Direction of US Economy

[MasterBlaster]

OK - I stand corrected on the tax thing.

By the way as the article reads, most of the income is not capital gains but "carried interest" which is taxed the same as LT capital gains.

 

[James5v]

I still would like to see major changes in the tax code such as a consumer tax or at least a one page simple tax form but I don't think there is any chance this is going to happen?

 

[ladelfina]

It is acutally due to a very unfair tax law in the US. The upper 1 or 2 % of the population get away with very little taxes.

I would prefer some kind of user tax. The more you spend money the more you pay. Of course, I live a rather simple life without a SUV.

James, these two statements taken together make no sense; Google both 'progressive' and 'regressive' taxation.

Even if there were only a sales, or 'user', tax, it would still fall disproportionately on the large number of lower-income people who NEED (yes, need) to spend most of their income on immediate expenses like food, clothing, shelter, health care and utilitities. Higher-income people will still sock away anything beyond this, where that $ can grow and the profits be used to pay any future 'user' tax they may incur. You may personally benefit from this kind of scheme, as would I.. but I would be curious to see any argument that it's more "fair". It wouldn't be. You'd still have the scenario in which ever-richer billionaires pay very little and ever-declining tax as a percentage of their ever-increasing wealth (how much of a billion can you actually SPEND on consumable items?).

I look at it this way: SINCE the US is very free-spending on war and various industry subsidies and any number of other things, I think progressive taxation is just 'pay to play'. Who benefits MORE from the court system, the transportation system and the defense of our kinda-free market.. me, the individual? Or Wal*Mart heirs? [Keep in mind their 'associates' make below poverty-level wages and they are fobbed off on Medicaid.] Since Wal*Mart heirs gain big.. their percentage of paying to maintain the system should be AT LEAST the same percentage as anyone making $20k,or $200k.. The sad truth is that this doesn't happen. Local consumption taxes already take 5%, 8%, 12% or more.. not off the top of a regular person's salary, which would be bad enough.. but AFTER federal and state income taxes have been paid on those sums.

 

[MasterBlaster]

Of course, I live a rather simple life without a SUV.

Oh the deprivation that some people put themselves through just to be able to FIRE.

The horror, The horror...

 

[kombat]

I must say, the reader comments below the Warren Buffett article are even more disturbing than Buffett's gross misrepresentation of facts. It makes me a little nervous that there appears to be such a large component of society who would eagerly and without remorse raid my nest egg, just because I "have more than everyone else." I really hope these people never get enough political clout to actually effect any real change, as the resulting damage to the economy would be practically irreversible.

 

[James5v]

If there was a consumer tax, the income tax would have to be repealed. I am not enough of a student of such things to know if a consumer tax would be more or less costly to any specific socioeconomic group than what they are paying now. It would force various individuals such as drug dealers who are not paying now to pay taxes, but I'm sure it would create another undergound of people who would find a way to avoid the system. Whether or not this would increase the amount of overall received taxes for the country, I also do not know.

I guess, though complicating the picture, certain things could be excluded from these taxes such as staple food to provide for some of our basic needs and protect low income people. However, I have no idea how such a thing would work.

The latest proponent of this is Warren Buffet and I imagined he could address these type issues. I live a rather simple life thus, for my own personal situation, I believe I would fair better with a consumer tax but do not know how my low income neighbor might fair.

At the least though, I would like the tax code greatly simplied so it would be easy for such people as me to correctly pay my taxes.

And yes our President does like to spend money and has increased the government rather dramatically. I thought Republicans were susposed to be for small governemnt and fiscal restraint. We Libertairians certainly support such things.

 

[camberiu]

That is one of the reasons why I support Ron Paul. He would try to repeal the 16th amendment and end this income tax non-sense once and for all.

 

[ladelfina]

The horror, The horror...

masterblaster, touché!

James. you seem to be preoccupied with drug dealers and their expenditures.

Strangely (to me), you seem less concerned with the instability, degradation and social havoc they wreak, than with the fact that some of their subsequent purchases may evade the tax regime... (permit me to laugh ironically: ).

If one is concerned that drug dealers can concede themselves mega-mansions and cigarette boats., the point (IMHO) would be to target the illegal dealings/dealers themselves, beyond the outward trappings and tax implications.

 

[James5v]

Obviously, it does not looke like they are going to be successfull. The drug war began in the 1960's and it is certainly much easier to obtain drugs where I live than it was then. It seems when there is a market and a profit to be made, goods will be provided whether the government likes it or not.

I am simply saying a consumer tax would at least provide income to the government from these type people and also from the many self employed individuals who keep their two sets of books.

 

[Independent]

If there was a consumer tax, the income tax would have to be repealed. I am not enough of a student of such things to know if a consumer tax would be more or less costly to any specific socioeconomic group than what they are paying now. It would force various individuals such as drug dealers who are not paying now to pay taxes, but I'm sure it would create another undergound of people who would find a way to avoid the system. Whether or not this would increase the amount of overall received taxes for the country, I also do not know.

