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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    I wanted to address this all by itself. As I noted in my previous post your first condition is being met because everyone pays taxes to fund both the state and federal government. Not all pay an income tax but that's only one form of taxation and I can't even count how many forms of different federal taxes we can potentially pay. You and I will unquestionably agree it's one hell of a lot of different types of taxation.

    What I really want to address is reducing the spending because we both agree that needs to be done. The only real question is whether we reduce spending responsibly or irresponsibly.

    The irresponsible way to reduce spending is to simply cut the authorization for the spending and ignoring the reason for the spending.

    The responsible was is to eliminate the reason for the spending.

    For example if we want to reduce welfare spending then we need to address the reason for the welfare spending. Welfare assistance is a means of mitigating the effects of poverty. Welfare assistance doesn't reduce the poverty anymore than an aspirin will reduce a brain tumor but the aspirin mitigates the pain created by brain tumor. People often ignore the brain tumor and complain about the cost of aspirin. Cure the brain tumor and the need for the aspirin goes away.

    So if we want to reduce welfare spending then we need to address the problem of poverty. If we reduce poverty then the reason for the amount we spend in welfare assistance is reduced.

    You've argued against "minimum living wage" and regardless of your arguments a "living wage" eliminates poverty for fulltime working households and it would reduce federal spending on welfare by about $400 billion a year and probably an equal amount in state welfare spending. Support it or not but without a "living wage" the welfare assistance is necessary and can't be reduced responsibly.

    I've heard presidential candidates today talking about creating more jobs but with unemployment under 5% we don't really need more jobs. We need better compensation for the jobs that already exist.

    I've made a proposal in the past to privatize Social Security but unlike Republican proposals mine was based upon the minimum wage and required 45 years because Social Security/Medicare is based upon the 45 year working career of the person. It also requires imposing the Social Security tax on all income regardless of source or amount during the 45 year transitional phase. In the end the safety net provided for by Social Security shrinks to virtually nothing and Medicare isn't required at all because proposal would provide benefits at least four-times greater than today's Social Security program. It's a pragmatic and responsible way to dramatically reduce federal spending over time but it does cost money to get there.

    Agree with me or not on specific proposals but the principle remains the same. Either we reduce spending responsibly by reducing or eliminating the necessity for the spending or we irresponsibly cut the spending authorization ignoring the reason for the spending.

    There are lots of ways to responsibly reduce expenditures as opposed to just irresponsibly cutting the spending authorization without considering the reasons for the authorization. I'll leave it up to you to imagine your own cases where you can responsibly reduce spending by addressing the reason for the spending. Don't address the cost of the aspirin but instead address the brain tumor that creates the need for the aspirin.

    My tax plan does none of this directly because it doesn't address the spending directly but it does address it indirectly. If the spending goes up or down relative to the national income then the tax rate goes up or down because linkage between the two is established. That isn't happening now because there's no linkage between the spending and the tax rates. If the government increase or decreases the spending today it will not affect the taxes we pay because there's no linkage between the two. I also eliminated the nefarious use of the GDP as a metric for income taxes because there's no relationship between the GDP and personal income taxes. Only gross personal income (GPI) has a relationship to income taxes and the GPD and GPI are different.

    I addressed the linkage taxation and spending in my proposal with an example. For example in 2013 the tax rate on all income above the Exemption would have been 29% but in 2014 that dropped to 24% based upon the spending relative to the gross personal income of the nation.
     
  2. OldManOnFire

    OldManOnFire Well-Known Member

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  3. OldManOnFire

    OldManOnFire Well-Known Member

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  4. Longshot

    Longshot Well-Known Member

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    The fairest system would be for each one of the member states to pay its fair share of the expenses of operating the union. This tax should be levied based on population.
     
  5. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    I've cut down my response to addressing these two statements starting with this one.

    Yes, there's always "waste" in spending regardless of whether it's the household, enterprise, or the government but.....

    There's a difference between "waste" and "necessary spending" and while there is "waste" in all spending it's really an insignificant percentage of the total spending. I recall that back in 2013 it was estimated that Medicare "wasted" about $40 million per year and for that year Medicare spending was over $550 billion so about 0.09% of the spending was waste (if my math is right). Yes, I know that Medicare is not funded from the general budget but the example is to show that with a huge government program the percentage of waste is really insignificant and that applies across the board on all government programs. In many cases, such as infrastructure, the federal government is under-spending. For example the federal responsibility for co-funding our interstate highway system, that's supposed to be funded by the federal fuel excise tax, is under-funded. In 2007 the federal government collected $30 billion from the fuel tax, spent $40 billion, and even that wasn't enough to cover the necessary spending on the nation's interstate highway system.

