what is a "fair" tax

[trapperjohn]

I must admit I would love to see a consumption tax replace our current income tax system. but........
Is a consumption tax really "fair"? Why should someone who spends more money give more money to the Government? Why should someone give the government more money just because they are stimulating the economy with their spending? I still think the only really "fair" tax is everyone pays the same dollar amount. Why is the government any different from any other service provider? I do not pay any more or any less for services from a business because of my income. Why should anyone have to give the government more money than someone else? Wouldnt the "fair" thing be to tally up the bill. Divide it by the number of people here, and send them all a yearly bill? How would that not be "fair"

Note. I am not talking best, or right or kind or anything but "fair"

 

[LD]

Just my 2 cents worth...........

Defining "fairness" as it relates to our tax system is about as slippery as defining "justice" as it relates to our legal system. One mans fairness/justice is another mans unfairness/injustice depending on which side wins.

However, I think trapperjohn answered his own question without realizing it. In providing the gallon of milk scenario he presented exactly what is being proposed in "consumption" or "national sales" tax strategies. Rich and poor pay exactly the same tax rate on given goods or services. The difference being in the value of items or amounts you choose to buy. A poor man buys one gallon of milk a week because that's what he can afford. Another man buys a gallon of milk every day. He's not being gluttonous, he just likes milk and can afford to drink a gallon a day. Although the gallon a day man pays more overall $$, the tax rate is the same for each man, per unit of identical goods purchased.

Yeah, consumption taxes can be called regressive upon lower incomes. However, the key here is the element of individual choice, and that's about as good as you're going to get in finding something that might be described as "fair".

Two men need a car to get to work and back. A poor man buys a $7,500 dollar car because thats what he can afford. Another man buys a $75,000 dollar car because that's what he can afford and chooses the added luxuries. Tax rates as a % of cost are the same. The poor man cannot really choose to buy the more expensive car but the wealthier man could choose to buy the cheaper car, pay the same tax rate, and yet avoid the higher total $$ tax. The wealthier man can choose to pay exactly the same $$ amount in taxes per annum as the poor man if he chooses to consume or purchase the same goods or services. Rather than getting pounded by politicians by mandate according to their spending frenzy, there is at least some semblance of individual control here that any person of modest or wealthier means can affect at their own discretion.

Flat taxes sound oh so nice and oh so simple. The problem lies in "fairness" as it relates to disposable income. Let's say we establish a flat tax rate of 20% across the board. Now, grab one man that makes $15,000 per year and one that makes $150,000 per year. Which one hardly feels the pinch and which one sweats making the house payment?

Underlying the questions of who "should pay more/less" and "who can afford to pay more/less" often lies the issue of income disparities and distribution. However, that's a completely different discussion.

 

[7.62FullMetalJacket]

$2,400,000,000,000 285,000,000 $8421 per person

I am 4 people so put me down for $33,684.

That is the tax burden if everybody pays equally.

This tells me 2 things:

I do not understand the federal budget and this is clearly way out of line. I think SS payments and Medicare must be deducted because they are self-funding.

The government costs way too much


This is just federal

Now state and local

 

[murrie]

Government spending needs / total population of USA = each persons tax bill?

yes that would by far be the most "fair"

But outside of simple division of costs per person the retail sales tax IMHO is the most fair - LD got it right - "the tax rate is the same for each man, per unit of identical goods purchased. "

A big part of the fairness of the consumption tax includes the Cost of Living rebate. Every dollar taxed up to a cost of living value, similar to in value the poverty line, gets refunded to everyone every month, or quarter. This way people who are only making enough to survive arnt paying much if anything in taxes. Once they begin to make more, and buy that new DvD player, they are taxed. They are taxed on that DvD player the same amount in taxes as someone who never has to worry about money because they inhereted more money than they could ever spend.

