NationStates Jolt Archive

If you have not heard of the 'conspiracy' you should watch "America: Freedom to Fascism" just Google it.

It makes a good case against the income tax.

However, the actual point of this is to find out whether people think it is right for the government to tax personal incomes.

Do you think someone should be allowed to take your money that you earned for yourself to use on whatever they want?

I personally think the government should abolish the federal income tax and substitute a federal sales tax. Lower taxes, and tax what you spend, not what you earn.

Yup. I've never been a supporter of income tax. Ever.

I not only support a ban on income taxs, but I also support the Fair Tax plan!

The Fair Tax Book by Mr. Neal Boortz (http://www.amazon.com/Fair-Tax-Book-Saying-Goodbye/dp/0060875496/ref=pd_bbs_sr_1/102-4801923-6976914?ie=UTF8&s=books&qid=1174371670&sr=8-1)

Definitely. Plus, a consumption tax would be much better because we could tax anyone who buys goods in our country; the illegal immigrant problem could be far more easily addressed if they are paying their share of taxes on what they buy without the need of citizenship like income tax. It would also increase the revenue we get from sales of imported as well as domestic goods as, which would be beneficial for current account and investment purposes by harmonizing all of our tax codes in to one system.

Quite beneficial, and a consumption tax can be far more progressively applied than an income tax without the need for screwed up junk like the AMT or the other taxes that make up our obscenely bureaucratic present system. It would be stunningly beneficial all around.

I agree. Terminate it.

Taxing for the greater good is a legitimate function of government. Remember, without the government the secure conditions necessary to generate the relatively obscene incomes we Americans enjoy would not exist.

On another note, I don't quite see how right-wingers can see a sales tax as any more legitimate than an income tax.

On another note, I don't quite see how right-wingers can see a sales tax as any more legitimate than an income tax.

I don't see it as illegitimate, I just see the income tax as a less fair and way more costly method of achieving the same ends. I have absolutely no problem with taxes whatsoever.

I mean, the sheer amount of bureaucracy and manipulation by wealthy and corporate interests that goes in to the income tax code is more than enough evidence that it needs to be changed. Hell, the amount of taxes uncollected each year are enough to completely eliminate our budget deficit and generate a small surplus even with the current tax cuts in place.

Nope. I don't think its right and should be done away with. We should be able to keep all that we earn.

But as of right now..I don't mind it. As a single parent I get it all back-and then some-at tax season.

Taxing for the greater good is a legitimate function of government. Remember, without the government the secure conditions necessary to generate the relatively obscene incomes we Americans enjoy would not exist.

On another note, I don't quite see how right-wingers can see a sales tax as any more legitimate than an income tax.

I am not against taxes in of itself, I realize that government do need money to run and I have no problem with it. I just have grief with the way the government collect taxes and how much tax they collect. To me, the income tax is not legitimate because the government is taking away money that I've earned, that I've worked for. The company that I work for have an agreement that I work for a certain amount of pay per hour, and for so many hours I would get this much at the end of the two weeks. Government should not get involved in this agreement because the agreement is originally between two parties, government just butted in.

Now with that in mind, I do agree with the sales tax, because the product that is made is made within the United States, a country that allows that product to be produced, shipped and sold within it's borders (assuming that it passes all of the tests), and as a result, the sales tax is a legit form of taxation.

Nope. I don't think its right and should be done away with. We should be able to keep all that we earn.

But as of right now..I don't mind it. As a single parent I get it all back-and then some-at tax season.

Yea, but what about us who don't get it back?

I not only support a ban on income taxs, but I also support the Fair Tax plan!

The Fair Tax Book by Mr. Neal Boortz (http://www.amazon.com/Fair-Tax-Book-Saying-Goodbye/dp/0060875496/ref=pd_bbs_sr_1/102-4801923-6976914?ie=UTF8&s=books&qid=1174371670&sr=8-1)

Read over half of it in a bookstore recently... it made good sense to me, as it was both progressive-minded and would incorporate purchases made by illegal immigrants.

Yea, but what about us who don't get it back?

Then I guess you do mind it.;)
Never said I supported it.

If you have not heard of the 'conspiracy' you should watch "America: Freedom to Fascism" just Google it.

It makes a good case against the income tax.

However, the actual point of this is to find out whether people think it is right for the government to tax personal incomes.

Do you think someone should be allowed to take your money that you earned for yourself to use on whatever they want?

I personally think the government should abolish the federal income tax and substitute a federal sales tax. Lower taxes, and tax what you spend, not what you earn.

I personally regard the taxes I pay as my financial contribution to society. I want good roads, safe streets, trash collection and a good and safe way of disposing it, I want good schools and a good education system, I want welfare to function, I don't want to see old people without pensions, I want a helpful and functional police force, I want secure and well-staffed and well-run prisons, I want a good public transport system, I want museums and libraries, I want parks (plenty of them), I want a good health system for everyone not just myself...

These are just a few things that I'm happy to pay all my taxes for, including income tax.
If it was up to me, I wouldn't pay for the military, but you have to take the good with the bad, I think.

You're forgetting something: if income tax is abolished and all that extra tax goes onto sales... won't that really, really, REALLY piss off anybody who takes a holiday there from overseas? Seriously, tourism will drop off.

I am not against taxes in of itself, I realize that government do need money to run and I have no problem with it. I just have grief with the way the government collect taxes and how much tax they collect. To me, the income tax is not legitimate because the government is taking away money that I've earned, that I've worked for. The company that I work for have an agreement that I work for a certain amount of pay per hour, and for so many hours I would get this much at the end of the two weeks. Government should not get involved in this agreement because the agreement is originally between two parties, government just butted in.

Now with that in mind, I do agree with the sales tax, because the product that is made is made within the United States, a country that allows that product to be produced, shipped and sold within it's borders (assuming that it passes all of the tests), and as a result, the sales tax is a legit form of taxation.

Since money has an abstract value, removing income tax will most likely just reduce the amount you earn or increase the price of goods. As far as you're concerned, the only benefit you get from removing income tax is the convinience. It doesn't actually mean you earn more money, because if Everybody earns more money, then nobody is earning anymore money than they were before.

You're forgetting something: if income tax is abolished and all that extra tax goes onto sales... won't that really, really, REALLY piss off anybody who takes a holiday there from overseas? Seriously, tourism will drop off.

Also, there are ways in which you can get all your money back as a tourist. Right now, when I travel to the US, I never bother. But if the price rose... I'd be figuring out how as soon as possible.

a consumption tax can be far more progressively applied

Um... how?

Taxing for the greater good is a legitimate function of government. Remember, without the government the secure conditions necessary to generate the relatively obscene incomes we Americans enjoy would not exist.

Quite the contrary; if you eliminated all government regulation of private enterprise and created an open private economy, I'm pretty sure you would see those with "obscene incomes" become even more outrageously wealthy (at the expense of the working class, of course). There is next to nothing that a government can do to make the rich richer, save making itself less involved, and thus- less a government.

On another note, I don't quite see how right-wingers can see a sales tax as any more legitimate than an income tax.

