A very simple economy plan. Feel free to shoot it down.

1. Keep (or increase) tax cuts for lower and middle class workers.

2. Reverse tax cuts on the top 10% of earners.

3. Do away with corporate tax cuts. Penalize any corporation that cuts jobs in the US to add jobs elsewhere, make it cost as much to employ an out-of-country worker as it would to keep the job here.

Fire away, I am not educated in economics but would like feedback.

I would add taking the "personhood" out of corporations...(I am not sure how to say it more succinctly than that...)

4. We have import taxes on imported goods, right? So, we need an import tax on imported services.
5. Remove tax breaks given for outsourcing jobs. (Cant believe we ok'd this)
6. Remove tax loopholes for the rich.

Trusts etc.

You can increase taxes on the wealthy all you want but they always figure out ways to avoid paying it.

Obviously I'm no economist either.

real problem is what the govt. DOES with the tax revenues.

That the top of the top don't receive much from wages as compared to 'deferred compensation' (ie stock options) and these need to be taxed above a certain amount.

Raise the minimum wage to $8.00/hr now, raised to $10 in NY, CA and other areas with extremely high cost of living.

Single-payer health-care for all

reverse Bush tax cuts, raise marginal rate on income over 100K to 35%, income over 200K to 40%, income over 300K to 40%, and income over $1 mil to 45%., close loopholes, increase capital gains and estate taxes.

Reduce regressive government taxes like passports, filing fees., PAY DOWN THE DEBT.

Impose penalties on companies that outsource, require that they pay the US minimum wage even offshore.

Stip corporations of personhood.

Corporate profits should be taxed at 5%, close loopholes.

I could go on and on...

Any economists here? What do you think about this site? Is this viable?

http://www.salestax.org/
Believe it or not the solution is simple - REPLACE the entire income tax system with the FairTax! The FairTax is a NATIONAL RETAIL SALES TAX; in other words, you would pay your federal taxes whenever you purchased a product or service. The FairTax means that the federal government would no longer withhold federal taxes from your paycheck - you get to keep more of what you make. You would no longer need to file federal income tax forms - the federal income tax system would be abolished. And under the FairTax all families will receive a monthly tax rebate check.
http://www.salestax.org/

Most rational economists (those who aren't locked into Austrian school thinking) will tell you that this is a tax that overcomplicates the tax system and tends to undertax the most wealthy.

Remember, those who make $50 million per year might live EXTREMELY comfortably on 2% of their income. That means they'd pay, for instance 20% of 2% of 0.4% taxes. Someone who makes $50 THOUSAND a year spend nearly all of it just to have some level of comfort and security. So, they'd pay 20% of $50k or 20%! Now, the first X% of all spending could be exempt, but the merchants couldn't possibly know who has hit that limit or not. So, people at the back end would have to file for exemptions by saving all receipts. But, since they wouldn't be able to go through an entire year paying the extra 20%, they'd need to file at least quarterly. WHAT A NIGHTMARE!

It's a terrible idea, fraught with injustices. I don't care how nicely dressed up that website is, putting earrings on a pig doesn't change the fact that it's still a pig.
The Professor

It taxes each and all equally. Of course, the benefit is that it focuses on spending not earning. From the opinion that taxes are a form of disincentive, it is arguably better from a macro-economic viewpoint to discourage spending than to discourage earning.

But I'm not an economist either.

than middle- and lower-class earners. The rich a much lower percentage of their income on taxable goods. There is no way to make it progressive. That alone is a reason to oppose it.

There is no way a 5% sales tax could replace the current federal income tax. And the "rebate check" idea is a pipe dream designed to lure potential supporters with false dreams of sugar plums.

Let's look at home ownership. A rich person can pay cash for a home. The rest of us go for a 30-year mortgage, deducting our mortgage interest every year. That deduction would be lost, and I doubt very much that we'd see an offset in the taxes we pay.

Such a plan also favors those without children who have fewer retail expenses on necessesities like clothes and school books (also, the child deduction would be lost) and FOOD - their plan does NOT exempt food from the sales tax. Very family unfriendly.

This sounds like a plan that favors the wealthy and corporations. Sales taxes are regressive! Ask yourself - would you like to pay a 10% sales tax on everything you buy if you make $40k per year? That leaves you with $36k for the year. A millionaire would pay $100,000 but keep $900k. Much easier to accept that as a deal.

And, check out this from their website:

The ugly facts.
When the income tax was instituted in 1913 the tax form was four pages long and you would had to have earned more than $300,000 (in 1994 dollars) to be even required to file a return.

Now, THAT sounds good to me. Go back to the original intent and have those making over $300k file a return and exempt the rest of us.

