(10-28-2016 01:54 PM)john01992 Wrote:  hammy, I know the difference between flat, fair, regressive and progressive. a number of sources describe fair tax as regressive because (and this point was absent from your post) the poor spend a larger percentage of their income on personal needs.

from the link you provided:

"The Fair Tax is also considered by some to be regressive since necessities are still subject to tax."

Considered by some doesn't mean is. That person wasn't taking a position on it, merely explaining the arguments being made.

Once again, you're ignoring the prebate.

from her article
The “prebate” is akin to a refund and is offered at the beginning of each month so that certain purchases are essentially tax-free.

So while they ARE taxed, you are pre-funded the tax you owe.

So it's net impact is zero

C'mon John... Seriously dude. You have to at least TRY

Ham,

Please try to understand that I wasn't going directly for the discussion, yet.

I was trying to get a baseline for the discussion. I wanted to know what you called my simple scenario above -- which I know you already are offering a more complex version -- do you call that progressive or not?

(10-28-2016 02:05 PM)john01992 Wrote:  The prebate is going to be the largest welfare program in history hammy.

Not if you then have to pay it in tax

You're arguing out of both sides of your mouth, John.

You're not looking smart doing that

If it's welfare, then they're not paying it in taxes thus it isn't regressive.
If it's regressive, then they're not getting the welfare.

(10-28-2016 02:06 PM)Hambone10 Wrote:  

(10-28-2016 01:54 PM)john01992 Wrote:  hammy, I know the difference between flat, fair, regressive and progressive. a number of sources describe fair tax as regressive because (and this point was absent from your post) the poor spend a larger percentage of their income on personal needs.

from the link you provided:

"The Fair Tax is also considered by some to be regressive since necessities are still subject to tax."

Considered by some doesn't mean is. That person wasn't taking a position on it, merely explaining the arguments being made.

Once again, you're ignoring the prebate.

from her article
The “prebate” is akin to a refund and is offered at the beginning of each month so that certain purchases are essentially tax-free.

So while they ARE taxed, you are pre-funded the tax you owe.

So it's net impact is zero

C'mon John... Seriously dude. You have to at least TRY

for f**ks sake I have said repeatedly, "some sources" and "described as" implying that some feel this way but not all.

do you pull this crap intentionally to try to get under my skin?

(10-28-2016 02:08 PM)Hambone10 Wrote:  

(10-28-2016 02:05 PM)john01992 Wrote:  The prebate is going to be the largest welfare program in history hammy.

Not if you then have to pay it in tax

You're arguing out of both sides of your mouth, John.

You're not looking smart doing that

If it's welfare, then they're not paying it in taxes thus it isn't regressive.
If it's regressive, then they're not getting the welfare.

you're the one one

look at me, i'm debating someone who thinks with an incorrect paragraph of his own words that automatically debunks mainstream beliefs.

it is commonly said fair tax needs a higher rate to be revenue neutral. rates cited from 30% to 40%.

it is commonly said the prebate would be the largest welfare program in history.

it is commonly said it would shift the burden to the middle class and ruin the middle class.

(10-28-2016 02:06 PM)MplsBison Wrote:  Ham,

Please try to understand that I wasn't going directly for the discussion, yet.

I was trying to get a baseline for the discussion. I wanted to know what you called my simple scenario above -- which I know you already are offering a more complex version -- do you call that progressive or not?

Fair enough

No it's neither progressive NOR regressive... it's flat at 10%... since you're not taxing income, you're taxing spending and they both pay the same percentage of their spending.

a guy who earns 300k and spends 300k has a higher tax bill than the guy who earns 300k and spends 295k... not because he earned more, but because he spent more. A guy who earns 300k and spends 305k (by leveraging his CC or home equity) pays even more.

'Sales' Taxes are thus not in any way relatable to income, but spending. I mean, obviously someone who earns more CAN spend more, but that doesn't mean they will or do.

(10-28-2016 01:25 PM)john01992 Wrote:  

(10-28-2016 01:19 PM)Owl 69/70/75 Wrote:  

(10-28-2016 11:12 AM)john01992 Wrote:  I have not seen one legitimate article call it progressive. I've seen a number of articles call it regressive.

