|
|
Post by pjohns1873 on Apr 25, 2014 17:22:59 GMT
I actually find much with whch to agree in your proposals. But perhaps not everything. Your suggestion as regarding federal taxes sounds very much like the so-called "Fair Tax" proposal. And I rather like that. In theory, at least. But I would need to discern whether I would end up a net winner or a net lose under the proposal, before I could endorse it in a manner that is more than just tepid. I am less enthusiastic about the proposal that the federal government impose a tax of 15.3 percent on "all income regardles of source" above some (fixed, but unspecified) amount, since I am now retired; so this would amount to an additional tax for me. At least, it would if my (rather modest) income were to place me above the threshold. As for a national sales tax, whereas I find the theory unobjectionable, I would worry that the tax that might be (temporarily) abolished in favor of the national sales tax would likely be Freddy Kruger-like--"It's ba-a-ack!"--and we would wind up with both taxes. And my goal is to dramatically decrease the tax burden upon all Americans, irrespective of socioeconomic class. And if the average American moves every five years--I believe that is the number that I have heard, in this regard; although I cannot prove its authenticity--would not a consumption tax upon the sale of the property amount to much more than five years' worth of property taxes would, typically?
Good questions so let me try to address them.
The replacement of of all tax deductions and tax credits with an exemption on taxation up to the median household income (I mentioned $50,000 in my original proposal because that is roughly median household income) means that anyone earning less than the exemption amount has no income taxes withheld and has no income tax obligation. Corporations are treated as "persons" and while enterprise does have legitimate deductions based upon expenditures (including divident payments by corporations that would be deductable) they also receive that same exemption on the first "$50,000" in income but then pay the same tax rate on all earnings above that. All income is treated the same basically which eliminates the advantage that corporations have over a sole proprietorship today. It eliminates "corporate caplitalism" in our tax codes.
I don't believe you have over $50,000/yr in income so you would pay zero in federal income taxes.
The Social Security tax is also tied to median household income of "$50,000" and 15.3% up to that amount goes exclusively to vested "retirement" investments. When a person retires they are no longer contributing to a "retirement" account so the "Social Security tax" on first $50,000 in annual income is waived and the person doesn't pay it. They would only pay the 15.3% on income in excess of $50,000/yr.
Since I don't believe you have over $50,000/yr in income and you are retired you would owe zero in Social Security taxes.
Just like I don't generally believe that both the Federal Government and State Government taxing and spending on the same thing (e.g. It makes no sense to me that the Federal government taxes and spends on education for all of the states) I don't believe that the taxation on the people should be based upon the same "tax" base. We have two places where money changes hands. It changes hands when a person earns money and it changes hands when a person spends money so these are the logical places where taxation can be imposed. The Federal government is already based upon obtaining it's income primarily with an income tax based upon the 16th Amendment and most States have a sales (consumption) tax.
My argument is let the federal government use the income tax to fund federal expenditures and then have the states use the consumption (sales) tax to fund state expenditures. Two different forms of taxation both based upon the changing of hands with one at the front end (income) and one at the back end (spending). In both cases to establish "fair taxation" based upon a single tax rate being imposed there is a provision to eliminate the regressive nature of the single rate with an exemption on income taxation and a prebate on spending taxation where everyone receives the same exemption and same prebate.
I don't know how to make taxation more fair. Everyone pays the same tax rates and receives the same exemptions on income and the same prebates related to spending.
On home ownership I've considered the "move" rate of people and I believe that your number of about 5 years is relatively accurate but there is a problem with it. Historically people didn't move nearly as much and it created stable neighborhoods where people actually knew who lived next door and down the street. Neighborhoods were much safer because of the stability of the neighborhood. Perhaps the "sale tax" instead of the annual property tax would be a very good thing as people would tend to buy homes to live in as opposed to use them for speculative real estate investments which became more of the norm over the last 40 years. It would change the dynamics of home ownership but think of the benefit to those that purchased an home and actually lived in it for the rest of their lives. No property taxes at all.
Thanks for the clarification.
All in all, your proposal in this regard seems beneficial to me--as well as being quite reasonable.
By the way, I would expect to live in my current home for the rest of my life. (I have resided here since December 1986, and have never yet had any desire to move elsewhere.)
|
|
|
|
Post by ShivaTD on Apr 26, 2014 12:23:49 GMT
Thanks for the clarification.
