I actually like the idea President Bush threw out there yesterday of a US value-added tax (VAT) or national sales tax replacing our federal income tax.
“It’s kind of an interesting idea that we ought to explore seriously,” Mr. Bush said in response to a question during an “Ask President Bush” session in Niceville, Fla.
Though the president’s remarks were informal, he made them at a time when some of his advisers, though by no means all, are urging that his speech at the Republican National Convention include a proposal for a vast overhaul of the federal tax system.
Mr. Bush’s comments were followed Wednesday by a conference call with reporters, arranged by the Bush-Cheney campaign, in which the chairman of the tax-writing House Ways and Means Committee, Representative Bill Thomas, Republican of California, said that he favored looking at “well-thought-out alternate tax structures” and that the committee planned to do so.
“We have one of the more regressive tax structures in the world today that basically is a 19th-century concept,” Mr. Thomas said, adding, “We should get that revenue from people in the least destructive way possible.”
Critics, including John Kerry, argue that such a national sales tax would “punish the poor and the middle class, who typically spend a larger share of their income than the wealthy on consumption.” Supporters argue that it’s simpler and fairer than our traditional income tax “because it would not provide the opportunities for loopholes and sophisticated tax-reduction schemes that tend to favor wealthy taxpayers.” If you buy a humungous SUV or a Hummer, you’re taxed on it fully, no loopholes.
As an anti-materialist, this suits me fine. Anything that encourages Americans to spend less money on frivilous products, many of which are only partially consumed before discarded, strikes me as a step in the right direction. Only problem being, our economy’s recovery is supposedly dependent on consumer spending:
Consumer spending accounts for roughly two-thirds of all economic activity in the United States. Thus, it plays a key role in shaping an economic recovery.
So Bush’s VAT idea might actually slow down the recovery, as consumers rethink their spending habits based on the new tax plan. Consider the attitude in Europe, where many countries have VATs, and unlike having all those taxes deducted from your paycheck, whereby many Americans put how much they’re taxed out of their minds and consider their take-home pay their income, you are faced with the reality of what your taxes are each time you make a purchase. It may not be their VATs alone, but consumer spending across Europe is not hot:
Frugal mind-set impedes growth in Europe
Anna Ficon spent a couple of hours on a recent Saturday afternoon dodging intermittent rain showers and trolling stores on Cologne’s busy Hohestrasse for a pair of summer shoes.
There was a “nice pair” of white sandals she saw recently for E50, or about $60. But, even in summer sale season, they had not been marked down. So the 47-year-old preschool teacher refrained from buying them. Four years of sluggish growth and high unemployment in Germany, she said, had persuaded her to be more frugal.
“I rarely buy new clothes anymore,” she said. “And when I do, I stay away from the latest fashion and look for things that I can wear for a few years.”
Across Europe, many people share this apprehension. It has crimped consumer spending and contributed to the holding back of overall economic growth, even as figures suggest that other key components of the region’s economy – notably exports – are on the upswing.
“The thing that is most disturbing is that as the economy has started to pick up, you haven’t had a similar pickup in demand,” said Michael Hume, an economist at Lehman Brothers International in London.
Again, an economy based on excessive consumption is wholly offensive to me. Waste is immoral, no matter how wealthy one is. A national tax that reminds people each time they go to buy something just how much the government is taking from them sounds good to me. It just may not be good for the nation.
UPDATE: Thanks to all the better informed comments by folks who understand the implications of the proposed national sales tax than I did. You’ll be happy to know that the President is now distancing himself from the idea as well.
1) It’s regressive as all get out without a very large standard deduction. You are kidding yourself if you think this President and this Congress would not make it as regressive as they can get away with.
2) Sure it provides an opportunity for loopholes. Does it apply to home purchases? Does it apply to rent? Does it apply to college tuition? Does it apply to medical care? Does it apply to health insurance?
You can certainly make a decent argument why it should not, but if it doesn’t it grows even more regressive. And there will probably be loopholes less justifiable than those above.
Are we going to crack down at customs? Are we going to develop a freaking black market?
How will corporations be taxed, if at all?
3) Then there’s this:
4) Would we keep the payroll tax? If so, even MORE regressive. If not, the consumption tax must be that much higher.
note: I realize I may be talking about a sales tax rather than a value added tax. I had the impression that’s what the GOP was talking about too. If not, could someone explain the difference to me & why these concerns would not apply?
Mr. Kerry’s reasonable objections are addressed by plans like the Fair Tax plan. Since it only taxes consumption above the poverty line is does not disproportionately fall on the poor. In addition since it replaces both the income tax and FICA (payroll tax), the working poor would be significantly better off than under the current scheme.
