David Cay Johnston: Time to junk income taxes?

[Winehole23]

This is America’s 100th year for individual income tax, a system as out of touch with our era as digital music is with the hand-cranked Victrola music players of 1912. It is also the 26th year of the Reagan-era reform for both personal and corporate tax, a grand design now buried under special-interest favors.


With U.S. elections in November, and the George W. Bush tax cuts due to expire at the end of 2012, it’s time for a debate that goes beyond ginning up anger over taxes and the superficial issue of tax rates.


It’s time to consider whether to get rid of income taxes, personal and corporate. What are the strengths and weaknesses of our current system? Should we tax individual and corporate income — or something else?


We need to think about it. Whatever systems we consider, we should weigh up what it takes to raise the necessary revenue along with such other attributes as minimal compliance cost, leakage and economic distortion.


Times change. Tax systems must change with them or else their lubricating effect turns to sand, wearing down the gears of commerce.


Just as the Industrial Revolution transformed a nation of farmers and mechanics into a land of factory hands and office workers, so too the digital revolution and globalization are fundamentally remaking society.


We need for our tax system to serve our 21st century civilization and its needs, including the costs of aging infrastructure and an aging population, costs that will be borne one way or another.
http://blogs.reuters.com/david-cay-johnston/2012/01/06/time-to-junk-income-taxes/

[boutons_deux]

what bullshit, just more airy-fairy anti-tax screed with no suggestions of alternatives.

[Winehole23]

boutons declares against tax reform

[Winehole23]

http://www.tax.com/taxcom/taxblog.nsf/Profiles/DavidCayJohnston?OpenDocument

[boutons_deux]

boutons knows that "tax reform" is always smokescreen and lies behind which is the 1% cutting taxes on themselves and raising taxes on the 99%.

[Winehole23]

didn't read anything, I see. you're as bad as WC and DarrinS.

[EVAY]

I read both of the pieces, WH, and while it seems impossible for a reasonable person to disagree with Johnston's premises, as well as his call for a national discussion, it seems almost naive to suggest that it can go anywhere in the poisoned atmosphere that is current American discourse.

[EVAY]

I mean, how many committees and task forces have recognized the validity of Johnston's
premises, addressed them, and promptly been ignored by both sides of the political aisles in washington?

[EVAY]

It is easy to say we ought to fix it, and so hard to come up with plans that do not create major dislocations in the economy at one place or another. For example, the Bowles-Simpson plan was fair in that it 'gored everybody's ox'. But it was a non-starter because, among other things, it called for a reduction or removal of the mortgage-interest-deduction
for middle class families. The impact of a move like that on an already reeling housing market was unthinkable.

So...nobody thought about it.

[EVAY]

When each party's avowed goal is to stop any program that the other party wants to advance, what possible use is there is attempting to come up with yet another plan?

[EVAY]

I honestly believe that a flat tax might be nice, except that the suggestion for one is usually accompanied by calls for removing deductions that lobbyists will put right back in.

[boutons_deux]

"removal of the mortgage-interest-deduction for middle class families."

it was not specific to middle class.

Johnston's ideas are mostly OK, which is exactly why UCA and 1% will (continue to) pay enough to keep them from being implemented.

"And what about corporate tax accounting costs"

GE's "corporate tax accounting costs" of 1000 people in its tax department pays off extremely well in greatly reduced/no income taxes.

[Wild Cobra]

Many of us have been advocating for about 10 years now, a consumption tax, rather than our current productivity tax.

[Winehole23]

When each party's avowed goal is to stop any program that the other party wants to advance, what possible use is there is attempting to come up with yet another plan?
the ongoing conversation can change the common sense. if the R's and D's continue to ignore the common sense of the people, an opening might be created for a third party.

Not bloody likely, admittedly, but not impossible either. Giving in to despair certainly isn't the answer.

[Wild Cobra]

the ongoing conversation can change the common sense. if the R's and D's continue to ignore the common sense of the people, an opening might be created for a third party.

Not bloody likely, admittedly, but not impossible either. Giving in to despair certainly isn't the answer.
A viable 3rd party will never happen, until most states require a 50%+1 win, with runoff voting.

[DMX7]

the ongoing conversation can change the common sense. if the R's and D's continue to ignore the common sense of the people, an opening might be created for a third party.

Not bloody likely, admittedly, but not impossible either. Giving in to despair certainly isn't the answer.