All in all, your proposal in this regard seems beneficial to me--as well as being quite reasonable.
By the way, I would expect to live in my current home for the rest of my life. (I have resided here since December 1986, and have never yet had any desire to move elsewhere.)
One of the reasons behind my proposal to eliminate state property taxes was that I lived in California until 1989 and we had a case where people that had purchased their homes in the 1950's were paying more in annual property taxes than they originally paid for their home. Many retirees were being foreclosed upon by the goverment if they didn't pay. That problem was eventually resolved at least partially by a Proposition that prevented the foreclosure by the government for failure to pay the property tax (it would collect when the property changed hands at some point in the future) and increases in the property tax rates were limited to 1% of assessed value (but nothing limited the assessment increases).
One attribute I truly appreciate about my federal tax proposal is that it fully funds federal expenditures and because it's based upon a single tax rate every American will know exactly how much "government costs" which is something people don't actually realize today because of borrowing to fund government. We can look at our current tax rates and because there are numerous tax rates we don't know who pays what or how much it would be if the actual expenditures were paid. Additionally because there is a single rate above the exemption level it taxes those that are most likely to be political donors that earn above median income ant they're the ones the politicians listen most closely to.
BTW we can roughly calculate the tax rate to fund federal expenditures (excluding Social Security/Medicare).
If we have $14 trillion in gross income and half of that is to be taxed to fund $2.5 trillion in general expenditures then the tax rate is about 35.7% but because of the $50,000 exemption that is not the rate that most Americans would pay. As noted anyone below $50,000 pays nothing and even those that earn above $50,000 don't typically pay that rate. Below is the 2010 "income" breakdown information:
If we look at the chart basically the bottom 90% of income earners all have an income of less than $114,000/yr but even someone earning $114,000 with the $50,000 exemption they would have a maximum taxable income of $64,000 that would be taxed at 35.7% or $22,848 in taxes. That would be an "effective" tax rate on gross income of 20%. Of course for the top 10% of income earners their effective tax rate rapidly increases as their income increases. A person with $1 million in gross annual income would pay slightly more than 33% on gross income but they could afford it.
Of course that is not the only federal taxation the person is subjected to. Everyone would still have the "Social Security" 15.3% "tax on income" where a "worker" has a slight advantage over the self-employed or investor because a worker's tax is an employee/employer split with the first $7,650 (15.3% of $50,000) going to fully vested private investment accounts while balance is used to fund Social Security/Medicare during the 45 year transition period to privatize Social Security and eliminate Medicare. The tax is still on the "labor of the person" when it's paid by the FICA/Payroll (employee/employer split) but it doesn't show up as income to the worker. That could be changed though if it was desirable (i.e. include the "payroll" tax as income to the employee on their W-2).
Using the same bottom 90% the maximum actual taxation for someone with the maximum $114,000 in income would be 15.3% of $64,000 or $9,792. Combined with the income tax of $22,848 they would have a combined tax rate of 28.6% on gross income.
As noted though in my proposal 1/2 of American households would have a "zero" tax rate as they would have no income tax obligation and all of their "Social Security" taxes would actually be "forced" individually vested retirement investments and not taxation and we're already having this money taken from us today.
Is my solution perfect? Not even I will make that claim but it is the fairest tax proposal I can come up with and it balances the federal budget in it's first year of implementation. Because of the combined taxes imposed on the upper 50% of income earners that support politicians it is also likely to lead to pressure to reduce general expenditures over time.
We can note that at the transitional taxation for Social Security/Medicare that is on income above $50,000/yr actually varies over time. The transition covers the costs over 45 years but they are not constant because as years go by more and more of the "Social Security" costs will be covered by private investment accounts. By the end of the tranistion period all that will need to be funded is a small safety net as overwhelmingly people will obtain their retirement income from their personal investment accounts. 45 years is a long time but remember it's making a change to a program that has existed for about 80 years. Basically we're digging ourselves out of a financial pit that took 80 years to dig in about 1/2 that amount of time. I wish we could do that with the national debt where we created about $12 trillion of debt in 12 years.
I actually put years into thinking about my tax proposals and when it was fully explained I've found support from both conservatives and liberals.
|
|
|
|
Post by pjohns1873 on Apr 26, 2014 20:45:46 GMT
Thanks for the clarification.
