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  1. #1 Taxes and the Relationship with Government 
    LTC Member Odysseus's Avatar
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    America is at a tipping point, and may have already crossed it, but there is a real problem when almost half of the country is getting revenue from the other half, and paying no taxes. The problem is that taxes are not, in and of themselves, a bad thing, as long as their purpose is properly understood.

    Governments must have revenue in order to operate. A just government responds to the will of the people, but it cannot be compelled to do so unless there are means for the people to express their displeasure with that government, and those means have teeth. The one thing that government responds to is the threat of losing power, so the one thing that threatens the interests of the governing class is if the electorate is motivated to vote them out of office. An electorate that is fully engaged with government, that pays taxes and expects something for those taxes, is one that will vote intelligently, or at least vote in its own interests. A government whose revenues do not come from its constituents can act with impunity, and considers its citizens either a nuisance or a threat to its power. This is the relationship between the governments of the Middle East and their peoples. They derive their income from oil, and have no need to permit a functional economy, which would create pockets of wealth and power that would rival theirs. If the state oil revenues are sufficient, the people get a gilded chain, but it's still a chain.

    Socialists envy the monarchs of the Middle East. They can rule by fiat, and as long as the people are fed and entertained (or exported to engage in jihad), the status quo favors them. The socialist's goal is to put as many people into this kind of modern welfare serfdom as possible, so that they will provide them with the power to compel the productive class to keep the money flowing. Eventually, of course, they run out of other people's money, as Margaret Thatcher famously observed, but until then, they get a lovely ride and the people that they keep in thrall see themselves as recipients of the governing class' largess, rather than as free citizens and equals.

    Obama and the Democrats have complained about the rich paying lower rates for their income. Okay, let's call their bluff. There are two ways to do this. The first is to take the cost of government, divide it equally among every adult, and send a tax bill for that amount. The second is a flat rate on all income above a certain amount, with no loopholes. The first has the advantage of equally distributing the cost of government on everyone, and forcing people to really look at what they are paying for. The second is more egalitarian, and would still ensure that everyone pays their fair share. Neither of these is likely to pass, but the next best thing is an expansion of the tax base, a lowering of the overall rate and an elimination of loopholes. This is what house Republicans should be fighting for.
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  2. #2  
    PORCUS MAXIMUS Rockntractor's Avatar
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    You are right Odey but we have to go through Boehner and Obama, oh and pinkey Reed too.
    How is obama working out for you?
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  3. #3  
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    Personally, I would prefer no income tax on wages, a small capital gains tax that only funds whatever regulation is needed to keep wallstreet/blanks from defauding people, and make the bulk of taxes with a national consumption/sales tax. That seems a lot more fair. Shit should be funded from related taxes. Roads are built with car/gas tax. Fund healthcare with cigarette/alcohol/fast food tax. And so forth. Energy tax/tariffs can fund the military. You want to fund planned parent hood? tax abortions and birth control.

    Might get a lot of disagreement, but no funds should be fungible imo.

    No income tax = more people buy more shit = better standard of living and more jobs. If you are Jay Leno with your thousands of cars, well thank you sir for personally funding every highway in California.
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  4. #4  
    Senior Member aerojarod's Avatar
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    Quote Originally Posted by Odysseus View Post
    Obama and the Democrats have complained about the rich paying lower rates for their income. Okay, let's call their bluff. There are two ways to do this. The first is to take the cost of government, divide it equally among every adult, and send a tax bill for that amount. The second is a flat rate on all income above a certain amount, with no loopholes. The first has the advantage of equally distributing the cost of government on everyone, and forcing people to really look at what they are paying for. The second is more egalitarian, and would still ensure that everyone pays their fair share. Neither of these is likely to pass, but the next best thing is an expansion of the tax base, a lowering of the overall rate and an elimination of loopholes. This is what house Republicans should be fighting for.
    I agree with your statement above. I think we can get bipartisan support to close corporate loopholes especially. Lower the business tax, close offshore loopholes... repatriot some profits and get some tax revenue.

    I also found this article from 1989 that proposes a two-tiered capital gains rate:

    Harvey Goldstein, a Los Angeles CPA, thinks he has come up with a proposal that might satisfy both the President and the Congress.

