Tax - best and worst system's

Realizing that me and Kodiak agreeing on this would only happen well Hell froze over I decided to do a more in depth search of his view of no corporate taxes and found a lot more information on them thus usually get's misplaced when passed along (no ones fault, we all do it).

A number of people and institutions have proposed removing the corporate tax however none of them are for not taxing business at all, What they want is to tax the dividends. In this regard I could get behind such an idea as it has a number of other positive flow on effect's. Having a flat tax on the dividend with out any tax breaks only targets the business owner's and not the consumer's, Not taxing the business profit's allow's for greater wage growth and for more investment into the economy. I personally wouldn't have a tax rate on the dividend's any less then 40% though wouldn't be against a mean's tested tax rate, With those poorer paying little to no tax (Basically set it up along the income tax rate).

And I agree with Kodiak on the national sales tax, while it does technically hurt the lower income more then the rich it is impossible to tax it all at different rates, Hence why every nation that has a VAT/GST/NST has them set at flat rates, Makes the system simple.

As to the fuel tax, That needs to be increased. Sitting idle since 1993 and all that has happened since then is the road system has continued to crumble away (the fuel tax is to fix the roads).

I can see what your trying to say but I must point out that your number's are grossly out of whack. For the tax rate to be 10% the cost of the item assuming the are paying the full 40% (give or take) then the profit margin before tax would have to had been 25%, Only a fraction of businesses have such profit rates. As to typical mark up, Well that is simply a stab in the dark, Mark ups generally are tiny, Should also note most product's don't go through so many cycles to get finished. As to the end cost being $24,943.58 vs $12,800 well if those numbers had been realistic then the US tax income from business would have been more then double what the US currently get's in corporate taxes.

Sorry but I can't stand over inflating something.

 

LWD--if you get a deduction for charity, you are really not giving without getting something back.... you are paying less taxes...is that true charity?? .and, in reality, the government is also giving to that charity....anyway you look at it, it's wacko...how does this help the government anyway??
and what's the charity?? is it religious??....there's a bunch of worms right there...people will give to charities without deductions...my dad does all the time.....they never should've started that......can you prove it helps the government?? they outspending now, and are out of control

 

I did choose that number because it made the math easy. Perhaps I should have chosen a different number but it's clear there's a significant impact.

Actually it's not. That is pretty much standard for retail stores and from what I understand for wholesalers.

That's highly dependent on the product. If you are looking at something mechanical at least parts of it likely have been through even more cycles. Some grocery items may only go through 1 or 2 cycles though (the major food companies controling much of the distribution and production structure). I'd stand by this as a reasonable estimate of the number of cycles though. That said and putting some differnt numbers into excel, a 1% tax rate yields almost $14K after 7 cycles (same $12.8K for no tax) where 2% yields ~$15K and 5% ~$18K Don't want as many cycles? with ony 4 1% means $1665 instead of $1600 and 2% $1732 so the impact is already significant.

Sometimes they can be useful in making a point but getting better numbers is worthwhile. Problem is we don't really know what any of the numbers are. In particular you were mentioning the number of cycles but if you look at the impact of things like the above on wages then what the wage earner buys impacts the over all tax burden as well. You essentially have a massive recursion problem. At this point the best we can probably do is bound the issue clearly it means that over 5% of most things we buy is a "hidden" tax and with some things it may be significantly more. Whether this is a serious issue or not is another matter and gets into phylosophy as much as anything which is in some ways the whole tax issue.

 

If I give $100 to a charity then get $30 off my taxes I've still given $70 to the charity that I don't get back. On the other hand if I choose charities whose purpose I beleive in I get the positive emotional impact of supporting a cause that I like. I'd still call that a charity either or both ways. The same thing if you give to say an NPR station which sends you a hat or a coffee mug worth a couple of bucks when you donate $50.

That's one way of looking at it but a key feature is the donor is deciding who the money goes to and not the governemnt. I personally think that's a very positive thing. I can as an individual direct some of governements spending.

From the above it should be clear that is not correct. There are some ways of looking at it where it makes a lot of sense.

I think I already pointed that out with the Katrina example. But again if the governement is going to take care of disaster victims (and one can make a case for it being constituionally mandated) if a charity can perform some of those functions and especially if they can do so cheaper and faster than the government it's good buisnes and good use of government funds to encourage such charities. Here's an example although the numbers are totally made up. Say it would cost the government $1000/day to run a soup kitchen tent in a disaster area but a charity can do it for $500 and there is a deduction for said charity that amounts to 30%. IF that's the case then the charity run soup kitchen is costing the government $150/day instead of $1000/day. Sounds like a good financial policy to me.

