f13.net

Fairer system, or screwjob on the poor? (http://www.foxnews.com/story/0,2933,131693,00.html)

I can already guess how this will divide up among party lines, but I am very much in favor of a system that doesn't have me dealing with the insanity of the tax codes and exemptions as an accountant. Frankly, I see that this system has worked wonders in Texas, where there is no state income tax. They specifically target goods at a higher rate, gas specifically. I do think it's a possibly system, if a poverty line is established that can receive tax rebates or prebates.





AND I HEAR HE EATS BABIES!

Bush is trying to make the income tax solely wage-based by removing all taxation of wealth and investment-based income.  Add to this a sales-tax and/or VAT and you have an extremely regressive system.  It will only make your tax filings easier if you have lots of investment income.  Otherwise, you won't see any change except an additional 7-10% on everything you buy.

No thanks.

I'm sorry... Isn't the national sales tax suppose to replace INCOME tax?  How would we not see a difference?  We wouldn't file federal income taxes anymore, because there would be a sales tax instead.  Only people spending money on big ticket, non-necessity items would be paying tax.  There is more to it than that, but that is the basic theory.  No more April 15th's...at least for federal.  States would likely follow.

It wouldn't be big ticket items, it would be ALL item.

They say the poverty line is 8k a year. That's laughable. So if you make 9k a year, you get to pay 26% sales tax on everything you buy, great!

It encourages people not to buy, which is dumb, and a flat tax is just a bad idea in general. Flat taxes are NOT fair. Just because the number is fixed doesn't make it "fair", that's first grade level analysis.

Any resonable human being who has thought about it for more than 30 seconds realizes that the value of money is not fixed, it depends on how much money you already have.

For they guy making 10k a year, 26% sales tax is a hell of a lot different than 26% for a guy making 100k a year.

Granted its a system that needs tweaks in places, as the poverty line issue is definetely one of them. I would like to see a sliding poverty line scale in percentage rebates probably up to about $20K a year. Couple that with possible dependent rebates as well for a flat rate. I do know that simplifying the process would eliminate federal funds going down the toilet just to keep the IRS functioning, and it would also eliminate the costs of people cheating the system. You can't dodge a sales tax easily.

The idea of consumption decreasing is an adequate rebuke of the system, but it overlooks two key factors. One, there would no longer be income removed from your paycheck, and thus you would have more distributable income to pay for things. Two, the consumption decrease would be temporary while buyers adjusted to price changes. Once the growing pains are gone, the system will operate as normal.

As for capital gains, that would have to be looked into more. Personally, I'm fine with no capital gains tax, as are most of the investors. However, I know that would make the have-nots jealous, so it probably won't happen.

You are right...not on big ticket items...all items.  Here is a link to an overview of some of the good points:

http://www.fairtaxvolunteer.org/smart/sketch.html

I'm paying well over 33% of my income now.  A 26% tax instead sounds better to me.  Perhaps someone with a better understanding of this could enlighten me?

I can see how IRS employees, or tax accountants might be upset about this...since it might mean their jobs.

simple example:

Person A makes 10,000 per year
Person B makes 100,000 per year
Person C makes 1,000,000 per year
Assume a 10% sales tax

A is fucking poor.  spends every last dime he makes, cause he can't afford to save.

10,000 * 10% = 1,000 paid in taxes for one year, or 10% of his income.

B is doing pretty well.  Saves 10% of his income, spends the rest.

90,000 * 10% - 9,000 paid in taxes for one year, or 9% of his income

C is fucking rich .  Saves 40% of his income per year.

600,000 * 10% = 60,000 paid in taxes, or 6% of his income.



Is this fair?  Depends on your opininion.  The system benenfits people who can save their money, but only the rich(er) can afford to save.

cause you are not actually paying 33%.  that may be your tax bracket, but it's a lot harder than that to figure out your tax burden.

I'd be completely in favor of a national sales tax, and I'd really like it if they'd just integrate the tax into the price like they do in Germany.  This was in the days before the Euro, but if something was labelled as DM 5.25, you paid DM 5.25.

What I'd be firmly against is VAT.  Valued Added Tax is an economic solution that looks great on paper, but is horrible in actual execution.  It was something that I absolutely hated where I encountered it, like in the UK.

A very in-depth paper on the subject (http://www.cato.org/speeches/sp5-11-5.html)

Some highlights:

This is called a Value Added Tax.



L
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Not really.  More likely it will be to stop-gap the loss of revenue from Bush's "ownership society" where if you make money by owning something, you pay no tax, but if you make money by busting your ass every day, you pay taxes, plus get hit with a sales tax.

This is an idea that sounds great, in the little soundbite chunks most politicians use to try to sell their ideas. Unfortunately, the more you think about it, the less you should like it.

Biggest bugaboo is the exemptions for the impoverished. Who administers that? Who administers the rebates if we ditch the IRS? Some administrative body will have to oversee it. I like how the politician who suggested this in the article above just foists the job off on the states. Thanks a bunch, cockknocker, who's going to fund that state agency when most state budgets are stretched to the max as it is? Not to mention that if we are hit with a national sales tax in addition to a state sales tax, that's double taxation.

And if we completely remove the corporate tax burden by taking away income tax, that places the burden at the cash register even higher. I'm sure businesses love it, because that means workers cost them less. I am entirely skeptical that an added tax on every sale is going to make up such a huge shortfall.

Though I hate the IRS, I'm thinking there are better ideas than this one to fix the tax problems of this country.

Yes. Abagadro is smoking crack.

You only pay tax when you SPEND money. Yes it is true that when Joe StockBroker grabs $10k off a stock market sale he pays no tax. Currently he'd pay 15% tax on that money. With the sales tax way he would pay 23% when he SPENDS the money.


When Joe Pauper buys a box of Cheerios he pays 23% tax (+~6.5% state tax).

When Joe Middle Class buys a new house he pays 23% tax (+~6.5% state tax).

When Joe Crack Dealer buys a new BMW with cash he pays 23% tax (+~6.5% state tax).

When Joe Rich Guy buys a $1 million dollar private jet he pays 23% tax (+~6.5% state tax).

When Joe Ultra Rich Guy drops $23 million on a fifth house in Carmel, CA he pays 23% tax (+~6.5% state tax).

None of the above would pay income tax. There would be no more taxes taken out of a pay check.


All cash transactions that never gets reported to the IRS like Joe Crack Dealer's money gets taxed when they SPEND it.


If I have $2 million in the bank and I'm making $200k a year off dividends/interest that's great. I'm making $200k and pay no tax. But if I want to SPEND the $200k I pay 23% tax on it. If I want to drop half of the $200k on a new car I take a 23% sales tax hit.


You think something that encourages people to save money is a bad thing? Currently most Americans save nothing. They have no idea how to save. Which means when the economy dumps they get janked. If they had been encouraged to save money instead of blowing it on the latest "Super Duper MPAA Action Movie" they might not be as bad off. And in case you hadn't noticed being credit card maxed out isn't the best place to be. When you file for bankruptcy now your credit card debt is NOT wiped out.

There might be a short term economic impact by American's starting to save money but I think it would help cushion economic problems in the long run by everyone having some savings.

Corporations only pay 10% of the income tax collected in the US right now (AKA they don't pay jack crap because they have the will and the way to find all the loopholes). The same goes for the ultra rich. For the most part they have the will and the way to pay as little tax as possible already, be it offshoring it, expensing options, using charity trust funds, farm equipment loopholes (read Humvee's), or other such means.

There are already import duties in place. If you buy a car in Oregon (which has no State sales tax) and you bring it to California you have to pay a duty on it when you register the car.

When Joe Foreign Music Label #2 ships all it's profits overseas it still takes the 23% tax hit when it SPENDS money on it's operation in the US.

And then there is all the movie companies. Know how they say X and X movie grossed $200 million. The joke in the movie industry is that no movies ever make any money. They siphon off all of the profit into their production companies and the movies NET $0 dollars (which is one reason why Stan Lee sued them over Spiderman royalties). With a national sales tax the production company that just dropped $250k on new film equipment just pay 23% sales tax on it.

----

Disclaimer: Count on the politicians to fuck up the implimentation though so it wouldn't work as described.

If food, clothing and shelter and first car/computer are exempted, then a national sales tax sounds like a good plan. Otherwise, it's too way regressive of a tax…

ROTFL, I say go for it.

After all, when the price of all your shit goes up by 23%, even more people will be hopping over the border to buy stuff in Canada :P

Will have to keep an eye on that one, if it goes through, maybe i should go into the duty free business.

