Balance Budget Tax Proposal

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

  1. OldManOnFire

    OldManOnFire Well-Known Member

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    Some things, like the comments above, are simply beyond rational discussion. This is almost like talking religion in which absolutely nothing needs to make sense, nothing is factual, nothing is proven, and it's just 100% personal feelings...and personal feelings cannot be argued.

    There is no 'they'! There is no 'we'! All there is...is 'you' and how you choose to manage your life. You make 100% of the decisions and unless you are 12 years old, no one is controlling your life and your decisions! Not 'they', not 'we', not the government, not the wealthy...
     
  2. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    I have no idea where your opinions originate but they're not based upon factual data that's been collected. There hasn't been a direct relation between productivity and worker compensation since 1970. Production as soared increasing by 80% while compensation has only increased by about 1/2 that amount. The only time period in relatively recent US history was after WWII and prior to 1970's when organized labor was able to negotiate increased compensation based upon increased productivity. If median income was based upon productivity since 1970 then the median income in the United States would be about $100,000 year.

    Additionally, income from investments has never been based upon productivity. Virtually no dollars in investments contribute to productivity. I checked this out once based upon SEC transaction (investments) for a month in dollars and the amount of investment dollars going directly to corporations that would fuel productivity through capital investment. Guess what! The amount of dollars going to corporations, assuming all of the offerings were purchased by investors, was less than 0.00005%. Effectively, rounded off to the 1000th of a percent, that equals zero dollars being invested in the productivity of corporations in the United States. Investments syphon off money from those that are actually producing the goods and providing the services and that's where the "lost dollars" go that aren't being paid out as compensation based upon the increased productivity of the workers since 1970.

    Which is why neither of us advocate socialism or even "perfect" socialism but the numbers still don't lie and it explains why we know why some Americans can afford a lot of taxation, why some can afford a little taxation, and why about 60% American households really can't afford taxation at all.
     
  3. Taxpayer

    Taxpayer Well-Known Member Past Donor

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    Production has soared. Worker contribution hasn't.

    A company with 100 workers has a certain productivity. Maybe 75 of them assemble, 20 of them sell, 4 of design and 1 pushes a broom. If those folks do exactly the same work, but the company chooses to assemble it's party into a doubly useful product that doesn't mean those folks were more productive. They are contributing exactly the same thing to the process they did yesterday.

    If you replace 75 of them with robotic assembly, that doesn't mean the remaining folks are four times as productive. Replacing the sales force with an e-Commerce site doesn't make the remaining employees five times as productive. If you got rid of all but the guy pushing the broom, it doesn't mean he was 100 times as productive as before you fired everyone else. He's pushing the same broom, contributing the same thing.

    If you don't believe you are being paid what your services are worth: quit. Find someone that will pay you what you think you're worth. If you can't find someone who is willing to pay what you think your service is worth, you're wrong about what you think your service is worth.



     
  4. geofree

    geofree Active Member

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    This is all false. The rich are stealing from the poor. The rich use privileges to reduce the choices the poor can make and barricade them from opportunities that nature freely provided. The rich spend billions of dollars every year to lobby government for these privileges. Some of these privileges allow individuals such as landowners to pocket the value that publicly provided services and infrastructure add to nearby locations. Other privileges restrict competition within the market, creating scarcity and higher consumer prices, which allow the rich to pocket more unearned wealth.

    There is nothing an individual can do to stop this institutionalized theft. The poor will have to eventually get smart, band together, and demand that these privileges be removed from the rich peoples possession, either through outright abolishment of the privileges or heavy taxation of those privileges. The poor will never have control over their life as long as these privileges remain within our system of government.
     
  5. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    There are so many flaws with this argument that I won't go into all of them but will touch on a couple.

    When automation replaces a part of the workforce it increases the value of the remaining workforce because the limited workforce becomes more valuable to the enterprise. For example if you transition from a sales force to e-commerce then the value of the customer representative soars because there isn't a sales person dealing with the customer addressing customer issues.

