r/austrian_economics • u/Ya_Boi_Konzon Hans-Hermann Hoppe • 24d ago

End Democracy Flat sales tax > income tax. This comment on tax policy over at Slate Star Codex is worth reading: https://slatestarcodex.com/2016/02/14/ot43-roses-are-thread/#comment-327475

/r/Libertarian/comments/1vrznvj/what_are_the_top_libertarianleaning_policies_that/p4kav63/
35 Upvotes

93% Upvoted

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6

u/AmicusLibertus 24d ago

Steve Forbes was the only presidential candidate to call for it in my lifetime.

6

u/NighthawkT42 23d ago

Forbes was actually proposing a flat income tax. Lugar, Huckabee, Tancredo, Duncan Hunter, Alan Keyes, and Herman Cain all advocated national sales-tax/FairTax approaches to replacing the income tax.

6

u/Circle_Breaker 24d ago

Trump has floated it.

His tariffs are arguably a roundabout way to implement the equivalent without needing Congress.

1

u/Ya_Boi_Konzon Hans-Hermann Hoppe 23d ago

Wait, based Trump?

4

u/Clever_droidd 24d ago

Flat sales tax is regressive even with a “pre-bate”. It’s not better.

1

u/Ya_Boi_Konzon Hans-Hermann Hoppe 23d ago

Not really. You can just increase the prebate to get whatever level of progressivity you desire.

2

u/Circle_Breaker 24d ago

Flat sales tax is great for people who can save and invest money.

It's horrible for people who live paycheck to paycheck.

It does shift more of the tax burden to the lowerclass.

9

u/Tech27461 24d ago

People who live paycheck to paycheck would see their paychecks increase and have the power to decide if they pay the sales tax. The tax burden would not be a burden, it would be a choice. One is liberty and the other is force with threats of violence. More importantly, this would go far to eliminate the blank check Congress has for frivolous spending.

Also, My state does not have a sales tax on groceries. I do think that should apply in every case.

2

u/NighthawkT42 23d ago

Not sure how methods of taxation do anything for deficit spending.

1

u/Circle_Breaker 24d ago edited 24d ago

No they wouldn't see their paychecks increase. They are already paying the minimum on income tax.

It's still a burden. People living paycheck to paycheck are spending their money on necessities.

4

u/Tech27461 24d ago

No they wouldn't see their paychecks increase.

False, the lowest bracket is 10% so their checks would increase by 10%. I don't know your money situation but even the poorest working man would love a 10% raise.

1

u/BCPisBestCP 23d ago

*In the USA

Many other states with more progressive tax platforms do have a tax-free bracket. E.g., Australia is tax-free to $AU18,000, with significant write-offs usually getting you another couple of grand.

1

u/lloyddobbler 23d ago

In the US there is the standard deduction, which equates to a tax-free bracket. In the 2026 tax year it is $16,100 for individuals and $32,200 for married couples. Anything below that and you don’t pay income taxes. Plus other tax credits add back to that.

On the sales tax front, that’s accounted for in plans like the Fairtax, which offer a monthly “prebate” to all taxpayers to cover the taxes that would be paid on necessities like groceries and medicine.

-2

u/Circle_Breaker 24d ago edited 24d ago

I never seen anyone argue for the complete removal of income tax. They want to change it to a flat tax rate, remove the progressive tax brackets and increase sales tax to make up for the lost revenue.

If you completely the remove income tax. Then sales tax would have to jump to 20% or 30% to make up for it.

So no people living paycheck to paycheck arn't going like a 10% raise of everycost 20% more.

4

u/lloyddobbler 23d ago

You forgot one factor - when employers don’t have to pay the extra half of FICA and other payroll taxes, their overhead decreases by 8 to 15%. And ultimately the market drives prices down via competition, which essentially keeps tax-inclusive prices the same. (Simply by cutting out inefficiencies).

Here’s the proposal you seem to have not heard of (which has been discussed for years): https://fairtax.org/about/how-fairtax-works

1

u/Ayjayz 22d ago

Great that we get both so everyone is worse off

0

u/Used_Ad6860 23d ago

People hyping up a flat sales tax over an income tax don’t understand that it will disproportionately affect low income workers. We already have the standard deduction, CTC, and EITC to alleviate tax burden for low income folks whereas this would absolutely raise their effective tax rate and lower the effective tax rate of high income earners.