   Does he pay 23% if he spends it on stocks?  What about bonds?  Does Comcast pay tax when it buys another cable company?  
   As long as the first 10 -20K is exempt ( and I like the smart card idea) I might support it.  IF stocks and company buy-outs are taxed.

Food, I agree with.

Clothing...not sure I agree. We spend a lot of money on clothing that has nothing to do with FUNCTION. If there was some specific type of generic clothing, I'd have no problem with selling a tax-free type of no-frills cotton underwear, t-shirts, socks, shoes, winter coat, and jeans. In other words, just this side of a burlap sack for the folks who can't afford to "not be caught dead in generic clothes".

Shelter? I wouldn't tax rent, but I would tax purchasing a home/land. Makes it a little harder to get into home ownership, but by not taxing rent, you help people make the transition by allowing them to save for their down payment. But I'm a nice enough guy to suggest a one-time exemption for first-time home buyers. Rental properties end up getting taxed as they are built, and/or purchased...plus anything the landlord has to buy to maintain the facility is taxed as well. Rentals become more affordable, because rental properties have to give renters a financial incentive to keep renting.

First car? Again, I'd base some of this on the type of car. Buying a used car for your first time? Sure...that's not bad. Trying to buy a BMW, or a brand-new Cadillac? That's a bit much. I'd say first-time cars are tax free up to $10,000, and any car can be purchased tax free if the sticker price totals under $5,000. Of course, we should also consider that in some urban centers, like New York, owning a car is considered a bit of luxury by some.

First computer??? That's really pushing it....I'd disagree.

Bring the noise.
Cheers..............

See..already you guys have made this "simple" plan into something pretty complex. Now you have to have an agency that keeps track of whether or not this type of clothing is funtional enough, whether or not this guy is buying a car for the first or second time, etc. Then, when you buy that house or car, you have to fill out a bunch of paperwork proving no prior ownership, etc.

Our EXISTING tax code sounds pretty simple if you don't get into the details. The more you make, the higher the percentage on your income is taken off. That's the one sentence executive summary.  Too bad actual policies are longer than one line...

Our tax laws could use some work, but that honest coversation starts with:
1: What are the major problems?
2: How do we fix them?

If tax code complexity is such a big problem, how about making it less complex? That has NOTHING to do with a new system. As I said above, the basic idea *is* pretty simple.

---
About the guy who wrote the paper claiming time wasted on taxes: replaces "taxes" with "snacks", "football", "water cooler conversation" or "masturbation" and you get the same thing. That is the dot-com era logic of "dog food is a 10 billion dollar industry, if we just get 1% we will be rich!" If you didn't spend that time doing taxes, you would have spent that time in some other wasteful way, not curing cancer...


Edit: That paper was total bullshit. If you read it with a critical eye it is extremely short on facts and full of leading language, baseless speculation, etc. I also find it odd that real estate as mentioned as not taxed...why not? Is land really that different from a microwave dinner?

There are some good arguments for a flat tax, that wasn't one of them.

What if I am paying for my kids college tuition, am I taxed on that? If so, good luck selling that to the public. If not, you've opened up a giant can of worms of "things we won't tax even though we said we would tax every good and service." Or is college not considered a good or service?

I would also point out that a flat tax isn't going to make your taxes any lower, on average. If you are in a low income bracket, it will probably make it higher. The fact is, we have money going out and need money going in. As long as the money coming in is the overall same amount, all you are doing is redistributing who pays what, not changing the average.

I make decent money and I rarely buy things so it would be a hit with me. But then again my friend who lives paycheck to paycheck would probably be screwed.

The best solution would be to have the government spend less money, but neither party is for that. Remember when Republicans were the party for a smaller, less intrusive government? The good old days...

As Joe Rich guy, why the fuck would I buy ANYTHING in the US? LOL American tax system, I buy your goods in Japan and ship them over in my private jet! (shit, SurfD pointed this out already.)

Of course, I'm all for it. All my income is tied up in school loans, health insurance and house payments. The rest goes to savings or my 401k.  If I dump $7k a year back into the economy on goods I've gone on a wild spending spree the entire year - and yeah, that figure includes food. I'm saving more cashand the gvt's getting less. I'm already a saver, I'm not dumping the extra into the economy, it's going into my pocket.  Go sales tax.

National Sales Tax is a great idea.  My only concern would be the short-term effect on consumption.

Bruce

Well, this kind of depends, doesn't it? Why couldn't we continue to allow programs similar to the 401(k) that allow tax-free investments to be made via payroll deduction?

I'm just not entirely sure I grasp why people want to beat up on investors....I would think that people would want to have the ability to make investments tax-free so that the poor and middle-class can make more investments.

Stocks provide capital for American business, and bonds provide capital to our government....both offer an ROI, which is an absolute must if you want people to either risk their money on business ventures, or to effectively lend money to our government. You've got to give them a reason to put the money to good use instead of simply hoarding it (not that banking institutions are averse to investments either).



All you do then is watch as more companies go bankrupt. You're effectively poisoning the smaller fish....sure, the big fish don't gobble them up, but they die anyway. Takeovers, mergers, and consolidations preserve more jobs than they cut (i.e. rendundant infrastructure). Additionally, when a company is bought out, their investors gain as the buyout can push up the stock value.

Not sure I see where you're going with this beyond taxing "evil" corporations. Those "evil" corporations provide jobs. Mergers and buyouts mean that part of the old company lives on.

Bring the noise.
Cheers..............

I think the point was we are moving towards a system where corporations are considered separate, equal entities in some situations but not others.

This gets to the basic point of why to incorporate at all. Corporations are separate legal entities. They have liability, even though they are abstract concepts. So, why shouldn't they pay taxes also?

It's not a matter of corporations being "evil" or not. They are legal entities, they buy stuff, they should be taxed in any system that taxes transactions.

Creating a corporation is really creating a proxy person, a fall guy. That guy should pay taxes. Hey, nobody forces you to incorporate! Not all businesses are corporations. If you choose to form a separate legal entity that assume your liabilities, it should also assume your tax liabilities. It isn't punishment.

Think about it this way: I choose to incorporate, you choose not to, and both our businesses spend $10 million. You get taxed and I don't, AND you are legally liable? That doesn't make sense. You get doubly screwed.

If you don't tax corporations, you can expect dummy corporations to pop up left and right. Start a corporation and pay zero taxes!

It's not about being "evil" or punishing anyone. A legal entity spends some money. We tax the spending of money. Hence they are taxed.

Maybe you're misunderstanding me....taxing the purchase of assets makes sense. Microsoft decides to buy a copier from Xerox, sure...tax it. That's a business-to-business transaction....one business purchasing good or service from another.

OTOH, one airline buying out the other (as an example) is different. You're talking about buying assets that had already been taxed once, when originally purchased. Additionally, mergers and buyouts are preferable to simply letting companies go into bankruptcy.

Of course, when businesses pay taxes, they pass those costs along to their customers sooner or later....whether that means other businesses or consumers is irrelevant.

Bring the noise.
Cheers.............

Just to clarify, a single registry, perhaps related to the social security number could be used to determine whether a car or house had been purchased before....or perhaps a notation on the credit report (no escaping a credit check when buying either) to indicate whether you have previously purchased a car or home.
 
You can spend up to $10k on your first car, and up to $5k on any car (EVER) and avoid paying any sales tax...NOT TOUGH. Rent isn't taxable, and a first-time home purchase isn't taxed...NOT TOUGH. Unprepared food isn't taxed...my home state does that already (i.e. groceries aren't taxed, restaurant meals are taxed)....again NOT TOUGH.

As to clothing, I'd just as soon say to tax it all. Ideally, if there were some way to essentially say "here is a crappy generic alternative that no self-respecting human would choose voluntarily if they had a choice, just to help the extremely poor", I'd be okay with that being tax-free. Since that isn't going to happen, you just tax all clothing.

Bring the noise.
Cheers.............

    Why do you see treating investors exactly the same as everyone else "beating up" on them?   Personally, I think the stock market could use a bit of sales tax.  It would make people invest in things for the long term.  It would tend to make CEOs THINK about the long term.  401k's are fine, keep them as they are.

I'm not on crack. Theoretically it is supposed to replace the income tax. In practice, there is no way you can shift that radically on a national basis. Won't happen.  It would turn the economy upside down. Phasing something like that in isn't easy either.

You will see it used to replace much of the tax cuts that are going in over the next 10 years that Bush wants to make permanent. Each and every one of those is a shift away from taxing wealth and the fruits of wealth, supposedly to spur people to "ownership," but it is a sop to his key consituency, rich folk.  Those have to be made up at some point and he is floating the balloon on sales tax to make that replacement.

