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Originally Posted by xjoe3x
Replying to you and mwillman.
As spacecoyote already know this is not a big benefit for the rich. It is a progressive tax, although it may not seem so at first glance. And while it is progressive it should benefit almost everyone.
First we will start with the prebate, it has multiple functions and helping the poor out is one of them. This is an amount of money given to families to cover the taxes of necessities. This is not meant to cover the actual cost of the food, just the cost of the tax on that food. This is about taxes not welfare. Welfare would be responsible for covering those costs. This means that the poor could live tax free. It is determined by family size.
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Will the prebate cover the costs of tax on all necesities (clothes and food) every time or does it expire over a course of the month (and renews at the beginning of each month)? Because if they expire, how do you ensure it will be enough to get them through the month.
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It repeals payroll taxes, which account for 38% of federal taxation and fall more on low and middle class families.
It saves about 80% of the 400 billion spent in compliance costs each year.
People with adjusted gross incomes of less than 20000 have a compliance cost of 4.53 percent of their income. People with adjusted gross incomes of more than 200000 have a compliance cost of .29 percent of their income. These compliance costs fall hardest on the poor.
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So the current system has problems, all systems have problems. But applying a new system would be un-cost effective. It would be better to just reform our current tax system.
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This plans main benefit, at least to me, is its huge benefit to the economy. This will raise the real wages and benefit all.
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And the rise in wages will raise prices. Basic laws of inflation. Because more money is going to flood the market (spendable income) the value of the dollar will drop.
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This plan significantly lowers taxation on work and savings. Therefore lowering the overall tax burden on works, that is according to a study done by professor Kotlikoff of Boston University.
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2 points for bringing in a study. -1 for not giving either the title or link to the study, so 1 point for you.
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It encourages savings instead of consumption. This will allow people to save for the future. This is a big contrast to our current system which taxes work and savings. It tries to get the poor and middle class to spend less and save more.
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What it encourages and what would happen are two different things. People will continue to buy crap as long as they can afford it. So the initial rise in prices (from the tax levied on them) will be offset by the "pay raise" from the the end of income tax.
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It lower the lifetime tax burden on all household. That is because of the savings, investment and economic growth that the system. Everyone wins because a stronger economy is good for all.
If we keep our current system we will have to double our payroll taxes, that is a 21% decrease in take home pay after taxes. That is to cover the the increased cost of social security. By 2030 we are looking at a 11.5% higher real wages than if we keep what we have. 25% higher by 2100.
Also of course it eliminates exemptions and special interests. Which is something I think we can all agree needs to be done.
There is extensive research and writing on the progressive nature of this tax in the book. I only took some of it. If you need more specific information on something, just ask. I think this plan will be good for everyone and really needed. The more supporters the better for all of us. I would really suggest the books, they are better at writing and explaining than I.
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So we need to reform social security, that's been important for years. I'll have to re-read the book, cause I didn't get excited about the system when I read it last time (so I read it half-heartedly during finals week.