a commentary on taxes

sugarb · 29th November 2009, 09:56 AM

This was in one of our local papers today:

http://www.irontontribune.com/news/2...ebt-and-taxes/

There are a lot of issues addressed in that one column...probably too many to even mean the point he's making is legitimate to begin with...but the discussion that follows it really caught my interest. I think because Reagan was brought up, and there was a comment stating something I wasn't aware of. So I'll ask you folks.

Is it true that Reagan raised taxes more than any other peacetime President?
What did that poster mean? I thought that Reagan lowered taxes, but did he only lower taxes for the extremely wealthy? And was that offset by an increase in Soc. Security taxes for everyone else? *Is* it a myth that Reagan lowered taxes?

Francesca R · 29th November 2009, 11:25 AM

America's tax is one of the most complicated in the (rich) world so it's easy to argue a lot of things. I know that the total tax + social contribution take is pretty low compared with the rest of the G-whatever. Also that most of it comes from tax on income and rather little of it from tax on spending or property or wealth. Certainly top income tax rates were cut a lot in the 1980s but the same is true in several other countries too, and to be honest this makes little difference to the total amount of government revenue.

America has a reputation for "giving the rich a break" but a lot of this is exaggerated, or at least, will be assuming the GWB tax cuts end (which is a racing certainty). Because US tax is more skewed to income than other countries (it is the only big economy without VAT) it is probably more progressive than most.

sugarb · 29th November 2009, 11:34 AM

Originally Posted by Francesca R

America's tax is one of the most complicated in the (rich) world so it's easy to argue a lot of things. I know that the total tax + social contribution take is pretty low compared with the rest of the G-whatever. Also that most of it comes from tax on income and rather little of it from tax on spending or property or wealth. Certainly top income tax rates were cut a lot in the 1980s but the same is true in several other countries too, and to be honest this makes little difference to the total amount of government revenue.

America has a reputation for "giving the rich a break" but a lot of this is exaggerated, or at least, will be assuming the GWB tax cuts end (which is a racing certainty). Because US tax is more skewed to income than other countries (it is the only big economy without VAT) it is probably more progressive than most.

Francesca R, hello. Yes, I find our tax system quite complicated. Recently I've been trying very hard to better understand them, but there are just so many factors it really does seem overwhelming to me. I had always thought that the rich should not be penalized any heavier than anyone else, that we should pretty much contribute equally in terms of percentages, but I am wondering if my thoughts there are flawed. So it helps to hear others opinions.

I don't mean to sound stupid, but what is VAT?

I should probably know that, I'm guessing.

Arcade22 · 29th November 2009, 11:35 AM

Originally Posted by sugarb

I don't mean to sound stupid, but what is VAT?

I should probably know that, I'm guessing.

http://en.wikipedia.org/wiki/Value_added_tax

Brainster · 29th November 2009, 11:48 AM

IIRC, the argument is that Reagan lowered taxes dramatically in 1981, then increased them substantially in 1982 (but not above the 1980 levels). Thus the 1982 tax increase is frequently referred to as the biggest tax increase of all time, although combined the two tax acts turned out to be a pretty substantial tax decrease.

sugarb · 29th November 2009, 11:50 AM

Originally Posted by Arcade22

http://en.wikipedia.org/wiki/Value_added_tax

Value added tax. Thank you, Arcade22! Going to read now.

leftysergeant · 29th November 2009, 11:56 AM

Originally Posted by sugarb

Francesca R, hello. Yes, I find our tax system quite complicated. Recently I've been trying very hard to better understand them, but there are just so many factors it really does seem overwhelming to me. I had always thought that the rich should not be penalized any heavier than anyone else, that we should pretty much contribute equally in terms of percentages, but I am wondering if my thoughts there are flawed. So it helps to hear others opinions.

The bolding above is mine, to point out where I think your reasoning is flawed.

The wealthiest tax payers are benefitting at a higher rate than the rest of us from the existance of our infrastructure, thus should be expected to contribute at a higher rate to its up-keep. Further, the highest earners neccessitate great government al outlays. On that basis alone, a graduated income tax makes sense.

The accumulation of too much wealth into too few hands has NEVER been good for any civilization. No civilization ever collapsed because the poor were too well-fed, or because there was little competition from outsiders for the trade in a community.

I totally dislike a VAT because it does impose more of a burden on manufactures. It were better, in terms of encouraging a rebirth of our industries, to raise tariffs, especially against those ocuntries where working people are not paid what they deserve. It does us no good to import $200 athletic shoes from countries where people cannot afford enough rice to achieve normal growth, because they are not going to buy enough of anything from us to make it worth our while. But if we can sell blue jeans to the Germans, it does us no harm to buy their shoes.

Arcade22 · 29th November 2009, 11:57 AM

Originally Posted by leftysergeant

The wealthiest tax payers are benefitting at a higher rate than the rest of us from the existance of our infrastructure, thus should be expected to contribute at a higher rate to its up-keep.

How have you come to this conclusion?

Kestrel · 29th November 2009, 11:59 AM

Originally Posted by Francesca R

America has a reputation for "giving the rich a break" but a lot of this is exaggerated, or at least, will be assuming the GWB tax cuts end (which is a racing certainty). Because US tax is more skewed to income than other countries (it is the only big economy without VAT) it is probably more progressive than most.

Most state and local governments in the US do impose sales tax and other regressive taxes. This helps make the total tax burden in the US regressive instead of progressive.

sugarb · 29th November 2009, 12:07 PM

Okay, from what little reading I've done so far (the value added tax is a bit confusing, but I'll get it), a value added tax *is* being proposed now in our government. Which means I'd better be learning something about it, eh?

It is considered an indirect tax? That is interesting. I think something similar to that already exists in terms of getting more than just one tax out of consumer items. In our state, if we purchase items out of state, we are supposed to report each of those on our tax forms and then pay the sales tax of those items, regardless of having already paid a sales tax on those items in another state. In other words, two states are profitting from one purchase, and ultimately, this isn't a good thing for consumers I don't think.

Does a value added tax add to the end price of a consumer product? And are sales taxes still applied as well to the end consumer? In other words, in each incremental step of production, to distribution and finally sale, a government is receiving multiple taxes on that one item? Have I got that right?

sugarb · 29th November 2009, 12:14 PM

Originally Posted by leftysergeant

The bolding above is mine, to point out where I think your reasoning is flawed.

The wealthiest tax payers are benefitting at a higher rate than the rest of us from the existance of our infrastructure, thus should be expected to contribute at a higher rate to its up-keep. Further, the highest earners neccessitate great government al outlays. On that basis alone, a graduated income tax makes sense.

The accumulation of too much wealth into too few hands has NEVER been good for any civilization. No civilization ever collapsed because the poor were too well-fed, or because there was little competition from outsiders for the trade in a community.

I totally dislike a VAT because it does impose more of a burden on manufactures. It were better, in terms of encouraging a rebirth of our industries, to raise tariffs, especially against those ocuntries where working people are not paid what they deserve. It does us no good to import $200 athletic shoes from countries where people cannot afford enough rice to achieve normal growth, because they are not going to buy enough of anything from us to make it worth our while. But if we can sell blue jeans to the Germans, it does us no harm to buy their shoes.

