are motivated by wealth and poor people are not motivated by wealth. This might be a shocker for you, but all rich people don't behave the same... some rich people are very frugal, others are very opulent. Those who are more frugal, naturally amass more wealth and don't generally spend as much as the opulent. Some rich people are greedy and some are benevolent. Some rich people give away more money than other rich people earn. You say that rich people don't spend all their income, but not very many people do spend all their incomes, if they are smart. It's actually one of the attributes which contributes to a rich person being wealthy, they were WISE with what they spent their money on, they didn't blow it on a bottle of ripple and a lottery ticket.
So, the tax from that money is not realized. It has not made it's way into the economy.
Right, and there isn't a way to force people to spend their wealth. Taxation tends to have the opposite effect, raise it too high, and fewer people will spend money. This is the reason most tax increases do not result in increased revenue. In order to get this money into the system so taxes can be realized, some incentive must be present to encourage people to spend their wealth. You stubbornly and defiantly refuse to let that happen, out of fear they will use their money to create more wealth. It's the diametric opposite of what you should do, if you want to increase revenues.
The second thing is wealthy people generate income from things like capital gains and other avenues which are either not taxed or taxed at a lower rate. Every dollar a person receives should be taxed. It's money coming in, income.
The more you tax something, the more rare the behavior becomes. This is another one of those "obvious things" we can look at here. This applies to rich people, poor people, and those in between. The higher the rate of taxation on anything, the less of it you will have. You want to tax income more? You'll create LESS income to be taxed more, it's the nature of the beast. To encourage a behavior, you have to incentivize the behavior... if you want more people to be wealthy, reduce the amount you are committed to take in taxes.
As for spending money out of country where do you think the money comes from that is used to invest in foreign countries? The way it is now big businesses get tax breaks. In other words less tax on income. They take that money and buy a factory in another country. Where is the tax for the US?
It's amazing.... you are using the argument that corporations buy factories in other countries
because the taxes are lower, to support
higher taxes to keep companies from buying factories in other countries? That can't possibly make any sense to even someone as illogical as you. If you want these companies to not buy factories in foreign countries, do something to inventivize buying factories in America, like eliminate corporate taxes! Now, if I am a rich person, all things being equal, I would rather buy a factory here, even though I might have to pay higher wages, because it reduces the costs associated with operation of a foreign factory. Remember, the reason I am buying a foreign factory instead, was because the tax rate was lower... that incentive has now been mitigated with no corporate tax.
The well-to-do buy homes in other countries. Whether it's a Swiss Chalet or a modest time share they made that money in the US and having only a consumption tax means the tax on that money is lost.
Well, not ALL the "well-to-do" buy homes in other countries, some never even visit other countries, we've been through this earlier... you want to paint an entire group of people you don't even know, with a broad brush, and insist they all behave the same... that is the viewpoint of a bigot. People are all individuals, they behave differently, their motivations are different. Now Apple, I don't care if you want to buy a blow-up doll from China, or spend your money on 1-900 calls to Russian hookers... it's your money, you can spend it wherever you please. Why do you think a person should have this right removed once they obtain wealth? I don't care that the wealthy might spend their money elsewhere, they aren't going to spend ALL their money elsewhere, if they LIVE in the United States! Now if they go and LIVE in their Swiss Chalet, what difference does it make? People living in Switzerland are not subject to US taxation, so what difference could it make to us? Even if you operated your American company from Switzerland, and earned an income in America... you sold something to someone, and a 23% Fair Tax was charged, collected, and paid to the US government in the transaction. After that, what you spend your money on should be your own business.
As for how a consumption tax would work, you are forgetting some crucial details to the plan... First of all, those who currently do not pay an income tax, would not be paying the Fair Tax on any basic need. The concept includes a "prebate" check, which is the estimated amount of Fair Tax a family would pay for food, rent, housing, clothing, medical, etc.. Each month, the "poor people" would get a check for the taxes on basic necessities of life, so they would not be paying any fair tax, if they didn't want to. People who are 'self-producers' like farmers, might actually come out well, because they might not even spend the estimated amount, and they could actually profit off the Fair Tax system. But now... let's move to THE RICH, and how this would effect them. I think you would agree, wealthy people tend to be more extravagant in their spending than someone who may be on a budget, living pay check to pay check. While we can't say this is always the case, because as I said earlier, we are all individuals with different circumstances, this is one of those obvious things we should be able to rationally agree with. People with money, tend to spend it. Yes, the rich person might indeed buy a Swiss chalet, but (1) that might be from trust funds and not income earned... and they are probably going to also throw a big going away party in The Hamptons for all their dearest friends... then they will most likely have to buy a plane ticket... how else are they going to get there? Oh, maybe they have to fly the G5? Then.... they just HAVE to bring along some staff... this could get costly.... but the 23% Fair Tax tab is rolling buddy! We're making revenue off ALL this "Old Money" that hasn't been spent in years! Income is one thing, consumption is a whole different thing. Rich people spend large sums of money... I do know this to be a fact. And they tend to do this
more when times are good and things are prosperous.
Finally, one last point I wanted to make, and it's on the issues you may personally have with 'corporate welfare' and how the greedy rich people and companies are all ripping us off with the tax codes, getting all these sweetheart deals... government subsidies and kickbacks.... loopholes in the tax code, which allow companies like GE to make billions and not pay taxes. With the Fair Tax, that all goes bye-bye. No more loopholes, no more deductions.... no more corporate tax or income tax! Just the 23% Fair Tax on everything bought or sold in America.
