6 ms·

completely agree with this sentiment. I've often wished a test city/state would be allowed to just do a flat tax and completely remove all tax code and see wha

completely agree with this sentiment. I've often wished a test city/state would be allowed to just do a flat tax and completely remove all tax code and see what happens. Obviously the convolutedness is a barrier to entry to small startups and a unfair advantage for established market entities. Also I'd love to see an experiment on a zero tax law that basically amounted to no taxes unless the business/person earned a net profit of something deemed reasonable (say 30-50k in a modern society). Why our societies constantly try to suffocate individuals trying to innovate and create value for his fellow members of society is beyond me.

techsupporter 9y ago
> I've often wished a test city/state would be allowed to just do a flat tax I don't want a flat tax (as in "all income taxed at 15%," let's say) because a flat tax has an unfair impact on people at lower income levels. But, otherwise, I agree with your entire post. Here's my ideal law, with the caveat that I have zero legal training beyond six seasons of Law and Order and four seasons of Suits: (1) The following marginal rates are established: (Emphasis here: these numbers are made up for demonstration purposes only.) - $0 through $13,000: 0% - $13,001 through $25,000: 5% - $25,001 through $46,000: 8% - and so on (2) All money earned, by whatever means and from whatever source, by a person or legal entity resident in the United States shall be subject to the tax specified above. (3) The Internal Revenue Service shall, no later than the 15th of April of each calendar year (or the next day following the business day after the 15th of April if the 15th of April falls on a Saturday, Sunday, or federal holiday), prepare and mail to each holder of an EIN, each person for whom any tax or income declaration form (such as W2, 1098, 1099, and similar) has been submitted to the IRS, a statement of what the IRS believes the taxpayer owes or is due as a refund. (4) If the IRS has notified the taxpayer that the IRS believes the taxpayer is due a refund, the taxpayer may notify the IRS of a financial account located inside the United States into which such refund shall be deposited or may request a paper check for such refund or, under such rules as the Secretary shall provide, make a request for United States Savings Bonds. Any request must be made within five years of the date the taxpayer knew or reasonably should have known that the refund was due, otherwise the refund is the property of the Treasury absent a showing of exigence. (5) If the IRS has notified the taxpayer that the IRS believes the taxpayer owes additional taxes, the taxpayer shall make payment to the IRS no later than the 15th of July following receipt of said notice (or the next day following the business day after the 15th of July if the 15th of July falls on a Saturday, Sunday, or federal holiday) by providing the IRS with debit instructions for a financial account located inside the United States or via a paper check or other form of transfer of dollars. (6) In the case that the taxpayer disagrees with a notice provided by the IRS under paragraphs 5 or 6, the taxpayer shall, no later than the 15th of July following receipt of said notice (or the next day following the business day after the 15th of July if the 15th of July falls on a Saturday, Sunday, or federal holiday), file the tax forms designated by the IRS under such rules as the Secretary shall provide, to indicate what the taxpayer believes is the proper tax due or refund owed. If the taxpayer still owes additional tax, the tax payment shall be due at the time of filing. The IRS shall have 120 days to respond, otherwise the taxpayer's submission is deemed valid and binding upon the IRS. (7) There is no paragraph seven.
- wbl 9y ago
  Define earned.
  - chii 9y ago
    Any money, cash, or equivalent, that you are in posession of at time T, that you did not have possession of at time T-1.
    - wbl 9y ago
      So the problem with this is if I spot you a buck at the subway because you are short, you have to remember and report this. That's what the gift exemption is for in current code. Then let's not get into Rabbi trusts and all sorts of other complexities related to when something is earned.
    - curun1r 9y ago
      What does equivalent mean? Is BitCoin an equivalent? Stocks? Real Estate? Food? An Education? Do like-kind exchanges count as income? What about non-like-kind exchanges? (i.e. what if you sell real estate and buy stocks?) What about barter? If I trade my property or time for someone else's property or time without it ever being denominated in "money, cash or equivalent," is that taxable? From the recent controversy, does a graduate school education have a taxable value when it's offset by work the graduate student does for the University? What about inherited wealth? Does an inheritance count as income? From one perspective, at T-1, you didn't have it and at T you did. But from the family unit perspective, nothing changed. If someone's spouse dies, since their 50% ownership of communal property just increased to 100%, is that taxable? If not, how is that really different than leaving wealth to children or extended family? What about expatriates? If someone lives in France, earns money in France and pays French taxes, do they pay US taxes too? What if they work part time in France and part time in the US...does that earn them the lower marginal rate in both countries despite earning a much more comfortable living? These kinds of overly-simplistic tax plans always seem to breakdown in accounting for situations that happen in the real world. And once all the necessary questions have been asked and the answers incorporated into the tax code, it's not that much simpler than what we currently have. Yes...the tax code is an overly-complex maze of crap that tends to benefit those with the best team of CPAs. But we're better off fixing that without throwing out the entire thing and starting from scratch.
emodendroket 9y ago
Flat tax rates end up being pretty unfair when we're thinking about individuals because the less money you make the more it hurts you to give up 30% of your income. Maybe, arguably, flat tax would be OK for businesses, but it would be very regressive if applied to personal income tax.
- jfaucett 9y ago
  Yes, I'd like to see experimenting with only a sales tax as well, so no income tax at all. You could then test a combination of the sales tax only with a flat corporate tax. These are all things hypothesized about and there has been a little bit of testing, but we really need to get on the ball with actually applying the scientific method to policy if we want to build more rapid progress in improving our societies.
  - emodendroket 9y ago
    Sales tax is even more regressive because the poorer you are the more likely you are to spend essentially all of your income. Sales taxes would have to go way up for that to work. We don't need to run an "experiment" to know the likely effects of this policy.
    - jfaucett 9y ago
      > We don't need to run an "experiment" to know this would be bad. That's the kind of armchair philosophizing that leads to all kinds of problems, we need more scientific method and less philosophy if we want to get anywhere in a productive manner. There's plenty of counter points to be made about the sales tax. Here's two. 1. Its the most efficient tax. 2. It has the lowest economic damage. For point #2, the idea is that if you can increase the wealth everyone benefits, since economics is not a zero sum game. Also you can get around whatever you deem vital needs/rights i.e. food, shelter, in your society through subsidizing. Here's some other information from an economic perspective as well (https://www.taxanalysts.org/content/economic-analysis-can-states-swap-sales-taxes-income-bytaxes https://www.taxanalysts.org/content/economic-analysis-can-st...). Anyway, to say its even more regressive and we don't need to experiment is not progressive. We have ostensibly the same goals (more wealth for everyone, fewer people in poverty/elimination of poverty,etc) and the only way to get at social systems that optimally give us our goals is to apply a more rigorous scientific method and get out of the political philosophy camp - IMHO :) How would we ever make any progress in medicine if we never conducted any experiments and relied instead purely on observational studies? How much slower would our progress be? see: https://www.thoughtco.com/the-economics-of-sales-taxes-1147582 https://www.thoughtco.com/the-economics-of-sales-taxes-11475...
tunesmith 9y ago
Or you could pick a "flat logarithmic" tax since the value of money is roughly logarithmic as it increases. Replace tax brackets with a simpler continuous formula that is the same for everyone.

