Taxed too many times
June 9, 2011 3:37 PM Subscribe
Why am I/things taxed so much?
Not getting into the argument of the percentage of taxation, I'm wondering what's the argument behind taxing individuals or things for sale so many times? I realise that it likely boils down to the gov't is ineffective at controlling spending but I'd like an economic explanation grounded in reality. Not first year 'people are rational' stuff.
For instance, I do my work and get taxed on income. Then I get taxed on my investments (There are exceptions). Then I get taxed on the things I choose to buy after that through sales tax. Sometimes I get taxed again an environmental tax or a sin tax.
If I buy something used through a business, chances are that items been taxed many times. Not only in import and duty taxes, but manufacturing taxes, taxes each time it changes hands, and I'm sure many other things that I've forgotten.
Granted I'm a bit ignorant about this particular issue but it appears to be a farce to me. So, is there a reason or is it just another byproduct of bloated bureaucracies?
Can anyone explain why all this tax is needed?
Not getting into the argument of the percentage of taxation, I'm wondering what's the argument behind taxing individuals or things for sale so many times? I realise that it likely boils down to the gov't is ineffective at controlling spending but I'd like an economic explanation grounded in reality. Not first year 'people are rational' stuff.
For instance, I do my work and get taxed on income. Then I get taxed on my investments (There are exceptions). Then I get taxed on the things I choose to buy after that through sales tax. Sometimes I get taxed again an environmental tax or a sin tax.
If I buy something used through a business, chances are that items been taxed many times. Not only in import and duty taxes, but manufacturing taxes, taxes each time it changes hands, and I'm sure many other things that I've forgotten.
Granted I'm a bit ignorant about this particular issue but it appears to be a farce to me. So, is there a reason or is it just another byproduct of bloated bureaucracies?
Can anyone explain why all this tax is needed?
Taxation happens every time money changes hands (well, in theory). The U.S. doesn't tax wealth, we tax the transfer of wealth. Basically every transfer of money is a taxable event unless their's a specific IRS carve out, such as qualified plans like 401(k)s.
posted by 2bucksplus at 3:41 PM on June 9, 2011 [2 favorites]
posted by 2bucksplus at 3:41 PM on June 9, 2011 [2 favorites]
..unless there is a...
posted by 2bucksplus at 3:42 PM on June 9, 2011
posted by 2bucksplus at 3:42 PM on June 9, 2011
Lots of reasons.
It's more palatable to people politically when they don't see all their taxes at once. Lots of taxes are used to incentivize or disicentivize activities that the government likes or dislikes, respectively. Certain taxes, like sales taxes, will hit even people who hide their income. Different taxes affect different segments of the population differently -- for example, taxes on investments don't affect people who don't have investments.
posted by shivohum at 3:43 PM on June 9, 2011 [4 favorites]
It's more palatable to people politically when they don't see all their taxes at once. Lots of taxes are used to incentivize or disicentivize activities that the government likes or dislikes, respectively. Certain taxes, like sales taxes, will hit even people who hide their income. Different taxes affect different segments of the population differently -- for example, taxes on investments don't affect people who don't have investments.
posted by shivohum at 3:43 PM on June 9, 2011 [4 favorites]
Don't look at it as "things" being taxed, but as "transactions" being taxed.
The government needs to be funded, and the best way (so far) has been for the government to take a cut of (nearly) all economic activity.
The "sin" taxes (whether booze of environmental) should be looked at as an attempt by the government to recover the external costs of that "sin".
posted by gjc at 3:52 PM on June 9, 2011 [1 favorite]
The government needs to be funded, and the best way (so far) has been for the government to take a cut of (nearly) all economic activity.
The "sin" taxes (whether booze of environmental) should be looked at as an attempt by the government to recover the external costs of that "sin".
posted by gjc at 3:52 PM on June 9, 2011 [1 favorite]
good answers from 2bucksplus and The World Famous. And don't think that smaller government -> lower taxation -> simpler taxation would be a solution, either. Say you decided to radically reduce the scope of government, such that it could bring in enough revenue just from a 10% retail sales tax (for example). Well, obviously there would be huge incentives to circumvent the sales tax by bartering or other loopholes. The economy itself is complex, thus the tax infrastructure must also be rather complex. Unfortunate but true.
posted by Chris4d at 4:04 PM on June 9, 2011
posted by Chris4d at 4:04 PM on June 9, 2011
Is this post serious? What specifically do you want to know? This seems like a "well, duh, the gov't is way less efficient than the private sector" rant without a clear issue to discuss.
You know it's easy to find out the history of most taxes, right? E.g., income taxes started out to pay for the Civil War. It's very easy to find out where these taxes came from and also why they didn't go away. (Case in point, a bridge by me has a $2 toll, the toll was implemented to pay for certain costs, which were paid for decades ago, but the toll remains, thanks to known, documented scumbag politicians.)
If you're asking why tax in so many places, it's because taxes set policy (e.g., people who purchase a home or reproduce get to pay less and people who smoke or drink get to pay more) and try to cover loopholes (e.g., if all taxes were removed except sales tax, people who do everything they could to barter).
posted by Brian Puccio at 4:12 PM on June 9, 2011 [3 favorites]
You know it's easy to find out the history of most taxes, right? E.g., income taxes started out to pay for the Civil War. It's very easy to find out where these taxes came from and also why they didn't go away. (Case in point, a bridge by me has a $2 toll, the toll was implemented to pay for certain costs, which were paid for decades ago, but the toll remains, thanks to known, documented scumbag politicians.)
If you're asking why tax in so many places, it's because taxes set policy (e.g., people who purchase a home or reproduce get to pay less and people who smoke or drink get to pay more) and try to cover loopholes (e.g., if all taxes were removed except sales tax, people who do everything they could to barter).
posted by Brian Puccio at 4:12 PM on June 9, 2011 [3 favorites]
Because in any given activity, you are using some kind of infrastructure, and that needs to be paid for. Take your "taxed on investments" example. If I don't have investments, I don't get taxed. You have investments - but for you to have investments, you need an infrastructure: banks need regulation, security laws need to be passed, enforcement needs to happen, and so forth and so on. All this costs money. Your investments, cost money to maintain. Who is supposed to pay for that? Of course, you could take that money from general taxes, but that raises two issues - one, I don't have investments, but I'm supposed to pay for the infrastructure for YOUR investments? But that's less important than the other point - if you say "general tax receipts", then you need to account for that cost. If the cost is "n", then you need to have taxes at level X+n. Either way, the infrastructure needs to be paid for. All activity has some kind of cost. If you have a factory that pollutes, or creates a road traffic burden - well, there's your environmental tax, because someone has to fund the superfunds so we don't all die from pollution. And so forth.
