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How about we just replace the IRS instead? 5% flat VAT tax. No exceptions. No tax breaks. No more tax incentives. EDIT: Ope, my original point is a flat tax. I

How about we just replace the IRS instead? 5% flat VAT tax. No exceptions. No tax breaks. No more tax incentives. EDIT: Ope, my original point is a flat tax. I said VAT as I was trying to decide 'what' to tax in my head, and it seems thats what people are latching onto, instead of my three sentences following of "No exceptions".

hindsightbias 5y ago
Tax law exists codify the exemptions for the rich. Gates, Bezos, billionaires/etc don’t pay taxes, you do. You can get rid of the IRS the day after you get rid of the rich.
- WalterBright 5y ago
  The vast bulk of Federal income tax revenue still comes from the rich. Getting rid of them isn't going to help the rest.
nathanvanfleet 5y ago
Making a really strong argument here.
AnimalMuppet 5y ago
In general, I like the idea. Couple it with a UBI to protect the poor, and I like it a lot. (The poor pay very little income tax. They would have to pay the VAT. That would hurt them compared to the current system.) But that won't get you where you say you want to go. Who's going to collect that VAT, and make sure that everybody pays it? The IRS. Your approach would get rid of the tax code, but not the IRS. (In getting rid of the tax code, it would let you get rid of the computer code in question, though.) The other problem is, you can't implement a "soak the rich" approach with a VAT. And currently, there's a lot of angst around wealth inequality, and most plans to do something about it involve taxing the rich more than everyone else. So your idea is fighting an enormous political headwind. You could propose something like VAT + income tax for those who make over $1 million/year or something...
- exabrial 5y ago
  > You could propose something like VAT + income tax for those who make over $1 million/year or something... What did a person making $1m/year do wrong they are penalized unfairly against another person that doesn't? I have a feeling, much like now, all this accomplishes in reality is the rich hire good enough accounts to hide their largest sums from the IRS. That leaves the middle class and poor once again bearing everything... and we're back to where we started. Carving out 0 exceptions and sticking to it ensures that that literally nobody can say they are being treated unfairly.
  - AnimalMuppet 5y ago
    Well, spin it how you will, but we've had this idea of a "progressive" tax system for quite a while now. ("Progressive" in the sense that those who make more, pay more, presumably because they can afford it more.) Our tax system has been that way for more than a century. So, you can call that "penalized unfairly", and others can call it "paying their fair share", but the reality is that it is the current default option. If you want a different system, you're going to need a lot better argument than "penalized unfairly". You're going to need an argument that can move the majority of voters, most of whom do not make more than $1 million/year. My previous point wasn't anything about "should", by the way. I was merely saying that, in the current political climate, not hitting the rich harder was something that would make it harder for a VAT-only scheme to become reality.
    - jfengel 5y ago
      You're going to need an argument that can move the majority of voters, most of whom do not make more than $1 million/year. Note that a lot of voters are convinced that they will make $1 million/year some day. Perhaps not today, but some day, and they seem happy to pay more today to ensure that they are not "penalized unfairly" when it's their turn. This is not necessarily a rational approach, since very few of them will ever earn that much money. But if your goal is to get votes, you can go a very, very long way with "penalized unfairly". Note how many oppose an inheritance tax that they'll never pay, simply by the expedient of dubbing it a "death tax". The "penalized unfairly" argument wouldn't wash with most economists, but there's not all that many of them. And nobody really listens to them anyway.
TAForObvReasons 5y ago
VAT is generally considered to be regressive (lower and middle class people tend to spend a larger percentage of their income and therefore are disproportionally affected). The taxation system reflects our societal values to an extent: tax breaks incentivize some activities and excess taxes disincentivize. Pure VAT disincentivizes spending and rewards wealth hoarding.
- jonnycomputer 5y ago
