A Perfect Storm: Deficit Soaring…Debt Soaring…Number Who Pay No Taxes…Soaring

[impalanar]

I believe the term is "unsustainable."

http://biggovernment.com/oftheeising/2010/03/25/a-perfect-storm-deficit-soaringdebt-soaringnumber-who-pay-no-taxes-soaring/


The “Perfect Storm,” described by author Sebastian Junger in his 1997 best-selling novel by the same name, referred to a confluence of weather conditions that produced a monster hurricane off the coast of New England. Today the term is commonly used to describe any combination of circumstances that drastically aggravate any given situation. For example, an exponential increase in the number of retired elderly Americans who require more health care being supported by a declining number of young Americans who provide the funds to cover those health care costs. With over 70 million baby boomers about to retire we, indeed, have the conditions for a perfect storm.

...

Essentially the United States is heading toward what might be called a tipping point. Increased government takeover of historically private personal obligations initiates a vicious cycle. The more we have a society where substantial numbers of people pay no taxes (now close to 40%), the more we create a voting bloc of citizens who will inevitably support new programs for which they don’t have to pay. Business people have a term for this. They dislike investing money with partners who do not invest even a minimal amount with them. It is called having “skin in the game” another way of saying that we all need to have common incentives.

[Dan43]

That is why I keep advocating that we should go to a flat tax with no deductions. That way everyone has some skin in the game.

[wallypiper]

WASHINGTON — Social Security will pay more in benefits than it receives in payroll taxes in the current fiscal year, six years earlier than expected, the Congressional Budget Office reported yesterday.
Last spring, Social Security trustees reported that expenses would exceed revenue beginning in 2016. Since then, applications for benefits have increased because people are retiring early due to the recession, and that, combined with high unemployment, means fewer workers paying taxes.

So our elected representatives busied themselves with trying to find a way to extend benefits to more people while our long standing public safety net was nose diving into insolvency, a situation that hey have known was coming for many years. Out out out. They are all out. Incompetent, dishonest, unethical clowns. They DESERVE to have bricks thrown at them.

[TarzanMan]

A flat tax on income or expenditures would be a horrible idea, given the distribution of wealth in the country.

If you want everyone to have 'skin' in the game then tax total wealth with a flat tax.

It will never happen because the top 25% of people in the country who own 87% of the wealth would pay 87% of the taxes (and they'd throw multiple fits). The middle 50% of people would pay 12.999% of taxes and the bottom 25% of people wouldn't pay anything.

[MrBlah]

A flat tax on income or expenditures would be a horrible idea, given the distribution of wealth in the country.

If you want everyone to have 'skin' in the game then tax total wealth with a flat tax.

It will never happen because the top 25% of people in the country who own 87% of the wealth would pay 87% of the taxes (and they'd throw multiple fits). The middle 50% of people would pay 12.999% of taxes and the bottom 25% of people wouldn't pay anything.

you may want to check the stats on who pays the taxes right now, the top 1 % pay 40 % of the taxes, the top 25 % pay 86 % of the taxes, the bottom 50 % pay 2.89 % of the taxes


I'm looking forward to your response to this, our current numbers are your "what if" numbers, I guess the top 25 % should start throwing multiple fits ?

[wallypiper]

A flat tax on income or expenditures would be a horrible idea, given the distribution of wealth in the country.

If you want everyone to have 'skin' in the game then tax total wealth with a flat tax.

It will never happen because the top 25% of people in the country who own 87% of the wealth would pay 87% of the taxes (and they'd throw multiple fits). The middle 50% of people would pay 12.999% of taxes and the bottom 25% of people wouldn't pay anything.

How does that change anything? Even if what MrBlah posted wasn't the case (it is), you're scheme still gives majority voting power to the people making the smallest contribution to the pot. The real problem here is that it's not about who pitches the biggest fit. It's about who writes the biggest check. If congress ever quit working for campaign contributions, the bottom 75% would take over.

[Dan43]

A flat tax on income or expenditures would be a horrible idea, given the distribution of wealth in the country.

If you want everyone to have 'skin' in the game then tax total wealth with a flat tax.

It will never happen because the top 25% of people in the country who own 87% of the wealth would pay 87% of the taxes (and they'd throw multiple fits). The middle 50% of people would pay 12.999% of taxes and the bottom 25% of people wouldn't pay anything.Please explain why going to a flat tax on all income is such a horrible idea.

