Dividend tax cut?

[Riggo-toni]

A remedy for the regressive nature of a VAT and/or flat tax is to exempt food (which the poor pay a higher proportion of their incomes on), and provide a large deductible per individual, so that noone pays taxes on, say, the first 10k of their income.

Interesting to note the hypocrisy of class warfare and tax "fairness" - noone suggests repealing the most regressive tax break of all time - the deductible for mortgages. Thanks to political connections, it may be "grossly unfair" to tax the rich less, but I've yet to hear anyone outside of the Concord Coalition suggest SPENDING less on the rich, despite the fact that the last gov't stats I heard were that in 1992 we were handing out $600B a year to people making over $50K/yr.

Also, many of the people on the left who fight the VAT for its regressive nature are also proponents of heavy spending & low interest rates which cause the most regressive hidden tax of all - inflation. Are you listening *cough*Sarbanes *cough*!

[Kilmer17]

ahhh there's the rub.

What is a necessity.

Food obviously, but what about Doritos?

Shelter certainly, but what about a TV? or take a step further, what about a plasma flatscreen digital?

That same percentage game works currently as well. It shouldn't though.

A simplified version of a common comparison.

3 people go out to dinner, it costs 100 dollars. Person A pays 80 bucks, person B pays 20 bucks and person C pays 0. Now if the cost of dinner gets cut in half how much should each person now pay?

The "rich" (remember, any family making over 93K according to the Dems) SHOULD get a higher monetary tax break, they pay a higher percentage into the sytem now.

[Atlanta Skins Fan]

Originally posted by joe

I find that a national sales tax and a flat tax are too regressive. They cause the less fortunate to pay a much higher percentage of their income in tax than rich, so that is really not the answer, unless you are very wealthy.

Boy I hate this objection.

First of all, I'm tired of protecting "the poor" and "the working class" -- who pay essentially no income tax, use the emergency room for doctor visits (paid for by us), blow all their money on lottery tickets and PlayStation 2, feed their families junk food, and then rant about how the rich are stealing money from the government.

I'm also tired of protecting the rich (corps and individuals), who use accounting tricks and loopholes to pervert our tax system.

Both extremes are symptomatic of a sick, unfair tax system that is inherently designed to punish genuine work and productivity.

A flat sales tax is the world's fairest tax system.

As for your miserable "less fortunate", they can be protected sufficiently from a national sales tax by providing exclusions on basic food staples and rent under $500/month. That gives them a roof and some food without the government getting in the way. Everything else is a privilege, and they can be taxed for it just like all the rest of us.

Tax the privileges, not the work.

[The Evil Genius]

A flat sales tax is the world's fairest tax system.

Its still a regressive system.

Assuming the 15% flat tax...Person A who makes 20k a year pays 3k in taxes. Person B who makes 40k a year pays 6k in taxes. Person C who makes 60k a year pays 9k in taxes.

Who do you think can "afford" to pay their taxes the most?

Other than whats in and whats not in the constitution, taxes will always cuase a lot of ****ing.

And by the way, does anyone know what percentage of America makes over 93k a year? It would be interesting to note.

[Kilmer17]

I'm not sure.

But I do know these are facts.

50 percent of people pay 95 percetn of taxes.

25 percent pay 75 percent of taxes

and the real kicker

the top 1 percent of wage earners in the US pay 50 percent of taxes.

[The Evil Genius]

Dont know how accurate this is...but here is a link I found...it looks like about 20% of all families fall above the 93k threshold.

And it doesnt jive with your last post Kilmer - but again - I dont know how accurate this data is...

http://www.allegromedia.com/sugi/taxes/#Head-1.htm

[Art]

TEG,

It's a fact that the top 50 percent of wage earners in this country pay just over 96 percent of income taxes. The other 50 percent pay just under 4 percent. These are truthful numbers supplied yearly by the IRS and you can find them at any one of a dozen reputable governmental sites. You probably don't need to go to allegromedia to back your thoughts up.

Kilmer is incorrect about his Top 1 percent though.

Here are the facts. The Top 1 percent of wage earners make 20.81 percent of all income, yet pay a total of 37.42 percent of the tax bite. The Top 5 percent of wage earners pay 56.47 percent of the nation's tax burden. The Top 10 percent pay 67.3 percent (and the Top 10 includes all families making over $120,000 a year). The Top 50 percent pay 96.09 percent of the federal tax burden.

These are factual numbers supplied by the IRS.

The fact is, I don't care a bit about whether a person making $20,000 can afford to pay tax or not. They should be paying something and people who make more should be paying less. Yeah, the "rich" get more money back because "rich" pay the tax in the first place.

[Kilmer17]

Thanks for doing the legwork Art.

