Is a fair flat tax possible?

[ParanoiA]

The average worker pays (your amount scaled by the amount of income) $65 a year for the federal highway system; since money is fungible you can't tell if that went to the highway close to your home, or somewhere far away from home. It doesn't matter. What D H was referring to (AFAICT) was your accounting of the services you used. He asked "Have you done a full accounting of the goods and services you receive" IOW, did you actually think through all of the tax-funded details that you take for granted. e.g. compared to the common tolls we see on other highways, did you use $65 worth of the federal system? There's a local toll road that costs about 30 cents per mile, so you only need 220 miles of highway driving to have gotten your money's worth.

 

Did I use any foodstamps? No. Section 8 housing? No. Do I receive farming subsidies? No. Do I use Medicare? No. Damn, that piece of the highway I'm using is getting pretty damned expensive.

 

But that doesn't matter anyway, because my disparagement of the confiscation method in trade for goods and services was not based on value, but on economic models of managing scarcity. If D H meant to challenge me on the value I get, then he missed it too. I'm talking about economic models, since ydoaPs tried to characterize state confiscation methodology as "payment for goods and services", emphasis mine.

 

Let's review what I actually said:

 

It's also the worst goods and services solution I've ever been a part of since my taxes are not the least bit proportional to the "goods and services" I received.

 

Like I said, my taxes are not proportional to the goods and services I receive, as I do not see the math on my tax forms that connects the two. I may be receiving way more than I deserve, or I may be receiving way less than I'm paying for, or it may vary from year to year. But it most certainly is not proportional to each other by any consistent pricing scheme - again, an exception to the rules that private business has to follow.

 

I believe that is a shitty way to do business. The worst solution I've seen yet for goods and services. I'm not sure if pricing by race or religion would be worse or better.

 

See? From the very beginning my argument was about lack of proportion between taxes and government provided goods and services, an economic criticism not a value argument. I even conceded I may be getting more than I deserve (bolded).

 

 

There's a line between payment and confiscation, and I don't charaterize confiscation as a moral economic model. It's merely a pragmatic reality of government operations - the government has to have funds to operate and it can't be usage sensitive. I accept that. I don't, however, display pride about it on political boards. The fact that humans need an external force at all, government we call it, to keep them decent to each other is another example of something we should not be "proud" of.

 

The fact that individual accounting of specific government goods and services consumed per individual doesn't exist, proves there is no deliberate link between what one consumes and what one sacrifices for it. In terms of economic models, since its being characterized as payment for goods and services, the closest model that resembles is a command economy. If you dont like the analogy, then I would guess you dont like the characterization of it being a payment for goods and services either.

 

You are, of course, free to move to a place that doesn't collect taxes at the figurative point of a gun.

 

And just so I don't have to post 5 more times what I didn't say, I'll say again, the only point I was making with this is that it's only better than any alternative we've thought of so far.

 

Well, so much for that…

Edited February 11, 2011 by ParanoiA

[D H]

Here you go

 

http://www.npr.org/b...ipt?sc=fb&cc=fp

That is not even close to the accounting to which I was asking referring. That accounting tells people the projects that their taxes are funding. I am asking for something I've never seen expressed: What is the monetary value of a well-maintained road system, of a well-defended country? How does these monetary values apportion to the citizenry? How does this apportionment depend on a citizen's wealth or income? My guess, and it is just a guess, is that value received from the government is greatest at the extremes of the wealth/income scales. The government does spend a lot on the behalf of the poorest and the richest members of society.

 

My point is that since the benefits from switching to a flat tax system will accrue primarily to the rich, how can such a tax be called "fair" without knowing how the spending on the rich compares to the taxes paid by the rich?

 

[swansont]

That is not even close to the accounting to which I was asking referring. That accounting tells people the projects that their taxes are funding. I am asking for something I've never seen expressed: What is the monetary value of a well-maintained road system, of a well-defended country? How does these monetary values apportion to the citizenry? How does this apportionment depend on a citizen's wealth or income? My guess, and it is just a guess, is that value received from the government is greatest at the extremes of the wealth/income scales. The government does spend a lot on the behalf of the poorest and the richest members of society.

 

My point is that since the benefits from switching to a flat tax system will accrue primarily to the rich, how can such a tax be called "fair" without knowing how the spending on the rich compares to the taxes paid by the rich?

 

I understand; I thought it was something like the accounting that ParanoiA was asking for, but I was wrong about that.

 

I tend the agree. A well-maintained road system allows businesses to increase profits, which benefits the rich quite a lot, and also makes cheap goods available, which benefits the poor a lot. Defending the borders has an increase in benefits as you move up the economic scale, because the richer you are the more you have to lose, and while poor have little to lose, and I would hazard a guess that being poor in a poor country is generally worse than being poor here (which explains why we have an influx of poor immigrants).

