If you could reinvent the tax system...

Posted:
in General Discussion edited January 2014
What would you do?



Flat tax? National Sales tax? Corporate or individual taxes only? Lower taxes? Higher taxes?



I'm starting to think a national sales tax, with no income taxes at all, might not be bad. I like the fact that you have more control over how much you pay.



If you want to be materialistic, that's fine, but you'll have to pay more taxes. If you prefer to save, you won't have to pay as much. And it's taxing consumption rather than income.



The problems are that it would probably be harder on the poor than the income tax, and that the tax would probably have to be very high (40%?) to make up for the income tax.



I also like "sin" sales taxes - tax the bad stuff more than the good. Tax fast food more than produce. Cigs more than pencils. Hair gel more than jello. You get the idea.



As for income taxes, I don't like a flat tax, because I think higher income people can afford to pay a bigger percentage than lower incomes. But I like a simplified system (duh).



How about no deductions for anything but a couple things: maybe just charity contributions and home interest. Then you can simply subtract a few items from your income, and then look up your tax in a table.
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Comments

  • Reply 1 of 22
    groveratgroverat Posts: 10,872member
    I'm also not keen on a flat tax. I think the progressive income tax is a good thing, but there's one key to it all:

    - Destroy tax shelters. No fancy bullshit to make your $100 million untaxable.



    Also, we should dissolve the IRS.
  • Reply 2 of 22
    jrcjrc Posts: 804member
    Why can't we try out a couple of systems for two years at-a-time? First flat, then national sales, then a mixture, etc.



    But, I like the flat tax idea.
  • Reply 3 of 22
    splinemodelsplinemodel Posts: 7,311member
    I'd be m ore in favor of revising the government, and then the taxes along with it. If the excess fat of the government were to be stripped away, that alone would lower taxes. Next, if a good number of the departments were privatized, that would also reduce taxes.



    So obviously if nothing were to change it seems like I'm a supporter of sales tax. However, I don't like the idea of being taxed, and all of the loop-holes and hooks involved, especially with sales tax. I'd much rather just pay the firm directly who's services I use.
  • Reply 4 of 22
    outsideroutsider Posts: 6,008member
    I say we only tax people who vote for the winner in the presidential election. That way more people would vote 3rd party.
  • Reply 5 of 22
    amorphamorph Posts: 7,112member
    Well, if the Pentagon ever figures out where it misplaced that $2.3 trillion, maybe we'll get a break.



    Unfortunately, but unsurprisingly, most of the wasted government spending seems to occur in the area where a) most of the money is spent, and b) there's the least amount of public (or even Congressional) knowledge and accountability. On the other hand, we can't exactly throw the defense budget wide open.



    Anyway...



    I generally dislike regressive taxes, and manufacturers tend to be clever about getting around product-category-specific regulations in general (SUV's: They're trucks, not cars, so federal mileage and safety regulations don't apply! Ha!). Someone would probably find some way to pass hair gel off as a basic good. Still, better than nothing. Flat taxes are just silly. Income taxes could be reduced substantially just by closing loopholes so that the people who can best afford to pay taxes actually pay them. However, there are legitimate needs for some tax shelters, and there are only so many ways to outwit a determined tax accountant.



    The IRS needs to be abolished and reconceived from the ground up. It's too byzantine, too arbitrary, too inconsistent, too bloated, too disorganized, and too scary. I recall that study that called 100 IRS representatives with the same question and got 100 different answers. Yikes! It's time to just scrap the whole thing - and the ridiculously convoluted tax code that supports it - and start over. Unfortunately, someone would have to find a way to restrain all the special interests who are responsible for the convolution in the first place.



    [ 04-16-2002: Message edited by: Amorph ]</p>
  • Reply 6 of 22
    westonmwestonm Posts: 140member
    &lt;dream&gt;



    First, I would do away with so many of these government "programs". I would cut back on many others, and put a decent voucher system in place,



    Then add a 12% flat tax for everyone who makes $35000 or more (goes to the federal government), and another 8% (for the states).



    I would also try to limit the number of mini-Enrons.



