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Thread: What does "99% of the world's wealth is owned by 1% of people" mean?

  1. #61
    Quote Originally Posted by nietzschefan View Post
    wtf do you mean regressive and progressive? You keep using these words...I do not thinka it means what you thinka it means.
    I know exactly what they mean.

    Sales taxes and Corporate taxes are passed on to the buyers and thus are generally considered to be very regressive.

    Income taxes are tiered by income, with the rates going up the more you earn and so are generally considered progressive.



    Only a lazy moron is making more than 100K a year and not themselves a "corporation". It's a needless shell game to punish the wage slave and intelligent, educated worker (even doctors now incorporate even in Canada). Then you only pay income tax on what your "spend" out of your corporation (cars, food etc)....then it become a sales tax right Arthur? Get a clue. It's all the same.
    Slightly different issue, personal incorporation.

    I've got to run, and I don't know about Canadian taxes, but I doubt you can escape normal income tax by incorporating yourself.

    Too easy of an out if that was the case.

    Got any back up for this assertion?

    Arthur

  2. #62
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    Quote Originally Posted by adoucette View Post
    And if you taxed stupidity....
    That's somewhat pithy, at least for someone as pigheaded and insecure as yourself.

    Meanwhile, the point: our system allows corporations to pass on tax hikes to individuals, but not for individuals to pass on tax hikes to corporations. Thus, corporations are effectively untaxable. This seems inequitable, on its face, at least so long as corporations are going to be allowed to engage in political speech, lobbying, etc.

    But what's striking is that you present this as some kind of clear argument against bothering to tax corporations, rather than the clear argument that it obviously is - for systemic reforms to patch this gaping hole. "Striking," in the sense that it clearly advertizes your status as a craven shill, that is.

    I wonder if you're familiar with the ultimate fate of our erstwhile countezero? Like him, you seem to be under the misapprehension that if you do enough recalcitrant bullying, you will somehow come to sway this forum and scatter your resistance. This, despite the clear trend-line running in the opposite direction, and the repeated spectacles of other such fools burning out and giving up. How many more months of chew-toy time will you provide, before you wise up? Why, do you suppose, do you seem to need this outlet for poking your projections in the eye?
    Last edited by quadraphonics; 11-21-11 at 06:18 PM.

  3. #63
    Quote Originally Posted by adoucette View Post
    Got any back up for this assertion?

    Arthur
    Money in the pocket of a "corporation" (again arthur this could be one person as I show below (Warren Buffet shoot himself out as an example), is progressive...money out of the pocket of the wage slave is progressive - ok arthur I get you...moving on...

    http://www.powerhomebiz.com/vol81/taxincorporating.htm

    For the sake of simplicity, if an S corporation with $100,000 of net profits pays its owner a reasonable salary of say $50,000 and non-taxable dividends of $25,000, the tax would be $7,650. This is a whopping $4,750 savings in tax! Even if you factor in additional costs such as workman's comp insurance, incorporation costs, professional fees and incidentals, the savings is still more than adequate.
    Ontario doctors:

    http://www.bdo.ca/library/publicatio...acts/05-02.cfm

  4. #64
    Quote Originally Posted by nietzschefan View Post
    Money in the pocket of a "corporation" (again arthur this could be one person as I show below (Warren Buffet shoot himself out as an example), is progressive...money out of the pocket of the wage slave is progressive - ok arthur I get you...moving on...

    http://www.powerhomebiz.com/vol81/taxincorporating.htm
    LOL

    So some self employed people might be able to save a very small amount of money on the "Self Employment Tax" by incorporating.

    Which brings in additional costs such as workman's comp insurance, incorporation costs, professional fees and incidentals (which if you notice aren't estimated)

    They still paid Income tax on their salaried earnings and so this example had NOTHING AT ALL to do with CORPORATE taxes.

    Which is a totally different subject.

    Indeed though, in this "simple example" the IRS would likely object because the $50,000 would NOT be seen as the required "reasonable salary for the business" and so that $25,000 of non taxable dividends would likely be cut quite a bit.

    Of course the ad is by a CPA, small business advisor and guest consultant of Active Filings LLC, a company that provides incorporation services in all US, so OF COURSE they want to make it look like there are big savings in incorporating.

    The IRS isn't that stupid though.

    Arthur

  5. #65
    Quote Originally Posted by quadraphonics View Post
    That's somewhat pithy, at least for someone as pigheaded and insecure as yourself.
    Not insecure in the least.

    Meanwhile, the point: our system allows corporations to pass on tax hikes to individuals, but not for individuals to pass on tax hikes to corporations. Thus, corporations are effectively untaxable. This seems inequitable, on its face, at least so long as corporations are going to be allowed to engage in political speech, lobbying, etc.
    So like I said, taxing corporations is non-productive.


    But what's striking is that you present this as some kind of clear argument against bothering to tax corporations, rather than the clear argument that it obviously is - for systemic reforms to patch this gaping hole. "Striking," in the sense that it clearly advertizes your status as a craven shill, that is.
    Yeah, you could try to patch the hundreds of pages of tax code dealing with corporations, or you could just simplify the whole thing by increasing the tax on income and scraping the corporate tax.

  6. #66
    Bloodthirsty Barbarian
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    Quote Originally Posted by adoucette View Post
    Not insecure in the least.
    Well, I'm convinced.

    Quote Originally Posted by adoucette View Post
    So like I said, taxing corporations is non-productive.
    What I said, is that corporations are constructed so as to be such, and that this is a mutable feature. To the extent that taxing corporations is non-productive, that is the case because we have chosen to make it so, and we can choose otherwise.

    Quote Originally Posted by adoucette View Post
    Yeah, you could try to patch the hundreds of pages of tax code dealing with corporations,
    My suggestion was to deprive corporations of the privilege of political speech. I doubt that the system which keeps them un-taxable will long persist once they are no longer allowed to influence such.

  7. #67
    Quote Originally Posted by quadraphonics View Post
    What I said, is that corporations are constructed so as to be such, and that this is a mutable feature. To the extent that taxing corporations is non-productive, that is the case because we have chosen to make it so, and we can choose otherwise.
    Doesn't matter
    Corporations don't pay any taxes.
    The people buying their products pay the taxes and thus they are nothing more than a back door sales tax and no matter what you do, they are very regressive.

    Are you in favor of a regressive tax system?

