patrick.net

I think one of the most equitable tax schemes possible is a VAT tax on purchases. Clean and simple. Sure, it's regressive, but it's a lot LESS regressive than what's in place now. A one-time tax on land like advocated here would be a 2nd choice.

I've made a gross income of less than $8k a year, and I've grossed I think a bit over $80k. A good wide range. And I can tell you, my tax percentage was far HIGHER on the low end of the income range. I paid less tax in absolute dollars when I grossed up in the high end. That's the reality of taxation in the US.

So yeah, a VAT, a flat tax, a land tax, something that doesn't kick the little guy in the nuts for a change would be rather nice.

I don't want to begrudge anyone their fun, but these people scare me... and they're the responsible ones.
McCullough and her husband, Donald Barks, had planned to tap home equity to convert their tumble-down garage into a home recording studio. They got as far as tearing down the garage and then realized that building a new structure would max out their home equity.

"The last few years we used that home-equity line of credit for fun things, like vacations," she said. "That's not going to happen anymore. We have not exceeded the value of our home, but I don't want to go there. That scares me."
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2008/02/12/MN19V0GLO.DTL&tsp=1

Progressive taxation IS welfare. Don't forget that.

"garage into a home recording studio"

(That's code for a place to get high)

Or better yet, GROW dope! :)

America is great because this country respects private properties. It is arguable that property rights are as important as civil liberties and human rights.

Wealth-based taxation will erode the core value of property rights.

Peter P Says:
I thought i liked the “Fair Tax” - flat tax on consumption.
I thought I did too… but there was before I found out the rate would be 23%!!

I would be fine with a 23% consumption tax. It is better than the ridiculous hack system we have in place now.

I would be fine with a 23% consumption tax. It is better than the ridiculous hack system we have in place now.

Don't forget we still have to pay state income tax and state sales tax.

Again, I prefer a drastic cut in government spending. Much of the government can be privatized.

Gold is down. What is happening? (Yeah, I am aware that those IMF clowns are trying to sell gold.)

I will be ok with even 100% consumption tax as long as it is not levied on food.

I have always been very discriminating in what I buy, if I buy something, I have to research it and make sure it is superb quality. Most of the times, I buy nothing at all.

Sick fatass Americans who love to buy cheap crap ought to be subsidizing my lifestyle.

I currently reside in an area with more than a few billionaires about. Mostly old money fortunes, with a few new ones as well. Obviously this money buys the best advisors and they have complex financial structures in place to maximize wealth preservation. The names of these families all on this list would recognize.

Fact is, there are numerous landowners out here with estates into the thousands of acres who pay less tax to the local governments than average middle income wage slaves in the tract developments. I know this for a fact. They do this through special farm use zoning, creative use of easements for "scenic" areas or "unique natural preserves" ect.

Meanwhile, they own the local political establishment through these special interest "groups", which they call innocuous sounding things such as "citizens for the environment" and the "anti sprawl council", and these groups spend vast sums on slates of candidates. These candidates then preserve the local status quo of endeavoring to keep spending low and favored tax structures in place.

None of this is surprising to anyone here, but it is interesting to see it in action up close. I'll reserve opinion and judgment on this state of affairs and let all draw their own conclusions, but clearly the current system has it's problems.

justme Says:
Wall ST is up today, supposedly in part because Warren Buffett is doing some bottom-fishing.

Buffett basically offered a pawn-broker deal to acquire the relatively healthy portion of the insurer's portfolio, while they would be left with the crap. It makes perfect sense - the "good" bonds get assurance from Buffett, the insurers get some capital to help them deal with the toxic waste that they're left with.

Unfortunately, I am guessing they won't accept his offer - and when their ratings are finally downgraded, even the good bonds they insured will suffer. Vive la contagion.

Fact is, there are numerous landowners out here with estates into the thousands of acres who pay less tax to the local governments than average middle income wage slaves in the tract developments.

See, flat tax is the solution.

Any system, if left alone long enough, will start to brew a bunch of established stakeholders, who will do everything possible within their power to keep their stake growing. That is just human nature.

I don't blame those people who did these fancy zoning and interest group lobbying to preserve family wealth, I know I would do exactly the same, if not more, if I were lucky enough to be in their shoes. That is just the competition of genes at its best.

That's why every once in a while we need some systematic reshuffle. Recession, or depression, is the best way to shake up the old rules and create some new one to re-balance everything.

Here's an interesting note from the IRS in the instructions for line 6 of Schedule A for this year:

Include taxes....you paid on real estate you own that was not used for business, but only if the taxes are based on the assessed value of the property. Also, the assessment must be made uniformly on property throughout the community....

