Now we're talking!
Almost makes me wish I was living in Georgia to vote for this: http://www.bizjournals.com/atlanta/stories/2007/04/16/daily39.html?from_...
House Resolution 900 would let Georgians vote in November 2008 to ditch all current state and local: property taxes; sales taxes; income taxes; gas taxes; estate taxes; unemployment and worker's compensation taxes; gross receipts taxes; insurance premium taxes; business and occupation taxes; intangible taxes; and utilities taxes. In their place, the state would collect a 5.75 percent flat income tax and what amounts to a 5.75 percent sales tax without any of the current exemptions.
Submitted by lordzorgon on Mon, 2007-04-30 20:38
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that is a beautiful
proposition! No question about that. Fair and clean.
"To discuss evil in a manner implying neutrality, is to sanction it." AR
And look
No exemptions for people living in poverty or on fixed wages. So do we raise their taxes or cut their services?
both
It's the Pact for the New American Century.
or how to make the US into a Third World Country. For more details see New Orleans.
The only hope is to join the military or live in groups in small houses or maybe a warm street corner. Do they have desk jobs in the Marines for those over 65?
Yes I think the tax code is messy.
For those penny pinchers who think they don't have to contribute to the civil society in which they live. Move.
I hear there is some cheap property in Iraq. It's delightful. They have no govt, so you don't have to worry about taxes everything is black market.
It is the economy, stupid.
it's easy to
want to give away other people's money in the name of common good or whatever other stupid concept.
"To discuss evil in a manner implying neutrality, is to sanction it." AR
snipe snipe
Thanks for the respect with the stupid comment.
I know. I know.
In your mind I am enemy #1 of America.
It is the economy, stupid.
haha
the stupid part was clearly not referring to you but to concepts Dems use to take our money :)
But you know I like sniping.
"To discuss evil in a manner implying neutrality, is to sanction it." AR
It is the Republicans
that have been taking your money!
Giving it to their friends and private contracters with zero oversight.
Their goal seems to be to bankrupt America, and sell out it's infrastructure
to any foreign govt that is willing to buy. Isn't that patriotic.
Public works. Dead.
Public parks. A waste of tax payer money.
Public education. A communist plot.
I am sick of the rhetoric from your side of the aisle.
It's way over the top and is not serving the country well.
It is the economy, stupid.
well I don't think so
I think selling our public infrastructure is a great idea as long as the contracts are good on oversight and the quality does not suffer. I read an article on it yesterday on MSNBC.
We should privatize everything but make sure that there are clauses that prevent companies from screwing the consumers or letting the quality be too lax. Create oversight departments to oversee the privatized infrastructure and public works. Same for schools, but obviously that will take time.
Capitalism is wonderful when done smartly.
"To discuss evil in a manner implying neutrality, is to sanction it." AR
that's nice
I disagree.
It is the economy, stupid.
How's that working out for you?
Sorry to break this to you Ender, but Santa Claus doesn't exist either, even if you think he's a great idea.
Yeah, it sure is
to the tune of $2 billion a week.
"Perplexity is the beginning of knowledge" -- Kahlil Gibran
Fourteen Million an Hour
Raise your hand if you are sick of this.
It is the economy, stupid.
heh
riiiight :) Unfortunately that part will take a while to get rid of.
"To discuss evil in a manner implying neutrality, is to sanction it." AR
Wow!
Look at my home state, taking reform to a whole new level. I think they're probably proposing it to make it so far to one extreme that after "negotiations" it will still end up in pretty good shape. Shoot, I might have to move back sooner than I thought if this goes through. The 31% of my paycheck the government and NY (and NYC) gets from me now (from my very un-New York City salary) is crazy.
http://wealthweekly.blogspot.com
Wii FC:2805-8311-8040-2678
Brawl: 2277-7051-2186
makes me want to move
there as well. I still like our NY area though... At least this year.
"To discuss evil in a manner implying neutrality, is to sanction it." AR
While I'm amenable to a simplified tax code...
...I absolutely hate sales taxes. Oregon doesn't have one, fortunately. I just find it incredibly annoying to have to figure out how much something will actually cost because the sticker price isn't the "real" price.
