Quote:
Originally Posted by King of New York
One question, though: let's say the government drops the income tax and relies entirely on consumption taxes, which are weighted heavily toward sin taxes.
That pushes the prices of sin products so high, that the vast majority of people start to live more healthy, more disciplined lives. Which then dries up all the sin tax revenue.
At that point, where do you go to get tax revenues?
That's the inherent contradiction in sin taxes: if they work in curbing sin, they must fail as a source of revenue, and they can only succeed as a source of revenue if they fail to curb sin.
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That's the wonderful thing about sin. The tax will curb some of the behavior somewhat, but just like alcohol or tobacco. But, people will still eat the garbage especially if the tax "seems" marginal.