Scared SH*TLESS about the lack of dialog re: new tax system

[FormerDittoHead]

This is really bugging me.

I have a degree in Business Admin / Accounting, taxes, practiced as an accountant for 2 years plus more than that in a corporate office...

But this week, some 'committee' along with some lobbists for multi-billionaires are going to into a room, and come out with suggestions where "everything is on the table" and THEN, hand it to Dick Cheney for final approval, so he can then tell BushCo what changes are going to be made (as if Bush has the brains to know even how to START to tackle something like this).

So, aside from most everyone in the country, professionally, let's see the parties who will be affected by this:

Accountants esp those who specialize in taxes.
Tax preparation services.
Financial planners.
Economists.
Tax Attorneys (I didn't check, are they "evil" too?)
Everyone working for the IRS

in other words, everyone who would KNOW about this subject, but aren't being ASKED about it...

OK, what am I scared of?

That there is so little talk about it in the media!

When Hillary brought in all these experts from various fields to create a nationalize health care insurance system, the neocons were ALL OVER how everything was being done "behind closed doors".

OK, where's the outrage?

[Rican1]

1. That's Bush's MO

Keep everyone in the dark and call the changes a "simplification"

[punpirate]

2. Well, since they have not proposed anything specific yet...

... I suppose that outrage might, for now, be misplaced.

Are they going to use "simplification" of the tax code to create another tax break for the wealthy and for large corporations? Yes, indeed, of that we can be reasonably sure. Will whatever plan they propose increase the shift in burden to the working class? Assuredly.

However, without a stated plan, how can one argue against it?

Let them make their proposal and them hammer it.

The secrecy of it is, however, typical of this administration, not exceptional.

Cheers.

[papau]

3. Fear - propose monster - get near monster - in this case he only wants

to make income other than wages non-taxable.

- you know - the 90% of the income of the rich that we call investment income or unearned income should be tax free because a consumption tax is so much better!

So look for bigger tax free accumulation opportunities.

And do not expect the GOP to explain how those on minimum wage will find the money to drop into a tax free accumulation account - or why they would want to since the only income tax they pay is payroll tax

And for goodness sake, just because the SOcial Security system is overfunded these days, do not expect the GOP to suggest a rate decrease - it would not really help the rich.

And removing the wage cap - which ends funding problems for 100 years and even allows a bit of a rate reduction - is not on the table 'cause that really does not help the rich.

[BenZona]

4. Don't Worry

B*sh won't "reform" the tax code until he fucks over Social Security, and that should take a few years at least.

[EVDebs]

5. I'd prefer David Cay Johnston and Warren Buffett on the tax reform

panel ! "Perfectly Legal" makes mincemeat out of Bush's $1.85 trillion tax cuts for the wealthiest 1 1/2 % of taxpayers, and we now see that Bush is using Reagan's modus operandi of paying for the 1981 tax cuts by raiding Social Security... now we'll have the 2001 tax cuts being paid for the same way, only this time they will have added $17 trillion to the overall deficit with that insane 'drug benefit' !

Warren Buffett in commondreams says it best: http://www.commondreams.org/headlines04/0306-01.htm

[DaedelusNemo]

6. Get out front with an attractive alternative

How's this for a basic line of attack that will be useful for almost any possible Bush scheme: "Labor should never be taxed more than wealth." If you've got a financial setup that allows you not to work, good for you, but you shouldn't expect a better deal on taxes than someone who must work for their money.

The democrats should look through and develop their own simplification of the tax code rather than waiting to find out what box Rove wants to put them in this time. Instead, start hammering on Bush's box now. Enemy of the working man is a good place to start with that. Contrast the openness of your approach with the secretiveness of his - 'we have nothing to hide with our tax plan.'

What would be nice to see is some really creative proposals to construct more rational tax schemes that try to match form to function so that secondary effects aren't counterproductive. Try to counter undesirable trends and to return costs to their rightful owners. I've got a gob of infant ideas but i'll spare ya'll for now.

[FormerDittoHead]

7. Thank you for "getting it".

Exactly, where's the alternative? Democratic representitives are mute!

PS: My solution: national property tax instead of a "consumption" tax, but more on that later and elsewhere...

[DaedelusNemo]

8. Shall we open the floor for proposals?

I think we ought to throw a bunch of ideas out and see what we have. Could be in this thread, could be in a new one.

It might be easier to get representatives to represent if an attractive alternative arises.

[DaedelusNemo]

24. Pollution tax

I posted this in another thread, but i realized that it ought to be in this discussion-of-tax-reforms thread.

