IRS Wants a Cut of Sales On eBay and Craigslist

Ponca City, We love you writes "In 2009, $60 billion worth of items were sold on eBay, meaning 'extra' money for many sellers, whose activities may provide them with taxable income. Now the Washington Post reports that beginning next year, a new law will require 'the gross amount of payment card and third-party network transactions to be reported annually to participating merchants and the IRS.' Also, for 2011 tax returns, 'taxpayers who annually sell more than $20,000 worth of goods and have more than 200 electronic transactions' will receive a new IRS form, known as 1099-K, for reporting the proceeds. The new tax issues shouldn't be a concern for people who sell just a few small items online for less than they paid for them, because as the IRS points out, income from auctions that resemble a garage or yard sale 'generally' isn't required to be reported. But if an online garage sale turns into a business with recurring sales and purchases of items for resale, it may be considered an online auction business. 'Generally, transactions resulting in a gain are reportable, regardless of whether the taxpayer is conducting a business,' says Gil Charney, principal tax researcher at The Tax Institute at H&R Block. The real reason behind the law is simple: Research shows taxpayers do a much better job of reporting taxable income when they know the IRS is receiving information about their transactions."

Comments

How's this news?

[Dyinobal]

How exactly is this news? Governments have wanted to tax everything since well since they were established it's what they do.

Re:How's this news?

[moosesocks]

It's news, because the tax code does cover sales such as the ones on eBay and Craigslist, but the users have been notoriously non-compliant.

No news here, but no new taxes either. Just even-handed enforcement of the existing tax code.

Re:How's this news?

[mcgrew]

Governments have wanted to tax everything since well since they were established it's what they do.

Except in this case at least, that's not so. TFS says they only tax yearly sales of $20k per year or more -- that's more than some people's entire yearly income. If you're trying to dodge taxes on that, and it's just a small part of your income, you're no patriot and you're an asshole.

That goes triple for tax dodging millionaires whether the tax dodges are legal or not. It's just wrong.

it's worse than that

[larry bagina]

starting in 2012, businesses (that includes me and many other people who do work on the side) need to file a 1099 if you pay more than $600 in goods or services from someone.

Re:it's worse than that

[JDAustin]

Its not just businesses who would have to pay it. The "health care reform" law puts this on individuals also.

On the OP, the IRS is actually being reasonable here (yes, a stopped clock is right twice a day). The basically want there share from those running a online store for profit.

Re:it's worse than that

[LynnwoodRooster]

Well what do you expect? If we're going to get a VAT tax you have to build in means of tracking every dollar of spending in the economy...

Re:it's worse than that

[PPH]

I'm looking at this from a slightly different point of view. If I, as a small business, accept credit card payments, I'd be insane not to expect the IRS to have its hooks into data on my receipts. But if I pay someone $600 for stuff, the IRS is going to expect me to track this for them? That means I'll have to get taxpayer IDs from any vendor I buy stuff from.

Try this some time: Walk into a local shop, buy a load of crap and then whip out your 1099-K form and ask them for their social security (or taxpayer ID) number. Odds are that the clerk will think you are nuts.

Re:it's worse than that

[ducomputergeek]

Our CPA is going to a seminar training session about this in June or July, but that was pretty much my response. If I go to Sams club and buy $600 worth of stuff for my house a year, which we probably do, I have to send Sams a 1099-K? What about the grocery store? What about Wal-Mart? Hell I spend $600 a month on basic needs. Hell I probably spend $600 a year at my favorite restaurant. Do I need to send them a 1099-K? Am I supposed to now itemize EVERYTHING I spend? I try to do that now for business expenses, but now if I walk into Walmart to buy a $3.00 can of shaving cream because I ran out that morning mean I have to keep track of all that shit?

Oh well, I guess that means we'll have to use plastic. "Visa, everywhere you want your purchases tracked....priceless."

Re:it's worse than that

[LynnwoodRooster]

Don't forget the gas station. Or United Airlines. And the additional money spent with your CPA who now has to track all this extra activity. And he'll have to now report to the tax form printing company because of the exponential increase on 1099s. And that tax form printing company will have to report the paper supplier, who has to report the mill, who has to report the logger, who has to report the landowner...

Re:it's worse than that

[Itninja]

That's why for all my side work, my best friends call me 'cash' ;)

Re:it's worse than that

[PPH]

do, I have to send Sams a 1099-K?

No. You send it to the IRS. What you have to do (as a business) is to get Sam's TIN and record it on the 1099-K. But I don't think this will apply to individuals making purchases.

Re:it's worse than that

[__aajfby9338]

I suspect that it'll become much more common for bosses to say things like "Hey Bob, here's $750 in cash. Take a long lunch and come back with a printer."

Re:it's worse than that

[Cheech Wizard]

Read the way the law is written (at present) closely - If you send the IRS a 1099-K or 1099-misc, you also have to send a copy to the company or person. It's that way with 1099-misc now. You have to send the IRS the original and the person/company a copy. I've sent out a lot of 1099's over the years and it is definitely a requirement that both get a copy.

Re:it's worse than that

[nmb3000]

It's a method that is bound to gain enormous complexity - as it has - as the definition of "income" is stretched and mutilated by the government.

Actually it seems like the idea of income taxes is incredibly straightforward. Any "income" (easily definable as any wealth you receive) is taxable at a certain rate.

Complexity comes from tax deductions and tax breaks, not the taxes themselves. The sheer number of tax deductions and various rules you can use to reduce your taxable income is crazy. If you drive a blue car on Tuesdays and Fridays but never on Wednesday and you have at least 4 children (but not more than 7) then you're eligible to get a $500 deduction for the Nancy Drew Blue Family Living Credit.

I agree that the system could be simpler, but for many people with simple incomes, it already is pretty dang simple (single 1040, maybe a 1099-INT for bank interest). It's when you have a large income and/or from many sources that it gets complex, and again, almost entirely due to tax breaks and reductions.

Re:it's worse than that

[kramerd]

If you are going to Sam's club to buy items you use in your business, yes, you need to keep your receipts, so that you can show your expenses (used to offset revenue to determine income for tax purposes). If you are going to Sam's club to buy groceries and fertilizer for your lawn, that isn't a business purpose.

The only reason you might need to keep track of that $3 can of shaving cream is if your business is a full service barbershop that still does old-timey shaves.

In the meantime, most businesses that have regular dealings with suppliers have monthly invoices. Walk into store, buy whatever on company credit card/credit line, get summary at end of month. 12 items a year isn't much to track.

Re:it's worse than that

[feepness]

I agree that the system could be simpler, but for many people with simple incomes, it already is pretty dang simple (single 1040, maybe a 1099-INT for bank interest). It's when you have a large income and/or from many sources that it gets complex, and again, almost entirely due to tax breaks and reductions.

These people with "simple" incomes work for a corporation. When you work for yourself, calculating your income means tracking your gross income and deducting your costs. That's where a lot of the deductions come in. My wife is a therapist with a private practice working about 20 hours a week making a modest part time income. We still have to track all that crap.

Furthermore, even as someone with a "simple" income myself, various retirement plans (401K, IRA, Roth IRA), and college savings plans for my kids (529 plan, Educational IRA), and flexible spending accounts (childcare FSA, medical FSA) it gets complicated real quick. Do you know all the rules for putting money into your 401K? Your Roth? Conversion? Mandatory disbursement? Borrowing money from your 401K?

The tax code needs to die a painful death.

Re:it's worse than that

[BitterOak]

Am I supposed to now itemize EVERYTHING I spend? I try to do that now for business expenses, but now if I walk into Walmart to buy a $3.00 can of shaving cream because I ran out that morning mean I have to keep track of all that shit?

Only if you're claiming that can of shaving cream as a business expense. This law covers only those items you will claim as a business expense, which as you say above, you already keep track of. Items for personal use, regardless of how expensive, are not covered by these new reporting requirements. So, if you buy a $700 computer at Staples for your home business which you will claim as a deduction, you will now have to get Staples' taxpayer ID and fill in the paperwork. If you buy the same computer for your kids to do their schoolwork, you don't have to.

Re:it's worse than that

[DogDude]

As a retailer, this is completely normal. However, if you're a retailer, I can't imagine why you'd walk into a shop to buy something to resell. But, yes, retailers regularly provide this info to vendors. We generally provide a state sales tax exemption that says that we are responsible for collecting sales tax, and often, we have to provide the FEIN. That's totally normal.

Re:it's worse than that

[ducomputergeek]

Problem is what constitutes a "business". For instance, i've inherited most of the family farms totally about 500 acres. I rent the farms to a farmer, but I still have to spend a few weeks a year down there to do maintenance on the bins, building, tractors, bush hog, spraying, etc.. I'm not sure how familiar you are with farm equipment, but if anything breaks, chances are it's going to cost more than $600 in parts & labor to fix.

Right now taxes are pretty easy. It's the checks that come in when we sell the grain against the expenses that go out for Diesel fuel, my share of the fertilizer. I keep a separate bank account for the farms to make things a bit easier. But now having to spent the time to send the fertilizer folks a 1099, the gas station (I buy diesel 20 gallons at a time) a 1099, the local mechanic a 1099, the kobota dealer a 1099, Rural Kinga 1099, and damn that gets to be a lot of work on top of keeping track of everything for my day job (software company I own).

At the software company, I expect having to keep track of everything as part of the cost of doing business. The farms are something that are just there and I would like to keep the farms. They've been in the family for 4 generations and provide a nice annual bonus for the amount of time I do put into it. But time is getting to be a problem for me and it really begs the question is it time to put the farms up for sale.

Re:it's worse than that

[AK Marc]

That statement is predicated upon the idea that taxing income is reasonable in the first place.

If you are going to play the semantics games, then put the blame where it goes. The IRS is being perfectly reasonable. They are tasked with collecting dollars "due" to the government. That responsibility and authority is in law. So it's Congress that lays out the "reasonableness" of the idea, and the IRS that executes it. So, even if the idea of taxing income is absurd, it is reasonable for the IRS to pursue this course because they aren't charged with examining the reasonableness of their purpose, that's the job of Congress. And if that's all wrong there, it's the voter's fault. But blaming the IRS because they are following the law someone else wrote is the only thing unreasonable here.

Re:it's worse than that

[value_added]

[I]f you buy a $700 computer at Staples for your home business which you will claim as a deduction, you will now have to get Staples' taxpayer ID and fill in the paperwork. If you buy the same computer for your kids to do their schoolwork, you don't have to.

I've got a better idea:

1. Buy a computer for the kids.
2. Have them do your work.
3. Deduct the kids.

Hmm. You think there's a Profit in there somewhere?

Re:it's worse than that

[jvkjvk]

Problem is what constitutes a "business". For instance, i've inherited most of the family farms totally about 500 acres. I rent the farms to a farmer

Congratulations on your successful farm business. Since this rule seems only to apply if you're making +$20K off of it, if you don't want to do the record keeping for your business, you can probably outsource that as well.

We had a tree farm. We planted it on some of the land my grandfather owned before he and grandmother had to move into town (polio can be a bitch). I can still remember my dad behind the plow, planting seedlings. Every summer we would go, after the growing season and use shears to trim the trees (you don't think they really grow that way most of the time, do you?). Every winter we would have a cut-your-own sale. The first winter, we did it out of the back of my dad's suburban. Oooh, that was cold. Then, we built a portable shack. It was some money for college for us. But it was still a business.

Just because this is particularly targets your type of "not a business, really! I just get this check every month ..." business doesn't mean that you were not exploiting a loophole in the tax code this attempts to fix. That "nice annual bonus" are the profits of your business. And if they are >$20K, then I don't see how you can claim it's not.

regards.

Re:it's worse than that

[gbutler69]

Personally, I think people who say that the tax laws and codes are too complex and too much to keep track of are just stupid. The laws are nowhere near as complex as I've heard people rant about. It's like everything else in life, 80% of people are too stupid! That's why society WILL fail. That is why, with the oil running out, people are pointing there fingers everywhere but at themselves. Most people are too stupid to handle the truth. It's going to be a goddamn bloodbath. Wait and see. Civil War. World War I. World War II. Korean War. Vietnam War. Iraq War 1 & 2. Afghan War. These have all just been practice. Within the next 5 to 15 years the shit is REALLY going to hit the fan. Movies like, "The Road" probably aren't too much of an exaggeration for how bad it is going to be. And you're worried about the complexity of the Tax Law. Pshaw!

Re:it's worse than that

[DannyO152]

Hang on. When a customer asks for your assistance in making sure their books are clean to their satisfaction, you give them attitude? If I was on the other end of that snark, I'd, say, "Ha, ha, that line about Dell, that's such a good one. Now we'll just be suspending process for payment until you get us that W-9. You have a nice day." I'd then probably do what I could to get you off of the approved vendor list. Yeah, I'm paid to push the paper and I expect that the people who want our money, the vendors, make it as easy as possible for me to process their billings, and that means clean, clear invoices and paper work. I'm not sure where pissing me off as I stare at your unpaid invoice is that bright an idea.

As to the original point, it has been suggested to me by the CPAs who have overseen my employers' books that we may feel confident that any transaction covered by sales tax is being reported properly and W-9/1099s are not necessary. For the record, where there is some ambiguity about whether a service vendor is a corporation, I get a W9 so I have on file their affirmation that they are incorporated. I've worked for S corps and when asked for a W9, I send it cheerfully.

Re:it's worse than that

[shadowbearer]

  Theoretically, a can of shaving cream is always a business expense; unless one has an employer who doesn't care if you show up unshaved. ;-)

  (I kid, but I wouldn't put it past the asshats at the IRS)

SB

Re:it's worse than that

[feepness]

Why? So you can pay more taxes? As the previous poster said, the tax code is generally only as complicated as you make it. The complication is generally for your benefit.

All of your "just a few hours here and there" add up to quite a bit over the course of a year.

Your whole thesis seems to be "if you don't like how complicated the tax code is, don't take advantage of the benefits". Sorry, that's my money, I'm owed it, and the fact I have to put in several additional days of effort every year is unacceptable to me.

Re:it's worse than that

[CodeBuster]

But time is getting to be a problem for me and it really begs the question is it time to put the farms up for sale.

That depends upon how you view the farms. Are the farms merely an asset which generates income or is there sentimental value? Your statement about the farms being in the family 4 generations leads me to conclude that it is the later more than the former. If the farms are merely asset income then presumably you would be willing to sell for the right price; but you seem uncertain. In the end, the only one who can answer those questions for certain is you.

Re:it's worse than that

[chameleon3]

However, if you're a retailer, I can't imagine why you'd walk into a shop to buy something to resell.

Two of my friends own an antique store in Beverly Hills, and they spend 3+ months out of the year driving through the midwest looking for antiques to buy and ship back to CA and resell at 2-5x the price.

Re:it's worse than that

[AnAdventurer]

I meant w9, not 1099. and it's not the W9, it the ton's of other paperwork they often send along with it. As an example a few days ago I got a request from a client on for a W9 on a payment that was over 30 days past due. Along with that W9 was an ethics and and workplace diversity statement (over 40 pages long) and a form for the right to native american hiring preference my company had to sign in order to get paid. Now this was for 4 hours of work I had 3 employees do over 30 days prior at a 3rd party's location. It's bureaucratic nonsense like that I am ultimately opposed to.

Deductions

[Nerdfest]

Does this mean that I'll be able to deduct all of my capital purchases from my income tax, as I may later sell it on eBay? I bought the things with after-tax dollars in pretty much all cases, so I think I should be able to recoup any money made from selling it without paying taxes on it personally. Taxing the sale of used items is taxing twice, which doesn't seem right.

Re:Deductions

[Nerdfest]

Sorry, I do need to add that it's not like double taxation isn't done. In Ontario, every sale of a car is taxed. The government can make a lot of money on a car that is frequently sold. Motorcycles hang around so long, and people upgrade so frequently that I would bet the sales tax eventually collected exceeds the original price of the bike.

Re:Deductions

[meniah]

You can (and should) deduct your IRS allowed capital purchases from your INCOME, not your income tax (deductions from your income tax are known as credits). If your purchases fall under the definitions of a deductible expense, than yes - you can deduct it from your taxable income (typically Schedule C, Section 179 and others). Depending on the expense, you will either take the entire amount for the year, or you will depreciate it over a period of time. When you go to sell it, if you make more money on it than you paid for it, than it's a gain - also reported on your Schedule C. If you lose money on it, the gain will generally be offset by the larger original investment. You are taxed on the NET gain. What you've described as double taxing is only happens if you don't declare the original expense. There's a lot more to it, so make sure to consult an accountant or tax attorney for your specific situation.

Re:Deductions

[cdrguru]

What was mentioned wasn't a sales tax but income taxes. A store already (collects and) pays a sales tax on goods sold and then somewhere along the line pays an income tax on the money collected.

Pretty much in the US if you make over $600 a year you are subject to income taxes. Period. On just about every dime you bring in. If you aren't reporting it as income, you are a tax cheat and robbing the people that should be getting your redistributed wealth, or so they say.

Re:Deductions

[dougmc]

In Ontario, every sale of a car is taxed.

Texas does the same thing, and I imagine many other US states have done this too. To make matters worse, Texas recently made the value of a used car for tax purposes based on blue book value or something similar, so if you sell a used car, they'll look up the value as if it was in good condition -- even if the car has been totaled. You can get the car appraised and use that value instead of the looked up value, but that costs about $300 -- often more than the tax will be for an older car. Licensed dealers are not subject to any of this -- they still use the actual sales price.

In any event, the IRS wanting their cut is not a new thing. The only new thing here is that they're now watching more carefully -- beyond that, the rules are generally unchanged. If you make a profit, the IRS wants their cut -- it doesn't really matter how you made this money -- with very very few exceptions.

Re:Deductions

[jon3k]

"Taxing the sale of used items is taxing twice, which doesn't seem right."

So a used car dealership shouldn't pay taxes?

Re:Deductions

[oddTodd123]

Does this mean that I'll be able to deduct all of my capital purchases from my income tax, as I may later sell it on eBay? I bought the things with after-tax dollars in pretty much all cases, so I think I should be able to recoup any money made from selling it without paying taxes on it personally. Taxing the sale of used items is taxing twice, which doesn't seem right.

Items are not taxed, transactions are. So by definition an item cannot be taxed twice. A transaction being taxed twice (by the same entity, as in, not state + federal) might be something to complain about. You think the provider of raw materials, the manufacturer, the transporter, etc., aren't all effectively paying taxes on different transactions regarding the same item?

As a side note, the goal of efficient taxation should be to tax everything a little bit and tax nothing a lot, since every tax distorts the economy. So it's better to have a little sales tax, a little income tax, a little investment tax, etc., instead of having all taxes concentrated in one area or aspect of the economy. (This is why the "Fair Tax" is such a bad idea.) Right now we probably have too much income tax relative to the other taxes simply because it is the easiest to make progressive, but it distorts the labor market.

Re:Deductions

[oddTodd123]

Items are not taxed

Sorry, except real estate.

Re:Deductions

[winwar]

"Taxing the sale of used items is taxing twice, which doesn't seem right."

Why isn't it right? This whole concept of double taxation is bad is stupid. You should be incredibly happy if you are only taxed twice on the same money.

If you receive a paycheck, you are being taxed twice on the gross amount (FICA, Income tax). If you happen to live in a state with income tax, you may be taxed up to three more times (school, local, state). All this before you even get to spend any of it.

Re:Deductions

[AK Marc]

eBay seems to be mostly internet businesses. It's not the flea market it once was. This is aimed at businesses who operate on a cash (or paypal) basis that are flying below the tax radar. They just want to catch the cheats, and there is no new tax from this.

Death and Taxes

[loose electron]

The Works of Benjamin Franklin, 1817:

        "'In this world nothing can be said to be certain, except death and taxes."

I see how this could be tracked on EBay - especially "Power Sellers" with 1000's of transactions.
But on CL? that's going to be interesting to see happen.

Re:Death and Taxes

[Anonymous Coward]

The Works of Benjamin Franklin, 1817:

                "'In this world nothing can be said to be certain, except death and taxes."

It's a funny saying, but it's not quite true.

There was a famous case in Australia often cited by economists. The government was changing their tax regime, and if you died after a certain date, then you paid less tax. Death rates dropped significantly before the deadline:

http://people.anu.edu.au/andrew.leigh/pdf/DeathAndTaxes_BEP.pdf

Re:Death and Taxes

[FatdogHaiku]

...The government was changing their tax regime, and if you died after a certain date, then you paid less tax. Death rates dropped significantly before the deadline:

Crikey mate, looks like Mom's gonna cark it... best empty the freezer...

Re:Death and Taxes

[jimmyfrank]

Just shows you how ignorant politicians are, i.e. tubes and such. Do they realize transactions don't even take place on craigslist? gd morons.

Re:Death and Taxes

[MacWiz]

But on CL? that's going to be interesting to see happen.

That's going to be more than interesting, and much closer to damn near impossible. Placing an ad does not mean a transaction actually took place, it just means you wanted one to happen.

Taxing wishes seems kind of 12th century.

Re:Death and Taxes

[KDR_11k]

Who cares? The seller is making money and above a certain threshold he was already supposed to report it, now they're sending forms directly to sellers who are likely to exceed the limit. What the IRS knows is that money changes hands and that if enough does they get a cut. That's all they need to know to handle this case.

Re:Death and Taxes

[jimmyfrank]

Who are they going to send forms to? People that post in local news, politics, or for sale:free? Or what about ads I see that are listed in electronics the read, free tv, paid 1000, needs major repair or use for parts. So yeah, this should be interesting.

Re:Death and Taxes

[Sulphur]

As I recall, the 104th Congress (William Jefferson Clinton concurring) made death retroactive.

Opt in taxes.

[areusche]

Will they make this as easy as claiming my earnings on black market goods like drugs and firearms? Maybe they should require stamps to be purchased for Ebay and Craigslist sales.

I like the concept of opt in taxes. That and I wish I could write off my net losses (heavy sarcasm).

You don't sell on Craigslist; you meet in person

[noidentity]

You don't sell things on Craigslist; you simply find buyers, meet, and sell it on your front porch (or somewhere in public).

Already taxable

[ig88b]

The income was already taxable, this will just help them find people trying to cheat the system. This is really no different than your bank reporting your interest paid on the 1099-int or one of the many other 1099 forms that are required to be filed by various entities.

Re:Already taxable

[LynnwoodRooster]

Actually, selling your own personal goods is not subject to income tax, even if there is an appreciation in the value (unless the item was bought for the sole purpose of investment). Buy a cell phone every 3 months then upgrading and selling the old one does not mean you have to pay income taxes on the sales of those phones.

Re:Already taxable

[ig88b]

Actually, selling your own personal goods is not subject to income tax, even if there is an appreciation in the value (unless the item was bought for the sole purpose of investment). Buy a cell phone every 3 months then upgrading and selling the old one does not mean you have to pay income taxes on the sales of those phones.

And if you actually read the details, you have to sell over $20,000 and have 200 transactions in order for it to be reported. This is not for people who sell their cell phone every 3 months.

Re:Already taxable

[LynnwoodRooster]

And if you actually read the details, you have to sell over $20,000 and have 200 transactions in order for it to be reported. This is not for people who sell their cell phone every 3 months.

$20K is nothing; I can sell my classic car in my garage and exceed that amount. And since the regulations are not yet written (1099K is still in draft), the "and 200 transactions" is still up in the air. Knowing the desire for tax revenues, my opinion is that it'll end up being $20,000 OR 200 transactions.

Additionally, if I sold my classic car for $25,000 (about what it's worth, and about about what I've put into it over the years), and had two garage sales where I sold a lot of my old clothes, computer parts, records, and trinkets (easily beyond 200 items), I could end up having to report. Having 50 transactions at a single garage sale is not that uncommon; having 4 garage sales a year (especially if someone is out of work and looking to raise money by selling assets) puts you into this new "you're a business even though you aren't" category.

Re:Already taxable

[EmagGeek]

If you sell a car for $25,000 on ebay, it would have to be reported, even if you are just selling your personal vehicle for less than you paid for it.

Re:Already taxable

[gnasher719]

If you sell a car for $25,000 on ebay, it would have to be reported, even if you are just selling your personal vehicle for less than you paid for it.

Obviously you won't have to pay any income tax.

Re:Already taxable

[IntlHarvester]

Since we're arguing by anecdote, there's people in my neighborhood who have been holding a weekly "estate sale" for the last two years. They're clearly running an antique business out of their garage, shouldn't they be paying taxes?

As a practical matter the IRS doesn't care about your garage sales, either online or off. Anyone who has bothered using eBay in the last 10 years knows that the place is dominated by small businesses selling new items. And there's no reason these people should have a tax advantage over their competitors just because they're operating under the semi-anonymity of eBay.

Re:Already taxable

[Rockoon]

To quote the fucking article:

"Some of these sellers may unwittingly be operating businesses, which could trigger tax consequences."

Unwittingly operating a business! For christ sakes, how is that even possible?

Unless the phrase "Ooops! I didn't know that I was operating a business!" jives with your world view, you cannot buy into the 'we just want to catch tax evaders' bullshit.

Re:Already taxable

[Rockoon]

You have a receipt for that 40 year old classic Rolls Royce you picked up in college?

Re:Already taxable

[LynnwoodRooster]

Yes, so rather than enforcing tax law against those businesses who risk running without reporting, we'll force everyone to greatly increase their reporting requirements. Yes, let's punish the many for the sins of the few.

Re:Already taxable

[LynnwoodRooster]

Not to the IRS. And not even to the State unless you wish to re-register the vehicle for use on public roads.

Re:Already taxable

[John Hasler]

> Unwittingly operating a business! For christ sakes, how is that even
> possible?

It's trivally easy. The IRS' definition of a business differs from that of the general public.

Re:Already taxable

[kramerd]

If you sell a car, you already have to report it, including book value and sales price, when you transfer title. Garage sales are specifically excluded from this (as long as you arent buying things specifically to sell at your garage sale).

Re:Already taxable

[Kilrah_il]

Having 50 transactions at a single garage sale is not that uncommon; having 4 garage sales a year (especially if someone is out of work and looking to raise money by selling assets) puts you into this new "you're a business even though you aren't" category.

So, you are unemployed. You set up a garage sale to raise money so you can feed your family, pay the rent, etc., etc. Sorry, but this sounds like a business to me.
If you have a garage sale once in a while just to get rid of some junk and raise a bit of extra cash, that's one thing. But if the garage sale is your main cash flow...

Re:Already taxable

[LynnwoodRooster]

To the State, if it's going to be re-registered, sure. Not to the IRS and not to the Federal Government.

Re:Already taxable

[LynnwoodRooster]

Selling ones personal assets has NEVER been construed as a business. Apparently the IRS now feels otherwise.

Re:Already taxable

[mcgrew]

$20K is nothing;

It's a year's salary to some folks. The walmart checkout people don't think it's "nothing". Hell, the US median income is $50k, meaning normal people don't consider it "nothing". Is five motthe of YOUR income "nothing"?

Re:Already taxable

[gbutler69]

No, it doesn't. Only lying dumbasses who try to pretend that they're not running a business. For fuck's sake, I am sick and tired of people complaining about paying taxes (and don't even try to say I don't pay taxes or am the beneficiary of free hand-outs. I've been working a full-time job(s) since I was 14 years old. I served in the military. I'm way more productive than most. I work, and have always worked, well more than 40 hours per week. I've given to charity. In fact, I can't pass a bum on the street without handing them some money (if I have it in my wallet)). YOU ARE THE BENEFICIARY OF ALL KINDS OF SERVICES FROM THE GOV'T. Not every service benefits you directly. But, most do. Even those that don't benefit you directly, do so indirectly by keeping a functioning society in which you can earn a living and have some ability at peace and happiness. If you cannot see this you are a selfish, idiot jackass who lacks humanity and you should be put up against a wall and put out of the rest of humanities misery. FUCK TARD!

Re:Already taxable

[LynnwoodRooster]

Apparently you didn't follow; having $20K in assets is really not a lot. Most people have more than that. A car, a TV, some DVDs, a computer or two... Selling assets for $20,000 is possible for most people, but now the IRS will consider you selling your own assets as a "business" and will want its "fair share" of your sales.

Re:Already taxable

[Kilrah_il]

If I open a new business, then everything there is my personal asset. Only when I make it an incorporated company (i.e. My Company Inc.) then there is a separation between my personal assets and the company's.
If my personal (non Inc.) company goes under, the people I own money to can sue the money from my personal belongings, because my property and the company's are the same. Thus, a small ma & pa shop is exactly a business selling personal assets (albeit, assets with high turnover).

Re:Already taxable

[LynnwoodRooster]

Can you sell your car right now without paying income tax on the proceeds? Yes, you can (now); in the future, maybe not. THAT'S the difference. Personal assets are assets you bought for your own use and enjoyment; reselling those assets used to be non-taxable as they were already bought with taxed income. Apparently the IRS wants to change the law so they can get another shot at that money...

Re:Already taxable

[mcgrew]

This isn't about assets, this is about income. The assets aren't being taxed, the income on sale of those assets is.

Re:Already taxable

[LynnwoodRooster]

Which has never been the case in the past. You could sell your personal assets and it wasn't considered income. Had an old car, unused bed, outdated computer? You could sell those without having to pay taxes because they were bought with taxed dollars. Now that's changing.

Re:Already taxable

[kramerd]

And?

The fact that your taxes go to your state instead of federal doesn't make them disappear. The fact that you are selling your car out of state doesn't make sales tax disappear either.

Re:Already taxable

[Rockoon]

Even those that don't benefit you directly, do so indirectly by keeping a functioning society in which you can earn a living and have some ability at peace and happiness.

Please explain how the drug war is benefiting me indirectly (or directly.)

Re:Already taxable

[BoberFett]

Great, they can tax me on the profit. I bought the TV for $1000 and sold it for $400. I'll happily report a $600 loss against my salary.

Re:Already taxable

[LynnwoodRooster]

No, it's not on the $600 loss. It's on the $400 "gain" you now show. Liquidation of assets above $20,000 will be taxable, regardless of profit or loss.

