What is the most fair form of taxation?

[begin_within]

Which is the most fair and equitable way for governments to raise revenue?

[Donald Ian Rankin]

1. Inheritance tax is a tax on strictly unearned wealth.

It also does less to retard the economy than most other forms of taxation.

[Zynx]

2. It also does not raise that much revenue.

It is also very unstable as a source of revenue.

[MNDemNY]

5. Maybe, but very effective as a social engineering tool.

[Zynx]

It's also easy to dodge. That's my other problem with it.

[Romulox]

39. That's because 99% of estates are exempt. nt

[MNDemNY]

44. It is the 1% that need to be "dismantled". IMO

[Zynx]

45. Most of the value in estates is in the top 5%. That falls, or at least fell, under

the scope of the estate tax. It's just that the fraction of the population that dies and the ways people dodge it make it not sufficient.

[Romulox]

46. It's not a valid argument to say that "it doesn't raise much revenue" if most estates are excluded.

[Zynx]

49. I just explained why that doesn't matter.

Also, if you want to tax $200,000 estates at 50%, be my guest in getting that passed.

There's not that much money there in any case. Wealth is significantly more concentrated than income. Therefore, there is little to be gained by expanding the base.

The estate tax is not a good source of revenue period. Given what a small chunk of the budget that ever was, the burden is on you, my friend, to prove otherwise.

[KittyWampus]

3. I've been working at my family's business my whole life. Please explain how my

inheriting it is "unearned".

[Donnachaidh]

8. So you haven't had a salary all those years?

You basically worked for free?

[MannyGoldstein]

10. Assuming that you're fairly compensated for your efforts...

Then the inheritance is unearned.

[TahitiNut]

18. You should be compensated for your labor - salary and possibly equity.

An inheritance is, itself, gained solely through the death of another person. There is no inherent 'earning' in an inheritance.

Of the three typical forms of income (wages, gains, and inheritance), only the first is derived from one's own labors. Capital gains, usually on stock, are attributable to the labors of others.

Strangely, we tax the income MOST that is MOST attributable to our own labors. That's stupid, imho.

[Zynx]

22. However, I think it would be silly to tax gains in equity too much.

The fact is that invested capital is needed to get the economy growing. People do need to earn a return on it. Ironically, Bush was extremely poor at growing private investment, while Clinton succeeded more than any president since FDR.

[TahitiNut]

29. The gain is taxed only when the 'investment' is SOLD (i.e. no longer invested).

Try this for a mental exercise: What can a person do with their accumulated wealth other than 'invest' it???

Even people with only bank deposits are 'investing' it. There is very little kept in mayonnaise jars buried in back yards.

In my view, capital gains should be taxed at a MORE PROGRESSIVE rate than earned income. At the lower end, I'd tax it less than earned income, up to about an average annual salary. After that, I'd apply rates higher than earned income but based on 'income averaging' to determine the bracket. I'd also exempt increases matching inflation and allow offsetting capital losses. Short term capital gains (held less than a year) should be taxed the same as ordinary earned income.

(I'd also impose up to a 1% federal sales tax on the sale or exchange of equities.)

[Zynx]

30. Long term capital gains should be taxed less than short term.

If you have short term taxed less, you are rewarding speculators and discouraging long term investment. We need more long term investment, not less. I don't think people should be penalized for providing more money for long term investment.

[TahitiNut]

51. Encouraging longer term investment (and genuine interest in business health) ....

... is part of why I believe a federal sales tax of up to 1% on the sale or exchange of corporate equities is a very good idea. The notion of "day-trading" and treating the equities markets as casinos is, I believe, contrary to the best interests of the underlying enterprises. As it is, less than 1% of the capital traded on the market ever reaches the enterprise in the form of plant, equipment, or wages. So, to call that money an 'investment' has become a misleading euphemism. (Yes, I do understand the need for secondary markets.)

