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Comment by jacooper | Hacker News Reader

Its better than vat, which increases the price on everyone, without taking their income into consideration.

Higher income people buy more stuff with a higher price tag. VAT is the most fair way to tax. You can reduce it for essentials such as baby formula and increase the rate for luxury cars, etc.

Consumption does not scale like that. If I consume 30% of my salary under the median income, there’s no way wealthy people making say, $10 million a year are spending 30% of that on consumption. Sure, some might, but many recent 1st generation wealthy are savers and would tend to invest income, not consume it.

VAT is regressive without some kind of subsidy or UBI.

There's a lot of the middle ground between "median income" and "$10 million per year". There are stories in the web about people who struggle to make ends meet on $400-500k income, because of "lifestyle inflation": big house, expensive clothes, eating out in fancy restaurants, exotic vacations - those people would pay tons of VAT tax :)

For people who actually make $10 million per year, and do not pay much in VAT, there are still better ways to tax them than the income tax (which they can avoid with some tax optimization scheme), like property taxes, or capital gain tax.

In eat the same food amount than my friends, but make a lot more money. 25% vat on pasta means nothing to me. Heck, I don't even look at food price.

But it means a lot to some of my friends with minimal wage.

Again you have your head around that all money should be taxed. And the government owns a percentage, or it’s not “fair“.

As long as the rich dude is investing it in businesses and things that push the economy forward, I see no issue with it. And of course that rich dude one day is going to wanna buy the Lambo, boats, and boob jobs for the girlfriend … and that’s when we tax him.

And by the way you’d be shocked at how much is rich people spend. I literally know guys making 10 million a year, with virtually no savings.

What is fair? For people that can save most of their money, VAT is a neglible proportion of their income. Poor people which spend all of their money (and more!) will pay a lot of VAT proportional to their income.

The first person might pay more in absolute terms, but that doesn't sound fair to me.

Incomes and savings have no utility to people until they are spent.

As a society, we want people saving for the future and investing in businesses. If someone’s doing actions that are beneficial to society, I see no reason to tax them. But as soon as you buy the Lambo … you get taxed.

Let’s take another example. Two middle-class households with exactly the same income. One household, is putting every cent they can towards a 529 plan for their kids college education. Any left over goes towards retirement. The second household, spends every dollar they have on luxury items and toys.

Why should both households be taxed at the exact same rate?

There is no arbitrary, technical way to tax that does not impose a value judgment.

"People who have more than they need to live are greedy and need to have their money taken and given to those who do not."

^ That is the most fair way to tax.

Canada has a quarterly “VAT” rebate (technically GST and PST, or HST depending on your province) scheme for lower incomes.

Make below X based on last year’s tax return? Here’s a quarterly cheque to offset the average individual’s sales tax.

That sounds like a particularly bad way to do it, it's cheaper for poor people but only after they have spent the larger amount.

So if price was a barrier before, it will still be a barrier afterwards unless you can afford to loan your money out to the government for 3 months

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