Here come the tax hikes

[Tiny]

Originally Posted by winn dixie

Consumption tax NOW! Abolish the irs! Abolish state income taxes!

Food and essentials not taxed!

Fair for everyone!

The so called rich pay taxes on their toys with no write offs.

The poor will watch their money more closely and spend within their means! No more lexus with 20 inch rims.

Hey WD, we can discuss it over tacos and tequila with AOC and Nancy. Or whatever kind of rock gut whisky you and Pelosi are drinking. Maybe we can persuade them.

[Texas Contrarian]

.

Originally Posted by Tiny

Great idea! You combine it with a rebate for the less well off.

https://fairtax.org/
https://en.m.wikipedia.org/wiki/FairTax

Yes! Lets do it! Our previous tax cuts weren't quite large enough for my tastes. I'd love to have a really huge one!

There's the following amusing thread from 2011:

https://eccie.net/showthread.php?t=316562 (LOL)

"A neat mathematical trick," said one poster. (What the hell? I LOVE "neat mathematical tricks!")

So what if it would increase the deficit by hundreds of billions of dollars per year? There's a solution! Just crank Professor Stephanie's MMT machine into high gear!

What's not to like?

.

[winn dixie]

Originally Posted by WTF

Many forget this reality...

Yeah politicians would fuck it up.

I define essentials as food, hygiene products diapers meds etc..
IMO a consumption tax is the fairest system Ive looked at!
No write offs for children. No write offs for business leisure.

A Flat tax is not fair. It taxes everyone too much!

Our current system is a joke.

[nevergaveitathought]

at first blush it does seem to me that it would tend to slow down the economy

and some sort of transition allowance would seem to be in order in the interest of "fairness"

as savings previously taxed under one system would now be taxed again under another

and assets used to reduce taxation under one system would now escape taxation when converted to cash once again

but the real reason a stand alone consumption tax wont happen - power

and you shouldn't want it to happen as the income tax system you think would then end...well good luck with that

but it is a soft and pleasant, way, way up there, pie in the sky

[oeb11]

DPST/ccp will never give up their tax breaks for contributors to the party.

same for Republicans.

They whole tax system has been jerry-rigged by Congress to benefit the parties in power.

[Tiny]

Originally Posted by CaptainMidnight

.



Yes! Lets do it! Our previous tax cuts weren't quite large enough for my tastes. I'd love to have a really huge one!

There's the following amusing thread from 2011:

https://eccie.net/showthread.php?t=316562 (LOL)

"A neat mathematical trick," said one poster. (What the hell? I LOVE "neat mathematical tricks!")

So what if it would increase the deficit by hundreds of billions of dollars per year? There's a solution! Just crank Professor Stephanie's MMT machine into high gear!

What's not to like?

.

Watch and learn WTF. You are about to see me get my ass kicked from here to Brownsville by arguing with someone whose knowledge of economics is far superior to mine. But I will do this cheerfully, knowing that which does not kill me makes me stronger.

I hope Matamoros still has some good $40 hookers.

OK CaptainMidnight, since you don't like tax cuts, I'll go back to 2016, when President Obama still ruled the roost and the Tax Cut and Jobs Act was just Paul Ryan's wet dream. That year individual income taxes were 8.2% of GDP and corporate income taxes were 1.6% of GDP:

https://www.whitehouse.gov/wp-conten.../hist_fy21.pdf (see Table 2.1 on page 36, GDP in 2016 was 18.75 trillion)

Why would replacing the income tax with a sales tax necessarily blow a hole in the budget, given we were just raising about 10% of GDP from the federal income tax? You might raise more money with the sales tax. It seems like it would depend on what you set the rate at, and compliance and any loopholes. You could make it less regressive, and maybe even progressive up to a point, with Winn Dixie's suggestions, taxing items like food at lower rates than, say, Mercedes and yachts and the like, and mine, through a rebate for the poor.

OK, this would discourage consumption, and it would lead to temporary inflation. But it would also encourage savings. Give manufacturers a reduced or "0" rate with exports, like the rest of the world does with VAT's, and watch our trade and current account deficits go to surpluses.

The biggest advantage in my little world is that it would hugely reduce the complexity of compliance. You are probably not familiar with the Tiny Curve, which is similar to the Laffer Curve. The y-axis on both curves is tax revenues raised. The x-axis of the Tiny Curve is "time spent doing the work to pay my income taxes." When you go to 100% on the x-axis, the amount of tax collected is "0", because Tiny is spending all his time on his income taxes. He doesn't have any time to actually work and make taxable income, so the government gets nothing.