Much rather deal with income, property, and capital gains taxes.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
I Think Sales Taxes are more Honest...
With income tax, those who have amassed enough income to live off of their investment income are making out like bandits--only paying 15% in taxes to the government (for capital gains)--and maybe property taxes. They have no real income to report (except investment gains). And if they're living off municipal bond income, well that means there's almost no taxes to pay at all! You can raise the bracket on "The Rich" as much as you want, it won't help much.
With a sales tax, there's no hiding--the rich, illegal immigrants, regular citizens--all contribute fairly based on consumption. If I had the choice of either-or, I would definately go for the sales tax if they would drop my property, income, and capital gains taxes.
Of course, I don't expect this to happen at all, so I guess I'll just find a way to deal with the (IMO) unfair status-quo tax system.
http://wealthweekly.blogspot.com
Wii FC:2805-8311-8040-2678
Brawl: 2277-7051-2186
Useful comment
to me anyway. Thanks.
What do you think about taxing stuff at different rates depending on categories (e.g. food versus luxury goods or whatever)? I can see arguments both ways, because you want people to be able to afford stuff they really need but OTOH a lot of jobs and income are tied into producing more expensive goods so you want them to sell well.
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
No qualms...
I personally have no qualms with differing tax rates on "needs" goods versus other goods and luxury items. I had an internship in Texas and lived in Forth Worth for a summer and found it very interesting. There was no state income tax, but they levied varying rates on goods and services. Groceries and medicine carried no sales tax. Prepared Foods (like restaurants and fast food), cars, etc., carried a 6.25% Sales tax + any Local (which could not exceed 2%.)
So in effect I thought it was pretty good. Needs weren't taxed, but extras/luxuries were.
http://wealthweekly.blogspot.com
Wii FC:2805-8311-8040-2678
Brawl: 2277-7051-2186
I'm not sure I agree.
The Sales tax does hit everyone, and hits them all equally. It is consequently terribly regressive.
The poor family down the street pays just as much tax rate as the trumps do.
The issue of people who make their wealth off of investments is ably handled by having a real capital gains tax (one that matches the income tax level, if not exceeding it).
But that means, as above, that they all get hit with the same tax rate which is horrible for low income people who do not have anywhere near the disposable income of the better off.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
In the Spirit of Common Ground..
I do agree that it hits them all equally, but why is that a bad thing? However, I think there is some compromise possible--for instance, no tax on necessities like food and medicine. Other items would have to taxed like everything else is. I think it underestimates the American people in general to assume that conditions have to be ideal to excel. It's like the minimum wage argument--both sides misrepresent minimum wage, saying that raising it would cause nationwide declines in small businesses or that not raising it would put the 4 person family out on the street. People rise above challenges when they are presented. I don't think anyone would be taken down by a sales tax, even when considering that most pay one right now.
I would however, be unequivocally against capital gains taxes, because the low tax rate is what encourages most Americans to save to begin with. It's an incentive to prepare for the future. Let's face it--most of us won't (well, I know I won't) be able to collect on Social Security, and most companies don't pay pensions anymore. given the opportunity to invest capital for the long term so that I can have a sensible retirement is what its all about.
In the end, I just seek a lower tax rate for those who've worked the low end jobs and progressed past them to reach for higher ground. I don't like to see taxes raised too much again just to see Congress fund their pet projects while not caring too much about those who have to live in the future.
http://wealthweekly.blogspot.com
Wii FC:2805-8311-8040-2678
Brawl: 2277-7051-2186
outrageous! :)
Common ground? Don't you know this is the internet? Them's fightin words!
Because one of them has little or no discretionary income and the other has a ton. Losing 5% of your money when you live on $150 a week is a big deal. In fact losing that much is pushing you that much closer to going without food or shelter or medicine. Losing 5% when you live on 2 million a week is annoying but hardly life threatening. You'll still afford all the essentials and a big bunch of luxury items.
that'd certainly help the regressive aspects. Although i think technically at that point what you have is not a slaes tax but a luxury tax.
Personally, as i said before, what I really hate about a sales tax is the mechanics of it. I just want to be able to pay what the price tag says rather than having to do a continual sum in my head to make sure I really do have enough cash on hand when i reach the checkout.