Re:Already taxable

[BoberFett]

I don't expect it will be long until that is tested in court. If selling more than $20K worth of personal property makes me a business, then I'm damn well going to call the original purchase of the product a business expense and write it off accordingly.

Re:Already taxable

[AK Marc]

I know people who make 100% of their income selling new items on eBay and such, and don't claim any of it. Why? Because they talked themselves into believing it's not a business since it's "just eBay" and such. They honestly don't think they are operating a business. They don't leave their house, they don't have "real" customers, they don't have a business license, so how can it be a business?

Abolish the IRS!

[fustakrakich]

Of course anybody who says that is labeled a loony teabagger... Good job guys... Effectively discrediting all opposition to the government was the plan all along, wasn't it?

Re:Abolish the IRS!

[clarkkent09]

Effectively discrediting all opposition to the government was the plan all along, wasn't it

I wouldn't say that the tea partiers are being discredited effectively. Polls show that about 35% of Americans either strongly or moderately support the Tea Party movement (that's 105 million people). Only 16% are strongly or moderately opposed. It shows in recent primaries as well. Just because on /. for some reason any post remotely supporting conservative views is immediately modded down doesn't really mean anything, it is the /. that is odd here.

As for abolishing the IRS, you can't do that. Who will collect the taxes? What we need is a simplified flat tax system (as per the contract: http://www.thecontract.org/the-contract-from-america/ ) like they have in just about all of the eastern European countries and they've been growing steadily (not that that's the only factor of course).

Re:Abolish the IRS!

[Improv]

Flat taxes are disproportionately hard on low-income earners, while they give the wealthy a huge break. They're not fair, stop pushing them.

Re:Abolish the IRS!

[Mashiki]

Run through the math on that one. The less you buy the less you're taxed, the more you buy the more you're taxed. But, living in a country(Canada) where we already have things like flat taxes, and HST's I still get fucked over with income tax. So, it really doesn't matter until the public at mass reaches a breaking point, and refuse to pay taxes.

Re:Abolish the IRS!

[night_flyer]

Of course it is hard on them... 47% of people don't pay income tax... so paying anything more will "hurt" them

Re:Abolish the IRS!

[Improv]

The very poor don't usually put a significant part of their income towards savings, while the very wealthy do. With an entirely spending-based tax system, the poor pay that tax on the majority of their income, while the wealthy pay it on relatively little.

It's more desirable that people earning very little pay no taxes, because that comes out of their necessities, while those with excess pay the taxes in proportion to what portion of their income is beyond what they need to survive. Progressive tax brackets meet this policy goal admirably, and have for a very long time.

Re:Abolish the IRS!

[clarkkent09]

How is paying the same percentage of one's income hard on one person and gives a "huge break" to another? By the way a low flat rate and abolishing all the deductions and so on would generate about the same tax revenue without the ridiculously complex and heavily abused system we have now, with much reduced IRS powers which currently I would say are unconstitutional and just in tax preparation expenses save (according to this wikipedia article, can't vouch for correctness: http://en.wikipedia.org/wiki/Tax_preparation) $250-$300 billion each year.

Re:Abolish the IRS!

[Improv]

If you want to argue constitutionality, find a lawyer. I'm not one, and as far as I know your opinion on the constitution is in an extreme minority.

One way to reduce tax prep costs would be to have the state manage it all online - other countries do that and the sum private-public costs are much less. Every time it's tried, all the tax-prep companies cry bloody murder, but we should probably ignore them.

The hard/huge break distinction is based on the idea that income necessary for a decent quality of life is different than income amounting to luxury, and that it is more important to weigh government services against the first than against both of them together. Tax policy has long had this as an explicit assumption.

Re:Abolish the IRS!

[clarkkent09]

The hard/huge break distinction is based on the idea that income necessary for a decent quality of life is different than income amounting to luxury, and that it is more important to weigh government services against the first than against both of them together. Tax policy has long had this as an explicit assumption.

That's what's happening now, but don't call it fair. Once the government starts implementing special rules for one (economic or otherwise) group and different rules for another (as opposed to having the same rules for every individual citizen) because of its arbitrary decisions on who "needs" what more or less, the result is those groups fighting over how to tweak those rules in their own favor and at the expense of others (see who dominates the political process in USA today: pressure groups, lobbies etc), which I think is the common root of just about all the problems of government. I would argue that it should not be within the power of the government (yes, constitutionally in case of the federal gov. but I would say the same thing about the states) to decide that person A's quality of life is not so great so it will tax person B more heavily to make up for it.

Re:Abolish the IRS!

[DaveV1.0]

In your other comment your referred to a "simplified flat tax system".

A flat tax is a tax where everyone pays the same amount of tax in dollars.
A flat rate tax is a tax where everyone pays the same percentage tax on income.

This is a very important difference. The former is unfair as one would pay the same amount of tax regardless of income.

What you should have said was a "simplified flat rate tax system."

Re:Abolish the IRS!

[DaveV1.0]

A) The GGP comment should have said "flat rate tax system" instead of "flat tax system" as demonstrated by the text of the link posted.

B) Neither a Flat Tax nor a Flat Rate Tax system are "entirely spending-based tax systems". In fact, neither system is even partially spending based. Rather the former is where everyone pays the same amount regardless of income, and the latter is a system where everyone pays the same rate regardless of income. Even the current system is not spending based.

Your so-called progressive tax brackets punish success and encourage tax evasion and complex tax laws.

Re:Abolish the IRS!

[Improv]

It's not arbitrary when someone spends 60% of their income on basic food and apartment rental and they pay at a far lower tax rate than someone who is very rich who is very far from need. Government policy has always aimed at some form of the public good, from when the founding fathers decided that mail rates for political journals would be based solely on their advertising (content would be subsidised because they believed that political discourse among those eligible to vote (white landowners, generally) was essential to the health of the nation) until modern times.

There will be politics, but that's no excuse to give up on a decent-but-messy system and replace it with a deficient-but-clean one. The actual results of your preferred policy would be to burden the poor and benefit the wealthy. It's more caring to tax excess than tax necessaries, and far less crippling to those at the bottom who are trying to get by or better themselves.

Re:Abolish the IRS!

[John Hasler]

> The very poor don't usually put a significant part of their income towards
> savings, while the very wealthy do.

Impose a flat rate tax on income with a 100% deduction for savings and a very, very large standard deduction such that the poor pay no tax at all (including no social security tax). There should be no other deductions, exemptions, or credits. Those who can afford to save will be given a strong incentive to do so thereby increasing investment (and future tax revenues) while relieving the poor of the burden of taxation.

> With an entirely spending-based tax system, the poor pay that tax on the
> majority of their income, while the wealthy pay it on relatively little.

Money the "wealthy" invest is not spent on themselves: it is invested to the benefit of society. They do this, of course, in the expectation that it will appreciate, providing them with more to spend (and therefor pay taxes on) in the future.

> It's more desirable that people earning very little pay no taxes, because
> that comes out of their necessities, while those with excess pay the taxes
> in proportion to what portion of their income is beyond what they need to
> survive.

Then how do you justify the explicitly regressive social security tax? Or sales taxes? Or any of the "excise" taxes? Or import duties? Or license fees?

Re:Abolish the IRS!

[Improv]

If we wanted to simplify the tax code, we could (provided politics don't get in the way - alas, they always do). It's really more the wrangling over that that produces complexity than anything else, and we'd see similar wrangling in any attempt to change the system towards what you want. Simplicity is not the only thing worthwhile in a tax system anyhow - I'd like it if it came without cost to other social priorities, but basically all the flat tax systems (income based or spending based) eliminate social priorities that are important to me.

Take it for granted that if it means giving a big tax break to the wealthy and any tax hike at all to the poor, I will oppose it.

Paying taxes is something one might view as punishment, or something one might view as duty. I think it's a duty of those who have excess to pay more taxes to support the public good. The goal is not to have them cease economic activity that (at least theoretically) is in the public interest, it is a simple recognition that excess wealth is less necessary for people's happiness and well-being than funds needed to get by. To the extent that wealth is success, I would say that they have a higher obligation, but it's not punitive in nature.

Re:Abolish the IRS!

[corbettw]

You're confusing excise taxes with flat income taxes. They have nothing in common except for being a way for the government to gets its filthy hands on your money.

Re:Abolish the IRS!

[corbettw]

20% flat tax with a one-time $50,000 exemption for every tax payer in a household (but you don't get a refund if you owe negative tax). How does that screw low-income earners?

Re:Abolish the IRS!

[zippthorne]

I think the idea is that you'd tax those stock buys in your flat tax, thus evening things out once again (and as an side-effect, stabilizing the markets and destroying "day-trading" and "high frequency trading" in one swell foop. Those strategies are only effective if trades are conservative (in the force-law sense.))

If you tax "everything you buy the same" then it should affect everyone equally. It's only when you start making some things taxed and some things not-taxed that you have to deal with the "inequality" of a flat tax.

Re:Abolish the IRS!

[fustakrakich]

Polls are stupid. They say 23% approve of congress, yet 95% are reelected very time.. And the teabaggers hardly even know what they are protesting, and lot of them are on the public dole also.. Don't you dare touch those farm subsidies, or medicaid, or any other pork that's headed their way..

Who will collect the taxes?

A department that can't make its own rules... And if we can't sue the government, then we must prohibit it from suing us, as the IRS can do now. I also demand that the presumption of innocence be applied to taxpayers. Current practice is a clear violation of the 4th amendment to me.

Simplified tax system? Yeah, eliminate all those nice loopholes that enable the richest of the rich to avoid paying altogether. In fact just apply the progressive system with no exemptions, especially that religion bullcrap. That should be considered a violation of the 1st amendment.

Actually to me the amount of tax isn't really important. I can compensate for that with wage demands, to know what I will take home. What I really want is to shift the paperwork to where it belongs, with the accountants and bureaucrats. That's one of the things we pay taxes for. They already get a copy of W-2s and bank statements. They should be doing the math and send a bill or check.

Re:Abolish the IRS!

[clarkkent09]

It's not arbitrary when someone spends 60% of their income on basic food and apartment rental and they pay at a far lower tax rate than someone who is very rich who is very far from need.

It is arbitrary in the sense of how do you decide what somebody needs. By what standard you decide that paying for food and apartment is all that a human being "needs" and anything more than that is luxury that is a fair game for the government to take away. The fairness comes into play on the other side, on the side of producing wealth, not on the side of spending it. Say person A and person B get paid the same hourly rate. Person A works twice as many hours as person B. How is it fair that he should be taxed at a higher rate than person B? He worked twice as much, produced twice as much, why shouldn't he receive twice as much money?

Re:Abolish the IRS!

[marco.antonio.costa]

What is the public good?

Re:Abolish the IRS!

[marco.antonio.costa]

What do you mean? It hits low-income earners no harder than the taxes they already pay.

Of course I would not support lowering rich people's taxes from 50% to 20% and raising poor people's taxes from 10% to that level, but I think lowering taxes so that everybody pays the lowest common denominator is the only way to be fair.

Progressive taxation is an ugly, ugly thing, in my view.

Re:Abolish the IRS!

[John Hasler]

> 47% of people don't pay income tax.

Only if you subscribe to the myth that the social security tax is not a tax.

Re:Abolish the IRS!

[DaveV1.0]

When one pays more taxes for being successful, it stops being a civic duty and starts being a punishment.

Re:Abolish the IRS!

[John Hasler]

> How does that screw low-income earners?

It doesn't, of course. It screws someone much more powerful: the enormous bureaucracy and industry that has grown up around the present insanely complex and capricious system. Even more important, it takes away the power of politicians to reward interest groups and punish scapegoats with special deductions, exemptions, and punitive taxes. It also makes it impossible to conceal tax increases.

Re:Abolish the IRS!

[Mashiki]

No government willingly gives up any form of taxation unless the public forces them to. You get a flat tax, you'll still be paying income tax.

Re:Abolish the IRS!

[floodo1]

You do realize that the top 10% of people spend proportionately less than the rest of the population. Instead they invest much larger percentages of their money (especially compared to the bottom 25%, which have 0.1% of their income from investments).

Given this reality, it's easy to see how poor people spend the vast majority of their money on consumption, while the rich spend far less. If the tax is based on consumption then it's inevitbale that it will be disproportionate.

Re:Abolish the IRS!

[rongage]

So (pulling numbers out of the air), you are suggesting that 80% of $20,000 is more than 20% of $250,000 (presuming ridiculous levels of spending for the low income earner and ridiculous levels of savings by the "high" income earner)?

Re:Abolish the IRS!

[4pins]

The quantity of taxes to be paid by the community must be the same in either case; with this advantage--if the provision is to be made by the Union--that the capital resource of commercial imposts, which is the most convenient branch of revenue, can be prudently improved to a much greater extent under federal than under State regulation, and of course will render it less necessary to recur to more inconvenient methods; and with this further advantage, that as far as there may be any real difficulty in the exercise of the power of internal taxation, it will impose a disposition to greater care in the choice and arrangement of the means; and must naturally tend to make it a fixed point of policy in the national administration to go as far as may be practicable in making the luxury of the rich tributary to the public treasury in order to diminish the necessity of those impositions which might create dissatisfaction in the poorer and most numerous classes of the society. Happy it is when the interest which the government has in the preservation of its own power coincides with a proper distribution of the public burdens and tends to guard the least wealthy part of the community from oppression!

Alexander Hamilton, Federalist 36

Re:Abolish the IRS!

[Improv]

I'm not sure if your alternative posited here is quite just - it has two problems that I see. First, it has the effect of benefitting the very wealthy (those in the upper part of those above the deduction) at the cost of the mid-wealthy. Having multiple grades is in my opinion a better alignment of duty to necessity. Second, it alienates those who can afford to support *some* of the nation's programs from the costs of those programs, which might lead to strange political effects. I like the multiple tax bracket idea (with no taxes for the lowest bracket) and progressively stronger brackets (or possibly a smooth gradient?) better for that reason.

Capital investment is a good thing, although I'm not sure the wealthy are the most qualified to efficiently invest those resources. A lot of what the wealthy spend is not investment by any means, and much of it is wasteful. I come from a wealthy family, and I know that society would've been better off had some of the splurges instead gone to better the educational system for those less well-off.

Our government is based on a mix of principle, haggling, and constrained improvisation. It's impossible to justify it in any reasonable sense - those taxes you mention sometimes were done to placate a particular interest group, sometimes to constrain people who were trying to cheat the system, sometimes because taxing in another way would've been politically or legally difficult (in-system logic), or to discourage certain activities. I wouldn't call our government principled, but I think it still generally works ok (even if we can do better).

Re:Abolish the IRS!

[Improv]

If he lived in a vaccuum, and if all money came from the same job, and if people had all their basic needs met, you might have a point. The thing is, society has worthwhile programs, it needs money, and person A and person B have different levels of their income spent on necessity versus luxury.

If you want to think about it moralistically, I'll phrase it that way (although I don't think of it this way internally): The idea of tax is to have useful programs, guarantees, and protections while harming the interests of people the least. Tax policy should be structured in a way so as to burden people's luxury desires rather than their necessity desires, because the basics for life are more important than what is required for a reasonable living standard, which in turn is more important than what is required for a luxurious living standard. To minimise the harm of tax, we choose varying levels of tax based on income.

Re:Abolish the IRS!

[MarceloR2]

What contorted logic is this of yours? What's fair for one is fair for the other, otherwise it isn't fair.

Re:Abolish the IRS!

[Improv]

It is fair for each. Our tax system, for each person, taxes mainly levels of wealth that amount to luxury, leaving the levels of wealth that allow less luxury less, and ideally hitting zero a bit before one reaches the absolute necessities of wealth.

It applies to everyine, it's just that the poor have less luxury wealth to tax. That's fair.

Fairness is not as simple as "the same thing" for everyone when not everyone has equal financial resources. If fairness were the same as equality, we'd literally pay everyone the same thing.

If you look at how employment works in our society, our tax system fits into it in that we try not to let taxes get in between people and their necessities; we place the tax burden on the wealthy because beyond a certain level they don't need their wealth as much as the poor - what might be yet another vacation to Europe to them might amount to healthy food or living someplace without rats to poor people. In a capitalist system, we may not be able to redress the fact that resources are being used badly, but we at least can avoid having our tax system make the problem worse.

It's also important that we don't make it a zero-tax to full-tax transition without gradation - for people with income similar to mine (mid 5-figures, no debt, no kids yet), I suspect I'd fall under that limit and pay no taxes in most proposals. That's a bad deal because there's a lot of people like me who vote, and it's important that we bear some of the tax burden so we're not tempted to vote for irresponsible spending. It may not be desirable for the poor to pay taxes, but keeping people like me in the loop is important - paying taxes is both a civic duty and something that suggests an involvement in keeping it responsible. I would happily have us pay more taxes if we got significant benefit from it. Sometimes this is directly to my benefit (e.g. if I paid $150 more in taxes a year for fully subsidised public transit, and saved $800 in fare), sometimes just to society.

Re:Abolish the IRS!

[Improv]

What I really want is to shift the paperwork to where it belongs, with the accountants and bureaucrats. That's one of the things we pay taxes for. They already get a copy of W-2s and bank statements. They should be doing the math and send a bill or check.

I agree entirely. However, every time someone has proposed this and pointed at the other countries that do this and do it well), the tax prep companies scream about unfair competition and conservatives worry about growth of government power.

The Europeans I know often find American politics perplexing - more than once I've heard that we're making things a lot harder than they need to be. Explaining American political traditions and paranoias is something I've had to do many times..

Re:Abolish the IRS!

[jeffporcaro]

This is not accurate for any actual flat tax proposal, at least since before the time of Dick Army. There are two relevant numbers for a modern flat tax - the Deduction and the Rate. The two are juggled by the government to ensure adequate government income. A typical starting point might be a deduction of $35,000 and a rate of 35%. All income up to the deduction is free income.

For example, a person earning $50k would pay 35% on $15k of income. A person earning $30k would pay no taxes. A person earning $700k would pay 35% on $665k.

The point of this taxation system is to remove the government's ability to motivate you to do what it thinks is important. No loopholes, no deductions, no incentives. There are benefits and risks to taking this approach, but a lack of progressive-ness in the tax code is not among the risks. This is arguably the most libertarian method for taxing a population. The poor pay nothing. The middle-income folks pay a small amount. The rich pay a lot, but at a reasonable rate (actually more than they pay now, since no deductions - that can represent a dramatic tax increase for the wealthy). Your tax return can fit on a post card - write down your income and mail it in.

There's still room for tweaking, unfortunately, as the government then gets in the business of deciding what's income. Do investment earnings count? Does inheritance count? Is this income before taxes or after? Similarly, is it income before other expenses like health care? Mortgage? School loan payments? Social Security? 401K? IRA? etc.

Flat taxes are disproportionately hard on low-income earners, while they give the wealthy a huge break. They're not fair, stop pushing them.

Re:Abolish the IRS!

[corbettw]

Agreed.

Re:Abolish the IRS!

[Improv]

Why should we want the government to lose its mechanisms for policy-based tax code? Also, I don't know about you, but when I hear "most libertarian", my initial reaction is extremely negative.

Re:Abolish the IRS!

[nabsltd]

Polls show that about 35% of Americans either strongly or moderately support the Tea Party movement (that's 105 million people). Only 16% are strongly or moderately opposed.

I suspect much of that has only the most simplistic of ideology behind it: things are going badly, and the current people in charge are to blame.

Since a lot of what is currently wrong started happening when a different party was in power, and that party got voted out for exactly the same reason, I don't see that anythings going to get much better any time soon.

Re:Abolish the IRS!

[nabsltd]

I like the multiple tax bracket idea (with no taxes for the lowest bracket) and progressively stronger brackets (or possibly a smooth gradient?) better for that reason.

I suspect the only two real problems with the current system is that the brackets aren't adjusting with inflation, and there needs to be one or more brackets above the current "two-income professional family all the way up to Bill Gates" that is tops in the US.

Re:Abolish the IRS!

[truesaer]

I suppose it doesn't. However, that is not the nature of any flat tax proposal I've ever heard. For example, according to FairTax.org for 2009 they propose that a single adult with no children receive an exemption of $10830 (and double that for a couple). With children you get more, but a couple with 7 children would receive only $47840 rather than the $100k you suggest.

Furthermore, the fair tax people say the rate would be 23%. However they're not using this rate the same way sales taxes currently apply. The rate means that 23% of the total cost of the item would be tax. Lets give an example of how this is different. If you buy a tube of toothpaste for a dollar, if any state had their sales tax rate at 23% you'd pay $1.23 for the toothpaste. However the way the fairtax.org people define the rate 23% of the final price goes to tax. This means that you would have to pay $1.30, 23% of which is $0.30 (leaving $1 for the merchant).

In other words, the rate is actually 30% the way everyone in the country currently understands consumption taxes to be applied. And it is far from certain that even 30% would be sufficient, they're making very rosy assumptions to make their plan appear as feasible as possible.

Now maybe you have some other flat tax scheme involved, but I'm skeptical that 2/3rds of the fairtax proposal with a much larger exemption could be revenue neutral, especially when the fairtax proposal itself probably isn't setting the rate high enough.

Re:Abolish the IRS!

[corbettw]

The fair tax people are idiots who haven't thought their scheme through. Just ignore them, it's not worth the effort to debate them on anything meaningful.

Re:Abolish the IRS!

[TooMuchToDo]

But 50% of Americans currently pay no federal tax whatsoever. How's that fair?

http://finance.yahoo.com/news/Nearly-half-of-US-households-apf-1105567323.html?x=0&.v=1>

Nearly half of US households escape fed income tax; Recession, new tax credits have nearly half of US households paying no federal income tax

Sorry, I must not be working hard enough. Us 50% that pay will try to work harder.

Re:Abolish the IRS!

[Improv]

People who are living close enough to levels where there are no luxuries shouldn't pay taxes. That's fair. Taxes on luxury levels of wealth make sense. Taxes on necessities don't.

Re:Abolish the IRS!

[TooMuchToDo]

Everyone is for wealth redistribution until its their own. You should pay tax even if its a token amount. No free rides.

Re:Abolish the IRS!

[Improv]

If it's truly and absolutely token (like $1 until it goes over some threshold), I probably wouldn't have a major issue with it.

Re:Abolish the IRS!

[zeet]

This is assuming you don't consider Social Security tax to be a tax at all. The rest of us who work for W-2 income do believe that's a tax.

Re:Abolish the IRS!

[TooMuchToDo]

Note I said federal tax. I understand any W2 folks pay FICA, Medicare, etc.

Re:Abolish the IRS!

[yacc143]

Life is unfairly way harder for poorer people. Let's abolish life.

Well for starters

[goombah99]

it means that they will have to collect your Taxpayer ID number and then validate it.

so no illegal alliens can use E-bay.

Since they will be reporting SSNs to the IRS it will also be interesting if the law enforcement agencies sniff this for fugitives. Supposedly SSNs are not supposed to get used for law enforcement but they are.

I wonder how they will deal with people who claim not to be US citizens.

Re:Well for starters

[LynnwoodRooster]

it means that they will have to collect your Taxpayer ID number and then validate it.

so no illegal alliens can use E-bay.

Perhaps you weren't aware that illegal aliens can get a ITIN (Individual Taxpayer Identification Number) from the IRS, and can actually report and file 1040s every year with that same TIN. Even when here illegally (thus making their entire income illegal).

The IRS doesn't care as long as you pay taxes, unless they feel you didn't pay enough, then it's up to you to prove you paid enough not up to the IRS to prove you didn't.

Re:Well for starters

[TheRaven64]

It's also worth noting that the IRS is prohibited by law from sharing information with other government departments, so illegal immigrants can pay taxes, even admitting to being illegal on their tax return, without fear that this information will be shared with the immigration department. Apparently getting money from people is more important than enforcing laws.

Re:Well for starters

[blantonl]

's also worth noting that the IRS is prohibited by law from sharing information with other government departments,

Really? That is interesting... because the FBI needed to get ahold of me about an issue with my business, and they contacted my [b]accountant[/b] first.... presumably through my corporate tax returns. Why/how else would they have contacted my accountant?

Re:Well for starters

[causality]

it means that they will have to collect your Taxpayer ID number and then validate it.

so no illegal alliens can use E-bay.

Since they will be reporting SSNs to the IRS it will also be interesting if the law enforcement agencies sniff this for fugitives. Supposedly SSNs are not supposed to get used for law enforcement but they are.

I wonder how they will deal with people who claim not to be US citizens.

How to solve all of these problems in one fell swoop: dispose of the income tax, disband the IRS, eliminate the ridiculously lenghty income tax code, and replace all of them with the Fair Tax. A national sales tax (NOT the same as a VAT) has none of these problems, carries no need to track income, is much more difficult to cheat, is paid by foreign nationals who visit this country including illegals, is paid by people who deal drugs and other contraband not currently tracked by the IRS, and has a much lower cost of compliance to businesses than the current ridiculously complex tax code.

Why it won't happen: an income tax has one "advantage" (though not for us) over all other systems of taxation. It makes it very easy to use carrot-and-stick methods to manipulate behavior and to give kickbacks to your special interest buddies. A national sales tax, on the other hand, would apply equally to everyone whether or not they are your buddies and whether or not they behave the way you want them to.

Re:Well for starters

[causality]

Apparently getting money from people is more important than enforcing laws.

Only when officials have to make a choice between them.

When they can, they avoid making such a choice. For example, speeding tickets. There they get to enforce the law while also making money.

Re:Well for starters

[peragrin]

I suggest you read the history of Al capone. He was never tried for killing anyone. Instead he went to jail for not paying taxes on his speakeasies, and illegal liqueur sales.

I don't know why people fail to understand history the implications it has across time. I am personally waiting for the IRS to start cracking down on drug dealers. there are billions in taxes that are waiting to be collected.

Re:Well for starters

[John Hasler]

> ...then it's up to you to prove you paid enough not up to the IRS to prove
> you didn't.

That isn't true.

Re:Well for starters

[General Wesc]

Apparently getting money from people is more important than enforcing laws.

Yes, because illegal aliens wouldn't be any less likely to file taxes if they believed it would result their arrest/deportation.

If we wouldn't have the information to share if we didn't have the protections, then providing the protections doesn't reduce information sharing. May as well argue for getting rid of attorney-client privilege because obviously accused criminals would continue to speak honestly to attorneys even if they knew their attorney would turn around and tell the prosecution everything.

Re:Well for starters

[Anonymous Coward]

IRS can't share the information with other agencies on its own, but other agencies can request the said information. You know, the FBI can subpena your tax return and IRS will have to give it to them. What IRS can't do, is take your tax return and share it with other agencies without such a subpena.

Re:Well for starters

[John Hasler]

> I am personally waiting for the IRS to start cracking down on drug dealers.
> there are billions in taxes that are waiting to be collected.

"Taxes"? They don't need no stinkin' taxes. If you get busted for drug dealing they will take all of your money.

Re:Well for starters

[kcitren]

And this tax is tracked how online? On ebay, for example, is ebay required to collect this tax? or the seller? or does the buyer just record all their purchases and pay up at the end of the year? I'm all for a national sales tax, but it still requires tracking of individuals.

Re:Well for starters

[LynnwoodRooster]

Sorry, but it is. I've dealt with it 3 times in the past, where I was threatened with liens and levies unless I could prove that I was correct. As far as the IRS was concerned, I did not properly report my LLC income (even though it had been legally shut down the year prior to the year in contention) and I had 30 days to respond or face levies. Even had an IRS Revenue Officer tell me, my lawyer, and and my CPA straight out that just because we had copies of my tax returns for the proper year, and just because we had a certified return receipt for the timely filing of that tax return it did not mean we actually mailed it; we could have mailed ANYTHING to them.

.
With the IRS, you are guilty until proven innocent. The burden of proof is on you to show the IRS is in error, not the other way around.

Re:Well for starters

[corbettw]

Entering or remaining in the country without authorization is a civil infraction; dodging your taxes is a felony. One is slightly more serious than the other.

Re:Well for starters

[gstoddart]

Since they will be reporting SSNs to the IRS

People give their SSN to eBay? Really??

That just sounds stupid -- that's not the kind of information web sites should have about you. That's not what it's for.

Re:Well for starters

[corbettw]

Yes, because passing two Constitutional amendments (one to repeal the income tax and one to authorize a general excise tax) is going to happen. Or you could just find a way to authorize Congress to levy excise taxes across the board (they might not even need an amendment for this, with the way the commerce clause has been abused). I'm sure they'd just shut down the IRS then, and not tax us both ways.

Re:Well for starters

[pdabbadabba]

And I suppose you don't care that the Fair Tax is a ridiculously regressive tax? Because it taxes buying power, it disproportionately effects those who do not save or invest but, instead, live paycheck to paycheck. So, if you're poor and you have to spend all your income on rent and food, the fair tax hits you hardest. If you're rich, and you are able to invest half your income, and you spend the rest, you're only taxed on half your income. Thus, the rich pay a lower real tax rate than the poor. (Add to this the fact that the marginal value of $1 is far less to a rich person than to a poor person to begin with and the system starts to look downright dystopian.)

The obvious way to fix this that I've heard some propose, is to allow exemptions for the poor, etc. But now you're getting back where we are now, where individuals have to keep track of their finances and report to uncle sam for their rebates. Except now individuals have to keep track of every single purchase, rather than just their annual income from their employer.

And this gets at the broader point: taxation is a powerful and legitimate tool for achieving public policy goals. But if you use a national sales tax, you either are robbed of those tools for the sake of keeping taxation simple, or you and up with the worst of both worlds: a highly regressive taxation system that is still a nightmare to administer.

Re:Well for starters

[causality]

And this tax is tracked how online? On ebay, for example, is ebay required to collect this tax? or the seller? or does the buyer just record all their purchases and pay up at the end of the year? I'm all for a national sales tax, but it still requires tracking of individuals.

No, it requires tracking of businesses and merchants. Ever buy groceries at (say) a Wal-Mart and then have to file a form with the state for the salex taxes you paid? No? Do you know why? Because that is a matter between Wal-Mart and the state in which that particular store is located. Wal-Mart has to pay sales taxes on its sales volume whether or not they pass them on to you. To keep things simple they pass them onto you on a per-transaction basis. That's why your receipt has line-items detailing your subtotal, the sales tax, and your final total which is the sum of both.

