Would unequal taxing by the government go to court?

[Questioninggeller]

I was thinking about this today...

The wealthy elite in this country get tax breaks that the rest of us don't get, isn't this discrimination?

They claim affirmative action is unfair, why doesn't someone battle the government's legislative body and excutive body against the unequal taxing?

[Tony]

The "wealthy elite" also pay a higher percentage. Isnt this discrimination?

[WildCat]

A flat tax via an Equal Protection of the Law lawsuit, now that's crazy talk. But I do wish it were that way!
IMHO, the income tax should be scrapped for a national sales tax (exempting food, of course), but we'll all die of old age before that happens.

[RichardR]

Originally posted by Questioninggeller
I was thinking about this today...

The wealthy elite in this country get tax breaks that the rest of us don't get, isn't this discrimination?

They claim affirmative action is unfair, why doesn't someone battle the government's legislative body and excutive body against the unequal taxing? It's their money to start with. A tax "break" really means we're not taking quite as much more from the rich than we were taking before. The system is already discriminatory - it discriminates against the rich. If you want to "battle the government's legislative body and excutive body against the unequal taxing" then you would be asking for the rich to be taxed much less.

So the answer to your question is "no".

[reprise]

IMHO, the income tax should be scrapped for a national sales tax (exempting food, of course), but we'll all die of old age before that happens.

Australia now has both an income tax system and a goods and services tax system.

[Ladewig]

The wealthy elite in this country get tax breaks that the rest of us don't get, isn't this discrimination

Yes, but not all discrimination is illegal. Federal law (Title VII) prevents discrimination based on race, color, religion, sex, national origin. Age was added to the list with the ADE Act of 1967. Disability status was added with the ADA. Economic status (along with sexual orientation) is not protected under the law.

Besides, if a case were ever considered, the wealthy would turn around and say, "we don't get earned income credits, so we're the ones really facing the discrimination."

Andrew Carnegie believed that the wealthy owed a debt to society and should help poorer people. He argued in favor of the estate tax.

[corplinx]

Originally posted by Questioninggeller
The wealthy elite in this country get tax breaks that the rest of us don't get, isn't this discrimination?


It would be, if it were true. Its the poor and middle class who get the big tax breaks.

[Rusty_the_boy_robot]

Originally posted by WildCat
A flat tax via an Equal Protection of the Law lawsuit, now that's crazy talk. But I do wish it were that way!
IMHO, the income tax should be scrapped for a national sales tax (exempting food, of course), but we'll all die of old age before that happens.

Hell, scrap all taxes and enact a national sales tax. But you also have to enact an extraordinarily high inheritence tax as well.

How many great american's have advocated this? How many great, and insanely rich american's have advocated this?

Well Bill Gates and Warren Buffett, the two richest men in America, have.

But they earned their money, they didn't inherit it.

[BillyTK]

Isn't sales tax a form of stealth income tax? It'd still tax privilege as rich people buy more expensive stuff and so would still pay more tax. Not that this is a problem for me ;)

The problem with income tax imo is that it's iniquitous because it limits the disposable income of less well-off people. Btw, in the UK we have VAT (sales tax), greenhouse tax and preventative tax (on cigarettes).

[Rusty_the_boy_robot]

Originally posted by BillyTK
Isn't sales tax a form of stealth income tax? It'd still tax privilege as rich people buy more expensive stuff and so would still pay more tax. Not that this is a problem for me ;)

The problem with income tax imo is that it's iniquitous because it limits the disposable income of less well-off people. Btw, in the UK we have VAT (sales tax), greenhouse tax and preventative tax (on cigarettes).

No, sales tax is like the only regressive tax there is.

Here is a quick muddy example:

Poor Rusty only earns $8 an hour. He spends 90% of his income every month and saves 10%.

Rich Rusty earns $45 an hour. He spends 70% of his income every month and saves 30%.

Poor Rusty is being taxed on 90% of his income. Rich Rusty is being taxed on 70% of his income.

There are many, many benefits to this tax when it is coupled with a ~90% inheritence/gift tax.

It could also simplifiy the HELL out of the tax code.

If people save their money they aren't taxed, but when they try to pass it on it will be taxed. So they should spend it, but then they are taxed. So they should save it for awhile, spend most of it, and pass on the minimum untaxed amount (say $10 million).

[BillyTK]

Originally posted by Rusty_the_boy_robot


No, sales tax is like the only regressive tax there is.

