Just imagine a time (pre 1913, US) when people could trade with each other without the government taking its cut, plus the nasty paperwork, and everyone not in compliance even when they want to be. I'd love to have some kind of land tax + national sales tax and get rid of income tax.
EU countries have VAT rates of 20-25% and do just fine. It’s nothing like enough to replace income tax though.
VAT is not quite equivalent to sales tax as it is only paid by the final consumer. (Businesses offset any VAT paid against against the VAT they collect on sales.)
That’s why I said add - I figure you need at least a 30% tax to replace federal income taxes, maybe more. State and local sales taxes aren’t anything to sneeze at either.
I think the mental impact of a 40%+ tax on transactions would have a chilling effect on them.
You overestimate what a vat or a sales tax would have to be to replace income tax.
Still sale taxes are generally regressive, even if they behave like VAT. The true step on federal taxes would be to simplify the system. Just a flat rate with no exemptions. The simple the system the less is spent trying to jimmy it, lobby it, etc.
This is unfortunately known for decades, and predicted accurately by Milton Friedman as a political problem, where both sides want different things, and both side actually get what they want politically.
What is interesting about the Land value tax is that, althought it might be crazy to think abuout at national level, it is perfectly reasonable and easy to do at the local level.
And economists both left and right agree that its a good tax. I never quite got why property taxes are so popular in the us and land value tax isnt. It just makes plain sense.
California is the first state that should be implementing it: if it had it, its housing problems would dissapear quickly. Nimbyism would dissapear very quickly.
I've heard of Georgism as far as it advocates a land tax as the fairest tax, but have not read anything in detail. I think the idea has merit and need to take the time to read about it in more detail and especially why people think it is a bad idea (besides that it is not the status quo).
