What are the pros of a flat tax over a proggessive tax?

Basic error if you believe in supply and demand. Only the likes of excise taxes are partially passed on to consumers. The tax burden will be dependent on demand elasticity

Its a mighty shame right wingers don't understand supply & demand!

 

Business taxes have nothing to do with supply and demand. Thats just total crap. You just randomly threw out some buzzwords that are totally irrelevent. Rework your programming.

 

You merely show your innocence. Its the price elasticity of demand that informs us to what extent taxes are passed on in the form of price rises. To have the consumer face all of the tax burden you'd need a perfectly inelastic demand curve.

Now you could try and refer to profit-related tax. The idea of increasing price then makes no sense unless the firm has been cretinous and failed to choose the profit maximising price/quantity combo

 

What are the pros?

None, flat taxes are actually regressive, their also less efficient. I'm a former Fair Tax guy, but realized quickly it was all mostly hype that would be very advantageous to those at the top and very harmful to those who earn the least. I do think simplifying the tax code is important for transparency reasons and the discretion it gives to bureaucrats. I've recently grown fond of a negative income tax that would replace all tax and entitlement programs.

 

LOL you are so ignorant.

 

LOL you are so ignorant.

 

The schoolyard response informs me that you've already lost. It no longer surprises me that right wingers do not understand basic economics. The importance of price elasticity of demand for tax burdens is well known (we were taught about it as nippers in secondary school). That profit-related taxes will have no impact (except perhaps for firm exit) is easily understood. One just needs to know that, according to supply and demand, it is profit maximisation that determines firm pricing (choosing an output level where marginal revenues and costs are equsted, leading to a price determined by the demand curve)

 

with a flat tax people still get rich, just look at how much the rich paid in taxes not so many years ago

I personally think we need a flat tax for every dollar one earns over the poverty limit, rich or poor, same tax per dollar, all income treated as income


.

 

That will assuredly have regressive elements (given the nature of marginal utility) and, with no integration of tax and benefit systems, either increase poverty or generate a poverty trap

 

it's much better then a consumption tax which also would have no integration of tax and benefit systems

the rich currently pay about 15% on 90% of the countries income, so a flat tax of 30% for every dollar above the poverty line would double the taxes collected on 90% of the income, as then the rich would pay the same tax as the working class


.

 

Its neither better or worse, its merely as bad.

 

Forget income taxes AND consumption taxes. A person's wealth (all assets - all liabilities) is the best measure of his "stake" in this country. Tax wealth on a flat basis.

 

The 'pro' of a poll tax is that it produces revolution, quite quickly. Go for it!

 

A transaction tax would be the most reasonable since it would tax money only when it changes hands. It has been estimated that a tax of 0.0002% on all electronic transactions would eliminate the need for all other taxes at every level of government and produce a surplus. The only real objection was from an Op-ed the Wall Street Journal which complained that a $50,000 tax on a $1Billion bank transfer would cause the entire global financial system to grind to a halt, a specious argument at best.

 

Yup. I think more important than whether the tax rate is flat or progressive is integration of tax and benefit systems, so there is no high marginal taxation, or marginal utility jumps, no matter the income (when you take into account both taxes and benefits). This could be achieved with negative income tax based welfare systems - Something like this:
https://docs.google.com/document/d/1Yuh_9_Oy5SPeKGppOhNPTpv3h5TTvpB6rQ46SQ54O78/edit

If there is going to be progressive tax, then it should really be on the very rich, and not on higher middle class, as it often ends up being.

 

In terms of revenue maximising (such that we have sufficient funds to create a post-tax schedule with no unemployment or poverty traps), targeting the 'very rich' isn't going to be sufficient. Too much dodging and evasion!

 

Well, for one thing, you couldn't monkey around in the economy via tax deductions. And for another thing, it would make the amount of money taken in taxes obvious. In short, it's a powerful way to prevent the corruption of politics. If I pay 20% to the government, and everyone pays that amount, that's all there is. If the government wants to come take more, they cannot hide it as a "we won't let you deduct this anymore" increase, or put it on the employers to take from the employees. My bill goes from 20% to 22%. And the government either makes a REAL case, or it doesn't pass. It also makes the class welfare option impossible. I cannot raise my neighbor's taxes without raising my own, so arguing that my neighbor has too much woudln't work.

The smartest thing governments did with the tax code was automatic deductions. Since people are not writing a check for the amount of their taxes, people don't think about them. Thus the government can raise taxes on income without a sticker shock. In fact, most people who get a refund from the government don't even realize that not only have they been paying taxes, but that the government KEEPS the interest that the money makes sitting in the bank before "refunding it". If people had to literally write a check for 40% of their income, there'd be a riot, but since the government can take it out in small increments over a year, people don't notice. Progressive tax rates are much the same thing. As long as you can pit the "poor" against the rich, there's no limit to the money you can rake in. Just talk about fairness, and the poor will gladly vote to raise taxes on the rich. Again, corrupt and unfair, but it makes government easier to fund. Make it a fee on something that only the rich buy, better still.

