I love how FairTax proponents keep saying "but you get to keep 100% of your money!" and "you don't pay taxes, the shopowner does" and "the price of goods on store shelves will drop!"
None of this is even remotely true. Not even the tiniest, if-you-squint-at-it-while-on-the-right-drugs, littlest bit of true. It's all complete fucking bullshit that anyone with two brain cells should be able to smell a mile away. Fuck, the last two things are contradictory statements. One is A, and one is B, and God himself couldn't create a universe in which A and B could both exist, they're that mutually exclusive.
Thats pretty faulty logic. The only way capital gains taxes would discourage investment would be if the capital gains tax was large enough that regular bank interest would earn more than actual investment after risk is calculated.
Not true at all. The more money you get from an endeavor, the more likely you are to perform that endeavor. Increasing taxes makes investment less lucrative, because the payout is less. This is true even if the investment is still the most lucrative thing you can do.
The effect of a small tax increase will be small, though, and this doesn't mean we shouldn't have capital gains taxes. But we need to carefully tailor the numbers such that they generate revenue without unduly hampering the propensity to invest.
While everything you are saying is 100% correct, I think you're presenting it in a negative light.
In an attempt to put it objectively:
People are going to choose the investments that they believe will give them the best return (usually monetary return, but there are other aspects as well). Taxing capital gains is going to decrease their net returns by the ammount of the additional taxes. As long as that ammount does not negate the value advantage that the particular investment has, it will have no effect on that person's habits.
The risk here is that if the taxes are high enough, the return will be reduced to the point where it is more lucritive to go do something else entirely with your money.
Evander on
0
Options
Nova_CI have the needThe need for speedRegistered Userregular
edited January 2008
That's discounting risk versus reward, Evander. People don't just go "What investment is likely to have the highest payout?" If the taxing of capital gains reduces the reward part of the equation to a point where it doesn't make the risk tolerable, then it'll kill investments, particularly with people that are cautious to begin with.
That's why people generally hedge their bets by investing in both high and low risk stocks. The high risk ones have a bigger potential payout, but they could also tank, so they buffer it with stocks with lower returns, but have a small chance of diving. If all of a sudden there's no buffer, or the risk is too great for the reward, the money goes elsewhere.
I've skipped over some stuff, but I have a question. Does Fair Tax mean if I buy all my non-grocery stuff on eBay, Craigslist, or garage sales, etc, I don't pay any taxes at all?
Yes, absolutely no taxes are paid. And because you probably wont pay any taxes on groceries due to the plan not taxing "essential goods" congratulations, you don't pay taxes!
The "Fair Tax" plan does levy a federal sales tax on new "essential goods" used for personal consumption, it just offers rebates (or "prebates") to everyone for purchases "up to the poverty line" (according to Huckabee's version). So "essential goods" are only effectively untaxed if you're dirt poor.
Any tax that lets most of the remainder stay with the rich also has the disadvantage of increasing inflation in a fractional reserve system, as they put more money in banks.
For those of you who believe cutting taxes increases revenue
That's discounting risk versus reward, Evander. People don't just go "What investment is likely to have the highest payout?" If the taxing of capital gains reduces the reward part of the equation to a point where it doesn't make the risk tolerable, then it'll kill investments, particularly with people that are cautious to begin with.
That's why people generally hedge their bets by investing in both high and low risk stocks. The high risk ones have a bigger potential payout, but they could also tank, so they buffer it with stocks with lower returns, but have a small chance of diving. If all of a sudden there's no buffer, or the risk is too great for the reward, the money goes elsewhere.
I didn't discount risk and reward, I simply skipped past it, rather than explaining it.
The effect is exactly the same if you want to consider risk versus reward explicitly. The rewards are decreased while the risks remain the same, but as long as the current investment is still the one with the most favorable outcome, there is no reason why some one would change investments.
Evander on
0
Options
ElJeffeNot actually a mod.Roaming the streets, waving his gun around.Moderator, ClubPAmod
People are going to choose the investments that they believe will give them the best return (usually monetary return, but there are other aspects as well). Taxing capital gains is going to decrease their net returns by the ammount of the additional taxes. As long as that ammount does not negate the value advantage that the particular investment has, it will have no effect on that person's habits.
