Thread: Taxes?

I think that we should distinguish between types of income: active income from wages and passive income from investments. The income of people who work for wages is limited by the number of hours they can work, both physically and, in some cases by law, while the income that people can make from investments is unlimited. If you invest your money at 12%, it doubles in six years, and doubles again, in another six years, and so on. This means that people who have only wages that cover their living expenses will never get ahead, while those with capital to invest will get richer and richer, while doing nothing. I say, no taxes on wages and a flat percentage on investment income, plus a rather hefty tax on inheritances.

Originally Posted by jockeys

why would you want to? I think the point of the thread was that a progressive tax is "unbalanced" as sicboater put it.

Because I firmly believe that those who reap the most benefit from living in the US should be paying for the privilege. Perhaps the opinion stems from my grade school days, when we were taught about "regressive" taxes. I can understand why some people think of this as unfair. I don't.

Many of the sales tax and flat tax schemes all have rebates and exemptions for those not making much money, anyway.

Originally Posted by Wildtim

I like the idea of a federal sales tax, but the flat tax would be a very easy solution, and I like the idea of a bunch of tax lawyers and IRS jerk being unemployed too.

I can't speak to IRS employee's, but my tax lawyer saved me a bunch of money and is a nice guy. I wouldn't want to see him out of work just because of his profession. Of course, my wife is a corporate litigator and we get the tax lawyering done in trade...lol

Originally Posted by jockeys

why would you want to? I think the point of the thread was that a progressive tax is "unbalanced" as sicboater put it.

Quite right! I wouldn't mind hearing someone proffer a solution that involved a progressive tax that is fair. I just don't think it is possible...

A very interesting point of view. I don't know about taxing inheritances though. It is highly likely that money would have been taxed already at least one time; but if not, what if you use it to invest? Then it would be taxed again under your outline. I like your separation of passive and active income. The problem (edit: I see) is, there is some investing that requires more time and skill than others (i.e. you can't be passive about day trading) would you have all capital gains taxed the same?

Originally Posted by Chimensch

I think that we should distinguish between types of income: active income from wages and passive income from investments. The income of people who work for wages is limited by the number of hours they can work, both physically and, in some cases by law, while the income that people can make from investments is unlimited. If you invest your money at 12%, it doubles in six years, and doubles again, in another six years, and so on. This means that people who have only wages that cover their living expenses will never get ahead, while those with capital to invest will get richer and richer, while doing nothing. I say, no taxes on wages and a flat percentage on investment income, plus a rather hefty tax on inheritances.

Originally Posted by sicboater

A very interesting point of view. I don't know about taxing inheritances though. It is highly likely that money would have been taxed already at least one time; but if not, what if you use it to invest? Then it would be taxed again under your outline. I like your separation of passive and active income. The problem is there is some investing that requires more time and skill than others (i.e. you can't be passive about day trading) would you have all capital gains taxed the same?

Well, maybe you could have a calculation of the number of hours spent actively involved in managing the investments, which would be active income.

The reason for taxing inheritances is so that families wouldn't accumulate great wealth over the centuries.

As for money being taxed more than once, I think that it is reasonable to tax money each time it changes hands. Why should someone have a huge advantage over someone else just because they had a rich parent?

Originally Posted by Chimensch

Why should someone have a huge advantage over someone else just because they had a rich parent?

why shouldn't they?

Originally Posted by jockeys

why shouldn't they?

Because, if the government has to take money away from someone, it would be preferable to take it from someone who had absolutely nothing to do with earning it.

Originally Posted by Quick Orange

What scares me though is when they start taxing online transactions. That's going to be a crappy day for everyone.

My state already does, sort of. I'm supposed to declare at the end of the year any purchases I have made from out of state, This includes over the internet, while on travel, everything and then I'm supposed to pay a rate equal to the state sales tax on it. They call it the "Use Tax". I bet your state has one too. I don't think anyone pays it though, because it is totally on the honor system and would be huge bear for a prosecutor to prove you have violated, unless it is one big purchase that could be tracked.