[ParanoiA]

Defending the borders has an increase in benefits as you move up the economic scale, because the richer you are the more you have to lose, and while poor have little to lose...

 

Little to lose except their livelihood, jobs. Influx of cheap labor means exactly that. And for jobs that can't be paid under the table, there's the supply and demand of working poor laborers that drive down prices and saturate openings. Markets eventually catch up, but there's a huge lag time there and it never catches up as long as the inputs keep increasing.

 

Now, the playstation poor won't feel much, but the working poor will.

[swansont]

Little to lose except their livelihood, jobs.

 

This might mean something if you hadn't truncated my quote.

 

Did I use any foodstamps? No. Section 8 housing? No. Do I receive farming subsidies? No. Do I use Medicare? No. Damn, that piece of the highway I'm using is getting pretty damned expensive.

 

Is this a promise to never use medicare? What about social security? Because you tend to run through what you paid in after only a few years of retirement. How much of the military did you use last year? (We weren't invaded, as I recall). Did you use GPS? Weights and standards? I assume you purchased things over the course of the year, by weight or volume. How much is not getting ripped off by someone selling you .95 gallons when you think you're getting a whole gallon (of milk, or gasoline) worth to you?

 

 

Well, so much for that…

 

You didn't make it clear that what you didn't say wasn't referring to the progressive tax system or the fact that it (like multitudes of other things) are enforced by law, and the police are armed.

[ParanoiA]

Is this a promise to never use medicare? What about social security? Because you tend to run through what you paid in after only a few years of retirement. How much of the military did you use last year? (We weren't invaded, as I recall). Did you use GPS? Weights and standards? I assume you purchased things over the course of the year, by weight or volume. How much is not getting ripped off by someone selling you .95 gallons when you think you're getting a whole gallon (of milk, or gasoline) worth to you?

 

I may never use Medicare at all. What if I die tomorrow? I won't use any of that stuff that in the future - but my family will sure have to pay inheritance tax huh?

 

Or will I use medicare because the government failed to protect me from a mugger?

 

What about when I got robbed? What happened to that money I gave for police protection? Do I get a refund?

 

Standards are only invented by the government? Funny, I seem to remember a certain standards institute...totally private...hmmm..

 

This might mean something if you hadn't truncated my quote.

 

The truncation has nothing to do with making or breaking my point. Add it back if you want, I just thought it was distracting from the italicized part I wanted to address.

[lemur]

The average worker pays (your amount scaled by the amount of income) $65 a year for the federal highway system; since money is fungible you can't tell if that went to the highway close to your home, or somewhere far away from home. It doesn't matter. What D H was referring to (AFAICT) was your accounting of the services you used. He asked "Have you done a full accounting of the goods and services you receive" IOW, did you actually think through all of the tax-funded details that you take for granted. e.g. compared to the common tolls we see on other highways, did you use $65 worth of the federal system? There's a local toll road that costs about 30 cents per mile, so you only need 220 miles of highway driving to have gotten your money's worth.

 

Do you have to pay a toll when you leave your county to a place where you don't pay property tax?

 

 

 

You are, of course, free to move to a place that doesn't collect taxes at the figurative point of a gun.

I think it's misleading to suggest that $65 a year is a bargain for highways. I don't know what portion of the bill is paid by higher tax brackets, but how can you feel charitable by funding a highway system that promotes your income to a disproportionately greater degree that all those workers who are supposedly getting such a bargain because of your contribution? I think interstate highways are beneficial in many ways, but they also seem to promote a lot of superfluous travel and business that may fill the pockets of some, but when does anyone who is poor complain that these highways promote lifestyles that they will never gain access to? What's more, maybe many poor or economically-alternative people don't want the kind of economy facilitated by the highways and yet they are supposed to be grateful for it. I'm not actually that opposed to having these interstate highways and free interstate commerce, but I do think there's too much arrogance in the attitude of people who simply assume that such an economy is an imperative and anyone who would do things otherwise has to hold their own against "the mainstream" or sink and join it. There must be a way to allow infrastructural progress without the automotive hyper-commuting culture it seems to bring with it spiraling to excessive levels.

[swansont]

I may never use Medicare at all. What if I die tomorrow? I won't use any of that stuff that in the future - but my family will sure have to pay inheritance tax huh?

 

Or will I use medicare because the government failed to protect me from a mugger?

 

What about when I got robbed? What happened to that money I gave for police protection? Do I get a refund?

 

Again, an obtuse view, bordering on appeal to ridicule.

 

Standards are only invented by the government? Funny, I seem to remember a certain standards institute...totally private...hmmm..

