A Forum for Grinches and Ho-Ho-Hoes

[Mmmm, Burger (C.J.)]

Originally posted by ltl/fb
And you do realize that if you are accepting keeping tax rates low on lower levels of consumption, the tax rates on higher levels are going to have to be pretty astronomical to have this be revenue neutral?

No, because pretty soon all hte baby boomers who are socking it away tax free, will start pulling it out and paying taxes that would have been paid now.

Once it's fully implemented it would be revenue neutral, with only a shift from savers to dissavers who are paying. And everyone will be richer because of the stimulated investment.

Why do you focus on rates? I'll pay 100% of my first dollar.

[Greedy,Greedy,Greedy]

Originally posted by Mmmm, Burger (C.J.)
I thought you were the expert, but I understand that IRA/401ks cannot invest in certain tangible assets, including such things as coins, baseball cards, and what not, but also including real estate (other that REITs) and presumably other things--you can't just own a factory in your IRA.

Because we're on an income system, you have to come up with a transition. You can't just say you get taxed when you pull out savings, because then all retirees get soaked. So if you use CSAs, it's entirely optional. Put in what you want, with the recognition that anything you pull out from that account will be taxed as "income". It's not a perfect system, but within a generation, one could much more easily transition to a pure consumption tax without the need for accounts.

Think outside the box people--it's not a tax shelter, it's just a question of when you pay the tax. With highly beneficial consequences for savings over consummption.

It's a question of the tax base; consumption taxes one particular base but leaves others alone. The others left alone are wealth and income. Definitions drive much of taxation: how you define "consume" is critical.

I can agree with you in theory that you can create a progressive tax system, but I'd not sure you want to. If you think savings drive all productivity, you'll be prone to think a consumption tax is a great thing. I don't - you can have excessive savings, and you need demand to fuel investment and make it rational.

As an example, assume you shift to a consumption tax and so people stop wanting to buy fancy Detroit cars, since the tax is steep. So, the auto jobs go away. Instead, people want to invest in something that's going to make money. Well, the US auto business sucks, so that's not an option. But, Toyota is doing well - so let's invest in Toyota. Cue giant sucking sound.

Consumption taxes can have their place, but as the primary means of support for the government, displacing income taxes, the base is just too narrow.

[ltl/fb]

Originally posted by Mmmm, Burger (C.J.)
Right now if you withdraw from an IRA you have to pay 20% to the IRS right off, even if you put the money into another IRA.

That is crap. You can do a direct rollover. If it's a minimum required withdrawal (the over age 70.5 ones), you are REQUIRED to take that as income and that's why you can't roll it over and there is withholding.

If you include the trips and other perks the companies give to executives (er, and other employees, ha ha, as if that happens) in income, they won't get subtracted out as savings and so they'll be taxed (in answer to Sidd's earlier comment).

[Sidd Finch]

Originally posted by Mmmm, Burger (C.J.)
Why? Your tax base is income + savings withdrawals. If you know your saving money, then your tax bill goes down; if you know you're withdrawing, it goes up.

Right now if you withdraw from an IRA you have to pay 20% to the IRS right off, even if you put the money into another IRA. Same reporting; same payment--if you withdraw from your CSA, you get withheld. Crikey--old people get regular payments from their IRA now, as required by law. They seem to be able to figure out their taxes.

Yes, old people get those payments, and the amount due in taxes is immediately known, or at least can be estimated with reasonable accuracy. Under your system, they need to calculate what they will have to set aside for taxes based on what they spend. While it might be possible to calculate what they will owe in advance -- though they would have to predict with accuracy just how much money they will spend between now and year-end, and god forbid something unexpected come up that drives that number up -- it is unlikely that most people would do this.


If you withdraw money from an IRA to put in another IRA, rather than doing a rollover, you are an idiot.

[ltl/fb]

Originally posted by Mmmm, Burger (C.J.)
No, because pretty soon all hte baby boomers who are socking it away tax free, will start pulling it out and paying taxes that would have been paid now.

Once it's fully implemented it would be revenue neutral, with only a shift from savers to dissavers who are paying. And everyone will be richer because of the stimulated investment.

Why do you focus on rates? I'll pay 100% of my first dollar.

You'll pay 100% tax on every dollar consumed? I doubt it. You would need to earn twice as much as you consume to do that.

