[Kazan]

aldo: i did the freaking math right in front of you, contrary to goober5000's assertion math != statistics

[aldo_14]

Then a secondary source shouldn't be a problem in asserting logical validity.

Offhand, have you factored in staple goods exemptions?  Or the possibility of combination income+Sale/Value Added Tax (secondary issue) as in the EU?

[Kazan]

staple good exemptions are irrelevant - both the poor and the rich buy stable goods

the tax proposed is not the same as what you have in britain, and what you have in britain is whack as well

[aldo_14]

I would wager that's the whole point of staple goods exemptions for VAT / sales tax - that way you only tax (or tax highest/er) the luxury goods for which the primary (or most frequent) consumers are the middle / upper class with the highest disposable income.

So, for example, you don't charge tax for people buying books, but you do for TVs.  You don't charge for bread or fruit but you do for cake & sweets, etc.

[Kazan]

people in every tier buy things considered "luxury goods", the effective tax is still higher for the person with less income

[aldo_14]

But not in (raw) monetary terms.

[Kazan]

actually it is - see previous calculations

[aldo_14]

Person with more money > buys more > pays more sales tax

Surely?

At at the end of the day, I presume you want people with most money to pay the most (per individual) as per income tax.  All I could see from your calculations was based upon an assumption that the upper-class spend less money on luxury items; the other big calculation was upon a house purchase and unless I'm not mistaken those are fairly infrequent events in an individuals life to make an overall derivation from (also, what about multiple house purchases, or different rates of changing home?).

[Kazan]

it's a double fallacy

A) "person with more money buys more" is not necceasrily true - it's less than 50% probable
B) they are still proportionately taxed less due to fixed-price-items

[aldo_14]

b) is only proven true if a) is true, unless I'm mistaken (because I'm sure  you'd need an idea of the average higher-sales-band purchase to work out the proportionate taxation).   And again, the raw numbers should mean more money is coming from a rich individual than a poorer one.

So...is a) proven? Can I see the stats please?

(and also any demographic info of customer income vs purchase volume / cost)

EDIt; actually I'm off to bed now, so no hurry.

[Kazan]

A) is not true, like i cited earlier they looked into it - most people with net worth >= 1mil are very frugal


however - even IF the richer person buys more their effective tax rate is STILL lower - refer to the mortgage example earlier

[aldo_14]

But the mortgage example is a single purchase; not a long-term illustration of relative spending by the 2 demographics.  For example, what about house furnishing costs (are we assuming neither will buy stuff to go in their house here)?

For example, I just bought a 700 quid TV; the VAt component (17.5% of that price) is a large taxation RE my actual income.  However, I only buy that one item once every few years, and only once.  Whereas someone with more money than myself may buy not only a more expensive telly, but more often and in a larger quantity - it's the stats on that sort of issue which interest me.

And that is of course assuming you apply purchase tax to a house (you don't in the UK, I think; a different and notably ****ed up tax based upon the property value applies); i.e. would a house costing below xx (of the local average, perhaps) be exampted or lower tax banded?

[Kazan]

aldo it demonstrates that for SIZE of purchase the rich guy is still effectively paying less

Whereas someone with more money than myself may buy not only a more expensive telly, but more often and in a larger quantity

the quantity assumption is exactly that: an assumption

let's calculate something here

you make what? 20K/year?

using the vat as T=17.5% that makes (Total Purcase Cost)=(Price)*1.175

say you bought a 700 quid tv that's 822.5 quid w/ taxes effectively 0.6% on your income

say a guy making 40k/year bought a 1000 quid tv - that's 1175 quid w/ taxes, that's effectively 0.4375 on his income, if he bought the 700 quid one the effective tax rate on his income is 0.3%

when figuring out comparative tax burden it is only appropriate to use equal priced items. Doing anything else is making assumptions that break down in real life.

there is simply no possible way to make a sales tax fair, and have the government have enough income -- a NST would cause an economic crash


It would do this two ways A) make the government debt skyrocket even faster (which causes a long term problem)
B) consumers would spend less (effectively, ie purchase fewer items) because the cost of those items when up, and their incomes did not.  a NST is effectively instant inflation

[Bobboau]

"no possible way to make a sales tax fair, and have the government have enough income"

so are you saying there is a way to make it fair that just isn't practical?

