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> FICA’s our most regressive federal tax., Reducing FICA and replacing revenue with a sales tax.
Supposn
post Sep 11 2014, 06:44 AM
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FICA’s our most regressive federal tax.

Should FICA be reduced and the revenue replaced by a more general tax?

I’m an advocate that FICA's entire portion of revenue earmarked for Medicare and half of the social security retirement’s portions of FICA revenue all be replaced with revenues from a general federal sales tax.

This proposal’s not feasible if the transactions subject to the federal sales tax exceed twice the USA payrolls (that are subject to FICA taxes). For any single rate of taxation, revenues between the employers FICA taxes and a sales tax differ only to their proportional relationship.

If payrolls subject to the FICA tax are 1/3 of transactions subject to a general federal sales tax, then replacing 4.55% of FICA taxes levied upon both employees and employers with a 4.55% sales tax will increase tax revenues by 3/2 = 150%.

If payrolls subject to the FICA tax are 1/2 of transactions subject to a general federal sales tax, then replacing 4.55% of FICA taxes levied upon both employees and employers with a 4.55% sales tax will not increase tax revenues; 2/2 = 100%.

Reduction of FICA still retains the remaining FICA payroll taxes’ financial relationships between laborers and their retirement benefits while reducing the most regressive of federal taxes levied upon laborers. It reduces the financial advantages for employers hiring laborers “off the books”. The FICA payroll tax specifically punishes enterprises that employ labor without regard to the enterprises’ profits, losses or volumes of sales.

Dependent upon the ratio of USA payrolls and transactions subject to a sales tax this proposal’s of very little, perhaps no financial benefit to employees and their families, it does not reduce their wages net purchasing powers. The proposal would reduce taxes upon all honest enterprises and some of the advantages to employers that evade taxes by hiring labor “off the books”.
All of this would be of some net benefit to USA's economic and social welfare.

Respectfully, Supposn
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Gray Seal
post Sep 11 2014, 02:41 PM
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Sales tax and property tax are also regressive taxes. You are proposing replacing one regressive tax with another. If the stated goal is to get away from regressive taxes some other option must be made.
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Hobbes
post Sep 11 2014, 03:11 PM
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QUOTE(Supposn @ Sep 11 2014, 01:44 AM) *
FICA’s our most regressive federal tax.

Should FICA be reduced and the revenue replaced by a more general tax?

I’m an advocate that FICA's entire portion of revenue earmarked for Medicare and half of the social security retirement’s portions of FICA revenue all be replaced with revenues from a general federal sales tax.


Sales taxes are a very regressive tax, so please elaborate on why you want to replace a tax because it is regressive with another regressive tax.

Also, given that, please elaborate on what you think the benefits would be, and why it would be worth the cost of setting up a system to actually collect such a tax. Please also include an analysis of why you think replacing an employer funded tax with one that each person would pay on their own would be beneficial, particularly to lower income workers.

Should FICA be reduced and the revenue replaced by a more general tax?

Pending elaboration of the above, no.

This post has been edited by Hobbes: Sep 11 2014, 05:05 PM
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Dingo
post Sep 11 2014, 04:16 PM
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To give it the proper ad.gif form.

FICA’s our most regressive federal tax.

Should FICA be reduced and the revenue replaced by a more general tax?


Not only FICA but federal income tax in general should be replaced by a flat assets tax. I've been beating this hobby horse on ad.gif since 2002. Some of the back and forth running backward in time might be worth perusing from this 'Search'. Since it is broadly inclusive you might have to scroll down to get some of the more relevant stuff.
http://www.americasdebate.com/forums/index...ts+tax&st=0

Greater simplicity, fairness and transparency are good reasons just coming out of the gate. I also think a form of sales tax(More like a fee) based on RCP(Real Cost Pricing), of which an added gas tax for public costs incurred should be considered along with more extensive employment of pay for use.

A standardized income for every citizen along with an equal kickback from certain use fees, like a pay at the pump gas fee, would also be included, but this gets beyond the subject matter of this topic so I will leave the thinking involved for another time.

This post has been edited by Dingo: Sep 11 2014, 04:25 PM
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Supposn
post Sep 12 2014, 04:36 AM
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QUOTE(Dingo @ Sep 11 2014, 12:16 PM) *
... Not only FICA but federal income tax in general should be replaced by a flat assets tax. ...