 

Hmmm indeed. You won't name it? I'm supposed to believe there is a non-government entity certifying the kilogram out there?

 

The truncation has nothing to do with making or breaking my point. Add it back if you want, I just thought it was distracting from the italicized part I wanted to address.

 

The italicized part is what you truncated. I said the poor have little to lose, except for the fact that being poor here is better than being poor elsewhere, which is why poor people emigrate here. Which is a lot like the point you made in your response, but you wouldn't know that if you just read the quote. Truncating it makes it seem I said something different.

 

I think it's misleading to suggest that $65 a year is a bargain for highways. I don't know what portion of the bill is paid by higher tax brackets, but how can you feel charitable by funding a highway system that promotes your income to a disproportionately greater degree that all those workers who are supposedly getting such a bargain because of your contribution? I think interstate highways are beneficial in many ways, but they also seem to promote a lot of superfluous travel and business that may fill the pockets of some, but when does anyone who is poor complain that these highways promote lifestyles that they will never gain access to? What's more, maybe many poor or economically-alternative people don't want the kind of economy facilitated by the highways and yet they are supposed to be grateful for it. I'm not actually that opposed to having these interstate highways and free interstate commerce, but I do think there's too much arrogance in the attitude of people who simply assume that such an economy is an imperative and anyone who would do things otherwise has to hold their own against "the mainstream" or sink and join it. There must be a way to allow infrastructural progress without the automotive hyper-commuting culture it seems to bring with it spiraling to excessive levels.

 

I don't see how promoting superfluous travel is a tax issue. As many are fond of pointing out, the poor generally don't pay much in income taxes (actually, they are fond of incorrectly claiming that the poor pay no taxes at all, but looking at the receipt will show that social security, medicare and medicaid are huge chunks of the tax burden for the average taxpayer, and virtually anyone with income pays those taxes). So the poor aren't "promoting" it at all. But many of them benefit in the form of cheaper goods and a wider variety of goods.

[lemur]

I don't see how promoting superfluous travel is a tax issue. As many are fond of pointing out, the poor generally don't pay much in income taxes (actually, they are fond of incorrectly claiming that the poor pay no taxes at all, but looking at the receipt will show that social security, medicare and medicaid are huge chunks of the tax burden for the average taxpayer, and virtually anyone with income pays those taxes). So the poor aren't "promoting" it at all. But many of them benefit in the form of cheaper goods and a wider variety of goods.

The general structuralist assumption is that the economic structure that promotes prosperity for a large number of people also makes the poor better off than they would be if large scale trade, interstate/global commerce, etc. were significantly less. There is another point of view, however, that believes that the poor and disenfranchized are actually worse off because of the success of "the mainstream economy." The easiest example I can think of goes back to the disenfranchisement of Native Americans in the 19th century due to the expansion of cotton and other cash-crop farming that promoted removal of those whose use of the land didn't generate as much profit. Still, who is to say that these people are better off for having been moved to reservations instead of being allowed to freely use the land, albeit without contributing to GDP? Likewise, who is to say that those who did and continue to profit from the large-scale capitalist approach to resource-management are ultimately better off than they would be if they used resources more conservatively and lived more frugally, generally? It seems like the stronger the economy gets, the more wasteful economic practices emerge and this eclipses the gains in efficiency that were achieved through economies of scale and technological innovations. And, imo, it seems like progressive taxation allows the wealthy to procure this system of economics just because it benefits them the most; and they just justify their profiteering by claiming that the middle and lower classes are better off as a result of their economic structuring.

 

 

 

[waitforufo]

I have read all the posts on this topic, but still struggle with the concept of “fairness” which is at the core of this topic.

 

Let’s say I’m selling beans. I sell them for the same price per pound to everyone. Is this not fair? Let’s say a rich man and a poor man each purchase five pounds. The price paid by the poor man represents a larger share of his income than it does for the rich man. Does this somehow make my pricing unfair? I don’t see how.

 

Perhaps it would be fair if we each paid of fixed price tax per year once we reached the age of majority regardless of wealth or income. Take the yearly government expenditure, divide by the number of citizens above the age of majority and then send each such citizen a bill. Sounds fair to me. Such a plan I’m sure would lead to much lower taxes.

 

Instead this topic is about a flat percentage per person. In such a system one would divide the yearly government expenditure by the combined income of citizens to determine the flat tax percentage. Each citizen would then pay that percentage of their income as taxation to the government. Such a system in my opinion would be far superior to our current system even though a person with a high income would unfairly pay more than a person with low income. Why do I consider this unfair. because they are both purchasing the same thing. Why do I think it is still superior to what we have now? Well be because those with low incomes would at least be paying something. The fact that they are paying something would again lead to lower taxes.