All in all, your proposal in this regard seems beneficial to me--as well as being quite reasonable.
By the way, I would expect to live in my current home for the rest of my life. (I have resided here since December 1986, and have never yet had any desire to move elsewhere.)
One of the reasons behind my proposal to eliminate state property taxes was that I lived in California until 1989 and we had a case where people that had purchased their homes in the 1950's were paying more in annual property taxes than they originally paid for their home. Many retirees were being foreclosed upon by the goverment if they didn't pay. That problem was eventually resolved at least partially by a Proposition that prevented the foreclosure by the government for failure to pay the property tax (it would collect when the property changed hands at some point in the future) and increases in the property tax rates were limited to 1% of assessed value (but nothing limited the assessment increases).
One attribute I truly appreciate about my federal tax proposal is that it fully funds federal expenditures and because it's based upon a single tax rate every American will know exactly how much "government costs" which is something people don't actually realize today because of borrowing to fund government. We can look at our current tax rates and because there are numerous tax rates we don't know who pays what or how much it would be if the actual expenditures were paid. Additionally because there is a single rate above the exemption level it taxes those that are most likely to be political donors that earn above median income ant they're the ones the politicians listen most closely to.
BTW we can roughly calculate the tax rate to fund federal expenditures (excluding Social Security/Medicare).
If we have $14 trillion in gross income and half of that is to be taxed to fund $2.5 trillion in general expenditures then the tax rate is about 35.7% but because of the $50,000 exemption that is not the rate that most Americans would pay. As noted anyone below $50,000 pays nothing and even those that earn above $50,000 don't typically pay that rate. Below is the 2010 "income" breakdown information:
If we look at the chart basically the bottom 90% of income earners all have an income of less than $114,000/yr but even someone earning $114,000 with the $50,000 exemption they would have a maximum taxable income of $64,000 that would be taxed at 35.7% or $22,848 in taxes. That would be an "effective" tax rate on gross income of 20%. Of course for the top 10% of income earners their effective tax rate rapidly increases as their income increases. A person with $1 million in gross annual income would pay slightly more than 33% on gross income but they could afford it.
Of course that is not the only federal taxation the person is subjected to. Everyone would still have the "Social Security" 15.3% "tax on income" where a "worker" has a slight advantage over the self-employed or investor because a worker's tax is an employee/employer split with the first $7,650 (15.3% of $50,000) going to fully vested private investment accounts while balance is used to fund Social Security/Medicare during the 45 year transition period to privatize Social Security and eliminate Medicare. The tax is still on the "labor of the person" when it's paid by the FICA/Payroll (employee/employer split) but it doesn't show up as income to the worker. That could be changed though if it was desirable (i.e. include the "payroll" tax as income to the employee on their W-2).
Using the same bottom 90% the maximum actual taxation for someone with the maximum $114,000 in income would be 15.3% of $64,000 or $9,792. Combined with the income tax of $22,848 they would have a combined tax rate of 28.6% on gross income.
As noted though in my proposal 1/2 of American households would have a "zero" tax rate as they would have no income tax obligation and all of their "Social Security" taxes would actually be "forced" individually vested retirement investments and not taxation and we're already having this money taken from us today.
Is my solution perfect? Not even I will make that claim but it is the fairest tax proposal I can come up with and it balances the federal budget in it's first year of implementation. Because of the combined taxes imposed on the upper 50% of income earners that support politicians it is also likely to lead to pressure to reduce general expenditures over time.
We can note that at the transitional taxation for Social Security/Medicare that is on income above $50,000/yr actually varies over time. The transition covers the costs over 45 years but they are not constant because as years go by more and more of the "Social Security" costs will be covered by private investment accounts. By the end of the tranistion period all that will need to be funded is a small safety net as overwhelmingly people will obtain their retirement income from their personal investment accounts. 45 years is a long time but remember it's making a change to a program that has existed for about 80 years. Basically we're digging ourselves out of a financial pit that took 80 years to dig in about 1/2 that amount of time. I wish we could do that with the national debt where we created about $12 trillion of debt in 12 years.
I actually put years into thinking about my tax proposals and when it was fully explained I've found support from both conservatives and liberals.
