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Paranoid Theory on Financial Future


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The benefit of doing a universal sales tax is not having to do a progressive tax. Luxury to you is necessity to others and Vice versa. Plus most luxury things are more expensive yielding a higher tax take in the first place.

The subjective nature of where to draw the line if it becomes a non flat tax then becomes the problem and doesn’t end up fixing anything.

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Actually there is a right answer. Free and fair market shouldn’t punish those who do well with their talents. Because the rest of the system depends on them.

Even if you took all the money from every billionaire...every last dollar from Bezos, Gates, and Musk, and ignoring the market inefficiencies in liquidating their stocks...you STILL wouldn't fund the

Not related to the tax discussion, but my wife also distrust the long term financial future (I do all of our long term investing). she wants me to pull it all out and buy airplanes and property...her

Disagree.. an income tax taxes my productivity while a sales tax taxes my consumption. That’s what I see as the major benefit. 
 

Sure, luxury items have a higher price so the quantity of tax paid is higher, but not percentage. Hard for me to buy the argument that a basic sedan/minivan should be taxed the same as anything Audi or Mercedes makes.  Not married to the progressive tax idea, but I think it’s worth exploring.

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Disagree.. an income tax taxes my productivity while a sales tax taxes my consumption. That’s what I see as the major benefit. 
 
Sure, luxury items have a higher price so the quantity of tax paid is higher, but not percentage. Hard for me to buy the argument that a basic sedan/minivan should be taxed the same as anything Audi or Mercedes makes.  Not married to the progressive tax idea, but I think it’s worth exploring.


Is a minivan a necessity or a luxury? Most cars seat 5 on paper... And where do you draw the line of what a luxury car is? And would there be a market for a non-luxury car that is missing key features to keep it from being labeled as luxury? Would manufacturers be okay being labeled as luxury and incurring extra tax on their goods and driving away prospective customers (comparing low end "luxury" vs high end "basic")? Or would the manufacturers lobby hard for an exception that benefits their business at the expense of government tax revenue that funds government programs (including the military)?

Is internet access a luxury? What about smartphones? Are firearms luxuries? Or [insert any leisure activity]? Point is, it's hard to draw the lines, and people have no problem labeling things they don't use/do as luxuries when voting.

Excluding rent (since my rent is about the same as my BAH which isn't taxes anyways), I spend somewhere around $3k/mo. Federal taxes (income, social security, and Medicare, all of which would need to be covered) are about $1450/mo, and based on my typical tax refund, I can subtract $100/mo from the tax liability. State/local sales tax (~6%) is included in my monthly spend amount. This puts a rough ballpark on what the fair tax should be to get the same federal tax revenue from me at about 48%. And this assumes that I keep consuming at the present rate (which is likely, barring things like a luxury tax which may affect what I spend money on).

That tax rate is easy for me to absorb as I'm not hurting for essentials or rent. But lower on the pay scales and that tax starts to hurt, unless there were exceptions based on income (and how do you capture losing a well paying job half way through the year and being unemployed the second half?) It also places the burden for any exceptions at the point of sale, creating frustrations for businesses and consumers that are normally reserved for tax season and the IRS.

This also excludes state income taxes, as I'm a resident of another state without a state income tax, so in a sense I don't pay my "fair share" to my local community I'm stationed at.
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I think the EU still has income taxes.. 
I’m on board with a sales tax.. as long as it’s the only tax.
I’d like to see some way to recover the tax loss from my Roth accounts.. but I’ll and I’m sure most others will live.
It would also be nice to make it a progressive tax as well.. luxury goods taxed higher than necessities.. I’m sure there’s plenty of lobbying to be done there to figure that out

Yes they do. Below is Germany’s numbers.
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Disagree.. an income tax taxes my productivity while a sales tax taxes my consumption. That’s what I see as the major benefit. 
 
Sure, luxury items have a higher price so the quantity of tax paid is higher, but not percentage. Hard for me to buy the argument that a basic sedan/minivan should be taxed the same as anything Audi or Mercedes makes.  Not married to the progressive tax idea, but I think it’s worth exploring.

We are on a progressive tax system. The point of an all sales tax system is to make it fair for everyone. If you want bigger and better things then you pay more. Not because your successful. Progressive taxation of the successful hurts everyone.
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9 hours ago, HeloDude said:

So you’re a fan of the Fair Tax plan?

 

Nope, not at all. It’s a regressive tax on poor folks that’ll push more poverty because they’re paying higher taxes (similar to VAT) on necessities to them. 

