# Best basis for taxation

by DaleSpam
Tags: basis, taxation
HW Helper
P: 3,684
 Quote by baywax The table would have to include every industry and every department of government to give a good representation of the country. When each party can see the effects of their policies on the other a better understanding of the whole can be achieved and policies can shift accordingly. But I know its much more complicated than that. For example, when the province of BC looks good because we have timber to sell, people forget about the soft wood lumber tariff imposed by the US on that commodity and they forget about the devastation caused by the pine beetle which has wiped out the soft wood industry in BC. We have what are called have and have not provinces. BC looks like a have but in actual fact the have we have is not. So many factors get lost in a 3-5 day meeting.
But representing every industry will result in a large enough meeting that some will be ignored... taking us back to the starting point. And this doesn't even deal with the issue of things that are beneficial only to companies but not consumers -- legalizing collusion, for example.
Mentor
P: 15,058
 Quote by CRGreathouse The widget companies' lower tax liability is not a benefit -- the only possible benefit is the government's tax revenue (which may increase or decrease).
You must have missed the rolls-eyes smilely at the end of the paragraph. To make it very explicit: Any statements regarding the benefits accrued by the government forcing companies to go out of business were strictly tongue-in-cheek.
HW Helper
P: 3,684
 Quote by baywax If the government used the FIELDS formulae where you charge very little on a lot of products... thus huge volume creates huge income... then there would be an even spread of the burden.
In what way should the burden be spread around?

I guess I'd like to split the problem of taxation into two parts: ethical and positive/non-normative. First we decide what would be fair to tax, then we decide (based on what fairness principles are accepted) what method of taxation would be least harmful.
PF Gold
P: 2,215
 Quote by CRGreathouse In what way should the burden be spread around? I guess I'd like to split the problem of taxation into two parts: ethical and positive/non-normative. First we decide what would be fair to tax, then we decide (based on what fairness principles are accepted) what method of taxation would be least harmful.
Going back to the General Services Tax. This applied to every purchase of most goods with regulations stating things like buying a dozen buns or a loaf of bread or a jug of milk would be exempt from the tax... but the companies creating these items collects GST on most items... passing the Government's taxation along to the consumer in full view of the consumer. In fact each service company charges GST for the govt and hands it in quarterly. The cut to begin with was 7%. Now its been lowered for popularity issues to 5%... just as this economic throttling has taken place. This taxation technique helped take the burden of running a nation off the big producers to some degree. It was like the FIELDS model in that it applied across the board to every service and many items. Often only representing a few cents here and there for the low-middle income consumer.

Luxury tax is another item that works to a degree. It hands the responsibility of a person's choice back to them in the form of a tax that will pay for search and rescue, airports, polluting manufacturing clean up costs, smoother roads etc.... because the car or stereo or Cessna manufacturer can't build that tax into there pricing but they can blame the government for it. In fact the rebates of up to $2000 on gas efficient vehicles provide the manufacturer with incentives and a sign that the government gives back.. sometimes. Sci Advisor HW Helper P: 3,684  Quote by baywax Luxury tax is another item that works to a degree. It hands the responsibility of a person's choice back to them in the form of a tax that will pay for search and rescue, airports, polluting manufacturing clean up costs, smoother roads etc. The purpose, presumably, of a luxury tax is to tax the rich more than the poor, especially when they're spending on 'frivolous' things instead of investing in the stock market or paying for their kids' college tuition. My point about separating ethics from non-normative economic analysis applies here: I'd like to compare the efficiency of • the current system • the current system with higher lux taxes and lower income tax on the rich • the current system with lower lux taxes and higher income tax on the rich  Quote by baywax the car or stereo or Cessna manufacturer can't build that tax into there pricing but they can blame the government for it. Car, stereo, and Cessna manufacturers do build the taxes into their prices. If car companies no longer needed to pay taxes, they could make more money by dropping their price (not by the full amount of the tax, but partway) in order to sell more units. PF Gold P: 2,215  Quote by CRGreathouse Car, stereo, and Cessna manufacturers do build the taxes into their prices. Sorry... what I was saying there was that the GST or Luxury Tax is alway added to the price of a luxury item... it shows up