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You may be a fan of replacing the income tax with a consumption tax. https://en.wikipedia.org/wiki/Consumption_tax https://en.wikipedia.org/wiki/Consumption_ta

You may be a fan of replacing the income tax with a consumption tax. https://en.wikipedia.org/wiki/Consumption_tax https://en.wikipedia.org/wiki/Consumption_tax

glennpratt 7y ago
Sales tax in the US is generally the most regressive tax we have, so I'd say no. Are you suggesting something different?
JshWright 7y ago
That would be much, much worse. It would be the exact opposite of what the GP comment suggested.
- thaumasiotes 7y ago
  > It would be the exact opposite of what the GP comment suggested. Huh? That comment suggested > The problem is that under the current tax scheme in the US people are taxed on their total income and companies are taxed on their profits. and > I think if we could just get rid of the income tax somehow (like have a land tax instead) the country would be so much better off. Replacing the income tax with a consumption tax follows directly from both of those points. As to the first, it replaces the system where companies are taxed on profits and people are taxed on revenue with a system where companies are taxed on profits and people are taxed on profits. As to the second, obviously, it gets rid of the income tax. What were you thinking your GP comment said?
  - cowsandmilk 7y ago
    > people are taxed on profits Setting aside the oddity of talking about profit of people, given constant income, you pay less consumption tax as your profit goes up. Consumption is expenses, profit = income - expenses. Rearranging. Consumption tax = y * expenses = y * (income - profit) where y is the consumption tax rate. So, as profits increase, expenses decrease and consumption tax goes down.
    - thaumasiotes 7y ago
      > Setting aside the oddity of talking about profit of people, given constant income, you pay less consumption tax as your profit goes up. > Consumption is expenses, profit = income - expenses. No, a person's profits are their consumption. Savings are not profits -- they don't benefit you at all. There's a chain going like this: Company spends money so that company receives (more) money so that person receives money so that person can spend money. The goal of the company is to accumulate money for someone else and that's how its profits are measured. Profit is money the company loses by paying it out to its owners. (Money the company loses by paying it out to non-owners is "expenses".) The goal of the person is to spend money on things it can actually use; for the person, money is an accounting tool, not an end goal. But we can identify profit the same way. Money that you lose by paying it out to yourself ("consumption") is your profit; savings is just money you might one day allocate to profit.
riddlemethat 7y ago
From a values perspective I like this approach. I don’t like that other people get to determine how much of the capital I pull in gets to be mine after all. On the other hand, I don’t think it would create much tax revenue. We only gave our government the right to institute an income tax thanks to the idiots who banned alcohol. Before that the feds relied on alcohol taxes to survive. Play stupid games, win stupid prizes. https://www.heinzhistorycenter.org/blog/at-the-history-center/beer-taxes-prohibitions-connection-national-income-tax https://www.heinzhistorycenter.org/blog/at-the-history-cente...
- dctoedt 7y ago
  > I don’t like that other people get to determine how much of the capital I pull in gets to be mine after all. Let me paraphrase Adam Gopnik's recent book, "A Thousand Small Sanities: The Moral Adventure of Liberalism": When you talk about "the capital I pull in," you're risking celebrating the driver while taking cars, roads, and gasoline for granted. [0] See also Elizabeth Warren's famous talk in her first Senate campaign: "There is nobody in this country who got rich on their own. Nobody. You built a factory out there - good for you. But I want to be clear. You moved your goods to market on roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory... Now look. You built a factory and it turned into something terrific or a great idea - God bless! Keep a hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.” [1] And of course Barack Obama's correct statement, intentionally taken out of context by the right: "You didn't build that" (referring to the roads and bridges that businesses depend on). [2] [0] https://www.amazon.com/Thousand-Small-Sanities-Adventure-Liberalism/dp/154169936X https://www.amazon.com/Thousand-Small-Sanities-Adventure-Lib... (not an affiliate link). [1] https://www.goodreads.com/quotes/439207-there-is-nobody-in-this-country-who-got-rich-on https://www.goodreads.com/quotes/439207-there-is-nobody-in-t... — also YouTube: https://www.youtube.com/watch?v=60fQCDqXfq0 https://www.youtube.com/watch?v=60fQCDqXfq0 [2] https://www.wikiwand.com/en/You_didn%27t_build_that https://www.wikiwand.com/en/You_didn%27t_build_that
NullPrefix 7y ago
Wealthy people don't consume more goods than average people.
- gremlinsinc 7y ago
  They do IF you consider all out-flow as taxable goods/services... i.e. E.g. estate, investments, property, employee wages, land (would be calculated differently...not on spend but on just ownership), purchases. Investment firms would pay the tax on money paid out to investor, so it'd need to put that rate in there somewhere. If you combine this with UBI + Single Payer + Free College -- then everyone will be able to afford the taxes they will pay on goods/services at the store/etc. If the lowest safety net keeps just about everyone around 35-45k with medical safety, then they can probably afford 5-10k in VAT fees, and if they no longer peg benefits to companies -- people have more fluidity about where they work based on the fact they aren't going to lose their medicare for all. This also means those who are fine not working and living on UBI ALSO drive up the rate of pay for those who DO want to work because supply/demand of workers will go down.
- todd8 7y ago
  Yes they do.
- AdrianB1 7y ago
  They don't consume more goods, they consume goods of much higher value (ex: luxury items and fine cuisine) and services so in the end they will pay much more taxes. What else do you think they spend the money on, if not goods and services?
  - rorykoehler 7y ago
    Equities (stocks), fixed Income (bonds), real estate, commodities, futures and other financial derivatives mainly. Basically they spend their money on investments.
    - AdrianB1 7y ago
      Spend and invest in the same sentence: not good.
rorykoehler 7y ago
Asset tax in combination with negative interest rates is the most equitable model in a capitalist society like ours. Use the proceeds to fund a universal basic income.
- AdrianB1 7y ago
  This is a complete nonsense: it is mixing an economic model with a taxation, gets to social ideas that are anti-economic (why bother having an economy at all if you do redistribution?) and throw the magic word "equitable" in it, all without any supporting argument. It is amazing, better crafted than demo scene.
  - deleted 7y ago
    [deleted]
  - rorykoehler 7y ago
    What do you think would happen with an aggressive capital gains tax (including on unrealized gains) and negative interest rates?
    - sokoloff 7y ago
      I'd expect movement of capital away from that economy and a 20+% recession in that economy.
      - rorykoehler 7y ago
        Where would capital move?
        AdrianB1 7y ago
        If that is the only argument, it does not hold.
        rorykoehler 7y ago
Retric 7y ago
Consumption taxes are income taxes with a loophole for whatever you exclude from the consumption side of thing. Exclude land purchases but not rent, and people have a huge incentive to buy land. The stated loophole is investment, again that’s equivalent to allowing people to deduct investments from income tax which clearly favors the wealthy. In the end countries spend a high percentage of GDP on thing people actually want. Everything after that is just deciding who pays for it. PS: Consumption taxes also push people to vacation and retire in different countries.
- infamia 7y ago
  A consumption tax also gives the working poor tremendous levers to better their circumstances. They aren't taxed on necessities for food and folks who make under a specified amount don't pay the tax at all. Most of the potential issues you pointed out impact any taxation system (i.e. carve outs for the wealthy) because they're political/power problems.