Let's not pretend like both parties are equally to blame.

[Wild Cobra]

Let's not pretend like both parties are equally to blame.
They are both to blame. I would disagree on the equal part, but that's a different discussion.

One major reason they will never change the tax system, to make it better for us, is because they lose power over us.

[Winehole23]

Let's not pretend like both parties are equally to blame.why not?

[Winehole23]

both are fucking horrible

[Winehole23]

we deserve other choices. red or blue, we end up with purple assholes either way.

[Wild Cobra]

we deserve other choices. red or blue, we end up with purple assholes either way.
That badly bruised huh?

[TDMVPDPOY]

theres fkn nothing wrong with the current system

if you want low paid workers to pay their share of tax, all you have to do is lift the minimum wage law...just enough to pushed them over the first income bracket where they are force to pay taxes...

if you want to get rid of companies outsourcing its fkn simple, if they want to operate in ur economy...raise fkn tariffs on imports and income derived from overseas tax higher, so these clowns are either forced to bring back manufacturing and investments stays in the country

[boutons_deux]

"all you have to do is lift the minimum wage law"

conservatives and businessmen scream bloody murder, ain't gonna happen at federal level, but some progressive states and cities have lifted it, eg, in SFO now over $10

[boutons_deux]

Ever hear Repugs, who defunded the IRS by several $100M, and conservatives bitching about this?

Unpaid taxes: IRS report says $450 billion owed

People and businesses underpaid their taxes by an estimated 17 percent in the most recent year studied, meaning they failed to send the government $450 billion it was owed,

The study covered 2006, the most recent for which the IRS said it had data available. The amount of underpaid taxes far exceeded the size of the entire federal budget deficit at the time.

After IRS audits and other enforcement efforts, non-compliance shrank to 14 percent, leaving the final amount of unpaid taxes at $385 billion.

That is still larger than the budget deficit for fiscal 2006, which was $248 billion. Fiscal years begin in October of the previous year.

Altogether, the IRS estimates it was owed nearly $2.7 trillion in taxes in 2006.

http://www.politico.com/news/stories/0112/71174.html#ixzz1irWceBlP

Added to that the legal loopholes and tax expenditures for UCA and the wealthy, and we're talking about real money.

And not a peep from the Repugs and conservatives.

[EVAY]

Giving in to despair certainly isn't the answer.

Are you certain that it reflects despair and not an appreciation of the economy of effort?


Crying that things are wrong doesn't seem to advance the proposition much either.

[Winehole23]

Are you certain that it reflects despair and not an appreciation of the economy of effort?I see the distinction you are making, but it appears to be one without a difference.

Crying that things are wrong doesn't seem to advance the proposition much either.complaining is about wrongs is necessary feedback and, if sufficiently intense, can get political traction.

[EVAY]

I see the distinction you are making, but it appears to be one without a difference.
complaining is about wrongs is necessary feedback and, if sufficiently intense, can get political traction.

Well, it seems to me that the difference is this: despair is a strong emotion that is characterized by a lack of all hope. A giving up, if you will.

On the other hand, an appreciation of the economy of effort is an almost emotion-less understanding that engaging in more of the behavior (coming up with solutions to the stated problem of tax codes being so out of touch with the needs of the country at the moment) that has been tried repeatedly by about 4 different commissions/committees in the past 18 months but has been met with indifference or outright hostility by members of both currently governing political parties, is a colossal waste of time.

IMHO, our energies are better spent trying to get moderates from both parties elected rather than the firebrands that are currently refusing to consider cooperation or compromise.

Until different people are receiving the reports of the commissions and committees that have worked and worked on these issues, there is little expectation that recent history will not be repeated.

What is that old saw about what it means to repeat the same behavior over and over and expect a different outcome?

[Winehole23]

Well, it seems to me that the difference is this: despair is a strong emotion that is characterized by a lack of all hope. A giving up, if you will.

On the other hand, an appreciation of the economy of effort is an almost emotion-less understanding that engaging in more of the behavior (coming up with solutions to the stated problem of tax codes being so out of touch with the needs of the country at the moment) that has been tried repeatedly by about 4 different commissions/committees in the past 18 months but has been met with indifference or outright hostility by members of both currently governing political parties, is a colossal waste of time.educating voters about the inequities/inefficiencies of our tax system and the necessity of reform is worthwhile regardless, but wrt to elected pols I can definitely agree.

