I would really just like a flat tax. No loopholes or deductions. Very simple. It should not take a masters degree to understand the tax code.
I recognize this is one of the main ways Policy is implemented (incentives can drive certain behavior), but we’ve got hundreds of years of complexity going on and I wouldn’t mind simplifying this.
Flat tax is too regressive. What seems justified is a basic S-curve indexed by income, and where the left hand side dips below zero so those below a certain line effectively get a negative income tax to maintain a certain standard of living.
I agree as well. Also, luxury goods (yacht, private airplane, (maybe) jewellery, etc...) should be taxed much heavier than bare necessities (food, clothing).
I believe some basic amount of wealth should be tax free (e.g. x-amount of square meter living space per person in a household, a car with value up to 25.000 USD perhaps, etc...).
I also believe many ultra-wealthy people setup foundations to control their wealth after their deaths, avoid paying inheritance tax and keep wealth inside the family by being able to decide who is on the board of such foundations. Foundations are also used to peddle influence. I believe for these reasons that donations to foundations should not be tax exempt.
I disagree, at least not with so simple an implementation. I don't want to live in a world where we're unable to escape working by constant taxes. There should be at least a minimum threshold where wealth is completely untaxed so that people can live freely and not have to work until they die. Enough for a house, some property and land, and a retirement fund. I'd consider it more justifiable to tax someone like Bill Gates with billions of dollars and millions of acres of land, but it's just unnecessary for taxes to be absolutely inescapable.
This comment perfectly encapsulates the political/societal leanings I completely disagree with. This sentiment of "nobody can have anything nice unless there's enough for absolutely everyone to have an equal amount."
Life's not fair, and no amount of politics or regulations will change that. There will always be some people with better health, more attractiveness, more intelligence, more charisma, better connections, more drive, better self-control, and so on. I have excellent physical and mental health despite hardly ever going to a doctor in my life; I have good genes and I have a natural interest in eating healthy and exercising. Some people are born into rich families and will never have to work a day in their life if they don't want to. Some people are beautiful and go about their life just shy of being worshipped because of their looks. That's life.
I have zero problem with a world in which some people have a way better life than everyone else. My goal is to avoid bringing anybody down while bringing as many people as possible up. Let the rich guy be rich, and find a way to help the poor guy educate himself and get more opportunities. Let the beautiful people be beautiful, and help everyone else take care of themselves better and learn to make the most of what they have. It's anti-freedom and dictatorial to force everybody to wage slavery just because some people are born poor or are careless about their finances.
> This comment perfectly encapsulates the political/societal leanings I completely disagree with. This sentiment of "nobody can have anything nice unless there's enough for absolutely everyone to have an equal amount."
That's not what the OP said. They said that they're against a system that permits some to escape work while others never can. In other words, some people can comfortably retire when they're old, and some are basically forced to work until the day they die, and some never have to work at all. That's not at all the same as saying that everyone should have equal outcomes at all levels of the game, so much as saying that everyone should eventually be able to cross the same finish line.
> It's anti-freedom and dictatorial to force everybody to wage slavery just because some people are born poor or are careless about their finances.
What you're failing to recognize is that wealth disparities are artificially created by government policies. The government isn't going around dictating to people what is or is not beautiful, or dictating what you must eat so you will be healthy, or what you must wear to be fashionable, but they are dictating what every person must pay into the system to keep it running.
It turns out, the people who are benefitting the most from the system are not paying into that system. If you're really interested in spreading freedom, then perhaps you should be more invested in the 99.9% whose financial freedoms are being curtailed in order to prop up that remaining 0.01%.
> In other words, some people can comfortably retire when they're old, and some are basically forced to work until the day they die, and some never have to work at all. That's not at all the same as saying that everyone should have equal outcomes at all levels of the game, so much as saying that everyone should eventually be able to cross the same finish line.
That's exactly what I was referring to. Unless everybody can retire, nobody can retire. No thanks. I will do whatever it takes to keep the US from becoming that kind of a dystopia.
> What you're failing to recognize is that wealth disparities are artificially created by government policies.
I don't hold that belief. Disparities and inequality are fundamental to human life, which is why I gave the example of attractiveness, health, etc. I also mentioned careless people because you'll always have people who are self-destructive or unable to support themselves, and you can't help every single person. I'm not bothered by that, I accept it as reality. Thus I think it's utopian to believe it's possible to live fully equally, and it only keeps anybody from having nice things just because there's not enough for everyone.
> That's exactly what I was referring to. Unless everybody can retire, nobody can retire.
No, it simplifies to "everybody can retire, period".
