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Most federal revenue comes from income and payroll tax. Is that optimal?

Soure: [pgpf.org]

If you were to increase the % of taxes from one source, which would you choose?

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Charter 6 Jan 17
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10

I would prefer reducing expenditure over increasing taxes.

2peros Level 8 Feb 27, 2021
7

Government needs to quit spending like a drunken sailor and lose the mentality that N America is the welfare state of the world we can’t continue bringing in more dependents

Nailed it! No one wants America to be the world’s policeman, but they sure expect American to be the world’s foster Mom.

6

I think it's worth remembering that before a person decides to make changes to a complex system, that person needs to be damn sure they don't make it worse, which is far more likely than it isn't.

As @wolfhnd mentions, whatever you decide to do, people will inevitably expend enormous energies to find weaknesses in any given system; the law of unintended consequences applies equally to all endeavors.

One of the problems with the constantly changing tax code is it creates an environment that favors large cooperations who can handle the changes easier than businesses with limited resources. It is really hard to plan if the rules change.

It also makes it nearly impossible to analysis the effects of taxation on policy. It is much like the way the government keeps changing the way inflation is measured. It is very difficult to make historical comparisons under the best of circumstances.

I like the idea of social engineering but I have been around too long to have much faith in it.

4

The most fair form of taxation is consumption tax, taxes on goods and services at the point of consumption. It ought to be scaled so that necessities are taxed least and luxuries taxed most. That way the poor are not overburdened with taxation and the rich "pay their fair share." Income tax discourages savings and investment, both engines of growth. Tariffs and other excise taxes artificially raise prices on imported goods and disincentivize native business to become competitive with outside corporations. This is not just a national sales tax, it would cover all forms of consumption.

4

Sales.

4

Cut government by 50%

Good point! But why stop at 50%? The Federal government has grown so bloated that the chief executive cannot control the executive branch, all because Congress has delegated its duties to legislate to the various departments. Make Congress do their job and they won't have time to do politically motivated investigations and bogus, unconstitutional impeachments. Article I of the Constitution of the United States begins thus, "All legislative powers granted herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and a House of Representatives." No where in there does it grant the authority to delegate that power.

4

The question basically asks what would be the least painful way to give the govt more money. I'd be more interested in a question that asks which of the hundreds of worthless programs we'd like the govt to abolish.

4

missing is: issuance of treasury debt followed by monetary policy that encourages mass inflation thereby devaluing the payback of the bond... AKA the suckers tax.

RobD1 Level 7 Jan 18, 2021

I don't know. Inflation is a flat tax shared by everyone who owns currency. Of course, rich people can afford to shift their assets away from the dollar. But still...

3

I would piss on O’Biden if his hair was on fire.
Taxes are the fuel our outrageously corrupt government runs on.
Starve a Fed
Feed a family !

David42 Level 7 Mar 10, 2021
3

ALL taxes are ultimately paid by the consumer, so all of the taxes listed above come out of your’s and my pockets at some, if not multiple points, just fancy names, smoke and mirrors to make us feel good about it. No corporation or business of any kind actually pay taxes, they collect them. Payroll, commodity, services, etc, are added to the overhead column and thereby added to the consumer price tag, the same as excise taxes, then you also pay a sales tax. Estate and gift taxes are paid before hand as income and then after the fact, as income. As a gainfully employed person, I am not particularly adverse to pay some taxes. As a US citizen, I believe it is my duty and honor to pay some taxes. However, I do not approve of how said tax payments are being used or allocated on the whole, lots of waste.

3

Leave it the way it is a society will evolve to the environment. You go messing with it and you have no idea what the consequences will be. That doesn't mean not closing loopholes and other ways people cheat on the system.

We have way to many cheater at every social economic level. Whatever system you adopt people will find a way to cheat.