A somewhat silly or petty reason, sure, but so long as there are other ways to accomplish the same gola silly reasoning wins out.
I don't think they have to be ideal, I just think we have a national interest in making them approximately even or fair.
I'm not sure I see your point. Savings aren't affected by CGT as I recall. Only the sale of stocks, bonds, et cetera. The idea that your save for retirement with stocks or bonds is certainly one way but hardly the only way and I see no reason that the practitioners of that means should get away without being taxed.
Beyond which if the issue is that SS is insolvent (which it isn't) and that businesses aren't paying pensions (which is true) then the solution is to fix those things. Require congress to leave the SS surplus alone so that it can cover the later deficit as it was meant to do. Create laws that encourage or require pension plans from employers, maybe in return for taking the health insurance burden off employers and onto the state.
While taxes don't bother me wasting tax money does and I certainly support any attempt to cut back on inefficient and stupid government use of money. The Ballistic Missile "Defense" program leaps to mind immediately.
BTW you may find this diary interesting if you haven't previously read it:
http://www.swordscrossed.org/node/952
I came. I saw. I posted.
Veni, Vidi, Bitchy.
Taxes
I understand the frustration with the sales tax being added on, but you get used to that fairly quickly.
Sales taxes in Texas, for example, are not levied on food and prescriptions, but we still call it a sales tax, not a luxury tax. Currently, in Houston, it's 8.25% (part city, part county, part state). I would imagine it is fairly common for other sales-tax states to exempt some part of the basic necessities. It is still a regressive form of taxation, but one that's usually hard to evade. This aspect becomes very important when you have several millions of undocumented and otherwise non-tax-paying Mexican citizens living and working in an area. We have no income tax, but property taxes are too high.
Capital gains apply only to, well, capital. Sales of stock or land are considered subject to capital gains.
Interest income and dividend income are taxed differently. Interest income from a regular savings account is taxed at ordinary income rates, not capital gains rates, so if you want to encourage normal savings, you have to change something other than the capital gains tax rate.
Companies have had financial incentives for pension accounts for the last thirty years at least. The employer contribution is fully deductable from taxable income. They pay no corporate income taxes on what they give to their employees' pension accounts. Anything more and the government will be paying them to fund the accounts.
"Perplexity is the beginning of knowledge" -- Kahlil Gibran
I understand the frustration
I don't wanna! (said in suitably petulant preschool tones)
I can see that point.
But if it doesn't tax food and medicine isn't it going to miss most of what the illegals are buying anyway? Maybe it's purely prejudice on my part but I somewho imagine that the illegal immigrants in texas don't represent much purchasing power what withe their $1.50 an hour gardening jobs. I imagine they probably are spending most of their paycheck on subsistance level living. Any discretionary cash probably goes to secondary markets (like buying a used car) where the tax won't be applied.
I'm not sure if this is arguing with me or agreing with me. Are you saying that sales of stocks and land shouldn't be taxed?
I don't see why you need to change something, per se. All you need is to make sure there isn't a disincentive to savings. As far as I can tell there isn't one.
Then just make it compulsory.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
Some of it
was to both Charles and you. It seemed you both were a bit confused on what was taxed when and how.
If you think an undocumented worker works for $1.50 an hour, you live in blissful ignorance of reality. This ain't 1950. The going rate for a body in the pickup bed is $100/day minimum, in cash. Skilled trades such as carpentry or tiling or roofing or plumbing demand more.
"Perplexity is the beginning of knowledge" -- Kahlil Gibran
I guess it depends on the field...
...I don't have any experience with construction, but in a lot of fields where illegals get used (berry picking, dish washing, et cetera) they do get paid that low.
one source:
Now that's from the heritage foundation which puts the reliability somewhere between "I read an unsourced account on a random internet chat room" and "a retarded chimpanzee scrawled this in his own feces on the wall of his pen."
I came. I saw. I posted.
Veni, Vidi, Bitchy.
For a forty hour week
that $323 works out to just over $8 an hour. Better than minimum wage.
I just walked outside and asked them. We have an "informal day laborer" station set up right down the street. We used to call them intersections. . . .