techsupporter 9y ago

> I've often wished a test city/state would be allowed to just do a flat tax I don't want a flat tax (as in "all income taxed at 15%," let's say) because a flat tax has an unfair impact on people at lower income levels. But, otherwise, I agree with your entire post. Here's my ideal law, with the caveat that I have zero legal training beyond six seasons of Law and Order and four seasons of Suits: (1) The following marginal rates are established: (Emphasis here: these numbers are made up for demonstration purposes only.) - $0 through $13,000: 0% - $13,001 through $25,000: 5% - $25,001 through $46,000: 8% - and so on (2) All money earned, by whatever means and from whatever source, by a person or legal entity resident in the United States shall be subject to the tax specified above. (3) The Internal Revenue Service shall, no later than the 15th of April of each calendar year (or the next day following the business day after the 15th of April if the 15th of April falls on a Saturday, Sunday, or federal holiday), prepare and mail to each holder of an EIN, each person for whom any tax or income declaration form (such as W2, 1098, 1099, and similar) has been submitted to the IRS, a statement of what the IRS believes the taxpayer owes or is due as a refund. (4) If the IRS has notified the taxpayer that the IRS believes the taxpayer is due a refund, the taxpayer may notify the IRS of a financial account located inside the United States into which such refund shall be deposited or may request a paper check for such refund or, under such rules as the Secretary shall provide, make a request for United States Savings Bonds. Any request must be made within five years of the date the taxpayer knew or reasonably should have known that the refund was due, otherwise the refund is the property of the Treasury absent a showing of exigence. (5) If the IRS has notified the taxpayer that the IRS believes the taxpayer owes additional taxes, the taxpayer shall make payment to the IRS no later than the 15th of July following receipt of said notice (or the next day following the business day after the 15th of July if the 15th of July falls on a Saturday, Sunday, or federal holiday) by providing the IRS with debit instructions for a financial account located inside the United States or via a paper check or other form of transfer of dollars. (6) In the case that the taxpayer disagrees with a notice provided by the IRS under paragraphs 5 or 6, the taxpayer shall, no later than the 15th of July following receipt of said notice (or the next day following the business day after the 15th of July if the 15th of July falls on a Saturday, Sunday, or federal holiday), file the tax forms designated by the IRS under such rules as the Secretary shall provide, to indicate what the taxpayer believes is the proper tax due or refund owed. If the taxpayer still owes additional tax, the tax payment shall be due at the time of filing. The IRS shall have 120 days to respond, otherwise the taxpayer's submission is deemed valid and binding upon the IRS. (7) There is no paragraph seven.

