Taxation

[iNow]

18 minutes ago, Outrider said:

Plenty of jobs in Texas. 

Look again after subtracting oil and gas. 

[swansont]

1 hour ago, Outrider said:

But why do we have to look to Kansas?

Because we're looking at a specific effect.

1 hour ago, Outrider said:

There are 7 states with no income tax at all.

States with no income tax have other taxes instead. 

1 hour ago, Outrider said:

I'm list them along with the number of homeless (per 100,000) in each state and then I will list 7 states with the highest income tax. Why homeless? I think it's a good measure of how a government takes care of the least fortunate among us and it's an easy number to find. 

 Does a large number mean the state can care for more homeless?

21 minutes ago, Outrider said:

Plenty of jobs in Texas. 

If they had decent jobs they wouldn't be homeless. And budgeting is one of the problems also corruption. No matter how high the taxes if they are not managed well failure will result.

How many are minimum wage? $7.25 an hour doesn't mean you won't be homeless.

[iNow]

1 hour ago, Outrider said:

But why do we have to look to Kansas?

Natural experiments in economics are hard to come by. Kansas is one of the first times empiricism has been applied in neutral terms to the most commonly espoused economic ideologies in a complete way.  The results are now (once again) in. Those who espouse the right wing mantra of "tax cuts always good" had their worldview finally put to the test, and it failed spectacularly. 

Eviscerated is probably the most accurate term. 

[Outrider]

7 hours ago, Ten oz said:

And I have repeatedly ask you for examples of countries or even states where less, much less, taxeshave benefited the economy.

Thats a hard question to answer because you don't define "much less"  and apparently  I have to show it was the low tax in and of itself that made the economy good. Sorry I can't do that. I think a low tax rate indicates good money management.

What I can show is countries with a healthy economy and a good standard of living the latter being more important to me. In fact if you can show me somewhere with a bad economy and 0 homeless I will take that over a booming economy and 437 per 100,00 homeless.

The U.S. taxes corporation's at 28% and top income earners at 39.6%. The highest sales tax is around 9.5%.

Russia is 20, 13 and 18

Litchtenstein 13, 18 and 8

Switzerland 18, 13 and 8

Andorra 10, 10 and 10 (keeps it simple)

Dubai and Kuwait 0, 0 and 0

 

8 minutes ago, iNow said:

Look again after subtracting oil and gas. 

Ok I will.

9 minutes ago, swansont said:

States with no income tax have other taxes instead. 

I am not arguing that taxes are bad but I do think its more fair to tax spending rather than earning.

12 minutes ago, swansont said:

Does a large number mean the state can care for more homeless?

Not sure I understand are you asking of they are only counted when services are offered?

I got the numbers here https://www.usich.gov/tools-for-action/map/#fn[]=1400&fn[]=3100&fn[]=6300&fn[]=10400&fn[]=13200

17 minutes ago, swansont said:

How many are minimum wage? $7.25 an hour doesn't mean you won't be homeless.

I agree thats what I meant by decent jobs. I'll look into it further soon.

[Outrider]

2 hours ago, swansont said:

How many are minimum wage? $7.25 an hour doesn't mean you won't be homeless.

Federal minimum wage. It's a fair point.

California 1.3% of total workforce 

New York 4.3%

Florida 4.5%

Wyoming 5.1%

Texas 6.3%

California looks great and Texas looks bad but New York is right there with 2 states that have no income tax. Which is back to my point that simply raising taxes is not an answer.

Heres another point for you. I'm in a 15% federal tax bracket and someone who makes far less than twice as much as me pays an additional 10%. Someone who makes 6 times as much I make pays 24.6% more than I do. But someone who makes 6 times more than that or 60 times more pays no extra percentage.  Does this seem fair? Why do our tax brackets top out at less than 500,000? This is part of the reason so much of the middle class are anti-tax. I really don't mind paying my share but I feel like I pay alot more than that.

So what would make you happy? For one thing I would like to see the tax brackets more fairly drawn and do away completely with income tax for people who make  less than 50,000 a year. They can pay their share in sales tax.