 

Now there is a recipe for disaster.

People will be balancing the tax rate against the interest rate on a loan, the tax rate will be higher and to avoid taxes people will get a loan to negate their assets. Interest on a loan will be much lower than the income tax rate.

Taxing wealth shifts the tax burden from the young to the old. Seniors have paid off their debts, home mortgage, saved for retirement, kids are out of the house, done all the right things and bam! you hit them with a wealth tax.

Most people have the majority of their financial value in non-liquid assets like their house and land. How are they going to pay the tax without cash? That was the problem in FLorida and California with the property tax (which is a wealth tax). A person with a modest income buys a modest home, 10 or 20 years later the city has expanded and their rundown home is in the middle of prime real estate, they can't pay the property tax and are evicted, or they can't pay and are forced into a quick sale and get ripped off.

How about the rich, the vast majority of their wealth is not liquid, its in ownership of their company, or property, or factories.

Whats this wealth tax rate going to be? 10% maybe? So in 10 years a rich person loses their wealth and is back to the same old average level of wealth. Thats a great disincentive to invest, start a new company, etc. And a great incentive for rich people to just leave the country. You think Warren Buffett would stay in the US if there was a big wealth tax? Hell no he would cut and run.

A wealth tax means the govt owns everything, there are no private property rights. The govt basically "allows" you to keep what it thinks you need.

Wealth tax - terrible idea.

 

This is a very silly comment. Wealth merely refers to a stock, rather than a flow. We would expect a tax regime to include wealth taxes. It just isn't cunning to think that we can construct a rational system based purely on such taxes

 

Actually, wealth taxation is economically far superior to income taxation, especially in a typical modern economy where almost all wealth consists of unproductive debt, rent collection privileges, etc.

Nope. The loan would be a taxable asset in the lender's hands. Borrowing money would do nothing whatever to negate the asset tax burden.

Only to the extent that the old are also rich.

If they can afford it. It's true that there is a transition problem, whereby people who have paid income tax all their lives are then taxed on their after-tax savings. But that is easily resolved by extending an asset tax credit for income taxes actually paid. The greedy, dishonest rich pay very little income tax, so they would not be sheltered, while honest working people who had already paid their fair share of taxes on their earnings would not be taxed on their savings. It is also virtually guaranteed that there would be a universal individual wealth tax exemption analogous to the universal individual income tax exemption. Maybe the first $100K would be tax free.

Use the assets more productively, or sell them to someone who will. That is why an asset tax is good for the economy. In particular, land's value should be taxed at a very high rate because its supply is fixed, and its value comes from government and the community in the first place, not the landowner.

Garbage. The problem in FL and CA was that rich, greedy parasites wanted to take wealth from society and not repay it in taxes.

Such claims are just false, stupid, absurd, and dishonest. When people see their property tax bills rising to the point where they can't afford them, they just sell out for a fat profit, and buy a nicer home in a quieter, less economically desirable neighborhood. All the stupid scare stories about seniors being tossed into the gutter for unpaid property taxes are nothing but deceitful crap. The few instances that actually happened occurred because the homeowners were senile, didn't understand their tax bills or the legal papers they were receiving, didn't have any family or legal representation to help them figure out what to do, etc. The same thing would have happened if they had an unpaid credit card bill, parking tickets, or whatever. Their rising property tax bill was just the trigger, not the cause. In fact, it proved they had plenty of assets to meet their obligations. They just weren't able to understand what was happening or figure out what to do to stop it.

And is either making profits sufficient to pay the tax, or should be sold to someone who can use it more productively.

No. 1% would be a reasonable start. 2% would replace all current federal tax revenue. I doubt it is feasible to go over 5% with a broad-based wealth tax. However, taxes specifically on rent collection privileges like land titles could be much higher.

Time for you to do some remedial math. Assuming no inflation, income, or spending, a 10% wealth tax would reduce the person's assets by about half in seven years. Another seven years, and their assets would be down to 1/4 of the original level. It would take about 40 years to tax away 99%, reducing a fortune of $1G to $10M.

The effects of more reasonable rates are quite modest. A 1% wealth tax would take over 70 years to reduce a person's fortune by half. A billion, down to a mere $500M?? Oh, the humanity!

You think income tax isn't? A wealth tax actually opens up more opportunity to people who aren't already wealthy.

In most cases that would be futile, as their assets can't be moved. Selling them would just mean they were paying all the future net tax on them in advance, through value discounting.

You haven't thought this through.

Silliness.

More silliness.

It's actually a much better idea than income tax.

 

First, you need to keep up with the thread. The proposal was a wealth tax and only a wealth tax, with wealth defined as assets - liabilities.

I would respond in detail, but you don't even understand the difference between debt and wealth. Debt is a liability, it is not wealth.

