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Should taxes be more or less progressive?

Dan4reason
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5/9/2013 9:07:27 PM
Posted: 3 years ago
Should we in the US be increasing the progressiveness (the richer the higher the tax rate) of our taxes or decreasing the progressiveness of our taxes? Should we be raising or lowering taxes on the rich? What about the middle class? What about the poor?
Contra
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5/9/2013 9:40:36 PM
Posted: 3 years ago
You never responded to my last post in a somewhat similar thread.

We should replace the whole current tax code with a flat consumption tax, and a flat value-added tax. The burdening corporate, income, and payroll taxes would all be eliminated in their entirety, as would be the slew of excise taxes, tariffs, random fees, etc.

America would have a very competitive economy. This simple, efficient tax code would incentivize private savings and investment, which will spur business expansion, R&D, entrepreneurship, and capital investment -- all increasing aggregate economic growth and improving real incomes.

Restore the free market and individual liberty, with libertarian, more laissez faire policies.

The opposite will not help. More regulations will strangle business operations. Tariffs will kill jobs, raise the cost of goods, and incite a trade war that would threaten tens of millions -- 1 out of every 5 -- American jobs. More spending will take capital out of the private sector. The welfare state will crush individual morale and the hard working Americans across the country, subsidizing lethargy while punishing workers.

There is my spiel.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Dan4reason
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5/9/2013 10:33:14 PM
Posted: 3 years ago
At 5/9/2013 9:40:36 PM, Contra wrote:
You never responded to my last post in a somewhat similar thread.

We should replace the whole current tax code with a flat consumption tax, and a flat value-added tax.

Will these taxes cover food expenses?

The burdening corporate, income, and payroll taxes would all be eliminated in their entirety, as would be the slew of excise taxes, tariffs, random fees, etc.

America would have a very competitive economy. This simple, efficient tax code would incentivize private savings and investment, which will spur business expansion, R&D, entrepreneurship, and capital investment -- all increasing aggregate economic growth and improving real incomes.

I am not sure how a more efficient tax code will really have on our economy.

The tax burden of our current tax complexity is about 200 billion. This is out of an economy of 15 Trillion. While reducing tax regulations will certainly make things easier for small business, I am not sure the impact will be all that large.

Restore the free market and individual liberty, with libertarian, more laissez faire policies.

The opposite will not help. More regulations will strangle business operations. Tariffs will kill jobs, raise the cost of goods, and incite a trade war that would threaten tens of millions -- 1 out of every 5 -- American jobs. More spending will take capital out of the private sector. The welfare state will crush individual morale and the hard working Americans across the country, subsidizing lethargy while punishing workers.

There is my spiel.

Currently we have a free trade policy with most countries so we don't have tariffs or trade wars. While I am against an excessive amount of the economy going toward a welfare state, we should try to achieve a balance between capital in the free markets and money providing the poor with something of a safety net. We will always have poor people, and it is good to make sure that they have enough to live on and enjoy some change of making something better of themselves.
Contra
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5/10/2013 3:36:48 PM
Posted: 3 years ago
At 5/9/2013 10:33:14 PM, Dan4reason wrote:
At 5/9/2013 9:40:36 PM, Contra wrote:
You never responded to my last post in a somewhat similar thread.

We should replace the whole current tax code with a flat consumption tax, and a flat value-added tax.

Will these taxes cover food expenses?

The value added tax would be included for all purchases/ transfers. There would be no exceptions, because having any sort of exemptions make the tax base go down and requires tax rates to go up.

The burdening corporate, income, and payroll taxes would all be eliminated in their entirety, as would be the slew of excise taxes, tariffs, random fees, etc.

America would have a very competitive economy. This simple, efficient tax code would incentivize private savings and investment, which will spur business expansion, R&D, entrepreneurship, and capital investment -- all increasing aggregate economic growth and improving real incomes.

I am not sure how a more efficient tax code will really have on our economy.

The tax burden of our current tax complexity is about 200 billion. This is out of an economy of 15 Trillion.

This is about 1.33% of GDP. This is significant, especially in the context that the economy has only been increasing by 2% per quarter, and that is a "bullish" figure under this administration.

While reducing tax regulations will certainly make things easier for small business, I am not sure the impact will be all that large.

About 1/3rd of small businesses say that tax compliance is their largest cost from gov't. It would be beneficial, and I believe that 7% would be 8 points below the current lowest corporate tax rate.

Restore the free market and individual liberty, with libertarian, more laissez faire policies.

The opposite will not help. More regulations will strangle business operations. Tariffs will kill jobs, raise the cost of goods, and incite a trade war that would threaten tens of millions -- 1 out of every 5 -- American jobs. More spending will take capital out of the private sector. The welfare state will crush individual morale and the hard working Americans across the country, subsidizing lethargy while punishing workers.

There is my spiel.

Currently we have a free trade policy with most countries so we don't have tariffs or trade wars.

We have plenty of tariffs still existing.

While I am against an excessive amount of the economy going toward a welfare state, we should try to achieve a balance between capital in the free markets and money providing the poor with something of a safety net. We will always have poor people, and it is good to make sure that they have enough to live on and enjoy some change of making something better of themselves.

Okay, this can be a fair point. I am not opposed to a minimal safety net. We could block grant programs like SNAP benefits, the free school lunch program, etc. so that the states can adjust these programs to their unique individual needs, and foster innovation and flexibility among all of the states so we can figure out the best path to go forward.

A prosperous society is also necessary for economic opportunity. Instead of relying on welfare payments, people can support themselves and improve America's aggregate wealth as well as their personal situations (output, or GDP).
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Khaos_Mage
Posts: 23,214
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5/10/2013 3:38:33 PM
Posted: 3 years ago
At 5/9/2013 9:07:27 PM, Dan4reason wrote:
Should we in the US be increasing the progressiveness (the richer the higher the tax rate) of our taxes or decreasing the progressiveness of our taxes? Should we be raising or lowering taxes on the rich? What about the middle class? What about the poor?

I liked where the taxes were during the Bush years, with a few exceptions I would like to tweak.

I don't have a problem with people who pay no taxes, but I have a serious problem with people who pay negative taxes. This should be eliminated.

College credits, Earned income credits, and child tax credits should be non-refundable tax credits. The main source of refundable credits (if not only).
My work here is, finally, done.
bossyburrito
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5/10/2013 3:45:44 PM
Posted: 3 years ago
At 5/9/2013 9:40:36 PM, Contra wrote:


Restore the free market and individual liberty, with libertarian, more laissez faire policies.

Taxes restore the free market and individual liberty?
#UnbanTheMadman

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To relax their restless flight
Somewhere out of a memory of lighted streets on quiet nights..."