wbl 9y ago
Define earned.
- chii 9y ago
  Any money, cash, or equivalent, that you are in posession of at time T, that you did not have possession of at time T-1.
  - wbl 9y ago
    So the problem with this is if I spot you a buck at the subway because you are short, you have to remember and report this. That's what the gift exemption is for in current code. Then let's not get into Rabbi trusts and all sorts of other complexities related to when something is earned.
  - curun1r 9y ago
    What does equivalent mean? Is BitCoin an equivalent? Stocks? Real Estate? Food? An Education? Do like-kind exchanges count as income? What about non-like-kind exchanges? (i.e. what if you sell real estate and buy stocks?) What about barter? If I trade my property or time for someone else's property or time without it ever being denominated in "money, cash or equivalent," is that taxable? From the recent controversy, does a graduate school education have a taxable value when it's offset by work the graduate student does for the University? What about inherited wealth? Does an inheritance count as income? From one perspective, at T-1, you didn't have it and at T you did. But from the family unit perspective, nothing changed. If someone's spouse dies, since their 50% ownership of communal property just increased to 100%, is that taxable? If not, how is that really different than leaving wealth to children or extended family? What about expatriates? If someone lives in France, earns money in France and pays French taxes, do they pay US taxes too? What if they work part time in France and part time in the US...does that earn them the lower marginal rate in both countries despite earning a much more comfortable living? These kinds of overly-simplistic tax plans always seem to breakdown in accounting for situations that happen in the real world. And once all the necessary questions have been asked and the answers incorporated into the tax code, it's not that much simpler than what we currently have. Yes...the tax code is an overly-complex maze of crap that tends to benefit those with the best team of CPAs. But we're better off fixing that without throwing out the entire thing and starting from scratch.

emodendroket 9y ago

Flat tax rates end up being pretty unfair when we're thinking about individuals because the less money you make the more it hurts you to give up 30% of your income. Maybe, arguably, flat tax would be OK for businesses, but it would be very regressive if applied to personal income tax.

jfaucett 9y ago
Yes, I'd like to see experimenting with only a sales tax as well, so no income tax at all. You could then test a combination of the sales tax only with a flat corporate tax. These are all things hypothesized about and there has been a little bit of testing, but we really need to get on the ball with actually applying the scientific method to policy if we want to build more rapid progress in improving our societies.
- emodendroket 9y ago
  Sales tax is even more regressive because the poorer you are the more likely you are to spend essentially all of your income. Sales taxes would have to go way up for that to work. We don't need to run an "experiment" to know the likely effects of this policy.
  - jfaucett 9y ago
    > We don't need to run an "experiment" to know this would be bad. That's the kind of armchair philosophizing that leads to all kinds of problems, we need more scientific method and less philosophy if we want to get anywhere in a productive manner. There's plenty of counter points to be made about the sales tax. Here's two. 1. Its the most efficient tax. 2. It has the lowest economic damage. For point #2, the idea is that if you can increase the wealth everyone benefits, since economics is not a zero sum game. Also you can get around whatever you deem vital needs/rights i.e. food, shelter, in your society through subsidizing. Here's some other information from an economic perspective as well (https://www.taxanalysts.org/content/economic-analysis-can-states-swap-sales-taxes-income-bytaxes https://www.taxanalysts.org/content/economic-analysis-can-st...). Anyway, to say its even more regressive and we don't need to experiment is not progressive. We have ostensibly the same goals (more wealth for everyone, fewer people in poverty/elimination of poverty,etc) and the only way to get at social systems that optimally give us our goals is to apply a more rigorous scientific method and get out of the political philosophy camp - IMHO :) How would we ever make any progress in medicine if we never conducted any experiments and relied instead purely on observational studies? How much slower would our progress be? see: https://www.thoughtco.com/the-economics-of-sales-taxes-1147582 https://www.thoughtco.com/the-economics-of-sales-taxes-11475...

tunesmith 9y ago

Or you could pick a "flat logarithmic" tax since the value of money is roughly logarithmic as it increases. Replace tax brackets with a simpler continuous formula that is the same for everyone.