How is that increasing the burden on the middle class? It actually balances the burden between middle class and wealthy so that Warren Buffet's secretary no longer pays more taxes than he does.
It's increasing the burden on the middle class because it's decreasing the burden on the poor and on the wealthy. Tax revenues aren't going to appear out of thin air, they're going to have to come from the middle class. The Fair Tax would effectively eliminate any taxes paid by Mr. Buffet, as he only actually spends a tiny, negligible proportion of his income, and that is the only portion of his income that would be taxable under a consumption tax. Proportionally, his secretary spends a much greater share of her income (nearly all of it), so unless she's hovering very near the poverty line, a larger proportion of her income would be going towards taxes.
Let us say assume (which I will grant is a huge assumption) that everybody will pay about the same in taxes – what is the advantage of a sales tax over a income tax? Well, what makes a good tax?
You seem to be arguing that the purpose of a tax is singular: to fund the government. You explicitly state that taxes should not distort the economy. I'd argue the opposite, that it is equally important that taxes do indeed distort the economy, merely in a desirable way. Specifically, that they promote an equitable distribution of wealth. While the Fair Tax may meet your criteria for a good tax (that it funds the government), it most definitely does not meet my criteria for a good tax (that it is highly progressive), as it allows the truly wealthy to further decrease their already-too-low (in my opinion) tax burden.
Valid points. The one thing I'd disagree with is that investment income creates the middle class jobs of tomorrow. Demand creates those jobs, demand which is driven by a non-negligible percentage of the population (i.e. not the 1%). I've never seen people get hired simply because there's money to blow.
I have yet to hear an explanation of why the Fair Tax would be beneficial to the middle class. Most discussions focus on how it won't fuck over the poor (which I don't entirely believe) or how it won't decrease the tax burden on the wealthy (which I totally disbelieve). Assuming that the Fair Tax can fully fund the government, the logical consequence is that it either fucks over the middle class (which I believe is likely) or that it's literally the same as what we have now (in which case why bother changing anything).
Actually, there's a mass exodus of New Yorkers to my New Jersey during shopping season because New York does charge sales tax on clothing whereas New Jersey doesn't. Yet another reason gimmicky tax codes don't work.
I've read all about the "Fair Tax". I admit that it sounded interesting to me at first glance.
Fundamentally, though, it results in a large part of the tax burden being shifted from the wealthy to the middle class. There's countless other posts under this story that explain why this is the case (including several of my own posts). In short, taxes on the wealthy are reduced, and taxes on the poor are not increased; the logical consequence is that either tax revenues go down (which would mean that such an approach is insufficient to fund our government) or that the tax burden on the middle class goes up (which would mean that such an approach leads to suboptimal outcomes for society).
The approach you propose has a maximum tax rate of 17%. This is less than the rate that applies to high-income earners today. Consequently, your proposal amounts to decreasing taxes for the wealthy. Since you're not proposing a decrease in tax revenues, the tax burden on other segments of society must increase to compensate. Since the tax burden on the poor is not increased, it logically follows that the increased tax burden falls squarely on the middle class.
Is that explanation sufficient, or is there some specific part that you'd like me to further elaborate upon?
Income inequality is bad because it limits economic freedom. The reasoning is as follows:
The guy with $5000 can do a lot more than the guy with only $100. A lot more, but not 50x more, because economic freedom doesn't scale linearly with wealth. Perhaps working with "real" numbers will help illustrate this point. If you have an annual income of $15K (minimum wage, full time), you can't do much. I'd argue that you can't even live on that kind of money, but apparently many people do, so let's just say you can't do much. If you have an annual income of $150K you can do quite a bit. You can raise a family, you can travel the world, you can choose from a wide variety of leisure activities. If you have an annual income of $1.5M, you have a few new options opening up. At $15M, you're really not opening up too many new opportunities. At $150M, I suppose the selection of megayachts you can choose from is a bit larger, but overall your quality of life isn't significantly different. And so the story continues.
