Replace income tax with property taxes?

[DrDeth]

*Originally posted by flex727 *
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Actually, taxable income isn’t all that objective either. Have you seen the size of the tax code, or seen that annual article in Money magazine where they have a dozen accountants do an average tax return and get a dozen answers?

**

Well, “TAXABLE income” is WAY different from “income which is taxable”. Most of the Code is taken up with sections 99% of Americans have no interaction with- ie very technical business stuff.

And that tax return is hardly “average”- it has Alternate Minimum Tax, and enough income to start phase out of deductions- only “average” if you’re a Republican . Most tax returns are the very simple 1040A’s & EZ’s. (My Bro does taxes)

[DrDeth]

*Originally posted by Highway *
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Deth, that’s exactly the point I was making. Actually, my withholding is 41% and FIT withholding is around 24%. I am adding in State, SS, Medicare, County, etc, because they are all related, especially the Social Security, as it just goes into the general fund like FIT. If we are discussing the abolition of the FIT, then it seems silly to leave the others alone. The collection of those will necessarily change with any change to the FIT. But I thought we were also discussing replacement of income taxes with property taxes, and all of those are income taxes, maybe not by definition, but by action. It would seem rather pointless to get rid of one income tax but leave the rest.

**

But then your figures are disingenuous. You computed the total of FEDERAL INCOME TAX collected, then compared it to the total value of property- to come out with a prop tax rate of 7%. But adding in all the rest of the stuff which is withheld, bumps that up to closer to 14%. Add in the fact that (as a WAG) some 1/3 of th eproperty is tax exempt (belongs to the Government most of it, then churches, etc), the normal Prop tax rates of 1>2%, you have an annual Property tax rate of some 20%. Thus an AVERAGE homeowner here in Silicon Valley would have an annual tax burden of $100,000!:eek:

No way, Dude!:wally

[flex727]

*Originally posted by suranyi *
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The point is they made their choice according to the current taxation system, and you’re proposing to fundamentally change that system in the middle of the story. I didn’t see you say anything about a grandfather clause that would protect current homeowners.

Ed **

Ahh! The issue of transition. Yeah, that’s a pretty thorny issue and probably the single biggest obstacle to the whole concept. I actually was intending to debate the merits of property taxation vs income taxation without respect to how we would get there. As I see it, the transition would have to be phased in over 20, 30, or maybe even 100 years because it’s not just couples in homes but entire industries that have made business decisions and investments according to the current taxation system. This same problem applies to all the alternative proposals to the income tax.

[flex727]

*Originally posted by DrDeth *
**

But then your figures are disingenuous. You computed the total of FEDERAL INCOME TAX collected, then compared it to the total value of property- to come out with a prop tax rate of 7%. But adding in all the rest of the stuff which is withheld, bumps that up to closer to 14%. Add in the fact that (as a WAG) some 1/3 of th eproperty is tax exempt (belongs to the Government most of it, then churches, etc), the normal Prop tax rates of 1>2%, you have an annual Property tax rate of some 20%. Thus an AVERAGE homeowner here in Silicon Valley would have an annual tax burden of $100,000!:eek:

No way, Dude!:wally **

You’re aiming this at the wrong guy. It was me (Flex727) making the argument and doing the calculation that resulted in the 7% figure. The original issue of this thread was can we replace the income tax with a property tax (see thread title). I was not assuming we would replace ALL federal taxes with a property tax.

[Highway]

*Originally posted by DrDeth *
**

But then your figures are disingenuous. You computed the total of FEDERAL INCOME TAX collected, then compared it to the total value of property- to come out with a prop tax rate of 7%. But adding in all the rest of the stuff which is withheld, bumps that up to closer to 14%. Add in the fact that (as a WAG) some 1/3 of th eproperty is tax exempt (belongs to the Government most of it, then churches, etc), the normal Prop tax rates of 1>2%, you have an annual Property tax rate of some 20%. Thus an AVERAGE homeowner here in Silicon Valley would have an annual tax burden of $100,000!:eek:

No way, Dude!:wally **

Again, like I said, I was showing why I don’t think the income tax should be replaced by a property tax because it would change behaviors towards ownership. I do not think imposing higher property taxes would be beneficial, and I NEVER brought up any proposed rates of property taxation. I mentioned my withholding figure to show how people don’t understand the amount of money they are paying in taxes, because it is withheld before they get it. The point of my posts was to show that the diverse points of government revenue have been developed to ‘cover all the bases’ and find most of the ways that money is invested, spent, or earned. Taking one of those collection paths away would quickly change the way people lived, making the change to a property tax bad.

I commend your effort to change my argument, but that’s not what I was going for.