Anyway, the current income tax system is ridiculously complicated, riddled with loopholes, and every politician and special interest seems intent on screwing it up more. That's not to say that you wouldn't have some similar problems (but to a lesser extent) with a sales tax. Or to say that replacing the income tax with something else has a snowball's chance in hell of ever happening in the USA. But come on man, let me dream. Without my AOC and fair tax fantasies I'd be a bitter, sad excuse for a man.

[dilbert firestorm]

the tax code is primarily done for the benefit of the very rich and big corporations with a lot of mooolah they do not want to lose.

[Texas Contrarian]

.

Originally Posted by Tiny

Watch and learn WTF. You are about to see me get my ass kicked from here to Brownsville by arguing with someone whose knowledge of economics is far superior to mine. But I will do this cheerfully, knowing that which does not kill me makes me stronger.

I hope Matamoros still has some good $40 hookers.

OK CaptainMidnight, since you don't like tax cuts, I'll go back to 2016, when President Obama still ruled the roost and the Tax Cut and Jobs Act was just Paul Ryan's wet dream. That year individual income taxes were 8.2% of GDP and corporate income taxes were 1.6% of GDP:

https://www.whitehouse.gov/wp-conten.../hist_fy21.pdf (see Table 2.1 on page 36, GDP in 2016 was 18.75 trillion)

Why would replacing the income tax with a sales tax necessarily blow a hole in the budget, given we were just raising about 10% of GDP from the federal income tax? You might raise more money with the sales tax. It seems like it would depend on what you set the rate at, and compliance and any loopholes. You could make it less regressive, and maybe even progressive up to a point, with Winn Dixie's suggestions, taxing items like food at lower rates than, say, Mercedes and yachts and the like, and mine, through a rebate for the poor.

OK, this would discourage consumption, and it would lead to temporary inflation. But it would also encourage savings. Give manufacturers a reduced or "0" rate with exports, like the rest of the world does with VAT's, and watch our trade and current account deficits go to surpluses.

The biggest advantage in my little world is that it would hugely reduce the complexity of compliance. You are probably not familiar with the Tiny Curve, which is similar to the Laffer Curve. The y-axis on both curves is tax revenues raised. The x-axis of the Tiny Curve is "time spent doing the work to pay my income taxes." When you go to 100% on the x-axis, the amount of tax collected is "0", because Tiny is spending all his time on his income taxes. He doesn't have any time to actually work and make taxable income, so the government gets nothing.

Anyway, the current income tax system is ridiculously complicated, riddled with loopholes, and every politician and special interest seems intent on screwing it up more. That's not to say that you wouldn't have some similar problems (but to a lesser extent) with a sales tax. Or to say that replacing the income tax with something else has a snowball's chance in hell of ever happening in the USA. But come on man, let me dream. Without my AOC and fair tax fantasies I'd be a bitter, sad excuse for a man.

I don't like tax cuts?

Actually, I am on the conservative/libertarian side of most economic and tax policy debates, and favor keeping rates as low as possible and simplifying the code to the maximum extent practicable!

The FairTax is a proposal featuring a 30% national consumption tax on goods and services along with a "prebate" designed to offset the cost of necessities such as food and medical care, so that lower-income households would be penalized less by its provisions. The way that would work is that, based on family size, every household would get a monthly payment calculated to be an estimate of the amount of tax levied on an average person's costs of food and health care. Thus it is claimed by FairTax supporters that the plan is a progressive tax, which it clearly isn't, as the effective tax rate falls as households rise through the income distribution. MPC (marginal propensity to consume) graphs appear in practically all introductory economics textbooks.

The reason this is such a political non-starter is that a far higher percentage of the tax burden would be redistributed to non-affluent households. Thus, the FairTax would be a very regressive tax. We currently have a quite progressive tax code; one that's far more so than every other country in high-income portions of the world.

It also would land well short of replacing the revenue raised by our current clusterfuck of a system, as it proposes to eliminate all other federal taxes -- including the payroll tax, which brings in roughly two-thirds of the amount raised by the income tax, if I remember correctly.

A quick drill-down on revenue:

Several people who have researched the VAT and other consumption taxes, including Robert Barro, have estimated that a broad-based federal tax of 10% could raise as much as 5% of GDP annually. That suggests that if it did not significantly suppress consumption (which a 30% tax might do), the FairTax could conceivably pull in gross revenue of 15% of GDP.