If you are going to go monkeying around with things I don't see much point to taxing cooperations who can just pass on the tax. If you are someone who instinctively dislikes cooperations them sure you can manipulate the social structure by varying taxes but looking back at most social engineering the unintended consequences exceed the intended consequences. You are talking about something so complicated nobody understands it.

wolfhnd Level 8 Feb 25, 2021
2

I’m a fan of taxing the shit out of businesses either hiding assets overseas or having manufacturing done overseas and then bringing their products back home to sell.

Want to kill jobs and reduce your tax base? Allow someone to have a sweatshop making their products at 60 cents/hour to be shipped 11,000 miles into a Walmart or wherever rather than having the jobs here, the products made here, and the money remain here.

2

It think we ought to dump the income tax and go completely to a consumption tax like a sales tax. Income taxes are too hard and too complicated to collect. I even think there should be a consumption tax on stock trades.

TyKC Level 7 Mar 2, 2021
2

Federal raffle/lottery

2

Doesn't really matter does it? I mean whatever the "source" of the money it gets passed along to the consumer in the form of increased costs of living. right? John Q Public foots the bill no matter how you structure in IMHO...but if I am wrong about that let me know please.

iThink Level 8 Feb 27, 2021
2

Tariffs

1

Tax politians at 100 percent of all payments salary contibutuins etc. When not is session they should be out picking up trash along the highway. Also they should not be exempt from any laws.

1

Fair Tax. The idea that anyone else has money except consumers is pure fiction. Government only takes from consumers. Business must pass on every single expense to consumers in their prices, as must corporations. Estate and gift taxes are redundant taxes that the government justifies to collect more goodies to make themselves look good for greater power.

Sales tax is the only fair tax, as the more you spend, the greater the number at exactly the same percentage rate. So it is automatically a progressive tax, without loopholes.

It might drive away those very wealthy individuals who would lose their loopholes and finally have to pay a lot of taxes, but those loyal to the country would stay.

Those who would rip the Constitution to shreds would leave. Good riddance. They never paid any taxes anyway and snubbed their noses at US antitrust laws. They have homes everywhere, and I would be delighted if they took their delusional self-importance elsewhere.

1

I’m guessing that US sales tax is collected at the state level, so it isn’t included here. In Canada it’s collected at the federal and provincial level, and the Goods & Services tax (GST) funds a very substantial chunk of national revenue - close to 12%. The GST plus provincial tax is a pain at the cash register, with Canadians paying around 15% on purchases depending on jurisdiction. But it’s targeted to the biggest spenders, so it’s fair, and lower income people receive quarterly rebate cheques.

I also wonder about US payroll “tax”, which sounds way out of line at 35%. The Canadian chart shows at 6.7% which is the premium deduced from pay cheques for employment insurance.

Income tax in Canada provides over 50% of federal revenues, and the corporate tax rate, is now much higher under our leftist government.

GeeMac Level 8 Feb 27, 2021

There is no federal US sales taxes, although I believe there should be.

@TyKC are there sales taxes at the state level?

@GeeMac Yes, in some states, but not all.

@GeeMac yes, for PA:
"Major items exempt from the tax include food (not ready-to-eat); candy and gum; most clothing; textbooks; computer services; pharmaceutical drugs; sales for resale; and residential heating fuels such as oil, electricity, gas, coal and firewood.

The Pennsylvania sales tax rate is 6 percent. By law, a 1 percent local tax is added to purchases made in Allegheny County, and 2 percent local tax is added to purchases made in Philadelphia."
[revenue.pa.gov].

1

I see no reason why corporations should get tax breaks to the extent that they do. That wold be my number one choice.

In my view, the corporate and income taxes would be flipped: 48% coming from corporations (i.e., not people) and 8% coming from income (i.e., people).

Result... many companies would go broke, move overseas or never even be started up.

@Lightman
Roughly, in the USA,

  • Corporate tax rate were about 47% from 1970 to 1990, 35% from roughly 1990 to 2017 and then dropped to 21% in 2018.

  • Corporate profits increase from 600 Billion in 2000 to 2000 Billion in 2020, despite being at a constant 35% corporate tax the majority of the time.

