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This doesn’t seem like a question inviting genuine discussion. Tax laws don’t take into account how hard someone works, where they went to school, or a taxpayer

by soared 6y ago

This doesn’t seem like a question inviting genuine discussion. Tax laws don’t take into account how hard someone works, where they went to school, or a taxpayers character. Unless your argument is that taxes should be based on factors outside of income/etc, it seems like you might be trying to bait people with some version of “Look how hard Steve works - you can’t possibly support raising taxes on him.”

umvi 6y ago
I think it's a valid question though. In my mind, the closest thing to a fair tax law is one that applies evenly to everyone, like UBI. Consider a flat 10% income tax applied evenly regardless of socio-economic status. If you made 1M, then you pay $100K. If you made $10K, you pay $1K. If you made $0 or less, you pay 0. That's it. In some senses that is very fair - everyone pays 10% of their income, no exceptions. It's this ultra-convoluted labyrinthine system of laws/exceptions that has allowed the wealthy people and companies to find so many loopholes. In my mind, just like simple software code is harder to exploit than spaghetti code, so simple laws are harder to exploit than spaghetti laws.
- dlp211 6y ago
  It only seems fair if you don't understand the marginal utility of dollars (some dollars are in fact far more valuable than others) and marginal propensity to spend.
- metiscus 6y ago
  Flat taxes are often criticized for failing to be progressive and that argument has some merit. As an example, 1 dollar in tax means more to someone making 10k than it does to someone making 100k.
  - umvi 6y ago
    That's true, one drawback is that it isn't progressive, but I would argue that the massive simplification of the tax law would allow the government to bring in much more money than it currently does, which it can then divert to social services for those who most need it. As an example of a working implementation of this system, The Church of Jesus Christ of Latter Day Saints effectively taxes all their members at a flat 10% of their annual income, and I thought I read somewhere the church is both debt-free and has a crazy amount of money in the bank ($100B+). Even though the poorest members still pay 10% and it impacts them more than Mitt Romney-type members, the poor members can then go and receive assistance from the church (rent money, food, etc.) if they need it. Of course, with a church people voluntarily give their money whereas with the government people do everything they can to keep their money, so perhaps it wouldn't be as effective as I think it would be. However, what is very clear to me is that the current tax law needs to be much, much simpler.
    - t-writescode 6y ago
      Are you familiar with the "Rules for Rulers" video by CGP Grey on YouTube? [1] In this video, it is argued that complicated tax law is the method by which democracies reward their particular "keys to the kingdom" - so the complexity is a feature, not a bug, and will be very difficult to undo; so "would all the government to bring in much more money than it currently does" may not be the goal. [1] https://www.youtube.com/watch?v=rStL7niR7gs https://www.youtube.com/watch?v=rStL7niR7gs
profile53 6y ago
I think that’s exactly what the parent commenter is saying, but I don’t think it is wrong to discuss per se. Consider 3 people: - Morgan. Worked 80 hour weeks for 40 years developing treatments for childhood cancer. Runs a charity supporting orphanages in their free time. Net worth: 8 million, income: 1 million - Sam. Started the largest pornography empire in the world and works as the CEO. Accused of child sex trafficking on multiple occasions, but no proof. Net worth: 8 million, income: 1 million - Jordan. Their great grandparents started a mining company and they inherited a trust fund. Never worked in their life. Net worth: 8 million, income: 1 million I’m willing to bet people would have value judgements on how much each person should pay in taxes. People do tie moral, emotional, or ethical considerations to what they consider fair. I personally believe these three people should be taxed almost the same, as the value judgements should have an impact elsewhere. I think estate/wealth taxes would be the only case where there should be a divergence, as they would only apply to the third person. What do you think?
- dlp211 6y ago
  We are a nation of laws, not men. Everyone should be treated the same under the law. Every person in your example should pay the same amount of tax.
  - profile53 6y ago
    I mostly agree on that. How do you feel about current estate taxes, which, in effect, mean the third person has paid more tax than the first two?
    - dlp211 6y ago
      Estate taxes are on the estate, not a person. Also, there is a built in assumption that taxes have been paid. This is almost always not true, see step-up cost basis. Estate taxes serve a purpose, though I would argue that a lack of will has caused them to not serve that intended purpose. That doesn't mean that estate taxes aren't the right tool, just that it has been sabotaged. That also doesn't mean that they are the correct or best tool, but until we can see what the full force of estate taxes are, it is impossible to say. The type of tax that you just described is called an inheritance tax, and I am perfectly ok with them as well. Income is income, it doesn't matter whether it comes from your employer, a rental company, self-employment, or otherwise. Something I would be against is both an Estate and Inheritance tax being levied by the same entity. That doesn't serve any real purpose. I'd actually prefer an inheritance tax combined with a more progressive tax system over an estate tax.