This is vastly more fair than the current system where near to 50% of the population pay little to no tax at all; while being able to buy new TVs, 5 CDs a month, eat out 3 times a week a at McDonalds without stuggling at all.

hell yes The government costs way too much, it wastes money like you and I breath. its just natural

And they get away with it because we are stupid, they take a little from us each week - it just disappears - we dont talk about how much we make, we talk about how much we bring home. like that guy from Mr. Deeds, very very sneeky...

 

[7.62FullMetalJacket]

OK. Adjustment based on 2005 budget

budget info

Discretionary Spending 818B, Mandatory Pay-as-Go 1.3T (SS, MC).

I am assuming we are only billed for discretionary funding for flat tax

so how about this

$818,000,000,000 285000000 $2870 per person

$11481 for a family of four

That seems more reasonable and is a HUGE tax cut for me.

 

[flatrock]

My idea of a fair tax would be to not tax any income until you broke a reasonable poverty level. Tax all income above that poverty level at a flat rate.

I'm not against helping out those that need help. However, other than helping with the basics, I would rather donate my time and money through organizations that support my moral beliefs.

I'm sick of giving money to the government and having it go to support things I am strongly against.

 

[jnojr]

If i go to walmart and am in line in front of a person who makes half as much as I do, should I pay twice as much for a Gallon of milk than the person behind me? No one would call that fair. that would be an example of a flat tax, you make twice as much you pay twice as much. Most people would agree that the fair thing in that case would be that each person pays the same amount for the same service.

Errmm... if it's "fair" to charge everyone the same proportion of their overall wealth for something, that would pretty much negate the concept of wealth entirely! Everyone would be "equal". Ain't gonna happen.

 

[Art Eatman]

Leaving out the "woulda/coulda/shoulda" about constitutional issues on taxes and not really all that concerned about "fairness":

Why is the flat tax issue an either/or? Why not some relatively low tax on income, AND a relatively low tax on sales?

It's easy enough to put in a floor for incomes below which no tax is due.

It's easy enough to exempt grocery-store food and medicines, and clothing items costing less than (for example) $50.

So much for worrying about "poor folks".

A single rate for any income above the floor does seem fair to me, if we're gonna worry about fairness. If you pay ten percent on your $30K a year, and I pay ten percent on my $million, where's my squawk? You have your $27K remaining for your overhead; I have my $900K. I can probably buy beans with that...

No shelters, no deferrals, no deductions. Well, maybe, residential mortgage interest deductions below some level for which I have no clue about appropriateness.

But, really, none of that matters. It's the state and local taxes that clobber the bejeezus out of the middle class--what's left of it. I did a "Let's pretend" on the numbers, a few years back. It worked out that the income tax was about 12% or 13% of my (assumed) $50,000 gross pay, after deductions; FICA was its 7.65%, and state/local taxes and fees totaled some 25% to 27%.

Art

 

[Marko Kloos]

Since all compulsory taxation is strong-arm robbery, there's no such thing as a "fair" tax. Fair taxation is as much of an oxymoron as a fair mugging.

 

[Glock Glockler]

The simplest thing for the Feds to do is simply bill the state govtsa percentage of the budget according the population in that state. If a state has 9% of the population they pay 9% of the budget and it's up to the state to collect it. No more IRS and no more having the Feds snoop through your financial records.

 

[Art Eatman]

You may well be right, Marko, but that's irrelevant. What we know is that no government will change to a fully privatized system. And that's a fact, like death or changing planes in Atlanta.

So: The issue then becomes one of trying to create fairness within whatever taxation structure(s) exist.

, Art

 

[tyme]

I'm willing to pay Federal taxes to cover:

-National defense.
-Healthcare (only necessary healthcare, not ER visits for colds)
-Long-term scientific research (stuff that's not strictly defense, like fusion research and space exploration) that's so costly that corporations won't fund it.

But if we could simply get rid of SS and the national debt, that would free up the better part of $1T/yr, which alone would drop taxes substantially. Legalizing drugs and taxing them would generate additional billions. A federal lottery, or several, would generate even more.

