Real Tax Numbers - Page 2

[QUOTE]Originally posted by THT:
<strong>I was just arguing that the NST wouldn't get rid of a tax agency. </strong>

True. I should say that I'm in favor of not eliminating, but reducing the IRS in power and size to the point where it would occupy only a few cubicles within the treasury department.

<strong> Like, in the case of a major war, who pays?</strong>

Hopefully, for once in history, our goddamn allies. No seriously, I'd have to look at the numbers, but in general I would say that part of defense is having reserves. If we are ever disciplined enough to create true monetary reserves (like a real SS fund) we could use that in desperate times. But yes, if we were cut to the bone and close to defeat i wouldn't have a fit about a temporary income tax being resurrected.

<strong>When income taxes were illegal, the US gov't had a very small military, virtually zero aid programs, and virtually no oversight agencies.</strong>

I could argue that our government could use some trimming (and given your views on defense you might agree with me in some areas), but that is another discussion. The simple point to take home here is that the 23% NST proposal I mentioned is revenue nuetral. So unless we need to spend a lot more it should work well.

<strong>I said businesses will price their product at what they can get most away with, not at the minimum they can sell it at.</strong>

And in general businesses can't get away with charging much more than their competitors even for more favorable products. Coke doesn't cost much more than Pepsi and DVDs all cost roughly the same despite the content. We could argue all sorts of different examples, but the big question is whether in the aggregate you believe that capitalism works- that competition tends to lower prices and increase product quality.

<strong>If the society is such that the lower classes are suffering badly, and the gov't needs to provide aid, I don't think there is a choice but to have progessive system.</strong>

The NST is progressive because the rich buy more things, thus paying more taxes. With exemptions and/or rebates you can have a situation where the poor pay no taxes at all. It is important to point out that after this point any money given to the poor is, indeed, taken from the rich.

Such taxation cannot be justified simply because the poor can use the money (I could use Steve Job's money, but I don't deserve it) especially when people have put themselves in bad circumstances through their own choices (having kids they can't afford). No, at this point one must be able to substantiate how the taxed (the rich) can expect some return on their investment. In some cases (education, health care) this can be justified, but the better off are by no means obligated to give their money to the poor just because the poor want it.

<strong>My only problem with it is that it would seem to make the low times very low (gov't deficits would balloon) and the high times sort of so-so, while an income tax would guarantee a revenue stream for the government. </strong>

Actually, the numbers show that spending is more constant than income as people tend to dip into savings when times are tough. Also, although I've never seen any of the NST people propose this, I think it would be interesting to have a national sale (drop the percentage to 20 or something) when the economy dips. I'd bet it would work better than $300 tax rebates that people just put into savings.

[ 01-31-2002: Message edited by: Nordstrodamus ]</p>

A national sales tax simply would not work, for two interlocking reasons:

1. If it's universal, it would be horribly, horribly, horribly regressive. The poorer you are, the greater portion of your income you spend. And the poorer you are, the more you spend on "things" (rent, food, diapers - all easily taxed and reported) and the less you spend on services (golf lessons, massages, consultants - all more easily hidden and unreported). The net result is inescapably to transfer the burden of taxation from the rich to the poor.

2. It's simply not practical to make it progressive. There's probably three ways to go about de-regressifying a NST.

One is to exempt basic items - food, clothing, shelter, maybe schooling. But how do you draw the lines? A $400/mo apartment on 130th St should probably be exempt, but should a $12,000/mo penthouse in the Upper East side? Bread and cheese, yes. Beer? Gourmet cheese? Organic bread? Wine? REALLY expensive wine? It would quickly become a nightmare of companies lobbying Congress to have their products exempted.

Or, we can do it by income. Under a certain income, pay no NST. But how does a retailer know someone's exempt? Easy solution! National ID cards with biometric data plus a government-certified income level! Intrusive, Orwellian, demeaning, and just imagine the black-market possibilities!

Or, you could try end-of-year rebates based on income. Wouldn't this make the current IRS bureaucracy look tame? Everyone in the country would still have to file a tax return. Everyone in the country would have to have their income verified by their employer. Since you'd be talking about massive sums here (the rebate checks would probably represent a significant percentage of government outlays - maybe as high as 25%, since poor spend out of proportion to their income, in contrast to how the rich currently pay income tax out of proportion to their income), the IRS would actually have to be able to catch cheaters. Lots of them. Plus, since you can't verify every penny people spend, you can't actually replace the money they give to the NST. You end up simply cutting them a check to boost their income. Anyone who thinks welfare is bad is gonna have a heart attack over this. The incentives are all wrong for a purportedly free, capitalist society. Not to mention the fact that you're setting up a massive Ponzi scheme - the poor spend, paying NST, so they get a check , which they spend, generating more NST, giving them a bigger check, more NST, bigger check, more NST...

All in all, you'd be replacing one milquetoastian nightmare with a flaming enchilada of a nightmare. Not worth it. In any event, why muck with the current system at all? The only ultimate reason can be that you think it doesn't distribute the burden of taxation fairly. So why hide behind a NST facade? Just propose changes to the current system that would distribute the burden the way you'd like. Wouldn't that produce a more honest debate?