The income enjoyed by a single $150M/year earner (and I use the word "earn" very loosely here) provides quite a bit of economic freedom of one individual. However, it could instead provide nearly as much economic freedom to ten individuals were it to be split evenly among them. Furthermore, it could instead provide just-a-bit-less economic freedom to a hundred individuals. It's evident that concentration of wealth does not optimally maximize economic freedom across a society, and consequently stratification of wealth ought to be anathema to libertarians. Of course, many "libertarians" I see on here are more concerned with government involvement in environmental policy than with something that actually has a meaningful (if not the most meaningful) impact on individual freedom: money.
That does sound like a great way of shifting a large portion of the tax burden to the middle class. I'm not sure why you think doing so would "fix" anything, unless you feel that the existence of a middle class is problematic.
Steve Jobs didn't get rich by *taking* money from us. He got rich by extremely overcharging us for things we wanted more than the cost of a cellphone contract (and the same thing goes for Bill Gates).
FTFY. If Steve hadn't been ripping everyone off, he wouldn't have gotten rich. That's why some people hate the rich: because they've been exploiting everyone else.
So it's actually better for the poor than the middle and upper classes.
It's definitely better for the poor than for the middle class. It can't possibly be better for the poor than for the upper classes, since the upper classes would be seeing tax benefits on a scale that the poor can't even fathom. The "Fair Tax" is a proposal to shift a large portion of the tax burden from the wealthy onto the already-hurting middle class.
Here in New Jersey, we have a similar approach to sales tax when it comes to food. Raw foods are not subject to sales tax, but prepared foods are (the logic being that it is a luxury to buy your food prepared). This well-meaning approach to sales tax hasn't been working here. The poor eat proportionally more fast food than do the rich, and consequently end up paying a higher effective sales tax rate on their diets.
Now I'm imagining a gaggle of bureaucrats extending this type of reasoning beyond merely food but to all goods. First, I question the effectiveness of such a policy, as it doesn't seem to be working well [here] even on a much smaller scale. Second, I question the efficiency of doing things this way, as I can't imagine how much it will "cost" to create a tax code so complex and then subsequently maintain it. Third, someone buying 60 Civics is consuming as much as someone buying 1 Ferrari but wouldn't be taxed equitably under your proposed tax policy.
That being said, I do think a consumption tax would be the "ideal" tax in many ways. If a tax on an activity discourages said activity, a progressive consumption tax is indeed our best option. However, to implement a true progressive consumption tax, the government would need to track all consumption spending for everyone. This poses significant privacy issues.
How do you implement a progressive consumption tax? Wouldn't the government need to track all consumption for every person? How do you propose that is accomplished without violating the privacy of every last person?
it would be somewhat "progressive" too...in that rich people tend to buy MUCH more expensive items, and more of them.
False. Proportionally to their income, rich people tend to buy less. That's why they get richer.
I'd say one extra thing...don't tax food, that way it wouldn't be regressive against the poor which is often the argument for a consumption tax.
Food isn't the only thing that rich people don't spend as much (proportionally) on as compared to the poor. Clothing, shelter, really just about any actual spending. The only thing the rich "spend" more on are yachts, jets, and helipcopters.
No, even if they're in a higher tax bracket, they necessarily still have more money (as far as net income goes). That's the entire point of brackets instead of thresholds.
The cost of day care has nothing to do with taxes, so let's not make things more complicated than they need be. That one parent staying home to take care of kids is cheaper than sending kids to day care has nothing to do with taxes and everything to do with that parent's earning potential and the cost of day care. Even if taxes were 0% for everyone, it's still possible that having only one parent working would be more cost effective than having both parents work if the cost of day care exceeds the income of one of the parents. Orthogonal issues.
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How is that increasing the burden on the middle class? It actually balances the burden between middle class and wealthy so that Warren Buffet's secretary no longer pays more taxes than he does.
It's increasing the burden on the middle class because it's decreasing the burden on the poor and on the wealthy. Tax revenues aren't going to appear out of thin air, they're going to have to come from the middle class. The Fair Tax would effectively eliminate any taxes paid by Mr. Buffet, as he only actually spends a tiny, negligible proportion of his income, and that is the only portion of his income that would be taxable under a consumption tax. Proportionally, his secretary spends a much greater share of her income (nearly all of it), so unless she's hovering very near the poverty line, a larger proportion of her income would be going towards taxes.
