Would government still function if taxes were not compulsory?

[alexlitel]

And one could pay as much or as little in taxes as they wanted. Effectively turning into a non-profit of sorts.

I'm aware it's a stupid hypothetical - a really fucking stupid hypothetical - but I'm sort of curious.

[Kalle]

That depends entirely on what you mean by the word "function".

[McKertis]

Watching USian TV, i'm really amused at how USians think taxation works. What i mean is, everything is going great - "lower the damn taxes already !"; everything is going to hell - "its a bad time to raise the taxes !"

When is it a GOOD time to raise the taxes ? The logic of some people...

[WarrenM]

It's never a good time. Mentioning that you'll need to raise taxes to implement your plan (whatever the plan is, doesn't matter) means that the country turns on you and calls you Hitler.

[lesslucid]

It wouldn't function. Mancur Olson calls it "the tragedy of the commons", economists often call it moral hazard, but whatever the terminology: if people generally are able to derive the benefits of something without contributing in the short term, even if they realise that collective non-contribution in the long term will result in the destruction of that thing, they will avoid contributing.

[Cubit]

Sadly, the majority of American conservatives (including some on this board) view most taxation as theft.

[Kalle]

It wouldn't function. Mancur Olson calls it "the tragedy of the commons", economists often call it moral hazard, but whatever the terminology: if people generally are able to derive the benefits of something without contributing in the short term, even if they realise that collective non-contribution in the long term will result in the destruction of that thing, they will avoid contributing.

This is true to a point, but what is more likely is that one or several groups with a lot of wealth will see a direct benefit in contributing to a government which is then entirely dependent on them.

[Kraaze]

This is true to a point, but what is more likely is that one or several groups with a lot of wealth will see a direct benefit in contributing to a government which is then entirely dependent on them.

Interesting point, I hadn't thought of that. One could argue that the "buy influence" model you suggest would quickly lead to an enshrined aristocracy and also stop being voluntary. That may be a preferable outcome to the collapse into anarchy that is the natural result of a government with no guaranteed income.

[Brian Seiler]

Sadly, the majority of American conservatives (including some on this board) view most taxation as theft.

This is not necessarily incompatible with the realization that taxes are also necessary in some cases. It is always wrong to take somebody else's property, but it's possible that the thing you need to take it for (say, staffing a police force, for an easy and non-controversial example) is so necessary that it can justify the taking. There's a big excluded middle between "nobody should ever be taxed ever for anything" and "taxes are just, like, a thing that you do, so, you know, do them, and stuff." The biggest problem with most American conservatives and tax policy is that the shrillness and divisiveness of modern politics forces them to exclude that middle in order to produce a marketable product for the next election.

[unbongwah]

When is it a GOOD time to raise the taxes ?
Tax cuts have been the mantra of the GOP for decades now. Once upon a time, it was supposed to be a means of fighting back against big-government liberalism: lower revenues and the gov't would have to lower spending (i.e., starve the beast). It didn't work and we wound up with a massive increase in deficit spending starting with Reagan, but at least it had a purpose. At this point tax cuts have become divorced from any sort of sane economic policy on the GOP's part; they're simply a cynical means of currying public favor, IMHO.

[Sharpe]

Alex, I'm not gonna get into the trenches here:

I'll just ask this: would YOU still function if all of your sources of revenue were not compulsory (ie they would only give you income if and when they felt like it).

Or maybe YOU would do fine if you are a charimatic stud who is able to live off the kindness of friends, family and stranger. But what about the overall population?

Dude, this hypothetical is so crap I'm not even gonna get pedantic on you. I'll just say: think for 2 seconds. Jebus.

[Houngan]

I think most folks believe the US has some sort of "product" that brings in money, and taxes are just a way for the greedy government to get more money to waste. They just don't get that our production has to be taxed for the US to realize any money at all. That, and the fact that you can always say government needs to cut spending and be right, without addressing just how far it can cut before things start to break.

H.

[Stepsongrapes]

I think most folks believe the US has some sort of "product" that brings in money, and taxes are just a way for the greedy government to get more money to waste. They just don't get that our production has to be taxed for the US to realize any money at all. That, and the fact that you can always say government needs to cut spending and be right, without addressing just how far it can cut before things start to break.

H.

This is exactly what I HATE about the Ross Perot business-type politicians. "The US government needs to be run like a business so that it can turn a profit!"

No, dufus, it's a government. It's SUPPOSED to run in the red. Governments spend money, they don't directly make it. Rather, they tax. The issue for me, as a moderate, is whether my money is being spent well and primarily only for issues that individuals can't feasibly or efficiently handle well, whether because of scale, motivation, or other factors.

[Jason McCullough]

No. This has been another episodes of easy answers to easy questions.

The biggest problem with most American conservatives and tax policy is that the shrillness and divisiveness of modern politics forces them to exclude that middle in order to produce a marketable product for the next election.

Why do you think the United States is the only first-world country with this problem?

[Brian Seiler]

This is exactly what I HATE about the Ross Perot business-type politicians. "The US government needs to be run like a business so that it can turn a profit!"

No, dufus, it's a government. It's SUPPOSED to run in the red. Governments spend money, they don't directly make it. Rather, they tax. The issue for me, as a moderate, is whether my money is being spent well and primarily only for issues that individuals can't feasibly or efficiently handle well, whether because of scale, motivation, or other factors.

Ehhhhhhhhh.......

Sort of. Governments should probably be run like businesses in that efficiency and efficacy should be rewarded and encouraged, because the natural tendency for a working body in the presence of unconditional funding is waste and idleness. Some governmental bodies (mostly services) should be supporting themselves through revenues. Others should still be providing a net benefit to society (and there aren't a whole lot of benefits that you can't reduce to numbers at some level of abstraction or another), but might not generate revenue commensurate to their value. For instance, a standing military is going to cost a lot of money, and if you're not invading anybody they're probably not going to be good for much, but the benefit of keeping your neighbors from annexing your pool is worth the cost. Nonetheless, if you really wanted to, you could probably express this as costs and benefits and use that as a method to determine whether your money is being spent well or not.

Really, there's not that much of a distinction between things that should be run "like a business" and things that should be run "like a government" - everything should be run as efficiently and effectively as possible. The only real difference is that some of the propositions that seem to be lossy are actually net gains in the long term and for society as a whole. Any program that spends money and doesn't create any benefit....well, that program is worthless and should be abandoned.

[Jason McCullough]

"Run like a business" makes no sense. Businesses focus on profit, not efficiency. Usually when people say that it's code for "stop giving services to poor people."

[Brian Seiler]

"Run like a business" makes no sense. Businesses focus on profit, not efficiency. Usually when people say that it's code for "stop giving services to poor people."

Businesses focus on efficiency as a corollary of seeking profit. It's possible to be profitable and inefficient at the same time, but most companies will also seek to remove any inefficiencies they can to maximize their profits. The "run like a business argument," every time I have heard it, has emphasized the desire to eliminate "money for nothing" situations which some perceive as encouraging idleness, whether it's the kind of funding that went to the college where I used to work where my supervisor would encourage us to spend all day in Austin doing things that notably were not work because, what the hell, our jobs aren't going anywhere, or the kind of funding that makes a social welfare program profitable enough to live off of and thus discouraging entry to the workforce (the example you're citing where this particular philosophy intersects with social welfare programs). Taking no position as to whether these arguments are correct or not, they are at least reasonable enough that you can't dismiss them offhand. Most of the objections made along these lines have less to do with wasting money by giving it to a bunch of poor people and more to do with wasting money by buying a bunch of subsidies to fund studies on the efficacy of hugging as a response to rabid koala attacks (or, if you want a crazy example that actually existed, Stargate). The practical arguments from this position sometimes reduce down to "eliminate specific kind of government benefit A," but usually this assertion is backed by a proposal that private sector industries can more effectively perform the task, with quality of evidence ranging all the way from bullshit to pretty good.

Honestly, I think that your position here might presume bad faith to an extent. Mitt Romney and Rush Limbaugh and Michael Steele don't want to build an offshore plant where they can burn the homeless like coal to power the Eastern seaboard. The position they take is legitimately motivated by a desire to do the right thing. They don't want to discontinue various welfare benefits (in the cases where they do want to do such a thing) so that they can point and laugh at the bum fights on the street corner from their air conditioned lofts, but rather because they genuinely believe that these programs are doing more harm than good. You might disagree with them legitimately on some of their claims - and I certainly do - but framing the argument in a manner to make all opponents to a position look like scheming Scrooge McDuck caricatures is really only useful for scoring rhetorical points off of a straw man. Their actual arguments might be stupid or they might not be, but the only way you'll find that out is if you investigate what they are.

[Jason McCullough]

You might want to look Satisficing (http://en.wikipedia.org/wiki/Satisficing). Tons of businesses pay no attention to efficiency.

The position they take is legitimately motivated by a desire to do the right thing.

Ha ha ha ha ha.

[Brian Seiler]

You might want to look Satisficing (http://en.wikipedia.org/wiki/Satisficing). Tons of businesses pay no attention to efficiency.

I would pose two responses to this. First, I would say that in my experience, this is not consistent with the behavior I have observed. While day-to-day operations might suffer this kind of decision making malady, every single project I have ever participated in was driven to optimize itself as hard as possible. Second, your argument doesn't follow from your premise. Some businesses may very well not attempt to maximize their performance, but that does not imply either that the business model in no way encourages efficiency or that there is a superior mode of motivating efficient behaviors. If you're questioning whether or not private enterprises are more efficient in general than public ones, it seems to me that the expected conclusion would be that the private enterprise is likely to be more efficient (though not necessarily ideally efficient). All that Wikipedia article demonstrates is that humans are lazy - I don't question that in the least.


Ha ha ha ha ha.

And this is the problem. It is incredibly rare to find people who are actively trying to do the wrong thing. I can't think of one example. More often than not, people who are advocating action you disagree with are either making fundamentally different assumptions that should be confronted or have errors of reasoning or fact in the course they want to pursue. Indicting these individuals' motivations, rather than their methods, is certainly rhetorically advantageous, but it's not particularly useful for formulating good policy. It kind of distresses me how much of modern political debate is about gaining rhetorical advantage and how little is about actually coming up with and implementing good ideas, and it bothers me when I see it happening. Carry on, though - I'm certainly in the minority with this view.

[Jason McCullough]

You goo-goos are ridiculous. If there's one person who's not legitimately motivated to do the right thing, it's fucking Rush Limbaugh.

[Brian Seiler]

So you would argue that Limbaugh is actively trying to achieve something that he knows is wrong? He might be a crazy, bigoted, drooling idiot, but all of those problems are things that can and should be addressed and evaluated reasonably. I will guarantee you as I sit here right now that that man does not want to cause deliberate suffering to any innocent person. He probably wants to cause suffering to people that he perceives as having done wrong, and most reasonable people would probably fundamentally disagree with his notion of right and wrong, but confronting him by sinking to his level is no way to eliminate his influence on the discussion. I dislike Limbaugh and his ilk as much as any crazed Marxist or LaRouchie or Objectivist for his pernicious attempts to characterize his opponents as being motivated to do evil, cause suffering, and kill people, but I accept that each one of those extremists is almost definitely acting to do what they recognize as the right thing. That doesn't mean I agree with him to any extent, but all assuming him to be some cross between Skeletor and Zuul does is entrench him and his method of discourse that much further.

