Why we need Equal Taxes

[Penumbra]

If I were to re-write a tax system from scratch, it would look something like this, based on what I currently know. It's basically a more progressive version of the "FairTax".

-Eliminate most existing taxes.
-Implement a federal sales tax on all goods consumed by the public. It's fairly easy accounting, and collected by the states and given to the federal government. (That's for the US; it will differ a bit based on the structure of the country).
-Get most taxes from consumption taxes. A federal sales tax, excise taxes, etc. Some small import taxes.
-To make it progressive (since consumption taxes are often naturally regressive), include a prebate; an amount of money sent monthly to each citizen. The exact figure should be determined, but I propose a figure that's a least double what the "Fairtax" proposes, to make it more progressive.
-Include an estate tax, with a tax credit of a few million dollars, so it's a tax on multi-million-dollar estate transfers.
-If there still isn't enough revenue, or it's not progressive enough, then implement a simple dividend and share repurchase tax. Corporations pay a percentage of their net share repurchases as tax, and investors pay a tax on their dividends, but they have a substantial tax credit so that only wealthy people end up paying it (which reduces the number of people that need to bother with, say, reporting $1k in taxable dividends).

The advantages are, it's cheaper to hire a domestic worker. More domestic jobs; more globally competitive. Consumption of both domestic and imported goods are taxed, rather than taxing the production of goods or the hiring of workers. This should have a positive affect on trade deficits or surpluses. More competitive exports.

In addition, tax filing is immensely simplified. Tens or hundreds of billions of dollars of tax filing (Government tax work as well as private tax services) are greatly reduced. Instead of most people filing a tax return, hardly anyone has to file a tax return. The only entities that file tax returns in this scheme, are businesses (to report their sales tax and share repurchase tax, which is simple by corporate accounting standards), and high net worth individuals (and the forms are easy).

 

[Penumbra]

Ahh i see, Australian accounting english vs American accounting english issue... I was referring to taxes on corporations, businesses etc... hence I used the word corporation, maybe i should have said business taxes then.

Well, you seemed to group them together. Some taxes are on corporations directly, while some taxes are on individual investors of a corporation.

Both Australia and the US, to my knowledge, have fairly high corporate tax rates. They also have dividend taxes. They differ in certain ways.

 

[Jeremy Mason]

Currently about 6% of federal spending goes towards interest on debt (varying to a certain extent on what time period we use in calculations). The other 94% goes to medicare, medicaid, social security, defense, and other mandatory and discretionary spending.

Depending on what year one goes by for calculations, for every dollar the federal government spends, about 2/3rds of it comes from their tax revenue of various sorts, and the other 1/3 comes from the addition of new debt. That's not sustainable and needs to be reduced, but it's not accurate to say that all money from income taxes and estate taxes goes towards paying the interest on US debt.

This, is not true,at all! Government lies. Sorry. Give me their lies, please describe.

 

[Penumbra]

This, is not true,at all! Government lies. Sorry. Give me their lies, please describe.

The numbers are freely available online, both from government sources and from private sources. I could give you a number of links, but I get the impression you're not interested in them.

 

[Jeremy Mason]

The numbers are freely available online, both from government sources and from private sources. I could give you a number of links, but I get the impression you're not interested in them.

Actually, I am interested. That way I can research the web-site.

 

[Penumbra]

Actually, I am interested. That way I can research the web-site.

White House
Wikipedia
New York Times
Tax Policy Center
FederalBudget.com
USGovernmentSpending.com
FactCheck.org

As can be seen, it's untrue that "All the money in the form of income tax and estate taxes, etc. goes towards paying the interest on the US debt". In reality, a fairly small percentage of government tax receipts go towards interest.

Currently, the national debt is roughly equal to the GDP. Banks and rating agencies still view US debt as fairly low risk because, quantitatively, it's nowhere near default. Before a country gets anywhere near the point where most of the tax receipts are going towards interest, default becomes inevitable and banks and credit rating agencies begin downgrading the debt and the interest rates start getting out of control. The US isn't anywhere close to having interest problems. However, if the debt keeps growing and growing as a percentage of GDP, then interest payments will become more and more of a problem, and the risk of default would increase.

