Creating Fair Taxation

And in a truly Free Market, such waste is rooted out and eliminated.

 

The fact that waste is inevitable doesn't imply that nothing is being done to reduce it both in private industry and our government. Every government agency has initiatives to identify waste and to eliminate as much as is financially feasible. I don't know where people come up with this idea that government agencies are attempting to reduce waste in the agency. Yes, we hear about the rare horror story where an employee was collecting wages for years without actually working but that's one out of millions of employees. Most government employees are hard working just like everyone in the private sector. Just like private industry some are even over-worked because they're job responsibilities consume more time than the can give to the job.

In any case the identifiable "waste" for goverment ranges in estimates from about $15 billion to $50 billion a year depending upon who's doing the estimate and when we consider the fact that the combined budget of the federal government is over $3 trillion a year it's an insignificant percentage. Yes, we need to work on reducing it, and we do, but as a percentage of budget it's not very much.

 

Yes and our government has the same cost reduction initiatives that private industry employs.

 

Tell me. What incentive do they have to stop waste and cut expenses?

 

Why not end our useless, wars on crime, drugs, and terror to end our need for an Income Tax?

 

"Spend it or lose it," is not a cost-reduction initiative.

 

Correct.
Bank fees is an example. They've been criticized for the fees they charge, and Dems call on more regulations to stop it. All that's needed is free market, which has provided competition in the form of prepaid debit cards. No overdraft fees and you can spend money from the cash deposit right away. No need to steal money from taxpayers to write and enforce unnecessary regulations.

 

We often see that in private industry as well but that doesn't disparage the attempts at reducing costs by eliminating unnecessary spending (waste).

 

There's actually a hidden fee with prepaid debit and credit cards because the enterprise issuing the cards earns a huge amount of interest in dollars on the money it receives before it pays out that money. They're earning money on the delay between receiving the funds that belong to the person and disbursement of the funds and it amounts to millions of dollars monthly that they're making on the person's money that doesn't receive any interest on their deposit. It's based upon "let's screw the person that can't afford a bank account" principle.

 

We need to get back to the fact that this thread is based upon the collection of income taxes to fund the general expenditures of the federal government. It is not the irrational "world peace" proposition of a beauty queen that solves all of the world's problems.

 

You haven't a clue what you're talking about. The banks are the ones that hold your money deposits for several days before you can spend it. The monthly fees for the debit cards are no more than those of banks, and you can spend a a deposit immediately. In fact, Walmart Blue bird cards have NO monthly fees and no deposit fees. American Express will pay you money back for using the card. I've gotten 200 dollars from them just for using mine frequently.

 

Would that still be a problem if Labor had equal protection of the law regarding the concept of employment at will, and unemployment compensation that clears our poverty guidelines, simply for being unemployed on an at-will basis in our at-will employment States.

 

My checking account, associated with my bank debit/credit card, is an interest bearing account and I'm collecting interest from the day of deposit to the day of withdrawal. That doesn't exist with prepaid debit/credit cards to my knowledge. So basically I'm "making money" on my bank deposits while those purchasing a debit/credit card that are also depositing money to an account are being screwed out of an interest payment for their deposit.

It is also true that my bank earns more interest on my money than what they pay me in interest but at least I'm getting something for my money on deposit.

 

Many banks are willing to waive some account related fees with any direct deposit.

 

The problem with gaining government revenue from income is that income from employment is declining and will continue to do so for the foreseeable future while capital income, which is rising and will continue to do so for the foreseeable future is taxed at a far lower rate. In other words, if the government is to maintain a reasonable revenue stream it needs to increase taxes on capital gains before raising taxes on employment income.

Raising the minimum wage would push up the entire wage curve which could maintain revenues from wage income and reduce marginal social spending increases over the short term but is not a long term solution.

 

There are two types of income: earned income that measures what a person has contributed to society, and unearned income that measures what a person is taking from society. The idea of income tax is to shift the burden of taxation off of the second type and onto the first type.

So, can you explain why anyone would want to do that, other than to make the tax system less fair?

So, any attempt to get to the root of the problem has to be dismissed as utopian? That about it?

 

My tax proposal abolishes the invidious classification of "capital gains" and taxes all income (above the exemption) regardless of source at the same tax rate. There would no longer be "earned income and unearned income" but instead there would only be "income" and the gross income of the household, minus the household exemption, would all be taxed identically.

Your concern has been addressed by this tax proposal.

This is a tax proposal that doesn't address the distribution of wealth being created in the United States. Once again I can't, nor did I attempt, to address every issue we have in the United States. I only addressed "taxing income on gross profits" for the household where the "exemption" in principle is designed to establish the basic and necessary and mandatory "costs" of the household that are not taxed.

As I like to say by analogy, "This is not the World Peace proposition of the beauty queen." It's a limited and pragmatic means of funding government were all personal income regardless of source is subjected to the same tax rules and it fully funds all of the authorized government expenditures.

 

All dollars spend the same regardless of source and this tax proposal taxes dollars the same regardless of source. The "exemption" establishes the baseline for the "mandatory costs" of the household and then all income above that amount is taxed at the identical rate and the rate is established by the authorized expenditures of Congress resulting in zero deficit spending.

This tax proposal doesn't "shift the tax burden" to either the workers or the investors because it treats both of them identically.

I believe this proposal does address the root of the problems when it comes to the necessary taxation to fund the authorized expenditures of government.

