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I don't know much experience with the taxing systems of other countries, so this is based on my own interpretation of the US tax laws.
When you purchase a product or a service, ie., a computer, a plumber's services; you are expected to pay an additional percentage to them, to cover sales tax. In
many places, such as where I live, it's 7%. The person/store you're paying takes that 7% and sends it to the government for their taxes.
However, when you receive your payroll check, taxes are subtracted from the amount that you actually made for that week, two weeks, whatever.
When you are hired by an employer, you are essentially providing a product or service to them. Therefore, like you pay sales tax to a store, the employer should pay the taxes on your income, thereby giving you the true amount of money you've earned.
If this is too much for employers to provide, businesses should pay the government it's sales tax out of their own pockets, not from the pockets of the consumer.
Either way, it's a much fairer situation.
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If this system were implemented, it would make sense to use a sliding scale not unlike the tax bracket system in use today, because the more a company is willing to pay a particular employee, the more tax they can afford to pay. If each company adjusted the salary of each employeesuch that their expense per employee were the same, then everyone would have a lower but now tax-free income. Those at the bottom of the scale who earn very little are already absolved from most income taxes and would be hurt by a lower income. Small businesses that rely on minimum wage workers would also be hurt by additional taxes. So it would make sense that wages at or below $x per year be exempt from taxes. An unscrupulous businessman could pay himself tax-free by dividing his own salary into many salaries of $x per year or less. The CEO of a company could easily give himself redundant entries on the payroll such that his $5 million salary isn't taxed down to $4.9 million. But at least this loophole is only profitable to the business owner |
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Either way, nothing would change. If businesses had to pay sales tax themselves, they'd just raise prices; if companies had to pay income tax themselves, they'd just lower wages. Prices and wages already include any built in compensation necessary. This is just an issue of accounting and advertising, not one of fairness. |
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egnor, wages lowering isn't true in all cases. Many, yes, but for those who are only making minimum wage, employer's couldn't lower wages to compensate. For the people only making minumum wage, the pre-payment of taxes would be beneficial. |
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I'd be a happy fella if my employer would just pay the tax on my cigarettes. I could buy them out in about a year-and-a-half. |
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As to the main, egnor is way ahead. Companies do not "pay" taxes. They collect funds for satisfying those obligations and rechannel them. |
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If it weren't for tax withholding, there's no way politicians would have been able to jack up taxes anywhere near as high as they have. The Revolutionary War was fought over levies which are tiny by today's standard. |
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The brilliance of this idea is that it simplifies the tax codes, at least for the average person. Of course wages would be lowered, but the lowered wages would be comparable wages after tax withholdings anyway. The difference is that you wouldn't have to fill out income tax forms. Average people who don't have a lot of deductions come out ahead, and the wealthiest people would actually have to pay their fair share.
Unfortunately the government will waste the money anyway, but that's another idea altogether... |
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What if you have multiple employers? What if you make some money on the side, or have your own business? There's a reason taxes are calculated per employee, not per employer. |
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If you're worried about taxing the rich, their taxes are likely to be in the form of capital gains and other personal income that doesn't come from an "employer" at all. |
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If you want to raise minimum wage, go right ahead, but that's an independent change. (At minimum wage, people don't pay much tax anyway.) |
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In the UK income tax is collected by the employer. You only have to fill out a tax form if your situation becomes too complicated for existing methods. |
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If you have multiple employers, you get taxed less. The idea is that if you work multiple jobs, you work harder for your money and therefore need it that much more. To keep it fair, wages should be normalized to dollars per hour. That way very highly part time workers don't get to cheat. And for those people without stable jobs, they can get a second job.
As for capital gains and other income sources, those could be taxed in more or less the same way. This idea is essentially a "salary tax" as opposed to an income tax and doesn't really cover those "non-salary earnings". Since what i consider to be "average people" get most of their income from working, they'd be paying less taxes anyway. |
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Fair share would definitely be no more than 10% of income. No salary tax for salaries below $50k per year. 10% tax on non-wage income above $50k per year. No loopholes. No deductions. I don't think that's too oppressive.
I think that those who work hardest for their money need it more and should pay less tax. I don't believe that someone who makes a million dollars per year works 20 times harder than someone who makes $50 thousand.
The executives sit at imported mahogany desks in spectacularly decorated corner offices on the 87th floor with a stunning view of the city skyline. They have secretaries to make them coffee, dictate their orders, and screen their calls. They drive luxury cars, live in fabulous houses, and take grand vacations. They don't have to worry about retirement, college funds, or health insurance.
Wealthy people live lavishly. 10% of their income means little to them. It'll come out of their retirement fund; perhaps they'd retire with several million dollars instead of many millions. Somehow I don't feel for them. For the average guy, those taxes would go to living a happier life.
It's not fair that those who |
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Well, all the rich people in the UK would love that one juan, they currently pay 40% tax on their millions. Giving them a 30% tax cut doesn' seem like it's favouring the lower paid much to me. if you wnat to do that (and I'm not advocating this incidentally) just put in a SUpertax bracket that kicks in at, say £250K.
