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A sales tax (or VAT) is highly regressive. There's nothing inherently complicated about a progressive income tax; it's the fact that we insist on having a dedu
by kgrin 16y ago
A sales tax (or VAT) is highly regressive.
There's nothing inherently complicated about a progressive income tax; it's the fact that we insist on having a deduction for mortgage interest, R&D, asset depreciation, hiring new workers and hundreds of other things that all individually might be things we want to encourage, but together add up to a complex and cumbersome system.
- InclinedPlane 16y agoA sales tax is not regressive, it's flat. Simply because it's not progressive doesn't make it the opposite.
- gte910h 16y agoA sales tax is regressive. The lower your income, the higher your tax burden as a percentage of income. Even the fair tax understands that which is why most versions of it has a huge tax credit per year.
- tocomment 16y agoA sales tax doesn't have to be regressive. If you tax luxury items while not taxing essentials you'd probably get an even more progressive system than we have now.
- rationalbeaver 16y agoThat's true, but making a sales tax progressive creates the same complication that exists in the current system, only with even more incentive for corporations to lobby for special exemptions, reclassifications, credits, etc., for the products that they produce.
- hga 16y agoExactly; all the companies who make goods that might conceivably qualify for an exemption start spending a lot of their focus on getting that (since it's a big discount if they do) instead of focusing on providing the best product/best price/whatever.
- fnid2 16y agoIt wouldn't be that difficult. Lots of states that have sales tax don't tax food. Simply make the essentials untaxed or any product of a particular category under a particular price untaxed. We have these measures in the current system. If you earn under $6,000 you pay no tax. The benefit is that you take the burden off the individual and leave it all to computers. There's a "Taxable" flag and the equation is simple. IF (item.category == Food or price < (select minprice from categorylimits where categorylimits.category = item.category)) then tax = 0 else tax = 0.25 * item.price Done. What a beautiful world that would be.