> I don't hold that belief. Disparities and inequality are fundamental to human life
When someone refers to "wealth inequality", they're not talking about disparities of 1 or two orders of magnitude, they're talking about 5 or 6 orders of magnitude. Show me a disparity in beauty or health of 6 orders of magnitude.
It's pretty clear that these analogies are not remotely faithful to what we're discussing here.
> No, it simplifies to "everybody can retire, period".
Sure, I'd love that too. It's a great goal but not one that I remotely believe is actually achievable. Feel free to come back within the next 50 years and say you told me so if I end up being wrong.
> When someone refers to "wealth inequality", they're not talking about disparities of 1 or two orders of magnitude, they're talking about 5 or 6 orders of magnitude.
This is an unfounded claim. I'd love to see what data you're basing this on.
> Show me a disparity in beauty or health of 6 orders of magnitude.
I can also easily show you disparities of that magnitude: just look at any of the many chronically ill patients that rack up medical expenses throughout their life, versus people who smoke and drink into their 80s and 90s without a problem and never see a doctor. You can easily use total lifetime medical cost as a metric if you want to meet your arbitrary disparity threshold. If you're in the "everyone's beautiful/healthy/smart in their own way" crowd then we have fundamentally different stances and there's little use talking further.
What incentive would I have in your system to be a frugal hard worker that practices delayed gratification instead of a dopamine-addicted wasteful lazy consumer?
What incentive do I have in not-that-system to be a cooperative, generous hard worker that practices collectivism instead of a power-addicted exploitative ambitious business magnate?
Collectivism is overrated and unnecessary. I'm a misanthrope and I don't want to live in a collective society, I want to live in a society where I can get away from other humans and keep to myself. Taxes and laws are enough to keep society civil and functional; going beyond that is imposing your own personal beliefs on everyone else, like a theocracy or dictatorship.
This is a pretty hilarious take IMO. Cooperation is literally the only reason humans are the dominant species on the planet. But sure, "overrated and unnecessary".
There's a difference between collectivism and cooperation. I contrast collectivism with individualism; i.e. valuing the collective over the individual vs valuing the individual over the collective. I want to live in an individualist society, not a collectivist one.
Most of the wealth tax proposals I've seen don't even kick in until you have tens or hundreds of millions of dollars. I don't think anybody needs to be worried about those people having to work until they die.
> I think no matter what you do, bad unintended consequences will occur.
I agree, and that's why I don't freak out when we have inequality. It's unavoidable for as long as we allow humans to grow based on genetic lottery rather than pre-approved personalities. No matter what system you have, if I'm smart and selfish enough, I'll find a way to exploit it for my benefit at least, and maybe go out of my way to harm others if I'm sadistic, too.
A wealth tax will fail for the same reason the income tax has failed. The extremely wealthy will move their wealth into complex multinational financial vehicles and strut up to the tax authority saying, "See? I own very little." It becomes the legislative cat and mouse game, which governments lose when up against those with massive assets with which to lobby.
There is not a good answer that I have found to the taxation issue. Wealth is self-sustaining over the short term like advantageous mutations are self-sustaining in biological systems.
> The extremely wealthy will move their wealth into complex multinational financial vehicles
In Elizabeth Warren's proposal, they would be subject to a 40% exit tax on the wealth that they moved. If they didn't pay the exit tax, that would be fraud.
As with most laws, the intention is noble but the outcome may not be. Every time a new law seems to be passed "strengthening" the tax code, it seems mysteriously effective against those who can't afford to pay a law firm's retainer and a lobbying group's salaries.
Who would wait long enough after that bill passed to keep their wealth in America? The second it went through congress the money would start pouring out
To be clear, in Warren's wealth tax proposal, it doesn't matter where the wealth is located. If you're an American citizen, you would be required to pay the tax on all of your wealth above $50 million, no matter where it is.
The alternative is to move your money overseas and renounce your American citizenship, at which point you would owe a 40% exit tax.
One could certainly hide their assets overseas, but that would be tax fraud, and if discovered would result in prison time for both accountant and wealthy individual.
Agreed. Flat tax and sales tax are both regressive and both hurt the population the economy needs most to spend on consumption to be viable with circulation.
Unfortunately Intuit (Turbotax) and the CPA trade groups lobby against any tax simplification whenever it comes up. Regulatory capture of our political process has corrupted it at every turn.
A flat tax simplifies one little bit of math, and doesn't really address loopholes and deductions. If you have an income tax you have to calculate "income". If I have a little store and buy gum for $1.00 and sell it for $1.10, it will not work well if that's counted as $1.10 of income. That $1.00 is a deduction. We can't eliminate them. It's a "loophole" when we think the deduction is not in the spirit of calculating income, but that's not an objective criteria.