  • Entrepreneurship has been steady at roughly 500 Thousand new companies started per year for the last 40 years despite changing corporate tax, with a dip due to the recession of 2010

  • Finally, on average 4% of jobs go overseas, also independent of corporate tax. Yet, paradoxically, even with a drop in the tax rate, 10% of the jobs went overseas from 2016 to 2020.

I'm not sure these figures support the thesis that if we reverted to the 35% corporate tax, or higher, companies would go broke, leave the country, or be shy about starting up.

@TheMiddleWay Well that's what happens here and we are not that dissimilar.

@Lightman

Australia had 400 bankruptcies in 2000, peaked to 1000 in 2012, and dropped to around 600 in 2017...
It also had around 120,000 new business registrations in 2004 and steadily rose up to 250,000 in 2017...
... all under a steady 30% corporate tax rate.

Meanwhile,
the us had 40,000 bankruptcies in 2000, diminishing to 20,000 in 2007, peaking at 60,000 in 2010, and dropping to 20,000 in 2015...
... all under a steady 35% corporate tax rate

Tax rate doesn't seem to correlate with companies going broke or new startups from what I could find.

@TheMiddleWay Did you read what I originally wrote... ? If you did did you understand it.
Your policies will do exactly what I said they would do YOUR POLICIES the MIX you suggest.

@Lightman
You said : "many companies would go broke, move overseas or never even be started up." as a reply to my wanting to not give corporations tax breaks, to effectively raise their taxes.

Yet historical data from the past 20 years, when the corporate tax has been steady both in the US and Aus, shows no correlation between corporate tax and companies going broke or going overseas.

What data supports your assertion that raising corporate tax would lead to "many companies would go broke, move overseas or never even be started up."?

@TheMiddleWay 20 years.... go back further.
Actually you don't even have to go back further if you knew anything.
What cars are made in Australia anymore?
How much manufacturing is done in Australia these days?
How many O/S companies have bought out Australian companies and or moved them O/S?
How many Australian companies have folded and been replaced by the Chinese?
Steel manufacturers, textile companies, etc...
The list goes on and on...

@Lightman
By all means, share with me your data from further than 20 years ago in support of your assertion.

@TheMiddleWay Look it up yourself... I'm busy... I'll provide you with names occasionally since you are so ignorant about it.
BONDS
HOLDEN

@Lightman

cars are made in Australia anymore?
How much manufacturing is done in Australia these days?
How many O/S companies have bought out Australian companies and or moved them O/S?
How many Australian companies have folded and been replaced by the Chinese?

I don't know.
But all those changes be under a steady 30% corporate tax rate, hence not a result of a changing tax rate.

@Lightman

Look it up yourself... I'm busy... I'll provide you with names occasionally since you are so ignorant about it.

No thanks.
Your assertion.
Your burden of proof.
I'm happy with my assertion as it stands.
Get back to me when you aren't busy if you want... or don't.

@TheMiddleWay no they can't... they are gone.

[cis.org.au]?
enlighten yourself

@TheMiddleWay lol geez and here I was thinking your original assertion was wrong... when are you going to prove that right eh... there are a great many examples proving me right all over the world.
You for some unknown reason except perhaps ego are in denial.

@TheMiddleWay lol and eventually the profit margin is not enough for the boards etc to continue the business or they move to cheaper labour... take your blinkers off

@Lightman

Australia is becoming increasingly reliant on a small
number of corporate taxpayers, so the budget is
becoming much more exposed to the fortunes of
these individual companies

That is not the case in the US.

Australia has a significant
problem with declining investment

This is not the case in the US

In the longer term, neither big business nor foreigners obtain a big benefit from the tax cut: most
of the benefit instead goes to workers.