In general, i tend more to the notion that we'd be better off without any sales tax at all. But, to consider the possibilities...

There are various ways in which businesses tend to shift their costs onto others. One of those, for example, is pollution. What if you were to assess a pollution tax on items, calculated to represent the cost of cleaning up after the manufacture, use, and disposal of the individual items? It puts that cost right back into the cost of the item which is where it belongs anyway. Instead of deforming the economy, it relieves a deformity. It would give an incentive for people to buy 'green'er products that is exactly proportional to the need.

You wouldn't have to have it as a in-store calculated tax; you could simply require that the producer pay that tax for each item it sells, and the cost would undoubtedly be part of the price they sell it for.

In addition, the tax would be almost entirely under the control of the taxed, a direct consequence of their action. If, for example, they go to the effort of cleaning up after themselves - or simply making less of a mess in the first place - instead of effectively paying the government to do it, their tax would naturally reduce. (assuming they can find a more cost-efficient way to clean it up than the government would use.) For that matter, if they can suggest to the government a cheaper (but still effective) way to clean it up, that would reduce their tax as well. It would be an incentive, for the large-scale polluters, to do research on how to reduce their pollution or clean it up better. It lets the market do its work, while establishing standards.

It is the fairest way i've been able to imagine to handle it.

[DaedelusNemo]

27. Labor should never be taxed more than capital

The money you get from working, actually creating wealth, ought to be taxed less than the money you get in any other way - particularly in those secondary ways dependent on labor, like the accumulation and manipulation of capital. Labor is the fuel that allows an economy in the first place. A tax on labor is like a tax on energy, in that its effect on the economy is profound and pervasive, and brings it to a crawl if set too high. The basic hard work that goes into making our economy possible should be encouraged and rewarded to the highest extent that we can manage - certainly more than any secondary consideration.

Investors would be crap out of luck - they would be completely unable to make their money, in fact, if not for all the hard work done by so many, and if not for their tax dollars that goes to creating a stable and healthy financial, monetary, development, and investment system, and the infrastructure that those things depend on. They should pay their fair share for what we have gone to such great expense and effort to make possible for them. That system incurs extra cost, and an extra tax on the profits it makes possible is therefore not only reasonable, but the only way to handle it with justice.

Agree? Disagree? Think it'd go over?

[trezic]

11. No thanks

Property taxes are the type of taxes most likely to cause resentment. Jarvis and Reagan exploited this well in California.

Generally, I wish the congressional Democrats had pulled their thumbs out of their asses and fought for the inheritance tax. It's not as though the overwhelming weight of thought wasn't on their side.

[FormerDittoHead]

14. What do you want? Fairness or political expediency?

**ANY** TAX causes resentment.

Hell, there's a ***good*** chunk of America that would cry "class warfare" if we were to raise progressive tax raises for those who make above $1 million...

A great many of these same voters think some "consumption" tax is "fair" too, and it's looking to go in that direction.

In the meantime, all we can offer is to make income taxes more complicated and to raise rates (for the wealthy, but that causes "resentment" as well, look at more recent elections!)

It disheartens me to see your willingness to discount the possibility of a national property tax just because it couldn't be "sold".

If *they* can get support for a national sales tax, ANYTHING can be SOLD, EVERYTHING'S ON THE TABLE.

But please don't assume I'm trying to deceive anyone.

I think the 'goal' here is to figure out what's **FAIR**, and go from there, and IMO, a national property tax is a FAIR and SIMPLE solution.

pasted from a prior message:

A national property tax, however, could not be more simple. Your local property tax collector would be instructed to add on a given small percentage on top of your present bill, and mail you the bill.

You don't even have to cut more than the one check you already use to pay your present taxes! Could it be more simple!???

It would involve MUCH less paperwork than an added sales tax, and it will rightly reflect the added use of our gov't resources, services and protections that the rich benefit from.

What's more... IT'S THAT MAGIC NEO-CON WORD... FLAT. The guy who owns a house worth $50,000,000 (Ken Lay) will pay 1000x that of a guy who's house is worth $50,000. (with a caveat, see point #2)

Five final points:

1) Like every state that I'm aware of, taxes on Farm land and other certain properties will be done at different rates, along with other reductions and exemptions (churches).

2) I would suggest some kind of "personal exemption" of some amount (the first $40,000 of value? Pick a number.) (additional for seniors?) for personal residences (not business property) so that someone living in a *modest* house ends up not paying anything more at all. Remember, however, your present, local property tax bill gives you no exception, so this could rightly be phased out (see point #4).

