The Incredible Shrinking Incomes of Young Americans

[Tamas]

You demonstrate the political problem of implementing sound tax policy.  The .01% are huge beneficiaries of preferential taxation of dividends.   The problem is magnified if there is no inheritance tax.  But people who will benefit very little from the current system seem to think it actually works for them.

Those people will benefit either way. They will have access to huge salaries and investments.

But most people will never have huge salaries but they can chip away through saving and investing.

Yes, that is why an effective tax system would progressively tax all sources of revenue.  People who earn very little would pay no tax while people who earn progressively more will pay progressively more tax.

The problem with that is that revenue taxes are easiest to avoid by clever tax planning.

Under current systems yes.  But that is not what I was advocating for. 

Ah, so we just need to come up with a tax system that's not possible to cheat. Glad we have this one worked out! Next topic please!

[crazy canuck]

Ah, so we just need to come up with a tax system that's not possible to cheat. Glad we have this one worked out! Next topic please!

No, what we (speaking mainly about Western Nations here) need is a tax system that is not so riddled with special rules and exemptions that really only benefit a small number who are the most wealthy. 

A flat tax is the next worst alternative proposal.

If you cant think past those two options then the discussion is indeed not worth having.

[DGuller]

Meh. Taxation should concentrate on consumption.

Then you would be penalising the poor who spend on consumption a much greater proportion of their revenues than the wealthy.

Taxation should concentrate on assets (with generous allowances for "first home" and the like).

In the long run, is that true?  The point of money is to use it for consumption, eventually.  Someone who doesn't consume isn't really claiming society's resources, he's just claiming pieces of paper.

[MadImmortalMan]

The point of money is to use it for consumption, eventually. 

I would say it isn't.

[DGuller]

The point of money is to use it for consumption, eventually. 

I would say it isn't.

So what is it then?

[crazy canuck]

The point of money is to use it for consumption, eventually. 

I would say it isn't.

So what is it then?

The main purpose of money is to create capital to make more money.  Only a fool or someone who has no other choice uses their capital to fund their consumption.

[MadImmortalMan]

I'm pretty sure the ultimate end for our money is to be burned by the Treasury Department. 

[crazy canuck]

 

[Martinus]

Meh. Taxation should concentrate on consumption.

Then you would be penalising the poor who spend on consumption a much greater proportion of their revenues than the wealthy.

Taxation should concentrate on assets (with generous allowances for "first home" and the like).

In the long run, is that true?  The point of money is to use it for consumption, eventually.  Someone who doesn't consume isn't really claiming society's resources, he's just claiming pieces of paper.

Not really - assets take many more forms than money - they can take form of real property, works of art, fixed assets etc.

The problem with taxing consumption is that it does not take into account the asset's longevity - ultimately, whether you buy one million burgers or a Beverly Hills mansion, the consumption-based tax will be the same. But the resources needed to protect and maintain either aren't.

That is why an asset tax is superior as it taxes into account the longevity of the asset (and, thus, resources needed to maintain) - something consumption tax doesn't do or does in only a remote way.

Edit: and this was only a side-argument about an asset tax - not the main rationale for it.

[Martinus]

The point of money is to use it for consumption, eventually. 

I would say it isn't.

So what is it then?

The main purpose of money is to create capital to make more money.  Only a fool or someone who has no other choice uses their capital to fund their consumption.

Wow what a sad perspective.

[crazy canuck]

Wow what a sad perspective.

[Martinus]

Wow what a sad perspective.

You can't take money with you to your grave. Consumption is the only sensible way to use money. The only question is whether to consume now or later.

[Tamas]

You can also leave it behind for your children and other people you care about to make their lives easier but you have shown you have no grasp of this concept

[Martinus]

You can also leave it behind for your children and other people you care about to make their lives easier but you have shown you have no grasp of this concept

That's still deferred consumption. This is my point. And surely, unless your kids are disabled or minors when you die, they should be able to earn their living, rather than counting on daddy to support them from beyond the grave, no?

[crazy canuck]

Wow what a sad perspective.

You can't take money with you to your grave. Consumption is the only sensible way to use money. The only question is whether to consume now or later.

Ah, truly spoken as someone only looking out for themselves.  For those of us who do think about other people, it is not all about simply spending it all on ourselves at some point.  Even people without children should think about the wider uses to which their accumulated capital can be used after their death.