Author Topic: Article on Tax Reform  (Read 1231 times)

NaturallyHappier

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Article on Tax Reform
« on: September 12, 2017, 02:00:07 PM »
I found this to be a very good article on taxation and tax reform.  It does a nice job explaining the tensions between reducing or eliminating the taxes on investments (dividends and capital gains) to decrease the taxes on corporations and investors, and reducing taxes for wage earners.  Which one stimulates the economy?

https://a.msn.com/r/2/AArNIjE?m=en-us


Slow2FIRE

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Re: Article on Tax Reform
« Reply #1 on: September 12, 2017, 03:04:32 PM »
Why not eliminate all corporate taxes.  Period.

Then, any way in which value or wealth is transferred from a corporation to an individual (or group of individuals) be taxed at income tax rates.  Dividends, Long Term Capital Gains, Salary, Stock Options, company vehicle, company housing, etc.

Now, adjust the personal income tax rates downward to meet revenue neutral status (corporate taxes are a smaller slice of the pie, but taxing all transfers of wealth and value from a corporation to an individual would likely be so large a source of tax dollars that overall income tax rates could probably drop for every W-2 employee).

GetItRight

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Re: Article on Tax Reform
« Reply #2 on: September 12, 2017, 04:03:10 PM »
All taxes harm individuals and society as a whole. Reduction in any tax will stimulate the economy. Which has the greatest effect? I don't know. It's not the government's job to stimulate the economy though.

Personally I'd lean towards eliminating hidden taxes first. Every tax should be a clearly visible line item to those paying it. The payroll tax is a goodexample, the half the employer is charged but the employee actually pays via lower wages.

Drifterrider

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Re: Article on Tax Reform
« Reply #3 on: September 14, 2017, 01:06:34 PM »
Why not eliminate all corporate taxes.  Period.

Then, any way in which value or wealth is transferred from a corporation to an individual (or group of individuals) be taxed at income tax rates.  Dividends, Long Term Capital Gains, Salary, Stock Options, company vehicle, company housing, etc.

Now, adjust the personal income tax rates downward to meet revenue neutral status (corporate taxes are a smaller slice of the pie, but taxing all transfers of wealth and value from a corporation to an individual would likely be so large a source of tax dollars that overall income tax rates could probably drop for every W-2 employee).

I second.  The owner's (stockholders, ya know the ones who invest in mutual funds and stocks) are being double taxed on their earnings.  Surprisingly enough, a lot of them don't realize that. 

Milizard

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Re: Article on Tax Reform
« Reply #4 on: September 14, 2017, 01:35:03 PM »
Why not eliminate all corporate taxes.  Period.

Then, any way in which value or wealth is transferred from a corporation to an individual (or group of individuals) be taxed at income tax rates.  Dividends, Long Term Capital Gains, Salary, Stock Options, company vehicle, company housing, etc.

Now, adjust the personal income tax rates downward to meet revenue neutral status (corporate taxes are a smaller slice of the pie, but taxing all transfers of wealth and value from a corporation to an individual would likely be so large a source of tax dollars that overall income tax rates could probably drop for every W-2 employee).

Why not eliminate all personal income taxes, period?  The federal government was originally supposed to be funded via tariffs and taxes on businesses.  Why not go back to that?

bacchi

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Re: Article on Tax Reform
« Reply #5 on: September 14, 2017, 01:53:43 PM »
Why not just eliminate all government? We can build our own roads if we really want them. We can put together our own militia if it's that important.


A Definite Beta Guy

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Re: Article on Tax Reform
« Reply #6 on: September 14, 2017, 01:59:47 PM »
Why not eliminate all corporate taxes.  Period.

Then, any way in which value or wealth is transferred from a corporation to an individual (or group of individuals) be taxed at income tax rates.  Dividends, Long Term Capital Gains, Salary, Stock Options, company vehicle, company housing, etc.

Now, adjust the personal income tax rates downward to meet revenue neutral status (corporate taxes are a smaller slice of the pie, but taxing all transfers of wealth and value from a corporation to an individual would likely be so large a source of tax dollars that overall income tax rates could probably drop for every W-2 employee).

Why not eliminate all personal income taxes, period?  The federal government was originally supposed to be funded via tariffs and taxes on businesses.  Why not go back to that?