A flat tax removes the benefit of shifting income to different entities to pursue lower marginal taxes, but I don't think that's the kind of abuse we're looking at here, nor is that abuse particularly scalable.
How about removing income tax (hard to measure, easy to avoid by rich) and increasing vat by the same amount. Vat could be even added to stocks (buying $5000 of Tesla stocks? Pay 20% vat. This could probably end all short term speculations as well). Definitely to yacht and houses, vacations, butlers and gardeners, gold doorknobs, Ferraris, swimming pools, 200" LCDs, hotel stays, massages, anything that is consumption really)
Because this would absolutely shaft everyone other than the well off?
Because there would be no way at all of scaling the tax based on income / wealth? So someone earning almost nothing with no wealth would be expected to pay the same tax as a billionaire?
A large UBI would address this OK, but FairTax seems to really work to keep the tax as regressive as possible without being quite so bad as a flat VAT. A "welfare payment" for "low-income earners" means you have to be in the system ("earner"), that income still has to be calculated, and that the payment is stigmatized ("welfare") instead of presented as an entitlement.
This also seems bad: "The proposed Fair Tax Act would apply a tax, once, at the point of purchase on all new goods and services for personal consumption" - "personal consumption" is arbitrary. A VAT tax applied everywhere for all goods would be fair and harder to avoid. Though even that seems like it would encourage financialization to hide material production.
I don’t know that flat tax is necessary - progressive taxation is a sane policy, as the marginal utility of money goes down the more of it you have, and therefore a larger tax burden is more easily borne - however addressing the gap between how asset and employment income are taxed is critical to combatting gross wealth asymmetry.
I write this as a member of the asset-owning class. I wasn’t always - I worked in the U.K., with my income automatically taxed via PAYE (Pay As You Earn), and paid between 20 and 45% effective tax rates on my earnings.
Now, my income is rentals and investments, and my effective tax rate is nearer 5%, on a much larger income than I ever had from employment. I’ve not done anything special or weird, I’ve just paid capital gains and written down the allowable expenses. It would not be hard to pay no tax, just by restructuring my finances a little, but it doesn’t sit well with me as it is.
Honestly, it’s nonsensical. At the very least asset income should be taxed at the same rates as labour income - but it should probably be taxed at a higher rate, as penalising productive labour and rewarding rent-seeking is ultimately contrary to the interests of everyone.
One could always tax land ownership. It cannot be hidden or escaped from. It's also the ultimate scarce resource and yet there are landlords who do nothing just draw rent from those who actually utilize the land.
An addendum re the UK: it's funny how the UK tax scheme is so punitive on the middle class. Earn 100k pounds gross and take home 50k. But the moment you become an asset owner, you can basically optimize all of it away. The two income brackets "supported" by the UK tax regime are the poorest and the richest.
That misses the point. The problem isn't income. The problem is there is no "simple" way to assess wealth.
Actually, simplest thing to do mathematically is to skip the dollar-denominated accounting entirely, and just pay the government in kind i.e. asset forfeiture / putting the means of production in partial state control.
e.g. the gov owns stock in a company based on the distribution of private ownership (is it equal like ESOP or unequal like Facebook and Google?), and without regard to the market price of the stock.
I challenge the mathematically literate in America to really think through this.
I would start with "cui bono" and look into learning about the various institutions in place who's main purpose is to maintain the complexity, that would stand to make significant losses (or disappear) if it were simplified.
(just in case this sounds like pessimism or apathy, I don't necessarily think it is. But if one genuinely wants change, one does need to be aware of where hurdles lie)
A flat tax removes the simliest fairest part of the tax code and leaves all the bullshit and loopholes behind. Don't make the mistake of thinking you're (and my) experience of the tax code is anything like the actual code. We only see 0.001%. It's easy to consider only the things we see after all.
I know that's not what you mean. But if you simply filed a 1040EZ, then paid a 20% penalty when the IRS sends you a letter saying pay the rest of what you owe, expect to pay... 28 percentage points effective instead of 26.
This is to say that tax complexity is a red herring. You can already live in an almost zero-complexity tax obligation personally, as a wage earner, above and beyond what is officially prescribed. It's not really what it's about. It's probably not about saving money either.
I recognize this is one of the main ways Policy is implemented (incentives can drive certain behavior), but we’ve got hundreds of years of complexity going on and I wouldn’t mind simplifying this.
I don’t know where to start though.