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Post by Justin Thyme on Jan 6, 2012 11:52:03 GMT -5
Split from: Study%3A+Romney+tax+plan+benefits+the+richThe inherent problem with a flat tax is that the lower the income, the higher a percentage of that income the person pays in sales taxes. As much as I like the theory of a flat tax, the issues of sales tax knocks the equality out from underneath the idea. Why is that a problem? This is a serious question with no right or wrong answers. I'm really interested in why people believe that people should be treated different according to their income.
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Post by Gary on Jan 6, 2012 12:17:02 GMT -5
The whole argument for a flat tax is that it is "fair for everyone". Unless sales taxes are ended, however, that argument is invalidated by the disparity in percentage of income paid in total taxes.
The institution of a flat tax combined with the elimination of sales taxes would be true fairness. A flat tax by itself would be a regressive burden on lower incomes. Basic math, really.
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Post by Justin Thyme on Jan 6, 2012 12:43:31 GMT -5
The whole argument for a flat tax is that it is "fair for everyone". Unless sales taxes are ended, however, that argument is invalidated by the disparity in percentage of income paid in total taxes. The institution of a flat tax combined with the elimination of sales taxes would be true fairness. A flat tax by itself would be a regressive burden on lower incomes. Basic math, really. Let me rephrase the question. Why is it fair to charge poor people less than affluent people? |
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Post by LimitedRecourse on Jan 6, 2012 12:47:21 GMT -5
I disagree with the assertion that sales taxes are unfair. Rich people and poor people alike pay tax on what they purchase. Wealthier folks tend to buy MORE and then are taxed MORE and at a LARGER percentage of their income.
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Post by ssmynkint on Jan 6, 2012 13:39:43 GMT -5
Yes, they have a higher standard of living to maintain, as is their right, having earned it. However, sales tax on necessities i.e., food (not soda & crap), medicines, etc. is regressive and an unfair burden.
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Post by Justin Thyme on Jan 6, 2012 13:42:43 GMT -5
However, sales tax on necessities i.e., food (not soda & crap), medicines, etc. is regressive and an unfair burden. That it is a burden I'll agree with but how is that unfair? |
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Post by Gary on Jan 6, 2012 13:48:44 GMT -5
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Post by Justin Thyme on Jan 6, 2012 15:40:42 GMT -5
Gary, I understand that the sales tax is a regressive tax. The reason I forked this thread was because I didn't want to threadjack the thread there, which was about a tax proposal by a candidate for president, with my question about our idea of fairness and how it relates to the poor. If you go into any retail store in Chattanooga you don't see multiple prices on items based on the income of the customer so why is it thought to be fair to have multiple tax rates based on income? Why is it thought to be fair to give tax discounts to poor people rather than pay taxes equally as they pay for items in a store? Government service to the poor doesn't cost any less than those same services to the affluent. |
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JC
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Post by JC on Jan 6, 2012 15:49:37 GMT -5
The whole argument for a flat tax is that it is "fair for everyone". Unless sales taxes are ended, however, that argument is invalidated by the disparity in percentage of income paid in total taxes. The institution of a flat tax combined with the elimination of sales taxes would be true fairness. A flat tax by itself would be a regressive burden on lower incomes. Basic math, really. I agree with this %100. Which is why I would like to see a real "fair tax" created. One in which everyone is taxed the same percentage on their income. No deductions or credits. No coddling the balls of the rich or the poor. Just imagine how much taxes would go down once everyone starts paying... |
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Post by Warkitty on Jan 6, 2012 16:05:05 GMT -5
Why is it thought to be "fair" to tax 10% of consumption so long as necessities are included?
If you're charging 10% on food, clothing and medicine (the majority of what the poor spends on despite any grumbling otherwise about how many poor actually have a refrigerator in their apartment), well that's a fraction of a percent of a wealthy person's means. For Joe the Janitor, it's a huge chunk out of his meager income.
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Post by Justin Thyme on Jan 6, 2012 16:16:57 GMT -5
Why is it thought to be "fair" to tax 10% of consumption so long as necessities are included? If you're charging 10% on food, clothing and medicine (the majority of what the poor spends on despite any grumbling otherwise about how many poor actually have a refrigerator in their apartment), well that's a fraction of a percent of a wealthy person's means. For Joe the Janitor, it's a huge chunk out of his meager income. If you do completely away with taxes the food cost is still going to be a larger percentage of the poor person's income than the rich person's income. Is that fair? |
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Post by Warkitty on Jan 6, 2012 16:49:15 GMT -5
So, because they're already putting more of what they get into survival, it's "fair" to ask them to dig deeper?
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goomba
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Post by goomba on Jan 6, 2012 18:59:30 GMT -5
just to be clear, aren't the majority of your sales tax going to the state and not the federal gov?
