Third Party & Independents: Archives

It’s the Republican expression of the Tu Quoque fallacy. “If Hillary could do it, we could do it.” And this, after criticizing Hillary for doing it.

That reminds me of those parents who smack their children upside the head after a bit of child-on-child violence, saying, “HEY—we don’t hit!!!”

V. Edward-

I’m just curious as to why you think a national sales tax, or a VAT, is a far fetched idea?

As I stated in the left blog, at least we get a good debate out of an otherwise slam dunk Obama win. I look forward to these two going at it on the issues.

George—

George—

Because it makes little practical sense (to me) and wouldn’t even begin to replace the revenue lost by abolishing the income tax, unless it were excessively high. A flat tax plan that eliminated all exemptions and taxed everyone at one rate make more practical sense to me. Now if you wanted to add a VAT on top of the on any income over say $500,000 a year, I could go for that.

Hmm, that is a rather strong statement against what Hillary did. Maybe he will stick to his principles and say no.

By the way, I don’t buy his argument against HRC. New Yorkers had a choice between a native and Hillary, and they decided she would represent them better.

Do you really think a flat-rate income tax is better than a national sales tax? The National sales tax seems to be by far a simpler to implement, fairer idea.

• No more federal tax collection infrastructure
• Taxing consumption seems fairer, the more you spend the more you’re taxed.
• we could make the tax mildly progressive by not-taxing essentials, say groceries and clothes
• Illegal immigrants suddenly pay taxes (afterall, they use services)
• “old money” inheritees now pay the same tax as everyone
• IRA, 529, 401(k) plans would no longer be necessary (as any money not ‘spent’ is by definition tax free
• “under the table” wages are suddenly taxed the same as everything else

I’m curious as to why you think a flat-rate income tax is a simpler solution. Admittedly the VAT to be revenue neutral might end up being 20% or so, but most of us pay at least that much in income taxes (which we would now have in-pocket), which we loan interest free to the government (for those of us who get a refund) as opposed to a sales tax which wouldn’t charge us until we spent it.

The problem is that rich people won’t get taxed for buying their French yachts and German cars overseas. This is basically a plan to eliminate our progressive tax structure.

Jason - There’s one fatal flaw I see in the National Sales Tax idea that nobody seems to be addressing. A lot of “old” money (and even some “new” money) is in a perpetually-invested status, and is almost never spent. As such, it would never be taxed.

Consider, for example, Bill Gates. Based upon current stock prices, he’s worth about $30 billion dollars. That’s $30 billion dollars that we’ve collected a heckuvalotta income taxes on (theoretically). But, since that’s $30 billion “unspent” dollars, they’d all be tax free under a Sales Tax.

Of course, that all changes if you plan to tax ALL sales, including sales of Stocks, Bonds, Precious Metals, etc. But that throws a HUGE monkey-wrench into the works, discouraging investments, and making the “lock-box under my bed” the world’s greatest tax shelter.

With the flat tax you guarantee that everyone pays their fair share. With the VAT I can envision the ultra rich buying their wares elsewhere and importing them into the U.S., which will of course give birth to laws designed to stop them from doing so, and the whole tax quagmire we now wallow in, will return anew. No, a flat tax of 15% of all combined income above $20,000 is the way to go.

And oh, one more piece, those Americans who have reached retirement age with an income of $100,000 and below would be exempt from federal taxes, as would active duty military personnel; those two groups deserve a break. BTW taxes are necessary in order to maintain our modern civilized society; you provide for the common defense, promote the general welfare, etc…

I am just pleased as punch that we have people from the left defending a flat tax! It must be xmas morning for me :)

Misha, it won’t last long. They’ll get their talking points from the Kerry campaign and launch back down the road of “keep the shelters in place but jack up the nominal rate to 99% to make you idiots THINK we’re taxing the rich…”

couldnt even let me be happy for one moment, could you Ciggy?

