Flat Tax

[GENIERE]

Just stumbled on the fact that Russia adopted a flat tax system about two years ago. Productivity rose rapidly afterwards and now at 10% growth per year.

I reviewed Dick Armey's proposal wherein he uses a flat rate of 17% for all tax payers, but includes savings for being married, number of children, etc. As it works out, a family of four would pay no taxes if their income was less than $35,000.00 yearly. This is much better than the present $25,000.00. Since there's no itemizing, the form is the size of a postcard.

Democrats opposed this, I have no idea why.

Regards

[damgo]

Russia's GDP growth is around 4% now. National economics is extremely complicated, and there have been tons of economic/structural changes going on in Russia, especially since 1999, when the current growth picked up.

The problem with that proposal is -- where is the money going to come from? No such thing as a free lunch; someone's getting screwed.

[Tom Mattson]

Originally posted by damgo
The problem with that proposal is -- where is the money going to come from? No such thing as a free lunch; someone's getting screwed. [/B]

This is a two-sided coin. On one side is taxation, and on the other side is spending. To make low taxes feasible, the government also has to spend less on socialist-type programs.

Originally posted by GENIERE
Democrats opposed this, I have no idea why.



Check the other side of the coin!

[GENIERE]

The article I read said Russia's GDP was 10% but even 4% these days is very good. The USA is about 1.7% now, and France about 1% I believe.

Tom - DA's proposal at 17% I believe was revenue neutral, so funding for social programs would not be hurt. Of course increasing the percent funding for those programs would be made more difficult. But with our multi-trillion dollar economy growing at 4% there'd be money to spare.

Let's see, at about 120 billion more every year - that buys a lot of social largess.


Geniere

[russ_watters]

Originally posted by GENIERE
Just stumbled on the fact that Russia adopted a flat tax system about two years ago. Productivity rose rapidly afterwards and now at 10% growth per year.

Democrats opposed this, I have no idea why. You can't assume a cause and effect there. Russia's economy has been in shambles since they tossed of communism. Its nothing for them to have 10% growth. Even at 10% growth they have a LONG way to go to have a decent economy.

And for the record, I'm a republican and I'm against the flat tax. And the thing is, very few people TRULY advocate a flat tax. A real flat tax would mean no standard deduction: the poor would pay exactly the same rate as the rich. And that rate would be pretty high - 30% or so. Thats a lot of money for someone without a lot of money. Estimeates that are much lower than that are dishonest. They hide the fact that they require a massive reduction in government spending.
This is a two-sided coin. On one side is taxation, and on the other side is spending. To make low taxes feasible, the government also has to spend less on socialist-type programs. Yeah, advocates of a flat tax throw that in there even though its really not connected to the concept of a flat tax. If the gov't reduced spending by 50% we could drop everyone's taxes anyway.

Its a little like the hydrogen fuel crowd. Where does the electricity to make the hydrogen come from? Oh, simple, just upgrade the power grid for solar and wind power. Sure...

[Njorl]

If you remove the deduction for home mortgage interest, about half the people who refinanced or bought their homes in the last three years would default on their mortgage. It is inconceivable that any congressman could vote in a flat tax without this provision and be re-elected. Once this is in, it isn't a flat tax.

People have just got to get over it. Taxes are not hard to do. Sure, if you've got 3 ex-wives, $200,000 in interest and dividend income and own several small businesses it is a lot of work. Tough. You chose that life.

The whole hubbub about flat taxes is to convince the middle class to raise their own taxes and lower taxes on the rich. The conservatives are trying to convince people their taxes are impossible when they take about 2 or 3 hours a year to do. They want people to pay a couple thousand dollars more to save an hour or two. I suppose this seems reasonable to the wealthy, some of whom earn a couple thousand dollars an hour.

This is similar to the whole "death tax" fiasco. The wealthy duped a huge percentage of the population into thinking small businesses and farms were being destroyed by estate taxes. The effect was insignificant. But once again, good PR by the rich causes the middle class to shoot themselves in the foot.

Njorl

[Tom Mattson]

Originally posted by GENIERE
Tom - DA's proposal at 17% I believe was revenue neutral, so funding for social programs would not be hurt.

A-ha. I read Damgo's post and assumed he was right about there not being enough to go around ("someone's getting screwed").

[GENIERE]

Yep, a true flat tax is not for the low wage earner, that’s why I referenced Dick Armey’s 17% proposal that excludes taxing low incomes, in effect doing what the Democrats want, i.e. shift the tax burden to the hi-income brackets. It does it without the class-divisiveness of the present system. It eliminates much of its inefficiencies so a dollar collected isn’t diminished as it travels through the bureaucracies. Since I had the numbers in front of me I calculated my taxes per DA’s flat tax. I would have paid more, but the rich would shoulder even more of the burden without access to the present loopholes. Remember the rich can shelter most of their income via many means with the present system. That is not possible with a flat tax. Earn $10,000,000.00, pay $1,700,000.00 period!

That said; my preferred tax system would be a sales tax with basic necessities excluded. It would keep Democrats happy for years, introducing bills and debating whether a 21” color TV was a necessity as opposed to a luxurious 22” TV.

