What Do You Think of Ted Cruz's 10% Flat Tax?

[What Would Jesus Do?]

Because it's better than the alternative.

Taxing income is necessarily complicated, and it's easy to avoid. Do you think drug dealers, prostitutes, gangsters and illegal aliens are filing tax returns?

With a consumption tax, everybody would pay every time they buy something at a store. As an added benefit, foreign tourists and "guests" would contribute to our tax revenues as well.

Florida's sales tax is basically invisible to me. I rarely think about it unless I'm buying something really expensive, like a car.

I think those are good arguments in favor of a national sales tax as part of the revenue-raising mix.

Not taxing income would also create its own tax avoidance scam. If you are wealthy enough, just buy your expensive toys abroad and never pay our consumption tax. I'm sure there will be some nations that will provide such consumption tax havens. We already see plenty of ordinary Americans who live near a state with no sales tax driving to stores conveniently just across state lines.

 

[moral_victory]

How could you possibly have gotten that from my post?

SMH

Because he is libertarian, sometimes they erupt into pure freedom magna with uncontrollable and illogical flow.

 

[The Tradition]

I think those are good arguments in favor of a national sales tax as part of the revenue-raising mix.

Not taxing income would also create its own tax avoidance scam. If you are wealthy enough, just buy your expensive toys abroad and never pay our consumption tax. I'm sure there will be some nations that will provide such consumption tax havens. We already see plenty of ordinary Americans who live near a state with no sales tax driving to stores conveniently just across state lines.

When you bring purchases in from a foreign country, you're subject to a Customs Duty Tax and an Internal Revenue Tax (IRT).

http://www.cbp.gov/travel/international-visitors/kbyg/customs-duty-info

 

[What Would Jesus Do?]

You assume the math in Trump's proposal would actually work. I don't know if anyone fact-checked it.

And besides, a one-time payoff of the debt doesn't do anything to stop Congress from running up the credit cards again.

True on both points. But the calculation I did years ago made it clear to me that "soaking the rich" would easily pay off the national debt and still leave them rich. Whether 15% would suffice, I don't know.

As for Congress running up the bill once the debt was paid, how about a compromise such that we impose the 1-time wealth tax to pay off the debt in conjunction with a constitutional amendment requiring a balanced budget going forward?

Is that the sort of compromise you could agree to?

 

[The Tradition]

True on both points. But the calculation I did years ago made it clear to me that "soaking the rich" would easily pay off the national debt and still leave them rich. Whether 15% would suffice, I don't know.

As for Congress running up the bill once the debt was paid, how about a compromise such that we impose the 1-time wealth tax to pay off the debt in conjunction with a constitutional amendment requiring a balanced budget going forward?

Is that the sort of compromise you could agree to?

That does sound like a good compromise to achieve fiscal sanity.

 

[What Would Jesus Do?]

Because he is libertarian, sometimes they erupt into pure freedom magna with uncontrollable and illogical flow.

I suspect that's right - although most hard core American libertarians I know will still allow for some government to keep down crime and such. Even all but the most extreme individualist anarchists envision agreements that society follows.

 

[What Would Jesus Do?]

What you just said here is brilliant. It's kind of the way taxes work. If you keep raising taxes on people they say I am not going to work so hard so I don't have to pay more taxes. Or I am not going to work at all and let someone else pay my way so I don't have to pay taxes. You seem to be turning the corner towards being a conservative.

I've been making this argument for years. It's part of my argument that we should tax honest earned income less than anything else - or at least not more than most other income, like we do now.

Whether more tax actually punishes the activity being taxed is actually an empirical question. Probably not always true. But it has always struck me as a good starting assumption.

 

[HawkMD]

True on both points. But the calculation I did years ago made it clear to me that "soaking the rich" would easily pay off the national debt and still leave them rich. Whether 15% would suffice, I don't know.

As for Congress running up the bill once the debt was paid, how about a compromise such that we impose the 1-time wealth tax to pay off the debt in conjunction with a constitutional amendment requiring a balanced budget going forward?

Is that the sort of compromise you could agree to?

A balanced budget amendment would seriously limit our ability to wage war, which would be one of the best unintended consequences. We would probably need a clause to exclude declared wars.

 

[What Would Jesus Do?]

Don't forget, besides the benefit of taking money out at a lower rate, the big benefit of an IRA or 401k, you are investing pretax dollars rather than post tax dollars, so there is more potential growth.

