What is the ideal taxation scheme?

[MagisterCultuum]

Flat taxes with significant exemptions would be good for the very poor and great for the very rich, but horrible for the middle class. A progressive tax with no exemptions would be much better.

 

[Nylan]

There is no such thing as a "fair" tax. All taxation is theft and must be abolished. The state, that relies on tax is a criminal organisation, it is the modern mafia.

Did you take a government class in high school?

 

[luiz]

Flat taxes with significant exemptions would be good for the very poor and great for the very rich, but horrible for the middle class. A progressive tax with no exemptions would be much better.

I disagree. You could have for instance a flat 15% income tax with an exemption of 15,000 dollars (per year). A middle class american making 50k would have 70% of his income subject to taxation, paying a total of $5,250 (an effective tax rate of 10.50%). A rich american making 500k would have 97% of his income subject to taxation, paying a total of $72,750 (an effective tax rate of 14.55%).

 

[uppi]

I disagree. You could have for instance a flat 15% income tax with an exemption of 15,000 dollars (per year). A middle class american making 50k would have 70% of his income subject to taxation, paying a total of $5,250 (an effective tax rate of 10.50%). A rich american making 500k would have 97% of his income subject to taxation, paying a total of $72,750 (an effective tax rate of 14.55%).

But the middle class is hit by the steepest progression. In your example the tax rate increases from 0% to 10% in the interval from 15k to 45k. That's double of what progression is left. If you want to do this revenue neutral, then the middle class will be the losers, because their tax rate would have to increase.

 

[Gustave5436]

There is no such thing as a "fair" tax. All taxation is theft and must be abolished. The state, that relies on tax is a criminal organisation, it is the modern mafia.

Don't forget the reason for the state's existence; the dominance of capital over the populace and the preservation of the socio-economic elite's property "rights."

Taxation is coerced appropriation (i.e. theft), sure, but it tends to be the rich who complain the loudest about taxation (and believe in silly things like "libertarian" capitalism), when it is the rich who are the greatest thieves in our society.

edit; to return to the subject of which form of taxation is the least unjust, as far as taxing individual citizens goes, it should be a highly progressive income tax alone, putting minimal tax pressure on the poor and ramping up to the majority of a person's income should her income be millions of dollars per year. That is, put the tax burden on those most able to pay, the rich, not the poor and middling income. Sales tax, alcohol tax, etc. are all regressive taxes.

 

[luiz]

But the middle class is hit by the steepest progression. In your example the tax rate increases from 0% to 10% in the interval from 15k to 45k. That's double of what progression is left. If you want to do this revenue neutral, then the middle class will be the losers, because their tax rate would have to increase.

But the progression is irrelevant. The middle class guy gets an exemption of 30% of his income, that's very considerable. The rich guy only got a 3% exemption. The system is not that unfair to anyone, you have to remember someone making 15,001 will still take home more money than someone making 15,000 and fully exempt.

 

[warpus]

Ideal is an utterly and completely flat tax. Everything you make, profit, whatever, you pay a flat rate on that everybody else pays. Personally I suggest 9.9% because it is arrogant of the government to get more than God.

That said, I accept that there is probably going to need to be some sort of initial exemption of some income to help the poor, but I wish we didn't need to do that.

Bill gates should pay the same percentage as I should. Why should he be punished for being more succesful?

If everyone only paid 10% tax, how could the government collect enough money for all the stuff it needs to do?

Where would the rest of the money come from?

 

[Earthling]

to return to the subject of which form of taxation is the least unjust, as far as taxing individual citizens goes, it should be a highly progressive income tax alone, putting minimal tax pressure on the poor and ramping up to the majority of a person's income should her income be millions of dollars per year. That is, put the tax burden on those most able to pay, the rich, not the poor and middling income. Sales tax, alcohol tax, etc. are all regressive taxes.

I generally agree with this, however, what I would add in my own view is that the income tax as things are understood now is not really done properly. Rather than straight income on salary/wages, investments, dividends, etc... need to be included at roughly the same rates, to prevent various loopholes.