I think people *will* consume less and save more under this system -- which is what you want, but which will keep it from being revenue neutral. And you can't use the baby boomer people to boost the revenues from consumption tax, because either they've already paid tax on what they save (so won't have to pay consumption tax, or much of one, b/c of transition measures) or they'd be paying tax on it as income anyway.

[ltl/fb]

Originally posted by Sidd Finch
Yes, old people get those payments, and the amount due in taxes is immediately known, or at least can be estimated with reasonable accuracy. Under your system, they need to calculate what they will have to set aside for taxes based on what they spend. While it might be possible to calculate what they will owe in advance -- though they would have to predict with accuracy just how much money they will spend between now and year-end, and god forbid something unexpected come up that drives that number up -- it is unlikely that most people would do this.


If you withdraw money from an IRA to put in another IRA, rather than doing a rollover, you are an idiot.

Withhold on withdrawals, like they do now. Presumably they will only be taking out what they plan to use for consumption anyway. If they are going to sock it right back into a savings account, it would be like a direct rollover.

[Shape Shifter]

The United States has no right, no desire, and no intention to impose our form of government on anyone else. That is one of the main differences between us and our enemies.
-- 2005 State of the Union address, Washington, D.C., Feb. 2, 2005

We are in Iraq to achieve a result. A country that is democratic.
-- 2005 State of the Union address, Washington, D.C., Feb. 2, 2005

[ltl/fb]

Originally posted by Shape Shifter
The United States has no right, no desire, and no intention to impose our form of government on anyone else. That is one of the main differences between us and our enemies.
-- 2005 State of the Union address, Washington, D.C., Feb. 2, 2005

We are in Iraq to achieve a result. A country that is democratic.
-- 2005 State of the Union address, Washington, D.C., Feb. 2, 2005

Maybe he doesn't think we have a democratic form of government.

[Mmmm, Burger (C.J.)]

Originally posted by Sidd Finch
Yes, old people get those payments, and the amount due in taxes is immediately known, or at least can be estimated with reasonable accuracy. Under your system, they need to calculate what they will have to set aside for taxes based on what they spend.

Are you reading my answers? You get a statement from your checking adn savings account each month, right? If you have a line for withdrawals, that's a pretty good way to figure out what your tax is, when withdrawals are taxed.

[Mmmm, Burger (C.J.)]

Originally posted by Sidd Finch



If you withdraw money from an IRA to put in another IRA, rather than doing a rollover, you are an idiot.

sure. but there are enough idiots out there that the IRS specifically covers how you have to do it if you don't actually roll over in the required manner.

[Mmmm, Burger (C.J.)]

Originally posted by Greedy,Greedy,Greedy
.

Consumption taxes can have their place, but as the primary means of support for the government, displacing income taxes, the base is just too narrow.

y'all just don't get that the money's not going to sit under someone's matress, untaxed. No, it's going to go into investment, and investment will employ people, and employed people will probably consume something. and pay taxes.

[Greedy,Greedy,Greedy]

Originally posted by Mmmm, Burger (C.J.)
No, because pretty soon all hte baby boomers who are socking it away tax free, will start pulling it out and paying taxes that would have been paid now.

Once it's fully implemented it would be revenue neutral, with only a shift from savers to dissavers who are paying. And everyone will be richer because of the stimulated investment.

Why do you focus on rates? I'll pay 100% of my first dollar.

Timing is everything. Many fortunes have been based on the time value of money. You've got to look at balancing the budget in each accounting period; if not, you have to figure in the financing costs of deferring the revenue.

You've been in Washington too long. You are starting to think that all the accounting fictions that have been used to undermine Gramm-Rudman can be counted on to actual create a workable revenue system. They can't - what has happened with the 10 year accounting cycle is that we've figured out how to increase the deficit through long term financing without admitting to ourselves that we are doing it.

[Greedy,Greedy,Greedy]

Originally posted by Mmmm, Burger (C.J.)
y'all just don't get that the money's not going to sit under someone's matress, untaxed. No, it's going to go into investment, and investment will employ people, and employed people will probably consume something. and pay taxes.

It won't employ people if no one buys the products. You are drying up demand with a consumption tax. Unless we are just producing for export (and if so, why not invest in production abroad, near the demand?).

You may also be lowering the return on investment. Lots of people to invest, fewer profitable companies, you take a lesser return to keep it invested.

[Tyrone Slothrop]

[Tyrone Slothrop]

Oddly enough, Bush's hands are not on Negroponte's head. What does this mean?