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by alexjplant 439 days ago
There's at least one plan [1] that specifically addresses this problem called FairTax:

> The proposal also specifies a monthly payment made to all households based on household size. Called a "prebate," the monthly payment offsets the regressive nature of a sales tax up to the poverty level.

Of course nobody agrees [2] on how effective this would actually be:

> Sales taxes are normally considered regressive though the FairTax provides a rebate that supporters argue would create a progressive effective rate on consumption. However, the Fairtax would also eliminate the EITC and CTC, dramatically reducing this benefit.[58] Additionally the FairTax would be applied to goods that are currently not subject to sales tax. These include all food, all prescription drugs and other health care products and services (such as doctor’s visits and laboratory tests), purchases of new homes, and utility bills. These goods make up a substantial share of low income families expenses

[1] https://en.wikipedia.org/wiki/FairTax

[2] https://en.wikipedia.org/wiki/Predicted_effects_of_the_FairT...

1 comments

FairTax only addresses regressivity up to the poverty level. Its proponents specifically cite the way it would affect investment and savings, which are the domain of the wealth(y|ier). People earning median household income would face a much greater tax impact than people earning 10x that level, which is precisely what the progressivity of income tax with marginal rates is intended to avoid.