You can login if you already have an account or register by clicking the button below.
Registering is free and all you need is a username and password. We never ask you for your e-mail.
Love it. Absolutely love it. The only thing better would be no income tax and a flat consumption tax (a la FairTax).
The taxation system is broken. Trying to fix it will only complicate it more. Scrap it and start over. Roll back the expenditures and roll back the taxes to match
Consumption taxes also collect revenue from underground and black market sources. Prostitutes and drug dealers don't pay income tax, regardless of the rate; however, they still have to buy food, water, clothes, etc. like the rest of us and taxes will be collected from that consumption.
In theory I like the idea of a consumption tax, but there are several major problems. First, anyone with any level of savings has already paid taxes on that money, so a conversion over to a taxation system based upon consumption would require double taxation. This leaves those with savings at a huge disadvantage. Think of the 65 year old man who has worked for the last 45 years to build his nest egg and has paid income taxes on all of it. Now suddenly everything is 20% more expensive to him which means his retirement savings is basically worth 20% less. I know there are clever ways to offer rebates and adjustments in an attempt to get around this issue, but none of them are very clean.
Second, when you add taxes to some items you are promoting the idea of saving rather than spending. For example, if I knew I had to pay a 10 - 15 or 20% tax on a new car... I would be more likely to purchase a car and drive it until it died and I was forced to replace it. Plus, if consumption taxes are only on NEW items rather than used as has been suggested in the past by the Fair Tax people, then nobody would ever want to buy new cards or new appliances or new televisions. The prices in the used market would rise to compensate, but the net effect is people would hold on to their items longer and wouldn't buy as much new stuff. That is great for the environment, but horrible for the economy.
The Fair Tax people had a fancy way around real estate, but again imagine having to pay 15 or 20% tax on a new home. Who would ever move knowing the huge penalty for doing so? Land and real estate wouldn't change hands as often which means people are less mobile which means a slow down on growth. Again there are ways around this issue, but none of them are clean.
I think Fair Tax works great on paper, but in practice is not much better than a traditional income tax system.
You raise some good points. For your first point you touched on the solution: rebates and adjustments post-change. That will fix the problem in the cleanest way possible. No matter what we do someone will be at a disadvantage for some amount of time because they have been planning for the current tax situation. Any change to that will alter their plans. It's just how it is and isn't a logical reason not to change it. If the majority benefit from a change, a change should occur.
As for the second point, dealers of new merchandise would have to lower their prices to compensate for the higher tax on new goods. This will benefit the consumer. The used product market will be fine and prices will not rise exorbitantly, as they will find an equilibrium to satisfy both supply of the product and the demand on that product. There are still many, many goods that cannot be bought used. Food is an example of this.
For the third point you misunderstand the Fair Tax system. You're already paying for your home with after-tax dollars. With the Fair Tax you get your whole paycheck all the time so the increase in consumption tax is offset by the fact that you have a larger amount of dollars in your pocket. Additionally, you would not have to pay yearly taxes on the property that you purchased (rented, more like...because if you don't pay your taxes they'll take your house), so the "true cost" of owning property decreases under the Fair Tax.
The Fair Tax is great both on paper and in practice. The problem is everyone is afraid to change the status quo. That's terrible.
My taxes would go up but i must admit I like the idea of a flat tax. I have heard of the transaction tax where every transaction has a small tax on it. So many possibilities. I could Google this, but are there any countries that use a flat tax system and is it liked?
Maybe I am missing the point (which is possible) but with all the deductions my income taxes have been extremely low. Ah, maybe I am missing the point, tax bracket vs actual tax rate (with deductions).
I like the transaction tax too. It's cool because it's completely based on how much you consume. More empowering. And yeah, just googled it and a lot of countries do a flat tax! https://en.wikipedia.org/?title=Flat_tax#Around_the_world
People argue that it isn't fair for poor people because the tax is a larger percentage of their income but they don't understand that that doesn't matter. They pay the same as everyone else which is exactly how it should be.
Also with a system like the Fair Tax plan you would get a credit for taxes paid on a certain amount of food based on the size of your family, since that's required for life. So as long as poor people aren't trying to eat t-bone steaks every night they're not worse off and will almost assuredly have more money in their pocket year after year.
