tax

[Anonymous]

"Further, if a sales tax were enacted (VAT or otherwise), it could exempt necessities like certain foods and medical basics."

This gets problematic. Do you exempt every food item? Non-food items necessary to the effective use of food (pots and pans, aluminum foil)? What is considered a "medical basic"? Band-aids? Vitamins? Heat pads? I could very quickly see the various lobbyists insisting that their products/industries be considered necessities or basics so that they can be tax free, giving them a price advantage over similar but unclassified products. Does the exemption apply to everyone equally, including the mother of four making minimum wage trying to buy eggs in bulk and the multi-billionaire buying caviar? Again, you end up attempting to promote social behaviors through the tax code.

You certainly could have a threshold, but then it is no longer a flat tax; you've simply created two tax brackets instead of the number we have now. This might be ideal, but you'd end up with a tricky situation where the higher the threshold, the higher the tax would need to be to generate the necessary revenue, thus making it necessary to raise the threshold, then the tax again, on and on and on. And how would you handle all the other types of taxes, including payroll taxes and the like?

[Anonymous]

Anonymous wrote:I don't think the government has proven itself particularly competent at promoting the right things. I offered three huge examples of the government's failure to promote the right social goods: nutrition, home ownership, and insurance. Want more? Many "green" technologies have proven far less beneficial than was originally advertised and their impact is far outweighed by the cost in lost tax revenues. How successful was the DARE program?

Does the government get it right sometimes? Absolutely. But I think they should bat at a much higher percentage when they essentially have unlimited funds and access to the necessary information to make such decisions. Either they are incompetent, corrupt, or both. If you don't have near incontrovertible proof that something is a social good, it shouldn't be aggressively promoted or even required by the government because such is the power of their endorsements. There is obviously room for the occasional mistake. But the track record is littered with decisions that were overly haste, poorly informed, or out-and-out bought.

Our disagreement appears to be to what standard the government should be held. I think it should be compared to the private sector, which is where the money would be otherwise. You're obviously applying a much higher standard to the government.

I'm not sure exactly what you're advocating, though. If the state is going to get involved in something, it can do it directly, it can issue grants to private programs, or it can use tax incentives. Some (most, I think) prefer the approach of tax incentives, because it's easier to stop and start and it doesn't involve more bureaucracy. Are you saying that you would prefer one of the other approaches, or are you saying that you would prefer the government not do stuff (unless there's near incontrovertible proof of its goodness).

It sounded to me like you were saying the latter, which is why I assumed you were Republican or Libertarian.

[Anonymous]

Anonymous wrote:As Jeff indicated, if a flat tax were implemented, it could exempt the first 30,000 or 50,000 dollars. Further, if a sales tax were enacted (VAT or otherwise), it could exempt necessities like certain foods and medical basics.

Why exempt necessities. Food is necessary, Steak and Lobster are not. Why not flat tax on everything. Maybe a lower tax on food and medical. Seems like it would work out. I don't really care if the millionaire isn't paying 10 percent of his wages in taxes as long as he is paying taxes. It is all relative.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I don't think the government has proven itself particularly competent at promoting the right things. I offered three huge examples of the government's failure to promote the right social goods: nutrition, home ownership, and insurance. Want more? Many "green" technologies have proven far less beneficial than was originally advertised and their impact is far outweighed by the cost in lost tax revenues. How successful was the DARE program?

Does the government get it right sometimes? Absolutely. But I think they should bat at a much higher percentage when they essentially have unlimited funds and access to the necessary information to make such decisions. Either they are incompetent, corrupt, or both. If you don't have near incontrovertible proof that something is a social good, it shouldn't be aggressively promoted or even required by the government because such is the power of their endorsements. There is obviously room for the occasional mistake. But the track record is littered with decisions that were overly haste, poorly informed, or out-and-out bought.

Our disagreement appears to be to what standard the government should be held. I think it should be compared to the private sector, which is where the money would be otherwise. You're obviously applying a much higher standard to the government.

