Hard Light Productions Forums
Off-Topic Discussion => General Discussion => Topic started by: Kazan on December 03, 2004, 10:48:26 am
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Holy freaking stupidity batman! Way to try and shift almost ALL of the tax burdeon onto the middle class.
Way to completely abandon the most conservative tenant of capitalizism - the progressive tax (yes it is a conservative tenant)
The repuglicans are trying to eliminate the income tax and replace it with a 23% national sales tax.
You read that right - 23% -- that means a $81 microwave costs $100 (99.63) after taxes
Sales taxes weigh entirely on the lower and middle classes
right now the only source i've seen is FuchsNews (So of course they're making this look like a great idea)
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23% seems a bit... exorbitant...
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What's the current US sales tax, BTW?
(incidentally, UK VAT - which I guess is roughly equivalent - is set at 17.5% with exemptions for necessary goods)
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we have no national sales tax currently
and you should be fighting to destroy the VAT
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Originally posted by Kazan
we have no national sales tax currently
and you should be fighting to destroy the VAT
Why? It'd only have to be replaced by some other tax.
(even if it wasn't mandatory for all EU countries, which it is; part of the common market agreement)
EDIT; other european VAT rates; http://www.trade.gov/td/tic/tariff/eu_vat.htm Highest EU is Denmark at 25% (full rate)
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It's per-state sales tax IIRC, and not all states have it.
What's wrong with VAT? You'd just have to replace it with something else...
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VAT's fine so long as it's moderated against the goods being taxed.... I couldn't find the full listing, but in the UK books and magazines in particular are untaxed (I think most staple food is, too), and some other items are charged at 5%.
It does seem bizarre to simply swap Income tax for VAT, though. Really you need both.
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what's wrong with the VAT? the same thing that is wrong with all sales-tax-instead-of-income-tax schemes all the tax burdeon goes on to the lower and middle class
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Originally posted by Kazan
what's wrong with the VAT? the same thing that is wrong with all sales-tax-instead-of-income-tax schemes all the tax burdeon goes on to the lower and middle class
Thats why there is a lower tax band and an exemption for necessary goods; like clothes and food. Also banded income tax helps (or should help) to re-address the balance.
Not that the UK tax system is ideal, of course. There are certainly a hell of a lot of ways it can be fixed up.
EDIT; VAT is not used instead of income tax, to be absolutely clear here.
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You forget though, Kazan, that with removal of Progressive Income Tax, most people's paychecks effectively double. 23% seems a bit high though. The Fair Tax (http://www.fairtax.org/) seems a better way to go and aliveates most of you're problems since spending up to the poverty level(~$20,000) is tax free.
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The problem with an entirely purchase based tax is that it discourages spending, I think. I also get the feeling that it'd surely be very unpredictable with relation to economic changes and trends.... and what I don't understand, is why not have both? It seems to work over here... except for the stupidly confusing tax forms (gah!).
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:wtf:
I thought sales tax was an exclusive power of the states?
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That FairTax thing is... interesting. It seems like a good idea in theory, but I don't know enough (read: anything) about the American tax system to comment properly. It seems to avoid a big issue, though - the wealth gap. People in positions of power will still be paid obscene salaries, while the poorest will still struggle to pay for basic needs. That's the biggest problem that needs looking at. The richer people should pay more tax, since they can afford it. Poor people should pay much less.
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Ah, but rich people = campaign contributors.
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Pyro, the essence of the Fair Tax is that people who live at or below the poverty line would not be taxed, period. And without an income tax eating half their wages they would have more discretionary income. Also, all purchases above poverty level are taxed, which means that if millionare A buy a $800,000 dollar yacht or a ferrari or something, and the tax rate is 10%, that purchase will be taxed $80,000 for a total purchase price of $880,000.
IE, the more extravagant you're lifestyle, the more tax you pay, the more you scrape by the less tax you pay.
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Yeah, but the millionaire still has vast pots of cash, and the extra 80 grand isn't a lot to him so he buys the yacht anyway without a second thought. Whereas, if someone poor earns and spends, say $18000 in a year normally, they don't pay tax. That's all well and good, as they can just about manage on that amount. But if said person's car fails the MOT, or they get burgled, or something else happens, and they have to spend an extra $3000 on replacement parts/stuff/whatever, then they suddenly have to start paying tax on that $1000 they've gone over the limit by. Given that they earn less than they've already spent anyway, they're pretty much ****ed (sorry to be crude, but it's a big problem trying to pay money you haven't got).
My point is, people should be taxed on what they earn, so that yeah, the guy earning $18000 pays no tax at all, but the guy on a million dollars pays 40-odd percent (at the least. I dunno what the rates are in America). He has so much more, so he can (and should) pay for the 18k guy.
Gaaaaaaah. I'm about as eloquent as a housebrick. :blah: Bloody hell. I hope the above is understandable.... :)
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Yes, but that's the thing, a progressive tax isn't fair. It punishes a person, sometimes heavily, for being successful.
What drive do I have to work hard and get rich, if the government is going to take up to half of my money for no other reason than I've worked my ass off and become successful?
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liberator the "Fair Tax" doesn't work
the only "fair tax" in existance is taxation proportionaly to the margional utility of a dollar for a person.
You want to extract X 'utility' from every person (ie the tax burdeon on their purchasing power is the same)
you have to take their total income and apply the law of dimishing returns giving you equal dollars, we'll use a calculation based upon their income to determine the total number of dollars to tax to have taxed the same number of "Equal Dollars" from everyone, and make this into a proportion of their income - we'll call this operation the "Equal Dollar Function" EDF(x)
X=EDF(income)*income;
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Originally posted by Liberator
Yes, but that's the thing, a progressive tax isn't fair. It punishes a person, sometimes heavily, for being successful.
wrong - see my previous post
you simply don't know economics, and neither does anyone who claims a progressive tax isn't fair
the only fair tax is taxation on equal dollars, so taxation as the same effect on everyone
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read the edit
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Originally posted by Liberator
Yes, but that's the thing, a progressive tax isn't fair. It punishes a person, sometimes heavily, for being successful.
I don't see it as punishment. I'd call it their moral and societal responsibility to help those less fortunate than themselves. And if they're that rich, they don't need that portion of their income, because they should have everything they could possibly need already. If they just want to buy a holiday house, or another sports car, then they can get ****ed. That's just greed.