This is just one way aspect of why things need to be taxed. Sometimes the government elects to tax particular economic entities because those entities actually incur the cost to government, sometimes it's simply because things need to be funded for the greater good and a given entity has deep pockets, so the government is like a bank robber - they go to where the money is. How can you justify the way of the robber here? Well, because presumably by increasing the well-being of the entire society, the entities being "unjustly robbed/taxed" also benefit. Imagine this scenario: there are 10 people "Country X", 9 have $1 each and the tenth has $1000. "Country X" is under physical threat, and needs to hire soldiers for a total cost of $200. If you take a dollar from the 9, you end up with 9 stone cold broke dudes and only $9, and all get slaughtered. So you take $200 from the tenth dude and $0 from the other 9. It still makes sense for the wealthy dude to part with $200, even if it is an "unfair" burden distribution, because the "Country X" is still better off, including the $1000 wealthy guy.
This gets at the heart of the failure of the extremist libertarian economic philosophy - it never takes into account the full cost of economic activity, either direct or indirect.
posted by VikingSword at 4:13 PM on June 9, 2011 [26 favorites]
This is just one way aspect of why things need to be taxed. Sometimes the government elects to tax particular economic entities because those entities actually incur the cost to government, sometimes it's simply because things need to be funded for the greater good and a given entity has deep pockets, so the government is like a bank robber - they go to where the money is. How can you justify the way of the robber here? Well, because presumably by increasing the well-being of the entire society, the entities being "unjustly robbed/taxed" also benefit. Imagine this scenario: there are 10 people "Country X", 9 have $1 each and the tenth has $1000. "Country X" is under physical threat, and needs to hire soldiers for a total cost of $200. If you take a dollar from the 9, you end up with 9 stone cold broke dudes and only $9, and all get slaughtered. So you take $200 from the tenth dude and $0 from the other 9. It still makes sense for the wealthy dude to part with $200, even if it is an "unfair" burden distribution, because the "Country X" is still better off, including the $1000 wealthy guy.
This gets at the heart of the failure of the extremist libertarian economic philosophy - it never takes into account the full cost of economic activity, either direct or indirect.
posted by VikingSword at 4:13 PM on June 9, 2011 [26 favorites]
It's not the usual way of thinking about it, but good old raw market basics suggests that governments might just tax and otherwise leverage their populations as heavily as they can, right up to the maximum level that those populations will tolerate without deciding to revolt.
In a long enough view, anyway.
posted by rokusan at 4:14 PM on June 9, 2011
In a long enough view, anyway.
posted by rokusan at 4:14 PM on June 9, 2011
I'm pretty sure the poster wants to know why there are such a large number and variety of taxes, not why taxes are so high.
1) To decrease political backlash. A small tax enacted upon a limited segment of the economy will be easier to pass through a legislature, and the taxees won't react as negatively. Politicians nearly always want more money to work with, so these little taxes will accumulate.
2) To reduce the avenues of tax evasion. Assuming we want every person to pay taxes, capital gains tax ensures that you can't avoid taxes by making your living trading stocks.
3) To mold economic activity. Examples include import duties, which increase domestic spending and reduce imports.
posted by yath at 4:16 PM on June 9, 2011 [3 favorites]
1) To decrease political backlash. A small tax enacted upon a limited segment of the economy will be easier to pass through a legislature, and the taxees won't react as negatively. Politicians nearly always want more money to work with, so these little taxes will accumulate.
2) To reduce the avenues of tax evasion. Assuming we want every person to pay taxes, capital gains tax ensures that you can't avoid taxes by making your living trading stocks.
3) To mold economic activity. Examples include import duties, which increase domestic spending and reduce imports.
posted by yath at 4:16 PM on June 9, 2011 [3 favorites]
We tax a lot of different things because if we only taxed some things and not others then people would stop doing those things that get taxed and do the other things. Worse yet, perhaps only some people would be able to stop doing those things and others would not be able, so now a tax that is supposed to affect everyone only affects those without the means (probably) to avoid it.
posted by It's Never Lurgi at 4:20 PM on June 9, 2011 [2 favorites]
posted by It's Never Lurgi at 4:20 PM on June 9, 2011 [2 favorites]
How about 10 years ago it cost $75.9 billion anually just to maintain exsiting roads and bridges.
posted by larry_darrell at 4:21 PM on June 9, 2011
posted by larry_darrell at 4:21 PM on June 9, 2011
It is a tax on transactions as many people have said but the real justification for all the taxes is that is how you fund the public goods that makes those transactions possible. Those taxes pay for national defense (classic public good), public works like sewers, roads, water and all the things that make modern civic life possible, policing and fire. There are also several private goods like education that as a society we have decided should also be funded through public means (and education makes transactions possible too-literacy really helps commerce). A modern industrial society is really nice to live in and the average wealth available to a poor person today rivals or exceeds that of the aristrocracy of old. All that nice stuff (like paved roads and making the poop disappear and criminals arrested) takes real money. If you want to see what happens without that see somalia, or even Mexico for a what can happen when the taxes aren't high enough.
posted by bartonlong at 4:28 PM on June 9, 2011
posted by bartonlong at 4:28 PM on June 9, 2011
The more complex the economy, the more kinds of taxes there are. A complex economy has a complex infrastructure - and it all needs to be paid for. If we abolished all private investments (as Communist countries did), the need for that infrastructure disappears - and so on. So if you want to have a complex and rich society - you must have a ton of different taxes levied in order to fund a whole array of different infrastructures. You can cut back on it, by making your society simple. Note, that poor countries have lower - or nonexistent - taxes, because they don't need them. See Pakistan. Or Congo. Or Somalia. Would you like to live in Congo? Here's a nice look at that from Kristof: A low-tax, religious-values nation - Pakistan. The bottom line, is that if you don't fund universities or education, you save taxes - and you also live like a savage. Don't like funding science? Live like they do in Mozambique. Cut off all those taxes, and you end up in a third world nation. It's a well-known pattern - advanced societies are always taxed at higher levels and their tax systems are far more complex than simple and poor nations - and there are powerful economic reasons that is so. There is no free lunch out there - gotta pay for everything, with taxes. This doesn't mean that there is no waste or inefficiency - but the answer is to reform particular practices and not abolish taxes, because you cannot have a complex economy without very complex and pretty high taxes. The paradox is of course, that at the end of the day, you are better off economically precisely because of those taxes.
posted by VikingSword at 4:32 PM on June 9, 2011 [7 favorites]
posted by VikingSword at 4:32 PM on June 9, 2011 [7 favorites]
Mod note: folks, let's keep this on topic and non-fighty please
posted by jessamyn (staff) at 4:46 PM on June 9, 2011
posted by jessamyn (staff) at 4:46 PM on June 9, 2011
Well, TWF, I don't want to derail this thread as it's arguably outside the scope of the question, but taxation, as has been alluded to above, is also a means for government to steer economic activity, to encourage some developments, discourage others etc., and you couldn't do that if your only tool were general taxes. You need targeted instruments. Of course, there are also political considerations, as well as a compliance cost and cost of recovery, which is why a lot of taxes have been labelled "fees" (especially here in CA). But fees are less desirable as an instrument, because they are less flexible (unless, of course you simply label a tax a fee and play such semantic games). But basically, for a complex economy you must have complex taxation - which is another reason things such as "flat tax" are pure idiocy just as extreme libertarianism is.
posted by VikingSword at 4:48 PM on June 9, 2011 [1 favorite]
posted by VikingSword at 4:48 PM on June 9, 2011 [1 favorite]
Are you asking why the total amount of tax you pay is so large or why the number of separate tax transactions that comprise it is so large?
posted by dfan at 5:08 PM on June 9, 2011
posted by dfan at 5:08 PM on June 9, 2011
Yath has it. We are all taxed in different ways because most taxes have specific antecedents, with the revenue generated from the tax spent or compensating for specific things, or the behaviour the taxes incents focussed on a particular outcome.
