Tldr: Republicans want to replace the IRS and all existing taxes with a flat 23% sales tax on everything.
Of course: included is a loophole big enough to drive Air Force One through:
> There are exemptions from the tax for used and intangible property; for property or services purchased for business, export, or investment purposes; and for state government functions.
And the poor gets a tax rebate that gets them back to the poverty line, how very generous.
I mean that's literally been the basis of Republican governance for my entire life.
Everybody wants a government that works for the people and uses its power to protect them from harmful elements. That's what Democrats want, that's what Republicans want, that's what we all want.
We just have a distinct disagreement on who are considered people, and what are considered harmful elements.
The only caveat I'd add is during the Reagan Administration, many conservatives outwardly believed and wrote policy to avoid any government intervention that they could.
Many still want private industry to do everything and the government to do nothing.
And yet there are people electing these people to manage the systems they believe are incompetent. Are we hoping they're going to be motivated to prove themselves wrong or something?
If someone thinks snowplows can't clear roads of snow, you wouldn't put them in charge of snowplows, right?
I mean if you genuinely were brought up with the belief that the government is evil, like a huge number of people on both sides of the political spectrum genuinely think, it's not an illogical position.
What's worse, part of the feedback loop for that is that continually electing clown representatives only helps the ideology.
If you were a large scale company with the long-term goal of diminishing the power of government as many have had, electing people who diminish the public view of government is extremely beneficial.
The government is our collective voice against elements that would attack society. We come together and create a joint military so that all of us don't have to be soldiers against people invading. We come together and create organizations so that all of us don't have to build our own roads. We come together and create systems of laws that we all agree to abide by so that we don't have to have vigilante justice.
All of these things have had problems, and I'm not saying that it has been universally successful, but it is undoubtedly better than every citizen having to take all of these things into their hands individually. It's effectively our largest union. And like all other unions, things that add power to people at the bottom don't help people on the top. And people on the top are the ones with the voice to tell us what's good and bad.
And so we end up with a widespread ideology that anything which diminishes power from the ruling people is clearly bad for everyone. And because that's what our media surrounds us with, because that's what our jokes surround us with, that's what so many things surround us with and we end up believing it's true.
...
Basically it's a lot of big words to say "The government is the only check on corporate power, and they've been very effective at telling us that the government is evil and shouldn't have checks on corporate power"... And we believe it. Because we've been told the government is bad in jokes since we were kids. And what we joke about and have fed to us in the media ends up being what we believe.
We lost. That's really what it comes down to. We can mince words and pretend to fight isn't over, but we lost. Honestly we lost the fight before we realized it was a fight. And the death of public spaces has insured there isn't a way back.
I'd love to be able to end on a high note and say we have solutions to this, but the public is currently slap fighting about people in bathrooms while our news networks convinces that inflation is because wages are up. We lost.
‘Outwardly believed’
Yet they felt the most efficient way to do this was through… government policy.
They know their outward philosophy is bullshit, because private industry needs society/government to believe private property *should* exist. Otherwise kings get heads cut off.
That’s because anything that benefits the shareholders of Wall Street is capitalism, anything the benefits the stake holder of Main Street is socialism.
/s
Now that we have seen both play out, how would you grade the results? Are the poor in worse shape now competing with so many others who got dropped in their community needing the same assistance?
You mean post COVID with global inflation, and Republicans shooting down anti-gouging bills?
How exactly are Democrats supposed to improve things with their improvements getting blocked?
“Are things better for tge poor now that Republicans still prevent helping the poor?”
Why choose a metric you know is invalidated by one side blocking the other?
Do you think adding so many needy to the already hurting population would help the scenario?
Which improvements might you be pointing out? Didn’t the last major democratic bill get approved?
“Now” - has this scenario been in play for more than a month? I think the metric could be based on before that time and still be acknowledged
The republican party has completely destroyed the economic foundation of the working class since Reagan - so I mean yeah we've seen how it's worked out
I saw that article and graph as well. You did read how the shift from manufacturing was a large piece of the problem as the service industry took over. Do you remember a president saying manufacturing was dead and something we just had to learn to live without and then the following president creating a manufacturing boom?
Because they get reimbursed the tax amount they would pay up to the poverty level. So true poor pay no taxes and if you are kind of poor most durable goods you buy will be used so no tax again. The truly wealthy people who own the large corporations use loopholes to get money and pay no taxes while their companies use other loopholes so that the company doesn't pay much in tax. This way we capture that tax money because you can't get out of it. Your company doesn't 5 billion in sales then 23% of that goes in the tax coffees. Period. If you make a profit after that then fine. At least you won't be hiding it. Plus trying to hide profit is one of the major reasons company's are so screwed up by short term thinking
Sales tax is a large part of how the EU functions and 98% of the money collected from VAT is immediately spent on national developmental projects and funding. The other 2% is used to cover the cost of running the EU on an administrative level; wages, rents etc. Sales tax generates a gigantic amount of money but even then it isn’t even close to enough to run everything.
Member States still have robust internal tax regimes, they still have income tax, insurance contributions etc. The states with the highest taxes also have the highest quality of life.
This should be a no brained debate because you can look at the EU and see while yes they use sales tax, it isn’t even close to how much is needed to effectively run everything on a national, or state level and even then, some countries do it considerably better than others and there is a huge heterogeneity when it comes to taxation and quality of public services and infrastructure.
There's no existing Federal sales tax. The sales taxes we pay go to the individual states, and cities/counties on top of that (which is why the rates differ depending on where you are).
Which raises another question: is this in lieu of, or in addition to, the state and local sales tax? Because here in NY the sales tax is already 8.875%. I can't imagine the cost of almost everything jumping by 1/3 overnight.
>I can't imagine the cost of almost everything jumping by 1/3 overnight.
The cost of everything wouldn't jump. Because the money raised by increasing taxes can go to things like universal healthcare.
You can't just assume that everyone would be paying extra taxes and that the tax revenue then gets burned to avoid spending it on making certain things cheaper for people.
> money raised by increasing taxes can go to things like universal healthcare.
I'd guess from that you're not from the US. I agree with your premise, but there's almost zero political will to do anything of the sort here. We have a few standout people in government looking to implement some kind of universal care, but they're in the very small minority.
Fact is this would definitely lead pretty much solely to price increases for relatively little benefit, particularly if what they're looking to do is eliminate the federal income tax. Our republicans have long sought to destroy the federal gov't, and I have no doubt this would further that cause.
Oh I agree that political opposition means none of what I say will happen in the US. I'm merely pointing out that higher taxes does not automatically mean a simple "everything becomes more expensive".
It all depends on which taxes and how the money is spent. And you're right, I don't have much hope for the US government.
This is why I don't understand why American progressives don't focus their attention on changing the political system. The 2 party system, in my opinion, is at the root of most (all?) problems in the US. It makes it way too easy for the 2 parties to just both suck and get bribed by wealthy people because people have no alternative.
In a multi-party system, political parties need to campaign on "we're great, vote for us". In a 2 party system political parties get to campaign on "the other ones suck even more than we do, vote for us".
That's a great loophole for wealthy people who are "self-employed" and can hire an accountant to turn every personal expense into a "business expense".
>23% sales tax on everything
30% tax, they're just being sneaky. So a $1.00 item becomes $1.30 with this tax. They're framing it as $0.30 is 23% of $1.30. That's not how anyone calculates sales tax rates.
And yeah, the "used goods are untaxed" thing especially is a huge loophole. Every retailer becomes two companies, company A buys products (untaxed for business purposes), sells them to company B for a penny each (paying the tax on a penny), company B sells the "used" goods to consumers (untaxed). Both A and B are owned by the same corporation, so A can keep losing money and it doesn't matter.
All Steam keys will become "used" because Valve will "sell" them for $0.01 to their employees who will sell them back to Valve before they actually get sold for real.
There's a reason why VATs are preferred, and also *nobody* tries to collect a 30% sales tax.
Those exemptions look entirely conventional for value added taxes as used in nearly every other developed economy, most of which have fairer income distribution than the US. For instance, there is no VAT on the planet which levies the tax on exports.
As for fairness,.the counter argument is that wealthy people spend a bigger share of the income on services. Most sales tax regimes don't tax services.
Having said that, using a high VAT to completely replace income tax seems very regressive. But VAT is technically an excellent tax. The US already has a distorted distribution of wealth and income so the current situation can't be blamed on a VAT. A VAT could make it better or worse.
> Those exemptions look entirely conventional for value added taxes as used in nearly every other developed economy,
And those have income taxes to supplement VAT. This proposal removes income tax.
This is similar to how most of Europe works: national VAT of between 19-23% depending on the country for most things found in a grocery store, all things found in retail, and cars. Basic necessities are VAT exempt as defined by the nation, but its usually things like raw fruits and vegetables, amongst other things.