Regarding progressive taxing:
The idea that we truly have a progressive tax structure is on e that I’d take with a grain of salt. Considering the number of loopholes, shelters, and SUVs we have around, I think it’s not quite as progressive as you’d think. Whereas a sales tax is almost by definition mildly progressive, especially if you excempt necessities like food, clothing, etc.

As far as importation goes:
What about “all the rich people” who buy our real estate, and securities, products, and services? Also, despite arguments about being a free-trade country we already have a huge number of tariffs and quotas for agriculture, manufactured goods, etc. Besides, how many companies don’t have a “significant” presense in the US? Companies that mail order are expected to collect tax on items delivered in states they do business in, I think a similar model should be possible on the national level. Especially with most of Europe having a VAT, there could probably be some kind of cross-collection agreement/framework put together.

As far as investments go:
Services can be taxed (investments generally have commisssions, trading fees, management fees, etc.) Also, the instant those rich people spend their money on something, it’s taxed. So I don’t see what the problem with encouraging investment is. The flipside is that elderly people who have investments, and own houses will not have their social security income taxed…

Read Michael Hodges’ Tax Report at:

http://mwhodges.home.att.net/tax.htm

“The government taxes when you earn it, taxes you when you save it, taxes you when you invest it, taxes you when you spend it, and, when you die, they tax what’s left over. What did they leave out?

5.1 months working for taxes is 43% of a year. In 1776 Thomas Paine argued that if a king demanded 50% in taxes, we wouldn’t pay it. We are nearly there.”

Bill, again, 43% is the nominal rate. As Jason mentioned, look at the loopholes, shelters, and the damn Hummer H2s that business owners get to write off just for having a logo on the side “advertising” the business. When you get up into the stratosphere of business success, you can afford armies of accountants and lawyers to find you more of the loopholes, more of the shelters, and more of the deductible SUVs. Leona Helmsley was attacked for her infamous quote “paying taxes is for the little people”, but as an observation of reality, she was right. It’s the middle class that gets squeezed by the current system, because the middle class doesn’t have recourse to the ways out of paying taxes, that the rich have.

The rate itself is negotiable, and could even be set by national referendum. SHOULD be even, since that is the spirit of the notion of “taxation with representation”.

The reason I like a flat tax after basic survival expenses (including health care), is partly due to simplicity, and partly because it doesn’t introduce a NEW tax. A new tax would tempt the government to institute the federal sales tax AND KEEP the income tax, and if you take one good look at Kerry’s tax-addicted mug, you know that’s exactly what somebody like him would try to pull.

Another potential problem in a sales tax approach is the difficulty in drawing the line, product by product, between what constitutes a “luxury” item and what is a “necessity”. If bottled water is a “necessity”, and some smarmy black-turtlenecked trust-fund-spender bought six truckloads of it to make an ice scultpure in his back yard on his birthday, he’s getting his luxury item at a low-tax rate. This approach also invites various industries to fight for a new brand of tax-shelter pork, whereby the cattle ranchers will try to say steak is a necessity, or Volvo dealers will try to say the safety enhancements of their cars make them basic and needed by the poor, and so on and so on until you have 50,000 corporations and business conglomerates all fighting over whose products get to be taxed at a lower rate. That’s nuts.

I think it should just be a matter of simplifying the existing income tax system to where all income is income, none of it is sheltered, the standard deduction is the cost of living, and the rate of tax on the remaining income is flat. Everybody files 1040EZ, and it takes each of them 5 minutes.

The Irony is, Hillary would have a greater claim to this seat than Keyes-

She was born there.

We live in far too mobile a society to expect people to be tied to the land like peasants.

How about this tax plan:
1) Determine the total dollar amount required to operate the government.
2) Determine what each state’s share of that cost would be.
3) Apportion the tax burden accordingly.

Where have I heard the word “apportionment” before…? Oh, wait. I know:

“Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.”

Yeah, that one passage of the Constitution still assumes blacks are still slaves, and still counts them as 3/5 of a person. You’d have to first amend it before even thinking about taking steps to re-implement it.

