Perry Proposes a Flat Tax

[DGuller]

Talking about philosophy and fairness with respect to calibrating tax rates on income strata is IMO a fool's errand.  For one thing it begs the question why income is the appropriate category to be taxing in the first place - as opposed to say wealth or consumption, or "social contribution" however measured.  Where I do think "fairness" comes into play is when the decision is made to tax income, but then different kinds of income streams are treated fundamentally differently, whether out of some misguided policy rationale ("boost savings") or because the privileged stream has a strong lobby behind it.  This is a big part of Buffet's critique of the code's treatment of cap gains, "carried interest" and the like.

With respect to the progressive rate structure specifically, it is interesting note that during the two world wars, the marginal rates on the top brackets hit very high levels, which I suppose indicates that when the chips are down, placing heavy tax burdens on the more wealthy strata is deemed an acceptable social outcome.  Whether that should apply to more permanent peacetime situation is another question, IMO historically the progessivity of the rate structure in the US is pretty flat right now and it doesn't seem unreasonable to steepen it out a little.

Back then we also enacted stuff like Social Security.  I don't think Social Security is going to be deemed socially acceptable either these days.

[Eddie Teach]

  For one thing it begs the question why income is the appropriate category to be taxing in the first place - as opposed to say wealth or consumption,

Seems a reasonable middle ground between those two.

[fhdz]

Back then we also enacted stuff like Social Security.  I don't think Social Security is going to be deemed socially acceptable either these days.

It's not that it's socially unacceptable; it's that it's headed for insolvency under the current structure.

[fhdz]

Yeah that was a rather weak example, fahdiz.

*shrug*

1) Definitely unhappy;
2) Nonviolent;
3) Were not allowed to acquire similar goods and services at a different location.

It's also not the first time that banks, fearing a bank run, have prevented people from removing their money by temporarily suspending withdrawals. I'd also be willing to wager that some of those other bank runs have made far more of a scene.

[grumbler]

  For one thing it begs the question why income is the appropriate category to be taxing in the first place - as opposed to say wealth or consumption,

Seems a reasonable middle ground between those two.

Three, actually.

But would people tolerate a tax on wealth?  Not just an estate or real estate tax, but on wealth proper?  They do on business inventories, but how could they ever do it for personal possessions and bank accounts?

[garbon]

Yeah that was a rather weak example, fahdiz.

*shrug*

1) Definitely unhappy;
2) Nonviolent;
3) Were not allowed to acquire similar goods and services at a different location.

It's also not the first time that banks, fearing a bank run, have prevented people from removing their money by temporarily suspending withdrawals. I'd also be willing to wager that some of those other bank runs have made far more of a scene.

The Dallas Group wasn't trying to close accounts but preventing people from entering the bank.  The CitiBank individuals in New York may have been trying to close their accounts (although Citibank says only one individual asked to close their account so who knows) but per one of the protestors : "We entered the building chanting. Inside, a man began by announcing that we were there to have a short teach-in regarding our student loan experiences...were were asked to leave by management, but chose to keep on talking. We were not shouting or moving about at all — we were in a loosely formed circle in the center of the bank lobby."

Color me unconvinced that they were arrested for disruptive behavior while trying to close their accounts.

[fhdz]

But would people tolerate a tax on wealth?  Not just an estate or real estate tax, but on wealth proper?  They do on business inventories, but how could they ever do it for personal possessions and bank accounts?

To me it seems fairer to tax consumption rather than wealth - but that's just sort of a first-blush reaction to such a proposal. And I'm not wealthy, either.

[Ideologue]

We tax cars and houses, I don't see why taxing a bank account would be particularly different (in fact, it'd be far superior, since taxing a bank account is taxing liquid assets, as opposed to potentially forcing the sale of a physical asset that generates wealth, like a car).

Yi, I didn't ignore you, I'm thinking about your question.

[Admiral Yi]

Yi, I didn't ignore you, I'm thinking about your question.

What question?

[Ideologue]

Yi, I didn't ignore you, I'm thinking about your question.

What question?

The one about why high income individuals should pay a higher percentage as well as merely a greater absolute amount in income tax.

My first response is to suggest that a high income individual is likelier to use more government-provided infrastructure, from roads to the court system, than a poorer individual.  Likewise, because they consume more, their needs must be serviced, on average, by more people than a poorer person.  This is more tenuous, but it segues into my second point.