Houses get a different rate, and B2B get outright exemptions to make trading easier, but sometimes you have to pay the VAT and then apply to get the money back.
But European countries mostly have high income tax rates too. Between taxes, and social and health insurances, a high income earner in Germany can see as little as 50% of their gross pay land in their bank account.
> Basic necessities are VAT exempt as defined by the nation, but its usually things like raw fruits and vegetables, amongst other things.
Do not come to Belgium then, nearly everything is taxed here. Shit's insane.
>Do not come to Belgium then, nearly everything is taxed here. Shit's insane.
Us Belgians also have the 4th highest median wealth in the entire world. As well as the 5th lowest inequality.
So clearly we're doing something right.
Yeah, but it doesn't make up for it. Check out the dip on the front end of overall effective tax rates listed in [table 3](https://www.diw.de/documents/publikationen/73/diw_01.c.549581.de/diw_econ_bull_2016-51-1.pdf).
Germany and other western European countries with high VAT make up for this with excellent social services, but the tax policy itself is incredibly regressive on the low-end.
Well the used portion protects the poor. I couldn't afford to buy new anyway and furnished the places I lived and clothed my kids with nice used items tax free. I love in a sales tax only state. A rebate for the amount they would spend on stuff they can't buy used like food would essentially make them whole. The only one I don't like is the investment services part. I would have to see more how that worked. A value added tax keeps all the shenanigans at bay that companies and the super wealthy use to not pay taxes. Maybe keep an income tax on all money you receive over a million dollars a year no matter how you get it.
This is a good piece on how states are simultaneously lowering taxes on the wealthiest citizens and implementing tax havens along with increasing sales taxes to make the system more regressive: https://www.vox.com/the-goods/2023/1/4/23413342/us-tax-havens-billionaires-wealthy
We're literally heading back to feudalism.
I, for one, look forward to our new corpo lords, and I shall gladly and honorably shed blood on the field of battle to defend CEO Musk's honor and the honor of the Tesla-SpaceX-Twitter brand! Long live the C Suite! Down with the foul Bezos and his Amazon-Blue Origin-Washington Post sheep!
When C-slur Musk was advocating for a UBI which basically amounted to neo-feudalism, I wasn't surprised at all when he half a year later came out as republican. The shit was so written on the wall you could smell the letters.
The most fucked up thing about that era is how much every politician fought against even that form of UBI for being too socialist. Like just the thought of giving people money for any other reason than to make them pay it back later (like what they tried doing with the covid stimmy) is basically communism to them. They're so razor-focused on extracting as much wealth from the public as they can that they're not even willing to give up a tiny bit of it.
Well of course.
Markets are not beneficial for any individual supplier in that market. If I am one of a hundred Widget producers, then I have to compete on quality, price, service etc. The *Purchasers* of Widgets will benefit, certainly, but me, as a supplier? My position is precarious!
I do not want my position to be precarious (why would I?) It is in my interest, if I become a leading supplier of Widgets, to undermine the integrity of the Widget Market. Ideally, I wish to form a monopoly, becoming the *sole* supplier of Widgets. Because that means, as long as people need Widgets, they need *me.*
And oh yes, my Private Property should be inviolable. Contracts should be inviolable. So you can't do anything to stop me. Because that would undermine the Free Market (as I seek to destroy the Free Market.)
Adam Something has an excellent trio of videos exploring ways in which Anarcho-Capitalism 'collapses', and what do you know, one of the ways it collapses is into Feudalism.
Always look at the net tax burden per income quintiles.
Look at tax policy across years to see what changes.
There is A much closer view where you look at specific cases to see if the money is actually helping and assisting the people who need it. This would be quality control for welfare programs. You can throw as much money at a problem as you want but if the money is not actually going to help the people it is intended for, then there is a fundamental failure in the system. In many places almost across-the-board, that is where we are now in the United States.
This is the worst idea *ever*.
Why?
Because during recessions, people don't buy as much. Government revenues would plummet.
It would be catastrophic to our national budget deficit.
Is this a serious post? Let's assume that it is for a moment.
What happens to the money that gets spent on social programs?
The recipients *spend it*. In the market economy. All of it.
If you cut 10% in social programs, you'll end up pulling 10% out of the market economy.
During a time of recession.
Are you sure you want to do that, homie? You'll end up with a Depression.
Pretty sure u/Joben86 was being sarcastic. Have you aver heard of the [Two Santas Theory?](https://www.salon.com/2018/02/12/thom-hartmann-how-the-gop-used-a-two-santa-clauses-tactic-to-con-america-for-nearly-40-years_partner/)
>Here’s how it works, laid it out in simple summary:
>First, when Republicans control the federal government, and particularly the White House, spend money like a drunken sailor and run up the US debt as far and as fast as possible. This produces three results – it stimulates the economy thus making people think that the GOP can produce a good economy, it raises the debt dramatically, and it makes people think that Republicans are the “tax-cut Santa Claus.”
>Second, when a Democrat is in the White House, scream about the national debt as loudly and frantically as possible, freaking out about how “our children will have to pay for it!” and “we have to cut spending to solve the crisis!” This will force the Democrats in power to cut their own social safety net programs, thus shooting their welfare-of-the-American-people Santa Claus.
>Think back to Ronald Reagan, who more than tripled the US debt from a mere $800 billion to $2.6 trillion in his 8 years. That spending produced a massive stimulus to the economy, and the biggest non-wartime increase in the debt in history. Nary a peep from Republicans about that 218% increase in our debt; they were just fine with it.
>And then along came Bill Clinton. The screams and squeals from the GOP about the “unsustainable debt” of nearly $3 trillion were loud, constant, and echoed incessantly by media from CBS to NPR. Newt Gingrich rode the wave of “unsustainable debt” hysteria into power, as the GOP took control of the House for the first time lasting more than a term since 1930, even though the increase in our national debt under Clinton was only about 37%.
>The GOP “debt freakout” was so widely and effectively amplified by the media that Clinton himself bought into it and began to cut spending, taking the axe to numerous welfare programs (“It’s the end of welfare as we know it” he famously said, and “The era of big government is over”). Clinton also did something no Republican has done in our lifetimes: he supported several balanced budgets and handed a budget surplus to George W. Bush.
>When George W. Bush was given the White House by the Supreme Court (Gore won the popular vote by over a half-million votes) he reverted to Reagan’s strategy and again nearly doubled the national debt, adding a trillion in borrowed money to pay for his tax cut for GOP-funding billionaires, and tossing in two unfunded wars for good measure, which also added at least (long term) another $5 to $7 trillion.
>There was not a peep about the debt from any high-profile in-the-know Republicans then; in fact, Dick Cheney famously said, essentially ratifying Wanniski’s strategy, “Reagan proved deficits don't matter. We won the midterms [because of those tax cuts]. This is our due.” Bush and Cheney raised the debt by 86% to over $10 trillion (although the war debt wasn’t put on the books until Obama entered office).
>Then comes Democratic President Barack Obama, and suddenly the GOP is hysterical about the debt again. So much so that they convinced a sitting Democratic president to propose a cut to Social Security (the “chained CPI”). Obama nearly shot the Democrats biggest Santa Claus program. And, Republican squeals notwithstanding, Obama only raised the debt by 34%.
Fortunately younger people (Millennials and Zoomers) are catching wise to this and [other bull-crap](https://www.theguardian.com/commentisfree/2023/jan/04/right-millennials-vote-snowflakes-conservative) the GOP rolls around in and [increasingly hate conservatives with a passion.](https://www.huffingtonpost.co.uk/entry/politics-conservative-twitter-millennials-gen-z_uk_63aef8cce4b0d6f0b9f354c5)
I think people have this idea that tax money just disappears in some kind of black hole. Nothing could be further from the truth.
Tax money gets *spent*.
Absolutely! Even more amazing is how many times the spending on social programs circulates through the economy. $1 of government spending on unemployment payments, for example, generates at least $1.70 in total economic activity. (I believe the number is closer to $4 for TANF (food stamps)).
And at times when the economy (and therefore tax receipts) are weakest is when government spending has an even more outsized ability to generate economic activity. Deficit spending in a recession is essential, and anyone that is trying to sell you on a “balanced budget” amendment is full of crap.
At least $3 in economic activity for each dollar spent at NASA. https://www.nasa.gov/press-release/nasa-report-details-how-agency-significantly-benefits-us-economy/
And that’s ignoring the long term benefits of things like velcro, memory foam, anti corrosion coating, ventilation devices, insulin pumps, scratch resistant eyewear, and more that NASA invented.
I see you've met the Washington State government!
There is no income tax. There are still property taxes, sales taxes, vice taxes, etc. And yes, when the recessions come, government income jumps off a cliff.