It’s fun to fantasize about but I doubt it will ever happen. There are too many powerful groups whose oxes would be gored by such a commonsense reform.
Doesn’t people consuming less equate to people producing less, which means more people out of work? Pardon me for such an elementary question, but Edward, just what do you propose we do in that event? Put them to work producing only un-frivolous things? (Whatever those are.) On the dole?
I’ll lob the question back at you this way Phil, are you advocating people spending money on things they don’t need just to prop up unnecessary businesses? Essentially buying things just to throw them away?
From the link above, which I believe refers to the Fair Tax plan (it’s the same 23% rate)
“There is no indication of what tax rate Speaker Hastert thinks would be necessary to replace all federal revenue. A current proposal by Rep. John Linder (R-GA) says that a 23 percent rate would be adequate. But such a low rate can only be sustained by making completely absurd assumptions about what would be taxed. Every serious economist who has ever looked at this question has concluded that a vastly higher rate would in fact be needed.
First, an unstated assumption is that the 23 percent rate proposed by Mr. Linder is comparable to existing state and local sales taxes, where the tax comes on top of the purchase price. Thus, a 5 percent sales tax on a $1 purchase comes to $1.05.
But that’s not the way the Linder plan works. He deceptively calculates the rate as if the tax is part of the purchase price. He calls this the tax-inclusive rate. Calculating the rate the normal way people are accustomed to with state and local sales taxes would require a 30 percent tax rate, not 23 percent.
When Congress’s Joint Committee on Taxation scored the Linder proposal 4 years ago, it estimated that it would actually require a tax-inclusive rate of 36 percent, not 23 percent, to equal current federal revenues. Calculating the rate in a normal, tax-exclusive manner would mean a 57 percent rate.
Economist Bill Gale of the Brookings Institution notes that supporters of the sales tax assume that there will be no tax evasion under their proposal and that the size of government will not grow, even though they would send a large annual check to every American in order to offset the regressivity of the tax. Making realistic assumptions, Mr. Gale estimates that the tax-inclusive rate, comparable to Linder’s proposed 23 percent rate, would actually have to be about 50 percent. A rate comparable to existing sales taxes would be close to 100 percent.
And let us not forget that state and local sales taxes would come on top of the federal sales tax, pushing the total rate even higher.”
I asked first, Edward. 🙂
In any case, I am hardly in a position to determine what other people do or do not need. Unless you want me choosing what, for example, you do or do not need. I can only determine what I need and, beyond that, what I want.
As someone who has been living under a VAT (the Canadian GST and PST) for a very long time, I gotta say it sucks. It does nothing to reduce materialism, and it’s a brutally unfair tax on the non-rich. We do have a GST rebate if your income falls below a certain level, but that fails to address the injustice of taking a larger proportion of middle-income earner’s paychecks than from the wealthy.
Once it’s in, though, expect it to stay. I rakes in too much money for most governments to want to do away with.
Income tax remains the best, if most unpopular, way to fairly gain government revenue.
I’ll also add that I find taxation as a form of behavior modification rather than — or coincident with — revenue collection to be immoral, even when it modifies people away from behavior I disapprove of. And especially when it’s based on a premise as dubious as “I don’t like people buying things I don’t think they need.”
I can only determine what I need and, beyond that, what I want.
Hoo boy! I have this little bit of waterfront property you might be interested in, Phil.
Well, not so much waterfront, as waterview, it sort of spans this body of water (the East River), and it could be yours for the bargain price of only $10,000! ;p
Do you really think Madison Avenue entrusts you to determine what you need, let alone what you want?
In the interest of pedandrtry, there is a gulf of difference between “I can only determine what I want” and “Only I can determine what I want.”
Do you really think I care what Madison Avenue thinks about what I want? There are people out there who are not advertising-guided robot missiles, you know. I’m sorry that you think so little of your fellow citizens’ decision making skills. (But you trust them to vote. Interesting.)
Eh, this is all window-dressing anyway. I oppose sales taxes generally because they’re horribly regressive. I still want to know what you’re going to do with all the people out of work when production decreases, though.
How will corporations be taxed, if at all?
I assume that any taxes paid by corporations are passed along to consumers already, hence we pay their taxes through higher prices. Change their taxation from profit to consumption and the same would, I expect, be true. Then it would depend on what “consumption” means. Would they be taxed on the price of the labor they “buy”? San Francisco already taxes payroll. That policy has been cited as a decent size drag on job growth.