  A tax system can be regressive and more efficient. The regressivity of a tax system can be offset by benefits, such as UBI, etc. Why is it that Europe has less income inequality and VAT? Because it is offset with a generous welfare state.
  - TAForObvReasons 5y ago
    European countries also have significantly higher income and other taxes. For example, in Germany, the marginal personal tax rate above 57K euros per year is 42% and the top rate is 45%. In the US, at $100K the marginal rate is 24% and the top marginal rate (above $540K) is 37%. That 8% difference at the top probably explains the income inequality situation moreso than any other difference
    - noodlesUK 5y ago
      I hear this from a lot of Europeans (I am also European), but it’s not really an apples to apples comparison. In the UK for instance we have a higher income tax rate of 40%. The US 37% rate is lower (but also comes in at a way higher threshold). However, in the US you also have state income taxes which range from 0-12ish percent, so your overall tax rate can end up higher
      - jonnycomputer 5y ago
        My main experience with taxes in Europe is in Poland, and that second hand from my mother-in-law, mostly. In the US, a typical tax payer will pay federal income tax, federal medicare and social security payroll taxes, state income tax (which varies a lot by state, but can be much more regressive than the federal income tax), and municipal or county property taxes (usually real-estate, but may also include things like vehicles), and a state+municipal sales tax on purchases. Not to mention various other taxes specific to things like gasoline, alcohol, tobacco, etc, and various usage fees for toll roads, etc. I'm sure things are similar in Europe in many ways, and different in others, but it can be a little hard to figure out how much I pay in tax total in a year, and I'm hardly an unusual case. All of this to really underline your point that just talking about US income tax is too incomplete a picture for the purpose of comparison.
jakearmitage 5y ago
VAT hurts the poor and the middle class. Seems like a bad move when we have billionaires playing around with rockets in space.
- WalterBright 5y ago
  Rich people playing with airplanes is how we wound up with cheap global air travel.
  - csb6 5y ago
    That is misleading and misses most of the story. A large reason we have cheap global air travel is due to government intervention, research, and military development since the first World War. The U.S. (and other) governments have massively subsidized the development of the aerospace industry for decades and built/funded key infrastructure such as airports. "Rich guys playing with airplanes" is not how the complex system of air travel was created. Hell, the guys who invented airplanes weren't even rich.
    - WalterBright 5y ago
      > Hell, the guys who invented airplanes weren't even rich. Sure, the Wrights were not rich. But Bill Boeing was. And Howard Hughes. Donald Douglas got financing to start Douglas. Allan Lockheed pretty much started from scratch. McDonnell developed its passenger jets from scratch. Airliner travel was a paying concerned because of rich passengers. Flying for ordinary people did not come about until the 1960s. BTW, jet engines were conceived and developed by private industry, because the government saw no value in them. Until the government saw flying jet aircraft. P.S. The government airplane project, the Langley Aerodrome, cost something like twenty times what the Wright Flyer did, and simply fell into the Potomac like a sack of wet cement.
tablespoon 5y ago
> How about we just replace the IRS instead? 5% flat VAT tax. No exceptions. No tax breaks. No more tax incentives. How about we not? And instead of a some VAT flat-tax nonsense, how about progressive income and wealth taxes with no tax breaks or incentives at the higher brackets? Now that we've settled that, lets talk about the IRS's software. Edit: > EDIT: Ope, my original point is a flat tax. I said VAT as I was trying to decide 'what' to tax in my head, and it seems thats what people are latching onto, instead of my three sentences following of "No exceptions". That doesn't improve your point as much as you think it does. It's still the kind of tax proposal that the wealthy put out because it's friendly to them (e.g. https://en.wikipedia.org/wiki/Steve_Forbes#Campaigns_for_president https://en.wikipedia.org/wiki/Steve_Forbes#Campaigns_for_pre...).
- scrubs 5y ago