[–]Eyevory0 points
1 point
1 point
(+1|-0)
ago
(edited ago)
First of all the cuts it would take to balance a budget when he is cutting the revenue by $2 Trillion over a decade would be massive. There isn't a single program that exists today that wouldn't need to be cut to some degree, and although I'm sure there are areas that could benefit from some cuts, I can't possible believe that it would be as easy to do as he makes it sound. In effect what he is suggesting is that our budget deficits rise even more until the point where the debt service payments would outpace GDP.
Second, a flat tax sounds nice on paper, but in reality it only serves to benefit the wealthy. The lower and middle classes pay a disproportionate amount of their income on basic needs such as food, shelter, clothing, healthcare etc. Keep in mind the price of a loaf of bread doesn't change whether you make $25,000 a year or $2.5MM. Same is true for a gallon of gas, a kilowatt of electricity, a parking ticket, or a tube of Crest. This results in those with more disposable income being able to save more since they have "extra", whereas those with more limited incomes barely manage to scrape by.
A flat tax is not a fair tax. Those who benefit from our economy the most should in fact pay a little bit more, and history has shown that when you have a progressive (aka: tiered) tax system, the upper income earners are more willing to reinvest income earned from businesses etc which in turn fuels the economy. When tax rates on the wealthy are cut, the gap between rich and poor grows and income inequality becomes a major issue such as we are experiencing today. Paul's plan would only serve to exacerbate that inequality... but it surely would please his wealthy benefactors as they would see their taxes drop from ~35% to less than 15% while the lower and middle classes could possible see their effective tax rates INCREASE due to the elimination of family and child tax credits.
Sorry but this is a non-starter. This is just pandering to the wealthy, but in reality this plan would create more problems than it solves. Horrible, horrible idea. A much better plan eliminates all tax credits and deductions as well as all loopholes. It then says every individual can earn X dollars a year tax free (for sake of argument, let's just say that number is $35,000). After that point, you have anywhere from two to five tax tiers that look like this (again just an example):
A plan such as this incentivizes upper income earners to reinvest money on new inventory, new employees, new facilities etc. However it also ensures nobody is dissuaded from trying to better themselves as incomes are never taxed at the rates we had in decades past when rates could reach above 90% for the upper incomes. The gap between rich and poor wouldn't continue to expand because tiers help to shift the tax burden upon those who can most afford it.
Also, the elimination of the inheritance tax or "death tax" is one way to ensure wealthy families continue to control the vast amount of wealth in our nation. In reality these taxes only ever impact a small percentage of the ultra wealthy, but never have any impact upon the average American, so how Congress has sold the public on those taxes being bad is beyond me.
Whether this is the answer or not I don't know but something needs to be done because as we all know "Insanity: doing the same thing over and over again and expecting different results."
i think we should go back to the taxation structure from 1940-1970, top tier brackets were taxed at up to 90%, most years had a 60-70% taxation. america accomplished a lot when the rich paid their fair share.
[–]joethebob0 points
0 points
0 points
(+0|-0)
ago
There is actually no documented use of that phrase by Einstein. I do like it's functional use case definition, but it tends to be over applied like all snappy quotes.
His proposed plan doesn't screw over poor people. He states that families with incomes of 50k or less will be exempt from it. I'm middle class and looking at my tax bracket, it brings down my tax rate by 8%...so no. It doesn't just benefit the wealthy.
Sort: Top
[–] zambeezy 0 points 2 points 2 points (+2|-0) ago
Love it. Absolutely love it. The only thing better would be no income tax and a flat consumption tax (a la FairTax).
The taxation system is broken. Trying to fix it will only complicate it more. Scrap it and start over. Roll back the expenditures and roll back the taxes to match
[–] ilikemyname [S] 0 points 1 point 1 point (+1|-0) ago
I agree! Tax based on consumption would be much more appropriate. Completely based on choice.
[–] zambeezy 0 points 1 point 1 point (+1|-0) ago
Consumption taxes also collect revenue from underground and black market sources. Prostitutes and drug dealers don't pay income tax, regardless of the rate; however, they still have to buy food, water, clothes, etc. like the rest of us and taxes will be collected from that consumption.