[quote]Originally posted by Nordstrodamus:
[QB][QUOTE]The simple point to take home here is that the 23% NST proposal I mentioned is revenue nuetral.[QB]<hr></blockquote>
Unfortunately, it's not revenue neutral.

Let's get something straight: American style capitalism is not any more "natural" or "moral" than any other system. For tens of thousands of years money did not exist. The constitution, os originally written, favored an economy much different than the one today. Our system of taxation is simply an agreed apon construct.

So rather than talking about whether a flat tax is "fair" or a progressive tax is "fair" it might be better to talk about what is a "fair" society.

I suggest the following:
every child can go to a safe clean school with a class size not above twenty students, modern text books are provided, there are plenty of after-school sports music and cultural programs

no one should be able to influence legislation with money

the judicial system should be fair and not based on money

that's EDUCATION, REPRESENTATION and JUSTICE - those things should equal for all.

It is clearly not the situation we have today. I trust if it were the situation America would be a lot different, a lot better than it is.

To achieve this schools should be funded at either a state or national level.

Ban paid political advertising! That's where all the money is going. Corrupt oil companies are paying off the government so they can buy TV ads - over a billion dollars worth in the last major election cycle. These ads tell us nothing about the cantidates and have led us to lying half-truth "sound-bite" politics. Besides that the American public actually owns the airwaves. Why are we paying private television networks to let us use our airwaves? The networks make a lot of money on the leases we give them.

More money spent for legal aid. It is a known fact that you are more likely to be put to death for a crime if you are poor, more likely to spend time in jail if you are poor. Why should the luck of birth determine whether or not you go to jail?

We can all agree on that right? Equal representation, equal justice, equal access to public education. I would trust a society with the above values to make decisions on taxation. This society is for the wealthy (oil men) and run by the wealthy (oil men).

[quote]Originally posted by BRussell:
<strong>
Unfortunately, it's not revenue neutral.</strong><hr></blockquote>

Ok Bertrand, you just read the riot act on someone for posting the roll eyes as a response. Care to back your statement up?

Sorry, I posted about that on page 1 of this thread, I was just referring back to that.

<a href="http://www.ctj.org/html/nytsales.htm" target="_blank">Here's the link I was referring to.</a>

[QUOTE]Originally posted by Towel:
<strong>A national sales tax simply would not work, for two interlocking reasons:

1. If it's universal, it would be horribly, horribly, horribly regressive. The poorer you are, the greater portion of your income you spend.

2. It's simply not practical to make it progressive. </strong>

Your first statement is really predicated on the validity of your second statement which is, indeed, false. A rebate system based on basic costs of living and all the indicators that we already use to identify what we term "poor" people can be adjusted so that poor people effectively pay no taxes. To deny this possibility is to deny that the term "poor" has any real meaning as an assessible economic condition. And since the rebate represents a lesser proportion of income as you go up the brackets then the rich end up paying a greater percentage of their income in taxes (because they spend more) that is what progressive means.

If you want to learn more check out <a href="http://www.fairtax.org" target="_blank">www.fairtax.org</a>

[ 01-31-2002: Message edited by: Nordstrodamus ]</p>

[quote]To deny this possibility is to deny that the term "poor" has any real meaning as an assessible economic condition.<hr></blockquote>

Not at all. It's just vastly more difficult to define and exempt poverty when you look at things solely through the consumption end. The bill you referenced tried to solve the problem by simply sending every family in the US a monthly check equal to 23% of the poverty-level income for a family of their size. 100 million checks every month. Does that seem practical to you? It took four+ months to mail out the tax rebate checks last summer. 1.2 billion checks per year would cost $400 million just in postage. The total outlay would be on the order of $300 billion/year. You'd need one hell of a bureaucracy to oversee that. And you'd have to make sure you collected an extra $300B in taxes to cover it (forget revenue-neutral). Can imagine the nightmares involved when people move, when families combine or add kids or kids move out? The level of simple fraud would be astounding (e.g. parents claiming kids at school while the kids claim themselves). You'd have to keep tabs on every single American family - every single American - at every moment, or they wouldn't get their checks (or would be able to defraud the system). Does that sound practical? More to the point, that sounds like a plan that would make your average conservative grab his rifle and head to the hills.

[QUOTE]Originally posted by Towel:
<strong>

The bill you referenced tried to solve the problem by simply sending every family in the US a monthly check equal to 23% of the poverty-level income for a family of their size. 100 million checks every month. Does that seem practical to you? It took four+ months to mail out the tax rebate checks last summer. 1.2 billion checks per year would cost $400 million just in postage. The total outlay would be on the order of $300 billion/year. </strong>

I don't think you'll find the same difficulties of tax compliance when the model is changed to one where people get money by making sure their address is correct. Also, the estimated cost of postage is unrealistic, because you just deduct that from the refund unless the person elects for electronic transfer (and no, I don't think the missing 32 cents is gonna break anyone). Also, you citing the retail price of stamps, but the gov pays wholesale. Man, are we getting into niggling little details now!