After payment of bills and interest fees, the consumer has a variable amount of disposable income that he/she may choose to spend; meanwhile, an income is a figure assigned by an external force, and thus any tax based on that figure is independent of the choice of the wage-earner.

One leaves ample room for choice and management- the other does not.

I am against income, taxes, and money in general - so "yes."

But probably not as you meant it. ;)

Um... how?

Tax higher-end goods more than lower end ones? Give a tax refund to people who meet certain income requirements?

Tax higher-end goods more than lower end ones?

And if a person doesn't spend his or her money typically?

Maybe I want a million loaves of bread....

Give a tax refund to people who meet certain income requirements?

I thought the whole point was to avoid bureaucracy?

I would be more interested in the curtailing of dirty money.

http://www.amazon.com/Capitalisms-Achilles-Heel-Free-Market-System/dp/0471644889/ref=sr_1_1/002-0081705-9184879?ie=UTF8&s=books&qid=1174373634&sr=8-1

I didn't think about tourism impact - that could be one negative effect of a sales tax.

However it is important to note - the income tax goes largely, if not completely, to welfare/medicade/social security. Other things are generally paid for with other taxes. (gas tax for roads, property tax for schools, etc.)

Now, I'm not against welfare, but I do believe the vast majority of people on it now do not need it or deserve it. The welfare system needs massive reform and a regulated way of making sure only those who need it get it.

You're forgetting something: if income tax is abolished and all that extra tax goes onto sales... won't that really, really, REALLY piss off anybody who takes a holiday there from overseas? Seriously, tourism will drop off.

The US has some of the lowest taxes in the world. Even with a full sales tax, I doubt that they'd care that much.

And if a person doesn't spend his or her money typically?

Maybe I want a million loaves of bread....

But how common is that? I don't think rich people are going to stop buying luxury cars and start buying bags of Cheetos because of a tax; they already pay a higher bracket to begin with and this just shifts it to what they buy instead. It also rewards saving, which might be a good thing for our debt-laden society.

I thought the whole point was to avoid bureaucracy?

A short application that would be based on your total income is a lot simpler than what we have now.

Um... how?

The "wealth effect" is an economic phenomenon that demonstrates how the ratio of consumption to savings increases as income increases. Applied to a sales tax, that means that people who make more money tend to spend more money (to reiterate, they not only spend more in amount, but also in percentage of income) than lower-income citizens.

Therefore the upper class' outrageous consumption, a much larger portion of their income per capita than the lower classes, yields a proportionately higher amount of tax revenue. The middle class' consumption is much lower, and the taxes collected would reflect that.

Likewise, someone working at minimum wage who has very little disposable income left after **necessities** would have to pay practically nothing.

Sorry if that was a bit verbose.

**The FairTax sales tax does not apply to goods deemed necessities.**

The US has some of the lowest taxes in the world. Even with a full sales tax, I doubt that they'd care that much.
Even with a corporate tax of 35%? The top income taxes are at the same level, but that is comparatively low nowadays I suppose.

Tax higher-end goods more than lower end ones? Give a tax refund to people who meet certain income requirements?

The FairTax plan includes a segment on what I can only call "conspicuous consumption"- that is, goods whose demand are comprised almost entirely of the upper-class.

Quite the contrary; if you eliminated all government regulation of private enterprise and created an open private economy, I'm pretty sure you would see those with "obscene incomes" become even more outrageously wealthy (at the expense of the working class, of course). There is next to nothing that a government can do to make the rich richer, save making itself less involved, and thus- less a government.

I think he meant stuff like create and enforce property rights, establiish a rule of law, provide public infrastrucure, subsidize basic research, and the like.

After payment of bills and interest fees, the consumer has a variable amount of disposable income that he/she may choose to spend; meanwhile, an income is a figure assigned by an external force, and thus any tax based on that figure is independent of the choice of the wage-earner.

One leaves ample room for choice and management- the other does not.

Umm.... the goal of income is consumption. If I sacrifice current consumption to save or invest its only so I can consume more in the future. While I may choose to consume less ultimately will have to consume my income sometime or what's the point. Also income is controllable to some degree. One has a number of jobs one can pick and choose from and one can choose what kind of investments one makes. Saying that one is volutary and the other isn't is just wrong.

they already pay a higher bracket to begin with

That's what I think we need to get rid of. Unequal taxation is unequal freedom. Everyone should pay the same tax for the same thing.

For example, if you had two people - one who makes a million a year, and one who makes thirty thousand - and both of them lived exactly the same, bought exactly the same things, and put the rest of their money in savings, why is it "fair" to tax the richer guy more just because he has a better job? Because that's how we reward productive members of society?

Sales tax would solve this kind of inequality.

The FairTax plan includes a segment on what I can only call "conspicuous consumption"- that is, goods whose demand are comprised almost entirely of the upper-class.

I'd just set brackets according to prices; it would have the same effect without the challenge of defining what a necessity or a luxury is. If something is expensive, there's almost a 100% chance that it is comparatively more of a luxury good than something cheaper (except medical care, which shouldn't be taxed to begin with), so people who can afford it can definitely afford to pay tax on it.

The "wealth effect" is an economic phenomenon that demonstrates how the ratio of consumption to savings increases as income increases. Applied to a sales tax, that means that people who make more money tend to spend more money (to reiterate, they not only spend more in amount, but also in percentage of income) than lower-income citizens.
It's the opposite actually. The higher income bands have a higher marginal propensity to save and a lower marginal propensity to consume. However, this is as a proportion of income and not in absolute terms, and plus their consumption is on far more expensive goods, especially luxury goods.

Generally, you don't get something for nothing.

There are reasons for the bureacracy in the income tax system. It does not just exist because all people but "FairTax" advocates are morons.

(This lesson has a wide application to public policy questions.)

But how common is that? I don't think rich people are going to stop buying luxury cars and start buying bags of Cheetos because of a tax; they already pay a higher bracket to begin with and this just shifts it to what they buy instead.

And how are you going to determine what rich people do and don't buy? Ask people their income before purchase?

Are you going to have any means for those whose tastes do not neatly correspond to your "one size fits all" standard to avoid having to pay extra tax (or to catch those who try instead to pay less than they should?)

A short application that would be based on your total income is a lot simpler than what we have now.

Because it's much less precise and effective, yes.

I'd just set brackets according to prices;

That's an awful, awful idea.

A dinner at a fancy restaurant may be a luxury, but a car isn't. Which is more expensive?

I think he meant stuff like create and enforce property rights, establiish a rule of law, provide public infrastrucure, subsidize basic research, and the like.

The kind of people who are making "obscene" amounts of money will never have a problem finding a means of protecting their shit. I know, as I have members of my family who make good on the idea of private security agencies. As for public infrastructure- like I said, eliminate government and you'd see the private sector go at it. Somebody, somewhere, is getting wealthier from that kind of market. As for a rule of law- all I can say is that wealthy people very seldom lose court cases to poor people. Abolish government, and I'm pretty sure that you'd see justice sway even more in favor of the have's and less in favor of the have-not's.


Umm.... the goal of income is consumption. If I sacrifice current consumption to save or invest its only so I can consume more in the future. While I may choose to consume less ultimately will have to consume my income sometime or what's the point.