If you tax total wealth this year, what do you plan to do for tax revenue next year?

[Karl Hungus]

I'll say it again. Everyone should pay the same amount of taxes. Just divide up the spending by the number of citizens.

[Butthead]

you ever taken an economics class?


A flat tax on income or expenditures would be a horrible idea, given the distribution of wealth in the country.

If you want everyone to have 'skin' in the game then tax total wealth with a flat tax.

It will never happen because the top 25% of people in the country who own 87% of the wealth would pay 87% of the taxes (and they'd throw multiple fits). The middle 50% of people would pay 12.999% of taxes and the bottom 25% of people wouldn't pay anything.

[likestoride]

I like the idea of everyone paying the same amount. You can bet we'd have different results on spending/wasting money.

[TarzanMan]

you may want to check the stats on who pays the taxes right now, the top 1 % pay 40 % of the taxes,
Ok, fair enough.

the top 25 % pay 86 % of the taxes,...
I said that the top 25% would pay 87% (http://www.georgiasportbike.com/showthread.php?940-A-Perfect-Storm-Deficit-Soaring%E2%80%A6Debt-Soaring%E2%80%A6Number-Who-Pay-No-Taxes%E2%80%A6Soaring&p=10118&viewfull=1#post10118).... this isn't much different than your number (86%).


the bottom 50 % pay 2.89 % of the taxes.
I'm looking forward to your response to this, our current numbers are your "what if" numbers, I guess the top 25 % should start throwing multiple fits ?

I think you misunderstood my post. I am drawing a distinction between wealth (all of someone's assets) and income (their increase in assets over the period of a year). The only 'fair' way (the 'fair tax' is supposed to be fair, right?) would be to add up all the wealth in the country and tax it evenly.

This means that if you own half the wealth in the country, then you would pay half the country's tax revenue. Taxing Income is a clumsy method of going about trying to make taxes 'fair' because the income distribution is even MORE skewed towards the top than wealth (which is part of the reason that the wealth distribution is becoming more uneven).

Addressing your other point....The top 25% of people already throw fits. If your personal income is more than $50k/yr then you're already in the top 25%. If your household income is more than $77k, then you're also in the top 25%.

I am just guessing here, but my guess is that top 25% group includes most of the people on this forum who b*tch about their taxes the most often.

[MrBlah]

the top 25 % cutoff tax filer is ~65,000 $ now

I guess I"m not really sure what your whole point was in that first post, or your 2nd

[TarzanMan]

Just saying that taxing wealth would be the most 'fair' way to go about collecting taxes and that simply taxing expenditures (which is my understanding of how the Fair Tax is supposed to work) would just transfer the burden away from the top end.

If anything, I am saying that the top end pays that much for a reason.

[impalanar]

If anything, I am saying that the top end pays that much for a reason.

What is the reason?

[wallypiper]

taxing expenditures (which is my understanding of how the Fair Tax is supposed to work) would just transfer the burden away from the top end.

How so? Even though they are, typically, big savers, people with big income are also big spenders. They would still pay most of the taxes.

Look. In the first place capitalism works because it is based on human nature. People respond to reward. When doing something garners reward, people do more of it. When doing something doesn't garner reward, people quit doing it. No government program can change that.

Any attempt to redistribute the rewards, whether they are in the form of income or accumulated wealth or other less tangible benefits, that is in conflict with that basic behavior will fail. The failure may be small and tolerable if it's outweighed by surrounding successes, or it may be catastrophic if it breaks the behavior/reward connection too broadly.

Tax collection need not be "fair". It should be effective.

[Karl Hungus]

I like the idea of everyone paying the same amount. You can bet we'd have different results on spending/wasting money.

It will never happen, but it makes as much sense as anything else, which is arguably "punishing success".

[Phatmax]

How so? Even though they are, typically, big savers, people with big income are also big spenders. They would still pay most of the taxes.

Look. In the first place capitalism works because it is based on human nature. People respond to reward. When doing something garners reward, people do more of it. When doing something doesn't garner reward, people quit doing it. No government program can change that.