The Fair Tax is designed to be revenue-neutral. That is, the federal government would collect the same amount of taxes under the national sales tax as it does now under the income tax. That means that unlike most state sales taxes, services are taxable because companies that sell no goods but make money from providing services currently pay income taxes. Thus, eBay would pay its own sales tax because providing the storefront and maintaining the Web site is a service and the merchants are its customers.

As a business or a merchant, it would cost less to comply with this simplified tax code than it does to comply with the enormousely complex income tax system we have today. That's partly because it only applies at the retail level; factories and wholesalers and such would not be paying it. Most importantly, it would represent the single largest transfer of power away from politicians and to the people that has ever occurred during my lifetime.

No offense is intended, but to be completely honest with you, your question is uninformed and trivially answered with a Google search. The Fair Tax bill is the most thoroughly researched piece of legislation in the history of the USA and such questions have been exhaustively answered. Really the only reason it has not already become law is not because there are credible objections to it, not because it would do harm, but because politicians do not wish to give up the tremendous and subtle power that the income tax code represents.

Re:Well for starters

[shentino]

Illegal immigrants can earn legal income, legal in the sense that they get to keep the money sans taxes.

Illegal income would be drug money and the like.

Re:Well for starters

[shentino]

As disclosed on the tax return's OMB disclosure, they can disclose it for the purpose of "enforcing federal non-tax laws"

Re:Well for starters

[deesine]

About entering you are incorrect: Improper entry by an alien is a violation of Title 8 of the U.S. criminal code punishable by a fine of between $50 and $250 and/or a maximum of six months in jail.

There is a legal distinction between entering and simply lacking legal immigration status, which is a civil violation as you noted.

Re:Well for starters

[shutdown -p now]

A national sales tax (NOT the same as a VAT) has none of these problems, carries no need to track income, is much more difficult to cheat, is paid by foreign nationals who visit this country including illegals, is paid by people who deal drugs and other contraband not currently tracked by the IRS, and has a much lower cost of compliance to businesses than the current ridiculously complex tax code.

And, it's regressive. Thanks for playing.

Re:Well for starters

[mcgrew]

Apparently getting money from people is more important than enforcing laws

But that IS the law. What's more important, catching a low level dope dealer or buying body armor for soldiers? Catching hookers or funding highways? Catching gamblers or funding NASA?

Re:Well for starters

[AK Marc]

And when they contacted me and told me that I owed $100,000 (or so, it was $50k plus a couple years of interest and penalties, wow those are steep), I wrote back with one form, filled in by hand, and one sheet of paper as a cover letter, and they mailed back a "you owe nothing" letter. So whatever your personal experience, it isn't the same as everyone else's. Even if you had it three times. Perhaps you set off one of their warnings once, and stayed on the watch list or something. But most people don't have that much trouble. I know I didn't have any trouble at all when I didn't report something I didn't need to report, but someone else reported incomplete information about me that caused a problem.

Re:Well for starters

[AK Marc]

Any other use delegitimatizes the arguments constantly thrown out about taxes being a civic duty or how people who argue against certain taxes or the structureitself are against "paying their fair share".

There is no construct of taxes that would work in the US that wouldn't have a large minority complaining about paying more than their fair share. If you can conceive of one, please share it. Fair Tax has been shared, and declared that many would complain. The same with the current system. Single people whine all the time, as do the childless. And the rich, and the poor. In fact, I can't think of any system that wouldn't have at least half the people complaining. But then, I may just hang around with people that complain about taxes a lot.

Re:Well for starters

[causality]

A national sales tax (NOT the same as a VAT) has none of these problems, carries no need to track income, is much more difficult to cheat, is paid by foreign nationals who visit this country including illegals, is paid by people who deal drugs and other contraband not currently tracked by the IRS, and has a much lower cost of compliance to businesses than the current ridiculously complex tax code.

And, it's regressive. Thanks for playing.

Another objection trivially answered. See this page in the section called "How does the prebate work?"

A sales tax is actually inherently progressive. It taxes not income nor savings, but consumption. Who do you suppose consumes more, rich people or poor people? Who do you suppose will pay a proportionally higher share?

Someone right at the poverty level will have no net Fair Tax liability because of the prebate. Someone below the poverty level will receive more in prebates than they pay in federal sales taxes. Anyone above either level will pay taxes according to how much they spend.

Like I said for a reason, this is the most well-researched piece of legislation in history. If you can think of an objection in two minutes, it has already been answered.

Re:Well for starters

[pdabbadabba]

Well, I don't see how we're going to get anywhere in debating this point except to say this: the government has an uncontroversial (as far as I know...feel free to surprise me) legitimate interest in regulating economic behavior. This means, ultimately, incenting some behaviors while disincenting others. It's easy to disincentivize a behavior by criminalizing it, so lets' set that aside. (Though I'm not saying that I think that's always, or even usually the best approach.) How, then, to affirmatively incentivize? The only obvious approach other than tax breaks is for the government to cut checks. But, at that point, it would've been more efficient to never have collected that revenue in the first place if you're just ging to give it back. So what, exactly, is the argument for raising the money and then giving it back as grants instead of just allowing the policy to be built into the tax regime in the first place?

And how exactly do taxes become less a civic duty when tax policy is used for policy making? Your duty is to pay the taxes that the government needs to affect it's policy goals. Who cares if the policy goal is affected in tax policy or through subsequent spending? The same argument can be run against your assertion that the notion of "paying your fair share" is undermined. If the tax policy is structured to achieve legitimate policy goals, what's "unfair" about it?

A concrete example: say that the government wants to help people start small businesses by boosting spending power of new small business owners by 10%. There are two ways we could do that: (1) use monies raised by other taxes to fund a grant paid to small business owner X in the amount of 10% of his income (with all the paperwork and verification that would be required to make that happen) or (2) we could just reduce X's tax liability by 10% in the first place. So, if we agree for the sake of argument that the policy of boosting spending power for small business owners is legitimate, then you have to answer the following questions:

1. Why is it that, if we go with option 2 instead of option 1, it is somehow no longer everyone's civic duty to pay taxes?
2. How is X paying his fair share in scenario 1 but not 2?

All the while bearing in mind that option 2 is clearly more efficient than option 1.

Re:Well for starters

[Man On Pink Corner]

Of course, "poor" people would pay exactly $0 worth of tax under any flat-tax plan I'm familiar with. But don't let that stop you; rant on.

Re:Well for starters

[causality]

And I suppose you don't care that the Fair Tax is a ridiculously regressive tax? Because it taxes buying power, it disproportionately effects those who do not save or invest but, instead, live paycheck to paycheck. So, if you're poor and you have to spend all your income on rent and food, the fair tax hits you hardest.

Another trivially answered objection. See my reply here. Having established with facts you can verify yourself that this is not a regressive tax and in fact has been carefully crafted not to be, I'll reply to some of your other points.

Also, take a look sometime at the USA's negative savings index. As a whole, the adult population is spending more money than they make and are not saving up for the future. We have had rich people and poor people for as long as we have had a country. We have not, however, had a negative savings index until rather recently. While it is not the cause of it, it's rather obvious that attaching a tax penalty to income and savings has an effect on this.

Living paycheck to paycheck is a big mistake; the slightest miscalculation, unanticipated expense, emergency, or disaster will break you if you do this. Cars break down, appliances break down, medical bills happen, and generally this is a problem waiting to happen. Like the negative savings index, it is only relatively recently in our history that so many people have chosen to do this. We should be educating people about why this is a mistake, not looking for ways to make it more comfortable to make this mistake.

If you're rich, and you are able to invest half your income, and you spend the rest, you're only taxed on half your income. Thus, the rich pay a lower real tax rate than the poor. (Add to this the fact that the marginal value of $1 is far less to a rich person than to a poor person to begin with and the system starts to look downright dystopian.)

Two things. First of all, the reason why you invest your income is because you expect a return on your investment. That ROI is more money in the pockets of those who invest. That wealth is ultimately spent by someone, either the investors themselves or their heirs. When it is spent, it is taxed by this sales tax.

Second, do you suppose money just disappears when it is invested? No. If you invest large sums of money in a company by purchasing its stock, the company uses that money to expand its operations, do more business (generating more taxes), hire more workers, etc.

What makes this fail is when companies see our tax code and decide that it's cheaper for them to take those investments and use them for overseas operations. Then that wealth leaves our country and does not return to us in this fashion. As a case in point, do some research about DaimlerChrysler and why they decided to headquarter in Germany, incorporate in Germany, and pay taxes in Germany. Hint: it was not their original intention. You see the same thing on a smaller scale when you look at all of the domestic companies who incorporate in Arizona for tax purposes even when they have no intention of doing business there. They do it because Arizona has no state income tax.

The obvious way to fix this that I've heard some propose, is to allow exemptions for the poor, etc. But now you're getting back where we are now, where individuals have to keep track of their finances and report to uncle sam for their rebates. Except now individuals have to keep track of every single purchase, rather than just their annual income from their employer.

Research the Fair Tax bill. It's a written document consisting of the proposed legislation. Nowhere does it require tracking every purchase in order for the prebate to work. Please don't just make things up and pretend that they are valid objections. If you really want to gain some perspective, lo

Re:Well for starters

[AK Marc]

The Fair Tax bill is the most thoroughly researched piece of legislation in the history of the USA and such questions have been exhaustively answered.

I'm glad I put the milk down, or it would be going through my nose right now. What's the economic impact of setting the pay-back line at poverty (as done now) vs twice poverty (and, of course, having a higher tax level to compensate)? It's never been researched at all. Back when no one heard of Fair Tax, I thought it great, and I asked the question, "why exactly poverty level?" and the answer back was something to the effect of "Because that's the lowest we can get it and the point is to sneak in something as regressive as possible while claiming it to be progressive." It is an arbitrary line drawn in the sand without *any* research at all.

If you disagree, please point me to some research done about how it would affect the US economy if that level was set at half-poverty, poverty, and twice-poverty. Go ahead, I'll wait.

And you are more civil than most with your "It's perfect, don't question The Fair Tax" stance. But usually, when I ask questions, they are even more self-righteous than that.

But mention that spending is more volatile than, say, income for boom bust periods and asking about what will be done to improve the stability of income, and they'll look at you like they never took econ 101. And these are the people claiming "the most thoroughly researched piece of legislation in the history of the USA" and miss simple things like spending being more variable than income. Really? Or correct me, where's the actual study on the effect of spending levels in varying economic times. After all, this completely unresearched piece of crap was so researched, you'd be able to prove me wrong easily. Instead, it's a good idea that was perverted early on by conservative people with the specific goal of getting the top income level as small as possible and convincing everyone else it was "fair."

When they have to name something with adjectives, you are safe in assuming the opposite, until they prove otherwise, and they haven't.

If you don't believe me, look at the utter shit being presented about it. http://en.wikipedia.org/wiki/File:FairTax_married.png Apparently, this "revenue neutral" legislation will reduce the taxes on everyone. Either someone's taxes have to go up, or it can't be revenue neutral. So the graph, done by "a Boston University study" (really some guy's thesis, and I've done one of those, I know what crap they can be) is presented like fact, and is demonstrably flawed. That's the level of research this gets. "It'll lower taxes for everyone, and is revenue general too" and no one notices those are contradictions... With research like that, who needs facts?

Re:Well for starters

[LynnwoodRooster]

You proved my point: you had to prove your innocence otherwise you were automatically guilty and subject to those fines and interest. If you didn't write back it would have been levy and lien time for you, regardless of the actual truth of the matter.

Re:Well for starters

[bkpark]

Illegal immigrants can earn legal income, legal in the sense that they get to keep the money sans taxes.

Illegal income would be drug money and the like.

Not to mention that IRS is charged with taxing all income, legal and illegal. That's how people like Al Capone were brought in on tax evasion charges, rather than the bigger crimes they've committed (but couldn't be proven in court).

Re:Well for starters

[pdabbadabba]

Well, I readily admit that I'm not a flat tax expert. (though I believe I described and criticized the flat tax approaches to poverty I'm familiar with; I didn't say there were none). What am I missing?

Re:Well for starters

[bkpark]

Well, I readily admit that I'm not a flat tax expert. (though I believe I described and criticized the flat tax approaches to poverty I'm familiar with; I didn't say there were none). What am I missing?

In case of Fair Tax, you are missing prebates.

I think other "flat" tax proposals include standard deductions (although lower than what we have now) to make sure that the really poor people aren't hit with the tax.

This isn't to say, of course, that Fair Tax doesn't have other problems (mainly the difficulty of doing two things simultaneously; repealing the 16th amendment and raising a new tax), but being regressive isn't one of them.

Re:Well for starters

[karmatic]

The obvious way to fix this that I've heard some propose, is to allow exemptions for the poor, etc. But now you're getting back where we are now, where individuals have to keep track of their finances and report to uncle sam for their rebates. Except now individuals have to keep track of every single purchase, rather than just their annual income from their employer.

You are aware that the "FairTax" proposal would replace other taxes with a sales tax, but apparently did not bother reading the proposal in full before attacking it.

The proposal calls for a "prebate" - basically paying _every_ taxpayer an amount equal to (Poverty Level * Sales Tax). So, those living at or below that level would pay no (or negative) taxes.

It doesn't have any exemptions whatsoever, and that is kind of the point. The poor pay just as much as everyone, but the effective rate is extremely low due to the subsidies. Individuals don't have to keep track of finances, or report things for rebates. Are you a citizen? You get a check. The check does nothing for Bill Gates (percentage wise), and makes all the difference in the world for someone living off $20,000 a year.

Let's look at tax rates. 2 scenarios:
1) Someone who spends all their money on food and rent. Rather poor, no disposable income.

Under the FairTax, the rent would be pre-tax money (as it effectively already is with someone who pays no income tax). No change there. If their grocery budget is $50/week (generous for a single person) - they would pay ~$215 a month in food costs. They would pay $50/mo in taxes, which would be more than offset by the $2500/year ($208/mo) prebate.

2) Family of four. Per census bureau, the "real" adjusted for income median household income was $50,233.00. Poverty level is 22,050. After prebate, even if they spent 100% of their income on things that were directly taxed (say they own their home), they would effectively only be taxed on the $28,183 difference, and it would be paid at 23%. So, on a $50,000 income, a family of four would pay ~$6500 in taxes.

As your income rises, it would approach 23%.

Re:Well for starters

[Registered Coward v2]

How to solve all of these problems in one fell swoop: dispose of the income tax, disband the IRS, eliminate the ridiculously lenghty income tax code, and replace all of them with the Fair Tax. A national sales tax (NOT the same as a VAT) has none of these problems, carries no need to track income, is much more difficult to cheat, is paid by foreign nationals who visit this country including illegals, is paid by people who deal drugs and other contraband not currently tracked by the IRS, and has a much lower cost of compliance to businesses than the current ridiculously complex tax code.

I find it odd that people somehow thing the "Fair Tax" will simplify the tax code. All the Fair Tax will do is change the loopholes resulting in people changing their behaviors. Smart people will figure out creative ways to minimize what they pay; the government will enact laws eliminating the loophole; people will find new creative ways to minimize taxes and soon you need an agency in place to monitor compliance.

Of course, some /. will say - "but it's a national sales tax - what don't you understand about that?" Fair enough. The first problem is what do you define as the sales price? Actual selling price? Fair market value? If it is the former, the I, the grocer, can sell you, the gas station owner, groceries for a penny in return for gas for a penny of equivalent value, while paying no tax. If the latter, then someone has to establish a "fair market value" to be applied to all goods sold. Granted that is a simplistic example; but I guarantee when many billions in tax money can be saved by carefully conducting transactions people will get paid well to craft transactions so there is minimal tax costs.

Re:Well for starters

[Fjandr]

Given the many things the Federal government does in excess of the authority granted by the Constitution, I'm sure this could be legitimized without a Constitutional amendment. After all, Prohibition required an amendment, and now it doesn't (just affects a different product). There are few politicians who give a damn about what the Constitution says. Sadly, it's already almost completely irrelevant, with the exception of a couple amendments. They'd just say the Commerce Clause covers it, which is their rationalization for almost everything they do now.

Re:Well for starters

[shadowbearer]

  I live in a state with service taxes on my business (customers, really) and 'use' taxes. Would the Fair Tax trump those?

SB

Re:Well for starters

[AK Marc]

I had someone report incomplete information for me that indicated I owed much more than I did. I wrote a single letter that consisted of nothing more than a verbose "nuh uh" and a filing of the optional form that explained away all of the inconsistencies. It took me a couple hours in research to find the right numbers to put in the form, one stamp, and my "proof" was hand-written numbers on a form.

I believe that contradicts you. They didn't send a bill. They sent a letter saying their records indicate I owe $100,000. I responded "your records are incomplete" (and yes, filed the optional form that I didn't need to file except for the 3rd party that gave incomplete data to them that they weren't required to file) and they went away forever. Oh yes, that's persecution. I can't handle the attack of the form letter that I sent one letter back about and the whole thing went away. Woe is me!

If you didn't write back it would have been levy and lien time for you, regardless of the actual truth of the matter.

I'll have what he's smoking. If someone sues you in court, and you receive the summons and don't show up, you will lose. You aren't assumed guilty until proven innocent. But if you don't show, you are. What did you do, ignore the IRS until they started seizing things? If you are truthful, accurate, and timely, you shouldn't run into trouble. But yes, if you have some action against you, whether by the IRS or a lawsuit, and you refuse to play by the rules, you will lose. That's how it works. You don't have the burden of guilt against you just because there are deadlines. Try that the next time you get a ticket. Don't do anything. And when a warrant is issued for you for failure to appear, tell them it's invalid because they didn't presume you innocent when you didn't show up in court at the appointed date. Let me know if that works.

Re:Well for starters

[winwar]

"A sales tax is actually inherently progressive. It taxes not income nor savings, but consumption. Who do you suppose consumes more, rich people or poor people? Who do you suppose will pay a proportionally higher share?"

As a percentage of their income, poor people consume more. In any case, fairtax would increase my tax liability when I made 35k a year. Not exactly a ringing endorsement.

"If you can think of an objection in two minutes, it has already been answered."

It won't work in practice? This legislation will never pass as written. There is a reason that the tax code is complex. People don't want a simple tax code-they want low taxes, government programs, and specific social policies. Politicians give it to them in part via the tax code.

Re:Well for starters

[Bing Tsher E]

Many states have official 'revenue stamps' that need to be attached to illicit drugs like Marijuana. So, when the big pot dealer gets busted, not only is he busted for posession, but also for tax evasion because each one kilo bag of pot didn't have the "State of Minnesota 1 Kilo Marijuana Tax Stamp" attached.

Re:Well for starters

[Bing Tsher E]

I think you missed 'What's more important, catching muggers or the 15% cost of living increase to the State Worker who cuts the grass at the State Capital for $78,000 a year.'

Re:Well for starters

[pdabbadabba]

The prebate, as far as I know, is a workable idea for relieving the very poor. I'm fine with it. But that doesn't make the tax progressive. All it does is keep you from taxing the destitute. Congratulations?Neither does the fact that the rich buy more stuff than the poor. What is at issue in deciding whether a tax is progressive is the percentage of income paid as tax. While it is true that rich people buy more stuf than poor people, they don't spend more as a percentage of their income than the poor; they spend much less.

Also, take a look sometime at the USA's negative savings index. As a whole, the adult population is spending more money than they make and are not saving up for the future. We have had rich people and poor people for as long as we have had a country. We have not, however, had a negative savings index until rather recently. While it is not the cause of it, it's rather obvious that attaching a tax penalty to income and savings has an effect on this.

Living paycheck to paycheck is a big mistake; the slightest miscalculation, unanticipated expense, emergency, or disaster will break you if you do this. Cars break down, appliances break down, medical bills happen, and generally this is a problem waiting to happen. Like the negative savings index, it is only relatively recently in our history that so many people have chosen to do this. We should be educating people about why this is a mistake, not looking for ways to make it more comfortable to make this mistake.

You miss the point; it's true that people don't save as much as they should. But this doesn't change the fact that, the richer you are, the more money you will have to save. Always. And if it's true that the rich save a larger portion of their income than the poor, then the rich are, ipso facto, taxed at a lower rate than the poor, and the Fair Tax is regressive.

It doesn't matter that the money will eventually be spent by somebody. The question is: who is spending it? The rich grow their savings when their income is high, and only shrink it when their income has trailed off or when they die (then their heirs spend it). Either way, the person spending the money will always tend to have less money than the person who saved it.Thats why that person is spending it and not continuing to save it. (Even if it's just the same person 20 years later.)

Put another way, the problem with a regressive tax isn't that you can't capture revenue from the money the rich people are saving. It's true that the money will be spent eventually and you'll get your revenue. It's a social policy concern about who you're taxing, and when.

I agree, of course, that incentivizing investment and savings are both good ideas, but the Fair Tax is hardly the only way to do that.

Re:Well for starters

[pdabbadabba]

You're right about prebates. And, as I've said elsewhere now, that seems like a fine way to avoid taxing the very poor. But the mere fact that there is a rebate for the poor doesn't make it progressive. It's still regressive (as least, as to everyone above the poverty line).

Re:Well for starters

[Bing Tsher E]

Apparently, this "revenue neutral" legislation will reduce the taxes on everyone. Either someone's taxes have to go up, or it can't be revenue neutral.

Perhaps everybody who pays taxes now will have their taxes go down, and the scofflaws and low-income people who presently pay no taxes will make up the difference. In other words, it could be a semantic trick: everybody who presently pays taxes WILL have their tax bill go down if the large number of people who pay no taxes start doing so.

Re:Well for starters

[Man On Pink Corner]

The real problem isn't regressive or progressive nature of a given tax, it's the idea that the government is making value judgments as to who is "rich" and who is "poor."

In the past, many middle-class people have supported Federal and state tax increases that "soak the rich," only to find that, oh, by the way, they are now considered "rich."

Re:Well for starters

[causality]

I live in a state with service taxes on my business (customers, really) and 'use' taxes. Would the Fair Tax trump those?

SB

I'd imagine not. As an example, I pay federal income taxes. The state in which I live also levies state income taxes. They are two entirely separate taxes and I have to pay each of them.

The big advantage of federalism is that if my state income taxes became too much of a burden I could relocate to a state with either lower state income taxes or no state income taxes. There's no such option with the federal government unless you want to emigrate to another country.

Re:Well for starters

[Jane Q. Public]

There is much to be said for the "Fair Tax". But it is far from perfect, and it has some of the same flaws as the income tax.

Let's keep in mind that "income" was originally a business concept, related to profits. Strictly speaking, laborers take home wages, not "income". They are trading their time and labor straight across for money. Thus they make no "profit" on the deal, and have no real "income". Granted, the common use of the word has changed over time, but that is not necessarily a good thing.

The original income tax was a "progressive" tax (I hate that phrase because it's grossly misleading) in more ways than one: not only was it graduated, but it was also laid strictly on businesses. Income tax for individuals was "voluntary", and AFAIK that law was never changed; in fact the IRS still states that income tax is "voluntary" in its code and enforcement regulations. (See the IRS notice linked to in OP. That is not exactly an example of what I meant, but does illustrate how IRS now uses the word "voluntary".) Hint to IRS: what you mean when you say "voluntary" has little resemblance to what I mean when I say "voluntary"!

In any case, back to my argument: it is glaringly obvious to honest historians that it was the income tax that has allowed such rapid and unconscionable expansion of the Federal government over the last 100 years, give or take. It is equally obvious that the monetary policies of that same government has, over the same period of time, devalued the dollar to approximately 5% or less of the value it had at that time.

There are a couple of big problems with the "Fair Tax" that it shares with the current income tax: (1) it is still subject to Congressional control and expansion, which is really the root of the problem, (2) it is not progressive enough, and (3) because it would replace the current income tax at a "revenue neutral" rate, not only would it be too high to start with, it continues to tax many people who should not be taxed on "income" at all, including laborers and contractors who are simply trading work for money, and thus have no real "profit" of their own. That includes many who are well above poverty level.

Re:Well for starters

[shadowbearer]

  Thanks.

SB

Re:Well for starters

[causality]

Apparently, this "revenue neutral" legislation will reduce the taxes on everyone. Either someone's taxes have to go up, or it can't be revenue neutral.

Perhaps everybody who pays taxes now will have their taxes go down, and the scofflaws and low-income people who presently pay no taxes will make up the difference. In other words, it could be a semantic trick: everybody who presently pays taxes WILL have their tax bill go down if the large number of people who pay no taxes start doing so.

There are a large number of people who not only have zero federal income tax liability, but who actually have a negative fed. income tax liability. Their income levels plus various exemptions etc. zeroes out their tax liability and they are still eligible for various credits, particularly the Earned Income Tax Credit.

Of course such people still enjoy the services and protections provided by government. Thus in purely financial terms, they are engaging in parasitism. This is a big step towards the welfare state, the nanny state, or whatever you prefer to call it. It works because there are large enough numbers of these people that their votes can easily sway elections and they vote in uniform blocs with little diversity of opinion among them. The number of adult voters with no federal tax liability was 38% prior to the recent stimulus bill and now sits around 47%. For any election, that's absolutely huge. Any politician who sees something wrong with this and wants to change it would immediately have 47% of the voters against him, so you see how it entrenches itself.

Politically, the purpose of creating and encouraging this class of taxpayers is to engage in class warfare. The game is to get a large percentage of the population dependent on government subsidies for their day-to-day living. Those people will then defend and re-elect the politicians who feed that dependency no matter how unreasonable their policies may be. The fact that the Baby Boomers have largely forgotten how to prepare for their own retirements and are utterly dependent on Social Security (no matter how bankrupt) and the fact that proposing changes to that system is political suicide is a good example of this game.

There is a second benefit to our rulers. The more "rich people" and "poor people" see each other as adversaries the more our politicians can play both sides against one another to entrench their power. It's classic divide-and-conquer.

Re:Well for starters

[AK Marc]

Perhaps everybody who pays taxes now will have their taxes go down, and the scofflaws and low-income people who presently pay no taxes will make up the difference.

The best I can figure, they (the IRS) estimate the Tax Gap to be 14%. For one, if a national sales tax is passed, I expect there will be an increase in cash transactions done with the intent of evading tax. And for another, the visual gap in the graph I saw seems to be greater than 14%. Just looking at a few of the large gaps, it looks like we'll cut everyone's taxes 33% or so, while having income remain the same. Some of that could be made up by the 14% Tax Gap, but I don't think that all the 14% would be made up, and even if it was, it doesn't fill in the remaining spaces.

Assuming the graph to be correct, I would have to assume that the grad student who invented that data skimmed through a couple scenarios and stuck to the one that demonstrated what he wanted to find, and the people whose tax burden increased greatly to make up the difference was ignored. Otherwise, he would have had to have made some silly, stupid mistake like including FICA in one but not the other. Or, worse yet, he's correct. The "revenue neutral" Fair Tax will result in hundreds of billions of dollars in shortfall because of bad numbers. But then, this greatly researched topic seems to only be researched by supporters, because those that don't support it, like me, wouldn't waste their time on it.

I first heard about Fair Tax almost 20 years ago. It was nuts and quacks then, and they've gotten mainstream support now, but when I still ask questions of the "local representatives" listed on official web sites, I get rude treatment for just asking basic questions about the effect of the tax on certain income levels and why poverty level was selected for the baseline and what the effects would be if that were adjusted up or down. "That's the way it is" is about the only polite answer I've ever gotten, but no one seems to know why or how or have anything supporting it at all, other than someone else before them told them that's the right thing. It's almost like a cult, and that scares me.

Re:Well for starters

[causality]

The real problem isn't regressive or progressive nature of a given tax, it's the idea that the government is making value judgments as to who is "rich" and who is "poor."

In the past, many middle-class people have supported Federal and state tax increases that "soak the rich," only to find that, oh, by the way, they are now considered "rich."

That absolutely serves them right. It's what you get when you use an emotional desire to nail other people as your basis for sound public policy. The only bad thing is that as tax law applies to everyone, people with more enlightened points of view are also paying for their shortsightedness.

Re:Well for starters

[Jane Q. Public]

Anticipating some flak, let me explain what I meant about labor and profit.

Let's say you take some raw materials, build a birdhouse, and put it up in your back yard. How much is that birdhouse "worth"? It is worth exactly the cost of the raw materials plus the labor you put into it. No more, no less. (Let's be clear that I am not talking about IRS regulations or anything like that here, I am talking about reality.) Some people might put a higher aesthetic worth on it than that, if it were skillfully built, but monetarily that's what it is currently worth.

Now let's say you build a bunch of birdhouses and put them up for sale. Now how much are they "worth"? Until you sell them, they are still only worth your cost plus labor. Economically, it is only when they are sold for more than that amount, that they increase in "actual value". If they stayed in the back of your pickup they would still be worth no more than the original cost plus labor. So in a real sense, they are "worth" what the market will bear... IF you sell them. In doing so, you "make" money, and that minus your cost plus labor is your profit. Sadly, accountants and the IRS have ceased to see your personal labor as a part of that accounting. You will be taxed on your "income" minus your costs, which equals your profits, as they figure it. Notice how your personal labor is not in that equation.

But it still exists, and still has worth. If you bought the materials, hired someone else to do the construction, and sold the birdhouses yourself, you will get the same revenue but now your profits are lower, because you had the expense of the labor. But while you are (presumably) still making a profit, what profit is your builder making? Zero. He is putting in the same labor you used to, and for which you did not get paid. So there is no "profit" in the labor: it is a direct trade of work for money. No economic value has actually been added via the labor, and the laborer has made no "profits".

The only transaction here that actually affects the economy is when the product is sold for a profit. And it is that amount, the "added value" or, as some would call it the "generated wealth", that should be taxed, because that is the only point where additional money is coming in. If the labor transaction is taxed as well, it then becomes a less-than-zero-sum game, or a negative incentive. Your tax policy is discouraging industry.

That is the way it used to be seen, and there is strong argument that it should still be seen that way today, because that is the reality of the situation. "Income tax" on laborers or simple contractors is a disincentive to the economy.

