Originally Posted by Sirisian
You realize that would mean switching from a progressive tax system to a regressive tax system. Poor people aren't taxed currently so the change would basically just tax them more while removing current taxes on the wealthy (since their investments wouldn't be taxed. Only their purchases).
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The taxes on everyone would be less. The same stuff that states don't sales tax would still not be taxed with a national sales tax. Poor people are1 taxed, they just have minimal to no tax liability, which means they get 95%+ returns... but they only get those returns annually. Under my system, that money would never leave their hands... till they bought something they don't really need.
Wealth redistribution is not what the government does, at least not in the sense that people think of when wealth is redistributed. So take less money from everyone.
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This allows the wealthy to accrue wealth more easily.
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It always has been, always is, and always will be easier to make money with money. Most people could be relatively wealthy, if they had some discipline, knowledge, and less money stolen from them by the government.
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Basically your stance on this depends on if you think wealthy people are being held back by a progressive tax and could do more for the economy. A lot of conservatives believe that.
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Costs trickle down. Taxes are costs. Who pays the taxes in a business situation? Customers and Employees. Customers are the obvious ones, but employees tend to be overlooked. There are two ways to bring up profits fast in the typical business situation, presuming consistent sales: Cut overhead (employees are the first cuts usually) and raise prices (customers pay more). Employee wages are determined based on the big picture of the business. The more it costs to do business, the less an employee can expect to be paid (whether per hour or total hours).
So really, lowering the tax burden on everyone is a massive stimulus to businesses and consumers. The dollar's inflation would plateau and possibly reverse course. You can't stop a wealthy class from existing without going full on down the socialist/communist path.
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It's a very complex subject so I'd recommend for you to read up on it.
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I'm always open to more learning on the subject, but Social Economics, Social Engineering, Sociology, and Business Administration were all areas I had intended to focus on for a Masters and eventually a PhD.
Anyway, progressive tax systems are designed to fix a flaw that is social and not economic.
Under my system, the rich would still have a significantly larger tax burden (by percentage) than the less than wealthy or the 'poor'. It just wouldn't be an income tax.
My system would tax wealthy individuals that don't have an income.