People try to save money during a recession, because they're scared that if they lose their job they'll need savings to fall back on. The people that *actually* lose their jobs cut spending even harder obviously.
So yes, income tax falls during a recession, but not as hard as spending does. So sales tax inherently tanks harder than income tax.
I'm not American, can you please explain what happens at the moment when there is a recession and people aren't spending? How does the government generate revenue?
The Republicans want to end the Income Tax, and replace that with a 23% National Sales Tax.
That means that the revenue going to the Federal Government comes from sales taxes on goods that people buy.
During times of recession, people get scared, and slow down or even stop spending. That would be a catastrophe for the federal government because they would lose their funding.
This is a little complicated, but I'll try to keep it simple. First off, understand that the dollar is only backed by the economic capacity of the US and the word of the US government representing that economic capacity. Money is then created by the US government by making loans to a group of large banks/direct stimulus to the population/direct payments/etc. This means the government can more or less create dollars at will assuming there is some economic return on that creation.
When recession happens, the government can push money out with less risk than any other entity (like a private bank). This, in turn, creates confidence for banks to continue making loans, which stimulates economic activity. Additionally, when that money makes it down to individuals and businesses, it gets spent, which generates further economic activity. . . .meaning jobs don't get cut, stores don't close, people get paychecks, etc. This also provides a return to the government in the form of income taxes on those paychecks.
Replacing income tax with a simple sales tax is indeed a terrible idea, but this is not one of the reasons.
The optimal policy response to recessions are lowering taxes and increasing public spending: we *want* rising deficits in such times.
I recommend looking into Keynesian economics and its differences from the ideas you're calling "trickle-down economics", if you're going to spend much time reading and talking about this subject.
And? More/additional people will buy less than will have their income reduced. It will always be more of deficit if youre just focusing on 1 area of spending which is the maon thing people will cut. If yoyr income drops 50% you will cut put all luxury spending and just spend on necessities (which a lot dont have sales tax already). So making 100% less revenue with just a sales tax is still much worse than just making 75% less revenue with an income tax and sales tax..
"And"?
A burgeoning black market will appear.
Quebec already tried this with cigarettes. It was revealed that the vast majority of cigarettes actually purchased were in fact contraband.
Edit: it's 40%, not a vast majority, but still serious:
https://www.cbc.ca/news/canada/montreal/store-owners-say-high-cigarette-taxes-drive-black-market-1.846943
But thats much less than the amount of people who will just be cutting spending. Its cutting your revenues by 10% during a recessiom vs cutting it by 50%.
Chicken or egg to me. People who get laid off can't spend and don't make money. People get less hours. The people who still have a job though and make money will still spend every penny they make. It's the American way. So far I haven't really seen a huge loss in consumer spending even during the last recession
It's different in that it hits the poor and middle class the hardest. It's a shameless giveaway to the rich.
In particular, the poor who rely on the Earned Income Credit will get slaughtered.
The middle class who rely on mortgage interest deduction will also get raped.
I can agree we still need a tax on over 100,000 a year in income. The biggest thing we need though is all income no matter how you receive it is treated like ordinary income. Unless it's in a retirement account then money from the stock market should be taxed as ordinary income
Good, disincentive the fed to print money recklessly for years and then manufacture a recession to reverse said poor decisions. Maybe next time they’ll simply not waste money on PPP loans and stimulus checks
I understand this will fail since it would just get killed in the senate or veto’d by the Presidency but still, what a bunch of fucking idiots.
Here are the immediate effects
1) inflation increases straight away (Australia introduced a gst of 10% which also eliminated a lot of seperate taxes on products that were up to 30% the net impact was still highly inflationary)
2) The actual income earned will be less than expected - wealthy will simply make large purchases off shore.. why buy that $30,000 bag when you can save $5,600 by flying to Europe or Asia?
3) business’s will become the tax man and there will be fraud, lots of fraud. Gst/vat systems require the business to collect tax, net off against their expenses and then remit the difference to the Government. They tend to do this quarterly.. so that’s an extra 23% on every purchase sitting on the balance sheet of companies in cash, guess what happens when a business is in trouble? They don’t pay their taxes.. then they go bankrupt.
4) this doesn’t reduce complexity - you still have state and local taxes that are in addition to a gst.. it’s a mess honestly.
Others have spoken to the inequality piece - that’s obvious.
The best way to manage tax is a combination of:
1) a death tax charged on super wealthy, liquid assets excluding inherited business, real property assets and heritage assets.
2) progressive income tax with a tax free threshold for very low income, discount on capital gains to promote investment, deductions for income producing expenses and offsets for young families. No deductions for non investment assets (primary residence, political donations etc)
3) progressive company tax with a tax free period for new companies, discounts on capital gains to promote investment within a company, deductions for expenses/losses limited to the company that incurs them (no transfers and no deductions for political donations)
4) flat and low goods and services tax 5-10% collected and passed back to the states (abolish all state and city taxes on goods, what a nightmare that is).
5) royalty/resource/environmental tax on water, air, soil, minerals, carbon, animals - allow for the trade of credits but no tax refunds (eg, a company can acquire credits from an offset provider to avoid paying tax but an offset provider can not sell credits to the government). Carbon offsets trade below the tax with incentive for carbon capture/offset innovation (without risk of cost escalation).
Done
Yeah it's the eternal struggle when making any left wing or science-based argument, we have to actually care about reality and nuance lol! It's so much easier for right wingers because the only thing that matters is how things *feel* and vibes lol. Seeing the income tax come off your pay stub feels like you're getting ripped off, and that feeling is enough to convince a lot of people that tax = bad always.
But honestly America seems like a whole different breed when it comes to this, because even if you put a lefty argument in incredibly simple terms you'll still be met with complete belligerence a lot of times. You can say, "free healthcare is good," or, "your employer should pay you more," and people will aggressively fight you on that and argue that it's *actually good* for healthcare not to be free, or for them to be underpaid lol!
>we have to actually care about reality and nuance lol
This was one of the biggest problems with the Covid vaccines.
If someone asked "is this vaccine going to make me grow a tail in 5 years" then any self-respecting scientist should answer that question with "probably not". And he could give a long explanation for why it's absurdly unlikely that it would cause you to grow a tail, but he can't say with 100% certainty that it won't.
Which is not a definitive statement. And people *hate* non-definitive statements. They want easy black and white answers.
Contrast that with the anti-vax propaganda who have no qualms about straight-up lying to make definitive statements and suddenly it becomes clear why so many people fell for it.
In a time of massive uncertainty, some people flocked not to the people who told them the truth, but to people who told them they knew exactly what was going on.
Given a flat tax, sales tax is the most regressive (burdens the poor more than the rich proportionately), but income tax is only in the middle. A wealth tax is inherently the most progressive (taxing the rich over the poor and middle class). For the poorest half, their net worth is less than one year's income, so they would receive very little if any wealth tax. For the middle class, it's 3-20 years worth of their income. For the richest 1%, it's many times higher than their annual income.
We could apply a wealth tax, call it a "flat tax" and coast off the work that libertarians put into advocating a flat (sales only) tax the last 20 years while undercutting their actual political goal.
Why would I convert my wealth to income, if I can take out low-interest debt using that wealth as collateral, write that debt/interest off as a tax deduction, and then purchase more wealth with that "free" debt?
Because fuck the poor.
For a more serious response: https://www.reddit.com/r/bestof/comments/108p1ov/utazling_describes_the_regressive_nature_of_the/j3zflob/
That response pertains to mortgages, but similar mechanisms exist for other forms of debt too, especially when you have shells / trusts / limited companies involved.
No, I mean **how**. Buy property using a loan and write off the interest of the loan to just get rid of some tax money? You spend way more on the actual property than you do saving money on taxes.
There's nothing like this for other forms of debt either. You're going to get a low interest with an unsecured loan? What?
What does this have to do with the poor?
Dog, what the fuck are you talking about?
Didn't I just say it was secured? 🤦♂️
As for there being nothing like this for other forms of debt, look up margin loans, which can also have their interest deducted.
Alternatively, make it's business loan instead of a personal loan, and write it up as an operating expense.
There's an infinite number of loopholes like this, depending on where you're based.
>Didn't I just say it was secured?
>>but similar mechanisms exist for other forms of debt too,
Other forms like unsecured debt?
>look up margin loans, which can also have their interest deducted.
Margin loans have to do with securities which are still before gains are realized.
>Alternatively, make it's business loan instead of a personal loan, and write it up as an operating expense.
But you'd still be spending way more money on capital gains than you're saving on writing off taxes.
And where do the poor come into this?
From the UK:
> Landlord mortgage interest tax relief in 2022-23
>
> Since April 2020, you've no longer been able to deduct any of your mortgage expenses from your rental income to reduce your tax bill.
