Replies to post #196928 on Zeev's Turnips Patch-No Politics (ZEEV)

[urmygold1]

not if those under $50,000 start to save their money instead of spending it and paying the tax...the wealthy will always spend their erational exuberance{g}

[Justin C]

those earnings under, let say $50,000/year will spend all that money and thus will pay that tax on 100% of their income

That would depend on how much of the expenditures were exempt from the tax (food, rent/mortgage, insurance, medical/drugs, childcare, etc.).

[S Chun-Li]

Those earning $1 MM will be more mobile and will to some extent spend their money in the country with the lowest sales tax. So, even if you think it would be fairer to make the tax more progressive, countries doing so will price themselves out of the market and end up making the sales tax more practically regressive, whilst hurting domestic production at the same time.

Hundreds of thousands of people each year make the crossing from England to France on a "booze cruise", to load their cars up with cheap alcohol and cigarettes, which are taxed much lower in France. There is a similar phenomenon with Swedes travelling to Denmark to shop for alcohol, while Danes travel to Sweden for other items. A smaller number shop around between different EU countries to buy cars.

For higher priced items like yachts, the use of "flags of convenience" has been around for centuries.

This is why there are "tax havens" which come under the protection of a country, and are home to that country's citizens, but have a lower rate. The govt would like to tax those citizens at a high rate, but knows they will lose the citizens and get zero if they attempt to do so.