Balance Budget Tax Proposal

Discussion in 'Budget & Taxes' started by Shiva_TD, May 21, 2016.

  1. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    Before even starting we need to understand that "deficit spending" is merely the result of not collecting enough in taxes to fund the Congressionally authorized expenditures. Currently all deficits relate to general expenditures because Social Security/Medicare have a dedicated tax source that has collected trillions of dollars in excess of authorized expenditures.

    In 2015 we had about $2.282 trillion in gross general tax revenues and $2.721 trillion in general expenditures resulting in a deficit of $439 billion dollars.
    https://en.wikipedia.org/wiki/2015_United_States_federal_budget#Receipts

    While there are (8) different federal general tax revenue sources identified the personal income tax ($1,534 billion), corporate income tax ($449 billion), and Estate/Gift Tax ($18 billion) all relate to "income" and represent roughly 88% of all federal general tax revenue and must be the focus for balancing expenditures and revenue.

    We're also going to consider the fact that Congress determines the authorized expenditures, not us, and Congress doesn't seem to have any problem with "spending money" (sarcastically stated) but does have a serious problem with collecting enough revenue to fund the expenditures and prevent deficit spending. This proposal is about collecting the revenue necessary as opposed to cutting the spending to ensure that we don't have deficit spending which increases the national debt.

    So let's start with the basics:

    PERSONAL INCOME TAXES:

    1. Eliminate the Capital Gains Tax.

    It makes absolutely no sense to create the invidious classifications of "earned income v unearned income" where the unearned income is taxed at roughly 1/2 the tax rate when compared to earned income.

    Capital Gains Tax Rate 2013.jpg

    It's all income and it all spends the same so let's just tax "income" without any invidious differentiation of what the source of the income might be.

    2. Eliminate Tax Credits

    Tax credits are a payment from the general tax revenues to the taxpayer that have been nefariously rolled into the tax codes which reduces the general revenue. While Congress may have reasons for the payments to the taxpayers these should be a part of the annual authorizations expenditures and not hidden within the tax revenue source.

    3. Eliminate All Individual Tax Deductions

    The purpose of tax deductions was to reduce "gross income" to "net taxable income" where the necessary and mandatory expenditures of the household were "deductible" while only "disposable income" (that is income above the "necessary and mandatory" expenditures) was subject to federal income taxation. Unfortunately over time the "deductions" have been corrupted by the politicians so include "discretionary spending" by the households so let's get rid of it.

    4. Create A Tax Exemption Based Upon Median Household Income ($53,657 in 2014)

    Retaining the principle behind that Tax Deductions that only "disposable income" (i.e. income in excess of the necessary and mandatory expenditures of the household) should be subject to the income tax the Exemption from Taxation is proposed to replace itemized tax deductions. The exemption amount is based upon two different sources:

    Firs is the right to "support and comfort" based upon the labor of the person based upon the Natural Right of Property as argued by John Locke in his Second Treatise of Civil Government, Chapter 5.
    http://www.constitution.org/jl/2ndtr05.txt

    Second is the MIT Living Wage Calculator that establishes the minimum necessary mandatory expenditures of the household.
    http://livingwage.mit.edu/pages/about

    In an effort to consolidate the ideology of the Natural Right of Property as expressed by John Locke and the MIT Living Wage Calculator that quantifies the actual "minimum necessary mandatory expenditures of the household" that varies by location slightly within the United States this proposal settles on "median household income" as the basis for the Household Exemption amount. Basically it covers the minimum necessary and mandatory expenditures of the household with a few dollars left over for "comfort" depending upon frugal budgeting by the household. The median household income changes annually and would be adjusted annually. It also varies by household composition and adjustments based upon family size and composition is to be accounted for.

    5. Eliminate the Inheritance and Gift Tax

    All inheritance and gifts to the person/household are a form of income and will be taxed as income. There will be no special tax rates for either gifts or inheritance but instead they will simply be identified as "income" for tax accounting purposes.

    6. Create a Voluntary "Once in a Lifetime" Tax Exemption of Up To $5 million

    Regardless of source the person/household can exempt all income for one year up to $5 million. All income for that year above the $5 million will be taxed at the tax rate established for the year. This could relate to a large inheritance, a large gift, lottery winnings, a signing bonus, or even regular wages from employment but it can only be exercised once by the "primary income earner" on the tax return.

    7. Corporate Tax Rate Same as Personal Income Tax Rate

    The corporate tax rates would be the same rates as the personal income tax rates and applied to net income (i.e. income above the actual cost of production and/or providing the service) of the corporation. It never made sense that a sole proprietorship paid the personal income tax rate while a corporation paid a different tax rate.

    8. The Personal and Corporate Income Tax Rate is Based Upon the Annual Authorized General Expenditures of Congress

    This is how we ultimately prevent deficit spending because the tax rate fully funds the expenditures. It's also relatively easy to calculate the tax rate because we roughly divide the gross domestic income (GDI) in half to account for the Exemption on Median Income and divide that by the authorized general expenditures (although this ignores revenue from corporate taxation).

    By way of example in 2013, a year where we had $680 billion in deficit spending, the GDI was $14.4 trillion and the general expenditures were about $2.6 trillion so we need only divide the $2.6 trillion by $7.2 trillion and the tax rate would have been 36.1% but remember that this tax rate is only imposed on personal income above the median income of $51,939 for 2013 that is Exempted from taxation on this proposal. We can also note that this is an extremely high estimate of the tax rate because corporate income tax revenue is not being accounted for. In reality the tax rate would have been closer to 29% for 2013 when corporate income taxes are accounted for.

    http://www.indexmundi.com/facts/united-states/gross-domestic-income
    https://en.wikipedia.org/wiki/2013_United_States_federal_budget#Total_receipts

    In any case the tax rate would have been exceptionally high to ensure a balanced budget in 2013 IMHO and that fact alone would have provided a motivation for Congress to reduce the authorized expenditures and currently Congress doesn't really have that motivation because expenditures are unrelated to the tax rates being imposed upon Americans.
     
