NationStates Jolt Archive

In the US, there have been proposals to change the Alternative Minimum Tax, which is in theory how the IRS can get money out of rich people who end up paying very little income tax. Unfortunately, it's not linked to inflation, so the rich of yesteryear are being treated as the upper-middle class of today.

Of course, the entire reason the AMT exists is because the tax system is a potpourri of rules made to try and fix the old rules, which in turn are supposed to fix the mistake of the still older rules...you get the idea. That's why I think a complete overhaul of the code would be useful. Any ideas on what could replace it?

In the US, there have been proposals to change the Alternative Minimum Tax, which is in theory how the IRS can get money out of rich people who end up paying very little income tax. Unfortunately, it's not linked to inflation, so the rich of yesteryear are being treated as the upper-middle class of today.

Of course, the entire reason the AMT exists is because the tax system is a potpourri of rules made to try and fix the old rules, which in turn are supposed to fix the mistake of the still older rules...you get the idea. That's why I think a complete overhaul of the code would be useful. Any ideas on what could replace it?

Yep shoot all of the greedy bastards, and take their lands and money!

By greedy bastards I mean those insanely rich people who spend time trying not to pay as much tax as they should.

A proportional tax system that uses the graduated taxing system, where one is taxed based on how much they earn per annum along with how much they make from their investments, and how they put into RRSP/RESP etc. But, it should be based on their total income, with the appropriate exceptions in place such as for medical and child care expenses (ie: daycare and education costs).

There's a poll a comin'.

By greedy bastards I mean those insanely rich people who spend time trying not to pay as much tax as they should.

I'd say most people would try and get out of paying as much tax as they should. Most just don't have the resources to come up with incredibly sneaky methods

I'd say most people would try and get out of paying as much tax as they should. Most just don't have the resources to come up with incredibly sneaky methods

Shoot them, shoot them all.......

I like the current tax system if we cleaned out all the mess.

Pay a percentage on your yearly "profit" like businesses do. We just need to adjust the deductions available.

Tax evasion isn't treated as a serious crime as it should be, along with electoral fraud (6 months jail term in the UK, for interfering with the very heart of our government system). Both should be made much more serious offences, with minimum mandatory jail terms, barring form holding certain offices and confiscation of property.

Tax evasion deprives the state of the ability to provide properly for the people and should be regarded as what it is, theft. Heavy penalties and a simplified system could help, with a much reduced system of "deductibles" and exemptions.

Rather than deducting certain expenses a better solution is simply to rasie the minimum threshold for paying tax, as only the poor truly need deductibles to meet their expenses, the wealthy can afford them in either case. With the higher threshold, the poor will still have the breathign room they need to meet their commitments, and the exemptions can be removed form thesystem, simplyfying it and giving less room for the wealthy to evade their obligations.

A ficticious example:

Present system

$10,000 threshold + medical + childcare + shampoo for my dog + carpet cleaning + mortgage exemptions then 25% tax up to $50,000 then 30% thereafter

Proposed system

$20,000 threshold, thereafter 25% up to $50,000 then 30%

Simpler. Also, heavy penalties for evasion.... confiscation of all assets (100% value) on which full taxes owed have not been paid, and prison... real prison, not open prison, for a long long time.

Tax evasion isn't treated as a serious crime as it should be, along with electoral fraud (6 months jail term in the UK, for interfering with the very heart of our government system). Both should be made much more serious offences, with minimum mandatory jail terms, barring form holding certain offices and confiscation of property.

Tax evasion deprives the state of the ability to provide properly for the people and should be regarded as what it is, theft. Heavy penalties and a simplified system could help, with a much reduced system of "deductibles" and exemptions.

Rather than deducting certain expenses a better solution is simply to rasie the minimum threshold for paying tax, as only the poor truly need deductibles to meet their expenses, the wealthy can afford them in either case. With the higher threshold, the poor will still have the breathign room they need to meet their commitments, and the exemptions can be removed form thesystem, simplyfying it and giving less room for the wealthy to evade their obligations.

A ficticious example:

Present system

$10,000 threshold + medical + childcare + shampoo for my dog + carpet cleaning + mortgage exemptions then 25% tax up to $50,000 then 30% thereafter

Proposed system

$20,000 threshold, thereafter 25% up to $50,000 then 30%

Simpler. Also, heavy penalties for evasion.... confiscation of all assets (100% value) on which full taxes owed have not been paid, and prison... real prison, not open prison, for a long long time.

Testify brother.....:D

A ficticious example:

Present system

$10,000 threshold + medical + childcare + shampoo for my dog + carpet cleaning + mortgage exemptions then 25% tax up to $50,000 then 30% thereafter

Proposed system

$20,000 threshold, thereafter 25% up to $50,000 then 30%

Simpler. Also, heavy penalties for evasion.... confiscation of all assets (100% value) on which full taxes owed have not been paid, and prison... real prison, not open prison, for a long long time.

that's a lot of tax for people to be paying.