Tobacco taxes are a great example of this: We tax tobacco to subsidise the incredibly high health cost burden it imposes on society, and also to make cigarettes etc more expensive so less people smoke them. Here in Australia, a large proportion of tobacco tax revenue is required to be spent on anti-smoking measures. This is obviously very different from income taxes.
Consumption taxes in general are quite popular for several reasons:
1) because only people consuming said good are likely to be taxed for it.
2) The public in general is liable to respond more positively to the "Death by a thousand cuts" of small but frequent consumption taxes rather than large income taxes.
3) Rich people and other vested interests like consumption taxes because rich people tend to consume largely the same amount of shit that poor people do - it's their income, money making and assets that are far greater.
4) From a legislative perspective, it's far easier to pass laws on new taxes and excise for specific things, rather than wholesale tax system reform that would be required to raise revenue more generally.
posted by smoke at 5:31 PM on June 9, 2011 [1 favorite]
Tobacco taxes are a great example of this: We tax tobacco to subsidise the incredibly high health cost burden it imposes on society, and also to make cigarettes etc more expensive so less people smoke them. Here in Australia, a large proportion of tobacco tax revenue is required to be spent on anti-smoking measures. This is obviously very different from income taxes.
Consumption taxes in general are quite popular for several reasons:
1) because only people consuming said good are likely to be taxed for it.
2) The public in general is liable to respond more positively to the "Death by a thousand cuts" of small but frequent consumption taxes rather than large income taxes.
3) Rich people and other vested interests like consumption taxes because rich people tend to consume largely the same amount of shit that poor people do - it's their income, money making and assets that are far greater.
4) From a legislative perspective, it's far easier to pass laws on new taxes and excise for specific things, rather than wholesale tax system reform that would be required to raise revenue more generally.
posted by smoke at 5:31 PM on June 9, 2011 [1 favorite]
Tax can be a powerful fiscal and social policy instrument (because it affects investment, savings and discretionary spending, and can incentivise certain behaviours), and so multiple taxes can sometimes be a symptom of various levels of government trying to achieve particular goals. Throw in governments adopting 'user pays' approaches to service delivery, and tax consumption, and that's a lot of tax.
posted by obiwanwasabi at 5:45 PM on June 9, 2011 [1 favorite]
posted by obiwanwasabi at 5:45 PM on June 9, 2011 [1 favorite]
Then I get taxed on my investments
You're not taxed on your investments. You're taxed on the realized gains from your investments.
It all starts when governments need to raise revenue to pay for their operations. Sounds simple enough. But when you levy a tax on one thing or collect taxes from one kind of transaction, you suddenly create an incentive for people to concentrate their economic activity on the untaxed transactions, so the government has to tax them, too. If you weren't taxed on your capital gains, but were taxed on your income, you would take the sort of jobs where your "income" was primarily from capital gains. Our tax structure is a combination of the need for revenue to pay for its operations (and so will tax any source that can afford to pay taxes but currently isn't), a need to close loopholes so that no transactions/purchases/jobs become "favored" over another, to pay for or offset the direct cost of services directly (gas taxes pay for roads, tolls pay for bridges and toll roads, national park fees pay for park maintenance), and a way to influence policy/behavior (cigarette & alcohol taxes, congestion tolls, etc.).
posted by deanc at 6:17 PM on June 9, 2011
You're not taxed on your investments. You're taxed on the realized gains from your investments.
It all starts when governments need to raise revenue to pay for their operations. Sounds simple enough. But when you levy a tax on one thing or collect taxes from one kind of transaction, you suddenly create an incentive for people to concentrate their economic activity on the untaxed transactions, so the government has to tax them, too. If you weren't taxed on your capital gains, but were taxed on your income, you would take the sort of jobs where your "income" was primarily from capital gains. Our tax structure is a combination of the need for revenue to pay for its operations (and so will tax any source that can afford to pay taxes but currently isn't), a need to close loopholes so that no transactions/purchases/jobs become "favored" over another, to pay for or offset the direct cost of services directly (gas taxes pay for roads, tolls pay for bridges and toll roads, national park fees pay for park maintenance), and a way to influence policy/behavior (cigarette & alcohol taxes, congestion tolls, etc.).
posted by deanc at 6:17 PM on June 9, 2011
I'd like an economic explanation grounded in reality. [...] For instance, I do my work and get taxed on income.
How can you "do your work"? Do you use any roads or cross any bridges on your way to work? Do you utilize any of the things you learned in the 12-odd years of free education you received? Do you breathe clean air while working? Drink clean water while working? How about your work environment? Free from thieves and murders and fires?
You are only able to "do your work" because of the vast array of systems that are in place that got you where you are and protect your ability to keep doing it. All the things you count on to "Just Work" are not one-time payments. They require continuous, recurring maintenance. That stuff costs money.
posted by Civil_Disobedient at 6:26 PM on June 9, 2011 [6 favorites]
How can you "do your work"? Do you use any roads or cross any bridges on your way to work? Do you utilize any of the things you learned in the 12-odd years of free education you received? Do you breathe clean air while working? Drink clean water while working? How about your work environment? Free from thieves and murders and fires?
You are only able to "do your work" because of the vast array of systems that are in place that got you where you are and protect your ability to keep doing it. All the things you count on to "Just Work" are not one-time payments. They require continuous, recurring maintenance. That stuff costs money.
posted by Civil_Disobedient at 6:26 PM on June 9, 2011 [6 favorites]
Aside from what VikingSword and TWF mentioned, taxation is the foundation of a healthy democracy. Money is a form of soft power. So, by paying taxes you earn a stake in the government; you have some control upon the power of government; and you force our politician to listen to us, and follow our bidding (to a certain extent). In countries where government funding did not come from taxation, invariably, there is a decline of democracy. You can see this in oil-funded theocracies in the Middle East, or international-aids-funded kleptocracies in Africa. Even in civilized countries like Russia and China, there are a lot of corruption and abuse of power because those governments are not funded by taxation of their citizenry; they are funded mostly from a small section of the population, and by a few government-owned industries. Look at any disfunctional society out there, and you can almost always trace it back to the lack of a wide base of taxation. It makes sense, politicians are human, and all power-hungry men in society will be attracted toward the hard-power of the gun and the soft-power of money. And even though idealistically, the power of the ballot should be supreme; in reality, citizenry need to be a lot more involved. It is vital that not only the government is electable, but also is powered both monetarily and militarily by as large a base of their citizenry as possible.
