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Ich gehöre nicht zur Baader-Meinhof Gruppe
Originally posted by Top Gear
Every time you buy a car with DSC/ESC, Jesus kills a baby seal. With a kitten.
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Although I would agree a pure consumption tax would free up a lot of beurocracy as I understand it as explained by it's critics, lower class would pay more than now and the wealthiest would pay far less. But I'm not an economist and it sounds like the economists don't agree as to whether the consumption only tax would be beneficial. Interesting idea. I think we should have a national sales tax to balance the income tax as most countries have, but pure consumption tax, not sure.sigpicComment
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If you really are concerned about the lower class, our current system does a horrible job... for sake of spoiling the middle class.
The middle class gets really silly benefits like subsidized housing debt, and enjoy an ever increasing quest for more, more, more stuff and a higher standard of living. Consumption tax would help with that and could offset the taxing of income (which ought to not be taxed or discouraged at all, and was supposed to be temporary).Originally posted by Reason.com article based on OECD Report
Regardless of tax rates and class warfare speak, the long-term tax revenues are ~19% of GDP. Spending is more than that. We need to control spending and the size of government. All this talk 'eat the rich' talk is silly and really ought to be find a more efficient way to receive taxes, and VAT does that, along with encouraging savings instead of taking on debt "to save".
Half the nation doesn't pay any income tax because they don't make enough. If goods are taxed more, then they will be able to afford less... but they usually get net transfer payments (negative tax rate) anyway so it's not a real problem since it's not like you couldn't change those to something else when the tax code is changed. (besides, 'help' could get more direct and efficient than a big refund check from Liberty Tax once a year)Last edited by rwh11385; 04-18-2012, 04:51 PM.Comment
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Some of the cliffnotes:
Long-Term Solutions: Flat Tax or Consumption Tax
A Lower-Rate Flat Tax
A lower-rate flat tax can be structured in a way that:
-Ensures the rich continue to bear more of the burden than they currently do; thus, the plan can be more progressive than the current system.
-Taxes income only once (when it is earned), and does not tax savings or investments; thus, the plan promotes efficiency and economic growth.
-Does more to help low-income families by providing incentives to purchase health insurance and invest for retirement.
A More Progressive Flat Tax
This plan allows a lower flat-tax rate and produces results that should appeal to liberals as well as conservatives. What conservatives most want is an uncomplicated system that taxes income only once (when it is earned) at one low rate. Liberals are more concerned about progressivity. They want the rich to bear more of a burden than the poor.
The left objects to most consumption tax proposals because they mistakenly believe they aren't progressive. Low- and middle-income people would pay a greater share of what they earn than rich people. This proposed system is more progressive than the Forbes flat tax. It's also more progressive than the current system. Using economic modeling, Kotlikoff found that under the NCPA flat tax the rich would bear more of the burden than they currently do.
Health Care and Pensions
Most flat-tax proposals ignore health insurance and retirement saving. Yet the failure to insure or save — especially for low-income families — is a social problem. For that reason, the rebate of tax dollars to the bottom third of taxpayers would be used to help solve these problems. For example, as a condition of receiving the 14 percent rebate, low-income families would be required to show they have health insurance and a retirement pension. Specifically, to get one-half the rebate (7 percent), they would have to produce proof of health insurance. This would encourage millions of people who qualify to enroll in Medicaid or in their employer's health plan. Barring that, families could apply the tax rebate to health insurance they purchase on their own. The other half (7 percent) of the rebate would be contingent on proof of a pension, an IRA, a 401(k) or some other savings account . So instead of national health insurance and more government spending on the elderly, this flat-tax proposal would encourage people to solve these problems on their own.
The tax system itself drags down the economy with the cost of keeping mountains of records and filling out voluminous forms. It also distorts economic decisions — everything from whether a spouse works to how much families save. The U.S. Government Accountability Office recently published estimates of these economic costs by various researchers. They found the efficiency cost of the tax system — the output lost over and above the amount of taxes collected — is 2 percent to 5 percent of gross domestic product. [See the figure.] In short, we lose between $240 billion and $600 billion every year just collecting taxes.
A post-card-sized tax return would slash compliance costs. A single tax rate applied to all wages would make the system more equitable and transparent. By improving economic efficiency, it would raise productivity and hence the rate of economic growth.
National Consumption Tax – The Fair Tax
Another innovative tax reform proposal that deserves consideration is the national sales or national consumption tax, more recently called the Fair Tax. The Fair Tax would build on these fundamentals of taxation:
-Only people pay taxes.
