It would have to be changed, if it were decided that a simple revenue tax was the way to go.
I think its a lousy savings plan for the disciplined and the lucky, and a really good one for the undisciplined or the unlucky - regardless of income (at least beyond some minimum amount required to feed yourself and keep a roof over your head and below the Scrooge McDuck swimming pools of money level of “rich.”). I’ve been talking to people who make a quarter of a million dollars a year and saved nothing for their kids college and don’t have 401ks - and they consume as fast as they make. Those people facing retirement won’t have a penny if social security fails.
You aren’t being asked to pay a strict revenue tax either, that’s why the standard deduction exists, and why you pay tax on your adjusted gross income and not your gross income.
Anyway, no chart can really show the true situation. A lot of the poor will receive more back each year from things like the Earned Income Credit than they paid in throughout the year, but the percentage they paid in throughout the year might be 14-18%.
Anyone above the poverty line who earns most of their money through a wage might end up paying a higher effective rate than a millionaire who earns their money through investment income. However, you have to factor in things like the homeowner’s tax credit and such, which can often be significant and may push even some middle class person’s effective tax rate to be quite low.
David Cay Johnston describes some of the schemes implemented by both major parties in the tax system to benefit the super wealthy in his book Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else
Some excerpts are on the web site.
David Cay Johnston’s other book Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and StickYou with the Bill) addresses this topic as well.
nm
Oh, I’m perfectly willing to knock off $6000 of their revenue, for the sake of fairness, don’t worry about that.
Two things could then happen. 1) All companies go out of business since they are going to be taxed on the 80-95% of their revenue that they have to spend to make a profit and thus will have a tax bill higher than the value of cash on hand or 2) all companies massively raise prices on everything so instead of the 2 to 20% profit margin they’ll need many times higher than that, as a result trillions of dollars of wealth and millions of jobs are destroyed.
Perhaps some sort of reasonable compromises can be reached, so that our honest and deserving corporations will not be crushed under foot. The poor dears.
I love when liberals show that they don’t understand not only economics and business, but simple math.
In 2011 Wal-Mart’s revenue was $421bn. Their net income was $15.35bn.
If they had to pay a 35% tax on that $421bn in revenue they made their tax bill would be $147.35bn, that is almost 10 times their net income. How do you propose they pay the bill? Just because $421bn moved through Wal-Mart’s hands doesn’t mean they actually have that money available, Wal-Mart operates on razor thin margins and has to buy everything it sells to you, so the idea that they should be taxed on their full revenue is ludicrous.
The reason individuals aren’t taxed the same way as corporations is because humans working for an employer do no have to buy a bunch of stuff or pay a bunch of people to earn their money, they simply have to give their time to their employer.
FWIW, persons who make their money by buying things and selling them, operating as sole proprietors, don’t have to count the total revenue of their sales as their AGI, either.
Great, so we agree revenue taxes are retarded. So when do we change the 1040EZ?
What is amusing is when conservatives claim that raising taxes on corporate profits will eliminate the incentive to create jobs despite the fact that investments in wages and benefits are tax deductible. The people pushing the misinformation that corporate taxes are on gross revenue and not net profit are usually conservatives from what I’ve seen.
I have yet to see anyone “push the misinformation” that corporate taxes are on gross revenue. Can you give a URL to such an occurrence?
As for the raising taxes on profits/incentive to create jobs decoupling because wages are tax deductible - charity is tax deductible as well. So tell me - when you raise taxes on people, does charity giving increase or decrease?
What in the fuck are you talking about? erislover is directly saying we should tax corporations on revenue because people are taxed on revenue. That is the concept I was arguing against, I wasn’t saying corporations are taxed on revenue right now.
Like Terr I’d love to see where not just conservatives, but anyone is making that claim?
Okay, so individuals can deduct any money they spend that is directly tied to their revenue generation. How much do you think the deduction will be?
I’d be willing to bet it’d be smaller than the standard deduction for most people.
Companies get to deduct their rent. That sounds great. That’d blow away the standard deduction for me. Then of course there’s the car to get to work, we’d have to amortize that over a few years. Plus furniture. And interest on school loans. When companies pay their employees to go back to school, how’s that work, tax-wise? It’d be nice if I could also deduct my payments. A man’s gotta eat, too. Don’t companies get to deduct 50% of such expenditures for their employees? I’m happy with that, no need to argue.
Corporate gross revenue tax is equivalent to a sales tax. x% of your gross revenue is identical to saying x% of your sales. companies will simply add that percent to every bill/price and go on their way.
Considering that sales taxes are totally regressive, I don’t particularly like this idea.
We can start by getting rid of all the dodges and loopholes that allow them to pretend their net income was only $15 billion.
Companies get to deduct their rent because it is 100% related to revenue generation. Since you also live there when you aren’t working, you wouldn’t be permitted to deduct the entire cost of your rent.
If you’ve ever actually filled out the self employment parts of a tax return, you actually can deduct some portion of rent and utilities. I’ve done that before, it ends up not being nearly so much as you imagine it would be.
You can also deduct part of your vehicle usage in the self employment form as well.