And the US does add some local and regional tax to sales, no? I remember the prices were always "without tax", so as a consumer you don't know how much you actually have to pay.
There are no federal (nationwide) versions of those, though.
My current state has sales taxes (on non-essentials), property taxes that go to the state and the local school district (separate assessments), and an income tax to the state and my local district. The state counts income as earned income and passive income. Federal deductions reduce my tax burden there, but no such deductions obtain at the state or local level.
While it's popular to talk about the tax differential between the EU and US—and there is one—it's probably not quite as big as advertised (at least not in all states).
https://en.wikipedia.org/wiki/Excise_tax_in_the_United_State...
If it happens to be regressive, then that can be solved by giving everyone $x. And then you recoup via marginal income/marginal sales taxes.
They're to collect money for the government so that it can do things (or just sit on the money if you're a king). King George didn't tax the colonies because he wanted them to stop doing things; he did it because he wanted the money. In more modern times, a government raises taxes to pay for new roads or whatnot.
Using taxes as punishment is just a nice benefit that the government can wield.
A lot of these schemes to “help the poor” in fact “cement feudalism” by destroying the middle class to the benefit of elites.
I would think an exponential function would easily prevent this.
Income taxes don’t have that, as they’re a progressive tax.
The idea you’ll have an “exponential function” in the tax policy is pure lunacy that’s not politically tractable, though.
Obviously this whole idea is politically impossible as it would result in huge wealth redistribution, but it is funny that with all the technological innovations, a simple exponential function for determining taxes is considered to not be feasible.
Your final point is a non-sequitur:
The objection to an exponential function isn’t the technical complexity, but the behavior of exponential functions. You’re just dressing up “seize the wealthy’s money” in fancy math.
Though, you’re also understating the complexity of having such a variable tax and the second order impacts you’re likely to cause.
Edit — replying here as I hit my posting cap:
We care because our goal is a prosperous society for our citizens, for which we need a robust and active middle class.
We don’t exempt those goods from taxes (as we do with the essentials). My point has been that your vision for taxes creates a bi-modal distribution between rich and poor by laying a heavy tax burden on the middle class, until they wither — essentially creating feudalism.
A healthy society (with progressive taxes) creates opportunities for the poor to advance their well-being out of poverty by not over-encumbering the path to a middle class life. Regressive taxes are antithetical to that.
I am not understanding this. Why would we care what the percentage of tax paid is as a proportion of income? Poorer people have already been helped by reducing sales tax rates for the amount of spend needed to ascertain a certain quality of life. If they choose to spend more, and a higher income person chooses to spend less, why would society care that the lower income person pays more as a percentage of their income?
Look at healthcare spending. Look at social safety nets. Look at defense. Odds are that any spending in an attempt to make VAT less regressive would wind up looking a lot like those and having most of the same problems because it would be subject to the same sets of perverse incentives from top to bottom.
Every time a new handout gets created, there is a predictable round of complaining from the fiscal conservatives, but fiscal conservatives make up only about 10-15% of Republicans and 3-5% of Democrats so inevitably the handout eventually gets passed, perhaps with a name-change or some token constraint, but then once established becomes normalized and permanent.
You could make the argument either way that this fall's more on the rich. They tand to have more bigger cars, bit then you could argue that the poor have older less efficient cars, but it isn't really aimed at wealth. I suppose the key is that any party can arrange their lifestyle to avoid being worse off.
You set the marginal rates, or the parameters of the function for determining the marginal taxes equal to however much is needed to cover the costs.
to avoid this, the refund would itself need to be progressive, giving back to some more than others, which sounds like a worse version of just progressively taxing in the first place
We constantly got clients who were newly rich and believed there were all sorts of tricks and loopholes that would allow them to avoid paying taxes. They'd come to us with ideas about trusts, shell companies, charitable organizations, loans, whatever, and inevitably leave frustrated and disappointed when they learned the really was no way to use their new wealth without the government first taking half.
Some states with sales tax (Texas and Florida come to mind) already do something like this by excluding groceries from their sales tax program.
https://taxfoundation.org/sales-tax-grocery-tax-exemptions/
I always try to advocate for KISS, keep it simple, stupid. Want to help poor people? Give them cash. Want to prevent political fighting about who constitutes poor people? Give everyone cash. And then take back based on marginal income/property/sales taxes.
I see the wisdom of removing tax on necessities. But after that it's essentially everyone's choice what they buy.
The issue seems to be that things that only the wealthy can take advantage of are under taxed.
Given the reduced frequency of cash transactions, it might be feasible.
We're living that right now with inflation and supply chain scarcity. The wealthy have what they need and can afford to wait or shop around. The immediacy of need for a one car household to replace their only vehicle puts them at the whims of a highly fluctuating car market. A wealthy household can afford regular maintenance, more reliable cars, or just to Uber around every day.
At scale, we can't buy the computer components we need at a price that isn't a huge markup of what we paid three years ago, which either gets passed on to customers or means we have to limit our service offerings. Instead, we're suspending some operations and waiting it out while we rework some designs. We're about as big and wealthy as orgs get and can survive it.
The cash benefits tax rates can also be increased.
As a rough outline:
UBI to ensure minimum quality of life
Marginal sales tax to tax luxury purchases more than necessity purchases
Estate tax to prevent too wide of wealth gap.
The goal would be to incentivize income and disincentivize profligate spending. If one does not want to be at the whims of a highly fluctuating car market, then they have to plan accordingly. But in the worst case, the UBI will be the safety net, and whether or not that means they can afford a car is up to society.
> At scale, we can't buy the computer components we need at a price that isn't a huge markup of what we paid three years ago, which either gets passed on to customers or means we have to limit our service offerings. Instead, we're suspending some operations and waiting it out while we rework some designs. We're about as big and wealthy as orgs get and can survive it.
I am not sure how this relates, but I think this is getting more into anti trust rather than personal taxes. Either way, I think society should reward businesses (or individuals) that invest in robustness/redundancies/resiliencies.
Now imagine a rich person making $200k, spending $100k taxed at 10% because of marginal increases, and saving the rest. The rich person also pays a net tax rate of 5%.
For example, $0 to $50k per year spend is taxed at 0%, then $50k to $100k is 10%, etc.
Although a continuous exponential function is preferable than discrete cliffs.
Consumption up to that amount is taxed at 0%. Marginal consumption above that amount is taxed at 20%.
Making sales tax less regressive would be a good thing.
The implementation difficulties don't bother me per se; I think what's making me not like this idea is that it wouldn't do much for wealth disparity. If you're Wealthy with a capital W, you don't really spend that much, compared to your income.
But even if I'm also interested in tax policies to decrease the accumulation of massive amounts of wealth and the accompanying power in the hands of a single individual, I shouldn't dislike a tax policy that would do a different good thing -- if it could be implemented -- just because it doesn't do the other thing I want.
These problems can be solved via extremely high estate taxes or property taxes.
The Federal Reserve Act was a key turning point in the entire US approach to monetary policy, and was also passed in 1913 under Woodrow Wilson, who later said "I am a most unhappy man. I have unwittingly ruined my country."
Down this path lies a rabbit-hole of epic proportions. I'll say this, the crash of 1907, spurring the commission sent to wine and dine and learn how to do things the European central banker way, was engineered, and the surface version taught is false.