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>This means you will have a regressive taxation scheme, where poor people have to pay a larger percentage of their income as tax, and rich people a very small percentage. Well, overlooking the obvious straw man argument, and ignoring that this has been successfully implemented already, in some of the most diverse poverty vs. wealth distribution countries in the world (India and Sri Lanka) .. this would only be the case if expenditure taxes weren't scaled to target the higher-end luxury items, but instead applied flat across society. Clearly, this is not the case with income tax - and it wouldn't be the case, necessarily, with an expenditure tax. Luxury items would be taxed at higher rates than basic life-survival items. Such a tax would be progressively or proportionally applied across society, such that the wealthy simply pay more for their luxuries, while the poor pay less for their essentials. In a properly designed expenditure-tax system, people still get wealthy by hard work or inheritance/exploitation - but when they try to spend that wealth, they are equalised by the expenditure tax compared to the less wealthy. And in this case its not theft, like income tax, because people still will have the choice on whether to spend their money, however it is earned, on luxury items (high tax rate) or survival items (low tax rate). The point is, they have the choice, and ~50% of their life is not spent just working for the state, as is the case with income tax repression. The only issue, is that it is 'difficult to administer' - but I see no reason to make tax bureaucrats lives easier. We already have sales tax in many states - eradicating income tax would mean freeing resources up to expand the scope of those sales taxes into a broader taxation on expenditure. Income tax results in people making the conscious decision to not make more money - because, after all, most of it will go to the government. Expenditure tax encourages people to save, and invest wisely in their local economy, and thus gives state managers the ability to direct those investments according to reduced tax rates around the commodities/services for which the state wants to promote growth. The current mess is repressive. People consciously don't work to improve their conditions in life, when half of that life is given over, immediately, to the government. This causes a lot of resentment over society, and promotes criminal tax avoidance all over the scale. |