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Forbes: Bill Gates Points To The Best Tax System, The Progressive Consumption Tax

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Forbes: Bill Gates Points To The Best Tax System, The Progressive Consumption Tax (Part 1)
Forbes Welcome


In a meeting at the AEI Bill Gates points to what economists will argue is the best possible tax system, the progressive PGR -1.01% consumption tax. It’s worth pointing out the details of quite why economists think this is such a good tax:

I think tax structures will have to move away from taxing payroll. … Technology in general will make capital more attractive than labor over time. Software substitution — whether it’s for drivers or waiters, nurses … it’s progressing. And that’s going to force us to rethink how these tax structures work in order to maximize employment given that capitalism in general over time will create more inequality, and technology over time will reduce demand for jobs, particularly at the lower end of the skill set. We have to adjust, and these things are coming fast. Twenty years from now, labor demand for lots of skill sets will be substantially lower, and I don’t think people have that in their mental model. … Economists would have said a progressive consumption tax is a better construct at any point in history. But what I am saying is that it’s even more important as we go forward because … I want to distort in the favor of labor. …When people say we should raise the minimum wage — I know some economists disagree — but I worry about what that does to job creation. The idea that through the Earned Income Tax Credit you would end up with a certain minimum wage that you would receive, that I understand better than intentionally dampening demand in the part of the labor spectrum that I’m most worried about.
 
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fair use viol
 
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There are a few things that I like about this. I will have to make some time to research it.
 
How would this not effect the economy? Everyone would be saving more and spending less, good on a personal level but a recipe for a massive recession.
 
How would this not effect the economy? Everyone would be saving more and spending less, good on a personal level but a recipe for a massive recession.

There would still be enough to go around towards strengthening the economy, and - more importantly - fixing a major failure of America's taxation-system. That is, its inherent Income Inequality.

Of course, if you don't care about Income Inequality, then you need not read any further. If, otoh, you are, then consider the Gini Index that gives us an idea just how "unfair" the US is in terms of the sharing the income all of us in a market-economy help generate - first as workers and then as consumers:

Gini Index.jpg

Note the distance between the US (in the mid-40s) and European Countries below, where taxation is higher, but Civil Services are also more prolific (National Health Service, Free Tertiary Education) ...
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There would still be enough to go around towards strengthening the economy, and - more importantly - fixing a major failure of America's taxation-system.

No there wouldn't be "enough to go around" every dollar saved and untaxed would be a dollar taken out of the economy and having a "fair" tax policy is not more important than the economy health
 
No there wouldn't be "enough to go around" every dollar saved and untaxed would be a dollar taken out of the economy and having a "fair" tax policy is not more important than the economy health

You're reaction is the sort of knee-jerk blindness to the facts displayed apparently.

The lower Gini Coefficient means that more of the Income generated by a market-economy is shared within that economy. Which means what? More people have more money since they have more income, so they buy more - thus sustaining a higher level of employment. (Of course, there is no prevention of an economic dysfunction, as in the Great Recession. But that recession was due mostly to Banking Regulator Oversight Negligence, ie., the FRB.)

That outcome is better for everyone, which is what Gates is trying to say ...
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Forbes: Bill Gates Points To The Best Tax System, The Progressive Consumption Tax (Part 1)

And the general answer is that fairness in a taxation system requires that those with the greatest capacity to pay should pay more tax than those with a lesser capacity to pay. This is accepted by pretty much everyone.

Hes wrong. Fair means equal. Progressivism is not equal. 2 people pay vastly different sums for the same return, which is again, unequal.

And its certainly accepted by pretty much everyone. He should probably stick to what he is good at, making software.
 
Hes wrong. Fair means equal. Progressivism is not equal..

You need a dictionary. Fair is fair, and equal is equal. They do not mean the same.

The issue is this: America is a country with a serious problem of Income Disparity, or Income Inequality. Think of it simply as Income Unfairness.

Nobody is saying that all individuals should have equal-incomes. Just that a progressive tax would reduce the unfairness of incomes that exists today.

Piketty's research showed the disparity starkly in the US. Since Income after taxation becomes Wealth (From The Economist: Piketty Split):
Piketty Split.jpg

Do you understand the importance of that infographic? It's on the right-hand side, and says "The national ratio of wealth-to-income of the 1% of households equals that of the 90% (of households)". Both around 20%.