  2. liberalminority

    liberalminority Well-Known Member

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    1) you can't eliminate the capital gains tax, the whole issue with it is that it is very low compared to people who work.
    the people who make money from capital gains are real estate investors, stock market investors, and similar like, all rich who don't actually work as wage slaves.

    they ought to be taxed higher for the privilege of being richer than everyone else, while doing lesser labor intensive work.

    2) tax credits are incentives that can get people to buy solar panels instead of relying on dirty fuels for energy that cause wars and affect the environment.

    the issue with tax credits is that they are given to special interests of the rich, not the betterment of the land.

    3) tax deductions are another way to give incentive to the poor and middle class to better society, such as charity.

    the issue with tax deductions are they are given to the rich, to save money on paying taxes for no reason at all but to make them richer.

    4) that would be counter to everyone contributing taxes to be patriots and helping to build their country.

    the problem with tax exemptions are that they do not go to the right people, such as the poor. a universal basic income that is tax exempt would be better than a living wage tax exemption, because it applies fairly for the support and comfort to those who do not work for better lifestyles by choice or not.

    5) inheritance tax should only be for millionaires and billionaires, because that just makes sense.

    6) a once in a lifetime exemption of 5 million benefits the rich, someone who is exempt from paying taxes on 5 million makes out better than someone who is exempt from paying taxes on 500.

    7) corporations shall not pay the same as individuals, they are not people. they should in fact pay more, since they have higher net worth than individuals and that could go to public services like roads and spaceships.

    8) the proportions are flipped to meet the expenditures, somehow since reagan the middle class paid more for public expenses and the rich paid the lesser. how did everyone get fooled for the past 30 years to allow this.
     
  3. Zorroaster

    Zorroaster Well-Known Member

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    An even more basic question is whether balancing the budget is a good idea.
     
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  4. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    There's the top 1/10th of 1% of income households (i.e. the super-wealthy) that are solely investors while the bottom 99.9% is typically comprised of workers that either invest or don't invest to provide for their future financial security. Literally tens of millions of working Americans are invested in the "markets" earning capital gains and everyone should be treated the same under the tax codes. For those that will have lower income based upon their investments they're future income is protected by the "Exemption" from taxation and for those with higher incomes from investments all of the annual income above the Exemption will be taxed at the annual rate for all income. This eliminates the favoritism for the "super-wealthy" (i.e. top 1/10th of 1% of income households) that derive all of their income from investments.

    My proposal doesn't eliminate the ability of the federal government to provide incentives but they would have to be based upon an authorized "expenditure" as opposed to being a "tax credit" or "tax deduction" on the individual/household income taxes. It would merely require a direct payment in the same amount of dollars for the purpose of the incentive. As noted today we find that "tax credits" and "tax deductions" often provide benefits to those that don't require the benefit at all.

    In point of fact we agree. Why, for example, should a multi-millionaire be able to deduct the mortgage interest rate on a million dollar loan when no one really needs to live in a million dollar home? They're able to deduct more than millions of households even earn in a year. If they can afford the home they can afford to pay the taxes on the income.

    Everyone living, working, and spending money in American is contributing to America so I've never understood the opinions of some on this issue. A person does not have to pay taxes to be a patriot. That is an absurd notion. The soldier dying in combat might not have paid any taxes and no one would doubt their patriotism.

    The "Exemption" does establish a "universal basic income that is tax exempt" per your comments. It excludes all income up to median income from federal income taxes. It doesn't establish the amount of income for the household but does exclude the income up to median income from federal income taxes and it applies to everyone.

    The "millionaires and billionaires" don't pay the inheritance tax. Only the heirs to their estates, that receive income from the inheritance, pay a tax and under my proposal they would pay the identical tax rate on the income (above the exemption) as everyone else unless they voluntarily decided to apply the "once in a lifetime" exemption in which case the "Exemption" is higher than the "median income" for the year. Of course it would be silly for anyone to use the "once in a lifetime" exemption on a small amount of income but arguably there could be reasons why they would use it for less than $5 million in income.

    For example a median income household, that wouldn't pay any income taxes because of the Exemption, might inherit the home their parents owned that's worth $300,000 and that would be "taxable" income at the prevailing tax rate. They would have the choice of either paying the income tax, saving the exemption for the future, or taking the exemption. It's their choice and if they take the exemption and later win the Powerball lottery then they have to pay the income tax on all of the Powerball winnings. It's their decision and the "value" is subjective to the individual/household making that decision and that can't really be measured in "dollars" saved or lost.

    A corporation is merely a business entity with multiple owners and is fundamentally no different than a sole-proprietorship for tax purposes. Yes, there are some legal protections for the stockholders but other than that a corporation and a sole-proprietorship are both business entities that can earn a profit and the profit should be taxed at the same tax rate regardless of size.

    My proposal fixes the problem of favoritism for the high income households deriving income from investments that was established under Reagan's "trickle-down economics" that failed miserably in practice. All income above the "Exemption" is taxed at the identical tax rate regardless of source so there's no favoritism for anyone under this proposal.
     
  5. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    There are two fundamental arguments why a balance budget is a good idea.

    1)The cost of servicing the debt created (i.e. interest payments on the debt) reduces the ability of the government to provide essential services to the people.

