Which tax is the least bad?

[Hawker]

A sales tax hits the poor harder than the rich and the benefits of the public spending go to the rich more than the poor.  As such, a sales tax is just another form of redistribution.

I don't believe that sales tax hits the poor harder than the rich. The standard argument is that poor people must spend more of their income (percentage-wise) than rich people. While this might be true for people who can't earn enough to support themselves, it is not true for anyone else.

I'm not sure that you have thought that through.  Consider a working stiff on $100k per year and an executive on $50 million.

The worker will spend more of his income consumer goods than the executive because spending $1 million per week on consumer goods is difficult.  The rich gain more from public services than the working people in the form of an educated workforce and good commercial infrastructure.  Therefore a sales tax works as a form of redistribution from the working stiff on his $100k to the executive on his $50 million.  

The question is whether we need the tax system to help the guy on $50 million?

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[Khadaji]

A sales tax hits the poor harder than the rich and the benefits of the public spending go to the rich more than the poor.  As such, a sales tax is just another form of redistribution.

I don't believe that sales tax hits the poor harder than the rich. The standard argument is that poor people must spend more of their income (percentage-wise) than rich people. While this might be true for people who can't earn enough to support themselves, it is not true for anyone else.

I'm not sure that you have thought that through.  Consider a working stiff on $100k per year and an executive on $50 million.

The worker will spend more of his income consumer goods than the executive because spending $1 million per week on consumer goods is difficult.  The rich gain more from public services than the working people in the form of an educated workforce and good commercial infrastructure.  Therefore a sales tax works as a form of redistribution from the working stiff on his $100k to the executive on his $50 million.  

The question is whether we need the tax system to help the guy on $50 million?

How does it 'help' the rich to have a perfectly fair percentage of income paid in taxes?

I'm guessing that you believe taxing those who make more money a higher percentage of their income is 'fair'.

It clearly is not. Nor does it 'hurt' someone who's barely scraping by to pay the SAME percentage. It's perfectly fair by any reasonable standards.

A sales tax truly *IS* fair. You get taxed for your own voluntary purchases. And yes, those who are wealthier will end up paying more money.

[Hawker]

A sales tax hits the poor harder than the rich and the benefits of the public spending go to the rich more than the poor.  As such, a sales tax is just another form of redistribution.

I don't believe that sales tax hits the poor harder than the rich. The standard argument is that poor people must spend more of their income (percentage-wise) than rich people. While this might be true for people who can't earn enough to support themselves, it is not true for anyone else.

I'm not sure that you have thought that through.  Consider a working stiff on $100k per year and an executive on $50 million.

The worker will spend more of his income consumer goods than the executive because spending $1 million per week on consumer goods is difficult.  The rich gain more from public services than the working people in the form of an educated workforce and good commercial infrastructure.  Therefore a sales tax works as a form of redistribution from the working stiff on his $100k to the executive on his $50 million.  

The question is whether we need the tax system to help the guy on $50 million?

How does it 'help' the rich to have a perfectly fair percentage of income paid in taxes?

I'm guessing that you believe taxing those who make more money a higher percentage of their income is 'fair'.

It clearly is not. Nor does it 'hurt' someone who's barely scraping by to pay the SAME percentage. It's perfectly fair by any reasonable standards.

A sales tax truly *IS* fair. You get taxed for your own voluntary purchases. And yes, those who are wealthier will end up paying more money.

You seem confused.  A sales tax is a tax on money spent - its not a tax of a percentage of income.  

My objection is to stealth redistribution. If its the only tax system, which is the premise of the poll, then a sales tax is a method that redistributes to the wealthy.  

[odolvlobo]

A sales tax hits the poor harder than the rich and the benefits of the public spending go to the rich more than the poor.  As such, a sales tax is just another form of redistribution.

I don't believe that sales tax hits the poor harder than the rich. The standard argument is that poor people must spend more of their income (percentage-wise) than rich people. While this might be true for people who can't earn enough to support themselves, it is not true for anyone else.