    Norman Spinrad wrote a book, I think it was Child of Fortune??  where they had a dole that anyone could go on any time they wanted.  You got a cot to sleep on, clothes to wear, and food to eat.  The food was bland and tasteless, the cot was not very comfortable, and the clothes were plain and baggy.  The upside was there was no paperwork or distribution problems.  Anyone, even the very rich could come and get some, if they wanted to.  
   In a way, it was the perfect safety net.  Sounds like what you're looking for.   Guaranteed subsistance, and if you want more, you have to work for it.

Because I see a difference between someone purchasing a tangible product or service, and putting capital into American companies so they have the capital to expand and grow. Indeed, investors get an ROI....that's why they invest. And everyone benefits from it when the company is successful. Company gets capital, hires employees, employees produce a product or provide a service in exchange for wages, company profits, investor gets a piece on that profit. Granted, when a company fails, the company and the investor have a lot to lose....but nothing ventured, nothing gained.

To do anything to discourage investing is stupid.....people that expect to retire on nothing but a savings anymore are deluding themselves. The young poor or middle class guy making an investment to plan for his future is more likely to be discouraged by a tax than the investment banker anyway (although their ROI needs to be higher, thus risk tolerance decreases).

Likewise it is stupid to institute a policy that encourages a specific type of investment strategy, particularly one that does not meet the needs of most investors. Long-term investments are not always the smart decision. There are plenty of times when making a short term investment is the proper move, especially in volatile industries. Many of these risky investments end up becoming innovative businesses, which contribute to our society at large.



You make long-term investments based on sound fundamentals, and typically on a proven business. Long-term investing is betting on the tortoise instead of the hare.

Unfortunately, not every business or business concept is a safe bet....some just have an inherent amount of volatility and risk not found in other investments. Those risks have the potential to yield even greater rewards....and some of those risky business ideas come to fruition and become innovative, revolutionary companies.

Investors always want to see gains...gains in revenues, profits, profit margins. No matter what kind of tax you add, you don't change that. If I have money in a company that is losing money, I'm better off getting my money out, or putting it elsewhere, and waiting until the storm is over. Bear and bull markets, man.

Seriously, I'd be interested to see your portfolio, based on your statements here.



401(k) investments are made prior to any deductions for INCOME TAX. No income tax = no 401(k) exemption from said income tax. "Keep it the same" isn't an option.

Bring the noise.
Cheers.............

Making such things tax-free is a long way from simply handing them out.

Bring the noise.
Cheers............

Ok, wait.  Instead of the wealthy carrying more of the burden, since they garner more of the reward, the cost gets to be spread equally to all people, even if the means of all people are very unequal.  "The poor" get to be exempt, but those just above the line of "the poor" get to pay full tilt.  In addition, it penalizes people who spend money, in an economy that is entirely consumtion driven.  That is, our economy is run on the premise that we want people to spend as much money as they earn as we can get them to, but we want to change it to penalize them for doing it.

What the hell, is the government hiring MMOG devs to design economies now?  Ooh, I know, how about a faucet-drain driven economy?

Does it really matter that much? In the end, the US is paying the same amount in taxes total.

I think less taxes would make most people happier than a different tax system, esepecially if that system is a national sales tax.

What's weird is that the Democrats are usually regarded as "tax and spend", while the Republicans have morphed into "spend and spend." Where is the "don't tax OR spend" party?

The choice now is spend a lot and pay for it, or spend a lot and create record deficits...the new Republican idea seems to be that they can spend as much or more than Dems, but tax less..."fuzzy math" GW!

The other day I saw an article refer to Bush as a "big government Republican." Lol. This is what people mean when they say they can't tell the parties apart. "I'm a Republican that believes in heavy government regulation, cops in the bedroom, and increased size and cost of government with more government intrusion!"

What ever happened to smaller government, no cops in the bedroom, right to privacy, no big brother, etc etc. Now the Democrats are the ones against Big Brother? It's hard to keep track. All this "triangulation" strategy of stealing the other guy's platform, plus catering to different bases is just becoming a mess.

So now, Republicans are for:
Heavy handed FCC regulation of content for morality. (but not regulation of what they are actually supposed to regulate)
Cops in the bedroom, amendments in the constitution regarding who can fuck who consensually. (Good thing to be spending time on!)
Increased government regulation of education. (States rights? Nope)
Database records of every citizen's habits and info.
Missions to Mars.
Increased spending.
Increased size of government.

Aren't these all things that just 10 years ago we would have said the Republicans were against?

I don't think it really has much meaning to be a Republican anymore. Fiscal conservative has meaning, neo-con has meaning, moral/religious conservative has meaning...but Republicanism is pretty watered down these days. Pro-business and what else?

To be fair, you can make a lot of the same points about Democrats.

I remember laughing at the last VP debates when Cheney and Lieberman kept agreeing on everything, and finally the moderator flat out asked if there was anything they disagreed on. That's just sad.

You would figure that if you had only 2 parties they would be polar opposites.

   Sorry, but no.  Investors are buying a product the company produces just as much as the people buying the washing machines.  They should be treated the same.  The dollars that come into a company from selling products have the same pictures of Washington on them that the sale of stock produces.  They both get used to hire employees, expand, etc..

The "product" being a piece of paper....it's an intangible. You'd be better off comparing it to insurance than a washing machine. And that's fine...I don't think we should tax insurance premiums either.



The difference of course being COST OF GOODS SOLD on products or services sold to the public. Those goods have an intrinsic value in and of themselves.

Stock certificates have no intrinsic value, and cost virtually nothing to create....hell, the stock you buy today could be worth absolutely NOTHING by tomorrow. The investor takes on a RISK, with no guarantee of getting anything in return. The point of taking that risk is SPECIFICALLY to provide capital to the company.....if the company turns that capital into a profit, the investor benefits. THE ONLY WAY THE INVESTOR GETS ANYTHING OUT OF THIS "PURCHASE" IS IF IT RESULTS IN A SUFFICENT ROI.

By comparison, if I buy a car and the company takes my money and uses it to improve their productivity and/or efficiency, do I get anything for that? NO. I paid my money, I got a car.

Bottom line is that you're comparing apples and oranges here.

Bring the noise.
Cheers.............

Probably good, as in LESS.  Americans consume way too much; we appear to be obsessed with it.  We need a little more conservation.  When 9/11 happened, did our "conservative" president tell us to tighten our belts to free resources for his "war on terror"?  NO, he said, "GO SPEND, SPEND, SPEND IF YOU ARE A REAL AMERICAN!"

I thought we were taxing "goods and services." How many services are tangible? How about a simpler rule: you get taxed when money departs your wallet, for whatever reason. That's the inverse of the rule today. (You get taxed on all incoming money) Just tax people on outgoing money.

If I pay someone to clean my house, I don't get anything tangible...




Replace "stock certificates" with "money."

Money has no intrinsic value. It's green paper. You can burn it to keep warm. Actual money isn't worth any more than 8x11 printer paper. How many dollars does it cost to print a dollar?



What's your point? If the risk isn't worth taking, don't take it. If the risk + the tax is too high for you, and you don't think you will see a good ROI, buy something else.

How is this different from any other speculation? Buying Beanie Babies? Should we not tax Beanie Babies? Or comic books? How much more intrinsically valuable is a comic book than a stock certificate?



That's not why people invest. They invest because they think they will see a good ROI. It has nothing to do with wanting to provide capital. As long as people think they will see a good ROI, they will invest. Providing capital is an aside.

Cars have utility, stocks have utility. Stocks are risky, but diversified stocks are not that risky, and they directly make you money. Your car doesn't pay you every month, your stock might. Your car will most likely never appreciate in value, your stock might.

I don't see any distinction. You are buying something because you want it. You want it because it's food you can eat, transporation, something shiny, something that can earn you money, etc etc. If you don't want it, don't buy it.

If the tax is scaring you off, obviously you don't want it badly enough. So buy something else.

Stocks aren't different than any other speculative investment. Oh shit, all those Fleer baseball cards I bought aren't worth their original cost...maybe I should get a tax refund! Plus I don't get any voting rights with my Fleer cards.

Not only are stocks a good investment and appreciate in value, they are technically a part of the company. You're never going to own Marvel Comics by buying lots of Spiderman...

You want to buy something, for WHATEVER reason. Ok, pay taxes on it. The end. You trade away your money for something, you pay. You are free to choose what you spend on...yay!

Edit: What nobody is pointing out here, is that poor people buy goods and services, and rich people buy stocks. (That's a gross simplification but still) So, you get to spend money on something that will make you money, but not pay any taxes...wacky. But if I buy a snowshovel so I can make money shovelling snow, I pay taxes, and I have to make my money through manual labor. In the end you can spend a lot more money than me getting started, and make a lot more money back, and not have paid any taxes in the process.