[swansont]

6 hours ago, iNow said:

Natural experiments in economics are hard to come by. Kansas is one of the first times empiricism has been applied in neutral terms to the most commonly espoused economic ideologies in a complete way.  The results are now (once again) in. Those who espouse the right wing mantra of "tax cuts always good" had their worldview finally put to the test, and it failed spectacularly. 

Eviscerated is probably the most accurate term. 

It's even more focused than that. It's "tax cuts on the rich and on businesses"

3 hours ago, Outrider said:

 Heres another point for you. I'm in a 15% federal tax bracket and someone who makes far less than twice as much as me pays an additional 10%.

They pay an additional 10% on the money in that bracket. The US 10% tax bracket is applied to the first $9,325 of everyone's taxable income (latest numbers). 15% is applied to anything over that, up to $37,950. 25% on anything over that, up until the top of that bracket, etc.

IOW, if your taxable income is $40,000, you only pay 25% on the $2050 of income in that bracket.

Quote

Someone who makes 6 times as much I make pays 24.6% more than I do. But someone who makes 6 times more than that or 60 times more pays no extra percentage.  Does this seem fair? Why do our tax brackets top out at less than 500,000? This is part of the reason so much of the middle class are anti-tax. I really don't mind paying my share but I feel like I pay alot more than that.

It's fairer than everyone paying the same percentage. I don't think the rates are unfair, per se, but someone making a lot of money has more ways to shield income from tax, and the income is likely to include capital gains, which are taxed at a lower rate.

[iNow]

12 hours ago, Outrider said:

I am not arguing that taxes are bad but I do think its more fair to tax spending rather than earning.

This approach disproportionately hurts the poor and middle class. It's known as a regressive tax where taxes on low earners skyrocket and taxes on high earners (who are already sitting on record amounts of cash) would plummet... along with revenues to government overall.

https://www.washingtonpost.com/posteverything/wp/2015/05/26/the-flat-tax-falls-flat-for-good-reasons/?utm_term=.7b55c4d269d7

Quote

The regressivity of the flat tax is another big problem. Our current federal income tax code is progressive (rates rise with income), and every distributional analysis I’ve ever seen of a flat tax shows a transfer of the tax burden from the wealthy to the middle class. According to the Tax Policy Center’s score of the Perry tax plan, the tax bill of families with incomes between $30,000 and 40,000 would go up by about $450, while that of millionaires would fall by about half a million bucks.

It would also lower revenue by between $500 billion and $1 trillion per year.

 

5 hours ago, swansont said:

It's fairer than everyone paying the same percentage. I don't think the rates are unfair, per se, but someone making a lot of money has more ways to shield income from tax, and the income is likely to include capital gains, which are taxed at a lower rate.

This gets to the heart of it. The rates are less relevant and less complex than the ways we define income and the exceptions we allow for income types not easily available to most citizens...the 99%.

Edited September 17, 2017 by iNow

[John Cuthber]

15 hours ago, Ten oz said:

Conceding that it is bad would beg to question how to fix it. 

You can fix your system by copying someone else.
You can borrow ours if you like. We still have the original adverts.

 

[Outrider]

iNow

I am not proposing a flat tax. I could get pn board with no income tax on 50,000 and below and a flat rate from there up to 100,000 and then brackets the rest of the way. Just to throw out some numbers I am not married to them.

I agree that tax shelters and the like are a big problem. The republican plan promises to address this but probably won't. 

I would like to see capital gains top earner rates locked in for a period of time maybe 10 years and reviewed at that time. Capital gains tax can encourage expansion in a business but to high can encourage corruption. 

Another thing I would like to see is higher sales tax and lower income tax.

[iNow]

2 hours ago, Outrider said:

Another thing I would like to see is higher sales tax and lower income tax.

Same challenges apply here. This disproportionately hurts the poor and middle class, and disproportionately benefits the already uber wealthy. Appreciate you clarifying your stance above, but do wonder if you're aware of / okay with the effect the policies you support would have on those already destitute and struggling. 

Changing the tax on groceries from $1 to $2 is fine for the person arriving to the store carrying $100. It's a lot more challenging when you arrived to the store with only .75¢, or even ten times that of $7.50. 

[John Cuthber]

5 hours ago, Outrider said:

The republican plan promises to address this but probably won't. 

Is it just me who thinks that is about as likely as turkeys voting for Christmas?

