4 ms·
> why are individuals taxed rather than businesses? The big question to me is, why do we tax production rather than consumption? We shouldn't have income taxes
by pdonis 1y ago
> why are individuals taxed rather than businesses?
The big question to me is, why do we tax production rather than consumption? We shouldn't have income taxes at all. We should have sales taxes. Make basic necessities like food exempt.
- saulpw 1y agoI've always heard that consumption taxes are regressive because poor people consume 100%+ of their income while rich people consume e.g. 1% of their income.
- wagwang 1y agoBad logic, if u dont consume then who cares if u have money.
- hydrogen7800 1y ago>who cares The people who maintain the infrastructure which enables you to have that money.
- saulpw 1y agoThe people who don't have money because you have it and won't spend it. The dragon's hoard is bad for everyone (including the dragon, ultimately).
- wagwang 1y agoYou need to start thinking about the economy in terms of goods and services instead of money. Hoarded money is dead money, it's actually anti inflationary. If there are 100 apples and everyone can afford 1 apple except for a rich person who can buy it all, it's actually a good thing that the rich person doesnt spend their money to buy the apples, thus driving up the price and depleting supply.
- alchemism 1y agoYou are conflating macro- and micro- economics a bit in that statement. Entities accumulating wealth incrementing towards infinity contributes to inflation, e.g. My family can spend 1 trillion to out-bid my competitor for ownership of a villa worth 1 billion for bragging rights. Commodity pricing may contribute to inflation over time. But commodity prices go down, whereas currency tends to move in one direction until the civilization backing it collapses, or the specie changes.
- wagwang 1y agoI'm more talking about how hoarded money has no effect until its spent, at which point the consumption tax kicks in. I.e. it's not really a regressive tax because you are taxed based on how you live, not how you can live.
- pdonis 1y agoI'm not sure it's true that rich people, on average, consume such a small percentage of their income. Think of all the rich people who end up having to declare bankruptcy--because they've spent so much on consumption that they've used up all their riches. It's true, though, that on average, rich people consume less of their income than poor people, because they save or invest a portion of it instead, simply because they can. That's a good thing. Our current tax system discourages people from saving and investing, and encourages them to consume. Then something bad happens and we wonder why there's nothing saved to tide us over. Exempting basic necessities from sales tax is how you prevent it from putting too much of a burden on poor people; most of what they consume is going to be basic necessities (or at least it should be, if they're rational), so it wouldn't be taxed.
- BobaFloutist 1y agoBecause that would incentivize sitting on money, and the economy works better when people spend money.
- jedberg 1y agoSo does taxing income, since we don't let people deduct most of their expenses. If you want to make people spend money, you'd implement a wealth tax.
- BobaFloutist 1y agoEvery time we try to institute a wealth tax, billionaires get antsy and start supporting fascism.
- jedberg 1y agoYeah, that's why we don't have one. :)
- pdonis 1y ago> that would incentivize sitting on money No, it would incentivize investing, since if you just leave money sitting under a mattress, it loses buying power over time because of inflation. > the economy works better when people spend money The economy works better when people create wealth through cooperation, specialization, and trade. Taxing production reduces the incentive for people to do that.
- barchar 1y agoIt's somewhat easier to administer an income tax. It's (more) counter cyclical due to bracket creep. it might help deal with internal trade imbalances. And it might be good to try and limit accumulation even if the accumulation doesn't have real economic effects; it can still create resentment or bestow power.
- pdonis 1y ago> It's somewhat easier to administer an income tax. Um, what? It requires huge government agencies, a ton of impenetrable regulations, and a lot of bother for people who have to file. Whereas we already have a much simpler system for assessing sales tax whenever people make purchases.