Also, that basically means that the government tracks all of my purchases which I am not comfortable with.Yeah, the problem with a federal sales tax is that it isn't a flat across the board tax, it is actually VERY regressive. The poor and most of the middle class tend to spend 100% of their incomes. So they will bear the brunt of the tax burden. Whereas the rich are able to save, invest, or otherwise do things with their money that do not incur sales taxation.Agree. That said, there IS a way to make sales tax work pretty well.
If you calculated an 'annual cost of living' and exempted all purchases up to that amount then, depending on how generous the 'cost of living' value was, you could allow most people to only pay sales tax on 'luxuries' above and beyond what they need to survive. Of course, then there would be an ongoing battle over the cost of living value with progressives wanting to include child care, college expenses, health care, et cetera and conservatives wanting to cut it back to only cover bread and water.
Don't they already?
Someone receiving a service or a good from a company or a public institution gets to pay tax on getting it. Simple. That is what we did in Sweden. The Social Democrats absolutely out and out HATED IT.How is that different than an income tax?
Because it doesn't let people who make lots of money get all their stuff and good things for free, thereby not counting as income, and thus exempting them from taxes. You get it, figure out the value, then tax that. Simple.
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Also, that basically means that the government tracks all of my purchases which I am not comfortable with.
No reason for that to be the case.
The easiest way to implement such a system would be as a 'credit card' which starts out each year with an amount of sales tax to be voided. Every time you make a purchase your card is scanned and the sales tax deducted until the card is empty.
COULD the government track all of your purchases? Sure. Just as they could now. However, nothing in the proposal requires or authorizes such tracking.
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The obvious solution might be to put the a sales tax on all investments, but a normal sales tax on stock purchases for example would cripple the whole industry. No one would invest if you paid the government 10% up front.
Er,....
It really depends on your investment model. If you're a buy-and-hold, long-term investor (like myself, for the most part), a 10% sales tax on investment is little more than a nuisance. I invest with a horizon measured in years or decades, and I expect, based on long-term average, to double my money every 7-10 years. Paying 10% off the top means that, instead, I'd double my money every 8-11 years.
And, in fact, most retail investors pay brokerage fees up-front that can easily amount to 10% or more of the investment (as well as paying fees to get out of the investment). Add to that the annual fee that most mutual funds charge on top of their sales fees, a 10% sales tax on investments isn't actually that burdensome.
The people who would scream about taxing investment transactions are the high-speed traders that make their money off moving billions of dollars around to take advantage of differences of tenths of a penny in stock prices over periods measured in milliseconds. These are the people who buy computer space right next to the stock exchanges so that they can minimize server lag. And, honestly, these are also the people responsible for destabilizing our financial infrastructure, so I'd be just as happy putting them out of business.
Actually, a financial transaction tax (essentially, a sales tax on investments) is a very good and relatively common economic policy. As per the link, "Over 30 countries – including Australia, Hong Kong, Singapore, Switzerland, and the U.K. – currently have some form of the FTT. Of the G20 nations, 16 have an FTT." "An FTT would raise at least tens of billions of dollars per year in badly needed revenue." One of the advantages of an FTT is that you only pay it when you want to (when you buy or sell), so there's no issue if you simply hold on to your investments -- or if you want to keep your money in your mattress.
And, of course, it's a highly progressive tax, because if you don't have money, you don't have money to invest. Which is why it's unlikely to happen in the US no matter how much sense it makes.
The people who would scream about taxing investment transactions are the high-speed traders that make their money off moving billions of dollars around to take advantage of differences of tenths of a penny in stock prices over periods measured in milliseconds. These are the people who buy computer space right next to the stock exchanges so that they can minimize server lag. And, honestly, these are also the people responsible for destabilizing our financial infrastructure, so I'd be just as happy putting them out of business.