    That's $668 billion that the federal government won't have to spend on infrastructure, the environment, science, welfare assistance, and/or the military in only four more years and that's an optimistic analysis of the future interest payments on the national debt.

    2) The future obligation to fund the debt imposes a tax burden on future generations that are not responsible for the debt. It's basically "taxation without representation" that's being imposed on future generations. By analogy it's like purchasing a car that you drive but not paying for it and instead requiring someone else to pay for it in the future. We receive the benefits of the spending but are refusing to pay for those benefits.
     
  6. Zorroaster

    Zorroaster Well-Known Member

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    Both of these points are false propaganda points promoted by various groups (Pete Peterson) to advance their unstated agendas,

    1) Debt service is a voluntary 'obligation.' We have an imaginary entity called the deficit. It is constructed by comparing two entirely unrelated processes, and imputing a necessary relation between them. The debt, as a real monetary entity, does not exist. We have institutional arrangements whereby any excess of spending over tax receipts is offset by issuance of treasuries. There is no mechanical operation that connects taxing and spending, and the issuance of treasuries is not necessary to permit sovereign spending.

    If you want to reduce the debt service numbers, all you have to do is simply reduce the issuance of treasuries. Period.

    2) Utter nonsense. The average maturity of treasuries is ~5 years. This hardly constitutes a burden on future generations. Trump is absolutely right that you could eliminate the deficit in 5 years, even if he may be a bit cloudy on how to do it. All you have to do is reduce the issuance of new treasuries. This is unrelated to spending and taxation.

    The purpose of government is twofold. Provide necessary services and to expand the economy by spending. Governments should always increase spending until unemployment is eliminated. Once unemployment is eliminated then spending is reduced, because it has no effect.
     
  7. liberalminority

    liberalminority Well-Known Member

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    half of the country are invested in the markets, there are still 47 percent of the country who are net recipients according to mitt romney.

    eliminating capital gains lets the richer half who profit from investing whether part time or full time off the hook from a fair tax liability as the working class.

    debt slavery is the only way to increase purchasing power, the government needs the ability to spend using a credit card as everyone else does.

    spending based solely on authorized expenditures limits the governments ability to offer proper incentives like solar panels.

    we agree on income inquality but have different solutions,

    that exemption allows many taxpayers who make a living wage to be free from taxes, it is not fair. there should be a universal basic income that is exempt from taxation for those who don't work, but not an exemption for those who work.

    working alone is not patriotic if the fruits of those labors are stuck in off shore accounts, expensive real estate, or personal bank accounts. some of it has to be shared with greater society



    many never acquire anywhere close to $5 million in a lifetime.. this will benefit a few who get lucky but not most.

    millionaire and billionaires heirs should pay an inheritance tax, if they are recieving millions and billions of dollars in trust funds.

    anything under a 1 million should be exempted from the inheritance tax, as that applies to everyone that is not rich.
    corporations are hiding trillions offshore, they can not be treated the same as individuals and taxed the same.

    they are the richest entities on the planet, need to pay more.
    reagan would have liked this tax proposal, it exempts the middle class and is a flat tax on the rich. it is actually worst because under reagans plan the middle class paid the biggest tax burden, under this tax plan no one pays taxes in the middle class, and the rich continue to pay less maybe the same as they do now or slightly more?
     
  8. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    Yes, Treasury securities generally mature in five years or less and are paid off but they are replaced with new Treasury securities to fund the redemption the securities that mature every year.

    If the federal government defaults on the interest payments for the outstanding Treasury securities, as you note, they will have to be paid in full within about 5 years because no one would purchase the replacement Treasury securities for the national debt. Where is the US government going to come up with almost $20 trillion to redeem the outstanding Treasury securities?
     
  9. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    I'll return to Mitt Romney's statement shortly in a response to another issue you raise.

    Eliminating the invidious classification of "capital gains" does not eliminate the income which is subject to the same tax rate as any other source of income. What it eliminates are the two different tax rates where "Capital Gains" are taxed at fundamentally 1/2 the tax rate when compared to earned income that the workers pay. Once again look at the tax rate chart:

    View attachment 43236

    The two different tax rates being imposed are simply wrong and I've eliminated that as well as the "progressive tax rates" because the "Exemption" inherently makes the tax rates progressive without applying different tax rates on different incomes.

    "Debt slavery" actually reduces spending power because of the loss due to interest on the debt. Of course I've never needed a credit card in my life because I always had the income to cover my expenditures so I didn't reduce my spending power by paying interest on debt with only one exception. I had a home mortgage but I also had a balanced budget where I accounted for the expenditure of repayment of the loan and now I'm living in a fully paid for home. This belief that people need a credit card is stupid because if you don't have the income to cover the charges on the credit card you shouldn't be spending the money, period.

    False once again. The government can provide "rebate" incentives just like private enterprise. Fill out a form, attach a copy of the receipt for payment, and send it in. The government can then issue a check (rebate) based upon the purchase and it could be far more timely than issuing the "rebate" (tax credit) on a person's income tax return.

    For example if I purchased solar panels in January of this year I wouldn't receive the "tax credit" until April of next year. If it was a "rebate" then I could logically have it within a couple of months from date of purchase. This could actually encourage lower income households to make these types of purchases (e.g. solar panels) because they might not be able to afford to wait up to 16 months for the "rebate" from the federal government on their spending.

    It's time to return to Mitt Romney's statement that 47% of income households had a zero (or negative) personal income tax liability. We need to understand that these are basically "working" households because a person that doesn't work doesn't typically have taxable income requiring them to file a tax return. The reason they don't have a personal income tax liability is because their income is below the "annual cost of living" established by our tax codes.

