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Confused
RealPoor Master of Posts
Joined: 08 Feb 2004
Posts: 6730
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 Posted: 08/11/04 - 11:00 Post subject: Please not be election-year shinanigans!
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It probably is, but Bush said that a National sales tax as a replacement to income tax is "the kind of interesting idea that we ought to explore seriously".
I always thought such an tax system would be a great idea. I don't know what kind of repercussions it would have on the economy (would people buy less since goods cost more even if they didn't pay income tax?), but it's just a good idea to me. It would reward production, since you wouldn't be taxed when you made more and would encourage savings and personal financial security (while punishing excessive consumption), since you could easily avoid taxes buy simply not buying anything. The idea of a Republican-controlled congress and executive branch for at least two years without concerns of reelection excites me. The budget could be balanced (via budget cuts) and the tax system could be overhauled. Plus all the leftists would be steaming mad.
http://news.yahoo.com/news?tmpl=story&cid=615&u=/nm/20040811/pl_nm/campaign_bush_taxes_dc_1&printer=1
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Renork
RealPoor Master of Posts
Joined: 23 Jun 2003
Posts: 6282
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Posted: 08/11/04 - 11:05 Post subject:
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Interesting idea, I dont think I personally have enough knowledge in the economy or taxes to realy have an educated opinion but from my feable view it doesnt sound like a horrible idea.
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sinrakin
RealPoor Master of Posts
Joined: 11 Oct 2002
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Confused
RealPoor Master of Posts
Joined: 08 Feb 2004
Posts: 6730
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Posted: 08/11/04 - 11:26 Post subject:
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| sinrakin wrote: | http://www.realpoor.com/viewtopic.php?t=27221
Also, I'm not sure that "punishing excessive consumption" is the best possible thing to do for the economy. |
I'm not sure if overall spending would decrease, though. You would be able to buy the same amount of goods, but you would be given more freedom since you could keep more money by not buying those goods. Alan Greenspan expressed concern about consumer debt and it's potential to destroy the economy ($8,500 revolving credit debt is ridiculous). I would like to see economists debate the issue, though.
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sinrakin
RealPoor Master of Posts
Joined: 11 Oct 2002
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Posted: 08/11/04 - 11:33 Post subject:
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I'd like to see more debate about it too. It's not a bad idea. And since a lot of European countries do it, there should be a lot of data out there to analyze its effectiveness.
As far as consumer debt destroying the economy, I think that reflects the fact that we've been keeping interest rates low to stimulate the economy for so long. We're finally starting to correct that. And personally, I think the whole concept of revolving credit card debt is ridiculous.
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Confused
RealPoor Master of Posts
Joined: 08 Feb 2004
Posts: 6730
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Posted: 08/11/04 - 11:40 Post subject:
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| sinrakin wrote: | I'd like to see more debate about it too. It's not a bad idea. And since a lot of European countries do it, there should be a lot of data out there to analyze its effectiveness.
As far as consumer debt destroying the economy, I think that reflects the fact that we've been keeping interest rates low to stimulate the economy for so long. We're finally starting to correct that. And personally, I think the whole concept of revolving credit card debt is ridiculous. |
Credit card debt is not a new thing. It certainly isn't a result of lower interest rates (average revolving debt has been reduced in the past couple of years thanks to home equity loans). Revolving debt remained high in the late 90's as well, when interest rates were much higher than they are now and people were better employed. I think it has more to do with America's consumer culture.
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Frax
RealPoor Master of Posts
Joined: 11 Oct 2002
Posts: 8489
Location: Fuck yoiu fucking fuckers
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Posted: 08/11/04 - 12:31 Post subject:
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| sinrakin wrote: | I'd like to see more debate about it too. It's not a bad idea. And since a lot of European countries do it, there should be a lot of data out there to analyze its effectiveness.
As far as consumer debt destroying the economy, I think that reflects the fact that we've been keeping interest rates low to stimulate the economy for so long. We're finally starting to correct that. And personally, I think the whole concept of revolving credit card debt is ridiculous. |
except the people paying off those huge credit card debts are in the 15-36% interest range... low interest rates have little to do with the overextension of credit, its more about people living beyond their means. When I was a teenager and young adult in the air force.. i racked up about 10k on credit cards.. it took me about 10 years to get out from that debt, now I save easily 2-3 times that a year.. in addition I do not charge anything on credit that I can't pay off in 30-60 days. To include the $2500 laptop i'm writing this post on.
