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A better strategy would be to do away with income tax altogether and replace with something easier to comply with and enforce like a Federal sales tax. States t

A better strategy would be to do away with income tax altogether and replace with something easier to comply with and enforce like a Federal sales tax. States that run on sales tax alone need only to collect revenue from businesses, which shrinks their staffing requirements. And since it's a straightforward % of sales, it's easier to audit as well.

ssnover 2y ago
These are not 1:1 replaceable. Income tax is progressively structured where higher earners pay a larger percentage in income that falls into higher income brackets. Sales tax is a flat percentage which varies based on item category, not the cost of the item.
- godelski 2y ago
  And if you need evidence to see that this statement is true, look at states where there is no income tax. It isn't just blue skies in those states. But you might need to look into the details to see that more clearly. There's no free lunch
- chrisco255 2y ago
  Of course they are. 7 states in the union operate just fine without income tax including Washington, Texas, Florida, and Tennessee. People are net migrating to states without income tax. Income tax brackets are an excessive complication that are completely unnecessary for running government. You can simply make essentials like groceries and tuition tax free, and keep everything else a flat %. It works fine.
mbrumlow 2y ago
All fine and dandy until somebody can’t stand that somebody makes more than them and wants to point out that because you make more and maybe even spend less that your overall tax to income rate is smaller than somebody else. Taxes are not just about revenue. It’s a political tool first. As the US government could just print money and dilute the value of the dollar as the tax. Recent moves that show it is political. Trump administration changed rules on how income is reported that affected blue states with high house prices and income tax without affecting red states with sales tax and low house prices much, by way of limiting the deduction of interest paid and state income tax on your federal tax bill. Meanwhile the current administration often says how bad trumps “tax cuts” where without even trying to undo the increased taxes on blue states.
b112 2y ago
I have no issue with billionaires, and don't resent their cash. But if you drop all income tax, and do only sales tax you'd miss a lot of their income. Same for the moderately wealthy too. I suspect you'd need 100% or even 200% sales tax to capture what you so now. That's going to lead to black markets, reduced economic output, etc too.
- chrisco255 2y ago
  What? 100% sales tax? No. 20-30% would do just fine. People have already run the numbers on this. Black markets already exist for under-the-table labor (tens of millions of illegal immigrants don't pay income tax). It's actually much harder to run a black market retail establishment as it requires public collusion and cash-based sales. The economic output would increase as compliance costs would be reduced. Furthermore, you could roll forward investments without needing to pay income tax, so that would lead to a compounding effect on economic output.
  - b112 2y ago
    I'd need to see the numbers on something like this. Just saying "Someone said it would work" isn't good enough for me. In my life I've seen so many cases of that, and then, lo and behold, the reality isn't even remotely accurate. An example being UBI, for which there is literally no way to pay. Or ridiculous assertions of "just tax billionaires!" to pay for it, which won't even cover one year of UBI. So when someone says "just change to a flat tax", without some raw data I balk. For example, "compliance costs"?! Just what compliance costs are these? Are you planning to get rid of social security, and medicare taxes on pay cheques too? Fine, but I once pondered that many government jobs are little more than paid welfare. Just what do you do with all those people that really cannot work well outside of a government, structured, coddled job? My point being, that "compliance costs" are no where near as much of a cost as you might think, as typically every penny paid comes back in income and other taxes, and also gets spent domestically on everything from groceries to car repairs. Those jobs aren't free, but they are not even 1/2 the price they appear to be. You want to talk about a "compounding effect", that's what government workers are. But regardless, the feds raised 4T this year, and 42% was income tax, and another 22% for social taxes, eg medicare, social and what not. If you're going to move those taxes from the "pay cheque taxed and income tax cycle" to "consumption tax at the till", then you'll need to replace 65% of existing taxes, which are >4T. Might as well say $3.5T at the federal level alone. Here: https://www.statista.com/statistics/249137/us-state-and-local-sales-tax-revenue/ https://www.statista.com/statistics/249137/us-state-and-loca... Says total revenue at the state AND county level is $700M. Here: https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States#/media/File:State_Sales_Taxes.webp https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_Stat... Shows an interesting graph, with some of the larger economic states, hovering at the top. I'm going to spitball and say 8% average. (The top 10 US states population wise, have more than 50% of the population, and that's why I'm going to poke it at 8%). So $700M at 8%, is 3.2T at 24%. That's surprisingly close. You are going to have to watch the black market though. Yes, it already exists.. so what? It will exist more. Especially with shipping stuff in from Canada, you're going to have to have to have "duty" of "federal state tax", otherwise everything will flow, shipped from Mexico and Canada.

