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> sales taxes (probably the fairest of all taxes). Just curious: what makes you come to this conclusion?
by atmavatar 9mo ago
> sales taxes (probably the fairest of all taxes).
Just curious: what makes you come to this conclusion?
- Pet_Ant 9mo agoI’m assuming they think that rich people spend more so they pay more. This is a fallacy, because poor people spend a higher portion of their income (over a 100% a lot of the time).
- Reimersholme 9mo ago[dead]
- epolanski 9mo agoMost economists agree that sales taxes are the fairest because they are always proportional to consumption.
- thisislife2 9mo agoI don't get it - what about "taxing consumption" makes it "fair"? Poor people aren't poor because they spend more money than others. They are poor because they don't have enough money to live a "decent" life (assume a middle-class lifestyle) or to even save it. Right?
- MichaelZuo 9mo agoConsumption has real negative externalities on the environment and other people… i.e. A burger wrapper doesnt care about economic status.
- genocidicbunny 9mo agoUntil you get to things like Vimes Theory of Boots. Not all consumption is equal. Not all consumption can be reduced. A burger wrapper might not care about economic status, the bag of beans and rice might.
- MichaelZuo 9mo agoHow is reducibility relevant? Do you think the burger wrapper just automatically winks out of existence for poor people?
- thisislife2 9mo agoAgain, what has that got to do with the "fairness" aspect of taxing consumption?
- MichaelZuo 9mo agoThere are no “fairness” molecules so it clearly cannot be relevant for the physical generation of negative externalities. How exactly that load is divvied up by society, where it would apply, is not something I know the answer to.
- IAmBroom 9mo agoCitation required. The economists I've read disagree strongly.
- lazylizard 9mo agoi thought most economists would agree that consumption should be encouraged and savings should be discouraged. and that'd be how progressive taxes work? people tend to save more and consume less as their incomes increase?
- MengerSponge 9mo ago"The law, in its majestic equality, forbids the rich and poor alike to sleep under bridges, to beg in the streets, and to steal bread." -Anatole France
- N_Lens 9mo agoSo fair!
- dillydogg 9mo agoIt's funny, because sales tax is considered among the most regressive form of taxation we employ from my understanding, which is supported by my econ friends. But I'm certainly not an economist.
- epolanski 9mo agoEconomists argue that they are the fairest because they tax consumption rather than production. Also everybody pays them, including people that avoid taxes (including criminal activities and tax evaders). The argument against this is that lower income households pay more of it as a portion of their income thus the consensus is that to be fairest you need rebates and no taxes on many essentials (which is why often medicines or milk, bread etc have very low or no sales tax/rebates).
- dillydogg 9mo agoIt is a good point. It depends on how regressive is defined. There are many competing arguments here, but two I am aware of are 1. Regressive deals with % of income spent. 2. Regressive deals with an ideal state where those with more excess income contribute more than those with less. In both of these, I suppose sales tax is regressive if it applies to all items, but only 2 is regressive with sophisticated rebates and untaxed categories.
- charlieyu1 9mo agoAnd it kills the economy and kills most small businesses. How is it fair to tax unprofitable businesses instead of a straight profit tax?
- IAmBroom 9mo ago> Economists argue that they are the fairest... You keep saying this, as if it will make this true. Please list these "economists"/"most economists".
- wahern 9mo agoI think you're confusing fair with efficient. IIRC, consumption taxes are more efficient in that, ceteris paribus, they result in the least economic distortion in terms of global wealth and productivity compared to alternatives like income taxes. But they're the least fair in the sense that those lower on the income bracket bear a higher burden in terms of marginal cost due to the higher fraction of necessary living expenses relative to income. Your first $1 of income and consumption has more marginal value to you and society then the second $1; so an X% tax on that first dollar has a higher marginal cost than X% on the second dollar. It's unfair in a very meaningful sense, not just a hand-wavy rhetorical sense; everything in economics is about marginal pricing. Think of it this way, which has more marginal value, a) $1 spent on food required for a person to live, or b) $1 spent on a fancy fixture for a new yacht? The answer is (a), both from the perspective of the individual and society has a whole; society because $1 spent sustaining a living individual contributes more productive capacity to society than $1 spent toward a yacht fixture, even after accounting for the fact someone was paid to make the fixture. AFAIU, it follows that efficiency and fairness (in the sense of marginal cost) are fundamentally related. But it gets really complicated from there--complexity that the "ceteris paribus" above is hiding--and drawing concrete policy conclusions much more fraught. Relatedly, consumption taxes can be structured in a progressive manner similar to income taxes, but... it's complicated; it's not so easy to ameliorate the unfairness issue, and once you start graduating rates it becomes difficult to compare schemes directly. For instance, I think just as a practical administrative and accounting matter progressive income taxation is easier to accomplish than progressive consumption taxation.