Should Taxes Be Cut? Just Asking?

[Eagle43]

This is an example I would use, years ago. Concerning taxes' relevance. It doesn't matter at what level, federal, state, or local, the government is waiting.

Say, a loaf of bread costs a dollar. When it was seed, it was taxed. Whoever sold the seed to the farmer had his labor, his product, etc. taxed. The farmer's land, equipment, gasoline, fertilizer, and labor all were taxed. After it was reaped, it was sent to a bakery, where everybody and everything there was taxed. Then a middleman got involved, and trucked it to the various supermarkets around the country. At each interval, the government taxed everything. The labor, the equipment, the utilities, the output, everything. Then you bought that loaf of bread. Of course, you bought it with wages, that were taxed, drove to the store in your car which was taxed, using gasoline that was taxed, and it was sold to you in a store where the employees and the owners all were taxed. You got rewarded by having to pay another tax just to buy that loaf of bread.

That loaf of bread probably should cost 25 cents. Just remove the government who contributed nothing or very little (roads, quality standards). Yet the government won at every transaction. And politicians, of all parties, complain if you want to cut taxes. Why? So they can use your money to control you, to dole it out to you provided you acquiese to whatever they want.

My example of the loaf of bread can apply to anything. TVs, books, cars, medicine, Walmart, anything. Just go back to the basic material, say the steel in the car, and count the number of times the government taxes until you buy it and even after you buy it. It's like a value added tax. You add value to the raw material(s) and the government adds a tax.

Am I wrong here? Is all of this taxation necessary to have good government?

 

[TromboneAl]

Yes, you're right. It's crazy to have so many different types of taxes. Income, property, sales, gasoline, DMV, liquor, etc.

You're also right that it's that way because the government wants to influence our behavior.

But it's also that way partly because people, and governments in particular, always make things more complicated than necessary.

 

[Nords]

Am I wrong here?  Is all of this taxation necessary to have good government?

Apparently so, or Al Gore wouldn't have been able to use our tax dollars to invent the Internet and this discussion board!

It'd be interesting to see a study comparing country's tax rates (what they actually collect, not what they wish they got) to some standardized definition of their level of civilization. I suspect that most of us would happily pay taxes if we didn't see so much waste & inefficiency with our money.

Some things just can't be done well by private industry: Police forces, fire departments, libraries, infant vaccines, orphan drugs, R&D, the arts, foreign relations, and the armed forces. As an example of the first two, consider Disneyland's & DisneyWorld's lack of disclosure in the "customer service" afforded by their privatized forces... and then imagine if Michael Eisner could have six months in charge of the U.S. Air Force.

 

[Cut-Throat]

Am I wrong here? Is all of this taxation necessary to have good government?

Since our government is currently spending much more than it takes in, it would seem logical to me that you first have to cut spending to cut taxes.

Reagan and Bush Jr. do not believe this however, even though Bush Sr. called it 'voodoo economics'.

So the question that you should be asking is "what part of government spending do you want to cut?" - the simple answer given by conservatives for the last 30 years always has been "Welfare!" - However this is the answer given by the math challenged and a lot of wishful un-thinking.

So what do you want to cut? - My Social Security or your Military Pension?

 

[Bruce]

I think you are asking the question the wrong way; what government spending would you want to do away with? Most of the things that the government provides are demanded by the people;

Defense, education, police, fire, roads, highways, etc.

I agree taxes are too high; but they cannot be cut as much as people think because there are some things that are needed by the people to function;

I am a liberterian; so I am for smaller government and smaller taxation; there are just some things that only the government can provide cost effectively (like defense)

 

[retire@40]

It's crazy to have so many different types of taxes.  Income, property, sales, gasoline, DMV, liquor, etc.

You're also right that it's that way because the government wants to influence our behavior.

Influencing behavior is a major reason.  There have been all kinds of new tax credits created because of Katrina.  Without the tax being there in the first place, there would wouldn't be a chance to help people and companies with tax credits.