I don't suppose you have a a low-paying job, or have ever had to "pinch" pennies, or had to put off certain bills at certain times, or paid only interest rates on credit? Sometimes one can afford to spend more, and sometimes one cannot. The elastic nature of savings versus consumption is necessary in microeconomics, and although one's income may ultimately vanish- the question of when allows me to spend less when I know I'm running tight in a given month and contrarily, to save more when I have a reason.

To ignore the importance of varying expenses over time is foolish, so a sales tax allows the consumer more adaptability to that variation.

Also income is controllable to some degree. One has a number of jobs one can pick and choose from and one can choose what kind of investments one makes. Saying that one is volutary and the other isn't is just wrong.

Right, but I don't think many people end up choosing between city drain repairmanship and topping the poprock charts.

And how are you going to determine what rich people do and don't buy? Ask people their income before purchase?

No, we just put taxes on goods according to price. If a rich person buys it, they buy it and if they don't they don't. There aren't any poor people out there buying Bugattis, so we can be quite certain that anyone who buys one is rich and will be paying taxes on it.

Are you going to have any means for those whose tastes do not neatly correspond to your "one size fits all" standard to avoid having to pay extra tax (or to catch those who try instead to pay less than they should?)

If people try that, they don't get the things they want. It hits them directly in their possessions, since they're not going to be able to get the things they want without paying taxes on them.

And unless they buy some strange combination of goods like a million loaves of bread, they're going to pay comparable amounts of tax as they did before.

Because it's much less precise and effective, yes.

Precise? We have at least several hundred billion in unpaid taxes each year and God only knows how much lost due to legal loopholes in the code; it's extremely precise and effective at taxing the poor and getting their full share, but it's terrible at reigning in the wealthy and making them do the same.

10,000 pages long and cluttered with special-interest loopholes isn't effective at all, it's a disaster that costs us billions each year.

I like the income tax. Getting rid of it and using a federal sales tax would lower revenue too much. I have no issues with paying income tax.

That's an awful, awful idea.

A dinner at a fancy restaurant may be a luxury, but a car isn't. Which is more expensive?

You are right, but this idea is adequately explained by the definition of "conspicuous consumption." I'm not well-read enough on it to go into much detail, but I think it would make good sense to you if you looked it up.

That's an awful, awful idea.

A dinner at a fancy restaurant may be a luxury, but a car isn't. Which is more expensive?

But if you set the bracket ranges wide enough, it wouldn't be too much of a problem. You could also just create categories for goods and services just like the government does with the CPI or PPI for inflation, and adjust accordingly.

It's the opposite actually. The higher income bands have a higher marginal propensity to save and a lower marginal propensity to consume. However, this is as a proportion of income and not in absolute terms, and plus their consumption is on far more expensive goods, especially luxury goods.

I'm reading my economics book, and it disagrees with you. More wealth generates the mental faculty of much more wealth, and therefore the consumer is more likely to spend more than what would be proportionately expected.

However, I'll Wiki it in case I'm misunderstanding...

If people try that, they don't get the things they want.

That's just not true.

Value is subjective. Different people value different things. Sometimes people want expensive items; sometimes they don't. Sometimes people's lifestyles, or occupation, or place of residence requires them to buy especially expensive (or cheap) goods; sometimes it doesn't.

None of that correlates with income. You've created an unbearingly arbitrary system.

Precise? We have at least several hundred billion in unpaid taxes each year and God only knows how much lost due to legal loopholes in the code; it's extremely precise and effective at taxing the poor and getting their full share, but it's terrible at reigning in the wealthy and making them do the same.

The state in class society will always exhibit this pattern.

If your consumption tax is loophole-free, it will only be so because you'd have removed the deductions existing in our present system, something that, if you wanted to do it (and it is not necessarily a good idea), could be accomplished without radically changing the whole thing.

It's the opposite actually. The higher income bands have a higher marginal propensity to save and a lower marginal propensity to consume. However, this is as a proportion of income and not in absolute terms, and plus their consumption is on far more expensive goods, especially luxury goods.

Economists believe people spend more when one of two things is true: when people actually are richer (by objective measurement, for example, a bonus or a pay raise at work, which would be an income effect), or when people perceive themselves to be "richer" (for example, the assessed value of their home increases, or a stock they own has gone up in price recently).

Consume more.

None of that correlates with income. You've created an unbearingly arbitrary system.

Perhaps my amateur nature doesn't demand a response, but on the slim chance that you and Vetalia have simply missed my other posts, I believe that the "tax goods based on price bracket" idea can be effectively resolved by implementing a graduated formula similar to that used to determine conspicuous consumed goods/services. The higher the percent of a given good's sales were to upper-class buyers, the more highly-taxed that good could be.

John lives in a city with easily-accessible public transport that is perfectly capable of serving his needs, but he wants a car - so he goes out and buys one.

Laura lives in an area with awful public transportation, and absolutely needs a car to commute to work. She buys a car, too.

For Laura it's a necessity, for John it's a luxury good. How on earth can you devise a consumption tax rate that will treat both fairly?

I'm reading my economics book, and it disagrees with you. More wealth generates the mental faculty of much more wealth, and therefore the consumer is more likely to spend more than what would be proportionately expected.

However, I'll Wiki it in case I'm misunderstanding...

What I learned in economics was the opposite of this. I believe Europa is correct. When a poorer person gains money, he/she is more likely to spend it so that they can meet their needs such as food, clothing, or health care. Since a wealthier person usually has all of their needs met, he/she has the ability to save it and usually does. Thus, shifting all taxes from income to sales would actually put a heavier burden on poorer populations.

The higher the percent of a given good's sales were to upper-class buyers, the more highly-taxed that good could be.

Ah, so you WOULD have to determine the income of people who buy certain goods.

Nice. What was that about reducing bureaucracy again?

Consume more.

Absolutely, yes. Relative to income, no.

EM has this right.

I don't suppose you have a a low-paying job, or have ever had to "pinch" pennies, or had to put off certain bills at certain times, or paid only interest rates on credit? Sometimes one can afford to spend more, and sometimes one cannot. The elastic nature of savings versus consumption is necessary in microeconomics, and although one's income may ultimately vanish- the question of when allows me to spend less when I know I'm running tight in a given month and contrarily, to save more when I have a reason.

To ignore the importance of varying expenses over time is foolish, so a sales tax allows the consumer more adaptability to that variation.

I don't get how it allows more adaptability in the importance of varying expenses over time. If I'm let go of my current job I'm without an income, but I'm still paying taxes on consumption. With income taxes I pay only if earning an income and with a progressive income tax it goes up as I make more money. Since most low income families spend the vast majority of what they make and thus have low savings a consumption tax seems insensitive to the importance varying expenses over time.

Right, but I don't think many people end up choosing between city drain repairmanship and topping the poprock charts.

Agreed, but the repairman probably has to spend most of his income in basic necessities. I don't see that he has a whole lot of choice in consumption levels.

John lives in a city with easily-accessible public transport that is perfectly capable of serving his needs, but he wants a car - so he goes out and buys one.

Laura lives in an area with awful public transportation, and absolutely needs a car to commute to work. She buys a car, too.