on the invoice as a government imposed tax... and is not hidden... unethically.... from the consumer. Sci Advisor HW Helper P: 3,684  Quote by baywax Sorry... what I was saying there was that the GST or Luxury Tax is alway added to the price of a luxury item... it shows up on the invoice as a government imposed tax... and is not hidden... unethically.... from the consumer. Ah. I'm not talking about that, though; I'm talking about how prices really change. If a company makes luxury watches which sell for$500 (making a profit of $120 per watch) and suddenly there is a luxury tax of 10% on the watches, I expect the company to lower prices (perhaps to$480, lowering profit per watch to $100) to keep buyers from switching to alternatives that aren't taxed. This is because, in essence, the company can make the watch$22 cheaper by losing only $20 per watch, so there's more benefit from the 'increased sales' (relative to not dropping the prices post-tax) than from the higher margin. Sci Advisor P: 2,283  Quote by D H ...(2) the rich do benefit more from government spending than do the poor. While the rich may not drive much more than the middle class, the companies whose stocks they own do benefit from improved roadways. Making it easier for people to get to work makes it easier form companies to make a profit. The rich benefit from government services to people other than themselves. IMO, I don't think the rich benefit from government services more than anyone else. In fact, using your truck example, passenger vehicles account for 93% of highway usage compared to the 7% of commercial vehicles. Plus commercial vehicles have higher associated fees than passenger vehicles, and the trucking company is providing a job for the driver (who isn't rich). CS Sci Advisor P: 2,283  Quote by DaleSpam Also, the rich directly benefit more because they have more assets that are protected by the police and military. As a Libertarian I disagree that John should pay for a benefit to Fred, regardless of the fact that John, as Fred's employer, gets some indirect benefit, but I think even so that there can be a direct justification for the rich to pay more than the poor. The military (and police) protect the US as a whole, regardless of how much each individual person makes. I don't see a benefit for the rich here either. I mean, we all live in the same place that needs protecting don't we (i.e. the US)? CS Mentor P: 16,945  Quote by stewartcs The military (and police) protect the US as a whole, regardless of how much each individual person makes. I don't see a benefit for the rich here either. I mean, we all live in the same place that needs protecting don't we (i.e. the US)? Yeah, I see your point. I guess the idea is simply that the rich have a bigger "slice" of the "US as a whole"-pie. So they can be considered to derive more benefit from the same protection. At the same time, that really brings up the issue of income vs. wealth, how do you best measure the slice? Sci Advisor P: 2,283  Quote by DaleSpam I guess the idea is simply that the rich have a bigger "slice" of the "US as a whole"-pie. So they can be considered to derive more benefit from the same protection. At the same time, that really brings up the issue of income vs. wealth, how do you best measure the slice? Do they really have a bigger slice of the pie though as a whole? There are by far less "rich" people than "poor" people in the US. I think they make up something like 1% of the people in the US which would be a rather small slice. CS Sci Advisor HW Helper P: 3,684  Quote by DaleSpam Yeah, I see your point. I guess the idea is simply that the rich have a bigger "slice" of the "US as a whole"-pie. So they can be considered to derive more benefit from the same protection. At the same time, that really brings up the issue of income vs. wealth, how do you best measure the slice? I think this is a valid point -- the rich do get more benefit. But assuming that the police/military protection applies to both the person and the property, and that both are of positive value (we prefer living to being killed, we prefer having our house to having someone burn it down), even a straight wealth tax (the property tax is a close relative) is 'too progressive', and that the tiered income tax structure is right out. Sci Advisor HW Helper P: 3,684  Quote by stewartcs Do they really have a bigger slice of the pie though as a whole? There are by far less "rich" people than "poor" people in the US. I think they make up something like 1% of the people in the US which would be a rather small slice. I don't know if that's relevant. DaleSpam was just suggesting that each rich person gets more benefit from government protection than each poor person, which seems reasonable to me. The government doesn't protect my vacation home because I don't have one. But obviously how many rich people there are depends on your definition of rich. By Victorian standards I'd imagine the majority of people in the US are rich. Sci Advisor HW Helper P: 3,684  Quote by stewartcs IMO, I don't think the rich benefit from government services more than anyone else. In fact, using your truck example, passenger vehicles account for 93% of highway usage compared to the 7% of commercial vehicles. Plus