[aldo_14]

VAT is included in the price; so the TV was £700 including tax.  Raw cost ~ 595, so tax is £105

My income is 1200 per month on a 6 month contact, expand that to a year for sake of this and it's roughly 14400.  + completion bonus(es), that's... ~£16,400.  Approx 0.64% tax (I think my income tax is 5%, incidentally; I just scrape into the lowest bracket, but I haven't factored my deductibles for self employment into that yet)

Also, I'm not just meaning someone buying the same TV; I'm meaning someone purchasing a new TV with improved spending power (i.e. can & will spend more as they have more)

I bought a £700 TV because I don't make much (sod all).  But, had I earned more and had a longer-term contract, I would have went for something a bit bigger and more expensive.  At 40k, I wouldn't just be buying a bigger TV, but much more stuff to go alongside it - new hifi, dvd, etc.  Of course, at £40k I'd probably also be paying off council tax for a flat, and have the cost of furnishing that, if you want to go really assumptative about it.

So what I need to know, is both the value of individual items bought by demographic, and also the quantity of them over a set time period (say 1 year).  

Because obviously I can't go solely by myself as an example; but i do know that with more money, I'd buy both more items and more expensive items (disposable income).  I'd imagine, as an aside, my ratio of money spend on necessities : money spent on luxuries would be vastly different, too.

[Mad Bomber]

I see it as the moral responsibility of the affluent to help provide for the less fortunate. It's just the right thing to do. It's even a basic tenet of Islam IIRC, and charity to those in need is mentioned plenty of times in the Bible.

And if some of them are going to be stingy bastards about it, well that's what the income tax and the IRS are for. (Hate to say it but they're a necessary evil.)

People should be able to choose which avenue to take to help one another -- through their church, their community, through taxes, or whatnot. It's everyone's responsibility to pull everyone up, not just the government or just the community.


In any case, I think that a National Sales Tax would exascerbate the rich-poor divide. It would also reduce the amount of money the government gets, and would slow the economy a lot as people restrict their purchases mostly to essentials (food, clothes, rent).

The tech sector in particular would implode for lack of sales and expensive production costs, and without that edge India and China will eat us alive. (Again, the international supercorporations, with lots of manufacturing in Asia reap the benefits, but do we?)

As the government gets less money, programs to help the poor and those unable to work (Social Security, welfare) have to be cut. "Starving the beast" of government is not what I had in mind. It's a government of, by, and for the people, and that's something to be cherished and protected, not starved, damnit.

Besides which, I can think of at least two states that would be hit very hard by this: Delaware and Montana. Both pride themselves on having no sales tax and attract a lot of buyers there. Both states would see a massive collapse in their local economies as stores and businesses see no reason to set up shop there anymore.


Also, aren't the Republicans supposed to be the party of states' rights? Funny how things change so quickly when the Republicans control Washington.


Mmkay. I'm done.

[aldo_14]

I would not say a sales tax as the one taxation method is correct, i.e. replacing income tax.  But I think it should have merits running in parallel to, for example, PAYE or progressive income tax.

[Kazan]

a small sales tax (5-8%) is fine, locally, which is what we already have

that funds schools, local government projects, etc


the federal government could not run off the income from a sales tax, it would also create an instant economic crash if it were to try to

this national sales tax would eliminate our progressive income tax and replace it with a sales tax (which are inherently regressive)

[Zarax]

BTW...
Historically (at least in some parts of Europe) the income tax was made to supplement the existing sales tax due to insufficent taxation income for the government, and that was in middle nineteen century, where you couldn't certainly call for state spending...

[Kazan]

Originally posted by Bobboau
"no possible way to make a sales tax fair, and have the government have enough income"

so are you saying there is a way to make it fair that just isn't practical?

actually no - im saying that both are unobtainable


to make it so it doesn't put most the tax burden on the poor you'd have to make everyone under a certain income exempt, but that's not fair to the people over that income

even with everyone paying into it the government still wouldn't have even revenue