4 ms·

I'm generally on the left, but let me ask: what's wrong with abolishing income taxes and, instead, charging consumption taxes on purchases and transfers? I may

I'm generally on the left, but let me ask: what's wrong with abolishing income taxes and, instead, charging consumption taxes on purchases and transfers? I may be utterly naive in my understanding, but I'd support this. No income tax at all; heavy consumption taxes. Tax private jets and true luxury goods at 95+%, food staples at 0%, inheritance transfers at 99% after an allowed small amount (handing an inheritance down to kids counts as "consumption") and general consumer goods around 30%. Real estate would be taxed 30% in general but much 75% (marginal) if the owner's real estate holdings (including the house being purchased) exceeded 8 years' median income. The tax would apply to services as well as goods, thus averting the regressive nature of the traditional sales tax. Please tell me why this is too naive to work. It seems like it would be a major improvement.

spitfire 17y ago
Anyone who has done well for themselves will leave. Those businesses that start to go well will leave. Picture the situation: You've started a company that's started to do well. You've worked day and night for years, suffering in the hopes of some payoff. Finally you can afford some nice things, then suddenly you're taxed at 95%. Makes you feel wanted, doesn't it?
- pw0ncakes 17y ago
  Anyone who has done well for themselves will leave. Those businesses that start to go well will leave. By this logic, why doesn't every successful Bay Area startup just up and move to Dubai? If a few rich assholes want to live in Dubai, fine by me, but the successful companies are always going to be where the skilled people are. Skilled people are where the infrastructure (education, health) is best, and you have to pay for infrastructure; that's why taxes exist. Finally you can afford some nice things, then suddenly you're taxed at 95%. Define "nice things". For me, "nice things" are good books, cool technologies, travel, challenging problems to solve, and interesting company. None of these have to involve luxury goods. My point is that we'd be taxing people based on what they buy, not their income. In other words, the tax is based on what you do with the money, not how much of it you make. If someone gets rich but is using his money reasonably, he pays reasonable taxes. If he wants to belch tons of CO2 into the air by flying around in his custom-built jet with a swimming pool in it, like a lot of the uncultured mouth-breathers in that set, he'll be very highly taxed for it. Besides, those among the rich who are ascending Society and flying around in private jets are too busy schmoozing and colluding to be building anything useful, just as authors who get sucked up into that high-society shitfest stop writing readable work. (Hard to write anything valuable if you're constantly coked up.) At this point, they effectively ought to retire. If we discourage them from being here, great! They're already past peak, and now they're just taking up space at the top. Their exodus makes room for people with talent and energy.
  - showerst 17y ago
    This actually happened in Britain in the 70's. At one point the top marginal tax rate topped 98%, and a large number of luminaries either moved out of the country or heavily obfuscated their finances. If even one warren buffet moves (or, more likely, suddenly shifts most of his income to barbados with legal financial engineering), it costs the government massive amounts of money. I won't touch the ad hominem attacks against an entire class of successful people, except to ask if Bill Gates has done anything useful with his money.
    - pw0ncakes 17y ago
      I won't touch the ad hominem attacks against an entire class of successful people Over 90% of people in this class achieved no success on their own, but had it bestowed upon them through family connections and inheritance. Likewise, a lot of genuinely successful (and even very, very rich) people aren't remotely connected to Society and the ruling-class chicanery. The reason the median American is so easily swindled by the Right is because he erroneously believes most of the upper class to be comprised of more successful versions of himself, ignoring the existence a tightly-interconnected ruling class (not quite a conspiracy, but as close as is possible in a society of this size) that hates his values and is actively colluding against people like him.
      - dsplittgerber 17y ago
        Please do show me any statistic or other facts-based argumentation, except for rambling, where it is shown that over 90% of "successful people" achieved no success on their own, but had it bestowed upon them. Have you ever looked at inheritance numbers in any society?
        pw0ncakes 17y ago
        I never said that 90% of "successful people" had not earned it. I said this of 90% of the ruling class. Most are born into it. By definition, someone who is born into the ruling class and turns out to be an idiot is not "successful". So most of the people I'm decrying are not "successful" people. However, they are powerful. George W. Bush comes to mind.
3pt14159 17y ago
So you are really asking a two separate questions: Your second question is "should we implement a social engineering scheme to avoid the regressive nature of the sales tax"? I say "no". We do that in Ontario and it has been such a nightmare because it distorts spending, complicates pst filing, and leads to people splitting up coffee orders at Tim Hortons into multiple bills (because a "meal" is tax as a luxury if it is above 4 dollars, and no, this was never adjusted for inflation and yes the tax applies to the whole $4.01 rather than just the cent) and other stupid things (never buy 3 muffins at Tim Hortons, you get bumped into the non-meal bracket, but buying 6 gets you the bulk discount AND exemption from the pst because your presumably buying 6 muffins to take home to your kids, rather than stuffing your face with a 3 muffin "luxury meal"). It is so stupid Ontario is doing away with it and harmonizing with the federal GST. As for inheritance, this will just hit the lower class. Only people with enough money for lawyers will set up trust funds or "gift" their children $500k to buy their house for them. Also when you say "inheritance transfers at 99%" I assume you mean the government takes virtually all of it. If I were dying and had $100M I'd move to the Turks and Caicos and die there, where I can give my kids what I want. As for your first question, which is basically "can we implement a simple VAT style tax (ie, tax both goods and services, but let companies deduct the VAT they paid against the VAT they collected) across everything and not greatly disadvantage the poor?" The answer is a resounding "Yes" except for a couple key conditions. First, give every adult a cheque for $7k a year if they have lived in the country for 10 months or more during that year. Don't ask for their income or anything. Then implement a 25% tax on EVERYTHING. "Ohh, but we want to encourage reading" NO! Don't let social engineering make this complicated. As soon as you bring in exemptions you bring in lobbyists, accountants, lawyers, and programming complications. All of which slow down productivity growth which, ultimately, reduces government revenue. The second thing you need to do is issue a one time cheque to people that are retired, based on their current savings that are not in some form of non-income tax fund. The reason for this is that if someone has paid income tax their whole life and was planning on using their $200k cash they have in their bank account to live, you can't just increase their cost of living by 30% or they will starve. That's it. Problem solved. No more tax forms, or telling the government how much you earned, or (besides the one time thing) how much you saved. No worrying about offshore bank accounts, or whether a freelancer should incorporate or not. More math brains in science and tech. More business brains in enterprise. The reason it won't ever happen? Politicians need to be busy bees.
JunkDNA 17y ago
The problem with most types of tax scenarios like you describe, is that the truly wealthy will always find some place else to reside where they can escape the taxes. They are the ones with the means to do it. Tax systems that target "the rich" nearly always net less than they should on paper for this reason. This happens in the US routinely. People flee states like New York and New Jersey and move to places like Florida. In general, the wealthy will always be able to afford and find a way around things like the inheritance tax and the housing taxes you describe. If the tax is severe enough, people will take drastic action. The above aside, from an economic perspective, you don't want to discourage people from buying "stuff" with their money. In your example, I'll take private jets and big houses. Lots of people at various rungs on the economic ladder are employed to make and support those things. From the guy that drives the fuel truck (or cement mixer) all the way up through the engineers who design the plane (or archtects who design the house).
prodigal_erik 17y ago
There is no "truth" about what necessities and luxuries are. Put any of our great-grandparents' families in a time machine and their children would now be taken away for neglect. For everything you own, somebody out there thinks it's a self-indulgent luxury you'd be better off without. What gets taxed as a "luxury" would become a political decision, which is a game the rich know how to win. Have you heard why SUVs suddenly became popular? Somebody figured out trucks over a certain weight limit were classified as business necessities with favorable tax treatment.