You may be a fan of replacing the income tax with a consumption tax. https://en.wikipedia.org/wiki/Consumption_tax https://en.wikipedia.org/wiki/Consumption_tax

glennpratt 7y ago

Sales tax in the US is generally the most regressive tax we have, so I'd say no. Are you suggesting something different?

JshWright 7y ago

That would be much, much worse. It would be the exact opposite of what the GP comment suggested.

thaumasiotes 7y ago
> It would be the exact opposite of what the GP comment suggested. Huh? That comment suggested > The problem is that under the current tax scheme in the US people are taxed on their total income and companies are taxed on their profits. and > I think if we could just get rid of the income tax somehow (like have a land tax instead) the country would be so much better off. Replacing the income tax with a consumption tax follows directly from both of those points. As to the first, it replaces the system where companies are taxed on profits and people are taxed on revenue with a system where companies are taxed on profits and people are taxed on profits. As to the second, obviously, it gets rid of the income tax. What were you thinking your GP comment said?
- cowsandmilk 7y ago
  > people are taxed on profits Setting aside the oddity of talking about profit of people, given constant income, you pay less consumption tax as your profit goes up. Consumption is expenses, profit = income - expenses. Rearranging. Consumption tax = y * expenses = y * (income - profit) where y is the consumption tax rate. So, as profits increase, expenses decrease and consumption tax goes down.
  - thaumasiotes 7y ago
    > Setting aside the oddity of talking about profit of people, given constant income, you pay less consumption tax as your profit goes up. > Consumption is expenses, profit = income - expenses. No, a person's profits are their consumption. Savings are not profits -- they don't benefit you at all. There's a chain going like this: Company spends money so that company receives (more) money so that person receives money so that person can spend money. The goal of the company is to accumulate money for someone else and that's how its profits are measured. Profit is money the company loses by paying it out to its owners. (Money the company loses by paying it out to non-owners is "expenses".) The goal of the person is to spend money on things it can actually use; for the person, money is an accounting tool, not an end goal. But we can identify profit the same way. Money that you lose by paying it out to yourself ("consumption") is your profit; savings is just money you might one day allocate to profit.

