UK Emergency Budget

[Ben Kenobi]

Now repeat the exercise saying you get $300 a month, and the absolute bare minimum you need to spend to avoid dying of exposure and/or malnutrition is $300.

With a 20 percent VAT you end up with a shortfall of about 60 a month. With a 16.67 income tax you'll have a 50 dollar shortfall, a difference of 10 dollars.

[Bugs ****ing Bunny]

It does get spent though. That money doesn't just sit in a pile. When you invest it, it gets spent. That reduces the value of the stocks, presumably, so the cost gets passed onto the investor somehow, doesn't it?

Lock it up as estate. Avoid inheritance tax through discretionary trusts and gifts within the exemption rules. The estate passes from one generation to the next (or further) without crystallisation for tax purposes.

That's how rich familes stay rich. Only the little men pay taxes.

[Hauldren Collider]

Uhh, not really. We have a ****ing progressive income tax. The top 5% income earners pay like 30% of the tax revenue.

Also like 30% of people in the US don't pay income tax at all.

They do pay FICA and medicare though.

[Asher]

It's just an expression, of course they pay some tax. But some rich people also have ways to get around paying taxes. They hire very smart people to do so.

[Ben Kenobi]

HE THINKS HE WON'T PAY TAXES ON HIS SAVINGS.

Actually, no I don't have to pay any taxes on my savings if the EIC is taken out.

you're going to SPEND those savings someday aren't you? Otherwise you've just been taxed your savings in their entirety.

So the fact that I have savings of 1000 dollars in the bank means that my savings have been entirely taxed? What silly logic is this?

Why would I spend it? It's earning me money all the time.

[Kuciwalker]

This is only true in theory where the money never leaves a tax system with a systematically applied VAT. It also assumes the money is going to be spent, not invested where people then live off the dividends. And yes, you pay tax on the dividends you get out of it -- but the fact that the payment to the government is deferred for people who have the means means it does not proportionally impact them as it does the poor.

Holy ****, Asher, this concept should be completely ****ing obvious to you. We just went through this same issue with nye a while ago - do you really want to be as dumb as he was?

A 20% VAT has a precisely flat proportional impact (relative to no tax) on lifetime income, modulo income that is never spent (and is then subject to estate tax + VAT when the inheritor spends it).

[Also modulo BFB's point re: deferring until a new tax regime emerges.]

[Kuciwalker]

Can someone explain this chart to me?

[OzzyKP]

Budget cuts in the UK.

Stupid argument about VAT.

Contributing something meaningful to the thread.

[Kuciwalker]

Wonderful thing about a VAT: it's much harder for the rich to avoid paying it

[Asher]

Holy ****, Asher, this concept should be completely ****ing obvious to you. We just went through this same issue with nye a while ago - do you really want to be as dumb as he was?

A 20% VAT has a precisely flat proportional impact (relative to no tax) on lifetime income, modulo income that is never spent (and is then subject to estate tax + VAT when the inheritor spends it).

[Also modulo BFB's point re: deferring until a new tax regime emerges.]

You seem to be incredibly naive. You're listening to theory, not reality.

It's proportional in theory. That is "obvious".

What is not obvious is reality. In reality, the deferred payment of VAT reduces the percentage of genuine income paid to VAT. The opportunity to invest the money while not paying the VAT means you will be supplementing your income further with investment income. You will have monetary gains from it, in effect.

Yes, VAT is the same % for everyone so a simpleton could conclude it is proportional. But it doesn't work like that in the real world when analyzing the big picture. In brief, the total income of rich people gets higher due to VAT payment deferral. So while the percentage is still the same, the quantity of money in the other 80% that does not get paid to VAT is going to be larger for rich people.

[Kuciwalker]

You seem to be incredibly naive. You're listening to theory, not reality.

It's proportional in theory. That is "obvious".

What is not obvious is reality. In reality, the deferred payment of VAT reduces the percentage of genuine income paid to VAT. The opportunity to invest the money while not paying the VAT means you will be supplementing your income further with investment income. You will have monetary gains from it, in effect.

Yes, VAT is the same % for everyone so a simpleton could conclude it is proportional. But it doesn't work like that in the real world when analyzing the big picture.

So many words, and yet strangely absent of meaning.

[Asher]

Not everyone is capable of getting it. That's okay.

[Kuciwalker]

Asher, construct an example where a VAT has one person paying a different proportion of their pre-tax income from another.

[Asher]

I guess you really did not understand my post.

The proportion is always the same. But the reason why the VAT is regressive is because the real impact of it provides benefits to the rich that the poor do not get -- the deferral of VAT payment granted by investments results in real-world supplemental income not afforded to poor people. The proportion is the same, but the overall income is higher for rich people as a direct result of the deferral of VAT payments.

If you're going to be pedantic and only look at the superficial -- yes, it is a proportional tax. 20% for everyone.
If you look at it in terms of the real world, the rich benefit more than the poor.

[MOBIUS]

You seem to be incredibly naive. You're listening to theory, not reality.

It's proportional in theory. That is "obvious".

What is not obvious is reality. In reality, the deferred payment of VAT reduces the percentage of genuine income paid to VAT. The opportunity to invest the money while not paying the VAT means you will be supplementing your income further with investment income. You will have monetary gains from it, in effect.

Yes, VAT is the same % for everyone so a simpleton could conclude it is proportional. But it doesn't work like that in the real world when analyzing the big picture.

So many words, and yet strangely absent of meaning.

Because you're a simpleton.

The concept has now been explained several times now, in several different ways to several different simpletons - if you still don't understand it, there is clearly no hope for you...

Or, to put it another way, if you're on the same side of the fence as Ben: You know as sure as **** you're just wrong!