That is a serios question. How to limit the charities. By it's very nature the governement has to IMO bend over backwards to not limit them too much (although establishing overhead limits would be a good idea IMO). When religion gets into the act it is even more complex and contenous. Is a donation to a church something that should be taxed or not taxed based on the freedom of relligion cluases? I suspect you can argue either way. Then there are things that are more subjective or less clear. For instance if soemthing reduces crime rate it both protects citizens and lowers the cost to the governement of dealing with crime. Figuring just what the success rates are though is often difficult much less the real costs and benefits.

But do they give as much and too the same institutions? For instance Michigan used to have a 50% tax credit for the first $200 you gave to public shools or educational institutions. I know that impacted where my money went. Why? Becuase I knew I could increase the effect of my caritable donations that way. Why do some charities hand out momentos or prizes for donations? Because it increases the donations enough to more than cover the cost of the items.

Never should have started what? Giving deductions or giving charitable deductions. I can see reasons for bellieving either but I can also see reasons for supporting either as well.

I think to some extent I have but we might need to look more closely at things if you disagree.

Thinking about the issue last night it occured to me that this was in a way, off topic. Spending especially out of control spending is IMO not really a function of the tax code. It's a course politicians have persued. I'm not at all convinced that "fixing" the tax code would have any significant impact on that. If we significantly increase tax revinew it might take them a while to out spend it but I would be surprised if it didn't happen.

 

http://www.wsj.com/articles/SB10001424127887324469304578143351470610998

here's an article on charities and deductions for them....just like I thought, the rich make out on the deductions....the ones who do not need the deduction.....they never should've started the charitable deduction...the pols are law happy..they like to make new and more laws for everything imaginable....new deductions, new laws, new obamacare taxes...they tax people who don't have healthcare, when those people don't need the healthcare...the youngsters in their 20s!!!! look, another new tax that is really ridiculous...they need to get rid of a lot of the laws, not make new ones
the keep spending more and they say we need to raise taxes....

 

While I definitly agree that politicians are at the core of the problem I'm not sure your conclusions are correct.

Say for instance a wealthy individual can pay $100,000 in taxes or donate $150,000 and pay $50,000 in taxes is that really to their benefit? They've doubled their cash out. As for the effect on the government that really depends on where they donated it. If it was to a church or some charities that don't end up doing the same or similar work to the governemnt then the benefits are questionable (their may be some second and third order effects though and these can on occasion be substantial). On the other hand ceratain other charities may require the government to spend less in that area and perhaps even multiples of the amount donated.

So it looks to me like charitable donations are not really a plus to the rich or at least as much of one is implied. Whether or not they benefit the government and thus the rest of us is an open question at this point.

 

It's still flying right over your head. I'm not talking about sales taxes. Any (ANY) tax you put on business is passed to the consumer. That's the way it works. It's overhead just like lights, power and labor.

That's fine as far as it goes, but what it does is open the very door I keep pointing out - that everyone fails to grasp this simple economic fact. So, slimey politicians can raise taxes on the "other guy" with the full support of those who can't grasp that they are actually paying the tax. This sleight of hand gives them the ability to screw us with new programs and handouts.

And I'll have to point out that each product is taxed many times in the course of getting to market and that cost balloons each time the product changes hands. The guy at the end of the line pays the full tariff.

 

It's not a tax, it is a fine.

The only way the IRS can collect is if you are getting a refund, from which they will deduct the appropriate amount. If you are not getting a tax refund, they cannot collect. That is the "loophole" that Obamacare uses to get around current law.

 

A tax is a tax.....sales tax, income tax.......Texans pay more in sales tax because they don't pay income tax...........off of that in many cases the tax is passed on to consumers.........that doesn't mean that that money went to the government in every case......corporations also find opportunity to have "TAX CREDITS" and often they are used to not pay the taxes you may have paid to them. Do consumers pay most of the taxes? I think so and I think the lower classes of our middle class suffer the worst.....so flat taxers would only accomplish INCREASING the burden down at the bottom where the load is already being carried. I have no problem with a graduated tax system but the loopholes need to be repaired not left for the rich to use to their advantage which transfers all load back down to the bottom. The flat tax is just another way of doing what we are already doing. I admire Warren Buffet and his kind who know what is going on and we should listen to what they advise whether it fits your narrow politic or not. He has made his fortune UNDERSTANDING the way money works and he feels the rich can afford a bigger share of the expenses. Why is it that CORPORATE WELFARE is never complained about? Why is that CORPORATE tax credits are never complained about? Why is it that the poor's tax credit is so complained about? Why is it that the poor's welfare is so complained about? Why is the Corporate tax credit is never mentioned? In our nation's budget 800 billion in corporate welfare....for the poor welfare, 90 billion. People only gripe about the 90 billion. Why?.....because they drink the same cool-aid supplied here so often. Someone wants you to focus on 90 billion while they help themselves to 800 billion because you are drinking your own cool-aid and they have kept us at the cool-aid trough for decades. Did you ever notice as we go through the steep economic cycles that it is only the middle class and lower that feels it.......while wall street is more and more insulated from the ups and downs? When Wall Street is totally insulated and human kind absorbs all the punishment there will be at least 10 new flavors of cool-aid.

