Quote:
Originally Posted by Slava
I'd greatly prefer consumption taxes over income taxes. They're efficient, and you can structure them to avoid the regressive aspect.
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I think people who think that you can structure consumption taxes so as not to be regressive, is either think explicitly of luxuries, tourism, new build housing, new cars... But I do worry about loopholes and administrative burdens related to taxes that are focused too narrowly. Or they have not clue how oppressive it is living truly pay cheque to pay check (without credit), spending $50/month on GST, then getting a $50 gst credit back at the end of the month is not a null outcome for the poor, they will experience interest and fees on things like predatory pay day loans, or purchase smaller packaging at higher per unit cost, while waiting for the credit, and will come out money behind.
It also ignores the re-enforcing cycle of capital, and how differing taxation on the wealth helps to perpetuate wealth gaps, and the wealthy often able to net returns on the money they are holding before the they spend it, effectively nullifying what the tax would have been if leveed at the time of income. I think there is an argument that if capital were a major constraint on ventures than this would be a negative, but we just haven't lived in the world in decades. Capital is all over the world begging for somewhere to go, to the point that people a creating make believe baseless asset classes just to trade capital around like virtual poker chips.
In our current environment there is basically no way to have a consumption tax that isn't regressive, some times regressive taxes are OK, depending on your goals. If you are trying to create vice taxes on non-essentials (like smoking), and sometimes in history the economic balance has not favored capital and investment has needed to be spurred. But right not we live in more of an idea gap than an investment gap, which is one of the reasons governments should be taking more on income and wealth to fund higher quality liberal arts, to help create the next ideas.