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How would you create a fair tax system?

Under this premise I believe we would see little change in the current way of things. One could claim that nearly all programs have a blanket positive effect therefor everyone should pay for them leading to what we have now.

Not necessarily. Running a zoo is hardly education. Nor is restocking lakes and ponds. There are a great many things while marginally beneficial, aren't things government should be doing. I'm talking about major benefits.
 
I would cut corporate taxes to almost nothing, dramatically raise the inheritance tax and slightly raise the capital gains tax. Most importantly, the system needs to be dramatically simplified. The system of deductions and credits is so complex it brings the whole system down. I would also look into replacing brackets with a formula that averages the same tax rate.
 
I would cut corporate taxes to almost nothing, dramatically raise the inheritance tax and slightly raise the capital gains tax. Most importantly, the system needs to be dramatically simplified. The system of deductions and credits is so complex it brings the whole system down. I would also look into replacing brackets with a formula that averages the same tax rate.

Why in the world would you do that?
 
I am also for removing alot of the child labor restrictions. Not all but many. I do not think a child in the US should be forced to work but I believe they should be allowed to if they are willing.

Kal'Stag, you may think I come off as a cold hearted sob by removing alot of the government aid that our current system offers. I assure you I am not. I have done much for elderly people in my life but I chose to help them. If I had been forced I would have done everything possible not to. Thats just the way I am ;).

Many people think that if government systems were removed that we would suddenly have an epidemic on our hands. I disagree. Look at our country before we had such programs and you will find that Americans can be very generous. Like me people volunteer to help their neighbors in times of need. Families often cared for members when they were ill or down on their luck. The problem with government system is (I believe the majority) on the system choose the system and are forcing other to pay for them.

My own grandparents rarely ever worked. They were pefectly able people but they chose not to because the government fed them. If the government had not given them food they would not have starved to death but instead would have worked. I have never heard of a case of someone starving to death because the could work and eat or starve and chose to starve.


Its naiive to think that taking away government institutions would fix everything, just like its naiive to think that economic planning can work.

The thing is that government is not too different from any other institution in the private sector (firms, non-profits, corporations, etc.) ... it is a form of organization that converts the choices of individuals into collective action.

Government was formed to protect the fundamentals that our society is built on. From a free market perspective, a government sets certain rules by which a free market can then operate (significantly different from economic planning).

We know from history that child labor laws were needed to prevent exploitation and produce a healthy/competitive society. so that is a game rule that we cannot generally part with.

Public education? Public health care? maybe that can be discarded with, but I do believe that certain regulations are still necessary. In other words, the government needs to produce certain rules for firms to operate within. As long as these rules don't infringe upon basic market dynamics, the results should be fairly efficient.

Taxes are inevitable (every institution (including government) has operating costs that need to be met). And you talk of voluntary taxes... free-rider problems severely limit their effectiveness. In other words, people want govt, but if you gave them the choice to pay taxes, they would try putting it off on others. Thats human nature.
 
Increase philanthropy. When you know that your heirs won't get much and you don't have lots of time to spend, you go out and give it to charities. That's more or less Buffet's reason.

So whats the use of saving to help support your kids after you die so that they can (hopefully) lead a better life than you?

I don't care what Buffet does.
 
Increase philanthropy. When you know that your heirs won't get much and you don't have lots of time to spend, you go out and give it to charities. That's more or less Buffet's reason.

Bull****.

When I know the government is going to steal it and I can't leave it for my kids, I either figure out back door ways to leaving it to them or I spend it on myself.
 
Taxes are inevitable (every institution (including government) has operating costs that need to be met). And you talk of voluntary taxes... free-rider problems severely limit their effectiveness. In other words, people want govt, but if you gave them the choice to pay taxes, they would try putting it off on others. Thats human nature.

This is a very astute observation imo, especially the sentence in bold. Very good post sir.
 
So whats the use of saving to help support your kids after you die so that they can (hopefully) lead a better life than you?

Depends what you mean by support. Leaving around enough so that your kids can be successfully through work is different than leaving enough so that your kids never have to work a day in their lives.

I don't care what Buffet does.

Perhaps not, but Buffet is indeed leaving something like $5 million for each of his kids. Enough for each to do what they want, but not exactly enough to do nothing for their entire lives.
 
The point of raising the inheritance tax is that it lets you have a lower tax burden on income. Its not really an argument that heirs shouldn't be allowed to inherit money, but that they should be taxed before those who are earning it in the workforce.
 
The point of raising the inheritance tax is that it lets you have a lower tax burden on income. Its not really an argument that heirs shouldn't be allowed to inherit money, but that they should be taxed before those who are earning it in the workforce.

