Fair Taxation

[Goingonit]

DuncanK, we went over this in the wealth tax debate. The money goes back into the economy, whether by investment or consumption, no matter whose it is.

[KrazyHorse]

Originally posted by David Floyd


If one person earns 1 million dollars, and pays a 23% tax, that's $230,000. If another person earns $10,000, 23% is $2300. Explain to me again how the rich person is paying less than the poor person?

Now if you want to argue that taxes are primarily designed for wealth redistribution and punishing wealth acquisition, fine, make that argument and we can talk about that. But if you don't agree with that statement, then, again, what do you care how much money people have left after paying an equal percentage?

Because the person who earns 1X10^6 $ in a year doesn't spend that 1X10^6 $; he spends a much lower percentage of his earnings than somebody who makes minimum wage.

Jesus, DF. Arguing economics is sort of hard when you fail to understand Grade 6 math

[loinburger]

Originally posted by David Floyd
If one person earns 1 million dollars, and pays a 23% tax, that's $230,000. If another person earns $10,000, 23% is $2300. Explain to me again how the rich person is paying less than the poor person?

You're assuming that the rich person spends all 1 million dollars on consumer goods, and invests/saves none of it. What everybody has been saying on this thread since the start is that this is not the case -- the poor spend more of their income on consumer goods than the rich, which is why sales taxes are regressive.

[Goingonit]

Originally posted by David Floyd


If one person earns 1 million dollars, and pays a 23% tax, that's $230,000. If another person earns $10,000, 23% is $2300. Explain to me again how the rich person is paying less than the poor person?

Because they don't spend all of their million. Assume that the minimum cost of living is $8,000. The rich guy can save up to $992,000 - money that does not get taxed under a consumption tax. His minimum tax is $1,840, or 0.184% of income.

The poor guy still needs to live - he can only save $2,000, and ends up paying tax on the rest of the $8,000 whether he wants to or not. His minimum tax is ALSO $1,840, or 18.4% of income.
[/QUOTE]

So it's not an equal percentage.

EDIT: Wow, 3 of the same arguments in a row.

[KrazyHorse]

Maybe he'd understand why a wealth tax is progressive taxation: because the richer portions of society have more stored assets as a percentage of annual income than the poorer sections do

[MRT144]

david, subtract the percentage from the original sum. can you live on 7700 dollars? how about 770,000? that 2300 means a lot more to a poor person than the 230,000 does to a rich person. when it comes down to it poor people need every penny they earn and this tax does not benefit them or even most of the population.

[David Floyd]

loinburger,

Lodge your complaints with the people who run this site, along with this one, this one, this one, and the other six billion people on the internet who use the correct definition of the term.

I notice you are using tax-related websites. Naturally they are going to be using the incorrect definition of "regressive" - remember what I said about negative connotations?

A consumption tax that would take a higher percentage of the incomes of those with low incomes than those with high incomes. Hence, a regressive tax.

That's nice, but the consumption tax is NOT an income tax. It only taxes what you choose to buy, and in fact, it appears that the plan mentioned on this thread includes rebates for necessities - that way, you won't be paying tax on what you need to survive. Now, if you want to buy a car, you'll be paying the same percentage of tax as a rich person, but it's your choice to buy the car. The fact that you are poor shouldn't be in reason to give you an unfair advantage over the rich person.

Frogger,

The classic example of progressive taxation is the income tax in force in most Western countries. The classic example of regressive taxation is the sales tax.

Whoa now. Your definition above is implying that there is no such thing as a regressive income tax. That is clearly false. You are using poor examples.

A progressive tax is a tax in which tax brackets exist, where those who make less money pay a lower percentage.

A regressive tax is a tax in which the opposite is true - the rich pay a lower percentage.

In a proportional system, the percentages are the same.

Since, in a consumption tax, the rich do not pay a higher percentage tax than the poor do, the tax must be proportional, and neither progressive nor regressive.

[DuncanK]

Originally posted by Goingonit
So, low-income groups pay essentially what they would under a flat-tax system (since income equals consumer expenditure) but high-income groups pay less (since for them income equals savings plus consumer expenditure). So it is acutally a regressive tax structure.

Well said Goingonit, may I add that high-income groups would have more ability to lower their tax bill and the low-income groups would have less ability since their income level is closer to minimum sustainable income. That's not fair.

[Urban Ranger]

Originally posted by DanS
It's not just a question of distribution of the burden. Some burdens allow more economic growth than others, even though they might be the same value. Extra economic growth increases the tax base for the future and makes us all better off, which is highly desirable.

This depends on which school you subscribe to, then. If you are a demand-side economist, you will disparge this tax as a hinderence to economic growth.

So this makes you a supply-sider.

[MRT144]

and we all know how well supply side works

[David Floyd]

Frogger,

Because the person who earns 1X10^6 $ in a year doesn't spend that 1X10^6 $; he spends a much lower percentage of his earnings than somebody who makes minimum wage.

No ****, yet the consumption tax has nothing to do with an income tax.

loinburger,

What everybody has been saying on this thread since the start is that this is not the case -- the poor spend more of their income on consumer goods than the rich, which is why sales taxes are regressive.

The tax isn't regressive, because the percentage is the same. And again, I believe the plan listed on this thread includes a rebate system for necessities anyway.

Going,

Because they don't spend all of their million. Assume that the minimum cost of living is $8,000. The rich guy can save up to $992,000 - money that does not get taxed under a consumption tax. His minimum tax is $1,840, or 0.184% of income.

The poor guy still needs to live - he can only save $2,000, and ends up paying tax on the rest of the $8,000 whether he wants to or not. His minimum tax is ALSO $1,840, or 18.4% of income.

Yes it is. The consumption tax is not a tax on income. Rather, it's a tax on what one chooses to buy with their income.

MRT,

david, subtract the percentage from the original sum. can you live on 7700 dollars? how about 770,000? that 2300 means a lot more to a poor person than the 230,000 does to a rich person. when it comes down to it poor people need every penny they earn and this tax does not benefit them or even most of the population.

Why should I care who benefits from basic fairness - or at least, a step in the direction of fairness?

[Urban Ranger]

Originally posted by David Floyd
The point of taxes is not to punish wealth acquisition, but to fund government, correct? Therefore, what do you care who ends up with more disposable income?

It's not that simple, David. If it is merely about funding the government, why would you decry the so called "double taxation?" Clearly, you have a double standard on these things.

[MRT144]

libertarians are so aggrivating with their logic shields

[KrazyHorse]

David, you're deliberately being dense.

[DuncanK]

Originally posted by David Floyd


If one person earns 1 million dollars, and pays a 23% tax, that's $230,000. If another person earns $10,000, 23% is $2300. Explain to me again how the rich person is paying less than the poor person?

This is neither progressive or regressive. It's just flat. A consumption tax would tax a higher percentage of lower income families income. And it is regressive.