    An enterprise does not base compensation upon the value of the work performed. The enterprise basis compensation upon how easily the worker can be replaced by another worker. This is what "market based compensation" is based upon.

    As an anecdotal example I was one of the top employees in my field working for Boeing on the 767. Based upon my knowledge of production I independently identified and personally promoted a change in production that reduced the costs of production of 767 by $22 million based upon a five year cost/benefit analysis. I literally had to "sell" this improvement to Corporate pitching it to the Board of Directors, CEO, COO and CFO.This was above and beyond the scope of my professional responsibilities and guess how much compensation I received for increasing the profits to Boeing by $22 million?

    You guessed it, I didn't receive a dime (but I did receive a nice piece of paper recognizing the contribution).

    I was receiving very good compensation already but that compensation was based upon how easily I could be replaced by another workers that could perform my normal work assignments that had nothing to do with this which was outside the scope of my job description and responsibilities. "Pay for performance" is generally nonsense under free market capitalism unless organized labor, representing the worker, is involved in negotiating the compensation for the workers. The individual worker doesn't have the economic power to negotiate compensation with an employer.
     
  6. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    There is considerable truth hidden within this, and it would take an essay to explore, but the key to how the "theft" occurs is based upon the difference between the "natural right of property" and "title to property" because there's a disconnect between the two in our capitalistic economy. The "title" can be transferred but the "natural right of property" is nontransferable. The theft occurs when the compensation for "title" isn't related to the value of the "natural right of property" in our economy.

    But this thread is about collecting the taxation necessary, in a fair manner, where the authorized expenditures of Congress are fully funded by the tax revenues received so we're straying off topic even though this problem warrants discussion.
     
  7. Taxpayer

    Taxpayer Well-Known Member Past Donor

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    A hundred employees: 75 assemble, 20 sell, 4 design, and 1 pushes a broom. Everyone does the same thing each day of the week. Monday night you replace the assembly people with robotics. Your opinion is the remaining employees became four times as productive the next day?

    Tuesday you replace the salesmen with e-Commerce, making the remaining workers five times more productive. Wednesday the designers are replaced with crowd sourced designs or contractors... again five times the increase.

    By your logic that guy pushing a broom became 100 times more productive in a week, without doing anything different. Who do you give credit for the productivity you awarded him when you get a Roomba?




     
  8. Taxpayer

    Taxpayer Well-Known Member Past Donor

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    In other words, another employee who could provide the productivity you were contracted for.

    Dirt and diamonds are made of the same stuff. You can demonstrably do more with dirt. Heck, without dirt our species would go extinct. Diamonds, not as much. People pay more for diamonds. Either at the cash register or in the work required to acquire them.

    If I need a skill you possess and it's a rare one, I'll pay moreĀ—either for your providing it or in acquiring the skill otherwise. If anyone can do what you can do, your performance is not as useful. Even if the skill you share with millions of others is an invaluable one.



     
  9. OldManOnFire

    OldManOnFire Well-Known Member

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    You obviously will never reach your potential because you have zero focus on reality...on you...controlling your own life. Your words are so pathetic making it sound like all people who are not privileged should just commit suicide since it's a waste of their time to put forth any effort to achieve more in life...wow...
     
  10. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    No. The compensation is related to the tasks the person is assigned to do (generally defined by the job description) by the employer and not their productivity.

    There are two factors involved in productivity. First and foremost is the employers assignment of tasks to be performed. All employers require workers to perform "non-value-added" tasks to some degree and those tasks result in no productivity where the employees time and company money is wasted. "Cost reduction programs" that attempt to eliminate "non-value-added tasks" have been key initiatives at every major aerospace company I worked for because management knows it's responsible for creating these non-value-added tasks.

    On the opposite end are employees that bring more than the necessary knowledge and experience required by the job role (job description) that they aren't compensated for and they can increase productivity based upon that knowledge and experience but, as noted, they don't get paid for that because it's not a part of the job description that is the basis for compensation.

