Direct versus consumption taxation.

[Shannow]

There's been a big push to tax consumption rather than income for decades.

Britain today announce that as part of their bailout (oops, stimulus package), they are reducing consumption tax and increasing income tax.

Smoke and mirrors ?

One side argues that the less direct tax, the more there is to spend, the other that cheaper apparent prices mean mores spending.

Both sides say more spending.

 

[Johnny]

Well, I will give you two examples from here.

Texas has no state income tax, but the sales tax is 8.5%

Wisconsin does have state income tax, but the sales tax is 5%

I lived in Texas for 40 years and now I live in Wisconsin. I much prefer the Texas way.

I am pretty much on a fixed income now and would rather pay my taxes as I spend, rather than have to fill out a multiple page form every year and write them a check.

 

[crinkles]

I think there has to be a balance. I don't mind my income tax, car registration (which I believe is just a "road tax") being paid to government (as long as they use it well, sometimes I feel like I am just supporting dole bludgers). But, when it comes to stuff like ciggarettes, alcohol, etc. I don't want to pay for that excess.

It still hurts on the odd occasion that I drink. I don't know how Yobbo's pay for their crates of booze.

Australia has 10% general sales tax on jsut about everything, "neccesities" like milk etc are not taxed. My wife always makes it known that sanitary pads are GST taxed, as if it's not a necessity?!

 

[kingrob]

Originally Posted By: crinkles


Australia has 10% general sales tax on jsut about everything, "neccesities" like milk etc are not taxed. My wife always makes it known that sanitary pads are GST taxed, as if it's not a necessity?!


Well, it could be argued that the human body has always needed food and drink, but we could go back to "natural" sanitary napkins made out of animal hide or human hair...

What exactly is a Yobbo anyway?

 

[Papa Bear]

They will probably adopt whichever method brings in the most money.

 

[Gary Allan]

Quote:
I think there has to be a balance.



I think exactly the opposite. You can attempt to balance very heavy loads. You have to close doors on multiple taxation ..otherwise you always end up with dual taxation.

I would support a national/state/local sales tax that exempts food and clothing if all other forms of taxation are abandoned. No exemptions for non-retailed "passed on" items. The forklift you buy for your warehouse won't be exempt ..nor the taxicab you buy ..etc..etc.

or

I'd support a 100% flat tax rate with no deferments or exemptions/deductions.

No matter how you tax, it's paid by someone and is integrated, in on manner or another, with the GDP.

Some who say that it will stunt grow may be correct, but the only ultimate truth would be that they believe in the tooth fairy and that growth isn't dependent upon making taxes appear to be disconnected from consumption.

Ultimately all costs are paid by producers and consumption is the one choke point where choice is 100% in the producers hands on what they pay tax on. Flat income taxes would make the most influential and powerful cut and bleed the same as the lower income producer, hence they'll suffer all the same effects across all income levels.

 

[PandaBear]

Originally Posted By: Johnny
Well, I will give you two examples from here.

Texas has no state income tax, but the sales tax is 8.5%

Wisconsin does have state income tax, but the sales tax is 5%

I lived in Texas for 40 years and now I live in Wisconsin. I much prefer the Texas way.

I am pretty much on a fixed income now and would rather pay my taxes as I spend, rather than have to fill out a multiple page form every year and write them a check.



California, state income tax (high) and an 8.25% sales tax. Love it?

 

[XCELERATIONRULES]

Would you guys rather get taxed on what you make,when you save it,and when you spend it,or just have it taxed once when you spend it.

Easy answer.

 

[BrianWC]

Originally Posted By: Johnny
Well, I will give you two examples from here.

Texas has no state income tax, but the sales tax is 8.5%

Wisconsin does have state income tax, but the sales tax is 5%

I lived in Texas for 40 years and now I live in Wisconsin. I much prefer the Texas way.

I am pretty much on a fixed income now and would rather pay my taxes as I spend, rather than have to fill out a multiple page form every year and write them a check.


Johnny, never move across the border. We have income and sales. State sales tax was repealed a few years ago with the thought being to raise the income tax rate on the "higher brackets." When people realized how many of them fit into the "higher brackets" there was a revolt. This swap is in the process of being repealed. But what has made the situation even worse was even though the state removed its sales tax, the parishes and cities of course didn't and in fact raised their share, hoping consumers would not balk since they'd keep paying the same thing at the stores.

 

[BrianWC]

Oh...and the sales tax rate in my city is a total of 8.6% Just to total it up, state income tax for single income over $25k is 6%, if you're married, it bumps up to $50k and over. Combine that with that wonderful 33% bracket that I'm in right now and that's 39% gone. Fun....

 

[Gary Allan]

Well, Brian ..do you actually pay 33% FIT ..or is that only what you're billed for before deductions. My household FIT was around 10% after the accountant got done with it. Naturally my local school and muni taxes are gaining big time.

The paper has daily headlines of local taxing authorities showing massive shortfalls in balancing their budgets.

Everything should be flat taxed on income. The more vital environments will attract the most producers at the lowest cost. No shell games ..no escape clauses ..no dodging the realities of the situation.

 

[tdi-rick]

Originally Posted By: crinkles
I

Australia has 10% general sales tax on jsut about everything, "neccesities" like milk etc are not taxed. My wife always makes it known that sanitary pads are GST taxed, as if it's not a necessity?!