I personally would like to see a cap on all wages of about £500,000 a year after tax. I challenge anyone not to be able to live extremely comfortably with that kind of money.
Originally posted by Liberator
What drive do I have to work hard and get rich, if the government is going to take up to half of my money for no other reason than I've worked my ass off and become successful?
But your life's ambition shouldn't simply be to get as rich as possible. That's.... I don't know. Sad. Shallow and sad. Success isn't (or shouln't) be measured by the size of your bank balance. And the thought that the money you would have blown on a Porsche has gone towards paying for the education and healthcare of your fellow people should be a good feeling. Shame the govamint is so crap at spending it: "I know! We'll blow untold billions on stealth fighters we'll never use, and leave kids learning from 20-year-old textbooks in crumbling schools!" etc, etc. But that's another argument. :)
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hey liberator - you still fail to understand the economics - because the "progressive" tax system we have now doesn't stick to the exact calculation forumalae and still favors the rich, several years ago (read under clinton) they didn't favor the rich to an unacceptable level though (they were still progressive)
the Fair Tax, and National Sales Tax, the VAT, and everything like it are REGRESSIVE taxes
Liberator - can you (without using google or wikipedia) tell me what the following are
A) The Law of Dimishing Returns
B) Equal Dollars
C) Net Utility
D) Marginal Utility
if you cannot you don't have any business thinking your opinion on taxation is valid
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This would crush the people that need to spend more naturally such as large families with lower mean income levels. I do see some positives in that it might lower the cost of goods since there would be less taxes on corporations. However, any money they would save might be sucked up in corporate bonuses and fatter dividends. It would simplify the tax code but would harm the middle class.
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Calm it down, Kazan. There's no need for that tone. Don't throw things at him and say "Ha! you know nothing!". That doesn't get us anywhere. Explain it, tell him (and me!) what those terms are. Then we'll have more understanding of the system. As it is, we just have bad blood.
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Don't make me post a Koala. :D
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liberator just annoys me with his constant insistence he knows everything, when he knows nothing
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Law of Dimishing Returns
in short, the LDR states that "The more of something you receive, the less each one is worth to you"
A diamond is nice, 100000 diamonds is boring -- do you follow me?
(im not as good as explaining this as a textbook/professor)
Equal Dollars
Equal Dollars are what someones dollars are worth to them after applying the LDR to their income
Net Utility
Net utility is the total "value", or "usablility" of everything you have, in this case your entire income.
even after the Equal Dollar Function is applied to income peoples Net Utility of the entire income still rises, so even extracting the same ammount of "Net Utility" in taxation dollars they're still going to be better oof
so NU(Income,100000)-NU(Tax,100000) > NU(Income,30000)-NU(Tax,30000)
Marginal Utility
Marginal Utility is the slope of the Net Utility function
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Originally posted by redmenace
Don't make me post a Koala. :D
:lol:
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Don't even try it... I've got pictures of kittens somewhere ;)
Cheers, Kaz - that's straightened things out. And it is right....
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Thank God for the PX on base. Sales Tax Free. :)
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Originally posted by Kazan
Holy freaking stupidity batman! Way to try and shift almost ALL of the tax burdeon onto the middle class.
Way to completely abandon the most conservative tenant of capitalizism - the progressive tax (yes it is a conservative tenant)
The repuglicans are trying to eliminate the income tax and replace it with a 23% national sales tax.
You read that right - 23% -- that means a $81 microwave costs $100 (99.63) after taxes
Sales taxes weigh entirely on the lower and middle classes
right now the only source i've seen is FuchsNews (So of course they're making this look like a great idea)
GEEBUS! We already pay 9 1/4% sales tax (which the **** hit the fan BIG TIME when that happened). If that happens, its going to be very hard for me to get buy seeing as I'm going to be attending the University of Memphis next month....and money is going tight for me as it is. What, do they think we're made of ****ing money or something?! I'll start buying my stuff from Canada before I'll EVER pay a 23% national tax....
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The national sales tax wouldn't be in addition to what we have now... it would replace the current income tax. Which IMO is a good thing. In one fell swoop it would eliminate one of the largest federal bureaucracies that costs tons of money and paperwork just to sustain itself each year. Not to mention getting rid of audits, which have been abused to harrass people far too often.
The tax code is so complicated now that no single person can hope to understand it.
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yeah.. it would also move the almost the entire tax burdeon onto the lower and middle class
you can keep the REAL fair tax - the progressive tax, and make the code simple
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Not really. We'd still have exemptions for necessities like food and clothing, as was posted earlier. That takes the burden off the lower classes. As for other material goods, basically, the more things you buy, the more you pay in taxes. That scales nicely among the middle and upper class, as the more money you make, the more things you buy, and the more expensive those things are. If people want to pay less in taxes, they'll save more of their money - which is also good for the economy. It works out nicely all around.
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Dare I say....
User Fees.
:nervous:
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Originally posted by Goober5000
Not really. We'd still have exemptions for necessities like food and clothing, as was posted earlier. That takes the burden off the lower classes. As for other material goods, basically, the more things you buy, the more you pay in taxes. That scales nicely among the middle and upper class, as the more money you make, the more things you buy, and the more expensive those things are. If people want to pay less in taxes, they'll save more of their money - which is also good for the economy. It works out nicely all around.
:yes:
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But the whole exemptions and exceptions and provizos are how the current tax code got so friggin complicated. Reforming the tax code now will only allow congress to screw it up all over again.
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I'm personally calling an end to all taxes...:nervous:
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What do you want in their place? Tariffs again? The Federal Government is going to want to get money somehow...
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Originally posted by redmenace
But the whole exemptions and exceptions and provizos are how the current tax code got so friggin complicated. Reforming the tax code now will only allow congress to screw it up all over again.
Such is the law of entropy. :sigh:
But this method should make it much harder for people to complicate the tax code. Theoretically, the only two things that need to be legislated are 1) the tax rate and 2) a list of tax-free goods. That's far simpler than the system we have now, with tax credits, income brackets, marital status, itemized deductions, blah, blah, blah. The cool thing about a national sales tax is that the Invisible Hand (tm) will automatically adjust spending to account for all those factors. Thus you eliminate the need for complicated formulas and bureaucratic record-keeping. :yes:
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except now individuals now have to keep records to send to the IRS of what to write off.