    As noted anecdotally I generated about $22 million in profit for the Boeing Company because of the knowledge and experience I had that was above and beyond what was required for my "job description" so I wasn't compensated for it. I was only compensated for the "job description" and not for my productivity.

    Compensation for employment is based upon "job description" created by the employers and is not based upon the productivity of the worker.
     
  11. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    Let's focus on reality for a moment because the person must have the means for achieving their full potential. Very few people are capable of jumping from the bottom of the economic ladder directly to the top of the economic ladder. They need to work their way up that ladder to achieve their full potential.

    I was fortunate to start my working career very early in life during the 1960's and early 1970's which was the heyday of the Middle Class and there were many, many rungs on the economic ladder so that a person, like myself that was an over-achiever, could work their way to success and reach their full potential.

    As we know since 1970 the "middle class" has been in decline. While productivity was increasing there wasn't a corresponding increase in compensation for employment. Compensation only increased at about 1/2 the rate of productivity and this resulted in the loss of "rungs" on the economic ladder. We had more and more people trying to climb the economic ladder with fewer and fewer middle income jobs that they could use for their personal advancement to achieve their full potential.

    So you mention a person striving to reach their full potential while ignoring the reality which is that we've made it next to impossible for a person to work their way up the economic ladder so that they can accomplish that. There just aren't enough intermediate steps on the economic ladder remaining for that to be pragmatically possible for the vast majority of workers in American.

    Once again, my tax proposal doesn't fix this problem. All my tax proposal does is to further eliminate the personal income tax burden imposed on those that aren't earning enough income to provide for their basic support and comfort today. My proposal isn't even a significant departure from what we have under our current income tax codes where 47% of households don't currently have a personal income tax burden and my proposal only raises that to 50%. Fundamentally only 3% of households are effected by my "Exemption" because 47% of households that can't afford to pay the income tax aren't paying income taxes already.
     
  12. liberalminority

    liberalminority Well-Known Member

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    For the people born after 1970 during the decline of the middle class, this tax proposal doesn't go far enough.

    What this tax proposal ought to do, is tax all the wealth that was stolen from the middle and transferred to the rich in the past 40 years with the highest marginal tax rates possible, while maintaining a functioning economy.
     
  13. Taxpayer

    Taxpayer Well-Known Member Past Donor

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    The job was created because someone thought accomplishing those tasks would produce a benefit. That expectation is how the tasks are related to productivity and that benefit is involved in determining an offer for someone to accomplish the tasks.



     
  14. OldManOnFire

    OldManOnFire Well-Known Member

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    An employer has a required task to perform and puts in place human labor that can perform that task. The price of that task is determined by how much the employer can afford to pay for that task. People or labor compete for the jobs that they are qualified to perform and agree on the compensation for the performance required. The compensation is determined by what the company can afford and the supply and demand of labor for each job description.

    I'm not sure why an employee who believes they generated $22 million in profits for the company, and was not compensated for their contribution, why they would remain with the company? If an employee truly is generating $22 million in profits for the company that employee must surely be compensated with higher wages, promotions, or bonuses. I believe it would be quite rare for any company to have an employee generate $22 million in profits and not be amply compensated for their efforts?

    Also, as an employee, we can look at our employer in two ways; first we can just perform the minimum requirements, get our pay, and race to happy hour each Friday, or second, we can make contributions above and beyond the scope and compensation of our job descriptions hoping this will lead to better job security, higher pay, bonuses, promotions, etc. If we choose the second option and we are not amply compensated for our efforts, we must seek new employment...
     
  15. OldManOnFire

    OldManOnFire Well-Known Member

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  16. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    You'll notice that I self-identify as a Progressive Libertarian and not a Magic Man. By definition a progressive libertarian works in a pragmatic step-by-step process to achieve a libertarian government and society. To the maximum degree possible I did address your concern based upon what I believe could be achievable with the following provision in my tax proposal.

