How to tax?

Serious discussions on politics, religion, and the like.

Re: How to tax?

Postby Deepbluediver » Sun Apr 06, 2014 8:40 am

JustinReilly wrote:First off, you forgot the form of taxation that funded most of the US government's activities for its first century of existence, tariffs. Tariffs were, well, sort of sufficient until the Civil War - and especially the Civil War pensions - greatly outstripped their capacity. Then the death of mercantilism and the realization that international trade can make everyone better off finally ended their dominance. We still have tariffs, of course, but we mostly use them as a stick to beat countries that mildly annoy us with (we all know of course what we do to countries that really annoy us), not as a revenue generator.

Yes! Import and (occasionally) export taxes have a long history, because prior to the digital age it was a lot easier for the government to see what was coming into or going out of the country than to track everyone's income or calculate the sales tax on a trade of 3 goats for 6 jugs of whiskey. :P

I agree that we need to simplify the tax code. As soon as Congress realized that voters scream a lot less about tax breaks than handouts, the tax code became their go-to tool for anything from supporting small farmers to putting money in the pockets of their golfing buddies. I take issue with a flat tax, however. It seems clear to me that my ten-thousandth dollar earned in a year has a very different value and utility to me than my ten-millionth. Having five or six marginal tax rates to account for this doesn't really make things that much more complicated, we're still talking fourth-grade math here. Moreover, the wealthy reap a far greater benefit from government than the poor. A poor person might receive a pittance from welfare or Social Security, but how much do, say, the Walton family benefit from a network of well-maintained transport infrastructure, or the titans of Silicon Valley benefit from an educated populace? Hell, just having the poor well-fed and complacent enough to keep them from mobbing together and smashing everything is worth a lot to the rich. Let them pay a share equal to the value they receive.

I guess in a theoretical economy in which we can only use a single type of tax, you would be right, and I would accept a system with different tiers.
But in our real-world economy we can tax people more for using certain services more anyway, mainly with Toll taxes. I know that most bridges already charge more for trucks than for cars; and the use of digital-devices (like E-Z pass) are becoming much more common. I feel like we are getting close to the point where we can start charging people based on exactly how many miles they drive, and on what type of car or truck they are driving in.

Also, While the wealthy benefit from these services, I'm not sure if I buy into the fact that they benefit more as much as you say, at least, not as much as you would make it seem. If I hire someone because of their education, they are benefiting from their education as well. Is the benefit of one employer greater than the combined benefit of all the people he hires? Maybe, maybe not; at the very least I think it gets very complicated.
Another example- police tend to spend a lot more time in poor neighborhoods than in rich ones, and the court system spends lots of resources dealing with the effects of poor-on-poor crime. This isn't to say the there aren't issues with the way white-collar crime is dealt with, but when you put a guy in prison for drug-dealing or assault or theft, the people who benefit most directly are his victims (or the would-be-victims he can no longer harm).

Also, the way our tax-system is structured, it puts a whole lot of the burden on the a very small number of people. If all the top one percent to decided to just peace-out and go to Europe for a year-long vacation, the government would be screw-.....
ok, technically we would only be MORE screwed, because there hasn't been a balanced budget in a decade and a half. And I realized I've just described the plot of Atlas Shrugged, but it's not as unrealistic as you might think.
The city of New York, for example, relied on high taxes paid by it's booming financial sector. When the economic downturn hit, all those poor, poor Hedge fund managers and stock traders took a beating, and didn't get their 6-figure bonuses. Most of them weren't exactly scraping by anyhow, but the city had it's tax revenue drop by something like 40% from one year to the next.

A lot of cities and states, in fact, due to both their constitutions and/or laws, are not allowed to maintain a surplus or establish a rainy-day fun (it must be paid back as a tax rebate) OR run large deficits (i.e. borrow money like the federal government), and so when they rely on highly a volatile tax-base they often find themselves getting pinched.
I think that the first part of this is the most BS-tty thing ever, but then again I've yet to see a politician who didn't spend every penny he could get his hands on, so maybe it's a moot point.

So, if we, the people, don't want to live in a plutocracy, and we aren't permitted to change it through legislation, what are the remaining options?

Constitutional amendment.
Or just elect other people.

Tailsteak wrote:...because the one thing people have always complained about with regard to American democracy, it's that the wealthy have too little influence...

Campaign finance reform is whole 'nother kettle of fish....and most of those fish are poisonous.
There was an interesting section of the book Freakonomics where the authors did an analysis regarding the effects of spending on political campaigns, and their ultimate conclusion was that it's less influential than most people seem to think, though.

Personally, I feel that it should be less-restricted, but also more open. (as a preface, all of this is American-based commentary; if someone wants to enlighten me as to how things work in other countries, I'd be glad to read it)
Anyone (being defined as an individual, not an entity or organization) should be able to donate any amount they want to any candidate, but every donation has to be tracked and the information has to be readily available to anyone who wants to see it. The other thing that needs to change is that the legal barriers to entry into the race need to come down. Right now in a lot of places it's really hard for anyone who isn't a member of one of the two major political parties to even get on the ballot. Who puts these barriers in place? The people who are already in office, of course, and they have little incentive to reduce them, obviously.
But if we resolve that, then the public can then pick and choose who they want to support with their votes, and they deserve whoever they pick. I'm not in favor of protecting people from themselves; if the research is easy to do, and people still don't do it, then they can put up with whatever shitty asshole they elect into power until the next election.
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Re: How to tax?

