A Consumption Tax

A recent article in the Economy section of The New York Times took a look at the case for larger and smaller governments. In his argument, which is well drawn out and explains both sides, the author debunks the typical conservative argument and talks about the difference between the consumption tax and the income tax. The tax system in the US is an income tax where a certain percentage of each persons income is given to the government in order to pay for public things we all benefit form. The consumption tax is based off of what consumers buy. The consumption tax is there for applied to what a person buys, so the more you consume, the more you are taxed. 

Both systems can be progressive or regressive depending on how they are set up, however, the consumption tax was inherently a conservative idea. It was originally conservative because in its rudimentary form it targets the poor and the rich equally. For example, if you put a consumption tax on all cars, then you are taking the same from low-income individuals as you would from high-income individuals. Therefore a policy is made progressive when it is FAIR. That is, taking more from the wealthy because they have more. My proposal is the implementation of a progressive consumption tax alongside our curernt income tax. 

A progressive consumption tax is tricky because it would not be beneficial to tax basic needs such as food, housing, or even clothes. In order to make the consumption tax progressive it would look to target accessories that are only consumed by the welathiest of individuals. For instance, you would not add consumption taxes to the entire automobile industry, but adding heavy consumption taxes to Ferraris. If you were to include this with our current income tax system we would begin to see  more means for redistrubtion to low income individuals. We would begin to see a taxation system that is able to more proportionately target the 1% in ways that are not achieved through he current income tax system in the US.