    Of course the federal government can't force the states to fund the responsibilities of state government. Not even the state courts have been successful at this. I've lived in both WA and AZ where the State Supreme Courts have ordered the state legislatures to provide additional funding for education and to date neither have fully complied... and this is funding above and beyond the 7% in federal funding they receive. If we want to end federal aid to education then you tell be how we can force the states to increase their taxes to offset the loss of 7% of the education budget funded by the federal government. To simply "cut" that funding results in underfunding for education at the state level and it's the students that suffer because they don't receive the education they deserve.

    In principle I agree that the states are responsible for a significant portion of federal spending because they don't tax enough to fund expenditures they're responsible for but I don't know how to fix that. This is "necessary" spending but I don't know how to fix the problem of under-taxation but the states where the states aren't fully funding the necessary spending.

    The federal government cannot force the states to fully fund the states responsibilities. All the federal government can do is mitigate the fact that the states are underfunding the necessary spending by providing federal funding to make up the difference.
     
  6. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    I'm not offering "another tax system" in my proposal. My tax proposal is merely a modification to our existing income tax so it's not a new tax but it does fully fund the federal government regardless of what the spending is this year, next year, or ten years down the road. It isn't a Bandaid fix because it fixes the problem of deficit spending forever regardless of what the spending authorizations might be.

    As you're very much aware I'm a "Progressive Libertarian" which means I seek to work in a step-by-step process to achieve the changes in society and government based upon the ideology of Classical Liberalism upon which our nation was founded. John Locke is generally referred to as the Godfather of Classical Liberalism so I'd like to quote what Locke had to say about taxation.

    http://www.constitution.org/jl/2ndtr11.txt

    As Locke notes government are not cheap and they come at great cost (great charge) and the people must fund government and they do so from their "estate" which, based upon the existing common definition from Locke's era, was the "wealth" of the person/household. Wealth is what the person/household possesses above and beyond what is required for their basic "support and comfort" (Ref Chapter 5 of the Second Treatise of Civil Government).

    The person/household that lives hand-to-mouth, day-to-day, month-to-month, and year-to-year has no "estate" (wealth) to tax. It was upon this ideological principle for taxation, as expressed by John Locke, that I established the Exemption. Under my proposal we tax the "estate" (wealth) of those households that actually have the ability to fund the taxes because they have an "estate" while about one-half of the people/households don't have an "estate" that can be taxed.

    The reason about one-half of households don't have an "estate" (wealth) to tax is because "Classical Liberalism" was corrupted by "Neo-Classical Liberalism" based upon the economic rationalizations of Adam Smith, the recognized Godfather of Neo-Classical Liberalism, in his book The Wealth of Nations. Adam Smith rationalized violations of the natural right of property for the benefit of the wealthy capitalist (owners of enterprise). Locke argued that "commerce" could and must benefit all of society based upon the natural right of property while Smith rationalized it should only benefit the Capitalist, motivated by greed, where any benefit to society would be purely accidental.

    If commerce was based upon the natural right of property established under Classical Liberalism then your wish would come true because we generate more than enough wealth annually so that every person/household in America would have an "estate" (wealth) that could be taxed.

    Basically you want taxation based upon Classical Liberalism but commerce is based upon Neo-Classical Liberalism that violates the natural Right of Property established by Classical Liberalism. Sorry but we can't have it both ways because the two ideologies conflict with each other. My tax proposal mitigates the conflict between Classical Liberalism where there would be the "Haves and Have-Mores" and Neo-Classical Liberalism where we have the "Haves and Have-Nots" in society.
     
  7. Longshot

    Longshot Well-Known Member

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    Voluntary exchange (i.e. commerce) doesn't result in either party losing any of his property, other than that which he agrees to give to the other party as part of the exchange.
     
