patrick.net

I'm with ya, Randy. Tax consumption. The more of a burden on society, the more that commodity gets taxed.

I would have an estate tax, though. Otherwise you'd have people who only ever amassed money and didn't spend it. Although if they didn't spend it, maybe they couldn't exert influence, which would require transfer or consumption...

Who would determine how much of a burden to society something is? Why have a tax that is avoidable by the ones who can afford the tax the most? No matter how creative I get, I can't think of a fairer tax than a progressive income tax.

Estimated average incomes derived partly from per capita GDP. Not a good measure, as they're based on a population mean of GDP, which doesn't say anything about distribution or typical pay packet sizes/actual measured incomes.

http://www.infoplease.com/ipa/A0934562.html

also the IMF World Economic Outlook database could be worth a look, but also uses per capita GDP...

Who would determine how much of a burden to society something is?

The elected representatives of the people. Same as always.

OK, so they would go commodity by commodity?

What expertise would a politician have as to the social impact of every commodity?

Bill Gates' dad wrote a book recently recommending estate taxes, and remarking on the legal system of property and ownership that creates the super-wealthy, i.e. once you've got it, no-one can really take it away from you, just ask Paris Hilton...

Why America Should Tax Accumulated Fortunes, B. Gates Sr.

What about the corruption this then opens up as industry lobbyists fight to counter scientists reporting to legislators?

I don't mean to spar, I've just always hated the concept of consumption taxes, because I've always been cynical about the fact it is normally Republicans who hate income taxes who propose them because they know they are regressive. Just my opinion though.

Consumption taxation empowers the people with a say in which behaviors they deem of value. The current system robs me of the chance to tune my behavior according to my own set of ethics and values.

We covered this ad naseum 2 or 3 threads ago.

Any "progressive" income tax or even a pure flat income tax is still regressive in terms of valuing productivity. There is no reason to tax my marginal dollar earned at the same or greater rate than the last aside from pure income confiscation and redistribution inevitably to someone who has failed to value productivity -- that includes the lazy poor as well as the lazy rich and the parasite corporation.

Just tax the damned value chain and consumption and leave income & gains out of it. Period. No one can complain if they are honest about it. Oh no, someone with less money has to pay more of their income to buy something. You don't say. Aside from DS' uncanny ability to alter the foundational theorems of mathematics, one can never avoid such a truism no matter how much you redistribute and reengineer.

"Progressive" taxation is the original Orwellian concept. It is regressive. Think about it. It really is.

The wholesale sales tax here used to go commodity by commodity, with differing rates of sales tax on each item, similar to import duty systems. The system was replaced by a 'flat', nearly universal goods and services tax (GST) pegged at 10%. The UK VAT is 17½% by contrast, which hurts a lot more as a non-progressive tax. Italy has 5 or 6 different rates, which makes more work re collection and categorisation -- one of the aims of a 'good' or efficient tax system is simplicity. Scrapping a wholesale sales tax on goods allowed the govt to take a slice of the services pie for the first time, however, similar to VAT systems everywhere -- the ratio of cost of goods vs services in society is swinging more towards services all the time... and services are more likely to recur than goods...

However, the 10% rate is 'fair' in that it is still supplemented by a progressive income tax system. It is harder to avoid such taxes, except for some 'black economy' areas in trades, etc. The tax was lifted on 'unprocessed' foodstuffs, so you could eat basic foods without being taxed.

I'm grumpy with Ozzies right now anyway. I always have to have conference calls in the middle of the damned night. Move your damned island to a more reasonable time zone already.

I'm really trying to see it your way, I promise, I just can't make the connection. I do agree with your premise in the first paragraph.

Aside from DS’ uncanny ability to alter the foundational theorems of mathematics

hmm, and how is progressive regressive? and what final outcome are you regressing to?

Ok Randy, since I know you have achieved some wealth, one could question your motive? We both seem to agree that progressive taxation is OK (I infer this by your stating my system is regressive and bad) so a wealthy person saying he supports a tax that is discretionary to him has to raise a red flag.

The other part that I struggle with is that I don't want government making a judgement call on every single thing I buy and whether it is good or bad. I think this is a blatant abridgement of basic freedom of commerce.

But nothing is absolute, I don't care about tobacco sin taxes, and all that good stuff, hell even oil taxes, knock yourself out, but it then gets to trans fat oils, and fertilizers and then it doesn't stop.

It all partly depends on whether you see a community as a bunch of atomised, disconnected individuals with only a cash nexus between them, or as an interconnected and interdependent whole, where everyone depends on someone for something. You may also want to recognise basic citizenship rights such as adequate food and clothing and shelter in a society which has a clear abundance or surplus. Once you realise that everyone depends on everyone else -- and the rich depend on everyone else to make them rich, one tiny slice of money at a time -- then the idea of the 'self made' millionaire of course becomes quite ludicrous -- the 'self made' millionaire was able to manipulate others and their economic relations in a way that disproportionately benefitted him or herself at everybody else's expense. Is this to be admired or congratulated? Not particularly, in my book. Australian Aboriginals have no strong sense of personal property, everything is the collective property of the tribe and is exchanged freely on request as the need arises to use it -- which of the two societies is actually more 'advanced'?

