In reply to: PBR Poll on Possible Federal Revenue Enhancements.... posted by Raoul
....The U.S. economy is based mainly on consumption.
And not all are equally beneficial. My sons play online games where if you leave a match you are banned for a period of time. They constantly induce them to upgrade.
Look at Fanduel. They show fans looking at garbage time as opportunities to continue betting.
I don't want to make this a values argument. Someone be!ow made a comment implying selfish intent. I am a Catholic and we are required to help the poor. I am arguing we have fiscal issues and need to discuss options and rationale s for them.
Consumers in the U.S. love to consume. High state sales tax in some states don’t seem to keep people from purchasing goods like their fellow Americans in no income tax states. Consumption especially won’t be an in issue given that relative income would increase with the elimination of the federal income tax.
one is consuming?
I had a sneaking suspicion he was looking at my paychecks, because when I found him eating my leftovers one day, he said "well you make twice as much as me..."
"I don't eat twice as much as you," I replied.
I don't particularly especially like the way "regressive" gets bandied about, but how do these people figure that consumption will scale in such a way to make this sustainable? It seems to me it's more "let's take a more from more people, rather than a lot more from a few."
I admit that it works in the EU, but my suspicion is that it isn't just VAT.
is also a value judgment so the move to shift taxes away from one method of collection toward another involves value judgments. I suppose the most value neutral system would be a flat tax with no exemptions or carve outs. Everyone pays the exact same % of their income regardless of the source of income or the amount. Janitor making minimum wage pays x%. Banker making 300,000 pays 10%. Jaime DImon makes 30,000,000 pay 10%
Even under that system I think there would be some on the right and left who would see value judgments. The right might argue that is isnt "fair" to require them to pay such a higher amount. The left might argue the system isnt fair because the wealthy would not pay on paper gains but can use those assets to go borrow money which can again generate paper gains they dont pay taxes on.
As was tripped below.
In the roommate situation, we both have similar living accommodations so we pay the same rent. If I get the bigger bedroom, I pay more. Those are fairly "easy" definitions of fair.
I would agree with you that it's murkier when it comes to consumption - I didn't intend for my argument to advocate for use-based taxes, more to highlight the problem with people who think that consumption only will solve all our ills (when some people cannot afford to consume).
The other part (of which I don't really have data on hand) is the effective tax rate. My understanding of the rebuttal to people who point to when individuals were taxed at a marginal rate of 90% was that they were very, very aggressive in finding loopholes so they paid a much lower effective rate. Closing out a lot of these exceptions would allow us to have both a clearer forecast and clearer picture of "who pays what".
comment on the topic.
Because taxation was primarily tariffs and excise taxes which fell primarily on the poor and insulated the wealthy. Initially the income tax was only meant to hit people in what are currently the highest tax brackets.
If you went to a sales tax, whatever issues we see with wealth/income inequality would explode.
We have an obscenity of a tax code.
We need everyone to feel the impacts of unconstrained spending and the pain of paying taxes.
system? Complexity is a problem but it is separate from spreading the pain.
I think it was JS Mill who supported only letting taxpayers vote. Having everyone foot the bill may help reduce government spending.
When I get home to computer, I will link.
When I get home to computer, I will link.
(a) that’s because we adopted the suggestion of the noted leftist, Milton Friedman, who thought that it would be a good idea to give low income folks an income tax credit instead of a welfare check. If we still separated the two, nothing substantive would change, but that percentage would go down.
(b) Most of those folks pay the payroll tax. The number of folks of pay neither is less than one in five. Many of them have no income, are retired, or are self employed and income averaging or done such dodge.
is dynamic.
It includes households with retirees who paid taxes for years but now have total taxable income (SS, pension, etc.) that falls below the threshold for income tax.
It includes adults in school (trade schools, associate programs, etc.) who are likely to enter the workforce at some point.
It includes some families with younger children - say a single parent with two children earning $17.50/hour (the average Wal-Mart wage as of January 2023 although their overall minimum wage appears to be $14 per the linked article) working full-time at Wal-Mart. At 40 hours a week (if you're lucky enough to be scheduled for that many hours) for 52 weeks, it would be $36,400 a year but after standard deduction, EITC, and other child tax/child care credits, you are likely looking at no federal tax obligation. But as her children grow, the parent's income potentially improves moving to a new job/position, etc, that filer may become a net income tax payor.
if 40% of returns have zero income tax liability this year and 40% have zero liability next year, the number of folks who have had no total liability in the two year period is less than 40%. I'm not sure we know how much less, though.
resembles a bell curve.
The younger and the older are more likely to not have federal income tax liabilities. This is a Forbes summary (which I know is not the best source) of an article from the National Tax Journal in 2019 and showed roughly 90% of people ages 25-55 pay income tax. Obviously, that data may have shifted with changing patterns of work during the Pandemic and the overall aging of the US adult population.
From the Article:
Age and non-payers
Now, Don Fullerton of the University of Illinois at Urbana-Champaign and Nirupama Rao of the University of Michigan have taken a deeper dive into the 47 percent (now 44 percent according to TPC estimates) Their findings, published in the June edition of the National Tax Journal here and summarized in TaxNotes here (paywall) are fascinating:
-The likelihood of not paying federal income tax is closely correlated to age: If you are very young or (especially) very old, you are far less likely to pay income tax than if you are working age. Only 11 percent of those age 25-55 do not pay federal income tax while more than 80 percent of those age 75 or older are non-payers.
-Relatively few people are persistent non-payers. Among those of prime working age who do not pay federal income tax in any given year, nearly one-third will do so for only one year. Almost 6 in 10 will be paying income tax within three years, and just one-in-eight are non-payers for a decade or more.
-By the way, Fullerton and Rao found a similar story when it comes to government benefits. If you include Social Security, older adults are far more likely to receive government transfer payments than younger people. And, of course, once they begin receiving Social Security, they will continue to do so for their lifetimes.
-But if you exclude their benefits and look only at working age people, the pattern looks a lot like it does for taxes. Among those who receive some government support in one year, 60 percent will get a transfer in the following year. But five years later, only about one-in-five still will be getting benefits. And after 10 years, only about 12 percent still get benefits.