For Laura it's a necessity, for John it's a luxury good. How on earth can you devise a consumption tax rate that will treat both fairly?

Since there is one kind of car and all...

Given de facto demographics, these two people would likely not be of the same socioeconomic class, and therefore they would not not have the same market of cars available to them.

However, to entertain your example... the suggested plan has tax rebates to people that fall into a certain income bracket. If Laura really *needed* a car, and John did not, yet they both paid the same sales tax on it- Laura's disadvantage would be at least in part compensated by the refund (which, as I understand it, comes at the end of each month).

Absolutely, yes. Relative to income, no.

EM has this right.

Gotcha. I thought it was both.

I don't get how it allows more adaptability in the importance of varying expenses over time. If I'm let go of my current job I'm without an income, but I'm still paying taxes on consumption. With income taxes I pay only if earning an income and with a progressive income tax it goes up as I make more money. Since most low income families spend the vast majority of what they make and thus have low savings a consumption tax seems insensitive to the importance varying expenses over time.

I follow you Tech, but keep in mind that the suggested plan has refunds for those who fall below certain income levels, and the gist of those refunds is that they are to equal a month's supply of basic necessities (probably based on core CPI). Thus, even those without jobs who consume are caught in the refund bracket.

I think it's pretty slick.

Agreed, but the repairman probably has to spend most of his income in basic necessities. I don't see that he has a whole lot of choice in consumption levels.

Right- he doesn't. That's why the sales tax idea would benefit low wage-earners. Your repairman who doesn't have money left to spend on non-necessities pays no sales tax.

Ah, so you WOULD have to determine the income of people who buy certain goods.

...Yeah. If I were ever in a position to implement any kind of economic policy, I'm pretty sure it would be nice to know those kinds of things. :rolleyes:

Nice. What was that about reducing bureaucracy again?

I never said anything about this plan reducing bureaucracy.

Risi the government isn't using the income taxs for whatever they want its going to a good place. Yes, they do divide it up amongst different thinhgs. Some of it goes to homeland Security, some of it goes to vertrans funds, and some of it goes to the insurace companies and free clinics around the United States.

I personally believe that it money that we don't really need sometimes. They are always other people worse off than ourselves. I lived next door to a man in his eighties, he served in world war 2. He was getting Six hundred dollars a month to live off of. Six hundred dollars a month. You know how little that is to live off of. Thats not much. If we were to Ban income taxs yhou know how much they would get? They wouldn't get anything. You know what would happen to our economy? It would cease to exist. We wouldhave no means to buy the oil to make the gasoline to fuel our cars, the same cars that get us back and forth to work everyday. What about the people whose homes are run off gas? They would freeze to death in the winter. There is no way that we are ever going to be able to ban income taxs.

these two people would likely not be of the same socioeconomic class

Why not?

Sure, there are probably intraregional class-based differences in the efficacy of public transportation, but there's no reason interregional differences would be class-based. Some areas just have better public transportation than others.

What if they ARE of the same socioeconomic class? It's hardly an absurd idea.

I never said anything about this plan reducing bureaucracy.

Then what's the point?

Why not?

Sure, there are probably intraregional class-based differences in the efficacy of public transportation, but there's no reason interregional differences would be class-based. Some areas just have better public transportation than others.

What if they ARE of the same socioeconomic class? It's hardly an absurd idea.

Then it sounds like the good is moderately affordable, as Laura is by no means wealthy if she doesn't already have a mode of transportation.

Then what's the point?

The taxpayer has more control over the amount they pay, and when they want to pay it (spend vs. save). Most of the advantages are simple microeconomics...

Do you think someone should be allowed to take your money that you earned for yourself to use on whatever they want?
I personally think the government should abolish the federal income tax and substitute a federal sales tax. Lower taxes, and tax what you spend, not what you earn.

1.This "someone" is the government of the society you live in and whose representatives you vote. It is not a generical "someone".
2.Tax what you spend = taxing a person according to his own NEEDS. Not according to his capability to contribute to the common good. Hence, a sales tax is unfair.

There is a value called "solidarity", that should be the common foundation of a society. Oh my, what a revolutionary I am.

*sigh* where's the "aww geez not this shit again" man?

sales taxes are flat in nature, in that the rich may pay a bit more because they spend a bit more, but the percentage tax is still the same.

income tax can be made progressive, thus it is a good means of wealth redistribution.

i could only support such a move if the basic necessities of life were not sales taxed, but then that would leave the government seriously short of revenue to provide public services and the like. therefore i say keep income tax

Then it sounds like the good is moderately affordable, as Laura is by no means wealthy if she doesn't already have a mode of transportation.

I do not own a car. Nor a motorcycle. Not even a bike. I got my feet, and a metro pass. I also live in boston which has a pretty good public transportation system.

I am a corporate attorney.

Given de facto demographics, these two people would likely not be of the same socioeconomic class, and therefore they would not not have the same market of cars available to them.


You slipped.

Laura has only the cheaper cars available. John has ALL cars available. Hence, even John could choose to buy a cheap car; Laura has no other choice.

No thanks. It ALWAYS sounds good till something bad happens and suddenly everyone starts spending less.

Nevada, which lives on sales tax, entered into a wonderful recession after 9/11 because people were just refusing to play in Vegas after that.

I know, I know, it'll make the government live within its means, but the problem with that philosophy is that sometimes the government has to not live within the tax revenue. Sometimes we might want to go to war, or have a hurricane to clean up after. The government's option then, if everyone is spending less due to said war/hurricane, would be to print more money, causing inflation.

As messy as the income tax is, at least there's a good guaranteed amount that keeps the US ticking along.

That is the most laughable idea I have ever heard.

If you aren't spending your money, you don't need it. Why should people with overpaid executive positions be allowed to amass vast fortunes because they are paid more than they need?

I don't think that any serious politician in my country would ever be so out of his mind that he'd ban income tax. One must be really stupid to do that.

Definitely. Plus, a consumption tax would be much better because we could tax anyone who buys goods in our country; the illegal immigrant problem could be far more easily addressed if they are paying their share of taxes on what they buy without the need of citizenship like income tax. It would also increase the revenue we get from sales of imported as well as domestic goods as, which would be beneficial for current account and investment purposes by harmonizing all of our tax codes in to one system.

Quite beneficial, and a consumption tax can be far more progressively applied than an income tax without the need for screwed up junk like the AMT or the other taxes that make up our obscenely bureaucratic present system. It would be stunningly beneficial all around.
*hugs*

it's not often that I go into a "tax thread" and find anyone who makes an intelligent well thought out statement that I agree with......

so......

QFT

I support a combination of both direct and indirect taxation. That way, higher income earners pay a larger share of direct taxes, and lower income earners pay a greater share of indirect taxes. Direct taxation should be the larger contributor, but I believe a combination of the two will lead to a similar proportion of people's incomes going to the government.

If you have not heard of the 'conspiracy' you should watch "America: Freedom to Fascism" just Google it.

It makes a good case against the income tax.

However, the actual point of this is to find out whether people think it is right for the government to tax personal incomes.

Do you think someone should be allowed to take your money that you earned for yourself to use on whatever they want?

