Why do we need taxes?

Venezuela is a terrible example though. They tied their entire economy to a single commodity and structured their long-term fiscal policy on oil prices remaining about $100 a barrel. When OPEC decided to screw Iran by tanking the price of oil by flooding the market Venezuela went belly up. That is the main inflationary factor for Venezuela and it's a fairly unique situation.

An extreme example, but the point still stands. If a central government can only increase the money supply, minus the ability to take money out by selling debt, there's no way to put a lid on inflation and keep it at a target rate. A treasury that finances expenses with printed money can't take that money back out of the money supply.
 
Every April I also get discouraged that, as a decent citizen who tries to pay his income taxes, I have to pay to do it. I can either pay an accountant, pay some other preparer, or buy tax software. But without doing that, I'm having to rely on filling out paper forms or finding someone to do it for free. With the complications involved, the threat of fines, and the dollar amounts, it's become harder and harder to DIY.
Costs me 800/yr.

Self employed.
 
A few myths persist:

1. cutting tax rates "steals" money from the government (productivity (wealth) originates in the private sector not the government)
2. government spending is an economic stimulus (the government does not produce anything, they parasite on the private sector producers)
3. government "allows" the private sector to exist (the exact opposite is true)
4. government knows best how to allocate capital (the government is not profit driven has no motive to be efficient)
5. government injects morality and fairness into caplitalism (the government collapsed housing by injecting high risk lending rules into mortgage underwriting)
6. government blocks monopolies (lately the government monopoly itself has been the problem)
7. government keeps markets from exploding and ensures fairness (see subprime crash)
 
It happens when government prints extra money.

And why is that bad?

Ultimately Bob's relative net worth is his % of the overall economy. That doesn't change. The nominal value change, but his spending power is no different that it was when he was taxed.
 
An extreme example, but the point still stands. If a central government can only increase the money supply, minus the ability to take money out by selling debt, there's no way to put a lid on inflation and keep it at a target rate. A treasury that finances expenses with printed money can't take that money back out of the money supply.

They can still sell debt when needed, even if they generally finance with printed money.
 
Which is why I'm fine with doing away with income taxes and pretty much every exemption/deduction/credit/loophole in favor of ad valorem. I am generally between 9-11% on my effective rate, mostly due to mortgage interest. I don't have much complaint about the level of taxation on my total income, but I certainly don't agree that mortgage owners should get preferential treatment over renters.

How about breeders? Drop the multi year discount for creating new taxpayers?
 
How about breeders? Drop the multi year discount for creating new taxpayers?
Despite being a little more on the liberal side... I'm of the opinion that reversible mandatory birth control should be a requirement for receiving certain forms of government assistance.

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I think the chains are rattling and the lock is not far behind.
 
They can still sell debt when needed, even if they generally finance with printed money.

Who in their right mind would buy them? The buyer would be guaranteed a loss because the return of capital would be with hyper-inflated dollars, because the treasury would always be pumping more dollars into the money supply. If they were indexed to inflation, that would just exacerbate the problem.

The US budget is what $3.5 trillion? GDP $17trillion? Dollars have value because they are scarce. Pump $3.5 trillion more of them out every year they aren't going to stay scarce for long.
 
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And why is that bad?

Ultimately Bob's relative net worth is his % of the overall economy. That doesn't change. The nominal value change, but his spending power is no different that it was when he was taxed.

For one thing it's unstable. Constantly changing prices means the cost of changing all your ads, menus, etc. increasing the cost of doing business. It messes up contract negotiations. It discourages saving for the future.
 
Despite being a little more on the liberal side... I'm of the opinion that reversible mandatory birth control should be a requirement for receiving certain forms of government assistance.

I wasn't even discussing those who breed while on government assistance. I was referring to the Dependent tax break.

A tax break for having sex and reproducing?

Same thing if you're taking care of parents. Or whoever you choose to take care of.

Doesn't deserve a tax break.
 
I wasn't even discussing those who breed while on government assistance. I was referring to the Dependent tax break.

A tax break for having sex and reproducing?

Same thing if you're taking care of parents. Or whoever you choose to take care of.

Doesn't deserve a tax break.
I think the logic there is that every person gets a deduction for themselves. You get to deduct yourself. Your dependents (if you had any) don't, except on your tax return since they are not filing one themselves.
 
Who in their right mind would buy them? The buyer would be guaranteed a loss because the return of capital would be with hyper-inflated dollars, because the treasury would always be pumping more dollars into the money supply. If they were indexed to inflation, that would just exacerbate the problem.
They would need to pay an interest rate that is higher than inflation for the bonds to get purchased. Happens all the time.

The US budget is what $3.5 trillion? GDP $17trillion? Dollars have value because they are scarce. Pump $3.5 trillion more of them out every year they aren't going to stay scarce for long.

Inflation isn't just tied to GDP, it's tied to net worth. US net worth is $125 trillion.