If I were going to support any sales tax, it would be a tax on everything except essentials. No food or medical care tax, everything else is fair game. Renting/buying shelter is a bit trickier...people need shelter, but not mansions. I would say people should only pay taxes on the portion of their payments over a certain threshold. (The idea being that housing is a requirement for life, but not nice housing)

If you don't need it to live, pay taxes on it.

Ok, you're mixing two ideas here.  One, I agree that Americans are wasteful consumers.  We throw away a lot of money on things we don't need, which pisses me off since my wife tends to be one of those who do that.  Two, our it's a bad thing because our economy is designed to be a consumtion economy.  When people don't spend, the entire economy suffers, and we hit a recession.  If I save money, then that's money not being put back into the economy to create jobs.  The point is that you can't claim that the way we do business now is bad, and throw it out wholesale without something to replace it.

My tax ideas are pretty simple. Tax people with lots of money, give people without money a break.

Problem is the folks making all the laws are those with the money, and lawyers to boot. No wonder the tax and legal systems are so messed up, pure self-interest.

Except the rich already pay more in taxes than the poor, and the people without money already get the biggest breaks.

I prefer a flat tax or national sales tax.  As for our current graduated tax system, I would support adding a new bracket for the "uber-wealthy", since one could argue that they don't really pay their fair share.  They pay the same as the moderately wealthy, and it means a lot less to them.  However, this really wouldn't do much to help pay off the deficit.

Remember the Laffler curve.  Depending on where we are, cutting marginal rates can actually INCREASE total revenues.  In reality, the curve is probably not a simple curve and probably influenced by thousands of variables, so it's hard to predict the result of any tax increase or decrease.  (And also hard to measure it, since other factors could have contributed to whatever the results we see after a tax change.)

Bruce

Not sure this has been mentioned but you are aware the if this passes the taxes you pay will be added back into your salaries so when you pay the sales tax on stuff you buy you actually arent loosing anything right? it simply eliminates the middle men in the IRS and you dont have to file taxes  anymore.
Im all for it as long as they dont start messing with nesessities like food and clothing.

If you pay someone to clean your house, you get a clean house. You get the tangible benefit of not having to clean your fucking toilet. If you are paying for a service, and you don't know what it does, YOU SHOULD PROBABLY STOP PAYING FOR IT.
 
Purchasing stock isn't a service, it's not a good. It is an intangible asset with POTENTIAL value....in that sense it is like an insurance policy.



I can take money into a store and use it to buy goods....I cannot do the same with a stock certificate. It has no real value, because it is not a LIQUID ASSET.

I wouldn't advise taxing people to exchange currencies, either...so again, I hope you have a better point than "stocks is like teh money".



Not everyone buys Beanie Babies or comics as an investment. My niece has owned beanies since she was 3, and she *gasp* actually played with them. You can actually get some enjoyment out of that product, whether it appreciates in value or not....you can read the comic, you can play with a toy.

Stocks and bonds are STRICTLY an investment. The risks that go along with stocks would be the equivalent of hoping your Beanie Baby doesn't deteriorate or disintegrate completely.

The tax actually impacts the risk assessment....if I have to pay $120 to buy $100 of stock, how much am I actually risking? That's right, $120. My stock has to grow in value by 20% just for me to break even. So the investment needs to have an even greater ROI...not just to recover the amount spent in taxes, but to then also provide better growth than I could get by putting the money in bonds, or in a simple interest-bearing savings. That could mean 30% or more needed JUST TO BREAK EVEN ON OPPORTUNITY COSTS. That's going to do a lot to discourage investment.



Why do you think the companies sell stock, dumbass? They do it to RAISE CAPITAL. When people provide capital, they expect a return on investment. Sure, their motivation is to get the ROI, but to do so, what do they do? Yep, they provide capital to businesses....knowing full well that the only way they benefit is if the company benefits.



What is the utility of a stock? My car can get me to work, it can take me to the grocery store...I can use it to visit my grandma. I can't do any of those things with stock without first SELLING THAT STOCK.

Diversification involves buying stocks in several different economic sectors.....there is no such thing as a diversified stock. You diversify your PORTFOLIO. Mutual funds are as close as it gets...and that is quite different from owning individual stocks....you're betting your money on their ability to research and create a diversified stable portfolio with a sufficient ROI for your risk.



You're talking out of your ass here. The only thing you can do with a stock is hope it appreciates in value. The other things you are talking about are commodities, many of which have a practical use or aesthetic value.



You contradicted yourself there....you claim they aren't different than any speculative investment, and then point out many ways how stocks are different from baseball cards and comics.

And nobody said a damn thing about giving tax REFUNDS for bad investments. There is a current tax deduction if you lose money on an investment.....but that baseball card or comic doesn't simply vanish if it drops in value.



So basically, you're taking this as a means to get those mean mean rich people? What a fucking crock of shit. I'm middle class, and I invest enough of my income that I end up living a less-than-impressive lifestyle. I have to make personal sacrifices to invest, because that's the smart move for my future....and even that could disappear in a cloud of smoke if the market were to completely go to shit (which would basically collapse the world economy).

If poor people or middle class folks don't invest, don't save, leverage themselves to the hilt, perhaps they need to examine their lifestyle. I have neighbors in my apartment complex that own $30,000 cars, and work $25,000 jobs....guys with a closet full of designer clothes....folks with a wall full of DVDs, games, and personal entertainment centers....and they have trouble paying their fucking bills. When I talk to them, most have no savings, they have no investments, and contribute the bare minimum to their 401(k), if they even have one.

By not taxing the purchase of stock, you make it more attractive then sticking money in the bank, or blowing it on meaningless crap. And that's a good thing.....smart financial planning can make the difference between sending a kid to college, and sending a kid to McDonalds for an application.

When you buy your snow shovel, how much risk is there? ZERO. It's a fucking shovel. Your business is all about making money by moving snow....how you do it is up to you. If we want to get technical, you could move snow using your hands, a snow plow on a truck, a shovel, or a wooden spoon. You pay taxes on the shovel because it is a tool that makes doing that job easier.....you get a benefit from it.

A stock isn't a tool any more than a poker chip in Vegas is a tool.



Then you go right back into regulating what is "essential". I agree with food not being taxed, I'd go along with medical care as well (of course, I also advocated above not taxing insurance....including medical insurance). I also advocated tax breaks on the first time you buy a home, or buy a car (under $10k)...and a break if you are buying a car under $5k. Clothes don't really work with that, because fashion is so subjective....unless you're prepared to regulate the difference between an "essential" tie and a "luxury" tie.

Poor people tend to rent.....so you don't tax rent. This allows them to have more money to invest, or to save so they can purchase a home. Home ownership is desirable....not just because you build equity, but because a house or land can appreciate in value over time. Additionally, once you own the home outright, you can accumulate wealth, because you no longer have money going out in house payments, mortgages, or rent.

However, not everyone *HAS* to own a home....so in the meantime, you're keeping rent more affordable fo the poor. If you do buy a home, first one is tax-free, beyond that, you pay taxes. So if you're Johnny Bluecollar and buy a tiny shack out in the sticks for $40,000, you might pay $10,000 on it......OTOH, if you're Oprah, and buy a $40,000,000 home in Beverly Hills, you pay $10,000,000 in taxes.

Bring the noise.
Cheers..............

Hence, the reason you don't tax investments. Give people a reason and incentive to invest, and they put their money back into the economy...just in a different way. A way that can help them generate wealth, and actually provides mobility within the socio-economic class structure.



So you want to tax wealth, not income or spending? The eventual result there is everyone ends up in one giant "middle class" of mediocrity. Yeah, that's REALLY going to create lots of incentive for people to work hard, innovate, and better themselves.

Bring the noise.
Cheers.............

DV you're taking us down the path of the existing tax code.  Introducing social engineering into NST just makes it another morass of loopholes and venality, adorned with ever-burgeoning and expensive bureacracy.

As far as the specifics of how you'd torture a new tax code, whatever.  Everyone has a reason why the other guy should carry the bale.

If we tax services and goods we tax investment tools as well as woodworking tools.  Anyone unwilling to pay the tax can forgo the investment opportunity.  Making exceptions for Motherhood and Wall Street simply relegates a tax code to the political gamesmanship that degrades our culture over time.

This argument comes down to "I like investing, and investing is good, so let's not tax it."

I like buying shit, and buying shit is good.

Maybe you do have noble goals and think that we can encourage everyone to invest, which helps our economy and helps the individual as well. But, if everyone invests money all that does is shift the bell curve, not change it's shape.

If everyone is investing more money, and therefore everyone has more money, the value of their money is going to decrease.