 

By the way, most flat tax proposals I have seen still include a level of income below which a person would pay nothing. This builds in progressivity. Again tipping fairness against those with high income.

 

With regard to entitlement programs swansont wrote…

 

As many are fond of pointing out, the poor generally don't pay much in income taxes (actually, they are fond of incorrectly claiming that the poor pay no taxes at all, but looking at the receipt will show that social security, medicare and medicaid are huge chunks of the tax burden for the average taxpayer, and virtually anyone with income pays those taxes).

 

I have heard this argument often, but I find it completely strange. When one pays for social security, and medicare by payroll deduction they are purchasing personal retirement healthcare and retirement income benefits from the government. In the case of medicare the rich currently pay more for the same benefit than the poor. How is this fair? In the case of social security those that pay more in get more out but this is not a linear relationship to the amount paid. The fairness balance is still against the rich. Fortunately for now there is still an income cap preventing this unbalance from producing more unfairness. I’m afraid this cap will soon be eliminated. The next step will be to reduce the amount paid by the poor until it is zero, proving again the fairness in never much of a consideration.

 

One last though on social security and medicare. Since each citizen is forced to pay under penalty for these benefits, the government better come through. That is why social security is the third rail of American politics. Each citizen is expecting to get what they already paid for.

[swansont]

The general structuralist assumption is that the economic structure that promotes prosperity for a large number of people also makes the poor better off than they would be if large scale trade, interstate/global commerce, etc. were significantly less. There is another point of view, however, that believes that the poor and disenfranchized are actually worse off because of the success of "the mainstream economy." The easiest example I can think of goes back to the disenfranchisement of Native Americans in the 19th century due to the expansion of cotton and other cash-crop farming that promoted removal of those whose use of the land didn't generate as much profit. Still, who is to say that these people are better off for having been moved to reservations instead of being allowed to freely use the land, albeit without contributing to GDP? Likewise, who is to say that those who did and continue to profit from the large-scale capitalist approach to resource-management are ultimately better off than they would be if they used resources more conservatively and lived more frugally, generally? It seems like the stronger the economy gets, the more wasteful economic practices emerge and this eclipses the gains in efficiency that were achieved through economies of scale and technological innovations. And, imo, it seems like progressive taxation allows the wealthy to procure this system of economics just because it benefits them the most; and they just justify their profiteering by claiming that the middle and lower classes are better off as a result of their economic structuring.

 

I don't see what this has to do with taxation.

 

I have heard this argument often, but I find it completely strange. When one pays for social security, and medicare by payroll deduction they are purchasing personal retirement healthcare and retirement income benefits from the government. In the case of medicare the rich currently pay more for the same benefit than the poor. How is this fair? In the case of social security those that pay more in get more out but this is not a linear relationship to the amount paid. The fairness balance is still against the rich. Fortunately for now there is still an income cap preventing this unbalance from producing more unfairness. I’m afraid this cap will soon be eliminated. The next step will be to reduce the amount paid by the poor until it is zero, proving again the fairness in never much of a consideration.

 

One last though on social security and medicare. Since each citizen is forced to pay under penalty for these benefits, the government better come through. That is why social security is the third rail of American politics. Each citizen is expecting to get what they already paid for.

 

The amount you pay in has little to do with what you get out. It dictates the rate at which the money is paid out, but you can get a lot more out than you pay in; it depends on how long you live. Regardless, it's still a tax.

[TonyMcC]

waitforufo said - "One last though on social security and medicare. Since each citizen is forced to pay under penalty for these benefits, the government better come through. That is why social security is the third rail of American politics. Each citizen is expecting to get what they already paid for".

 

The main point of social benefits is that some will get more than they paid for and some will get less according to their needs. This is obviously true with pension schemes also. It seems to work quite well in the UK. Is it unfair that poorer, long lived people should benefit from the richer who die young?

Edited February 13, 2011 by TonyMcC

[lemur]

I have read all the posts on this topic, but still struggle with the concept of "fairness" which is at the core of this topic.

 

Let's say I'm selling beans. I sell them for the same price per pound to everyone. Is this not fair? Let's say a rich man and a poor man each purchase five pounds. The price paid by the poor man represents a larger share of his income than it does for the rich man. Does this somehow make my pricing unfair? I don't see how.