The only tax heirs should pay on their inheritance is nothing. The money's already been taxed, the government has no moral claim to it.

If one wanted to falsely argue that it should be taxed, the inheritance should be counted as nothing more than income and taxed at whatever rate the heir pays at when he files his 1040.

There's nothing special about an inheritance that makes it deserving of special grabbing from the government. It's not the government's money.
 
Depends what you mean by support. Leaving around enough so that your kids can be successfully through work is different than leaving enough so that your kids never have to work a day in their lives.

What business is it of yours, or anyone else's?
 
The point of raising the inheritance tax is that it lets you have a lower tax burden on income.

That's one view on it.

Its not really an argument that heirs shouldn't be allowed to inherit money, but that they should be taxed before those who are earning it in the workforce.

As I understand what Buffet argued, he doesn't want to create a class of people who do nothing for society but live off their inheritance.
 
Its naiive to think that taking away government institutions would fix everything, just like its naiive to think that economic planning can work.

The thing is that government is not too different from any other institution in the private sector (firms, non-profits, corporations, etc.) ... it is a form of organization that converts the choices of individuals into collective action.

Government was formed to protect the fundamentals that our society is built on. From a free market perspective, a government sets certain rules by which a free market can then operate (significantly different from economic planning).

We know from history that child labor laws were needed to prevent exploitation and produce a healthy/competitive society. so that is a game rule that we cannot generally part with.

Public education? Public health care? maybe that can be discarded with, but I do believe that certain regulations are still necessary. In other words, the government needs to produce certain rules for firms to operate within. As long as these rules don't infringe upon basic market dynamics, the results should be fairly efficient.

Taxes are inevitable (every institution (including government) has operating costs that need to be met). And you talk of voluntary taxes... free-rider problems severely limit their effectiveness. In other words, people want govt, but if you gave them the choice to pay taxes, they would try putting it off on others. Thats human nature.

I didnt see anything that we are really disagreeing on. Taxes to run basic services would be necessary and I do not dispute that. Those would be paid by everyone. But non escentual programs would be voluntarily paid.
 
The only tax heirs should pay on their inheritance is nothing. The money's already been taxed, the government has no moral claim to it.

Not really. Generally those who will see the estate tax are those making significant amounts of money and thus those in the highest tax brackets. Guess what those people do? They invest the money into state municipal bonds which are tax free. So thus, that money has not been taxed. Basic allocation of high income workers dictates that they seek the lowest marginal tax for their investments. While the marginal tax is actually quite high on municipal bonds in the form of opportunity cost, the effective tax is quite low by comparison. And someone with a decent estate planner will simply take the money earned from tax free municipal bonds and reinvest them as they mature. So imagine taking $10 million in munibonds with a return of 4%. Over the course of 20 years, with full reinvestment, the amount of money at the end is almost $22 million. None of that $12 million was taxed. Another 10 years and it's over $32 million.
 
Reduce the amount of the GDP that government, at all levels, can take to 3%. At that low a level, any halfway-equitable distribution would be so fair we'd barely notice that we were paying tax.


For a very long stretch of our history, that was about what government got, 3% of the GDP.


No, I'm not entirely serious. We'd have to change dramatically as a nation. We'd have to eliminate all entitlements and social programs, close down about two-thirds of gov't bureaucracies and cut staff by 60% in the rest, cut the military in half and make most of the remainder "Reserves", and give up fighting overseas unless our survival is demonstrably on the line, cut down on lots of regulation as being unenforceable with such decimation of the size of the bureaucracy...

Say, ya know, that doesn't sound half bad...


G.
 
Depends what you mean by support. Leaving around enough so that your kids can be successfully through work is different than leaving enough so that your kids never have to work a day in their lives.

Who cares if they have enough money to never have to work again. What is it to you? If they have enough money to live without having to work they certainly are not going to be using any of the tax money for medical reasons either. Or use up any government welfare.

Perhaps not, but Buffet is indeed leaving something like $5 million for each of his kids. Enough for each to do what they want, but not exactly enough to do nothing for their entire lives.

Once again..so? I could easily live off of $5 million for the rest of my life. And leave some for my kids ta boot.
 
The only tax heirs should pay on their inheritance is nothing. The money's already been taxed, the government has no moral claim to it.

All money gets taxed multiple times. The company I works for pays corporate taxes, I pay income taxes on my salary, I pay tax on the stuff I buy, which then becomes corporate revenue ect. Taxation is a zero-sum game. Not taxing inheritance means you have to tax working people more.