    "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. "


    The problem you're addressing goes much deeper because it originates in the difference between ownership established by title (under the doctrine of the Divine Right of Kings) and the Natural Right of Property as expressed in the last section of Chapter 5 in John Locke's Second Treatise of Civil Government.

    http://www.constitution.org/jl/2ndtr05.txt

    The excessive wealth accumulation being referred to is where a person has "carved" too much for themselves which is useless, dishonest, and a violation of the Natural Right of Property of all people in society. To change from "ownership established by title" to the "natural right of property" as argued by John Locke, which is what's required for your proposition, is a huge task that we haven't even begun to address. Someday, as a Progressive Libertarian, I hope we will take on the challenge but we're far from even beginning that task today.
     
  17. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    As noted the employer doesn't compensate the employee based upon the value of the work performed but instead based upon what the employer can afford to pay. Unfortunately many employers are poorly qualified when it comes to business so that are incapable of paying what the work performed is actually worth. For example in a business plan the target for employee compensation averages about 25% of gross sales but the employee doesn't determine the gross sales. The gross sales are determined by the management/owner's decisions. So if the management/owner is not generated enough in gross sales then they can't afford to pay the workers as much. The employee suffers financially because of the mismanagement of the enterprise that doesn't generate enough in gross sales to adequately compensate the employee.

    That's an owner problem, not an employee problem, but the employee is the one that ultimately suffers financially from bad management.

    I was already in the highest professional position attainable (without going into management that I chose not to do - been there, done that in the past) and receiving maximum compensation for that position possible and company policies and procedures prevented a bonus from being issued or, because I was already at the top in compensation, from receiving an increase. In fact I was at the highest possible level industry-wide to I couldn't even go to another company and work in the same profession in a higher classification.

    Of note later in my career I did make two moves professionally to other employers. The first was a lateral move in the same job classification (which, as noted, was the highest in my field in aerospace) for certain reasons (smaller company) and the next move was in the same classification for more compensation (from about $75,000/yr to a base of $120,000/yr where I earned up to $150,000/yr because of overtime) but I will also address what happened after that in addressing your next reply.
     
  18. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    True but as noted those "rungs" aren't on the economic ladder. As I mentioned I made two voluntary moves after leaving Boeing. One was lateral and one was for more compensation but.... eventually the second company lost the contract that paid for my compensation and although they retained me for a year without me basically doing anything because I was that valuable eventually they had to lay me off.

    So here I was a very highly qualified person, in the highest level of professional competence, with an exceptional resume and references, but when I looked for another job in my skill level requiring my knowledge and experience there were no openings. Yes, others were working in that field in that job description but no company was going to fire them and hire me. I couldn't get a job at my level at even 1/2 the compensation I was previously receiving and couldn't even get a job in a lower level position because they are already filled. There weren't even "parallel rungs" on the ladder available much less any higher level rungs because none existed. I'd max'd out my profession and couldn't even get a job. If I couldn't get a job then no one will less experience or skills could have "moved up" the ladder into the position I'd previously held.

    That is true but as I mentioned as the number of workers decreases due to automation then their value to the enterprise for work that can't be done by automation increases proportionately.

    That is true but that doesn't imply there are any job openings where a person can move from one level up to the next.... and as you accurately noted automation is replacing those jobs and the only direction for the displaced worker is down because there are no opening above. That's what we've been seeing. People are displaced and then they have to accept lower level employment that prevents others from moving into those positions.

    Employers only look for the most qualified employees when they have a job opening. They don't fire employees that have job specific knowledge to make room for new employees that don't have job specific knowledge.

    How much sense does it take to realize that it's ineffective to tax a person $100 and then replace that taxation with $100 in government welfare assistance so they can pay their bills when that welfare assistance costs the government $110 because of additional administrative costs?

    Based upon our current tax codes about 47% of all income households can barely meet their mandatory expenditures or can't meet them at all and require government welfare assistance. You may not think that 47% is very many but statistically it's quite a few that can't afford to even pay $10 a year in income taxes.
     