So he doesn't argue that tax cuts would keep more jobs or bring in more invesments; merely that the workers would benefit

The substantial impact of the corporate tax rate on
investment, including foreign investment, is shown in
numerous international studies, including:

He cites several stuides that show a 1% drop in tax leads to about a 2% increase in foreign investment.
Yet that is not what we see in the US: after the 2016 tax decrease of over 10%, foreign investment decreased. yet based on the cited studies, we would expect a 20% increase.

@Lightman
Also, the arguement the paper you present is one of decreasing taxes, not increasing them. Economy is a non-linear system and thus you can't argue that what is true when you decrease is true in reverse when increasing.

As well, given that vast differences in teh US economy... plus data that shows that a tax decrease of over 10% in the US in 2016 DID NOT have the effects predicted in the paper... means that either the paper is wrong for the USA, wrong for Australia, or the Australian and US economies cannot be compared such that what happens over there reflects what would happen over here.

At the end of the day, all this speculating is pointless. At some point, Biden will very likely overturn the Trump era corporate tax rates and then we'll see whether your results bear true. Based on historical data, I don't think so but that is as speculative as you thinking that that is so.

Good talk and thanks for the insight into Australian economics... quite a quagmire the whole world is in economically it seems. 😟

@TheMiddleWay Oh for goodness sake I can't believe you fail to see the relevance.
You want to increase the tax burden.
What did Trump do and what was the effect?

@TheMiddleWay "So he doesn't argue that tax cuts would keep more jobs or bring in more invesments; merely that the workers would benefit"
Gee what benefits... could it be... more jobs better pay etc, etc...

@Lightman

What did Trump do and what was the effect?

It's not about who did what.
But it's true that his administration decreased corporate tax from 35% to 21% and that led to a decrease in foreign investment, not the 20% increase that the paper you presented argued would happen

@TheMiddleWay Oh for God's sake Trumpaphobia...
He was President and he did it.... what did he do in the tax cuts?
I know very well that earlier on the wealthy (Trump included) did pretty well and others did just so so.
Now concentrate on the positives that came about and don't just be a biased TDS sufferer.
For couples with an income of $60,000 and two young children, the Trump tax cut resulted in a complete elimination of federal income tax. It doesn’t matter what state they’re in.

At $120,000 of income (and the same two kids), Trump is cutting taxes by amounts ranging from 22% in New York to 30% in Texas.

At $600,000, you see reductions ranging from 7% to 9%, even in high-tax locales like California. How can this be, given the cutback on the deduction for state and local taxes? The answer relates to the alternative minimum tax that was a prominent feature of the old law. The AMT had the effect of making that deduction largely unusable.
It has been widely claimed that the "black" and "latino" poorer demographics, did well from the economic changes and the only downturn occured due to the corona virus.

@TheMiddleWay also...

"President Trump claimed in 2019 that he had delivered "the largest poverty reduction under any president in history"."

Well we all know Trump always exaggerates...

"In 2019, around 4.2 million fewer people were living in poverty in the US compared with the previous year, according to official data."

"The US Census Bureau has published this poverty data since the end of the 1950s. The largest fall in a single year was in 1966 during the administration of President Lyndon B Johnson, when almost 4.7 million people were lifted out of poverty."

"The continued strength of the economy under President Trump (at least until the pandemic hit) has been matched by a continuing fall in the poverty rate. This overall national figure masks wide variations across regions and ethnic groups in America. "

You have to admit that the POVERTY RATE in the Trump term did continually fall.
Also the Unemployment rate under trump after Obama also continued to fall.

@TheMiddleWay Of course not all foreign investment is a good thing.

@Lightman

Now concentrate on the positives that came about and don't just be a biased TDS sufferer.

We were talking about the effect of corporate tax rates on foreign investment, entrepreneurship, and bankruptcy; not Trump, not personal income tax.

@TheMiddleWay I'm not talking about trump per se... you seem to be obsessing about his name though.
I only used his name to identify the government.
So getting back on topic... please explain why you think your ideas will not end up doing what I said would happen.

@Lightman

I only used his name to identify the government.