Given the number of people living in the US, that has to be one of the most UNFAIR divisions of wealth of any country on earth.

If not the most ...
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You need a dictionary. Fair is fair, and equal is equal. They do not mean the same.

The issue is this: America is a country with a serious problem of Income Disparity, or Income Inequality. Think of it simply as Income Unfairness.

Nobody is saying that all individuals should have equal-incomes. Just that a progressive tax would reduce the unfairness of incomes that exists today.

Piketty's research showed the disparity starkly in the US. Since Income after taxation becomes Wealth (From The Economist: Piketty Split):
View attachment 67202774

Do you understand the importance of that infographic? It's on the right-hand side, and says "The percentage of total net household income of the 1% of households equals that of the 90% (of households)".

Given the number of people living in the US, that has to be one of the most UNFAIR divisions of wealth of any country on earth.

If not the most ...

Fair: treating people in a way that does not favor some over others

Fair | Fair Definition by Merriam-Webster

Fairness is not about outcome, its about treatment. The govt should treat everyone the same, regardless of how wealthy they are. The purpose of taxation is to pay for govt services, not to effect social outcome.
 
Fair: treating people in a way that does not favor some over others

Fairness is not about outcome, its about treatment. The govt should treat everyone the same, regardless of how wealthy they are. The purpose of taxation is to pay for govt services, not to effect social outcome.

It's about both. For any outcome, treatment is necessary.

So, it all depends upon what you mean by "treat".

Do you mean in terms of personal income taxation, a flat-rate across all incomes?

That's is not happening. The tax is progressive only for the lowest levels of Income. Above $64K, it becomes a flat-tax. Which is the principle reason that a tiny, tiny proportion of the Very Rich (1%) have the same portion of Wealth as 90% of the rest-of-us.

That is gross unfairness ...
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It's about both. For any outcome, treatment is necessary.

So, it all depends upon what you mean by "treat".

Do you mean in terms of personal income taxation, a flat-rate across all incomes?

That's is not happening. The tax is progressive only for the lowest levels of Income. Above $64K, it becomes a flat-tax. Which is the principle reason that a tiny, tiny proportion of the Very Rich (1%) have the same portion of Wealth as 90% of the rest-of-us.

That is gross unfairness ...
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No, its not about both. All people are equal and have the same rights to liberty. What they do with it has no relation to the tax they owe society for protecting that liberty. My having a bigger house than yours is not unfair. You have the exact same opportunity to achieve it if thats how you choose to pursue happiness. If you decide to become a teach instead of a actor, and make 100x less, you still have the same obligation to pay for the society that protects your right to choose that path. Not 100x less obligation.
 
My having a bigger house than yours is not unfair. You have the exact same opportunity to achieve it if thats how you choose to pursue happiness.

Your notion of "liberty" seems self-centric. It's not about you having a bigger house than me. Be my guest. Or "choose" liberty. (Given its obverse, who would "choose" it?)

It's about you having ten houses, his 'n hers Ferraris for each, a jet to get those in the Caribbean or the Swiss Alps. Etc., etc., etc. Whilst 50 million Americans live below the Poverty Threshold. This nation is made up - at opposite ends - of both kinds of families.

And there is absolutely no such rule in our democracy as "Survival of the fittest", which Darwin intended for a world of unknowing animals. Neither is there any endemic right stipulated in the Constitution to become massively rich. And in the notion of liberty is fairly easy to understand.

From WikiP:
Liberty, in philosophy, involves free will as contrasted with determinism. In politics, liberty consists of the social and political freedoms to which all community members are entitled. In theology, liberty is freedom from the bondage of sin. Generally, liberty is distinctly differentiated from freedom in that freedom is primarily, if not exclusively, the ability to do as one wills and what one has the power to do; whereas liberty concerns the absence of arbitrary restraints and takes into account the rights of all involved. As such, the exercise of liberty is subject to capability and limited by the rights of others.

One of those restraints principally is "poverty". One neither wills themselves into or out of poverty. It's mostly a matter of birth. (Trump likely would not be so rich had he NOT inherited $40M from his father.)

Exiting poverty requires the support of the community - notably in learning and obtaining the skills that a functioning market-economy requires. Which is why we have (very late in our existence) developed free Primary/Secondary Education a hundred years ago. We should now take the step up to free Tertiary Education, uniquely because (like 100 years ago) it is now necessary.