Hello, leftysergeant. When I say "penalized", I mean it no differently than if one were to say low earners are "rewarded" by receiving in some cases tax refunds in excess of their contributions. It would seem to me that those are actually the people benefitting most from our infrastructure (those who get more then they pay in), and I have no problem with that. But without the wealthy, I also realize that those people wouldn't be able to get more than they contribute, so to my mind that is a redistribution of wealth that is necessary. I just don't have friendlier terms for it than penalties and rewards.

I agree with much of the rest of your post. I don't understand value added tax enough to really comment on that part of it, but...I have serious problems with importing goods that sell for extremely high prices, as if they were still being manufactured here in the states, when we know that the actual people doing the manufacturing aren't getting paid what, in our terms, is a fair wage.

What I am wondering is if there would be a system that would benefit everyone equally in terms of services and cost. Such as a flat tax, but that still doesn't address offshore accounts or profits made on the backs of what, to our minds and society, would be slave labor.

sugarb · 29th November 2009, 12:17 PM

Originally Posted by Brainster

IIRC, the argument is that Reagan lowered taxes dramatically in 1981, then increased them substantially in 1982 (but not above the 1980 levels). Thus the 1982 tax increase is frequently referred to as the biggest tax increase of all time, although combined the two tax acts turned out to be a pretty substantial tax decrease.

Brainster, ah, okay I see what you mean. So basically the tax burden on individuals was still less than levels prior 1980, but the full decrease was unsustainable.

WildCat · 29th November 2009, 12:43 PM

Originally Posted by Francesca R

Because US tax is more skewed to income than other countries (it is the only big economy without VAT) it is probably more progressive than most.

But our corporate income tax rates are far higher than any European country I know of, and of course this cost ultimately gets passed on to consumers as a hidden tax on them. American politicians like to hide the taxes people pay.

WildCat · 29th November 2009, 12:45 PM

Originally Posted by leftysergeant

I totally dislike a VAT because it does impose more of a burden on manufactures.

No such thing is possible. Any tax on manufacturers ultimately must be paid by their customers, you and me. There is no free lunch.

Francesca R · 29th November 2009, 12:54 PM

Originally Posted by Kestrel

Most state and local governments in the US do impose sales tax and other regressive taxes. This helps make the total tax burden in the US regressive instead of progressive.

Sales tax is generally applied at significantly lower rates than VAT (which is 15%-20%). Same for excise duties. The net result is that the US raises a significantly lower fraction of its government receipts from consumer spending. On that measure alone, it is less regressive.

Skeptic · 29th November 2009, 12:54 PM

Quote:

The accumulation of too much wealth into too few hands has NEVER been good for any civilization.

Which is why communism is a catastrophe; in it, whatever wealth is still produced after the communist system killed all incentive to work and produce, is accumulated in the hands of the tiny group at the top whose job it is to make sure wealth is distributed "fairly".

Francesca R · 29th November 2009, 12:58 PM

Originally Posted by WildCat

But our corporate income tax rates are far higher than any European country I know of, and of course this cost ultimately gets passed on to consumers as a hidden tax on them. American politicians like to hide the taxes people pay.

Correct about more coming from tax on companies. Not correct to say this is all passed on to consumers. Indeed that's a reductio-ad-absurdam of tax policy used by those who understand almost nothing about it. I'll let it go by as a slip.

WildCat · 29th November 2009, 01:01 PM

Originally Posted by Francesca R

Correct about more coming from tax on companies. Not correct to say this is all passed on to consumers. Indeed that's a reductio-ad-absurdam of tax policy used by those who understand almost nothing about it. I'll let it go by as a slip.

If it doesn't get passed to the consumers who pays it? I suppose you could pay your workers less, or offer fewer benefits, or fire some workers and try to get by with less, but it's not likely to come from corporate profits.

Francesca R · 29th November 2009, 01:10 PM

Originally Posted by sugarb

I had always thought that the rich should not be penalized any heavier than anyone else, that we should pretty much contribute equally in terms of percentages

"Equal in terms of percentages" (for income tax) is commonly known as "flat tax" and is not considered progressive. When coupled with consumption tax (which is normally a flat rate with essential exemptions) and capital gains tax (usually a lower rate than income, with higher thresholds before it kicks in too), a flat income tax rate would typically mean that a smaller percentage of a wealthy person's total earnings (profits, income, capital gains) is taxed than a poor person's. For this reason, the first part of progressive income tax scales tend to just restore this "equality".

Originally Posted by sugarb

Hello, leftysergeant. When I say "penalized", I mean it no differently than if one were to say low earners are "rewarded" by receiving in some cases tax refunds in excess of their contributions. It would seem to me that those are actually the people benefitting most from our infrastructure (those who get more then they pay in), and I have no problem with that. But without the wealthy, I also realize that those people wouldn't be able to get more than they contribute, so to my mind that is a redistribution of wealth that is necessary. I just don't have friendlier terms for it than penalties and rewards.

Redistribution isn't the only aim of tax, and neither is fairness. First and foremost it is to raise revenue for the state in the most efficient way possible--which means the way that distorts/reduces economic performance least--in order to provide public goods. Taxes generally hamper ("penalise" if you wish) production and wealth generation however they are designed, but some ways of taxing are less growth-reducing than others (these tend to be property taxes and VAT . . . property tax is not regressive but VAT is).

In theory, a state could use the most efficient ways of taxing output, and then redistribute any way it likes independently of this via a structure of transfer payments, although this means building a larger social welfare system. In this respect, the US acts less than Europe, Canada, Australasia and Japan.

Francesca R · 29th November 2009, 01:11 PM

Originally Posted by WildCat

If it doesn't get passed to the consumers who pays it? I suppose you could pay your workers less, or offer fewer benefits, or fire some workers and try to get by with less, but it's not likely to come from corporate profits.

This just goes around and comes around. Where do consumers get their money from? So it all gets passed back to employers and welfare providers . . .

Sure some of it comes out of corporate profits.

Francesca R · 29th November 2009, 01:14 PM

Originally Posted by leftysergeant

No civilization ever collapsed because the poor were too well-fed, or because there was little competition from outsiders for the trade in a community.

Plenty of state-sponsored confiscation schemes collapsed while masquerading as exactly that to the people they violated.

Francesca R · 29th November 2009, 01:18 PM

Originally Posted by sugarb

Okay, from what little reading I've done so far (the value added tax is a bit confusing, but I'll get it), a value added tax *is* being proposed now in our government. Which means I'd better be learning something about it, eh?

Dunno. Judging the efficacy of admin-Obama from here, it seems plausible that you won't get VAT, nor carbon trading, nor health reform. So they'll need another bubble or something instead.

/cheap pot-shot/apologies

WildCat · 29th November 2009, 01:28 PM

Originally Posted by Francesca R

This just goes around and comes around. Where do consumers get their money from? So it all gets passed back to employers and welfare providers . . .

Sure some of it comes out of corporate profits.

Are profit margins lower for US companies than for European companies in the same industry?

Lothian · 29th November 2009, 01:35 PM

Originally Posted by sugarb

Does a value added tax add to the end price of a consumer product?

