Consumption Tax is the only way to go. It's progressive by nature because people that earn more spend more. It helps to self-limit government because people can see the cost of government every time they are in a checkout line. It requires little oversight and shrinks the IRS. It brings the underground economy into the taxpaying sector, every doper, hooker and illegal immigrant will pay their tax when they spend. The Electronic Point of Sales machines can very easily be programmed to collect a consumption tax. It won't fly with the "more government please" crowd though, they will kick, scream, lie, throw tantrums, ad infinitum, ad nauseum.... even while Socialism is undergoing a worldwide world class meltdown before their very eyes... many of them don't participate in the economy that much. I know a few, they are parasites and they don't care about the overall economy, in fact I wonder if they don't enjoy ruining things for productive people...
+2 Flat tax or consumption tax is fine... but you have the individual county taxes as well. You're forcing all shopping to the internet... including autos. How about homes? What about second-hand items (including homes, cars, etc.)? Would you tax any transfer of ownership? That's not enforceable outside of title transfers. Seems even more rife for abuse and you're going to kill the internet economy as Congress would pass internet taxes. The IRS CAN enforce and collect a flat-tax on income. The issue is with the tax-code. You're reducing 10s of thousands of tax code documents to a single sentence. I am open to either and I agree that a consumption tax is probably cleaner and will directly and positively impact the US per capita savings rate.
Someone in another forum not long ago had some interesting/compelling arguments against a consumption tax. I'm so disgusted with the current system I don't know that I care that much as to a flat tax or consumption tax. Just so long as it's simplified AND everyone is paying something,
Pigou rocks. I edited my last to make a reference to the increase in personal savings. Most "reasonable" people are frugal and it would cause huge inflows into productive uses of capital (SAVINGS, investments, durables). It's massively deflationary with respect to finished goods.
I wrote a taxation system. Based on flat tax. The advantage of that is more than just revenue. The simplicity enables taxes to be paid monthly for people with irregular income. It also makes pension tax relief clearer. There are many other benefits.
Consumption based tax on everything new. If it is used, it doesn't get taxed (or the tax gets refunded like a VAT). A whole new used market for tons of goods will start up, and we might produce less, but we'll consume less, too.