Forget the Rich, Let's Increase the Tax Base!

[BMT (RIP)]

http://www.foxnews.com/opinion/2010/...ease-tax-base/

BMT

[Paslode]

I'd would be inclined to agree, especially if we all paid the same percentage and no one was rewarded or penalized because of their income level.

[1stindoor]

And let's see...how can we increase our tax base?...I know, lets legalize all of those downtrodden illegal immigrants and make them US citizens!

[Don]

Originally Posted by 1stindoor

And let's see...how can we increase our tax base?...I know, lets legalize all of those downtrodden illegal immigrants and make them US citizens!

...or better yet...keep downtrodden illegals illegal and institute the fair tax. That way we can have the best of both worlds. A plethora of cheap illegal labor...while Uncle Sugar still get his slice of the take! What a bargain! All that, and we can still be outraged over the lack of border security. It is a Win/Win.

[nmap]

Regarding bringing in more immigrants, legal or otherwise...

I wonder. True, if they're brought in, one gets more individuals earning money and presumably paying taxes. (Yes, I understand the "pink" signal.

But the other side of that is an increased supply of labor, which must surely drive down the price for other labor of similar skill levels. At the bottom levels, the individuals earn so little that they pay little or no income tax, although they do still pay Medicare and Social Security withholding. In addition, they may consume additional services such as subsidized housing, food stamps, and Medicaid.

If we sharply reduced immigration, particularly illegal immigration, I wonder if the wage scale would tend to move up, thus pushing people into higher brackets.

Would it increase labor costs and prices to consumers? Probably. But it might be a way to shift more of the population into a higher tax bracket.

Would a flat tax of 10% across the board work?

Be it, aluminum can collector, CEO/Pres., mail room worker, lawn care provider, pimp, whore, drug user, etc....

[Don]

Originally Posted by wet dog

Would a flat tax of 10% across the board work?

Not a "flat tax" but a "consumption tax". You only pay taxes when you buy something, rather than trying to figure out "earned income". With earned income, a drug dealer, for example, will report no earned income...he would be a total nut case to try to do so...so he doesn't pay taxes. He does, however; go out and pimp his ride, buy some cop killas for his Glock fo-tay, and get some new bling every now and then. With the fair tax, he is paying taxes for each transaction.

Right now, almost half of the folks that file taxes don't actually pay taxes. They get back everything they paid in...and some get back more. If that isn't a classic example of redistribution of wealth...then there isn't such a thing.

[1stindoor]

Originally Posted by Don

Not a "flat tax" but a "consumption tax"....

I readily admit I'm fairly ignorant of a lot of the "tax issues," however, I contend that we already pay a consumption tax. Our products are taxed many times over during their production, import, shipping, etc...and then taxed again by the local and state at the point of sale.

[Don]

Originally Posted by 1stindoor

I readily admit I'm fairly ignorant of a lot of the "tax issues," however, I contend that we already pay a consumption tax. Our products are taxed many times over during their production, import, shipping, etc...and then taxed again by the local and state at the point of sale.

A consumption tax would replace sales tax and income tax.

I am not an expert on the subject, but I have read the book, and I stayed at a Holiday Inn express last night. There are some very good points to instituting the fair tax. Not only does it make everyone pay taxes, it also would open the floodgates for corporations to move to the US, as well as US corporations to bring their overseas revenue home.

Estimates are somewhere in the 5 trillion dollar range in regards to US corporate earnings that are squirrelled away overseas due to tax implications if they are brought home. (I totally pulled that stat out of my a$$, but I think NMAP will confirm/deny the dollar amount).

This also would reduce the tax code fom over 20,000 unintelligible pages down to very few. I was going to say "smaller is better"...but I felt a dogpile coming on.

[1stindoor]

Originally Posted by Don

A consumption tax would replace sales tax and income tax.

I am not an expert on the subject, but I have read the book, and I stayed at a Holiday Inn express last night...