Yes

Quote:

And are sales taxes still applied as well to the end consumer?

No VAT is instead of sales tax.

Quote:

In other words, in each incremental step of production, to distribution and finally sale, a government is receiving multiple taxes on that one item? Have I got that right?

Yes, but ....the Government ends up with the full VAT due on the end product but at each stage of production it is only the added value that is effectively taxed.

Say VAT is 10% and a wood cutter chops down some wood and sells it to a lumber yard for £10 he would add on £1 of VAT

The lumber yard would process it and sell it to a furniture maker for £20 and they would add £2 of VAT

The furniture maker would make furniture and sell it to a customer for £40 and would add £4 of VAT.

But other than on the supply to the final consumer, the VAT paid on supplies bought can be offset against VAT charged on onward sales. So in the above example the Government ends up with the £4 VAT paid and they get it as follows

Wood cutter £1 charged = £1 VAT to Government
Lumber yard £2 charged less £1 paid = £1 VAT to Government
Furniture maker £4 charged less £2 paid = £2 VAT to Government

leftysergeant · 29th November 2009, 02:09 PM

Originally Posted by WildCat

No such thing is possible. Any tax on manufacturers ultimately must be paid by their customers, you and me.

And when that reaches a certain point and we are no longer able to buy the product, it hardly matters how much of it the manufacturer shirks. Further, it taxes the gross output of a factory, rather than the net profit that the factory makes. Exactly the opposite of what you want during an ecconomic down-turn.

I am also opposed to ad valorem sales and real estate taxes. This taxes a larger percentage of a working man's income, since he may already be spending most of what he earns just to obtain neccessities, leaving him little opportunity to amas capital to go into a small business of his own. Thus mega-chains and big box stores crowd out the local entrepreneurs who would actually provide more jobs for employees and local merchants. The wealthier investor, by contrast, will pay out a smaller percentage of his income for neccessities and sales taxes, and have a lot more money on hand to buy job opportunities out from under the small-time operators.

Cain · 29th November 2009, 03:24 PM

Originally Posted by sugarb

Is it true that Reagan raised taxes more than any other peacetime President?
What did that poster mean? I thought that Reagan lowered taxes, but did he only lower taxes for the extremely wealthy? And was that offset by an increase in Soc. Security taxes for everyone else? *Is* it a myth that Reagan lowered taxes?

To answer your question, it depends. Reagan apologists (falsely) claim tax cuts resulted in otherwise higher revenues, so, counter-intuitively, if the government collected more money, on this thinking, it's a credit to Reagan. Reagan's largely responsible for flattening taxes, but he had enablers in Congress, the people who actually make the laws.

I'm pretty sure the 26.9% figure in the article is ratio tax revenue to GDP, and the U.S. is typically the second lowest in the industrialized world (after Japan). Republicans in general are in favor of reducing the Federal Income Tax, even if it means raising payroll taxes. The payroll tax is regressive, and the income tax is progressive. David Cay Johnson, tax reporter for the NYT, hits all the major notes in his book Perfectly Legal.

Most importantly, tax cuts without spending cuts are not tax cuts. Such policies shift (or redistribute) the tax burden to future generations.

sugarb · 29th November 2009, 04:26 PM

Originally Posted by Lothian

YesNo VAT is instead of sales tax.

Yes, but ....the Government ends up with the full VAT due on the end product but at each stage of production it is only the added value that is effectively taxed.

Say VAT is 10% and a wood cutter chops down some wood and sells it to a lumber yard for £10 he would add on £1 of VAT

The lumber yard would process it and sell it to a furniture maker for £20 and they would add £2 of VAT

The furniture maker would make furniture and sell it to a customer for £40 and would add £4 of VAT.

But other than on the supply to the final consumer, the VAT paid on supplies bought can be offset against VAT charged on onward sales. So in the above example the Government ends up with the £4 VAT paid and they get it as follows

Wood cutter £1 charged = £1 VAT to Government
Lumber yard £2 charged less £1 paid = £1 VAT to Government
Furniture maker £4 charged less £2 paid = £2 VAT to Government

Hey, thanks! I get that. So the people in the steps of manufacturing a product who make the MOST from each unfinished product in each step pay a greater percentage of the VAT to government. Basically, it is everyone involved sharing the tax burden for an item. Everyone involved in profitting from an item, I mean.

I said that poorly, but...it's actually making more sense to me now. Thanks again.

sugarb · 29th November 2009, 04:31 PM

Originally Posted by Cain

To answer your question, it depends. Reagan apologists (falsely) claim tax cuts resulted in otherwise higher revenues, so, counter-intuitively, if the government collected more money, on this thinking, it's a credit to Reagan. Reagan's largely responsible for flattening taxes, but he had enablers in Congress, the people who actually make the laws.

I'm pretty sure the 26.9% figure in the article is ratio tax revenue to GDP, and the U.S. is typically the second lowest in the industrialized world (after Japan). Republicans in general are in favor of reducing the Federal Income Tax, even if it means raising payroll taxes. The payroll tax is regressive, and the income tax is progressive. David Cay Johnson, tax reporter for the NYT, hits all the major notes in his book Perfectly Legal.

Most importantly, tax cuts without spending cuts are not tax cuts. Such policies shift (or redistribute) the tax burden to future generations.

Mmm, but if I recall correctly, Reagan ran up a huge deficit (?), which says to me based on your last sentence that yes, tax cuts were a myth. Interesting. One more question: what did the Clinton administration do differently that resulted in an actual lowering of the deficit?

Lothian · 29th November 2009, 04:53 PM

Originally Posted by sugarb

Hey, thanks! I get that. So the people in the steps of manufacturing a product who make the MOST from each unfinished product in each step pay a greater percentage of the VAT to government. Basically, it is everyone involved sharing the tax burden for an item. Everyone involved in profitting from an item, I mean.

Sort of, but then again not really. The tax is neutral until the final consumer. Although it is collected in stages the burden is passed.

Take the Lumber yard in the example. Without tax he buys wood for £10 and sells it for £20, making a £10 profit. With tax he buys for 11 (10+1) sells for 22 (20+2) and passes £1 tax to the government making an overall £10 profit, exactly the same as without tax. The same is true for everyone in the chain until you reach the final consumer, the member of the public who can't recover the tax or pass it on. The tax burden rests entirely with the final consumer.

The people in the chain are just 'unpaid tax collectors' (although they have use of the tax until they need to pay it across to the Government)

Random · 29th November 2009, 05:05 PM

Originally Posted by sugarb

Mmm, but if I recall correctly, Reagan ran up a huge deficit (?), which says to me based on your last sentence that yes, tax cuts were a myth. Interesting. One more question: what did the Clinton administration do differently that resulted in an actual lowering of the deficit?

As time passes, the natural population growth of the US causes the economy to expand over time. As the economy expands, tax revenue increases*. President Clinton just made sure that the US budget increased at a slower rate than tax revenue. Eventually, revenues caught up to expenditures and you had a balanced budget.

*This is sometimes used to explain that tax cuts increase tax revenue. As taxes are cut, the theory goes, the economy expands so tax revenues increase. Therefore, tax cuts can pay for themselves! This never seems to work in reality however, as the increased economic activity from the tax cuts is rarely large enough to make up for the loss in revenue from the reduced tax rate. If you meet someone using this argument, just ask them why we don't reduce taxes to zero percent. Surely this will have money pouring in, right?

