No tax on tips: Why politicians love it, and economists don't

Re:No tax on tips: Why politicians love it, and economists d... by pdonis on Thursday August 15, 2024 @01:56PM (#41258687)

What you are calling "unearned income" can still represent production indirectly, since it is income from passive investments, which are supposed to give returns based on creating wealth. It is true that that isn't always the case, however, particularly when such investments can include various sorts of derivatives and other zero-sum transactions.

That said, if no income were taxed at all, any disparity between how the various kinds of income were taxed would go away.

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Re:No tax on tips: Why politicians love it, and economists d... by mattgrice on Friday August 16, 2024 @03:24AM (#41263982)

That seems a very elegant solution to the problem of fair income taxes. Just don't tax income, that way you can't have a disparity in income tax. What should we tax instead? Capital seems to me a viable choice. It would be a lot more work for everyone, though.

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Re:No tax on tips: Why politicians love it, and economists d... by pdonis on Friday August 16, 2024 @10:25AM (#41266735)

> What should we tax instead?

My proposal (in the GP of the post you responded to) was to tax consumption, i.e., a national sales tax or something like it.

> Capital seems to me a viable choice.

What would count as "capital"?

Whatever the answer is, this would seem to me to have the same issue as income taxes have: you would be taxing production instead of consumption, hence lowering the incentive to produce.

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Re:No tax on tips: Why politicians love it, and economists d... by triceratops on Friday August 16, 2024 @01:46PM (#41268601)

> What you are calling "unearned income"

It's not an ideological framing. The IRS calls it that.

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