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Thread: The results are in on social security

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    Re: The results are in on social security

    Quote Originally Posted by cpwill View Post
    what? you got a credit for investing that was greater than the capital gains tax rate?
    You can deduct certain investments from tax liability thus reducing net taxes.


    the Fair Tax is the best method that I've seen put forth. Notably, most the strongest criticisms of it tend to come from groups which don't actually grade the legislation as written, but have to change it in order to make it fail.
    The problem with the fair tax is that it too greatly reduces purchasing power while disproportionately adversely affects the poor due to taxes being levied on things like rent, thus forcing a good percentage of power to rely on the prebate. Instead the sales tax should exempt food (if it can be bought with food stamps it doesn't get taxed), medical (plastic surgery and similar things get taxed), rent of primary residence (or tax rent less), and tax water, heat, and electricity less. Combine this with Friedman's reverse income tax would be a much more equitable system.

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    Re: The results are in on social security

    Quote Originally Posted by xpiher View Post
    You can deduct certain investments from tax liability thus reducing net taxes.
    reducing certainly. below zero (which is the federal tax rate for consumption) I would like to see.

    The problem with the fair tax is that it too greatly reduces purchasing power while disproportionately adversely affects the poor due to taxes being levied on things like rent, thus forcing a good percentage of power to rely on the prebate.
    the prebate simply makes all spending up to the poverty line tax free - the Fair Tax is actually better for our poor than our current tax system, as our current tax system hits them with the payroll tax straight out of the gate.

    Instead the sales tax should exempt food (if it can be bought with food stamps it doesn't get taxed), medical (plastic surgery and similar things get taxed), rent of primary residence (or tax rent less), and tax water, heat, and electricity less.
    doing that will simply require you to raise the rates on other things to make up for the lost revenue.

    Combine this with Friedman's reverse income tax would be a much more equitable system.
    running a dual-system like this only begs politicians to make names for themselves monkeying back and forth with each - increasing uncertainty, degrading growth, and making it easier for politicians to raise taxes. A single rate at the retail level is something that you can only raise when you are willing to admit that you are raising it.

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    Re: The results are in on social security

    Quote Originally Posted by cpwill View Post
    the prebate simply makes all spending up to the poverty line tax free - the Fair Tax is actually better for our poor than our current tax system, as our current tax system hits them with the payroll tax straight out of the gate.
    It does not because it doesn't cover the taxes laid on health care and rent.

    doing that will simply require you to raise the rates on other things to make up for the lost revenue.
    I realize that, but that's not necessarily a bad thing. It would prompt people to buy used goods.

    running a dual-system like this only begs politicians to make names for themselves monkeying back and forth with each - increasing uncertainty, degrading growth, and making it easier for politicians to raise taxes. A single rate at the retail level is something that you can only raise when you are willing to admit that you are raising it.
    Its not a dual system. The prebate is based on income, the difference being that its not designed to make up completely for taxes spent on life necessities and is given to everyone. Combining not taxing life necessities with the reverse income tax you only give money to the poor.

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    Re: The results are in on social security

    Quote Originally Posted by xpiher View Post
    It does not because it doesn't cover the taxes laid on health care and rent.
    the poverty line is the poverty line - the Prebate covers all taxes paid up to that point, and yes, indeed, does make for a better tax system for our poor than the current one. you are forgeting that the costs of healthcare and rent have the current tax code already embedded in them

    I realize that, but that's not necessarily a bad thing. It would prompt people to buy used goods.
    the government should not be in the business of trying to tilt the market towards particular winners or loser - and engaging in such will simply have every industry spending millions on getting their "vital" product tax-free as well.

    Its not a dual system.
    running a sales and an income tax regime? could have sworn "dual" meant "two"

    The prebate is based on income
    no, it is based on the poverty line. you get the prebate irrespective of your income.

    the difference being that its not designed to make up completely for taxes spent on life necessities
    given that we define that by "the poverty line", yes, it does.

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    Re: The results are in on social security

    Quote Originally Posted by cpwill View Post
    given that we define that by "the poverty line", yes, it does.
    No, it does not. Thats why we won't agree because, after reading the fair tax book, I came to the conclusion that it doesn't cover all the taxes due mainly to taxing rent

    the government should not be in the business of trying to tilt the market towards particular winners or loser - and engaging in such will simply have every industry spending millions on getting their "vital" product tax-free as well.
    You do realize that the fair tax, as it is written, does not tax any used good?

