Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
So I listened to NPR planet money. They did a re-run of an economic platform that was signed off by liberal to conservative economists. These had unanimous support. Do you support the no-brainer platform
Cannot say without more detail. How would this plan affect total revenue and overall income distribution? What about independent contractors - would you disallow them to even deduct their expenses? And how does it make any sense to eliminate taxes but also eliminate loopholes in the tax code? What is a closed loophole in a non-existent law? You're going to have to say a lot more. Otherwise my default position is to oppose the reform, in the spirit of favoring the known over the unknown.
If you do 3 you don't need 2. No matter the tax system, people will try to avoid or minimize their tax. Then there will be more money for them. Pure-as-the-driven-snow systems, one straight out an economics text book are probably the most likely to be evaded because professors typically have a horrible grasp on peoples' ingenuity when it comes to keeping their own money.
I'd almost prefer the pre-income tax systems, where government raised money through tariffs, selling land and other stuff. That interfered with the fewest number of people, at any rate.
The rulers will always have to be supported, and lavishly (if you don't believe it go to DC). They will always need enough money to pursue their pet projects. The best way to limit the harm they do is to have a tax system that yields the least money.
If you do 4, you don't need 2. If you do 3 or 4, you don't need 1. 5 is far more complicated and just as prone to political influence as 1, 2, and 3 combined. 5 is probably going to result in a large tax on 6 and food and energy consumption. In other words, the whole thing is another political plan to replace everything with a sales tax. Whoever wrote the plan isn't as smart as he thinks he is. All "reform" plans are essentially attempts to change the system in favor of the whoever sponsors the plan and the activities in which they're engaged.
The US would move to a consumption tax based system. This means, that there would be a VAT and national sales tax to replace corporate and individual income taxes. The tax system would be much simpler. That is the proposal set forth by the economists.
For those people wondering about how will it be progressive, there would be a prebate, just like the fair tax model. You could call it a guaranteed income if you will. They didn't mention it specifically but it has been thrown around a lot.
So if taxes were 10% and the poverty level was 10,000. Then people would be given 1,000 dollars a year at least to make sure that didn't effectively tax poor people.
You could convert the current income tax to a consumption tax simply by adding a deduction for deposits to savings accounts and adding wirhdrawals from such savings to taxable income.
A VAT is meanwhile paid every time a good moves forward by one step in the chain of production. Simplicity is not necessarily one of its attributes.
The US would move to a consumption tax based system. This means, that there would be a VAT and national sales tax to replace corporate and individual income taxes. The tax system would be much simpler. That is the proposal set forth by the economists.
For those people wondering about how will it be progressive, there would be a prebate, just like the fair tax model. You could call it a guaranteed income if you will. They didn't mention it specifically but it has been thrown around a lot.
So if taxes were 10% and the poverty level was 10,000. Then people would be given 1,000 dollars a year at least to make sure that didn't effectively tax poor people.
The tax rates would be much higher. The progressivity would end at a very low level of income. This has been bandied about many times for the flat income tax and the flat consumption tax. There would be so many existing and new loopholes, such as non-profits, cash businesses, bartering, etc. that the tax would have to be much higher.
End the fake tax deferral for corporations abusing the foreign domicile scheme and levy 4% compound annual interest on the taxes they haven't paid. You could bring in a trillion dollars at one time.
Any attempt to reform the tax system should start by getting rid of all tax deferrals so that everyone starts off from the same level of compliance.
That is the question most people don't have to deal with but which makes the tax code complex. For workers, income is what you received on a W-2, or maybe a 1099. You traded labor for cash. It's realized and taxed. It's easy to catch, and imposed in the days when all businesses needed labor, and capital markets were largely domestic.
Politicians, always in control of the tax code, don't understand what they preside over. Something is presented to them, it sounds good and they pass it. Why does a person who works for themselves have to pay not just income tax and payroll tax, but self-employment tax to boot, in comparison with a company that elects to become an ESOP (company owned by the employees) which pays only normal FICA tax on its payroll and is exempt from income tax entirely?
As our government has now taken control of what book income is as well, we have crazier and crazier codifications under the umbrella of making American GAAP the same as everyone else's. The new revenue recognition rules have eliminated matching. Sign a 30 year deal and feel free to show all proceeds from the term immediately. Sign the deal outside of the US in a free tax area, and then sell the resulting receivable into the US and you've passed on all of the risk of non-collection the Americans, while showing none of the income here.
The AICPA is almost a relic at this point, displaced by the IASB, SEC and PCAOB. Once control is lost over the bookkeeping, it is only a matter of time before the vultures swoop in, grab the easy money, leave a mess and a horrid trail of bad loans. All because of games now able to be played with income.
So for companies, scrap the income tax. Accept that companies are now global and so is capital. Additionally, so is systemic risk. Taxing leverage and excesses, on the other hand, would be far more useful in getting companies to avoid the most speculative and riskiest paths that are the most detrimental to the economy. W-2 and 1099 income can continue to be taxed, and I honestly don't mind them getting the deductions so long as they carry the risks AND the rewards individually. Taxation on excessive consumption would help solve America's main problem.
Accountability is the best we can hope for. The SEC was originally put into place to drive home accountability. It has long lost its path.
Nationalize all real estate and give everyone tax credits for their equity. Make all taxes unconstitutional. Charge rent on all the real estate. Let people use their tax credits to pay their rent.
If the goal is to oversimplify the whole tax system, how could it be done better than that? The main complication would be deciding how much rent to charge for what. Those decisions could be made by appraisals which could be appealed.
But people would not vote for such a scheme, because they actually like taxes. Taxes are a game, in which the players try to make the system as fair as possible for themselves, and as unfair as possible for others. Whoever gets the most fairness for themselves, and the least for others, wins the game. People do not voluntarily give up their games, unless they're perpetual losers.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
What is income?
