Sales tax or income tax?

8561 · Jan 9, 2005

Henro - you and I agree. I'm with you that it is awful to see a widow or a family go through that, my point was that it is a reality that sometimes has to be faced. I'm not saying I'm in favor of it, and I want to be clear on that. I do however, understand and accept it. I am somewhat short of retirement, but I am a man of modest means, I can assure you. This is likely a decision I will face at some point in my lifetime.

I would also point out that my folks are retired, and my grandparents passed away last year after having to sell their home. They did so willingly, knowing that it was the right thing to do. Perhaps if society as a whole (meaning government) had more fiscal restraint, this wouldn't become a reality for so many.

Henro · Jan 9, 2005

I'm with you that it is awful to see a widow or a family go through that, my point was that it is a reality that sometimes has to be faced. 

8561,

What you say is true.

Unfortunately it is only a reality because we all accept it, instead of doing something to change it. /forums/images/graemlins/frown.gif

Myself, I made a conscious decision just to live with it, rather than spend most of the rest of my life trying to drive a change in the way things are... /forums/images/graemlins/blush.gif Guess I would rather have seat time... /forums/images/graemlins/shocked.gif

I guess we have to give some credit to all those weirdo hippies (just joking, always wanted to be one of them but never qualified) out there in California... /forums/images/graemlins/grin.gif The did get rid of property tax, didn't they? I really don't know, but I seem to remember proposition something or other...being passed...

DUMBDOG · Jan 9, 2005

If I remember correctly it was proposition 13 and it limited real estate taxes to 1% of the property value and rolled back property values to a few years before.

Junkman · Jan 9, 2005

We have more than a few actors living in CT..... possibly one of them will run for governor and fix the tax laws. I remember when our past Governor Weicker wanted a state income tax and he wouldn't sign any state budget until he got what he wanted. For this unusual effort to stuff the income tax down the throats of the citizens of Connecticut, he received the John F. Kennedy Profile in Courage Award. United Parcel Service who had there Corporate headquarters located in Connecticut also gave him a special honor. They packed up and moved out of Connecticut shortly thereafter and publically laid that at the feet of the Governors actions. Many other corporations also followed the UPS exodis.

LBrown59 · Jan 12, 2005

One of many problems with real estate tax is renters don't have to pay it.
Since they don't they have to pay the tax they have no qualms about voting in school levies to increase the homeowners property taxes.
If you don't own property you shouldn't be allowed to vote on issues affecting real estate taxes.

The county auditor and the property tax officials in this county have no idea of what they are doing or how to value property.
I have caught them up in blunder after blunder over the years.
The latest one being their recent updated appraisal of my peoperty which is $38400 dollars more than the appraisal I just got on a loan application.
On the new appraisal they tacked on an $1800 value for air conditioning. I don't have a/c.
They also have a building listed that Is not on my property.
They also have a bad habit of charging real state tax on storage buildings that are not real property.

They charged me taxes for years on such a building on an annual deprecation of value deal.
After the building depreciated down to a zero value they added the building back on the books the next year at a higher value than it was in the beginning.
How can something that has no value suddenly be worth more than it was in the beginning?

They have been billing me for 23 years on a piece of land in another area.
Funny thing about this is the land doesn't exist.

The one I think that takes the cake is the time they gave one of my parents lots to the state and continued to collect taxes on it from Mom and Dad for 25 years after the county gave the lot away.

When Mom died in 89 I also discovered the tax authorities had been taxing them on more than twice the value of their home all those years.
My parents never knew about either of those situations as both of them died before this was found out.

Talk About Being Taxed To Death.

OkeeDon · Jan 12, 2005

" One of many problems with real estate tax is renters don't have to pay it."

One of the biggest fallacies is that renters don't pay real estate tax. Who does pay it? The landlord? Where does he get the money? From the rent, of course. If there were no property taxes, the rent could be lower; if taxes are increased, I guarantee the landlord will raise the rent. Moreover, the landlord gets to take an income tax deduction for the taxes, while the tenant, who provides the money to pay the taxes, gets no such deduction.

