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View Full Version : Econcomics and Taxation (continued from news)




JaredR26
07-08-2007, 07:55 AM
Starting this thread to continue the discussion we had going in the news section.

Original thread:
http://www.ronpaulforums.com/showthread.php?t=6054


I'd be happy to debate it in the General Politics section if you're interested. I've felt for some time now that Henry George was right on the money. I have yet to see a well thought out counter argument to his ideas. Mostly people just think there is too much red tape to cut through to implement it.



Doesn't a consumption tax fuck the poor (who may not even be paying much in the way of income tax, if any at all) in a big, big way?

I think this FairTax idea is a bad one, especially considering it's pitched a zero-sum transfer. Now, if they dumped income tax and went to a national sales tax of say, 5%, I could deal with that. But I've only ever heard Boortz talk about 25% or some crap. WE TODD DID.


Ron Paul spoke about funding the military with a tarrif only. Personally, I think that sounds like a fantastic idea, as it would also incentivize local production again.


Not if you exempt food. The rich spend more than the poor and would still pay more.

JaredR26
07-08-2007, 07:56 AM
First of all, there are 2 problems here. It is not fair to mix them in an attempt to prove your point. The first problem is the method the federal government uses to collect funds. The second problem is the spending of the government.



Doesn't a consumption tax fuck the poor (who may not even be paying much in the way of income tax, if any at all) in a big, big way?

I think this FairTax idea is a bad one, especially considering it's pitched a zero-sum transfer. Now, if they dumped income tax and went to a national sales tax of say, 5%, I could deal with that. But I've only ever heard Boortz talk about 25% or some crap. WE TODD DID.
Most americans typically pay 30-40% of their income in taxes. How high or low any tax would have to be has nothing to do with the tax itself- It is an issue of how much the govt spends.

A national sales tax in its simplest form DOES hurt the poor. Not ruin their lives, but it would disproportionately affect the poor.
However, the fairtax is much closer to a luxury tax than anything else. The fairtax makes spending allowances to each family regardless of income, which offsets the amount of tax they would pay for basic necessities at the poverty line. So under the fairtax, Bill Gates would get some money back from the government as compensation for living expenses, just the same as Joe Schmoe. But they would get the SAME amount back. Bill Gates would get less than pocket change, Joe Schmoe living at the poverty line would get back the entire amount he had paid in taxes.

http://www.runningincircles.com/archive/2005/05/06/the_progressive_democrats_sale


Ron Paul spoke about funding the military with a tarrif only. Personally, I think that sounds like a fantastic idea, as it would also incentivize local production again.
Yes, he spoke about it. He did not say it was a good idea. I do not think that any modern nation could fund their modern national defense solely through tariffs in todays world. He said it was what we did before. That does not mean it will work today. What RP was actually addressing, if you don't take his words out of context, is that our federal spending is way to high.

JaredR26
07-08-2007, 08:12 AM
Well I'm a Georgist. I think the government can be entirely funded by a tax on the unimproved value of land. The rental value on the portion of a property that is the actual land (not the buildings or other improvements) is the only portion which has value solely created by the community, and is the most logical choice for a government tax. Read Henry George's Progress and Poverty. It is freely available online.

I hadn't ever really heard of this before, and I did a little searching to be more informed. Regardless, this seems like a _REALLY_ bad idea to me. First of all, the amount of money that I think the government needs to spend is still very large. I don't believe the government should be as big as it is now, but if you just keep the military alone, the government would be 1/5 of its current size, which is still HUGE. I don't think any significant military spending should be cut- It is very important to maintain a very strong military.

Under a Georgian taxation system, farmers are taxed MUCH more than anyone else, because they own a way more land than anyone else. Farming as it is now is a very difficult profession. Breaking even requires a huge amount of work, which sometimes still isn't enough if you have a bad season. Assuming that government spending is cut to 30% of what it is now, which I think is unrealistic and extreme, this tax would be prohibitively high. Farming as a profession would be obliterated.

Exports of foods or any farm-made product would cease overnight, and imports of foods would quadruple or more in a few months. All of this cost would be transferred to consumers, especially the poor who spend proportionately more on foodstuffs than anyone else. Prices of american made foods would double or triple immediately. I don't see ANY benefits to a Georgian taxation system other than the philosophical feel-good logic of the government only taxing what they have an inherent right to tax. I don't think that offsets the destruction it would cause for farmers and the markets based on it.

Fortunately, and for good reason, this kind of thing could never get passed. If you look at a map of the US colored republican(red)/democratic(blue) according to how each county voted in 2000, the entire map is red. That 50% of the population owns 90% or more of the land in the country because its mostly farmers. The democratic 50% of the vote comes from spotty blue areas around large cities.

With all due respect WizardWatson, I think you need to consider the implications of what you are saying. It is very possible, however, that I have completely overlooked something myself, or that I don't know enough about the subject. You originally said:

I'm against Gravel because of his support for the federal sales tax bologna. Him and many others have convinced themselves that sales tax is different than an income tax.

I admit there are subtle differences but they are so subtle as to really be irrevelant.
And I outlined massive differences between the two ideas and implementations. Do you still think the differences between them are subtle?
The Georgian taxation system you mentioned is essentially a property tax that ignores the free market(a bad idea in any policy), and wreaks havoc on the farmers and rural parts of america, forcing them to pay destructively disproportionate amounts of tax.

fsk
07-08-2007, 08:19 PM
Most americans typically pay 30-40% of their income in taxes.


Are you sure about that?

Are you including the inflation tax?

Are you including sales tax?

Are you including property taxes?

Are you including the tax on corporate profits? The tax on corporate profits just gets passed along as higher prices.

Are you including the cost of compliance with government regulations? For example, government regulation of the health care industry drives up prices. Doctors are licensed by the government, which drives up prices.

Are you including the cost of the government subsidies to large corporations, squeezing out smaller competitors?

If you add up every single tax, I calculate a taxation rate of 60% to 95%.