Njori - The average overpayment by taxpayers who do not itemize such things as motgage payments was less than $500.00 per the GAO. It seems unlikely that half would default for lack of about 1/2 months morgage payment. Those that might are likely to be under the income level of $35,000.00/yr. who would pay no taxes.


Regards

[Zero]

And, don't forget that the rich will always find ways, as now, to avooid paying whatever taxes they can.

[russ_watters]

Originally posted by Zero
And, don't forget that the rich will always find ways, as now, to avooid paying whatever taxes they can. Thats why the tax code needs to be simplified (regardless of if we keep the progressive rate or go to a flat tax). Getting rid of the loopholes would fix a lot of problems.

[kyleb]

yep, i am for ought right flat tax; although i do play with the loopholes a lot while they are there.

[eNtRopY]

Originally posted by GENIERE
Democrats opposed this, I have no idea why.


Flat taxes always equal savings for the rich.

Think about it. A tax of $17,000 for a person who makes two million dollars per year is like a tax of $170 for a person who makes $20,000 per year. That's almost like not taxing the rich at all.

As we can all see, a flat tax rate would be much more fair.

eNtRopY

[Zero]

Originally posted by russ_watters
Thats why the tax code needs to be simplified (regardless of if we keep the progressive rate or go to a flat tax). Getting rid of the loopholes would fix a lot of problems.

You mean like the loophole for dividends? And, I don't know about where you live, but here in North Carolina, the Republicans call any loophole closing a 'tax hike'. Talk about your lying politicians!

[Zero]

If you have a million dollars, and you pay a flat 20%, you are left with $800,000...your lifestyle isn't affected that much. If you only make $30,000, and you pay out $6000 in taxes, that is the difference between driving a new car and an old car, renting vs buying a place to live, etc. A flat tax hits the poor MUCH harder.

[kyleb]

oh come on, a flat tax hits everyone proportionately the same; that is the whole point. sure 20% of 30,000 means the difference between a new car and an old car, but 20% of one million means the difference between a new jet and na old jet. oh and i forgot to mention that i think taxes should be optional; but if you wasn't to be able to drive on public roads, have firemen rush to put out your blazing house, or enjoy the other services that taxes pay for then you damn well better put in your share.

[N_Quire]

Sweden probably has the highest income taxes in the world (though it's business tax is relatively low). Income tax is progressive and the minimum rate is about 30 percent and that is on all money earned. Sales tax is 25% in most cases. And yet there is widespread support in Sweden for this tax system and the welfare state that in enables.

I have lived in Sweden and enjoyed such things as 1 year maternity leave (well my wife enjoyed that) on almost full pay with the job guaranteed when the mother goes back to work. As part of the package was one month's paternity leave for me. I also enjoyed generous sick pay, free or inexpensive health care. I received a grant to learn Swedish and was given free plane tickets to the college. In total over my ten years in the country I received about $50,000 in business grants in order to start my business. I did not have to pay any of this money back. I had a complicated spine operation and three months of physical therapy, all free.

I felt very generously treated in that high tax country and I did not mind paying my share towards the common good. When I earned a lot, I paid a lot. I even supported the fact the labor unions are very strong in Sweden and did a good job of protecting their members' rights. I did not mind that at least 30 cents on every dollar I eanred went to the government, which then redistributed it.

What were the downsides? There aren't as many burger flipping type jobs as in America, the economy is much more organized and labor unions have a much bigger say than in America. You don't just get on the phone or knock on doors to get a job. Nor was there the chance to earn HUGE salaries as in America. I guess too that it might feel unfair if you pay a lot of tax and are never ill, don't have kids and don't require government subsidized retraining.

Sweden, although it is considered a social-democratic country is in many ways much freer and more liberal than America. It is of course a democracy and is certainly a lot less prudish than America and religion has almost zero influence on daily life.

The standard of living in Sweden and USA is pretty comparable. But it is better to be poor in Sweden. And it is probably more fun to be rich in America.

[Dissident Dan]

Geniere, Russia also recently got over being a totalitarian state with a poorly and centrally-planned economy. That might just have a little something to do with their growth rate. To say that the flat tax was the cause of their growth is spinning any stats you can get your hands on in the way that you want. There are many, many factors in an economy.

The only way that a flat 17% tax rate could possilby produce the same amount of income is throught the elimination of loopholes--which are put in place and protected by the same side of the political spectrum that wants flat taxes, which tells you what their real motivation is...more money for the rich. Loopholes and flat rate/bracketed taxes are two separate issues. You can eliminate the loopholes without eliminating the tax brackets, or vice-versa (or both or neither). I am in favor of eliminating only the loopholes.

kyleb, to equate not being able to buy a new jet to not being able to buy a decent car is ludicrous. The jet guy already has more than enough money and a super-lavish lifestyle. He won't miss the jet.

[kyleb]

Originally posted by Dissident Dan
kyleb, to equate not being able to buy a new jet to not being able to buy a decent car is ludicrous. The jet guy already has more than enough money and a super-lavish lifestyle. He won't miss the jet.

who's this "he" you are talking about here; are you speaking in a wwjd sense? [6)]

seriously, "he" would most definitely miss the jet just like someone else would most definitely miss having a car. then again, neither of them are necessary parts of life as the fact that most people have gone without either plainly shows. we can play in the sand all day long drawing lines of what to call fair, but but that doesn't make it right. such things are matters of opinion and things tend to go a lot better when we avoid arguing over them, such as by keeping our rules simple and haveing them apply to everyone the same.