    He begins by accepting a part of both arguments. Because investment in business is both good for America and inherently risky, it makes sense to offer tax-based incentives for such investments. But since trading in established stocks is neither helpful to business growth nor particularly risky, there is no reason why profits from such trading should be favored in the tax law.

    ``If we are interested in making capital available to American business, or for the development of low- and middle-income housing,`` he says, ``why not give a preferential tax treatment to the first purchaser of these assets, where the funds invested go directly to the issuing or developing entity?``

    Goldstein`s point is that it is the original investment in an enterprise that sparks the growth of new businesses, new homes, new jobs, and new revenues, and that, therefore, ought to be encouraged by tax law. Since subsequent sales of the same asset do nothing for the enterprise, there is no reason to treat profits from such resales differently from any other income.
    Just offhand, 15% and 30% sound reasonable, and should certainly get bipartisan support.

    It can be crafted so small businesses, start-up investors, and job creators wouldn't be hurt. And so that the 1-percenter types, hedge fund managers, etc. would be paying "their fair share". They really don't need anyone to go to bat for them.
    "Our Constitution was made only for a moral and religious people.
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  5. #5  
    Senior Member Zeus's Avatar
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    Theory Basics

    The basic idea behind the relationship between tax rates and tax revenues is that changes in tax rates have two effects on revenues: the arithmetic effect and the economic effect. The arithmetic effect is simply that if tax rates are lowered, tax revenues (per dollar of tax base) will be lowered by the amount of the decrease in the rate. The reverse is true for an increase in tax rates. The economic effect, however, recognizes the positive impact that lower tax rates have on work, output, and employment--and thereby the tax base--by providing incentives to increase these activities. Raising tax rates has the opposite economic effect by penalizing participation in the taxed activities. The arithmetic effect always works in the opposite direction from the economic effect. Therefore, when the economic and the arithmetic effects of tax-rate changes are combined, the consequences of the change in tax rates on total tax revenues are no longer quite so obvious.

    Figure 1 is a graphic illustration of the concept of the Laffer Curve--not the exact levels of taxation corresponding to specific levels of revenues. At a tax rate of 0 percent, the government would collect no tax revenues, no matter how large the tax base. Likewise, at a tax rate of 100 percent, the government would also collect no tax revenues because no one would willingly work for an after-tax wage of zero (i.e., there would be no tax base). Between these two extremes there are two tax rates that will collect the same amount of revenue: a high tax rate on a small tax base and a low tax rate on a large tax base.




    The Laffer Curve itself does not say whether a tax cut will raise or lower revenues. Revenue responses to a tax rate change will depend upon the tax system in place, the time period being considered, the ease of movement into underground activities, the level of tax rates already in place, the prevalence of legal and accounting-driven tax loopholes, and the proclivities of the productive factors. If the existing tax rate is too high--in the "prohibitive range" shown above--then a tax-rate cut would result in increased tax revenues. The economic effect of the tax cut would outweigh the arithmetic effect of the tax cut.

    Moving from total tax revenues to budgets, there is one expenditure effect in addition to the two effects that tax-rate changes have on revenues. Because tax cuts create an incentive to increase output, employment, and production, they also help balance the budget by reducing means-tested government expenditures. A faster-growing economy means lower unemployment and higher incomes, resulting in reduced unemployment benefits and other social welfare programs.

    Over the past 100 years, there have been three major periods of tax-rate cuts in the U.S.: the Harding-Coolidge cuts of the mid-1920s; the Kennedy cuts of the mid-1960s; and the Reagan cuts of the early 1980s. Each of these periods of tax cuts was remarkably successful as measured by virtually any public policy metric.

    Prior to discussing and measuring these three major periods of U.S. tax cuts, three critical points should be made regarding the size, timing, and location of tax cuts.
    The 21st century. The age of Smart phones and Stupid people.

    It is said that branches draw their life from the vine. Each is separate yet all are one as they share one life giving stem . The Bible tells us we are called to a similar union in life, our lives with the life of God. We are incorporated into him; made sharers in his life. Apart from this union we can do nothing.
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