A radical new idea for taxation, your thoughts please.

It will proberbly turn out that this is not that radical at all and has been around for years but it's radical to me right now.

I would like to ask that whilst considering this idea we do so not from a personal perspective but from a viewpoint for society as a whole.

I do not understand the taxation laws for most nations but in the UK the standard method of taxation is Pay as you earn.

Put simply you get 10 grand a year to earn tax free and then pay 20% on everything over 10 grand, then after 30 ish grand you pay a higher rate and so on.

The crazy idea I had and bear in mind it is new years day and I am not fully over the excess of last night is instead of taxation being based yearly that it was cumulative over the course of your life.

In essence you would start with an inflation linked lifetime limit of tax free allowance and have bands that kick in at certain threshholds gradually getting higer and higher as your personal lifetime income increases.

I think there are some positives and negatives in this but will refrain from going into them now to see if anyone else has an opinion.

a reply to: nonspecific


Are you talking about a "progressive" tax system like in the US?


Flat tax with NO exemptions is the better way to go. Simple, easy, no more lobbyist favors, less corruption, easy, fair, etc.

I am not sure how it works in the US I meant that you would have a tax allowance for your entire life and only paid the relavant amount when you had hit certain lifetime earnings.

a reply to: infolurker

a reply to: nonspecific

Ah, I see.


Here is the problem with that... say I have been making $120 thousand for years. Now I am older, lost my job of 20 years and I have to work a much lower paying job, say $30 thousand a year.

Since I made much more earlier in life, now I have to pay a much higher tax now that I am going bankrupt?

As I said there are pro's and cons, is 120k a decent amount of money where you live? Had my proposed system been in place could you have made provisions in terms of savings and investments that would have made your current circumstances better now than if you had gone down the route you have gone down?

Have you on reflection lived beyond your means believing that things would always be the same?


a reply to: infolurker

a reply to: nonspecific

Anything inflation linked is a no-go. Inflation numbers are manipulated by central banks and the numbers are routinely cooked by governments.

a reply to: nonspecific

Tax the rich and leave the poor alone, its as simple as that!

After all it stands to reason that you chase the people with the money rather than the people without. Anything else is simply counter productive, essentially a waste of time. Even hard core debt collection agency's understand that simple concept. Government agencies on the other hand, well they do say "stupid is as stupid does" fits that lot like a glove if you ask me.

My crazy idea would in a sense do just that when you are young and low paid you have additional funds to save for a house if you choose to, If you decide to travel or take time out you get to keep your tax allowance for a later time.

If you have limited potential you are able to work a crappy but important job and still have a half decent quality of life.

It would also encourage early retirement making way for progression in the younger generations.

a reply to: andy06shake

a reply to: nonspecific

Personally I have always thought the flat tax rate was the way to go.20% across the board for everyone and its a done deal. Auto paid in,no need for the IRS,Just auto taken out.

originally posted by: andy06shake
a reply to: nonspecific

Tax the rich and leave the poor alone, its as simple as that!

After all it stands to reason that you chase the people with the money rather than the people without. Anything else is simply counter productive, essentially a waste of time. Even hard core debt collection agency's understand that simple concept. Government agencies on the other hand, well they do say "stupid is as stupid does" fits that lot like a glove if you ask me.

That is what happens now. The rich pay the vast majority of taxes with nearly 50% not paying anything. The problem is government can't stop promising money to everyone else and spending like a drunken sailor. You could take every dime of the top earners and it still would not be enough.

Everyone needs some skin in the game. I don't care how poor you are. Either that or only certain tax payers should be allowed to vote.

originally posted by: Dimithae
a reply to: nonspecific

Personally I have always thought the flat tax rate was the way to go.20% across the board for everyone and its a done deal. Auto paid in,no need for the IRS,Just auto taken out.

I agree. Flat tax, no deductions of any kind. All income treated the same. I also believe tax day should be the day prior to elections. I would also like to get rid of paycheck withdrawals. People need to see and feel how much they pay in taxes and hold politicians accountable.

For tax systems to work they need to be simple to understand. The OP sounds rather complicated.

Regards

a reply to: Edumakated

"That is what happens now. The rich pay the vast majority of taxes with nearly 50% not paying anything"

Um, where? Where do "nearly 50%" not pay anything? That's a sweet deal, but not my understanding of any nation's tax system---even the poorest get taxed on cigarettes, property, etc.

"You could take every dime of the top earners and it still would not be enough."