When you define legitimate articles as those which call it regressive, that kind of becomes a self-fulfilling prophecy.

anything that disagrees with you is no longer legitimate in your eyes. including WSJ, forbes, and fortune.
true or false, the poor spend a larger percentage of their income on personal needs than the rich?
in that sense it is considered regressive and rightly so.

I did not say that. What I'm saying is that opinions aren't facts. Opinion articles, no matter where they appear, are not facts.

Let's talk facts
Fact: Every developed country except the USA has a national consumption tax, source OECD Tax Database (Google it if you are not familiar, it is generally accepted worldwide as the leading authority in the area). Further from OECD, the consumption tax typically is 20% or higher and typically generates 30% or more of total tax revenues. As a result, many of those countries are able to have lower and flatter income tax rates.
Fact: Under international law, a consumption tax can be and is levied on all imports and embedded consumption taxes are rebated on all exports. This constitutes the "tariff" that those countries supposedly charge on imports from the US and the "subsidy" that they supposedly give to their companies who export to the USA. This clearly gives companies in those countries multiple advantages over US companies in the global economy.
Fact: It is well documented that manufacturing jobs are going overseas and this is hurting our middle class. Some are going to third world countries to take advantage of low wages and lax regulations. But not all. For one thing, many of the low paid workers cannot execute more complex work assignments. So many of those jobs are going to other advanced, developed countries.
Opinion: The tax differential creates a significant incentive for companies to locate at least the more profitable segments of their value chain to countries on the favorable side of that differential. This is actually a fact, but I don't have a source to link, so I'll let it be an opinion.
Opinion: The knock on effect of our not having a consumption tax is more harmful to the middle class than the "regressive" impact of consumption taxes.

If you want to discuss which hurts the middle class more, that's fair game. But other facts are that those countries with consumption taxes and flatter income taxes than ours have less inequality in income and wealth dispersion, and they are generally moving toward more equal while we are moving toward less.

(10-28-2016 02:15 PM)john01992 Wrote:  look at me, i'm debating someone who thinks with an incorrect paragraph of his own words that automatically debunks mainstream beliefs.

You're not this stupid so you must simply be trolling.

Not my words... and not incorrect. She is merely noting that people like you make that claim. She didn't say it was 'true'. That's why she said 'considered by some'. She makes it very clear that she is only giving a quick primer on the issues and not taking a position, which is why I thought you'd like to read it (completely non-partisan). Obviously I should have known better.

You understand the difference between 'considered by some' and 'is a fact', right?

Quote:it is commonly said fair tax needs a higher rate to be revenue neutral. rates cited from 30% to 40%.

it is commonly said the prebate would be the largest welfare program in history.

it is commonly said it would shift the burden to the middle class and ruin the middle class.

ibid.

It is also commonly said simultaneously that God exists and that he doesn't. That Hillary has serious diseases and that strippers are working their way through med school.

Common in democratic and some RINO circles.

You're simultaneously arguing that it's regressive and that it's a large welfare program. It can't be both, other than semantics as I said.

By that I mean, if I give a poor person $5,000 in cash and then tax them $5,000, it DOES create a large cash pay out to the poor AND a large tax increase on them... but the net impact on that person is zero, as is the net impact on the government.

Only an partisan idiot trying to convince fools of something is focused on such meaningless trivialities. The end result is a wash.

Ham,

Yes, what you say is obviously correct.

I'm just trying to understand how you can talk about "effective" tax rate and ignore income?

First, "it is commonly said" describes opinions, not facts.

(10-28-2016 02:15 PM)john01992 Wrote:  it is commonly said fair tax needs a higher rate to be revenue neutral. rates cited from 30% to 40%.
it is commonly said the prebate would be the largest welfare program in history.
it is commonly said it would shift the burden to the middle class and ruin the middle class.

Now to address those specific opinions.

The rate comment is a semantic one. Fair tax is intended to be an included tax. Those who argue for the higher rate are calculating the tax as an incremental tax. A simple example will illustrate. Say something costs $100 total, of which $25 is consumption tax and $75 is pre-tax. As an included tax, the rate is 25/100 or 25%. As an incremental tax, the rate is 25/75 or 33%. There's no difference in the tax, just the calculation methodology. Fair Tax proponents insist that the included tax approach is more appropriate for comparison with income taxes, because as is obvious from the example, income taxes are calculated on an included tax basis.