I'm not sure exactly what you're advocating, though. If the state is going to get involved in something, it can do it directly, it can issue grants to private programs, or it can use tax incentives. Some (most, I think) prefer the approach of tax incentives, because it's easier to stop and start and it doesn't involve more bureaucracy. Are you saying that you would prefer one of the other approaches, or are you saying that you would prefer the government not do stuff (unless there's near incontrovertible proof of its goodness).

It sounded to me like you were saying the latter, which is why I assumed you were Republican or Libertarian.

I do have libertarian leanings on some issues, but my bigger concern is that if we accept that the government can promote what it considers social goods, what do we do when it promotes a social good we find disagreeable? Why should my tax dollars go to promote it? When a homeowner receives a tax break that a renter does not, the renter is essentially subsidizing the home owner's mortgage. I find this highly objectionable.

I think you are conflating two issues. I am not seeing that the government should not do things or be involved in things. I believe in public options in a variety of industries, though not necessarily as they are currently constructed.

If the government doesn't offer a tax break for mortgage interest, how does that put the money into the private sector? What that really does is decrease everyone's tax burden. It puts more money into people's pockets, which they can choose to spent in the private sector, save, or burn in a ritualistic bonfire in the back yard. Yes, the homeowner loses in this deal, but only because they were unfairly profiting from a government subsidy that they ought not to have been entitled in the first place. I don't think there should be tax credits or exemptions or breaks; the only exception I would possibly make is for dependents, at a flat rate, because having dependents costs an individual more money. Again, every time the government gives a tax credit/break/exemption, they are essentially subsidizing that behavior on the backs of those who don't engage in that behavior.

[Anonymous]

Anonymous wrote:Seems like it would work out.

Depends what you mean by "work out." What are you trying to achieve?

Anonymous wrote:I don't really care if the millionaire isn't paying 10 percent of his wages in taxes as long as he is paying taxes.

Some of us do. But I don't understand your statement - you just want to make sure he's paying something? So, .00000000001%? I don't get your point.

Anonymous wrote:It is all relative.

What do you mean by that in this context?

Here's the problem with a flat income tax. Right now, we have people in this country who cannot afford necessities. Let's say you make the tax flat by increasing the tax rate of the poorer people. Now you have more people who cannot afford necessities. OK - now make the tax flat by cutting the rate of the rich. Now have much less money in the government, and we're already running massive deficits.

[Anonymous]

Anonymous wrote:I do have libertarian leanings on some issues

Sounds like a lot of issues, actually. Not saying there's anything wrong with that.

Anonymous wrote:...but my bigger concern is that if we accept that the government can promote what it considers social goods, what do we do when it promotes a social good we find disagreeable? Why should my tax dollars go to promote it?

How is that a bigger - i.e., different - concern? That's the libertarian position.

Anonymous wrote:...what do we do when it promotes a social good we find disagreeable?...When a homeowner receives a tax break that a renter does not, the renter is essentially subsidizing the home owner's mortgage. I find this highly objectionable.

We suck it up, and continue to support those programs we think are right and good. That's democracy and taxation. Your "system" of the government supporting only those programs that are unquestionably good doesn't answer your question, because there will still be disputes. I say a single-payer health insurance system is unquestionably good, and you (hypothetically) say no. We both say that public roads are unquestionably good, and another guy says he lives in a private community and owns a helicopter, so screw us. (Incidentally, I agree with you re the homeowner's credit.)

Anonymous wrote:I think you are conflating two issues. I am not seeing that the government should not do things or be involved in things. I believe in public options in a variety of industries, though not necessarily as they are currently constructed.

I didn't conflate; I asked you. Either you're objecting to the level of government involvement that we've had, or you're objecting to government action through tax breaks as opposed to other methods. I asked you which one it was.

If it's the first, that's a long discussion that we've probably both had several times with different people. If it's the second, I'm asking why action via the tax code is worse than other action.

Anonymous wrote:If the government doesn't offer a tax break for mortgage interest, how does that put the money into the private sector? What that really does is decrease everyone's tax burden.