-Consumption tax rates are self-limiting.
-Uniformity of taxation wards off special interest manipulation.
As described at fairtax.org, the Fair Tax proposal would replace all federal income and payroll taxes with a progressive national retail sales tax. The Fair Tax would also incorporate a tax credit to ensure no federal taxes are paid on spending up to the federal poverty level. The Fair Tax would replace federal personal and corporate income taxes, gift, estate, capital gains, AMT, Social Security, Medicare, and self-employment taxes and it would be administered primarily by existing state sales tax authorities.
Based on work done by Boston University economist Laurence Kotlikoff and Beacon Hill Institute, a Fair Tax rate of $0.23 out of every retail dollar spent on new goods or services would generate federal tax revenues of approximately $2.6 trillion – about $350 billion more than the revenues generated by the taxes it would repeal. The Fair Tax would likely lower the lifetime tax burden for most Americans and would greatly simplify federal tax compliance. The Fair Tax would also obviate the need for the Internal Revenue Service.
Conclusion
Both the flat tax and the consumption tax are big improvements over the current mess. A low-rate flat tax would help the economy. A rebate to the poor would enhance progressivity. Making the rebate contingent on the purchase of health care and saving for retirement will improve the quality of life. A national consumption tax – with a provision exempting spending up to the federal poverty level – would dramatically shrink the costs of tax compliance and would promote an efficient, transparent means for federal revenue generation.
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Just imagine what would happen if consumption was taxed instead of a million loopholes and the efforts of Congressional social engineering at work...
The average American might find the ability to save and invest, and even if CEO's get massive equities for income... they'd still have to pay tax when they went to spend from them.Last edited by rwh11385; 04-18-2012, 05:41 PM.Comment
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Oh to think if this country was ran by those with intents of furthering its interests instead of those of political supporters... or by intelligent problem solvers instead of rhetoric-repeating conflict-makers.
Oh well, if ya read through the NCPA analysis, it's clear that either form of alternative can be progressive and make accommodations for the less fortunate. Although even then, vastly more simple in that you don't have a thousand different deductions or credits, but just worry about needs.Comment
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And that shows you haven't actually read anything about it. That's why I provided the handy-dandy link.
People at, or below, the poverty line will pay NO TAX on providing necessities for their families.
The wealthy consume far more, thus would pay more. It provides the same level of funding to the Fed's as the current 77,000 page tax code. And by removing the income tax, you remove people's ability to game the system (how great would it be to never file taxes again as an individual).
What do you think would happen to the economy in the US with ZERO corporate income tax..............hello sub-2% unemployment.
Although it sounds like you would go for Hermain Cains, 9/9/9 plan.Last edited by z31maniac; 04-19-2012, 04:37 AM.Need parts now? Need them cheap? steve@blunttech.com
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There's a time for everything
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Well, the tax cliff avoidance "fixed" the problem for now. But much of the controversy may have been bypassed if Bush learned a bit from what Reagan got from the Treasury letter to him. But they didn't really need to compromise as they held the House and Senate and White House. Had they read over the study in 1984, they may have been able to avoid some of the backlash - even if they would have had to disappoint their donors somewhat.
Compared to prior taxes, average Americans still enjoy a low capital gains tax which hopefully will encourage investment. But much of the rebellion of the class warfare was towards Romney getting their income taxed at a lower rate than people's marginal rate, which was included in the study Reagan saw. (Particularly when carried interest is brought into discussion) Obviously, the average American doesn't actually pay their marginal tax overall (due to stair-step of marginal rates and also deductions and credits of our complex tax system), but they nonetheless don't think the difference in taxes due to sources of income is unfair... which is what the Treasury told Reagan. The capital gains tax rate even with the rise in the top rate and medicare tax on it is still lower than what Reagan raised them to with the reform of 1986. (23.8% vs. 25%)
Tax Reform for Fairness, Simplicity, and Economic Growth: The Treasury Department Report to the President, November 1984-11/01/1984
Sound like all good things. And back in 1984 seemed to support what we are talking about again now.The objectives of our study included: lower marginal tax rates; reduced interference with private economic decisions; simplicity; revenues equal to those of the existing tax system; fairness for families; equal treatment of all sources and uses of income; an unchanged distribution of tax burdens across income classes; and encouragement to economic growth.
We believe that our proposals for a modified flat tax best reconcile these competing objectives. They include some features that are similar to those in flat tax pro*posals that have been offered by members of Congress, but our proposals are much more comprehensive.