    My suggestion was to deprive corporations of the privilege of political speech. I doubt that the system which keeps them un-taxable will long persist once they are no longer allowed to influence such.
    They are run by people and so there is no way to deprive them of such.

    Indeed, if you quit taxing them you would eliminate much of the reason they try to influence politics.

    Tax people's incomes.

    It's much more direct.
    It's much more progressive.
    It's got a whole lot fewer loopholes.

    Then add a sales tax but exclude necessities such as food, clothing, utilities, medicine and housing.

    Arthur

  8. #68
    Cartoon for Arthur. He's the guy with glasses I guess.


  9. #69
    Registered Senior Member toltec's Avatar
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    It means keep downloading torrentz and feel no guilt about it.

  10. #70
    Quote Originally Posted by nietzschefan View Post
    Cartoon for Arthur. He's the guy with glasses I guess.
    Note that the cartoonist at least recognizes what you don't.

    The issue isn't Corporate taxes as they aren't even mentioned, with this caveat, Corporate Taxes are essentially a Sales Tax and are simply passed on to the consumer and as shown in the cartoon, are quite regressive.

    Arthur

  11. #71
    hobnob with the flash mob Aqueous Id's Avatar
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    Quote Originally Posted by adoucette View Post
    Note that the cartoonist at least recognizes what you don't.

    The issue isn't Corporate taxes as they aren't even mentioned, with this caveat, Corporate Taxes are essentially a Sales Tax and are simply passed on to the consumer and as shown in the cartoon, are quite regressive.

    Arthur
    I'm curious - "regressive"? Is that a accidental epithet, or something in particular that you are encapsulating in that word?

  12. #72
    Please use Sugar Cane Alcohol Billy T's Avatar
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    Quote Originally Posted by adoucette View Post
    ... Corporate Taxes are essentially a Sales Tax and are simply passed on to the consumer and as shown in the cartoon, are quite regressive. Arthur
    That is I think on average true, but does depend upon what the corporation is selling. I.e. not true it they sell $100,000 cars, big yachts, etc.

    If you want to make corporation's taxes more progressive, better for the US in many ways, etc. here is how:
    Quote Originally Posted by Billy T View Post
    ... If corporations were not taxed but did distribute their earning with a max delay of 10 years to tax payers, not only as I have long said would they be more competitive internationally (helping with trade balance, job creations, etc.) But also the Government would collect more revenue. This is because (I am almost certain*) the average marginal tax rate of the taxpayers receiving these dividend distributions would be higher than the current average corporate tax rate. – Perhaps a revenue increase large enoungh to pay off US debts without destroying the value of the dollar, which is the current plan?

    ------------
    "Almost certain" because under my tax code all income it treated the same - no capital gains rate, etc. only one progressive rate schedule. Also with greater exports, more people working, more taxes are paid and less "welfare assistance" is required.

    If you want to see details and several page of discussion about my suggested tax code see: http://www.sciforums.com/showpost.ph...41&postcount=1 it is so simple the tax law fits on a 3.5 index card, not 30,000 volumes of special interest, lobbyist written laws. (The 10 year delay gives working capital, funds for expansion and financing goods until sold, etc. without borrowing, etc.) One possible 10 year duration "Phase in Plan" could be all use current tax law but pay only 90% of its computed tax in year 1, 80% in year two, etc. With only 10% the simple plan's computed tax being paid in year 1, 20% in year two, etc. or something like that.

    My tax plan is so simple most any tax payer can do it in less than 5 minutes, if they have their data collected. A slight increase in effort initially but a great reduction in effort by and after year 10 of the phase in. Once the income has been taxed, you can give it to someone else and it is not taxed again (no gift tax or inheritance tax).

    The rate progressive rate table is annually adjusted to make "pay as you go" government, except in declared war time. Thus, every new benefit for the current generation the government gives out to win votes increases their, not their children's, tax burden. "Pay as you go" prevents the instability of democracies discussed here: http://www.sciforums.com/showpost.ph...19&postcount=1

    Which was first discussed in Democracy in America by Alexis de Tocqueville in 1835: "... mutually corrupt citizens and the democratic state. Citizens vote for those politicians who promise to use the state to give them whatever they want. ..." But with the invention of fiat money has become much worse, much more unstable, than de Tocqueville could ever have imagined. - As world's worst ever depression, soon to come, will show.
    From: http://www.sciforums.com/showpost.ph...3&postcount=81 Most of the concerns you may have about my simple tax plan (like what if stock is owned by foreigner, etc.) have been discussed in the three pages of posts after the OP in the first quoted link, not in post 81, if not fully addressed in the old OP. If you have a concern, not already discussed, please state it, preferably in a new post in that old OP thread.

    A minor benefit of my simple tax plan is that corporation can fire all their tax lawyers and close that sub division for still greater international competitiveness. All the data they need for the IRS is already in their annual reports. BTW, corporations should not be allowed to spend one dime on finance of politicians their campaigns, etc. but of course their employees, could like others can.
    Last edited by Billy T; 01-16-12 at 07:40 PM.

  13. #73
    hobnob with the flash mob Aqueous Id's Avatar
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    Quote Originally Posted by Billy T View Post
    ... my simple tax plan...

    Interesting, that pendulum keeps swinging back, but never lands anywhere

    Not to minimize your ideas, but I have forever wondered about this simplicity issue. To me, it breaks down like this:

    (1) First of all the tax code is extremely simple if you're broke

    (2) When you break poverty level it increases in complexity to code infrared: very simple

    (3) When you climb the brackets as a paid robot, code chartreuse: quite simple

    (4) When you add a mortgage, code peach (trying to remember my crayola colors here): one extra receipt, one attachment to the 1040, 5 minutes of work

    (5) Go next to sole proprietorship, and you won't have time to file anything yourself, you go through a CPA, so complexity drops back to zero: code aquamarine or something

    (6) Beyond this, hit paydirt, win the lotto, Daddy Warbucks kicks the bucket, or your ultimate dating site goes viral: bingo, you've got problems, but a recruiter finds you five top lawyers and you leave it to them from your jacuzz in Monaco - code zip.