But a little bit of data, if you check the federal reserve data on wealth (http://www.federalreserve.gov/releases/z1/current/z1.pdf) you will find that total household and nonprofit organizations checkable deposits and currency account for 0.86% of their total assets, and 1.05% of the total net worth. All other assets are in real assets (house, car, land, factory, etc) and financial assets such as retirement plans (401k), college funds, stocks, timed instruments (savings bonds, CD, treasury bonds), etc.

A wealth tax of more than 1.05% cleans out all readily available cash and forces people to sell other assets, which has a significant impact on their lives.

Just to be revenue neutral, the wealth tax would have to 3.3% with the current national total net worth around $60T.

I know, you are going to say that only the top 1% will pay the wealth tax, then the tax is around 9%. Back to my original post - the wealthy will leave the country or hide their assets, those that dont will be driven out of wealth and back to the "average" level in 10 years or so.

And when 1% of the population funds the remianing 99%, the system will be corrupt and collapse.

A national wealth tax has 2 major problems. How are you going to value every property in the nation every year? How are people going to pay the tax when most of their wealth is not liquid?

Time for you to learn some remedial economics.

To pay the 9% or 10% wealth tax, people would have to sell assets that generate income, which causes them to sell further assets. Remember, only 1.05% of total net worth is completely liquid cash. Its not a simple rate equation like you would use on a loan.

Class dismissed.

Do some research about the impact of property tax. Start with South FLorida, that was the entire motivation for the reworking of the Florida property tax in 2007.

 

So? How would borrowing reduce wealth? You have a liability, but you also have an equivalent asset, the loan proceeds.

ROTFL!! You'd "respond in detail," would you? Don't make me laugh. You understand nothing whatever about this subject.

Debt is a liability for the debtor, but an asset for the lender. Debt is also a liability that comes with an asset: the loan proceeds. You obviously just don't know anything about debt, wealth, assets, liabilities, or taxation.

No, that's just a stupid lie on your part. It is easy for rich people sell or liquidate a portion of their financial assets with no impact whatever on their lives. If you had ever owned any financial assets, you would know that.

That's household net worth. To prevent people from sheltering their wealth from taxation using corporate vehicles, you'd also have to tax corporate wealth, too.

I say no such thing. It would likely be roughly the top 10%. But most of the tax would be paid by the top 1%.

It won't do them any good, as already explained.

Already refuted. Do the math. Even at a tax rate of 3%, it takes about 25 years just to reduce a fortune by half.

Such claims are absurd. It is the 99% who are currently funding the 1%.

Most assets are constantly valued in the financial markets. Real estate is already valued by local property tax authorities.

How are you going to measure everyone's income every year?

Most TAXABLE wealth IS liquid, and they will quickly learn to maintain sufficient liquidity.

ROTFL!! You are about to make a fool of yourself again, I see....

Already refuted. The overall wealth tax rate would be in the low single digits. You are just makin' $#!+ up.

Nope. Why would it? Once they sell some, they have the liquidity they need; and from that point on, income from their remaining assets covers the tax.

Irrelevant. Liquidity cycles through the system.

Right: it's even simpler.

As I have just schooled you again.

I have. You are just makin' $#!+ up.

Bull$#!+. The FL property tax was reworked to increase the welfare subsidy giveaway to landowners, who don't want to repay any of what the community is giving them.

Here's a typical case:

When Sergio Martinez, 41, bought his 5-bedroom Miami house three years ago for $405,000, the taxes were only $2,800. But before he became eligible for the homestead cap last year, they'd jumped to $7,400. His house is now valued at more than $900,00 — and if he were to sell it, the new owner would be staring at an annual tax bill of almost $20,000. "That's a big reason I'd have trouble finding a buyer for this house, and why I'd have trouble buying a new one here myself," says Martinez, who now works two jobs in order to pay his tax and insurance bills. Unless Martinez wants to leave South Florida, "I'm essentially in jail in my own house."

http://www.time.com/time/nation/article/0,8599,1632143,00.html#ixzz241vZHtps

See that? The community has GIVEN HIM $500K in increased land value, or $100/yr, and he complains at having to pay back a microscopic $7K of it! And the house wouldn't be valued at $900K if he couldn't find a buyer for it at that price, or close to it. "In jail in my own house," indeed. What a stupid, grotesque lie. It is exactly the low property tax rates, homestead caps, etc. that have made FL real estate so unaffordable. If you can't afford your property taxes, just shut up, sell your house, and shovel the money the community has given you into your pockets.

Greedy scumbag.

 

Property tax? Don't forget to mention your contempt for home owners (despite home ownership being encouraged in countries with higher poverty risk)

 

It's actually more specifically for you.

Hehe. Clue time.

 

You're not making sense! The self-insurance role of home ownership is well understood (and tested empirically by the analysis into welfare states by the likes of Frank Castles). In contrast, you've suggested home owners are worst than thieves. Tut tut!