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View Diary: EconPop Series (6) The Coming $50 Billion Unemployment Bill (16 comments)

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  •  Payroll taxes are more than just income tax. (0+ / 0-)

    Payroll deductions currently cover both state and federal income taxes, Social Security deductions, disability insurance, and other things in different states. So payroll deductions are not going to disappear anytime soon, and as long as the machinery is in place it should be used to also collect income taxes. Going to extraordinary lengths in an attempt to eliminate one of these deductions just doesn't make sense. I hated to see those deductions on my paychecks, too, but at some point I realized that this money went to build the society around me. So I quit complaining about paying my share even though I fully realize there are serious flaws in the machinery of the system. And the example of the countries around the world that have arguably better societies than our own tells me the system can be made better.

    VAT rebates for the poor don't work, as the experience in Canada has proven. The poor mostly end up paying the tax, and that is part of the reason I am dead set against any kind of VAT. I don't agree it is better than the current system at all. Consumption taxes are extremely regressive and nothing can change that. Only progressive income taxation is both equitable and practical.

    And I don't understand why it would be desirable to encourage small investors to put their money directly into equities rather than through intermediaries like mutual funds. Most small investors don't know crap about investing - 99% can't even read a balance sheet or a P&L statement. Why not just put slot machines on every corner and let the government take a cut? Like I said above, I would be supportive of a reduced tax rate on IPOs to encourage innovation and business formation because taking a company public creates wealth. Try reading Louis O. Kelso if you're interested in real reformation of the capital markets.

    -6.38/-3.79::'A man is incapable of comprehending any argument that interferes with his revenues.' Descartes

    by skrymir on Tue Jul 14, 2009 at 06:45:42 PM PDT

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    •  So you are defending the status quo? (0+ / 0-)

      Even if the current system shifts the heaviest burden upon the wage earner. Do you deny that the costs of the employers componet of federal payroll withholding and the corporate federal income taxes or the business owners individual income taxes are  embedded in the price of every American product/service? So you think it's fair that businesses defer these costs upon their customers (that are most likely wage earners) which are already directly paying their own payroll taxes and personal income taxes at the fullest rates? You don't think that replacing these federal taxes would unburden both small business and the wage earner?

      This doesn't sound progressive at all to me. In fact it sounds sneaky, under-handed, and not in tune with the letter and the spirit of the federal constitution. What difference would changing the rates make? It would only make the problems worse. We need solutions that will work. The status quo is not an option, in my opinion.

      Really don't mind if you sit this one out. My words but a whisper -- your deafness a SHOUT. I may make you feel but I can't make you think..Jethro Tull

      by RMForbes on Wed Jul 15, 2009 at 11:49:12 AM PDT

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      •  Somebody has to pay for government services. (0+ / 0-)

        And it shouldn't be mostly the poor, which would be the case with your ill-advised VAT.

        And yes, I agree that all the costs associated with payroll deductions for businesses are passed on to the consumer, the vast majority of whom are wage earners. But I am not defending the status quo, I am rejecting your idea of the substitution of a VAT which is even more regressive than the existing system. And your idea for raising revenue with a huge transaction tax on securities of 0.5% won't work because traders will simply move to offshore exchanges or private electronic exchanges to avoid the tax.

        The truth is that there is no equitable replacement for the graduated income tax, which taxes people according to their ability to pay. Did you want to replace it with an asset tax, like property taxes, where only property owners pay taxes? How about import and export taxes that discourage trade? How about excise taxes on manufactured goods? None of these things will work and you know it.

        That leaves a VAT, which is the last refuge of those who are willing to screw the poor to save themselves some money. Like I said before, rebate schemes only work for about 20% of those eligible, as demonstrated in Canada. Shifting the tax burden onto those who can't afford it is neither moral nor a good long-term plan. I have already stated what I would do to make the system more equitable, and that is to make the income tax schedule more progressive and raise the top marginal rate, tax capital gains as ordinary income except for IPOs, and increase the inheritance tax to curtail the power of inherited wealth. That is hardly defending the status quo.

        As soon as you come up with an alternative scheme for raising revenue that doesn't screw poor people and is actually workable, I will give it serious consideration, but all I'm hearing from you at this point is that you want to fuck over the poor with a VAT because you don't like paying your share.  So when you come up with an actual idea that doesn't come from darwinian GOP talking points, let me know. Until then, I suggest you do some reading so you aren't suckered into these self-serving, fuck-everybody-else schemes.

        As an aside, when I did own a business and had to make all those payments, I simply hired an accounting firm who took care of all deductions and payments for less than $100/mo. All I did was sign the checks. It's not that hard or a major burden. It's the cost of doing business, and if a business' profit margin isn't big enough to deal with these costs, the owner should consider another line of business. Try comparing the cost of doing business in the US with the costs in Europe or Canada or South America, or in any corrupt country you wish to name in Asia. And I'm not talking about wage levels, I'm talking about the fees, taxes, licenses, gratuities, and bribes required to stay in business. I'll take the US any day.

        -6.38/-3.79::'A man is incapable of comprehending any argument that interferes with his revenues.' Descartes

        by skrymir on Thu Jul 16, 2009 at 11:04:58 AM PDT

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        •  Many misconceptions (0+ / 0-)

          First, I am not advocating a VAT. An Ad Valorum 10% retail consumption tax would only be added at the point of sale. The price of the product or service would include the tax (ad valorum), the customer would not be required to maintain records or save receipts. The retail mechant would just be required to add total sales and remit 10% (less .25% or $200 which ever is greater to cover costs of compliance)to the federal coffers. It's very simple and straight forward not like a VAT. A VAT would be a compliance nightmare. Labling all consuption taxes a VAT or Sales Tax deflects real debate and is how the rethugs argue points, so please don't go down that road. We progressives should be able to discuss things without falling into the same traps that plague the rethugs.

          Next, most off shore capital markets already have transaction taxes higher than .5% and the tax didn't effect their business. Plus, it would not effect the account managers, the tax would inflate the price of the transaction by .5% and be collected by the exchange and the remitted to the federal government. It works this way now and the rates where higher until 1966, why not kick the rates back up again? The investment class must be required to contribute to federal tax revenues to pay for the benefits they enjoy. For the last 30+ years they have been getting a free lunch.

          You really misunderstand if you think these ideas are only about me. Yes, I'm a lower middle class wage earner but I work with hundreds on small business owners and I see how much they are negatively impacted by these federal taxes. Small business is the primary source of jobs and increasing stress on this group reduces employment opportunities. By reducing the costs of federal taxes on small business more jobs will be created and more federal revenues will be generated. The working poor and small business would be the largest beneficiaries of my federal tax reform ideas. The wealthy would be required to pay their share without the ability to defer liability. These ideas will stimulate the entire economy from the bottom up. This may sound like the wingnut model to you, but they would hate this idea because they would have to actually pay their fair share for a change.

          Really don't mind if you sit this one out. My words but a whisper -- your deafness a SHOUT. I may make you feel but I can't make you think..Jethro Tull

          by RMForbes on Fri Jul 17, 2009 at 09:35:32 AM PDT

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