Tax Plan Debate

First gut response is that it sounds complicated (it is taxes though, so kinda normal for it to be complicated). Buddy Roemer has an interesting tax plan frame work that seems like it might be too simple. www.buddyroemer.com/node/49 but there may be some viable ideas. Simple + complicated (details) = just right?

Im not a tax expert, but somewhere in between, there is a right answer.

My main concern is with your "American Tax Plan" framework is that it begins with loopholes. In my opinion, one of the major problems we have currently is that the political parties have given too many tax loopholes to those groups whose support they wish to gain. If the Modern Whig tax plan begins in the same way, giving tax loopholes to what may be seen as a core part of the Modern Whigs party's base, it would appear that we are no different from the Democrats and Republicans when it comes to taxes.

We should not begin the tax conversation with "who doesn't have to pay?" but rather "what should Americans have to contribute?” We can determine this by taking a close look at the overall income of Americans, the current percentage of income that people have to spend on income taxes, the average cost of living versus the amount of remaining income, and the operating cost of our government. Armed with this information we can make informed decisions over who should pay what income tax percentage and why.

Just my 2 cents... I am glad that you are researching an alternative to our current tax system and hope you will keep us updated as it takes shape.

Agree with prior comments - not sure it's appropriate to start with who doesn't pay taxes. These eliminations are basically loopholes.

Perhaps starting with more generic decisions: progressive/regressive, flat/escalating, incentive/disincentive.

I'd argue for progressive (poor pay little to no tax), escalating (rate goes up with income), and disincentive (penalizes bad behavior - like polluting). This actually is what we have now (except for the 9,999 pages of loopholes). Mostly the tax code just needs housecleaning.

The question for us is what is a fair tax policy ... and why do we think it is fair. Things like - are all sources of income equal? Wages, interest, dividends, and capital gains, currently have different tax rates. Is this fair? I'd say no, income is income, no matter how it arrives.

The argument that I keep hearing in support of lower tax rates for things like dividends is that they've already been taxed once, as corporate income, and shouldn't be taxed again at a high rate. I'm not sure I agree with that, but I'm not familiar enough with the details to have a strong opinion.

Tax policy is not my area of expertise, but I think one of the major culprits is the rule that allows corporations with offshore income to not pay taxes on that until it is brought back to the US.

If I am correct in my understanding, then that allows for this scenario.

A company with an offshore manufacturing subsidiary produces various parts and sub-assemblies offshore. It then sells those parts at a relatively high profit to a domestic subsidiary that does final assembly, showing the profit offshore. The domestic subsidiary assembles the final product and sells at very low profit.

That would allow a company to keep a large amount of the profit from an item untaxed depending on how it pays dividends.

I suspect that some variation on this is what allows international corporations such as GE to have a zero tax liability.

Gene, can you shed more light and a more informed opinion than mine on this?

Yeah I am thinking this plan needs an overhaul. My problems with it are the same as others have stated. starts with loopholes, the trigger mechanism. These things would make the plan rife for exploitation. Some of these eliminations and Reductions (military, first responders) that stuff makes for good Politics but as for coming up with a new and logical and serious Tax Policy... I dunno. Personally I think to some extent everyone should pay some tax even just a little so that when Politicians talk about raising taxes everyone is effected. In fact Pols would have an incentive to keep taxes low or to reduce!

I lean toward the flat tax with modifications. Perhaps the poor could get essentials tax free. maybe even food completely free if you met a needs standard.

i will say of course i am not a Tax expert and perhaps someone that is can shed some more light

Hello!
The Founding Fathers were in favor of a progressive tax plan. I agree with the general idea that people who give something to America should be taxed less: service members and first responders, say. But I also think that people who take from America should be taxed more - for example, the people who pay nothing in taxes and send American jobs to China (yes, I am thinking about G.E.). This is only fair, because their behavior indicates that they are taking more than they are giving back. I'd also suggest the following as a place to start thinking about a tax philosophy: http://american_almanac.tripod.com/carey95.htm

Does "people who give something to America" include all public servants and members of the armed services? How do you determine who should be considered an "American contributor" and thus pay less taxes?

Same could be said of people who "take from America". How is this defined exactly? Is any company that outsources considered a taker? Or is it only when combined with taking advantage of our current tax loopholes that it becomes an offence?