[Zynx]

52. I agree on that. I think there should be a financial transactions tax.

It could be just 0.5% and yield just as much as the capital gains tax currently does with greater stability in revenues.

I think short term capital gains should be taxed mercilessly. There is no good that comes from that.

I am also referring, by the way, to privately owned businesses and equity stakes in those businesses. I want people to be encouraged to invest for long periods of time. I see no reason to tax short term gains at a preferential rate to long term gains.

[Selatius]

24. A lot of Europeans laugh when I say capital gains is taxed lower than payroll income.

In many of their countries, capital gains is taxed the same as payroll income. They are less likely to delineate a difference between earning income from one's own labor and earning income from the labor of others. Nevermind inheritance taxes. For many of them, it has been a done deal since the time of the French Revolution and the World Wars. They learned the hard way what happens when concentrated wealth falls into the hands of a few who would bend nations to their will with that power.

[Donald Ian Rankin]

25. In one sense, (at least some) capital gains are taxed.

Things like stocks and shares have their value taken into account when pricing them. To get them, you have to pay money, which (if you go back enough steps) was earned as (taxed, earned) income, and the amount of your taxed income you have to spend reflects their untaxed nature.

That breaks down when you come to gains in inherited capital, of course.

[Idealism]

4. The most impactful for sure would be Corporate profit taxes

In the later part of the 1990s and earlier this decade, corporate profits were across the board at all-time highs, yet average worker compensation during this period didn't even keep up with inflation (as worker pay failed to do since Reagan).

If the corporations who are making obscene amounts of money aren't willing to pass that profit on down to those who work for them and make that profit possible, then fuck 'em.

[corruptmewithpower]

31. Corporations don't pay taxes.

Their customers (us) just pay higher prices. Also, our relatively steep corporate tax rates put our companys at a disadvantage vs offshore competitors

[SmileyRose]

33. Snort

so much bullshit, so little time.........

[TahitiNut]

60. Indeed. All such threads seem to get at least one fallacious corporatist talking point.

The basic concept of a tax on PROFITS seems totally lost on so many. It's a shame. Even more shameful is the lack of fundamental comprehension of how such profits are distributed in today's economic system with its Gini index of over 0.55.

[Idealism]

41. Our corporate tax rates are not steep

They marginal tax rates are, but corporations admittedly never pay that. Our average corporate tax rate is in the low 20s (which puts us square in the middle of pack status with other developed nations).

The way our corporate tax structure is set up now, they can escape paying their fair share of taxes, but if you were to implement a Corporate profit tax, they wouldn't be able to. The government would have to redistribute the profits to the workers, considering the corporation sure as shit won't do it.

[corruptmewithpower]

43. Hope the government doesnt redistribute it to fat cats.

[Muttocracy]

6. I'd vote for 3 - corporate, property, and import

because those are linked to government services/oversight (infrastructure, regulation, public safety, environmental protection, public education)

edit to add - and income tax, but I'd make it steeply sloped (very high rates on wealthy, very low on middle class)

[valerief]

9. Yeah, I wanted to vote for both corporate and import, too. nt

[On the Road]

7. Nobody Selected Personal Income Tax?

It was the primary way the playing field was leveled before 1981. The percentages were just changed to lower taxes for the rich. No reason they can't change back.

[valerief]

15. The rich pay taxes? News to me! I thought only "little people pay taxes." nt

[On the Road]

28. Taxpayers with Income Over $500k

represented 0.5% of all tax returns but paid 42% of all taxes.

Taxpayers with income over $100k represented 8.4% of all tax returns but paid 82% of all taxes (both from Table 2.1 below).

The percentage used to be (and should be) higher.

