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Which is why consumption taxes tend to be some of the more regressive forms of taxation we have. If you’re poor, you tend to have to spend a much higher fracti

Which is why consumption taxes tend to be some of the more regressive forms of taxation we have. If you’re poor, you tend to have to spend a much higher fraction of your wealth on consumption just to survive.

BobbyJo 2y ago
I feel like a sales tax coupled with a 0% rate on the first X$ of spending would be a sweet spot. Could use a card or something to track taxes per person spending at the register. No tax filing, still lower rates for poor people. That'd be nice.
- cogman10 2y ago
  How would you track it? But also there's the very real problem of wealth concentration. The economy works best with flowing income. It works worst when money is at rest. With a sales tax only you end up in a situation where wealth can be endlessly horded, which takes that velocity of money out of the market. For example. Let's say there's 1000 monies and 100 people's. If bread costs 10 monies everyone gets fed if wealth is evenly distributed. However, as wealth concentrates into one person less people can afford to eat which has a knock on effect of potentially putting bakers out of business (ultimately raising the price of bread). Sales tax only explicitly favors wealth concentration. The more money you have the more you can defer and invest to accumulate more wealth. If you don't have enough money then it's impossible to ever start accumulating.
  - newAccount2025 2y ago
    Maybe ending inheritance or making money expire would be a good idea? It all feels like aristocracy to me now.
    - cogman10 2y ago
      An easy first step is simply raising taxes. They are ridiculously low. But further, I'm partial to the wealth tax (or a property tax). Couple that with social spending which will hyper juice the economy. The more needs we have provided, the more excess wealth can be spent on luxuries which is what encourages capitalism in flourish in the first place. There are ancillary benefits to having a progressive and aggressive tax system. If there's one thing business owners hate, it's giving money to the government. So if they can avoid being taxed by hiring more employees or paying them a higher salary, that's exactly what they'll do. It flips the incentives around revenue and pushes businesses to invest in the business. That was a huge driving factor of the innovations in the 60s, 70, and early 80s. We've been stagnating since mainly because the government has been slowly pulling back on taxation making it much more profitable to horde rather than invest and innovate.
  - JamesBarney 2y ago
    > But also there's the very real problem of wealth concentration. The economy works best with flowing income. It works worst when money is at rest. With a sales tax only you end up in a situation where wealth can be endlessly horded, which takes that velocity of money out of the market. This is basically arguing the world works best when the rich buy bigger yachts instead of bigger factories. All of this wealth the rich have isn't gold coins in a giant vault like scrooge McDuck, it's a sheet of paper that says they own .3% of Microsoft. > For example. Let's say there's 1000 monies and 100 people's. If bread costs 10 monies everyone gets fed if wealth is evenly distributed. However, as wealth concentrates into one person less people can afford to eat which has a knock on effect of potentially putting bakers out of business (ultimately raising the price of bread). What you're describing is a recession do the a drop in aggregate demand. Yeah this is bad and we have monetary and fiscal policy to reverse it. And usually monetary and fiscal policy are better because if we just fixed it by incentivizing the rich to spend more money on consumer goods we'd have more workers building mansions vs homes. Not to mention we are currently do not have that problem, which is why we have inflation above target. I think there are a lot of good reasons to tax the rich (and upper middle class) more, like our ballooning deficit, but creating tax incentives so the rich spend more money in an economy that is already on the verge of overheating isn't one of them.