<strong>You'd need one hell of a bureaucracy to oversee that. And you'd have to make sure you collected an extra $300B in taxes to cover it (forget revenue-neutral). Can imagine the nightmares involved when people move, when families combine or add kids or kids move out? The level of simple fraud would be astounding (e.g. parents claiming kids at school while the kids claim themselves). You'd have to keep tabs on every single American family - every single American - at every moment, or they wouldn't get their checks (or would be able to defraud the system). Does that sound practical? </strong>

You've just described the income tax as it currently exists Please explain how the NST would require more bureacracy than the current system.

[ 01-31-2002: Message edited by: Nordstrodamus ]</p>

[quote]Originally posted by BRussell:
<strong>Sorry, I posted about that on page 1 of this thread, I was just referring back to that.

<a href="http://www.ctj.org/html/nytsales.htm" target="_blank">Here's the link I was referring to.</a></strong><hr></blockquote>

Ah the Citizens for taxing more. . I can give you a quick assessment of their points, but seeing as how they didn't supply references I can't evaluate their validity...

1. I looked on the web to try and find an independent evaluation of the amount of taxable spending, but couldn't find one. I'd admit that if they are correct that the fairtax people are talking about a "tax inclusive rate" the 23% might be a little misleading, but 30% is still palatable due to the lower costs, especially of commodities, by eliminating passed on business taxes. (Here I have no stats to site, but asking a few of my friends who work in business 20-30% seems like an entirely reasonable estimate for the added costs of products due to taxes.)

That also brings up another important point- I don't think the CTJ crowd is going to figure in all the savings of reducing the costs of the income tax, both on the administration end and the compliance end. I'm sure they would be more likely to consider all the unemployed IRS auditors and accountants as lost jobs instead of added costs of production.

Now, the lowered costs of things does complicate the argument. Presuming the total taxable purchases was cited before the reduced costs of eliminating business tax then, to the decrement of my position, we would have to reduce that 20-30% before seeing how much of a rate would be needed to be revenue nuetral. So, 4.6 billion minus 20-30% would be between 3.22 and 3.68. Getting 1.36 trillion out of that (assuming that's right, but undoubtedly out of date since the bush cut ) would be a tax rate of between 37%-42%. But remembering that this increase was entirely due to the reduced cost of products after removing passed on business taxes the realized increase in cost is about 29.5% (did I just run in a circle?). Ah well, it's worth it to make sure we settle on the right numbers.

2. Speaking of circular reasoning. The CTJ people suggest that it's a shell game to include tax paid by the government in buying airplanes, building roads, etc. Well, what happens now? Don't airplane makers and construction companies pay income taxes and business taxes?

3. Finally, their last argument citing "hard to tax" items all in an effort to push the rate to 52% for shockvalue is too nebulous to formulate a response. But even at that high a rate I wouldn't pay as much as I currently do in income taxes and I am by no means rich.

Even without the refs to challenge I will gladly concede a 30% tax rate to acheive nuetral revenue. It's still a hell of a deal! .

<strong>Originally posted by Nordstrodamus:
I could argue that our government could use some trimming (and given your views on defense you might agree with me in some areas), but that is another discussion.</strong>

The gov't could use some honest, or perhaps more competent, accountants. That alone will save a good 20% (if not more) of the Federal budget.

<strong>The simple point to take home here is that the 23% NST proposal I mentioned is revenue nuetral. So unless we need to spend a lot more it should work well.</strong>

I don't care about the numbers so much as how the change in tax schemes affects the consumption of the buying public. The presumption that spending is constant doesn't jive to me. Especially if the basic necessities of living (food, shelter, clothing et al) are exempted, revenue from sales tax could severely nosedive if there is a recession. Though deficit spending would be fine if the good times can pay it off.

<strong>Coke doesn't cost much more than Pepsi and DVDs all cost roughly the same despite the content.</strong>

For commodities, I'd agree. But commodities aren't the entire market.

<strong>We could argue all sorts of different examples, but the big question is whether in the aggregate you believe that capitalism works- that competition tends to lower prices and increase product quality.</strong>

What's your example?

Are kitchen appliances as good as they used to be? Is planned obselence a market strategy in today's world? If so, why?

The place where it works supremely is semiconductors, but semiconductors are magic alien technology, so I don't know if it should count But on aggregate, I'm not sure about the premise: tends to lower prices and increase product quality. It is most certainly a dominant aspect of it, and is taught that it does that in every economics class. But it's a dynamic system in reality (as opposed to being taught as a static one in textbooks), and any such system can take on many a different characteristic.

<strong>The NST is progressive because the rich buy more things, thus paying more taxes. With exemptions and/or rebates you can have a situation where the poor pay no taxes at all. It is important to point out that after this point any money given to the poor is, indeed, taken from the rich.</strong>

By progressive NST I mean a luxury item would have 30% sales tax, not the 20% for a non luxury item. And obviously it's takig from the rich and giving it to the poor, I just disagree with the rhetoric of "redistribution of wealth".

<strong>Such taxation cannot be justified simply because the poor can use the money ... but the better off are by no means obligated to give their money to the poor just because the poor want it.</strong>

The justification is that we as a society have a kinship with our fellow citizens and should help them when they are in trouble and keeps the society more fluid and tenable. Now what is considered trouble is debatable, but the idea is to keep a good portion of the lower classes viable for upward mobility which education, aid, et al would help us or them out with. Abuse issues should always be mitigated.

