Because if you didn't then there wouldn't be enough schools for all children to be able to attend. If we did that then the only people who could afford kids and put them in school would be the rich. The result over time would be horrible even for people like you who do not have children. You gotta look at the whole picture and think several steps ahead here. This country would fail if everything were taxed on a person by person basis. Trust me on this one. I work in my county's school budget department.
Originally posted by: Regs
The poor guy would some how manage to pay 100k a year on property tax though in the current situation_
Apples and oranges. I'm talking about replacing FEDERAL income tax with a FEDERAL asset tax. The fact that the rich guy has to pay a STATE or COUNTY property tax doesn't change the fact that he is paying far less FEDERAL taxes.
Like I said above, the government would not need to track the value of everything a person owns. That responsibility would be on the individual.
The government knows:
a- your total assets from the year prior
b- your income based on the same methods used to compute income tax
Adding those together, the government knows what your total assets could be for the current year.
If your assets depreciated or were lost or destroyed, it is your job as an individual to provide documented proof as part of your tax filing. This would be virtually the same process as providing proof of deductibles for federal income tax- if you don't do it, you can't claim the deductible on your income, if you don't do it for an asset tax, you can't claim a depreciation on your asset. Given a little bit of data, there could even be a "standard depreciation" value that people can take to simply the taxes if they want, just like there is a standard deduction on income tax.
What exactly will be the list of assets which constitute as taxable wealth in your system as opposed to assets that do not? What is your basis for each item on this list? Does it makes sense to tax each of these different assets using the exact same formula? If so then why? If not then why not? What will that formula be? Will it result in more or less money for our government to work with? What will stop people from transforming their assets to a form which is not on your list in order to avoid taxes? How do you handle assets such as real estate owned in foreign countries. How do you handle foreigners that live outside of this country owning assets in America such as real estate?
The list is almost never ending yet you need to be able to fully understand and answer all of these questions as well as understand both the short and long term effects of each and every one of them.
The list is almost never ending yet you need to be able to fully understand and answer all of these questions as well as understand both the short and long term effects of each and every one of them.
OP - what you are still failing to address is that if you tax ones wealth/assets then eventually they will have no assets.
This system completely discourages any economic growth and we would be little more than a fallen soviet union if we did so.
This system completely discourages any economic growth and we would be little more than a fallen soviet union if we did so.
Well gee, you are right, it's way to hard to calculate the depreciating value of an asset. I guess it's impossible to charge taxes on assets because of your logic. I guess that means it's impossible to charge a tax on any real property, such as car or a house.
That is a lot more work considering the vast number of different assets out there than dealing with income. Hence, my point.
You are still failing to address that you can't just make random claims without any facts to back them up.
Please explain to me how people can own houses when local state property taxes tax them down eventually to zero?
The answer is simple. People WORK, and use the money they make to pay the taxes, and then they are able to keep their stuff.
If I were rich and your system was put in place, I would place all of my assets in various countries outside of the American border. Good luck coming up with all of the numbers needed make your system work if I were to do that.
You communist! Why should everyone else pay for your kids to go to school, we don't live in Soviet Russia.
/spidey
And if I were working and had to pay income tax, I would place my job outside the American border. You are talking about illegal tax evasion, which... other than being ILLEGAL, is not exactly super easy to do otherwise everyone would do it. Would you really move to another country just to pay less taxes? Why haven't you already moved away?
What the hell would you prefer? Only the rich going to school leaving everyone else uneducated?
No, I'm not irrationally opposed to communistic policies when I see they serve a good purpose. I was just making fun of spidey, because he kept calling me a communist.
No it's not illegal to purchase assets outside the border, but it is illegal to do so and then not pay tax on them.
http://en.wikipedia.org/wiki/Tax_evasion
"Country of residence
One way a person or company may lower their taxes due is by changing one's tax residence to a tax haven, such as Monaco or Switzerland, or by becoming a perpetual traveler; however, some countries, such as the U.S., tax their citizens, permanent residents, and companies on all their worldwide income. In these cases, taxation cannot be avoided by simply transferring assets or moving abroad.
The United States is unlike almost all other countries in that its citizens, and legal permanent residents, are subject to U.S. tax on their worldwide income even if they reside temporarily or permanently outside the United States. U.S. citizens therefore cannot avoid U.S. taxes simply by emigrating."
Yes, that is accurate. However, it is not hard to do and your system would encourage it. Also, it is much more difficult to track and prove accuracy in that case. It's bad enough that we would be expecting the government to do all of the work that needs to be done to track and prove accuracy within our borders let alone amongst all of the various countries outside of them. It will require much more attention to detail because of its increase in complexity over income. Lots of mistakes will made. Lots of activity will be over looked.
I am going to end my replies here and just leave happy knowing that this system is not in our future.
CPA
Elite Member
- Nov 19, 2001
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Sounds like you're talking about a Franchise Tax. Yes, this type of tax is already out there and is the reason so many companies are incorporated in Delaware and Nevada - those two states don't have franchise taxes. You would see a similar flight out of this country if the Feds did it.
I didn't read the whole thread, but please answer this simple question.
Why exactly do you think there's such a disconnect between income versus wealth anyway? In a capitalist economy the best way to make more money (income) is to have money in the first place.
Please explain.
Why exactly do you think there's such a disconnect between income versus wealth anyway? In a capitalist economy the best way to make more money (income) is to have money in the first place.
Please explain.
http://www.taxfoundation.org/blog/show/341.html
The top 50% of income earners make about 86% of the income and pay about 96% of the taxes
Do you honestly think the same group does not own the vast majority of the assets in the country?
Of course there are going to be some individual exceptions. But when you're discussing a tax system please look at the big picture.
The top 50% of income earners make about 86% of the income and pay about 96% of the taxes
Do you honestly think the same group does not own the vast majority of the assets in the country?
Of course there are going to be some individual exceptions. But when you're discussing a tax system please look at the big picture.
Thats great. I don't think there is a huge disconnect. But I don't think it's as simple as you state it.
While a person with a high income probably has a lot of wealth later in life, he didn't necessarily start that way.
The way it works now, you might start with close to nothing, but if your income is X you pay tax based on that. 20 years later you retire and no more income tax.
This hypothetical change would greatly reduce the tax paid early on, instead it would be paid later in life, mostly after retirement. The same amount of money is paid overall, but at the start of a person's career when they need the money the most they could keep the majority of it.
The difference comes when you look at people born rich, and corporations. Inherited rich who have no need to work might have little to no income, and thus little to no income tax, but under an asset tax they would pay.
And corporations, it seems like a lot of corporations barely break even, investing everything into market share and development and showing very little profit on paper. If corporations were taxed based on total assets rather than income, it would discourage them from running with zero profit just to build market share.
And finally, I think it would reduce inflation. If there was an asset tax, excessive saving without investment would be discouraged, and I see savings as a direct cause of inflation. As inflation is sort of an asset tax of it's own, it would effectively make this a free tax: you would be paying your 1% to the government, but inflation would be 1% lower than it would be otherwise, so no net cost.
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