It would be the largest primarily because it is comprehensive whereas the comparables are piecemeal focused programs. And if it's the largest, so what? What's wrong with that? If the goal is to reduce inequality, the largest welfare program sounds like a way to achieve that goal.

If you shift more of the tax burden onto the middle class at the same time you make yourself more attractive to more enterprises that are going to create more jobs to grow that middle class, that sounds no worse than a push to me.

(10-28-2016 02:30 PM)MplsBison Wrote:  Ham,

Yes, what you say is obviously correct.

I'm just trying to understand how you can talk about "effective" tax rate and ignore income?

I'm not really ignoring it... but because in your example, we aren't taxing income, you can't say whether the tax is progressive or regressive... that would depend on the choices of the individuals being taxed and not the tax mechanism itself. That's why I made the demonstration with the 3 people who all earned 300k, but spent 295, 300 and 305k. The income was always the same, as was the tax rate, but the effective tax rate 'relative to income' changes as the spending changes.

In order to determine if it is really progressive or not, you have to consider these other factors... which is where I initially went. It is the prefund that makes these 'flat' taxes progressive, and also encourages saving for lower incomes, that disappears as incomes rise. This is because the prefund IS based on incomes (as somewhat of a proxy for spending).... but the taxes paid are based on spending.

So no matter how much you earn, the taxes on your first $50,000 in spending is covered. THAT is where the reconnection to income comes in. That's why when we put that back in your examples, it once again becomes more progressive.

So the best I can tell, the real reason you advocate for a sales tax with a refund (yes, I know you called it a prefund) based on income, is for purely practical reasons.

It seems to me that, in a magical world where you could make everyone exactly report their true incomes, you have no problem with an income tax that has an increasing rate on higher income brackets.

(10-29-2016 10:11 AM)MplsBison Wrote:  So the best I can tell, the real reason you advocate for a sales tax with a refund (yes, I know you called it a prefund) based on income, is for purely practical reasons.

It seems to me that, in a magical world where you could make everyone exactly report their true incomes, you have no problem with an income tax that has an increasing rate on higher income brackets.

Yea, why bother with going to a sales/consumption tax if you're going to base it on income.

It fails for a variety of ways.

1) Rich people don't spend as much as poor people as a percentage of income. It, by its very nature, becomes a tax cut for the rich.

2) It would contract the economy

3) It would create all kinds of nightmares with income reporting, by providing a cash incentive for people to massively cheat on their taxes. That prefund provision would be a nightmare to police in practice.

4) It would probably crater our local and state government's financing.

Bad, bad, bad idea. Might look good over at some conservative think tank, but no way this works in the real world.

(10-29-2016 10:23 AM)Tom in Lazybrook Wrote:  Yea, why bother with going to a sales/consumption tax if you're going to base it on income.

The version of Fair Tax that has been introduced as proposed legislation is not based on income. The tax is a flat rate on all consumption (you could exclude consumption of certain items, but that would require a higher tax rate to make it revenue-neutral). The refund/prefund/prebate (whatever you want to call it) makes up for this by giving you a monthly check to offset the tax on consumption up to a certain level. The amount of the check is determined not by income but by family size. Say you set the tax at 30%, the target income at the poverty line (everything consumed up to the poverty line is therefore tax free, if you consume less you actually make money on the deal), and let's say we are looking at a family of four and the poverty level for a family of four is $30,000. Then that family gets a check (or EFT or whatever) for $750/month ($30,000x30%=$9,000 and $9,000/12=$750).

Replies to your other comments are based on that model.

Quote:It fails for a variety of ways.
1) Rich people don't spend as much as poor people as a percentage of income. It, by its very nature, becomes a tax cut for the rich.

The more you spend, the higher your rate becomes, all the way to infinity, because of the effect of the rebate/prebate/prefund. Agreed, the "rich" don't spend as high a proportion of their income as the poor and middle class. That's not necessarily a bad thing. A consumption tax would inevitably encourage more saving by the poor and middle classes. That is a good thing, particularly considering that we currently spend more and save less of our incomes than any other developed country. Bottom line, if you goal is to decrease income inequality by making the rich poorer, you probably won't like the consumption tax. If on the other hand, your goal is to make the poor richer, you would like it.

