Tax Reform Panel meets and is proposing changes to the tax code\

Parent Cafe
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<p>Xiggi, you are bringing up different issues.</p>

<p>It seems to bother you that a person who may not be that educated can make $60,000 a year and buy a $600,000 house. It bothers you that he doesn’t pay enough in taxes to cover public school costs.</p>

<p>That gets us into social goods vs private goods and who should pay for social goods.</p>

<p>What did I say, or Kluge, or Taxguy, that was factually incorrect?</p>

<p>We are not crippling the locomotives. That’s BS. The locomotives make more money than the rest the wagons. The locomotives are rewarded. Then look at Kluge’s report on who pays the taxes and how much. Then consider this. The locomotives need the rest of the wagons.</p>

<p>People are not sitting in a wagon and doing nothing. That’s more nonsense.</p>

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<p>“It seems to bother you that a person who may not be that educated can make $60,000 a year and buy a $600,000 house. It bothers you that he doesn’t pay enough in taxes to cover public school costs.”</p>

<p>Are you disputing the fact that the person in question does not carry his own burden, even if he would be working? </p>

<p>The individual facts do not bother me. It bothers me that people fail to see that a system that allows such situation is untenable in the long run. And yes, I question WHY others have to be paying for this person’s lifestyle and his idle place in the wagons? </p>

<p>I do not consider non-sense to use the examples -you indirectly provided- and dismantle the notion that the middle class carry the burden of taxation. Please total the net tax contributions of all the persons in the example, and then compare it to one individual with the same combined income. </p>

<p>I know Kluge’s table and fail to see how that supports the tax discrimination in favor of riches at all.</p>

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<p>xiggi, your most recent post begs a reply. I’ll start at the bottom and work up. </p>

<p>Yes, many countries in Europe have a VAT. But they also have income taxes, most at rates higher than in the US. Just as importantly, their social safety nets return taxes to a lot of the middle and lower income groups in the form of services. Remember, for example, that most of the Euro zone countries provide health care for ALL citizens. </p>

<p>Now, let’s take your example of the middle income civil servant. In most places, a $65,000 per year civil servant would not be buying a $600,000 house, unless that person likes speculation or creative finance. And, someone elsewhere could engage in the same speculation.</p>

<p>Further, I think it unfair (and perhaps slightly naive) to claim that that same income buys a better lifestyle here than elsewhere. Frankly, the data just does not support your claim, especially when, for example, you factor in the greater time off in other countries. I suspect few folks in Germany would give up their generous vacations for more income. (full disclosure: they’re being forced to give up time off for no more income in some industrial restructuring moves.)</p>

<p>yes, lifestyles elsewhere are different than here. In the UK, Germany and many other densely settled countries, you are more likely to live in a flat than a single family house. This is more due to density and lifestyle, though. </p>

<p>Finally, a comment about our poor. Yes, conditions in Western Europe are vastly better for the poor. Our health statistics like neonatal death rates, for example, are more like the emerging economies around the world than the world power we are. The conditions for many of our poor are absolutely atrocious. NO brought some of this to light.</p>

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<p>What I find so striking about all of this is the presumption that our government has the right and the obligation to redistribute income for social goals, rather than just levying that which it needs to perform its constitutional functions. It’s a moral issue, I realize, but if religious people were insisting on a government-enforced tithing system, you would all be up in arms (I forgot–you would allow the government to deprive you of arms. Whatever.) However, because you view yourselves as <em>secularly</em> moral people, you seem to feel that you have the right, duty, and obligation to impose your morality on the rest of your fellow citizens. You’re just moralistic church people, sans church.</p>

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<p>Xiggi - I agree with much of what you had to say. You do, however, seem to be hung up on some things regarding the specific people in the “middle class” article - due in part, I think, to misunderstanding based on some poorly-reported aspects of those people’s budgets. Regarding the Mornings - they’re paying over $6,000 a year in real estate taxes, which are included in their “housing” expense in the article, and represents a big part of education funding in California. The small amount of “taxes” listed in their budget is artificially low because the husband’s current income is from disability insurance. (That income is “taxable”, but it’s not clear if it’s subject to social security tax.) When he returns to the workforce his taxes will return to a higher level. So they are actually paying more than you seem to realize. Also, they had to have made a significant down payment to have only a $3,000 monthly mortgage and tax payment on a $598,000 house. I’d guess in the neighborhood of $200,000 (the article doesn’t say.). So that property represents their “savings” as well as their “lifestyle”.</p>

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<p>Xiggi, What is this idle place in the wagons? </p>

<p>A person works and makes $60,000 a year. What do you want that person to do? </p>

<p>Are cops idle in the wagons? Firefighters? Garbage collecters? The people that stock food in the store so you can eat? Truck drivers? The people that put up the stop signs so we don’t have auto accidents?</p>