There's no upward mobility in making money unless you are closing the gap between the high and low end.  How much money you have is relative to how much everyone else has - not everyone can be rich.

If a whole bunch of middle and lower class people start investing, the lower class people will have less initial capital to invest, make fewer real dollars back, and still end up lagging when the average cost of goods increases. Basically investing would be a good thing for individuals until it caught on.
---

Think about it this way : typically the rich and middle class are much mroe likely to invest than the lower class. If we tax investments and NOT goods, that would tend to flatten the curve. (Actually, by flatten I really mean the opposite...bring the two ends closer)

Not only that, but we could take that tax money and put it into programs for the poor, further moving their end of the curve up!
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Anyway, I still don't see how this is all that exciting. If we spend the same and expect to collect the same amount in taxes, it's just a matter of who is paying what, the average is the same.

I would suspect that with a national sales tax, the average lower-middle class person would pay as much or morethan before, and the upper class would pay less. That is my suspicion, but I haven't seen any hard data either way. Which is a suspicious thing to leave out.

All we would be doing is rejiggering who pays what amount. So...who pays less and who pays more under the new system? That's an obvious question to ask. I suspect nobody is answering it because the answer wouldn't be pleasant to the typical voter.

If you are going to propose redistributing the tax burden (which is what this is), it would be nice to say HOW it is being redistributed.

I suspect it would not be very popular if someone did the research and found out that the typical middle class family would pay 5% more than they do now, and the typical ultra-rich family would pay 60% less.

Edit: About social engineering and taxes: I half-joke with my coworkers a lot about our tax code. I have no kids, am single, have no dependents, etc. The tax code punishes me for this. (One man's break is another man's punishment) I am a middle class person but because I don't fit the middle class profile I don't get any breaks...it's ridiculous that being married or having kids can give you a tax break! Aren't those things rewarding enough on their own?

That kind of social engineering pisses me off, because my taxes are higher not because I earn more, but because I made some choices in my life that aren't good enough for Uncle Sam. Nothing I've done is illegal or out of the ordinary, but becaue I don't fit the proper mom and pop mold I get screwed?

Yes. I'd substitute monetary equality for mediocrity, however. I don't measure people by their station or wealth, but by their personality and spirit.

I'm sorry that money is the only reason you can see to work hard, innovate, and better yourself. I do it to make myself a better person, for a fraction of what I could earn in the private sector. I worked my ass off to innovate and be a better person as a musician, usually for negative cash flow. Because innovation is a reward in itself, and bettering yourself makes you a better person.

So basically, you're saying that we end up with loopholes and bureaucracy by not taxing investments, and applying sales tax differently in a handful of instances? You will never get a fair system of taxation for this country that fits into one paragraph. EVER.

The point is not to excuse the rich who make large sums of money by investing....the taxes to them would be a speed bump, not a road block. The point is to make investing accessible and desirable for hard working Americans who make the responsible choice to plan for the future.....a significant tax on buying stock hits them harder because they have less money to invest, and a lower tolerance for risk than someone with millions.

As to the rest...I don't like taxing insurance because it is an added expense of auto ownership, home ownership, and healthcare....things we want to be affordable. We don't tax the first-time home buyer because we want people to own homes. Likewise with the car buyer who chooses modest transportation to get started in life.

It's all moot point anyway, this discussion alone serves to prove the point that it's worth looking into. However, most of the folks in the thread will continue to argue the mantra of "SCREW THE RICH, THE TAX SYSTEM SHOULD BE LIKE A MODERN DAY ROBIN HOOD" no matter how much any proposed system tries to be fair and grant the lower socio-economic classes access into the arenas of home ownership, investments, business ownership, higher education, and upward socio-economic mobility.

Some people want to insist the lower class needs a boost upward....I'll go so far as to say that we should throw them a rope ladder and let them pull themselves up. However what I will never agree with is this perceived need to "make things fair" by grabbing the guys at the top of the ladder by the ankles and dragging them down closer to everyone else.

This is the land of opportunity...we have to make sure everyone has *AN OPPORTUNITY TO SUCCEED* not *THE SAME OPPORTUNITY TO SUCCEED*....the former you can do, the latter you cannot.

Bring the noise.
Cheers...........

It all depends on what's "fair."

Your idea of fair might be everyone paying the same percentage. My idea of fair might be everyone paying the same fixed amount. Some other guy's idea of fair might be paying paying the same percentage of income. Another guy might think "fair' is a graduated income scale.

Just because a percentage or real dollar amount is equal doesn't make it fair or unfair. How is taxing a flat rate fair? I mean, maybe I bought twice as much stuff, but maybe I needed that stuff!

My basic idea of fair is this: The more money you have, the less money is worth. People who have more money should pay more, and people who have much more money should pay much more, because the effect is really the same as a poor person paying a smaller amount.

The end result of the tax system should be graduated, with people at the top not only paying more, but paying a higher percentage relative to their assets.

If your national sales tax would accomplish this, fine. But that's my idea of fair, based on how it impacts people to take away money. Bill Gates could lose 50% of his assets in one day and it would be largely academic.

It's not about punishing people for having more money. It's just that the more money you have, the less it is worth.
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What about just lowering taxes, and lowering spending? Seems simpler to me.

Some people are going to say "why try harder? why work harder? the system is designed such that I cannot advance beyond a certain level". People hit a break-even point in such a system, at which point they can't get appreciable gains for their efforts.

I don't consider the value of a human being to have anything to do with their net worth....but unless you suggest that we should live in happy happy land and reward the nicest people while punishing the evil mean people, we have to accept reality....this doesn't mean that attempts to put everyone on a level economic playing field is fair to those who have worked harder and been successful.

The businessman who works his way up from nothing and goes on to build a company from nothing into a financial giant that employs thousands.....well, he may not be any better of a human being than the homeless guy who sleeps outside the liquor store in a puddle of his own urine....but he has certainly made a bigger contribution to society and our economy.



The altruistic pursuit of human excellence notwithstanding, Sky.....some people indeed have other motivations, but the most common one is money. Perhaps you'd prefer a posession-free society of absolute equality where people all work together in peace to further the advancement of the species. But that's not reality. It's a fuckin John Lennon song.

Bring the noise.
Cheers.............

So basically, your idea of fair is that regardless of how much money everyone has, their purchasing power should be equal? In other words, the same shirt you can buy for $20 should cost Bill Gates $200,000, because he has a net worth that is 10,000 times greter than yours?

Is there a point in discussing this further with suggestions like this being thrown about?

Just say that your ultimate goal is that you don't believe economic stratification should exist at all, because that's the ultimate result of such a plan. Start discussing the plight of the proletariat, and just get it over with already.

Bring the noise.
Cheers............

So, your basic point is that you don't understand what "graduated" means. (Hint: we use that system today!)

What I'm suggesting is, gasp, the same system we have in place...oh my!

Does the system today give everyone equal spending power? No. Did I say everyone should have equal spending power? No. Nice straw man...weak.

I like how whenever someone says something, you look in your Republican phrases handbook to put words in their mouth. We think corporations are "evil", we want to "punish" corporations, we want to "drag people down by their ankles", we want socialism, blah blah blah.

What happened to reading what people say and trying to understand it?

My crazy, CRAZY notion was that the rich should pay more as a percentage of total assets than the poor. OH NO SOCIETY WILL CRUMBLE IF WE DO THAT!!! OMG!!! OMG OMG OMG!

Do you not know how our tax code works right now? Is there a point in further discussion if you go bonkers when someone suggests the same principles WE ALREADY HAVE TODAY?

Lol...knee jerk reaction much?

"So basically, your idea of fair is that regardless of how much money everyone has, their purchasing power should be equal?"

You just made that up dude...I guess it's easier to argue with invented arguments than real ones...

    That depends.  If you really enjoy misrepresenting other people's positions, calling them names, and being a tool, then by all means keep typing.  But don't call it discussion.

I think if we have a national sales tax, it applies to everything. Real Estate, goods, services, stocks, and yes corporate acquisitions. The reason that I think that is for the basis of simplicity and to help acquire the necessary funds.

However, nobody says the rates at which different things are nationally taxed have to be the same. You are allowed as the government to tax food and cigarettes differently under the law. Tax luxery items harder if you want. Tax stocks lightly so it only affects those who buy in large numbers. Tax Real Estate on an assessed value yearly basis instead of on the exchange.

That solves a lot of the problem people have with taxing the hell out of those that must buy staples like food and shelter. Just make the %'s lower and give out a flat exemption per person regardless of income.

In the last several posts the question of fair has come up...and peoples opinions on what fair means to them.