There is no inherent right to become massively rich, especially when one benefits from fruits of someone else's labor in order to enrich themselves grossly because the nation was not sufficiently intelligent to implement adequate progressive taxation.

There is an inherent right to obtain a decent education that gives you the intelligence to become rich.

Nobody has a right to a free lunch, but yes there is an innate right to health of both body and intelligence; and the nation should be largely responsible for assuring that such individual investments are available to all and sundry.

According to their abilities, limited only by their desires. Our present system of education, however, makes a mockery of that "right" ...
 
Your notion of "liberty" seems self-centric. It's not about you having a bigger house than me. Be my guest. Or "choose" liberty. (Given its obverse, who would "choose" it?)

It's about you having ten houses, his 'n hers Ferraris for each, a jet to get those in the Caribbean or the Swiss Alps. Etc., etc., etc. Whilst 50 million Americans live below the Poverty Threshold. This nation is made up - at opposite ends - of both kinds of families.

And there is absolutely no such rule in our democracy as "Survival of the fittest", which Darwin intended for a world of unknowing animals. Neither is there any endemic right stipulated in the Constitution to become massively rich. And in the notion of liberty is fairly easy to understand.

From WikiP:

One of those restraints principally is "poverty". One neither wills themselves into or out of poverty. It's mostly a matter of birth. (Trump likely would not be so rich had he NOT inherited $40M from his father.)

Exiting poverty requires the support of the community - notably in learning and obtaining the skills that a functioning market-economy requires. Which is why we have (very late in our existence) developed free Primary/Secondary Education a hundred years ago. We should now take the step up to free Tertiary Education, uniquely because (like 100 years ago) it is now necessary.

There is no inherent right to become massively rich, especially when one benefits from fruits of someone else's labor in order to enrich themselves grossly because the nation was not sufficiently intelligent to implement adequate progressive taxation.

There is an inherent right to obtain a decent education that gives you the intelligence to become rich.

Nobody has a right to a free lunch, but yes there is an innate right to health of both body and intelligence; and the nation should be largely responsible for assuring that such individual investments are available to all and sundry.

According to their abilities, limited only by their desires. Our present system of education, however, makes a mockery of that "right" ...

Yes, there is a inherint right to obtain an education, by paying for it. There is no inherint right to make someone else pay for it.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

There are your inherint rights. Until you pass an amendment which says Im not at liberty to have as many houses as I want, then I do.
 
Yes, there is a inherint right to obtain an education, by paying for it. There is no inherint right to make someone else pay for it..

Right, so you want to go back in time and make primary- and secondary-education payable.

Will wonders never cease in this forum ...
 
THREAD RESTART FROM FORBES

Bill Gates Points To The Best Tax System, The Progressive Consumption Tax

Excerpt:

Tim Worstal: In a meeting at the AEI Bill Gates points to what economists will argue is the best possible tax system, the progressive PGR -0.74% consumption tax. It’s worth pointing out the details of quite why economists think this is such a good tax:

Bill Gates: I think tax structures will have to move away from taxing payroll. … Technology in general will make capital more attractive than labor over time. Software substitution — whether it’s for drivers or waiters, nurses … it’s progressing. And that’s going to force us to rethink how these tax structures work in order to maximize employment given that capitalism in general over time will create more inequality, and technology over time will reduce demand for jobs, particularly at the lower end of the skill set. We have to adjust, and these things are coming fast.

Economists would have said a progressive consumption tax is a better construct at any point in history. But what I am saying is that it’s even more important as we go forward because … I want to distort in the favor of labor. …When people say we should raise the minimum wage ... but I worry about what that does to job creation.

There’s two parts to why such a progressive consumption tax is regarded so highly by economists. The first part speaks to efficiency, the second to equity.

To deal with the second idea first: despite many thinking that economists are simply the handmaidens of the oppressor class of the 1% “what’s fair?” is a question that is asked rather a lot in the halls of academe. And the general answer is that fairness in a taxation system requires that those with the greatest capacity to pay should pay more tax than those with a lesser capacity to pay. This is accepted by pretty much everyone: that average tax rates should rise with income. Sure, some to many go on and insist that the rich should pay much more than this, face rising marginal rates perhaps, but the original contention is supported by pretty much everyone. And that’s where the “progressive” part comes in. It doesn’t mean that there has to be a number of different tax rates: that would be insisting that there must be higher marginal rates. All you need to have rising average tax rates is that there is a flat tax with some non-taxable allowance at the bottom of it.