Valid questions.
Look at it this way: this country gives states large sums of money for homeland defense, while states are laying off police and firefighters. Also, salaries for first responders are contributing to states' financial problems. I am not sure I would include DMV personnel in these tax discounts!! but I am open to suggestions about where to draw the line. This is less about "who is deserving" and more about the public good / public safety.
As far as "taking from America" I would certainly include companies that are using tax loopholes, and there are companies that receive enormous subsidies from the U.S., despite being profitable without subsidies. Those subsidies should end. The financial firms that are supposedly "too big to fail" and get taxpayer money? Takers. As far as outsourcing in general, I think American trade policy has contributed to the problem, and ought to be looked at. Our policy allows Chinese goods to be cheap, so companies go to China. And then, on election year, the same companies give campaign contributions to the politicians who gave them all this cheap labor.

I would want a tax plan that taxes all income at a flat rate. One exception may be made for capital gains for initial public offerings. IPO's are the only stock transactions that a company can use for productive use. All subsequent transactions on the secondary market are speculative.

I am not sure about eliminating or reducing federal income taxes for first responders ...and I just earned my EMT certification. At the very least, I would not put these tax breaks until AFTER the debt has been paid down. Tax breaks for veterans may make sense but a refined GI bill may be a better use of money. We also need to remember that the civilian sector his hurting too. I would not want to create a wedge issue between the military and the civilian labor forces.

I would also apply a tariff for all firms that offshore jobs and then import goods and services for sale within the US.

Here's what I would like to see.

1. Progressive taxation for income, with a 90% top, for billionaires

2. Flat tax for corporate taxes

3. Tax penalties for companies that don't meet environmental safety standards

4. "Sin taxes" on alcohol, cigarettes, marijuana, junk food, and prostitution, but a flat sales tax on commodities, and little to no sales tax on water, foods grown locally or organically, and medicine.

5. Federal taxes being different in each state based on how much the state's tax rates are.

Lexicon, before I debate your 5 points, I think you should be made aware that history has utterly debunked Marx and his writings....

Much to the dismay of the OWS crowd, who need a reality check anyhow, the corporate tax rate here in the US is dreadfully high. It used to be one of the lowest, but over time, most nations have dropped theirs in recongition of good industrial policies, e.g., why over tax the engines of job creation.

All the presidential candidates are making tax proposals with what I consider to be ridiculously incremential or marginal changes. E.g., lowering the corp rate from 36% to 28%, or 33% as another proposes. Only a 3-8% drop? Why not get some guts and do somethng meaningful. How about moving it to 15% making it one of the LOWEST corp tax rates in the world. Yes, you'd upset the OWS crowd and likely be called a corproate schill by the ignorant, but the fact remains that it would bolster DOMESTIC job creation.

To my mind's eye, that is the irony of tax proposals. Either they want to revamp the whole thing, or others suggest changes that are so marginal as to be useless. Which begs the question...

Does anybody really know what time it is?

In what way do you believe this would bolster domestic job creation?

The aim of corporations is not patriotism, its profit. I’m not saying this is wrong, just pointing out that while I’m sure corporations would welcome a lower tax rate (as it would increase the profits they keep) this will not necessarily translate into domestic job creation.

First, corporations would have to decide whether they are interested in using this money to create any new jobs. Many might instead decide to either hold on to these additional profits and/or to pay some of it out to their investors (or to company executives via bonuses).

Second, if they chose to create more jobs they would have to decide whether those jobs would be domestic or overseas. Again, the aim of corporations is to maximize their return on investment, so they would be looking for the lowest cost that would provide them with the maximum return. That would often make it more likely for corporations to create jobs overseas than domestically. And for those companies that do create jobs domestically, what will the wages be? It is a mistake often made in the media to view all jobs in a positive light without taking a look at the wages associated with them, and determining if an individual is truly getting paid the value of the service they are providing. If not, we are looking at exploitation instead of honest compensation.

Third, the revenue lost by lowering these taxes would have to be recovered from somewhere. For example, just closing corporate tax loopholes will not be enough to recover this lost revenue (and definitely would not get you down to 15% or even to 28% for that matter). This would likely mean that the taxes would be increased in some other form on the American public in order to make up for the revenue lost via lowering the corporate tax.

This is just my opinion on the subject and I might be wrong. I just think the focus should be more on changing our international trade agreements and closing tax loopholes that cannot be justified as being beneficial to the American economy and/or supporting innovation. I don’t think lowering the corporate tax rate will make a significant (if any) difference at all, though I’m sure it would be very welcome by the corporations.