Here is the current from the US and those "incomes" are after deductions

* 10% on the income between $0 and $15,100
* 15% on the income between $15,100 and $61,300; plus $1,510.00
* 25% on the income between $61,300 and $123,700; plus $8,440.00
* 28% on the income between $123,700 and $188,450; plus $24,040.00
* 33% on the income between $188,450 and $336,550; plus $42,170.00
* 35% on the income over $336,550; plus $91,043.00

Married Filing Separately Filing Status
(Tax Rate Schedule Y-2)

* 10% on the income between $0 and $7,550
* 15% on the income between $7,550 and $30,650; plus $755.00
* 25% on the income between $30,650 and $61,850; plus $4,220.00
* 28% on the income between $61,850 and $94,225; plus $12,020.00
* 33% on the income between $94,225 and $168,275; plus $21,085.00
* 35% on the income over $168,275; plus $45,521.50

Head of Household Filing Status
(Tax Rate Schedule Z)

* 10% on the income between $0 and $10,750
* 15% on the income between $10,750 and $41,050; plus $1,075.00
* 25% on the income between $41,050 and $106,000; plus $5,620.00
* 28% on the income between $106,000 and $171,650; plus $21,857.50
* 33% on the income between $171,650 and $336,550; plus $40,239.50
* 35% on the income over $336,550; plus $94,656.50

the poor have a lot more wiggle room here.

Flat rate of 20-30% has always been a taxation system I feel could work perfectly well in the UK, allowing for the current amount of non-taxable income, and the privatisation of the NHS.

... the privatisation of the NHS.
The NHS is the one thing that keeps people paying taxes. If you're going to take that out you might as well just abolish tax altogether.

The NHS is the one thing that keeps people paying taxes. If you're going to take that out you might as well just abolish tax altogether.

No it isn't. The police force and army, if you seek, wrongly, to identify a single factor, are of far more significance than a socialist experiment gone wrong.

Fair Tax Plan! (http://www.fairtax.org/site/PageServer)

Fair Tax Plan! (http://www.fairtax.org/site/PageServer)

the fair tax plan is by no measure "fair" and I hesitate to even give it the distinction of being called a "plan". The only part they got at all right is the tax.

No it isn't. The police force and army, if you seek, wrongly, to identify a single factor, are of far more significance than a socialist experiment gone wrong.
If all my tax money was going towards was funding militant foreign policy and the establishment of a totalitarian big brother state then I would sure as hell never pay taxes again. Maybe I'm clutching the last few straws of British liberalism here, but it seems as though our commitment to public services is all we've collectively got left to be proud of.

The current US tax system is so convoluted it takes years of study to get a reasonable understanding of it. Even IRS auditors have trouble understanding the maze of rules.

The problem is that politicians get a little kickback to make some little exemption, deduction, or tax credit for some special interest group. This leaves us with hundreds of pages of garbage of a tax code. Simplify it by getting rid of all exemptions, deductions, and tax credits.

Tax everything at 15% of all income made above the poverty line. Thats it. No if, ands, or buts. Makes it super simple - everyone can figure out exactly what they owe, and auditors can tell at a glance if someone isnt paying enough (thus enforcement becomes both very effective and very cheap).

The tax code should not be used to set public policy - it should not be used to alter behavior or change social behavior.

Tax everything at 15% of all income made above the poverty line.
In theory, that's all well and good, but in practice, it wouldn't work. Management will just give themselves no salary and charge all personal expenses to their company. Thus, they'd end up paying nothing at all.

You need some way to tax beyond just doing it according to income. Perhaps corporate taxation would be a way around it, but that'd get people in business foaming at the mouth if there isn't another, equally convoluted system of exceptions and special cases.

Just set the limit on deductions to "33% of your tax, plus 33% of the national avaerage income" or something. Maybe those aren't the ideal numbers, but you get the idea.

Yep shoot all of the greedy bastards, and take their lands and money!

By greedy bastards I mean those insanely rich people who spend time trying not to pay as much tax as they should.

Like all polititions?

There would be people in a few states who keep their whole paycheck.
In other states they are screwed because they pay not only federal income tax but also state income tax.
So much to keeping the whole paycheck.

The fairtax plan is a bunch of bs but not fair at all.

Flat consumption tax with a tax credit for low income families and individuals. Best part is, illegal immigrants pay their share in to the system and have to become citizens to get the money back; it would provide an incentive to pursue citizenship, especially if there was a tax credit for the cost of doing so.

I was reading someplace that once a person earns an annual income of $3 million, they can be taxed on 90% of their income and it won't affect their lifestyle.

I suggest that we begin with that philosophy. Anyone making 3 million dollars annually pays 90% in tax, then provide a gradual decrease in tax percentages. Then I suggest that you eliminate taxes on anyone making less then $45,000.

Also all state-income tax, property tax and sales tax should be deducted from your income to determine your taxable income.

Flat consumption tax with a tax credit for low income families and individuals. Best part is, illegal immigrants pay their share in to the system and have to become citizens to get the money back; it would provide an incentive to pursue citizenship, especially if there was a tax credit for the cost of doing so.

Are you crazy? Becoming legal is what they want, pardoned for ignoring and breaking the law.
In my opinion, before they leave the country involuntarely let them pay a huge fine as compensation for them breaking the law and misusing the social system.
With the revenue you could lower taxes, at least for a while. ;)

I was reading someplace that once a person earns an annual income of $3 million, they can be taxed on 90% of their income and it won't affect their lifestyle.

I suggest that we begin with that philosophy. Anyone making 3 million dollars annually pays 90% in tax, then provide a gradual decrease in tax percentages. Then I suggest that you eliminate taxes on anyone making less then $45,000.

Also all state-income tax, property tax and sales tax should be deducted from your income to determine your taxable income.

If you were only being taxed on income, you would still have $300,000 left over, so you could probably continue living a good life.