BTW tariffs are an absolutly horid idea considering that the world has changed and adding tariffs on imported products would serve on to piss off international Industries and screw with trade in general. In the words of my marketing prof., who is an expert in international business, you DO NOT through up barriers to trade.
OH NO, I am starting to sound like Kazan :p
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Originally posted by redmenace
except now individuals now have to keep records to send to the IRS of what to write off.
No, individuals don't have to keep track of anything. Only businesses. And the records are really quite simple... when you're ringing up an item, you check the list to see if it's exempt. If it is, no tax. If it isn't, calculate and add the tax from the universal tax rate.
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Originally posted by Grey Wolf 2009
What do you want in their place? Tariffs again? The Federal Government is going to want to get money somehow...
LOL don't listen to my politics. I'm never serious when I talk about it.
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It was primarily a reply to Terminator, for his comment about abolishing taxes. There are only about four ways for governments to make money:
1. Taxing what you already have (property tax)
2. Taxing what you are earning (income tax)
3. Taxing what you buy (sales tax)
4. Taxing what you import (tariff)
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The money system itself is obsolete. why? because the best stuff in life is open-source
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goober even with those exemptions the vast majority of the tax burdeon STILL goves on the lower and middle classes
econ 101 my friends
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I didn't read any of the thread, I like the idea in general, in fact I have been wanting something along these lines for a while now, but I want to look into the details of it, it needs to have diferent classes of items with diferent rates, otherwise it's little more than a flat tax (wich I sort of like the theory behind, but don't consiter it practical). for example food should have little or no taxation on it, houses should have tax rated determined by the value of the property (and if the person/corperation has other properties) energy should probly be progresively taxed so there is an additional penalty for waisting it, and people who are poorer don't have to pay as much to heat there bedrooms.
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Originally posted by Kazan
goober even with those exemptions the vast majority of the tax burdeon STILL goves on the lower and middle classes
econ 101 my friends
On the contrary... if they buy nothing but exempt goods, then they pay no taxes by definition. Even with the current system, most of the tax burden has to come from the wealthier classes (upper class and mid-to-upper-middle class), because they're the ones with the money.
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But then the government would have their revenue directly related to actual sales of merchandise. This could bring a conflict of interest.
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Tax Burdeon is measured in EFFECT
under ANY sales tax system more of the burdeon is on the lower and middle classes - unless you exempt everything under 10,000 sticker price (and have exemption on automobilies and homes based upon income) -- but then you'll never bring in enough income
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what if the tax wasn't linear, but some sort of geometric or exponental or logorithmic model based on price of the item?
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there is no way to make a sales tax non-regressive
sales taxes are, by nature, regressive
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how so, from what I see the more you spend the more you pay, it can even be calabrated so that spending on luxuries costs you substantualy more than nesesities, wich the current tax system can only hope to aproximate.
if you buy a $200,000 dolar car you pay a $100,000 tax, if you buy an $8,000 car you pay a $200 tax
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it's burdeon bobboau -- burdeon
apply the law of dimishing returns to their income and figure out their equal dollars, it's pretty bloodly simple: it roally annoys me when people forget this simple freaking econ thing
they pay a higher percentage of their income, they page a higher number of equal dollars as well - so they're double ****ed
sales taxes are regressive taxes - period
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Originally posted by Kazan
it's burdeon bobboau -- burdeon
You mean burden?apply the law of dimishing returns to their income and figure out their equal dollars, it's pretty bloodly simple: it roally annoys me when people forget this simple freaking econ thing
Simpler than Bobboau's car example? I doubt it, unless you can come up with an example of your own. I've studied a fair bit of economics myself, and I haven't seen anything fairer than a national sales tax.
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I think the point is that a national sales tax could be applied fairly, but we all know that if the current government trys it will fail miserably.
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Oh, a sales tax.
Let's begin the evasion festival!
Let's clarify things a bit...
Here's how sales tax works in EU (i'll simplify the model a bit):
There are 4 classes of taxeable goods (and services of course):
1) Basic Food & Healthcare - no tax
2) Generic Food & Healthcare (plus health and education services) - 4% tax
3) There are some socially useful goods and services (IE school books + energy) that gets a "reduced" 10% tax
4) Most stuff gets the standard 20% tax
Where is the problem?
There is no way to make things really fair (everyone will have to buy items with the highest taxation, no matter how you want to put it...), as most everyday use items aren't life essential so they gets full taxation.
In addition to that evading taxes in part or in the whole is really much easier, especially for services where you cannot even track stored stuff.
Also, historically no government managed to survive only with sales taxes, not even by cutting most social services like school and healthcare.
EU uses VAT (or it's equivalent, the name changes from nation to nation) only to finance specific projects, leaving the main part of the spending funded by income taxes...
Oh, i forgot an "hidden tax", the ones that comes with interest rates which is around 27%, so you're taxed even when you get loans.
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goober5000 - then you must have slept through when they explained what equal dollars were
Sales taxes are REGRESSIVE - they hare more impact on the lower and middle classes, and they put more of the burden on lower and middle class
The fairest tax is the Tax on Equal Dollars aka A progressive tax
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Why does that sound like a Liberal economic principle to me? I mean besides the fact that Kaz is being rabid about it.
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because EVERYTHING you don't like is liberal
let's do a little math here -- two peope make 10,000 in purchases i
let's say 3000 of the purchases made by both people are tax-exempt, so you have $7000 in taxable purchases
that's $8610 in taxable purchases _After_ tax (at 23%), making an effective tax percent (ETP) of 16.1% on their purchases
now say that person A makes 30,000/year, and person B makes 100,000/year
the ETP on their income for A is 5.3%
the ETP on their income for B is 1.61%
now - some people claim the principle "more wealthy people buy more expensive things more often", that assumption is FALSE. The majority of individuals in the US with networths at or over $1m are very FRUGAL people, that's why their networth is so high (one of the respectable tv-news-journals ie like 20/20 did a report on this is in the late 90s... and i happen to remember seeing it ... but i forget which one)
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Now let's take the same Person A(Inc=30K), and same Person B(Inc=100K)
now let's say they both purchase Zap! Smart Cars because they have great gas milage.