Also, having so many different types of taxes isn't so crazy.  It's done to broaden the tax base.  If you only had a gasoline tax, for example, you would only be taxing those who use gasoline.  Having multiple sources of tax streams helps the economy absorb taxes much better and helps spread the tax burden more evenly.

 

[ERD50]

It's crazy to have so many different types of taxes. Income, property, sales, gasoline, DMV, liquor, etc.
......always make things more complicated than necessary.

How about a way to simplify taxes that is not quite as dramatic as any of the fair/flat tax proposals? And that is, why not just eliminate corporate taxation? After all, the tax is just reflected in the consumer price of the product. Worse yet, the cost of compliance (accountants, lawyers) and avoidance (corps paying accountants and lawyers to figure out how to minimize the tax hit) just gets passed on to the consumer also.

So, in the long run, no corporate tax should lower total costs to consumers, and we could probably throw out 80% of the tax code. I guess a national sales tax could replace the lost tax revenue, but this would be more efficient than all these corporate tax laws, wouldn't it? Just X%, not much to it.

Cutting spending is probably a good idea, but a different topic.

-ERD50

 

[haha]

Influencing behavior is a major reason.  There have been all kinds of new tax credits created because of Katrina.  Without the tax being there in the first place, there would wouldn't be a chance to help bribe people and companies with tax credits.

Ha

 

[sgeeeee]

. . .
Am I wrong here?  . . .

Yes.  You are wrong.  

Taxes are too low.  This is clear since we are not paying our bills and taxes are the income portion of the equation.  Talking about reducing taxes while we are spending more than we bring in is lunacy.  The only real question is, which taxes are too low?  We just reduced the taxes on the wealthiest people in the country by an amount that would have paid off the social security future shortfall.  That's where I would start.  Those taxes are too low.  There are others too.

Or you could argue that spending is too high.  That is clearly a realistic option.  As soon as someone actually cuts spending we can seriously entertain a question about whether taxes are too high.

 

[MJ]

A small start would be to cut the health and retirement benefits Congress gets even though we all know they deserve it.


Fat chance.

MJ

 

[Marshac]

Taxes are too low.  This is clear since we are not paying our bills and taxes are the income portion of the equation.  Talking about reducing taxes while we are spending more than we bring in is lunacy.  The only real question is, which taxes are too low?  We just reduced the taxes on the wealthiest people in the country by an amount that would have paid off the social security future shortfall.  That's where I would start.  Those taxes are too low.  There are others too.

I agree. It's fine if folks want to lower taxes, but they must also be willing to accept lower levels of service- this could mean more tole booths on the roads, more use fees similar, etc. What amazes me is that Republicans for the past few years have talked about 'smaller government', and then implement many of the keynesian economic plolicies traditionally associated with the left. You can't cut taxes AND increase spending at the same time- if you could, countries like Norway would implement their welfare state AND have a low tax burden..... they, unlike us, understand that there is no free lunch.

IMO deficites can be good, but how we're using them is bad.

Good uses-
1. Fund a war
2. Fund large public works projects (transportation, energy, etc)

Poor uses-
1. Prop up current accounts
2. Pay for ongoing services such as medicaid (#1, just stated differently)

If we as a society wish to provide services like healthcare, public pensions, decent transportation, 'homeland security', then we need to take a big step back and figure out where our priorities really are.... I have nothing against any of the above programs, but believe that it's wrong to pass the buck to future generations.

 

[HFWR]

On the tax side: tax too much, and you slow the economy and siphon capital that could be used more productively. Tax too little, and you can't fund "vital" services, or you run deficits. I vaguely recall the number 17% being considered optimum, but by whom I don't recall...

On the spending side: per Al Greenspan, the level of social services/safety net is a political/societal decision, in many respects, not an economic one, per se. More govt services/safety net, less overall economic growth, though possibly more stability, and less inequality.