[Zero]

Originally posted by kyleb
seriously, "he" would most definitely miss the jet just like someone else would most definitely miss having a car.

You don't really believe that, do you? A personal jet is a luxury; a car is required to maintain employment in many parts of the world. I don't know anyone who flies to work, but without a car I am unemployed.

[GENIERE]

Quote from The Cato Institute:

“Countries trying to collect punitive taxes from the rich, like France and Sweden, end up short of rich people to tax. As a result, they mainly rely on flat-rate payroll and sales taxes (VAT). That is another reason we cannot combine revenues from all taxes to gauge the economic damage from high income tax rates. A 1999 study in the Journal of Public Economics by Kneller, Bleaney and Gemmell found that progressive income taxes were clearly harmful to growth, but found far less damage from flat-rate taxes on what people earn or spend.”

Above predicted what happened in California wherein the loss of the well-paid high tech jobs contributed to a massive state debt. All states are feeling the crunch of the weak economy but none to the degree that California suffers due to the progressive tax structure.

People not governments create wealth. Inhibiting economic growth simply removes wealth from everyone.

Is it not better for all to move up a notch than for all to move down a notch?

Steve

[Zero]

Saying "Is it not better for all to move up a notch than for all to move down a notch?" makes anything you say suspect. There is no way for people on the bottom to move up without someone at the top sacrificing. That is a simple fact, and no amount of argument changes it. If a large portion of the lower class is going to have more, someone else has to have less.

[damgo]

There is no way for people on the bottom to move up without someone at the top sacrificing. Not true... consider technological progress, increasing economic efficiency, bringing more natural resources into use, creating more long-term infrastructure.

However, I agree that saying "Is it not better for all to move up a notch than for all to move down a notch?" makes anything else you say suspect. That's straw-man rhetoric; obviously everyone agree with it. Of course the disagreement is with the assertion that X will move everyone up and not X will move them all down.


Citing a Cato Institute opinion on the flat tax is like citing a Greenpeace opinion on genetic engineering. They are obliged to find the 'evidence' shows that a progressive tax is bad, as their libertarian philosophy tells them it must be so.

I could just as easily cite a PPI report:Tax reform is Washington's latest answer for the discontent Americans feel with national politics and their own economic prospects. Several presidential hopefuls have promised to replace the current system with a new flat tax or a national retail sales tax, and others would substitute a new consumption-based income tax. Among the various proposals, the flat tax in particular has gained a following, probably because it purports to use tax reform to change politics as well as the economy. As we will see, its advocates claim too much. In fact, their analysis of the current tax system is often wrong. Their promise to reform politics is largely empty. And the policy would probably leave the country worse off, both socially and economically, than it is now.

[Zero]

Even so, damgo, even so...

forteh average person, some new advancement isn't going to give them any more wealth, unless they invent it. There is really only so much wealth, and the more of it is concentrated in a few hands, the less there is for everyone else to share.

[Hurkyl]

forteh average person, some new advancement isn't going to give them any more wealth, unless they invent it. There is really only so much wealth, and the more of it is concentrated in a few hands, the less there is for everyone else to share.

That's not so.

Well, I suppose it is if you define the total amount of wealth in, say the US, as the number of gold bars sitting in Fort Knox.

But for more sensible definitions, technological advancement can most certainly increase wealth. For example, advances in manufacturing technology could diminish the number of Rubik's cubes that have to be discarded due to defect, thus strictly increasing the number of Rubik's cubes in the world. Since a finished Rubik's cube has more value than a discarded heap of plastic and colored stickers, increases in the efficiency of Rubik's cube manufacturing mean a strict increase in the amount of wealth available in the world!

Hurkyl

[GENIERE]

I have as much empathy for the plight of poor persons as others in this forum. I have as much suspicion as to the real motivations of those promoting a liberal/socialist agenda as they may have of mine. If we assume all have a honest motivation to improve the plight of the less fortunate, only the means to achieve that end need be considered. It is better to debate an issue’s merits rather than to engage in questioning another’s motives.

I’ll not further defend the flat tax. Not because I don’t believe it’s superior to the present system, but because I prefer a sales tax. The founding fathers were, for the most part, wealthy individuals who spent much time considering taxation when writing the Constitution. They were unfortunately ambiguous in defining what was exactly intended. They used a term “direct tax” as applied to an individual. It’s usage I infer to mean a value added tax (sales tax).

I’d like comments on a sales tax replacing the income tax. For starters a sales tax would not be applied to basic necessities. A tax on a fee for service is the same as a tax paid when buying a refrigerator. What defines a basic necessity, I think is a key issue. Businesses would pay taxes in the same way as an individual.