[–] Eyevory ago
In theory I like the idea of a consumption tax, but there are several major problems. First, anyone with any level of savings has already paid taxes on that money, so a conversion over to a taxation system based upon consumption would require double taxation. This leaves those with savings at a huge disadvantage. Think of the 65 year old man who has worked for the last 45 years to build his nest egg and has paid income taxes on all of it. Now suddenly everything is 20% more expensive to him which means his retirement savings is basically worth 20% less. I know there are clever ways to offer rebates and adjustments in an attempt to get around this issue, but none of them are very clean.
Second, when you add taxes to some items you are promoting the idea of saving rather than spending. For example, if I knew I had to pay a 10 - 15 or 20% tax on a new car... I would be more likely to purchase a car and drive it until it died and I was forced to replace it. Plus, if consumption taxes are only on NEW items rather than used as has been suggested in the past by the Fair Tax people, then nobody would ever want to buy new cards or new appliances or new televisions. The prices in the used market would rise to compensate, but the net effect is people would hold on to their items longer and wouldn't buy as much new stuff. That is great for the environment, but horrible for the economy.
The Fair Tax people had a fancy way around real estate, but again imagine having to pay 15 or 20% tax on a new home. Who would ever move knowing the huge penalty for doing so? Land and real estate wouldn't change hands as often which means people are less mobile which means a slow down on growth. Again there are ways around this issue, but none of them are clean.
I think Fair Tax works great on paper, but in practice is not much better than a traditional income tax system.
[–] zambeezy 0 points 1 point 1 point (+1|-0) ago
You raise some good points. For your first point you touched on the solution: rebates and adjustments post-change. That will fix the problem in the cleanest way possible. No matter what we do someone will be at a disadvantage for some amount of time because they have been planning for the current tax situation. Any change to that will alter their plans. It's just how it is and isn't a logical reason not to change it. If the majority benefit from a change, a change should occur.
As for the second point, dealers of new merchandise would have to lower their prices to compensate for the higher tax on new goods. This will benefit the consumer. The used product market will be fine and prices will not rise exorbitantly, as they will find an equilibrium to satisfy both supply of the product and the demand on that product. There are still many, many goods that cannot be bought used. Food is an example of this.
For the third point you misunderstand the Fair Tax system. You're already paying for your home with after-tax dollars. With the Fair Tax you get your whole paycheck all the time so the increase in consumption tax is offset by the fact that you have a larger amount of dollars in your pocket. Additionally, you would not have to pay yearly taxes on the property that you purchased (rented, more like...because if you don't pay your taxes they'll take your house), so the "true cost" of owning property decreases under the Fair Tax.
The Fair Tax is great both on paper and in practice. The problem is everyone is afraid to change the status quo. That's terrible.
[–] brechmos 0 points 2 points 2 points (+2|-0) ago
My taxes would go up but i must admit I like the idea of a flat tax. I have heard of the transaction tax where every transaction has a small tax on it. So many possibilities. I could Google this, but are there any countries that use a flat tax system and is it liked?
[–] johnsmith21 0 points 2 points 2 points (+2|-0) ago
How are you paying less than 14.5% in taxes??
[–] brechmos ago
Maybe I am missing the point (which is possible) but with all the deductions my income taxes have been extremely low. Ah, maybe I am missing the point, tax bracket vs actual tax rate (with deductions).
[–] zambeezy ago
Probably making very, very little money
[–] ilikemyname [S] 0 points 1 point 1 point (+1|-0) ago
I like the transaction tax too. It's cool because it's completely based on how much you consume. More empowering. And yeah, just googled it and a lot of countries do a flat tax! https://en.wikipedia.org/?title=Flat_tax#Around_the_world
[–] zambeezy 1 point 1 point 2 points (+2|-1) ago
People argue that it isn't fair for poor people because the tax is a larger percentage of their income but they don't understand that that doesn't matter. They pay the same as everyone else which is exactly how it should be.
Also with a system like the Fair Tax plan you would get a credit for taxes paid on a certain amount of food based on the size of your family, since that's required for life. So as long as poor people aren't trying to eat t-bone steaks every night they're not worse off and will almost assuredly have more money in their pocket year after year.