[Atlanta Skins Fan]

Originally posted by The Evil Genius

Its still a regressive system.

Assuming the 15% flat tax...Person A who makes 20k a year pays 3k in taxes. Person B who makes 40k a year pays 6k in taxes. Person C who makes 60k a year pays 9k in taxes.

And guess what: that's fair!

Who do you think can "afford" to pay their taxes the most?

Who cares? That's an irrelevant question.

The logic of your argument is reverse-Darwinianism: punish those who succeed, and reward life's losers.

I'm glad Bill Gates is stinking rich. He earned it. Did you notice that logo that flashed by this morning? It says "Microsoft". It does not say, "Designed by the loser who won't work hard or improve his skills, who's so stupid he blows money on lottery tickets and fast food, who never contributes value to society, who breeds imbeciles and fails to champion their education, thereby prolonging his dim-witted dead weight on future generations."

Just try to run a small business. If you do, you'll discover in seconds the giant elephant crushing productivity in America -- i.e., our punitive income tax system. It's productivity you should care about: encouraging people and companies to work hard and use their talents to the fullest. Our system is an upside-down bizarro world that rewards the lazy, the stupid and the cheaters, while punishing the productive and the behavior that creates productivity.

If it makes you feel better, a flat sales tax still takes way more from the rich than the poor. Let's take two classic stupid uses of money, taxed at 20%:

• Rich jack@ss with too much money decides that instead of using that money to help other people, what he really should do is buy that $90,000 Lexus. Tax: $18,000.
  
• Moron working the McDonalds drive-thru clears $20 a day after basic expenses. Instead of applying the money toward a computer class that could improve his skills and better his lot in life, he blows $5/day on fast food, $5/day on lottery tickets, and $10/day paying the note on the new car he bought to make him feel better about his lousy life. Tax: $4/day, or $120 a month.
  

Feel better now? The rich and the middle class will still be paying almost all the taxes. But at least not *all* of the taxes. And the taxes will be paid in proportion to our stupid spending decisions.

[The Evil Genius]

Just a little bitter ASF huh? I think you labeling all people who make 20k a year as lazy people who blow their money on Doritos, lottery tickets, etc...is sad.

But hey...you live in your fantasy world. I will live in mine.

[Darth Tater]

Since this has come down to a debate about regressive tax policies, I figure I'll define the terms as they were taught to me

Regressive Tax - The less you make, the more in proportion to your income you owe. Modifying the EG's example: I make 20K/year and pay 7K in taxes, someone else makes 40K/year and pays 7K while a person making 80K also pays 7K. Something like this would most likely be the result of a national sales tax. A better(worse?) example of regressive taxation (since it is real and not theoretical) is FICA.

Progressive Tax - The more you make, the more you pay in proportion to your income. Again using EG's example: I make 20K/year and pay nothing, someone else makes 40K and pays 6K, while the person making 80K pays about 15K.

Fair Tax - One that is neither regressive or progressive. Kind of like EG's example that he called regressive.

Based on these definitions, the only tax system that is fair is a flat tax. However, in that case, one could argue as to what income is. We could get some VERY loopy definitions of what is.

[Atlanta Skins Fan]

Originally posted by The Evil Genius

Just a little bitter ASF huh? I think you labeling all people who make 20k a year as lazy people who blow their money on Doritos, lottery tickets, etc...is sad.

It's true: I exaggerate.

There is also the 1 in 10 who took a good look at themselves, sucked up their courage and started their own business offering services in the skill of their choice: cleaning service, sewing service, lawn maintenance, computer repair, messenger service, graphic design, software development, web-site maintenance, in-home cooking services, etc. Things looked great, until they failed to withhold income taxes from their paltry startup income, incurring massive payroll tax penalties and interest. The IRS then seized their paltry business assets, drained their bank accounts by levy, and put a lien against their house. Falling behind in their mortgage payments, they discovered that the bank will now foreclose because of the tax lien. Their spouse, after dozens of demeaning arguments, leaves them and takes half their belongings. The lives of their kids are ruined. Finally, things look better on that one bright day when, stinking drunk, they get the terrific idea to put both barrels of the shotgun in their mouths and end it.

You're right: those who are not lazy are punished by our tax system.

[joe]

Another great arguement for gun control ASF, keep the depressed from sucking on the end of a shotgun

[Art]

The point here remains.

Fifty percent of tax payers pay 96 percent of the burden. The other 50 percent pay 4 percent of the burden. If you are going to enact cuts in taxes, obviously, the people paying 96 percent of the taxes will get the money back.

And to a Democrat, this is a tax cut to the rich. In the Democratic plan, they actually have a tax credit going to people who don't pay taxes already. It's astounding really.

