MP MN Leads the Nations in Progress Towards Tax Fairness
Here are some comments:
1.Fair would be if we took the total cost of government, divided it by the number of adult able bodied citizens. And each adult then paid their fair share of the bill. (ie Dues concept)
2.Fair would be if total cost of government was divided by the total income of every adult able bodied citizen. And each citizen paid their fair share of the bill. (ie Percent of Winnings to the House Concept)
3.Fair would be if total cost of government was divided by the total income - some base living cost (~$25,000?) of every adult able bodied citizen. And each citizen paid their fair share of the bill for every $ they make above the base living. (ie Percent of Winnings above Base Cost to the House Concept)
4.Fair would be if taxes and credits/programs were set to reduce the net income and wealth gap between the adult able bodied citizens. This means high income and wealthy people pay significantly higher rates than other citizens in attempt to attain a fair society.(ie Equalization concept)" G2A
"That appears to be what this entire discussion is about "What is fair" looking back to 40s, 50's, 60''s,70's
Reference 1. " Incomes grew rapidly and at roughly the same rate up and down the income ladder, roughly doubling in inflation-adjusted terms between the late 1940s and early 1970s. The income gap between those high up the income ladder and those on the middle and lower rungs — while substantial — did not change much during this period.
Beginning in the 1970s, economic growth slowed and the income gap widened. Income growth for households in the middle and lower parts of the distribution slowed sharply, while incomes at the top continued to grow strongly. The concentration of income at the very top of the distribution rose to levels last seen more than 80 years ago (during the “Roaring Twenties”)." Source: Center on Budget & Policy priorities
Reference 2: Preamble to the constitution: (The "why" it was written)
We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.
Conclusion: When the balance of wealth gets too far out of balance that part in the preamble called "insure domestic tranquility" & "promote the general welfare" comes into play, interpreted from this end it means we don't want to repeat history, storming of the Bastille, Insurrection, street riots, labor riots at the turn of the last century like in the middle east. WIKI Civil Unrest
However it appears that the conservative position is, dam the objectives full speed ahead lets rip this country apart from end-to end, regardless the price. We will look just like Somali at this pace. (Great place no taxes no government and lots of guns).
Yep we are all sure that would never happen here! Kind of like 911? " Dennis
"The "40s, 50's, 60''s,70's" are some what pointless today. Most of the countries in the world were recovering from WWI and WWII which meant American products and services were in high demand worldwide, American's believed strongly in "Buy American" and were willing to pay more for the product and service which supported higher wages and unions, etc.
Then came the late 70's when the other countries were fully recovered and ready to compete aggressively, and the American citizens gave up "Buy American" and aggressively pursued "Buy High Value/Low Cost" no matter which American jobs were sacrificed. To make this worse: global shipping, communication, logistics, etc costs and delays plummeted which made off shoring and foreign companies more competitive.
Regarding your "Keep the Peace" rationale, I agree that it is pragmatic however I don't think it describes FAIR. It is somewhat like paying the "mob for protection". The mob isn't really doing anything to justify the payment, they just insist that you pay or else. From what I see here, it looks like you support option 4. Use taxes as needed to keep the wealth differential at an arbitrarily chosen FAIR level." G2A
"Not my keep the peace point :The "founders/framers" keep the peace point. The preamble is near on 250 years old!. Don't agree with it, don't think it describes fair, are we picking and choosing what we should and should not abide by that the framers/founders laid out?
Arbitrary? Tax code is written into law by the wealthy protectors. Back at you, the rich have the wealth, you are arguing that poor folks have the upper hand on rich folks? If so why do the rich folks have all the $? Who is screwing who? Scoreboard 100-0 and the complaint is the 0 folks are cheating!
Yes very familiar with history and economics. We can start another complete dialogue on cause and effect. Blame the greed of the unions or the greed of the capitalists, environmental policy, special tax laws for the capitalists, regardless, the capitalists won!
A reference point 50.60,70's was provided, don't like it, provide a new one. that supports the position that rich folks are getting screwed on taxes.
