Every “Flat Tax” program I have studied has the rich payng less and the middle class paying more.* Every single one.*
The problem is that the rich have the resources to move overseas. The Bahamas is a darn pleasant place to get citizenship and be rich, and won’t soak you. I know several rich people who have said “screw it” and just picked up and moved to Asia - Thailand seems to be a popular destination for the U.S. and European rich to hide and not pay taxes - I don’t think most of them even move citizenship - they just move assets and never plan to reenter the country. Globalization has effected tax policy as well as everything else - if I can fly my kids and their families to my home in the Philippines every year, is it so much different than retiring in Miami?
You have to be careful how much you decide to “soak” the rich, because they - more than anyone else - have other choices.
Ah, I thought tabs was in reference to the “tags” or something on the car, or the costs associated with renewing your license tags.
Here we pay a yearly tax on our cars, I guess those are the same thing as the tabs, but they are called property taxes here. Property taxes on homes here are calculated in on the monthly payment. (Or so I am told, I don’t currently own a home)
Is this a tax paid to the town and to the state registry? Here we pay to register our cars each year before we can have them inspected.(aka “vehicle registration” - property tax refers solely to homes and land up this way) I’ve heard there are states who don’t require a yearly inspection, but I never stopped to wonder if they had to register them anyway.
You have to pay US capital gains (and maybe income, I’m not sure) if you’re a US citizen, regardless of your country of residence. I suppose that some people might give up citizenship and move to the third world but I can’t imagine its a huge amount. After all, what’s the point of being rich if you feel you have to go hide in Thailand to save money instead of living where you’d prefer.
Quite the patriots aren’t they?
If somebody is ready to ditch the U.S. just to get a break on their taxes – good riddence I say!
In any case, there were trans-Atlantic flights and ocean liners back when rich were paying twice what they pay now and we didn’t see a mass exodus back then. I doubt we’ll see one now.
Often time’s taxes appear to be collected more than once on the same dollar or item. Examples of this have been pointed out in prior post. It is legal as pointed out in prior post. The main purpose of collecting tax is to fund government. There seems to be a conflict between governmental services desired by the public and taxes willing to be paid. If these double taxes were eliminated then all other things being equal, an increase in tax elsewhere would be needed. Perhaps the issue is one of fairness.
In my view there are three main objective in tax codes. 1. Collect enough taxes to fund government. 2. Effect public policy desires including economic goals. 3. Taxes should be fair. Add to this the political process involving the special interest of many groups (we all got our own interest) and you get what we got. Some would say that we satisfy none of these goals.
I make a good living dealing with the federal tax code and I’ve got to tell you that my clients spend way too much money dealing with taxes and hedging against uncertainty in future tax liability. To say the least the federal tax code does not make me proud to be an American.
So what would I do if I were tax King?
Government should aim to collect enough tax to cover disbursements. I will admit that there may be times when the federal government needs to deficient spend for economic reasons. However the effect that the federal budget and taxation has on the economy is immaterial compared to the federal monetary policy. The tax code is a billion dollar stick and federal research is a multi trillion-dollar stick. If the Bush tax rate reduction had any real effect on economic growth it was because taxpayers had larger refunds due to the unforeseen tax rate reduction mid year. In other words they had additional cash to spend because of money that they had saved for taxes or received in refunds. Additionally, this use of the tax code created uncertainty for taxpayers. Uncertainty translates to cost in that taxpayers spend money to try to hedge this uncertainty. In short the managing of the economy should be left to the Federal Reserve.
I also think the tax code is a terrible place to pursuer public policy. It appears more palpable to give a tax break than write a check. Is there any difference? If we switch to writing checks to achieve public policy goals, then at least we reduce the complexity and cost of tax compliance. I also think that the cost of these policies would be more accountable.
Additionally, to me it is seems questionable if public policy through taxation really works. Even though we think about how economic systems work by examining the effect of changing one variable and holding all others the same, this isn’t the real world. For example, does increasing the personal residence interest deduction enable more taxpayers to own their own or a bigger home or does it result in the increase in the price of personal residences? Does it distort markets so that more investment is n personal residences as opposed to productive infrastructure that may increase the economic productivity? Does increasing the tax rates for higher income taxpayers really shift the burden of taxation to these folks or does it in the long run result in the increase of the value of these individuals’ services (Doctors) and in effect higher cost to the lower income taxpayer. Does tax policy distort markets resulting in economic inefficacies?
So let my wrap this up. If I were tax King I would:
No public policy in tax code. Make it a lot simpler, cleaner, less politics in the decision making progress.
Restructure as many collections by government as feasible to be fee based. For example I would move all taxes to build and maintain roads and highways to a gas tax. This would be very fair. The more you drive, the bigger vehicle your drive, the less efficient vehicle your drive the more your pay.
For the rest of the money needed to fund government, collect on a rational basis approximating benefit received from government. Rules should be long term with advanced notice of changes to reduce uncertainty. Or a value added tax as mentioned in a prior post.
Alan Greenspan liked the idea of the value added tax. The reason is because he believes that it would discourage consuming and encourage savings. You can replace the word savings with “investment in productive assets.” Can you hear the collective carping of the pants by retailers in this country?
BTW, none of this has any chance of ever happening.
