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Sales taxes are regressive and affect the poorest the most. Income taxes (can be) progressive. Progressive taxation benefits society at large.

roenxi 5y ago
> Progressive taxation benefits society at large... ... claim the poor and the people who make their money off capital gains. Who gets to decide what "good for society" means in context of taxation is possibly the most political question out there. It is not at all obvious that making the most productive people pay most of the burden gets to the best outcome.
- dnautics 5y ago
  the more people's lives you are affecting in a positive sense the more likely it is you are making a very high income. the opposite arrow is not necessarily true, but one wonders if there isn't a 'baby with the bathwater' effect with progressive taxation.
  - tluyben2 5y ago
    As OSS dev this very often not true for instance: there is a lot of OSS having a positive effect on a huge amount of people and yet the authors scraping by. Paying for OSS should be a tax write off aka charity. Would stimulate more people to just open source it all.
    - dnautics 5y ago
      You assume that the value in this case is created merely by its existence but software in a vacuum is worthless. The value in software is also created by orgs that choose to use the software, by distribution networks. It must be reduced to practice. As a software dev that can be a hard pill to swallow.
      - tluyben2 5y ago
        Yes, agreed. But does that change the case?
        dnautics 5y ago
        Yes? I am asserting that you are overestimating the value of the programmer, which is one axis of the correlation I suggest.
- unethical_ban 5y ago
  Being highly paid or at the top of a management structure does not equal being more productive. It is one philosophy that there exists some line, some fuzzy DMZ that gets crossed between being merely "wealthy and more prosperous than others" and obscene. Colloquially that seems to be "billionaire" but I bet a lot of people on the farther-left would define is somewhere north of $10 million. Especially in a country so far behind the rest of the developed world with regards to access to health-care and housing for so many millions of people.
  - roenxi 5y ago
    Billionaires don't generally pay progressive income taxes. They're part of the 'money off capital gains' crowd.
NickM 5y ago
Sales taxes can be done in a progressive way if you calculate total purchases for the year as (reported income minus reported money added to savings). Though, of course, you then need even more reporting than we already have, but it would have the upside of no longer disincentivizing work like the current system does, and rewarding savings over spending too.
- NickM 5y ago
  Not sure why I got downvoted; while it's not super well-known, this is a real and potentially feasible idea that has been studied by economists and has had papers written about it. You can absolutely apply tax brackets to sales tax to avoid making it a regressive tax, it's just a little bit more administratively complex.
  - gamblor956 5y ago
    There are a number of reasons for your downvotes. For starters, income taxes don't disincentive work and are in fact lower now than they were during our greatest periods of economic growth. And from the perspective of someone who actually works in tax: the "FairTax" simply pushes all the complexity to everyday transactions, instead of minimizing it to periodic transactions occurring 1-2 times a month (with reporting once a year). It would hugely disincentive paying for actual things, and artificially incentivize (untaxed) services over (heavily taxed) goods. Moreover, the "FairTax" rate would be 30% or more on all purchases. Not only would the FairTax would obscenely regressive in effect, but a tax rate that large would push a substantial portion of the economy underground! There's so much wrong with "FairTax" that it should be called "Ridiculous Tax."
    - dragonwriter 5y ago
      > income taxes don't disincentive work While I agree with much of your post, current taxes on income (featuring reduced taxes on capital income, exclusion of most income from gifts/inheritances, and supplemental taxes on labor income [“payroll tax”]) absolutely disincentivize working for income if you have choices of how to get income. Now, lots of people don't have choices and are stuck with work, but that doesn't mean there is no disincentive effect. (Of course, “treat income as income” makes this much fairer than the status quo, much less the laughably misnamed “FairTax”.)
mrfusion 5y ago
I figure you can make them progressive by taxing luxury items and not necessities. Obviously there’s a ton of gray area but it could still help a lot.
nightski 5y ago
This is alleviated with a probate and has been studied in depth ala the FairTax. It's FUD and is holding us back. Not to mention there are many efficiencies that come with this system which would likely cause prices to even out over time near their current levels or just slightly higher.