Postby Leibowitz » Mon Apr 07, 2014 12:08 pm

There aren't five ways to tax. There are an infinite number of ways to tax, including a mind-boggling plethora of mixed systems. And a mixed system is what you want, because no simple method works well and fairly by itself. And yet, you also want to keep the system's complexity low, to reduce loopholes and graft.

Economics is a very complex field. As a rule, if you're considering a complex field, and someone tells you (or you find yourself thinking) "All you gotta do is..." or "It's simple, you just have to..." then they are catastrophically oversimplifying. Some things really are difficult, and a "well shucks, ain't so hard, y'all are just makin' it too complicated" attitude can be disastrous.
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Re: How to tax?

Postby RyukaTana » Mon Apr 07, 2014 6:59 pm

The opposite attitude is intensely more damaging. Humans overcomplicate so much of their lives that things become complicated when they're really not. It's not hard to be kind and honest, except in a world where humans choose not to do so because the results are as immediately obvious. Looking at something that is historically complex, and complicating it because that's the common experience, is a disservice to humanity.

Does that mean taxes fall under that category? No, but they might. At the very least, there's usually a middle-ground that's far better than either extreme.
"Yamete, oshiri ga itai!"
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Re: How to tax?

Postby luislsacc » Mon Apr 14, 2014 1:20 pm

Gee, this one is a doozy. I'll take your question as meaning "Of only these five, and without mixing them, which one would you choose?". If my interpretation is wrong then by all means, I'll be glad to be corrected.

Let's see what the taxes are taxing/ what are the requirements for taxing.

Head Tax - taxes everyone alive in a country, so reason of taxation is being alive, thereby using communal resources in some way.

Income Tax - taxes income, or money made (to oversimplify), so the motive of taxation is the fact that the person that year gained money.

Tolls - Here's where the fact we're conversing in english makes some confusion in my head, as at least where I live, tolls aren't defined as a tax - for something to be defined as a tax, it must mean that the State is unilaterally taking money from the person for whatever uses it might find appropriate, and not providing anything specific to the person, where a toll mandates that the State reciprocates the payment in some specific way related to the reason that caused the payment. Still, tolls charge for use of government emmenities, so they require people to use said emmenities.

Sales tax - it taxes purchases, (namely commercial purchases, but this one tax government would need all the help it could get so let's broaden that to all purchases). This means that people must purchase things in order to pay taxes.

Asset tax - taxes people based on their belongings, therefore you must own things ( or money) in order to be taxed.

I'll run through the ones that wouldn't work for me first. All these are made with the assumption that the current values for these taxes would increase greatly.

Asset tax - It wouldn't work because it'd be far too disparaging, namely those who own the most things would pay the most, and if they wished to keep owning the same things they'd have to pay for them every year. This would cause people to have a desire to not own things of great value, like lands, buildings, large amounts of money etc. You might think this would be good for economic fitness, but money always has to end up somewhere and it's not like people will trade it for nothing, so either the people would be taxed for the possessions they obtained in order not to have money, or they would spend more money than necessary on consumables. In any of those cases, this would result in a loss of preparation for the future ( not as much reason to keep a nest egg if it's just going to be plucked out every year), so this would really only benefit big comercial businessess. Plus, this tax wouldn't take into account people who owned very valuable possessions they had no plan on liquefying ( think of the old family farm, perhaps inherited art pieces, etc.), who would be paying above their means just to maintain their right to a heritage and personal history.

Sales tax - As the single form of taxation, this is much too imbalanced. A person is their thirties with a house and 3 dependant family members who makes 20.000 a year has the same essential expenses in consummables that the same person but who makes 200.000 a year, yet it's clear that one can afford to pay much more than the other. Sure, they'll be likely to buy more stuff, but 10 times worth more stuff? Doubtfull.

Tolls - Wouldn't work because the people more likely to spend more money on government ammenities ( which are generally cheaper) are those who have less money, as those with more money can afford to have their needs met in private institutions. The only way to counterbalance this would be to create tolls in order to be able to run private institutions, which would bleed out to the end customer, but even then people with more money can afford things like better food, which would make them need things like healthcare less often.

Head tax - come on Tailsteak, this one is kind of silly, it's obvious a hugely significant amount of the population has no real means to generate income, therefore having no way to pay for their head tax. This would either result in the tax being paid for by family members, effectively punishing people for having large families, or would be defaulted by the people, thereby encouraging people who would expect low income to not work at all. As an alternative, those who didn't pay could go to prison, but I don't think I'd make a society where being poor is a crime. Plus, that would force the burden of paying for them on everyone else anyway, which isn't much different from how things are now, sans dystopia.

So I go with income tax. Why? Because it assures that the only people being taxed are the ones that earned money ( or other forms of income), and that what's been taxed isn't being taxed again ( at least for the same reasons). Add a system where the percentage paid varies by how much is made, and there is room for equity in the system.
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Re: How to tax?

Postby Iskra » Fri Apr 18, 2014 5:21 am

I like Georgism, which probably says more about my relationship with practicality(I'm against it) than it does about how a government should be run.
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