commercial vehicles have higher associated fees than passenger vehicles, and the trucking company is providing a job for the driver (who isn't rich). I don't know if they benefit a lot more or just a little more -- people have argued both on this thread -- but I do think that they (sensibly) benefit more. But I'm not saying that the total benefit to all rich people is greater than the total benefit to all nonrich people, just that the average rich person gets more gross benefit from the government than the average nonrich person does -- for some reasonable value of 'rich', anyway. Sci Advisor P: 2,283  Quote by CRGreathouse I don't know if that's relevant. DaleSpam was just suggesting that each rich person gets more benefit from government protection than each poor person, which seems reasonable to me. The government doesn't protect my vacation home because I don't have one. The government still protects the adjacent/surrounding homes that probably are not vacation homes. It's not like the "rich" people use the government as private security for their vacation homes or whatever other property they own. The security/police/military is already in place and would exist regardless of whether or not the "rich" had the extra home or other property. So I don't see how they benefit more.  Quote by CRGreathouse But obviously how many rich people there are depends on your definition of rich. By Victorian standards I'd imagine the majority of people in the US are rich. I agree the definition of rich is quite subjective. Admittedly I'm not familiar with what Victorian standards were like, I imagine if one were to adjust the value of money for inflation, etc. then it wouldn't be too much of a difference in the terms. CS Sci Advisor P: 2,283  Quote by CRGreathouse ...just that the average rich person gets more gross benefit from the government than the average nonrich person does -- for some reasonable value of 'rich', anyway. Just out of curiosity, how did you form that opinion? I seem to hear this statement a lot but I've never really heard a reasonable explanation as to why other than that's just the way it is. CS Mentor P: 15,058  Quote by stewartcs The government still protects the adjacent/surrounding homes that probably are not vacation homes. It's not like the "rich" people use the government as private security for their vacation homes or whatever other property they own. The security/police/military is already in place and would exist regardless of whether or not the "rich" had the extra home or other property. So I don't see how they benefit more. On that basis, I hereby petition my local government to stop levying property taxes on me (at least the portion that goes to the police department) because the security/police is already in place and would exist regardless of whether or not I personally pay my share of that protection. Sci Advisor HW Helper P: 3,684  Quote by stewartcs I agree the definition of rich is quite subjective. Admittedly I'm not familiar with what Victorian standards were like, I imagine if one were to adjust the value of money for inflation, etc. then it wouldn't be too much of a difference in the terms. Well, for starters, the Victorians didn't have computers, cars, air conditioning, vaccines, or well-insulated houses. In modern America a person can own a car and live in an insulated apartment with heat and air conditioning while still falling below the poverty line.  Quote by stewartcs The government still protects the adjacent/surrounding homes that probably are not vacation homes. It's not like the "rich" people use the government as private security for their vacation homes or whatever other property they own. The security/police/military is already in place and would exist regardless of whether or not the "rich" had the extra home or other property. So I don't see how they benefit more. I agree that the security would exist without those homes, but the rich still get that benefit (even if it's totally unintentional).  Quote by stewartcs Just out of curiosity, how did you form that opinion? I seem to hear this statement a lot but I've never really heard a reasonable explanation as to why other than that's just the way it is. First of all, let me state that this is not a bad state of affairs. If a nonrich person pays$8,000 in taxes and gets $12,000 in government benefits while a rich person pays$100,000 in taxes and gets $10,00 in benefits, that's a pretty unfair situation. Saying that the rich person in this example gets more than$12,000 in benefits (perhaps only $13,000) doesn't seem like much to ask. I'm not saying that they get more proportional benefit -- in fact I feel that this is false. • Police protection is determined in part by location: better areas get better police protection because local policing is paid for by local taxes. Rich people live in better areas. • Rich people have more to lose. If the government shuts down and a mob destroys my house, I'm out$**,000. If a mob destroys a rich person's mansion, they're out \$*,*00,000.
• Rich people get indirect benefits. If you own stock in any company that uses US infrastructure (that would be pretty much every US company) you benefit from that company's gain.

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