Edward: I think the question is not, Do those who oppose this advocate unnecessary spending to prop up the economy?, but rather: given the need to finance the government somehow, which way would, all things considered, be best? One of the considerations that would have to come into play in answering this question is: what economic effects would a given proposal have? — Plus, I also wonder by what standard we measure the ‘necessity’ of a given purchase. Finally, when you say you object to “materialism” you might mean either of two things: (a) people’s preoccupation with material objects, possibly at the expense of other, better values, or (b) people actually being able to buy those objects. It seems to me that (a) is the most plausible thing to object to. But a sales tax would only address (b). Absent some argument for the claim that a sales tax would lead people not just not to buy stuff, but not to be concerned with the stuff they can’t buy, it might turn out that a sales tax left people as materialistic as ever, just more frustrated.
About the advisability of such a tax in general: as others have noted, it would be deeply regressive. The disparities between the rich and the poor are already growing at a troubling rate, and it seem to me wrong to do something that would greatly exacerbate this process without a very good reason. (Note to conservatives: I am not saying that I think that there’s something wrong with being rich, or that rich people’s money is fair game, or anything. It’s just that, as I said above, when one is assessing different tax proposals one should consider all their various costs and benefits, and exacerbating an already troubling level of inequality is one of them.)
I have seen proposals to get around the regressivity of the sales tax by exempting some amount of purchases — the first n dollars you spend. But this would remove what I assume is one of its selling points — namely, the fact that if it worked like state and municipal sales taxes, it would not require filling out forms and so forth. If one is interested in simplifying life for taxpayers, it would (imho) be vastly preferable for the government to use the income data it already collects, plus any other information it already has (e.g., number of kids a family has) to calculate income tax, and then allow individuals to either file a tax return (if they have deductions, or some other form of complicated financial life), or not (if they accept the calculation), and also to evaluate the calculation and contest it if they choose, and to opt out of this system if they choose. This wouldn’t help the likes of Bill Gates, but it would simplify the lives of a lot of people whose financial lives are straightforward.
Absent some argument for the claim that a sales tax would lead people not just not to buy stuff, but not to be concerned with the stuff they can’t buy, it might turn out that a sales tax left people as materialistic as ever, just more frustrated.
It was a rather tongue-in-cheek argument, hilzoy, but your point is noted.
My overarching point is an objection to an economy based on ever-expanding consumption. Not just as the population grows, but for each individual. Record credit card debts indicates we’re buying more than we can afford. We have a culture of consumption that is unhealthy, financially and spiritually. A VAT may not curb it, as you note, but take to its logical conclusion (and we’re not that far from it now), people will be spending money just to prop up the economy and getting nothing of value in return.
“Consider the attitude in Europe, where many countries have VATs, and unlike having all those taxes deducted from your paycheck, whereby many Americans put how much they’re taxed out of their minds and consider their take-home pay their income, you are faced with the reality of what your taxes are each time you make a purchase.”
Based on my experience living in the Netherlands, this is completely wrong. Consumers here don’t see the VAT indicated in prices on the shelves, and may or may not see it on their receipts – they probably do if they buy a book in the bookstore, but definitely not in the case of supermarket purchases. Even if it is on the receipt, I don’t think people pay much attention to it.
By contrast, everyone gets some indication of payroll taxes in the mail in the form of annual statements from their employers. Not everyone looks at those either, but the percentage that do, especially those who file their income tax returns, is likely to be much higher than the percentage of people who are aware of their VAT payments. The latter group probably consists only of business owners and self-employed people who have to file their VAT earnings and can deduct the VAT on their business expenses. I’d say VAT is the more effectively hidden tax.
And yes, it does put the crimp on spending, simply because prices at the checkout are higher. On the other hand, when the VAT was last raised from 17.5% to 19.5% a few years ago, economists said it made a significant contribution to inflation that year as well. I’d stay away from it.
Edward, you state that “an economy based on excessive consumption is wholly offensive to me.” Do you have any works of fiction in your home? I have dozens. These books will never feed, clothe, or shelter me; my consumption of them is probably excessive. However, by purchasing so many books I have helped artists to remain artists, allowing them to create more art.
Is this the kind of thing you were talking about? If not, what makes it less offensive than, for example, buying a plasma television for every room in my home?
Nice post Eddie!
A VAT combined with a wealth tax (an annual 1 or 2% tax on the very wealthy–net assets greater than $5 million) and Trusts like Ford Foundation) works for me.
Nice post Eddie!
Well there’s my lithmus test answered. Thanks for helping see the error of my ways, Timmy. ;p
Is this the kind of thing you were talking about? If not, what makes it less offensive than, for example, buying a plasma television for every room in my home?
What makes a collection of second-hand books picked up specifically over my lifetime less offensive than plasma televisions in every room of your house? You auditioning for Last Comic Standing?
