Tax Reform Thread

[Kidlicious]

Why am I wrong?

Isn't a tax progressive when rich people pay more than poor people?

No. You don't even know the definition of the most common terms.

[Ben Kenobi]

I see nothing that says it is limited only to percentages.

[Kidlicious]

You don't see a lot of things.

[Ben Kenobi]

Commies love twisting words. The flat tax is progressive and fair.

[rah]

http://www.investopedia.com/terms/p/progressivetax.asp

What Does Progressive Tax Mean?
A tax that takes a larger percentage from the income of high-income people than it does from low-income people.

[DanS]

I think reducing corporate taxes would be of great benefit to the US. We have among the highest corporate tax rates -- or perhaps the highest -- in the world, which pushes economic activity overseas.

Corporate income taxes aren't very stable, so the utility of the tax within a cyclical economy is suspect.

These days, the competitive stature of the United States isn't often challenged by low labor rates. Rather, it's the corporate investment incentives in other countries that makes companies move their operations overseas. If you care about manufacturing in the United States, you should be for a reduction of corporate taxes.

[Ben Kenobi]

So what's the definition of a regressive tax, Kid?

Is the flat tax regressive?

[rah]

What Does Regressive Tax Mean?
A tax that takes a larger percentage from low-income people than from high-income people. A regressive tax is generally a tax that is applied uniformly. This means that it hits lower-income individuals harder.
Investopedia explains Regressive Tax
Some examples include gas tax and cigarette tax. For example, if a person has $10 of income and must pay $1 of tax on a package of cigarettes, this represents 10% of the person's income. However, if the person has $20 of income, this $1 tax only represents 5% of that person's income.

Sales taxes that apply to essentials are generally considered to be regressive as well because expenses for food, clothing and shelter tend to make up a higher percentage of a lower income consumer's overall budget. In this case, even though the tax may be uniform (such as 7% sales tax), lower income consumers are more affected by it because they are less able to afford it.

[notyoueither]

A modest national sales tax wouldn't be a bad idea

It would be a disaster for the USA. One of the few business advantages is that you don't have one. It's a huge job killer.

The flat tax is a much better idea. Rather then having a sales tax, just make it so that everyone pays the same amount as a percentage of their income. It's still progressive, because people who make more pay more.

I'm pretty sure you don't have this right when the topic is a VAT.

[Drake Tungsten]

Consider taxes national savings.

Why would I do something stupid like that? Given that the vast majority of federal spending goes to the military and transfer payments to seniors, only a **** would see increasing tax revenues flowing to the federal government as an efficient way to boost national savings (and therefore investment).

Good ideas.

Kiddy's agreeing with you now, Dan. Don't you think it's time to reevaluate your position?

[MRT144]

Ben, who has higher unemployment, Canada or US right now?

[Hauldren Collider]

Corporate income taxes are a stealth tax perpetuated by the populist hatred of the evil conglomerates that provide employment and production for almost everyone. Whenever someone calls corporations evil it makes my brain hurt. It's a plainly ridiculous sentiment.

[DanS]

Kiddy's agreeing with you now, Dan. Don't you think it's time to reevaluate your position?

I'm happy to reevaluate my position, but this has no reference to Kid.

[Drake Tungsten]

Ross Douthat has a post over at the NYT today that provides a quick overview of the recent arguments about the VAT, plus his own take on its political feasibility...

Will We Get a V.A.T.?

[Drake Tungsten]

Nearly half of US households escape fed income tax

WASHINGTON (AP) -- Tax Day is a dreaded deadline for millions, but for nearly half of U.S. households it's simply somebody else's problem.

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization. ...

In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by the consulting firm Deloitte Tax.

Tax cuts enacted in the past decade have been generous to wealthy taxpayers, too, making them a target for President Barack Obama and Democrats in Congress. Less noticed were tax cuts for low- and middle-income families, which were expanded when Obama signed the massive economic recovery package last year.

The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners -- households making an average of $366,400 in 2006 -- paid about 73 percent of the income taxes collected by the federal government.

The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

http://finance.yahoo.com/news/Nearly-half-of-US-households-apf-1105567323.html

It's kind of crazy how narrow the U.S. income tax base has become.