Here is a quick muddy example:

Poor Rusty only earns $8 an hour. He spends 90% of his income every month and saves 10%.

Rich Rusty earns $45 an hour. He spends 70% of his income every month and saves 30%.

Poor Rusty is being taxed on 90% of his income. Rich Rusty is being taxed on 70% of his income.

There are many, many benefits to this tax when it is coupled with a ~90% inheritence/gift tax.

It could also simplifiy the HELL out of the tax code.

If people save their money they aren't taxed, but when they try to pass it on it will be taxed. So they should spend it, but then they are taxed. So they should save it for awhile, spend most of it, and pass on the minimum untaxed amount (say $10 million).

So sales tax puts the burden on the poor? Is that a *good* thing? :confused:

[Rusty_the_boy_robot]

It sounds worse then it is.

I don't have time to lay the whole scheme down but you should be able to find some good web sites or buy Buffetts books to get the whole picture.

It's something like this:

The sales tax would encourage people to save money, even poor people. Saving money would assist in the poor people in being less poor.

The inheritence tax would encourage the elderly ricgh to spend money. Spending money would encourage businesses to borrow that saved money to expand.

It's supposed to help create a middle class where becoming rich requires hard work not having a rich daddy.

It would also reduce the tax code from 56 THOUSAND pages to around four-hundred.

Still a lot, but 56,000 pages? WTF?

[Crossbow]

Originally posted by Questioninggeller
I was thinking about this today...

The wealthy elite in this country get tax breaks that the rest of us don't get, isn't this discrimination?

They claim affirmative action is unfair, why doesn't someone battle the government's legislative body and excutive body against the unequal taxing?

To: Questioninggeller

You ask two excellent questions; first, is unequal taxation considered discrimination? And second; could such discrimination be addressed by the courts?

Essentially, the first question can be answered as 'Yes', since money provides one with many more options than one would have if they did not have money.

However, the answer to the second question is 'No', the courts have never been too sympathetic to issues of personal economics. Also, even though there are rich people who are able to escape paying taxes on most, and in some cases, all, of their income, they do so by legal means. So unless all of the tax laws are so completely overhauled in order to prevent such things from legally happening, they will continue to be legal and thus continue to happen.

Sorry for the harsh reality check!

[Rusty_the_boy_robot]

Originally posted by Crossbow


To: Questioninggeller

You ask two excellent questions; first, is unequal taxation considered discrimination? And second; could such discrimination be addressed by the courts?

Essentially, the first question can be answered as 'Yes', since money provides one with many more options than one would have if they did not have money.

However, the answer to the second question is 'No', the courts have never been too sympathetic to issues of personal economics. Also, even though there are rich people who are able to escape paying taxes on most, and in some cases, all, of their income, they do so by legal means. So unless all of the tax laws are so completely overhauled in order to prevent such things from legally happening, they will continue to be legal and thus continue to happen.

Sorry for the harsh reality check!


Too bad the tax codes won't be overhauled. The complicated mess helps the people who can hire lawyers avoid paying taxes, and the people who can hire lawyers are also the people who can hire lobbyists. They are also the people who can afford to run for office.

But objectively speaking, if we overhauled the tax code it would be good for the economy, and that means it would be good for everyone.

[BillyTK]

Originally posted by Rusty_the_boy_robot
It sounds worse then it is.

I don't have time to lay the whole scheme down but you should be able to find some good web sites or buy Buffetts books to get the whole picture.

It's something like this:

The sales tax would encourage people to save money, even poor people. Saving money would assist in the poor people in being less poor.

The inheritence tax would encourage the elderly ricgh to spend money. Spending money would encourage businesses to borrow that saved money to expand.

It's supposed to help create a middle class where becoming rich requires hard work not having a rich daddy.


Thanks for the explanation, Rusty! I'll do some background research... It seems to me though that if you've got minimal disposable income then you have such whether it's your earnings or purchases which are taxed, unless there's a range of necessities which are exempt, although I foresee problems in defining what those necessities could be.

For example, in the UK there's no VAT on food unless it's prepared food, purchased and eaten on premises (eg at a restaurant, cafe, fast food joint). There *is* VAT on sanitary towels, veternary services and utilities such as gas and electricity... it's just crazy!

[Rusty_the_boy_robot]

I think for simplicities sake we should levy the tax on all goods, even foods.

But if you think of it this way, the sales tax will affect consumers but it will affect busiensses too. If one business wants to compete on price it will have to assume the sales tax and try to subsidize it.