Credit cards are bad news in the hands of irresponsible people, i'm glad I learned young and was able to correct that financial situation on my own before I became a literal slave to the credit.
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Fabulez
Luke Warm
Joined: 11 Nov 2002
Posts: 437
Location: up in here
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Posted: 08/11/04 - 15:47 Post subject:
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I would love it if we could throw out the current 18,437 pages of the US Tax Code and replace it with:
"You have to pay 20% on everything you buy"
(or whatever)
Unfortunately there are a ton of tax lawyers and other professionals with a huge buttload of money who won't look on this favorably.
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Luturb
RealPoor Guru
Joined: 11 Oct 2002
Posts: 4042
Location: Livermore, California
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Posted: 08/11/04 - 16:37 Post subject:
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| Fabulez wrote: | | Unfortunately there are a ton of tax lawyers and other professionals with a huge buttload of money who won't look on this favorably. |
Yea it would be a disaster for CPAs and companies like TurboTax and H&R Block. But hey, s***w them. I pay $65 a year for basically being able to fill in my 1040EZ on the computer instead of paper, since I am a single guy with no dependants and no deductions, but am still too scared to fill out my tax forms without some kind of help.
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Akronn
RealPoor Master of Posts
Joined: 11 Oct 2002
Posts: 8752
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Posted: 08/12/04 - 00:18 Post subject:
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It's super easy, Luturb. 
'Out of sight, out of mind' helps keep our consumer-driven economy going. Most people really don't have any idea how much (or how little) they pay in taxes. Especially since so many folks refer to professionals when filing. It's money that you never knew you had already spent.
However... tacking 20% or something in taxes on to every item would definately have a negetive impact on consumer consumption. Sure people would have more mad money w/o income tax, but then they could actually see every little piece taken out of their budget... and they're not going to like it.
It's an interesting idea, and one I'd think would have alot of support. But it would be a mistake in the long run.
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Confused
RealPoor Master of Posts
Joined: 08 Feb 2004
Posts: 6730
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Posted: 08/12/04 - 00:56 Post subject:
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| Akronn wrote: | It's super easy, Luturb.
'Out of sight, out of mind' helps keep our consumer-driven economy going. Most people really don't have any idea how much (or how little) they pay in taxes. Especially since so many folks refer to professionals when filing. It's money that you never knew you had already spent.
However... tacking 20% or something in taxes on to every item would definately have a negetive impact on consumer consumption. Sure people would have more mad money w/o income tax, but then they could actually see every little piece taken out of their budget... and they're not going to like it.
It's an interesting idea, and one I'd think would have alot of support. But it would be a mistake in the long run. |
You also think that the economy is currently in the s*****r. I guess that means this is a good idea.
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Akronn
RealPoor Master of Posts
Joined: 11 Oct 2002
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Posted: 08/12/04 - 01:09 Post subject:
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Oh here, don't take my word for it:
| Quote: | Conservative economist Bruce Bartlett, an adviser to President Reagan and author of the 1981 book Reaganomics: Supply-Side Economics in Action, illustrated this quite bluntly in a recent column for the conservative Web site National Review Online.
"With all due respect to Speaker Hastert, trying to eliminate the IRS by adopting a national retail sales tax is a very dumb idea," Bartlett wrote.
One of the biggest roadblocks to such a proposal is that it could entail doing away with tax deductions precious to many Americans, including the home mortgage deduction.
After all, buying a house is, technically, consumption. Same thing with buying diapers and food for the kids -- say goodbye to the child tax credit. If you get sick, you'll be paying that 23 percent tax on your doctor and prescription bills, too.
You could make such purchases tax-exempt, but that would push the tax rate on other goods even higher. In fact, that 23 percent rate is probably not what the rate would actually be, anyway. Bartlett said in the real world, it would be closer to 30 percent.
Economist Robert McIntyre, director of Citizens for Tax Justice, a liberal think tank, said other estimates of the tax rate necessary to run the government have been even higher than that.
