European Court Ruling on UK Taxation Laws

[WhoWee]

This is regression in the extreme, though. Poorer people have to spend their pay and they would pay almost all of a national sales tax. Rich people don't have to spend their income and expose themselves to taxation. Even better for them, much of their income is not categorized as income.

That would depend upon the definition of taxable items - wouldn't it? If everything was taxed - utilities, raw materials, equipment, building materials, parts, and services then wouldn't it be possible that business (including the largest corporations) might carry the load?

A real world example - for a small business:

If the national sales tax was an even 10%, a small (family owned) sandwich shop franchise with revenues of $300,000 per year and COGS ($120,000) 40%, utilities of $25,000, franchise costs $30,000 (5% franchise fees and 5% marketing marketing) 10% and business/professional services of $10,000 = $185,000 in taxable purchases @ 10% = $18,500 in tax due. The same shop (after labor $60,000 and rent/mortgage $35,000) would have a pre-tax income of $20,000 under current rules (before depreciation and healthcare or other benefits) - less the $18,500 in national sales tax = $1,500 in annual income. Hopefully, the owner was included as an hourly worker in the payroll figure and they're building equity in the real estate.

 

[Jasongreat]

I agree that a national sales tax would be better, but it would still be involuntary. Would you say that if one chooses to work for money then they are choosing to pay taxes on it?

The advantage would be (personal finances) privacy restoration (to a degree) and the inability of government to "divide and conquer" since we would all be in the same boat. And it would be hard for politicians to deceive people about how much taxes are paid by different categories of people.

Yes I would say that paying income taxes is voluntary, I routinely turn down overtime since more of that money goes to taxes than goes to my pocket. I think that taxes should come from our discretionary money though, not out of our living expenses. People should be able to keep all their income and only be taxed on their profits(money not used to survive), just like corporations do now. We could set up a savings percentage so one could set aside 10%of their income per year tax free, they could spend all they needed to on living expenses and what ever they have left over would be the taxable amount. Which imo would stimulate independence as well as the economy and personal savings, the more people spend to live and keep their savings near the limit the more of the value of their labor they keep. I feel like a national sales tax could be set up on only certain items like things people want but don't neccessarily need. One of the big advantages of a system set up like this is all our taxes would be placed in one spot, if the government grew too much so the tax rate got too high the people would feel it right away, instead of allowing governments to bleed us through a thousand cuts to where very few know how much they really pay in taxes each year. Also, if people were incentivized to save we wouldn't need all the social programs we are now inundated with and which are bankrupting our country.

 

[turbo]

Let's look at "income" and the taxes on income. What is the tax rate on payroll earnings? What is the tax rate on capital games? What is the tax rate on interest, rent incomes, etc? The US tax code is regressive and is aimed at lower-earning wage-earners. The wealthy can shelter income, and they enjoy low tax-rates that are designed especially to favor the types of income that they enjoy.

Right-wingers sometimes float the "flat-tax" red-herring, but they fail to mention that if all income was taxed equally on a fair basis, their sponsors would have to pay a fair share of taxes, and that is something that they are not willing to do. A progressive income tax on all forms of income would be fair, and would set this country back on a decent footing in short order, IMO.

 

[mheslep]

Let's look at "income" and the taxes on income. What is the tax rate on payroll earnings? What is the tax rate on capital games? What is the tax rate on interest, rent incomes, etc? The US tax code is regressive ...

One can argue some about payroll taxes which are intended to be returned to you (good luck) if you like, or the odd Rockefeller escapee, but taken as a whole the federal income tax is overwhelmingly progressive, deductions and all.

 

[Al68]

This is regression in the extreme, though.

Not regressive at all, much less "in the extreme".

Poorer people have to spend their pay and they would pay almost all of a national sales tax.

False. Poor people tend to spend what little they have on things exempt from every National sales tax plan I've seen.

Rich people don't have to spend their income and expose themselves to taxation.

That's right. If they invest their money in the economy instead of spending it to consume wealth, the amount invested would not be taxed directly, except to the extent that the investment is spent on material goods. The portion spent to pay wages would be tax-free.

Even better for them, much of their income is not categorized as income.

None of it would be categorized as anything without an income tax. Duh!

The US tax code is regressive and is aimed at lower-earning wage-earners.

Instead of proving this to be false for the umpteenth time, I'll just ask you to substantiate it for the umpteenth time. Any evidence for that assertion?

How many more times do you plan to make this assertion with no attempt to substantiate it, then others prove it false unambiguously, then you drop it just to make the same claim later, with the same result? I predict many, based on history.

Right-wingers sometimes float the "flat-tax" red-herring, but they fail to mention that if all income was taxed equally on a fair basis, their sponsors would have to pay a fair share of taxes, and that is something that they are not willing to do.

Any evidence of that? I'm a "right-winger" and I advocate a flat tax (exempting a large standard deduction, which would exempt the poor and lower middle class completely). So do many Republicans.

Any evidence of a single Democrat in Washington who favors any kind of flat tax whatsoever?

 

[Mech_Engineer]

Let's look at "income" and the taxes on income. What is the tax rate on payroll earnings?