True to a point, but you're discounting non-monetary incentives. If I see a twenty sitting across the street, I'll go across to pick it up. If you decrease the denomination, I'll be less likely to go to the effort. I mean, I probably won't even bend over to pick up a penny that's right under me. It's not worth my time.
Different people have different thresholds for action. Hell, a rich guy might not even cross the street for anything less than a hundred. Now, it's true that raising taxes on the capital gains will pretty much be a binary thing for a given person. I might not change my behavior at all if you raise the tax from 10 to 15%. But nationwide, many people will, and that aggregate behavior will result in correspondingly less investment.
I think we're more or less on the same page - capital gains taxes of some sort are a good idea, provided they're not too high. But I'm reading you as saying that we can raise the tax rate a certain amount without having any effect on investment at all, and that I disagree with. Small increases will have small effects, but the effects will be there. It's just that the good coming from that tax hike might outweigh the decrease in investment.
ElJeffe on
I submitted an entry to Lego Ideas, and if 10,000 people support me, it'll be turned into an actual Lego set!If you'd like to see and support my submission, follow this link.
It's just one of those criss-crossing charts... whichever leads to the highest net benefit for the country as a whole... just like how they decide prices for products based on how much profit you get by selling X at price Y.
People are going to choose the investments that they believe will give them the best return (usually monetary return, but there are other aspects as well). Taxing capital gains is going to decrease their net returns by the ammount of the additional taxes. As long as that ammount does not negate the value advantage that the particular investment has, it will have no effect on that person's habits.
True to a point, but you're discounting non-monetary incentives. If I see a twenty sitting across the street, I'll go across to pick it up. If you decrease the denomination, I'll be less likely to go to the effort. I mean, I probably won't even bend over to pick up a penny that's right under me. It's not worth my time.
Different people have different thresholds for action. Hell, a rich guy might not even cross the street for anything less than a hundred. Now, it's true that raising taxes on the capital gains will pretty much be a binary thing for a given person. I might not change my behavior at all if you raise the tax from 10 to 15%. But nationwide, many people will, and that aggregate behavior will result in correspondingly less investment.
I think we're more or less on the same page - capital gains taxes of some sort are a good idea, provided they're not too high. But I'm reading you as saying that we can raise the tax rate a certain amount without having any effect on investment at all, and that I disagree with. Small increases will have small effects, but the effects will be there. It's just that the good coming from that tax hike might outweigh the decrease in investment.
It has been found that this is equaled out by the fact that many others will just do more work to get the same amount. If the tax also raises prices, they'll actually work even more to afford the same amount.
One possible benefit of a flat sales tax would be to simply the tax process - if more tax revenue is from a flat, no (or few) exemption source then if implemented well it might. But would that possibility outweigh the negatives - probably not.
How long does it take you guys on average to complete and file your annual tax return, say in hours?
One? Maybe two? (Then again, I usually file a 1040A.)
And the answer isn't "simplify the tax code", it's "end loopholes, like the ones that allow private equity firms to treat their income as capital gains."
I file a 1040EZ, takes about fifteen minutes.
And most of that is clicking "next" in the free TurboTax.
People are going to choose the investments that they believe will give them the best return (usually monetary return, but there are other aspects as well). Taxing capital gains is going to decrease their net returns by the ammount of the additional taxes. As long as that ammount does not negate the value advantage that the particular investment has, it will have no effect on that person's habits.
True to a point, but you're discounting non-monetary incentives. If I see a twenty sitting across the street, I'll go across to pick it up. If you decrease the denomination, I'll be less likely to go to the effort. I mean, I probably won't even bend over to pick up a penny that's right under me. It's not worth my time.
Different people have different thresholds for action. Hell, a rich guy might not even cross the street for anything less than a hundred. Now, it's true that raising taxes on the capital gains will pretty much be a binary thing for a given person. I might not change my behavior at all if you raise the tax from 10 to 15%. But nationwide, many people will, and that aggregate behavior will result in correspondingly less investment.
I think we're more or less on the same page - capital gains taxes of some sort are a good idea, provided they're not too high. But I'm reading you as saying that we can raise the tax rate a certain amount without having any effect on investment at all, and that I disagree with. Small increases will have small effects, but the effects will be there. It's just that the good coming from that tax hike might outweigh the decrease in investment.
