MD Tax Increase

[FromTexas]

We will agree to disagree then. I can understand the negatives people see in it, but my understanding is different. I look at it is a term that accurately describes the effect the tax has.

For example, lets say since its "fair to all" that it becomes the soles means of taxation. We tally up a number that will satisfy all government functions. Lets say 16% and to only focus on this case, lets say that the price of goods with this new tax are inelastic (demand stays the same so we can avoid other economic effects).

Would you not agree that the poverty income level would have to be increased? Would you not agree that the woman previously working 2 jobs with 2 kids making $18,000 would suddenly not be able to make ends meet? Would you not agree that the person making $2 million a year would suddenly be very happy? Would the rich not be able to easily avoid the tax compared to lower incomes (purchase out of country and bring home or ship to self -- if they wanted to pay less tax, they buy less non-essential items, while the person with $18,000 has to use their entire disposalable income to buy food and clothes)?

See, that last line is the key. We are not saying one person pays more of their income making it a higher burden because they buy one item or two. If that were it, they could by choice choose to buy the item and pay the tax (equal and fair then). The difference is, in most states with sales tax, there is a tax for food, medicine, and clothes. A person with a low income spends all their disposable income on these items that are taxed. It is a tax on all of their income. For those of us better off, we have disposable income we can save, choose to spend, or otherwise -- we can also use the internet to avoid sales taxes with our computers, buy overseas, etc...

That is why I see it that way. It doesn't make it a bad tax. It just means that it should exempt (or reduce the burden greatly) on particular items that are needs and be mixed with other taxes that equalize the burden elsewhere.

 

[sleuth]

Originally posted by FromTexas
Would you not agree that the poverty income level would have to be increased? Would you not agree that the woman previously working 2 jobs with 2 kids making $18,000 would suddenly not be able to make ends meet? Would you not agree that the person making $2 million a year would suddenly be very happy? Would the rich not be able to easily avoid the tax compared to lower incomes (purchase out of country and bring home or ship to self -- if they wanted to pay less tax, they buy less non-essential items, while the person with $18,000 has to use their entire disposalable income to buy food and clothes)?

See, that last line is the key. We are not saying one person pays more of their income making it a higher burden because they buy one item or two. If that were it, they could by choice choose to buy the item and pay the tax (equal and fair then). The difference is, in most states with sales tax, there is a tax for food, medicine, and clothes. A person with a low income spends all their disposable income on these items that are taxed. It is a tax on all of their income. For those of us better off, we have disposable income we can save, choose to spend, or otherwise -- we can also use the internet to avoid sales taxes with our computers, buy overseas, etc...

So basically you're saying you would agree with a national sales tax if food, clothing, and medicine were exempt?

 

[Larry Gude]

Tex...

...I am arguing from an indefensible position: What SHOULD happen.

You're point is based in the reality of politics.

Every time rates 'progress' the rich paying their fair share is touted and then Congress goes about the task of passing loophole after loophole, making the tax code ever more complex and ever more beyond the common man, burying him.

IF taxes began and ended with what was fair, then governemnt consumption simply could not reach excessive levels were the common man and those not doing very well would be forced into survival mode.

As it is, we have witholding and we have endless user fees and corporate taxes and most people simply don't know what they are paying or what they would be earning if government didn't take it from them before they recieved their money.

So, we fall into human nature, stick it to the rich, to corporations, class warfare. Governemnt has the nerve to say "we'll make them pay their fair share...but you'll never see yours!"

All the while, the system schemes to keep people from knowing what is going on unless they wanna work to find out and also to keep people from voting for sound tax policy as they fall into dispair and 'it doesn't matter'.

Overnight, if people were paid a gross paycheck for their services and had to write checks to pay for government then, like corporations and the rich, we'd have people intensely interested in what government does and we'd have a healthy poltical life.

Who wants that?

I'll never see change for the better if I simply accept bad policy.

 

[FromTexas]

Originally posted by sleuth14
So basically you're saying you would agree with a national sales tax if food, clothing, and medicine were exempt?