Mob for protection? They are called political contributions, and the rich mob is getting great protection from their political "Congressional" enforcers. See the allowable usury rates lately? 228% +++++, right to the point of special tax exemption treatment for the wealthy. The focus of the discussion "What is fair"
Fact: Poor people are poor because they have little-no wealth, rich people are rich because they have lots to unbelievable wealth. Sorry its not the other way around. Is there agreement on the definition of poor and rich?"" Dennis
"As I said, it seems you think the Option 4 is FAIR. You would set rates even more progressive than they are today on those who are successful / wealthy so that more money can be given to those who are unsuccessful/ poor. Personally I think that is punishing good behavior even more and rewarding bad behavior even more is going to yield bad results for the future of America, but I have been wrong before. I think the founding Fathers were more Capitalistic than you think."
72 comments:
Should a desire to achieve "fairness" be the primary driving force behind tax policy. We tax the rich not because it's fair, but because they have money. We could, instead, tax everyone equally on a per capita basis. That might be fair, but then it would leave our borders undefended and pretty much in short order we would be invaded by Russia, if not Canada.
Is that a price we are willing to pay for fairness?
--Hiram
I don't argue your pragmatic logic.
The question is why do Liberals keep saying that the rich are not paying their fair share?
It seems to me we should all be very thankful that the wealthy are paying to protect our borders, feed our poor, etc...
Especially if people like Dennis get their way and impose option 4 on the country.
Maybe the less affluent Liberals feel guilty for paying little and getting a lot? Maybe their anger is a self defense mechanism.
The question is why do Liberals keep saying that the rich are not paying their fair share?
We have a sense that fairness should be defined in terms of what is given that those who have received so much from our society should be expected to give more bsck. It's another way of defining fairness. There are lots more.
--Hiram
Maybe the less affluent Liberals feel guilty for paying little and getting a lot?
Certainly lots of affluent liberals are willing to pay more, indeed are often accused of hypocrisy because of that.
--Hiram
Hiram,
The affluent Liberals are not accused of hypocracy because they say they are willing to pay more.
They are accused of hypocracy because they say they are willing to pay more:
- yet they don't write extra checks to the US Treasury.
- they tend to give less to charity than their Conservative peers
Hiram,
The affluent Liberals are not accused of hypocracy because they say they are willing to pay more.
They are accused of hypocracy because they say they are willing to pay more:
- yet they don't write extra checks to the US Treasury.
- they tend to give less to charity than their Conservative peers
about - "they tend to give less to charity than their Conservative peers" I get tired of hearing this.
I bet if you excluded voluntary membership dues to their church clubs the difference would disappear. My church has a budget of $1.2 million, to mostly provide programming for its members. That total does include about $75,000 that is true charitable contributions to other organizations.
Now are you saying caring for one's spirit, psychological balance and eternal soul is less important than caring for their physical needs? Maybe we would have fewer needy if more people went to church and followed some of those valuable teachings...
Especially those regarding waiting for marriage to have kids. And working hard to stay married.
What is it, the top 1% pay something like 30% of all taxes, and the bottom 50% pay none? I fail to see how that is even remotely fair, and I defy anyone to prove mathematically that it is (if x=100y, is x=y?)?
The whole income inequality debate is just more liberal foolishness, anyway. The economic studies show that in the time of economic growth, income inequality is reduced, and all income groups benefit. When taxes go up, economic growth is reduced (like our current situation under Obama) and income inequality goes UP.
So, if you want to be fair, you cannot follow the progressive cant, you have to rely on conservative principles to promote fairness and provide economic benefits to all.
maybe health club memberships should be counted as charitable giving as well.
They are accused of hypocracy because they say they are willing to pay more:
- yet they don't write extra checks to the US Treasury.
- they tend to give less to charity than their Conservative peers
I have always been comfortable with charges of hypocrisy. Better to have ideals and fall short of them, than not to have ideals at all. But the fact is, these accusations of hypocrisy have always illustrated a lack of understanding of how policy works. I think a stoplight near my house stays on red too long. So am I a hypocrite if I don't run the red after what I think an appropriate timeM has passed? Maybe. Joe Soucheray would certainly think so. But the fact is, we can dispute policies as much as we want, but once they are implemented, we are all bound by them. If that's hypocrisy, than hypocrisy is an essential element in living in an organized society, and not a bad thing at all.
--Hiram
Hiram,
"but once they are implemented, we are all bound by them."
FYI. The people who think they should pay more taxes are free to do so. The policy allows for that.
Laurie,
Do the health clubs let charities use their vacant rooms, offer free counseling, offer free life coaching for anyone who attends whether they pay dues or not, organize mission trips, partner with organizations like PRISM and Feed My Starving Children, help raise children, console family members when their family members and friends die, etc?