The adoption of these reforms should have far reaching and positive effects on the U.S. economy. Rate reductions of the magnitude we propose will open wide the doors of opportunity to those who are willing to work, to save and invest, arid to innovate. With investment decisions being determined by economic consequences, rather than by the tax system, capital will be allocated more efficiently across industries, and growth will accelerate.
Seems familiar.Introduction
The present U.S. tax system desperately needs simplification and reform. It is too complicated, it is unfair, and it retards savings, investment, and economic growth.
Going after deductions was actually the Republican fiscal-cliff approach.Tax Simplification and Reform for Individuals
The Treasury Department proposals combine lower tax rates, increased personal exemptions, and zero bracket amounts with the repeal or modification of a number of existing deductions, exclusions and credits. The proposal does not generally change the distribution of individual tax burden across income classes, though it does reduce tax burdens more than proportionally for taxpayers with the lowest incomes.
Maybe if they continue to seek out more sensible candidates and have a logical plan for 2016 they can simplify the tax brackets like the Treasury said to do and reduce the marginal rates some in response to cutting deductions.
Any tax inevitably discourages the type of activity that is taxed. An
ideal tax system would, however, interfere with private decisions as little as possible. That is, it would not unnecessarily distort choices about how income is earned and how it is spent. It would not undulyEqual Treatment of Equals
A tax that places significantly different burdens on taxpayers in similar economic circumstances is not fair. For example, if two similar families have the same income, they should ordinarily pay roughly the same amount of income tax, regardless of the sources or uses of that income. A fair tax system does not allow some taxpayers to avoid taxes by legal means or to evade them by illegal means.Economic Growth
The U.S. economy has long been hampered by a combination of defects in its tax system. High marginal tax rates discourage work, saving and investment, and invention and innovation. Heavy reliance on income taxation, rather than taxes on consumption, has produced a further disincentive for saving.
They have a flat tax and a modified one. Their "modified flat tax" would be simplified to 3 tax rates. And looked at consumption taxes and VAT.
111. consumed Income Tax
Consumption provides an alternative to income as the basis for personal taxation. A personal tax on consumption, or consumed income, would be levied by exempting all saving from tax, allowing a deduction for repayment of debt, taxing all borrowing and withdrawals from savings. Consumed income would be reported on a form much like the present form 1040. Deductions would be allowed for deposits in "qualified accounts" similar to existing individual retirement accounts ( I R A s ) ; withdrawals from such accounts would be subject to tax. (Further details of such a tax are described in Chapter 9.)
Though a flat rate could be applied to the consumption base calculated in this way, most proposals for a consumed income tax postulate personal exemptions and graduated rate schedules. Thus, a consumed income tax could be progressive, if that were desired. Itemized deductions could also be allowed, as under the existing income tax.5. Economic Advantages
Advocates of a consumed income tax argue that i t is preferable to the ordinary income tax on conceptual and economic grounds, as well as
on administrative grounds. First, an income tax penalizes saving by inducing taxpayers to consume rather than save for future consumption. By comparison, under certain circumstances, a tax on consumption does not distort the choice between consuming now and saving for future consumption. This is a major attraction of any tax on consumption.Something good to read through, especially if you were curious with FairTax or other alternatives to our crazy complex current tax code. Some of the challenges or issues of administration for the alternates may have changes quite a bit with technology as well.IV. Sales Tax
The fourth option considered by the Treasury Department in its study of fundamental tax reform was a general sales tax, such as a value-added tax or retail sales tax. Chapter 10 of this volume examines sales taxes in greater detail, and Volume 111 contains an even more detailed analysis, especially of the value-added tax.Comment
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I will say one thing. i am very very against a VAT............ National sales tax in leiu of income taxes sure, but NOT a VAT. VAT makes it way too easy to hide large tax increases with in the system, and makes the system nearly as complex and transparent as mud, like we have as it is now. (just in a little different way). But I would take it in a heart beat if it would disband or at least castrate the IRS.
This is just 1st reaction to the last blurb of your information there heeter.The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money. -Alexis de TocquevilleOriginally posted by Fusion
The Desire to Save Humanity is Always a False Front for the Urge to Rule it- H. L. Mencken
Necessity is the plea for every infringement of human freedom. It is the argument of tyrants.
William Pitt-Comment
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I think a lot of discussion and thought now will help figure out a solid plan for 2016.
There are pros and cons to each. If you open all the documents, it goes more into depth. And there's other analysis elsewhere too - hope they get focused on after the spending cut / debt ceiling issue gets resolved in Feb. Maybe that will include trimming of our itemized incentives.Comment
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