Although we frequently disagree, this is one proposal on which we can probably come together. (Given the $50,000 exemption--I am assuming that would apply to single individuals, and not exclusively to families--I would pay zero income tax, under this proposal.) Let me play devil's advocate for a moment, however, and just note that whereas $50,000 is a pretty solid income around these parts--where the cost of living is low--it is not so much in, say, California or New York. Or in New Jersey. Or in...well, lots of other places. So I have to wonder if the family with a total gross income of $114,000--which is not an enormous amount of money where the cost of living is astronomical--would fare so well under this proposal. |
|
|
|
Post by ShivaTD on Apr 27, 2014 11:33:18 GMT
Although we frequently disagree, this is one proposal on which we can probably come together. (Given the $50,000 exemption--I am assuming that would apply to single individuals, and not exclusively to families--I would pay zero income tax, under this proposal.) Let me play devil's advocate for a moment, however, and just note that whereas $50,000 is a pretty solid income around these parts--where the cost of living is low--it is not so much in, say, California or New York. Or in New Jersey. Or in...well, lots of other places. So I have to wonder if the family with a total gross income of $114,000--which is not an enormous amount of money where the cost of living is astronomical--would fare so well under this proposal.
In truth the $50,000/yr is based upon "median household income" and it would vary based upon the size of the "household" and there is a word for that but I forgot what it is. A single person with no dependents doesn't require as much "household income" as a couple with two children. Bascially the "exemption" would differ based upon different size households and a person would submit a type of W-4 form to establish the amount of income from their job that wouldn't be subjected to income tax withholding.
There are a few local municipalities that have very a very "high cost of living" like downtown Seattle or perhaps the "biggie" which is probably Manhattan Island but it's really driven by real estate values and not really by the costs of goods and services. I once lived on the water of Keauhou Bay Kona (the white roofed house on the left at the end of Kamehameha III Rd in the Google Map image) and while the rent was high the price of a six-pack of beer and a gallon of milk was about the same as on the mainland. (BTW I loved living there. I share the house with two wonderful women and one was a bartender and the other handled local chartet helicopter flights while I did underwater photography)
Anyway, typically people that can't afford the real estate in these high cost of living municipalities don't live there but do work there. No one with a $114,000/yr income is going to have any problem financially regardless of where they live because if they can't afford the local real estate they can afford it just a few miles away and commute. If a person chooses to live in high priced real estate that is their choice and it isn't being driven by economic necessity.
When we address the "average cost of living" by State there are differences but it's mostly driven by real estate prices. The costs of goods and services between the states is relatively the same so I don't think I'd consider it when it comes to federal taxation. A person can always choose to move to Mississippi if they believe the cost of real estate is too high in California but they'll probably earn less. What I have found is that anyone can afford to live based upon "median household income" of about $50,000 for a family of four. Above that amount a person can afford to pay taxes that are "progressive" because of the "exemption" on median household income.
It is interesting though that you seem to care about the "cost of living" when it comes to taxation but don't seem to care about it at all when it comes the employee wages. I care about both because both affect the "standard of living" of the person.
|
|
|
|
Post by pjohns1873 on Apr 28, 2014 0:24:20 GMT
Although we frequently disagree, this is one proposal on which we can probably come together. (Given the $50,000 exemption--I am assuming that would apply to single individuals, and not exclusively to families--I would pay zero income tax, under this proposal.) Let me play devil's advocate for a moment, however, and just note that whereas $50,000 is a pretty solid income around these parts--where the cost of living is low--it is not so much in, say, California or New York. Or in New Jersey. Or in...well, lots of other places. So I have to wonder if the family with a total gross income of $114,000--which is not an enormous amount of money where the cost of living is astronomical--would fare so well under this proposal.
In truth the $50,000/yr is based upon "median household income" and it would vary based upon the size of the "household" and there is a word for that but I forgot what it is. A single person with no dependents doesn't require as much "household income" as a couple with two children. Bascially the "exemption" would differ based upon different size households and a person would submit a type of W-4 form to establish the amount of income from their job that wouldn't be subjected to income tax withholding.
