[vtsnowedin]

Congress is beginning to consider a tax code overhaul with all the usual players having their thumbs on the scale making sure that they and their contributors get the majority of any tax cuts and others (you and me more then likely) make up the difference.
My question is what do we the members here at Peakoil think would be the best tax code for the USA? Start with the goals you want to obtain and move on to what should be tax exempt and what brackets there should be and the rate for each bracket.
The tax code has always been used to direct people to do things the government thought would be good for the country (and some rich powerful people at the same time). The tax deduct-ability of home mortgage interest encouraged home buying over renting which gave many Americans a positive net worth at the same time it made a lot of money for bankers and home builders and tradesmen.
Money invested in the stock market was not taxed yearly as long as it was left invested providing capital for industry and was only taxed as "capital gains when it was withdrawn from the market. etc. etc.
But that was the way it has been done in the past, the question is what should we do going forward?
I'll not try to steer the discussion beyond saying the tax code needs to generate enough money to pay the governments bills without generating a big surplus that will encourage more programs and spending.
Your thoughts Ladies and Gentlemen?

[Plantagenet]

$this->bbcode_second_pass_quote('vtsnowedin', '.')
My question is what do we the members here at Peakoil think would be the best tax code for the USA? Start with the goals you want to obtain and move on to what should be tax exempt and what brackets there should be and the rate for each bracket.

[Hawkcreek]

I would like to see EVERYONE paying the same percentage rate in taxes. This would be computed after considering all taxes and fees being paid on a nationwide basis. For example, if a poor person pays .005 percent of his weekly pay to enter a national park, everyone else would have to pay the same percentage. Naturally, this would get rid of all incidental fees paid to the national and state governments.
Same for property tax. That tax would come out of the profits from corporations, rather than be passed on the consumer of their products.
It would take a few years to find the true amount of hidden taxes everyone is paying, but if everyone, including those people type entities called corporations, paid the same percentage, I would call it good. This would probably come out to 30 to 40 percent of all income going to taxes.

[Subjectivist]

Simple, 10% sales tax and no other taxes or fees, then cut the budget to fit the income. It will never happen without a full blown revolution, but that is my goal tax/spending level for the Federal Government.

[vtsnowedin]

$this->bbcode_second_pass_quote('Plantagenet', '')$this->bbcode_second_pass_quote('vtsnowedin', '.')
My question is what do we the members here at Peakoil think would be the best tax code for the USA? Start with the goals you want to obtain and move on to what should be tax exempt and what brackets there should be and the rate for each bracket.

[vtsnowedin]

$this->bbcode_second_pass_quote('Hawkcreek', 'I') would like to see EVERYONE paying the same percentage rate in taxes. This would be computed after considering all taxes and fees being paid on a nationwide basis. For example, if a poor person pays .005 percent of his weekly pay to enter a national park, everyone else would have to pay the same percentage. Naturally, this would get rid of all incidental fees paid to the national and state governments.
Same for property tax. That tax would come out of the profits from corporations, rather than be passed on the consumer of their products.
It would take a few years to find the true amount of hidden taxes everyone is paying, but if everyone, including those people type entities called corporations, paid the same percentage, I would call it good. This would probably come out to 30 to 40 percent of all income going to taxes.

[vtsnowedin]

A question for you to consider.
If itemized deductions are drastically reduced should the standard deduction remain fixed or should it be a percentage of gross income?
After all a millionaire probably has a house with much higher property taxes and interest payments on his Jumbo mortgage. If the rich were held to a fixed percentage of deductible income they might buy more wisely and pay cash for the portion above what the deducible covered.
Should the guy renting a closet sized apartment in NY city be subsidizing the wall street banker in the penthouse and his "cottage" in the Hampton's?

[Plantagenet]

$this->bbcode_second_pass_quote('vtsnowedin', '')$this->bbcode_second_pass_quote('Plantagenet', '')$this->bbcode_second_pass_quote('vtsnowedin', '.')
My question is what do we the members here at Peakoil think would be the best tax code for the USA? Start with the goals you want to obtain and move on to what should be tax exempt and what brackets there should be and the rate for each bracket.

[farmlad]

I would like to see a Land/Location Value Tax being implemented and increased as part of simplifing taxes. See https://en.wikipedia.org/wiki/Land_value_tax.

It makes sense that since we are all born into this world not by our personal choice and with a desire to live and have stuff that we should pursue the most equitable methods to share natural and social resources. So if someone wants property closer to populations then they should have to pay more but whether they build a house or a business or leave it vacant is their choice and the tax should not vary all that much.

This way we are taxing the access to natural resources rather than labor so that people have a lot greater incentive to work as well as employ workers but access to natural resources goes to the highest bidder and it will hurt his pocket book.

[Plantagenet]

$this->bbcode_second_pass_quote('farmlad', 'I') would like to see a Land/Location Value Tax being implemented and increased as part of simplifing taxes. See https://en.wikipedia.org/wiki/Land_value_tax.

It makes sense that since we are all born into this world not by our personal choice and with a desire to live and have stuff that we should pursue the most equitable methods to share natural and social resources. So if someone wants property closer to populations then they should have to pay more but whether they build a house or a business or leave it vacant is their choice and the tax should not vary all that much.

This way we are taxing the access to natural resources rather than labor so that people have a lot greater incentive to work as well as employ workers but access to natural resources goes to the highest bidder and it will hurt his pocket book.

[EdwinSm]

On same percentage charges, here in Finland we have some of that with fines. For example at speeding fine is determined as a number of day income as declared in the last tax year. That has lead to some racing drivers having fantastically high fines

[vtsnowedin]

$this->bbcode_second_pass_quote('Plantagenet', '
')CHEERS!