    But anyway since the tax complexity always comes up, and the clamor always ends in this double bind between simplicity and fairness, I long ago stumbled onto this idea, it's the damnedest simple solution ever, so good in fact that I can't possibly be the first who conceived it..ready? Here goes:

    (1) Flat tax at X%, where X is decided by referendum
    (2) No income tax return, nothing to file
    (3) Not enough to run the Government? No problem. Every April 15th, each Taxpayer gets to file the following:

    (a) A worksheet in which you specify which programs you wish to fund and how much each gets. It is completely voluntary, and every possible expenditure is subject to vote. You allocate dollars and cents to programs you like, until you've used all of your contribution

    (b) An average income is calculated by the IRS (the whole agency is reduced to one 1986 level desktop PC). (OK with a math co-processor and modem card.)

    (c) Above average: you only get to vote the amount of tax dollars of a person making average income. The rest of the taxes you paid go to a general fund.

    (d) Below average: you get to vote all of your tax dollars, plus, any amount you wish to rob from the general fund up to a total not exceeding the average.

    (e) Some folks won't participate. The fund will have a surplus. On April 16th, the 1986 PC will release the balance to the huge server once operated by the now vacant IRS building(s).

    (f) anyone who wants to can file an amended return, within 90 days, and go back with another shot at voting the surplus. Anything left over goes to charity.

    (g) On July 16, come hell or high water, the chairs of the two or three surviving budget committees will hold a 5-minute hearing to formally declare the budgets that were elected by the voters, then recess for one calendar year.

    (h) The program committees get their money and deal with it. The voters have spoken. No more trash talk, or greasy palm sales pitches to the public. All of the public servants are given a fair hourly wage, but also required to remain in their cubicles during work hours. Lobbies that don't take the hint are formally restrained from public property. The right of corporations to have free speech in political advertising is overturned.

    (i) within a short period - a year or so - all of the deadwood in government and the leeches that cling to them, are weeded out. All of the people in government who are employed to fudge numbers can have a subroutine named after them that runs on the PC, as stubs for later patches that might be needed if subsequent referenda call for an upgrade.

    (j) all tax, law, financial, lobby, contract (etc) workers who used to run the machine will not be laid off. They will be offered a job change, doing actual productive work to solve the pressing needs of the country, as demanded by the voters who create the agenda in this manner.

    (k) if it turns out I am the first to think of this, I get full rights to the following: I want 100% of the benefits promised to me during the years the IRS deducted Social Security premiums from my income. Also, if the country gets through it OK, I want token recognition, and for this I would accept anything modestly cool, like the privilege to go to three public places named after people I think were creeps, and change them to three of my favorite words, one of which is Quetzlcoatl.

    it's really simple, a little exotic maybe, a little upheaval, but after that everyone will get over it and get back to whatever they were doing before the question ever came up.
    Last edited by Aqueous Id; 01-17-12 at 12:32 AM.

  14. #74
    Please use Sugar Cane Alcohol Billy T's Avatar
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    Quote Originally Posted by Aqueous Id View Post
    Interesting, that pendulum keeps swinging back, but never lands anywhere
    That is because the people cannot make significant changes when the system is already well designed for the benefit of the people who control of it. I.e. The US has a government "of the rich, by their lobbyists and for their corporations."

    All your first numbered points only note that the tax code is less complex for some (especially those who do not pay) than for others. That does NOT change the complexity of the code its self. With lobbyist providing money (bribes) and their desired text to Congress, the tax code has grown to more than 700,000 pages with many thousands of benefits for special groups. I want all treated the same instead and only people paying taxes. The flat tax seems to be at the core of your suggestion so I will only comment on it.

    It is easy to mathematically prove that a flat tax will DESTROY the middle class. I have proved it several times in posts and no one has found any flaw in the proof. Here is the first proof a search found showing that “flat tax” (without some other means to get the wealthy paying progressively higher percent of their income) will concentrate almost all of the wealth in the hands of a very few. – If continued long enough – the wealth distribution of the middle ages will be reproduced. I.e. the “monetary king” and his favorite people will own everything. If you can find some error in the math proof of this, please do so.
    Quote Originally Posted by Billy T View Post
    ... Note also that the tax code is complex (700,000 printed pages, written by lobbyist for the rich and corporations) so that for example Warren only pays 17% of his income in taxes, but his secretary pays 34% of her income to the IRS!

    But even that is not the main cause of the dying middle class. - The main cause is the concentration of wealth in the US society which is set up for the benefit of the already rich. (Government "of the rich, by the rich & for the rich")

    I have several times posted MATHEMATICAL PROOF that the system is rigged to take wealth from the middle class and transfer to the most wealthy, even if they did not get higher rates of return on their investment and pay lower tax rates!

    The essence of the simple math model is to note that every one has certain necessary expenses (food, housing, clothing, etc.). In the model I have assumed that they are E dollars for the middle class and 10E for the very wealthy ("E" for Essential costs.) and just for numerical illustration, that the after tax income for the middle class is "I" and 25I for the better off. (The most wealthy have at least 200I as their after tax income.)

    With taxes on each assumed to be fI, where f << 1. Note that in fact the "f" for the middle class is greater than for the wealthy (whose tax lawyers know how to exploit the tax code better) but for simplicity, I ignore that in the math model.

    That means the middle class has (I - E - fI) to spend. I.e. All I except E & fI of taxes could be spent on investments if he chooses and the wealthy has (25I -10E - fI) he can invest. In addition to all the other conservative assumptions made to avoid arguments, I also falsely assuming that the both get the same rate of return, R, on their investment.

    I.e. the net worth of the middle class annually increases by a capital gain of: c = R(I - E - fI) and that of the wealthy by C = R(25I -10E - fI). (Note C >> c.) Thus next year, assuming no real increase in I, E, R or f, the capital increase for the middle class will be R{c + (I - E -fI)} and that of the rich will be R{C+ (25I -10E - fI)} Note that both terms inside the {...} are larger for the wealthy than for the middle class, so not only are the wealthy growing richer faster each year, but they are doing so at an ever increasing rate as the years go by! Basically this faster rate of increase in wealth for the already wealthy is due to the fact that their essential expenses are a much smaller fraction of their income. For the poor E is essentially 100% of I so even if paying zero taxes, then can never prosper. They live "hand to mouth" and often are hungry before the end of the month, their children brain damaged by malnutrition, etc. - This in the world's richest country - SHAME!