IMHO, our energies are better spent trying to get moderates from both parties elected rather than the firebrands that are currently refusing to consider cooperation or compromise.

Until different people are receiving the reports of the commissions and committees that have worked and worked on these issues, there is little expectation that recent history will not be repeated.I'm not too sanguine about the two major parties. Both have basically been captured by the the special interests that fund elections and write laws for them.

The system is broken. Voters should bust both parties in the chops by supporting a third more oriented to the public interest than crony capitalism. until voters can instill fear of accountability at the polls, or reform changes the role of money, nothing will change, even if more moderate Dems and Republicans are elected.

[Borat Sagyidev]

Many of us have been advocating for about 10 years now, a consumption tax, rather than our current productivity tax.

We have a consumption tax in place, it's called sales tax.

Productivity tax? Care to elaborate, maybe you mean earned income tax?

As far as unearned income tax, I'm not sure how you can reason that productive especially given the past few years and beyond. Mitt Romney, Donald trump and many others for example has a history of bankruptcy that tax us all. if they're productive by your definition, so was Hurricane Katrina.

[EVAY]

educating voters about the inequities/inefficiencies of our tax system and the necessity of reform is worthwhile regardless, but wrt to elected pols i can definitely agree.
I'm not too sanguine about the two major parties. Both have basically been captured by the the special interests that fund elections and write laws for them.

The system is broken. Voters should bust both parties in the chops by supporting a third more oriented to the public interest than crony capitalism. Until voters can instill fear of accountability at the polls, or reform changes the role of money, nothing will change, even if more moderate dems and republicans are elected.

amen!!

[EVAY]

WRT voters needing to 'bust both parties in the chops' I actually kind of hopeful that voters are really getting to that point. Unfortunately, we don't have a third option available at the moment, but I think this would be the year they could really make some headway if someone were to run.

Anybody hearing anything about another candidate?

I remember voting for Kinky Friedman for Governor of Texas once because I didn't like either of the other candidates...but that kind of thing is essentially throwing your vote away. I'd love to see a real third party that had something to offer.

[boutons_deux]

ain't no change gonna happen. the pendulum has swung and stuck in favor of the 1%

Enjoy your academic discussions and fantasies.

[Winehole23]

suit yourself. go read something else if you don't like it.

[ElNono]

:reading

[Winehole23]

exactly

[boutons_deux]

Nobody has a single, tiny suggestion how to Take Our Country Back from the 1%, zero ideas.

I read that some cities have declarations that Corporate-Americans aren't people, but without Federal law and extreme right-wing activist pro-business/anti-human SCOTUS overturning C-U, ain't nothing gonna change.

In the Greatest Country In The Universe EVER, 100s of cities are tearing down their lamp posts because they can't pay the electricity.

The median income for a worker is $26K/year, $13/hour, no benefits, no vacation, no sick pay, no group insurance. 50% of workers are working poor.

[Wild Cobra]

Nobody has a single, tiny suggestion how to Take Our Country Back from the 1%, zero ideas.

Once I figure out how to take it back from the 47%, I might focus on the 1%.

[Wild Cobra]

The median income for a worker is $26K/year, $13/hour, no benefits, no vacation, no sick pay, no group insurance. 50% of workers are working poor.
Has anyone ever told you that you have an entitlement mentality?

[vy65]

In the Greatest Country In The Universe EVER, 100s of cities are tearing down their lamp posts because they can't pay the electricity.

If they're really losing money, wouldn't it be cheaper to just leave them off?

Oh, and also, could you hook us up with a link?

[boutons_deux]

Return to a Darker Age

http://mobile.nytimes.com/article?a=890759&f=28&sub=Sunday

[vy65]

In the Greatest Country In The Universe EVER, 100s of cities are tearing down their lamp posts because they can't pay the electricity.

lol


So it is all the more remarkable that, in what appears to be a spreading trend, dozens of cities and towns across America - from California and Oregon to Maine - are contemplating significantly reducing the number of street lamps to lower their hefty electric bills. In some communities, utility companies have already torn posts from the ground. Faced with several million dollars in unpaid bills, Highland Park, Mich., has lost two-thirds of its lamps, whereas officials in Rockford, Ill., have extinguished as many as 2,300, or 16 percent of all the city's streetlights.

I also missed the part where *hundreds* of cities can't pay their electricity bills. Link?

