Answer to a failing economy: FAIR TAX!

Dixie said:
*sigh* Why is it, you constantly run to examples of what "other countries" do? How can we LEAD if we have our noses up the ass of another country, trying to emulate them? What is your fascination with the smell of French ass?
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I'm just pointing out, taxation competes in a globalized world. If everyone else has a 20% corporate tax and we have a 0% corporate tax, corporations will of course want to locate here. If everyone has a 0% corporate tax, though, we gain as much economic benefit from a capital inflow perspective (essentially the benefit you have stated in numerous posts) as in a world where everyone has a 20% tax. If we LEAD them into a 0% tax world, that's where it will be. And our individuals will have to pay more to make up for that fact.
 
RStringfield said:
Dixie is overstating the impact that the tax code has on earning extra income. But, at 70% rates his examples become very real. Capital flight is not the only problem then and maybe not even the biggest problem.

If one makes 200/hr and pays 35% taxes on the last dollar earned, the disincentive is fairly small. They are still making $130/hr after taxes. Raise that to 70% and they are only making $60/hr. Many will just take a vacation.
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You are missing the big picture here. First of all, rich people don't have to earn incomes, they already have the bases covered, they don't need to earn another penny as long as they live, and they can live fat and happy on some island in the Bahamas! Now, they CAN invest their money into new ventures... if they do it here, they can expect to fork over 35% of whatever they happen to make, maybe more if people like Waterhead are in charge! OR... they can invest their money into new ventures in Dubai, where they don't pay a corporate tax and can keep all they make! So they have options, and currently, the option of investing in the US, is foolish. They are better off to just enjoy the weather in the Bahamas and not worry about earning a dime! I had rather they be investing in new ventures in the US, creating new jobs, growing and making tons of money, because that means people are working and making tons of money and spending it to make him tons, and with the Fair Tax, the government is prospering in the process!
 
Bittermark said:
At the very least, the federal government needs take a trillion dollars out of the economy to fund it's discretionary spending. Whether you take that through a consumption tax or an income tax, it's going to have a significant economic impact. One is not largely better than the other. The main economic impact is always going to be from the trillion dollars sucked out of the economy.
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Well if you are getting a trillion dollars from consumption tax, it means people are spending a LOT of money, and that is GOOD for the economy! Right?
 
Dixie said:
The "strain" on millionaires is NOT the issue! $350,000.00 will go a LONG way in Dubai, where there is no corporate tax!
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I'm confused. Are we talking about business or individuals here?

Dixie said:
IF you were wealthy, and wanted to make more money, why the hell would you invest in the US and pay the government 35% of what you make, when you could do the same deal in Dubai and NOT pay the 35%?

What exact same deal could you do in Dubai?

And, anyway, are you talking about the corporate tax? If they wanted to do deals, they'd probably be paying through our capital gains or corporate income tax, which is not at 35%. Even if you did make 350k a year, you'd only be paying 100k of that at the 35% rate, not all of it.

Dixie said:
What would possess you to do that? You just LOVE throwing your money away because you want so badly to provide free health care to 20 million illegal aliens? So you can line the pockets of Democrat cronies and their lobbyist friends? Maybe so you can perpetuate the illusion of the Social Security system actually being solvent for another year or two? Hell, I can think of a lot better ways to spend $350,000.00!
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1. The HCR reform doesn't provide HC to illegal aliens.
2. Earmarks don't make up a substantial portion of the budget.
3. SS is solvent for the next few decades.
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Bittermark said:
I'm just pointing out, taxation competes in a globalized world. If everyone else has a 20% corporate tax and we have a 0% corporate tax, corporations will of course want to locate here. If everyone has a 0% corporate tax, though, we gain as much economic benefit from a capital inflow perspective (essentially the benefit you have stated in numerous posts) as in a world where everyone has a 20% tax. If we LEAD them into a 0% tax world, that's where it will be. And our individuals will have to pay more to make up for that fact.
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But everybody is not going to reduce their corporate tax to 0% And even IF that happened one day.... where would you rather put your corporation? Communist China? Pakistan? India? I mean, we DO have a little "advantage" over most of the world, all other factors being equal!
 