The national sales tax would be fair to me because:
I would only be taxed on the money I chose to spend.  Not on my money before I even get it home.

The NST might be complex, but it wouldn't require near the behemoth that is the IRS.  Some rules about what is taxable and what isn't...first homes, first cars, unprepaired food, and etc.  You'll need a baby IRS to manage this stuff, just not a bunch of auditors.

...and about taxing investments:  Certainly, pay taxes on investments.  But not at the time when you make the investment.(Buy the stock, bond, or insurance)  But pay the tax when you SPEND the money you MADE on the investment.

I like DV's points.

It sort of works like this anyway. When you have that much money you buy more expensive crap because otherwise it doesn't feel like you've bought anything.

A car for $500k isn't any better than a car for $30k but unless you spend $500k for a car when you have $100 million in the bank you don't feel like you've bought anything. Is a $10k name brand bullshit suit better than a $300 no name suit? No, not really but if you have money to blow you feel like a loser for buying the $300 suit instead.

You said that they should pay a higher amount and a higher rate so that "the effect is really the same as a poor person paying a smaller amount". You're also talking about "how much they have"....that is taxing wealth. We don't do that now.

I also took it in the context of your point....a national sales tax should not exist unless it accomplishes that. For a sales tax to make it so the impact of any given purchase is equivalent (i.e. in terms of % of net worth), it'd have the exact result I described.

You used the term "the same"...I took that to mean equivalent. Way off base, I realize.



"I like it better the same like it is now, but diffrent cuz it shud be BETTER".

We don't tax wealth today, we tax income. GIANT FUCKING DIFFERENCE.



What do you want, then? What would the goal of your proposed system be? Do you deny that you want the rich to pay a much bigger percentage of their wealth in taxes?  Because after all "Bill Gates could lose 50% of his assets in one day and it would be largely academic"....right?

You want the top tax brackets to pay if not more, at least as much money in taxes as they do today, yes? If you continue to disproportionately increase the tax burden on the top tax brackets, what happens to that upper class? Taxes drag them down/slow them down, allowing others to catch up.

Do this to a large enough degree, and you're pulling down "rich" people at multiple levels....varying only the pace by which you are doing so. If you're looking to inflate the middle class, you propose to pull some folks down from positions of wealth, and boost the lower classes up.

By comparison, I'm saying we need to stop asking for the ENTIRE lower class to improve their position....some of them just never will. Provide the opportunity so that those with ambition have a means to elevate themselves to the middle class or even beyond, with literally unlimited potential.....a potential only limited by their imagination, determination, and ingenuity.



As a percentage of TOTAL ASSETS....thats the kicker. We don't do that now. We do it on income....income != total assets. Big difference between taxing people based on their income levels and their total wealth.

Yknow why? I could earn a billion dollars in one year, pay all of the appropriate taxes, retire, and continue to be taxed on my wealth for the rest of my life. If that taxation exceeds the interest rates on my savings and/or ROI on my investments, I'm losing money....and that's without even spending anything! It's telling me that nothing can stop me from losing money on a continuous basis.

It's effectively a case of you saying "these folks have too much money, so we are going to take some of it away from them". That's not my idea of fair.



See that little thing at the end? Notice how it's curvy at the top?

But even after clarification, you're still suggesting something that I vehemently disagree with....taxing TOTAL ASSETS instead of income or spending is a systemic means of pumping up the middle class by taking money away from the wealthy, and providing advantages to the lower classes to even things out.

Explain to me how it doesn't do that, and how that wouldn't be the ultimate goal (or at least effective result) of that system. Please.

Bring the noise.
Cheers.............

The difference of course being choice, and at least a perceived difference in the quality of goods purchased. Rolex vs Timex. Harley vs Honda. Mercedes vs Mitsubishi.

As to suits, $300 vs $500 can be a significant difference in quality. From $500 to $1000....not so much. Beyond that, I have to imagine it continues on a scale of diminishing returns....but I really couldn't say, as I've never gone shopping for a $10,000 suit.

Bring the noise.
Cheers..............

We tax gifts, we tax inheritance. We tax all the ways you can establish wealth.  We tax wherever your wealth comes from - all incoming wealth at any time.



No, I don't deny that! Again, that's how we work today. The rich *do* pay a larger percentage of their wealth right now. I like that.



This is wrong in about 5 different ways.

First, I want taxes across the board lower.
Second, I don't want to increase the proportions forever, just to some fair level. Most of that, IMO, is lowering the burden at the low end rather than raising it at the high end. (Assuming we can cut spending at all)
Third, the poor can NEVER catch up via a graduated tax, unless moving up in a bracket actually means you take home less net, which would be absurd.

Today, you get marginal returns on higher incomes. The higher the income, the less real return you see on it. But you still see a positive return! There is no way for someone else to "catch up" that way.

I also do not believe in the "disincentive for wealth." As long as you get positive returns on your money, there is an incentive for wealth. I don't think any person is suggesting we tax the rich to the point where they actually make the same or less than a poor person...it's a matter of diminishing returns.

I believe that "fair" is people getting diminishing returns as they move up the economic ladder.



There really isn't a big difference. People get taxed today based on assets like property. At some point, your assets were income, it's a just a matter of when the tax comes in.



Tax = you lose money. Whenever you are taxed you are losing money. If you earn a billion dollars one year, and continually lose money from then on, you are probably still in pretty good shape.

A tax on assets vs. a tax on income would be lower, since it is continuous. It also encourages wealth creation. It's an income incentive.

But, my point is not to advocate an assets task. I am trying to capture the basic idea that people who can afford to pay more, pay more, as a percentage, not just in real dollars.

I would want any tax to stick to that same point. The more you have, the higher percentage you can afford to pay. Whether or not "the more you have" means assets or income, or discretionary spending money, doesn't really matter that much.

A sales tax could capture that if the rich tend to spend disproportionately more than the poor, but they don't. A typical poor person is going to spend a huge percentage of their income every year, a typical rich person won't. So you get the opposite effect that I would like - now the less money you have, the more you pay as a percentage of income/assets.

People who live paycheck to paycheck literally cannot afford to pay any taxes. I'm fairly certain that if you made a graph of spending as a percent of income, it would be exponentially smaller as income rose. (As your income rises, the percentage of that you spend goes down)
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Again, the basic idea is quite simple and is just a restatement of what we have today: Those who can afford to pay more, pay more, not only as a real dollar amount, but as a percentage.

And again, any change in the tax system is just a change in who pays what amount. With a flat sales tax, if the rich pay less, SOMEONE is paying more. I'd like to see a breakdown of who would pay what under a sales tax. Does typical average American family with 2.3 kids pay more or less?

I don't buy into the notion that a sales tax would be a lower overall tax because it would make the economy better overall...remember the projected record surplus? Those kinds of projections are garbage.

Umm, everyone does understand that the state of Texas has used sales tax and property tax as its primary sources of income for decades and there is no state income tax in Texas?

Obviously, there will need to be some minor changes for a national version but don't act like this idea of a sales tax with no income tax is completely a theoretical exercise with no real world examples of success.

In Texas, food and necessities, ie., baby diapers, etc., are not taxed.  Virtually all other purchases are taxed at ~ 8.25 % depending upon the county taxes in that area.  Recently, the state has declared one weekend a tax free weekend in August for purchase of school supplies and clothes where anything that is arguably for school use is tax free.  If you think Walmart is hell on a normal day, try it on Tax Free Weekend! :)

The system is workable but unlikely to happen due to intransigence and the CPA full employment act, the US Tax Code.

A few things:

Bruce -

It's the Laffer Curve.  Never really been much empirical evidence to support it's application to individual income taxes,  though it has been successfully applied to estimate returns on debt to Latin American countries/other high foriegn debt countries.

Deadweight Loss -

This terminology/way of looking at things is pretty widely accepted by most economists.  It's most common usuage is the "Deadweight Loss of Monopolies",  essentially the aggregate difference between producing goods to a point where marginal cost=marginal revenue (market,  many suppliers), vs. producing goods to where average cost = marginal revenue (monopolists,  colluding oligopolists).  

We use this terminology due to the problem in defining "fair".  Very obviously,  fair is individually determined and not a hard standard to set any kind of taxation policy to.  You end up with a mess. (see people not working because then they'd lose welfare)

By minimizing deadweight loss,  you seek to maximize utility and/or efficiency.  Essentially,  the article quoted makes the argument that tax accounting/law is essentially a deadweight loss or form of rent-seeking behavior whose elimination would lead to more use of assets in productive vs. administrate uses.

Equality vs. Opportunity -

Basic fact:  The more wealth redistribution/social equality you have,  the lower your growth rates will be.  At one end you have higher inequality, higher growth countries (US, Southeast Asian tigers, etc) and on the other you have more equality/lower growth (Europe).