Jon, you've never asked a corporate CFO for their insights I can tell. But that is OK, hardly anyone has who speaks to corporate taxes. We might gain a vastly more accurate perspective if we did. In fact, I might argue it is the perspective we need to have when adressing this issue. Most Americans are employed by corporations, a trend MWP would like to see accelerated! Our goal is to incent corps to repatriate profit and spend that profit on payroll, R/D, etc, lets commence....

US multinationals have buried both assets and production overseas due to more favorable economics. Assets due to taxes, production due to labor and other lower costs.

If we drop the corporate tax rate substaintially ( not cowardly as proposed), many of those corporations will repatriate the profits back to the U.S.

Will this repatriation cause doemstic job growth? No, not directly, it's not that simple. What it does do, however, is change the calculation of profitablility by geography by the corporation's treasury. Contrary to what your President told you, we DO want some of those jobs coming back from overseas. And in fact, if the President truly gave a rats arse about jobs, he may have said something akin to, "and we are targeting those type of jobs we'd like to bring back through various corporate incentives". A policy cocktail, if you will.

So dropping the corporate tax rate to 10%, or 15% negates your points one and two. It makes it numerically profitable to repatriate, and potentially numerically more profitable to produce more domestically for export markets, rather than the model of local (foreign) production to serve the local (foreign) market. A model that the high US corporate tax rates have served to foster. A model that has seen much US technology stolen.

Lastly, point three. Why does everyone assume a non dynamic system of equations? What are you all, politicians? :o) Lets be smarter than that!

Jon is correct that if we lower the highest corp tax on profits to 10-15%, IF NOTHING ELSE CHANGES, revenues will drop. But we are trying to effect dynamic change, are we not? What if corps decide to repatriate a bunch of profits being held for years overseas as the new 10%(hypothetical)tax rate is much lower than most foreign countries. And what if they the directors choose to not pay themselves (as individual tax rates for the directors ought be much higher than 10%) but to take a portion or all of those profits and either , 1.) invest in RD, 2.) hire new labor/production or 3.) pay it out in an enhanced dividend.

Can you see how revenue might not drop by that much, and even if it did, there might be associated side payments that are greater net/net than the drop in revenue? Throw that "policy cocktail" on top of it and then incent certain job categories, like ag or basic manufacturing in addition to a lower corp rate.

Wait, that is starting to look like a true industrial policy - can it be?????? ( US has never had one, and clearly needs one NOW!)

Is any one of those three scenarios better to the domestic economy than keeping the US dollars overseas? It really is as simple as I make it out to be. It's the political obfuscation y'all have to get around, not the math.

What if we said the new corp tax rate on foreign repatriations was ZERO if those monies went into payroll or domestic production. There's a drop in revenue in corporation's taxes we OUGHT BE PRAYING FOR!!!!

Math doesnt lie, people do! :)

So its really quite straightforward to look at the corp tax code and other incentives that may work, if you look at it through the eyes of a corporate CFO, and not from a place of "all corporations are bad and greedy", which is hate politics and therefore, patently false.

We really need to unass that hate politics stuff. Its mainly a lie and obscures the truth. As it did here, in fact.

I'd like to bring this back full circle, back to Brian's OP.

Guess we've unarsed the no taxes for Vets or disabled ( well diasbility payments can be tax advantaged) as unfair.

Hey, I'd like to pay less tax because I cant downhill ski due to my "army knee", but....

The Fat Cow/Lean Cow metric, I beleive we need to employ, both on the revenue AND the expenditure side of the US federal budget. Oh heck yes we do.

Personally, the tax code isnt all that broke. It works OK except for those multimillionaries that have loopholes, and it could be a bit simpler. So that's easy, close the loopholes for those that have multi-million dollar AGI's, and simplify the rest of it keeping the same progressive scale we have now.

So simpler, fairer, with a fat cow/lean cow mechanism and a revisit of corporate tax rates.

Brian, to the author goes the call, what say ye?

@Gene- I think a 10-20% corporate flat tax would be good. If they do outsource, we can raise it for the company. However, factory jobs aren't exactly what we should have in mind for future Americans.

What were you going to say about the other ideas?

And I'm not a Marxist, I just like that quote.