  19. OldManOnFire

    OldManOnFire Well-Known Member

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  20. OldManOnFire

    OldManOnFire Well-Known Member

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  21. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    A minimum cost that is universally applied to all enterprises does not affect competitiveness. Arguably any changes should be phased implementation to allow the business plans of all enterprises affected to adjust over time. Because the "profit margin" is a percentage that's linked to the costs an increase is costs actually increases the profits in dollars while maintaining the same profit margin (percentage).

    This is wrong or misleading on several counts. The Business Plan must always be adjusted to address every factor that effects the enterprise. Increase costs or a reduced market size must be addressed by changes to the Business Plan that could include price adjustments, better marketing, improved customer service, or a revision to the tasks being assigned to the employees. Increases in the gross revenue can certainly be generated by changes in the Business Plan and, in fact, most changes to a business plan address increasing gross sales as opposed to addressing increases in costs. Increases in the "minimum compensation package" mandated under law are not arbitrary and apply equally to all enterprises that don't meet the changes in the criteria. Once again they must be addressed in the Business Plan but other than that there are no negative consequences to the enterprise. Only the failure of the enterprise to address the changes results in negative consequences to the enterprise.

    While a person may choose to work for Company A, Company B, or Company C if all of them are under-compensating for employment then it doesn't matter which company the person chooses to work for.

    The profits of the enterprise are not negatively effected by minimum employee compensation that exists so long as it applies all enterprises. It's just a another cost that must be accounted for in the Business Plan.

    Post Script - You are correct that a company can choose to outsource the work but in doing so they actually increase the costs of labor they pay for. As the co-owner of a small manufacturing company we outsource much of our work but by doing so the cost we pay for labor is over four-times more than what we'd pay if we did the work in-house. We would pay about $35-$40/hr in labor costs for machining of parts but by outsourcing the work we're paying about $150-$200/hr for the machine work.
     
  22. OldManOnFire

    OldManOnFire Well-Known Member

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  23. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    As always I'm enjoying our discussion on this but it's really off topic to the thread which is about a tax proposal that includes no provisions for addressing the minimum wage (compensation) laws or their effects on enterprise, the person/household, or the economy.

    The closest we come to relevancy is the "Exemption" I propose that based upon the ideological arguments for the "natural right of property" that are based upon labor providing for the support and comfort of the person/household and the quantified costs of the minimum/mandatory cost of living as quantified by MIT with it's Living Wage Calculator.

    The Exemption is based upon a general concept that the minimum-mandatory cost of living establishes the bottom line "costs" to the household, similar to the itemized costs of the enterprise, and that taxation should only be imposed upon the "profits" of both the enterprise and the individual household. Any household that doesn't have enough income to fund the minimum-mandatory costs of living does not have the discretionary income with which they can pay income taxes.

    I'm not deviating much from the current concept for income taxes that we already have reflected by the "standard deduction" as well as itemized deductions for the household but what I do attempt to achieve is to eliminate the nefarious deductions that are unrelated to the minimum-mandatory expenditures for the household.

    For example every household arguably has to "pay rent" regardless of whether they lease an apartment or purchase a home and pay the mortgage. There is a minimum-mandatory expenditure for this and it's been quantified. On the flip side our current "mortgage deduction" is irrational because it allows the deduction on interest up to a $1 million mortgage but no one is required to live in a million dollar home. That is a luxury and not a necessary expenditure related to the minimum-mandatory costs of living. For example the MIT calculator establishes that the minimum-mandatory cost for "rent" for the median household (i.e. 2.54 people that assumes two adults) in my county (Yavapai AZ) is $6,271. This is one hell-of-a-lot less than someone with a $1 million mortgage paying 3% interest and writing off $30,000 on their income taxes. The "Exemption" basically makes the $6,271 "deductible" as a component of the Exemption and taxes would be paid on additional $23,729 expenditure because it is a voluntary expenditure and not a mandatory expenditure of the household. If the person/household can afford to live in a million home they can afford to pay income taxes on the $23,729 in voluntary expenditures related to financing it.