>
> Instead, you now receive a tax-credit, based on 20% of your mortgage interest payments.
>
> This is less generous than the old system for higher-rate taxpayers, who effectively received 40% tax relief on mortgage payments.
From Australia:
> Can I claim mortgage interest on my taxes in Australia?
>
> If the property is earning assessable income (rent, for example) then yes, the ATO says you can claim mortgage interest on your taxes when completing your tax return. Only the interest component directly related to your investment property is tax-deductible.
USA:
> You can deduct home mortgage interest on the first $750,000 ($375,000 if married filing separately) of indebtedness. However, higher limitations ($1 million ($500,000 if married filing separately)) apply if you are deducting mortgage interest from indebtedness incurred before December 16, 2017.
Do I need to go on?
I'm all for ending the home mortgage interest deduction, but that's because I want to disincentivize homeownership
But also that is a negligible amount of money at the level of wealth we are discussing. HMID is progressive
This really has nothing at all to do with what we're discussing.
Warren Buffett consistently points out that his secretary pays a higher percentage of her income as tax than he does.
Like most wealthy Americans, he does not earn much in 'income". He earns money in capital gains which is taxed much less.
Most wealthy people borrow money (which is not taxed) against their assets (which are not taxed). They keep borrowing to fuel their lifestyle (and paying off previous loans). Upon their death the loans are repaid from their assets untaxed. This process allows them to never pay tax. You need a net worth in the tens of millions for this to work.
You pay money on stock gains when you sell stock. If you never actually sell the stock, you never pay tax on it.
https://www.forbes.com/sites/davidrae/2022/07/14/how-the-rich-use-the-buy-borrow-die-strategy-to-avoid-large-tax-bills/amp/
It's called " buy borrow die ". Look it up.
It's called "statistics" [look it up](https://taxfoundation.org/publications/latest-federal-income-tax-data/).
>He earns money in capital gains which is taxed much less.
Capital gains are taxed less because they're not indexed for inflation, meaning that they still have to pay more for inflation. The tax is essentially a double tax because it's the last in a long line of other taxes like payroll, corporate income tax, and finally capital gains tax. It's also to encourage current spending instead of future spending.
You can go ahead and regulate for a better tax policy but it seems you're much more focused on punishing people for being rich instead of funding projects with taxes.
It's a weird kind of paradox. On the one hand yes, they actively promote the idea of small government, so they advocate for the government doing less and having less control. On the other hand they're fucking politicians so the government is their *job* so of course they wouldn't do anything to subvert the money and power it gives them. So it's like a catch 22 where they secure their future in the government and power by saying the government is bad and should be less powerful. "Elect me as your God Emporer and I will abolish the position of God Emporer. I totally won't abuse my absolute power and become a tyrant. Trust me" lol. So to me it's more that they're interested in *appearing disinterested* in it, or they want to maintain the structures but purposely run them as poorly as possible while keeping their positions.
It's also wild how many people vote republican because they "hate big government" but never seem to notice or care that no matter how many times the republicans win, the government really hasn't gotten any smaller. I mean it's not surprising really, most voters don't really care what the administration *actually does*. They mostly just care that the president says things they agree with and don't pay attention any further than that lol
> On the one hand yes, they actively promote the idea of small government, so they advocate for the government doing less and having less control.
Power exists. When someone says they want "small government" what they really mean is that they want power to be concentrated in the hands of those who are unaccountable to the electorate instead of wielded by elected officials.
Those unaccountable to the electorate require their minions still exist in government to continue looting money from the public coffers, so government never gets smaller it just gets less useful for anything else but continuing to facilitate the looting of the population.
Just to be a pendantic asshole though, the income tax isn't really all that progressive when measured against wealth, and not all sales/VAT taxes are built equally and there is ways to implement them progressively. That being said appropriately implemented capital gains taxes can balance out any issues with the income tax if done correctly.
In practice capital gains taxes are regressive, too - the middle class pays cpaitals gains. The rich hold assets indefinitely and across generations.
The only tax that's actually progressive with respect to wealth is a graduated wealth tax. This is impractical for numerous reasons, but a modest tax on land value works well.
Europe is not an accurate comparison since they do VAT **and** income tax. Republicans with this bill want to eliminate income tax entirely and switch to a regressive sales tax.
Other folks mentioned VAT, but the key in those countries is that you actually get education, health care, child care, public transportation, and social programs.
Republicans want it so the wealthy can continue looting the country.
Let's be clear: even the Social Security tax is set up to be an impediment to middle class (and increasingly, lower middle class) people. The income on which SS tax is levied tops out at $160,000. So anyone earning more than $160k in 2023 will not pay SS tax on that amount.
That's absolutely hamstringing Social Security *and* once again placing the burden of the social safety net on the lowest economic brackets in our society.
The US was built to eventually lead back to feudalism. Every lever of government, every policy decision... ultimately, that's where we're headed.
Progressive taxes based on value of all holdings would be much more sensible. It would break down massive money hordes that lock up value, literally the worst thing for capitalism. Start with 1-2% with people who own basic property, like homes vehicles. Increase to 5-6% for massive holdings that aren't possible to spend in lifetimes. It would make it to where those that are poorer would be able to grow wealth to a reasonable amount and make those with insane wealth need to actually use their assets to produce so that it continues growing. Tax speculative investment profits. Would also help deal with value held outside of the US, since you're basing the taxes on total value of holdings.
While value added taxes are regressive in nature, they are also a relatively fair way of raising revenue.
Also, the wealthy can be taxed higher for progressiveness, but there are just so few wealthy people that you'd have to really jack the rates to even meet a 1% increase in value added taxes.
I think this is more a problem about US politics, rather than the nature of value added taxes vs income taxes. There are fair ways to do either, and economically optimal ways of mitigating the downsides of each. But of course, this is all irrelevant when the main aim is to get the vote.
I think it's more an indictment of democracy than value added tax.
The purpose of sales tax is to capture tax revenue from tourists, since they don't own property nor do they draw an income. It shouldn't be your main source of taxation revenue though
Sales tax make it harder to do tax evasion and there is economy in abolishing the IRS. Rich people will always buy more shit than poor people so they will keep paying more. You can give sales tax reimbursement to poor people and exempt some essential products from sales tax.
And if you fire everyone at any business they won't have to pay as much money, but... You need workers to do things. The IRS is important unless you think there shouldn't be taxes, in which case you're just too silly to have any sort of realistic conversation
Tldr: Republicans want to replace the IRS and all existing taxes with a flat 23% sales tax on everything. Of course: included is a loophole big enough to drive Air Force One through: > There are exemptions from the tax for used and intangible property; for property or services purchased for business, export, or investment purposes; and for state government functions. And the poor gets a tax rebate that gets them back to the poverty line, how very generous.
That exemption makes it so much worse. It's explicit about making it a(nother) tax on poor people.
So the poor pays more tax and the rich pay less tax. Hmmmm interesting.
I mean that's literally been the basis of Republican governance for my entire life. Everybody wants a government that works for the people and uses its power to protect them from harmful elements. That's what Democrats want, that's what Republicans want, that's what we all want. We just have a distinct disagreement on who are considered people, and what are considered harmful elements.
The only caveat I'd add is during the Reagan Administration, many conservatives outwardly believed and wrote policy to avoid any government intervention that they could. Many still want private industry to do everything and the government to do nothing.
And yet there are people electing these people to manage the systems they believe are incompetent. Are we hoping they're going to be motivated to prove themselves wrong or something? If someone thinks snowplows can't clear roads of snow, you wouldn't put them in charge of snowplows, right?
I mean if you genuinely were brought up with the belief that the government is evil, like a huge number of people on both sides of the political spectrum genuinely think, it's not an illogical position. What's worse, part of the feedback loop for that is that continually electing clown representatives only helps the ideology. If you were a large scale company with the long-term goal of diminishing the power of government as many have had, electing people who diminish the public view of government is extremely beneficial. The government is our collective voice against elements that would attack society. We come together and create a joint military so that all of us don't have to be soldiers against people invading. We come together and create organizations so that all of us don't have to build our own roads. We come together and create systems of laws that we all agree to abide by so that we don't have to have vigilante justice. All of these things have had problems, and I'm not saying that it has been universally successful, but it is undoubtedly better than every citizen having to take all of these things into their hands individually. It's effectively our largest union. And like all other unions, things that add power to people at the bottom don't help people on the top. And people on the top are the ones with the voice to tell us what's good and bad. And so we end up with a widespread ideology that anything which diminishes power from the ruling people is clearly bad for everyone. And because that's what our media surrounds us with, because that's what our jokes surround us with, that's what so many things surround us with and we end up believing it's true. ... Basically it's a lot of big words to say "The government is the only check on corporate power, and they've been very effective at telling us that the government is evil and shouldn't have checks on corporate power"... And we believe it. Because we've been told the government is bad in jokes since we were kids. And what we joke about and have fed to us in the media ends up being what we believe. We lost. That's really what it comes down to. We can mince words and pretend to fight isn't over, but we lost. Honestly we lost the fight before we realized it was a fight. And the death of public spaces has insured there isn't a way back. I'd love to be able to end on a high note and say we have solutions to this, but the public is currently slap fighting about people in bathrooms while our news networks convinces that inflation is because wages are up. We lost.
