Taxes

[Welcome Back Apathy]

What do you think about taxes? Income taxes? Capital gains taxes? Sales tax? Etc. etc. etc. What is a fair way to tax people? What is an effective way to tax people? Any other topics I'm missing that are tax related.

 

 

 

 

 

Personally, I think that the most FAIR way to tax people would be through sales tax only. That way, someone who only spends money on food, rent, etc. (the small things) will not get over-taxed, while it would do no good for rich people to hoard money in offshore accounts. If you pay a lot in taxes, you only have yourself to blame. And the only way to cheat on taxes is to have a lemonade stand or something :-) Because you're selling a product without giving the taxes to the government! It would make our tax code much simpler. Yes, sales tax only would solve a lot of problems.

 

I have a degree in economics, though, and I know that while it would be simple and fair, it would also cause a lot of economic problems to do it. High sales tax would increase black market goods. It would encourage people NOT to spend money--which is good in the cases of the people who tend to spend more than they have, but overall slows the economy. If it could work, it would be the best solution to the U.S. government, but it wouldn't work.

 

So I think income tax is the best way to go about it. And a progressive income tax, while it may seem unfair to some people, is the most effective way. I have a hard time keeping from rolling my eyes when the top whatever percent complains about their high tax bracket. I know that many businessmen work very hard for their money, but they don't work exponentially harder than the worker who works a 40 hour week and makes $30,000 a year. So why do they make exponentially more money? Okay, you know what? Make exponentially more money. Just don't complain about getting taxed more for it; don't say it's not fair. It is perfectly fair.

[passiflora]

I agree with you - income tax is probably the best way to go, especially with brackets for higher income levels. It's unfortunate that almost a third of people's income is "taken away", so to speak, but I guess it comes back in a lot of ways through services that the government offers. I wish everyone could pay less taxes, but I'm also a big fan of education, health care, and other social programs, so I guess we can't have it both ways. :P

 

p.s. Any opinion on property tax? I don't know much about it, but I'm under the impression that a lot of it stays local and is beneficial, e.g. for building or improving roads or other public spaces.

 

p.p.s. When it comes to government spending and taxes, I've noticed that some people are quick to bring up the fact that churches enjoy tax exempt status, and that if this weren't the case, the government would be billions and billions of dollars richer every year. Again, I'm not really an expert on any of this stuff, but I thought I'd toss in a point that might be a little more controversial. :O

[Batman]

My problem with taxing the "rich" more is that if they are rich then they control the goods you are buying. So when you take a lot of money from them they are going to try and get it back by increasing prices. A flat tax is probably the only fair way to go about it. It is simpler and you are still being taxed so all those programs that taxes are funding will still be around. On the other hand if you take away all of the different places to tax you can get rid of the IRS and all of their taxing laws and that would lose lots of people their jobs.

 

So, go flat tax, even though it won't happen.

[Emily]

Agreed with flat tax. Determine a percentage and make it stick, none of this loophole crap.

 

I'm a firm believer that if you use public services (yes, road maintenence and trash collection are public services), you should pay into the taxes that fund them. If you own buildings or land for whatever purpose, you pay the appropriate taxes. Unless you are 100% self-sufficient and so isolated as to never use anything tax-funded, you should be taxed.

[cleomiele]

My extent of significant economic knowledge lies in a one college course thus far, but at this point I'm going to have to agree with the progressive tax. It doesn't seem fair to me that--in using a flat tax--lower-income people will ultimately wind up with MUCH less than those in the higher income brackets. If you're not making that much in the first place for whatever reason, you shouldn't be taxed just as much as someone with lots of disposable income. I'm not saying higher-income people/families don't earn or deserve their money; I'm just saying that it makes more sense to, yes, tax everyone, but in a way that is contingent upon how much they make. Making certain people and organizations (like churches) tax-exempt also doesn't make any sense to me! I think everyone should have to contribute to the funding of public services; who hasn't been affected by or used public education, roadway maintenance and beautification, or trash collection, etc. at some point in their lives?

 

However, I think we can all agree on having a system of taxing that doesn't include any loopholes for anyone. I don't think that's fair at all.

[Welcome Back Apathy]

Making certain people and organizations (like churches) tax-exempt also doesn't make any sense to me!

 

We make non-profit organizations tax-exempt because they don't make profit. Because it's charity. Anyone who DOES make money in non-profits gets taxed on their income. Churches do a lot of charity work, and are therefore tax-exempt.

 

However, not all church money goes to charity. Some of it does go to pay the ministers--and I'm cool with that. But then a lot of the money goes to fund...a lot of things that are a misuse of money. (At least a misuse of money that isn't taxed.) Malls. Lobbying. In fact, certain churches have made such a misuse of their money that many argue that these churches should have their tax-exempt status taken away. And I will agree with that. They actually broke the conditions that allows them tax-exempt status; they need to be taxed now. Not all churches; just the ones that are breaking the law.

 

 

My problem with taxing the "rich" more is that if they are rich then they control the goods you are buying. So when you take a lot of money from them they are going to try and get it back by increasing prices.