Dingo, I consider the concept of a flat tax based upon assets as being outside of this topic and it’s certainly not related to the proposal I’m advocating here but I do have some opinions regarding your proposal.

Do you mean the heirs of rich families will continue to pay high taxes every year regardless of their annual net incomes? That’s certainly a pure socialist concept.
When socialists were able to overturn a government, they attempted to confiscate the assets of the wealthy in a single or a series steps. A flat tax on assets would accomplish that goal in annual installments.

Consider rich people who choose to devote themselves to more altruistic pursuits. There have been people that accumulated, inherited or otherwise acquired wealth but turned to endeavors for other than financial gain. You would increase the financial penalty due to their choice?

Taxing accumulated assets does not better serve their nations’ economies.

Respectfully, Supposn
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Dingo
post Sep 12 2014, 05:26 AM
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QUOTE(Supposn @ Sep 11 2014, 09:36 PM) *
QUOTE(Dingo @ Sep 11 2014, 12:16 PM) *
... Not only FICA but federal income tax in general should be replaced by a flat assets tax. ...

Dingo, I consider the concept of a flat tax based upon assets as being outside of this topic and it’s certainly not related to the proposal I’m advocating here but I do have some opinions regarding your proposal.

Do you mean the heirs of rich families will continue to pay high taxes every year regardless of their annual net incomes? That’s certainly a pure socialist concept.
When socialists were able to overturn a government, they attempted to confiscate the assets of the wealthy in a single or a series steps. A flat tax on assets would accomplish that goal in annual installments.

Consider rich people who choose to devote themselves to more altruistic pursuits. There have been people that accumulated, inherited or otherwise acquired wealth but turned to endeavors for other than financial gain. You would increase the financial penalty due to their choice?

Taxing accumulated assets does not better serve their nations’ economies.

Respectfully, Supposn

Supposn no moderator called you on it but you are supposed to formally submit a question or series of questions. That is what we then respond to. I attempted to correct that by lifting out your only statement that could be divined as a question and I think responded appropriately. The question refers to substituting a "more general tax", so I offered one.

Frankly I don't get how a flat tax is particularly socialist - I'm not talking about government ownership, just a flat assets tax for which there already is a precedent. It's called a property tax. And I don't see where a 1 or 2 percent tax would be particularly confiscatory, certainly no more than an income tax or sales tax. If a person is rich they can certainly pay such a tax and still contribute to altruistic endeavors.

Basically I want a tax as a simple, fair(Doesn't play favorites) and transparent source of revenue for the government, not as a way to manipulate social policies. I'd say in that sense I'm less socialist than you are.
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AuthorMusician
post Sep 12 2014, 12:39 PM
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QUOTE(Dingo @ Sep 12 2014, 01:26 AM) *
Basically I want a tax as a simple, fair(Doesn't play favorites) and transparent source of revenue for the government, not as a way to manipulate social policies. I'd say in that sense I'm less socialist than you are.

Remember that social engineering and socialism don't equate. Socialism attempts to redistribute wealth so that the money doesn't collect at the top, unlike what we have today in the USA. Social engineering attempts to manipulate society by making some things more expensive and other things less expensive, such as seeking out oil drilling sites.

Paying into FICA stops at a relatively low income level, the reasoning being that if you earn enough, you won't need SS when you retire or cut back on working. However, that income level hasn't been adjusted for a while, and it's probably too low. With socialism, the upper levels would pay in all the way to the top rather than having a cap on income level.

Is what we have now too complicated? Does it require too much pay-in at the lowest levels of income? These seem to be the questions in the debate, and I have to say no to the first question and maybe to the second.

If FICA were a tax that went toward something out of reach to the lower incomes, then yes, that would be a badly regressive tax. But it's different from a tax in that the money is supposed to be for a set of benefits that all who have paid in receive at some time or another in life, whether straight retirement funds, survivor funds, disability funds, and so on.

Is it social engineering to keep our workforce away from abject poverty, or at least attempt to do this? I say no. It's allowing for working people to keep on living even while too old to work. It helps out the spouses of deceased workers to make ends meet, even if the spouses have not worked for pay a single day in their lives. I don't see this as social engineering as much as supporting the nation's population of workers and their spouses, also their children should the primary income-generating parent die early. It's social responsibility, not engineering.