There is a flip side to that too: because you pay taxes, you care more about government. Look at a stereotype of a welfare recipient. He/she will not care how the government is run, or whether any policies enacted is sensible. He/she will only care about the welfare check. Responsible, tax-paying citizens are those who care about good government, and good policies. And the very real motivation that force them to care is because of the real money they send to government every month. In a way, you can see why rich people spend so much in politics (from buying lobbyist, to contribute to campaign finances, to bribe officials): they are liable for a lot of taxes. Both paying taxes and getting government benefits are a form of civic participation. It's just that people get a lot more passionate about paying taxes because it's highly visible and personal; the benefit of good road or less crime, are less visible and more diffused.
So, be glad that you have the *privilege* of paying taxes, and be more engaged in government. Because the alternative is not having a voice in government, and look at how citizens of other oppressive government fares. I'd hope that more people can pay taxes, I believe that everyone should pay taxes, and thus, everyone should care about our government. In a way, American politics are in decline today precisely because wealth and taxation has become very unequal; and it's divisive, and disfunctional.
posted by curiousZ at 6:49 PM on June 9, 2011 [6 favorites]
There is a flip side to that too: because you pay taxes, you care more about government. Look at a stereotype of a welfare recipient. He/she will not care how the government is run, or whether any policies enacted is sensible. He/she will only care about the welfare check. Responsible, tax-paying citizens are those who care about good government, and good policies. And the very real motivation that force them to care is because of the real money they send to government every month. In a way, you can see why rich people spend so much in politics (from buying lobbyist, to contribute to campaign finances, to bribe officials): they are liable for a lot of taxes. Both paying taxes and getting government benefits are a form of civic participation. It's just that people get a lot more passionate about paying taxes because it's highly visible and personal; the benefit of good road or less crime, are less visible and more diffused.
So, be glad that you have the *privilege* of paying taxes, and be more engaged in government. Because the alternative is not having a voice in government, and look at how citizens of other oppressive government fares. I'd hope that more people can pay taxes, I believe that everyone should pay taxes, and thus, everyone should care about our government. In a way, American politics are in decline today precisely because wealth and taxation has become very unequal; and it's divisive, and disfunctional.
posted by curiousZ at 6:49 PM on June 9, 2011 [6 favorites]
I agree with yath - I understood this question to be "why are there so many different tax events?", not "why are taxes so high?" or "why do I have to pay taxes at all?"
My layperson's understanding:
If I buy something used through a business, chances are that items been taxed many times. Not only in import and duty taxes, but manufacturing taxes, taxes each time it changes hands, and I'm sure many other things that I've forgotten.
I used to own a little independent record company. If you bought a CD from me, I think that would be the first taxable event for that disc. When I pressed CDs through a manufacturer, they sent me a little form to fill out with my business ID number, attesting that I was reselling the CDs; once they had that form, they didn't charge me sales tax for the discs. (If you live in another country, with VAT, you may indeed be paying tax every time things move through the supply chain; I don't know much about VAT.) If the item wasn't imported, of course, there wouldn't be import or duty fees; and to my knowledge, outside of a VAT system, there would NOT be taxes each time it changes hands - the first time it's sold at retail, yes, and then afterwards if it's resold at retail as a used item, but not from the blank disc manufacturer to the disc pressing plant, and not from the pressing plant to me.
If you're asking about VAT systems, perhaps someone who understands VAT better could chime in.
posted by kristi at 7:17 PM on June 9, 2011 [1 favorite]
My layperson's understanding:
- yath's #2 - that we tax all kinds of different transactions to make sure everybody pays some taxes; limiting taxes to payroll taxes would give an unfair advantage to people who were retired or lived off their investments; limiting taxes to property taxes would give an unfair advantage to people who rent (although they'd presumably pay taxes through their landlords, but ...), and so on
- also, different governing bodies receive their revenue from different taxes. Where I live (California), property taxes typically fund local services like police, parks, and libraries; federal income tax goes to the federal budget, state income tax goes to the state budget. Sales tax mostly goes to the state, but there's an additional bit of sales tax that goes to the county. If there were only one government entity that needed money, maybe we wouldn't need so many taxable events, but as it is, we have lots of different levels, from city (or even assessment district) on up to national. A lot of people seem to like the fact that they can have some choice in their tax rates by choosing where they live.
If I buy something used through a business, chances are that items been taxed many times. Not only in import and duty taxes, but manufacturing taxes, taxes each time it changes hands, and I'm sure many other things that I've forgotten.
I used to own a little independent record company. If you bought a CD from me, I think that would be the first taxable event for that disc. When I pressed CDs through a manufacturer, they sent me a little form to fill out with my business ID number, attesting that I was reselling the CDs; once they had that form, they didn't charge me sales tax for the discs. (If you live in another country, with VAT, you may indeed be paying tax every time things move through the supply chain; I don't know much about VAT.) If the item wasn't imported, of course, there wouldn't be import or duty fees; and to my knowledge, outside of a VAT system, there would NOT be taxes each time it changes hands - the first time it's sold at retail, yes, and then afterwards if it's resold at retail as a used item, but not from the blank disc manufacturer to the disc pressing plant, and not from the pressing plant to me.
If you're asking about VAT systems, perhaps someone who understands VAT better could chime in.
posted by kristi at 7:17 PM on June 9, 2011 [1 favorite]
Money is a form of soft power. So, by paying taxes you earn a stake in the government
thank you, curiousZ
posted by toodleydoodley at 7:31 PM on June 9, 2011
thank you, curiousZ
posted by toodleydoodley at 7:31 PM on June 9, 2011
The government taxes income. That is funds you didn't have before, coming to you. It taxes your work income and then the money you make off of your investments. That is money coming in that you didn't have before.
Sales taxes are local, and they are ways that are politically acceptable to tax something other than income, which local governments have a hard time doing, politically, and practically, as they lack the enforcement mechanisms the federal government makes. Sales taxes and property taxes tax fewer things than the income of every person.
posted by Ironmouth at 7:31 PM on June 9, 2011
Sales taxes are local, and they are ways that are politically acceptable to tax something other than income, which local governments have a hard time doing, politically, and practically, as they lack the enforcement mechanisms the federal government makes. Sales taxes and property taxes tax fewer things than the income of every person.
posted by Ironmouth at 7:31 PM on June 9, 2011
The other thing is that you have to understand that you are being taxed by the community to provide for the things you get from the community. Policing, roads, a stable business climate enforced by law, regulation, and the courts, where an individual can obtain personal justice through a civil suit. You are paying for defense, for efforts to clean up the air and water you need to live, to create the markets that bring the banana that grows in Guatemala to you door at low, low prices. You are paying for the air traffic control and air safety system that allows you to fly where you want, that allows for you to have things delivered to you the next day. You obtain so much from these things.
posted by Ironmouth at 7:35 PM on June 9, 2011 [1 favorite]
posted by Ironmouth at 7:35 PM on June 9, 2011 [1 favorite]
From the OP:
Then I get taxed on my investments (There are exceptions).
You seem a bit unclear. You have never been taxed on your investments. You have been taxed on your investment income - in other words, the money you earn investing is taxed, just as the money you earn working is taxed (albeit at different rates).