  I'm not seeing much action, but this is one area where Biden has the right talk. The rich (define north of $500k/yr) can play games. Here's two off hand I know in my circle: - a family has non-trivial assets and income in three states but for federal and tax purposes they live in TN where's there's no state tax. The other two states are def not cheap compared to TN. This was setup by buying a house and having a part time job in TN for about 1 year to establish bonafide residency much of which stopped once gained - business owner takes annual trip to Florida for business training with board/ management. That's a write off. But with some fancy accounting the owner smiles saying once they open the meeting with lunch, they left and spent the rest of week playing golf. Whether the company or individual the rich guys are taxed less than me. The bottom 40% (??) don't pay much either. That leaves the upper middle class to foot a lot of the hill. Well I'm calling BS on that.
- deeptote 5y ago
  Agreed, consumption taxes overwhelmingly favor the rich.
  - namelessoracle 5y ago
    Im pretty sure existing tax laws favor the rich right now too
glerk 5y ago
If we can dream of reforming the whole system, how about a voluntary tax in exchange for a governance stake? Like, the more tax I pay, the more say I have in the decisions my government makes?
- jlawson 5y ago
  Plutocracy.
  - glerk 5y ago
    Yep, plutocracy in the open without loopholes, lobbying and corruption. Just directly weigh the votes by the amount of participation to the common pot.
- meetups323 5y ago
  We already do, those taxes just go directly to the salaries of elected officials.
- exabrial 5y ago
  In my opinion, I think a completely voluntary tax system is what we have to achieve as a race to get to the next level as a civilization. I think a flat tax is a step in the right direction because it eliminates an entire swath of corruption.
  - colejohnson66 5y ago
    The US tried a voluntary tax system with the Articles of Confederation. It didn’t work.
- night862 5y ago
  What about instead, make voting rights a promisory note which can be traded and sold? Eg, "My share of the House Rep vote from this Friday until next Tuesday" can be traded until "This Friday" for a "Burger" at Double Burger, or maybe some cash.
- gleenn 5y ago
helloooooooo 5y ago
So you want to cause the greatest impact to those who spend the largest portion of income, rather than invest? This is frankly a terrible policy proposal and would only serve to harm the least well off. Leave it to Silicon Valley types who make a large enough fortune to retire by 40 to not understand the needs of those less well off.
ghaff 5y ago
Wealthier people would love it. This was a pretty popular conservative tax proposal back in the 1980s or so. (Actually a flat VAT tax is even more regressive than a flat tax generally.)
jonnycomputer 5y ago
Its not that I disagree, I think the VAT is much better than an income tax; but that has nothing to do with the IRS. The IRS would still have to administer the collection of tax revenue.
deleted 5y ago
[deleted]
pooper 5y ago
> No tax breaks. No more tax incentives. While I strongly disagree with the rest of the comment, I also am furiously in support of getting rid of all credits, deductions, exemptions, incentives, and so on. I think we need a VAT at the federal government level but we also need to increase the federal income tax on everyone. I would like this tax hike to pay for Medicare for all. Problem is that over sixty percent of the people seem satisfied with the current status of healthcare. Also I imagine they tend to vote in higher proportion than people like me. I have no idea how to fix this situation. Anyone have any thoughts?
- arghnoname 5y ago
  I used to be vehemently in favor of medicare for all. I still see all the many problems in the American healthcare system I ever did, but I don't want medicare for all anymore. My faith in our political system and its authoritarian impulses makes the thought of our government having a monopoly on healthcare unacceptable to me. As someone who has been on both sides of this issue, I think this is common. It isn't about loving the private insurance companies--everyone knows they suck--it's about trusting that the government solution will be better. With our government, can you honestly and with full confidence say it would be? My confidence totally flipped. I'm more confident it would be a disaster than not and then would be weaponized politically.
czbond 5y ago
"I will replace you with a small shell script". We only need taxes because of government. How about a law that shrinks the size of all governmental budgets and personnel by 3% every year until we decide to stop? We'll make do, I promise. Then our taxes naturally go down.