Actually, a financial transaction tax (essentially, a sales tax on investments) is a very good and relatively common economic policy. As per the link, "Over 30 countries – including Australia, Hong Kong, Singapore, Switzerland, and the U.K. – currently have some form of the FTT. Of the G20 nations, 16 have an FTT." "An FTT would raise at least tens of billions of dollars per year in badly needed revenue." One of the advantages of an FTT is that you only pay it when you want to (when you buy or sell), so there's no issue if you simply hold on to your investments -- or if you want to keep your money in your mattress.
And, of course, it's a highly progressive tax, because if you don't have money, you don't have money to invest. Which is why it's unlikely to happen in the US no matter how much sense it makes.
A FTT is part of Clinton's "Wall Street reform" platform:
Impose a tax on high-frequency trading. The growth of high-frequency trading has unnecessarily placed stress on our markets, created instability, and enabled unfair and abusive trading strategies. Hillary would impose a tax on harmful high-frequency trading and reform rules to make our stock markets fairer, more open, and transparent.
Even if the Dems take back the Senate (barely) and unseat some Repubs in the House, it's going to be tough fight to get it through.
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And, of course, [the FFT is] a highly progressive tax, because if you don't have money, you don't have money to invest. Which is why it's unlikely to happen in the US no matter how much sense it makes.A FTT is part of Clinton's Wall Street reform platform:
Impose a tax on high-frequency trading. The growth of high-frequency trading has unnecessarily placed stress on our markets, created instability, and enabled unfair and abusive trading strategies. Hillary would impose a tax on harmful high-frequency trading and reform rules to make our stock markets fairer, more open, and transparent.Even if the Dems take back the Senate (barely) and unseat some Repubs in the House, it's going to be be [a] tough fight to get it through.
Yes, it's part of the platform, and it's one more reason to vote for Clinton. But it's also highly unlikely to be implemented barring a landslide,.... which is yet one more reason to vote for Clinton.
But for those of you who keep saying "oh, there's no reason to vote for any of the mainstream candidates, because Clinton is just a tool of the plutocrats,".... well, no. But she can't actually stand up to the plutocrats without a lot of help from the voters.
Note that the FTT is usually proposed on the order of a small fraction of a percent.
So, um, this is when I point out that "now we're just haggling over the price"? (Tip of the pen to Winston Churchill.)
A 10% one would be devastating to anything not being held for years.
Awesome. Warren Buffett would love it, as would Jack Bogle, as would anyone else who wants the US economy to be based on long-term growth instead of moving money around from pile to pile.
As a sales tax, it would need to apply to any such transaction. Not just stocks, but bonds,cds and other safe places to park money. Want to shift out of the stock market as you near retirement?
As I said earlier, it's no big deal. By the time I'm ten years from retirement, I will have had my retirement portfolio for something like thirty or forty years, and the stocks in it will be up something like 800% to 3000%. A ten percent tax off the top would reduce those numbers to 720% to 2700%, which is still a very nice return on my investment. The fees I've been paying all these years because my retirement plan at work isn't very good probably dwarf what a one-time 10% tax would be.
But for some reason, no one's worried about a 1% annual fee (despite the fact that Investopedia calculates it to be equivalent to about a 30% hit on your returns).
True, but it also represents a significant penalty if you realize that you really need the money you invested to be liquid (I know, don't invest unless you don't need it for living right now, but life happens). That means it's harder for young people to dip their toes in before they have much of their finances squared away.
Whether that's a serious problem or just discouraging people from making a bad decision is in the eye of the beholder, but I think it's important consequence to consider.
Edit: also, thejeff's point was that it makes tweaking investment profiles expensive. Because shifting from 50% stocks now to 20% to reduce market exposure would mean taking a 3% haircut on your investment unless you leave it in cash. Probably not worth purchasing bonds unless they're exempted from the sales tax we're talking about here.
Don't they already?Also, that basically means that the government tracks all of my purchases which I am not comfortable with.Yeah, the problem with a federal sales tax is that it isn't a flat across the board tax, it is actually VERY regressive. The poor and most of the middle class tend to spend 100% of their incomes. So they will bear the brunt of the tax burden. Whereas the rich are able to save, invest, or otherwise do things with their money that do not incur sales taxation.Agree. That said, there IS a way to make sales tax work pretty well.