Ditto.

please explain why you think your ideas will not end up doing what I said would happen.

Already did.
Time to move on.

@TheMiddleWay no you didn't and you didn't refute my claims either.

@Lightman
🤷

@TheMiddleWay Speak up... I can't hear you....

1

A progressive wealth tax... and that income you use to reduce sales tax and then income tax.
So the total amount of tax stay the same.
You just move the tax burden from the working middle class to the 10% upper class and specifically the 1% super class.

Hanno Level 7 Feb 4, 2021
1

Tough one, as I don't think more taxes are the solution to the problem. Maybe the excise tax.

Not well versed in economics... but is an excise tax like the VAT in England... like Sales Tax in teh USA?

@TheMiddleWay

Sort of, but not really.

An excise tax is when you're taxing a specific good for a politic reason; for example, you heavily tax cigarettes because you want to make it more onerous for people to choose to smoke.

A VAT is where you apply a tax to every step of the process where the product is processed or manipulated in some way ("value-added" ); in a practical sense, the more an item is processed, the higher the tax you pay on it. So simple goods, like hand-made stuff, get little VAT, whereas stuff like televisions and automoblies get a high VAT. The goal here is to make it onerous to overconsume or consume non-essential (luxury) goods. That is, if you're wealthy, you'll pay accordingly for your ability to consume.

So they are the same in that they are both consumption taxes, but different in that they serve different purposes.

EDIT: Forgot...a sales tax is simply a flat consumption tax that is applied to all non-essential goods, irrespective of how many processing steps those goods go through.

@Alysandir
Thanks!
I like the sound of a VAT as preventive of overconsumption A LOT more than an excise tax that promotes a certain politic or morality.

@TheMiddleWay

I'd say that's a fair characterization.

Not having lived in a country that uses VAT, my impression is that it gets really harsh - for example - if you want to own a car, which you could say is a politic agenda to get people to use public transportation and cut down on smog. So politics MIGHT have something to do with VAT, but overall the impression I get is to encourage frugality and simplicity.

Why? Again, just spitballing here, but it could be cultural, and it could be to train people to spend less before they become pensioners and are on the social welfare system.

@Alysandir, @Middleway,

VAT beats GST and both taxes everyone... so it is a way to make sure the tax evaders and cheats at least pay some tax.
GST can hit the poor hard if too high, and VAT is slightly better.

I hate to have many taxes however you need four taxes and they need to adjusted according your economy and social makeup.
Wealth, income, sales and excise.

I also want a “pollution” tax... where every manufacturer or packer pays the total cost of recycling/disposal of packaging and once use only products right in the beginning... and in exchange there are no charges for recycling and waste management later to the public.

@TheMiddleWay Canada implemented a Goods and Services tax (5%) applied across the board on most purchases over 30 years ago. It now provides almost 12% of federal revenue, most of it from affluent spenders. Lower income people who spend less, not only pay less, but are rebated cash quarterly based in overall income. There are broad exemptions for items like fresh foods or educational materials.

Canadians pay a dual federal and provincial sales tax —the total can be as low as 5% or as high as 15% when the provincial portion is added.

0

None, lower taxes, cut spending and the economy will be able to support the government.

azjc Level 6 Apr 5, 2021
0

I support an appropriate tax strategy, an excellent system which generally ensures contributions are based on income and wealth for the benefit of all. Of course the balance of how much is raised, type and how it is spent is always arguable. What I do think is essential is for demonstration of integrity within the system. At present the super rich and the richer and larger companies have a distinct advantage as employ lawyers and accountants who actively hide and move profit around the world to escape tax. As they are generally also powerful and influential politicians avoid confronting them (Taxing the rich is a subject always neatly avoided at Davos) These should be actively and visibly targeted. It remains obscene that some have extreme wealth whilst others starve. Most of us will willingly contribute if the money is spent wisely for the greater good but require fairness.

Jasper Level 4 Apr 3, 2021
0

That's easy. Tax everybody but me. snowflake alert

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