It's not obvious to me why capital gains tax should have a different rate than other income tax.

[swansont]

1 hour ago, John Cuthber said:

Is it just me who thinks that is about as likely as turkeys voting for Christmas?

It's not obvious to me why capital gains tax should have a different rate than other income tax.

Because the people taxed are more likely to be wealthy, of course.

(IOW, they probably shouldn't be, but rich people make the rules)

[Phi for All]

On 9/16/2017 at 6:25 PM, Outrider said:

I am not arguing that taxes are bad but I do think its more fair to tax spending rather than earning.

My philosophy is that you were able to earn that money because of the way this society is set up (or at least that's what societies should be doing, putting opportunity in the paths of its members). You agreed to follow the laws and mores, and do your part. In return, your potential for earning increases significantly compared with complete independence from society. Because you chose society, you can now specialize in something you can trade for, instead of having to hunt and gather all your own food and stuff. You could have gathered your family and bought an island somewhere so you all can live off the land in isolation, never needing roads or parks, or even stores and manufacturers, but you didn't.

Taxing your earnings is an incentive to earn more. Taxing your spending means you might avoid spending, and that doesn't help the society's economy. As others have mentioned, sales tax affects a larger portion of a poor person's income than it does a wealthy person's. 

Why don't you think it's "fair" to tax earnings? 

[Outrider]

5 hours ago, John Cuthber said:

Is it just me who thinks that is about as likely as turkeys voting for Christmas?

It's not obvious to me why capital gains tax should have a different rate than other income tax.

Capital gains is more of a corporate tax IMO when set to high it tempts "cooking the books"  and when set to low (along with decreasing revenue) dosent encourage growth. When set at a fair amount companies can go out and buy new equipment and invest in new ideas thus lowering their profit and paying less taxes. 

 

7 hours ago, iNow said:

Same challenges apply here. This disproportionately hurts the poor and middle class, and disproportionately benefits the already uber wealthy. Appreciate you clarifying your stance above, but do wonder if you're aware of / okay with the effect the policies you support would have on those already destitute and struggling. 

Changing the tax on groceries from $1 to $2 is fine for the person arriving to the store carrying $100. It's a lot more challenging when you arrived to the store with only .75¢, or even ten times that of $7.50. 

Who first thought it was a good idea to tax milk and bread anyway? Taxes on those sorts of items should be done away with I hope we can at least agree on that.

How bout this. I can afford a 1,000 dollar tv and I pay 10% tax on it. You can afford a 2,000 tv so you pay 12% and so on. I think some kind of system like that would be much more fair than what we have now.

https://www.cnbc.com/2015/02/11/tax-refund-fraud-to-hit-21-billion-and-theres-little-the-irs-can-do.html

2015 article

Quote

Tax-refund fraud is expected to soar again this tax season, and hit a whopping $21 billion by 2016, from just $6.5 billion two years ago, according to the Internal Revenue Service.

We already talked a little about legal tax shelters. And I'm not saying nobody will find a way to cheat a sales tax system but I do think it will be easier to control.

Just to be clear I am not asking that we gut the income tax system today but I would like to a fair national luxury tax implemented and start moving more towards that sort of system.

4 hours ago, Phi for All said:

My philosophy is that you were able to earn that money because of the way this society is set up (or at least that's what societies should be doing, putting opportunity in the paths of its members). You agreed to follow the laws and mores, and do your part. In return, your potential for earning increases significantly compared with complete independence from society. Because you chose society, you can now specialize in something you can trade for, instead of having to hunt and gather all your own food and stuff. You could have gathered your family and bought an island somewhere so you all can live off the land in isolation, never needing roads or parks, or even stores and manufacturers, but you didn't.

I agree with all of that. The people who cry that we are going to be a socialist country don't understand we already are more than we are not.

4 hours ago, Phi for All said:

Taxing your earnings is an incentive to earn more.

How so?

4 hours ago, Phi for All said:

Taxing your spending means you might avoid spending, and that doesn't help the society's economy.

The more I can save the less I might be a burden on you in the long run. Tax cuts never stimulate in the short run but give them a chance, especially for the middle class, over time they will have more money to invest and more set back for catastrophic illness or accident.

