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No, it penalizes firms that are fairly big. Typically oligopolies. We might have to adjust it by sector, but then the tax system blows up in size.Quote:
Originally Posted by Loki
In fact, in Simcity 2000, I believe it was possible to tax by sector. Or something like that.
Except you're taxing revenue (or profit, that much is not clear), not company size. Let's put it like this. Imagine there are two banks, each with 1,000 workers and renting the same amount of space (and with the same amount of branches). Due to incompetence, one bank loses money. The other banks makes a $100 million profit. If you're not punishing success, you should be taxing them at the same rate...Quote:
Originally Posted by agamemnus
Just for fun; explain how you think to tax negative income?Quote:
Originally Posted by Loki
Income != Profit.Quote:
Originally Posted by Hazir
Government taxes negative profit all the time. VAT/Sales, Payroll, Property etc, etc ... it can be the taxman which can be the one who sends bad businesses bust.
How about flat rates for companies, progressive rates for individuals? There's got to be a way to consider great differences between individuals, not just by their income but also stage of life. It's all relative:Quote:
Originally Posted by Asmodian
$35K/yr income for a new college grad with no assets, and student loan debt, is wholly different than $35K/yr income for a senior with a mortgage and some retirement savings, but health problems. You don't want to discourage the young person from saving/investing, maybe buying a home, starting a family. But you also don't want to force the senior to sell their home in order to pay taxes, or afford the gaps in Medicare coverage.
AND the CEO whose salary is $1 but gets $35K/yr in dividends or capital gains, owns real estate or other assets, is very different than the secretary whose wage income is $35K/yr, renting an apartment, raising a couple of kids. aka Buffet Rule
and these differences are taken in to account just fine by flat tax rate as it is flat in % terms not in absolute terms.Quote:
Originally Posted by GGT
At the individual level....taxing X% of income doesn't account for necessary vs discretionary spending needs, and cost of living.Quote:
Originally Posted by Asmodian
ps remember the US doesn't have a national healthcare system, and people are buying their own health insurance. Even with some employer subsidies, that can eat up 20-30% of middle income earnings.
Taxing profit...Quote:
Originally Posted by Loki
I am punishing success, I guess, at some level. The bank that loses money goes out of business, yes? In this case then it's mission accomplished.
The general aim is to extract the efficiencies of ginormous corporations (which includes being able to weaken the competition or keep new entrants away!) while allowing for continual growth of new players in the market.
I had another thought.
Let's increase and widen the luxury tax. I've always wanted to do that.
Increase it to what and cover what? How about (crazy idea I'm sure) simplifying the tax system?
Create a simple, flat tax rate for each of corporate earnings, individual earnings and sales. Minimise or eliminate exemptions.
That way you catch everyone regardless of how they shape it up and no individual tax is set so ridiculously high that everything is done to avoid it.
I don't think a flat sales tax is a good idea. You do have negative externalities and positive externalities from buying various things, and taxes are a good way to minimize those.
The rationale for a high luxury sales tax (think cars over $50K, boats over $40K, jewelry, houses over $750K) is that it reallocates economic power towards the production of other stuff that is generally more useful to maintaining and growing the economy. I do not think that such tweaks are a slippery slope to a state-planned economy.
Instead of a direct Luxury Sales tax, we could cap FHA loans (well below the current $750K cap), and limit mortgage interest deductions. There's really no reason to justify million dollar deductions on multi-million dollar homes, or tax breaks for vacation/second home loans.Quote:
Originally Posted by agamemnus
And to get more revenue for SS and Medicare, we could raise or end the cap on income contributions. It doesn't make sense to limit it to $110K (or whatever it is now).
Interesting thought. You'd think mortgage interest deductions are already capped.. they are not?
I don't get why you have mortgage interest deductions in the first place, abolish them.
It's an incentive to buy a house rather than rent (not a bad way to foster/strengthen the idea of individual rights and freedoms in a democracy, I think), though it distorts lending prices... but most of that risk is already carried by the government now, so meh.
Oh, I get why they exist, though I agree they do more harm than good. They were put in place to foster a home ownership culture in the US; just one of those weird American Dream things that people have. On a more practical level, it enforces saving in a way that other retirement schemes (e.g. 401(k)s do not); most wealth in the average American household is tied up in their home.Quote:
Originally Posted by RandBlade
I agree they're a terrible idea and should be eliminated, though.
Even though I own a home, I agree. (shudder)
I think we need to admit that the big government D's and R's have no real interest in changing the tax code.
I'm not convinced "big government" is the obstacle, but legislators being too heavily influenced by special interest groups, lobbyists, and big donors.
Home mortgage interest tax deductions were pushed heavily by Banks, mortgage companies, loan officers/servicers, Nat'l Assoc. of Realtors, Nat'l Assoc. of Builders, and many more. It was the same thing in prior decades, when banks succeeded in making credit card interest tax deductible (since expired), as an incentive to get people to use credit instead of cash/checks.
Wow, are we gonna have this argument again?
Legislators ARE part of big government, and if they didn't have the power they have, then they wouldn't be influenced by these groups.
No, we don't have to rehash what BIG government means, or whom US legislators are elected to represent.
But I thought it was important to remind people how/why home mortgage interest payments became tax-deductible in the first place, since we're discussing tax policy. It wasn't just big government trying to encourage home-ownership, but also certain big businesses.
Yep, it's another form of crony crapitalism
Yep. And 'only' ~ 25% of US tax filers actually use the mortgage-interest tax deduction. It can also incentivize peopleQuote:
Originally Posted by Veldan Rath
buyingborrowing more house than they need, and pump up housing prices by transactional costs (skewing actual value). That's bubble based behavior.