Kestrel · 29th November 2009, 05:36 PM

Originally Posted by Francesca R

Sales tax is generally applied at significantly lower rates than VAT (which is 15%-20%). Same for excise duties. The net result is that the US raises a significantly lower fraction of its government receipts from consumer spending. On that measure alone, it is less regressive.

The US does have other regressive taxes. For example, the 7.65% Social Security tax applies to incomes below approximately $100,000. Incomes above that figure don't pay any additional tax.

Kestrel · 29th November 2009, 05:53 PM

Originally Posted by Random

As time passes, the natural population growth of the US causes the economy to expand over time. As the economy expands, tax revenue increases*. President Clinton just made sure that the US budget increased at a slower rate than tax revenue. Eventually, revenues caught up to expenditures and you had a balanced budget.

It's not just population growth. Improvements in productivity allow the economy to grow faster then the rate of population increase.

daenku32 · 29th November 2009, 05:56 PM

Originally Posted by WildCat

If it doesn't get passed to the consumers who pays it? I suppose you could pay your workers less, or offer fewer benefits, or fire some workers and try to get by with less, but it's not likely to come from corporate profits.

Since the corporate taxes are paid from corporate profits, that means that the consumers already paid for it, whether the government collects or not. It's not like the corporation is going to forgo profits just to save you money.

WildCat · 29th November 2009, 06:27 PM

Originally Posted by daenku32

Since the corporate taxes are paid from corporate profits, that means that the consumers already paid for it, whether the government collects or not. It's not like the corporation is going to forgo profits just to save you money.

When I' say "profits" I'm referring to profit after taxes, not pre-tax profit.

Cain · 29th November 2009, 11:54 PM

Originally Posted by Random

As time passes, the natural population growth of the US causes the economy to expand over time. As the economy expands, tax revenue increases*. President Clinton just made sure that the US budget increased at a slower rate than tax revenue. Eventually, revenues caught up to expenditures and you had a balanced budget.

But Clinton also argued to raise taxes on the rich, which Congress did. The top marginal bracket went up to almost 39%, a huge help in reducing deficits considering the "booming" economy of the 90s worked best for the super wealthy.

Inflation and population growth are ignored by right-wing flaks when it comes to claiming Reagan's policies grew the budget.

Quote:

If you meet someone using this argument, just ask them why we don't reduce taxes to zero percent. Surely this will have money pouring in, right?

There is merit to the so-called Laffer Curve, the problem is that Republicans always insist we're to the right of the sweet spot. Martin Gardner's famous rendering in Scientific American:

Darth Rotor · 30th November 2009, 09:14 AM

Originally Posted by Kestrel

Most state and local governments in the US do impose sales tax and other regressive taxes. This helps make the total tax burden in the US regressive instead of progressive.

This. ^^^^^

Sales tax and property tax are not all that add to the total tax bill.

See also clever stuff added as extra tax on one's cell phone and cable bills, added city taxes in, for example San Antonio, on any hotel night stay.

The hand never stops dipping into one's pocket.

DR

Francesca R · 30th November 2009, 09:28 AM

Over here, known as stealth taxes

Kestrel · 30th November 2009, 09:50 AM

Originally Posted by Darth Rotor

This. ^^^^^

Sales tax and property tax are not all that add to the total tax bill.

See also clever stuff added as extra tax on one's cell phone and cable bills, added city taxes in, for example San Antonio, on any hotel night stay.

The hand never stops dipping into one's pocket.

DR

I suspect that the administration costs for many of the smaller taxes are rather high. For example, the town I lived in back in Illinois had an $8 yearly vehicle tax. It cost the city at least $2 per car to print the stickers and handle the paperwork.

Lothian · 30th November 2009, 10:12 AM

Originally Posted by Kestrel

I suspect that the administration costs for many of the smaller taxes are rather high. For example, the town I lived in back in Illinois had an $8 yearly vehicle tax. It cost the city at least $2 per car to print the stickers and handle the paperwork.

I think you need to consider why the activity is taxed in the first place. Was the vehicle tax a revenue raiser or was it really to restrict in-town parking to residents? Sometimes a tax is more of a permit.

I think that was the case with the UK dog licence which was dropped in 1987 when the fee was 37.5p (4 years after the 1/2p was withdrawn!). I think it was designed ,not to raise money but, so that dogs could be matched to their owners. Obviously the bit of paper became redundant once studies proved that dogs could be matched to their owners on the basis of looks.

Ohmer · 30th November 2009, 05:35 PM

Originally Posted by sugarb

Mmm, but if I recall correctly, Reagan ran up a huge deficit (?), which says to me based on your last sentence that yes, tax cuts were a myth. Interesting. One more question: what did the Clinton administration do differently that resulted in an actual lowering of the deficit?

Gory details.

http://en.wikipedia.org/wiki/Nationa...idential_terms

The debt shot up during the Reagan administration.

29th November 2009, 09:56 AM	#1
sugarb Muse Join Date: Feb 2008 Posts: 869	a commentary on taxes This was in one of our local papers today: http://www.irontontribune.com/news/2...ebt-and-taxes/ There are a lot of issues addressed in that one column...probably too many to even mean the point he's making is legitimate to begin with...but the discussion that follows it really caught my interest. I think because Reagan was brought up, and there was a comment stating something I wasn't aware of. So I'll ask you folks. Is it true that Reagan raised taxes more than any other peacetime President? What did that poster mean? I thought that Reagan lowered taxes, but did he only lower taxes for the extremely wealthy? And was that offset by an increase in Soc. Security taxes for everyone else? Is it a myth that Reagan lowered taxes?
sugarb Muse Join Date: Feb 2008 Posts: 869

29th November 2009, 11:34 AM	#3
sugarb Muse Join Date: Feb 2008 Posts: 869	Originally Posted by Francesca R America's tax is one of the most complicated in the (rich) world so it's easy to argue a lot of things. I know that the total tax + social contribution take is pretty low compared with the rest of the G-whatever. Also that most of it comes from tax on income and rather little of it from tax on spending or property or wealth. Certainly top income tax rates were cut a lot in the 1980s but the same is true in several other countries too, and to be honest this makes little difference to the total amount of government revenue. America has a reputation for "giving the rich a break" but a lot of this is exaggerated, or at least, will be assuming the GWB tax cuts end (which is a racing certainty). Because US tax is more skewed to income than other countries (it is the only big economy without VAT) it is probably more progressive than most. Francesca R, hello. Yes, I find our tax system quite complicated. Recently I've been trying very hard to better understand them, but there are just so many factors it really does seem overwhelming to me. I had always thought that the rich should not be penalized any heavier than anyone else, that we should pretty much contribute equally in terms of percentages, but I am wondering if my thoughts there are flawed. So it helps to hear others opinions. I don't mean to sound stupid, but what is VAT? I should probably know that, I'm guessing.
sugarb Muse Join Date: Feb 2008 Posts: 869

29th November 2009, 11:35 AM	#4
Arcade22 Muse Join Date: Aug 2007 Location: Västerbotten, Sweden Posts: 543	Originally Posted by sugarb I don't mean to sound stupid, but what is VAT? I should probably know that, I'm guessing. http://en.wikipedia.org/wiki/Value_added_tax
	__________________ Pro gloria et patria Ten subway stops from downtown Stockholm is "little Mogadishu" a drab suburb of the Swedish capital where radical Islamists are said to be recruiting the sons of Somali immigrants for jihad in the Horn of Africa.