I'm not sure that you have thought that through.  Consider a working stiff on $100k per year and an executive on $50 million.

The worker will spend more of his income consumer goods than the executive because spending $1 million per week on consumer goods is difficult.  The rich gain more from public services than the working people in the form of an educated workforce and good commercial infrastructure.  Therefore a sales tax works as a form of redistribution from the working stiff on his $100k to the executive on his $50 million.  
The question is whether we need the tax system to help the guy on $50 million?

Both are going to spend all of their money eventually whether it is on consumer goods or whatever. The tax itself is fair, though public spending may not be.

[Hawker]

A sales tax hits the poor harder than the rich and the benefits of the public spending go to the rich more than the poor.  As such, a sales tax is just another form of redistribution.

I don't believe that sales tax hits the poor harder than the rich. The standard argument is that poor people must spend more of their income (percentage-wise) than rich people. While this might be true for people who can't earn enough to support themselves, it is not true for anyone else.

I'm not sure that you have thought that through.  Consider a working stiff on $100k per year and an executive on $50 million.

The worker will spend more of his income consumer goods than the executive because spending $1 million per week on consumer goods is difficult.  The rich gain more from public services than the working people in the form of an educated workforce and good commercial infrastructure.  Therefore a sales tax works as a form of redistribution from the working stiff on his $100k to the executive on his $50 million.  
The question is whether we need the tax system to help the guy on $50 million?

Both are going to spend all of their money eventually whether it is on consumer goods or whatever. The tax itself is fair, though public spending may not be.

You are agreeing that the purpose of the tax is to finance public spending and you are agreeing that the rich benefit more than the middle class from public spending.  So a sales tax is a form of redistribution from the working stiffs to the wealthy.  

If its what you want, OK, but its important to be clear that what you are doing is advocating redistribution.  My personal view is that the tax should be just to finance public spending and that adding redistribution to the system needs to be justified.

[odolvlobo]

Both are going to spend all of their money eventually whether it is on consumer goods or whatever. The tax itself is fair, though public spending may not be.

You are agreeing that the purpose of the tax is to finance public spending and you are agreeing that the rich benefit more than the middle class from public spending.  So a sales tax is a form of redistribution from the working stiffs to the wealthy.  
I'm fine with that if its what you want.  But its important to be clear that what you are doing is advocating redistribution.

Taxing and spending are completely different. Having a sales tax doesn't prevent the government from spending all the money on poor people, for example.

[Hawker]

Both are going to spend all of their money eventually whether it is on consumer goods or whatever. The tax itself is fair, though public spending may not be.

You are agreeing that the purpose of the tax is to finance public spending and you are agreeing that the rich benefit more than the middle class from public spending.  So a sales tax is a form of redistribution from the working stiffs to the wealthy.  
I'm fine with that if its what you want.  But its important to be clear that what you are doing is advocating redistribution.

Taxing and spending are completely different. Having a sales tax doesn't prevent the government from spending all the money on poor people, for example.

True but such a system would not survive long. In a viable society, tax will support the overall economy, which has winners and losers, and of course that means a sales tax redistributes towards the rich.

People seem to be hung up on the "fairness" thing.  Fairness is not the only criterion for a tax - I believe the economic effects of the tax should be the first consideration.

The advantage of a property/resource tax is that it encourages economic development of assets and thus regardless of whether or not its "fair" it does create wealth for the whole society.  The disadvantage of a sales tax is that it discourages declared spending and as such makes economic development slower.  

[odolvlobo]

The advantage of a property/resource tax is that it encourages economic development of assets and thus regardless of whether or not its "fair" it does create wealth for the whole society.  The disadvantage of a sales tax is that it discourages declared spending and as such makes economic development slower.  

Sales tax encourages savings, which directly encourages production and therefore economic growth. Increased spending only indirectly contributes to economic growth.

[Hawker]

The advantage of a property/resource tax is that it encourages economic development of assets and thus regardless of whether or not its "fair" it does create wealth for the whole society.  The disadvantage of a sales tax is that it discourages declared spending and as such makes economic development slower.  

