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OK so then, new question. Half my life is basically over but you guys are the ones that have to figure this biotch out over the next few years for yourselves. What does your generation think the answer is to a growing debt, unsustainable SS (which I don't believe in but some folks just don't plan and I hate to have 20 million homeless 70 year olds), and yet still maintain a government that is able to protect the people?
I dream of a day when chickens can cross the road without having their motives questioned.
Yeah, I'm all about limiting government control and firing off these idiots. For instance, relatively close to me is something called like the Department of Hiring or Employment or something here in Chicago. I mean, we have a department for that? WTF do they even do? Sit around, collect a pay check, claim they hired some people for some BS job that they won't be at in 5 months? It's frustrating. We pay taxes to hire people so they can pay taxes to hire other people that will only minimally contribute to society. And for some reason, people (democrats) seem to openly support this as if it is helping. Unbelievable. It's a damn mental disorder.
Life is frustrating, but I'd rather work and pay taxes so people like college students can vote against me. The alternative is being poor and trying suck off the teet of society so I can get by purchasing crappy clothing, eating fast food, getting fat, and being lazy. Being a republican is far better than the alternative lifestyle. I just fear those that are willing to get relevant degrees, work, and save for retirement are going to be dragged down by the fools of our society.
Just reading this board shows the clear divide between educated republicans in accounting, finance, law, medicine, and other productive areas vs. those with degrees in sociology, theatrical plays of medieval times, or interpretive dance that bring almost no skills to the working world. The 60's brought some important ideas to light, but they've also poisoned the collective brain of society. The sad thing is, that dude with the douche-y Dave Matthews Band picture is just one of millions that don't pay taxes and are seemingly content with making enough money to just get by while relying on taxing those that aspire to do more with their life. Disgusting really. It's like trying to swim with dumbbells attached to your ankles.
Wait!!! You are in Chicago? Dude, we have to have a beer. I live just east of Rockford. Yeah I read the other stuff and pretty much agree.
Taxing too little? Ruh, roh. The last thing we nee to do is lower the purchasing power of those living in this country. Jesus.
Economics, accounting, finance, and basic law should be the staples of our education instead of some of these hippy educations we're going towards. My goodness. Increasing taxes? The f'ing morons that tax us can't even help us out! You want to hand them MORE of YOUR money? Hahahahahaha. Liberalism... it's a mental disorder. It's got to be. On that note, I'm going to get some dinner and study so I can be a CPA and hand over more of my hard earned money to you idealistic fools.
Not true - the tax is calculated on how much you spend not the % of your income you spend.
Higher income individuals will consume more than lower income and would pay more of the tax.
As mentioned below (thanks btw), you're confusing the argument.
It's a fact that wealthy individuals spend less of their income than low-income individuals do. This fact, by itself, causes a "federal flat sales tax" or similar structures to be regressive.
Here's an example:
Person A earns $40,000 per year and spends 50% of their income, $20,000. If a 10% tax applies to that consumption, Person A would pay $2,000 in tax. This results in an effective tax rate of 5% of income.
Person B earns $1,000,000 per year and spends 40% of their income, $400,000. This is still a substantial amount of spending. If a 10% tax applies to that consumption, Person B would pay $40,000 in tax. This results in an effective tax rate of 4% of income.
That is what regressive means. Higher incomes pay a lower rate of tax on their income. So yes, higher income individuals would pay "more tax" but they would pay a LOWER RATE of tax. Most tax structures in place favor progressive systems, as the common belief is a progressive system is more equitable.
But this is not a tax based on income, it is based on consumption. The more stuff you buy the more tax burden you bear.
Read the post I just wrote. You "pay more" but you are taxed at a lower rate. Do you honestly think it's fair to tax someone who makes $1 million at a lower effective rate than someone who earns $40,000?
I'm confusing the argument? You are saying a consumption tax is a regressive way to tax income.
This type of tax is being proposed as a replacement to taxing income.
Umm... taxing anyone, at all, is taxing income. They have to use their income to pay the tax. So yes, it is a regressive means of tax.
And yes, you're still confusing the argument.
I'm a total noobie with the stuff, just a uni student lol, but interesting thread. Got me wondering so I asked my dad what we have in Canada and I guess we have a VAT as well as income tax.
Personally, I think you guys are F'd for a long time haha. Too many stubborn idiots trying to equate any government action to communism. Same people are the ones asking the gov to ban gay marriage too haha. I really like how the PC gov up here is running things (well for the stuff I understand) but I'm biased being from Alberta as well as wanting to work in the oil patch :/
Don't you mean wealth?
Lower income individuals have no wealth. So, for simplicity's sake, I chose to call it 'income'.
Stop avoiding the "tax burden" comment you made. Higher incomes will pay more tax in sheer dollar terms, but will have a much lower "burden" because of a lower tax rate.
No a flat income tax is neutral, but slightly progressive if you want to get technical. See example below:
Say theshold for paying tax is set at $10,000 (your standard and only deduction) and the rate is 20%.
