Are you suggesting a European style VAT system? This might work better than an income tax for consumers, but I’m not sure how one would assign tax liabilities to manufacturers, importers, wholesalers, dealers, and retailers. Given that many products have parts manufactured in several different companies, who would bear the tax liabilities? A ten speed bicycle with maybe 50 parts may have 75 countries involved in it’s final form. Assigning profit to the supply chain seems complicated enough to create the very loopholes such a system is intended to close.
Don’t think that is adequate. Value of any product includes the costs and profits at every stage of production and delivery to the consumer. We could quibble the definitions, but it still doesn’t solve the problem of assigning the level of liability of all the various entities in the manufacturing>supply chain>consumer.
Sure it does. Say I am assembling a product from parts that I buy. I don’t actually manufacture anything - I buy the parts and assemble them. Flashlights are often made this way. Each of my suppliers pays a VAT on each part. Say these parts cost me ten dollars, and I wholesale each assembled flashlight for 12.00. I pat a VAT on two dollars.
Now, say each supplier has in turn (before they reach me) added a buck in value as they sell the parts to me. They each pay tax on a buck. It doesn’t matter what anyone’s overall profit (or loss) is. Just what the added value is.
Something I forgot to add is that each time VAT is paid, previous VATS are deducted from the base cost. In case it matters.
read my lips–flat tax. That means no loop holes for anyone with income. The net result is that the percentage everyone would have to pay would be lower. The clergy would no longer be exempt from income taxes. It’s the idea of equity for all income earners. You like GM. So what? Everybody wants to make a case their pet project should be the exception. Consequently, lobbyists in Washington are bleeding the system dry. Simplicity and equity for all should be the primary values of the tax system. Lets’ get the fat cats off the dole. Don’t worry, I don’t have a lobbiest for my ideas in Washington. If your rich, you have nothing to worry about . We’re talking pipe dream here.
I did understand you the first time, felix. Thought maybe we’d have a conversation. No skin off my back.
I thought I made it clear that it wasn’t GM that I liked, but its rank and file employees. Sometimes, no matter how good you think the rule is going to be, there’s a benefit to excepting it. That doesn’t make it a “pet project”. The byzantine interlacing of treaties in Europe led to WWI. Maybe they should have made an exception.
If everyone is to be treated equally, then I want to same monthly welfare check a single mom gets, the same free health care and the maximum SS payment - now would be nice - in case I die before I’m retired.
Equity isn’t everything. And it’s impossible. Sounds nice when you say it, but it really has no definition in real life.
And there’s that same vague reference about fat cats on the dole. I guess we are to blindly accept your prescriptions without ever really knowing what they are.
I intended conversation. I’m pretty sure you can’t see my lips from where you are. That was supposed to be funny. The Federal Government has stepped in and propped up failing corporations for decades. I don’t want my taxes going there. If you do, your values are different than mine, that’s all. The welfare mom is no less a stereotype then fat cats on the dole. If stereotypical images cloud the vision, I guess we both will have to abandon them to see clearly. It seems to me that equity or proportionality is about as close as you can come to justice in matters of money. I’m surprised to learn that you disagree. Anyway, I doubt that you or more importantly those with the power to change the system will “accept my prescriptions”. I am merely expressing my opinions based on my values. Simplicity and equity are two qualities that I would like to see in the tax system that I don’t see.
Well, that was what I was getting at - is it equity or porportionality? Those can actually be two very different approaches to social justice. Do we cut taxes ten percent across the board? Or only for those less well off? That’s a hot debate whenever tax cuts come up. And it seems the divide is along the lines of values, so I wonder which values you have. I don’t know, right now.
Flat taxes are regressive, of course. I favor a national sales tax (a VAT). Instead of income tax, which is progressive, as we have it. But this means that consumers pay all the taxes - corporations will pass the taxes on to the consumer. By some definitions, this is perfectly equitable. Of course, they pass those taxes on now. Yet, some people want corporations to pay more income taxes.
I’m just trying to find out what people really want. Mostly, I find that they want what serves political purposes, without thinking about the purely economic consequences.
I’m not sure that welfare moms are a stereotype. There are stereotypes about welfare moms.
Personally, I think that what should be done is to keep the income taxes of businesses intact on the current graduated scale (based on how much the business earns), but completely get rid of all payroll taxes and institute a VAT. There are many, however, that consider this greatly anti-consumerist as it will promote saving as opposed to spending and could discourage investing in tangible goods/properties, such as houses (because they will be hit with the sales tax).
Well, Pav - we need a higher savings rate. A VAT may be “anti-consumerist”, but isn’t one of our problems that we consume too much? And a lot of that consumerism is financed by credit. At 18%, in many cases. We could all but do away with the IRS and many would save a lot on accounting and bookkeeping. Small businesses would benefit - especially partnerships and sole proprietorships.
Maybe the average TV would shrink by a few inches. Maybe there wouldn’t be quite as many cell phones in land fills. Houses don’t necessarily need to be taxed, nor inexpensive clothing nor basic food items. But that’s the problem with “equity”. Many states don’t collect tax on groceries - is that “equitable”?
I think you can design a tax policy that helps those who need it most. Right now, there are states that tax the hell out of beer, but not million dollar homes. Is that the best way to go?
The idea I am suggesting is not to raise or cut taxes. Rather it is to restore a sense of fairness to the system. So every income earner would be taxed the same percentage. That seems equitable to me. All deductions and exemptions and credits would be eliminated from the tax code. Simplicity is an important element that has been lost by the complexity of the tax code. People have to be able to understand the system or they won’t buy into it. People have understandably come to distrust the “experts” who design tax policy. Embedded in tax policy is layer upon layer of Congressional initiatives favoring various interest groups.
