Taxes-

Partially inspired by Savage Heathen's Sin Tax thread.

So, similar to my Race thread, let's start this off with a few questions about taxes.

• On Income Tax- Should everyone pay the same percentage (flat tax) or, should it be scaled with the rich paying having a higher percentage (or vice versa) of their income taxed? Why/Why not?
• On Sin Taxes- Is it fair to tax certain goods more highly than others?
  • Would they be more acceptable if they were called something else?
  • Is it acceptable if the increased tax money goes to specific areas?
• On Tax Free Goods- What, if any goods should be tax free?
• On Tax Breaks- Should any corporations/businesses/individuals not have to pay taxes?

edited 13th Jun '11 5:15:06 PM by Wulf

They lost me. Forgot me. Made you from parts of me. If you're the One, my father's son, what am I supposed to be?

I'd rephrase the first one, as even with a flat tax, it's equal as percentage, not equal amount. Also the second(or third question), they are called Excise taxes, not sin taxes.

edited 13th Jun '11 4:56:24 PM by blueharp

No one should be exempt from taxes unless you honestly cannot support yourself.

Tax churches too.

Income taxes–progressive taxation. Because expenses do not scale with income.

Tax breaks for corporations–generally against. Perverts the free market.

• Income tax: I like the graduated income tax. While a flat tax seems more fair on the face of it, it doesn't take into account the people who don't have to pay income tax due to lack of income. During the last year, I didn't have to pay income tax because I was making minimum wage or less. If I had been taxed on my income, I wouldn't have been able to survive, since minimum wage isn't a livable wage any more. However I think that the income tax system needs an overhaul. There's too many loopholes, and too many times a raise at work can mean less money coming in when it bumps you into a higher tax bracket.

• Sin taxes: I'm okay with sin taxes. Washington state has ridiculous taxes on alcohol and cigarettes, and there's been some quibbling lately over whether or not candy should be taxed as well *
  ^{I'd support it more if the criteria for what was "candy" was actually candy. Under the proposed tax, baking goods could be counted as a candy, for example. It's just badly written.}
  • I wouldn't mind if they were called something else or if it was kept the same.
  • I also wouldn't mind if we could vote on where the taxes went. Much like how property tax goes into the city pot for maintaining the community, I think that using taxes to provide welfare assistance or healthcare assistance would be good.

• Tax Free Goods: I don't mind paying taxes on stuff. If I'm too poor to eat, food stamps are available, and taxes don't get added to the bill if you use them.

• Tax breaks: I like the tax breaks that go towards small businesses and local businesses. It encourages people to open stores/manufacturing/etc and the more businesses in an area, the more people can be employed. I think that all individuals should be taxed in some way *
  ^{While I didn't pay a federal income tax this year, I paid quite a bit in the form of sales tax. Washington State doesn't have a state income tax.}
  and I very much agree that corporations and larger multi-state businesses should be taxed.

"I don't know how I do it. I'm like the Mr. Bean of sex." -Drunkscriblerian

Fixed-percentages don't work in reality. It's tempting on the surface, but... well, it's obvious. A rich person, even after having 20% or whatever of his income taken away, can still support herself easily. A poor person cannot; that 20% might push her below the poverty line.

Assuming we keep the state and taxation... If you've totally gotta have taxes, 't least they can be an progressive income tax. Not necccessarily very high, but it should be quite progressive (working and lower middle classes should pay very little, upper middle class should pay some, rich should pay a higher amount).

Sales Taxes? They're all regressive: The rich save a larger percentage of their income (thus, no sales tax). Most of the working classes don't save a dime or save very little. Sin taxes are especially offensive: They're not only regressive, but they're straight up sumptuary laws to restrict what the proles can or can't do. Ideally, sales taxes would be abolished altogether. If they can't be, go to:

Tax-Free Goods: I am against sales taxes in the first place. As many goods as you can get away with. Luxuries that are expensive enough to be pretty much rich-only need not be tax-free, but basic goods and the relatively cheap luxuries of the average Joe and the working class should.

Tax breaks for corporations: Democratic, worker-owned and worker-managed cooperatives should pay no corporate taxes at all, to incentivize that form of production and to encourage self-reliance. Freelancers shouldn't pay any corporate taxes either, even if they technically are an LLC.

