4 ms·
This is actually wrong and for reasons that surprised me when I found out and it does not require luxury taxation. Many? Most? People earning (say) $500k+ dodg
by harry8 8y ago
This is actually wrong and for reasons that surprised me when I found out and it does not require luxury taxation.
Many? Most? People earning (say) $500k+ dodge their income tax, legally and illegally. There's a whole industry of it. Yes let's clamp down on that as we've been trying to across the world for decades. Not likely to eradicate it by next year though, right?
So you tax consumption at a flat rate /in addition/ to income tax. You ensure the people earning less get a tax break or a transfer payment increase to cover the consumption flat tax and then some.
All those wealthy people are now paying that base rate on their consumption in a way that is basically unavoidable.
So for your progressive taxation, the initial bracket cannot be avoided. People in higher brackets still should pay more.
By using consumption to tax the initial bracket the poor get an increase in after tax income. The rich (on average) get a higher tax bill.
Yes it depends on the modelling and getting the implementation right as all tax regimes do. Yes it is progressive.
When you see consumption tax as necessarily regressive (as I did once) you are missing the most important thing about them which is they really aren't. They're the best way of getting a big tax revenue increase at the expense of those who cheat. I like that, myself.
- arcticbull 8y agoIMO if you're basing your tax model on people dodging half of it you've kind of missed the point. People willing to dodge taxes will dodge taxes one way or the other. Re: consumption tax, just buy stuff on Amazon, boom, taxes dodged. Or on eBay, receiving "gifts" from your seller. The solution isn't to invent a whole new parallel tax system so the dodgers pay a little instead of what they owe, the solution is to get the tax money back from the dodgers. The unpaid taxes on the amount of wealth squirreled away offshore by the wealthy right now would pay off the entire US national debt.
- kmlx 8y ago“The unpaid taxes on the amount of wealth squirreled away offshore by the wealthy right now would pay off the entire US national debt.” without a source i call BS on this. us debt: 22 trillion. assuming 25% as median tax rate means that people in the US have more than 100 trillion USD stashed in offshore. to put this in context, top 50 US companies have around 3 trillion USD in offshore.
- arcticbull 8y agoAbout 11.5% of global GDP is hidden in offshore accounts, amounting to $8.7T, and unpaid taxes to the US would amount to $170B in 2016 alone. Another $70B avoided by companies, so around a quarter trillion dollars per years in net new missing taxes per year. Given that's less than the current deficit, it makes what I said unlikely, although depending how many years it's been going on that's a big piggy bank. I'll see if I can dig up what I was initially thinking, but I could have just mis-remembered. [1] https://www.bostonglobe.com/ideas/2018/01/20/trillions-dollars-have-sloshed-into-offshore-tax-havens-here-how-get-back/2wQAzH5DGRw0mFH0YPqKZJ/story.html https://www.bostonglobe.com/ideas/2018/01/20/trillions-dolla...