"Imagine a 40-to-50 percent sales tax -- that would cheer everybody up," McIntyre said.
What's more, a simple sales tax would punish people at the lower end of the income scale, who tend to consume almost all of their income in order to stay afloat. That means they'd be taxed at the 30-percent rate on their full income, while the wealthy would be taxed only on whatever part of their income they spend.
If somebody making $500,000 spends $250,000, for example, they'd be taxed 30 percent of what they spend, or $75,000, which amounts to just 15 percent of their total income. That's called a "regressive" tax -- the higher your income, the less tax you pay -- and it is not a politically popular idea.
What's more, McIntyre and some other economists believe, it will hurt the economy. If people are taxed heavily on their consumption, they'll be inclined to consume less, according to this theory, which will force businesses to produce less.
"If people don't buy stuff, why would anybody invest in machinery to make stuff?" McIntyre said. |
You can ignore the liberal if you wish, but Reagan's economist may know a thing or two. Of course... we could all be wrong, I suppose.
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Ashley
Toomuchtimeonhands
Joined: 13 Mar 2003
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Location: Amfek.org
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Posted: 08/12/04 - 01:22 Post subject:
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haha- Delaware would lose its whole reason for existence.. the "home of tax-free shopping" would become a tiny worthless state!
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Confused
RealPoor Master of Posts
Joined: 08 Feb 2004
Posts: 6730
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Posted: 08/12/04 - 01:27 Post subject:
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| Akronn wrote: | Oh here, don't take my word for it:
| Quote: | Conservative economist Bruce Bartlett, an adviser to President Reagan and author of the 1981 book Reaganomics: Supply-Side Economics in Action, illustrated this quite bluntly in a recent column for the conservative Web site National Review Online.
"With all due respect to Speaker Hastert, trying to eliminate the IRS by adopting a national retail sales tax is a very dumb idea," Bartlett wrote.
One of the biggest roadblocks to such a proposal is that it could entail doing away with tax deductions precious to many Americans, including the home mortgage deduction.
After all, buying a house is, technically, consumption. Same thing with buying diapers and food for the kids -- say goodbye to the child tax credit. If you get sick, you'll be paying that 23 percent tax on your doctor and prescription bills, too.
You could make such purchases tax-exempt, but that would push the tax rate on other goods even higher. In fact, that 23 percent rate is probably not what the rate would actually be, anyway. Bartlett said in the real world, it would be closer to 30 percent.
Economist Robert McIntyre, director of Citizens for Tax Justice, a liberal think tank, said other estimates of the tax rate necessary to run the government have been even higher than that.
"Imagine a 40-to-50 percent sales tax -- that would cheer everybody up," McIntyre said.
What's more, a simple sales tax would punish people at the lower end of the income scale, who tend to consume almost all of their income in order to stay afloat. That means they'd be taxed at the 30-percent rate on their full income, while the wealthy would be taxed only on whatever part of their income they spend.
If somebody making $500,000 spends $250,000, for example, they'd be taxed 30 percent of what they spend, or $75,000, which amounts to just 15 percent of their total income. That's called a "regressive" tax -- the higher your income, the less tax you pay -- and it is not a politically popular idea.
What's more, McIntyre and some other economists believe, it will hurt the economy. If people are taxed heavily on their consumption, they'll be inclined to consume less, according to this theory, which will force businesses to produce less.
"If people don't buy stuff, why would anybody invest in machinery to make stuff?" McIntyre said. |
You can ignore the liberal if you wish, but Reagan's economist may know a thing or two. Of course... we could all be wrong, I suppose. |
That still falls into the "good thing" category. The government grants tax deductions as a way to control behavior. They think home ownership is good...therefore home interest is tax deductible. Besides, that's erroneous thinking. Even if you are in the camp that likes behavior-restricted tax deductions, a sales-based tax does not presume that they would go away. If the government doesn't tax houses...then they don't have to be taxed. If the government does not want to tax prescription drugs...They don't have to be taxes. Nobody said anything about a "flat" sales tax. Even county/state taxes levy taxes differently on different products. People don't usually have to pay sales tax on groceries...But they have to pay excessive sales tax on liquor and cigarettes.