    &lt;/end of dream&gt;
  • Reply 7 of 22
    whisperwhisper Posts: 735member
    If we keep the income tax, I think we should get rid of the whole "bracket" thing. I don't like the idea of a pay raise reducing my net income.
  • Reply 8 of 22
    spartspart Posts: 2,060member
    The problem with only taxing sales and taxing them high would be that it would wreck the economy.
  • Reply 9 of 22
    brussellbrussell Posts: 9,812member
    [quote]Originally posted by Whisper:

    <strong>If we keep the income tax, I think we should get rid of the whole "bracket" thing. I don't like the idea of a pay raise reducing my net income.</strong><hr></blockquote>Getting a pay raise can't reduce your net income. The brackets are marginal rates, meaning that only the amount that goes over the bracket cut-off is taxed at the higher level, not your whole income. Now THAT would be evil.

    :eek:
  • Reply 10 of 22
    sdw2001sdw2001 Posts: 16,937member
    [quote]Originally posted by BRussell:

    <strong>What would you do?



    Flat tax? National Sales tax? Corporate or individual taxes only? Lower taxes? Higher taxes?



    I'm starting to think a national sales tax, with no income taxes at all, might not be bad. I like the fact that you have more control over how much you pay.



    If you want to be materialistic, that's fine, but you'll have to pay more taxes. If you prefer to save, you won't have to pay as much. And it's taxing consumption rather than income.



    The problems are that it would probably be harder on the poor than the income tax, and that the tax would probably have to be very high (40%?) to make up for the income tax.



    I also like "sin" sales taxes - tax the bad stuff more than the good. Tax fast food more than produce. Cigs more than pencils. Hair gel more than jello. You get the idea.



    As for income taxes, I don't like a flat tax, because I think higher income people can afford to pay a bigger percentage than lower incomes. But I like a simplified system (duh).



    How about no deductions for anything but a couple things: maybe just charity contributions and home interest. Then you can simply subtract a few items from your income, and then look up your tax in a table.</strong><hr></blockquote>





    Well, these are some of the only things that you have said that I agree with (ever!) You can't tax spending at 40% though....that would destroy the consumer driven economy we have,



    I am in favor of eliminating the social security and medicare tax, and replacing it with a 1% national sales tax. That is an immediate 12% raise for all working Americans, with the tax being related to spending.



    In any case, by the time one gets done, one pays 50-60% of his income to the government in some way or another. That is a travesty.
  • Reply 11 of 22
    eskimoeskimo Posts: 474member
    I don't mind the current bracketed income tax but I would love for a simplified version of it. A few ideas:

    1) Make 1 tax on capital gains, not 3-5 depending on how long you held the stock, when you sold it and who you sold it to.



    2) Eliminate deductions, people can have a certain flat amount to deduct for themselves and their dependents, but no more itemized BS. Other than this allow tax shelter through existing IRA and 401 programs which encourages people to save.



    3) Apply rule #2 to corporations, no more loopholes, you make profits, you pay taxes.



    I think with these rules the % at each level could be lowered to a reasonable amount.
  • Reply 12 of 22
    [quote]Originally posted by BRussell:

    <strong>

    As for income taxes, I don't like a flat tax, because I think higher income people can afford to pay a bigger percentage than lower incomes... </strong><hr></blockquote>



    So? That doesn't give you a moral claim on their money.



    [quote]<strong>But I like a simplified system (duh).



    How about no deductions for anything but a couple things: maybe just charity contributions and home interest. Then you can simply subtract a few items from your income, and then look up your tax in a table.</strong><hr></blockquote>



    Here's the root of the problem. The minute you allow the home mortgage interest deduction there is no logical reason to exclude other deductions. Of course you can't not have this deduction because interest costs have already been capitalized into the cost of housing. Eliminate the deduction and housing values will fall overnight. This is great if you don't own a house and calamitous if you do. The political support for such a change falls apart. Also, keeping the home mortgage interest deduction raises the rate for revenue nuetrality to about 25% - way too high, IMO. (Frankly, I don't give a damn about revenue nuetrality - the government takes way too much - but that's another argument entirely.)