 

[civ_king]

There is no such thing as a "fair" tax. All taxation is theft and must be abolished. The state, that relies on tax is a criminal organisation, it is the modern mafia.

Objective:
Income tax: 0%
Social security, healthcare, etc: 0%
sales tax: 0%
property tax: 0%
regulations and other state fees: 0$

Who doesnt like it?

the state predates the mafia somewhat...

 

[Godwynn]

Marginal tax rates.

Income Tax (Including Dividends and Capital Gains):
$1-24,999: 5%
25,000-49,999: 15%
50,000-99,999: 25%
100,000-249,999: 35%
250,000-499,999: 45%
500,000-999,999: 60%
1,000,000+: 75%

National Sales Tax: 1%

Inheritance Tax:
0-249,999: 25%
250,000-999,999: 50%
1,000,000+: 75%

Don't ask why, I just made them up in about forty-five seconds and it looks good. I hope it closes the budget hole.

 

[Integral]

@Godwynn: No exemptions at the bottom?

And I'm not fond of the sales tax as it's mission creep and won't do much good anyway (1% of PCE is $90 billion, which really isn't worth a whole new type of tax). Keep the Federal government to either an income or a sales tax; there's no need to let it have both.

 

[Godwynn]

@Godwynn: No exemptions at the bottom?

I probably would have come up with some, along with corporate taxes if I spent two and a half minutes on it. I came up one minute and forty-five seconds short of that.

 

[Integral]

I probably would have come up with some, along with corporate taxes if I spent two and a half minutes on it. I came up one minute and forty-five seconds short of that.

That's still twenty seconds more thought than I've put into the thread, so...

 

[Godwynn]

That's still twenty seconds more thought than I've put into the thread, so...

Today in Labor Problems I learned about the income and substitution effect. I value my leisure time.

 

[Cutlass]

That's still twenty seconds more thought than I've put into the thread, so...

you spent how many hours on the concept over the past few years?

 

[amadeus]

Today in Labor Problems I learned about the income and substitution effect. I value my leisure time.

Aren't you afraid you'd drive out the rich if they're taxed so punitively? 75% marginal rate? Even the most communally-minded Western European nations are not so suffocating...

 

[Arwon]

Ideal is an utterly and completely flat tax. Everything you make, profit, whatever, you pay a flat rate on that everybody else pays. Personally I suggest 9.9% because it is arrogant of the government to get more than God.

That said, I accept that there is probably going to need to be some sort of initial exemption of some income to help the poor, but I wish we didn't need to do that.

Bill gates should pay the same percentage as I should. Why should he be punished for being more succesful?

Diminishing marginal utility.

 

[Cutlass]

Aren't you afraid you'd drive out the rich if they're taxed so punitively? 75% marginal rate? Even the most communally-minded Western European nations are not so suffocating...

where the hell are they going to go? this isn't state taxes we're talking about.

 

[Integral]

Today in Labor Problems I learned about the income and substitution effect. I value my leisure time.

:shudder: bringing back bad memories of intermediate micro and public finance.

\begin{effort}
Sigh, tax rates.

I propose that an optimal tax structure be
- efficient, in that your optimal tax structure T* could not be replaced by another T** which makes at least one person better off without making anyone else worse off (an optimal tax system should meet the minimum standard of Pareto efficiency, for the nerds)
- Horizontally equitable, so that two people identical in all relevant aspects pay the same taxes
- Vertically equitable, so that those with a greater ability to pay should, in general, pay more
- As simple as possible, but no simpler
- Does not generate excessive deadweight loss

Of course, the weights to each of those items will differ across persons.
\end{effort}

you spent how many hours on the concept over the past few years?

Far too many.

Again, I'm sort of willing to write a long post here on taxes, but not without some indication that it would generate feedback (and as we know, no one likes long posts). And most of the ideas are scattered about some other posts on the forums anyway.

 

[MagisterCultuum]

Godwyn's tax rates on the poor are also obscenely high. I can only assume he means for the state to provide for almost all our needs.



The kind of people who make over a million a year can leave the country pretty easily, and likely take their business with them. He didn't mention any tariffs, so if the business deals with any physical product at least they would be better overseas.