One underlying problem with any sweeping proposal like the one to replace all income taxes (I’m assuming at the federal level) and replacing them with a VAT is that there is a practical need for governments to spread their tax takes over a variety of tax types. I think it’s fairly obvious that people will increasingly attempt to avoid or evade a tax if it rises too high (“too” being ill-defined).
Governments that rely too much on very high excise taxes find they reap a lot of smuggling. As income tax rates rise, working for cash becomes increasingly tempting at the lower eds of the income scale, and creating dubious tax dodges more tempting at the upper ends. When employer payroll taxes get too high employers are the ones who are tempted to hire under the table. And so on.
So multiple tax types don’t just spread the pain, they are a pragmatic way of making sure that most people will contribute something to the treasury no matter what. Beware of the theoretical benefits of over simplifying the collection of taxes!
(I freely acknowledge that this says nothing about equity, fairness, efficiency, social goods and social bads).
Great idea it is to have a 50% tax, or so, including on health care, your insurance, and buying a house, unless you want the rate even higher.
Note that Bruce Bartlett is a respected convservative economist whose history ,/a> is with pinkos Ron Paul and Jack Kemp, and the Reagan and Bush White House.
Edward, do you *really* think everyone should pay 50% sales tax? Especially those making under $30k/year?
“If you buy a humungous SUV or a Hummer, you’re taxed on it fully, no loopholes.”
If you want to eliminate loopholes, you can do that right now. Meanwhile, *were* we to switch to a sales tax, the same powers in place today would lobby for their loophole equivalents in the sales tax. What, they’re otherwise going to drop dead, or cease having power in Congress?
So how would switching to a sales tax eliminate loopholes any more than they’re eliminated today?
“We have a culture of consumption that is unhealthy, financially and spiritually.”
That’s an interesting assertion. Can you offer it in the form of a proof?
Or even define it?
Would you like others to accept it?
Do you have examples of more healthy societies?
So how would switching to a sales tax eliminate loopholes any more than they’re eliminated today?
It’s what proponents of the national sales tax argue it could mean, but I assumed because you’d pay at purchase, as opposed to the end of the year when you file with your loopholes and excuses.
“What makes a collection of second-hand books picked up specifically over my lifetime less offensive than plasma televisions in every room of your house? You auditioning for Last Comic Standing?”
It helps if you can explain your assumptions, Edward, rather than simply assume them and mock others for not automatically sharing them.
It’s a perfectly valid question. Moreover, one can make the case that manufacturing and selling plasma tvs puts a vastly greater number of people to work than producing a book — I say this as someone who grew up in the book business — and thus does far more to eliminate unemployment, hunger, and disease.
Do you want to make fun of that as a ridiculous idea?
If there’s any sort of exemption based on your income, you’d have to prove what your income is. A lot of the shenanigans in the current tax system come in at the level of declaring income, and not the level of deductions.
And businesses would have to somehow prove that they were really charging & paying the full sales tax, which would require filing.
In real estate alone….To both eliminate the mortgage interest deduction, AND require people pay 30-50% more than the purchase price of their home? It seems like it would crush the housing market. I can’t imagine this will be allowed to stand.
I don’t know it works for large purchases that people need to pay for with loans.
I also don’t understand how it works as far as purchases by the government.
And the FAQ page at the Fair Tax page struck me as deeply dishonest. I spotted some deceptions, and could not shake the feeling that I was missing 20x as many as I saw because of a lack of economic training. I would love to see what Krugman & DeLong make of it.
We have a culture of consumption that is unhealthy, financially and spiritually.”
That’s an interesting assertion. Can you offer it in the form of a proof?
Well, I can try.
Financially: I think the fact that middle class bankruptcy is at all time high is a good indication.
This happens, from what I read, because middle class people spend to close to the edge of what they can afford, and then any unforseen hardship pushes them over.
Spiritually: This is obviously a more subjective argument, but essentially it’s based on the teachings of Christ.
I believe spirituality is a journey, and like in any journey, you’re gonna be stronger (have more ability to move forward) if you’re carrying only the bare necessities. Excessive materialism weighs you down.
It’s a perfectly valid question. Moreover, one can make the case that manufacturing and selling plasma tvs puts a vastly greater number of people to work than producing a book — I say this as someone who grew up in the book business — and thus does far more to eliminate unemployment, hunger, and disease.
Do you want to make fun of that as a ridiculous idea?
Fair enough, JW didn’t deserve such a glib dismissal (obviously it was a value judgement on my part that shouldn’t be assumed to be universal).
The question is whether having books, which serve no essential needs (another value judgement that shouldn’t be assumed to be universal, I’d point out) are any less materialistic than plasma televisions in every room of one’s house.