Aside from that, I guess corporations *might* have their corporate tax lowered if they, say, go green or offer lots of high-paying jobs to people.

edited 13th Jun '11 5:12:25 PM by SavageHeathen

You exist because we allow it and you will end because we demand it.

• On Income Tax- Should everyone pay the same percentage (flat tax) or, should it be scaled with the rich paying having a higher percentage (or vice versa) of their income taxed? Why/Why not?

Flat tax isn't useful, a graduated progressive income tax is most useful. This helps the poor with economic mobility and enter the middle class easier.

• On Sin Taxes- Is it fair to tax certain goods more highly than others?

Yes. If a good comes with externalities not accounted for in its pricing, then a tax should be placed on it to accurately reflect the cost that society would normally have to pick up the tab on.

• Would they be more acceptable if they were called something else?

I don't think it matters, renaming something is just political games. People should be intelligent enough to discuss taxes for what they are.

• Is it acceptable if the increased tax money goes to specific areas?

Not really, I don't like earmarked dollars except for very specific things. Restricting the ability of the government to react in a flexible manner to changing economic circumstances is a recipe for long-term disaster.

• On Tax Free Goods- What, if any goods should be tax free?

Basic items should be tax-free, mostly all the things that poor people would purchase. So this is typically low-end clothing and raw food. Maybe some random other stuff too but it should be kept simple so as not to weigh down the bureaucracy.

• On Tax Breaks- Should any corporations/businesses/individuals not have to pay taxes?

Sure. I believe in profit-based individual income tax, so it means if you're below low-income cut off (a higher number than the poverty line) you should pay zero taxes. Below poverty you should receive money.

Corporations should pay a graduated corporate tax. This benefits smaller companies and small business capitalism over that of monopolies and large corporations.

@ Drunk

Are you sure you make less money being bumped into a higher tax bracket? You should be making more money no matter what, but you make less on the margin.

@Breadloaf: Maybe not as a whole, but the jump from lower class to middle class can translate into a reduction in take-home wages, depending on where you're from. Usually, you can get it back at the end of the year in your tax return, but that doesn't help with the day-to-day expenses.

"I don't know how I do it. I'm like the Mr. Bean of sex." -Drunkscriblerian

Oh, you mean the take-home pay goes down, alright. That's more clear to me.

I think when everyone pays the same amount it's called a "tithe"?

I'm opposed to corporate taxes as a whole and thing they should be removed.

Fight smart, not fair.

Why? Corporate Taxes have a very valid reason for existing: Since corporations are designed to shield their individual owners from liability, it is only fair that corporations pay the public for this protection.

edited 13th Jun '11 9:49:41 PM by Jauce

The only reason we need a progressive tax is because the poor can't survive being taxed at the level that we*

tax the rich. The reason we tax the rich that highly is because we need the revenue for federal programs. A really huge chunk of federal expenses involves, basically, giving the money back to people. And at this point, ending those expenses is politically unfeasible, and continuing them is financially so. Who was it who said that the democracy would survive until the people realized that they could vote themselves money from the treasury?

In greater immediate relevance: What's most important is that it be simple. The current mess of tangles is impossible to deal with intelligently. A tax code should really be among the least complicated of laws, and instead it's among the most. If you can describe it in a paragraph or less (and it's not something like 'tax all brackets at 100%') it's probably better than what we have now. (Yes, there are many policies that are concisely descriptable that are worse than the current one. Read the above as requiring some basic level of common sense.)

Shinigan (Naruto fanfic)

Corporate taxes are done on the profits of a business, which would otherwise just go into the owners pockets. I see no reason to flag this profit as different from when it goes from being a profit margin to being mailed out to investors. It also serves to eliminate a large amount of tax laws and gets lawyers fired.

Fight smart, not fair.

So you are proposing to allow corporations a free pass to individual profit, without individual liability, for the sake of eliminating overhead? That does not seem fair to me.

Tax corporations on revenue if you want to ensure a good stream of money.

