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Comment by mysterypie | Hacker News Reader

Possible solutions (speaking about the US of course):

1. Let the federal government establish a uniform national sales tax and outlaw all state and local sales taxes.

2. Even better, eliminate sales taxes entirely. Replace it with higher income taxes or property taxes. Yes, yes, I know, regressive, not progressive, taxing consumption is better, but there's something to be said about an economy without crazy levels of bureaucracy and regulations.

3. Just keep fighting off the states until they accept that Internet orders should be non-taxable. The Internet has completely changed the business models of music delivery, porn, and newspapers. No reason it can't eventually convince states to back off on sales taxes.

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You have it backwards. taxing consumption is actually more regressive than taxing income - the spending a wealthy person has is far more variable (and generally a lower % of income - some of it goes to investments, etc).

domestic investments => jobs

Not true if "investments" are just chasing fixed assets like real estate in a zero-sum manner.

Actually, there is no reason a consumption tax can't be progressive. Comsumption = income - net_savings. Some years you might even have negative net savings, and the formula still works.

It turns out that reports from all the same reporting entities that report to the IRS now are nearly sufficient to implement such a scheme, most of the data is there, it just might have to be reformated, perhaps some bits and pieces added to the report.

You can exempt consmption below some amount, say a reasonable amount of money to feed, cloth, and house your family, and provide basic transportation. Then you can have a progressive tax rate applied to consumption above that. Rich people are not going to stop buying yachts, fancy cars, linen suits, and avocado toast. The net effect on the economy should be good overall.

Usually when someone says "consumption taxes are regressive": a) they only imagine collecting the tax point-of-sale, and b) they don't imagine a consumption tax with a variable rate. But in reality, a progressive consumption tax is a simple matter of tweaking the current reports sent to the IRS by employers and financial entities for the income tax computation, and then applying different arithemetic.

The federal government has no Constitutional authority to outlaw sales taxes on intrastate sales.

This is worse - those are in-state sales according to most states: your goods are shipped from a warehouse in the state to an address in the state.

I did realize that, but there are ways the federal government could do it. For example, the way they strong-armed[1] all the states to impose a 55 mile per hour speed limit for a period of 2 decades by threatening to cut off highway funding.

[1] https://en.wikipedia.org/wiki/National_Maximum_Speed_Law#Ena...

That was an unconstitutional disgrace and should not be a model for the future.

I downvoted this, but now I wonder if I was too hasty. I agree that it might be a disgrace, but I don't know of any legitimate argument that the approach was unconstitutional. Do you have such an argument?

From a strictly legal perspective, probably not. But, in general, we shouldn't applaud the federal government effectively forcing the states to implement policies through indirect measures when it isn't allowed to do so directly.

There possibly comes a point when the stick becomes so big and so disconnected from the behavior being forced that an amenable Supreme Court rules it's an end run around the constitution.

They lacked the explicit constitutional power to enforce the federal will, so they did it in a sneaky, backhanded manner by pulling at the purse strings.

Same BS as making the uniform drinking age of 21 years.

The feds raise taxes in every state to pay for something, then extort those same states to dance to the federal tune in order to get back some of the money taken from their citizens to build roads that would benefit them. If the Feds didn't take that money, the state could have taken it to build their own roads.

It would be great if the federal power could not transfer funds to the states without using apportionment solely by criteria that cannot be gamed politically. Divide-and-conquer is not a tactic that should be countenanced within a federation of supposed equals.

I think Real ID is the latest round of the same way of strong-arming the states, by denying to non-compliant states a benefit that will be enjoyed by compliant states.

There was nothing unconstitutional about that. The States were free to set whatever speed limit they liked if they didn't want federal money to fix their state highways.

Moreover, that mechanism is precisely the mechanism by which the Federal government convinces states to enact federal policies: by dangling federal monies in exchange for the enactment of state laws.

False, the court found this sort of thing Constitutional in South Dakota v. Dole.

Wickard v. Filburn, 317 U.S. 111 (1942).

Ad. 2

I've seen proposals (in EU countries at least) to do the opposite: eliminate personal income tax in favour of VAT/Sales tax - removes the burden of filling (and more importantly processing) personal income tax returns, removes 99% of all entities that could be subject to tax audits and so on.

The parent comments mentions a solution where there can still be different tax regimes like the EU. But, you only pay tax to one place and they take care of splitting. Let the bureaucracy do it's work.

#2 sales tax is highly regressive/flat, income tax is progressive to highly progressive, and property tax is mildly progressive (property is a form of consumption).

Property taxes are fairly progressive, from where I sit. Richer people have more assets and would pay more taxes.

Except there is no accounting for income. So if I'm poor, or become poor, I still have to pay the assesed property tax on any property I own. I may be forced to sell the property as a result.

Property tax works against poor people being able to own property or keep property they own.

This is why elderly people who may own their homes free and clear can still be forced out of them when they retire or become disabled.

> ...if I'm poor, or become poor, I still have to pay the assesed property tax on any property I own.

Are you really poor if you own valuable assets?

Speaks to a problem of means testing property taxes on anything other than the property value - how to define poor in a way that can’t be games by skillful accounting?

A fix to this would be to lien the property with the unpaid taxes, but not force the sale. Eventually, the owner will sell or die. The tax liens can be recovered at that point.

For an example tax of 2%, the property could sustain the liens for decades, allowing the owner to keep control of the land, even if they're unable to pay the taxes owed. The revenue to the government could be provided by bonds backed by those liens. Maybe require some portion of the tax to be paid in cash, and some penalty rate on the liens, to encourage payment of taxes by those that can afford them?

If you're poor, how did you come to own the assets in the first place?

If you became poor, then maybe you should sell the property to gain more liquidity, balance your portfolio, and transfer the property to someone with enough income to fully maintain it.

People's situations change all the time. And saying that someone should have to leave their property that they own because they can't afford the taxes on it is pretty awful. Especially if they can't afford them because property values spiked.

Many jurisdictions offer deferred property tax payments for the retired, or disabled.

Aside from that, someone who owns valuable fixed property free and clear should be able to find a lender who can open a small mortgage against the property to cover taxes.

I would still require income to be able to pay back that mortgage.

They can also be quite regressive. If you buy a house somewhere, live in it and retire, and then property values shoot up, you're kinda screwed.

Hence Prop 13 in California--which lots of folks here complain about on a regular basis.

Alternatively Amazon could be responsible for collecting and paying the sales tax for you.

They could, but they don't want the potential liability when they get it wrong. And they will get it wrong, sales tax rules can be incredibly arcane.

For example, in Minnesota groceries are tax-free but ready-to-eat prepared food is not. If I buy a pizza from Papa John's it gets taxed, if I buy a bake-it-yourself pizza from Papa Murphy's it doesn't.

They already have to deal with this complexity for their own products.

Yes, but they can justify the liability for products they sell themselves. There's also a problem with products that Amazon doesn't sell which are carried only by third parties.

Something tells me "brick and mortar" won't be big fans of option 3.

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