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Double_R
Posts: 4,886
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5/10/2013 5:18:39 PM
Posted: 3 years ago
At 5/9/2013 9:40:36 PM, Contra wrote:
America would have a very competitive economy. This simple, efficient tax code would incentivize private savings and investment, which will spur business expansion, R&D, entrepreneurship, and capital investment -- all increasing aggregate economic growth and improving real incomes.

I never understood this conservative talking point. How exactly does a more efficient tax code incentivize private savings and investment? I have never met anyone who said "gee I would love to save and invest in my furture, but that tax code is just so complicated that I'm just going to waste my money instead"

Unless of course by "more efficient" you mean everyone pays less taxes. If that is the case then this is an entirely different debate from what you are making it sound.
Contra
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5/10/2013 6:08:28 PM
Posted: 3 years ago
At 5/10/2013 3:45:44 PM, bossyburrito wrote:
At 5/9/2013 9:40:36 PM, Contra wrote:


Restore the free market and individual liberty, with libertarian, more laissez faire policies.

Taxes restore the free market and individual liberty?

No, you see reducing the current tax code to a smaller, more limited scale would restore our economic health, and I also advocated for a return towards more individual liberty (allowing same sex marriage or civil unions, legalizing drugs, ending the Patriot Act/ NDAA).

Lower taxes promote more economic growth because individuals and businesses have more cash wealth for savings and investment. Businesses can reinvest, expand, and hire more workers. Workers can pay off their debts, and use their money how they wish. There will be more aggregate demand in the economy.

The profit motive exists, and to generate higher profits you need to have more output, which requires more input (more capital investment, more labor resources).
-------------

If we wanted a pure free market, we would need an anarchist society, but I don't think that is feasible or desirable.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Contra
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5/10/2013 6:16:46 PM
Posted: 3 years ago
At 5/10/2013 5:18:39 PM, Double_R wrote:
At 5/9/2013 9:40:36 PM, Contra wrote:
America would have a very competitive economy. This simple, efficient tax code would incentivize private savings and investment, which will spur business expansion, R&D, entrepreneurship, and capital investment -- all increasing aggregate economic growth and improving real incomes.

I never understood this conservative talking point. How exactly does a more efficient tax code incentivize private savings and investment?

By efficiency I was talking in terms of dead-weight economic loss caused by the current tax code, which taxes investment and savings more than consumption. In contrast, taxing consumption has the opposite effects, and results in less economic waste.

Consumption is not as economically beneficial. I can consume a hamburger today, but one year ahead from now, those resources would have been used.

Investment, say in a manufacturing plant, creates more wealth. A year from now, it is likely that this factory will be creating wealth in the form of more products and goods for society, so it is added to society's wealth, instead of simply consuming and destroying it.

And with consumption at 70% of GDP, it is plenty high enough.

I have never met anyone who said "gee I would love to save and invest in my furture, but that tax code is just so complicated that I'm just going to waste my money instead"

Haha. If you buy some shares, say ARMH, you are taxed more so than if you had consumed. The company is taxed with the corporate income tax, then your dividends are taxed again before you receive them.

Consumption isn't taxed. So yeah people probably aren't thinking like you said, but behavior changes in a way that doesn't facilitate more development.

Unless of course by "more efficient" you mean everyone pays less taxes. If that is the case then this is an entirely different debate from what you are making it sound.

That can also apply as well. If we happened to use the example I said earlier, I believe that nearly everyone would pay fewer taxes (because there would be no payroll or excise taxes as well).
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Cowboy0108
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5/11/2013 2:03:13 PM
Posted: 3 years ago
FairTax is the best system of taxation. High sales tax and rebates that ensure that the purchase of absolute necessities would not be taxed. Furthermore, there would be no tax other than the sales tax.
Go to fairtax.org for more information about this system of taxation.
Lordknukle
Posts: 12,788
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5/11/2013 3:12:21 PM
Posted: 3 years ago
At 5/11/2013 2:03:13 PM, Cowboy0108 wrote:
FairTax is the best system of taxation. High sales tax and rebates that ensure that the purchase of absolute necessities would not be taxed. Furthermore, there would be no tax other than the sales tax.
Go to fairtax.org for more information about this system of taxation.

Obviously, regressive taxes are the way to go.

/end sarcasm
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
DanT
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5/12/2013 12:56:13 PM
Posted: 3 years ago
At 5/9/2013 9:07:27 PM, Dan4reason wrote:
Should we in the US be increasing the progressiveness (the richer the higher the tax rate) of our taxes or decreasing the progressiveness of our taxes? Should we be raising or lowering taxes on the rich? What about the middle class? What about the poor?

"The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state." ~ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations

"The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person. Where it is otherwise, every person subject to the tax is put more or less in the power of the tax-gatherer, who can either aggravate the tax upon any obnoxious contributor, or extort, by the terror of such aggravation, some present or perquisite to himself. The uncertainty of taxation encourages the insolence and favours the corruption of an order of men who are naturally unpopular, even where they are neither insolent nor corrupt. The certainty of what each individual ought to pay is, in taxation, a matter of so great importance that a very considerable degree of inequality, it appears, I believe, from the experience of all nations, is not near so great an evil as a very small degree of uncertainty." ~ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations

Adam Smith seemed to favor the flat tax
"Chemical weapons are no different than any other types of weapons."~Lordknukle
Khaos_Mage
Posts: 23,214
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5/12/2013 3:39:30 PM
Posted: 3 years ago
At 5/12/2013 12:56:13 PM, DanT wrote:
At 5/9/2013 9:07:27 PM, Dan4reason wrote:
Should we in the US be increasing the progressiveness (the richer the higher the tax rate) of our taxes or decreasing the progressiveness of our taxes? Should we be raising or lowering taxes on the rich? What about the middle class? What about the poor?

"The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state." ~ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations

This gives way to a progressive code, since the poor cannot be taxed much.

"The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person. Where it is otherwise, every person subject to the tax is put more or less in the power of the tax-gatherer, who can either aggravate the tax upon any obnoxious contributor, or extort, by the terror of such aggravation, some present or perquisite to himself. The uncertainty of taxation encourages the insolence and favours the corruption of an order of men who are naturally unpopular, even where they are neither insolent nor corrupt. The certainty of what each individual ought to pay is, in taxation, a matter of so great importance that a very considerable degree of inequality, it appears, I believe, from the experience of all nations, is not near so great an evil as a very small degree of uncertainty." ~ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations

This seems to favor a simple tax code, not necessarily an unprogressive one.


Adam Smith seemed to favor the flat tax
I don't think he does. He seems to favor something close to a flat tax, but not "the flat tax".
My work here is, finally, done.
DanT
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5/12/2013 4:30:16 PM
Posted: 3 years ago
At 5/12/2013 3:39:30 PM, Khaos_Mage wrote:
At 5/12/2013 12:56:13 PM, DanT wrote:
At 5/9/2013 9:07:27 PM, Dan4reason wrote:
Should we in the US be increasing the progressiveness (the richer the higher the tax rate) of our taxes or decreasing the progressiveness of our taxes? Should we be raising or lowering taxes on the rich? What about the middle class? What about the poor?

