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Why is regressiveness (measured with respect to income) a bad thing? As you note, high income people don't remotely consume everything they produce. What they

Why is regressiveness (measured with respect to income) a bad thing? As you note, high income people don't remotely consume everything they produce. What they don't consume is invested, increasing productivity in the future. A progressive (w.r.t income) tax merely reduces investment (since high productivity folks have less to invest), and will be consumed if it is redistributed to lower productivity people. Why is a shift from investment to consumption considered a universally good thing? Could a situation arise when you'd favor a regressive tax structure in order to increase investment and reduce consumption?

sokoloff 11y ago
It's quite strange for me to be arguing this side, as I generally favor a flat consumption/VAT tax, if I believed we could actually cut over to it without just increasing the overall tax financial and compliance burden by keeping today's system and ADDING a high rate VAT. I would also be willing to accept a zero-rate VAT on certain essentials, but wouldn't demand it. The reason to oppose regressive income taxation IMO is the decreasing marginal utility of money. If you take the view that some amount of taxation is proper and necessary, the question that follows immediately is how to best raise that money. I'd prefer a flat consumption tax (with minimal, if any, exclusions), but if you can't switch wholesale to that system and instead you retain some amount of income-based taxation, that taxation ought not be regressive (IMO) because that double-credits the most advantaged members of society (decreasing marginal utility coupled with decreasing rate of taxation). I'm also opposed to estate taxes, taxes on dividends and capital gains, etc, and all other forms of multi-level taxation. Ideally, tax the money once, tax it at a level rate for consumption, and minimize the compliance and collection costs and losses.

sokoloff 11y ago

It's quite strange for me to be arguing this side, as I generally favor a flat consumption/VAT tax, if I believed we could actually cut over to it without just increasing the overall tax financial and compliance burden by keeping today's system and ADDING a high rate VAT. I would also be willing to accept a zero-rate VAT on certain essentials, but wouldn't demand it. The reason to oppose regressive income taxation IMO is the decreasing marginal utility of money. If you take the view that some amount of taxation is proper and necessary, the question that follows immediately is how to best raise that money. I'd prefer a flat consumption tax (with minimal, if any, exclusions), but if you can't switch wholesale to that system and instead you retain some amount of income-based taxation, that taxation ought not be regressive (IMO) because that double-credits the most advantaged members of society (decreasing marginal utility coupled with decreasing rate of taxation). I'm also opposed to estate taxes, taxes on dividends and capital gains, etc, and all other forms of multi-level taxation. Ideally, tax the money once, tax it at a level rate for consumption, and minimize the compliance and collection costs and losses.