Both ultimately tax production if you think about it, so why not take it on the front end, and let people accumulate, and spend as they see fit. I do believe that people spending (not going into debt) is what gets things going so I don't understand why we would discourage it. Just look how people avoid sales taxes now by buying online.

Love the points DS, I was actually thinking the same thing. Gasoline for instance has a retail and wholesale use (we drive our cars, but business also transport) so the taxes just keep getting multiplied all the way up the value chain.

Or, to put it another way, given that the surrounding society made the rich rich, to the point where they have far more than they can ever use, then that society can equally well take some of the excess wealth back to give to the others, in the form of a 'progressive' tax on income. Income is the most direct measure of how socially secure you are, after all, it is the medium that secures your wellbeing. Thus, we talk about income taxes being 'direct' and VATs being 'indirect'...

I gained the same respect for the Polynesian cultures as well. Here it is generally asserted that communal type societies don't last, but for some reason those cultures have existed for thousands of years. Everyone has a place and a purpose.

Malcom says: Ok Randy, since I know you have achieved some wealth, one could question your motive?

Holy pot calling the kettle black, Batman! :o

Geez, Malcom, maybe you think a progressive tax is a great idea because you haven't (yet?) achieved some wealth?

At least VAT at a federal level isn't as discretionary as sales tax. Here in the states, the system is so silly people easily get around it. In California to stop people buying cars out of state, you pay the sales tax when you register the car.

Brand,
No, I've done OK, I was just playing devil's advocate. It doesn't seem to be a question that a progressive income tax actually taxes wealth, the issue seems to be the morality of it. Though I am honestly trying to understand how it becomes regressive in Randy's view.

From my observation I spend much less that people who are horribly poor. I own my house outright, and I have solar, so I don't even have an electric bill. That's why I know that wealthy people are wealthy (said many times here by different people) because we don't spend like other people. My trash can is almost empty when I put it out each week, and my neighbors (has always been the case) are all overflowing with boxes and all kinds of waste.

I have seen it suggested in a few places that hunter-gatherer societies are sufficiently productive that they effectively lack the concept of scarcity. This would put them somewhat outside the bounds of economic analysis.

I also submit that those cultures never came close to making it out of the gravity well, or understanding the genome. To spend eons without attempting to understand the universe is a foreign mindset to me, and one I find strangely depressing.

I've just always been the black sheep of my circles because I don't resent taxes. I feel like I get a decent value for living in a free, generally disease free, peaceful society, with decent infrastructure. People thought I was nuts when I just happily paid a ton of money in gains taxes on investment properties because I knew a 1031 was just delaying the inevitable. I've seen so many people play games with taxes and it is just not worth it.

I've thought that as well requiem, I just respect the order of the societies, but during American Indian Studies I became depressed envisioning societies with no dates or history books, just stories passed down with no reference in time. Different mindset though. At lease those societies don't go in circles God --> No God = Evolution --> Maybe God = Intelligent Design.

Malcolm Says:
Love the points DS, I was actually thinking the same thing. Gasoline for instance has a retail and wholesale use (we drive our cars, but business also transport) so the taxes just keep getting multiplied all the way up the value chain.

The GST is only levied on the final consumer, though, there's no multiplier effect -- every business carefully claims 'input credits' all the way back up the line for the GST they were charged by the preceding vendor. Naturally, the introduction of the GST required a radical transformation of accounting systems and more interaction with the Tax Office -- requiring filing a monthly or quarterly 'acitivity statement' and remitting the GST to govt -- and a lot of shopkeepers resented becoming a tax collector for the govt... Not sure how it works in US with state-based VATs, if there are any...

"Geez, Malcom, maybe you think a progressive tax is a great idea because you haven’t (yet?) achieved some wealth?"

This is inline though with my concerns that people love to stick it to someone else. That's why I get fired up during prop 13 discussions as well.

DS, sales tax works the same. I assume GST is abbreviated for retail sales tax. Anyway, yes the retailer is the tax collector for the government and files a return each month or quarter declaring the total taxable retail sales, and remits the sales tax collected. Here in San Diego (varies slightly county by county, and some states don't have sales tax at all) sales tax of 7.75% is collected on all retail sales of tangible products.

requiem Says:
I have seen it suggested in a few places that hunter-gatherer societies are sufficiently productive that they effectively lack the concept of scarcity. This would put them somewhat outside the bounds of economic analysis.

That would be said for all societies, hunter-gatherer societies the least. They had less of an abundance than our present society, which controls the production of food, etc. Note that this society type represents the last 200,000 years of human history, other types only the last 10,000 or so.

