The Off Topic Topic

[Valmy]

Sometimes I wonder what's wrong with just a VAT system coupled with UBI as the entire taxation system.  All the wealth in the world doesn't mean anything until you claim it in the form of goods and services, only then dies it impose liability on others.  The UBI part will make it progressive.

Well...anything with UBI would make me happy and would sort of balance out the regressive nature of a VAT.

[Josquius]

I wonder if VAT could be fixed to be viable as a stand alone.
Like super high rates on luxuries.
Would it be easier or harder to dodge it more spread out

[Barrister]

Sometimes I wonder what's wrong with just a VAT system coupled with UBI as the entire taxation system.  All the wealth in the world doesn't mean anything until you claim it in the form of goods and services, only then dies it impose liability on others.  The UBI part will make it progressive.

The argument against VAT is that it is ultimately regressive - that lower income people spend a much mower portion of their income on goods and services than do wealthier people.

A poor person spends all of their income on food and shelter, which is essential for survival but brings no long term benefit.  A rich person though might invest in stocks or a widget manufacturing facility that will bring far more profits to them down the road.

[DGuller]

Sometimes I wonder what's wrong with just a VAT system coupled with UBI as the entire taxation system.  All the wealth in the world doesn't mean anything until you claim it in the form of goods and services, only then dies it impose liability on others.  The UBI part will make it progressive.

No progressivity.

There is progressivity when you add UBI.  The aggregate tax on your total spending will start at negative infinity with zero spending, and cap out at the VAT rate as your spending approaches infinity.

[Admiral Yi]

There is progressivity when you add UBI.  The aggregate tax on your total spending will start at negative infinity with zero spending, and cap out at the VAT rate as your spending approaches infinity.

Is there?  Seems to me if UBI is universal and everyone get the same amount, it's flat.

I don't understand the zero infinity accountant mumbo jumbo.

[DGuller]

Sometimes I wonder what's wrong with just a VAT system coupled with UBI as the entire taxation system.  All the wealth in the world doesn't mean anything until you claim it in the form of goods and services, only then dies it impose liability on others.  The UBI part will make it progressive.

The argument against VAT is that it is ultimately regressive - that lower income people spend a much mower portion of their income on goods and services than do wealthier people.

A poor person spends all of their income on food and shelter, which is essential for survival but brings no long term benefit.  A rich person though might invest in stocks or a widget manufacturing facility that will bring far more profits to them down the road.

Ultimately you either spend your income, however big it is, or you don't.  If you spend it, it's consumption, and it gets taxed with VAT.  If you don't, you're implicitly donating it to society by never "withdrawing" the goods or services that you have a claim on.

[Grey Fox]

How do you tax investment income in that system?

[Admiral Yi]

Ultimately you either spend your income, however big it is, or you don't.  If you spend it, it's consumption, and it gets taxed with VAT.  If you don't, you're implicitly donating it to society by never "withdrawing" the goods or services that you have a claim on.

Another excellent point.  You're on a roll chico.

[Admiral Yi]

How do you tax investment income in that system?

When it gets spent on goods or services.

[DGuller]

There is progressivity when you add UBI.  The aggregate tax on your total spending will start at negative infinity with zero spending, and cap out at the VAT rate as your spending approaches infinity.

Is there?  Seems to me if UBI is universal and everyone get the same amount, it's flat.

I don't understand the zero infinity accountant mumbo jumbo.

First of all, UBI is not flat the way we define flat.  Head tax is not a flat tax just because everyone pays the same amount, it's a highly regressive tax.  UBI is a negative head tax, and thus would be highly progressive. 

Flat is usually defined with respect to income, though I would argue it can also be defined with respect to spending.  If you earn $100,000, your $10,000 UBI check will reduce your tax rate by 10%.  If you earn $1,000,000, your UBI check will reduce your tax rate by 1%.  UBI is by its nature increasing the progressivity of your total tax burden.

[DGuller]

How do you tax investment income in that system?

You wait until that investment income is consumed.

[HVC]

You don't "withdraw" goods or services, but don't you also keep cash out of the general market. And Doesn't seem like that would be good.

Doesn't Germany do some heavy progressive corporate tax to force companies into using cash for r&d and expansion rather then hoarding it. Though I might be misrememebering.

[Admiral Yi]

First of all, UBI is not flat the way we define flat.  Head tax is not a flat tax just because everyone pays the same amount, it's a highly regressive tax.  UBI is a negative head tax, and thus would be highly progressive. 

Conceded.

[Barrister]

I wonder if VAT could be fixed to be viable as a stand alone.
Like super high rates on luxuries.
Would it be easier or harder to dodge it more spread out

The more exceptions you bring in the harder it is to administer.

Canada's GST (which is a VAT) makes a few exemptions for things like "groceries" or prescription drugs.  Which can lead to some argument and debates (if you buy 1 donut you pay GST, but not if you buy 6 or more because it's then classified as a grocery item).  But the biggest headache is that that the GST is only supposed to be charged to the "final consumer".  So if you have a mining company selling iron ore to a smelter, the smelter selling iron ingots to a steal mill, the steel mill selling steel to an auto parts manufacturer, then the auto parts manufacturer sells the auto part to a car company, then the car company sells to you - GST gets charged each step along the way, but then gets rebated back except for the sale to you.  You can imagine how difficult that can be to supervise and administer.

[Barrister]

You don't "withdraw" goods or services, but don't you also keep cash out of the general market. And Doesn't seem like that would be good.

Doesn't Germany do some heavy progressive corporate tax to force companies into using cash for r&d and expansion rather then hoarding it. Though I might be misrememebering.

Yeah I was going to say something like that.

I mean I'm not an economist (although I took like Econ 101 in university) but leaving money out of circulation doesn't  "donate" it to society, it's just keeping it out of circulation and worthless.