How to Fix the Tax Code + the Problem With Corporate Jargon

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**SPEAKER_2** (0:41)
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**Scott Galloway** (2:08)
Welcome to Office Hours of Prof G. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. Anyway, if you'd like to submit a question for next time, you can send a voice recording to officehoursofprofgmedia.com. Again, that's officehoursofprofgmedia.com. Or post your question on the Scott Galloway subreddit, and we just might feature it in our next episode. I have not seen or heard these questions. Our first question comes from David, who emailed us. Scott, I'm writing to get your thoughts on the concept of a national sales tax, specifically, what do you think about a tax that would apply to everything other than unprocessed food, with an additional luxury tax included? I would be interested to hear your perspective on this idea.
I think we have that. I think it's called federal taxes, or a VAT, a value added tax, which is big across Europe. The lowest income quintile spends $35,000 a year, exceeding their reported income, while the highest quintile spends $150,000 a year. A flat sales tax effectively hits the bottom group at nearly 100 percent of disposable income. So I don't like sales taxes because I feel like they're regressive. There's something I just don't see. I'm just not down with pretty much any tax at this point that taxes any household making say less than $60,000 or $80,000 a year. I just think they've gotten so hit so hard from inflation, from outpacing wage growth, oil price spikes, 22 percent of their cost related to energy. So it feels like we've outsourced so much pain to lower middle class households recently that I don't think any national tax, I don't like it is the bottom line because I think it just disproper. I wouldn't feel it and that's not where we need to tax. We need people who are wealthy to feel it and pay a disproportionate amount of it. In sum, the rich pay proportionally far less. Low-income households spend 16 percent of their budget on food versus 10 percent of the highest earners, so the unprocessed food exemption helps, but housing, transportation, and utilities, all taxable, still dominate long-income budgets. The existing national sales tax proposal, the Fair Tax Act, sets a 30 percent rate and attempts to offset regressivity with a monthly pre-bate. But analysts note, it still hits retirees, large families, and students the hardest, the tax foundation. So what do we need? I don't like a national sales tax. What do we need? We need to remove the exemption on a state tax. The best tax is the tax that is the least taxing. So if you were to tax all food, that's a really bad tax because everybody's got to eat, and if all of a sudden the percentage low-income households spend on groceries goes from 30 percent to 40 percent, that's not helping anybody, and it doesn't affect upper-income households at all. So you want to tax it as the least taxing. So what are the least taxing taxes? Lower the estate tax exemption from 30 million to 1 million. We're going to have something like $120 trillion passed down over the next 30 or 40 years. We don't need dynasties in the United States. One of the key points of distinction between the US and Europe is meritocracy, meaning that we don't build dynasties. We like people to make their own money. And if the Bezos kids inherit $30 billion instead of $40, we're all going to, they're going to be just fine and so are we. So only, I think, 8% even qualify for that exemption. So only one in 12 households would be hit by additional tax. I wouldn't even call it an additional tax, would not have that tax loophole. And I don't think the kids would be any worse off. I know a lot of rich kids and the difference between them inheriting $10 million or $12 million just doesn't make any difference to their lives. They're equally fucked up and trying to please daddy with their Range Rover they didn't earn. Little angry? Little angry? I hate rich kids. Let me just come out and say it. And every time I meet a rich kid that works really hard, I'm really impressed because if I was a rich kid, I would add a cocaine habit and a Range Rover and not much else. I don't know where kids get their fire if their parents are rich. And that's something I think about a lot. But that's another talk show. Anyway, lower the tax exemption on estates from $30 million to $1 million. An alternative minimum tax. The tax code has gone from 400 pages to 4,000, and those incremental 3,600 pages are there to fuck the middle class.