In this sense businesses will continue to be taxed and they won't be able to use tax shelters or schemes to get out of it.

[BillyTK]

Originally posted by Rusty_the_boy_robot
I think for simplicities sake we should levy the tax on all goods, even foods.

But if you think of it this way, the sales tax will affect consumers but it will affect busiensses too. If one business wants to compete on price it will have to assume the sales tax and try to subsidize it.

In this sense businesses will continue to be taxed and they won't be able to use tax shelters or schemes to get out of it.

From our experience, businesses pass on the cost of administering sales tax to the consumer; the consumers pay businesses to collect taxes on behalf of the government, and businesses profit by generating interest on collected sales tax before passing it on to the government.

Plus there's various scams surrounding offsetting collected sales tax against owed sales tax, and using offshore holdings and accounts to avoid paying sales tax anyway. I'm not saying everyone's busy at defrauding the government, but just to illustrate how sales tax is no less problematic than other forms of taxation.

[ceo_esq]

"Would unequal taxing by the government go to court?"

Believe me, every kind of taxing by the government has gone to court.

The constitutional taxing authority conferred upon Congress is so broad and exhaustive that it effectively trumps the Equal Protection Clause of the Fourteenth Amendment – at least to the extent that the Equal Protection Clause cannot be invoked to prevent Congress from employing whatever exemptions, classifications or discrimination it likes (unless so outrageous and so unrelated to any conceivable public policy as to indicate real prejudice). Many lawsuits have been brought trying to enforce increased uniformity in federal taxation, and the courts have generally said that the Constitution prevents imposing such restrictions on Congress.

When it comes to state rather than federal taxes, the rules are a little different. State taxing power is more limited by the Equal Protection Clause, and many state tax laws have successfully been challenged as violations of equal protection. However, before you go you out and file a lawsuit against your home state, you should know that even states have a lot of constitutional leeway in constructing their tax schemes.

From Allegheny Pittsburgh Coal Co. v. County Comm’n of Webster County, 488 U.S. 336 (1989) (internal citations and quotation marks omitted):The States, of course, have broad powers to impose and collect taxes. A State may divide different kinds of property into classes and assign to each class a different tax burden so long as those divisions and burdens are reasonable. It might, for example, decide to tax property held by corporations ... at a different rate than property held by individuals. In each case, if the selection or classification is neither capricious nor arbitrary, and rests upon some reasonable consideration of difference or policy, there is no denial of the equal protection of the law.

[Denise]

As a single mom with one child, on federal and state taxes, I get back more than I paid in.

[RichardR]

Originally posted by Rusty_the_boy_robot
The sales tax would encourage people to save money, even poor people. Saving money would assist in the poor people in being less poor. If a person is poor, how do you expect them to save money? And do you have any evidence that this has worked anywhere in the world?

Originally posted by Rusty_the_boy_robot
The inheritence tax would encourage the elderly ricgh to spend money.Do you have any evidence that an inheritance tax encourages the rich to spend more?

Originally posted by Rusty_the_boy_robot
Spending money would encourage businesses to borrow that saved money to expand. Can you please explain this?

[Tmy]

Is it a fact that the rich pay a higher percentage? Sure its easy when you look at Fed income tax brackets, but what about all those hidden tax/fees that everyone pays?

Plus what is so fair about taxes? Services? Is it fair that I pay taxes for a public school I dont use. Teh rich act as iftehy pay all these taxes and get nothing in return. How about the goverment/legal/physical infrastructer that makes it possible for them to be successful.

[Jocko]

Originally posted by Tmy
Plus what is so fair about taxes? Services? Is it fair that I pay taxes for a public school I dont use. Teh rich act as iftehy pay all these taxes and get nothing in return. How about the goverment/legal/physical infrastructer that makes it possible for them to be successful.

...Maybe it's time to avail yourself of that public school?

Sorry, Timmy, you just left that hanging out there and you know I had to swing at it.

[WMT1]

Originally posted by Tmy
Plus what is so fair about taxes?

Nothing.


Is it fair that I pay taxes for a public school I dont use.

No.


Teh rich act as iftehy pay all these taxes and get nothing in return.

I think I'm starting to see a pattern here. This rather sweeping generalization sort of reminds me of your Jesse Jackson comment in the other thread.


How about the goverment/legal/physical infrastructer that makes it possible for them to be successful.

What about it? Aren't they paying taxes for it? And doesn't that same infrastructure make it possible for anyone to become successful?

[Tmy]

Cheese n crackers this whole place is about generalizations!!!