<strong>Actually, the numbers show that spending is more constant than income as people tend to dip into savings when times are tough.</strong>

How are these numbers derived? From States with no income taxes? If so what was taxed in those states.

Good points here. But, Fran441, I simply cannot believe your twisted, naive and illogical view of reality. I'll stop short of name calling, but I don't understand your thinking.

I once did the math, and I found that someone who makes about $50,000 a year and owns a home pays almost 60% of his income to a Federal, State or Local government agency in one form or another. This sounds ludicruously high, I know. But it is true, because someone in this bracket pays federal income tax at 27%, State income tax, local income and property tax, sales tax, use tax, gasloine tax, phone tax, and just about every other thing one can imagine. I did the math, and I know. Considering that federal income tax, social security tax, and medicare tax alone come to 40% of gross income, it is not hard to see how we can easily approach 60% or more.

I won't argue fine points here like the WSJ article's specific calculations or interpretations. Instead I will argue that we, as Americans are taxed to death, literally. It is just that we don't notice the small stuff, like federal access fees and what not. I will also argue that Fran441 has a much different philosophy then many of us. He seems to believe that government should fix most if not all problems and always provide what is fair or "deserved". Democrats often make statements like "no one who works hard in America and plays by the rules should have to want for things" (Gephardt, 2002) Seriously! I am sorry, but that is not how things are, and that is not how things should be. America is not a guarantee.

In addition, I argue that paying 40% right off the top of every check is not "fair" as democrats argue. It is not right nor productive. Paying 50-60% of one's income to a government agency in some form or another is simply unjust.

Fran, what I don't understand is how you don't understand that the government should not even be allowed to run a surplus! That simply means they are collecting more money than they are spending for years and years...more money than is needed.

The federal government was created to secure the national defense, provide infastructure, and help secure the public good. The states were supposed to have the real power. They don't.
You also fail to see that providing for our priorities doesn't cost what the government is taking in. It goes to waste on pork programs and pet projects. An example of this is federal funding for a train museum in a PA town that has never had a train in it. This really happened.

Defense spending: Fran, you are wrong. Yes, Bush is increasing spending. Much of it will go to military pay, which is poor at best right now. Much of it will go to rebuilding a military with aging equipment that was dessimated by the Clinton administration. And yes, he is increasing it by about 20%.....but this is after
the democrats cut it by 30% over the last 10 years..

I am not a Republican blinded by my own views. The "train example" was supposedly accomplished by Arlen Spector (R--PA). I just think our government is so completely and totally too BIG. Taxes are truly the highest they have been since WWII. That is insane. No one should pay 30% or more in income tax...NO ONE. And please, don't give me the line "only the rich pay that much". If you think rich is $52K-150K, think again. I know people tbat are in the middle range of that scale and believe me, though they are comfortable they aren't rich either.

We have created a system that punishes success and rewards failure.

[ 02-01-2002: Message edited by: SDW2001 ]</p>

So what you're really saying is that our government has failed us. You're saying that we need to completely reform the government to change the way it spends money, because you're proposing that our government spends less than half of the money it does now.

[quote]Fran, what I don't understand is how you don't understand that the government should not even be allowed to run a surplus! That simply means they are collecting more money than they are spending for years and years...more money than is needed.<hr></blockquote>

What surplus? It's gone. Spent. Lost. The United States is still in debt from overspending since 1945. We have a national debt that we have an obligation to pay back. That debt would have been gone in less than a decade with the 'surplus' being spent towards it. Now, we're just slipping further in to debt.

[quote]The federal government was created to secure the national defense, provide infastructure, and help secure the public good. <hr></blockquote>

So you're saying that what we should do is pull out of all of our international efforts including the current military action, and just focus on protecting ourselves? That would save a lot of money off of the defense budget. No more troops overseas, no more spending money on overseas bases, and you could cut down on the size of the standing army significantly. That would save a lot of money.

Also, let's forget about all of the public works projects the government is working on. I'll focus on Massachusetts roads because that's what I'm familiar with. Let's stop the work on Route 3. Let's stop the Big Dig. These projects are costing the federal government money, so why don't we just leave the roads like they are? Old and dilapidated. Let's forget about the projects focussed around cleaner energy. Why waste money researching them if there isn't money to build the end result later?

Now it's hard to define the public good. I'm not sure exactly what you mean. I'm assuming you mean FBI, fire, police, 911, and public programs to help people out. So do we cut the police budgets? What about fewer firemen? I guess we'll just cut the programs that help out the less fortunate. What we really need is people out walking the streets at night instead of having something to do or someplace to go. Let's make it more likely for them to commit a crime and get thrown in prison where he'd cost the government more money than it would if they had him a program to get him work, or have him have a place to sleep.

So you say the states should have the power then? The federal government steps back, and the states step up. Okay. Now you have the states with the burdens of funding public education, public works, state and local police, firemen, and everything dropped by the federal government that's important to a state.