Like I said, though, I am in the minority, right along with all those people who thought that P.Z. Myers was being a dick when he offered to publicly desecrate the host and wishes that he and people like him would just shut up if all they can do is carp and ridicule. Maybe I'm naive, but I like to believe that legitimate argument is the best method for dealing with contentious issues and leads to the best results. Sometimes, on very rare occasion when the moon is full and the planets are aligned just so, extremists actually happen upon claims that aren't ridiculous on their face, and all that rejecting their entire wad of talk on the whole because of their inherent and intrinsic evil does is make you look close-minded. I'm very uncomfortable when the process of policy making is driven more by what you can spin things to sound like than forming good policy, which is where this leads to.

[Jason McCullough]

He's a sleazeball in it for the money. If you believe the conservative defense of him when he says outrageous quasi-racist things, it's because he's just a shocking entertainer, not someone who actually holds those political opinions. I guess under that is generic kinda-racist rich white guy, but there's really no way to tell.

I accept that each one of those extremists is almost definitely acting to do what they recognize as the right thing.

This also applies to crazy homeless people shouting about CIA conspiracies. It's a ludicrous way to approach politics.

[Stepsongrapes]

Really, there's not that much of a distinction between things that should be run "like a business" and things that should be run "like a government" - everything should be run as efficiently and effectively as possible. The only real difference is that some of the propositions that seem to be lossy are actually net gains in the long term and for society as a whole. Any program that spends money and doesn't create any benefit....well, that program is worthless and should be abandoned.

The problem with cost-benefiting government is that it creates a false insentive to select between government programs (particular when coupled with a fixed tax base).

Properly run, a government should decide what NEEDS to be a government program, and then implements. This should be done separately from an estimation of whether the best cost/benefit is achieved.

For example, if the post office scores higher in a cost/benefit analysis, it doesn't mean that we should drop highway safety programs. Rather, you raise taxes as needed to cover both, once the decision has been made that both need doing.

Another issue with cost-benefit is this false impression that you can assign a benefit in terms of dollars to everything. All you're doing is falsely making the metric fit the thing being measured for many, many social benefits. Cost/benefit analysis works for companies because profit is the ONLY benefit that matters.

What is the benefit of educating a child even if he she goes on to be a ditch digger? Shouldn't that money be spent on furthering the recruitment of PhD's to the US? No- both need to be done.

[unbongwah]

If you believe the conservative defense of him when he says outrageous quasi-racist things, it's because he's just a shocking entertainer, not someone who actually holds those political opinions. I guess under that is generic kinda-racist rich white guy, but there's really no way to tell.
So which would be worse: Rush actually being the offensive douchebag he sounds like; or Rush just pretending to be the offensive douchebag he sounds like to drum up ratings?

The first means he's honestly nutso; the second means he's a shrewd manipulator of the honestly nutso. Not sure which makes him more evil.

[Jason McCullough]

Beats me. It's kind of like the Nixon: better than GWB discussion. One was a very effective guy who had some good outcomes (China!) who also committed awful crimes (Watergate, discussing have a journalist killed, threatening to coup the government rather than go down in Watergate). And the other was an incredibly inept guy who meant well.

[alexlitel]

Alex, I'm not gonna get into the trenches here:

I'll just ask this: would YOU still function if all of your sources of revenue were not compulsory (ie they would only give you income if and when they felt like it).

Or maybe YOU would do fine if you are a charimatic stud who is able to live off the kindness of friends, family and stranger. But what about the overall population?

Dude, this hypothetical is so crap I'm not even gonna get pedantic on you. I'll just say: think for 2 seconds. Jebus.I'm aware it's a stupid hypothetical - a really fucking stupid hypothetical - but I'm sort of curious.

Anyways, I was thinking that a government would be like the preeminent charity in this instance.

[Huzurdaddi]

And the other [W]was ... [a] guy who meant well.

link? cite? Anything? I know of nothing that supports this, nothing.

[Jason McCullough]

Ellsberg (http://en.wikipedia.org/wiki/Daniel_Ellsberg) on wikipedia. It's little known, but what got Watergate started was them burgling the office of his therapist. Check cites 15 & 16 for their apparent plans to beat him up. There's a better description in his autobio.

Nixon tapes (http://www.eschatonblog.com/2004/08/nixon-and-g.html) where they had the CIA spying on Jack Anderson...and:

Mr. FELDSTEIN: Well, it's pretty wild, but it's true. The CIA started spying on Anderson under Nixon which was illegal, and Anderson found out about it and he sicced his nine kids--he's a devote Mormon and has nine children--on the CIA agents and they waved and let the air out of the tires of the agents and made sport of it all. So everything Nixon tried, you know, didn't seem to work and finally he turned to smearing him sexually and an assassination plot.

NAYLOR: Now what did the assassination plot involve? I mean, was this something that Nixon was directly involved with?

Mr. FELDSTEIN: We don't know. Here's what we do know--and it's been really interesting. I've been going through the National Archives documents on this and the White House tapes. We do know that E. Howard Hunt and G. Gordon Liddy, two names that would become famous a few weeks later during the Watergate break-in when they were arrested as part of that, secretly met at The Hay-Adams Hotel in March of 1972, a block from the White House, and they discussed rubbing out Jack Anderson, and they discussed various ways they were going to kill him. First, they talked about putting LSD in his drink. The trouble was as Mormon and a teetotaler, he didn't drink alcohol. So that was out. So then they talked about making him crash in an automobile accident, but they would have to go to the CIA and use a special car for that. So finally G. Gordon Liddy volunteered to kill Anderson himself personally by knifing him, slitting his throat, and staging it as a mugging that would look like a Washington street crime. At the last minute, this assassination plot was aborted, and a few weeks later, the men were arrested in the Watergate break-in and never had a chance to put their plan into operation.

Andrerson's wiki (http://en.wikipedia.org/wiki/Jack_Anderson) page is hilarious, by the way.

The Joint Chiefs were apparently concerned (http://www.google.com/search?q=nixon+jount+chiefs+impeachment&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a) enough about Nixon to send out special warnings on how to take orders. There's a better quote from one of the insiders about how Nixon was erratic at the time and scaring them, but I can't find it. Ah, here we go (http://www.theatlantic.com/doc/198308/hersh-ford/3).

Since moving to the Pentagon, Schlesinger had had occasion to learn firsthand of the desperation in the White House, he told an acquaintance recently. Late in 1973, a few weeks after the White House had been criticized for what seemed to be an eighteen-and-a-half minute erasure in a crucial tape recording, Haig had telephoned Schlesinger with a disturbing order. Acting on behalf of the President, he told Schlesinger to arrange for the National Security Agency, the nation's communications intelligence agency, which is under Pentagon control, to produce a duplicate set of White House recordings. Schlesinger worried that any attempt by Nixon and Haig to involve the nation's most sensitive intelligence service in Watergate could only hurt national security. The NSA, of all agencies, had to be above suspicion. After consulting his closest associates in the Pentagon, among them Martin R. Hoffman, the secretary of the Army, Schlesinger telephoned Haig with a counter-offer: it was, of course, perfectly proper for the NSA to duplicate tapes at Nixon's request, he said; but the Defense Department felt that it would have to inform the Watergate Special Prosecution Force of the request and allow it, if it so chose, to have a representative witness the procedure. Haig was, as Schlesinger anticipated, enraged at the suggestion, and became only more so when Schlesinger persisted by telling him that if the White House's purpose was solely to reproduce the recordings so that more persons could listen to them, there could be no objections to permitting the Special Prosecutor's office to participate. Haig abruptly hung up; there would be no more Watergate-related calls to Schlesinger from Haig's office.

Laitin's warning, Schlesinger's experiences in the Bureau of the Budget, the dispute with Haig, and Schlesinger's suspicion of General Cushman were the driving forces behind Schlesinger's next move. As he told the acquaintance, "I had seen enough so that I was not going to run risks with the future of the United States. There are a lot of parliamentary governments that have been overthrown with much less at stake." Sometime in late July of 1974, Schlesinger called in Air Force General George S. Brown, the newly appointed chairman of the Joint Chiefs of Staff.

Basically, there was the good Nixon: knew his foreign policy. Master statesman. Broked China. Bipartisan policymaker for the EPA. Then there was the private Nixon, who was Satan incarnate, manipulating the government like a tinpot dictator and threatening to nuke Hanoi. God only knows what else we'll find out did.

[Huzurdaddi]

Good links. I actually did not know much about Ellsberg, that is great stuff.

But I was wondering if you had any links about W being "[a] guy who meant well." That runs pretty much counter to everything I have read about the SOB.

[Brad Wardell]

But are we talking about income tax or various types of use tax?

I tend to prefer taxes that are made on use of governmental services.

[Doug Erickson]

There's no difference between a political personality pretending to be nutso and actually being nutso, insomuch as outcomes are concerned -- which is all I care about.

Inefficiency is to be anticipated, and I think we spend WAY too much time dwelling on it. Yes, lazy fat poors will eke out marginally less-than-dreadful existences on your tax dollars, and will probably throw it back in your face. Yes, occasional smug bureaucrats will pour your dimes down the drain chasing high scores in Bejeweled 2 or updating Facebook. Welcome to fuckin' humanity, I say; quit worrying about the trees -- or, more specifically, the ugly and somewhat frequent patches of slimy lichen clinging parasitically them -- and start lookin' at the whole damn forest.

The question for government isn't "is it efficient" but rather the vastly more simple yet challenging "does it WORK". Government welfare programs may pay obese slobs and dumbs to exist, but at least it keeps them (barely) sedated in their pathetic subsistence. And despite the fact that there's a government DBA or water council board member or DMV fascist out there chugging Starbucks instead of Putting Your Tax Dollars To Work(tm), somehow roads still get built, kids get (sorta) educated, people with tansy weed growing in their backyard get a visit from the local toxin inspector (motherfuckers), and the people you hold in contempt still get their checks delivered to them. Could we do it better? Probably. Are we still relatively safe and afforded many amenities not found in third world nations? Seems so!

[Jason McCullough]

Oh, that? Well, there's no like any reports of Bush secretly conniving like there is, say, Nixon, and other than his hilarious loyalty fetish the consistent message from people who used to work for him is "well-meaning and totally out of his element" - Paul O' Neill, for example. Even O'Neill's accusation that he came in immediately gunning for Saddam right after his inauguration fits with that - that famous quote about "they tried to kill my dad", for example. And if you source back all the really terrible stuff that happened in his administration it always has Cheney, Rove, or Rumsfeld behind it. There's no evidence he knew a thing about Rove trying to can all those US attorneys for not being movement wingnuts, or Cheney and pals on Plame.

[alexlitel]

But are we talking about income tax or various types of use tax?

I tend to prefer taxes that are made on use of governmental services.Income tax.

[Doug Erickson]

I'd also like to answer that many state governments can answer "Does it WORK" with a resounding "oh GOD NO" followed by the sounds of Governator Commando weeping into a bathtub full of IOU notes

[Brad Wardell]

It seems like there's a lot of more effective ways to tax than taxing income -- especially now.

A graduated national sales tax would be harder to avoid.

[RyanMichael]

It seems like there's a lot of more effective ways to tax than taxing income -- especially now.

A graduated national sales tax would be harder to avoid.

Wealthy people spend a much smaller fraction of their income on "stuff" than poor people do, to a much greater disproportion than their income is taxed.

A national sales tax, graduated or not, is not going to come near to replacing the income tax unless it's completely onerous.

[arctangent]

And if you source back all the really terrible stuff that happened in his administration it always has Cheney, Rove, or Rumsfeld behind it. There's no evidence he knew a thing about Rove trying to can all those US attorneys for not being movement wingnuts, or Cheney and pals on Plame.