    Instead of using the 47 percentile I established the Exemption slightly higher at 50% percentile (median income) for two fundamental reasons:

    1. We don't track the 47 percentile that Mitt Romney referred to based upon the IRS statistics but we do track median annual income. Yes, by bumping it up to the 50 percentile I'm including 3% of all income tax households above what the IRS tax codes establish as a "living income (wage)" and this 3% arguably they might have a few dollars left over for discretionary spending but not much.

    2. I don't really trust the IRS tax codes when they establish how much it costs for the household to live on and instead referred to the MIT Living Wage Calculator as a guideline. Selecting a random location I'm going to refer to Yavapai County, Arizona, just because I live here but you can compare any other random location for you personal evaluation.

    In Yavapai County, Arizona two adults with two children fall into two different groups. We could have one working adult and the minimum/mandatory cost of living is $47,741 or both adults could be working in which case the minimum/mandatory cost of living is $62,366 according to the MIT Living Wage Calculator. If we average the two then the "cost of living" for two adults with two children in Yavapai County, Arizona is $55,040 which is greater than the "median income" that I'm using for my Exemption.

    http://livingwage.mit.edu/counties/04025

    So my "Exemption" isn't perfect because it's a compromise. It's slightly more than the IRS establishes as the minimum annual cost of living for the household while it's slightly less than what the MIT Living Wage Calculator establishes for a family of four with two adults but it does meet your criteria that those with more income than they require for their annual minimum/mandatory expenditures are taxed while those with income below this level are not taxed.
     
  10. Zorroaster

    Zorroaster Well-Known Member

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    1) There is no reason to ever default on treasuries.
    2) The constitution prohibits doing so via the full faith and credit clause.
    3) The amount of new treasuries issued is voluntary. Once this number is reduced, the debt service numbers will start coming down.
    4) The debt may be brought down without increasing taxes or reducing spending. These two functions are not connected to debt issuance.
    5) Debt does not finance government spending. Functionally, debt need only be issued to accommodate the needs of savers.
    6) The US never has to "come up" with cash. It is the creator of cash.
     
  11. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    Like you I was very concerned with these off-shore tax havens that are created by treaties between the United States and foreign countries like the UK that established the Cayman Islands as a tax haven. In reading the actual treaty I found that a person living in the US could create a paper corporation in the Cayman Islands, then channel investment income into that paper corporation, and then pay themselves out of that "corporate" account without incurring any tax liability to either the UK or the US. Basically the whole scam relies on the term "capital gains" which I eliminate from our tax codes. Under my proposal a person living in the US only has "income" regardless of source (e.g. working or investment) and that income is taxable regardless of where that income is paid. Additionally, because corporations and individuals pay the identical tax rates there's no advantage to the "paper corporation" that would receive the net income in a foreign country for the US taxpayer.

    By eliminating the nefarious category of "capital gains" from our tax codes and treating all income identically it effectively nullifies the treaty provisions that create the tax havens and all of that income now becomes subject to taxation and would be taxed at the prevailing tax rate for the year in which the income is received by either the person or the corporation. Literally hundreds of billions of dollars in annual income that are currently exempt by treaty from income taxation would become taxable. Problem solved.

    In fact few actually receive a windfall income from any source totaling over $5 million but some do. In any case everyone with income in excess of the annual Exemption would be able to benefit from this once-in-a-lifetime tax exemption and that most people would arguably take advantage of. Just because someone doesn't receive $5 million doesn't imply that they wouldn't benefit from the exemption.

    One group instantly comes to mind and that's the family owned farm where, when the owner dies, their heirs would often be forced to sell the farm and give up their means of income just to pay the taxes on the inheritance. Not only do they lose the farm they also lose their jobs running the farm as well.

    They millionaires and billionaires don't pay the inheritance tax and under my proposal they would have already paid the income tax on the money they have. Their heirs would be subject to the tax, even on income received in the form of a trust fund, based upon the prevailing tax rate in the year they received the income. Yes, they could opt for the "once-in-a-lifetime" tax exemption on up to $5 million but they would pay the prevailing tax rate on all of the income above that amount.

    For example I believe Donald Trump received somewhere between $100-$200 million in inheritance from his father. He could have exempted $5 million but then would have paid perhaps 30% (assuming that prevailing rate at the time of inheritance) on the balance so he would have paid roughly $30 million or $60 million on the inheritance (the identical tax rate that anyone else would have paid for the same year). When Trump's father was alive and bailed Donald Trump out several times with millions of dollars then Donald Trump would have had to pay the income tax on that income. Perhaps Trump would have used his exemption then in which case all of his actual inheritance would have been taxable at the prevailing rate.

    In any case the "once-in-a-lifetime" Exemption can only be used once and everyone that has income in excess of the annual tax Exemption can take advantage of that. For a lower income household that perhaps wins $1 million from the lottery it could actually be more important to them financially than the heir of a billionaire where the tax Exemption doesn't mean nearly as much.

    Why do you limit to inheritance? Isn't a million dollars a million dollars regardless of source?

    What is the logic to only limiting it to a million dollars? A million dollars used to be a lot of money but it's not very much today.

    For example if I have a million in my bank account today I'll only receive $2,500/yr in interest on the deposit because my bank is only paying 0.25% interest on deposit (thank you Federal Reserve for gutting bank interest rates). Even if I put the money into an annuity I'd probably only get about 5% or $50,000/yr in income. That's not really a lot of money.

    Yes, corporations can be treated like individuals and, as noted, my tax proposal eliminates the ability of the corporation to hide income off-shore because they are treated identically to individuals.