29th November 2009, 11:48 AM	#5
Brainster Philosopher Join Date: May 2006 Posts: 7,063	IIRC, the argument is that Reagan lowered taxes dramatically in 1981, then increased them substantially in 1982 (but not above the 1980 levels). Thus the 1982 tax increase is frequently referred to as the biggest tax increase of all time, although combined the two tax acts turned out to be a pretty substantial tax decrease.
Brainster Philosopher Join Date: May 2006 Posts: 7,063	__________________ 1960s Comic Book Nostalgia Check out my (Republican-oriented) Political Blog. Visit the Screw Loose Change blog.

29th November 2009, 11:50 AM	#6
sugarb Muse Join Date: Feb 2008 Posts: 869	Originally Posted by Arcade22 http://en.wikipedia.org/wiki/Value_added_tax Value added tax. Thank you, Arcade22! Going to read now.
sugarb Muse Join Date: Feb 2008 Posts: 869

29th November 2009, 11:25 AM	#2
Francesca R Girl Join Date: Nov 2006 Location: London EC1 Posts: 8,115	America's tax is one of the most complicated in the (rich) world so it's easy to argue a lot of things. I know that the total tax + social contribution take is pretty low compared with the rest of the G-whatever. Also that most of it comes from tax on income and rather little of it from tax on spending or property or wealth. Certainly top income tax rates were cut a lot in the 1980s but the same is true in several other countries too, and to be honest this makes little difference to the total amount of government revenue. America has a reputation for "giving the rich a break" but a lot of this is exaggerated, or at least, will be assuming the GWB tax cuts end (which is a racing certainty). Because US tax is more skewed to income than other countries (it is the only big economy without VAT) it is probably more progressive than most.

29th November 2009, 11:56 AM	#7
leftysergeant Philosopher Join Date: Jul 2007 Location: Spanaway WA Posts: 6,717	Originally Posted by sugarb Francesca R, hello. Yes, I find our tax system quite complicated. Recently I've been trying very hard to better understand them, but there are just so many factors it really does seem overwhelming to me. I had always thought that the rich should not be penalized any heavier than anyone else, that we should pretty much contribute equally in terms of percentages, but I am wondering if my thoughts there are flawed. So it helps to hear others opinions. The bolding above is mine, to point out where I think your reasoning is flawed. The wealthiest tax payers are benefitting at a higher rate than the rest of us from the existance of our infrastructure, thus should be expected to contribute at a higher rate to its up-keep. Further, the highest earners neccessitate great government al outlays. On that basis alone, a graduated income tax makes sense. The accumulation of too much wealth into too few hands has NEVER been good for any civilization. No civilization ever collapsed because the poor were too well-fed, or because there was little competition from outsiders for the trade in a community. I totally dislike a VAT because it does impose more of a burden on manufactures. It were better, in terms of encouraging a rebirth of our industries, to raise tariffs, especially against those ocuntries where working people are not paid what they deserve. It does us no good to import $200 athletic shoes from countries where people cannot afford enough rice to achieve normal growth, because they are not going to buy enough of anything from us to make it worth our while. But if we can sell blue jeans to the Germans, it does us no harm to buy their shoes.

29th November 2009, 11:57 AM	#8
Arcade22 Muse Join Date: Aug 2007 Location: Västerbotten, Sweden Posts: 543	Originally Posted by leftysergeant The wealthiest tax payers are benefitting at a higher rate than the rest of us from the existance of our infrastructure, thus should be expected to contribute at a higher rate to its up-keep. How have you come to this conclusion?
	__________________ Pro gloria et patria Ten subway stops from downtown Stockholm is "little Mogadishu" a drab suburb of the Swedish capital where radical Islamists are said to be recruiting the sons of Somali immigrants for jihad in the Horn of Africa.

29th November 2009, 11:59 AM	#9
Kestrel Graduate Poster Join Date: Dec 2007 Location: DM79 Posts: 1,901	Originally Posted by Francesca R America has a reputation for "giving the rich a break" but a lot of this is exaggerated, or at least, will be assuming the GWB tax cuts end (which is a racing certainty). Because US tax is more skewed to income than other countries (it is the only big economy without VAT) it is probably more progressive than most. Most state and local governments in the US do impose sales tax and other regressive taxes. This helps make the total tax burden in the US regressive instead of progressive.

29th November 2009, 12:07 PM	#10
sugarb Muse Join Date: Feb 2008 Posts: 869	Okay, from what little reading I've done so far (the value added tax is a bit confusing, but I'll get it), a value added tax is being proposed now in our government. Which means I'd better be learning something about it, eh? It is considered an indirect tax? That is interesting. I think something similar to that already exists in terms of getting more than just one tax out of consumer items. In our state, if we purchase items out of state, we are supposed to report each of those on our tax forms and then pay the sales tax of those items, regardless of having already paid a sales tax on those items in another state. In other words, two states are profitting from one purchase, and ultimately, this isn't a good thing for consumers I don't think. Does a value added tax add to the end price of a consumer product? And are sales taxes still applied as well to the end consumer? In other words, in each incremental step of production, to distribution and finally sale, a government is receiving multiple taxes on that one item? Have I got that right?
sugarb Muse Join Date: Feb 2008 Posts: 869

29th November 2009, 12:14 PM	#11
sugarb Muse Join Date: Feb 2008 Posts: 869	Originally Posted by leftysergeant The bolding above is mine, to point out where I think your reasoning is flawed. The wealthiest tax payers are benefitting at a higher rate than the rest of us from the existance of our infrastructure, thus should be expected to contribute at a higher rate to its up-keep. Further, the highest earners neccessitate great government al outlays. On that basis alone, a graduated income tax makes sense. The accumulation of too much wealth into too few hands has NEVER been good for any civilization. No civilization ever collapsed because the poor were too well-fed, or because there was little competition from outsiders for the trade in a community. I totally dislike a VAT because it does impose more of a burden on manufactures. It were better, in terms of encouraging a rebirth of our industries, to raise tariffs, especially against those ocuntries where working people are not paid what they deserve. It does us no good to import $200 athletic shoes from countries where people cannot afford enough rice to achieve normal growth, because they are not going to buy enough of anything from us to make it worth our while. But if we can sell blue jeans to the Germans, it does us no harm to buy their shoes. Hello, leftysergeant. When I say "penalized", I mean it no differently than if one were to say low earners are "rewarded" by receiving in some cases tax refunds in excess of their contributions. It would seem to me that those are actually the people benefitting most from our infrastructure (those who get more then they pay in), and I have no problem with that. But without the wealthy, I also realize that those people wouldn't be able to get more than they contribute, so to my mind that is a redistribution of wealth that is necessary. I just don't have friendlier terms for it than penalties and rewards. I agree with much of the rest of your post. I don't understand value added tax enough to really comment on that part of it, but...I have serious problems with importing goods that sell for extremely high prices, as if they were still being manufactured here in the states, when we know that the actual people doing the manufacturing aren't getting paid what, in our terms, is a fair wage. What I am wondering is if there would be a system that would benefit everyone equally in terms of services and cost. Such as a flat tax, but that still doesn't address offshore accounts or profits made on the backs of what, to our minds and society, would be slave labor.
sugarb Muse Join Date: Feb 2008 Posts: 869