 

[biere]

I am for a consumption tax.

I am also for firing most of the folks who work for the government.

Local, state, and federal governments need to do only those things that are required to keep things functioning.

Paying UN dues, not needed. Having a welfare or earned income credit or any other form of wealth redistribution is not needed. Having an irs with such silly tax laws, not needed. Having an atf and such silly gun laws, not needed.

The government is supposed to work for its people's best interest. Currently I see the government working in its best interest since it continues to grow and thus spend more of my money.

One of the few things I think is needed for the federal government to do, national security and import/export controls.

Keeping the airlines running with tax payer dollars, not needed.

And for those thinking about sending everyone a federal bill for their portion of the yearly budget, itemize mine so I can pay only for those things required to operate this country.

Things are tight moneywise for me, they have been for a year. I have learned to live on less money and use fewer things. It is time the government had its own depression and learned to live at that level.

Until the government is downsized and taught to only do those few things that are required to be done for the country to operate, there will be no "fair" tax no matter how you define fair.

And don't think I have all the answers. I just think I am able to point out part of the problem.

 

[Scottmkiv]

I think that taxation is by definition a non-voluntary transaction (i.e. theft) therefore no taxation can be fair.

There are alternative, voluntary, methods of government funding that I think are realistic given a constitutionally sized (or even double or triple that) government. My favorite of these is a contract enforcement fee of 1% of the total value of any transaction. This would mean that if you want to be able to take a contractual claim to a court (say a car's warranty) then you must have paid at the time of purchase 1% of the total value to the government. This would be totally voluntary, and would raise, at the very least, tens of billions annually.

 

[grampster]

I tend to be with Art on this one. There really is no such thing as "fair" taxation. Define fair! One man's castle is another man's prison. So we have to try and accomodate what is necessary. Probably a small flat tax along with a small consumption tax would be best. The flat tax confiscates the necessary money for defense, and basic government functions such as borders, courts, etc. The consumption tax causes those who "choose" to consume more to pay more. If you are going to use up more stuff or space, then pay the freight. If you buy lakefront property you pay more than for land in the middle of the desert. Regarding the black market, if the consumption tax was not egregious, then why screw around much trying to avoid it other than for the excitement of it from time to time. A healthy black market leads to innovation.
Lot's of ideas about government spending and priorities in previous posts, so I won't add to them. Government does do some things right (or could) like transportation, communications, light and heat. But what really is necessary is a movement to create a Constitutional amendment to mandate a sunset of 7 years on any law enacted that appropriates money to survive. A supermajority (2/3 vote of the Congress) would be necessary to keep it alive. That way you get accountability and debate as to the efficacy of a given law.

grampster

 

[Marko Kloos]

There really is no such thing as "fair" taxation. Define fair!

A fair transaction is one where both parties come to an agreement on a voluntary basis without the use of fraud or force from either party.

A private contract is fair.

A compulsory tax collected at gunpoint is not.

There's no way to make a system "fair" that rests on coercion. The most you can hope to achieve is to modify it so that the tax man takes more out of your neighbor's pocket than out of yours.

To most people, "fair" means "someone else gets to pay for it", and it's usually justified and rationalized with "they have it, and I don't." "They" usually refers to "rich people", meaning those who have more money than you do.

 

[iapetus]

Government does do some things right (or could) like transportation, communications, light and heat.

What do you mean by "communications, light and heat"?

 

[griz]

If i go to walmart and am in line in front of a person who makes half as much as I do, should I pay twice as much for a Gallon of milk than the person behind me?

It may surprise you to learn that I have heard people argue for that very thing. Their prinicple is all work should equally valued so it is "fair" to them. There have been governments based on that therory but they didn't/don't work.

And don't be mislead by the term "fair" in ANY piece of legislation. Think of a name like "gun safety act" and what that law would actually look like.

