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Can we pay for healthcare and SS with sales tax?

Jimmy Who

Jimmy Who

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Just asking why and why not?
 
Why would we consider it?
 
Jimmy Who said:
Just asking why and why not?
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I vote not. First, it would raise the burden on everyone and disincentive consumption. Second, because a tax would have to be extremely high, to the point that it would be regressive and actually hurt the poorest in society. That means such a tax would place the burden paying for the social safety net on those who use the social safety net. Thus it would largely eliminate the benefit of a social safety net.

It's not unlike paying for foodstamps by placing a sales tax on food.
 
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Jimmy Who said:
Just asking why and why not?
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Legally no. Not social security. It has to be funded through payroll deductions. It is how it was set up. Your benefits are based on your contributions and there is no practical way to link my sales tax payments to my social security account.
 
Felis Leo said:
I vote not. First, it would raise the burden on everyone and disincentive consumption. Second, because a tax would have to be extremely high, to the point that it would be regressive and actually hurt the poorest in society. That means such a tax would place the burden paying for the social safety net on those who use the social safety net. Thus it would largely eliminate the benefit of a social safety net.

It's not unlike paying for foodstamps by placing a sales tax on food.
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It would be flat, not regressive, and much like how income taxes dont significantly disincentive work, it wont disincentive consumption. Florida is funded by a sales tax and nobody has stopped buying stuff. And the poor would likely still be opted out of really paying for it as they dont pay income tax now. As with any tax, the rich will pay a disproportionate amount of tax.

Furthermore its not a social safety net. Its a retirement benefit. You pay taxes for it and you are entitled to the benefit when you retire. People who do not pay for SS or Medicare tax can not get it.
 
Jimmy Who said:
Just asking why and why not?
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SS and Medicare/Medicaid are already set up through payroll taxes so Im not sure what the incentive to chnge would be. If people really want Medicare for all, the funding mechanism is already in place. Just raise the withholding on everyone and viola, free healthcare.
 
jonny5 said:
Its flat. The rate stays the same regardless of the value of the thing being taxed.
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Those with lower incomes spend a greater portion (percentage) of their meager incomes on taxable items. That is why most such flat (fair?) tax proposals include a "prebate".

Another issue, noted above, is that it removes any record of past contributions on which to base individual SS retirement benefits.
 
Felis Leo said:
I vote not. First, it would raise the burden on everyone and disincentive consumption. Second, because a tax would have to be extremely high, to the point that it would be regressive and actually hurt the poorest in society. That means such a tax would place the burden paying for the social safety net on those who use the social safety net. Thus it would largely eliminate the benefit of a social safety net.

It's not unlike paying for foodstamps by placing a sales tax on food.
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This. In a nutshell.
 
jonny5 said:
It would be flat, not regressive, and much like how income taxes dont significantly disincentive work, it wont disincentive consumption. Florida is funded by a sales tax and nobody has stopped buying stuff. And the poor would likely still be opted out of really paying for it as they dont pay income tax now. As with any tax, the rich will pay a disproportionate amount of tax.

Furthermore its not a social safety net. Its a retirement benefit. You pay taxes for it and you are entitled to the benefit when you retire. People who do not pay for SS or Medicare tax can not get it.
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Sales taxes are regressive.. not flat. and it does disincentive consumption. and the rich will pay a disproportionate amount of sales tax because we will pay less than the poor and middle class.

And SS is a social safety net.. its not a retirement benefit.
 
ttwtt78640 said:
Those with lower incomes spend a greater portion (percentage) of their meager incomes on taxable items. That is why most such flat (fair?) tax proposals include a "prebate".

Another issue, noted above, is that it removes any record of past contributions on which to base individual SS retirement benefits.
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Its still a flat rate though. Everyone pays the same rate on the same purchase. As you say, the poor would likely still pay no tax in the end due to a prebate or exemption. But you dont need to remove the record of contribution (income actually). SS isnt based on how much tax you pay but rather how much income you make while paying it. Medicare just requires you pay anything for a certain number of years.
 
jaeger19 said:
Sales taxes are regressive.. not flat. and it does disincentive consumption. and the rich will pay a disproportionate amount of sales tax because we will pay less than the poor and middle class.

And SS is a social safety net.. its not a retirement benefit.
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Sales taxes are flat. Everyone pays the same rate on the same purchase. A progressive tax would increase the rate as the value increased, such as the income tax. A regressive tax would decrease the rate as the value increased.

And SS is not a social safety net. See above about why.
 
Fletch said:
SS and Medicare/Medicaid are already set up through payroll taxes so Im not sure what the incentive to chnge would be. If people really want Medicare for all, the funding mechanism is already in place. Just raise the withholding on everyone and viola, free healthcare.
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Well one reason would be to turn it into a real wealth redistribution system, making everyone pay for a system only some use, and making the rich pay a greater share of it. The rich dont need SS or medicare. Thus they pay for a system that doesnt really benefit them. And since they earn the most income, they pay the most payroll tax.
 
jonny5 said:
Sales taxes are flat. Everyone pays the same rate on the same purchase. A progressive tax would increase the rate as the value increased, such as the income tax. A regressive tax would decrease the rate as the value increased.