Now a Smart Car costs around $15,550 - after a 23% NST that's $19,065 after tax, or a total of $3565 in taxes.
that gives you ETP(A)=11.88%
and ETP(B)=3.565%
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im munching out some very difficult 30-year-mortgage math right now.. so it may be a little bit -- it's a RPITA
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if someone who is richer does not spend there monie then they don't pay higher taxes, it is a taxation on luxuries. if you want to live the high life you have to pay more. it's based on how much you spend (and what you spend it on) not how much you make.
oh yeah, and "sales taxes are regressive taxes" say it once or twice then try expanding, when you repete the exact phrase over and over again, well lets just say...
"liberal activist judges legislateing from the bench"
:) don't fall into that patern
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Now let's take A & B again, and say the poor bastars are purchasing houses - we'll assume that B is even purchasing a MORE EXPENSIVE house
we'll say that A is buying a $150,000 house (pretty average for many areas of the country)
we'll also say that B is buying a $250,000 house
after taxes that's $184,500, and $307,500 respectively
now we'll assume they have 30-year-mortagages, at 6% (that's pretty damn good)
we'll say interest is compounded monthly, payments are $1100 and $1850 /month respectively (w/ taxes) instead of $900/month and $1500 respectively (note: all rounded off to the nearest ten)
giving us the following two equasions for figuring out total-cost-of-purchasing
we need to figure out their "zero-numbers"
So for A that's an extra $200/month, and B it's an extra $350/month, giving $2400 and $4200 extra a year respectively
creating an ETP(A)=8%, and ETP(B)=4.2%, and remember the rich guy bought a more expensive house!
Note: had they purchased the same house ETP(B)=2.4%[/i]
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the math for figuring this out was HARRY!
P = principle
i = interest/year
n = years
q = equal payments/year
M = equal payment ammount
M=Pi/[q(1-[1+(i/q)]^-nq)]
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Originally posted by Bobboau
if someone who is richer does not spend there monie then they don't pay higher taxes, it is a taxation on luxuries.
no - it's a taxation on LIFE, and the tax burdeon will always fall in greater ammount onto the lower and middle classes -- look at the math i just crunched out for you
the rich are that way because society enabled them to gain their position, and a higher percentage tax on them is required to affect their purchasing power in the same way you affect a poorer persons
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someone who only buys low or no taxation items will pay no or little tax, are you telling me that if you were put in charge of formulateing how what items were taxed you could not make it fair?
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there is NO possible way to make a sale tax "fair", they are strictly regressive --- look at the math is just did*
*the only way to make them not burden the poor is make them entirely on the rich and that's not fair either, nor will it raise enough revenue
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There are too many types of tax.
Income tax only is the way forward, with a good tax-free threshold for the lower income group.
All the rest can DIAF....
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a "tax free" threshold then a tax ammount based _roughly_ on your equal dollar value is the only "fair" tax - and the rich still have more buying power, so they shouldn't be *****ing
the idea that "getting taxed more" (they're not, because tax ammount must be considered in equal dollars) is "punishing" is stupid
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Originally posted by Kazan
there is NO possible way to make a sale tax "fair", they are strictly regressive --- look at the math is just did*
To be honest that looks like a lot of sleight-of-hand, but it's something I hadn't seen before. Can you link to any articles about it?
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how does the math look like sleight-of-hand? i laid out all the calculations for you?
any economics book on tax policy should have this all laid out, but i don't have any textbook names right now
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Lots of math is sleight-of-hand. Mark Twain said, "There are lies, damn lies, and statistics." I'd want to see a textbook or an economics paper explaining this.
And incidentally, this wasn't in my economics textbook in any of the three ECO courses I took.
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imagine that - tax theory not being in a CEO class :rolleyes:
it's pretty simply bro - no sleight-of-hand there, and the fact you're claiming that is grasping at straws
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I'm not grasping at straws, Kazan. I'm asking an honest question, and I deliberately worded my posts so as to come off the least accusatory as possible. I've studied a fair bit of economics and seen none of what you're saying. Forgive me if I don't believe you without a bit more proof. :rolleyes:
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excuse me for being incredulous of someone calling math "Sleight of hand" when it's all laid out before them so they can run the numbers themselves
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I told you... statistics and math can often be manipulated to show whatever they want. I want to see an economics paper or an article or a reference that explains this in some depth.
I've asked you three times now to provide a link or a secondary source and all you've done is blow off steam. This leads me to think that your theory isn't as bulletproof as you'd like us to believe.
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goob...this isn't that difficult...we were talking about this in my HS econ class a few days ago.
I'm going to use a stupid example. Persons C and D, coz Kaz already used A and B :p. Person C makes 1k a month, person D makes 2k a month. Persons C and D are friends, and decide to stop and have a burger together, and pay for their own meals. Lets say they have a big meal and each pay $5 in tax for their meals. Person C just paid half a percent of their income for that meal, person D paid a quarter percent of their income for their meal. Person C just paid twice as much tax as Person D. The only formula used here was that tax rate = (Amt Collected in Tax/Total Cost)*100 (percentage formula)
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That's only an isolated example. You can't consider isolated points on the spending spectrum, you have to compare the total aggregate spending against total aggregate income. Over an entire year, Person C's spending habits are going to be different than Person D's spending habits. Person D might eat fast food twice as often as Person C, for example.
This is why I said that the numbers could mean anything you want them to mean, and why I wanted to see an economics paper or description of the theory. :)
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Goober, you're right to be suspicious. The reason you haven't come across the idea of "Equal Dollars" even after much economic study is the same reason you are unlikely to have encountered Afrocentrism in a serious History course or Intelligent Design in a Biology course: it's quackery. If anyone doubts this, please go to the nearest bookshop and library and see if there is anything in the Economics textbooks about it. If you don't want to expend the shoe leather, try Googling the phrase (http://www.google.com/search?q=%22Equal+Dollars%22&sourceid=opera&num=0&ie=utf-8&oe=utf-8), and see if you find anything on it that's not part of a far-left web site. It's a socialist political preference masquerading as an economic law.
Diminishing marginal utility does exist, of course, and it describes the process by which people generally get less and less pleasure or value from each additional good, be it apples or televisions. But it's a silly mistake to confuse the goods you buy with the means of exchange you use to pay for them. What evidence is there of diminishing marginal utility of money itself?
Bottom line: no matter how much Kazan may arrogantly claim to be speaking on behalf of plain economic realities, either centuries of orthodox economics is correct or Kazan is correct. But both cannot be.
