Reply #59: The point of progressivity is that the more you have, the more you pay in

[AP]

taxes. People for whom the system works should be expected to pay a little more for the infrastructure that made them wealthy. Furthermore, your value of an additional dollar is a function of how many dollars you already have. So, if you want people with a lot of dollars to feel the same pain as someone with few dollars, you can't charge people with few dollars and a lot of dollars the same tax rate. That's why the flat tax is so regressive.

Well, a sales tax is even more regressive because the more you don't spend (ie, the definition of being rich: income excedes outflow by a wide margin) the lower your effective tax rate.

A millionaire who spends 100,000 a year on taxable goods would pay an effective tax rate of 1.75% (assumming a sales tax of 17.5%)

A person who spends 10K on taxable items, who only makes 10K a year, would pay a 17.5% effective tax rate.

A person who spends 20K on taxable items, but only makes 15K per year (which is not uncommon) would pay tax on wealth they don't even have.

That's no fair at all.

Do you think a millionaire wouldn't kill for the chance to pay 1.75% tax on wealth versus what they pay now?

Why would credit card companies care? Because they make money when you go into debt. If we raised tax revenue solely on spending and not on wealth, they would see prices go up, which would mean that people have to finance more of their purchases, which means profits go up. In fact, once you start going into debt, they would make money on the sale and the tax part of every purchase you make. They'd be making money off of taxes. If they charge 20% interest, that means that a 17.5% sales tax would be a 3.5% profit for credit card companies for the at least 1/5th (and maybe 1/3rd) of Americans who already don't make more than they spend each year.