Consideration of a Head Tax

[CaptLouAlbano]

A few of us were sitting around this weekend enjoying some really good bourbon and the subject of taxes came up. One of my friends suggested the following:

Instead of moving to a flat tax, sales tax or other sort of plan why not have a head tax? There are roughly 275 million people aged 18 and older in the country. If every person was assessed a head tax of $10,000 that would result in 2.75 trillion dollars in revenue to the Federal Government (which oddly enough was the budget just prior to Obama's first term). The head tax would eliminate the payroll tax, FICA, Medicare tax, etc - just the one tax payable in either weekly, bi-weekly, monthly or quarterly installments as chosen by the individual. There would be no corporate tax, no capital gains tax, no federal taxes on fuel, etc. Just the 10 grand per person, the only truly fair tax since everyone is considered equal regardless of income.

Now, the top 50% of people would be seeing a reduction in taxes. The bottom 50% of people would see their tax burden go up. The bleeding hearts would cry foul over this, but he had a solution. A non-profit third party corporation would be set up so that people that cannot afford the tax can apply for financial aid. Those bleeding hearts who have voted for years to expand the federal government can donate money to this fund to pay for others that are so called less fortunate.

But, in reality, with the elimination of corporate taxes and the reduction of taxes for that top 50% we would see an almost immediate explosion in the economy resulting in less and less people falling into that "needy" category.

Moving forward, Congress would be stuck with a Federal Budget equal to the adult population times $10,000 (obviously this would require some sort of balanced budget amendment), and raising the budget (and therefore the tax payment) would be political suicide. In fact, as I pondered, those who would want to cut government spending further (and thereby reducing the head tax) would be extremely popular.

We thought about this idea for a while, and couldn't come up with many holes in this thinking, other than the typical "it's not fair that poor people have to pay more now" argument (which we believe was solved by the non-profit idea)

Thoughts? Comments? Suggestions?

[tod evans]

Thoughts? Comments? Suggestions?

There's not one damn thing the federal government offers that I'd value at $100.00 let alone $10k....

[CaptLouAlbano]

There's not one damn thing the federal government offers that I'd value at $100.00 let alone $10k....

Agreed, but as it stands now, if you are in the top 50% of income earners your tax burden is greater than 10K. And that doesn't even take into consideration the fact that you are paying corporate taxes that are built into the price of damn near everything you purchase.

So sure, I would love to see a Federal Budget reduced down to darn near nothing, but that isn't the reality for the present day. Hell, just getting the budget reduced to 2008 levels would be called Draconian.

[mrsat_98]

There's not one damn thing the federal government offers that I'd value at $100.00 let alone $10k....

[QUOTE]You cannot give Reputation to the same post twice.[QUOTE]

Hey mods, can you fix this $hit ?

[donnay]

First we have to do away with all the Big government first and take it back to a limited government as it was intended to be. As it stands now, they would frivolously spend that money in no time.

[Christian Liberty]

Basically, this is the logical equivalent of "Let's steal just as much, but from different people." So, I see it as kind of a wash. What are you going to do with people who don't have 10K? Or who only have 10K?

[CaptLouAlbano]

First we have to do away with all the Big government first and take it back to a limited government as it was intended to be. As it stands now, they would frivolously spend that money in no time.

Well at 2.75 trillion that would be right around the budget level of 2008, about a trillion less than Obama's current budget.

[fisharmor]

There's not one damn thing the federal government offers that I'd value at $100.00 let alone $10k....

One of the first things I heard Ron Paul say that made me realize he's a genius was on the topic of taxes. It was back in 2007 and he was talking to a really small group in NH.
He was talking about things the president could realistically do to effect change.

One idea, that I'm surprised nobody else has mentioned since (even RP himself), was to eliminate withholding.

Make every taxpayer in the US write out a check every single quarter.
And watch how fast things change after that.

Lou kind of hit it already....

just the one tax payable in either weekly, bi-weekly, monthly or quarterly installments as chosen by the individual.

You don't need to mess with the code or eliminate everything. All you need to do is implement THAT part, and the system would enter a controlled crumble.

[phill4paul]

There's not one damn thing the federal government offers that I'd value at $100.00 let alone $10k....

Or .01 until they fix the damn mess. Which is currently more than I give them. They will be fine w/ the 10k per head. Then it will slide to $10,100 etc. etc. Just like they did with the income tax.

[LibertyEagle]

Here's the thing, in my opinion. Government would take that 2.75 Trillion dollars and keep all the other taxes too. For the people, ya know.

[CaptLouAlbano]

Basically, this is the logical equivalent of "Let's steal just as much, but from different people." So, I see it as kind of a wash. What are you going to do with people who don't have 10K? Or who only have 10K?

Addressed by the non-profit that bleeding hearts could contribute to that cry foul over it not being fair. But truthfully, the reduction in taxes for the top 50% and the elimination of corporate taxes would result in massive economic growth. Therefore, those who are on the lower end of the economic scale would see their income rise.

Are you suggesting that instead it is better to have a progressive tax with those who earn more paying more?

