Taxing problems


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Matt Giwer
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Message 1136636 - Posted: 6 Aug 2011, 7:17:58 UTC

There is only one fundamental principle of taxation. No tax is fair. All arguments on a "fair" tax founder on the fact that no two people completely agree on the meaning of fair.

Governments require taxes to exist and perform their functions. The issue of what their functions should be is a separate issue. What their present functions are have to by paid for by taxes -- for the purists also by duties and imposts and a couple other odd terms.

In the real world tax revenue is what can be collected. In a barter economy collecting coins is a joke so a fraction of crops was the tax. However the gov collecting and storing grain and bartering the animals was also an expense so once small coins became common the farmers had to do the storage and selling to get the coins for taxes. So there is clearly a cost trade-off in the form of taxation.

Back in the good old days prior to the income tax business was the major source of revenue.

Business is based on profitability. Earnings from sales (product price) minus all costs including taxes is the profit. Companies live or die on profit. So increase the taxes and and prices are increased to maintain profit. Back in the good old days business taxes could have been viewed as an indirect income tax as all business taxes are passed on to the consumer.

But today we have direct income tax so it is (theoretically) immaterial if businesses are taxed or not -- particularly business income tax. Business taxes are merely a hidden form of income tax as the ultimate source is the same. It is the consumer who pays.

Therefore in any rational discussion business income tax, taxes on corporations, is nothing more than pandering to the masses.

Lets take away the theoretically. In the US state business taxes try to get some vigorish for the state which is paid by the business raising prices in all the states in the US. So an opportunistic state will raise taxes to just below the level where businesses move to another state.

To make it completely practical, nations do the same to their own companies and those taxes are paid by raising prices around the world. And the same limits exist. Tax a company at too high a rate and they move to another country.

The principle behind all this is a very old one. You can't live on percent profit only on the actual dollars earned regardless of the percent. A lower profit on greater sales is more dollars to spend. That is what forces companies to keep prices competitive.

Now you have the facts upon which any and all tax discussions must be based. All else is fluff.

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Message 1136677 - Posted: 6 Aug 2011, 10:56:51 UTC

Taxes are taxes are taxes, no matter what you call them. We had Purchase tax, then it went to VAT, Value added Tax. We had Rates then the Poll tax, now Council tax.

Taxation in the United Kingdom may involve payments to a minimum of two different levels of government: The central government (HM Revenue and Customs) and local government. Central government revenues come primarily from income tax, National Insurance contributions, value added tax, corporation tax and fuel duty. Local government revenues come primarily from grants from central government funds, business rates in England and Wales, Council Tax and increasingly from fees and charges such as those from on-street parking. In the fiscal year 2007-08, total government revenue was 39.2 per cent of GDP, with net taxes and National Insurance contributions standing at 36.9 per cent of GDP[1]—approximately £600 billion (using 2008 nominal GDP measured in dollars, and converting using 2009 conversion rate).

Matt Giwer
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Message 1136726 - Posted: 6 Aug 2011, 13:57:18 UTC - in response to Message 1136677.

Taxes are taxes are taxes, no matter what you call them. We had Purchase tax, then it went to VAT, Value added Tax. We had Rates then the Poll tax, now Council tax.


And if you want any kind of government you have to pay for it. The means of paying for it are today subsumed under the single word taxes. If you want government you pay for government. If you do not want government then some gang will impose it on you and take what they want. This is the way of the world. To be more correct it is the way of the human species which is inherently hierarchical.

The question is then what do you want the government to do. It is not like we can start over so the options are limited. But if you want government money after retirement you have to pay for it while working. Fact of life. Money has to come from some place.

If you want to keep an entire class of predators off the streets who have no source of income but crime then you have welfare. Welfare is cheaper than prisons in which all of them must eventually reside to get predators off the streets. People will steal to eat, period. One may debate the manner in which the dole is administered but not that it should not exist.

