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I'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 ago
  Bad 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 ago
    The 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 ago
      You 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 ago
        You 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 ago
          I'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.
          • alchemism 1y ago
            It would not be called "The Paradox of Saving" if that statement was true! =)
            • wagwang 1y ago
              You're assuming all economic activity is good activity. Billionaire spend allocates capital to frivolous garbage that does not improve human experience.
• pdonis 1y ago
  I'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.