A provision could also be made for apartment buildings to prevent landlords from passing on the added expense. You could simply multiply every rented personal residence (not talking office buildings) by $40,000 and use THAT as a possible exemption for rental property taxes. Any additional amount would then have to paid by renter + landlord.

3) Every dollar of it should go to reducing income taxes. I'm not talking about INCREASING net taxes, but redistributing the proportional burden to those who receive the proportional benefit, UNLIKE income taxes or a sales tax.

4) It would have to be phased in over a number of years (like 10? 20?) but this would be very easy to do.

5) Property taxes would continue to be considered a deductable expense for business activities.

I'm creating a website to more graphically make these points, and to try to provide an alternative to the JUGGERNAUT that a national sales tax will become, and it being a sweeping bonanza to further reduce tax burdens for the rich.

[trezic]

18. Reasons why a national property tax is not so hot

1. When imposing taxes, their political legitimacy has to be considered. This is not optional. During WW2, the administration rejected a plan to finance the war exclusively through taxation because it was feared that this would destroy support for the war. Instead, it was financed through a mix of bonds and taxes. Property taxes piss people off because it's a never ending payment on something you own.

2. Valuation. Basing national taxation on property would mortgage fiscal stability on a speculative form of wealth. When real estate bubbles form, like today, there is a general rise in valuations. With increasing valuation comes increasing revenue. However, when it crashes, so does the tax base. Add in the necessary lag to any sort of appraisal regime and you have a recipe for extending recessions into depressions. The difference with income tax in this scenario is that if people are out of work, they obviously aren't paying income taxes. However, with a property tax regime, even if they lose their job, they still owe Uncle one hell of a chunk.

3. Inefficiency. The current system, pay as you go, has a great virtue that a property tax system lacks: predictability. Since the amount owed for property taxes changes yearly, it gets harder to predict what's owed. There's another reason I like pay as you go, but dammit I forget it right now. When it hits me, I'll do an addendum.

4. Regional differences. A great example of this is the European Central Bank. Unlike the Fed, the ECB had been extremely reluctant to lower rates in response to the economic slowdown. As a result, rather than being affected uniformly, different countries in the EU got different results. France was not affected much at all by this refusal. Germany, however, was affected substantially. Unlike the French, the German economy has been hit hard over the last 15 years in the effort to integrate the east. These artificially high rates depressed business activity in Germany and contributed to economic growth under 1%. The same is likely to be true of a national property tax. Such a regime would be unlikely to take account of regional economic differences. If California is having a rough time, as in the 90s with defense cutbacks, the tax becomes a governor on economic growth. Politically, it would prove impossible to have a variety of tax rates for different regions.

5. Constitution. There is no Constitutional basis. Any attempt to stretch the commerce clause to cover property would rightly be overturned. In addition, an attempt to set different rates for different regions would be barred by Article 1, Section 8, Clause 1.

6. Corruption. As it stands now, Congress has to raise rates in order to increase revenue. With this regime, rates could be set artifically low and appraisals artifically high. It's too easy to picture the Congress trumpeting a 10% rate while tarpaper shacks get valued at $300k.

[FormerDittoHead]

15. PS: I agree about inheritance taxes...

I'm not suggesting to let these slide, in fact, I think all "trusts" and "foundations" should be phased out for the frauds they are: means to avoid inheritance taxes and perpetuate a non-working aristocracy.

As a former accountant, I can tell you that, when planned, the rich (who actually wanted to pass their money to their kids, some don't care about their kids) manage to avoid this one way or another.

I would like to see the Democrats stick up for the inheritance tax and START to crack down on all the "loopholes" the rich use to do so.

Democrats? Hello?

[DaedelusNemo]

17. Thoroughly agreed

On inheritance tax and loopholes. Of course, repubs will counter any attempt to eliminate a loophole with the cry of tax-raising. A smart dem way to handle that is to present each loophole with a corresponding tax cut (or very appealing program) that is made possible by it. Then it's our effort to cut taxes while they try to protect their special privileges for the wealthy. When they bloviate that it's a tax cut, respond with "So eliminating loopholes is bad? You're standing in support of all tax loopholes, of all the special tax exemptions of a privileged few?" That's a loser for them. People gnash their teeth over loopholes that other people get.

[trezic]

19. A different method

Adam Smith and Theodore Roosevelt both championed inheritance taxes for the purpose of inefficiency. Too much money doing nothing is a threat to capitalism.

