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So my effective tax rate on consumption is indexed on my ability to hide my assets? Maybe my household LLC should buy all my groceries while I work for the LLC

So my effective tax rate on consumption is indexed on my ability to hide my assets? Maybe my household LLC should buy all my groceries while I work for the LLC which employs me as the sole contractor and live in the house that I rent from the LLC which I am the sole owner of. For major purchases, I can hire a low-income person to do the purchase and then sell the item to me, or maybe they lease it to me. I'm not a tax lawyer but it's pretty easy to see the many loopholes in alternative tax proposals.

lotsofpulp 2y ago
>So my effective tax rate on consumption is indexed on my ability to hide my assets? Where are you getting this from? Sales tax has nothing to do with one's assets. Also, land value taxes make hiding assets moot, since all real assets have to be stored on land. Of course, copyright protections would need to be reformed to be for far shorter durations of time. >Maybe my household LLC should buy all my groceries while I work for the LLC which employs me as the sole contractor and live in the house that I rent from the LLC which I am the sole owner of. Why should LLC's be exempt from the tax? >For major purchases, I can hire a low-income person to do the purchase and then sell the item to me, How does this help? You are still purchasing the item. If you are referring to purchasing it with cash and committing tax evasion, the same is possible with income tax today. >or maybe they lease it to me. Renting something is still considered a sale. You get charged sales tax at hotels. Renting apartments is not usually subject to sales tax, but that is a policy choice.
- vlovich123 2y ago
  > Where are you getting this from? Sales tax has nothing to do with one's assets Earlier you said > And poorer people are automatically exempted from tax since the power law formula parameters be set to slowly ramp up I too am very confused on how you envision this sales tax working where it's variable in some way that poor people don't get the tax but rich people do so I understand why OP is asking about asset tracking. If you're talking about it as a tax that increases the more you spend you've still got problems of hiding how much I'm spending through various legal entities. It also has a macro economic problem, at least how the consumer economy is structured, that could slow down the gears of business until society realigns (if it does) because people will be incentivized to consume less. You've got alternative models where you go after specific products and tax more for conspicuous consumption like yachts but that feels like it has all the inefficiencies of central planning a market.
  - lotsofpulp 2y ago
    >that poor people don't get the tax but rich people do Because poor people can't spend money (since they don't have it), hence they pay much less (or even no tax). The curve of a power law formula can be modified to whatever is socially acceptable. Otherwise, rich people who are hoarding assets will get taxed via land value taxes utilizing the same framework. >you've still got problems of hiding how much I'm spending through various legal entities. Same with income tax. Completely stamping out tax evasion is not a realistic goal with any system. Also, various legal entities are all tied to beneficial owners with taxpayer ID numbers. Databases would make quick work of sorting this kind of stuff out. >It also has a macro economic problem, at least how the consumer economy is structured, that could slow down the gears of business until society realigns (if it does) because people will be incentivized to consume less. Yes, that is why it is a pipe dream. But it would actually accomplish environmental goals as opposed to just pay lip service and pretend. >You've got alternative models where you go after specific products and tax more for conspicuous consumption like yachts but that feels like it has all the inefficiencies of central planning a market. Completely unnecessary to complicate things which also opens up avenues for corruption. A yacht is super expensive, it's obviously going to be hit with a ton of tax. Just come up with a tax curve (like we already do with the various income tax deductions/brackets) that provides the tax revenue and still allows people to spend enough money to provide for their basic needs.
    - vlovich123 2y ago
      > Because poor people can't spend money (since they don't have it), hence they pay much less (or even no tax) Poor people can buy a car. Middle class families can buy 2 cars. Neither can buy 100 exotic cars. Is the purchase of each additional car going to increase the tax paid? Are exotic cars taxed more? You keep stating to use a power law formula but you're critically omitting what the inputs are to determine your tax rate. And now you've also admitted that assets determine your sales tax whereas you seemed to be arguing earlier that that wasn't the case when asked if the sales tax rate is dependent on your ability to hide assets. > Otherwise, rich people who are hoarding assets will get taxed via land value taxes utilizing the same framework Rich people hoard assets in all sorts of ways including collecting physical items which you can store where land is cheap if you wanted. That's why the income tax is effective - it's taxation at the moment the money changes hands / you've realized a gain.
scotty79 2y ago
Ownership can be tracked. You're tax rate can be proportional to all of your assets along the ownership tree (tax already paid by the branches on what they own can be deducted). You can of course "own" things informally but then you don't get any support from courts when the paper owner decides you really own nothing.

