Where on the political spectrum do you lie? (Mods: Please don't move!)

[Amanda]

reaganyouth, my post was intended for humor as well, which I would have thought would have been obvious. Iced-T, please point out one of the "lies" I've told.

[Kenyth]

A couple of popular tax misconceptions by both sides.

To the liberals:
Rich people do not pay less taxes. They generally have much more complex financial affairs and spend more money in more directions. If something they spend money on is tax deductible, it's worth their time to take advantage of it.

To the conservatives:
Going to a tax system where only sales tax is used and abolishing income tax would compltely screw the working class and poor. The less money you make, the higher a percentage of your income that you spend on goods and services. Therefore the higher a tax percentage you will pay.


To everyone:
The current system is pretty fair percentage-wise. After it's all said and done and the returns are given back, we (middle class) spend about %20 of our income on taxes. The rich pay few percent more, and the poor pay practically nothing.

[Amanda]

Kenyth, I completely agree with you about a nationwide sales tax. Aside from its regressivity, it encourages thrift in an economy driven by consumption. If I have to pay 23% higher tax rates every time I go to purchase a car or a piece of furniture, I'm gonna buy fewer cars and less furniture. Furthermore, I can't envision a scenario where a sales tax on the selected items subjected to the tax would produce enough revenue to finance government. In fact, a black market would likely develop for goods whose prices would be artificially inflated by the national sales tax. There are so many things wrong with the supersized national sales tax idea that I could go on all day listing them.

As for the current tax structure being fair, times are changing quickly. Bear in mind that from the 1950s through the 1970's, the top tax rate was never lower than 70%. Today, it's 33%....and that's on top of recent revisions to further reduce the tax burden on stock holders, heirs and heiresses. Who gets to the pay the taxes that they're not? In the short term, smokers, homeowners and college students, all of whom are seeing "sin taxes," property taxes and college tuition rates soar far faster than the rate of inflation. In the long-term, the burden will fall on future generations who will see higher income tax rates necessary to finance national debt interest.

And keep in mind that this regressive restructuring of the tax code is occurring at a time when those seeing their taxes cut are also seeing their share of the national GDP soar, a dynamic that's been in place for about 30 years now. On the other hand, those seeing their taxes increase have largely been experiencing flatlined income growth over the same period. It's a system doomed to destroy itself.

[reaganyouth84]

[QUOTE=Amanda]Kenyth, I completely agree with you about a nationwide sales tax. Aside from its regressivity, it encourages thrift in an economy driven by consumption. If I have to pay 23% higher tax rates every time I go to purchase a car or a piece of furniture, I'm gonna buy fewer cars and less furniture.QUOTE]

Do you have any idea what that would do to our market, and economy if we cut back on what we purchase? Not only on a national level, but on a world wide level? Let's put it this way, it wouldn't be good.
-Mike

[Amanda]

That's exactly the point I was making. If a supersized national sales tax becomes law and replaces the existing income tax, as an increasing chorus of primarily Republicans suggest it should, the higher prices of goods creates a huge disincentive for making purchases. Our economy is fueled by consumer spending, and such a tax promotes thrift.

We get mixed messages on this subject all the time. Take the days after 9-11, for instance, when our elected leaders encouraged us to do our part to help the economy by "spending" at the local mall and car dealership. Message: we can spend our way to financial prosperity. On the other hand, many of that same lawmakers have since lectured us on our dangerously low personal savings rate, accusing us of recklessly spending our way to personal bankruptcy and leaving ourselves high and dry for our retirement years. Problem is, we can't spend and save at the same time. The conventional wisdom is that we're now moving into a "saving period" where consumers are more like to pinch their pennies than buy big screen TV's. On the surface that sounds good, but an economy of savers is an economy without growth. Just ask the Japanese. There's no easy answers, but the worst-case solution, far as I can tell, is a national sales tax.

[cigar no baka]

That's exactly the point I was making. If a supersized national sales tax becomes law and replaces the existing income tax, as an increasing chorus of primarily Republicans suggest it should, the higher prices of goods creates a huge disincentive for making purchases. Our economy is fueled by consumer spending, and such a tax promotes thrift.

We get mixed messages on this subject all the time. Take the days after 9-11, for instance, when our elected leaders encouraged us to do our part to help the economy by "spending" at the local mall and car dealership. Message: we can spend our way to financial prosperity. On the other hand, many of that same lawmakers have since lectured us on our dangerously low personal savings rate, accusing us of recklessly spending our way to personal bankruptcy and leaving ourselves high and dry for our retirement years. Problem is, we can't spend and save at the same time. The conventional wisdom is that we're now moving into a "saving period" where consumers are more like to pinch their pennies than buy big screen TV's. On the surface that sounds good, but an economy of savers is an economy without growth. Just ask the Japanese. There's no easy answers, but the worst-case solution, far as I can tell, is a national sales tax.

It's not that black and white. There is a balance between spending and saving that is good for the economy. Also, from time to time, more spending is helpful, other times, more saving is helpful.

I think a national sales tax would cause upheavals within the economy. I am not an economist, is anyone else? Care to elaborate?

[reaganyouth84]

It's not that black and white. There is a balance between spending and saving that is good for the economy. Also, from time to time, more spending is helpful, other times, more saving is helpful.

I think a national sales tax would cause upheavals within the economy. I am not an economist, is anyone else? Care to elaborate?

Hang on, I'll go call my buddy Al Greenspan, or as I like to call him the G-Man
-Mike

[reaganyouth84]

That's exactly the point I was making. If a supersized national sales tax becomes law and replaces the existing income tax, as an increasing chorus of primarily Republicans suggest it should, the higher prices of goods creates a huge disincentive for making purchases. Our economy is fueled by consumer spending, and such a tax promotes thrift.

We get mixed messages on this subject all the time. Take the days after 9-11, for instance, when our elected leaders encouraged us to do our part to help the economy by "spending" at the local mall and car dealership. Message: we can spend our way to financial prosperity. On the other hand, many of that same lawmakers have since lectured us on our dangerously low personal savings rate, accusing us of recklessly spending our way to personal bankruptcy and leaving ourselves high and dry for our retirement years. Problem is, we can't spend and save at the same time. The conventional wisdom is that we're now moving into a "saving period" where consumers are more like to pinch their pennies than buy big screen TV's. On the surface that sounds good, but an economy of savers is an economy without growth. Just ask the Japanese. There's no easy answers, but the worst-case solution, far as I can tell, is a national sales tax.

Ok, I though you were trying to say that if we stopped buying things like we are that our economy would be better. Now, I see that you are saying, or at least I think, is that if we stop buying then producers of goods can't make as much money or produce as many goods, therefore workers would be laid off, yada yada yada. Just making sure that you were thinking what I was thinking.
-Mike