Thursday, 6 April 2017

Consumption taxes are fine? No, they're not

Very disappointed with Bruening's reasoning here.
http://mattbruenig.com/2017/04/05/why-co...-are-fine/

I reply to him via twitter the following:

--- Matt, by regressive, critics mean that the levy is the same for the rich & poor. The rich won't feel the tax, the poor will.
Also, since you're talking about the US, US Federal Taxes don't fund anything. They simply create demand for the US dollar.
State governments, unlike the Fed Government, are constrained in their spending by what they can borrow, tax, and receive from the Fed Gov.
So if you want state governments to levy a 10% VAT, that's fine. But there's absolutely no reason why the Fed Gov should levy a VAT.
If you want to tax the rich, levy a progressive tax on all incomes, that only the opulent minority will qualify to pay. ---

Whether he realizes or not, Bruening is actually making the case for flat taxation, invoking that a person's tax obligation is proportional to his or her spending. Proportional equity. So the rich pay more, the poor pay less, at the same tax rate. Very strange to see this type of argument from a progressive.

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