patrick.net

Yes. 30% sales tax is better than 30% income tax. That's fairly obvious to anyone who earns a paycheck.

Imagine this, I make pet beds in south Georgia. I sell a bed to Wal-Mart or such for $6/hr. My competition makes pet beds in China and sells pet beds to Wal-Mart etc for $6. Now, I have to pay my employees as well as absorb about 8% tax. My employees have to absorb 20% income tax or something like that depending on their family income, deductions, etc.

So, both my company and the supplier benefit from the USA government. 40% of the employees at wal-mart or such receive some sort of government assistance. Buy hey! Who pays for that? Not my competitor in China. Nor his employees. I pay for that. And my employees.

What's more, the whole economic system, police system, world-military protection, and other benefits paid for by USA taxpayers benefit my company and that of my competitor. Who pays for that? Not my competitor.

So, would you prefer me to pay a 30% sales tax or a 30% income tax? Surely you can see that the latter taxes Americans more. HAve you never runa company, even a single person company? And surely you can see the former imposes the tax load on my competitor company in China as well as my company in the USA. So, are you saying you favor the communist system of China and believe Americans should be punished for working in America and foreign companies continued to be given a free lunch at the cost of Americans?

This would also shift tax burden from younger to older people. AARP would crap all over this. It would however allow the gov't to effectively cut social security payments (buying power) without actually cutting social security payments (nominal).

Melmakian says

The only way to impose such a thing on consumption at such a high rate would be via a VAT, where the tax is applied through each stage of production/distribution.

Don't even go there.

Land/property value tax makes more sense.

I see government as a defender of private properties. Such tax is more like a protection fee and it is not punitive on production.

More importantly, once taxation is seen as a way of "equality" and "Wealth redistribution" all is lost.

I guess internet retailers would hate the fair tax idea! Solution doesn't have to be "fair tax" but do need to move from a payroll tax system as it punishes workers. (as to the tax dodge argument above, what do you think the "farm and construction" wavers in the IRS tax code do? Or other under the table workers?)

maxweber21 says

I guess internet retailers would hate the fair tax idea! Solution doesn't have to be "fair tax" but do need to move from a payroll tax system as it punishes workers.

payroll taxes do not "punish" workers.

Untax workers and landlords will take every penny of the increased disposable income.

We simply need to raise taxes to match what we're spending. This basically means double the tax burden across the board, from people who don't have a pot to piss in to Buffett.

Germany, Denmark, and Sweden have a tax-to-GDP in the 45% to 55% range. Ours is around 25%.

Oh, and fuck China. American labor rates can't compete with Chinese labor and working conditions, nor should we try.

Bellingham Bill says

We simply need to raise taxes to match what we're spending. This basically means double the tax burden across the board, from people who don't have a pot to piss in to Buffett.

Or we simply lower spending to match half of the tax revenue. The we can cut taxes in half.

Bellingham Bill says

Germany, Denmark, and Sweden have a tax-to-GDP in the 45% to 55% range.

We should not aspire to be those countries. We should be more like Switzerland.

Bellingham Bill says

payroll taxes do not "punish" workers.

Untax workers and landlords will take every penny of the increased disposable income.

Let's eliminate minimum wage so those "evil" landlords get less, since lower take-home pay does not "punish" workers.

Peter P says

"evil" landlords get less

funny you put that in scare quotes.

Peter P says

since lower take-home pay does not "punish" workers.

absence of minimum wage just results in labor bidding their wages down to $0.

this is no longer the 19th century, bud.

however, minimum wage is basically a rent subsidy in the end. Churchill observed as much in his 1909 speeches on land value tax, how removing a bridge toll just resulted in area rents rising.

Peter P says

Or we simply lower spending to match half of the tax revenue. The we can cut taxes in half.

"simply" LOL

We should aspire to be those countries. We should not be more like Switzerland.

Boy, arguing like an idiot is fun!

Bellingham Bill says

absence of minimum wage just results in labor bidding their wages down to $0.

this is no longer the 19th century, bud.

How is that necessarily a bad thing, if that is the true price?

Passage of time does not imply progress. Humanity took a turn for the worse quite sometime ago.

Peter P says

How is that necessarily a bad thing, if that is that true price?

there is no such thing as "true price". Just power relationships, driven by supply and demand.

Humanity took a turn for the better quite sometime ago.

Bellingham Bill says

We should aspire to be those countries. We should not be more like Switzerland.

Boy, arguing like an idiot is fun!

I rather live in Switzerland than any of those countries.

Good Swiss food too!

your main determinant appears to be maximizing your local Gini ratio.

What's the point of living if you are expected to be just like everyone else? Income disparity is a good thing. It keeps things dynamic.

Peter P says

Income disparity is a good thing. It keeps things dynamic.

Income disparity on the merits is a wonderful thing (if you're on the winning end of it). And as a native-born American, I don't kid myself that I didn't win the birth lottery back in the 1960s and have benefitted immensely from the imbalances in my favor.

