very astute. The original implementation of the income tax last century was billed as a "soak the rich" program. I would only favor the fair tax if they abolished 16th amendment.
This has been quite a respectable (and respectful) debate with really good points being made (I knew it was possible on ET.. ). I appreciate the contributions and am definitely more informed because of them. kt
I don't think taxation is the real issue. I think the problem is that the politicians in their zeal to do everything, don't have the intention of understanding that there is no money to spend so they won't spend it. There is always some scheme using forward budget planning to justify overspending. There is always some cause that deserves more capital expenditures even thought there is no real way to pay for it. If you set caps on spending, then you're considered unfair and non-caring of those in need. Did you ever notice that no budget is EVER enough? No program has a downward sliding expenditure plan. And no help program is ever put in place that helps someone by making sure that they don't need to use it forever. A politicians goal truly is to spend money! As long as they have the ability to claim to be "speaking for the disadvantaged," budgets are always going to be upward flexible. That means that even when they balance, they won't. And just when they get it right, out of the woodwork comes that catastrophe that we can have those who are doing better than others shoulder more of the responsibility for. Why? Just because they have more! And the circle starts again!
i'm not going to read 15 pages of comments to see if this point has already been made, so I'll make it anyway if it has Such a tax would convert current after tax savings (held in excess of an IRA) into pre-tax income. Money that has already been taxed heavily, and confiscated though inflation You cant encourage savings with a process that punishes those who already have
Oh yes, that's spot-on. In addition.... The country sends about $2.5T in federal income tax to Washington, but the Congress spends $3T. That "extra" money pump supports "inflationary growth", but it also helps support the notion of "things getting better" for the economy and tends to help keep incumbents in office. (Or better yet, why don't we just collect zero income tax. That way, the people could spend they $2.5T they now send to the Gummint, and the Gummint could just PRINT $3T and spend it. Boy, wouldn't THAT give a boost to the economy?) Pres Bush wants to make the "tax cuts permanent". I guess that means he also wants to make "deficit spending" permanent. At some point the world will puke on the $USD because of this practice and we will be just like any other 3rd-World Banana Republic with inflation run amok and the value of our currency destroyed. In other words, nearly everyone in the US will be bankrupted by a worthless currency. (My most optimistic hope is that is doesn't occur in my lifetime, as I have no sense the Gummint will change its ways until the curtain comes crashing down). 20 years ago, we had a "Balanced Budget Law" enacted... The 1987(?) Gramm-Rudman-Hollings bill.... When it came time to "honor" spending limitations, Congress just chucked it into the dumpster when they realized it would be no fun to live within its limitations on spending. Imagine.. they just totally disregarded a federal law!! Congress has racked up nearly $9T in deficits over the years... and that's just the "on budget" ones. Somebody is going to be left holding the bag on all of that. Either (1) future generations will have to pay off its interest and principle, (2) everyone to whom an obligation is owed will get STIFFED, or (3) the Gummint will run the printing presses and pay everyone off with Monopoly money.... but then EVERYONE will have been stiffed because you can't exchange worthless fiat currency for goods and services. Odds are it will be a combination of 2 & 3, but mostly #3, because that's what all bankrupt, 3rd-World Banana Republic economies eventually resort to. Federal politicians are a bigger threat to every American's way of life than all the Osamas and terrorists on the planet!!
In Canada we already have a consumption tax to some extent. We're charged 7% federal sales tax in addition to income tax. It doesn't really hurt the poor at all. It's not charged on food unless it's served in a restaurant. It isn't charged on rent either. That would cover the majority of spending for the poor. I think it's good since it discourages consumption and encourages investment and it's a lot easier to implement than income tax. Income tax only discourages people from working and building the economy. Hopefully if the US switches to a consumption tax we will follow suit by going to a consumption tax only and get rid of our income tax.
I agree, all due respect to the lives lost, Osama and his buddies only cost the US a few billion dollars by destroying a couple of 30 year old buildings. Bush and his cronies have wasted trillions or a thousand times that much with his response.
Excellent Commentary All The real issue at hand is what system needs to be implemented that will actually make a numerical positive difference... If a matrix is granted and employed but does not make a numerical difference the system will have changed for naught... The USA has high costs of production because of high standards of living....Since high costs are not likely to decline..then another approach must be made to take away from someone else...namely other countries... When the USA has a tax system that will attract the wealth of the world in its banks...and cause other significant businesses to locate here in droves....then this is the direction the USA must take.... This will start worldwide government to government competition and shrink the size of governments world wide... Since the US is consumption sensitive...then the best psychological move is a 10% tax.. 10% is a competitive worldwide number....the wealth of the world will move to and stay in the USA.... And of course the consumption tax is better for many reasons...freedom being the first one.... The flat tax has less freedom attached....
Well the segment is almost over but it will probably be replayed later.... David Cay Johnston (NY Times business reporter) is commenting in depth about the various loopholes and inadequate structures in the tax system on C-SPAN1 right now. Very interesting.
Well let's just face the fact that changing the current broken system just as in social security, some groups are going to get screwed in attempt to go back to a more equitable situation . However does that mean we must leave things the way they are?