BF2S Forums Please debate tax issue

MAinly because you wont get the states and the Fed govt to agree on a good split. The way it is now, they are rakeing in money hand over fist. Each state can raise and lower taxes at will. To have a .17% Fed tax and A god knows what % state tax would be too much for most middle class working folks. It would have to be a very regulated stystem on the side of the states or they will bleed there people dry.

<[onex]>Headstone wrote:

MAinly because you wont get the states and the Fed govt to agree on a good split. The way it is now, they are rakeing in money hand over fist. Each state can raise and lower taxes at will. To have a .17% Fed tax and A god knows what % state tax would be too much for most middle class working folks. It would have to be a very regulated stystem on the side of the states or they will bleed there people dry.

Your forgetting that this would eliminate income taxes.  Right now most people probably pay around 20-25% in income taxes.  You have no choice with income taxes, you've gotta fork it over.  With a sales tax you only pay taxes if you buy things.  So you actually have more money to purchase things since the government isn't taking away you spending power before you even have it. (like the current system).  It's also self regulating.  Those who can afford to spend more money and do so wind up paying more in taxes, and those who can't afford to spend as much money won't spend as much and thus pay less in taxes.  The biggest problem I see is that you really need to have taxes on all new items, this means food, gas, and other essentials.  This is a problem for the very poor, so you'd have to come up with a voucher system or something.


The best argument I can give for a flat sales tax though.

Income tax is a tax on production.
Sales tax is a tax on consumption.

Which makes more sense?

JimmyBotswana wrote:

It wouldn't be too much if there were no income taxes

Sure. But then I suppose it wouldn't be too much to go without health, education or any other services either.

Last edited by Spark (2006-11-04 19:52:33)

Flat tax sounds great but not exactly possible. You can't just get rid of all the deductions and exemptions. What do you think would happen to all the major corporations ? If you answered pay the flat rate you are wrong. They would be relocating.

found this on wiki..

Some taxes other than the income tax (for example, taxes on sales and payrolls) tend to be regressive. Hence making the income tax flat could result in a regressive overall tax structure. Under such a structure, those with lower incomes tend to pay a higher proportion of their income in total taxes than the affluent do. It is a fact that the fraction of household income that is a return to capital (dividends, interest, royalties, profits of unincorporated businesses) is positively correlated with total household income. Hence a flat tax limited to wages would leave the wealthy much better off. Similarly, the loss of deductions will adversely affect some middle income households. The upshot could be a regressive shift in the tax burden. Hence opponents of the flat tax conclude that it is deceptive to advertise that tax as fair, when in fact it shifts the tax burden from the well off to the middle class. The real issues are deductions and what money counts as taxable income, not the flatness of the tax rate schedule.

ts-pulsar wrote:

I'd recommend reading the Fair Tax by Neil Boortz.  He goes over the implications of a flat sales tax very thoroughly and has many innovative solutions to problems created by a flat sales tax.

This one http://www.amazon.com/Fair-Tax-Book-Goo … mp;s=books ?

In Australia, NZ and a few other nations we have a tax like that called GST. In AUS it's set to 10%, but we still pay income tax. Due to intense opposition when it was being introduced, many transactions are exempt. The taxation of food was fiercely debated - and ended up complicating the tax system with a category list of food that is and isn't taxed.

The problem is implementation...because during the 'transision period' to a flat tax, all the other taxes won't get recinded.  Therefore we'll be stuck with BOTH taxes.

The poor and middle classes will bear the brunt of the flat tax.  The rich, however, will just go overseas to buy their luxury items.  So unless that loophole is plugged it will only be locals who pay.

The 'underground economy', like the 12 million illegals, will start actually paying taxes.

deeznutz1245 wrote:

I don't know much about economics so I wont pretend I do. But let me ask this, do you think the amount of people who dont pay any taxes now would make a difference? Do you think them now paying tax would increase govt revenue for social services and whatever else they spend money on? I do now see how it could be a problem with spending fluctuations and all. And also I think food and essentials should be exempt. It wouldnt be fair to lowere middle class families to pay the same as upper class for food. Good points people.

The lower class familes would not be any worse off, assuming the taxes are equal percentages of GDP, they would have an appropriately increased level of disposable income to compensate for any raises in price.

Interest rates would tank because people would not be penalized for earning/investing money.  The Stock Market would goto 25,000.

We have IVA (VAT) 21% and Income Tax.  I hate VAT being so high, compared to the sales tax of US which is around 7 or 8 depending of the State, of course.

If you really look at the Fair Tax system though it has quite a few solutions for those that can't afford to pay so much of their income in taxes.  It's usually a cash back system, where the government sends you a refund check every month, most likely based on your income and what the assume you were spending.

The_Shipbuilder wrote:

Harmor wrote:

Interest rates would tank because people would not be penalized for earning/investing money.  The Stock Market would goto 25,000.

I'm not convinced because I don't follow the logic behind that first sentence. Can you walk me through the logic?

Are you assuming that a sales tax would encourage people to shift expenditure away from purchasing taxable items toward investing? I don't get it.

My understanding is that high interest rates reflect a lenders' market in which borrowers are willing to defer consumption, therefore it's a booming economy with a rosy outlook. Low interest rates reflect that borrowers are less willing to defer consumption: they require liquidity and are unwilling to borrow so lenders have to drop their rates to make them more attractive.

What he said.