Isn't that standard behavior, though, to keep the President safe by making sure he has plausible deniability about those kinds of things? The "who will rid me of this troublesome priest?" kind of deniability?

Although W being clueless is certainly plausible, too.

[Brad Wardell]

Wealthy people spend a much smaller fraction of their income on "stuff" than poor people do, to a much greater disproportion than their income is taxed.

A national sales tax, graduated or not, is not going to come near to replacing the income tax unless it's completely onerous.

I'm not so sure about that.

Right now, we tax income but we don't really tax wealth. We tax work and labor but we don't really tax the accumulation of wealth. It's much more difficult to track the accumulation of wealth which is why we tend to focus on taxing labor.

But taxing spending is much more straight forward. Especially given that we could do it at a graduated rate. The rich could pay more when they buy X, Y, Z and they do end up buying stuff. The rich don't just take their money and put it under mattresses (Well maybe now but not usually! :) )

[Stepsongrapes]

I'm not so sure about that.

Right now, we tax income but we don't really tax wealth. We tax work and labor but we don't really tax the accumulation of wealth. It's much more difficult to track the accumulation of wealth which is why we tend to focus on taxing labor.

But taxing spending is much more straight forward. Especially given that we could do it at a graduated rate. The rich could pay more when they buy X, Y, Z and they do end up buying stuff. The rich don't just take their money and put it under mattresses (Well maybe now but not usually! :) )

How is the graduated portion of this supposed to work? Do you keep track of annual spending and charge more for the 2nd 100K of spending versus the first?

Also, we do tax the making of wealth, not just labor. That's what capital gains taxes are.

On spending, it's hard (if not impossible) to make a progressive sales tax, given the aforementioned less spending (as a percentage) by the wealthy. Further, does property count under sales? Property, along with buying labor (rich people use money to buy labor as well) account for a lot of upper class spending compared to lower/middle class.

The flat sales tax (I realize you're saying graduated, but I frankly don't know what that partically means) has always been challenged on the basis that it is regressive. Does a "graduated" tax address this?

[magnet]

How is the graduated portion of this supposed to work?

Through malicious neglect. A rebate today to offset the shift of wealth to the upper tiers. Next year, the rebate doesn't quite keep up. A decade later and the rebate is still stuck at 2009 levels, so the upper tiers finally profit.

But taxing spending is much more straight forward. Especially given that we could do it at a graduated rate. The rich could pay more when they buy X, Y, Z and they do end up buying stuff. The rich don't just take their money and put it under mattresses

Pretty much every rich guy who advocates a national sales tax thinks that it shouldn't apply to, say, the sale of stock certificates. Or any other financial instrument. That tells me something about where they are coming from.

I wonder where you are coming from.

[Huzurdaddi]

Oh, that? Well, there's no like any reports of Bush secretly conniving like there is, say, Nixon, and other than his hilarious loyalty fetish the consistent message from people who used to work for him is "well-meaning and totally out of his element" - Paul O' Neill, for example. Even O'Neill's accusation that he came in immediately gunning for Saddam right after his inauguration fits with that - that famous quote about "they tried to kill my dad", for example. And if you source back all the really terrible stuff that happened in his administration it always has Cheney, Rove, or Rumsfeld behind it. There's no evidence he knew a thing about Rove trying to can all those US attorneys for not being movement wingnuts, or Cheney and pals on Plame.

I wouldn't call his loyalty fetish 'hilarious', it is both natural as he simply could not inspire people through his competence and evil, requiring such levels of fealty has been generally been a key element in the worst governments in history.

O'Neill's book, while somewhat accusatory did not really attack the administration (considering how O'Neill was lured away from an awesome position in private industry to work in the administration and then was dumped unceremoniously you would figure he could have attacked more, but then again, IIRC, his book was written pretty early in the Bush years and everyone was scared to take ill of our King at the time).

Going to war because "the tried to kill my dad" is not well meaning, it is the height of selfishness. Not to mention it shows a complete lack of the mental discipline/intelligence needed to make such weighty decisions.

I just have not seen anything that supports that he was well meaning. Drunk? Yes. A person born into wealth and prestige and sad that it did not automatically grant him epic levels of success? Yes. A person who was intellectually out of his element in the prestigious schools he was sent to and who therefor hated 'eggheads'? Yes. A person who was somewhat fun at parties? Maybe, more likely sycophants trying to get on his good side.

I just don't see *anything* what so ever *nothing* of value in the man. Zero. Zip. Nada. Noting to support that he was "well meaning/intentioned".

Now that I think about it, the only real difference I see between Nixon and W is that Nixon was competent, very competent, at his job. If W was unaware of some of the worst dealings of his administration it is only because he was lazy (all of the books are unanimous on this point) and incapable of adding value at any stage to be included in the process. I personally think that W was more poisonous for America, not only because his administration's mistakes were bigger, which they were, not only because unlike the Nixon administration his legacy is one of complete failure, but because he personally is responsible for the final nail in the concept of a meritocracy.

[Huzurdaddi]

I tend to prefer taxes that are made on use of governmental services.

BTW: shocking.

[Brad Wardell]

Through malicious neglect. A rebate today to offset the shift of wealth to the upper tiers. Next year, the rebate doesn't quite keep up. A decade later and the rebate is still stuck at 2009 levels, so the upper tiers finally profit.



Pretty much every rich guy who advocates a national sales tax thinks that it shouldn't apply to, say, the sale of stock certificates. Or any other financial instrument. That tells me something about where they are coming from.

I wonder where you are coming from.

Well one of my big beefs is that the investment class gets off lightly on the burden of taxes.

Why is Warren Buffet's tax burden so much less, as a %, than the average American's?

[Brad Wardell]

How is the graduated portion of this supposed to work? Do you keep track of annual spending and charge more for the 2nd 100K of spending versus the first?

Also, we do tax the making of wealth, not just labor. That's what capital gains taxes are.

On spending, it's hard (if not impossible) to make a progressive sales tax, given the aforementioned less spending (as a percentage) by the wealthy. Further, does property count under sales? Property, along with buying labor (rich people use money to buy labor as well) account for a lot of upper class spending compared to lower/middle class.

The flat sales tax (I realize you're saying graduated, but I frankly don't know what that partically means) has always been challenged on the basis that it is regressive. Does a "graduated" tax address this?

A flat tax isn't regressive unless we compare it to a progressive income tax.

But a graduated sales tax would have richer people (defined by their assets) paying more as a % than the middle class or poor.

I also think that a certain fixed amount should have no taxes at all. I.e. the first $nK spent each year has no taxes so that people with only enough to pay for essentials aren't taxed.

Then again, i would also like to see most taxes shifted back to the states. When I think about all the services most people use, they're almost always provided by the state or local governments (subsidized increasingly at the federal level) while the bulk of our taxes are going to the federal level.

[Stepsongrapes]

A flat tax isn't regressive unless we compare it to a progressive income tax.

Actually, it is regressive simply by the fact that it will hit the lower incomes, percentage-wise, more than the upper incomes. It is per se regressive as long income/spending percentages stay at their current levels (which isn't likely to change, given the realities of basic living expenses).

But a graduated sales tax would have richer people (defined by their assets) paying more as a % than the middle class or poor.

I honestly still don't understand how you envision this working. If I understand you correctly, government has to keep track of your assets and your spending to determine how much to tax you? That seems difficult.

Then again, i would also like to see most taxes shifted back to the states. When I think about all the services most people use, they're almost always provided by the state or local governments (subsidized increasingly at the federal level) while the bulk of our taxes are going to the federal level.

I have a feeling military (and other internationally related) spending has a HUGE amount to do with this. Frankly, I'm pretty sure this issue is also related to the redistribution from Blue to Red states. I'm pretty sure if you handed taxes back based on state contribution or even population levels, that there would be some serious tax-starved Red states. Last I checked, federal spending went WAY disproportionately to Red states. But, given that I lean towards the socially liberally side of moderate, I'm okay with that (those are, in fact, the poor people).

Overall, I'm confused about your whole reasoning on a "graduated" sales taxes. Is it 1) meant to alter the current distribution of tax burden (e.g., become more regressive or progressive) or is it meant to maintain the status quo 2) if status quo, what exactly is the purpose of switching?

[Brad Wardell]

I think that it's easier to find what general tax brackets someone fits into and tax what they spend than to find their general tax bracket and then also have to figure out their exact income through various forms that they themselves have to turn in.

[Stepsongrapes]

I think that it's easier to find what general tax brackets someone fits into and tax what they spend than to find their general tax bracket and then also have to figure out their exact income through various forms that they themselves have to turn in.

In our current system, both of your steps are one in the same: your income IS your tax bracket.

In your proposed graduated sales tax, there are two steps: 1) assess your assets (income?) and 2) assess your spending levels. How exactly are you keeping track of what people spend without complex forms? I'm supposed to save my receipts? Any non-flat tax means annual spending needs to be tracked (as opposed to simply assessed at the time of sale).

If your whole proposal is meant to be some sort of bureaucratic thing that maintains the current tax burden status quo, it seems really, really hard to implement.

[Brad Wardell]

The problem has to do with precision. It's relatively easy to get a general tax bracket of someone. It's a lot harder to collect the precise amount because it relies on that person reporting every penny.

What I'm musing about here is you still do a general tax bracket analysis (say, poor, middle class, rich) but have the tax payment when transactions are made.

[MarinusWA]

Some forms of taxes are theft. Inheritance tax up front.

[MikeSofaer]

The income tax system we have now is terrible, but I don't think a sales tax would be much better, I think it would get gamed even more than what we've got.

I don't know if Brad is actually advocating a wealth tax, but that makes sense to me. There are nations that do that. The "death tax", to use the negatively charged term, also makes sense to me (educational trusts exempted, which of course could create some extremely luxurious "school" environments, but such is the game). Maurinus just called it the most thefty of taxes, but the person is dead now, and to some extent it's good to keep the starting line in more or less the same place for everyone.

I don't usually like the idea of the government charging a fee for service. If it's not a necessary service, why is the government providing it? If it is necessary, why are you charging for it? In some cases (water and power) one reason to charge is to limit usage to what is needed, but the pricing structure doesn't align with that (don't charge until you reach a certain threshold, then charge a lot). In other cases (public transit) use fees make no sense to me. And in some cases (mail) I don't really see the compelling need for the government to provide the service. I'd rather see the USPS replaced with a nationwide no-charge ISP at wikipedia speeds.

But the question at hand! A government can't survive without revenue, and charitable contributions providing enough money is not going to work. A government could survive only on fines, but that's begging for corruption. Come to think of it, the charity option is a corruption guarantee. So I think taxes are the way to go.

Mostly, I think there should be more focus on efficiency. Collecting sales taxes isn't efficient. Taxing poor people isn't efficient. Usage fees on public transit aren't efficient, and discourage the use of the transit system. The government should get its money with minimum fuss (somewhat subject to the politics of what is fair) and spend its money on things that require state power, and enhance the public welfare a lot.

[Huzurdaddi]

Some forms of taxes are theft. Inheritance tax up front.

BWHAHAHAHHaahahahahaah!!!

[Greatatlantic]

As somebody who does his own taxes, I've found myself becoming very sympathetic to the idea of a national sales tax. Of course, I'm also pretty far down the liberal economic spectrum, and I want my taxes to be progresive, not regressive. I don't see why this can't be achieved if done right. For example, food should not be taxed, especially fast food. Rent, up to a certain point say $800, should not be taxed. Buying a house... TAXED! Up front! Basic life essentials, toilet paper, shampoo, water (when its not in a bottle), not taxed. Stocks... taxed.