1. Progressive income tax, preferably geometrically increasing and formulaic rather than bracketed, kicks in around or over what the lost living wage is in that region. Adjust the rate for parents and other providers for dependents. Tax corporate income too, Oh, and inheritances/estates.
2. I don't do sin taxes, I do health taxes. The government is offering services as regards security, healthcare, environmental protection, and so on. Thus, if something puts the pool of service recipients at risk and thus costs us more, we might as well create the funds to cover that from the riskmakers. The little extra you pay on the cigarette carton offsets what you'd be paying if more people had cancer. This principle can be expanded. I'd tax currency transactions and stuff like purchasing foreign debt more, for instance, to make money off of the global casino. If you're going to gamble with our currency, we might as well run this casino properly and make sure the house gets a secure cut.
3. Tax-free should be the default, barring health taxes as described above and *maybe* tariffs depending on international context.
4. Barring people below the living wage and most university students? No exceptions.

Share it so that people can get into this conversation, 'cause we're not the only ones who think like this.

I'm not sure what you're getting at. If the corporations profits are not taxed, the untaxed money will get distributed to the stock holders, where it can be taxed as regular income. Why use a more complex system when you can just tax at one location.

Fight smart, not fair.

Hahah. They won't distribute it to the share-holders for taxation purposes, they'll put it in limbo...and still manage ways to reap the benefits.

I hate to break this to you but since 1933 when it was first instituted, minimum wage has never been a livable wage. (Not unless you are working 2 or 3 minimum wage jobs) It's not supposed to be.

edited 14th Jun '11 4:22:55 PM by MajorTom

If they're keeping the money from the share-holders, isn't that fraud?

Fight smart, not fair.

• On Income Tax- Tax the mega rich, like Fortune 500 people. Because they need to give a little back to society instead of just acting like The World Nobles.
• On Sin Taxes- Tax cigarettes, tax marijuana if it becomes legal, tax the bigger guns, mainly because one, drugs are disgusting and they make people into absolutely laughable wastes of space. Two, because if you want to get high, you make the state healthy with your money, because in a few years when you are brain dead / dead, you won't be doing much else.
• On Tax Free Goods- Nothing should be tax free, except if you are really hurting. The State needs money to function, after all.
• On Tax Breaks - NO corporate tax breaks, I am sick of those mega corps getting away with stuff like that. Tax them as much as the mega rich, I think if we take enough money from these guys all, we can repair our economy.

I'm going to run with the Canadian taxation system but the American one isn't substantially different.

Stock Options -> any gains made are taxed at 50% of normal rate

Stock grants -> treated as normal income

Dividends -> (Get ready for this one) First you bump up the dividend income by 25%, then you multiply it by 2/3, so it's like around 82%. Then you apply tax credits to this. The usual marginal tax rate for dividend income is around 14-17% (which by contrast, the lowest income tax bracket is 20.05% combined Federal/Provincial for Ontario). The lowered tax rate is to reflect the corporate tax already paid. Corporate stockholders are capable of paying zero tax on the income earned through dividends, to reflect that there was already tax paid via corporate tax.

Dividends are paid out after corporate tax is paid.

edited 14th Jun '11 11:49:30 PM by breadloaf

@Deboss: Not if the shareholders don't object. Generally what this means is that companies whose stock price is rising over the short to medium term don't have to worry about paying dividends, since the company is making them wealthier in another way.

I do think that corporate income taxes should be got rid of, but that the capital gains tax differential should be eliminated. The rich constantly claim that it's necessary to encourage investment, but I call bullshit; what are you going to do with that money, stick it in your mattress and watch it deflate to nothing? Of course you invest it. It doesn't need the tax break. Everything you earn should be taxed at the income tax rate.

If there's a tax shortfall that way, raise the upper rates to compensate.

A brighter future for a darker age.

Part of getting rid of corporate taxation would include declaring dividends to be standard income, just like capital gains. I think.

Fight smart, not fair.

What's going to prevent company owners to just treat their corporations as trusts, then?

If your income is taxed at 40%, but corporate income is not taxed and you own an LLC... You're going to abuse the Hell out of your expenses account and live tax-free.

edited 15th Jun '11 3:20:10 AM by SavageHeathen

You exist because we allow it and you will end because we demand it.