Either we need to cap that deduction, or get rid of it entirely.
We should not get rid of it entirely as it will cause too much of an effective extra tax on the middle class, but capping it: yes-siree. I even found a recent article showing politicians like Obama looking to cap it. (actually 1 month old... can anyone find a newer one?): http://dealbook.nytimes.com/2012/11/...as-vulnerable/
In terms of housing bubbles and/or distorting housing costs, we should also tell the Fed to stop buying mortgage-backed securities, and we should scale back the terribly wasteful and injurious (to nearby houses and cities, in the long run) FHA and state-based low-income housing construction. Cheaply made houses based on a premise of social justice going against all market forces.. what's not to like?
Hi, aggie. If we got rid of the mortgage interest deduction entirely....wouldn't that force housing costs lower, and mostly benefit the middle class instead of the bankers?
I agree that the Fed should stop buying MBS, since that just keeps zombie bankers feeding off consumers. But they're central bankers....
FHA is horribly twisted at this point, so entangled in every home and mortgage (and bank) that it's almost impossible to separate the service from the product, the bank loan from the house, the people from their home. :(
Also, we don't need new construction to fill the needs for low-income housing in most areas. Vacant buildings abound, especially shuttered factories. They were constructed during boom times, using brick and mortar, steel and concrete. They just need to be retro-fitted for residential housing.
It will lower housing costs, but the benefits of the current effective subsidy is shared between the homeowner and the bank. It's all about triangles.Quote:
Originally Posted by GGT
Those factories probably need to be torn down! The market should decide.Quote:
Also, we don't need new construction to fill the needs for low-income housing in most areas. Vacant buildings abound, especially shuttered factories. They were constructed during boom times, using brick and mortar, steel and concrete. They just need to be retro-fitted for residential housing.
Higher prices benefit banks (and anyone in the chain) more, since they earn a percentage of the loan amount. There's no incentive to keep prices stable when they make profit on escalating prices or bubbles. Those aren't triangles with equal sides. :pQuote:
Originally Posted by agamemnus
It's stupid and wasteful to tear down buildings with good foundations and "bones", especially if they're already near other housing clusters. 'The Market' shouldn't mean bankers who'd prefer a tear-down and new construction that can cost more.....simply because they profit by underwriting higher loan amounts.Quote:
Those factories probably need to be torn down! The market should decide.
Kinda agree with GGT, refurbished factories/mills are great potential for new businesses and residential. Maine has been doing this with its Green Zones. Old unused papermills are converted into multiple businesses and residential units.
Right GGT - because people who own property should not be allowed to do what they want with it. Are you sure you wouldn't want to live in a communist country where the state makes the decisions?
I don't think that was were she was going with that Lewk. She was pointing out that tearing down perfectly good buildings can be shortsighted. Remodleing them can mean more profit for the owners then going tothe bank and asking for $$$ to tear the whole thing down and start over.
If the owner DOES want to...more power to them.
All I'm saying is that it's a cost-benefit analysis that should be based on the economics of the area instead of historical sentiments/politics.
Quite true.
Did you mean to say economics of the era (not area)? :confused:Quote:
Originally Posted by agamemnus
Repurposing historical buildings isn't just 'sentimental'. It's cost-effective to salvage materials that are now quite expensive to use (marble, slate, copper, solid woods, even brick and concrete block). Almost anything hand-made by Master Tradesmen is more valuable than today's mass produced plastics and veneers.
It's easy for city officials to cave to political pressures to raze-and-rebuild....when Banks are pushing for higher loans, local Chamber of Commerce wants to attract building industries, municipalities need more tax revenue, and people are calling for Jobs that can't be outsourced. But that's the mentality that led to our housing bubble, with so much sprawl, Walmart and big-box stores with massive parking lots, and too many new houses made of flimsy vinyl and toxic Chinese drywall....
You do know you are agreeing in essence right?
I wasn't sure aggie was using the same definition of "markets" in the decision process. Certain places with high unemployment may want to raze-rebuild just to pump employment in construction/building trades. But that's short-sighted reactionary economics, not really sustainable community planning.
Maybe we're going about this the wrong way.
What would happen if every state and federal legislator was automatically put into the middle-income tax bracket, regardless of their actual legislative paycheck, or other income from wealth assets? Disabused of any income shelter or tax avoidance scheme. Forced to live like everyone else. Family legacies would not be able to use special political status to protect their heirs, at the expense of every working man: not for Rockefellers, Heinzes, Bushes, McCains, Romneys, Bloombergs, Trumps, Kennedys or Kochs.
The minute those multi-generational "wealth" names become part of our political process in the body of --elected-- legislators, they'd have to treat their own legacy fortunes just like every other --working-- family does. No special tax exemptions or exclusions. No loopholes for highly paid, clever tax attorneys to find. No tax haven schemes. No "blind trusts" either.
Would that make our legislators more in-tune with the average electorate?
Don't give them life long pensions or health care. Make them live by the same laws they pass. They can not vote themselves raises. Only allow the next person to get their seat to get the raise.
Might weed out the career politicians and return us to citizen legislators.
I've proposed that, too. PA legislators gave themselves pay raises, while the state capitol was driving the state toward bankruptcy. When tax payers got wind of this grift and croneyism, all hell broke lose. Too bad it took a scandal to force our legislators to do the "right" thing, and rescind their self-appointed COL raises. But legislators still get paid more than they're worth, with the luxury of tax funded pensions, platinum healthcare, and lifelong benefits. :rolleyes:Quote:
Originally Posted by Veldan Rath