    Because corporations are subject to the same tax provisions and rates as the individual they would pay more on their profits regardless of source or where they receive those profits, just like a person.

    This is highly inaccurate.

    For example "middle class" is based upon "median income" which is Exempt from taxation under my proposal. Upper middle class income earners will pay the income tax but only on income above median income. So assume the tax rate is 25% and median income of $50,000 and the household has $100,000 in gross income (upper middle class) then they pay $12,500 in taxes for an effective tax rate on gross income of 12.5%. Take the wealthy household with $1 million in gross income. After the Exemption they pay the 25% tax rate on $950,000 in income, or $237,500, for an effective tax rate of 24.75%.

    The millionaire is paying almost double the effective tax rate on their annual income when compared to the upper middle income earner with 1/10th the income while the true middle income earners pays nothing because they're barely meeting their annual living expenses.

    This is a highly progressive tax proposal and, in fact, is the most progressive form of tax on income that I'm aware of.
     
  12. liberalminority

    liberalminority Well-Known Member

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    according to the panama papers the rich are hiding money in other countries since the swiss government exposed their scams, so i would assume you are correct on the cayman islands treaty.

    i disagree in your solution to this loophole, the spirit of the capital gains tax was to double tax the wealthy. wage slaves don't have the privilege of setting up offshore paper corporations nor earning investment income.

    eliminating capital gains allows the rich to earn passive income from low risk investments, and be taxed the same as someone who works harder for paychecks like a nurse or fry cook proportionally speaking..

    when we consider progressive taxation, proportionally it is still unfair taxation since the rich make more than they need, and much more money than they could ever want reasonably speaking when compared to the majority of taxpayers, even when they are taxed more at a progressive rate.

    farmers are great, especially when they don't use GMO's or pesticides and grow organically, but if they are sitting on multi million dollar land they are in the top 1 percent of rich and their heirs should not be exempt from an inheritance tax.

    i don't see how an inheritance tax could make them lose the farm if its worth millions of dollars, they can borrow against it and let the bank own it for awhile until they make those payments while still maintaining a good quality of life.

    donald trump is in the top .1 percent of the rich, capital gains taxes and inheritance taxes if properly directed at the rich and aggressively used, would certainly humble people like him.

    my logic is that income from inheritance, capital gains, investments, the sort of income of the very wealthy, is from easy money.

    they need to be double taxed, it would be unethical or immoral to see their earnings in the same light as a secretary or janitor who works harder in more labor intensive work.



    the supreme court saw corporations as people and allowed them free speech by way of unlimited spending, it would be even worse if they were protected by human rights and taxed as individuals.

    corporate tax rates are separate from individual tax rates, so they can be taxed higher than individuals since they are not people.



    well respectfully, this tax plan perpetuates the exploitation of the net recipients of the united states of america.

    47 percent of the country don't contribute anything but are takers, and the top half who are net contributors are allowed to be patriotic and dictate how the bottom half should live, since they appear to be the ones who take personal responsibility for their lives and earned their positions in life.

    what we need is a tax plan that allows everyone the pride of being a net contributor to their country, and that can only be done if wealth was redistributed from the top half to the bottom half in a drastic fashion that includes double taxation of capital gains, inheritance, investments, shell corporations, real corporations, and everything else in between that the richer half employ to their advantages.
     
  13. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    This is a tax proposal and as such it can't solve every economic problem that exists.

    I'm not sure where the idea originated that the Capital Gains tax was to increase taxation on the wealthy 1/10th of 1% income households that derive their income almost exclusively from investments considering the tax rates on unearned income are roughly half the tax rates on earned income. Could you provide some source materials to support this opinion? At best, by eliminating the Capital Gains tax and taxing all income based upon the same criteria at the same tax rate (above the exemption) I've eliminated the under-taxation on capital gains.

    Let us also remember that increased taxation on the wealthy doesn't eliminate poverty. At best the revenue from the tax can be redistributed as welfare assistance but welfare assistance merely mitigates the effects of poverty without reducing the actual poverty. Only increased income from employment actually reduces poverty. For those that want to eliminate poverty they need to focus on a much higher "minimum wage" based upon the "cost of living" (i.e. a living wage). As far as I was able to go in a tax proposal was to ensure that no one earning less than median income would be subjected to the personal income tax.

    The value of the land is unrelated to that which it produces. The land values have increased due to more and more people and less and less land available to them. Most small farmers barely eek out a living and don't generate the revenue necessary to fund a huge loan against the land to pay the taxes that would be imposed. Remember that small farmer has to compete with the mega-agricultural industry even when they find the niche market of organic crops. How much they can charge for their produce is limited and the land simply can't produce enough for the additional financial burden the tax would impose. They would be forced to sell to pay the taxes and with that sale they also lose their only source of income.

    Donald Trump would be a racist, xenophobic, misogynistic, narcissistic, megalomaniac, fascist regardless of how much he paid in taxes.

    The bottom 99% often receive "easy money" as well and how the income is derived cannot be the criteria for a tax code. I worked my entire career and earned a lot of money and most of it was "easy money" because I never had to work hard for it. A ditch digger works hard for their money but I was an aerospace engineer that spent my time sitting on my butt mostly just thinking about problems that had to be solved. I put in a lot of time but it was never hard work.

    The janitor and the secretary that earn less than median income aren't taxed under my proposal so the tax on the high income households is infinitely higher than the tax on those with income below median income.

    Corporate tax rates are lower, not higher, than personal tax rates today. I once ran the calculations for a sole-proprietorship and a corporation where both had $100,000 in net income. The sole-proprietor paid about $37,000 in federal taxes while the corporation only paid $22,000 in federal taxes on the identical net income. I attempt to eliminate that disparity in taxes between the sole-proprietor and the corporation.