It depends on the relationship between various prices. Let's say you trade in farmland and housing at a rate of 10k/acre and you pay your farm workers $5/day. Now your workers are making $100/month working 5-day work weeks. Now let's say you charge them rates for housing and food so that their $100/month is just enough, but they can't save money to buy their own land. Wouldn't they be stuck working for you? Now, if you charge the same price for beans to your land-owning neighbor, they are paying you out of income they are making by renting housing and selling beans at the same prices you are; which means they also are preventing the workers from saving up enough money to buy their own farm land. So, in essence, you and your rich neighbor would be colluding to keep the workers from saving money and starting their own farms, simply by charging the same "fair" price for beans, land, rent, and other commodities. In other words, it ultimately comes down to relative prices and the ability to CHOOSE whether to save or not to save. If workers fail to save because they choose to just work and pay their rent, that would be one thing. If that's what they choose because they don't have any other option, that's something else isn't it?

 

 

 

I don't see what this has to do with taxation.

It has to do with the role taxation and spending have in maintaining certain economic possibilities. If, for example, independent farmers and business people are incapable of competing with large-scale inter-regional industries, the interstate highway system would be privileging mass-production over local independent economic activities. Look at how the advent of railroads and steam-shipping, for example, made it possible to harness a great deal more land for cultivating raw materials for the global colonial economy. You can argue that this economy ultimately helped everyone it influenced more than it harmed them, but I'm not sure everyone would agree with you.

 

The practical issue would be to ask what it would take to foster maximum economic-cultural independence/diversity for people to be able to choose their own approach to economic sustainability. Can some people have an economy that requires massive infrastructure, industry, etc. without economically driving others to have to participate in that economy just to pay their bills and taxes? What is currently happening is that the government is maintaining an infrastructure that supports a corporate economy that is not very flexible in terms of employee-choice. Basically people have the option of conforming to corporate expectations or being relegated to menial low-wage position, if that. If they choose to be self-employed, they have to compete with corporate enterprises and generate enough revenue to compete with consumers making corporate wages. Some people manage it, but I don't think it's an option for everyone yet. My point, though, was that I don't think the economy that is supported by the current tax/government system is universally more beneficial than one that would, say, re-invest less through tax/spend. Of course, I can't say this definitively, but I think it's worth more detailed analysis. I don't think you should just automatically assume that the interstate highway system is a major benefit to all classes, although it may be.

 

 

Generally, however, I think the current relationship between progressive taxation, government spending, and corporate/private economics is more favorable to the middle-class than to working and/or poor people. I think the closer middle-class incomes get to lower-class incomes, the less incentive their is to sell premium products at higher prices and thus raise the bar for profit for businesses that cater to the poor. So, for example, low-price supermarkets and other retailers have to keep prices higher to appease their investors and employees because those people expect to have income on par with higher-priced businesses. In this sense, the working and poor classes have to struggle to keep up with middle-class, in the current economy promoted by progressive-tax government. Do you have data/reasoning that contradicts this?

Edited February 13, 2011 by lemur

[swansont]

Generally, however, I think the current relationship between progressive taxation, government spending, and corporate/private economics is more favorable to the middle-class than to working and/or poor people. I think the closer middle-class incomes get to lower-class incomes, the less incentive their is to sell premium products at higher prices and thus raise the bar for profit for businesses that cater to the poor. So, for example, low-price supermarkets and other retailers have to keep prices higher to appease their investors and employees because those people expect to have income on par with higher-priced businesses. In this sense, the working and poor classes have to struggle to keep up with middle-class, in the current economy promoted by progressive-tax government. Do you have data/reasoning that contradicts this?

 

Walmart.

[lemur]

Walmart.

One word posts. . . what's your point about Walmart? Yes, it is a price leader that provides one-stop shopping which lowers costs and benefits the poor and working class. There is much criticism of Walmart, but I think much of it is from the perspective of a disgruntled middle-class that wants/expects a certain lifestyle and conditions of employment. Personally, I don't see what would be wrong with Walmart setting standards of employment for the entire workforce. People complain that they hire people part time so they can deny them benefits, but what would happen if everyone in an economy worked part time without benefits? Wouldn't health-care just have to adjust to what working people could afford, for example?

[swansont]

One word posts. . . what's your point about Walmart? Yes, it is a price leader that provides one-stop shopping which lowers costs and benefits the poor and working class. There is much criticism of Walmart, but I think much of it is from the perspective of a disgruntled middle-class that wants/expects a certain lifestyle and conditions of employment. Personally, I don't see what would be wrong with Walmart setting standards of employment for the entire workforce. People complain that they hire people part time so they can deny them benefits, but what would happen if everyone in an economy worked part time without benefits? Wouldn't health-care just have to adjust to what working people could afford, for example?

 

You asked me if I had any data or reasoning to contradict your point that businesses would feel compelled to cater to the middle class in order to appease investors and employees. I give you Walmart as a counterexample. Or any in a list of discount retailers that cater to thrifty shoppers.

