[DanielBMarkham]

Replacing income tax with a consumption tax would see the super rich pay even less tax as they spend a smaller percentage of their income compared to those with a lower income.

I've heard this argument before, and this is going to sound pedantic, so I apologize, but just exactly how rich can you be if you don't spend your money on things?

Or, put a different way, the rich only (bother us/owe more/are easy targets/need to pay up) because a) they don't have to work to live, and b) they buy and own cool stuff we want.

Obviously being able to live without working is a goal for everybody, so I'm tossing that out. What I'm left with is that we identify rich people by the stuff they buy or own. Without that, you wouldn't really have rich people -- or if you had them, as far as their participation in society they would be just the same as anybody else. They'd be invisible -- both in their appearance and in their stress on the social fabric.

So if you want to sack the rich, do it by taxing the things that we identify with being rich -- buying and owning stuff. That way -- poof! -- there are instantly less rich people in the world, and you've created a stable societal goal for people to strive for which kind of boils down to "make as much money as you need to not work" which is a laudable goal for every society, I would think. Right?

Not trying to argue, just thinking out loud. I've spent some time thinking about this, and I think a consumption tax could be supported by folks no matter what their political philosophy or party. The idea is inherently less political than an income tax. Of course, we'll all get hung up on whether it should be progressive or not, but hey -- baby steps.

[yummyfajitas]

The problem is that consumption inequality is not nearly as large as income inequality. If your desire is to soak the rich, you pick the statistic which gives you the broadest base for doing so - consumption is simply not that statistic. In the US, the rich have iPhones while the poor are stuck with iClones [1].

As for why we want to soak the rich, it's clearly not (a) - most poor people work very little (by choice).

[1] Note: this is not my opinion on Android (I hate Steve Job's walled garden, and am very happy with my N1), but it is the opinion of several lower class people I know.

[philwelch]

The argument for rich people paying more tax isn't because we don't like them, it's because government is expensive and we can't afford it without rich people subsidizing everyone else.

Keep in mind that rich people also have more of a vested interest in maintaining the system, so it's not entirely unfair to them, either.

[yummyfajitas]

Rich people have a vested interest in maintaining public goods (roads, police, military), but such goods comprise a minority of the government.

Most government spending is simply taking money from some people and giving it to other people. This is explicitly not in the interests of the rich.

http://www.usgovernmentspending.com/year2009_US.html

[philwelch]

Most government spending is simply taking money from some people and giving it to other people. This is explicitly not in the interests of the rich.

This is categorically untrue. Social welfare and wealth redistribution, from the perspective of the rich, are a concession to the poorer classes in the interest of pacifying them and preventing a violent leftist uprising. Of course, this has to be done through the government rather than voluntarily because, for game-theoretic reasons, it can't be done voluntarily.

[yummyfajitas]

Most of the transfers are to old people, a group which is disproportionately unlikely to be poor or to engage in a violent uprising.

Of course, if the poor are truly as evil and dangerous as you say, wouldn't it be better just to wall them off from the rest of us? For the cost of welfare, we could triple the money we spend on the police.

[philwelch]

Most of the transfers are to old people, a group which is disproportionately unlikely to be poor or to engage in a violent uprising.

You're right, and there other self-interested motivations for rich people to support social welfare, including hedging against future misfortune, support of friends and loved ones who may not be as well off and who would be more expensive to support on an individual basis, and the fact that end-of-life health care is often expensive enough to matter even to the significantly wealthy.

Of course, if the poor are truly as evil and dangerous as you say, wouldn't it be better just to wall them off from the rest of us?

Where did I say the poor are evil? I'm accounting for self-interest, not making a moral argument.

Oppressing the poor in order to keep them from rising up against the ruling class has never worked. Taking care of the poor in order to prevent them from even wanting to rise up against the ruling class consistently works.

This isn't even a new idea. I ripped it off from Bismarck, who, "working closely with big industry and aiming to head off the Socialists, implemented the world's first welfare state in the 1880s." http://en.wikipedia.org/wiki/Otto_von_Bismarck#Bismarck.27s_...

As notahacker points out, a lot of this stuff is also a side effect of having a democracy. Having a democracy is perhaps an even better hedge against violent uprisings.

[yummyfajitas]

You're right, and there other self-interested motivations for rich people to support social welfare,...

If that were true, there would be no need for force. We could make SS/medicare an opt-in scheme.

Where did I say the poor are evil?

If the poor will use violence unless they receive tribute, they are evil.

Oppressing the poor in order to keep them from rising up against the ruling class has never worked.

I'm only advocating separation. If the poor truly are dangerously violent, lets wall them off from the rest of us. A fence is pretty easy to police.

Oppression is only necessary if you need the labor output of the poor, which we manage to survive just fine without (in the US, the vast majority of the poor don't work at all).

[notahacker]

Sure, but the 20%[1] of government spending that actually is explicitly in their interests is so fundamental to most rich people's ability to accumulate and enjoy their fortunes. The 80% of the rest of the spending is an acceptable price to pay if you consider it to be explicitly in their interest that the government is not subject to the capricious behaviour of the unaccountable ruler too. Today's government systems weren't designed by the poor.

[1]Pareto-inspired made-up-statistic