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Finance: What is a Consumption Tax? 10 Views
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Description:
What is a Consumption Tax? A consumption tax is one that is charged at the time of purchase for a product or service. Consumption taxes can include sales tax, value added tax, excise tax, import tax, and other taxes government wishes to charge at a point of sale.
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- Terms and Concepts / Tax
Transcript
- 00:00
Finance a la shmoop, what is a consumption tax? Ah consumption wasn't that a [Woman coughs up a dolphin]
- 00:09
disease in the 17th century like you know your lungs filled up with water, [Woman banging her chest]
- 00:12
couldn't be a tax on that... Hmm, like how would they ever collect. Well in fact a
- 00:17
consumption tax in finance land is about taxing what you consume yeah duh so
- 00:24
continuing from the 17th century and then 18th centuries remember that Boston
Full Transcript
- 00:29
Tea Party thing, yeah that thing. Well the Brits wanted to tax American tea like a [Bags of tea leaves]
- 00:35
farthing per bushel or whatever the currency and measures were back then but
- 00:39
that was a tax per unit or per element of consumption, yeah consumption tax. Gas [Someone pouring tea out of a pot]
- 00:45
tax, that's a consumption tax, gas is 3 bucks [Someone filling up their car]
- 00:48
a gallon or so and the tax is per gallon something like 80 cents give or take in
- 00:54
a red state and more than that in the blue so the more gas you consume the [States shown on the map]
- 00:57
more tax you pay. All right consumption tax, real estate well it's usually taxed [Guy pointing at a list of consumption taxes on a whiteboard]
- 01:02
based on the market value of the place you just bought, buy a more expensive
- 01:06
house and well you'll pay a higher amount of tax so what's a non
- 01:10
consumption tax if all those are consumption taxes. Well income tax for
- 01:15
one you're not consuming anything your yearly tax bill isn't based on how much [Cup of tea is knocked out by yearly tax bill]
- 01:20
stuff you buy but how much dough you made. Well same with a payroll tax [Money being counted for the tax bill]
- 01:24
payroll tax is based on how much money someone makes at a job and the
- 01:29
conditions of their employment again not about the consumption of any goods or [Guy eating a burger]
- 01:33
service you know other than all your free time... All right well the estate tax
- 01:38
is another example unless Congress passes a bill the taxes are zombiefied
- 01:42
brethren based on the amount of brains they consume all the estate tax is based [Girl counting her money]
- 01:46
on income sort of definitions of income are squishy.. rather than consumption so
- 01:53
yeah that's kind of an iffy one. All right then again those zombies have been
- 01:56
dodging the IRS for a while now and you know we got to make them pay their fair [Guy in a suit looks scared of the zombies]
- 02:00
share let's say they foot the tax bill for the next being how about that, no but [The guy in a suit is chased away]
- 02:04
that's not gonna work everyone knows you know the zombies well they're a bunch of [Guy on the floor with his head cracked open]
- 02:08
deadbeats
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