The poor will be receiving more of their income since there isn't any withholding. Also there is a prebate based on a current index of what it takes to live - this is sent out monthly to cover the cost of basics like food and clothing (it basically provides a refund for any expenditures for items in value up to the current poverty level in taxes used in withholding). It actually has an opposite effect for the poor as they will have more money to spend for necessities with no adverse effect on those below poverty level.Doesn't this mean that the poor will be paying a proportionally larger burden of taxation since they spend more of their income than the rich?
To expand on this futher, it's possible for someone very wealthy to live in the US tax free (they can use off-shore accounts to shelter money from taxation and prevent the loss due to the death tax; they also can invest the bulk of their money in holdings and get paid in tax-free dividends - essentially living the life of luxury without creating any income or paying any taxes) - by moving to a consumption tax the very wealthy will have to pay for anything that they buy - now paying taxes where previously they didn't. And futher, those who are living off of stocks and bonds aren't paying into medicare or social security - all of us who get that paycheck are essentially carrying the burden for everyone who doesn't).
The tax burden gets spread across everyone spending money and doesn't rely on the smaller percentage of workers currently taxed. It creates a dollar-for-dollar federal revenue neutrality that is currently missing and entirely abused by many that "game" the system. The more I look into this, the smarter it becomes.
-- John
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