[joelhaasnoot]

This is the same in the Netherlands - VAT on ebooks is 21% ("luxury goods"), normal books are at the 6% rate (same as household goods, foods, etc). Then again, there are more strange classifications in any tax schedule - hamster food is taxed at 21%, rabbit food at 6% (rationale supposedly being rabbits are food too...) and fixing a moped is 21%, but a bike is 6%.

[tokenizer]

The only problem I have with an analyzed/conditional tax system is the legitimacy of the party in charge of collecting it.

Everyone can nod their heads at taxing vehicles more than bicycles, but if that additional government income goes into tax breaks for certain corporations, or bad social policies (everyone thinks there's one!).

This is why I enjoy flat taxes, so we can focus more on the policies that money provides, rather than siderail that discussion with debates on what those taxes should be.

Obviously we should implement policies that become less expensive with time, but hearing that the Netherlands has a 21% tax rate on moped repair is insane. What does that money directly contribute to? The military? Tax breaks?

With flat sales taxes we can focus directly on policy. Everyone is equal in terms of the percentage of product consumers must pay in taxes, for their product.

[gamblor956]

Everyone is equal in terms of the percentage of product consumers must pay in taxes, for their product.

That's only true in an absolute sense, but not in a relative sense. For a person making minimum wage, each dollar is worth significantly more to that person than someone making 6 figures a year. Moreover, they must ultimately spend more of their income on purchases subject to a sales tax. Thus, the person making minimum wage ends up paying a larger portion of their wealth in taxes, even though it is the person making 6 figures a year (or more) who actually derives greater value (relative and absolute) from the government services funded by those taxes.

A flat tax may be conceptually easy to understand, but it is not economically or morally equitable.

[Double_Cast]

>> Everyone is equal in terms of the percentage of product consumers must pay in taxes, for their product.

> For a person making minimum wage, each dollar is worth significantly more to that person than someone making 6 figures a year.

I believe you're referring to "Marginal Propensity to Consume". But MPC is evaluated with respect to dollar-amounts, not percentages like you imply. A dollar bill is tangible, but a percentage is a ratio, which is abstract. So I feel like you're comparing apples to oranges. I.e. a "flat tax" vs a "flat tax rate".

Under a flat tax rate, minimum wage earners are more sensitive to dollar changes, but also pay less total dollars. Does the former compensate for the latter? Moot. But let's not forget that a flat tax rate would simplify the tax code and more conspicuously expose loopholes.

Elegance and simplicity are often unnecessary and quixotic. But in this case, I think it's actually the progressive tax rate schemes which are unnecessary and quixotic. According to the U.S. Constitution, the purpose of a tax is to enable the U.S. Government to raise the funds necessary to continue operating, not to redistribute wealth. A flat tax rate and a progressive tax rate can accomplish this same goal, but a progressive tax rate is so needlessly arbitrary. Inevitably, a progressive tax rate graph looks more like an S-curve than a J-curve. This is due to the asymptote which arises because the domain is [0, inf) while the range is [0%, 100%].

If you're worried about the ethics of inequality, I think this is more aptly dealt with via tax returns and subsidies. I like to think of this as separating the core from the features.

[joelhaasnoot]

Ah yes - flat sales tax - County XYZ needs a new courthouse so decides to raise sales tax 0.5% within city limits. Not only more complicated, but doesn't seem very fair either. Our taxes are easier than the US system because it's a national tax. My main problem with this tax strategy is that we're "protecting" an industry (book publishers, sellers, etc) that's in decline and probably will stay that way. Taxing ebooks more isn't going to change that - the economics of bits vs printed pages are ofcourse also inverse as these tax rules.

[mrgoldenbrown]

The higher tax is not on all ebooks. It is on DRM'd ebooks in particular. The goal, as far as I can tell from the translated article, is to discourage DRM and "licensing" of content, and encourage DRM free formats.

[mercurial]

I'm sure the government will just happily give tax breaks (this need not be VAT...) or contracts to Big Business in a land of flat taxes, really. I think, on average, that I'm pro non-flat taxes. I'd love to see books NOT be taxed 25% here.

[rtpg]

There's no functional difference between a flat tax with tax credits to booksellers than an equivalent reduction in sales tax. Conditional tax systems are policy.