this post was submitted on 28 Jan 2025
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No Stupid Questions

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Many EU countries have a "VAT" and like feel like this is kinda targeting poor people. Like, for the rich, this is insignificant, for poorer people, a (example) 20% tax would be a huge burden. Why do they do this?

๐Ÿค”

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[โ€“] MothmanDelorian@lemmy.world 5 points 1 day ago (1 children)

All consumption taxes are regressive.

[โ€“] Boomkop3@reddthat.com -1 points 1 day ago (1 children)

Fortunately they hit the rich harder than poor. Which means there's more money for the social programs that keep those who are struggling alive

[โ€“] Maggoty@lemmy.world 1 points 1 day ago (1 children)
[โ€“] Boomkop3@reddthat.com 2 points 1 day ago* (last edited 1 day ago) (1 children)

Not everywhere. Tax evasion is a thing, and some countries have messy laws. But for vat it does, rich people simply tend to buy more, and more expensive stuff

[โ€“] Meron35@lemmy.world 4 points 1 day ago (1 children)

No, consumption taxes (such as VAT) are generally considered to be regressive, because the rich spend less on consumption relative to their income.

In almost all countries, the top income decile was estimated to have paid a share of their income that is only 60% of what the bottom half pays in consumption taxes.

The inequality impact of consumption taxes: An international comparison - ScienceDirect - https://www.sciencedirect.com/science/article/abs/pii/S0047272723000798

[โ€“] Boomkop3@reddthat.com 0 points 1 day ago

More taxes paid are still more taxes paid. Regardless of whether that's a large or small portion of someone's income.

More tax revenue is more money for social services.

I know it's not all perfectly fair, but it's not all bad.