Internal Revenue Official Site
Individual Statistical Tables by Tax Rate and Income Percentile

---snip

Number of Returns, Shares of AGI and Total Income Tax, and Average Tax Rates
Classified by: Selected Ascending Cumulative Percentiles of Returns Based on Income Size Using the Definition of AGI for Each Year, Table 2
Tax Years: 1986 - 2006

http://www.irs.gov/taxstats/indtaxstats/article/0,,id=133521,00.html

[Zynx]

11. I am going to say some variant of the income tax.

I think the income tax should simply be along the lines of the payroll tax with the modification that all gifts of stock and other corporate benefits should have to be accounted for in W-2s. You could tie all income to a person's Social Security number, have it instantly taken out just like with payroll taxes. Screw all the exemptions and deductions. Let's just have clean rates. We could set aside the portion for Social Security and Medicare and the excess would go into the general fund. The rates would automatically kick in at various income levels and climb as high as 40% with employer matching. With employer matching, you could get rid of the corporate income tax which is far too easy to dodge.

My criteria beyond fairness also includes stability of the revenue source because without stability of revenue it is difficult to forecast how much you have for programs. That has its own issue.

[baldguy]

12. Eat the rich!

Corporate profit tax, Inheritance tax, Property tax, Personal income tax - all of them, in that order.

[valerief]

17. Excellent. nt

[Zynx]

19. I don't like the property tax that much. My problems with it have to do with administration.

If a city that provides a lot of services tries to increase the property tax, rich people can easily leave and live in the suburbs with very little in the way of services and pay low property taxes. Meanwhile, people in the city get soaked. That's the problem with property taxes.

[Venceremos]

40. Don't like property tax either

There's just too much wiggle room for local governments to institute unfairly high property taxes, including on poor people.

We live in a rural area, with almost no services. No street lights, blacktopped and gravel roads as opposed to paved, no trash pick-up, no city water, etc. But our property taxes are almost as high as the closest metro area with full services.

Our county government managed it through the way they assess property values. We actually have a low tax rate, but properties are so grossly overvalued that we have a crushing tax debt. They've been sued for it, all the way to the state supreme court, but unfortunately, the county won.

[backscatter712]

13. Other: Progressive-taxation.

The exact mechanism doesn't really matter - income-tax works. Just so long as the richer you are, the higher your tax rate.

We still have a sort of progressive taxation in this country in that the higher your income is, the higher your tax rate is. Of course, in the Bush years, so many loopholes have been drilled into the tax code that it's effectively become regressive.

Hopefully, when the economic storm lets up, or at least dies down to a dull roar, Obama and Congress can push through some legislation to close the tax loopholes, and maybe create a new tax bracket or two that targets the Davos rich.

[corruptmewithpower]

14. Negative income tax

In a negative income tax system, people earning a certain income level would owe no taxes; those earning more than that would pay a proportion of their income above that level; and those below that level would receive a payment of a proportion of their shortfall, which is the amount their income falls below that level.

http://en.wikipedia.org/wiki/Negative_income_tax

Its biggest promoter was a crazy libertarian economist, but what the heck. A good idea is a good idea!

[Ediacara]

16. Corporate and progessive income (including big reductions in low end FICA)

NOT sales taxes.

[underseasurveyor]

20. Tax pollution

The more an industry pollutes the more they pay.

[OutNow]

21. Wealth Tax

Tax on income is progressive, but tax on wealth is more progressive. Billionaires can still use loopholes to reduce their income and therefore income tax. Since there has been a wealth distribution plan in favor of the rich for over 30 years, it's time to reverse the direction in favor of the lower 90 percent of us. Does this sound like socialism? Yup, it does.

[Zynx]

23. Very very very difficult to administer. Also, a very volatile source of revenue.

Wealth has taken a huge hit recently. Revenues would be in the toilet for government now.

[Chemical Bill]

61. Hear, hear! n/t

[Warpy]

26. OTHER: progressive income tax, only this time

let's tie it to the median wage to be calculated yearly so inflation doesn't rob us like it did when it was tied to fixed dollar amounts.

Honestly, this stuff was all hashed out a hundred years ago and worked well until the inflation of the 70s allowed Reagan to come in and fuck us all.