Originally Posted by sicboater

Quite right! I wouldn't mind hearing someone proffer a solution that involved a progressive tax that is fair. I just don't think it is possible...

I believe that a progressive tax in inherently unfair, as it punishes those who do well, and those without children. (under our current rules)

I once asked a liberal friend of mine why he thought the rich should not only pay more in absolute terms, but in relative terms. He replied, "they can afford it."

Well, by his logic (and I use the term in the loosest possible sense) it should be LESS ILLEGAL to mug a rich person than a poor one, because the rich guy can afford to be mugged.

One poster mentioned that those who reap more benefits should pay for the privilege. I believe it is not a privilege at all, but something you work hard for (has been in my case) and EARN. I'm not saying that there aren't people out there that defy this rule... there are. I'm just saying it seems grossly unfair to punish those who work hard and do well simply for working hard and doing well.

I am also going to go ahead and state my sincere belief that children and dependents should NOT reduce your taxable income. As discussed at great length in another thread, I am of the opinion that children are a luxury. When I lived in East Texas, I had this neighbor that was a crackwhore. I'm not being cruel, she was a crack addict and a prostitute, literally. She had 5 kids. And no real job. Every year at tax time, I had to pay a large percentage of my income because I was
a. single
b. childless
c. financially successful (at least, moreso than average, in that county)

She, on the other hand, got enough welfare to feed her children and buy her smokes and beer, plus the county helped with her rent. As if this was not frustrating enough, one day I met her our mailboxes, and she cheerfully told me she was pregnant. Unsure why she was cheerful, I politely congratulated her anyway. She then tells me, "Yep, dat's real good news fer me, gummint gon gimme two hunnerd extra ey month now." (Cajun accents are hard to represent typographically, use your imagination) Flummoxed and enraged by this, I ask her if she knows where the money comes from. "Gummint. De gimme uh check" I responded, "Yes, but where exactly does the government get the money?" She thought for a minute, and said, "well, I figger de gummint get they money from taxin' people." I told her this was correct, and that I was one of the people who paid these taxes. I even went so far as to say that I found it unfair. She shot back, "unfair! you tell me bout unfair, you ain't got no five kids to feed!" I told her that was true, I had decided not to have children. She elaborated, "you got dat new car, dem nice clothes, you got all kinna stuff. you kin affor' it." I then asked, quite simply, why I should have to pay for her mistakes. There was a tense, silent moment, that ended abruptly when she threw her beer bottle at me (drinking while pregnant, really nice) and stomped back into her house. That conversation has stayed with me for years, and most likely will remain in my mind the rest of my life. I had never seen such an obtuse sense of entitelment. I instantly hated the system that had allowed this situation to occur. I didn't know where she had gone wrong... we were the same age, the same color, had both gone to public school, etc. I had decided to work my butt off, take out student loans and make something of myself. She had decided it wasn't worth the trouble, evidently. I despised her laziness, and I despised even more the beaurocrats that decided she was right: I COULD afford to have my money taken. So they were going to. And they were going to give it to her, and everyone like her. How could I NOT hate the system?

If you ever wondered why I'm a rabid libertarian, and have such a violent, burning hatred for socialism, now you know. It's fundamentally wrong. If people can abuse a system, they will, that is one thing I have learned in life. If the system has to go wrong in one direction, I'd rather it let people get away with success than get away with subsidized failure.

Originally Posted by sicboater

What is the best option and why?

The current system is unbalanced, so how would it better be implicated?
It seems like no tax at all would be unrealistic, so if not the current income tax, which would you prefer and why?

-Flat Tax- everyone pays the same percentage of their income.
-Federal sales tax (what is sometimes called the Fair Tax)
-Other?

I am really on the fence about this one as all the options have good pluses and minuses.

No amount of taxation will support the current US federal government budget, so for me the question is not one of solving a problem, but merely one of how much the people will put up with.

Tax me zero, tax me 100%, the same overspending will go on as it has been for decades