US Fiscal Crisis Solved-The Just Tax.

Do you support this idea?

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Mark1031

Mark1031

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I have a wonderful solution to the US financial problems that should appeal to all sides in the debate. I can balance the budget easily with a simple 2% flat tax that will bring in $4.16T as opposed to the 2.7T (2007 number) http://en.wikipedia.org/wiki/Federal_tax_revenue_by_state. The flat tax will be on total assets. An estimate of the total assets in the US is $188T. http://rutledgecapital.com/2009/05/24/total-assets-of-the-us-economy-188-trillion-134xgdp/. I am going to say that every life is worth $100K based mostly on a rough estimate of life insurance. This gives a tax base of ca. $208T and taxed @ 2% would bring in 4.16T/yr.
I would argue that this is a truly fair way to collect taxes. Now you could play with it at the edges say have some standard deduction and some way to protect a fraction of assets for retirement etc.
But the argument I want to make is that this is FAIR! According to some conservatives, government is there to protect property and contracts etc so in this manner you would be paying based on how much is being protected.
It is not an unheard of tax- local property taxes are just such a tax.


I don’t want to get too much into the weeds of the practicality or economics of it. I am particularly interested in why this would be less fair or just than a tax on income or on sales , flat, progressive or otherwise.
 
If the tax is on assets, is there a credit for liabilities? For example, if I own a $250k home on a $200k mortgage and I still owe $150k, what would my tax base be?
 
amadeus said:
If the tax is on assets, is there a credit for liabilities? For example, if I own a $250k home on a $200k mortgage and I still owe $150k, what would my tax base be?
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I could go either way whatever you think is fair. As it is now for proberty tax your tax base would be the full value of 250K.
 
A tax on property is no more unfair than a tax on income, but it's not any more fair either. There are always issues. For instance, under your proposed system if a person spends 50,000 dollars on a car he will still pay taxes over that ammount, as the car is an asset. But if he instead spends it all on a Vegas trip with hookers and cocaine his taxe base is now 50k smaller. Now you may argue that's fair, since a car requires state protection while the trip does not, but that's debatable. You'd be essentially taxing investment and durable goods while giving a free ride to services and non-durables. Probably bad economics.
 
Some would have issues with the principle of taxing the same assets over and over, even at a proposed 2% rate.

Another thing - I'm 99% sure that the wealthiest percentages of the population have the resources and financial insight/consultation to make sure, that the majority of their assets will be organized in such a manner that they will never ever pay a dime of their value in taxes. That's essentially how it is today.
 
luiz said:
A tax on property is no more unfair than a tax on income, but it's not any more fair either. There are always issues. For instance, under your proposed system if a person spends 50,000 dollars on a car he will still pay taxes over that ammount, as the car is an asset. But if he instead spends it all on a Vegas trip with hookers and cocaine his taxe base is now 50k smaller. Now you may argue that's fair, since a car requires state protection while the trip does not, but that's debatable. You'd be essentially taxing investment and durable goods while giving a free ride to services and non-durables. Probably bad economics.
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This is an excellent point. I suppose this could be combined with a sales tax on services to try and deal with this. However, to some extent the $$ he paid for the services are taxable assets in someone elses hands-let's say the casino owner as hookers and coke are underground economy anyway.

But in fairness if you immediately blow all your $$ on "services" then you have nothing left for the government to protect and we are recovering the taxes from the rich service industry which is accumulating assets requiring protection.
 
Agent Cooper said:
Some would have issues with the principle of taxing the same assets over and over, even at a proposed 2% rate.

Another thing - I'm 99% sure that the wealthiest percentages of the population have the resources and financial insight/consultation to make sure, that the majority of their assets will be organized in such a manner that they will never ever pay a dime of their value in taxes. That's essentially how it is today.
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My home is taxed every year at about 1%.

The fact that the wealthy can manipulate the system is not relevant to what the system actually is and its fairness.
 
The welfare services could probably be cut back immensely by this anyway, since much welfare is pretty much just a refund on taxes the poor pay.