Besides, I already brought up the point he made. Nobody can say for certain whether people would spend less (though they obviously spend too much as it is). While goods would cost more to buy, people would also have much more disposable income. The psychological effect is difficult to predict. Will people spend just as much because they feel wealthier (with more money in their pocket) even if goods cost more? Or will they be sheepish about spending the extra dough. Either way it offers much more freedom to Americans, and we all know that's something you want to restrict.
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Confused
RealPoor Master of Posts
Joined: 08 Feb 2004
Posts: 6730
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Posted: 08/12/04 - 01:28 Post subject:
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| hunnybunny wrote: | | haha- Delaware would lose its whole reason for existence.. the "home of tax-free shopping" would become a tiny worthless state! |
They could change their name to the "home of slightly lower-tax shopping".
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Akronn
RealPoor Master of Posts
Joined: 11 Oct 2002
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Posted: 08/12/04 - 11:03 Post subject:
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| Confused wrote: | | Besides, I already brought up the point he made. Nobody can say for certain whether people would spend less (though they obviously spend too much as it is). While goods would cost more to buy, people would also have much more disposable income. The psychological effect is difficult to predict. Will people spend just as much because they feel wealthier (with more money in their pocket) even if goods cost more? Or will they be sheepish about spending the extra dough. Either way it offers much more freedom to Americans, and we all know that's something you want to restrict. |
Yes, alot of people spend too much already. The average American carries quite a nice credit card debt. Again, 'out of sight, out of mind,' money people never see results in more spending.
The main problem with abolishing income tax is simple and can be summed up in one word: freeloaders.
Now what does this mean? It means there are many in this country who would be leeches and purchase very little (and quite often these people send their money overseas!). You say that's their right? Well, don't forget there are basic services our country provides that cost money. National defense, for instance, or the police, or the fire department, etc. Who will pay for these services? Consumers. Who benefits? Everybody. That's a problem.
Ben Franklin said it best: "In this world nothing is certain but death and taxes."
He knew how the system worked. People would love nothing more than to receive services they never paid for, and don't think they wouldn't try.
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Goraz
RealPoor Guru
Joined: 11 Oct 2002
Posts: 3736
Location: Philadelphia
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Posted: 08/12/04 - 12:13 Post subject:
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Farva, whats that restaurant that you always like to go to?
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Confused
RealPoor Master of Posts
Joined: 08 Feb 2004
Posts: 6730
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Posted: 08/12/04 - 12:18 Post subject:
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| Akronn wrote: | | Confused wrote: | | Besides, I already brought up the point he made. Nobody can say for certain whether people would spend less (though they obviously spend too much as it is). While goods would cost more to buy, people would also have much more disposable income. The psychological effect is difficult to predict. Will people spend just as much because they feel wealthier (with more money in their pocket) even if goods cost more? Or will they be sheepish about spending the extra dough. Either way it offers much more freedom to Americans, and we all know that's something you want to restrict. |
Yes, alot of people spend too much already. The average American carries quite a nice credit card debt. Again, 'out of sight, out of mind,' money people never see results in more spending.
The main problem with abolishing income tax is simple and can be summed up in one word: freeloaders.
Now what does this mean? It means there are many in this country who would be leeches and purchase very little (and quite often these people send their money overseas!). You say that's their right? Well, don't forget there are basic services our country provides that cost money. National defense, for instance, or the police, or the fire department, etc. Who will pay for these services? Consumers. Who benefits? Everybody. That's a problem.
Ben Franklin said it best: "In this world nothing is certain but death and taxes."
He knew how the system worked. People would love nothing more than to receive services they never paid for, and don't think they wouldn't try. |
If it's viable, I think it's a good idea. Who cares if some people buy less...That's kind of the point. When Ben Franklin was president, there was no income tax at all. He would be appalled by the modern tax rates. With the exception of roads, I don't use any government services that I don't pay for (e.g.airport security taxes, etc...). So why am I paying for those services I don't get? Aren't people freeloading off of me? Why not make government services pay-as-you-go? This is a more just method of taxation, in my view. I'm not sure if it would work out financially, though. Another benefit I just thought of...It would encourage productivity to higher levels because it would eliminate the graduated income tax.