If so, maybe you are correct. Though I have never heard of one that does.
The people who think they should pay more taxes are free to do so.
That's why they work to pass the laws they do.
--Hiram
By my estimation 90% of church revenues, space, staff time etc is used to benefit its members. I just don't see that giving a few thousand dollars to a church proves that one is more generous than a person who doesn't attend/give to a church.
We include money given to my church on our tax form. It just doesn't feel like charitable giving to me.
So, Laurie, a fair tax would eliminate all or most deductions?
Laurie,
Maybe you need to find a religious and giving church.
I believe my church gives more money away than the majority of churches, including yours.
Maybe you need a more reality based understaning of how churches spend their money.
The Shocking Truth of Church Budgets
2013 Church Budget Allocations, Learning Priorities, and Quarterly Financial Trends
the line item for local/national/international benevolence is about 3%. As I said my church does about double that.
I am puzzled by what you consider benevolance. What do you think those buildings and personnel do?
Remember that the people and buildings are part of the benevolance. And everyone no matter their wealth is free to seek the services and solace.
"vacant rooms, offer free counseling, offer free life coaching for anyone who attends whether they pay dues or not, organize mission trips, partner with organizations like PRISM and Feed My Starving Children, help raise children, console family members when their family members and friends die, etc?"
I think maybe it is your belief that charity must "provide the fish", where as the Church also tries to help people learn "how to fish".
I really can't believe how dense you are being re this topic. Those buildings and personnel serve their members. 95% (probably more like 99%) of church resources benefit the members who make the offerings / pay the dues. If I pay for relegious services for my family I think it is a stretch to say this is being charitable.
All the $ I spend on teaching materials for my students feels much more like charity to me.
btw, about mission trips, if I spend $2000 on a mission trip to Africa I have just paid for a wonderfully enriching experience for myself. If I truly want to help the poor children of Africa I will give the $2000 directly to Unicef or some organization where 95% of the $ will actually benefit the destitute.
Thankfully the government has a broader definition of charitable giving than you do.
By the way, 1/3rd of my giving goes to the Church and 2/3rds goes to what you deem true "hand out" charities.
Our Pastor and the ELCA are pretty flexible regarding the tithing goal and where it goes.
I still argue that Liberals are much less charitable.
My logic is that they are always looking to the government / wealthy to care for the poor and needy, like it is the governments responsibility.
Likely all the while forgetting that they can personally make a difference. Please remember that supporting charities and the needy was drummed into me every Sunday for most of my life. It is an integral part of me.
I am not sure where the non-religious would get that excellent brain washing.
well, you're still wrong - about I still argue that Liberals are much less charitable.
Study: Conservatives and liberals are equally charitable, but they give to different charities
(that link is a 2012 article that weirdly links a 2013 research paper -not sure how that works.)
An LA times columnist also writes about this research:
Who's more charitable -- conservatives or liberals?
btw, now that I have made made pt I do think church donations are somewhat charitable, especially for the generous donars who keep the church running and programs/ services available for those who can't contribute much.
Since I do not get to church as often as I should, I am happy they went to online giving. It is a little odd never putting anything in the offering plate, however it ensures I do not forget to give.
"Is the objective of this United States to create a country with class's of Dukes and lords (Super rich) that control more or less the commerce income distribution of the country?
You believe existing tax laws are fine, Blood and sweat income taxed at 15-30%, money changer income taxed at 15% or less?
I believe the tax laws are corrupt: Which means, today, we punish the poor for good behavior and are rewarding the rich for bad behavior. If we are punishing the rich "Why do they have all the wealth?"
Check that Preamble again: "A more perfect union"" Dennis
"If we are punishing the rich "Why do they have all the wealth?" The "Rich" have the "Wealth" because they are roughly the same thing. One is used to define the other.
If some guy named Bill Gates had not created a little world changing company, he would not have had much wealth. If that guy from Omaha named Warren Buffett had not been really good at picking and making companies successful, I could see him punching a clock at a local company.
Now the big question is why do most lottery winners not have much wealth after a couple of years?
The reality is that people and families who are wealthy know how to save, invest, work, learn, add value, say no to themselves, etc.
Now I agree that the capital gains rates could maybe be higher, however remember that investment money can move elsewhere as taxes rise. And the alternative minimum tax law drives up the rate for the wealthy." G2A
"I forget to address this, must be the jet lag. I am sitting in my hotel in Shanghai right now thinking about your comment. Personally I think the USA is a "more perfect union". It does a good job with carrots and sticks.
