The Glade 4.0

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Well Ali Baba had them forty thieves, Scheherezade had a thousand tales
But master you in luck 'cause up your sleeves you got a brand of magic never fails...
...Mister Aladdin, sir, What will your pleasure be?
Let me take your order, Jot it down -You ain't never had a friend like me
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Once again, you are committing a bare assertion fallacy. There is nothing ordinary about making taxation relative to income in a system without only a flat consumption tax. Indeed, as Wikipedia notes:The marker for regression is always the amount taxed, not the source of that taxation. Consequently, current taxation is REGRESSIVE, because payroll taxes are capped, thereby exempting any portion of income over $185,000, as the amount taxed is income. Asset taxes, such as inheritance taxes, are also regressive except existing exemptions that are periodically evaluated or eliminated based on the whims of Congress and the Executive. Consumption taxes are not regressive, because they do not scale with inversely with consumption.

So, again, please explain how a VAT only system with a flat consumption tax is regressive without shifting the marker outside the accepted and standard definition.

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Is there any particular reason why we care if a tax is regressive or not?

This is sounding a lot like the "is the guy a terrorist or not"arguments. Ok, whether he is or isn't, "terrorist" is just a categorization. It shouldn't be a giant issue whether he is or not unless you've got some reason to want the emotional connotations of the word on your side.

Similarly, I'm wondering why it really matters if a tax is regressive or not by any definition unless people are just accepting that regressice = inherently good or inherently bad.

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"Hysterical children shrieking about right-wing anything need to go sit in the corner and be quiet while the adults are talking."

Diamondeye:

That's a little hairier, but the general position is that regressive taxation is bad.

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I feel an lot like when I am dealing with a dispute at home.


"Keira, no. I don't care. Lachlan, NO. If you two can't get along, you BOTH go to bed. No, I don't want to hear another word about it. SHUT IT!"


Of course, they're 7 and 4 years old...

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Well Ali Baba had them forty thieves, Scheherezade had a thousand tales
But master you in luck 'cause up your sleeves you got a brand of magic never fails...
...Mister Aladdin, sir, What will your pleasure be?
Let me take your order, Jot it down -You ain't never had a friend like me
█ ♣ █

Why?

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"Hysterical children shrieking about right-wing anything need to go sit in the corner and be quiet while the adults are talking."

Diamondeye:

The simplest answer is fairness, but that's a long discussion about Rousseau, Smith, and Adams. Economically speaking, it's rather material. Currently, the United States has two competing individual tax systems: Payroll Taxes (FICA, Social Security) and Income Taxes. U.S. Payroll Taxes are the definitive example of regressive taxation. They have a hard ceiling, after which no more income can be taxed for this purpose. Income Taxes are the definitive example of progressive taxation: burden scales both absolutely and percentage wise relative to income.

In an aggregate super economy, like the United States, regressive taxation limits and marginalizes the economic power of those struggling to meet necessity level expenditures. Moreover, it divorces the laborer from their productivity. Even though tax credits alleviate some of this burden, the net effect is to reduce economic viability and increase real poverty for those living paycheck to paycheck. It also presents several interesting complications to fiscal responsibility. The combination of the two means that income growth relative to inflation, assuming a Heterodox Managed Economic, is generally slow and inadequate because the level at which immediate financial need evaporates is significantly higher than the mean individual income in the U.S.

Short version: more poverty, more crime, more credit dependent individuals.

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It all started with Robin Hood. Taking from the rich and giving to the poor makes for good theater. If you're rich, it's automagically assumed that you got that way by stepping on the backs of the poor.

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In time, this too shall pass.

How much of that is inherent to the regressiveness of the tax, and how much to the way it is handled here, specifically the fact that it exists in conjunction with other taxes?

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"Hysterical children shrieking about right-wing anything need to go sit in the corner and be quiet while the adults are talking."

Most people who argue for Fairtax or a flat consumption tax do so with the argument of, "progressive taxation is unfair, we should do this instead." If regressive taxation is morally acceptable then progressive taxation is even more so.

Also, people are suspicious of those that propose flat consumption tax systems because they make absolutely absurd claims. 11% consumption tax would be revenue neutral with the current tax system? Really? A tax system that, in the best possible case, (everyone consumes 100% of their income) is equivalent to an 11% income tax somehow collects more money than the current system where the rate is over three times as high? It's absurd. The people making $200k or more currently pay over 60% of all US income taxes. You are seriously going to claim that if you implement a tax system that taxes this group at 11% of their consumption, which is highly unlikely to be anywhere near 100% of their income on average, you will somehow still recover the same amount of money as a >30% total income tax on them? Combine this with wall-banger assertions that are completely impossible, (flat consumption tax proponents frequently claim that it would cause nearly everyone in the country to pay less of their total income in taxes yet somehow magically generate more money for the government, even though everyone is paying less out.) and you see why the position gets no respect.