    Sorry but I can't change Supreme Court decisions and "civil rights" are statutory in nature. We would need to change the Constitution or the statutory laws of Congress to change the Supreme Court decisions.

    I'm not even going into the "givers and takers" argument except to point out that all economies are based upon an economic pyramid and without the bottom 47% there isn't a top 53%. The foundation of every economy is based upon the lowest paid workers and without them there can be no wealthy people.

    The problem with our economy is that the bottom 47% aren't earning enough to live on and there's no economic reason for that. Every worker in the United States could be earning at least a "living wage" eliminating most of the poverty in America and that would be equal to only about 16% of the gross personal income being generated annually. It's a "compensation" issue and not a "tax" issue and, at best, my proposal ensures that they're not subject to a personal income tax.

    So yes, we have a "compensation" issue but it's not a "tax" issue and I'm only addressing taxation.
     
  14. liberalminority

    liberalminority Well-Known Member

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    i would have to agree to disagree on this tax proposal, though if it really is a compensation issue and not tax issue then Donald Trump is correct in that the trade agreements are unfair.

    higher paying jobs can be brought back for the bottom 47 percent of the country, so they are not dependent upon higher taxes on the rich to solve their problems.
     
  15. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    The tax codes cannot correct all of the flaws inherent in free market capitalism. Sorry but it just can't be done.

    Would you actually take advice from a person that as CEO drove four corporations into bankruptcy costing investors and lenders hundreds of millions of dollars and where one of his corporations is currently being prosecuted for fraud? It's also my understanding that Donald Trump, in addition to being an executive failure, has zero knowledge or experience with foreign trade because none of the corporations he created ever dealt in foreign trade. This man is a complete idiot when it comes to government, enterprise, and foreign trade and only idiots are listening to him today.

    The loss of higher paying jobs is not because they went anywhere. The loss of higher paying jobs is due to automation where computers and robotics have eliminated the jobs. By way of example the US has "lost" about 40% of our manufacturing jobs per capita since 1970 but they didn't go anywhere because worldwide the number of manufacturing jobs per capita has also declined by about 40%. We can also look at the banking industry as an example. The "service" job of bank teller, a relatively good paying job historically, has been all but eliminated by ATM's and digital money transfers. Even in my local Chase Bank the few bank tellers remaining are being replaced by newer ATM's that automate virtually all of the bank teller's tasks. Their jobs aren't being "exported" but instead they're being eliminated and they will never come back just like the manufacturing jobs that have been lost.

    We face the obsolescence of human labor in the not-too-distant future and we're seeing the effects of that today as more and more jobs are being replaced by automation leaving more people vying for fewer and fewer jobs and that's driving down the compensation for labor.

    Automation that replaces human labor is a serious problem with our capitalistic economy that relies on human labor for compensation and it must be addressed but it's well beyond the scope of a change in our tax codes.

    For my part I refuse to be the beauty queen that promises "world peace" but instead seek to address one problem at a time and, in this case, it's our nefarious tax codes that result in the deficit spending by Congress. It's just a small problem when compared to all of the problems that face us but we can only resolve the problems one at a time. I know you see more problems, as do I, but we need to address those problems separately one at a time.
     
  16. Alwayssa

    Alwayssa New Member

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    Interesting idea.

    1. Making all income taxed the same will increase revenues marginally, but the cost will be more in terms of consumer choices.
    2. Tax credits are designed to encourage consumer behavior, or sometimes reward consumer behavior, in specific, directed costs. Credits on a tax return should be minimal that encourages long term planning, but not eliminated. We could eliminate education, child, and dependent care credit with the increased standard deduction/personal exemption(s), but I would not eliminate credits such as fuel tax credits. the reintroduction of the alterative vehicle credit, and a few others.
    3, 4, 5 is only possible if that deduction/exemption is warranted. However, with 5, we are moving back towards a system similar to the early days of the tax code where only the first taxpayer were less than 5% of the total population.
    6. too hard to implement but it could follow the former IRC 1034 rules just not with a personal residence.
    7. They generally are anyways.
    8. Too hard to implement given the flexibility of our economy.
     
  17. bringiton

    bringiton Well-Known Member

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    True, but it is entirely related to the profits it could produce. A vacant lot in Manhattan, which produces nothing, is worth just as much as the land sitting under the skyscraper next door, which produces profits of millions per year.
    No. Land value comes from three sources: the services and infrastructure government provides, the opportunities and amenities the community provides, and the physical qualities nature provides at that location. As the physical qualities have always been there, the basic reason for all land value increases is increased subsidization of the landowner by government and the community.
    That's why land should be taxed just heavily enough that you could buy it for a pittance. That way, the farmer only has to pay for government once, instead of twice or three times.
    You mean he can't produce enough.
    If landowning rather than productive contribution is their only source of income, they deserve to lose it.
    The lower down the percents they are, the less they receive.
    It most certainly can. In fact, that is the only defensible basis of a tax code. "Beneficiary pay." Remember?
    The relevant criterion is not how hard you worked, but how much your work contributed to production.
    But your contribution helped aircraft fly. That's what was worth a lot, not the amount of discomfort you endured.
    Income is always The Wrong Thing To Tax.
    There are two excellent economic reasons for it: the Law of Rent and the Henry George Theorem, which you could Google to advantage.
    If you try to pay workers more, their landlords will just take it all. You can't address any of this until you address the land problem.
    Addressing only taxation can only address the issue if you address the issue of justice. Your proposal doesn't do that.
     
  18. tkolter

    tkolter Well-Known Member

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    I would just do three things.