[–] Eyevory 0 points 1 point 1 point (+1|-0) ago (edited ago)
First of all the cuts it would take to balance a budget when he is cutting the revenue by $2 Trillion over a decade would be massive. There isn't a single program that exists today that wouldn't need to be cut to some degree, and although I'm sure there are areas that could benefit from some cuts, I can't possible believe that it would be as easy to do as he makes it sound. In effect what he is suggesting is that our budget deficits rise even more until the point where the debt service payments would outpace GDP.
Second, a flat tax sounds nice on paper, but in reality it only serves to benefit the wealthy. The lower and middle classes pay a disproportionate amount of their income on basic needs such as food, shelter, clothing, healthcare etc. Keep in mind the price of a loaf of bread doesn't change whether you make $25,000 a year or $2.5MM. Same is true for a gallon of gas, a kilowatt of electricity, a parking ticket, or a tube of Crest. This results in those with more disposable income being able to save more since they have "extra", whereas those with more limited incomes barely manage to scrape by.
A flat tax is not a fair tax. Those who benefit from our economy the most should in fact pay a little bit more, and history has shown that when you have a progressive (aka: tiered) tax system, the upper income earners are more willing to reinvest income earned from businesses etc which in turn fuels the economy. When tax rates on the wealthy are cut, the gap between rich and poor grows and income inequality becomes a major issue such as we are experiencing today. Paul's plan would only serve to exacerbate that inequality... but it surely would please his wealthy benefactors as they would see their taxes drop from ~35% to less than 15% while the lower and middle classes could possible see their effective tax rates INCREASE due to the elimination of family and child tax credits.
Sorry but this is a non-starter. This is just pandering to the wealthy, but in reality this plan would create more problems than it solves. Horrible, horrible idea. A much better plan eliminates all tax credits and deductions as well as all loopholes. It then says every individual can earn X dollars a year tax free (for sake of argument, let's just say that number is $35,000). After that point, you have anywhere from two to five tax tiers that look like this (again just an example):
0 - $35,000: 0% $35,001 - $75,000: 15% $75,001 - $150,000: 25% $150,001 - $300,000: 35% $300,001 - Max: 50%
A plan such as this incentivizes upper income earners to reinvest money on new inventory, new employees, new facilities etc. However it also ensures nobody is dissuaded from trying to better themselves as incomes are never taxed at the rates we had in decades past when rates could reach above 90% for the upper incomes. The gap between rich and poor wouldn't continue to expand because tiers help to shift the tax burden upon those who can most afford it.
Also, the elimination of the inheritance tax or "death tax" is one way to ensure wealthy families continue to control the vast amount of wealth in our nation. In reality these taxes only ever impact a small percentage of the ultra wealthy, but never have any impact upon the average American, so how Congress has sold the public on those taxes being bad is beyond me.
[–] 9-11 ago
flat tax is just code for "i think i'm wealthy but i'm really not".
[–] 342498? 0 points 1 point 1 point (+1|-0) ago
Whether this is the answer or not I don't know but something needs to be done because as we all know "Insanity: doing the same thing over and over again and expecting different results."
Albert Einstein
[–] 9-11 0 points 2 points 2 points (+2|-0) ago
i think we should go back to the taxation structure from 1940-1970, top tier brackets were taxed at up to 90%, most years had a 60-70% taxation. america accomplished a lot when the rich paid their fair share.
[–] rererert ago
Why is their fair share a larger percentage of what they earn than your fair share?
[–] joethebob ago
There is actually no documented use of that phrase by Einstein. I do like it's functional use case definition, but it tends to be over applied like all snappy quotes.
[–] 344264? ago
All I can tell you is everywhere I look it is attributed to him and you know if I used it someone else would say I should have attributed it to him.
I think it applies nicely.
[–] ilikemyname [S] ago
Amen!
[–] [deleted] ago (edited ago)
[–] ilikemyname [S] ago
His proposed plan doesn't screw over poor people. He states that families with incomes of 50k or less will be exempt from it. I'm middle class and looking at my tax bracket, it brings down my tax rate by 8%...so no. It doesn't just benefit the wealthy.