Tax Reform Ideas

Discussion in 'Politics, Religion, Social Issues' started by atszyman, Nov 29, 2004.

  1. atszyman macrumors 68020

    atszyman

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    #1
    I've been sleep deprived for a couple weeks now, and some of this may not be thought out that well. Given that the USA will be over $8 trillion in debt soon (discussed here), I think that many of us can agree that there needs to be an increase in government revenue. As much as any administration promises, I don't believe that any administration has managed to shrink the federal government (please correct me if I'm wrong).

    One thought that was actually brought up by some co-workers and friends at lunch one day would be to implement a "War Tax" to finance the operations in Iraq. Two benefits that I can see are the fact that wars would no longer be a drain on the federal government allowing us to reduce deficits. It would also help to show taxpayers the monetary costs of war. It may seem cold, and I really hate to say it, but there are many people who don't have any friends or relatives in the military and since taxes have actually been cut it seems as though the war is more or less free since it has very little direct impact on their daily lives. (Please do not read this wrong it is not my intention to offend anyone)

    Why couldn't such a system be applied to the rest of our taxes?

    My suggestion would be to set up our current tax system into two categories (there would be more but Social Security and Medicare are already pulled out of our checks). The two categories would be Operational Costs and Debt Payments. This would in effect create four "pockets" that our taxes go into. In order for this to work we would have to have true isolation between the pockets, a deficit in one pocket would result in increases for the next year to cover the difference, and a surplus would result in a reduction.

    As an added informative feature the budget information should be available via a website with the url on your tax return so when you look at your return and see $x,xxx.xx for any given pocket you can go and see where the money goes (this might create some better informed tax payers which could truly result in smaller government over time as unnecessary programs are questioned by more and more voters).

    Of course this would also require some sort of balanced budget stipulation to require deficits to be funded in the next fiscal year. It would also be nice if it would cause the government to be more forthright about how much any given bill will really cost, i.e. bill h.r. 2021 to keep courts from hearing "under God" Pledge of Allegiance cases would raise your Operational Cost taxes by $xxx.xx per year.

    Feel free to call me an idiot and show me why this wouldn't work but I think it could be a beneficial reform that might actually result in better informed voters as people truly start to look at where their tax dollars end up going.

    I realize that all of the information is available somewhere but it is not the easiest to find and of course the search will discourage a lot of people. By making it available on your tax return I think people would be more willing to look at the information when they look at their bill and wonder where their money went. I also believe that with the debt and wars broken out into separate categories more people might be willing to suffer tax hikes in order to reduce the debt, assure that our troops are well equipped, and be successful in our military endeavors.

    Edit :
    In my rambling I completely neglected the purpose for this thread. I wanted to see what kind of ideas other members have for tax reform and of course given the nature of the forum the debate on why particular ideas will/won't work.
     
  2. IJ Reilly macrumors P6

    IJ Reilly

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    #2
    FWIW, the number of federal employees was reduced by something like 300,000 during the Clinton administration.
     
  3. miloblithe macrumors 68020

    miloblithe

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    #3
    "Of course this would also require some sort of balanced budget stipulation to require deficits to be funded in the next fiscal year. It would also be nice if it would cause the government to be more forthright about how much any given bill will really cost, i.e. bill h.r. 2021 to keep courts from hearing "under God" Pledge of Allegiance cases would raise your Operational Cost taxes by $xxx.xx per year."

    A nice idea, but not really possible. The congress and senate members (and their staffs) who propose bills have no idea how much their proposals will cost. Estimates are generally made up (to be reasonable) by interns in their twenties. Realistically, congress and senate staffs simply don't have the capacity to do cost estimates accurately. Giving them that capacity would require hiring extra staff and providing extra research options to existing staff, which would all cost money.
     
  4. Mudbug Administrator emeritus

    Mudbug

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  5. kuyu macrumors 6502a

    kuyu

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    #5
    The war tax idea isn't bad, but I think they did that during WWI or II. They called it a "victory tax". After the war ended, they never repealed it and today we call it the "income tax" instead.

    Check this plan out. It's not perfect, but it's an upgrade IMHO...

    www.fairtax.org
     
  6. blackfox macrumors 65816

    blackfox

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    #6
    Personally, I would like Corporations to pay their reasonable share of taxes.

    Since a Corporation legally enjoys many of the rights afforded to living individuals, they should also be taxed like one.
     
  7. zimv20 macrumors 601

    zimv20

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    #7
    another word: regressive.
     
  8. zimv20 macrumors 601

    zimv20

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    #8
    i say, forget all the legal stuff you've mentioned and simply put the additional information on people's paychecks. e.g.

    - Fed Tax, operational
    - Fed Tax, debt
    - State Tax
    - FICA, yours
    - FICA, not yours

    okay, the last two are kind of a joke. still, people will figure "it" out soon enough, where "it" equals how much it really costs to run so many deficits.
     