That would mean that STATE taxes would go up. Unfortunately for the tax payer, your idea would cost more money that it would bring in. Why? The FEDERAL government can lose money. That's why we're in debt. The STATE governments have a constitutional duty to produce a BALANCED state budget. They won't have the leverage that the federal government does, and taxes will have to go up everytime the state needs to spend more.

The bottom line is that the United States is a superpower; the last superpower. As a result, we have a very important world role as a peacekeeper, as humanitarians, and sometimes as police. How are we able to do this? Through the taxes that the citizens pay. Without this money, we would have a much lower standing in the world, as we would be foucssed entirely on domestic affairs, and not on worldwide issues at all.

Taxes are the price of being American. Most of us are very fortunate compared to the rest of the world. It's easy to complain about taxes because it's so hard to give up our money, but it's neccesary for the good of our nation, and the world.

This thread gives me a really good laugh. The Wall Street Journal complains that the rich are paying a higher percentage of taxes as time goes on. This is simply because they are making more and more and taking a higher share of the wealth. BRussell posted a link sayingthat the top 1% made an extra $400,000 after taxes per year. Assuming this is true, that is a HUGE amount extra to make per year. I've heard the average wealth of the top 1% is $10 million, so to pull in 400K extra in a single year is a huge gain, while the bottom 20% makes $100 less.

But that's not all. What about the number of hours worked? I don't have the link but I'm sure someone can find one. 20 years ago the average person in England, France, Germany, and the United States worked about 1800 hours per year. Because socialism more fairly distributes wealth, the Europeans now work about 1650 hours per year. They work 150 hours less and I highly doubt they decided to work less and make less money. I'm sure they are making at least the same then and now. And they get to retire earlier, too. The same money with more holidays.

In the U.S., the average American now works 2000 hours per year, or 200 hours MORE. But the bottom 20% is making $100 less, and my guess is probably the bottom 50% is not making any more. The middle class has had all their holidays taken away from them and the poor are working more and more hours just to get by. But if you have a $60,000+ job you still get the days before and after Thanksgiving and New Years Eve, and several other holidays.


The rich are getting richer because everyone else is working more hours and the returns go to top 25% of the population. This WSJ article is a joke.

[QUOTE]Originally posted by THT:

<strong>I don't care about the numbers so much as how the change in tax schemes affects the consumption of the buying public. The presumption that spending is constant doesn't jive to me. Especially if the basic necessities of living (food, shelter, clothing et al) are exempted, revenue from sales tax could severely nosedive if there is a recession.</strong>

Good, because BRussel might have me dead to rights that the 23% is a bit off, looks more like 30%, But as I argued that is still a great deal. Anyway, I'm not arguing that spending remains absolutely constant, but that it is more stable than income. I can't find the link right now (there might be some stats on the fairtax site), but it does jive with me that it's more common for people to have spending reserves (savings) than income reserves (a spare job ready to go at a moments notice). Also, as I mentioned, I think a temporary NST reduction would spur economic activity much faster than an income tax rebate- It's a national sale! 5% of everything!!!

<strong>What's your example?</strong>

Semiconductors is clearly the best example despite their alien orgins.

<strong> But on aggregate, I'm not sure about the premise: tends to lower prices and increase product quality. It is most certainly a dominant aspect of it </strong>

On the whole, by and large, in the aggregate, dominant aspect, etc... I won't argue that marketing and planned obsolesence don't come into play, but the dominant aspect is that capitalism works and that competition would cause savings in businesses taxes to be passed on to the consumer.

<strong>By progressive NST I mean a luxury item would have 30% sales tax, not the 20% for a non luxury item. </strong>

I don't doubt that there would be an effort to tax luxury items, but this usually ends up screwing the little guys. They put a luxury tax on yachts and it ended up hurting the yacht makers because the rich started buying their yachts overseas. I mean who would've thought the rich could have afforded to go to Europe!

<strong>The justification is that we as a society have a kinship with our fellow citizens and should help them when they are in trouble and keeps the society more fluid and tenable. Now what is considered trouble is debatable, but the idea is to keep a good portion of the lower classes viable for upward mobility which education, aid, et al would help us or them out with. Abuse issues should always be mitigated.</strong>

I support funding a very strong public education system, universal healthcare for kids, universal preconception and prenatal care, expanding the school lunch program, temporary safetynets, and a whole bunch of other effective programs that apply equally to rich and poor. The effect is to give everyone a greater amount of opportunity and support in bad times, but my motivation is not at all altruistic. I support such things only to the extent that I can expect a return on investment. In some cases the return is monetary (spend more on education, pay less on prisons) and in others it's more aesthetic (a good, safe environement to live in). But I don't agree with the notion that I am obligated to give my money to the less fortunate or that I have the right to take money from the rich simply because I could use it more than them.

P.S. I would've responded earlier, but the boards were indicating that mine was the last post even though it wasn't. Might have been an early sign that the boards were about to go down.

<strong>Originally posted by Nordstrodamus:
Anyway, I'm not arguing that spending remains absolutely constant, but that it is more stable than income. I can't find the link right now (there might be some stats on the fairtax site), but it does jive with me that it's more common for people to have spending reserves (savings) than income reserves (a spare job ready to go at a moments notice).</strong>

Spending reserves? Isn't that called debt in today's world?