Why don't you tell us?

What is the tax rate on capital games?

It's only 0% on long-term capital gains for the bottom 2 tax brackets. This is a tax-break for the middle class, not rich people.

What is the tax rate on interest, rent incomes, etc?

Relevance? These are tax-breaks for everyone.

The US tax code is regressive and is aimed at lower-earning wage-earners. The wealthy can shelter income, and they enjoy low tax-rates that are designed especially to favor the types of income that they enjoy.

If that were true, how do you defend the fact that the bottom 40% of wage earners pay NO federal icome taxes (and actually get some money back), and the top earners pay the vast majority of the federal gov't tax revenues?

Right-wingers sometimes float the "flat-tax" red-herring, but they fail to mention that if all income was taxed equally on a fair basis, their sponsors would have to pay a fair share of taxes, and that is something that they are not willing to do.

Who are "their sponsors"? Everyone should pay a share of taxes which fund basic gov't services, do you not agree?

A progressive income tax on all forms of income would be fair, and would set this country back on a decent footing in short order, IMO.

Define "fair."

... and you say "would be" as if the US tax code isn't highly progressive right now!

 

[Mech_Engineer]

"A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy."
-A. F. Tytler

 

[WhoWee]

"A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy."
-A. F. Tytler

Then history repeats itself?

 

[Mech_Engineer]

Then history repeats itself?

Essentially yes. It's a little creepy this quote was made 200 years ago, and the US is essentially following the prediction...

 

[WhoWee]

Essentially yes. It's a little creepy this quote was made 200 years ago, and the US is essntially following the prediction...

Have you been watching Glenn Beck?

When the system no longer works (vacuum is created) something will replace the system (fill the void).

I mentioned Beck because he often talks about the "shadow government" (the czars that have not been approved by the balance of power) and the "puppet master" (he says George Soros). I agree, it's "creepy".

 

[Gokul43201]

Even with the flat tax on state services, if I pay twice the taxes someone else does, that doesn't mean I'm granted twice the access to roads or police.

Odds are, a family of four earning $100,000 can afford more (as well as bigger and less efficient) cars, more vacations, will be more likely to drive to a nearby grocery store, and will have more savings and investments to protect from burglars than a family of four living on a $50,000 annual income. So, to some extent, it seems fair that they'd have to pay more tax rather than an equal amount. A better system, if one were possible, might be to tax based on consumption of services - perhaps the topic for a separate thread.

 

[Gokul43201]

Essentially yes. It's a little creepy this quote was made 200 years ago, and the US is essentially following the prediction...

In what way do you think the US is following the prediction?

 

[Al68]

In what way do you think the US is following the prediction?

The obvious way? In many recent elections, a majority voted for the candidate who "promised the most benefits" from the treasury, and specifically for that reason.

Isn't that the primary message of the Democratic Party?

 

[WhoWee]

In what way do you think the US is following the prediction?

In the context of this thread, nearly half of the population does not pay Federal income tax.

 

[Al68]

"A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy."
-A. F. Tytler

Interestingly, Karl Marx said essentially the same thing.

But it's not a democratic process alone that's the problem. It's the combination of a democratic process and a government empowered to take property (that isn't owed to it) by force (institutionalized theft). Of course that scenario was thwarted by the U.S. Constitution, and worked pretty well for a while, until power hungry politicians realized they could corrupt the judicial branch by putting their cronies on the bench.

 

[mheslep]

Not regressive at all, much less "in the extreme"

Why don't you think sales taxes are regressive?

 

[Gokul43201]

The obvious way? In many recent elections, a majority voted for the candidate who "promised the most benefits" from the treasury, and specifically for that reason.

Isn't that the primary message of the Democratic Party?

So if this were accurate, Dems would be dominating government in recent history, on their way to establishing a dictatorship. How is that even remotely true?

http://en.wikipedia.org/wiki/List_of_Presidents_of_the_United_States#List_of_presidents

 

[WhoWee]

The obvious way? In many recent elections, a majority voted for the candidate who "promised the most benefits" from the treasury, and specifically for that reason.

Isn't that the primary message of the Democratic Party?

Your post made me think of this video.

 

[bobc2]

I think to keep the cost of running our economy in perspective, it might be relevant to consider the amount of money the wealthy contribute to the expansion of businesses, jobs and GNP generally.

Most of the money in the hands of low and moderate income people is spent on things consumed personally. But, most of the money used by the wealthy is not used for personal consumption. It is invested in a way by which the fruits of investment largely flow to others. When you carefully analyze what happens to their money you realize it is being used by others, resulting in more business expansion and more jobs. Even the profits from investment are continually reinvested for the most part--it is not used for personal consumption. The wealthy enjoy considerably more personal consumption than the poor, to be sure, but most of their wealth is in continuous use by others--it's a kind of capitalistic welfare system benefitting everyone. The ever-increasing taxing of the wealthy and corporations takes away these benefits that flow to the larger population.

The argument that the wealthy don't contribute their fair share results from very shallow and uninformed considerations.

 

[Al68]

Why don't you think sales taxes are regressive?

