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The rich spend a smaller share of their income, so a VAT scheme would in practice produce a regressive taxation scheme, with the lowest incomes paying relativel

by Joeri 7y ago

The rich spend a smaller share of their income, so a VAT scheme would in practice produce a regressive taxation scheme, with the lowest incomes paying relatively the most, because they have to spend all of their income.

Forbo 7y ago
What about a flat transactional tax that occurs any time money changes hands? I found this not too long ago and have been enamored with the idea: http://apttax.com/execsummary.php http://apttax.com/execsummary.php
- Forbo 7y ago
  Fuck me, right? Would be nice to know why this is seemingly such a shitty idea, but guess I'll never hear why.
  - LordDragonfang 7y ago
    Simple answer? Economies perform better when money changes hands more frequently. Disincentivizing that is generally a bad idea. Additionally, taxes like that disproportionately affect the poor, who often have to spend their income as soon as they get it, and barely affects the rich, who have lots of money sitting around not being spent.
  - AnthonyMouse 7y ago
    The problem with it is that it creates a powerful incentive for vertical integration and puts everyone else out of business. If you have a product that goes from mine to mill to factory to wholesaler to retailer to consumer, the tax is paid five times. But if the same company owns the mine as operates the retail store, it's paid only once. That's an insurmountable advantage for vertically integrated companies, so no others remain and tax-wise you end up with the same result as sales tax or VAT (i.e. the tax is paid on the total final value) except that you've needlessly destroyed every non-vertically integrated business. That is the problem that VAT solves, by giving longer supply chains the same tax treatment as vertically integrated corporations.
- jklein11 7y ago
  I’m not really understanding how this is different from the VAT taxation scheme.
  - sobani 7y ago
    VAT means Value Added Tax. @Forbo's was talking about a transaction tax. The difference can be explained by this completely made up example: A steel mill buys iron ore for $1 a kilo and makes steel of that. A nail factory buys steel for $1.50 a kilo and makes nails of that. A distributor buys those nails wholesale for $2 a kilo. A hardware store buys those nails from the wholesaler for $2.50 a kilo. A contractor buys those nails from the hardware store for $3 a kilo. The subcontractor bills $3.50 a kilo for those nails. The general contractor bills you $4 a kilo for those nails. With VAT you/the general contractor/all businesses involved pay taxes on a total of $4. With a transaction tax, it would be paid on $17.50. But the above is a simplified example. In the real world there are probably a lot more businesses (each specializing in their own niche) and therefor transaction involved in getting that nail into your wall.
- conanbatt 7y ago
  It's a great idea for the bitcoin and cash community.
ordinaryradical 7y ago
What's the possibility of implementing this in combination with a luxury rate adjustment that takes something like median values for product categories and then scales rates as you move above or below that? Because it would seem to me that consumption of low-income earners will trend toward below-the-median while consumption of the wealthy will trend toward above-the-median, giving you an additional handle to make this taxation progressive.
- deleted 7y ago
  [deleted]
- Joeri 7y ago
  Well, it all depends on how you define product categories. Is a macbook pro the same product category as a chromebook? You can slice the market in such a way that luxury goods would all be bucketed into “median” price range. IMHO it’s easier to construct a “fair” tax system on the income side than on the expenditures side, provided you count all income equally. Currently income from labor is usually taxed higher than income from investment, and that’s not fair.
ameister14 7y ago
That's why you pair it with a UBI, as the poster above said - if you add in more than the average cost of taxes on the UBI among people making less than, say, $150,000, it becomes significantly more progressive, even if they spend the entirety of the UBI.

by Joeri 7y ago

Forbo 7y ago

What about a flat transactional tax that occurs any time money changes hands? I found this not too long ago and have been enamored with the idea: http://apttax.com/execsummary.php http://apttax.com/execsummary.php

Forbo 7y ago
Fuck me, right? Would be nice to know why this is seemingly such a shitty idea, but guess I'll never hear why.
- LordDragonfang 7y ago
  Simple answer? Economies perform better when money changes hands more frequently. Disincentivizing that is generally a bad idea. Additionally, taxes like that disproportionately affect the poor, who often have to spend their income as soon as they get it, and barely affects the rich, who have lots of money sitting around not being spent.
- AnthonyMouse 7y ago
  The problem with it is that it creates a powerful incentive for vertical integration and puts everyone else out of business. If you have a product that goes from mine to mill to factory to wholesaler to retailer to consumer, the tax is paid five times. But if the same company owns the mine as operates the retail store, it's paid only once. That's an insurmountable advantage for vertically integrated companies, so no others remain and tax-wise you end up with the same result as sales tax or VAT (i.e. the tax is paid on the total final value) except that you've needlessly destroyed every non-vertically integrated business. That is the problem that VAT solves, by giving longer supply chains the same tax treatment as vertically integrated corporations.
jklein11 7y ago
I’m not really understanding how this is different from the VAT taxation scheme.
- sobani 7y ago
  VAT means Value Added Tax. @Forbo's was talking about a transaction tax. The difference can be explained by this completely made up example: A steel mill buys iron ore for $1 a kilo and makes steel of that. A nail factory buys steel for $1.50 a kilo and makes nails of that. A distributor buys those nails wholesale for $2 a kilo. A hardware store buys those nails from the wholesaler for $2.50 a kilo. A contractor buys those nails from the hardware store for $3 a kilo. The subcontractor bills $3.50 a kilo for those nails. The general contractor bills you $4 a kilo for those nails. With VAT you/the general contractor/all businesses involved pay taxes on a total of $4. With a transaction tax, it would be paid on $17.50. But the above is a simplified example. In the real world there are probably a lot more businesses (each specializing in their own niche) and therefor transaction involved in getting that nail into your wall.
conanbatt 7y ago
It's a great idea for the bitcoin and cash community.

ordinaryradical 7y ago

What's the possibility of implementing this in combination with a luxury rate adjustment that takes something like median values for product categories and then scales rates as you move above or below that? Because it would seem to me that consumption of low-income earners will trend toward below-the-median while consumption of the wealthy will trend toward above-the-median, giving you an additional handle to make this taxation progressive.

deleted 7y ago
[deleted]
Joeri 7y ago
Well, it all depends on how you define product categories. Is a macbook pro the same product category as a chromebook? You can slice the market in such a way that luxury goods would all be bucketed into “median” price range. IMHO it’s easier to construct a “fair” tax system on the income side than on the expenditures side, provided you count all income equally. Currently income from labor is usually taxed higher than income from investment, and that’s not fair.

ameister14 7y ago

That's why you pair it with a UBI, as the poster above said - if you add in more than the average cost of taxes on the UBI among people making less than, say, $150,000, it becomes significantly more progressive, even if they spend the entirety of the UBI.