FICA also helps out those hit hard by recessions, thereby wiping out retirement savings. Theoretically, your retirement savings are not fair game in bankruptcy, or at least it used to be, but in actuality, people burn through the 401k and IRA money while keeping up with the bills. More retirees are having to make do with nothing but SS as a result.

Sure would have been nice if the economy didn't go through boom-bust cycles, but that is just how the economy works. Nobody has been able to figure out how to keep the economy in a steady-state, and so the theory that workers do better saving for their own retirements falls flat. That only works if the income is high enough to weather the downturns without dipping into retirement savings.

FICA money is supposed to be protected from the government dipping into those funds for other reasons, but the protection isn't sufficient. Remember the lock-box idea that Gore pushed while winning the popular vote in 2000? That was to keep grasping government hands off the funds, which are kept in interest-bearing Treasury bills and bonds. Remember when GWB tried to convince the nation that the Treasury securities were just worthless paper?

Yeah, that didn't go far due to it being a bald-faced lie.

As for FICA being too complicated, it doesn't look that way to me. The more you pay in, the more you get back. You can pay in only so much, due to the income level cap. The system does depend on an economy that keeps enough people employed and at high enough income levels, so there's a challenge on how we do business. If a recession goes on too long, the system won't survive without changes.

But those changes would amount to tweaking the dials, not entirely replacing the system with something different. It looks to me that the case for replacement is too weak to stand. The anticipated benefits don't outweigh the risks.
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Supposn
post Sep 12 2014, 01:46 PM
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QUOTE(Gray Seal @ Sep 11 2014, 10:41 AM) *
Sales tax and property tax are also regressive taxes. You are proposing replacing one regressive tax with another. If the stated goal is to get away from regressive taxes some other option must be made.

Gray Seal, USA’s tax rates upon net incomes are progressively increased for each progressively increased income bracket. (Currently we recognize four brackets of individuals’ incomes).
The problems arise in determining what actually are the net annual incomes. The determination of net income has become the greatest and most complex segment of the accounting industry and of extraordinary expense to both governments and taxpayers. This to no small extent contributes to our population’s growing mistrust in our own government.

Lobbyists plead for their clients' relief due to their actual or supposed tax disadvantages. Each exception and exclusion is added to tax regulations similar to onions layers that grow over each other under the earth. These justified and unjustified tax loop holes in aggregate undermine the progressive characteristic of our “progressive” income taxes.

The short response to your objection is USA’s progressive taxes upon net incomes are not as progressive as some would have us believe them to be and although general sales taxes are not progressive, they also are not regressive.

A nation’s aggregate economy is less regressive when its laws and regulations include provisions to better protect the poor, the working poor and the disabled. Social Security, Medicare and Medicaid certainly are of more value to persons of lesser rather than higher incomes. Reduction of their benefits due to inadequate funding would be regressive.

Refer to the thread entitled “Federal sales tax”:
http://www.americasdebate.com/forums/index...showtopic=22860

Respectfully, Supposn

This post has been edited by Supposn: Sep 12 2014, 01:57 PM
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Gray Seal
post Sep 12 2014, 03:06 PM
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Defining what is deductible or not in determining income can be eliminated by simplifying the tax to apply to what comes in the door. Such a tax is a transfer tax. It is essentially a use tax for money. What is money? A means to identify value while making transactions more liquid. It seems appropriate to have a fee for the use of money. It could be a low percentage (1% or less).

General sales taxes are regressive. Banks transfer large sums back and forth without paying any tax. Individuals transferring money for groceries do pay a tax. It sure looks regressive to me. Solve this by a transfer tax.

Using government to tax others in order to pay for what you want is "regressive".

-------

QUOTE(AuthorMusician)
It's social responsibility, not engineering.
It seems to me, you apply responsibility or engineering according to what you like. If you like it, it is responsibility. If you do not like it, it is engineering. Otherwise, the heavy hand of government is the same.

-------

QUOTE(AuthorMusician)
Sure would have been nice if the economy didn't go through boom-bust cycles, but that is just how the economy works. Nobody has been able to figure out how to keep the economy in a steady-state, and so the theory that workers do better saving for their own retirements falls flat.
The economy goes through the boom-bust mostly because of government and central banks. There will be fluctuations but not the extremes we have now if deficit spending ended and central banks eliminated.