Any attempt to redistribute the rewards, whether they are in the form of income or accumulated wealth or other less tangible benefits, that is in conflict with that basic behavior will fail. The failure may be small and tolerable if it's outweighed by surrounding successes, or it may be catastrophic if it breaks the behavior/reward connection too broadly.

Tax collection need not be "fair". It should be effective.

Careful, you might be accused of wanting to eat babies shortly.

[bigb996]

i think we should implement a dishonesty tax for our wonderful members of our government. Let them pay extra for once.

[MrBlah]

Just saying that taxing wealth would be the most 'fair' way to go about collecting taxes and that simply taxing expenditures (which is my understanding of how the Fair Tax is supposed to work) would just transfer the burden away from the top end.

If anything, I am saying that the top end pays that much for a reason.

how would you do this, tax everyone based on what they are worth instead of how much they make? Is that a one time thing? Eventually everyone would be broke unless you earn a tremendous amount of income.

there goes the concept of ownership out the window

[impalanar]

there goes the concept of ownership out the window

I get the impression Tarzanman would OK with this.

[TarzanMan]

It wouldn't be practical to collect taxes in the manner I described. The entire exercise is intended as an example of what a truly 'fair' tax would have to look like to ensure that everyone pays their fair share (no more, no less).... in contrast to a tax on expenditures.

Might I suggest looking at what I have posted in relation the context of the discussion instead of digging around for reasons to disagree with me?

[impalanar]

It wouldn't be practical to collect taxes in the manner I described. The entire exercise is intended as an example of what a truly 'fair' tax would have to look like to ensure that everyone pays their fair share (no more, no less).... in contrast to a tax on expenditures.

Might I suggest looking at what I have posted in relation the context of the discussion instead of digging around for reasons to disagree with me?

How is your system fair? I should be all for your system since home values are depressed and I probably have a negative net worth, and would then pay no taxes. But to me that just doesn't seem fair.

[Phatmax]

How about you READ about the FairTax and how it works before bashing it?

The FairTax:

Enables workers to keep their entire paychecks
Enables retirees to keep their entire pensions
Refunds in advance the tax on purchases of basic necessities
Allows American products to compete fairly
Brings transparency and accountability to tax policy
Ensures Social Security and Medicare funding
Closes all loopholes and brings fairness to taxation
Abolishes the IRS

[TarzanMan]

My system would be fair because each dollar or asset would be taxed the same rate, no matter who owned it.

That way, a bajillionaire paying 1 million dollars tax on his $10 million in assets has no reason to complain because the hobo down the street had to pay $1 on his $10 worth of assets.

[Phatmax]

how would you do this, tax everyone based on what they are worth instead of how much they make? Is that a one time thing? Eventually everyone would be broke unless you earn a tremendous amount of income.

there goes the concept of ownership out the window

I think TarzanMan ascribes to the Hugo Chavez / Fidel Castro method of taxation.

[TarzanMan]

How about you READ about the FairTax and how it works before bashing it?

The FairTax:

Enables workers to keep their entire paychecks
Enables retirees to keep their entire pensions
Refunds in advance the tax on purchases of basic necessities
Allows American products to compete fairly
Brings transparency and accountability to tax policy
Ensures Social Security and Medicare funding
Closes all loopholes and brings fairness to taxation
Abolishes the IRS

I know all those things about the fair tax already. I just (apparently) have a better understanding of how it would affect the source of tax revenue in this country than you do.

The bulk of the revenue would come from the bulk of the populace. The bottom 75% who control 13% of the wealth. That is a bad idea unless you're a rich guy.

[TarzanMan]

I think TarzanMan ascribes to the Hugo Chavez / Fidel Castro method of taxation.
At least most of the people I argue with on the board have some semblance of an idea of what they are talking about. I know teenagers who understand this topic better than you do.

Why don't you buy some more books that Neal Boortz tells you to? You're a sheep.

[impalanar]

My system would be fair because each dollar or asset would be taxed the same rate, no matter who owned it.

That way, a bajillionaire paying 1 million dollars tax on his $10 million in assets has no reason to complain because the hobo down the street had to pay $1 on his $10 worth of assets.

Who do you tax after 10 years?

[Phatmax]

My system would be fair because each dollar or asset would be taxed the same rate, no matter who owned it.

That way, a bajillionaire paying 1 million dollars tax on his $10 million in assets has no reason to complain because the hobo down the street had to pay $1 on his $10 worth of assets.

