> We already get taxed multiple ways. I pay income tax and sales tax
Shouldn't we also not do that?
Suppose you pay a 25% income tax and then a 10% sales tax. You're paying the same amount, almost a third of your income, as you would with a 47% sales tax. Which to begin with misleads people into thinking their rate is lower than it is, and on top of that incurs the significant overhead of needing two independent collection infrastructures.
> Suppose you pay a 25% income tax and then a 10% sales tax. You're paying the same amount, almost a third of your income, as you would with a 47% sales tax.
No, I don't, because I don't spend 100% of my income every year on income-tax applicable goods. A good chunk of my income, even that which is taxed with income tax, goes to other things (like my mortgage, other investments, groceries, savings accounts, charitable donations, etc.) that either defer paying sales taxes or have no sales tax applied.
Meanwhile other purchases have extra sales taxes applied such a liquor or hospitality taxes.
Obviously the hypothetical is assuming a uniform 10% sales tax, but what's your point? If you had a 20% sales tax on accommodations then incorporating a 25% income tax into it would make it a 60% sales tax. If you wanted to continue omitting the existing sales tax contribution to groceries but apply the income tax portion you could use 33% instead of 47% and so on.
My point is some people spend all their money on sales tax applicable things while others don't spend all their income. So those who don't spend all their money get to avoid those taxes on some percentage of their invome, potentially indefinitely.
Think for a second. What kind of household spends every penny they make? Which one maybe manages to toss some money into savings every month? Which one doesn't even come close to spending their income?
Which household here pays the highest effective tax rate?
Which still doesn't have anything to do with whether it's income or sales tax. If someone has some money they're not intending to spend anytime soon then they put it into a 401k to defer the taxes, or any of a dozen other things that have a similar result.
Sure it does. There are caps to those tax advantaged savings accounts. There's no cap on not spending money.
You're still designing a system where the highest effective tax rates are paid by the lowest income people and the lowest effective tax rates are paid by the highest income people. You've pointed to nothing that changes this truth.
> There are caps to those tax advantaged savings accounts.
Caps that are set to the amounts where people start having enough money to hire a tax accountant and thereby use the various other ways of deferring income tax on money you're not immediately spending.
> You're still designing a system where the highest effective tax rates are paid by the lowest income people and the lowest effective tax rates are paid by the highest income people.
The status quo is even worse: They not only defer income tax on the money they're not spending, they defer it on money they are spending, by borrowing against the assets and spending the loan. Which a consumption tax would have them paying.
Meanwhile you can exempt necessities from a consumption tax to various degrees or issue a large fixed tax credit to everyone, which lowers the effective rate on ordinary people by as much as you like.
It's unfortunate, but corporations moving to nations with lower corporate rates could reduce overall revenue if the domestic rates are too aggressive. In many ways it's easier to corporations to change nations than citizens.