There are a few local municipalities that have very a very "high cost of living" like downtown Seattle or perhaps the "biggie" which is probably Manhattan Island but it's really driven by real estate values and not really by the costs of goods and services. I once lived on the water of Keauhou Bay Kona (the white roofed house on the left at the end of Kamehameha III Rd in the Google Map image) and while the rent was high the price of a six-pack of beer and a gallon of milk was about the same as on the mainland. (BTW I loved living there. I share the house with two wonderful women and one was a bartender and the other handled local chartet helicopter flights while I did underwater photography)
Anyway, typically people that can't afford the real estate in these high cost of living municipalities don't live there but do work there. No one with a $114,000/yr income is going to have any problem financially regardless of where they live because if they can't afford the local real estate they can afford it just a few miles away and commute. If a person chooses to live in high priced real estate that is their choice and it isn't being driven by economic necessity.
When we address the "average cost of living" by State there are differences but it's mostly driven by real estate prices. The costs of goods and services between the states is relatively the same so I don't think I'd consider it when it comes to federal taxation. A person can always choose to move to Mississippi if they believe the cost of real estate is too high in California but they'll probably earn less. What I have found is that anyone can afford to live based upon "median household income" of about $50,000 for a family of four. Above that amount a person can afford to pay taxes that are "progressive" because of the "exemption" on median household income.
It is interesting though that you seem to care about the "cost of living" when it comes to taxation but don't seem to care about it at all when it comes the employee wages. I care about both because both affect the "standard of living" of the person.
I should probably begin by noting that I am more concerned about the cost of living because a dollar more toward the cost of living is actually a dollar more; whereas a dollar more in wages (or salary) is really only about 60 or 65 cents more, after taxes. Moreover, I simply do not believe that the federal government should intrude upon consensual business relationships between two individuals--irrespecive of their comparative "power." It is my understanding that the cost of living in Washington (DC), San Francisco, Los Angeles, New York, and quite a few other metropolitan areas, is much higher than the norm--not just in these cities' toniest suburbs. Again, let me emphasize that I really do not intend to rain on your parade; in fact, I find your proposal far more positive than negative. I am just looking at (what I consider to be) its one imperfection. |
|
|
|
Post by ShivaTD on Apr 28, 2014 14:55:45 GMT
I should probably begin by noting that I am more concerned about the cost of living because a dollar more toward the cost of living is actually a dollar more; whereas a dollar more in wages (or salary) is really only about 60 or 65 cents more, after taxes. Moreover, I simply do not believe that the federal government should intrude upon consensual business relationships between two individuals--irrespecive of their comparative "power." It is my understanding that the cost of living in Washington (DC), San Francisco, Los Angeles, New York, and quite a few other metropolitan areas, is much higher than the norm--not just in these cities' toniest suburbs. Again, let me emphasize that I really do not intend to rain on your parade; in fact, I find your proposal far more positive than negative. I am just looking at (what I consider to be) its one imperfection.
Ah... we agree that the difference is basically due to taxation because the "cost of living" relates to net (disposable) income while "wages" relates to gross income before taxation. That is actually what my tax proposal addresses because taxation by both the State and Federal government dramatically reduces and/or eliminates the difference between gross income and net income for those earning below the median household income. If it wasn't for taxation then there would be a direct correlation between wages and the cost of living as both would relate to gross income and gross spending.
In trying to put some numbers to this difference in the cost of living in different places. I compared the cost of living in Cheyenne WY to Washington DC. It costs 6.73% more to live in Washington DC that we know has a high cost of living when compared to Cheyenne WY that I assumed had a much lower cost of living. Then I compared the median real estate values of the Northwest to the Northeast and found that the median housing costs in the NW as about $189,000 while the median housing cost in the NE was about $241,000. That is a huge difference in housing costs that does effect the overall cost of living but the fact is that someone with $114,000 in income (i.e. the top income for the bottom 90% of Americans) could easily afford the median housing costs in either location. The housing costs are a problem for low income workers that are below median income but even a person with the median income of $50,000 could afford to purchase a home in either geographical location. Only the poor have a hard time when it comes to higher real estate values as they are forced to find places to live far below the median housing costs.
Now I don't know what the "current" qualifications are for a home loan but years ago when I had about a $50,000/yr income I did prequalify for a home loan and the bank approved me for up to a $250,000 home loan. Of course that was far more than I wanted to spend so I purchased a home for $97,000. More recently (2-yrs ago) I had an income of about $114,000/yr and I purchased my current home for $150,000. I have no clue what I would have "qualified" for because I didn't ask but the $150,000 home fit nicely into my budget.
