Taxes, taxes, taxes and LESS TAXES... wait, what?!?!?

[BugI02]

Although I prefer the consumption tax model personally, I would caution against unintended consequences. Driving down consumption, as people move to tighten up where they can to decrease their tax liability, could easily negatively impact the overall economy. The number I remember, that 70% of the US economy is based on consumer purchases, could be out of date; but if it is even still close I think the effects of a wholesale change in taxation could be unpredictable

Such changes might present opportunities, though. I would welcome a change back to making truly durable goods, which would last a long time if well taken care of, as a change from cheap throwaway products. If market forces were right, as could be the case with consumption based taxation, consumers might be willing to pay a premium price for goods that don't need to be replaced as often and such products perhaps could be profitably produced onshore if absolute lowest price was less of a driver

 

[jamil]

Sure it's somewhat arbitrary. I don't deny that.

And you are exactly correct that any rate-based taxation might similarly be.

I'd agree that it's potentially a moral issue that someone pay more tax just for buying more stuff. My point is only that *if* you grant the legitimacy of rate-based taxation, it is less morally defensible to tax their income or property that their consumption. And it is less economically desirable also.

Maybe it's not a compelling argument, but I will argue just the same income taxation in particular is morally less justifiable compared to other forms of taxation. You could argue that a property tax is like a sales tax, only paid on installments. Instead of taxing the transaction that grants ownership, you tax the ownership afterwards.

But when you tax income, the government is making itself a party to your employment contract and via withholding demanding you work for the government FIRST.

I'd agree to some extent that fee-for-service is generally a better model. Uncle Sam builds a new $5B aircraft carrier and each of 400 million American households gets a bill for $12.50 as they will all presumably each benefit the same from it.


I won't stipulate the legitimacy of any particular taxation scheme save consumption. However, I will say certain things are preferable to others within a given framework-- whether I like that framework or not.

Bringing in the aspect of morals into how we should tax makes it into an is/ought argument. Because of Hume's Guillotine, "ought" doesn't logically follow "is" on its own. You have to have an overall objective value to which you apply is, to justify the ought. If you turn your argument into something more objective, making it into an is argument, where the conclusion follows from the premise, there could be merit in saying that. Taxing consumption is "better" than other rate based taxation if you properly define "better" and show the facts which support that it is indeed "better".

I think consumption tax does have some merits. But I'm inclined to agree with Bug here, at least partially, because the proponents of consumption taxes tend to make assumptions. For example, when opponents say that it would just raise prices of goods beyond the usable income gains from not having to pay income taxes, proponents say that it'll even out because businesses would adjust their prices to account for the income & employer taxes they no longer have to pay. But it's not apparent that this would be the case. They just believe it will. Likely, businesses would lower their prices a little, but **** consumers as much as they could get away with.

 

[Libertarian01]

I didn't realize how ignorant some people are.

I just got done having a conversation with my CPA buddy who explained to me how some of his very bright clients, including medical doctors, folks with years of education, cannot understand how they are paying less because their tax bill was higher at the end of the year.

For example, a guy last year may have had a total tax bill of $80,000. At the end of the year due to withholding and other issues he got a refund of perhaps $2,000 to owing maybe $8,000. This year his total tax bill was $55,000, but the withholding went down to only $40,000, so at the end of the year he owed $15,000. He thinks his taxes went UP, even though they dropped $25,000!

He has had multiple clients that have had to come in and he has shown them, side by side, their bill from last year to this year, with this year being many thousands of dollars less. BUT with the lower withholding they owe more at the end of the year and think their taxes went up, leaving his office PO'd!

It amazes me how some folks can be so bright on some issues and woefully ignorant on others, even when you set things side by side with cold, hard numbers.

Regards,

Doug

 

[jamil]

I didn't realize how ignorant some people are.

I just got done having a conversation with my CPA buddy who explained to me how some of his very bright clients, including medical doctors, folks with years of education, cannot understand how they are paying less because their tax bill was higher at the end of the year.

For example, a guy last year may have had a total tax bill of $80,000. At the end of the year due to withholding and other issues he got a refund of perhaps $2,000 to owing maybe $8,000. This year his total tax bill was $55,000, but the withholding went down to only $40,000, so at the end of the year he owed $15,000. He thinks his taxes went UP, even though they dropped $25,000!

He has had multiple clients that have had to come in and he has shown them, side by side, their bill from last year to this year, with this year being many thousands of dollars less. BUT with the lower withholding they owe more at the end of the year and think their taxes went up, leaving his office PO'd!

It amazes me how some folks can be so bright on some issues and woefully ignorant on others, even when you set things side by side with cold, hard numbers.

Regards,

Doug

Maybe they should look at their effective tax rate after completing their tax return, and compare it to last year.

Here's the problem. Lots of research suggests that once people believe something, they'll look for the first thing that confirms their belief, and they'll expend much effort to find information critical of the opposing side. My SIL says the tax break is peanuts. That's because Nancy Pelosi said it's peanuts. So, does dear SIL bother to look into the possibility that Pelosi's statement was political? Did she look deeper into the issue to see if Pelosi was full of ****? No. But she spent days researching to dig up anything she can find that is critical of the tax cuts. She accepts Pelosi's statement as true without looking critically at it at all.


Was your tax rate significantly different from last year? "That's just trickery from Fox News! My refund was lower! Therefore Trump's tax cut is fabricated."

 

[Libertarian01]

Maybe they should look at their effective tax rate after completing their tax return, and compare it to last year.

Here's the problem. Lots of research suggests that once people believe something, they'll look for the first thing that confirms their belief, and they'll expend much effort to find information critical of the opposing side. My SIL says the tax break is peanuts. That's because Nancy Pelosi said it's peanuts. So, does dear SIL bother to look into the possibility that Pelosi's statement was political? Did she look deeper into the issue to see if Pelosi was full of ****? No. But she spent days researching to dig up anything she can find that is critical of the tax cuts. She accepts Pelosi's statement as true without looking critically at it at all.


Was your tax rate significantly different from last year? "That's just trickery from Fox News! My refund was lower! Therefore Trump's tax cut is fabricated."

I don't disagree but from what I have heard the bigger issue is the change in withholding. People are paying less AND getting a larger paycheck, but that larger paycheck is reflecting less withholding, thus creating a greater debt at year end.

Mike said early in the season his "average" client (and this is just guessing) is about 3% lower. Now, that translates into a 15% drop to 12%, or a 30% drop to 27%, which isn't 3% at all, but off the base you see what I mean. He has had very few clients owe more.

But when you sit down last years return RIGHT NEXT to this years return and they still don't get it that they're paying less...

Regards,

Doug

 

[ATOMonkey]

Let us read from the Chapter 1 verse 5 in the prophetic film Idiocracy:

"And lo the idiots were unable to complete even the most rudimentary arithmetic.."