spitfire 17y ago

Anyone who has done well for themselves will leave. Those businesses that start to go well will leave. Picture the situation: You've started a company that's started to do well. You've worked day and night for years, suffering in the hopes of some payoff. Finally you can afford some nice things, then suddenly you're taxed at 95%. Makes you feel wanted, doesn't it?

pw0ncakes 17y ago
Anyone who has done well for themselves will leave. Those businesses that start to go well will leave. By this logic, why doesn't every successful Bay Area startup just up and move to Dubai? If a few rich assholes want to live in Dubai, fine by me, but the successful companies are always going to be where the skilled people are. Skilled people are where the infrastructure (education, health) is best, and you have to pay for infrastructure; that's why taxes exist. Finally you can afford some nice things, then suddenly you're taxed at 95%. Define "nice things". For me, "nice things" are good books, cool technologies, travel, challenging problems to solve, and interesting company. None of these have to involve luxury goods. My point is that we'd be taxing people based on what they buy, not their income. In other words, the tax is based on what you do with the money, not how much of it you make. If someone gets rich but is using his money reasonably, he pays reasonable taxes. If he wants to belch tons of CO2 into the air by flying around in his custom-built jet with a swimming pool in it, like a lot of the uncultured mouth-breathers in that set, he'll be very highly taxed for it. Besides, those among the rich who are ascending Society and flying around in private jets are too busy schmoozing and colluding to be building anything useful, just as authors who get sucked up into that high-society shitfest stop writing readable work. (Hard to write anything valuable if you're constantly coked up.) At this point, they effectively ought to retire. If we discourage them from being here, great! They're already past peak, and now they're just taking up space at the top. Their exodus makes room for people with talent and energy.
- showerst 17y ago
  This actually happened in Britain in the 70's. At one point the top marginal tax rate topped 98%, and a large number of luminaries either moved out of the country or heavily obfuscated their finances. If even one warren buffet moves (or, more likely, suddenly shifts most of his income to barbados with legal financial engineering), it costs the government massive amounts of money. I won't touch the ad hominem attacks against an entire class of successful people, except to ask if Bill Gates has done anything useful with his money.
  - pw0ncakes 17y ago
    I won't touch the ad hominem attacks against an entire class of successful people Over 90% of people in this class achieved no success on their own, but had it bestowed upon them through family connections and inheritance. Likewise, a lot of genuinely successful (and even very, very rich) people aren't remotely connected to Society and the ruling-class chicanery. The reason the median American is so easily swindled by the Right is because he erroneously believes most of the upper class to be comprised of more successful versions of himself, ignoring the existence a tightly-interconnected ruling class (not quite a conspiracy, but as close as is possible in a society of this size) that hates his values and is actively colluding against people like him.
    - dsplittgerber 17y ago
      Please do show me any statistic or other facts-based argumentation, except for rambling, where it is shown that over 90% of "successful people" achieved no success on their own, but had it bestowed upon them. Have you ever looked at inheritance numbers in any society?
      - pw0ncakes 17y ago
        I never said that 90% of "successful people" had not earned it. I said this of 90% of the ruling class. Most are born into it. By definition, someone who is born into the ruling class and turns out to be an idiot is not "successful". So most of the people I'm decrying are not "successful" people. However, they are powerful. George W. Bush comes to mind.