Hi Gene. There were no moral judgments being made in my post; no “hate politics” as you say. Why shouldn’t a corporation be profitable? It’d go out of business otherwise. I was solely pointing out the importance of looking at the profit-motivation behind company actions, and that if companies were to choose to invest domestically there would likely need to be a profitable reason behind it (be it short or long-term). As such, I was curious as to how you believed lowering the corporate tax rate would result in bolstering domestic job creation? Why would lowering the tax rate make it more profitable for a company to hire domestically? I was asking for some more details and thought it would be helpful if you understood my current thoughts on the issue when composing your response. I believe you have addressed my question (though it does look like a lot of “ifs” must be met in order to achieve the desired outcome).

The overall point of my post was that you can lower tax rates on corporations, but you cannot control what they do with the money. Could they use it to invest in R&D, to hire more domestic employees, to pay out dividends, or to repatriate the funds in some other way? Sure. Will they (or will enough of them anyway)? Maybe or maybe not. Where is the economic study that demonstrates that “’A’ would lead to ‘B’ which would in turn lead to ‘C’ because it is the most profitable path for corporations to take”? Instead it sounds like more of a “’A’ might lead to ‘B’ if enough corporations do ‘C’,’D’, and ‘F’ which we believe will lead to ‘E’ because we hope it will be the most profitable path for corporations to take". I'd be very interested in reading the economic studies that support this "more drastic cuts" position if you have them available to share. All I’m currently getting from our Congressional Democrats, Congressional Republicans, and the President are talking points.

Jon, my apologies, it was lexi's post saying "90% for billionaires" that seemed to be hate-borne diatribe.

Truth be known, I have no high end studies at my fingertips. I am so incredibly irreverent, I would see tham as suspect and "bought and paid for" anyway. But a university study, canvassing corporate controllers and CFO's>? Maybe CFO magazine has done their own poll of readers?

These would be very valid data sources on the very difficult to predict causal chains you speak of.

Yet, it goes without saying that the rest of the world has dropped their corp taxes to below ours, whereas 20-30 years ago , ours were lowest.

Yet another indelible sign that the folks who've been calling themselves leaders in this country, dont have a damn clue as to what it takes to run the ship. Not a damn clue it would seem. Its been sinking for years, and they're all out at $1000/plate dinners feeding us the acid cocktail of free trade.

Boy, its sure as heck easy to get a little HATE running thru your veins when you frame it that way.

For a Vet, maybe more than just a little. The juxtapostion of combat carnage and $1000 a plate bullshit is hard to take.

Gene, it looked like you may have been on to something. For example, the large corporations already do not pay the statutory corporate tax rates. They use techniques like the “Double Irish” and the “Dutch Sandwich” in order to lower their tax rates, resulting in a much lower effective tax rate. Lowering the tax rate to 28% (or even to 25%) would not necessarily motivate these companies to repatriate their money as they might still get lower rates by using methods like those mentioned previously. As such, I am curious about how economists would view more drastic cuts (like the one you proposed)? What would be the consequences? Would it not only motivate US companies to repatriate their money, but also motivate foreign companies to put their money here as well? How would the revenue loss be handled, or would it be offset in some way? I'm definitely curious about this strategy.

Hi All! First post here and strangely it is on a topic I have little to no background knowledge about. HA! Having said that... here goes:

I have always approached every decision in life with the same question "What is fair and equitable?"

The simple tax solution to me would be a Flat Tax. It doesn't matter if you make $10,000 a year or $10,000,000. You pay the same rate. That's fair. All income is taxed the same, whether you earn it with blood sweat and tears, or with the anguish of mental computations in an office. Every American has god given talents. Why differentiate physical skills from mental skills. That is basically what you do when you give tax breaks to those with certain jobs, and I am a Fireman/Paramedic so under some suggestions I would pay less. I don't want to pay less, I want to pay my FAIR share! Thant is what every American should be happy to pay.

When it comes to corporate tax rates I am clueless. I can understand the competitive disadvantage that America has with a tax rate higher than most other nations. However, the idea that cutting corporate tax rates as a way to spur domestic job growth is a fantasy. Corporations are greedy, and the people who run them, by in large, are also greedy. You don't need to be a Rhodes Scholar to see this. Jobs will be sent out to countries that have the lowest costs, period. If its a factory job it will be sent to China, while research jobs can easily be sent to any number of locations around the world. I agree with the earlier post that there needs to be a tariff placed on goods entering the US to even the playing field for those goods produced here. Again, "fair and equitable."

