The Benefits of the Fair Tax
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14-02-2014, 02:53 PM
RE: The Benefits of the Fair Tax
(14-02-2014 02:05 PM)wazzel Wrote:  First point, fair is relative. We do not see or acknowlede all we receive from our tax payments.

Sure, there will never be agreement as to what is really fair in terms of taxes, because no-one wants to pay them. But why not? It's because there is no connection between taxes paid and services received. How many people do you know that constantly whine about how unfair it is that they have to pay for groceries? Maybe a few left wing kooks, but that's about it. The closer taxation is to the service it delivers, the more it seems fair to more people.

One other point on income taxes and fairness. Criminals don't pay income taxes, as their income is achieved off book. The criminals I'm sure, think this is fair, but no-one else does. Is a tax system that is easily avoided through common criminal behavior really the best? But consider that even bank robbers have to live somewhere, and so they can't avoid property taxes. They also have to make legitimate purchases, so they can't avoid consumption taxes.

Quote:Second, you want taxes unavoidable so the revenue stream can be constent as possible. I see no reason why the type of tax matters. If you are alloted to pay $30k in taxes a year the government will get $30k in taxes from you.

That isn't even how it works now. Even with income taxes, there are steps you can take to reduce your taxes. The same is true of property taxes, and sales taxes. How many wealthy or middle class people are going to choose to live like paupers just to avoid taxes? A few, but not enough to make a difference.

Texas' economy is ranked right near that of Russia in terms of size, yet Texas has no personal income tax. It does have a franchise tax, but it's fairly small, accounting for only about 5% of revenue. Texas is also not suffering from the kinds of financial crisis we see going on in Ca and a lot of other high income tax states. These ideas of reliance on property and consumption taxes are not just theory, they actually work.

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14-02-2014, 03:05 PM
RE: The Benefits of the Fair Tax
(14-02-2014 02:53 PM)toadaly Wrote:  
(14-02-2014 02:05 PM)wazzel Wrote:  First point, fair is relative. We do not see or acknowlede all we receive from our tax payments.

Sure, there will never be agreement as to what is really fair in terms of taxes, because no-one wants to pay them. But why not? It's because there is no connection between taxes paid and services received. How many people do you know that constantly whine about how unfair it is that they have to pay for groceries? Maybe a few left wing kooks, but that's about it. The closer taxation is to the service it delivers, the more it seems fair to more people.

One other point on income taxes and fairness. Criminals don't pay income taxes, as their income is achieved off book. The criminals I'm sure, think this is fair, but no-one else does. Is a tax system that is easily avoided through common criminal behavior really the best? But consider that even bank robbers have to live somewhere, and so they can't avoid property taxes. They also have to make legitimate purchases, so they can't avoid consumption taxes.

Quote:Second, you want taxes unavoidable so the revenue stream can be constent as possible. I see no reason why the type of tax matters. If you are alloted to pay $30k in taxes a year the government will get $30k in taxes from you.

That isn't even how it works now. Even with income taxes, there are steps you can take to reduce your taxes. The same is true of property taxes, and sales taxes. How many wealthy or middle class people are going to choose to live like paupers just to avoid taxes? A few, but not enough to make a difference.

Texas' economy is ranked right near that of Russia in terms of size, yet Texas has no personal income tax. It does have a franchise tax, but it's fairly small, accounting for only about 5% of revenue. Texas is also not suffering from the kinds of financial crisis we see going on in Ca and a lot of other high income tax states. These ideas of reliance on property and consumption taxes are not just theory, they actually work.

While I am sure the current sucess in Texas has something to do with taxation I doubt it is the only factor. Oil and gas has been a big financial contributor to the state in the past few decades. Texas also spends less on social programs than CA does.
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14-02-2014, 03:35 PM
RE: The Benefits of the Fair Tax
(14-02-2014 03:05 PM)wazzel Wrote:  While I am sure the current sucess in Texas has something to do with taxation I doubt it is the only factor. Oil and gas has been a big financial contributor to the state in the past few decades. Texas also spends less on social programs than CA does.

