The Growing Exploitation of Tax System by Uber-Wealthy

[ctm]

1 hour ago, Legaltitan said:

I realize all of that.  What I am saying is, I am willing to accept the risk that this new simplified tax code is a giveaway to the wealthy if it means blowing the whole thing up and starting over.  Even if it becomes regressive, etc., at leas we can start anew and worry about raising revenue later.  That is not an ideal way to run a railroad but I am saying the tax code presently is so bad in its complexity that almost anything that is simple would be better, and I am at least willing to consider virtually anything that cuts through the noise and starts anew.

So, even in the worst case scenario, at least the army of super nerds that only the super rich can afford will be gone, and we can adjust rates and find ways to increase revenues later if needed. 

A regressive tax code is bad for the economy as a whole.  I'd rather pay my accountant than see the economy decline and my stocks tank.

[Legaltitan]

Just now, ctm said:

A regressive tax code

Did you read the article?

It already is regressive, in practice.  And it is regressive in the worst possible way, due to the ability of rich people to use economically inefficient means to hide their wealth and avoid taxes.

 

[ctm]

2 minutes ago, Legaltitan said:

Did you read the article?

It already is regressive, in practice.  And it is regressive in the worst possible way, due to the ability of rich people to use economically inefficient means to hide their wealth and avoid taxes.

 

Yes I read it.  Of course it's regressive, but it could get a lot worse. A 19% value added tax like Cruz proposes would crush the middle class, especially seniors.

[Starkiller]

If it were up to me I'd just set up a system with a VAT, gas tax, and payroll tax along with an income tax that has a much higher income floor and a high flat rate that taxes investment income the same as regular income and no (or minimal) exemptions.

The normal citizen would pay little or nothing in income taxes (though they would still need to file a basic income statement), they would be paying on everyday expenses. And the wealthy would be paying the progressive taxes through their income taxes.

And there is NO CHANCE that Republicans would allow that...

[Cyrus]

Gas taxes already exist (42.35 cents per gallon in CA, to be 54.35 cents soon). Consumption taxes already exist (between 7.5-10% in CA). Payroll taxes already exist. (Social Security 6.2% for the employer, 6.2% for the employee in addition to federal income tax). California also has a state income tax (1-12.3% progressive tax with 6% for all income over 29K, 9% over 51K) in addition to mandatory state disability insurance. (CA SDI). All that on top of property taxes as well (bond measures too).

The addition of more payroll and gas taxes with a VAT would hurt for those living in states like California. I'm all for increasing taxes where necessary, but considering the layers of the US government it's not quite as simple as adding new tax systems. Particularly for a VAT would be at least another 5-10% (if not more). 

[Starkiller]

7 minutes ago, Cyrus said:

Gas taxes already exist, just not on a federal level. Consumption taxes already exist, just not on a federal level. Payroll taxes already exist. (they're just not earmarked for the general fund). The addition of more payroll and gas taxes with a VAT would hurt for those living in states like California. I'm all for increasing taxes where necessary, but considering the layers of the US government it's not quite as simple as adding new tax systems.

Gas taxes do exist on the federal level. We all pay both state and federal gas taxes. But I'm not talking about adding them, just keeping them.

And I'm not saying we need higher payroll taxes. Or a high VAT. It can be a low one. But effectively it would be offsetting the low income tax rate for lower earners that allows for a flat tax income tax rate paid by the wealthy.

They could use an annual tax rebate or negative income tax to offset the VAT for low income Americans as well.

[Cyrus]

My mistake on the federal tax (I revised my original post before your reply). Also an annual reimbursable tax would hurt the poor more than an income tax seeing as withholdings can be adjusted on a per paycheck basis. Having a low VAT (<5%) doesn't make sense due to the cost of compliance. I don't believe that a "simple" tax system is better, but I do think that a more "elegant" one would be better. Adding new layers, like a VAT, while keeping other things the same (even if shifting the numbers) doesn't seem like a good solution.

[Starkiller]

The advantage of a VAT is that you basically have 2 simpler flat tax systems instead of one extrodinarily complex income tax like we have today. But certainly there are other downsides. I just like the simplicity.

