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VAT are regressive taxes and would impact the poorest the most heavily. That said, the pricing curve doesn't ignore tax, and if the company has to pay tax, the

by r00fus 7y ago

VAT are regressive taxes and would impact the poorest the most heavily. That said, the pricing curve doesn't ignore tax, and if the company has to pay tax, then the price will go up, but sometimes not at all because the pricing curve still means passing on all the costs mean lower demand. It depends on the elasticity of demand. Which is why a "flat tax without exception" has downsides. Inelastic demand allows companies to push more/all costs to customer without impacting the pricing curve.

deleted 7y ago
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chillacy 7y ago
Consider the two theoretical choices that Greg Mankiew (economist) supplies: 1. Means Tested Transfer of $1k per month to those with 0 income, phased out progressively by 20 cents per dollar of income. Funded by a progressive income tax: 20% of incomes above $60k. 2. Universal Basic Income: $1k per month to all, funded by 20% flat tax on all income. Which is better? (Answer: they're the same). It's just that choice 2 gives and takes income from all at different times, but the political benefits are enormous. Universal programs are much more resistant to being slashed like the current TANF and SNAP programs. https://taxfoundation.org/universal-basic-income-ubi-means-tested-transfers/ https://taxfoundation.org/universal-basic-income-ubi-means-t...
- r00fus 7y ago
  Ok, tell me why, if I'm paying for a 20% flat tax, I couldn't be persuaded by future demagogue that my measly $1k/mo isn't worth it if I'm say, paying more in taxes than the $12k annual? The problem comes with the loopholes - cap gains, real estate taxes. Do those fall under flat tax?
  - chillacy 7y ago
    > cap gains, real estate taxes. Do those fall under flat tax? Depends on implementation I suppose. The example given is just a simple illustration that a regressive looking and progressive looking scheme could have the same payouts in theory, they just seem different on the surface. > if I'm paying for a 20% flat tax, I couldn't be persuaded by future demagogue that my measly $1k/mo isn't worth it if I'm say, paying more in taxes than the $12k annual? If you can afford to spend $120k a year on luxury consumables (assuming 100% VAT passthrough) then you're probably savvy enough to figure that out without the demagogue. But there aren't a lot of people with that kind of money. Historically universal programs fare better, Alaska is one example.

by r00fus 7y ago

deleted 7y ago

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chillacy 7y ago

Consider the two theoretical choices that Greg Mankiew (economist) supplies: 1. Means Tested Transfer of $1k per month to those with 0 income, phased out progressively by 20 cents per dollar of income. Funded by a progressive income tax: 20% of incomes above $60k. 2. Universal Basic Income: $1k per month to all, funded by 20% flat tax on all income. Which is better? (Answer: they're the same). It's just that choice 2 gives and takes income from all at different times, but the political benefits are enormous. Universal programs are much more resistant to being slashed like the current TANF and SNAP programs. https://taxfoundation.org/universal-basic-income-ubi-means-tested-transfers/ https://taxfoundation.org/universal-basic-income-ubi-means-t...

r00fus 7y ago
Ok, tell me why, if I'm paying for a 20% flat tax, I couldn't be persuaded by future demagogue that my measly $1k/mo isn't worth it if I'm say, paying more in taxes than the $12k annual? The problem comes with the loopholes - cap gains, real estate taxes. Do those fall under flat tax?
- chillacy 7y ago
  > cap gains, real estate taxes. Do those fall under flat tax? Depends on implementation I suppose. The example given is just a simple illustration that a regressive looking and progressive looking scheme could have the same payouts in theory, they just seem different on the surface. > if I'm paying for a 20% flat tax, I couldn't be persuaded by future demagogue that my measly $1k/mo isn't worth it if I'm say, paying more in taxes than the $12k annual? If you can afford to spend $120k a year on luxury consumables (assuming 100% VAT passthrough) then you're probably savvy enough to figure that out without the demagogue. But there aren't a lot of people with that kind of money. Historically universal programs fare better, Alaska is one example.