Sales taxes go to immediate local governments (city, typically); they may or may not have income taxes as well, but sales tax on purchases has nothing to do with your federal income taxes. IOW, paying the Fed taxes does nothing to support your local infrastructure.
posted by IAmBroom at 7:59 PM on June 9, 2011
Then I get taxed on my investments (There are exceptions).
You seem a bit unclear. You have never been taxed on your investments. You have been taxed on your investment income - in other words, the money you earn investing is taxed, just as the money you earn working is taxed (albeit at different rates).
Sales taxes go to immediate local governments (city, typically); they may or may not have income taxes as well, but sales tax on purchases has nothing to do with your federal income taxes. IOW, paying the Fed taxes does nothing to support your local infrastructure.
posted by IAmBroom at 7:59 PM on June 9, 2011
IOW, paying the Fed taxes does nothing to support your local infrastructure.
Well, not quite. A lot of federal funds are given to the states for various projects. For example, highways are generally built and maintained by state governments, but a lot of the money comes from the federal taxes on gasoline, the trucking industry, and other sources. Those funds are then distributed to the state governments either for specific projects based on need or for more general use according to complex formulas that everyone spends a lot of time arguing about. Similarly, subsidized rental housing is run by local housing authorities, but the money comes from HUD, paid for by federal tax dollars.
posted by zachlipton at 8:21 PM on June 9, 2011
Well, not quite. A lot of federal funds are given to the states for various projects. For example, highways are generally built and maintained by state governments, but a lot of the money comes from the federal taxes on gasoline, the trucking industry, and other sources. Those funds are then distributed to the state governments either for specific projects based on need or for more general use according to complex formulas that everyone spends a lot of time arguing about. Similarly, subsidized rental housing is run by local housing authorities, but the money comes from HUD, paid for by federal tax dollars.
posted by zachlipton at 8:21 PM on June 9, 2011
the courts, where an individual can obtain personal justice through a civil suit.
Just to add to Ironmouth's great point about the benefits you get from the community: it's not just about your ability to sue someone once they've actually screwed you over. The very existence of the courts deters people from breaking the law — both civil (e.g. breaching a contract they signed with you) and criminal (e.g. murdering you or stealing your property).
posted by John Cohen at 8:23 PM on June 9, 2011
Just to add to Ironmouth's great point about the benefits you get from the community: it's not just about your ability to sue someone once they've actually screwed you over. The very existence of the courts deters people from breaking the law — both civil (e.g. breaching a contract they signed with you) and criminal (e.g. murdering you or stealing your property).
posted by John Cohen at 8:23 PM on June 9, 2011
If I buy something used through a business, chances are that items been taxed many times. Not only in import and duty taxes, but manufacturing taxes, taxes each time it changes hands, and I'm sure many other things that I've forgotten.
Yeah. There's a distinction here between a sales tax system, which we have in the US, and a VAT (Value Added Tax) system, which you see in much of Europe and elsewhere. With a sales tax, the only taxable transaction happens when the product is sold to an end user at the end of the production, distribution, and retail chain. The businesses that make and sell the goods don't pay sales tax when they purchase the raw materials or inventory.
In contrast, with a VAT system, tax is collected on every step in the chain based on the "value added" by the supplier. So the manufacturer, the wholesaler, and the retailer all participate in the taxing process. The actual tax, of course, still winds up being paid by the end consumer.
Duty on imports is actually a quite small proportion of the federal budget. Many goods enter duty free or at rather low rates. Substantial tariffs tend to only get used for foreign policy reasons (e.g. goods from North Korea) or in targeted situations when we want to punish another country for its trade practices.
posted by zachlipton at 9:13 PM on June 9, 2011
Yeah. There's a distinction here between a sales tax system, which we have in the US, and a VAT (Value Added Tax) system, which you see in much of Europe and elsewhere. With a sales tax, the only taxable transaction happens when the product is sold to an end user at the end of the production, distribution, and retail chain. The businesses that make and sell the goods don't pay sales tax when they purchase the raw materials or inventory.
In contrast, with a VAT system, tax is collected on every step in the chain based on the "value added" by the supplier. So the manufacturer, the wholesaler, and the retailer all participate in the taxing process. The actual tax, of course, still winds up being paid by the end consumer.
Duty on imports is actually a quite small proportion of the federal budget. Many goods enter duty free or at rather low rates. Substantial tariffs tend to only get used for foreign policy reasons (e.g. goods from North Korea) or in targeted situations when we want to punish another country for its trade practices.
posted by zachlipton at 9:13 PM on June 9, 2011
Response by poster: Wow, a lot to digest, thank you all. To clarify a few points that some people got:
1. Yes, I was asking why there are so many tax events as some of you have said. I was hinting at some sort of verification to my belief that some of these are archaic and only contribute to needless spending by the gov't yet are still in practice. I'm all for many public services, I'm just curious if there were any taxes that really make economists blood boil that are still in use for some inexplicable reason.
2. I realise I get taxed on capital gains, and I can deduct losses. I actually worded it like that but erased it to streamline the question. Sorry for the confusing edit.
3. I understand that taxes pay for my first world lifestyle but it just seems like, as one poster worded it, a thousand small cuts. Are they all needed?
4. I never really thought of it as the gov't trying to steer policy or behaviour outside of the obvious sin taxes on things like cigarettes.
5. A few said that if they didn't tax certain areas, people would flock to that area to make money. I believe it. It's like the benevolent CEO's that take a $1 salary. That's all well and good but they gladly did that because then they pay less taxes on the dividends they got that year, which are substantial, and they get press. Or in the early days of the internet and ebay when you could set up a business and get away with not paying taxes (Various tax agencies of course cracked down when they realised what was happening).
6. I'm not a total novice with regards to the taxes. I understand that the rich pay most of the total amount of taxes, but relatively little as a percentage individually. The upper middle class end up paying a lot individually because they don't quite have the income to get the high earners deductions (Doctors and other professionals), the lower class pay the least in terms of total tax dollars to the coffers and as a percentage but what tax they do pay like sales tax and sin tax, hurt them the most.
7. I'm not a libertarian, I'm not right wing. I just see a lot of excess and useless spending at all levels. For instance, our property taxes went up for the fifth year in a row (In a recession), as did many other municipal services. Yet, in our city hall there is one manager for every three employees. That's insane. They spent 4 million to purchase land worth 2 million from a company owned by an alderman (Councilman in the states I think). And even the low workers get amazing benefits and start at around 40k a year. For cashiers. I hear this isn't uncommon at all.
posted by penguinkeys at 9:20 PM on June 9, 2011
1. Yes, I was asking why there are so many tax events as some of you have said. I was hinting at some sort of verification to my belief that some of these are archaic and only contribute to needless spending by the gov't yet are still in practice. I'm all for many public services, I'm just curious if there were any taxes that really make economists blood boil that are still in use for some inexplicable reason.
2. I realise I get taxed on capital gains, and I can deduct losses. I actually worded it like that but erased it to streamline the question. Sorry for the confusing edit.
3. I understand that taxes pay for my first world lifestyle but it just seems like, as one poster worded it, a thousand small cuts. Are they all needed?
4. I never really thought of it as the gov't trying to steer policy or behaviour outside of the obvious sin taxes on things like cigarettes.