"I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I traveled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer. " Benjamin Franklin, On the Price of Corn and Management of the Poor, November 1766" G2A
"I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I traveled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer. " Benjamin Franklin, On the Price of Corn and Management of the Poor, November 1766"
Kind of an interesting set of ideas. How did Franklin explain the rigid class system that existed in his era?
--Hiram
Even if I concede for the moment that conservatives and liberals are equally charitable (which one study does not prove, in the face of numerous others), I still have to point out that conservatives CHOOSE to give to charity, while liberals choose NOT to give more to the government, whom they expect to "care for the poor." Best examples are Bill Gates and Warren Buffet, who COULD write huge checks to the government, but instead contributed something like $90 Billion of their combined wealth to the "Gates Foundation." They actually paid LESS in taxes than they should have, as well as not contributing extra to the government's "charitable" enterprises. It's as if they understood that government can't do charity, just redistribution of wealth, and they wanted no part of it despite protestations to the contrary. They're happier for everybody ELSE to pay more in taxes.
Let's burn this straw man to the ground right now. Of course, folks don't give money to the government -- because they don't have any control over where it would go. That's quite different than proposing or supporting a tax increase to pay for a specific set of policies.
That's an odd sort of straw man, because every time I hear liberals talk about raising taxes, it's either "for the poor" or about "tax fairness" so wealth can be redistributed to the poor. Yet NEVER do I hear a liberal saying they've sent in a huge extra payment, beyond their income tax due, to "lead by example."
"That's an odd sort of straw man, because every time I hear liberals talk about raising taxes, it's either "for the poor" or about "tax fairness" so wealth can be redistributed to the poor. Yet NEVER do I hear a liberal saying they've sent in a huge extra payment, beyond their income tax due, to "lead by example.""
The point is that when you send in a check to the government, you have no idea what it will be used for. As such, there's no example to be set.
That's quite different than suggesting that we should raise taxes and use those funds for a specific purpose.
"That's quite different than suggesting that we should raise taxes and use those funds for a specific purpose."
I guess rarely do I hear where the money should be spent in the same statement that says taxes should be raised. All I typically hear are folks saying that we need to implement Option 4 to be more fair. Kind of like Dennis does in his statements.
And in the case of school referendums, they ask for money and as Jerry often mentions, they do not commit to any deliverable.
"I guess rarely do I hear where the money should be spent in the same statement that says taxes should be raised. "
That's just nonsense. Democrats are rather clear on where their priorities are from a spending perspective.
Sean,
I don't think "everything except maybe the military and corporate welfare" counts as being clear and/or concise.
And if you doubt me, Democrats want to spend more on the poor, healthcare, education, corporate regulation and oversight, polution control mandates and oversight, immigration amnesty, affordable housing, mass transit, bike paths, etc, etc, etc.
"Democrats are rather clear on where their priorities are from a spending perspective."
I'm afraid that doesn't explain why they routinely pass tax increases BEFORE they pass the spending bills (I think it's about "fairness" with them.) And I don't think they do "priorities" at all. Witness the current uproar over "roads and bridges." Dayton and the DFL want ANOTHER huge tax hike for this "priority," but if it's such a priority, then why isn't something else in the budget a lower priority that can be reduced to pay for the roads and bridges?
"I don't think "everything except maybe the military and corporate welfare" counts as being clear and/or concise"
Well, if you're looking to internet message boards for such answers, you're going to come up short. (And you could easily say the same thing about conservative commentators and their desire for budget cuts. Long on the wish list, but short on specifics.)
Let's look at our elected representatives. Gov. Dayton has proposed tax increases, with discrete places in the budget where he is increasing spending. In Washington, House Republicans passed the Ryan budget framework, but have yet to produce a single appropriations bill that supports the detail of that framework.
"Witness the current uproar over "roads and bridges." Dayton and the DFL want ANOTHER huge tax hike for this "priority," but if it's such a priority, then why isn't something else in the budget a lower priority that can be reduced to pay for the roads and bridges?"
At the state level, we haven't regularly paid for roads and bridges out of the general fund, except for the occasional use of some one-time dollars.