lotsofpulp 2y ago

>So my effective tax rate on consumption is indexed on my ability to hide my assets? Where are you getting this from? Sales tax has nothing to do with one's assets. Also, land value taxes make hiding assets moot, since all real assets have to be stored on land. Of course, copyright protections would need to be reformed to be for far shorter durations of time. >Maybe my household LLC should buy all my groceries while I work for the LLC which employs me as the sole contractor and live in the house that I rent from the LLC which I am the sole owner of. Why should LLC's be exempt from the tax? >For major purchases, I can hire a low-income person to do the purchase and then sell the item to me, How does this help? You are still purchasing the item. If you are referring to purchasing it with cash and committing tax evasion, the same is possible with income tax today. >or maybe they lease it to me. Renting something is still considered a sale. You get charged sales tax at hotels. Renting apartments is not usually subject to sales tax, but that is a policy choice.

vlovich123 2y ago
> Where are you getting this from? Sales tax has nothing to do with one's assets Earlier you said > And poorer people are automatically exempted from tax since the power law formula parameters be set to slowly ramp up I too am very confused on how you envision this sales tax working where it's variable in some way that poor people don't get the tax but rich people do so I understand why OP is asking about asset tracking. If you're talking about it as a tax that increases the more you spend you've still got problems of hiding how much I'm spending through various legal entities. It also has a macro economic problem, at least how the consumer economy is structured, that could slow down the gears of business until society realigns (if it does) because people will be incentivized to consume less. You've got alternative models where you go after specific products and tax more for conspicuous consumption like yachts but that feels like it has all the inefficiencies of central planning a market.
- lotsofpulp 2y ago
  >that poor people don't get the tax but rich people do Because poor people can't spend money (since they don't have it), hence they pay much less (or even no tax). The curve of a power law formula can be modified to whatever is socially acceptable. Otherwise, rich people who are hoarding assets will get taxed via land value taxes utilizing the same framework. >you've still got problems of hiding how much I'm spending through various legal entities. Same with income tax. Completely stamping out tax evasion is not a realistic goal with any system. Also, various legal entities are all tied to beneficial owners with taxpayer ID numbers. Databases would make quick work of sorting this kind of stuff out. >It also has a macro economic problem, at least how the consumer economy is structured, that could slow down the gears of business until society realigns (if it does) because people will be incentivized to consume less. Yes, that is why it is a pipe dream. But it would actually accomplish environmental goals as opposed to just pay lip service and pretend. >You've got alternative models where you go after specific products and tax more for conspicuous consumption like yachts but that feels like it has all the inefficiencies of central planning a market. Completely unnecessary to complicate things which also opens up avenues for corruption. A yacht is super expensive, it's obviously going to be hit with a ton of tax. Just come up with a tax curve (like we already do with the various income tax deductions/brackets) that provides the tax revenue and still allows people to spend enough money to provide for their basic needs.
  - vlovich123 2y ago
    > Because poor people can't spend money (since they don't have it), hence they pay much less (or even no tax) Poor people can buy a car. Middle class families can buy 2 cars. Neither can buy 100 exotic cars. Is the purchase of each additional car going to increase the tax paid? Are exotic cars taxed more? You keep stating to use a power law formula but you're critically omitting what the inputs are to determine your tax rate. And now you've also admitted that assets determine your sales tax whereas you seemed to be arguing earlier that that wasn't the case when asked if the sales tax rate is dependent on your ability to hide assets. > Otherwise, rich people who are hoarding assets will get taxed via land value taxes utilizing the same framework Rich people hoard assets in all sorts of ways including collecting physical items which you can store where land is cheap if you wanted. That's why the income tax is effective - it's taxation at the moment the money changes hands / you've realized a gain.

scotty79 2y ago

Ownership can be tracked. You're tax rate can be proportional to all of your assets along the ownership tree (tax already paid by the branches on what they own can be deducted). You can of course "own" things informally but then you don't get any support from courts when the paper owner decides you really own nothing.