If you calculated an 'annual cost of living' and exempted all purchases up to that amount then, depending on how generous the 'cost of living' value was, you could allow most people to only pay sales tax on 'luxuries' above and beyond what they need to survive. Of course, then there would be an ongoing battle over the cost of living value with progressives wanting to include child care, college expenses, health care, et cetera and conservatives wanting to cut it back to only cover bread and water.
No reason for that to be the case.
The easiest way to implement such a system would be as a 'credit card' which starts out each year with an amount of sales tax to be voided. Every time you make a purchase your card is scanned and the sales tax deducted until the card is empty.
COULD the government track all of your purchases? Sure. Just as they could now. However, nothing in the proposal requires or authorizes such tracking.
They can't track my purchases if I pay in cash. Forcing me to carry a "tax credit" credit card is definitely going to be used to track my purchases.
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Edit: also, thejeff's point was that it makes tweaking investment profiles expensive. Because shifting from 50% stocks now to 20% to reduce market exposure would mean taking a 3% haircut on your investment unless you leave it in cash. Probably not worth purchasing bonds unless they're exempted from the sales tax we're talking about here.
Actually, I'm still cool with that, since overtweaking is one of the major problems that reduce the average investor's returns.
Goodness, the more of these objections that people come up with, the better idea it sounds. Just like using sin taxes as a public health measure to reduce smoking, using a "bad investment decision tax" to improve fiscal responsibility is starting to sound sensible and practical.
Don't they already?Also, that basically means that the government tracks all of my purchases which I am not comfortable with.Yeah, the problem with a federal sales tax is that it isn't a flat across the board tax, it is actually VERY regressive. The poor and most of the middle class tend to spend 100% of their incomes. So they will bear the brunt of the tax burden. Whereas the rich are able to save, invest, or otherwise do things with their money that do not incur sales taxation.Agree. That said, there IS a way to make sales tax work pretty well.
If you calculated an 'annual cost of living' and exempted all purchases up to that amount then, depending on how generous the 'cost of living' value was, you could allow most people to only pay sales tax on 'luxuries' above and beyond what they need to survive. Of course, then there would be an ongoing battle over the cost of living value with progressives wanting to include child care, college expenses, health care, et cetera and conservatives wanting to cut it back to only cover bread and water.
They can't track my purchases if I pay in cash. Forcing me to carry a "tax credit" credit card is definitely going to be used to track my purchases.No reason for that to be the case.
The easiest way to implement such a system would be as a 'credit card' which starts out each year with an amount of sales tax to be voided. Every time you make a purchase your card is scanned and the sales tax deducted until the card is empty.
COULD the government track all of your purchases? Sure. Just as they could now. However, nothing in the proposal requires or authorizes such tracking.
Forgive me for my ignorance, but doesn't the IRS track cash payments too? For purposes of laundering for instance?
Forgive me for my ignorance, but doesn't the IRS track cash payments too? For purposes of laundering for instance?
How would they know that I just bought a pizza? Big brother conspiracy theories aside
Or if they keep it hidden in various low amounts, Jeff.
I know this is a non-sequitur, but I can't stop giggling at Trump noseflags.
Forgive me for my ignorance, but doesn't the IRS track cash payments too? For purposes of laundering for instance?
No. As BNW pointed out, how could they?
At the state level, the government tracks cash payments on the seller side (to make sure they get their 6% sales tax on all sales, including cash sales), but there's no way to make the connection between any particular bag of chips being sold at a 7-11 and any particular customer who bought it.
If it's a transaction between two private parties, like at a garage sale, no one can track it at all.
They also track certain cash transactions at banks (for example, if you want to withdraw $10,000 in cash). The bank needs to make you sign a form, and it's illegal to withdraw $9,999 in the afternoon and then come back tomorrow morning for another $9,999, although people still try and sometimes get away with it. But once the cash is in your hand, people will not know what you did with it.