Sure, I haven't thought through everything and there'd be details for experts to work out, but it should be at least as workable (and progressive) as our increasingly Byzantine (cataphract rush!) income tax system.

[MikeSofaer]

For example, food should not be taxed, especially fast food.
I'd much rather see ground beef and George Foreman grills go tax-free than McDonald's. I'm OK with social engineering through taxes, especially food choices if we're going to socialize medicine.

[Qmanol]

I'd much rather see ground beef and George Foreman grills go tax-free than McDonald's. I'm OK with social engineering through taxes, especially food choices if we're going to socialize medicine.

We do that. There is a 10% Goods and Services tax in Australia which came in in 2000 and replaced the state sales taxes. There is an exemption for 'basic food' a term which I can't immediately define, but would probably include ground beef and definitely not McDonalds.

[MarinusWA]

BWHAHAHAHHaahahahahaah!!!
Thank you for you insightfull response.

Oh wait....you are just being dense like in the Acorn thread. Good show!

The "death tax", to use the negatively charged term, also makes sense to me Marinus just called it the most thefty of taxes, but the person is dead now, and to some extent it's good to keep the starting line in more or less the same place for everyone.

It's not about the person who died, it's about what they leave behind for their spouse and children. Even worse, if the spouse dies as well shortly after, you get hit twice by this tax and the children have even less. Not to mention that every penny from an inheritance HAS ALREADY BEEN TAXED in one form (income, VAT, inheritance tax) or another.

And the starting line argument doesn't really hold either because the people who would get hurt the most by this usually are rich enough to have some tax skeeve working for them to get around it. Yet people who broke their back working to make sure their children have a better life then they had get burned by this. I'm all for spreading out wealth a bit more equally but we have Wealth tax for that.

In the Netherlands inheritance tax is by far the most disliked tax (and we have a lot of different taxes here).

[MikeSofaer]

Every penny from an inheritance HAS ALREADY BEEN TAXED in one form (income, VAT, inheritance tax) or another.

And the starting line argument doesn't really hold either because the people who would get hurt the most by this usually are rich enough to have some tax skeeve working for them to get around it. Yet people who broke their back working to make sure their children have a better life then they had get burned by this. I'm all for spreading out wealth a bit more equally but we have Wealth tax for that.
I don't see a problem with DOUBLE TAXATION!!! per se. Some things get taxed twice, depending on how things go, and that's OK.

Sure, people get around inheritance taxes when they can. So you make it harder to get around.

And I don't see the problem with the starting line argument. If you get your kid through college debt-free, that's a pretty big boost. More isn't even necessarily helpful.

But sure, exempt half a million dollars beyond education funding of inheritance per beneficiary, if it makes it more palatable.

[Qmanol]

Thank you for you insightfull response.

Oh wait....you are just being dense like in the Acorn thread. Good show!



It's not about the person who died, it's about what they leave behind for their spouse and children. Even worse, if the spouse dies as well shortly after, you get hit twice by this tax and the children have even less. Not to mention that every penny from an inheritance HAS ALREADY BEEN TAXED in one form (income, VAT, inheritance tax) or another.

And the starting line argument doesn't really hold either because the people who would get hurt the most by this usually are rich enough to have some tax skeeve working for them to get around it. Yet people who broke their back working to make sure their children have a better life then they had get burned by this. I'm all for spreading out wealth a bit more equally but we have Wealth tax for that.

In the Netherlands inheritance tax is by far the most disliked tax (and we have a lot of different taxes here).

Stating that income has already been taxed is a little silly. The dollar I spend was taxed when it was my income, and is taxed when I spend it (Sales tax), will be taxed as it goes into the pay of an employee (income tax) who will then spend it, etc, etc.

There's nothing special or magical about 'already taxed' money. The government taxes economic _activity_. You might disagree about which activities it chooses to tax, but complaining that the money is taxed twice is dumb.

[Robert Sharp]

The short answer to the OP is no.

The long answer is NOOOOOOOOOOOOOOOOOOOO

[lesslucid]

As somebody who does his own taxes, I've found myself becoming very sympathetic to the idea of a national sales tax. Of course, I'm also pretty far down the liberal economic spectrum, and I want my taxes to be progresive, not regressive. I don't see why this can't be achieved if done right. For example, food should not be taxed, especially fast food. Rent, up to a certain point say $800, should not be taxed. Buying a house... TAXED! Up front! Basic life essentials, toilet paper, shampoo, water (when its not in a bottle), not taxed. Stocks... taxed.

Sure, I haven't thought through everything and there'd be details for experts to work out, but it should be at least as workable (and progressive) as our increasingly Byzantine (cataphract rush!) income tax system.

One of the problems with designing a "perfect tax system" is that different tax systems have different costs for implementing, collecting, and enforcing. A tax which appears to tick all the boxes in terms of efficiency and fairness and so on may completely fall down in the category of practicability. One of the big advantages of income tax is that it is (at least relative to other forms of taxation) straightforward to measure and collect.

Sales tax is much harder to get right. A differentiated sales tax with exemptions for certain categories is harder again. Think about it this way: when you get your weekly pay on friday, the government takes out a 20% bite. It's a single transaction with a single act of taxation. Now think about what needs to happen for the government to collect that same amount of revenue from you in sales tax: every time you buy a stick of gum, or a bus ticket, or a pair of socks, part of what you pay goes to the seller, and part goes to the government. Instead of single simple transaction, you collect the same revenue through a hundred little different transactions, each with its own associated paperwork and collection costs.

[TheTrunkDr]

The problem has to do with precision. It's relatively easy to get a general tax bracket of someone. It's a lot harder to collect the precise amount because it relies on that person reporting every penny.

What I'm musing about here is you still do a general tax bracket analysis (say, poor, middle class, rich) but have the tax payment when transactions are made.
You're not really getting to the question of how this is to be implemented though. How is a retailer or service provider supposed to know how much to tax an individual? Also, how is the government supposed to know how much to collect from those same businesses? The only way would be to provide your SSN every time you buy something and putting a huge burden on businesses to track how much tax they've collected for each transaction. This system is unworkable and easily gamed on both the consumer and business side with both parties in the transaction benefiting from defrauding the government.

[noun]

I tend to prefer taxes that are made on use of governmental services.

To me, this is as silly as Willie Nelson refusing to pay taxes because the government spends it on war. or whatever the hell his reason was. We don't get to choose what our taxes are used for. God, if that was possible, our nation would probably end up with free cable but no police or fire service. This is a necessary burden for being part of a society; we contribute money in taxes that are used to fund services that someone in our society needs.

I swear, I just don't get today's conservatives that believe they should have the ability to make as money as they want and have access to any services they might need without having to paying tax on those services, or worse, are ready to just dispose of them altogether because THEY don't need them. Screw other people, daddy needs another $100 in the bank.

And I'm so tired of hearing people whine about "double taxation". You're not taxing the money itself, doofus; you're taxing a new individual's receipt of it. This is why your employer pays taxes on the money they make and you have to pay taxes on the money you earn from them. If money only ever got taxed once in its existence, governments would be broke. You can't earn money without taxes when you live in a society. Deal with it.

[Brian Seiler]

We don't get to choose what our taxes are used for.

Vuh?

I swear, I just don't get today's conservatives that believe they should have the ability to make as money as they want and have access to any services they might need without having to paying tax on those services, or worse, are ready to just dispose of them altogether because THEY don't need them. Screw other people, daddy needs another $100 in the bank.

That's.......not right at all. The members of today's conservative group that think beyond "I want Jesus to cover up that Justice statue lady's tits because it makes me uncomfortable when a rock gets me hard" object to having government take tax money and use it to provide services that could be provided by the private sector. It's like if we went to a restaurant that served steak and chicken and lobster and we were all splitting the bill evenly and I ordered the surf and turf while you ordered the plain breast of boring chicken with bland seasoning. And then I knocked back a couple of cocktails while you sat there and sipped your iced tea. And then I ordered a dessert the size of my fat ass while you awkwardly squirmed in the chair across from me because you really needed to use the can but couldn't stand to do that in public. If you want to understand what conservatives feel like, put yourself in the position of the guy who just needs to use the toilet in that example. The conservative stance on taxation is that any tax is always assumed to be bad from the outset and must then be justified before you can consider it morally acceptable. I actually agree with them on that one - taxes ARE the forcible removal of wealth from individuals to the state and should only be taken for clearly justifiable reasons.

[unbongwah]

I tend to prefer taxes that are made on use of governmental services.
When I think about all the services most people use, they're almost always provided by the state or local governments (subsidized increasingly at the federal level) while the bulk of our taxes are going to the federal level.
The vast majority of the federal budget goes to national defense and entitlement programs (i.e., Social Security, Medicare, Medicaid). I'm curious as to how you would assess a use tax on those. Or are you subtly arguing to starve the beast?

[Blackadar]

The short answer to the OP is no.

The long answer is NOOOOOOOOOOOOOOOOOOOO

+1

Hell, if we want to lower taxes, let's start with the biggest line items in the Federal Budget.

How much do we want to cut from HHS? The CDC? Medicare? Medicaid? The FDA?

How much do we want to cut from the Department of Defense?

Start there, because beyond the interest payments on the debt, that is where the majority of the spending is.

[Kraaze]

The vast majority of the federal budget goes to national defense and entitlement programs (i.e., Social Security, Medicare, Medicaid). I'm curious as to how you would assess a use tax on those. Or are you subtly arguing to starve the beast?

I think it's just plain old resentment at paying his fair share.

[unbongwah]

I think it's just plain old resentment at paying his fair share.
Ahh, but to a wealthy conservative, it isn't paying his fair share when it comes to entitlement programs, because those are just wealth redistributions - taking from the rich and giving to the poor! It's Uncle Sam as Robin Hood only not noble!

[noun]

Vuh?

What? Is there a form I missed? Because other than an occasional local referendum on the ballot asking for more money for ambulances, firefighters or schools, I'm unaware of any other options for directing my tax money.

It's like if we went to a restaurant that served steak and chicken and lobster and we were all splitting the bill evenly and I ordered the surf and turf while you ordered the plain breast of boring chicken with bland seasoning. And then I knocked back a couple of cocktails while you sat there and sipped your iced tea. And then I ordered a dessert the size of my fat ass while you awkwardly squirmed in the chair across from me because you really needed to use the can but couldn't stand to do that in public. If you want to understand what conservatives feel like, put yourself in the position of the guy who just needs to use the toilet in that example.

I'm glad to hear that you, as a conservative, don't oppose every single tax just because it's a tax. Some taxes are great, and I'm happy to pay more because I earn more because I know other segments of society benefit. But your metaphor confuses me. Are you saying you have to settle for far less because some poor person is living it up on your dime, and then preventing you from using any public services? If so, that's crazy talk. If anything, I see the worst examples of conservatives spending money other people don't even make in a year, then complaining because some minimum wage earner who can't afford health care wants a raise so he can afford to ride the bus to work. In other words, I see the richest people willing to screw the poorest people for more nickels because they're too poor to fight back.

[Brian Seiler]

What? Is there a form I missed? Because other than an occasional local referendum on the ballot asking for more money for ambulances, firefighters or schools, I'm unaware of any other options for directing my tax money.

Just because you don't get direct control over what the government does should not imply that you don't get, you know, the indirect kind. If your congressman votes up a bunch of crap you don't agree with, you vote against him, and eventually if enough people agree with you, the program gets defunded. That's how it works in theory. In practice, there's a hell of a lot of inertia behind any government program that gets started, but one of the basically two things that you're voting for when you fill in a ballot these days is how to spend the fat lump of money.