Assuming I have only one copy of each book, but that the televisions receive the same channels, I’d say there’s a quantitative difference of some importance here.
Also assuming the person with all the TVs can easily move from room to room (with no other information, I’d say that’s fair), again I’d say there’s an important quantiative difference.
Considering the cost of the my total book collection is most likely less than $5000 and that’s the price of one good sized plasma TV (unless I’m confusing them with the cheaper ones…wouldn’t know, don’t have one), again, there’s an quantitative difference here.
Regarding employment, one needs to consider other factors in addition to money. Quality of work. Which would you prefer? To work in a publishing company, editing books? Or in a Television factory, assembling cases?
Surely there are creative jobs in the television factory (design, engineering, marketing, etc.), as there are mundane jobs in the publishing company (warehouse maintenance, shipping department, customer service [although that’s debatable]), but the overall environment in a publishing company would offer greater job satisfaction for most people I’d venture. Those two-martini lunches are not smiled upon in the tv factory.
Finally, my books are a legacy I can leave to my heirs. What’s in them is destined to expand their horizons and hopefully lead them to cherish the values I cherish. What’s in the the plasma television are destined to be just more glass, wires and metal on the local scrap heap.
“I assume that any taxes paid by corporations are passed along to consumers already, hence we pay their taxes through higher prices.”
Oh, capitalism foul! Corporations charge what consumers are willing to pay. If they charge more or less, they are punished.
Taxes reduce the amount of that income that can be used for other purposes, like reinvestment or golden parachutes.
“There are people out there who are not advertising-guided robot missiles, you know. I’m sorry that you think so little of your fellow citizens’ decision making skills. (But you trust them to vote. Interesting.)”
It’s no great secret that peoples’ desires can be manipulated. There is a multibillion dollar advertising industry propped up on the fact, an enormous amount of well-understood research, and marketing managers can translate spending into sales numbers with surprising accuracy. Surely you don’t think it’s a coincidence that hot women show up in beer ads a lot.
Saying so is equivalent to saying humans are human. If you think that’s denigrating, then you have to think the human condition is denigrating. It’s also part of the human condition that that desire is insatiable, a fact which drives the economy, but isn’t really good for you psychologically. There are some alternatives, but they take work to avoid your instincts. Fella name’a Siddartha worked out a fairly good system.
Since capitalism is fundamentally a system to translate desire and effort into the same currency, and therefore rewards those who most satisfy the desires of others, it’s an interesting question of what would happen if people generally started curbing or releasing their desires rather than attempting to satiate them. I don’t believe capitalism would work in that environment, although there might be some inflationary effect or natural adjustment that would make it all balance out. . I’m not much of an economist. Maybe the ratio of effort to reward would go way down, so you wouldn’t really need to do much to make enough to get by.
I believe spirituality is a journey, and like in any journey, you’re gonna be stronger (have more ability to move forward) if you’re carrying only the bare necessities. Excessive materialism weighs you down.
OK, so that was pretty lame. Let me try again.
Spirituality, for me, is contemplating (or being close to) God. Whether “God” for you is a diety, the oneness of the universe, mother Earth, or the perfection of a molecular structure, material objects, each of which places its own demands on your time and attention, leave less time to contemplate God. Or something like that that’s too hard to express clearly in words.
It’s no great secret that peoples’ desires can be manipulated. There is a multibillion dollar advertising industry propped up on the fact, an enormous amount of well-understood research, and marketing managers can translate spending into sales numbers with surprising accuracy. Surely you don’t think it’s a coincidence that hot women show up in beer ads a lot.
I work in a business that helps PR and marketing professionals do their thing, so I’m not coming from a position of ignorance here, sidereal. I’m saying that a) there are degrees of susceptibility to advertising, and one can inoculate oneself. It isn’t that hard, b) advertising can help convince you that you need something you never though you did, but it’s hard to get someone to buy something they don’t actually want. Again, this is all window dressing anyway. I’m not the determiner of what Edward needs, and he is not the determiner of my needs.
I believe spirituality is a journey, and like in any journey, you’re gonna be stronger (have more ability to move forward) if you’re carrying only the bare necessities. Excessive materialism weighs you down.
Super. I don’t believe in spirituality, and I certainly don’t think that tax policy is an appropriate means for forcing people to accept your religious theories.
But granting some leeway on the concept, did it ever occur to you that people who are not you might fulfill their “spiritual journeys” through interaction with material objects of one kind of another? I don’t “need” scuba equipment, or telescopes, or musical instruments, or a 55″ television. But I have all of them. Because scuba diving, astronomy, playing in a band, and watching movies on a large screen fulfill personal desires of mine.