My second thought is that taxing individuals highly valued by the market due to high demand and low supply is a market corrective for the lower income earned by those whose skills are in higher supply, but are foundational and necessary to society, without which the higher valued individual could not function in his or her higher valued role.  However, I suspect you wouldn't buy that, because I reckon you assume that the market valuation of any activity is its intrinsic value, whereas I assume that supply is an extrinsic factor to value that affects the market valuation of an activity but not its intrinsic value.  If that makes sense.

[grumbler]

We tax cars and houses, I don't see why taxing a bank account would be particularly different (in fact, it'd be far superior, since taxing a bank account is taxing liquid assets, as opposed to potentially forcing the sale of a physical asset that generates wealth, like a car).

Houses and cars have market value.  When I register a car or the deed to a house, the state tells me how much I have to pay in taxes.  I don't see an equivalent enforcement mechanism for bank account balances, bonds, stocks, unincorporated partnerships, and the like.

I'm not opposed to the idea, but don't see how you are going to enforce it, and also agree that liquidity of wealth could be an issue.  Is it practical to sell 15% of a farm or house?

[Admiral Yi]

My first response is to suggest that a high income individual is likelier to use more government-provided infrastructure, from roads to the court system, than a poorer individual.  Likewise, because they consume more, their needs must be serviced, on average, by more people than a poorer person.  This is more tenuous, but it segues into my second point.

I don't see how yo can sustain this one.  There are a number of services and infrastructure whose provision has zero corelation to income.  A poor person walks on a sidewalk just as much or more than a rich person.  A middle class person drives across a bridge roughly as frequently as a rich person. 

My second thought is that taxing individuals highly valued by the market due to high demand and low supply is a market corrective for the lower income earned by those whose skills are in higher supply, but are foundational and necessary to society, without which the higher valued individual could not function in his or her higher valued role.  However, I suspect you wouldn't buy that, because I reckon you assume that the market valuation of any activity is its intrinsic value, whereas I assume that supply is an extrinsic factor to value that affects the market valuation of an activity but not its intrinsic value.  If that makes sense.

Sounds like your're trying to argue that some jobs generate positive externalities that the market doesn't account for.  The first problem with that argument is that typically we try to account for jobs that generate externalities by making them public sector jobs.  The second problem is to show that those extenalities rise at a faster rate than income.  I.e. you and I only get 30 cents worth of police protection on our marginal dollar of income but Lemonjello and Marty get a full dollar on their marginal dollar. 

If *that* makes any sense.

[Ideologue]

We tax cars and houses, I don't see why taxing a bank account would be particularly different (in fact, it'd be far superior, since taxing a bank account is taxing liquid assets, as opposed to potentially forcing the sale of a physical asset that generates wealth, like a car).

Houses and cars have market value.  When I register a car or the deed to a house, the state tells me how much I have to pay in taxes.  I don't see an equivalent enforcement mechanism for bank account balances, bonds, stocks, unincorporated partnerships, and the like.

I'm not opposed to the idea, but don't see how you are going to enforce it, and also agree that liquidity of wealth could be an issue.  Is it practical to sell 15% of a farm or house?

That's the thing, taxing an account obviates any need for valuation.  It's worth exactly what it says.  The only remaining problem would be tracking, which banks of course already must do for their own purposes.

I'm not really advocating it as such, though.  I just said it seemed like a better idea than property taxes, which I don't really like very much at all.

[Sheilbh]

Houses and cars have market value.  When I register a car or the deed to a house, the state tells me how much I have to pay in taxes.  I don't see an equivalent enforcement mechanism for bank account balances, bonds, stocks, unincorporated partnerships, and the like.

I think houses and cars and things like art are included in the European 'solidarity' wealth taxes.  I think Luxembourg, France and Switzerland have them - they're progressive which is somewhat curious when they're on net assets over, say, €1million.  I believe there's been a fair few other wealth taxes introduced as part of the austerity measures in various Euro countries.

[MadImmortalMan]

Property taxes are like a tax on merely existing for poor people. That shit shouldn't exist. Or at least not on owner-occupied residences. Then again, if it's a rental, the income is taxed anyway.