  8. OldManOnFire

    OldManOnFire Well-Known Member

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  9. OldManOnFire

    OldManOnFire Well-Known Member

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    All people have an 'estate' to tax and the size and type of estate varies from one person to another. An 'estate' does not only mean property. A guy who dies and owns no property but has $100 or $100 million in stocks/bonds, etc. has their estate defined as their accumulated wealth of stocks and bonds. People have both income and wealth of varying degrees and both help to define the 'estate'.

    How a government collects the necessary tax revenue to fund the government is the fundamental question I continue to ask and IMO all Americans who choose to live and do business in the USA should help fund the government which they demand. The guy with $100 can fund $5 per year and the guy with $100 million can fund $15 million per year but the key is all Americans funding the government which they are demanding...
     
  10. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    The "estate" is net assets (i.e. assets minus liabilities) and it can be a positive or negative estate. For example the person that purchases a $200,000 home with a $40,000 down payment but has no other assets has a negative estate of $160,000 if they die. You can't tax a negative estate.

    A person/household that has $30,000 in their minimum-mandatory expenditures for the year but doesn't have that much income has a "negative" estate for the purposes of the income tax (that doesn't tax wealth) and you can't tax a negative number.

    We don't tax the gross revenue of enterprise because that would be wrong and it's wrong to tax the gross revenue of the household.
     
  11. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    Arguably correct but there is a "cost/benefit" relationship because identifying and reducing the waste costs money. Having worked in manufacturing for my entire career we came up against this same problem. It costs the enterprise money to identify the waste and you quickly reach the point where the costs of identifying and eliminating the waste costs more than what's saved. It makes no sense to spend $100 to save $10.

    In reality that's predominately what is happening and I'll provide a couple of examples.

    The states have an educational funding requirement of 100% but only collect enough taxes to fund 93% of the cost. The federal government also collects taxes and the states, under the law, request the additional 7% of their educational funding from the federal government which the federal government provides. The state then distributes all of the 100% of funding to the local school districts and the local school districts literally spend the money. The federal government isn't doing any of the actual spending, nor is the state, because all of the spending is literally controlled by the local school boards.

    We have federal funding for our interstate highways but the federal government doesn't typically spend money on highway construction. The federal government distributes the funding to the states that also provide funding and the states issue the contracts and pay for the highway construction.

    The spending is almost always based upon the lowest level of government where it's most efficient while the tax revenues to fund the expenditures can come from all levels of government taxation.



    I agree which is why tax proposal addressed that problem.. No more borrowing by the federal government to fund general expenditures because the income tax, under my proposal, fully funds the authorized general expenditures.

    Are you opposed to the US Constitution because this proposal would violate it.

    Of course the states can fund themselves but the state legislatures often choose not to do that. Mostly we see this in Red States like Kansas where the state legislature/governor cut taxes (mostly for the wealthy) so much that it can't even afford it's minimal necessary expenditures. On the other hand California, a Blue State, is generating a budget surplus.
     
  12. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    Commerce is not voluntary in the United States today. There isn't enough unused free land where over 300 million people can directly provide for their support and comfort from nature without engaging in commerce. Our laws of property aren't even based upon the Natural Right of Property but instead are based upon "statutory title" that is a remnant of the Doctrine of the Divine Right of Kings that John Locke argued against in addressing the "Natural Right of Property" in his Second Treatise of Civil Government.

    As I noted earlier our nation was founded based upon Classic Liberalism that embraced the natural rights of the person that includes the natural right of property as best defined by John Locke but that was corrupted by Neo-Classical Liberalism when it comes to "property" as advocated by Adam Smith that didn't give a damn about the Natural Right of Property. Adam Smith advocated solely for the capitalist's unlimited accumulation of wealth motivated by personal greed that violated of the Natural Right of Property of the person. Neo-Classical Liberalism is the core problem with capitalism in America today because it violates the Natural Right of Property of the Person.

    If capitalism and commerce in the US was based upon Classic Liberalism then every household would have more than enough income to provide for their support and comfort and every household would be able to pay income taxes. That isn't the case so my tax proposal addresses that fact.
     
  13. Longshot

    Longshot Well-Known Member

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    How does that address my statement? Voluntary exchange (i.e. commerce) doesn't result in either party losing any of his property, other than that which he agrees to give to the other party as part of the exchange.
     
  14. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    Voluntary exchange only exists if both of those that are a party to the transaction can say "No" but that doesn't exist when commerce is mandatory.