I personally think the government should abolish the federal income tax and substitute a federal sales tax. Lower taxes, and tax what you spend, not what you earn.
But don't you realise that a sales tax is just an income tax on businesses (essentially)? Why not abolish tax altogether, and the government whilst you are at it. Then we can all have snow cones with the increased efficiency of the market after all of the freed up deadweightloss from the replacement of government monopolies with competing markets.

Twill be swell.

Then it sounds like the good is moderately affordable, as Laura is by no means wealthy if she doesn't already have a mode of transportation.

So?

The question is not whether the good is affordable - the question is whether you can actually achieve a fair sales tax rate for goods that, depending on circumstances, can be either luxuries or necessities.

The taxpayer has more control over the amount they pay,

Why is this a good thing?

and when they want to pay it (spend vs. save).

In the end, it's still paid. This seems a very minor advantage at most.

Finding the most optimal form of taxation is a tricky proposition.
There are many instances of countries around the world simplifying their tax systems and slashing tax rates dramatically boosting revenue.

If you wanted to stick to an income tax, it would be rational (though not politically feasible given politicians being beholden to special interests and not the people) to reduce the tax code to the simplest form and slash the tax rates to a single low rate. Eliminating loopholes and exemptions would remove legal measured of tax avoidance (disproportionately favoring the rich) while cutting the tax rate would reduce the incentive to hide income or otherwise avoid taxation. It also greatly reduces the scope for corruption (which is why it will never happen).

This would substantially boost revenue while simultaneously reducing the dead weight loss imposed on the economy from burdensome regulations. Lost productivity from complicated tax forms and procedures is significant, not only for every business, but for individuals as well.

Personally, I like the idea of offering a flat income tax rate with a negative payment equal to the nominal poverty line. This eliminates welfare programs and creates the ‘progressive’ qualifier to the tax while maintaining one simple rate of taxation. There is no need for programs like social security or welfare if there is a negative tax payment.

This would greatly pare down the bureaucracy of the IRS as doing one’s taxes would be incredibly simple, which would also make enforcement incredibly simple. (Income * rate) – Negate transfer.

This would go a long way towards fixing what is wrong with the income tax.

On another note, I don't quite see how right-wingers can see a sales tax as any more legitimate than an income tax.
Two reasons.

First, it's more efficient and creates less of a drag on the economy.

And second, everyone pays it. Currently the wealthy can avoid paying taxes by not earning anything, and illegal immigrants can avoid taxes by earning only under the table. As long as your sales tax is not so severe as to create a significant black market, those problems are solved.

I not only support a ban on income taxs, but I also support the Fair Tax plan!

The Fair Tax Book by Mr. Neal Boortz (http://www.amazon.com/Fair-Tax-Book-Saying-Goodbye/dp/0060875496/ref=pd_bbs_sr_1/102-4801923-6976914?ie=UTF8&s=books&qid=1174371670&sr=8-1)

i have been meaning to read this for awhile now, have not yet been able to. i listen to neil boortz and think its a rather interesting idea.

The problem with sales taxes is it causes a high tax load on low income people, which would then need to be offset by an expanded welfare system. I happen to think expanding the welfare bureaucracy is a horrid thing. If you disagree, go work in a department of social services for a little while – 2 months of processing food stamp applications will turn the most diehard socialist libertarian.

If you then argue that ‘necessities’ will not be taxed while luxuries will be heavily taxes you fall into the trap of determining which is which. This leads to lobbyist retaining control over the tax system. What qualifies as a ‘necessity’ and what a luxury? Where do you draw the line? ‘I’ll know it when I see it’ is not a position you can take when dealing with legislation (just look at horrid obscenity laws).

Consumption taxes also greatly encourage smuggling and the black market. Selling items without the high taxation on goods and services (the tax level would have to be very significant to fund the bloated federal governments in the US or any European nation with which I am familiar) would be very lucrative. The black and grey markets already make up a significant portion of the economy, and this portion will only grow with higher consumption taxes – to the detriment of the state coffers, punishing law-abiding citizens, and distorting consumption behavior to a great degree.

The problem with sales taxes is it causes a high tax load on low income people, which would then need to be offset by an expanded welfare system.
You could exempt essentials from the tax. Don't tax food, for example, and that would dramatically ease the tax burden on the poor.
If you then argue that ‘necessities’ will not be taxed while luxuries will be heavily taxes you fall into the trap of determining which is which. This leads to lobbyist retaining control over the tax system. What qualifies as a ‘necessity’ and what a luxury? Where do you draw the line? ‘I’ll know it when I see it’ is not a position you can take when dealing with legislation (just look at horrid obscenity laws).
Hence my flat definition of food as a necessity and leaving out everything else. Pick a position and stick with it. By exempting food, I'm removing most of the burden from the poor, but I'm still making them pay taxes on anything else they think they want. They don't get to avoid the taxes just because they're poor - that would create an incentive to be poor.

Lobbyists are a problem - reshaping the political system to eliminate them will take some work
Consumption taxes also greatly encourage smuggling and the black market.
As I said, smuggling and the black market are concerns, but they can be mitigated somewhat by being moderate with your tax rates.

Currently, there's a thriving smuggling business moving liquor from Alberta to British Columbia. I would blame BC's high liquor taxes (and restrictive distribution laws) for this.

If the taxes are too high, people will evade them. This isn't news. Lower the taxes.

Hence my flat definition of food as a necessity and leaving out everything else. ...

in some scandinavian countries, fuel for heating (assumedly gas) is seen as a necessity. otherwise you freeze to death.

i personally would consider clothing, water, electricity, fuel, healthcare and maybe even broadband, these days, as necessities as well as food. therin lies a problem... who decides? it may be a simple decision for you, but as with most politics there will always be differing points of view.


and, as i said earlier, unless you make sales tax very very high, the government will have to take a serious cut in its expenditure.

I've a CRAZY idea!

Why don't we just tax the rich until we have enough money to fund a proper national health service and education system that gives everyone an equal chance?

Or, we just actually screw the whole "property" idea and work together to make a better world for all humanity?

There is a value called "solidarity", that should be the common foundation of a society. Oh my, what a revolutionary I am.

But do you think solidarity is/should be a compulsory status?

Individual liberty is just as, if not more important.

The only problem with removing the income tax is that the same bureaucratic nutsos in charge of this system will be in charge of coming up with a new one.

I do not own a car. Nor a motorcycle. Not even a bike. I got my feet, and a metro pass. I also live in boston which has a pretty good public transportation system.

I am a corporate attorney.

Right, but as I suggested before- a graduated formula that takes into account the number of sales to buyers of higher economic classes would allow for exceptions to the rule. To be more clear, there wouldn't simply be two brackets called "luxury" and "normal"; rather, there would be a sales tax proportional to the probability that the good is conspicuously-purchased.

I'm not sure if such a system would be practical to implement, but to completely dismiss the idea as being at least legitimate seems a bit naive.

So?
The question is not whether the good is affordable - the question is whether you can actually achieve a fair sales tax rate for goods that, depending on circumstances, can be either luxuries or necessities.