Those two qualifiers are enough for me. I probably should do more than a overlook at the consumtion tax issue. One of the biggest questions I can imagine would be how would the state and local governments get their "cut?"

I also don't understand why it would make US manufacturers move back to the U.S., afterall there's still the wage and benefits package for their employees to consider. What would entice the company to come back to the US? Seems to me this genie has already escaped. Originally I suggested heavily taxing their products upon return to US soil...but that too will just get passed down to the consumer. Honestly I don't see any real fix until the average American consumer is willing to spend more to have things made and produced in the U.S.

[Don]

Originally Posted by 1stindoor

Those two qualifiers are enough for me. I probably should do more than a overlook at the consumtion tax issue. One of the biggest questions I can imagine would be how would the state and local governments get their "cut?"

I also don't understand why it would make US manufacturers move back to the U.S., afterall there's still the wage and benefits package for their employees to consider. What would entice the company to come back to the US? Seems to me this genie has already escaped. Originally I suggested heavily taxing their products upon return to US soil...but that too will just get passed down to the consumer. Honestly I don't see any real fix until the average American consumer is willing to spend more to have things made and produced in the U.S.

Right now the US has the second highest corporate tax rates in the world. Going from second highest to none, you would assume it would prompt a move to headquarter your corporation in the US. Again, the taxation only happens upon purchase of an item, not on earnings.

There are already sales taxes embedded in every level of manufature of a good. These would all be stripped out and replace with a tax rate of 20% (I think). This would actually not make the price of goods go up. It would be practically transparent due to the embedded sales taxes. It has been awhile since I read the book, so the info isn't exactly fresh in my mind, but there was practically none of the plan that didn't make perfect sense.

We drafted a document 4 pages long that established the greatest form of government on Earth...but can't reduce the tax code to a manageable level. Go figure...

[1stindoor]

Originally Posted by Don

We drafted a document 4 pages long that established the greatest form of government on Earth...

That was quite possibly the best statement I've read in quite a long while.

[nmap]

Originally Posted by Don

Estimates are somewhere in the 5 trillion dollar range in regards to US corporate earnings that are squirrelled away overseas due to tax implications if they are brought home. (I totally pulled that stat out of my a$$, but I think NMAP will confirm/deny the dollar amount).

If we include high net-worth individuals, the amount may be twice that.

LINK

The paper suggests about $11 trillion is offshore, and that the earnings could be on the order of $860 billion - which implies an uncollected tax (assuming 30% rate) of about $255 billion each year.

As a side-note, the tax revenue as a percentage of GDP is amazingly constant, ranging from 16.1% to 20.8%. This suggests that a 10% flat rate would require considerable spending cuts - but a 20% rate would put us where we are now. No doubt the fair tax rates could be adjusted for some suitable outcome.

LINK - Scroll down to table 2 at the bottom

Would corporations come back if the tax rate were lowered? Perhaps. I suspect many regulations can be side-stepped (but not violated) with the right accounting tricks.

[Don]

Originally Posted by nmap

Would corporations come back if the tax rate were lowered? Perhaps. I suspect many regulations can be side-stepped (but not violated) with the right accounting tricks.

The question isn't would corporations come back if the tax rates were lowered...it is would they come back if the tax rates were GONE.

Federal tax revenue would be generated by consumption (purchase of goods) not earned income. Not sure how state taxes would play into this, but it is the federal tax system that chafes my a$$ anyway.

In reality, I wouldn't really care if it was a flat tax or the fair tax as long as it was less than 5 pages...and there were no exceptions. If everyone carries the same tax burden...that is a "fair" tax. As soon as you start throwing stipulations in there...special interest groups will be all over the legislators and we will be up to 20,000 pages and my ne'er-do-well brother in law getting back $5000 a year he never contributed in the first place.

[ZonieDiver]

I suspect many regulations can be side-stepped (but not violated) with the right accounting tricks.

Don't you mean "generally accepted accounting principles"?