Regards

[kyleb]

Originally posted by Zero
There is no way for people on the bottom to move up without someone at the top sacrificing. That is a simple fact, and no amount of argument changes it.

well in keeping with damgo's policing of straw-man rhetoric, i have to point out that it is the sacrificing of the people who make up "the bottom" that puts others in positions at "the top." those people make their fortunes though carriers of exportation of people services though jobs, and they lure people into those jobs with the the same products they need employes to create. it is a vicious damn cycle and someone generally gets the short end of the stick but it still takes two to tango.


oh and sure a jet is a luxury but so is a car, and there are plenty of places in this world where one can easily go without either; last time i looked neither was listed on Maslow's hierarchy of needs and i have done without the former all of my life and the ladder for the better part of it.

Originally posted by Hurkyl
Well, I suppose it is if you define the total amount of wealth in, say the US, as the number of gold bars sitting in Fort Knox.

why would you do something silly like that?


lastly, GENIERE, i have always though that tax should be moved to one side or the other and across the board like they are now; but i don't know why i would support sales tax over income tax.

[damgo]

If we assume all have a honest motivation to improve the plight of the less fortunate, only the means to achieve that end need be considered. It is better to debate an issue’s merits rather than to engage in questioning another’s motives. Agreed! The important thing I think here is to be critical of sources... it's all too easy to find plausible-sounding economic arguments for almost any position. I generally discount pretty much any economics coming from a politically-affiliated group.

I'm not sure about the sales tax, I know very little about the whole issue. (links would be welcome) My initial concerns are 1) it would seem to add 'friction' to the economic system by discouraging transactions/trade; 2) it wouldn't provide adequate income redistribution effects; and 3) there would be no taxation of the 'sale of labor', so a business owner who is in effect buying labor from his employees and selling the product would avoid being taxed. well in keeping with damgo's policing of straw-man rhetoric, i have to point out that it is the sacrificing of the people who make up "the bottom" that puts others in positions at "the top." those people make their fortunes though carriers of exportation of people services though jobs, and they lure people into those jobs with the the same products they need employes to create. it is a vicious damn cycle and someone generally gets the short end of the stick but it still takes two to tango. I tried to parse this but failed... can you maybe rephrase?

[Hurkyl]

/boggle

I don't think I've ever had just a contentless part of my post quoted solely for the sake of a contentless reply... I feel special now! [:))]

Hurkyl

[GENIERE]

Please assign the lowest income level that determines a person’s economic status. Assume Caucasian single male to keep things simple. Example: Over $1,000,000.00 determines “wealthy” status.

Wealthy
Rich
Comfortable
Upper middle class
Middle class
Lower middle class
Poor
Destitute

Assume you pay no taxes other than a sales tax and basic necessities are excluded. A sales tax could be flat or progressive. Do you prefer flat sales tax of say 35% on all fees or purchases, a progressive tax wherein a higher percentage is applied to more expensive items, or progressive by income level?

The aim is to make a more efficient tax system, eliminate the loophole ridden, extremely complex, difficult to enforce present system. Inefficiency robs us all, especially the poor, if bureaucracy, accounting firms, and law firms consume 90% of our tax dollar. With a flat sales tax system, a small business with gross receipts of $1,000,000.00 at year-end would simply pay $350,000.00 in taxes and not need an accountant.

Recall the recent corporate crimes and accounting firms abetting those crimes. The more simple the system, the easier it is to enforce compliance. Should a more efficient system be presented to Congress, expect an intense lobbying effort by law firms and accounting firms to prevent passage.

Our trillion-dollar economy need not grow much to provide a decent income for all. Further growth provides all needs of health care, education and quality of life. In this Star Trek utopian world, employment may be optional. All depends on allowing capitalism to work as efficiently as possible.

Regards

[GENIERE]

.

[kyleb]

Originally posted by Hurkyl
/boggle

I don't think I've ever had just a contentless part of my post quoted solely for the sake of a contentless reply... I feel special now! [:))]

Hurkyl

lol, Hurkyl; i was just joking on the fact that our economic system has no physical basis, gold or otherwise. but im glad i could warm your heart a little. [t)]

and damgo, i'm not sure what the problem is what part do you not understand? i suppose a generalized rephrase would be; the fat man could not have gotten fat without others letting him hoard their share of the food.

[Zero]

Originally posted by Hurkyl
That's not so.

Well, I suppose it is if you define the total amount of wealth in, say the US, as the number of gold bars sitting in Fort Knox.

But for more sensible definitions, technological advancement can most certainly increase wealth. For example, advances in manufacturing technology could diminish the number of Rubik's cubes that have to be discarded due to defect, thus strictly increasing the number of Rubik's cubes in the world. Since a finished Rubik's cube has more value than a discarded heap of plastic and colored stickers, increases in the efficiency of Rubik's cube manufacturing mean a strict increase in the amount of wealth available in the world!

Hurkyl

But, hey...only theb people who own the resourses see any benefit from that. Me and you might save a dollar on one, but the guy making them makes millions extra.

[Zero]

Originally posted by kyleb

oh and sure a jet is a luxury but so is a car, and there are plenty of places in this world where one can easily go without either; last time i looked neither was listed on Maslow's hierarchy of needs and i have done without the former all of my life and the ladder for the better part of it.





Well, in rural areas (where the average income is lower anyways, in a double whammy!), without a car you are sunk. Not only could I not have a job, but I would have to walk 5-7 hours to even apply for unemployment benefits, and walk 2 hours every time I had t cash my check. A car IS a necessity for some of us.