"The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state." ~ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations

This gives way to a progressive code, since the poor cannot be taxed much.
The progressive tax code is not proportionate to the taxpayers' income. Progressive taxation, and regressive taxation, are by definition disproportionate.


"The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person. Where it is otherwise, every person subject to the tax is put more or less in the power of the tax-gatherer, who can either aggravate the tax upon any obnoxious contributor, or extort, by the terror of such aggravation, some present or perquisite to himself. The uncertainty of taxation encourages the insolence and favours the corruption of an order of men who are naturally unpopular, even where they are neither insolent nor corrupt. The certainty of what each individual ought to pay is, in taxation, a matter of so great importance that a very considerable degree of inequality, it appears, I believe, from the experience of all nations, is not near so great an evil as a very small degree of uncertainty." ~ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations

This seems to favor a simple tax code, not necessarily an unprogressive one.
A progressive tax code is not simple.


Adam Smith seemed to favor the flat tax
I don't think he does. He seems to favor something close to a flat tax, but not "the flat tax".
He favors a flat tax. Just admit it, don't cede that he favors flatter taxes, while maintaining the unsubstantiated claim that he favors progressive taxation.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
Khaos_Mage
Posts: 23,214
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5/12/2013 4:54:48 PM
Posted: 3 years ago
At 5/12/2013 4:30:16 PM, DanT wrote:
At 5/12/2013 3:39:30 PM, Khaos_Mage wrote:
At 5/12/2013 12:56:13 PM, DanT wrote:
At 5/9/2013 9:07:27 PM, Dan4reason wrote:
Should we in the US be increasing the progressiveness (the richer the higher the tax rate) of our taxes or decreasing the progressiveness of our taxes? Should we be raising or lowering taxes on the rich? What about the middle class? What about the poor?

"The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state." ~ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations

This gives way to a progressive code, since the poor cannot be taxed much.
The progressive tax code is not proportionate to the taxpayers' income. Progressive taxation, and regressive taxation, are by definition disproportionate.
And, the phrase "as nearly as possible" shows that it is ideal, but not pragmatic. Therefore, he would likely opt for a progressive code. (Even two tiers of 1% and 2% would be progressive)


"The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person. Where it is otherwise, every person subject to the tax is put more or less in the power of the tax-gatherer, who can either aggravate the tax upon any obnoxious contributor, or extort, by the terror of such aggravation, some present or perquisite to himself. The uncertainty of taxation encourages the insolence and favours the corruption of an order of men who are naturally unpopular, even where they are neither insolent nor corrupt. The certainty of what each individual ought to pay is, in taxation, a matter of so great importance that a very considerable degree of inequality, it appears, I believe, from the experience of all nations, is not near so great an evil as a very small degree of uncertainty." ~ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations

This seems to favor a simple tax code, not necessarily an unprogressive one.
A progressive tax code is not simple.
Sure it is.
Look at our current system and look at the chart for how much you owe. Or look at the calculations. It is quite simple.

How hard is it to say that if you make $10K, you pay 10%. If you make more than that, you pay 15% on all income minus $10K, plus $1000? This would be progressive and simple.

What is difficult is calculating your taxable income from total income via deductions, exemptions, and exceptions, along with calculating any credits to offset taxes owed. However, a flat tax that keeps this element is also not simple.



Adam Smith seemed to favor the flat tax
I don't think he does. He seems to favor something close to a flat tax, but not "the flat tax".
He favors a flat tax. Just admit it, don't cede that he favors flatter taxes, while maintaining the unsubstantiated claim that he favors progressive taxation.

I would wager he favors a flatter tax than we have, but I do not believe he would pragmatically favor a flat tax.
My work here is, finally, done.
DanT
Posts: 5,693
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5/12/2013 10:45:36 PM
Posted: 3 years ago
At 5/12/2013 4:54:48 PM, Khaos_Mage wrote:
At 5/12/2013 4:30:16 PM, DanT wrote:
At 5/12/2013 3:39:30 PM, Khaos_Mage wrote:
At 5/12/2013 12:56:13 PM, DanT wrote:
At 5/9/2013 9:07:27 PM, Dan4reason wrote:
Should we in the US be increasing the progressiveness (the richer the higher the tax rate) of our taxes or decreasing the progressiveness of our taxes? Should we be raising or lowering taxes on the rich? What about the middle class? What about the poor?

"The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state." ~ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations

This gives way to a progressive code, since the poor cannot be taxed much.
The progressive tax code is not proportionate to the taxpayers' income. Progressive taxation, and regressive taxation, are by definition disproportionate.
And, the phrase "as nearly as possible" shows that it is ideal, but not pragmatic.

Not true. He was not talking about just income taxes, but rather taxation in general. This was the first of his 3 tax maxims.

"Chapter V. Section 2.24
Before I enter upon the examination of particular taxes, it is necessary to premise the four following maxims with regard to taxes in general.
Chapter V. Section 2.25
I. The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state."

Later when addressing property taxes, he says taxes on property should not be in proportion to the property owned, but to the ability .to pay. Hence, if you own $1,000,000 worth of land, but only make $50,000 a year, you should not be forced to pay 10% of your property's value ($100,000). Once again, taxes should be in proportion to the tax payer's revenue, despite the source of taxation.

Adam smith identified 4 sources of taxation; property taxes, income taxes, sales taxes, and an equiproportionate tax on all 3. Because sales taxes and property taxes are hard to match to the tax payer's income, he said you should get it as close as possible. He was recognizing the difficulty in making taxation proportionate, not that taxation should be slightly disproportionate.

Therefore, he would likely opt for a progressive code. (Even two tiers of 1% and 2% would be progressive)
You are reading intent where none exists.


"The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person. Where it is otherwise, every person subject to the tax is put more or less in the power of the tax-gatherer, who can either aggravate the tax upon any obnoxious contributor, or extort, by the terror of such aggravation, some present or perquisite to himself. The uncertainty of taxation encourages the insolence and favours the corruption of an order of men who are naturally unpopular, even where they are neither insolent nor corrupt. The certainty of what each individual ought to pay is, in taxation, a matter of so great importance that a very considerable degree of inequality, it appears, I believe, from the experience of all nations, is not near so great an evil as a very small degree of uncertainty." ~ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations

This seems to favor a simple tax code, not necessarily an unprogressive one.
A progressive tax code is not simple.
Sure it is.
Look at our current system
You mean the 70,000 page tax code??? You first....
and look at the chart for how much you owe. Or look at the calculations. It is quite simple.