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*hides his Pathfinder collection* no one will know what I did with the money!! ;)
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A flat tax would be regressive.
Anyone who doesn't know what that means probably shouldn't be making tax policy recommendations...
A flat tax would be regressive.
Anyone who doesn't know what that means probably shouldn't be making tax policy recommendations...
Unless of course, your goal is to serve people like the Walton family by purposely making the tax system regressive.
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Next on Trump's list "Telling People in Philly their food sucks."
I know this is a non-sequitur, but I can't stop giggling at Trump noseflags.
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Yeah, the problem with a federal sales tax is that it isn't a flat across the board tax, it is actually VERY regressive. The poor and most of the middle class tend to spend 100% of their incomes. So they will bear the brunt of the tax burden. Whereas the rich are able to save, invest, or otherwise do things with their money that do not incur sales taxation.Agree. That said, there IS a way to make sales tax work pretty well.
If you calculated an 'annual cost of living' and exempted all purchases up to that amount then, depending on how generous the 'cost of living' value was, you could allow most people to only pay sales tax on 'luxuries' above and beyond what they need to survive. Of course, then there would be an ongoing battle over the cost of living value with progressives wanting to include child care, college expenses, health care, et cetera and conservatives wanting to cut it back to only cover bread and water.
All that really does is screw the middle class (or whatever you want to call the group that's just above the cost of living threshold).
Paulina Poor, making $15,000, will be living on bread and water, but at least she won't pay a sales tax.
Betty Billionaire, making $150,000,000, can live on caviar and champagne (at least until vitamin deficiency sets in), but won't care, because she literally can't spend more than $10,000 a day, or $3,650,000 a year, and thus pays no sales tax on about $146 million of her income.
And Molly Middleclass, making $150,000 (by a very generous view of the middle class) may be able to save $30,000, but since she's not living on bread and water, she pays tax on 80% of her income.
Betty gets more than 97% of her income tax-free, while Molly is paying taxes on all but 20% of it.
And Louise Lower-Middleclass, Molly's cousin, making $50,000, is lucky to save $3000... and is therefore paying tax on all but 6% of her income. So it's still a tax that heavily favors the extremely rich.
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In other news, Trump is now trying to tell the people of Nevada how to pronounce their state's name.
Which explains why Nevada went blue in the polls recently.
I was dating an accountant briefly and brought the subject up.... I kid you not she went beserk!
Not surprising... flat rate = no need for accountants!! :))
No. Fewer tax accountants certainly, but still plenty of accountants. Countries with a flat tax (e.g. Russia) still have accountants.
The similar statements when candidates say "I'll get rid of the IRS" make me equally incredulous. Are they just going to change the name? Fire everyone, and then hire new people?
Cause the government is still going to have to receive money if it's going to operate. You're still going to have to verify that people are paying the appropriate amount of money. The IRS isn't going away, except maybe in name. It's just going to move to a different part of the Treasury Department. It's not just a populist statement, it's a stupidly populist statement.
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In other news, Trump is now trying to tell the people of Nevada how to pronounce their state's name.
He's one school visit away from arguing with a teacher about how to spell potato, isn't he?
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In other news, Trump is now trying to tell the people of Nevada how to pronounce their state's name.He's one school visit away from arguing with a teacher about how to spell potato, isn't he?
Plllllllllleeeeeeeaaaaaaaassssssse let this happen if it hasn't already.
TRUUMP. That is all.
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All that really does is screw the middle class (or whatever you want to call the group that's just above the cost of living threshold).
Sure... but the point would be to set it such that the group spending just above the limit is generally called 'the wealthy'.
Also note, I'm not saying this is the greatest and most wonderfulest possible way to handle government revenue... just that it IS possible to have a sales tax which doesn't screw the poor and the middle-class.
