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Also, a sales tax is probably the fairest known model of taxation My understanding is that it is one of the most unfair. Poorer people will lose a greater perc

by nixme 17y ago

Also, a sales tax is probably the fairest known model of taxation My understanding is that it is one of the most unfair. Poorer people will lose a greater percentage of their income to sales tax than richer people because certain consumptions aren't elastic to increasing income. Now some states won't collect sales tax on items deemed "necessities" but the classifications can get tricky and imo just leads to inefficiency. Like you said, sales tax can be considered a form of regressive tax: http://en.wikipedia.org/wiki/Regressive_tax http://en.wikipedia.org/wiki/Regressive_tax. How is that then fair?

evgen 17y ago
I am guessing that the parent was suggesting that while it is regressive it taxes consumption and this seemed to be a fairer mechanism in his/her view. The fair/unfair distinction can be sliced in a lot of different ways, but there are some benefits that can be claimed for a tax that is applied to consumption regardless of whether or not that consumer is rich or poor.
ShabbyDoo 17y ago
You are right that it tends to be slightly regressive w.r.t annual income. However, every dollar earned that is eventually converted into something tangible must be taxed. So, it's eventually flat if earnings are ever enjoyed. Is flat fair? There's nothing inherently "fair" about a zero second derivative. I'm actually ok with some sort of government rebate for the first N dollars of taxation to reduce the burden on America's (relatively) poor people.
- nixme 17y ago
  Except that the rich or even moderately well-off never convert even close to all their money into something tangible while the poor almost always must immediately. The rich don't live paycheck to paycheck. They save, invest, go on vacation, etc. They defer the second taxation (sales/use) to a later date or place -- they have choices where the poor do not. So while it might seem flat theoretically, it becomes regressive quickly. But we probably agree on more than we disagree. I actually agree that flat isn't fair and that the current situation isn't fair to b&m stores either. I just don't think the solution is to interfere with interstate commerce. States need to enforce use taxes, or if that turns out to be unenforceable, which I suspect it might, rethink their taxation strategy. By the way, not sure why you were downvoted. I upvoted to correct that. Thanks for the discussion -- it got me thinking about this situation quite a bit.

by nixme 17y ago

evgen 17y ago

I am guessing that the parent was suggesting that while it is regressive it taxes consumption and this seemed to be a fairer mechanism in his/her view. The fair/unfair distinction can be sliced in a lot of different ways, but there are some benefits that can be claimed for a tax that is applied to consumption regardless of whether or not that consumer is rich or poor.

ShabbyDoo 17y ago

You are right that it tends to be slightly regressive w.r.t annual income. However, every dollar earned that is eventually converted into something tangible must be taxed. So, it's eventually flat if earnings are ever enjoyed. Is flat fair? There's nothing inherently "fair" about a zero second derivative. I'm actually ok with some sort of government rebate for the first N dollars of taxation to reduce the burden on America's (relatively) poor people.

nixme 17y ago
Except that the rich or even moderately well-off never convert even close to all their money into something tangible while the poor almost always must immediately. The rich don't live paycheck to paycheck. They save, invest, go on vacation, etc. They defer the second taxation (sales/use) to a later date or place -- they have choices where the poor do not. So while it might seem flat theoretically, it becomes regressive quickly. But we probably agree on more than we disagree. I actually agree that flat isn't fair and that the current situation isn't fair to b&m stores either. I just don't think the solution is to interfere with interstate commerce. States need to enforce use taxes, or if that turns out to be unenforceable, which I suspect it might, rethink their taxation strategy. By the way, not sure why you were downvoted. I upvoted to correct that. Thanks for the discussion -- it got me thinking about this situation quite a bit.