[kyleb]

or hop on a greyhound for 50$, move someplace else, and stop whining about how trapped you are. ;)

[Zero]

Originally posted by kyleb
or hop on a greyhound for 50$, move someplace else, and stop whining about how trapped you are. ;)

Well, how do you do that if you have a mortgage, bills, children and school, etc?

And how is that 'whining' somehow less important than some billionaire complaining that his taxes are too high to buy tha island he's always wanted?

[kyleb]

please don't argue in circles with me; i never once claimed that anything was "somehow less important" than anything else, it seems you are suffering from a case of fault projection here. oh and as for the mortgage, bills, children, school and the like; it's not like they just magically appeared or something. i mean i don't see how you can rightly expect me to explain how to fix every little trouble anyone ever brought upon themselves; i am always glad to help but i only have so much time avalable so i must insist on a more direct of a question and even then i can't say i am the best man to give the answer. however, there is always the choice between bending over and taking it or standing up for what you believe is right, and doing the latter is were most people will find happiness.

[Zero]

Originally posted by kyleb
please don't argue in circles with me; i never once claimed that anything was "somehow less important" than anything else, it seems you are suffering from a case of fault projection here. oh and as for the mortgage, bills, children, school and the like; it's not like they just magically appeared or something. i mean i don't see how you can rightly expect me to explain how to fix every little trouble anyone ever brought upon themselves; i am always glad to help but i only have so much time avalable so i must insist on a more direct of a question and even then i can't say i am the best man to give the answer. however, there is always the choice between bending over and taking it or standing up for what you believe is right, and doing the latter is were most people will find happiness.

That's cute...blame the middle class for not being rich, and blame the poor for the need to eat...

How can you think you sound intelligent when you describe basic human needs and behavior(shelter, food, procreation) as "every little trouble" that people should stop whining about? Or are only rich people allowed to want to have children and a place to live?

[damgo]

But, hey...only theb people who own the resourses see any benefit from that. Me and you might save a dollar on one, but the guy making them makes millions extra. So everyone's better off -- it's a Pareto dominant outcome.

[russ_watters]

Originally posted by Zero
That's cute...blame the middle class for not being rich, and blame the poor for the need to eat... Don't forget to blame the rich for being successful (bastards).Assume you pay no taxes other than a sales tax and basic necessities are excluded. A sales tax could be flat or progressive. Do you prefer flat sales tax of say 35% on all fees or purchases, a progressive tax wherein a higher percentage is applied to more expensive items, or progressive by income level? Big, big problem with that: the poor spend more of their income than the rich do. So that makes a national sales tax regressive.

[kyleb]

Originally posted by Zero
That's cute...blame the middle class for not being rich, and blame the poor for the need to eat...

i am not blaming anybody for anything here; that seems to be your bag, and i do wish you would free yourself of it.

Originally posted by Zero
How can you think you sound intelligent when you describe basic human needs and behavior(shelter, food, procreation) as "every little trouble" that people should stop whining about?

well how can you think anyone sounds intelligent when they can't stop whining about basic human needs and behavior long enough to achieve those rather simple goals? aside from the procreation bit anyway, which leads me to:

Originally posted by Zero
Or are only rich people allowed to want to have children and a place to live?

i made a conscious effort to avoid the situation when i did not feel i was finically capable to handle it; i lost a really good woman over that too but sacrifice is part of life. i don't see why other people should be exempted from such hardships.

seriously, i went to the same brainwashing institutions we call public schools, i have been suckered into chasing many a carrot on a stick, i have a rather intimate knowledge with how twisted and screwed up this world is; but i don't see what your point is. the best i can tell, the rich pay less a percentage on income on tax as most people; what do you have against bringing balance to that?

*edited for clarity and question highlighted in hopes that it might garner a responce.*

[Zero]

Originally posted by kyleb
i am not blaming anybody for anything here; that seems like be your bag, and i do wish you would free yourself of it.



well how can you think you sounds intelligent can't stop whining about when basic human needs and behavior when such things are relatively simple to achieve? aside from the procreation bit anyway, which leads me to:



well i made a conscious effort to avoid the situation when i did not feel i was finically capable to handle it; i lost a really good woman over that too but sacrifice is part of life.

seriously, i went to the same brainwashing institutions we call public schools, i have been suckered into chasing many a carrot on a stick, i have a rather intimate knowledge with how twisted and screwed up this world is; but i don't see what your point is. the best i can tell, the rich pay less a persentage on income on tax as most people; what do you have against bringing balance to that?

Maybe you shouldn't post when you're tired (or been drinking...). I'm having a hard time understanding your exact point.

[Zero]

Originally posted by damgo
So everyone's better off -- it's a Pareto dominant outcome.

Long term, the difference betwen rich and poor gets greater...how is that positive?

[Zero]

Originally posted by russ_watters
Don't forget to blame the rich for being successful (bastards). Big, big problem with that: the poor spend more of their income than the rich do. So that makes a national sales tax regressive.


Hmmm...I don't blame people for their sucess. Over time, however, the money falls into fewer and fewer hands, and opportunities begin to vanish: ask any local businessman how it feels to have a WalMart Supercenter move in, cut jobs in the area, and run the little stores out of business.