  9. Xtremehkr macrumors 68000

    Xtremehkr

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    #9
    Well, let's see. We have other threads that describe outrageous national debt and a President who is going to push for more spending, war, and continued tax cuts. A tax structure that favors business and a population willing to see the end of government. Hmm what does that spell?

    The wealthiest are the business owners who can avoid taxes through buying through their companies, or through Steve Jobs like perks, cause technically he is paid a $1 or so right?

    So who is this going to hit hardest? And where will the budget cuts me made?

    Could a 15% flat tax rate really cover this? What is the cost of running the country is 13.5% and the interest is more than the payments? Further cuts.

    Who pays and who suffers?

    What are the chances of an unregulated economy making everything work?

    will it come to that?

    Or will this lead to an eventual public rebellion over the excessive reach that corporate America has achieved?
     
  10. Thomas Veil macrumors 68020

    Thomas Veil

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    #10
    Actually, I like antszyman's idea as it is. It would force the government to be more forthright about exactly what part of government is costing us how much.

    A couple of thoughts:

    IJ's right when he says Clinton reduced the size of government.

    I too would like to see corporations pay their fair share. You could probably wipe out a significant chunk of debt if they did. (But how do you keep them from screwing the little guy by simply turning around and raising prices?)

    There was a "war tax" more recent than WWII. Lyndon Johnson instituted a 10% surtax to help pay for the Vietnam war, and it was continued by Nixon. It was paid by individuals and corporations.
     
  11. atszyman thread starter macrumors 68020

    atszyman

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    #11
    The only problem I have with doing only this is that there is no assurance that the government will actually spend the debt money on the debt and the operational current day to day expenses. The key is that when money is collected for the debt it should go towards the debt. I don't trust any administration to raise taxes to pay off the debt under the current system since I have no assurance that the money will be going where they said. I would be more than willing to pay more in taxes if I knew that it was actually going to pay down the debt.

    The current system of government manages to estimate budgets every year. I didn't say that it had to be perfect which is why the deficits and surpluses could be spread out over the following years. I don't think that there would have to be that much staff increase to start estimating the cost of bills. Sure they wouldn't be perfect but they would probably improve over time.
     
  12. kuyu macrumors 6502a

    kuyu

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    #12
    Jobs is paid $1 in salary, but after stock options, Jobs is the second highest paid executive in America. Only the Colgate guy makes more money.

    Last year Jobs cleared $76 million dollars in "compensation"

    To be technical, business owners aren't the wealthiest American's. I believe you're thinking of C-corps (like Apple) which issue millions of shares of stock to the public. Thus, the owners are the shareholders, i.e. regular people.

    Most "owners" as you put it own sub-chapter S-corps (like your local businesses), which means they own the preferred stock, or they are a proprietor. In either case, they make about $150,000 a year on average. But, the legal liabilities associated with this type of ownership are very expensive. 1 in 3 is sued every year. Plus, s-corps and proprietors have to pay the full 15% into FICA, yet they don't get anymore money in the end.
     
  13. kuyu macrumors 6502a

    kuyu

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    #13
    Oh, forgot to mention that under fairtax the poor (people under the poverty line) pay ZERO taxes. All of it is rebated each month.

    Also, you don't get SS until 65, while the average black person doesn't live that long. It's basically a tax on minorities that is reaped by white women (who live the longest). In a privatized system, if you die before 65 your heir(s) can have the money in your account.

    Currently, your kids only get the money if they are under 18. They get a little bit if they are over that, but it doesn't even come close to defraying the cost of the funeral. My roommates dad died last year, and he got screwed on the deal. His dad owned a small computer company, so he paid 15% of earnings every year for about 25 years. He died at 62, and his son was 20. My roomate is still $5,000 in the hole because of the funeral.

    About $10,000 a year for 25 years, and his son got a mountain of debt. What a great system...
     
  14. IJ Reilly macrumors P6

    IJ Reilly

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    #14
    As a self-employed person who pays a double-share of SSI tax, you won't get much argument from me about the equity of the current system. Yet I am perplexed by your roommate's dilemma. The numbers you've provided suggest that his father was at or above the ceiling for paying SSI ($60,000 net taxable income or thereabouts), and yet he left his family in debt. This suggests a problem that no amount of tax policy will cure.
     
  15. stubeeef macrumors 68030

    stubeeef

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    #15
    Business 101=-corp don't pay tax. The consumer does, it is a fallacy to think such. Corp charge higher prices to cover higher taxes, so the consumer pays it. Then when US corp go out of biz because of foreign comp doing it cheaper we find ourselves with high unemployment.

    I would like a tiered flat tax, NO deductions! Under 25k/yr pays $0. 50k and under 12%, 100k and under 15%, 200k and under 16% and above 200k 17% And I would like to see SS reform-no cap on withholding-go to the moon-you make 5 million you pay over 310,000. But no benefits to those with demonstrated captial in excess of 5 million at retirement age. Move age to 70, and enforce fraud detection.