"Perplexity is the beginning of knowledge" -- Kahlil Gibran
Sure, but...
...that's median.
In other words $100 day can't be the minimum they all get unless they work three days a week. For everyone making $100 a day (for what, 10 hours work?) there has to be someone making less.
In other words if your median pay is close to the minimum wage you've got problems. It should be way higher because doubtless someone somewhere is making a lot more than minimum wage.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
The problem with a sales tax...
is that the hiding is on the other end, by the seller who goes black market and avoids the tax, and is therefore being able to undercut his/her competitors... there's already considerable black market activity with current modest state sales taxes. Payroll taxes are nice because it's truly hard to hide because you have to have some collusion between worker and employer to avoid the tax without being discovered. There's really no way for the IRS to check sales taxes like they can check income taxes by matching up worker income tax returns with business payroll tax info.
skymutt: wise and powerful... enlightened...
Texas does a fair job
because the words "sales tax audit" still strike fear in the heart of any merchant. Businesses are varied and the sales tax rules are not clear (e.g. if you provide forks, that food might be taxable, but if you don't, it might not be). From the merchant's side, assuming you collect taxes appropriately, the monthly remittance part is online and painless. And once you file, they have data with which to monitor your subsequent reporting and identify abnormalities.
But you're right. I've heard all kinds of reasons from my customers why I should not be charging them sales tax. Folks will expend a whole lot of air just to save a quarter. And I know first-hand of small businesses who start up, run, and (usually) die without ever having paid sales tax or any other required taxes.
Like payroll taxes, sales taxes can be evaded if there is collusion between the business and the customer. And if enough customers choose to support illegal businesses, then those businesses will eliminate the legal ones.
There is something to be said for a culture that voluntarily upholds the law.
"Perplexity is the beginning of knowledge" -- Kahlil Gibran
I hope this passes
It would at least be valuable as a fiscal experiment.
But no floor? Even the fair tax
gives a prebate to everyone every month. 4.5% might not seem like a lot, but as a sales tax it hits the poor dispropotionately hard. As an income tax, it not only tightens their budget even further, but it may slow consumer spending in the short term.
I am nonetheless sympathetic to any effort to simplify the tax code. I also believe that there is more to be saved by closing corporate tax loopholes and shelters for investment income than there is by nickel-and-diming the needy. So it may well be a net positive even from a liberal perspective (as long as we get some Big Government programs going to help those we've shafted).
Well put
(I fixed your link -- it wants the http:// part too, sorry about that).
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
A one-rate flat tax is fundamentally unfair
However, it is possible to have a flat tax that applies to everyone and is fair.
Instead of 5.75% on everyone no matter the income:
1. The first $20,000 of income is exempt for everyone. If you only make $20,000 a year, you pay nothing. If you made $300,000 last year, you pay nothing on the first $20,000.
2. The next $30,000 of income is taxed at 3%. So, if you made $50,000 last year, you pay nothing on the first $20K and $900 on the next $30K.
3. The next $50K is taxed at 5%. So, if you made $100K last year, you pay zero of the first $20K, $900 for the next $50K and $2,500 on the next $50K -- for a total tax of $3,400.
4. The next $100K is taxed at 7%. So, if you made $200K, your tax would be the $3,400 on the first $100k and another $7,000 for the second $100k -- for a total tax of $10,400, or an effective rate of about 5%.
5. Income in excess of $200K would be taxed at 10%.
qui tacet consentire
Isn't this pretty much what we have now?
I mean the idea of a flat tax is just to make it flat. Exempt the first 20,000, then apply the 5.75 across the board. Generally, people are less apt to try and hide/shelter income as much if they know the tax system is more fair.
http://wealthweekly.blogspot.com
Wii FC:2805-8311-8040-2678
Brawl: 2277-7051-2186
While I see
your point about the progressive taxation critique of quaoar's comment, where do you get your assertion that people are more willing to pay fair taxes? People in a capitalist system are greedy which creates a lie, cheat, and steal atmosphere. If you don't believe me, open today's paper and see the corrupt CEO
du jour. Secondly, there are some who see any taxation (besides military and police--Ender for example) as unjust taxation. So the definition of fair is lacking in your statement.
