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If we were to move away from an income based tax system to a sales or VAT based tax system, would it address some of the issues noted in the article? Edit: s/\

by u801e 9y ago

If we were to move away from an income based tax system to a sales or VAT based tax system, would it address some of the issues noted in the article? Edit: s/\./?/

hamandcheese 9y ago
Sales tax results in the poor and middle class paying vastly higher tax rates as a percentage of their income compared to the rich.
- u801e 9y ago
  If we were to exempt things like food and rent from the tax, then that may address that issue to some extent. Regardless, the rich do tend to spend a lot more money compared to the middle class or poor.
  - hamandcheese 9y ago
    If you’re going to make arguments like that though it’d be easier to just keep things the same. Yes, the rich pay way more taxes in absolute terms but equal or less in relative terms.
    - u801e 9y ago
      > If you’re going to make arguments like that though it’d be easier to just keep things the same. For the government and businesses, that may be true, but if taxes were sales/VAT based instead of income based, then it would remove a significant burden from individuals (since they would no longer have to file taxes every year).
      - hamandcheese 9y ago
        True, never thought of that!
EddieRingle 9y ago
IMO a solution that people rarely discuss is a land value tax, typically also supplemented by pigovian taxes on things like alcohol, carbon emissions, etc. I personally think income taxes have proven to be a beauracratic and political nightmare with high economic overhead. I don't see a VAT being much better. And as others will mention, just switching to a general sales tax is highly regressive.
- the_cat_kittles 9y ago
  why is a land value tax good? just curious
  - hamandcheese 9y ago
    I think property taxes (and not necessarily limited to land) are considered more ideal because it taxes wealth as opposed to income.
  - bufordsharkley 9y ago
    1) It can fund revenue for public goods with little to no deadweight loss 2) It targets "unearned wealth" instead of earned income 3) It grows with the growth of a municipal area, allowing for public finance that scales with the demands of a growing city 4) It can efficiently be used to pay for declining cost industries within a municipality (natural monopolies such as public transit) 5) It naturally is compatible with a UBI, insofar as you're merely distributing value which is considered to be commonly owned to all

by u801e 9y ago

If we were to move away from an income based tax system to a sales or VAT based tax system, would it address some of the issues noted in the article? Edit: s/\./?/

hamandcheese 9y ago

Sales tax results in the poor and middle class paying vastly higher tax rates as a percentage of their income compared to the rich.

u801e 9y ago
If we were to exempt things like food and rent from the tax, then that may address that issue to some extent. Regardless, the rich do tend to spend a lot more money compared to the middle class or poor.
- hamandcheese 9y ago
  If you’re going to make arguments like that though it’d be easier to just keep things the same. Yes, the rich pay way more taxes in absolute terms but equal or less in relative terms.
  - u801e 9y ago
    > If you’re going to make arguments like that though it’d be easier to just keep things the same. For the government and businesses, that may be true, but if taxes were sales/VAT based instead of income based, then it would remove a significant burden from individuals (since they would no longer have to file taxes every year).
    - hamandcheese 9y ago
      True, never thought of that!

EddieRingle 9y ago

IMO a solution that people rarely discuss is a land value tax, typically also supplemented by pigovian taxes on things like alcohol, carbon emissions, etc. I personally think income taxes have proven to be a beauracratic and political nightmare with high economic overhead. I don't see a VAT being much better. And as others will mention, just switching to a general sales tax is highly regressive.

the_cat_kittles 9y ago
why is a land value tax good? just curious
- hamandcheese 9y ago
  I think property taxes (and not necessarily limited to land) are considered more ideal because it taxes wealth as opposed to income.
- bufordsharkley 9y ago
  1) It can fund revenue for public goods with little to no deadweight loss 2) It targets "unearned wealth" instead of earned income 3) It grows with the growth of a municipal area, allowing for public finance that scales with the demands of a growing city 4) It can efficiently be used to pay for declining cost industries within a municipality (natural monopolies such as public transit) 5) It naturally is compatible with a UBI, insofar as you're merely distributing value which is considered to be commonly owned to all