Is he going to pay that every year? So in 10 years he has been taxed 100% of his assets? WTF is that?

[Phatmax]

At least most of the people I argue with on the board have some semblance of an idea of what they are talking about. I know teenagers who understand this topic better than you do.

Why don't you buy some more books that Neal Boortz tells you to? You're a sheep.

Ahh, yes... the "mock and ridicule" method of Saul Alinsky attack.

Good try, but unfortunately, you are wrong.

In fact, not only wrong, but pathetic. Your slavering hatred of the system that forces you to actually work hard for your rewards is showing through.

I suppose that if you miraculously became a multi-millionaire overnight, you would be fine getting half your wealth taken away for the good of others.

Of course, if you worked your entire life and scrimped, saved, learned, sacrificed and slaved to become wealthy, you might have a different opinion.

[TarzanMan]

Who do you tax after 10 years?


Is he going to pay that every year? So in 10 years he has been taxed 100% of his assets? WTF is that?

WOW are you guys really that bad at math? Lol... extrapolate a tax rate of 10% every year out for 10, 100, 1000 years and let me know when you end up with 0.

Why are you even arguing with me if you can't grasp the simple stuff?

[Phatmax]

I know all those things about the fair tax already. I just (apparently) have a better understanding of how it would affect the source of tax revenue in this country than you do.

The bulk of the revenue would come from the bulk of the populace. The bottom 75% who control 13% of the wealth. That is a bad idea unless you're a rich guy.

Not to be rude, but who the F*CK are you to start in on what I do and don't understand?

[TarzanMan]

Not to be rude, but who the F*CK are you to start in on what I do and don't understand?

Your own posts belie your lack of understanding on the topic. Don't get mad at ME because YOU post stupid stuff.

[Phatmax]

Your own posts belie your lack of understanding on the topic. Don't get mad at ME because YOU post stupid stuff.

No, I pretty much stand by all my stuff. You can't actually prove it wrong, you just mock it be being stupid IN YOUR VIEW, as it appears that you think you are the only person who can be right.

As to my understanding of economics, I have a pretty fair grasp of reality, not the theory that you hold near and dear to your class-envying heart.

[TarzanMan]

Plenty of folks on this board disagree with me. I don't begrudge anyone a conflicting opinion as long as they can qualify/justify their opinion and back it up (with you know... facts or a legitimate difference of opinion on a key point).

However, if you're going to stand over there and yell about how awesome the Fair Tax yet screw up simple arithmetic then you're going to get called on it.

[Phatmax]

Plenty of folks on this board disagree with me. I don't begrudge anyone a conflicting opinion as long as they can qualify/justify their opinion and back it up (with you know... facts or a legitimate difference of opinion on a key point).

However, if you're going to stand over there and yell about how awesome the Fair Tax yet screw up simple arithmetic then you're going to get called on it.


Jeez.

So you want to tax the value of assets?

And you want zero income tax?

Do you also want zero sales tax at every level? City, county, state, federal?

Do you also want zero property tax?

Do you also want zero ad velorum tax?

Do you also want zero fuel taxes, liquor taxes, tobacco taxes and the like?

How many times are you going to tax the value of the same asset? (will you continue to collect 10% on it, ad infinitum, until it is worth $0.000000001?)

Maybe I am not clear on how you want an asset based taxation system to work.

However, everyone consumes and the wealthy consume at a much higher cost level then anyone else. Plus, with a consumption tax they would be freed to INVEST more money in their businesses, thus hiring more people and actually providing more wealth to others.

ETA: Even if they were incredibly selfish pricks and bought boats and cars and planes and big houses, each one of those items comes from a place that EMPLOYS people to make them. So when that happens, not only is the rich guy paying his consumption tax, he is providing work for people with his act of consumption.

[impalanar]

WOW are you guys really that bad at math? Lol... extrapolate a tax rate of 10% every year out for 10, 100, 1000 years and let me know when you end up with 0.

Why are you even arguing with me if you can't grasp the simple stuff?

You got me there, I hit reply too fast.

So, if we tax everyone 10% of their net worth, their net worth will have a half life of 10 years. I.e. you start with $10,000,000 in 10 years you have ~$5,000,000 assuming an average growth rate of 3.16% (what the GDP has averaged since 1970) and with it tax revenues will be cut in half every 10 years. This seems unsustainable to me.