In the US, there have been proposals to change the Alternative Minimum Tax, which is in theory how the IRS can get money out of rich people who end up paying very little income tax. Unfortunately, it's not linked to inflation, so the rich of yesteryear are being treated as the upper-middle class of today.

Of course, the entire reason the AMT exists is because the tax system is a potpourri of rules made to try and fix the old rules, which in turn are supposed to fix the mistake of the still older rules...you get the idea. That's why I think a complete overhaul of the code would be useful. Any ideas on what could replace it?
Of course. Abolish income tax and replace it with the Fair Tax.

www.fairtax.org

I was reading someplace that once a person earns an annual income of $3 million, they can be taxed on 90% of their income and it won't affect their lifestyle.

I suggest that we begin with that philosophy. Anyone making 3 million dollars annually pays 90% in tax, then provide a gradual decrease in tax percentages. Then I suggest that you eliminate taxes on anyone making less then $45,000.

Also all state-income tax, property tax and sales tax should be deducted from your income to determine your taxable income.

Taxing high earners just gives the incentive to try to avoid taxation or just leaving the country altogether. We should not encourage high earners to leave the country. The more you punish productive people, the fewer productive people you will have. Your goal of economic equality will eventually be reached - anyone with any ability will have left, leaving only the poorest behind.

Are you crazy? Becoming legal is what they want, pardoned for ignoring and breaking the law.

In my opinion, before they leave the country involuntarely let them pay a huge fine as compensation for them breaking the law and misusing the social system.
With the revenue you could lower taxes, at least for a while. ;)

That's the idea. If they want to keep breaking the law, they have to pay for it and they're not going to get anything in return until they become citizens. It encourages legal immigration and discourages illegal immigration, which is obviously a good thing. If they become legal immigrants, they get their benefits in return for their money rather than paying in and getting nothing in return.

the fair tax plan is by no measure "fair" and I hesitate to even give it the distinction of being called a "plan". The only part they got at all right is the tax.
I'm sure you're not saying this without a good reason. But are you talking about the HB 25 version, or what you've read about elsewhere?

It's quite fair and well thought through. Tell me why not.

I just whish they would charge income tax or sales tax, one or the other, NOT BOTH, stop taxing money that has already been taxed before I ever see it. Or if your are for sales tax, stop taxing my money before I ever see it. I believe the elimination of one or the other is the first step in a full on revision of the tax system.

That's the idea. If they want to keep breaking the law, they have to pay for it and they're not going to get anything in return until they become citizens. It encourages legal immigration and discourages illegal immigration, which is obviously a good thing. If they become legal immigrants, they get their benefits in return for their money rather than paying in and getting nothing in return.

But of course - before they can enter legally they have to leave the country. And if they don't leave on their own, then the fine which covers also their bus ticket to Tijuana or other places they are from. ;)

I'm (hopefully) going to be working for one of the major US tax-prep firms, so I applaud anything that makes taxes harder for ordinary humans to do! More commissions for me, dammit!

But of course - before they can enter legally they have to leave the country. And if they don't leave on their own, then the fine which covers also their bus ticket to Tijuana. ;)

And transfer payments back to Mexico. There is absolutely no incentive whatsoever for them to remain illegal immigrants, especially when the cost of becoming a citizen will be refunded once they are granted citizenship.

I'm (hopefully) going to be working for one of the major US tax-prep firms, so I applaud anything that makes taxes harder for ordinary humans to do! More commissions for me, dammit!

is it the green one? I used to own a franchise of the green one.

is it the green one? I used to own a franchise of the green one.

Yep, the green one. Worked there during the '99 season, passed my exam (barely - I forgot my Ativan, got all anxious, and rushed through), hopefully will hear from the district manager on Thurs or Fri.

How about a maximum personal wage of $50,000, and a maximum corperate profit of $10,000,000? The rest goes to the Government.

I was reading someplace that once a person earns an annual income of $3 million, they can be taxed on 90% of their income and it won't affect their lifestyle.

I suggest that we begin with that philosophy. Anyone making 3 million dollars annually pays 90% in tax, then provide a gradual decrease in tax percentages. Then I suggest that you eliminate taxes on anyone making less then $45,000.

Also all state-income tax, property tax and sales tax should be deducted from your income to determine your taxable income.

It will affect the lifestyle pretty much if you put 90% income tax on 3 million. That leaves you $300,000 for a year or pretty much $25,000 per month.
If you take that much out of their paycheck, who do you think buys all the costly toys that generate also employment.
Once you take the money from the rich, you won't have paychecks for the ones with your $45,000 paychecks.

Taking money from the rich will cause unemployment in the lower income levels. Before they change their lifestyle they fire their secretary, their cook, chauffeur, nanny and maid.
Not to mention all the other businesses that can shut down business or at least fire half of their employees after losing good paying clients.

For winning less than $2,700,000 you ruin people's life and you do alot of damage to the economy.

Yep, the green one. Worked there during the '99 season, passed my exam (barely - I forgot my Ativan, got all anxious, and rushed through), hopefully will hear from the district manager on Thurs or Fri.

I owned one with like 4 other people from 2002-2005 it was fun. I sold my share, might work this season, have to go back to class and get enough "hours" in though.

Luckily their classes count for my EA stuff too so no biggie.

Why isn't a flat tax up there? By that I mean a tax where everyone pays the same % of their income. The rich would pay the most and the poor would pay the least so it should satisfy the pro-tax-the-shirt-off-your-back people and I wouldn't mind.

I'd also be pleased enough with a sales tax.

