What is "fair" when it comes to rich people and taxes?

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_subgenius
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Re: What is "fair" when it comes to rich people and taxes?

Post by _subgenius »

SteelHead wrote:Trucking company is going to spend much more on gasoline consumption tax. Where is the advantage?

Any time dollars are exchanged for goods or services, tax it at a flat rate.

awkward, you seem to be unaware of the issues involved.
...truckers currently pay specific taxes for the road, whereas you do not....ever seen a weigh station on the highway?...or that little sticker? ever heard of the heavy highway use tax?
besides...why should i offer more subsidy to their profit business? the trucking industry already gets enough from us. Freight trucks make up about 11% of the traffic on roads but cause anywhere from 80-90% of road damage...yet only pay in about 35% for maintenance etc..all the while making a profit...a subsidized profit. A flat tax on gas is ridiculous and would likely cause gas to be inaccessible to the average person due to cost, thus limiting the amount of non-freight traffic on the road, lessening income usable for road construction/repair and thus seeing roads diminish in quality and usefulness....regression

So, you conveniently, thus far, avoid the obvious issue if how a flat tax is regressive in application and that there is no effective or fair way to transition to such a system...and that a flat tax would eventually lead to yard sales being taxed, and a host of other actual real world issues that are unresolved with the pie in the sky thinking of a flat tax.
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_subgenius
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Re: What is "fair" when it comes to rich people and taxes?

Post by _subgenius »

beastie wrote:It seems to me that taxing consumption would, you know, discourage consumption. I know that there's been an emphasis on the "supply" side of the equation for a while, but the "demand" part matters, too.

As far as what would be fair? I don't think "fair" is probably the most useful term, because what is useful to the economy as a whole varies depending on other economic factors. But I would say that given that the top 1% hold about 36% of all net worth, and 42% of all financial investments, maybe we could split the difference and say 39% - still quite a low rate given historical perspectives.

I'm actually open to different ideas about how the economy can best be stimulated. But one thing should be clear by now. Republicans aren't going to improve the deficit by reducing taxes.

most flat tax advocates do not realize that it is simply a VAT dressed in a pretty skirt....and ultimately is just a weapon for class warfare. The tax burden ultimately shifts to the middle class and then to the poor and ultimately becomes absurd. Not a viable solution for educated people.
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_EAllusion
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Re: What is "fair" when it comes to rich people and taxes?

Post by _EAllusion »

How on earth is a flat income tax a thinly disguised VAT? That makes no sense.

I support replacing the income tax with a VAT with a progressive prebate tied to cost of living expenses to take out the regressive nature of the tax.
_MeDotOrg
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Re: What is "fair" when it comes to rich people and taxes?

Post by _MeDotOrg »

EAllusion wrote:How on earth is a flat income tax a thinly disguised VAT? That makes no sense.

I support replacing the income tax with a VAT with a progressive prebate tied to cost of living expenses to take out the regressive nature of the tax.


I'm not sure I know what a 'progressive prebate' is. Would this be different than the Fair Tax Act?
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_Analytics
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Re: What is "fair" when it comes to rich people and taxes?

Post by _Analytics »

cinepro wrote:I agree. The income tax should be much lower.

If we want to encourage people (and companies) to save and invest, then we should be taxing consumption, not income or investment. It's not that hard to figure out.

Do we want people and companies to save and invest more? Why?

If people across the board reduced their spending and increased their savings, several things would result: first, with less consumer consumption, there would be less consumer production and fewer consumer jobs. Second, all of that money they used to spend on stuff would be going into savings accounts and the stock market.

More people savings would result in interest rates going down. Will that result in more production? Is the reason companies aren't making more capital investments because interest rates are too high?

More people investing would cause the stock market to go up. Again, will the Dow Jones going up cause there to be more jobs? Is the reason there isn't more money being invested into corporations because of the high cost of capital?

The answer to the questions in the last couple of paragraphs is no. In aggregate, America is saving too much. We will have high unemployment until consumption goes up. That is the real problem.
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Re: What is "fair" when it comes to rich people and taxes?

Post by _cinepro »

Analytics wrote:Do we want people and companies to save and invest more? Why?


People will still consume. Only, they would hopefully do it with money that they have saved for that purpose. They would also hopefully be increasing their wealth with money that they invested. Obviously, the flip-side of saving and investing is borrowing on credit.