    1. Cut the military budget over eight years by 2.5% per year cumulative as a gradually increasing reduction, focusing on equipment and weaponry, not manpower. We would acquire a policy of being "good enough for the job" and buy such items as needed from allies when they produce a weapon system or gear good enough for the job and look for the best bang for the buck. Focusing on making said items in the USA in targeted trade deals. If say France has a fine fighter then buy that instead of our own fighter plane. We would maintain a cost containment policy no more ever cost new designs if an older one can be updated.

    2. If we are engaged in conflict longer than 60 days have a War Tax for two years sufficient to cover the costs paid for in payroll taxes and a tax on goods and services other than tax exempt ones to be calculated using the high end of the likely costs including veteran benefits.

    3. Move Veterans to Medicare with all options available to Seniors for supplemental advantage plans, shutting down the VA, doing this over eight years. Facilities for specialized mental health care and independent living support would remain placed under the Department of Health and Human Services.

    4. Tax gasoline to an amount to match $4/gallon in taxes to adjust for base gas prices the added money going up or down accordingly this is to go for highway and bridge infrastructure projects and mass transportation improvements nationally or a one time vehicle environmental impact fee whichever would best apply (electric vehicles and hybrids the latter would apply).

    5. List the Social Security income cap taxable to $500k on all income, the extra to help fund disability SSDI and SSI as well as boost Social Security solvency with a small reduction in the rater.

    6. States would be responsible for funding paychecks and training the National Guards in their states with the Federal government covering equipment and weapons but they would be under direct control of the governors and would no longer be deployable outside the USA without a formal congressional declaration of war and the consent of the state governor.
     
  19. Seth Bullock

    Seth Bullock Well-Known Member Past Donor

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    I agree with that.

    To the OP I would like to say that I found your thoughts to be very interesting, and you have obviously spent a lot of time thinking about this topic. *hat tip*

    I have often stated my belief that both R's and D's in Congress are addicted to deficit spending, albeit for different reasons, but the result is the same - more and more deficit spending and debt. And, in different posts about taxation on PF, I have stated my belief that the only way to create the political will to get spending under control is to make the public actually pay for it with real money out of their own pockets. In the past I have suggested a phase-in of increased tax rates, so people can plan for it, and so the economy is not suddenly shocked beyond what it can tolerate.

    One little caveat I would offer about corporate taxation ... I think I would give corporations that actually manufacture goods in the U.S. a 0% tax rate. The rest of them could be taxed, but not the ones whose profits were derived from actually manufacturing goods in the U.S. I think the reason for that is obvious, and I need not explain it to you.

    Again, good writing, very interesting ideas ... :applause:
     
  20. Lil Mike

    Lil Mike Well-Known Member

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    In theory, you may have a point, in actual practice however, our deficit spending is covered by issuing debt. So for the debt already issued, it's very much real, not simply an imaginary entry on a spreadsheet. What you want to do, is simply "print" money unconnected to any other issue than how much is needed. I see this all the time on this forum, so I'm curious if there is a country currently getting away with this?
     
  21. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    Let me respond.

    #1 isn't about increasing or decreasing tax revenue because the revenue is based upon the tax rate necessary to fund the authorized expenditures. What #1 does is eliminate favoritism in our tax codes based upon the principle that all dollars are the same regardless of source. I have no idea how this would affect consumer spending one way or the other because consumer spending is always based upon disposable income.

    Elimination of tax credits in #2 does not prevent the government from subsidizing consumption. What it does do is remove the nefarious practice of providing government subsidies to those that don't require the subsidy. For example there have been several proposals by Republicans to offer tax credits for the purchase of individual health insurance policies in the past but what really happens? First of all the person would have to purchase the insurance paying the premiums for 12 months without any funds from the government (i.e. the can afford the insurance) and then, in the following year, they would receive a "subsidy" in the form of a "tax credit" from the government. The tax credit wouldn't help anyone that couldn't fully afford the health insurance in the first place so it accomplishes nothing positive for those that could really use the subsidy.

    If the government wants to subsidize certain expenditures then it should do so with a direct and immediate subsidy and not with a tax credit that only really helps those that don't require the subsidy in the first place.

    3, 4, 5, and 6 all work together so you can't exclude 6 from the analysis. Yes, the exemption is necessary because we should never have been taxing the necessary/mandatory expenditures of the household to begin with. You don't take food of the table of the household to pay for government expenditures. Once again this is based upon the business tax model where only "profits" (i.e. disposable income after expenditures) is to be taxed. #6 is not hard to implement at all because all it takes is a single form declaring the income, regardless of source, and applying the exemption to it. All of the income above the exemption is taxed at the prevailing tax rate for the year in which that income is accrued.

    #7 - The maximum corporate tax rate is 35% while the maximum personal income tax rate is 39.6% so obviously they're not paying the same tax rates. While not much of a change because there would only be a single tax rate then logically both the corporation and the individual would be required to pay the identical tax rate on income to eliminate this disparity regardless of the fact that it's only a small disparity.

    #8 is not hard to calculate. We know what the federal government's authorized general expenditures are for the year and we have a fairly accurate prediction of gross personal income for the year upon which to establish the tax rate. All that we need to do is divide the authorized general expenditures, that we know in advance, with 1/2 of the projected gross personal income (to allow for the exemption) and it gives us the tax rate for the year. It would actually produce a surplus because the "exemption" isn't based upon "average income" but instead is based upon median household income which is less than the average gross personal income. I don't know why someone would believe it is hard to calculate the tax rate for the year. In any case it wouldn't be regressive taxation because the necessary/mandatory expenditures of the household are always tax exempt (under the Exemption) and only "discretionary income" is being taxed. Of course there could be a minor margin of error in calculating the tax rate for the year but that could be addressed by the following year's tax rate.
     