Why isn't a flat tax up there? By that I mean a tax where everyone pays the same % of their income. The rich would pay the most and the poor would pay the least so it should satisfy the pro-tax-the-shirt-off-your-back people and I wouldn't mind.

I'd also be pleased enough with a sales tax.

A regressive tax is a flat tax. There might be some difference, but I think they're more or less the same.

I owned one with like 4 other people from 2002-2005 it was fun. I sold my share, might work this season, have to go back to class and get enough "hours" in though.

Luckily their classes count for my EA stuff too so no biggie.

Might want to hurry, then. In our area, Basic Building Blocks part 2 starts next week.

Yep shoot all of the greedy bastards, and take their lands and money!

By greedy bastards I mean those insanely rich people who spend time trying not to pay as much tax as they should.

That would be illegal.

Might want to hurry, then. In our area, Basic Building Blocks part 2 starts next week.

they will probably let me skip it. *nod* I have connections.

they will probably let me skip it. *nod* I have connections.

Lucky you, then <pouts>.

A regressive tax is a flat tax. There might be some difference, but I think they're more or less the same.
What I'm talking about is a flat percentage, what's up there is a set sum. There is a difference. It's pretty damn big. One depends on how much you make and the other is the same for everyone. What I suggested is actually progressive in a sense because the richer tax payers would pay more than the poorer, they'd just be paying the same rate. It'd be kind of like what they do for tickets in Sweden or one of its neigboring nations.

What I'm talking about is a flat percentage, what's up there is a set sum. There is a difference. It's pretty damn big. One depends on how much you make and the other is the same for everyone. What I suggested is actually progressive in a sense because the richer tax payers would pay more than the poorer, they'd just be paying the same rate. It'd be kind of like what they do for tickets in Sweden or one of its neigboring nations.

You're correct, sorry, my mistake.

What I'm talking about is a flat percentage, what's up there is a set sum. There is a difference. It's pretty damn big. One depends on how much you make and the other is the same for everyone. What I suggested is actually progressive in a sense because the richer tax payers would pay more than the poorer, they'd just be paying the same rate. It'd be kind of like what they do for tickets in Sweden or one of its neigboring nations.

Progressive is actually the rich paying a higher percentage, no?

Why isn't a flat tax up there? By that I mean a tax where everyone pays the same % of their income. The rich would pay the most and the poor would pay the least so it should satisfy the pro-tax-the-shirt-off-your-back people and I wouldn't mind.

I'd also be pleased enough with a sales tax.

With a flat tax you have lower income who struggle to pay rent or buy food and the richer need just a few weeks more to pay off their Jaguar.
An increasing tax rate up to a certain maximum that shouldn't be too high is the right thing to do.

- Flat tax, 15-20% tops.
- A free amount per head, not per income earner.
- Voluntary additional taxes for government income transfer programs (eg welfare and healthcare).

Taxing high earners just gives the incentive to try to avoid taxation or just leaving the country altogether. We should not encourage high earners to leave the country. The more you punish productive people, the fewer productive people you will have. Your goal of economic equality will eventually be reached - anyone with any ability will have left, leaving only the poorest behind.
In fact, proof of that is how business won't tolerate the unfair tax structure in the United States. When Daimler and Chrysler merged, where did the corporate headquarters end up? Not in the United States...

But the original idea was to reform the AMT -- even if we do nothing else to the tax code, we should eliminate the AMT. It was established to soak a very few that were able to avoid taxes by using legitimate deductions. It isn't maintained by Congress or the IRS, so let's just eliminate the darned thing.

Progressive is actually the rich paying a higher percentage, no?

Yes. If you want to think of taxes in math terms:

Progressive--A quadratic equation
Flat--A linear equation
Regressive--A constant

But the original idea was to reform the AMT -- even if we do nothing else to the tax code, we should eliminate the AMT. It was established to soak a very few that were able to avoid taxes by using legitimate deductions. It isn't maintained by Congress or the IRS, so let's just eliminate the darned thing.
I think it could work if it was hooked to inflation. In 1970, it fulfilled its goal, but since then inflation has made it less useful.

It will affect the lifestyle pretty much if you put 90% income tax on 3 million. That leaves you $300,000 for a year or pretty much $25,000 per month.
If you take that much out of their paycheck, who do you think buys all the costly toys that generate also employment.
Once you take the money from the rich, you won't have paychecks for the ones with your $45,000 paychecks.

Taking money from the rich will cause unemployment in the lower income levels. Before they change their lifestyle they fire their secretary, their cook, chauffeur, nanny and maid.
Not to mention all the other businesses that can shut down business or at least fire half of their employees after losing good paying clients.

For winning less than $2,700,000 you ruin people's life and you do alot of damage to the economy.

One of the advantages of doing your homework on a subject is that you never see citations like this:

http://www.slate.com/id/2177546/entry/2177630/


One of the pleasures of reading Paul Krugman's new book, The Conscience of a Liberal, is to be reminded that during the Eisenhower years the U.S. economy enjoyed explosive growth even though the top income-tax rate was 91 percent! (The tax cut that made John F. Kennedy a hero to supply-side zealots brought that top rate down to 70 percent, or twice what it is today.) In his April 2007 Washington Monthly column, "Tilting at Windmills," our mutual friend Charles Peters demolished Republican claims that Bush's tax cuts were responsible for bringing the unemployment rate down to 4.6 percent:

In the twenty-two years since the end of World War II that unemployment has been less than 5 percent, taxes have been higher than they are now twenty-one times. In thirteen of those years, the top rate was 70 percent or higher. In nine, it was 90 percent. That's right, unemployment less than 5 percent and a tax rate of 90 percent. Actually, in four of those years the unemployment rate was under 4 percent, the lowest it has been.

