Proposed tax plan for the USA

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Jebus
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Proposed tax plan for the USA

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Here is the tax plan I would recommend if I were the American president:

Flat tax rate 20% above $30000. Hence, those who make under $30k per year pay no income tax, while those who make 50k would pay 20% of the amount exceeding 30K (i.e. 20% of 20000= $4000).

Remove VAT on necessary and encouraged products, such as basic plant-based food products, bus and train travel, basic apartment rent, while raising the VAT on unnecessary and discouraged products, such as luxury cars, air travel, meat, alcohol, and cigarettes.

Now, I can hear the republican yell in my ear that the economy will be damaged and unemployment will rise if people stop buying luxury cars. Although I only have basic knowledge of economics I suspect this is bullshit. Wouldn't the economy simply adapt and create different employment areas if people stopped buying Corvettes?
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brimstoneSalad
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Re: Proposed tax plan for the USA

Post by brimstoneSalad »

Sales tax is state by state, there's no federal sales tax in the US. Sales tax is pretty regressive in the U.S. and is applied across the board in many states (some exclude unprepared food items, like at grocery stores).

Just revising that system to have sales tax only on luxury goods would go a long way, but Republicans would have a fit and Democrats would prefer income tax anyway. The only exception is for things like cigarettes and alcohol which may have additional taxes. (There may be rare local exceptions too, but I don't know of any)

It's also a problem that this wouldn't take into account child tax credits or anything like that.
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Re: Proposed tax plan for the USA

Post by AKiry »

According to standard economics, if people are indifferent between two choices e.g car or public transport, then a price change in one will cause an increase in demand for the other (this is known as the substitution effect). How much they substitute will depend on an individuals perceived cost of replacing the one item for the other and the gain achieved by having the one over the other. I suspect that those who are not indifferent between a luxury car or a less expensive one will simply pay more to have the luxury car since any alternative will have a higher cost to them (in terms of not having their favoured car) than the increase in price. Otherwise they will substitute and the economy is the no worse.
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Re: Proposed tax plan for the USA

Post by AKiry »

It is an interesting tax plan. Currently, the lowest 25% of Americans earn around $22,000 so under this scheme they would not pay any income tax. The extra money these people have they could then save or spend which is still a boon to the US economy. The highest 20% of earners would pay around $16,400 while the top 5% would pay around $35,300. It's pretty close to the current tax level. I would also propose an increase in the capital gains tax to make up for some of the lost revenue; this would target the wealthiest since the poorest generally don't invest in the stock market and other financial instruments. Sources used:

http://www.taxpolicycenter.org/statistics/household-income-quintiles
https://www.irs.com/articles/projected-us-tax-rates-2016
https://www.investopedia.com/articles/personal-finance/101515/comparing-longterm-vs-shortterm-capital-gain-tax-rates.asp
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Jebus
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Re: Proposed tax plan for the USA

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brimstoneSalad wrote: Sun Dec 10, 2017 6:23 pmIt's also a problem that this wouldn't take into account child tax credits or anything like that.
It's a problem in the sense that the majority of the people would be against it. However, if I were president I would want to discourage lower income families from having children, hence no tax credits or allowances.
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Jebus
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Re: Proposed tax plan for the USA

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AKiry wrote: Mon Dec 11, 2017 11:11 am It is an interesting tax plan. Currently, the lowest 25% of Americans earn around $22,000 so under this scheme they would not pay any income tax. The extra money these people have they could then save or spend which is still a boon to the US economy. The highest 20% of earners would pay around $16,400 while the top 5% would pay around $35,300.
Interesting stats.
AKiry wrote: Mon Dec 11, 2017 11:11 amIt's pretty close to the current tax level.
Do you mean it's close in terms of tax money collected by the government?

AKiry wrote: Mon Dec 11, 2017 11:11 amI would also propose an increase in the capital gains tax to make up for some of the lost revenue;
Don't you think a VAT increase on unnecessary and health/environmental damaging products would make up the difference? I'm not sure about the capital gains tax. The profit margin on stocks is so razor thin as it is.
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brimstoneSalad
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Re: Proposed tax plan for the USA

Post by brimstoneSalad »

Jebus wrote: Mon Dec 11, 2017 11:32 am
brimstoneSalad wrote: Sun Dec 10, 2017 6:23 pmIt's also a problem that this wouldn't take into account child tax credits or anything like that.
It's a problem in the sense that the majority of the people would be against it. However, if I were president I would want to discourage lower income families from having children, hence no tax credits or allowances.
That wouldn't just affect lower income families, it would affect middle income families too.
No amount of fines, taxes, or jail time will prevent accidents, kids are pretty stupid. If you want to prevent children coming into bad situations you need social programs and education.
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Jebus
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Re: Proposed tax plan for the USA

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brimstoneSalad wrote: Mon Dec 11, 2017 11:42 amThat wouldn't just affect lower income families, it would affect middle income families too.
Good, I don't want most of the middle class to have children either.
brimstoneSalad wrote: Mon Dec 11, 2017 11:42 amNo amount of fines, taxes, or jail time will prevent accidents, kids are pretty stupid. If you want to prevent children coming into bad situations you need social programs and education.
I agree about the social programs and education, but how is that relevant to the discussion?
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brimstoneSalad
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Re: Proposed tax plan for the USA

Post by brimstoneSalad »

Jebus wrote: Mon Dec 11, 2017 11:47 am I agree about the social programs and education, but how is that relevant to the discussion?
It won't stop most of them from having children, it will just make their lives shittier because now you've taxed them into poverty.
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Jebus
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Re: Proposed tax plan for the USA

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brimstoneSalad wrote: Mon Dec 11, 2017 11:59 amIt won't stop most of them from having children, it will just make their lives shittier because now you've taxed them into poverty.
"Taxing them into poverty" is an exaggerated statement. Especially since I've just presented a tax plan that will benefit the poor. What you are suggesting is that those who decide not to have children will (in effect) pay even more (in addition to increased education and healthcare costs) for those who do decide to have children.

It would stop some of them from having kids which is a positive. The other positive is that the government would have more money to spend on things that will make most of the people (and animals) happier.
How to become vegan in 4.5 hours:
1.Watch Forks over Knives (Health)
2.Watch Cowspiracy (Environment)
3. Watch Earthlings (Ethics)
Congratulations, unless you are a complete idiot you are now a vegan.
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