The question comes down to whether or not you think transportation is structurally underfunded or not. Republicans -- based on their proposal -- agree with the Governor that it is structurally underfunded, they just disagree on the magnitude and how to increase transportation funding. Republicans are willing to take funds away from the General Fund on an ongoing basis to fund transportation, while Dayton prefers to increase the taxes that feed the dedicated transportation streams.
"At the state level, we haven't regularly paid for roads and bridges out of the general fund,..."
You are correct that we normally fund roads and bridges out of capital expenditures, through the bonding bill. It is one of just a few "investments" by government that makes sense. But the money to repay those bonds comes out of total state funds, and the questions remain: If roads and bridges are such a priority, what low priority items are to be cut back? Are dedicated funds really the proper way to control spending and set budget priorities? What does "transportation" have to with roads and bridges?
"But the money to repay those bonds comes out of total state funds"
Nope. Transportation bonding is backed by the dedicated funding streams, not the general fund -- except for various one-time expenditures.
Yes, and the transportation funds are part of "total state funds." And dedicated funds make prioritizing a budget impossible. Tax money is (or should be) fungible, which makes "fairness" all the more difficult.
Right now our tax system treats every dollar differently, depending on who earns it, where it comes from, and where you spend it. There is absolutely no way to make that fair because of the complexity. Fair has to be simple, like the FAIR tax.
Sean,
Here are some tax increase arguments from Dayton.
Fair Taxes
AE Include Fed Taxes
USA Today Obama Spend Plan
The latest from MP.
"Now comes the tough part: How do you suggest we do the leading? Rightly don't think you will find much disagreement from most anyone.
Been to many countries as well: How about Pakistan? Story I got watching the kid drag his mangled legs across the street (palming one hand in front of the other), the kid probably was born with good legs, but his father broke them, that way he would get a job as a beggar! Acceptable?
(I'll leave, Cairo, Thailand, Philippines etc. eye opening experiences off)
"Money has never made man happy, nor will it, there is nothing in its nature to produce happiness. The more of it one has the more one wants."
Ben Franklin
Seems old Ben had a quote for everyone!" Dennis
Here's the definitive data on current tax "fairness" that shows conclusively that the current system is UNFAIR, but to the top earners, not the bottom as constantly preached by the left. I can only wonder what the chart would look like if it were based on /disposable/ income, rather than total. I suspect it would make the case that the poor AND the rich are both getting screwed, which is pretty much what the vaunted "Minnesota tax incidence study," which does not count federal taxes, shows. The only solution is to scrap the whole idea of making the current code fair, and go to a single, simple, one-rate tax (preferably on consumption).
Heritage report
Here was my response to Dennis.
"So how did we jump to third world horror stories?
As I said, personally I think the USA is a "more perfect union". It does a good job with carrots and sticks. To just give more money to poor people that live on American soil just because they live here seems like you want to just give them free carrots and eliminate the sticks. Probably not a very good way to encourage them to work to excel.
By the way, I am a big fan of encouraging people to volunteer and donate. (ie Give2Attain) By the way, I am in Beijing now." G2A
Here's the definitive data on current tax "fairness" that shows conclusively that the current system is UNFAIR, but to the top earners, not the bottom as constantly preached by the left
Conceding for the moment that the current system is unfair, would a fair system yield the revenue we need? It's unfair, really, to tax people just because they have money. It punishes them. A fairer system would tax people without money, but considerations of fairness aside, the simple and plain fact is that people without money can't pay taxes, because they don't have the money to pay them. So, inevitably, we have to have an unfair system, a system that punishes people with money, because they are the ones who can pay their taxes.
--Hiram
I have no issue with that logic.
However one would think the people who pay less would be thankful and express gratitude towards those who pay more.
Yet that is definitely not the case based on the comments of many Liberals.
However one would think the people who pay less would be thankful and express gratitude towards those who pay more.
I know I am. Just as I am sure the wealthy are grateful and thankful for the working people who made them rich.
--Hiram
"the working people who made them rich" Please explain. This sounds like one of the Obama sound bites.
I mean the employer paid their employees a market wage or higher for their labor / creativity. The business owner only charged what the market would pay for the product or service. It seems everyone should be happy that they are getting something from the free market that our taxes enable, not just the "rich".
More from Dennis.
"Unless of course we are ranking poverty on a scale of 1-10.