The issue is never taxes. The issue is only government functions. Reduce or eliminate the functions so the costs go down and taxes go down.

Myself, I have been hanging around on this planet since 1945. I do not remember a single tax issue that started with the elimination of a government service. In fact I can only remember increases in government services and complaints about paying for it. When our children want something and object to paying for it we educate them on the way the world works.

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Message 1136763 - Posted: 6 Aug 2011, 14:56:23 UTC

TOOOOOOOoooooooo simple for them.


By making it complex they a doorway into punishing you when they get it wrong.





Besides if it were simple what would all the tax accountants do? - They'd have to go and get a real job and earn real money, not con the rest of us into thinking they are so clever because they understand tax laws better then us...
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Message 1137089 - Posted: 7 Aug 2011, 4:23:05 UTC - in response to Message 1136728.

Simpler to have a VAT - just as regressive too -- but we don't want to target all those poor ultra wealthy dudes.

Flat tax, no loopholes, no deductions, no BS.

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Message 1137090 - Posted: 7 Aug 2011, 4:24:52 UTC

Involuntary euthanasia ought to do the trick -- no medicare, medicaid or social security costs to deal with.

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Message 1137212 - Posted: 7 Aug 2011, 14:30:36 UTC

Besides if it were simple what would all the tax accountants do? - They'd have to go and get a real job and earn real money, not con the rest of us into thinking they are so clever because they understand tax laws better then us...


They do earn real money because they help to concoct the tax laws, that only they can understand, and then charge us for interpreting the laws that they made.

But, the really clever ones, plan the tax laws such that they can be got round by tax avoidance, not tax evasion. Then they charge us even more money for that. Accountancy like the law used to be a highly respected profession, but not any more. Would you let your daughter marry an accountant or lawyer?

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Message 1137621 - Posted: 8 Aug 2011, 16:07:10 UTC - in response to Message 1136728.

Flat tax, no loopholes, no deductions, no BS.


What does that have to do with the services you have to pay for?
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Message 1137626 - Posted: 8 Aug 2011, 16:26:56 UTC - in response to Message 1136763.

TOOOOOOOoooooooo simple for them.


Flat tax, no exceptions, keep it simple. The same tax rate on food, medicine, electricity, heating oil, mink coats and corporate jets.

No objections right?

=====

Now tell me what kind of tax. Sales taxes only? Sales to who. Start with something from the ground like oil. The first buyer pays sales tax only or everyone along the way down to the consumer?

Oil is international but taxes are national. Oil produced, shipped, refined and sold within a country is taxed at every step leading to one price. Oil produced outside the country and shipped by a foreign corporation escapes two levels of taxation. Domestic oil is more expensive to the consumer than foreign oil. Is it desired to put domestic producers out of business?

An oil import tariff equivalent to the lost taxes? But the producer and shipper have paid taxes to their countries so this will make foreign oil more expensive than domestic? Is cutting off imported oil the intent?

If the price of oil increases the price of everything increases. Is that the intention?

Other commodities are similar and each have their unique quirks.

=====

Income tax has already been addressed as all business taxes are passed to the consumer so they are nothing but cosmetic political taxes.

Flat income tax? Define income.

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Message 1137676 - Posted: 8 Aug 2011, 18:53:04 UTC - in response to Message 1137626.

As pointed out before, Taxing corporations isnt a bad thing. Passing their tax burden onto the consumer only works to an extent. At a certain point in price/taxation Corporate profits/sales will plummet. So to say any tax on a corporation is a cost to the consumer is just silly its a cost of doing business and profit margins. Currently, Corporations feel the need for enormous profits and enormous BOD bonuses. that is not how business is supposed to work. If a corporation can make and sell something cheap they used to at least pass some of the saving onto consumers. Now that cost savings goes right back into the fatcats wallet.
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Message 1137698 - Posted: 8 Aug 2011, 20:14:39 UTC - in response to Message 1137676.

