T Nation

Tax Reform Panel

[quote]vroom wrote:
Rainjack, because the media we watch and read is so dominated by the US, the issues of the day, and the thinking of the day, has a lot of due with influencing thoughts north of the border.

So, I don’t see why you have to take potshots when I’m actually agreeing with you on something, but you’ve missed the mark.
[/quote]

The pot shots are for you using so many we’s and ours in your previous post.

I’m fairly sure you can talk about the U.S. tax policy without sounding as if you are more a part of it than paying into SS a few years ago.

[quote]rainjack wrote:
The pot shots are for you using so many we’s and ours in your previous post.[/quote]

You mean in this…

That way we can point to it and bitch at our government and they’ll feel compelled to simplify our lives too.

Sorry dude, but I have to call reading comprehension on you. Here is what it obviously means:

That way we (Canadians) can point to it (your system) and bitch at our (Canadian) government and they’ll (the Canadian government) feel compelled to simply our (Canadian) lives too.

Pbltpblt. If you weren’t looking so hard to find fault with everything, you wouldn’t find it so often. Anyway, keep trying to make sure I don’t associate myself too closely with Americans, I know it is vital to national security!

[quote]rainjack wrote:
Zap Branigan wrote:
Because it would suck to pay 20% of 30,000 while someone else pays nothing and makes 29,999.

The way it would work - at least under the Forbes plan would be that everyone is exempted for the first $30K. So if I made $29,999 - and you made $30,001, you would only pay $0.20 in tax - not $6,000.20[/quote]

That makes too much sense. We cannot let this happen!

[quote]vroom wrote:
rainjack wrote:
The pot shots are for you using so many we’s and ours in your previous post.

You mean in this…

That way we can point to it and bitch at our government and they’ll feel compelled to simplify our lives too.

Sorry dude, but I have to call reading comprehension on you. Here is what it obviously means:

That way we (Canadians) can point to it (your system) and bitch at our (Canadian) government and they’ll (the Canadian government) feel compelled to simply our (Canadian) lives too.

Pbltpblt. If you weren’t looking so hard to find fault with everything, you wouldn’t find it so often. Anyway, keep trying to make sure I don’t associate myself too closely with Americans, I know it is vital to national security![/quote]

Sorry vroom - I failed to read it the way you said it.

I apologize.

[quote]haney wrote:
ZEB wrote:
Just create a flat tax where there are no write offs for the “rich.” And zero taxes paid for anyone making under 30-K per year. The flat tax could be 20%.

How could anyone hate that?

that doesn’t answer how would you tax a business?[/quote]

You don’t. End the double tax.

[quote]Garrett W. wrote:
haney wrote:
ZEB wrote:
Just create a flat tax where there are no write offs for the “rich.” And zero taxes paid for anyone making under 30-K per year. The flat tax could be 20%.

How could anyone hate that?

that doesn’t answer how would you tax a business?

You don’t. End the double tax.[/quote]

well if we are talking about fair across the board than this would be an issue.

under our current system business have huge write offs because of what they buy. If you are proposing what I think you are then that would work out great for me. I would never pay taxes at all. It would not be evenly balanced though for the average joe who works.

I think you could tax business income once at the corporate level - either a flat tax or one with one or two gradations (a “flatter” tax, if you will). Eliminate the dividend tax entirely.

Reduce deductions and write offs in exchange for the elimination of the dividend tax.

[quote]BostonBarrister wrote:
I think you could tax business income once at the corporate level - either a flat tax or one with one or two gradations (a “flatter” tax, if you will). Eliminate the dividend tax entirely.[/quote]

That should have been done years ago.

There are really not that many deductions a business can take apart from the expenses involved in the generation of income.

Depreciation is probably the only expense that can be considered a write off, but only when you use first year expensing of depreciable assets (Section 179, and 168).

Eliminating tax credits is a whole other ball game, however.

[quote]haney wrote:
Garrett W. wrote:
haney wrote:
ZEB wrote:
Just create a flat tax where there are no write offs for the “rich.” And zero taxes paid for anyone making under 30-K per year. The flat tax could be 20%.

How could anyone hate that?

that doesn’t answer how would you tax a business?

You don’t. End the double tax.

well if we are talking about fair across the board than this would be an issue.

under our current system business have huge write offs because of what they buy. If you are proposing what I think you are then that would work out great for me. I would never pay taxes at all. It would not be evenly balanced though for the average joe who works.

[/quote]

How would you ever not pay taxes? Do you not take any money out of your business for personal expenses? Is everything you own purely for business use?

[quote]Garrett W. wrote:
haney wrote:
Garrett W. wrote:
haney wrote:
ZEB wrote:
Just create a flat tax where there are no write offs for the “rich.” And zero taxes paid for anyone making under 30-K per year. The flat tax could be 20%.

How could anyone hate that?

that doesn’t answer how would you tax a business?

You don’t. End the double tax.

well if we are talking about fair across the board than this would be an issue.

under our current system business have huge write offs because of what they buy. If you are proposing what I think you are then that would work out great for me. I would never pay taxes at all. It would not be evenly balanced though for the average joe who works.