California is also resource rich. But yes, their excessive welfare state is the source of their financial problems.

But the point I was making had to do with Texas and it's ability to run a thriving state government without income taxes (franchise tax caveat). It's economy is sufficiently large to prove that dependence on consumption and property taxes can work at grand scales.

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14-02-2014, 03:43 PM
RE: The Benefits of the Fair Tax
(14-02-2014 03:35 PM)toadaly Wrote:  
(14-02-2014 03:05 PM)wazzel Wrote:  While I am sure the current sucess in Texas has something to do with taxation I doubt it is the only factor. Oil and gas has been a big financial contributor to the state in the past few decades. Texas also spends less on social programs than CA does.

California is also resource rich. But yes, their excessive welfare state is the source of their financial problems.

But the point I was making had to do with Texas and it's ability to run a thriving state government without income taxes (franchise tax caveat). It's economy is sufficiently large to prove that dependence on consumption and property taxes can work at grand scales.

That is true. I have lived 11 of the past 16 years in Texas. Texas also has some high usage fees compared to LA, not sure how they are compared to CA. My PE license is $235 per year for the TX one and $185 bi-annually for the LA one. It can work on the state level, but not sure it can be applied on a national level. I still do not see where the method of tax collection matters a whole lot. I still stand behind calling it a shell game. People will choose the one they think will give them personally the best deal.

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14-02-2014, 03:53 PM
RE: The Benefits of the Fair Tax
(14-02-2014 03:43 PM)wazzel Wrote:  That is true. I have lived 11 of the past 16 years in Texas. Texas also has some high usage fees compared to LA, not sure how they are compared to CA. My PE license is $235 per year for the TX one and $185 bi-annually for the LA one. It can work on the state level, but not sure it can be applied on a national level. I still do not see where the method of tax collection matters a whole lot. I still stand behind calling it a shell game. People will choose the one they think will give them personally the best deal.

PE - Professional Engineer, just incase.

You are in Texas, probably for the same reason I am...work opportunity. Might there be a causal relationship between the lack of income taxes, and the existence of that opportunity? In the end you're right, that governments will tax as needed to raise whatever revenue they want, but if you tax productivity, you will reduce it. Property and consumption taxes are not a disincentive to productivity.

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14-02-2014, 04:17 PM
RE: The Benefits of the Fair Tax
(14-02-2014 02:31 PM)wazzel Wrote:  You are also compareing a country that is the size of a small US state in size and population. Not really a valid comparison to me.

YES!!!!

100% correct. There is NO comparison. A small tax jurisdiction is orders of magnitude more efficient than a big one! YES!!! That's why you get some value from your tax dollars when taxation is at the local level, and as the size of the jurisdiction grows, there are so many layers of bureaucracy and middle men that by the time it reaches, say, 300m people, like the US Fed Gov't, you're not getting anything for your tax dollar! That's why I keep saying taxation should be done on smaller, local scales. You seem to concede the point that there's no comparison between the efficiency of small, local taxation vs. big, huge national taxation. So why are you defending big, huge tax jurisdictions?

(14-02-2014 02:31 PM)wazzel Wrote:  Yes really, it does not matter if they get the money when you earn it or spend it or they sends you a bill for owning property they will get the money. Quit using stupid examples.

These are actual, real-life examples!! Why do you think they have a tax on cigarettes, but not bread??? Explain that, if, as you say, it makes no difference what you tax and people are going to pay it regardless?? Why is it that when Europe places 400% taxes on gasoline, suddenly people stop driving so much and take public transport? Why is it that when Denmark places a 100% on cars, nobody buys new cars?