    This simple math model proves that "flat tax" ideas are doomed to destroy the middle class. A progressive tax rate* is essential to prevent all the wealth of the society from becoming concentrated in the hands of a few. (Eventual if a flat tax system remained unchanged for centuries one person or more likely one corporation, would own everything).

    This concentration of wealth is INHERENT, a mathematical fact, if no offsetting redistribution of wealth away from the rich and back to the less well off is not also part of the economic system. The US had nearly an adequate re-distribution progressive tax code, but it has been destroyed by GWB's tax breaks for the very wealthy plus the modifications of the tax code for the benefit of the already wealthy (corporations included).

    Thus the current destruction of the middle class and their reduced ability to support the "consumer economy" is to be expected - no surprise - and a major reason why the US is doomed. ...
    -----------
    * Or some other mechanism of wealthy redistribution - such as social collapse French Revolution etc. style with transfer back of the society's wealth from the super rich back to the population.
    From: http://www.sciforums.com/showpost.ph...&postcount=176
    Last edited by Billy T; 01-17-12 at 06:47 AM.

  15. #75
    hobnob with the flash mob Aqueous Id's Avatar
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    Billy T,

    Hopefully you gleaned from my post that it was facetious enough to survive serious scrutiny.

    So I surprise myself to some extent for getting to defend it against two glaring pitfalls to your analysis, in which, if one of us were Rick Perry and the other Newt Gingrich, I would easily win the debate and then take the county by a landslide because I hereby walk on water (but then I would have to resign, merely for hating my name).

    Here are your two weak points:

    (1) 700,000 lines of tax code does not affect the little guy and barely touches the middle class. Most of these folks don't have to choose a method of depreciation, for example, on the rustbucket parked in the driveway - so that 20 or 30 pages is wasted pulp. And so on. See?

    (2) The flat tax you think would kill the middle class failed to take into account that in my perfectly democratic schema the percentage is arrived at by referendum. So what if the country decides to pay 5%? You see: there's the safety mechanism. It won't fail on those grounds because the people will have spoken. There is no longer a top-down architecture - it does a 180 and goes bottom-up.

    I fully expected to get attacked on the feasibility of forcing the budgets through an annual popular apportionment, or for taking perks like the mortgage deduction - but hey - everybody's taxes will come out so low, none of that will matter.

    All that will matter is that the world would have to change so drastically--all the rules of the game would be thrown out the window--that it would be analogous to reloading your operating system from one that always crashed, to one that is only capable of crashing once a year--but no matter, a new version gets loaded then anyway.

    Here is the first chart that should come up anytime this topic is raised:



    Forget the passion that this raises for a moment. Notice the total annual revenue on the back of the individual hovers around ONE TRILLION A YEAR since 2000. And forget the ONE POINT FIVE TRILLION A YEAR in corporate taxes that consumers pay in the cost of goods.

    Just consider what happens if we force the total revenue to change. When we do this, it's going to be an impulsive act, blind to the consequences. It will be done totally on self-interest. People with a conscience can try to tax themselves more but their honesty will probably be overridden by the majority who hate the system and will struggle against it. At first. Now watch.

    The next data we need is the one that tells us how many individuals there are in the lower curve of chart #1. I found that around 130,000,000 people filed returns in 2004. For simplicity's sake, (and compassion) I'm going to subtract 30,000,000 who had insufficient income. This gives us the nice round number of 100,000,000 victims. Go back to the chart and notice that 2004 fits the trend where we are hovering around ONE TRILLION in revenue. Now divide. Ouila! On average, we pay $10,000 per individual taxpayer.

    Now we're getting somewhere. Next question: how much does the average taxpayer earn, because if it's $40,000 then we're already averaging 25% flat tax, so I think your gripe against flat tax will crash. It seems that in 2004 the average personal income was about $30,000. That's from Wiki, and I'm not sure how good it is, but let's consider it anyway. In this case, we already have a 33% flat tax on their backs. See what I mean?

    Now let's play God with the economy. I have imposed the monstrous decision to let people choose their percentage of flat tax. It will be by referendum, and the votes cast get averaged. So here we can simulate what will happen. Do you really think 33% will get voted in? Hell no! People probably want to see their taxes at 10% or less. I'm going to pick that for a ballpark number so we can put the key in the ignition and crank this baby.

    Go back to the total annual revenue of ONE TRILLION. In scenario #1 where we assume the average income is $30,000, and the average tax rate is 33%, we are now going to cut revenue to about one third, yielding about THREE HUNDRED BILLION. In scenario #2 where we use $40,000 as the average individual income and 25% as the average tax rate, we are going to cut the revenue to FOUR HUNDRED BILLION.

    Noticed we haven't touched the corporate earnings. Do they get break? What do you think the working class voters will say? Hell no! So they are left to the devices of the economists who will take over the government when this hypothetical system kicks in. Economists will set policy and if the voters don't like it - foobar. Another new game comes to town.

    So the budgeteers still get ONE AND A HALF TRILLION to abuse, they just can't can't be lobbied anymore, or the whole meetinghouse goes to jail.

    The rest, the chunk coming from individuals, is completely democratized, so nobody has a gripe any more and the huge bureaucracy shuts down and we can go back to piddling away our lives without this constant intrusion about the collective wallet.

    Notice I completely left out the system which establishes corporate tax code and collects it. Hah hah hah. Remember now, the IRS is dismantled. But we still have Congress, and remember they are confined to their cubicles. So under this whizbang idea, the political process pays the people by actually shouldering that burden, and getting voted out of office if they screw it up.

    Also remember, the people are funding what they want, so Congress gets to come behind and clean up with the huge corporate revenue, to keep old folks in their homes and the sanitation trucks running and all of the other messy details of trying to live as a commune of capitalists.

    Notice this would completely unglue the irrational fringe groups like the T baggers and the Libationtarians.

    Please understand this is mostly tongue in cheek, superficial, and anyway no one seriously thinks real problems ever get solved here. It's just talk. But consider it. I think it's really cool and I don't care what the naysayers have against it, unless anyone comes up with a DEMOCRATIC solution, I usually don't pay much attention.

    But thanks for reading anyway. And don't forget, I want the old placard from the Ronald Quetzlcoatl Library.