Individual 1 makes $11,000 - he would pay $200 ([11k-10k]*20%)in taxes for an effective tax rate of 200/11,000 or 1.8%
Individual 2 makes $40,000 - she would pay $6,000 in taxes for an effective tax rate of 6000/40000 or 15%
As the income level goes up, the effective tax rate goes up asymptotically toward the flat tax rate, thus making it slightly progressive. This is simple math.
A flat tax is one tax rate for all brackets, but you get the one standard deduction. Basically you don't pay taxes until you reach X level of income and you pay Y rate for every dollar above that level. So as income goes up your approach the effective tax rate of Y.
The fair tax is neither progressive or regressive, but rather all voluntary. The pre-bate handles the concern of those that claim that it is regressive. Example work best for me, so here you go.
Let's assume the poverty level is $1000 per month for an individual and the "fair tax" rate is 20% (published rate is typically 23% and poverty is likely a bit higher, this is just for easy numbers).
Each legal resident (single) would receive a pre-bate of $200 per month, no matter how much you make. The $200 comes from $1,000 (poverty level) * the rate (20%) or in other words, the amount of taxes that you would pay if you just spent what is required to live. Thus all taxes paid are in essence voluntary. You don't have to buy the steak vice the hamburger, but if you have the money most people will spend more than what they need. This is a choice and thus the taxes you pay are a choice.
So the effective mandatory tax rate for the "fair tax" is 0%. The effective overall tax rate is a function of how much you spend beyond the poverty level and how much you make.
Effective tax rate for someone who makes $100K above poverty line and spends it all each year (plenty of these people) is 20%. Effective tax rate for a guy who makes $50K above poverty line and saves $20K (spends $30k) is 10% (50K*.20/60K). Now you can flip that to the miser rich guy at a really small % and the poor guy living beyond his means at 20%. It doesn't change the fact that you don't have to pay a dime if you choose to live small (and thus use fewer gov't services).
My appoligies to the OP, I tend to reply to BLF a lot and get a bit off topic, but the advantages of the "Fair Tax", the tax system that eliminates the IRS/Income tax and establishes a national sales tax on all new (key only new) goods and services. Another key point to understand is that the tax is only added at the end, not to intermediate products. Say I make the bumber for the new Chevy pick-up at my factory. I will not add the tax to the bumpers that I sell to Chevy, b/c the bumper is a piece of a new assembly that will be on the shelf with the tax added in. In other words, the "Fair Tax" is not a VAT.
1 - You get your full salary as take-home pay (not counting state/local income taxes). You boss gives you a rais to $60K/yr and you are paid once a month. Each of your checks would be $5,000 (no FICA, unemployment ins...just what state/local takes out).
2 - April 15th becomes just another day (well I earned my submarine officer dolphins on 4/15/2004 - so I will remember it).
3 - People who work in the black market economy (get paid cash under the table - drugs, illegals ...) will pay taxes and do so at a higher rate if they are not here legally (not here legally, you don't get the pre-bate).
4 - All federal taxes are voluntary - see above.
5 - Assuming that virtually all people who make more than the poverty level will choose to spend a good percentage of that money (easy assumption), then we greatly expand our tax basis.
6 - Reduced lobbyist power over congress. The way we got to 70K+ of pages in the IRS tax code and all the loopholes that allow for firms like GE to pay 0% taxes while little start-up competing against them pays 35% are very related. Firm X gives $$$ to Congressman Y's election, after election Congressman Y adds a litle rider to a bill that adds a new page to the tax code and what do you know, Firm X's effective tax rate just went down b/c the loophole was written for them to take advantage of and likely written by their tax lawyers (first draft anyway). Well, under the FT, everything is taxed the same from milk to a yacht, they're all getting the same % tacked on. This point is crucial to understand, you cannot start handing out excemptions. The pre-bate ensures that you don't pay taxes on the necessities and once you start adding exceptions to the rule, then lobbyists start circling with their campaign contributions in exchange for their products exemption.
7 - Levels the playing field for US products. It doesn't matter if the widget was made in the US or in China. If it is a new good on the shelf in the US, it has the X% FT added onto it.
8 - Prices on goods does not effectively change. 22% of the average item's price is due to the embedded taxes. The general FT rate to get an neutral revenue from today's IRS is 23%. So (1-0.22)*(1+0.23) ~ 1. Basically, the FT eliminates the middle men, instead of taking out taxes at each step in the process it is aggregated at the end.
9 - 500 top businesses were polled about their reaction to the FT if it were enacted. 80% said they would open their next factory in the US, the best part is the remaining 20%. They would re-headquarter to the US immediately. This is an extremely good thing for factory workers and all of us.
1 - Regressive Tax (claimed). See my post about the pre-bate and thus all taxes are voluntary. This is an invalid response that is either un-informed or is from a person who doesn't thin much about personal responsibility.
