What does fair mean when it comes to income taxes?

[drkitten]

What you suggest is sounding like a Value Added Tax, which is very common in the rest of the developed world. Runs 15 to 25% in the EU.

Not quite, but close.

And, yes, I think a national VAT would be a very good thing for the United States.

 

[tyr_13]

They can afford it so they have to pay? By that logic since you can give me oral sex you now have to.

I wasn't aware that the government required oral sex to keep working. Did you steal that line from Bill Clinton?

 

[a3sigma]

This has been proposed.

The problem, of course, is that flying on an airplane is not something subject to "sales" tax. You're not buying the airline. One of the problem with sales tax specifically is that it's more regressive than necessary. Poor people buy goods (which are taxed); rich people buy services (which are not). But this can be dealt with by a "consumption" tax instead.

Thank you, drkitten. Consumption AKA Value Added Tax.

For more see:

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

 

[NewtonTrino]

Is there anyone else that agrees with me that a voluntary tax system would be the fairest? Or am I just a crazy kook?

Seriously, the government needs money to provide services. If people aren't willing to pay without a gun in their face then why force them?

 

[drkitten]

Is there anyone else that agrees with me that a voluntary tax system would be the fairest?

Almost certainly not.

People certainly wouldn't pay.

If people aren't willing to pay without a gun in their face then why force them?

Because people still want services.

 

[paximperium]

Is there anyone else that agrees with me that a voluntary tax system would be the fairest? Or am I just a crazy kook?

Seriously, the government needs money to provide services. If people aren't willing to pay without a gun in their face then why force them?

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

 

[a3sigma]

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

Good link, thanks.

Everywhere I've been in Europe, public transportation operates on an honor system. Riders are simply expected, and relied on, to purchase and carry a valid ticket or fare card to use the system. I've seen very little enforcement in Western Europe -- almost never in Germany, Austria or Switzerland. Pretty heavy, and heavy handed, enforcement in Hungary and the Czech Republic, though. I've no idea why that is, heard some interesting speculation. Popular belief in the social contract, principles of governance, civic duty, and responsibilities of living in a civilized country may have something to do with it.

Would it work in the U.S.? Does anyone know of a city that has tried it?

 

[a3sigma]

Is there anyone else that agrees with me that a voluntary tax system would be the fairest? Or am I just a crazy kook?

Seriously, the government needs money to provide services. If people aren't willing to pay without a gun in their face then why force them?

Tax laws, in fact nearly all laws in a civilized country, depend largely on voluntary compliance. This doesn't mean there may not be serious consequences for failure to comply. But, there isn't a cop standing in front of every home and business, and it's impossible to rigorously audit every tax return. Nobody has a gun in their face. Most people who cheat get away with it. If caught, the penalty is usually nothing more than a fine. Tax evasion is a calculated risk, and it's a pretty straightforward calculation at that -- amount saved by cheating, against the amount of the penalty and the odds of being caught. Pretty good bet, actually -- if Vegas offered odds like those, they'd go broke in a week.

If enough Americans cheated on their taxes, of course, the U.S. Treasury, our cities and states, would be even more bankrupt than they already are.

 

[NewtonTrino]

Because people still want services.

Don't you see this as being a problem though? If people aren't willing to chip in why should they expect to get anything? To me this whole thing seems like organized extortion. We want free services and you have money therefore we take it from you. That's pretty hypocritical.

 

[NewtonTrino]

Tax laws, in fact nearly all laws in a civilized country, depend largely on voluntary compliance. This doesn't mean there may not be serious consequences for failure to comply. But, there isn't a cop standing in front of every home and business, and it's impossible to rigorously audit every tax return. Nobody has a gun in their face. Most people who cheat get away with it. If caught, the penalty is usually nothing more than a fine. Tax evasion is a calculated risk, and it's a pretty straightforward calculation at that -- amount saved by cheating, against the amount of the penalty and the odds of being caught. Pretty good bet, actually -- if Vegas offered odds like those, they'd go broke in a week.

If enough Americans cheated on their taxes, of course, the U.S. Treasury, our cities and states, would be even more bankrupt than they already are.

Most people aren't in a position to be able to cheat due to the way they setup the system. I'm fairly certain if I was to not pay my taxes someone would show up at my house with a gun at some point to take me away. Hey, it happened to wesley snipes!

Anyway I don't cheat on my taxes and I would contribute to society if taxes were voluntary. However the amount I pay now is IMHO unfair given the representation that I have in the political process.