Think about what happens when a company stock is diluted through a secondary - it doesn't just affect the float.

e.g.
Let's say you have a float that's 5% of market cap, and you have a secondary of 5%, the expected devaluation of the float is still 5%, even though the new float is now double of what the old one used to be.
 
I wasn't even discussing those who breed while on government assistance. I was referring to the Dependent tax break.

A tax break for having sex and reproducing?

Same thing if you're taking care of parents. Or whoever you choose to take care of.

Doesn't deserve a tax break.

If you're in the 33% bracket, you don't get one anyway.
 
I think the logic there is that every person gets a deduction for themselves. You get to deduct yourself. Your dependents (if you had any) don't, except on your tax return since they are not filing one themselves.

Why get a deduction for yourself? The only possible reason is to set up stuff like the breeder discount. Just lower everyone's rate at which taxation starts (including the progressive bumps in tax rate), by the deduction amount, and be done with it all.

It has to be complex as possible to allow for manipulation of behaviors. A multi year discount for making new taxpayers is an obvious manipulation. Just like the homeowner interest discount.
 
Why get a deduction for yourself? The only possible reason is to set up stuff like the breeder discount. Just lower everyone's rate at which taxation starts (including the progressive bumps in tax rate), by the deduction amount, and be done with it all.

It has to be complex as possible to allow for manipulation of behaviors. A multi year discount for making new taxpayers is an obvious manipulation. Just like the homeowner interest discount.
Nate, you know that I'm in the same boat as you; no dependents and have never had one. However, I don't view the deduction for dependents as a "reward" since it costs more to raise a kid than the amount of the deduction.
 
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How about breeders? Drop the multi year discount for creating new taxpayers?

Doesn't bother me, and we just had our first child 9 months ago. Adjust the rate accordingly so that there's no need to deduct for oneself or dependents.


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They would need to pay an interest rate that is higher than inflation for the bonds to get purchased. Happens all the time.



Inflation isn't just tied to GDP, it's tied to net worth. US net worth is $125 trillion.

Think about what happens when a company stock is diluted through a secondary - it doesn't just affect the float.

e.g.
Let's say you have a float that's 5% of market cap, and you have a secondary of 5%, the expected devaluation of the float is still 5%, even though the new float is now double of what the old one used to be.

Inflation is tied to money supply, reflected in the price of goods and services, assets and production. But let's just simply talk cash instead. M1 today, spendable cash in all it's forms, is about $3.5trillion. Doubling that wouldn't be massively inflationary? When a stock splits 2for one, what happens to the share price?
 
I don't believe you get a tax break for having sex, unless, of course, you're in the business.
 
I've learned that several folks have never read about the Fair Tax. Go to Amazon and search for Fair Tax Neal Boortz, the books are easy reads. No one mentioned that we had no permanent income tax until 1913. Did you know that current tax code is 74,608 pages, someone please explain why that is necessary?
 
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True. Lots of the little manipulations go away as income rises. Others kick in, like capital gains rates (assuming most really poor folk aren't doing much investing).

And then you get to pay less on a percentage basis than the guy who works for a paycheck, AMT not withstanding.
 
I've learned that several folks have never read about the Fair Tax. Got to Amazon and search for Fair Tax Neal Boortz, the books are easy reads. No one mentioned that we had no permanent income tax until 1913. Did you know that current tax code is 74,608 pages, someone please explain why that is necessary?

Lobbyists need work too.
 
Communist countries have no taxes. The government owns everything and people get paid all the same. Everyone is equal. Everyone is poor.

All but two of the many communist countries abandoned communism and adopted western style capitalism with some government safety net welfare system. It isnt just the economics. Its the idea of freedom. Freedom to choose. Freedom of expression.

The US is the wealthiest country in the world along with Western Europe and Japan. Its working. All these countries that are wealthy have taxes. All free countries have taxes. That is reality. Of course you have to have taxes to pay for the things government does. Things like build airports.

We tried a system of feudal enterprise where every road was a toll road and you had to pay to have your kids educated. Didnt work well. Kings and Popes, went away with the Renaissance. Separation of Church and State arrived. Everyone wants what the western countries have, except a few that are on the extreme right or extreme left. Best place is in the middle, a mix of capitalism and government. As much freedom as possible. Thats what works!

We can elect leaders that move the needle to right or left, but we keep the capitalist system we have and lets face it, we need to provide for those that cant take care of themselves too, don't we?

Actually communist countries do have taxes. China has a very large tax system with numerous types of taxes.
 
How can China be communist when it has owned real estate market, a stock market, banks and all the other institutions of capitalism? They still CALL their government communist yes. But that doesnt make it communist.
 
How can China be communist when it has owned real estate market, a stock market, banks and all the other institutions of capitalism? They still CALL their government communist yes. But that doesnt make it communist.

Bingo, San Colorado. At least one other Asian communist government has figured that out. And well before the Chinese.

The Soviets since WWII have supported China as their allies. Up until the 1950's when China wanted to stop playing.

Then, fast forward to the late sixties and early seventies. The Soviets wanted Vietnam. After the war was over they had it briefly, but like the Chinese, the Vietnamese didn't really want to become a puppet of the Soviet Union.
 