  16. #76
    Please use Sugar Cane Alcohol Billy T's Avatar
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    To Aqueous Id

    I did not fully understand your post but will make three points in reply:

    (1) You too can find no fault with the math proof than some form of progessive tax rates (or their equivilent) are NECESSARY to prevent wealth from becoming ever more concentrated in the hands of ever fewer people. I.e a "flat tax" is a disaster for the middle class, which is already shrinking after GWB made US taxes less progressive (and of course the rich beneficiaries are growing wealthier with reduced taxes).

    (2) On your (2) just because some section of the 700,000 PAGES of legal tax code (not 700,000 lines of code for a computer) does not apply to you doesn't mean you are not effected by it. If some section allows corporation X to take a million dollar depletion allowance, either your taxes are greater or your children's debt is.

    (3a) Your "I fully expect to get attacked on the feasibility ..." is correct. I don't think the people will vote to have adequate level of taxes because they are demonstrating that they will not even taxes themselves for much of what they demand of the government but prefer to leave ever increasing debts for their children to pay.

    (3b) My tax plan is not so drastic a change or in conflict with human nature. One main justification for the lower capital gains tax rate is that the corporations have already paid taxes on their profits (and in the long run their profit is what give stocks value etc.)

    All I am really suggesting, in simplified essence, is:
    (1) that corporate profits instead be taxed when it comes to real people and be treated like any other income people get. As corporations are dis-proportionally owned by the better off in society, the tax rate on these profits will, on average, be higher than now, giving IRS more. I.e. instead of, as adoucette noted in post 70 being "quite regressive" as passed thru to buyers of their products, taxes on corporate profits become somewhat progressive.
    AND
    (2) that all income is treated equally for all people (one progressive rate table, annually scaled to make "pay as you go government" in peace time rather than constantly growing debt for the next generation until the system collapses in chaos).

    Which of these two points do you oppose?
    Last edited by Billy T; 01-17-12 at 05:36 PM.

  17. #77
    Quote Originally Posted by Aqueous Id View Post
    Next question: how much does the average taxpayer earn, because if it's $40,000 then we're already averaging 25% flat tax, so I think your gripe against flat tax will crash. It seems that in 2004 the average personal income was about $30,000. That's from Wiki, and I'm not sure how good it is, but let's consider it anyway. In this case, we already have a 33% flat tax on their backs. See what I mean?
    How is that "average" calculated? There are still a lot of non-working mothers in the USA. The poverty line for a family of four is just over $20K, so $40K for an average family of four sounds realistic. That's right at the line between the "lower middle class" and the "middle middle class," or whatever the proper terminology is. Many of the moms in that demographic don't have jobs with significant incomes, so if their husband earns $30K and they earn $10K, there's your $40K average.
    Noticed we haven't touched the corporate earnings. Do they get break? What do you think the working class voters will say? Hell no!
    I'm probably in the "upper middle class" (I think these days the shorthand definition of that demographic is "we can afford to retire before we die") but I say "Hell no" too. Corporate profits need to be taxed at more-or-less the same rate as if the firm was not incorporated and we were therefore taxing the partners who have to claim it as personal income.

    The reason for this is that by the time the corporate profits are distributed to the people who own the company (the entrepreneurs or venture capitalists who founded it and/or the various categories of stockholders, which these days includes a large portion of pension funds, which trickle down into the pockets of us old people who now have lower incomes and pay tax at a lower rate than we used to), those owners pay income tax at the capital-gains rate, which is much lower than the regular-income rate. And before you stand up and shout, "Well then let's just abolish that 'loophole' and increase the tax on capital gains," remember that not all capital gains are corporate profits--i.e., the sale of stocks. Many of those profits are just ordinary people selling the house they bought twenty years ago and making a profit on inflation. (Remember when the value of your house increased every year, the Good Old Days?) There are dozens of other ways of incurring a capital gain--both perfectly respectable and perfectly reprehensible--and as a B.S. in Accounting I can assure you that it would be impossible to sort them out and only raise the tax on the "bad guys."

    No, the only way to start solving this problem (if it is indeed a problem, I'll save my POV on that dubious assertion for another post) is to tax corporations ("artificial persons") at the same rate as "real persons." Sure there's a down-side to that tactic too--perfection is sadly unobtainable in the real world-- but IMHO it's not as big a down-side as the current system.
    Notice this would completely unglue the irrational fringe groups like the T baggers and the Libationtarians.
    I don't think any of those groups are irrational. They're just desperate and hope that a new system can't be any worse than the old one. These days it's hard to argue against that, since the old one will surely collapse if the Europeans don't find a magic potion to cure their own problems and drag us all down with them.

    As a registered Libertarian and a philosophical libertarian I take personal umbrage at your insult. Ron Paul was our own candidate in 1988 and his ideas are no wackier than anybody else's including Obama. (I'm as proud as any old picket-sign-waving hippie to have a dark-skinned person in the White House, but that doesn't excuse him from doing his job, which he ain't.) One libertarian writer recently defined the U.S. government very accurately in twelve words and a comma: The world's largest insurance company, protected by the world's largest standing army. We War Babies (and our elders, the Depression Babies) may be dragging that system down because all the medical miracles of the 1940s and 50s have extended our lifespans, but once the zillions of Baby Boomers start sucking at the public teat, that system will crash. A government with sixteen layers of civil "servants" who do almost nothing but sit around "administering" each other is not an efficient way to run a health care industry. Just like the education industry and the charity industry, it already looks like an arm of the government, with more of the tax money that goes into running it spent on the salaries of lawyers, bookkeepers and other bureaucrats than those of actual medical personnel who save our lives and make us healthy in other ways. A private organization could not operate at this low level of efficiency. The Germans or the Chinese would compete them out of business! People are already quietly going off to places like Thailand for surgery that easily meets U.S. standards, at a fraction of the cost.

    As for the so-called "Defense" Department, they may only account for 20% of the federal budget, but hey that's a hell of a lot of money! Since the nasty enemy they needed to protect us against collapsed two decades ago, they have been frantically searching for someone to take its place and justify their budget. To their horror the Chinese refused to take the mantle, realizing that it's more profitable, more fun, and a whole lot more pleasant, to take over the world economically instead of militarily. So they invented the hobgoblin of "Islamic terrorism," which kills Americans at the same rate as peanut allergies and nowhere near as fast as American drunk drivers, and started a new Holy War which may go nuclear if Israel or Pakistan finds itself with its back against the wall.