It is not that simple. For example, I don't file a W-2, I file a 1099-misc, because I'm an independent contractor. The W-2G is for reporting winnings. The 2555 Form is for foreign income.

There are allot of forms that need to be filled out, due to the complexity of the tax code. It is not as simple as finding your tax bracket, and paying the tax. Under the current code, much of the responsible has been shifted to the employer, which deters them from hiring more employees.
Most tax payers hire a tax service or tax lawyer, due to the complexity of the tax code. They try to minimize taxes owed, and as a result most Americans pay no income taxes. I will likely get $1,000 back after filing taxes on the $1,000+ I will make this year as an independent contract (thus doubling my money). Although my mom uses a tax service, it still takes her hours to file taxes.

Even if it was as simple as finding your bracket, a flat tax would still be simpler, because everyone would know their rate.
How hard is it to say that if you make $10K, you pay 10%. If you make more than that, you pay 15% on all income minus $10K, plus $1000? This would be progressive and simple.

Not as simple as everyone paying 10%.
What is difficult is calculating your taxable income from total income via deductions, exemptions, and exceptions, along with calculating any credits to offset taxes owed. However, a flat tax that keeps this element is also not simple.

I am against deductions, exemptions, and tax credits. They make taxes even more disproportionate. It is basically government spending without appropriation, by not enforcing taxation. It is an outlay listed as a lost receipt.



Adam Smith seemed to favor the flat tax
I don't think he does. He seems to favor something close to a flat tax, but not "the flat tax".
He favors a flat tax. Just admit it, don't cede that he favors flatter taxes, while maintaining the unsubstantiated claim that he favors progressive taxation.

I would wager he favors a flatter tax than we have, but I do not believe he would pragmatically favor a flat tax.

You should stop reading intent where none exists. Too many people do that. I hate it when people do that to me in debates, so I'm sure Adam Smith would hate it when people do that with his books.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
Dan4reason
Posts: 1,168
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5/25/2013 5:09:38 PM
Posted: 3 years ago
At 5/10/2013 3:36:48 PM, Contra wrote:
At 5/9/2013 10:33:14 PM, Dan4reason wrote:
At 5/9/2013 9:40:36 PM, Contra wrote:
You never responded to my last post in a somewhat similar thread.

We should replace the whole current tax code with a flat consumption tax, and a flat value-added tax.

Will these taxes cover food expenses?

The value added tax would be included for all purchases/ transfers. There would be no exceptions, because having any sort of exemptions make the tax base go down and requires tax rates to go up.

Got it.

The burdening corporate, income, and payroll taxes would all be eliminated in their entirety, as would be the slew of excise taxes, tariffs, random fees, etc.

America would have a very competitive economy. This simple, efficient tax code would incentivize private savings and investment, which will spur business expansion, R&D, entrepreneurship, and capital investment -- all increasing aggregate economic growth and improving real incomes.

I am not sure how a more efficient tax code will really have on our economy.

The tax burden of our current tax complexity is about 200 billion. This is out of an economy of 15 Trillion.

This is about 1.33% of GDP. This is significant, especially in the context that the economy has only been increasing by 2% per quarter, and that is a "bullish" figure under this administration.

I can understand the need to simplify the tax code. I just don't know why we have to do it without the progressiveness.

While reducing tax regulations will certainly make things easier for small business, I am not sure the impact will be all that large.

About 1/3rd of small businesses say that tax compliance is their largest cost from gov't. It would be beneficial, and I believe that 7% would be 8 points below the current lowest corporate tax rate.

However that would greatly reduce revenue. What will we have to cut in order for this to happen? And do you have a source on the tax compliance stat?

Restore the free market and individual liberty, with libertarian, more laissez faire policies.

The opposite will not help. More regulations will strangle business operations. Tariffs will kill jobs, raise the cost of goods, and incite a trade war that would threaten tens of millions -- 1 out of every 5 -- American jobs. More spending will take capital out of the private sector. The welfare state will crush individual morale and the hard working Americans across the country, subsidizing lethargy while punishing workers.

There is my spiel.

Currently we have a free trade policy with most countries so we don't have tariffs or trade wars.

We have plenty of tariffs still existing.

If we do, then we definitely don't have a lot.

While I am against an excessive amount of the economy going toward a welfare state, we should try to achieve a balance between capital in the free markets and money providing the poor with something of a safety net. We will always have poor people, and it is good to make sure that they have enough to live on and enjoy some change of making something better of themselves.

Okay, this can be a fair point. I am not opposed to a minimal safety net. We could block grant programs like SNAP benefits, the free school lunch program, etc. so that the states can adjust these programs to their unique individual needs, and foster innovation and flexibility among all of the states so we can figure out the best path to go forward.

I guess that is fair. I think that government aid that might help the economy would also help. For example, aid to college students, and aid to the recently unemployed are some good ideas. I also think some programs to help elderly Americans who were poor their entire lives and need help might receive some aid.

A prosperous society is also necessary for economic opportunity. Instead of relying on welfare payments, people can support themselves and improve America's aggregate wealth as well as their personal situations (output, or GDP).

A prosperous nation is one that keeps total government spending at or below 25% of the economy. It maintains a strong military but does not spend too much on it. It helps students, the elderly, and the poor but does not focus too much money on these groups. It makes sure that businesses are not doing things that are hurting America or consumers but does not over-regulate. It discourages bad behavior that should not be outlawed by taxation. It adjusts taxes to make sure that income inequality is not too high and uses that money for welfare, education, and science.

A flat tax would not help take care of income inequality while a progressive tax will.
Dan4reason
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5/25/2013 5:37:42 PM
Posted: 3 years ago
At 5/12/2013 12:56:13 PM, DanT wrote:
At 5/9/2013 9:07:27 PM, Dan4reason wrote:
Should we in the US be increasing the progressiveness (the richer the higher the tax rate) of our taxes or decreasing the progressiveness of our taxes? Should we be raising or lowering taxes on the rich? What about the middle class? What about the poor?

"The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state." ~ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations

"The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person. Where it is otherwise, every person subject to the tax is put more or less in the power of the tax-gatherer, who can either aggravate the tax upon any obnoxious contributor, or extort, by the terror of such aggravation, some present or perquisite to himself. The uncertainty of taxation encourages the insolence and favours the corruption of an order of men who are naturally unpopular, even where they are neither insolent nor corrupt. The certainty of what each individual ought to pay is, in taxation, a matter of so great importance that a very considerable degree of inequality, it appears, I believe, from the experience of all nations, is not near so great an evil as a very small degree of uncertainty." ~ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations


Adam Smith seemed to favor the flat tax

Adam Smith did not have a whole lot of information on our current income inequality.
DanT
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5/25/2013 5:57:06 PM
Posted: 3 years ago
At 5/25/2013 5:37:42 PM, Dan4reason wrote:
At 5/12/2013 12:56:13 PM, DanT wrote:
At 5/9/2013 9:07:27 PM, Dan4reason wrote:
Should we in the US be increasing the progressiveness (the richer the higher the tax rate) of our taxes or decreasing the progressiveness of our taxes? Should we be raising or lowering taxes on the rich? What about the middle class? What about the poor?