Quote:2) It would contract the economy

The models that I've seen generally predict up to a 2% higher annual growth rate as a result of going to such a tax. In particular, because of the way that consumption taxes are treated by WTO under international law, there would be a significant positive effect on balance of trade, and it would immediately become more attractive to conduct high value-added activities in the USA. Specifically, countries with national consumption taxes are allowed to charge it on imports when landed (without counting it as a tariff) and also (and this is a huge also) to rebate imbedded consumption taxes on exports. You probably hear about countries with which we have free trade agreements that still charge "tariffs" on imports from the US and also pay "subsidies" on exports to the US. This is what that is about, and it is perfectly legal under international law. In fact, any attempts by the US to counter this would be illegal under international law and would subject us to sanctions by the WTO.

The way that it would cause the economy to grow is that it would replace the current tax disincentives for locating value added parts of the value chain in the US with a significant tax incentive for doing so. It would greatly increase US competitiveness for manufacturing. That would invariably bring manufacturing jobs to the US, which would benefit and grow the middle class more than any other policy being proposed by either side.

Quote:3) It would create all kinds of nightmares with income reporting, by providing a cash incentive for people to massively cheat on their taxes. That prefund provision would be a nightmare to police in practice.

Actually, it would reduce those incentives to almost nil. The only way to cheat would be to lie about your family size. That's not exactly impossible to monitor. Moreover, almost all tax collection would now occur at the business level, meaning far fewer entities to audit, therefore increasing audit coverage and efficiency, and almost certainly compliance. Remember also that any attempt to dodge the tax would require the participation of at least two parties, buyer and seller, and the more people involved, the harder keeping things secret.

Quote:4) It would probably crater our local and state government's financing.

Based upon what? It would be a relatively simple matter for state and local governments to piggy back on the consumption tax and that would give them their required revenues with less hassle and more certainty than now.

Quote:Bad, bad, bad idea. Might look good over at some conservative think tank, but no way this works in the real world.

So the 30-odd developed countries (every one but us) that rely on consumption taxes for at least a significant portion of their tax revenues are not in the real world? What planet is Germany on? France? England? Sweden? You name it, any other developed country?

(10-29-2016 10:11 AM)MplsBison Wrote:  So the best I can tell, the real reason you advocate for a sales tax with a refund (yes, I know you called it a prefund) based on income, is for purely practical reasons.
It seems to me that, in a magical world where you could make everyone exactly report their true incomes, you have no problem with an income tax that has an increasing rate on higher income brackets.

Here's the problem with that. In a closed system, with no alternatives, it might work. But in the global economy, we don't have a closed system.

Let's say our top rate to make that happen is 40%. Let's say the top rate in other developed countries is 20%. Those numbers aren't far off from the current situation. If I have a deal that is going to make $100 million a year pretax profit, then I can save $20 million by moving that deal overseas. Note that under current law, I don't have to move overseas myself, just move the deal overseas, and don't take out any more personally than I need to live on. We could remove the incentive to move overseas by lowering our tax rate to meet the world. The tax revenue impact would be a net of increases due to increased activity here and decreases due to lower rates on activities that were here before. If the net impact is a reduction in revenues, we could make it up the way other countries do, with a consumption tax.

We could also remove the incentive to move overseas by requiring US citizens to pay US taxes on worldwide income, both personally and on their share of companies that they control. Now those "rich" individuals would have to make a choice that is currently not required. Do they stay here and pay $20 million more in taxes, or do they move overseas and bank the additional income? This usually prompts some reaction from the left like, "Muffy is not going to like Mogadishu." First, Muffy's not going to have to move to Mogadishu. There are plenty of other alternatives that will accomplish the same objective, many of them quite pleasant--Madrid, London, Geneva, Valparaiso, Oslo, Auckland, Budapest, Prague come to mind. Second, give Muffy $20 million a year, and she could make Mogadishu quite enjoyable. My best guess is that there might be some people who are so red-white-and-blue that they stay here and pay $20 million for the privilege, but that there are also a bunch that would reach their choking price far below that level.

