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> What Fiscal Policy Are You Voting For, What is the best taxation policy for our economy
Eeyore
post Oct 12 2012, 05:33 PM
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In the First Presidential Debate thread, a sub-debate has emerged about the best tax policies for the country. This is a conversation I am interested in. Here are several of the posts on this theme that stem from a comment about the best tax policy for our country.



QUOTE(Gray Seal @ Oct 11 2012, 01:39 PM) *
What proof is there that raising taxes on the wealthiest of Americans will negatively impact the economy?

What proof is there that raising the taxes of anyone will negatively impact the economy? Would raising your taxes impact you? How about if the poorest had their taxes had their taxes raised? Prove that is a bad thing. Oh where, oh where is the proof?

Raising someone's taxes always hurts them. It is always negative. Some people may agree to pay more but that would be a rare bird. Most people do not care if someone else has to pay more. Some want to raise other people's taxes, "It does not hurt me, could help me, so I am for it."

Is it not obvious that having money taken from you without your consent is a bad thing, a negative thing? Is it not obvious that people who have money taken from them do not have that money available to invest for productive means?

It is a common theme in the United States to vote so you can get free stuff or at least get it on the cheap. Make someone else pay for it. As long as someone else, in this case a wealthier person, is the one being gored it is not a negative impact.

Taxes should be fair and low. Arbitrary and high are not fair nor good and such means of applying taxes are negatively impacting the economy. It is common sense to recognize this to be true. Arbitrary taxes can benefit some at the expense of others. Because some benefit does not mean the overall result is good.



QUOTE(Amlord @ Oct 11 2012, 01:49 PM) *
QUOTE(Gray Seal @ Oct 11 2012, 02:39 PM) *
What proof is there that raising taxes on the wealthiest of Americans will negatively impact the economy?

What proof is there that raising the taxes of anyone will negatively impact the economy? Would raising your taxes impact you? How about if the poorest had their taxes had their taxes raised? Prove that is a bad thing. Oh where, oh where is the proof?

Raising someone's taxes always hurts them. It is always negative. Some people may agree to pay more but that would be a rare bird. Most people do not care if someone else has to pay more. Some want to raise other people's taxes, "It does not hurt me, could help me, so I am for it."

Is it not obvious that having money taken from you without your consent is a bad thing, a negative thing? Is it not obvious that people who have money taken from them do not have that money available to invest for productive means?

It is a common theme in the United States to vote so you can get free stuff or at least get it on the cheap. Make someone else pay for it. As long as someone else, in this case a wealthier person, is the one being gored it is not a negative impact.

Taxes should be fair and low. Arbitrary and high are not fair nor good and such means of applying taxes are negatively impacting the economy. It is common sense to recognize this to be true. Arbitrary taxes can benefit some at the expense of others. Because some benefit does not mean the overall result is good.

This may be the Post of the Year.

Thanks Gray Seal. I think just about everyone should agree in principle with what you've said but we know that some don't agree. They think that harming another (taxing them more heavily) is fair. As the President put it "At some point, you've made enough money!".

What these people don't realize (or don't seem to, anyway) is that these people's pursuit of money employs people. Does Bill Gates need Microsoft? Couldn't he just walk away? Should Jimmy Haslam (who just bought the Cleveland Browns) shut down all Pilot/Flying J's since he has enough money? Doesn't these men's pursuit of "more" employ a lot of people?

Economist Walter E. Williams always uses the analogy that government taxes are legalized theft. They take from some people and then they dole it out to people (sometimes the same people). The mugger on the street feels that he has more of a "need" for the money in your wallet than you do. The government has the same idea: "we will decide who needs this money, so hand it over". This is how government bureaucrats gain power: by taking from some people and giving to others.



QUOTE(Gray Seal @ Oct 12 2012, 08:14 AM) *
QUOTE(entspeak)
I said "negatively impact the economy." Obviously paying more money in taxes is always a negative - nobody likes to do it, but that wasn't the question I asked.

I may be introducing a new concept. Take the entire economy and let's break it down to its individual parts. That would be the individuals within the economy. Individuals are making decisions about what they wish to do within the economy. Individuals are being harmed by taxes. It takes away from their choices by force. If they are willing to give the money it would be a contribution. The individuals have no choice as force is being used to take the money. They are being taxed. These individuals now have less ability to invest in their own business or to be productive.

If you take the accumulation of all of these parts which are being harmed it is logical to conclude that the whole is being harmed. bad + bad + bad = bad

I was responding to your question by looking at the parts of the economy to determine what is happening as a whole. It is not a proof. It is a concept. I was suggesting you are asking for a proof which is very difficult to do (as the variables in a macro economy are so numerous). But, concepts are understandable. Simplifying, in this case looking at the parts which make up the whole, can lead to better comprehension and understanding. It is not a proof but it is an understanding.



