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12. Re: Amazon Adds Microtransactions Jan 23, 2013, 16:46 jdreyer
@ Jacob & Dev,

1. If a flat sales tax replaced income taxes, that would be extremely regressive and plunge millions of Americans into poverty. People of lower incomes spend almost all of their income, while wealthier people only spend a fraction. This would flip the current system on its head with poor people paying the largest % of their income in taxes while the rich would pay the smallest. The rich would actually prefer this, and there have been many attempts by the rich to get a flat tax replacing the income tax through congress.

2. To say "40-something percent of Americans that do not pay federal taxes right now" is incorrect. Everyone who has a legal job pays the payroll tax. Everyone. The exemption you're talking about is the income tax only.

3. That number (47%) is very misleading. It includes retired people (who worked their whole lives, and paid taxes that whole time), unemployed people (which hovers at about 8% due to the economic collapse, and who would gladly pay taxes if they had a job), and people who derive their income from investments.

4. Don't forget that the rich already get a HUGE tax break in that they don't pay payroll tax on any income over $110K.

The 40-something percent of Americans that do not pay federal taxes right now, and would have to when they buy groceries, gas, and consumer electronics, are a splash in the ocean compared to the potential revenue of charging the most wealthy a flat rate on everything, too.
The problem is that the rich don't really buy that much more than the poor. They invest their extra money which is taxed completely differently and not subject to sales tax. Then, the money that comes in from those investments isn't even taxed at income-level rates. Which is why Romney's secretary was paying a higher % of her income in taxes than Romney himself was, despite her income being about $40K and his being about $40 million.
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