[lotsofpulp]

Correct, and it could be implemented as a power law formula that makes it impossible for the super rich to avoid tax (since they are the only ones that can spend a lot). It also aligns incentives with environmentalism and reducing waste and consumption. And poorer people are automatically exempted from tax since the power law formula parameters be set to slowly ramp up.

This is also easily accomplished now that almost all payments are happening digitally, assigned to a taxpayer ID#. We can easily replace a W-2 or 1099 with total spending instead of taxing working.

Of course, this should also be paired with similarly designed land value and estate taxes to disincentivize hoarding.

[shermantanktop]

So my effective tax rate on consumption is indexed on my ability to hide my assets?

Maybe my household LLC should buy all my groceries while I work for the LLC which employs me as the sole contractor and live in the house that I rent from the LLC which I am the sole owner of. For major purchases, I can hire a low-income person to do the purchase and then sell the item to me, or maybe they lease it to me.

I'm not a tax lawyer but it's pretty easy to see the many loopholes in alternative tax proposals.

[lotsofpulp]

>So my effective tax rate on consumption is indexed on my ability to hide my assets?

Where are you getting this from? Sales tax has nothing to do with one's assets. Also, land value taxes make hiding assets moot, since all real assets have to be stored on land. Of course, copyright protections would need to be reformed to be for far shorter durations of time.

>Maybe my household LLC should buy all my groceries while I work for the LLC which employs me as the sole contractor and live in the house that I rent from the LLC which I am the sole owner of.

Why should LLC's be exempt from the tax?

>For major purchases, I can hire a low-income person to do the purchase and then sell the item to me,

How does this help? You are still purchasing the item. If you are referring to purchasing it with cash and committing tax evasion, the same is possible with income tax today.

>or maybe they lease it to me.

Renting something is still considered a sale. You get charged sales tax at hotels. Renting apartments is not usually subject to sales tax, but that is a policy choice.

[vlovich123]

> Where are you getting this from? Sales tax has nothing to do with one's assets

Earlier you said

> And poorer people are automatically exempted from tax since the power law formula parameters be set to slowly ramp up

I too am very confused on how you envision this sales tax working where it's variable in some way that poor people don't get the tax but rich people do so I understand why OP is asking about asset tracking. If you're talking about it as a tax that increases the more you spend you've still got problems of hiding how much I'm spending through various legal entities. It also has a macro economic problem, at least how the consumer economy is structured, that could slow down the gears of business until society realigns (if it does) because people will be incentivized to consume less. You've got alternative models where you go after specific products and tax more for conspicuous consumption like yachts but that feels like it has all the inefficiencies of central planning a market.

[lotsofpulp]

>that poor people don't get the tax but rich people do

Because poor people can't spend money (since they don't have it), hence they pay much less (or even no tax). The curve of a power law formula can be modified to whatever is socially acceptable. Otherwise, rich people who are hoarding assets will get taxed via land value taxes utilizing the same framework.

>you've still got problems of hiding how much I'm spending through various legal entities.

Same with income tax. Completely stamping out tax evasion is not a realistic goal with any system. Also, various legal entities are all tied to beneficial owners with taxpayer ID numbers. Databases would make quick work of sorting this kind of stuff out.

>It also has a macro economic problem, at least how the consumer economy is structured, that could slow down the gears of business until society realigns (if it does) because people will be incentivized to consume less.

Yes, that is why it is a pipe dream. But it would actually accomplish environmental goals as opposed to just pay lip service and pretend.

>You've got alternative models where you go after specific products and tax more for conspicuous consumption like yachts but that feels like it has all the inefficiencies of central planning a market.

Completely unnecessary to complicate things which also opens up avenues for corruption. A yacht is super expensive, it's obviously going to be hit with a ton of tax. Just come up with a tax curve (like we already do with the various income tax deductions/brackets) that provides the tax revenue and still allows people to spend enough money to provide for their basic needs.

