The Bill

Does anyone have an opinion on this bill? I'm planning to write my final paper for the quarter on it. From my perspective, it has both good and bad. I see simplifying the tax code as a plus. Screwing low income families, however, seems to be a problem (it's fine if you have the money to live off of until you get your tax rebate... but many don't). Elimination of the estate tax is also something I would argue against. However... I wouldn't mind seeing this pass with a couple choice amendments (that would, unfortunately, probably kill it).

What about you, forum dwellers?

Even if the bill contains rebates for the low-income family, the basic effect of this tax is to shift a massive, massive chunk of the tax burden off the very wealthy and onto ordinary middle-class people.

The very small minority of very wealthy people are a big cash cow. I think the top 2-5% of people pay something like a quarter of all tax revenues. (Correct me if my number is way off, I'm doing this from memory). This tax bill lets them off nearly scott-free. There's only so many mansions and Mercedes and tropical islands they each can buy.

This would inevitably lead to very deep cuts in Government spending, and while some of this may be warranted, it is social security, healthcare, and the military - the biggest items on the budget - that are going to take the brunt of it.

And also, unless the spending cuts are very, very huge indeed, it'll likely make the deficit even worse.

Well, let's see. Any property or service purchased for business or investment purposes is exempt from this tax, which is presumably supposed to replace the income tax eventually. So under this bill; not only is every business in the US completely exempt from this tax, we find that the rich can never be taxed on anything that might conceivably be an investment or business purchase...like yachts, luxury islands, and mansions. Nor can they be taxed as they use dividends (which would be tax free) to buy more bonds, commercial real estate, or stocks (which are all investments); in order to make themselves that much richer.

Typical Republican class-war poop.

Ouch. I've had concerns about the lack of taxes on wealth, especially the potential for aristocracy created by the removal of the estate tax. I admit that I'm also worried by some estimates that the tax would have to be 50% or more to equal current government income.

To amend my initial statement, I wouldn't mind seeing this bill pass with a ton of amendments. :\

Probably just easier to kill it and propose a new and different one.

Sorry to ask the Stupid Question, but what arguments are the proponents of this bill using to justify the evident policy of not taxing really wealthy people?

When asked, they claim that giving more money to the rich boosts the economy. In fact, it's the worst possible way to achieve that end; every dollar given to the rich only generates 60 cents worth of economic activity. The poor, on the other hand, generate several dollars worth of economic activity for every dollar they get (since they live hand to mouth anyway, they'll put money right back into circulation)...but catch the poor giving a sizable bribe to a right-wing Congresscritter.

It's nearly half, in fact, from that top 2-5%. If you also include the top 2-5% of corporations, it's in the neighborhood of two-thirds or three-fourths.



Don't be fooled by the traditional leftist straw-man of corporate lobbying. That's part of it, of course, because lobbying is always part of it, but it's neither the main justification nor the main reason.

It's all about fairness, they say. The position goes that just as everyone has the same rights, everyone should have the same tax rates. Collecting more taxes from the wealthy, it goes, for no reason other than the fact that they're wealthy, serves no purpose but to penalize success.

Think of it this way, using a metaphor. Joe Six-Pack has ten dollars and Joe Blow has a hundred. It's tax day. Joe Six-Pack's final bill is fifty cents, whereas Joe Blow's bill is fifty. For the proponent of a Fair Tax system, Joe Blow is being taxed a hundred times more than Joe Six-Pack but only earns ten times as much - in short, his tax rate (that is, percentage) is ten times higher for no reason other than because he happened to have a hundred.

Opponents of the bill say that the rich should be taxed a higher percentage because they'll still have more left over. Proponents say that they should not be disproportionately taxed because it's unfair. The Libertarian Party is huge on that, and their ideological opposite, the Socialist Party, is huge on the other.

Which shall it be, equality of opportunity or equality of status?



Oh, just a side note: it's hardly all about yachts and mansions. It's about jobs. People with more money can start and invest in more and larger businesses and in doing so they can hire more people and pay them more, as well as produce more. Say what you will about trickle-down economics, it has no more or fewer flaws than trickle-up.

*coffcoffcoffboilshiftcoffcoffcooff*
let me tell you something about rich people (based on close observation there of). Rich people are rich because they have lots of money. They are rich because they hang onto money.

(Hint. If a company wants to improve it's dividends for its stockholders does it...
a) Create lots of jobs?
b) Rightsize?
There, that wasn't so hard, was it?)

If you want to keep money in circulation, the last place you should put it in the hands of rich people.

I've heard of supply side and demand side, but trickle-up is new to me. I guess the idea is that if you invest in the poor, the rich will take some of the money? Who wants that? Trickle-down economists think helping them helps everyone, but who besides the upper classes think helping them is an end in itself?