Re:Well for starters

[Jane Q. Public]

Of course, "poor" people would pay exactly $0 worth of tax under any flat-tax plan I'm familiar with. But don't let that stop you; rant on.

And who do you count as "poor"? Whoever the government says is poor? Why should we believe them? Historically, they have lied to us about literally everything else to do with the economy.

As likely as not, the "poor" would be only those from whom it would not be worth the government's effort to try to wring more money. And as a practical matter that's not a very good definition.

But there is even more to it than that. What about those who are not poor, only because they work that much harder than the ones who are? Is it then fair to tax them and not the others, just because they worked harder? (See my argument further up about taxing labor.)

I do believe that in a very broad, general sense, something like a sales tax is much better than the huge crock of manure that is our current income tax system. But given that, a lot of thought and effort would still have to go into it to make it anywhere near "Fair".

Re:Well for starters

[CodeBuster]

The federal government sets the poverty level based upon some formula for families and individuals. Call it arbitrary if you wish, but the tax brackets in the present income tax system are no less arbitrary. Some bureaucrat sets these numbers, hopefully using some sort of econometric data, but they have to be set by someone in the government whether the system is income tax or Fair Tax. I would file your question under the, "no worse than present or alternative tax systems" category. Laws require limits, arbitrary though they may be, whether that is limits for tax brackets, drinking age or poverty level for an average family of four; that's just the way it is.

As for volatile income, what do you think the average middle class tax payer has been experiencing for the last decade or more? Outsourcing, recessions, getting laid off, having 3 or 4 jobs in 10 years; welcome to the club I say. The government needs to start doing what families and responsible individuals are already doing: spending their money more wisely, saving for rainy days and generally trying to exercise prudence and restraint with their finances. Why should we hold the government bureaucrats and politicians to a lesser standard? Instead we have massive deficit spending on stupid crap that most people don't want. There is a reason why the Tea Party is winning major elections around this country; the people are tired of being pissed on and told that it is raining when it comes to debt and spending. If they ran their personal financial lives like the government, they would be living in a perpetual state of bankruptcy and poverty. Nobody, whether government, family or individual, can live indefinitely on borrowed money.

Finally, on the question of revenue it probably makes more sense to talk in terms of "net revenue" to the US Treasury. The government wastes approximately one 1/4 to 1/3 (depending upon who you believe) of each year's tax revenue simply collecting it under the present income tax system. The US income tax codes are so complicated and illogical that even scientists and engineers have trouble completely understanding the full details and implications. As the grand parent pointed out, the insanely complicated income tax code makes no logical sense whatsoever as a revenue collection device; it is grossly inefficient. However, it does make sense as a political patronage and special interest reward mechanism (tax lawyers and accountants not the least among those special interests, but also companies who use the complex income tax codes to avoid paying most taxes). The average taxpayer is ignorant or naive if he believes that the present system of income tax is better for him than a national sales tax, as outlined in the Fair Tax books, would be.

If your primary objection to Fair Tax is, "it isn't progressive enough", simply adjust the rate and raise the reimbursement level to achieve whatever level of progressivity that you desire. The real question is how much corruption and waste are you willing to continue tolerating under the current US income tax system simply because you like its "progressive" feature? How much waste is too much? When does a perceived social good come at a price which is simply too high? I tend to agree with the grand parent, those who oppose Fair Tax are either special interest members (i.e. tax attorneys, accountants or other recipients of political patronage), misguided people (generally on the left) or people who don't have any skin in the game (i.e. no significant taxable income or assets).

Re:Well for starters

[Jane Q. Public]

"Another trivially answered objection. See my reply here. Having established with facts you can verify yourself that this is not a regressive tax..."

It can't be a "regressive" tax. But what you state in that linked post:

"A sales tax is inherently progressive. It taxes not income nor savings, but consumption..."

is also just wrong.

Do you even know what "progressive" and "regressive" mean? If the Fair Tax is essentially a flat tax, then it is neither. A tax can be flat, or progressive, or regressive, but by definition, it is only one of them.

Of course in reality few taxes are 100% one or the other. For example, if as you say "poor" people (who are they?) don't pay it, then it's not entirely a flat tax, it has been modified to be slightly progressive. But that doesn't make it a "progressive" tax. It's still essentially a flat tax.

And one could put a flat tax on savings or income, and it would still be a flat tax, not a progressive or regressive tax.

Having stated all that, certainly different taxation schemes can have an effect that we would normally associate with a progressive or regressive tax. But that still doesn't make them "regressive" or "progressive" taxes. Please learn the difference so we can all be on the same channel here.

Re:Well for starters

[russotto]

Many states have official 'revenue stamps' that need to be attached to illicit drugs like Marijuana. So, when the big pot dealer gets busted, not only is he busted for posession, but also for tax evasion because each one kilo bag of pot didn't have the "State of Minnesota 1 Kilo Marijuana Tax Stamp" attached.

There's a Supreme Court case shooting that one down on fifth amendment grounds: Timothy Leary v. United States, 395 U.S. 6, 89 S. Ct. 1532 (1969)

Re:Well for starters

[Nyder]

I suggest you read the history of Al capone. He was never tried for killing anyone. Instead he went to jail for not paying taxes on his speakeasies, and illegal liqueur sales.

I don't know why people fail to understand history the implications it has across time. I am personally waiting for the IRS to start cracking down on drug dealers. there are billions in taxes that are waiting to be collected.

Be easier if they legalized drugs and became the dealers themselves.

Re:Well for starters

[CodeBuster]

it disproportionately effects those who do not save or invest but, instead, live paycheck to paycheck.

sounds like a pretty powerful incentive to start...saving and investing! People who claim that there is "nothing left" to save at the end of the month more likely than not have their priorities misplaced.

So, if you're poor and you have to spend all your income on rent and food, the fair tax hits you hardest

Except their spending is...reimbursed. It is even possible that basic foodstuffs and certain categories of clothing could be, gasp, untaxed. Have you actually read the Fair Tax books? If you had, you probably wouldn't be saying these things like that.

Add to this the fact that the marginal value of $1 is far less to a rich person than to a poor person to begin with and the system starts to look downright dystopian.

That it is a theory, but it is not and cannot be proven fact. Who knows how much that "last dollar" is really worth in lost utility except the person from whom you confiscated it? Who are you to say how much my hard earned dollars are worth to me or whether or not I deserve to keep them less than some who earns less. That question can only be answered by each individual for themselves. The national sales tax allows each individual to answer that question for themselves with each taxable purchase they chose to make...or not make.

But now you're getting back where we are now, where individuals have to keep track of their finances and report to uncle sam for their rebates. Except now individuals have to keep track of every single purchase, rather than just their annual income from their employer.

Again, did you even read the Fair Tax books? Every American taxpayer, whether billionaire or pauper, would be issued a reimbursement check up to the poverty level (or some other fixed level) of spending; no filing of paperwork, other than address to mail or account number to deposit the check, required.

And this gets at the broader point: taxation is a powerful and legitimate tool for achieving public policy goals.

That is debatable. For example, I tend to be more sympathetic to the argument that taxes exist primarily to provide revenue to fund the necessary functions of government. It is not legitimate, in my opinion, to subordinate the primary goal of revenue collection to social policy objectives when collecting taxes. Recall that government mandated loans to subprime borrowers in favored political classes was in no small part responsible for the ongoing financial meltdown and economic unpleasantness. IMHO, wastefulness is neither a virtue nor a social good which is why I favor efficiency over social policy when collecting taxes.

a highly regressive taxation system that is still a nightmare to administer.

Except it is not regressive because of the aforementioned reimbursement. In fact, the reimbursement incorporates many of the positive features of the Negative Income Tax, without retaining the undesirable parts of the present income tax system. As for being a nightmare to administer how can you sit there and with a straight face suggest that analyzing tax returns for tens of thousands of businesses is less bothersome, from an administrative and bureaucratic standpoint, than analyzing and processing income tax returns for millions of individual American citizens AND businesses every year? The income tax returns are both more numerous AND more complex than the Fair Tax returns required of businesses would be. It defies reason to suggest that the IRS can handle the present income tax mess, but administering the Fair Tax would be a nightmare. A nightmare compared to what I ask? The present US Income Tax system? Please.

Re:Well for starters

[AK Marc]

Laws require limits, arbitrary though they may be, whether that is limits for tax brackets, drinking age or poverty level for an average family of four; that's just the way it is.

Yes. But they come to reasons for them. The poverty level being chosen, as far as I could tell, was because that was the most regressive the makers of it could come up with and think they'd get away for it. There's a logical reason for 21. It may not be right. It may be arbitrary. But there is logic behind it. For using the poverty level, there's no logic. "That's the minimum amount to live" is as far as they got. Well great. But that's circular. Every time I ask "why the poverty level" I get the definition of poverty level. Even you did it. Yes, I know who sets it and how. That's irrelevant to the use of it by Fair Tax.

As for volatile income, what do you think the average middle class tax payer has been experiencing for the last decade or more?

Again, not even coming close to addressing my issue. I never said income was or wasn't volatile. I directly implied it was, and that's obvious. I stated that expenditures are *more* volatile. Since you didn't disagree at all and whine about how volatile income is, then you must be acknowledging that the Fair Tax will have massive swings in income for the government between years unlike anything we've ever seen before. Otherwise, why would you have completely dodged my question and instead made up something unrelated to it to discuss?

The government wastes approximately one 1/4 to 1/3 (depending upon who you believe) of each year's tax revenue simply collecting it under the present income tax system.

From http://www.irs.gov/taxstats/article/0,,id=102174,00.html as quoted at http://www.nteuirswatch.org/Numbers2.htm "42 cents. How much it cost IRS employees in fiscal 2006 to collect $100 in tax revenue." Since we collect something on the order of $1 trillion in income tax, and the IRS's budget is about $10 billion, that seems to me to be about $1 per $100, but in either case, 1% on overhead is a little bit away from the 33% number you gave. Given that I've documented my sources, I'd be interested in who says it takes hundreds of billions of dollars to collect the revenue. Sure, it would be nice to trim that 1% off the budget, but it seems silly to be off by 33 times the real number and try to use that to justify a massive change in taxes. If they do their numbers on the FairTax as well as they do the numbers on the cost of the IRS, I will add that to the list of reasons I oppose the FairTax.

If your primary objection to Fair Tax is, "it isn't progressive enough", simply adjust the rate and raise the reimbursement level to achieve whatever level of progressivity that you desire.

Fine in principle, but when I asked the question of officials in Fair Tax, including the schedules they have on those rates and the effect on the economy, the answer was "we haven't a fucking clue, now go fuck off." Sometimes they were more polite than that, and sometimes not, but that was *always* the answer whenever I asked the question of someone officially affiliated with Fair Tax. If you have ever gotten a different answer, I'd be interested in the name of the person you talked to.

The real question is how much corruption and waste are you willing to continue tolerating under the current US income tax system simply because you like its "progressive" feature?

Well, perhaps the number falls between the current level and 33 times the current level.

I tend to agree with the grand parent, those who oppose Fair Tax are either special interest members (i.e. tax attorneys, accountants or other recipients of political patronage), misguided people (generally on the left) or people who don't have any skin in the game (i.e. no significant taxable income or asse

Re:Well for starters

[Lehk228]

their income isn't illegal, they are illegally here but their income is earned just like you and me.

Re:Well for starters

[Lehk228]

have fun in somolia. good luck and stay away from the whores.

Re:Well for starters

[AK Marc]

But it still exists, and still has worth. If you bought the materials, hired someone else to do the construction, and sold the birdhouses yourself, you will get the same revenue but now your profits are lower, because you had the expense of the labor.

But you can pay yourself. You can assign a dollar figure to the labor and contract out the labor to yourself. Theoretically, without loopholes, you'd still have the same tax burden. But the taxes on corporations and people are not at the same rate, nor the same type. So it won't match, but in a balanced system, it would. Wages are "income" in the same sense that a lost sale isn't a business loss. It isn't tangible and wouldn't be there if some other action wasn't taken, so it's "created" like profit. (and the IRS will likely audit you if they figure it out, because most who do things like that are doing so illegally, when it's a perfectly legal practice when done right)

I understand what you are saying, but the definition the IRS uses is obviously different from yours. You are selling your time at cost, but the IRS says you'd have $0 on that time if you were sleeping at home, so any more than that is profit. It's the same as when I do skilled work for a non profit. They'd have to pay someone else $120 or more per hour, but if I do it for them, I don't get to deduct any more than just my driving distance. But then, I blame the doctors and lawyers for that. It used to be deductible, but those with high billing rates deducted unskilled work at their skilled (and then inflated) wages. So a doctor filing papers would deduct $500/hour so that now, someone with technical expertise doing actual work in that technical field (electrician, computer work, etc) can't deduct their time.

Re:Well for starters

[nabsltd]

Living paycheck to paycheck is a big mistake; the slightest miscalculation, unanticipated expense, emergency, or disaster will break you if you do this. Cars break down, appliances break down, medical bills happen, and generally this is a problem waiting to happen.

Although it may be a "mistake", for many this is unavoidable.

I live in an area where basic living costs (housing, food, transportation, etc.) are higher than the national average (sometimes a lot more). But, there are still many jobs that don't pay enough to survive, even if you spend every penny you earn on absolute necessities.

Some people in these sorts of situations would be slightly better off moving to a cheaper place to live, but without a guarantee of a job in that location, they couldn't do it.

Re:Well for starters

[pdabbadabba]

sounds like a pretty powerful incentive to start...saving and investing!

I'm not talking about pople who live paycheck-to-paycheck voluntarily. Many people above the poverty line still have problems with stable housing and employment that make it very difficult to save effectively. And this is completely irrelevant to the question of whether the tax is regressive.

And yes, I forgot about the prebate. It probably will not come as a surprise that I don't think about Fair Tax policy quite as much as you. But the prebate does not keep the tax from being regressive. As to everyone who is above the poverty line, the richer you are, the smaller a portion of your income you spend and, thus, the smaller a percentage of your income you pay in taxes. It's as simple as that.

That it is a theory, but it is not and cannot be proven fact.

It is, actually, a proven fact. It turns out that this is really easy to prove experimentally. And it's also very obvious common sense. What I'll grant is that it's difficult to measure exactly how strong that effect is. But that doesn't mean you shouldn't try to approximate.

That is debatable.

Most tings are. But what is you account, then, of why it is acceptable for the government to spend money to promote policy goals, but not acceptable to achieve the same policy goal by simply not collecting the money in the first place?

Re:Well for starters

[corbettw]

Whoop-de-whoop, it's a misdemeanor, then. Still hardly something to get all upset about.

Re:Well for starters

[nabsltd]

The check does nothing for Bill Gates (percentage wise), and makes all the difference in the world for someone living off $20,000 a year.

Since the "prebates" are not tied to actual income but instead are tied to situation (single or couple plus number of children), the amount of difference it makes for a $20K gross income will vary wildly.

Also, as far as I can see, either there is no provision for families outside of the "norm" like a couple, two kids, plus a grandparent, or else it becomes a huge avenue for fraud to keep your parents "alive" and their prebate checks coming to you. And, you can't cut off people from prebate payments just because they aren't active earners...I don't plan on getting a paycheck my entire life, but I'm pretty certain I'll be spending money to pay for my upkeep.

Last, what happens to Social Security? This plan would remove FICA payroll taxes, but I assume that current recipients of Social Security checks would keep getting them. What about me? Would I still be able to collect when I retire? If not, I want all that money back that I paid in, and I suspect I wouldn't be alone in that. But, If I still get paid when I retire, what will the amount be based on, since no more FICA will be collected?

There are some advantages to "FairTax", as well as some disadvantage, but I think the real problem is all the unanswered questions.

Re:Well for starters

[corbettw]

Which is even worse. Like I said, there's no way they'd shut down the IRS if Congress started levying excise taxes across the board. We'd just end up with both forms of tax and even less money in our pocket.

So please, drop the "Fair Tax" nonsense. It's not going to happen the way you think it will, and it's not going to help anyone.

Re:Well for starters

[nabsltd]

If their grocery budget is $50/week (generous for a single person) - they would pay ~$215 a month in food costs.

I hadn't noticed this part before...please tell me where you buy groceries.

I'm an insanely cheap food shopper, where $3 of ground beef, a $1 box of "Hamburger Helper" (or equivalent), and a few cents of assorted condiments will give me the basis for 4 meals. Add in a few veggies and sides, and $2 meals aren't out of the question.

But, I do a lot of this by acting as the warehouse (I can't get ground beef that cheap without buying 8 pounds at Sam's, and you need to stock up on everything else on sale), and that takes some overhead and planning that may not be possible for everyone. In addition, I'm OK with cheap frozen veggies. If you deviate from this super cheap planning in any way (e.g., slabs of meat, fresh vegetables, or veggies that aren't corn, green beans, or carrots), it's tough to eat balanced, healthy meals for just $5/day (which is about where I would guess your "non-generous" number would be).

And I know about the "healthy" part. In college, when I was broke and ate really cheap, there was one point that I was heading down the line towards scurvy due to not being able to afford veggies ($0.25 for an 8-pack of hot dogs, $0.25 for the buns and $0.20 for two boxes of generic mac-and-cheese made two meals for a roommate and I).

Re:Well for starters

[shentino]

You miss my point.

If it was illegal income then it would be confiscated completely under asset forfeiture.

Then again, that might be a good incentive for illegals not to come here, if we could confiscate their earnings in addition to deporting them.

Re:Well for starters

[CodeBuster]

The poverty level being chosen, as far as I could tell, was because that was the most regressive the makers of it could come up with and think they'd get away for it.

How can you be sure? If we shouldn't use the Federal Government's estimation of poverty level spending then what definition should we use? You say that you know who sets the Federal Poverty level (the Census Bureau) and how, but then fault the Fair Tax for using that level? Perhaps you have some disagreement with the Census Bureau's assessment? Fine, but just because the Fair Tax picked the government's own number that is somehow evidence of an "agenda"? Picking the Federal Poverty level as the minimum level of reimbursement seems reasonable enough to me. The exact number is open for discussion anyway. The important idea to take away is that the Fair Tax requires reimbursement of some reasonable level of expenditure, subject to what everyone agrees is "reasonable", to every US taxpayer.

You seem to be very dissatisfied with every person who tries to explain Fair Tax to you. Tax policy is inherently a complex subject, which is why the Fair Tax ideas were written down in book form, and even more formally in the text of the Fair Tax bills that have been referred to committee in Congress. Perhaps you can read the book and the committee bills thoroughly to fully satisfy your desire for the niggling details? As for adding or subtracting features from the Fair Tax bill, I would have to agree with the Fair Tax people that that is a more thorny issue. For example, removing the "prebate" concept from the bill removes the progressive features entirely (a tactic which might be used by those looking to kill the entire proposal for other reasons) or failing to abolish the income tax may lead to the income tax being phased back in at some future date on top of the Fair Tax. The amounts and magnitudes are generally up for discussion, but as I said previously tax policy is complex and pulling threads out of the tapestry very quickly unravels the entire proposal. That is probably why most Fair Tax supporters take major additions or deletions so seriously.

Re:Well for starters

[CodeBuster]

What I'll grant is that it's difficult to measure exactly how strong that effect is. But that doesn't mean you shouldn't try to approximate.

Fair enough, but I still maintain that it is better to let people sort themselves by a national consumption tax rather than the government deciding before any spending decisions are made via the income tax. With the national sales tax, each person can decide for themselves how much tax they are able and willing to pay by adjusting their own levels of non-essential consumption. The prebate feature of the fair tax is designed to help people exempt some portion of their income from tax for purchases which they consider to be "essential". The fair tax lets each person decide for themselves both how much taxable consumption is enough for them (i.e. how much that last dollar was really worth to them) AND which purchases are "essential" and thus not subject to tax (i.e. the prebates up to some minimum level of expenditure: presumably for basic food, clothing and shelter). IMHO, this is the way it ought to be. Personal choice and personal responsibility through expressed consumption preference in the market.

why it is acceptable for the government to spend money to promote policy goals, but not acceptable to achieve the same policy goal by simply not collecting the money in the first place?

In general a dollar which makes a round trip through the government and back into the economy loses a substantial fraction of its value during the round trip. I tend to favor the government NOT redistributing income via the tax system for this reason because it is generally more economically efficient to leave the money in private hands. This is especially true if the government is NOT going to spend the money on something that only the government has the power to do, like national defense, environmental regulation, or law enforcement. I tend to think more often in terms of desirable and undesirable from the standpoint of efficiency, when I think about tax policy, rather than the more absolute acceptable or unacceptable dichotomy.

Re:Well for starters

[AK Marc]

How can you be sure?

Because that's how the statements came across in the early 90s when I talked with people pushing it back then. Sure, with 20 years between then and now, and the records being verbal and loose, I'm sure that it can't be proven at all why that was chosen. But the fact that no one can answer the question leads me to think that no one knows. Do you really want a tax scheme invented by people that don't even know why they chose the numbers they did?

Tax policy is inherently a complex subject, which is why the Fair Tax ideas were written down in book form, and even more formally in the text of the Fair Tax bills that have been referred to committee in Congress.

I spoke with the people that made Fair Tax back before any of the books were written.

The amounts and magnitudes are generally up for discussion, but as I said previously tax policy is complex and pulling threads out of the tapestry very quickly unravels the entire proposal.

I don't believe you. I once asked, hypothetically, what would happen if they were to make the rebate payments at above tax level and reducing SS payments to match. The response was violent. Yelling. Curse words. And I didn't do anything other than ask a question. Either the people working on it were mentally unstable, or it's a religion to them. Either way, I asked such questions more than 10 years before the first Fair Tax bill, and was snubbed firmly.

And I've still never figured out how SS, which is income based, will be transitioned to a sales tax economy. Will they still have all the wages reported? Or will they track it based on voluntary disclosures? Or will the government track every bit of tax you pay and where? It seems that it will destroy SS. And I was trying to figure out how to deal with that in the tax structure, and just gave up. Come to see that almost 20 years later and they still have no clue (at least none I saw when brushing up on it for these posts). If you can explain how SS will continue to be income related when no income is filed with the feds, I'd like to hear it. If not, then they had a bright person who probably asked too many questions who wanted to solve this for them 20 years ago who they alienated and turned into an enemy. All because they were afraid of anyone saying it wasn't perfect, or such. But you can tell that from the name. The "Fair Tax." That's like the PATRIOT Act. Give it a cool name for marketing, regardless of the realities of it. Personally, I've been trying to get them to rename the Death Tax to the Paris Hilton Tax. After all, who really is excited to see her get more money just because her family was rich? It's not like there's anything left on her that isn't plastic.

Re:Well for starters

[AK Marc]

If they don't tie this in with massive repeals of prohibition, then people buying drugs and such will still not pay taxes. It's not like the drug dealers will collect taxes on their retail sales.

Re:Well for starters

[Jane Q. Public]

No, I don't think you did get what I was saying. I know that you can pay yourself, just as you could pay others. But my point was that the labor, by itself, does not "create" wealth or profit. Only the sale does. If you don't sell the product, not only has no value been added in an economic sense, but you probably couldn't pay for your own labor either.

The place where "income" is made is at the sale of the product, not when the product is built. Sure, you can elect to do the work yourself and save that labor cost in dollars, but then you are still expending the labor. It is a 1:1 trade. So in an economic sense (not an IRS sense), there is seldom any profit in labor. By taxing labor, the IRS is taking money out of the economy. There is nothing on the + side.

Money, or profit, is "made" only when there is a sale of the product. That is the only place where money comes in to our little system, which (if you are running a profitable business) should be more than what is going out. Nothing in the labor transactions actually create profit or generate wealth. Because the sale is the sole place where "profit" is being made, that is the only reasonable place (from an economic standpoint) to put a tax. I realize that is a controversial statement these days so I will qualify it: that is the only place you can put a tax so that it will not act as a drag on the economy.

Our great-grandfathers understood this. It is only in the 20th century that this concept seems to have been buried in a pile of tax code.

So, anyway: yes, I am fully aware that the IRS has a different view of this than I do; that was the point!

Re:Well for starters

[rflii]

The IRS is not allowed to openly share information with other agencies nor do they check if non-citizens have a valid visa to work in the US. If a law enforcement agency has an open investigation they can get a subpoena fairly easily (rubber stamped request form). The subpoena process is to help track law enforcement agencies from abusing the power to access your information. So if you got contacted by the FBI through your tax records, then you were under investigation or someone connected (partner, customer, vendor) was being investigated. Since these investigations tend to spider out a bit, it could have been even three connections away from you.

Re:Well for starters

[Fjandr]

That's pretty much my take on it as well. There's no way they'll dry up a source of money as large as the income tax. It gives them too much power to throw away. The only way it would ever disappear is by force.

Re:Well for starters

[dryeo]

Of course you can quit paying taxes, just don't work.
This is much like if you don't want to pay for anything else, it means going without the benefits of what you'd otherwise payed for.
Civilization costs money.

Re:Well for starters

[dryeo]

it's the idea that the government is making value judgments as to who is "rich" and who is "poor."

That's easy. The rich are the ones who need protecting from the poor rising up and taking what they have.
The poor are the ones that if they were much poorer would rise up and take what they need from the rich.

Re:Well for starters

[AK Marc]

No, I don't think you did get what I was saying.

Why is it always like that? I understand just fine. I just think you are wrong. Explaining it to me again won't help when I already understand. But so many people think "Oh, he must not understand, because if he understood, he'd obviously think exactly like I do."

But my point was that the labor, by itself, does not "create" wealth or profit. Only the sale does.

Wealth and profit are unrelated. Wealth is a measure of liquidated value at current market rates. Profit is an arbitrary accounting definition that usually, as you indicate, require the sale be done before it is measured. They are distinct words which share little, if any, in common.

By taxing labor, the IRS is taking money out of the economy.

Money is never taken out of the economy. Everything taken in by the government is immediately spent again and right back in the economy. They don't collect taxes and burn the money. The concept of "removed from the economy" is like saying that a river will destroy the planet because all the water dumped into the ocean will make the oceans overflow and drown everyone. When you look at one specific transaction it sounds plausible, but it's not correct when you know the whole picture.

Nothing in the labor transactions actually create profit or generate wealth.

Again, you use "wealth" in a direct contradiction to how I understand the meaning. When someone shows up in the woods with an axe and walks away after having built a house, he added "wealth" with nothing but labor. He might not profit from it if he never sells it. He might not have made any money from it. But, if he were to sell it, land with a house is worth more than one without, so it did increase the wealth with no action other than labor.

So, anyway: yes, I am fully aware that the IRS has a different view of this than I do; that was the point!

I believe all the dictionaries also have a different view of it than you do. And in any case, your complaint with the IRS is a matter of timing, not substance. You seem to understand that labor adds value, and that increased value isn't recognized as profit until a sale, but you don't see where wealth is made, or that you and the IRS see everything exactly the same, except for a minor difference of the timing of when the value is added for taxes.

Re:Well for starters

[lul_wat]

>I am personally waiting for the IRS to start cracking down on drug dealers.

You want the IRS to take on the CIA? I'd love to see that too.

Re:Well for starters

[Jane Q. Public]

"Wealth and profit are unrelated. Wealth is a measure of liquidated value at current market rates..."

No, I meant what I said, and you still didn't get what I was saying. And by putting that in your reply, you prove it. Don't confuse the fact that we are using the terminology differently with whether I am right or wrong. Twice now you have stated, in effect, "But what I mean when I say "blah"... therefore you are wrong". That's pointless. I had already mentioned that we were using the terminology differently. Are you paying attention?

Regardless of how you "understand" the meaning in some other context, try paying attention to what I am saying. I gave a hypothetical scenario having to do with making and selling a product. In that scenario, as with most real-world scenarios, labor does not directly result in adding value to the overall economy. By that I mean, the labor by itself does not insert a product or other thing into the market that had value greater than its raw cost plus labor. Only selling did that. Until the product was sold, the economy as a whole gained nothing. It doesn't matter how many people put how many hours into it, with how much skill! Until something is marketed, labor is worth nothing to the overall economy in the way of value added or profit.

Let's take another hypothetical example: you buy a little old house, and over the course of 20 years you add rooms here and there, and a garage, and make improvements, and so on. But until you tire of living there and put it up for sale, you have added nothing to the economy. The home and property might be valued higher in theoretical terms, but that will never be realized until there is an actual sale. You have taken money that was already in circulation, and used it to subsidize your own labor (or paid others to do that labor). But until that property is placed in the market, the effect on the economy is near zero. You took your own wages and gave them to someone else to build cabinets. That's still a 1:1 trade... or near enough as makes no difference. All by itself, no matter how much effort was put into it or how much was spent on outside labor, until a product (property) is actually marketed, none of that effects the overall economy at all. That's what I mean when I say labor is a "zero-sum" proposition: by itself, it does little or nothing to or for the overall economy. INDIRECTLY it can, but that is very indirect. For the most part it does not directly insert "value added" goods into the economy or otherwise cause the economy to grow. It is an even proposition. The only time the economy overall gains in value is when there is a sale, and a new product that is now worth more than its cost and labor alone enters the market.

If you want to quibble over whether the added value that is created and inserted into the economy represents "wealth" or "profit" or grape jelly, fine. It's just terminology. It has no bearing on the central concept.

Re:Well for starters

[dimeglio]

I think they added Craig's list to avoid looking like they're picking on only one company (eBay). This is going to be also interesting information for international sellers. I'm sure their government is looking for extra income as well.

Re:Well for starters

[josecanuc]

If you are truthful, accurate, and timely, you shouldn't run into trouble.

I won't say I have run into trouble.... But the IRS clearly stacks the deck in their favor in their policies. I filed my return well before April 15 this year, as usual, just because I like to get it done as soon as I have all of the information required to finish. The return indicated a sizeable refund. A week after I finished, I received a 1099-MISC form from a part-time employer that I had forgotten about. I wanted to make sure the IRS had the correct information, so I promptly filled out an amended return, included a check for the additional tax owed by this additional income, and sent it off to them. They cashed the check within 4 days.