Where the theory really falls down is in making claims about the utility of the top slice of someone's income without taking any account of the disutility of working to earn it. In real economics, a person does not work an extra hour a day or so unless the utility of the wage is greater than the disutility of giving up on that hour of leisure time every day. The longer a person works, the keener he is to stop and do something else. Most of us have probably experienced that in practical everyday life: the first hour or two at work is fine, the next couple burdensome, another two a real drag and the last couple of hours seeming like they'll never end.
A person will therefore work up until the point where the disutility of work is as great as the utility of the wage he gains from it. This is true irrespective of the wage he earns: whether someone is a millionaire or a pauper, if he gets greater utility from the hourly wage he receives than from an extra hour of leisure, he will work another hour. If not, he won't. Obviously, people will each make different calculations based on the sort of work they are doing and the wage they receive for it, but it's like ignoring one blade of a pair of scissors to reach judgements about the utility of income without considering the disutility of work. As soon as you include both together, you see through the mirage of considering only the income, and not at all the effort necessary to earn it.
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You actually forget that this kind of economical theory works fully only in theoretical conditions...
In reality you cannot reliably measure the marginal utility of your working hours neither adjust them as much as you want, you're basically owned by your company unless there is a welfare system that backs you up.
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One of the other great economic fallacies apparent above is the idea that if you impose a sales tax of, say, 23% on a good, then its price will automatically rise by 23%. If Kazan were an informed and honest reader of economics, he would have pointed out the mistake in this assumption by now.
Imagine a situation where no one has to pay any income tax, then suddenly a 23% income tax is introduced. Do they really suppose everyone's wages would rise by 23%? Of course not. Companies could not afford to give everyone that much extra money. (If they could afford that, wages would already be very much higher as businesses would bid up the wages of staff in the hope of attracting the best workers.)
Instead, wages would rise, so that employees didn't have to cover all the costs, but not by the full 23%, which would mean employers having to cover all the costs.
What applies to the price of labour (the wage) applies to the price of all goods. If the public was willing to pay an extra 23% without cutting the volume of goods it bought, you can bet companies would already have raised their prices accordingly. But of course, people couldn't afford to pay an extra 23% for the same goods. Again, prices would rise, but again it would be to a midpoint somewhere between the old price and 23% more.
Look at it this way.
A company is charging $50 for a CD player. Then suddenly the government introduces a $10 tax on all CD players sold. If it increased the price to $60, it would still earn the same $50 as before on each CD player it sold, but they would sell a lot fewer CD players at that price. They would end up with lots of unsold stock at the end.
Alternatively, if they left the price at $50, they would take home only $40 on each CD player. Because the price hasn't changed, they would have just as many people wanting to buy CD players as before, but they can afford to supply far less of them when they are getting only $40 back from them instead of $50. They would end up with a lot of customers willing to buy the CD players at that price, but unable to obtain one.
The solution is to raise prices to the point where supply and demand are equal again. At, say, $54, fewer CD players will be bought than at $50, and because the company gets $44 on each sale ($54 - $10 tax), it can afford to supply more of them than if they were taking only $40. The price will change, but a new equilibrium would be found. Certainly that equilibrium will not be the full percentage of the tax.
And even if it were quite a big one-off increase in prices, it would be offset by the big tax cut everyone who pays income tax would receive. Would it matter if cars cost 18% more if your income rose by 25%? The only difference would be you would now have a much bigger incentive to work extra hours, because the wages you get to keep for yourself have risen, and a lower incentive to spend, because prices have risen. This is itself a good thing in a country where many hope strongly that the capital account surplus will be reduced by an increase in domestic saving, thereby ensuring that the current account deficit will be lower.
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Finally, for now, let's look at this idea that a national sales tax would somehow be unfair.
Take two people who are the same in every economic way but one. They intend to spend 70% of their income and save 30%. The only difference is X earns twice as much as Y.
Well, he may earn twice as much, but because they spend the same share of their income, he also spends twice as much. That means that with a national sales tax he pays twice as much tax. Is this wrong? I don't see why.
Both men have a stake in protecting their property from invaders and criminals and so on, but because X has bought twice as much as Y, he has twice as much stake, twice as much to lose. So he should pay twice as much tax - not 1.5 times as much or 3 times as much or 30 times as much. Twice as much. Fair is fair.
Kazan says that in fact, things aren't really like this. The rich spend a lower proportion of their income than the poor. Maybe so. But if they are only spending, say, 20% of their income in a particular year, they are only getting the benefits of their money to that amount. The important figure therefore is not how much they earn but how much they spend. If X is only spending 10% more than Y even if he earns twice as much, then he must be living in a very similar house, must eat very similar food and enjoy very similar luxuries. Sure, he'll be a bit better off each year in terms of what he buys - about 10% better off. Then that's how much extra tax he should pay! With a national savings tax he would.
You might say that X has lots of savings he can spend later on, and those benefits should be taken into account, too, because they are worth a lot more than 10%. But they will be! With a national savings tax, as soon as he spends those savings in ten or thirty years time, he will be paying the sales tax on whatever he buys. The only difference is he is paying less now and more later.
If he never takes his savings out of the bank, that's fine too: there is nothing anti-social about this. It simply means that all his life, because of his savings, banks have had more money to loan out to the rest of us, creating jobs and wealth all over the economy. The money is not withdrawn from use by its being saved and then loaned out by a bank. It is simply transferred to the current use of people who borrow from banks to invest, to start a company or to take out a mortgage.
Whichever way you slice it, a national sales tax is fair. If someone spends half as much as you, he is only getting half the benefits you do, so he pays half as much tax. If he spends twice as much as you, he will get twice the benefits you do, and so will pay twice as much tax. If he saves now and spends later, he'll not pay that much tax now, but he'll pay more tax later on. If he saves now and doesn't get around to spending later, he'll not get more benefits now or later, and he won't be charged extra taxes now or later either.
Unfair? Don't make me laugh.
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You forget that saving money generates extra money, as most people with a noticeable cash surplus will make investments on that.
And out of theory, if you can save $1000 a month you aren't likely going to buy stocks, while if you can save $1000 you're quite likely to reinvest them.
This wouldn't be taxeable money since stocks and other financial tools aren't affected by a sales tax.