"The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state." ~ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations

"The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person. Where it is otherwise, every person subject to the tax is put more or less in the power of the tax-gatherer, who can either aggravate the tax upon any obnoxious contributor, or extort, by the terror of such aggravation, some present or perquisite to himself. The uncertainty of taxation encourages the insolence and favours the corruption of an order of men who are naturally unpopular, even where they are neither insolent nor corrupt. The certainty of what each individual ought to pay is, in taxation, a matter of so great importance that a very considerable degree of inequality, it appears, I believe, from the experience of all nations, is not near so great an evil as a very small degree of uncertainty." ~ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations


Adam Smith seemed to favor the flat tax

Adam Smith did not have a whole lot of information on our current income inequality.

>.< The gap between the rich and poor was greater in the 18th century. That really has no impact on the effects of taxation. Economics is science, arguments about income equality are not scientific arguments they are moral arguments.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
Contra
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5/25/2013 6:16:26 PM
Posted: 3 years ago
At 5/25/2013 5:09:38 PM, Dan4reason wrote:
At 5/10/2013 3:36:48 PM, Contra wrote:
At 5/9/2013 10:33:14 PM, Dan4reason wrote:
At 5/9/2013 9:40:36 PM, Contra wrote:
You never responded to my last post in a somewhat similar thread.

We should replace the whole current tax code with a flat consumption tax, and a flat value-added tax.

Will these taxes cover food expenses?

The value added tax would be included for all purchases/ transfers. There would be no exceptions, because having any sort of exemptions make the tax base go down and requires tax rates to go up.

Got it.

The burdening corporate, income, and payroll taxes would all be eliminated in their entirety, as would be the slew of excise taxes, tariffs, random fees, etc.

America would have a very competitive economy. This simple, efficient tax code would incentivize private savings and investment, which will spur business expansion, R&D, entrepreneurship, and capital investment -- all increasing aggregate economic growth and improving real incomes.

I am not sure how a more efficient tax code will really have on our economy.

The tax burden of our current tax complexity is about 200 billion. This is out of an economy of 15 Trillion.

This is about 1.33% of GDP. This is significant, especially in the context that the economy has only been increasing by 2% per quarter, and that is a "bullish" figure under this administration.

I can understand the need to simplify the tax code. I just don't know why we have to do it without the progressiveness.

It is good that we both agree on tax simplification.

A progressive tax could be simple, but a proportional tax is much more prone to stay simple.

After the 1987 tax reform, the tax code only had two tax rates, and only the charitable tax deduction. Look how it has evolved.

The payroll tax is somewhat like a proportional tax, up to its cap around $100 k.

While reducing tax regulations will certainly make things easier for small business, I am not sure the impact will be all that large.

About 1/3rd of small businesses say that tax compliance is their largest cost from gov't. It would be beneficial, and I believe that 7% would be 8 points below the current lowest corporate tax rate.

However that would greatly reduce revenue. What will we have to cut in order for this to happen? And do you have a source on the tax compliance stat?

(http://www.aabri.com...) It was actually 36% of small business owners.

The VAT tax base would be equal to total consumption (70% of GDP) (http://www.taxpolicycenter.org...)

Ideally, then the VAT would raise 7% of the 70% share of GDP, or in others words about 5% of GDP (about $800 billion).


While I am against an excessive amount of the economy going toward a welfare state, we should try to achieve a balance between capital in the free markets and money providing the poor with something of a safety net. We will always have poor people, and it is good to make sure that they have enough to live on and enjoy some change of making something better of themselves.

Okay, this can be a fair point. I am not opposed to a minimal safety net. We could block grant programs like SNAP benefits, the free school lunch program, etc. so that the states can adjust these programs to their unique individual needs, and foster innovation and flexibility among all of the states so we can figure out the best path to go forward.

I guess that is fair. I think that government aid that might help the economy would also help. For example, aid to college students,

Not a bad idea if the aid is targeted only to those currently in college (because aid to the unemployed college graduates creates harmful incentives)

and aid to the recently unemployed are some good ideas.

individual savings accounts I think would be better than the current UI system

I also think some programs to help elderly Americans who were poor their entire lives and need help might receive some aid.

We could personalize Social Security so that it is not PAYGO and doesn't encompass theft, and improves the retirement payments for all retirees.

A prosperous society is also necessary for economic opportunity. Instead of relying on welfare payments, people can support themselves and improve America's aggregate wealth as well as their personal situations (output, or GDP).

A prosperous nation is one that keeps total government spending at or below 25% of the economy. It maintains a strong military but does not spend too much on it. It helps students, the elderly, and the poor but does not focus too much money on these groups. It makes sure that businesses are not doing things that are hurting America or consumers but does not over-regulate. It discourages bad behavior that should not be outlawed by taxation. It adjusts taxes to make sure that income inequality is not too high and uses that money for welfare, education, and science.

In my ideal world, we would cut federal gov't spending by 60% or more.

But I can respect your views, as they are not going to destroy the economy. But spending vast sums of money on welfare and retirement programs (PAYGO) reduces the amount of private savings in the economy, reducing economic output and thus GDP (real incomes).

Education should be more controlled at the state and local levels of government. Increasing federal spending on schools will just increase federal control which harms educational performances. It would be much more beneficial if we were to block grant education spending.

Pigovian (sin) taxes are not the worst thing in the world either, but if they usually fall on the poor and probably more importantly create black markets if the rates are too high.

A flat tax would not help take care of income inequality while a progressive tax will.

Income inequality is not nearly as high as you probably believe it is, just saying. Compared to the rhetoric, it is not high enough yet to cause any harm. We should focus on improving the economy and fostering higher take-home pay, instead of policies which punish all income earners.

And here is an important thing that people seem to forget. We need to have a free market health care system, so that it is more affordable and so there is greater health care access.

American businesses would be more competitive, and families will actually have rising wages. Pay raises have been absorbed by rising health care costs, which is creating the picture that wages have been stagnant.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Dan4reason
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5/25/2013 9:31:01 PM
Posted: 3 years ago
At 5/25/2013 6:16:26 PM, Contra wrote:
It is good that we both agree on tax simplification.

A progressive tax could be simple, but a proportional tax is much more prone to stay simple.

Yes, a proportional tax is simpler but simplicity is not the only thing we should be looking out for when we are taxing although it is important.

After the 1987 tax reform, the tax code only had two tax rates, and only the charitable tax deduction. Look how it has evolved.