I wasn't discounting non-monetary incentives, at least it was not mu intention. I lumped them in with the general "value" of the return.
Personally, I own some Israel bonds that, while being pretty low risk, aren't necesarily the best maximization of my investment potential. However to me personally, the value of investing to Israel makes up for any other associated value gap. Honestly, I would have to reach a point where I was losing money on those bonds before I would decide not to invest in them, because of the non-monetary value to me.
Edit: And what I was saying was that small increases will have no major effects. There will definitely be some people whose investmentsare affected, but if done properly, as you and I both agree on, the effects will be overwhelmingly positive.
What law prevents a company from giving a luxury item to a middleman and the middleman sells it to a super-rich type used.
Say Samsung has created a HDTV built out of gold and custom made for Richie Rich. Richie Rich doesn't want to pay tax on it so Samsung gives the TV to Bob in accounting with the instructions to sell it to Richie Rich used. Richie Rich then buys it and Bob keeps the money but he doesn't get a paycheck for the next two years to balance that out.
What law prevents a company from giving a luxury item to a middleman and the middleman sells it to a super-rich type used.
Say Samsung has created a HDTV built out of gold and custom made for Richie Rich. Richie Rich doesn't want to pay tax on it so Samsung gives the TV to Bob in accounting with the instructions to sell it to Richie Rich used. Richie Rich then buys it and Bob keeps the money but he doesn't get a paycheck for the next two years to balance that out.
One possible benefit of a flat sales tax would be to simply the tax process - if more tax revenue is from a flat, no (or few) exemption source then if implemented well it might. But would that possibility outweigh the negatives - probably not.
How long does it take you guys on average to complete and file your annual tax return, say in hours?
One? Maybe two? (Then again, I usually file a 1040A.)
And the answer isn't "simplify the tax code", it's "end loopholes, like the ones that allow private equity firms to treat their income as capital gains."
I've never understood why capital gains arent taxed... other than that only rich people / corporations have capital gains, and thus they have the influence to get it not taxed.
Can someone explain to me why taxing capital gains is a bad thing?
Well, they ARE taxed, it's just at a lower rate than regular income. The idea is that high capital gains taxes discourage investment, which is pretty bad. The problem is that when you look at the structure of how Joe Worker makes his money versus Richie Rich, you see that most of Rich's income comes from invetments and capital gains.
Thats pretty faulty logic. The only way capital gains taxes would discourage investment would be if the capital gains tax was large enough that regular bank interest would earn more than actual investment after risk is calculated.
Exactly.
The real reason is that the rich people who were really behind capital gains tax reduction and possibly elimination are greedy fucks. But thats neither here nor there.
What law prevents a company from giving a luxury item to a middleman and the middleman sells it to a super-rich type used.
Say Samsung has created a HDTV built out of gold and custom made for Richie Rich. Richie Rich doesn't want to pay tax on it so Samsung gives the TV to Bob in accounting with the instructions to sell it to Richie Rich used. Richie Rich then buys it and Bob keeps the money but he doesn't get a paycheck for the next two years to balance that out.
What law prevents a company from giving a luxury item to a middleman and the middleman sells it to a super-rich type used.
Say Samsung has created a HDTV built out of gold and custom made for Richie Rich. Richie Rich doesn't want to pay tax on it so Samsung gives the TV to Bob in accounting with the instructions to sell it to Richie Rich used. Richie Rich then buys it and Bob keeps the money but he doesn't get a paycheck for the next two years to balance that out.
What law prevents a company from giving a luxury item to a middleman and the middleman sells it to a super-rich type used.
Say Samsung has created a HDTV built out of gold and custom made for Richie Rich. Richie Rich doesn't want to pay tax on it so Samsung gives the TV to Bob in accounting with the instructions to sell it to Richie Rich used. Richie Rich then buys it and Bob keeps the money but he doesn't get a paycheck for the next two years to balance that out.
It's fraud but how would you prove it?
There is such a thing as forensic accounting.
Yes. Uh, thanks. But what's step one?
Follow the paper trail. That's ALWAYS step one.
Basically the risk involved (people at this hypothetical Samsung would go to prison for this) is not worth whatever reward would come of it (why does Samsung give a shit if Richie Rich pays tax on their TV?). And all it would take is for somebody to find out that it may have occurred...following the paper trail in such a situation would probably be fairly trivial.