Higher incomes have the advantage because in the market (look both into theory and real world) once a certain threshold is passed "money will start generating extra money".
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I don't know who Aphomojb is, or why he thinks that just because he makes mile long posts he can get away with posting total and completely büll**** - but WOW what a pile of steaming horsehockey
first A) just because you don't get a "good result" on google doesn't mean the term is invalid - try googling for a lot of things and you're going to get corrupted results
let me first debunk his "Quackery" bull**** - because first i dubbed a term for conversation, to make it easy to refer to "Dollars adjusted for the Law of Diminishing Utility"*
*i have been using "The Law of Diminishing Return" a little loosely, on income you are specifically dealing with the "The Law of Diminishing Utility"
a little more indepth analysis
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The progressive tax is the most conservative economic policy in capitalism - those who are capable of giving more back to society, since society has given them more, are responsible to do so - don't believe me? Adam Smith vs. George Bush on Taxes (http://www.commondreams.org/views01/0122-01.htm) - don't believe them? READ HIS BOOK
So the "centuries of orthodox economics" and I are in agreement.
Your bit on disutility is inapplicable, especially for salaried employees, and people who make their money off the stock market, etc. So in otherwords it's completely irrelevent in the realm you used it.
there is an entire post debunked
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On taxation:
HELLO Total cost of product = Initial cost + Tax Cost
so Cost(net) = Cost(item) + Cost(Tax)
if we state them proportionately
Cost(item) = 1
Cost(tax) = .23
Cost(net) = 1.23
we then just have just made a coefficient for TOTAL COST OF PRODUCT that we then apply to prices.
The cost of the product from the perspective of the company did not rise, they're not paying their employees anymore.
However the cost of the product from the persepective of the consumer did rise, and they're not receiving any additional income.
companies pass the tax onto consumers - they even tell you they're doing it
there's another entire post debunked
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Savings ARE antisocial
because of his savings, banks have had more money to loan out to the rest of us
however you are overlooking the fact that this only works in theory loan demand is NOT elastic to interest rate, infact in most places it's very inelastic in terms of interest rate.
we know this from expirience
The only field where there is noticeable elasticity of loan demand in relation to interest rate is long term loans such as 30-year and 40-year mortgages when the mortgage is a fixed-rate mortgage
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Your entire post is based off of neoliberal* ec
Even when the richer person SPENDS MORE they're still paying a lower percentage of their income in taxes. - You completely fail to do SIMPLE MATH OF
Effective Tax Rate = (Taxes)/(Income)
Furthermore not only does your claims about history contradict history, and Adam Smith himself, but your later claims about loans contradict all known capitalist history
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Kazan, you just got completely owned by somebody with only three posts. If I were you, I'd quit now and hope the thread slips off the page quickly and quietly. :lol:
Just to tie up loose ends...
1) A progressive tax is not a conservative philosophy. On the contrary, the idea that certain classes of people must be taxed more than others ("from each according to his ability, to each according to his need" - great in theory, horrible in practice) is a fundamental socialist philosophy.
2) Companies can not pass the entire burden of their tax onto consumers. Neither can they absorb the entire tax themselves. Either the supply or the demand will shift, causing both parties to absorb part of the tax according to their respective elasticities. This is one of the fundamental concepts taught in any Introduction to Economics courses. If you don't know this, you have no authority on which to discuss the economics of taxation in the first place.
3) Savings is far from antisocial. It increases aggregate equity, which enables consumers to pay down debt. Paying down debt is A Good Thing (tm), as you have ranted so often about in your posts about the U.S. deficit.
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goober5000 if you consider someone posting three long posts of complete and total bull**** "owning" then you have some pretty large intellectual problems
because you're saying he "owned me" because you agree with him, not because he's correct
1) Adam Smith is the guy who invented the idea of the progressive tax - THE FATHER OF CAPITALISM, the progressive tax, is a conservative thing
2) Companies _DO_ pass the entire burden of sales tax onto the consumer - this is one of the FACT taught in any good intro to economics, and it's a fact you should have known your entire damn life from expirience
3) if those people are in debt then their not "saving" they're paying down indebtedness -- the money is still moving through the economy
true "savings" (ie money sitting in a bank, that you don't owe to other people) slows the economy - we know this theoretcally and empirically
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Progressive taxation is a fundamental of capitalistic economies, it is one of the first things they teach you in economic classes.
Socialism is another whole matter, and it is to each according to his own contribute. "Each according to his need" is pure communist theory, which has never been applied in practice.
Kazan is absolutely right when he says that a flat sales tax is unequally appliable.
You are forgetting a fubdamental thing of the economic system: Saving potential.
There are basically two kinds of savings, invested and uninvested one, but both counts as extra income.
If you invest your savings, say by putting it into a bank you are getting an extra income, which will lower the global amount you're taxed for, and more you will save there less you will proportionally be taxed while your income will get higher and higher.
If you don't invest your savings then you are microscopically (on indivual basis, multiply it for a large enough quantity of individuals and you will witness all negative side effects, like in 1929) artificially making a good (money is a good, this is base economics) scarcer and thus altering the balance of the economic system, while increasing the value of your saving on long term and thus getting an "income" there too (basically the same thing as if you would invest on gold or similar value stuff).
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Adam Smith bio (http://www.adamsmith.org/smith/)
There's a variety of thinktank articles on said website; interestingly, a lot seem to be about calling for lowering of taxes and the use of flat rather than progrssive income taxation. But I'll leave others to pick through all that malarky.
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aldo: then that site isn't holding to Adam Smith and shouldn't be calling themselves the "Adam Smith Institute"
it's just like those ****ing antifirst-ammendment assholes in the "Constitution Party" calling themselves "The Constitution Party"
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I am not in a position to comment on the validity of said site. I just point it out, and leave it to other people to make up their own opinion.
Albeit this may be of reference - http://www.adamsmith.org/smith/won-b5-c2-article-4-ss2.htm
EDIT; link sorted. wonder where that . came from....
oh, and for those who can't be bothered backtracking from said link to the index;
http://www.adamsmith.org/smith/won-b5-c2-article-4-ss7.htm (on taxes of luxury goods. I think. Hard to read this 18th century stuff...)
