Tax Season Start
Long read if you want to understand Tax if not just ignore it.
Taxes in America finally explained. Since it is tax season, let's put tax cuts in terms everyone can understand. Ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, A,B,C,D (the poorest) would pay nothing. E $1. F $3. G $7. H $12. I $18. J (the richest) would pay $59. The owner threw them a curve: I'm going to reduce your daily beer by $20. Drinks for the ten now cost just $80. The bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount. A,B,C,D,E (the poorest) would pay nothing. F $2. 33%savings = $1 G $5. 28%savings = $2 H $9. 25% savings = $3 I $14. 22% savings = $4 J (the richest) would pay $49. 16% savings = $10 But once outside the restaurant, the men began to compare their savings. F "I only got $1 out of the $20, but J got $10!" E "Yeah, that's right, I only saved $1,too. It's unfair!" H "Why should J get $10 back when I got only $2? The wealthy get all the breaks! A,B,C,D "Wait a minute, We didn't get anything at all. The system exploits the poor! So all 9 men beat up J. The next night J didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between or among all of them for even half of the bill! And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier. Zpeed |
This isn't really an accurate comparison. Its an oversimplified example for those that think a weighted tax system is unfair.
The first major flaw is that it assumes there is only one really rich person and one really poor person. Unfortunately, the scale is tipped so there are thousands (if not more) poor people for every rich person. So, you have thousands of people paying $1 and 1 person paying $49. Also, as a whole, the country needs to shift some of the personal burden onto the rich because they can afford it. The opposite, a flat tax system, just reduces the ammount of money a government takes in (not necessarily a bad thing) while widening the gap between the rich and the poor. The rich would get richer, the poor wouldn't be able to live and the middle class would disappear into the poor. And on that note, this whole thing is unpatriotic. If you hate our country so much that you need to squabble over a few bucks, than you may as well just leave. It'll be better for everyone. |
Quote:
|
Oh, and the patriotism thing was a joke :p
But I do find it funny that the people that most often claim to patriotic also threaten to leave over tax reasons. |
Here's another thing missing from that analogy: H I and J all have expensive tax lawyers and lobbyists they each pay $2 to find all the loopholes that allow them to save $10 to $20 on their tax bills.
Did anyone watch the NV Democratic debates? Obama pointed out that Warren Buffet pays a lower tax percentage than his secretary because his income is primarily due to stocks and dividends, and not salary that's directly taxable. IMO, the only truly fair tax system is pure sales tax. Separate all goods and services into three categories: 1) Staples (food/services that people need to survive) tax free 2) General (the majority of goods/services) 10% sales tax 3) Luxury (expensive items that you could get by w/ the general version but you'd rather spend the money on the "better" item... like a $50k+ car) 20% sales tax Force the states to integrate their income taxes into the sales tax system, so CA residents would generally pay 10% Fed + 4% State + 7% county/city = 21% sales tax. Of course that sounds pretty high, but remember that you'll generally be getting 35% more money per month. Items destined for resale (raw goods used in manufacturing, items for sale in a store, etc) are not taxed. Property tax probably remains a separate system. Items imported or exported are subject to separate tariff laws. Use a computer/network/database based accounting system that allows resellers to easily pay their taxes on a monthly basis via their POS systems. So taxes are collected far more painlessly than having to file a report once a year to settle up w/ the gov't. This would also reduce the cost of maintaining the IRS tremendously. And since we're now collecting taxes on all sold items, we're collecting money from income tax evaders, illegals, drug dealers, and the big one: internet sales. The goal is, every month put *all* the money I've earned into my pocket and let *me* decide how much my gov't is going to get from me by how much I spend. Work the percentages such that the gov't gets all it needs and I'm paying them less yearly. Also, I'd like to see Social Security as we know it dismantled... and if it comes back, none of this "those that pay now pay for those collecting now" crap... If I'm forced to pay into it, I want my money invested for me and guaranteed to be there when I need it, not spent on the folks that are collecting now in the hopes that there will be people to pay me back later. And finally, we'd need to vastly upgrade our concept of fiscal responsibility. IMO, every large gov't organization should be able to operate fine on half the money they're getting. If the gov't were a business, it'd be out of business. For examply, you don't see successful businesses paying out guaranteed raises to tenured employees regardless of performance ('cept for places like Ford and GM who are going to be out of business due to the unions they employ). Make our gov't programs responsible for their own livelihoods, much like the USPS. If a program isn't making money, find out why and change it. Frankly, I don't see any reason why (with the exception of the military) all of our programs can't be run like private businesses who's goal is to make a profit. /overgeneralized rant |
Scott,
The biggest issue I have with your idea is the classification of things for the different tax brackets. Is soda a luxury item because I don't really need it? Is an STi a luxury item because it's not an efficient commuter vehicle? Why not just a flat sales tax period? More expensive things will pull in more total tax. Think there would also need to be a way for the merchant to divy up the collected sales tax to the different localities in the most efficient way possible. Wouldn't be a big deal for brick-n-motor stores but online retailers would need to cut a check to every individual city (worst case) Totaly agree on the Social Security part. |
What I still don't understand is who pays to fix the beer fridge? A,B,C, or D??