I'm not so sure this assertion would be correct, or perhaps I should say I'm not sure it would give the result that we think it would. Again, what I'm trying to get at is there will be different and most likely unpredictable behaviors for different tax schemes.

For instance, your example on how luxury taxes penalize the middle class. If it's cheaper to buy stuff overseas, doesn't that mean the market for overseas goods would be considerably larger? With Internet shopping, one only has to buy the bare essentials in the USA because everything could be gotten with a click of a button from overseas companies with cheap shipping contracts.

<strong>On the whole, by and large, in the aggregate, dominant aspect, etc... I won't argue that marketing and planned obsolesence don't come into play, but the dominant aspect is that capitalism works and that competition would cause savings in businesses taxes to be passed on to the consumer.</strong>

Just wanted you to back off on the assertion that free markets will equate to cheaper and better quality products.

But yes, if businesses were smart, they would never ever pay for any sort of tax levied on them because all costs would be passed on to the consumer or employee payrolls. Eliminating it could yield cheaper products and services for the consumer. I'm using "could" instead of "would" here on purpose, but it's not exactly a two way street because competition isn't always there. And if it is there, sometimes it doesn't help.

I'm still waiting for my cable and telephone bills to go down. With satellite TV and cell phone competition aplenty, the cable and phone companies still don't lower prices nor have they improved services.

<strong>But I don't agree with the notion that I am obligated to give my money to the less fortunate or that I have the right to take money from the rich simply because I could use it more than them.</strong>

There is no right or obligation. It's all about the math. If for the good of public, a government program is needed to do something and said program becomes an undue burden on the lower class, ie the taxes would drive them to unacceptable levels of cash flow, then there really is no choice.

[quote]Originally posted by spindler:
<strong>This thread gives me a really good laugh. The Wall Street Journal complains that the rich are paying a higher percentage of taxes as time goes on. This is simply because they are making more and more and taking a higher share of the wealth. BRussell posted a link sayingthat the top 1% made an extra $400,000 after taxes per year. Assuming this is true, that is a HUGE amount extra to make per year. I've heard the average wealth of the top 1% is $10 million, so to pull in 400K extra in a single year is a huge gain, while the bottom 20% makes $100 less.

But that's not all. What about the number of hours worked? I don't have the link but I'm sure someone can find one. 20 years ago the average person in England, France, Germany, and the United States worked about 1800 hours per year. Because socialism more fairly distributes wealth, the Europeans now work about 1650 hours per year. They work 150 hours less and I highly doubt they decided to work less and make less money. I'm sure they are making at least the same then and now. And they get to retire earlier, too. The same money with more holidays.

In the U.S., the average American now works 2000 hours per year, or 200 hours MORE. But the bottom 20% is making $100 less, and my guess is probably the bottom 50% is not making any more. The middle class has had all their holidays taken away from them and the poor are working more and more hours just to get by. But if you have a $60,000+ job you still get the days before and after Thanksgiving and New Years Eve, and several other holidays.


The rich are getting richer because everyone else is working more hours and the returns go to top 25% of the population. This WSJ article is a joke.</strong><hr></blockquote>

Well then i must be an anomoly. I make less than 50K and I get all the holidays and full bennies. I have seen a year over year increase in my pay as well. Just goes to show you, no matter who you are talking to nobdy is 100% right when it comes to taxes.

The so called 'consulting company' I work for didn't deduct my local (city) taxes properly all year. I just found out today that I owe a heap of money to the city. <img src="graemlins/surprised.gif" border="0" alt="[Surprised]" />



Not the city's fault. HR screwed up. It happened to a couple of us.

I know this doesn't solve the country's tax debate once and for all but I just had to shout about it somewhere.

Here's a good one from the NYTimes:

More Get Rich and Pay Less in Taxes

February 7, 2002

By DAVID CAY JOHNSTON


The number of Americans with million-dollar incomes more
than doubled from 1995 through 1999, as their salaries and
their profits from stocks soared, government figures to be
published today show. The percentage of their income that
went to federal income taxes, however, fell by 11 percent.

The incomes of Americans who made less grew as well,
though by far less, and the share of their income that went
to taxes rose slightly, according to Internal Revenue
Service income tax data for the five years through 1999,
the latest year available.

The wealthiest Americans paid a smaller share of their
income in taxes because in 1997 Congress reduced taxes on
capital gains, which account for a significant share of
their income.

Congress also cut taxes for the middle class, but only one
in five taxpayers qualified for those cuts, which involved
new tax credits for children and education expenses. So, as
a group, the portion of their income going to taxes rose.

For those with million-dollar incomes, the share of their
income that went to taxes fell to 27.9 percent in 1999,
from 31.4 percent in 1995.

For those Americans who did not make a million dollars, the
portion of their income going to taxes edged up in those
years, to 12.8 percent from 12.5 percent.

About 205,000 taxpayers made $1 million or more in 1999, up
from less than 87,000 in 1995. The average income of those
who made $1 million or more rose by $568,000 to $3.2
million.

the whole article can be read here:
<a href="http://www.nytimes.com/2002/02/07/business/07TAX.html" target="_blank">http://www.nytimes.com/2002/02/07/business/07TAX.html</a>

I bet if George Bush was not a wealthy oil man he would not be proposing so many tax cuts for the wealthy oil men.