Are you saying you have to settle for far less because some poor person is living it up on your dime, and then preventing you from using any public services?

I'm saying that for some people, watching other people take advantage of your dime with no immediate, identifiable benefit to you is irritating. An awful lot of "rich people" don't get through the day twiddling their thumbs and swimming in their big piles of money, after all - they work too. A lot of the resistance to taxation you see comes from Rich Uncle Moneybags not being particularly interested in building a dam in Western Pennsylvania when he lives all the way down in Florida. That reaction should be understandable. Whether it's merited or not is another consideration entirely, but think about it this way: how would you feel if your girlfriend/boyfriend/wife/husband/whatever went to a jewelry store with you and tromped up to the case and demanded that you get THIS RING RIGHT NOW NOW NOW NOW? I mean, you went there with the intention of buying some jewelry, right? I can't speak for you, but that kind of sense of entitlement to my money rubs me precisely the wrong way. I've got no problem being generous, but when people start demanding it of me, I want to punch them in the face.

In other words, I see the richest people willing to screw the poorest people for more nickels because they're too poor to fight back.

That's one way to look at it. The other way is, why should I have to pay for this guy to ride the bus just because I have more stuff? It's not like I got more stuff by turning him upside down and shaking him until all of his pocket change fell out into a big sack. It seems to me that there's a fundamental lack of understanding between the most vocal and acidic of conservatives and liberals these days on that sort of issue. I don't think I need to explain how liberals feel like everybody should be helped up to some basic standard, but to put the conservative's basic reaction into perspective, if I had to work for the stuff that I got, and I earned all this junk that I have now, why should I have to give an increasing percentage of this junk that I've got to that guy over there? What claim does he have on my things? Why does my property belong to him and not me? That's a view that you can debate, but it's not one that you can just discard offhand because, as far as I can tell, it's not ridiculous on its face. The conservative in your example doesn't want to grab cash from anybody who's not quick enough to stop him - he wants to keep the stuff that belongs to him. It's not about depriving people to him - it's about respecting his individual right to property. It's not a malicious motivation - it's just the valuation of the freedom to keep and dispose of property higher than the valuation of the right of another individual to a certain material standard.

Personally, I tend to endorse rights before material entitlements. A person deserves the opportunity to succeed, but not necessarily the material prerequisites to do anything he wants, at least not as long as we live and operate in an economy of scarcity (read as: at least until somebody invents the replicator from Star Trek). I understand where people who want to achieve a certain level of material equality are coming from, and, hell, to a certain extent they are right, and some "liberal" programs have good merit. If a person wants to propose a new government program that will require taxpayer funding, I'm willing to entertain the notion, but first and foremost that person is going to need to explain to me why private industry isn't meeting the proposed goal already and why the establishment of the new program is an effective way to resolve the issue providing benefits in excess of its cost. I assume that makes me a conservative.

[Jason McCullough]

Sure, I haven't thought through everything and there'd be details for experts to work out, but it should be at least as workable (and progressive) as our increasingly Byzantine (cataphract rush!) income tax system.

The income tax system is complicated because people get Congressman to pass special exemptions for them. What makes you think that wouldn't happen to a sales tax system?

[Huzurdaddi]

It's not about the person who died, it's about what they leave behind for their spouse and children. Even worse, if the spouse dies as well shortly after, you get hit twice by this tax and the children have even less. Not to mention that every penny from an inheritance HAS ALREADY BEEN TAXED in one form (income, VAT, inheritance tax) or another.


Sniff. Our little baby republican did not get all of the inheritance that he was OWED! Oh noes. That spoon will have to be to be made of pewter instead of silver. What ever will he do?

[Stepsongrapes]

Personally, I tend to endorse rights before material entitlements. A person deserves the opportunity to succeed, but not necessarily the material prerequisites to do anything he wants, at least not as long as we live and operate in an economy of scarcity (read as: at least until somebody invents the replicator from Star Trek).

You seem to assume that everyone has equal opportunity to success in our current society (one which you're ALREADY complaining about). That's a BIG BIG BIG assumption. Frankly, it's a dumb and self-serving assumption. Whether it is anectdoctally true in your case (i.e., pulled yourself up from nothing) it is categorically and statistically untrue.

Wealth provides opportunity. Making a dollar for the poor guy isn't the same as making a dollar for the rich guy. If you agree that everyone deserves an equal opportunity (a right you might even say!) then that means equality as to a basic, material level of subsistance and education.

Your whole friend/girlfriend whatever entitlement situation ignores the fact that we are a society, not a collection of individual relationships. You get to pick your friends, not the society you live in (well, you're free to leave). Society is more like family then friends, obligations extend both ways. Are poor people "demanding" basic needs such as food, education, housing? Essentially, yes. The question is, do you have a problem with that? If so, that's a fundamentally a moral issue. Saying they're demanding lobster or diamonds or whatever is BS. Yes certain demands are being made (and fulfilled) in our current society. So what?

If you think that I consider the nameless bum down the street as a mooching friend, you're wrong. He's a member of the society I choose to live in, one in which 1) I don't think I benefit from having bums around and 2) that I believe includes basic rights such as health and education. Thinking that you can obliviously live aloof from the rest of society is silly. If you think extreme wealth disparity won't negatively impact you, I think you're being foolish. Frankly, I see the whole liberitarian philosophy of to each his own as extremely simplistic and naive.

A person deserves the opportunity to succeed, but not necessarily the material prerequisites to do anything he wants,

Talk about a strawman. I've yet to see the political platform that advocates this position. If there are people that are currently doing whatever they want on government's dime, I'd call that abuse of the system.

[Brian Seiler]

Wealth provides opportunity.

Wrong - wealth enables activities. There's a subtle difference. Do I have the right to marry a supermodel? Do I have the right to get a doctoral certification in Studies in Robotics and Ethics? Money can open a lot of doors, but that doesn't imply that the doors it opens are fundamental rights. If you intend to argue that a given thing is a natural right, that's a different argument to make - you're not arguing that the individual has a right TO THE MATERIAL WEALTH, but rather that the individual has a right to the consequence of that wealth.

Making a dollar for the poor guy isn't the same as making a dollar for the rich guy. If you agree that everyone deserves an equal opportunity (a right you might even say!) then that means equality as to a basic, material level of subsistance and education.

This argument in no way follows from its premise, which is part of the problem. Liberal and conservative thought diverge at a fairly fundamental level, and the result is that many of the assumptions that you make might not be entirely reasonable if you tweak that fundamental, underlying assumption. Some advocates just don't get that.

You get to pick your friends, not the society you live in (well, you're free to leave). Society is more like family then friends, obligations extend both ways.

If you think that I consider the nameless bum down the street as a mooching friend, you're wrong. He's a member of the society I choose to live in...

So, wait - you choose to live in the society that you don't get to pick?

[MarinusWA]

There's nothing special or magical about 'already taxed' money. The government taxes economic _activity_. You might disagree about which activities it chooses to tax, but complaining that the money is taxed twice is dumb.
It's not about how a euro is taxed multiple times, it's about how it is taxed multiple times. VAT and income tax can be rationalized because the state as a whole provides an environment for the transactions they tax to take place to begin with.
Inheritance tax however taxes a 'transaction' that will happen with a 100% certainty for a event (the death) that belongs to the natural order of things and has no economic basis (unlike paychecks and buying consumer goods). So I don't see an inheritance as a transaction and as such feel it should not be taxed.

On that same line, wealth tax isn't rational either, just a moral choice by the state inspired by a poor(read, not rich enough to have to pay wealth tax) majority. Is that theft? Possibly.

[Stepsongrapes]

This argument in no way follows from its premise, which is part of the problem. Liberal and conservative thought diverge at a fairly fundamental level, and the result is that many of the assumptions that you make might not be entirely reasonable if you tweak that fundamental, underlying assumption. Some advocates just don't get that.

You're seriously willing to sit with a straight face and say that in our world, existing wealth has no relationship to the ability to make more wealth?

You might as well straight out admit that you're in it for yourself and no one else. Any gain to you, no matter how small, is worth more than any concievable gain to another. At least then, you'd be honest with yourself. Denying basic reality is a poor way to go about it.

As to "choosing" society, you do have a choice in your actions, are you trying to create a society of equality or one in which each man is an island. Obviously, your personal choice is clear from your positions. There's also the choice of moving to Dubai or whatever.

[Brian Seiler]

You're seriously willing to sit with a straight face and say that in our world, existing wealth has no relationship to the ability to make more wealth?

What does that have to do with anything? Of course having money makes making more money easier because you can put your money to work on its own making money. I don't see what relationship that has to anything we're talking about. A 10% return on investment isn't an opportunity in the sense that you're using the term.

You might as well straight out admit that you're in it for yourself and no one else. Any gain to you, no matter how small, is worth more than any concievable gain to another.

False dichotomy - I can recognize that my survival is my own responsibility without necessarily valuing picking up a penny over rescuing a drowning toddler. There's a fundamental difference between asserting that charity is a virtue and claiming that it is an obligation. I think I've been pretty clear that I would agree that some programs have perfectly good merit as tax-funded initiatives.

As to "choosing" society, you do have a choice in your actions...

So we're back to bums being mooching friends, then? I must admit that I'm beginning to get a little turned around here.

[lesslucid]

I'm saying that for some people, watching other people take advantage of your dime with no immediate, identifiable benefit to you is irritating. An awful lot of "rich people" don't get through the day twiddling their thumbs and swimming in their big piles of money, after all - they work too. A lot of the resistance to taxation you see comes from Rich Uncle Moneybags not being particularly interested in building a dam in Western Pennsylvania when he lives all the way down in Florida. That reaction should be understandable. Whether it's merited or not is another consideration entirely, but think about it this way: how would you feel if your girlfriend/boyfriend/wife/husband/whatever went to a jewelry store with you and tromped up to the case and demanded that you get THIS RING RIGHT NOW NOW NOW NOW? I mean, you went there with the intention of buying some jewelry, right? I can't speak for you, but that kind of sense of entitlement to my money rubs me precisely the wrong way. I've got no problem being generous, but when people start demanding it of me, I want to punch them in the face.

I feel like I've said this same thing in ten different threads before, but, I guess I'm a sucker for punishment because here I go again...

...the problem I see with this line of reasoning is that you are talking about your money as though it were something that you had a natural right to. But I would put it another way: money is the way that society communicates the amount of value that you've provided to it and which you can therefore make claims on it in return. Money is something that is created by society (the printing is done by the government, as a representative of the society, but at a deeper level the money is invested with the quality of being a genuine marker of value by the collective belief that it is such) and therefore the society is entitled not only to allocate it through the marketplace but to reallocate it through taxation. To show that one form of allocation is legit and the other isn't requires a better refutation than just the declaration that "it's my money".

To sharpen the point a little: virtually everything that you have that makes it possible for you to earn money was given to you, gratis, by the society you live in. Of course, your willingness to make an effort is an important catalyst for those gifts, but if we take away all the stuff that was given to you by society - your culture, your education, your language, your capacity to interact with other human beings, &c &c - you would not merely be rendered poor. Effectively, your entire existence would be made impossible.

This means you don't confront society as an equal, separate, self-made entity, entitled to receive value in strict ratio with whatever you choose to grant it. You are a part of it, made from it, living on its substance. When it asks for some of your substance in return, you need a damn good reason to say no. Such good reasons exist, I'll happily grant. But "it's my money" isn't one of them.