Right. (That is, if we assume that rates overall end up lower b/c that segment of the population isn't getting the tax break.) That's putting that money into the private sector. "Private sector" doesn't just mean corporations.

Anonymous wrote:Yes, the homeowner loses in this deal, but only because they were unfairly profiting from a government subsidy that they ought not to have been entitled in the first place.

As I said, I don't support the mortgage break. Your statements have been much broader than that, though.

Anonymous wrote:I don't think there should be tax credits or exemptions or breaks; the only exception I would possibly make is for dependents, at a flat rate, because having dependents costs an individual more money. Again, every time the government gives a tax credit/break/exemption, they are essentially subsidizing that behavior on the backs of those who don't engage in that behavior.

Every time the government does anything, it's subsidizing something on the backs of those who don't use it. (In a sense. I don't "use" the SEC, but I'm a beneficiary of it.) If you have some reason why it's worse to give a tax break to homeowners than to mail them checks, I'm sincerely interested to hear it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I do have libertarian leanings on some issues

Sounds like a lot of issues, actually. Not saying there's anything wrong with that.

Anonymous wrote:...but my bigger concern is that if we accept that the government can promote what it considers social goods, what do we do when it promotes a social good we find disagreeable? Why should my tax dollars go to promote it?

How is that a bigger - i.e., different - concern? That's the libertarian position.

Anonymous wrote:...what do we do when it promotes a social good we find disagreeable?...When a homeowner receives a tax break that a renter does not, the renter is essentially subsidizing the home owner's mortgage. I find this highly objectionable.

We suck it up, and continue to support those programs we think are right and good. That's democracy and taxation. Your "system" of the government supporting only those programs that are unquestionably good doesn't answer your question, because there will still be disputes. I say a single-payer health insurance system is unquestionably good, and you (hypothetically) say no. We both say that public roads are unquestionably good, and another guy says he lives in a private community and owns a helicopter, so screw us. (Incidentally, I agree with you re the homeowner's credit.)

Anonymous wrote:I think you are conflating two issues. I am not seeing that the government should not do things or be involved in things. I believe in public options in a variety of industries, though not necessarily as they are currently constructed.

I didn't conflate; I asked you. Either you're objecting to the level of government involvement that we've had, or you're objecting to government action through tax breaks as opposed to other methods. I asked you which one it was.

If it's the first, that's a long discussion that we've probably both had several times with different people. If it's the second, I'm asking why action via the tax code is worse than other action.

Anonymous wrote:If the government doesn't offer a tax break for mortgage interest, how does that put the money into the private sector? What that really does is decrease everyone's tax burden.

Right. (That is, if we assume that rates overall end up lower b/c that segment of the population isn't getting the tax break.) That's putting that money into the private sector. "Private sector" doesn't just mean corporations.

Anonymous wrote:Yes, the homeowner loses in this deal, but only because they were unfairly profiting from a government subsidy that they ought not to have been entitled in the first place.

As I said, I don't support the mortgage break. Your statements have been much broader than that, though.

Anonymous wrote:I don't think there should be tax credits or exemptions or breaks; the only exception I would possibly make is for dependents, at a flat rate, because having dependents costs an individual more money. Again, every time the government gives a tax credit/break/exemption, they are essentially subsidizing that behavior on the backs of those who don't engage in that behavior.

Every time the government does anything, it's subsidizing something on the backs of those who don't use it. (In a sense. I don't "use" the SEC, but I'm a beneficiary of it.) If you have some reason why it's worse to give a tax break to homeowners than to mail them checks, I'm sincerely interested to hear it.

I'm not going to go point-by-point through this, only because the conversation is getting lengthy and I think we are probably closer together than initially believed.