Of course. That is what I am saying. I actually do not have problems with a sales tax though. I am just using the words that reflect the action of it. As I said, as long is it is mixed in a basket of other taxes (for many reasons) it is an effective revenue tool. Obviously you don't want to just depend on a sales tax because you hurt businesses and when a recession hits, the tax is severly elastic in nature and will dramatically reduce tax roles. The most stable tax for a state government (unfortunately) is property tax.

But back to your question, that is definitely the point. If you remove all food, clothing, and medicine (necessary items) from the sales tax, you are making it a choice. I wouldn't even say removing clothing is necessary. Just food and medicine. Those are survival items. Clothing can be countered with the tax holiday like here in Texas. Its only for certain items that relate to the going back to school time. Clothing is among them. All people get the tax break if they shop then. There is a choice still of when to shop for a needed item.

If you just place it on all other goods, people have a choice whether to utilize that good or not. Its fair. Also, that break is only on grocery food items. Its not on premade (restaraunts and pre-made meals at the store). If those in poverty don't want to live cheaper by making healthy meals and instead want to live off McDonalds, they have to pay as well. They are choosing.

Now -- I saw Larry had a response. I will do that seperate since I can't don't want this to be an essay.

 

[FromTexas]

Re: Tex...

Originally posted by Larry Gude
...I am arguing from an indefensible position: What SHOULD happen.

You're point is based in the reality of politics.

Every time rates 'progress' the rich paying their fair share is touted and then Congress goes about the task of passing loophole after loophole, making the tax code ever more complex and ever more beyond the common man, burying him.

IF taxes began and ended with what was fair, then governemnt consumption simply could not reach excessive levels were the common man and those not doing very well would be forced into survival mode.

As it is, we have witholding and we have endless user fees and corporate taxes and most people simply don't know what they are paying or what they would be earning if government didn't take it from them before they recieved their money.

So, we fall into human nature, stick it to the rich, to corporations, class warfare. Governemnt has the nerve to say "we'll make them pay their fair share...but you'll never see yours!"

All the while, the system schemes to keep people from knowing what is going on unless they wanna work to find out and also to keep people from voting for sound tax policy as they fall into dispair and 'it doesn't matter'.

Overnight, if people were paid a gross paycheck for their services and had to write checks to pay for government then, like corporations and the rich, we'd have people intensely interested in what government does and we'd have a healthy poltical life.

Who wants that?

I'll never see change for the better if I simply accept bad policy.

I agree, with the bolded paragraph especially. However, what I don't agree on is that is schemes to do this. Its the nature of the political system we have (and I know this is where we will have to agree to disagree again). We started with a much simpler system. People ask for change, politicians change. Over many years and modifications, the tax codes have become complex. I do not believe there is a scheme to do it. It is just what happens. We have many politicians, each with people lobbying and seeking specific changes. They compromise with each other and end up with many varying loopholes, new policies, etc all jumbled together. The federal government really has the income tax though. They are taxes on gas along with other excise taxes they have, but nothing compared to income.

Where this tax web you see comes from is one of the biggest political merits of our system as it was created. We have seperate levels of government based in federalism. The federal government must run, and it has its tax system. The state government must run, and it has its tax system (since income is used mostly by the fed, states need to very their roles slighty with property and sales). Then states grant some autonomy to local governments by giving them their authority (property tax in most places). All these governments are really seperate and each must collect revenue to run to perform the functions that we expect them to. That is really where it all becomes complex. We could streamline it, but we would be removing the autonomy we enjoy of our local and state governments. Right now, if you don't like the way your local government does something you can move somewhere where they do what you like (same with state). This is the way the founding fathers wanted it. They did not want one central authority.

This also promotes inovation in government at the state and local level. People will notice when your government is doing something drastically different or hurtful to those who live there and people will see the differences. States must recognize how they fit into those states around them and try not to cause people to vote with their feet. If they all were the same, you would have no choice but to deal with it.

