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Roguish Lawyer
02-05-2004, 11:57
Should rich people pay more taxes than others?

There are four sub-questions here:

1. Should everyone pay the same flat amount? Why or why not?

2. Should everyone pay the same percentage amount? Under this system, if the amount is 10% for everyone, you pay $1,000 if you make $10,000 and you pay $10,000 (ten times as much) if you make $100,000.

3. Should we have graduated tax rates, so you pay a higher rate if you make more money?

4. Should people below a certain income level pay no taxes at all? What level? Wesley Clark is proposing $50,000.

CPTAUSRET
02-05-2004, 12:01
No:

Four sub-questions, one answer:

FLAT TAX, NO EXCEPTIONS:

Would probably need to be in the 15-20% range:

Terry

Ockham's Razor
02-05-2004, 12:26
I would favor a Flat Tax only if you were able to give me a 100% assurance that there would be no tax shelters available to hide income. This also raises another question, would we still have deductions? Would you still be able to write-off your mortage interest?

Spartan
02-05-2004, 13:20
I'd llike to see a flat spending tax (no income tax), without all the special excise taxes we have in place for various products such as fuel, tobacco products, hotel rooms, rental cars, etc....

This would be executed only for sales where the product went to an end-user of that product. Sales from one company to another where a material or good were incorporated into a finished product would not be taxed.

In such a structure, one would not be taxed for accumulating or transferring wealth, only for spending that wealth. So, if you want to live a life of luxury, you'd end up paying for it. If you wanted to accumulate wealth for retirement, you would not be taxed until you spent it.

Roguish Lawyer
02-05-2004, 13:24
Originally posted by Spartan
I'd llike to see a flat spending tax (no income tax), without all the special excise taxes we have in place for various products such as fuel, tobacco products, hotel rooms, rental cars, etc....

This would be executed only for sales where the product went to an end-user of that product. Sales from one company to another where a material or good were incorporated into a finished product would not be taxed.

In such a structure, one would not be taxed for accumulating or transferring wealth, only for spending that wealth. So, if you want to live a life of luxury, you'd end up paying for it. If you wanted to accumulate wealth for retirement, you would not be taxed until you spent it.

You are a wise dude.

Roguish Lawyer
02-05-2004, 13:29
Originally posted by NewportBarGuy
I would favor a Flat Tax only if you were able to give me a 100% assurance that there would be no tax shelters available to hide income. This also raises another question, would we still have deductions? Would you still be able to write-off your mortage interest?

Most flat tax proposals eliminate most if not all deductions.

The mortgage interest issue is a false one. People freak out because they included tax savings in their calculations when determining how much house they could buy, and they don't want to lose the ability to make mortgage payments when they can't write off mortgage interest any more. What they forget is that the flat tax results in an equivalent or lower overall tax burden, so they'll still be able to make mortgage payments without a problem. Unfortunately, this issue confuses so many people that it may be impossible to get a flat tax approved. Just ask Jack Kemp.

D9
02-05-2004, 14:50
If there has to be a tax, then I think the only just solution is a flat tax. Ostensibly, the tax is to provide services (defense, etc.) that are both necessary and provided to everyone. If you are getting the benefit of it, then you should pay for it - period. Our current tax scheme is based on the premise, "From each according to his ability, to each according to his need." Any guesses where that slogan comes from?

D9
02-05-2004, 14:53
Additionally, I say get rid of payroll deduction and make every America write a check to the government on April 15. Most people have NO IDEA how much they spend annually in taxes. In fact, many idiots think after they get their refund check that not only are they not paying taxes, but that they're actually making money on the deal! Make people write a check once a year, and see how much more interested the American voter becomes on where government is spending our money.

Spartan
02-05-2004, 15:04
I think that most American's have no idea of the level they are taxed at. Income Tax, plus taxes on fuel that is in turn built into every product that is transported and all the intermediate products that make the final product, sales tax, property tax, etc... It's probably closer to 55% of your total revenue (income) prior to that first application of income tax, social security, state taxes, disability insurance, etc...

Most Americans, since they have no true idea how much they do pay in taxes really are, income + spending + excise, would have no way to properly budget for it.

Taxing on the spending side of the house, as opposed to the income side, would be more fair than income as there is no penalty for earning and the tax would be based purely on consumption.