Nate, you know that I'm in the same boat as you; no dependents and have never had one. However, I don't view the deduction for dependents as a "reward" since it costs more to raise a kid than the amount of the deduction.

Someone else's cost of their hobby of amateur parenting, is none of my concern, when saying they don't deserve a tax break for participating in said hobby. ;-)
 
How can China be communist when it has owned real estate market, a stock market, banks and all the other institutions of capitalism? They still CALL their government communist yes. But that doesnt make it communist.

Let's see, the sole ruling party is the Chinese Communist Party, they control all the land, the economy, speech and assembly, religious belief and maintain a Leninist power structure. So though they've adopted some capitalist aspects, yeah, I'd say they are still communist.
 
I've learned that several folks have never read about the Fair Tax. Go to Amazon and search for Fair Tax Neal Boortz, the books are easy reads. No one mentioned that we had no permanent income tax until 1913. Did you know that current tax code is 74,608 pages, someone please explain why that is necessary?
It's called "soft tyranny."
 
Inflation is tied to money supply, reflected in the price of goods and services, assets and production. But let's just simply talk cash instead. M1 today, spendable cash in all it's forms, is about $3.5trillion. Doubling that wouldn't be massively inflationary? When a stock splits 2for one, what happens to the share price?

It's not the right analogy. Both of those actually.

a) Yes, the U.S. has $3.5 trillion in physical cash instruments, but inflation doesn't just affect cash - it affects any cash-convertibles. E.g. the Russel 3000 alone is $25.6 trillion. Even if there was a way to only devalue only the cash, it creates arbitrage opportunities for computers to pick up that $1 for 97c on the dollar, which pushes up the index in line with inflation, which in turn sucks the injected cash back up again.

The whole 'market cap' of U.S cash-convertables is $135 trillion. That's what you're diluting against - not just the $3.5 trillion in actual cash.

b) A 2-for-1 split is not a diluting event - it's a nominal event - everybody owns the same % of the company before and after. It's the equivalent of exchanging dollars into cents (a 100-to-1 split). Instead, the equivalent of inflation when it comes to company stock, is a secondary offering. In a secondary the company prints more shares which it keep for itself (or sell it immediately to raise cash), which in turn causes the %'s ownership to drop for each of the other shareholders, and thus the share price to drop. If the shareholders don't like this, they vote the board out and get another one.


I'm starting to spot an interesting trend here:

a) Most people are fine with how the private sector raises money
b) Most people just voted and say they want government to run more like the private sector
c) Most people are against having the government raise money the exact same way that the private sector would...

Mmm....
 
Let's see, the sole ruling party is the Chinese Communist Party, they control all the land, the economy, speech and assembly, religious belief and maintain a Leninist power structure. So though they've adopted some capitalist aspects, yeah, I'd say they are still communist.

So other than religion, pretty close to here.

You forgot schools.
 
So other than religion, pretty close to here.

I found it interesting/shocking the first time I spoke to someone who grew up in China and learned that private citizens could not own any land. Everything is a lease-hold.

And then I found out that most of Hawaii works the same way...
 
I found it interesting/shocking the first time I spoke to someone who grew up in China and learned that private citizens could not own any land. Everything is a lease-hold.

And then I found out that most of Hawaii works the same way...

You don't really own land in the U.S. anywhere. Try not paying the property taxes and see how long you get to keep it. Usually about four to
seven years. And that doesn't even include eminent domain seizures. (Oh sure, they'll pay you for it, but it wasn't really yours to keep. You don't own squat.)
 
Why can't we inflate madly? Simple. Because it's immoral. Like you implied, it is theft from the individual.
 
A few myths persist:

1. cutting tax rates "steals" money from the government (productivity (wealth) originates in the private sector not the government)
2. government spending is an economic stimulus (the government does not produce anything, they parasite on the private sector producers)
3. government "allows" the private sector to exist (the exact opposite is true)
4. government knows best how to allocate capital (the government is not profit driven has no motive to be efficient)
5. government injects morality and fairness into caplitalism (the government collapsed housing by injecting high risk lending rules into mortgage underwriting)
6. government blocks monopolies (lately the government monopoly itself has been the problem)
7. government keeps markets from exploding and ensures fairness (see subprime crash)

Yeah. But pay particular attention to number 3. Sometimes "allow" is not the operative word. "Bought and paid for" comes to mind. Ah, to not only own the company, but to own the Government to. That could never happen here...............................................................
 
You don't really own land in the U.S. anywhere. Try not paying the property taxes and see how long you get to keep it. Usually about four to
seven years. And that doesn't even include eminent domain seizures. (Oh sure, they'll pay you for it, but it wasn't really yours to keep. You don't own squat.)

By that logic you don't own your plane in CA either, because if you don't pay the taxes they will take it.

It's that magical "social contract" that nobody signed.

You signed it by living in the US. Don't like the system? Pick another country. I'm very confident you will find yourself continuing to choose to live in the US given the other options.
 
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