BTW In the same year that I had a gross income of $114,000 my combined federal taxation was slightly more than $28,000 which is almost identical to what I would pay under my proposal for federal taxation.
As noted I've never stated that my proposal was "perfect" but I'd rather keep it simple as opposed to jerking around with the "exemption amount' based upon local costs of living calculations. The fact that millions of people move from one location to another every year alone would make such a proposal a nightmare IMO. It isn't perfect but it is a proposal that I've gained support from by both progressive-liberals and social-conservatives which is what would be needed if we were ever to have significant tax reform.
What it does take is answering the questions that people present because on the surface people are skeptical. It appears, on the surface, to have provisions that some at either end of the political spectrum would disagree with but once they look at it from an overall perspective it begins to make sense to them. Anything they think they lose they gain back elsewhere.
Two examples:
Social conservatives initially objected to the same tax being imposed on a corporation because it would reflect "double taxation" on dividends paid the the investor so that was easily solved by making "dividend payments" by the corporation a "deduction" to the corporation. Taxation on dividends is taxed at the individual level and not at the corporate level.
Progressive liberals initially objected to privatization of Social Security until they learned that a safety net was still retained and that it assured at least four-times the income when compared to the current Social Security program because the benefits, even for the safety net are based upon combined personal assets and government funding if ever necessary. (Conservatives didn't object because even a lifetime minimum wage worker wouldn't require the safety net based upon historical investment data). Fixing federal taxation based upon my proposal, while it isn't perfect, isn't a hard nut to crack but fixing state taxation is. That would either require legislatve action in all 50 states or more probably a Constitutional amendment that established the state taxation was to be based upon almost exclusively by a consumption tax with prebates.
|
|
|
|
Post by pjohns1873 on Apr 28, 2014 20:05:21 GMT
I should probably begin by noting that I am more concerned about the cost of living because a dollar more toward the cost of living is actually a dollar more; whereas a dollar more in wages (or salary) is really only about 60 or 65 cents more, after taxes. Moreover, I simply do not believe that the federal government should intrude upon consensual business relationships between two individuals--irrespecive of their comparative "power." It is my understanding that the cost of living in Washington (DC), San Francisco, Los Angeles, New York, and quite a few other metropolitan areas, is much higher than the norm--not just in these cities' toniest suburbs. Again, let me emphasize that I really do not intend to rain on your parade; in fact, I find your proposal far more positive than negative. I am just looking at (what I consider to be) its one imperfection.
Ah... we agree that the difference is basically due to taxation because the "cost of living" relates to net (disposable) income while "wages" relates to gross income before taxation. That is actually what my tax proposal addresses because taxation by both the State and Federal government dramatically reduces and/or eliminates the difference between gross income and net income for those earning below the median household income. If it wasn't for taxation then there would be a direct correlation between wages and the cost of living as both would relate to gross income and gross spending.
In trying to put some numbers to this difference in the cost of living in different places. I compared the cost of living in Cheyenne WY to Washington DC. It costs 6.73% more to live in Washington DC that we know has a high cost of living when compared to Cheyenne WY that I assumed had a much lower cost of living. Then I compared the median real estate values of the Northwest to the Northeast and found that the median housing costs in the NW as about $189,000 while the median housing cost in the NE was about $241,000. That is a huge difference in housing costs that does effect the overall cost of living but the fact is that someone with $114,000 in income (i.e. the top income for the bottom 90% of Americans) could easily afford the median housing costs in either location. The housing costs are a problem for low income workers that are below median income but even a person with the median income of $50,000 could afford to purchase a home in either geographical location. Only the poor have a hard time when it comes to higher real estate values as they are forced to find places to live far below the median housing costs.
Now I don't know what the "current" qualifications are for a home loan but years ago when I had about a $50,000/yr income I did prequalify for a home loan and the bank approved me for up to a $250,000 home loan. Of course that was far more than I wanted to spend so I purchased a home for $97,000. More recently (2-yrs ago) I had an income of about $114,000/yr and I purchased my current home for $150,000. I have no clue what I would have "qualified" for because I didn't ask but the $150,000 home fit nicely into my budget.
BTW In the same year that I had a gross income of $114,000 my combined federal taxation was slightly more than $28,000 which is almost identical to what I would pay under my proposal for federal taxation.
