this post was submitted on 04 Feb 2024
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A Boring Dystopia
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How do we tax the rich?
Everything above the neck goes.
Get rid of an income tax and move to a federal sales tax on everything. Provide cost of living stipends for everyone. It could provide a safety net and stop tax avoidance schemes.
Sales tax on everything... isn't a tax on wealth. Why not just do some of the things Scandinavian countries do?
Why is it so all-or-nothing on any one idea? There is a lot of nuance in how you tax income, and the teeth and regulation in order to effectively tax corporations. E.g. Anything over 400k, taxed at 90%... is something. Suggesting to tax it instead at 0% because you can slap on some flat sales tax.... is just silly.
Doesn't help that politics are very corrupt, politicians can do insider trading, media is owned by private interests, unions are demonised and unsurprisingly workers rights are almost non-existent, and you have a two party system that's deeply flawed.
The US had a real shot at moving in the right direction, but the DNC saw it fit to sabotage its own candidate. I'd imagine treason charges for something like that... but, not even an apology.
Anyways....
You don't need to tax wealth. Amased wealth will be taxed when the wealth is spent.
I understood your argument. It's just not how it works. Even if amassed wealth was used to buy stuff as a exchange of goods, it wouldn't be anything significant, and it would be less significant the more wealth we're talking about. That in itself should clue you in on why this doesn't work.
If taxes is a problem in terms of inequality, why... not tax it more progressively then? That's the whole point of it. Reduce taxes for lower brackets, increase for higher brackets. Even if you thought 0% tax makes sense, which sort of already exists for the lowest bracket, and you want this to apply to more people... then, just do that, starting at from lower income side. Do the same starting from the upper income side, but there you increase it significantly. How far you go, is politics.
Put into place stricter regulations for the exploitation of workers. Actually enforce this stuff, not just give fines that are less than the gains. Replace your election system, it's broken. Etc. There are soooo many things, that actually make sense, and would have a good effect. But looking at say 400k+ incomes and thinking "tax it at 0%". Reagan's grave would look like the classic zombie stereotype, except it would be his dick protruding from the ground.
The thing a consumption tax fixes is eliminating all the tax avoidance schemes. People living off their wealth don't pay high taxes, they take out loans against their wealth and pay the loan back at 5% instead of the 20% capital gains tax. Carl Icahn, an investor was able to pay no income tax using this scheme. He had an adjusted gross income of $544 million but deducted it all from paying his 1.2 billion dollar loan.
That's... why you might want to tax wealth? Sales tax does literally nothing to address the problem of neither wealth nor income inequality. Income tax does address some of it. Removing it just because it doesn't address all of it is absurd. Thinking it is covered by sales tax, is even more so. Those who would be in the lower tax brackets would have less buying power, and those with high incomes would be having a party, well... until the fairly immediate collapse of the economy and the riots start, that is. Just because one aspect doesn't cover everything doesn't mean you remove it all-together and replace it with... well, I'm still curious.
The ways to circumvent paying taxes, is what you go after, but you don't do that by just removing existing obstacles. You do it by adding more obstacles. You can still tax income, and you adjust it to tax the high income earners much more. You evaluate wealth and tax that. You put a tax on absurd inheritances. You limit the profitability of trading necessities (e.g. housing) as goods by also high taxation.
The only thing I objected to in your original comment was to suggest 0% tax on income... and that this is compensated for by increasing sales tax... as if it solves anything at all. Income tax accounts for about 50% of the US federal budget. Tricks to avoid paying income tax are well known, but the idea of not addressing the issue, but instead just "start from scratch", or suggest to remove something fundamental to the function of a modern state, is ... tiresomely American. It's like the Churchill quote of Americans always doing the right thing, after having tried everything else.
Income inequality hasn't been solved by progressive income tax, it's not a magical sacred cow. It's always been flawed.