 

4 hours ago, Phi for All said:

Why don't you think it's "fair" to tax earnings? 

Well it dosent have to be but I think most of the time it turns out that way. It turns out that most people who can afford an army of accountants to constantly come up with new and creative ways to avoid taxes have just such an army.

[iNow]

I'm rushing so will try to return later, but much of that fraud IRS currently forecasts is people falsely submitting claims for others... stealing their refund (I.e I submit a return pretending to be you so I can collect and cash your check) as opposed to people evading payment of taxes owed (though that's a big problem too given our lack of investment in enforcement mechanisms)

I like the return free filing idea submitted by Goolsbee and others. In short, government already has all your info from employers and financial institutions. They could prepare your taxes for you, ask you to confirm if it looks right or offer edits and corrections if it doesn't, then voila. Done. Intuit turbotax and HR Block have understandably lobbied heavily against these ideas. 

https://www.brookings.edu/research/the-simple-return-reducing-americas-tax-burden-through-return-free-filing/

Edited September 19, 2017 by iNow
Spelling

[Outrider]

https://en.m.wikipedia.org/wiki/Tax_evasion_in_the_United_States

Quote

 

In the United States, the IRS estimate of the 2001 tax gap was $345 billion.^[15] For 2006, the tax gap is estimated to be $450 billion.^[16]

A more recent study estimates the 2008 tax gap in the range of $450 to $500 billion, and unreported income to be approximately $2 trillion.^[17] Thus, 18 to 19 percent of total reportable income is not properly reported to the IRS.^[18]

 

https://en.m.wikipedia.org/wiki/Panama_Papers

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The Panama Papers are 11.5 million leakeddocuments that detail financial and attorney–client information for more than 214,488 offshore entities.^[1][2] The documents, some of which dated back to the 1970s, belonged to the Panamanian law firm and corporate service provider Mossack Fonseca,^[3] were leaked in 2015 by an anonymous source.^[4]

 

[swansont]

11 hours ago, Outrider said:

Capital gains is more of a corporate tax IMO when set to high it tempts "cooking the books"  and when set to low (along with decreasing revenue) dosent encourage growth. When set at a fair amount companies can go out and buy new equipment and invest in new ideas thus lowering their profit and paying less taxes. 

That's not capital gains. It sounds like you're describing depreciation of capital improvements.

Capital gains is a tax on money made from stock (or other) investments. The problem is that lower-income folks don't have a lot of money to invest, and don't benefit from the lower rate, as they have little to no money to invest.

11 hours ago, Outrider said:

Who first thought it was a good idea to tax milk and bread anyway? Taxes on those sorts of items should be done away with I hope we can at least agree on that.

Basic foods (unprepared foods, at least) are often not taxed.

 

[iNow]

1 hour ago, swansont said:

Basic foods (unprepared foods, at least) are often not taxed.

In fact, in more than half of the US 50 states, grocery items are completely exempt from sales tax (or taxed at a drastically reduced rate). This is not, however, the case in Outrider's home state of Alabama so the confusion is understandable.

https://blog.taxjar.com/states-grocery-items-tax-exempt/

[Outrider]

8 hours ago, swansont said:

That's not capital gains. It sounds like you're describing depreciation of capital improvements.

Capital gains is a tax on money made from stock (or other) investments. The problem is that lower-income folks don't have a lot of money to invest, and don't benefit from the lower rate, as they have little to no money to invest.

You are right and I was wrong thanks for clearing up my misconception. 

There is a long running debate that capital gains tax does or does not stimulate investment but if it works at all it dosent work in the manner I described. 

Edited September 19, 2017 by Outrider

[Outrider]

10 hours ago, iNow said:

In fact, in more than half of the US 50 states, grocery items are completely exempt from sales tax (or taxed at a drastically reduced rate). This is not, however, the case in Outrider's home state of Alabama so the confusion is understandable.

https://blog.taxjar.com/states-grocery-items-tax-exempt/

But it was you who used groceries as an example of why you think sales tax is regressive. 

Yes I am well aware of Alabama's social and economic problems. Many of these policies (see "right to work state") were put in place when the democrats had a stranglehold here but now that the republicans are mostly in control things are really um pretty much the same.