    Once again the argument behind the Exemption is that "costs" should not be taxed while "profits" should be taxed. Since enterprises always account for all their expenditures they itemize their costs but households do not so the Exemption is created so that we don't impose an irrational accounting requirement to determine the minimum-mandatory costs on every household because we don't need to do that. It's already quantified and the Exemption, although generalized for application as a national standard, is based upon that principle. Tax profits and not costs.
     
  24. OldManOnFire

    OldManOnFire Well-Known Member

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    The root issue here is not how a tax system is designed but IMO more about where the taxes will be extracted. As I have mentioned I believe all Americans should help fund the government which they demand. How is it possible for people to choose to live in the USA, make demands on the government, demand jobs, demand wealth, demand home ownership, demand education and health care, demand safety and protection, demand retirement, etc. etc. etc. and not help fund this? Americans who are capable of working, capable of earning an income, including those in retirement with means, are the Americans I say MUST help fund the government which they are demanding. We can extract a larger proportion of taxes from business but in doing so this also burdens business with an expense that might be better spent elsewhere. We can extract more and more from the wealthy but fact is this will force diminishing returns. We can force higher taxation on capital gains but this too will have diminishing returns and possibly effect investments. The elephant in the room that you or no one discusses is the out of control spending by government! On another thread the data says federal government spending will increase 50% during the next nine years to >$6 TRILLION! The same data shows deficit spending will be 100% greater than today! Meanwhile the US workforce as a percentage is decreasing. Today we REFUSE to pay our way and I could ask where are the taxes coming from in 2025 when tax revenue demands will be 50% higher than today? IMO there is no tax system proposal worth a dime if it does not do two things; first, get all Americans involved in funding the government which they demand, and second, does not deal with greatly reduced government spending...
     
  25. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    In point of fact every working household in America and most non-working households in America do fund the state and federal governments through taxation but none of them pay all of the different forms of taxation being imposed. What is nefarious is when we only address one form of taxation while ignoring the other forms of taxation that the person/household pays.

    For example many like to claim that 47% of American households are not funding the federal government because they have a zero or negative personal income tax liability and that's nonsense. They're working households and they pay another form of income tax called the FICA/Payroll/Self-Employment tax which is also used to fund federal expenditures and, in fact, it funds about 1/3rd of all federal expenditures. If we break down the Social Security tax it has two components. The Tax for Social Security and the Medicare portion. There are very wealth high income households that don't pay a dime of the Social Security portion of the FICA/Payroll/Self-Employment tax because it's only imposed on "earned income" while these super-wealthy households derive all of their income from investments that are codified as "unearned" income. When compared to the super-wealthy a minimum wage workers is getting screwed base upon the FICA/Payroll/Self-Employment tax imposed on income because they're funding about $900 billion in federal expenditures (the Social Security portion) while the wealthy investor isn't pay one dime to support this expenditure.

    Let's look at another federal tax. One of the primary forms of taxation to fund the federal government historically was the Whiskey tax. No one really needs to drink whiskey and it's always paid for with "discretionary" income and a tax is imposed upon it. So even a person under my Exemption level is funding the federal government if they purchase alcoholic beverages that are all subject to a federal excise tax that has a been a traditional form of funding the federal government.

    Use electricity and you're paying a tax that funds the US government. Purchase an item at a local store where a sales tax exists and you're funding state and local government. Own a home or rent an apartment and your either directly or indirectly paying the property taxes (that are included as a component of the rent).

    Everyone is paying state and federal taxes and everyone has a "dog in the hunt" although the taxes come in different forms and people pay different amounts. Economic studies actually indicate that the lower the income the higher the tax burden relative to income is in the United States. So basically low income households are carrying a higher tax burden than high income households although this is basically due to the regressive nature of most state tax laws.

    So what you want already exists in America and being nefarious by only addressing one form of taxation doesn't change the fact that everyone is paying both state and federal taxes. It's virtually impossible to not pay taxes in America.
     

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