That is certainly an option. Of course I’m sure you are aware of the counter-arguments (regressiveness, in paticular, especially if you exempt all food and clothing rather than giving a prebate or standard exemption of some sort).
Also, do you know what kind of rate would be required if you exempted all food, clothing, shelter, and medical costs? The Fair Tax people peg it at 23%, which considering their biases is pretty much a lower bound - and they don’t exclude any of the categories you do. Your plan would require a significantly higher rate, IMO.
This is essentially what the Earned Income Tax Credit is, which is exactly one of the things that enables some people to not pay any income tax, which is what all those conservatives are up in arms about!
I don’t think it matters at all “why” someone is paying no taxes. A person’s contribution to the economy is not and probably should not be the determinant of the right to vote.
I’m under the impression that they don’t have to kick in for all the benefits that the government provides them… at least in terms of an income tax.
Let me put it this way: for those who have kids, do they value things that were given to them vs things they worked for/earned? Which one do they take for granted? Which one do they take better care of?
This is actually a decent point, and I’ve thought about this for awhile. I agree that the ‘poor’ is not where the money is per se, but come on - the bottom half? Half the country is poor now?
Even public services that scale their fee based on your financial situation usually take *something *(think in terms of clinics, therapy, school lunch programs in my state, etc). Giving away services (or anything) makes it less valued, and paradoxically more demanded.
It’s like the old saying - if they made election day the day after Apr 15/tax day, there wouldn’t be a liberal left alive in the country. Maybe forcing some contribution, even token ones, would help people see the fiscal trainwreck we’re heading for (highly accelerated due to this administration).
Yes, but he will also be able to apply for benefits in the second year.
You can’t?
Well, I guess you’re entitled to your opinion. In MY book the guy that makes 100K has 5 times as much income as the guy that makes 20K. We can tax that money when he earns it here or try to tax it when he spends it after he retires in some jurisdiction that has a sane tax system…
So if I hop over to Canada to buy automobiles, boats, jewelry, computers and stuff, I can avoid paying taxes on those items?
Is this based on the 50% of all American’s don’t pay federal income tax soundbyte floating around? I mean, it’s true, only 20% of my household pays federal income tax. My 3 kids don’t pay federal income tax, and if they did it would probably be breakiing child labor laws. My wife is a stay at home spouse, largely to take care of our special needs daughter, and she doesn’t pay any federal tax either.
50% doesn’t sound unreasonable after you strip out minors, college kids, SAHM, retired with no income, those with income below the poverty line.
Yet all of those people are citizens, and we live in a country where one person has one vote and representation stems from voting and not taxation.
And you don’t see why limiting it to income taxes isn’t cherrypicking?
Why couldn’t I say: OMG, Hedge Fund manager John paulson earned $5 billion dollars last year and only paid $8,000 in social security taxes, which is a tax rate of0.00016% and some poor guy making minimum wage is paying 8%. So the minimum wage guy is paying a rate 50,000 times as high as this billionaire.
The minimum wage earneer shold get 50,000 votes to John Paulson’s one vote.
What point are you trying to make other than trying to characterize the poor as freeloaders or little children?
You do know that everyone who earns a paycheck pays Social Security taxes and Medicare taxes on the first dollar earned, right? And that SSN and Medicare taxes are not subject to deductions or adjustments? And that Social Security tax is 7% of income, plus another 7% that the employer pays for a total of 14% of wages, straight off the top? And that these SS tax payments are put into the so-called “trust fund”, which means it is used to buy a treasury bond? And when SS buys a treasury bond, the general fund gets that money, which is used to to pay general obligations?
You’re delusional if you think the “rich people deserve to have their taxes cut, poor people deserve to have their taxes raised” is going to attract much support outside of the conservative chattering class.
How is it more regressive if you exempt necessities? The poor spend more on those things, as a percentage of income, than the rich. So a greater percentage of the poor’s income is exempt. Thus they pay less tax. That’s progressive (and thus, on the SDMB, fair), not regressive.
Now I could see having an annual limit on housing expenses based on the zip code. You can spend a hell of a lot on a house. But really, how much more could you really spend on food and electricity if you wanted to…2x? 3x? Not 20x like you can with a house.
So what? Right now, they take .30-.33 on the dollar in federal, state, and local taxes before I even see the money. I’d gladly pay 50% tax on my unnecessary spending if it meant I could keep the whole dollar and spend all of it on food/rent/electricity. If you figure that a well-off person spends 33% of their funds on necessities vs. the poor’s 80%, then the poor would pay 10% overall (20% * 50%) and the rich would pay 33% (66% * .5). If the rich guy saves his money, then he doesn’t pay the tax until later. If he dies with it in the bank, then the government takes some in estate tax.
The point is, the rich guy can always decide to live like he’s poor and get treated equally by the IRS. He’s got that freedom of choice. That’s the important part. That’s what makes it fair.
There is a recession, which contributes toa temporary increase in this figure plus the fact taht Obama’s stimulus included a tax cut of up to $800 that eliminated the tax burden for a lot of people.
I had free lunch growing up. When they changed that to make me pay a nickel for my lunch, it didn’t change my attitude about the lunch at all.
So you don’t think payroll taxes are “some contribution”? The fiscal trainwreck we are headed towards is driven largely by medicare and historically low tax rates. How has this administration highly accelerated this problem?