[lemur]

You asked me if I had any data or reasoning to contradict your point that businesses would feel compelled to cater to the middle class in order to appease investors and employees. I give you Walmart as a counterexample. Or any in a list of discount retailers that cater to thrifty shoppers.

Ok, now I see your point. I agree to an extent, but part of my point was that even these kinds of discount retailers still have to pay salaries and costs that cater to middle- and upper middle class lifestyles. For example, when Walmart builds a new store, they still have to buy land, hire contractors, construction workers, buy building materials, etc. Although they may be able to find suppliers with a philosophy similar to theirs, they may not be able to for everything. Likewise, taxation and government expenditures tend to pay middle-class and upper-middle class wages, which creates a class of consumers that "subsidize" retailers at price-classes above that of Walmart and other discounters.

[Marat]

Returning to the question of the OP, a 'fair flat tax' is obviously impossible, since the very notion trades on the false impression that having the numerically 'same' tax for everyone must also have the 'same' significance for everyone, and thus be fair. But in fact, a flat tax of $15,000 for everyone would deprive some poorer people of their ability to enjoy a nutritious diet or live in a non-rat-infested apartment while it would deprive middle class people of their ability to take a golfing vacation to the Bahamas; and for rich people, only their accountants would be able to detect the essentially immeasurably same effect of the tax. So if you measure the fairness of any tax by its equal impact on various humans, then that fairness can never be achieved.

 

Imposing an equal percentage tax on everyone, say 30% of income, would be plagued by the same unfairness, only in moderated degree, since 30% of a poor person's income will deny their ability to afford basic human needs, while 30% of a billionaire's income will be an invisible loss in real human terms of life quality.

 

The illusory 'fairness' of a flat tax or a flat percentage tax is that it is fair only to amounts of money but not to the reality of human experience. The very fact that it is even taken seriously by some (such as Steve Forbes, who was described by one commentator as having lost his bid for the Presidency only because 'he looks as though he was stitched together out of dead people') exemplifies what the sociologist and psychiatrist Erich Fromm once described in his book, 'The Anatomy of Human Destructiveness,' as the generalized psychopathology of expressing hatred of human beings by valuing inanimate things over real human interests. So in this instance we have piles of cash treated 'fairly' by flat taxes or flat percentage taxes, regardless of the cost in fairness to real human needs.

[D H]

The truth of what constitutes "fairness" in taxation is out there somewhere, perhaps somewhere between YdoaPs argument that anything but a flat tax is communist / socialist / marxist and Marat's argument that a flat tax is put together by someone stitched from dead people.

 

Name calling is not a rational way to argue your point.

[waitforufo]

The amount you pay in has little to do with what you get out. It dictates the rate at which the money is paid out, but you can get a lot more out than you pay in; it depends on how long you live. Regardless, it's still a tax.

As part of my retirement I can purchase a lifetime annuity. The cost of that annuity depends on when I purchase it and interest rates when I purchase. I can even purchase this annuity as part of a whole life insurance policy that I pay for with monthly installments. If I live a long time, such an annuity will pay out more than the actual dollars I pay in. The companies that sell me such an annuity or life insurance policy can still make money since they invest the money I give them either as a lump sum or as monthly installments. They can make money due to compound interest.

 

I tire of hearing about how most people get more out of social security then they pay in. Such a calculation never takes into account the future value of an annuity. If an individual and their employer's contribution to social security were simply invested into government savings bonds throughout there life, the vast majority of people would retire with significant wealth. This sum would far exceed what most collect from social security throughout their life. Your suggestion that most put in far less than they take out assumes that the money is invested in a shoe box under their bed.

 

With regard to social security being a tax, this is true only to the extent that you have to pay it or the government will lock you up. These programs are intended to be paid for by the individuals who receive the benefits. That is also how they continue to sell them to the people.

 

waitforufo said - "One last though on social security and medicare. Since each citizen is forced to pay under penalty for these benefits, the government better come through. That is why social security is the third rail of American politics. Each citizen is expecting to get what they already paid for".

 

The main point of social benefits is that some will get more than they paid for and some will get less according to their needs. This is obviously true with pension schemes also. It seems to work quite well in the UK. Is it unfair that poorer, long lived people should benefit from the richer who die young?

In the US a pension is part of an employee's compensation. This means that the employee pays for it over time. This may not be directly apparent but the employee is in effect paid less than if they did not receive a pension. Those that don't work don't get a pension. Also, your pension monthly payment is based on years of service and income during employment history. Perhaps the problem has to do with the word "benefit." With regard to pensions in the US this term has nothing to do with altruism. With regard to pensions (and insurance in general) a benefit is simply compensation for the price paid.