hindsightbias 5y ago

Tax law exists codify the exemptions for the rich. Gates, Bezos, billionaires/etc don’t pay taxes, you do. You can get rid of the IRS the day after you get rid of the rich.

WalterBright 5y ago
The vast bulk of Federal income tax revenue still comes from the rich. Getting rid of them isn't going to help the rest.

nathanvanfleet 5y ago

Making a really strong argument here.

AnimalMuppet 5y ago

In general, I like the idea. Couple it with a UBI to protect the poor, and I like it a lot. (The poor pay very little income tax. They would have to pay the VAT. That would hurt them compared to the current system.) But that won't get you where you say you want to go. Who's going to collect that VAT, and make sure that everybody pays it? The IRS. Your approach would get rid of the tax code, but not the IRS. (In getting rid of the tax code, it would let you get rid of the computer code in question, though.) The other problem is, you can't implement a "soak the rich" approach with a VAT. And currently, there's a lot of angst around wealth inequality, and most plans to do something about it involve taxing the rich more than everyone else. So your idea is fighting an enormous political headwind. You could propose something like VAT + income tax for those who make over $1 million/year or something...

exabrial 5y ago
> You could propose something like VAT + income tax for those who make over $1 million/year or something... What did a person making $1m/year do wrong they are penalized unfairly against another person that doesn't? I have a feeling, much like now, all this accomplishes in reality is the rich hire good enough accounts to hide their largest sums from the IRS. That leaves the middle class and poor once again bearing everything... and we're back to where we started. Carving out 0 exceptions and sticking to it ensures that that literally nobody can say they are being treated unfairly.
- AnimalMuppet 5y ago
  Well, spin it how you will, but we've had this idea of a "progressive" tax system for quite a while now. ("Progressive" in the sense that those who make more, pay more, presumably because they can afford it more.) Our tax system has been that way for more than a century. So, you can call that "penalized unfairly", and others can call it "paying their fair share", but the reality is that it is the current default option. If you want a different system, you're going to need a lot better argument than "penalized unfairly". You're going to need an argument that can move the majority of voters, most of whom do not make more than $1 million/year. My previous point wasn't anything about "should", by the way. I was merely saying that, in the current political climate, not hitting the rich harder was something that would make it harder for a VAT-only scheme to become reality.
  - jfengel 5y ago
    You're going to need an argument that can move the majority of voters, most of whom do not make more than $1 million/year. Note that a lot of voters are convinced that they will make $1 million/year some day. Perhaps not today, but some day, and they seem happy to pay more today to ensure that they are not "penalized unfairly" when it's their turn. This is not necessarily a rational approach, since very few of them will ever earn that much money. But if your goal is to get votes, you can go a very, very long way with "penalized unfairly". Note how many oppose an inheritance tax that they'll never pay, simply by the expedient of dubbing it a "death tax". The "penalized unfairly" argument wouldn't wash with most economists, but there's not all that many of them. And nobody really listens to them anyway.

TAForObvReasons 5y ago

VAT is generally considered to be regressive (lower and middle class people tend to spend a larger percentage of their income and therefore are disproportionally affected). The taxation system reflects our societal values to an extent: tax breaks incentivize some activities and excess taxes disincentivize. Pure VAT disincentivizes spending and rewards wealth hoarding.

jonnycomputer 5y ago
A tax system can be regressive and more efficient. The regressivity of a tax system can be offset by benefits, such as UBI, etc. Why is it that Europe has less income inequality and VAT? Because it is offset with a generous welfare state.
- TAForObvReasons 5y ago
  European countries also have significantly higher income and other taxes. For example, in Germany, the marginal personal tax rate above 57K euros per year is 42% and the top rate is 45%. In the US, at $100K the marginal rate is 24% and the top marginal rate (above $540K) is 37%. That 8% difference at the top probably explains the income inequality situation moreso than any other difference
  - noodlesUK 5y ago
    I hear this from a lot of Europeans (I am also European), but it’s not really an apples to apples comparison. In the UK for instance we have a higher income tax rate of 40%. The US 37% rate is lower (but also comes in at a way higher threshold). However, in the US you also have state income taxes which range from 0-12ish percent, so your overall tax rate can end up higher
    - jonnycomputer 5y ago
      My main experience with taxes in Europe is in Poland, and that second hand from my mother-in-law, mostly. In the US, a typical tax payer will pay federal income tax, federal medicare and social security payroll taxes, state income tax (which varies a lot by state, but can be much more regressive than the federal income tax), and municipal or county property taxes (usually real-estate, but may also include things like vehicles), and a state+municipal sales tax on purchases. Not to mention various other taxes specific to things like gasoline, alcohol, tobacco, etc, and various usage fees for toll roads, etc. I'm sure things are similar in Europe in many ways, and different in others, but it can be a little hard to figure out how much I pay in tax total in a year, and I'm hardly an unusual case. All of this to really underline your point that just talking about US income tax is too incomplete a picture for the purpose of comparison.

jakearmitage 5y ago

VAT hurts the poor and the middle class. Seems like a bad move when we have billionaires playing around with rockets in space.

WalterBright 5y ago
Rich people playing with airplanes is how we wound up with cheap global air travel.
- csb6 5y ago
  That is misleading and misses most of the story. A large reason we have cheap global air travel is due to government intervention, research, and military development since the first World War. The U.S. (and other) governments have massively subsidized the development of the aerospace industry for decades and built/funded key infrastructure such as airports. "Rich guys playing with airplanes" is not how the complex system of air travel was created. Hell, the guys who invented airplanes weren't even rich.
  - WalterBright 5y ago
    > Hell, the guys who invented airplanes weren't even rich. Sure, the Wrights were not rich. But Bill Boeing was. And Howard Hughes. Donald Douglas got financing to start Douglas. Allan Lockheed pretty much started from scratch. McDonnell developed its passenger jets from scratch. Airliner travel was a paying concerned because of rich passengers. Flying for ordinary people did not come about until the 1960s. BTW, jet engines were conceived and developed by private industry, because the government saw no value in them. Until the government saw flying jet aircraft. P.S. The government airplane project, the Langley Aerodrome, cost something like twenty times what the Wright Flyer did, and simply fell into the Potomac like a sack of wet cement.