[QUOTE]Originally posted by THT:
<strong>Spending reserves? Isn't that called debt in today's world? </strong>

I might be misreading the winking smiley, but just in case you got my meaning wrong by spending reserves I meant savings. It's easier to have savings than to have a reserve job.

<strong>For instance, your example on how luxury taxes penalize the middle class. If it's cheaper to buy stuff overseas, doesn't that mean the market for overseas goods would be considerably larger? With Internet shopping, one only has to buy the bare essentials in the USA because everything could be gotten with a click of a button from overseas companies with cheap shipping contracts.</strong>

Two seperate issues here- for true luxury items if the tax is prohibitive enough then the rich, having the resources to go offseas, can buy elsewhere. As for taxing internet purchases- the NST would apply to all internet purchases of goods sold in the US and bought in the US. Goods imported to be sold in the US would, therefore, be taxed. Now, if the savings of purchasing overseas and avoiding the NST was substantial enough to outweigh the shipping costs and such then you might start seeing a lot of lost revenue. This is the same problem states are currently having with internet purchases across state borders, but applied on a national level. Other countries have NSTs so I assume there are already treaty agreements to accommodate such issues.

<strong>Just wanted you to back off on the assertion that free markets will equate to cheaper and better quality products.</strong>

I don't know that I "backed off" of anything. How bout I put it this way- Under our system of capitalism, lower prices and/or higher quality products are the rule rather than the exception.

<strong>There is no right or obligation. It's all about the math. If for the good of public, a government program is needed to do something and said program becomes an undue burden on the lower class, ie the taxes would drive them to unacceptable levels of cash flow, then there really is no choice.</strong>

It's really, really important to pay attention to the justification used here. If the justification is simply, "Oooh it would help out the poor so much to have this government program, let's take the money from the rich, they don't need it." Then that is the moral equivalent of stealing. OTOH, if it can be demonstrated that helping the poor through some program can return some benefit to those paying for it (say by reducing the more expensive costs of prisons) then it's a return on investment.

[quote]Originally posted by Nordstrodamus:
<strong>OTOH, if it can be demonstrated that helping the poor through some program can return some benefit to those paying for it (say by reducing the more expensive costs of prisons) then it's a return on investment.</strong><hr></blockquote>

Here is the whole problem with your arguments. You think the rich are paying for programs to benefit the poor. What the rich are paying for (and clearly not paying enough) is for the privilage of being rich in this country. This is the best place in the world to be rich.

[quote]Originally posted by wwwork:
<strong>

Here is the whole problem with your arguments. You think the rich are paying for programs to benefit the poor. What the rich are paying for (and clearly not paying enough) is for the privilage of being rich in this country. This is the best place in the world to be rich.</strong><hr></blockquote>

Huh? Are you suggesting that the rich use government resources more than the poor? Since the rich obviously do not use more welfare, medicaid, public education, defense, or prison funds than the poor I must ask to what resources you refer? If you are talking about farm subsidies or other big business subsidies I would whole hartedly agree that we should get rid of these.

<strong>Originally posted by Nordstrodamus:
I might be misreading the winking smiley, but just in case you got my meaning wrong by spending reserves I meant savings. It's easier to have savings than to have a reserve job.</strong>

It was just a facetious comment about people not saving anymore, and would rather go into debt. We're a credit card nation afterall.

My reservations about the NST has always been about what happens to the government revenue stream when the necessities of life (food and clothing) have been exempted from sales tax. The rich will typically always spend, but the middle class and lower class will try to stretch their money.

<strong>This is the same problem states are currently having with internet purchases across state borders, but applied on a national level. Other countries have NSTs so I assume there are already treaty agreements to accommodate such issues.</strong>

My comment was based on the presumption of cheap international shipping fares: "from overseas companies with cheap shipping contracts" and of the product being produced overseas. The NST would be around 20 to 30%. For light products (as in not heavy, not the photonic kind), that 20 to 30% sounds a lot more than shipping costs.

The US also has two very long borders with two countries wherein someone can just hop across the border to save 10 to 20%.

<strong>I don't know that I "backed off" of anything. How bout I put it this way- Under our system of capitalism, lower prices and/or higher quality products are the rule rather than the exception.</strong>

I'm more apt to believe "you get what you pay for." Mostly because the cost of doing something can't be reduced below the human factors involved. Semiconductors are exempted because they are magic alien technology

<strong>It's really, really important to pay attention to the justification used here. If the justification is simply, "Oooh it would help out the poor so much to have this government program, let's take the money from the rich, they don't need it." Then that is the moral equivalent of stealing.</strong>

No one is thinking that way. It's always about the good of the public.

<strong>OTOH, if it can be demonstrated that helping the poor through some program can return some benefit to those paying for it (say by reducing the more expensive costs of prisons) then it's a return on investment.</strong>

The intention of any aid program is to keep people on their feet until they can find another source of income. That such aid programs can be abused doesn't mean that the aid programs are wrong, just that they can be abused. I would agree that programs that don't provide a good return on investment is not a good thing, but there is more than the choice of axing it. Fixing it would be another option.