*Assuming you start with a sizable net worth and a sizable income to go with it, you can probably do OK until you hit a wicked downturn.

[TarzanMan]

So you want to tax the value of assets?
I don't think it would ever be logistically feasible, but yes... that would be my idea of a completely fair system of taxation.


And you want zero income tax?
If you taxed wealth at the end of the fiscal year, there would be no reason to have to tax income. Any income that you didn't spend would become part of your assets


Do you also want zero sales tax at every level? City, county, state, federal?
Presumably, the state would have their own tax and the feds would have their own as well.


Do you also want zero property tax?
Property is (and probably would be) considered part of one's wealth or assets.


Do you also want zero ad velorum tax?
A tax on wealth would be very similar to an ad valorem tax


Do you also want zero fuel taxes, liquor taxes, tobacco taxes and the like?
These things would not be taxed if you bought and consumed them within the same fiscal year because they would not exist anymore (and hence not be part of your wealth)


How many times are you going to tax the value of the same asset? (will you continue to collect 10% on it, ad infinitum, until it is worth $0.000000001?) Ad infinitum. This is a BAD situation if you don't have any yearly income, but still have large assets.


Maybe I am not clear on how you want an asset based taxation system to work.

However, everyone consumes and the wealthy consume at a much higher cost level then anyone else. Plus, with a consumption tax they would be freed to INVEST more money in their businesses, thus hiring more people and actually providing more wealth to others.

The problem is that the wealthy don't consume all that much compared to how much more money they make than the median citizen. In the end, you can only drive so many cars, eat so much food and wear so many clothes.

[impalanar]

Ad infinitum. This is a BAD situation if you don't have any yearly income, but still have large assets.


Or, little yearly income and any assets at all. Talk about a system designed to keep poor people poor, but I guess it would be fair since it would make rich people poor too.

[TarzanMan]

I think the situation you describe would only be a problem if you didn't have any income.

Lets say you had a net worth of $20k and make $40k a year? If you spend $30k on expenses (car, food, rent, whatever) then at the end of the year your assets are $30k and you'd pay $3k in taxes. Now instead of being worth $20k you are worth $27k

If you live cheap instead and spend $10k that year instead then your asset worth at the end of the year is $50k and you pay $5k in taxes.
Your new worth is $45k.

Seems to work in that example?

[MONICA]

I think the situation you describe would only be a problem if you didn't have any income.

Lets say you had a net worth of $20k and make $40k a year? If you spend $30k on expenses (car, food, rent, whatever) then at the end of the year your assets are $30k and you'd pay $3k in taxes. Now instead of being worth $20k you are worth $27k

If you live cheap instead and spend $10k that year instead then your asset worth at the end of the year is $50k and you pay $5k in taxes.
Your new worth is $45k.

Seems to work in that example?

So if I blow all my money on cocaine, I don't have to pay taxes at all, because I don't own anything. ...Lovely...Just be on welfare, at taxpayer expense, and never have to pay for any of it. Maybe you should think this through a little more.

[TarzanMan]

Why would you be on welfare? But yes, if you didn't have any assets (house, bank account, cash) then you wouldn't pay any taxes.

Seeing as how cocaine is illegal... no one is going to pay taxes on it (fair tax or not).

As for people on welfare... you can give them $100 a week that they buy things and pay 8% taxes on.. or you can give them $92 a week and tell them to get the same stuff. Difference is that at the end of the year, 10% of the money they haven't spent plus any new assets they have (car, etc) is coming back as taxes

[impalanar]

Why would you be on welfare? But yes, if you didn't have any assets (house, bank account, cash) then you wouldn't pay any taxes.

Seeing as how cocaine is illegal... no one is going to pay taxes on it (fair tax or not).

As for people on welfare... you can give them $100 a week that they buy things and pay 8% taxes on.. or you can give them $92 a week and tell them to get the same stuff. Difference is that at the end of the year, 10% of the money they haven't spent plus any new assets they have (car, etc) is coming back as taxes

Except that they would still be paying the 8%. Even with the Fair Tax, it doesn't get rid of local and state taxes. Why did you bring up the Fair Tax any way?

[MONICA]

Why would you be on welfare? But yes, if you didn't have any assets (house, bank account, cash) then you wouldn't pay any taxes.

