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It actually makes much more sense to use a uniform sales tax: (1) If you spend more, you're taxed more. Obviously this is better for poorer people, who spend l

by oDot 6y ago

It actually makes much more sense to use a uniform sales tax: (1) If you spend more, you're taxed more. Obviously this is better for poorer people, who spend less, but also for rich yet reserved people, who keep most of their money in the bank (which lends it) and are earning an income (=productive). Both will not penalized. (2) It's much hard to raise, because people will just stop buying stuff, which is much easier than quitting a job to not pay income tax (3) Being uniform, it doesn't choose favorites. Everything is taxed the same

blahbhthrow3748 6y ago
Sales tax fails to capture the accumulation of capital, so (1) is kind of bogus. If you make 100 billion dollars and invest it you and several generations of your family coild live comfortably without ever working and your tax burden would only depend on your spending. A sales-only tax incentivized rent seeking, basically, because the rentiers pay the same taxes as the renters while accumulating capital.
- LVTfan 6y ago
  and so often it gets invested in land, which includes not just the sites under our feet, but vital natural resources, the kind that are finite in supply.
  - oDot 6y ago
    If you take a look at the data, "investing in land" wasn't as luxurious as it is today, due to government actions inflating the market.
- oDot 6y ago
  But what is investing other the attempt (aware or unaware) of creating wealth? When people make money, it means someone bought something from them. This means they had to create something other want. That can be a service, a good, or a house for rent. Remember that those who rent houses are people who can't afford to buy them, so they need someone with capital to manage the house. I am renting myself and I much prefer it at the moment to owning a house. You want billionaires to keep their money, because unless they put it under their mattress, they are growing the economy, which means lowering prices and raising quality.
geofft 6y ago
> rich yet reserved people, who keep most of their money in the bank (which lends it) and are earning an income (=productive) ... will not penalized. This goes against just about every standard defense of the ability to be rich: that rich people are job creators, that they power the economy by buying things, etc. Why should we discourage them from employing people and buying things? I don't want a loan (that needs to be repaid) from a bank from a rich person, I want the rich person to either employ me or buy goods and services from me. Actually, that's another point - does employment incur your "sales" tax? If not, it's more advantageous to hire a private chef or driver than to pay for a restaurant meal or a taxi trip, which makes the tax regressive - there's a discontinuity when you're able to hire someone instead of getting a service from a business.
- andrepd 6y ago
  Replace "the rich" with "Lords" and your post is an adequate defense of feudal society. In other words, you're thinking "inside" the system, i.e. justifying the system with itself.
  - geofft 6y ago
    Well, the position I'm arguing against is that the lords should be left alone, that it's better for them to have their fiefdoms be isolated places than to actually employ anyone or purchase anything, and that we should use tax law to incentivize the lords to never interact with the peasants. (Or in other words - my actual position that the nobility should be abolished. I'm just surprised to see someone say not only that it should stay, but that the world would be better if they didn't provide any of the benefits people usually claim in defense of feudal society, so I'm trying to understand what their position is.)
- oDot 6y ago
  An economy is driven by production, not consumption.
  - geofft 6y ago
    Sure. But the standard way of driving production is private consumption. Given that you have disincentivized the poor from consuming, what is the counterbalance that incentivizes the rich to produce? (There are a couple of standard answers, including government consumption / public works projects, that can address this.)
DrAwdeOccarim 6y ago
The issue I've always had with the uniform sales tax idea is that poorer you are, the larger percentage of your money you pay in taxes. As a total cost, it's ultimately regressive.
zozbot234 6y ago
Really, the thing is that the whole "single tax idea" is a bit misguided. A consumption tax (sales tax) is great, but there are some sensible reasons to tax capital income/investment to some extent, too. Mostly, because it correlates somewhat with basic ability-to-pay; also, because people might try to disguise income/expenses as investment-related in order to shield them from taxation, and having a more uniform tax base helps prevent this. But the broad principle that capital investment should bear a lower tax burden is quite correct. And one you've accepted that general principle, it makes a lot of sense to tax rent-generating assets like land and spectrum rights (since those are not really "capital" in the first place), which is pretty much the Georgist idea.
- oDot 6y ago
  > Mostly, because it correlates somewhat with basic ability-to-pay; What do you care about ability-to-pay? > ...also, because people might try to disguise income/expenses as investment-related in order to shield them from taxation, and having a more uniform tax base helps prevent this. You can't shield from that tax. All entities pay, for every sale, no refunds.
  - zozbot234 6y ago
    > What do you care about ability-to-pay? Because it helps align incentives. You can have a 7% tax on sales, or a 5% tax on sales plus a 2% tax based on a noisy correlate. The latter will raise more revenue at a lower excess cost. > You can't shield from that tax. All entities pay, for every sale, no refunds. That would make it a tax on revenue, which is quite distortionary indeed and generally considered a last-resort. (Or you could have a VAT, where all entities pay but tax paid on non-final sales is refunded. VATs are quite good but not totally free of this kind of gaming.)
    - oDot 6y ago
      > Because it helps align incentives. You can have a 7% tax on sales, or a 5% tax on sales plus a 2% tax based on a noisy correlate. The latter will raise more revenue at a lower excess cost. I see. Well we seems to have different goals. As I see it, government is mostly good at destroying wealth, and so I aim to minimize their revenue. > That would make it a tax on revenue, which is quite distortionary indeed and generally considered a last-resort. (Or you could have a VAT, where all entities pay but tax paid on non-final sales is refunded. VATs are quite good but not totally free of this kind of gaming.) I am essentially suggesting a non-refundable, uniform VAT

by oDot 6y ago

blahbhthrow3748 6y ago

Sales tax fails to capture the accumulation of capital, so (1) is kind of bogus. If you make 100 billion dollars and invest it you and several generations of your family coild live comfortably without ever working and your tax burden would only depend on your spending. A sales-only tax incentivized rent seeking, basically, because the rentiers pay the same taxes as the renters while accumulating capital.