Sorry for general messiness with which I've made this point... I suspect I am past my bedtime.

[Jason McCullough]

So I don't see an inheritance as a transaction and as such feel it should not be taxed.

Why one earth is a transaction necessary for taxation? Also note that technically inheritance taxes are often collected are on capital gains that have not been taxed previously. For example, if I buy $1000 in stock today, leave it there, and when I die it's worth $10,000,000, that's nearly 10 million dollars in capital gains that's never been taxed. If I give it to someone and they sit on it, it'll continue being untaxed until someone actually sells it. This shouldn't go on forever; lifetime sounds like a reasonable cutoff.

Do I have the right to marry a supermodel?

Do we have to go over how rights don't mean someone is obligated to give it to you again?

On the note of what does society owe its members (http://d-squareddigest.blogspot.com/2003/02/scattered-shots-in-general-im-in.html):

Time to break a New Year's resolution ... earlier in the year, under the heading "Department of the Bleeding Obvious", I put up a list of things that I had decided were no longer up for argument in 2003 because I'd lost patience with everyone who disagreed with me. Most of them are still valid, but I've kind of reconsidered on one of the bullets, specifically "That it is the proper function of civil society to provide a decent standard of living for its members, and that the definition of "a decent standard of living" has nothing to do with caloric survival requirements"

Don't get me wrong; I don't think that I'm no longer correct on this, I just think that the second clause bears a bit more argument and that there is still probably some useful conversation on the subject between me and those unfortunate enough to disagree with me. Somebody asked in comments "Does a 'decent living' include a cable modem?", and on reflection, I think it's a serious question which deserves an answer.

My view on the subject of what constitutes a decent living goes right back to Adam Smith, whose views on the subject are not so well known, but exemplify the strand of humanity and sound common sense which has been so thoroughly ignored in his writing ever since he coined that phrase about the Invisible Hand. Smith asked the question in Wealth of Nations, in respect of the minimum standard of living, whether it was part of that standard for a man to own a clean linen shirt (at the time, linen and the laundry thereof were just making the transition from a luxury of the upper class to a mass market product). Smith's answer was that, although a linen shirt was clearly not a necessity for survival, and had not been part of the basic standard of living even ten years earlier, it was at the time of writing. His reason for so concluding was that things had advanced to the point at which any industrious tradesman could afford to wear linen and keep it laundered, so any tradesman not able to afford his linen shirt would be thought lazy or inferior; even if he had happened into that state of penury by bad luck, he would find it very difficult to get employed and get out of it once he was in it.

That seems like, adjusted for technological advance, a good rule of thumb for today. Taking out clue from the fact that the senses of "decent" which refer to the display of taboo body parts, and the senses which refer to material standards of living, must have some common origin, I'd define "a decent standard of living" as "the lowest level of material possessions in a society which allows one to escape shame and prejudice". So for example, while the phrase "trailer trash" is in common usage, a decent standard of living implies not living in a trailer. If it is impossible to get a job without an email address, then maybe a modem of some sort (not necessarily ADSL) is a part of that standard. And so on.

[Kraaze]

It's not about how a euro is taxed multiple times, it's about how it is taxed multiple times. VAT and income tax can be rationalized because the state as a whole provides an environment for the transactions they tax to take place to begin with.
Inheritance tax however taxes a 'transaction' that will happen with a 100% certainty for a event (the death) that belongs to the natural order of things and has no economic basis (unlike paychecks and buying consumer goods). So I don't see an inheritance as a transaction and as such feel it should not be taxed.


Government absolutely provides the environment that allows that transaction to take place. In an anarchistic government-free situation a last will and testament might as well be toilet paper and kinship to the deceased would be irrelevant as to how the possessions of the deceased would be divvied up.

[MarinusWA]

Why one earth is a transaction necessary for taxation?

It's not, I was just comparing it to VAT and income tax which both are transaction based and inheritance tax is based on a transaction as well (from the deceased to whoever).
If I give it to someone and they sit on it, it'll continue being untaxed until someone actually sells it. This shouldn't go on forever; lifetime sounds like a reasonable cutoff.
My counter question is, why should something be taxed if they sit on it? Why should there be a cutoff? In the other case you are basically saying, "We should tax it because it's there." Besides, the moment you decide to spend it, it gets taxed immediately by VAT anyway.

In an anarchistic government-free situation a last will and testament might as well be toilet paper and kinship to the deceased would be irrelevant as to how the possessions of the deceased would be divvied up.In such an environment, the concept of ownership itself would be irrelevant to begin with and your suggested situation would not occur. Either you have the might to hold on to it for your descendants to inherit it or you don't in which case there won't be an inheritance to begin with. If you go along this route you can rationalize any form of tax on pretty much everything.

Anyway, that's just more proof that non compulsory tax is a bad bad idea. I always suggest the "All tax is theft!" people to give up their nationality. If you're stateless you don't have to pay taxes!

[Kraaze]

If you go along this route you can rationalize any form of tax on pretty much everything.


This is correct, and I can, and it's a logical and reasonable conclusion. There is no "transaction", to use your terminology, that government does not enable or facilitate in some fashion and so there is no transaction that one can logically claim government should stay out of since it isn't their business.

[Jason McCullough]

My counter question is, why should something be taxed if they sit on it? Why should there be a cutoff? In the other case you are basically saying, "We should tax it because it's there." Besides, the moment you decide to spend it, it gets taxed immediately by VAT anyway.

For the same reason we don't let income taxes get assessed 50 years later: economic activity today should pay for the government today, in general. For practical reasons you don't want to reassess asset profits too often, but you also don't want to let them go on forever untaxed.

[extarbags]

It's like if we went to a restaurant that served steak and chicken and lobster and we were all splitting the bill evenly and I ordered the surf and turf while you ordered the plain breast of boring chicken with bland seasoning. And then I knocked back a couple of cocktails while you sat there and sipped your iced tea. And then I ordered a dessert the size of my fat ass while you awkwardly squirmed in the chair across from me because you really needed to use the can but couldn't stand to do that in public. If you want to understand what conservatives feel like, put yourself in the position of the guy who just needs to use the toilet in that example.

So in this example, the inconsiderate asshole who consumes all he sees and lives a life of decadent luxury represents... people on welfare?

[Dave47]

Brian,

There's something fundamentally dishonest about your metaphors and examples. We're not talking about subsidized surf and turf dinners, free jewelry, or the right to date supermodels.

If you have a problem with society providing a basic level of minimal benefits and privileges to the poor, let's address the arguments for and against those programs. Let's not dress this up in fabricated tales of moochers stealing lobster dinners while wearing jewelry they cannot afford.

[Brian Seiler]

Brian,

There's something fundamentally dishonest about your metaphors and examples. We're not talking about subsidized surf and turf dinners, free jewelry, or the right to date supermodels.

If you have a problem with society providing a basic level of minimal benefits and privileges to the poor, let's address the arguments for and against those programs. Let's not dress this up in fabricated tales of moochers stealing lobster dinners while wearing jewelry they cannot afford.

If my examples were intended to make an argument, that would be appropriate. They are not. They are intended to illustrate a feeling so that folks can understand just what in the hell is going through the minds of the people they're arguing with in the hopes of maybe understanding the root of the opponent's position and incorporating it into the eventual solution.

"A basic level of minimal benefits and privileges" is far too general a proposition to even begin to discuss, and that is not my intention. It's a subjective grouping of various and sundry stuff. That's a more appropriate activity for specific propositions - for instance, the question, "Does every individual have the right to both preventative and critical health care?" I'm simply trying to illustrate the gut level reaction that happens in your average conservative and why that doesn't necessarily make them evil, or even wrong.

[Stepsongrapes]

If my examples were intended to make an argument, that would be appropriate. They are not. They are intended to illustrate a feeling so that folks can understand just what in the hell is going through the minds of the people they're arguing with in the hopes of maybe understanding the root of the opponent's position and incorporating it into the eventual solution.

I don't see how you can illustrate using a "feeling" based on a incorrect facts. If, you mean, that the emotional response of conservatives is flawed/shortsighted/irrational, then sure that's a good illustration. Otherwise, all you've given us is an example of how conservative thought is premised on false assumptions. How is one to reach an understanding with someone that they feel is being inflammatory and irrational?

This is one fundamental truth I will 100% agree with: progessive taxation and most social services are forms of forced wealth redistribution. The question is whether wealth redistribution for the purposes of ensuring certain fundamental needs (however you define those needs) is an acceptable principle.

Unless I'm misreading you, your answer is "no". If that's the case, then you're right: conservative and liberal (heck, moderate as well) thought really does diverge at a fundamental level. There is no reconciling a doctrine that says what mine is always mine to control with a doctrine that says all members of society deserve certain basic things. One must sacrifice the first doctrine to achieve the second.

I'm simply trying to illustrate the gut level reaction that happens in your average conservative and why that doesn't necessarily make them evil, or even wrong.

Honestly, the "gut level" reaction sounds a lot like the inherent, base, childish desire of people not to share. Whether that is "evil" or not I don't know. It's certainly wrong, if Sesame Street is right about the topic. Certainly, it's wrong in the context of a functioning society rather than a collection of individual hunter-gatherers.

[TheTrunkDr]

If my examples were intended to make an argument, that would be appropriate. They are not. They are intended to illustrate a feeling so that folks can understand just what in the hell is going through the minds of the people they're arguing with in the hopes of maybe understanding the root of the opponent's position and incorporating it into the eventual solution.
Yes because those poor people who need government assistance are sick of eating surf and turf while those upper class individuals are stuck living off potatoes and rain water.

[unbongwah]

Honestly, Brian, all you're doing is convincing me that conservatives' "gut-level reaction" is largely divorced from reality if you have to resort to such strained analogies. How hard is it to just say, "I don't want my tax money spent on poor people - let them learn to fend for themselves like the rest of us!"? Everything else is just B.S. and rainbows.

[shift6]

We're not talking about subsidized surf and turf dinners, free jewelry, or the right to date supermodels.
I would like to drop your Con-Law course, sir. Could you recommend someone who is talking about these things?

[Doug Erickson]

I understand what Brian is trying to explain -- that conservatives have a moral outrage over the thought of some anecdotal schlub getting by on welfare, and they inflate this outrage to typefy the whole system. That said, it's an asshole's attitude, and so short-sighted as to be embarrassing.

Usually, this is what my conservative friends and family spend most of their time railing against: people they've encountered in their life that are poor or lower-class who appear to abuse (or may actually be abusing) government welfare programs and health services -- and who, in every account, dare to cop an attitude. Usually, I simply remind these conservative peeps that they are discussing anecdotes, and that they are getting worked up over a few clear cases out of the countless they know nothing about, but if you get enough folks recounting anecdotes in a room or a forum, they develop a crazy consensual reality.

Still, the refusal to admit their middle- and upper-class dependence on a stable, progressive society -- and the fact that taxes MUST be coercive otherwise we would never collect enough to provide that stability and standard of living -- is pretty annoying in that "fuck the forest, this tree SUCKS" kinda way. I think both conservatives and liberals can agree that there's a whole truckload of room for efficiency in the usage and application of collected taxes, though.

[MikeSofaer]

We're a wealthy society, and I'm totally comfortable arguing that we should extend things like high school education and public transit rights (you know, stuff that helps people be productive) even to people who are freeloading assholes. We can afford it, and the effort to screen those people out isn't worth it.

