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Thread: Income Tax

  1. #1
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    Income Tax

    Basic question I: Why should income be taxed?

    Basic question II: Why should private real property be taxed on a yearly basis?

    In a free market capitalistic system it makes no sense what so ever to tax income/profits from any source and/or to have the government charge, what is in effect, "rent" on private real property.

    Income/profit is a good thing and ownership of private property is a basic right in a free society.
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    Basic question I: Why should income be taxed?
    To generate money for government

    Basic question II: Why should private real property be taxed on a yearly basis?
    To generate money for government

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    Quote Originally Posted by Steeeeve View Post
    To generate money for government

    To generate money for government
    So you are saying that only those ways can generate revenue for the operation of government?

    You need to get out more.
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    Quote Originally Posted by a777pilot View Post
    So you are saying that only those ways can generate revenue for the operation of government?

    You need to get out more.
    I never said it was the only way to generate revenue. You simply asked "why is income taxed" and I told you why.

    Honestly I don't even see why it matters HOW you tax because the net result is always the same.

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    Quote Originally Posted by Steeeeve View Post
    I never said it was the only way to generate revenue. You simply asked "why is income taxed" and I told you why.

    Honestly I don't even see why it matters HOW you tax because the net result is always the same.
    The question is not....How we tax? The real question should be....What do we tax?

    Income/profits and private real property ought not be taxed.
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    Quote Originally Posted by a777pilot View Post
    The question is not....How we tax? The real question should be....What do we tax?

    Income/profits and private real property ought not be taxed.
    That's the same question and neither one matters. The government needs X in revenue to do what it needs to do. How you get there, or "what we tax" to get there is mostly irrelevant. The only issues with how or "what" we tax is in terms of fairness and feasibility. Income/profits and real property taxes are not impacted by either one of those.

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    Quote Originally Posted by Steeeeve View Post
    That's the same question and neither one matters. The government needs X in revenue to do what it needs to do. How you get there, or "what we tax" to get there is mostly irrelevant. The only issues with how or "what" we tax is in terms of fairness and feasibility. Income/profits and real property taxes are not impacted by either one of those.
    "Fairness"?
    What the hell does that mean?

    Besides, government spends way too much. They need to drastically cut back.
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    Quote Originally Posted by a777pilot View Post
    "Fairness"?
    What the hell does that mean?

    Besides, government spends way too much. They need to drastically cut back.
    What happened to your argument about not taxing income or property?

    The only point about fairness I was making is that an income tax isn't, by itself, an unfair tax.

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    Quote Originally Posted by Steeeeve View Post
    What happened to your argument about not taxing income or property?

    The only point about fairness I was making is that an income tax isn't, by itself, an unfair tax.
    If that was your intent, I agree.

    I would like to see a sales/consumption/transfer tax system.....with no deductions for anything.

    If one buys an item or a service, one pays a tax.

    If one consumes via trades, one pays a tax.

    If one transfers money or wealth, one pays a tax.

    Capital(savings), income or profits are not taxed.
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    Quote Originally Posted by a777pilot View Post
    I would like to see a sales/consumption/transfer tax system.....with no deductions for anything.

    If one buys an item or a service, one pays a tax.

    If one consumes via trades, one pays a tax.

    If one transfers money or wealth, one pays a tax.

    Capital(savings), income or profits are not taxed.
    That's fine but this is a solution in search of a problem. Furthermore, we already have a sales tax at at the state and local level where the property tax you oppose is. Dividing, what would become a 50-70% sales tax, by local, state, and now federal is just a bit annoying in my opinion and extremely frustrating for online companies.

    At best, you shift tax burden to the middle and lower middle class which I think is unwise and violates the number 1 tax rule from Adam Smith.

    Finally, the whole question of "what do you tax" comes into play. Do we tax drugs, homes, or baby food? If so, think about how people pay for things. The lower and middle class tend to put things on credit. When you add a huge sales tax to this at 15-20% interest you can really just finish off the middle class.

    Yeah, the sales tax looks good on its face but if you think about it for a bit it really isn't a smart way to go. Income and property taxes work just fine.

  11. #11
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    Quote Originally Posted by Steeeeve View Post
    That's fine but this is a solution in search of a problem. Furthermore, we already have a sales tax at at the state and local level where the property tax you oppose is. Dividing, what would become a 50-70% sales tax, by local, state, and now federal is just a bit annoying in my opinion and extremely frustrating for online companies.

    At best, you shift tax burden to the middle and lower middle class which I think is unwise and violates the number 1 tax rule from Adam Smith.

    Finally, the whole question of "what do you tax" comes into play. Do we tax drugs, homes, or baby food? If so, think about how people pay for things. The lower and middle class tend to put things on credit. When you add a huge sales tax to this at 15-20% interest you can really just finish off the middle class.