You have 10% more dollars to invest. So if you actually invest all those extra dollars and if you successfully grow that investment, then you have more earnings at the end. So, yes, there's still a benefit. But if we are talking about savings accounts instead of IRA or 401k, that sounds like you are limited to the usual savings instruments. Trivial interest, in other words. Unless Cruz plans to let people gamble on the stock markets with their "savings accounts."

Hmmm. Would Chris Christie let them bet their "savings accounts" on Fantasy Football?

 

[What Would Jesus Do?]

A balanced budget amendment would seriously limit our ability to wage war, which would be one of the best unintended consequences. We would probably need a clause to exclude declared wars.

Any balanced budget amendment would have to have some way to handle emergencies. But it would also have to be tough enough to guard against phony emergencies.

We've already seen how the constitutional power to declare war gets trivialized into broad and vague authorizations to use force for the duration of whatever. Obviously the "release valve" allowing a temporary debt would have to be stricter than that.

 

[What Would Jesus Do?]

I think Cruz is just slick enough to be a used car salesman and that his plan is complete horseflop.

No need to insult used car salesmen.

 

[What Would Jesus Do?]

When you bring purchases in from a foreign country, you're subject to a Customs Duty Tax and an Internal Revenue Tax (IRT).

http://www.cbp.gov/travel/international-visitors/kbyg/customs-duty-info

Do we enforce that better than cross-state purchases?

My guess is there will be plenty of ways to launder the money to avoid consumption taxes - just as there are now to avoid our current taxes. Unfortunately, we'll probably have to give it a try to see how they work - and when we see what loopholes the smart money people have found, then we'll face a well-funded lobbying effort to NOT fix those loopholes.

This is one of the reasons why I would be receptive to having a consumption tax as part of the mix, but not as the whole revenue-raising scheme.

I would also be curious to see how much bartering and other gray market activity increases.

Some jurisdictions are already experimenting with local currencies. Some people and vendors use bit coins. How would those be affected by a consumption tax? If we set up the enforcement schemes to include and tax purchases made with alternative currencies, we give them legitimacy - something the government has been resisting. Yet if we don't, do they become a way to dodge the consumption tax?

 

[The Tradition]

The government has already figured out what to do about virtual currencies.

https://www.irs.gov/uac/Newsroom/IRS-Virtual-Currency-Guidance

 

[The Tradition]

And yes, there would be some people trying to avoid the tax on sales transactions, but it's a lot easier to regulate all the nation's retailers vs. everyone who earns an income in the entire country.

 

[What Would Jesus Do?]

The government has already figured out what to do about virtual currencies.

https://www.irs.gov/uac/Newsroom/IRS-Virtual-Currency-Guidance

Thanks.

 

[Hawk and Awe]

And yes, there would be some people trying to avoid the tax on sales transactions, but it's a lot easier to regulate all the nation's retailers vs. everyone who earns an income in the entire country.

Tend to agree with this from a regulation stand point. As accounting software continues to improve it will get even easier.

There would still be a lot of kinks to work out. Many discussed above and I'd add that I'm not sure how a national system would coexist with the state system. Would people continue to vote for local option taxes if the rate is already very high? That would cause some problems for growing school districts

Ultimately I think it's always good to add a new revenue stream if it's revenue neutral.

 

[PCBHAWK]

Yep

Its a good idea! Millionaires achieved their wealth by living in the best country in the world to accumulate wealth. They should do their part, help our country and pay down the national debt.

Its not like this tax will disrupt their lifestyle and place them in the poor house.

 

[What Would Jesus Do?]

A few years ago I bought some DVDs from Amazon.co.uk. I didn't pay the VAT that a Brit would have to pay. Nor did I pay a state sales tax. Presumably I should pay state tax, but if the seller doesn't charge it, how many of us keep track and pay it later on?

 

[What Would Jesus Do?]

Ultimately I think it's always good to add a new revenue stream if it's revenue neutral.

I think most "Fair Tax" supporters envision this replacing income tax - not as an added revenue stream.

 

[Hawk and Awe]

I think most "Fair Tax" supporters envision this replacing income tax - not as an added revenue stream.

That's just silly to me. Exchanging one bad system for another. I was working off of your earlier post of adding it to the "revenue raising mix".

It also occurs to me if they weren't so reliant on income taxes it might allow them to actually get creative with the tax plan. Ideas like a derivative or transaction tax might not seem so aggressive

 

[What Would Jesus Do?]