    You give a man a tool, and he'll find something to go out and build with it. You give him the world's largest and best-funded army, and he'll go out and build a war with it. Time to bring those poor suckers home, and save that 20% of the federal budget. I'm already drawing Social Security so I need it.

  18. #78
    hobnob with the flash mob Aqueous Id's Avatar
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    Quote Originally Posted by Billy T View Post
    Which of these two points do you oppose?
    I was being half facetious.

    Here is my take on your proposal:

    (a) the simplest of rates is the flat rate, though your idea is only marginally more complex

    (b) the graduated rate you describe seems to mimic the status quo

    (c) most taxpayers do not benefit from deductions, so they are effectively in your schema already, except that you will move the brackets (that's good)

    My objection is the other aspect which no one seems to care about. As I explained, although I can not fathom this ever happening, I do wish that each person who pays the individual income tax would have an opportunity to directly choose which dollar goes where. Regardless of the economics of this fringe idea, my purpose in bringing it was to suggest that we ought to have some mechanism to stop all the jealousy and bickering about funding our government. Give people the right to choose and they lose the rationale to bitch about it. The system will auto-correct.

    Until that system arrives, I can't imagine how ANY tax reform program will cure this underlying issue.

    The second element that remains is the magnitude of rates being paid. They seemed very high to me, but I have been accustomed to deductions that drive my effective rates down. You object that a low flat rate will not bring enough money. My system says, who cares, everyone funds what they want, so what's the problem? What ever we get is what the people want. So that aspect is cured also. Not sure if you picked up on that. You seem concerned that there won't be enough revenue - but you're missing the point that individuals get to make the budget - so the issue vanishes. And there's still a sizable chunk from industry to cover the quirky public behavior.

    Don't you think its a little strange that all of the funding decisions are done for us, by proxy? Why do we have to put up with that? We all know a software remedy would put us a mouse click away from wresting the purse strings away from the shot callers who are pushing us around like lost lambs. Go online, pick your programs, deposit your funds as you please, and it's done.

    You see - no more budget process - not for the part that affects individuals. It would remain in place for corporations, leaving that to the Constitutional authority of Congress to regulate commerce, not individuals. (By the way, I'm not denying that Congress has Constitutional authority to levy taxes, and to create the IRS. It always irks me that rabble rousers will lie about that to fire up their constituents.)

    If you notice, I differentiate completely between individual taxes, which currently produce around $1T, all all other (corporate, excise, whatever else) which produces $1.5T. My quick and dirty estimate showed we might take a revenue reduction of a few $100B, but so what? That will resolve itself when the programs people want get their voted share of the pie. Besides, if you don;t like it, you change your allocation next year. It auto-corrects. Also, there's that bucket of treasure in the corporate tax coffers - at least to point where the rates don't drive them out of business. But whatever the revenue amount is, it will always be enough to cover the bases, since it already produces around 60% of total revenue.

    I'm not sure if you follow that or not.

    The chart I dragged up shows 40% of revenue comes from individuals, and 60% is from other sources, which I just assumed is mostly corporations. (This is one reason I don't agree with your blanket statement that they pay less than us. I don't have enough data at my fingertips to break it down, but at least it seems they are carrying around 60% of the revenue. That sounds maybe even reasonable).

    BTW I grabbed these numbers quickly so I haven't had a chance to confirm them. I was surprised that the "average income" took so much digging to sort out, and I still had to fudge it. That seems odd to me, too, that the key sites want to make it clear that you understand the shapes of the curves, that it's not realistic to average millionaires with poverty level incomes. Still every top ten searches I did were way too cluttered with details to give me ready access to the bottom line. That's unsettling to me. It makes me think no one wants to stand up and proclaim clearly what this magic number is. As if no one really knows?

    I only jumped on your post because you raised the tax issue and the idea of taxes always wires me up. I didn't specifically have a gripe against your idea. I really don't oppose your idea at all. I just want the other changes too.

  19. #79
    hobnob with the flash mob Aqueous Id's Avatar
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    Quote Originally Posted by Fraggle Rocker View Post
    How is that "average" calculated? There are still a lot of non-working mothers in the USA. The poverty line for a family of four is just over $20K, so $40K for an average family of four sounds realistic. That's right at the line between the "lower middle class" and the "middle middle class," or whatever the proper terminology is. Many of the moms in that demographic don't have jobs with significant incomes, so if their husband earns $30K and they earn $10K, there's your $40K average.
    Yes I was surprised that I couldn't quickly pull up "the average" so I made some assumptions. What I noticed was 130M individual returns, but 1/4th of them were below taxable status. (Scary but plausible). So I went with the 100M individuals who were above poverty. Then I just eyeballed from the revenue chart and noticed average revenue from individual returns hovers around $1T since FY2000. That gives an average tax of $10K per filer. So that's when I went looking for the average income, and it was buried in a pile of demographic breakdowns. There was one that breaks it down by race, and on that chart I saw a cumulative average across races, so I went with that. It was around $30K. It blew my mind to think that the average taxpayer might be taking home only $20K, but that's what I gathered, anyway. I hope I'm wrong. That's why I tried it with $40K, too, because that would give a 25% average rate—which is still high—but it seemed a little more plausible to me. And like you mentioned it at least seems plausible for a family of four. I think I normalized out the welfare folks when I dropped 30M people who owed no taxes. So I think your reasoning—that says $40K is in the ballpark—is a more likely number.

    Quote Originally Posted by Fraggle Rocker View Post
    I'm probably in the "upper middle class" (I think these days the shorthand definition of that demographic is "we can afford to retire before we die") but I say "Hell no" too. Corporate profits need to be taxed at more-or-less the same rate as if the firm was not incorporated and we were therefore taxing the partners who have to claim it as personal income.
    The first chart I pulled up showed that individuals produce 40% of total revenue, averaged over 10 years. That leaves corporate revenue, plus: well—the only thing that comes to mind is excise taxes—but I suppose there are other coffers its ledger, too. I just arbitrarily called that 60% "corporate revenue" since I was making a rough estimate anyway. It seems plausible that they are producing around 60%. I suspect they are getting too many breaks, but at the level of my spot-checking I couldn't readily land on any fact to support it one way or the other. I like your way of thinking of the corporation as partners who should have a burden on par with real people. That gives a rationale for fairness that hadn't crossed my mind until you mentioned it. I think that would be a winning platform for any candidate, on its appeal to fairness alone.