Logically, if you believe no one has been able to figure out how to keep the economy steady-state you must at least agree the Federal Reserve must go as its stated goal is to maintain an economic steady-state, something you do not believe is possible.

Because of the price inflation caused by the Federal Reserve, money loses value. People's savings is eroded. Why have a safe guard against inflation via FICA when eliminating the creation of money would do it better? Eliminating deficits spending and the central bank will do more for the poor than a new regressive sales tax.
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Dingo
post Sep 12 2014, 03:53 PM
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QUOTE(AuthorMusician @ Sep 12 2014, 05:39 AM) *
QUOTE(Dingo @ Sep 12 2014, 01:26 AM) *
Basically I want a tax as a simple, fair(Doesn't play favorites) and transparent source of revenue for the government, not as a way to manipulate social policies. I'd say in that sense I'm less socialist than you are.

Remember that social engineering and socialism don't equate. Socialism attempts to redistribute wealth so that the money doesn't collect at the top, unlike what we have today in the USA. Social engineering attempts to manipulate society by making some things more expensive and other things less expensive, such as seeking out oil drilling sites.

Just to clarify the matter I pulled this definition of socialism off of google.

a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.

To put it simply the economic process is essentially in the hands of government at whatever level. My invocation of a strictly practical policy neutral revenue gathering tax intrudes itself into the economic process much less than is presently the case.

QUOTE
Paying into FICA stops at a relatively low income level, the reasoning being that if you earn enough, you won't need SS when you retire or cut back on working. However, that income level hasn't been adjusted for a while, and it's probably too low. With socialism, the upper levels would pay in all the way to the top rather than having a cap on income level.

My flat assets tax would extract from everybody from top to bottom at the same asset tax rate, bypassing the upper limit problem. In neither case do I think more or less socialism is invoked. It is simply equal taxation, not intentionally seizing economic control. The flat assets tax can be a source of old age protection and medicare funding. Tying the tax to assets would seem to make the annual percentage payment considerably lower.

QUOTE
Is what we have now too complicated?

Absolutely, which is part of the appeal of the much simpler flat assets tax. Along with simplicity it is fairer and more transparent(Much harder to avoid and hide).

QUOTE
If FICA were a tax that went toward something out of reach to the lower incomes, then yes, that would be a badly regressive tax. But it's different from a tax in that the money is supposed to be for a set of benefits that all who have paid in receive at some time or another in life, whether straight retirement funds, survivor funds, disability funds, and so on.

Is it social engineering to keep our workforce away from abject poverty, or at least attempt to do this? I say no. It's allowing for working people to keep on living even while too old to work. It helps out the spouses of deceased workers to make ends meet, even if the spouses have not worked for pay a single day in their lives. I don't see this as social engineering as much as supporting the nation's population of workers and their spouses, also their children should the primary income-generating parent die early. It's social responsibility, not engineering.

FICA also helps out those hit hard by recessions, thereby wiping out retirement savings. Theoretically, your retirement savings are not fair game in bankruptcy, or at least it used to be, but in actuality, people burn through the 401k and IRA money while keeping up with the bills. More retirees are having to make do with nothing but SS as a result.

Sure would have been nice if the economy didn't go through boom-bust cycles, but that is just how the economy works. Nobody has been able to figure out how to keep the economy in a steady-state, and so the theory that workers do better saving for their own retirements falls flat. That only works if the income is high enough to weather the downturns without dipping into retirement savings.

FICA money is supposed to be protected from the government dipping into those funds for other reasons, but the protection isn't sufficient. Remember the lock-box idea that Gore pushed while winning the popular vote in 2000? That was to keep grasping government hands off the funds, which are kept in interest-bearing Treasury bills and bonds. Remember when GWB tried to convince the nation that the Treasury securities were just worthless paper?

Yeah, that didn't go far due to it being a bald-faced lie.

As for FICA being too complicated, it doesn't look that way to me. The more you pay in, the more you get back. You can pay in only so much, due to the income level cap. The system does depend on an economy that keeps enough people employed and at high enough income levels, so there's a challenge on how we do business. If a recession goes on too long, the system won't survive without changes.

