Income Tax=Oligarchy, progressive income tax=even more oligarchy

[Vic Vega]

If someone came across 500 million dollars, pairs the income tax on it, put it in the bank, never earned interest on it and never took another job in his life (essentially, no yearly income) some of you criminals would invent ways to tax that person's wealth again.

That's what we're really talking about here, isn't it? You people are satisfied with taxing people's piddly capital gains when they have 10 million in the bank - some how, some way, you want the 10 million, even though it's ALREADY been taxed.

 

[Brainonska511]

If someone came across 500 million dollars, pairs the income tax on it, put it in the bank, never earned interest on it and never took another job in his life (essentially, no yearly income) some of you criminals would invent ways to tax that person's wealth again.

That's what we're really talking about here, isn't it? You people are satisfied with taxing people's piddly capital gains when they have 10 million in the bank - some how, some way, you want the 10 million, even though it's ALREADY been taxed.

Capital gains have not already been taxed.

 

[Craig234]

A flat tax doesn't shift taxes off the rich if you tax capital gains at the same rate. Look at the effective tax rates of the wealthiest people. Most of their income is capital gains anyway. The income tax hits upper middle class people, doctors, lawyers, and other professionals.

Liberals have this weird commitment to the progressive income tax, even if doesn't hit the people they claim to be targeting.

You're mixing apples and oranges. The progressive income tax, and the taxation rate for unearned versus earned income, are two separate issues.

We could tax capital gains at the same rate as earned income today, without the flat tax.

The simple fact is, the flat tax shifts taxes off the rich and onto others. The rich obviously spend a drastically lower percent of their wealth on consumption than any other class.

 

[Craig234]

If someone came across 500 million dollars, pairs the income tax on it, put it in the bank, never earned interest on it and never took another job in his life (essentially, no yearly income) some of you criminals would invent ways to tax that person's wealth again.

That's what we're really talking about here, isn't it? You people are satisfied with taxing people's piddly capital gains when they have 10 million in the bank - some how, some way, you want the 10 million, even though it's ALREADY been taxed.

No, you just sound like a nut who has a tax complex. 'thieves! steal wah wah wah!' No clue about issues like concentration of wealth, just a child-like complex.

 

[hal2kilo]

If someone came across 500 million dollars, pairs the income tax on it, put it in the bank, never earned interest on it and never took another job in his life (essentially, no yearly income) some of you criminals would invent ways to tax that person's wealth again.

That's what we're really talking about here, isn't it? You people are satisfied with taxing people's piddly capital gains when they have 10 million in the bank - some how, some way, you want the 10 million, even though it's ALREADY been taxed.

Well, unless the person lives on an island that they own, grow their own food, hire security guards, has his own fire department, and has his own physician, I would suspect that this person would at least pay sales tax. I'm sure all this just went over your head though.

Member of the stealing other's people wealth club.

 

[thecoolnessrune]

Since you are pushing this, answer one simple question.

What is the distribution of taxes by income/wealth now, versus under your plan?

Does it matter? I don't know fully what it is, nor can I say it really is all that important to me. There are many arguments on both sides with the rich, poor, and middle class all screaming that they pay the most taxes. The point is that you replace all that with a simple system that taxes things the *proper* way. Tax is an economic punishment, this is basic knowledge, and currently by taxing income we punish *incentive* to work. Why do that when instead you can tax *consumption*. Taxing consumption is fair, because people are being taxed an equal percentage of their consumption. Rich people who consume more will pay more tax in the end but it will be his *fair* share.

Why should someone be repeatedly taxed for making money? We currently punish people for making money, punish them for keeping money, punish them for saving money, and punish them for being responsible with money. We pretty much take what should be a proper management of money, reverse it, and implement it as policy.

 

[Siddhartha]

OP,
With the tax plan you are proposing, who will pay less and who will pay more taxes?

 

[Zebo]

That's funny. The rhetoric I hear regularly (not from you, but from people crying about taxes on the wealth they'll never actually have outside their fantasies) is that the poor don't pay taxes.

So how would they end up paying less than nothing?

I don't agree with this statement. They may not pay income tax which is just a fraction of what govt collects.

Poor pay lots of taxes though. SS and med for one, 7.5%, even if you make minimum wage. Sales/gas/excise/property etc etc. I guarantee a poor person pays more than 15% since all their income is consumed on buying shit just to live and get by. These would be scraped with a flat tax.

