I bought a truck the other day. It was used, and I was the 3rd owner. (Original owner died, transferred title to heir, heir sold it to me.)
I transferred title, bought tabs, etc. I also had to pay 6.5% sales tax on the price I paid for the vehicle. Which made me think. When the original owner bought the vehicle, he paid taxes. The heir may or may not of, I think it was outside of probate, so I’m not sure. Now I am paying taxes on it. And when I sell it, the next person has to pay it as well.
The state makes some pretty good money on this idea, methinks.
My question is this, how is this legal? And what other items can they repeatedly tax in such a manner?
The idea that money can only be taxed once, an idea that I think can be traced to Grove Nordquist, is a false one. Under the American system, money is taxed when it changes hands, as in sales when a sales tax is imposed by a state or local government as a percentage of sale, as income when it is received by the worker or by the company that makes a sale, or through an inheritance tax or estate tax or death tax when it is transferred pursuant to a person’s death. Money is fluid and passes easily from person to person. While the idea that there is a tax bite for each transfer can be burdensome, there is nothing per se immoral, illegal or unconstitutional about it.
Any of them. Somebody goes to a store and buys something. They pay sales tax. The store owner collects the money as income and pays income tax. He pays his clerk with the rest of the money and the clerk also pays income tax. The clerk takes the moeny he has left after paying income tax and goes to a store to buy something and he pays sales tax.
The tax isn’t on any single dollar bill. It’s the transactions that are being taxed. And each transaction is seperate. Every time money changes ownership from one person to another, the government collects a percentage.
When I worked in a tire store in the '70s, we included federal excise tax on tires, then calculated sales tax on the total. So customers paid tax on a tax.
I’m not sure if that still holds.
Peace,
mangeorge
You mean something like a national sales tax instead of a national income tax?
Unless you’re rich, you’ll almost certainly be paying more with the sales tax.
Consider someone like Bill Gates. He probably earns something like 1000x what I do. But he doesn’t consume 1000x what I do – there’s only so much champagne and caviar that one person can eat. Most of his income winds up reinvested or donated to charity. So if you switch to taxing consumption instead of income, the tax burden of rich people like Mr. Gates will go down. And if he’s paying less, someone else has to pay to more to make up for it – namely, you and me.
Personally I think we should jack the top tax bracket back up where it was from the 1930’s to the 1980’s: 70-80%. Trickle-down economics has been a failure – all it’s done is create massive debt and stagnate the wages of the middle class and the poor.
Sick of high taxes? Soak the rich, baby. It’s the American way!
I think the Fair Tax’s answer to this is that you will get reimbursed every month for the taxes on “basic necessities”, and only pay tax on luxuries. So in the end Bill Gates should spend more in taxes than you, so long as you aren’t buying a yacht.
If the goal is to get Bill Gates to pay more taxes, then you don’t need to redo the entire tax structure from scratch. You just raise the top rates. Easy-peasy.
The Fair Tax plan says it’s revenue neutral. So it’s not changing our overall tax burden one whit, it’s just changing how it’s calculated. It’s a Chinese fire drill, a bunch of noise and scrambling to get right back where we are right now … assuming they do it fairly … which is unlikely. Sales taxes have always been one of the most regressive forms of taxation and it’s almost certain that the “Fair Tax” in whatever final form it assumes will wind up sticking it to the poor and the middle class.
Warren Buffet has written a lot on this topic - because he believes himself to be undertaxed. Buffet makes very little in salary - most of his income comes from capital gains and dividends, taxed at 15%. Plus even on his salary, if its greater than (somewhere around $100k, I’m not looking up the numbers right now) he doesn’t pay SS tax.
Now, there are some good reasons that capital gains rate and dividend rate is 15% - it encourages investment. Plus that’s long term capital gains, you tie up your money for at least a year to get that (long term used to be longer) and the lower tax rate is suppose to compensate you for the inflation of tying up your cash.
But raising the top bracket isn’t going to do much, because few in the top bracket are making the majority of their money in salary.
I’ll post a Buffet interview if my Googlefu is working.
That’s a VAT - you apply taxes on every step of the value chain (Value Added Tax). We don’t have one because we’ve decided not to have one - we do one final sales tax transaction that is supposed to cover all the value. Why don’t we have one. Business fights it. Its a pain to administer and account for and the perception is that consumers would pay a lot more for the same products - so consumers aren’t fond of the idea either. We talk about putting one in - alot. The administration and accounting has gotten SO much easier with ERP systems, most of our peer countries have them and the issues are fairly well understood. But they are seen as “raising taxes” which leaves a poor taste in the mouths of politicians looking to get reelected.
Oh, I agree! I’d raise the upper tax bracket AND jack up the capital gains tax AND increase the corporate tax rate to boot.
Ownership is control. Right now the very wealthy are receiving far more income than they can ever spend even on the most lavish of lifestyles. So they take most of their money and use it to increase their assets. The net result over decades of this sort of thing is exactly what you’d expect: The very wealthy control a larger and larger percentage of the country – the real estate, the factories, the corporations – and the poor and the middle class control a smaller and smaller percentage. Keep it up long enough and we’ll wind up with a pattern of wealth distribution that resembles Latin America: a few super-rich families owning almost everything, a tiny middle class, and a huge sea of poor people with little hope of bettering their lot.
Soaking the rich isn’t just a good way to balance the budget. It’s also good for America in the long run by preventing economic power from pooling at the top.