Really, what gets my goat is the many, many, many people who don't realize all the ways in which the government subsidizes certain behaviors through the tax code. They may know they get a tax break, but they don't see this as a government handout the way we so easily see welfare or food stamps. And so many people rail against those programs, completely oblivious to the fact that they likely are guilty of the same "government mooching" they accuse others of. I am not saying you are one of these people, as you seem to understand the way the system works, but I am bothered by those who do subscribe to such hypocrisy. And it is this type of shadiness that makes me particularly object to such issues going through the tax code. Obviously, the information is available for all who seek it. But the way the issues are framed matters. Also, the tax code is passed in a different way than other legislation. Obama could have avoided the "mandate fee" debates by raising taxes on everyone and offering a tax break to those who hold insurance. Accomplishes the same thing, but through different means, and risks subverting the political process. And we certainly don't need more than that.

Now, there is certainly room to disagree on what the government should or should not be involved in. Not everyone with a mortgage who opposes welfare is a hypocrite. They may have a reasoned opinion for why the mortgage interest tax exemption is different than welfare.

However, I have never really seen a strong articulation as to why home ownership is a social good that the government ought to financially incentivize. As we've seen recently, we probably had too many people owning homes and look where that got us. Now, that is not necessarily the government's fault, but I think it shows that there is not the direct linear relationship between home ownership and social good. There is probably an ideal percentage of people who should own homes (which likely fluctuates based on the state of the economy); straying to far above or below this probably puts the economy and other aspects of society at risk. So, does the government offer the tax break when we are below and eliminate it or tax extra when we are above? This is clearly a very flawed mechanism to attempt to manipulate this decision. You seem to agree that mortgage deduction is a bad one, so I don't really need to go further. I'd be curious to hear how those who do support it do so, without simply resorting to "A lot of people would be in trouble without it."

So, my idea is that there should be no tax exemptions/breaks/credits, except for dependents, be it sales tax, income tax, etc. I do believe in a progressive, graduated tax structure (which even the "flat tax" is when you put in a threshold). I think that the government's involvement in social policy should be done through direct legislation, not the tax system.

[Anonymous]

Anonymous wrote:Really, what gets my goat is the many, many, many people who don't realize all the ways in which the government subsidizes certain behaviors through the tax code. They may know they get a tax break, but they don't see this as a government handout the way we so easily see welfare or food stamps. And so many people rail against those programs, completely oblivious to the fact that they likely are guilty of the same "government mooching" they accuse others of. I am not saying you are one of these people, as you seem to understand the way the system works, but I am bothered by those who do subscribe to such hypocrisy. And it is this type of shadiness that makes me particularly object to such issues going through the tax code. Obviously, the information is available for all who seek it. But the way the issues are framed matters. Also, the tax code is passed in a different way than other legislation. Obama could have avoided the "mandate fee" debates by raising taxes on everyone and offering a tax break to those who hold insurance. Accomplishes the same thing, but through different means, and risks subverting the political process. And we certainly don't need more than that.

I think those are good points, though I don't think there are many substantial things in there that directly affect the average citizen. The mortgage interest does, obviously, and it would surely have a very different feel if the government sent you a fat check instead of giving you the deduction. (If nothing else, it might improve people's view of government).

[Anonymous]

Anonymous wrote:

Anonymous wrote:Really, what gets my goat is the many, many, many people who don't realize all the ways in which the government subsidizes certain behaviors through the tax code. They may know they get a tax break, but they don't see this as a government handout the way we so easily see welfare or food stamps. And so many people rail against those programs, completely oblivious to the fact that they likely are guilty of the same "government mooching" they accuse others of. I am not saying you are one of these people, as you seem to understand the way the system works, but I am bothered by those who do subscribe to such hypocrisy. And it is this type of shadiness that makes me particularly object to such issues going through the tax code. Obviously, the information is available for all who seek it. But the way the issues are framed matters. Also, the tax code is passed in a different way than other legislation. Obama could have avoided the "mandate fee" debates by raising taxes on everyone and offering a tax break to those who hold insurance. Accomplishes the same thing, but through different means, and risks subverting the political process. And we certainly don't need more than that.

