I don't think that is a given. If you put the consumption tax only on luxury goods it could be progressive. I doubt the poor are buying Rolex watches and if they are taxes aren't the problem.

I lived in different countries where they had both taxes. I think what also makes a difference is how that tax money is spent. Also, what gets taxed as a luxury item can be interesting. Things I did not expect to be taxed as luxurious items like books or tampons

The poor may not be buying Rolex watches, but you can be sure that there are a lot of kids out there lusting after $400 basketball shoes. And you might be surprised at what counts as a luxury sometimes - liquor, steak, and other goods that even poor people can sometimes afford.

If you start taxing luxury goods, all you do is put creature comforts further out of the reach of the majority. That is regressive.

This is actually wrong and for reasons that surprised me when I found out and it does not require luxury taxation.

Many? Most? People earning (say) $500k+ dodge their income tax, legally and illegally. There's a whole industry of it. Yes let's clamp down on that as we've been trying to across the world for decades. Not likely to eradicate it by next year though, right?

So you tax consumption at a flat rate /in addition/ to income tax. You ensure the people earning less get a tax break or a transfer payment increase to cover the consumption flat tax and then some.

All those wealthy people are now paying that base rate on their consumption in a way that is basically unavoidable.

So for your progressive taxation, the initial bracket cannot be avoided. People in higher brackets still should pay more.

By using consumption to tax the initial bracket the poor get an increase in after tax income. The rich (on average) get a higher tax bill.

Yes it depends on the modelling and getting the implementation right as all tax regimes do. Yes it is progressive.

When you see consumption tax as necessarily regressive (as I did once) you are missing the most important thing about them which is they really aren't. They're the best way of getting a big tax revenue increase at the expense of those who cheat. I like that, myself.

IMO if you're basing your tax model on people dodging half of it you've kind of missed the point. People willing to dodge taxes will dodge taxes one way or the other. Re: consumption tax, just buy stuff on Amazon, boom, taxes dodged. Or on eBay, receiving "gifts" from your seller.

The solution isn't to invent a whole new parallel tax system so the dodgers pay a little instead of what they owe, the solution is to get the tax money back from the dodgers. The unpaid taxes on the amount of wealth squirreled away offshore by the wealthy right now would pay off the entire US national debt.

“The unpaid taxes on the amount of wealth squirreled away offshore by the wealthy right now would pay off the entire US national debt.”

without a source i call BS on this.

us debt: 22 trillion. assuming 25% as median tax rate means that people in the US have more than 100 trillion USD stashed in offshore.

to put this in context, top 50 US companies have around 3 trillion USD in offshore.

About 11.5% of global GDP is hidden in offshore accounts, amounting to $8.7T, and unpaid taxes to the US would amount to $170B in 2016 alone. Another $70B avoided by companies, so around a quarter trillion dollars per years in net new missing taxes per year. Given that's less than the current deficit, it makes what I said unlikely, although depending how many years it's been going on that's a big piggy bank. I'll see if I can dig up what I was initially thinking, but I could have just mis-remembered.

[1] https://www.bostonglobe.com/ideas/2018/01/20/trillions-dolla...

Depends on what you tax. A high tariff on imported caviar or luxury sedans isn’t going to impact Joe Sixpack.

Good. Given a fair tax system would be proportional / flat, perhaps a little imbalance in the other direction evens it all out towards flat / proportional tax (everyone at the same percentage)

Right so those least able to pay, the ones who spend all they get — which is what keeps the economy moving btw, pay the same amount as people who are most able to pay and least likely to spend, slowing down the economy. How can I lose?!

Good point...I'd like to see a flat income tax of 0% and then have taxes based on consumption

So, the people with the most money pay the same tax as those with a low income?

That...doesn't sound fair at all. It's equality but not equity.

The parent comment talked about a flat percentage tax. So the people with more money would not be paying the "same tax". They would still be paying a lot more. A truly fair tax would have everyone paying the same flat fee for the same public services rendered.

It isn’t, though, because of the marginal utility of money. Someone making $10k/yr sees much more value from an extra $10k than someone making $10M. For one it’s a lifeline and for one a rounding error. While a flat tax is fair in numbers it’s not fair in marginal value or utility. IMO that’s a much bigger deal. There are other macroeconomic advantages to giving the little guy the extra, though I don’t want to repeat myself so I’ll keep that in my sister reply.

