My .02 on the "tax hike/tax cut" debate.

lilwing88

I read this article that I wanted to share, as it really cleared up a lot of things about taxes and GDP and the bigger picture......

There's No Escaping Hauser's Law

My opinion on the matter is that taxes should remain the same or even be lower in some cases. Heck, in a perfect world, there should be a flat tax with no loopholes or exemptions or shelters. Because that's the reality that everyone is ignoring in this debate. People are fuming mad because wealthy corporations don't pay enough in taxes. I say that anger is shortsightedness. If you think the tax cuts should expire for the wealthy, do you honestly believe that they will end up paying more into taxes? The opposite will, in fact, happen. They will pay less. They will become more concentrated on avoiding taxes than with generating wealth. They will lay off employees. They will cut back production. They will hide or underreport income. Our tax system is extremely flawed and our government is spending what they don't have. I think our government needs to concentrate more on cutting spending (you know, maybe try just spending what they have for once....) and moving towards a low flat tax with no exemptions or loopholes.

I think it's easy to say that Conservatives are just "looking out for their rich buddies." I'd like to think that they're looking at the bigger picture. When companies are given tax breaks and incentives, it stimulates expansion and growth. Meaning more jobs and more money to go around.

To put it more simply: if a company has a few thousand employees, but doesn't have to pay high income taxes, then they will be more likely to hire more employees to increase production and generate more income. The more employees they hire, the more that's being paid to the government in income tax anyways.

The article says it a lot better than I ever could. It's worth the 5 or 10 minutes of your time......

fla-gypsy

I support the "Fair Tax" Under that plan no one escapes paying their fare share.

ejenne87

fla-gypsy:

I support the "Fair Tax" Under that plan no one escapes paying their fare share.

As do I. I am a big fan of this actually.

Amos Umwhat

Interesting read. I must admit that the flat-tax proposal seems the most fair. Also, small businesses are being creamed by the current tax system. It's a freaking mess. My wife's brother runs a small business, falls into the category about to have their taxes raised, and the numbers proposed by the tax hike just don't add up.

Our current system is so jacked-up full of 'gotcha' tricks to make it as hard as possible for the small businessman to break even, much less expand. The disinformation, on all sides, is a kaleidoscope of colliding "facts". I heard a former Clinton staffer make the point this morning that Clinton raised taxes on the wealthiest, and the following two years were unprecedented job growth. The tax breaks came, and were followed by a lull. This seems counter-intuitive, so there were other factors? I'm no expert.

The upshot of all this, for me, is that it brings to mind something that I remember from my childhood, my favorite Sci-fi author (Robert A. Heinlein) used to point out in his novels and other writings. The government can't give the people anything, unless it takes it away from you first. There are certainly a lot of areas where we could ask for less.

xmacro

fla-gypsy:

I support the "Fair Tax" Under that plan no one escapes paying their fare share.

I'm really leery of the Fair Tax; it's essentially the exact same thing as europe has, the Value-Added-Tax, or VAT; whereas a VAT imposes taxes at every level of production, the Fair Tax only taxes the final product. Not only does it leave room for manipulation and undervaluing the products that went into something, but it favors simple products over more complex ones, which means technological products will be taxed more than a simpler-to-produce products. A VAT or Fair Tax taxes products, driving up costs and making things more expensive, so it discourages consumption and lowers sales.

I've said it before, but a flat tax is the best IMO - no one's favored, no one's disfavored. Everyone should pay equally a fix % of their income, with no exceptions.

Amos Umwhat

xmacro:

fla-gypsy:

I support the "Fair Tax" Under that plan no one escapes paying their fare share.

I'm really leery of the Fair Tax; it's essentially the exact same thing as europe has, the Value-Added-Tax, or VAT; whereas a VAT imposes taxes at every level of production, the Fair Tax only taxes the final product. Not only does it leave room for manipulation and undervaluing the products that went into something, but it favors simple products over more complex ones, which means technological products will be taxed more than a simpler-to-produce products. A VAT or Fair Tax taxes products, driving up costs and making things more expensive, so it discourages consumption and lowers sales.

I've said it before, but a flat tax is the best IMO - no one's favored, no one's disfavored. Everyone should pay equally a fix % of their income, with no exceptions.

Also very interesting. I must admit, when I've heard the term "fair tax", I thought it was the flat tax, as this seemed most fair. So, I gather you're saying that in the case of more technological products there is a cumulative effect? Again, I say a fixed rate for everyone seems the most fair. Also, it seems to me that the overall rate is too high. I mean, if the government can't get by on, say, 25% of the money, we must have too much government.

xmacro

Amos Umwhat:

xmacro:

fla-gypsy:

I support the "Fair Tax" Under that plan no one escapes paying their fare share.

I'm really leery of the Fair Tax; it's essentially the exact same thing as europe has, the Value-Added-Tax, or VAT; whereas a VAT imposes taxes at every level of production, the Fair Tax only taxes the final product. Not only does it leave room for manipulation and undervaluing the products that went into something, but it favors simple products over more complex ones, which means technological products will be taxed more than a simpler-to-produce products. A VAT or Fair Tax taxes products, driving up costs and making things more expensive, so it discourages consumption and lowers sales.

I've said it before, but a flat tax is the best IMO - no one's favored, no one's disfavored. Everyone should pay equally a fix % of their income, with no exceptions.

Also very interesting. I must admit, when I've heard the term "fair tax", I thought it was the flat tax, as this seemed most fair. So, I gather you're saying that in the case of more technological products there is a cumulative effect? Again, I say a fixed rate for everyone seems the most fair. Also, it seems to me that the overall rate is too high. I mean, if the government can't get by on, say, 25% of the money, we must have too much government.