The national sales tax is an interesting idea which would have some of the equity and simplicity qualities I’m looking for. It might encourage savings. There may be unintended consequences, I haven’t examined it closely. Is that what the so called “fair” tax advocates propose? I’m concerned about justice. Like you I am not merely purely economics. I’m skeptical of economic theory that claims to be pure of ideology.
If you want to defend your use of “welfare moms”, I’ll defend my use of the “corporate fat cats” stereotype. We can do that. It doesn’t interest me much. Or we could try to set aside such inflammatory language in favor of dispassionate discourse.
VATs are regressive. So poor wage earners would pay a higher percentage of their income than wealthy ones would - unless some items are exempted. But those would be exemptions.
Reliance on credit would be neither here nor there, in my opinion. Although any sales tax would be, presumably, greater, that gives me no reason to assume that whatever percentage of purchases people use credit for now would decline, (even if general consumerism declined) in fact, the percentage of credit use would probably go up for the poorest (assuming the flat sales tax is a greater percentage than FICA taxes they have taken out) because it would take a greater percentage of their income (all other things being equal) to purchase a given item.
I agree that small businesses would benefit, and that money would be saved on accounting and bookkeeping. Of course, that still does not make it a better deal for, “Working Class Joe,” particularly if FICA still remains in place. I understand that the nature of the VAT is such that it is to be flat, but perhaps we could work out a graduated scale (you would have to present a card to have the tax adjusted) for the poorest of people?
I can say that the State of West Virginia taxes 6.5% on everything that you would buy in the grocery store. I will also say that the State of Ohio taxes 7% on everything you buy in the grocery store with exception to non-prepared foods and some beverages. However, if you are proposing that some items, in fact, should be classified as tax-exempt, I would certainly agree. Although, I think paying sales tax on one’s home/automobile is justifiable because (as you pointed out with the TV size) one could mitigate that cost by, “Buying down.”
Absolutely not, but speaking of sin taxes, (and other taxes such as those on fuel) in your opinion, should those taxes remain intact?
I find it interesting that we are saddled with an overly complex tax code that reinforces the widening spread between rich and poor. Even more interesting is that this discussion is preoccupied with the same dilemma that created the problems in the first place. Exemptions. Who get’s exemptions for what purpose? So it seems that the discussion isn’t about taxation, but using taxation to redistribute wealth. So I have to ask why? What is there about taxes that makes people with low incomes pay less than those who are rich? It seems to me we ought to talk about taxes as taxes rather than taxes as a method of social engineering. They’re two seperate subjects.
I’m not talking about a blanket redistribution of wealth in any sense. The suggestion in my most recent post is essentially indicative of my desire for the poor not to be in a worse position than they already are. If the same percentage of their income is taxed as it would be now, that’s perfectly fine.
Taxes are, by definition, a redistribution of wealth. There is no such thing as a tax system that is not a redistribution of wealth. If I am taxed for schools, but have no children, then part of my wealth is redistributed. I don’t drive on every road, my house never catches fire, and I never call the cops.
Yeah, Pav - Connecticut, I believe still charges sales tax on clothing only over a certain amount. It used to be $50.00, but I think it’s higher now. I’m neither rich nor poor, but aside from shoes, I don’t spend more than 50.00 on any clothing item. So it’s not just for poor people.Same can be done with food - we already subsidize milk and everything corn - we could do away with those costly subsidies and tax high-end stuff - a higher tax on restaurants. Tax McDonald’s instead of beer.
Yeah - get rid of all payroll taxes. With the exemptions - everyone benefits - everyone buys bread. The working class benefits more with the exemptions, but so what? They only benefit because they can’t afford the high-end clothing to begin with.
These are more regressive than VATs (with exemptions). I do not favor them. I have said this before, but the working class guy whose weekend “recreation” is a pizza and a six pack - because that’s all he can afford - why tax his beer so much? If I fly to Miami beach for a week, I am not really concerned with the sales tax. I’ll pay it. Tax that. Tax airline travel more and leave beer alone. tax premium gas and not 87. Really - c’mon. there are people who just need a little break. I don’t want to sound like a liberal - I have had more than one car that requires premium. Let’s have a little compassion for people.
That’s true. I consider it a bit nit-picky, but true. When I referred to a redistribution of wealth, I was primarily referring to a redistribution of economic classes, which I don’t think the tax change should (or would, necessarily) entail.
I don’t personally support any kind of restaurant tax over-and-above any sales tax that already exists. I honestly don’t see any need for there to be a restaurant tax because it seems like a perfectly legitimate way for one to obtain one’s food. For instance, at Papa John’s, I could get a large Veggie pizza and order of cheese sticks for $15.00, the average it costs us to cook dinner at home is right about $15.00, so what’s the difference? I understand that there are restaurants where people pay more than that, (where my family, admittedly, occasionally goes) but it seems that a restaurant tax basically would just make it more costly for people (and would affect poorer people the most) to enjoy a meal away from home.
I do support a flat-tax on clothing, regardless of price, with an income-based tax exemption (under our theoretical system) when appropriate.
Agreed.
I would probably say that I am in favor of a higher tax on airline travel, but oppose any tax on any kind of fuel whatsoever. I think that the elimination of fuel tax would make it cheaper for airlines to run their planes, and therefore, ticket prices would go down to such an extent that the (additional) amount taxed on airline travel would be mitigated by lower ticket prices.
Well, we can quibble over particulars. The price exemption on clothes is simpler than an income-based one. Are we to show a W-2 at the register? A tax refund is counter-productive, because we’d still have to file taxes to get it.