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PaperclipPerfector  1yr ago (text post)   3089 thread views

Small-Scale Question Sunday for September 3, 2023

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

Culture war topics are accepted, and proposals for a better intro post are appreciated.

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In a nutshell: If we adopt the FairTax, many taxes are gone, replaced by a 23% sales tax on new products and services.

It's actually defined such that the tax is 23% of the total amount you pay, including tax. So if the total price is $100, $23 goes to the tax and $77 to the seller. It's more like a 30% tax.

One reason it’s calculated that way is to point out income tax is also calculated that way: a tax percent out of an amount instead of a tax on top of an amount.

Yeah. The math is a bit counterintuitive if you're used to thinking about income taxes. For example, a 100% sales tax only creates a tax wedge of 50%, and a sales tax can go over 100%. To create the 95% tax wedge that inspired the song "Taxman," you'd need a 1,900% sales tax.

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