As noted I've never stated that my proposal was "perfect" but I'd rather keep it simple as opposed to jerking around with the "exemption amount' based upon local costs of living calculations. The fact that millions of people move from one location to another every year alone would make such a proposal a nightmare IMO. It isn't perfect but it is a proposal that I've gained support from by both progressive-liberals and social-conservatives which is what would be needed if we were ever to have significant tax reform.
What it does take is answering the questions that people present because on the surface people are skeptical. It appears, on the surface, to have provisions that some at either end of the political spectrum would disagree with but once they look at it from an overall perspective it begins to make sense to them. Anything they think they lose they gain back elsewhere.
Two examples:
Social conservatives initially objected to the same tax being imposed on a corporation because it would reflect "double taxation" on dividends paid the the investor so that was easily solved by making "dividend payments" by the corporation a "deduction" to the corporation. Taxation on dividends is taxed at the individual level and not at the corporate level.
Progressive liberals initially objected to privatization of Social Security until they learned that a safety net was still retained and that it assured at least four-times the income when compared to the current Social Security program because the benefits, even for the safety net are based upon combined personal assets and government funding if ever necessary. (Conservatives didn't object because even a lifetime minimum wage worker wouldn't require the safety net based upon historical investment data). Fixing federal taxation based upon my proposal, while it isn't perfect, isn't a hard nut to crack but fixing state taxation is. That would either require legislatve action in all 50 states or more probably a Constitutional amendment that established the state taxation was to be based upon almost exclusively by a consumption tax with prebates.
Well, your proposal to establish the only form of state taxation as "a consumption tax with prebates" would not upset the apple cart so much in Tennessee (or Florida, or Texas) as it would in some other states, as already we do not have a state income tax. However, local communities do currently have property taxes. And the idea of a prebate would certainly be helpful. In general, I believe your idea for taxation is reasonable enough. Let me ask you this, though: What is your source for the assertion that the cost of living in Washington, DC is merely 6.73 percent greater than it is in Cheyenne, Wyoming? (I cannot say, with any authority, that you are incorrect here. But it does seem a bit difficult to believe.) |
|
|
|
Post by ShivaTD on Apr 29, 2014 12:38:56 GMT
Well, your proposal to establish the only form of state taxation as "a consumption tax with prebates" would not upset the apple cart so much in Tennessee (or Florida, or Texas) as it would in some other states, as already we do not have a state income tax. However, local communities do currently have property taxes. And the idea of a prebate would certainly be helpful. In general, I believe your idea for taxation is reasonable enough. Let me ask you this, though: What is your source for the assertion that the cost of living in Washington, DC is merely 6.73 percent greater than it is in Cheyenne, Wyoming? (I cannot say, with any authority, that you are incorrect here. But it does seem a bit difficult to believe.)
What I hate when it comes to real estate property taxes is that the "assessment" is arbitrary based upon changing prices generally driven by inflation (caused by government) and real estate speculation. When I purchase a home for $150,000 (which I did a couple of years ago) that is what it is worth to me regardless of inflation or real estate speculation. It is "my value" established by my consent and I shouldn't be taxed based upon government caused inflation or market driven changes based upon speculation to the values of other properties in the area.
Eliminating the annual property tax should not adversely affect local communities because they get the "money up front" and don't have to wait for years to receive that same amount of funding. Of course they could fritter it away, which isn't uncommon for government to do, or they could only spend the interest obtained by the funds indefinately over time. What the local and state governments decide to do with the money once they get it is up to them.
I don't recall which online calculator I used but in looking for one similar I find that numerous "results" are possible. Using Bankrate.com's calulator it actually reflected that a person would have a lower cost of living in the DC metro area.
As I noted though I wouldn't be concerned about it because as soon as the politicians start monkeying around with the proposal they would screw it up just like they've done with the original income tax codes. KISS (Keep It Simple Stupid) is the only way I can see of keeping it fair. If the "cost of living" is too high in one location then the person always has the option of moving somewhere else. As I also noted for the bottom 50% of the People they would be better off anyway and even someone at the top 90 percentile income bracket with $114,000/yr in household income isn't going to have their standard of living be negatively effected.
Even someone with $100 million in annual income, regardless of the tax rate, isn't going to have their lifestyle negatively effected because they probably spend far less than 20% of their gross income on living expenses as extravagant as that lifestyle might be.
|
|