[kyleb]

Originally posted by Zero
Maybe you shouldn't post when you're tired (or been drinking...). I'm having a hard time understanding your exact point.

lol, neither; maybe you shouldn't be so quick to dismiss things that don't instantly click with your line of thought. i admit my dyslectica may be keeping me from properly proofreading the writing but best i can tell it is all respectable english. i would at least appreciate a response to the question that i concluded with, is that too much to ask?

[Zero]

Originally posted by kyleb
lol, neither; maybe you shouldn't be so quick to dismiss things that don't instantly click with your line of thought. i admit my dyslectica may be keeping me from properly proofreading the writing but best i can tell it is all respectable english. i would at least appreciate a response to the question that i concluded with, is that too much to ask?

Nope, it is your sentence construction that's got me snookered!

[kyleb]

lol, actually my dyslectica did seem have some effect on my proofreading. i caught a few errors after reading though it three more times today, maybe correcting those will help, I'll go back and do that now. [;)]

[Zero]

Never mind...I hijacked the thread a bit, and I'm sorry...

[kyleb]

but back to the topic, i ask again:

the best i can tell, the rich pay less a percentage on income on tax as most people; what do you have against bringing balance to that?

[GENIERE]

Any tax can be regressive, flat, or progressive. It just depends on how its structured.

Too many loose ends on this thread, I'm out of here.

Regards

[andrew14]

So let me get this straight, my parents worked hard in school and got good grades, went to college, and then became lawyers making a good living just so they can pay roughly 50% of their income to the Federal government which in turn gives it to the people that slept through class and did not work hard. Does this not seem to rub against the whole American dream of freedom and making a good life for yourself and your children?

[Zero]

Originally posted by andrew14
So let me get this straight, my parents worked hard in school and got good grades, went to college, and then became lawyers making a good living just so they can pay roughly 50% of their income to the Federal government which in turn gives it to the people that slept through class and did not work hard. Does this not seem to rub against the whole American dream of freedom and making a good life for yourself and your children?

You make the mistaken assumption that the only reason that poor people are poor is because they are 'lazy'. If you seethings that way, what use is there in talking about anything else?

[kyleb]

there are most defiantly many reasons besides laziness, but my argument that discussing the reasons only takes time from resolving the issues. i think andrew14's point is very valid issue against taxing the wealthy harder, regardless of the fact that his argument was oversimplified. also, are you ignoring my question on purpose Zero?


and GENIERE, i still would like to hear about why you support sales tax only as opposed to income tax only; assuming you find your way back to participating in this thread that is.

[Zero]

Originally posted by kyleb
there are most defiantly many reasons besides laziness, but my argument that discussing the reasons only takes time from resolving the issues. i think andrew14's point is very valid issue against taxing the wealthy harder, regardless of the fact that his argument was oversimplified. also, are you ignoring my question on purpose Zero?


and GENIERE, i still would like to hear about why you support sales tax only as opposed to income tax only; assuming you find your way back to participating in this thread that is.

Laziness is the LAST issue to address, not the first. It is very nearly an invalid place to start, which is why I dismissed it.

As far as your question: I still don't get it?

[kyleb]

well if you are going to argue that we should pander to lazy people as long as there are other issues to deal with, i think you have stepped out of the bounds of reasonable logic; so i suppose i withdraw my question anyway. [s(]

[GENIERE]

Kyleb - Just for you.

Simply a question of efficiency.

Few people could argue that the present system is efficient, needing a large bureaucracy and enforcement system. The 101,000+ pages of taxcode are convoluted and subjectively interpreted to the benifit of those that can employ experts.

To repeat, any tax system can be regressive, flat, or progressive based on how it's structured.

With a sales tax, the seller or provider of a service would be taxed. Obviously there are far fewer businesses than individuals. They simply pay a tax based on receipts as they already do in most states. IRS Bureaucracy would shrink enormously, not to mention the HR Block type industry, corporate attourneys, and corporate accountants. All of which are paid by tax dollars however indirectly. I fail to see how that helps the poor among us.

Which Agency is Larger?
----------------IRS-----------FBI-----------Border Patrol

Annual Budget---$7.8 billion--$3.0 billion--$0.7 billion

# of Employees---100,551-------11,271--------6,848

Source: Department of Treasury, Internal Revenue Service, FY 99 Budget in Brief, for FY 1998. Congressional Research Service, for FY 1997

How Big is the Tax Code?

----------------------Numberof Pages---Number of Words

Internal Revenue Code-9,471------------5.75 million

Tax Code Regulations--91,824-----------1.3 million

Total Tax Law---------101,295----------7.05 million

War and Peace---------1,444------------660,000

The Holy Bible--------1,291------------774,746

Source: Commerce Clearing House, Standard Federal Tax Reporter, 1996. Commerce Clearing House, Standard Federal Tax Reporter, 1997. The Library of Congress, Congressional Research Service


Regards

[kyleb]

Originally posted by GENIERE
Kyleb - Just for you.

lol thanks GENIERE, i think you explained it for yourself as well though; or at least you get something out of it anyway because you made me a believer in the shift to a sales only tax system. [:))]

[Tog_Neve]

There are many comments I could make going back through this thread...but fortunately most were redirected later on...LOL

Kyleb -
the best i can tell, the rich pay less a percentage on income on tax as most people; what do you have against bringing balance to that?
I would be very interested in where you have come up with this idea? As income is increased in this country so is the tax percentage.