Later, when I checked on my return's status online, I found there was some delay, so I called. They apparently got "confused" because I sent money when they owed me a refund, so they put the entire refund on "hold" and could not release it until they figured it out. So apparently what happened is the pile up all the amended returns (1040-X) and sit on them until they're done with the regular returns (makes sense). From the perspective of their computer system, I had sent a check, but no 1040-X form since it was not yet processed.

Because of this inconsistency (and they understand what happened), they "cannot release" my refund until the 1040-X is processed, which "may take up to 16 weeks".

When you owe the IRS money (past the due date), they charge interest. When they owe you money, they don't pay interest. I tried to be timely and it's ending up crimping my plans for increasing the energy efficiency of my home. When you call the IRS, there is no "supervisor" or manager you can request to speak to when one of the minions doesn't give the answer. They are the end of the line (until you get a lawyer, then you're losing money in the long run) and they don't care about doing the right thing, except when the right thing is to get more taxes or hold onto money longer.

Re:Well for starters

[flyneye]

Tonight at 9 on channel 10!
        Man in Cessna dragging and EBay banner crashes plane filled with napalm and Beanie Babies into IRS building. No survivors and nothing of value was lost.

Re:Well for starters

[infinite9]

There is a second benefit to our rulers. The more "rich people" and "poor people" see each other as adversaries the more our politicians can play both sides against one another to entrench their power. It's classic divide-and-conquer.

I think you're almost right. It's more like this: The more white people and black people (or citizens vs illegals, or democrats vs republicans, etc) see each other as adversaries, the more our politicians continue can accept money from the rich, and divert our attention from the real problem, which is the transfer wealth from the poor to the rich and the subsequent enslavement of the poor.

Re:Well for starters

[CodeBuster]

You might try the following video on YouTube for a basic overview of FairTax.

As for SS, I would like to see us move towards a private pension system, as they have right now in Chile, where people contribute their own money to a private account which is managed according to their wishes by a private firm with a fiduciary duty to their account holders. Naturally, this would have to be done as part of a program which continues paying present retirees and transitions younger workers into the private pension system with the eventual goal of phasing out SS as we know it now. This scares the hell out of some people, but anyone who really stops to consider the present system and understands inflation and fiat currency understands that the current Ponzi scheme operated by the Federal Government as SS is not only unsustainable, it is also unfair; a mean trick played by the old against the young and by the government against its people. Let me say this: if I was allowed to opt-out of SS, stop paying SS taxes and instead fund a private pension, I would do it in a New York Minute and so would most other young people with more than a few rocks rolling around upstairs.

Re:Well for starters

[multiplexo]

Of course such people still enjoy the services and protections provided by government. Thus in purely financial terms, they are engaging in parasitism. This is a big step towards the welfare state, the nanny state, or whatever you prefer to call it. It works because there are large enough numbers of these people that their votes can easily sway elections and they vote in uniform blocs with little diversity of opinion among them.

Yes, and those uniform voting blocs of non-productive parasites are called Red States. If you weren't a lazy and stupid Libertard you would know that the least productive and most parasitic parts of our country happen to be the most conservative. For every dollar that ultra-liberal California sends to Washington D.C. they receive back .78 cents in federal spending. For every dollar that ultra-libertarian Alaska sends to Washington, D.C. they get back $1.84. Kentucky, home of Rand Paul, the son of Libertarian darling Ron Paul takes $1.55 in federal spending for every $1 they pay in taxes. The parasites you talk about are overwhelmingly Republicans and Libertarians. And of course Ron Paul has never, ever told any of his constituents that they need to pull themselves up by their own bootstraps and not rely on the federal government.

The number of adult voters with no federal tax liability was 38% prior to the recent stimulus bill and now sits around 47%.

What a load of Libertarded bullshit. This statistic and others like it, so casually tossed about, without any attribution ignorant and dishonest Libertards such as yourself conveniently ignores the fact that these people are still paying Social Security taxes, which make up a large portion of federal spending. The numbers that you're referring to, either disingenuously or stupidly are the numbers of Americans with no Federal Income Tax Liability. Now, these numbers might have increased after the last stimulus bill, but those people are still paying taxes, 15.4 percent of their income, and associated state and local sales and property taxes. So the myth that you're propagating is bullshit and you of course have no numbers to back it up because you're a Libertard and Libertards just make shit up or get their information from conservative e-mails that contain 20,000 Fwd: headers. Oh, and if you look at the chart I linked to you'll find that the states with the highest percentage of individuals who have no federal income tax liability are the Libertarded and Republican Red States while the state with the lowest percentage of citizens with no federal income tax liability is liberal Masschusetts.

Politically, the purpose of creating and encouraging this class of taxpayers is to engage in class warfare. The game is to get a large percentage of the population dependent on government subsidies for their day-to-day living. Those people will then defend and re-elect the politicians who feed that dependency no matter how unreasonable their policies may be.

Again, this perfectly explains the why the Libertards and Republicans who live in the red states keep electing ignorant racists and crackers to Congress such as Jim DeMint, Richard Shelby, John Cronyn and Sam Brownback. These guys are assholes, they're chock full of stupid religious beliefs and hate the idea of individual freedom. They want to use the government to shove Jesus down your throat and if you don't want Jesus shoved down your throat, well too bad. But they keep the welfare payments flowing to their constituents and are thus re-elected, even though they're stupid, corrupt, hate-filled bigots whose very existence is offensive to anyone who believes in limited government.

There is a second benefit to our rulers. The more "rich people" and "poor people" see each other as adver

Re:Well for starters

[TooMuchToDo]

If you get busted for drug dealing they will take all of your money.

Sounds very much like a tax to me. =)

Re:Well for starters

[AK Marc]

I had already mentioned that we were using the terminology differently. Are you paying attention?

Language exists to communicate ideas. You are purposefully using words in a manner you know no one else uses. That's lying. You are purposefully speaking in a manner designed to give a false impression in someone else. It doesn't matter if you believe it. No one else takes it the way you mean it, and you know it, so you are a liar.

"Wealth" is unrelated to "income." You equated then confused the two. I can accept people that use definition 35 of a word, indicating that it's a nearly unused definition. But when people's dogma gets to where they redefine every word they use to things they know no one else uses, they just passed from a curiosity to a batshit insane liar. If you can't find a definition of "wealth" that even comes close to meaning what you've asserted, then I'll just assume you have a mental illness. I hope you seek treatment.

Let's take another hypothetical example: you buy a little old house, and over the course of 20 years you add rooms here and there, and a garage, and make improvements, and so on. But until you tire of living there and put it up for sale, you have added nothing to the economy.

And again, you've increased your wealth, but not seen profit, income, or any of that. But you used "wealth." If I start Microsoft and give myself 1000 shares out of 2000, and through splits and such and growth, Microsoft is worth $1,000,000,000,000 and I still hold 50% of the shares (now much more than 1000 shares after splits), then I'm still poor, because I haven't sold anything? Or am I rich because I have hundreds of billions of dollars in a mostly liquid form I could cash in anytime? The argument of when it's "income" is unrelated to the addition of "wealth" as a parameter. "Wealth" doesn't live in the economy. "Wealth" doesn't make the economy go. "Wealth" is a valuation of holdings. If those holdings aren't changing hands, then there is no income.

If you want to quibble over whether the added value that is created and inserted into the economy represents "wealth" or "profit" or grape jelly, fine. It's just terminology.

Again, I understand and disagree. You are an idiot in that you claim you understand me and that I don't understand you. Wealth is created when the market value of the item is increased. Income is generated when it's sold. "Value" (or whatever) is where you are claiming the increased wealth, if not realized, is not an increase in value, and you are asserting that the IRS does see it as an increase in value. That's factually incorrect, and I may not have used "wealth" in a manner that agrees with your mangling of the language.

It's just terminology. It has no bearing on the central concept.

God. You really are that stupid. If you can't say your idea in the words everyone else uses, then you can't get across the central concept. Yes, the definitions of the words are meaningless, but *only* if everyone agrees on the definitions of the words. I'm telling you that your definitions are not just personal takes that disagree with the IRS, but that they disagree with every definition ever printed in any dictionary ever, and with every other person on the planet using those words. As such, that means you suffer from a mental illness called a neurosis. You have a disconnect with reality. Either that, or you are too stupid to read a dictionary and pick appropriate words for established concepts.

Again, I fully understand exactly what you are trying to say. That you can't understand that only further indicates that you have no idea what you are talking about. Perhaps I could have been a little more direct with "you are a fucking idiot that can't use language to get across a simple concept because you are too hung up on your platitudes to understand communication" but I tried to play your game, accepting all your premises, and just quibbling over the concept of added value

Re:Well for starters

[AK Marc]

I'm not defending/advocating the fair tax, but I'm growing really tired of "regressive taxes" being portrayed as Pure Conservative Evil. If the IRS bureaucracy was removed from government and the process of collecting taxes streamlined I have no doubt that you could reduce taxes without reducing the amount of taxes collected, particularly if the system was more difficult to game/launder/fraud/cheat/bribe/trick. Instead we pay people to push paper for the sake of pushing paper.

Why can't they both be evil? It isn't a either or. And I don't want to go to evil. If we are going to scrap it and start over, picking something just slightly less evil is just stupid. Pick something that's good, or at least neutral, since people hate taxes in general.

People are quick to complain that the rich "need to pay their fair share", which in progressive circles seems to mean "the rich should pay for all the social services they do not use" or that "the rich should pay for being allowed to be rich".

My stance is that the poor don't use the most expensive service. A homeless person wouldn't notice or care if Venezuela invaded and nationalized everything. But Bill Gates would lose everything. So those holding wealth are the only ones that benefit from the military. The poorer you are, the less your life would change under a new government. And much of the "poor get all the services" whine is negated by the fact that welfare is much cheaper than prison. If you don't give people any services, they will end up in prison or dead. So, would you kill people to save money? If not, then welfare is cheaper then no welfare.

The next best thing is to have a system that lets those with the ability and drive to succeed to succeed on their own merits with as minimum a barrier to entry as possible. Make it easy for people to start businesses, not just people who already have money.

But what happens when we work so hard to make "movement" easy, that we make it harder on those in both the top and the bottom? And people *don't* move in the US. In "socialized" countries, they have more actual people move than in the US, where we pride ourselves on making it easy. Why is that? It's not easy now, nor has it ever been, to move in the US. But the idea of it has always been pushed.

Tax personal income, not business income, since taxes on businesses are simply an indirect tax on the consumers who purchase their goods/services.

So, the businesses use services. And rather than having the business (or their customers) foot the bill for the services they use, you want to socialize the costs of business to all people. You want to make someone who doesn't use a service at all pay for it because it was used by a business. That's a socialist idea that doesn't make any sense, given the anti-socialist ideas you have been giving.

Or better yet, bill individuals for services used.

That's just silly. What do you do if you have a mentally ill person who can live on their own with $500 a month of assistance, or you give them no assistance, since they can't pay for it, and instead, they get put in jail or a hospital and then you are out $2000 a month with the bill going to someone that can't pay for it. Your idealism just lost us $1500 a month. Do that enough, and you are paying trillions in order to save billions. If you really wanted cheaper government, you'd be looking for increased value, not decreased (shifted) costs that are false gains.

Re:Well for starters

[AK Marc]

This scares the hell out of some people, but anyone who really stops to consider the present system and understands inflation and fiat currency understands that the current Ponzi scheme operated by the Federal Government as SS is not only unsustainable, it is also unfair; a mean trick played by the old against the young and by the government against its people.

There exists no currency that isn't "fiat" so addition of that word indicates that you either don't understand what it means, or that you are trying to trigger some emotional response, rather than an intellectual one. Furthermore, SS isn't a Ponzi scheme. Yes, you are paid "someone else's" money and don't get returns on yours, but, and this is the part you are obviously missing, it isn't an investment. You might as well be trying to sue Ford for your car depreciating. Sure it depreciated, but you either knew that going in, or you are so stupid that you should be shot and put out of my misery.

So it seems you like playing word games to avoid discussing the issues. You'd rather paint them with colorful words, then whine about the colors. When you grow up and can form sentences without redundant words and inaccurate metaphors added solely to distract and confuse, then let me know and I'll try to discuss the issues with you. But for now, it seems you have latched onto some dogma surrounding it that has led to some inability to even describe the issue, let alone start to work on making it better.

Re:Well for starters

[CodeBuster]

I think now I understand why you cannot get the answers you want from those who support the fair tax. I was actually trying to explain things to you, but you keep acting like a liberal jerk. I figure that you are either doing this on purpose to bait me or you are just not capable of understanding. Either way I'm through trying to explain it to you. Perhaps someday, when your income is high enough and you start paying serious taxes, you will finally understand.

Re:Well for starters

[AK Marc]

Ha ha ha. I am called a liberal by the conservatives, and a conservative by the liberals. So if they both hate me, I must be doing something right. When you use "fiat currency" it indicates to me that you are stupid or so sold on dogma that you can't intelligently talk about the issues. Drop the irrelevant, redundant, and distracting adjectives and maybe someone will take you seriously. Or, prove me wrong by listing a single printed paper money issued by any government on the planet that isn't "fiat."

And wasting time whining about SS being a Ponzi scheme when it obviously isn't is another way to distract from the issues. If you were trying to explain FairTax to me, you could have done a much better job of explaining it, rather than hitting the ignorant talking points of a conservative that doesn't understand high school economics. For one, a Ponzi scheme requires fraud, and you obviously know what it is, so to complain that it's fraudulently telling you (or others) that their money is tied up in their personal account just for them makes you look like a liar, or an idiot that uses words he doesn't understand.

If you want to discuss something, stick to the issues. And don't editorialize in such a blatant and biased manner that you alienate your audience. But apparently it's obviously my problem for recognizing your bias and trying to filter through the crap to get to the real points. Or, just prove me wrong by naming a country that doesn't use fiat currency or show me a publication from the SSA that states that everything you pay in, you will get back with gains. Because you implied both, and both are wrong, and you are either so biased you don't see how that's a problem, in which case I can't trust anything you say, or you don't know you are incorrect, in which you aren't smart enough to listen to. So go ahead, prove me wrong on either of those two. Otherwise your feigned offense at someone pointing out your ignorant bias being the reason you won't discuss FairTax will just be added to the long list of asses who are so drowned in dogma they can't intelligently discuss FairTax without abusing the intelligence of their audience.

Perhaps someday, when your income is high enough and you start paying serious taxes, you will finally understand.

I'm in the top 10% of income. Where do I need to be before I start understanding?

Re:Well for starters

[Jane Q. Public]

"Language exists to communicate ideas. You are purposefully using words in a manner you know no one else uses. That's lying. You are purposefully speaking in a manner designed to give a false impression in someone else. It doesn't matter if you believe it. No one else takes it the way you mean it, and you know it, so you are a liar."

What kind of BS is this? No, I was using terms in a way that I knew were different from the way YOU were using them, but I was not using them in ways that I "know no one else uses". I explained early on that meanings had changed over time, and in the case of at least one of them I was trying to explain to you how. But no, that wasn't good enough. Then, because you were complaining about my terminology again, I explained it to you all over again, without using those words. But no, that still wasn't good enough for you. And despite your repeated statements that you understood what I was saying, you have demonstrated time and again that you DIDN'T understand what I was saying. Just the fact that you keep bringing up the IRS shows that you really haven't understood at all. Yes, added value and realized value are part of it, to be sure, but are not the entire point.

If all you want to do is quibble over words, and call me names because you don't like the way I use them, then I have no use for this conversation. It was intended to be educational, but apparently you care nothing about the principle if it doesn't match your preconceptions.

For example: I stated at one point that "... labor, by itself, does not 'create' wealth or profit." Your reply? "Wealth and profit are unrelated. Wealth is a measure of liquidated value at current market rates. Profit is an arbitrary accounting definition that usually, as you indicate, require the sale be done before it is measured. They are distinct words which share little, if any, in common."

Did I say there that they were the same things? No, in fact by writing "wealth or profit" I clearly implied that they were NOT the same. Yet you saw fit to write a paragraph to lecture me about it anyway.

More: "Money is never taken out of the economy. Everything taken in by the government is immediately spent again and right back in the economy. They don't collect taxes and burn the money."

Well of course it doesn't just disappear. Did you honestly think I meant that literally? (In an economy that uses fiat currency, there are circumstances under which money can "disappear", but this is not one of them.) "Taking money out of the economy" is not a phrase I made up. It might not be technically accurate, but it is generally understood to mean that money is being taken away from the production side of the economy. And while it is true that the government spends the money, it often does not spend on things that are productive to the economy. Further, everything government does has an associated cost. So on an overall (net) basis, governments never produce, they expend. "Taking money out of the economy" implies that money is being taken from production, the net effects being to depress production, and motivation for production. This is all Econ 101 stuff.

And where did I "blame" the IRS for anything at all? I mentioned that they way they tax can be damper to the economy, but I did not say it was "their fault". (I am not stupid. I am aware that Congress makes the laws.) I do not recall stating that it was stupid, either, or even unintentional, although I did imply that I did not think it was good. I was simply pointing out that there IS a genuine economic difference between taxing labor and taxing profits. If you want to disagree with that, that's your business. But any 101-level macroeconomics (or even microeconomics) text will tell you about it. And I know that for a fact because while I am not an economist by profession, I was at the top of my class in all of my college economics courses.

In any case, that last paragraph

Re:Well for starters

[infinitelink]

Food isn't taxed in the U.S., by the way: Federal law exempts it. States can re-define what constitutes "food", to some extent, e.g. in Colorado they've defined candy as a non-food item, and also given a definition for candy, and are now taxing it, but for many items they could very likely be beat-up by the Fed for attempting to somehow un-define food as food when it's fairly obvious that it is. [Please note, none of my reply should be taken as tax advice, and in any event you have questions about tax issues or want to act on some information, you should consult with a real, certified, licensed, (or whatever legal designation exists in you jurisdiction for recognition of someone as a valid practitioner of law) legal practitioner of law.

Re:Well for starters

[Kevin108]

So, if you're poor and you have to spend all your income on rent and food, the fair tax hits you hardest.

How so, when the FairTax provides a prebate up the the poverty level for your household which will cover these expenses (unless you've chosen to live beyond your means)?

Re:Well for starters

[Kevin108]

Last, what happens to Social Security? This plan would remove FICA payroll taxes, but I assume that current recipients of Social Security checks would keep getting them.

The FairTax is revenue neutral. The federal government will still be provided with just as much money as it is now. That's not to say they won't bankrupt SSI anyway.

Re:Well for starters

[geekoid]

The IRS doesn't volentarily share your informaziton, One of two things happen:
the get a legal document from a court that says the must turn over some very spefic information, or the IRS goes through channel to get law enforcement help with a tax issue.

For example, you owe taxes and refuse to pay.

Yes, most illegal immigrant get a tax number and pay taxes. Something the neo-cons don't want you to know.

It make sense for the illegal immigrant to do because it shuts down a possible avenue for investigation.

Re:Well for starters

[geekoid]

You need to read up.
AL Capone had income he failed to report. at THAT moment, it means the IRS can go through legal channels and get the FBI to act as the enforces to a subpoena.

Had he paid taxes, it never would of worked.

SO if you get into a lot of money and don't want to report it, don't show up in the newspaper talking about all the money you have.

No oe said you can't get arrested for tax evasion.

Re:Well for starters

[geekoid]

No, you had to defend your innocence.

Learn the difference.

Re:Well for starters

[Man On Pink Corner]

The rich are the ones who need protecting from the poor rising up and taking what they have.
The poor are the ones that if they were much poorer would rise up and take what they need from the rich.

Perhaps in the pages of Marx and Engels this is true, but in this version of reality, most crimes of both property and violence are perpetrated by poor people against other poor people.

You could also argue that a subset of the rich, in the guise of bankers, brokers, and other nonproducers, are the ones doing most of the stealing from poor and rich alike.

Either outlook is a more realistic model than that bit of simplistic class-baiting goofiness.

Re:Privacy

[Anonymous Coward]

I believe you're under-estimating Facebook.

Re:"Research"

[noidentity]

Research also shows that people are more apt to give muggers with guns money, than someone merely asking for spare change.

Re:Privacy

[Nichotin]

In Norway, the tax department actually have people employed to surf the popular sites like Finn and QXL (auction/trading sites), and even blogs, to try to uncover tax evasion. One of the most popular bloggers in our country, which is a 14 year old girl nicknamed Voe, probably has to pay taxes because she recieves so many free products from vendors (who hope to get get free advertising).

1099's have been around for a long time

[Anonymous Coward]

So, what you're saying is that you've been avoiding/evading paying taxes in the past? The requirement for 1099s for $600 or more has been around for a long time. The fact that people are ignorant of the rules doesn't really change that. Yes, you as a payer now have a slightly increased paperwork burden to actually fill out the 3 boxes on the form (name& address, TIN, and dollar amount), but I don't see that it's a huge issue. It's not like there's a filing fee for the 1099s, and if you're *in business* then annual recordkeeping isn't a big deal, eh?

Re:1099's have been around for a long time

[LynnwoodRooster]

So, what you're saying is that you've been avoiding/evading paying taxes in the past? The requirement for 1099s for $600 or more has been around for a long time.

If you actually KNEW the law you would know that you only had to report for individuals who you paid more than $600 in a year. Not for companies (sole props, LLCs, or corporations).

This new regulation means that if you buy a $600 color laser printer from Office Depot you need to issue Office Depot a 1099 tracking that purchase. And if you buy gas at Costco for your travel to your clients you probably have to issue Costco a 1099 as well. McDonald's for the food you buy. United Airlines for the air tickets. NewEgg for the computer equipment. Apple for the two development iPads. And on and on...

Re:1099's have been around for a long time

[HiChris!]

This is not the case. The problem is the new law (1099-misc not the 1099-K) will require an extreme increase in paperwork. The $600 requirement is now for EVERYTHING you do - not just for salary and similar expenses. Make a purchase for something (goods or service) over $600 and you need to file paperwork - that means getting TIN for all sorts of places - hotels, office supply store, rent, and on and on. For a large company that electronically files everything - they'll simply hire a few people to take care of it. However the small business owner will have an exponential increase in paperwork. An estimate of the average number of 1099s a small business files is about 10-15 a year currently - under the new law this number for many small business will be well over 100 (and that estimate only included 1099s for services not goods so the actual number is probably more than double that). Even if each form only takes 10 minutes to file if the owner does it themselves that is 1000 - 2000 minutes a year (16 - 32 hours) many owners of small business already work long hours 60+ a week and an extra couple hours a month is ridiculous to put them through. If they pay an accountant or the like more money goes out of the business. In the US with the economy the way it is currently and unemployment the way it is - this could slow down hiring of new people and/or reduce incomes of business who have to hire someone to take care of it. Most of these businesses are complying with everything already - this is punishing the many for the (potential) fraud of the few. With the number of new IRS agents that will need to be hired - they'd be better off just enforcing the current laws and do some quick audits of suspicious businesses

Re:1099's have been around for a long time

[oddTodd123]

McDonald's for the food you buy.

If you are spending $600/year on McDonald's food, you have worse problems than mailing out a few extra 1099s.

Re:1099's have been around for a long time

[Golddess]

Uh, you realize that that is only $1.64 a day? I don't go there, but it sounds like just a coffee is $1.19. Throw in the occasional breakfast sandwich, or maybe lunch, and I could easily see someone surpassing $600 when they don't really go there that often.

Re:1099's have been around for a long time

[Hognoxious]

However the small business owner will have an exponential increase in paperwork.

Bollocks. What's the variable on the x axis?

Re:1099's have been around for a long time

[Golddess]

Actually, lets expand upon my previous post a bit.

$1.19 per coffee.
52 * 5 = 260 weekdays per year.
$1.19 * 260 = $309.40 spent on coffee per year.
$600.00 - $309.40 = $290.60 for other stuff.
Lets assume $5 per person per meal.
For just yourself, $290.60 / $5 = 58.12, so little over once a week. I guess maybe that could be considered a bit much. But add in your SO and maybe a kid, and that goes down to about 1.5 times a month ($290.60 / $15 = 19.37, or 1.61 per month).

I don't know about you, but that doesn't really seem like a lot.

Re:1099's have been around for a long time

[bws111]

Where do you see that in the law? According to the IRS website, the 1099-K will be issued by third-party payers (merchant cards, credit cards, etc) to the merchant saying how much they paid you during that year. So if you sell $1000 worth of stuff on eBay (in any number of transactions) and use PayPal to get paid, at the end of the year you will get a 1099-K from PayPal stating they paid you a total of $1000 dollars that year. No where does it say anything even remotely like individuals will be required to issue 1099-Ks.

Re:1099's have been around for a long time

[thePowerOfGrayskull]

So, what you're saying is that you've been avoiding/evading paying taxes in the past? The requirement for 1099s for $600 or more has been around for a long time. The fact that people are ignorant of the rules doesn't really change that. Yes, you as a payer now have a slightly increased paperwork burden to actually fill out the 3 boxes on the form (name& address, TIN, and dollar amount), but I don't see that it's a huge issue. It's not like there's a filing fee for the 1099s, and if you're *in business* then annual recordkeeping isn't a big deal, eh?

Erm - not quite. This has never been in place for purchase of tangible goods. This means that if your business buys $1000 in computers from CompUSA, you have to report it. If you buy $601 in paper clips from Office Depot, you have to report it.

Yes, you're tracking this anyway if you're doing proper bookkeeping; but small and medium sized business will now be responsible for including hundreds of new forms every year. Large businesses will be responsible for tens or hundreds of thousands, depending on how many vendors they do business with.

Already paid taxes on those items once before...

[Anonymous Coward]

We have already paid enough taxes on the stuff we already own. If tax paying citizens want to sell something that they have already had to pay a sales tax to get, we should be exempt from any further taxation on said items. Am I missing something here, or is this just another greedy stab from our darling government???

It's worse than it looks.

[John Hasler]

All businesses no matter how large or how small or informal will have to file a 1099 for every entity to which they pay more than $600 in payments for goods and/or services in a year. This includes everything: the part-time plumber, your landlord, the power company, Office Max, WalMart, etc. You are going to have to get Best Buy's TIN if you purchase a server from them. The average USA small business will need to file about 600 every year.

Re:It's worse than it looks.

[PPH]

will have to file a 1099 for every entity to which they pay more than $600 in payments for goods and/or services in a year.

...for every US entity to which they pay ....

If I purchase stuff from a foreign entity, there is no such requirement. What they earn is between them and their taxing authority. But that authority doesn't get me (the customer) involved in tracking these transactions. So, all other things considered, I'm better off buying my stuff overseas. Since 'my stuff' is software and online services, there are no added shipping costs. And I save all that time managing 1099 forms.

I see our online services business moving off shore in the near future.

Re:It's worse than it looks.

[LynnwoodRooster]

What will probably happen soon after the 1099K is in force will be that the IRS will disallow any business deductions for which you have not filed a 1099K, meaning you cannot deduct those overseas purchases, with the end result being reduced trade and a further collapse of our economy. And you'll file a 1099K for EVERY expense (note that right now you HAVE to file for any individual you paid over $600, but you can still file a 1099 for someone paid less than that amount; it's voluntary under the $600 limit, mandatory above). Perfect means of tracking every dollar spent by businesses large and small, so as to ease the transition to a VAT.

Re:It's worse than it looks.

[Anonymous Coward]

Im a lawyer and this is already happening. My IT clients are opening up shop in Canada right now to get around this very requirement. This country is shooting itself in the foot.

Re:It's worse than it looks.

[DavidD_CA]

While the law does give the IRS that ability, they haven't finished it yet.

There's a provision that says something to the effect of "paperwork as necessary, deemed by the IRS" and it's entirely likely that the IRS doesn't want small businesses submitting 100 additional 1099s every year.

But on the bright side, most small businesses should be using some kind of software to track their vendors/purchases anyway. This might be Quickbooks or whatever. That software will likely be updated by 2012 to crank out those 1099s in some sort of automated fashion. It might even have a "vendor database" which knows everyone's TIN and be able to submit it all electronically. Who knows.

And just for curiosity, I checked my software (Microsoft Money) to see how many business vendors I had in 2009 that were over $600. There were exactly 13. Granted, I'm a tiny one-employee service-based business, but that's hardly the "average" estimate you quoted above.

And let's not forget that this is *already* a requirement for services provided. It's only now being extended to goods.

Re:It's worse than it looks.

[PPH]

Well then, I could do the same thing. Work as a contract employee for an offshore corporation*. Have them handle all the purchasing, subtract expenses from the revenue for my services and pay me the difference. Of course, I'd report everything I was paid. Honest. But the home office has a bad habit of replying to IRS queries with, "Kiss my hairy ass". Not my fault. I have the utmost in respect for our taxing authorities. But my boss has a bit of an attitude problem.

*A number of engineering firms in my neigborhood have already gone this route. While they still have a local presence, all the money flows occur offshore.

Re:It's worse than it looks.

[TooMuchToDo]

You're not the only one. I know of several other business owners (I own a hosting/tech services firm) that have moved their credit card transactions out of the US. People will put up with byzantine regulations for only so long.

Re:Privacy

[Anonymous Coward]

You would think that the Supreme Court decision Roe v.s. Wade (which is normally applied towards a woman's "right to privacy" to have abortions) could be applied here. I don't tell my neighbors or friends how much I earn -- it is none of their business and something I consider private. I suspect just about everyone on Slashdot considers their income the same. Why should I tell the government how much I earn? This is especially the case when it has been shown time and time again that they can't keep things private. (Just look at how government employees got into "Joe the Plummer's private dealings with the government and released to the press how he owed back taxes as a way to discredit him.)

The government has no need to know how much you earn. There are alternative ways to collect taxes. For example, if there were a flat tax, it could be collected from the employer. An audit would simply consist of the IRS looking to see how much was paid in payroll and how much was paid in taxes and making sure that the numbers work. Deductions could then be handled by the individual sending in claims to the IRS who would send back a check for the appropriate amount. The only reason why the IRS needs to know how much you earn is to be able to make some people pay more in taxes than others. (Which I've always felt violated the "Equal Protection Clause" of the U.S. Constitution that holds that we are all supposed to be equal under the law.) A national sales tax too would keep the IRS from needing to know how much you (or anyone else) earns.