I'm pretty sure I've stated this before, but it wouldn't be as simple as 'yes, this H2 is a luxury' and 'no, this Honda is a necessity.' Based on the percentage of a good's sales to the deemed 'upper-class', one can determine the extent to which a good is conspicuous consumption. Therefore, those goods purchased less often by the deemed upper-class (and more so by the middle/working) would be assigned a smaller tax rate.


Why is this a good thing?

It's not unless you value individual liberty and the freedom to be responsible for yourself.

In the end, it's still paid. This seems a very minor advantage at most.

Progress is progress. I don't go into an idea expecting it to transform the slums into mini-utopias, but I see any step towards fairness as worthwhile.

I'm pretty sure I've stated this before, but it wouldn't be as simple as 'yes, this H2 is a luxury' and 'no, this Honda is a necessity.' Based on the percentage of a good's sales to the deemed 'upper-class', one can determine the extent to which a good is conspicuous consumption. Therefore, those goods purchased less often by the deemed upper-class (and more so by the middle/working) would be assigned a smaller tax rate.

So?

You're still assigning ONE TAX RATE to two vastly different circumstances.

That makes no sense.

It's not unless you value individual liberty and the freedom to be responsible for yourself.

You mean the freedom to pay less than you deserve by utilizing the obvious loophole?

Progress is progress.

That is hardly "progress."

I personally think the government should abolish the federal income tax and substitute a federal sales tax. Lower taxes, and tax what you spend, not what you earn.

No way near as efficient at generating revenue as income tax.

I'm no economist, but wouldn't a switch to a massive goods and services tax essentially massively increase the cost of doing business in America, and make all foreign product more competitive? Wouldn't you essentially have to close off the economy and switch the role of the IRS to 'black market busters'?

It's not just the final product that a consumer is purchasing that sales tax applies to. (At least, I didn't think so.) Every exchange of materials in the production process is subject to taxation, is it not? So, unless your company was a monolithic giant that owned every single aspect of the production of the good you are selling, you're drastically increasing the cost of production, making foreign imports far more appealing to consumers. Sure, you get to keep more of your money, but what you can afford is far less than it once was.

Even if I'm wrong on that count, it is far easier to track a person's income, than it is for every transaction in the economy.

I'm no economist, but wouldn't a switch to a massive goods and services tax essentially massively increase the cost of doing business in America, and make all foreign product more competitive? Wouldn't you essentially have to close off the economy and switch the role of the IRS to 'black market busters'?

It's not just the final product that a consumer is purchasing that sales tax applies to. (At least, I didn't think so.) Every exchange of materials in the production process is subject to taxation, is it not? So, unless your company was a monolithic giant that owned every single aspect of the production of the good you are selling, you're drastically increasing the cost of production, making foreign imports far more appealing to consumers. Sure, you get to keep more of your money, but what you can afford is far less than it once was.

Even if I'm wrong on that count, it is far easier to track a person's income, than it is for every transaction in the economy.

Sales tax is not a VAT; it applies only to the final product sold to the end user, not every time something changed hands through the production process.

It does not raise the cost of doing business as it simply shifts the apparent tax burden from the cost of labor to the cost of personal consumption. It doesn't really matter (from the standpoint of the cost of doing business) where the taxation comes from as it all percolates through the system - what is pertinent is how efficient the tax can be.

This would actually encourage exports (essentially anything exported is not taxed), discourage imports (sales tax applies to everything sold), and give massive incentives to the black market.

Income tax is actually fairly difficult to count because of all the various deductions and exemptions, plus the very difficulty in defining 'income' to begin with - not everyone works a 9 to 5. Sales tax on the other hand, is very easy to collect as it is simply counted with every transaction from a licensed retail establishment. Sales taxes are some of the simplest to collect.

Consume more.
In absolute terms (in which case, I conceded you're correct). Look up marginal propensity to consume and to save. The first is inversely proportional to wealth.

If you have not heard of the 'conspiracy' you should watch "America: Freedom to Fascism" just Google it.

It makes a good case against the income tax.

However, the actual point of this is to find out whether people think it is right for the government to tax personal incomes.

Do you think someone should be allowed to take your money that you earned for yourself to use on whatever they want?

I personally think the government should abolish the federal income tax and substitute a federal sales tax. Lower taxes, and tax what you spend, not what you earn.

Yes, I would rather be charged Income tax and have those taxes fund services needed by society in general than get a note saying what I owe once a year.

Sales tax is not a VAT; it applies only to the final product sold to the end user, not every time something changed hands through the production process.

It does not raise the cost of doing business as it simply shifts the apparent tax burden from the cost of labor to the cost of personal consumption. It doesn't really matter (from the standpoint of the cost of doing business) where the taxation comes from as it all percolates through the system - what is pertinent is how efficient the tax can be.

This would actually encourage exports (essentially anything exported is not taxed), discourage imports (sales tax applies to everything sold), and give massive incentives to the black market.

I'm going to have to call the 'liar, liar, pants on fire' defense. Seeing as I once owned a business. Everything we purchased in order to pursue our business was purchased from another business... with sales tax added. That includes - vehicles, equipment, fuel (well, taxes are blended), materials and uniforms. All subject to sales tax.

Now if all of these things are suddenly taxed much higher my cost of business is up, and I have to pass those costs on to the consumer, and tack on yet another rediculously high sales tax. And this only includes my side of the business, it says nothing about my suppliers. There's no magical place where I was able to buy my materials and supplies tax free.

There was enough black market going on in my business as it was. If someone came up to me and could offer me equipment at half-the-cost, no questions asked, sometimes I took it. When money's tight, you do what you have to. Increase the cost of my doing business, and I'll be even more likely to avoid the taxman on sales.

If anything, seeing as I owned a moving business, you essentially would shut me down, seeing as my consumers would suddenly realize that it's vastly cheaper to move themself. (Or, hire movers who work completely under the table, which defeats the purpose of shifting your tax burden.)

Now, this is only from my personal experience. I can't see from any other business owners I know who knew of magical non-taxed goods that they could buy. So, tell me again how foreign imports and black market items would not be preferrable to our suddenly high-taxed merchandise and services?

ADDENDUM: I guess my point, is that it's not just the product going to the consumer that is going to be taxed, and affect the business. One must also consider 'everything' that a business purchases in the process of doing business. Increasing sales tax increases the cost of doing business.

Personally, I like the idea of offering a flat income tax rate with a negative payment equal to the nominal poverty line.
If there are to be taxes, I'd prefer this too.

I'm going to have to call the 'liar, liar, pants on fire' defense. Seeing as I once owned a business. Everything we purchased in order to pursue our business was purchased from another business... with sales tax added. That includes - vehicles, equipment, fuel (well, taxes are blended), materials and uniforms. All subject to sales tax.

Now if all of these things are suddenly taxed much higher my cost of business is up, and I have to pass those costs on to the consumer, and tack on yet another rediculously high sales tax. And this only includes my side of the business, it says nothing about my suppliers. There's no magical place where I was able to buy my materials and supplies tax free.

There was enough black market going on in my business as it was. If someone came up to me and could offer me equipment at half-the-cost, no questions asked, sometimes I took it. When money's tight, you do what you have to. Increase the cost of my doing business, and I'll be even more likely to avoid the taxman on sales.

