"Fair Tax" - Another Nan Nightmare

Does Nan want a fair tax or a flat tax? (0.00 / 0)

If we assume that without government there is no accumulation of wealth, because there are no laws and no police/armed forces to protect that accumulation of wealth, then it stands to reason that the wealthiest are the ones who benefit most from government.

By good conservative concepts that those who benefit should be those who pay; it therefore stands to reason that the wealthiest should pay the most for government.  That's why a graduated income tax rate is a good conservative concept.

Of course, getting self-described "conservatives" to accept this is another matter.

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by: Dan Jacoby @ Sat Oct 02, 2010 at 19:20:48 PM UTC

That would be an incorrect assumption. There is (0.00 / 0)

accumulation of wealth in Somalia, specifically, in the south where there is no real government rather than Somaliland or Puntland where there is.  In fact, the south is where the Coca-Cola company opened its bottling plant in 2004.

The most productive and capable are less and less in need of what a nation-state can provide and more and more heavily taxed so those states can provide those services.  No one wants the US to become Somalia, however, we no longer have the tax base to support the government we have now.  

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by: John Minehan @ Sun Oct 03, 2010 at 19:24:23 PM UTC

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There is a government (0.00 / 0)

Without governments, such as the U.S. government, there is no Coca-Cola.  Corporations are fictional creations, sanctioned by governments.  Absent "official" government, only a feudal system where the de facto government is the landowner (unless you have a prince overseeing it all, in which case the prince is government) can accumulate wealth.

Any accumulation of wealth in southern Somalia, therefore, is due to the presence of the U.S. government forces in the area, either directly (through military intervention) or indirectly (through payments to neighboring governments).

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by: Dan Jacoby @ Sun Oct 03, 2010 at 19:41:16 PM UTC

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Flat tax again? (0.00 / 0)

rolls eyes.

If we don't tax income and interest and dividends and capital gains, people who just accumulate money - the Gordon Gecko's who are just in it for the game - will never pay any taxes.

If the conservatives are so anxious to impose a regressive tax, why not raise the tax on Gasoline, lets say, $1.00 per gallon. At least we'll be helping the environment.

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by: Amherst Guy @ Sat Oct 02, 2010 at 19:53:07 PM UTC

I'd like to see an analysis (4.00 / 1)

It appears to me that every time we create a large spread between income tax rates and capital gains tax rates we get a bubble.

My theory is that lowering the capital gains tax rate doesn't increase the demand for venture capital, but does increase the supply.  As a result, a lot of venture capital will go into bad investments (like pets.com) because there aren't enough good investments for all that supply.

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by: Dan Jacoby @ Sat Oct 02, 2010 at 20:46:54 PM UTC

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How can you, or anyone, with a straight face, tax money that was earned (0.00 / 0)

and then invested into something productive?  Do you understand where businesses get money to expand?

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by: John Minehan @ Sun Oct 03, 2010 at 19:26:49 PM UTC

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Cart before the horse (0.00 / 0)

There is no business, or anything productive -- at least not for any decent length of time -- unless there is demand for the product or service.  By creating an oversupply, which a large spread between income tax and capital gains tax does, you generate an oversupply of something.

In the early 1920s, it was land sales in Florida.  When that bubble burst, the money went into stocks and new investment creations (an early version of derivatives).  In the mid-1990s, it was the tech bubble, followed by the housing bubble.

We can argue over the ethics of double-taxation until we're blue in the face, but you cannot deny the historical impracticality of wanting extremely low (or, as it appears in your case, no) taxes on capital gains while work is taxed at a much higher rate.

One more thing:  By taxing capital gains at a rate much closer to income earned through work, you encourage production in a manner that rewards the actual producers in such a way as to create the demand that balances the supply.  By creating a spread between the two, the only way people can buy what is being produced is by going into debt, which is what, over the decades, has led to our present disaster.

There is an economic theory, popularized in the 1930s by Upton Sinclair, that states (put in simplistic terms) that production will always exceed possible consumption, and that government should create and hand out money to people in order to balance the equation.  For more, Google "Upton Sinclair" and "EPIC" (which stood for "End Poverty In California").  I'm not sold on his ideas, but they do provide interesting fodder for discussion and debate.

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by: Dan Jacoby @ Sun Oct 03, 2010 at 19:57:05 PM UTC

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