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Comment by loceng | Hacker News Reader

POTUS candidate Andrew Yang's foundation for his #1 policy/solution is a 10% VAT tax.

Edit: Curious why facts are downvoted? Does HN not like discussing solutions and people actively working on solutions?

I almost never weigh in on political stuff. But, F* that. Do you want to be able to never afford anything? Because, that's a good start. What we really need to do is balance the budget by cutting back on the quantity and expensiveness of existing programs. The government needs to optimize. We are spending too much. Which are dirty words no one wants to hear or perform.

You’re right that VAT is regressive and the middle class would bear the brunt of it, but I encourage you to consider other ways to address the issue. “Cutting spending“ is almost always code for “cutting spending on stuff the middle class and poor need,” which only pits workers against workers. Rather than die in a circular firing squad, how else could the shortfall be explained? Look into stagnant wages, wealth inequality, and ask where all the productivity gains of the computing revolution have gone.

Not the parent poster, but we should probably start with our biggest outlays, and work down from there. I'm assuming that's military spending and entitlement programs. If I'm wrong, we can start with whatever the two largest outlays actually are.

I believe that Medicaid, Medicare, and Social Security make up close to 50% of the government's budget. Put military spending in there, and I'd be surprised if it didn't go over 75%.

Note that at all levels of government, spending is close to $7 trillion annually, with only $4 trillion from the federal government. Medicare and SS are together about $1.5 trillion. Defense is about $700 billion. Roads, education, schools, etc., make up most of the $3 trillion state spending.

I'm not against sales tax; there are many benefits to it.

However

A 10% sales tax is a 10% tax on poor people's disposable income since they have almost no savings. How do we square that regressive circle?

In Yang's case, the 10% VAT is accompanied by a $1000/month Universal Basic Income.

That should eliminate all the income from the VAT and then some, so the firefighters are still dropping your calls.

$ 1000/adultmonth = $ 12 000 / adultyear. -> requires $120 000 of disposable income spent per adult. Very few people spend $120 000 of VATable (A family making $300 000, a good income, doesn't spend anywhere near $120 000)

This assume everything is taxed under VAT. As Yang has discussed, necessities don't need to be taxed. Luxury items can have a higher tax.

In the UK at least a lot of "basic" things are exempt from VAT, although the rules are quite complex:

https://www.gov.uk/guidance/rates-of-vat-on-different-goods-...

In Europe they largely don’t try to square the circle, aside from maybe exempting necessities like food. They offer efficient, high quality welfare services to low income people in return for those taxes. (Of course, low income people get much more in services than they pay in VAT.)

But they do, in a way, by using those increased revenues to fund a comprehensive social safety net. If you just add VAT in the US, yeah it would be a disaster.

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