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aldo_14: 404 (remove the period at the end and it works)
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Quote from the Article:
"It is thus that a tax upon the necessaries of life operates exactly in the same manner as a direct tax upon the wages of labour. The labourer, though he may pay it out of his hand, cannot, for any considerable time at least, be properly said even to advance it. It must always in the long-run be advanced to him by his immediate employer in the advanced rate of his wages. His employer, if he is a manufacturer, will charge upon the price of his goods this rise of wages, together with a profit; so that the final payment of the tax, together with this overcharge, will fall upon the consumer. If his employer is a farmer, the final payment, together with a like overcharge, will fall upon the rent of the landlord. "
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I don't who you are Aphomojb, but you have just become very high on my bow down to list.
:welcome:
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liberator: and yet nothing he said is factual - and was demonstrated to be false decades ago
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Aphomojb, I hope you've been lurking a while to know what you just got your self into :)
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yeah - into trying to look smart, when what he's posted is completely wrong
and i fail to comprehend how intelligent people like you (bobboau) and goober5000 can be so ignorant
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Oooh, is it insult time already? I'll need to fetch my profanisaurus (http://www.milkinfirst.com/dictionary/profanisaurus.htm).
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ignorant is not an insult, stupid is an insult, retarded is an insult
ignorant just means they failed to learn something/were not taught something
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It depends on people's stance...
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So if I were to call you ignorant in another thread, then you wouldn't be offended?
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you'd have to demonstrate what im ignorant about, i've already demonstrated what their ignorant about to make it clear that it is fact
the only person who gave and decent showing of support for their opinion based their position on three fundamental assertions, each assertion being false, and having known to be false for decades
they didn't know better, he should have
they are ignorant, he is an idiot
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Originally posted by Kazan
you'd have to demonstrate what im ignorant about, i've already demonstrated what their ignorant about to make it clear that it is fact
the only person who gave and decent showing of support for their opinion based their position on three fundamental assertions, each assertion being false, and having known to be false for decades
they didn't know better, he should have
they are ignorant, he is an idiot
Well, you've not really. You've said they're ignorant, which is a wholly different thing.
From what I can tell you've posted one link (from the 'Common Dreams Newscentre', which may or may not be biased - i don't know), had a go at Goober because he asked for some form of explanatory information, had a go at me for posting an innocuous link to a thinktank containing Adam Smiths bio and stated a number of facts without actually giving a backup source (such as 'only works in theory', 'demonstratably false', etc without actually giving the demonstration).
In the absence of anyone actually posting a backup source to their particular arguement, the only thing I have to go on is who is the most convincing & persuasive person at arguing their position. Which would be either Goober or Aphomojb, because they've not had to use an all caps, bold, red text sequence or the word 'bull****' once.
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aldo: i did the freaking math right in front of you, contrary to goober5000's assertion math != statistics
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Then a secondary source shouldn't be a problem in asserting logical validity.
Offhand, have you factored in staple goods exemptions? Or the possibility of combination income+Sale/Value Added Tax (secondary issue) as in the EU?
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staple good exemptions are irrelevant - both the poor and the rich buy stable goods
the tax proposed is not the same as what you have in britain, and what you have in britain is whack as well
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I would wager that's the whole point of staple goods exemptions for VAT / sales tax - that way you only tax (or tax highest/er) the luxury goods for which the primary (or most frequent) consumers are the middle / upper class with the highest disposable income.
So, for example, you don't charge tax for people buying books, but you do for TVs. You don't charge for bread or fruit but you do for cake & sweets, etc.
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people in every tier buy things considered "luxury goods", the effective tax is still higher for the person with less income
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But not in (raw) monetary terms.
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actually it is - see previous calculations
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Person with more money > buys more > pays more sales tax
Surely?
At at the end of the day, I presume you want people with most money to pay the most (per individual) as per income tax. All I could see from your calculations was based upon an assumption that the upper-class spend less money on luxury items; the other big calculation was upon a house purchase and unless I'm not mistaken those are fairly infrequent events in an individuals life to make an overall derivation from (also, what about multiple house purchases, or different rates of changing home?).
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it's a double fallacy
A) "person with more money buys more" is not necceasrily true - infact it's less than 50% probable
B) they are still proportionately taxed less due to fixed-price-items
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b) is only proven true if a) is true, unless I'm mistaken (because I'm sure you'd need an idea of the average higher-sales-band purchase to work out the proportionate taxation). And again, the raw numbers should mean more money is coming from a rich individual than a poorer one.
So...is a) proven? Can I see the stats please?
(and also any demographic info of customer income vs purchase volume / cost)
EDIt; actually I'm off to bed now, so no hurry.
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A) is not true, like i cited earlier they looked into it - most people with net worth >= 1mil are very frugal
however - even IF the richer person buys more their effective tax rate is STILL lower - refer to the mortgage example earlier
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But the mortgage example is a single purchase; not a long-term illustration of relative spending by the 2 demographics. For example, what about house furnishing costs (are we assuming neither will buy stuff to go in their house here)?
For example, I just bought a 700 quid TV; the VAt component (17.5% of that price) is a large taxation RE my actual income. However, I only buy that one item once every few years, and only once. Whereas someone with more money than myself may buy not only a more expensive telly, but more often and in a larger quantity - it's the stats on that sort of issue which interest me.
And that is of course assuming you apply purchase tax to a house (you don't in the UK, I think; a different and notably ****ed up tax based upon the property value applies); i.e. would a house costing below xx (of the local average, perhaps) be exampted or lower tax banded?
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aldo it demonstrates that for SIZE of purchase the rich guy is still effectively paying less
Whereas someone with more money than myself may buy not only a more expensive telly, but more often and in a larger quantity
the quantity assumption is exactly that: an assumption
let's calculate something here
you make what? 20K/year?
using the vat as T=17.5% that makes (Total Purcase Cost)=(Price)*1.175
say you bought a 700 quid tv that's 822.5 quid w/ taxes effectively 0.6% on your income
say a guy making 40k/year bought a 1000 quid tv - that's 1175 quid w/ taxes, that's effectively 0.4375 on his income, if he bought the 700 quid one the effective tax rate on his income is 0.3%
when figuring out comparative tax burden it is only appropriate to use equal priced items. Doing anything else is making assumptions that break down in real life.
there is simply no possible way to make a sales tax fair, and have the government have enough income -- infact a NST would cause an economic crash
It would do this two ways A) make the government debt skyrocket even faster (which causes a long term problem)
B) consumers would spend less (effectively, ie purchase fewer items) because the cost of those items when up, and their incomes did not. a NST is effectively instant inflation
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"no possible way to make a sales tax fair, and have the government have enough income"
so are you saying there is a way to make it fair that just isn't practical?