It taxes "profits" while exempting "costs" for the household so effectively taxes are only paid for with income used for discretionary spending while income used for mandatory spending is not taxed and it taxes all income used for discretionary spending identically.

 

There is one issue related to the "Exemption" because I based it upon "median household income" as opposed to "average household income" which is considerably higher because of the small percentage that have income many times what the average household has. For example if we look at the top 400 income households they had income roughly 5,000 times greater than the median household income.

When I ran the "tax rates" for 2013 (29%) and 2014 (24%) they were based upon "average household income" and not on "median household income" so the tax rates were actually higher than they would have been. Basically we could increase the "Exemption" by basing it on "average household income" as opposed to "median household income" and that would change the previously calculated tax rates for income above the exemption.

The only problem per se with this is that it allows more "comfort" above the necessary "support" required for the American household. In short it would be exempting some "profit" above the "minimum costs of living" for all households. I thought about that and had an internal debate on which way would be better to go and selected the "median income" over "average income" as being more pragmatic. I anticipated the "conservative" argument that those with incomes between the "median income" and the "average income" could afford to pay some income taxes.

 

Wrong bringiton.

Companies need money and a lot of type 2 income is not income, it's cash flow, capital gains and or dividends that is a result of taking money that was already taxed then investing it in companies. By investing in companies they are contributing to society.

You did however forget type 3 income, welfare income (in the form of subsidies), ... income where people take from tax payer funded coffers but the taker does not provide a product or service in return. Welfare income / subsidies is received without the taker contributing to society.

 

There is not two types of income because then there would only be two types of income taxation.

Don't conflate meanings now. "Earned Income" is just policy. It has nothing to do with...

Society is a nebulous thing. Measures are also a nebulous thing. You're basically arguing for gibberish since you've provided no context.

The second type don't take yachts or private airplanes. They take food, shelter, and hopefully healthcare. What is the first going to do with it's investment capitol? Create jobs and healthe security for the second? Not unless it's profitable. Which is the negative incentive to not do so since your model is entirely based on pricing. The tragedy of the commons.

The idea of income tax, or any kind of tax, is to get money where it is located to pay for government services. I hate the income tax, but if you don't earn legal income then you don't pay it. It's really not that hard to follow.

 

This is based upon misinformation.

Investment funds fall into two categories. There are funds that were previously taxed as income and are used for investments and there are also funds that were tax-deferred and used for investment.

Funds used for investments that have been previously taxed as income are not taxed again as income. For example a person can purchase $1,000 in stock and later sell it for $2,000. Only the $1,000 in profits is taxed as income.

Funds used for investments that were initially "tax-deferred" are taxed when the asset is sold. So if the person purchases $1,000 in stocks with funds that were never taxed and then sells the stock for $2,000 then all of the $2,000 is untaxed income and all of it is subject to the income tax.

Dividends are "untaxed income" and are always subject to taxation because they've never been taxed before.

Of note in my proposal I allow corporations to "deduct" dividend payments so that the same "dollars" are not double-taxed at both the corporate and individual level of taxation.

We can also note that very little investment capital actually goes to corporations. Only primary investments where the stock is purchased directly from the corporation (typically as IPO's) provides any funding to the corporation. Virtually all investments are "secondary" investments with zero dollars going to fund the corporation. Based upon a review of SEC transactions and IPO's for a single month less than 0.00005% of all transactions in dollars went to fund corporations. Effectively the amount of investment dollars going to fund enterprise in the United States is ZERO.

My tax proposal actually addresses this because all "welfare" benefits go to fund the minimum mandatory expenditures (i.e. below the Exemption) of the household and therefore relate to "cost" of the household that are untaxed while only "profits" (i.e. income in excess of the Exemption) are taxed under my proposal.

 

Income, regardless of source, is always the same because all "dollars" spend the same.

 

You're one of the most knowledgable people on this site when it comes to taxation. Is the cancellation of a tax deduction a spending cut or a tax increase?

 

That's more of a philosophical question than it is an accounting question.

Technically it's neither IMHO because it doesn't affect the tax rate(s) (or spending) but it could increase an individual's tax liability which would also increase government revenue without a tax increase. Of course some tax deductions are very limited in application because few people actually qualify for the deduction.

Hypothetically there could be a tax deduction for the purchase of a private jet (I don't think there is but there could be) but because only a handful of people purchase private jets the elimination of the deduction has virtually no impact on society. Ending the mortgage deduction would affect far more people but it still only affects people with a mortgage and it wouldn't affect any renters or those like myself that paid cash to purchase their home. In any case it doesn't change the tax rate(s) so effectively it's not a tax cut or a tax increase.

The addition or cancellation of deductions doesn't affect government spending one iota because federal spending is unrelated to tax revenues. I change that with my proposal and while my proposal doesn't limit government spending the tax rates do change based upon the spending authorizations relative to gross income (from all sources). Under my proposal if spending authorizations go up relative to gross income the tax rates go up and that's a tax increase and if the spending authorizations go down relative to gross income then it's a tax cut.

In my proposal the "Exemption" replaces all "Deductions" and because it's based upon "median household income" the Congress can't change it because only the economy can change it. If median household income goes up or down for any reason then the "Exemption" changes accordingly because it's not subject to statutory definition. Personally I find the "Deductions" to be nefarious because Congress manipulates them to provide benefits to some while disparaging others. I wanted to remove the nefarious political actions by members of Congress related to taxation and this was a "best fix possible" to that problem.

Hope that answered your question.