 

[nnmartin]

If the higher class pays the most taxes, nobody would want to get the most well paying jobs which are usual the most essential ones for our society (eg hospitals)

by high paying hospital jobs do you mean nurses, orderlies, cleaners and porters?:sarcastic

I think not!

 

[Alceste]

So, when was the last time Mr. Black made out a big fat check to the IRS above and beyond his assessed taxes? There is that provision already, you know. The wealthy could simply write checks for a few mill and sent it with their tax returns.

Exit question: Isn't it better to give.... (rather than be mandated to shell out.)

Just goes to show you that (as research indicates) the wealthy are positively stingy compared to lower income brackets when it comes to charitable / voluntary giving.

 

[Alceste]

Not be taxed at all? Or to what effect?

It is cheaper not to tax people who earn less than a subsistence income than it is to tax them, then try to find a way to give that money back in the form of rebates, food stamps, medicare or other fundamental necessities they can no longer afford.

 

[nnmartin]

Given the choice between getting paid, say, $30k to be a doctor or $30k to be a waiter, most people will probably forgo medical school and become waiters.

not sure I agree with that because being a waiter must be fairly dull but a doctor has an interesting job.

Quality of life and job satisfaction play large roles as well here , also there is the respect and status issue attached to most jobs.

Not many people would want to be a toilet cleaner even if it paid the same as a lawyer for instance.

 

[nnmartin]

One last point...the OP contains a troubling bit of class warfare. It borders on ridiculous that the "1%" are greedy because they want to keep the money they've earned a not have it stolen by the government so that low achievers don't have to pay taxes at all.

They've made their money by stealing it off the people - the government only wants to do what's right by redistributing some of it.

Of course these 1% are greedy.

Most of them probably have 5 cars, 3 mansions and a harem of servants - yet they still want more!

In the good old days they'd have been lined up and shot!

 

[InformedIgnorance]

There IS however an important distinction that should be made about those among the 1% who earned their money (there are a very small number of those) as opposed to those who either inherited wealth (which should be covered by an estate tax and after that it should be fine) as well as those who obtained their wealth through working the bureaucratic system to bolster their wealth (who should have that wealth stripped away and then be put in jail).

 

[Alceste]

There IS however an important distinction that should be made about those among the 1% who earned their money (there are a very small number of those) as opposed to those who either inherited wealth (which should be covered by an estate tax), or who obtained it through working the bureaucratic system to bolster their wealth (who should have that wealth stripped away and then be put in jail).

I am very skeptical that any person can "earn" $960,000 a year.

 

[nnmartin]

^^ I thought inherited wealth was taxed though?

 

[InformedIgnorance]

Oh I think that -most- of them do not earn what they get paid, however there are some people usually those that are either extremely successful specialists (in particular fields) who perform otherwise impractical or impossible functions and radical (as opposed to incremental) innovators who advance technology and thus society... some of those people would IMO be legitimate in earning 20x times the standard wage. The overwhelming number of executive positions however would not fall into this category of utility and to be honest it is these people whom I identified, who would seldom be among the 1%, unless they are among the innovator group and were able to successfully patent the innovation and exploit that innovation commercially (which is usually not the case as established competitors will manage to release new products/services based on that innovation yet different enough to avoid patent issues and therefore the innovator seldom succeeds).

And yes, inherited wealth is taxed. However I do not believe it is taxed enough... personally I would make it taxed more frequently as opposed to on an individual's death... I would make it an annual, lower rate tax of the entire living individual's estate.

 

[Jeremy Mason]

White House
Wikipedia
New York Times
Tax Policy Center
FederalBudget.com
USGovernmentSpending.com
FactCheck.org

Thank you!

As can be seen, it's untrue that "All the money in the form of income tax and estate taxes, etc. goes towards paying the interest on the US debt". In reality, a fairly small percentage of government tax receipts go towards interest.

I can seem to find a chart that quantifies any interest payment. That's even scarier.

Currently, the national debt is roughly equal to the GDP. Banks and rating agencies still view US debt as fairly low risk because, quantitatively, it's nowhere near default. Before a country gets anywhere near the point where most of the tax receipts are going towards interest, default becomes inevitable and banks and credit rating agencies begin downgrading the debt and the interest rates start getting out of control. The US isn't anywhere close to having interest problems.