It is amazing to me that people hold that in the U.S. there is a right to privacy when applied to abortions but clearly don't feel that there is any sort of privacy when it comes to just about anything else.

Loophole / workaround

[bobdotorg]

What's to stop someone from having multiple eBay / PayPal accounts? Will keeping each of them under $20k or 200 transactions prevent reporting?

Also, how the hell is Craigslist supposed to do accounting for anonymous ads?

Re:Loophole / workaround

[fyngyrz]

What's to stop someone from having multiple eBay / PayPal accounts?

How about having to give your taxpayer ID number (SSN for most of you... yes, that same SSN they promised not to use for anything but your retirement accounts, you stupid suckers) to Ebay for starters. Then, when you try to open account #2, they say, oh, wait, we already have an account for that TIN, sorry, no more accounts for you.

Fake TIN/SSN? Jail.

Don't worry; while the government isn't bright enough to keep from screwing the citizens, it is bright enough to keep the majority of citizens from screwing it.

It's just going to keep getting more and more like this. They conned the public, and the supreme court, into giving up 4th amendment guarantees on privacy a long time ago -- no legal recourse remains.

Re:Loophole / workaround

[gnasher719]

What's to stop someone from having multiple eBay / PayPal accounts? Will keeping each of them under $20k or 200 transactions prevent reporting?

I don't know how the US IRS works; in the countries that I know that kind of action, when found out, would make you enemies in the IRS. And that is not a good idea, since nobody in the whole world is hundred percent correct in all their tax affairs, and by pulling a stunt like this you would make it obvious that any incorrectness on your part is not an innocent mistake but an attempt at tax evasion.

Re:Loophole / workaround

[John Hasler]

> What's to stop someone from having multiple eBay / PayPal accounts? Will
> keeping each of them under $20k or 200 transactions prevent reporting?

Yes, until you get caught, convicted of tax evasion, and sent to prison.

Maybe you won't get caught...

Re:Loophole / workaround

[Lando]

Just a brief note on the fake ssn comment. While you may go to jail for fraud if you use a fake ssn, make sure that you randomly make up a ssn and don't use a social security number of someone you actually know of, ie identity theft. Otherwise you'll get a heavier sentence.

http://techdirt.com/articles/20100520/0032159501.shtml

Re:Loophole / workaround

[fyngyrz]

English is one of those languages where one word, or a phrase, can include other meanings. From the fourth:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures...

It is very clear that this describes the people's right to not have the feds (and the states, by 14th amendment incorporation) look inside their houses; not look at their papers; not look upon their bodies; not look at their belongings. Those of us who speak English well tend to sum all that up as "privacy, invasion thereof." Perhaps you should read this.

Re:Dear IRS:

[meniah]

..and by not paying taxes, that makes you better? Everyone benefits from something your taxes pay for.

I'd just like to say

[Vinegar Joe]

Fuck the IRS.

Re:I'd just like to say

[corbettw]

Pretty sure there's a tax on that.

Re:I'd just like to say

[mcgrew]

That's illegal in most places; at least if you pay them.

It's legal to fuck your congressman's wife unless you pay her for it.

Re:I'd just like to say

[shadowbearer]

  Prostitution is already federally taxable IIRC. We need a new tax agency to apply that tax to the government.

SB

Sales Tax Makes No Sense

[SplicerNYC]

Well, it makes sense that a government entity wants more money but the logic of a sales tax escapes me. If I'm buying something, the person who is taking my money is making income and therefore paying taxes on it. So a sales tax is a tax paid by the buyer for the privilege of being allowed to buy something? Makes no sense.

Re:Sales Tax Makes No Sense

[rotide]

Not in all cases. I'm looking to start a small business and the number one advice/point that was drilled into my head by the small business assistance group was to make sure that I rolled all income into expenses. If you do this, you don't pay taxes on it. Yes, you still have to collect sales tax but _no_ income tax for the owner/business.

Basically, if I started a beach chair company I should take the proceeds to buy "business things" like new computers, car to transport me to the post office, etc and to take "research trips" and "business lunches/dinners" to offset the income.

You know, head down to the Caribbean to scope out the competition, potential distributors, etc.

Doing that I can basically take "free" vacations, meals, car, etc, but the downside is I can't have a wad of cash from selling my goods. If I want to have a wad of cash or put money into my personal savings, it's income and reported as such.

Again, business trips/expenses are not taxable.

So I literally could sell a million dollars of goods over the next year and report $0 income. That's not to say I didn't take a trip to Europe and eat out every day. And that new pickup in the driveway is a business vehicle. The business, on paper, would barely be breaking even, but I'd be enjoying life.

Re:Sales Tax Makes No Sense

[John Hasler]

> So I literally could sell a million dollars of goods over the next year and
> report $0 income. That's not to say I didn't take a trip to Europe and eat
> out every day. And that new pickup in the driveway is a business vehicle.
> The business, on paper, would barely be breaking even, but I'd be enjoying
> life.

Until they audit you, disallow all your "expenses" for the last five years, bankrupt you with penalties, and prosecute you for tax evasion.

In other words, it doesn't work that way. Whoever has been advising you is a liar or a fool. Yes, you can push the limits a little bit. Get caught at that and all it will cost you is lawyer and accountant fees and some fines. Push it as hard as you propose, though, and you could end up in prison.

Re:Sales Tax Makes No Sense

[will_die]

No, because after a few years, 2-3 IIRC, with no profit you are not longer a business the IRS classifies yours actions as a hobby.
There are additional rules on food and proving that the trips were business related.

Re:Offshores?

[meniah]

It does, though I don't see it being able to solve the problem. You still have to pay taxes being an American citizen. Oh, you mean evading being reported to the IRS by using an international 3rd party? Now you've committed a felony. Problem not solved.

Why is income reported twice?

[techmuse]

When you earn income from a job or investments, that income is normally reported to the IRS. But then you have to report that same income yourself. Why is the data not just sent straight to the IRS, which could automatically calculate your tax bill?

Re:Why is income reported twice?

[LynnwoodRooster]

It's called penalties and interest of which the IRS makes a good amount of income from. If you - or the person reporting on you - mess up then you've created a situation where you are subject to high fees and interest on the error. Unless of course you are a high placed Government official like Tim Geithner or Charlie Rangel. Then it's just a simple mistake and not a problem at all...

Re:Why is income reported twice?

[The Snowman]

When you earn income from a job or investments, that income is normally reported to the IRS. But then you have to report that same income yourself. Why is the data not just sent straight to the IRS, which could automatically calculate your tax bill?

Two reasons.

First, you don't know exactly what the IRS knows, so you are more likely to report everything, even stuff the IRS doesn't know -- the government makes more money. Second, and this follows from the first, it keeps people more honest and less likely to cheat.

Besides, do you really want to trust the government to calculate your taxes? The government wants all of your money -- it is in your best interest to prevent them from taking it, by any means legally possible.

Re:Why is income reported twice?

[rotide]

You lost me. First you state that the government doesn't really know how much you owe them (read: they are probably low-balling the figure) then you go on to say that they will charge you more than you're due; "government wants all your money".

It can't be both ways.

I'd rather the government take all the information that is already forwarded to them via work and they can just tell me what to send in (if anything). If they owe me, use the bank account I setup last year or ask for a new one.

Re:Why is income reported twice?

[DaveV1.0]

Because not all income is reported to the IRS in that manner. Cash tips, small gambling proceeds, money earned by self-employment, etc. are all income that needs to be reported but for which there is no reporting done.

If you start a side business teaching people how to use computers and it is a cash business, you are required to report the income and pay the income tax. The self-employed have to pay taxes and report income too, even if they only do it part time.

If you work as a drug dealer or prostitute or any other criminal activity, you are required to report the income and pay the tax. Al Capone was arrested for tax evasion, not murder, conspiracy, etc.

If you work as wait staff or pizza delivery or , you are supposed to report your cash tips.

Took a trip to Vegas and won $500 at the slots? You don't have to pay the taxes then, and the casino does not report it to the IRS. That is your job. The casinos only have to report wins over a certain amount.

The only way the IRS could calculate one's tax bill would be if the IRS knew everything you did and everything you earned, or if the tax law was simplified a great deal. The problem comes in during itemized deductions and deductible expenses. There are many things that can be deducted, such as business expenses, job hunting expenses, moving expenses, etc.
Drive your car for work? You can deduct some or all of gas, maintenance and depreciation.
Home office used solely for work? You can deduct part of your mortgage or rent.
New suit for job hunting? Deductible.
Continuing education? Deductible.

So, not all income is reported and not all deductions and credit are reported, so one is required to report everything to IRS when one files one's income tax form.

Understand now?

Re:Why is income reported twice?

[LynnwoodRooster]

Obviously you've never really dealt with the IRS! If they believe you had more income than you reported, then you did. It's up to you to prove you didn't, not up to the IRS to prove you did. They can seize every dollar you have, and legally lock down every asset you have (so you cannot sell your car or your house, or even get a loan against either) until you prove you are innocent.

.
I'm still trying to get the IRS to understand the 1065 they received in 2008 after I shut down my LLC in 2007 was the final 1065 and for the tax year 2007. The IRS is convinced I filed that 1065 for the 2008 tax year and never filed for 2007. And again, it's ME who has to prove I am right and innocent, not the IRS that has to prove they are correct.

Re:Why is income reported twice?

[John Hasler]

> If you work as wait staff or pizza delivery or , you are supposed to report
> your cash tips.

Actually, the IRS will impute an amount of tip income based on your wages and the type of restaurant. You will be required by law to pay income tax on that amount regardless of how much you actually received. The only way out is for the restaurant to have a strictly-enforced no-tips policy.

Re:Why is income reported twice?

[The Snowman]

You lost me. First you state that the government doesn't really know how much you owe them (read: they are probably low-balling the figure) then you go on to say that they will charge you more than you're due; "government wants all your money".

The IRS knows most of what you owe, but probably not everything. They could do the work for you, or have you do it and possibly report more. Plus, if you screw it up, they can hit you with penalties and interest, for even more money.

It can't be both ways.

The government wants as much of your paycheck as possible. The game here is that they can't just do that, they need to pass laws that are overly complex and halfway reasonable. This encourages people both to over report and to screw things up so they can get extra money, yet not be so pissed off they vote the scumbags out of Congress.

Re:Why is income reported twice?

[EmagGeek]

"Actually, the IRS will impute an amount of tip income based on your wages and the type of restaurant."

That is only true if you are an exempt employee (exempt from minimum wage, that is) and the restaurant pays you at less than minimum wage (on the assumption that tips make up for it).

Pizza delivery drivers are not exempt from minimum wage, and therefore cannot be subject to imputed income calculations. They are still, however, required by law to report all tip income and pay tax on it (not that any of them do).

Re:business opportunity

[Bysshe]

wow, paranoid much?

Taxes aren't evil - they pay for your lifestyle. If you don't want to pay them, get the government to spend less.

Umm. I wouldn't be opposed to them taxing

[melted]

Umm. I wouldn't be opposed to them taxing the _profits_, not gross sales. Particularly if they let me deduct the losses when I sell something for less than I paid for it a month ago.

Re:Umm. I wouldn't be opposed to them taxing

[gnasher719]

Umm. I wouldn't be opposed to them taxing the _profits_, not gross sales. Particularly if they let me deduct the losses when I sell something for less than I paid for it a month ago.

That would be what they will be doing. The point is that if you have $20,000 gross revenue then you have to tell them so they can calculate your taxable profits and tax you on them. Or possibly find out that you had no taxable profits. Like if you bought a car for $100,000 and sell it a year later for $60,000, you then have to report your sales, but you are not going to be taxed on anything.

Re:Umm. I wouldn't be opposed to them taxing

[Maximus633]

Until the IRS can tax you for all the good times you had in that $100,000 car.

Just a thought...

Re:Umm. I wouldn't be opposed to them taxing

[kramerd]

While you have been taxed on that car (through sales tax on the initial purchase, annual registration, upkeep of your driver's license, on every gallon of fuel you put into it, built into the price of your car insurance, etc), you won't be taxed on the sale of it due to this proposal unless you are running a business that buys cars from one place and sells them elsewhere.

Meanwhile, if you happen to be running an online car dealership, I promise you that you have been taxes before the 1099-k.

Re:Privacy

[0xdeadbeef]

Preventing me from cheating on my taxes is working against me?

I guess all laws that inhibit me from doing what I want are working against me.

About time!

[hackel]

Those people have been scamming the system for far too long, I'm very glad to hear this. Unfortunately they're still not doing enough to go after the mega-corporations and their thousands of tax loopholes.

Re:About time!

[LynnwoodRooster]

Unfortunately they're still not doing enough to go after the mega-corporations and their thousands of tax loopholes.

The people who are given the millions and billions of dollars by those same corporations and groups are the same people who write the tax laws to create those tax loopholes. It's called payback - you put your money down, you get your loophole.

Re:Offshores?

[LynnwoodRooster]

Hey, you can even try working overseas, living overseas every day of the year, but then the IRS still demands their cut, even if you paid taxes on it already in your new country of choice! Uncle Sam wants it all, no matter where or how you earned it, or even if you've already paid taxes on it two or three times...

I'm sure Goldman Sachs will thank you handsomely.

[Colin Smith]

Or should that be China?

I'm never too sure these days with trillion dollar handouts and trillions in national debt.

 

Re:business opportunity

[roman_mir]

Taxes pay for my lifestyle?! I am paying for my lifestyle, with all the work and all the bills.

Bankers, those get paid for their lifestyle from the Fed but not from taxes, purely from a money printing press.

Re:business opportunity

[Bysshe]

if you drive, you use roads. if you go outside, police are there to protect you (unless you're in LA, then they're there to brutalize you). your taxes are going to secure oil sources around the world. your taxes go to subsidize corn which is in nearly every product you consume.

Yes, your taxes go to your lifestyle.

Re:You don't sell on Craigslist; you meet in perso

[Plekto]

Not necessarily. A lot of businesses are forced to advertise in the "dealer" section for car sales. Expanding this to most of the other categories has been talked about by CL users for several years now, as they generally want to avoid businesses using CL as a source of free advertising. It would be fairly simple for CL to implement this and comply(at least on the surface) with the IRS' wishes. It would also reduce the spam by an enormous amount. As it is, you have to put at least half a dozen "-foo" modifiers in any search field to get rid of spam and junk.

Don't use our roads then.

[Beelzebud]

When you're on the run, don't use any roads, sidewalks, or anything else tax money pays for. If you do, you're just leeching off society for a free ride.

Re:Don't use our roads then.

[xmundt]

Greetings and salutations..
          Well, here in Tennessee, a vast majority of the road creation and maintenance is paid for by a $0.30/gallon (or so) fuel tax collected by the STATE, and, licensing fees collected from the commercial haulers. There are some federal subsidies, but, most of the federal money goes to the Interstate system...So...unless one has a Tesla, there is no way to avoid paying for the roads.
            Regards
            Dave mundt

Re:business opportunity

[gothzilla]

You mean they pay for other people's lifestyles, specifically the rich friends of politicians who recieved trillions in stimulus money and the lazy who feed off of the welfare system. If we stopped giving money to those two groups then everyone's tax burden would drop like a rock.

Re:business opportunity

[Beelzebud]

Yes because you are an island that brought yourself up without any intervention from society. I'm sure you've NEVER used anything paid for by tax money!

Noncompliance

[Iamthecheese]

It is trivial to make ten different ebay accounts with ten different pseudoidentities and keep the total for each under $20,000 a year. It is trivial to then transfer the money to one's real account.

Re:Cue all the teabaggers blaming Obama...

[tuxgeek]

I work with some of those tea baggers. Sometimes I can't believe the stupid shit they say & think

Never mind:
* The record national debt run up by Smirky & Snarly
* The national/global economic crash caused by 8 years of complete republican control
* 2 Unwinable wars in muslim nations for the benefit of the American multinational energy and military industrial complex corporations

disclaimer for the trolls: I hate all politicians and believe they all need to be dragged into the street and shot as traitors

Re:Change we can believe in?

[Improv]

Sestak criminal? Do you know something we don't?

Governments do useful things, and they acquire funding for that through taxes. Eventually, online goods and services were going to be taxed - everyone knew that. Nobody thought the state was going to just wither and die, leaving us an ugly return to barbarism..

and...

[fyngyrz]

...it will be trivial for them to demand your TIN, and jail you if you commit fraud.

They like to jail people. Done a headcount lately?

Re:and...

[fyngyrz]

Except we don't have an out of control government.

No?

Commerce clause? Ex post facto laws? Most of the bill of rights thrown out the window? Unjust wars? Insane debt levels? Financial system based entirely on an illusion? Judges asserting section five powers that there are no mention of in article three? Intellectual property laws that do more to deter innovation than to encourage it? Educational system that result in large percentages of the population indulging in rampant superstition, and largely unable to read, write or think at a level I'd accept for secretarial work, never mind the tiny (and largely wrong) collection of "facts" they bring with them? Have you noticed that almost our entire manufacturing base is no longer present and accounted for? I could go on - for pages - but it's pretty depressing.

Wait -- I should have asked -- do you live in the USA? Because that's the government I was speaking of. If you live somewhere else, you might, I suppose, have a government that's just fine. I doubt it somehow, but I accept the idea in principle. The US government, however, is an utter clusterfuck. You'd have to be the most servile kind of blinders-wearing sycophant to think otherwise.

Re:and...

[rubycodez]

http://en.wikipedia.org/wiki/File:US_incarceration_timeline-clean.svg

it's a big business, and also helps the ongoing transition to a police state.

Re:and...

[Man On Pink Corner]

Except we don't have an out of control government.

A content-free statement if there ever was one. Under any regime, no matter how oppressive, there will always be someone who will claim it's not "out of control" (yet), or that the electoral process still has the power to reform the system.

Your entire post could be replaced by two words: People forget.

Re:and...

[Improv]

Likewise, under any regime, no matter how friendly, there will always be someone who claims it is out of control.

The point of counterasserting it using the same words is to note the subjectivity of the phrasing - it's too easy to simply sop it up without thinking about it. Who says we have an out-of-control governmnent? Why? What do they mean by that? Is it a statement of fact or a slogan? Can they back it up? Are they just indicating that they're not getting their way?

My answer actually *is* that things are *not* out of control, that they're mostly the way they've been for a very long time, and that while we can certainly do better, things are not terrible now.

Re:and...

[shadowbearer]

  That is the sort of thinking that has brought the US to the point where it is. "We're better than everyone else!" ... except we're not.

  I would suggest reading Richard Shenkman's book "Just How Stupid Are We" as a starting point. As the GP says, one could literally go on for pages. Shenkman does.

SB

Re:and...

[Man On Pink Corner]

Who says we have an out-of-control governmnent?

It's always perilous to put words in dead peoples' mouths, but IMHO it would be quite a stretch to think that the authors of the Constitution wouldn't consider today's Federal government to be "out of control." You're right in saying that the founders were hardly paragons of justice themselves, but they did have some very definite ideas regarding the proper limits of central power, and we've strayed a long way from the path they had in mind. Fyngerz's original reply only hints at some of those departures.

Re:and...

[winwar]

"The US government, however, is an utter clusterfuck. You'd have to be the most servile kind of blinders-wearing sycophant to think otherwise."

Hyperbole much?

You lack historical perspective if you seriously think that the US government is the worst it has ever been. The only people that used to be able to vote in this country were white landowners. Slavery used to be acceptable. We committed systematic genocide of the Native Americans. There was no stable economic system in this country for much of its history. The bill of rights WAS thrown out of the window by Lincoln during the Civil War (hell, there WAS a Civil War). We have a large history of unjust wars including the The Spanish-American War and probably every conflict fought in South America. We detained a hundred thousand people based on their ancestry 65 years ago. Shall I go on?

The government is not out of control. It is merely doing what a large portion of the electorate wants it to do, as best it can considering that the electorate holds contradictory beliefs. Just because it is not what YOU want it to do does not mean it is unconstitutional or out of control.

Re:and...

[Improv]

Why would we care what the founders thought about governmental theory? We have their original system, and we've continued to evolve it just as all governments across the world continue to evolve. Should a Frenchperson care whether the Napoleonic code they use in modern times would be approved of by those that made the original?

Remember that the idea of centralisation of power was something they got very wrong from the start, and the reason the constitution was written was to try to fix some of the problems of the disasterous first government. There was a lot of discussion on the topic back then with a lot of debate - the founders were not of one mind. We're probably much closer to John Adams' vision for government, but closer to Thomas Jefferson's vision for society. On this issue, I think we should stay with Adams and try to gently reign in our Jeffersonian social tendencies (I know it's a loose analogy and the bits don't like up perfectly - if you're interested in history, no need to make that point).

Re:and...

[Man On Pink Corner]

Why would we care what the founders thought about governmental theory?

Um, because those thoughts, as encoded in the Constitution, are supposed to be the foundation for our laws?

Re:and...

[Improv]

We have their document, and we place a lesser reliance on their writings at the time, but we're not here to worship them. They're one of the few people who (mostly the same people, anyhow) got a second try after botching one go at a government. Them being dead now, it's ours to keep changing or abandon at our pleasure. We only really need to know or care what they thought, beyond the document, to give us context to interpret it (along with the rest of common law which provides more context).

Re:and...

[fyngyrz]

You lack historical perspective if you seriously think that the US government is the worst it has ever been.

And you lack discussion skills -- I didn't say that. I simply said it was a clusterfuck. And it is. It's been worse. And it's been better, too. Right now, it's at (one of several) serious low-water marks, though.

The only people that used to be able to vote in this country were white landowners.

Which would be useful, if the vote did anything but install hand-picked puppets for their respective parties, choices that the voters don't make, I might add -- the parties pick who stands and gets support, and you pick from there.

We committed systematic genocide of the Native Americans.

Well, not quite. We killed the ones that got in our way. The rest, or at least their descendants, are still here. So genocide is fairly hyperbolic in itself here. Definitely a low point. Of course, now we have a permanent criminal class, of which the native Americans carry a decent membership in. If you can't ruin 'em one way, there's always another in the wings, eh?

There was no stable economic system in this country for much of its history.

There still isn't.

The bill of rights WAS thrown out of the window by Lincoln during the Civil War (hell, there WAS a Civil War).

Well, it's gone again. Or hadn't you noticed? And this time, without the excuse of a real war, much less a war on our own soil.

We have a large history of unjust wars including the The Spanish-American War and probably every conflict fought in South America.

Yes, and we're cooking three of them now. Afghanistan, Iraq, and a pretend one here that's being used as the sandpaper to the wood of the bill of rights. In fact, there are precious few times when we aren't at war, and that should be cause for pause all by itself.

We detained a hundred thousand people based on their ancestry 65 years ago.

Actually, we detained them because their brethren-in-race bombed Pearl Harbor; It wasn't what their parents ever did, it was what their originating country was doing right then. Not saying it was right, but you'll do better if you actually understand what was going on. It wasn't racist; it was straight-up fear based. We didn't care that they were Japanese; we cared that their families were making war on us, and we suspected that these people might as well. Just as people look at US Muslims today with great suspicion. When a class misbehaves, we go after all of them. It's what we do (wrongly.) That's why we have a permanent underclass of felons today. We tar them all most thoroughly so we don't have to actually deal with individuals. Despite the fact that some of them are completely harmless. We really don't care.

Shall I go on?

Oh yes, please do. :)

The government is not out of control.

Yes, it is. It is operating well outside the bounds of its authorizing document; that is its only justification for anything it does, and therefore, it is running an an unauthorized mode, using powers not given to it, but usurped and coerced from the people. Wake up and smell the burning parchment, my friend.

Just because it is not what YOU want it to do does not mean it is unconstitutional or out of control.

It has zero to do with what "I want"; it has to do with the constitution saying "no, don't, shall not" and so forth, and the government going, "will, am, shall too." You can't hide the malfeasance -- it's plain as day.

It is merely doing what

Re:and...

[fyngyrz]

Even if we discard the entirely dysfunctional first government(s) the US had between the Brits and the Constitution, you'll find even our earliest forms of government to be hopelessly corrupt, not comitted(sic) to modern notions of equality, fairness, or civility.

I'm afraid you're confusing "I want it to be better than it is" with "it was worse than it is at some points." I speak from the viewpoint of the former; the latter is only of use as a means (rarely used, I admit freely) to learn how "not to do it again" from. History is something to contemplate calmly, and from a distance. The present reality is something we have to live in and frankly, it doesn't make any real difference at all if we had slaves in the 1800's -- it is far more important that people are being coerced today by the government. So forgive me if I don't rise to your "the past was terrible" bait. My point is today is terrible on its own unique terms, and needs fixes on many levels.

I happen to otherwise admire John Adams, but his behaviour (and Federalist behaviour in general) in struggle with Jefferson brought the US as close as it ever came to the witchhunts of the Reign of Terror in France (McCarthy in the 50s may be similar in some ways too).

Oh, we have our witch hunts today. Drug based, sex based, race based, felony based. Violence from the people, from the police, and organized ostracism (and worse) from the government and businesses. As I mentioned elsewhere, the creation of a permanent criminal class is a current area in which we're doing very advanced work both politically and socially. Oh, you forgot about them, eh? Most people do. Being as they're criminals, and all. Of course, the fact that a great deal of "criminal" activity is group A applying their opinions to group B (recreational drugs being an excellent example here, though certainly not the only one) and the fact that in other cultures, some of this "criminal' activity is perfectly ok, etc., doesn't stop the public and the government from permanently hosing those people's lives -- it doesn't even slow them down. Oh yes, witch hunts are alive and well.

Re:and...

[Improv]

So it looks like we're both in posession of the facts - that doesn't usually happen in discussions and I've learned that I can't assume it in a dicussion (IRL or online). I am aware of the modern problems you mention, I just maintain that we're better off than we were, and that compared to many other nations, were're doing quite well. Our only real competitors on that front are, IMO, western europe and Australia, not our own past.

My impression is that the "out of control" phrase is usually uttered by libertarians (or at least conservatives) who want to tear down society in a return to an idealised past that's distant from the real one. If you're just contending that we're differently bad, I probably don't disagree with you except in overall comparison. To me, a return to either the real past or the particular imagined one I've heard so much about would be a move to a world that's much worse. Provided we're not using backwards-looking phrases or methods, I'm open to changes that look like they'd bring benefit to society. I'm not so bothered by government coercion when it serves a good purpose - when it does not, I am open to adjustments (several of the topics you mentioned are areas where I'd also like to see change).

I'm happy to see phrases like History is something to contemplate calmly, and from a distance - I comment on Politico reasonably often, and while I occasionally articulate my own positions (a liberal/academic flavour of socialism), more of the time I try to either provide historical context to news stories there or criticise a lot of the knee-jerk responses on the stories there. I'm glad to have reasoned and intelligent discussions on these topics, so it's cool to have people like you around.

If you were actually in the same town as me, I'd invite you out to tea to discuss these things further - unfortunately it's a bit of a PITA to discuss these things at length in a forum. If there are some topics you really want to discuss further where you think we actually disagree (or you're curious if we do), let me know - right now, as far as I can tell, all we disagree on are possibly the overall evaluation/meaning of "out of control", and possibly a disagreement on government coercion.

Best wishes

Re:and...

[fyngyrz]

What you want is a chart that shows imprisoned folks as a percentage of the overall population. This chart is fine. Many other things have changed as well, and are not shown, such as draconian drug law implementation, sentence lengths, three strikes rules, and so forth. No chart can be reasonably approached without background knowledge of the area in question, including imprisoned folks as a percentage -- it still doesn't tell the whole story. Nor, I think, would any chart, because the more you add into the chart, the more it conveys a viewpoint, rather than raw data. I find the raw prisoner count more informative for that very reason. I just don't take it as the final authority on what is going on. If your complaint is that some people will... that'll never be solved. There will always be a level at which people simply don't understand what they are looking at. We're not, unfortunately, all created equal, and we're not all educated equally, either.

Re:business opportunity

[Bysshe]

The US enjoys one of the lowest tax burdens in the western world already. What you see as hugely wasteful (yes, the wars and the bailouts certainly were that) is a drop in the bucket compared to the taxes that actually go to things you use.

with a handle like gothzilla, you've obviously attended the public school system. That was also paid for by taxes. As is much of the medical research that has kept Americans from dying from McDonald's induced coronaries.

The lazy who feed off the welfare system are also just a miniscule percentage

A much much larger chunk goes to the retirees and their medicare.Example: "In 2004 Social Security, Medicare and Medicaid were 8 percent of national income." Taking an average 25% tax rate, that means 32% of your taxes went to these benefits.

Removing the two groups you just mentioned would not drop your tax burden in reality. It would just balance the budget and maintain what you have now... instead of what will happen in the near future: tax hikes.

Re:Already paid taxes on those items once before..

[jwdav]

For casual users buying and selling on eBay, especially selling at less thn first paid, I would agree with not paying taxes. This is targeting people operating ongoing online businesses that compete with offline businesses, yet pay no state, federal, local or sales taxes. Either all reselling should be tax free, or all taxed - what's going on now is unfair to businesses that do pay taxes & duties.

This that to cover on line sales / that don't get?

[Joe The Dragon]

This that to cover on line sales / that don't get taxed?

Re:Cue all the teabaggers blaming Obama...

[LynnwoodRooster]

* The record national debt run up by Smirky & Snarly

Which clearly is resolved by increasing the deficit by an order of magnitude...

The national/global economic crash caused by 8 years of complete republican control

I think Senator Tom Daschle (D - SD), Senate majority leader from June 2001 through January 2004 would disagree. As would Speaker of the House Nancy Pelosi (D - CA, speaker of the house from Jan 2007 to the present) and Senate Majority Leader Harry Reid (D - NV, from Jan 2007 to present). In fact, it seems that of those "8 years of complete republican control" about half of them saw divided Government.

2 Unwinable wars in muslim nations for the benefit of the American multinational energy and military industrial complex corporations

Which, apparently, the current Administration has decided to ignore and escalate, simultaneously.

We now return you to your partisan rant...

Politicians? Puppets.