 

[Craig234]

Does it matter? I don't know fully what it is, nor can I say it really is all that important to me. There are many arguments on both sides with the rich, poor, and middle class all screaming that they pay the most taxes. The point is that you replace all that with a simple system that taxes things the *proper* way. Tax is an economic punishment, this is basic knowledge, and currently by taxing income we punish *incentive* to work. Why do that when instead you can tax *consumption*. Taxing consumption is fair, because people are being taxed an equal percentage of their consumption. Rich people who consume more will pay more tax in the end but it will be his *fair* share.

Why should someone be repeatedly taxed for making money? We currently punish people for making money, punish them for keeping money, punish them for saving money, and punish them for being responsible with money. We pretty much take what should be a proper management of money, reverse it, and implement it as policy.

You really don't get it. You're like a deer in the headlights, worshiping the simplicity of the tax, and seduced blindly.

The bottom line is that it's a massive transfer of taxation off the rich - and therefore a massive transfer of wealth to them, yet again. You don't know or care about it.

That's the only issue that matters here. And no, an exemption at the bottom does not begin to fix it. Progressive rates do.

 

[the DRIZZLE]

You're mixing apples and oranges. The progressive income tax, and the taxation rate for unearned versus earned income, are two separate issues.

We could tax capital gains at the same rate as earned income today, without the flat tax.

The simple fact is, the flat tax shifts taxes off the rich and onto others. The rich obviously spend a drastically lower percent of their wealth on consumption than any other class.

To a point you're right that they are two separate issues, but they're linked. IMO if you taxed capital gains at the current 35% tax bracket that would really start to discourage investment, whereas a 23-25% flat tax with capital gains taxed at the same rate wouldn't be nearly as bad for investment. Look at the effective tax rates of the wealthiest Americans, it's simply false to state that a flat tax structured the way I am proposing wouldn't be a substantial increase for them.


You could compromise and still make it somewhat progressive. Something like 10% up to 30k, 20% up to 75% and 26% above that. Obviously you have to play with the numbers to get the revenue that you want, but you'd be suprised how much you could bring down the brackets and remain revenue neutral if you taxed capital gains as income.

However I like the idea of a flat tax because it just makes sense in a republic. People want a new gov't program? Well then its easy to do the math and say everyones taxes with go up by x%. I see a lot of value in that. It makes it easier for the public to see the costs of things.

 

[Thump553]

Way too much stuff is currently taxed as capital gains. I have a hunch Apple stock is going to go up and buy some and a year later sell it for twice the price. I've never worked for Apple and none of the purchase price or sales price for the stock I owned went to the Apple Corporation. How does this example above-which is probably 99%+ of the stock market activity-encourage MEANINGFUL investment in US productivity?

I have no problem with special capital gains rates going to the owners. Maybe have something like the at-risk rule used in real estate. But the current special breaks given to so-called capital gains are a cruel hoax played on working Americans.

 

[thecoolnessrune]

You really don't get it. You're like a deer in the headlights, worshiping the simplicity of the tax, and seduced blindly.

The bottom line is that it's a massive transfer of taxation off the rich - and therefore a massive transfer of wealth to them, yet again. You don't know or care about it.

That's the only issue that matters here. And no, an exemption at the bottom does not begin to fix it. Progressive rates do.

I'm sorry, maybe you're used to the regular P&Ners here but as someone who just stops in occasionally your silly banter doesn't work on me. All you did was try to criticize my viewpoint and nothing else. You yourself are blinded by driving some sort of imaginary point that the rich are out to get us. We're consumers. We *consume*. By taxing consumption you tax fairly because everyone is free to consume as much or as little as they want, and you can get rid of all these little loopholes and exemptions at the top AND at the bottom because it will always be fair.

*That's* my point. Your goal of trying to transfer as much tax burden onto the rich is NOT my goal and is not the goal of any American honest with himself about what allowed this country to rise to greatness in the first place. It is *your* goal. And that is fine because this is all about discussion. But you are not discussing things in a civil manner when you try to take your goal, mix it with a different goal entirely and then say that I don't get it. It just makes you sound like a fool.

You are for transferring the majority burden of taxes onto the rich because they are rich. That's a fine viewpoint to have.

I am for distributing the tax burden equally amongst the population based upon consumption. That's just as fine a viewpoint to have.