We were just down-graded not to long ago and the debt seems to be getting bigger. There goes another ceiling cap.

The charts that refer to gross national debt (around 15-16 Trillion dollars) do not account for the 5+ Trillion dollars of the Freddie Mac and Fannie Mae's debacle, nor does it account for the trade deficit nor the social security and medicaid/medicare deficits.

http://en.wikipedia.org/wiki/United_States_public_debt

Unfunded obligations excluded

The U.S. government is obligated under current law to mandatory payments for programs such as Medicare, Medicaid and Social Security. The GAO projects that payouts for these programs will significantly exceed tax revenues over the next 75 years. The Medicare Part A (hospital insurance) payouts already exceed program tax revenues, and social security payouts exceeded payroll taxes in fiscal 2010. These deficits require funding from other tax sources or borrowing.[20]
The present value of these deficits or unfunded obligations is an estimated $45.8 trillion. This is the amount that would have to be set aside during 2009 so that the principal and interest would pay for the unfunded obligations through 2084. Approximately $7.7 trillion relates to Social Security, while $38.2 trillion relates to Medicare and Medicaid. In other words, health care programs will require nearly five times the level of funding than Social Security. Adding this to the national debt and other federal obligations would bring total obligations to nearly $62 trillion.[21] However, these unfunded obligations are not counted in the national debt.

15-16 trillion in Gross National Debt sounds Grossly off to me.

However, if the debt keeps growing and growing as a percentage of GDP, then interest payments will become more and more of a problem, and the risk of default would increase.

Your websites describe this trend quite remarkably.

 

[Penumbra]

Thank you!

I can seem to find a chart that quantifies any interest payment. That's even scarier.

Almost every one of those links I provided includes info on the interest payment.

We were just down-graded not to long ago and the debt seems to be getting bigger. There goes another ceiling cap.

The charts that refer to gross national debt (around 15-16 Trillion dollars) do not account for the 5+ Trillion dollars of the Freddie Mac and Fannie Mae's debacle, nor does it account for the trade deficit nor the social security and medicaid/medicare deficits.

United States public debt - Wikipedia, the free encyclopedia
15-16 trillion in Gross National Debt sounds Grossly off to me.

Your websites describe this trend quite remarkably.

Our debt was indeed downgraded, from perfect to only near-perfect.

The trade deficit is not debt. They're different things, but related as part of the same common poor choices in consumption habits, poor political agreements, bad tax policy, and so forth.

Other deficits, again, are not debt. Social security actually has a surplus on paper, but other agencies borrowed from it. Now it's loosing money because people are living so much longer than they were when social security was started. Deficits and debts are different things; deficits over the long term, build debt. But while debt has to be paid off over time, deficits can be fixed rather quickly if a government were able to be rational (but all too often they can't be). Unfortunately, it's not just government that's irrational, because polls of voters show that voters, in aggregate, can't agree on what they want.

 

[Jeremy Mason]

Almost every one of those links I provided includes info on the interest payment.

I know, I reviewed them a bunch last night and couldn't find them when I posted. My recollection was 6 percent? Something that sounds suspicious.

Our debt was indeed downgraded, from perfect to only near-perfect.

A slippery side nontheless.

The trade deficit is not debt. They're different things, but related as part of the same common poor choices in consumption habits, poor political agreements, bad tax policy, and so forth.

Yes and therefor explains the graphs in your posted websites. I agree with you, to a point. I'm not convinced that the majority of deficit is not transferred to debt. I think you iterate this latter in this post.

Other deficits, again, are not debt.

Explain, that one to my landlord.

Social security actually has a surplus on paper, but other agencies borrowed from it. Now it's loosing money because people are living so much longer than they were when social security was started.

True, however, it still has to have an immediate attention ie $.

Deficits and debts are different things; deficits over the long term, build debt.

Here we are.

But while debt has to be paid off over time, deficits can be fixed rather quickly if a government were able to be rational (but all too often they can't be).

Your disclaimer explains my point.

Unfortunately, it's not just government that's irrational, because polls of voters show that voters, in aggregate, can't agree on what they want.

True, but the choices are (one or two) and usually not what the people want. Corporate filtering of the choices gives the voter, (a lesser of two evils) in those choices and not the true intentions of the voter, federally.