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Old October 28th, 2012, 12:28 PM   #50 (permalink)
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Originally Posted by Gmash View Post
That would be a huge tax increase for lower income people, who have to spend most of the money they make.
Depends. I've seen different proposals address this. Some propose no taxes at all on necessities like food. Others propose taxes on some foods that are deemed non-necessary. So if you buy hamburger, it's tax free, but if you buy caviar or lobster or prime rib you pay taxes. Others have simply done the math on how much it takes to live at the poverty level. They propose issuing a check to everyone every year for the amount you would pay in taxes if you live at the poverty level. This way the poor are paying no taxes at all. Anyone who lives above the poverty level pays taxes.

Originally Posted by ElasticNinja View Post
You can't just completely rely on sales tax (or VAT as we call it). The highest rate in Europe is 27% (minimum allowed is 15%), and I don't think it should be higher than that, as you then have to provide more transfers to the working and lower middle classes. Perhaps if the federal government was to set minimum income tax rates for states and obliged them to provide services (healthcare, third level education etc), the federal government could largely reduce income taxation, if they also brought in a 20-30% sales tax and removed the right for states and local government to levy such taxes.
Or perhaps the state could provide less services and people could fix their own mess themselves. I still remain completely unconvinced that wealth transfers are needed at all. Personally I don't want any money that I didn't earn myself, but that's just me. Maybe I'm weird that way. A handout mentality is what is wrong with some people in this country.
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