So your "true incomes" depends upon exactly what you mean by that term. If you mean US source income, then people will keep earning more and more income overseas to take advantage of lower rates. Their effective US tax rate will still be much lower than US statutory rates. If you mean worldwide income, then a bunch of them will be leaving to go overseas. Their effective US tax rate will be zero.

By the way, this analysis frequently prompts a comment from the left to the extent that we don't know this will happen, or they don't believe this will happen, or a question as to how we know this will happen. Simple, it's happening now. People aren't moving themselves overseas in great numbers, because they don't have to. They are moving investments (and with them middle-class jobs) overseas, just as noted above.

Or do you have something else in mind?

(10-29-2016 10:11 AM)MplsBison Wrote:  So the best I can tell, the real reason you advocate for a sales tax with a refund (yes, I know you called it a prefund) based on income, is for purely practical reasons.

It seems to me that, in a magical world where you could make everyone exactly report their true incomes, you have no problem with an income tax that has an increasing rate on higher income brackets.

Actually I would. VAT/Sales Tax acts as a tarriff on imports. That's why I want it. Having France be at a 20% advantage to us costs us jobs.

I base the prefund on income because that's the only way to estimate spending up front.

(10-29-2016 10:23 AM)Tom in Lazybrook Wrote:  Yea, why bother with going to a sales/consumption tax if you're going to base it on income.

It fails for a variety of ways.

It fails because you misrepresent it.

You can't do a prefund based on what hasn't yet been spent. If you'd rather do as Europe (and many states) do and exempt certain items from VAT, we can do that... but many of those things (like food, clothes etc) are imported. The VAT they have and our lack of one gives them an automatic 20% advantage.

Quote:1) Rich people don't spend as much as poor people as a percentage of income. It, by its very nature, becomes a tax cut for the rich.

Wrong for a variety of reasons... Primary among them is that the wealthy don't have income, they have gains. Their tax rate is well below 20%. a 22-24% VAT would be a tax INCREASE for them... and we've already addressed the issue for the poor.

Quote:2) It would contract the economy

How? I know it wouldn't... but I want to hear your rationale. So you know, decades of evidence both here (sales tax) and in Europe disagrees with you.

Why would raising money for the government through a VAT harm the economy any more than raising money for the government through any other means?

Quote:3) It would create all kinds of nightmares with income reporting, by providing a cash incentive for people to massively cheat on their taxes. That prefund provision would be a nightmare to police in practice.

Yeah... you should read up on it. This is so wrong I don't know where to start. First of all, once you're above say 50k (or wherever we set the cap) then its pointless to cheat.... and if you make less than 50k, there is no advantage to report earning even less... so the only people who CAN cheat are those who say make 50k from a w-2 job and then work 'for cash' under the table. How is THIS cohort bigger than the current cohort of people who avoid reporting income? At least THIS way, they're encouraged to report the 50k (so they can get the prebate). The only guy who 'cheats' is the guy who only earns 30k but reports that he earns 50k. Who the hell is going to do that and how would they do it?

Said differently, the drug dealer and trust fund baby get no prefund.

and more importantly, those few income reporting cheats STILL pay taxes. The foolish guy who earns 30k and reports 50k only gets an additional 4k.

The easiest way (in MY Mind) would be to base the prefund on your wage income... Just as they can take money OUT of your paycheck for Medicare, Medicaid and witholding, the government could just as easily add money to your paycheck.

Quote:4) It would probably crater our local and state government's financing.

Again, why? Why is it okay to raise taxes through one mechanism but not another? What difference does it make?

Quote:Bad, bad, bad idea. Might look good over at some conservative think tank, but no way this works in the real world.

But it DOES work in dozens of countries... and the only difference between what they do and the 'fair tax' is some semantics.

The two bi-partisan committees that recommended adding a VAT/Sales tax are essentially copying what Europe does.... and they BOTH have a prefund. The Fair tax is not nearly as different as you think it is. I'm a bigger fan of those plans than the fair tax, but they are really not that different and all preferred to what we do now.

STARTING with the idea that the wealthy don't have/report income.... but everyone else does... which is PRECISELY why you need to move away from Income Taxes if you want the wealthy to pay more.