Check out their FAQs here: http://www.fairtaxvolunteer.org/smart/faq-main.html

Looks worse and worse the more you look at it.

Someone emailed me the site and I was, like, duh, I dunno, seems skewed, and why the hell was Delay all for it back in 2003, but what the hell do I know?

But now, thanks to your expertise and explanations, I now can pretend I have a clue! DUers, you guys rock!

Their most conservative estimates show that about a 40% sales tax would be required in order to generate the revenues current taxes generate.

Not to mention the panel's also said that Americans would not go along with any tax system that isn't progressive in nature. So I wouldn't worry too much about those "Fair" tax systems.

I won't hold my breath. :eyes:

But as I learned more, realized it's full of holes. I don't paint it as 'Evil' as some on DU will surely do, but rather, shortsighted.

Wealth is required to answer peoples needs. It is also used to meet people's wants.

Creating Wealth requires inputs from LABOR, CAPTIAL, and LAND.
Labor is work done by people, by brawn or brains, as the saying goes.
Capital is man made equipment, machinery, buildings, etc., that are used in production. Do not confuse Capital with money - they are not the same.
Land includes all natural resources, land, spatial locations, electromagnetic spectra, minerals, fossil fuels, water, etc.

In the act of creating wealth, each of these FACTORS OF PRODUCTION recieves a payment: WAGES go to labor, INTEREST goes to capital, and RENT goes to land.

Typically, labor will attempt to find the highest available wages. People will move, or change professions, etc. Witness the influx of central americans into north america. Competition between individual and group suppliers of labor keeps wages low, no higher than is necessary to attract the labor.

Capital, too will attempt to find the highest available interest. In fact, capital behaves almost exactly like labor. It will be moved, or built where it can maximize it's interest. In most cases, capital can move internationally far easier than labor can. Just like labor, competition between capital suppliers keeps interest low, no higher than is necessary to attract the capital.

You may have a few questions at this point, more than likely they are due to the desire by some economists to conflate capital and land. Bear with me. Land, or rather land owners will attempt to find the highest available rent. It cannot be moved, however it does have a monopoly on the particular location it represents. It will absorb any surplus in production - leaving only the bare minimum for wages and interest.

Once the wealth has been produced, it is traded for something else, typically money. In the absense of taxes and regulation money is then divided up among the owners of the factors of production. If the sale is taxed, a portion of the sale goes to the government. However, the presence of the tax reduces the demand for the product - which forces producers to produce less and accept a lower price and yet forces consumers to pay a higher price. Because production is lowered, fewer inputs from the factors of production are required - which in turn, reduces the demand for labor, capital, and land.

In short:
Taxing sales reduces sales, which reduces wages, interest, and rent, as well as raising consumer prices.
Taxing labor reduces demand for labor, which increases unemployment and lowers wages.
Taxing capital reduces demand for capital, which reduces interest and reduces the demand for capital: which lowers demand for labor, capital, and land.

Which leaves LAND.
Taxing land reduces the demand for land. However, because land is not produced, this tax comes completely out of the owner's share of rent. The price of land is set entirely by demand. IOW, the consumer price remains the same, and the producer owner price reduces, with the difference going to the public purse.

Even honest conservative economists will admit that taxes on land are the least harmful, economically. More libeeral economists will tell you that they are actually beneficial:
1) they enforce conservation of resources
2) they encourage dense compact urban development
3) they force producers to trade LABOR efficiency for LAND efficiency:
A) Small land efficient organic farms v. large, labor efficient corporate farms
B) Small land efficient shops v. large parking lot labor efficient big box stores
C) Small land efficient restaraunts v. large labor efficient fast food shops
4) since they take away the speculative value of land, overall demand for land is reduced - lowering consumer prices as well, and putting urban sites to highest and best use.
5) they make housing costs (40% of most incomes) more affordable
6) they put labor to full employment, raising wages.

Marginal tax rates, as long as they stay below confiscatory rates (which my models show are about 45%) do not negatively impact economic health.

The reduction of those rates, which lower gov't revenues, that are not matched with TRULY ACROSS THE BOARD spending cuts (that means everything, not with exemptions for "mandatory" spending or defense, but not SS or Medicare because that's a different tax system) is what negatively affects economic growth. The velocity of money is NOT increased when tax rates go down, and as we've seen in the 80's and now, employment does not improve and median incomes do not go up when tax rates are dropped.

It's simple: Deficits bad. Tax rates that allow revenue to match outflow, good. Raising high earner rates a few percent hurts them not a whit, and increases revenue. Now, one needs to be very careful about corporate taxes. The Clinton administration had them about as high as they should go, before the increase in taxes causes price increases to compensate. That results in potential decreases in consumption which can be followed by unemployment rise, and inflation.