    Make state taxes capped at 4%, and privatize as much as possible.

    My sister n Law (an extreme liberal) helps with medicare and medicade for a private company in the Asheville area. She has worked for years to get people to stop going to the emergency room for everything from colds and precriptions. She is infavor of a copay because there is no realized benefit for these people to not go the the emerg room. They should get free emerg room service unlimited for emergencies-no question-but non emergencies should get a $25-$50 copay. These health care costs are approx 62% of NC state budget now.
     
  16. pseudobrit macrumors 68040

    pseudobrit

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    #16
    1) Increase the standard deduction. Everybody gets a tax cut!

    2) Create two new upper brackets for the upper class and adjust their rate accordingly (somewhere around and above 40%) to cover the difference.

    3) Increase dividend tax to pre-Bush levels.

    4) Kill as many corporate loopholes and tax shelters as possible.
     
  17. IJ Reilly macrumors P6

    IJ Reilly

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    #17
    Har, har, har, har, har. Really, I'm laughing over here. I was admitted to the hospital recently and even though I came to them with a doctor's diagnosis in hand, I spent over nine hours on a gurney in the ER before they finally gave me a bed upstairs. Then about a week later my doctor thought I might need a non-emergency procedure for which he also directed me to the ER because it would have been too difficult and time-consuming to schedule as outpatient (fortunately, he decided I didn't need it). So please, please don't tell me about how the hospitals and insurance industry are trying to contain costs because once you've seen the inside of this system, it becomes clear that this is not the object of the game at all.
     
  18. mactastic macrumors 68040

    mactastic

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    #18
    Perhaps people would stop going to the ER for a cold if they had health coverage. I suppose the other option is to stop admitting anyone to the ER who can't show either proof of health insurance, or proof of ability to repay. Showing compassion in the ER but not in the doc's office is a guarantee that anyone who can't afford to see a doctor will take the taxpayer-funded ambulance ride to the hospital every time.

    What's that? You don't want to have to pay for taxpayer-funded health care? It's already happening! Only it's hugely inefficient to get your cold taken care of in the ER rather than at the doc in the box.
     
  19. stubeeef macrumors 68030

    stubeeef

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    #19
    I don't care if you believe me, the fact does not require your belief.
     
  20. stubeeef macrumors 68030

    stubeeef

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    #20
    ????????????
    If you have a cold go to the dr office, not the er, these are people who have coverage, from the state.
     
  21. mactastic macrumors 68040

    mactastic

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    #21
    Ok, let's spell it out for you Stu. If you have a stomach ache and you are uninsured and you call an ambulance, you get a free ride to the ER. You also get (eventually) an examination from a doctor. Hospitals do not turn down people who call in and say it's an emergency. People understand this and some have been known to abuse the system. I know I know shocking, but I'm sure you understand that people do indeed game the system from time to time. These people are called 'frequent fliers' by the EMT's who see them regularly.

    On top of these people, there are the regular folks who go without insurance until they get really sick or have an accident. The hospital isn't going to turn you away are they? Even if you manage to get out from under the crippling debt that kind of situation leaves you in (or you just ditch out and don't pay), the hospital is still out the money. So they stick it to the next paying customer they can.

    Uncovered emergency visit costs are a huge factor in the high costs the rest of us pay when we visit. Why do you think aspirins have cost $50 in the hospital for years before conservatives thought to blame trial lawyers for the increased cost?
     
  22. stubeeef macrumors 68030

    stubeeef

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    #22
    We obviously have a disconnect. I was refering to those insured by the state under medicare and medicade not the uninsured. I don't want to deny legitimate care to these people, only if it is considered non-emerg I want them to pay a co-pay. That way they learn to find the dr's office too. The uninsured problem is vastly different.
     
  23. zimv20 macrumors 601

    zimv20

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    #23
    why do people seek treatment for colds at all? the cure is the always the same: sleep, nutrition and time. personally, i take some herbs that boost my immune system, so i rarely have downtime. i learned a long time ago that all doctors do for colds is give you unnecessary anti-biotics that end up making you sick in a whole 'nother way.

    w/ a little education and personal responsibility, our healthcare system would be in much better shape. heck, how about some reimbursement for our gym fees? that'd probably be one of the better healthcare investments insurance companies could make.
     
  24. IJ Reilly macrumors P6

    IJ Reilly

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    #24
    It's a question of experience, not faith. The insurance companies try to avoid providing coverage and the hospitals try to milk as much from the insurance system as possible. Doctors and patients are caught in the middle. Doctors can't provide the level of care they would like and patients get sent to the ER for outpatient procedures. The system is about as broken as it gets. No belief required, just open eyes.
     
  25. skunk macrumors G4

    skunk

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    #25
    Your sister's efforts are laudable but this is anecdotal evidence.
    By the way, on what basis do you judge her an "extreme liberal"? I'd be fascinated to hear what that means to you.
     

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