Your side has to start wising up to this. How many ultra wealthy people do you have to see with a tax rate in the teens, when AMT is supposed to limit you to 25%, AND have them move money offshore to avoid our taxes altogether before you recognize this and start taxing something OTHER than income? Hell, why does the AMT exist AT ALL if people aren't finding ways around the statutory rates?

Ham,

So two things:

1) OK, but here is what makes me suspicious: why are you trying to sell this as a way to "claw back" the taxes that the rich should be paying but are skipping out by moving income out of the country?

It's just a little hard for met to believe that the actual prime motivation for this is to stop people from cheating their income taxes. Why do you care if rich people do that? How does that hurt you?

And so, I can only assume that there's another reason, the real reason, that you want sales taxes to fund the federal govt rather than income taxes. And you're not being forthcoming about what that reason is ....

2) I don't follow that a federal sales tax acts as an import tariff. Why does a 10% sales tax on an American good that costs $X differ than a 10% sales tax on an import that costs $X ??



At the end of the day, I actually don't care what mechanism is used to collect the tax dollars. It should be whatever the smartest, best way to collect the dollars would be.

I care only about:

- enough tax dollars be collected to fully fund federal spending
- the wealthier you are, the higher the rate of taxes that you pay is

(10-29-2016 06:02 PM)MplsBison Wrote:  Ham,
So two things:
1) OK, but here is what makes me suspicious: why are you trying to sell this as a way to "claw back" the taxes that the rich should be paying but are skipping out by moving income out of the country?
And so, I can only assume that there's another reason, the real reason, that you want sales taxes to fund the federal govt rather than income taxes. And you're not being forthcoming about what that reason is ....

So let me get this straight, you are too stupid to understand the explanations that you have been given, so you attribute that stupidity to nefarious intent on the part of my buddy Hambone?

OK, that's a bit harsh, and I apologize, but I think he and I are both getting tired of offering the same explanations over and over and having them ignored by those whose preconceived notions prevent them from being open minded enough to understand.

Let me speak frankly. The reason that he is "trying to sell this as a way to "claw back" the taxes that the rich should be paying but are skipping out by moving income out of the country" is because this is a way, and pretty much the only "way to "claw back" the taxes that the rich should be paying but are skipping out by moving income out of the country." Unless you want to impose draconian measures which will ensure massive capital flight, the best way to tax the "rich" is to tax them when they spend, rather than tax them when they make, money. There will always be multiple ways to make money perfectly legally while sheltering it from taxes. But with a consumption tax, it's pretty hard to spend it without paying taxes.

Quote:2) I don't follow that a federal sales tax acts as an import tariff. Why does a 10% sales tax on an American good that costs $X differ than a 10% sales tax on an import that costs $X ??

Let's say you have a product that costs $400 to manufacture in the US but only $300 to manufacture overseas. Assume that $300 is the landed cost at a US port of entry, including shipment costs. Assume further that we have a free trade agreement with the source country. In today's situation, that product comes into the US economy at a cost of $300, with a $100 advantage over the US-made product. Now let's impose a 25% consumption tax. The cost of that import just went up to $400. We collect a $100 consumption tax (25% x $400) when it is offloaded at the port of entry.

Let's look at one other aspect, what happens in the source country. Both the US and the foreign source product include a significant amount of embedded taxes in cost--manufacturer's income taxes, its supplier's income taxes, it's employees' income taxes, supplier employees' income taxes, for the US company, consumption taxes collected at every step of the process for the foreign company, plus a lower level of those income taxes. What happens when the product is exported is that the origin country forgives all the embedded value added taxes.

So even with a country with which we have a free trade agreement, we get to collect a "tariff" on imports and we get to "subsidize" exports. Under international law, it's not a tariff or a subsidy, so it's perfectly legal. But when you hear people complaining that our free trade partners collect "tariffs" on imports from the US and pay "subsidies" on exports to the US, that is what they are talking about. It obviously has a strong enough protection effect that free trade opponents complain about it repeatedly. That should answer your question.

Quote:At the end of the day, I actually don't care what mechanism is used to collect the tax dollars. It should be whatever the smartest, best way to collect the dollars would be.

If you want a tax mechanism that is relatively easy to police, and one that will impose a lesser drag on the economy, then the consumption tax is the way to go, either exclusively or as a major component of the total tax picture.

