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The problem is that sales tax is an extremely regressive model. If two people buy $100 of goods, but one makes an income of $100K a year and the other $20K, the
by nkohari 9y ago
The problem is that sales tax is an extremely regressive model. If two people buy $100 of goods, but one makes an income of $100K a year and the other $20K, the taxes are effectively 5X higher for the person making less money.
No one likes paying any taxes, but at least income tax aligns the motivations of the individual with those of the government. If you make more money, you prosper, and so the government -- which ostensibly creates a society that helps you to prosper.
- Simon_says 9y agoBecause the guy who makes 5 times more will spend 5 times more?
- nkohari 9y agoIn practice, that isn't remotely true. People on the lower end of the income scale (are forced to) spend a much larger percentage of their income in order to meet their basic needs. People on the higher end of the scale spend more on a dollar-by-dollar basis, but a much smaller percentage of their income. Then they save and invest the rest, which also creates more wealth from their existing wealth.
- Simon_says 9y agoWhen they save and invest, what do you think happens to that investment eventually? It's converted back into cash and spent, donated, or bequeathed. The fact that there's an intermediate step of investment is irrelevant to the fact that lifetime ingress of value equals lifetime egress of value.
- nkohari 9y agoI'm sorry, but that just doesn't make any sense at all. All capital is not eventually spent; otherwise there would be no such thing as generational wealth. Technically speaking, I guess maybe over the course of the rise and fall of a society what you're saying is true, but I don't think the government would want to wait that long to see some tax revenue.