Should we eliminate the federal government's ability to tax individuals and instead permit the feds to tax states according to each state's GDP? States would be free to choose how to raise that money from their citizens.
This is a bit like what the European Union does. EU doesn't have a direct tax, but each country pays an amount based on the sales tax base. There are a number of adjustments and it's fairly complex, but this makes the countries fight the bureaucrats.
I think the idea is good. The principles are fairly straight forward. If the EU gets out of control people can tell their own local elected politicians instead of someone far away in Brussels.
No that won't work. That's why the constitutional convention came about in the first place. See the Glorious Cause: The American Revolution, 1776-1789, Robert Middlekauff. The states were acting like banana republics and wouldn't pay cost for the
Revolutionary War debt. So they changed from a confederation to what we now know as federalism. I'm totally against anything like that.
Only if we include DC. Their GDP per capita is huge. Delaware is #2 (probably because of their corporation friendly laws).
Abolish all taxes. Institute a federal sales tax only.
And make states completely dependent on the federal government for all revenue?
No fucking way.
It's the fairest system
It also doesn't mean that states would only get revenue from the Feds.
When you say abolish all taxes, that sounds like abolishing all state level taxes, too.
That's what I meant for the individual only. State governments could still levy in other ways or through revenue generating investments. You could also incentivize production by giving states more federal money based on production.
So would states be able to tax or not?
Yes, just not on an individual.
I could have been more clear on that. I'm sorry. It didn't look that way when I wrote it.
Then no, I have to disagree. My goal would be to make states more independent, and minimize control over them at the federal level. Consolidating the power to tax individuals under the authority of the Feds alone would effectively reduce states to...
...nothing but administrative districts- lines on a map.
No, it's not the fairest. I spend 90% of my income every month, Bill Gates spends maybe 2%? If we both pay 15% sales tax, who will pay a higher percentage?
@just. Bill gates.... Because the stuff rich people buy us very expensive whereas the lady at the trailer park buying diet rite only pays very little.
Bill Gates doesn't buy a new jet every month. The lady buying diet rite still spends 100% of her income, and he still spends little. Any way you dice that, mathematically she will pay a higher effective rate. Use some examples.
Guys this is exactly why I would prefer the Feds not monopolize the tax system. Allowing these decisions to happen at the state level would give us real world data on which systems really work the best.
One state could do a sales tax system, like Texas, and another could institute a crippling tax on successful people, like California. It would soon be very clear which systems work the best.
I am aware that he "doesn't buy a new jet every month" but his consumption rate is much higher. If he pays 100,000k in taxes every month he still pays more overall. I also said this would be in place of state sales taxes which the poor already pays.
You could also reimburse those living in poverty at the end of the year based on a estimated expenditure.
Well, states already have different tax systems. Some rely heavily on income taxes, others sales taxes, and finally some on property taxes. Each having varying levels of success.
Magnum- most national sales tax proposals use a "probate" system for that very reason. People living under a certain income would get a prorated check every month to cover the cost of their estimated sales tax rate,
You're right, justrich. The issue is that state taxes are significantly lower than federal taxes, and so the effectiveness of each system is generally obscured by the much larger portion of income taken by the IRS,
Imagine he makes $1M a year and spends $200K. At 15% sales tax he'll pay $30K in taxes, 3% overall. If a lady making $50K spends $40K she'll owe $6K in taxes 12% overall. Even if you refunded her half of that, she still pays double the rate.
So in Texas, for example, people only pay state sales tax, there is no state income tax. There are definitely economic benefits that can be measured, but the benefits are diminished by the presence of the federal income tax.
But if there was a state where people ONLY paid income tax, and a state where people ONLY paid sales tax, and anothe where people paid both- then we'd really see which works best.
And my post about 4 responses up should have said "prebate", not "probate." Stupid autocorrect
In my opinion, sales tax systems would only exacerbate income inequality further because the rich spend far less than the poor do as a percentage of income. Thus, the burden would inevitably shift to lower incomes.