How would you ever not pay taxes? Do you not take any money out of your business for personal expenses? Is everything you own purely for business use?[/quote]

Currently My business owns the majority of my possessions. most vacations I take I usually have business associated with it so there are write offs that come with my trips. It is not that I don’t pay taxes. Lets assume my business really only make 1 dollar profit and everything else is an expense how much tax will I pay on that dollar?

Hrm… Difficult situation. Big-time audits are due.

If of course you weren’t making money, you’d get moved into a hobby bracket a lose all write-offs, which I feel should also be the case for people who are deliberately trying to shuttle money through their business should be audited and addressed accordingly. Perhaps a system to determine if the write-offs are real or used to hide taxes?

I think a simplification and correction of write-offs would be necessary. I think corporatations should take profits and just tax them at the individual level (ie with dividends). But many of these other areas of write-offs that a vague. (My “business” trips between home and school etc.) Perhaps a % of write-offs in these grey areas should be capped. I really don’t know the answer and am kinda rambling. Fair enough to say what I propose wouldn’t work with the current situation of write-offs.

(I know vacations are 1099 as income for the self-employed. Perhaps something similar for the individual occurs. But I’m not really sure.)

[quote]Garrett W. wrote:
Hrm… Difficult situation. Big-time audits are due.

If of course you weren’t making money, you’d get moved into a hobby bracket a lose all write-offs, which I feel should also be the case for people who are deliberately trying to shuttle money through their business should be audited and addressed accordingly. Perhaps a system to determine if the write-offs are real or used to hide taxes?

I think a simplification and correction of write-offs would be necessary. I think corporatations should take profits and just tax them at the individual level (ie with dividends). But many of these other areas of write-offs that a vague. (My “business” trips between home and school etc.) Perhaps a % of write-offs in these grey areas should be capped. I really don’t know the answer and am kinda rambling. Fair enough to say what I propose wouldn’t work with the current situation of write-offs.

(I know vacations are 1099 as income for the self-employed. Perhaps something similar for the individual occurs. But I’m not really sure.)[/quote]

In my opinion the only way to really tax a business would be with a consumption tax. Nothing is a write off then. I would not be rewarded for how I handle things currently either. Until then I will continue to follow the guidelines set up by the system. I would prefer change even though it would come at a cost to me and my business.

That is also my problem with a flat tax too. It leaves too many exemptions in its current proposed state.

[quote]haney wrote:

In my opinion the only way to really tax a business would be with a consumption tax. Nothing is a write off then. I would not be rewarded for how I handle things currently either. Until then I will continue to follow the guidelines set up by the system. I would prefer change even though it would come at a cost to me and my business.

That is also my problem with a flat tax too. It leaves too many exemptions in its current proposed state.
[/quote]

My main problems with consumption taxes are: 1) it would turn businesses into the de facto tax collectors for national government, with all the attendant record-keeping and reporting burdens that would come with such a role; and 2) You’d have the negative incentive on commerce that is currently in place on investment via cap gains and dividend taxes, but it would be much bigger in the short run because it would be a change from 0 to taxed-to-death in an instant – I don’t know that it would be a good idea to create such an economic disincentive for transaction/consumption activity.

Other than makng business the tax collector - I think a consumption tax is in many ways superior to a flat tax if it is done within certain parameters.

  1. Some goods and services should be exempted from taxation, or at the very least credits extended to cover certain goods or services. For individuals that should be credit for purchase of food, basic clothing and shelter. For business - it should be any raw materials, or work in process that is purchased for resale. Even with a consumption tax, goods and services should not be subject to double taxation. That makes most of the purchases made in a manufacturing exempt until it reaches the end consumer.

  2. All other taxes must be abolished including fuel taxes, social security taxes, medicare taxes, capital cgains taxes, death taxes, and any other tax or fee that is hidden - such as the federal surcharge you pay on you phonebill.

There are other things that need to be looked at and abolished, or tightened up before a consumption tax would be palatable - but those are the two main things I see that must be done.

[quote]BostonBarrister wrote:

My main problems with consumption taxes are: 1) it would turn businesses into the de facto tax collectors for national government, with all the attendant record-keeping and reporting burdens that would come with such a role; and 2) You’d have the negative incentive on commerce that is currently in place on investment via cap gains and dividend taxes, but it would be much bigger in the short run because it would be a change from 0 to taxed-to-death in an instant – I don’t know that it would be a good idea to create such an economic disincentive for transaction/consumption activity.
[/quote]
The pros are we become a save incentive economy instead of a consume and spend economy.

It is not perfect, but it is certainly appealing if you remove the cap. gains tax.

[quote]BostonBarrister wrote:

My main problems with consumption taxes are: 1) it would turn businesses into the de facto tax collectors for national government, with all the attendant record-keeping and reporting burdens that would come with such a role;[/quote]

Are businesses not already the de facto tax collectors for state and local sales taxes? In most states the federal tax portion would likely be included in regular monthly or quarterly filings, then forward to the feds by state revenue department. It would add some record keeping and reporting overhead, but I disagree that it would be a huge burden.*

*(If it’s done right, which of course is always a big caveat when you’re dealing with government bureaucracy.)