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Comment by mbostleman | Hacker News Reader

I like finding approaches that don't necessarily "solve" a problem, but rather don't have the problem in the first place so that there's nothing to solve.

In this case, I would suggest dropping income tax altogether, decommissioning the IRS, and using the state infrastructure already in place to collect an equal amount of revenue from sales tax.

No filing. Broader tax base, including criminals and illegal activity. Everyone's checking account effectively becomes a 401k.

Sales tax is regressive, yes. But proposals like the FairTax suggest the idea of an annual "prebate" or credit up front in the form of a check that effectively eliminates taxes on spending up to poverty level income.

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I guess the argument against this is that some super-rich don't spent on th emainland or not even at all, just bank a tonne of cash.

In that case, the overall income from tax would be lower than it is now.

I don't necessarily agree but the idea is normally that "rich" people should pay a higher percentage of their income as tax because "they can afford it".

I personally like the idea of a fixed rate from 0 to infinity like Russia iirc, which gives everyone skin in the game and avoids some of the tax avoidance that we see to avoid the thresholds.

>>In that case, the overall income from tax would be lower than it is now.>>

No, because it's a requirement of the design that the revenue be the same. So to the tax rate goes up until the result is the same.

This would have consequences for wealth inequality. Households with lower incomes spend much larger percentage of their money on goods with sales tax than more wealthy households. This plan would increase tax for low income families and majorly decrease it for families with where a lot ad money flows into investments or savings.

>>Households with lower incomes spend much larger percentage of their money on goods with sales tax than more wealthy households>>

Right, I addressed this.

However, for the wealthy household, exactly what is the utility of all the money they have if they can't spend it? The minute any money is spent, the not-taxed argument comes apart because it is now taxed. How can you be wealthy if you do not have access to money?

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