I'll tell you which one will work best: I'll work in the sales tax state and buy everything in the income tax state. Haha, it's perfect!
Justrich- 1. You're right, people would try to manipulate the system. That would be something the states would have to figure out, and have figured out in the past.
2. You're taking a very simplistic look at sales tax as it pertains to...
...income. You're not taking into account that the biggest earners are also the biggest employers. Bill Gates may only spend 6% of his income on taxes in a system like Magnum wants, but the remaining income he generates is either invested...
...in his business in the form of new jobs and capital, or it is invested in the stock market, which is a significant factor in growing businesses in our country. That means more and better jobs,
I'm not saying I completely agree with that model, but I am saying Id like to see it, and other systems, given a fair chance so we can all benefit from really seeing which systems work the best.
No, I agree that my example was overly simplistic, but it was intended to show the sheer gap between how much the rich spend versus the poor and how that rate factors in. Surely we would exempt certain necessities and have the prebate or rebate
system in place. What's really wrong with graduated income rates though? Aside from the ridiculous numbers of exemptions and deductions, it does a decent job of keeping the burden low on the poor and higher on the rich.
I think it would be an interesting experiment, I certainly agree. However, it would be difficult to convince 300M people to go along with it.
Mainly because progressive tax models punish success and hamstring businesses. Small business owners, for example, are punished for having a good year by being out in a higher tax bracket when that money could be better used....
...paying off their business loans (making them more stable employers), or hiring more workers (helping someone help themselves), or simply allowing a business to expand opened grow, which is good all around.
I agree with what you're saying there, somewhat. Being in a higher bracket doesn't mean he now pays that marginal rate on all dollars though, just the dollars above the threshold. It's not as punishing as people make it out to be. Mathematically an
I agree- getting 300m people to go along would be tough.
Then again, we did pass the 16th amendment, so repealing isn't impossible, which is what this poll is all about.
individual could never actually pay the full percentage of the bracket he's in. He can get close, but he can never technically reach it. I'm also not saying it's ideal. What I don't like is when people argue that flat tax or fair tax will lower
taxes on the power and raise them on the wealthy. They are regressive systems in that regard and would do the opposite. As for the economic effects are, that's harder to judge.
You know, I've been thinking about petitioning Tony for a SOHOA just for taxes. Get a panel of people and just debate it out. Talk about a firestorm...
Yes. It used to be like that.
Except it was based on population, not GDP.
I know. I guess you could say I'm regressive.
Interesting, I've never heard that idea before. I'd have to think on it for a bit first.
How about allowing states to run themselves and all but dissolving the fed?
If the states are the ones in control of the purse, that's eventually what happens down the line.
I just don't see how that could work from a practical standpoint. Why not the federal government just collect all taxes and then apportion to each according to its GDP? Both cases have flaws. Each has to tax according to its needs.
Because the way you suggested makes states completely dependent upon the federal government for all revenue.
The states would cease to have any meaningful ability to self govern.
And it would be very practical.
States collect the taxes- which is something they already do either through income or sales tax.
Then the state sends one check to the federal govt.
I was only providing a counter-argument, not actually advocating it. I don't see the real benefit to the states collecting federal taxes. The states collect everything they need and spend it on whatever they want, the feds do the same.
The benefit is multifaceted, but most significant would be that states would be free to collect the taxes as they saw fit. Not all tax methods are equal, and this would provide the opportunity to let states use the method that works best for them.
I'd take my millions and move to the best deal state.
Would like to explore that more but still more a fan of the fairtax. To me taxing more based on GDP is taxing success.
I agree, but failing that this is probably the best way to experiment with the best tax system on a state by state basis.
Make the 16th amendment void.
Yeah, but I honestly don't think ppl would know what I was talking about if I just asked "should we repeal the 16th amendment?"
Thank you, public school system.
Now they do.