And SS is not a social safety net. See above about why.
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Sales taxes are regressive in that a greater percentage of tax per income is taken from the poor and middle class. This is the definition of regressive.

And SS is a social safety net.. its not a retirement benefit.

IF it was a retirement benefit.. I would be guaranteed to get my money out of it n. but I will never get the money out of social security that I put in. Unlike my retirement.

You or your spouse or your parent has to put into the social safety net for you to take out.. but its still a social safety net.
 
jonny5 said:
Well one reason would be to turn it into a real wealth redistribution system, making everyone pay for a system only some use, and making the rich pay a greater share of it. The rich dont need SS or medicare. Thus they pay for a system that doesnt really benefit them. And since they earn the most income, they pay the most payroll tax.
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The rich need medicare… and they like social security since it benefits them.

In fact social security is already a wealth redistribution system already that benefits the rich.
 
jonny5 said:
Its still a flat rate though. Everyone pays the same rate on the same purchase. As you say, the poor would likely still pay no tax in the end due to a prebate or exemption. But you dont need to remove the record of contribution (income actually). SS isnt based on how much tax you pay but rather how much income you make while paying it. Medicare just requires you pay anything for a certain number of years.
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Another problem is that retirees would then also pay the national sales tax.
 
jonny5 said:
Sales taxes are flat. Everyone pays the same rate on the same purchase. A progressive tax would increase the rate as the value increased, such as the income tax. A regressive tax would decrease the rate as the value increased.

And SS is not a social safety net. See above about why.
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You are misunderstanding the meaning of regressive. A regressive tax has greater impact on poor people than rich people. Both rich and poor would pay the same amount of sales tax on the same purchase. The poor person would spend a greater percentage of their income, therefore...regressive. The rich person would likely pay more in tax because they are buying more stuff.
 
OrphanSlug said:
Why would we consider it?
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I would seriously consider sales tax on stock!!! That would curtail the short term trading for profit and it would disproportionately affect the rich more than the poor.

PS, we can not afford to have a group of traders exempt from said tax.
 
jaeger19 said:
Sales taxes are regressive.. not flat. and it does disincentive consumption. and the rich will pay a disproportionate amount of sales tax because we will pay less than the poor and middle class.

And SS is a social safety net.. its not a retirement benefit.
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What would happen if there was a sales tax on stocks?
 
charliebrown said:
What would happen if there was a sales tax on stocks?
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Interesting. Probably not much since there is already somewhat of a "sales tax".. like process called a commission (most usually based on the amount of the trade).
 
jaeger19 said:
Interesting. Probably not much since there is already somewhat of a "sales tax".. like process called a commission (most usually based on the amount of the trade).
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A commission is going to the Wall street house as a handling fee. A sales tax, lets say 1%, would go into the federal coffers as a revenue generator.

Just an idea that most rich people would probably agree too. Wall Street would not like it because volume would go down and their ability to buy and sell assets very quickly would disappear. I personally can deal with watching Wall Street suffer just a bit.
 
charliebrown said:
A commission is going to the Wall street house as a handling fee. A sales tax, lets say 1%, would go into the federal coffers as a revenue generator.

Just an idea that most rich people would probably agree too. Wall Street would not like it because volume would go down and their ability to buy and sell assets very quickly would disappear. I personally can deal with watching Wall Street suffer just a bit.
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Rich people are never going to agree with it. Never. Because who wants to lose a million on stocks. and then pay another 1% to the government after that loss?

And frankly.. rich people ain;t going to suffer because there will be a way around it. Just like we get around sales tax now.
 
jonny5 said:
It would be flat, not regressive, and much like how income taxes dont significantly disincentive work, it wont disincentive consumption. Florida is funded by a sales tax and nobody has stopped buying stuff. And the poor would likely still be opted out of really paying for it as they dont pay income tax now. As with any tax, the rich will pay a disproportionate amount of tax.

Furthermore its not a social safety net. Its a retirement benefit. You pay taxes for it and you are entitled to the benefit when you retire. People who do not pay for SS or Medicare tax can not get it.
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you point is a bit off.
Florida also does not have a state income tax either, and their sales tax is quite low considering that essential items are not taxed like food.
that is why it is not regressive and it does not stop spending, however if the state would to jack the sales tax to 10% and then the counties have their only +2-3% on top of it.
then yes you would see a huge disincentive on spending.

sales tax hits poor people. unlike income taxes.

those types of sales tax are only not regressive if there is a discount or non-tax on essential items such as food etc ...
 
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