But those changes would amount to tweaking the dials, not entirely replacing the system with something different. It looks to me that the case for replacement is too weak to stand. The anticipated benefits don't outweigh the risks.

All good points. However I asked in a thread I created the question if you were advising a 25 year old whether his/her social security payments would be available to them in 40 years what would you say? I'd say no. Being sort of the Cassandra of environmental destruction and resource depletion on ad.gif plays into my thinking. Once a sufficient number of young people come to that view, and I think events will eventually convince them so, I think social security will naturally collapse due to lack of support.

A flat assets tax along with a guaranteed citizen income partially supported by a kick back from real cost pricing taxes/fees(Think Hansen's one dollar added gas tax) constitutes a much more solid buffer for the serious down turns to come. Unlike income tax it provides a kind of counterpoint to hoarding. Out of that old age, disability, medical care etc. would be provided for to the degree we can and/or wish to support them.
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AuthorMusician
post Sep 13 2014, 08:27 AM
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QUOTE(Dingo @ Sep 12 2014, 11:53 AM) *
A flat assets tax along with a guaranteed citizen income partially supported by a kick back from real cost pricing taxes/fees(Think Hansen's one dollar added gas tax) constitutes a much more solid buffer for the serious down turns to come. Unlike income tax it provides a kind of counterpoint to hoarding. Out of that old age, disability, medical care etc. would be provided for to the degree we can and/or wish to support them.

Great, do you have any comparisons between what we're doing now versus what you're proposing?

BTW, your definition found on Google regarding what socialism is does not matter within the context of social engineering versus social responsibility. The only commonality is the root word, social.

The Fed has other roles than one, but that's a tangent that probably won't be explored without good computer models. However, the economy swung very wildly before its institution, and that was indeed one of the primary reasons it was created. The terms used before the Fed was panic of such-and-so year. That's because bank notes would go worthless overnight, thereby wiping out savings for that rainy day(s). Strange tricks that banks would do before the Fed included displaying a keg of nails covered with a thin layer of gold coinage. Clever marketing, ultimately failure.

Now we have Federal Reserve Notes, which have better backing than just banking reputations. You should have noticed that even with the Meltdown of 2008, USDs didn't go worthless overnight. It can be argued that it's just fiat money, but that's how the global economy now works. A counter argument can be made that modern economics would not be possible otherwise, say with a gold or platinum (pick your shiny material) standard.

Anyway, got any data to promote your taxation idea? Any models? Examples of other places doing the same thing?
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Dingo
post Sep 13 2014, 05:33 PM
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QUOTE(AuthorMusician @ Sep 13 2014, 01:27 AM) *
QUOTE(Dingo @ Sep 12 2014, 11:53 AM) *
A flat assets tax along with a guaranteed citizen income partially supported by a kick back from real cost pricing taxes/fees(Think Hansen's one dollar added gas tax) constitutes a much more solid buffer for the serious down turns to come. Unlike income tax it provides a kind of counterpoint to hoarding. Out of that old age, disability, medical care etc. would be provided for to the degree we can and/or wish to support them.

Great, do you have any comparisons between what we're doing now versus what you're proposing?

BTW, your definition found on Google regarding what socialism is does not matter within the context of social engineering versus social responsibility. The only commonality is the root word, social.

The Fed has other roles than one, but that's a tangent that probably won't be explored without good computer models. However, the economy swung very wildly before its institution, and that was indeed one of the primary reasons it was created. The terms used before the Fed was panic of such-and-so year. That's because bank notes would go worthless overnight, thereby wiping out savings for that rainy day(s). Strange tricks that banks would do before the Fed included displaying a keg of nails covered with a thin layer of gold coinage. Clever marketing, ultimately failure.

Now we have Federal Reserve Notes, which have better backing than just banking reputations. You should have noticed that even with the Meltdown of 2008, USDs didn't go worthless overnight. It can be argued that it's just fiat money, but that's how the global economy now works. A counter argument can be made that modern economics would not be possible otherwise, say with a gold or platinum (pick your shiny material) standard.

Anyway, got any data to promote your taxation idea? Any models? Examples of other places doing the same thing?