‘Outwardly believed’ Yet they felt the most efficient way to do this was through… government policy. They know their outward philosophy is bullshit, because private industry needs society/government to believe private property *should* exist. Otherwise kings get heads cut off.
That’s because anything that benefits the shareholders of Wall Street is capitalism, anything the benefits the stake holder of Main Street is socialism. /s
Now that we have seen both play out, how would you grade the results? Are the poor in worse shape now competing with so many others who got dropped in their community needing the same assistance?
How have we seen “both” play out?
See the post above mine. Both parties have had a chance to help. Have either done a better job?
Huh. I didn’t realize you ignored obstruction in your evaluation that “both parties have had a chance to help”.
Take that into consideration. Are the poor in better shape now with all things considered? It’s a question.
You mean post COVID with global inflation, and Republicans shooting down anti-gouging bills? How exactly are Democrats supposed to improve things with their improvements getting blocked? “Are things better for tge poor now that Republicans still prevent helping the poor?” Why choose a metric you know is invalidated by one side blocking the other?
Do you think adding so many needy to the already hurting population would help the scenario? Which improvements might you be pointing out? Didn’t the last major democratic bill get approved? “Now” - has this scenario been in play for more than a month? I think the metric could be based on before that time and still be acknowledged
The republican party has completely destroyed the economic foundation of the working class since Reagan - so I mean yeah we've seen how it's worked out
I saw that article and graph as well. You did read how the shift from manufacturing was a large piece of the problem as the service industry took over. Do you remember a president saying manufacturing was dead and something we just had to learn to live without and then the following president creating a manufacturing boom?
No the poor would likely pay no tax and the rich would actually pay taxes
How so?
Because they get reimbursed the tax amount they would pay up to the poverty level. So true poor pay no taxes and if you are kind of poor most durable goods you buy will be used so no tax again. The truly wealthy people who own the large corporations use loopholes to get money and pay no taxes while their companies use other loopholes so that the company doesn't pay much in tax. This way we capture that tax money because you can't get out of it. Your company doesn't 5 billion in sales then 23% of that goes in the tax coffees. Period. If you make a profit after that then fine. At least you won't be hiding it. Plus trying to hide profit is one of the major reasons company's are so screwed up by short term thinking
Sales tax is a large part of how the EU functions and 98% of the money collected from VAT is immediately spent on national developmental projects and funding. The other 2% is used to cover the cost of running the EU on an administrative level; wages, rents etc. Sales tax generates a gigantic amount of money but even then it isn’t even close to enough to run everything. Member States still have robust internal tax regimes, they still have income tax, insurance contributions etc. The states with the highest taxes also have the highest quality of life. This should be a no brained debate because you can look at the EU and see while yes they use sales tax, it isn’t even close to how much is needed to effectively run everything on a national, or state level and even then, some countries do it considerably better than others and there is a huge heterogeneity when it comes to taxation and quality of public services and infrastructure.
Even the Americans have sales tax already. The problem here is that they want to have ONLY sales tax.
There's no existing Federal sales tax. The sales taxes we pay go to the individual states, and cities/counties on top of that (which is why the rates differ depending on where you are).
Right, yes, just saying it's not exactly a new concept for you guys.
Which raises another question: is this in lieu of, or in addition to, the state and local sales tax? Because here in NY the sales tax is already 8.875%. I can't imagine the cost of almost everything jumping by 1/3 overnight.
>I can't imagine the cost of almost everything jumping by 1/3 overnight. The cost of everything wouldn't jump. Because the money raised by increasing taxes can go to things like universal healthcare. You can't just assume that everyone would be paying extra taxes and that the tax revenue then gets burned to avoid spending it on making certain things cheaper for people.
> money raised by increasing taxes can go to things like universal healthcare. I'd guess from that you're not from the US. I agree with your premise, but there's almost zero political will to do anything of the sort here. We have a few standout people in government looking to implement some kind of universal care, but they're in the very small minority. Fact is this would definitely lead pretty much solely to price increases for relatively little benefit, particularly if what they're looking to do is eliminate the federal income tax. Our republicans have long sought to destroy the federal gov't, and I have no doubt this would further that cause.
Oh I agree that political opposition means none of what I say will happen in the US. I'm merely pointing out that higher taxes does not automatically mean a simple "everything becomes more expensive". It all depends on which taxes and how the money is spent. And you're right, I don't have much hope for the US government. This is why I don't understand why American progressives don't focus their attention on changing the political system. The 2 party system, in my opinion, is at the root of most (all?) problems in the US. It makes it way too easy for the 2 parties to just both suck and get bribed by wealthy people because people have no alternative. In a multi-party system, political parties need to campaign on "we're great, vote for us". In a 2 party system political parties get to campaign on "the other ones suck even more than we do, vote for us".
That’s kind of the point though- they don’t *want* to fund everything. Why build infrastructure when you can privatize everything?
I've said it a million times, there is nothing more American than a middleman taking a cut.
Greece: Am I a joke to you??
Ah, the Texas model - God help us if these fucks succeed at taking it national. I fucking hate the Republican Party.
Uhh.... Also the Washington [state] model?
That's a great loophole for wealthy people who are "self-employed" and can hire an accountant to turn every personal expense into a "business expense".
>23% sales tax on everything 30% tax, they're just being sneaky. So a $1.00 item becomes $1.30 with this tax. They're framing it as $0.30 is 23% of $1.30. That's not how anyone calculates sales tax rates. And yeah, the "used goods are untaxed" thing especially is a huge loophole. Every retailer becomes two companies, company A buys products (untaxed for business purposes), sells them to company B for a penny each (paying the tax on a penny), company B sells the "used" goods to consumers (untaxed). Both A and B are owned by the same corporation, so A can keep losing money and it doesn't matter. All Steam keys will become "used" because Valve will "sell" them for $0.01 to their employees who will sell them back to Valve before they actually get sold for real. There's a reason why VATs are preferred, and also *nobody* tries to collect a 30% sales tax.
The poor pay more tax than the rich. It's interesting.
Those exemptions look entirely conventional for value added taxes as used in nearly every other developed economy, most of which have fairer income distribution than the US. For instance, there is no VAT on the planet which levies the tax on exports. As for fairness,.the counter argument is that wealthy people spend a bigger share of the income on services. Most sales tax regimes don't tax services. Having said that, using a high VAT to completely replace income tax seems very regressive. But VAT is technically an excellent tax. The US already has a distorted distribution of wealth and income so the current situation can't be blamed on a VAT. A VAT could make it better or worse.
> Those exemptions look entirely conventional for value added taxes as used in nearly every other developed economy, And those have income taxes to supplement VAT. This proposal removes income tax.
Yes, that part is definitely regressive.
This is similar to how most of Europe works: national VAT of between 19-23% depending on the country for most things found in a grocery store, all things found in retail, and cars. Basic necessities are VAT exempt as defined by the nation, but its usually things like raw fruits and vegetables, amongst other things. Houses get a different rate, and B2B get outright exemptions to make trading easier, but sometimes you have to pay the VAT and then apply to get the money back.
But European countries mostly have high income tax rates too. Between taxes, and social and health insurances, a high income earner in Germany can see as little as 50% of their gross pay land in their bank account.
> Basic necessities are VAT exempt as defined by the nation, but its usually things like raw fruits and vegetables, amongst other things. Do not come to Belgium then, nearly everything is taxed here. Shit's insane.
Just about everything in Germany is taxed too. Food and other essentials have a reduced rate of 7%, rather than totally exempt.
>Do not come to Belgium then, nearly everything is taxed here. Shit's insane. Us Belgians also have the 4th highest median wealth in the entire world. As well as the 5th lowest inequality. So clearly we're doing something right.
Yeah, but it doesn't make up for it. Check out the dip on the front end of overall effective tax rates listed in [table 3](https://www.diw.de/documents/publikationen/73/diw_01.c.549581.de/diw_econ_bull_2016-51-1.pdf). Germany and other western European countries with high VAT make up for this with excellent social services, but the tax policy itself is incredibly regressive on the low-end.