Let us say assume (which I will grant is a huge assumption) that everybody will pay about the same in taxes – what is the advantage of a sales tax over a income tax? Well, what makes a good tax?
You seem to be arguing that the purpose of a tax is singular: to fund the government. You explicitly state that taxes should not distort the economy. I'd argue the opposite, that it is equally important that taxes do indeed distort the economy, merely in a desirable way. Specifically, that they promote an equitable distribution of wealth. While the Fair Tax may meet your criteria for a good tax (that it funds the government), it most definitely does not meet my criteria for a good tax (that it is highly progressive), as it allows the truly wealthy to further decrease their already-too-low (in my opinion) tax burden.
So that's why Chris Tucker's net worth is negative $11.5M? I thought it was tax issues...
Middle class, n., the social group between the upper and working classes, including professional and business workers and their families.
They're "already-hurting" in that their income (median household income) has been declining (in real terms) since the 1980s.
Valid points. The one thing I'd disagree with is that investment income creates the middle class jobs of tomorrow. Demand creates those jobs, demand which is driven by a non-negligible percentage of the population (i.e. not the 1%). I've never seen people get hired simply because there's money to blow.
I have yet to hear an explanation of why the Fair Tax would be beneficial to the middle class. Most discussions focus on how it won't fuck over the poor (which I don't entirely believe) or how it won't decrease the tax burden on the wealthy (which I totally disbelieve). Assuming that the Fair Tax can fully fund the government, the logical consequence is that it either fucks over the middle class (which I believe is likely) or that it's literally the same as what we have now (in which case why bother changing anything).
That's an interesting opinion you have there. Thank you for sharing it.
If it wasn't already apparent from context that my statement applied specifically to income tax, then let me make it explicit.
My statement applies specifically to income tax.
Actually, there's a mass exodus of New Yorkers to my New Jersey during shopping season because New York does charge sales tax on clothing whereas New Jersey doesn't. Yet another reason gimmicky tax codes don't work.
I've read all about the "Fair Tax". I admit that it sounded interesting to me at first glance.
Fundamentally, though, it results in a large part of the tax burden being shifted from the wealthy to the middle class. There's countless other posts under this story that explain why this is the case (including several of my own posts). In short, taxes on the wealthy are reduced, and taxes on the poor are not increased; the logical consequence is that either tax revenues go down (which would mean that such an approach is insufficient to fund our government) or that the tax burden on the middle class goes up (which would mean that such an approach leads to suboptimal outcomes for society).
The approach you propose has a maximum tax rate of 17%. This is less than the rate that applies to high-income earners today. Consequently, your proposal amounts to decreasing taxes for the wealthy. Since you're not proposing a decrease in tax revenues, the tax burden on other segments of society must increase to compensate. Since the tax burden on the poor is not increased, it logically follows that the increased tax burden falls squarely on the middle class.
Is that explanation sufficient, or is there some specific part that you'd like me to further elaborate upon?
Income inequality is bad because it limits economic freedom. The reasoning is as follows:
The guy with $5000 can do a lot more than the guy with only $100. A lot more, but not 50x more, because economic freedom doesn't scale linearly with wealth. Perhaps working with "real" numbers will help illustrate this point. If you have an annual income of $15K (minimum wage, full time), you can't do much. I'd argue that you can't even live on that kind of money, but apparently many people do, so let's just say you can't do much. If you have an annual income of $150K you can do quite a bit. You can raise a family, you can travel the world, you can choose from a wide variety of leisure activities. If you have an annual income of $1.5M, you have a few new options opening up. At $15M, you're really not opening up too many new opportunities. At $150M, I suppose the selection of megayachts you can choose from is a bit larger, but overall your quality of life isn't significantly different. And so the story continues.
The income enjoyed by a single $150M/year earner (and I use the word "earn" very loosely here) provides quite a bit of economic freedom of one individual. However, it could instead provide nearly as much economic freedom to ten individuals were it to be split evenly among them. Furthermore, it could instead provide just-a-bit-less economic freedom to a hundred individuals. It's evident that concentration of wealth does not optimally maximize economic freedom across a society, and consequently stratification of wealth ought to be anathema to libertarians. Of course, many "libertarians" I see on here are more concerned with government involvement in environmental policy than with something that actually has a meaningful (if not the most meaningful) impact on individual freedom: money.