That's my two cents. :)

Boo flat tax. Someone making more money should pay a higher % of their taxes.

Lexikon, would you please explain the reason for your position that "Someone making more money should pay a higher % of their taxes"? I'm not saying I agree or disagree; I'd just like to read your rational behind that position as opposed to a flat tax.

Gary, we had a Rhodes Scholar running the country for a while. Not much noteworthy there except he is still sponging off the rich, his life long MO. So it dont mean diddly to me. ALTHOUGH, Bill Bradley is a pretty impressive fellow, as I like hoops!

Sure hope there is some greed in the corporate system, else our companies will die off or be eaten alive. You all talk like greed is a sin, and at some magnitude and level it is. Yet, I'm here to tell you, the non-Rhodes scholar working stiff that I am, a wee bit of "ethical avarice" is what it takes to make the system work. Growth, innovation, etc, it dont happen nearly as often when there is no self interest.

Jon, lexi is a closet Marxist, but he dont know it yet. Com'on lexi, get the heck out the closet man, and be who you are! :)

To repeat, I beleive that our tax tables are as progressive as they need be. Close some loopholes ( cap gains and K-1's into ordinary income in a slot from 2MM to 10MM ), raise everyone over 100K a few percent, include an automatic +/-5% bracketing as our lean cow/fat cow mechanism and we're done with personal income tax.

WE DONT NEED A COMPLETE REVAMP OF THE TAX SCHEME -only its simplification, and a few revenue enhancers, imho. Yet ironically, the pols and their pundits seem to be calling for one. Pundits never ran companies - incremental improvements are all that is required and advised on the personal side.

Corporate taxes, here MAYBE we need something abit more bold than the mamby-pamby chicken little shit stuff that you all call "talking points".

But ironically, here we dont have folks looking for a completle revamp, and it seems to be clearly required. If I was President, there would be a bunch of due dilligence here, truly a poll of corporate CFOs. Not parading them in front of some Congressional committee for the cameras, but a blind poll to gain accurate data.

Can anyone 'splain to me the mechanism that requries the Fed Gov't to fix stuff that isnt broken, and to mess with things that seem to be working well? Something tells me its to give the public the ILLUSION of ACTION, but I may be overly jaded.

Because most of us have run our lives and business with a vastly different decision matrix.

Someone who is making more money has benefited more from the system that has been designed and funded through taxes. So they should have to pay a higher percentage of their income.

They can also afford paying higher taxes, while poorer people will need the money in order to stay happy and healthy.

Also, in order to keep most of the necessary government programs running, I don't think that a flat tax will be able to pay for all of it.

"Jon, lexi is a closet Marxist, but he dont know it yet. Com'on lexi, get the heck out the closet man, and be who you are! :)"

I've never read Marx's works.

Jonathan - Personally, I've got nothing against a flat tax, as long as the only income that is taxed is that which is surplus to survival.

And, in modern terms, 'survival' needs to mean a bit more than a cup of beans and rice a day and a cardboard box to crash in. Among other things, the bottom end needs enough resources to be able to lift themselves up.

And enough support so that they don't become (even more of) a burden on the rest of us.

"Poorer peple will need money to stay happy and healthy."

I have to call you out on this. My guess, and its not a crack on you, is that you are less than 25 years old, maybe less than 21. Please go around the block another 10,000 times and come back and report if this utterance is true. Again, no crack on you, and if you are that young, I am uncharacterisitcally covetous of you ( which is sinful in my world). That statement seems to indicate a life experience that isnt broad enough yet to make such blanket generalizations. In fact, the more life experience one gains, the less one is likely to make such broad generalizations at all. It is a rainbow, with very few black and white hitchin' posts.

And if you hand't read Marx, I might posit, dont bother. Most of that diatribe was only valid in the nascient years of the industrial revolution. The Russians weren't die hard Marxists either, it simply gave them a "security blanket" against the more developed European continent. ( read Max Weber's spin on that - its quite poignant) Having said that, we Whigs are living the historical dialectic, which I beleive Karl first identified. He wasn't a dummy!