The point was: What is the leading that was suggested? What is the actionable step? What is the encouragement, all the things that are going to change these folks way of thinking, life styles? Comparatively speaking what is being done that's wrong, how much is too much, when do you take kids away because of poor parenting skills, since you are in China, what is too much dictatorial and what is not enough, presume you have also been to Singapore, easier, ~ 4.5 M people, but still a strong fist, China much more difficult, much stronger fist. That continues to be the discussion,
"What's fair and reasonable" Question is: Do we put these folks on a City payroll, county, state, if private payroll and no skill or no job, leave the family in the street? Leave them on a piece of cardboard outside the hospital emergency door? Do we have "Tax" financed charity, or do we take the chance at contribute what you think is right? Like Pakistan.
And how do these decisions tie back to the founders intentions i.e the preamble?"
And my resonse:
"Not sure. However taking more from the successful, and giving it to the unsuccessful with few or no requirements on them to perform or improve in some way is definitely not the answer.
Continuing to let women/couples have more children than they can afford/support, funding their irresponsible choices with other people's money, etc is definitely not the answer.
My Conservative readers really disliked it when I said that we should have the teachers grade Parents. Then have their taxes or benefits adjusted as needed, or social servises should be able to intervene based on that grade." G2A
I wish he would join us over here to continue this discussion. I am pretty sure so one but me and him are looking at the old MP article.
"Conceding for the moment that the current system is unfair, would a fair system yield the revenue we need?" -- Hiram
Yes, of course it would, if it were designed to be so, with the only question is-- what is "fair"? Is it one of the 4 options outlined at the start of this discussion? I think not. And it certainly cannot be fair if there is any complexity involved in it-- taxing multiple things, for example, like property, consumption, income, investment, etc. The fairest system I can think of is to have everybody taxed on retail consumption of disposable income. That is, a tax on all retail sales above a "poverty level" income, and EVERYBODY gets that exemption. The poor pay "nothing" because they get a rebate, while still paying the tax. The rich get the same rebate, but pay a lot more in taxes. We don't tax savings or investment because it's not "spent," but when you cash out the investment to buy a new boat, you pay based on how fancy the boat. Seems pretty fair to me.
Jerry,
Your tax proposal is still one of the silliest things I have ever read. Based on your plan Warren Buffett wil pay almost no taxes.
And you will use the tax code to dissuade people from buying things. Are you trying to bring our economy to a slow crawl?
What am I missing here?
And it certainly cannot be fair if there is any complexity involved in it-- taxing multiple things, for example, like property, consumption, income, investment, etc.
Interesting that complexity precludes fairness. The reason why we tax multiple things, of course, is because we do multiple things, and not all of us do the same things. Is it fair, for example, for people who live off investments not to pay taxes, while people who live off wages do? Is it fair for people who accumulate enormous fortunes not pay taxes, while again people who work do?
--Hiram
That is, a tax on all retail sales above a "poverty level" income, and EVERYBODY gets that exemption. The poor pay "nothing" because they get a rebate, while still paying the tax. The rich get the same rebate, but pay a lot more in taxes.
Really? I am a fairly well off person, but I don't buy much stuff, one reason I am fairly well off. Why is it fair that my spending habits should result in my paying lower taxes?
--Hiram
You are obviously missing the elegant simplicity and basic fairness of the FAIR tax.
– It is fair because everybody pays exactly the same rate – 23% – on retail sales.
– It is fair still because EVERYBODY receives a rebate equal to the sales tax they would pay on the necessities of life (I.E. The federal poverty level for a family their size right). This means you only pay taxes on what you spend of disposable income.
– That exclusion turns this from a flat tax into a tax that is perfectly progressive. People spending less than the poverty level actually get tax money back. Those just over the poverty level pay an effective rate that is only a tiny fraction of the nominal rate, well those who spend a great deal slowly approach an effective rate equal to the nominal rate.
– It is going to seem fair because the neighbor who lives in a house like yours and puts all his money into his business isn't going to pay much in taxes, but those flaunting their wealth with ostentatious living are going to pay plenty.
-- It is fair because people are not taxed for saving and investing, but when that money is withdrawn and spent, investors pay the same rate as those whose income comes from wages.
– This tax is fair because it "catches" everybody, including the wealthy who now shelter their income and wealth, and the drug dealers who don't declare it.
– What you are missing is that, because of all the hidden taxes that are currently in everything we buy, this tax would be "price neutral" to the consumer. And the rate is set to be "revenue neutral" to the federal government, after all other federal taxes are eliminated.