Seeing as how cocaine is illegal... no one is going to pay taxes on it (fair tax or not).

As for people on welfare... you can give them $100 a week that they buy things and pay 8% taxes on.. or you can give them $92 a week and tell them to get the same stuff. Difference is that at the end of the year, 10% of the money they haven't spent plus any new assets they have (car, etc) is coming back as taxes

Ok fine. Replace cocaine with something that is legal, but not an asset. Maybe I spend it all partying at the club, and I rent an apartment instead of buying a house. If I spend all my money, I don't have to pay taxes. Is that what you are suggesting?

Our economy NEEDS people to save money. That is where the money for loans to start businesses which create jobs comes from. It's when people live beyond their means, and can't pay their bills that we have a housing market crash with people defaulting on loans. I don't think we really need to encourage that type of behavior. Actually, with your idea, what would be the incentive for anyone to even buy a home? Government should only be there to make sure that people are not cheating others, or breaking the law. It is NOT government's job to decide how much money you should be allowed to keep, or to give your money to someone else.

[impalanar]

I think the situation you describe would only be a problem if you didn't have any income.

Lets say you had a net worth of $20k and make $40k a year? If you spend $30k on expenses (car, food, rent, whatever) then at the end of the year your assets are $30k and you'd pay $3k in taxes. Now instead of being worth $20k you are worth $27k

If you live cheap instead and spend $10k that year instead then your asset worth at the end of the year is $50k and you pay $5k in taxes.
Your new worth is $45k.

Seems to work in that example?

Are we talking Assets or Net Worth? The terms are not interchangeable.

[Dan43]

WOW are you guys really that bad at math? Lol... extrapolate a tax rate of 10% every year out for 10, 100, 1000 years and let me know when you end up with 0.

Why are you even arguing with me if you can't grasp the simple stuff?Maybe you should try some extrapolation. Let's create a fictional retired person to work with. This person has worked hard all his life. Every year the government has taken 10% of not only what he has earned that year, but also 10% of the value of everything he has accumulated in years prior. He is now 62 years old and he is ready to retire. He has managed to accumulate $1,000,000 in assets to last him the rest of his life. With todays life spans that would easily be another 20-25 years. 10 years later at age 72 without ever having spent a dime his total assets will have fallen to $350,030. The federal government will have taken the other $649,970 in taxes on his "total wealth".

Please explain how this "total wealth" taxation plan of yours make ANY sense.

[MrBlah]

dumbest thing I've ever heard of, it's something a communist country would do

[Dan43]

I think the situation you describe would only be a problem if you didn't have any income.

Lets say you had a net worth of $20k and make $40k a year? If you spend $30k on expenses (car, food, rent, whatever) then at the end of the year your assets are $30k and you'd pay $3k in taxes. Now instead of being worth $20k you are worth $27k

If you live cheap instead and spend $10k that year instead then your asset worth at the end of the year is $50k and you pay $5k in taxes.
Your new worth is $45k.

Seems to work in that example?Until you take into account that most people want to build net worth throughout their life time. Under your plan if your savings, investments property amount to 10k this year, you own 1k in tax. If you add another 10k to it next year you owe 2k in tax. Add another 10k and you are at 3k in tax. At that rate how long does it take for the average income family to hit the wall where they can not increase their net worth because there is nothing left of their income after covering food, clothing, transportation and taxes? 10 years? 20?

[Trey]

The problem is that the wealthy don't consume all that much compared to how much more money they make than the median citizen. In the end, you can only drive so many cars, eat so much food and wear so many clothes.

Are you sure about that? Expendable income is expendable income no matter your wealth..

I may splurge and have a 15 dollar lunch on Friday as my income allows, where as the "wealthy" may splurge and buy a 50 dollar lunch..

I doubt you'll find any research that the wealthiest Americans spend any less percentage wise than the average citizen... Most likely its the opposite..

[ogle-z]

[QUOTE=TarzanMan;10316]

Seeing as how cocaine is illegal... no one is going to pay taxes on it (fair tax or not).

