Why income tax is nessecary

from JoeUser Forums
I am currently researching for my point. Please be patient. - (EDIT) Ok. I found the website I was looking for. Though I agree that the income tax is flawed, and it needs reformation, those that suggest we abolish it don't see the problems asosciated with such an act. The biggest problem is that there is a huge industry based around income taxes (the accounting industry). Chicago sun times estimated that it was a 200 billion dollar industry. That would make it worth 10% of all the revenue of the government, and 2% of the US's GDP. That would be a huge thing to loose. Further, I haven't been able to find any stats, but I wouldn't rule it out that the marekt vaule of all the accounting corporations is more than 2 trillion dollars. They would sustain a cripling loss in value if they loose their income tax accounting income. This would hurt the 331,000 certified public accountants (American Institute of Certified Public Accountants), the public who own the stock in these companies and the economy as a whole. I agree that there need to be some changed in the tax structure, and I am up to a discusion on whether lower tax rates actually increase tax revenues, but the point is that income tax is an essential and integral part of our society and our economy and ending it would be a massive problem. Thanks for listening to my thoughts. Sandy2
politics
8,335 views 23 replies
Reply #1 from JoeUser Forums Top
double post
Reply #2 from PolMach Forums Top
Hehe thats pretty funny. You see that we spend $200B on accountants and tax lawyers and say "we can't make taxes more simple because a lot of these people would lose their jobs, lose invested money, etc."

I see that same statistic and say "Its ridiculous that we have to spend 2% of our GDP in order to pay taxes because they're too complicated for people to understand, either enact a flat tax thats simple enough for anyone to fill out on a postcard or eliminate the income tax and replace it with a tax on land value."

I strongly disagree with your logic. The same argument could be made that we should illegalize air travel because it hurts the bus and railroad business, or that we should outlaw the internet because less people go to libraries. If your logic was applied to every situation, then we'd never progress. Besides, many of those CPAs are employed within companies to do bookkeeping so their jobs would still be safe, and the rest would be able to find new job opportunities because businesses would have to spend less on preparing their taxes so they could spend more on expanding their operations.

Theres also the fact that our current tax system put american companies at a disadvantage against companies in countries with simpler tax codes, meaning that more companies would move away from america, hurting the american economy in every way.
Sins of a Solar Empire II
Reply #3 from JoeUser Forums Top
Thanks for replying. I was hoping to start a discusion. First of all, I agree that it is ridiculous how complicated our tax system has become. But you suggest that the CPA's jobs would be secure because they belong to companies that do more than one thing. Realize that these companies would have to cut 200 billion in costs, and the first thing that goes are jobs. Think about it this way. At 200,000 dollars a year, 200 billion dollars employs 1 million people. 200 billion dollars would bankrupt the entire accounting industry. Second, you point to airlines and the bus system. The government started the income tax before the accounting industry adapted to the system. It would be the governments fault entirley if they suddenly dropped something that these companies have been relying on, and that they developed around. Even further, you compare libraries to the internet. I would argue that the internet has helped libraries more than it has hurt them.
Theres also the fact that our current tax system put american companies at a disadvantage against companies in countries with simpler tax codes, meaning that more companies would move away from america, hurting the american economy in every way.


Name a company that has left the USA.

Reply #4 from PolMach Forums Top
"Name a company that has left the USA. "
-Accenture, an accounting firm based on the remnants of Arther Anderson moved to Bermuda. Ingersoll-Rand, an "American" construction equipment manufacturer also moved offshore.

A company only needs their "headquarters" to be in a foreign country to get foreign company tax benefits. They still might have alternate offices and employ thousands of people in america. But the bottom line is that they aren't paying business taxes.
Reply #5 from JoeUser Forums Top
so basically, you're in favor of an entitlement mentality?

You are saying, in essence, that job retention for accountants is more important than tax reduction, in essence forcing the American public to underwrite their chosen profession. This is a false economy, nothing less.

The income tax system as it stands is incredibly ridiculous. The dollars made by the manufacturer are taxed, the dollars earned by the employee are taxed, the products purchased by the employee are taxed, even the labor hired out by joe six pack is supposed to be taxed. It is crippling the lower class, and the "lower rich" pay a ridiculous amount of taxes because they can't afford the loopholes of their wealthier counterparts. When the "Tax Freedom Day" (how long you have to work to pay your taxes) is in JUNE, that means we're paying an absurd amount of taxes, much of it going to government boondoggles and wasteful programs.

