Thread: The State Death Tax

Originally Posted by goober

Why is taxing income from labor justified?
Shouldn't property be the prime target of the tax man?
It's the easiest tax to collect, it doesn't require government intrusion into your private affairs. It's almost impossible to avoid paying property tax, just close the loopholes, just divide the total assessment (over exclusion) by the budget and there's the tax rate.

Its very difficult to collect, as property is not in a cash form, and it requires legions of assessers to value property. Its also very unfair as two people with identical homes may be taxed differently, and if you dont pay, the sheriff comes and takes your house. This means you effectively dont own your property, as you have to pay the govt to keep it.

Really, there is no rational tax system. Govt has to be funded somehow, and we should find the least punishing way to do it. I dont anything would agree that our current system is that way.

Originally Posted by smurf

1) Encourage earning and saving over consuming.

This would be a bad thing. It's a good idea for me or you to save as much money as possible. It's a bad idea for everyone to save as much money as possible. That's how recessions happen.

2) Tax the vast amount of money (most notably from the drug trade) which goes unreported as income.

While simultaneously eliminating taxes on all the money you make without spending, making the tax structure highly regressive.

3) Simplify the tax code.

It would simplify the tax code. There are better ways to do that though.

Originally Posted by Porras

This would be a bad thing. It's a good idea for me or you to save as much money as possible. It's a bad idea for everyone to save as much money as possible. That's how recessions happen.

That is, of course, shortsighted. There may very well be an economic adjustment at first, but it would be far outweighed by the increase in capital that the citizens would accrue from saving at a greater rate.

Originally Posted by Porras

While simultaneously eliminating taxes on all the money you make without spending, making the tax structure highly regressive.

Everyone gets a rebate for taxes paid at the poverty level, thus it would not be "regressive" at all. Unless you somehow are going to argue that the poor spend more than the rich do.

Originally Posted by Porras

It would simplify the tax code. There are better ways to do that though.

I haven't seen one yet.

Originally Posted by smurf

That is, of course, shortsighted. There may very well be an economic adjustment at first, but it would be far outweighed by the increase in capital that the citizens would accrue from saving at a greater rate.

I think it would be detrimental in the long term. America is prosperous because people spend like sailors.

Everyone gets a rebate for taxes paid at the poverty level, thus it would not be "regressive" at all. Unless you somehow are going to argue that the poor spend more than the rich do.

They spend a higher percentage of their income.

I haven't seen one yet.

Flat tax above the poverty level would work. There's still the need to file, making collection more problematic than a sales tax, but it would be much simpler than our current system.

Originally Posted by Porras

I think it would be detrimental in the long term. America is prosperous because people spend like sailors.

I disagree completely.

You should first have money, before you spend money. This proposal would go a long way towards creating an incentive for people to do that. America's financial problems are mostly attributable to the fact that we spend too much.

Originally Posted by Porras

They spend a higher percentage of their income.

That is not always true. Regardless, with a rebate for taxes paid at the poverty level, they would pay no tax. How is the poor paying no tax at all regressive?

Originally Posted by Porras

Flat tax above the poverty level would work. There's still the need to file, making collection more problematic than a sales tax, but it would be much simpler than our current system.

Anything would be simpler than our current system, but a national sales tax would be much simpler.

Originally Posted by smurf

I disagree completely.

You should first have money, before you spend money. This proposal would go a long way towards creating an incentive for people to do that. America's financial problems are mostly attributable to the fact that we spend too much.

On an individual level, I completely agree with you, but that mentality doesn't do much to promote business. The entirety of my income requires that people spend twice as much as necessary for pizza and then give me a couple extra bucks just for the hell of it. If everyone is saving, I'm suddenly out of work along with many others across the nation.

That is not always true. Regardless, with a rebate for taxes paid at the poverty level, they would pay no tax. How is the poor paying no tax at all regressive?

I'm not saying it's fully regressive. The guy making and spending $20,000 a year, however, is paying a higher percentage than the guy making $500,000 and spending $100,000.

Anything would be simpler than our current system, but a national sales tax would be much simpler.

Yes, but simpler doesn't always (I'd say especially in this case) mean better.

Originally Posted by Porras

On an individual level, I completely agree with you, but that mentality doesn't do much to promote business. The entirety of my income requires that people spend twice as much as necessary for pizza and then give me a couple extra bucks just for the hell of it. If everyone is saving, I'm suddenly out of work along with many others across the nation.

Not to burst your bubble, but if your livelihood depends on the irrationality of a consumer continuously consuming beyond his means, then you are in trouble at some point anyway. In fact, one could argue that is exactly where we are now in the economy: the post-burst hangover of the housing over-consumption party.

Originally Posted by Porras

I'm not saying it's fully regressive. The guy making and spending $20,000 a year, however, is paying a higher percentage than the guy making $500,000 and spending $100,000.

No. If poverty level is $20,000, then that guy is paying no tax, even if he spends every penny of the $20,000.

If the tax rate is 25%, then the guy making $500,000 is paying $20,000 if he only spends $100,000 (($100,000-$20,000) * 25%). I might add that it is highly unlikely that someone making $500,000 annually is only going to spend $100,000, but it is possible.

Regardless, the more that one spends, the more that they pay in tax.

Originally Posted by Porras

Yes, but simpler doesn't always (I'd say especially in this case) mean better.

You are certainly entitled to your opinion. I hold a different view on the matter.

Originally Posted by smurf

No. If poverty level is $20,000, then that guy is paying no tax, even if he spends every penny of the $20,000.

But the poverty level isn't $20,000. For a single person, it's $10,830 as of 2009. This means the guy making and spending $20,000 is paying 11.5% (assuming the tax is 25% of total cost) of his income in taxes and the guy making $500,000 and spending $100,000 is paying 4.5% of his income in taxes.

I'll also point out that neither of these allows the nation to pay it's bills. Maybe if the tax were 60% of total cost.

Originally Posted by Porras

But the poverty level isn't $20,000. For a single person, it's $10,830 as of 2009. This means the guy making and spending $20,000 is paying 11.5% (assuming the tax is 25% of total cost) of his income in taxes and the guy making $500,000 and spending $100,000 is paying 4.5% of his income in taxes.

I'll also point out that neither of these allows the nation to pay it's bills. Maybe if the tax were 60% of total cost.

Actually, with all the tax credits, he may not be paying any tax.

Originally Posted by jviehe

Actually, with all the tax credits, he may not be paying any tax.

I'm assuming the desire for a simpler system will mean we have something the average person can make sense of. Increase of the poverty line for more dependants and that's it.