The problem is that saving/investing and borrowing are tied to each other; there needs to be an equilibrium. And this equilibrium is naturally brought about by interest rates. Greater savings leads to lower interest rates (to encourage borrowing), and lesser savings leads to higher interest rates (there is less to "borrow").

If interest rates were allowed to fluctuate naturally, then the process would work ideally (and fairly!) But since interest rates are manipulated by a central bank, the market is thrown out of balance to the benefit of some and the disadvantage of others.

Consumption from savings is good. Consumption from borrowed money can be good (wise investment and growth), or it can be disastrous (housing market 2003-2007). If the market is allowed to manage the consequences of wise borrowing (and lending) and foolish borrowing (and lending), then things can stay in balance. If the market is distorted, then all bets are off.
_Droopy
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Re: What is "fair" when it comes to rich people and taxes?

Post by _Droopy »

krose wrote:The quick and easy answer to your fairness question is that a person making many millions per year should never pay a lower rate than someone making $80K, which is what we have now.


Why not? What do tax rates have to do with anything (and why should there be various progressive tax rates at all?)? If a millionaire pays vastly greater sums of his own money in taxes than someone making $80K, what is the relevance of the rate being higher? Mitt Romney pays oceans of his own money in tithing compared to most LDS, and the rate is a flat 10%.

To fix that, we have to equalize the way capital gains and dividends are taxed. Taxing work income at a higher rate than investment income is absurd.


Taxing capital gains at all is absurd (and morally questionable). You're inability to comprehend the conceptual and economic link between investment and work - as if the one could exist without the other or as if people who invest their money in productive economic activity do not "work," is telling.

I do agree that the word "fair" probably has as many interpretations as there are people, in a discussion of taxes. And the emphasis is always going to be on how much is paid by other people at other income levels. That's how we get people advocating raising taxes only on upper incomes, while at the same time Romney and his wealthy donors complain that 47% of the country don't pay income taxes because their incomes are too low.


46.4 percent of American filers pay “zero or negative” income tax.

But one thing that's certain right now is that tax revenues are much too low for current spending levels. Either taxes have to be increased or spending cut, because there isn't enough money coming in to pay for everything we want to spend it on.


And your recommendation, having come to that understanding?

And as long as we are unwilling to have a serious national debate about what our values are (what programs we want and are willing to pay for), it's going to continue to get worse.


I have no idea what this means.

In my opinion, we need to cut back drastically on bloated military spending...


We are now running perilously close, relatively speaking, to a skeleton crew military that is recklessly underfunded, undermanned, and degraded in its ability to project power given present and realistic future threats. We are nowhere near what is realistically required of a superpower under present conditions in what is now essentially a monopolar (and WMD-proliferating) world coming apart under the influence of radical Islam and its allies in the post and remaining socialist world - Russia, North Korea, China, and Venezuela etc. I like Grimm's fairly tales, Krose, but yours are a poor substitute.

and let all tax rates return to pre-Bush levels. The rates were not too high 15 years ago.


Upon what criteria?

They're too low now, across the board.


Upon what criteria?

Tax cuts don't create jobs.


The level of both theoretic, historical, and empirical stupefaction necessary to make this statement reaches escape velocity with only a little help from the classic leftist sense of anointed moral supremacy of the kind that explains Obama's messiah-like cult status on the Left as well as the Left's traditional stubborn resistance to the stark facts of its own history of abject failure in everything it has ever attempted or supported. They all see themselves in this messianic light, to one degree or another, and Obama is really something like a canvas upon which to paint their own displaced and externalized vision of themselves as redeemers of humanity.


That's been made clear in the last decade.


Empirical, historical, and economic nonsense. But so what? We are in a postmodern, post-rational, post-normal, post-critical thought world, in which wishes are horses, and beggars can ride (while they check their food stamp balance on their government cell phones).

As for cutting social programs, I believe the majority of us want to keep them strong. We just need to make sure we're also willing to pay for them.