I see nothing wrong with discussing the merits and results of either of these policies, but saying I don't get it just because I don't agree with your economic policy, with no regards as to why you don't agree with *mine*, is not helpful or discussionary, its just inflammatory. But that's what you use here in P&N. Inflammation to get a result so that you can take some sort of moral superiority. Discuss this like an adult or go discuss someone else's talking point.

 

[PhatoseAlpha]

The problem is that your sales tax isn't actually related to consumption at all.

Consider: I want to buy a chocolate bar. I'm going to eat it - the consumer is me. If I order factory direct, then it gets taxed once - from the factory to me. If, however, it goes through typically distribution channels, it gets taxed at least twice - once from the factory to the grocery store, then again from the grocery store to me. Same product, same consumption, taxed twice as much.

You're not actually taxing use - you're taxing transfers. This means your tax provides a disincentive for transference, which means money moving around slows, which mean the economy slows.


Then you've got another problem. If I'm Walmart, and I'm going to buy 10 million toasters for my retail stores, do I buy from China or American? If I buy from China, the sale can take place in China, and I don't pay taxes. If I buy American, I do. American producers are in a bit of trouble, wouldn't you say?

What about electronic sales? MP3s and the like? Netflix and iTunes are almost certainly going to move operations to Canada, at the very least, to avoid this tax.



Perhaps these problems can be dealt with - but by the time you've done so, the simple tax will be as complicated and labyrinthine as our current tax system. Not really an improvement.

 

[Anarchist420]

OP,
With the tax plan you are proposing, who will pay less and who will pay more taxes?

I'm not proposing any tax plan; taxes should be abolished, at least at the Federal level.

What I was saying was I think that if we have to have an income/CG tax, then it should be something taxed at something like a flat marginal rate of 23% with an exclusion amount of about 54k. The rich would pay much more under that system, while the poor would pay nothing (assuming FICA was abolished).

 

[jackstar7]

With no federal taxes, how do you propose to maintain a national defense?

 

[her209]

I am for distributing the tax burden equally amongst the population based upon consumption.

Except your tax plan as you've laid out doesn't do that.

1. The poor are able to save very little money (duh!) and therefore pay close to the flat consumption tax rate.
consumption tax rate x consumption total / money earned

2. The rich are able to stash the majority of their earnings into savings or overseas investments. I can't see how the government is going to be able to tax overseas investments, e.g. buying an overseas company or stocks in said company.

3. Likewise, the rich already own their homes. You can only tax them on home purchases going forward.

4. You tax plan doesn't address other things such as estate ("death") taxes. Does the heirs of a millionaire pay anything on their inheritance?

5. Do companies pay taxes on salaries paid to employees in much the same way companies pay taxes on widgets used to put into their product lines and to run their business?

 

[her209]

With no federal taxes, how do you propose to maintain a national defense?

Duh! A well regulated militia.

 

[thecoolnessrune]

The problem is that your sales tax isn't actually related to consumption at all.

Consider: I want to buy a chocolate bar. I'm going to eat it - the consumer is me. If I order factory direct, then it gets taxed once - from the factory to me. If, however, it goes through typically distribution channels, it gets taxed at least twice - once from the factory to the grocery store, then again from the grocery store to me. Same product, same consumption, taxed twice as much.

You're not actually taxing use - you're taxing transfers. This means your tax provides a disincentive for transference, which means money moving around slows, which mean the economy slows.


Then you've got another problem. If I'm Walmart, and I'm going to buy 10 million toasters for my retail stores, do I buy from China or American? If I buy from China, the sale can take place in China, and I don't pay taxes. If I buy American, I do. American producers are in a bit of trouble, wouldn't you say?

What about electronic sales? MP3s and the like? Netflix and iTunes are almost certainly going to move operations to Canada, at the very least, to avoid this tax.



Perhaps these problems can be dealt with - but by the time you've done so, the simple tax will be as complicated and labyrinthine as our current tax system. Not really an improvement.

In the current system there are many companies that sell refurbished goods. Newegg is one I'm sure everyone knows here. In those cases is the profit from reselling that good spared from the income tax simply because at some point it had been sold before? That's not the case at all.

A tax on transference of a good would occur under an income or consumption tax. There are many industries that rely on the resale of goods and the profits of those companies are taxed as income.

As I said in above posts, the beauty of the consumption tax is if it is happening in America, it can be taxed. If that product comes into America, it is taxed with a certain percentage of the base purchase price. It won't matter if the product is made in America or China, it will be taxed when it gets into the American economy. Now one could argue that the supplies would be taxed higher and thus the final price would be higher for an American good rather than a Chinese good, but that's already true for reason far beyond simple taxation of a widget.

