# What would be wrong with dropping the income tax entirely? **URL:** \ **Category:** Great Debates\ **Created:** [July 24, 2012, 2:31pm UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237 "2012-07-24T14:31:27Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![clairobscur](https://avatars.discourse-cdn.com/v4/letter/c/839c29/32.png) [@clairobscur](https://boards.straightdope.com/u/clairobscur)\ **Post date:** [July 25, 2012, 1:21am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/41 "2012-07-25T01:21:32Z")
> [@puddleglum](#): > > Lowering income causes people to work more? Two scenarios, one I pay you five dollars for every basket of cherries you pick and the other I pay you ten dollars for every basket of cherries you pick. In your scenario you pick more cherries in the first scenario. > . Yes, that’s exactly what might happen. The first 10 dollars will pay for, say, food, the next ten dollars for housing, the next ten dollars for healthcare, for instance. At this point, basic needs are covered. Everybody will work until he gets at least that much money. People getting 5 dollars for every basket will indeed work twice as much. Past this point, every dollar has less and less value. And conversely, the less free time you have, the more valuable it becomes. Then, maybe people who are paid 10 dollars will work more than people being paid 5 dollars. Because for person A, owning, say, a large plasma TV screen might be worth 1 hour spent picking cherries, but not 2 hours spent doing the same. So, this person will pick another basket only if he’s paid 10 dollars (\*) So, it’s very unclear who will work more. People getting paid 10 dollars have a greater incentive to work after having covered their basic needs. But will it make up for the fact that people getting paid 5 dollars had to work twice as much to cover said basic needs? You can’t tell. (\*)Obviously, person B might be perfectly happy with only his basic needs covered but a lot of free time and won’t pick anymore cherries regardless of the salary offered. And person C really, really wants the plasma screen and will keep working even if paid only 5 dollars. But on the overall the more you pay, the more likely people are to pick another basket. But only up to a certain point. ---
**Author:** ![Linden\_Arden](https://avatars.discourse-cdn.com/v4/letter/l/53a042/32.png) [@Linden\_Arden](https://boards.straightdope.com/u/Linden_Arden)\ **Post date:** [July 25, 2012, 1:25am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/42 "2012-07-25T01:25:32Z")
> [@Omar\_Little](#): > > Here’s an idea…make the federal government smaller. Neither party is interested. ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [July 25, 2012, 1:51am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/43 "2012-07-25T01:51:03Z")
> [@Linden\_Arden](#): > > Neither party is interested. Nor is the public, not really. Oh, plenty of people like the idea in the abstract - as long as it’s talking about _someone else’s_ favorite program or agency getting cut. But when it comes to _actually_ cutting back the government, it turns out that most of it is there because large numbers of people want it there. ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [July 25, 2012, 2:15am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/44 "2012-07-25T02:15:29Z")
> [@puddleglum](#): > > This is bizarre. Think of an island with coconut trees. One person is planting coconut trees, one is eating coconuts, who is contributing to the economy of the island? The purchaser. Really. Plant all the trees you want, but if no one wants their fruit you still make no money. > [@](#): > > What makes an economy wealthy is productivity, try going to Haiti and telling them that their problems are caused by people not buying enough stuff. Did the huge vault in living standards that came with the industrial revolution happen because people decided to start buying more stuff? You’re confusing material culture with the economy. In the short run, you make money because someone can pay for what you produce. Money is accrued in the following ways: people spend money for your goods and services, people pay you rents, a patron (possibly the state) supports you, theft, or extortion. The sale of goods and services requires demand: customers with purchasing power. Rents collected on tenants without income just get you poor debtors. A patron has to have means to support you. If the state, it may have to collect taxes or rents. Theft and extortion require a victim with something to take. Now, it is true that material culture is improved by people making things, and they deserve to be paid. Guess who pays them? Either customers or patrons. If you don’t expect customers to afford your work product, then go with hat in hand to the state or some charity and see if they’ll pay you out of a respect for the inherent social value of your work product. If it is your contention that your industry requires state subsidy, fine. _Pace_ Bastiat, some do. But in a market economy, we traditionally subsidize the producers of popular goods by giving the people the ability to pay. If the people can’t pay, the producer may lose his margin and go broke. > [@](#): > > Lowering income causes people to work more? Two scenarios, one I pay you five dollars for every basket of cherries you pick and the other I pay you ten dollars for every basket of cherries you pick. In your scenario you pick more cherries in the first scenario. Not proven. In fact, someone might spend twice as much effort on a job that pays half as much, if he has particular objectives in mind and costed. Don’t assume that there’s always a better-paying job available to a given worker. It can be easier to work longer hours than to apply to a new client or employer. > [@](#): > > If the tree would like to keep the cherry you are punishing the tree by taking its cherries. I don’t think you understand the meaning of the word “punish.” ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [July 25, 2012, 2:25am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/45 "2012-07-25T02:25:16Z")
