Maybe not, but your proposal was fairly specific about how much revenue it would generate using GDP numbers, which we have discovered are not really relevant to your proposal. You admit that you are unable to come up with some numbers that support your version of GDP, or even a source for them, so we must assume that your proposal is based entirely on imaginary numbers made up out of thin air. Absolute measures are pretty irrelevant when everything is relative. For example the GDP doubled from 1982 to 2008. This is fairly close to the long term historical average of economic growth in the US over the last 150 years despite all the short term ups and downs of the economy, some of them far more drastic than the current situation. Is it more reasonable to assume that this long term trend will likely continue for some time into the future or to assume that this trend has suddenly become irrelevant based on the short term retraction of the last few years despite 150 years of evidence that the economy has always recovered from these situations and maintained its long term growth trend?
Yes, there is a slight problem with the math because the consumption tax is based upon new goods and services and not on the government GDP statistics which mis-represent what is actually produced in new goods and services. Unfortunately those are the only numbers readily available but it does not change the basic proposition at all. It only effects the tax rate necessary to replace all other federal taxes (excluding "user fees" such as postage stamps and patent fees). How much this would effect the tax rate is exactly proportional to how much our government mis-represents the GDP. On the "positive" side of the equation that determines the tax rate is that we consume more new goods and services than we produce. This is reflected by the trade deficits which are running about $600 billion/yr and that reflects pure consumption all of which would be taxed under a consuption tax. That alone represents $150 billion/yr in additional federal tax revenues at a 25% rate as none of this is currently taxed by our income tax system. http://www.census.gov/indicator/www/ustrade.html So the numbers aren't perfect but instead an approximation. That does not effect the proposal as it only effects the tax rate. Want a lower tax rate then demand less from the US government. Want a higher tax rate then demand more from the US government. Because the taxes are reflected by a simple single tax rate and there are no embedded taxes, loopholes, or corruption. The tax is absolutely fair as everyone pays the same tax on new goods and services and everyone receives the same prebate. It is progressive based upon the prebate level which determines individual prebates that off-set the taxation on necessary goods and services. In a real sense this is true because a consumption tax based upon new goods and services would change as well based upon actual consumption. BTW on the news I did hear some information but it was so vague as to not give me a warm and fuzzy. A newcaster mentioned that 70% of the US economy is based upon consumption. What I don't know is if this relates to 70% being based upon the consumption of goods where services represent the other 30% and I'm doubtful that it reflects only consumption of new goods and services. I'm still searching to find an actual number representing just the consumption of new goods and services. I'll keep looking.
I keep hearing the number floats between 60% and 70% attributed to 'personal consumption'. I believe this means that of our total GDP, 60-70% is created by personal domestic consumption and the other 30-40% is exports or consumption outside of the USA. I've always felt that one of our goals should be to change this ratio to something more resembling 45-50% personal consumption and 50-55% exports. One of our problems today is that Obama believes US citizens are going to consume themselves back into economic prosperity...I don't think so! If I am right, then greatly increasing exports is the answer to so many of our problems today...
Total exports for 2010 were slighty over $1.8 trillion and our estimated GDP for 2010 was $14.7 trillion so exports account for roughly 12% of the GDP. Of note while "consumption" is equal to somewhere between 60%-70% of the GDP that also includes roughly $2.3 trillion of imported goods (or a trade deficit of slightly more than $500 billion in 2010). http://www.census.gov/foreign-trade/statistics/historical/gands.txt http://en.wikipedia.org/wiki/US_GDP Would increase exports help our economy? Absolutely and actual the numbers above reflect that it shouldn't be all that hard to even double our exports but to do that we need a marketing advantage that we lack today.
From an unknown source; Over 70% of what the U.S. produces is for personal consumption - more than $10 trillion of the $14.6 trillion 2010 GDP. That's because the U.S. has a lot of people within its borders, so U.S. companies have become very good at knowing what consumers want. Nearly half (47%) of GDP is services, not products. These include everything from financial services to health care. Goods or products are nearly one-fourth of the economy. These are further divided into two sub-categories. Non-durable goods are 16% of GDP. The three largest components of non-durable goods are food, clothing and fuel. Durable Goods, such as autos and furniture, is the smallest category, at only 7% of GDP. Business investment, such as software, business equipment, and manufacturing, comprise 16% of economic output. It includes construction of housing and commercial real estate, but doesn't count real estate resales. Government spending is 20% of total GDP, up from 17% in 2000. State and local government produce 12% of GDP. The Federal Government produces 8% of GDP, and two-thirds of this defense-related. Imports and exports have opposite effects on GDP. Exports add, while imports subtract, from GDP. Imports are greater than exports, and so the net effect of trade is a deficit. Imports are growing faster than exports, thanks to jobs outsourcing in manufacturing.