There are many different proposals out there, and, since I am not an accountant, I can't tell you which ones make sense. But I CAN tell you the income tax system as we know it needs to change if we want to deal with the fiscal mess we've created to pass on to our children.
Reply #6 from JoeUser Forums Top
Income tax needs to be changed. But it need not be abolished. If income tax is to be abolished, then it is the responsibility of the government to let accountants know that over the next twenty years we will slowly phase out income tax and switch to such and such a tax system. I also don't agree that income tax is inherently flawed. The reason it is currently so flawed is that there are so many ridiculous tax deductions that may or may not apply to you. I agree that it is technically an invasion of ones privacy to know how much money one is making, but since that data is not available to other government agencies except the IRS (or at least it is not supposed to be), and that it is held confidential, it is not a complete invasion of privacy (as parts of the patriot act are). I started this forum because what I want is a discussion on how everyone feels we should fix our tax system (reasonably). I meant by this article to try and show that radical changes are not practical. If I failed in this I apologize. How do you propse we fix the tax system? (Cwarsh I have seen your article on the LVT and respect that, but I am looking more for a discussion on how to work with what we have rather than completley get rid of the current system. I am certainly up to a discussion on how to supplement a reduced income tax with a LVT). Thanks everyone.
Reply #7 from PolMach Forums Top
The United States of America use to only tax businesses and certain products and that is where the problem is.

One of the reasons why The United States of America has an income tax is simply because businesses owners claim themselves as employees and paid themselves all of the remaining amount of which they made (businesses profit). Thus they did not have to pay any taxes or very little for their business. Clever huh?...

Also, income tax just use to be utilized during wars, the civil war being the first real income tax in history for The United States of America.

But before The United States of America had a continuing income tax, The United States government (specifically the President) asked for handouts from Rockefeller and other rich business owners for handouts or The United States government would have to basically claim bankruptcy. Pretty horrible huh?...

I would love not to pay taxes as a worker forever but it's never going to happen, unless everything is state ran which is basically a pure form of Socialism which essentially Communism.

I myself (and my family and friends) are actually getting paid by The United States Government by tax refunds with all the new tax laws and credits. Basically I'm paying nothing and getting a check in the mail every fiscal year... Wierd huh?... And no I'm not giving an intrest free loan to Uncle Sam! Just to straighten all you accountants out there.

But here is a strangest thing... When President Clinton was in office I (among everyone I knew) had absolutely no money to pay their income taxes with and some eventually turned to using their credit card. The economy was at it's worst, although people will tell you it was at its best when President Clinton was in office all I remembered is everyone saying "How are we ever going to pay our income tax?" I'm not joking, it was that bad. And we haven't had a surplus in the treasury while President Clinton was in office we never had a surplus since 1969 when President Nixon was in office and the Vietnam war was going on. As wierd as that sounds The United States Government can be driven on a war economy pretty easily.

But since I don't want Communism I would rather see some tax reforms when President Bush is in office or when he eventually leaves but I don't want it to be like when President Clinton was in office.

Just to let all you economic people out there know that we can have the substantial debt we currently have because our productivity is high but I realize it's getting to the point where the productivity is meeting with the national debt and thats a big no-no. When it meets, I think taxes should be a little higher so The United States Government can counteract it.

I could'nt imagine living in a country that didn't have any debt and wouldn't live in a country that hasn't expirenced it recently or has some existing debt.

But I could'nt imagine living in a country that didn't have an income tax too.
Reply #8 from JoeUser Forums Top
Actually clinton did have a surplus. In '99 it was a 115 billion surplus.

Reply #9 from PolMach Forums Top
"But before The United States of America had a continuing income tax, The United States government (specifically the President) asked for handouts from Rockefeller and other rich business owners for handouts or The United States government would have to basically claim bankruptcy. Pretty horrible huh?..."
-A lot of libertarians believe that thats how the US government should be run- by private donation. They believe that its unconstitutional or unfair for the government to make anyone do something if they don't want to, including paying taxes. Actually, if the government was reduced to the barebones organization that libertarians believe in, I think it would be possible... just not practical. You would probably be able to get enough donations from people who appreciate it.. but then you have the problem of people who use the services of the government but then aren't paying....etc. Also, because donation would be entirely voluntary, the wealthiest people would have far to much power over the government.... right now if they live in america, they have to pay their taxes. Under this system, if they live in america they can ask the government for preferential treatment and then give a contribution... of course thats pretty much how it works already but you know what I mean.
Reply #10 from JoeUser Forums Top

preserving the federal income tax to protect the livelihood of tax accountants/tax attorneys  makes about as much sense as not decriminalizing the use of narcotics and other drugs of abuse because itll put dope dealers outta work (with apologies to any tax accountants and/or attorneys who read this..and the same goes for you dope dealers: neither group has done anything to deserve me besmirching your chosen vocation with such a slanderous comparison but i needed a simile).


