1.  12/16/2004, 12:26 PM Originally Posted by meyerweb Especially lowering their expenses. Hence the explosion in tax shelters of questionable legality. Why? OK, let's say it takes X dollars to fund governent programs. Call it 1 Trillion, only because that's a nice round number. Now say that in the year 2000 the top quintile payed 22% of that 1 Trillion. That left 78%, or 780 billion dollars, to be paid by the rest. Now say that a consumption tax, replacing taxes on income, interest, dividends and capital gains, reduces the share the rich pay to 18%. That means the remaining 80% now pay 820 billion dollars in taxes. In very simple terms: if the wealthy pay less, the rest of us pay more. Your math is simply wrong! While you reduced the "percentage" of tax paid by the wealthy you didn't apply the percentage the higher income that they get by reducing taxes on capitol gains etc..
2.  12/16/2004, 12:26 PM Originally Posted by sxtg We keep hearing that, but have yet to hear how! Probably the best study to date on the subject, from the CATO institute, concludes that the flat rate national sales tax as you all are discussing it, would indeed be quite regressive. http://www.cato.org/pubs/pas/pa-289.html
3.  12/16/2004, 01:09 PM Originally Posted by sxtg Your math is simply wrong! While you reduced the "percentage" of tax paid by the wealthy you didn't apply the percentage the higher income that they get by reducing taxes on capitol gains etc.. Huh? I don't understand what you're trying to say. Are you implying that reducing capital gains taxes raises a person's taxable income? Not so. Reducing taxes on captial gains effectivly increases a persons after tax income, but it has no impact on other income taxes. And a consumption tax will eliminate all taxes on captial gains, which is another benefit to the wealthy, since much of their income is from gains, whereas the typical worker has relatively little income from capital gains. Just what are you trying to say? Bob Meyer I'm out of my mind. But feel free to leave a message.
4.  12/16/2004, 01:22 PM Originally Posted by meyerweb Huh? I don't understand what you're trying to say. Are you implying that reducing capital gains taxes raises a person's taxable income? Not so. Reducing taxes on captial gains effectivly increases a persons after tax income, but it has no impact on other income taxes. And a consumption tax will eliminate all taxes on captial gains, which is another benefit to the wealthy, since much of their income is from gains, whereas the typical worker has relatively little income from capital gains. Just what are you trying to say? That is exactly what I am trying to say. Eliminating income tax would effectively raise income. So when you apply 18% (as opposed to 22%)remember to apply to the higher income this would raise the wealthy actual chunk of the needed funds. Thereby reducing the burden by the rest.
5.  12/16/2004, 01:22 PM I'd have to say a flat tax is the best. Everyone is taxed exactly the same that way. Tired of hearing how the rich should pay more because they can. Everyone should be taxed equally. The idea that "the poor" would suffer is an emotional response. The tax has limits and many things (basic neccesities) would not be subject to tax. It should also be pointed out that this would replace the income tax. Again everyone would be taxed the same and everyone would have the same advantage/disdvantage. Why do some folks feel the ned to punish people because they make money? Instead of attacking them, try learning from them.
6.  12/16/2004, 01:25 PM Now what I don't know is rather or not implying a consumption tax would have a negative effect on consumption itself, which would obviously create an negative impact on our economy in general.
7.  12/16/2004, 01:35 PM Actually I dont think it would. Without an income tax people would have more money. What do they do when they have larger paychecks? Spend more. Yes there would be some slowdown as people got used to it but by and large I think it would level out. The biggest downside I see is for folks who are selfemployed and pay their taxes quarterly or annually with any withholding being done. We essentially have our money now and so it would hurt immediately. I also wonder if all the business deductions would go away or how that would be handled.
8.  12/16/2004, 01:39 PM Originally Posted by Woof Actually I dont think it would. Without an income tax people would have more money. What do they do when they have larger paychecks? Spend more. Yes there would be some slowdown as people got used to it but by and large I think it would level out. The biggest downside I see is for folks who are selfemployed and pay their taxes quarterly or annually with any withholding being done. We essentially have our money now and so it would hurt immediately. I also wonder if all the business deductions would go away or how that would be handled. These biz probs are the ones I was talking about. Corps would pay the same as everyone, they would pay taxes on equip, etc.. Eventually the bean counters would get involved and less and less would be spent on equipment. Right now its the opposite, Corps spend money on equip to reduce tax. I can see where that would create enormous probs, not only on the imediate economy but in relation to more injuries on the job, lost time and then less consumption on the whole, etc... I am glad its not up to me to figure these things out.
9.  12/16/2004, 01:42 PM Originally Posted by meyerweb Especially lowering their expenses. Hence the explosion in tax shelters of questionable legality. Why? OK, let's say it takes X dollars to fund governent programs. Call it 1 Trillion, only because that's a nice round number. Now say that in the year 2000 the top quintile payed 22% of that 1 Trillion. That left 78%, or 780 billion dollars, to be paid by the rest. Now say that a consumption tax, replacing taxes on income, interest, dividends and capital gains, reduces the share the rich pay to 18%. That means the remaining 80% now pay 820 billion dollars in taxes. In very simple terms: if the wealthy pay less, the rest of us pay more. This is overly simplified of course, because it ignores deficits (already at all time highs during the Bush years, and likely to grow even larger), and potential budget cuts. But the Republican congress doesn't seem any more interested in cutting the overal budget any more than democrats did, nor does Bush seem even a little bit concerned with doing so. So don't expect overall tax receipts to drop very much, for very long. Eventually the deficit has to be payed for, one way or another. Would it be ok with you if the wealthy's percentage went up? We don't know if the percentage would go up or down. With flat tax, the percentage is based on taxable income. With consumption tax, the percentage is a function of spending patterns. And as to tax shelters. That type of foolishness could just go away.
10.  12/16/2004, 01:50 PM What about retirees who have spent their whole lives paying income taxes, and now pay very little to the federal gov't. A consumption tax effectively taxes their income twice, right?
11.  12/16/2004, 01:53 PM Well I'd say its just not a simple now we have a flat tax. It's going to be quite a bit more complex.
12.  12/16/2004, 01:54 PM Only if they are living off their principle as opposed to dividends, interest, etc. But, the broader point is, yes the cut-over will be difficult. Behaviors will be adjusted.
13.  12/16/2004, 03:44 PM Originally Posted by Woof I'd have to say a flat tax is the best. Everyone is taxed exactly the same that way. Tired of hearing how the rich should pay more because they can. Woof I disagree with you, but I appreciate your honest approach to the subject. What I just do not understand is this song and dance about how the flat tax is somehow going to benefit the poor.