 

Prices are determined by the market. You really can only control prices if you have a monopoly, AND if the item you're selling is actually 100% necessary. Like medicine and rent. (And again, you have to have a monopoly.) Food doesn't tend to have this problem because you always have choices for food, and you can always grow it yourself. So if the rich increase prices, people will respond by not buying it. Then they have to lower the prices down again.

 

I can understand why people don't think it's fair to have a progressive tax rather than a flat tax. I tend to agree, actually, that it's not fair. However, I find it far more unfair that the people who control the businesses take increasingly huge bonuses every year while wages remain stagnant. I find it unfair that they control the job market, and therefore get to force people into desperate situations where they have no choice but to work for far less than they are worth. I find it unfair that based on minimum wage years ago and inflation, minimum wage is currently A THIRD of what it should be be. I find it unfair that skilled workers--with college degrees in the field they are trying to work in--have to work more than 50 hours a week to be able to pay rent for a two bedroom apartment--and that's not including bills, food, clothing, transportation, or any of that.

 

So unless we can regulate that unfairness, I say progressive tax all the way.

[sarria33]

I remember in my finance class, I learned that sales tax doesn't benefit the poor. For example if sales tax is 7%, and both a rich and poor person have to pay that, the poor person suffers because its such a huge percentage out of their income but a rich person it would just be chump change.

 

I think progressive tax is fair. If you tax poor people the same as a rich, they will never be able to benefit their situation because they will be worried about paying the tax. However, rich people as their salary increases can pay more in taxes but still make a decent living.

[flavoureddestruction]

I think progressive income is a good way, but you would get the people in the top bracket whinging about how they've worked for their money. Though it's probably one of the fairest.

 

The idea that very low income earners pay little to no income tax would be amended by the higher income earners.

 

But then everyone whinges about the low income earners being lazy and not working and then it becomes a vicious cycle...

 

It's a dog eat dog world. :/

[Welcome Back Apathy]

I remember in my finance class, I learned that sales tax doesn't benefit the poor. For example if sales tax is 7%, and both a rich and poor person have to pay that, the poor person suffers because its such a huge percentage out of their income but a rich person it would just be chump change.

 

Remember, though, that rich people spend a lot more money than poor people do. That "chump change" to a rich person is on electronics, expensive cars, etc. Consider what a poor person spends money on...

*Food--which there is no sales tax on.

*Rent--which there is no sales tax on.

*Clothing--there is sales tax, but a lot of poorer people get their clothing secondhand, and there's no sales tax on secondhand clothing.

*Public transportation--which is subsidized. If you have to buy a car, you tend to buy it secondhand, and there's no sales tax.

 

There are other things you'll spend money on, of course, but someone without much money will not be spending money outrageously, so the sales tax won't do much.

 

Now remember that even though it doesn't happen much, you can institute extra sales tax on luxury items. I recently went on a trip to Vermont, and I noticed that in addition to the sales tax, there is a restaurant tax because eating out is a luxury. It would be doable.

[Emily]

Remember, though, that rich people spend a lot more money than poor people do. That "chump change" to a rich person is on electronics, expensive cars, etc. Consider what a poor person spends money on...

*Food--which there is no sales tax on.

*Rent--which there is no sales tax on.

*Clothing--there is sales tax, but a lot of poorer people get their clothing secondhand, and there's no sales tax on secondhand clothing.

*Public transportation--which is subsidized. If you have to buy a car, you tend to buy it secondhand, and there's no sales tax.

 

There are other things you'll spend money on, of course, but someone without much money will not be spending money outrageously, so the sales tax won't do much.

 

I'm not sure about other areas/countries, but this is not true where I live.

 

I work in retail, so I see a trend in purchase habits. When "check day" hits (when the welfare/unemployment cheques come out [not disability, but simply government money to people who DON'T work, not that CAN'T work for medical reasons]), you generally have the poorer people shopping because they have money to spend. What do I see being purchased? Expensive, boxed pre-prepared food (much of which there is tax on here), electronics (TVs, speakers, videogames, etc), cigarettes, etc. There is definite an upswing in these types of purchases every month around the same time, so it can't be just a coincidence. In other observation, the liquor store is always busier and I see SO many more cabs (minimum 12$ for a roundtrip here).

 

I'm not trying to generalize everyone in saying ALL people with less money do this, but, around here at least, it's a definite problem. People aren't accountable for how they spend their money. And, granted, people should ideally be able to spend how they see fit, but it sort of defeats the purpose when people are paying taxes on things, then receiving the money back in government subsidies.

 

Karina made a good point that extra taxing on luxury items would be a solution. We already have some form of that (again, not sure if this applies everywhere or just here), where fresh foods, kids clothes, etc are either not taxed, or taxed at a lower rate, while things like electronics, junk/processed food, etc are subject to additional tax.

 

The problem that I've found with this (I'm a cashier and people always complain to me, yay) is that people feel like their being "punished" by extra taxes and they should have the "freedom" to buy whatever they "want." People have some sort of entitlement issue that stands in the way of any proposed tax plan. It's really a mess.