Sales tax encourages savings, which directly encourages production and therefore economic growth. Increased spending only indirectly contributes to economic growth.

Thats an interesting theory: http://en.wikipedia.org/wiki/Paradox_of_thrift

What you are talking about with savings is debt funded investment.  That's a good thing but a sales tax would make it less likely because it reduces sales.  A resource tax on the other hand encourages investment in assets and if there is no sales tax holding back the consumer, its a better way to grow your economy.

[Khadaji]

A sales tax hits the poor harder than the rich and the benefits of the public spending go to the rich more than the poor.  As such, a sales tax is just another form of redistribution.

I don't believe that sales tax hits the poor harder than the rich. The standard argument is that poor people must spend more of their income (percentage-wise) than rich people. While this might be true for people who can't earn enough to support themselves, it is not true for anyone else.

I'm not sure that you have thought that through.  Consider a working stiff on $100k per year and an executive on $50 million.

The worker will spend more of his income consumer goods than the executive because spending $1 million per week on consumer goods is difficult.  The rich gain more from public services than the working people in the form of an educated workforce and good commercial infrastructure.  Therefore a sales tax works as a form of redistribution from the working stiff on his $100k to the executive on his $50 million.  

The question is whether we need the tax system to help the guy on $50 million?

How does it 'help' the rich to have a perfectly fair percentage of income paid in taxes?

I'm guessing that you believe taxing those who make more money a higher percentage of their income is 'fair'.

It clearly is not. Nor does it 'hurt' someone who's barely scraping by to pay the SAME percentage. It's perfectly fair by any reasonable standards.

A sales tax truly *IS* fair. You get taxed for your own voluntary purchases. And yes, those who are wealthier will end up paying more money.

You seem confused.  A sales tax is a tax on money spent - its not a tax of a percentage of income.

I'm truly amused when people don't read what they respond to. I made precisely two points... the first was on the inherent unfairness of a progressive tax structure, the second point was the completely fair nature of a sales tax.

How you managed to conflate those two points tells me that you've not had your morning coffee before responding... 

My objection is to stealth redistribution. If its the only tax system, which is the premise of the poll, then a sales tax is a method that redistributes to the wealthy.  

I find that nonsensical, but I'm sure you'll be happy to explain.

But perhaps a definition of the word "fair" is in order first.

You apparently aren't using it in the dictionary meaning of the term.

[Hawker]

...snip...

My objection is to stealth redistribution. If its the only tax system, which is the premise of the poll, then a sales tax is a method that redistributes to the wealthy.  

I find that nonsensical, but I'm sure you'll be happy to explain.

But perhaps a definition of the word "fair" is in order first.

You apparently aren't using it in the dictionary meaning of the term.

Consider 2 women - one has inherited a factory and earns millions per week - the other sweeps the floor in the factory.  Taxes are used to provide a decent workforce and decent infrastructure.

If you levy a sales tax or poll tax, the poor woman pays a greater percentage of her income.

The rich woman has an indirect subsidy from having her workers educated by the state, her premises protected by the police and so on.  So the poor woman is paying a bigger percentage of her income and its being used to subsidise the rich woman.

That's redistribution.  If one person is getting a better return on her tax dollars than the other, the system is moving wealth from the other to her.  If what you want is redistribution that's fine.  But its important to be explicit and say so even if you think that its the fair way to do things.

The big question here is why is fairness the only criterion you are interested in?  If there is to be only one tax, it should be one that ensures the system works at its best potential.  A resource tax does just that - it encourages people to employ their assets.  

[Khadaji]

...snip...
[/quot]

I can well understand why you wanted to snip that. It's embarrassing to be caught trying to make an argument based on a flawed reading of what someone actually said.

My objection is to stealth redistribution. If its the only tax system, which is the premise of the poll, then a sales tax is a method that redistributes to the wealthy.  

I find that nonsensical, but I'm sure you'll be happy to explain.

