VAT is regressive - that is it takes a proportionately larger chunk the poorer you are - often considered unfair. For example if I and Warren Buffet buy a car then I have spent a much larger percentage of my overall wealth than he does
Warren Buffet is likely to buy a much more expensive car, or cars.
He's spending more on everything than you are.
That doesn't even things up, of course, but then neither does the current system. It would arguably be closer to even.
The beauty of a universal sales tax (as an alternative to income tax), in addition to the fact that the wealthy consume more of everything, is that a transaction tax is more difficult to lobby loopholes into.
And, of course, it potentially doesn't need as large (read expensive) a bureaucracy to manage and enforce it.
It also removes the burden of record keeping/reporting from consumers and payroll tax from employers.
A lot of people have spent time thinking about the idea. One example:
https://fairtax.org/
It's not a problem free solution of course, but neither is the current one. Someday a proposal for a transaction tax might even make it out of committee.
> Warren Buffet is likely to buy a much more expensive car, or cars.
According to [1] Warren Buffett's house is worth .001% of his total wealth, at $652,619.
And for Warren Buffet to pay sales tax proportional to someone with $500,000 in assets buying a $50,000 car, he'd have to buy the world's most expensive car - a $5 million Koenigsegg of which only 3 were ever made - 1700 times over.
It's one of those annoying internetisms that people often pick one part of a post or idea, take it out of context, and respond to that misrepresentation.
It's a bit like a straw man fallacy.
It happens a lot less often on HN though in my experience.
Right after the bit you quoted I noted that WB buying an expensive car doesn't even things out.
The idea of sales tax as a replacement for income tax isn't new or lacking rigor. Over the years it's had a lot of support from both economists and politicians. The math, at least on the surface, does work.
Personally, I haven't spent enough time looking at it to have a lot of conviction one way or the other about it's viability.
But it's an interesting idea that isn't invalidated by comparing cars.
In the grand scheme of things, Warren Buffet does not spend any money on taxable products. He invests money, but investments cannot be taxed in a VAT scheme, for obvious reasons.
Different VAT categories exist though. Not every country uses them but it's a tool in the toolbox. On the other hand, taxes in a lot of European countries are regressive.