[LibertyEagle]

Addressed by the non-profit that bleeding hearts could contribute to that cry foul over it not being fair. But truthfully, the reduction in taxes for the top 50% and the elimination of corporate taxes would result in massive economic growth. Therefore, those who are on the lower end of the economic scale would see their income rise.

Are you suggesting that instead it is better to have a progressive tax with those who earn more paying more?

Bleeding hearts want to bleed YOUR heart and monies; not their own.

[Christian Liberty]

Addressed by the non-profit that bleeding hearts could contribute to that cry foul over it not being fair.

You do realize that most of the "bleeding hearts" are only like that when it comes to someone else's money, right?

But truthfully, the reduction in taxes for the top 50% and the elimination of corporate taxes would result in massive economic growth. Therefore, those who are on the lower end of the economic scale would see their income rise.

Hopefully so.

Are you suggesting that instead it is better to have a progressive tax with those who earn more paying more?

I think it would be better to have no taxes But, are you suggesting that everyone who does not have 10K should be imprisoned? Are you saying that people who only make 10K or so a year should be left with nothing at all? Or are you under the impression that the non-profit will actually bring anything to the table?

To answer your question in terms of relative evils, I think a flat tax where everyone pays the same percentage would be less undesirable than either a progressive tax or what you're suggesting, but I view all taxes as being fundamentally evil.

[Christian Liberty]

Bleeding hearts want to bleed YOUR heart and monies; not their own.

Exactly. Although, I may be thinking in different terms than the Captain. He may be presupposing that all the welfare programs and financial aid and such still exist, which wasn't what I was thinking. If all of those things exist, it may be possible for someone to survive with no income, assuming the government steals all their income for taxation purposes (I see this as REALLY undesirable, and frankly, I do see stealing ALL of someone's money as being "worse" than stealing 40% or so from a wealthy person, even though I see both as being evil) but my question about people who don't even have/make 10K would still remain.

I don't believe any of those programs should exist. If people need help they should be helped voluntarily and not coercively. But I see a difference between accepting that some people might starve if we don't proactively help them and proactively taking what they do have in order to be "fair."

[otherone]

We thought about this idea for a while, and couldn't come up with many holes in this thinking

That would be the bourbon.

[CaptLouAlbano]

Bleeding hearts want to bleed YOUR heart and monies; not their own.

Oh I know that. And I am sure there are other ways something like this could be structured to offset the taxes of those who "cannot pay". The essence of it all was the elimination of corporate taxes and proposing a system that is truly fair where everyone pays the exact same amount regardless of income.

[otherone]

One idea, that I'm surprised nobody else has mentioned since (even RP himself), was to eliminate withholding.

I've had that thought in the past as well. Instead of directly challenging income tax, challenge withholding...the system would shut down.

[Christian Liberty]

Oh I know that. And I am sure there are other ways something like this could be structured to offset the taxes of those who "cannot pay". The essence of it all was the elimination of corporate taxes and proposing a system that is truly fair where everyone pays the exact same amount regardless of income.

I don't see how that's intrinsically more "fair" than any other system.

10,000 dollars is a drop in the bucket to Bill Gates yet it could be a poor person's entire livelihood. While stealing 10,000 from anybody is wrong, would you really think stealing 10K from Bill Gates and stealing 10K from a poor guy who will starve without it is comparable?

[CaptLouAlbano]

I think it would be better to have no taxes But, are you suggesting that everyone who does not have 10K should be imprisoned? Are you saying that people who only make 10K or so a year should be left with nothing at all? Or are you under the impression that the non-profit will actually bring anything to the table?

To answer your question in terms of relative evils, I think a flat tax where everyone pays the same percentage would be less undesirable than either a progressive tax or what you're suggesting, but I view all taxes as being fundamentally evil.

Well "no taxes" is a fantasy land given our present situation, so it's moot.

I look at it this way, Americans have voted for decades for the government we have today. Therefore, the burden of this government should be equal to all regardless of income. Someone who earns $10K per year is in that situation in large part because of decisions they have made over the course of their life. While there are exceptions, poor people are poor because of their own life choices. I have no sympathy for a 30 year old able bodied male who only makes minimum wage.

Truth is, someone who only makes $10K per year receives tens of thousands of dollars in government benefits: housing, food stamps, medicaid, welfare payments, etc. In this head tax scenario, those benefits would be reduced by $10K or they could apply for financial assistance from the non-profit charity.

[otherone]

The essence of it all was the elimination of corporate taxes and proposing a system that is truly fair

Taxing corporations isn't fair?

[CaptLouAlbano]

I don't see how that's intrinsically more "fair" than any other system.

10,000 dollars is a drop in the bucket to Bill Gates yet it could be a poor person's entire livelihood. While stealing 10,000 from anybody is wrong, would you really think stealing 10K from Bill Gates and stealing 10K from a poor guy who will starve without it is comparable?

Because it is equal to all regardless of income. For someone like myself it would save me tens of thousands of dollars every year that I can spend, invest, save and use to grow the economy.

[Christian Liberty]

[QUOTE=CaptLouAlbano;5484158]Well "no taxes" is a fantasy land given our present situation, so it's moot.[/QUPTE\

I understand that.