Deficit spending is useful in certain circumstances, as enumerated earlier, but they should be limited to economic "emergencies", much as the SPR should be used only for emergencies; i.e. war and/or extreme economic upheaval.

Under most circumstances, though, spending should equal revenue, or revenue should equal spending. I'm certain spending could be cut in many places, and only a few special interests would even notice...............

IMHO... 8)

 

[Mr._johngalt]

Yes.  You are wrong.  

Taxes are too low.    As soon as someone actually cuts spending we can seriously entertain a question about whether taxes are too high.

Are you trying to be sarcastic? No one is going to do any serious spending cuts
(at least not the 2 main parties). Given that, if you really believe
"Taxes are too low." Well............you need more help than you can find on this board.

JG

 

[sgeeeee]

Are you trying to be sarcastic?  No one is going to do any serious spending cuts
(at least not the 2 main parties).  Given that, if you really believe
"Taxes are too low."  Well............you need more help than you can find on this board. 

JG

Your ability to be adamantly irrelevant is amazing.

 

[Mr._johngalt]

Your ability to be adamantly irrelevant is amazing.   

Yep, it's a gift

JG

 

[xavion]

I think you are asking the question the wrong way; what government spending would you want to do away with?  Most of the things that the government provides are demanded by the people; .....

....I am a liberterian; so I am for smaller government and smaller taxation; there are just some things that only the government can provide cost effectively (like defense)

Well said!  Government spending cuts should be fairly easily to implement... too bad almost all politicians are afraid to stand up to special interest groups because they care more for their own re-election than the well being of the nation.  Cutting pork projects and the thousands upon thousands of BS executive/managerial positions in govt. that are given as rewards to faithful lackeys would be another good step...

 

[Marshac]

too bad almost all politicians are afraid to stand up to special interest groups because they care more for their own re-election than the well being of the nation. 

Perhaps we need term limits.... one term.

 

[laurence]

Ah, term limits. I'm not neccesarily opposed, but you would need the limit to be a nationwide law, otherwise states w/o limits would begin to gain undo influence at the expense of states with them (the chair recognizes the senior senator from Idaho, chair of every important comittee due to his 30 years of tenure). Also, I would suspect you would just shift more power to the lobbyists/appointent officials, etc. much like the Eunichs who controlled access to the Chinese Emporer.

 

[MasterBlaster]

I vaguely recall the number 17% being considered optimum, but by whom I don't recall...

Optimum taxation : How many feathers can you pluck without killing the bird ?

From what I've read optimum government take occurs at a total taxation of around 35-40 percent. This is for all government taxation at all levels of local, state, and federal governemnt (income, property, sales, parking fees, excess profits taxes etc).

When taxes go up the expectation is for increased government revenue yet the oposite may occur as the economy often retracts and actual government revenue goes down.  It is my understanding that current total tax rates are above opimum levels for total government revenue.

This concept has some interesting consequences, So for example if we raise payroll taxes to fund social security shortfalls will that stiffle the economy and lessen the income tax take for a net loss of revenue ?

In the long run government spending that is beyond the plucked bird limit is un-sustainable regardless of how much taxes go up.

The 17 percent that you refered to was Steve Forbes concept for a national sales tax to replace national income taxes.  

<A government which robs Peter to pay Paul, can always count on the support of Paul. – George Bernard Shaw>

 

[ronin]

Term limits seems to cause the really persistant honey bees to hop from flower to flower leaving us with naive, ineffective rookie legislators who need cram in all the lobbyists pollen they can in a single term.

 

[Marshac]

Eunichs who controlled access to the Chinese Emporer.

Not worth the price IMO...

 

[Marshac]

Term limits seems to cause the really persistant honey bees to hop from flower to flower leaving us with naive, ineffective rookie legislators who need cram in all the lobbyists pollen they can in a single term.

If everyone was a rookie, you wouldn't have all the n00bs trying to act and play like the 'big boys'