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Fabulez
Luke Warm
Joined: 11 Nov 2002
Posts: 437
Location: up in here
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Posted: 08/12/04 - 13:03 Post subject:
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| Confused wrote: | | So why am I paying for those services I don't get? Aren't people freeloading off of me? Why not make government services pay-as-you-go? |
Why not make them privately-provided?
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Confused
RealPoor Master of Posts
Joined: 08 Feb 2004
Posts: 6730
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Posted: 08/12/04 - 13:08 Post subject:
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| Fabulez wrote: | | Confused wrote: | | So why am I paying for those services I don't get? Aren't people freeloading off of me? Why not make government services pay-as-you-go? |
Why not make them privately-provided? |
A lot of them could be. Some services need to be based in government, but not nearly to the extent that we have now.
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Akronn
RealPoor Master of Posts
Joined: 11 Oct 2002
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Posted: 08/12/04 - 13:10 Post subject:
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Roads would be easy to tax, the government could take the money from gas taxes, bus fare taxes, etc. That would seem fairly equitable.
But again, pay-as-you-go wouldn't work for police, defense, etc. You're going to need some form of income tax. I'm all for scaling back our federal taxes if it means the elimination of some pretty silly spending (I'd just assume have gas prices rise than keep giving oil companies huge breaks - why are people who don't even drive subsidizing them?). However, people often don't know what's good for them. Sure you've never used the fire department, but it's awfully nice to have one around.
Our tax laws could use an overhaul, but you could never simplify them to the point of 'everything has 23% tax, and that's it.' You'll still wind up with 18,000 pages of exceptions, stipulations, etc. Otherwise, alot of essential functions of our government would be hurting.
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Confused
RealPoor Master of Posts
Joined: 08 Feb 2004
Posts: 6730
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Posted: 08/12/04 - 13:22 Post subject:
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| Akronn wrote: | | You'll still wind up with 18,000 pages of exceptions, stipulations, etc. Otherwise, alot of essential functions of our government would be hurting. |
Unless, of course, you don't. Different goods can be taxed at different rates. There could be a database of taxation rates provided to retailers that would simplify the taxation process (aren't computers wonderful!) where it's relatively transparent to consumers. There could be 18,000 pages of tax rates, but who cares if it's just 180,000 rows in a database? Taxes on the fly!
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Soriak
Toomuchtimeonhands
Joined: 11 Oct 2002
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Posted: 08/12/04 - 14:09 Post subject:
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I wonder who came up with that idea... it doesn't take a genius to figure out the issues with it.
One simple example:
You buy a car with a $50,000 retail value in the US. With the proposed tax system you'd pay an additional 30% (see Bartlett's comment in Akronn's post) - or $15,000 - for a total of $65,000.
Now let's look at import taxes:
Source
| Quote: |
Foreign-made vehicles imported into the U.S., whether new or used, either for personal use or for sale, are generally dutiable at the following rates:
Autos. . . . . . . . . . . . . . . 2.5%
Trucks . . . . . . . . . . . . . . 25%
Motorcycles. . . . . . . . . . 3% or 3.4%
Duty rates are based on price paid or payable. Most Canadian-made vehicles are duty-free.
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Importing a non-canadian car would cost you currently $1,250 in taxes. Now you also have to factor in the shippment cost, but there's no way that amounts to $13,750.
So at the least you'd have to increase all import taxes by 30% and make all goods brought to the US subject to those taxes. Otherwise those close to the canadian boarder can buy groceries and small stuff in canada and not pay taxes on it at all - how are you going to properly enforce that? (groceries might not amount to that much, but you can also make other small purchases of higher value - such as a laptop, without anyone notiving or taxing it.
If you bought an imported car from a US retailer, would you have to pay 30% on that purchase as well? Considering he already paid 32.5% import taxes, and thus covered the 30% tax already. Or would all imported wares be excluded from such a tax? (That could create a psychological incencitive to buy importet goods, since many would believe they actually saved money by not having to pay those taxes)
Now I'm not an economist, but I don't see how *reducing* spending is a good idea for the economy. Aren't President Bush's recent tax cuts intended to increase the spending?
Also regressive taxes are a rather bad idea, no matter how much you want to promote success and career.