<p>These people aren’t idle in a wagon? Wall Street economists? Stock analysts? Real estate brokers? Insurance brokers? Mortgage brokers? Why, because they make money?</p>

<p>Driver, you are finally figuring it out. You can be moral and not be religious. :)</p>

<p>You benefit by these social programs. I do too.</p>

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<p>NMD, As far as lifestyles and expectations of “standards”, it is hard to make correct comparisons. All I can say is that my cousins who live in Belgium drive much smaller cars (often THE single family car), live in smaller houses (with much smaller and less bulging closets), rarely have multiple televisions (that are taxed annually), earn lower NET salaries, and have smaller disposable income. Yet, they find a way to save some money. </p>

<p>I am familiar with the European situation and the inclusion of social services. Last semester, I had to research the comparative tax systems in Europe and discuss the reaction by the EU members to the entry of Slovakia and the implementation of a 19% flat tax system. As you may know, Slovakia has been a magnet for FDI and the reactions from countries such as France and Germany was virulent. However, Germany also promptly lowered its taxes and increased incentives for capital investments. </p>

<p>At that time, I used some data from <a href=“http://www.worldwide-tax.com/[/url]”>Taxes, Income Tax, Tax Rates, Tax updates Business News, Economy 2024; . Here is a table showing the Corporate taxes, the personal income taxes, and the national sales taxes or VAT HIGHEST rates. What is missing for complete comparisons are the level and impact of the social security taxes paid by employers and employess, which in some countries are very high. </p>

<p>FWIW, many countries have a hybrid system for medical coverage where the basic coverage is a governmental burden, but most expenses are covered by private insurers (for instance mutuelles in Belgium) paid by employers and employees. </p>

<p>Countries without national taxes
Cyprus(offshore) 4.25% 4.25% -
Egypt 40% 20-40% -
Hong kong 17.5% 16-20% -<br>
India 35-40% 10-30% -
Japan 30% 10-37% -
U.S.A. 35% 0-35% -
Zambia 15% 10-30% - </p>

<p>Countries with national taxes
Argentina 35% 6-35% 21%
Australia 30% 17-47% 10%GST
Austria 25% 21%-50% 20%GST
Belgium 33.99% 25-50% 21%
Brazil 34% 15-27.5% 25%
Bulgaria 15% 10%-24% 20%
Canada 32-40% 16-29% 7%
China 33% 5-45% 17%
Cyprus 10-15% 20-30% 15%
Czech Rep. 26% 15-32% 19%
Denmark 30% 38-59% 25%
Estonia 24% 24% 18%
Finland 26% 10.5 -33.5% 22%
France 34.93% 10%-48.09% 19.6%
Germany 25% 15-42% 16%
Greece 32% 0-40% 19%
Hungary 16% 18-38% 25%
Indonesia 30% 5-35% 10%/15%
Ireland 12.5% 20-42% 21%
Israel 34% 10-49% 16.5%
Italy 33% 23%-43% 20%
Latvia 15% 25% 18%
Lithuania 15% 10-35% 18%<br>
Luxemburg 30% 6-38.95% 15%
Malta 35% 15-35% 18%
Mexico 32% 3-33% 15%
Monaco 33% 0-33% 20.6%
Morocco 35% 0-41.5% 20%
Netherlands 31.5% 0-52% 19%
New Zealand 33% 0-39%% 12.5% gst%
Norway 28% 28-55.5%% 24%
Pakistan 35% 7.5%-35% 15%
Philippines 32% 5-32% 10%
Poland 19% 19-40% 22%
Portugal 27.5% 15-40% 19%
Romania 16% 16% 19%
Russia 24% 13% 18%
Saudi Arabia 20% 0-20% 5%
Singapore 20% 2%-22% 5%
Slovakia 19% 19% 19%
Slovenia 25% 16%-50% 20%
South Africa 30% 18-40% 14%
Spain 35% 15-45%% 16%
Taiwan 25% 6-40% 5%
Thailand 30% 5-37% 7%
Turkey 30% 15-40% 18%
U.K. 30% 0-40 17.5%
Vietnam 28% 0-40% 10%</p>

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<p>Dstark, you’re focusing on professional activities (jobs). In my example, I was focusing on net contributions to the economic side of our society.</p>

<p>If you consume -or cost- more than you earn, someone else has to pick up your tab. This has nothing to do with the value or merits of different jobs.</p>

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<p>So you are against somebody else picking up the tab? </p>

<p>You mentioned the wagon. Who is sitting in the wagon?</p>

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<p>xiggi, </p>

<p>Your Belgium example is a good one, but keep in mind that comparing Belgium to either Texas or California, states you know well, is impossible. It MIGHT just be possible to compare life in Belgium to life in New Jersey, our most densely populated state, but maybe not. It is also interesting to compare lifestyles in Sweden, which has a low population density, to the US. </p>