 

[NewtonTrino]

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

But there are already a bunch of free riders. Those with lower incomes have voted to pay no taxes and have me take up the burden. There are plenty of middle class people who pay very little in taxes due to mortgage writeoffs, children and other tax credits. They've voted themselves a free ride. Some of these people could certainly afford to pay more of their share of the load.

Anyway it's clear nobody agrees with my volunteer taxes idea. I didn't figure this was something that would ever realistically happen. Maybe in the year 2525... if we're still alive....

 

[lionking]

Don't you see this as being a problem though? If people aren't willing to chip in why should they expect to get anything?

So you are proposing roads not get built outside properties of people who don't pay taxes?

 

[NewtonTrino]

So you are proposing roads not get built outside properties of people who don't pay taxes?

No, I didn't say anything about roads. All I'm proposing is that taxes are voluntary and that we try to create a culture where this works.

 

[Puppycow]

I believe that there's a value to everyone, including the rich, of not having lots of beggars on the streets. The rich also benefit from having a large middle class, and living in a society where most people have means.

If everyone had to pay the same taxes, the poor and lower middle class would no money left over for anything else. Hence there would be no incentive to work except under the table, like illegal immigrants.

Does Bill Gates get more benefit from government than the homeless? Absolutely!

A "flat tax" BTW, is usually thought of not as the same tax for everyone, but as the same percentage of whatever's being taxed for everyone.

 

[lionking]

No, I didn't say anything about roads. All I'm proposing is that taxes are voluntary and that we try to create a culture where this works.

Sorry, taxes don't pay for roads?????

 

[Skeptic Ginger]

Why isn't it? Are you claiming that Bill Gates gets more value from the government than the homeless does?
If so, can you substantiate that claim?

As a matter of fact, Gates believes he gets more from the government and should pay more. So did his father and they have both said so publicly. Gates believes the reason he got rich in the first place was because the country offered him the opportunity and the means, and for that, Gates believes he owes a lot back.

 

[Skeptic Ginger]

Yes of course he does. He has more assets and property in which his interest is protected by enforced rule of law. This answer is elementary.

Heck, Gates and a few hundred more millionaires have their own town and own police force. I do a little work for the City of Medina where Gates lives.

My son went to elementary school in Medina. The PTA fundraiser was a $50/a plate dinner and silent auction which raised over $100,000 dollars. One of the donated auction items was a Limo ride to school for your kids.

It's a fun little town.

 

[NewtonTrino]

Sorry, taxes don't pay for roads?????

Stop putting words in my mouth. What the taxes are used for is immaterial to what I'm saying.

Pretending that the tax system is "fair" is silly. There is no such thing as "fairness" only what people can get away with. If everyone considers it "fair" for rich people to pay more tax that's fine. I'm just saying that I would prefer to live in a society where "fairness" was more about everyone contributing equally than ability to pay. Obviously my thinking here is so far outside the mainstream that it's pointless to even advocate for this. I'm also biased because I'm one of the guys writing the big checks.

 

[Skeptic Ginger]

I guess one question would be, is this actually true? For example if I had $100M sitting in the bank right now I would be investing it into all kinds of different research groups and companies to help deliver needed services to the public and try and solve some of our problems.



Wouldn't a more logical view be that there should be a minimum statutory CONTRIBUTION by everyone to the public good? ...

FICA tax is structured that way.

This discussion seems to be focusing on income tax. Sales taxes are regressive taxes where the poor pay a greater proportion. Capital gains taxes are treated differently from 'ordinary income'. Capital gains are not charged against inherited wealth.

I get extra write offs for depreciation as a business expense that really amounts to a paper credit. While there are times I have to recoup the depreciation if I resale something like my car or house (home office section depreciates, the whole house doesn't) it still ends up being a deduction. The bottom line is one isn't taxed on all of one's income and home owners and business owners get some income deducted before the income tax rate applies.


But as for the philosophy the people with more wealth should pay more taxes, there are many of us who do see this as reasonable in a moral society.

 

[Puppycow]

Is there anyone else that agrees with me that a voluntary tax system would be the fairest? Or am I just a crazy kook?

Seriously, the government needs money to provide services. If people aren't willing to pay without a gun in their face then why force them?

Almost certainly not.

People certainly wouldn't pay.

Consider religions though. Most churches rely on voluntary donations.

I think that this is something that has never been seriously tried.

Maybe in some sci-fi future when/if there's more than enough resources for everybody to live the lifestyle they like, and it's like a status symbol to pay taxes (as like a rich philanthropist). And on the flip-side, disrepute attached to failure to pay taxes. So, the right social and cultural context would be necessary. Basically, people would have to believe in this at least as strongly as religious people believe in their religion.