I believe in a consumption tax, I tend to think it's much fairer and should encourage saving. yes, I know 'they' want us to spend ATM
Unfortunately it was severely compromised here when introduced as the Greens and Democrats blocked passage until certain items like fresh food where exempt.
It really makes the paperwork side of things a nightmare for business, and guess who ends up paying for the increased overheads ?
It's crazy for the corner Take-away when the have to charge GST on things like fresh sandwiches when the ingredients are GST free, so they can't claim input credits, or worse, when they cook a chook GST is liable on a hot one, but if they let it cool off and sell it cold it's GST exempt ?????
I'd hate to do their GST return every quarter, at least mine is dead simple.

10% across the board consumption tax was supposed to do away with a multitude of smaller, inefficient taxes and the buggers were supposed to overhaul the income tax system too, which never happened, and now everyone that draws a wage has been hit with bracket creep.
It doesn't effect me, but it's unfair on the average PAYE wage earner.

 

[BrianWC]

Originally Posted By: Gary Allan
Well, Brian ..do you actually pay 33% FIT ..or is that only what you're billed for before deductions. My household FIT was around 10% after the accountant got done with it. Naturally my local school and muni taxes are gaining big time.

The paper has daily headlines of local taxing authorities showing massive shortfalls in balancing their budgets.

Everything should be flat taxed on income. The more vital environments will attract the most producers at the lowest cost. No shell games ..no escape clauses ..no dodging the realities of the situation.



Yes, remember, I am not one of the privileged people! We have a few deductions. The wife's mileage, daycare, 3 kids, mortgage interest....we haven't really put much toward retirement yet b/c until this year we needed every bit of cash to get by. Now things are great. But I still want more of what we make!

 

[JHZR2]

Originally Posted By: Johnny
Well, I will give you two examples from here.

Texas has no state income tax, but the sales tax is 8.5%

Wisconsin does have state income tax, but the sales tax is 5%

I lived in Texas for 40 years and now I live in Wisconsin. I much prefer the Texas way.

I am pretty much on a fixed income now and would rather pay my taxes as I spend, rather than have to fill out a multiple page form every year and write them a check.


It would only be practical in a western state or as a federal effort. Why? Well, if I need to buy something large, Ill go and buy it in Delaware where there is no tax. If NJ instituted a higher sales tax, dont you think more folks would do this by going to DE or PA?

Id say so. If you live in Houston or Dallas, youre probably stuck. If you live in an area where the states are smaller and closer together, as in most of the wealth centers of the country (e.g. Boston, NY, Phila., DC, Atlanta, Chicago), people can fairly easily go somewhere else if it is a better deal...

 

[oilyriser]

In Canada, you have to pay tax on a bag of salt, or a bottle of drinking water. But necessities like milk, sugar, bars of gold and silver, baby formula, and basic groceries are exempt.


did I just read bars of gold and silver???

Yes, gold bullion is considered a basic necessity in Canada.

 

[SinisterK9]

I'll take a fair and flat tax for everyone, preferably on goods. Well at least for 99% of everyone as there are always exceptions to any rule. If you want a way around the rule, then join the military and shop on base. Otherwise you pay everywhere you go. But this 40% of Americans not paying their way is garbage. Having rich people pay nearly all the taxes in this country is also garbage.

The richest people in this country already account for almost all of the tax revenue collected. Further, the overwhelming number of millionaires in the United States are self made men/women. In most cases, it was not inherited, contrary to popular belief and bed time stories.

I have a dream of being a millionaire one day, and passing on wealth to my family. And should I reach that goal, I feel no need to be penalized for success. No need to tax me for making it, then taxing any money I make in interest off of it, then taxing me when I die, then taxing it if it's some some sort of gift or inheritance and so on and so forth.

So, in summary: Fair flat taxes, let thriving business continue, let failing business fail, and keep the government out of my life to the largest extent possible.

 

[Gary Allan]

Quote:
The richest people in this country already account for almost all of the tax revenue collected.


That's accurate and also misleading. The highest wage earners in the highest brackets also tend to have substantial income that is deferred or what falls outside of income tax. It's "owned" income vs. "earned" income.

The majority of the taxpaying population only gets to move 15% of their income and offer it to the market to be milked and harvested for their future retirement, while any top level executive will have several magnitudes times his "earned" income sequestered from taxation.

 

[XS650]

Originally Posted By: oilyriser
In Canada, you have to pay tax on a bag of salt, or a bottle of drinking water. But necessities like milk, sugar, bars of gold and silver, baby formula, and basic groceries are exempt.


did I just read bars of gold and silver???

Yes, gold bullion is considered a basic necessity in Canada.


Bars of gold and silver are seen as investments. You don't pay tax on stock and bond purchases do you?

 

[Pablo]

Progressive income taxes are evil beasts wearing do-gooder sheepskin jackets. The idea of the state stealing more money because you hump harder and smarter is abhorrent to my puny free brain. Legal financial success should not be penalized. Yes I know there are more ways to define success than money - but all that is created by taxing more as you earn more are fancy escape clauses, class envy, segmented society, spend and spend government, less actual revenue collected, dissuading further financial success…….

 

[oilyriser]

You can make jewelry out of the silver bars.

The system, whatever it is, should be made simple, with no exceptions, classes, or categories. The more you complicate things, the more people have to become lawyers to argue over it, and the fewer smart people you have working on solving real problems.