A progressive tax-rate is progressive from the beginning to the end. Ours is presently progressive up to $64K of household income, then becomes a flat-tax at 28/30%. Flat-taxes are dangerous instruments, especially when incomes become astronomic as they do for the 1Percenter group of households.

The idea that all income below the Poverty Threshold ($24K for a family of 4) should go untaxed - if combined with a minimum wage of $10/15 an hour - would work wonders for those below the Threshold. But the taxation progressiveness must be constantly increased up to an including the 1Percenter households in order for income-gusher to come to a stop.

As regards the above red-outlined part of the quote, it seems that Gates is forgetting that progressiveness in taxation cannot exist by raising "average tax rates". Progressiveness, for it to really work, must show increased taxation percentages at each incrementally higher level of Income.

MY POINT

If a reformation of the tax-system does not happen, then nothing will effectively change the Income Disparity rampant in the country today ...
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- fixing a major failure of America's taxation-system. That is, its inherent Income Inequality.

So then why not end liberal policies that cause inequality:


1) liberals destroyed the family creating millions of poor single Mom's unsuited for work and equality


2) liberal unions drove 30 million jobs off shore


3) highest liberals corporate tax rate in world drove 20 million jobs off shore


4) liberal deficits encourage China and Japan to buy our debt rather than our products with their dollars


5) Obamacare prevents businesses from hiring and growing thus recessing 20% of our economy


6) Liberal union war on our schools has destroyed them rendering many of our kids fit for work!!


7)) Liberal war on religion has has left many Americans aimless and without drive or ambition and thus inequal.


8) Liberals support minimum wage making it illegal to hire many who then cant achieve equality


9) liberals invited in 20 million illegals to take our jobs thus making equality impossible for 20 million.
 
THREAD RESTART FROM FORBES

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Not sure why youre restarting. Nothing has changed. His opinion is no better than it was when you first posted it. Fair means equal, and progressive taxation is not equal. 1% of the citizens pay 30% of all income tax. And 80% of all spending goes to the bottom 99%. That is the definition of unfair taxation. When the constitution was written, and for the first 150 years, all taxes where required to be uniform, and spending was required to benefit the general welfare, not specific individuals.

It wasnt until the interventionism and welfare state of the early 1900s came around that the govt became unfavorable, and they had to start stealing from business owners and the rich to pay for it.
 
How would this not effect the economy? Everyone would be saving more and spending less, good on a personal level but a recipe for a massive recession.

spending less is a bad thing? What kind of ****ed up economy fails if you save money?
 
Fair: treating people in a way that does not favor some over others

Fair | Fair Definition by Merriam-Webster

Fairness is not about outcome, its about treatment. The govt should treat everyone the same, regardless of how wealthy they are. The purpose of taxation is to pay for govt services, not to effect social outcome.

good, so let's stop using a tax policy that creates an uber-rich overclass.
 
Not sure why youre restarting.

Because I first posted the entire text, and was set upon by the "powers that be" in this forum. (Unknown creatures that they are.)

The full-text was dumped, and so I restarted it with the smaller excerpt.

It wasnt until the interventionism and welfare state of the early 1900s came around that the govt became unfavorable, and they had to start stealing from business owners and the rich to pay for it.

Leave your BS about "stealing" in the toilet, where it belongs way down in the bog ...
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Because I first posted the entire text, and was set upon by the "powers that be" in this forum. (Unknown creatures that they are.)

The full-text was dumped, and so I restarted it with the smaller excerpt.



Leave your BS about "stealing" in the toilet, where it belongs way down in the bog ...
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I can tell your not interested in actual debate, so Ill just leave you to your yes men.
 
pretty much all of them, especially one like ours built on needing an ever expanding GDP as well as a large service industry

Americans are savers now. It's a problem for the economy - Jun. 1, 2015

Rising savings rate could cause problem for economy - Feb. 12, 2009
I don't think that's necessarily a problem with the economy, as much as it's a problem with sellers either not providing anything worth buying, or everything that is worth buying is too expensive. It's not so much a problem as much as it is a sign of other things going on. Kinda like coughing doesn't make you sick, but it's a sign you might be sick.
 
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