Betty Billionaire, making $150,000,000, can live on caviar and champagne (at least until vitamin deficiency sets in), but won't care, because she literally can't spend more than $10,000 a day, or $3,650,000 a year, and thus pays no sales tax on about $146 million of her income.
Not likely. Yachts are expensive. Imelda Marcos spent millions of dollars on shoes. Sure, at a certain point you are making more than you can ever spend... but that's what the estate tax is for. :]
Please, Based Trump. Build a wall around Florida so that Hurricane Matthew does not pummel my home. (Srs)
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Only winners get reprieve from hurricanes. Pretty sure Trump will say its your fault for living there.
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Only winners get reprieve from hurricanes. Pretty sure Trump will say its your fault for living there.
God I hope it hits his golf course hard.
True, but it also represents a significant penalty if you realize that you really need the money you invested to be liquid (I know, don't invest unless you don't need it for living right now, but life happens). That means it's harder for young people to dip their toes in before they have much of their finances squared away.
Whether that's a serious problem or just discouraging people from making a bad decision is in the eye of the beholder, but I think it's important consequence to consider.
Edit: also, thejeff's point was that it makes tweaking investment profiles expensive. Because shifting from 50% stocks now to 20% to reduce market exposure would mean taking a 3% haircut on your investment unless you leave it in cash. Probably not worth purchasing bonds unless they're exempted from the sales tax we're talking about here.
Transactional Tax on investments probably doesn't make a lot of sense. What needs to be taxed is the profits from those transactions. Because that what makes sense and doesn't actually do the kind of harm that sense markets tanking. The same way you don't tax a writer based on how many books/stories he wrote, but how much he made from those books.
Granted it would increate the appeal of long term government bonds, which I guess wouldn't be bad for managing our debt.
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Transactional Tax on investments probably doesn't make a lot of sense. What needs to be taxed is the profits from those transactions. Because that what makes sense and doesn't actually do the kind of harm that sense markets tanking.
No, it's the transactions themselves. Look up the various "flash crashes" sometime. The basic issue is that high-speed, rule-based trading causes instability because the market is so responsive, it will steer itself into a tree. More formally, it amplifies systemic risk. Here's Investopedia's take on it:
One of the biggest risks of algorithmic HFT is the one it poses to the financial system. A July 2011 report by the International Organization of Securities Commissions (IOSCO) Technical Committee noted that because of the strong inter-linkages between financial markets, such as those in the U.S., algorithms operating across markets can transmit shocks rapidly from one market to the next, thus amplifying systemic risk.
The relationship between high-frequency trading and market instability is well-documented.
Granted it would increate the appeal of long term government bonds, which I guess wouldn't be bad for managing our debt.
Wouldn't matter, really. It would probably reduce our interest rate slightly in the long run, but very few people buy government bonds for the tax advantages. (They pay sufficiently low interest that most US taxpayers, including corporations, are usually about as well off buying taxable bonds and simply paying the tax; arbitrage traders make sure of this.)
They're usually bought as a method of controlling risk in your portfolio; the idea being that, since US bonds are more or less the very definition of risk-free (and by extension, return-free...) you can use them for capital preservation at the same time that you're buying orange groves and coffee plantations in Norway that you expect to make a killing on when global warming takes full effect.
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Trump on Hurricanes
Someone needs to take Trump's twitter away from him
Edit: thought Trump was speaking of the recent Hurricane but this was from 4 years ago. Not that it isn't equally as disgusting, but somewhat less stupid
How would they know that I just bought a pizza? Big brother conspiracy theories aside
Forgive me for my ignorance, but doesn't the IRS track cash payments too? For purposes of laundering for instance?
If the idea of cash were proposed today the government security folks would FLIP OUT.
"What, you mean untraceable currency that we have NO control over after we circulate it, and we have to pay to print it? Are you crazy?"
Seriously, look how the feds freaked out over bitcoin, and that has nothing on cash. The government security folks would LOVE for the country to go cashless.