If anything, seeing as I owned a moving business, you essentially would shut me down, seeing as my consumers would suddenly realize that it's vastly cheaper to move themself. (Or, hire movers who work completely under the table, which defeats the purpose of shifting your tax burden.)

Now, this is only from my personal experience. I can't see from any other business owners I know who knew of magical non-taxed goods that they could buy. So, tell me again how foreign imports and black market items would not be preferrable to our suddenly high-taxed merchandise and services?

ADDENDUM: I guess my point, is that it's not just the product going to the consumer that is going to be taxed, and affect the business. One must also consider 'everything' that a business purchases in the process of doing business. Increasing sales tax increases the cost of doing business.

That all depends upon the jurisdiction you are in and what the laws are regarding what constitutes reselling. In terms of vehicles and uniforms, your business was the end consumer, so of course you pay sales tax (which can usually be refunded as a business expense from the state at the end of the year, though then you get into all sorts of entanglements with income taxes). You can purchase the materials used in providing the client with your services tax-exempt if charging the client sales tax on what you in-turn sell to them (thus any one item is only charged sales tax at the very end).

Thus, while you do technically pay sales tax on intermediary inputs, that money can be refunded (so essentially it is an interest free short-term loan to the government - dont you love how they get to do things like that?). This is also where we get into the interaction of income taxes.

Were income taxes to be eliminated, the whole interaction will be changed resulting in entirely new tax systems - thus current tax law will not even be applicable in any case.

And if you really want to get technical - any sales tax at all is effectively a price increase in the good or service itself as the consumer doesnt care one diddly what is the cost and what is the tax, the bottom line they have to pay is all they care about.

So yes, a sales tax will increase the end cost of products, but the lack of income tax for the end consumer (either business or individual) will in effect be a massive boost to income, which will counteract the increase in prices. This is why it is fairly irrelevant where the tax comes from - it is still the same money coming out of the economy - how efficiently that tax can be collected is what matters. Sales taxes distort consumption, but how great a distortion is entirely dependent upon the exact form of the tax.

I don't support ANY tax. But I think that direct taxes are worse than indirect taxes.

I just found out today from a lecturer that, in the UK, despite having a progressive income tax system the poor pay a higher percentage of their income in tax to the government than the rich - this being almost entirely due to the incredible amounts of regressive stealth taxes levied by the government.

41.6% of the poor's income is collected as tax, as opposed to 36.5% of the rich's.

I just found out today from a lecturer that, in the UK, despite having a progressive income tax system the poor pay a higher percentage of their income in tax to the government than the rich - this being almost entirely due to the incredible amounts of regressive stealth taxes levied by the government.

Not to mention that the truly wealthy can always find ways of avoiding tax through the use of creative accounting. Every tax system has loopholes and exemptions which can be manipulated if you are willing to devote enough resources to such a pursuit.

That all depends upon the jurisdiction you are in and what the laws are regarding what constitutes reselling. In terms of vehicles and uniforms, your business was the end consumer, so of course you pay sales tax (which can usually be refunded as a business expense from the state at the end of the year, though then you get into all sorts of entanglements with income taxes). You can purchase the materials used in providing the client with your services tax-exempt if charging the client sales tax on what you in-turn sell to them (thus any one item is only charged sales tax at the very end).

Thus, while you do technically pay sales tax on intermediary inputs, that money can be refunded (so essentially it is an interest free short-term loan to the government - dont you love how they get to do things like that?). This is also where we get into the interaction of income taxes.

Were income taxes to be eliminated, the whole interaction will be changed resulting in entirely new tax systems - thus current tax law will not even be applicable in any case.

And if you really want to get technical - any sales tax at all is effectively a price increase in the good or service itself as the consumer doesnt care one diddly what is the cost and what is the tax, the bottom line they have to pay is all they care about.

So yes, a sales tax will increase the end cost of products, but the lack of income tax for the end consumer (either business or individual) will in effect be a massive boost to income, which will counteract the increase in prices. This is why it is fairly irrelevant where the tax comes from - it is still the same money coming out of the economy - how efficiently that tax can be collected is what matters. Sales taxes distort consumption, but how great a distortion is entirely dependent upon the exact form of the tax.

Okay, so you will admit that the products themselves will cost more? Therefore the overall cost of producing is going to be slightly higher than competitive foreign product. The foreign producer will still have a cheaper product in the end, unless they are using a similar tax system. I don't see how that helps you exporting (my goods cost more to create) or importing (my foreign competitors don't have the higher tax costs in production.)

Higher sales taxes have always been a boost for black market economies. In Canada, when the price of cigarettes became relatively high due to a tax increase, smuggling american cigarettes became the alternative. It was simply cheaper. Now, people are buying reservation cigarettes, at vastly lower prices, due to the lack of taxation. It's not really going away either.

I'm all in favour of simple and fair taxation systems. But doing without income taxes in favour of a large sales tax seems like more trouble than it is worth.

Okay, so you will admit that the products themselves will cost more? Therefore the overall cost of producing is going to be slightly higher than competitive foreign product. The foreign producer will still have a cheaper product in the end, unless they are using a similar tax system. I don't see how that helps you exporting (my goods cost more to create) or importing (my foreign competitors don't have the higher tax costs in production.)


Most nations with some sort of consumption tax, ususal VATs, give refunds to companies who export products so that there is no lost competitive edge.

in some scandinavian countries, fuel for heating (assumedly gas) is seen as a necessity. otherwise you freeze to death.
Right - I'm Canadian, I should have thought of that.
i personally would consider clothing, water, electricity, fuel, healthcare and maybe even broadband, these days, as necessities as well as food. therin lies a problem... who decides? it may be a simple decision for you, but as with most politics there will always be differing points of view.
I'd include food, water (assuming you have to pay for water), electricity OR fuel (but not both), and that's pretty much it. I'd also want to make it really difficult to amend that list, because otherwise we get exactly the problem you mention - people dithering over designations.
and, as i said earlier, unless you make sales tax very very high, the government will have to take a serious cut in its expenditure.
I see that as a good thing. The government spends altogether too much money now.

Okay, so you will admit that the products themselves will cost more? Therefore the overall cost of producing is going to be slightly higher than competitive foreign product. The foreign producer will still have a cheaper product in the end, unless they are using a similar tax system. I don't see how that helps you exporting (my goods cost more to create) or importing (my foreign competitors don't have the higher tax costs in production.)

Higher sales taxes have always been a boost for black market economies. In Canada, when the price of cigarettes became relatively high due to a tax increase, smuggling american cigarettes became the alternative. It was simply cheaper. Now, people are buying reservation cigarettes, at vastly lower prices, due to the lack of taxation. It's not really going away either.

I'm all in favour of simple and fair taxation systems. But doing without income taxes in favour of a large sales tax seems like more trouble than it is worth.

As I said, it all depends on how you structure the tax. Most sales tax regimes are simply charged to the end consumer. The taxes paid by businesses on inputs or capital investments can be refunded by the state, leaving the final tax burden to be borne by whomever purchases the end products.