I haven't got any comprehensive models but as stand ins I would offer California and Alaska. California before Proposition 13 drastically lowered property taxes(Think flat assets tax) had one of the best school systems in the country. After Prop. 13 it has one of the worst along with a lot of other public services going down the tubes. Alaska charges a fee to its oil and gas companies which is then invested with equal annual payments being made to every Alaskan resident. Arguably this is one of the reasons Alaska has the lowest difference in income between top and bottom of any of the 50 states. I can't prove the leveling effect but it makes sense. But for most of my economics, which I more fully flushed out earlier, I'm applying my version of common sense and logic. Oh I left out charging for paper bags at markets and not offering plastic bags to encourage people bringing in their own carrying bags, that is a lower level of what RCP(Real Cost Pricing) looks like and is an environmental boon.

As for socialism, I guess I'll just stick with google's definition because it jibes with the definition I have always been aware of since being a child ie public ownership or control of the means of production and distribution pretty much. Generally it is associated with redistribution of the wealth but it doesn't have to be. A bunch of social engineering commissars could subsidize themselves very well and pay their workers pittance. Back in the old days a Yugoslav name Dilas wrote a book called 'The New Class' where among other matters he discussed this problem in his socialist state.

I'm not sure where you got the impression I was invested in the gold versus fiat money argument. I'm not. In fact, as I have pointed out to some folks, gold hit a high water mark around 1980 and then I think went into an eclipse for the next 15 years or so I believe. It was one of the worst investments around. Now after another rise it appears to be sinking again. It is pretty much a commodity plain and simple as far as I am concerned. As long as folks value a particular money marker, the US dollar for instance, I would guess it would hold up.

My point, as I indicated, was that due to the coming degradation of the environment and diminishing of vital natural resources our whole entitlement system is going to come under challenge. I happen to think that my approach, which directly draws revenues from real value and makes folks pay real costs, some of which can be kicked back as an incentive to ease the pain like Hansen's one dollar gas tax, and lets them play landlord to the earth(Property), exacting fees from the owners to be equally distributed, is the best buffer to the coming down turn.

Of course none of this will have any value finally if we don't deal with the elephant in the room, growing population, and start turning things around. The politics that go with that aren't too hard to figure out and I won't go into it here.

This post has been edited by Dingo: Sep 13 2014, 08:25 PM
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Supposn
post Sep 13 2014, 08:07 PM
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QUOTE(Gray Seal @ Sep 12 2014, 11:06 AM) *
Defining what is deductible or not in determining income can be eliminated by simplifying the tax to apply to what comes in the door. ...
... Using government to tax others in order to pay for what you want is "regressive" tax. ...


Gray Seal, USA’s governments, enterprises and individuals spending for tax accountants and legal specialists are just additional examples of what Veblen described as “conspicuous consumption; i.e. spending to appear fashionable and gain social status)?
There’s no other taxing basis that I’m aware of, which is more expensive and difficult to administrate and enforce that of taxing net incomes.

Governments that that effectively enforce both net income taxes and gross sales taxes have little additional expenditures due to their sales tax. Almost all of the raw data and statistical information regarding individual enterprises serving as point of sales tax collectors is imbedded within the overhead necessary to administer and enforce their collection of net income taxing revenues.

Although many government’s public services are (at least in theory), equally available to all persons regardless of their incomes, those services are (proportional to incomes), of greater benefit to those of lesser incomes. Rather than reducing such services due to lack of funding, I’m advocating that FICA funding should be reduced and a broader based tax, (i.e. a general sales tax) provide the additional revenue.

Using government to tax others in order to pay for what you want is not as you wrote regressive"; that’s politics as usual.

FICA's the most regressive federal tax.

Respectfully, Supposn

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Dingo
post Sep 13 2014, 08:38 PM
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QUOTE(Supposn @ Sep 13 2014, 01:07 PM) *
Governments that that effectively enforce both net income taxes and gross sales taxes have little additional expenditures due to their sales tax. Almost all of the raw data and statistical information regarding individual enterprises serving as point of sales tax collectors is imbedded within the overhead necessary to administer and enforce their collection of net income taxing revenues.

Both income and sales are easy to hide unlike major assets. That gives a flat asset tax more integrity not to mention it is the least regressive of the three and the simplest to determine.
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Hobbes
post Sep 13 2014, 08:45 PM
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QUOTE(AuthorMusician)
Sure would have been nice if the economy didn't go through boom-bust cycles, but that is just how the economy works. Nobody has been able to figure out how to keep the economy in a steady-state, and so the theory that workers do better saving for their own retirements falls flat.


