Fiscal Cliff (Page 2)

Congressmen love cutting spending when it's not in their own state

Can you hardly blame them? Someone started a Big Bird should pay his fair share thread here and everyone and their dog jumped on the band wagon to save big bird from any spending cuts.

Everyone wants less spending but no one wants anything cut. Can't have it both ways.

I'd like to explore the possibility of a flat tax. Everyone gets some skin in the game rather than being rewarded for not making money and making babies. 

Income or consumption?

The good reason is because with our progressive tax system, if we went to a flat tax it would be around 26% and the middle class would have an absolute cow.

A consumption tax would be better.... but then slowly more and more exceptions would be added in. Then that opens the can of worms for VAT.

The problem with a VAT is that it is a hidden tax, people don't really know what they are paying.  The propensity for abuse by politicians is too high.  If you want to go with consumption go with a straight sales tax that people have to pay at the register to buy things so they know what they are paying.

Why 26% where did that come from? Has someone done the math?

Genuinely curious, seems high to me.

Does seem like a good way to be fair about it. Exempt food and certain meds, sales tax on everything else. 

That way if I want to keep my money I can, if I want spiffy things I have no one to blame but me for all my money going out the door. 

ETA: but the spending does need to go down as well, by a lot, so the rate isn't astronomical. 

The difference between the VAT and a sales is that the VAT is added at every stage of production with no way for the consumer to know the dollar figure they are paying as TAX vs Price.  Hiding a tax so that no one knows the true cost will not help create the "responsibilty" response you are looking for.  With a sales tax the amount is present on your reciept and in you mind every time you make a purchase as you will have to figure the tax before you pay.  It is also easier to say "we just need to raise the vat .5%" when you have no basis on which to figure out how much that .5% will cost you in real dollars.  Look at when counties and such raise the sales tax rate.  They don't tell you how much it will cost you to fund that school gym complex they just tell you it's .1% more on your tax rate.  You figure out what it costs you when you go to the store.  .1d% here .1% there pretty soon you are talking about money.  My objection is that you should see what it costs you to fund the government not have it hidden.

You didn't ask me, but I say income. We are talking about federal tax, right?

ETA - I'd also like to know where the 26% figure came from.

I am more trying to say it is easier to convince people to let you raise a tax you do not see by .5% here and 1% there than it is to raise a sales tax that way.  With a sales tax you are confronted with the numbers at the cash register every time you purchase items and it is delineated for you the cost of that item vs the tax on that item.  That is not the case for the VAT.  You do not "see" the tax that way and that makes it easier for politicians to raise it.  I said nothing about corrupt politicians unless you consider them all corrupt.

when policies and regulations raise costs and taxes on a business, don't you think they are already passing that on as a price increase to their consumer?  i don't really see a difference in this and how things work today. 

A consumption or sales tax is not a value added tax. Two different things. There are some pros and cons with VATs, same for consumption... But you do not get to call it the same thing.

How it is supposed to work is if you had a sales tax of 10% and bought a widget for $100, tax would be $10. That $10 would supposedly be broke up along the manufacturing every time value was added to it. So the revenue should still be $10, but different people are paying from it. But there are cases that won't happen, and then there are ways around it. It become a night mare to administer... which obviously would be good for all the unemployed IRS workers. A consumption tax is much easier, and it isn't hidden to the consumer.

Yes they have. Some put it a little higher, some a little lower. But that is the number I have seen for a while. If you do a true flat tax.... then you have to figure out who that dose NOT apply to... kids, dependents, retirees, on government assistance, below a income level. those number certainly matter, because when it is all over, those left are who gets to pick up the tab.

As far as I'm concerned, I would want to do away with personal income tax, and do consumption. Well all tax actually, capital gains, estate... ect. Then there is, business tax... what do they pay? Would they pay consumption on goods... like GM would pay consumption tax of the goods they produce... the materials bought to make a car. But then what does Goldman Sachs pay? they produce no goods, just money off of money.

Ya, that's the point.  I can't really answer for Trinnas, but for me it is the same, and that is what I would like fixed. At the end of the road is the consumer, or the tax payer. The government can impose what ever tax they want fro what ever reason, but at the end of the day the consumer pays it. So as a revenue instrument, I go to work and I pay taxes on my income, then what is left over, there is a certain percentage of my money left over that pays all the taxes on everything I am connected with.

People look at income tax... mine is only 13%... but my actual tax burden is more like 35% after I pay all my taxes on everything, gas, sales, property, state... ect.

But my true tax burden would then go to what my consumer goods I buy and what taxes go into the price I pay. My true tax burden may be more like 40%-50%.

It isn't rocket science. Take all the tax revenue brought in by the State and Federal governments, and then divide that by those of us paying it. Generally anyone over 18 and not on welfare. If people actually saw that number... I'm guessing they would be a little upset.

But then again I don't get a TV. I get a whole society to live in and enjoy. That costs a bit of money. But if there was a consumption tax, it would be much harder to manipulate the tax code and spend all you can get. People would probably pay attention every time they wanted to raise it and would want to know why. And then you could not just take it out of the rich guys pocket, it would come out of YOUR pocket.