[DaedelusNemo]

22. To take it a little further

Even granting the immediate counter-argument you will get that mostly people will find something to do with that money, the problem remains of the increasing centralization of the economy that unrestricted inheritance brings.

The market works better the more participants there are, and the more discretionary income most of them have; the broader, and the deeper, it is. Piling most of the money up into a few high peaks - however well handled they may be - leaves the rest of the market stranded in the shallows, restricting the flow and thus the development of the rest of the economy.

Republicans understand this. It's their argument for preferring that less money pass through the government, and in itself it's a good one - though of course the fact that they ignore the government's unique ability to make some sorts of investments renders their use of the argument dishonest. No surprise there, nor should we be surprised that they ignore the principle when it suits them, such as when they want to get rid of the inheritance tax.

[flaminbats]

25. there are alternatives..

http://scholar.lib.vt.edu/VA-news/VA-Pilot/issues/1995/vp950502/05020007.htm

"The USA Tax is designed to reward saving and investment and to penalize consumption. Tax brackets would be maintained and each income group in society would pay about the same proportion of total taxes as they do now. So, unlike flat taxes, the burden wouldn't be shifted to those earning less."

Combine this with the repeal of Republican taxcuts for the rich, and you have a fair alternative resulting in lower deficits. The windfall profits tax was proposed by Carter. It would tax any increase in corporate energy prices at 50%, and use the revenue to develop alternative sources of energy. Another alternative is the BTU tax supported by Gore. It was a tax based on the individual consumption of energy not the price level. The revenue brought in from such a tax would be used to help the poor pay their energy bills.

Alternatives are great, but they will never pass as long as Republicans are in control. :kick:

[DaedelusNemo]

26. How about a progressive energy / utility tax?

Designed so that those who use only a little pay a fairly small amount - people who really go hog wild would pay correspondingly more. It reflects the notion that we have a higher priority on everybody being able to afford some than we have on a few people being able to afford a lot. Basically, it would encourage people to think again before being wasteful, and think several times before being profigately wasteful.

We might need to put businesses on a different scale, though - that energy use does benefit the rest of us to some extent; perhaps divide their use by the number of employes to get their effective 'tax bracket'? (Although - i think we ought to get rid of brackets entirely and replace them with smooth curves; they are unfair to people at the low end of the bracket.)

I'm not sure it's a good idea to base such taxes on consumption rather than price. A tax on price tends to make it more difficult to raise the price, and that's a good thing, i think. I think making it progressive would have the desired effect as far as making it easier on the poor.

On the USA tax, i'm sympathetic to the notion of tax exemptions on savings, but i wouldn't want it to be open-ended - otherwise it would encourage hoarding, which is no good for the economy (and has already been going on to some extent though the falling dollar / inflation is discouraging that now.) Perhaps no tax up to some certain amount, then going up progressively.

But why a flat tax on corporations?!?

- Being able to present attractive alternatives is beneficial whether or not they can be passed in the short term - it may well help the democrats get back in much quicker if people see them as having something serious to offer. A really good proposal would create resentment that it can't be passed and good will for the proposer.

Indeed, democrats can consider their out-of-power status to have some blessing mixed with it, in that they are freer to propose bold steps without having to compromise them down to get them passed right away; and since they don't have any power to hold onto, they need not knowtow to any special interests to keep it. They have a free hand to build a new power base.

[flaminbats]

28. What about BTU tax rates based on income?

we could tax wasteful energy consumption and using progressive tax rates.

[Coastie for Truth]

9. Jonathan Chait's article

"Bait and ... President Bush's proposed 'tax reform' isn't tax reform at all. It's the opposite. Just look at who's behind it.." The New Republic, January 12, 2005, page 17.

Check it out-

The gist-- Bush's "Tax Reform" is a totally wage tax system with no taxes on corporations, interest, dividends, capital gains, or off-shore income. Ultimate in regressive taxation.

[DaedelusNemo]

10. "Labor is prior to, and independent of, capital.

Capital is only the fruit of labor and could not exist if labor had not first existed. Labor is the superior of capital and deserves much the higher consideration."

- Abraham Lincoln

[Robert Oak]

12. "The U.S. tax code is the most political law in the world"

Jonathan Blattmachr - Tax attorney for the super rich

we have a page www.noslaves.com/taxes.htm

but even on DU you can see it, the minute any topic gets complicated
especially when specifics are mentioned (numbers, statistics),

people's eyes glaze over and they move to a topic that is more
"on the emotional front".