    The person can't say no to paying for utilities because they won't have water or energy.
    The person can't say no to purchasing food because if they do they starve to death.
    The person can't say no to many of the expenditures they're required to make.

    The actual "minimum-mandatory" expenditures of the household, required because commerce is not voluntary, are not mythical or subjective. MIT did an exhaustive study to create the MIT Living Wage Calculator.

    The person can't say no to employment because if they do they won't earn money to pay their bills. The vast majority of individuals are not capable of self-employment and even the self-employed work for the customer. The individual cannot typically say "No" to the compensation offered by the employer because it's "market-based" so all employers pay the same basic wage for the same work. That includes the involuntary acceptance of employment where it doesn't provide for the minimum-mandatory cost of living.

    Do people really think that people would accept the "minimum wage" if they weren't forced to because they don't have the financial assets to refuse?
     
  15. Longshot

    Longshot Well-Known Member

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    The fact that I starve without food has no bearing on the fact that voluntary exchange (i.e. commerce) doesn't result in either party losing any of his property, other than that which he agrees to give to the other party as part of the exchange. It's a non-sequitur.
     
  16. liberalminority

    liberalminority Well-Known Member

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    they are not forced to work for minimum wage, they can go on welfare and live in a lap of luxury with free obama phones, free internet, free housing, free food stamps, and the taxpayer pays for it all.

    the poor in america are rich compared to the poor in mexico.
     
  17. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    It is not a voluntary exchange because the person can't refuse to purchase the food at whatever price the market establishes. The person can shop at different markets but they still end up being forced to purchase the food at the seller's price. They can't pragmatically grow or go out into nature and secure the food they need and they are forced to purchase the food from the market at the selling price established by the grocer.

    That is not a "voluntary" exchange because the buyer has no choice but to purchase the food at the sellers price.

    A voluntary exchange only occurs if no force exists related to the exchange.
     
  18. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    No one living on welfare assistance in the United States is living in luxury. They're living in poverty because welfare, at it's best, provides a sustenance level of existance. We can also note that our the criteria for our primary welfare programs, such as food stamps, was not created by the Obama administration. The current criteria for SNAP (food stamp) benefits was created in 2003 under the Bush Administration and not under the Obama Administration.

    We can also dispel the "Welfare Queen" myth that was debunked ages ago. Americans want to work and, in fact, the vast majority of welfare receiving households are working households. Given a choice between working that provides for all of their minimum-mandatory expenditures and working plus receiving welfare benefits to meet those identical minimum-mandatory expenditures virtually all Americans would choose the work over welfare & work. The belief that Americans like receiving welfare as opposed to working for a living is another right-wing myth.

    Comparative poverty? Seriously? This is like claiming that execution by hanging is better than execution by beheading when in both cases the person ends up being dead.

    Of course the United States doesn't make the commerce laws or welfare laws for Mexico. If you choose to condemn Mexico then that's fine but the differences between the US and Mexico cannot be used to address how we, in the United States, address commerce or welfare assistance.
     
  19. Longshot

    Longshot Well-Known Member

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    Nobody is forcing them to do anything. They voluntarily choose to purchase food.
     
  20. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    The force is not imposed by another person. Life itself forces them to purchase food because they can't secure enough food from nature. The belief that only the force of another person is applicable is myopic. When you have no choice it doesn't matter what the cause is because you cannot make a voluntary choice.

    In any case this is off topic and has nothing to do with taxation.
     
  21. Longshot

    Longshot Well-Known Member

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    You raised the point in the first place.

    And because each of us requires food, we each voluntarily trade with other to acquire that food.
     
  22. danielpalos

    danielpalos Banned

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    how many businesses balance their budgets when engaging in capital intensive ventures?
     
  23. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    My apologies then if I took the discussion off topic but under the "natural right of property" the person doesn't have to purchase food but instead can obtain any food from nature necessary for their support..... even if that food is being grown by a person so long as it's in excess of what the person growing the food requires for their survival. The "natural right of property" only exists so long as there is "enough, and as good" as remaining for all of the people.

    Now, back to the income tax.
     
  24. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    All of them or they soon no longer exist.
     
  25. danielpalos

    danielpalos Banned

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    It is easier pay down a scheduled debt than to purchase capital intensive goods, outright.
     

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