I look at it this way, Americans have voted for decades for the government we have today. Therefore, the burden of this government should be equal to all regardless of income. Someone who earns $10K per year is in that situation in large part because of decisions they have made over the course of their life. While there are exceptions, poor people are poor because of their own life choices. I have no sympathy for a 30 year old able bodied male who only makes minimum wage.

Well, you said "18+" and there is a difference between someone who recently graduated high school and a 30 year old. Regardless, I see your point. But, I'm not talking about forcing someone else to pay for that person who only makes minimum wage. Shouldn't he at least be able to keep what he actually does earn though?

Truth is, someone who only makes $10K per year receives tens of thousands of dollars in government benefits: housing, food stamps, medicaid, welfare payments, etc. In this head tax scenario, those benefits would be reduced by $10K or they could apply for financial assistance from the non-profit charity.

That's true as well, I guess I'm thinking in the absence of welfare whereas you're thinking with modern welfare. THat said, what if someone only makes 9K a year? Let's say the non-profit charity doesn't exist (because progressives are shown to by hypocrites like we know they are.) Would you support sending that person to prison?

[Christian Liberty]

Because it is equal to all regardless of income. For someone like myself it would save me tens of thousands of dollars every year that I can spend, invest, save and use to grow the economy.

Yeah, I don't really see it that way. I think the "least bad" form of tax system would take an equal percentage from each person, not the exact same dollar amount.

I'm not sure this is a point I can actually prove, though. It would be far easier to prove that taxation is inherently evil, but I obviously know that's kind of a fantasy ATM.

[CaptLouAlbano]

Taxing corporations isn't fair?

Not at all, since all corporate taxes are merely passed onto the consumer in the form of higher prices. But if you wanted to do so, you could do a head tax on each corporation and therefore lower the head tax burden for the individual.

[Christian Liberty]

I know this is debated around here, but I don't really see a "corporation" as a "person", rather, its simply a group of people who have contracted with each other. So in the "head tax" scenario I would think each individual who is in the corporation would owe 10K but the corporation itself wouldn't owe anything anymore than a building pays a head tax

[CaptLouAlbano]

Yeah, I don't really see it that way. I think the "least bad" form of tax system would take an equal percentage from each person, not the exact same dollar amount.

Then you support a progressive tax system. All of the current flat tax proposals, even Rand's. This is from an article about Rand's tax proposal

"Paul asserts that his flat tax would be progressive since the net percentage of one's wages paid in taxes would rise along with income.

Here's a simplified example of what that means: Say a married couple with two kids makes $100,000 in wages and is allowed to exempt $35,000 for their standard deduction and $6,500 for each dependent. Their total exemption would be $48,000.

So they would pay 17% on the remaining $52,000 of their income, or $8,840 in federal income taxes. That represents 8.84% of their gross income, which is their net effective tax rate.

If the same couple made $200,000 in wages, they would owe $25,840 in taxes for an effective tax rate of 12.92%."

[otherone]

For someone like myself it would save me tens of thousands of dollars every year

[Christian Liberty]

Then you support a progressive tax system. All of the current flat tax proposals, even Rand's. This is from an article about Rand's tax proposal

"Paul asserts that his flat tax would be progressive since the net percentage of one's wages paid in taxes would rise along with income.

Here's a simplified example of what that means: Say a married couple with two kids makes $100,000 in wages and is allowed to exempt $35,000 for their standard deduction and $6,500 for each dependent. Their total exemption would be $48,000.

So they would pay 17% on the remaining $52,000 of their income, or $8,840 in federal income taxes. That represents 8.84% of their gross income, which is their net effective tax rate.

If the same couple made $200,000 in wages, they would owe $25,840 in taxes for an effective tax rate of 12.92%."

I'm fine with Rand's system, as far as it goes, but what I would consider a truly flat tax proposal would be everyone pays the same percentage of all their income, with no deductions. That said, I don't really look at it as an issue of trying to find the "most fair" tax system so much as trying to get taxes as low as possible. If I had a ballot option to vote to completely eliminate taxes on the top 50% I would do it. Trade the top 50% for the bottom 50% and I'd still do it.

BTW: Its not fair to say I "support a progressive tax system." I don't support any tax system. This is a discussion, at least for me, about what tax system is the least bad. But I don't actually "Support" any tax system. And I never will.

[otherone]

Not at all, since all corporate taxes are merely passed onto the consumer in the form of higher prices.

Having a choice of what to consume is infinitely fairer than your livestock tax.

[CaptLouAlbano]

[QUOTE=FreedomFanatic;5484163]

That's true as well, I guess I'm thinking in the absence of welfare whereas you're thinking with modern welfare. THat said, what if someone only makes 9K a year? Let's say the non-profit charity doesn't exist (because progressives are shown to by hypocrites like we know they are.) Would you support sending that person to prison?

Well yes, if we rolled back the budget to 2008 levels, welfare would still exist. I'd like to eliminate all welfare programs and that would reduce the budget greatly (about 20% of the budget is some form of welfare). Of course, if we were able to spur the economy by reducing the tax burden of corporations and individuals that have serious money then we effectively could eliminate the need for welfare and transition to a charity based system for the truly needy.