Originally Posted by IamIan
Government is not a one sided effect.
You described several aspects of the drag ... If you are going out to this much broader view ... Where and how do you then compensate for the benefits?
Government does not add any value to any process. Therefore, the best
possible outcome to government provided services is that they cost "only a little more" than if the government were not involved.
You also have to step back and accept that there is a fundamental difference between services provided to a person who is financially self-sufficient and services provided to "beneficiaries." (I'll refrain from incendiary words..
) While you might receive 90 cents on your dollar in terms of services you receive if you are a net supporter of the system, the flip side is that if you ARE one of the productive you are supporting 5 - repeat 5 - other people for those services. So the theory that you "get it back" is statistically absurd.
You mentioned several times about effects on business and then conclude in the end a impact on people ... I'm not so sure changes that benefit businesses always equally benefit people.
Profitable businesses hire people. Unprofitable businesses do not. Anything that adds to the cost of a delivered product or service must be added to the price
or that product / service becomes unprofitable. The more "load" there is on the business, the less likely it is to be profitable - and the fewer people it employs. Statistically, each government job comes at the expense of anywhere between one (if you are an economic rabid liberal) and five (if you are an economic rabid anarchist) private sector jobs. The truth, of course, lies somewhere in between - but it is at least more than 1. Regulations are pure drag, adding no government jobs but reducing profitability - causing some businesses to shed labor and others to fold completely.
Just remember: TANSSAAFL. (There ain't no such thing as a free lunch).
I'm sure not all system designs and structures will benefit everyone equally ...
True, but there is a fundamental question of whether or not that is even a desirable goal for government to interfere in. If you really want "equality," you have to treat everyone the same - meaning if you give to one you must give to all (obviously impossible, someone somewhere has to do actual work). Giving money to those who are, for whatever reason, not fiscally responsible is inherently corrupt; if the goal were to have equal people, wouldn't it be better to have a program ensuring everyone has the same genes? (Note: Being purposely provocative to promote thought).
America was founded on the principles of Freedom - free people from oppressive taxation and give them equal opportunity
(and note that the Boston Tea Party was about a 3% tax on tea). Money is an exchange medium for labor - and if our real tax rate is over 50% then what that means is that freedom left the station 100 years ago.
If we are to design a system ... I think we should honestly look at who we want the primary beneficiary of that design to be.
If you design a system with the goal of picking winners and losers, you are a totalitarian and, quite frankly, I would not help you if you were bleeding on the side of the road. Unless it was to back up and finish the job....
Government is force
. The idea of the Rule of Law was to prevent government from picking winners and losers
. All people were to be treated equally under the law
. Instead, now we have laws specifying exactly who may or may not do what to whom based on race, sex, religion - we have codified racism and sexism into our very laws.
If you want a better system, start with the underlying principles
of America's Constitution. They were brilliant men, but no one had ever tried that particular experiment and so they made the mistake of trying to express principles through rules. Every 5 year old knows "rules can be changed or broken."
I do agree with the concept of the more open tax rate ... as a general concept ... I am not sold on any one direction / form as of yet ... I see some different pros and cons to different forms of it ... be it a single sales tax as you described ... or a single income tax as others have described... or some hybrids others describe.
The advantage of doing some kind of sales tax rather than our current system are numerous. I won't say that the FairTax is the be-all end-all, and in fact I see two problems with it, but it is a million times better than what we have.
To understand why it is better not just as a tax system, but for We the People, you must understand why Marx wanted an Income Tax. It is not
about collecting necessary revenues. It is about CONTROL
- which is antithetical to the principles our country was founded upon.
Do you know which of the many intelligence gathering agencies in the United States is the largest? CIA? NSA? FBI? If you guessed one of those, you would be wrong. The largest intelligence gathering agency in the United States is the IRS. It's stated purpose is to collect tax revenues; however, its real purpose is an excuse for the government to demand every piece of personal financial information from every business and individual in the land worth more than a few pennies. They then use that information to create sound-bytes to divide us, saying, "20% of Americans are POOR!!!!!" It is utter B.S., of course - "poverty" is far and away simply an age thing. 90% of people in the bottom 10% of income earners today will, later in their lives, be in the top 10% of income earners. If you wanted a system to collect revenues efficiently
, it is hard to imagine a worse system - even official
figures say that it costs twenty five cents for each dollar they manage to collect.
So, the benefits of a flat rate Sales Tax vs. Income Tax, Employment Taxes, what have you:
- Requires no personal information - from anyone.
- Costs less than 10% (direct costs) to collect the same revenues
- Eliminates most of the indirect costs of tax collection
- Provides a level playing field for domestic goods (today burdened with all of those embedded costs and taxes) and foreign goods (free to be sold without the burden of our tax system to our citizens)
- Makes our goods and services more competitive abroad (again, not pre-loaded with taxes)
- Makes our labor more competitive internationally, drawing international investment into our economy
- Makes America a tax haven for the estimated $30 trillion in assets that have been secretly, and not so secretly, taken abroad due to our punative tax rates
- Treats everyone the same in the market place - no playing favorites (Congress might actually have to work on solving some problems if they aren't busy granting tax favors to cronies)
- The entire level of direct taxation is visible to every American every day, enabling us to effectively combat "requests" from Congress to "raise the rate" (because they can no longer play us against each other, saying "we're only going to take it from the RICH!!!")
- People would no longer be punished for a few brief years of success (most people only make a LOT of money for a few years, and much of it is taken away in taxes). Instead, people would be rewarded for saving (no capital gains, no taxes paid until you purchase new goods and services).
Those are just a few of the more salient reasons. If, as a society, we truly believe that there should be a special tax on the rich - THEN MAKE ONE. Stop trying to have 70,000 pages of indecipherable rules that no one, not even the head of the IRS, understands. But if you do that, realize that everyone approaching whatever is defined as "rich" will want to leave the country just before reaching that threshold - a stupid way to run a country.
One of the potentially larger cons I see , that would have to be dealt with for a society to enact the only a sales tax idea is that :
A person or company earning income in country A that has no income tax ( only sales tax ) ... and then spends it buying goods and services in country B ... That person or company is effectively benefiting from all the government services in country A that others in Country A are paying for ... but they are not themselves paying their fair share for.
True, but they bear the import costs and, if the U.S. switched to a Sales Tax you can bet your bottom dollar others would have to follow suit - negating the advantage. Self adjusting in short order.
Perhaps not a deal breaker in itself ... that system system has other pros and other types of systems have their own fair share of cons ... but that is something I see as a significant Con of that sales tax only style system.
Think of it in terms of ethical principles and it becomes obvious. What we purchase abroad is, in some abstract sense, almost irrelevant - we are still the world's largest MARKET
. With a Sales Tax, people are taxed for the opportunity to sell to the MARKET, rather than on their PRODUCTIVITY. Everyone is treated equally - and if other countries keep income and other unethical taxes that get loaded into their prices, they will lose market share.