to add to the absurdity, this year tax preparers began enthusiastically outsourcing the actual 'work' component of their trade and even more tax returns will actually be prepared in india in the future--at least til someone in on the other end realizes the lucrative potential of the personal data theyre being given.  so the actual effect of killing the federal income tax must be balanced against the potential loss of revenue for american companies like levi-strauss and nike caused by failure to reach projected sales of their products which are themselves outsourced elsewhere.


the global implications are earthshattering if not worse! this debacle could eventually force the us to begin growing and processing its own opium poppies and coca plants just to make up for the shortfalls elsewhere.


 

Reply #11 from JoeUser Forums Top
Also, how can anyone say that it is unconstitutional to pay taxes? There is an ammendment specifically related to taxes- stating that the federal government may force people to pay tax on their income, and that congress can enforce this with legislation including jailing.

Reply #12 from JoeUser Forums Top
You could always have a national sales tax. Government would get plenty of money and those accountants could find different jobs.
Reply #13 from PolMach Forums Top
The problem with a national sales tax is that it shifts the tax burden onto more Americans. Poor Americans usually have to spend a very high percentage of their income just to get buy, while richer Americans, although they might be spending alot more in dollars, can afford to spend a very low percentage of their income, and invest or save the rest.

An example of how this might work is that someone with a relatively low monthly salary, let's say %1,500 a month would probably ending up spending atleast 50% of that on whatever he or she needs to get by. A rich American, making say $50,000 a month might end up spending much more than the poorer American, but it would probably still be only 20%-30% of his salary tops.

Therefore, the poor American would pay taxes on 50% of his income at the same rate that the rich American would be paying only 20%. Would that really be fair?? It would be hard for the poor American to even put food on the table while the rich American enjoys a fantastic tax reduction.
Reply #14 from JoeUser Forums Top

matt: But you could exclude basics from a national sales tax.  For instnace, food could be excluded.  You could even exclude houses/rent where the value is below a certain level. Health care could be excluded.  Essentially you could come up with a way where the necessities of life, as determined by our citizenry, wouldn't be taxed at all.

 

Reply #15 from PolMach Forums Top
Yeah, an NST would be essentially the same thing as a flat tax, and in both cases you have to make some exemptions at the bottom. For example, you might have a 18% flat tax with you first $15,000 in income not taxed. OR under an NST every person would get a $2500 credit and would pay maybe 20% sales tax. A problem with an NST might be that selling to foreigners would be more difficult. Foreigners shouldnt have to pay an NST, so you would have to have special paperwork for sales to foreigners, and then that could be taken advantage of etc.

I still like LVT the best. Theres no hiding land, if you own land you pay the tax.
Reply #16 from PolMach Forums Top
matt: But you could exclude basics from a national sales tax. For instnace, food could be excluded. You could even exclude houses/rent where the value is below a certain level. Health care could be excluded. Essentially you could come up with a way where the necessities of life, as determined by our citizenry, wouldn't be taxed at all.


This is a great idea, at least in some shape or form. Lower the taxes on "neccesities", increase taxes on "luxury goods". Actually income taxes should be abolished completely not only because of the reasons everyone else here has listed but because it is illegal and unconstitutional to collect income taxes from the American public (we have IRS agents and judges breaking the law daily). Of course we'd have to make up for at least a portion of that government income, but a lot of it is being wasted on IRS agents and judges who have to interpret tax codes anyways.
Reply #17 from PolMach Forums Top
under an LVT couldn't people just rent land or invest money in other things and avoid paying much in the way of taxes? Or is there some way to make sure that doesn't happen?

And I guess a National Sales Tax could be made to work. It would definitely make paying taxes a lot simpler. One question though is if and how corporations would pay taxes under a national sales tax. And I guess I'm still a little concerned that the rich could avoid spending money by saving or investing it and pay considerably less taxes than they do now. but it certainly is a plan with a lot of potential, it may just need to be smoothed out.