QUOTE(Amlord @ Oct 12 2012, 08:55 AM) *
QUOTE(entspeak @ Oct 12 2012, 04:55 AM) *
QUOTE(Amlord)
Politicians, even liberal politicians, all agree that raising taxes in a slow economy is a bad move.

Again... do they? In the article you cited, liberal politicians didn't have a problem with raising taxes, they just wanted to raise them for those making over $1M. Please provide proof that all politicians, even liberal ones, agree that raising taxes in a slow economy is a bad move.


President Obama agreed to extend the current tax rates because he didn't want to raise taxes during a downturn. I cited the quote. I should not have used the term "all", so I'll retract that.
QUOTE(entspeak @ Oct 12 2012, 04:55 AM) *
QUOTE
The reduction of rates doesn't result in the reduction of revenues. It never does.

blink.gif On what planet? If you reduce the tax rates, revenue is reduced. You are taking in less money.

Look at the historical tables of income collection.


President Bush cut taxes in 2003. Receipts to the treasury in fiscal year 2005 (which starts in 2004), were higher both in terms of absolute dollars and in terms of percentage of GDP every year after that (except FY2004 itself where the percent of GDP was 0.1% less, total receipts were still higher) until the recession hit in 2007. 2007 is still the highest amount the federal government has ever collected ($2.568 trillion).

The same happened during Reagan's tax cut era which started in 1982 (FY1983).

Tax rates don't change tax revenues all that much. Here is a fairly straightforward explanation.

QUOTE
The clear message from the Wall Street Journal chart is that the gold line (tax revenues) has been pretty steady at about 18-20% of GDP for 60 years even though the other line (tax rates) fluctuated from a high rate of 91% to a low of just under 30%. Despite changing tax rates, the actual tax revenues as a percentage of GDP really have not changed much.


Tax receipts are relatively stable because people will only pay what they feel is fair.

QUOTE
Does soaking the rich work?

Unfortunately, tinkering with the tax code seems to be irresistible to almost all politicians. In addition, raising taxes on the ‘rich’ is a populist theme many politicians have adopted. This idea is widespread even though there is a very good chance that higher tax rates will not lead to higher tax revenues. Our political leaders often misunderstand the long-term consequences of tax law changes and they advocate policies that bear little or no relationship to economic reality.

As you can see from these charts, soaking the rich by raising tax rates generally does not work. And, there can be collateral damage in that high tax rates almost always reduce economic activity which hurts everyone. If the goal is to maximize economic growth and generate adequate tax revenues, we know what makes sense.




My questions for debate are:

What tax policies are you voting for this November?

Why do you see your policies as the best for our country in the current economic and fiscal climate?




This post has been edited by Eeyore: Oct 12 2012, 05:34 PM
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scubatim
post Oct 13 2012, 12:23 AM
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QUOTE(Dingo @ Oct 12 2012, 07:11 PM) *
QUOTE(scubatim @ Oct 12 2012, 05:06 PM) *
QUOTE(Dingo @ Oct 12 2012, 07:00 PM) *
QUOTE(scubatim @ Oct 12 2012, 04:56 PM) *
If I lease my car and rent my home, do I pay taxes?

You don't own them so of course not.

So it is possible to hide from paying taxes just like people do today on income taxes. I was getting interested in this plan until I found the obvious flaw.

Whose hiding? The owner of the house pays and the owner of the car pays. One could say indirectly you contribute to the tax through pass along costs.

Actually, millionaires can hide. Make hundreds of millions and lease expensive homes and cars. Leave the tax paying up to the business owner.

So the banks will pay a large amount of the taxes in America with this plan?

As a small business owner, would I pay taxes on my personal assets and a separate tax on my business assets? Do I get two deductions then?

Who does the inventory on my assets? Do you assess my jeans every year? Who determines the value of everything? What isn't included? For instance, I have on my fireplace mantle about eight photos of family in hand made picture frames. How is this assessed?

In my garage, I have a dozens of drill bits. Do I have to fill out extensive inventories and provide their individual values?

What about my daughter's hair ties. I mean she is four, but they are hers. Do they go towards my total asset value, or does she make her own list?

Who keeps track of everyone's assets? The government is going to keep track of the value of everyone's assets?