I'm not sure how a national system would coexist with the state system. Would people continue to vote for local option taxes if the rate is already very high? That would cause some problems for growing school districts.

Good point.

Similarly, if the feds ditch the income tax, will states be able to retain an income tax? If not, would they then raise their state sales tax to keep getting the same revenue?

I have seen some Fair Tax proposals claiming that 14% would be enough. But most reasonable estimates I've seen peg the tax between 22-26%. Now figure that the state has to double or triple its sales tax when it drops the income tax. All of a sudden we are looking at a 40% combined sales tax.

That's simply scary.

How does that NOT hurt sales and drive some companies out of business?

 

[What Would Jesus Do?]

That's just silly to me. Exchanging one bad system for another. I was working off of your earlier post of adding it to the "revenue raising mix".

It also occurs to me if they weren't so reliant on income taxes it might allow them to actually get creative with the tax plan. Ideas like a derivative or transaction tax might not seem so aggressive

I was wondering something similar.

If we are charging a consumption tax, would that apply to stock purchases, too? We will no longer be getting income or cap gains taxes when they are sold.

So, when you buy 100 shares of Apple for $11950, you pay the $8 transaction fee plus $2629 in tax.

Ouch.

Unless you think you'll make more than 22% off the stock, why be in the market?

 

[What Would Jesus Do?]

The other thing I do like about the national sales tax idea is that it would finally take away the internet advantage over brick and mortar businesses.

 

[shank hawk]

How could you possibly have gotten that from my post?

SMH

You implied that a nation run by 'rule of force' rather than rule of law is a bad thing. Are we to believe that in an anarchy, a few random, thuggish gangs are worse than a six hundred billion dollar a year imperial army waging war across the globe? Because that's what I got from your post.

You also implied that this nation is actually run by rule of law - when you know for a fact that what we have is crony capitalism, aka legalized prostitution. People with the money make the rules; and pay those responsible for enforcing the so-called rules to look the other way.

And as for raising tax money to pay for government 'services', it's somewhat akin to paying inmates 40 cents per forced hour of labor to pay for 'services' received from the warden.

After a hundred+ years of failed empire, financed by a monetary Ponzi scheme, you statists refuse to admit that it's the game, not the players, that's the problem.............and that there's not the tiniest difference between a Bush, an Obama or a Clinton.

 

[What Would Jesus Do?]

You implied that a nation run by 'rule of force' rather than rule of law is a bad thing. Are we to believe that in an anarchy, a few random, thuggish gangs are worse than a six hundred billion dollar a year imperial army waging war across the globe? Because that's what I got from your post.

You also implied that this nation is actually run by rule of law - when you know for a fact that what we have is crony capitalism, aka legalized prostitution. People with the money make the rules; and pay those responsible for enforcing the so-called rules to look the other way.

And as for raising tax money to pay for government 'services', it's somewhat akin to paying inmates 40 cents per forced hour of labor to pay for 'services' received from the warden.

After a hundred+ years of failed empire, financed by a monetary Ponzi scheme, you statists refuse to admit that it's the game, not the players, that's the problem.............and that there's not the tiniest difference between a Bush, an Obama or a Clinton.

You seem to be dramatically changing your tune from what you seemed to say originally.

Maybe if you'd be more clear about what you mean and less disposed to attacking others based on your erroneous understanding of their positions this wouldn't happen so much.

 

[NoleSoup4U]

A flat tax is the only way you will probably ever get rich people to pay taxes.

 

[86Hawkeye]

A flat tax is obviously not going to happen anytime soon. But there are some good points in here. It boggles my mind why Congress allows the AMT to exist.

Because it's a money grab that never got fixed and they can't get rid of it now because they'd lose too much revenue.

It is particularly damaging to the middle class.

 

[86Hawkeye]

Its a good idea! Millionaires achieved their wealth by living in the best country in the world to accumulate wealth. They should do their part, help our country and pay down the national debt.

Its not like this tax will disrupt their lifestyle and place them in the poor house.

Define millionaire.

 

[NoleSoup4U]

Define millionaire.

And this right here is a big part of the problem. Someone who grosses a million dollars isn't rich, they are middle class.

 

[shank hawk]

Because he is libertarian, sometimes they erupt into pure freedom magna with uncontrollable and illogical flow.