[fyngyrz]

Politicians? They're just a manipulated subset. Go after the lawyers. That has the potential to actually solve the problem. Laws are created by lawyers, not politicians. Judges - inevitably lawyers as well - are the ones demolishing the bill of rights and otherwise turning government compliance with the constitution into a parody of the oaths they swear. Lawyers are the ones that have made the idea of intellectual property into a series of brick walls instead of encouragement to the citizens to innovate. Lawyers have made medical care both more expensive and more difficult.

Make sure you tear up the laws as well, and start over with some simple ones individuals and juries can understand. There's no real need for judges or lawyers. Juries are sufficient, given just a moderate amount of structure and a reasonable, simple set of laws to moderate.

Shakespeare's Dick the butcher was on to something. The fact that it was obvious then, as now, should provide at least a hint as to the basic underlying truth.

Is a man not entitled to the sweat of his brow?

[Phizzle]

"No!' says the man in Washington, 'It belongs to the poor.' 'No!' says the man in the Vatican, 'It belongs to God.' 'No!' says the man in Moscow, 'It belongs to everyone.'

Re:Is a man not entitled to the sweat of his brow?

[mcgrew]

Bullshit. You pay taxes to pay for highways, schools, cops, fire departments, and lots of other stuff that benefit YOU, and the more you have the more it benefits you. Like one guy's sig says, "I like paying taxes, with them I pay for civilization.

An attitude like yours smacks of sociopathy.

Re:Is a man not entitled to the sweat of his brow?

[Riddler Sensei]

Whoa, slow your roll. I reckon his comment was a joke as it's a direct quote from the beginning of Bioshock http://www.youtube.com/watch?v=CVR2gZANx10.

Re:Is a man not entitled to the sweat of his brow?

[Leebert]

You pay taxes to pay for highways, schools, cops, fire departments,

These examples are the first trotted out whenever someone complains about taxation in the U.S. So please, pray tell, what percentage of my taxes go to "highways, schools, cops, and fire departments"? And assuming there is no waste in those four (A ridiculous assumption, I might add), may we please complain about waste in the rest of government?

Re:Is a man not entitled to the sweat of his brow?

[mcgrew]

A lion's share of Federal taxes go for defense. Waste? Of course there's waste; the larger any organization, public or private, the more waste. But don't bitch about paying taxes, bitch about your taxes being wasted.

I'm particularly miffed at corporate welfare, IMO the biggest waste.

Re:Offshores?

[LynnwoodRooster]

Try China...;)

Re:business opportunity

[roman_mir]

this is a tired argument. Can we already take the roads away from the Fed because this argument is pathetic. People pay property taxes for a reason. If instead of paying taxes I was actually given choice of buying totally private and driving on totally private roads I would completely and totally do it. As it is, it's difficult to drive from point A to point B without crossing Some federal road.

Re:Cue all the teabaggers blaming Obama...

[Low Ranked Craig]

Most of the tea party people I know hate Bush only slightly less than Obama...

Having said that, the 2009 and 2010 deficits are almost 3 trillion dollars. The biggest deficit 2000-2008 was about $480 billion. So, while I believe that $480 billion dollar deficits are bad, $1.5 trillion is 3 times worse, and 2011 isn't going to be much better. The record debt under Bush looks very conservative compared to the actual 2009 and projected 2010-2012 budgets, and as usual the deficits are likely to be larger than the projections...

I hate all politicians and believe they all need to be dragged into the street and shot as traitors

That would be too good for them. I think stripping them of their power and assets and forcing them to get real jobs would probably be a fate worse than death for most of them.

Re:business opportunity

[roman_mir]

Oh, and I PAY taxes. I would RATHER pay user fees for every single thing in my life just to avoid this particular accusation. I would rather pay for private roads, private security and private fire department. I would rather NOT have FDA and would buy food from sellers who do not have to pay for government licenses. I would rather do a lot of things, too bad I am surrounded by people, who don't have any principles at all.

and...

[fyngyrz]

Governments do useful things, and they acquire funding for that through taxes.

They also do harmful things, and they acquire funding for that through taxes as well. This is one (of many) reasons that government powers and government funding should be severely limited. The main reason we have an out of control government is because they control their own funds, and now also their powers (the constitution no longer governs them.) Not only do they tell you how much you have to pay them, and how often, and why, and for what, and what words like "income" and "profit" mean, they can print money (via the banking scam), incur unlimited debt (stroke of a pen, no approval required), and spend it all any way they want -- and all without you getting a word in edgewise.

Legally speaking, you can't do squat about it. In the case of the US, that's the hallmark of a government that is not in the least responsible to the people who originally put it in place. That connection has been well and truly severed.

Re:business opportunity

[Cheech Wizard]

There have been off shore transaction processors for years. No really 'new opportunities' in this, but I'm sure more people in the US will use them than do now.

Start taxing drug dealers and make marijuana legal

[Joe The Dragon]

Start taxing drug dealers and make marijuana legal.

just think how much tax can be made from marijuana and how much law time that can free up.

Re:Just straighten this up

[DaveV1.0]

I see you are tired of having multiple levels of government and wish to abolish the state anf local levels. I am sure that will go over real well, especially when the federal government does not have the authority to do that.

Re:Start taxing drug dealers and make marijuana le

[DaveV1.0]

Summary execution for all drug dealers and drug abusers via a .45 caliber bullet in the back of the head upon conviction, retroactive to 1970.

Just think of all the tax money, prison space, and law time that can be saved.

Re:Change we can believe in?

[LynnwoodRooster]

Sestak criminal? Do you know something we don't?

You're right; Sestak didn't do anything criminal. The White House did.

Re:business opportunity

[jcr]

There have been off shore transaction processors for years.

Yep. The effect of this IRS action will be primarily to damage eBay's business.

-jcr

Re:You don't sell on Craigslist; you meet in perso

[taustin]

Craig's List has no knowledge of what transactions actually take place, regardless of what section. They do not know if a car was sold through the dealer section, or for how much, or to whom, or, really, by whom in many cases.

Re:Change we can believe in?

[NaCh0]

Let me break it down for you.

Who said the era of big government is over?

Who delivered the bribe to Sestak?

There ya go. HAND.

Re:Change we can believe in?

[Improv]

Quite possibly. Unfortunately, this is one of those laws that everyone ignores - most presidents from Regan to FDR have been involved in something like this, and there usually isn't even a scandal about it. Heck, with Reagan it was reported in newspapers and nobody made much about it.

It would be good to see tougher rules for what politicians can do like this moving forward though. I'm not too keen to see angry conservatives looking to regain face after being embarassed by widespread dislike of BushJr using this as a basis of a witchhunt, but it would be enormously healthy to see stricter ethics rules on political favours.

If there were a broad consensus from conservatives to liberals that we're ready to stop allowing this kind of thing, and that in the future we'll get involved whenever it occurs again, whether those involved are liberal or conservative, dems or repubs, then I'd be happy to support an investigation. If this amounts either to a standard that only democrats will ever be held to, or amounts to a witchhunt, I'll grudgingly accept the status quo and suggest we ignore it until there's a consensus to apply it fairly to everybody.

Re:Start taxing drug dealers and make marijuana le

[LynnwoodRooster]

If we had a $10 per joint tax, and 100 million people lit up every day, we'd reduce our national deficit by about 20%. Not much at all, really...

I'll go slow

[fyngyrz]

How is paying the same percentage of one's income hard on one person and gives a "huge break" to another?

I'll use 20% as an example. You can substitute any number.

If your earnings are low enough that with 100% of your income you are *just* paying the rent and food and utilities, and then they apply 20% taxes, you're screwed.

If your earnings are high enough that you can pay all those things and you have 20% left, and then they apply a 20% tax, you're simply ok.

If your earnings are high enough that you can pay everything, go to Maui and Europe, and drive (and insure) a Lamborghini and have 80% left over, and they apply an 20% tax, you're not only ok, you're golden, as they say.

That - in short - demonstrates how "20%" means something different specifically depending upon your earnings.

Fair: Tax purchases, not income; don't tax necessities (generously figured as X dollars of food per person, X kilowatts per person, X gallons of water per person, X number of square feet per person, etc.) Every person gets X in certificates good for those tax debts, rather than the usual money. Like food stamps; but water stamps, real estate tax stamps, etc. These act like money, but only in the domain they are meant for - when submitted back to the IRS by the appropriate vendors. Tax every other purchase. At the other end, absolutely separate government spending from government income collection and distribution; and disallow operating at a deficit, period.

Re:I'll go slow

[clarkkent09]

Way to ignore the process by which people come to earn money in the first place and just to focus on spending it as if it appeared in their wallet by magic. Btw, what kind of god are you to decide that all I need is to pay for "rent and food and utilities" and that means I'm "ok" and everything else above that is yours to take away by force and dispose of however you see fit (you being the government in this case)?

Re:I'll go slow

[Improv]

There are no gods. It is, however, a legitimate role of government to structure activity and rewards. I am not proposing (nor does our current system enact) a formula where everything beyond necessities is taken. The gradated tax system doesn't work that way.

No, dumbass.

[copponex]

Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore, advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle.

http://en.wikipedia.org/wiki/Keynesian_economics

The Keynesian experiment was back in the 1950s and 1960s, when the American middle class was the envy of the world. Countries like Canada, Germany, and France have Keynesian economies and strong government regulation, and are doing much better than the United States in terms of quality of life, external debt, and life expectancy.

In short, they are like parents who send their kids to college, but stop sending them money if they find out it's all going towards coke and hookers.

Here in the states, we've discovered the raging brothel, and continue to hand money over to corporations that do nothing economically useful with the money. The problem is not investment and full employment as a goal of government policy, but the corruption and colossal failures of American governments since 1980.

Re:No, dumbass.

[roman_mir]

Dude, Keynesian is an on going experiment. What else do you think all this money printing and borrowing is, that is then 'lent' to the banks at no interest? That's what it is, the goal is to provide the consumers with more credit and so they can take on more debt, just like the government is doing and buy more crap.

Keynesian is all around, it's all the cheap credit, it's the inflation, it's the creation of monopolies by government, it's the government 'jobs' that don't reduce the trade deficit by a penny.

Keynesian is all around when they say: "oh, this economy is doing better now, look, consumers are spending again". - what a cretinous thing to say. economy is about production, not about consumption. Any dunce and dolt can consume, wealth is not in money and not in money printing, it's about making shit people want to trade their useful shit for.

Canada is going to feel this, once US hits rock bottom more than other countries (more than Mexico I bet). Until Canada restructures their economy not to be dependent on the US by more than 80% of exports. France is having gigantic problems that will show up sooner than later, watch and see all of the printed money that was put into banks and lent to countries like Greece, why do you think the French pres. was talking smack to Merkel when she threatened not to give money to Greece? Because so much of the Greece debt was provided by France. France threatened to leave the EU, I say good luck, Merkel should have called the bluff.

Germany is unlike other countries in EU, it PRODUCES stuff people want. So what 'Keynesian' are you talking about in this case? It's much less than you'd believe, they don't borrow money to spend, they earn money to spend. Even their school education USED to be free, now it is NO longer the case, they will be paying over a thousand Euro starting this year per year of school, I am sure it'll have to go higher and higher and all due to all these Keynesian nonsense, that gave a green light to all these NON producing countries to take debt to cover their ever increasing social expenses by the government that can't be actually paid for.

Keynesian is wonderful if someone ELSE is footing the bill. Once they stop doing this stupid thing, watch the Keynesians crash and burn.

Re:No, dumbass.

[copponex]

What else do you think all this money printing and borrowing is, that is then 'lent' to the banks at no interest? That's what it is, the goal is to provide the consumers with more credit and so they can take on more debt, just like the government is doing and buy more crap...
Germany is unlike other countries in EU, it PRODUCES stuff people want. So what 'Keynesian' are you talking about in this case? It's much less than you'd believe, they don't borrow money to spend, they earn money to spend.

Consumerism is not the same thing as Keynesian. Germany just has better fiscal policy. It does not seek to balance the budget at the expense of investment every year as required by classical economic theory, but it does invest wisely and direct it's economy towards useful ends.

Here's the paragraph you need to read every time you want to assign some bad fiscal policies to Keynesian theories:

Keynes theory suggested that active government policy could be effective in managing the economy. Rather than seeing unbalanced government budgets as wrong, Keynes advocated what has been called countercyclical fiscal policies, that is policies which acted against the tide of the business cycle: deficit spending when a nation's economy suffers from recession or when recovery is long-delayed and unemployment is persistently high—and the suppression of inflation in boom times by either increasing taxes or cutting back on government outlays. He argued that governments should solve problems in the short run rather than waiting for market forces to do it in the long run, because "in the long run, we are all dead."

http://en.wikipedia.org/wiki/Keynesian

There are some lessons we cannot afford to learn every generation, and our economic system is no different. We don't throw away science every 40 years because that would be enormously wasteful. The only way to pass on this knowledge about the cyclical, irrational behavior of unregulated markets is through government policy.

And, as an additional exercise, find the first country on this GDP per Capita list that does not have a Keynesian oriented economy.

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita

I look forward to your response.

Re:No, dumbass.

[roman_mir]

you are mistaken.

The market is not irrational in having business cycles, there is nothing irrational about eating and then taking a dump, is it?

Business cycles are exactly what is needed to keep economy healthy, the boom becomes a problem, just like overeating, and a bust is the solution of the problem - taking a dump and detoxing.

Boom ends up producing too much, creating jobs that should not have been there. As an example I will use the Internet dot com bubble. Would you argue that it was good for economy to have all those HTML 'coders' create websites with loaned money to buy pencils at a dollar and then sell them at 50% loss on the Internet? Of-course they would 'make it up on volume'.

If you don't understand how that is a boom, which leads to market being saturated with unneeded jobs (fat) and it is in a need of a correction, then I can't argue with you. The people MUST lose jobs, some companies MUST fail and some lenders MUST go under and prices on consumer items MUST deflate. This keeps the lenders and companies honest and gives the consumers time to think over their expenses as well.

Do you call that irrational? Calling it that is irrational from my perspective.

You are also wrong on the Keynes. It is all Keynes ideas of keeping the Bust out of the economy that is happening and is leading to over-consumption, and it is precisely for the Keynes ideas that government must keep the boom going and must not allow bust to happen.

Why would government want a bust? Government is a disease of the society comparative to hypertension and obesity and diabetes, that's how society gets sick and dies. It is also an economic burden, it is not a productive force. Government hates the bust portion of healthy economic cycle because it forces government to shrink.

To avoid the bust, the government prints money and borrows and in fact if it actually was able to take 100% of all personal incomes, it could not cover its expenses at this point - that is not just a chronic, that is a disease in acute form.

It's like trying to prevent someone, who overate from relieving themselves, the consequences could be very bad - intoxication and death (maybe an explosion even, ouch).

Just because so many governments of the world have adopted this Keynesian idea does not make it right, it is wrong, just like slavery was wrong even though accepted by a majority.

Re:No, dumbass.

[copponex]

The market is not irrational in having business cycles, there is nothing irrational about eating and then taking a dump, is it?

Wow. You are now literally talking shit.

If you don't understand how that is a boom, which leads to market being saturated with unneeded jobs (fat) and it is in a need of a correction, then I can't argue with you.

You can't argue with me because you are basically ignorant of economic theory. You think you know what things are called, but you have no idea how they are applied.

The people MUST lose jobs, some companies MUST fail and some lenders MUST go under and prices on consumer items MUST deflate. This keeps the lenders and companies honest and gives the consumers time to think over their expenses as well. Do you call that irrational?

There is nothing in that statement that conflicts with Keynesian theory. Keynesian theory suggests that counter cyclical investment and changes to the interest rate will soften the booms and the busts, and it did, from the late 1930s until the 2000s. There was consistent economic growth mixed with recessions. Before deregulation in the 1980s, the middle class grew from the 40s through the 70s, and income equality improved. After the regulatory agencies were gutted and left to die, and the unions were virtually dismantled, income equality went down, inflation went up, and then the American manufacturing sector was dismantled and moved overseas. CEOs went from making around 100x their average employee in the early 80s to 300x their average employee today.

It is all Keynes ideas of keeping the Bust out of the economy that is happening and is leading to over-consumption, and it is precisely for the Keynes ideas that government must keep the boom going and must not allow bust to happen.

Read above. You either refuse to understand Keynesian theories, or you are too stupid to comprehend them.

Why would government want a bust? Government is a disease of the society comparative to hypertension and obesity and diabetes, that's how society gets sick and dies. It is also an economic burden, it is not a productive force. Government hates the bust portion of healthy economic cycle because it forces government to shrink.

You think the government has a mind of it's own, just like the market? You cannot anthropomorphize large complex systems to be good or evil and be taken seriously anywhere but on an internet forum. If you think there's some institutional bias, then you need to provide some evidence for your claim, besides the flat repetition of "Government bad." If that were the case, strong states wouldn't dominate the world economically. Somalia would be the paradise of Africa. Please try to stick with reality.

in fact if it actually was able to take 100% of all personal incomes, it could not cover its expenses at this point

You're fucking lying. The GDP of the United States is far larger than the Federal Budget. We're not even at a historical high for external debt versus GDP. That spiked at 120% during WWII. I think we're around 100% now, which is bad, but is also the world average at this point in time.

Just because so many governments of the world have adopted this Keynesian idea does not make it right, it is wrong, just like slavery was wrong even though accepted by a majority.

Every country did not adopt Keynesian policies. The ones in South America who had the Chicago school of economics forced down their throats are doing very poorly, except compared to the countries ravaged by war or without any natural resources. They have not done nearly as well as the Keynesian states.

Re:No, dumbass.

[roman_mir]

Wow. You are now literally talking shit.

- just switching to terms that you can understand.

You can't argue with me because you are basically ignorant of economic theory. You think you know what things are called, but you have no idea how they are applied.

- this statement is void of any content.

There is nothing in that statement that conflicts with Keynesian theory. Keynesian theory suggests that counter cyclical investment and changes to the interest rate will soften the booms and the busts, and it did, from the late 1930s until the 2000s

- at the expense of creating long term imbalances in the system that will end up killing the economy.

There was consistent economic growth mixed with recessions.

- despite and not because of the central economic planning done by the government based on the Keynesian ideas. The consistent growth, which started after the WWII and continued until the collapse of the USSR allowed the markets to become globalized. The nineties were a disaster, many people say that Clinton was 'good' for economy, my opinion is that he was terrible with Greenspan fueling the bubble that burst around 2000.

Before deregulation in the 1980s, the middle class grew from the 40s through the 70s, and income equality improved.

- whatever. You are missing the elephant in the room, the globalization of the economy due to the softening of the cold war and then the collapse of the USSR, which was the major factor in the fall of the US economy as well. US economy was a much more closed system and too much of the 'growth' was due to the military industry, which, in my not so humble opinion is just another burden on the economy and not anything that is productive. Bombs blow up, and you build more, but who needs your bombs? People need iPhones more than bombs.

After the regulatory agencies were gutted and left to die, and the unions were virtually dismantled, income equality went down, inflation went up, and then the American manufacturing sector was dismantled and moved overseas. CEOs went from making around 100x their average employee in the early 80s to 300x their average employee today.

- you got it all mixed up. The government Created the Monopolies by propping them up with free money and by blocking any real competition with regulations. Once Monopolies grew big enough, then they bought the Government. At the same time the world globalized due to the collapse of the USSR and this allowed movement of the jobs to China, which does not have the regulations on environment of-course, but more importantly they don't have unions or minimum wage laws.

Chinese can produce cheaper and the Government created Monopolies took advantage of this fact in a way, that medium/small business never would be able to. Government taxation, regulations and free money to preferred monopolies and special tax provisions for the monopolies killed competition and the small/medium size business, so don't complain when the government created monopolies moved their production (since you like the government interfering with economy), they are economies of scale, unlike small business, which could not have gained as much from moving production to China.

Read above. You either refuse to understand Keynesian theories, or you are too stupid to comprehend them.

- and you have got an asshole in place of a mouth.

You think the government has a mind of it's own

- sure, it's brainless.

You cannot anthropomorphize large complex systems to be good or evil and be taken seriously anywhere but on an internet forum.

- why are you talking to me?

If you think there's some institutional bias, then you need to provide some evidence for your claim

- evide

Re:No, dumbass.

[Apple Acolyte]

Dumb ass indeed. You seriously believe that Socialist Western Europe is better off than the United States? Have you heard of European states like Portugal, Italy, Greece, Spain that are in sovereign debt crisis and failing because of their Socialist welfare states? Have you seen the value of the Euro lately? It's not done declining, by the way. Have you heard of Great Britain's sovereign debt crisis? Give me a break.

And yes, before you say it, I know that the United States has a huge looming sovereign debt crisis of its own, but that's due to the US attempting to emulate Europe. It's due to enormous governments at the federal and state levels, due to the Socialist Entitlements regime put in by two of the worst presidents in American history, FDR and LBJ, may they rot. The financial fraud perpetrated on the American public by Socialist Insecurity and Medicrap make Bernie Madoff look like a minor leaguer, yet all your beloved Democrats and Socialists want to do is to grow the unsustainable Socialist state even further. And you heard about our banking crisis in that hovel you reside in, right? In large part it was due to progressive pressure politics, the CRA and crooked Congressmen like Butt Pirate Barney Frank, who was literally in bed with the Socialist lending institutions Freddie and Fannie, declaring them to be financially sound right before the crisis hit.

Dude, I hope you're a troll because if you truly believe what you wrote, you've got to be one of the most pathetically moronic, deluded saps around. Seriously, look into a brain transplant.

Re:Cue all the teabaggers blaming Obama...

[Anonymous Coward]

The tea party is half Ron Paul libertarian, half Sarah Palin neo-conservative, which is why its doomed to fall apart as soon as they have to take a foreign policy position.

Also, be careful comparing "budget" numbers, as Bush & Congress were running both wars outside of the budget.

Re:Change we can believe in?

[Improv]

What does Sestak have to do with tax policy and government size anyway?

But.... but...

[Petersko]

Somebody could have a big income, but spend like a person with an avereage income. How will you disproportionally punish him for doing well?

Re:But.... but...

[AK Marc]

How will you disproportionally punish him for doing well?

Apparently taxing someone in accordance with their ability to pay is "punishment."

Re:But.... but...

[bkpark]

Somebody could have a big income, but spend like a person with an avereage income. How will you disproportionally punish him for doing well?

Why, by running high inflation and heavy regulation & taxing of businesses.

High inflation ensures that this big miserly border-line treacherous criminal will lose any money he saves in banking account, etc, forcing him to invest that money into businesses, if he wants to maintain the value of his money.

Once you've forced him to put the money into businesses, then you take the money from the businesses with various fees and what-not. (Some tweaking and fixes will be necessary, such as banning of owning gold and silver by members of public, as well as a ceiling on interest rates banks can pay on savings, but the general idea remains the same.)

There are many, many ways to "spread the wealth around" even without a progressive income tax. Progressive income tax just makes it easier.

Re:But.... but...

[CodeBuster]

I suppose that you simply...wouldn't. Of course, that is anathema to the social progressives on the left who desire, among other things, forced redistribution of income.

Re:But.... but...

[Yoozer]

Perhaps by asking him to contribute his share to society, because the most likely way he got to be in that position was because he could draw on a pool of sufficiently educated workers, a factory that was up to code, safe machinery, and a decent infrastructure.

Re:But.... but...

[Captain Centropyge]

Being taxed a larger percentage of income just because you earn more is ridiculous. The only purpose this serves is to even out the distribution of wealth. To take from the rich and give to the poor. It sounds good in theory, but is really just a dick move.

Make $20k/yr? Oh, that's okay. You can't afford to pay taxes. (And I'm okay with people in poverty not paying taxes, for the record.) But, make $1M/yr? Yeah, we'll just take half of that, thanks! That IS unfair. Just because they can afford to pay more (which, by definition, would be true simply because they have more disposable income) they SHOULD pay more? I think that's taking "all men are created equal" in a completely wrong direction.

Re:But.... but...

[AK Marc]

Being taxed a larger percentage of income just because you earn more is ridiculous.

Yet, as far as I can tell, every government with income tax (and that's most, if not all of them) does it. So it's everyone else on the planet that's ridiculous, and you are the only sane person out there.

The only purpose this serves is to even out the distribution of wealth.

I try to stay away from words like "all" "never" and "only." All it takes is one simple statement like "One purpose of targeting the wealthy with a higher percentage of tax is that their ability to pay is not linear. That is, a poor person that makes $1000 dollars a year getting charged a 50% tax is left to live on $500, making it a real financial hardship, and a person making $1,000,000 a year living off of $500,000 has a much easier time of it." That's not about "redistribution" but about making the impact even, and the impact being even means having to have variable rates. Ooh look. You gave an absolute, and now are proven wrong. What's best is I can even be wrong about the effects. You stated the "only purpose" is wealth redistribution, and there are lots of other purposes, even if they aren't actually achieved. If you said "the only effect is ..." Then my argument would be insufficient, or if you said "the main purpose ...", again, my argument would be insufficient. But thankfully, you are so full of dogma that you think is blind absolutes of purpose (everyone's out to steal from the rich or whatever) so proving you 100% wrong is trivial.

Just because they can afford to pay more (which, by definition, would be true simply because they have more disposable income) they SHOULD pay more?

You complain about people paying what they can afford. Are you really arguing that you think people should pay more than they can afford? How will that work? When it comes to feeding their children or paying taxes, what do you think people will do if given the choice? Why would you put them in that situation when there are others with a greater disposable income? In theory, they are trying to tax people a percentage of their disposable income at a flat-ish rate. Why are you opposed to taxing people on their ability to pay, and instead punishing people for being poor by taxing them beyond their ability to pay?

I think that's taking "all men are created equal" in a completely wrong direction.

Everyone is equal. If the poor person wins the lottery or a rich person wins the lottery, they'll be taxed the same. People are being taxed based, not on raw income, but on their ability to pay a portion of that income. That's equal. But you want to tax the poor at a greater portion of their disposable income. Let me guess, you think they are poor by choice and if they just worked harder they'd be rich? Since it's their fault, then who cares, right?

Re:But.... but...

[Captain Centropyge]

You make a lot of assumptions in your post about me.

1. Governments have tax brackets because it's a patchwork solution for a system that didn't work. People cry and whine about what's fair and not fair, back and forth, and this ends up as a compromise. But there are way too many loopholes for rich and poor to make anything work because of all the patches to the system. Yes, they have tax brackets, but that doesn't mean they are the best system for taxing the people.

2. I don't have a problem with helping the poor sustain themselves with some government benefits. My issue is that people like you say, "he can afford to have more of his income taken away, so it's fine." No, it's NOT fine. Whether you earn $50k or $1M, I see no reason to go money-grabbing from the rich simply because they can afford it. Do I wish I was rich? Hell yes. But with something like flat tax or Fair Tax, the rich will end up paying more in taxes than poor people anyway. If there were a flat tax of 20%, rich people pay more. If there's a national sales tax, rich people will still pay more. They tend to spend considerably more than poor people do.

3. You're implying I'm saying that people should pay more than they can afford. That's retarded. Again, poor people will always get breaks on taxes and such. My point was: just because I can do just fine if you snatch an extra half-million dollars from me in taxes doesn't make it right to do so. All you're doing is taking more from the rich and giving it to the poor in tax breaks and gov't programs. Again, distributing the wealth more evenly.

4. Again, poor people will always get tax breaks. No one wants to drive people into starvation and crime because they cannot live on what they earn. There will be rebates, exemptions, stamps, etc. My issues are less with the poverty-stricken, and more to do with the huge distinction between middle and upper classes when it comes to income taxes.

Re:But.... but...

[AK Marc]

You make a lot of assumptions in your post about me.

Name one, and state whether it's correct or incorrect.

Governments have tax brackets because it's a patchwork solution for a system that didn't work.

If it doesn't work, why does everyone use it? How can you say it doesn't work when it's obviously in place just about everywhere and working just fine?

My issue is that people like you say, "he can afford to have more of his income taken away, so it's fine."

Then you have a problem with every government on the planet and 99% of the people. And you state it like it's somehow me that's the one that's arguing the unusual position.

No, it's NOT fine. Whether you earn $50k or $1M, I see no reason to go money-grabbing from the rich simply because they can afford it.

So you'd prefer to tax those who can't afford it? I don't get what you want and why. Perhaps the reason you think that I make assumptions is because you say nothing.

Let me make it clear. Please post your personal beliefs of how taxes should be levied, and if a dramatic difference from every taxation plan being currently implemented, please tell me what effect you think it will have on the economy and the standard of living. Since you just whine about taxes but don't state how we should be collecting $2,000,000,000,000 from just under 150,000,000 people, I'd like to hear your plan so I can't have any incorrect assumptions about your plan and thoughts on that plan.

You're implying I'm saying that people should pay more than they can afford. That's retarded.

You said that charging people more because they can afford it was bad. Since you don't want to charge those who, in your words can afford it, that only leaves charging those who can not afford it. After all, since you aren't charging taxes to those who can afford it, who else is left?

My issues are less with the poverty-stricken, and more to do with the huge distinction between middle and upper classes when it comes to income taxes.

You've stated you'd like to become rich (or something to that effect). Wouldn't lower taxes on you as you earn your wealth make that easier? You are advocating something that's going to stop you from doing what you say you want. That just seems silly to me. And, from where I sit, unless you consider $20k per year "middle class" the middle class is the class bearing the brunt of the taxes. The rich don't pay taxes. Billionaires pay a much much smaller portion of their wealth in taxes than anyone in the middle class. Yes, their tax bracket on earned income is higher than the people working for a living, but the rich don't work. They invest. And they pay taxes on that equal to the poor people. They are in the lowest bracket for the majority of their income. Evidently you don't understand how taxes work and who pays what. I'm in the top 10% of wage earners and pay less than 10% in federal taxes. All the taxes I pay, including multiple pieces of land with taxes on them, and Social Security and sales taxes and such come to under 20% of my income. I know the rich aren't taxed, because I'm called rich, and I don't pay much in taxes.

Re:But.... but...