|
I got news for ya - with that income difference "J" wouldn't be caught dead hanging in public around with those peons "A" thru "I". Although "B"'s wife is on meth and a parttime hooker that "J" sees about once a week at lunchtime.
And if any of you guys think you'll ever make it even to the "H" or "I" income level... keep dreaming buddy. |
The downside to moving all taxation to the sales side is that it curbs spending and slows/reverses economic growth. Income tax on the other hand reduces buying power, but does not affect spending of what's left.
/overgeneralization response |
Quote:
The real goal of the luxury tax would be to allow the tax code to apply to all people regardless of income, such that low income families can get buy easily because most of the money they spend is on 60% staple items, 30% general, and only 10% luxury. But rich mo-fos that spend a ton of money on sports cars, boats, vacation homes, will be paying 10% staple, 40% general and 50% luxury rates. A popular alternative method is to really go with a flat sales tax across the board, but give tax credits in the form of cash refunds to low income folks. But this sort of thing would fit into a re-worked welfare program IMO. But IMO welfare needs to be overhauled to be a performance based system like the rest of the gov't. Something along the lines of requiring recipients to meet milestones that push them to get off welfare in order to continuing to receive it... like educational steps. For example, a single mother with 3 kids wants to receive welfare, instead of giving her money based on the current requirements, how about the government pays her to go to college. Require her to spend a minimum of 25 hours / week in classes in exchange for a welfare wage that pays enough to feed, cloth, and house her and her family. Also include funds for day care if her kids are young. Might as well throw in free healthcare as well. Sure it will be expensive as hell on a per-case basis, but hopefully it will end long term dependency on welfare. With regards to Kevin's comments... a switch from income tax to sales tax would generate economic issues during the transition, so it would likely need to be done during a period of prosperity, but in the long term I doubt there would be a fundamental difference in the controls over the economy. Fed loan rates would still apply for manipulation of inflation. Plus, I imagine that being able to trade stocks on the market w/o taxation would do wonders for boosting the economy opposite the slowdown found at the sales counters across the country. |
Scott for President!
|
Quote:
|
Quote:
|
Regarding loans, I was referring to cars suddenly being far more upside-down upon signing than they currently are. I think car sales would suffer across the board until either lenders considered taxes paid as part of the purchase price and inherent value of the car, or taxes were collected based on the dealer's cost and applied prior to the sale. Adding $4-6000 to the typical loan amount on a vehicle without adding it to the value of the car makes it a lot harder for most people to get a loan with normal down payment amounts as they are today. It's not really an issue about people not being willing to pay it.
|
Quote:
Plus, since many cars are "staple" items, they wouldn't be taxed anyway. Anything that qualifies as basic transportation (which is what people that are pinching pennies would likely buy anyway) would be categorized as a "staple" and therefore would be un-taxed. But if you want a sports car or luxury car or something "baller", well you're paying 20% tax... you gotta pay to play after all! |
Quote:
This really only leaves you with 2 "new" categories. The existing tax free food items and everything else. there is no real reason to define general and luxury categories IMHO. You want a "new" something other than food staples, you pay 25% tax. That should greatly reduce waste and promote second hand stores and the repair of used items rather than disposal. And you do pay tax on new homes/construction/remodeling as the materials and labor that made them have never been taxed. Essentially everything except reasonable sustenance gets taxed exactly once when it reaches the first end consumer whether the consumer is a person or corporation. |
Here's an interesting article (though I skimmed over much of it since the economic math involved is dry, boring, and over my head).
