The poor don't pay income tax. Or are you referring to cash grab by the government?Quote:
Originally Posted by Loki
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The poor don't pay income tax. Or are you referring to cash grab by the government?Quote:
Originally Posted by Loki
The only reason it should be considered regressive is if the richer save/invest more but those are a good thing to be encouraged, not frowned upon.
It also has the advantage of catching black market incomes (drug dealers etc still go shopping) as well as tourists etc.
Fixed!Quote:
Originally Posted by Lewkowski
About 2/3 of Mitt Romney's 47% of leeches pay federal payroll taxes (FICA, etc.). Most pay state level income taxes (if they live in a state with such taxes), all pay consumption taxes (sales tax, energy/fuel taxes, utility taxes/fees), all pay various fees for gov't services, etc. It doesn't sound like much to you, but it sure adds up for the poorest of our poor.Quote:
Originally Posted by Lewkowski
I suspect it's even more regressive for middle income brackets. There's a bit of a trap for people who pay income taxes (and are ineligible for e.g. EITC) but don't make enough money to take advantage of most of the deductions (which disproportionately help the upper middle class). They probably end up paying quite a bit more than they should based on the metric I mentioned above.
Agreed with the second part (though I'm not sure why catching spending by tourists is such a priority); there are a lot of good reasons for consumption taxes.Quote:
Originally Posted by RandBlade
On your first part, though, I disagree. Obviously the rich are going to spend a lower percentage of their income on consumption - they have far more scope to take advantage of the opportunities and security available through saving and investing. That's why flat consumption taxes are considered regressive. It's not the saving/investing that is 'frowned upon', though, it's the unequal tax burden. That marginal dollar to a poor person gives them a huge opportunity for increasing their utility and economic advancement; the marginal dollar for a rich person will probably be put in a low-yielding security. There's absolutely no reason for the poorer to subsidize the tax burden of the rich IMO; at least make the system flat (in terms of proportion of total income) rather than regressive.
This comes back around to the fundamental question of whether unequal incomes are bad. Obviously I don't think the inequality is in itself a bad thing; it's a natural consequence of capitalism, and it has driven remarkable economic success and innovation that has enhanced everyone's lives. Yet the problem with inequality really lies in how it can become entrenched in societies, where mobility becomes a challenging proposition. So the real issue is not one of inequality in outcome, but how best to ensure equality of opportunity. I see this as one of the government's jobs, and as such is should provide certain universal services that give everyone a decent chance of improving their societal standing through hard work - good basic education, universal rule of law, basic nutrition/healthcare for children, etc. This should be paid for not through a punitive tax code that makes it ever-harder for the poor to invest in themselves and their children, but through a progressive tax code that recognizes that those who have benefited from our political and economic system (and its myriad opportunities) also have a stake in ensuring equal opportunities for future generations.
I actually don't see much of a philosophical difference between VAT and sales taxes.Quote:
Originally Posted by wiggin
But similarly to our other discussion, I disagree with your assignment of a rational basis for the tax. The idea that consumption is "bad" suggests that all commerce and trade is "bad". It's one thing to charge taxes as a price of admission to income-producing society. But taxing consumption simply because it's consumption seems both counterproductive, and a plot to just let the government skim off everything. If we think certain things are bad, we can enact outright bans. Or even sin taxes in some extreme cases.
More practically, it's clear that ones countries inure their populations to VAT (to the point that taxation is literally hidden in the price of everything), it becomes a huge cash cow for government that they can raise as they please with economically devastating impact.
:haha: at the last line of your post.
I think taxing everything and then waiting for people to agitate for exceptions is a nice way to distort everything.Quote:
Originally Posted by RandBlade
Actually there's surprisingly little agitation for that. The essentials are clearly defined and if anything certain things have gone from zero-rated to now taxed but rarely the other way around.