You know, puddleglum, maybe I’m wrong and you’re right. But it seems like when I tried to unpack your supply-side assumptions, I kept hearing something like Krushchev-style central planning, where the worker is great because he produces, and we must lionize the worker, and if we keep at it we can show those decadent exploiter consumerists! Are supply-siders actually some kind of libertarian version of late-era Stalinists? Maybe not, but it goes to show that left and right hit a lot of common notes. ---
**Author:** ![Qin\_Shi\_Huangdi](https://avatars.discourse-cdn.com/v4/letter/q/f04885/32.png) [@Qin\_Shi\_Huangdi](https://boards.straightdope.com/u/Qin_Shi_Huangdi)\ **Post date:** [July 25, 2012, 2:34am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/46 "2012-07-25T02:34:13Z")
> [@Der\_Trihs](#): > > Nor is the public, not really. Oh, plenty of people like the idea in the abstract - as long as it’s talking about _someone else’s_ favorite program or agency getting cut. But when it comes to _actually_ cutting back the government, it turns out that most of it is there because large numbers of people want it there. There are few not too unreasonable ideas to start with-cutting back military spending ten percent, raising the retirement age to 70 (when the retirement age was set at 65 by Bismarck, far fewer people lived to that age obviously), and axing all extras like the National Endowment for the Arts and so on. ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [July 25, 2012, 2:46am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/47 "2012-07-25T02:46:27Z")
> [@foolsguinea](#): > > But it seems like when I tried to unpack your supply-side assumptions, I kept hearing something like Krushchev-style central planning, where the worker is great because he produces, and we must lionize the worker, and if we keep at it we can show those decadent exploiter consumerists! > > Are supply-siders actually some kind of libertarian version of late-era Stalinists? Maybe not, but it goes to show that left and right hit a lot of common notes. The economic right is less different from the Communists than they like to pretend; they mainly just want to call their totalitarian organization a corporation instead of a government, and their overlords CEOs instead of commissars. And they want to shove Jesus instead of Marx down everyone’s throat as the one true prophet. As someone once said, if IBM merged with the Pentagon and took over the country, you’d have communism. > [@Qin\_Shi\_Huangdi](#): > > There are few not too unreasonable ideas to start with-cutting back military spending ten percent, raising the retirement age to 70 (when the retirement age was set at 65 by Bismarck, far fewer people lived to that age obviously), and axing all extras like the National Endowment for the Arts and so on. And all of those would have huge numbers of people screaming in rage. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [July 25, 2012, 2:48am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/48 "2012-07-25T02:48:17Z")
(I’ll admit right off I haven’t read all posts so I’m responding to the OP.) A problem with a consumption tax is that it’s harder to enforce than an income tax. Using withholding, an income tax is generally collected at the point where a person is paid, which makes it easier for the government to focus its attention on that relatively limited area and enforce compliance. But a consumption tax would tax a much much greater number of transactions and it would be virtually impossible for the government to watch a significant fraction of these. So it would be easy for people to evade the tax by buying things “under the table”. ---
**Author:** ![kp\_72110](https://avatars.discourse-cdn.com/v4/letter/k/e68b1a/32.png) [@kp\_72110](https://boards.straightdope.com/u/kp_72110)\ **Post date:** [July 25, 2012, 3:23am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/49 "2012-07-25T03:23:04Z")
I’m always curious why people think paying taxes to an inefficient system like a government entity is the best way to redistribute money? There are certainly better ways to make sure the people you want to help get the help they need other then through government. Taxes are such a poor way to really help people that sincerely need help. ---