I also submit that those cultures never came close to making it out of the gravity well, or understanding the genome. To spend eons without attempting to understand the universe is a foreign mindset to me, and one I find strangely depressing.

Well, they attempted to explain the universe, as curious beings, in the form of myths, as did all other 'pre-Enlightenment' societies -- Romans, Greeks, Norse, Aztecs, Celts, etc. Widespread atheism and secularism are particularly new and alien concepts to us in our history, in fact. But certainly there is a technology and knowledge differential, and technological breakthrough has been layered upon breakthrough in an accelerative process in the last 10,000 years. Proponents of 'capitalism' here would doubtless argue that it is the judicious placement of capital that spurs many of the breakthroughs in the inexorable working of markets... I'm not sure that such breakthroughs require the existence of the very rich or a society that does not know how to redistribute, though...

As products move up the value chain they are not taxed. Businesses actually sperate out their sales for resale, and end user retail and track it the state issues resale certificates which basically exempt you from being charged tax because you are adding value or retailing it to the end user. My understanding of VAT (lived in England for a year) and it is discussed in schools here is that tax is charged on each step except for the very last one, the end user.

GST is goods *and services* tax -- the sting is in taxing intangible services, an increasingly large slice of the expenditure pie... e.g. borrowing a DVD from Blockbuster, seeing the doctor, paying the mobile phone bill, etc...

Actually DS, I'll get flack for saying this I always do among my friends, but it is government that is necessary for the society to get going. Without collective expenditures on infrastructure, and things like sanitation, and defense you can't establish commerce.

I like to use a coral reef as a visual. You need a solid infrastructure, then the free market grows all over it.

California has gotten more creative as well. Renting a car is seen as taxable because you are using up part of the value. Basically depreciating it by renting it. I also believe video rentals are taxed, probably the same reasoning, but we don't pay tax here for a plumber's labor. Some states just charge it on everything. Here in California you don't pay sales tax on groceries.

My interpretation of the 'provide for the general welfare' clause of the Constitution is basically the duty of government to build public works projects.

I wish everyone a good night.

While our present society produces sufficient food to easily feed everyone on the planet, there remain distribution issues. With a hunter-gatherer society, abundance may be less, but availability is greater. Ah, here it is: from Wikipedia, a paper by a Marshall Sahlins, suggesting "data indicated that hunter-gatherers worked far fewer hours and enjoyed more leisure than typical members of industrial society, and they still ate well. Their "affluence" came from the idea that they are satisfied with very little in the material sense. This, he said, constituted a Zen economy."

My thinking is that mobility (as is often the case with such societies) also prevents the accumulation of wealth; when I have been on backpacking trips, the tools and supplies are similarly shared out and there is a severe disincentive to carrying along bricks of gold. I suspect that when saddled with the trappings and requirements of agrarian life, such societies would lose that "Zen economy" over time, especially as they grew.

yeah, VAT progressively adds tax as value is added, and has different input and output taxes, or something... the GST here is slightly different, in that the tax is paid entirely by the end consumer, and there is only ever 1 tax rate to worry about. Not meaning to brag, but the Oz system seems to be simplest to administer for these reasons.

All income tax and GST is collected by the Federal govt, and the promise was that the GST is simply given in its entirety to the states by the Feds. Apparently the govt is 'awash with GST money', although the roads and rail are still falling apart. There are still state excises on fuel and the sin taxes as well. Somehow the Federal govt went from an $8bn deficit to a $10 bn surplus in 12 years too...

The definition of 'welfare' is to 'fare well' -- the 'general welfare' to my mind is expenditure on health, education and other transfers such as family payments, unemployment benefits, and so on. There are plenty of public works here -- new schools with too few teachers, shiny new hospitals with too few staff -- where the govt provides one-off funding for construction but does not allocate recurrent funding for adequate staff levels to provide the service that was intended...

My theory is everyone hates capitalism and free markets except when they are winning.

I exclude myself from that definition. But people who've achieved their own wealth are the exception to the rule.

Note, I don't even define "wealth" as money or material wealth. Someone who's built their own empire of anything of value to them, regardless of what form, will have a fundamentally different view on that being redistributed away from them. I'd imagine an isolated monk or a rural bio dynamic self sustainable simply living hippie are similarly offended when someone attempts to redistribute their spiritual or self esteem value away from them by granting to others who did not make the same sacrifices in life to achieve it in the first place. This doesn't indicate these people are mean, foul or amoral. It simply means they are human and wish to see their sacrifices rewarded accordingly.

After all, isn't that why so many renters on this board are so enraged by boomers and FBs? As a renter who could've and would've bought, but didn't because she sacrificed in order to save for tomorrow, isn't she right to get pissed off when the government wants to use her sacrifice to ease the suffering of those who didn't?

It's no different with taxes.