FWIW we’ve already got regressive taxes in the form of payroll tax, which kick in from $0 and cap out once you earn enough. So unless you’re unemployed, you’ve paid taxes even if your marginal income tax rate is 0%.

I feel you are reinventing definitions. The “same tax” would be very literally giving up the same value. The only common definition of value in society is currency - that is literally its role, to serve as a common measure (and storage) of utility. It does not confer net utility in and of itself (goods and services do), and therefore this argument of marginality doesn’t apply to it.

I understand that goods and services acquired with currency can experience diminishing returns. But unless you think the rich and poor should be paying different amounts for every good and service (for example a cup of coffee), then I don’t think this is a consistent, principled argument.

And once again, let me point out that GP’s comment on a flat tax would STILL mean the rich give up more value than the poor, and it would still not be a truly ‘fair’ tax. And on a side note, ‘progressive’/‘regressive’ are made up terms used to play rhetorical games by leveraging the negative connotation of the term ‘regressive’. A better set of neutral terms would be ‘uniform’ or ‘fair’ or ‘flat’ versus ‘non-uniform’ or ‘unfair’ or ‘graduated’.

The rich already pay different amounts than the poor for goods and services in pre-tax dollars. That's kind of the idea, IMO. If my average tax rate is 28% and a poor person pays an average 5% then the same $5 SF coffee costs me $6.94 and them $5.26.

The dictionary definition is quite clear: A progressive tax is a tax in which the average tax rate (taxes paid ÷ personal income) increases as the taxable amount increases. [Google]

A regressive tax is a tax applied uniformly, taking a larger percentage of income from low-income earners than from high-income earners. It is in opposition to a progressive tax, which takes a larger percentage from high-income earners. [Also Google]

As such, Medicare taxes are regressive because they are capped at some amount of earned income, whereas the ordinary income tax rate is progressive because your marginal rate increases as you earn more money.

You are correct that a flat tax is neither progressive nor regressive with respect to dollars, but it is regressive with respect to marginal utility of those dollars to the earner. "Fair" is a value judgement and colors the conversation.

And labels of ‘progressive’ and ‘regressive’ aren’t value judgments? IMO they are subjective judgments much more so than calling a true flat tax “fair”. Equal value contribution is fair, after all.

The dictionary definitions you are quoting are in existence simply due to common use in modern times, but I am claiming they are nevertheless bad definitions that were engineered to color the discourse on this topic.

Exactly.

We're both kids. I have 12 marbles. You have 24 marbles. We need to give up some marbles for the common good. We could debate whether us both giving 6 marble is fair, or wether you giving 8 and me giving 4 is fair. I can see both arguments.

However… in no rational world is it fair for you to give 10 and me 2.

Marbles aren't a good analogy because they have equal marginal utility.

Let's replace marbles with hamburgers. You and your buddy Steve lay out your food for the day. You have 2 hamburgers, exactly enough to meet your daily caloric needs. Your buddy Steve has approximately 10 hamburgers. Dramatically more hamburgers than he needs to live. More than he could eat if he tried.

Now, we need 1 hamburger for the common good. If you take that one hamburger from the guy with 2, he's hungry, and if you keep doing it, he may die. Steve, on the other hand, can't eat all his hamburgers one way or the other, so taking one from him makes much less of a difference.

Now how does that change the equation? It's fair for Steve to donate 0.8 burgers and you to donate 0.2 -- this represents fair distribution on a marginal value basis. So yes, 10:2 is completely fair. In fact, 10:0 is fair if I'm making millions and someone else is making a handful of thousands per year.

I'm personally in one of the top tax brackets and I think it should be higher. We already pay 50%-ish marginally in California, so moving up to AOC's 70% isn't really a big difference. I should be paying more, because we live in a community and I want that community to be nice. I don't want to live in a world where I have nice things and walk by people with nothing, on the ground, doing heroin like I do on my way to work every morning here in SF. All because it's not "fair" to take a burger from me, when I have more burgers than I know what to do with.

Progressive, as in, it progresses upward with income. Regressive as in the tax rate regresses (moves downward) with income. It's a descriptive term. Fair is a value judgement, "progression" is a description. While all words and names carry some value judgement I think "progressive and regressive" (as related to the marginal rate) carries less value judgement that ("fair and unfair").

"Regressive" is not a synonym for "flat" - a flat tax is neither progressive nor regressive. And these terms are purely descriptive, defined via their effect on the effective tax rates.