A flat tax would be fair. It wouldn't be regressive in the slightest. If I make $120,000 and pay 10 percent in a flat tax, then I pay $12,000. If you make $20,000 and pay 10 percent you pay $2,000. I'm still paying six times what you're paying. But, relative to our income, we're paying the same percentage.

That can't be defined as regressive. That's called fair.

I still find it funny that when Cheney took the office of Vice President he had to divest his stock holdings. He had a tax bill of $36 million that year. If a tax cut gives him back $4 million, how is that a bad thing? He's still paying $32 million dollars to the federal government. That's atrocious.

But, as long as we are currently stealing money from people bold enough to make it as is our current tax system, when you do offer any change in the code, the only thing you can do is give money back to people who already pay in. There's nothing else you can do.

[Riggo-toni]

While all of us debate the income tax system, please bear in mind one very important detail.

If the Government spent only as much per year as they did in 1990, we could ELIMINATE the income tax altogether and still have a surplus, even w/o any additional taxes. And that's not even taking into account how other revenues would swell from the economic benefits.

[Kilmer17]

The biggest cost increase in the budget since 90 is the cost of military equipment. That same equiment and costs have created things like Predator Drones and smart bomb technology that are keeping many of our soldiers out of the line of fire. It's money well spent.

I agree we need to reign in spending (both parties and all politicians are guilty of it), but military spending is a necessity.

[Atlanta Skins Fan]

Originally posted by riggo-toni

While all of us debate the income tax system, please bear in mind one very important detail.

If the Government spent only as much per year as they did in 1990, we could ELIMINATE the income tax altogether and still have a surplus, even w/o any additional taxes. And that's not even taking into account how other revenues would swell from the economic benefits.

Getting stoned during Limbaugh: riggo-toni's happy hour. :high:

OK, please post some numbers or supporting links for this "thesis".

[Riggo-toni]

Uh, I've never taken drugs, nor have I ever listened to Limbaugh.

From Congressman Ron Paul (this was written in early 2001):

The Case Against the Income Tax

Could America exist without an income tax? The idea seems radical, yet in truth America did just fine without a federal income tax for the first 126 years of its history. Prior to 1913, the government operated with revenues raised through tariffs, excise taxes, and property taxes, without ever touching a worker's paycheck. In the late 1800s, when Congress first attempted to impose an income tax, the notion of taxing a citizen's hard work was considered radical! Public outcry ensued; more importantly, the Supreme Court ruled the income tax unconstitutional. Only with passage of the 16th Amendment did Congress gain the ability to tax the productive endeavors of its citizens.

Yet don't we need an income tax to fund the important functions of the federal government? You may be surprised to know that the income tax accounts for only approximately one-third of federal revenue. Only 10 years ago, the federal budget was roughly one-third less than it is today. Surely we could find ways to cut spending back to 1990 levels, especially when the Treasury has single year tax surpluses for the past several years. So perhaps the idea of an America without an income tax is not so radical after all.

Case Against Income Tax

[Atlanta Skins Fan]

Originally posted by riggo-toni

Yet don't we need an income tax to fund the important functions of the federal government? You may be surprised to know that the income tax accounts for only approximately one-third of federal revenue. Only 10 years ago, the federal budget was roughly one-third less than it is today. Surely we could find ways to cut spending back to 1990 levels, especially when the Treasury has single year tax surpluses for the past several years. So perhaps the idea of an America without an income tax is not so radical after all.

Case Against Income Tax

riggo-toni, no offense intended, just having fun with you.

Thanks for the reference. I'm quite sympathetic to the philosophy of the article, but it appears that the author is doing some fancy word play. Assuming his facts are correct, his implied solution is unworkable.

The greatest increase in the federal budget in the last 10 years is for entitlement programs, which are supported by social-security and medicare taxes. The income tax supports the primary federal budget. We can't simply roll back entitlement spending and drop the income tax, unless we want to declare war on seniors, the crippled and the poor.

I'm all for eliminating the income tax. But it does have to be replaced by something: my suggestion is a flat sales tax on goods and services.

[fansince62]

good thread...*ell I learned sumthin!! btw, I have heard it argued that while reducing/eliminating dividend taxes may have a marginal effect at best in respect to stimulating the economy, the intent is to alter the incentives for CFOs/CEOs at large corporations in terms of their financial strategies.

Art...while I agree in the main with your argument...note that you are making one large assumption: that the marginal utility of those taxed dollars are the same between rich and poor folks. obviously not always the case; hence, liberal notions about fairness, justice, gross consumption, etc.

ASF...you surprise me! I have an uncle who attended an Ivy league school during the 60s and was unabashedly to the far left on most political matters. he then started his own business and became progressively angrier (and more conservative) over time for precisely the same reasons you list.