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I think the best solution would be to get rid of income taxes and just have sales and property taxes. Taxing the rich a higher rate is always going to seem unf

I think the best solution would be to get rid of income taxes and just have sales and property taxes. Taxing the rich a higher rate is always going to seem unfair to them because the only way those taxes can be lessened is by making less money. Taxing $2 million house at a special rate is a different story, it seems fair because if you don't want to pay the tax you live in a more modest house. Luxury cars, fur coats, yachts, etc. can all have different sales tax rates and they still become a status symbol many of the rich are willing to pay for but not being forced to pay for.

yummyfajitas 16y ago
This is considered by many to be unfair because consumption inequality is not as large as income inequality. Peter Thiel may be 10,000-100,000x richer than me, but I'd be very surprised if he consumes even 1000x more than I do.
- megaman821 16y ago
  The consumption tax doesn't have to be a flat tax. You pay more tax for a pack a cigarettes than a pack of paper. Peter Theil makes about 200x more a year than the average person, but he doesn't have to consume 200 times more than the average person if all the items he wants to buy are at a much higher tax rate. They only way to avoid the tax is to not buy luxury items, and if a billionaire wants to live the life of a guy making 50k a year, let him have at it.
  - neilk 16y ago
    You're taxing the wrong thing. Your idea would be great if we wanted billionaires to act like regular joes. But generally, in North America, we don't care about that. The problem was about fixing the deficit. yummyfajitas was right: consumption taxes are generally considered regressive. Also, the rich, or even the professional class, have many more options to disguise their consumption as business expenses.
    - megaman821 16y ago
      The point is billionaires won't live like regular joes. You think just because the tax is higher they will start purchasing a Timex instead of a Rolex? Even now it would be hard to justify a $100k car as a business expense, with a simplified sales and property tax code it would be even easier to stop.
      - deleted 16y ago
        [deleted]
    - rgraham 16y ago
      Consumption taxes can be regressive. Ideas like the Fair Tax (http://en.wikipedia.org/wiki/FairTax http://en.wikipedia.org/wiki/FairTax) generally include provisions to reduce the disproportionate effects on people making less money (and proportionally spending more to survive). Taxing consumption also encourages people to save and invest. In my opinion, this is a much better base for a society than encouraging spending and not saving. Most western countries tax income less and consumption more than the US. Disguise? There are no exemptions. A significant focus of the idea is to remove the politics, special cases, and loopholes around the tax system. The 10th largest economy in the world functions on property and sales taxes alone. We call it Texas.
- Vivtek 16y ago
  But a combination of a consumption tax with a very progressive property tax would probably work rather well, especially if "property" is extended to include assets of all kinds and not just real estate.
loumf 16y ago
One huge problem with this is for people that have already built up savings based on taxed income -- mostly those in or near retirement. If we move over to consumption based, they are now going to live in a far worse tax environment then they planned for or that is fair (it's a kind of double-taxation to tax your income higher while earning income and then your consumption when you are mostly consuming, but not earning) Not insurmountable, but it needs to be addressed, because it's a large voting block. Also, we'd need a much better way to enforce it than we currently have. Taxes like these are trivial to dodge and hard to prove.
- megaman821 16y ago
  Retirees are the people in the worst situation but it can be helped a little by not collecting taxes on the IRAs and refunding the tax on the Roth IRAs. A sales tax my be slightly harder to collect but there will be a lot less people to collect it from. As the IRS, I'd rather deal with a few million merchants than hundreds of millions people.
pmorici 16y ago
Are the rich actually taxed at a higher rate? The first x dollars of income are taxed at the same rate for everyone aren't they?
- megaman821 16y ago
  Kinda, they reach a higher tier of taxes. For example, money above $200K is taxed at a higher rate than $1 to $200K. So their first $200K is taxed just like everyone else's money up to $200k. By taxing the rich, everyone means increasing the tax rate at the highest tiers.
ams6110 16y ago
The people who build yachts, $2MM homes, luxury cars, etc. might see that as "unfair"

yummyfajitas 16y ago

This is considered by many to be unfair because consumption inequality is not as large as income inequality. Peter Thiel may be 10,000-100,000x richer than me, but I'd be very surprised if he consumes even 1000x more than I do.

megaman821 16y ago
The consumption tax doesn't have to be a flat tax. You pay more tax for a pack a cigarettes than a pack of paper. Peter Theil makes about 200x more a year than the average person, but he doesn't have to consume 200 times more than the average person if all the items he wants to buy are at a much higher tax rate. They only way to avoid the tax is to not buy luxury items, and if a billionaire wants to live the life of a guy making 50k a year, let him have at it.
- neilk 16y ago
  You're taxing the wrong thing. Your idea would be great if we wanted billionaires to act like regular joes. But generally, in North America, we don't care about that. The problem was about fixing the deficit. yummyfajitas was right: consumption taxes are generally considered regressive. Also, the rich, or even the professional class, have many more options to disguise their consumption as business expenses.
  - megaman821 16y ago
    The point is billionaires won't live like regular joes. You think just because the tax is higher they will start purchasing a Timex instead of a Rolex? Even now it would be hard to justify a $100k car as a business expense, with a simplified sales and property tax code it would be even easier to stop.
    - deleted 16y ago
      [deleted]
  - rgraham 16y ago
    Consumption taxes can be regressive. Ideas like the Fair Tax (http://en.wikipedia.org/wiki/FairTax http://en.wikipedia.org/wiki/FairTax) generally include provisions to reduce the disproportionate effects on people making less money (and proportionally spending more to survive). Taxing consumption also encourages people to save and invest. In my opinion, this is a much better base for a society than encouraging spending and not saving. Most western countries tax income less and consumption more than the US. Disguise? There are no exemptions. A significant focus of the idea is to remove the politics, special cases, and loopholes around the tax system. The 10th largest economy in the world functions on property and sales taxes alone. We call it Texas.
Vivtek 16y ago
But a combination of a consumption tax with a very progressive property tax would probably work rather well, especially if "property" is extended to include assets of all kinds and not just real estate.

loumf 16y ago

One huge problem with this is for people that have already built up savings based on taxed income -- mostly those in or near retirement. If we move over to consumption based, they are now going to live in a far worse tax environment then they planned for or that is fair (it's a kind of double-taxation to tax your income higher while earning income and then your consumption when you are mostly consuming, but not earning) Not insurmountable, but it needs to be addressed, because it's a large voting block. Also, we'd need a much better way to enforce it than we currently have. Taxes like these are trivial to dodge and hard to prove.

megaman821 16y ago
Retirees are the people in the worst situation but it can be helped a little by not collecting taxes on the IRAs and refunding the tax on the Roth IRAs. A sales tax my be slightly harder to collect but there will be a lot less people to collect it from. As the IRS, I'd rather deal with a few million merchants than hundreds of millions people.

pmorici 16y ago

Are the rich actually taxed at a higher rate? The first x dollars of income are taxed at the same rate for everyone aren't they?

megaman821 16y ago
Kinda, they reach a higher tier of taxes. For example, money above $200K is taxed at a higher rate than $1 to $200K. So their first $200K is taxed just like everyone else's money up to $200k. By taxing the rich, everyone means increasing the tax rate at the highest tiers.

ams6110 16y ago

The people who build yachts, $2MM homes, luxury cars, etc. might see that as "unfair"