Ya know what the problem is though -- too MANY and TOO MUCH tax. People are only looking at the income tax. I don't know how much it is for me specifically. It comes out of my paycheck and it's a lot. That's all I know (haven't done my taxes yet). However, let's say that you lose 20% due to that tax. Now you pay 7 to 9% of your purchases in tax You pay a fair amount of gas tax (23 cents per gallon or something like that) Businesses get taxed and they pass the cost down to the consumer. Yeah, I know that some businesses don't pay, but small businesses do, and they have A TON of taxes on them. There are property taxes And that's only a tiny bit. There are taxes on virtually everything. Taxes are supposed to pay for certain things, but then those things are taxed also because the money got spent somewhere else. I can't find a list of them, but just look around. Whatever it is gets taxed. Virtually every single thing that exists in our society has some sort of tax on it somewhere. So when we look at our taxes, we can't just focus on income. The government will just create other underhanded taxes that we may not realize exist.
If 4 in 5 people don't see any difference it might be because many people that make very little, pay very little to no taxes in the first place. So what can we do, mail them a check and have them pay no taxes? The United States derives most of its revenue (tax) from the wealthier portion of this country. Consumption Tax: Has its strengths and its weaknesses. The US has been a consumption based society in which we have the lowest savings rates of most developed nations. Though this sounds wonderful to corporations it can be a negative when people begin to borrow to feed the thirst and then much of their income gets pushed into paying interest and not on consumption, which is a substantial negative. If this pattern continues, consumption will fall and questions on how that will affect government stability of income. Flat Tax: I believe a flat tax is much fairer than the current system. I don't feel individuals should be penalized because they make more than others. People in the lower income levels don't even pay taxes, versus those in the top pay close to 40%. The reason the US is the strongest country in the world is not because we speak English or because we have the biggest guns (which is a result of why), it is because we are the strongest economy financially in the world. A capitalist/ free economy society allows innovation and incentive to work harder for additional revenue. The sad truth is that everyone is not equal. Some work harder than others and they should recieve benefits for their additional work or they will not do it, that is why socialism/communism failed, if you take away worker incentive, your economy will crumble ala Russia. The growth in industry started by businessmen, fueled the revenue for the government in the form of taxes that allows the US to buy the best weapons, and manipulate the world in terms of loans and force their opinions on the world through the International Monetary Fund IMF or loans or support.
You may feel a boost from lowered taxes. I know the rebate I got was helpful -- though it is long gone now. But, in the long-term it is not specifically helpful to anyone. When taxes are lowered, the amount an employer needs to pay you is also lowered. The market will find a new equilibrium and you will have the same standard of living you would have had with higher taxes -- you'll just do it with a lower salary. In the long-term, it is irrelevant how much you pay. What is relevant to making decisions about taxes is the efficient use of money. There are some things for which government is most efficient user of funds. For example, I doubt any entity besides a government could build an army as big, as sophisticated, and as effective (at bullying the whole world ) as what the US government has put together. That's an efficient use of money and therefore a good investment of society's wealth (assuming of course that having such an army in the first place is a good idea). At the same time, the private sector may be better at, say, making candy; so money for that should be left in the private sector. An inefficient use of capital resulting from using tax money to fund projects the government is inefficient in completing will impoverish (to one extent or another) the society. That will affect everyone's personal wealth. That's why my own feeling on the tax reduction is not to bother. Address the budget: do the things you're good at, don't do the things you are no good at. Then, take whatever money you need to fund it and leave the rest. (The interesting thing is that this is the essential basis of both Trickle Down Economics and Bolshevism.)
There was a study by a tax reform group recently that estimated that the "average" American spends approximately 45% of his earnings on taxes. I'll try to find a link.
Flat Tax: I believe a flat tax is much fairer than the current system. I don't feel individuals should be penalized because they make more than others. People in the lower income levels don't even pay taxes, versus those in the top pay close to 40%. The reason the US is the strongest country in the world is not because we speak English or because we have the biggest guns (which is a result of why), it is because we are the strongest economy financially in the world. A capitalist/ free economy society allows innovation and incentive to work harder for additional revenue. However, the reality of a flat tax is that it squeezes money out of the poorest segments of society (as you said, they currently pay less than "their share"). By doing that, all you do is increase the amount the government will have to spend on social services -- welfare, etc. It's really pretty counter-productive. Part of what makes capitalism work so well in 1st world countries is that there is a social safety net that ensures we don't have a massive impoverished class of people in society. Without that, the poor get poorer, the rich get richer, and the poorer class will slowly grow in size. That is a formula for failure in any society. A flat tax works against the "pull the bottom rungs up" philosophy that our society uses.