If unemployment is at all-time lows during periods of high taxation and low taxation, then taxation has _____ effect on unemployment?

A. High
B. Low
C. None
D. Stop picking on me, you "socialist" bastard!
E. C and D.

One of the advantages of doing your homework on a subject is that you never see citations like this:

http://www.slate.com/id/2177546/entry/2177630/



If unemployment is at all-time lows during periods of high taxation and low taxation, then taxation has _____ effect on unemployment?

A. High
B. Low
C. None
D. Stop picking on me, you "socialist" bastard!
E. C and D.

How high were the limits back then?

I'm sure you're not saying this without a good reason. But are you talking about the HB 25 version, or what you've read about elsewhere?

It's quite fair and well thought through. Tell me why not.

The most direct and apparent problem with it right off the bat is that I'd prefer my savings account and retirement fund not depreciate overnight by about a third.

If unemployment is at all-time lows during periods of high taxation and low taxation, then taxation has _____ effect on unemployment?

A. High
B. Low
C. None
D. Stop picking on me, you "socialist" bastard!
E. C and D.

That's pretty misleading, given that the entire reason why unemployment was low during the 1950's was due to the Korean War. Once the war ended, unemployment shot up to 7.5% and didn't break 5% again until 1967, not coincidentally after the tax cuts of the early 1960's.

And the "explosive" growth...if you consider 2.3% per year growth and nearly no change in real per-capita GDP from 1945 to 1960 explosive, that's news to me. The bulk of the growth in the 1950's was due to the fact that the economy was recovering to its trend from before the Depression and after WWII; it grew at a fast rate because the economy was so underutilized to begin with. The economic performance of the US in the 1950's was extremely mediocre, especially when compared to growth in the 1960's. It performed about as well as the 1970's, which are known more for stagflation than anything else.

1950-1959:+37.3%
1960-1969:+54.3%

There is a massive difference between the two decades in terms of real GDP growth as well as unemployment.

Regressive doesn't mean that everyone pays the same number of dollars. If you and I pay 25% tax while Bill Gates* pays 20% tax, it's a regressive tax even though he pays a LOT more tax than any of us do.

The issue at stake is that (in general) the more money someone makes, the higher percentage of their income they can afford to pay. I don't think *ANY* NSG user can afford a 90% tax income, yet not only can Bill Gates afford one, but he'd have more money left over after taxes than any of us before taxes.



* Note that this assumes that Bill Gates (aga 52, net worth ~$59 billion) makes $1 billion per year. It could be off a bit, but the idea will still be true.

Here's what I mean by depreciating savings accounts. The idea of fair tax is no income tax, higher sales tax. Let's say in reality today I have a total income tax of 33% and a sales tax of 7%.

So let's say I make, befofe all taxes, $162.00 Now tax takes away 1/3 of that, leaving me with $107.00.

With a 7% sales tax that $107 can buy me something with a sticker price of $100. So with a $162 income, we calculate a 33% income tax and a 7% sales tax and the government ends up with $62 of my $162 dollars after I buy a $100 purchase. So to ensure the government gets the same $62 after I spend my $162 that calculates to about 38% sales tax.

OK, 38% sales tax, seems fair. Here's the problem though. Let's say instead of running off and spending my $107 I stick in in a bank. Then the next year, income tax goes away, and a higher sales tax goes in place. now there's 38% sales tax. But the money in my savings account was ALREADY assessed an income tax. So now I take my $107 out and go and buy something and encounter this 38% sales tax, which means my $107 can only buy something with about a $77 sticker, where as before I could buy something worth $100.

So once a fair tax plan goes into effect, everyone who has saving accounts, taxed retirement funds, CDs, bonds, T-bills, basically any kind of money put away gets MASSIVELY screwed. Basically you've cut the value of everyone's savings between 1/4 and 1/3, unless the government compensates those who were already taxed, which will cost so much money that any supposed benefits would take decades to manifest.

I voted option #5.

What I suggested is actually progressive in a sense because the richer tax payers would pay more than the poorer, they'd just be paying the same rate.
A progressive tax deals solely with the percentage paid. A flat tax is not progressive, and can never be progressive. In some circumstances, it is actually regressive.

Taxes don't do anything that I couldn,t do myself, so I'm a no tax guy.

EDIT: or something that my community couldn't do by itself.

Steeply progressive income tax with no deductions. Start at about five percent for the very poorest, and progressively work your way up. Median income earners taxed about a 15-20%, the highest percentiles taxed at 50% or potentially higher.

So long as the transition into the next tax bracket leaves the person still at least someway better off then he was when he was in the top end of the last bracket, then conservatives have no room to bitch about "punishing success".

Yes. If you want to think of taxes in math terms:

Progressive--A quadratic equation
Flat--A linear equation
Regressive--A constantProgressive need not be quadratic, just any function that is concave up.

Same with regressive, it need only be concave down.

Here's my idea for taxes:

Non-essential items have a VAT of 10%. Half of the revenue from the tax goes to the state, the rest to the federal government.
The income tax is progressive, and is hooked to inflation.
Deductions may, at most, halve the tax owed.
There are no tariffs, but all income is taxed (even income made overseas).