Does this imply that California property taxes, completely NOT uniform throughout the community due to Prop 13, are NOT tax deductable?

Not tax advice....tax headache.

Any system, if left alone long enough, will start to brew a bunch of established stakeholders, who will do everything possible within their power to keep their stake growing. That is just human nature.

I don’t blame those people who did these fancy zoning and interest group lobbying to preserve family wealth, I know I would do exactly the same, if not more, if I were lucky enough to be in their shoes. That is just the competition of ge-nes at its best.

That’s why every once in a while we need some sys-tematic reshuffle. Recession, or depression, is the best way to shake up the old establishments to make way for the new.

I think Warren might be playing a very dangerous game this go around. I think it is a clear attempt to corner to the muni insurance markets, which has been a very profitable underwriting business historically. But will it continue to be so?

Its all a risk game, and he will be making a wager on the default rate of muni bonds. Will he have flexibility to rapidly adjust to changes in performance of this debt? I don't know that past performance is any guarantee of future in this area. How optimistic are you about what is coming? I know my small locality is talking about issuing $100M in debt soon, to spend on water projects, some parks, some physical improvements. By my estimation, most not that necessary. Our local "leaders" are saying things such as 'we must move forward' and 'we believe in the future', ignoring the coming storm. And they already are carrying a huge debt load (if I was Warren, I would not want to insure that or it would be very, very expensive). Meanwhile, I see the tax base rapidly disintegrating. And I do mean disintegrating. I would imagine we will start seeing this everywhere. Budget numbers are predicated on continued growth, and they do not map to reality at all.

Probably Warren gets this, he is much smarter than I. But maybe there is some kool aid drinking going on there. Am I too pessimistic, will we see local government debt defaults over relatively near term?

OO - California doesn't have a sales tax on food - Arizona does. Arizona is tax-happy in fact, it's over 10% sales tax where I am. Businesses are leaving because of the high taxes.

ESR,

I don't think businesses are leaving because of tax, businesses are leaving because FBs can't afford to buy anything.

The reason why US has degraded so much in terms of quality of stuff offered on the market is because the sales tax is too low. I still remember that the socks that I bought in early 90s (made in Mexico) could last a few years and the socks I buy now (made in China) could only last a year. Sure, the price of the latter is about half, but if you amortize the cost over days worn, perhaps the former was a better deal. This perhaps applies to all imports.

I think there should be a fixed sales tax on different categories of merchandise. The fixed tax acts like an entry barrier to low-cost crap. If you have to pay 50 cents sales tax on all types of socks, you probably will choose the highest quality ones. If you need to pay $50 sales tax on all LCD monitors, you probably will pick the most durable one.

That's why I am more for a high, fixed sales tax than just land tax.

> As soon as some voters don’t have to pay any tax they don’t have any
> problem voting for higher taxes.

WHO would not have to pay any tax? Everyone living on this land would end up paying the land tax. Tenants would pay it indirectly, through the rent to their landlord, but they would most certainly pay it, no exceptions.

So you can be quite sure that people would be careful about voting unnecessary tax increases.

As for the rate, the most clever idea I've heard is this: pay whatever land tax you want. But every tax payment is also a legally binding offer to sell the land. So if you pay very little, you have valued your land at a low price, and someone else can just buy it from you!

Not sure I really like that, but it does seem fair.

"we must move forward"

Yeah it's the same BS every time major contractor firms smell a recession on the horizon. A nice little public works project to tide them over. All of a sudden Portland is very concerned about the state of our roads and they're talking about issuing over 125 mil. in bonds for the comm. coll. "expansion". What a joke.

I think all roads should be toll roads.

http://www.bloomberg.com/apps/news?pid=20601087&sid=az.e27ptjVuI&refer=home

"Paulson said that he's open to additional measures, while rejecting a Democratic proposal for the government to buy distressed mortgages."

A glimpse of things to come? The dominant political party seeks to socialize property ownership, and it's not even getting any real press.

Toll roads are fine so long as thoroughly and properly regulated. There is an egregious example here where Mobil Exxon developed this huge ex burb community, and through a much lauded private public partnership another group built a major highway from this community into the employment center. Alternatives double commute time. Toll rates have been steadily rising, and the owners lobby owns the system. Despite muted backlash outcries, another rate increase proposal is set to pass. No real public utilities commission looking out for the public interest.

Captive sheeple in their sh*tboxes, currently paying over $150 avg tolls monthly just to commute on this road. Not surprisingly, with the price of gas, the property values in this massive community are set to crash and already have fallen off the cliff. And these are the sh*tboxes supporting local government tax base.

The dominant political party seeks to socialize property ownership, and it’s not even getting any real press.

Scary. Hopefully the next Republican president will veto all such ideas.