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VAT is included in the price; so the TV was £700 including tax. Raw cost ~ 595, so tax is £105
My income is 1200 per month on a 6 month contact, expand that to a year for sake of this and it's roughly 14400. + completion bonus(es), that's... ~£16,400. Approx 0.64% tax (I think my income tax is 5%, incidentally; I just scrape into the lowest bracket, but I haven't factored my deductibles for self employment into that yet)
Also, I'm not just meaning someone buying the same TV; I'm meaning someone purchasing a new TV with improved spending power (i.e. can & will spend more as they have more)
I bought a £700 TV because I don't make much (sod all). But, had I earned more and had a longer-term contract, I would have went for something a bit bigger and more expensive. At 40k, I wouldn't just be buying a bigger TV, but much more stuff to go alongside it - new hifi, dvd, etc. Of course, at £40k I'd probably also be paying off council tax for a flat, and have the cost of furnishing that, if you want to go really assumptative about it.
So what I need to know, is both the value of individual items bought by demographic, and also the quantity of them over a set time period (say 1 year).
Because obviously I can't go solely by myself as an example; but i do know that with more money, I'd buy both more items and more expensive items (disposable income). I'd imagine, as an aside, my ratio of money spend on necessities : money spent on luxuries would be vastly different, too.
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I see it as the moral responsibility of the affluent to help provide for the less fortunate. It's just the right thing to do. It's even a basic tenet of Islam IIRC, and charity to those in need is mentioned plenty of times in the Bible.
And if some of them are going to be stingy bastards about it, well that's what the income tax and the IRS are for. (Hate to say it but they're a necessary evil.)
People should be able to choose which avenue to take to help one another -- through their church, their community, through taxes, or whatnot. It's everyone's responsibility to pull everyone up, not just the government or just the community.
In any case, I think that a National Sales Tax would exascerbate the rich-poor divide. It would also reduce the amount of money the government gets, and would slow the economy a lot as people restrict their purchases mostly to essentials (food, clothes, rent).
The tech sector in particular would implode for lack of sales and expensive production costs, and without that edge India and China will eat us alive. (Again, the international supercorporations, with lots of manufacturing in Asia reap the benefits, but do we?)
As the government gets less money, programs to help the poor and those unable to work (Social Security, welfare) have to be cut. "Starving the beast" of government is not what I had in mind. It's a government of, by, and for the people, and that's something to be cherished and protected, not starved, damnit.
Besides which, I can think of at least two states that would be hit very hard by this: Delaware and Montana. Both pride themselves on having no sales tax and attract a lot of buyers there. Both states would see a massive collapse in their local economies as stores and businesses see no reason to set up shop there anymore.
Also, aren't the Republicans supposed to be the party of states' rights? Funny how things change so quickly when the Republicans control Washington. :p
Mmkay. I'm done.
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I would not say a sales tax as the one taxation method is correct, i.e. replacing income tax. But I think it should have merits running in parallel to, for example, PAYE or progressive income tax.
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a small sales tax (5-8%) is fine, locally, which is what we already have
that funds schools, local government projects, etc
the federal government could not run off the income from a sales tax, it would also create an instant economic crash if it were to try to
this national sales tax would eliminate our progressive income tax and replace it with a sales tax (which are inherently regressive)
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BTW...
Historically (at least in some parts of Europe) the income tax was made to supplement the existing sales tax due to insufficent taxation income for the government, and that was in middle nineteen century, where you couldn't certainly call for state spending...
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Originally posted by Bobboau
"no possible way to make a sales tax fair, and have the government have enough income"
so are you saying there is a way to make it fair that just isn't practical?
actually no - im saying that both are unobtainable
to make it so it doesn't put most the tax burden on the poor you'd have to make everyone under a certain income exempt, but that's not fair to the people over that income
even with everyone paying into it the government still wouldn't have even revenue
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Wow...another reason to move to Canada :)
Only 15% total sales tax in Ontario :D (thats 7 precent federal and 8 percent provincial). I always loved shopping in the states where you had no sales tax whatsoever. That was wild.
BTW: What would they do for tourists in the US?
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this would kill tourism as well
generally it would cause one huge economic crash because consumer purchasing power would floor, so their purchasing would floor
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Thank God the state of Texas has no state income tax. :)
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Originally posted by IceFire
BTW: What would they do for tourists in the US?
Claimback ala VAT I'd imagine; of course, the dollar is so weak justnow (record low compared to the euro, for example) any sales tax wouldn't be a massive deterrent.
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Its still 0.82 cents Canadian to the American dollar. So its important :D
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Originally posted by Thrilla
Thank God the state of Texas has no state income tax. :)
maybe that explains why your schools suck so much
and why the president from that state imposed that stats sucky school system (no child left behind) on states like mine that pwned texas, and has caused our educational quality to be dragged down
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You think they would put state income tax money into the education system?!?! You think wrong.
You think people in Texas are stupid? Please...
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Putting money into the educational system? Are you mad?
That would screw all the investment on TV "education"!
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The thing about TV Education is that it is one-way, you can't argue with a TV, so you are given opinions etc with no choice to debate them.
That is why Tutors are vital ;)
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Originally posted by Thrilla
You think they would put state income tax money into the education system?!?! You think wrong.
You think people in Texas are stupid? Please...
EVIDENCE genius, EVIDENCE
your education system ranks 49th in the nation
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Originally posted by Flipside
The thing about TV Education is that it is one-way, you can't argue with a TV, so you are given opinions etc with no choice to debate them.
That is why Tutors are vital ;)
Err... i shall put the [Sarcasm] tags next time...
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Originally posted by Kazan
your education system ranks 49th in the nation
Just out of interest. Who's worse?
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alabama or lousiana IIRC*
these previous ones were as of 2000
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ooh.. texas has managed to move up since bush left - and yes that's since he left, they tossed out all of bush's state education iniatives
they're 33rd now, tied with west virginia
50th right now is new mexico, nevada being 49
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Where are you checking out Kaz?
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doh.. i should have posted that link... now i've lost the URL