29th November 2009, 12:17 PM	#12
sugarb Muse Join Date: Feb 2008 Posts: 869	Originally Posted by Brainster IIRC, the argument is that Reagan lowered taxes dramatically in 1981, then increased them substantially in 1982 (but not above the 1980 levels). Thus the 1982 tax increase is frequently referred to as the biggest tax increase of all time, although combined the two tax acts turned out to be a pretty substantial tax decrease. Brainster, ah, okay I see what you mean. So basically the tax burden on individuals was still less than levels prior 1980, but the full decrease was unsustainable.
sugarb Muse Join Date: Feb 2008 Posts: 869

29th November 2009, 12:43 PM	#13
WildCat NWO Master Conspirator Join Date: Mar 2003 Location: Albany Park, Chicago Posts: 24,983	Originally Posted by Francesca R Because US tax is more skewed to income than other countries (it is the only big economy without VAT) it is probably more progressive than most. But our corporate income tax rates are far higher than any European country I know of, and of course this cost ultimately gets passed on to consumers as a hidden tax on them. American politicians like to hide the taxes people pay.
	__________________ "My opinion is not uninformed there are just many things I have no clue about." -atavisms "Iran DOES have the right and good reason to attack Israel." -parky76

29th November 2009, 12:45 PM	#14
WildCat NWO Master Conspirator Join Date: Mar 2003 Location: Albany Park, Chicago Posts: 24,983	Originally Posted by leftysergeant I totally dislike a VAT because it does impose more of a burden on manufactures. No such thing is possible. Any tax on manufacturers ultimately must be paid by their customers, you and me. There is no free lunch.
	__________________ "My opinion is not uninformed there are just many things I have no clue about." -atavisms "Iran DOES have the right and good reason to attack Israel." -parky76

29th November 2009, 12:54 PM	#15
Francesca R Girl Join Date: Nov 2006 Location: London EC1 Posts: 8,115	Originally Posted by Kestrel Most state and local governments in the US do impose sales tax and other regressive taxes. This helps make the total tax burden in the US regressive instead of progressive. Sales tax is generally applied at significantly lower rates than VAT (which is 15%-20%). Same for excise duties. The net result is that the US raises a significantly lower fraction of its government receipts from consumer spending. On that measure alone, it is less regressive.

29th November 2009, 12:54 PM	#16
Skeptic Sum, ergo cogito Join Date: Jul 2001 Location: Behind the chessboard Posts: 13,334	Quote: The accumulation of too much wealth into too few hands has NEVER been good for any civilization. Which is why communism is a catastrophe; in it, whatever wealth is still produced after the communist system killed all incentive to work and produce, is accumulated in the hands of the tiny group at the top whose job it is to make sure wealth is distributed "fairly".
	__________________ CNN, Fox, MSNBC are all terrible, all do the exact same thing: take news wire reports, add a bunch of unnecessary opinion, and then re-brand it as "infotainment" as if this were some sort of useful service. It is akin to paying me to read a newspaper to you, while interrupting frequently with my own opinion. -- Zaphod2016

29th November 2009, 12:58 PM	#17
Francesca R Girl Join Date: Nov 2006 Location: London EC1 Posts: 8,115	Originally Posted by WildCat But our corporate income tax rates are far higher than any European country I know of, and of course this cost ultimately gets passed on to consumers as a hidden tax on them. American politicians like to hide the taxes people pay. Correct about more coming from tax on companies. Not correct to say this is all passed on to consumers. Indeed that's a reductio-ad-absurdam of tax policy used by those who understand almost nothing about it. I'll let it go by as a slip.

29th November 2009, 01:01 PM	#18
WildCat NWO Master Conspirator Join Date: Mar 2003 Location: Albany Park, Chicago Posts: 24,983	Originally Posted by Francesca R Correct about more coming from tax on companies. Not correct to say this is all passed on to consumers. Indeed that's a reductio-ad-absurdam of tax policy used by those who understand almost nothing about it. I'll let it go by as a slip. If it doesn't get passed to the consumers who pays it? I suppose you could pay your workers less, or offer fewer benefits, or fire some workers and try to get by with less, but it's not likely to come from corporate profits.
	__________________ "My opinion is not uninformed there are just many things I have no clue about." -atavisms "Iran DOES have the right and good reason to attack Israel." -parky76 Last edited by WildCat; 29th November 2009 at 01:02 PM.

29th November 2009, 01:10 PM	#19
Francesca R Girl Join Date: Nov 2006 Location: London EC1 Posts: 8,115	Originally Posted by sugarb I had always thought that the rich should not be penalized any heavier than anyone else, that we should pretty much contribute equally in terms of percentages "Equal in terms of percentages" (for income tax) is commonly known as "flat tax" and is not considered progressive. When coupled with consumption tax (which is normally a flat rate with essential exemptions) and capital gains tax (usually a lower rate than income, with higher thresholds before it kicks in too), a flat income tax rate would typically mean that a smaller percentage of a wealthy person's total earnings (profits, income, capital gains) is taxed than a poor person's. For this reason, the first part of progressive income tax scales tend to just restore this "equality". Originally Posted by sugarb Hello, leftysergeant. When I say "penalized", I mean it no differently than if one were to say low earners are "rewarded" by receiving in some cases tax refunds in excess of their contributions. It would seem to me that those are actually the people benefitting most from our infrastructure (those who get more then they pay in), and I have no problem with that. But without the wealthy, I also realize that those people wouldn't be able to get more than they contribute, so to my mind that is a redistribution of wealth that is necessary. I just don't have friendlier terms for it than penalties and rewards. Redistribution isn't the only aim of tax, and neither is fairness. First and foremost it is to raise revenue for the state in the most efficient way possible--which means the way that distorts/reduces economic performance least--in order to provide public goods. Taxes generally hamper ("penalise" if you wish) production and wealth generation however they are designed, but some ways of taxing are less growth-reducing than others (these tend to be property taxes and VAT . . . property tax is not regressive but VAT is). In theory, a state could use the most efficient ways of taxing output, and then redistribute any way it likes independently of this via a structure of transfer payments, although this means building a larger social welfare system. In this respect, the US acts less than Europe, Canada, Australasia and Japan.

29th November 2009, 01:11 PM	#20
Francesca R Girl Join Date: Nov 2006 Location: London EC1 Posts: 8,115	Originally Posted by WildCat If it doesn't get passed to the consumers who pays it? I suppose you could pay your workers less, or offer fewer benefits, or fire some workers and try to get by with less, but it's not likely to come from corporate profits. This just goes around and comes around. Where do consumers get their money from? So it all gets passed back to employers and welfare providers . . . Sure some of it comes out of corporate profits.

