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Federal Tax Reform w/o Spending Reductions
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Author:  RangerDave [ Wed Feb 24, 2010 7:36 pm ]
Post subject:  Federal Tax Reform w/o Spending Reductions
I take it as a given that the American people are unwilling to substantially reduce the amount of Federal government services and spending. Americans always talk about it, but no matter who's in office, they never actually do it. So, assuming the amount of spending remains roughly where it is (as a % of GDP), how do you think the tax system should be reformed in order to deal with the deficit?
Author:  Elmarnieh [ Wed Feb 24, 2010 7:38 pm ]
Post subject: 
The least rights infringing form of tyranny within these constraints is likely a national sales tax that excludes food, clothing, and shelter.
Author:  Kaffis Mark V [ Wed Feb 24, 2010 7:58 pm ]
Post subject:  Re:
Elmarnieh wrote:
The least rights infringing form of tyranny within these constraints is likely a national sales tax that excludes food, clothing, and shelter.

Nope. Because as long as you make exceptions based on categories, all you're doing is opening the door to corrupt bargaining with regard to categorizing things, and making new exemptions.

Fair tax, or at worst, flat tax.
Author:  Taskiss [ Wed Feb 24, 2010 8:23 pm ]
Post subject: 
VAT
Author:  Rorinthas [ Wed Feb 24, 2010 10:47 pm ]
Post subject:  Re: Federal Tax Reform w/o Spending Reductions
Assuming it stays at the same &of GDP (I don't believe it will) then I'd say flat income, and flat income only. No excemptions deductions or transfusions allowed.

No estate or property. If I used my after flat income tax to buy property don't penalize me for it year after year.

No sales tax, If I spend or my money, that's on me.

And it stops the tax code from being used as a weapon. Granted it kills all the IRS and
return preparation jobs, but I think it's good in the long run.
Author:  Xequecal [ Thu Feb 25, 2010 12:50 am ]
Post subject:  Re: Federal Tax Reform w/o Spending Reductions
I don't like Fairtax and other consumption taxes as they're regressive taxes, which is just as unfair as progressive taxes. Flat income tax is IMHO the best solution.
Author:  Hopwin [ Thu Feb 25, 2010 7:50 am ]
Post subject: 
Drop income tax completely and institute a Federal Sales Tax on all goods and services.
Author:  Arathain Kelvar [ Thu Feb 25, 2010 9:02 am ]
Post subject: 
Put up a website, with a sliding bar for the budget next to all federal programs. The public can go to this website to "vote" on spending, by adjusting the bars.

Oh, and the website calculates your projected tax burden based on where you put the program budgets.

You'll see where people want the reductions in spending.

Otherwise, consumption tax.
Author:  Kaffis Mark V [ Thu Feb 25, 2010 9:58 am ]
Post subject:  Re: Federal Tax Reform w/o Spending Reductions
Xequecal wrote:
I don't like Fairtax and other consumption taxes as they're regressive taxes, which is just as unfair as progressive taxes. Flat income tax is IMHO the best solution.

Fair Tax actually works out to be mildly progressive, when you factor in the prebate. It's a flat tax rate on point of sale spending, with a fixed $ amount prebated to you to cover the tax on baseline necessities. So the more you spend, the higher your effective tax rate gets. That's progressive, not regressive. If you spend at the poverty level, you get a tax rate of 0%.

In fact, I don't see how you consider consumption taxes regressive overall -- it's a flat tax rate on spent money. You can make the argument that people who save some of that money causes a regressive tax rate effect, but the purpose of saving money is to spend it later. Unspent money being untaxed isn't really a concern for me.
Author:  Khross [ Thu Feb 25, 2010 10:25 am ]
Post subject:  Re: Federal Tax Reform w/o Spending Reductions
Xequecal wrote:
I don't like Fairtax and other consumption taxes as they're regressive taxes, which is just as unfair as progressive taxes. Flat income tax is IMHO the best solution.
Consumption taxes are not regressive.
Author:  RangerDave [ Thu Feb 25, 2010 11:06 am ]
Post subject:  Re: Federal Tax Reform w/o Spending Reductions
Khross wrote:
Consumption taxes are not regressive.


Well, the tax itself is (assuming we're talking about an across-the-board tax on all goods and services). The expenditures financed by the tax are usually progressive though, so overall it's still a progressive system.
Author:  Xequecal [ Thu Feb 25, 2010 12:29 pm ]
Post subject:  Re: Federal Tax Reform w/o Spending Reductions
Khross wrote:
Xequecal wrote:
I don't like Fairtax and other consumption taxes as they're regressive taxes, which is just as unfair as progressive taxes. Flat income tax is IMHO the best solution.
Consumption taxes are not regressive.


Ok, technically it's not regressive on consumption, (obviously) but it is regressive on income as consumption as a percentage of income decreases as income increases. This is even admitted by the creators of FairTax.
Author:  Kaffis Mark V [ Thu Feb 25, 2010 1:23 pm ]
Post subject:  Re: Federal Tax Reform w/o Spending Reductions
Xequecal wrote:
Khross wrote:
Xequecal wrote:
I don't like Fairtax and other consumption taxes as they're regressive taxes, which is just as unfair as progressive taxes. Flat income tax is IMHO the best solution.
Consumption taxes are not regressive.