3pt14159 17y ago

So you are really asking a two separate questions: Your second question is "should we implement a social engineering scheme to avoid the regressive nature of the sales tax"? I say "no". We do that in Ontario and it has been such a nightmare because it distorts spending, complicates pst filing, and leads to people splitting up coffee orders at Tim Hortons into multiple bills (because a "meal" is tax as a luxury if it is above 4 dollars, and no, this was never adjusted for inflation and yes the tax applies to the whole $4.01 rather than just the cent) and other stupid things (never buy 3 muffins at Tim Hortons, you get bumped into the non-meal bracket, but buying 6 gets you the bulk discount AND exemption from the pst because your presumably buying 6 muffins to take home to your kids, rather than stuffing your face with a 3 muffin "luxury meal"). It is so stupid Ontario is doing away with it and harmonizing with the federal GST. As for inheritance, this will just hit the lower class. Only people with enough money for lawyers will set up trust funds or "gift" their children $500k to buy their house for them. Also when you say "inheritance transfers at 99%" I assume you mean the government takes virtually all of it. If I were dying and had $100M I'd move to the Turks and Caicos and die there, where I can give my kids what I want. As for your first question, which is basically "can we implement a simple VAT style tax (ie, tax both goods and services, but let companies deduct the VAT they paid against the VAT they collected) across everything and not greatly disadvantage the poor?" The answer is a resounding "Yes" except for a couple key conditions. First, give every adult a cheque for $7k a year if they have lived in the country for 10 months or more during that year. Don't ask for their income or anything. Then implement a 25% tax on EVERYTHING. "Ohh, but we want to encourage reading" NO! Don't let social engineering make this complicated. As soon as you bring in exemptions you bring in lobbyists, accountants, lawyers, and programming complications. All of which slow down productivity growth which, ultimately, reduces government revenue. The second thing you need to do is issue a one time cheque to people that are retired, based on their current savings that are not in some form of non-income tax fund. The reason for this is that if someone has paid income tax their whole life and was planning on using their $200k cash they have in their bank account to live, you can't just increase their cost of living by 30% or they will starve. That's it. Problem solved. No more tax forms, or telling the government how much you earned, or (besides the one time thing) how much you saved. No worrying about offshore bank accounts, or whether a freelancer should incorporate or not. More math brains in science and tech. More business brains in enterprise. The reason it won't ever happen? Politicians need to be busy bees.

JunkDNA 17y ago

The problem with most types of tax scenarios like you describe, is that the truly wealthy will always find some place else to reside where they can escape the taxes. They are the ones with the means to do it. Tax systems that target "the rich" nearly always net less than they should on paper for this reason. This happens in the US routinely. People flee states like New York and New Jersey and move to places like Florida. In general, the wealthy will always be able to afford and find a way around things like the inheritance tax and the housing taxes you describe. If the tax is severe enough, people will take drastic action. The above aside, from an economic perspective, you don't want to discourage people from buying "stuff" with their money. In your example, I'll take private jets and big houses. Lots of people at various rungs on the economic ladder are employed to make and support those things. From the guy that drives the fuel truck (or cement mixer) all the way up through the engineers who design the plane (or archtects who design the house).

prodigal_erik 17y ago

There is no "truth" about what necessities and luxuries are. Put any of our great-grandparents' families in a time machine and their children would now be taken away for neglect. For everything you own, somebody out there thinks it's a self-indulgent luxury you'd be better off without. What gets taxed as a "luxury" would become a political decision, which is a game the rich know how to win. Have you heard why SUVs suddenly became popular? Somebody figured out trucks over a certain weight limit were classified as business necessities with favorable tax treatment.