Philosophically, not so much. Practically, they're much better than sales taxes. The main point in their favor is that they are self-enforcing. Furthermore, you can capture 'value added' in the country which doesn't have a final sale in your borders (depending on how you set up VAT and reimbursements for VAT).Quote:
Originally Posted by Dreadnaught
I actually agree with you here - consumption is not an evil in and of itself. That's why I put it in quotes. I consider pollution an outright bad, and a negative externality. Consumption in general, though, is not. However, given a choice between discouraging more consumption and discouraging more employment and income, I'd definitely go with consumption. I consider consumption as an end to itself to be more or less neutral, but I consider income and employment to be unmitigated goods.Quote:
But similarly to our other discussion, I disagree with your assignment of a rational basis for the tax. The idea that consumption is "bad" suggests that all commerce and trade is "bad". It's one thing to charge taxes as a price of admission to income-producing society. But taxing consumption simply because it's consumption seems both counterproductive, and a plot to just let the government skim off everything. If we think certain things are bad, we can enact outright bans. Or even sin taxes in some extreme cases.
Don't really see how it's any different from income (or worse, payroll) tax in that it inures people to paying a chunk of their income and is a huge cash cow. My critiques of it have to do with issues of complexity and regressiveness, not government overreach.Quote:
More practically, it's clear that ones countries inure their populations to VAT (to the point that taxation is literally hidden in the price of everything), it becomes a huge cash cow for government that they can raise as they please with economically devastating impact.
We discussed this a long time back, and I think you're still wrong. I do more or less believe that the paperwork burden isn't as large on companies as I initially suspected, but compliance with the complexities of a VAT or sales tax is a real pain given the weird and blurred distinctions between different categories and the varying rates for those categories.Quote:
Originally Posted by RandBlade
Err, I used to do taxes for a charity, VAT is extremely easy to manage and report. No real blurred distinctions between different categories either, and most cases you're not sure of are listed as examples on their website. In two years I never was in doubt which category something was.
I'm not going to get into this again. Let's agree to disagree.Quote:
Originally Posted by Flixy
I'm sure it's also a lot different from country to country, but especially for businesses who, let's face it, usually have the same kind of items each month, it's not hard over here. Especialy since you only have to determine it for things you sell yourself, the rates for what you buy are determined by the seller.Quote:
Originally Posted by wiggin
I have hands on experience, Flixy has hands on experience. Are you disagreeing due to evidence or your imagination?Quote:
Originally Posted by wiggin
I've had to calculate sales tax rates in MA based on their ridiculously complex set of criteria, and it's far less complex than the way VAT exemptions work in most countries. The broader issue of the paperwork burden of requiring every step to pay is obviously irrelevant for a point-of-sale tax like MA sales tax, but the question of exemption categories etc. is universal.Quote:
Originally Posted by RandBlade
Regardless, I said I'm not getting into this again, and I won't.
Fine don't get into it if you want but that doesn't mean I won't reply to your concerns as I see fit.
MA may have a complex system (I don't know it) but that doesn't mean either that we do, or we have a more complex one. I think ours is actually fairly straightforward - underlying assumption that EVERYTHING is taxed and all at the exact same rate, apart from relatively clear exemptions.
Plus it's not like its a unique issue. I can't think of a single tax (income, sales, corporate etc) that doesn't have exemptions or adjustments etc ... The rather straightforward and basic yes/no basis is far more simple than payroll taxes for example.
I can't speak for MA, or for other countries with VAT, but over here the set of criteria is far from complex or ridiculous. The only somewhat tricky (and even then, not really tricky) thing VAT related I encountered were situations where there wasn't a clear log of sales (i.e. a bar) that sold things from both the high tax rate (beer and wine) and the low tax rate (non-alcoholic drinks). Since we only knew the total amount of money we had and the amount of supplies we sold, but not how many individual beers or sodas we sold, that was slightly tricky. Other than that, administration is extremely simple, you never have to keep in mind who you are selling to, just what the product is. And filing is, over here, extremely simple. But I like our tax agency in that sense anyway, they do appear to try and make things as simple as possible for everyone (which I gather is not the way the IRS works :p).Quote:
Originally Posted by wiggin
Only other annoying thing I encountered is when hiring musicians charging VAT, because you have to prove you aren't the one supposed to pay payroll taxes so that's a payroll tax issue, not VAT, and exclusively an issue for artists and athletes. Either way, payroll taxes are a lot more annoying than VAT, and don't get me started on corporate taxes...
Agreed with everything Flixy said except here its even simpler as we have a single rate for almost everything (including everything in the bar). Its very rare and clear things (like types of energy for example) that are on a low rate.
Well food is here, and non alcoholic drinks count as food.