    - cogman10 2y ago
      > This is basically arguing the world works best when the rich buy bigger yachts instead of bigger factories. Yachts are wealth that would be taxed. And in fact, assuming you are taxing the rich based on their wealth/property/ and income then you are in fact incentivizing them to buy bigger factories rather than yachts. The bigger factory generates more wealth for them while not being taxed because it isn't directly owned by them. A yacht only costs them money. > All of this wealth the rich have isn't gold coins in a giant vault like scrooge McDuck, it's a sheet of paper that says they own .3% of Microsoft. And what do those sheets of paper do? Do they create jobs? Do they employ people? The problem with the investment ownership model is it's completely speculative without any actual feedback into the economy. The only difference between the paper that grants ownership of microsoft and the paper that allows you to pay back debt is one has speculative value for trade. Because the value of the sheet of paper is based on what the market values that sheet of paper as, it creates perverse incentives that aren't actually economically good. For example, the last couple of years when tech businesses hired a bunch of employees because that made the stock go up, then fired a bunch of employees because that make the stock go up. Businesses are being ran not based on whether or not the goods are being sold or valuable, but rather whether or not the speculators in the market think it's good or valuable. That's a major negative distortion of the market. The entire point of stock isn't bigger factories, it's to enable bigger yachts. Stock as compensation, particularly for business owners, is one of the worst inventions of society. It is what causes enshittification. > if we just fixed it by incentivizing the rich to spend more money on consumer goods we'd have more workers building mansions vs homes. Right, but as you point out, that's not what the rich are doing. They are instead buying paper that does not feed back into the economy. But further, there are only so many consumer good someone could buy before they are completely satiated. There's only so much bread one person needs. There are limits to the bed or computer someone could buy. We are at the point where the wealth literally have more money than they can spend and that's part of the problem. > Not to mention we are currently do not have that problem, which is why we have inflation above target. We have inflation above target because businesses have merged and consolidated to the point where they can aggressively raise prices not because they need to but because they have the general population over a barrel. Collusion and speculation is a big factor in a lot of the inflation. That's not universally true, after all egg price inflation has been due to herd culling for bird flu. It is however fairly true and something that businesses are bragging about during their quarterly shareholder meetings. > creating tax incentives so the rich spend more money in an economy that is already on the verge of overheating isn't one of them. Where and how they spend their money matters. And part of the defense against further inflation can be more taxes/regulations. For example, vacancy taxes for residential units which would help pull back the real-estate market.
- Cerium 2y ago
  Just assume that the money will be spent and put a $X*tax-rate refundable credit on the tax return.
  - BobbyJo 2y ago
    Income taxes require extra infrastructure. If you can do everything buy-side, it'd cost less to implement I think.
- daveguy 2y ago
  That sounds rather dystopian to me. Tracking all spending by each person individually. It'd be like forcing the population to use something like Bitcoin, but with every address registered to a citizen. That's a big nope from me. We could just tax higher income more and extreme wealth.