[Captain Centropyge]

Unfortunately, as it stands right now, no tax system is going to help pay for everything the government is spending, so it does no good for me to argue with you on that point. Maybe when politicians stop spending money like it grows on trees (in mints?)..?

Again, I said nothing of taking more money from the poor to even things out. The other proposed tax systems have a significantly lower cost to run than the current system does. That right there should help considerably. The serious amount of waste in the current tax system is a big part of the problem.

And how can you say the rich don't pay taxes? Perhaps the super-rich don't pay a good PERCENTAGE of their income in taxes, but they do pay quite a bit in taxes. (They also pay their tax agencies a lot to find loopholes, I'm sure. That doesn't help.) But the "rich" as the government defines it certainly pay quite a bit in taxes. The only way you can say that the middle class bears the brunt of our taxes is because it's the largest group of taxpayers.

If you want to take money from anyone, how about taxing corporations a bit more? They have more loopholes to escape paying taxes than anyone.

Re:But.... but...

[AK Marc]

Unfortunately, as it stands right now, no tax system is going to help pay for everything the government is spending, so it does no good for me to argue with you on that point.

Well, if you are purposefully arguing something that is impossible in the present conditions, then we might as well go back to arguing that excise taxes should be used to pay for everything. After all, that worked for 100 years, why not now?

Or, as others have said, "wealth" is the real value people should be taxed on. The government protects you, and income isn't correlated with protection of property as much as real estate holdings are. So just repeal the income tax and tax real estate to generate the income for the US. That's completely flat. You volunteer to pay for taxes by buying land (or, as the nutters will say, since it can be seized for non-payment, you are merely renting from the government, but whatever they like to call it, I'm ok with).

So if we are looking at unrealistic taxes, we might as well explore everything. But for balancing the budget, all we need to do is raise capital gains to a higher bracket (mid to high 20s) and tack on a couple percentage points to all the brackets and we'd have a balanced budget. It would hurt the economy (as all massive tax increases do) but it would balance the budget without any more than a tweak of the current system. So I don't even necessarily agree that we couldn't collect enough for current expenses.

But then I also hear and understand your point, in that if the government was as small as it was in the mid 1800s, then we wouldn't need anything more than excise taxes to pay for it, so we have more funding choices if the government were small.

If you want to take money from anyone, how about taxing corporations a bit more? They have more loopholes to escape paying taxes than anyone.

And here I'd have guessed you as one of the "repeal corporate taxes and levy them only on personal income" people. That's the Fair Tax stance. Personally, I'm all for levying tax on corporations at a rate of 1% of gross receipts. Screw deductions. Screw "net income". Screw all the work arounds they make up. For every dollar you touch, send $0.01 to Uncle Sam. They want to be "legal persons" so we should treat them as such. Threaten them with "personship" under the IRS tax code, and if they don't like it, hit them with something like the 1%. I'd like to see them file income taxes like a person, where they end up paying in the personal rates. But that would send a large number of corporations under, as they've structured themselves in very specific ways to avoid taxes in the current setup.

Many of them even manage to avoid paying taxes at all. They work themselves like a multi-national corporation, and the profits hit the books of companies that don't do any business in the US, while the US branch makes zero profit. I've heard (and I don't have the references here, so don't bother asking) that some "American" corporations have more than a billion dollars in real profit per year and don't pay a penny to the US government.

But the "rich" as the government defines it certainly pay quite a bit in taxes.

The government defines "rich" in a manner unrelated to anyone else. Most people define "rich" as wealthy. The US government defines it as having high income in any particular fiscal year. I know no one else who uses that definition. "Lifestyles of the Rich and Famous" didn't have a retrospective on the lottery winners that got $5,000,000 in one year, spend $6,000,000 in the next 5 years, then declared bankruptcy and ended up worse than they were before they won (and, last I heard, a sizable percentage end up worse than before winning shortly after winning - perhaps it has something to do with playing the lottery being fiscally irresponsible, and putting that much cash in the hands of someone fiscally irresponsible is a bad idea). There are a couple magazine articles every year about those with the most i

Re:But.... but...

[Captain Centropyge]

It seems we're more on the same page than previously believed. I'll admit I get a bit defensive at times, and it's tough to guess inflection through words on a screen. You've apparently done more research into the tax world than I have, what with well-thought-out and sensible arguments. I assume we can both agree there are considerable flaws in the current system. It's just a matter of how to go about fixing them, without causing all sorts of other problems. Well-played, sir. :)

Re:You don't sell on Craigslist; you meet in perso

[kramerd]

Yes, but cars generally have VIN numbers and registration. Even a used car dealer is going to have a hell of a time hiding the fact that they sold a car (after all, if its still in their inventory and not reported stolen, how will they explain that it was involved in an accident 5 states away?).

Re:Cue all the teabaggers blaming Obama...

[RightSaidFred99]

Yeah, the debt run up by Dubya was a pittance compared to what's going to be run up by the Democrats this cycle. The numbers they _lied_ about were ridiculously high, the real numbers will be insane. You think the cast of Dubya's 8 years was a snaggle toothed bunch of villains? Wait until you see the extent to which these current scoundrels have lied about how much all this shit they're doing is going to really cost.

It's even funnier when left wing nuts blame the Republicans for the housing meltdown than it is when right wing nuts blame the Democrats and CRA. It was a bubble - just like the Internet bubble. Sorry, lefty, government is not the solution to all of our problems.

2 unwinnable wars? Maybe. One of them was legitimate (Afghanistan), one questionable. I think Dubya was a liar too, but my viewpoint is softening on the old scoundrel a little bit. Iraq might have been some plan to create a battlefield with Al Qaeda that was well away from US civilians. Draw them to us where we can fight them at least a little more on our terms. I don't know - they sure as shit lied about it, whatever the real reasons. I think the "durr, it was for multinational evil corporations" screed the left wing loons rant about is a bit facile.

Re:a few small words

[RightSaidFred99]

Cackle all you want. I mean, how could the IRS ever get details on electronic transactions you make, amirite? It's just inconceivable! that the IRS would ever catch these sneaky Robin Hoods, huh? Right....

Second, I agree with a flat tax of some sort but it will never happen. The rich pay the majority of the taxes in this country and it's harder to soak them as much if you go to a flat tax. The left wing will never go for it.

Re:Cue all the teabaggers blaming Obama...

[jimbolauski]

Most of the tea party people I know hate Bush only slightly less than Obama...

It's not that they hate him it's that through his poor leadership Obama was able to get into office based on warm tingly feelings instead of platforms.

Lots of unwarranted hysteria here...

[dals_rule]

There's no reporting requirement for individuals --- Payment processors like Paypal will have to report on their customers who have more than 200 sales transactions that account for more than $20k in a year. The assumption is that anybody clocking those sorts of numbers is probably running a business and should be reporting the income and expenses already. The only people adversely affected will be those who are not reporting their sales on their 1040 or Schedule C forms because the IRS will be able to cross check their reporting with that of their credit card processors.

Re:business opportunity

[zippthorne]

Woah woah, No FDA at all??? Or just no FDA? 'Cause I rather like the idea (in principle) of an organization whose stamp on a food product means, "it is what it says it is" and/or "won't kill you if eaten"

Re:business opportunity

[zippthorne]

8% is very difficult to believe, considering they took 14% off of all wages below $87.9k. I guess that leaves non-wage earnings making up the difference, but that tends to be weighted toward the already-wealthy...

Re:Privacy

[brit74]

The IRS wants to know all about your online transactions.

No, they don't want to know "all about your online transactions" - they just want to know the amount of money someone is earning *if* they're earning more than $20,000 / year. They don't know what you're buying/selling, and they don't care if you're a casual buyer/seller.

And unlike Facebook, the IRS will definitely use the information against you.

Yeah, I know. They also demand to know how much money you earn at your job, and then they *use that information against you* by making you pay taxes.

But where are all the people who love to complain about their precious privacy?

No kidding. I hear that they even want to know how much money everyone earns and what their social security number is! Sorry, Gestapo, you can take your prying eyes somewhere else!

Re:business opportunity

[pedrop357]

Where does paying farmers to grow nothing, handing out billions to private companies, spending exorbitant amounts of money to build airports in tiny towns, subsidizing tobacco farmers, etc. come into play? Should I still just pay my taxes without complaint simply because politicians managed to buy enough votes to outnumber me and those who agree with/think as I do?

S-Corp!

[AnAdventurer]

I do absolutely every transaction I can though my S-Corp. No Taxes, No late fees. All I have to pay tax on is the transfered net to me personally. This is some more paperwork with the state bi-annually but its worth it. Everything becomes an expense for my business. In other words, I only pay taxes on what I actually pay myself. It helps I have a service/rental company with a few employees.

Re:I'm sure Goldman Sachs will thank you handsomel

[value_added]

Dude, chill out. Last I checked, derivatives aren't traded or sold on Craigslist or eBay, and profits on those are already taxed by the IRS. And China, they buy US treasury bonds direct. If you're angry about world+dog, try to form a coherent thought before you start typing, or find something else to do.

It's horrible

[AK Marc]

Oh no! The IRS is enforcing the rules against cheats and fraudsters. People are running "cash" businesses and lying on income tax returns to fraudulently hide income, and the IRS just wants to stop that. The IRS estimates that the income tax evasion is in the hundreds of billions of dollars range. This means that if people had actually been paying their fair share (And the government didn't just raise spending to match, yes I know I'm dreaming) that our taxes would be 25% less (because the debt would be paid off and we'd be operating with a balanced budget).

How horrible, the people that have been committing perjury for years with businesses they haven't declared will have to declare them. The were required to declare them before, so this really isn't a huge change, other than because so many go unreported, the IRS is trying new ways of getting the lying eBay cheats to declare, inconvenience us. Sure, a simplified system would benefit everyone, but lying to steal money from the people isn't something I think a good thing, like so many who brag about cheating the government out of taxes they owed.

Re:It's horrible

[Renraku]

Honestly, "cheats and fraudsters" means people that knowingly and willingly cheat the IRS. How many people here know the correct tax forms to fill out and the appropriate rules and regulations they'll have to follow when they sell a car? Most people have a hard time figuring out their tax return, much less the plethora of bonus taxes the IRS likes to levy.

Perhaps they should make the system simpler and people would have less excuse to not pay? I mean you could levy the death sentence and seizure of all family assets if you find someone 'cheating' the tax code but that won't make people more likely to wade through the whole damn fifty book set of tax books.

Re:It's horrible

[AK Marc]

I may be wrong (working from memory), but I think that the IRS estimates that 80% of shortfall in payment is deliberate. Much of it comes from people with home businesses overstating expenses and understating revenue (hence why they are audited more).

If people were really concerned about it, they'd just save everything and take it in to one of the millions of places with "guaranteed audit protection" and such. But people like to game the system. They think it a great thrill when they "forget" a payment or "estimate" a deduction a little high and get back more than they should.

Re:You don't sell on Craigslist; you meet in perso

[AK Marc]

Craigslist is never going to know that. Craigslist knows nothing about the transactions. Craigslist is a place to meet people and nothing else. Sometimes you date them, sometimes you buy things from them, and sometimes you sell things to them, but you don't give money to Craigslist for the transaction, and they never know if it completed or anything else.

eBay knows all. That is the difference.

Re:Privacy

[marco.antonio.costa]

Yes, because there is no difference between 'doing what you want' and trying to keep the fruits of your labor from an out of control government.

Honest question.

[CrazyJim1]

Lets say 5 years ago you bought three tractor trailer full of taxable items you resale. You sell $50,000 worth of stuff, but you actually paid $45,000 for the stuff initially. Do you have to pay taxes on $50,000 or the $5,000 difference?

Re:Honest question.

[gbjbaanb]

I'm not sure about you Americans and your zealous taxman, but generally yes, its the $50k. You then claim the $45k as deductible expenses reducing the bill to $5k.

Of course, if you can't prove that you did buy the trailer full of stuff, its because the seller isn't paying tax on it. The taxman will charge you the full amount, which really just means you're paying the tax your supplier should have paid. The taxman gets it all regardless of who pays for it.

Re:Honest question.

[nabsltd]

I'm not sure about you Americans and your zealous taxman, but generally yes, its the $50k. You then claim the $45k as deductible expenses reducing the bill to $5k.

In the US, that's a big "it depends".

If the sale falls under capital gains, then how the basis is figured varies based on exactly what the stuff was and exactly how you acquired it.

For instance, if you receive something without paying any money for it, when I go to sell it, the basis might be the fair market value of the item (e.g, if the item is a house, depending on how you received it), or $0 (e.g., if you salvage items in international waters).

For sales that don't fall under capital gains, there are rules about what part of the cost of goods sold you can actually write off. In the example given, you likely had to write off the original $45K purchase against income from that year, and when you actually make the sale, you would be charged taxes on the full $50K. If the items do or don't depreciate, then you have even more things to consider.

As others have stated, the US tax law is too damn complicated. My addition to that is that there are too many loopholes that can only be exploited by people with very large amounts of money and very good lawyers and accountants.

Not disproportionately

[Petersko]

"And I suppose you don't care that the Fair Tax is a ridiculously regressive tax? Because it taxes buying power, it disproportionately effects those who do not save or invest but, instead, live paycheck to paycheck. So, if you're poor and you have to spend all your income on rent and food, the fair tax hits you hardest. If you're rich, and you are able to invest half your income, and you spend the rest, you're only taxed on half your income. Thus, the rich pay a lower real tax rate than the poor. (Add to this the fact that the marginal value of $1 is far less to a rich person than to a poor person to begin with and the system starts to look downright dystopian.)"

Actually, the current system is disproportionate. One person should pay the same tax rate as any other person, regardless of income. That would be proportionate. A higher income person paying 20% taxes would pay more taxes than a lower income person paying 20% taxes. Making him pay 30% is just robbery.

Re:Not disproportionately

[pdabbadabba]

Well, sure. Both systems are disproportionate. But the current system (or, at least an idealization of it) is disproportionate in a way that requires the poor to pay a lower percentage of their income than the rich. The flat tax is a disproportionate system that requires the opposite. If we're stuck with disproportionate systems, why should I prefer the latter?

And while we're at it, why do we care about equal percentages? It seems to me that the fair thing would be for each person to give up the same amount of value so that the actual economic burden of taxation on everyone is the same. Since a dollar is worth much less to a rich person than a poor person, that would seem to require that the rich be taxed at a higher percentage rate.

Re:Not disproportionately

[eyrieowl]

That's a somewhat misleading way to present it. The poor person and rich person pay the same 20% rate on the same level of income. The tax system is tiered. i.e., income up to a certain point gets taxed at a certain rate (starting at 0%). Income in excess of that gets taxed at the next highest rate. So, while a certain person's tax bill may end up equalling 30% of their income, that would mean they made such a great deal more than the lower brackets that it completely masked the fact that they were paying at a lower rate for that part of their income.

Re:Not disproportionately

[Captain Centropyge]

Maybe a dollar is worth considerably more to a rich person, which may just be how they became rich to begin with.

Re:business opportunity

[roman_mir]

No FDA at all. I don't want my food producers to have to pay for the licenses to a government agency that is only good at eating and taking in tax and license money and nothing else.

Re:I'm sure Goldman Sachs will thank you handsomel

[AK Marc]

And you expect us to pay off the debt without enforcing tax laws against cheats?

Re:business opportunity

[mcgrew]

BTW, the 'citizens', I mean the consumers of the 'land of the free' are having real problems with trying to open offshore bank accounts, credit lines and the latest of these is that any foreign hedge funds are no longer allowed to advertise to US consumers.

Less than 1% of US citizens have any use for this, you unpatriotic elitist.

The government is tightening the grip on the people's money and freedoms.

Anybody who thinks money is freedom is an idiot. You're a slave to your own greed.

OK

[gbutler69]

DISCLAIMER: The below paragraph is political commentary and exaggeration to make a point about your stupid assertion to not pay taxes and should not be construed as any sort of actual threat!

Fuck Off! If you don't want to pay your fair share of the services you receive from the Gov't, then FUCK OFF! So someone can come to your house to kill you, rape your wife, murder your children, and steal your shit! Don't expect any help from the Gov't that you don't want to pay any taxes to. Dumb-ASS!

Now, let's try again to be a reasonable and intelligent member of a society instead of fucking moronic douche-bag. JACK-ASS!

Re:OK

[kd5zex]

Well, actually the "services" you describe are not likely to be realized anyway. Especially since it is known that the police have no duty to provide you any protection.

The actual role of a peace officer is mainly the collection of folks that owe, or people who the peace officer deems as such, the state monies. So they would show up after you have been killed, your wife raped, children murdered and shit stolen take a few pictures, ask a few questions, chat about the game this weekend, fill out some papers and hang out until the funeral home comes to pick your unprepared ass up.

Re:I'm sure Goldman Sachs will thank you handsomel

[Fjandr]

Given the way US debt works, it will never be paid off, regardless of how they enforce the tax laws.

It's worse than it computes.

[Ostracus]

The average USA small business will need to file about 600 every year.

Whew! The computer came along just in the nick of time.

Re:business opportunity

[Hognoxious]

Look, I earn my money, it's the rest of the world that are parasites and rip-off artists.

I must be right, everybody thinks the same thing.

Re:Cue all the teabaggers blaming Obama...

[shadowbearer]

  Isn't a lot of that deficit from the bailouts and wars started under the Bush admin?

  I suspect that we'll be having our own revolution, pretty soon, and it'll likely make all former historical revolutions look like, well, a tea party ;-(

SB

Re:business opportunity

[roman_mir]

Less than 1% of US citizens have any use for this, you unpatriotic elitist.

- right, excuse me, I forgot the rights that only very few people could use anyway are not the rights worth protecting, is that your position, YOU unpatriotic elitist?

Anybody who thinks money is freedom is an idiot. You're a slave to your own greed.

- oh, if your money is not providing you with freedom, it only means you don't have enough of it.

Re:business opportunity

[roman_mir]

fuck you, people lived before FDA just as well, and FDA does nothing to protect you from the real dangers, it's not their policy to protect against anything with long term effects, only acute effects count. But acute effects are easy to pinpoint to the manufacturer and sue their ass off and out-compete them with better products.

We don't have a VAT in the US. Not yet.

[jht]

The "intent" of the eBays and Craigslists of the world is supposedly to let people sell things they don't want around (more or less). If I buy something with my income, and pay sales taxes on it, then sell it later on then so be it. If I'm lucky enough to make a little money on the arrangement (like if it turns out to be collectible), that's splendid. But it's not a business. Taxes due at each step of a transaction are a VAT, and we don't do that here.

If I'm buying goods wholesale or as an investment and I'm trying to sell them at a profit as my means of earning a living, though - well, that's taxable in this country and that's just all there is to it.

I run a services business (as an S Corp), and I could probably pay a little less tax if I weaseled appropriately and just buried all my income as "expenses". I don't. The business pays what are real, legitimate expenses (I don't buy an iPod for my kid and call it "computing equipment" or any of that kind of shady stuff). I keep my business and personal money separate and I pay myself and my employees a salary. I could probably make a few more bucks being really aggressive about things, but I know I'm doing the Right Thing and I'm not in line for an eventual trip to Federal Pound Me In The Ass Prison.

In other words, if you're trying to live free of the IRS by doing a cash business on eBay, screw you. Pay up.

Re:We don't have a VAT in the US. Not yet.

[ErikZ]

Boy, you're going to be pissed when the IRS comes after you then.

If they had to generate more revenue, who do you think they'll go after? People who struggle against them and try to hide their income, or the people who just pay up?

Hint, they'll go after the easier people.

Re:We don't have a VAT in the US. Not yet.

[DerekLyons]

If I'm buying goods wholesale or as an investment and I'm trying to sell them at a profit as my means of earning a living, though - well, that's taxable in this country and that's just all there is to it.

In other words, if you're trying to live free of the IRS by doing a cash business on eBay, screw you. Pay up.

Precisely. There's a lot of other screwy things taxwise coming down the pike because of the damnable Healthcare 'reform' bill that nobody read - but this isn't one of them.

Re:You don't sell on Craigslist; you meet in perso

[kramerd]

Yeah, that was kind of my point.

Re:Cue all the teabaggers blaming Obama...

[Low Ranked Craig]

Not budget - actual dollars added to the deficit.

Re:Cue all the teabaggers blaming Obama...

[Low Ranked Craig]

Really? The bush administration is responsible for the 2010 and 2011 budgets? I had no idea the administrations 2 years out of office had to be part of the budgeting process.

Golden Goose

[nurb432]

Meet death.

Well....that's a tough one I admit...

[gbutler69]

...and is probably due for some serious review. I'd lean towards full legalization with people being held responsible for their actions. I am willing to admit though, that we don't yet know if that'd be a good thing or not. We could end with far too many people hopped up on crack and heroine and we might not be able to meaningfully hold them responsible beyond jailing them for non-drug crimes they might commit. I think those that support these sort of drug laws believe that to be the case and most who support them (not necessarily those who are making money off it though) believe having these laws is better for society than not. I'm pretty much with you though and think the negatives of these sorts of laws far outweight the positives. I'd be happy to support, along with you, any group that would like to work to have these laws changed. Still, that doesn't mean I shouldn't pay my taxes. It means I should become and active participant in our democracy and the public discourse and work to have unjust laws corrected.

Re:Well....that's a tough one I admit...

[Rockoon]

You could have just said that you were wrong, that the government does indeed spend money in ways that do not benefit me. I gave only a single example.

Still, that doesn't mean I shouldn't pay my taxes. It means I should become and active participant in our democracy and the public discourse and work to have unjust laws corrected.

People that are not paying their taxes are actively not paying them. Are you suggesting that you have a monopoly on the right way to protest?

Re:Well....that's a tough one I admit...

[gbutler69]

If you don't want to pay your taxes, then don't expect any gov't services. Police, Fire, Military, etc. etc. Instead, when someone comes to your house, steals your shit, and/or murders you and your family, don't expect anyone in the gov't to give a shit. That doesn't sound too palitable now does it?

Re:Well....that's a tough one I admit...

[gbutler69]

If you don't want to pay your taxes then you should be thrown in jail. I pay my taxes. Pay yours you stupid mother-fucker! Everything that makes the goddamn society civil in most part comes from our collective responsibility to the society. If you don't want to have any responsibility to other members of the society than fuck-off and die. You and your stupid idiotic tax protest. You're a fucking retard! I'm sick of you goddamn people. You and the Mother-Fuckers living here in Medina, Ohio - basically a Shagra-La if there ever was one compared to anywhere else in the world - throwing hissy fits like little spoiled children, calling Obama a Nazi, standing around with their over-fed bellies hanging out with signs saying they are being oppressed. They don't know the meaning of the fucking word! I swear to all that is decent that it is time for a fucking shooting war against all you selfish, self-centered pricks. You can suck my cock and eat the shit out of my asshole you stupid, lazy, selfish cock-sucker! PAY YOUR FUCKING TAXES SHITFACE!

Re:Well....that's a tough one I admit...

[Rockoon]

Nobody here said that they dont pay their taxes.

As such, your response is very educational. You are stupid. Very stupid. And emotional. Stupid and emotional. A great combination for those that want to lead you around like a sheep.

I say no.

[moxley]

No...they can't have it. Next question please....

That rule has been around for a while

[way2trivial]

it does not apply when the payments go to a corporation- only when it's to an individual

1098/1099 misc filings are already required it's not new

Re:Cue all the teabaggers blaming Obama...

[baKanale]

Most of the tea party people I know hate Bush only slightly less than Obama...

They say that now, but where were they between 2001 and 2009? Something tells me it wasn't protesting what they "hate" about Bush. I haven't spoken to many, but the few I've talked to cheer on everything he did in the name of "protecting freedom" from "terrorists". Yeah, they "hate Bush" my big fat ass. I love how they only speak out against the government when a Democrat is in the White House.

IRS Wants a Cut of Sales On eBay and Craigslist...

[nitehawk214]

"IRS Wants a Cut of Sales On eBay and Craigslist".

Yeah, well so do I. However unless they get some laws changed they are not going to be getting more of a cut than I am.

I am sure taxing all online transactions will make politicians very popular.

FYI - the IRS sees drug money already

[bussdriver]

The big time drug money gets laundered and invested as well as played with by the bankers who love the extra billions to work with. The IRS sees part of these huge actions already so dealing with the smaller stuff is not worth the political costs involved.

Here's the funny part...

[humphrm]

... EBAY is no longer stuck in 1995, when small sellers actually had a chance to sell things on EBAY. Sadly, that no longer happens. The small "garage sale" vendors don't sell shit on ebay, so they go to places like Craigslist. The big sellers should have always been paying taxes anyway.

Re:Cue all the teabaggers blaming Obama...

[PatPending]

The president's instincts are by now obvious to all: deflect blame, point fingers, and lash out at others, most especially his predecessor. We know from press reports (see here and here) that the strategy for the Democrats in 2010, two years after Obama was elected president, is to – you guessed it – blame George W. Bush.

Re:business opportunity

[zippthorne]

Doesn't have to be a government agency. A third party certifying agency could be sufficient. As long as them themselves are also audited somehow...

Re:Dear IRS:

[thePowerOfGrayskull]

Everyone benefits from something your taxes pay for.

Most especially the politicians, banks and auto companies. If my taxes got used in a significant and beneficial way, paying them would be much less abrasive. I keep voting for politicians who promise to change this, but for some reason it never pans out...

Oy.

[fyngyrz]

You've completely missed the point and misunderstood what I was saying.

I wasn't suggesting any income level is ok, or that any particular way to earn is ok, or that any particular tax is ok (or not.)

I was setting a defined horizon, then demonstrating what happens to that horizon at different income levels and a constant tax rate. You can set the horizon anywhere you want, living any way you like, with any particular tax rate, and the example works precisely the same way.

The point simply was, and remains, that a particular tax rate affects people at different income levels differently. Which is the answer to the original question.

Re:business opportunity

[gothzilla]

My wife was on welfare before we were married. I've been in the offices and talked to a lot of people. Where you get the notion that the lazy make up a miniscule percentage is beyond me.

Most of the people there were there by choice, not because they had an actual need. About 90% of all the conversations I overheard were about the best ways to work the system and avoid being kicked off. Whoever told you the number of lazy people on welfare was miniscule was full of crap. The number of people who have an actual need is what's miniscule.

I can also say as someone who ran a business was that about 75% of all the applications I got were from people who had no intention of actually getting a job, but just needed me to tell welfare when they called that they actually applied so they wouldn't get kicked off. Most of them were perfectly capable of working, but socialism breeds laziness and destroys the human spirit. Why should they work when they get a free handout?

Here's a chart that incorporates population

[fyngyrz]

Prisoners by headcount and as a function of population

Re:Cue all the teabaggers blaming Obama...

[multiplexo]

Yeah, the debt run up by Dubya was a pittance compared to what's going to be run up by the Democrats this cycle. The numbers they _lied_ about were ridiculously high, the real numbers will be insane. You think the cast of Dubya's 8 years was a snaggle toothed bunch of villains? Wait until you see the extent to which these current scoundrels have lied about how much all this shit they're doing is going to really cost.

Got any sources to back that up? Of course not, you're a teabagger. You're too busy massaging Glenn Beck's balls with your tongue to actually do any research, so you just repeat what you heard on his show.

It's even funnier when left wing nuts blame the Republicans for the housing meltdown than it is when right wing nuts blame the Democrats and CRA. It was a bubble - just like the Internet bubble. Sorry, lefty, government is not the solution to all of our problems.

Yeah, and neither is the "free market". Of course the teatards don't mind government spending when they benefit from it. Which they do, quite handsomely. In fact the most teatarded portions of America are also the portions that receive more in federal spending than they contribute in federal taxes.

2 unwinnable wars? Maybe. One of them was legitimate (Afghanistan), one questionable. I think Dubya was a liar too, but my viewpoint is softening on the old scoundrel a little bit. Iraq might have been some plan to create a battlefield with Al Qaeda that was well away from US civilians. Draw them to us where we can fight them at least a little more on our terms.

Or it could be that they were just a bunch of stupid bastards who saw a chance to try out a neo-conservative foreign policy. Your supposition about Iraq though is one of the stupidest fucking things I've ever read on Slashdot though. Really, if you're dumb enough to believe that then you probably have problems maintaining basic sphincter control.

I don't know - they sure as shit lied about it, whatever the real reasons. I think the "durr, it was for multinational evil corporations" screed the left wing loons rant about is a bit facile.

Well those multinational corporations have benefited quite handsomely from our middle eastern adventure, haven't they teatard?

Re:Cue all the teabaggers blaming Obama...

[multiplexo]

Most of the tea party people I know hate Bush only slightly less than Obama...

That's what these lying shits say, but when Bush was in office, for at least the six years of his administration they were sucking his balls like the high class whores that Elliot Spitzer likes to hire, you know, teabagging. The teabaggers remind me of the Germans, when things were going well for Nazi Germany they were all about Hitler, they loved the guy, couldn't get enough of him and said nothing when their Jewish neighbors were hauled off to the camps. But after the Allies kicked Nazi Germany's ass, after the US Army Air Corps and RAF burned their cities to the ground and the Red Army raped and pillaged it's way across the eastern half of the country, after we had our boots on their throats they were all saying "Nazis, I wasn't a Nazi, I hated Hitler. He was awful. I had no idea what was going on in those camps."

You want to drag people into the street and shoot them as traitors. Shoot the fucking teabaggers. The teabaggers are the morons who gave us the War on Some Drugs. They're the morons who are in favor of destroying our freedoms in the name of the War on Terrorism. The teabaggers are stupid, easily manipulated human garbage who hate freedom, hate individual liberty, hate the rule of law, won't and can't take responsibility for themselves and are the first ones to jump on any bandwagon or follow any leader who promises them security if they'll only give up their liberty and the liberty of others.

Re:business opportunity

[TooMuchToDo]

Unless Ebay picks up and incorporates in Bermuda or somewhere else. It's not like it's hard for them to announce their AS from anywhere else in the world with reliable fiber and power.

Re:business opportunity

[mcgrew]

If I can't use a right, it isn't a right. If you have a right I lack, it isn't a right, it's a privilege.

And money doesn't provide you with freedom, it enslaves you.