I think those are good points, though I don't think there are many substantial things in there that directly affect the average citizen. The mortgage interest does, obviously, and it would surely have a very different feel if the government sent you a fat check instead of giving you the deduction. (If nothing else, it might improve people's view of government).

I think there are probably more than either of us realize. Other common ones include:
- charitable donations
- health insurance
- retirement savings
- "green" technologies
- professional specific deductions (teacher expenses; "qualified performing artists")
- education expenses (student loans, tuition)
- child care expenses

Now, I am certainly not going to argue that all of these are wrong or bad or that the government has no interest in encouraging people to pursue these behaviors. But, again, every tax break that someone receives for doing so simply pushes the cost onto others. And to pretend otherwise, as so many people do (there was an interesting study done on members of the Tea Party and how they sought to justify the "government handouts" they received while simultaneously decrying others for receiving other forms of government handouts) is wrong and disingenuous. I think if more people knew that the reason taxes are so high is because the government is giving away money to individuals for all of these (and other) behaviors, they might also support a simplified tax code (except those who are selfish and think they are entitled to their government subsidies but no one else is, something that stretches across all parties).

[Anonymous]

Anonymous wrote:... I think if more people knew that the reason taxes are so high is ...

Your discussion makes a lot of sense, but then comes this description that flies in the face of our historically low taxes. Or are you speaking in terms of the world-view of the tea party?

[Anonymous]

That's a good list. I'd add the dependent deductions as applied to children.

I'd put charities in a separate category. The donations are for a public good, with no special benefit to the taxpayer, so it's a way of funding social goods without the government middle man. I might change my mind on that were I to learn more about things like buying art, waiting for it to appreciate, then donating it for a big deduction.

[Anonymous]

Anonymous wrote:

Anonymous wrote:... I think if more people knew that the reason taxes are so high is ...

Your discussion makes a lot of sense, but then comes this description that flies in the face of our historically low taxes. Or are you speaking in terms of the world-view of the tea party?

Allow me to clarify. People often complain that taxes are too high. What they don't realize is that the reason they are so high has much to do with all the deductions they take and seek. I realize that, relative to our own history and compared to many other nations, we pay low taxes.

[Anonymous]

Anonymous wrote:That's a good list. I'd add the dependent deductions as applied to children.

I'd put charities in a separate category. The donations are for a public good, with no special benefit to the taxpayer, so it's a way of funding social goods without the government middle man. I might change my mind on that were I to learn more about things like buying art, waiting for it to appreciate, then donating it for a big deduction.

Dependent deductions I am not as bothered by. I see those as an acknowledgment that having children or other dependents incurs a certain cost and taxes should not prevent people from providing basic needs to their family. But, yea, they are a major deduction as well.

What if the charity is the Klu Klux Klan? It is not hard to get tax-exempt status. Not all charities perform a public good, especially with so much waste and inefficiency.

[Anonymous]

People complain about taxes being high b/c their wages are stagnate. The vast majority live pay check to pay check and have no money to sparse. The top 1-2% don't have this problem and are paying less in taxes. There is no growth.

[Anonymous]

Anonymous wrote:Dependent deductions I am not as bothered by. I see those as an acknowledgment that having children or other dependents incurs a certain cost and taxes should not prevent people from providing basic needs to their family. But, yea, they are a major deduction as well.

I put it with the others because it's a choice, and one with at least imagined benefits to the taxpayer. In fact, I think it's less defensible than most of the others because it's not as if, were tax breaks impossible, the government would instead give cash to people with children.

Anonymous wrote:What if the charity is the Klu Klux Klan? It is not hard to get tax-exempt status. Not all charities perform a public good, especially with so much waste and inefficiency.

Yeah, but I object to plenty of directly funded government programs, too. I'm more concerned about the fact that a tax break means you get votes based on your income - i.e., instead of the government deciding what charities are worth supporting, the people with the money do. I haven't looked in a while, but I saw a chart a while back showing the huge portion of charitable contributions that go to the arts and similar, which are mainly used by the upper classes.