**Author:** ![Avareth](https://avatars.discourse-cdn.com/v4/letter/a/90db22/32.png) [@Avareth](https://boards.straightdope.com/u/Avareth)\ **Post date:** [July 25, 2012, 3:33am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/50 "2012-07-25T03:33:11Z")
> [@Frylock](#): > > What about going entirely to a consumption tax? > > Assuming certain basic cheap goods are tax free (as they currently are already) would this at least stop people from arguing unnecessarily about who is being taxed fairly? > > Are there economic reasons why it can’t work? > > A while ago I read an article (don’t remember where, sorry) which claimed that an all-consumption-tax system is favored by economists from across the political spectrum. Is there a consensus for or against the idea? No, I don’t think there is an economic reason why an all consumption tax wouldn’t work. I’ve been in favor of an all-sales tax option for years – very similar to an all-consumption tax, again assuming essentials are tax-free. The problem is that eliminating the IRS would displace hundreds of thousands of IRS workers (not to mention the many more private-sector jobs that rely on income tax), and that would be impossible. It is not an economic limitation; it is a political impossibility. ---
**Author:** ![Avareth](https://avatars.discourse-cdn.com/v4/letter/a/90db22/32.png) [@Avareth](https://boards.straightdope.com/u/Avareth)\ **Post date:** [July 25, 2012, 3:44am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/51 "2012-07-25T03:44:49Z")
> [@kp\_72110](#): > > I’m always curious why people think paying taxes to an inefficient system like a government entity is the best way to redistribute money? There are certainly better ways to make sure the people you want to help get the help they need other then through government. Taxes are such a poor way to really help people that sincerely need help. A fairly small percentage of our taxes pay to help people who may or may not need that help, and who may or may not receive that help more efficiently through other means. Taxes primarily (ideally, anyway) pay for infrastructure. Who would voluntarily pay for the roads that everybody drives on? Who would voluntarily pay for an aircraft carrier for national security? Who would voluntarily pay for their own child’s education, much less that of a worthy neighbor, who might end up curing cancer? Not enough funds would go to those sources voluntarily; taxes are necessary. ---
**Author:** ![kp\_72110](https://avatars.discourse-cdn.com/v4/letter/k/e68b1a/32.png) [@kp\_72110](https://boards.straightdope.com/u/kp_72110)\ **Post date:** [July 25, 2012, 3:50am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/52 "2012-07-25T03:50:07Z")
So by your logic, bureaucratic jobs are a necessary part of our economy. I strongly disagree but perhaps I’ll start another thread on that logic. Flawed logic in my opinion. But I don’t want to hijack any further. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [July 25, 2012, 4:07am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/53 "2012-07-25T04:07:59Z")
OP wants to _change_ Federal revenue, not _reduce_ it. I thought Dopers were better at staying on-topic than this. Nevertheless … > [@Qin\_Shi\_Huangdi](#): > > There are few not too unreasonable ideas to start with-cutting back military spending ten percent… In round figures, U.S. military spending is $700 billion or about $2200 per capita. That doesn’t even include Homeland Security, etc. A 10% cutback would save $220 per capita. That’s not chump change. > [@Qin\_Shi\_Huangdi](#): > > … axing all extras like the National Endowment for the Arts and so on. Whoaa! What’s with you right-wingers and the NEA? And when did you start pretending your hatred for public arts was about saving money? NEA spends $150 million (note the ‘m’ please) or 50 cents per capita. To mention it in the same paragraph as the military for savings shows innumeracy. What are you going to do with your 50 cents, **Qin**? “Super-size, me”? I think I’ll just save mine up for twelve years and treat myself to a haircut. > [@Little\_Nemo](#): > > A problem with a consumption tax is that it’s harder to enforce than an income tax. Using withholding, an income tax is generally collected at the point where a person is paid, which makes it easier for the government to focus its attention on that relatively limited area and enforce compliance. > > But a consumption tax would tax a much much greater number of transactions and it would be virtually impossible for the government to watch a significant fraction of these. So it would be easy for people to evade the tax by buying things “under the table”. Simplicity and ease of enforcement is an important issue, but it’s one reason that I agree with OP that alternatives should be explored. I mentioned real estate taxes which are almost impossible to evade, and there are others. I think sales or VAT taxes are relatively easy to collect, on the majority of material items. (Exempting items sold via Internet seems a mistake, but that’s another topic.) Income tax enforcement is more problematic. You speak of “collected at the point where a person is paid” but this works best against “the little guy.” Waitresses are withheld on expected tips, whether they get the tips are not. But criminals, various types of entrepreneur, and some lawyers have plenty of unreported income. Instead of taxing income, there is considerable logic to taxing spending on luxuries. Services and underground economy are a problem. Money spent on (or earned by) hookers and blow may be largely untaxed in both income tax and sales tax schemes. One way for government to make up revenue shortfalls would be to get in on the hooker and blow businesses but, again, that’s a topic for a different thread. :eek: ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [July 25, 2012, 4:47am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/54 "2012-07-25T04:47:44Z")