5. A few said that if they didn't tax certain areas, people would flock to that area to make money. I believe it. It's like the benevolent CEO's that take a $1 salary. That's all well and good but they gladly did that because then they pay less taxes on the dividends they got that year, which are substantial, and they get press. Or in the early days of the internet and ebay when you could set up a business and get away with not paying taxes (Various tax agencies of course cracked down when they realised what was happening).
6. I'm not a total novice with regards to the taxes. I understand that the rich pay most of the total amount of taxes, but relatively little as a percentage individually. The upper middle class end up paying a lot individually because they don't quite have the income to get the high earners deductions (Doctors and other professionals), the lower class pay the least in terms of total tax dollars to the coffers and as a percentage but what tax they do pay like sales tax and sin tax, hurt them the most.
7. I'm not a libertarian, I'm not right wing. I just see a lot of excess and useless spending at all levels. For instance, our property taxes went up for the fifth year in a row (In a recession), as did many other municipal services. Yet, in our city hall there is one manager for every three employees. That's insane. They spent 4 million to purchase land worth 2 million from a company owned by an alderman (Councilman in the states I think). And even the low workers get amazing benefits and start at around 40k a year. For cashiers. I hear this isn't uncommon at all.
posted by penguinkeys at 9:20 PM on June 9, 2011
I'm just curious if there were any taxes that really make economists blood boil that are still in use for some inexplicable reason.
This probably varies from country to country-- not ones that make economists' blood boil so much as taxes levied for a specific reason that are no longer necessary: for example, the Federal Telephone Excise Tax was first passed, basically as a luxury tax, during the Spanish-American war. It would get repealed and re-enacted for the purpose of funding "emergency" needs, and then sort of just became permanent over time. It's been partially repealed and is on its way to being fully repealed.
I suspect that the sort of taxes like this that remain on the books for what is effectively no good reason are probably marginal and don't have that many economic consequences-- otherwise they'd have been noticed and repealed, but they're probably here and there, hiding in various corners of the tax code.
posted by deanc at 9:39 PM on June 9, 2011 [1 favorite]
This probably varies from country to country-- not ones that make economists' blood boil so much as taxes levied for a specific reason that are no longer necessary: for example, the Federal Telephone Excise Tax was first passed, basically as a luxury tax, during the Spanish-American war. It would get repealed and re-enacted for the purpose of funding "emergency" needs, and then sort of just became permanent over time. It's been partially repealed and is on its way to being fully repealed.
I suspect that the sort of taxes like this that remain on the books for what is effectively no good reason are probably marginal and don't have that many economic consequences-- otherwise they'd have been noticed and repealed, but they're probably here and there, hiding in various corners of the tax code.
posted by deanc at 9:39 PM on June 9, 2011 [1 favorite]
Gosh, the conservative narrative sure is powerful...
I'm not sure that there are any taxes that a consensus of economists/Americans/politicians oppose. Remember that our legislators are very rarely career bureaucrats. You have a chance to fire your representatives every two years, and your senators every six. There's a particularly large amount of churn in the House, and if there's one thing that a freshman legislator hates, it's "unnecessary bureaucracy." Anything that was that unpopular or blindingly inefficient would be struck down, if only because it makes for a great accomplishment to list when running for re-election.
As others have mentioned, taxing just one thing (or a small number of things) would be extraordinarily unfair to one group of people, and generate a huge windfall to another. It can also be very difficult to firmly explain (in law) what it means to "Tax Income." Laws are often extremely verbose as to be as unambiguous as possible. This is one of those annoying necessities of a functioning legal system.
The complicated tax code also allows the government to "fine tune" the economy. Lots of economists don't like this, although it makes intuitive sense in some areas (eg. encouraging domestic food production or discouraging foreign oil imports).
The "thousand small cuts" are also necessary to prevent taxation from being overtly regressive (that is, heavily burdening poor people). Some have advocated a "flat" sales or income tax, where 20% of the money that you make or spend is taken as tax, and would theoretically be the only tax that you pay. This sucks, because $2,000 is a ton of money to a family making $10,000; while $20,000 (though still a lot of money) is an acceptable loss to a family making $100,000.
We could also go into the fact that the American government is actually pretty efficient by international and historic standards. Americans face one of the lowest tax burdens in the industrialized world, while the size of the American Government (per capita) has steadily shrunk since WWII, current administration included. The series of tax cuts that we've had since the 1980s are almost entirely responsible for the deficit, and have done next to nothing to shrink the government in any meaningful way.
Local politics are fucked because there's such a small level of interest. The average American does not keep track of their local, state, and federal elected officials. Can you even name your congressional delegate? Unlike the presidency, local/state politics are unsexy, and receive little substantive coverage in the media.
There's also, of course, the possibility that 3 employees/manager may make sense for certain roles. 3 nurses to one doctor sounds about right, for instance. I've worked in government and private industry, and have seen plenty of waste in both. Private industry are very good about covering up internal scandals. It's very easy to sit outside of an organization, and make large hand-waving gestures about how the organization is inefficient.
The plain truth is that doing business (whether as a government or private company) is bloody expensive. Costs add up very quickly.
If I needed to run a letter across town by the next morning, I'd hop in my car and do it myself. At the most, it costs me a gallon of gas.
If I were a business, I'd have to pay my employee his normal wages while he delivers the letter, reimburse his mileage, make sure that he's insured to be driving while on the job, and also worry about his normal job function, which he isn't doing while he's delivering the letter. Unless you've got a dedicated letter carrier, it's far cheaper to fork over $20 to UPS, even though $20 seems exorbitant for such a simple chore to an outside observer.
I understand that the rich pay most of the total amount of taxes, but relatively little as a percentage individually. The upper middle class end up paying a lot individually because they don't quite have the income to get the high earners deductions (Doctors and other professionals), the lower class pay the least in terms of total tax dollars to the coffers and as a percentage but what tax they do pay like sales tax and sin tax, hurt them the most.
No, this is wrong. The Rich *do* pay more taxes, both as a percentage and absolute value. The current argument is that they don't pay enough more. As I mentioned earlier, a millionaire can live quite well with 50% of his earnings subtracted as tax. For a worker earning minimum wage, a 15% tax may very well be the difference between eating or not.
There's also no high earners deduction. No idea where you got that from. However, the rich do tend to be better at locating loopholes and deductions, or abusing the current structure of the capital gains tax (which, IMO, needs to be fixed ASAP).
Also, remember that taxes in the US are calculated at the margin. As a hypothetical, you might be charged 0% on the first $5,000 you make, 10% on the next $10,000, 20% on the next $50,000, and then 99% on anything past that.
So, if you're poor and making $5,000 you pay no tax. However, if you step past the $65,000 mark, your entire income doesn't instantly evaporate as the 99% rate kicks in. You only pay 99% of the amount past $65,000 that you earn.
posted by schmod at 10:03 PM on June 9, 2011 [1 favorite]
I'm not sure that there are any taxes that a consensus of economists/Americans/politicians oppose. Remember that our legislators are very rarely career bureaucrats. You have a chance to fire your representatives every two years, and your senators every six. There's a particularly large amount of churn in the House, and if there's one thing that a freshman legislator hates, it's "unnecessary bureaucracy." Anything that was that unpopular or blindingly inefficient would be struck down, if only because it makes for a great accomplishment to list when running for re-election.