No, its 50% of households. This was true last year but it has historically been closer to 33%. this eyar wasw a bit different because of the recession plus an $800 tax credit that Obama gave to every taxpayer earning less than 150K (that $800 elimianted the tax burden for a LOT fo people).
Hm. You are probably correct. I was basing that comment off a claim from the FairTax folks, and considering their interests that was probably a mistake on my part.
So you would put your federal sales tax on home purchases too? I was including an exclusion for all home purchases under my “it’s more regressive to exempt” statement. If you tack a 25% tax on home purchases above a certain threshold then I think you probably get a bit towards fairness.
So you would keep the estate tax? I think that is an essential part of any of these plans - otherwise the lack of taxation of wealth accumulation could lead to a permanent aristocracy pretty quickly. I’m assuming your not taxing capital gains or dividends or any of that either, correct?
Of course, the poor person doesn’t have that choice. I guess if you make the exemption high enough it doesn’t matter.
Like I said, I’m not 100% opposed to different tax structures, and reducing income taxes and replacing with a VAT or GST is certainly something I’m open to. My concerns are that (a) it’s not significantly less progressive than the current system and (b) it maintains federal revenue and something closer to the historical 18-20% of GDP rather than the current ~16% (numbers from memory, may be slightly off).
Its VERY progressive as long as you make less than the poverty level. Then it gets progressive until you hit about $150K, then it get regressive again.
The fair tax imposes tax on rent and the purchase of a new home (but not on the purchase of a pre-owned home).
George Bush established an advisory panel to look into tax reform President's Advisory Panel on Federal Tax Reform - Wikipedia and it concluded in 2006 that 23% wasn’t enough to be revenue nuetral with the current INCOME tax system. It would have to be 25% assuming a 15% evasion rate and 33% with a 30% evasion rate. It would have to be even higher if it wanted to be revenue neutral with payroll, estate, and gift taxes which are also repealed under the FAIR Tax.
The 15% and 30% include things like going to Canada or Mexico to buy your cars (or buying them over the internet from Canada or Mexico). Car dealerships int hte US would largely be garages to service cars bought from Canada.
Nothing is exempted under the FAIR tax. You get a check in the mail based on the size of your family and then you pay a tax on the purchase of all new products. If you exempted groceries, utilities and rent, the FAIR tax rate would have to be much much higher.
Thats not the way FAIR tax works and the ability to evade by purchasing in another jurisdiction shifts the burden even more.
And the poor guy has no choice at all because he MUST spend everything he earns.
The rich guy has the choice to buy his ferarri from a dealership in Toronto.
I’m not opposed to other tax structures either but you have to show me that it would be an improvement over what we have now to go through the trouble of implementing an entirely new tax paradigm, noone seems to be able to do that with any degree of confidence and if you compared the FAIR tax with what we would have if we eliminated (or severely reduced the corporate tax, you can’t even make a good argument for why the FAIR tax would be better than what we have now).
Right now its just another stupid Republican idea that promises more than it can possibly deliver.
The whole federal income tax system works on marginal tax rates or tax brackets, and yet there continue to be hordes of people who think that clicking over into the next bracket has the effect of applying the next marginal rate to the person’s whole income. Do these people ever actually look at their own tax liability, and at how it is calculated?
There’s no reason we have to write the law in such a way that goods purchased outside the country and imported would be exempt from taxation. You buy a car in Canada and you don’t pay any US taxes on it until you try to drive it across the border. Then you have a choice–pay tax on the car you’re trying to import, or leave it in Canada.
And of course, you’ve already paid Canadian Taxes on it, that’s the beauty of a consumption tax. Neighboring countries will have agreements with each other such that consumers only have to pay VAT once–if you purchase the car in Canada and pay 23% VAT, then import the car to the US where the VAT is 25%, you will only owe the 2% difference.
Of course goods can be smuggled across the border to avoid paying tax, but it’s not going to work for big ticket items like cars that need to be licensed, registered, and insured. Show up with a Ferrari that doesn’t have a tax stamp, and the DMV won’t give you a license plate.
It’s easy in the United States to avoid local and state sales taxes by crossing the border into a low/no sales tax locality, purchasing your goods, and bringing them back home. People who live near in southern Washington cross over into Oregon all the time for to purchase goods. But that’s because states don’t have border controls like countries do. So consumption tax havens outside the United States won’t work unless you consume your goods while abroad, or take up smuggling.
The rich guy is free to leave the country and avoid our taxes altogether. So he always has the freedom of choice and a tax rate of 100% is perfectly fair.
And how exactly does freedom of choice become the metric of fairness for the tax burden? It tells us nothing about the relative burdens.
I am not making that point at all, unless your definition of freeloader is different than mine.
I’m making the point that those who pay into the system have more of a vested interest in seeing it run effectively, efficiently, and demand good stewardship of their money. Not sure why anyone would argue this point, frankly.
Well, I’ve been referring to the income tax mostly, if only because if you talk about all the other taxes (excise, tires, alcohol, smokes, etc etc etc) there’s so many other variables.
As for SS and Medicare, those are kind of special taxes - they are used for one purpose (or at least, are supposed to be used… Al Gore’s lockbox didn’t get too far). If it would make you happy, I would stipulate that my comments refer to the 90% of Government that doesn’t touch those two entitlements (not that they don’t have to be addressed; but the massive time lag in pay-in to pay-out means that the value of having skin in the game is really diluted).
PS Unless you like to be a pyro w/a flamethrower in a field of strawmen, please cite where I said in this thread that rich people should have their taxes cut.