As pointed out before, Taxing corporations isnt a bad thing. Passing their tax burden onto the consumer only works to an extent. At a certain point in price/taxation Corporate profits/sales will plummet. So to say any tax on a corporation is a cost to the consumer is just silly its a cost of doing business and profit margins. Currently, Corporations feel the need for enormous profits and enormous BOD bonuses. that is not how business is supposed to work. If a corporation can make and sell something cheap they used to at least pass some of the saving onto consumers. Now that cost savings goes right back into the fatcats wallet.

The requirement to maintain the profit margin is one of the fiduciary duties of the corporation to the shareholders. Any raise in the costs must be factored into the price charged as the profit margin must be maintained at all costs. -- The profit margin makes up most of the share price, hence the reason it must be maintained. -- This will happen up to the breaking point. At that point the company will go under and taxes will fall below zero -- capital gains loss rule -- and unemployment benefits will skyrocket. It is a total fallacy that paper can pay taxes, only people can pay taxes.

Taxing a tobacco company may serve a purpose of discouraging smoking. Taxing a food farmer simply is a way to implement a highly regressive tax on the population.

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Message 1137736 - Posted: 8 Aug 2011, 21:14:07 UTC - in response to Message 1137698.

Regarding taxing corporations -- fair point, instead of increasing the tax on corporations, increase the tax rate on those getting REALLY high compensation from corporations.
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Message 1137769 - Posted: 8 Aug 2011, 22:16:16 UTC - in response to Message 1137736.
Last modified: 8 Aug 2011, 22:16:36 UTC

Regarding taxing corporations -- fair point, instead of increasing the tax on corporations, increase the tax rate on those getting REALLY high compensation from corporations.

Totally agree. New individual tax brackets.
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Message 1137808 - Posted: 8 Aug 2011, 23:37:15 UTC - in response to Message 1137769.

My goodness -- agreement -- we clearly are not qualified for public office <g>.

I'd also like to see some elimination of the high end deductions that are in the tax code (mortgages over $500K, second homes, that sort of thing).


Totally agree. New individual tax brackets.


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Message 1137885 - Posted: 9 Aug 2011, 3:34:32 UTC - in response to Message 1137808.

and bonus or non hourly wages be considered for higher tax brackets for anything over 4 figures in bonus money annually
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Message 1137900 - Posted: 9 Aug 2011, 4:44:06 UTC - in response to Message 1137808.

(mortgages over $500K

In Los Angeles, that is a starter home.

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Message 1137910 - Posted: 9 Aug 2011, 5:07:00 UTC - in response to Message 1137900.

Well, before the bubble, certainly. <rueful smile>

That being said, assuming mortgage companies are not restarting the games of Fannie's past, who qualifies for $500K+ mortgages these days?




(mortgages over $500K

In Los Angeles, that is a starter home.


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Message 1137911 - Posted: 9 Aug 2011, 5:09:42 UTC - in response to Message 1137885.

Well, the tax cut code for millionaires that allowed wages to be called capital gains or dividends -- yup -- I figure aside from Norquisticans, folks defending that are either defending their own turf or voting against self interest.

and bonus or non hourly wages be considered for higher tax brackets for anything over 4 figures in bonus money annually


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Message 1137925 - Posted: 9 Aug 2011, 5:28:46 UTC - in response to Message 1137910.

Well, before the bubble, certainly. <rueful smile>

That being said, assuming mortgage companies are not restarting the games of Fannie's past, who qualifies for $500K+ mortgages these days?




(mortgages over $500K

In Los Angeles, that is a starter home.


In LA Jumbos are being advertised on the radio. Yes, the games of the past never stopped, option ARM's and the like. The Community Reinvestment Act hasn't been repealed.

Amazingly in my LA area hood, late 40's early 50's era ranch style houses, home prices are still rising or were until a couple months ago. The city has recently had to adopt anti-mansionazation rules. I'm seeing a few more places than usual up for sale and that will depress prices. I think a few double incomes where one lost their job are finally being forced to sell.
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