I don't have a good grasp on economics at all, so I'm responding to this more so that I can get a response to the argument rather than positing these as firm counterarguments. I guess what I'm trying to say is, don't kill me.
The fair tax - a 23% sales tax on "all" goods - is retarded for the following reasons:
- It's regressive. The rich spend a tiny fraction of their income on goods and services as compared to the poor and middle class. Most of their income goes into savings and investment, because seriously, how much can you really spend on food and clothes and Super Sweet 16 Birthday Parties and small island nations and whatever the fuck else it is that uber-richies buy? Contrast this with the poor, who live paycheck to paycheck and spend 100% of their income on subsistence. You can prebate or rebate folks until the cows come home, but this can only shift the burden up so much. There is no way to place the bulk of a sales tax burden on people who, as a percentage of their income, don't buy all that much. It's like trying to place the bulk of a shoe tax on double amputees. You can either bone the poor, or you can bone the middle class. With some clever finagling, you might even be able to bone the upper-middle class. But the rich will pretty much walk away laughing.
So, the argument is that even with a sensible rebate system that doesn't fuck the poor/middle class completely over, there wouldn't be enough taxes generated, right?
- It's volatile. Consumer spending habits vary wildly based on economic conditions, which means government revenue will vary wildly. This is a Very Bad Thing.
Something off the fairtax website that's confusing me.
The FairTax is replacement, not reform. It replaces federal income taxes including personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes.
If I'm understanding that correctly, they want to replace all of those taxes with just the flat tax? That's...well, down here they have the relevant to what jeffe said question,"Is consumption a reliable source of revenue".
Yes, in fact, consumption is a more stable source of revenue than income, as shown in Figure 3. The chart compares the yearly changes in the tax bases for the income tax (adjusted gross income -- AGI) and the FairTax (personal consumption expenditures -- PCE) for years 1974 to 2004. PCE has always grown from year to year, whereas AGI dropped from 2000 to 2001 and from 2001 to 2002 -- two years in a row. The higher growth rates of AGI in boom years result in overspending and then when the economy slows down either budget cuts are needed or, what is more often the case, taxes are raised or the budget deficit increases.
Aside from the fact that unless I'm reading it terribly wrong, their chart isn't matching what they're saying, it seems like they're only comparing income taxes with all the projected fair gains tax, instead of all of the taxes it mentioned it was replacing.
Ummm, playing Devil's Advocate (because I would never support replacing a graduated income tax wholly with a flat tax), one of the arguments in favour of some level of flat sales tax is precisely that rich people can't avoid it through tricky accounting. Whatever they decide to buy will get taxed at a particular rate. Whereas income tax can be avoided (as I understand) to some degree by hiding your income streams.
So as far as I know, one of the arguments for this is a reduction in black market incentives (by which I mean untaxed income, not necessarily untaxed sales).
I am aware that the burden, regardless of this point, falls heavier on the poor than the rich and is regressive, however nonetheless it doesn't invalidate this positive as I understand it.
(Again, please don't crucify me, I wouldn't support a 23% flat tax)
Is this something someone can refute, or is it just the general feeling (my feeling as well) that this positive does not outweigh (or come close to outweighing) the negatives?
Solvent on
I don't know where he got the scorpions, or how he got them into my mattress.
Ummm, playing Devil's Advocate (because I would never support replacing a graduated income tax wholly with a flat tax), one of the arguments in favour of some level of flat sales tax is precisely that rich people can't avoid it through tricky accounting. Whatever they decide to buy will get taxed at a particular rate. Whereas income tax can be avoided (as I understand) to some degree by hiding your income streams.
So as far as I know, one of the arguments for this is a reduction in black market incentives (by which I mean untaxed income, not necessarily untaxed sales).
There wouldn't be a tax on purchases imported from abroad, so you'll just see more European widgets come into vogue since all the tax sheltered rich will start doing their shopping in Milan. If you want to implement a flat tax then look into the NIT. It's the only one that's practical, progressive, and feasibly implementable. Not that it doesn't have plenty of kinks to be worked out as well.
moniker on
0
Options
AegisFear My DanceOvershot Toronto, Landed in OttawaRegistered Userregular
Ummm, playing Devil's Advocate (because I would never support replacing a graduated income tax wholly with a flat tax), one of the arguments in favour of some level of flat sales tax is precisely that rich people can't avoid it through tricky accounting. Whatever they decide to buy will get taxed at a particular rate. Whereas income tax can be avoided (as I understand) to some degree by hiding your income streams.