I am not sure there were only two taxes back then but I certainly agree the tax code was a lot simpler back then. I think the best way to ensure simplicity is to have fewer taxes. My plan would include an income tax, a business tax on large corporations, and a few sin taxes on individuals and businesses. The income and business tax could become more complex if there are loopholes but the loopholes would be good by definition. Also net earnings made on stocks and earnings will be counted as income.

The payroll tax is somewhat like a proportional tax, up to its cap around $100 k.

The payroll tax would be eliminated by my plan. Also, state and local governments could only have income, business, and sin taxes as well.

Not a bad idea if the aid is targeted only to those currently in college (because aid to the unemployed college graduates creates harmful incentives)

Yes, college aid to students would only go to college students. To help college grads find jobs, we could provide a tax benefit to companies who do hire them.

individual savings accounts I think would be better than the current UI system

Many recently unemployed people don't have very much in savings because either they were not being paid very much or were burning through their savings because of the bad economy. Many of them may be going back to school in order to get a new career path. So we do need a UI system but not for 60 weeks like we do now. Maybe more like 20 weeks.

We could personalize Social Security so that it is not PAYGO and doesn't encompass theft, and improves the retirement payments for all retirees.

To a certain extent I agree with you. However in my view social security would be included in the income tax (we are debating the income tax elsewhere), and would be saved or invested however you wanted. When you get old enough or there is evidence that you will die soon, you will be returned your money plus any interest collected. So I see my version of social security as less of a tax as forcing people to save for retirement.

Also some income taxes would be used to help elderly Americans who are not getting by in their old age on top of any social security benefits. This is most similar to our current social security tax system.

In my ideal world, we would cut federal gov't spending by 60% or more.

I agree to something like that but much of that spending would be shifted to state governments. Federal spending is 22.74% of the Economy, state spending is 9.31% of the economy, and local spending is 9.87% of the economy. So total spending is around 40% of the economy. A better balance is if state spending is 9% of the economy, local spending is around 3% of the economy and federal spending is 13% of the economy. State governments would take on half of the welfare and education taxation.

But I can respect your views, as they are not going to destroy the economy. But spending vast sums of money on welfare and retirement programs (PAYGO) reduces the amount of private savings in the economy, reducing economic output and thus GDP (real incomes).

Yes, welfare spending does reduce economic growth but in my view it is good to strike a balance between the two. All welfare spending should make up about 10% of the economy.

Education should be more controlled by the state and local levels of government. Increasing federal spending on schools will just increase federal control which harms educational performances. It would be much more beneficial if we were to block grant education spending.

That makes some sense however I do think the federal government should provide some funding to education so people in a poor state don't get less education than other in a rich one.

Pigovian (sin) taxes are not the worst thing in the world either, but if they usually fall on the poor and probably more importantly create black markets if the rates are too high.

They do fall on the poor more but we can adjust income taxes to make up for that. They do create black markets but most Americans don't participate in that. These are a good thing because some things are bad for this country as a whole, e.g. smoking, eating too much.

Income inequality is not nearly as high as you probably believe it is, just saying. Compared to the rhetoric, it is not high enough yet to cause any harm. We should focus on improving the economy and fostering higher take-home pay, instead of policies which punish all income earners.

http://www.currydemocrats.org...

This graphic shows the income going to each group. The top 1% gets 25%, the top 10% gets 50%. This is quite a lot.

http://www.currydemocrats.org...
Looking at this image, from 1970-2008, the income of the bottom 90% fell by 1% while that of the top 10% grew drastically. So all of the economic growth went to the rich. This is why our income inequality is bad.

And here is an important thing that people seem to forget. We need to have a free market health care system, so that it is more affordable and so there is greater health care access.

American businesses would be more competitive, and families will actually have rising wages. Pay raises have been absorbed by rising health care costs, which is creating the picture that wages have been stagnant.

Our healthcare system is a lot more privatized than European systems yet we pay more for healthcare and our costs rise at a higher rate. In my opinion we need to make sure everyone or nearly everyone has insurance so there are no freeloaders. This can be aided by having extra income taxes for those who choose to go without insurance.

We also need to remove excessive regulations and legal suite burdens from our health systems, and make sure that our healthcare is run privately. However government should pay some healthcare costs for the poor and elderly. The states should set up an insurance exchange much like Obamacare is doing now.
Dan4reason
Posts: 1,168
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5/25/2013 10:15:29 PM
Posted: 3 years ago
At 5/25/2013 5:57:06 PM, DanT wrote:
At 5/25/2013 5:37:42 PM, Dan4reason wrote:
At 5/12/2013 12:56:13 PM, DanT wrote:
At 5/9/2013 9:07:27 PM, Dan4reason wrote:
Should we in the US be increasing the progressiveness (the richer the higher the tax rate) of our taxes or decreasing the progressiveness of our taxes? Should we be raising or lowering taxes on the rich? What about the middle class? What about the poor?

"The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state." ~ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations

"The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person. Where it is otherwise, every person subject to the tax is put more or less in the power of the tax-gatherer, who can either aggravate the tax upon any obnoxious contributor, or extort, by the terror of such aggravation, some present or perquisite to himself. The uncertainty of taxation encourages the insolence and favours the corruption of an order of men who are naturally unpopular, even where they are neither insolent nor corrupt. The certainty of what each individual ought to pay is, in taxation, a matter of so great importance that a very considerable degree of inequality, it appears, I believe, from the experience of all nations, is not near so great an evil as a very small degree of uncertainty." ~ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations


Adam Smith seemed to favor the flat tax

Adam Smith did not have a whole lot of information on our current income inequality.

>.< The gap between the rich and poor was greater in the 18th century. That really has no impact on the effects of taxation. Economics is science, arguments about income equality are not scientific arguments they are moral arguments.

Do you have evidence this gap was greater in the 18th century?

When it comes to income inequality, look at the image below:
http://www.currydemocrats.org...

From 1970-2008 all economic growth went to the top 10%. This is two income inequality is bad.
flaskblob
Posts: 68
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5/25/2013 10:38:38 PM
Posted: 3 years ago
At 5/9/2013 9:40:36 PM, Contra wrote:
We should replace the whole current tax code with a flat consumption tax

You would be penalizing seniors who live on fixed incomes, encourage a larger black market which can easily be done online. You would discourage domestic consumption. With consumption taxes you discourage consumption.

Retirees could easily move to other countries to thwart the tax.
Of course I'm using those fallacies; they're the only logical ones." - f3ffy
flaskblob
Posts: 68
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5/25/2013 10:39:43 PM
Posted: 3 years ago
At 5/25/2013 5:37:42 PM, Dan4reason wrote:
Adam Smith did not have a whole lot of information on our current income inequality.

