Consumption Tax
Categories: Tax, Econ, Regulations
The basic rules of economics say that, the more expensive a product, the less of it will be purchased on a supply and demand chart. But who needs economics when you've got a massive, self-created pension crisis to shovel money at these days?
The government needs your money. And the easiest way for them to get money into the coffers is to target the biggest part of the U.S. economy: The consumer economy.
Bring on the consumption tax, a percentage or nominal fee on every single purchase made by the consumer. In the United States, the most common form is a sales tax, while in Europe, you're more likely to face a value-added tax.
So...let’s say you live in Chicago. You buy a candy bar for $2.00 on Michigan Ave.
On top of that two bucks, you pay 10.5% in sales tax, bringing your total to $2.21. That 21 cents allegedly goes to the state and local government to help them plug their ever-expanding budget deficits. In reality, your 21 cents have been flushed down a hole, never to be seen again.
It's a great place to live.
Related or Semi-related Video
Finance: What is VAT?5 Views
finance a la shmoop what is the eighty or VAT well it's this what okay then I
never mind Breaking Bad was awesome though anyway in finance land VAT or V.A.T[Car drives by financeland sign]
stands for value-added tax and it is simply a consumption tax like the tax
rate on anything you buy in Massachusetts is say ten percent so you
think that car cost thirty grand no it was thirty three grand and you'll pay [Car on a driveway]
other v.a.t.s like a tax for your license plate registration and other
stuff note that the V and the A in their value-added yeah and it's a fair
question to ask value-added for whom and the answer is the government the taxman [Uncle Sam poster appears on wall]
v80 tax is that three dollar gallon of gas at the same rate for Bill Gates as
it does for Joe Sixpack it is a regressive tax that is rich in poor
people all pay the same rate and yes Bill Gates jet probably uses more gas [Bill Gates stood by a jet]
than does Joe six-packs but the rate per gallon is the same and this causes
controversy among various political factions who feel that it's wrong to tax [Political figures speaking on stage]
the poor at the same rate as the rich well when it comes to income tax the
rich are taxed vastly more not just in volumes of dollars taxed because they
earn more money but in the rate of tax applied like let's punish those
hard-working plumbing parts suppliers and reward the guy who's asleep at the [People using laptop on benches]
tollgate taking the five bucks like someone in a blue state making thirty
grand a year pays fifteen percent tax on their last dollar someone making 500
grand pays like fifty cents or half so over time a number of politicians have
suggested that v80 should somehow have an income level overlay that is the
buyer of a given gallon of gas should state what income tax bracket they're in [Man unscrewing gas knob]
when they go to the gas pump and that for Bill Gates that gallon should cost [Gas pump filling up car]
like thirty eight dollars whereas for the Union Tollbooth worker yeah wake up
there buddy five bucks each time well they only have to pay two dollars for
their gallon of gas fair not fair well ask the toll booth guy
you know when he wakes up [Toll both man sleeping]