But then you have to subtract the cost of the "prebate" payments to households; which, as I recall, would amount to about 3%-3.5% of GDP. So the net effect of all this would be that the plan would raise about 11.5%-12% of GDP.

After the large tax cuts of 2003 and then again in 2017, our current system raises about 16%-16.5% of GDP, which obviously still lands well short of covering the pre-pandemic level of federal spending. The annual run rate of debt accumulation during the 12-month period ending in February 2020 was about $1.25 trillion, or approximately 6% of GDP.

So, it looks to me like the FairTax would add close to $1 trillion annually to our fiscal deficit if it were to replace the entirety of our present federal tax system, which is the proposal.

.

[Tiny]

Originally Posted by CaptainMidnight

.I don't like tax cuts?

Actually, I am on the conservative/libertarian side of most economic and tax policy debates, and favor keeping rates as low as possible and simplifying the code to the maximum extent practicable!

I knew that, which is why I was scratching my head about your post.

Originally Posted by CaptainMidnight

It also would land well short of replacing the revenue raised by our current clusterfuck of a system, as it proposes to eliminate all other federal taxes -- including the payroll tax, which brings in roughly two-thirds of the amount raised by the income tax, if I remember correctly.

A quick drill-down on revenue:

Several people who have researched the VAT and other consumption taxes, including Robert Barro, have estimated that a broad-based federal tax of 10% could raise as much as 5% of GDP annually. That suggests that if it did not significantly suppress consumption (which a 30% tax might do), the FairTax could conceivably pull in gross revenue of 15% of GDP.

But then you have to subtract the cost of the "prebate" payments to households; which, as I recall, would amount to about 3%-3.5% of GDP. So the net effect of all this would be that the plan would raise about 11.5%-12% of GDP.

After the large tax cuts of 2003 and then again in 2017, our current system raises about 16%-16.5% of GDP, which obviously still lands well short of covering the pre-pandemic level of federal spending. The annual run rate of debt accumulation during the 12-month period ending in February 2020 was about $1.25 trillion, or approximately 6% of GDP.

If I were dictator, I wouldn't replace Social Security and Medicare taxes with a sales tax. I'd only replace the income tax, which is about 10% of GDP.

Then I'd abandon my Libertarian leanings and force people to squirrel away massive amounts of money through deductions from their paychecks to pay for retirement, medical insurance, a down payment on a house, and educational expenses, like Singapore.

Originally Posted by CaptainMidnight

So, it looks to me like the FairTax would add close to $1 trillion annually to our fiscal deficit if it were to replace the entirety of our present federal tax system, which is the proposal..

I didn't actually know what was baked into the fair tax. And I understand why you don't like it. An extra 5% of GDP added annually to the national debt, assuming government wouldn't radically cut expenditures, would be catastrophic.

And yes, if you looked solely at, say, the top two quintiles of income earners and ignored everyone else, the fair tax would be very regressive.

On the other hand, as you correctly say, we've got the most progressive tax system in the developed world. We could use a bit less progressivity. You can't pay for everything from the pockets of the top 1%.

[WTF]

Originally Posted by Tiny

Watch and learn WTF. You are about to see me get my ass kicked from here to Brownsville by arguing with someone whose knowledge of economics is far superior to mine. But

.

That didn't take long!

[Tiny]

Originally Posted by WTF

That didn't take long!

Give me a break. He only kicked my ass from here to Corpus Christi. Which kind of sucks, I was looking forward to those $40 hookers in Matamoros.

[WTF]

Originally Posted by Tiny

You can't pay for everything from the pockets of the top 1%.

They are the one's who can influence lawmakers to reduce spending! If they are not willing to use that influence to do so, they should get clobbered with more taxing!

[WTF]

Originally Posted by Tiny

Give me a break. He only kicked my ass from here to Corpus Christi. Which kind of sucks, I was looking forward to those $40 hookers in Matamoros.

He kicked your ass around the world and you just happened to land in CC.

[WTF]

Originally Posted by CaptainMidnight

.

We currently have a quite progressive tax code; one that's far more so than every other country in high-income portions of the world.

True.

https://www.taxpolicycenter.org/taxv...ry-progressive

However SS and Medicare taxes are regressive. We have a ton of other regressive tsxes.

I've read somewhere where when combined we have a tax rate of around 40%, this was before Trumps tax overhaul.

I do wonder how we think we can continue to tax at 16%-17% of GDP.

[rexdutchman]

They whole tax system has been jerry-rigged by Congress to benefit the parties in power.
And the corp elites , and the power elitist no one else That's what Identity Politics is all ABOUT