If everyone was paid the exact same amount would that be better?
Of course I'm using those fallacies; they're the only logical ones." - f3ffy
Contra
Posts: 3,941
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5/25/2013 11:01:33 PM
Posted: 3 years ago
At 5/25/2013 10:38:38 PM, flaskblob wrote:
At 5/9/2013 9:40:36 PM, Contra wrote:
We should replace the whole current tax code with a flat consumption tax

You would be penalizing seniors who live on fixed incomes, encourage a larger black market which can easily be done online. You would discourage domestic consumption.

Additionally, this proposal would end all social security taxes.

Tax evasion wouldn't be as cut and dry to be honest.

The structure of the tax would be:

Income - savings - investment = consumption (taxed at 7%)

So checking, general savings, HSAs, 401(k)s, IRAs, and any other savings accounts would be untaxed. Income devoted towards other savings and investment, such as CDs or general stocks and bonds would also be untaxed.

The remainder of your income, which is used for consumption, would be taxed at the 7% rate.

With consumption taxes you discourage consumption.

That's the point of the tax. To discourage consumption, and instead encourage savings and investment.

Retirees could easily move to other countries to thwart the tax.

I doubt that many would.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Dan4reason
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5/25/2013 11:17:41 PM
Posted: 3 years ago
At 5/25/2013 10:39:43 PM, flaskblob wrote:
At 5/25/2013 5:37:42 PM, Dan4reason wrote:
Adam Smith did not have a whole lot of information on our current income inequality.

If everyone was paid the exact same amount would that be better?

No. That would greatly increase income inequality.
flaskblob
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5/25/2013 11:18:48 PM
Posted: 3 years ago
At 5/25/2013 11:17:41 PM, Dan4reason wrote:
At 5/25/2013 10:39:43 PM, flaskblob wrote:
At 5/25/2013 5:37:42 PM, Dan4reason wrote:
Adam Smith did not have a whole lot of information on our current income inequality.

If everyone was paid the exact same amount would that be better?

No. That would greatly increase income inequality.

Now I'm confused.
Of course I'm using those fallacies; they're the only logical ones." - f3ffy
Contra
Posts: 3,941
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5/25/2013 11:33:56 PM
Posted: 3 years ago
At 5/25/2013 9:31:01 PM, Dan4reason wrote:
At 5/25/2013 6:16:26 PM, Contra wrote:
It is good that we both agree on tax simplification.

A progressive tax could be simple, but a proportional tax is much more prone to stay simple.

Yes, a proportional tax is simpler but simplicity is not the only thing we should be looking out for when we are taxing although it is important.

Economists agree that the tax code should be simple, efficient, fair, and raise enough revenue. Proportional consumption taxes succeed on all counts.

(http://www.econlib.org...)

After the 1987 tax reform, the tax code only had two tax rates, and only the charitable tax deduction. Look how it has evolved.

I am not sure there were only two taxes back then but I certainly agree the tax code was a lot simpler back then. I think the best way to ensure simplicity is to have fewer taxes. My plan would include an income tax, a business tax on large corporations, and a few sin taxes on individuals and businesses. The income and business tax could become more complex if there are loopholes but the loopholes would be good by definition. Also net earnings made on stocks and earnings will be counted as income.

By taxing both large corporations (probably their profits I'm guessing), and then taxing dividends and capital gains at the individual level, you have a system of double taxation on investment, which is a harmful economic policy.

We should encourage, not discourage investment.

The payroll tax is somewhat like a proportional tax, up to its cap around $100 k.

The payroll tax would be eliminated by my plan.

Good, I would consider it one of the worst kinds of taxation.


To help college grads find jobs, we could provide a tax benefit to companies who do hire them.

Or eliminate all corporate taxation in the first place, like I suggested. That couldn't hurt. A VAT is ultimately passed onto the consumer in the form of a consumption tax.

individual savings accounts I think would be better than the current UI system

So we do need a UI system but not for 60 weeks like we do now. Maybe more like 20 weeks.

That would be better.

We could personalize Social Security so that it is not PAYGO and doesn't encompass theft, and improves the retirement payments for all retirees.

To a certain extent I agree with you. However in my view social security would be included in the income tax (we are debating the income tax elsewhere), and would be saved or invested however you wanted. When you get old enough or there is evidence that you will die soon, you will be returned your money plus any interest collected. So I see my version of social security as less of a tax as forcing people to save for retirement.

That is also much better, assuming that retirement choices (what you invest in) are left to the individual. Letting the fed gov't invest in companies would be an awful, horrible policy.

Also some income taxes would be used to help elderly Americans who are not getting by in their old age on top of any social security benefits. This is most similar to our current social security tax system.

In my ideal world, we would cut federal gov't spending by 60% or more.

I agree to something like that but much of that spending would be shifted to state governments. Federal spending is 22.74% of the Economy, state spending is 9.31% of the economy, and local spending is 9.87% of the economy. So total spending is around 40% of the economy. A better balance is if state spending is 9% of the economy, local spending is around 3% of the economy and federal spending is 13% of the economy. State governments would take on half of the welfare and education taxation.

You are sounding more rational now. Kudos.

But I can respect your views, as they are not going to destroy the economy. But spending vast sums of money on welfare and retirement programs (PAYGO) reduces the amount of private savings in the economy, reducing economic output and thus GDP (real incomes).

Yes, welfare spending does reduce economic growth but in my view it is good to strike a balance between the two. All welfare spending should make up about 10% of the economy.

That's way too high.


They do fall on the poor more but we can adjust income taxes to make up for that. These are a good thing because some things are bad for this country as a whole, e.g. smoking, eating too much.

We are going to have to debate tax policy sometime in the future, we're both passionate on these issues.

Income inequality is not nearly as high as you probably believe it is, just saying. Compared to the rhetoric, it is not high enough yet to cause any harm. We should focus on improving the economy and fostering higher take-home pay, instead of policies which punish all income earners.

http://www.currydemocrats.org...

This graphic shows the income going to each group. The top 1% gets 25%, the top 10% gets 50%. This is quite a lot.

http://www.currydemocrats.org...
Looking at this image, from 1970-2008, the income of the bottom 90% fell by 1% while that of the top 10% grew drastically. So all of the economic growth went to the rich. This is why our income inequality is bad.

First the lower income classes would have benefited if they could better enjoy the fruits of their labor, i.e. lower tax rates and lower health care costs.

As we can expect in a free market economy, workers who have more productive (more skills and experience) earn higher wages. Why isn't this fair?

Is it really social injustice that a college graduate earns more than a high school dropout?

Income inequality in general is low when we compare the share of income earned (as a percentage of GDP) among the income quintiles.

Also, income inequality is quite low over the course of a person's lifetime.

Additionally, people aren't static. They move around, usually up, the economic ladder. There is income mobility. So some years, people are in one quintile, and later move into others.

I have several great facts to use, but I have to save them for a later debate regarding welfare and general poverty.