> [@kp\_72110](#): > > I’m always curious why people think paying taxes to an inefficient system like a government entity is the best way to redistribute money? There are certainly better ways to make sure the people you want to help get the help they need other then through government. Taxes are such a poor way to really help people that sincerely need help. It’s not about redistributing money. The government mainly does things like defend the country, maintain a legal system, run schools, build roads, etc. People seem to be okay with this. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [July 25, 2012, 5:18am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/55 "2012-07-25T05:18:46Z")
> [@Frylock](#): > > What about going entirely to a consumption tax? > > Assuming certain basic cheap goods are tax free (as they currently are already) would this at least stop people from arguing unnecessarily about who is being taxed fairly? > > Are there economic reasons why it can’t work? > > A while ago I read an article (don’t remember where, sorry) which claimed that an all-consumption-tax system is favored by economists from across the political spectrum. Is there a consensus for or against the idea? The idea behind a **progressive** consumption tax is that you get rid of the tax on income, but you still report all earnings to the tax authority… along with all savings. The savings aren’t taxed, so you’re only hit with a bill based on what you consumed, with a standard deduction of, I dunno, maybe 30k for a family of four. If you earn 30k a year in such a family, and spend it all on necessities, you don’t have any federal consumption tax bill. If you earn 100k and live an equally frugal life, meaning you have 70k of savings, then you also have no federal consumption tax liability. Any consumption past the initial deduction gets hit with a tax, and this can rise step-by-step as income tax liability does. Say that if your income is 50k and you spend 40k a year, that’s 10k of taxable consumption, and it might get hit with a 20% rate, meaning 2k of tax liability. If you spend 130k in a year, 100k of that consumption is taxable. Maybe the first 50 is taxed at 20%, and the second 50 is taxed at 40%, meaning a total consumption tax liability of 30k. And so on. I don’t know what the rates would have to be, although the steepest marginal rates can theoretically be much more stiff than the ideal marginal rates on income taxes, because income taxes are more inefficient, in that they provide disincentives to work. Consumption taxes only provide disincentives to consume, which should mean more savings and thus more money available for future economic growth. I’ve been thinking about starting a threat on the progressive consumption tax for probably about a year, but taxation isn’t really my thing, and I haven’t had time to do my homework properly on the topic. The basic idea, though? It seems solid to me. Implementation and enforcement? That’s another question. Advocates say that we could keep track of income just as we do now, and we could keep track of savings much as is done currently with tax-exempt retirement accounts. That’s definitely a huge difference from the bureaucratic hassle of a national “sales tax”, but I still don’t know exactly how efficiently it would work, how easy it would be for the rich to dodge the tax, etc. At minimum you’d have to have consumption penalties for moving savings overseas, even if it’s claimed to be for “investment”. There’s no reason for the US federal government to subsidize foreign investment (or just as likely, foreign consumption) in that way. More random thinking about the implementation: You’d also have to be careful about someone living a mostly frugal life, and then making a huge purchase in a single year. If they empty out their savings all at once, there’s no way they’d be able to afford the tax liability for so much consumption, unless the liability somehow levied at the time of sale. I don’t know how that sort of case would be handled. It’s an interesting topic. (Far secondary at the moment to issues of macro and monetary policy, in my biased opinion, but still a very interesting topic.) ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [July 25, 2012, 5:27am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/56 "2012-07-25T05:27:00Z")
> [@kp\_72110](#): > > I’m always curious why people think paying taxes to an inefficient system like a government entity is the best way to redistribute money? There are certainly better ways to make sure the people you want to help get the help they need other then through government. Taxes are such a poor way to really help people that sincerely need help. No, they are the most efficient method. They take in more money than charity ever has or will, including a huge amount from people who would cheerfully see the rest of us die before they willingly helped anyone besides themselves. The government has more resources and a better economy of scale than anyone else, and is often less corrupt and inefficient than private charity. > [@kp\_72110](#): > > So by your logic, bureaucratic jobs are a necessary part of our economy. If you want to live in even a semi-modern society yes they are. Bureaucracy is a basic part of the infrastructure of society; for all its flaws, it is vital to innumerable things that couldn’t be accomplished without it. ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [July 25, 2012, 5:32am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/57 "2012-07-25T05:32:46Z")
