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IRS braces for $500bn drop in revenue as taxpayers skip filings in wake of DOGE cuts
(www.independent.co.uk)
this post was submitted on 23 Mar 2025
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I honestly have no idea what you're trying to say. No one is talking about poor people buying five cars and yachts. I'm talking about how when you're poor, and you're trying to make what little you have cover (for example) clothing, paying $10 in taxes is a bigger portion, and thus hurts more, than if you were rich and had to pay the same tax.
Do you know how money works? How the more money you have, the less each dollar matters?
What I'm attempting to say, and apparently not getting across properly, is that if the common day-to-day items that you need to live your life are exempt from the consumption tax, then the poor people would never have to pay it.
If food was exempt from the consumption tax, then nobody would have to pay the consumption tax, because everybody eats food. Both rich and poor people.
Another example would be shirts. How many new shirts does the average person need per year? Set the consumption tax to apply to any purchase of shirts more frequently than that. If a person needs two shirts per year, then those two shirts would not be taxed, and the third shirt and beyond would be. So you still get shirts, and you don't have to pay the tax.
You need a new car, say once every 10 years, and you can buy one car every 10 years without getting the consumption tax. But if you want more than one car in that time frame, then you pay the consumption tax, etc.
Mind you, this is if we agree that taxation is needed at all, anyway.
And who would exactly make sure that you are not going over the amount of shirts to dodge the consumption tax? With no IRS and without 99% of the government I assume nobody???
That's a good point. Which is why it's probably a better idea to just have the consumption tax apply to everybody equally instead of different levels, because otherwise you would end up creating a surveillance state. Well, not like we already don't have one, but still, that's a different story.
If a poor person needs a new shirt, they will go buy a shirt and wear it until they can't anymore. Whereas if a rich person goes, they will buy 10 shirts instead of just one. So the poor person gets hit with the consumption tax and the rich person gets hit with 10 times the consumption tax.
A poor person would buy a car, say once every ten years, and pay the consumption tax one time, where a rich person goes out and buys ten really expensive cars, and not only pays the consumption tax on the car itself, but ends up paying an extreme amount more because of the branding of the car. The poor person buys a Honda Civic to get them to and from work, where the rich person buys a Bugatti.
Ok, I kind of get what you're going for, but that's still a very regressive taxation model. Assuming we could reach some consensus on "taxation has a place in government", in my opinion you want to tax people who can better afford it. This is why flat taxes kind of suck.
Like let's say we did a flat 10% tax of money. Someone who makes $10,000 pays $1000, and is left with $9000. Barely enough to live on. Someone who makes $1,000,000 pays $100,000 and is left with $900,000, which is a shit load of money. This is why progressive taxation is more popular. We say, don't tax the first $10,000 at all, then tax stuff from like $10,001 to $100,000 at 10%, then $100,001 to $500,000 at 20%, and everything above that at 50%. (Numbers made up). Now people who have a lot of money pay more, and the cost of being rich scales.
We don't really want very wealthy people. We don't want money and power to consolidate in the hands of a few people. We want a flatter distribution of wealth. Now you have more people living life, having ideas, making inventions and art. If you put all the money in the hands of a few, and everyone else struggles to meet their basic needs, your society isn't going to thrive.
Taxing what people purchase would be regressive, because there's a certain floor for what everyone needs to buy. Some rich guy just isn't buying so much more stuff that it's going to work out.
The progressive tax, as you have more money, is clearly working. Because Elon Musk exists, and Jeff Bezos exists. If it was truly working properly, these types of people would not exist. The idea appears to make sense, but we're living it and it's not working.
Progressive taxation has been systematically attacked by conservatives for years. That's why you see people saying we should make the top marginal tax rate back to 90% like it was in the 60s. https://taxpolicycenter.org/statistics/historical-highest-marginal-income-tax-rates
You also need to address problems like stepped-up-basis, and buy-borrow-die strategies. I think there are also unpatched problems with corporate income, but I'm less familiar with the details there.
This is a complicated and storied part of humanity. I really recommend reading more about it.