What fun is a message board without generlizations?!!!!

JOCKO: Go ahead and make fun of my dyslexia!!! I'm glad you find the handicapped so humorous!!! maybe you can find some cripple to laugh at? (Where is King of the Americans anyway.)

[Segnosaur]

You may have heard of 'Tax Freedom Day'. That is the day (falling somewhere in the middle of they year) after which you have paid off all your govenment taxes (federal, state/provincial, and local), and all your money is all your own. (Yes, you could just have easily talked about the % of your money used as taxes, but a 'tax freedom day' gives a more, well, graphic view of what is happening.)

For those in Canada (where we have a similar tax system to the US... Income taxes, sales taxes of various types, etc., although our tax rates are much higher than those in the U.S.) there is a tax calculator:
http://www.fraserinstitute.ca/shared/taxcalc.asp
(there may be one available for the U.S. tax system.)

If you play with the calculator (trying different numbers), you'll find that people with higher incomes pay more in taxes when all levels of taxes are combined.

[WMT1]

Originally posted by Tmy
Cheese n crackers this whole place is about generalizations!!!

I think you may be lost. This whole place is actually about skepticism.

[WildCat]

Originally posted by Rusty_the_boy_robot
In this sense businesses will continue to be taxed and they won't be able to use tax shelters or schemes to get out of it.
Businesses don't pay taxes. Repeat - businesses don't pay taxes. They merely pass it on to the consumer, as they must w/ all their costs and expenses.
Every penny of tax on businesses is a hidden tax on consumers, I don't know why people don't understand this.

[pgwenthold]

Originally posted by WildCat

Businesses don't pay taxes. Repeat - businesses don't pay taxes. They merely pass it on to the consumer, as they must w/ all their costs and expenses.
Every penny of tax on businesses is a hidden tax on consumers, I don't know why people don't understand this.

Maybe because they understand economics instead?

A business CANNOT just pass costs on to their customers. The only way that cost of production, which includes taxes, wages, and materials, affects the price is by affecting the supply. IOW, things that cost more to produce will be in lower supply, and hence can influence the purchase price.

If prices are properly set to begin with, at the maximum at the price/revenue curve, an increase in production cost cannot be recovered by increasing prices.

[WildCat]

Originally posted by pgwenthold


Maybe because they understand economics instead?

A business CANNOT just pass costs on to their customers. The only way that cost of production, which includes taxes, wages, and materials, affects the price is by affecting the supply. IOW, things that cost more to produce will be in lower supply, and hence can influence the purchase price.

If prices are properly set to begin with, at the maximum at the price/revenue curve, an increase in production cost cannot be recovered by increasing prices.
Only in the short term. If a company cannot pass it's costs on to its' consumers, it will go out of business. High taxes will force a business to either reduce costs in other areas (labor, materials, etc.) or locate to an area w/ lower taxes.
Think of it this way - if taxes were eliminated for business altogether, do you think corporate profit margins would rise in the long term? In ECON 101 it's taught that high profit margins invariably attract more competition which will undercut your price in order to gain market share. Your business will either have to follow suit or go out of business. So the taxes are obviously getting passed on to the consumer, no matter how you try to hide it.

[corplinx]

Originally posted by Rusty_the_boy_robot


Poor Rusty only earns $8 an hour. He spends 90% of his income every month and saves 10%.

Rich Rusty earns $45 an hour. He spends 70% of his income every month and saves 30%.




So this is an unfair tax on the rich? In your example Rich Rusty pays much more money.

The only truly "fair" way to distribute the tax burden is to divide the budget by the number of people and send everyone a bill for their share.

However, if they did that then there would be revolt. I suspect it would be the kind where the rich get killed instead of the kind where a new government is put in place that spends less.

[Segnosaur]

Originally posted by WildCat

Only in the short term. If a company cannot pass it's costs on to its' consumers, it will go out of business. High taxes will force a business to either reduce costs in other areas (labor, materials, etc.) or locate to an area w/ lower taxes.

There is another possibility... Taxing companies will cause profits to fall (assuming prices are not raised, and the compnay does not move to a lower tax area), and that means dividends paid to stock holders (including pension funds, etc.) will fall. This means that they will collect less income tax from rich people, or people withdrawing their money in their retirement years.

[pgwenthold]

Originally posted by WildCat

Only in the short term. If a company cannot pass it's costs on to its' consumers, it will go out of business.