  22. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    The problems remain with our current tax codes if all we do is increase the tax rates that have absolutely nothing to do with the authorized expenditures. There's no "linkage" today between spending and tax rates which is why we have deficits. If, for example, the federal government increases defense spending by $200 billion for the year no one's tax rates go up to fund the expenditure. That's downright stupid. We must have linkage between the spending and the tax rates to ensure a balanced budget.

    No, the reason isn't obvious for numerous reasons.

    Taxation does not affect whether a product is produced in the United States or not because the taxation is only imposed on the profits and not on the costs of production.

    The profits from the corporation are either re-invested to expand production based upon consumption, and are tax deductible in the future, or they're paid out as dividends to the stockholders that would pay the income tax (above their household exemption) anyway. Of note I would allow a corporate deduction on dividend payments to avoid double taxation on the same dollars of income. The "corporate profits" actually are income to the stockholders and should be taxed directly upon the income to the stockholder. If the profits are retained within the corporation, and not re-invested to expand production where they're tax deductible, then the profits should be taxed like any "profits" to any enterprise.

    Additionally few products "manufactured in the United States" are solely manufactured in the United States. Take a new car made in Detroit. The steel is typically imported and not produced in the US anymore. A Boeing 787 is manufactured all over the world and is only assembled in the United States.

    It's pragmatically impossible to segregate that which is produced in the United States from what is not produced in the United States for tax purposes and, as noted, it has no influence whatsoever on whether a product is produced or not produced in the United States.

    I've been working on this for several years and actually have to give credit to all of those that have discussed this basic proposal in the past. Most of what I've put together comes from the ideas of other people.
     
  23. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    FALSE - The true land value comes exclusively from it's use. It's "assessed value" comes from it's potential use and not it's actual use.

    For example if there are 40-acres of land that's exclusively restricted to use for farming because it's zoned "rural-agricultural" and that zoning cannot be changed then it's only worth what a farmer can produce from the land. The "assessed value" can be based upon the speculation that the zoning could be changed to industrial or residential where the land would be worth more.

    For example Central Park in NYC isn't "worth a dime" because it can't be used for any commercial purposes. The zoning is never going to change and the land will never be sold so it isn't worth anything to anyone.

    You confuse "land speculation values" with the "actual value of the land" established by it's commercial use authorized by the existing zoning regulations. The "farmer" can't earn more money from the land because the farmer is restricted to using the land for the growing of agricultural products.
     
  24. Seth Bullock

    Seth Bullock Well-Known Member Past Donor

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    Oh yes, I agree with that. Think of the effect that would have on a politician's decision to take the country to war, for example. If Americans actually had to pay for wars through increased taxes, we wouldn't go to war unless the country was unified and it was absolutely necessary.



    But the taxes on profits are a cost that effect the net profit a company makes. The motive for what I am suggesting is to induce manufacturers to stay here or to move here. America needs that kind of employment, and we are rapidly losing it. We are turning into a country of wealthy, highly educated professionals, and low-paid service industry workers. I think our overall economy is better off when we have an abundant diversity of job opportunities at all levels of the income ladder, not just the top jobs and the bottom jobs.

    Makes sense.

    I respectfully disagree. I fully understand that all kinds of raw materials and parts go into making products, and I understand that those raw materials and parts may come from overseas. But those raw materials and parts are assembled somewhere and turned into marketable products. And if that "somewhere" is in the U.S., that is good for the American economy. And so I would exempt from taxation the profits derived from those products that were made (or assembled) in America in exchange for the good for the country of having that company stay here and employ Americans. And remember, the more people who have the opportunity to work hard, create a track record, move up, receive benefits, etc, the fewer people we have on the welfare rolls, and the fewer people we have in that 47%, and all of that reduces government expenditure, and thereby helps keep the federal budget balanced.

    Great! Well then, here is my little contribution. Cheers!
     
  25. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    Yes, the taxpayers actually being required to fund the expenditures would influence what Congress authorizes spending for. As correctly noted because there's no linkage today the spending is not constrained by the tax revenues being collected.

    There is a general misconception that American manufacturing jobs have been "shipped" overseas but based upon actual research that isn't really the case. The number of manufacturing jobs in the United States per capita has decreased by about 40% since 1970 but that's not unique to the United States because worldwide the number of manufacturing jobs has also decreased by about 40% since 1970. If the jobs were being "exported" then we'd see an increase in foreign countries but that is not happening. The jobs are simply gone because they've been replaced by automation.

    I've read that today only about 6% of all jobs are related to the production of commodities in the United States and that's not where our economic woes originate. The problem is with the vast majority of jobs that are in the service sector today and "under-compensation" for that labor where households can't afford their minimum necessary and mandatory expenditures. If we want to address the economic problems it's not manufacturing we should be focused on but instead we need to focus on under-compensation for service sector jobs that represent the majority of jobs in our economy.

    Even doubling the number of manufacturing jobs would not reduce the number of individuals on the welfare roles. We can also note that much of the profit on goods manufactured in the United States is the mark-up on the cost of products and materials purchased from overseas. A company, under your proposal, could actually earn virtually all of it's profits from the "imported" goods and materials and yet you would exempt all of their profits. Imagine this. Harley Davidson could have an entire motorcycle produced overseas except for the installation of the horn (to complete the assembly) and then would be exempt from taxation by installing the horn in the United States. Final assembly (manufacturing) doesn't really bring work into the United States.

    Love your contribution. Thank you.
     

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