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Consumption taxes in practice are incredibly regressive. Someone who earns $20,000 must spend the majority of their money in order to live. Someone who earns $1

Consumption taxes in practice are incredibly regressive. Someone who earns $20,000 must spend the majority of their money in order to live. Someone who earns $1.2 million will probably spend a small fraction of it.

meric 15y ago
You can lower the tax on goods that lower income individuals are likely to spend on, while increasing tax on goods higher income individuals are likely to spend on, to make it more progressive.
- Aloisius 15y ago
  Most of the rich don't go around buying stupidly expensive things. They don't get rich by spending. They get rich by saving. There are billionaires that live in modest homes and don't particularly act or spend like their rich, but they enjoy all of societies benefits that created an environment that enabled them to become rich. They should pay for it so that future billionaires and millionaires can be made.
  - estevez 15y ago
    Or they could just kill the estate ("death") tax, ensuring that those future billionaires are their descendants.
    - Aloisius 15y ago
      The goal is not to create billionaires, but to create an environment where people try to become billionaires. Simply spawning them serves no benefit.
benmmurphy 15y ago
i'm not convinced. if someone earns $20,000 over their lifetime and consumes $20,000 over their lifetime I would say they are richer than someone who earn $1.2 million their lifetime and consumed $10,000 over their lifetime. it is total lifetime consumption that matters. so if people are not spending all their income than it can't increase regressivenes it can only help to increase consumption equality.
rmrm 15y ago
that is why the "fair tax" where everyone receives an equal rebate to cover a certain base level of spending has merit. 15% tax rate applied at point of sale universally. Say $20K in spending per person is exempt. Each person receives rebate (or prebate) check for $3K. You end up with a progressive consumption tax.

meric 15y ago

You can lower the tax on goods that lower income individuals are likely to spend on, while increasing tax on goods higher income individuals are likely to spend on, to make it more progressive.

Aloisius 15y ago
Most of the rich don't go around buying stupidly expensive things. They don't get rich by spending. They get rich by saving. There are billionaires that live in modest homes and don't particularly act or spend like their rich, but they enjoy all of societies benefits that created an environment that enabled them to become rich. They should pay for it so that future billionaires and millionaires can be made.
- estevez 15y ago
  Or they could just kill the estate ("death") tax, ensuring that those future billionaires are their descendants.
  - Aloisius 15y ago
    The goal is not to create billionaires, but to create an environment where people try to become billionaires. Simply spawning them serves no benefit.

benmmurphy 15y ago

i'm not convinced. if someone earns $20,000 over their lifetime and consumes $20,000 over their lifetime I would say they are richer than someone who earn $1.2 million their lifetime and consumed $10,000 over their lifetime. it is total lifetime consumption that matters. so if people are not spending all their income than it can't increase regressivenes it can only help to increase consumption equality.

rmrm 15y ago

that is why the "fair tax" where everyone receives an equal rebate to cover a certain base level of spending has merit. 15% tax rate applied at point of sale universally. Say $20K in spending per person is exempt. Each person receives rebate (or prebate) check for $3K. You end up with a progressive consumption tax.