quote:

Originally posted by lavaca:
I can't believe the tripe I read here. I was a CPA before I went to law school, studied tax policy, and actually practiced tax law for a couple of years before I switched to insurance. Tax theory is complicated. The US is unusual in that it taxes US citizens on their world-wide income, not just their US sourced income, but it allows tax credits for foreign taxes.

But the real question is whether a VAT or an income tax is more fair. First, an income tax is anti-competitive and discourages production, so that's bad, but it's what the US does. Why tax people on making money, hiring people, etc. Sounds stupid. It is. And people evade it.

A VAT is much more difficult to evade and is fair. Some say it's a regressive tax but it is not. Everyone pays their share. You are taxed on what you spend. Rich people spend more than poor people so they pay based on what they spend. Now there are individuals that would come out on top, like Warren Buffett, who makes a lot of money but doesn't spend it, but they are the exception.

But you absolutely can't tax unrealized gains, because it is NOT INCOME.

Let's say I buy a painting. Should I pay income taxes every year while the value of the painting goes up? Let's say I have to do that.

But before I sell the painting, they find out it was taken from Jewish folks by the Nazis and I lose the painting altogether. Does the government refund my taxes and pay me interest for the decades over which I paid taxes?

This is silly.

Some investments don't pan out.

quote:

Originally posted by lavaca:
I can't believe the tripe I read here. I was a CPA before I went to law school, studied tax policy, and actually practiced tax law for a couple of years before I switched to insurance. Tax theory is complicated. The US is unusual in that it taxes US citizens on their world-wide income, not just their US sourced income, but it allows tax credits for foreign taxes.

But the real question is whether a VAT or an income tax is more fair. First, an income tax is anti-competitive and discourages production, so that's bad, but it's what the US does. Why tax people on making money, hiring people, etc. Sounds stupid. It is. And people evade it.

A VAT is much more difficult to evade and is fair. Some say it's a regressive tax but it is not. Everyone pays their share. You are taxed on what you spend. Rich people spend more than poor people so they pay based on what they spend. Now there are individuals that would come out on top, like Warren Buffett, who makes a lot of money but doesn't spend it, but they are the exception.

But you absolutely can't tax unrealized gains, because it is NOT INCOME.

Let's say I buy a painting. Should I pay income taxes every year while the value of the painting goes up? Let's say I have to do that.

But before I sell the painting, they find out it was taken from Jewish folks by the Nazis and I lose the painting altogether. Does the government refund my taxes and pay me interest for the decades over which I paid taxes?

This is silly.

Some investments don't pan out.

quote:

Rich people don't spend the same proportionately to live on as poor or middle class people.

quote:

Originally posted by LHeym500:
They spend more, but I doubt they spend more of their income.

It is obvious you just want to insulate Musk and investments while breaking the backs of wage earners.

quote:

Originally posted by ledvm:

quote:

Rich people don't spend the same proportionately to live on as poor or middle class people.

Correct. Rich spend way more…doing away with the regressive argument.

quote:

Originally posted by RolandtheHeadless:

quote:

Originally posted by ledvm:

quote:

Rich people don't spend the same proportionately to live on as poor or middle class people.

Correct. Rich spend way more…doing away with the regressive argument.

The key word you miss in my statement is "proportionately."

A rich guy might buy a Mercedes, while the poor guy settles for a used Toyota Tercel. The Mercedes costs more, but a higher percentage of the poor guy's income is spent on his Tercel.

quote:

Originally posted by jeffeosso:
Sorry guys, I think the VAT take is a disproportionate load, without some pretty great carve outs, on the lower end of the income -

Let's say a meal cost $15 ( i know, i am still living in 2019) and there's a 20% VAT on that - $3. The person making median income pays a higher percentage of their income on the meal --

yes, i get it, you can then say 'rich people eat $150 dollar meals, and the VAT would be $30, therefore they pay MORE in taxes" which would also be true -

but the proportion (percentage) of the income could be vastly different (allowing for the narrow mathematical case where it could be the same)

Since 1/2 of Americans pay no federal income tax, and that number (AGI) should be easy to derive, we could do a flat tax, on income afterwards

"to be "fair"" you would either have to have the same percent paid or amount paid - while I know it's unworkable, the "amount paid" is my personal, though non-starter, way to do this ..Why? McDonald's doesn't charge you a different price based on your income (directly) with the "zip code" taxes being real -

quote:

Originally posted by ledvm:
Your reasoning assumes that only necessary expenditures are made by both parties and that is simply not the case. The rich are going to spend more on unnecessary goods and services than necessary.

The fact that it is possible for them to not is what makes the arrangement fair.

quote:

Originally posted by crbutler:
I agree that if we transition to a VAT it would cause some significant slowdowns in the economy until folks got used to it. Investment vehicles would become transactions. Stock splits would become a purchase. Exercising a stock option would be taxible. You would probably see he stock market tank and all these mutual funds everyone is using for retirement would become worth a lot less.

Going to VAT means taxes are charged for the person buying your stock, so expect they will want you to take less to make up for that…

One thing I think you would see is a significant increase in unreported transactions/ barter.

Tipping would be payment for service and taxable.

I still think a flat tax with no exceptions is probably the fairest and most efficient way to pay for the government.

Trump’s tariff plan would not work so well- for the government. Yes it would bring back production to the US. It would also be the beginning of the end of free markets worldwide. Everyone else would start doing the same. So pretty soon China has little except a big army and no reason not to use it… and USG revenue is zeroed out because we are now only buying domestically.

Reset back to 1914.

quote:

I still think a flat tax with no exceptions is probably the fairest and most efficient way to pay for the government.

quote:

Originally posted by LHeym500:
Boys. I hate to say it, but I think we have arrived at a consensus.

I would use the taxation of stocks to leverage this resolution.

quote:

Originally posted by crbutler:
I agree that if we transition to a VAT it would cause some significant slowdowns in the economy until folks got used to it. Investment vehicles would become transactions. Stock splits would become a purchase. Exercising a stock option would be taxible. You would probably see he stock market tank and all these mutual funds everyone is using for retirement would become worth a lot less.

Going to VAT means taxes are charged for the person buying your stock, so expect they will want you to take less to make up for that…

One thing I think you would see is a significant increase in unreported transactions/ barter.

Tipping would be payment for service and taxable.

I still think a flat tax with no exceptions is probably the fairest and most efficient way to pay for the government.

Trump’s tariff plan would not work so well- for the government. Yes it would bring back production to the US. It would also be the beginning of the end of free markets worldwide. Everyone else would start doing the same. So pretty soon China has little except a big army and no reason not to use it… and USG revenue is zeroed out because we are now only buying domestically.

Reset back to 1914.