Progressive need not be quadratic, just any function that is concave up.
True, these are just examples.

Same with regressive, it need only be concave down.

Depends what you're graphing: if it's income vs. percentage of income given to taxes, yes. If it's income vs. total amount of money given, regressive would be constant.

Here's my idea for taxes:

Non-essential items have a VAT of 10%. Half of the revenue from the tax goes to the state, the rest to the federal government.
The income tax is progressive, and is hooked to inflation.
Deductions may, at most, halve the tax owed.
There are no tariffs, but all income is taxed (even income made overseas).

Heres my idea, don't tax anybody

True, these are just examples.



Depends what you're graphing: if it's income vs. percentage of income given to taxes, yes. If it's income vs. total amount of money given, regressive would be constant.In the second case, what would you call a tax function that is concave down. It is not regressive, but sure as hell not flat...

In the second case, what would you call a tax function that is concave down. It is not regressive, but sure as hell not flat...

I'm getting my terms confused, but I believe a regressive tax is one that is the same for all people, regardless of income or price (if it's a sales tax). Thus, someone with $1,000 that paid a $50 tax would give 5% of his income, while one with $10,000 would give only 0.5%.

I support:

No tax on consumption.

A strong progressive tax on capital and wealth.

No tax on consumption.

A strong progressive tax on capital and wealth.

That makes no sense. You'd be discouraging the things necessary to provide people with jobs and continued economic growth while simultaneously encouraging the wealthy to spend their money entirely on consumer goods rather than invest it. It penalizes responsible investing and wealth accumulation and encourages short-term materialism.

Ill give you some basic definitions.

Progressive tax = the more money you make, the higher the percentage you pay.

Flat tax = same tax rate for everyone, regardless of income.

Regressive tax = the more money you make, the lower the percentage of that income you pay.

A set dollar amount would qualify as a regressive tax, but any tax which takes a smaller percentage of your income as that income level rises is regressive. For example, payroll taxes are regressive because Social Security tax is only taken on the first $90k, thus if you make more than 90k, you pay a lower percentage of your total income - thus it is a regressive tax.
Thank you. That's what I thought it meant, but it never hurts to double-check.

I'm getting my terms confused, but I believe a regressive tax is one that is the same for all people, regardless of income or price (if it's a sales tax). Thus, someone with $1,000 that paid a $50 tax would give 5% of his income, while one with $10,000 would give only 0.5%.

Ill give you some basic definitions.

Progressive tax = the more money you make, the higher the percentage you pay.

Flat tax = same tax rate for everyone, regardless of income.

Regressive tax = the more money you make, the lower the percentage of that income you pay.

A set dollar amount would qualify as a regressive tax, but any tax which takes a smaller percentage of your income as that income level rises is regressive. For example, payroll taxes are regressive because Social Security tax is only taken on the first $90k, thus if you make more than 90k, you pay a lower percentage of your total income - thus it is a regressive tax.

I'd like to see a progressive income tax with a few refundable middle class tax credits plus a EITC or negative income tax combined with a VAT tax.

Here's what I mean by depreciating savings accounts. The idea of fair tax is no income tax, higher sales tax. Let's say in reality today I have a total income tax of 33% and a sales tax of 7%.

So let's say I make, befofe all taxes, $162.00 Now tax takes away 1/3 of that, leaving me with $107.00.

With a 7% sales tax that $107 can buy me something with a sticker price of $100. So with a $162 income, we calculate a 33% income tax and a 7% sales tax and the government ends up with $62 of my $162 dollars after I buy a $100 purchase. So to ensure the government gets the same $62 after I spend my $162 that calculates to about 38% sales tax.

OK, 38% sales tax, seems fair. Here's the problem though. Let's say instead of running off and spending my $107 I stick in in a bank. Then the next year, income tax goes away, and a higher sales tax goes in place. now there's 38% sales tax. But the money in my savings account was ALREADY assessed an income tax. So now I take my $107 out and go and buy something and encounter this 38% sales tax, which means my $107 can only buy something with about a $77 sticker, where as before I could buy something worth $100.

So once a fair tax plan goes into effect, everyone who has saving accounts, taxed retirement funds, CDs, bonds, T-bills, basically any kind of money put away gets MASSIVELY screwed. Basically you've cut the value of everyone's savings between 1/4 and 1/3, unless the government compensates those who were already taxed, which will cost so much money that any supposed benefits would take decades to manifest.
This is going to be short and probably incomplete. But I'll get back to it around lunch time...

We need to recognize a couple things.

First, only people pay tax. Any tax levied on a business is passed through. We call it overhead. We add a percentage to every sale, before profit, to pay for all the things that keeps the business alive. Taxes are one of those things.

Second, it costs money to comply with the tax code. Guess who pays for that? It's not the business because it's overhead.

Why mention all this? Because that $100 toy really contains taxes and their associated costs embedded into it. A number of economists have decided [no citing right now, but it's documented on the FairTax site] that about 23% of any item is really just the costs associated with taxes and compliance. When we remove that cost, the overhead margin can be reduced and that product can be sold for 23% less.

Your $100 toy is really sold for $77, but with a tax-inclusive sales tax of 23%, the price at the register is still $100. With any amount of income tax, you would pay $100 + sales tax at the register. Replace the income tax with the FairTax and that toy costs you $100.