Sure, that CEO has much more work than the average walmart employee, and he definatly deserves to earn much more money. (whether or not he deserves as much as CEOs currently make is another discussion, let's say he does)
But additionally to that, you want to promote the spending of the CEO's money overseas?
Let's go with another made-up example.
Our CEO makes $10M/year and currently pays 35% taxes - or $3,500,000.
There is *no way* he'd pay anything close to that with the proposed tax system.
Seriously - what does he buy in the US? Food and gas? Salery for his privat jet pilot and other private employees (house maids, whatever else) aren't subject to such a tax. He already has a jet, so no taxes to pay on that purchase either.
even if he'd spend his entire income in the US, he'd *still* end up paying less taxes.
Additionaly, every cent he spent overseas would essentially be tax free.
Yay for that $2M vacation in europe that he'd otherwise have had to pay $700,000 in taxes on.
Obviously that doesn't just go for people who make $10M. Everyone who makes over $310k/year would profit no matter how he spent the money, as the base tax already is 35%.
But even with $70k/year (or 28% tax) you'd most likely pay much less than you do now.
Also with such a system, you make money spent outside of the US completly tax-free, which is beyond retarded.
In the end, no matter how you spin it, the government will have *MUCH* less money than it does now. Considering how they're already deep in the red, that might not be such a good idea.
There's a good reason no country has a system like that - it just isn't going to work.
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Confused
RealPoor Master of Posts
Joined: 08 Feb 2004
Posts: 6730
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Posted: 08/12/04 - 14:29 Post subject:
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| Soriak wrote: | I wonder who came up with that idea... it doesn't take a genius to figure out the issues with it.
One simple example:
You buy a car with a $50,000 retail value in the US. With the proposed tax system you'd pay an additional 30% (see Bartlett's comment in Akronn's post) - or $15,000 - for a total of $65,000.
Now let's look at import taxes:
Source
| Quote: |
Foreign-made vehicles imported into the U.S., whether new or used, either for personal use or for sale, are generally dutiable at the following rates:
Autos. . . . . . . . . . . . . . . 2.5%
Trucks . . . . . . . . . . . . . . 25%
Motorcycles. . . . . . . . . . 3% or 3.4%
Duty rates are based on price paid or payable. Most Canadian-made vehicles are duty-free.
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Importing a non-canadian car would cost you currently $1,250 in taxes. Now you also have to factor in the shippment cost, but there's no way that amounts to $13,750.
So at the least you'd have to increase all import taxes by 30% and make all goods brought to the US subject to those taxes. Otherwise those close to the canadian boarder can buy groceries and small stuff in canada and not pay taxes on it at all - how are you going to properly enforce that? (groceries might not amount to that much, but you can also make other small purchases of higher value - such as a laptop, without anyone notiving or taxing it.
If you bought an imported car from a US retailer, would you have to pay 30% on that purchase as well? Considering he already paid 32.5% import taxes, and thus covered the 30% tax already. Or would all imported wares be excluded from such a tax? (That could create a psychological incencitive to buy importet goods, since many would believe they actually saved money by not having to pay those taxes)
Now I'm not an economist, but I don't see how *reducing* spending is a good idea for the economy. Aren't President Bush's recent tax cuts intended to increase the spending?
Also regressive taxes are a rather bad idea, no matter how much you want to promote success and career.
Sure, that CEO has much more work than the average walmart employee, and he definatly deserves to earn much more money. (whether or not he deserves as much as CEOs currently make is another discussion, let's say he does)
But additionally to that, you want to promote the spending of the CEO's money overseas?
Let's go with another made-up example.
Our CEO makes $10M/year and currently pays 35% taxes - or $3,500,000.
There is *no way* he'd pay anything close to that with the proposed tax system.
Seriously - what does he buy in the US? Food and gas? Salery for his privat jet pilot and other private employees (house maids, whatever else) aren't subject to such a tax. He already has a jet, so no taxes to pay on that purchase either.
even if he'd spend his entire income in the US, he'd *still* end up paying less taxes.
Additionaly, every cent he spent overseas would essentially be tax free.
Yay for that $2M vacation in europe that he'd otherwise have had to pay $700,000 in taxes on.