But perhaps a definition of the word "fair" is in order first.

You apparently aren't using it in the dictionary meaning of the term.

Consider 2 women - one has inherited a factory and earns millions per week - the other sweeps the floor in the factory.  Taxes are used to provide a decent workforce and decent infrastructure.

If you levy a sales tax or poll tax, the poor woman pays a greater percentage of her income.

And the millionaire pays more TOTAL taxes... so what?

I note for the record that you seem unwilling to provide a definition of "fair". I suspect that you know that progressive taxation is NOT fair under any ordinary definition of the word.

The rich woman has an indirect subsidy from having her workers educated by the state,

Not the function of the state. Indeed, for thousands of years, government had no stake in public education.

her premises protected by the police and so on.

The police also protect the poor woman.

  So the poor woman is paying a bigger percentage of her income and its being used to subsidise the rich woman.

Nonsense. The millionaire is paying in TOTAL taxes far more than the worker ever will.

That's redistribution.

Yep... it is... you just have the wrong direction.

If one person is getting a better return on her tax dollars than the other, the system is moving wealth from the other to her.

Nope... there's no "return" on her tax dollars. The tax dollars had NOTHING WHATSOEVER to do with the creation of that wealth. You simply wish to punish the rich for their exceptional ability to help more people.

If what you want is redistribution that's fine.  But its important to be explicit and say so even if you think that its the fair way to do things.

I'm amused that you think I'm in favor of tax redistribution when I'm arguing for the ONLY system that does not do this.

The big question here is why is fairness the only criterion you are interested in?

It's perhaps just as important to note that you are not interested in a fair system.

If there is to be only one tax, it should be one that ensures the system works at its best potential.  A resource tax does just that - it encourages people to employ their assets.

No, your proposal punishes people for employing their assets. You wish to take a greater percentage of income away from those who have proven their ability to help more people. That's punishment.

Here in the U.S., close to half of the people pay no federal taxes at all.

If 'fair' isn't the criteria you want to use... why not name it?

[Hawker]

Khadaji - in the real world, the state does provide an educated workforce and commercial infrastructure that will give the wealthy woman a better return on her taxes if the only way of raising tax is a sales tax.  To argue for a tax system on the basis that you don't think the state should provide education is to ask us enter a parallel universe.  

You asked what I think a fair system would be?  In a democracy, I think a system that is has no impact on the spread of wealth and power in society is fair.  It doesn't matter if people make huge amounts of money or inherit it.  It stinks if the tax system gives it to them just because they were born in the right place.  That is my objection to ideas like flat taxes and sales taxes - they give a much bigger return on tax paid to those who need an educated workforce and a well run economy.

[Khadaji]

Khadaji - in the real world, the state does provide an educated workforce and commercial infrastructure that will give the wealthy woman a better return on her taxes if the only way of raising tax is a sales tax.  To argue for a tax system on the basis that you don't think the state should provide education is to ask us enter a parallel universe.

And yet, people became wealthy thousands of years ago, with no public education system whatsoever.

You asked what I think a fair system would be?

Until you define the term "fair" - we won't be speaking of the same topic.

In a democracy, I think a system that is has no impact on the spread of wealth and power in society is fair.

Then you aren't in favor of progressive tax systems... good to see you agree with me.

It doesn't matter if people make huge amounts of money or inherit it.  It stinks if the tax system gives it to them just because they were born in the right place.  That is my objection to ideas like flat taxes and sales taxes - they give a much bigger return on tax paid to those who need an educated workforce and a well run economy.

Oops... I guess you really didn't mean what you said. You ARE in favor of a taxing system that inhibits the free growth of wealth & power.

[Hawker]

Khadaji - in the real world, the state does provide an educated workforce and commercial infrastructure that will give the wealthy woman a better return on her taxes if the only way of raising tax is a sales tax.  To argue for a tax system on the basis that you don't think the state should provide education is to ask us enter a parallel universe.

And yet, people became wealthy thousands of years ago, with no public education system whatsoever.

You asked what I think a fair system would be?