I posted a major scandal on government contracts, few read it, none comment, probably because it's too complex a topic.

So, this is precisely how they get away with this outrage...

even journalists are clueless on tax law and thus don't even try
to cover the story, it's too detailed for people to take the time
to understand.

Taxes makes most people shudder in confusion.

The 108th congress passed HR 4520, dared to call it "The American Jobs Act of 2004"
...
this bill gave millions in pork to corporations and increased incentives
(tax incentives) to offshore outsource our jobs.

http://forum.noslaves.com/index.php?showtopic=281&st=0&#entry468

But, even activists didn't catch what was going on.

Originally the bill did have some amendments for US workers but
what they did (do) is pass a version that actually is ok, at the last minute, ship it off to the house ways and means committee (which should be renamed the corporate and special interest committee) which ripped out anything good in the bill and put in tons of corporate pork.
Then they call a very quick vote and get this turd passed...
all the while people are confused even about it and don't write
their representatives bitching their heads off...because in the press a month ago was a story about how this bill was ok.

But, guess what a fast one is pulled, now the bill isn't what it was a month ago...it's an evil special interest piece of shit and nobody
even complains until it's too late.

Originally the bill was to simply relieve the WTO successful
complaint brought by the EU on the US ETSI tax credit, worth $5B
and put in $137B of tax cuts which are almost all pork, especially
for the pharmaceutical and high tech corporations.

[trezic]

13. Interesting

The Cato material was especially interesting. I'm just curious how a company can be oversubsidized, overtaxed, and overregulated all at the same time. It seems that the taxes and subsidies would cancel each other out, eh?

I think Cato had half a point with targeted tax breaks as well. While it can be, and has been, a political tool, it can also serve as incentive for expansion into new areas that are of low or marginal profitability. Libertarians just never want to admit that it's not the 18th century anymore.

[DaedelusNemo]

16. *initially* of low or marginal profitability

minor emendation. If it's permanently of low profitability, there's no point in supporting it (unless of course there are other motives, like wanting people to get water or whatever.) Helping to get a new industry over the initial hump, on the other hand, is a great idea for increasing opportunity all around.

I've just about come to the conclusion that i can't use the word libertarian anymore, just like i can't use the word liberal. They've both been so effectively branded as extremist ideology (partially by Cato) as to blind folks to the beliefs of the larger population who now have to try to come up with new words to express themselves.

/edit: dangling participle

[trezic]

20. Well

I don't mean to portray them as extremists. They're usually idealists, in the best sense of the word. While I can agree with their core principles of freedom, both personal and economic, I recognize that everything has its limits.

[DaedelusNemo]

21. But most of them agree with you

and that's not what comes across from the Libertarian party or from the supposedly-libertarian-but-republican-funded think tanks - or, indeed, a lot of the posters who will identify themselves as libertarian. Their vision of libertarianism is in fact anarchy, not libertarianism. Libertarianism traditionally was for 'government which governs least', not 'no governing at all.'

Most people will agree simultaneously that they don't want the government to be any larger or interfering than it need be - and that they want a guarantee of affordable health care for everybody. The range of disagreement about which government is necessary, and which isn't, isn't nearly so wide amongst most people as the "Libertarians" and republican politicians try to make it seem.

See, i'm not sure what to do about this. Living in a red state, and talking to people online, i know that many people who usually vote republican usually do so because they believe the republicans are the party of small government and maximum freedom - and that these people are very disappointed with Bush, and very wary of the theocrats who want to dismantle the seperation of church and state.

These are the people that i refer to as libertarians, many of whom don't know the word. They could be called left libertarian or social libertarian if you like, since they do believe the gov't should play a role in guaranteeing 'life, liberty, and the pursuit of happiness', including retirement and health care and education and the rest of it.

But when i try to talk to democrats about attracting these people - and mind you, the dems are already officially for fiscal conservatism and civil rights, they just need to package it better - it is clear from the response i get that the well has been thoroughly poisoned for the word 'libertarian'. But how, then, do i talk about this very large group of people who are being pushed away by the republican big money-theocrat alliance and could be so easily pulled in by the democrats simply by expressing their principles better?

[Robert Oak]

23. try corporate sponsored think tanks

Koch is behind the Cato institute

http://www.disinfopedia.org/wiki.phtml?title=Charles_G._Koch_Charitable_Foundation

They are as "ideal" as whatever their short term profit margins need.

Listening to them is like listening to Ford tell you their Explorers
never had a problem with rolling over and all of their cars are great.