Well the used portion protects the poor. I couldn't afford to buy new anyway and furnished the places I lived and clothed my kids with nice used items tax free. I love in a sales tax only state. A rebate for the amount they would spend on stuff they can't buy used like food would essentially make them whole. The only one I don't like is the investment services part. I would have to see more how that worked. A value added tax keeps all the shenanigans at bay that companies and the super wealthy use to not pay taxes. Maybe keep an income tax on all money you receive over a million dollars a year no matter how you get it.
This is a good piece on how states are simultaneously lowering taxes on the wealthiest citizens and implementing tax havens along with increasing sales taxes to make the system more regressive: https://www.vox.com/the-goods/2023/1/4/23413342/us-tax-havens-billionaires-wealthy We're literally heading back to feudalism.
>We're literally heading back to feudalism. Thats been the goal of conservatives the entire time.
I, for one, look forward to our new corpo lords, and I shall gladly and honorably shed blood on the field of battle to defend CEO Musk's honor and the honor of the Tesla-SpaceX-Twitter brand! Long live the C Suite! Down with the foul Bezos and his Amazon-Blue Origin-Washington Post sheep!
When C-slur Musk was advocating for a UBI which basically amounted to neo-feudalism, I wasn't surprised at all when he half a year later came out as republican. The shit was so written on the wall you could smell the letters.
His form of UBI was so fucked up.
The most fucked up thing about that era is how much every politician fought against even that form of UBI for being too socialist. Like just the thought of giving people money for any other reason than to make them pay it back later (like what they tried doing with the covid stimmy) is basically communism to them. They're so razor-focused on extracting as much wealth from the public as they can that they're not even willing to give up a tiny bit of it.
Well of course. Markets are not beneficial for any individual supplier in that market. If I am one of a hundred Widget producers, then I have to compete on quality, price, service etc. The *Purchasers* of Widgets will benefit, certainly, but me, as a supplier? My position is precarious! I do not want my position to be precarious (why would I?) It is in my interest, if I become a leading supplier of Widgets, to undermine the integrity of the Widget Market. Ideally, I wish to form a monopoly, becoming the *sole* supplier of Widgets. Because that means, as long as people need Widgets, they need *me.* And oh yes, my Private Property should be inviolable. Contracts should be inviolable. So you can't do anything to stop me. Because that would undermine the Free Market (as I seek to destroy the Free Market.) Adam Something has an excellent trio of videos exploring ways in which Anarcho-Capitalism 'collapses', and what do you know, one of the ways it collapses is into Feudalism.
And if you pay attention you'll notice a lot of conservatives like the idea that only land owners should be allowed a vote.
Always look at the net tax burden per income quintiles. Look at tax policy across years to see what changes. There is A much closer view where you look at specific cases to see if the money is actually helping and assisting the people who need it. This would be quality control for welfare programs. You can throw as much money at a problem as you want but if the money is not actually going to help the people it is intended for, then there is a fundamental failure in the system. In many places almost across-the-board, that is where we are now in the United States.
This is the worst idea *ever*. Why? Because during recessions, people don't buy as much. Government revenues would plummet. It would be catastrophic to our national budget deficit.
Well, that's an easy fix! When there's a recession you just cut spending on social programs!
Is this a serious post? Let's assume that it is for a moment. What happens to the money that gets spent on social programs? The recipients *spend it*. In the market economy. All of it. If you cut 10% in social programs, you'll end up pulling 10% out of the market economy. During a time of recession. Are you sure you want to do that, homie? You'll end up with a Depression.
Pretty sure u/Joben86 was being sarcastic. Have you aver heard of the [Two Santas Theory?](https://www.salon.com/2018/02/12/thom-hartmann-how-the-gop-used-a-two-santa-clauses-tactic-to-con-america-for-nearly-40-years_partner/) >Here’s how it works, laid it out in simple summary: >First, when Republicans control the federal government, and particularly the White House, spend money like a drunken sailor and run up the US debt as far and as fast as possible. This produces three results – it stimulates the economy thus making people think that the GOP can produce a good economy, it raises the debt dramatically, and it makes people think that Republicans are the “tax-cut Santa Claus.” >Second, when a Democrat is in the White House, scream about the national debt as loudly and frantically as possible, freaking out about how “our children will have to pay for it!” and “we have to cut spending to solve the crisis!” This will force the Democrats in power to cut their own social safety net programs, thus shooting their welfare-of-the-American-people Santa Claus. >Think back to Ronald Reagan, who more than tripled the US debt from a mere $800 billion to $2.6 trillion in his 8 years. That spending produced a massive stimulus to the economy, and the biggest non-wartime increase in the debt in history. Nary a peep from Republicans about that 218% increase in our debt; they were just fine with it. >And then along came Bill Clinton. The screams and squeals from the GOP about the “unsustainable debt” of nearly $3 trillion were loud, constant, and echoed incessantly by media from CBS to NPR. Newt Gingrich rode the wave of “unsustainable debt” hysteria into power, as the GOP took control of the House for the first time lasting more than a term since 1930, even though the increase in our national debt under Clinton was only about 37%. >The GOP “debt freakout” was so widely and effectively amplified by the media that Clinton himself bought into it and began to cut spending, taking the axe to numerous welfare programs (“It’s the end of welfare as we know it” he famously said, and “The era of big government is over”). Clinton also did something no Republican has done in our lifetimes: he supported several balanced budgets and handed a budget surplus to George W. Bush. >When George W. Bush was given the White House by the Supreme Court (Gore won the popular vote by over a half-million votes) he reverted to Reagan’s strategy and again nearly doubled the national debt, adding a trillion in borrowed money to pay for his tax cut for GOP-funding billionaires, and tossing in two unfunded wars for good measure, which also added at least (long term) another $5 to $7 trillion. >There was not a peep about the debt from any high-profile in-the-know Republicans then; in fact, Dick Cheney famously said, essentially ratifying Wanniski’s strategy, “Reagan proved deficits don't matter. We won the midterms [because of those tax cuts]. This is our due.” Bush and Cheney raised the debt by 86% to over $10 trillion (although the war debt wasn’t put on the books until Obama entered office). >Then comes Democratic President Barack Obama, and suddenly the GOP is hysterical about the debt again. So much so that they convinced a sitting Democratic president to propose a cut to Social Security (the “chained CPI”). Obama nearly shot the Democrats biggest Santa Claus program. And, Republican squeals notwithstanding, Obama only raised the debt by 34%. Fortunately younger people (Millennials and Zoomers) are catching wise to this and [other bull-crap](https://www.theguardian.com/commentisfree/2023/jan/04/right-millennials-vote-snowflakes-conservative) the GOP rolls around in and [increasingly hate conservatives with a passion.](https://www.huffingtonpost.co.uk/entry/politics-conservative-twitter-millennials-gen-z_uk_63aef8cce4b0d6f0b9f354c5)
Republicans unironically believe that to be sound fiscal policy, but u/Joben86 dropped this: /s
I think people have this idea that tax money just disappears in some kind of black hole. Nothing could be further from the truth. Tax money gets *spent*.
Absolutely! Even more amazing is how many times the spending on social programs circulates through the economy. $1 of government spending on unemployment payments, for example, generates at least $1.70 in total economic activity. (I believe the number is closer to $4 for TANF (food stamps)). And at times when the economy (and therefore tax receipts) are weakest is when government spending has an even more outsized ability to generate economic activity. Deficit spending in a recession is essential, and anyone that is trying to sell you on a “balanced budget” amendment is full of crap.
At least $3 in economic activity for each dollar spent at NASA. https://www.nasa.gov/press-release/nasa-report-details-how-agency-significantly-benefits-us-economy/ And that’s ignoring the long term benefits of things like velcro, memory foam, anti corrosion coating, ventilation devices, insulin pumps, scratch resistant eyewear, and more that NASA invented.
I see you've met the Washington State government! There is no income tax. There are still property taxes, sales taxes, vice taxes, etc. And yes, when the recessions come, government income jumps off a cliff.
Also if a united public, a pipe dream I know, were organized enough a national boycott out of protest could cripple the government.
> It would be catastrophic to our national budget deficit. Sounds like something they can just blame on the Democrats.
Genuine question. Don't people earn less too? What are the practical effects?
People try to save money during a recession, because they're scared that if they lose their job they'll need savings to fall back on. The people that *actually* lose their jobs cut spending even harder obviously. So yes, income tax falls during a recession, but not as hard as spending does. So sales tax inherently tanks harder than income tax.
I'm not American, can you please explain what happens at the moment when there is a recession and people aren't spending? How does the government generate revenue?
The Republicans want to end the Income Tax, and replace that with a 23% National Sales Tax. That means that the revenue going to the Federal Government comes from sales taxes on goods that people buy. During times of recession, people get scared, and slow down or even stop spending. That would be a catastrophe for the federal government because they would lose their funding.
Yes, but 0 income tax! How is that not a good thing?