Until you define the term "fair" - we won't be speaking of the same topic.

In a democracy, I think a system that is has no impact on the spread of wealth and power in society is fair.

Then you aren't in favor of progressive tax systems... good to see you agree with me.

It doesn't matter if people make huge amounts of money or inherit it.  It stinks if the tax system gives it to them just because they were born in the right place.  That is my objection to ideas like flat taxes and sales taxes - they give a much bigger return on tax paid to those who need an educated workforce and a well run economy.

Oops... I guess you really didn't mean what you said. You ARE in favor of a taxing system that inhibits the free growth of wealth & power.

If that growth in wealth is achieved by redistribution through the tax system, there has to be a very good reason for it.  I don't see that there is a good reason to redistribute towards the wealthy so naturally I oppose any tax system that does just that.

In any case, a sales tax does not encourage the use of assets.  A resource tax does.  On that basis alone, its a no brainer as to which is the better tax.

[Khadaji]

Khadaji - in the real world, the state does provide an educated workforce and commercial infrastructure that will give the wealthy woman a better return on her taxes if the only way of raising tax is a sales tax.  To argue for a tax system on the basis that you don't think the state should provide education is to ask us enter a parallel universe.

And yet, people became wealthy thousands of years ago, with no public education system whatsoever.

You asked what I think a fair system would be?

Until you define the term "fair" - we won't be speaking of the same topic.

In a democracy, I think a system that is has no impact on the spread of wealth and power in society is fair.

Then you aren't in favor of progressive tax systems... good to see you agree with me.

It doesn't matter if people make huge amounts of money or inherit it.  It stinks if the tax system gives it to them just because they were born in the right place.  That is my objection to ideas like flat taxes and sales taxes - they give a much bigger return on tax paid to those who need an educated workforce and a well run economy.

Oops... I guess you really didn't mean what you said. You ARE in favor of a taxing system that inhibits the free growth of wealth & power.

If that growth in wealth is achieved by redistribution through the tax system, there has to be a very good reason for it.

You make a false statement without any citation or support, then conclude that your opinions on taxation are correct based on that false statement.

Progressive taxation takes away the very capital needed by those who are best posed to create real wealth. You undoubtedly believe that the government can more effectively spend that capitol than the people who EARNED it.

I don't see that there is a good reason to redistribute towards the wealthy so naturally I oppose any tax system that does just that.

The wealthy do not benefit from progressive taxation, nor would their wealth be created hypothetically with a flat tax.

In any case, a sales tax does not encourage the use of assets.

Neither does a progressive tax. You wish to punish the very people who've DEMONSTRATED by their very wealth that they can use their assets most effectively.

A resource tax does.

No, it merely drains capitol from the very people who've proven that they can make the most effective use of it.

On that basis alone, its a no brainer as to which is the better tax.

A conclusion based on faulty data will rarely be accurate.

[Hawker]

Google "straw man" - I never proposed a progressive taxation system so need not defend one.

[Khadaji]

Google "straw man" - I never proposed a progressive taxation system so need not defend one.

If you have no interest in taxing a millionaire at a higher rate than you do his janitor, then we agree.

[odolvlobo]

Hawker,

You seem incapable of distinguishing between taxation and spending. The collection of taxes is independent of the distribution of benefits. As I already pointed out, whatever you consider as equitable is possible with a sales tax.

I think it makes more sense to consider the economic ratifications of the tax system, and the social aspects of the spending.

[Khadaji]

Hawker,

You seem incapable of distinguishing between taxation and spending. The collection of taxes is independent of the distribution of benefits. As I already pointed out, whatever you consider as equitable is possible with a sales tax.

I think it makes more sense to consider the economic ratifications of the tax system, and the social aspects of the spending.

A good point... collection is totally and completely separate from spending.

And you are certainly correct that a sales tax is by far the fairest tax there can be. It's almost COMPLETELY voluntary. If you don't want to pay taxes, don't buy anything.

And millionaires certainly spend more on 'things' than a janitor does.