– It is fair because everybody pays exactly the same rate – 23%
What matters about taxes isn't the rate you pay, what matters is how much you pay. Given a choice, which would you rather do? Pay less in taxes assessed at a higher rate? Or more in taxes assessed at a lower rate?
Look at this way. Mitt Romney pays 13 percent of his income in taxes. Is he really going to be happy with a flat tax rate that requires him to pay 23 percent of his income in taxes?
--Hiram
This isn't a tax on income, it's a consumption (sales) tax.
Let's take your definition of fair, where it isn't the rate you pay, but how many dollars. By that measure, our current system is wildly unfair. ASSUMING everybody pays the rate they are supposed to pay, which nobody does because of the 60,000 pages of loopholes in the current code, Mitt Romney would pay more in percentage AND MUCH more in real dollars. You cannot possibly make the tax code fair by making it more complicated; that's how it got where it is. The only solution is something simple, based on disposable income, and perfectly progressive.
Personally I think you are missing the obvious point. America's economy lives and dies on consumer spending. Anything that dissuades people from spending will cause HUGE problems.
The upside is that my stingy conservative beloved Parents would pay almost nothing in taxes.
Mitt Romney would pay more in percentage AND MUCH more in real dollars.
And that's really the problem. People like to say they want simplified taxes. But what they really want is to pay less in taxes, and they are perfectly fine in engaging in all sorts of behaviors complicating their tax situation in pursuit of that goal.
Complications, as a rule, reduce your tax bill. And since politically, it's much easier to pass measures that lower taxes than raise taxes, complications are easier to add to the tax code and harder to remove. The net result is that the tax code gets bigger and more complicated. It's like a Darwinian form of natural selection. The politics that drives tax policy naturally selects for the complicated.
--Hiram
And I think YOU are missing the point. A sales tax that is "price neutral" won't affect consumer spending at all. And remember, without withholding, everybody gets their /whole/ paycheck to spend or save as they see fit. Even if they spend the whole paycheck, they essentially pay the same in taxes as before.
And your "stingy" parents should NOT be paying taxes, because they aren't living high on the hog like those rich show-offs down the street. And because their savings will grow tax-free until spent, they will have more to enjoy in their golden years.
My point was that Mitt Romney would pay his FAIR share of the taxes, by percent and by actual dollars, no less and no more. And that is with no "complications" whatsoever. It is all those complications that make it impossible for the current tax system to be fair, even were that the objective of the tax system, which it isn't. That's only one of the desirable aspects of it. Any time one person gets a tax "break" that nobody else gets-- a sugar subsidy, section 179 depreciation, or home mortgage deduction-- you have made the system unfair. ONLY solution is to wipe it all out, which is what the FAIR tax does.
A sales tax that is "price neutral" won't affect consumer spending at all.
Not changing the price I guess doesn't change the price. Tautologies are as true as they are uninteresting.
--Hiram
So, a tautology that is true makes the claim that consumer spending will be affected false, yes?
"It is fair because everybody pays exactly the same rate – 23% – on retail sales."
It's a major tell that your tax plan is a bunch of garbage when you state your tax rate in a way that no one else does in order to make the rate look smaller.
"It is fair still because EVERYBODY receives a rebate equal to the sales tax they would pay on the necessities of life "
Which means poor people would need to get a government check on a regular basis to stay afloat.
"It's a major tell that your tax plan is a bunch of garbage when you state your tax rate in a way that no one else does in order to make the rate look smaller."
Who, exactly, is this "no one else"? Isn't it equally fair to say that opponents of this tax plan deliberately state the revenue-neutral tax rate in a way that makes the rate look larger? And that they also lie about this being on TOP of all other taxes, when it is in fact a replacement?
"Which means poor people would need to get a government check on a regular basis to stay afloat."
Yes, and I don't have a problem with that, but you are mistaken about the nature of the check. First of all, it's actually called a "prebate" because it is a rebate of poverty-level sales taxes in advance of every month. It would actually subsidize the poorest households. But EVERYBODY gets the same check, based on family size. Bill and Melinda Gates get the same (roughly) $500 monthly as Joe and his wife Ina, who comes in twice a week.
"Who, exactly, is this "no one else"? Isn't it equally fair to say that opponents of this tax plan deliberately state the revenue-neutral tax rate in a way that makes the rate look larger?"
Do you ever correct someone who says "Minnesota has a base sales tax rate of 6.875%" and tell them the rate really is 6.43%?