You're argument that it doesn't matter what you tax because will never change their behavior to avoid taxation is ABSURD! OF COURSE whatever is taxes, people avoid. The more you tax, the more people avoid it. The more you tax hard work, the more people avoid it. The more you tax property, the less people spend on their property. This is a no-brainer. You're really grasping at straws to insist it makes no difference what you tax because it won't change people's behavior.
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14-02-2014, 04:20 PM
RE: The Benefits of the Fair Tax
(14-02-2014 03:53 PM)toadaly Wrote:  
(14-02-2014 03:43 PM)wazzel Wrote:  That is true. I have lived 11 of the past 16 years in Texas. Texas also has some high usage fees compared to LA, not sure how they are compared to CA. My PE license is $235 per year for the TX one and $185 bi-annually for the LA one. It can work on the state level, but not sure it can be applied on a national level. I still do not see where the method of tax collection matters a whole lot. I still stand behind calling it a shell game. People will choose the one they think will give them personally the best deal.

PE - Professional Engineer, just incase.

You are in Texas, probably for the same reason I am...work opportunity. Might there be a causal relationship between the lack of income taxes, and the existence of that opportunity? In the end you're right, that governments will tax as needed to raise whatever revenue they want, but if you tax productivity, you will reduce it. Property and consumption taxes are not a disincentive to productivity.

Was in Texas. I got the opportunity to move home to Louisiana and took it. Taxes are probably part of the picture but not the picture. I do not think any form of taxation, if applied properly, are counter to productive labor. The specific mechanism of collection is unimportant. Functionally they all do the same thing.
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14-02-2014, 04:25 PM
RE: The Benefits of the Fair Tax
(14-02-2014 04:17 PM)frankksj Wrote:  YES!!!!

100% correct. There is NO comparison. A small tax jurisdiction is orders of magnitude more efficient than a big one! YES!!! That's why you get some value from your tax dollars when taxation is at the local level, and as the size of the jurisdiction grows, there are so many layers of bureaucracy and middle men that by the time it reaches, say, 300m people, like the US Fed Gov't, you're not getting anything for your tax dollar!

So - economies of scale: not applicable in any way to state functions?

An interesting proposition...

(14-02-2014 04:17 PM)frankksj Wrote:  You're argument that it doesn't matter what you tax because will never change their behavior to avoid taxation is ABSURD! OF COURSE whatever is taxes, people avoid. The more you tax, the more people avoid it. The more you tax hard work, the more people avoid it. The more you tax property, the less people spend on their property. This is a no-brainer. You're really grasping at straws to insist it makes no difference what you tax because it won't change people's behavior.

It's ironic that you would use the phrase "grasping at straws" in describing such a straw man.

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14-02-2014, 04:34 PM
RE: The Benefits of the Fair Tax
(14-02-2014 04:20 PM)wazzel Wrote:  Was in Texas. I got the opportunity to move home to Louisiana and took it. Taxes are probably part of the picture but not the picture. I do not think any form of taxation, if applied properly, are counter to productive labor. The specific mechanism of collection is unimportant. Functionally they all do the same thing.

How can you properly apply taxes to productive labor, without acting as a disincentive to productive labor? No matter the nuances, it's going to be a disincentive. Taxation is not exempt from market forces. If taxes cause a reduction in take home pay, there is then less incentive to work in the first place, particularly if on the other end, there are also incentives not to work - such as never ending unemployment payments. If taxes cause milk to cost more, people will buy less milk. This is basic economics. There's nothing controversial about these statements.

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14-02-2014, 04:35 PM
RE: The Benefits of the Fair Tax
(14-02-2014 04:34 PM)toadaly Wrote:  How can you properly apply taxes to productive labor, without acting as a disincentive to productive labor? No matter the nuances, it's going to be a disincentive. Taxation is not exempt from market forces. If taxes cause a reduction in take home pay, there is then less incentive to work in the first place, particularly if on the other end, there are also incentives not to work - such as never ending unemployment payments. If taxes cause milk to cost more, people will buy less milk. This is basic economics. There's nothing controversial about these statements.

Of course it's a (dis)incentive.

It's just far from the only relevant factor - thus it cannot be said to necessarily have an immediate and commensurate impact.

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