As an interesting historical sidelight, apportionment is a concept that got handed down from the Feudal system, where taxes were first collected by local landlords, then paid by them to the Barons and Earls, and then their oathal Dukes, and by the Dukes on up to the King. Each nobility step in the taxation process took a cut for himself and passed the rest of it on up the oathal chain (Feudal itself comes from the two words, “fee” and “oathal”, where a lord is bound by oath to serve a patron, in return for a “fee” that he keeps for his military and administrative services). In a way this had some systemic advantages because if a feudal lord at a lower level was holding back or skimming too much, the King would get irate and pay him a visit with an army, lay siege to his castle, and make him see the error in his math.

In modern times, though, an argument could be made that taxation need no longer be this multi-level. There are economies of scale we have in today’s banking system, that they didn’t have back when a tax collector had to trudge a cart full of valuables from county to county.

You make an excellent argument, Ciggy. I am on board. Especially with the standard deduction being cost of living. Now is that a fixed rate per family regardless of domecile, or will it be calculated per geographic location given some large disparities in cost of living across this country. (Appalachia vs. Beverly Hills comes to mind)?

Ciggy,

The ‘3/5 of a person’ factor has been rendered moot by the abolition of slavery, but your point is well made. By simply apportioning the amount of taxes due there would be no need for an income tax, flat tax, VAT, etc. and all arguments against the constitutionality of the current tax scheme go away. The Feds publish the budget, tell the states what their share is and the states, in turn, pass the cost down to the serfs… uh… citizens.

We then get a nice, clear picture of how much money all of the “free” government programs cost each and every one of us. Also, the taxation becomes more of a usage fee than is the case now. If I make 200K per year, does it cost the government more to provide services for me than for someone who makes less? For someone who makes more? No it doesn’t, so how would it be fair to charge me more? Everyone who uses the services pays the same for them.

What could be more fair than that?

David,

Now is that a fixed rate per family regardless of domecile, or will it be calculated per geographic location given some large disparities in cost of living across this country. (Appalachia vs. Beverly Hills comes to mind)?

I would calculate it to the granularity of a 5-digit zipcode. If a taxpayer were to file online (as they should be able to), they could simply enter the zipcode and the standard deduction would auto-populate. Or in the tax booklet, there could be a table sorted by zipcode, to give them the amount to fill in on the form.

It’s safe to say this approach would put TurboTax and Kiplinger’s Tax Cut out of business, not to mention H & R Block. But, oh well.

Incazzarsi,

The Feds publish the budget, tell the states what their share is and the states, in turn, pass the cost down to the serfs… uh… citizens.

LOL. Ahem… yeah. One thing I do like about that sort of a system is that each state could determine its own approach to taxation: VAT in one state; graduated tax with loopholes and shelters in some very stupid state; flat tax in a very smart state (grin). That could provide multiple laboratories of what works and what doesn’t, accelerating our scientific learning process and strengthening our democracy.

Politically it might not fly though. I can already see the boneheads in California saying “hey….. why do WE have to pay THIS much while in Montana they only have to pay THAT much?”

They’d also argue that a state with a lower population and a higher average income would feel almost no pain, while a state with a high population and low average income would feel inordinately high amounts of pain. And that’s a lot of pain for the Bill Clinton types to pretend to feel in their maudlin method-acting. I’m not sure their talent range could handle it.

Ciggy,

My guess is that you’re smart enough to live in a smart state. I left a stupid state and moved to a more stupid state, so I’m gonna leave that aspect alone. ;-)
Other than that, I’m with you.

A friend argued for a stronger central goverment recently by saying that his rights should not change from one state to another. I reminded him that was exactly what the Founders had in mind when they set things up this way. (Or, at least, the way things are supposed to be running.) He said that the Founders couldn’t anticipate everything that would happen in the future. I agreed with him.

They couldn’t anticipate years of government propaganda camps brainwashing our children into being mindless drones bent on serving the state. (And making one state dumber than the others…)

Politically we’re not ready for that drastic of a change. Your average voter is willing to cast a ballot for the lesser of two evils. THAT’s what we have to change. The rest will come naturally afterward.

Incazzarsi, I agree.