National Sales Tax

[Margalis]

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.

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...

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.

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?

The investor takes on a RISK, with no guarantee of getting anything in return.

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?

The point of taking that risk is SPECIFICALLY to provide capital to the company

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.

[Roac]

Probably good, as in LESS. Americans consume way too much; we appear to be obsessed with 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.

[Sky]

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.

[SirBruce]

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

[DarkDryad]

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.

[Dark Vengeance]

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...

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.

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?

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".

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?

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.

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.

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.

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.

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.

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.

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.

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 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.

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.

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.

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.

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..............

[Dark Vengeance]

If I save money, then that's money not being put back into the economy to create jobs.

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.

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

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.............

[personman]

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.

[Margalis]

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!
---

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?

[Sky]

The eventual result there is everyone ends up in one giant "middle class" of mediocrity.

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.

Yeah, that's REALLY going to create lots of incentive for people to work hard, innovate, and better themselves.

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.

[Dark Vengeance]

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.

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...........

[Margalis]

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.
---

What about just lowering taxes, and lowering spending? Seems simpler to me.

[Dark Vengeance]

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.

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.

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.

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.............

[Dark Vengeance]

It all depends on what's "fair."
*snip*
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.

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............

[Margalis]

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...

[Zaphkiel]

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?
...

    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.

[Paelos]

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.

[kidder]

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.

[Krakrok]

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?

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.

[Dark Vengeance]

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

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.

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 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.

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?

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.

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?

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.

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...

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.............

[Dark Vengeance]

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.

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..............

[Margalis]

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

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.

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?

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.

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.

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.

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.

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.

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.

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)
---

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.

[Nazrat]

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.

[Johny Cee]

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....

[Krakrok]

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

[Margalis]

A few things:
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.  

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.
---

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?

[Dark Vengeance]

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." ?

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.

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?

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.

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.

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 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 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.

*snip*
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.

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.

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.

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.

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

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.............

[Paelos]

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

Because that would be neat.

[El Gallo]

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

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

[personman]

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.

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.

[geldonyetich]

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.   Hey, if Ronald Regan can get the public to vote their party into office when the public is harboring doubts, Arnold can even moreso.

[Paelos]

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.

[Dark Vengeance]

Also, I totally guessed they were going to pull this card.   Hey, if Ronald Regan can get the public to vote their party into office when the public is harboring doubts, Arnold can even moreso.

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.............

[Roac]

So you want to tax wealth, not income or spending?

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.

[Dark Vengeance]

So you want to tax wealth, not income or spending?

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.............