 

Looks like your the one drinking too much Kool Aid...

Yeah...That was Obama's "American Recovery and Reinvestment Act of 2009"...What year are you living in?

And it was hardly $800 billion in "corporate welfare"
http://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009#Tax_incentives

"Corporate welfare" usually runs around $100 billion to $150 Billion depending on the year.

Regretfully, most of us are employed by said corporations. As such, in return for our "work", the "corporation pays us, which allows us to put food on the table, pay bills, pay mortgage, etc. So, in a sense, "corporate welfare" also benefits us corporate employees.

As to "complaining" about the poor's welfare. Go down to your local big box grocery store on or about the 5th and 10th working days of the month and watch the "show". Need a wedding cake, use the EBT card. Need a deli platter for the big party, use the EBT card. Need "smokes", use the cash portion. Come out with 2 to 3 shopping carts overloaded with groceries and get into a pimped out SUV/car(the rims and stereo system alone cost more than I paid for my used Honda Accord). Do this, and you might start to realize the thought I have every now and then..."I am living wrong!"

Now, don't get me wrong, welfare is needed, but should be regulated as strictly as they do the WIC Program - You can only buy certain necessities. Not the many frivolous grocery items you see stacked in their carts. You want the frivolous items, join the rest of us and work for it.

I now return you to your regularly scheduled Kool Aid.

 

Why so angry mr t?
Educated, personable when wants to be.
Why you have to take an axe sometimes. ..try catching flies with sugar rather than vinegar.
You just shot VG down. He has been here longer than you. Maybe show some respect.

 

Not anger...Jealousy...Where is my handout?

I only take to the axe when a statement is so egregious that it needs to be axed...And his "800 billion in corporate welfare" needed the axe...Badly.

My respect is earned...Not given. Even then, if you have earned my respect and are dead wrong, I will say so.

FWIW, he may have been here a month and a week longer than I have...So, Poppy, I ask you this one question...

How big a lie does that entitle him to tell?

 

Just saying, there is a way to disagree without putting another down. Why be so harsh.

 

I hate Kool Aid.

 

I like Raspberry Red and Loudmouthed Lime myself.

https://www.youtube.com/watch?v=Ujip5DxwGQw

 

Hahaha...that is how we should disperse tension in the ME.
Remembering those packets of coolaid brother D55.
I was a Tang man.
https://www.youtube.com/watch?v=Wf1kw5Yp9Ck

 

For the moment I cannot find my source for the 800 Billion figure, however there is a way of calculating certain benefits and credits that add up to that that I cannot find.......I did find that there remains in some estimates a 3 to 1 ratio of corporate welfare to welfare for the poor and will cite that. Poppy I expect them to attack me....I have not been so popular at times and I am out on the stump....the principles of why people show hypocritical concerns remain the same if I happen to be off a bit or quite a bit on the figures.......the ratio speaks for itself if it is smaller than my sources I was reading but that does not alter the reasoning behind my thinking.....people get angry at what goes to the poor but care little about what goes to others even if it is far more! I am not an enemy of the corporation.....I believe in it being the producing power of the world but it does not need the tax payer's money to prosper if it is run right...the worker in a corporation should get his money by working profitably for the corporate structure and I believe in being a good "corporate" citizen....it don't need a taxpayer dole, benefiting a worker....http://www.foreffectivegov.org/node/341

 

Victor, you're guilty of accepting the fallacy that corporations pay taxes. They don't. In the real world, taxes are passed to the consumer. We pay the taxes by proxy, in the form of higher costs for everything we buy. When we raise the cost of products above what the market will bear, we force that production (and those jobs) overseas.

If people could grasp this simple economic fact, we could then institute a fair and transparent system of taxation.

 

One of the reasons is that they are fundamentally very different things. Indeed even calling it "corporate welfare" was an attempt to frame it in terms suitable for propaganda. Welfare, as in the real thing, is fundamentally charity, certainly other justifications have been propased and justifyably so but they are really secondary. Tax deductions and credits for corporations on the other hand are best viewed as investments, the government is giving them a break in return for something. Given that, railing against corporate "welfare" makes little sense. Surely there are cases where the desired return is unlikly or perhaps not even possible and those cases need to be looked at and for and brought to the light. Similarly there are other cases where the returns simply aren't worth the investment and again those need to be examined but the system as a whole doesn't. As for the real welfare IMO it needs a rework, some of the mechanisms have clearly been counter productive and the system has been abused (as has the corporate tax break system) but that's not really what this thread is about.