FREEDOM is what sets you free, not a government check. If you hadn't noticed, a government check acts like shackles to the human spirit. Health amongst the folks who are on the government dole is poorer than their taxpaying counterparts. Fact. Its only in part due to economics. In part poor education. In part, I would argue, a lack of self respect/esteem, which that government check and food stamps reinforce every time you receive them. The " who is going to help me", to me very Un-American ethos which ought be self reliant.

Simply an observation of REALITY with a small dose of IMHO, not a policy position.

Personally, I've been abjectly poor, and quite flush. Happiness is not conditional upon my physical economic state. I may be a odd ball freak ( I pray I indeed am), but it is still a valid observation of the human condition.

Sorry to digress. Carry on.

"The bottom end needs enough resources to be able to lift themselves up".

Twich, I dont know if you meant it, but that right there is a very profound statement the way you express it. Break it down.....

Enough resources - not direct payments, but resources. Which forces me to define it this way, "What resources do I need to earn a living and support a family."

( the answer to that question may be the key to the plight of most unemployed 18-30 year old Black American males - a radically underserved population. They're served by incarceration. 'Mr.Charley' hasnt a clue what to do with them, adn doesnt even understand the issues.)

To lift THEMSELVES UP! - rifle shot on target right there. Goes to motive, personal betterment and therefore, completley holistic and sustainable. Further, it plays into Constitutional Principles, which helps rewite their social contract.

That's FN elegant right there bro!

I know this is a tax thread, but Twitchy's comments were way too cool to leave alone.

I'm 18.

"Health amongst the folks who are on the government dole is poorer than their taxpaying counterparts. Fact."

Do you think they would be doing better off without the check? There would probably be other variables, such as them being unhealthy to begin with, or just simply poorer.

"In part, I would argue, a lack of self respect/esteem, which that government check and food stamps reinforce every time you receive them. The " who is going to help me", to me very Un-American ethos which ought be self reliant."

Nobody is completely reliant on themselves. We all are helping each other whether directly or indirectly. Everyone tries to help themselves as much as they can, but not everyone can fix everything every time and need a lot of help.

Welfare, unemployment benefits, and food stamps aren't supposed to be permanent, and if people don't want to have low esteem for receiving them, they should be motivated to get a better job with a better pay.

"Personally, I've been abjectly poor, and quite flush. Happiness is not conditional upon my physical economic state."

It is however conditional on your physical state. With more money you can buy healthier foods, better medicine, and other things like a gym membership and camping permits. You will also be able to buy more educational resources for your children so they'll do better in schools.

IDK what your circumstance and actions were but they are different for every person and there are many different results.

Somemone assumed I was speaking to temp benefits , when my reference was to permanent benefits. Never before in my short life (51) have I known so many friends needing some sort of assistance, from public to job retraining,etc - the cost of blind devotion to free trade by folks who dont even know its theory and basis, imho. Although I was on unemployment well before the "giant sucking sound" happened. I was very thankful for the few months of sustainance as I got my act together.

Our "leaders" are intellectually void when it comes to true long term economic programs, or a simple effective industrial policy. No where else can you tell they're all followers then this issue. They literally have no clue. But folks still think they do as they weren't called out on it enough; now they're entirely naked as the moment of truth has arrived. Recall the old Army addage, "Bullshit don't cut it at the moment of truth." In-friggin' deed!

Hillary Clinton promised some defined number of jobs in upstate New York when she first carpetbagged the Senate seat.( 50,000?) Utter bullcap it was. Sound byte w/o corresponding dilligent action. And the public bought it at first. Who's the fool?

Anyway, the problem I spoke to lies when benefits become permanent and one gives up hope of self-actualization. This is what the reader missed. A simple fact.

WAIT! This is a TAX thread. I am at fault for digressing YET AGAIN! A point to consider: even as our non-technical discussions show, many issues are linked and interrelated, like a cross-impact matrix, if you tweak one, it effects the others. This is how reality works. Proper, well designed public policy ought have REALITY as an input. It makes it a dimension or two more complex, but enhances its efficacy exponentially.

Now, imagine the current paradigm producing a sustainable and holistic policy based on a cross impact style of analysis, yielding a holistic interrelated set of policies(this defines the goal of our Renewed American System). Can you see that? Nope? Correct! It will NEVER happen in this paradigm; they can't even compromise without adding layers and layers of garbage to bills making them ineffectual and overly burdensome to implement. Bad public policy is what we've come to expect. Kill the corporate parties and we have a chance at balancing the Republic. They, the now fully corporate institutions of Reps and Dems, are the agents acting against us and against true bold change. No matter what sound bytes they utter, that simple, undeniable fact remains based on observations of their inefficacy of action on so many fronts over the last string of decades. They don't get much done right. And they dont rightly care, it would seem, as they never really fix anything after they miss the first time. Witness how quick pols are to get on the bandwagon if something good happens economically as if they caused it to occur. Remember, if you'll excuse the NCO-speak, "Bullshit dont cut it at the moment of truth!"