There's a difference between having taxes on companies or pass-through entities and taxes on individual people. The argument is that the taxes are less distortionary and more transparent if they are on actual individuals instead of on the entity level.

A similar reason for eliminating the so-called "employer side" portion of your payroll tax. The incidence of the tax is on the employee. It's hidden from you because it's the "employer side," but the incidence is on you.

Also, individual people do not have as many tax shields and do not have as much legal representation as major corporations. GE can always lobby to give themselves a tax break, but the individual stockholders and executives will have a much tougher time, because they can't hire as many lawyers as GE collectively can.

fattest_foot

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Re: Article on Tax Reform
« Reply #7 on: September 14, 2017, 02:00:50 PM »
All taxes harm individuals and society as a whole. Reduction in any tax will stimulate the economy. Which has the greatest effect? I don't know. It's not the government's job to stimulate the economy though.

Personally I'd lean towards eliminating hidden taxes first. Every tax should be a clearly visible line item to those paying it. The payroll tax is a goodexample, the half the employer is charged but the employee actually pays via lower wages.

I generally see GDP being calculated as Consumption (people buying stuff) + Investment (business reinvestment) + Government (government spending) +/- Exports/Imports.

Government spending is a significant portion of GDP, and therefore significant portion of the economy. In fact, in most of my economics classes it's understood that during a recession or down economy, the government spends in order to stimulate the economy (to make up for shortfalls in C and I). This is what the government did in 2008 by spending that $700B or whatever it was.

spud1987

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Re: Article on Tax Reform
« Reply #8 on: September 14, 2017, 02:08:11 PM »
Why not eliminate all corporate taxes.  Period.

Then, any way in which value or wealth is transferred from a corporation to an individual (or group of individuals) be taxed at income tax rates.  Dividends, Long Term Capital Gains, Salary, Stock Options, company vehicle, company housing, etc.

Now, adjust the personal income tax rates downward to meet revenue neutral status (corporate taxes are a smaller slice of the pie, but taxing all transfers of wealth and value from a corporation to an individual would likely be so large a source of tax dollars that overall income tax rates could probably drop for every W-2 employee).

I second.  The owner's (stockholders, ya know the ones who invest in mutual funds and stocks) are being double taxed on their earnings.  Surprisingly enough, a lot of them don't realize that.

Although the "double tax" concern is real when it comes to corporate earnings, it is slightly overblown. Dividend payments from corporations to individuals only are taxable to the extent that individuals pay taxes on dividends. It is surprising, but roughly 70% of dividend payments are to tax-exempt persons (pension funds, 401ks, etc.).

Sen. Hatch has introduced corporate integration as part of tax reform. Essentially dividends would be deductible for corporations similar to how corporations can deduct interest expense.

A Definite Beta Guy

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Re: Article on Tax Reform
« Reply #9 on: September 14, 2017, 02:24:04 PM »
All taxes harm individuals and society as a whole. Reduction in any tax will stimulate the economy. Which has the greatest effect? I don't know. It's not the government's job to stimulate the economy though.

Personally I'd lean towards eliminating hidden taxes first. Every tax should be a clearly visible line item to those paying it. The payroll tax is a goodexample, the half the employer is charged but the employee actually pays via lower wages.

I generally see GDP being calculated as Consumption (people buying stuff) + Investment (business reinvestment) + Government (government spending) +/- Exports/Imports.

Government spending is a significant portion of GDP, and therefore significant portion of the economy. In fact, in most of my economics classes it's understood that during a recession or down economy, the government spends in order to stimulate the economy (to make up for shortfalls in C and I). This is what the government did in 2008 by spending that $700B or whatever it was.
Macro-economic stabilization is probably one of the few things that everyone should agree the government should be doing. It's definitely the explicit mandate of the Federal Reserve, so it's sort of an implicit mandate for the other branches.

Optimiser

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Re: Article on Tax Reform
« Reply #10 on: September 14, 2017, 02:29:41 PM »
Why not eliminate all corporate taxes.  Period.

Then, any way in which value or wealth is transferred from a corporation to an individual (or group of individuals) be taxed at income tax rates.  Dividends, Long Term Capital Gains, Salary, Stock Options, company vehicle, company housing, etc.

Now, adjust the personal income tax rates downward to meet revenue neutral status (corporate taxes are a smaller slice of the pie, but taxing all transfers of wealth and value from a corporation to an individual would likely be so large a source of tax dollars that overall income tax rates could probably drop for every W-2 employee).

