Not every tax has to be progressive. It's enough to make the whole tax system progressive to achieve overall progressiveness. (Tautologically..)
Income taxes or even refunds or a basic income can fix that up.
VAT is mostly flat.
(I am in favour of taxing land by value for most or even all government expenditure. That's highly progressive, impossible to evade, and does not distort the economy at all: land's supply is fixed.)
A flat tax isn't progressive though (unless modulated by significant exemptions and deductions, and then you're back where you started). And effectively regressive once you factor in diminishing marginal utility.
While I agree with you mostly, why wouldn’t you call sales tax progressive? The more you earn, the more you will spend, so the more you pay.
The big issue I have with sales tax is that it is a much worse solution to the problem than a simple value-added tax (VAT). Most countries have figured out that VAT is more difficult to cheat.
A flat tax rate, in its most basic form is neither progressive nor regressive, but simply proportional. I'd take that over the currently implemented progressive* tax.
*Progressive as long as you ignore the primary sources of income for the wealthy.
You can mitigate that effect by some kind of basic income or return of paid VAT (you collect receipts or something and get the money back up to certain amount or 100% up to certain amount, 50% up to another step etc.). You can make VAT progressive this way.
No, I think you mean a true flat tax, e.g. a poll tax, is the ultimate regressive tax.
I have come to find that "regressive" moves the goalposts. It sounds as if the rich pay less. They don't pay less; they pay more. They just don't pay more when dividing taxes by their total income. I've never heard a convincing argument for why that formula is the ultimate benchmark.
And anyway, virtually all sales tax proposals have some per capita rebate/basic income, and that can be tweaked to make it as progressive as your heart desires.
Technically, a flat tax by definition is neither regressive nor progressive, it is proportional. Federal income taxes and I presume corporate taxes are currently progressive (with a million and one deductions). Moving to a flat tax for either of those would be a move in the regressive direction, but it's still not technically regressive.
Personally, I'm fine with taxes having progressive rates but not the countless deductions.
Everything would be so much better if there was just a simple flat-tax. Same tax for all buissness and people. Same tax for incomes of all kinds.
And before the Progressives start rioting, its easly possible to make it somewhat progressive. Then we can foreever argue if it should be more or less progressive.
The amount of time saved by people and more importantly buissnesses is quite extraordinary. Additionally it would make finding tax cheaters far easier. The IRS could be much smaller. That also has positive effects on privacy.
The book "The Flat Tax" was released in 1981 and was implmented in some of the countries that became free after the collapse of the USSR.
It doesn't matter whether a tax is progressive or regressive on its own. What matters is its place in the overall system of taxes and transfers. You can have a progressive wealth redistribution system based mostly on regressive taxes (sales tax, carbon tax, vice taxes) by ensuring that transfer payments and tax breaks are heavily directed towards low income residents. "Regressive" is not an end-all reason to reject a taxation scheme that has many other desirable properties, namely internalizing externalities and directing market forces towards less pollution-intensive technologies.
Well, really it's progressive if it only taxes stuff you don't need to buy. Here's what I think:
Fuel and food, no tax.
School supplies, shoes, clothing, any item under $100, no tax. Over $100, ramp it up.
Diamond rings, 100% tax.
Alcohol and cigarettes, 20-30%.
Used cars, no tax.
New cars, 10% up to 100%. Credits if they're electric or extremely fuel-efficient.
Playstations, high end sneakers, Smart TVs, iPhones, rims, jewelry, expensive furnishings, rugs, anything better than your basic washer/drier: 100% tax.
Books: Free and subsidized by the government, as many as you want, any book ever written.
Healthcare: Free.
College: Free.
Basically under my plan, as long as you get stuff you need for your family, you pay no tax. If you get stuff you want for your pleasure, you pay tax on it.
How's that regressive?
The only real downside I see is the potential for a massive black market in luxury goods, tobacco and alcohol. But legalizing and taxing pot and prostitution should take some of the sting out of that.
Income taxes or even refunds or a basic income can fix that up.
VAT is mostly flat.
(I am in favour of taxing land by value for most or even all government expenditure. That's highly progressive, impossible to evade, and does not distort the economy at all: land's supply is fixed.)
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