2 - Business's won't collect the tax. There will be tax fraud no matter what system is used. Under this system, the only people that have to be "watched" are final point of sales business for new products and services and the rate is X%, no exceptions. The current system collects taxes from individuals and businesses alike and has 70K+ pages of regulation. Which one do you think is easier to circumvent? The simpler system (FT) is much much easier to oversee.
3 - Businesses tax rate is 0% under the FT. Well that is the true tax rate for all businesses since the beginning of time. A business only gets money from two sources: the investor and the entity that buys their goods or service. So any tax that the company pays, is paid by the individual whoe purchase that stock/widget. This is a whole new discussion, but screaming for higher corporate taxes is asking to tax yourself and rather myopic and illogical.
A national sales tax is not regressive since the wealthy will still pay most of the taxes in this country.
As for the percentage of income argument they have a point, but its a moot one. All classes will be paying less taxes.
Liberals don't like it because it will be harder to fund massive spending. They don't subscribe to the starve the beast idea of taxes.
Wrong. You clearly don't know the meaning of regressive.
This post was edited by CMXI 16 months ago
So why don't you explain it then?
Regressive Tax - you pay a smaller % of your earnings in taxes as your income increases
Progressive Tax - flip side, % goes up as earnings go up. This is how our income taxes are set-up, but the loopholes make it easy for those in the low and high ends to eliminate a lot of their taxes, thus creating a bell shaped curve when looking at effective tax rate vs income.
Neutral Tax - flat tax, everyone pays the say %, obviously the more you make, the more you pay, but not on a % scale.
The "Fair Tax" is neither regressive nor progressive. The pre-bate eliminates all taxes paid up to the poverty (min amount to live on) level, thus all taxes paid are voluntary and will vary greatly based on individuals spending choices.
Even with a flat tax, the current leadership would still use that talking point of having the "rich" pay just a little bit more because they can afford it,
Even if a flat tax was instituted, the current leadership would not eliminate the irs - they would still be needed to maintain the administration's improved unemployment numbers as even more agents would be required to oversee the Obama Care Protocols.
I know South Africa uses it as well as many British dependancies and commonwealth nations. Should be enough material out there about the realized pros and cons versus the projected ones before it was implemented.
Beatings will continue until morale improves
menichols' addressed regressivity in relation to income taxes, I'll address it in relation to a sales tax.
The definition of a regressive tax is a tax that falls disproportionately (in relation to percentage of income) on those who earn the least.
Say you have a national sales tax of 8%, and two people, person A (who makes $30,000/yr) and person B (who makes $100,000/yr). Maintaining this flat tax means that if A and B purchase the same item (let's say a $10,000 car), they each pay $800 in tax. However, that means person A is paying 2.66% of their income in tax, while B is paying 0.8% of their income in tax, despite making the exact same purchase.
Therefore, as you can see, a flat sales tax meets the definition of a regressive tax.
So, you may ask, what's the problem here? Why does it matter that A is paying a greater percentage of their income in tax?
Most everyday goods (food, toiletries, etc.) are relatively inelastic (demand doesn't rise/fall with price, since we all need food to survive), and are consumed in relatively similar quantities for each person. Thus, regardless of whether someone makes $30,000/yr or $100,000/yr, they'll still need to eat roughly similar amounts of food (let's say $5,000/yr for food expenses). In this example, A will pay 1.33% of their income in taxes, and B will pay only 0.4% of their income in taxes.
So, if you replace a federal income tax structure with a federal sales tax, rather than having everyone pay an equal percentage of their income, you're weighting it so that, no matter what, someone who earns less will be paying a higher tax rate than someone who earns more. Some will argue that those who earn more will consume more, thus paying more taxes, and subsequently a larger percentage of their income will go to taxes, but this is a false equivalency. Income taxes are designed so that, when taken out, everyone is essentially at zero when it comes to consumption.
Thus, to compare to a flat sales tax, we have to look at a flat sales tax assuming that everyone is at the same level (of consumption). As we can see from the above examples, if the level of consumption is consistent between two people, the one who earns less will always pay a higher tax rate.
If it were a flat sales tax alone, you would be right. However the "Fair Tax" includes a pre-bate to every household for the taxes that they would pay up to the poverty level. Thus as explained above, the tax is neutral and the % of income you pay in taxes is completely up to the individual and their spending choices (note choices not requirements). Milk and bread are necessities, a 60" TV with all the cable channels is not.
Again, example (these are just numbers to illustrate a point):
* Assume poverty level is $1,000 per month
* Assume "Fair Tax" rate is 20%
This would mean that you would spend $200 per month in taxes just buying the basic necessities. Under the "Fair Tax" you would get a monthly prebate of $200 (FT rate * poverty level) and thus pay a net of $0 in taxes on necessities. Everything you spend beyond necessities is a choice. A person making $2000 per month can choose whether or not to spend all none or a portion of the remaining $1,000.
The "Fair Tax" is not regressive.
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