 

You ask about fairness regarding money received based on the lifetime over which benefits are received. First, I don't believe I complained about this point. I was complaining about people not making the same payment for the same monthly benefit regardless of how long one receives those monthly benefits. With regard to any lifetime annuity life expectancy is simply a investment risk acknowledged by all. I hope to live longer while those that sell me the annuity hope I don't. Those the sell the annuity average there risk by selling annuities to many people. By doing so they can lower the cost of the annuity making it more attractive to me to purchase. The government doesn't have to do this since they can force me to pay. The governments also isn't required to invest the money I pay them. That's why social security is a Ponzi scheme.

 

It depends on the relationship between various prices. Let's say you trade in farmland and housing at a rate of 10k/acre and you pay your farm workers $5/day. Now your workers are making $100/month working 5-day work weeks. Now let's say you charge them rates for housing and food so that their $100/month is just enough, but they can't save money to buy their own land. Wouldn't they be stuck working for you? Now, if you charge the same price for beans to your land-owning neighbor, they are paying you out of income they are making by renting housing and selling beans at the same prices you are; which means they also are preventing the workers from saving up enough money to buy their own farm land. So, in essence, you and your rich neighbor would be colluding to keep the workers from saving money and starting their own farms, simply by charging the same "fair" price for beans, land, rent, and other commodities. In other words, it ultimately comes down to relative prices and the ability to CHOOSE whether to save or not to save. If workers fail to save because they choose to just work and pay their rent, that would be one thing. If that's what they choose because they don't have any other option, that's something else isn't it?

 

I'm not quite sure how this applies to the topic at hand. Well perhaps in the fact that the I have to choose social security and medicare without my own consent. The government plays the part of both of your farmers. Your right, that is something else indeed.

[lemur]

Returning to the question of the OP, a 'fair flat tax' is obviously impossible, since the very notion trades on the false impression that having the numerically 'same' tax for everyone must also have the 'same' significance for everyone, and thus be fair. But in fact, a flat tax of $15,000 for everyone would deprive some poorer people of their ability to enjoy a nutritious diet or live in a non-rat-infested apartment while it would deprive middle class people of their ability to take a golfing vacation to the Bahamas; and for rich people, only their accountants would be able to detect the essentially immeasurably same effect of the tax. So if you measure the fairness of any tax by its equal impact on various humans, then that fairness can never be achieved.

Another way to look at it is that a flat tax ensures that public spending always respects the level of the smallest contribution. Think of it like a party where everyone contributes to the food budget. If some people would contribute a lot and others very little or nothing, the party could still serve many expensive foods and loads of it. If, on the other hand, the lowest contribution was set as the maximum, only beans, rice, and tortillas might get served but at least everyone could feel proud of having contributed their fair share. It would maybe be annoying to the rich that they weren't allowed to flaunt their wealth by paying for an extravagant party (and thus making their servants work themselves to the bone to make it happen) but at least EVERYONE's contribution would be significant in that all contributions would be basically equal.

[swansont]

As part of my retirement I can purchase a lifetime annuity. The cost of that annuity depends on when I purchase it and interest rates when I purchase. I can even purchase this annuity as part of a whole life insurance policy that I pay for with monthly installments. If I live a long time, such an annuity will pay out more than the actual dollars I pay in. The companies that sell me such an annuity or life insurance policy can still make money since they invest the money I give them either as a lump sum or as monthly installments. They can make money due to compound interest.

 

I tire of hearing about how most people get more out of social security then they pay in. Such a calculation never takes into account the future value of an annuity. If an individual and their employer's contribution to social security were simply invested into government savings bonds throughout there life, the vast majority of people would retire with significant wealth. This sum would far exceed what most collect from social security throughout their life. Your suggestion that most put in far less than they take out assumes that the money is invested in a shoe box under their bed.

 

With regard to social security being a tax, this is true only to the extent that you have to pay it or the government will lock you up. These programs are intended to be paid for by the individuals who receive the benefits. That is also how they continue to sell them to the people.

 

 

In the US a pension is part of an employee's compensation. This means that the employee pays for it over time. This may not be directly apparent but the employee is in effect paid less than if they did not receive a pension. Those that don't work don't get a pension. Also, your pension monthly payment is based on years of service and income during employment history. Perhaps the problem has to do with the word "benefit." With regard to pensions in the US this term has nothing to do with altruism. With regard to pensions (and insurance in general) a benefit is simply compensation for the price paid.

 

You ask about fairness regarding money received based on the lifetime over which benefits are received. First, I don't believe I complained about this point. I was complaining about people not making the same payment for the same monthly benefit regardless of how long one receives those monthly benefits. With regard to any lifetime annuity life expectancy is simply a investment risk acknowledged by all. I hope to live longer while those that sell me the annuity hope I don't. Those the sell the annuity average there risk by selling annuities to many people. By doing so they can lower the cost of the annuity making it more attractive to me to purchase. The government doesn't have to do this since they can force me to pay. The governments also isn't required to invest the money I pay them. That's why social security is a Ponzi scheme.