Basically, this guy is arguing that the US is bankrupt, and here's his solution for avoiding hyper-inflation: Quote:
The bottom line is: it's going to cost a metric shit-load of money and a new dawning of national fiscal responsibility and/or selling the whole country to China to prevent another depression. A 33% national sales tax could help... but damn that's going to hurt my race budget. :lol: Then again, I won't be doing much racing if we have a new depression. :( |
So they assume consumer spending will be about the same? Everyone would freak out and hardly buy anything after a "30%" raise in price, even though they are getting more on their paycheck. The drive of spending by the consumer would be strangled and the economy would crumble.
|
Quote:
|
Since we are posting articles, here is a rebate one.
http://www-personal.umich.edu/%7Eshapiro/TaxRebates.pdf |
Quote:
Oh, and an increase in inflation isn't just something that might happen, it's already happened. The price of food staples like milk, eggs, meat, etc. have all gone up 20-30% in the last year. Anyone else been looking at their grocery bill and wondering why it seemed so damned high these days? You're not just imagining it, things really are more expensive now. Dollars to donuts it just gets worse, because our currency is sinking like a lead balloon and the Fed doesn't seem to be interested in anything but continually cutting interest rates. |
Quote:
The weak dollar is not bad for the economy. This is a common fallacy. It is likely that the weak dollar is going to save us from the current slowing economy by increasing exports, as well as foreign investors saving our struggling financial institutions and investing in our real estate market. And the largest TAX issue right now in the US is not taxing the rich, but small and large businesses taxes. The US has one of the highest corporate tax rate vs. European nations and small business are taxed at the same rate as individuals. This is ridiculous. This is part of the reason employers can't afford health care plans for their employees and why small business are getting crushed. Why would anyone want to own a business or invest in the US when it is more expensive to do business here unless the dollar was ridiculously cheap and/or the companies were on sale. Welcome to the world economy. Be glad it is here to help, or we would be headed for a depression, not just a slow down or mild recession! |
Quote:
Since the crops used to be used for everything in the grocery store, including feeding livestock, the prices have gone up. There are hundreds of ethanol refineries under construction, and when they all start demanding corn and other crops in the next few months/years, the situation will get even worse. The ironic part is that if every singe crop grown in the US was converted to ethanol, it would only cover 4% of the current energy use (and in the process the population would starve and the revenue from food exports would dry up). Awesome! Article |
My uncle owns like 10 tractors that he uses for construction. He was telling me that in 2009 (IIRC) he'll have to have most of his heavy equipment updated for new smog laws, if that's even feasible...he may have to just sell his old equipment for pennies on the dollar and buy new or maybe retire.
Anyway, FWIW, he was telling me that it takes more than a gallon of diesel to make a gallon of biodiesel. :huh: Any idea if that's true? |
Quote:
It's an awesome idea... using "America's Heartland" to detach ourselves from Middle Eastern oil. But it's not like we've got excess corn flying out of the nation's ass... Plus the cost of converting corn to fuel is not cheap, nor is it efficient when you factor in the cost of farming plus the cost of refining. Maybe going the route of using farm waste or biofuel as fuel for electric power plants... that's not a bad idea. But trying to fuel cars with corn isn't even a good stop-gap measure on the way to hydrogen power. I will say though, E85 is a great fuel... great in turbo cars. IMO, we need nuclear, wind, solar and clean-coal power, and plug-in hybrid or straight electric cars. Use ethanol just as an octane booster for normal fuel... don't expect it to save us from external energy dependency. |
All times are GMT -8. The time now is 12:34 AM. |
Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2024, Jelsoft Enterprises Ltd.
All Content Copyright Subaru Enthusiasts Car Club of the Sierras unless otherwise noted.