Actually, under the Fair Tax the cocaine would be indirectly taxed. The dealer must buy Cheetos and Diet Coke for their children's supper, Nike shoes to throw on the power lines, pants and t-shirts in XXXL to go on their 5'4" frame and a gun told hold sideways. All these things would be taxed at retail.
Also, under your tax of assets, what happens when a child inherits a home, business or farm? Even if they inherit just a $250,000 home and are taxed 10%, it eats up half of someone's $50,000/yr income. Even if that asset has been in the family for generations (as in the case of many farms) it would most likely be lost. And yes, I know this is the case sometimes now, but it would be greatly increased under a asset tax system.

[BUD]

Quit confusing the liberal with facts. That's not playing fair.

[wallypiper]

I think the situation you describe would only be a problem if you didn't have any income.

Lets say you had a net worth of $20k and make $40k a year? If you spend $30k on expenses (car, food, rent, whatever) then at the end of the year your assets are $30k and you'd pay $3k in taxes. Now instead of being worth $20k you are worth $27k

If you live cheap instead and spend $10k that year instead then your asset worth at the end of the year is $50k and you pay $5k in taxes.
Your new worth is $45k.

Seems to work in that example?

This has been said, but it is the most compelling argument against taxing assets so I'll say it again. Taxing assets encourages consumption and discourages saving. The result would be a shrinking economy. Economic growth is financed by savings. Let's say you have a business making custom motorcycle parts. You make enough to get by but your income is basically fixed because you only have one milling machine and you can only operate one machine at a time. You want more income. To make more, you need another machine (they cost $500) and an employee to run it. To get another machine, you save money. But with the asset tax, you lose part of every dollar you save to the government. And the more you save, the more you lose. This year, you saved $100 and had to give the government $10. You have $90 in your machine fund. The next year, you save another $100 and you have $190 but the government takes $19 so you end up with only $171. So the second year, even though you scrimped and saved $100, you only added $81 to your machine fund. And every year, that effect gets worse. Third year, save $100, have $271, gov takes $27.10, you have $243.90. You saved $100, but only added $72.90 to your machine fund. How many years are you going to keep doing that? Think you'll ever make it to $500?


Are you sure about that? Expendable income is expendable income no matter your wealth..

I may splurge and have a 15 dollar lunch on Friday as my income allows, where as the "wealthy" may splurge and buy a 50 dollar lunch..

I doubt you'll find any research that the wealthiest Americans spend any less percentage wise than the average citizen... Most likely its the opposite..

Actually, I expect they do pay less, percentage wise, than the average citizen. Of course, that's how most wealthy people get wealthy. They spend less of their income and save more. The fair tax encourages that behavior which is good for everybody because saving finances economic growth which results in more jobs, more income more, more spending, more tax revenue . . . It does NOT eliminate the inequality of wealth and income but only government control of both the means of production and the distribution of income can do that. The income tax is a disaster. It inherently punishes productivity and success. For almost 100 years the government has been tweaking it trying to eliminate that built-in bias, but you can't really do it. By it's very nature, it punishes hard work and reward.

[BUD]

The government cannot ever effectively equalize outcomes. People have different work ethics, talents, motivations, and self discipline. The old joke about equalizing grades applies here. Some people work 60+ hours a week, don't spend their money on every big screen tv that comes out, and save while producing. Some have to be prodded to work 20 hours a week if they work at all, they eat out 5 times a week, buy a new TV every year for their apartment....etc How could they possibly be expected to have the same outcomes. Keep the opportunity there for everyone but let the individuals decide the outcome. NEVER in the history of the world has socialism/communism worked.

[Karl Hungus]

The government cannot ever effectively equalize outcomes. People have different work ethics, talents, motivations, and self discipline. The old joke about equalizing grades applies here. Some people work 60+ hours a week, don't spend their money on every big screen tv that comes out, and save while producing. Some have to be prodded to work 20 hours a week if they work at all, they eat out 5 times a week, buy a new TV every year for their apartment....etc How could they possibly be expected to have the same outcomes. Keep the opportunity there for everyone but let the individuals decide the outcome. NEVER in the history of the world has socialism/communism worked.

Bud, I agree with everything you say here except that the government wants to equalize outcomes. No one in the government has said that. They have said that they want to narrow the widening gap between rich and poor. That's not the same thing.

