15 thoughts on “No Kidding”

  1. I worked part time a few weeks last year in an attempt to go back full time maybe. Between that and my SSD I NOW owe some income tax. It’s completely, utterly and totally ridiculous that I owe taxes on my whopping $16K income last year, and G.E. owe ZERO on BILLIONS!!

    And before anyone says, “…but they employee people, you were the employee”.

    I paid taxes in all the years where I WAS the employer too. I’m all about a flat tax!!

  2. In spite of our having the second-highest nominal corporate-income tax rate in the developed world (Hello, Japan!), the rates actually paid by businesses vary wildly according to their political clout.

    One of the reasons for Japan’s lost decade (or two, I suspect they will have another), is that there is no real turnover of large businesses – no start up culture. And this is where the US is heading. While GE pays no tax, small businesses do, this is a huge bias towards too big to fail businesses with political clout and against start ups and small businesses (where all the new jobs actually come from). Large monopolies have a tendency to get into bed with one another – governments like big businesses, but the economy does not.

  3. Flat Tax would be a good idea indeed. Especially a Flat Tax on … Sales! We should tax consumption, not wealth production. Taxation on income and capital gains is just stupid.

  4. One of the reasons for Japan’s lost decade (or two, I suspect they will have another), is that there is no real turnover of large businesses – no start up culture. And this is where the US is heading.

    An inevitable consequence of the bald-faced lie that any company can be “too big to fail.”

    Whoever first coined that phrase needed to be flayed alive and rolled in rock salt. I wonder if it’s too late?

  5. Brock,

    I agree. A national sales taxes is a much better solution to the issue of raising revenue. Not only is it fairer, but it also reminds folks about the cost of government every time they go to the store.

  6. It occurred to me the other day, probably as a delayed refection on what might be good and bad about the ‘fair tax,’ that our tax system is also partly or largely responsible for the illegal immigration mess. One big complaint people often have about illegal immigrants is that they don’t pay taxes yet they get lots of benefits. If illegal immigrants had to pay through, say, a consumption tax, there’d be less concern about their presence. Additionally, a feature of the ‘fair tax’ is the ‘prebate’ intended to exempt the first X dollars of each family from the consumption tax. Said prebate would not be available to illegal immigrants (and presumably an attempt to get such a prebate would flag them as illegal immigrants AND tax fraudsters), thus insuring illegal immigrants actually pay MORE tax. This would provide a disincentive to illegally immigrate, and additional government revenue from those who choose to do so anyway–kind of a tariff or automatic fine on illegal immigration. Of course, you’d still have issues with black markets to avoid the consumption tax, enforcing the minimum wage for illegal workers (and arguing about whether said workers depress the wages for legal residents and how fair that is), and all sorts of other things. But at least the tax system would become a disincentive to immigrate illegally rather than an incentive.

  7. I’d settle for a flat GST too. Just so long as we ALL do it!!! I’ve read time after time about the billions we’d gain by taxing people with a GST who now don’t get taxed. All those who get paid from drug running, or paining houses for friends and family for cash P/T, would get hit.

    Legalize marijuana and go to a GST, we’d have a tax surplus in 5 years.

    (it’s based on increased tax revenues, via the GST…people buying munchies would pay more out of their income for snack foods…it’s a little convoluted, but it might work) (no…I did not get the idea from Charlie Sheen) (Tommy Chong, I think)

  8. Before we get too carried away with the idea of a consumption tax, let’s remember what happens when governments raise taxes on legal products beyond a certain threshold – smuggling (e.g. cigarettes). There will always be people in the underground economy who will find a way around the system. Sure, they’d pay taxes on their legal purchases but they’ll also avoid paying the taxes they can avoid. Prohibition I (alcohol) and II (drugs) have shown that suppliers will spring up to meet a perceived need.

  9. In recent years there has come about a twist on the old axiom about taxation — you know, the one that says if you want less of something, tax it.

    In reality, if you want the government to suddenly want more of what it currently wants less of, tax it.

  10. Larry J,

    Those problems occur because of taxes on Specific product, like cigarettes or a specific activity like importing. With a General Sales Taxes those ill gotten gains would eventually be realized and returned to the system as the criminals buy their sports cars or mansions.

  11. Income vs. sales tax doesn’t make much difference to me to long as the result is simple, transparent, and a reasonably low top marginal rate.

  12. Thomas, you’re forgetting that criminals, by definition, don’t obey the law. That’s why they still get drugs and guns despite any of the attempts to prevent that from happening. There are always ways of getting around the law if you’re sufficiently motivated even when it comes to buying houses and cars. Dirty lawyers, corrupt public officials, smugglers and forgers can let the sufficiently crooked get away with anything.

  13. Larryj,

    But somewhere, somehow, the money from an underground economy tends to enter the above ground economy. The car dealers selling the fast cars will need to pay sales taxes on them no matter who buys them. Same for the mansions and other trappings of wealth. Its hard to hide those, nor the purchase of them.

    Now I could see a small agricultural community avoiding it by folks just trading neighbors potatoes for beef and staying under the radar, but not the big time criminals who like to spend their ill gotten gains on the status symbols of success.

    For example, the guns they buy are not made in a basement, they are sold by the major manufacturers and somewhere in the custody chain someone paid the sales tax on them even if they bought them from an underground arms dealer.

  14. Who says you need to go to a dealer to buy a car? Thousands of cars are stolen and/or smuggled every month. Buying a house off the record is harder but not impossible by any means. Like I said, criminals don’t obey the law.

    Likewise, there will be tremendous pressure to waive the sales tax for many items such as food and medicine as is currently the case in many states. Companies will pay their bribes (campaign contributions) to get their products exempted just as they pay to get special tax treatment now. It’s pretty naive to assume otherwise.

  15. Larryj,

    The vast majority of the cars stolen end up getting chopped up for parts or taken into Mexico. Very few end up of DMV rolls in the U.S., its just too hard to change all the vin and serial numbers. But one impact will be to see car sales slow, as is the case when California extended its sales tax to cover automobiles. But on the other hand all the foreign firms selling autos in the U.S. will now be paying into the treasury, as will all the products being imported.

    As for houses, its really hard to do a real estate deal under the table, even if its cash, and get a warranty deed. You really overestimate the difficulty of avoiding sales tax when its done on the national level.

    And at some point down the road someone who gets the money spends it legitimately, so it will contribute to the system.

    Yes, I imagine packaged food, medicine and medical services will get an exemption as they do in many states. But that will probably be easier and cheaper to do then trying to identify everyone living under some cut-off point where taxes are refunded as most of the proposals have. And one of the attractions of a flat sales tax is the reduced costs to administer it. Not having to refund any money to those with income under a specified level will make that much easier.

Comments are closed.