Ok, technically it's not regressive on consumption, (obviously) but it is regressive on income as consumption as a percentage of income decreases as income increases. This is even admitted by the creators of FairTax.

But that's a huge technicality because unspent income gets spent someday.
Author:  Khross [ Thu Feb 25, 2010 2:02 pm ]
Post subject:  Re: Federal Tax Reform w/o Spending Reductions
It's still not regressive, since those with larger incomes spend more money.
Author:  Diamondeye [ Thu Feb 25, 2010 2:05 pm ]
Post subject:  Re: Federal Tax Reform w/o Spending Reductions
I think the question is largely irrelevant; any increase in revenue will simply get spent on bigger and bigger programs, since an unlimited about of "improvement" in social services is possible. No matter how well-funded health services and th elike are, there will always be some "travesty" justifying more and more spending.
Author:  Xequecal [ Thu Feb 25, 2010 6:36 pm ]
Post subject:  Re: Federal Tax Reform w/o Spending Reductions
Kaffis Mark V wrote:
But that's a huge technicality because unspent income gets spent someday.


No it doesn't. If you invest the money and those investments lose value, you've essentially spent some of your money without paying taxes on it.
Author:  Khross [ Thu Feb 25, 2010 7:17 pm ]
Post subject:  Re: Federal Tax Reform w/o Spending Reductions
Xequecal wrote:
Kaffis Mark V wrote:
But that's a huge technicality because unspent income gets spent someday.


No it doesn't. If you invest the money and those investments lose value, you've essentially spent some of your money without paying taxes on it.
And that's how it should be, Xequecal. The risk/reward for putting money into entrepreneurship is penalty/gain enough in itself.
Author:  Kaffis Mark V [ Thu Feb 25, 2010 9:31 pm ]
Post subject:  Re: Federal Tax Reform w/o Spending Reductions
Xequecal wrote:
Kaffis Mark V wrote:
But that's a huge technicality because unspent income gets spent someday.


No it doesn't. If you invest the money and those investments lose value, you've essentially spent some of your money without paying taxes on it.

Okay, so you don't get taxed on losing investments. I don't have a problem with that. If the investment gains value, however, if you ever realize any of that value by spending it on something (in your retirement, on a mansion, whatever), you now pay tax on it.
Author:  Xequecal [ Thu Feb 25, 2010 9:34 pm ]
Post subject:  Re: Federal Tax Reform w/o Spending Reductions
So a very wealthy person like Warren Buffet who has >95% of his net worth stashed in various investments only pays tax on 5% on his income. Meanwhile, the average lower middle class person is paying tax in 110% of their income because they spend more than they make. The tax is massively regressive.
Author:  Rynar [ Thu Feb 25, 2010 9:40 pm ]
Post subject: 
Despite the popularity of sports cliches to the contrary, you can't give more than 100%.
Author:  Xequecal [ Thu Feb 25, 2010 9:45 pm ]
Post subject:  Re:
Rynar wrote:
Despite the popularity of sports cliches to the contrary, you can't give more than 100%.


I know a guy whose life plan for the next two years is to (seriously) max out about $30,000 in various credit card and loan debt, stash all the **** he bought in a rented storage unit under a fake name, then declare bankruptcy to wipe his debt and keep all the stuff. It is very possible to spend more than 100% of what you make.
Author:  Rynar [ Thu Feb 25, 2010 9:56 pm ]
Post subject: 
You judge his character to be strong enough to merit friendship?
Author:  Rafael [ Thu Feb 25, 2010 10:25 pm ]
Post subject:  Re: Re:
Xequecal wrote:
Rynar wrote:
Despite the popularity of sports cliches to the contrary, you can't give more than 100%.


I know a guy whose life plan for the next two years is to (seriously) max out about $30,000 in various credit card and loan debt, stash all the **** he bought in a rented storage unit under a fake name, then declare bankruptcy to wipe his debt and keep all the stuff. It is very possible to spend more than 100% of what you make.


Why would you go through all that work? Credit cards are considered unsecured debt.
Author:  RangerDave [ Thu Feb 25, 2010 10:49 pm ]
Post subject:  Re: Federal Tax Reform w/o Spending Reductions
Khross wrote:
It's still not regressive, since those with larger incomes spend more money.


Not as a percentage of their income, Khross, which is what regressive/progressive refers to.
Author:  Khross [ Fri Feb 26, 2010 12:23 am ]
Post subject:  Re: Federal Tax Reform w/o Spending Reductions
RangerDave:

Not at all, since we're no longer taxing income if we switch to a flat VAT. So, if you will, kindly stop defining arbitrary terms for political gain. Even assuming current debt loads, which are retarded, the average middle class family would at best spend 11% of 107% of income, or 12%. And they would be punishing themselves for fiscally imprudent behavior. But, either way, everyone would pay 11% of expenditures in taxes.

On the flip side, the tax paradigm you continue, and its associated entitlements, actually are regressive and negatively impact the poorest segments of society vastly more than a VAT vs. a negative savings rate household. In fact, it's rather amazing you can argue that current taxation is progressive when caps on SS and Medicare are in place. Payroll taxes as a climbing portion of withholding are devastating to the very entitlement recipients they fund. And they're even more devastating to the people who just barely don't qualify. Staffers at my University pay more in taxes relative to income than I do in the current system (out of my salary, that is).
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