[boutons_deux]

the trend is just getting started. America in permanent decline thanks to Repug/conservative "principles".

[vy65]

Cool, so you don't have any evidence. Thanks!

[boutons_deux]

there's plenty evidence. Keep whistling past the graveyard

[Borat Sagyidev]

Has anyone ever told you that you have an entitlement mentality?

Yes, WC, someone who complains about $13 an hour has an entitlement mentality. Granted some of them do, but it pales in comparison to the shit 1% get away with.

Nevermind those "unlucky" bankers getting bailed out with everyones dollars, including yours for their catastrophic failures and continue a to live a undeserved yacht using lifestyle. Those people making ends-meat and physically working are so much worse.

The funny thing is that WC and many like him think they have integrity or some other self proclaimed value, while most of the top1% of wealthy in this country think he's just another dumb fool, easily moved into their cause via a few kick backs just to keep them just happy enough.

You'll notice only 10% of whites owned slaves pre-civil war, but they sure got a lot more of people to fight to death, while they as slave-owners claimed exemptions for being too important to fight or die.

Not much different than average chicken hawks today.... and today just as then a whole bunch of fools support them.:rolleyes

[Winehole23]

Last week, the IRS released a report on the estimated "tax gap," or money that people legally owe in taxes but evade paying.


For 2006 (the most recent year calculated), the gap stood at $450 billion, an increase from 2001's estimated tax gap of $345 billion.


Keep in mind, this isn't money people legally avoid paying by using tax shelters like an IRA (http://wiki.fool.com/Can_I_Invest_in_a_401%28k%29_Without_an_Employer%3 F?utm_source=Fool&utm_medium=links&utm_campaign=IRA&source=ihlsitlnk0000001) or 401(k) (http://wiki.fool.com/401%28k%29?utm_source=Fool&utm_medium=links&utm_campaign=401%28k%29&source=ihlsitlnk0000001). This is tax revenue illegally unpaid thanks to things like offshore bank accounts and unreported cash receipts from businesses.


The IRS only issues these reports every five years, and each report details just one year. But let's use some assumptions. Assume 2001's tax gap of $345 billion was reflective of the 2001-2005 period, and 2006's $450 billion gap was reflective of the 2006-2011 period. In total, that's $4.4 trillion in lost tax revenue over the last decade.


Now, this is a rough estimate at best. I used (http://www.fool.com/investing/general/2011/04/21/the-most-sensible-way-to-solve-the-budget-deficit.aspx) the IRS' old data last year to estimate the decade's loss from tax evasion at $3 trillion. The real figure, which is almost impossible to know, is probably somewhere between $3 trillion and $5 trillion. Either way, what I wrote last year holds true:

Put that money in perspective. Tax evasion in the last decade cost an amount roughly equivalent to the Bush tax cuts, the Obama stimulus, and the wars in Iraq and Afghanistan... combined. It's amazing more people aren't outraged about this stuff. Rather, they likely would be if they knew about it. As long as there are taxes, there will be tax evasion. It will never be eradicated. The question is whether the tax gap can reasonably be reduced from current levels.


If it can, we're not trying hard enough. As David Cay Johnston recently wrote in Reuters, the IRS' budget is being cut by 5%, which will likely increase tax evasion through fewer enforcement officers. He explained:

IRS data show that auditors assigned to the 14,000 or so largest corporations found $9,354 of additional tax owed for every hour spent testing tax returns (http://wiki.fool.com/Tax_Overpayment_Implications?utm_source=Fool&utm_medium=links&utm_campaign=tax%20returns&source=ihlsitlnk0000001) in the 2009 fiscal year (http://wiki.fool.com/Fiscal_year?utm_source=Fool&utm_medium=links&utm_campaign=fiscal%20year&source=ihlsitlnk0000001). The highest-paid IRS auditors make $71 an hour. Based on a 2,080-hour work year, that works out to around $19 million of lost revenue annually for every senior corporate auditor position cut from the payroll.http://www.fool.com/investing/general/2012/01/20/3-huge-recent-economic-developments-you-may-have-.aspx

[cheguevara]

didn't read anything, I see. you're as bad as WC and DarrinS.

you are just realizing this??

[cheguevara]

Has anyone ever told you that you have an entitlement mentality?

WC with the uppercut to the ribcage.

[Winehole23]

you are just realizing this??hardly, but boutons needs the reminder