Posted on 12/18/2005 4:46:00 PM PST by FairOpinion
YES! 83% (8832 votes) A consumption tax would be great for the American economy. Do away with complicated income taxes!
NO! 17% (1761) A consumption tax would not be fair for low-income households. Keep the current income tax system!
We'll send your vote to your congressional representative and senators.
WOW!
Seven years and this is your response on an issue that has been discussed thousands of times?
Investments are not taxed for anyone.
Shoes are taxed for everyone.
Everyone -- E V E R Y O N E -- gets a prebate to cover taxes on purchases up to the poverty level for their family size. That means that shoes and everything else for this 'poor' woman is UNTAXED.
You'll get no fight from me on that. I have been opposed to these programs since the 60's.
The dishonest claims such as that income taxes are included in prices make me very doubtful about the sales tax. That and the fact that the ACTUAL tax is almost 30% rather than 23. If the proponents cannot understand basic economics enough to know how prices are derived I have zero confidence in their ability to understand taxation and its impact on the economy.
Income taxes are just one of the many expenses business must pay in order to stay solvent.
All expenses, including business income taxes, are paid by individuals - not by business. Business just collects tax and remits as an unfunded mandate.
Business taxes and tax costs (along with all othe expenses) are collected in higher prices, lower wages, or reduced ROI.
Lowering wages and reducing ROI cannot be sustained - they are emergency measures for increasing cash flow temporarily - but a business cannot keep employees at below-market wages, nor can business keep attracting investors at below-market returns. The only indefinite stream of cash flow to pay expenses comes from sales revenues.
So expenses are in prices - expenses include taxes and tax costs.
Regarding the rate - it can be expressed tax inclusive like the income and payroll taxes are expressed - in which case the tax would be 23%. The rate can also be expressed like a sales tax in which case it is appx 30% (29.87%). Both represent the same amount of tax. For example, if you buy a $100 item and $23 of it is tax, the rate can be expressed as 23/100 or as 23/77. Take your pick. I use both rates. Note that they both represent $23 of tax.
Speaking of understanding prices, those not in the real world but rather in a textbook frequently misunderstand the theories as they apply.
Anyone makes a decision as to whether a given return is sufficient to produce - if I know my return will be diminished by expenses, I will require an increased return to perform - increased to the extent that the reduction due to expenses (or anticipated expenses)still leaves sufficient return to induce my production.
That the textbooks in which you reside are theoretical and not practical has always been trivially obvious.
Meaningless polls, which say nothing.
Income taxes are calculated on a residual, profit, they are not included in prices by calculation. Every book on microeconomic theory will tell you the same thing. Now payroll taxes, SS taxes are REAL costs of production and are included in prices.
You also are incorrect as to the incidence of taxes. Consumers do not pay all of the costs of all taxation. Once again such statements show a lack of education in economic theory. This lack makes your arguments incapable of swaying those who have actually studied economics. Of course there are very few of those so such bilge will not be questioned that much.
Sales taxes are expressed as a percent of the base price EVERYWHERE they are used. To use your method is contrary to standard practice and highly deceptive.
Income taxes simply are not an expense in the production function and your inability to understand/admit that does not elevate you above those who know different. Such taxes come AFTER all activity has ceased: production, and sale. Then profit is calculated and only after these three steps is income tax finally determined.
All taxes are simply not the same and do not have the same impact on businesses and consumers which your fight for a new scheme of taxation implicitly admits. Income taxes are no more an expense to the producer than a sales tax is.
Consumers do not pay all of the costs of all taxation.
Yes, they do. Your continual denial of this accentuates your reliance on textbook theory over real world experience, of which you have none.
Sales taxes are expressed as a percent of the base price EVERYWHERE they are used. To use your method is contrary to standard practice and highly deceptive.
My methodology is to use both rates depending on context. How is that "highly decpetive"? You only want to claim such so that you have a reason to reject the nrst - rahter than simply owning up to the real reason.
Income taxes simply are not an expense in the production function and your inability to understand/admit that ...
I never said they were. You are making that part up.
Income taxes are no more an expense to the producer than a sales tax is.
Does a sales tax increase the price of a good? Yes.