BillyP · Jan 12, 2005

One of the biggest fallacies is that renters don't pay real estate tax. Who does pay it? The landlord? Where does he get the money? From the rent, of course. 

You are right, Don but the thing is most renters don't think that far ahead. The other thing is school bond elections have a very low voter turn out. The largest percent of voters are the people that work there, the teachers, support personnel and their relatives.

Alan L. · Jan 17, 2005

A national sales tax, in my opinion, would stifle the economy. The last thing we need is for consumer spending to be curtailed in the interest of saving taxes.

I believe a certain amount of progressiveness is needed in the tax system in order to collect the revenue that is needed. Taxes are too high, income taxes are too complicated, and the rich get too soaked, but a tax still has to be somewhat progressive, or the lower income folks just can't pay it.

The only positive I seed to a national sales tax is that some income tax dodgers and illegal aliens would start having to pay some tax. But other than that, I don't see how it could be fair or workable.

rozett · Jan 17, 2005

( A national sales tax, in my opinion, would stifle the economy. The last thing we need is for consumer spending to be curtailed in the interest of saving taxes.)

In all likelyhood consumer spending would increase. With the elimination of income taxes, everyones take home pay would get a good boost. Most of that will go right into the economy.

( The only positive I seed to a national sales tax is that some income tax dodgers and illegal aliens would start having to pay some tax. But other than that, I don't see how it could be fair or workable. )

Fair would be in the eyes of the beholder. I'm not sure what you would consider fair taxation. I'm also not sure what you mean by workable, but I see it as ease of collection. Since all but a few states already collect a sales tax, increasing it slightly would be very easy.

OkeeDon · Jan 18, 2005

"Since all but a few states already collect a sales tax, increasing it slightly would be very easy." 

Ah, if it were but a slight increase, it might be palatable. I did a Google search on "national sales tax" and came up with a few well-documented studies on how it would work. There were written by proponents of such a system, so if there was any bias, it would be in favor of the sales tax.

Essentially, what they are talking about is a 15% (some are higher) national sales tax collected by the states as you suggest, with rebates or credits for purchases up to the poverty level - the first $18K plus of purchases would be tax free.

Sounds pretty good, until you remember that the states will still be collecting their sales tax, as well -- averaging somewhere around 6 - 7% or more, with the result that in some cases, the tax on a purchase might approach 25%! Then, they sneak in the idea that while there would be no income tax, there would still have to be a payroll tax, administered by the Social Security department, to cover Social Security and Medicare. This is in addition to the 15% national tax. Since many people, including my wife and I, actually pay more in FICA and Medicare taxes than we do in income taxes, this would result in a HUGE tax increase.

The simple fact is that you can tax and spend, as is often pinned on one party, or you can borrow and spend, as is the case with the current majority party, or you can cut spending, which neither party shows any propensity to do. There are no magic bullets -- if you're going to spend, you have to raise the money somewhere to do it. You may shift the burden around with different tax schemes, but in the end, everyone will pay more if there is no cut in spending.

Of course, the problem is that with the exception of waste and fraud, there really is no easy way to cut spending. That's why even the conservative party is still spending it. As one example, think about the party that was going to abolish the department of education a few years ago, and now brags about "No Child Left Behind" as one of it's maor accomplishments. By the way, before anyone punches the "notify moderator" button, this is not a bash on either party, just a statement of fact.

I think one of the primary reasons these schemes are floated by politicians is because most of them are sneaky ways to raise taxes without seeming to do so.

Frankly, the present tax system is the one in which I pay the lowest taxes. Most of our investments have been in various forms of real estate, and rental real estate just happens to be one of the neatest loophole providers ever invented. We're self-employed so we pay the max on SS and Medicare, the full boat employer's and employee's shares, on all the dollars we earn after expenses. However, once our income gets past that and into real estate stuff, the loopholes knock such a hole in the dollars that are left that we pay barely a pittance in comparison to the FICA. There's no way on earth that I'd favor a national sales tax or a flat tax.

Not fair, you say? You don't have access to those breaks? Pshaw. I'm far from a wealthy man, but we chose to structure it that way, and the same choices are available to everyone.