Quote:It's just a little hard for met to believe that the actual prime motivation for this is to stop people from cheating their income taxes. Why do you care if rich people do that? How does that hurt you? ...

I care only about:
- enough tax dollars be collected to fully fund federal spending
- the wealthier you are, the higher the rate of taxes that you pay is

How do you reconcile those two statements from the same post? On the one hand you don't seem to care about what rich people pay, on the other you do. What is your real position?

Also, regarding your "weather you are, the higher rate of taxes that you pay" comment, the point that Hambone and I are trying to make is that in a global economy that is impossible to achieve when other countries have lower top marginal tax rates. And today, you can pretty much take your pick of which one you want. Given the choice of paying 40% here or paying 12.5% in Ireland, they're choosing to pay 12.5% in Ireland and will continue to do so. So suppose you pass a law that you have to pay US taxes on all worldwide income. That's when it becomes economically infeasible for the "rich" to stay in the US. And this is not, "Muffy is not going to like Mogadishu" stuff. There are plenty of very desirable places to live that offer significant tax advantages versus the US. And for that matter, when you're talking about saving tens of millions of tax dollars, that's enough money to make even Mogadishu pretty livable.

(10-29-2016 06:02 PM)MplsBison Wrote:  1) OK, but here is what makes me suspicious: why are you trying to sell this as a way to "claw back" the taxes that the rich should be paying but are skipping out by moving income out of the country?

I'm not. The primary reason to do it is that it levels the import/export differential with most of the rest of the world. I'm merely responding to the idea that it is somehow a break for them. It's not.

Quote:It's just a little hard for met to believe that the actual prime motivation for this is to stop people from cheating their income taxes. Why do you care if rich people do that? How does that hurt you?

Because they aren't cheating on their taxes. What they're doing is making the best choice for them and their money. They're still paying taxes on their money, just not here. I want their money here for numerous reasons...
1) they're paying taxes... I want them to pay it here
2) they're investing in businesses (which creates jobs)... I want them to invest it here

Both of those things are good for all of us and don't 'hurt' the wealthy.

Quote:And so, I can only assume that there's another reason, the real reason, that you want sales taxes to fund the federal govt rather than income taxes. And you're not being forthcoming about what that reason is ....

Wow. Because I'm trying to take over the country through a pattern of misinformation? I don't even know how to respond to this. Obviously neither party is pushing this too hard, so it certainly isn't for political purposes.

Quote:2) I don't follow that a federal sales tax acts as an import tariff. Why does a 10% sales tax on an American good that costs $X differ than a 10% sales tax on an import that costs $X ??

Owl explains this better than I do, but the gist of it is that our products sold there have a tax on them... and their products sold here do not.

Here for a primer that goes through some of the math: https://en.wikipedia.org/wiki/Value-added_tax


Look at the MAP towards the bottom of who uses VAT and who doesn't. Us, Greenland and a few African nations.

Some selected quotes

Many politicians and economists in the United States consider VAT taxation on US goods and VAT rebates for goods from other countries to be unfair practice.

Another avenue of criticism of implementing a VAT is that the increased tax passed to the consumer will increase the ultimate price paid by the consumer. However, a study in Canada reveals that in fact when replacing a traditional sales tax with a VAT consumer prices actually fell.

Obviously the devil is in the details, but the major concerns about VAT are fairly easily addressed.

Quote:At the end of the day, I actually don't care what mechanism is used to collect the tax dollars. It should be whatever the smartest, best way to collect the dollars would be.

I care only about:

- enough tax dollars be collected to fully fund federal spending
- the wealthier you are, the higher the rate of taxes that you pay is

Which is precisely why I want the wealthy to have increased reasons to invest their money here and/or decreased reasons to keep it elsewhere.

Consider how much money it costs and how inefficient it is to set up all of these complex transactions to avoid US taxes... and you KNOW (because the government tells you) that the top 100 pay a rate in the teens despite having a 40% marginal rate. If you get 20% from them, that's a tax INCREASE, not a cut.

I appreciate that the two of you keep trying to educate people on this but it seems a few just don't want to understand.

I really don't understand why fair/flat hasn't caught on. So much better.