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Comment by erfderd | Hacker News Reader

I'm not against sales tax; there are many benefits to it.

However

A 10% sales tax is a 10% tax on poor people's disposable income since they have almost no savings. How do we square that regressive circle?

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In Europe they largely don’t try to square the circle, aside from maybe exempting necessities like food. They offer efficient, high quality welfare services to low income people in return for those taxes. (Of course, low income people get much more in services than they pay in VAT.)

But they do, in a way, by using those increased revenues to fund a comprehensive social safety net. If you just add VAT in the US, yeah it would be a disaster.

In the UK at least a lot of "basic" things are exempt from VAT, although the rules are quite complex:

https://www.gov.uk/guidance/rates-of-vat-on-different-goods-...

In Yang's case, the 10% VAT is accompanied by a $1000/month Universal Basic Income.

That should eliminate all the income from the VAT and then some, so the firefighters are still dropping your calls.

$ 1000/adultmonth = $ 12 000 / adultyear. -> requires $120 000 of disposable income spent per adult. Very few people spend $120 000 of VATable (A family making $300 000, a good income, doesn't spend anywhere near $120 000)

This assume everything is taxed under VAT. As Yang has discussed, necessities don't need to be taxed. Luxury items can have a higher tax.

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