[Bobboau]

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

[Kazan]

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]
------------------------------------------------------

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)]

[Kazan]

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

[Bobboau]

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?

[Kazan]

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

[Clave]

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....

[Kazan]

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

[Goober5000]

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?

[Kazan]

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

[Goober5000]

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.

[Kazan]

imagine that - tax theory not being in a CEO class


it's pretty simply bro - no sleight-of-hand there, and the fact you're claiming that is grasping at straws

[Goober5000]

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.

[Kazan]

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

[Goober5000]

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.

[Anaz]

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 . 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)

[Goober5000]

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.

[Aphomojb]

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, 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.

[Zarax]

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.

[Aphomojb]

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.

[Aphomojb]

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.