Quite a claim---here are the top 5 of 2014.

Bill Gates is worth 81 BILLION. Warren Buffet is 74 BILLION. Carlos Slim is 72 BILLION. Ormancio Ortega is 60 BILLION. Larry Ellison is 55 BILLION.

342 BILLION Dollars for the top 5 richest people. This is just under the GDP of South Africa, or overthe GDP of Israel, or Denmark, or even Hong Kong.

You have points about government spending and bailouts, but man, it's not like they're bailing the citizens out. They're bailing out corpo-nations, bailing out each other.

"Either that or only certain tax payers should be allowed to vote."

I have no words for this.

Here's the list of Billionaires---www.forbes.com...
Here's GDP's as listed by the UN, IMF, or the World Bank---en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

How about dump extortion .. erm.. taxes entirely and telling all the politicians no more free ride go get real jobs and actually work for a living ..

I would say that it is less complicated, until you hit a lifetime threshold you pay no tax, once hit you pay tax.

This would mean billions would not be involved at anyone time reducing admin?

Maybe it is less simple than I imagined.

a reply to: paraphi

a reply to: Edumakated

You cannot take something from people who do not have anything I'm afraid. Cannot get blood from a stone ether. As to only allowing a specific demographic to vote. Well there goes any notion of democracy I'm afraid.

We need to change the distrabusion of wealth in order for any taxation to function effectively. And in order to do that we need to remove a significant proportion of the rich from our society's I'm afraid.

a reply to: kismetpair927

I'm not going to do you homework for you, but the CBO publishes data as to who pays federal income taxes. Look it up. The bottom 50% of wage earners pay no FEDERAL income taxes. Yes, they pay consumption taxes and local taxes, but that is not the topic. In fact, the poorest actually have -9% tax rate meaning they are getting paid by the government, not paying. The top 1% of wage earners pay 30% of the tax burden. If that isn't progressive enough then I really don't know what else can be done. To claim the "rich" aren't paying their fair share is just plain ignorance.

From Professor Walter Williams, noted economist at Stanford. "This year, Congress will spend $3.7 trillion dollars. That turns out to be about $10 billion per day. Can we prey upon the rich to cough up the money? According to IRS statistics, roughly 2 percent of U.S. households have an income of $250,000 and above. By the way, $250,000 per year hardly qualifies one as being rich. It's not even yacht and Learjet money. All told, households earning $250,000 and above account for 25 percent, or $1.97 trillion, of the nearly $8 trillion of total household income. If Congress imposed a 100 percent tax, taking all earnings above $250,000 per year, it would yield the princely sum of $1.4 trillion. That would keep the government running for 141 days, but there's a problem because there are 224 more days left in the year."

And yes, I believe only tax payers should be voting. People need skin in the game or else they don't realize the consequences of their vote. Our Republic will fail (as it is now) when voters figure out they can vote themselves other people's money. You cannot have half the population voting to take the earnings of the other half and also have politicians promising favors to the no paying half to be paid for by the productive. It simply will not work long term.

a reply to: andy06shake

How does getting rid of the rich help you? How would your life be better if there were no Bill Gates? You realize these people are immensely wealthy because they created something of value on a large scale. In the process of becoming worth $50 billion or whatever Gates is worth nowadays, how many millionaires and other billionaires did he create? How many jobs? Microsoft employs how many tens of thousands of people? We haven't even gotten to the other companies that have thrived because of Microsoft? The charitable contributions? I can go on and on.

What is crazy is you cannot tax the rich if there are no rich people. See how convoluted your thinking is? What poor person has ever given you a job? What is the point of taking risks and working hard if there is no reward for your efforts?

a reply to: Edumakated

I highly appreciate that you did lead me to the CBO site for further reading on the subject, and the quote you provided does give a great deal of perspective.

for continued reading: www.cbo.gov...

(Published November '14)

I still disagree about the voting thing, but admittedly, it is because I don't believe the outcomes of elections is decided by votes or voters. But I can see your point and appreciate the response.

a reply to: Edumakated

It's not about just helping me its about helping one another and a fair days pay for a fair days work!

Less rich people means wealth could be distributed more evenly hence more equality among our population. Then you can tax people fairly and generate a more stable revenue stream simply because people are on a more even keel. We don't need more millionaires or billionaires we need parity among the masses. The uneven distribution of wealth simply creates more and more of a social divide between the haves and the have nots of society and simply brings us one step closer to economic oblivion.