Mr. Getty,
Why, you argue like a true scholar!
Not.
Heather (who did deserve a little rudeness back, given her use of the word “moron”)raised a concern that many people may have: that when sales taxes have been raised on luxuries in the past, such as the Yacht tax, they have done significant damage to the industry, leading to huge layoffs.
Excerpt from “Shipwrecked in New Jersey” by Robert A Peterson, in The Freeman – http://www.thefreemanonline.org/columns/shipwrecked-in-new-jersey/ :
“With so many benefits “trickling down” to middle-class and poor Americans, it’s hard to understand why Congress would seek to destroy the boat-making industry. Yet that’s exactly what it did in 1990 when, according to a Wall Street Journal report, “Congressional Democrats [were] eager to show they were being tough on the rich.” A ten percent tax was added to the cost of luxury yachts. Since a yacht today costs anywhere from $100,000 to $200,000, this means that at least $10,000 had to be paid to the government before a potential buyer could get his first whiff of salt air. With the economy already heading for trouble, this was the proverbial straw that broke the camel’s back. Ocean Yachts in Weekstown trimmed its workforce from 350 to 50. Egg Harbor Yachts entered Chapter Eleven bankruptcy, going from 200 employees to five. Viking Yachts dropped from 1,400 to 300 employees. According to a Congressional Joint Economic Committee Study, the boat industry nationwide lost 7,600 employees within one year. As Bob Healy, president of Viking Yachts explained on NBC News, “Every six or seven years, you have a down cycle. You might be off 20 percent, 30 percent, or 40 percent at maximum. Our industry is off 90 percent nationally”
I understand that your proposal is to do away with income tax entirely, which would certainly free up all that money taken from the upper middle class and the wealthy. But it isn’t immediately clear that the luxury taxes would still not exceed the amount many wealthy would be willing to pay for a yacht and other luxuries. You suggested a tax of 100% on high end cars. Maybe this would not make any difference at all to sales of high end cars to the super wealthy. But I don’t know what it would do to sales to the “marginally” wealthy, people who would buy a car at $60,000, but not at $120,000. And I don’t know whether those lost sales would harm the marginal luxury producers or not.
True, if the wealthy didn’t have to pay income tax, they would have more money to invest in other segments of the economy (and so would middle class people), so perhaps a drop in luxury goods sales wouldn’t matter to the economy as a whole and to employment. But these are the kinds of ideas that need to be explored.
Economics is a complex and tricky business, and you have put forward an untried idea. You said so yourself: “…but I can tell you with 100% confidence that the USA has never tried replaceing the income tax with a progressive national sales tax.”
Has this replacement been tried elsewhere? If so, to what results?
If you are serious about this idea, and want others to take it seriously, then you need to address people’s concerns reasonably and with the awareness that the burden is on you to provide the evidence that this plan can work. You do your case no good by engaging in name-calling (even if Heather did use the term “moron”) or by failing to address the legitimate concerns of those who haven’t yet examined in-depth the plan you’re offering.