Obviously that doesn't just go for people who make $10M. Everyone who makes over $310k/year would profit no matter how he spent the money, as the base tax already is 35%.
But even with $70k/year (or 28% tax) you'd most likely pay much less than you do now.
Also with such a system, you make money spent outside of the US completly tax-free, which is beyond retarded.
In the end, no matter how you spin it, the government will have *MUCH* less money than it does now. Considering how they're already deep in the red, that might not be such a good idea.
There's a good reason no country has a system like that - it just isn't going to work. |
This whole thing makes no sense...dismissed.
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Soriak
Toomuchtimeonhands
Joined: 11 Oct 2002
Posts: 952
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Posted: 08/12/04 - 14:39 Post subject:
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| Confused wrote: |
This whole thing makes no sense...dismissed. |
How does it not make sense?
If you don't have an income tax, how are you going to tax money spent outside of the US? Or as for my example: How are you going to put a sales tax on a laptop bought in canada? (You can put that under a seat and never declare it - or just claim you owned it already)
How would you tax the money spent on a vacation overseas? (no income tax, no sales tax on anything other than the plane ticket)
And Most importantly: how are you going to 'rebalance the budget' to make up for the billions of dollars the government makes less?
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Fabulez
Luke Warm
Joined: 11 Nov 2002
Posts: 437
Location: up in here
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Posted: 08/12/04 - 14:45 Post subject:
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| Soriak wrote: | Let's go with another made-up example.
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This pretty much sums up this whole post.
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Confused
RealPoor Master of Posts
Joined: 08 Feb 2004
Posts: 6730
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Posted: 08/12/04 - 14:49 Post subject:
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| Soriak wrote: | | Confused wrote: |
This whole thing makes no sense...dismissed. |
How does it not make sense?
If you don't have an income tax, how are you going to tax money spent outside of the US? Or as for my example: How are you going to put a sales tax on a laptop bought in canada? (You can put that under a seat and never declare it - or just claim you owned it already)
How would you tax the money spent on a vacation overseas? (no income tax, no sales tax on anything other than the plane ticket)
And Most importantly: how are you going to 'rebalance the budget' to make up for the billions of dollars the government makes less? |
Have you ever been overseas? When you buy something and bring it back to the US, it goes through customs and often times excise taxes are charged on those goods. Failing to declare goods is illegal and consitutes tax fraud (something that would be greatly reduced by charging sales tax over income tax). Sales tax could be applied to those items brought back. Hotels, food and entertainment expenses overseas could not be taxed, but that's a relatively small amount. Even that could be taxed, though. International airline trips could be taxed based on your duration overseas (although there would be quite a discrepency between people who spend different amounts).
It actually offers fewer loopholes, anyway. I can go buy a laptop in the US and not pay taxes on it right now. I just have to write it off as a business expense. I'm actually going to do that soon.
As for your last statement, it would remain to be seen whether a tax system like this would generate less revenue for the federal government. But the best way to balance the budget is not by increasing government revenue, but by decreasing it's spending.
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Soriak
Toomuchtimeonhands
Joined: 11 Oct 2002
Posts: 952
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Posted: 08/12/04 - 15:25 Post subject:
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| Fabulez wrote: | | Soriak wrote: | Let's go with another made-up example.
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This pretty much sums up this whole post. |
Those theoretical examples are based on numbers and facts - I'll gladly back up all of them. The $10M income was picked as an example, the CEO of GM made at some point $14M/year (including stock benefits) - if you want I'll look for the article again.
Tax percentages for the sales tax come from the article posted, a link to the 2.5% car import tax has been provided, and the current income tax can be found on the IRS page.
As for spending $2M on a vacation: See the Birthday party Tyco's CEO threw for his wife: http://www.usatoday.com/money/industries/manufacturing/2003-10-27-tyco_x.htm
Considering there a places more expensive than that, spending $2M in a couple weeks of complete luxury is definatly possible. You don't have to go out of your way to spend over $1,000 on a dinner here, without ordering really expensive wines or 5-course menus.
| Quote: |
When you buy something and bring it back to the US, it goes through customs and often times excise taxes are charged on those goods. Failing to declare goods is illegal and consitutes tax fraud
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That sounds good in theory, but how would you proof someone's laptop wasn't purchased a while ago in the US? You can't stop every car and search them, then claim receipts for every piece of cloth or jewelry worn, or every other item they have in possession.