The short takeaway from this lenghty post, and it is unrelated to tax code but not Mack's opening thoughts is:

The fat cow/lean cow mechanism Brian Mack introduced is a prefect moniker for how the system is supposed to work but never does. The system is simply making the fat cows fatter right now! The point is, whether it is incorporated into tax policy or not, under the general heading of fiscal responsibility....

If we are to defend this way of life and economic system of managed capitalism and craft it into a model for all to see, then we ought manage it correctly by the metrics.

Under the constraints of fat cow/lean cow metrics, the U.S. Government ought be LAVISHING on public asssitance of all types right now, having peaked in its dole output possibly two or three quarters ago based on the then current economic data. As todays economic data seems to be stablizing, the metrics would require us to be moving back to "neutral" towards fat cow territory, where surpluses are built. Of course defining the economic metric for "fat cow", as we havent had much good economic data over the last ten years, would be slightly, and I mean slightly problematic. We'd also have to include a demographic overlay in the system of equations governing fat cow/lean cow to hold the "large waves" constant.

Not all that difficult from a methodological point of view, YET IMPOSSIBLE IN THE CURRENT POLITICAL CLIMATE. Unless, that is, millions of citizens are empowered with the knowledge. Then, we'd have the systemic change we need from the roots up.
Dig?

We did spend more public money over the last two to three years, but it was a policy clusterfutz getting it to happen. To all the Fed-haters out there, likely is that the a-political Fed saved us from near catastrophy because Washington sure as heck couldn't and froze. Why? Do I really need to quote more NCO-speak, in CAPS!?

Whether the fat cow/lean cow metric has utility in the tax code, I donnow. Reckon that tax revenues are already economically dependent, so there is a self-correcting mechanism already in place. The expediture side is where we really, imho, need to install the "Permanent Defense of Capitalism". ( yes, Lexi's Marx can kiss my Whig...)

finally, put your rose colored Whig Zen-see glasses on and play with this thought; Federal policy incorporates a built in pendulum called fat cow/lean cow which automatically, based on economic data, provides generous amounts of TRANSIENT public assistance under conditions of economic duress to family units across America. Bold, like a guaranteed montly income as some unions do when on strike. I highlight transient as this is the operative word, and fat cow/lean cow defines it perfectly for all, without ambiguity. The question is, how would such an institutionalized regime of fat cow/lean cow look to the average citizen if it is framed as "our government's protection of capitalism, and the core principles of life, liberty and the pursuit of happiness." Would it alter the general public perception of the efficacy of our system, the proper role of assistance(transient)and their own connection to the system? Can you spell R-A-S?

Cannot we dispel with all this socialist mumbo jumbo and attempt to have everyone "buy into" a new social contract with one clearly articulated, easy to understand, and A-POLITICAL policy which builds on common ground?

COME TOGETHER.

Too darn Whiggy, is it? Not if we can find 100,000 more Whig freaks just like you and me it 'aint'. ;o)

WHIG OUT!

Why have corporate taxes at all? Corporations are simply people. Profits are divided among stockholders, who then pay income taxes on those earnings.

A flat tax on all earnings above the poverty level would be the second best tax plan in my opinion.

The best plan without a doubt is having the Fair Tax replacing all other federal taxes.

"Someone who is making more money has benefited more from the system that has been designed and funded through taxes. So they should have to pay a higher percentage of their income."

Using your argument, someone making less money had the same system that was designed and funded through taxes. Since they failed to make good use of that tax funded system they should be taxed at a higher rate because their lack of effort resulted in a waste of tax revenue.

How about the first $60,000 anyone makes is tax free. You also start a new bracket somewhere in the millions of dollars. It makes no sense those who make 250K are taxed the same on income as those who make $100 million.

Folks "making" 100,000,000 have more than "income" happening which is why the tax code is somewhat complex on that.