D9
02-05-2004, 15:30
I hear you, but is there any reason that the net consumers should subsidize, say, the national defense of the earners? If the idea is to make each pay according to the benefit he derives, and government was limited to its proper function, then why make the consumers pay for the savers? Both enjoy the equal protection of their rights by the gov (in a perfect world), so they should pay equally IMO.

I think you take the budget/divide it by the adult population, and send everyone a Bill. If necessary, you can put it on a one-year lag so that people have time to budget accordingly. Besides, if the function of government was limited to the protection of rights there would be A LOT LESS to have to pay.

AustinMillbarge
02-05-2004, 16:06
The free rider problem is an issue regardless of if you have a consumption or income tax. Of course, it could be largely eliminated by, as you say D9, limiting the function of the government to that which is outlined in the Constitution. Then again, I'd be making $5 million a year in the NHL if I only had some talent. I don't see either happening anytime soon.

But while we're in the dream world, I'm with Spartan: consumption tax. When in doubt, give people the option to manage their own tax burden.

...although the budget/adult population plan would certainly have some interesting effects on how the average American viewed things on Capitol Hill. Let's see those bastards pass a salary increase for themselves with that system in place. :D

Roguish Lawyer
02-05-2004, 16:25
The primary argument for a consumption tax is that it encourages savings and investment, not that it is fair or equitable. It will never happen because it is grossly regressive.

I agree with D9's comments to a degree -- a state theoretically benefits wealthy people more than the poor because they have more to lose from anarchy. On the other hand, democracies and other states have demonstrated the ability to take from the rich and give to the poor -- Tocqueville was right.

Spartan
02-05-2004, 16:36
Originally posted by D9
why make the consumers pay for the savers? Both enjoy the equal protection of their rights by the gov (in a perfect world), so they should pay equally IMO.


Well, for one, those who spend would have more assets and a greater interest in seeing the government protect their ability to continue to own and enjoy whatever they've purchased.

If what is saved by a a company, most companies are driven to increase growth and profits, thereby purchasing assets, capital equipment, etc... to continue growing, thereby being taxed for those items which do not end up in a final product.

Those who have saved also have assets, but presumably, those assets are intangible financial assets and are insured, perhaps to a larger degree than those which are tangible assets.

Eventually, whatever is saved is inherited by someone, and spent, so it's not like it will never be taxed. The tax will just be deferred until the money is spent. Money has no value at all if it is never spent. If the value of our currency would decrease, you'd see plenty of spending, while it still had value, and thus the tax revenues would increase. But I don't know if we want to get into the whole monetary policy issue here. It's been a while since I took economics.

Ockham's Razor
02-05-2004, 17:39
Originally posted by Roguish Lawyer
Most flat tax proposals eliminate most if not all deductions.

The mortgage interest issue is a false one. People freak out because they included tax savings in their calculations when determining how much house they could buy, and they don't want to lose the ability to make mortgage payments when they can't write off mortgage interest any more. What they forget is that the flat tax results in an equivalent or lower overall tax burden, so they'll still be able to make mortgage payments without a problem. Unfortunately, this issue confuses so many people that it may be impossible to get a flat tax approved. Just ask Jack Kemp.

I did not know that, thank you for the clarification.

I realised how misguided I was regarding deductions after further thought. If you have a further 10% or so of your taxes back, from 33% tax bracket to say a 20-25% flat-tax, then you'd have that cash in hand already.

Would we keep or scrap the capital gains taxes under this flat-tax idea? This is a huge issue, expecially with so many people relying on their investment vehicles for retirement.

Ockham's Razor
02-05-2004, 17:51
Originally posted by Spartan
I think that most American's have no idea of the level they are taxed at. Income Tax, plus taxes on fuel that is in turn built into every product that is transported and all the intermediate products that make the final product, sales tax, property tax, etc... It's probably closer to 55% of your total revenue (income) prior to that first application of income tax, social security, state taxes, disability insurance, etc...

Most Americans, since they have no true idea how much they do pay in taxes really are, income + spending + excise, would have no way to properly budget for it.


Wow, that is a great post. I've thought the same for years, never seen it put so clearly, though. Instead of one large tax we are nit-picked to death by small taxes. Though, if my state would actually use the gas tax money on improving the roads, I'd not gripe, but they do not. heh... And don't forget property taxes. We also have an excise tax on our cars in this state. If I could get what they value my truck at in selling it, I'd be a very happy person.

Actually, that brings up another point. If we have a federal flat-tax, would the states follow suit?