So as far as I know, one of the arguments for this is a reduction in black market incentives (by which I mean untaxed income, not necessarily untaxed sales).
I am aware that the burden, regardless of this point, falls heavier on the poor than the rich and is regressive, however nonetheless it doesn't invalidate this positive as I understand it.
(Again, please don't crucify me, I wouldn't support a 23% flat tax)
Is this something someone can refute, or is it just the general feeling (my feeling as well) that this positive does not outweigh (or come close to outweighing) the negatives?
The aim of the flat/fair tax as mentioned by its proponents, though, is to allow people to have a lower tax burden and therefore more money to get themselves out of debt, invest, spend, whatever. However, if you end up instituting such a proposal and all it ends up doing is create more hardship for those you were wanting to lift the tax burden from then yes the negatives outweigh any positives gained. Considering what one advocated for didn't happen in implementation, one's plan is a failure.
Yes, because the government taking 23% of my paycheck before I even have a chance to spend it on tax-free food, energy, (and unless you own your home) housing is not regressive at all.
Are you seriously arguing that this will hurt poor people? Explain. Because I've been one of those "poor" people and the biggest fucking barrier to getting out of it was fucking income tax raping me right as I crossed the threshold.
First off, without the "prebates" that Huckabee and some other (or maybe even most other) "Fair Tax" advocates are suggesting, the "Fair Tax" is regressive as hell.
With the "prebates", it shifts the regressive taxation burden from the poor to the moderately poor, or middle class, or whoever earns only a bit more than whatever the income cut-off for a "prebate" is, while the wealthy get a much lower tax burden, especially as a percentage of their income.
Most of those "neccessities" are not. Those that are, are already not taxed under current sales taxes, and wont be under a national sales tax. Food, water, not taxed. Energy, not taxed. Rent, not taxed. Clothing is, but as with all glorius percentages, dont buy expensive shit and you wont pay expensive taxes. Car? Buy used. Insurance? Not taxed. Gasoline? Short of national taxes on it ALREADY, it wont be taxed any extra.Best of all, you get the ability to save money pretax, helping you out of poverty. You can feed yourself, put a roof over your head, and get to and from your job without paying a dime in taxes, and your only paying taxes when you buy new clothes.
How exactly are poor people going to get raped when they dont buy homes, new cars, or cable tvs? Middle class, maybe. But the poor? Fuck I want some of that kool aid. Make the middle class taking a bigger hit argument maybe. But the poor?
Yes, cause fucking the middle class is so much better. Let's grind those fuckers into the ground.
Like we've all said, right from the start. If you just do straight flattax, with no rebates, it fucks the poor. Every rebate, prebate, exemption and whatever just shifts the fucking upward.
But thats the point.....youre talking about a straight flat tax, which the FairTax is not.
And it doesnt"shift the fucking upward", it just encourages the people that MOST need to, to save their incomes and not spend it on consumerist bullshit, namely the poor and lower-middle class.
This sounds less like a sound economic doctrine and more like a Christmas miracle.
Wow....so.....imbedded taxes dont exist? Or you dont believe they will go away when you eliminate income tax that is automatically passed to the consumer? Cause either way, Im not the one that needs economics lessons.
Embedded taxes absolutely do exist. But believing that companies will lower their prices (thus reducing what would be pure profit) because their own costs may have gone down (it all depends on if their suppliers lower their prices, too... pyramid scheme basically) is farcically naive. Since when do corporations lower prices out of a sense of generosity?
Fatty McBeardo on
0
Options
HachfaceNot the Minister Farrakhan you're thinking ofDammit, Shepard!Registered Userregular
Imbedded taxes absolutely do exist. But believing that companies will lower their prices (thus reducing what would be pure profit) because their own costs may have gone down (it all depends on if their suppliers lower their prices, too... pyramid scheme basically) is farcically naive. Since when do corporations lower prices out of a sense of generosity?