[Stepsongrapes]

Usually, I simply remind these conservative peeps that they are discussing anecdotes, and that they are getting worked up over a few clear cases out of the countless they know nothing about, but if you get enough folks recounting anecdotes in a room or a forum, they develop a crazy consensual reality.

For every one of these anecdotes, I would hope that someone would read something like this:

http://www.huffingtonpost.com/2009/09/29/family-sees-shame-fear-in_n_303537.html

I honestly believe that this is attitude of most Americans relying on social services:

"I miss feeling like a man," Ed says, choking back a sob. When he used to come home on Friday nights with a paycheck in his pocket, he felt like he was providing for his family. He'd have the guys over, and they'd sit around in the garage, talking and drinking cold beer.

"When you're getting unemployment, and things are being given to you, you're not earning it," he says. "I'm grateful, but I'm not earning it."

[Reldan]

You might want to look Satisficing (http://en.wikipedia.org/wiki/Satisficing). Tons of businesses pay no attention to efficiency.

Sadly, governments go beyond this and view satisficing a problem as though it WERE the optimal goal, and then merely satisfice this simpler problem. At least businesses solve the problem at the end of the day even if the solution isn't optimal.

Also, if you had a national sales tax and no income tax, why wouldn't the rich simply establish a residence in a foreign country and buy all their goods on foreign soil?

[Doug Erickson]

Perhaps the most disturbing implication of this attitude is the idea that conservatives believe that if the government provides some sort of guaranteed baseline or standard for living, many people will stop working. This is sort of projected selfish pessimism says some pretty shitty things about the conservative mindset. I assume that MOST people do in fact prefer to contribute to society and their lives through productivity, and that financial incentive is not the end-all, be-all of human motivation -- that we have many other mechanisms in our social infrastructure and behaviors that guarantee we will seek work beyond a subsistence-level monetary one. Basically, I don't trust a man who tells me most people are fundamentally lazy and unmotivated beyond what that information tells me about the speaker. I look at my employees and I see a whole complicated aggregation of impulses beyond the need for fiscal remuneration driving their work ethos.

[Stepsongrapes]

Perhaps the most disturbing implication of this attitude is the idea that conservatives believe that if the government provides some sort of guaranteed baseline or standard for living, many people will stop working. This is sort of projected selfish pessimism says some pretty shitty things about the conservative mindset. I assume that MOST people do in fact prefer to contribute to society and their lives through productivity, and that financial incentive is not the end-all, be-all of human motivation -- that we have many other mechanisms in our social infrastructure and behaviors that guarantee we will seek work beyond a subsistence-level monetary one. Basically, I don't trust a man who tells me most people are fundamentally lazy and unmotivated beyond what that information tells me about the speaker. I look at my employees and I see a whole complicated aggregation of impulses beyond the need for fiscal remuneration driving their work ethos.

I think much of this is rationalized by a kind of fatalism: those who are willing to work would clearly not be in need of social services. You can ALWAYS work harder. Ergo, those who are on social services are there willing.

I honestly think this is the rationale of most of the hardcore NON-RICH conservatives. It's pride (justifiably) in their own hard work and an effect of living on the precipice. They just don't admit/foresee that they could fall in that hole for reasons beyond their control.

[Doug Erickson]

Oh, it's definitely a platitude spun by middle-class and lower-class Republicans. And yeah, you're right; it's a sort of narrative that validates their own sense of security, and disacknowledges the very complexity of the factors that contribute to one's "success" in this country and society.

The rich conservatives I know are just Christian ideologues completely divorced from economic concerns, or who have a smug pseudo-epistemological Libertarian attitude about taxation and social services that demonstrates a disconnect, rather than an expertise, in the economics that define the lives of most of their fellow Americans.

[magnet]

Well one of my big beefs is that the investment class gets off lightly on the burden of taxes.

Why is Warren Buffet's tax burden so much less, as a %, than the average American's?

Fair enough.

Although the national sales tax gets all the attention, there are other ways of replacing income taxes. Some aren't even regressive.

For instance, how about the Automated Payments Tax? It's assessed whenever money moves into, out of, or between two bank accounts. Think of it as an ATM fee for the state. Very easy to collect and very hard to evade. It's not charged on cash transactions, but who uses cash any more?

The beauty of it is that the volume of transactions in the US is so high, with a tax rate of 0.3% you could replace income as well as sales taxes and stay revenue neutral. Kind of like the Office Space scheme. So even if you could avoid taxes by buying that Lexus with a suitcase full of cash, it's hardly worth it.

[MikeSofaer]

The beauty of it is that the volume of transactions in the US is so high, with a tax rate of 0.3% you could replace income as well as sales taxes and stay revenue neutral.
Sure, the volume is high until you start to tax transactions.

[magnet]

The 0.3% figure assumes the volume would fall by half.

[Stepsongrapes]

Fair enough.

Although the national sales tax gets all the attention, there are other ways of replacing income taxes. Some aren't even regressive.

For instance, how about the Automated Payments Tax? It's assessed whenever money moves into, out of, or between two bank accounts. Think of it as an ATM fee for the state. Very easy to collect and very hard to evade. It's not charged on cash transactions, but who uses cash any more?

The beauty of it is that the volume of transactions in the US is so high, with a tax rate of 0.3% you could replace income as well as sales taxes and stay revenue neutral. Kind of like the Office Space scheme. So even if you could avoid taxes by buying that Lexus with a suitcase full of cash, it's hardly worth it.

Actually, the whole "it's hardly worth it" would only apply to individuals. I'm sure that institutions would adjust their behavior for something that amounts to so many dollars. They'd be stupid not to. It seems crazy that you could slap a tax on it and expect qualifying transactions to be maintained at untaxed levels.

EDIT: dammit intervening posts. Regardless of the half, taxing on any action that isn't nearly unavoidable (earning income, spending income) seems bound to fail when we're talking about amounts sufficient to run our government.

[MikeSofaer]

The 0.3% figure assumes the volume would fall by half.
Why half?

[magnet]

Actually, the whole "it's hardly worth it" would only apply to individuals. I'm sure that institutions would adjust their behavior for something that amounts to so many dollars. They'd be stupid not to.

Sure, some would adjust their behavior. But how would they adjust it?

I mean, presumably there was a reason to pay somebody to arrange the money transfers in the first place - reducing their debt, rearranging investments, maintain the liquidity of their offices, etc. Those things have tangible value, and in some cases the value is greater than 0.3% of the transaction.

And some things can't be adjusted. You have to pay suppliers and employees, after all.

EDIT: By the way "spending money" is a lot more avoidable than making transactions.

[magnet]

Why half?

Probably wouldn't fall by that much. It was a conservative estimate.

[Stepsongrapes]

in some cases the value is greater than 0.3% of the transaction.

This part I agree with- for any given class of transactions where the assessment is that doing it now adds more value, the transactions will continue.

But for everything else, you'd see institutions lumping or avoiding the necessary transactions. Given that we are essentially in a zero cost situation currently, I'd bet that a lot of the transfers are being done simply because we can do so for nearly zero cost.

.3% PER TRANSFER is a huge amount. We aren't talking .3% annual, we're talking per transfer.

[MikeSofaer]

Probably wouldn't fall by that much. It was a conservative estimate.
Why do you think that?

[wildpokerman]

So in this example, the inconsiderate asshole who consumes all he sees and lives a life of decadent luxury represents... people on welfare?

No it represents the fucking baby boomers who have plunged this country into debt with 3-4 unnecessary wars, and a deluxe pension and healthcare plan that will be underfunded conveniently as soon as the next generation is about to retire.

This is why Republics are doomed to fail. As soon as prosperity arrives the largest population group demands government benefits far above their ability to produce until half the population is on welfare. Not poor person assistance, paychecks to the portion of the population that doesn't need them.

It destroyed the Romans and it will destroy us too.

[magnet]

Why do you think that?

Because you need to pay suppliers and employees. And investments should earn at least as much as the inflation rate on average, which means they will be expected to earn more than 0.3% if held more than a few months.

[magnet]

This is why Republics are doomed to fail. ... It destroyed the Romans and it will destroy us too.

The Roman Republic ended when Caesar took power in Rome after a glorious period of conquest and expansion. It had nothing to do with your description.

In fact, offhand I can't think of any republics that were destroyed by entitlement programs. Most of them, including Athens, were destroyed by needless wars.

[deccan]

...the problem I see with this line of reasoning is that you are talking about your money as though it were something that you had a natural right to. But I would put it another way: money is the way that society communicates the amount of value that you've provided to it and which you can therefore make claims on it in return. Money is something that is created by society (the printing is done by the government, as a representative of the society, but at a deeper level the money is invested with the quality of being a genuine marker of value by the collective belief that it is such) and therefore the society is entitled not only to allocate it through the marketplace but to reallocate it through taxation.

To follow this line of thought through to its logical conclusion, surely this must apply to all property in general, not just money specifically?

[lesslucid]

To follow this line of thought through to its logical conclusion, surely this must apply to all property in general, not just money specifically?

Yes. "Property" is a concept that only makes sense in a social context. If you wash up alone on a deserted island, it makes no difference whether or not you tell yourself that the rocks and trees are your property. It's only if there are other people there that you need to work out rules about what belongs to who and what is allowed or forbidden ("anyone can climb the trees, but this coconut shell is my drinking cup, so lay off!").

...which doesn't mean that all property should therefore be held in common or that property is theft or any such thing. There are good reasons to have some things, or categories of things, defined as privately owned, and others as publicly owned. But decisions about differences of opinion about which things should go in which category are most appropriately made at the level of the whole society. We don't have a perfect decision making process to do that with, but democracy is the best we have. As nearly as is possible, a democratically elected government is the avatar of the best interests of the society as a whole.

[MikeSofaer]

Because you need to pay suppliers and employees. And investments should earn at least as much as the inflation rate on average, which means they will be expected to earn more than 0.3% if held more than a few months.
Well, people won't stop paying suppliers and employees, but how large a percentage of the money is in that?

[foogla]

No it represents the fucking baby boomers who have plunged this country into debt with 3-4 unnecessary wars, and a deluxe pension and healthcare plan that will be underfunded conveniently as soon as the next generation is about to retire.

This is why Republics are doomed to fail. As soon as prosperity arrives the largest population group demands government benefits far above their ability to produce until half the population is on welfare. Not poor person assistance, paychecks to the portion of the population that doesn't need them.

It destroyed the Romans and it will destroy us too.

man what

[MarinusWA]

Sniff. Our little baby republican did not get all of the inheritance that he was OWED! Oh noes. That spoon will have to be to be made of pewter instead of silver. What ever will he do?
But ofcourse, because I'm in favor of removing inheritance tax I MUST be a right wing conservative republican with rich mommy and daddy.

Oh wait...
A) I don't live in the US.
B) The last party I voted for is liable to be called communist even by US Democrats.
C) I'm from a blue collar family.

Tell me Huzardaddi, is all this an effect of being stuck in a pigeonhole for too long? You should get that looked at.

For the same reason we don't let income taxes get assessed 50 years later: economic activity today should pay for the government today, in general.
I agree with this but I don't feel passive value increase of say stock is 'activity' for the owner of the stock (it is for the company). But in this case it starts to boil down to arguing semantics what constitutes economic activity so meh.

Regardless, considering the defense from most people here for pretty much all taxes at what point does a tax become theft, if at all? Why not an air tax for everyone based on their use of oxygen?

[lesslucid]

Regardless, considering the defense from most people here for pretty much all taxes at what point does a tax become theft, if at all? Why not an air tax for everyone based on their use of oxygen?