As for Netflix and iTunes, again, you're not taxing the seller, you're taxing the buyer. The subscription holder (if in America) would pay a tax just the same as a state tax is paid on certain online stores. If we wanted to delve into a little deeper, a tax could be regulated to also be paid anytime a good or service actually leaves the country. That tax would be collected by the seller similar to the state tax on a local level.

I have no doubts that some point of regulation would be required (it always is when society has become based upon finding loopholes), but I still firmly believe it would be less convoluted and much fairer (which is my personal goal) than a tax on wealth.

 

[thecoolnessrune]

Except your tax plan as you've laid out doesn't do that.

1. The poor are able to save very little money (duh!) and therefore pay close to the flat consumption tax rate.
consumption tax rate x consumption total / money earned

2. The rich are able to stash the majority of their earnings into savings or overseas investments. I can't see how the government is going to be able to tax overseas investments, e.g. buying an overseas company or stocks in said company.

3. Likewise, the rich already own their homes. You can only tax them on home purchases going forward.

4. You tax plan doesn't address other things such as estate ("death") taxes. Does the heirs of a millionaire pay anything on their inheritance?

5. Do companies pay taxes on salaries paid to employees in much the same way companies pay taxes on widgets used to put into their product lines and to run their business?

1. What does that matter? There will always be those who don't earn much. Always. A consumption tax encourages saving. While they may not be able to save much, they are still encouraged to. The only way to save more is to make more. A consumption tax or income tax won't change either aspect of that. However under an income tax, we currently tell poor Americans that if they make *little* enough, they'll get more money back, which is a terrible way to spur incentive and work ethic.

2. If these investments are done over a standard market industry like we already do, then why wouldn't they be taxed same as we already have the capital gains tax based on investments? The only difference is you tax the purchase of these investments rather than the gains made from them.

3. Some poor already own homes. Many middle class already own homes. Rich own homes. We don't tax people who already own homes anyways except for the standard real estate and property taxes. What is your point there?

4. The transferrence of wealth (I think Phatose made a great point by calling it a transfer tax. That actually makes a lot of sense.) could be taxed, like we already do. The only difference is that it would be taxed according to the standard tax rate, rather than the ridiculous estate and gift taxes we currently have in place.

5. That would be the opposite of what I was saying, which was the buyer paying the tax. So in that case it would be more of the employee paying the tax. That being said, wouldn't that be a tax on primary income? I agree that it wouldn't likely be a good idea to tax that, though of course currently we tax it fairly heavily anyways. (I know I make minimum wage and see quite a bit of it pulled out for services I'll likely never live long enough to use, especially if we have to keep raising the Medicare and social security ages )

 

[Craig234]

I'm sorry, maybe you're used to the regular P&Ners here but as someone who just stops in occasionally your silly banter doesn't work on me.

Translation: you're confused and the truth can't get through to you.

All you did was try to criticize my viewpoint and nothing else.

Wrong, showing your lack of reading comprehension. But if it were true, not much of a response. Is the criticism accurate? You don't seem to care.

You yourself are blinded by driving some sort of imaginary point that the rich are out to get us.

A complete fabrication misrepesenting my position.

We're consumers. We *consume*. By taxing consumption you tax fairly because everyone is free to consume as much or as little as they want, and you can get rid of all these little loopholes and exemptions at the top AND at the bottom because it will always be fair.

Showing exactly what I said, you don't get it. I could repeat it, but it's like the proverbial singing lessons for the pig.

Suffice it to say, repeat the point to yourself, this is a massive shift of taxes off of the wealthy onto everyone else. And no, it's not 'fair', either.

*That's* my point. Your goal of trying to transfer as much tax burden onto the rich is NOT my goal and is not the goal of any American honest with himself about what allowed this country to rise to greatness in the first place.

Another straw man misrepresenting my position. You got a little rich man semen on your dress, by the way, Monica.

It is *your* goal.

No, it's not. I want a higher level of taxation on the rich than you do, which is a rational discussion meaning you have no interest in it.

[quote[And that is fine because this is all about discussion. But you are not discussing things in a civil manner when you try to take your goal, mix it with a different goal entirely and then say that I don't get it. It just makes you sound like a fool.[/quote]

It was perfectly civil until this post responding to you grossly misrepresenting my position. Sounding like a fool to a fool is to be expected when you are right.

