The Dismantling of ObamaCare - Ongoing Updates.

[somarco]

Kirby, can you describe a tax system that is equitable in your view?

The "poor" pay little or no income taxes. In many cases their federal income tax is negative. But FICA and SE taxes hit everyone that earns a paycheck or commission. There is an upper income limit applied to FICA taxes but that should be eliminated in my opinion.

The poor also get govt handouts that many times are worth $20,000 or more.

 

[VolAgent]

Kirby, can you describe a tax system that is equitable in your view?

The "poor" pay little or no income taxes. In many cases their federal income tax is negative. But FICA and SE taxes hit everyone that earns a paycheck or commission. There is an upper income limit applied to FICA taxes but that should be eliminated in my opinion.

The poor also get govt handouts that many times are worth $20,000 or more.

Sure, no taxes at all. Of course that is impossible.

I prefer taxes that are in direct relation to use, such as fuel taxes. With a little thought, I'm sure I could come up with arguments that even those taxes aren't "fair".

I will admit, I am against consumption tax as the primary method of funding government. It seems most people who propose such a plan are simply trying to shift more of the tax burden to lower income people. A progressive income tax can be rather equitable. However politicians can't resist tinkering with it to favor one activity or class over another.

I will take the mortgage deduction as an example. Why is it tax deductible, but rent is not, simply to encourage home ownership. It is Congress favoring home owners over renters. They have their reason why, however it still alters the tax. And of course Congress can't stop there and so we have numerous deductions and credits. We have one of the highest if not highest corporate taxes in the world, 35% top tax. However, many of our largest corporations manage to never pay it or have negative tax for years due to all the exemptions, deductions and other credits.

 

[lukifer]

So that is a bit of a fallacious argument. It all depends on which you want to measure, total taxes paid or taxes paid as a percentage of income.

Considering the average savings for Americans hovers around 5% regardless of income, it is safe to say that the minimum wage mom isn't going to save any more of her income than the $250k household percentage wise. People, regardless of income, aren't slamming all their money away in rainy day funds.

That being said, for the gross majority disposable income is disposed of. The ones who make more pay more. Single mom may pay taxes on a $1000 car while the wealthier will pay taxes on their $50k car... therefore paying more into coffers regardless of percentage of income.

When we discuss the "fair share" aspect, the wealthier people are taxed higher overall because they consume more at a higher price point, generally speaking. They buy bigger homes, fancier toys, and aren't usually shopping at Dollar Tree for household supplies.

Single mom making $25k/yr may not be taken her kids out to a $30 meal at Five Guys, where the wealthier may. Because there isn't a scarcity of resources (in this case money) for the wealthier, they are less likely minimize their use of it.

 

[VolAgent]

Considering the average savings for Americans hovers around 5% regardless of income, it is safe to say that the minimum wage mom isn't going to save any more of her income than the $250k household percentage wise. People, regardless of income, aren't slamming all their money away in rainy day funds.

That being said, for the gross majority disposable income is disposed of. The ones who make more pay more. Single mom may pay taxes on a $1000 car while the wealthier will pay taxes on their $50k car... therefore paying more into coffers regardless of percentage of income.

When we discuss the "fair share" aspect, the wealthier people are taxed higher overall because they consume more at a higher price point, generally speaking. They buy bigger homes, fancier toys, and aren't usually shopping at Dollar Tree for household supplies.

Single mom making $25k/yr may not be taken her kids out to a $30 meal at Five Guys, where the wealthier may. Because there isn't a scarcity of resources (in this case money) for the wealthier, they are less likely minimize their use of it.

That 5% is across the board, not broken down by income. The wealthy did not get and stay that was by spending everything.

The Average Savings Rates By Income (Wealth Class) | Financial Samurai
https://dqydj.com/how-much-do-people-save-by-income/
CHART: Savings Rate By Income Level - Business Insider

The rich generally save a much greater percentage of their income and spend a lower percentage. Also they may spend it in ways not captured by a consumption tax. So yes, consumption taxes hit the lower income harder as a percentage of income without some mechanism to compensate.