I'm not sure if your first question is rhetorical, but non-rhetorical answer: something called a "tax" becomes more like theft if it isn't legitimated by the consent of the governed, preferably through a system of representative democracy. Or, as a slogan: "no taxation without representation".

The second question is obviously rhetorical, but I'll answer it anyway: poll taxes are regressive and unpopular. Measuring air use would also be a vast, foolish waste of resources. Other than those things, though, a fine idea. :P

[red guy]

Why is Warren Buffet's tax burden so much less, as a %, than the average American's?
Because plutocrats like Richard Mellon Scaife taught Republicans to use terms like "death tax" and "small business owners" when discussing plans to decrease taxes for the super rich.

[Houngan]

Sadly, governments go beyond this and view satisficing a problem as though it WERE the optimal goal, and then merely satisfice this simpler problem. At least businesses solve the problem at the end of the day even if the solution isn't optimal.

Also, if you had a national sales tax and no income tax, why wouldn't the rich simply establish a residence in a foreign country and buy all their goods on foreign soil?

Yes, as has been shown by Californians moving away from the state to escape the taxes. If you give the people most able to live elsewhere a reason, they will.

H.

[MarinusWA]

I'm not sure if your first question is rhetorical, but non-rhetorical answer: something called a "tax" becomes more like theft if it isn't legitimated by the consent of the governed, preferably through a system of representative democracy. Or, as a slogan: "no taxation without representation".
I know, I figured that 'theft' in this thread wasn't ment in the actual legal sense but the 'omg, they took my money!' sense.

[magnet]

Well, people won't stop paying suppliers and employees, but how large a percentage of the money is in that?

I think you are making this needlessly complicated.

A corporate income tax (T1) will generate
T1*(revenues - costs)

A corporate payment tax (T2) will generate
T2*(revenues + costs)

You can reduce both by decreasing revenues. Obviously, most corporations aren't interested in going Galt.

You can reduce the former by increasing your costs, although that has some undesirable side effects. Still, as you know the current system has some perverse incentives.

You can reduce the latter by decreasing your costs. Most companies already have strong incentives to do so.

In practice, the effect of the payment tax is to give an additional incentive towards vertical integration. And that should be weighed against the benefits of doing away with income tax.

[Jason McCullough]

Yes, as has been shown by Californians moving away from the state to escape the taxes.

Bullshit, bullshit, bullshit. Citation showing correlation between state tax rates and outmigration, please.

[MikeSofaer]

I just suspect there are a lot of very large money transfers going on that are happening for reasons of corporate structure etc. I'd want to see actual data on how much of the money being transferred around is basically self-dealing.

[Kraaze]

I just suspect there are a lot of very large money transfers going on that are happening for reasons of corporate structure etc. I'd want to see actual data on how much of the money being transferred around is basically self-dealing.

Those transfers have a fee don't they? I know they used to, but maybe it's free nowadays since it's a trivial operation for the banks computers.

I'm dating myself here but when I learned about this stuff in the 90s I was taught that frequent bouncing of money from account to account inside a company was frowned upon and was a red flag for auditors because it indicated either money-wasting incompetence or a smoke screen to cover fraud.

[MikeSofaer]

Those transfers have a fee don't they? I know they used to, but maybe it's free nowadays since it's a trivial operation for the banks computers.

I'm dating myself here but when I learned about this stuff in the 90s I was taught that frequent bouncing of money from account to account inside a company was frowned upon and was a red flag for auditors because it indicated either money-wasting incompetence or a smoke screen to cover fraud.
I suspect the more money and units you have, the more you transfer money around for convenience. Particularly among financial companies. Maybe that's not a large piece of the total, but I want to actually see numbers. I am skeptical!

[magnet]

I want to actually see numbers. I am skeptical!

There are some numbers here:

http://econwpa.wustl.edu/eps/pe/papers/0106/0106001.pdf

[MikeSofaer]

There are some numbers here:

http://econwpa.wustl.edu/eps/pe/papers/0106/0106001.pdf
Looks like most of the money volume happens inside the financial sector. The data on elasticity wrt transaction cost is sketchy. The 50% isn't far from a guess.

[magnet]

Looks like most of the money volume happens inside the financial sector. The data on elasticity wrt transaction cost is sketchy. The 50% isn't far from a guess.

Well, since nobody has ever actually replaced income taxes with payment taxes, pretty much anything you see will be a guess. I mean, when you get right down to it, even the Laffer curve is a guess.

[ridge]

People would govern fine. Business, yes, our "free market" economy would wilt because our banks, insurance, medical care, tanks, and research rely on government spending and dollars invested in all those areas create the next layers of the economy. Just the facts for all those teabaggers out there. Fixed noises needs government spending so their viewers can pay for worthless noise.

[Phil_Stein]

The data on elasticity wrt transaction cost is sketchy. The 50% isn't far from a guess.

It's a pretty ridiculous number.

Look at table 2 in his paper. Going by the "Percent PT" column, which totals to 100.0%, it appears that only 2 rows are specifically for non-financial goods and services. Specifically, the rows I'm thinking of are "Final oods and Services" and "Intermediate Goods". Those total to 11.2%. If we throw in "Transfer Payments" (I'm not quite sure what those are) and "Mortgage Loans and Repayments" we get to 13.6% that are basically non-Wall Street things. Which means Wall Street things (trading in stocks, bonds, forex, etc) is about 86.4% of the identified total.

He wants to replace all federal, state and local taxes with this system, and shows that in 1996, these totaled $1,357 billion. That's obviously a pretty old figure. I'm not quite sure where to find comparable data to what he's using that's current, but GDP data can be found here (http://research.stlouisfed.org/fred2/graph/?chart_type=line&width=1000&height=600&preserve_ratio=true&s[1][id]=GDPA). I used the "Download Data In Graph" link, and GDP has grown 84.2% from 96 to 08 (I'm assuming the figures are nominal). Let's make the reasonable assumption that the $1,357 billion, figure would need to grow 84.2% to be about right for 2008, so it should be about $2,500 billion - a nice round figure.

So, he wants to extract $2.5 trillion from the economy via this transactions tax, which, IIUC, would be a flat tax on transactions. And per his transaction figures, about 86.4% of transactions are Wall Street type transactions. If that percentage held, then Wall Street transactions would generate about $2.16 trillion, annually in tax bills.

Well, that might seem nice to non Wall Streeters. Hey, let them foot the bill, and the rest of us pay only a tiny amount in taxes.

But it's a fantasy.

The vast majority of Wall Street transactions try to scalp a few basis points here and there, among market makers and high volume trading houses and the like. There's nothing particularly wrong with this - it adds liquidity to the market, and helps prices respond more quickly and more accurately to news and such.

But it's just not profitable enough to sustain 86% of the cost of government.

The entire industry of "Finance and insurance" had peak earnings, per the BEA, of $192 billion in 2005. In 2008, the figure is $99 billion. You can't extract $2.16 trillion in taxes that would primarily come from the participants in an industry that has earnings of less than a tenth of that.

Yes, some individuals and companies, both domestic and overseas who are not in the BEA figure for that industry would pay some of the tax. But my guess is it would be a relative pittance, as a fraction of the total. The big volume on Wall Street is the big players trading big dollars at high frequency with each other.

Aside from the fact that the math doesn't come close to working at the high level, there are tons of likely problems at a lower level. In the face of a 30 bp tax on transactions (15 bp each on buyer and seller, if you like), I would imagine that a huge chunk of business would move to London and other international centers, and what couldn't be moved for one reason or another would revert to a much, much lower level of volume with far less participation by market makers (and hence, far less liquid markets, and far less tax revenue).

[Phil_Stein]

To throw an illustrative example into the mix:

SPY is an ETF for the S&P 500. I think it's the most heavily traded ETF - it's a nice trading vehicle for US large caps, and also a nice way to park money for short periods (or long periods) when you want exposure to the US market in a liquid, low cost vehicle.

Per Morningstar (http://quicktake.morningstar.com/etfnet/fees.aspx?symbol=SPY&country=USA), the total expense ratio, as of 9/30/08, was 0.09% (I assume that, as is typical for these things, that's an annual figure).

Per Yahoo! Finance, it had net assets, as of 8/31/09, of $69.44 billion.

It had average share volume over the last 3 months of 188,615,000 shares per day. At today's last trade (during regular market hours, I think) of $105.59, that's about $19.9 billion per day.

i.e. The entire float turns over roughly every 3 and a half days.

If, each time it turned over, the buyer and seller paid, between them, 30 basis points, then, over the course of a year, if we assume about 250 trading days, and 3.5 day turnover, the tax would be paid about 71.4 times, for a total tax bill of about 71.4 x .30% = 21.42%.

i.e. The bill in taxes for folks trading SPY would be over 200 times higher than the annual expense ratio for the ETF itself.

Wouldn't happen.

Volume would fall off a cliff.

Again, most likely scenario would be that much of the trading in stuff like this would move overseas. The bits that remained in the US would see volume fall drop precipitously.

50% reduction in transactions?

Pfffffffffffffffffffffff...

[magnet]

Well, that might seem nice to non Wall Streeters. Hey, let them foot the bill, and the rest of us pay only a tiny amount in taxes.

What? Do you think the retail industry "foots the bill" for states that are funded by sales taxes? Because what usually happens is that the tax is passed onto their customers, and retail margins stay roughly the same.

Likewise, I don't expect Wall Street itself to foot any bills. I expect Wall Street customers to foot the bill. And pretty much everyone is a Wall Street customer.

To throw an illustrative example into the mix:

SPY is an ETF for the S&P 500. I think it's the most heavily traded ETF

So it's not a representative example.

How long is the average security held?

i.e. The bill in taxes for folks trading SPY would be over 200 times higher than the annual expense ratio for the ETF itself.

That's a meaningful comparison only if the same people were repeatedly buying and reselling the stock. But apart from day-traders, most people buy or sell a given stock once a month at most. And if that's the case, then it makes no difference to you how much money the government is making off of other people.

You're right that the day traders would move overseas. I think that's pointed out in the article.

[Phil_Stein]

Also, FWIW, the UK actually does have (or at least did) a "stamp tax", which amounts to a transaction tax, on trading. But, IIRC, there are vast exemptions to it for market makers, among others. This article (http://www.lowtax.net/lowtax/html/offon/uk/uk_gotaway.html) talks about it a bit, and says that despite the high rate (supposedly 0.5%) it only raised GBP2.6 billion in 2003/4.

And if the US really did impose some major tax on financial transactions and London didn't want the business, there would likely be plenty of other alternatives - nations and markets that would offer trading without the tax or with a much much lower tax. Virtually every modern industrial nation has a financial marketplace of some sort.

[Phil_Stein]

For the high volume trading, there isn't necessarily a customer. Much of it is run from proprietary trading desks using the firm's own capital. Some is by hedge funds which do use customer's capital, but in the face of a 0.3% transaction cost, that wouldn't be profitable, at least, not at volumes anywhere near those of today.

As for SPY - it's a good example not only because it's the most heavily traded (I think), but because it's the original ETF (I think) and probably the best known. It's also one I have traded. If you want more research on other ETFs and or the market as a whole, you can do your own.

Nutshell summary - shares, forex, bonds and the like trade hands at tremendous rates BECAUSE it is cheap and easy to do so. Market makers can make bets on very small expected profits. If you increase transaction costs dramatically (my guess is that a 30 bp transaction tax would mean at least a 10X and possibly a 100X increase in overall costs for trading much of the highest volume stuff), volume would either move to where things remained cheap (off-shore) or, to the extent that was not possible, largely dry up.