If one wanted to falsely argue that it should be taxed, the inheritance should be counted as nothing more than income and taxed at whatever rate the heir pays at when he files his 1040.

Depending on how your tax brackets work, that isn't a terribly unreasonable level.

There's nothing special about an inheritance that makes it deserving of special grabbing from the government. It's not the government's money.

Is there something special about me getting paid that makes it the governments money? Taxes are a requirement to pay for our government, and they need to gathered one way or another. I fail to see why getting money from dead relatives is more special than getting it from a job.
 
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Not really. Generally those who will see the estate tax are those making significant amounts of money

Irrelevant. Its STILL not the government's money.

and thus those in the highest tax brackets.

It's immoral and a violation of the Fourteenth Amendment to 'bracket" people into taxable classifications.

Guess what those people do? They invest the money into state municipal bonds which are tax free. So thus, that money has not been taxed.

You mean they obeyed existing law to guide their investments?

This is some kind of crime that necessitates posthumous punishment?

Basic allocation of high income workers dictates that they seek the lowest marginal tax for their investments.

The implication being that low income workers seek to pay more taxes, or that their too stupid to figure out what to do with their money? Whatever.

You still haven't said where the crime was committed that makes differential taxation moral.

While the marginal tax is actually quite high on municipal bonds in the form of opportunity cost, the effective tax is quite low by comparison. And someone with a decent estate planner will simply take the money earned from tax free municipal bonds and reinvest them as they mature. So imagine taking $10 million in munibonds with a return of 4%. Over the course of 20 years, with full reinvestment, the amount of money at the end is almost $22 million. None of that $12 million was taxed. Another 10 years and it's over $32 million.

Uh-huh.

And when people take withdrawal from their 401(k) they pay tax at the current rate for their income that year, even though it's never been taxed in the forty years it's been sitting in the account.

So your argument that SOME inherited wealth hasn't been taxed does not justify the government stealing the money when it's finally re-entering the market. Oh, and btw, the seller of those tax free munies has been EARNING a heck of a lot more than the 4% interest he's been paying on it, so it's not like the municipality it taking a loss on those bonds, oh no, so any argument that "full value" wasn't earned or given on the bonds is just nonsense.

So. Tax deferred 401(k) funds are taxed at current rates on disbursement, but you're claiming that tax free munies (and all inherited monies) should be taxed at incredible rates just because there's a lot of money there.
 
By that reasoning, trusts shouldn't be taxed and therefore be allowed to accumulate all of the money in the world because it's not our business.

No. That doesn't follow at all. It's a statement worthy of aiming your "gun" at. :roll:
 
All money gets taxed multiple times. The company I works for pays corporate taxes, I pay income taxes on my salary, I pay tax on the stuff I buy, which then becomes corporate revenue ect. Taxation is a zero-sum game. Not taxing inheritance means you have to tax working people more.

Not if you stop spending their money on crappy unconstitutional government programs.

Depending on how your tax brackets work, that isn't a terribly unreasonable level.

More to the point, it's perfectly reasonable.

Is there something special about me getting paid that makes it the governments money? Taxes are a requirement to pay for our government, and they need to gathered one way or another. I fail to see why getting money from dead relatives is more special than getting it from a job.

Because in reality it's not coming from dead relatives, it's coming from living heirs.
 
Not if you stop spending their money on crappy unconstitutional government programs.

Except if you cut spending, you should be able to lower taxes if revenue needs are decreased. In fact, if you had the inheritance tax alongside of the income tax, you could cut them both. No matter how you slice it, not having an inheritance tax requires a higher income tax.


Because in reality it's not coming from dead relatives, it's coming from living heirs.

That makes no sense. Living heirs are getting money from their dead relatives, that is the very definition of inheritance. In any case, it doesn't change my point.
 
Except if you cut spending, you should be able to lower taxes if revenue needs are decreased. In fact, if you had the inheritance tax alongside of the income tax, you could cut them both. No matter how you slice it, not having an inheritance tax requires a higher income tax.

Sounds perfectly fair to me.

Just because it cuts the cost down to strangers you never met is no good reason to support any form of theft by the government.

Everyone should pay either the same dollar amount of taxes, or the same tax rate on their total annual income, be that income arise from straight wages, wages plus interest, interest alone, gifts, or inheritances.

The title of the OP is "fair" tax, isn't it?



That makes no sense. Living heirs are getting money from their dead relatives, that is the very definition of inheritance. In any case, it doesn't change my point.

The dead, by definition, own no property. The estate is immediately the property of the heirs, who are alive. That the process of transferring the titles and sorting out the details takes time matters not, it's theirs from the date of death.
 
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