And here is an important thing that people seem to forget. We need to have a free market health care system, so that it is more affordable and so there is greater health care access.

American businesses would be more competitive, and families will actually have rising wages. Pay raises have been absorbed by rising health care costs, which is creating the picture that wages have been stagnant.

Our healthcare system is a lot more privatized than European systems yet we pay more for healthcare and our costs rise at a higher rate. In my opinion we need to make sure everyone or nearly everyone has insurance so there are no freeloaders. This can be aided by having extra income taxes for those who choose to go without insurance.

Don't you think that insurance, a 3rd party, increases health care costs? If you don't bear the burden of your costs, you aren't cost conscious, spend more on unnecessary health care, and costs rise.

Imposing a requirement that people have health insurance is a violation of individual liberty and wouldn't do that much to lower costs.

We also need to remove excessive regulations and legal suite burdens from our health systems, and make sure that our healthcare is run privately. However government should pay some healthcare costs for the poor and elderly. The states should set up an insurance exchange much like Obamacare is doing now.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Dan4reason
Posts: 1,168
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5/26/2013 12:30:03 AM
Posted: 3 years ago
At 5/25/2013 11:18:48 PM, flaskblob wrote:
At 5/25/2013 11:17:41 PM, Dan4reason wrote:
At 5/25/2013 10:39:43 PM, flaskblob wrote:
At 5/25/2013 5:37:42 PM, Dan4reason wrote:
Adam Smith did not have a whole lot of information on our current income inequality.

If everyone was paid the exact same amount would that be better?

No. That would greatly increase income inequality.

Now I'm confused.

Sorry, I read that question wrong. I believe that there is a balance to be maintained when it comes to income inequality. Too little income inequality hurts economic growth for the majority of Americans. Too much also hurts economic growth for the majority of Americans.
Dan4reason
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5/26/2013 11:36:13 AM
Posted: 3 years ago
At 5/25/2013 11:33:56 PM, Contra wrote:
At 5/25/2013 9:31:01 PM, Dan4reason wrote:
Yes, a proportional tax is simpler but simplicity is not the only thing we should be looking out for when we are taxing although it is important.

Economists agree that the tax code should be simple, efficient, fair, and raise enough revenue. Proportional consumption taxes succeed on all counts.

(http://www.econlib.org...)

I don't view the proportional consumption tax as fair because it is a greater burden to the poor than to the rich. Also there are many liberal economists who will agree with me.

I am not sure there were only two taxes back then but I certainly agree the tax code was a lot simpler back then. I think the best way to ensure simplicity is to have fewer taxes. My plan would include an income tax, a business tax on large corporations, and a few sin taxes on individuals and businesses. The income and business tax could become more complex if there are loopholes but the loopholes would be good by definition. Also net earnings made on stocks and earnings will be counted as income.

By taxing both large corporations (probably their profits I'm guessing), and then taxing dividends and capital gains at the individual level, you have a system of double taxation on investment, which is a harmful economic policy.

We should encourage, not discourage investment.

The business tax is a double tax. Not only does it make a tax on investment a double tax but it also makes a tax on income a double tax. So if you want to remove a tax on investment, you have to remove a tax on income too.

Double taxing is not a problem as long as we reduce the income tax to make way for the business tax. We should tax corporations because over time markets tend to head to a more monopolistic state, and greater taxes for corporations give smaller businesses a competitive advantage. Taxing corporations and mid-sized businesses is beneficial so that we can encourage good behavior through tax breaks e.g. green energy.

The payroll tax would be eliminated by my plan.

Good, I would consider it one of the worst kinds of taxation.

To help college grads find jobs, we could provide a tax benefit to companies who do hire them.

Or eliminate all corporate taxation in the first place, like I suggested. That couldn't hurt. A VAT is ultimately passed onto the consumer in the form of a consumption tax.

Simply eliminating all corporate taxation will not encourage businesses to hire new grads as opposed to more experienced workers.

Yes, welfare spending does reduce economic growth but in my view it is good to strike a balance between the two. All welfare spending should make up about 10% of the economy.

That's way too high.

Maybe more like 7%.

This graphic shows the income going to each group. The top 1% gets 25%, the top 10% gets 50%. This is quite a lot.

http://www.currydemocrats.org...
Looking at this image, from 1970-2008, the income of the bottom 90% fell by 1% while that of the top 10% grew drastically. So all of the economic growth went to the rich. This is why our income inequality is bad.

First the lower income classes would have benefited if they could better enjoy the fruits of their labor, i.e. lower tax rates and lower health care costs.

Yes, but if there is too much income inequality too much of that growth will be going to the upper classes.

As we can expect in a free market economy, workers who have more productive (more skills and experience) earn higher wages. Why isn't this fair?

That is fair and that will continue to be true. All I am saying is that the current level of income inequality needs to be brought down, maybe to a level it was at in the 1960's.

Is it really social injustice that a college graduate earns more than a high school dropout?

No. However most of the income inequality is between the rich and middle class, and super-rich and middle class. I care less about social justice than I do about making sure that incomes are rising well for a large group of people not just a small one.

Income inequality in general is low when we compare the share of income earned (as a percentage of GDP) among the income quintiles.

Statistics?

Also, income inequality is quite low over the course of a person's lifetime.

Statistics?

Additionally, people aren't static. They move around, usually up, the economic ladder. There is income mobility. So some years, people are in one quintile, and later move into others.

There is some income mobility yes, but that doesn't change the fact that greater income inequality means incomes for the vast majority of Americans is not growing.

Actually US has less upward mobility than Europe does.
http://business.time.com...
http://www.nytimes.com...

And upward mobility in the US is declining.
http://www.heraldtribune.com...

These problems are rooted in this greater income inequality. My theory is when the lower classes have less resources compared to the higher ones, they are less able to compete.

Our healthcare system is a lot more privatized than European systems yet we pay more for healthcare and our costs rise at a higher rate. In my opinion we need to make sure everyone or nearly everyone has insurance so there are no freeloaders. This can be aided by having extra income taxes for those who choose to go without insurance.

Don't you think that insurance, a 3rd party, increases health care costs? If you don't bear the burden of your costs, you aren't cost conscious, spend more on unnecessary health care, and costs rise.

Insurance does increase costs but it is necessary because often people can't afford medical costs once they are incurred. So they often just have to pass on those costs to those paying insurance. This is not a good system. Insurance plans do not give you a complete free ride and you do have to pay some of the costs.

We should allow people access to more drugs without doctor visits. That would bring down costs.

Imposing a requirement that people have health insurance is a violation of individual liberty and wouldn't do that much to lower costs.

As stated above, it would reduce the burden of insurance payers paying for the free treatment of the uninsured. I am not requiring people to purchase insurance, only that they will be paying high income taxes if they don't.