No its not absurd Xeq as there would be no safe harbors like the current loophole strewn tax code. You're making a huge simplification by assuming people with lots of money pay those listed tax amounts when in reality many of them claim 0 taxable income.

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"...but there exists also in the human heart a depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom." - De Tocqueville

Wait, I thought taxes on the rich were too high with the current tax system? Now they pay very little?

No, he's not saying that. He's saying the high taxes on them combined with the complex tax code cause them to get taxed as if they have 0 income... in other words as if they were poor.

If the tax rates were lower there would be less incentive to do this, and if they were simpler, there would be less opportunity.

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"Hysterical children shrieking about right-wing anything need to go sit in the corner and be quiet while the adults are talking."

I've never seen an 11% consumption tax proposed as revenue neutral. Fair Tax, for instance, proposes a 23% inclusive rate.

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"Aaaah! Emotions are weird!" - Amdee
"... Mirrorshades prevent the forces of normalcy from realizing that one is crazed and possibly dangerous. They are the symbol of the sun-staring visionary, the biker, the rocker, the policeman, and similar outlaws." - Bruce Sterling, preface to Mirrorshades

They are. Its just the creation of loopholes exists specifically for the well connected to escape taxation burdens. Do you really think a rich person is going to donate to the political campaign of someone who will cause direct harm to them if there isn't an escape vehicle? Why do you think legislators exempt some businesses from taxation or groups - its so they still get funded by those groups and businesses.

The individual rich can offshore money and harbor it in various other locations if they play the game right. This doesn't mean that a tax rate of almost 40% isn't obscene. In fact the obscene nature of it is one reason it is avoided with so much effort.

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"...but there exists also in the human heart a depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom." - De Tocqueville

Wouldn't a federal sales tax result in big-ticket items being purchased overseas?

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Which particular items? I assume you're talking about items with prices above $1000?

TV's, computers, cars, planes, etc... I can't see them being purchased overseas 'cause you would have to pay duties to get them back in the country. Cars and things like that still need to be licensed here if you want to use them here. Boats maybe... I don't know how that works, but still I don't think it would amount to much. I reserve the right to be wrong on this, but I don't see overseas purchases being a huge deal.

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In time, this too shall pass.

Its more expensive to bring vehicles into California. Between import fees and smog work its cheaper to go the normal route than try to circumvent it, especially if you get caught not having done the required paperwork and conversions.

One of my buddies kept getting his car registered, much more cheaply, in the state where he came from. Worked for years, then he got a ticket, and the cop wrote him up for out of state tags when he noticed the car was registered in his name, and the two year registration was about to expire, and his California driver's license was about to expire.

His lawyer told him yes, they could fight it, but it would cost him even more than the penalty for his lawyer's fees and he would lose and still have to get the conversion done.

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The U. S. Constitution doesn't guarantee happiness, only the pursuit of it. You have to catch up with it yourself. B. Franklin

"A mind needs books like a sword needs a whetstone." -- Tyrion Lannister, A Game of Thrones

So, therefore by deduction, Hellfire is for ...

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

Personal attacks and mindlessness.

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The U. S. Constitution doesn't guarantee happiness, only the pursuit of it. You have to catch up with it yourself. B. Franklin

"A mind needs books like a sword needs a whetstone." -- Tyrion Lannister, A Game of Thrones

X-Treme discussion.

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In time, this too shall pass.

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

/em returns to the scene of the crime!



Like I said, I know what the technical definition of regressive is, but I honestly never see it used that way outside of formal economics discussions. In my experience, even economists, when writing for the informed layman, refer to consumption taxes as regressive because they are "regressive" with respect to income. I don't know that there's any political/partisan advantage to using it that way, though. "Regressive" is a dirty word to the left, but "progressive" is a dirty word to the right, so the advantage, if any, is probably highly dependent on one's audience.

Anyway, terminological debates aside, the point I was trying to make was simply that even though a flat consumption tax takes an equal % of everyone's expenditures, it takes a higher % of poorer people's incomes. As for the current tax system, I agree that it's at least borderline regressive overall. I'm not even necessarily opposed to changing over to a consumption tax (though I worry about the lack of transparency with a VAT). I just think any tax reform proposal has to take into account what % of people's income will be taxed away, since that's the number that best describes the impact of the tax on standard of living.

RangerDave:

Even progressive income taxes, such as our own, take a higher percentage of poor people's incomes. The complexity of our current system certain favors the rich, hence so much income being moved to non-AMT affected sources. I'm still absolutely certain I can make more money in a year than Joe Average Poverty Guy can still get the EIC.

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