ssnover 2y ago

These are not 1:1 replaceable. Income tax is progressively structured where higher earners pay a larger percentage in income that falls into higher income brackets. Sales tax is a flat percentage which varies based on item category, not the cost of the item.

godelski 2y ago
And if you need evidence to see that this statement is true, look at states where there is no income tax. It isn't just blue skies in those states. But you might need to look into the details to see that more clearly. There's no free lunch
chrisco255 2y ago
Of course they are. 7 states in the union operate just fine without income tax including Washington, Texas, Florida, and Tennessee. People are net migrating to states without income tax. Income tax brackets are an excessive complication that are completely unnecessary for running government. You can simply make essentials like groceries and tuition tax free, and keep everything else a flat %. It works fine.

mbrumlow 2y ago

All fine and dandy until somebody can’t stand that somebody makes more than them and wants to point out that because you make more and maybe even spend less that your overall tax to income rate is smaller than somebody else. Taxes are not just about revenue. It’s a political tool first. As the US government could just print money and dilute the value of the dollar as the tax. Recent moves that show it is political. Trump administration changed rules on how income is reported that affected blue states with high house prices and income tax without affecting red states with sales tax and low house prices much, by way of limiting the deduction of interest paid and state income tax on your federal tax bill. Meanwhile the current administration often says how bad trumps “tax cuts” where without even trying to undo the increased taxes on blue states.

b112 2y ago

I have no issue with billionaires, and don't resent their cash. But if you drop all income tax, and do only sales tax you'd miss a lot of their income. Same for the moderately wealthy too. I suspect you'd need 100% or even 200% sales tax to capture what you so now. That's going to lead to black markets, reduced economic output, etc too.

chrisco255 2y ago
What? 100% sales tax? No. 20-30% would do just fine. People have already run the numbers on this. Black markets already exist for under-the-table labor (tens of millions of illegal immigrants don't pay income tax). It's actually much harder to run a black market retail establishment as it requires public collusion and cash-based sales. The economic output would increase as compliance costs would be reduced. Furthermore, you could roll forward investments without needing to pay income tax, so that would lead to a compounding effect on economic output.
- b112 2y ago
  I'd need to see the numbers on something like this. Just saying "Someone said it would work" isn't good enough for me. In my life I've seen so many cases of that, and then, lo and behold, the reality isn't even remotely accurate. An example being UBI, for which there is literally no way to pay. Or ridiculous assertions of "just tax billionaires!" to pay for it, which won't even cover one year of UBI. So when someone says "just change to a flat tax", without some raw data I balk. For example, "compliance costs"?! Just what compliance costs are these? Are you planning to get rid of social security, and medicare taxes on pay cheques too? Fine, but I once pondered that many government jobs are little more than paid welfare. Just what do you do with all those people that really cannot work well outside of a government, structured, coddled job? My point being, that "compliance costs" are no where near as much of a cost as you might think, as typically every penny paid comes back in income and other taxes, and also gets spent domestically on everything from groceries to car repairs. Those jobs aren't free, but they are not even 1/2 the price they appear to be. You want to talk about a "compounding effect", that's what government workers are. But regardless, the feds raised 4T this year, and 42% was income tax, and another 22% for social taxes, eg medicare, social and what not. If you're going to move those taxes from the "pay cheque taxed and income tax cycle" to "consumption tax at the till", then you'll need to replace 65% of existing taxes, which are >4T. Might as well say $3.5T at the federal level alone. Here: https://www.statista.com/statistics/249137/us-state-and-local-sales-tax-revenue/ https://www.statista.com/statistics/249137/us-state-and-loca... Says total revenue at the state AND county level is $700M. Here: https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States#/media/File:State_Sales_Taxes.webp https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_Stat... Shows an interesting graph, with some of the larger economic states, hovering at the top. I'm going to spitball and say 8% average. (The top 10 US states population wise, have more than 50% of the population, and that's why I'm going to poke it at 8%). So $700M at 8%, is 3.2T at 24%. That's surprisingly close. You are going to have to watch the black market though. Yes, it already exists.. so what? It will exist more. Especially with shipping stuff in from Canada, you're going to have to have to have "duty" of "federal state tax", otherwise everything will flow, shipped from Mexico and Canada.