Well, this is a nice semantic argument. In a viable business, the revenues will be more than enough to cover the total costs. Thus, the money they get from the consumer is what they use to pay their bills.

But companies that don't make enough money to cover their bills can't just increase their prices to cover their production costs.

However, the point is that your argument is that they don't pay any taxes is silly. They pay taxes on their earnings, just as you pay taxes on your earnings. By your logic, I don't really pay taxes at all, because I get money from my employer, so I am really passing my tax liability onto my employer.

It doesn't matter that they get their money from consumers, they are the ones paying the taxes on their money.

Here's my way of showing this: Suppose the government suddenly and secretly revoked the companies tax liability. No taxes owed at all. How much would the companies drop their price? Assuming that the product is properly priced in the first place, they would not drop the price at all, because doing so would result in lower profits.

It's not the production costs that set the prices. In a market economy, the prices are set by an independent mechanism. If the revenues that result from those prices are too low to cover production, then they can't just raise the price to cover it.

[WildCat]

Originally posted by pgwenthold
Well, this is a nice semantic argument. In a viable business, the revenues will be more than enough to cover the total costs. Thus, the money they get from the consumer is what they use to pay their bills.
My point was that at some point high taxes can make a business
unviable, they go out of business.

However, the point is that your argument is that they don't pay any taxes is silly. They pay taxes on their earnings, just as you pay taxes on your earnings. By your logic, I don't really pay taxes at all, because I get money from my employer, so I am really passing my tax liability onto my employer.
How do you pass your taxes on to your employer? I don't follow this at all. You are being paid what you're worth to the company.
It doesn't matter that they get their money from consumers, they are the ones paying the taxes on their money.
"Their" money is what's left after they pay the tax. They simply take the tax from the consumer and pass it on to the gov't.
Here's my way of showing this: Suppose the government suddenly and secretly revoked the companies tax liability. No taxes owed at all. How much would the companies drop their price? Assuming that the product is properly priced in the first place, they would not drop the price at all, because doing so would result in lower profits.
Didn't you read my post? If the company was making that high of a profit margin it would attract competition that would undercut them on price, and thus take market share. The "proper price" would have to be adjusted downwards. The only instances where this model doesn't hold is where the company's products are protected by patents (which give them a competitive advantage), they are a protected monopoly (cable, natural gas), or they are the sole company in an industry w/ such high entrance barriers (ie, aerospace or automobile manufacturing) that it discourages new companies to enter the market.
It's not the production costs that set the prices. In a market economy, the prices are set by an independent mechanism. If the revenues that result from those prices are too low to cover production, then they can't just raise the price to cover it.
Exactly. And taxes are part of the production cost, and they can be so high as to put a company out of business.

[pgwenthold]

Originally posted by WildCat


How do you pass your taxes on to your employer? I don't follow this at all. You are being paid what you're worth to the company.



Hey, it's your logic, not mine.

The revenue that companies get (and get taxed on) comes from whatever the product sells is worth. They pay taxes on that revenue portion greater than costs (to some extent), just as you pay tax on income greater than living costs. If, as by your argument, the company tax is passed on to the consumer, then by the same token, your personal tax is passed on to your employer.



"Their" money is what's left after they pay the tax. They simply take the tax from the consumer and pass it on to the gov't.

By the same argument, "your" money is what is left over when you pay your income tax. You simply take money from your employer and pass it on to the gov't.

Thus, by your argument, you are passing your tax liability on to your employer.

[WildCat]

Originally posted by pgwenthold
Hey, it's your logic, not mine.

The revenue that companies get (and get taxed on) comes from whatever the product sells is worth. They pay taxes on that revenue portion greater than costs (to some extent), just as you pay tax on income greater than living costs. If, as by your argument, the company tax is passed on to the consumer, then by the same token, your personal tax is passed on to your employer.
By the same argument, "your" money is what is left over when you pay your income tax. You simply take money from your employer and pass it on to the gov't.
Thus, by your argument, you are passing your tax liability on to your employer. [/B]
I see the point you are making now, but this was also my point, which is that corporate taxes are a hidden tax on you, the consumer. Your income tax is not a hidden tax since you know what it is!.
But as I pointed out businesses must pass the costs of doing business on to the consumer, whether it is material, labor, or taxes. If they can't, they will go out of business.
If people knew how much they were really being taxed they would be outraged, thus business taxes are popular w/ politicians (let's make those greedy fat-cat corporations pay the taxes). And the consumer, blissfully unaware of the real tax rate imposed on them, go along with it.