I don't buy that. Yes, I know it seems logical, but in practice it's not so clear cut. With deductions, rich people end up paying very little for income tax. With sales tax (or VAT) the person spending more pays more, and it's more difficult to escape.
This issue is very unintuitive and numbers tend to hide reality. Let me put an example on how numbers can fool us.
In my country, Spain, there has been a recent discussion about what economic model we want. Left wing parties argue that in countries like Denmark (that's seen as a very good place to live) taxes are higher than ours.
But that's terribly misleading. The important number is how much money you're left with after paying taxes and what you can purchase with it. Our salaries are too low so, even if the tax percentage is lower, and prices are a little lower (not in Madrid or touristic areas) we still are poorer after taxes and we have worse public services.
> With deductions, rich people end up paying very little for income tax
You're utterly wrong. The wealthiest 0.001% paid 17.6% of their income in taxes in 2012[1]. That's not "very little" -- it's likely in the tens of millions per person. The top 1% paid even more than that.
Some corporations will avoid income tax altogether, as will some small-business owners, but individuals still pay substantial amounts of income tax. The "deductions" you mention aren't structured to eliminate most people's tax bills, and the loopholes don't work for everyone.
I said wealthy people prevent sensible, non-regressive taxes. You said that can't be right because rich people don't pay taxes. I showed you that they pay millions in taxes, on average.
Perhaps because in the end, you pay for stuff with dollars, not with percentages?
That whole game of playing with abstract fractional numbers is already massively progressive. I think people fail to appreciate how very bizarre this "accepted norm" actually is.
The goal of all taxing and spending must be related to political goals. They aren't goals in and of themselves. What is the political value of taxing a flat percent instead of a progressive percent (let alone taxing a flat dollar amount)?
The political value of progressive percentages is that it keeps the money supply stable without taking too much spending power away from the lower and middle income people where their spending power relates directly to things like seeing children cared for well with good education, time with parents, and other opportunities etc. There's a huge social value in maximizing the number of people who have spending power enough to live reasonably stable, healthy lives, as long as we avoid perverse incentives and allow healthy market mechanisms to keep the economy running smoothly.
So, what's the policy objective of going the other way (away from progressive percent tax rates)?
A fundamental sense of fairness -- for reasons given above.
I understand that the "social contract" may dictate otherwise in practice (even ignoring arrogant self-declarations of "social value", coming from a communist East European country, I've seen enough of those). After all, we're just a bunch of primates.
But to pretend there's nothing bizarre about this group-above-individual arrangement, that the opposite is somehow a completely invalid or incomprehensible viewpoint, is a serious lapse of the imagination.
>The wealthiest 0.001% paid 17.6% of their income in taxes in 2012[1]. That's not "very little" -- it's likely in the tens of millions per person. The top 1% paid even more than that.
So what? How much did they have left? How much utility do they have with what they have left?
I don't buy that. Yes, I know it seems logical, but in practice it's not so clear cut. With deductions, rich people end up paying very little for income tax. With sales tax (or VAT) the person spending more pays more, and it's more difficult to escape.
This issue is very unintuitive and numbers tend to hide reality. Let me put an example on how numbers can fool us.
In my country, Spain, there has been a recent discussion about what economic model we want. Left wing parties argue that in countries like Denmark (that's seen as a very good place to live) taxes are higher than ours.
But that's terribly misleading. The important number is how much money you're left with after paying taxes and what you can purchase with it. Our salaries are too low so, even if the tax percentage is lower, and prices are a little lower (not in Madrid or touristic areas) we still are poorer after taxes and we have worse public services.
Tourism is poisoned candy.