Gah; reading that post over again, I see I made a few errors. The VAT taxes a product at every level of production, while the Fair Tax, as I understand it, taxes the product at the retail stage alone. I screwed up when I said the Fair Tax pushes up prices on higher-end products; the VAT is the one to do that since the more production stages something has, the more it gets taxed under the VAT. At any rate, I still say the Fair Tax is liable to political manipulation since Congress can always decide that some industries should have a higher retail tax than others, thus leaving room for them to meddle

As for the flat tax, I'd rather see a rate closer to 18% than 25%. The reason is that I've been reading Arthur Laffer (the guy who created the Laffer curve), and he's created a bell curve that shows that the point of diminishing returns is around 18% (I think that's right . . . been awhile since I read his stuff) - try to tax above that rate, and people start figuring it's cheaper to hide their money than pay taxes; the point of diminishing returns.

Amos Umwhat

xmacro:

Amos Umwhat:

xmacro:

fla-gypsy:

I support the "Fair Tax" Under that plan no one escapes paying their fare share.

I'm really leery of the Fair Tax; it's essentially the exact same thing as europe has, the Value-Added-Tax, or VAT; whereas a VAT imposes taxes at every level of production, the Fair Tax only taxes the final product. Not only does it leave room for manipulation and undervaluing the products that went into something, but it favors simple products over more complex ones, which means technological products will be taxed more than a simpler-to-produce products. A VAT or Fair Tax taxes products, driving up costs and making things more expensive, so it discourages consumption and lowers sales.

I've said it before, but a flat tax is the best IMO - no one's favored, no one's disfavored. Everyone should pay equally a fix % of their income, with no exceptions.

Also very interesting. I must admit, when I've heard the term "fair tax", I thought it was the flat tax, as this seemed most fair. So, I gather you're saying that in the case of more technological products there is a cumulative effect? Again, I say a fixed rate for everyone seems the most fair. Also, it seems to me that the overall rate is too high. I mean, if the government can't get by on, say, 25% of the money, we must have too much government.

Gah; reading that post over again, I see I made a few errors. The VAT taxes a product at every level of production, while the Fair Tax, as I understand it, taxes the product at the retail stage alone. I screwed up when I said the Fair Tax pushes up prices on higher-end products; the VAT is the one to do that since the more production stages something has, the more it gets taxed under the VAT. At any rate, I still say the Fair Tax is liable to political manipulation since Congress can always decide that some industries should have a higher retail tax than others, thus leaving room for them to meddle

As for the flat tax, I'd rather see a rate closer to 18% than 25%. The reason is that I've been reading Arthur Laffer (the guy who created the Laffer curve), and he's created a bell curve that shows that the point of diminishing returns is around 18% (I think that's right . . . been awhile since I read his stuff) - try to tax above that rate, and people start figuring it's cheaper to hide their money than pay taxes; the point of diminishing returns.

Ah, that makes more sense. I like the 18% better, too, I just picked 25% at random because I think it's roughly 10% less than what's happening now.
I've got to learn to cut & paste, apologies to all for having to see the whole discussion every time.

fla-gypsy

Link to the "Fair Tax" website. The book is good reading and goes into great details on the mechanics.

http://www.fairtax.org/site/PageServer

lilwing88

My biggest concern with the Fair Tax is the likelyhood that blackmarkets and counterfiet goods will increase and become a major drain on law enforcement. Plus customs will be flooded with illegal knockoff merchandise from overseas.

A flat tax is more easily enforcible. The money comes right off the top of your income at payroll. No filing. No deductions. People will still probably work "under the table" for cash in some cases, but at least they'll be working for it.

PuroFreak

lilwing88:

My biggest concern with the Fair Tax is the likelyhood that blackmarkets and counterfiet goods will increase and become a major drain on law enforcement. Plus customs will be flooded with illegal knockoff merchandise from overseas.

A flat tax is more easily enforcible. The money comes right off the top of your income at payroll. No filing. No deductions. People will still probably work "under the table" for cash in some cases, but at least they'll be working for it.

Merchandise coming from overseas will not effect tax income at all however. Since the final sale is what would be taxed under the Fair Tax, it would still apply to knockoff merchandise. Also the black market issue is a bit of a concern, but not enough to hurt revenue. The biggest thing that could be done with the Fair Tax is a massive reduction in size of the IRS.
I do still believe there are flaws with this system as well...

lilwing88

PuroFreak:

lilwing88:

My biggest concern with the Fair Tax is the likelyhood that blackmarkets and counterfiet goods will increase and become a major drain on law enforcement. Plus customs will be flooded with illegal knockoff merchandise from overseas.

A flat tax is more easily enforcible. The money comes right off the top of your income at payroll. No filing. No deductions. People will still probably work "under the table" for cash in some cases, but at least they'll be working for it.

Merchandise coming from overseas will not effect tax income at all however. Since the final sale is what would be taxed under the Fair Tax, it would still apply to knockoff merchandise. Also the black market issue is a bit of a concern, but not enough to hurt revenue. The biggest thing that could be done with the Fair Tax is a massive reduction in size of the IRS.
I do still believe there are flaws with this system as well...

My concern with the knockoffs isn't the tax revenue, but rather the quality control issue. The IRS would shrink, but fraud investigation units within local police departments would expand tenfold.

zoom6zoom

With the Fair Tax there's no withholding at all. You can pretty much eliminate the IRS. Corporations don't pay taxes, and never have. You might think they do, but higher rates are just passed on to the end user... you.