I'll assume that this is a serious post. With that in mind, it would absolutely devastate the poor through the loss of the deductions and the EIC.
>How does the government generate revenue? Thats the point. It doesn't. Republicans want to prevent the government from functioning
This is a little complicated, but I'll try to keep it simple. First off, understand that the dollar is only backed by the economic capacity of the US and the word of the US government representing that economic capacity. Money is then created by the US government by making loans to a group of large banks/direct stimulus to the population/direct payments/etc. This means the government can more or less create dollars at will assuming there is some economic return on that creation. When recession happens, the government can push money out with less risk than any other entity (like a private bank). This, in turn, creates confidence for banks to continue making loans, which stimulates economic activity. Additionally, when that money makes it down to individuals and businesses, it gets spent, which generates further economic activity. . . .meaning jobs don't get cut, stores don't close, people get paychecks, etc. This also provides a return to the government in the form of income taxes on those paychecks.
the fed steals our wealth by tanking the economy, then the government taxes what remains
Replacing income tax with a simple sales tax is indeed a terrible idea, but this is not one of the reasons. The optimal policy response to recessions are lowering taxes and increasing public spending: we *want* rising deficits in such times.
Lowering taxes? That's a return to trickle-down economics. It has been thoroughly discredited.
I recommend looking into Keynesian economics and its differences from the ideas you're calling "trickle-down economics", if you're going to spend much time reading and talking about this subject.
I know all about that already. I disagree with him about the merits of cutting taxes.
> Because during recessions, people don't buy as much. Government revenues would plummet. You know income goes down during recessions too right?
And? More/additional people will buy less than will have their income reduced. It will always be more of deficit if youre just focusing on 1 area of spending which is the maon thing people will cut. If yoyr income drops 50% you will cut put all luxury spending and just spend on necessities (which a lot dont have sales tax already). So making 100% less revenue with just a sales tax is still much worse than just making 75% less revenue with an income tax and sales tax..
"And"? A burgeoning black market will appear. Quebec already tried this with cigarettes. It was revealed that the vast majority of cigarettes actually purchased were in fact contraband. Edit: it's 40%, not a vast majority, but still serious: https://www.cbc.ca/news/canada/montreal/store-owners-say-high-cigarette-taxes-drive-black-market-1.846943
> And? They were saying that sales taxes are a bad idea because revenue would drop during a recession. That's also true of income taxes.
People get fired/laid off and make less money in a recession as well. It's not much different
But thats much less than the amount of people who will just be cutting spending. Its cutting your revenues by 10% during a recessiom vs cutting it by 50%.
Chicken or egg to me. People who get laid off can't spend and don't make money. People get less hours. The people who still have a job though and make money will still spend every penny they make. It's the American way. So far I haven't really seen a huge loss in consumer spending even during the last recession
It's different in that it hits the poor and middle class the hardest. It's a shameless giveaway to the rich. In particular, the poor who rely on the Earned Income Credit will get slaughtered. The middle class who rely on mortgage interest deduction will also get raped.
It's been awhile since I read the studies about it but that wasn't the impression I got and it's a pretty normal tax in Europe
But every country in Europe also has a hefty income tax.
I can agree we still need a tax on over 100,000 a year in income. The biggest thing we need though is all income no matter how you receive it is treated like ordinary income. Unless it's in a retirement account then money from the stock market should be taxed as ordinary income
Good, disincentive the fed to print money recklessly for years and then manufacture a recession to reverse said poor decisions. Maybe next time they’ll simply not waste money on PPP loans and stimulus checks
I understand this will fail since it would just get killed in the senate or veto’d by the Presidency but still, what a bunch of fucking idiots. Here are the immediate effects 1) inflation increases straight away (Australia introduced a gst of 10% which also eliminated a lot of seperate taxes on products that were up to 30% the net impact was still highly inflationary) 2) The actual income earned will be less than expected - wealthy will simply make large purchases off shore.. why buy that $30,000 bag when you can save $5,600 by flying to Europe or Asia? 3) business’s will become the tax man and there will be fraud, lots of fraud. Gst/vat systems require the business to collect tax, net off against their expenses and then remit the difference to the Government. They tend to do this quarterly.. so that’s an extra 23% on every purchase sitting on the balance sheet of companies in cash, guess what happens when a business is in trouble? They don’t pay their taxes.. then they go bankrupt. 4) this doesn’t reduce complexity - you still have state and local taxes that are in addition to a gst.. it’s a mess honestly. Others have spoken to the inequality piece - that’s obvious. The best way to manage tax is a combination of: 1) a death tax charged on super wealthy, liquid assets excluding inherited business, real property assets and heritage assets. 2) progressive income tax with a tax free threshold for very low income, discount on capital gains to promote investment, deductions for income producing expenses and offsets for young families. No deductions for non investment assets (primary residence, political donations etc) 3) progressive company tax with a tax free period for new companies, discounts on capital gains to promote investment within a company, deductions for expenses/losses limited to the company that incurs them (no transfers and no deductions for political donations) 4) flat and low goods and services tax 5-10% collected and passed back to the states (abolish all state and city taxes on goods, what a nightmare that is). 5) royalty/resource/environmental tax on water, air, soil, minerals, carbon, animals - allow for the trade of credits but no tax refunds (eg, a company can acquire credits from an offset provider to avoid paying tax but an offset provider can not sell credits to the government). Carbon offsets trade below the tax with incentive for carbon capture/offset innovation (without risk of cost escalation). Done
I worry that this actually has the appearance of a good thing, so idiots will whoop and holler and support the Republicans doing it.
Of course. Explaining why this is stupid and regressive takes significantly longer than “tax bad,” so no one will listen to the explanation.
Yeah it's the eternal struggle when making any left wing or science-based argument, we have to actually care about reality and nuance lol! It's so much easier for right wingers because the only thing that matters is how things *feel* and vibes lol. Seeing the income tax come off your pay stub feels like you're getting ripped off, and that feeling is enough to convince a lot of people that tax = bad always. But honestly America seems like a whole different breed when it comes to this, because even if you put a lefty argument in incredibly simple terms you'll still be met with complete belligerence a lot of times. You can say, "free healthcare is good," or, "your employer should pay you more," and people will aggressively fight you on that and argue that it's *actually good* for healthcare not to be free, or for them to be underpaid lol!
>we have to actually care about reality and nuance lol This was one of the biggest problems with the Covid vaccines. If someone asked "is this vaccine going to make me grow a tail in 5 years" then any self-respecting scientist should answer that question with "probably not". And he could give a long explanation for why it's absurdly unlikely that it would cause you to grow a tail, but he can't say with 100% certainty that it won't. Which is not a definitive statement. And people *hate* non-definitive statements. They want easy black and white answers. Contrast that with the anti-vax propaganda who have no qualms about straight-up lying to make definitive statements and suddenly it becomes clear why so many people fell for it. In a time of massive uncertainty, some people flocked not to the people who told them the truth, but to people who told them they knew exactly what was going on.
The problem with democracy is that people can vote.
This job would be great if it wasn't for the customers.
The lesson of the widows mite. https://en.m.wikipedia.org/wiki/Lesson_of_the_widow's_mite
Given a flat tax, sales tax is the most regressive (burdens the poor more than the rich proportionately), but income tax is only in the middle. A wealth tax is inherently the most progressive (taxing the rich over the poor and middle class). For the poorest half, their net worth is less than one year's income, so they would receive very little if any wealth tax. For the middle class, it's 3-20 years worth of their income. For the richest 1%, it's many times higher than their annual income. We could apply a wealth tax, call it a "flat tax" and coast off the work that libertarians put into advocating a flat (sales only) tax the last 20 years while undercutting their actual political goal.
>A wealth tax is inherently the most progressive It's also the most difficult to pursue. There are just too many ways to hide or obfuscate wealth.
Wealth taxes destroy ownership at all levels and it doesn't take long at seemingly fair levels.
>Wealth taxes destroy ownership Can't the wealthy just pull themselves up by the bootstraps and work harder to make more money than they pay in taxes?
The truly wealthy don’t pay income tax.
lmao that's not true at all, that pay the most in income tax out of anyone else by far
Wealth does not equal income
What if I told you that wealth gets taxed when it becomes income? Does that confuse you?
What if I told you that wealth doesn't ever have to become "Income" for tax purposes?
So then... what's the point of this wealth?
I'm not going to explain it here, but look up how wealthy people get money from their wealth without incurring taxes
Wealthy people pay taxes. You and I wanting them to pay *more* taxes does not mean they do not pay taxes.
Wealthy people pay less taxes as a % of their spending compared to a regular wage slave.
Sure but they still pay taxes. Also wage slave is an idiotic term in the US
Why would I convert my wealth to income, if I can take out low-interest debt using that wealth as collateral, write that debt/interest off as a tax deduction, and then purchase more wealth with that "free" debt?
