[incangold]

VAT can be considered a regressive tax because the poorer I am, the more of my money I spend on goods and services, and the less on savings and investments. As a proportion of income, poor people spend more on VAT than rich people. I think it’s about double, in the UK. So you’re right that cutting VAT helps richer people more in absolute terms. But in terms of of quality of life it helps poorer people more.

[edit] assuming we’re talking about VAT on things that everyone buys. Which is why tax codes often exempt essential items from VAT.

[david38]

You can do both, in that you can have a system where if you make less than X, you don’t pay VAT on certain things, or less.

California is now doing this for electric car rebates. Only works for items pinned to a person.

This can easily be compensated for by simply giving the poor more rebate on income tax.

[hdgvhicv]

Give people as a whole more money and they can spend it on housing. Given the decades long supply problem with housing it simply means rents increase to fill the void.