[lbo-talk] Progressive taxation vs flat tax

[Shane Mage]

Doug wrote:
>R wrote:
>
>>a flat tax is the most regressive tax there is.
>
>No it's not - a flat tax is flat (and if there's a large exemption, 
>it can be moderately progressive up to a point). A sales tax is 
>regressive because the poorer people are, the larger the share of 
>their income they consume. People at the bottom of the distribution 
>could end up paying many times the percentage of their income in 
>sales taxes as those at the top.

But the same applies to VAT as to "flat" income tax.  The "large
exemption" would take the form of a "flat" rebate of the entire
VAT on the subsistence level of consumption expenditures.  Just
as with income tax the level of progressivity varies with the size
of the exemption, so with VAT the level of progressivity varies
with the level of consumption defined as "subsistence"--with
the advantage that a large majority of people would directly
benefit from continual increases in the living standard socially
defined as "subsistence."

Shane Mage

"When we read on a printed page the doctrine of Pythagoras that all 
things are made of numbers, it seems mystical, mystifying, even 
downright silly.

When we read on a computer screen the doctrine of Pythagoras that all 
things are made of numbers, it seems self-evidently true."  (N. 
Weiner)