tablespoon 5y ago

> How about we just replace the IRS instead? 5% flat VAT tax. No exceptions. No tax breaks. No more tax incentives. How about we not? And instead of a some VAT flat-tax nonsense, how about progressive income and wealth taxes with no tax breaks or incentives at the higher brackets? Now that we've settled that, lets talk about the IRS's software. Edit: > EDIT: Ope, my original point is a flat tax. I said VAT as I was trying to decide 'what' to tax in my head, and it seems thats what people are latching onto, instead of my three sentences following of "No exceptions". That doesn't improve your point as much as you think it does. It's still the kind of tax proposal that the wealthy put out because it's friendly to them (e.g. https://en.wikipedia.org/wiki/Steve_Forbes#Campaigns_for_president https://en.wikipedia.org/wiki/Steve_Forbes#Campaigns_for_pre...).

scrubs 5y ago
I'm not seeing much action, but this is one area where Biden has the right talk. The rich (define north of $500k/yr) can play games. Here's two off hand I know in my circle: - a family has non-trivial assets and income in three states but for federal and tax purposes they live in TN where's there's no state tax. The other two states are def not cheap compared to TN. This was setup by buying a house and having a part time job in TN for about 1 year to establish bonafide residency much of which stopped once gained - business owner takes annual trip to Florida for business training with board/ management. That's a write off. But with some fancy accounting the owner smiles saying once they open the meeting with lunch, they left and spent the rest of week playing golf. Whether the company or individual the rich guys are taxed less than me. The bottom 40% (??) don't pay much either. That leaves the upper middle class to foot a lot of the hill. Well I'm calling BS on that.
deeptote 5y ago
Agreed, consumption taxes overwhelmingly favor the rich.
- namelessoracle 5y ago
  Im pretty sure existing tax laws favor the rich right now too

glerk 5y ago

If we can dream of reforming the whole system, how about a voluntary tax in exchange for a governance stake? Like, the more tax I pay, the more say I have in the decisions my government makes?

jlawson 5y ago
Plutocracy.
- glerk 5y ago
  Yep, plutocracy in the open without loopholes, lobbying and corruption. Just directly weigh the votes by the amount of participation to the common pot.
meetups323 5y ago
We already do, those taxes just go directly to the salaries of elected officials.
exabrial 5y ago
In my opinion, I think a completely voluntary tax system is what we have to achieve as a race to get to the next level as a civilization. I think a flat tax is a step in the right direction because it eliminates an entire swath of corruption.
- colejohnson66 5y ago
  The US tried a voluntary tax system with the Articles of Confederation. It didn’t work.
night862 5y ago
What about instead, make voting rights a promisory note which can be traded and sold? Eg, "My share of the House Rep vote from this Friday until next Tuesday" can be traded until "This Friday" for a "Burger" at Double Burger, or maybe some cash.
gleenn 5y ago

helloooooooo 5y ago

So you want to cause the greatest impact to those who spend the largest portion of income, rather than invest? This is frankly a terrible policy proposal and would only serve to harm the least well off. Leave it to Silicon Valley types who make a large enough fortune to retire by 40 to not understand the needs of those less well off.

ghaff 5y ago

Wealthier people would love it. This was a pretty popular conservative tax proposal back in the 1980s or so. (Actually a flat VAT tax is even more regressive than a flat tax generally.)

jonnycomputer 5y ago

Its not that I disagree, I think the VAT is much better than an income tax; but that has nothing to do with the IRS. The IRS would still have to administer the collection of tax revenue.

deleted 5y ago

[deleted]

pooper 5y ago

> No tax breaks. No more tax incentives. While I strongly disagree with the rest of the comment, I also am furiously in support of getting rid of all credits, deductions, exemptions, incentives, and so on. I think we need a VAT at the federal government level but we also need to increase the federal income tax on everyone. I would like this tax hike to pay for Medicare for all. Problem is that over sixty percent of the people seem satisfied with the current status of healthcare. Also I imagine they tend to vote in higher proportion than people like me. I have no idea how to fix this situation. Anyone have any thoughts?

arghnoname 5y ago
I used to be vehemently in favor of medicare for all. I still see all the many problems in the American healthcare system I ever did, but I don't want medicare for all anymore. My faith in our political system and its authoritarian impulses makes the thought of our government having a monopoly on healthcare unacceptable to me. As someone who has been on both sides of this issue, I think this is common. It isn't about loving the private insurance companies--everyone knows they suck--it's about trusting that the government solution will be better. With our government, can you honestly and with full confidence say it would be? My confidence totally flipped. I'm more confident it would be a disaster than not and then would be weaponized politically.

czbond 5y ago

"I will replace you with a small shell script". We only need taxes because of government. How about a law that shrinks the size of all governmental budgets and personnel by 3% every year until we decide to stop? We'll make do, I promise. Then our taxes naturally go down.