    Yeah, the sales tax looks good on its face but if you think about it for a bit it really isn't a smart way to go. Income and property taxes work just fine.
    Yes, tax everything. No deductions. No exceptions.

    It will not shift taxes to the middle and lower economic class. The rich spend way more than any others. What they don't spend is used in savings as capitol to increase economic activities and creates jobs.

    There is no way the tax would have to be as high as you assume.
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    Quote Originally Posted by a777pilot View Post
    Yes, tax everything. No deductions. No exceptions.

    It will not shift taxes to the middle and lower economic class. The rich spend way more than any others. What they don't spend is used in savings as capitol to increase economic activities and creates jobs.

    There is no way the tax would have to be as high as you assume.
    Actually, in order to keep revenue at the same level it is at now (so completely ignoring reality where we need to increase revenues by 25% even if we do massive cutting of the federal budget), Steeeves estimate is likely low. Most of the estimates regarding taxation level required to make a consumption tax work are low because they fail to take into account that a heavy consumption tax WILL change consumption behavior. Assuming we exclude food from consumption tax, which is a necessity if we dont want people starving to death, the minimum consumption or "sales" tax level required would be somewhere between 40 and 45%.

    From am macroeconomic standpoint this would be exactly the same as seeing 50% price inflation over the first several years, which would lead to immediate wage inflation, which would further feed price inflation. Essentially the normal market inflationary controls would go right out the window because you are basically talking about government price fixing, only in a direction contrary to what we have seen in the past (uncle sam mandating higher prices instead of lower ones).

    There have been dozens of studies on this when presented under the guise of the "fair tax" that show that it would certainly shift the tax burden to the middle and lower class because while the upper class obviously spends more money, they spend FAR less in relation to their income. The CBO calculated that a "fair tax" would shift roughly 78% of the tax burden to the lower and middle class.

    Likewise the idea that money that the wealthy save automatically becomes capital for job creation is more than a little out of keeping with how modern business expansion is funded. Nobody funds expansion out of pocket. If everybody did, our economy would collapse. You want to fund a new business, or expansion of an existing one, you go to the bank and borrow money into existence to do it. Pretty much our entire monetary system is based on that. If people stopped doing it and primarily started funding expansion out of pocket, the entire system would stop working and we would fall into a deflationary spiral essentially making EVERY investment a bad one.
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    Quote Originally Posted by a777pilot View Post
    It will not shift taxes to the middle and lower economic class. The rich spend way more than any others. What they don't spend is used in savings as capitol to increase economic activities and creates jobs.
    Yes it would. Bush's advisory committee report that covered the FairTax showed that the middle class will get a tax increase while the extremely poor and rich do better.



    There is no way the tax would have to be as high as you assume.
    Depending on what you want to replace with a sales tax, I probably low-balled it. Average current sales tax rate is close to 7%. If you add that to the 38% rate you'd need to be neutral you are at 45% sales tax. If the locality charges a food tax you can add even more.

    Now, you said we shouldn't tax income. That means the state income tax would go away as well. You'd have to add somewhere between 10-20% to cover that cost. You also mentioned you wanted to eliminate property taxes. Depending on your locality that could be anything from 5-20%.

    So let's assume it's just 50%. If you buy a house costing $200,000 you would pay $100k in taxes. Your mortgage is now based upon $300,000 instead of $200,000. At 5% interest that is an extra $100k you paid over a 30 year loan.

    The sales tax is a silly idea which is why it goes no where. How to collect tax has never been the problem. This is why I say the sales tax is a "solution is search of a problem".

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    Quote Originally Posted by daewoo View Post
    Steeeves estimate is likely low.
    Ha, beat me by 2 minutes.

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    1. I don't want to make up with increased taxes our deficit. I want to shrink government and cut most programs back to the level they were in say 2006.

    2. My program is not a national sales tax nor anything like what this Bush commissioned studied.

    I want to tax spending and the use/transfer on money/wealth. There is a big difference.

    Example: If Bill Gates give $2 billion to a charity now what is the consequences? Great publicity for him and a great tax write off. In my tax system the $2 billion would be taxed.

    If Warren Buffett buys $10 billion worth of Bank of American now what happens? He owns a large portion of the company. In my system that $10 billion would be taxed.

    Today if Mitt Romney moves tens of millions of dollars to a foreign bank what happens? Basically nothing. In my system that money would be taxed. It's his money but he made a free choice to move it. It gets taxed.

    My system is NOT a sales tax.
    "If you voted for Obama in 2008 to prove you're not a racist.....
    ....you'll have to vote for someone else in 2012 to prove you're not an idiot."

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