I’m actually more of a fan of the tax rate schedule under Eisenhower when we invested heavily in infrastructure/science/space exploration/defense/etc. over the continued hopes of trickle-down.

But, I’m a dirty lefty that thinks corporations and ultra wealthy can afford to pay more in taxes/have their tax loopholes closed/bring their stashed cash back to the US. I think they’ll survive.

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51 minutes ago, FDNYOldGuy said:

Nope, not at all. It’s a regressive tax on poor folks that’ll push more poverty because they’re paying higher taxes (similar to VAT) on necessities to them. 

I’m actually more of a fan of the tax rate schedule under Eisenhower when we invested heavily in infrastructure/science/space exploration/defense/etc. over the continued hopes of trickle-down.

But, I’m a dirty lefty that thinks corporations and ultra wealthy can afford to pay more in taxes/have their tax loopholes closed/bring their stashed cash back to the US. I think they’ll survive.

So your original problem was that rich people (supposedly) pay less of a percentage of their income in federal income taxes...and yet you’re against the Fair Tax which literally taxes everyone the exact same amount for what they purchase.

But I do agree with the first 5 words of your last paragraph, so there’s that I guess.

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It’s actually relatively simple: do you believe the “free market” is fair? Or do you believe the “free market” has inefficiencies that unfairly benefit the wealthy?

Those that think it’s “fair” will support a “fair” tax. Those that don’t will support a structured progressive taxation policy.

https://www.google.com/amp/s/www.pewresearch.org/fact-tank/2018/10/04/partisans-are-divided-over-the-fairness-of-the-u-s-economy-and-why-people-are-rich-or-poor/%3famp=1

Spoilers, republicans are more likely to think it’s fair, and democrats are more likely to not. There’s not really a right answer here, it’s all based on feelings.

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To think there is an objective "right" here is the height of arrogance. No doubt the successful should be incentivized, but there are obvious market distortions that don't make it such a simple matter. 

A fair tax on consumption isn't really fair IMO since it's regressive on income, on average higher earners spend less and invest more as a percentage of income.

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7 minutes ago, DosXX said:

To think there is an objective "right" here is the height of arrogance. No doubt the successful should be incentivized, but there are obvious market distortions that don't make it such a simple matter. 

A fair tax on consumption isn't really fair IMO since it's regressive on income, on average higher earners spend less and invest more as a percentage of income.

Have we moved beyond the need for taxes as a source of revenue? Do they now solely exist to balance some perceived unfairness in the economic stratification of the country?

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Have we moved beyond the need for taxes as a source of revenue? Do they now solely exist to balance some perceived unfairness in the economic stratification of the country?

Yes. We have. But only because we are printing money. So it doesn’t really matter.
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Just now, Guardian said:


Yes. We have. But only because we are printing money. So it doesn’t really matter.

Well, hell...let's make it fair and set all the tax rates to zero.

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We are on a progressive tax system. The point of an all sales tax system is to make it fair for everyone. If you want bigger and better things then you pay more. Not because your successful. Progressive taxation of the successful hurts everyone.


Fair is only a matter of perspective.

Fair tax shifts extra burden on the lower income people while cutting taxes on the very rich (in terms of percentage of income). Lowering taxes on the upper end of income earners lowers overall (absolute) tax revenue, which necessitates an increase in tax rate for everyone in the fair tax system.

Most of the discussion centers on personal taxes. Should businesses also be on a flat tax system? Or would that hurt smaller businesses s and startups?

Another way to look at the progressive tax system is that the more successful you are, the more you should pay into the system that created the environment for your success. That environment isn't just the business environment, but at a national level, things like defense, economic policies, legal system, law enforcement, education, research, etc. That's not to say you can't be rich; a progressive system allows you to keep accumulating wealth, just at a shower rate the further you get on the upper extreme.
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Actually there is a right answer. Free and fair market shouldn’t punish those who do well with their talents. Because the rest of the system depends on them.


That success doesn't exist in a vacuum.

Who should pay to keep the free market free? Including the legal system to settle disputes, and law enforcement to enforce those legal decisions. Plus national defense/diplomacy to keep outside forces in check and not have undue influence on our markets.

Successful businesses and a free market rely on government to keep some semblance of societal order and "fairness". Otherwise, things get messy quickly.

How we get to what is fair and how to pay for it doesn't have an objective answer. It's all subjective based on your values, assumptions, and biases. Especially when you scale up a system to include a large number of people.