“This happens, from what I read, because middle class people spend to close to the edge of what they can afford, and then any unforseen hardship pushes them over.”
Another way to look at it is that poor people don’t go bankrupt because they don’t have the credit to spend in the first place, and that rich people don’t go bankrupt to much because they, you know, have a lot of money.
And since the majority of people are middle class, I find it unsurprising that they’d be the ones most going bankrupt.
So far as I can tell, much, if not most or all, of your beliefs in this matter flow from a belief that ownership of material goods is an outright evil, if only to small degree; which is entirely different from ownership being merely neutral.
With all due respect to Jesus, I’m a bit dubious about his strengths as an economist. I’m no economist myself, but I do understand that without consumption there is no incentive for production, and without growth in production there is no growth in wealth, and without growth in wealth, we don’t have money left to elminate or reduce poverty.
Therefore reducing consumption leads to increased starvation, disease, and death.
This doesn’t seem moral or spiritual to me.
Of course, one can try command-system economics for economic growth. That’s proven highly successful, as well as spiritual and moral, hasn’t it?
“Regarding employment, one needs to consider other factors in addition to money. Quality of work. Which would you prefer? To work in a publishing company, editing books? Or in a Television factory, assembling cases?”
The question isn’t about what sort of work I’d prefer; it’s about increasing employment, period. I’m first worried about people having jobs to survive with before I’m primarily worried about quality of life, important as the latter is as well. But it’s not the top priority, and shouldn’t be.
And since the majority of people are middle class, I find it unsurprising that they’d be the ones most going bankrupt.
I’m always a bit curious about this assertion (which, I should note, I’m not disputing). Why is it that we always define “classes” in the US such that this is true? It’s not like there are any extrinsic qualities that allow one to say that this income is lower class — excuse me, “working class” — and this income is middle class, or that this is still middle class but that is upper class — excuse me, “rich” — so why do we put the breaks where we do? Is there something in the income distribution that suggests breakpoints there? Is it a societal need to believe that we’re all just plain folks, neither rich nor poor? Very puzzling.
I’m first worried about people having jobs to survive with before I’m primarily worried about quality of life, important as the latter is as well.
We disagree then. I think quality of life is so much more important than survival. Of course, I don’t need much to enjoy my life, so we may not be as far apart as all that.
With all due respect to Jesus, I’m a bit dubious about his strengths as an economist.
You’re gonna burn in hell… ;p
But granting some leeway on the concept, did it ever occur to you that people who are not you might fulfill their “spiritual journeys” through interaction with material objects of one kind of another? I don’t “need” scuba equipment, or telescopes, or musical instruments, or a 55″ television. But I have all of them. Because scuba diving, astronomy, playing in a band, and watching movies on a large screen fulfill personal desires of mine.
Phil, I think you’re missing my point. It’s not the consumption of products you’ll actually use I object to. It’s the consumption of those you won’t use. It’s the TV in the den you watched twice but then never again. It’s the 30 CDs in your collection you’ve never opened. It’s super-sizing your meal and throwing 1/4 of it away. If diving brings you peace and time to contemplate the universe, I’ll chip in myself to help you buy the gear.
People in this country shop, just to shop, however. It’s obscene.
Surely you don’t think it’s a coincidence that hot women show up in beer ads a lot.
Of course not, I blew all the candles out when I was 9 and thought my wish had been granted. Now you’re telling me its all about increasing sales? Sniff, I need a drink.
“Now you’re telling me its all about increasing sales? Sniff, I need a drink.”
Alright :).
Next question, do you think it’s wasted money? Meaning, do you think it fails to work? Phil opines that it’s easy to avoid the effects of luscious female imagery and implications of a nonstop party atmosphere. . as opposed to, say, a list of ingredients, which is all you’d need if advertising was merely informational. I would argue that that makes him (and yourself, if I understand that you’re arguing the same thing) the one with the low opinion of humanity, not Edward. Since so many people fail to engage in this simple innoculation. I would rather argue that it’s extremely hard, not easy, to avoid the associations that careful advertising creates.
Well, I do need a new BCD, Edward. You can make the check payable to . . . 😛
Well, I do need a new BCD
Hmmm. Do you really?
nemo: In real estate alone….To both eliminate the mortgage interest deduction, AND require people pay 30-50% more than the purchase price of their home? It seems like it would crush the housing market. I can’t imagine this will be allowed to stand.