    Quote Originally Posted by Fraggle Rocker View Post
    The reason for this is that by the time the corporate profits are distributed to the people who own the company (the entrepreneurs or venture capitalists who founded it and/or the various categories of stockholders, which these days includes a large portion of pension funds, which trickle down into the pockets of us old people who now have lower incomes and pay tax at a lower rate than we used to), those owners pay income tax at the capital-gains rate, which is much lower than the regular-income rate. And before you stand up and shout, "Well then let's just abolish that 'loophole' and increase the tax on capital gains," remember that not all capital gains are corporate profits—i.e., the sale of stocks. Many of those profits are just ordinary people selling the house they bought twenty years ago and making a profit on inflation. (Remember when the value of your house increased every year, the Good Old Days?) There are dozens of other ways of incurring a capital gain—both perfectly respectable and perfectly reprehensible—and as a B.S. in Accounting I can assure you that it would be impossible to sort them out and only raise the tax on the "bad guys."
    Oh, so you did accounting—wow: I never would have guessed that from your posts in the other fields. That's remarkable. Hey, but the capitalization for tax sheltering purposes seems to exist merely as an incentive. It seems like the tax system is maybe in the wrong business here. Incentives can be done in other ways. I don't know how you ever undo it, it's so wrapped around the axle of tax code and bean-counting culture. I think we will never be able to stomach perks, like the depreciation of the corporate luxuries—jets, limos, posh real estate, etc.—but then there's huge capital sitting on factory floors. I mean, even minus the goods—it's crazy how rich in assets we are compared to the rest of the world. And that’s the part of industry that average Americans probably almost feel patriotic about. And it’s unfathomably huge. When I first saw this thread, and I was wondering about how much wealth was in the top 1% of income, it occurred to me that if you were to count every airplane in every airport with all of the piles o' stuff airlines own, and conduct an full appraisal of all capital assets alone, it would probably knock our socks off to discover how wealthy they actually are. And that’s just one industry.
    Quote Originally Posted by Fraggle Rocker View Post
    No, the only way to start solving this problem (if it is indeed a problem, I'll save my POV on that dubious assertion for another post) is to tax corporations ("artificial persons") at the same rate as "real persons." Sure there's a down-side to that tactic too--perfection is sadly unobtainable in the real world-- but IMHO it's not as big a down-side as the current system.I don't think any of those groups are irrational. They're just desperate and hope that a new system can't be any worse than the old one. These days it's hard to argue against that, since the old one will surely collapse if the Europeans don't find a magic potion to cure their own problems and drag us all down with them.
    Now we are learning that a global economy means more than the World Bank, and places we'd never imagined as economic linchpins—Ireland? Greece?—that surprised a lot of casual observers like me. At the same time we see them behaving badly…mostly cheesy corruption…which is, after all, a way of life in some cultures. So that's another dimension to globalization that will drag on maybe forever. It just seems weird that the world is actually wired this way. Maybe some unforeseen windfall (like raising a new generation of optimists who develop a little more self-respect?) will come of it.
    Quote Originally Posted by Fraggle Rocker View Post
    As a registered Libertarian and a philosophical libertarian I take personal umbrage at your insult.
    It was crass. Libertarians scare me, but your loyalty and participation are on the mark. If everyone participated, we could fix a lot of problems faster and cheaper.
    Quote Originally Posted by Fraggle Rocker View Post
    Ron Paul was our own candidate in 1988 and his ideas are no wackier than anybody else's including Obama.
    Obama doesn't scare me like Ron Paul, but I certainly understand your position.

    Quote Originally Posted by Fraggle Rocker View Post
    (I'm as proud as any old picket-sign-waving hippie to have a dark-skinned person in the White House, but that doesn't excuse him from doing his job, which he ain't.)
    I think the BS factor swamped him, the rise of the political media outlets and the evangelicals. They wasted a whole year on the Economic Stimulus another on Health Care and another on the Budget. I thought he hit the ground running and actually accomplished a lot of the goals of his platform. I happen to like him because I noticed him from his involvement in overturning the Illinois death row cases, then when he was keynote speaker in 2004. He had a voice that struck me as one that addresses the human condition without pretense. I also noticed earlier he was networking with scholars and other experts in an unprecedented way. Also I liked his online campaign and the way his ton of small contributions surpassed Hillary’s few huge ones. That was a first, really remarkable, like “the people” came out of a coma and suddenly were participating. All of this is fine with me. Personally I hope he gets re-elected. It may be too late to rekindle some of that fire. But at least for a while the country seemed perkier than ever possible. Negativity and malaise set in fast after that, fueled by what seemed to me to be jealousy and a lot of lowbrow ambushing, mostly over lame-brained, frivolous crap.
    Quote Originally Posted by Fraggle Rocker View Post
    One libertarian writer recently defined the U.S. government very accurately in twelve words and a comma: The world's largest insurance company, protected by the world's largest standing army. We War Babies (and our elders, the Depression Babies) may be dragging that system down because all the medical miracles of the 1940s and 50s have extended our lifespans, but once the zillions of Baby Boomers start sucking at the public teat, that system will crash. A government with sixteen layers of civil "servants" who do almost nothing but sit around "administering" each other is not an efficient way to run a health care industry. Just like the education industry and the charity industry, it already looks like an arm of the government, with more of the tax money that goes into running it spent on the salaries of lawyers, bookkeepers and other bureaucrats than those of actual medical personnel who save our lives and make us healthy in other ways. A private organization could not operate at this low level of efficiency. The Germans or the Chinese would compete them out of business! People are already quietly going off to places like Thailand for surgery that easily meets U.S. standards, at a fraction of the cost.
    I have dealt with government staff and I was often surprised how they reversed my conceptions of them as being mired in bureaucracy. So I guess that always sticks in my mind when this issue comes up. Another one is how much those agencies are actually costing, and how much could be saved by gutting them. Something I have observed them do, contrary to the model, is to kick ass in the areas of regulations, and also in paring down contracts to the bone, squeezing out the lowest bids imaginable. I happen to have a personal take on it, as far as the efficiency aspect, and so it just doesn’t jump out at me as much as a lot of other issues do. I couldn’t even tell you how many people are on the Federal payroll, or how big is “Big Government”. That term even bugs me because I can’t measure it against anything except a perception—so who’s calling it Big, and when was it not Big, and when it wasn’t, how Big was it? I’m not denying it completely; it’s more an admission of my unfamiliarity with this than anything else.
    Quote Originally Posted by Fraggle Rocker View Post
    As for the so-called "Defense" Department, they may only account for 20% of the federal budget, but hey that's a hell of a lot of money! Since the nasty enemy they needed to protect us against collapsed two decades ago, they have been frantically searching for someone to take its place and justify their budget. To their horror the Chinese refused to take the mantle, realizing that it's more profitable, more fun, and a whole lot more pleasant, to take over the world economically instead of militarily. So they invented the hobgoblin of "Islamic terrorism," which kills Americans at the same rate as peanut allergies and nowhere near as fast as American drunk drivers, and started a new Holy War which may go nuclear if Israel or Pakistan finds itself with its back against the wall.
    You give a man a tool, and he'll find something to go out and build with it. You give him the world's largest and best-funded army, and he'll go out and build a war with it. Time to bring those poor suckers home, and save that 20% of the federal budget. I'm already drawing Social Security so I need it.
    Yes, the Dept of “Offense” has been the Cold War millstone that just won’t unhang itself from around our collective necks. They are on the chopping block; there’s heat on them to cut like never before. I don’t think there's sufficient political will to keep catering to them. So we will probably see some sizable cuts there, too. Probably all big ticket items like the carriers and new tactical fighters will fizzle out. Then some more aerospace layoffs will follow. The cost of personnel and insanely expensive areas like “logistics and support” remains problematic. And we’re trying to acknowledge more war-related injuries and disability, and treat them with more respect than with past veterans. So there’s just so much you can cut before you hemorrhage. Their brand is all about morale, so you don’t want to crush them like a bug, but clearly they are going to have to take their medicine just like everybody else.

