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Comment by landemva | Hacker News Reader

Yes simlified taxes - repeal the personal income tax and replace with consumption-based sales tax. No more W2 withholding, no more individual fed/state filing, no more deduction games, no need for tax prep sites.

Maybe the sales tax would be zero rate for uncooked food at grocery stores.

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Simplified taxes does not have to mean lower taxes. You're conflating 2 issues (or intentionally associating them).

Removing loopholes, reducing the kinds of things that can be claimed without solid proof (or likelihood of needing to be proved, or complicated to prove), reducing the amount of paperwork that can create loopholes, etc. is part of simplifying.

Removing personal deductions, a simple 1-step calculation, is not simplifying.

And reducing tax rates is not necessary to simplify taxes. A graduated income tax is very simple.

Think about it harder. Don't be intellectually lazy and just jump to cutting certain taxes because it would be "simpler". Unless that's your goal.

>> Simplified taxes does not have to mean lower taxes. You're conflating 2 issues.

When did I suggest lower taxes? I suggested sales tax increase which would offset removal of personal income tax.

You're implicitly implying that sales taxes would be lower than an income tax. Which they would not be (for most taxpayers), in order to raise the same amount of revenue.

Sales taxes are generally regressive.

If you're poor you're paying a high percentage of your income on this sales tax.

If you're not poor a much smaller percentage will be towards sales tax.

>> of your income

Rich people have investments and that is not income for tax purposes if it is correctly set up. For many rich, they have escaped from W2 taxes on income. "Income" according to the personal income tax code of IRS.

Poor working people, and middle class, have IRS income. The rich have investments and trusts and LLCs and loopholes.

LLCs cannot be used to avoid income taxes. The income from an LLC passes through directly to the tax returns of the owners, where taxes on it are due and payable. Same with trusts and trust beneficiaries.

Capital gains on investments are taxable as well, although some people can defer paying capital gains taxes simply by not selling until they need to. That does not avoid taxes, but rather defer them until later.

If anything "the rich" are subject to additional taxes, notably estate taxes. Irrevocable trusts can be used to reduce estate taxes, but do not reduce income taxes except by having a different person (the trust beneficiary) pay taxes on trust income.

So enact a hugely regressive tax that hits poor people the hardest as a percent of income, while lets rich people accumulate obscene wealth tax free? That’s what funding everything with sales tax does.

Poor people don't have mortgage interest deduction and other tax deduction acrobatics, so poor people are harmed today. And removal of paycheck W2 withholding would be a take home pay increase. The tax prep sites and government paper pushers would have to find something else to do for work. The corporate income tax could remain, if you like.

That has nothing to do with the deductions they get now?

If W2 withholding was removed, people who have more take home pay then go into debt when taxes were due.

To clarify, I suggest remove the personal income tax so there is no need for W2 withholding. Replace with a sales tax, with basic necessities having zero rate sales tax.

Poor people are harmed by the loopholes not the inherent principles, so instead of fixing the loopholes the proposal is to move a plan that inherently hurts poor people, no loop holes needed. Wow what a great plan.

Consumption taxes are hugely regressive, and really hit poor people hard. This would make doing taxes easier and probably cheaper for well paid programmers (like many of us), and hit poor people hard. We need non-regressive taxes. California has high taxes but surprisingly is less regressive than many places. I say surprisingly because it's hard to overcome the power of wealthy people pushing tax rates down for themselves via political donation (such as is seen in the us federal tax system).

This would disproportionally hit the poor. And the rich would be laughing even harder because their tax rate would effectively drop to zero.

The rich already laugh because their gains are not mostly W2 income. The rich already opted out.

No reason to make it even worse. Some rich guy I know wanted to show me his art collection, a whole bunch of non-descript stuff that sold for an immense amount of money. All I could think was to encourage him to buy more art: his money would be in better hands if it flowed back into the world through the artists. Then I learned that it is just a speculative thing, that there is a whole industry around this and that the artists see almost nothing of the money. But the galleries, the 'connoisseurs', the auction houses and the brokers all make bank. And they too are rich people... quite frustrating.

My grandmother was a walking collection of proverbs and one of the more pointy ones was 'the devil always shits on the larger heap'. I'm not sure if the meaning comes across in English but the gist is that once you're wealthy more wealth is pretty much guaranteed whereas the poor just get poorer.

Then automatically give a tax credit to the poor. (yeah, I know how well that would go over in the US)

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