Choose where you want to be on the scale.  In democratic countries,  it's essentially a pendulum between business/professionals/middle class entrepeneurs and the populists/working classes.  Push too hard you get either revolution or stagnation.

Sales tax on Investments -

This would destroy the capital market.  A functioning capital market allocates money based on return on investment/empirical functions.  Without a functioning capital market you get an increase in rent-seeking bahavior,  as people compete with bribes, gifts, lobbyists, whatever to secure investment dollars from governments/large banks.  

This doesn't lead to sustained long-term growth.

The capital market will have hiccups,  and have failures at times,  but there is no better alternative.  See the application of Scientific Communism (Soviets, Eastern Europe) or the bank fiascos that led to Japan's stagnant economic growth in the 90's/early 2000's (capital allocated to friends/related companies instead of by profitibility,  essentially text book rent-seeking vs. profit-seeking behavior).

Saving vs. Consumption -

The rate of savings in a country has been directly tied to growth.   Increasing aggregate savings rates causes GDP to increase rate of growth,  before it levels off at the "normal" growth rate for a country/society.  As long as the savings rate remains constant,  you'll keep that gain.  When savings rate decreases,  it will decrease the rate of GDP growth normal to the economy,  and level off at the curve appropriate for normal GDP rate plus savings rate.  

See Solow's Growth Theorem.

 ---------------

Broken down:

Die, thread, die....

Nevada has no sales tax and no income tax. And it glows.

So how DO you determine a policy? Fairness is at the crux of a real (read: not in a textbook) tax policy debate. Fair is individually determined...so are a bunch of other things we try to reach a concensus on and legislate. When was the last time the government stated "hey, this thing is subjective, so let's not bother taking it into account." ?

So you want to eliminate the IRS to improve efficiency...why does that imply a sales tax? How do you determine what is taxed, and at what rates?

Our tax code today is *very* concerned with being fair. My crystal ball tells me any new one we would have a prayer of passing would have to be as well.

I don't see the jump from "wasting money on administration is bad" to "we need smart cards that track consumer shopping patterns"... That paper is not saying that administrative waste is bad. (Or, it is saying a lot more than that) In anyone here arguing that administrative waste is good?

Administrative waste is bad...so break out the smart cards!

I like how not one person can state what the effect of a different tax code would realistically be in terms of who pays what. That's the obvious first question.

Here is my new rule of tax policy proposals: If you are going to propose a tax policy, be prepared to state how the tax burden will be redistributed! If you can't answer that you haven't gotten past the "boy, I have a swell idea!" stage.
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Now, I'm not asking anyone on this board to do that (I mean, figure it out themselves). But, you would figure people seriously advocating a new policy in a "serious" study would have an answer, no? In software design we call this insane concept a "use case."

it's pretty obvious:
Step one: Cool idea.
Step two: Here is how my cool idea would operate in a number of real scenarios.

The point we are at, right now, is "hey, as a very high level concept a national sales tax sounds ok!" That isn't a proposal, it's just a statement.

Edit: Property taxes are asset taxes. Individual states are pretty different as far as how they collect taxes, it's a lot harder to come up with a national one size fits all.

I would also ask this question again: Is there a political party that wants to spend less? If so, where is it hiding?

His point was that nobody is ever going to agree on "fair"....so what we really have to do is find a point somewhere in the middle that both sides can begrudgingly live with.

I guess some of it depends on how you define poor.....when you talk about folks "living paycheck-to-paycheck", that exists at most levels of the tax brackets. One of my sales reps clears 6 figures each year, and she is living paycheck to paycheck, mainly because she is trying to take care of elderly parents, and her deadbeat kids and their families.

Or, as I described earlier, you have folks that are paycheck to paycheck that put themselves in that position through irresponsible spending....and don't kid yourself, the poor do that too. Improving their situation might mean going without cable or a cell phone....it might mean shutting off the ISP...it might mean buying clothes at K-Mart....it might mean cooking at home instead of hitting Burger King....it might mean driving a beat-up looking used car (or even taking the bus, if it's an option).....it might mean crossing that six pack or carton of smokes off the shopping list....it might even mean cancelling the MMOG subscription, or cutting back on buying or renting movies, music, or video games. And it's amazing how many of those things can apply to 'the poor', just as easily as they apply to you or I.

Shit, just typing that has me thinking I'd be smart cutting back my lifestyle a bit in order to pay down what little debt I have left, or putting more money into my investments. The backlash is the "hey, I have to enjoy life a little too" reaction...and it's understandable, but it doesn't excuse me for not being further ahead financially.



The idea being that it's easier to set up a tax rate for various products (as a % of the selling price) that is enforced at the register. People can't evade sales taxes unless someone else voluntarily eats it.



Fair, of course, being subjective...and I'd bet my testicles that most Americans at all income levels don't believe the current system is completely "fair".



I think you only need smart cards if you start trying to say "any spending below X is tax free". Better to tax certain items and not others, so there is no need to track every transaction IMO. Ideally, you pull taxes from the things that the poor do (or at least should) spend money on.....hence food, insurance, rent, utilities, purchasing your first home, buying basic transportation, and investments.



Check back on that original post in the thread....the whole thing essentially stemmed from Bush saying "I'm not exactly sure how big the national sales tax is going to have to be, but it's kind of an interesting idea that we ought to explore seriously".

While we haven't found a solution in the span of less than 2 pages, we've certainly validated his statement that it is worth exploring seriously....yknow, by professional economists working in teams for several days, weeks, months, or years....and then hashed out throughout our legislative process to haggle over how "fair" everything is.



Property taxes are taxing specific types of assets...not the total wealth of an individual. You take someone like Gates, and even a 1% tax on his total wealth would outpace any reasonable expectation for even his income.

Can Gates afford to lose some money? Sure....but some would argue that nobody needs more than say $20,000,000, or even far less. But for a man with billions, this would mean that they literally couldn't tax his income enough.....or that they would gladly put a significant tax on his total wealth without a second thought.

The "rich people have more than they need, so they should pay more, it's only fair" position becomes a slippery slope....particularly when you start talking about taxing someone's TOTAL assets.

While I can appreciate the motivation of those who want to fund all sorts of programs, pay down the debt, and whatnot....I don't think that's the fairest way to do it.



Libertarian....they're the guys on the bottom of the ticket that nobody takes seriously.

Or, of course, there are the traditional conservatives.....the ones that Democrats have continuously tried to villify as "heartless" for trying to cut spending or hold back new programs. Of course, now we have Democrats trying to play that financially responsible role...but rather than cut spending, their solution seems to be to tax the top income brackets....making taxation even more disproportionate.

Not to open up a can of off-topic worms....but when you look at the challenge of fighting the war on terror (including homeland security), stimulating the economy, and not cutting spending on social programs, something had to give. Ultimately, it ended up being the budget. While I strongly disagree with running up deficits for future generations to pay off, I think the historic trifecta of the recession, 9/11, and the corporate scandals put us in such a bind that we didn't have much choice.

Anyway, I feel like we're at an impasse in this conversation....at least as it pertains to the thread topic. So, if you want to discuss further via PM, feel free....but I think we ultimately disagree on what contitutes "fair".
 
Bring the noise.
Cheers.............

I miss the old WT.o days when you had the option to lock your own thread.

Because that would be neat.

Just wait 'til they put in that giant nuclear waste dump.

Yes but you'd have to look at Britain before the 1990s to find an example of that.  When tax levels get to 80-90% then we finally see genuine contraction.  Tax levels of 40% cpme nowhere near triggering the problems you decribe.

Those who get the most pay the most.  This is the same line of reasoning used to explain why the majority of "temporary" tax "cuts" should go to this group.  Let's not abandon that form of reasoning simply because it is mildly inconvenient.

Those who own the most have the greatest obligation to keep their environment stable and more certain.  Can they chose not to?  To a certain extent absolutely but not to the detriment of the entire system.

Look, no one is going to chose not to invest because they're paying taxes.  Wealthy people tend to understand one has to spend it to make it.  Wealthy people capable of looking farther ahead than next week are less concerned that they pay higher taxes than that the money be used well and in the interests of keeping society capable of future growth.

Relax, I'm going to try to not post things I've little facts to back up.

Question: Would the national sales tax be added on top of state income tax?  

If not, I probably wouldn't notice the difference, living in a state that already has sales tax.

Also, I totally guessed they were going to pull this card (http://www.foxnews.com/story/0,2933,132537,00.html).   Hey, if Ronald Regan can get the public to vote their party into office when the public is harboring doubts, Arnold can even moreso.