Perhaps the idea is that the poor get money and buy from corporations owned by the rich? I dunno.

The problem with both trickle-down and "trickle-up" economic theory is that what the economy needs is an ocean, not an river. It needs a cycle.
But rich people don't spend very much money, so it's not circulating. If the money flows from poor to rich, it stops at the rich: no cycle. If the money flows from rich to poor, it turns around, goes the other way, and then stops at the rich again. A little bit of a cycle, but still not what we need.

That's why we should tax the rich heavily: to divert the cash flow from the rich, through the government, and back to the poor, who can then give it to the rich who will be taxed.

See?

Lets "reframe" the title as "The Tax Avoidance For the Rich Act of 2005".


Try the following:

The object is to create a tax code that occupies one page of double spaced text, or less.

1. All tangible and intangible assets received by a person counts as income.

2. Poverty level living expenses are deducted from income. Lets say 12,000 per year, indexed to the cost of living.

3. Savings placed in a federally defined plan is deducted from income. this plan is controlled by the individual and the funds may be invested as they see fit.

4. Money withdrawn from this federally defined plan is income.

5. Money invested in the individual's education or the education of dependents is deducted from income.

6. Taxes are paid on the balance, at a multi-tiered progressive rate, determined by congress.

I'm hoping that the 'education' you refer to is thoroughly acredited?

And - there must be a good reason that the expenses incurred in generating income can largely be deducted from one's tax. Or is there?

But they've taken the "fairness" argument way too far. A flat tax rate on income is one thing, but what this bill does is wipe out taxes on income from inheritance and capital gains.

What's so "successful" about inheriting a kajillion dollars from granddad? You didn't do anything to earn or deserve it, aside from not pissing off granddad while he was still alive.

And if you made all your money by investing in the stock market, and you're really good at it, then great. Good for you. But why shouldn't you pay taxes on that income? I can't think of a single good reason why.

Because, y'know, the people who have no disposable income are the ones who invest heavily in large-scale business ventures.

You have points. The rich have a tendency to hang on to money. The poor have an equally strong tendency to circulate it amongst themselves.

The rich waste their money by keeping it and by buying yachts, fine cocaine, and strippers. The poor waste their money by getting less for the same portion of income on basic amenities, and on debt, booze, and hookers.

But that's not all they do with it.



I never said I agreed with this bill. Personally, I think it could work (as well as the current system, which isn't saying much) to abolish income taxes altogether and just have a flat national sales tax.

Acreditation, I presume, would be required. As always, the devil is in the details.

Expenses in generating income would be on the business side of the equation. Therein, I suggest:

1. Business pays no tax (we all know that taxes on businesses are surreptitious taxes on the consumers. This includes sales tax, income tax, FICA, Medicaire, etc).

2. Assets used by employees are counted as employee income above a defined threashhold. For example:

a. Daily meal costs above $100, with allowance for city in which expense is incurred. That is, in Phoenix you get $100, in New York you get $175. If you spend $300 at the 21 Club in NY, your 1099 shows $125 as income.

b. Daily transportation costs above $50. If you rent an SUV at $100 per day, your 1099 includes $50 per day as income.

c. Use of the corporate jet. If the business class fare is $450, and your company's depreciation cost for the three executives is $3000 for the week you use the jet, your 1099 shows $550 as income.

d. First class travel - if your First Class ticket to London and back is $1,249 (includes champaigne and lobster thermidore), and the business class ticket would have cost $879, your 1099 shows $370 as income.

e. Your corporate yacht costs $9,450 per day to operate and you use it to entertain an important client. You are allowed $100 for meals, $50 for transportation, and your 1099 shows $9,300 as income (per day). If your corporation, LLC, partnership or sole proprietership only uses the yacht 10 days a year, then your share is 1/10 x 365 x 9450 (= $3,449,250) - (100 + 50) = $344,775 per day on your 1099 as income.

In other words, reasonable expenses are deductable for doing business. Scamming the system is not.

3. Dividends are a business expense and are taxable income to the recipient (thus we eliminate double taxation).

As an aside, item #1 and #3 eliminates localities passing legislation exempting companies from taxation as a means to compete for location. This is an endless spiral to the bottom, which impoverishes the local taxpayers (it is left as an exercise to the reader to demonstrate why). Rather, localities must henceforth compete on a quality of life basis. This means school systems, health systems, transportation systems, and the arts and sciences cultural environment (not to mention sports...btw...in Phoenix, arts events generate $300+ million per year and sports events generate less...we have attracted T-Gen because our symphony, dance companies, theater and opera appeal to the highly paid workers that T-Gen employs...oh, yes, there is a great rock venue here too).