I second.  The owner's (stockholders, ya know the ones who invest in mutual funds and stocks) are being double taxed on their earnings.  Surprisingly enough, a lot of them don't realize that.

I third, with one exception. I don't think we should lower income tax until the budget is balanced. This could of course be done with spending cuts too. I don't really care which form it takes, as long as we stop giving our future selves the shaft.

Valhalla

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Re: Article on Tax Reform
« Reply #11 on: September 14, 2017, 10:11:26 PM »
Why not eliminate all corporate taxes.  Period.

Then, any way in which value or wealth is transferred from a corporation to an individual (or group of individuals) be taxed at income tax rates.  Dividends, Long Term Capital Gains, Salary, Stock Options, company vehicle, company housing, etc.

Now, adjust the personal income tax rates downward to meet revenue neutral status (corporate taxes are a smaller slice of the pie, but taxing all transfers of wealth and value from a corporation to an individual would likely be so large a source of tax dollars that overall income tax rates could probably drop for every W-2 employee).

I second.  The owner's (stockholders, ya know the ones who invest in mutual funds and stocks) are being double taxed on their earnings.  Surprisingly enough, a lot of them don't realize that.
Most people are ignorant of basic finance and tax rules.  Many people I know want to "tax the evil corporations"... they aren't smart to know that the corporation is not a real person, only a legal / tax entity.  This will never happen.  Imagine the protest by people that "evil corporations" are getting away from having to pay taxes like the rest us!!
working on my TPS reports...don't bother me, or take my red stapler!

Paul der Krake

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Re: Article on Tax Reform
« Reply #12 on: September 14, 2017, 10:24:56 PM »
I second.  The owner's (stockholders, ya know the ones who invest in mutual funds and stocks) are being double taxed on their earnings.  Surprisingly enough, a lot of them don't realize that.
So what? They get triple-tax every time they buy something subject to sales tax.

Telecaster

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Re: Article on Tax Reform
« Reply #13 on: September 14, 2017, 10:59:20 PM »
Why not eliminate all corporate taxes.  Period.

Then, any way in which value or wealth is transferred from a corporation to an individual (or group of individuals) be taxed at income tax rates.  Dividends, Long Term Capital Gains, Salary, Stock Options, company vehicle, company housing, etc.

Now, adjust the personal income tax rates downward to meet revenue neutral status (corporate taxes are a smaller slice of the pie, but taxing all transfers of wealth and value from a corporation to an individual would likely be so large a source of tax dollars that overall income tax rates could probably drop for every W-2 employee).

I've long thought so too.  Be a lot more honest and a helluva lot simpler. 

BTDretire

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Re: Article on Tax Reform
« Reply #14 on: September 15, 2017, 04:16:35 AM »
Why not eliminate all corporate taxes.  Period.

Then, any way in which value or wealth is transferred from a corporation to an individual (or group of individuals) be taxed at income tax rates.  Dividends, Long Term Capital Gains, Salary, Stock Options, company vehicle, company housing, etc.

Now, adjust the personal income tax rates downward to meet revenue neutral status (corporate taxes are a smaller slice of the pie, but taxing all transfers of wealth and value from a corporation to an individual would likely be so large a source of tax dollars that overall income tax rates could probably drop for every W-2 employee).

I second.  The owner's (stockholders, ya know the ones who invest in mutual funds and stocks) are being double taxed on their earnings.  Surprisingly enough, a lot of them don't realize that.
Most people are ignorant of basic finance and tax rules.  Many people I know want to "tax the evil corporations"... they aren't smart to know that the corporation is not a real person, only a legal / tax entity.  This will never happen.  Imagine the protest by people that "evil corporations" are getting away from having to pay taxes like the rest us!!
I thought you were going to say, "Many people I know want to "tax the evil corporations"... they aren't smart to know that",
all taxes are paid by the people buying the product, i.e. the individual consumer pays the corporate tax!

Drifterrider

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Re: Article on Tax Reform
« Reply #15 on: September 15, 2017, 05:31:43 AM »
Why not eliminate all corporate taxes.  Period.

Then, any way in which value or wealth is transferred from a corporation to an individual (or group of individuals) be taxed at income tax rates.  Dividends, Long Term Capital Gains, Salary, Stock Options, company vehicle, company housing, etc.