Well, based on their thumbnail sketch (I haven’t read the detailed proposal) “used” homes are exempted. Does this mean a new home effectively depreciates as soon as you take posession, making it a bad investment? Or will the prices adjust to equalize? In either case, how would this affect housing starts? Same deal for cars, except cars already depreciate the moment they become “used”, so this should just exacerbate the problem. Shouldn’t we expect a severe drop in new auto sales? But would antiques and previously-owned art, items that tend to appreciate, be exempted from any taxes because they are “used”, making them comparatively fantastic investments for those who can afford them (i.e. the relatively wealthy)?
This proposal, at least on first blush, sounds like a recipe for a thriving gray market in big ticket items (including new real estate) and a black market in other goods. But then, I’m not an economist.
Nemo: And the FAQ page at the Fair Tax page struck me as deeply dishonest.
No kidding! From their FAQ:
Who on earth considers only spending in determining whether a tax is progressive? I’d love to see a chart of tax payments relative to spending power. And never mind that those who are living beyond their means, but are above the poverty line, will get taxed on money they don’t have to begin with. This is incredibly dishonest of them, in my opinion.
nemo: When Congress’s Joint Committee on Taxation scored the Linder proposal 4 years ago, it estimated that it would actually require a tax-inclusive rate of 36 percent, not 23 percent, to equal current federal revenues. Calculating the rate in a normal, tax-exclusive manner would mean a 57 percent rate.
The Fair Tax folks have this to say about the Joint Committee on Taxation (from A rebuttal of Blank’s KiplingerForecasts.com article of June 30, 2004 linked here):
Make of that what you will.
sidereal, I was really just going for a chuckle.* My wife is a producer for perhaps the best agency in the US and they work REAL hard to make the ads sell stuff, and the companies keep coming back to spend more money, so it either works, or they’re scared to stop, just in case…
Is that money wasted? Well, money spent targeting children is certainly not wasted. They are becoming major decision-makers in modern households. And it’s not wasted on me, I do indeed respond to a funny or beautifully shot ad, kinda. I mean, were I to ever buy a new, smallish, honestly a little ugly, American car, I would certainly look at a Saturn because their ads both reflect my sense of humor and talk about a couple things I like in a car company.
*But I do need a drink.
Well, money spent targeting children is certainly not wasted. They are becoming major decision-makers in modern households.
Isn’t part of growing up learning about advertising and purchases? I say this because when I was a youngster, my friends and I did pretty well and avoiding the mind-control rays of advertising. For instance, those ads for the Mouse Trap board game made it seem like the coolest thing ever invented – but word got around the playground that all the gadgets broke and you lost the pieces and it sucked. I can still remember the song for “Crispy Critters” cereal that we were all obsessed with, but we had all tried it at various friends houses and it wasn’t very good at all, so I never asked for it. I’m just saying it was pretty clear to me at an early age that the buyer must beware.
I mean, were I to ever buy a new, smallish, honestly a little ugly, American car, I would certainly look at a Saturn because their ads both reflect my sense of humor and talk about a couple things I like in a car company.
Yeah, but the theory being thrown around here – that the ad industry operates orbital mind-control lasers – implies that you wouldnt be interested in purchasing an automobile if it hadn’t been for those folksy ads. Of course, it influenced which car you’d consider – and I’m just gonna guess that an ad for Bentley might be very persuasive to you but ultimately irrelevant. I was obsessed with cars for a little while as a kid and somehow Mercedes started sending me their magazine for kids – that definitely made an impression on me – but their investment has (yet) to pay off, as I hate driving and refuse to buy a car.
I leave everyone with my favorite anecdote about advertising from when I worked in the industry, about Little Caesars pizza. They had those ads for years with slapstick gags that made you laugh. At some point, the executives at Little Caesars went to the agency and said, “Look, everyone loves your ads, but we think it’s time to actually sell the product – the pizza.” The creative director sat back for a minute, thought about it, and said, “Sir, that’s impossible, because your pizza tastes like shit.”
“People in this country shop, just to shop, however. It’s obscene.”
And it’s obscene because desiring material goods loods to shopping.
Respectfully, Edward, you appear to be being both tautological, and expressing a assertion that can only be described as a religious belief. I am pleased it if serves you well, but I hope you don’t expect this to convince others.
Otherwise I’d ask you why is it obscene, but it appears we’d get back on the wheel of “it leads to waste.” Why is “waste” bad again, and why is it “waste” when various people earned their living and paid taxes from the effort?
After all, with due respect to your sense of moral outrage, I’m not clear why anyone else should adopt it any more than you should adopt the moral outrage parameters of a Jerry Falwell. You’re not talking economics, you’re talking religion, of your own particular flavor, apparently.
Just nipping in ever so briefly, I don’t think accumulation of wealth, or shopping just to shop, are bad of themselves, and as a Christian I don’t think Jesus Would Say That (or implied it). The point was not You Are Evil If You Are Rich, but that there’s a strong chance that materialism can get in the way of spiritualism.