Folks, I've researched the fair tax ad nauseum, and while it may sound like a good idea, implementation or even discussion of same has to be held off until we get folks on the Hill who actually understand cash flow, dont lie to the public, and balance the budget. Only under conditions of surplus, or near surplus can we even entertain tax code redux. I cant fathom why no one gets this. Its DOH, for anyone who runs a good sized business.

Dont screw with your revenue stream ( other than to enhance it) while your expenditures have balooned. Kripes, even ECONOMISTS understand this simple accounting logic it would seem after the recent survey they participated in.

For so many economists to agree on anything is noteworthy. They all agreed that it is both an expenditure and income problem. Which is like saying plants grow with both sun and water but not just one. DOH!

Dogwood,

I am a bit confused by the following statement that you made:

Why have corporate taxes at all? Corporations are simply people. Profits are divided among stockholders, who then pay income taxes on those earnings.

Are you suggesting that all companies should be made to pay dividends to their stockholders? Currently, not all companies have a dividend policy and the way for investors in these companies to make a profit is to offload their investment (i.e. sell their stock at a higher value than what they purchased it for). The way you have currently stated your stance implies that a company that chooses not to pay dividends should be exempt from taxation. Is that what you meant to write or am I misunderstanding what your stance is?

If you do choose to force companies to pay dividends, how would you respond to those that would rather companies not pay out dividends at all, but should rather reinvest in the comapany to increase its value? The rationale being that taxation on dividends is higher than on capital gains. This doesn't help the government in terms of tax revenue, but it can result in larger profits for the investors.

Also, how would you determine what percentage of profits are paid out to stockholders versus what percentage is kept by the company (for performing such tasks as implementing projects, repurchasing company stock, acquiring new companies and other profitable assets, etc...)?

What about a simple flat income tax and a low national sales tax?
The Flat tax would cover Social Secuirty Medicare, Obama care, etc. (although i dissagree with these programs, we can't expect to get rid of them quickly, thusly we should include them into our tax plan for now)
The National sales taxwould be implemented to tax income supplements such (ex. stock trading)
Also for any tax plan to work and not take the majority of taxpayers oney, we have to remove all charity based loopholes, these loopholes were created in good intentions, "people should be rewarded for charity", but it takes away income from the American government which is in a debt crisis.

The best tax plan is detailed in the book "Resuscitating America - An Independent Voter's Guide to Restoring the American Dream." It is part of a comprehensive economic plan which would revive the economy, balance the budget, and help us to solve our energy and environmental problems. Moreover, it would help fix the extreme income disparity problem we are facing and discourage the exporting of our jobs. Maybe most importantly, it would do all of these things without increasing the size or scope of the federal government.

It really is an interesting read on economics and has the only (truly) comprehensive economic plan I've seen.

"Using your argument, someone making less money had the same system that was designed and funded through taxes. Since they failed to make good use of that tax funded system they should be taxed at a higher rate because their lack of effort resulted in a waste of tax revenue."

Um, no you can't prove that they didn't put enough effort. The people that should be blame would be the people who tried to help them.

Plus, it would burden them with taxes, and just because someone makes not that much money doesn't mean their job isn't useful.

Anyways, I kind of like the no tax plan explained here. However, I think that property taxes are important since you are using more of our Earth.

http://fairtaxfraud.com/alternatives.asp

Sorry, but just the first few paragraphs of "The Defects in the FairTax Plan" are so ill-informed and biased that it throws the whole rest of the document into question.

Just as one of the most blatant examples: "Although the FairTax would eliminate individual income tax returns, the FairTax turns every business (from Ebay sellers to farmers markets, and up) into a tax collectors. Every business no matter how small and every Internet business will have to collect taxes for the federal government."

Almost every business is a tax collector now. That's what payroll taxes are. And most businesses already collect sales tax for state and local governments, so that's not a big change either.

FairTaxFraud is indeed. Dont bother. Very poorly written, with much political diatribe and not much real thought.

The Resucitation book might have merit. We do get a little "us v them" in the preamble, but I would reserve judgement until I see some of the meat.

And whomever said reduce the charitable contribution tax deductions be very careful. Frankly, the charities might allocate the resources much more properly than the Fed govt. But more to the point, under the spending curbs that the supposed leaders havent told you about yet ( its inevitable so...), charities become even more important. And they are suffering now with fewer donations. Imagine if you cut off deductibility of donations. Bad move. Stupid move actually.