How is taxation based on income equitable when so many people find loopholes to avoid taxes?
Joshua Sanders
1

Taxation based on income is not perfect; that’s why I agree that the loopholes should be abolished. But taxation based on consumption is regressive — it exacts a greater price on the poor than on the wealthy.

As a percentage of their income, the affluent do not in reality “consume far more than anybody.” They spend money on the same things that those of moderate wealth do, say homes and automobiles for instance — although it’s accurate that the ones they buy are more expensive.

The bulk of their income, however, does not go toward consumption, but into investments — often in tax-protected offshore accounts.

In contrast, the poor expend a much greater share of their total income (generally all of it) on the consumption of goods and services. A tax on consumption hits the poor on every dollar they earn. The well-off are spared this penalty.

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