Actually putting Arnold in office would go against most of the old-guard Republican ideals, ie-doing an end run around the Consitution. Then again, this isn't the party I knew and loved from the days of lesser government and kicking the poor around.

Not the first time someone has proposed this....and while the GOP certainly has a viable Presidential candidate if it passes, nothing would stop any number of foreign-born Democratic celebrities from running for office either.

It's not as if Arnold is the only celebrity in this country either....but as it turns out, there just happen to be very few Hollywood types that would be taken seriously as a candidate, or that would even have the ambition to run. Given this country's infatuation with celebs, it's surprising.

God help us all if Brad Pitt and Timothy Sarandon^h^h^h^h^h^h^h^h Robbins were to run.

Bring the noise.
Cheers.............

There currently already exists taxes on wealth; property tax, car tax, and inflation (yes, this one is intentional).  I prefer income tax over sales tax because it allows taxing on a curve, granting more breaks to the poor and heavier taxation, on the wealty.  Note that even though this is how we operate today, it doesn't prevent people from wanting (and more importantly, trying) to be wealthy.

Taxing specific assets is a far cry from taxing total assets, and IMO that distinction makes all the difference in the world on this subject.

Personally, I have no problem with the graduated INCOME taxes, beyond what I described above. My problem comes when folks suggest that the answer is to place a heavier burden on the top income brackets again and again. It always comes back to the justification of "well, they can afford to pay more, nobody really deserves to make that much anyway", and then they react like the folks being taxed are greed personified if they even think to object.

It's far too easy to spend other people's money...which is why I am a fiscal conservative at heart. Do I like the current deficit spending? Hell no. Do I think it was necessary, given the circumstances? Absolutely...but that's another discussion entirely, one I won't indulge here.

Bring the noise.
Cheers.............

Reread.  There are property tax, car tax, and inflation.  That means they tax the largest two assets, and the bulk of most people's wealth, directly.  Inflation hits every bit of your money; bonds, stocks, savings accounts, what's in your wallet.  It is taxation; the government controls how much printed money is in the system.  Their goal is to maintain a very tight grip on inflation at a couple percent - meaning the dollar in your pocket loses half its value in about 30 years.  If you had a million dollars, liquid, you'd lose about 25k in value over a year.  That's more than some people's salaries.  

No, the government doesn't tax everything.  They'd have a hard time trying - I guess I could stock up on gold bars, but they don't do much for me.  They'll dodge inflation (more or less - depends on the supply/demand of gold, but assume it here), but they aren't entertaining - like about anything I could buy (spend incentive), nor do they acrue wealth like investment (economic assist).

Inflation indeed reduces the purchasing power of the dollar in our economy, but you're fishing here. It isn't a direct tax, as it doesn't take money from you. It's a simple reduction in the value of individual units of currency due to increased supply. Moreover, it hits the value of every dollar equally.....quite different than A GRADUATED TAX ON TOTAL ASSETS, as was suggested earlier in the thread.
 


Actually, I have some money invested in gold...the price of gold per ounce does, of course, fluctuate....but it's considered a pretty stable investment. I have money in the foreign currency markets too. Just part of diversification.

Bring the noise.
Cheers............

I sure hope this proposed Sales Tax replacement is applied to purchases made outside of the United States as well.   Heck, even I have the internet, I can buy things from outside of the country easily.   If there's one thing that MMORPGs have taught me about economies, it's that people will take the path of least resistance whenever it's offered.    You'd get an economic double-whammy, not only are people not paying taxes by buying things from outside of the United States, but they are not supporting american businesses anymore.

Yes it does.  The government isn't ripping money out of your pocket, as with income tax, but the value of your dollars drops overtime, and it is intentional.  It's a very intentional way for the government to cut your wealth by ~2.5% every year.  



Yes, so do a lot of people, and it's very stable - because it's value doesn't change (mostly), while that of the dollar does.  Gold roughly matches inflation, and carries little risk compared to other investments, so conservative investors put a fair chunk of their money into it.  In truth however, you are not earning money by investing in gold, just preventing the government from hitting you up for investment.  To make things worse, you still are likely paying taxes; income tax when you sell them for profit, and sales tax if you literally bought a gold bar at a store (as opposed to through a mutual fund, etc).

And it is a tax because the government is using inflation as a tool to control concentration of wealth.  If the total sum of printed US bills in the world were $100 (simple example), and you and I each had $10, and the government decided one day to print another $100 - we effectively just got taxed for 50% of our wealth.  Instead of having 10% of the market each, we now have 5%, and the government has at least half.  The government took half our wealth - and half the wealth of the people holding the other $80 - and put it in their pocket.  It doesn't matter here that the government isn't physically taking away the dollar bills in your pocket; it works to their advantage that they don't, because people (like you, apparently) don't understand how it's affecting their personal budget, and that it has the same effect and similar goals to a tax.

Sales tax works pretty well over here in Europe.

Most countries apply a higher rate to shit you don't need higher than to, say, food ('essentials' basically food, clothing, and printed material get a zero rating here in the UK), which works to stop it being excessively regressive.

It's also extremely cheap to administer, unlike, for instance, income tax.

Most importantly though it gives government a solid macro economic tool they wouldn't otherwise have. Want to encourage saving and slow consumption? Reduce income tax, increase sales tax. Want to encourage consumption at the expense of saving? Vice versa, and you can do either one without any net impact on total tax income or spend.

Most countries have a sales tax these days, it is not the end of the world.

There is a difference, and it relates to the way rebates work if you buy something, process it, and sell it on.

They look exactly the same to the consumer however.

If you want to press the pedantic point that inflation diminishes the value of the dollar, fine. I've already conceded as much, and that it has the same net effect SIMILAR to taxation. It still does not make it a DIRECT TAX, akin to income tax or property tax. You've even said so yourself.

It does not remove dollars from your pocket...it merely diminishes the purchasing power each unit of currency has. Yes it has the same effect and similar goals.....but that doesn't change the fact that it IS NOT A TAX.

Unless you can change the definition of "tax" or "inflation, you're SOL on this one. You're arguing against "inflation doesn't take away money" by talking about the relative value of money. Inflation reduces

But yknow what....compare it to the suggested GRADUATED TAX ON TOTAL ASSETS in the thread. Inflation reduces the value of the dollar...and that effects EVERYONE.



What's your point? That gold is less volatile than the dollar? Absolutely. Are you getting real gains in value? Not really....but if you can use such investments to RETAIN value while others lose that value to inflation, it is a net gain.

Now it's not the aggressive growth investments that stocks can be, but it is at least better than holding onto the raw currency, or sticking your funds into a non-interest-bearing account.

Moreover, it does act as a stabilizing force in my portfolio, balancing out some of the bigger risks I take elsewhere. So it does provide another benefit that isn't readily apparent...some additional peace of mind in a tough market.

Bring the noise.
Cheers.............

A little clarification,  because you're only partially right.

Inflation IS a direct tax when the government increases the RATE of inflation.  Generally referred to as siegnerage....  crap, can't spell it.  Basically, look at the massive inflation in Russia and Latin America in the 90's as your examples.  

In your example,  assume either devaluation if the money supply is constant and not being replaced, or a low rate of 2-4% if the gov't is replacing money regularly,  while introducing small amounts of new money or has GDP growth.  By printing another $100 dollars,  it's forced inflation from a couple percent to 100%.  

But the government doesn't net that entire difference.  In fact,   inflation will continue for some time AFTER the increase in money supply because peoples expectations affect the rate of inflation.  DV and Roac will obviously expect the government to print more money,  so will use their money to buy physical assets or foreign currency.  Supply of money will increase,  dropping it's price/value.  Also, as inflation worsens,  people will proactively devalue money to when they can actually spend it.

Essentially,  it's a ruinous cycle that leads to hyperinflation as the government's new printing of money will be devalued BEFORE it is introduced into the economy.  Plenty of stories from Russia about people standing in line for bread,  but by the time they get to the counter their money has lost a large portion of it's value.  Generally at this point people move to barter or they Dollarize.

In most developed nations,  there is a very low rate of inflation that has as much to do with GDP/purchasing power growth as it does with government's printing money.  There are many times the number of dollars "on paper" in bank accounts or ledgers or whatever as there are actual dollars,  and the government only prints enough to replace current supply.  Of course,  it's mostly interest rates/debt driven now, as well.

Summation:  Inflation in most developed nations is NOT a form of direct taxation currently.  A little creative work with the printing press/interest rates is needed first.

We should just give the rich people guns and the poor people sticks, and let them kill each other right now. It all sounds good until you realise how many fucking people we've made improverished in our reenactment of monarchy.

Federal sales taxes are one step closer to the big proletariat beat down.