    In a perfect world, I'd like to see a flat tax. Here in the real world, anything that moves us in that general direction will do.



    [ 04-17-2002: Message edited by: roger_ramjet ]</p>
  • Reply 13 of 22
    brussellbrussell Posts: 9,812member
    [quote]Originally posted by roger_ramjet:

    <strong>So? That doesn't give you a moral claim on their money.</strong><hr></blockquote>I see the economic theory behind the flat tax - if you redistribute the tax burden so it's greater on the lower-income, and lower on the upper-income, you're putting more money in the hands of those who create jobs, and taking it away from those who just consume.



    But moral reasons? The top incomes have gotten much richer over the past several decades, and the bottom half has remained stagnant. So is it really moral to put a greater tax burden on the bottom/middle, and lessen the burden on the top?



    And even the economic theory is in doubt. The economy should have been better under Reagan, and we should have gone into deep depression under Clinton, if things were as simple as "trickle down."
  • Reply 14 of 22
    pscatespscates Posts: 5,847member
    I'm with Splinemodel on this: if the way the government operated was somehow massively restructured and the fat, waste, bureaucracy and inefficiency could be eliminated or GREATLY reduced, I'm convinced lots of other problems would take care of themselves and be fixed, almost as a result.



    Jeez, that's a long sentence!



    Everyone of us know there is MASSIVE, unchecked and ridiculous waste and lameness going on. Government contracting, purchasing, the Pentagon, questionable studies and programs, etc.



    I shudder to think how much money we simply fling down the drain on things that don't warrant it.



    That and the whole "$97 for an allen wrench" stuff we all hear about that goes on.



    I have many friends in the military, and several of them in the supply and maintenance field. The stories they've told me over the years about how much certain items cost and how you have to order them in cartons of 100 when you only need 6 and so forth...



    Ridiculous.



    The dollar figures I've been quoted absolutely blew my mind.



    Back on topic (sorry), I like the idea of a national sales tax.



    Hell, I like ANYTHING besides the current convoluted, ****ed-up system.



    Lewis Black from Comedy Central did a HILARIOUS show last weekend about taxes. He nailed it perfectly (ripping the tax code, the IRS, how we have to PAY people to translate English back to us from the tax forms, etc.) and I spent an hour laughing my head off.



    Then afterward, I was angry as hell because he was RIGHT!



  • Reply 15 of 22
    splinemodelsplinemodel Posts: 7,311member
    [quote]I also like "sin" sales taxes - tax the bad stuff more than the good. Tax fast food more than produce. Cigs more than pencils. Hair gel more than jello. You get the idea. <hr></blockquote>



    This is one of the most disgusting things I've heard you say. You are truly an intelluctual-aristocrat, holier-than-thou type that I would like to see dissolve into the ground if you truly believe this.



    I think George Will put it best in a recent article about GM: "Some Americans (let us avoid the term "liberals") hate fun, such as cheeseburgers, talk radio, guns, Las Vegas and cars that are larger than roller skates and that look more interesting than shoeboxes. They hated 1950s cars that looked -- as a sniffy critic said -- like jukeboxes on wheels. Such people love guilt, and want people to feel guilty about cars because cars have made possible suburbs, Wal-Mart, McDonald's and emancipation from public transportation."



    Such a tax would border on unconstitutional status. Please, BRussell, move to Europe and don't vote for silver-spoon-fed democrats that want to make the lives of so many americans miserable, just so they can claim to be "progressive."
  • Reply 16 of 22
    sdw2001sdw2001 Posts: 16,937member
    [quote] And even the economic theory is in doubt. The economy should have been better under Reagan, and we should have gone into deep depression under Clinton, if things were as simple as "trickle down." <hr></blockquote>



    What you don't undertstand is that Reaganomics did indeed work. George Bush the senior was not the same man and changed mnay of Reagan's iniatives due to political pressures. In particular, he allowed spending to go up dramtically around 1990, and raised taxes.