The UK used to have this in the 70's - all ernings over a hundred thousand or so (?not sure on exact number) were taxed at 93%.
You are simply describing socialism. Go read some books - it didn't work. All the talent (which provided the creative force to create wealth) upped and left to live in places where they paid less tax (well that's an exaggeration, but if we're going to be simplistic about it...) |
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How can you say that's not favoring the lower paid? The lower paid are virtually tax-free! I'm not saying that rich people should be taxed until they are poor. I'm saying that if they pay their fair share, it has little to no impact on their lifestyle. Anyway government spending is out of control. Taxes are outrageously high except for those who are outrageously wealthy. $20 million from now I'll applaud the tax system which will allow me to keep virtually all of my fortune away from the government wastrels. |
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We obviously differ in our understanding of the word 'fair'. If I earn twice as much as you, I still pay the same for a gallon of petrol, a loaf of bread, and a Mercedes 300 SLR. Why should I pay more than you for a hospital, a prison and a homeless person? If the answer is simply that I *do* earn more, this is not fairness, this is envy. |
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Sales tax is applied regardless of income of consumer. If a merchant pays tax on item sold to consumer and consumer pays none, the merchant is subject to double taxation. If a merchant raises price of goods to compensate for tax, greater vulnerability in the free market is likely, i.e. 'Walmart' or somesuch has greater buying power, so on and so forth, to the extent that they drive other businesses out of competition ad infinitum. Then you have higher unemployment. Higher unemployment results in more dollars spent on Unemployment Compensation. Blah Blah Blah. By the way, Employers have to match withholdings to a large degree. They are already paying taxes on someone elses income. Not just taking it out of checks and handing it over to Uncle Scam.
While I would just as soon see everybody - self included - get a fair taste of the good life, that's the way the cookie crumbles. |
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There is a slight difference between consumer goods (a gallon of petrol, a loaf of bread, and a Mercedes 300 SLR) and public services (hospitals , prisons, and homeless shelters). One pays for consumer goods by choice. A rich person may choose to purchase an expensive car such as a Mercedes, but it's totally by choice. He could just as easily opt to buy a VW Beetle, a PT Cruiser, a bicycle, or even a bus pass. No one gets to choose tax funded public services. Imagine if taxes were abolished; who would pay the police? The aristocracy would be immune to the law. The poor would be unprotected. Millionaires would get away with murder without lawyers. You can't expect the poor to pay for shelters. If they could afford that, they wouldn't be homeless. Angel, please pay attention in civics class. |
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I did not suggest that taxes be abolished. I questioned the 'fairness' of the notion that higher income should imply higher taxation. If you are merely rehashing what you were told in Civics class, as your snide comment suggests, why are you not questioning it? |
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Angel, just because I can recall what I learned in grade school doesn't mean that I quoted it verbatim from the book. Unlike parrots and Christians, I actually understand the words I say (and type). And yes I make a lot of snide comments, I take pride in it.
I'm dumbing this down to the point that even an AOL user can understand it. My "fair tax" is essentially a flat tax except that is has 2 tax brackets: comfort and below subsistence. Comfort level means that you earn enough money to support yourself and therefore should pay taxes.
Below subsistence means that you are struggling to get by and deserve a break from taxes. How can you support everyone if you can't support yourself?
The goal is not to penalize anyone for making more money, but give a break to those people who make less.
To illustrate my point, I'll use an analogy. The citizenry is like a sports team. To be successful, everyone who plays must use his talent (income) and play to the best of his ability (pay taxes). However, some people on the team are on the injured list (below subsistence income). They don't get to play because they would hurt themselves more than they would help the team.
The problem with the current US system is that wealthy pay a significantly smaller proportion of taxes compared to the rest of the populace. That's like the star of the team deciding to only play 10 minutes of the game. I blame the coaches! |
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I have the feeling that you still don't get it. I had to be vaugue about sports because outside of the US soccer (what they wrongly call football) is very popular. Soccer is too low scoring to fit with this next idea. To understand this you should be familiar with NBA Basketball.
Let's say our sports team is the Philly Sixers. What if Allen Iverson complained that he scores most of the points? The team wouldn't win if number 3 decided to only score 10 points each night. He has to score a lot because he is the star of the team. Without his effort, the team wouldn't even make the playoffs!
What's that I hear? How does that relate to anything? That's what the rich do! They complain about extra taxes. They make extra money! What would they do with the extra money? Buy an extra home? Why? You can only live in one at a time! What would I do with my tax money? get a hooker! |
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Juan, I've no doubt nobody here likes the system any more than you do. But we're not Rich lawmakers protecting themselves and their Pork Barrel constituency. What you're saying is idealistic in its idealogue and possibly what Dems would pursue were they a lot more to the left. |
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The system is corrupt. This post is getting way too long; I concede. Get me a hooker! |
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Politicians are O.P.M. [other people's money] addicts. They love giving away other people's money. Funny they're not usually so generous with their own. |
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