Have heard it stated before that 90% of the tax income is paid by 10% of the population. If you check the numbers you will find that to be true. I pay about 15% income tax which if I put it at a generous $2500. Now take a person who makes $1 mill a year. They are put in the 37% tax bracket and pay $370,000. It takes 148 people making what I make to pay the same amount that one person was paying.

And if you check the IRS statistics for even last year www.irs.ustreas.gov you will find supporting information to the same. California last year had more returns filed with incomes greater than $1mill than any other state. California was also the largest in total collection than any other state.

As far as eliminating income tax and applying a sales tax. I see that as causing more harm than good. Granted it would be a more evenly spread tax and one that would be paid by all, rich or poor...and would be more of a usage tax. OUr current system does not really take into account standards of living for different area. Someone making $50K a year in South Dakota may be living high on the hog (so to speak) while the same in NYC is barely stepping out of a box under a bridge. But yet they pay the same percentage of taxes.
However sales taxes are hard to project. Peoples spending habits change. Thus attempting to balance a budget based solely on a sales tax would be difficult. Plus if it was to high it would slow down purchasing. I would start to think hard about buying that new car if there were an extra 10% added onto it for a tax. Instead thinking of the used car for a fraction of the cost and thus paying a fraction of the tax. And as you mentioned the possible reduction in accounting staff...Lots of jobs lost there. Then if it got to high as far a sales tax is concerned you could have increase in imported good of our own products. It could get cheaper to buy that new car in Canada and bring it back into the states than it would to buy it at the local dealer. Thus also causing a possible slow down in the economy and loss of jobs as well.
Your best bet for a sales tax would be to place a small (.25-1%) across the board for goods. It is small enough to not really deter anyone from making or breaking a purchase but yet large enough to bring in a heafty chuck of change to the budget.

One site has a thing up on their page www.cato.org/pubs/pas/pa-272.html. they are talking about a 15% sales tax. That would be totally outrageous. Her in my town we pay a sales tax of 8% as it is...then tack on another 15% and that Pepsi I was buying is now up to a $1.25. That new Kia that was priced at $10K is now $12.3K. Guess what? I am going to go buy that car in a state that has lower sale tax. And jack up the price of gas more as well. Tennessee has an average sales tax of 9.35% with a state running at 7%. They have the highest average in the nation. Add another 15% onto that. Remember a while back Folks in TN stormed the capital when they were talking about raising the sales tax again...what would they do if there was another 15% added on??

Just some thoughts on it. Sales tax has some merits but overall to many drawbacks to be effective or efficient. Plus overall the impact would not be worth it. Maybe a small amount that would not even really be noticed could generate a good bit of revenue to the fed...but the fed could not rely solely on sales tax because it is not a predictable amount.

[Dissident Dan]

OK, we have how much money it takes to run the IRS. How much do they take in? How much less would it cost to run the IRS with any proposed change? How much more/less would they take in with said proposed change?

[kyleb]

Originally posted by Tog_Neve
I would be very interested in where you have come up with this idea? As income is increased in this country so is the tax percentage.

understood, but also as capital is more readily available it becomes easier to find loopholes to avoid taxation; so while they have a higher percentage on taxable income, most have a lower much lower percentage of their income being taxed; at least that is what i have seen of it. however, i am interested in the statistics you were referring to. i dug around the site a bit but failed to come up with the information in question; any chance you could you provide a more direct link?

[GlamGein]

I have some questions about this flat tax if any of you are up to answering:

Why do Married people get a write-off or benefits or whatever? Please excuse my ignorance.
It doesn't seem fair that if a tax was to be equal, why should married people have to pay less?

As for Democrats not liking the idea, imagine what 17% is to a working single mother compared to the CEO of a big corporation. The CEO would have what, one less SUV or Airplane, while the mother would have less food for her child. Big difference there.

[damgo]

Like I think Njorl pointed out at the beginning of this thread, focusing on the complexity of the tax laws / cost of the IRS etc is a red herring. The amount of money they spend in trivial in comparison to the total amount of tax collected: ~2,000 billion a year. I would bet a lot of that 0.5% that goes to the IRS wouldn't be significantly affected by altering the tax code.

In any case, we can probably all agree that a simpler system with less loopholes and special provisions is desirable. Such a system could be basically identical to the current one, flat, sales, whatever.

For some background, here is one of the OMB's pages with a breakdown of US Federal revenue/spending. They are usually fairly non-partisan.
http://w3.access.gpo.gov/usbudget/fy2000/guide02.html

[Zero]

Originally posted by GlamGein

As for Democrats not liking the idea, imagine what 17% is to a working single mother compared to the CEO of a big corporation. The CEO would have what, one less SUV or Airplane, while the mother would have less food for her child. Big difference there.

A working single mother is LAZY, that's why she isn't a millionaire...haven't you read this thread?