    Reagan's plan literally saved the country, IMO, from going from a recession (and a BIG one, might I add), to a depression. He dramatically lowered the top brackets, from almost 75% to 50% to 30%. The reformed, massive tax cut caused deficits at first, but as the economy rebounded it created MORE revenue. The problem in the eighties was unrestrained democratic spending and, by the same token, the need to spend billions more on the military during the cold war.



    The Reagan era was one of the most prosporous ones in the natons history. The effects of his programs are still being felt today, and many argue that he, in fact, was responsible for the eventual boom in the nineties. And don't forget, much of the nineties' boom was due to the dot-com boom and a technological revolution of sorts. I don't credit Clinton in the least with this economy, but rather I credit him with being lucky. The economy was already in recovery when George Bush the senior was leaving office, and it rebounded slowly until around 1996 when it exploded. Personal income taxes, until this year, were at an all time high (except for the WWII years I understand) until GWB's recent tax cut.



    In essence, I believe the economy of the eighties was better than the nineties. Or...at least equivalent. And I believe much of the nineties was due to the tax code revolution of the eighties.
  • Reply 17 of 22
    alcimedesalcimedes Posts: 5,486member
    flat sales tax. this is the only fair tax.



    exclude food and clothing and housing.



    also, instead of all this car insurance stuff, just tack on 12 cents to every gallon of gas, and no one has to pay car insurance.



    if you drive, you use gas, and you're insured.



    nothing ticks me off more than seeing people on welfare with digital statellite tv.
  • Reply 18 of 22
    thttht Posts: 3,100member
    <strong>Originally posted by SDW2001:

    In essence, I believe the economy of the eighties was better than the nineties. Or...at least equivalent. And I believe much of the nineties was due to the tax code revolution of the eighties.</strong>



    Thing's are never so simple as the politicized version of events. For example, the 80s also had a technological revolution called "personal computers", and in that respect, Reagan can also be considered lucky. But associations like that are just making a series of events fit one's worldview, and it never works that way.



    National sales tax would be fine. It can be as progressive as need be. Almost anything (that is considered "fair" to everyone) would be fine actually. The main thing is that the gov't spenders, Congress, must be checked from abusing it.
  • Reply 19 of 22
    sdw2001sdw2001 Posts: 16,937member
    [quote]Originally posted by THT:

    <strong>[qb]Originally posted by SDW2001:

    In essence, I believe the economy of the eighties was better than the nineties. Or...at least equivalent. And I believe much of the nineties was due to the tax code revolution of the eighties.</strong>



    Thing's are never so simple as the politicized version of events. For example, the 80s also had a technological revolution called "personal computers", and in that respect, Reagan can also be considered lucky. But associations like that are just making a series of events fit one's worldview, and it never works that way.



    National sales tax would be fine. It can be as progressive as need be. Almost anything (that is considered "fair" to everyone) would be fine actually. The main thing is that the gov't spenders, Congress, must be checked from abusing it.[/QB]<hr></blockquote>





    1) Computers were becoming quite common, but did not yet drive our economy. In the nineties, we were switching over from an industrial economy to a telecommunications and service economy.



    2) I really don't think Reagan was lucky with the economy. Perhaps a little.....but it was the complete overhaul of the tax system that did it.
  • Reply 20 of 22
    thttht Posts: 3,100member
    <strong>Originally posted by SDW2001:

    1) Computers were becoming quite common, but did not yet drive our economy. In the nineties, we were switching over from an industrial economy to a telecommunications and service economy.</strong>



    The personal computer industry, ie, any computer placed on top of a desk as opposed to the mainframe industry dominated by IBM, grew by an order of magnitude or more. It grew the typical 15 to 20% in hardware and however much the accompanying software growth is computed, much the same as it was in the 90s. Saying one is better than the other is stretching it I think.



    <strong>I really don't think Reagan was lucky with the economy. Perhaps a little.....but it was the complete overhaul of the tax system that did it.</strong>



    I think you're fitting you're Republican worldview to spin the events to your favor. I'm more apt to believe it was just part of the typical business cycle which would involve a variety of factors dynamically influencing each other working on a timescale of decades or more than 5 years.



    [ 04-19-2002: Message edited by: THT ]</p>
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