This post has been edited by scubatim: Oct 13 2012, 12:26 AM
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JohnfrmCleveland
post Oct 13 2012, 12:35 AM
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Scubatim, if you are trying to pick a fight with Dingo, do it somewhere else. Your goofy little detour is ruining the thread.
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Dingo
post Oct 13 2012, 12:44 AM
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An assets tax is just an extension of the property tax. The deduction would take care of most of the little stuff you are talking about. Mostly you would be dealing with big obvious stuff and I'm sure there would be an averaging schedule so you wouldn't have to itemize everything. Of course the equity in your home and business would be taxed at the flat rate. Farms would be a problem if they are priced for potential development. There has to be real long term clarity in zoning and pricing of farm property. As for things like money, gold and jewelry the threat of forfeit and even further penalties if they go undeclared I think would be a pretty solid deterrent. Who wants to risk a 100% loss to avoid say a 4% tax. You can't even declare it stolen if you haven't payed a tax on it.

The simplicity, transparency and fairness make it heads and tails better than just about any other tax.
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scubatim
post Oct 13 2012, 01:03 AM
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QUOTE(JohnfrmCleveland @ Oct 12 2012, 07:35 PM) *
Scubatim, if you are trying to pick a fight with Dingo, do it somewhere else. Your goofy little detour is ruining the thread.

Actually, I have never explored the asset tax. I have explored the flat tax and the fair tax, but not the asset tax. I am asking and challenging in order to learn.

Go elsewhere to try to tell people what to do.

QUOTE(Dingo @ Oct 12 2012, 07:44 PM) *
An assets tax is just an extension of the property tax. The deduction would take care of most of the little stuff you are talking about. Mostly you would be dealing with big obvious stuff and I'm sure there would be an averaging schedule so you wouldn't have to itemize everything. Of course the equity in your home and business would be taxed at the flat rate. Farms would be a problem if they are priced for potential development. There has to be real long term clarity in zoning and pricing of farm property. As for things like money, gold and jewelry the threat of forfeit and even further penalties if they go undeclared I think would be a pretty solid deterrent. Who wants to risk a 100% loss to avoid say a 4% tax. You can't even declare it stolen if you haven't payed a tax on it.

The simplicity, transparency and fairness make it heads and tails better than just about any other tax.

In order to apply a deduction, every item must be inventoried especially if you face forfeiture of the item if not claimed. Sure you may not pay tax on the value of the drill bit, but you have to claim the drill bit in order to maximize the value of the deduction.

The biggest fault I find with this plan isn't in the structure, even though I think it is more tedious than our current system, is that I will have to pay tax on the same item over and over again. Over a period of time, I could pay over 100% tax. In fact, if I inherit something from a parent or grandparent, between the generations there is a potential for a tax of unlimited times the value of that item.
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Dingo
post Oct 13 2012, 01:29 AM
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QUOTE(scubatim @ Oct 12 2012, 06:03 PM) *
QUOTE(Dingo @ Oct 12 2012, 07:44 PM) *
An assets tax is just an extension of the property tax. The deduction would take care of most of the little stuff you are talking about. Mostly you would be dealing with big obvious stuff and I'm sure there would be an averaging schedule so you wouldn't have to itemize everything. Of course the equity in your home and business would be taxed at the flat rate. Farms would be a problem if they are priced for potential development. There has to be real long term clarity in zoning and pricing of farm property. As for things like money, gold and jewelry the threat of forfeit and even further penalties if they go undeclared I think would be a pretty solid deterrent. Who wants to risk a 100% loss to avoid say a 4% tax. You can't even declare it stolen if you haven't payed a tax on it.

The simplicity, transparency and fairness make it heads and tails better than just about any other tax.

In order to apply a deduction, every item must be inventoried especially if you face forfeiture of the item if not claimed. Sure you may not pay tax on the value of the drill bit, but you have to claim the drill bit in order to maximize the value of the deduction.

The biggest fault I find with this plan isn't in the structure, even though I think it is more tedious than our current system, is that I will have to pay tax on the same item over and over again. Over a period of time, I could pay over 100% tax. In fact, if I inherit something from a parent or grandparent, between the generations there is a potential for a tax of unlimited times the value of that item.

I can't see drill bits being inventoried. Tools would be probably averaged in. As far as paying over and over on an asset you already do that with a house and of course the asset tax removes the income tax, which is a payment over and over. An interesting moral question comes up. Why should a passive asset which generates no income be treated differently from an active asset which generates income? Since I don't have an answer to that and I'm inclined toward simplicity I say treat them the same.

As for dislocations that may arise then there is the possibility of a compensating public subsidy which gets to another principle of mine. If the government is going to get into the subsidy business it should be over the table in payments rather than under the table through deductions and credits etc. Transparency leads to trust and integrity. We treat a government subsidy as a subsidy not the whole range of euphemistic labels that make artificial distinctions. A subsidy is a cash payment from government. All the others except the initial establishing of the bar on when assets kick in are simply removed.
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