Whether a national sales tax is regressive or progressive depends on the specific plan. Like I pointed out earlier, the ones I've seen and would favor exempt food, housing, etc, and/or provide a mechanism to refund taxes paid by poor/lower middle class.

 

[Al68]

The obvious way? In many recent elections, a majority voted for the candidate who "promised the most benefits" from the treasury, and specifically for that reason.

Isn't that the primary message of the Democratic Party?

So if this were accurate, Dems would be dominating government in recent history, on their way to establishing a dictatorship.

That doesn't follow from my statement. I said "many", not all recent elections.

 

[rcgldr]

Most of the money in the hands of low and moderate income people is spent on things consumed personally.

Which creates the demand for goods in a consumer based economy.

But, most of the money used by the wealthy is not used for personal consumption. It is invested in a way by which the fruits of investment largely flow to others.

Much of that investment is in the form of the stocks, which other than IPO or company direct sales of stock, doesn't help the GDP significantly, although it does help drive up the prices of stocks that make up a big part of many people's 401k plans.

The ever-increasing taxing of the wealthy and corporations takes away these benefits that flow to the larger population.

The trend has been the other direction:

http://rationalrevolution.net/articles/american_income_taxation.htm

Also, from CNN Parker Spitzer episode (Jan 4, 2011), the total tax in the USA isn't alll that progressive. Deduct income spent on the basic necessities (food, clothing, shelter, transportation, ...) from total income as a percentage, and the graph would probably show a regressive total tax pattern.

 

[Vanadium 50]

"Total tax" seems like a difficult thing to calculate. Does it count state taxes? Excise taxes? Property taxes? Indirect taxes? (e.g. tariffs and subsidies)

What exactly are we looking at here?

 

[rcgldr]

"Total tax" seems like a difficult thing to calculate. Does it count state taxes? Excise taxes? Property taxes? Indirect taxes?

I would assume it includes all "direct" taxes, but no "indirect taxes", such as those passed on from companies via the price of products. You'll have to ask CNN how they came up with that chart, although I've seen similar ones in the past. Link to the blog, the chart is included in the third article:

http://parkerspitzer.blogs.cnn.com/page/3

 

[WhoWee]

I would assume it includes all "direct" taxes, but no "indirect taxes", such as those passed on from companies via the price of products. You'll have to ask CNN how they came up with that chart, although I've seen similar ones in the past. Link to the blog, the chart is included in the third article:

http://parkerspitzer.blogs.cnn.com/page/3

Elliott Spitzer - now there's a guy with "skin in the game". (sorry - just reading the headlines from the link)

 

[Mech_Engineer]

Also, from CNN Parker Spitzer episode (Jan 4, 2011), the total tax in the USA isn't alll that progressive. Deduct income spent on the basic necessities (food, clothing, shelter, transportation, ...) from total income as a percentage, and the graph would probably show a regressive total tax pattern.

How do you account for the fact that this graph ignores that the bottom ~43% of americans receive tax "refunds" equal to or greater than their tax contribution, negating their contribution?

 

[Vanadium 50]

Unless we know exactly what's in this plot, it's kind of meaningless. It's possible that state and other taxes are responsible for the effect you see. It's also possible that credits are excluded that that that's responsible for what you see.

We have a source, but the source doesn't tell us what we are looking at.

 

[rcgldr]

I don't know the details of the CNN link, but the other one I posted has more data, and shows that the relative tax burden for the wealthy has been reduced over the last few decades.

http://rationalrevolution.net/articles/american_income_taxation.htm

 

[WhoWee]

I don't know the details of the CNN link, but the other one I posted has more data, and shows that the relative tax burden for the wealthy has been reduced over the last few decades.

http://rationalrevolution.net/articles/american_income_taxation.htm

Your information was last updated in 2004?

 

[Mech_Engineer]

I don't know the details of the CNN link, but the other one I posted has more data, and shows that the relative tax burden for the wealthy has been reduced over the last few decades.

http://rationalrevolution.net/articles/american_income_taxation.htm

And I posted links directly from the IRS which show the percent contribution of the rich has increased (despite the reduction in the tax rate). So which is right?

 

[Mech_Engineer]

Unless we know exactly what's in this plot, it's kind of meaningless. It's possible that state and other taxes are responsible for the effect you see. It's also possible that credits are excluded that that that's responsible for what you see.

We have a source, but the source doesn't tell us what we are looking at.

The graph also seems to be contradicting data from the IRS.gov website, which plainly presents data that the top 50% of the population pay 97% of all taxes. If we assume this is true, how can the graph show the bottom 40% paying approximately 7-8% of taxes?

Something doesn't add up in that graph.

 

[rcgldr]

The graph also seems to be contradicting data from the IRS.gov website, which plainly presents data that the top 50% of the population pay 97% of all taxes. If we assume this is true, how can the graph show the bottom 40% paying approximately 7-8% of taxes?

I think that's 97% of all federal income taxes, not all taxes.

 

[Vanadium 50]

If that plot is "all taxes", that's all the more reason for understanding what is in there, as "all taxes" might (probably would) include state and excise taxes, which vary by individual: a smoker, drinker and driver in California will pay more than someone who does none of these things in New Hampshire.