🚀 go-pugleaf

David Meyers (dmeyers@panix.com) wrote:
: In article <4qc3cj$bdj@nntp.atlanta.com> collins@zeke.paros.com (Jeffery A. Collins) writes:
: >Maureen Eagle (maureen@mathcs.emory.edu) wrote:
: >: 1.  Exemption for food/housing means that a very POOR family using
: >: few consumer goods (buying clothes at thrift shops for $3, buying
: >: food and housing with their money, and using wits and imagination
: >: for entertainment instead of Nintendos and movies) would pay much
: >: less than 15% of their income.  Ditto for the frugal saving for
: >: their primary residence (which would also be exempt from taxation).
: >
: >    It seems to me that there is a flaw in this argument.  A consumption
: >tax is regressive for the following reason.  If your income was near
: >the poverty line you will probably need to spend most of it to simply
: >service, hence your tax rate will be near 15%.  If your income is very

: Perhaps you ought to re-read Ms. Eacle's first statement.
: If food and housing are _exempted_ from that tax, it more
: than compensates.  Very poor folks spend the majority of their
: income on exactly those things - their housing and food.
: Figure they are probably spending on the order of 60% of
: their income on rent and food.  If they spend the entire
: remaining 40% on taxable goods, their total tax paid is
: quite a bit less than 15% of their income - in this case it
: would actually be 6%.  Contrast this to a wealthier person
: who spends more money on consumer goods and other taxable
: items, as a portion of their spending.

You are right, I didn't take into account an exemption for food
and housing.  I do not know exactly how this exemption would be
implemented, but it seems like an area open for abuse.  Would
all housing be exempt - even if it is a multi-million dollar
house?  How about the vacation house?

I am for a simple, fair tax.  I just don't believe that any type
of consumption tax can really be fair.  A simple flat tax on
income with NO exemptions seems to be the simplest tax that is
also fair.  Most of the flat income tax proprosals that I've seen
all add exemptions for those types of income most common to the
richest people.

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