29th November 2009, 01:14 PM	#21
Francesca R Girl Join Date: Nov 2006 Location: London EC1 Posts: 8,115	Originally Posted by leftysergeant No civilization ever collapsed because the poor were too well-fed, or because there was little competition from outsiders for the trade in a community. Plenty of state-sponsored confiscation schemes collapsed while masquerading as exactly that to the people they violated.

29th November 2009, 01:18 PM	#22
Francesca R Girl Join Date: Nov 2006 Location: London EC1 Posts: 8,115	Originally Posted by sugarb Okay, from what little reading I've done so far (the value added tax is a bit confusing, but I'll get it), a value added tax is being proposed now in our government. Which means I'd better be learning something about it, eh? Dunno. Judging the efficacy of admin-Obama from here, it seems plausible that you won't get VAT, nor carbon trading, nor health reform. So they'll need another bubble or something instead. /cheap pot-shot/apologies

29th November 2009, 01:28 PM	#23
WildCat NWO Master Conspirator Join Date: Mar 2003 Location: Albany Park, Chicago Posts: 24,983	Originally Posted by Francesca R This just goes around and comes around. Where do consumers get their money from? So it all gets passed back to employers and welfare providers . . . Sure some of it comes out of corporate profits. Are profit margins lower for US companies than for European companies in the same industry?
	__________________ "My opinion is not uninformed there are just many things I have no clue about." -atavisms "Iran DOES have the right and good reason to attack Israel." -parky76

29th November 2009, 01:35 PM	#24
Lothian (edited for breach of rule 10) Join Date: Apr 2002 Location: A small, blue-green world in one of the less fashionable sectors of the galaxy Posts: 7,033	Originally Posted by sugarb Does a value added tax add to the end price of a consumer product? Yes Quote: And are sales taxes still applied as well to the end consumer? No VAT is instead of sales tax. Quote: In other words, in each incremental step of production, to distribution and finally sale, a government is receiving multiple taxes on that one item? Have I got that right? Yes, but ....the Government ends up with the full VAT due on the end product but at each stage of production it is only the added value that is effectively taxed. Say VAT is 10% and a wood cutter chops down some wood and sells it to a lumber yard for £10 he would add on £1 of VAT The lumber yard would process it and sell it to a furniture maker for £20 and they would add £2 of VAT The furniture maker would make furniture and sell it to a customer for £40 and would add £4 of VAT. But other than on the supply to the final consumer, the VAT paid on supplies bought can be offset against VAT charged on onward sales. So in the above example the Government ends up with the £4 VAT paid and they get it as follows Wood cutter £1 charged = £1 VAT to Government Lumber yard £2 charged less £1 paid = £1 VAT to Government Furniture maker £4 charged less £2 paid = £2 VAT to Government
	__________________ "When two opposite points of view are expressed with equal intensity, the truth does not necessarily lie exactly half way between. It is possible for one side simply to be wrong." Richard Dawkins and Jerry Coyne JREF Forum Campaign Group Last edited by Lothian; 29th November 2009 at 01:37 PM.

29th November 2009, 02:09 PM	#25
leftysergeant Philosopher Join Date: Jul 2007 Location: Spanaway WA Posts: 6,717	Originally Posted by WildCat No such thing is possible. Any tax on manufacturers ultimately must be paid by their customers, you and me. And when that reaches a certain point and we are no longer able to buy the product, it hardly matters how much of it the manufacturer shirks. Further, it taxes the gross output of a factory, rather than the net profit that the factory makes. Exactly the opposite of what you want during an ecconomic down-turn. I am also opposed to ad valorem sales and real estate taxes. This taxes a larger percentage of a working man's income, since he may already be spending most of what he earns just to obtain neccessities, leaving him little opportunity to amas capital to go into a small business of his own. Thus mega-chains and big box stores crowd out the local entrepreneurs who would actually provide more jobs for employees and local merchants. The wealthier investor, by contrast, will pay out a smaller percentage of his income for neccessities and sales taxes, and have a lot more money on hand to buy job opportunities out from under the small-time operators.

29th November 2009, 03:24 PM	#26
Cain Contrarian Join Date: May 2002 Location: S. California Posts: 3,958	Originally Posted by sugarb Is it true that Reagan raised taxes more than any other peacetime President? What did that poster mean? I thought that Reagan lowered taxes, but did he only lower taxes for the extremely wealthy? And was that offset by an increase in Soc. Security taxes for everyone else? Is it a myth that Reagan lowered taxes? To answer your question, it depends. Reagan apologists (falsely) claim tax cuts resulted in otherwise higher revenues, so, counter-intuitively, if the government collected more money, on this thinking, it's a credit to Reagan. Reagan's largely responsible for flattening taxes, but he had enablers in Congress, the people who actually make the laws. I'm pretty sure the 26.9% figure in the article is ratio tax revenue to GDP, and the U.S. is typically the second lowest in the industrialized world (after Japan). Republicans in general are in favor of reducing the Federal Income Tax, even if it means raising payroll taxes. The payroll tax is regressive, and the income tax is progressive. David Cay Johnson, tax reporter for the NYT, hits all the major notes in his book Perfectly Legal. Most importantly, tax cuts without spending cuts are not tax cuts. Such policies shift (or redistribute) the tax burden to future generations.
	__________________ Well, well, well. If it ain't the serious, elusive Leroy Green. I've been waitin' a long time for this, Leroy. I am sick of hearin' these ***** Superman stories about the "wassah" legendary Bruce Leroy catchin' bullets with his teeth. Catches bullets with his teeth?! ***** pleeze.

29th November 2009, 04:26 PM	#27
sugarb Muse Join Date: Feb 2008 Posts: 869	Originally Posted by Lothian YesNo VAT is instead of sales tax. Yes, but ....the Government ends up with the full VAT due on the end product but at each stage of production it is only the added value that is effectively taxed. Say VAT is 10% and a wood cutter chops down some wood and sells it to a lumber yard for £10 he would add on £1 of VAT The lumber yard would process it and sell it to a furniture maker for £20 and they would add £2 of VAT The furniture maker would make furniture and sell it to a customer for £40 and would add £4 of VAT. But other than on the supply to the final consumer, the VAT paid on supplies bought can be offset against VAT charged on onward sales. So in the above example the Government ends up with the £4 VAT paid and they get it as follows Wood cutter £1 charged = £1 VAT to Government Lumber yard £2 charged less £1 paid = £1 VAT to Government Furniture maker £4 charged less £2 paid = £2 VAT to Government Hey, thanks! I get that. So the people in the steps of manufacturing a product who make the MOST from each unfinished product in each step pay a greater percentage of the VAT to government. Basically, it is everyone involved sharing the tax burden for an item. Everyone involved in profitting from an item, I mean. I said that poorly, but...it's actually making more sense to me now. Thanks again.
sugarb Muse Join Date: Feb 2008 Posts: 869