[iNow]

In my attempt to explain the idea using everyday relatable terms, I chose a bad example. You're correct. My apologies. The same challenges I highlighted still apply. Flat tax disproportionately hurts the poor and middle class while disproportionately helping the already wealthy. 

[swansont]

10 hours ago, Outrider said:

But it was you who used groceries as an example of why you think sales tax is regressive. 

Based on your proposal that we tax spending. Such a tax would indeed be regressive, unless we took steps to mitigate that effect (such as exempting food, and other changes, some of which we've discussed)

Another problem with it is that wealthy people are wealthy because they don't spend all of their money. Someone who makes a $1,000,000 but spends only $100,000 is paying the same tax as two people who spend $50,000 and have nothing left over. 

[Ten oz]

On 9/19/2017 at 6:53 AM, swansont said:

That's not capital gains. It sounds like you're describing depreciation of capital improvements.

Capital gains is a tax on money made from stock (or other) investments. The problem is that lower-income folks don't have a lot of money to invest, and don't benefit from the lower rate, as they have little to no money to invest.

Basic foods (unprepared foods, at least) are often not taxed.

 

To your point:

", in 2013 the top one percent of households had 49.8% of all privately held stock, 54.7% of financial securities, and 62.8% of business equity. The top ten percent had 84% to 94% of stocks, bonds, trust funds, and business equity, and almost 80% of non-home real estate."

http://www2.ucsc.edu/whorulesamerica/power/wealth.html

[Phi for All]

On 9/18/2017 at 5:19 PM, Outrider said:

I agree with all of that. The people who cry that we are going to be a socialist country don't understand we already are more than we are not.

I think this is a big problem in the US, this (mis)understanding we have about socialism, capitalism, and communism. Too many people think it has to be all one way, that if we allow funds to be spent on public projects it diminishes our capitalist endeavors. I think the problem is that we approach ALL of our spending from a capitalist POV, so the parts of society that are owned by the People or the State aren't managed effectively. The Bush II revamp of Medicare is a classic example, where the People's ability to negotiate for better prices is struck down to benefit private industries. Our socialism is watered down and ineffective. imo.

On 9/18/2017 at 5:19 PM, Outrider said:

How so?

Your paycheck (which you get as a net amount with taxes already taken out) has to stretch to cover your expenses, so if you aren't making enough, you find a better paying job. If you budget, you don't use your gross pay to do it, you use your net. 

OTOH, you might easily put off a purchase if the taxes on it put it out of your budget's reach. That's why I say it's better to tax income than spending in most circumstances.

On 9/18/2017 at 5:19 PM, Outrider said:

The more I can save the less I might be a burden on you in the long run. Tax cuts never stimulate in the short run but give them a chance, especially for the middle class, over time they will have more money to invest and more set back for catastrophic illness or accident.

Give them a chance? Isn't that what we've been doing for the last 60 years or so? It's not taxes that cause the problem you point to, it's wages. They've been uncoupled from productivity ever since the Nixon years, with the difference going straight to the 1%

 

On 9/18/2017 at 5:19 PM, Outrider said:

Well it dosent have to be but I think most of the time it turns out that way. It turns out that most people who can afford an army of accountants to constantly come up with new and creative ways to avoid taxes have just such an army.

Exactly right, it doesn't have to be. I think the first step is to stop electing extremist capitalists to fix the problem with extremist capitalism.

[swansont]

11 minutes ago, Phi for All said:

I think this is a big problem in the US, this (mis)understanding we have about socialism, capitalism, and communism. Too many people think it has to be all one way, that if we allow funds to be spent on public projects it diminishes our capitalist endeavors. I think the problem is that we approach ALL of our spending from a capitalist POV, so the parts of society that are owned by the People or the State aren't managed effectively. The Bush II revamp of Medicare is a classic example, where the People's ability to negotiate for better prices is struck down to benefit private industries. Our socialism is watered down and ineffective. imo.

We have a Pavlovian response to the words from decades of propaganda. Some amount of socialism is actually mandated in the Constitution.  

11 minutes ago, Phi for All said:

It's not taxes that cause the problem you point to, it's wages. They've been uncoupled from productivity ever since the Nixon years, with the difference going straight to the 1%