roenxi 5y ago

> Progressive taxation benefits society at large... ... claim the poor and the people who make their money off capital gains. Who gets to decide what "good for society" means in context of taxation is possibly the most political question out there. It is not at all obvious that making the most productive people pay most of the burden gets to the best outcome.

dnautics 5y ago
the more people's lives you are affecting in a positive sense the more likely it is you are making a very high income. the opposite arrow is not necessarily true, but one wonders if there isn't a 'baby with the bathwater' effect with progressive taxation.
- tluyben2 5y ago
  As OSS dev this very often not true for instance: there is a lot of OSS having a positive effect on a huge amount of people and yet the authors scraping by. Paying for OSS should be a tax write off aka charity. Would stimulate more people to just open source it all.
  - dnautics 5y ago
    You assume that the value in this case is created merely by its existence but software in a vacuum is worthless. The value in software is also created by orgs that choose to use the software, by distribution networks. It must be reduced to practice. As a software dev that can be a hard pill to swallow.
    - tluyben2 5y ago
      Yes, agreed. But does that change the case?
      - dnautics 5y ago
        Yes? I am asserting that you are overestimating the value of the programmer, which is one axis of the correlation I suggest.
unethical_ban 5y ago
Being highly paid or at the top of a management structure does not equal being more productive. It is one philosophy that there exists some line, some fuzzy DMZ that gets crossed between being merely "wealthy and more prosperous than others" and obscene. Colloquially that seems to be "billionaire" but I bet a lot of people on the farther-left would define is somewhere north of $10 million. Especially in a country so far behind the rest of the developed world with regards to access to health-care and housing for so many millions of people.
- roenxi 5y ago
  Billionaires don't generally pay progressive income taxes. They're part of the 'money off capital gains' crowd.

NickM 5y ago

Sales taxes can be done in a progressive way if you calculate total purchases for the year as (reported income minus reported money added to savings). Though, of course, you then need even more reporting than we already have, but it would have the upside of no longer disincentivizing work like the current system does, and rewarding savings over spending too.

NickM 5y ago
Not sure why I got downvoted; while it's not super well-known, this is a real and potentially feasible idea that has been studied by economists and has had papers written about it. You can absolutely apply tax brackets to sales tax to avoid making it a regressive tax, it's just a little bit more administratively complex.
- gamblor956 5y ago
  There are a number of reasons for your downvotes. For starters, income taxes don't disincentive work and are in fact lower now than they were during our greatest periods of economic growth. And from the perspective of someone who actually works in tax: the "FairTax" simply pushes all the complexity to everyday transactions, instead of minimizing it to periodic transactions occurring 1-2 times a month (with reporting once a year). It would hugely disincentive paying for actual things, and artificially incentivize (untaxed) services over (heavily taxed) goods. Moreover, the "FairTax" rate would be 30% or more on all purchases. Not only would the FairTax would obscenely regressive in effect, but a tax rate that large would push a substantial portion of the economy underground! There's so much wrong with "FairTax" that it should be called "Ridiculous Tax."
  - dragonwriter 5y ago
    > income taxes don't disincentive work While I agree with much of your post, current taxes on income (featuring reduced taxes on capital income, exclusion of most income from gifts/inheritances, and supplemental taxes on labor income [“payroll tax”]) absolutely disincentivize working for income if you have choices of how to get income. Now, lots of people don't have choices and are stuck with work, but that doesn't mean there is no disincentive effect. (Of course, “treat income as income” makes this much fairer than the status quo, much less the laughably misnamed “FairTax”.)

mrfusion 5y ago

I figure you can make them progressive by taxing luxury items and not necessities. Obviously there’s a ton of gray area but it could still help a lot.

nightski 5y ago

This is alleviated with a probate and has been studied in depth ala the FairTax. It's FUD and is holding us back. Not to mention there are many efficiencies that come with this system which would likely cause prices to even out over time near their current levels or just slightly higher.