Ummm, playing Devil's Advocate (because I would never support replacing a graduated income tax wholly with a flat tax), one of the arguments in favour of some level of flat sales tax is precisely that rich people can't avoid it through tricky accounting. Whatever they decide to buy will get taxed at a particular rate. Whereas income tax can be avoided (as I understand) to some degree by hiding your income streams.
Er. What do you mean by rich people?
The kind of super-rich multi-millionaire types who hide their income in complex accounting can easily avoid a sales tax, because they can easily spend much of their money abroad or importing. Subsistence produce doesn't really constitute a large percentage of their expenditure. In fact, my hunch would be that they would be better off than before.
Most middle-class comfortably-well-off people are in pretty much the same boat, as most of their luxuries can be imported, or already are. How a flat tax deals with imports would be a major issue, because it would also have a major impact on trade.
What's left is services, food, petrol, housing and so on. How the tax dealt with mortgages, renting and so on would be a big thing, because that is a large percentage of most budgets. But essentially, being rich still would give you the opportunity to avoid tax.
Posts
None of this is even remotely true. Not even the tiniest, if-you-squint-at-it-while-on-the-right-drugs, littlest bit of true. It's all complete fucking bullshit that anyone with two brain cells should be able to smell a mile away. Fuck, the last two things are contradictory statements. One is A, and one is B, and God himself couldn't create a universe in which A and B could both exist, they're that mutually exclusive.
Also, thanks Jeffe for the sig.
While everything you are saying is 100% correct, I think you're presenting it in a negative light.
In an attempt to put it objectively:
People are going to choose the investments that they believe will give them the best return (usually monetary return, but there are other aspects as well). Taxing capital gains is going to decrease their net returns by the ammount of the additional taxes. As long as that ammount does not negate the value advantage that the particular investment has, it will have no effect on that person's habits.
The risk here is that if the taxes are high enough, the return will be reduced to the point where it is more lucritive to go do something else entirely with your money.
That's why people generally hedge their bets by investing in both high and low risk stocks. The high risk ones have a bigger potential payout, but they could also tank, so they buffer it with stocks with lower returns, but have a small chance of diving. If all of a sudden there's no buffer, or the risk is too great for the reward, the money goes elsewhere.
The "Fair Tax" plan does levy a federal sales tax on new "essential goods" used for personal consumption, it just offers rebates (or "prebates") to everyone for purchases "up to the poverty line" (according to Huckabee's version). So "essential goods" are only effectively untaxed if you're dirt poor.
The federal "poverty line" for single people is just over $10K a year, FYI.
For those of you who believe cutting taxes increases revenue
I didn't discount risk and reward, I simply skipped past it, rather than explaining it.
The effect is exactly the same if you want to consider risk versus reward explicitly. The rewards are decreased while the risks remain the same, but as long as the current investment is still the one with the most favorable outcome, there is no reason why some one would change investments.
True to a point, but you're discounting non-monetary incentives. If I see a twenty sitting across the street, I'll go across to pick it up. If you decrease the denomination, I'll be less likely to go to the effort. I mean, I probably won't even bend over to pick up a penny that's right under me. It's not worth my time.
Different people have different thresholds for action. Hell, a rich guy might not even cross the street for anything less than a hundred. Now, it's true that raising taxes on the capital gains will pretty much be a binary thing for a given person. I might not change my behavior at all if you raise the tax from 10 to 15%. But nationwide, many people will, and that aggregate behavior will result in correspondingly less investment.
I think we're more or less on the same page - capital gains taxes of some sort are a good idea, provided they're not too high. But I'm reading you as saying that we can raise the tax rate a certain amount without having any effect on investment at all, and that I disagree with. Small increases will have small effects, but the effects will be there. It's just that the good coming from that tax hike might outweigh the decrease in investment.
It has been found that this is equaled out by the fact that many others will just do more work to get the same amount. If the tax also raises prices, they'll actually work even more to afford the same amount.
I file a 1040EZ, takes about fifteen minutes.
And most of that is clicking "next" in the free TurboTax.
I wasn't discounting non-monetary incentives, at least it was not mu intention. I lumped them in with the general "value" of the return.
Personally, I own some Israel bonds that, while being pretty low risk, aren't necesarily the best maximization of my investment potential. However to me personally, the value of investing to Israel makes up for any other associated value gap. Honestly, I would have to reach a point where I was losing money on those bonds before I would decide not to invest in them, because of the non-monetary value to me.