 

[Iain]

To most people, "fair" means "someone else gets to pay for it", and it's usually justified and rationalized with "they have it, and I don't." "They" usually refers to "rich people", meaning those who have more money than you do.

You're right there Marko.

On the subject of a flat tax, the idea worries me a little. Arbitrarily I put the percentage at 10% ok? So someone on $500,000 a year pays $50,000 leaving them with $450,000. Some on $20,000 a year pays $2,000 leaving them with $18,000. Although they pay the exact same proportion $2k out of $20k seems like a bigger hit.

Conversely I have a major problem with taxing people over the odds because they are successful. We need successful people.

As for what I am willing to pay for:

- A smaller govt than we presently have (over here)
- National defense
- Police
- Healthcare (NHS - but many of you will disagree)
- Certain basic level of Social Security...

...and suddenly it is all adding up.

 

[grampster]

Iapetus,
Communications = Telephone
light = electricity
heat = natural gas

Once upon a time the government closely regulated those industries and all of them were delivered efficaciously, at little cost, were maintained and responsive to public needs.

Government de-egulated and the service got worse, cost more and the infrastructure is outdated, not in good repair and not large enough to serve the need. Try calling one of them for service.

While I am a good capitalist and believe in the market place, it has been obvious that putting profit ahead of necessity when that necessity is a fairly universal requirement of our 21st century lifestyles, then it seems that a little government oversight worked better. The system wasn't broke imho, but they "fixed" it anyway.

 

[mercedesrules]

(Marko Kloos) Since all compulsory taxation is strong-arm robbery, there's no such thing as a "fair" tax. Fair taxation is as much of an oxymoron as a fair mugging.

I used to think that "intelligent moderator" was an oxymoron. Your existance disproves that thought.

MR

 

[griz]

762 FMJ

I think your first number of $8400 is right. The "non-discresionary" spending isn't just SS and such, it includes anything required to be paid. Things like military salaries and already committed project money fall under that.

I think the reason people don't believe that high a number is correct is because the vast majority of the people don't pay that much. In other words, we are already "soaking the rich". Believe it, your government IS that big.

 

[trapperjohn]

Once upon a time the government closely regulated those industries and all of them were delivered efficaciously, at little cost, were maintained and responsive to public needs.

Grampster, I can not agree with you on this. compare the phone service choices and the cost today to what it was in the late 70's.

 

[grampster]

trapperj,

My phone bill in the '70's was about $6.00 a month for calling most everybody I needed to call. If I had a problem, I called the Bell Telephone, they answered on the 3rd ring and a repairman was usually on site the same day and fixed the problem no matter where it was at no charge. The phone was a large heavy dial phone, good sound quality, that my folks got in the '40's and it still works yet today.

My phone bill today is about $50.00 a month. If you can get through to whatever phone company you have, if you actually know who they are, it sometimes takes days or long waits on hold. There is generally bad sound quality delivered by phones that generally only last a year or two before puking. If an when you can get a service person, usually you are in for an argument about just exactly where is the problem and is it his responsibility or yours etc etc.

Sorry, but I'll stand by my belief that public utilities worked better when they were government regulated monopolies. Cell phones are a nice option, but I think they would have evolved anyway, and I'm not so sure that they were, in fact, an advancement as they only seem to work properly when users of them are actively p*****g off those around them, or they don't work at all.

 

[MeekandMild]

Back over 100 years ago the concept of "fair tax" resulted in a few experimental single tax communities. Basically these communities had one single local tax rate, charged on improvements to the land. Concept was great until the states and feds started taxing everything under the sun.

I think the only fair taxation nowadays would be tariffs, collected at the borders which coincidentally would be guarded by 200,000 otherwise unemployed beaurocrats. It is really sad the communistas hit on using the all the implied value judgements of the words regressive and progressive, basically derailing discussion about taxation for the last 50 years.