But I am arguing that so much of our disparities today are coming from active parasitical taps, where people are profiting from the mere ownership of existing wealth, not the provision of new goods and services that a really "free" market requires.

These are the rents that are killing our system, people getting something for nothing just like the rent-seeking that corrupted the Soviet bullshit system.

"As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce. The wood of the forest, the grass of the field, and all the natural fruits of the earth, which, when land was in common, cost the labourer only the trouble of gathering them, come, even to him, to have an additional price fixed upon them. He must then pay for the licence to gather them; and must give up to the landlord a portion of what his labour either collects or produces. This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land, and in the price of the greater part of commodities makes a third component part." -- some communist, writing here

Bellingham Bill says

Income disparity on the merits is a wonderful thing. And as a native-born American, I don't kid myself that I won the birth lottery back in the 1960s and have benefitted immensely from the imbalances in my favor.

Merit is a subjective concept.

Bellingham Bill says

But I am arguing that so much of our disparities today are coming from active parasitical taps, where people are profiting from the mere ownership of existing wealth, not the provision of new goods and services that a really "free" market requires.

So instead of taxing income we should be taxing wealth. I definitely agree that rent-seeking is a major problem and Land Value Tax in place of income tax can be a solution.

Global cap-and-trade birth permits can reduce child-births in underdeveloped places and reduce the unfairness of the birth lottery.

Peter P says

So instead of taxing income we should be taxing wealth.

No, not even "wealth". People should be rewarded for saving and not consuming their income, LOL.

LVT is arguably necessary, but I remain unconvinced that it would be sufficient in keeping a given economy a symmetric exchange between peers.

Not everyone in an economy can be rent-seekers. Somebody has to do the fungible labor with the crap natural wages. The "socialist" states address this by providing a good box of social goodies for everyone in their system, and this is apparently working pretty well for them.

It's all about the flows, keeping them symmetric and preventing money from piling up with the most successful earners.

What income goes up the pyramid must come back down. LVT addresses part -- the main part even -- of the problem but not all of it.

Peter P says

Global cap-and-trade birth permits can reduce child-births in underdeveloped places and reduce the unfairness of the birth lottery.

Pony permits would also work well.

Whatever happened to your small-government laissez-faire the-individual-knows-best minarchism???

Peter P says

Merit is a subjective concept.

Everything is a subjective concept

Bellingham Bill says

No, not even "wealth". People should be rewarded for saving and not consuming their income, LOL.

That is your opinion. There is no good or bad ways to spend or save money. You just need to be responsible for your own finances.

Bellingham Bill says

It's all about the flows, keeping them symmetric and preventing money from piling up with the most successful earners.

Flows are good. Rent-seeking is bad only because it is more like a black hole.

Bellingham Bill says

Everything is a subjective concept

Only to subjectivists like me.

Amazing.

Here's the link if you want to vote:
http://wh.gov/Nksv

Other ideas espoused in this thread don't seem like a solution. I think the opinions expressed by most in this thread do not prefer the working people. The working people actually do make up a majority of America and are actually what makes America great.

The obvious preference of the news articles on the current high profile "tax cliff" seems to be the same as most of the persons posting here: protect the wealthy in disfavor to the workers. Reminds me of ancient Egypt so I guess its the default human system; but, ironically, its not the one on which this country was founded nor which made America the greatest country in the world.

Bellingham Bill says

maxweber21 says

I guess internet retailers would hate the fair tax idea! Solution doesn't have to be "fair tax" but do need to move from a payroll tax system as it punishes workers.

payroll taxes do not "punish" workers.

Untax workers and landlords will take every penny of the increased disposable income.

We simply need to raise taxes to match what we're spending. This basically means double the tax burden across the board, from people who don't have a pot to piss in to Buffett.

Germany, Denmark, and Sweden have a tax-to-GDP in the 45% to 55% range. Ours is around 25%.

Oh, and fuck China. American labor rates can't compete with Chinese labor and working conditions, nor should we try.

payroll taxes do "punish" workers.

Bill, that's small business 101. Get a copy of the IRS Tax Guide for Small Business. Its clear you have absolutely no knowledge of how the income tax system actually works. Why do you think the IRS wrote out independent contractors for tech consulting decades ago? You really should learn something about how the tax system works before making arguments.

1. Did you see all those mega SUV's on the road a decade or so back? Why do you think those were bought?
2. One can write off a trip to somewhere by A. having one's own corp, or B. being on a W-2?
3. FICA, SS, Medicare et al is deducted from A. payroll, or B. distributions/dividends?
4. Dividends are the same as income for most purposes but are taxed at A. Same rate as income, or B. rate favoring the wealthy?
et nearly ad infinitum.

Cheers

BTW, Bill, I agree with your statements on rents. USA starting to remind one of a moundbuilder society.