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> If you're using a regressive VAT tax to pay for UBI you are not redistributing wealth, you are disproportionately taxing the poor to distribute to themselves
by 3131s 7y ago
> If you're using a regressive VAT tax to pay for UBI you are not redistributing wealth, you are disproportionately taxing the poor to distribute to themselves (https://www.quora.com/Why-is-value-added-tax-regressive https://www.quora.com/Why-is-value-added-tax-regressive) much of which will be lost as the prices of goods increases to match equilibrium. Amazon won't "pay the tax" it will pass the tax along in the form of higher consumer prices.
A flat value added tax is regressive, but a VAT itself is not inherently regressive. Imagine if we have a VAT on yachts and nothing else, does that disproportionately affect the rich or the poor?
That's why Yang is proposing to exempt basic goods and raise the rate on some luxury items.
Even under a flat 10% VAT paired with the UBI, you would only be worse off if you spend $120,000 yearly on items with a 100% pass through (the IMF's estimates on the average pass through under a VAT are much lower than this).
> If the primary concern is tax evasion, there are many ways to improve this while still maintaining progressive taxation.
You are going to need to specify a better alternative then. Again, a VAT has inherent properties that make it highly auditable and therefore easier to administer. A wealth tax, in comparison, is much more subject to misreporting because it relies on asset valuation.
> And I'm sorry, but even if this would work, I'm still not going to be sold on the idea that the world should be lorded over by a few trillionaires from California.
Do you want wealth redistribution or not?
Yang wants to give individuals legal ownership of their own data and control over how it is used, so I'm not so sure that most of those California billionaires are all that fond of him anyway.
- harimau777 7y agoFor sake of argument, could this inadvertently make it more difficult for middle class people to pursue goals outside of basic survival? It seems to me that many otherwise "normal" middle class people have one area, their hobby, where they own luxury products. That might be a sports car, a horse, a sailboat, ski trips, etc. Might a VAT tax on luxury goods make those products out of reach for the middle class? While I can understand taxing a billionaire who buys luxury products in every area of their life, it doesn't strike me as unreasonable for someone to have one area that they choose to focus their resources.
- barrkel 7y agoTaxing transactions other than capital purchases isn't going to make much of a dent in inequality. The reason we have such inequality is from capital income and appreciation. Taxing ordinary income or outgoings won't help much.
- 3131s 7y agoOk, fortunately Yang also wants to increase capital gains taxes to the same rate as income taxes. https://www.yang2020.com/policies/capital-gain-carried-interest-tax/ https://www.yang2020.com/policies/capital-gain-carried-inter...
- StreamBright 7y agoIt would make more people move to tax havens.
- crdoconnor 7y ago>Imagine if we have a VAT on yachts and nothing else, does that disproportionately affect the rich or the poor? Nobody? They'll buy yachts abroad.
- notahacker 7y agoYup. Plus talking about 'VAT on yachts' is nonsensical in the context of funding a basic income anyway. There are a lot of economically inactive people to fund and not many yachts being purchased; wealthy dynasties tend to consume only tiny fractions of the economic rents they can extract from the economy each year. Choosing a consumption tax as a means of funding a UBI ensures that the bulk of the net contribution towards funding it will be paid by the large numbers of people who spend most of their incomes on consumption - i.e the middle classes.
- 3131s 7y agoI was only trying to illustrate that a VAT isn't inherently regressive, that example wasn't meant to be taken that seriously.
- crdoconnor 7y agoYou inadvertently did the exact opposite.
- devonkim 7y agoVAT is usually much higher in the world. 10% ish would put the US in the lower quartile. So not worth dodging the VAT and then to transport over still