[cantastoria]

I agree with your analysis but I think you missed the fact that al ot of other countries tax spending through VAT rather than income. I'm not saying this is a better system (I don't think it is...). For instance, the standard VAT in Norway is 25% (14% for food and drink) so the slack is being taken up (in a big way) somewhere else.

I also don't care if there is a large income disparity. All the remedies I've seen proposed to fix this "problem" essentially just raise taxes on top earners. I can't think of a worse place for that money than in the hands of a politician.

[anamax]

> I agree with your analysis but I think you missed the fact that al ot of other countries tax spending through VAT rather than income.

Sales taxes and VAT makes the US even more progressive in comparison because the rich spend a smaller fraction of their income on VAT-taxed things.

For example, Bill Gates spends maybe 5x as much as me on dinner yet we both pay the same tax rate on said dinner. His "dinner budget" is in the noise in his budget. Mine isn't.

Luxury item taxes are in the noise for him so the fact that I don't pay them doesn't make a significant difference wrt progressiveness.

[anamax]

> All the remedies I've seen proposed to fix this "problem" essentially just raise taxes on top earners. I can't think of a worse place for that money than in the hands of a politician.

There are two other problems with too much progressivity.

(1) govt revenue becomes extremely volatile. Rich people tend to have more volatile incomes, so when they take a hit, anyone dependent on them takes a hit.

(2) Rich people have more choices in how and when they recognize income.

WRT (2), CA has a fair number of people who get rich on paper, move out of the state, and then turn their wealth into cash. Since the latter is the taxable event, CA loses.

[adolph]

Wouldn't a large consumption tax make the overall effect even more regressive? (Maybe you are reinforcing the parent comment's point?)