Wholesale transactions are business transactions not subject to sales taxes (but they are included as gross receipts in an entity income taxes) because businesses would just pass the tax cost down to the end user anyway, so its more efficient just to apply the sales tax at that end, consumer level. That, and businesses have more clout with the government than consumers do.
Sure, but if you want to you have two choices - move overseas and give up U.S. Citizenship (and maybe these people aren’t patriots, but I can’t blame them when the citizens here want to “soak” them), or move overseas and stop paying taxes - its illegal, but no one is going to extradite you for not paying taxes and if you never enter the country again… I wouldn’t do either, but there are people who do - with our measely 15% capital gains rate and 36% (is that what it is) maximium tax rate.
Libertarians like me tend to get horrified when people start talking about the government maximizing tax revenue streams. That is a foreign and despicable concept. Instead, we think that the government should give a fair assessment of the money it needs to its job and then find out the minimum, most fair way to raise the money for it through taxes. I find it odd that anyone would disagree with that goal as opposes to raising as much wherever it can be found without stirring up a critical mass of people that leads to a democratic revolt.
Tax policy has been great at stimulating the economy. When the tax code has allowed accelerated depreciation, businesses spend like crazy on capital. Granted, it has had unintended consequences (some believe the S&L scandal was a direct result of giving tax breaks for investing in real estate). But it has traditionally worked - and its working now to get companies to spend in the Katrina zone.
Give them a check and they don’t necessarily spend it on capital. Spending creates a multiplier. The government writing checks doesn’t ensure that multiplier (as we discovered with our rebates - if you use that rebate to pay bills you’ve already amassed - no multiplier).
Who’s arguing that? I don’t want government to take the maximum possible, I just want it to cover it’s expenses, which it’s currently not doing.
And, in the interests of fairness, I want to see the rich paying significantly more and the middle class and the poor paying less. Tax rates for the rich about as low as they have ever been since the income tax was instituted and I’d like to see the rates returned to something closer to the norm.
And if Libertarians want less government, I wish they’d work for that DIRECTLY instead of supporting tax cuts that leave expendatures untouched. How about we reduce the size of government FIRST, then cut taxes, since going about it the other way has already failed TWICE.
But these free lunches are so delicious…
It is paid every year, end of December, the form says “Personal Propery Tax” and includes all items, Cars, Trucks, RV’s, Campers, Boats, etc. I tried to find a cite online, but there wasn’t one that I could find.
We have yearly inspections, which are required before you can re-license your car, but they are required before you actually register. Oh they recently changed it so we can relicense every 2 years if we so choose. Costs 2X as much, but only have to do it half as many times. 
I can only speak for Florida, but we have no vehicle inspection, and no personal property tax on vehicles.
You do have to pay ~35 bucks per year for registration on your car.
When I left the state of West Virginia years ago, you had to get a vehicle inspection every year AND pay a personal property tax on your car AND pay the ~35 per year registration fee.
No, the “personal property tax on vehicles,” popularly known as the “car tax,” is a tax paid to the state/county government’s general treasury, just like real property tax. Such revenues are not earmarked for transportation-related costs. The vehicle registration fee is a separate thing, as are annual safety inspections and emissions testing.
Vehicle taxes can be one of two kinds of taxes. If everyone pays the same amount of money - its a licensing fee (its still a tax) - like getting your dog licensed every year. If the amount of money is based on the value of the car, its a property tax. In some cases, its somewhat of a blend of these two things. Some have both - a base license fee and then a tax based of the value of the car (a property tax) on top of that. Some have the fee for inspection on top of that as well - like West Virgina - which is a “service fee” on top of the license fee and then the property tax - but that, as well, is still a tax.
I don’t disagree with getting more money from the rich, but in general your posts have reflected a very poor understanding of what being rich is, and how to get money.
As far as taxing corporations: corporations that are publicly held are held by little old grannies with $60,000 to live off for the rest of their lives as well as large shareholders. It’s not as simple as just “taxing them more.” Many of them (Exxon is a good example) make lots of money just because they are large, not because they are making an obscene percentage of profit. It’s too complicated to distill in this post, but a simplistic view to just tax corporations more is silly.
As far as raising tax brackets AND jacking up capital gains–neither one will touch a rich person much at all. They neither make much of the kind of income that gets taxed with income tax, nor do they live off assets which have been cashed in and are subject to capital gains.
Simplifying existing structures is one answer, but it’s highly unlikely to happen. For an assortment of reasons, both altruistic and abominable, it is the complexity of the tax law–the exceptions, and the special cases, and the bizarre definitions, and so on–that make it reasonably easy to avoid paying taxes if you are wealthy. And in the end it’s almost impossible to tax wealth itself: “Hey, Bill; you’ve got 50B dollars. Please send the US government 10% of it…”
Jacking the tax rate to 70-80% for wealthy individuals would kind of put a dent on opportunites that would help society (you know, invest in a company that makes consumer goods–for you and your family). What incentive is there to invest if you’re going to be taxed at 80%? We would have to depend on altruistic endeavours. And the money flowing there isn’t going to be too great if the tax rate is ridiculous.
Well, there is a fair ways to go between the rates you speak of and the current maximum federal income tax rate of 35%. There is even a further ways to go between that and the current long-term capital gains tax rate of 15%.