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VAT is the most regressive tax since inflation. Rich people spend basically zero of their wealth. Poor people spend almost all of it. Even though there are exce

by piker 5mo ago

VAT is the most regressive tax since inflation. Rich people spend basically zero of their wealth. Poor people spend almost all of it. Even though there are exceptions and item-level exemptions, it's still the poor people who feel these prices the most, and it is reflected in spending behaviors in European countries in my experience.

yladiz 5mo ago
I was about to comment something like this. Consumption from a VAT perspective doesn't increase linearly with wealth, so a more wealthy person isn't going to spend and get taxed via VAT 100x more than someone with 100x less wealth, and VAT affects the poor much more than the rich because it's a tax on consumption irrespective of wealth, so the poor pay a larger percentage of their wealth to VAT. We should just get rid of VAT and replace the lost tax revenue with something that's more equitable, such as a proper wealth tax. It's not like wealth goes away with a UBI.
joe_mamba 5mo ago
This. But this is also by design. So ask your government why it has been designed that way.
- carlosjobim 5mo ago
  It's because an all-encompassing taxation system gives value to the paper money the government and the banks create.
Wilsoniumite 5mo ago
VAT is regressive when you consider wealth yes, but as I wrote in the piece it's both counterbalanced by the UBI, and indeed there are mechanisms by which VAT is actually progressive. This OECD paper goes into more detail [1]. The short version is: VAT on its own and in practice is regressive but only because of savings. That's pedantic, I know, but it matters for the purposes of how the VAT-UBI loop scales. In particular, it allows you to fund a larger UBI more quickly than with any other funding method. [1] https://www.oecd.org/en/publications/reassessing-the-regressivity-of-the-vat_b76ced82-en.html https://www.oecd.org/en/publications/reassessing-the-regress...
- KaiserPro 5mo ago
  from the paper: > even a roughly proportional VAT can still have significant equity implications for the poor – potentially pushing some households into poverty." from your page: > Elastic goods, i.e luxuries, shed demand as prices rise whilst inelastic goods like bread do not. This has the effect of refocusing the economy away from luxuries and toward inelastic necessities, which effectively makes VAT progressive, not regressive. As someone who lives with a VAT rate of 20% on most goods (and 5% on other with 0% on most foods) it doesn't meaningfully direct away from luxury goods. Its just priced into things (and if your a build er o cash in hand, then you can make 20% extra) Personally I would rather we look at "council houses" and making them much more universal. As that would be cheaper than UBI but have some of the same benefits.
  - Wilsoniumite 5mo ago
    It's priced in, yeah. As I said in the comment and in the post, VAT on its own is not nice. The paper also states: > Nevertheless, any VAT increases, including VAT base broadening measures that impact the poor, should be accompanied by compensation measures for poorer households, such as targeted tax credits or benefit payments. Which is essentially what I propose through UBI, I just have broader scope.
AdrianB1 5mo ago
I see the point, but I don't see what is wrong with that, and I am relatively poor person. I see calls for equality all over the place, but nobody wants to be equal, especially not in taxation - a fix amount (not percent of something) sum per citizen is equal and nobody wants it. Equal rights, equal taxes, equal obligations, no exceptions - be it financial, demographic, military, etc.
- iamnothere 5mo ago
  A Georgist-style land value tax (LVT) is fairer and has the added benefit of ending land speculation, a practice that leads to distortions in the housing market and harmful property boom-bust cycles.
  - AdrianB1 5mo ago
    That is basically removing property rights, when the land is not yours but you just rent it ... you will own nothing and be happy.
    - iamnothere 5mo ago
      You didn’t make the land (nobody did). LVT is the “least bad” tax because in an LVT-exclusive system you are not taxed on your labor, your inventions, or your possessions. You’re only taxed for your exclusive use of a common resource (land). You may be opposed to all taxes, but if you acknowledge the need for some kind of tax, it at least has some kind of rational and seemingly fair justification.
      - AdrianB1 5mo ago
        You bought the land, so it is yours, right? Yes, I am fine with taxes, but not with any type of tax, not property taxes (it is bought with money already taxed) and not with taxes as punishment or taxes as political games. I am opposed to taxes as a purpose, I am for taxes as a means to pay for some universal services that you cannot pay by consumption.