"you are mistaken about the nature of the check"
No, I understand exactly how it works.
And that's not even getting into all the other problems with the FairTax, including that no independent economist has determined that the claim of the 23%/30% rate is revenue neutral (most tag it around 30%/41% because of the tax evasion effects that this tax will cause). And the fact that you'd be making all sorts of things where sales taxes aren't in effect (housing, medical services, etc.)
"Do you ever correct someone who says "Minnesota has a base sales tax rate of 6.875%" and tell them the rate really is 6.43%?"
No, but neither do I use that alternative mathematical statement of the facts to argue that the MN sales tax is unworkable and unwise.
"No, I understand exactly how it [the prebate] works."
And yet you said "the poor" would need a check. EVERYBODY gets the check, need it or not.
"... no independent economist has determined that the claim of the 23%/30% rate is revenue neutral ... because of the tax evasion effects ...."
Citation, please. One of the supposed benefits is that there are no loopholes and no "evasions."
"And the fact that you'd be making all sorts of things where sales taxes aren't in effect (housing, medical services, etc.)"
I think you mean making TAXABLE all of these things, and you are correct, but of course it applies only to NEW RETAIL sales, so selling your house doesn't require taxes. Buying a new house direct from the builder WOULD trigger the tax, but of course none of the material or labor that went into the house would be taxed so the price, including tax, would be about the same as otherwise. Medical fees would also be taxed, but again, the medical provider pays no tax on employees or materials used in providing the service, so again, the price to the customer is about the same as before. The provider essentially "passes through" the tax to the government.
"And yet you said "the poor" would need a check. EVERYBODY gets the check, need it or not."
I said: "Which means poor people would need to get a government check on a regular basis to stay afloat."
Which is true, and does not reference whether non-rich people get a check or not.
"Citation, please."
The Wikipedia entry lists a few.
Wiki FairTax
This one is instructive, from the GW Bush Administration's Panel on Tax Reform.
Bush Tax Panel - See Ch. 9.
"Which is true, and does not reference whether non-rich people get a check or not."
Yes, but by not including that tidbit of information, you leave the impression you do not know it. Really, we need to communicate better; this is in fact a complex subject.
The FAIR tax is NOT a VAT tax (as suggested by one of your citations) and should not be confused with one.
I was unable to find in your citations any evidence-- just speculation-- that the FAIR tax would result in more "tax evasion," quite the opposite. I also found some bad arguments against the idea of "price neutrality" and against the notion of "revenue neutrality" and even against the idea that this is a truly progressive tax.
I can understand that calculating the revenue neutral rate might be difficult, but not THAT difficult. Total consumer spending is known. Total number of families is known. Current federal revenue is known. Just find the rate that produces that revenue from total consumer spending, plus the total amount of rebates. You should also be able to get it by looking at current percent of GDP taken by the tax systems, and it's not too far off.
"I was unable to find in your citations any evidence-- just speculation-- that the FAIR tax would result in more "tax evasion," quite the opposite."
The level of tax evasion -- practically none -- asserted by FairTax supporters is every bit as much speculation. But we do have evidence that people try to evade all sorts of taxes today, even ones with smaller percentages than the ~30% rate that would result under the FairTax.
I disagree. Your citation specifically went through the percentages of sales by large businesses unwilling to help customers cheat, and the risk that small businesses would take to their business licenses for minimal gains. Far bigger than these are the loopholes and evasions of the current income tax code because nobody understands the darn thing well enough to cheat, or to prove cheating? They quoted the fact that 45 different tax preparers were given a modestly complex return to file, and none of them agreed with the "correct" answer! How many of them "cheated"? None?
Now, I can maybe see a black market springing up, but... If I buy my items from the wholesaler at the same price as Target, and then I sell them without the tax, I collect the same profit per unit that Target does but I'm afoul of the law. If I "split" the tax bill with you, I collect an additional profit, but now I'm supposed to turn in those tax proceeds and I get caught quicker. The best dodge I can think of, and it's been done, is selling "used" goods. The company rents me a car, and I drive it around for a few weeks, a month, maybe even 6 months. Then I return this "rental" and turn around the next day and buy it "used." Of course, I paid sales tax on the rental fee. I think that would quickly be found to be a dodge, and the company would have to PAY sales tax on the cars they rented out. Remember, the number of "tax returns" filed is going to be greatly reduced, so enforcement can be stronger.
Post a Comment