> [@Hellestal](#): > > I don’t know what the rates would have to be, although the steepest marginal rates can theoretically be much more stiff than the ideal marginal rates on income taxes, because income taxes are more inefficient, in that they provide disincentives to work. Consumption taxes only provide disincentives to consume, which should mean more savings and thus more money available for future economic growth. Consumption taxes still provide a disincentive to work; if you aren’t going to spend anything more than a certain amount of money, you don’t need to work for more. They also provide a disincentive to hiring people by depressing demand. And saving only has potential to stimulate the economy if it’s eventually spent and if there’s something to invest in, which a consumption tax discourages (the latter by suppressing demand). ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [July 25, 2012, 6:03am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/58 "2012-07-25T06:03:59Z")
> [@Qin\_Shi\_Huangdi](#): > > There are few not too unreasonable ideas to start with-cutting back military spending ten percent, raising the retirement age to 70 (when the retirement age was set at 65 by Bismarck, far fewer people lived to that age obviously), and axing all extras like the National Endowment for the Arts and so on. Get back to us about raising the retirement age to 70 when you are within 50 years of it. It sounds a much better idea at 20 then it does at 60. It also sounds a lot better for people sitting in air conditioned offices on their asses (guilty) than for those working on roofs. Also, if we raised the retirement age to 70, you’d never get a job when you get out of college, because people like me will be Bogarting them. I understand the incentive to raise the retirement age, but there are problems. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [July 25, 2012, 6:11am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/59 "2012-07-25T06:11:38Z")
> [@Hellestal](#): > > I don’t know what the rates would have to be, although the steepest marginal rates can theoretically be much more stiff than the ideal marginal rates on income taxes, because income taxes are more inefficient, in that they provide disincentives to work. Consumption taxes only provide disincentives to consume, which should mean more savings and thus more money available for future economic growth. Investment in what, given that consumption would be decreased. Second, I posted a link on the relative amount of sales taxes versus income taxes are paid by those in different income classes. In California the sales tax rate is higher than the income tax rate (obviously not on the same base) and we see that top earners pay a far smaller percentage of their income in sales taxes than on income taxes. Maybe that would help you estimate how high marginal consumption taxes would have to be to make up - damn high for a back of the envelope calculation. Other people have mentioned the incentive to cheat. In California, at least, we are supposed to declare products purchased out of state or on-line and pay taxes on them with our income tax form. Let’s just say compliance is less than 100%. I can just see fast speedboats smuggling iPads and minks from Canada. ---
**Author:** ![Nava](https://avatars.discourse-cdn.com/v4/letter/n/da6949/32.png) [@Nava](https://boards.straightdope.com/u/Nava)\ **Post date:** [July 25, 2012, 11:59am UTC](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237/60 "2012-07-25T11:59:24Z")
> [@Patty\_O\_Furniture](#): > > 120 times bigger? Really? I guess I can’t even imagine where I could buy a $30,000 suit but I guess they’re out there somewhere. While I know that items like those are often sold with a discount “because you are such a good customer!”, the issue of Vogue Spain I read the other day had, among other things, a pair of shoes for 6300€ That’s two shoes, not two cupboards full of shoes, ok? And no, they didn’t come with a masseur and a pedicure either, nor was it the most expensive piece of clothing. Spain raised its VAT two years ago. It’s going up again, and some things which used to carry the “basic product” rate will now be considered “luxuries” (one of them is haircuts); the fact that “feminine higiene products” are considered “luxuries” is a sore point with many women, although apparently not sore enough. Which items are considered luxuries and which aren’t can be a very controversial point. What to cut? Oh boy. Again, we’re cutting stuff left and right. There’s even regional governments which had already planned a budget with superavit (which is how they should always be, damnit; that way if there’s an emergency you cover it from the superavit) but which are having to cut more, cut more, and cut in spots where they didn’t want to because it’s being ordered from above and it’s being ordered with the kind of legal instruments against which we have no recourse. Education. Healthcare. Those roads which are our pride and joy (you famously can tell when you’re entering or exiting certain regions from the change in the road). But the Government is one of the biggest spenders, specially once you clump all its levels together: cut too much and the economy takes a big hit, leading to more people unemployed, to more people in need, to more companies and individuals going bankrupt. And to less spending - so less income for the Government too… [Previous page](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237.md?page=2) [Next page](https://boards.straightdope.com/t/what-would-be-wrong-with-dropping-the-income-tax-entirely/629237.md?page=4)