Laffer Curve?
Hey, stop laughing..I'm talking about the economist.
I see you're laughing harder now...
Nah, but back in the day tax rates were in the 90% range for the Rich. JFK cut it down to 70% and more tax money came in. I think Reagan cut it to 50%, and now it sits at 35%. If I'm not mistaken, each time, tax revenue increased shortly thereafter.
Here in NYC, Bloomberg cut taxes, and now he's trying to determine how to divvy up an unexpected 4.4 Billion Tax Revenue surplus. I think something's up.
Seeing Corrupt CEOs in the media is like seeing Welfare Queens in the media. They sell papers. I'd be willing to guess that just like most welfare recipients aren't gaming the system, most CEOs aren't either. There will be a few that we can splash on the newspapers that people will buy and think to themselves "See, this is why capitalism sucks..."
I don't believe all taxation is unjust. We just need to make it flatter, and I just think above a certain income level, people can handle it. Let's have one tax rate that everyone pays, like tithes. Whatever you make, you give x% of that to the government. Maybe we could even have two levels of taxation and not five.
"Rich taxes" usually hurt us in the long run. The AMT is a bad tax that now affects regular folks. It was once intended to squeeze more money from the rich. Now Congress hems and haws about how bad it is but no one wants to get rid of it because it's such a cash cow. Same with Social Security. They won't stop borrowing against the surplus and talks about how bad shape it's in, and tries to solve the problem by asking rich people to subsidize their bad spending habits.
I'll pay taxes. I just want them to stay reasonable.
http://wealthweekly.blogspot.com
Wii FC:2805-8311-8040-2678
Brawl: 2277-7051-2186
No, it isn't
Under the current system, if you make $100K, the entire $100K is taxed at the same rate.
qui tacet consentire
Not true in any US jurisdiction I have ever heard of
Would you care to provide evidence for this claim?
In mathematical terms, the income tax we have today is a continuous function. There are no discontinuities where earning $1 extra causes your tax to jump by a large amount. The marginal rates are not continuous, but the resulting tax (the integral of the marginal rates) is.
Evidence:
(page 6)
Federal: http://www.irs.gov/formspubs/article/0,,id=150856,00.html
CA state: http://www.ftb.ca.gov/forms/06_forms/06_540tt.pdf
(Having a discontinuity in the income tax would be a *really* bad idea.)
The definition of a flat tax is a tax that has only one rate. The only way to make a flat tax progressive is with some sort of exemption or rebate.
Your example is a progressive tax with multiple income brackets, not a flat tax.
Good point on continuity
And it's also very careful to consider time discontinuities when making changes to the tax system... for instance, if we advocate an increase in the capital gains tax on securities, we certainly don't want to trigger a stock market crash as people rush to sell their stock and take their gains at a lower tax rate before the tax increase kicks in. Similarly, if you went to a straight sales tax, you'd have to worry about a spike in purchases of big-ticket items right before the changes take effect, followed by a marked slowdown in consumer purchases after the change takes effect. This effect could drive the economy into recession, cause job losses, and drive down tax receipts. This is part of the reason why I'm more in favor of reforming the current system rather than going to a completely different taxation system.
skymutt: wise and powerful... enlightened...
Agreed, but watch out, the current system has time problems too
Most high-income people have the ability to shift income from year to year through various complex (and somewhat risky!) accounting gymnastics. Some simple examples are picking tax lots when selling stock and timing stock sales/option exercises to fall in the right tax year, but far more elaborate schemes exist also (especially for business owners).
Under a progressive income tax, it is better to earn $200K two years in a row than to earn $100K one year and $300K the next year. Therefore, many high-income people waste a lot of time trying to average out income like this, in an attempt to reduce their tax burden.
Just another example of the ridiculousness that our tax code inspires -- how it causes people to waste time on an unproductive activity (shifting income from year to year) rather than leaving them more time to spend on productive activity (earning more income in the first place).