LVTfan 6y ago
and so often it gets invested in land, which includes not just the sites under our feet, but vital natural resources, the kind that are finite in supply.
- oDot 6y ago
  If you take a look at the data, "investing in land" wasn't as luxurious as it is today, due to government actions inflating the market.
oDot 6y ago
But what is investing other the attempt (aware or unaware) of creating wealth? When people make money, it means someone bought something from them. This means they had to create something other want. That can be a service, a good, or a house for rent. Remember that those who rent houses are people who can't afford to buy them, so they need someone with capital to manage the house. I am renting myself and I much prefer it at the moment to owning a house. You want billionaires to keep their money, because unless they put it under their mattress, they are growing the economy, which means lowering prices and raising quality.

geofft 6y ago

> rich yet reserved people, who keep most of their money in the bank (which lends it) and are earning an income (=productive) ... will not penalized. This goes against just about every standard defense of the ability to be rich: that rich people are job creators, that they power the economy by buying things, etc. Why should we discourage them from employing people and buying things? I don't want a loan (that needs to be repaid) from a bank from a rich person, I want the rich person to either employ me or buy goods and services from me. Actually, that's another point - does employment incur your "sales" tax? If not, it's more advantageous to hire a private chef or driver than to pay for a restaurant meal or a taxi trip, which makes the tax regressive - there's a discontinuity when you're able to hire someone instead of getting a service from a business.

andrepd 6y ago
Replace "the rich" with "Lords" and your post is an adequate defense of feudal society. In other words, you're thinking "inside" the system, i.e. justifying the system with itself.
- geofft 6y ago
  Well, the position I'm arguing against is that the lords should be left alone, that it's better for them to have their fiefdoms be isolated places than to actually employ anyone or purchase anything, and that we should use tax law to incentivize the lords to never interact with the peasants. (Or in other words - my actual position that the nobility should be abolished. I'm just surprised to see someone say not only that it should stay, but that the world would be better if they didn't provide any of the benefits people usually claim in defense of feudal society, so I'm trying to understand what their position is.)
oDot 6y ago
An economy is driven by production, not consumption.
- geofft 6y ago
  Sure. But the standard way of driving production is private consumption. Given that you have disincentivized the poor from consuming, what is the counterbalance that incentivizes the rich to produce? (There are a couple of standard answers, including government consumption / public works projects, that can address this.)

DrAwdeOccarim 6y ago

The issue I've always had with the uniform sales tax idea is that poorer you are, the larger percentage of your money you pay in taxes. As a total cost, it's ultimately regressive.

zozbot234 6y ago

Really, the thing is that the whole "single tax idea" is a bit misguided. A consumption tax (sales tax) is great, but there are some sensible reasons to tax capital income/investment to some extent, too. Mostly, because it correlates somewhat with basic ability-to-pay; also, because people might try to disguise income/expenses as investment-related in order to shield them from taxation, and having a more uniform tax base helps prevent this. But the broad principle that capital investment should bear a lower tax burden is quite correct. And one you've accepted that general principle, it makes a lot of sense to tax rent-generating assets like land and spectrum rights (since those are not really "capital" in the first place), which is pretty much the Georgist idea.

oDot 6y ago
> Mostly, because it correlates somewhat with basic ability-to-pay; What do you care about ability-to-pay? > ...also, because people might try to disguise income/expenses as investment-related in order to shield them from taxation, and having a more uniform tax base helps prevent this. You can't shield from that tax. All entities pay, for every sale, no refunds.
- zozbot234 6y ago
  > What do you care about ability-to-pay? Because it helps align incentives. You can have a 7% tax on sales, or a 5% tax on sales plus a 2% tax based on a noisy correlate. The latter will raise more revenue at a lower excess cost. > You can't shield from that tax. All entities pay, for every sale, no refunds. That would make it a tax on revenue, which is quite distortionary indeed and generally considered a last-resort. (Or you could have a VAT, where all entities pay but tax paid on non-final sales is refunded. VATs are quite good but not totally free of this kind of gaming.)
  - oDot 6y ago
    > Because it helps align incentives. You can have a 7% tax on sales, or a 5% tax on sales plus a 2% tax based on a noisy correlate. The latter will raise more revenue at a lower excess cost. I see. Well we seems to have different goals. As I see it, government is mostly good at destroying wealth, and so I aim to minimize their revenue. > That would make it a tax on revenue, which is quite distortionary indeed and generally considered a last-resort. (Or you could have a VAT, where all entities pay but tax paid on non-final sales is refunded. VATs are quite good but not totally free of this kind of gaming.) I am essentially suggesting a non-refundable, uniform VAT