I don't see how you get from the one to the other. Workers would benefit in the boom cycles, and there are plenty of ways to protect your money in the bust cycles. Even if they didn't do any of them, the overall return from the stock market is much higher than the return the government generates. That's not the problem. The reason workers do better with government handling their retirement is that the typical worker gets much more back in return than they ever put in, which is why it keeps taking more and more workers to support each retired person. SS is essentially the world's largest Ponzi scheme...it all looks great, until it collapses under its own weight. If you look at the projections of the unfunded outlays, and how the number of workers to support each retired person will keep growing...that point is definitely coming.

As for keeping the economy in a steady state...I agree. The problem isn't that they can't do it. It is that they keep trying to anyway. What this has done is make the boom bust cycles much shorter, making it harder to adjust to them.
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Supposn
post Sep 14 2014, 03:58 PM
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QUOTE(Dingo @ Sep 12 2014, 01:26 AM) *
... Not only FICA but federal income tax in general should be replaced by a flat assets tax. ... Supposn no moderator called you on it but you are supposed to formally submit a question or series of questions. That is what we then respond to. I attempted to correct that by lifting out your only statement that could be divined as a question and I think responded appropriately. The question refers to substituting a "more general tax", so I offered one.

Frankly I don't get how a flat tax is particularly socialist - I'm not talking about government ownership, just a flat assets tax for which there already is a precedent. It's called a property tax. And I don't see where a 1 or 2 percent tax would be particularly confiscatory, certainly no more than an income tax or sales tax. If a person is rich they can certainly pay such a tax and still contribute to altruistic endeavors.

Basically I want a tax as a simple, fair(Doesn't play favorites) and transparent source of revenue for the government, not as a way to manipulate social policies. I'd say in that sense I'm less socialist than you are.


Dingo, you’re correct and I’m wrong; your response was appropriate.

Regarding comparisons between taxing net annual incomes vs. a general sales tax, refer to post #2 of the thread “Federal sales tax”
http://www.americasdebate.com/forums/index...#entry100028111 .

The taxing of real-estate property is logically justified by government provided services and infrastructure that generally increase the values of such properties.
But the school taxes levied upon real-estate are under legal attack throughout many areas of the USA because they deny many children of poorer communities what the state would the government considers to be a minimal level of education that are explicitly or indirectly referred to within the state’s own laws. School districts over-dependence upon real-estate taxes are in regard to the education of children in poorer school districts, denying those children equal consideration under the law.

Other than real-estate taxes, within the USA I’m unaware of any eternally recurring tax upon the values of entities’ entire wealth. I cannot perceive how doing so would be feasible or of net benefit to our nation or to any individual state?

Respectfully, Supposn

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Dingo
post Sep 14 2014, 05:08 PM
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Supposn I'm not saying you are saying this, but just to be clear, real estate taxes are not simply applied to schools but in fact to the police and just about the every other municipal service. The question of application of tax revenue fairly is a matter to be addressed under any tax system. I don't recall poor school districts enjoying any benefits when Proposition 13 was passed, quite the contrary. And certainly a general assets tax would be potentially fairer than a locally controlled property tax approach since it is not parochial in nature.

It is interesting that the flat asset tax, called here a wealth tax, is garnering far more interest than when I first checked google on the matter. No less than the NY Times weighs in. They do offer a modestly progressive wealth tax along with a straight flat assets tax across the board. You can take your pick. The perspective here is heading off the growing wealth inequality by employing a wealth tax.

http://www.nytimes.com/2012/11/19/opinion/...ncome.html?_r=0

QUOTE
The global financial crisis did make a dent in the assets of the wealthiest American families, but its effects for the bottom half were utterly destructive; the number of owner-occupied homes has fallen by more than a million since 2007. People in different socioeconomic strata are living ever more different lives, with dangerous results for society: erosion of empathy, widening of rifts and undermining of meritocracy.

American household wealth totaled more than $58 trillion in 2010. A flat wealth tax of just 1.5 percent on financial assets and other wealth like housing, cars and business ownership would have been more than enough to replace all the revenue of the income, estate and gift taxes, which amounted to about $833 billion after refunds. Brackets of, say, zero percent up to $500,000 in wealth, 1 percent for wealth between $500,000 and $1 million, and 2 percent for wealth above $1 million would probably have done the trick as well.