How does the Fed make out? Just the same. With income tax, you have to earn $133 to spend $100, or if you earn $100, you keep $77 and the Government gets $23. With the FairTax, you keep that whole $100 and if you choose to spend it -- remember the operative word is _choose_ -- the Government will still get their $23.

[that was the easy part, as always, conclusions are a little harder and here's where I'm going to shortchange you for now]

Because retail prices will actually drop as business adjusts overhead rates, your savings will actually have more purchasing power. Remember, under the current income tax, when you withdraw money from savings to make a purchase, you are still paying all these taxes that are embedded in the price of a item. The difference is that with the FairTax, you get to choose the amount of tax you pay with your choice of lifestyle.

One other thing -- you've probably invested pretty wisely. Tax-deferred investments really make you money with a one-time windfall. And income-generating investments will really increase in value as the costs of sales decrease.

--- Edit
Looking back, I'd say my conclusion was pretty accurate. Turns out the Heritage Foundation released a report on how income taxes inhibit savings. So not only do savings have MORE buying power under the FairTax, but they are more heavily encouraged, leading to more capital development with domestic capital -- We don't need to borrow from furriners and the dollar doesn't suffer so much.

So bring on the FairTax, bring back business to the United States and let's start putting that capital(profit) to work here, rather than overseas.

How about a maximum personal wage of $50,000, and a maximum corperate profit of $10,000,000? The rest goes to the Government.

That amounts to £25,000 per annum. That's risable.

Replace the income tax with the FairTax and that toy costs you $100.

Knowing american businesses - no. They would then add sales tax to it afterwards (25% suggested, I believe) and it would then cost $125.

Heres my idea, don't tax anybody

Then how would the goverement be able to provide services?

I spent a bit of time pondering this myself a few years back, and hit on a an idea. I havn't really gone over it though and don't know how viable it would be but here goes.

No corporation tax, in it's place the government would request materials and manpower from companies in order to build, repair and maintain infrastructure.

The bigger the company the more aid in materials or manpower the government could request from you.

The agenda of the republican / neo-con anti-tax crusaders is to eliminate all taxation, and to foster hatred and distrust of the government.

They are part of the way there already. The Bush tax cuts have cut government revenue by $180 Billion per year, which has returned the USA to a record level of budget deficits, and pushed the national debt up to nearly $3 Trillion.

They are also campaigning - quite successfully - against government run programs like Social Security, Welfare, Medicare etc. A significant proportion of the electorate now has immense distrust in those systems - for no good reason. Yes - they all need a bit of reform, but privatisation won't do that (at least not the right way). The ultimate goal of the neo-cons is to shut down all government programs completely - which is why they are trying to persuade the public that the government is useless / not to be trusted.

The campaign towards a "flat tax", or a "fair tax" is at best a compromise. The fair tax plan is eerily reminiscent of the Feudal System which operated in Britain centuries ago. The Flat Tax is not much better - most republicans support either one for the very simple reason that their own taxes will go down.

The taxes for the lower earners aren't being cut very much (if at all) - because the idea is to make everyone hate their government. If you are on a low income, and 10 - 20 percent is snatched away, you're going to hate your government quite a lot. If you're on a higher income, you generally hate your government already, mostly because you pay tax and don't use any of the services it provides.

So in answer to the question "how can the government provide services without tax income" - the simple answer is: It can't. But that's just the way the neo-cons want it to be anyway.

Yes. Texas is fun.

Yes. Texas is fun.

Well I wouldn't know about that, but if you read any Joe R Lansdale novels, Texas sounds bloody dangerous.

Well I wouldn't know about that, but if you read any Joe R Lansdale novels, Texas sounds bloody dangerous.
No I don't read 'em. Texas is still fun. :D

Knowing american businesses - no. They would then add sales tax to it afterwards (25% suggested, I believe) and it would then cost $125.
I guess you don't know business well, do you. A selling price is roughly cost of the product + overhead + profit. As the overhead decreases, the sales price will also decrease. There is nothing gained by selling something for more than you need to.

In other words, if it costs you $1 to make something, you need to add 15% to pay the bills for the company, and you want 10% profit on top of that, you need to sell the thing for $1.25. If your overhead is reduced by 5%, then you can get by with only charging $1.20. You have a competitive advantage until the rest of the market catches on and reduces their costs or profit.

If everyone experiences the same drop in overhead because of the lack of taxes, then everyone will drop their sales price.

Then how would the goverement be able to provide services?

It wouldn't. :)

I guess you don't know business well, do you. A selling price is roughly cost of the product + overhead + profit. As the overhead decreases, the sales price will also decrease. There is nothing gained by selling something for more than you need to.

In other words, if it costs you $1 to make something, you need to add 15% to pay the bills for the company, and you want 10% profit on top of that, you need to sell the thing for $1.25. If your overhead is reduced by 5%, then you can get by with only charging $1.20. You have a competitive advantage until the rest of the market catches on and reduces their costs or profit.


That's a bit simplistic. While prices would go down given the scenario you're describing, they certainly wouldn't do so as much. The market is not perfectly competitive, which means that part of the cost decrease can just be seen as an additional profit. This is the case the less the market is competitive and the more the good is necessary for the customer.

That's a bit simplistic. While prices would go down given the scenario you're describing, they certainly wouldn't do so as much. The market is not perfectly competitive, which means that part of the cost decrease can just be seen as an additional profit. This is the case the less the market is competitive and the more the good is necessary for the customer.
And this opinion is based on your years of experience building, pricing, and selling products? My experience is that we try to reduce every cost as much as it can be reduced, while maintaining an acceptable profit. Everyone else does it, so when you're in a competition to sell, sales price is most of what matters to the customer. You have to continuously work to reduce that sales price. It is that simple.