riddlemethat 7y ago

From a values perspective I like this approach. I don’t like that other people get to determine how much of the capital I pull in gets to be mine after all. On the other hand, I don’t think it would create much tax revenue. We only gave our government the right to institute an income tax thanks to the idiots who banned alcohol. Before that the feds relied on alcohol taxes to survive. Play stupid games, win stupid prizes. https://www.heinzhistorycenter.org/blog/at-the-history-center/beer-taxes-prohibitions-connection-national-income-tax https://www.heinzhistorycenter.org/blog/at-the-history-cente...

dctoedt 7y ago
> I don’t like that other people get to determine how much of the capital I pull in gets to be mine after all. Let me paraphrase Adam Gopnik's recent book, "A Thousand Small Sanities: The Moral Adventure of Liberalism": When you talk about "the capital I pull in," you're risking celebrating the driver while taking cars, roads, and gasoline for granted. [0] See also Elizabeth Warren's famous talk in her first Senate campaign: "There is nobody in this country who got rich on their own. Nobody. You built a factory out there - good for you. But I want to be clear. You moved your goods to market on roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory... Now look. You built a factory and it turned into something terrific or a great idea - God bless! Keep a hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.” [1] And of course Barack Obama's correct statement, intentionally taken out of context by the right: "You didn't build that" (referring to the roads and bridges that businesses depend on). [2] [0] https://www.amazon.com/Thousand-Small-Sanities-Adventure-Liberalism/dp/154169936X https://www.amazon.com/Thousand-Small-Sanities-Adventure-Lib... (not an affiliate link). [1] https://www.goodreads.com/quotes/439207-there-is-nobody-in-this-country-who-got-rich-on https://www.goodreads.com/quotes/439207-there-is-nobody-in-t... — also YouTube: https://www.youtube.com/watch?v=60fQCDqXfq0 https://www.youtube.com/watch?v=60fQCDqXfq0 [2] https://www.wikiwand.com/en/You_didn%27t_build_that https://www.wikiwand.com/en/You_didn%27t_build_that

NullPrefix 7y ago

Wealthy people don't consume more goods than average people.

gremlinsinc 7y ago
They do IF you consider all out-flow as taxable goods/services... i.e. E.g. estate, investments, property, employee wages, land (would be calculated differently...not on spend but on just ownership), purchases. Investment firms would pay the tax on money paid out to investor, so it'd need to put that rate in there somewhere. If you combine this with UBI + Single Payer + Free College -- then everyone will be able to afford the taxes they will pay on goods/services at the store/etc. If the lowest safety net keeps just about everyone around 35-45k with medical safety, then they can probably afford 5-10k in VAT fees, and if they no longer peg benefits to companies -- people have more fluidity about where they work based on the fact they aren't going to lose their medicare for all. This also means those who are fine not working and living on UBI ALSO drive up the rate of pay for those who DO want to work because supply/demand of workers will go down.
todd8 7y ago
Yes they do.
AdrianB1 7y ago
They don't consume more goods, they consume goods of much higher value (ex: luxury items and fine cuisine) and services so in the end they will pay much more taxes. What else do you think they spend the money on, if not goods and services?
- rorykoehler 7y ago
  Equities (stocks), fixed Income (bonds), real estate, commodities, futures and other financial derivatives mainly. Basically they spend their money on investments.
  - AdrianB1 7y ago
    Spend and invest in the same sentence: not good.

rorykoehler 7y ago

Asset tax in combination with negative interest rates is the most equitable model in a capitalist society like ours. Use the proceeds to fund a universal basic income.

AdrianB1 7y ago
This is a complete nonsense: it is mixing an economic model with a taxation, gets to social ideas that are anti-economic (why bother having an economy at all if you do redistribution?) and throw the magic word "equitable" in it, all without any supporting argument. It is amazing, better crafted than demo scene.
- deleted 7y ago
  [deleted]
- rorykoehler 7y ago
  What do you think would happen with an aggressive capital gains tax (including on unrealized gains) and negative interest rates?
  - sokoloff 7y ago
    I'd expect movement of capital away from that economy and a 20+% recession in that economy.
    - rorykoehler 7y ago
      Where would capital move?
      - AdrianB1 7y ago
        If that is the only argument, it does not hold.
        rorykoehler 7y ago

Retric 7y ago

Consumption taxes are income taxes with a loophole for whatever you exclude from the consumption side of thing. Exclude land purchases but not rent, and people have a huge incentive to buy land. The stated loophole is investment, again that’s equivalent to allowing people to deduct investments from income tax which clearly favors the wealthy. In the end countries spend a high percentage of GDP on thing people actually want. Everything after that is just deciding who pays for it. PS: Consumption taxes also push people to vacation and retire in different countries.

infamia 7y ago
A consumption tax also gives the working poor tremendous levers to better their circumstances. They aren't taxed on necessities for food and folks who make under a specified amount don't pay the tax at all. Most of the potential issues you pointed out impact any taxation system (i.e. carve outs for the wealthy) because they're political/power problems.