The other part that gets weird is that in theory, in a democracy, everyone has the same amount of say in what the country does. But in practice, being wealthy substantially increases your influence on the country's decisions, especially when it's not a direct democracy and you can lobby a smaller number of voters (representatives or senators).
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Wasn’t this country moved to and founded on not paying taxes?
Found on not being taxed without representation, not just a blanket not paying taxes period.

In other words, we wanted to have a say in our destiny as states and as a country
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56 minutes ago, pawnman said:

Well, hell...let's make it fair and set all the tax rates to zero.

He's not entirely wrong on that point, but setting it to zero would be problematic because taxes give the dollar its value in modern centralized banking system (and only printing would lead to hyperinflation). It's a primary source of demand for dollars. There are more reasons it's important to have taxes, balancing of economic stratification being one of them, but it's not the sole reason by any means.

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Kind of within the same realm - Are these real estate prices here to stay? We sold our home in Virginia last June for $464k, Zillow now has it valued at $515k. The people who bought the home of the people who bought ours (crazy story) purchased that home for $306k and just listed it at $380k. 

Our home in San Diego was valued by Redfin and Zillow at 12.5% higher than what we purchased it for nine months ago. This was verified with an actual appraisal to lock in a 1.75% refinance (1.4 points). 

What the hell is going on? Is it just inflation due to excess cash in circulation? I don't really feel like it is a bubble but welcome to hear opinions. 

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Kind of within the same realm - Are these real estate prices here to stay? We sold our home in Virginia last June for $464k, Zillow now has it valued at $515k. The people who bought the home of the people who bought ours (crazy story) purchased that home for $306k and just listed it at $380k. 
Our home in San Diego was valued by Redfin and Zillow at 12.5% higher than what we purchased it for nine months ago. This was verified with an actual appraisal to lock in a 1.75% refinance (1.4 points). 
What the hell is going on? Is it just inflation due to excess cash in circulation? I don't really feel like it is a bubble but welcome to hear opinions. 

It’s the excess of cash involved in speeding current offers combined with limited supply.

There is an influx of buyers relocating in the face of higher property taxes in high cost areas and COVID. Essentially it’s caused a bunch of people with good equity to enter much less expensive markets.

Other problem is lumber costs shot up massively, and now builders are slowing to minimum work just to keep their teams employed but they can’t build the houses they contracted for at a profit, much less can they engage in new property development.


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Anyone remember the market of 06ish and what happened during the correction?

I had a ton of friends underwater on mortgages when the market corrects.

No biggie if it’s your long term home...pay for a place you like. It’ll suck if the market corrects and people need to PCS and sell.


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11 hours ago, VMFA187 said:

Kind of within the same realm - Are these real estate prices here to stay? We sold our home in Virginia last June for $464k, Zillow now has it valued at $515k. The people who bought the home of the people who bought ours (crazy story) purchased that home for $306k and just listed it at $380k. 

Our home in San Diego was valued by Redfin and Zillow at 12.5% higher than what we purchased it for nine months ago. This was verified with an actual appraisal to lock in a 1.75% refinance (1.4 points). 

What the hell is going on? Is it just inflation due to excess cash in circulation? I don't really feel like it is a bubble but welcome to hear opinions. 

Inflation paired with record low housing inventory.  Only something like 1 million homes available nationwide...lowest since the 80s.

Too bad I sold my house last year...

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On 4/12/2021 at 11:16 PM, DosXX said:

He's not entirely wrong on that point, but setting it to zero would be problematic because taxes give the dollar its value in modern centralized banking system (and only printing would lead to hyperinflation). It's a primary source of demand for dollars. There are more reasons it's important to have taxes, balancing of economic stratification being one of them, but it's not the sole reason by any means.

Real estate, stock market, and grocery stored don't provide demand for dollars?  The value of currency is based on government taking back some of the currency they issue?

Gonna need you to explain that one in more detail.

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Not related to the tax discussion, but my wife also distrust the long term financial future (I do all of our long term investing). she wants me to pull it all out and buy airplanes and property...her words. So tempting - I hate being a responsible adult. 

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1 hour ago, brabus said:

Not related to the tax discussion, but my wife also distrust the long term financial future (I do all of our long term investing). she wants me to pull it all out and buy airplanes and property...her words. So tempting - I hate being a responsible adult. 

Sounds like a wonderful woman—you’re a lucky man.

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