Comment by gggggggg | Hacker News Reader

Comment by gggggggg | Hacker News Reader

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I gave up on that page very early. Its horrible.

That being said, I have a tax theory. Forgetting about the political power required to do such a thing. Would it be possible to do away with all the taxes and replace them with a very low sales tax that gets applied to everything. e.g. Farmer buys a cow, pay 1% sales tax Milk wholesaler buys the milk to process, pay 1% sales tax Shop buys the milk to sell, pay 1% sales tax Shop buys labour to work in the shop (staff), pay 1% sales tax I buy milk to consume, pay 1% sales tax

More examples. Trade BitCoin, pay 1% sales tax Sell a house, pay 1% sales tax Trade shares, pay 1% sales tax

I accept some of this will be hard to police without the incentive for smaller businesses to claim the tax back.

I believe the key to making this work, is having no possible way to get exemptions. Doesn't matter if you don't make a profit, you still pay, doesn't matter if you are a organisation looking to on-sell or a consumer, every transaction pays and no way to offset this.

Finding the magic % would be difficult, but is the key part. Would this be possible? Where could I go on the inter webs to ask if such a scenario would even be possible

That would really strongly encourage vertical integration.

Consider a company that owns oil wells, pipelines, refineries, and gas stations. It never pays sales tax on its petroleum products. Only the final consumer does on the gasoline he buys.

A competitor network made up of independent parts has an oil drilling independent pay sales tax after it sells crude to a trading firm, the pipeline owner pays sales tax on the money it gets from the driller for the use of its pipeline, the trading firm pays sales tax when it sells the crude to a refiner, the refiner pays sales tax when it sells the oil to an independently owned gas station, and finally the end consumer pays the same sales tax as the integrated firm when it sells to the end user.

Countries that raise significant revenue from sales taxes generally use a VAT (value added tax) to avoid this problem.

...and it's worth noting that the VAT is very susceptible to judgement calls and therefore lobbying by special interests and weird edge cases where canned tomatoes get one tax rate and fresh ones another.

Think through the effects a little bit if you do this you'll get big corporations buying their entire supply chain to end up at 1% tax to pay. The more complicated the supply chain the more expensive the products would become.

e.g say for a car you'd have 10 companies chained (mining company, refining company, plastic creation company, ...)

You'd end up with ~10% tax on a car but 2% for milk. Makes it very tricky to do specialized high tech produts

This would strongly encourage vertical integration. If a grocery store owns the dairy and the creamery, they can sell their cheese for significantly less than a grocery store that incurs tax when it buys cheese from the creamery that incurs tax when it buys milk from the dairy.

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