As others have mentioned, taxing just one thing (or a small number of things) would be extraordinarily unfair to one group of people, and generate a huge windfall to another. It can also be very difficult to firmly explain (in law) what it means to "Tax Income." Laws are often extremely verbose as to be as unambiguous as possible. This is one of those annoying necessities of a functioning legal system.
The complicated tax code also allows the government to "fine tune" the economy. Lots of economists don't like this, although it makes intuitive sense in some areas (eg. encouraging domestic food production or discouraging foreign oil imports).
The "thousand small cuts" are also necessary to prevent taxation from being overtly regressive (that is, heavily burdening poor people). Some have advocated a "flat" sales or income tax, where 20% of the money that you make or spend is taken as tax, and would theoretically be the only tax that you pay. This sucks, because $2,000 is a ton of money to a family making $10,000; while $20,000 (though still a lot of money) is an acceptable loss to a family making $100,000.
We could also go into the fact that the American government is actually pretty efficient by international and historic standards. Americans face one of the lowest tax burdens in the industrialized world, while the size of the American Government (per capita) has steadily shrunk since WWII, current administration included. The series of tax cuts that we've had since the 1980s are almost entirely responsible for the deficit, and have done next to nothing to shrink the government in any meaningful way.
Local politics are fucked because there's such a small level of interest. The average American does not keep track of their local, state, and federal elected officials. Can you even name your congressional delegate? Unlike the presidency, local/state politics are unsexy, and receive little substantive coverage in the media.
There's also, of course, the possibility that 3 employees/manager may make sense for certain roles. 3 nurses to one doctor sounds about right, for instance. I've worked in government and private industry, and have seen plenty of waste in both. Private industry are very good about covering up internal scandals. It's very easy to sit outside of an organization, and make large hand-waving gestures about how the organization is inefficient.
The plain truth is that doing business (whether as a government or private company) is bloody expensive. Costs add up very quickly.
If I needed to run a letter across town by the next morning, I'd hop in my car and do it myself. At the most, it costs me a gallon of gas.
If I were a business, I'd have to pay my employee his normal wages while he delivers the letter, reimburse his mileage, make sure that he's insured to be driving while on the job, and also worry about his normal job function, which he isn't doing while he's delivering the letter. Unless you've got a dedicated letter carrier, it's far cheaper to fork over $20 to UPS, even though $20 seems exorbitant for such a simple chore to an outside observer.
I understand that the rich pay most of the total amount of taxes, but relatively little as a percentage individually. The upper middle class end up paying a lot individually because they don't quite have the income to get the high earners deductions (Doctors and other professionals), the lower class pay the least in terms of total tax dollars to the coffers and as a percentage but what tax they do pay like sales tax and sin tax, hurt them the most.
No, this is wrong. The Rich *do* pay more taxes, both as a percentage and absolute value. The current argument is that they don't pay enough more. As I mentioned earlier, a millionaire can live quite well with 50% of his earnings subtracted as tax. For a worker earning minimum wage, a 15% tax may very well be the difference between eating or not.
There's also no high earners deduction. No idea where you got that from. However, the rich do tend to be better at locating loopholes and deductions, or abusing the current structure of the capital gains tax (which, IMO, needs to be fixed ASAP).
Also, remember that taxes in the US are calculated at the margin. As a hypothetical, you might be charged 0% on the first $5,000 you make, 10% on the next $10,000, 20% on the next $50,000, and then 99% on anything past that.
So, if you're poor and making $5,000 you pay no tax. However, if you step past the $65,000 mark, your entire income doesn't instantly evaporate as the 99% rate kicks in. You only pay 99% of the amount past $65,000 that you earn.
posted by schmod at 10:03 PM on June 9, 2011 [1 favorite]
it appears to be a farce to me
I agree with many of the points above. But to say something a bit unpopular here, it is a little bit of a farce, because it comes out of the sausage making, image control, and historical and current circumstances that govern politics.
Let's say a bridge in California is literally falling apart. The Bridge Authority realizes that it cannot allow the bridge to kill drivers, and the State cannot cut off one major commute route to one of its largest, most prosperous, most tax-generating cities. So, what funding mechanism should be used to find enough revenue to repair the bridge? An increase in the bridge toll? A gas tax? Neighboring cities' general funds? A state bond? This question is both moral / philosophical -- do all cities in California, or along I-80, benefit from this bridge, or only San Francisco and Oakland? should we highly tax current users to pay for this upgrade or should we spread the cost over the many generations of residents who will use the bridge? -- and practical -- what funding mechanisms are allowed by current law? what mechanisms will politicians or voters be willing to say "yes" to?
But what happens when those questions yield different answers? If an expense is unavoidable, and the philosophically-sensible approach is politically or legally impossible, then lawmakers have to get creative. Limitations on raising certain taxes mean that new kinds of taxes have to be invented. Sometimes this is "good," if it means that the revenue comes from what I would consider more "appropriate" sources, but often it just results in new levels of farce. For instance, California's Proposition 13 limited increases to residential property taxes. But it didn't limit increases to police officers' and fire fighters' salaries, so maintaining staffing levels requires a barrage of other taxes (transfer taxes, development impact fees, local ballot measures, the innovative crash tax). Over the past five years or so, voters in California have directly voted for many new propositions that issued general obligation bonds, to be paid back out of the state budget, but at the same time, legislators have refused to vote for any new taxes because many signed a pledge not to. That political limitation has led to massive cuts to many program budgets, and to efforts to avert those cuts via new taxes or fees (FAQ: Why is the vehicle license fee (VLF) increasing?). In fact, get ready for some hilarity in California around the difference between taxes and fees, following the passage of Proposition 26, which apparently was funded primarily by the oil, gas, and tobacco industries and reclassifies many fees as taxes, with the apparent goal of limiting the likelihood that they will have to pay fees like a per-barrel oil-spill management fee, or a fee on oil sales to fund used-oil recovery (... or something. I don't pretend to understand Prop 26).
In short, and with the caveat that I only know one little slice of the world, there are some sensible aspects of the way taxes and fees are issued, and there are also some nonsensical aspects, which tend to occur when smart people figure out how to make sensible things happen despite barriers to a more sensible approach.
posted by slidell at 10:10 PM on June 9, 2011 [1 favorite]
I agree with many of the points above. But to say something a bit unpopular here, it is a little bit of a farce, because it comes out of the sausage making, image control, and historical and current circumstances that govern politics.
Let's say a bridge in California is literally falling apart. The Bridge Authority realizes that it cannot allow the bridge to kill drivers, and the State cannot cut off one major commute route to one of its largest, most prosperous, most tax-generating cities. So, what funding mechanism should be used to find enough revenue to repair the bridge? An increase in the bridge toll? A gas tax? Neighboring cities' general funds? A state bond? This question is both moral / philosophical -- do all cities in California, or along I-80, benefit from this bridge, or only San Francisco and Oakland? should we highly tax current users to pay for this upgrade or should we spread the cost over the many generations of residents who will use the bridge? -- and practical -- what funding mechanisms are allowed by current law? what mechanisms will politicians or voters be willing to say "yes" to?