[vlovich123]

> Because poor people can't spend money (since they don't have it), hence they pay much less (or even no tax)

Poor people can buy a car. Middle class families can buy 2 cars. Neither can buy 100 exotic cars. Is the purchase of each additional car going to increase the tax paid? Are exotic cars taxed more? You keep stating to use a power law formula but you're critically omitting what the inputs are to determine your tax rate. And now you've also admitted that assets determine your sales tax whereas you seemed to be arguing earlier that that wasn't the case when asked if the sales tax rate is dependent on your ability to hide assets.

> Otherwise, rich people who are hoarding assets will get taxed via land value taxes utilizing the same framework

Rich people hoard assets in all sorts of ways including collecting physical items which you can store where land is cheap if you wanted. That's why the income tax is effective - it's taxation at the moment the money changes hands / you've realized a gain.

[lotsofpulp]

> Is the purchase of each additional car going to increase the tax paid?

Yes, tax liability = total spending during the year plugged into the power law tax formula.

>Are exotic cars taxed more?

Depends how much the taxpayer spends in a year. There is no tax rate for each specific item. The tax rate is for a total level of spending, which eliminates all loopholes.

> You keep stating to use a power law formula but you're critically omitting what the inputs are to determine your tax rate.

The input is total spend in a year. Just like right now, the input is income in a year.

> And now you've also admitted that assets determine your sales tax

No, I did not. The formula to calculate sales tax liability only requires inputting total spending. Land value taxes are a separate thing. We currently have land value taxes, except they are flat rate and too low because property taxes inefficiently tax improvements on the land more than the land itself.

> That's why the income tax is effective - it's taxation at the moment the money changes hands / you've realized a gain.

Sales tax can also be at the moment the money changes hands. It currently is. Even with the complication of a power law tax formula, I can’t see why the government can’t email you a monthly invoice.

[scotty79]

Personally I wouldn't do the spending tracking for individuals to decide tax rates just because it's complex and perhaps to intrusive.

I'd go with same tax rates for everybody, but tax credits for useful activities. Since being a poor consumer is useful activity because those pay most attention to what they buy I'd be just giving people tax credit for existing and possibly for working if I wanted to incentivise that. Since purchase tax for individual consumers should be collected and paid by the sellers to save the individuals the burden of it and to ensure compliance then the best form of tax credit for consumers is just cashed given them directly from the government. Some for existing some possibly to supplement their salaries if they work. There's some risk that they won't spend it all to pay for their purchase tax but this can be forgiven as it'll mostly happen for the very poorest.

[lotsofpulp]

How is it complex or intrusive? We’re almost already completely there via various electronic payment methods linked to each individuals’ tax ID#.

You would no longer have to give out your tax ID# to employers or customers. The electronic payment company (which should be a government utility, but that’s a different conversation) simply reports your purchases, just like we do with various 1099/W-2 forms right now.

[scotty79]

> How is it complex or intrusive?

You'd have to have huge database of what every individual bought ever. How many beers, how many condoms per month they purchase. Or at least how many times they were making purchases in sex shop, liquor store, marihuana dispensary.

Currently your payments as a customer aren't bound to your TAX is if you don't specifically opt into it and you have no reason to do that if you don't have a company.

That's increase in a intrusiveness many would strongly oppose.

You can of course compromise and base your tax progression only on the sum of large purchases that are being registered already like houses and cars and investments.

But there's still issue of charging the correct tax if you don't connect consumer with their tax id on every purchase.

I think that companies that sell directly to consumers should collect purchase tax of consumer and pay it. And the rate should be the same for all consumers. To award consumers tax credits government just could give them cash directly that will come back to the government in the form of purchase tax that consumers pay (to sellers or through payment processors that transfer it to the government).

You can still punish the rich by reducing their tax credits progressively with how much assets such as cars, real estate and investments they own.

[scotty79]

Ownership can be tracked. You're tax rate can be proportional to all of your assets along the ownership tree (tax already paid by the branches on what they own can be deducted).

You can of course "own" things informally but then you don't get any support from courts when the paper owner decides you really own nothing.

[scotty79]

Do you have any keywords for me that I could read up on?

I came up with the idea of puchase tax and progressive real estate tax myself, but I'm sure other people had same ideas before me.