Sounds like an effective way to eliminate the middle class by shifting a large proportion of the tax burden to them from the wealthy.
But other than that, it's a great idea.
That does sound like a great way of shifting a large portion of the tax burden to the middle class. I'm not sure why you think doing so would "fix" anything, unless you feel that the existence of a middle class is problematic.
Steve Jobs didn't get rich by *taking* money from us. He got rich by extremely overcharging us for things we wanted more than the cost of a cellphone contract (and the same thing goes for Bill Gates).
FTFY. If Steve hadn't been ripping everyone off, he wouldn't have gotten rich. That's why some people hate the rich: because they've been exploiting everyone else.
So it's actually better for the poor than the middle and upper classes.
It's definitely better for the poor than for the middle class. It can't possibly be better for the poor than for the upper classes, since the upper classes would be seeing tax benefits on a scale that the poor can't even fathom. The "Fair Tax" is a proposal to shift a large portion of the tax burden from the wealthy onto the already-hurting middle class.
Works fine with cars, sure.
Here in New Jersey, we have a similar approach to sales tax when it comes to food. Raw foods are not subject to sales tax, but prepared foods are (the logic being that it is a luxury to buy your food prepared). This well-meaning approach to sales tax hasn't been working here. The poor eat proportionally more fast food than do the rich, and consequently end up paying a higher effective sales tax rate on their diets.
Now I'm imagining a gaggle of bureaucrats extending this type of reasoning beyond merely food but to all goods. First, I question the effectiveness of such a policy, as it doesn't seem to be working well [here] even on a much smaller scale. Second, I question the efficiency of doing things this way, as I can't imagine how much it will "cost" to create a tax code so complex and then subsequently maintain it. Third, someone buying 60 Civics is consuming as much as someone buying 1 Ferrari but wouldn't be taxed equitably under your proposed tax policy.
That being said, I do think a consumption tax would be the "ideal" tax in many ways. If a tax on an activity discourages said activity, a progressive consumption tax is indeed our best option. However, to implement a true progressive consumption tax, the government would need to track all consumption spending for everyone. This poses significant privacy issues.
Regressive taxes are impractical.
How do you implement a progressive consumption tax? Wouldn't the government need to track all consumption for every person? How do you propose that is accomplished without violating the privacy of every last person?
it would be somewhat "progressive" too...in that rich people tend to buy MUCH more expensive items, and more of them.
False. Proportionally to their income, rich people tend to buy less. That's why they get richer.
I'd say one extra thing...don't tax food, that way it wouldn't be regressive against the poor which is often the argument for a consumption tax.
Food isn't the only thing that rich people don't spend as much (proportionally) on as compared to the poor. Clothing, shelter, really just about any actual spending. The only thing the rich "spend" more on are yachts, jets, and helipcopters.
How?
Why isn't there another company offering to sell electricity or gas to me?
Here in New Jersey, we deregulated the energy industry 15 years ago. There are indeed many companies offering to sell electricity to me.
All those... moments... will be lost in time, like [small cough] tears... in... rain.
Time... to die...
(the certain events are a subset of probable events)
Not according to the colloquial English with which I am familiar. Nonetheless, my apologies for misunderstanding you.
And you're only looking at reasons to avoid excess income.
You're ignoring all the regressive taxes that we have.
FICA / Social Security / Medicare ~117k?
That 6.2% FICA tax rate dwarfs the other things you itemized, doesn't it?
No, even if they're in a higher tax bracket, they necessarily still have more money (as far as net income goes). That's the entire point of brackets instead of thresholds.
The cost of day care has nothing to do with taxes, so let's not make things more complicated than they need be. That one parent staying home to take care of kids is cheaper than sending kids to day care has nothing to do with taxes and everything to do with that parent's earning potential and the cost of day care. Even if taxes were 0% for everyone, it's still possible that having only one parent working would be more cost effective than having both parents work if the cost of day care exceeds the income of one of the parents. Orthogonal issues.