One thing that will complicate the situation though is people selling good and services without taxing them. I would imagine that there would be a big black market for that. Currently, since cigarette taxes are so high people illegally sell them tax free. Horribly, we found that Hezbollah, a Middle East terrorist group, was selling cigarettes in the U.S. illegally and using the money to fund their terrorist operations in Israel. If an NST were instituted law enforcemnt would have to be increased significantly to deal with illegal sale of goods
Reply #18 from JoeUser Forums Top
Someone said that foreigners wouldh ave to pay NST and that would be somewhat dificult. All that would happen is that when ever you purchased something, a tax would be added so even foreigners would pay with no special paperwork. I believe that there should also be a National Services Tax and a National Wealth Tax (that taxes a portion of your accumulated wealth, therefore the wealthy would pay at least a little more taxes, but then again they should if they are accumulating wealth because the police and the government protect that wealth from being stolen and insure the banks from failing.
Reply #19 from PolMach Forums Top
Foreigners shouldnt have to pay an NST, so you would have to have special paperwork for sales to foreigners, and then that could be taken advantage of etc.


Cwarish

The rest of your post was good and I liked it, but why not have foreigners pay? They use our services too. The only exception is that they don't get the same rights in court (that's if the ACLU don't get that changed), but they don't have duties either like Jury duty and military draft.

This would be away for even illegal emigrants to pay. Also think of all the people who could simply renounce their citizenship to avoid taxes.

When I lived in Germany I could have easily turned in a stack of waver and got my taxes back. It just didn't feel right when I did because those Polizie were protecting my too.
Reply #20 from PolMach Forums Top
"but why not have foreigners pay? They use our services too. The only exception is that they don't get the same rights in court (that's if the ACLU don't get that changed), but they don't have duties either like Jury duty and military draft."
-Take this for an example- foreigners don't currently pay income tax.
I shouldn't have said foreigners, I should have said residents. If your primary residence isn't in america you shouldn't have to pay NST. For example, tourists, people here on business, or even people that have second homes (that they don't spend the plurality of their time in) shouldn't have to pay. They don't get to vote either, it would be blatant taxation without representation. Also, the VAT which most european countries employ is similar to an NST, and if you're a tourist or there on business theres a way that you can show your reciepts and get what you paid in VAT refunded.

"under an LVT couldn't people just rent land or invest money in other things and avoid paying much in the way of taxes? Or is there some way to make sure that doesn't happen?"
-IF a person rents land, they have to be renting it from a person that owns the land, who would have to pay the LVT. The owner would have to pass down that cost to his rentees. Also, yes under an LVT people would buy less land and invest more in companies, but remember this- every company needs land, whether its for an office or fatory or farm, whatever.
Reply #21 from JoeUser Forums Top
When a tourist from california visits Michigan they have to pay michigan sales tax. By the same token, why shouldn't tourists have to pay sales tax in this country?
Reply #22 from PolMach Forums Top
They don't get to vote either, it would be blatant taxation without representation.


Cwarsh

Good point. I like it.

I don't agree though. It falls into the same reasoning that foreigner should have the same legal rights to courts, this is what the ACLU fighting for. But the constitution lacks any good definition on that. I personaly believe the constitution gives no rights for foreignes. If they are here then they either join us or must follow a style of court system like thier own country with our laws(but no tax exemption). I think the only way to clean that mess ip is a new constitutional ammendment.

But thats a whole diffrent post.
Reply #23 from PolMach Forums Top
Citizen sandy2

No offence but you are way off, you are talking about a deficit and not actual debt.
President Clinton only stop the rising of the national debt, there was no surplus of debt but only with trade.
The The United States of America has been in debt for a long time and will probably be in debt for a long time, if not forever.

Debt is not a bad thing, it just depends on the debt.
For instance, for everyone who has a house or a graduated college student, a house loan or student loan is debt but its an investment of who you are and will eventually pay itself off and make you profit down the road. Just as true with The United States and the citizens of The United States.

Also, when debt is paid off it is paid with money that is worth less in the future do to inflation, so it won't really cost as much as one says.
But I believe, as a Keynes believer, that when the debt is really out of controll (debt rising while productivity goes down) then you have some problems.

Although I agree that The United States of America should be support by having donations from corporations I didn't like it how the only time that donations were asked was when The United States of America was on the verge of economic collapse. Eventhough it didn't happen, it was a very close call.

Also by asking these corporations and companies to donate in todays world might not happen since there are subsidiaries in other countries, so they wouldn't necessarily want to help or nothing could happend to them if they didn't. But I also know that there are some that would help, the question is would it be enough after major budget cuts?...

About legality of taxation pertaining to the constitution, its not unconstitutional by any means because it was voted in by the representitives who speak on behalf of the people. If the representitves didn't think it was in the best intrest of what the people wanted but voted it in, it would be political suicide. Theres always the chance the amendment could be tossed out later in history and be brought back in, since history has a tendency to repeat itself.