    As far as social security, it has the Boomer Bubble to swallow, and after that it’s going to get very sick. I don’t really worry about it crashing, but I’m trailing you a few years so my attitude may change drastically down the road. I do think that in a future economy the US bond market will be adequate to shore it up, and I don’t worry about the foreign investment aspect of that, either, because the threats are different in the evolving global setting. These days it seems like a good healthy sign when they rush in buy us up like crazy. Stability of course is the key, it’s just hard to imagine how that’s achievable anymore, since the financial network is so sensitive. Now you get feedback loops that practically go into oscillation where none seemed to exist before. The structure used to run open loop, like when the World Bank was the forcing function for hotspots in Latin America and Africa. Those days (hopefully) are over, but also: damn, they’re over--there went the stability.
    Last edited by Aqueous Id; 01-18-12 at 03:04 AM.

  20. #80
    Please use Sugar Cane Alcohol Billy T's Avatar
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    Quote Originally Posted by Aqueous Id View Post
    ... Here is my take on your proposal:

    (a) the simplest of rates is the flat rate, though your idea is only marginally more complex

    (b) the graduated rate you describe seems to mimic the status quo

    (c) most taxpayers do not benefit from deductions, so they are effectively in your schema already, except that you will move the brackets (that's good) ...
    On (a) Einstein answered for me: things should be made as simple as they can be, but not more simple than that. As I have repeatedly PROVED mathematically with many false simplifying assumption that weaken the proof (like that the rich's persons rate of return is not more than the middle class person's & he only has 25 times the income of the middle class, etc.) THE FLAT TAX WILL DESTROY THE MIDDLE CLASS. That is currently happening, but slower than with a flat tax as GWB only reduced the progressive tax rates at the top income end.

    SUMMARY: The “flat tax” is too simple as it destroys the middle class basis for mass production economies. It will restore the Middle Age’s distribution of wealth and the craftsman production system. – A Monetary King and his friends own everything. If you don’t believe that find flaw in the math proof.

    On (b) Yes for most people that is true except their taxes will be lower (and at lower rate) when those with good tax lawyers no longer have 700,000 pages of special tax reduction laws reducing their taxes. (Technically, they are court enforceable "rules" not laws.)

    On (c) If you mean most get no benefit (only harm) from the 700,000 pages of special tax deductions, like Oil and other mineral “depletion deductions” yes; but if you mean none of the current deductions, no. More than half of Americans get deductions they itemize on their 1040s, quite a few even if they are also claiming the “standard deduction" – such as $1500 for buying an electric car, or cost of better insulation, solar panels, etc.

    All these deductions, which are available to everyone if they do what the government wants them too, are in fact examples of “central planning” – I.e. the government is tilting your economic decisions to favor what it thinks is best, not keep your decision only influenced by the market place. The government is not as smart as Adam Smith’s “invisible hand.” One of the most damaging of the government plans, largely responsible for the current economic mess, is the idea everyone should be a home owner instead of a renter. The only deduction I have in my tax plan is for unusually large medical expenses as that is just a humane consideration, not governmental central planning. They really are “negative income” so should make your net income less.

    Quote Originally Posted by Aqueous Id View Post
    ... I do wish that each person who pays the individual income tax would have an opportunity to directly choose which dollar goes where. … The system will auto-correct.
    No. There will be many needless deaths before it totally collapses. For example who will “ear mark” their taxes for the necessary government agencies that keep the food safe, the mines inspected, the air planes well controlled, stop the snake oil salesmen with their cancer cures, etc. There are more than a 1000 ways the system would fail if the people decided what got funded by how much. Also a problem would be the gross over funding of many ideas with taxes – looking for proof that God created everything, evolution is wrong, etc. (Is that what you want at least 10% of all taxes paid to do?) not to mention in detail the fact that few in state X would support any government spending that did not benefit state X directly.
    Quote Originally Posted by Aqueous Id View Post
    ... You object that a low flat rate will not bring enough money. ..
    No my objection is that it will destroy the middle class and thereby the efficiency of mass production for a mass market. For example, all the hand made cars will cost more than $300,000 but the Flat Tax’s eventual “Monetary King’ and his friends can pay that.

    Quote Originally Posted by Aqueous Id View Post
    ... we ought to have some mechanism to stop all the jealousy and bickering about funding our government.
    Letting people of state X only support expenditures made in state X will help that!

    SUMMARY: Your main error is ignoring the mathematically proven social changes the Flat Tax MUST eventually produce.
    Again, if you disagree, show where the proof is in error.
    Last edited by Billy T; 01-18-12 at 07:46 AM.

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