Sure, in many cases it doesn't make a big difference, but it could become a serious issue. (think jewelry or designer clothing)
| Quote: |
International airline trips could be taxed based on your duration overseas (although there would be quite a discrepency between people who spend different amounts).
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There are HUGE discrepencies in spending... you can go 2 weeks overseas for $2,500 while others spend $10,000 in a week. Again, you don't even have to go crazy to spend 10k.
| Quote: | | I can go buy a laptop in the US and not pay taxes on it right now. I just have to write it off as a business expense. |
You can only do that, because it's your own company though. Not many people are in that position.
| Quote: |
But the best way to balance the budget is not by increasing government revenue, but by decreasing it's spending. |
I absolutly agree with you there. However I'm not sure how feasible that is, considering the government already is far in debt and apparently still can't efficiently cut costs.
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Confused
RealPoor Master of Posts
Joined: 08 Feb 2004
Posts: 6730
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Posted: 08/12/04 - 15:45 Post subject:
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This post is a pain to break up. 
| Soriak wrote: |
As for spending $2M on a vacation: See the Birthday party Tyco's CEO threw for his wife: http://www.usatoday.com/money/industries/manufacturing/2003-10-27-tyco_x.htm
Considering there a places more expensive than that, spending $2M in a couple weeks of complete luxury is definatly possible. You don't have to go out of your way to spend over $1,000 on a dinner here, without ordering really expensive wines or 5-course menus.
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Actually this entire party was probably written off as a corporate event. More likely than not, no taxes were paid on it that income (paid for out of Tyco's coffers) whatsoever.
Most people who are capable of spending $2 million in a couple weeks on vacation take advantage of lots of loopholes. For example, foreign-incorporated companies don't have to pay US income tax for goods/services sold overseas.
| Soriak wrote: | | Quote: |
When you buy something and bring it back to the US, it goes through customs and often times excise taxes are charged on those goods. Failing to declare goods is illegal and consitutes tax fraud
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That sounds good in theory, but how would you proof someone's laptop wasn't purchased a while ago in the US? You can't stop every car and search them, then claim receipts for every piece of cloth or jewelry worn, or every other item they have in possession.
Sure, in many cases it doesn't make a big difference, but it could become a serious issue. (think jewelry or designer clothing) |
Like I said...This simply constitues tax fraud. People do this all the time by simply not declaring all their income. This is especially common in cash-heavy areas like in bars, bowling alleys, etc... It could simply be an illegal act. If you break the law, you risk prosecution. Cigarettes are a good example since they're heavily taxed. There are occasions of smuggling of cigarettes from one location to another, but it's pretty rare.
| Soriak wrote: | | Quote: |
International airline trips could be taxed based on your duration overseas (although there would be quite a discrepency between people who spend different amounts).
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There are HUGE discrepencies in spending... you can go 2 weeks overseas for $2,500 while others spend $10,000 in a week. Again, you don't even have to go crazy to spend 10k. |
I was giving an example solution, which I admitted wasn't that good. A better one would be to simply ignore it. $2500 write-off. That's a good thing.
| Soriak wrote: | | Quote: | | I can go buy a laptop in the US and not pay taxes on it right now. I just have to write it off as a business expense. |
You can only do that, because it's your own company though. Not many people are in that position.
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Actually anybody could do that. It's called a non-reimbursable business expense and, so long as you claim it's exclusively for work and required by your employer, then it can be written off. It's especially helpful to have a home office. Since I do have business (of sorts), I can even go on vacation within the US tax-free. If I wanted to, I could jump on a plane to New Orleans to make a sales call, try to sell something down there, and write it off. There are plenty of loopholes that a sales-tax based system wouldn't afford most people.
| Soriak wrote: | | Quote: |
But the best way to balance the budget is not by increasing government revenue, but by decreasing it's spending. |
I absolutly agree with you there. However I'm not sure how feasible that is, considering the government already is far in debt and apparently still can't efficiently cut costs. |
That's why we have the right to vote.
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