[Ganja Ninja]

27. There is no one type of tax that is completely fair.

I favor a combination of taxes with fewer tax loop holes over all. Simplify, set lower rates overall and make everyone pay.

[rrneck]

32. Graduated income tax

on ALL income. The highest tax on unearned income. Anybody making less than 30k pays no tax at all.

[The2ndWheel]

34. Most fair and equitable? Everyone gets to choose

Choose which taxes you want to pay, how much in taxes you want to pay, where your tax money goes, or even if you want to pay taxes in a given year. That's when things would break down though, since if people throughout history had had a choice as to pay taxes or not, we'd have a very different world. However, seeing that everything else in life which revolves around fairness and equality seems to be about choice, perhaps taxes should fall under that same umbrella.

Now, the most effective way for the government to generate revenue? Probably one of the other choices.

[Nicholas D Wolfwood]

35. Whom ever voted for sales tax is woefully misguided.

Sales taxes are a backhanded way to get poor people to pay more of the tax burden than they should. It's essentially a backdoor flat tax, because everyone has to buy stuff at some point. Worse, however, is that poor people have to spend a disporportionate amount of their income, whereas wealthier people save or invest much larger portions. Thus, the tax is disporportionately paid for by lower and middle class Americans, not upper class ones.

[SmileyRose]

36. My vote is a consumption tax.

Goods and services purchased by the end user subject to an equal percentage national sales tax. Goods imported by the end user also subject to the national sales tax. Make it progressive by deciding what income level constitutes basic necessities of life for the family size (poverty level?) and prebate every citizen the national sales tax percentage based on that income (for instance if we decide $10,000 is the minimum it takes to support a single person and the tax is 20% then they would get a "prebate" of $2000/12 each month.)

If a rich guy liquidates US assets and buys a vacation home in Paraquay then hit him with a fee to transfer wealth out of the country.

[bobbolink]

57. Great libertarian snake oil. And the poor die. But, Isuppose that's just fine with you libertarian

[Dr.Phool]

37. A new, novel, sales tax.

Eat the rich.

Serve them on a plate in a restaurant, and I'll gladly pay a sales tax on it.

[begin_within]

38. Wasn't that a Monty Python or Benny Hill sketch?

I remember some kind of skit about a restaurant for cannibals.

[FiveGoodMen]

42. Personal income tax. Progressive so that the rich pay more.

Extremely progressive so that the wildly over-compensated get to hand all their income -- beyond some threshold -- over to Uncle Sam.

Corporate profits go to those who run the corporations and those who own them (the stockholders).

Tax them enough and we probably get the money whether we take if from the corporations directly or not.

[Tierra_y_Libertad]

47. Voluntary. Where we get to choose what we fund.

[jazzjunkysue]

48. Fair is irrelevant. Think about moral, ethical, responsible, patriotic

I mean, if someone uses the american rights and privileges and capitalist system to amass a fortune, and others in society are suffering, that person is morally obligated to ascribe a portion of the wealth to those who cannot provide for themselves, like children and the elderly and the infirm.

I think that portion should rise in proportion to the amount the wealth sets them apart from the average citizen.

Fair is simply applying the same percentage to all, and it's not ethical.

[leftofthedial]

50. imprisoning the super wealthy

and divvying up their shit

[rug]

53. Everyone who voted Republican pays the cost of Iraq.

[Fire_Medic_Dave]

55. Does that mean they don't have to pay for the stuff they are against?

[rug]

56. We'd still come out ahead.

[Fire_Medic_Dave]

58. System doesn't work that way.

[BlooInBloo]

54. Option: They all have their place in the complete picture of tax burden distributiion.

It's not, contrary to simplistic Americans, all-or-nothing. It's how-much-where.

[1]

59. cigarette taxes. n/t.

[SergeyDovlatov]

62. Voluntary funding of the programs I like.

Say, Iraq war will get $0 from me.
NASA can get some, etc