by soared 6y ago

umvi 6y ago

I think it's a valid question though. In my mind, the closest thing to a fair tax law is one that applies evenly to everyone, like UBI. Consider a flat 10% income tax applied evenly regardless of socio-economic status. If you made 1M, then you pay $100K. If you made $10K, you pay $1K. If you made $0 or less, you pay 0. That's it. In some senses that is very fair - everyone pays 10% of their income, no exceptions. It's this ultra-convoluted labyrinthine system of laws/exceptions that has allowed the wealthy people and companies to find so many loopholes. In my mind, just like simple software code is harder to exploit than spaghetti code, so simple laws are harder to exploit than spaghetti laws.

dlp211 6y ago
It only seems fair if you don't understand the marginal utility of dollars (some dollars are in fact far more valuable than others) and marginal propensity to spend.
metiscus 6y ago
Flat taxes are often criticized for failing to be progressive and that argument has some merit. As an example, 1 dollar in tax means more to someone making 10k than it does to someone making 100k.
- umvi 6y ago
  That's true, one drawback is that it isn't progressive, but I would argue that the massive simplification of the tax law would allow the government to bring in much more money than it currently does, which it can then divert to social services for those who most need it. As an example of a working implementation of this system, The Church of Jesus Christ of Latter Day Saints effectively taxes all their members at a flat 10% of their annual income, and I thought I read somewhere the church is both debt-free and has a crazy amount of money in the bank ($100B+). Even though the poorest members still pay 10% and it impacts them more than Mitt Romney-type members, the poor members can then go and receive assistance from the church (rent money, food, etc.) if they need it. Of course, with a church people voluntarily give their money whereas with the government people do everything they can to keep their money, so perhaps it wouldn't be as effective as I think it would be. However, what is very clear to me is that the current tax law needs to be much, much simpler.
  - t-writescode 6y ago
    Are you familiar with the "Rules for Rulers" video by CGP Grey on YouTube? [1] In this video, it is argued that complicated tax law is the method by which democracies reward their particular "keys to the kingdom" - so the complexity is a feature, not a bug, and will be very difficult to undo; so "would all the government to bring in much more money than it currently does" may not be the goal. [1] https://www.youtube.com/watch?v=rStL7niR7gs https://www.youtube.com/watch?v=rStL7niR7gs

profile53 6y ago

I think that’s exactly what the parent commenter is saying, but I don’t think it is wrong to discuss per se. Consider 3 people: - Morgan. Worked 80 hour weeks for 40 years developing treatments for childhood cancer. Runs a charity supporting orphanages in their free time. Net worth: 8 million, income: 1 million - Sam. Started the largest pornography empire in the world and works as the CEO. Accused of child sex trafficking on multiple occasions, but no proof. Net worth: 8 million, income: 1 million - Jordan. Their great grandparents started a mining company and they inherited a trust fund. Never worked in their life. Net worth: 8 million, income: 1 million I’m willing to bet people would have value judgements on how much each person should pay in taxes. People do tie moral, emotional, or ethical considerations to what they consider fair. I personally believe these three people should be taxed almost the same, as the value judgements should have an impact elsewhere. I think estate/wealth taxes would be the only case where there should be a divergence, as they would only apply to the third person. What do you think?

dlp211 6y ago
We are a nation of laws, not men. Everyone should be treated the same under the law. Every person in your example should pay the same amount of tax.
- profile53 6y ago
  I mostly agree on that. How do you feel about current estate taxes, which, in effect, mean the third person has paid more tax than the first two?
  - dlp211 6y ago
    Estate taxes are on the estate, not a person. Also, there is a built in assumption that taxes have been paid. This is almost always not true, see step-up cost basis. Estate taxes serve a purpose, though I would argue that a lack of will has caused them to not serve that intended purpose. That doesn't mean that estate taxes aren't the right tool, just that it has been sabotaged. That also doesn't mean that they are the correct or best tool, but until we can see what the full force of estate taxes are, it is impossible to say. The type of tax that you just described is called an inheritance tax, and I am perfectly ok with them as well. Income is income, it doesn't matter whether it comes from your employer, a rental company, self-employment, or otherwise. Something I would be against is both an Estate and Inheritance tax being levied by the same entity. That doesn't serve any real purpose. I'd actually prefer an inheritance tax combined with a more progressive tax system over an estate tax.