5 ms·

Time to get rid of all federal taxes except a national sales tax. Our Rube Goldberg tax system has got to be the single biggest drag on economy. Imagine the mon

by schwit 16y ago

Time to get rid of all federal taxes except a national sales tax. Our Rube Goldberg tax system has got to be the single biggest drag on economy. Imagine the money that goes into complying with taxes doing something constructive.

kgrin 16y ago
A sales tax (or VAT) is highly regressive. There's nothing inherently complicated about a progressive income tax; it's the fact that we insist on having a deduction for mortgage interest, R&D, asset depreciation, hiring new workers and hundreds of other things that all individually might be things we want to encourage, but together add up to a complex and cumbersome system.
- InclinedPlane 16y ago
  A sales tax is not regressive, it's flat. Simply because it's not progressive doesn't make it the opposite.
  - gte910h 16y ago
    A sales tax is regressive. The lower your income, the higher your tax burden as a percentage of income. Even the fair tax understands that which is why most versions of it has a huge tax credit per year.
    - tocomment 16y ago
      A sales tax doesn't have to be regressive. If you tax luxury items while not taxing essentials you'd probably get an even more progressive system than we have now.
      - rationalbeaver 16y ago
        That's true, but making a sales tax progressive creates the same complication that exists in the current system, only with even more incentive for corporations to lobby for special exemptions, reclassifications, credits, etc., for the products that they produce.
        hga 16y ago
        Exactly; all the companies who make goods that might conceivably qualify for an exemption start spending a lot of their focus on getting that (since it's a big discount if they do) instead of focusing on providing the best product/best price/whatever.
        fnid2 16y ago
        It wouldn't be that difficult. Lots of states that have sales tax don't tax food. Simply make the essentials untaxed or any product of a particular category under a particular price untaxed. We have these measures in the current system. If you earn under $6,000 you pay no tax. The benefit is that you take the burden off the individual and leave it all to computers. There's a "Taxable" flag and the equation is simple. IF (item.category == Food or price < (select minprice from categorylimits where categorylimits.category = item.category)) then tax = 0 else tax = 0.25 * item.price Done. What a beautiful world that would be.
gte910h 16y ago
People just don't seem to get it: We have a byzantine tax code to made people do X instead of Y and to not do Z in favor of Q. Congress wants to do these things, and the tax code is the easiest way to do them. Congress will STILL want to do these things even if you do fair tax. If the fair taxers get their way, we'll likely end up with income AND vat 10 years down the line. Ech. And you realize: Fair Tax would ALSO cover all investments? Buy a house: 40% to the governement. Buy stocks: 40% to the governemnt, etc.
- koanarc 16y ago
  "Congress wants to do these things, and the tax code is the easiest way to do them. Congress will STILL want to do these things even if you do fair tax." Sounds to me like Congress is the problem.
  - gscott 16y ago
    I would suggest a dictatorship instead. I am willing to be the dictator and I promise I will address all of these problems right away.
    - koanarc 16y ago
      Well, I think that's a step backwards, but at least that would mean you were willing to admit that what we're doing right now isn't working any more. [immediate edit:] Most of us have too much knee-jerk nationalistic pride to think about changing the system on a fundamental level.
      - nitrogen 16y ago
        there's nothing like going all meta during a discussion to kill one's political power ;). Arguing over the details is a lot safer than looking at the big picture, I would think.
    - mkramlich 16y ago
      You'll need way more karma points before you can become dictator.
blasdel 16y ago
The tax system is complicated not because of the taxes themselves, but because of all the tax credits created to incentivize behaviors. The vast majority of tax cuts are really just government spending in disguise -- pork for a special interest group that gets allocated by the constituents' accountants instead of in a spending bill, and adding directly to the national debt instead of through the budget.
- korch 16y ago
  This nails exactly what wrong with the tax system. In the history of civilization, the ebb and flow of empires has always consisted of tax disputes wedging factions into alliances who fight for more control. Taxes cause this process! It doesn't matter what the tax is, who pays, or who is paid, just that there's all this extra drain on the natural activity of flowing capital. The logic is Microecon 101: Taxes are the equivalent to the a transaction+holding cost of using Uncle Sam's currency. Use gold, well, then you're paying to store and transport it. If Uncle Sam was smart about his paper, he would make the Federal Reserve into Federal PayPal, having the Federal Gov't charge, oh say, a 0.001% transaction fee on any exchange of US currency. Same difference, amirite?

by schwit 16y ago

kgrin 16y ago

A sales tax (or VAT) is highly regressive. There's nothing inherently complicated about a progressive income tax; it's the fact that we insist on having a deduction for mortgage interest, R&D, asset depreciation, hiring new workers and hundreds of other things that all individually might be things we want to encourage, but together add up to a complex and cumbersome system.