And this opinion is based on your years of experience building, pricing, and selling products?

Rather years of studying what lots of people have discovered over a couple of decades combined with common sense (for instance, even if you have no idea about competitive markets (oligopoly situations vs. the hypothetical perfect competition) you should know that not every company earns the same profit percentage, even if they sell what looks like the same good. That's what marketing does for ya, to name one example).

Progressive income tax discourages growth. Everyone should pay a flat tax, plus a set amount. $1,000 would be good.

In the US, there have been proposals to change the Alternative Minimum Tax, which is in theory how the IRS can get money out of rich people who end up paying very little income tax. Unfortunately, it's not linked to inflation, so the rich of yesteryear are being treated as the upper-middle class of today.

Of course, the entire reason the AMT exists is because the tax system is a potpourri of rules made to try and fix the old rules, which in turn are supposed to fix the mistake of the still older rules...you get the idea. That's why I think a complete overhaul of the code would be useful. Any ideas on what could replace it?

The AMT wouldn't be that hard to fix if it was simply indexed instead of being based on fixed amounts.

I'm no mathematician, but the formulae used by the IRS to set rates, with the exception of interest and penalty computation, are absurdly simple. It's always either X% or X+Y%. And even at that, you don't actually due the math. It's all done for you and put on multi-page tables.

It would be a simple matter to set up a progressive income tax table based on the money you make minus the cost of modest food, shelter, and transportation in your geographical area (living in Bel Air shouldn't be a tax right off, you get lumped in with South Central). Then the tax is based on a curve that the more you get, the more you pay, but at no point would earning more mean that you end up with less money after taxes than you would if you made a little less. Like how right now if you sell stock for $2,500 you might loose out on a $5,000 earned income credit.

It wouldn't have to make doing your taxes any harder. It would be a simple matter for the IRS to put together a simple program with Visual Basic that if you type in the numbers requested you get your tax bill. Hell, if I remembered high-school calculus I could do it. Of course, I'd still have to go up against the multi-million dollar lobby effort of Turbo Tax.

Progressive income tax discourages growth. Everyone should pay a flat tax, plus a set amount. $1,000 would be good.

Progressive income tax only discourages growth if it is not a smooth curve. If earning $10 more meant you paid $10 more, or even $15 dollars more then it would discourage growth, but that hardly ever happens.

Not to mention, some limits on growth are a good thing. When a single corporation can override the will of the people with a few million in campaign contributions, that corporation has grown too big.

And this opinion is based on your years of experience building, pricing, and selling products? My experience is that we try to reduce every cost as much as it can be reduced, while maintaining an acceptable profit. Everyone else does it, so when you're in a competition to sell, sales price is most of what matters to the customer. You have to continuously work to reduce that sales price. It is that simple.

Which is why when Reebok moved all of its factories overseas their sneakers went from $90.00 per pair to $40.00 a pair, right?

Oh, wait. That didn't happen.

But it is why the record companies reduced the price of CD's two $2.00 a disk after they replaced $10.00 audio tapes which were more expensive to produce. No, that's right, CD's haven't come down in price at all, and when audio tapes last shared shelf space with CD's, the less expensively manufactured CD's still cost 50% more than audio tape.

There are plenty of ways that a sufficiently well placed merchant can keep prices up while keeping costs down. The cost of production creates a price floor, but is has a completely inelastic effect on price. There is only one factor that determines the price of a product. What people are willing to pay.

Yep shoot all of the greedy bastards, and take their lands and money!

By greedy bastards I mean those insanely rich people who spend time trying not to pay as much tax as they should.

You mean as rich as, say, Bill Gates? Because if so, I agree, however I don't believe we should shoot people who are merely "rich": just the insanely rich. lol :p :D

In the US, there have been proposals to change the Alternative Minimum Tax, which is in theory how the IRS can get money out of rich people who end up paying very little income tax. Unfortunately, it's not linked to inflation, so the rich of yesteryear are being treated as the upper-middle class of today.

Of course, the entire reason the AMT exists is because the tax system is a potpourri of rules made to try and fix the old rules, which in turn are supposed to fix the mistake of the still older rules...you get the idea. That's why I think a complete overhaul of the code would be useful. Any ideas on what could replace it?

I suggest that the AMT be done away with, because due to inflation it now also affects the middle and upper-middle classes instead of just the affluent, rich, super-rich, and unbelievably rich. Or at the very least, PERMANENTLY raise the minimum income threshold for the AMT (i.e. the amount below which the AMT does not apply) to something more appropriate, like, say, $500,000 or something like that, to protect the middle class from it.

And this opinion is based on your years of experience building, pricing, and selling products? My experience is that we try to reduce every cost as much as it can be reduced, while maintaining an acceptable profit. Everyone else does it, so when you're in a competition to sell, sales price is most of what matters to the customer. You have to continuously work to reduce that sales price. It is that simple.If everyone would does that, why do gas prices take days to fall after the cost of crude goes down, but they go up within the hour? Or the US Canadian dollar. In the last five or six years, our dollar gained over 40 cents against your dollar, yet we still pay the 40% extra on goods (or roughly 40%, back when our dollar was only 0.65USD it made the two ever out).

You only go for the competitive edge when it is the most profitable situation. Often is the case that gouging just makes you more money than lowering your prices.