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@ Undisciplined
2025-02-28 16:00:20
I've been very hopeful that the proposal to replace the IRS, and all of the taxes it collects, with a combination of sales taxes and tariffs, will go through, but just this morning some of the secondary effects of such a change occurred to me. Now, I'm even more hopeful that this happens.
# The Obvious Benefits
My initial reasons for excitement were the obvious ones: consumption based taxes have better incentives than production based taxes (I know tax incidence muddies the waters, but this is still true) and consumption taxes are more avoidable than the slew of individual and corporate taxes currently in place.
# Financial Privacy
One second order benefit occurred to me immediately: Without taxes on income/payroll/inheritance/capital gains/etc. the state loses most of its rational for its rampant invasions of our financial privacy. Since most businesses are already subjected to the invasion of their financial privacy (through state and local sales taxes), this is a huge net positive.
Not only is this better for its own sake, but all of the monitoring that goes into current financial surveillance is costly. Getting all of those transactions costs out of our financial system will be a huge positive.
# No More Benefits Tied to Employment
This is what hit me this morning. The reason Americans get so many benefits through their employers is because they're tax exempted.
Having our healthcare tied to our employer, and largely decided by them, is a huge distortion in the health care market and it radically reduces competition. Without preferential tax treatment, we would just be paid out that money in our salaries and make our own health care choices. As such, expect the current medical-industrial complex to fight this tax reform tooth and nail.
The other element of this that I realized is that retirement accounts will lose the tax penalty, come withdrawal time (obviously depending on which type you have). That'll be a huge boon for many of us, and make up for the impending collapse of Social Security.
# What Else?
I haven't spent much more time thinking through other implications. What other effects will there be if the current tax regime is replaced with sales taxes and tariffs.
originally posted at https://stacker.news/items/899802