If you can do both, that’s fine. That’s not a problem. I think many people, if not a majority, find it difficult, but it’s not the materialism that’s bad, it’s the sense of priority.
So shopping just to shop isn’t bad, but it’s a shame if people do this when they could give the money to charity, in my pinko hippie philosophy. That belief doesn’t need religious faith.
Jesus said, if you belief He did, which ah surely do, it’s easier for a camel to pass through the eye of a needle than a rich man to enter the kingdom of Heaven. He also said nothing is impossible for God. He didn’t say All Rich People Shall BURN IN THE FIERY FLAMES.
But sure, the more money one has, the higher one revises one’s estimate, I would say, of what ‘much money’ is.
The argument has been made that when diving without an exposure suit, since your buoyancy changes very little during descent, a BCD is unnecessary
1) “The argument has been made” does not equate to “it’s true that.” I can’t think of a reputable diving association that would make such a claim — where did you get that quote from? A BCD, among other things, assures that your equipment is held in place properly and securely, and your profile in the water is kept narrow to prevent drag. It also assure that, if you need to ascend quickly in an emergency, or ascend far away from the dive boat, you can stay at the surface comfortably without treading water and wasting energy, and without dumping your weights.
2) One is loathe to go diving in the mid-Atlantic region, let alone in inland lakes and quarries in Northern Virginia, without at least a 3mm shorty suit, even on the hottest day of the summer. Water temperature gets very low very quickly when you get below thirty feet. Even in the tropics, if you’re going to go below, say, 40′, you’d better wear a suit, because you’re going to lose heat like a busted radiator if you don’t. Anyone who dives below that depth without a suit is irresponsible and deserves to get hypothermia.
Otherwise I’d ask you why is it obscene, but it appears we’d get back on the wheel of “it leads to waste.” Why is “waste” bad again, and why is it “waste” when various people earned their living and paid taxes from the effort?
James added some nice depth to the argument, but I feel one point here could use some additional exploration. Why is “waste” bad? First off, it’s part of the definition of the word:
waste – n a bad use of something valuable that you have only a limited amount of
Secondly, though, its only defense is the argument that there is an unlimited amount of what it is you’re wasting. Sunshine, for example, is hard to waste (unless you live in a very rainy place, I guess).
But any object you can purchase in a traditional exchange of money for goods way is not unlimited. AND if it really is valuable, it has value for others who can’t easily afford it one can assume. One’s buying it, just to waste it, keeps its price inflated, further limiting its availability.
Living in a poor nation, where people recycle everything and can’t afford to throw things away because they’re bored of them or had their fill teaches you to value things in a different way. I lived in pre-EU Portugal for a while (obviously not the poorest nation in the world, but that only strengthens my point that waste is obscene). Very little was wasted there. The idea of not finishing your meal, for example was not only offensive but looked upon as insane. Food was not unlimited.
I see your attitude toward it, Gary, as naive. The argument for not wasting is you don’t know when you won’t have it anymore. When things will get tougher, belts will have to be tightened, and you’ll wish you had spent your money more wisely. It’s thinking forward a bit.
None of this argues against accumulating wealth (quite the contrary). None of this argues against buying luxury items (if you can afford them). None of this argues against having a comfortable life. Shopping as a hobby though…that I find offensive. It suggests money is unlimited, or as plentiful as time at least, and if that’s so, it’s much better to use that time/money to do something more productive than hoping something strikes your fancy and says “buy me.”
You’re right that much of this is originally informed by my religion (and rather impoverished childhood), but this has stayed with me my entire life, whereas other aspects of my religion I now seriously question. It has proven itself as valid to me through every stage of my life. So I don’t see it as personal (i.e., nonuniversal) a truth as you’re trying to make it sound. But that’s me.
I can’t think of a reputable diving association that would make such a claim — where did you get that quote from?
Well, to be forthright, the very next line in that text made more or less the same points you do. (But that wasn’t as much fun as the selective quote, so…)
Point taken about the icy Atlantic. Was “down the shore” last weekend…brrrrr doesn’t cover it….Eastern folk are nuts!
crionna: “I assume that any taxes paid by corporations are passed along to consumers already, hence we pay their taxes through higher prices.”
sidereal: Oh, capitalism foul! Corporations charge what consumers are willing to pay. If they charge more or less, they are punished.
True, but taxes are a cost that must be covered (generally) in order to turn a profit. So, if a business cannot sell for a price that covers this cost, they simply stop selling the product. Therefore, I figure their taxes are bundled in the price of any made for profit good (actually a mixture of all their goods) a profitable corp. sells.