[quote]Originally posted by Nordstrodamus:
<strong>

Huh? Are you suggesting that the rich use government resources more than the poor?</strong><hr></blockquote>

Of the industrialized countries, the US taxes the wealthy the least. Property and finance laws favor the wealthy more here than elsewhere.

When the top tax rate was 39% you did not see them moving out of the country though they were the most able to. You did not see their percentage of the total wealth go down - quite the opposite was true. They just got richer compared to everyone else. Good for them.

But here is the thing - rather than admitting how fortunate they were to live here where it is practically impossible to lose money if you have enough of it, where you can pay off politicians to cut your capital gains taxes while they talk freedom, where local funding of public schools assures the poor get the worst education (and are dumb enough to think a flat tax is good for them), rather than being at all grateful ... they just get greedier.

My point is that our whole system favors the wealthy. Their taxes are not paying for social services. Their paying because social services are NOT more extensive. They are LUCKY to live in a country where the tax rate is not 70%. They are FORTUNATE that workers have not demanded more vacation time. etc.

and I still think if George Bush was not a wealthy oil man he would not be proposing so many tax cuts for the wealthy oil men.

[quote]Originally posted by Nordstrodamus:
<strong>Are you suggesting that the rich use government resources more than the poor? Since the rich obviously do not use more welfare, medicaid, public education, defense, or prison funds than the poor I must ask to what resources you refer?</strong><hr></blockquote>
That's an interesting question.

I don't think it's quite as clear cut as it seems at first - that the poor get the gov't money.

If you look at the big-ticket items in the budget,

1. Social security: it's distributed regardless of wealth.
2. Health care: Medicaid is for the poor, but Medicare is for elderly regardless of wealth.
3. Military: This is harder to evaluate, but many lower- or middle-class people join up and are paid by the military, although many of the expensive line items go to high-tech defense industry contracts and benefit upper-class engineers and business people the most.
4. Debt interest: If anything benefits wealthier investors rather than the poor.

There are welfare, food-aid, children, etc. benefits for the poor, but they don't add up to as much as most people probably think - only a few % of the total outlays.

And there's also "corporate welfare." Granted, tax cuts aren't really gov't handouts, but I think if they're targeted specifically at certain businesses they could be considered as such.

And there are certain services that probably are used by the rich more than the poor: the arts, for instance, and national parks.

With respect to state budgets, most is spent on public education, which can be used equally by rich or poor.

So, what % of our total federal and state taxes are handouts to the poor? Not very much, it seems to me.

My wife and I become more and more disgusted with the amount of taxes we pay. We are in the top 10 percent bracket and hardly feel middle class. We are buying are first home and it's a huge financial burden. And we are super-rich? Not.

Granted, we do live in Los Angeles. But that shouldn't matter. The tax system should be fair and we are getting screwed. Now that I think about it, why would I ever believe in charity again when we are giving away 60+k a year to the govt and less fortunate? That is a LOT of money that we could save for future college education and retirement.

I agree with the current progressive rates. They do NOT need to be lowered aside from the pending Bush reductions over the next decade. However, the ceilings for each bracket need to be lifted drastically! I often don't like the though of making more money per annum because the harder I work the more I diminish my return for that work. Sad, but true.

Every once in a while I recall that my grandfather came to America around 1900 and started a business when there was NO INCOME TAX. Trippy to think about :eek:

some data: <a href="http://www.irs.gov/pub/irs-soi/98inrate.pdf" target="_blank">http://www.irs.gov/pub/irs-soi/98inrate.pdf</a>

As I recall the repubs, evil defenders of the rich, have never been too friendly to funding the arts. Also, whenever they show the summertime onslaught of tourists on Yellowstone they all look like a bunch of Joe Sixpacks to me.

Bush is most definately a whore for the oil industry and I think both his and the republicans party's resistance to doing real tax reform (like the NST) reveals what hypocrits they are. I'm afraid that both parties have fallen in love with the tax code too much to get rid of it

[ 02-09-2002: Message edited by: Nordstrodamus ]</p>

[quote]Originally posted by Nordstrodamus:
<strong>

I never understood this line of reasoning. People should be happy with being overtaxed because at least they aren't as overtaxed as in other countries. Does this apply to other liberties? Should we accept more censorship just because most other countries limit the free speech of their citizens more than we do?]</strong><hr></blockquote>
Good point.

[quote]Originally posted by Nordstrodamus:
<strong> I don't think it can be shown that the rich are taking tax money from the poor.</strong><hr></blockquote>
No, not at all. I'm just pointing out that, contrary to popular belief, most tax dollars are not sent out to the poor. Most are spent without regard to the income of the beneficiary - social security, military, medicare, interest on the debt.
[quote]Also, whenever they show the summertime onslaught of tourists on Yellowstone they all look like a bunch of Joe Sixpacks to me. <hr></blockquote>Sure, middle class. I live not too far from some of the most beautiful national parks in the world (e.g., Glacier), and I've seen studies that the poor don't go to the parks. Anyway, National Parks are probably .000000000000000001% of the budget.