The issue is ...Why punish the people that are the most successful? They are the ones creating jobs for the masses, why should they pay the brunt of the tax. Does a rich person get ANY more benefits from the government then a poor person? A flat tax or a VAT tax would work and it would be fair to everyone. It would encourage people to get out and push themselves, and it would not punish the people who have actually gotten out and achieved. You do not tax essentials those are tax free, and you put a higher tax on luxury items, so that the poor do not suffer. It can be done where the tax is pretty much a voluntary thing. Of course, if you want a national healthcare system then all of this is out the window..... DaDakota
First, I do want a national healthcare system particularly considering the fact that I have friends who can't afford basic treatment because insurance is too expensive. But, I digress... I'm not sure that placing a tax burden on people who struggle every day would be fair. Flat tax, in particluar, is tough on poor people. It may not be that tough for a guy who makes $100K to pay $10K in taxes. He's still making $90K. But, to only make $12K and have that reduced by $1.2K is a lot. I think it is a shame that poor people in this country have been equated with lazy, good-for-nothing slobs that have no interest in being successful. There is no cookie cutter answer to the problems out there. Not every poor person is lazy and not every rich person is a go getter. Give that "get out and work harder" speech to the man who lives a street over from us and is relegated to a wheel chair and the need for 24-hour supervision. Tell that to the woman who can't go to school and get her degree because her husband abandoned her and her two children, so she has to work as a waitress to make just enough money to pay the bills and send her kids to daycare even though she has to hit the food bank once a month or so to make the food budget work. It all sounds much easier and cleaner than it really is.
The issue is ...Why punish the people that are the most successful? They are the ones creating jobs for the masses, why should they pay the brunt of the tax. Does a rich person get ANY more benefits from the government then a poor person? The current tax system doesn't punish the people that are most successful. By giving the "masses" more money, you create a market for the rich people to make money. If the poor people have no money, the rich people aren't going to make any money either. Basically, this is the opposite of "trickle-down" economics -- "trickle-up" economics. A flat tax or a VAT tax would work and it would be fair to everyone. It would encourage people to get out and push themselves, and it would not punish the people who have actually gotten out and achieved. A flat/VAT tax does nothing of the sort. In the current system, you will never be better off by making less money (except maybe at the lowest-of-the-low points under the welfare mark). It's always better to make $100,001 than $100,000. You are certainly not punished for making more money. It can be done where the tax is pretty much a voluntary thing. Yes ... this sounds like a formula for success. Bottom line is that if you change the tax system, one of two things will happen: (1) Poor people pay more - this will hurt the economy and hurt everyone in the long run (2) Poor people pay less - this is the opposite of what you're hoping to get
I am saying everyone pay their fair share. I am in favor of giving people a chance to succeed, but I am against punishing people because they make more money. Why should someone who makes $500,000 a year pay a MUCH higher percentage then someone who makes $30,000 a year? It should simply be everyone pays a set rate. Give people an incentive to get out and TRY to get to a higher tax bracket. Jeff, I understand your points but what I am talking about is mostly a luxury tax...the poor would not have to pay 1 penny. In essense you are giving the CONTROL over how much tax you pay to the PEOPLE. If a rich person wants to go out and buy a $100,000 yacht, and it has a $20,000 tax associated with it, how does that hurt the poor? It is a voluntary tax. The essentials, food, clothing, housing/property, would all be tax free. DaDakota
I get that, however, what about healthcare, auto repair, exterminators, plumbers, electricians? Would services require taxes? What about furniture? Would a bed be exempt but only if it cost less than $500? What about really expensive clothing? Furs, $1000 shoes, designer dresses - those are all luxury items yet they would be exempt under your plan. How about eating out at expensive restaurants versus fast food? How about transportation? Are used cars included or just Jaguars? Is there tax on your bus fare? What about companies? Do they have to pay taxes on mergers, stock purchases or even legal and accounting services? How do you charge taxes on something bought from another country and mail ordered here? What if you buy that $100,000 yacht in the Bahamas and sail it back to the US? Whenever you have taxes, you are going to create loopholes somewhere and the only people who can afford to find them are the rich people you are proposing to tax. Assuming you do away with property taxes, school taxes and income tax, you'd have to charge a VERY steep sales tax to cover even the most basic necessities - police, fire, EMS, garbage pickup, military, road construction, education, etc. Unless you just say, "Anyone who is below the poverty level pays no sales tax at all," you are putting a burden on people who cannot afford the burden all the while you are cutting the benefits that, at times, keep them from starvation or living on the streets because this tax could not possibly support government-sponsored clinics, housing or food. It sounds good in theory but it would very likely be a disaster in practice.
Suffice it to say I disagree, Desert Scar...I think most people, if you asked them on the streets, wouldn't have the first clue what they paid in taxes last year. Unless of course they're self-employed. I can tell you EXACTLY what I paid, for that very reason. But when it's withheld for you, you're simply not as mindful of it. I know when I was an employee of another company, I had no clue what I was actually paying....again, I hear people say, "i didn't have to pay taxes this year" all the time!