Just my opinion though.


edit: just realized quotes are always all bold. Fixed it to reflect my statements.

 

[Larry Gude]

How about I use...

something like SOP or 'the way things are done'?

what I don't agree on is that is schemes to do this

As an employer I am required to serve as an agent, a tax collector, for the state and the federal government. I do not get paid for it. I do not get use of any governmental resources or protections in the performance of this duty and I can go to jail for not doing it right.

The legislatures and the courts don't seem to mind though if it ever got to a court it is clearly coercive and probably in violation of takings clauses or other property protections.

However, it's just the way it is. Slavery was that way once.

Retail establishments, in addition to payroll, get to collect sales tax, which they don't mind; they make money on it.

Further...

Where this tax web you see comes from is one of the biggest political merits of our system as it was created.

Merit? Not one single member of Congress does their own taxes. I doubt anyone in Annapolis does. We have a, good word, web, that makes understanding fiscal policies of government beyond the average citizen. Hell, it's beyond the capabilties and/or understanding of those pass the laws.

I see no problem in having citizens pay their tax bills directly. We pay bills every month. The colection aperatus that business must deal with can be moved to help citizens comply and we all get the added benefit of EVERYONE knowing what's going on.

In short, I see an engaged citizenry which, to me, is the politicians worst nightmare. Very hard to serve a special master when all the masters who voted for you are paying attention.

If witholding is such a great idea, why not force employers to withold rent or mortgage monies? Groceries? I do have to do child support.

Why should the government, the entity most able to absorb being last in line by shear virtue of size, be the first to get your money?

 

[FromTexas]

The merit I am referring to is the one I talked about after mentioning that the reason for the web is a political merit. I then refer to that merit, as created by the founding fathers, federalism.

I understand your point that people should understand their taxes, and I am in agreement with you. I just don't believe it is as simple as that.

Government has come a long way to help people (at the State level at least) understand their taxes. Truth-in-taxation laws have taken hold in many states (which includes making people aware of the amount needed to fund the government at last years level, the percentage increase sought, and a rollback feature the citizens can enact if over a certain percent). In addition, many states have made property tax bills define where each amount of property tax goes (to each municipal taxing entity - school district, city, special district, state).

The income tax is really where you would find the complexities over other taxes (along with fines and fees for environmental issues on businesses and other of their ilk). Yet, you can make it simpler so you always understand the bottom line. You have the choice for no payroll deductions to be made toward your income tax. You will have none withheld and you will only see the net bill when you calculate it up at the end of the year.

Those who make under a certain amount don't have much to worry about in the complexities because they won't be beyond standard deductions and have hardly any tax due (if any at all) -- those beyond that level who don't have the income for other means can get free aid from the IRS online or at a site to do their taxes. Check out the IRS site and you will see that millions have qualified for free tax preparation from private firms in a partnership with the IRS (these firms aren't mandated to do this, they have agreed to).

Above that level, you can buy a $15 piece of software and it is very reliable and without having taken any deductions you will see your net bill and pay it in April. Its not law that you have to take an income tax deduction, you can have none withheld if you like. The only collections that must be made medicare/social security or the comparable system allowed.

Where people don't see the effects are when business pay income taxes or have to pay fines, regulatory fees, or other taxes. That is because in 90% of the cases, the cost is shifted forward to the consumer in increased prices. The consumer does not see that part of the product that they are paying that is indirect tax applied to them.

Don't get me wrong, we are very close to agreement on what you state. I just see the change that is helping to make it easier to understand and definitely believe it should be. It would be nice, if like our social security statement each year, we got a piece of paper in the mail that said you have paid x taxes to y entities at z rates.

BTW - for numbers sake - here is a quote from the IRS/private partnership.

The partnership agreement calls for the Free File Alliance to provide free tax preparation and filing to at least 60 percent of all taxpayers or approximately 78 million individuals who file an individual tax return. Each participating software company has its own eligibility requirements.