[Tog_Neve]

kyleB

http://www.irs.ustreas.gov/taxstats/article/0,,id=102886,00.html
That one you will see that it shows "State with the highest number (of returns with AGI>$1 million) which is California.

http://www.irs.ustreas.gov/pub/irs-soi/02db06co.xls
Shows total gross IR collections
Showing California as paying $232,301,672,000 which is about $50 Billion more than NY (#2).

And would agree that with the increase in the income comes the ability to find more loopholes by hiring more accountants and the like.
But does not change the fact that even if they make a billion dollars but are able to report only a million then they are still paying as to the figures mentioned above...it would take 148 of me to equal the same amount as what that person paid.


Tog

[kyleb]

oh sure, more total but less %; when i say flat tax i mean not the same for everyone but get rid of the loopholes as well. however GENIERE has me sold on sales tax only now, that sounds like a really good system. oh, and thanks for the links. [:)]

[Dissident Dan]

http://www.irs.ustreas.gov/taxstats/article/0,,id=102886,00.html reports gross individual income tax collections as 1.178 trillion. Add in all the other tax collections, and you get 2.09 trillion.

http://www.cia.gov/cia/publications/factbook/geos/us.html reports the 2001 GDP at 10.082 trillion. Gross individual income tax collections are 11.6% of that. Total gross tax collections are 20.7% of that.

According to http://quickfacts.census.gov/qfd/states/00000.html, per capita money income in 1999 was $21,587. They estimate that there were 284,796,887 in 2001. If we use a figure of $22K per person, with 285 million people, we have $6.27 trillion. To get the $1.178 trillion out of a flat tax rate from that, you need a rate of about 28%. That's a hefty chunk of change for someone who makes $10K a year. Instead of $10K, he has $7200.

-------
EDIT

I messed up, it's 18.8%, or 19% rounded, that the tax rate would need to be for a flat tax to generate the same amount of income...it seems to me that a lot of people are evading their taxes..

Anyway, for someone who makes $10K/year, that would be reduced to ~$8100/year.

[Tog_Neve]

Geniere and Kyleb

You put out some statistics but let us examine them some more.

----------------IRS------------FBI---------Border Patrol
Annual Budget--$7.8b----------$3.0b----------$0.7b
# of Emp------100,551---------11,271---------6,848
budget/emp-----77,572---------266,169-------102,196
Avg Sal----------------approx 39,000/yr----------- (GS level 7 at about 6 years)
Showing that a larger percentage of budgetary funds is used to pay salaries in the IRS than in FBI or border patrol. Which is understandable...The FBI and Border Patrol have more hardware to maintain and such. Whereas the IRS is more of a simple people organization.

Lets look at those tax code numbers
-----------------Num Pages--------Num Words-------avg words/page
IR Code -----------9,471----------5.75 mil----------607
Tax Code Regs-----91,824----------1.3 mil-----------14
War and Peace-----1,444-----------660,000-----------457
Holy Bible--------1,291-----------774,746-----------600
So the IR code is about as condense as the Bible.

Now this is not stating that the tax code could use a revamp....even if structure is left the same the tax code could be cleaned up a bit. Many left over tid bits of things that are out dated and such...similar to laws in most states that have relevance for things 100 years ago but none now.

And Kyleb I fail to see how Geniere has brought forth anything that would show how benificial an elimination of income tax and bringing in sales tax would be benificial in any way. Maybe I missed it. But as someone else pointed out the sales tax would have to be in the range of 20% or more in order to cover the cost. Put that on top of your local sales tax as well and you could be paying close to 30% sales tax. That would be on pretty much everything sold...including the trip to McDonalds.

A sales tax based system for the federal gment is not stable enough to account for accurately. We evaluate the sales index on a monthly basis. And it changes monthly...sales go up and down depending on what is going on in the world, the time of year, and many many other factors. However you can accurately predict income for the nation. YOu can more accurately predict that if 95% of the nation is employed and making 30K per year then next year close to 95% of the nation will be employed and probably making at least 30K per year if not closer to 32K per year (raises to equal possible inflation index).

Tog

[Dissident Dan]

To advocates of a flat taxing rate:

Do you find it acceptable to make everyone pay 18%? That seems unreasonably high for people below the poverty line. It seems unreasonably low for fat cats whose companies require the SEC, EPA, Trademark and Patents offices, and various other government organizations to be run.

[russ_watters]

Originally posted by Dissident Dan
To advocates of a flat taxing rate:

Do you find it acceptable to make everyone pay 18%? That seems unreasonably high for people below the poverty line. It seems unreasonably low for fat cats whose companies require the SEC, EPA, Trademark and Patents offices, and various other government organizations to be run. Yeah, I said that 2 pages ago, but it was conveniently ignored. Its always conveniently ignored.

[Njorl]

[QUOTE]Originally posted by GENIERE
Njori - The average overpayment by taxpayers who do not itemize such things as motgage payments was less than $500.00 per the GAO. It seems unlikely that half would default for lack of about 1/2 months morgage payment. Those that might are likely to be under the income level of $35,000.00/yr. who would pay no taxes.


Regards [QUOTE]

This is an illogical conclusion. Those who chose not to itemize usually know that their overpayment will be small. Most are in the late years of their mortgage. Someone in the first years of a mortgage would wind up paying about $3000-$6000 thousand more per year. That's $250 to $500 dollars a month. That is foreclosure for millions.

Njorl