 

[bluemarlin08]

The poor even with Obamacare are still going to the ER for non emergency reasons, why not, long wait to see primary care doc, they have 0 deductible and 0 premium.

 

[somarco]

I prefer taxes that are in direct relation to use

That would be a consumption tax.

You consume. You pay.

It seems most people who propose such a plan (consumption tax) are simply trying to shift more of the tax burden to lower income people.

Maybe some, but I have never heard anyone state that as the reason. Illegals and those that live "off the grid" can and do avoid income taxes but many of them take more than they contribute. A consumption tax means they will pay at least something rather than getting everything for free.

A progressive income tax can be rather equitable.

The current system is progressive, so I guess it depends on how you define equitable.

Those who earn 86% of the income in this country pay 100% of the income taxes. Those "top earners" are defined as earning $47,000 and up.

You may consider that equitable.

I don't.

 

[junkman]

We have a spectrum of possibilities with taxes. 1. Tax the users. Gas tax works well for roads.

2. Tax those who have money. This works for things like Medicade or unemployment. You can't tax the users because they don't have money especially when working.

Another use is to allocate spill over costs. Economic theory says that all costs must be priced into a product. Cigarettes for example don't pay for the cancer caused by smoking. If they did, price would rise and people would smoke less and related cancer would drop. As it is, we let tobacco companies make more profit than than justified by the value of their product.

Congress is the best that money can buy. Lobbyists rule!! Much worse in the near future.

 

[VolAgent]

That would be a consumption tax.

You consume. You pay.



Maybe some, but I have never heard anyone state that as the reason. Illegals and those that live "off the grid" can and do avoid income taxes but many of them take more than they contribute. A consumption tax means they will pay at least something rather than getting everything for free.



The current system is progressive, so I guess it depends on how you define equitable.

Those who earn 86% of the income in this country pay 100% of the income taxes. Those "top earners" are defined as earning $47,000 and up.

You may consider that equitable.

I don't.

One, I prefer not to talk about equitable, as that is subjective. What one person considers fair may not be considered so by another.

And you have been around long enough to know politicians rarely tell the truth, even when they aren't lying. No one is going to come out and say, "I want to shift taxes onto the poor." Even if they design a plan to do exactly that.

 

[somarco]

I never mentioned politicians. You inferred that.

It is the people who are paying the taxes, mostly the middle class, who are asking for relief.

The wealthy have "loopholes". The poor don't pay income taxes. That leaves the common man (and woman) to shoulder the burden of paying for all that free stuff.

 

[VolAgent]

I never mentioned politicians. You inferred that.

It is the people who are paying the taxes, mostly the middle class, who are asking for relief.

The wealthy have "loopholes". The poor don't pay income taxes. That leaves the common man (and woman) to shoulder the burden of paying for all that free stuff.

I have yet to see a tax plan proposed by anyone who wasn't a politician or with a vested interest in the political system.

And no, a consumption tax is not in direct relation to use.

My buying a new tv for instance has absolutely no relationship to my use of the county hospital. Nor does it impact my use or my child's use of the school system, emergency services, or numerous other government services. The closest relationship may be to the roads, although a gas tax would be most closely related. And that is just state and local.

If you go to federal, it is almost completely divorced. How does my buying anything relate to entitlement programs, which dominate the federal budget?

Arguing which plan is fair or not fair is pointless unless you can agree on a definition of "fair". From the chart you included, the high quintile pays the bulk of federal income tax, while the lowest two actually receive money back versus pay any income tax. Is that fair? I suspect as a group the highest quintile would say no and the lowest two would say yes.

And ultimately, I would say complaining about our tax system misses the real issue. We simply aren't getting any value. The federal budget is dominated by Social Security and Medicare. Yet many people receiving it are still living in poverty and are in poor health. Throwing more money at either one isn't necessarily going to fix it either.

http://federal-budget.insidegov.com/l/119/2016

I personally find it disingenuous how they lump unemployment and labor in with Social Security, knowing that Social Security is the driver of that category. Viewing similar pie charts on another page, it appears to be coming from OMB that way.