You are for transferring the majority burden of taxes onto the rich because they are rich. That's a fine viewpoint to have.

Not exactly a misrepresentation finally for once, but a straw man not getting the reasons and benefits at all. It's because I want good for many people, bottom line.

I am for distributing the tax burden equally amongst the population based upon consumption. That's just as fine a viewpoint to have.

No, it's not. It is quite harmful to most people in society, which you need to either own up to, or be called ignorant at best.

I see nothing wrong with discussing the merits and results of either of these policies, but saying I don't get it just because I don't agree with your economic policy, with no regards as to why you don't agree with *mine*, is not helpful or discussionary, its just inflammatory. But that's what you use here in P&N. Inflammation to get a result so that you can take some sort of moral superiority. Discuss this like an adult or go discuss someone else's talking point.

You are expressing a view you don't understand the implications of.

To make this point to you and other readers, I asked you a simple question you should be able to answer if you are pushing the policy. You cannot.

And you have shown no interest in getting the answer - you are an ideologue, here to push a policy without any rational or factual basis, just shallow propaganda.

You ask for 'discussion', but you ignore the points made to you, for example the very basic point that the rich spend a *far* lower percent of their income than anyone else.

Studies have found - ones you should get a clue about - that this would be a massive redistribution yet again of taxation off the rich onto others.

That's why it has big bucks for propagandists to market it to simple voters who will fall for it because of neat things like the name 'fair tax'.

You need to do less complaining and more research before you come back and have something more substantive and accurate to post.

You ask for civil, then start with not misrepresenting what I say to your little straw men versions, and try reading what I actually said, and again, get informed.

Even a common sense notion - look at who is funding this and their interests - would help you, if you can be a bit rational. Are the wealth just being benevolent?

I won't even bring up the topic for discussion of deciding proper levels of taxation for different groups. It's been tried with right-wing ideologues before.

 

[Craig234]

To a point you're right that they are two separate issues, but they're linked. IMO if you taxed capital gains at the current 35% tax bracket that would really start to discourage investment, whereas a 23-25% flat tax with capital gains taxed at the same rate wouldn't be nearly as bad for investment. Look at the effective tax rates of the wealthiest Americans, it's simply false to state that a flat tax structured the way I am proposing wouldn't be a substantial increase for them.

They're separate issues. If you want to talk about a 23-25% tax rate on capital gains, you can to do that just as easily with the current system.

However I like the idea of a flat tax because it just makes sense in a republic. People want a new gov't program? Well then its easy to do the math and say everyones taxes with go up by x%. I see a lot of value in that. It makes it easier for the public to see the costs of things.

You need to pay less attention to the emotional reaction to 'liking' the simplicity and more attention to the relevant fact, it redistributes wealth MORE to the top.

And now you have added lemons to the apples and oranges, by bringing up the topic of making voters appreciate the cost of programs.

How, exactly, more than can be done now? By making them pay more? Well, that just conceded that point. The lemon here is the issue of borrowing/debt.

It would exist under a flat tax as it does under the current system. It makes no sense to create a disaster redistributing taxes off the rich to 'make a point' to people.

 

[thecoolnessrune]

Craig, you're obsessed in your own goal, and because of that you deem everyone else's viewpoint as ignorant.

No matter how you feel about it, you aren't having a discussion. You're just attempting to belittle because someone won't see it "your way" based on goals they may or may not share with you.

Unfortunately because of that simple aspect you're simply wrong, and I think most people simply laugh at anyone on this forum who talks about "I know studies" without pulling up the reading material. If you want to be considered by me, do your part, otherwise you're just another useless ranter who isn't worth the bytes of data put into his post.

 

[the DRIZZLE]

First, they are not separate issues because I am starting with the assumption of a revenue neutral reform of the tax system. Second, my opinion on the poltical value of a flat tax is no less valid than the value you place on a progressive system because of your political/philosophical/moral beliefs.

Third, a flat tax with capital gains taxed at the same rate would shift a massive amount of the tax burden onto the rich. This can easily be shown. Here is a report about the tax returns of the 400 richest Americans http://www.irs.gov/pub/irs-soi/07intop400.pdf They have an effective tax rate under the current system of 16.5%. Two thirds of their income is capital gains. Under my proposal their effective tax rate would be 23%, the same as everyone else's. This is a huge tax increase. The average person in the top 400 would see an increase of $25 million per year.

But I guess thats not a big enough tax hike for you.