This tax would be a good idea. You just have to make sure you assets grow 2+% per year, enough to cover the tax and inflation. Since stocks grow 8-10% per year, it'd be easy to outpace them.

As a bonus, due to income not being taxed, you have a TON more money to grow. As well, no dividends/capital gains taxes means investments swell, in turn generating more money for the wealth tax down the line.

As the wealth tax is low, I think I can support this.
 
The main problem is in assessing what assets someone has, and what actual current value of something is. People could easily shift assets out of the country. And any asset that isn't publicly traded has a debatable current market worth that is changing all the time.

I think I had a similar conversation with MagistarCullum a year or so back. If I own shares of stock in a business, the quantity of share by their market price. But which market price? The year's high? The year's low? The year's average? But if I own a business that has not been on the market and not recently sold, how do you value it?
 
Mark1031 said:
My home is taxed every year at about 1%.
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You pay annual taxes of your car, bike, flatscreen tv's, dish washer, jewelry, brand clothing, furniture, kids toys, computers, iPods, Blu-ray player etc. etc?

Those are assets with a dollar value attached to them as well. Everything you could collect insurance money for if your home burned down is an asset.
 
@ Cutlass. I don't want to get too much into the practicality of this but suffice to say that the value of property is rated all the time (eg for loans etc.) and for publicly traded companies it is a snap.

Could it be manipulated? Sure anything can and is now, so the fact that it can occur does not move the main discussion of whether this is fair or not. The enforcement of economic laws is a matter of political will and overcoming corruption no matter what the underlying law is.
 
For the poor this system will be great. For the higher ups, it relies on them making smart investments.

Sounds like we'll find ourselves with a bunch of interdependent portfolios. You invest in company x, but company x is also succumbing to a tax, so it has to keep operations profitable and expands into company y, etc...

So long as a company runs a 2% profit all is good. How high is the average company's profit margin, though?
 
Mark, 'fair' is always subjective. I don't think you can place an objective value of fairness on anything. Personally, I think it's fair to shift the tax burden substantially upwards. And there are a number of ways of doing that. But what is fair to me isn't going to be to someone else.
 
Cutlass said:
Mark, 'fair' is always subjective. I don't think you can place an objective value of fairness on anything. Personally, I think it's fair to shift the tax burden substantially upwards. And there are a number of ways of doing that. But what is fair to me isn't going to be to someone else.
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Ahhhh but this is the absolute crux of the matter. Of course different people have different assessments of what is fair. But to do something politically you must convince most people that it is fair and just, minimally at least to them, but better to everyone.

I also think it is fair to shift the burden upwards but it can be difficult to explain why- esp. to conservatives. The only argument I hear from lefty politicians is that they (the wealthy) can "afford it". This is the most pathetic and to me obviously unfair/unjust argument you can possibly make (if I was a conspiracy buff I would think they were purposely throwing the game). It's like the guy next to me in a restaurant sending his bill to my table saying I should pay it because I can obviously afford it more than he can. There is a good chance that it is true but in no case am I likely to pay it and will be offended by the suggestion that I should.

I think my proposal would shift the burden up but with a reasonable and logical rationale.
 
It does create a weird situation where I might have to sell assets to afford my taxes. This becomes a problem if there is some type of synergistic effect from my assets.
 
El_Machinae said:
It does create a weird situation where I might have to sell assets to afford my taxes. This becomes a problem if there is some type of synergistic effect from my assets.
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Hopefully you have a large amount of investments in dividend taxes!

...well no. That would only go so far. It wouldn't cover say, the taxes on one's home or car.

So you end up selling your stocks to pay for those, and in turn, have to start paying the wealth tax out of your own personal income... effectively rendering it an income tax.
 
Why not simply increase the gas tax 1¢/2 weeks? Emissions would drop quite a bit.
 
Taxing assets is very hard to estimate, enforce and impractical if you are imposed such tax yourself. Simply raising income taxes, ending all deductions and closing loopholes are a much easier solution.
 
The people this would hit hardest have way too much influence to ever allow it to happen.
 
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