It would actually help the poor, wouldn't it? More money in the government's coffers means more goods and services available to the truly needy.
Why should someone who makes $500,000 a year pay a MUCH higher percentage then someone who makes $30,000 a year? Because the person who earns $30,000 per year has to put a larger portion of their earnings into day-to-day essentials like food, clothing, and shelter. Let's say Person A ($500k/yr) pays 40%. Person B ($30k/yr) pays 15%. If you say a person needs $20,000/year to reasonably live, then: Person A is paying $200k out of $480k disposable income (or 41.6%) Person B is paying $4.5k out of $10k disposable income (or 45%). That's kind of what the "standard deduction" is for, except that people don't live off of the $4000 per year or whatever the deduction is. If you look at *disposable* income, the current tax system isn't as progressive. Give people an incentive to get out and TRY to get to a higher tax bracket. People already have an incentice to get to a higher tax bracket ... it means they are making more money. Ask a poor person whether they'd rather make their $20,000 per year and only have to pay 10% taxes, or make $500,000 per year and have to pay 40%. I think you'll find most already pick the latter. Incentive to earn money is not an issue as-is.
MM, so you are saying people are more knowledgeable about what their taxes are used for (the expenditures of government at all levels) than the amount of money taken out of their paycheck for income tax. I find this highly doubtfull. I am not saying people are fully aware and informed about their budgets and taxes paid, but I think they are infinetly more aware of those things than they are of than the government expenditures and services paid for by taxes that benifit them or their extended family directly or indirectly. I am thinking back to a question in a different context in the Life of Brian, "What have the Romans ever done for us", replace this with "What has the government ever done for us"--well, how about domestic peace, protection from foreign invaders, roads, parks, subsidized education for your family if not you, subsized cancer treatments, safer transportation, social security benifits for your older relatives, medical coverage for older relatives, and on and on and on. I am not saying government is efficient or high producing in all these areas but can you think about where society would be without them. It is easy to say taxes are too high--but when you talk about making a "real" dent in taxes without balooning government debts further you have to cut in the biggies: federally, this means social secuity benifits, the military, medicare and health research funding. Locally (local and state) this means cutting higher and secondary education, police forces and prison systems. Which one of these things do the big tax cutting proponents really want to cut--because something has to give. And dilly dailying around that we just need to cut farm subsidies, eliminate welfare, $1000 hammers, congressional pork etc., is just rhetorical games to avoid facing the tough budget questions.
It would actually help the poor, wouldn't it? More money in the government's coffers means more goods and services available to the truly needy. Yes and no. How many fewer people would buy the yacht if it cost $20,000 more? And how many job cuts would that lead to? Those lost jobs are the things that the poor need most. They'd probably prefer to pay taxes and have a job than not have a job at all. Ultimately, everyone depends on everyone else for the economy to work. Making the poor pay more will affect the rich, and vice-versa. Is there a better way than we have now? Almost definitely, since ours changes every 3-5 years. But it's not as simple as saying the rich or the poor should bear a larger burden.
Could we privatize some of these big expenditures like education, prisons, health care, medical research, parks, and retirement benefits. That way the burden of paying for things is put on the people who use them. If I never go to a national park, I don't think I should have to pay for it. I certainly don't get free healthcare so I don't think I should be paying for that either. Prisons could make money if they used the prisoners as cheap labor. It somes like some people just are more producers and others are more producers.
None of those would adequately reduce taxation. There are three things that dominate tax money revenues: 1. Social Security/Government Retirement Benefits - it represents 75 to 80 percent of the entire entitlement program. 2. The military - the government spends more every 15 minutes on the military than they do every YEAR on education. 3. Infrastructure - No one is going to take over the job of road and building construction because there is absolutely NO money in it yet building and maintaining our nation's roads and infrastructure is one of the most costly elements of every state and federal budget. If you want to deal with high taxes, go for the things that REALLY make a difference. Education, national parks, health care (which has been dramatically reduced in the past 10 years in favor of privatization), prison systems and medical research (which makes up a fraction of health care costs) are all incidental compared to the three I mentioned. I mean, national parks? Good grief, those guys are lucky if they get any money at all. Education? Teachers in most inner city schools still have to provide supplies on their own dime for students and schools are turning to soft drink companies to sponsor pouring rights for extra cash. At least pick stuff that makes a dent in taxes at all.
Jeff I agree with your overall assessment with some cavouts. Education and prison systems are typically the two largest state/local government expenditures and I would bet rival our military expenses overall. It is just the vast majority of those revenues are collected by the state/local. When states are talking about serious tax cuts--it is at the expense of education (no politician will say he will cut the prison system and release prisons early to do it). Hydra, most of the things you want privitized won't be because their is no money in it or too many risks. Also, do you have relatives on SS or medicare, just because you personally are not eligible right now doesn't mean at some point it won't benifit you or your family.