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Post by Justin Thyme on Jan 6, 2012 19:49:20 GMT -5
So, because they're already putting more of what they get into survival, it's "fair" to ask them to dig deeper? Dig deeper or just as deep as everyone else? Do we sell them bread cheaper because they are already putting the bulk of their income into survival? I'm not saying I don't have an obligation to the poor, I'm just asking if a progressive tax structure is really fair or is a better word for it compassionate? |
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Post by ssmynkint on Jan 6, 2012 20:41:05 GMT -5
Is compassion not fair, just, right?
Meaningless word gamesfrom ivory towers signifying nothing, obfuscating the real humanity. of the issue,
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Post by Justin Thyme on Jan 6, 2012 20:46:19 GMT -5
Is compassion not fair, just, right? Meaningless word gamesfrom ivory towers signifying nothing, obfuscating the real humanity. of the issue, So don't question it? Just accept that fairness is what we are told? |
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Post by el Gusano on Jan 7, 2012 1:50:32 GMT -5
that argument is invalidated by the disparity in percentage of income paid in total taxes. I think you are confusing a flat tax with the Fair Tax. (And a misrepresented Fair Tax at that.) A flat tax by definition would create NO disparity of percentage whatsoever. Everyone would pay the exact same percentage of their income in the flat tax. The disparity is there with or without the flat tax for the rest of the taxes. But with the Fair Tax, no one pays any taxes at all below the poverty level (with the flat tax no one pays income tax below the poverty level) and everyone pays the exact same fair rate above the poverty level. |
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Post by LimitedRecourse on Jan 7, 2012 10:07:06 GMT -5
"So, because they're already putting more of what they get into survival, it's "fair" to ask them to dig deeper?"
How about we insist they work harder and longer to earn more money, like most of the people in this country had to do in order to obtain their wealth? One's income is the part of this equation that is second most easiest to adjust, up or down. The easiest adjustment to this faulty mathematical belief system is spending. Spend less. Earn more. You will become wealthier. HOW you spend your money is not the government's business (barring illegal activities). The CONSEQUENCES of your faulty CHOICES should also NOT be the government's business, and the other taxpayers should NOT have to pay for your shortsightedness.
There ARE those whose circumstances are not of their own devices; we should gladly assist them for a while to get them on their feet. (4 generations of the same family living in public housing is a tad bit too long, BTW.) The majority of those NOT paying any taxes, yet still sucking on the government teat should be weaned.
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Post by daworm on Jan 7, 2012 17:15:43 GMT -5
And flawed, however.
Look at it this way. Of what use is money you do not spend? Sure, it can sit in a bank and earn interest, or be invested and earn value and/or dividends, but until it is spent, it has no use whatsoever. And let's say someone makes a bit more than others, and does invest it and turn it into more money than he or she started with, what's the tax burden then, under a basic flat tax? Let's do that math, shall we?
Person A makes $20,000 last year, spent every dime of it, and paid the flat tax of 10% (just to make the numbers easy) on all of it. So, he paid $2,000, for a total of 10% tax burden. Nothing more to say about him, because he's spent it all.
Person B made $200,000 last year, spent $100,000 of it, and invested the rest making a 10% return on it. So last year, he paid 10% of $100,000 or $10,000, and his effective rate for last year, so far is only 10%. Sounds regressive so far, right? But let's see what happens this year, when he takes that $100,000 he saved and earned 10% on, so that it is now $110,000, and spends it. Now he pays 10% on that $110,000, or $11,000 in tax. Of the initial $200,000 he earned last year, he has now paid $21,000 in taxes, which means his effective tax rate is now 10.5%. Yep, he's paid a higher effective rate than the guy making $20,000 a year.
The opposite could happen, he might have invested that $100,000 and lost 10%, in which case if he spent the remaining $90,000 would mean he paid $19,000 in taxes for a rate of 9.5%. But since on average, over time, investments make positive gains, on average, most people who don't spend all they make will end up paying an average higher rate per year than anyone else when they do eventually spend it.
And if they never spend the money they saved last year? Remember what I said before? Of what use is money you do not spend? It might as well be a mountain of toilet paper for all the good it does them if they don't spend it. But except for the super wealthy, that won't be the case, most people will retire and that money will get spent, and when it is, it will be taxed. What isn't spent will be inherited by someone, and it will then be taxed TWICE (once for estate taxes, assuming estate taxes still exist) and again when the inheritor spends it. The wealthiest of the wealthy might continue on generation after generation with accumulated, unspent (and thus untaxed) wealth, but again, of what consequence is that, when it does them no good until it is spent?
If you think about it, isn't that what taxes should be for, the consumption of wealth (in the sense that anything that has value is wealth, be it a piece of chewing gum or a bar of gold)? Money is just an IOU for wealth. Money is just paper, or bits in a computer somewhere. Taxing money doesn't make sense, taxing consumption of wealth does.
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TNBear
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Post by TNBear on Jan 7, 2012 20:30:08 GMT -5
Since this question seems to be one of mathmatics, cannot one of the super-duper computers come up with a workable answer.
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Post by LimitedRecourse on Jan 8, 2012 9:09:03 GMT -5
Not with the vast right-wing conspiracy controlling science.
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