IMO, I should be able to spend a zillion dollars on whatever I want, as long as I'm not buying people it's none of anyone's business.
The way to make sure everyone pays taxes is to tax property, or sales, or do a value added tax. Want a progressive tax? Higher taxes on second properties, or luxury items. Now you don't have any reason to need to know what everyone in the world has or does with their money.
I believe an income tax should be the only tax, since it covers any and all economic transactions, and it's the only progressive tax.
- There's only a single loophole: People who use their business to pay for personal expenses. They are easy to catch, and the simplicity of the tax scheme allows collectors to focus on this one loophole.
- It's simple to collect: Ask all the banks for everyone's statement, and apply a percentage to their calendar year's income. You could even deduct tax when people deposit money.
- It's simple to forecast and calculate: Everyone knows how much tax they owe, and knows how much tax they will owe.
- It's progressive: The more people make the more they pay. Property tax, sales tax, gas tax, etc. all disproportionately affect people with less money.
I consider myself a fairly progressive person. But I think at least some of the people, who don't like paying so much taxes, don't like the fact that the government is allocating the tax money collected, and it could, according to their belief, cause inefficiency.
I agree with that notion to a certain degree. For example, I wish there is a way to allocate the tax that I pay yearly to the programs that I want to fund. Specifically speaking, say if I pay $100 in tax, I should have a say to paying at least $50 of that to programs that I think are important for me (e.g., dept. of transportation; dept. of education; EPA...)
Of course -- taxes should be progressive. But this doesn't address "rich people" evading taxes, it addresses transactions from people from all slices of the socioeconomic spectrum, with a cap that is entirely too low and invasive.
For example: if and when your country goes to pot, and you have a moral obligation to get your family out because we have this perceived notion of borders and sovereignty based on history we didn't agree to, a $3k block on transactions may well block you. We don't have to imagine very hard -- the US withdrawal from Afghanistan is a recent prime example. Social order is delicate.
As a more mundane example, perhaps I purchase an item at auction, art or contents of a storage locker. Reporting burden should be on the records of the facility and subject to occasional audit, not on every single transaction that goes through. That'd be like implementing a carbon toll for every mile that I use a bus, walk with shoes, ride a bike, or use any form of motor vehicle. There are much better ways to do that.
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.
Perhaps a flat sales tax? Or something fair? Why is there an attempt to punish the rich here? We need some taxes, but this shouldn’t be a blank check. At what point do you think the government should stop taking taxes? By your logic should we not just give 100% of our pay to the gov and start issuing cars, houses and other needs? Also why is anything good simply because it’s progressive? Is there no other factor?
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.
Progressive consumption tax is ridiculous. It requires your tax rate at the point of sale to be dependent on all your purchases to that point in time. That's just not practical. Or it may require every purchase you make to be recorded for tax-time when you then pay the taxes. Either way it requires the government to know every purchase you make, or at least the price. This is not something anyone should want.
I wholly disagree with 'progressive' taxing. Taxing should be like voting, everyone gets the same whether they want it or not.
Problems arising from taxation shouldn't be solved by complicating the taxation process, they should be resolved after taxation. If you take 10% of everyone's wages then the top 20% will be paying 80% of the nations income tax. Distribution to people below the poverty line can be implemented (as in most countries it is) after taxation.
I get one vote, I should be getting one tax, just like everyone else.
You're assuming the value per dollar a poor person gains from their money is equal to what a rich person gains.
I want progressive taxation precisely because I think rich people are less able than others to spend their resources in a way that brings net benefit to the world.
Interesting point. Not exactly how I read it, but this makes sense as well.
For the progressive consumption tax, to make it really meaningful and fair, you have to have very reliable data on what price range for given type of good is excessive. Alternatively, you could just tax classes of goods, such as luxury cars, etc.
The one problem with such a tax is that it enables people to save a lot more instead of spending it. If the money sits in the banking system, it at least does some work, but if the saving happens in the form of physical goods of perceived high value (such as gold or jewelry), it doesn't actually help the economy beyond the initial purchase.
That said, I would love to not have to pay income tax :)
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.)
What exactly is "fair"? There are lots of ways we could tax people, that some or other people would declare to be fair.
Sure, we could tax all sales at 20%, or 45%. That would be fair. Can you see any problems?
We could tax everyone a flat amount - $10k or something. That would be fair. Can you see any problems?
We could tax everyone a flat percentage - 15%, say. That would be fair. Can you see any problems?
We could tax everyone such that we all have the same income - $50k perhaps. That would be fair. Can you see any problems?
The idea that higher taxes "punish" the rich doesn't make sense to me. We have the money! Of course that's where taxes should come from. What, we're going to shake down the people making $12 /hour? They don't have any money.
Here is my thinking: we should decide, as a society, what is essential. Defense, roads, fire departments, schools, etc. And then we figure out the best tax system to pay for that. We should aim for that system to:
1) Gather as much money as we need to pay for the essentials.
2) Cost as little to administer as possible.
3) Discourage harmful societal behaviour and/or encourage beneficial societal behaviour (generally, the more you tax something, the less of that thing you get).
4) Impact people's lives as little as possible. This is where progressive taxation wins - if you tax a poor person, that's money they really, really need. They were going to spend that on essentials. If you tax a rich person, their quality of life isn't meaningfully impacted. If Jeff Bezos has to pay more taxes, that impacts his day-to-day life exactly not at all.
5) Be conceived from behind the 'veil of ignorance', as much as possible. (This is where the 'fairness' argument comes in)
There's a baseline level of consumption required to survive. Meaning everyone eats, rents, drives to work, buys an entertainment system. Paying for what you consume is a regressive way of generating tax revenue as the tax is raised from the poor masses.
Progressive taxation exists because people with more income have more disposable income. When you tax a poor working single mother of three and she must choose between buying food or paying tax, you will get riots eventually. When you tax a millionaire who's choice is buying a sports car or paying tax, riots don't usually happen.
How do you decide who needs it? I think the sane option really would be to give it to everyone and increase taxes to compensate. Progressive taxes fall most heavily on those that can afford them. They are the best tool for this job.
Of course to really get this fair, you should tax wealth too, which tends to be difficult...
Not only do I want everyone in my "class" to contribute more to society, everyone significantly above me should be contributing a larger share. This is the basis of progressive taxation.
The way to make sure everyone pays taxes is to tax property, or sales, or do a value added tax. Want a progressive tax? Higher taxes on second properties, or luxury items. Now you don't have any reason to need to know what everyone in the world has or does with their money.
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