This means that exports are encouraged because the tax burden is not placed on the cost of labor (thus the cost of production is lower with slightly lower labor) and the final sale taking place outside of the jurisdiction is not taxed at all.

Imports are discouraged because the same sales tax applies to imports, despite the tax code in the originating jurisdiction likely having a labor cost associated with it has imposed a price premium on the product already.

As I said, it all depends on how you structure the tax. Most sales tax regimes are simply charged to the end consumer. The taxes paid by businesses on inputs or capital investments can be refunded by the state, leaving the final tax burden to be borne by whomever purchases the end products.

This means that exports are encouraged because the tax burden is not placed on the cost of labor (thus the cost of production is lower with slightly lower labor) and the final sale taking place outside of the jurisdiction is not taxed at all.

Imports are discouraged because the same sales tax applies to imports, despite the tax code in the originating jurisdiction likely having a labor cost associated with it has imposed a price premium on the product already.
Exactly right.

On another note, I don't quite see how right-wingers can see a sales tax as any more legitimate than an income tax.

Well, sales taxes don't force rich people to pay more then poor people. Therefore, it's fair.

:rolleyes:

I'm going to have to call the 'liar, liar, pants on fire' defense. Seeing as I once owned a business. Everything we purchased in order to pursue our business was purchased from another business... with sales tax added. That includes - vehicles, equipment, fuel (well, taxes are blended), materials and uniforms. All subject to sales tax.
The GST doesn't apply to business inputs. I can't speak to provincial taxes.

You think the income tax is unfair?? HAH there are much more unfair taxes out there. There is a tax that means that if you buy shares worth over a certain amount (and guessing between £10,000 and £30,000) then you have to pay 40% as tax!!!!!!! Firstly that some serious money and goes way into the scale ofunfairly large, but secondly and more imprtantly, when this tax was introduced it was BACKDATED by something like 3 years!!!!! That means that people who had innocently bought large quantities of shares 3 years before got a whopping great tax bill that they wernt expecting, and hadent planned for.
What makes it even more unfair tho, is that when it was implemented it then then went through everyone who was now in that catagory and FINED them for late payment!!!!! My parents had to pay a £6000 fine for not paying a tax which hadent existed until then!

Why don't we just abolish all tax and get rid of the government altogether? Who cares where they take it from? As long as they get it to do what they need to.

As I said, it all depends on how you structure the tax. Most sales tax regimes are simply charged to the end consumer. The taxes paid by businesses on inputs or capital investments can be refunded by the state, leaving the final tax burden to be borne by whomever purchases the end products.

This means that exports are encouraged because the tax burden is not placed on the cost of labor (thus the cost of production is lower with slightly lower labor) and the final sale taking place outside of the jurisdiction is not taxed at all.

Imports are discouraged because the same sales tax applies to imports, despite the tax code in the originating jurisdiction likely having a labor cost associated with it has imposed a price premium on the product already.

Okay, fair enough.

What about tourist dollars? Are you not killing the tourism industry in your own country? Not only from foreign tourists who may be inclined to spend less somewhere else, but from homegrown tourism willing to spend less outside the country? (Okay, I realize you won't completely destroy tourism but it would have a detrimental impact, wouldn't it?)

I must say, it would be a nice change for poor people to not pay their taxes either.

:D

I do agree that the government is overstepping itself a bit...

Okay, fair enough.

What about tourist dollars? Are you not killing the tourism industry in your own country? Not only from foreign tourists who may be inclined to spend less somewhere else, but from homegrown tourism willing to spend less outside the country? (Okay, I realize you won't completely destroy tourism but it would have a detrimental impact, wouldn't it?)

Shifting the tax burden from income to consumption will shift additional cost onto those who did not make an income but consume (such as foreign tourists). Thus the cost of coming into the country would go up - likely discouraging people who might prefer to spend their money in locations where they can get a better return for their recreational dollar. You just have to hope tourism demand is fairly inelastic.

Shifting the tax burden from income to consumption will shift additional cost onto those who did not make an income but consume (such as foreign tourists). Thus the cost of coming into the country would go up - likely discouraging people who might prefer to spend their money in locations where they can get a better return for their recreational dollar. You just have to hope tourism demand is fairly inelastic.

Just do what countries with a VAT tax do; you collect your reciepts from what you purchase and then you can collect a refund for the taxes you paid. That way, they're not going to have to pay that tax if they don't want to.

You just have to hope tourism demand is fairly inelastic. Which it isn't.

A national sales tax would be ok if it didn't cover food, school books, or medicine then counted double on luxury items.

I just found out today from a lecturer that, in the UK, despite having a progressive income tax system the poor pay a higher percentage of their income in tax to the government than the rich - this being almost entirely due to the incredible amounts of regressive stealth taxes levied by the government.

41.6% of the poor's income is collected as tax, as opposed to 36.5% of the rich's.
Yep, that is how the tax system actually functions. It's not much better in the USA, where both the highest paid and lowest paid pay roughly 45% in total taxation. According to other estimates, and accounting for the effect of welfare, the total taxation burden on all income bands is 20% or so, meaning it's a flat tax. I am not sure how correct that latter estimate is though.

As I said, it all depends on how you structure the tax. Most sales tax regimes are simply charged to the end consumer. The taxes paid by businesses on inputs or capital investments can be refunded by the state, leaving the final tax burden to be borne by whomever purchases the end products.

This means that exports are encouraged because the tax burden is not placed on the cost of labor (thus the cost of production is lower with slightly lower labor) and the final sale taking place outside of the jurisdiction is not taxed at all.

Imports are discouraged because the same sales tax applies to imports, despite the tax code in the originating jurisdiction likely having a labor cost associated with it has imposed a price premium on the product already.
It also encourages people who live near the border to buy the domestic good in a different country and sneak it back across the border.

Was someone trying to argue that sales tax is simpler to collect and does not effect exports?

I would think that the very fact that tax can be claimed back as expenses towards export would make the whole system as vastly complicated: as the there has to be distinctions as what was used in production for export; what is used for both domestic markets and export markets and what can be included; what can realistically be considered a part of the cost of doing business; and government checks that products really were exported and that reciepts haven't been falsified; then there's customs and exercise too - how much can legally be brought into the country tax free; does selling to a tourist count as export; and so on and so on.

Can a law firm claim that it needs to send its lawyers to its clients, and thus the cost of doing so can be claimed as part of the cost of doing business? Hence, can the law firm buy luxury company cars for its employees, advertise them as a perk of working for this company and then claim the sales tax back on these cars? If so, wouldn't that set a precedent to remove huge swathes of luxury goods from what is taxable? If not cars, when what other products could be claimed? There's going to a large function, so the company buys large amounts of food (more than is needed), and then lets its employees take much of the food home with them (all of it probably still packaged).

Well, sales taxes don't force rich people to pay more then poor people. Therefore, it's fair.

:rolleyes:

You know, it took me 10 seconds to understand the irony and I was about to write a vitriolic response. Silly me.

You know, it took me 10 seconds to understand the irony and I was about to write a vitriolic response. Silly me.
I actually agree with him. A sales tax does tend to tax rich people more than poor people because they spend a greater proportion of their income on nonessential goods, but it doesn't FORCE them to pay extra just because they have more.