29th November 2009, 04:31 PM	#28
sugarb Muse Join Date: Feb 2008 Posts: 869	Originally Posted by Cain To answer your question, it depends. Reagan apologists (falsely) claim tax cuts resulted in otherwise higher revenues, so, counter-intuitively, if the government collected more money, on this thinking, it's a credit to Reagan. Reagan's largely responsible for flattening taxes, but he had enablers in Congress, the people who actually make the laws. I'm pretty sure the 26.9% figure in the article is ratio tax revenue to GDP, and the U.S. is typically the second lowest in the industrialized world (after Japan). Republicans in general are in favor of reducing the Federal Income Tax, even if it means raising payroll taxes. The payroll tax is regressive, and the income tax is progressive. David Cay Johnson, tax reporter for the NYT, hits all the major notes in his book Perfectly Legal. Most importantly, tax cuts without spending cuts are not tax cuts. Such policies shift (or redistribute) the tax burden to future generations. Mmm, but if I recall correctly, Reagan ran up a huge deficit (?), which says to me based on your last sentence that yes, tax cuts were a myth. Interesting. One more question: what did the Clinton administration do differently that resulted in an actual lowering of the deficit?
sugarb Muse Join Date: Feb 2008 Posts: 869

29th November 2009, 04:53 PM	#29
Lothian (edited for breach of rule 10) Join Date: Apr 2002 Location: A small, blue-green world in one of the less fashionable sectors of the galaxy Posts: 7,033	Originally Posted by sugarb Hey, thanks! I get that. So the people in the steps of manufacturing a product who make the MOST from each unfinished product in each step pay a greater percentage of the VAT to government. Basically, it is everyone involved sharing the tax burden for an item. Everyone involved in profitting from an item, I mean. Sort of, but then again not really. The tax is neutral until the final consumer. Although it is collected in stages the burden is passed. Take the Lumber yard in the example. Without tax he buys wood for £10 and sells it for £20, making a £10 profit. With tax he buys for 11 (10+1) sells for 22 (20+2) and passes £1 tax to the government making an overall £10 profit, exactly the same as without tax. The same is true for everyone in the chain until you reach the final consumer, the member of the public who can't recover the tax or pass it on. The tax burden rests entirely with the final consumer. The people in the chain are just 'unpaid tax collectors' (although they have use of the tax until they need to pay it across to the Government)
	__________________ "When two opposite points of view are expressed with equal intensity, the truth does not necessarily lie exactly half way between. It is possible for one side simply to be wrong." Richard Dawkins and Jerry Coyne JREF Forum Campaign Group Last edited by Lothian; 29th November 2009 at 04:55 PM.

29th November 2009, 05:05 PM	#30
Random Graduate Poster Join Date: Jul 2001 Location: Massachusetts Posts: 1,812	Originally Posted by sugarb Mmm, but if I recall correctly, Reagan ran up a huge deficit (?), which says to me based on your last sentence that yes, tax cuts were a myth. Interesting. One more question: what did the Clinton administration do differently that resulted in an actual lowering of the deficit? As time passes, the natural population growth of the US causes the economy to expand over time. As the economy expands, tax revenue increases. President Clinton just made sure that the US budget increased at a slower rate than tax revenue. Eventually, revenues caught up to expenditures and you had a balanced budget. This is sometimes used to explain that tax cuts increase tax revenue. As taxes are cut, the theory goes, the economy expands so tax revenues increase. Therefore, tax cuts can pay for themselves! This never seems to work in reality however, as the increased economic activity from the tax cuts is rarely large enough to make up for the loss in revenue from the reduced tax rate. If you meet someone using this argument, just ask them why we don't reduce taxes to zero percent. Surely this will have money pouring in, right?
	__________________ If the Government is a car setting out to give every one a ride to work, then for 40 years the Republicans have been puncturing the tires, pouring sand in the gas tank, stealing the distributer cap, and, whenever they can get their hands on the wheel, driving it straight into the nearest ditch and then, pointing to the wreckage as the tow truck backs up to it, saying, See, this proves that people were meant to walk. And they do this so that they don't have to chip in on gas. -Lance Mannion

29th November 2009, 05:36 PM	#31
Kestrel Graduate Poster Join Date: Dec 2007 Location: DM79 Posts: 1,901	Originally Posted by Francesca R Sales tax is generally applied at significantly lower rates than VAT (which is 15%-20%). Same for excise duties. The net result is that the US raises a significantly lower fraction of its government receipts from consumer spending. On that measure alone, it is less regressive. The US does have other regressive taxes. For example, the 7.65% Social Security tax applies to incomes below approximately $100,000. Incomes above that figure don't pay any additional tax.

29th November 2009, 05:53 PM	#32
Kestrel Graduate Poster Join Date: Dec 2007 Location: DM79 Posts: 1,901	Originally Posted by Random As time passes, the natural population growth of the US causes the economy to expand over time. As the economy expands, tax revenue increases*. President Clinton just made sure that the US budget increased at a slower rate than tax revenue. Eventually, revenues caught up to expenditures and you had a balanced budget. It's not just population growth. Improvements in productivity allow the economy to grow faster then the rate of population increase.

29th November 2009, 05:56 PM	#33
daenku32 Muse Join Date: Dec 2002 Posts: 748	Originally Posted by WildCat If it doesn't get passed to the consumers who pays it? I suppose you could pay your workers less, or offer fewer benefits, or fire some workers and try to get by with less, but it's not likely to come from corporate profits. Since the corporate taxes are paid from corporate profits, that means that the consumers already paid for it, whether the government collects or not. It's not like the corporation is going to forgo profits just to save you money.
daenku32 Muse Join Date: Dec 2002 Posts: 748

29th November 2009, 06:27 PM	#34
WildCat NWO Master Conspirator Join Date: Mar 2003 Location: Albany Park, Chicago Posts: 24,983	Originally Posted by daenku32 Since the corporate taxes are paid from corporate profits, that means that the consumers already paid for it, whether the government collects or not. It's not like the corporation is going to forgo profits just to save you money. When I' say "profits" I'm referring to profit after taxes, not pre-tax profit.
	__________________ "My opinion is not uninformed there are just many things I have no clue about." -atavisms "Iran DOES have the right and good reason to attack Israel." -parky76

29th November 2009, 11:54 PM	#35
Cain Contrarian Join Date: May 2002 Location: S. California Posts: 3,958	Originally Posted by Random As time passes, the natural population growth of the US causes the economy to expand over time. As the economy expands, tax revenue increases. President Clinton just made sure that the US budget increased at a slower rate than tax revenue. Eventually, revenues caught up to expenditures and you had a balanced budget. But Clinton also argued to raise taxes on the rich, which Congress did. The top marginal bracket went up to almost 39%, a huge help in reducing deficits considering the "booming" economy of the 90s worked best for the super wealthy. Inflation and population growth are ignored by right-wing flaks when it comes to claiming Reagan's policies grew the budget. Quote: If you meet someone using this argument, just ask them why we don't reduce taxes to zero percent. Surely this will have money pouring in, right? There is merit to the so-called Laffer Curve, the problem is that Republicans always insist we're to the right of the sweet spot. Martin Gardner's famous rendering in Scientific American*:
	__________________ Well, well, well. If it ain't the serious, elusive Leroy Green. I've been waitin' a long time for this, Leroy. I am sick of hearin' these ***** Superman stories about the "wassah" legendary Bruce Leroy catchin' bullets with his teeth. Catches bullets with his teeth?! ***** pleeze.