Does an income tax increase the price of a good? Yes.
You're caught in your own contradiction. LOL.
The government also hates it because they can't buy votes by giving interest groups special tax breaks. Plus, if the government needs to raise revenues they can't do it through hidden taxes. I think it is the only tax that hits everyone equally and gives you some control over how much taxes you choose to pay based on what you consume. Liberals hate free choice.
You hit it right there!
I never said they did. What I posted is:
All expenses, including business income taxes, are paid by individuals - not by business.
So you've not replied to what I've posted. My previous post hence is in error. Consumers do NOT pay 100% of tax - tax is shared by individual consumers, individual wage earners, and individual investors as I posted and you missed:
Business taxes and tax costs (along with all othe expenses) are collected in higher prices, lower wages, or reduced ROI. Lowering wages and reducing ROI cannot be sustained - they are emergency measures for increasing cash flow temporarily - but a business cannot keep employees at below-market wages, nor can business keep attracting investors at below-market returns. The only indefinite stream of cash flow to pay expenses comes from sales revenues.
Income taxes are not an expense. Only business which are profitable have them. Are you claiming they are an expense for some but not others?
Your use of both rates is an anomaly among those pushing this new scheme. I applaud you for that the others keep dishonestly talking about 23% which is used by NO state sales tax.
You have repeatedly claimed income taxes are an expense of production.
Does a sales tax increase the cost of a good? Yes. So far so good.
Do income taxes increase the cost of a good? NO. They aren't even calculated until long after the good has been sold. There is no contradiction in anything I have said.
Where?
Yes.
If I produce a product I choose to do so based on expected return. If I can charge $50 and earn my expected return, I'm happy. However, if I know my profit will be taxed, I must "back-in" to my price so that after-tax profits are what I want.
Of course I may not get what I want for my product, but I'm sure going to try. I can anticipate tax expenses pretty well and try to recover them.
That you assert that anticipated reductions in return are not considered in pricing is preposterous.
I assure you that I increase the price of my service to allow my after-tax return to be what I require.
Yes.
If I buy my goods to produce from someone else, their price to me includes all of their costs, including taxes and tax costs.
Taxes and tax costs increase the price to the consumer and producer prices too.
Rates of return on investment are calculated prior to any taxation of business income. They are affected by expenses but not by income taxes. ROI are the means of determining whether to make a certain investment rather than another. They are devices to allocate resources and are not affected by income taxes which tax profits at the same rate.
Your confusion about the nature of income taxes appears to be incapable of clarification. They simply are not a business expense but calulated upon the results of business operations AFTER all expenses are paid. If all expenses sum up to more than revenue then there is NO income tax. Thus this is clearly not an expense and the consumer pays no more for the item which has produced a profit than he does for the one which did not. When there is a profit and a tax paid it also is no more an expense than having a crook rob the owner of all his profit in a holdup. THAT is also no expense.
Goods you purchase are priced whether or not the company made a profit or not. They include all actual expenses: payroll taxes, cost of production, cost of distribution etc. If you buy a widget in January the seller will not even know if he will make a profit to pay a tax on until December. His price is set to maximize his profit and thus maximize the amount he pays as income tax. Ironically you and the IRS have the same goal for you: it wants you to make as much profit as possible which will give it the most tax possible.
No business can say "We want to make $100,000 after taxes hence our price is ....." They do not have such power. All they can do is compare the actual costs of producing and TRY to obtain a price sufficient to cover those costs. But their success in doing so is determined by market conditions and often they fail. Even the largest and most powerful companies cannot guarantee positive results. Look at GM.
Agreed.
If all expenses sum up to more than revenue then there is NO income tax.
Agreed. And that does not mean that the price of the good did not include amounts representing desired return.
I cannot fathom the idea of ignoring future income tax in determining my price. If I did so, I would surely be less profitable by the amount of the tax, which I am not willing to do. If I require a return of 50 per hour on my service, then I can charge 75 and keep appx 50. If I did not consider taxes in determining my price, I would end up with a return of 30, which is not sufficient to induce my labor.
I cannot understand how you can ignore this fundamental truth. You really have never been in a position to see how business works - you only read about it eh?
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