<p>Germany is an interesting case. They’ve had true structural problems in their economy - repressively high taxes, dysfunctional labor markets, a corporate governance structure past its prime, the mistakes made in reunification of east and west. It will be interesting seeing if tax changes have any impact. </p>

<p>Medical care is curious. Yes, it is true that some countries (Germany is another example) work through private insurers. what they don’t do is have such huge pools of uninsured. They do this through a variety of means, including state subsidized policies for the unemployed.</p>

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<p>“You do, however, seem to be hung up on some things regarding the specific people in the “middle class” article - due in part, I think, to misunderstanding based on some poorly-reported aspects of those people’s budgets.”</p>

<p>I agree and discussed some of this in the original thread, where we also discussed the differences between California and, say Texas. In Texas, a home of $600,000 would cost between $15,000 and $18,000 a year in taxes. However, we do not have income taxes. Further, I know that a $600,000 home around here is absolutely different from what it would be in Richmond. As Dstark said, it is all relative. </p>

<p>As you said, we don’t know the distribution of the $3,000 mortgage payment, but I agree that they must have had substantial equity -probably from the sale of a smaller home that had appreciated. </p>

<p>Despite singling out this family -and being overly harsh- my main point was that our system encourages us to live in a certain way. I said earlier that we prefer to bury our head in the sand, the same sand upon which we build illusory castles. In my view, we postpone the inevitable and may very well compromise our future. While I believe in the theories of constant growth, I remain frightened at the prospects that we hope to cure our problems by spending ourselves in oblivion. </p>

<p>I have no great answer, but I deeply care to find one. And it is because I care that I question how long we can defer the realization that we may not be as rich a country as we might believe.</p>

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<p>Alas, I am and will be for quite some time. That is where real life takes precedent over hypothetical discussions.</p>

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<p>Xiggi, I agree our system encourages certain behavior. </p>

<p>I bet a $600,000 house in Richmond would cost between $200,000 and $300,000 in Austin Texas. So the property tax might not be so different and we do have a state income tax here.</p>

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<p>Xiggi, you are too hard on people who are sitting in the wagon. :)</p>

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<p>DS, NMD, Kluge, this was great fun. I thank you for your courtesy in dealing with some of my naive or puerile positions. However, I’ve got to go back to the reality and hit the books. I need to sharpen my tools to debate with y’all (as they say in Texas). :)</p>

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<p>"my naive or puerile positions. "</p>

<p>Maybe Xiggi should say “unjaded, fresh perspective”?</p>

<p>BTW, for anyone following the Delphi bankruptcy, Xiggi’s comment on not being as rich as we think may start hitting some folks pretty close to home. </p>

<p>IMHO, it is frightening to see a whole class of workers undergoing financial meltdown. Until you’ve seen how hollowed out some of these communities are, you just cannot imagine the impact. </p>

<p>We sit here posting on CC, from our computers, sipping a latte grande, not realizing there is an emerging class of folks for whom Walmart is upscale shopping, and the local dollar store is getting expensive. </p>

<p>Sigh.</p>

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<p>

I KNEW IT!!!</p>

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<p>Driver, </p>

<p>You’d rather be chugging a MGD?</p>

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<p>

Dstark, that’s quite an accusation when it’s obvious you haven’t read the bill, and also you’ve forgotten an important part of the definition of “regressive” which is that the spending that counts is subsistence spending. The FairTax removes the embedded taxes which all of us pay that are incorporated into the price of goods and services, AND provides a prebate to offset subsistence spending for everyone.

Also not true. In fact, the rich (and especially the very wealthy) will see their taxes go up as the income tax loopholes disappear and exhorbitant lifestyles are taxed accordingly.

Well, you’re right, I don’t need a Harvard professor to figure it out, because I have a few degrees in economics myself :smiley: I have played around with the numbers and I have figured it out. You can too–there is a comparison calculator at <a href=“http://www.fairtax.org%5B/url%5D”>http://www.fairtax.org</a> . </p>

<p>Is the FairTax perfect? Well, inasmuch as there is no such thing as perfect, no. I can think of one change in particular that I would make in it. Is it possible that the scoundrels in Congress will try to raise the rate, exempt products, and so forth? Sure, they’ll try, but it cannot get any worse than the tinkering with the income/SSI/Medicare taxes that has resulted in what we have.</p>

<p>The big losers under the FairTax are the K street lobbyists, because it will take away some of their income, and the Congress itself, because it will take away some of their power. If you aren’t in either group, then you should approach the FairTax with an open mind and check it out.</p>

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<p>I heard Neal Boortz interviewed about FairTax this morning. Not sure how it slipped in under my radar but it did. Thanks for the heads-up, Wyogal.</p>