Also a reason why "dynamic scoring" of tax changes is important. Suppose we introduce a new tax bracket of 40% starting at $1M income. Chances are that this will earn significantly less revenue than static projections predict. Today I pay approximately the same federal tax if I earn $500K one year and $1.5M the next year, because the rate caps out at 35% in the $300K range. Once I'm in that bracket, shifting income from year to year becomes pointless. But if we introduced a $1M bracket, that same taxpayer might shift income around so that they appear to earn $1M in each year, staying under the new top bracket. After all, that income shift would save you a whole $25K -- probably worth doing if it's not too hard! (Of course this is only one of the many effects of tax rates on behavior that dynamic scoring is meant to take into account.)
Most high-income people have
Yes, but different people shift to-from different years, and it all generally evens out, so there's not the threat of big shocks. Actually, this effect could probably help to smooth out tax receipts, boosting receipts in years of weaker economy and thus lower incomes. This effect could be nominally benefical to government budgeters.
As to the lost productivity of shifting around money-- most people earning in the higher income brackets with significant investments who are interested in shelter from tax have accountants and personal financial advisors who do this kind of stuff for them. I guess that you can argue that with a simpler tax code, these accontants and advisors would be freed up to do more productive work, and there's a little truth to that, but that same argument could be made that we ought to have a barter economy and free all the bankers and brokers to do more productive work. The fact is, those tax accountants and financial advisors churn their paychecks back into the economy, so there's probably not that much negative economic effect and it all amounts to a little bit of benign wealth transfer from the big earners to the tax accountants and financial advisors and a modest bit of lost productivity-- probably small prices to pay if the progressive tax code indeed has the desired effect of creating a happier, healthier society for the majority of the people.
skymutt: wise and powerful... enlightened...
Bankers add economic value; tax accountants do not
Yes, I am definitely arguing that a simpler tax code would free up accountants, financial advisors, lawyers, and IRS auditors to perform more productive economic activity rather than pointless paper-pushing.
But no, shifting to a barter economy would *not* increase efficiency, even if it puts some bankers and so on out of work. Barter is extremely inefficient. Bankers do serve an economic function: they serve as intermediaries between those who want to borrow and those who want to save.
If you don't think bankers add any value to the economy, feel free to try your own luck at lending (http://www.prosper.com
). Hint: it's a lot harder than it looks.
Waste remains waste even if you are paying someone to do it. If we had a simpler tax code, those accountants and so on would find other, more productive lines of work, where they would produce things of greater value than they are producing today.
You can't create wealth by paying people to do the bureaucratic equivalent of digging ditches and then filling them again.
The evidence in states like CA that have steeply progressive income taxes suggests otherwise. Income tax revenues are highly variable/unpredictable here because they spike/drop based on realized capital gains from the stock market and the housing market. (Only some people actually do the income averaging I suggest, and they never do a perfect job at it.) Sales and property taxes are much more stable. States with less progressive income taxes tend to not have as much of a problem with this.
At the federal level, you can observe the same effect with payroll (FICA) taxes vs. income taxes. Payroll tax collections are easy to predict; income tax collections are hard to predict. Why? (1) Payroll taxes are regressive rather than progressive, so they don't depend on how much money a small number of highly paid people earned this year. (2) Payroll taxes exclude capital gains, which are extremely unpredictable.
Points taken...
And you're probably right about the points I made which you addressed... but I still tend to believe that these effects tend to be relatively minor and productivity losses small, and that the marginal productivity loss caused by the need for "paper pushers" to service and administer a more complex, progressive income tax system is just not that significant when compared to the benefits of a progressive income tax itself to society.
skymutt: wise and powerful... enlightened...
That makes so much sense
And it is so simple.
It is the economy, stupid.
What YOU suggest is by no means fair.
At least by MY definition of fair. You pay $5.75 for every $100 of income and I pay $5.75 for every $100 of income, that's fair.
Screw the exemption crap. Screw the progressive tax rate crap. Those are the things that make it (the current system) unfair.
A progressive tax fails on all of these (the underlined) points:
Therefore, for these reasons, I disagree with your basic contention that a progressive scale is "fair".
Republican Maverick at Large
-4:Strongly Disagree; 0:Meh; +4:Strongly Agree
I think he is using
6 b (2): : consonant with merit or importance : DUE [a fair share]. But point taken.