Now, adjust the personal income tax rates downward to meet revenue neutral status (corporate taxes are a smaller slice of the pie, but taxing all transfers of wealth and value from a corporation to an individual would likely be so large a source of tax dollars that overall income tax rates could probably drop for every W-2 employee).

Why not eliminate all personal income taxes, period?  The federal government was originally supposed to be funded via tariffs and taxes on businesses.  Why not go back to that?

We can.  I'll survive.  Will you?  I can accept a consumptions tax in place of other taxes.  Can you?

If you don't object to paying double taxes on the same income I certainly don't object to you doing so but I object to ME doing so.  Got mutual funds?  Stocks?  Bonds?

Milizard

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Re: Article on Tax Reform
« Reply #16 on: September 15, 2017, 07:18:03 AM »
So many people just reflexively say, don't bother taxing corporations--individuals are the ones ultimately paying the taxes anyway.  So what's the difference if individuals are not made to pay income taxes?  They'd be ultimately paying anyway, right? And you've increased the simplicity of life and freedom of the vast majority of people who aren't business owners.  401ks and Roths? Irrelevant.  529's? Just save and invest in your own.  No tax shelters needed.   The IRS can shrink as it focuses on a smaller population and more limited tax codes.

If you've only considered one side without giving fair consideration of the opposite,  you've  only done half the job.  Honestly,  this idea just popped into my head, but I think that it would prove to be and invaluable thought experiment no matter the ultimate conclusion reached.   We keep using the same assumptions, as if they are written in stone,  but they aren't, and all it does is lead us down the same old paths.

CBnCO

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Re: Article on Tax Reform
« Reply #17 on: September 15, 2017, 08:20:46 AM »
Why not just eliminate all government? We can build our own roads if we really want them. We can put together our own militia if it's that important.

Ha! Seriously, we should be more focused on how out of control government spending, debt, and intrusion into our lives is rather than the tax system. The whole concept of "revenue neutral" means we are just going to shift around the tax burden..some will win and others will lose and usually the ones who lose are those with the least political influence..and that we inherently agree that the current size of government and its level of spending is ok. I've always thought at the core of the MMM philosophy was a spirit of personal responsibility, independence, and freedom that is somewhat incongruent with the shenanigans we see out of our government and their grand schemes (healthcare, border walls, tax reform, foreign military interventions, etc..)

PizzaSteve

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Re: Article on Tax Reform
« Reply #18 on: September 15, 2017, 08:30:30 AM »
A lot of political content in this thread with limited real content aimed at better government services or taxes.  Time to lock or stick to advice on how to optimize taxes under various tax proposals.

No one wants to live in government free chaos like parts of Africa dealing with disease, warlords, ethnic cleansing, no roads, and confiscation of assets by any teenager who has an AK47.
« Last Edit: September 15, 2017, 11:21:08 AM by PizzaSteve »
All posts are opinions of the author subject to independent verification by the reader.  No representations of fact are asserted regarding commercial products or services.

Pizzasteve prefers to avoid excessive critical debates.  In the event of a post, no need to reply or quote if you disagree. I am posting information meant to stand on its own and hope to avoid back and forth debating.

OurTown

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Re: Article on Tax Reform
« Reply #19 on: September 15, 2017, 09:28:58 AM »
Long term, I agree with the position that we can't tax income forever.  That's because, in the future, we won't have any income when robots are doing the jobs.  Strangely enough, we may be able to continue to function with a combination of universal basic income and a consumption tax.

Short term, I don't know that a national sales tax would work because the rate would need to be pretty high.  Maybe if it was combined with a financial transaction tax it would raise enough revenue, don't know.

bacchi

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Re: Article on Tax Reform
« Reply #20 on: September 15, 2017, 10:20:40 AM »
Long term, I agree with the position that we can't tax income forever.  That's because, in the future, we won't have any income when robots are doing the jobs.  Strangely enough, we may be able to continue to function with a combination of universal basic income and a consumption tax.

Short term, I don't know that a national sales tax would work because the rate would need to be pretty high.  Maybe if it was combined with a financial transaction tax it would raise enough revenue, don't know.

It'd be extremely high. And what happens when a consumption tax is really high? A black market forms to avoid the ~50% sales tax.

Obviously, we'd need a small army of agents to investigate and find these black markets. We'll call this government agency the "IRS."