I'm not a libertarian; I'm an anarchist. Libertarianism is just my attempt at a compromise.

 

[joelbc1]

A few years ago I bought some DVDs from Amazon.co.uk. I didn't pay the VAT that a Brit would have to pay. Nor did I pay a state sales tax. Presumably I should pay state tax, but if the seller doesn't charge it, how many of us keep track and pay it later on?

VAT taxes are refundable if you are not an EU reside. Some rather cumbersome paperwork/receipts required....the most difficult thing is to find out where you drop these claims (well hidden in most EU airports)....but the credit comes back to you either via check or credit back on your (chosen) credit card.

 

[PCBHAWK]

Define millionaire.

$999,999.99 plus a penny.

I think Trump said wealth over 10 million.

 

[PCBHAWK]

And this right here is a big part of the problem. Someone who grosses a million dollars isn't rich, they are middle class.

They net 750k and you think that's middle class?

 

[Hawk and Awe]

The other thing I do like about the national sales tax idea is that it would finally take away the internet advantage over brick and mortar businesses.

Are you saying a National sales tax would replace the state sales taxes? Or something else?

The Internet sales tax issue is a problem with tracking compliance laws/rates for each state and locality. Assuming the state systems continue to exist that would still be a problem. So a National system would hit Internet sales, but would avoid state tax.

The Internet sales tax thing is really annoying to me. If you're selling things nationally why are you exempt from having to learn the rules? And why can't we just come up with simplified rules specific for the Internet? Pick a rate, charge all Internet sales, remit to the county where the purchase took place. Pretty easy.

 

[What Would Jesus Do?]

Are you saying a National sales tax would replace the state sales taxes? Or something else?

The Internet sales tax issue is a problem with tracking compliance laws/rates for each state and locality. Assuming the state systems continue to exist that would still be a problem. So a National system would hit Internet sales, but would avoid state tax.

The Internet sales tax thing is really annoying to me. If you're selling things nationally why are you exempt from having to learn the rules? And why can't we just come up with simplified rules specific for the Internet? Pick a rate, charge all Internet sales, remit to the county where the purchase took place. Pretty easy.

No, but it it might be something to think about. Why not combine all sales taxes, send them to a "single payer" who distributes to the fed and states.

Agree with your points in 3rd paragraph except that I would divide the internet tax among state of seller, state of buyer, and fed.

 

[The Tradition]

No, but it it might be something to think about. Why not combine all sales taxes, send them to a "single payer" who distributes to the fed and states.

Agree with your points in 3rd paragraph except that I would divide the internet tax among state of seller, state of buyer, and fed.

Why would states want the federal government to get in between their citizens that the states' own taxmen? Besides, some states have higher taxes than others, and don't get me started on the patchwork of municipal taxes.

Lets keep this focused on federal taxation, please.

 

[joelbc1]

Personally, I find nothing too far out of line with the current tax code. I think a re-establishment of the old Clinton rates would be more appropriate. What I do find offensive and unfair is the "special" tax rates given to the wealthy of 18%. That is pure bullshit. Income is income. Once it is used, it needs to be taxed appropriately at the appropriate (fair) rate. A milionaire's annual income should pay a higher tax rate than a welder's or a cashier's.

 

[What Would Jesus Do?]

Personally, I find nothing too far out of line with the current tax code. I think a re-establishment of the old Clinton rates would be more appropriate. What I do find offensive and unfair is the "special" tax rates given to the wealthy of 18%. That is pure bullshit. Income is income. Once it is used, it needs to be taxed appropriately at the appropriate (fair) rate. A milionaire's annual income should pay a higher tax rate than a welder's or a cashier's.

I think we could solve some of the problems just by sunsetting all the deductions and subsidies and such. If they have to be held up to public scrutiny and renewed on a recorded vote each year, provision by provision, I bet we'd see a lot of simplification and phasing out of the most egregious "loopholes."

Then, as you say, a sensibly progressive rate scheme should take care of many of the rest of the problems.

Do those and then revisit the question in a few years.

 

[tarheelbybirth]

And this right here is a big part of the problem. Someone who grosses a million dollars isn't rich, they are middle class.

There's the problem...people have somehow latched onto the idea that the top 5% in the richest country on Earth don't have enough money.

 

[What Would Jesus Do?]

There's the problem...people have somehow latched onto the idea that the top 5% in the richest country on Earth don't have enough money.

Bingo!