Edit: And what I was saying was that small increases will have no major effects. There will definitely be some people whose investmentsare affected, but if done properly, as you and I both agree on, the effects will be overwhelmingly positive.
Say Samsung has created a HDTV built out of gold and custom made for Richie Rich. Richie Rich doesn't want to pay tax on it so Samsung gives the TV to Bob in accounting with the instructions to sell it to Richie Rich used. Richie Rich then buys it and Bob keeps the money but he doesn't get a paycheck for the next two years to balance that out.
It's fraud but how would you prove it?
There is such a thing as forensic accounting.
Exactly.
The real reason is that the rich people who were really behind capital gains tax reduction and possibly elimination are greedy fucks. But thats neither here nor there.
Yes. Uh, thanks. But what's step one?
Follow the paper trail. That's ALWAYS step one.
Basically the risk involved (people at this hypothetical Samsung would go to prison for this) is not worth whatever reward would come of it (why does Samsung give a shit if Richie Rich pays tax on their TV?). And all it would take is for somebody to find out that it may have occurred...following the paper trail in such a situation would probably be fairly trivial.
The fair tax - a 23% sales tax on "all" goods - is retarded for the following reasons:
So, the argument is that even with a sensible rebate system that doesn't fuck the poor/middle class completely over, there wouldn't be enough taxes generated, right?
Something off the fairtax website that's confusing me.
http://www.fairtax.org/site/PageServer?pagename=about_faq_answers#2
If I'm understanding that correctly, they want to replace all of those taxes with just the flat tax? That's...well, down here they have the relevant to what jeffe said question,"Is consumption a reliable source of revenue".
Aside from the fact that unless I'm reading it terribly wrong, their chart isn't matching what they're saying, it seems like they're only comparing income taxes with all the projected fair gains tax, instead of all of the taxes it mentioned it was replacing.
On the black screen
So as far as I know, one of the arguments for this is a reduction in black market incentives (by which I mean untaxed income, not necessarily untaxed sales).
I am aware that the burden, regardless of this point, falls heavier on the poor than the rich and is regressive, however nonetheless it doesn't invalidate this positive as I understand it.
(Again, please don't crucify me, I wouldn't support a 23% flat tax)
Is this something someone can refute, or is it just the general feeling (my feeling as well) that this positive does not outweigh (or come close to outweighing) the negatives?
http://newnations.bandcamp.com
There wouldn't be a tax on purchases imported from abroad, so you'll just see more European widgets come into vogue since all the tax sheltered rich will start doing their shopping in Milan. If you want to implement a flat tax then look into the NIT. It's the only one that's practical, progressive, and feasibly implementable. Not that it doesn't have plenty of kinks to be worked out as well.
The aim of the flat/fair tax as mentioned by its proponents, though, is to allow people to have a lower tax burden and therefore more money to get themselves out of debt, invest, spend, whatever. However, if you end up instituting such a proposal and all it ends up doing is create more hardship for those you were wanting to lift the tax burden from then yes the negatives outweigh any positives gained. Considering what one advocated for didn't happen in implementation, one's plan is a failure.
Currently DMing: None
Characters
[5e] Dural Melairkyn - AC 18 | HP 40 | Melee +5/1d8+3 | Spell +4/DC 12
Embedded taxes absolutely do exist. But believing that companies will lower their prices (thus reducing what would be pure profit) because their own costs may have gone down (it all depends on if their suppliers lower their prices, too... pyramid scheme basically) is farcically naive. Since when do corporations lower prices out of a sense of generosity?
Thank you.
Er. What do you mean by rich people?
The kind of super-rich multi-millionaire types who hide their income in complex accounting can easily avoid a sales tax, because they can easily spend much of their money abroad or importing. Subsistence produce doesn't really constitute a large percentage of their expenditure. In fact, my hunch would be that they would be better off than before.
Most middle-class comfortably-well-off people are in pretty much the same boat, as most of their luxuries can be imported, or already are. How a flat tax deals with imports would be a major issue, because it would also have a major impact on trade.
What's left is services, food, petrol, housing and so on. How the tax dealt with mortgages, renting and so on would be a big thing, because that is a large percentage of most budgets. But essentially, being rich still would give you the opportunity to avoid tax.