PS: Vtsnowedin---what is YOUR favored tax plan? You started this thread---please participate in your own thread and tell us what changes you want in the tax system.

[MD]

Sales tax only. Scaled by purchase price. The bigger the ticket, the bigger the tax. Primary residence exempt.

[vtsnowedin]

$this->bbcode_second_pass_quote('MD', 'S')ales tax only. Scaled by purchase price. The bigger the ticket, the bigger the tax. Primary residence exempt.

[Subjectivist]

$this->bbcode_second_pass_quote('vtsnowedin', '')$this->bbcode_second_pass_quote('MD', 'S')ales tax only. Scaled by purchase price. The bigger the ticket, the bigger the tax. Primary residence exempt.

[Hawkcreek]

$this->bbcode_second_pass_quote('vtsnowedin', '')$this->bbcode_second_pass_quote('Hawkcreek', 'I') would like to see EVERYONE paying the same percentage rate in taxes. This would be computed after considering all taxes and fees being paid on a nationwide basis. For example, if a poor person pays .005 percent of his weekly pay to enter a national park, everyone else would have to pay the same percentage. Naturally, this would get rid of all incidental fees paid to the national and state governments.
Same for property tax. That tax would come out of the profits from corporations, rather than be passed on the consumer of their products.
It would take a few years to find the true amount of hidden taxes everyone is paying, but if everyone, including those people type entities called corporations, paid the same percentage, I would call it good. This would probably come out to 30 to 40 percent of all income going to taxes.

[Outcast_Searcher]

$this->bbcode_second_pass_quote('Plantagenet', '')$this->bbcode_second_pass_quote('vtsnowedin', '.')
My question is what do we the members here at Peakoil think would be the best tax code for the USA? Start with the goals you want to obtain and move on to what should be tax exempt and what brackets there should be and the rate for each bracket.

[Outcast_Searcher]

The VAST majority of the complexity in the tax code isn't computing the rate. It's computing the INCOME. The flat tax doesn't do ANYTHING to fix that.

I made the statement above. For people who file the EZ form or who don't fool with investments more complex than bank accounts and mutual funds, I'll back it up a little.

I'm a complete piker as far as complexity of investments. All I do that's somewhat unusual is actively trade a lot of stocks and options with a small percentage of my portfolio, and invest a significant percentage of my long term mutual fund money in broad international stock index funds, as a dollar and US economic growth hedge. (Call it an "idiots on Capitol Hill hedge", if you will).

So, thank goodness, I have an accountant who does the taxes. So she worries about the detailed rules, the changes, the forms and subforms, and all the nightmarish details. I used to try to do that and became extremely depressed annually over the stress of doing my taxes -- even with tax software and spreadsheets. (This was before brokers had to compute your capital gains/losses for you. Oh, and before spreadsheets and tax software, it could almost elicit thoughts of suicide for an honest non-accountant.

But my current tax returns are currently 50 to 100 pages, and there's a LOT in there I only vaguely understand, and forms I wouldn't even know to fill out, unless tax software did it for me.

But some typical issues I've dealt with over the last 10 years that illustrate the complexity of defining income:

1). Wash sale rules. Nontrivial if you trade a lot of options on stocks you hold. For example, defining "substantially indentical" investments. There are complex rules for deep in the money options (I hold some long term ones as rough proxies for the underlying stocks). And I've never been able to get the IRS to issue a written opinion to be confident on this. And this affects hundreds of thousands of investors, so you'd think it should matter.

2). The reporting of foreign income, since there is a foreign income tax credit. I've had fights with the IRS over reporting foreign income for a fund like the Vanguard Total International Stock Index Fund -- by putting "Various" where it wants to know what country the investment is for. I've had to send 20+ pages of documents, spreadsheets, etc. to the IRS explaining why I don't KNOW precisely what the country make-up of such a fund is, and why they need to go to Vanguard to get this. (The numbers change monthly, the history isn't shown consistently on the website, I'm not sure of the rules when it changes monthly, I'm not sure why the details matter, etc). I've had to wait multiple years with my return in limo while the IRS delayed, and finally agreeing with me, in some cases.

By the way, I see the accountant now uses "Other" instead of "Various". Which seems to help keep the IRS from objecting. Is that madness, or what?

3). The volume of paperwork and data can be daunting. I have three brokers (for various reasons). My 1099's from the brokers typically come to 200ish pages. Again, thank goodness the brokers now have to compute the income/losses for stocks and options. But is this all done correctly? I eyeball things and look for flagrant errors and am confident it's within a "stone's throw" of what the correct totals are, but frankly, I'm not sure if it's completely correct, and am not inclined to find out as long as they're close. (Which is why I pay someone ELSE to do my taxes).

And this is just the tip of the iceberg for one aspect of tax complexity re computing income. And I don't see any flat tax scheme changing ANY of that. Thus, unless you exempt a lot of investment income (which I think is a BAD idea) -- I don't see the IRS going anywhere if you want people to pay roughly what they owe in taxes.

[vtsnowedin]

$this->bbcode_second_pass_quote('Subjectivist', '
')
Besides, to fund the basic needs of Government as opposed to the wants of the politicians a 20 percent tax is excessive. The government should supply national defence and infrastructure backed up by a court system. Very little else is either hecessary or proper for Government to be involved in.

[vtsnowedin]

$this->bbcode_second_pass_quote('Hawkcreek', '
')Going to a park is voluntary, but the funds to set aside, develop, and maintain the highways to that park are not voluntary. Effectively, the poor person spends a higher portion of his income to see that park than a rich person.