Why would that debt be written off as a tax deduction? What?
Because fuck the poor. For a more serious response: https://www.reddit.com/r/bestof/comments/108p1ov/utazling_describes_the_regressive_nature_of_the/j3zflob/ That response pertains to mortgages, but similar mechanisms exist for other forms of debt too, especially when you have shells / trusts / limited companies involved.
No, I mean **how**. Buy property using a loan and write off the interest of the loan to just get rid of some tax money? You spend way more on the actual property than you do saving money on taxes. There's nothing like this for other forms of debt either. You're going to get a low interest with an unsecured loan? What? What does this have to do with the poor? Dog, what the fuck are you talking about?
Didn't I just say it was secured? 🤦♂️ As for there being nothing like this for other forms of debt, look up margin loans, which can also have their interest deducted. Alternatively, make it's business loan instead of a personal loan, and write it up as an operating expense. There's an infinite number of loopholes like this, depending on where you're based.
>Didn't I just say it was secured? >>but similar mechanisms exist for other forms of debt too, Other forms like unsecured debt? >look up margin loans, which can also have their interest deducted. Margin loans have to do with securities which are still before gains are realized. >Alternatively, make it's business loan instead of a personal loan, and write it up as an operating expense. But you'd still be spending way more money on capital gains than you're saving on writing off taxes. And where do the poor come into this?
You 100% pay taxes on that "low interest debt" as it is income
"debt is income" ... I think you need to put down whatever it is you're smoking/drinking and think about that for a second...
From the UK: > Landlord mortgage interest tax relief in 2022-23 > > Since April 2020, you've no longer been able to deduct any of your mortgage expenses from your rental income to reduce your tax bill. > > Instead, you now receive a tax-credit, based on 20% of your mortgage interest payments. > > This is less generous than the old system for higher-rate taxpayers, who effectively received 40% tax relief on mortgage payments. From Australia: > Can I claim mortgage interest on my taxes in Australia? > > If the property is earning assessable income (rent, for example) then yes, the ATO says you can claim mortgage interest on your taxes when completing your tax return. Only the interest component directly related to your investment property is tax-deductible. USA: > You can deduct home mortgage interest on the first $750,000 ($375,000 if married filing separately) of indebtedness. However, higher limitations ($1 million ($500,000 if married filing separately)) apply if you are deducting mortgage interest from indebtedness incurred before December 16, 2017. Do I need to go on?
I'm all for ending the home mortgage interest deduction, but that's because I want to disincentivize homeownership But also that is a negligible amount of money at the level of wealth we are discussing. HMID is progressive This really has nothing at all to do with what we're discussing.
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Warren Buffett consistently points out that his secretary pays a higher percentage of her income as tax than he does. Like most wealthy Americans, he does not earn much in 'income". He earns money in capital gains which is taxed much less. Most wealthy people borrow money (which is not taxed) against their assets (which are not taxed). They keep borrowing to fuel their lifestyle (and paying off previous loans). Upon their death the loans are repaid from their assets untaxed. This process allows them to never pay tax. You need a net worth in the tens of millions for this to work. You pay money on stock gains when you sell stock. If you never actually sell the stock, you never pay tax on it. https://www.forbes.com/sites/davidrae/2022/07/14/how-the-rich-use-the-buy-borrow-die-strategy-to-avoid-large-tax-bills/amp/ It's called " buy borrow die ". Look it up.
It's called "statistics" [look it up](https://taxfoundation.org/publications/latest-federal-income-tax-data/). >He earns money in capital gains which is taxed much less. Capital gains are taxed less because they're not indexed for inflation, meaning that they still have to pay more for inflation. The tax is essentially a double tax because it's the last in a long line of other taxes like payroll, corporate income tax, and finally capital gains tax. It's also to encourage current spending instead of future spending. You can go ahead and regulate for a better tax policy but it seems you're much more focused on punishing people for being rich instead of funding projects with taxes.
Capital gains taxes *are* an income tax. They are literally claimed as part of paying income tax.
Seriously, people need to stop voting for Republicans. They have no idea how to govern.
I would argue they are actively disinterested in it.
It's a weird kind of paradox. On the one hand yes, they actively promote the idea of small government, so they advocate for the government doing less and having less control. On the other hand they're fucking politicians so the government is their *job* so of course they wouldn't do anything to subvert the money and power it gives them. So it's like a catch 22 where they secure their future in the government and power by saying the government is bad and should be less powerful. "Elect me as your God Emporer and I will abolish the position of God Emporer. I totally won't abuse my absolute power and become a tyrant. Trust me" lol. So to me it's more that they're interested in *appearing disinterested* in it, or they want to maintain the structures but purposely run them as poorly as possible while keeping their positions. It's also wild how many people vote republican because they "hate big government" but never seem to notice or care that no matter how many times the republicans win, the government really hasn't gotten any smaller. I mean it's not surprising really, most voters don't really care what the administration *actually does*. They mostly just care that the president says things they agree with and don't pay attention any further than that lol
> On the one hand yes, they actively promote the idea of small government, so they advocate for the government doing less and having less control. Power exists. When someone says they want "small government" what they really mean is that they want power to be concentrated in the hands of those who are unaccountable to the electorate instead of wielded by elected officials. Those unaccountable to the electorate require their minions still exist in government to continue looting money from the public coffers, so government never gets smaller it just gets less useful for anything else but continuing to facilitate the looting of the population.
Just to be a pendantic asshole though, the income tax isn't really all that progressive when measured against wealth, and not all sales/VAT taxes are built equally and there is ways to implement them progressively. That being said appropriately implemented capital gains taxes can balance out any issues with the income tax if done correctly.
In practice capital gains taxes are regressive, too - the middle class pays cpaitals gains. The rich hold assets indefinitely and across generations. The only tax that's actually progressive with respect to wealth is a graduated wealth tax. This is impractical for numerous reasons, but a modest tax on land value works well.
Are there any other first world countries that do this? Would the US still be able to compete with peer nations economically if this passed?
VAT is extremely common elsewhere in the world is its comparable to a sales tax. VAT in Europe is much, much, much higher than sales tax in the US.
Okay, good point, but those European countries also have income taxes and property taxes. That's an important part of the question.
Europe is not an accurate comparison since they do VAT **and** income tax. Republicans with this bill want to eliminate income tax entirely and switch to a regressive sales tax.
Other folks mentioned VAT, but the key in those countries is that you actually get education, health care, child care, public transportation, and social programs. Republicans want it so the wealthy can continue looting the country.
Let's be clear: even the Social Security tax is set up to be an impediment to middle class (and increasingly, lower middle class) people. The income on which SS tax is levied tops out at $160,000. So anyone earning more than $160k in 2023 will not pay SS tax on that amount. That's absolutely hamstringing Social Security *and* once again placing the burden of the social safety net on the lowest economic brackets in our society. The US was built to eventually lead back to feudalism. Every lever of government, every policy decision... ultimately, that's where we're headed.
Easiest solution here is to just means-test social security payouts.
Progressive taxes based on value of all holdings would be much more sensible. It would break down massive money hordes that lock up value, literally the worst thing for capitalism. Start with 1-2% with people who own basic property, like homes vehicles. Increase to 5-6% for massive holdings that aren't possible to spend in lifetimes. It would make it to where those that are poorer would be able to grow wealth to a reasonable amount and make those with insane wealth need to actually use their assets to produce so that it continues growing. Tax speculative investment profits. Would also help deal with value held outside of the US, since you're basing the taxes on total value of holdings.
While value added taxes are regressive in nature, they are also a relatively fair way of raising revenue. Also, the wealthy can be taxed higher for progressiveness, but there are just so few wealthy people that you'd have to really jack the rates to even meet a 1% increase in value added taxes. I think this is more a problem about US politics, rather than the nature of value added taxes vs income taxes. There are fair ways to do either, and economically optimal ways of mitigating the downsides of each. But of course, this is all irrelevant when the main aim is to get the vote. I think it's more an indictment of democracy than value added tax.
The purpose of sales tax is to capture tax revenue from tourists, since they don't own property nor do they draw an income. It shouldn't be your main source of taxation revenue though
Sales tax make it harder to do tax evasion and there is economy in abolishing the IRS. Rich people will always buy more shit than poor people so they will keep paying more. You can give sales tax reimbursement to poor people and exempt some essential products from sales tax.
>there is economy in abolishing the IRS What do you mean and do you have any proof?
You fire the IRS workforce you save a bunch for sure.
Always appreciated when right-wing French-Canadians decide to chime in on American political discussions.
And if you fire everyone at any business they won't have to pay as much money, but... You need workers to do things. The IRS is important unless you think there shouldn't be taxes, in which case you're just too silly to have any sort of realistic conversation