[MrBlah]

Bud, I agree with everything you say here except that the government wants to equalize outcomes. No one in the government has said that. They have said that they want to narrow the widening gap between rich and poor. That's not the same thing.

sounds like the same thing to me

[wallypiper]

Here's how to narrow the gap. Once the economy starts to recover, especially employment since a recovery without jobs means nothing to the unemployed, those people that wish to move from the poor toward the rich end of the gap should save some of their income. I know it can be hard. But look, when I was 20, I was making $18000. That's equal to about $65K today. That is much less, in inflation adjusted dollars, than I make now. But I was still able to save some money. I had no advantages over the next guy other than a willingness to work my ass off for somebody and live on less than I made. I drove an old car that required me to work on it every few months. I had no special skills in that regard but went to a store and bought a service manual so I could fix the things that broke. I lived in a dumpy apartment that cost about 25% of my take home pay. I ate cheap. I drank cheap. I lived cheap. I was having plenty of fun though. Seeing other people around me that had more, and there were plenty, didn't make me jealous and resentful. It inspired me to find out how to get from where I was to where they were. (That mostly involved more work, by the way, and a never ending willingness or even eagerness to learn new things.) The government is not the solution to income/wealth disparity. Personal commitment and a willingness to sacrifice some immediate reward for some long term goals is how you change your location on the curve. The reason the gap is widening is because more and more people believe that they should be able to achieve the wealth and comfort that richer people have without making the effort and sacrifice that those people made. It's not a problem with our economic system or our education system. It's a problem with our society and our values. Government can't fix it. Resources devoted to looking for ways for government to fix it are wasted and that makes it worse.

[BUD]

Why is narrowing the gap between rich and poor even that big of a deal? Our poor people here have a very high standard of living compared to a lot of other countries. My parents never used credit cards and paid cash for just about everything if not everything. At our church, we were often the ones that helped deliver food supplies to needy families. It always boggled my mind how these "needy" families would have a nice color tv, beer in the fridge, a nicer car than we had...etc. It really was an eye opener. Often, they would be in government subsidized housing. Wally hit it dead on. People want all the bells and whistles but they don't want the work that it takes to acheive them legitimately. They elect politicians who promise to use the police power of government to take it from those who earn them and give it to those who don't. If they don't want to work for it, let them stay poor. Removing the stigma of poverty only increases the amount of poverty. Trying to equalize outcomes only ensures a bad outcome for everyone. The government should protect us from our enemies, regulate commerce, and do a very limited amount of other duties as specified by the constitution. This social engineering crap is only increasing our implosion and hastening the day when we no longer are relevant as a country.

[G_MAN]

Why is narrowing the gap between rich and poor even that big of a deal? Our poor people here have a very high standard of living compared to a lot of other countries. My parents never used credit cards and paid cash for just about everything if not everything. At our church, we were often the ones that helped deliver food supplies to needy families. It always boggled my mind how these "needy" families would have a nice color tv, beer in the fridge, a nicer car than we had...etc. It really was an eye opener. Often, they would be in government subsidized housing.

This was an eye opener to me as well growing up.

[Butthead]

my first job out of college with a finance degree in 1990 i made a whopping $23K per year. that was about enough money to share
an apartment with a buddy, buy a used car and have a little beer money. i could have stayed in that station of life, but chose not to. many
others choose to stay there. i looked to people that had the kind of jobs i wanted and asked them what i need to do to get there. it's up
to you.

[BUD]

“Government exists to protect us from each other. Where government has gone beyond its limits is in deciding to protect us from ourselves" Ronald Reagan.

http://thinkexist.com/quotations/poverty/4.html

[BUD]

They [Democrats] are the same people who rediscover poverty every election and promise to cure it. They've cured it so often that they've now made a profession of it. They thrive on failures, on righting wrongs, on aiding victims, and so forth. It must be understood that success in those tasks would put them out of business. No matter how many programs are set up and operating, their proponents never claim success for them. To do so would be to say the problems have been solved, meaning the programs are no longer needed. And the programs, not the problems, are their very reason for being. Ronald Reagan

http://www.quotationcollection.com/author/Ronald_Wilson_Reagan/quotes

[BUD]

There are many well-meaning people today who work at placing an economic floor beneath all of us so that no one shall exist below a certain level or standard of living, and certainly we don't quarrel with this. But look more closely and you may find that all too often these well-meaning people are building a ceiling above which no one shall be permitted to climb. Between the two, they are pressing us all into conformity, into a world of standardized mediocrity. Ronald Reagan