Bittermark said:
Yeah, 70% was a bit of an extreme example to pick. The taxation policies of the 40's-70's were more of a maximum wage policy than anything else. Again, only something you can get away with when your economy isn't globalized.
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I think anything over 50% is far too high. It's not so much that the $200/hr guy is only taking home $60. That is still pretty good money. But the idea that the government gains more than him is enough to make him say f it, and go on vacation.
 
RStringfield said:
I think anything over 50% is far too high. It's not so much that the $200/hr guy is only taking home $60. That is still pretty good money. But the idea that the government gains more than him is enough to make him say f it, and go on vacation.
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Except you can't say "F" it and go on vacation when you have a $500K mortgage, 2 car payments, 3 kids college funds and orthodontia bills.
 
RStringfield said:
I think anything over 50% is far too high. It's not so much that the $200/hr guy is only taking home $60. That is still pretty good money. But the idea that the government gains more than him is enough to make him say f it, and go on vacation.
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The guy making 250k a year is probably the sofware engineer, or some other productive person. One of the things I've never liked about the personal income tax. The people who get rich off of simply owning things, and don't personally contribute much to society, pay a much lower rate. And that's almost all of the rich today.

And it's difficult to rectify that in a globalized world. It's hard to pick up and move to a different country to avoid paying 40% taxes. It's very easy to just invest somewhere else.
 
Dixie said:
But everybody is not going to reduce their corporate tax to 0%
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It's one thing if a nation like Dubai or Estonia does away with the corporate income tax. They essentially become tax havens pursuing begger-thy-neighbor economic.

It's an entirely different matter if the biggest economy in the world does it. Other nations will be practically forced to get rid of their income taxes if we do.
 
Mott the Hoople said:
Except you can't say "F" it and go on vacation when you have a $500K mortgage, 2 car payments, 3 kids college funds and orthodontia bills.
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You can do better than that. A 500k mortgage would give that person a payment to income ratio of less than 10%. They should be able to afford that easily.

You are basically arguing that the wealthy do not have greater financial security. If that is true, then taxing them at ridiculously high rates seems even less fair.
 
RStringfield said:
You are missing the point. You can no more pass on the extra taxes due to the accumulation of unproductive capital than you could pass on any other cost.

Corp A is worth $6 million and has a tax liability of, say, $120K.

Corp B is worth $5 million and has a tax liability of $100K.

They are in all other respects equal. They both produce a million widgets a year. All other costs are the same.

Corp A can not pass on the extra $20k because it is not a cost shared by Corp B. If they raise their price over that of Corp B they lose sales. They can only pass on accumulations of wealth that make them more productive or efficient.
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No. You are missing the point.

Point 1. I agreed it was a good idea so long as it was not the sole taxation.
Point 2. It absolutely doesn't matter if they "can" or "cannot" because if they cannot pass the cost of doing business into the product, they'll lose money and go out of business.

All corporate taxation is a form of regressive sales tax because the cost of doing business is always figured into the product. Always. If company A cannot be competitive because their competitor can price their product less than they can due to the taxation, they will simply close shop and move on.
 
Damocles said:
Point 2. It absolutely doesn't matter if they "can" or "cannot" because if they cannot pass the cost of doing business into the product, they'll lose money and go out of business.
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Or they'll just make a lower profit. Or they'll get rid of the unproductive capital by paying out dividends. Or they'll find a productive use for the capital. There are several other options, but they cannot simply pass on the added cost. If they go out of business due to inefficiency then that may be a good thing. Creative destruction.
 
RStringfield said:
Or they'll just make a lower profit. Or they'll get rid of the unproductive capital by paying out dividends. Or they'll find a productive use for the capital. There are several other options, but they cannot simply pass on the added cost. If they go out of business due to inefficiency then that may be a good thing. Creative destruction.
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What about them simply moving assets to other countries?

I would agree to a wealth tax in combination with several other small taxes. Having multiple taxes would mean one tax wouldn't be piling on all its negative effects on the economy all at once. Sort of like homogenization.
 
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