What constitutes equitable is that it is their choice to live a wealthy life style and pay high taxes or to live a modest lifestyle and pay less taxes.

Let me put forth this image. Consider a man who put $1,000 into some stock of some funny sounding company (say Apple) and then went off to Tibet to become a Buddhist monk and has spent the last 40 years living on a grain of rice per day, leaving his family’s lawyer with power of attorney to handle all financial decisions……. His manager handles today a billion dollars a year in income coming in and he pays massive taxes on that. What difference would it make to this hypothetical monk if those billions simply grew and grew without any taxes to worry about? If you make lots of income but have no particular desire to consume anything then the tax code as it now stands shouldn’t really be a problem of inequitity for you.

Given that something like 45% of taxpayers pay no income tax, can a national sales tax actually be easier to avoid?

Yea we been thru that already, non-smokers don’t pay tobacco taxes either. Look at my link again, total taxes from all sources lines up almost perfectly with income. Those who make 20% of all the income pay about 22% of all the tax or so. Moving to a national sales tax then basically ensures, then, that you’ll make the tax system regressive, causing those who have less income to pay relatively more in taxes than those with more. This is well trodded ground. Look up the history of the US after 1865 or so. Our tax system was basically a variation of the national sales tax, it was called the tariff and it was effectively a sales tax because you either paid the tax if you purchased manufactured goods from abroad OR if you brought domestic goods you still paid more since the tariff locked out competition. The rich loved it because at a certain level of income, you can grow you income faster than you can grow your consumption so even though technically a rich person with a frugal lifestyle paid less tax than a rich person with a Donald Trump/Paris Hilton lifestyle, it didn’t really matter to the extravagent person.

It will however make everyone painfully aware of how much government is actually costing them

Why? As you said you’re going to exclude everything you ‘need’ so the only stuff getting taxed will be ‘upper lifestyles’. I’d look forward to lots and lots of petty debates trying to get more and more consumption goods listed as ‘necessary’. Are boats a luxury good? Cars? Trucks? A day at Walt Disney World? What if you’re bringing your kid to Florida for a major operation and give her a day at Disney World before hand to boost her morale?

No IMO we’re better off with an income tax, even though some in the upper brackets will always complain about it. I don’t buy the Randian idea that high income equals some type of super-human superman to whom we owe an extra level of gratefullness.

Tells the real story. Long story short, look at all taxes paid to all income. The top 1% of earners made something like 21% of all income, and paid something like, horror, 22% of all taxes.

In fact, its pretty amazing when only 50% of federal revenues are income tax based and when you look at the big picture we have lots of taxes that are not strictly income based (property, sales, tobacco, gas, etc.) that taxes fall almost exactly in line with income.

But I’m not saying it’s unfair. They have to set the limit somewhere, and by age 17 kids can begin earning enough of their spending money to make up the difference, if that’s an issue for the family.

When i moved out of my my parents’ home, they said that they would gain a room and lose a deduction. I think having me out of their hair made up for the loss of the deduction!

Mark Barrett,
Well-argued reply. Much clearer than the original posting.

I think the discussion about debt is always useful but people tend to confuse the nature of debt on a national level with that on the individual level. What we are able to do in 2030 depends on what we have in 2030 in terms of people and capital. Debt then is a bit like poker chips. They tell you how much of the pot each player gets to have but what counts more is how big the pot is.

On the individual level, though, debt does matter. If you pay down all your debts, amass a large savings, you as an individual will enjoy more in 2030 than someone who does the opposite.