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Topics Homepage> The U.S. should tax consumption, not income

The U.S. should tax consumption, not income

PRO (7 assertions)

No framework

1. Assertion: Consumption tax will stimulate our economy


-You earn $100

-Income tax eats away 40%, or $40 from you

-Only have $60 left to buy things or save

-With consumption tax, you still get to keep your $100

-Now, you’ll have lots of money, and will spend most of it

-So now, a video game that used to cost $10 no costs $15, correct?

-But with your extra $40, that $5 seems like nothing

-With more money in pocket, you will obviously spend more

-Same amount of people paying more money=good economy

-Not encouraging overspending- Just that with extra money they can be taxed more on everything they buy and they can save the rest

-Encourages thinking twice about everything you buy

Evidence: Brookings Institute

2. Assertion: The consumption tax is more stable


-No one’s paying as much money as they should in income tax

-Large portion of rich abuse tax system


-And for consumption tax, people always buy things

-May not buy house, but we always have to buy necessities

-Income tax is unstable

-40% of Americans who could pay it don’t

-Very flawed

-Many don’t pay

-But we’re so used to this instability that we don’t notice it

-Consumption is guaranteed

-People always have to buy things

-But you don’t necessarily have to have a job

-Recession and unemployed people

-No one to escape consumption tax, but many ways to escape income tax

Evidence: NYTimes

3. Assertion: Consumption tax promotes savings


-Encourages capital investment

-Reason economy down because Americans spend too much

-Encourages people to save

-By switching form income to consumption, we’re making paradime shift from promoting unstable, overspending society to better society

-More than just a tax_ Promoting a different mindset in America- more savings and investments and less carefree spending

-Housing crisis because of too much spending

-People spent and couldn’t pay off

-By promoting this tax, we are promoting a new lifestyle_ Save and think twice before spending

Evidence: USA Today

4. Assertion: We can make the consumption tax work with a simple plan


-Gov. can define tax specifically

-But we will have a tax rebate plan for people in lower tax bracket

-funded by gov. stimulus package

-We understand that there will be a burden put on lower class

-Why we will have tax rebate plan

Evidence: Brookings Institute

Assertions #5, 6, 7

CON (6 assertions)

The PRO has two burdens to prove in this debate:

1. To prove that the gov. has a guaranteed flow of revenue when we tax consumption so that the government doesn’t sink into even deeper debt. They cannot prove this, than we should win this debate

2. Prove why we need to prioritize one tax over the other_ Why not have both?

1. Assertion: The consumption tax would be hard for certain classes to pay


-Elderly and unemployed would suffer most

-Have to raise consumption tax 68% in order to compensate for loss of tax flow (Brookings Institution)

-Unemployed, so have no income

-No way to make back the money that they are spending

-Also unfair for poor

-Have no income

-So how fair that they pay as much in taxes as the rich and other well-off people?

-Pay what they’re used to paying +68% interest

Evidence: Brookings Institute

On average, middle-class and poor people actually consume more than the wealthier upper class, so this tax would only put an unnecessary burden on the poor. It is a regressive tax- Brookings Institute

2. Assertion: Income tax will gross more money for the US government


-People consume less than make

-Consumption tax not set

-Income steady and regular

-Consumption tax up and down

-If not enough made by this regressive tax, it will have to go up

-Income tax= more $$ for gov.

-Government needs $$ ($1 trillion in debt)

-Even at 10% unemployment, 90% of the workforce is still making money

-As the workers make money, the government can maintain an income stream, even in a depression

-Again, raise it 68%?

-This would cause resentment and an uprising with the American people

Evidence: The Economist

The top 5% of American citizens in ranking by wealth are responsible for 50% of tax flow and revenue for the

Income tax is expected to yield $2 trillion according to CNN. However, if we taxed consumption 20%, than we’d earn $534 billion less.

3. Assertion: Income tax creates a fair middle-class


-Income tax taxes wealthy people who earn more

-Taxes less people who earn less

-Poor and unfortunate get much needed breaks

-This creates a middle-class, which politically and economically runs our country
- A person making $20,000 a year will pay less (percentage wise) than someone making $200,000 a year

-This is an effective strategy to distribute the wealth.

Evidence: USA Today

4. Assertion: Taxing consumption will kill our country’s GDP


-Taxing consumption means you’re regulating the amt. of goods_ Decreases demand

-GDP based on how many goods sold

-Consumption tax regulating demand

-Demand drives economy

-So basically stifles demand

-So economy goes down

-And when economy goes down, every one is hurt

Evidence: The Economist

Assertions #5, 6