by piker 5mo ago

yladiz 5mo ago

I was about to comment something like this. Consumption from a VAT perspective doesn't increase linearly with wealth, so a more wealthy person isn't going to spend and get taxed via VAT 100x more than someone with 100x less wealth, and VAT affects the poor much more than the rich because it's a tax on consumption irrespective of wealth, so the poor pay a larger percentage of their wealth to VAT. We should just get rid of VAT and replace the lost tax revenue with something that's more equitable, such as a proper wealth tax. It's not like wealth goes away with a UBI.

joe_mamba 5mo ago

This. But this is also by design. So ask your government why it has been designed that way.

carlosjobim 5mo ago
It's because an all-encompassing taxation system gives value to the paper money the government and the banks create.

Wilsoniumite 5mo ago

VAT is regressive when you consider wealth yes, but as I wrote in the piece it's both counterbalanced by the UBI, and indeed there are mechanisms by which VAT is actually progressive. This OECD paper goes into more detail [1]. The short version is: VAT on its own and in practice is regressive but only because of savings. That's pedantic, I know, but it matters for the purposes of how the VAT-UBI loop scales. In particular, it allows you to fund a larger UBI more quickly than with any other funding method. [1] https://www.oecd.org/en/publications/reassessing-the-regressivity-of-the-vat_b76ced82-en.html https://www.oecd.org/en/publications/reassessing-the-regress...

KaiserPro 5mo ago
from the paper: > even a roughly proportional VAT can still have significant equity implications for the poor – potentially pushing some households into poverty." from your page: > Elastic goods, i.e luxuries, shed demand as prices rise whilst inelastic goods like bread do not. This has the effect of refocusing the economy away from luxuries and toward inelastic necessities, which effectively makes VAT progressive, not regressive. As someone who lives with a VAT rate of 20% on most goods (and 5% on other with 0% on most foods) it doesn't meaningfully direct away from luxury goods. Its just priced into things (and if your a build er o cash in hand, then you can make 20% extra) Personally I would rather we look at "council houses" and making them much more universal. As that would be cheaper than UBI but have some of the same benefits.
- Wilsoniumite 5mo ago
  It's priced in, yeah. As I said in the comment and in the post, VAT on its own is not nice. The paper also states: > Nevertheless, any VAT increases, including VAT base broadening measures that impact the poor, should be accompanied by compensation measures for poorer households, such as targeted tax credits or benefit payments. Which is essentially what I propose through UBI, I just have broader scope.

AdrianB1 5mo ago

I see the point, but I don't see what is wrong with that, and I am relatively poor person. I see calls for equality all over the place, but nobody wants to be equal, especially not in taxation - a fix amount (not percent of something) sum per citizen is equal and nobody wants it. Equal rights, equal taxes, equal obligations, no exceptions - be it financial, demographic, military, etc.

iamnothere 5mo ago
A Georgist-style land value tax (LVT) is fairer and has the added benefit of ending land speculation, a practice that leads to distortions in the housing market and harmful property boom-bust cycles.
- AdrianB1 5mo ago
  That is basically removing property rights, when the land is not yours but you just rent it ... you will own nothing and be happy.
  - iamnothere 5mo ago
    You didn’t make the land (nobody did). LVT is the “least bad” tax because in an LVT-exclusive system you are not taxed on your labor, your inventions, or your possessions. You’re only taxed for your exclusive use of a common resource (land). You may be opposed to all taxes, but if you acknowledge the need for some kind of tax, it at least has some kind of rational and seemingly fair justification.
    - AdrianB1 5mo ago
      You bought the land, so it is yours, right? Yes, I am fine with taxes, but not with any type of tax, not property taxes (it is bought with money already taxed) and not with taxes as punishment or taxes as political games. I am opposed to taxes as a purpose, I am for taxes as a means to pay for some universal services that you cannot pay by consumption.