 

 

I'm not quite sure how this applies to the topic at hand. Well perhaps in the fact that the I have to choose social security and medicare without my own consent. The government plays the part of both of your farmers. Your right, that is something else indeed.

 

You compare it to an annuity and then (correctly, IMO) call it a Ponzi scheme. The latter is precisely why it is not like an annuity. If you did turn it into one, you couldn't invest the money in government bonds, either, because that would defeat the whole purpose of it — all the payout would still be taxpayer-funded.

[ParanoiA]

Again, an obtuse view, bordering on appeal to ridicule.

 

Except it's not a "view" but an observation that has yet to be falsified. My "view" is that your tax bill is *not* tied directly to your individual usage of government services. And that's it. That's been it for a long damn time now.

 

This latest exchange in particulars is just another of your campaigns to miss the point and conflate my "view".

 

I then took that little piece of tax bill trivia and synthesized it with ydoaPs's "market" observation of goods and services and applied it to simple, economic theory. As an economic solution, to dissociate personal sacrifice with reward and access to resources is a proven terrible economic model, as evidenced by the fall of command economies. Well, North Korea is still going on strong isn't it? Instead, demand economies allocate resources or manage scarcity far better. Don't also conflate demand markets with laissez faire capitalism - no swinging pendulums here, just common sense.

 

And then, because you infer that extension to be a repudiation of government methods of tax collection, you reply with irrelevant questions about how much government service I've used. Only someone who doesn't understand what I'm saying would respond with such questions.

 

Here's my "view": Proportional government confiscation of private property without respect to proportional usage of government services is necessary for a functioning governing institution, if for no other reason, than because no individual can know what government services or goods they will consume in a lifetime.

 

I may use a billion dollars of medicare when I turn 70, or I may die when I'm 45 and never use a dime. Government confiscation for a pool of resources based on need is a practical, functional reality, and arguably, the whole purpose of government to begin with.

 

I don't like it. Just like I don't like police officers. I don't like these things, but they are the best solution we have at the moment. At the moment is key here too. I'm not done thinking about human happiness. I'm not done considering the role and execution of government. I'm not "satisfied" with confiscation. Just like I'm not satisfied with a "crime rate".

 

So, I don't care to characterize forcible means as benevolent welfare, or good ole payment for "goods and services".

 

Unlike most, I didn't think this American experiment was finished. Did I miss a meeting?

 

 

Hmmm indeed. You won't name it? I'm supposed to believe there is a non-government entity certifying the kilogram out there?

 

Shit man, here's just one: ANSI - The American National Standards Institute or ANSI is a private non-profit organization that oversees the development of voluntary consensus standards for products, services, processes, systems, and personnel in the United States.

 

Yeah, I'm sure the "kilogram" is way beyond those fellas...

 

I guess Bell Labs and AT&T just lucked into establishing the standards for the telecommunications industry without government. Makes one wonder how we ever got the standardized T1 carrier, huh?

 

You don't "need" a government to bully everyone into standards. Businesses stand to lose and gain from standards and it's those forces that bring them to the table. Not as much fun as bureaucratic forces, I know, but it's actually ethical. Go figure.

Edited February 17, 2011 by ParanoiA

[D H]

Shit man, here's just one: ANSI - The American National Standards Institute or ANSI is a private non-profit organization that oversees the development of voluntary consensus standards for products, services, processes, systems, and personnel in the United States.

 

Yeah, I'm sure the "kilogram" is way beyond those fellas...

ANSI receives a good chunk of its funding from the US government.

[ParanoiA]

ANSI receives a good chunk of its funding from the US government.

 

Well sure, and in further historical discovery we see 5 private and 3 government entities forming the original AESC in 1918. But what's the point?

 

Again, I keep getting the goal posts moved. They are private, non-government (for redundancy's sake) non-profit and they do not use force to make people use their standards. They rely on voluntary inclusion. And at the current level of government intrusion, no private standards committee can be effective without rubbing shoulders with government on some level. That is hardly, even remotely an argument that government is needed for standards, rather that is an observation of present straits.

 

And that's just one. Mankind didn't measure stuff until government was invented? Please. All government did was speed up the process of standardizing by being the prick and naming the winner in an industrial competition. Instead of the market deciding who's standards will be adopted, the government chose for the market. Instead of convincing the private consumers of products and services, the winner just had to convince a handful of bureaucrats - just one of many, many channels of collusion we can be proud of.

 

Any other one liners?

Edited February 17, 2011 by ParanoiA