BobbyJo 2y ago

I feel like a sales tax coupled with a 0% rate on the first X$ of spending would be a sweet spot. Could use a card or something to track taxes per person spending at the register. No tax filing, still lower rates for poor people. That'd be nice.

cogman10 2y ago
How would you track it? But also there's the very real problem of wealth concentration. The economy works best with flowing income. It works worst when money is at rest. With a sales tax only you end up in a situation where wealth can be endlessly horded, which takes that velocity of money out of the market. For example. Let's say there's 1000 monies and 100 people's. If bread costs 10 monies everyone gets fed if wealth is evenly distributed. However, as wealth concentrates into one person less people can afford to eat which has a knock on effect of potentially putting bakers out of business (ultimately raising the price of bread). Sales tax only explicitly favors wealth concentration. The more money you have the more you can defer and invest to accumulate more wealth. If you don't have enough money then it's impossible to ever start accumulating.
- newAccount2025 2y ago
  Maybe ending inheritance or making money expire would be a good idea? It all feels like aristocracy to me now.
  - cogman10 2y ago
    An easy first step is simply raising taxes. They are ridiculously low. But further, I'm partial to the wealth tax (or a property tax). Couple that with social spending which will hyper juice the economy. The more needs we have provided, the more excess wealth can be spent on luxuries which is what encourages capitalism in flourish in the first place. There are ancillary benefits to having a progressive and aggressive tax system. If there's one thing business owners hate, it's giving money to the government. So if they can avoid being taxed by hiring more employees or paying them a higher salary, that's exactly what they'll do. It flips the incentives around revenue and pushes businesses to invest in the business. That was a huge driving factor of the innovations in the 60s, 70, and early 80s. We've been stagnating since mainly because the government has been slowly pulling back on taxation making it much more profitable to horde rather than invest and innovate.
- JamesBarney 2y ago
  > But also there's the very real problem of wealth concentration. The economy works best with flowing income. It works worst when money is at rest. With a sales tax only you end up in a situation where wealth can be endlessly horded, which takes that velocity of money out of the market. This is basically arguing the world works best when the rich buy bigger yachts instead of bigger factories. All of this wealth the rich have isn't gold coins in a giant vault like scrooge McDuck, it's a sheet of paper that says they own .3% of Microsoft. > For example. Let's say there's 1000 monies and 100 people's. If bread costs 10 monies everyone gets fed if wealth is evenly distributed. However, as wealth concentrates into one person less people can afford to eat which has a knock on effect of potentially putting bakers out of business (ultimately raising the price of bread). What you're describing is a recession do the a drop in aggregate demand. Yeah this is bad and we have monetary and fiscal policy to reverse it. And usually monetary and fiscal policy are better because if we just fixed it by incentivizing the rich to spend more money on consumer goods we'd have more workers building mansions vs homes. Not to mention we are currently do not have that problem, which is why we have inflation above target. I think there are a lot of good reasons to tax the rich (and upper middle class) more, like our ballooning deficit, but creating tax incentives so the rich spend more money in an economy that is already on the verge of overheating isn't one of them.
  - cogman10 2y ago
    > This is basically arguing the world works best when the rich buy bigger yachts instead of bigger factories. Yachts are wealth that would be taxed. And in fact, assuming you are taxing the rich based on their wealth/property/ and income then you are in fact incentivizing them to buy bigger factories rather than yachts. The bigger factory generates more wealth for them while not being taxed because it isn't directly owned by them. A yacht only costs them money. > All of this wealth the rich have isn't gold coins in a giant vault like scrooge McDuck, it's a sheet of paper that says they own .3% of Microsoft. And what do those sheets of paper do? Do they create jobs? Do they employ people? The problem with the investment ownership model is it's completely speculative without any actual feedback into the economy. The only difference between the paper that grants ownership of microsoft and the paper that allows you to pay back debt is one has speculative value for trade. Because the value of the sheet of paper is based on what the market values that sheet of paper as, it creates perverse incentives that aren't actually economically good. For example, the last couple of years when tech businesses hired a bunch of employees because that made the stock go up, then fired a bunch of employees because that make the stock go up. Businesses are being ran not based on whether or not the goods are being sold or valuable, but rather whether or not the speculators in the market think it's good or valuable. That's a major negative distortion of the market. The entire point of stock isn't bigger factories, it's to enable bigger yachts. Stock as compensation, particularly for business owners, is one of the worst inventions of society. It is what causes enshittification. > if we just fixed it by incentivizing the rich to spend more money on consumer goods we'd have more workers building mansions vs homes. Right, but as you point out, that's not what the rich are doing. They are instead buying paper that does not feed back into the economy. But further, there are only so many consumer good someone could buy before they are completely satiated. There's only so much bread one person needs. There are limits to the bed or computer someone could buy. We are at the point where the wealth literally have more money than they can spend and that's part of the problem. > Not to mention we are currently do not have that problem, which is why we have inflation above target. We have inflation above target because businesses have merged and consolidated to the point where they can aggressively raise prices not because they need to but because they have the general population over a barrel. Collusion and speculation is a big factor in a lot of the inflation. That's not universally true, after all egg price inflation has been due to herd culling for bird flu. It is however fairly true and something that businesses are bragging about during their quarterly shareholder meetings. > creating tax incentives so the rich spend more money in an economy that is already on the verge of overheating isn't one of them. Where and how they spend their money matters. And part of the defense against further inflation can be more taxes/regulations. For example, vacancy taxes for residential units which would help pull back the real-estate market.
Cerium 2y ago
Just assume that the money will be spent and put a $X*tax-rate refundable credit on the tax return.
- BobbyJo 2y ago
  Income taxes require extra infrastructure. If you can do everything buy-side, it'd cost less to implement I think.
daveguy 2y ago
That sounds rather dystopian to me. Tracking all spending by each person individually. It'd be like forcing the population to use something like Bitcoin, but with every address registered to a citizen. That's a big nope from me. We could just tax higher income more and extreme wealth.