Author Topic: Question on Changing Taxes  (Read 731 times)

Gotera

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Question on Changing Taxes
« on: April 23, 2018, 01:19:55 PM »
I've heard arguments against income taxes, stating that a man should be allowed his full income, and not have a portion taken by a state. So that the state wouldn't lose funding, would it be any more beneficial or detrimental if income tax was removed and in it's place, a larger sales tax was enforced?

JLee

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Re: Question on Changing Taxes
« Reply #1 on: April 23, 2018, 01:36:01 PM »
Plenty of states don't have income taxes.  Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming..and NH/TN don't tax wage income either.

Sibley

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Re: Question on Changing Taxes
« Reply #2 on: April 23, 2018, 03:11:04 PM »
There are a variety of ways to replace the income tax:

Sales tax
VAT
Property taxes
Estate (death) taxes
Charging for services

Each have their pros and cons. I find I'm more concerned with the expenditure side of the equation - if the government is appropriately spending and managing the funds in takes in, then I'm more likely to be satisfied with whatever method is in place. That includes a lack of (or robust prosecution of) corruption and graft.

robartsd

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Re: Question on Changing Taxes
« Reply #3 on: April 23, 2018, 03:35:38 PM »
The big tax in the US for most is Federal Income Tax.

One problem with replacing income tax with sales tax is that income tax currently is progressive (you pay more taxes as a percentage of income the more money you make). Sales tax is flat (you don't pay a higher/lower sales tax rate based on how much you buy). This would be a problem for the poor and a boon to high earners.

I'd prefer taxes based on an attempt to account for externalities (like pollution), but I think income tax is better than sales tax as a primary funding source for government.

YttriumNitrate

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Re: Question on Changing Taxes
« Reply #4 on: April 24, 2018, 08:41:35 AM »
The big tax in the US for most is Federal Income Tax.
Don't you mean payroll tax? It wasn't until getting into the six figure range that my federal income tax exceeded FICA, and then there's this.

BTDretire

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Re: Question on Changing Taxes
« Reply #5 on: April 24, 2018, 04:03:38 PM »
The transistion would be hell.
If we went to a sales tax or VAT, what about all the regular saving or Roth accounts that taxes already been paid on. Should you be forced to pay again, what's the fix.
  The "Fair Tax" overcomes the progressive problem by sending everyone a check for the amount of sales tax on $40k or whatever amount they decide on. And then everyone pays the full sales tax amount.
 Just hope we can avoid income taxes and a VAT tax.

Maccountant

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Re: Question on Changing Taxes
« Reply #6 on: April 24, 2018, 07:57:01 PM »
@ YttriumNitrate  - Payroll tax funds social security and medicare. It's not a revenue source in the sense the Federal Government can do what it pleases with funds collected via payroll tax.

Federal Income Tax on the other hand is all fair game

robartsd

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Re: Question on Changing Taxes
« Reply #7 on: May 07, 2018, 10:23:50 AM »
The transistion would be hell.
If we went to a sales tax or VAT, what about all the regular saving or Roth accounts that taxes already been paid on. Should you be forced to pay again, what's the fix.
  The "Fair Tax" overcomes the progressive problem by sending everyone a check for the amount of sales tax on $40k or whatever amount they decide on. And then everyone pays the full sales tax amount.
 Just hope we can avoid income taxes and a VAT tax.
I could see a sales tax with a fixed universal refund amount working OK at overcoming the progressive vs. flat tax problem if the refund was made as a monthly payment rather than annually. If we did switch over to a sales tax instead of income tax, there could be a special refund that you could apply for based on Roth distributions.