Social Security, Medicaid and Medicare, are gone after the 2020s. (Social Security runs out of money in 2033 and people coming into the system will face a 25% reduction in benefits (Social Security is already broke, as a matter of economic fact. It is running a permanent and continuing deficit (for all leftists, this means it pays out more then it actually has in revenue) each and every year. Its present unfunded liability is $11.3 trillion). Medicare now faces a long term unfunded liability of $37 trillion and already, in 2012, its hospital insurance (HI) program is running a deficit of $31.8 billion. Medicare will begin its final plunge into insolvency in 2024. Medicaid spending - equally unsustainable - is skyrocketing with no end is in sight. By 2035, these three programs alone will be consuming some 35% wealth produced in the American economy.

Medicaid and Medicare together face a long term unfunded liability of almost $46 trillion).

This is not, as statist collectivists like the author of this post want you to believe, a matter of what we're willing to pay for, or what we want. Its a matter of stark realities, both economic, philosophical, and moral, that we are going to have to face and face very soon. The reality is that we are impoverishing and destroying the economic and societal futures of our children and grandchildren, bankrupting both them and their nation, suffocating any possibility that they will be able to enjoy the kind of economic possibilities, opportunities, or freedoms we and our progenitors have enjoyed, and inevitably closing the window of freedom, liberty, the unalienable rights of the individual, and a lawful, civil society, upon ourselves and our posterity.

The New Deal welfare state is unsustainable. The welfare state and its major entitlement programs are doomed, both here and in Europe, and if not deeply reformed and rethought, will take our economies and civil society with them when they collapse. This is not theory but stark empirical and economic reality. To save these programs as government programs means either, for all intents, the destruction of the economy in depth (if the EPA doesn't finish it off first, that is), or drastic cuts in benefits.

There is a way out of all of this, but, of course, that way is anathema to the Anointed (if for no other reason than that they, the Saviors, Redeemers and the conscience of humanity, would not be able to take any credit).

The way out is liberty; it is the way of unleashed, unchained democratic capitalism, limited, constitutional government; an economy grounded in work, industriousness, thrift, savings, and investment instead of debt and entitlement; a concept of economic relations founded in personal aspiration and personal responsibility and not in envy and political activism; an emphasis on wealth creation by rather than redistribution to, and a return to gospel - which means home and family - centered concepts of that which constitutes optimum social, cultural, and economic conditions within which individuals and the society as a whole can both prosper materially speaking, but maintain itself as an ethically viable civilizational structure as well.
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_Droopy
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Re: What is "fair" when it comes to rich people and taxes?

Post by _Droopy »

The best case for real tax reform would be, in my view, a simple, fair, flat tax (not a consumption tax like the "fair" tax) that would tax all income once, at the same rate, at the source. Loopholes would at the same time be closed, and the capital gains tax, death tax, and AMT abolished (along with the rogue IRS).

Regressivity is really just another class envy-based criticism that is much more concerned with psychological symbolism than with actual overall effects and long-term trends throughout the economy as a whole and amongst the vast majority of the population (a regressive tax may take a greater percentage of income from lower than higher income people, even though that rate may be quite low and the wealthy are paying far greater amounts of earned income, in absolute terms, and contributing a vastly greater percentage of taxes relative to all taxes paid)

Or, we can continue with our economically irrational and morally shaky progressive tax system, and with the United States tax code, the single greatest engine of social engineering and permanent incumbency within American government.
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_EAllusion
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Re: What is "fair" when it comes to rich people and taxes?

Post by _EAllusion »

MeDotOrg wrote:
EAllusion wrote:How on earth is a flat income tax a thinly disguised VAT? That makes no sense.

I support replacing the income tax with a VAT with a progressive prebate tied to cost of living expenses to take out the regressive nature of the tax.


I'm not sure I know what a 'progressive prebate' is. Would this be different than the Fair Tax Act?


A prebate is simply paying people X amount of dollars in a particular time frame to offset the regressiveness of the tax. Most people who support this, including me, believe the amount should be tied to the cost of essential goods. The FAIR Tax's proposal is a flat prebate. I prefer that the prebate be prorated based on income level: ~4 brackets with no exceptions, deductions, or offsets. Same principle, though.
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Re: What is "fair" when it comes to rich people and taxes?

Post by _EAllusion »

Droopy -

Why is it not more fair to charge every American the same flat fee as a tax instead of a flat tax rate? Mitt Romney pays 20k a year or whatever and so does Joe Blow in Everytown, USA. What isn't that even better? After all, everyone pays an equal amount, so isn't that the most fair of all?
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