But, your idea is fine. Both theoretically and practically.
The Professor

decades. I mean when it was substantially higher your economy was really thriving, I believe; very high employment, tremendous synergies?

And hasn't the multiple of the income of your CEO's over their median worker, quite gratuitously, become absolutely obscene and counter-productive?

it into social programs that will lift people out of poverty.

Point 3 has a lot of problems. If you raise costs for US corporations, by raising taxes and forcing them to use labor at US rates, they cannot compete globally. There will be too much competition from overseas corporations who don't have those burdens. So, the US wouldn't generate jobs and our situation might actually get worse.

We need another approach to achieve the goals you have in mind. My suggestion would be to impose tariffs on all imported goods based on wage rate differences. For products produced in countries with wage and benefit rates similar to ours, there would be no tariff. For products from third world countries where wages and benefits a significantly less than those in the US, there would be a high tariff.

This would encourage US companies to build their products here, not abroad. It would also help US companies to succeed here and not just give up to the low wage Asian companies.

might actually get worse".

I suspect "might" is the operative word (as you, indeed, perhaps may consider "suspect" is). An awful lot of jobs could be created at home.

How about investments too? Is the entitlement to invest in foreign companies sacrosanct for any good reason? I very much doubt it. Keynes reckoned even the UK could be self-sufficient, so the possibilities for a country the size of a continent must be mind-blowing.

and are, in effect, a wealth transfer from consumers to the protected producers.

Evidence has not shown that tariffs raise wages, or even keep jobs here. Look at steel.

Blocking imports while attempting to maximise exports was the goal of Mercantilism, it didn't work then, and it won't work now. It would, however, fit in with the modern American penchant for imperial warfare.

If you want to create jobs in the US, stop taxing jobs in the US: The payroll tax is a 15.3% tax, federal income tax on most jobs is 15-20%, state & local income taxes are 7-8%. That is a sum total of some 40% tax on the 'price' of labor. Put another way, it costs an employer $70,000 to 'buy' a $50,000 employee. I do not know what the elasticity of labor demand is, but I damn sure know that taking away that 40% tax on labor would employ a lot more people.

Taxing the ownership of or the returns to capital reduces demand for labor as well - as long as it's man-made capital. Of course, capital is pretty lightly taxed today.

Doesn't leave much to tax, especially if we remain stuck in the mindset of discussing what kind of income tax we need.

They've offered a sales tax: this, too, is an indirect tax on wages, would raise consumer prices, stifle commerce, reduce employment, and enrich no one but the exporters and the land owners.

I offer a land value tax - with a small homestead exemption. Such a tax does not bear on labor at all, nor does it stifle productive investment. It does stifle consumptive investment - land being one of the few portions of our economy that is actually zero-sum.

Such a shift would require that individual states take over (or retake) more functions of government. As this occurred, I'd favor 'rolling up' taxes from the bottom - starting with the payroll tax. Note that there are Federal lands, and various things that the federal government could tax with same 'don't touch labor' effect.

Get rid of Bush

a year..

on imported goods and services? make raw materials exempt. seems like that would make actually manufacturing within the US more attractive

If you do that, domestic producers have no foreign competition that forces them to hold down prices and improve quality. We'd see higher prices, poorer quality, and bigger bonuses to company execs who fleeced the public. Not a good idea.

We need a tariff based on relative wage rates and living conditions. That would eliminate the cost of labor, benefits, and environmental regulations from the business cost model. We could also lower business taxes somewhat using the revenues generated by the tariffs.

We'd see a huge return of manufacturing to the US. The job market would boom and our nation's wages would start to grow in relation to productivity gains (instead of falling under Repugs).

It's fun to tinker with this stuff. Here's mine:

1) Income tax: No tax on first $20K of taxable income, and tax rates of 15% on next $30K, 25% on next 50K, 40% on excess. ALL deductions phased out when income from all sources, including net gains, exceed $500,000.

2) Dividends taxed at income tax rates. Long Term Cap Gains at 25%.

3) Estate Tax: A tax at the generational level (ie, surviving spouses not taxed on deceased spouse's estate, no matter how large) on estates exceeding $5 million at 50% on the excess.

***

The only thing I'm too unfamiliar with to comment about is corporate taxation. I have thought that the "double taxation" problem as regards dividends might be solved by simply withholding income paid as dividends from taxation at the corporate level. But what is a proper rate and how should income be computed? I can't even posit a rough idea of that, and I have an accounting degree!