InclinedPlane 16y ago
A sales tax is not regressive, it's flat. Simply because it's not progressive doesn't make it the opposite.
- gte910h 16y ago
  A sales tax is regressive. The lower your income, the higher your tax burden as a percentage of income. Even the fair tax understands that which is why most versions of it has a huge tax credit per year.
  - tocomment 16y ago
    A sales tax doesn't have to be regressive. If you tax luxury items while not taxing essentials you'd probably get an even more progressive system than we have now.
    - rationalbeaver 16y ago
      That's true, but making a sales tax progressive creates the same complication that exists in the current system, only with even more incentive for corporations to lobby for special exemptions, reclassifications, credits, etc., for the products that they produce.
      - hga 16y ago
        Exactly; all the companies who make goods that might conceivably qualify for an exemption start spending a lot of their focus on getting that (since it's a big discount if they do) instead of focusing on providing the best product/best price/whatever.
      - fnid2 16y ago
        It wouldn't be that difficult. Lots of states that have sales tax don't tax food. Simply make the essentials untaxed or any product of a particular category under a particular price untaxed. We have these measures in the current system. If you earn under $6,000 you pay no tax. The benefit is that you take the burden off the individual and leave it all to computers. There's a "Taxable" flag and the equation is simple. IF (item.category == Food or price < (select minprice from categorylimits where categorylimits.category = item.category)) then tax = 0 else tax = 0.25 * item.price Done. What a beautiful world that would be.

gte910h 16y ago

People just don't seem to get it: We have a byzantine tax code to made people do X instead of Y and to not do Z in favor of Q. Congress wants to do these things, and the tax code is the easiest way to do them. Congress will STILL want to do these things even if you do fair tax. If the fair taxers get their way, we'll likely end up with income AND vat 10 years down the line. Ech. And you realize: Fair Tax would ALSO cover all investments? Buy a house: 40% to the governement. Buy stocks: 40% to the governemnt, etc.

koanarc 16y ago
"Congress wants to do these things, and the tax code is the easiest way to do them. Congress will STILL want to do these things even if you do fair tax." Sounds to me like Congress is the problem.
- gscott 16y ago
  I would suggest a dictatorship instead. I am willing to be the dictator and I promise I will address all of these problems right away.
  - koanarc 16y ago
    Well, I think that's a step backwards, but at least that would mean you were willing to admit that what we're doing right now isn't working any more. [immediate edit:] Most of us have too much knee-jerk nationalistic pride to think about changing the system on a fundamental level.
    - nitrogen 16y ago
      there's nothing like going all meta during a discussion to kill one's political power ;). Arguing over the details is a lot safer than looking at the big picture, I would think.
  - mkramlich 16y ago
    You'll need way more karma points before you can become dictator.

blasdel 16y ago

The tax system is complicated not because of the taxes themselves, but because of all the tax credits created to incentivize behaviors. The vast majority of tax cuts are really just government spending in disguise -- pork for a special interest group that gets allocated by the constituents' accountants instead of in a spending bill, and adding directly to the national debt instead of through the budget.

korch 16y ago
This nails exactly what wrong with the tax system. In the history of civilization, the ebb and flow of empires has always consisted of tax disputes wedging factions into alliances who fight for more control. Taxes cause this process! It doesn't matter what the tax is, who pays, or who is paid, just that there's all this extra drain on the natural activity of flowing capital. The logic is Microecon 101: Taxes are the equivalent to the a transaction+holding cost of using Uncle Sam's currency. Use gold, well, then you're paying to store and transport it. If Uncle Sam was smart about his paper, he would make the Federal Reserve into Federal PayPal, having the Federal Gov't charge, oh say, a 0.001% transaction fee on any exchange of US currency. Same difference, amirite?