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    Re: The results are in on social security

    Quote Originally Posted by xpiher View Post
    No, it does not. Thats why we won't agree because, after reading the fair tax book, I came to the conclusion that it doesn't cover all the taxes due mainly to taxing rent
    I don't know how to put it to you other than the stupid-sounding "yes, it does". it takes the poverty line, takes the amount of taxes that would be paid on spending up to that line, and sends you a check for that amount. I don't even know how you would figure that Rent would somehow magically be special or make a difference to the poverty line, here.

    You do realize that the fair tax, as it is written, does not tax any used good?
    yes. that does not detract from the point that once the government ceases to tax all goods at the retail level, it has to spike taxes for some items in order to make up for the loss of revenue in others. this places government in the position of tilting spending in favor of some sectors of the economy and away from others. tell me, how well did the policy of government encouraging (say) home purchasing work out for us?

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    Re: The results are in on social security

    The reason why it doesn't cover all the taxes spent on life necessities, and rent is the main culprit, because the base poverty line is different in each state and rent various between the different states. At least thats the way I read it.

    Quote Originally Posted by cpwill View Post
    yes. that does not detract from the point that once the government ceases to tax all goods at the retail level, it has to spike taxes for some items in order to make up for the loss of revenue in others. this places government in the position of tilting spending in favor of some sectors of the economy and away from others. tell me, how well did the policy of government encouraging (say) home purchasing work out for us?
    If I was the person writing the change, I would simply tax everything else but those thing that I outlined as exempt more equally.

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    Re: The results are in on social security

    Quote Originally Posted by xpiher View Post
    The reason why it doesn't cover all the taxes spent on life necessities, and rent is the main culprit, because the base poverty line is different in each state and rent various between the different states. At least thats the way I read it.
    if the poverty line is different in each state... and rent is different in each state.... doesn't it seem to follow that the two will travel in the same direction?

    If I was the person writing the change, I would simply tax everything else but those thing that I outlined as exempt more equally.
    then I worry you are just setting the system up for permanent malinvestment and failure - you are using tax policy to feed the boom/bust cycle.

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    Re: The results are in on social security

    Quote Originally Posted by cpwill View Post
    then I worry you are just setting the system up for permanent malinvestment and failure - you are using tax policy to feed the boom/bust cycle.
    How did you get promoting boom and bust cycles from just not taxing life necessities and then taking the revenue loss difference, and raising the tax on all other goods equally? According to the fair tax act, to be revenue neutral all new goods and services would have to be taxed at 23%. If you removed medical, food, shelter, and utilities (tax at a lower rate) from the equation then to be revenue neutral I think it would require the tax to be roughly 3% higher. However, I wouldn't make it revenue neutral. I'd cut government to make up for the short fall.

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    Re: The results are in on social security

    Quote Originally Posted by xpiher View Post
    How did you get promoting boom and bust cycles from just not taxing life necessities and then taking the revenue loss difference, and raising the tax on all other goods equally?
    issuing a prebate already handles taxes up to lifes' necessities. if you think it should be more, argue for increasing the poverty line.

    however, favoritism between the various sectors of the economy on the part of government (especially via something as powerful as the tax policy under discussion) distorts market signals by distorting prices. It encourages over investment in some sectors, and under investment in others. The overinvestment in these sectors continues to grow (rewarded by preferential government treatment) until it become unsustainable due to the overvaluing of its' merits. Government thus creates a series of bubbles in various sectors of the economy through preferential treatment - and the malinvestment creates a boom/bust cycle.

    According to the fair tax act, to be revenue neutral all new goods and services would have to be taxed at 23%. If you removed medical, food, shelter, and utilities (tax at a lower rate) from the equation then to be revenue neutral I think it would require the tax to be roughly 3% higher.
    given the large percentage of our spending that is done on those four things, you are wildly incorrect. think more than 50%.

    However, I wouldn't make it revenue neutral. I'd cut government to make up for the short fall.
    that at least is something we can generally agree on.

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