Seriously, look how the feds freaked out over bitcoin, and that has nothing on cash.?
When did the feds 'freak out' over bitcoin? So far as I've seen they've mostly ignored it. Certainly haven't taken any significant action to regulate it.
I'm about to be tied up for a few hours, but I'll post some article links tonight.
Seriously, look how the feds freaked out over bitcoin, and that has nothing on cash.When did the feds 'freak out' over bitcoin? So far as I've seen they've mostly ignored it. Certainly haven't taken any significant action to regulate it.
Yeah, this. Congress hasn't passed any regulations, the IRS regs on virtual currencies focus mostly on Second Life, the CPFB hasn't done anything beyond conversations, and the only prosecutions have not been focused on virtual currency per se, but on classic pump-and-dump scams involving arbitrage between various forms of virtual currency. Or in less parliamentary language, counterfeit virtual currency (as though someone were trying to pass off Monopoly money as actual money).
There's absolutely no barrier under law to the use of Bitcoins as a medium of exchange for goods and/or services, although the IRS continue to enforce long-standing regulations that such transactions must be converted into dollar values and declared as income -- but that's true of barter transactions generally; if I swap my guitar collection for your car, the value of your car is supposed to be taxable income to me, and the value of my guitars is supposed to be taxable income to you -- of course, the value of my guitars is also a business expense, so it should balance out.
I don't see any "freaking out" there. Could you enlighten me?
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In today's news, 30 former Republican Congressmen have released a letter saying they cannot vote for Trump.
"In nominating Donald Trump, the Republican Party has asked the people of the United States to entrust their future to a man who insults women, mocks the handicapped, urges that dissent be met with violence, seeks to impose religious tests for entry into the United States, and applies a de facto ethnicity test to judges," they wrote. "He offends our allies and praises dictators. His public statements are peppered with lies. He belittles our heroes and insults the parents of men who have died serving our country. Every day brings a fresh revelation that highlights the unacceptable danger in electing him to lead our nation."
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Saying that nobody feels more than the way he does about things is a very common statement from him, like when he threatened to sue the Clinton campaign over an attack ad and said nobody had more respect for vets than he did. Like we're just going to forget his attack on a Gold Star family, or saying that soldiers suffering PTSD were weak, or that people who got captured couldn't be heroes?
Seems like smoke and mirrors to me - all part of his idea that people like the "best" stuff, so he will always try to portray himself as the very top of everything. But that's a pretty fragile house of cards when people look closely...
I don't find his statement from a few days ago about PTSD that outrageous. It could have been worded better, but it contains the context that the country has a responsibility to support and care for vets that are dealing with PTSD. Yes his statement could have been worded better, but in my view, as a vet with mental health issues, I didn't find his statement particularly upsetting.
Part of that may be my awareness of a phenomenon called "post traumatic growth". It's like PTSD, but instead of debilitating health issues, your mental resiliency actually improves. There are some theories as to why an individual goes one way instead of the other. Should an individual who experiences PTG instead of PTSD be considered stronger? Not really, but I think it's an issue of word choice more than sentiment.
I think there are a ton of other offensive things that Trump has said, that being inarticulate about mental health care isn't the worst thing in the world.
Part of Trump's problem is that host of other things; few are willing to give him the benefit of the doubt any more because he has been so crass so often.
I'm about to be tied up for a few hours, but I'll post some article links tonight.Seriously, look how the feds freaked out over bitcoin, and that has nothing on cash.?
When did the feds 'freak out' over bitcoin? So far as I've seen they've mostly ignored it. Certainly haven't taken any significant action to regulate it.
US Senators want to shut down bitcoin
Senator calls for bitcoin ban in letter to financial regulators
US Govt reaction to bitcoin is acknowledgement of dollar vulnerability
Federal reserve on bitcoin Ok, this one is biased as hell....
Homeland Security Forms Bitcoin Taskforce.
None of this even gets into the cries to abolish/regulate-to-death cryptocurrency after the silk road takedown.