They could also just call it a federal sales tax and skip the VAT differences, again for simplicity. States already generally collect a sales tax. So they could simply report the federal portion to the IRS.

[TitanDuckFan]

2 hours ago, Legaltitan said:

I realize all of that.  What I am saying is, I am willing to accept the risk that this new simplified tax code is a giveaway to the wealthy if it means blowing the whole thing up and starting over.  Even if it becomes regressive, etc., at leas we can start anew and worry about raising revenue later.  That is not an ideal way to run a railroad but I am saying the tax code presently is so bad in its complexity that almost anything that is simple would be better, and I am at least willing to consider virtually anything that cuts through the noise and starts anew.

So, even in the worst case scenario, at least the army of super nerds that only the super rich can afford will be gone, and we can adjust rates and find ways to increase revenues later if needed. 

Sounds better, maybe even great Legal.  Given the current situation though, getting it done doesn't seem plausible.

Not that I don't want to see it done, I would, but the pessimist in me has doubts.  Big ones.

[TitanDuckFan]

14 minutes ago, Starkiller said:

The advantage of a VAT is that you basically have 2 simpler flat tax systems instead of one extrodinarily complex income tax like we have today. But certainly there are other downsides. I just like the simplicity.

Any VAT, like any sales tax, is the least equitable of all taxes when measured as a percent of income.

Then there's the issue of whether or not it's a substitute, or just another layer of taxation.  For some reason existing taxes never seem to go away.

Others just get added on.  That's what I see happening with a VAT.

[Starkiller]

10 minutes ago, TitanDuckFan said:

Any VAT, like any sales tax, is the least equitable of all taxes when measured as a percent of income.

Absolutely. But there are ways to offset that. 

And for what it's worth, that would also please people who are concerned with illegal immigration.

10 minutes ago, TitanDuckFan said:

Then there's the issue of whether or not it's a substitute, or just another layer of taxation.  For some reason existing taxes never seem to go away.

Others just get added on.  That's what I see happening with a VAT.

As long as my idea of the income tax were implemented along with a federal sales tax, that wouldn't be an issue.

[TitanDuckFan]

33 minutes ago, Starkiller said:

Absolutely. But there are ways to offset that. 

And for what it's worth, that would also please people who are concerned with illegal immigration.

As long as my idea of the income tax were implemented along with a federal sales tax, that wouldn't be an issue.

That's the problem with how taxes have been implemented in my lifetime SK.

Your ideas, my ideas, OUR ideas in general get ignored, and politicians do it their way.

[OILERMAN]

5 hours ago, Legaltitan said:

 We are approaching "pitchforks in the street" levels of inequality.  This could go on for years and years unchecked in the guilded age, but in the information age you would think eventually folks will wake up to what's going on. 

 

There will be no pitchforks and the people will not wake up. The media will make damn sure of this.

Not only will people not wake up they'll support the very politicians calling for tax breaks that help create the inequality, even against their own interests.

[TitanDuckFan]

2 hours ago, ctm said:

A regressive tax code is bad for the economy as a whole.  I'd rather pay my accountant than see the economy decline and my stocks tank.

2 hours ago, ctm said:

Yes I read it.  Of course it's regressive, but it could get a lot worse. A 19% value added tax like Cruz proposes would crush the middle class, especially seniors.

http://www.businessinsider.com/money-printing-caused-asset-inflation-2015-12

The remnants of the middle class are on the ropes.  This BI article explains why your stocks look so good, while what was the middle class isn't really a factor anymore.

They're irrelevant under the fiscal policies we've had for the last 8 years or so.

 

[chef]

9 hours ago, Legaltitan said:

 

One interesting thing from the article was how they mention how much the best and the brightest get high off finding ways to beat the system.  This was my best friend "Bill" (name changed to protect the innocent) from law school, who was Valedictorian of our law school class.  The dude loved nothing more than crunching those numbers and finding wholes and workarounds in the tax code.  He was also, incidentally, Jewish and the biggest pot smoker I have ever known.

Sounds like Millertime, aka JB (Jew Boy), but I think he was a few classes ahead of you (and behind me), and more of a contractual guy.

 

But he was brilliant, and loved pot.