DinOR,

>we must move forward”
>Yeah it’s the same BS every time major contractor firms smell a recession on the horizon.

Does this somehow tie in with the major "infrastructure push" on Wall St? I made a comment about the sudden popularity of pushing "infrastructure stock" a few threads ago,.

Toll roads are fine so long as thoroughly and properly regulated.

The idea is to deregulate such things. Hopefully, privatization of roadways will lead to competition.

Captive sheeple in their sh*tboxes, currently paying over $150 avg tolls monthly just to commute on this road.

People are responsible for their own decisions.

Private toll roads are the worst idea ever. Private owners will milk the public over and over and over again. A public road is built, and when it is paid off, everyone gets to use it for fun and profit, in perpetuity. Mainyentance does not really cost all that much, gas tax takes care of it.

justme said:
Regressive tax encourages one class of people to sit on their fat asses while another class of people do the production for them.

If you look at the big picture, "Progressive" taxes do the same thing.

In fact, I have given up trying to earn more income because of the f*cked up "progressive" crap. I actively seek out legal ways to make marginal income outside of the wage trap just to get around this b.s.

Toll road is better than gas tax because it can allocate resources best. When the operation of toll roads becomes profitable, more toll roads will be built, creating competitions. The result is lower cost for all.

We should also privatize all schools.

"Now servicers have to do triage" LOL!

MEDIC!

A glimpse? You KNOW I can't stand the sight of blood?

Thanks Quiet Renter.

Administrator Says:
As for the rate, the most clever idea I’ve heard is this: pay whatever land tax you want. But every tax payment is also a legally binding offer to sell the land. So if you pay very little, you have valued your land at a low price, and someone else can just buy it from you!

This is actually in effect for transactions in many countries that tax the transfer of assets.

If you declare a low valuation for the asset, to cheat the government of transfer-taxes, the government reserves the right to buy the asset from you for that price. Very difficult to game the system.

Just a lousy $150 bucks to drive on a slightly less f@cked up road with 10% LESS traffic! Sign me the f@ck up! Yeah buddy! :)

When the carpool lanes became an obvious and complete failure coming down from Scamcouver into Portland they sold a "pass" to allow you to drive almost with a lane to yourself!

I think toll roads would also eliminate a lot of "cruising". Dickheads with no where to go and all day to get there (expired plates) and no insurance will have to hang out behind 7-11! Good riddance!

Progressive taxation (or welfare in general) is there to keep the poor eternally poor.

If you declare a low valuation for the asset, to cheat the government of transfer-taxes, the government reserves the right to buy the asset from you for that price. Very difficult to game the system.

Yep. The best policy is achieved through balance, not regulation.

SP,

>If you look at the big picture, “Progressive” taxes do the same thing.

This is all about what the slope of the tax rate function should be [the function rate=f(income), if you will]. Peter P says the slope should be flat or negative, I say it should be positive, and noticeably so. Picking the slope exactly equal to zero seems very arbitrary. I don't see slope==0 to be some god-given constant of optimality, derived from the finer or cruder points of human nature. I do think that a positive number is optimal, and strikes the correct balance between "fairness" and "mobility", when viewing the economy as a dynamical system.

Personal wealth should decay exponentially with time through wealth and inheritance taxes, so that unproductive wealth (aka. sitting on ones fat ass) is penalized. The time constant should be such that amassed wealth is mostly gone within 3 generations. Work should be rewarded through increasing pay, but one should also pay a larger share of taxes because wealth is always built on the backs of everyones labor. I personally find it foolish, egomaniacal and disengenious to think that ones wealth simply a function of ones own effort. Not that I'm accusing anyone of thinking that :-).

Patrick,

The name-your-price system of property valuation system is pure genius, but the problem is always that the system will be gamed, sooner or later. And I think I can guarantee there will be unintended consequences.

My accountant been doing taxes 40 years. He says there is constant 'flat tax' talk but every year the tax rules get more and more complex and byzantine. Witness the oct 2007 'dont tase me bro' walkaway tax free rule....(if you bought your house in certain years or walk away in certian years?)

The only way to wipe out all taxes and start over is to start a brand new country. And then after 30 years you will need better schools and have 2 wars and have new taxes every year just like the old country....

tax reform -its hopeless. Ron Paul has a better chance getting elected than any flat tax system.

Personal wealth should decay exponentially with time through wealth and inheritance taxes, so that unproductive wealth (aka. sitting on ones fat ass) is penalized.

Why?

Why not penalize welfare recipients for sitting on their fat asses and breeding future welfare recipients like rabbits.

If we cannot get a flat tax we should at least hope for a cut in marginal tax rates.

Again, justme, we should agree to disagree. :)