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First, both of those guys earning $10m will have paid a $4m income tax. With the remaining $6m, it'll be difficult to claim existing consumption taxes paid will
by meric 15y ago
First, both of those guys earning $10m will have paid a $4m income tax. With the remaining $6m, it'll be difficult to claim existing consumption taxes paid will be anything close to $4m.
Second, you can implement a progressive consumption tax scheme. You can mirror with existing income tax system - first $10,000 spent each year is tax free, next $20,000 at 15% and so on. It could be hard to implement at this moment but with the advance of technology it would certainly become possible. An alternative would be to charge higher taxes for luxury goods like yachts and fast cars and lower taxes for basic goods like food and transportation.
The collected taxes can given back to the populace as social welfare. Most people would want to only limit welfare to low income individuals and families. I do not share the same opinion - there are many convoluted rules it is hard for people to see what the government is really incentivising you to do - in my country if you save more than $2,500 you lose your welfare payments until your bank account balance goes back below $2,500. Which I think is dumb.
- mseebach 15y agoHow will you track consumption (required for a non-flat consumption tax) without creating a bureaucratic nightmare? There is a strong incentive to appear to spend less than you do (in order to hit the progression later), so every single can of coke you get needs to get attached to your tax-ID.
- meric 15y agoDefinitely it will be difficult to implement at the moment. At the rate the government is passing legislation on tracking people and making companies provide their data to government whenever requested, though, I can definitely see one day (maybe 50 years) where all this will be possible. e.g. When cash is replaced by only bank accounts, then every transaction becomes traceable. As I said before though, you can as an alternative lower sales tax on basic goods and raise them on luxury ones.
- mseebach 15y agoYes, let's actively lobby the government to put infrastructure in place to monitor every single penny we spend. There's no way that could go wrong.
- yummyfajitas 15y agoTax the coke at the point of sale? Your receipt might look like: 1 coke $1 Consumption tax $0.15 ------------------------- total $1.15 I don't think it would be hard to program cash registers to do this automatically. Who knows, maybe this problem is already solved?
- mseebach 15y agoThat's flat, not progressive. Progressive consumption tax would mean that the first $5.000 worth of goods you buy are not taxed, the next $15.000 are taxed at 15%, everything beyond that at 20%. How will each vendor know which rate to tax you at?
- icebraining 15y agoThat problem is indeed solved, it's what we have here in Europe. But that's a fixed rate per product, while meric was proposing a tax rate dynamically adjusted to the individual.