Comment by epolanski

I agree with your overall point. But I find it odd that you consider sales taxes to be the "fairest". Similarly, I find it odd that you put "progressive" taxes in some tension with "fair" taxes. Folks in the highest income range arguably benefit the most from govt services (e.g., infrastructure, defense, R&D, rule of law). They also have a much higher ability to pay well beyond basic survival needs. And, they can reduce sales tax burden by saving versus consuming, a choice that is not available to lower-income.

> And every time you decide to cut on services, you are just moving money elsewhere: more inequality -> more social tensions and criminality, you just end up paying way more to live in a safe place and pay for private and public security and prisons.

There's no reason to think that the amount of taxpayer-funded services in a political jurisdiction has inversely proportional relationship with amount of crime that that happens there (nor any particular relationship with what kinds of crime, how serious the specific crimes are, and so on). Same thing with social tensions - social tension are caused by a lot of things, many of which aren't particularly related to the raw amount of taxpayer-funded services that exist. Would a more redistributive welfare state have made the partition of India between (mostly) Hindus and (mostly) Muslims less likely, for instance?

>> taxes are complicated to implement, I'm not sure how can you implement a progressive yet fair system without loopholes

It's hard, but possible. However the goal of people who created current tax code is exactly opposite: to create system with loopholes.

US tax code is a mess, there should be less amount of different taxes, more unified taxes.

>I'm not sure how can you implement a progressive yet fair system without loopholes

Georgism, a single tax on the unimproved value of land

> sales taxes (probably the fairest of all taxes).

Just curious: what makes you come to this conclusion?

I can't say how much such a person should pay in taxes, but it is kinda funny that I'm paying the same amount 39.5-40% with my five digit salary and no property.

I don't know who should pay what amount, but I'm pretty sure that me and that millionaire should have different tax brackets. Let alone people with tens, hundreds of millions or more.

PS: I'm in EU, not USA, but here I'm in a highest tax bracket so the point still stands, my tax rate is the same as for any local millionaire. Maybe even more, since those people are aggressively utilizing tax loopholes, shell corporations and offshore tax havens.

But tax may be easy to implement

I think reversed-VAT is the good way to do

The overall idea with VAT is that you are taxed when you buy things

The reversed-VAT is the idea that you are taxed when you earn money (not "income" as in "salaries": every time some wealth are earned somehow)

Fixed rate, money's origin is of no concern, nor is money's usage

Say, you have a 40% tax on everything (using the same rate is important): - your company sold random stuff: you keep 60% - you earned money from interest / investment / etc: you keep 60% - income from your job: you keep 60% - a gift from your uncle: you keep 60% - inheritance: you keep 60% - exchange some money between your companies: you keep 60% - you borrow something: you keep 100% (it will fall back to 40% tax if that borrow is transformed into a gift) - you earned something of value (non-money gift), in one form or another: you have to pay 40% of its value

The root of all evil is the thinking that tax are made to make "a better world", that it is a tool a (social) justice or whatever

But it must be the same for everybody. Because only then it can be simple. And the more complex it is, the more loophole you have ("whack a mole" style as we have today)

Now, one person could keep all his money. Is it an issue ? No ! First, because he would have been taxed to 40% already. And then, because everybody dies someday. And that day, 40% of this person's riches will be retrieved: which would, again, be nice to the society as a whole: it would damage multi-generational wealth (while not void it).

Just make borrowings above the basis taxable as gains, its not hard

Even Georgism style taxes will face the problem that if the tax is high enough, it will be worth hiring some really smart person to figure out how to work around it.

Of course, you're also going to have to face the problem that representative democracy includes the ability to buy loopholes.

And then, there are unintended consequences because representatives aren't necessarily the most financially savvy. I'm thinking about the 401k program that disproportionately advantages high income people when it was touted as a savings route for middle class people.

Sales tax is one of the most UNFAIR, being a flat tax, it affects people in indirect proportion to their wealth (poorest hit hardest, proportionately).

Selecting the precise threshold where a marginal point kicks in is pretty funny, though I'm sure you didn't intend it. Above a million there's also the MHSA tax. Marginal at over a million is 50% or more unless you optimize.

This doesn't seem quite right. Even using SmartAsset's income tax calculator for a city in California, I'm getting around a 45%+ tax rate for someone making one million a year of income.

It's actually pretty easy to pay an 80%+ tax rate in California if you consider taxes that your employer pays, sales tax (11%+ in some areas), local assessments, capital gains tax, etc.

I mean Capitalism's solution to labor movement is to create company towns and using scrip to prevent it's workforce from freedom to leave. Maybe we can apply similar Capitalist principles/established solutions in this scenario?

I also like the idea of sales taxes over income and especially wealth taxes for a number of reasons.

1. It limits the opportunities for the government to use force on the general population. Today, if you do not file your annual taxes, men with guns come and put you in jail. A sales tax does not require this level of enforcement to be inflicted on the average citizen.

2. It's voluntary to a degree. Today if you don't like what the government is doing and want boycott paying taxes you cannot practically do so because of point 1 above. With a sales tax you can decide to defer unnecessary spending as a form of protest.

3. In theory it's vastly simpler to reason about and plan for. The myriad of tax advantaged accounts that have proliferated over the years in the US is daunting: IRAs, 401k/403b, 529s, FSAs, HSAs, Trump Accounts, Roth variants. We ask citizens to best guess how to allocate investments between these vehicles for goals decades in the future. If you need emergency access you're often looking at paying penalties. Not to mention the poor user experience baked into many of the designs. 401ks put the burden on your employer to restrict your investment options to their curated choices and their chosen plan administrator. You have to leave your job and roll it into an IRA to finally have the freedom to pick your own investments and who you have the account with. FSAs have the annoying use-it-or-lose-it rules. 529s are bizarrely state sponsored but you can choose a plan from any state. Like your state's plan but want to have the account at your broker? Too bad, you have to use the administrator your state chooses.

4. It's widely understood that if want less of something you should tax it. By taxing income and wealth it discourages work and saving. A sales tax discourages consumption instead, which encourages saving and is also pro environmental.

5. Changing asset allocation is free. Today, changing investments in a taxable account, where there are gains, triggers a taxable event. This discourages the movement of that capital to other investments.

6. In theory it's harder to dodge taxes as the simpler system has less loopholes.

7. On average, people with more wealth should have more expensive lifestyles which translates to them paying higher taxes.

I understand the arguments that sales taxes are regressive, let rich people dodge taxes by living frugally, etc. I accept all that may be true and I'm ok with it. Many seem fixated on using the tax code as a mechanism to level inequalities, as if that were its primary function, and a sales tax doesn't advance that goal enough for them. I think I can accept that some people are going to be vastly wealthier than me and are going most likely live a much easier life because of it; much like I can accept that some people are going to much prettier than me, taller than me, less genetically disposed to certain medical conditions, have been born to better families/circumstances and those things can all provide significant advantages in one's life.

California is not a safe place