These tax rates would garner a small portion of the extra wealth America’s richest families could expect to accrue simply by investing what they already had. The rates would also be enough to slow — if not reverse — the increase in inequality. To see how the wealth tax would work, consider a family with $500,000 in wealth and $200,000 in annual income. Right now, they might pay $50,000 in federal income tax. With the wealth tax brackets described above, they would pay nothing. On the other hand, a family with $4 million in wealth and $200,000 in annual income would owe $65,000. Most families that depend on their wealth for their income would pay more, and most that depend on their earnings would pay less.


This post has been edited by Dingo: Sep 14 2014, 05:14 PM
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Gray Seal
post Sep 15 2014, 03:11 AM
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QUOTE(Supposn)
There’s no other taxing basis, that I’m aware of, which is more expensive and difficult to administrate and enforce that of taxing net incomes.
This is a observation for which I am in total agreement.

QUOTE(Supposn)
Although many government’s public services are (at least in theory), equally available to all persons regardless of their incomes, those services are (proportional to incomes), of greater benefit to those of lesser incomes.
I would prefer to look at government's spending. Public services can be defined to fit a desired observation. Government spending is definite number. Government spending is geared towards those better off, undoubtedly.

As to FICA, why should retirement be government provided to people who are capable of operating in the market on their own? Why should such programs be mandated upon successful people who do not want it? Filtering any sort of tax through government to give it back to the people from whence it was taken it foolish, inefficient, and a loss of wealth to individuals who produced the wealth.

Do you consider "politics as usual" to be a specific answer to a problem or a good general throw away excuse to not address an inquiry? If politics as usual is good enough for you then I am not sure why much if anything needs to be changed, in your eyes. Politics as usual is taking us down the road of bust.

-------

Dingo, the flat assets tax will be as arbitrary and capricious as property tax. Property taxes are not fair.

Flat asset taxes will be the same as property tax in that you are in constant rent to government to stay on your land. It is a mortgage you can never pay off. It will not be nice when you have to pay rent on all your possessions as if government owns it. Property tax and asset taxes puts government as owner. Talk about socialism. What sort of freedom would that be?

-------

Hobbes, boom-bust is good for workers? I have seen no evidence of this at any point in US history. Currently, boom-bust is great for one portion of the market and that is the financial sector. Government protects these filthy rich financiers with bail outs.

Boom-bust cycles have not been shortened with the creation of the federal reserve. Examples are the 30s and the current travesty.

I agree with you totally on SSI being created and managed as a Ponzi scheme.
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Dingo
post Sep 15 2014, 07:27 AM
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QUOTE(Gray Seal @ Sep 14 2014, 08:11 PM) *
Flat asset taxes will be the same as property tax in that you are in constant rent to government to stay on your land.

And who protects your ownership to that land? Call the tax say protection money if you like. The government is the closest thing to a representative of the public. They, the citizens, are the ultimate owners of country. It seems quite appropriate that enjoying certain use rights to a piece of that country should involve a fee to the landlords. That's another thing I like about the flat assets tax. It is the most clearly fair and rational tax based on the real chain of ownership. Relatedly who creates and protects your money?

This post has been edited by Dingo: Sep 15 2014, 07:30 AM
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Gray Seal
post Sep 15 2014, 12:32 PM
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Owners of land protect their property. At least that should be the bottom line. Owners of land can organize to jointly protect land. It is called free association. Having demanded rent for owning assets will further take that away.

You could not be more truthful by calling support of the state protection money. Except protection money is not taxes. It is political contributions. The state has become heavy handed and biased. If you want to have a equal shot at the largess you best provide some political contribution. Only the cartels who do so expect fair treatment. That is why some cartels contribute to two candidates in the same race. Big money controls the state and will as long as individual freedom is not valued.

How can you say citizens are the ultimate owners of the country when you would deny any of them having free and clear ownership? You wish for the country to be completely controlled by the largest cartels.

I wish our money was protected. It is manipulated and controlled for the benefit of government and financiers. If we want our money protected the federal reserve must end. We must demand no more money creation and no more deficit spending.
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