I guess, though complicating the picture, certain things could be excluded from these taxes such as staple food to provide for some of our basic needs and protect low income people. However, I have no idea how such a thing would work.

The latest proponent of this is Warren Buffet and I imagined he could address these type issues. I live a rather simple life thus, for my own personal situation, I believe I would fair better with a consumer tax but do not know how my low income neighbor might fair.

At the least though, I would like the tax code greatly simplied so it would be easy for such people as me to correctly pay my taxes.

And yes our President does like to spend money and has increased the government rather dramatically. I thought Republicans were susposed to be for small governemnt and fiscal restraint. We Libertairians certainly support such things.

This report isn't perfect President's Advisory Panel on Federal Tax Reform - Final Report - November 1, 2005, but it does have a pretty good overview of a lot of tax issues. It includes a significant section on simplifying the current income tax in Chapter 6. It also has two versions of consumption taxes - VAT in Chapter 8 and Retail Sales Tax in Chapter 9. One good thing about this group is that they actually try to make the numbers work. One bad thing is that their "mission" from Bush included maintaining some of the complicating features of our current system.

If you want a "progressive" sales tax, it seems most practical to simply rebate some fixed dollar amount to everyone. But the tax rates get so high that there is a lot of incentive to cheat. I don't think your drug dealers will pay a lot more than they do now - they'll simply pay cash to sellers who are comfortable breaking the law.

 

[Running_Man]

1. Oil prices are over $90.00 but gas prices do not reflect this increase. Why? Gasoline was actually in good supply in the United States so despite the fact that crude had gone up there were competitive pressures on the market for gasoline.

2. How bad is the banking system? The loans that have been made by the major banks that are a real problem. Since the banks were allowed to earn huge fees on off-balance sheet holdings risk was never a consideration. The eventual cost since this was never priced in the first place will not be known until totally unwound.. Estimates are increasing by tens of billions per week as the crisis unwinds. Banks are have been and will continue to be the worst investment vehicle until the entire process has unwound.

3. How does the average middle class person maintain his standard of living, i.e. two SUV’s, two children in high school, large house note, high gas prices, etc.? Home Equity loans

4. When will the deflation of house prices be reflected in the stock market? It is not the deflation of house prices but the destruction of the debt on those houses that will cause major interruptions in the stock market.

5. When or if all of the above create a Bear Market? Probably has already begun. If you look at a situation and say the collapse of the US dollar increase of oil to 90+, home prices declining and banks losing tens of billions on ill-conceived bank products and still see a market near all-time highs I reccomend selling. If the market were already down 40-50% and you see this news there is the good possibility those events are priced into the markets. There is so much faith in stock markets that noone sells anymore. The recent collapse of the US dollar has made the possibilty of an extremely rapid decline in the stock market. People forget that in 1969 Warren Buffet really made his mark by selling all his stocks and saying the market was overpriced and coming back 5 years later and saying he felt like a kid in a candy store with the average price down more than 60 percent.

I would really appreciate some feedback for I am at a lost. I am only 20% invested in mutual funds and have been slowing moving out of the stock market during this year. I am retired and have been decreasing my risk but do not like the poor 4.5% return but at least I’m not loosing money.

Thanks,

James[/quote]

 

[ERD50]

This report isn't perfect President's Advisory Panel on Federal Tax Reform - Final Report - November 1, 2005, but it does have a pretty good overview of a lot of tax issues. It includes a significant section on simplifying the current income tax in Chapter 6.

Independent, thank you for linking to that document. I just started reading it, and it is really a breath of fresh air. I figured the people in washington were actually ignorant of all these issues. Apparently, they are not. They seem to hit most of my hot buttons.

Unfortunately, that does not mean they are going to act on this info, but maybe there is a small thread of hope?

-ERD50

Some highlights of the ex summ (edited and emph by me):

• We have lost sight of the fact that the fundamental purpose of our tax system is to raise revenues to fund government.

• Tax provisions favoring one activity over another or providing targeted tax benefits to a limited number of taxpayers create complexity and instability, impose large compliance costs, and can lead to an inefficient use of resources.

• The current tax system distorts the economic decisions of families and businesses, leading to an inefficient allocation of resources and hindering economic growth.

• The complexity of our tax code breeds a perception of unfairness and creates opportunities for manipulation of the rules to reduce tax. The profound lack of transparency means that individuals and businesses cannot easily understand their own tax obligations or be confident that others are paying their fair share.

• The tax system is both unstable and unpredictable. Frequent changes in the tax code, which often add to or undo previous policies, as well as the enactment of temporary provisions, result in uncertainty for businesses and families.

• The objectives of simplicity, fairness, and economic growth are interrelated and, at times, may be at odds with each other. Policymakers routinely make choices among these competing objectives, and, in the end, simplification is almost always sacrificed.

 

[dumpster56]

Runningman


3. How does the average middle class person maintain his standard of living, i.e. two SUV’s, two children in high school, large house note, high gas prices, etc.? Home Equity loans


That is so darn sick!! Home equity loans people really are living on the edge.