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I'd agree with Ron Paul. APT is a tax on the flow of money, so it discourages flow - that's a not a good thing. Plain old consumption (sales) tax is better because the behavior it encourages is savings. APT encourages inertia because money escapes tax by staying wherever it happens to be. That discourages investment because money gets taxed on the way out. Savings good; investment good; consumption is good when its rational (we could use a bit more rational with out consumption in the U.S.). Sales taxes burden consumption, encouraging rationality. If you're going to say consumption taxes are regressive, then I use the same justification that APT uses for it's non-regressive impact - the rich spend more, so they pay more. You think this is regressive because the poor pay a higher percentage of their income as tax, but the reality is that all of corporate spending is before income tax, while all of labor is after income tax. The wealthy own/control corporations that buy things they use (cars, travel, even houses) with pre-income tax dollars, thus providing a lavish lifestyle above the tax line. Consumption taxes level that playing field.

If you tax spending instead of income, Paris Hilton will pay taxes on her travel expenses to visit company properties around the world in exactly the same fashion that a carpenter taking his family on a vacation would pay. She will do it more often, therefore leveling the regressive nature of consumption tax. A further adjustment can be made, by deliberately not levying consumption taxes on used goods. The poor can escape taxes on furniture, cars, appliances, even clothes, thus leaving only food and medicine. Except for the obvious luxury segment, food is about the same for everybody. If you want to address the regressive nature of medical costs, deal with that issue in a benefit program, not the collection program. A consumption tax on new goods and services has a larger population base than income tax because illegal aliens, criminals, and tourists also contribute whenever they shop in an actual store. Sure, sale of illegal drugs will escape taxes, but they're doing that under income tax. A consumption tax is superior to APT because it spreads the burden across black market elements and tourists. Consumption taxes suffer from the same cash escape that APT does, but how significant is that?

Taxes should encourage rational behavior. A tax on the flow of money doesn't accomplish any rational objective there, in fact APT works in the opposite direction to rationality - where you want money to work in the economy, either as investment or consumption, APT discourages both with equal disregard. It also encourages keeping money in the mattress to escape tax on the way in. The banking system would collapse almost overnight.

U.S. gross domestic product is about $14.5T <<a href="http://www.forecasts.org/gdp.htm">http://www.forecasts.org/gdp.htm>. The U.S. federal revenues total $1.7T (though spending is running about $2.8T) <<a href="http://en.wikipedia.org/wiki/2007_United_States_federal_budget">http://en.wikipedia.org/w...ted_States_federal_budget>. If consumption taxes directly replaced ALL current federal revenue sources you'd have a 11.72% consumption tax rate. If you just replaced the personal and corporate income taxes with consumption taxes, you only need to replace $1.1T in individual income taxes + $370.2B in corporate income taxes, but let's throw in $869.6B in social security taxes and $26B in estate and gift taxes for a total of $2.3658T, now divide that by the GDP and you get a 16.31% consumption tax rate. How do you get 30% out of 16.3? What are you smoking? If you're going to argue against consumption taxes, don't just throw out a meaningless wild ass guess, argue against the real number. Go get some real figures and argue with facts.

So you're worried about consumption tax cheats? Forty-seven states collect sales tax. If sales tax avoidance were a serious problem, wouldn't we already have seen a huge black market emerge? Do you really think that flea markets will displace grocery stores and JC Penny and the rest of the mainstream retail trade? How many flea markets are there compared to the number of strip malls? Just driving around, I don't think flea markets are a real threat and the fact is that they're supposed to collect sales taxes too.

If you're worried about no tax on used cars because it would threaten car makers, maybe the threshold should be no taxes on used cars selling for less than 25% of what you could earn in a year at minimum wage, i.e. just over $4000. That way, the regressive impact of consumption taxes is minimized (just food and medicine).

On the other hand 0.3% on every deposit or withdrawal from a bank account is likely to keep money out of banks. We'd have a domestic capital shortage and capital flight to overseas investments. We want to attract capital, not drive it away.

If the tax system were based on consumption, people would be encouraged to SAVE to avoid tax, thus building up cash reserves to help weather economic depressions like the one we are experiencing now. We currently have a debt based economy. The only people that benefits is lenders. We need a tax system that helps people make the transition from working class to some degree of financial independence. Taking working class incomes at gun point (or jail point as the case may be), deprives people of the chance to do their own capital planning. The APT doesn't fix that situation, it obscures that path just as much as depriving people of their cash via income tax.

APT has absolutely no beneficial effects and several deleterious ones. It's bad news.