[31reasons]

Can't we just have Sales tax only. People who buy more will pay more taxes. You can exempt certain items like food, education, healthcare. Why do we need complicated income tax model? In the Sales Tax Only model, wealthy investors can invest as much money as they like but they will only be taxed if they liquidate their stocks and buy a fancy car or a yacht. I am trying to understand why we need Income tax at all?

[PeterisP]

A sales-only tax (i.e. taxing consumption) means that the burden of taxation is disproportionally shifted towards the poor. A poor person consumes almost 100% of their income; a very poor person consumes more than 100% of their income (by going into debt), an upper-middle class person consumes much less than 100% of their income (they get savings, some investments, and big expenses like student loans and mortgage don't count for sales taxes), and a very wealthy person consumes just a small part of their total income, as most of their spending is essentially buying control of means of production and control of other people, which is not consumption and not affected by sales tax.

If all your spending is consumption, then all of that is taxable, and if much of your spending is to gain more income in the future (e.g. buying rent housing, or stock/control in companies) then that's tax-free - in essence it's a tax system that strongly facilitates a rich-get-richer, poor-stay-poor dynamic and increases inequality. And that's generally considered a bad thing for society.

[nieksand]

A couple of random thoughts as a former WA state resident...

* WA omits groceries, prescriptions, and rent from sales tax. So many of the actual necessities in life are already not impacted.

* No personal income tax drastically simplifies and shrinks the tax bureaucracy. According to the Seattle Times, the city's goal of taxing high earners will cost "10 million to $13 million to set up, plus $5 million to $6 million per year to manage and enforce". That isn't counting the overhead costs on the citizens themselves. This is all money that could more productively flow elsewhere.

* There seems to be an assumption that income taxes will drastically reduce the sales tax. But from my memories of living in both CA and NY don't really bear that up. If anything, these states all have problems with spending too much... more tax revenue is like giving alcohol to an alcoholic and just makes the problem worse.

* Income taxes give politicians another tool for pandering to special interests. In NY, one of my exes got a fixed tax deduction for classroom supply expenses because she was a teacher. That's neat, but there was no such tax-payer candy for my own professional expenses. And back then her salary quite a bit higher than mine. Not fair.

* (bonus!) We often tax things that we wish to disincentivize, such as cigarettes. If you accept the premise of anthropogenic global warming, then perhaps we should drastically jack up sales tax instead to reduce consumption, keeping the omitted categories above.

[AnthonyMouse]

> A poor person consumes almost 100% of their income; a very poor person consumes more than 100% of their income (by going into debt), an upper-middle class person consumes much less than 100% of their income (they get savings, some investments, and big expenses like student loans and mortgage don't count for sales taxes), and a very wealthy person consumes just a small part of their total income, as most of their spending is essentially buying control of means of production and control of other people, which is not consumption and not affected by sales tax.

This is the common refrain, but it doesn't hold up to scrutiny. Even upper middle class people spend almost all of their income, and what they don't spend goes into tax-deferred retirement accounts. And tuition and student loan and mortgage interest are tax deductible.

Even the super rich don't pay income tax on the money they don't spend because they keep it in offshore tax shelters.

Moreover, income tax can't reach existing wealth (a dollar you already had isn't income), and income tax is collected even when the money is used to pay existing debt, so the working poor are taxed when they earn what they already owe to the credit card company.

[joshklein]

It's been over a decade since I studied the literature on this, but the dead weight loss caused by a tax at the point of transaction is larger; a case can reasonably be made that transactions that would otherwise occur did not due to tax.

Income tax removed before you receive your paycheck into your bank account has been demonstrated in psychological studies to be less onorous, and cause less behavior change (you don't ask for a lower paycheck because you don't like tax).

I'm sure I'm grossly oversimplifying, so someone with more economics education please chip in!

[AnthonyMouse]

> It's been over a decade since I studied the literature on this, but the dead weight loss caused by a tax at the point of transaction is larger; a case can reasonably be made that transactions that would otherwise occur did not due to tax.

> Income tax removed before you receive your paycheck into your bank account has been demonstrated in psychological studies to be less onorous, and cause less behavior change (you don't ask for a lower paycheck because you don't like tax).

Another way of putting this is that sales taxes encourage saving and income taxes encourage borrowing. Lo and behold, the average American is up to their eyeballs in debt and a large fraction of income is going to interest payments instead of actual spending. It is hard to see why this should be considered a good thing.

[baursak]

Sales tax is overwhelmingly regressive. Instead, having "wealth tax only" would do a lot of good.

[carradjm]

https://en.wikipedia.org/wiki/Georgism

This is where we need to eventually transition.

[JamesBarney]

I'm not sure what's makes an income tax less complicated than a sales tax.