But what happens when those questions yield different answers? If an expense is unavoidable, and the philosophically-sensible approach is politically or legally impossible, then lawmakers have to get creative. Limitations on raising certain taxes mean that new kinds of taxes have to be invented. Sometimes this is "good," if it means that the revenue comes from what I would consider more "appropriate" sources, but often it just results in new levels of farce. For instance, California's Proposition 13 limited increases to residential property taxes. But it didn't limit increases to police officers' and fire fighters' salaries, so maintaining staffing levels requires a barrage of other taxes (transfer taxes, development impact fees, local ballot measures, the innovative crash tax). Over the past five years or so, voters in California have directly voted for many new propositions that issued general obligation bonds, to be paid back out of the state budget, but at the same time, legislators have refused to vote for any new taxes because many signed a pledge not to. That political limitation has led to massive cuts to many program budgets, and to efforts to avert those cuts via new taxes or fees (FAQ: Why is the vehicle license fee (VLF) increasing?). In fact, get ready for some hilarity in California around the difference between taxes and fees, following the passage of Proposition 26, which apparently was funded primarily by the oil, gas, and tobacco industries and reclassifies many fees as taxes, with the apparent goal of limiting the likelihood that they will have to pay fees like a per-barrel oil-spill management fee, or a fee on oil sales to fund used-oil recovery (... or something. I don't pretend to understand Prop 26).
In short, and with the caveat that I only know one little slice of the world, there are some sensible aspects of the way taxes and fees are issued, and there are also some nonsensical aspects, which tend to occur when smart people figure out how to make sensible things happen despite barriers to a more sensible approach.
posted by slidell at 10:10 PM on June 9, 2011 [1 favorite]
7. I'm not a libertarian, I'm not right wing. I just see a lot of excess and useless spending at all levels. For instance, our property taxes went up for the fifth year in a row (In a recession), as did many other municipal services. Yet, in our city hall there is one manager for every three employees. That's insane. They spent 4 million to purchase land worth 2 million from a company owned by an alderman (Councilman in the states I think). And even the low workers get amazing benefits and start at around 40k a year. For cashiers. I hear this isn't uncommon at all.
Yes, there are real abuses. And eternal vigilance really is the price of liberty (which isn't the same thing as freedom-look it up if you never have). The government must be watched by concerned, engaged citizens (and I mean citizen in the classic sense of the word, not a catchall term meaning legal resident of a country). The government is constantly changing, both for good and ill. If you do care get involved (in a thoughtful educated way). Go down to your cities manager office and ask to volunteer for a committee. Maybe historic commission or planning or budget oversight or whatever but get involved and start getting known in the system. When you get a name for yourself actually run for office. County commissioner, city councilman, alderman, whatever. Then you will be making the decisions on these things. For our democracy to work (and taxes are a real big part of why our system works pretty damn well really) it requires citizens that give a damn to actually be engaged. I got one of those 'cushy' jobs at city hall (I am a engineer-i am responsible for making the poop disappear and not foul the rivers, and providing a good working road system for your daily commute) because I give a damn. I am forgoing a significantly higher salary and chance for advancement to do this job (I get paid just fine, but not as much as I could make in the private sector) for a lot of reasons but one of the big ones is that this is my way for my voice to be heard in government. Just be a taxpayer is also contributing but if you want things to change you have to get involved. at the least volunteer for a campaign for someone you agree with. It will be very enlightening as to why our taxes are the way they are and why government is the way it is. These things evolve over time to best suit their environment as do all living things.
TL;DR, check out government, volunteer for something at city hall or party headquarters. It will make it all much clearer as to why the system is this way.
posted by bartonlong at 10:13 PM on June 9, 2011 [1 favorite]
Yes, there are real abuses. And eternal vigilance really is the price of liberty (which isn't the same thing as freedom-look it up if you never have). The government must be watched by concerned, engaged citizens (and I mean citizen in the classic sense of the word, not a catchall term meaning legal resident of a country). The government is constantly changing, both for good and ill. If you do care get involved (in a thoughtful educated way). Go down to your cities manager office and ask to volunteer for a committee. Maybe historic commission or planning or budget oversight or whatever but get involved and start getting known in the system. When you get a name for yourself actually run for office. County commissioner, city councilman, alderman, whatever. Then you will be making the decisions on these things. For our democracy to work (and taxes are a real big part of why our system works pretty damn well really) it requires citizens that give a damn to actually be engaged. I got one of those 'cushy' jobs at city hall (I am a engineer-i am responsible for making the poop disappear and not foul the rivers, and providing a good working road system for your daily commute) because I give a damn. I am forgoing a significantly higher salary and chance for advancement to do this job (I get paid just fine, but not as much as I could make in the private sector) for a lot of reasons but one of the big ones is that this is my way for my voice to be heard in government. Just be a taxpayer is also contributing but if you want things to change you have to get involved. at the least volunteer for a campaign for someone you agree with. It will be very enlightening as to why our taxes are the way they are and why government is the way it is. These things evolve over time to best suit their environment as do all living things.
TL;DR, check out government, volunteer for something at city hall or party headquarters. It will make it all much clearer as to why the system is this way.
posted by bartonlong at 10:13 PM on June 9, 2011 [1 favorite]
I just saw your response. Your #7 asks about waste and corruption. That's a completely separate topic from the number and type of taxes paid and cannot be addressed by limiting taxes. Take the bridge example. It's possible that the State could hire the Governor's cousin's bridge company and overpay them. It's possible that the State could assign some first-year project manager to the project and end up with cost overruns. It's also possible that the State could get the best deal possible and efficiently build the bridge that everyone needs. That question is an entirely different one than taxes. If your goal is to prevent waste and corruption, that goal is not primarily addressed by focusing on taxes. The city could have half as much money, gut its police force, and still overpay its alderman for his/her land. You're still not getting value for your money. Cutting taxes would only mean that you'd also not be getting police services.
One last example. I had to set up a tax payment plan because (since I worked two jobs) I had underestimated my withholdings last year. I promptly sent in my very simple form, signing up for monthly payments and giving them an account number to bill me monthly. The state tax collection department took six months to do the data entry on that one page of paper. In the meantime, they tried to send me to collections, mailed me notices, spent an hour on the phone with me, sent out another form for me to set up an auto-pay account, got to my first form in the pile and entered that, then had a phone call with me over that confusion to avoid setting up two accounts. A great deal of inefficiency resulted because they were not staffed appropriately. I would've happily paid $105 for every $100 I owed either that year, for the privilege of setting up monthly payments without all that stress, or every year, to know that the state isn't throwing away my money having its tax department looking for people's lost forms under mile-high piles of paper. As in any company, not properly funding a department will also result in inefficiency.
posted by slidell at 10:22 PM on June 9, 2011 [2 favorites]
One last example. I had to set up a tax payment plan because (since I worked two jobs) I had underestimated my withholdings last year. I promptly sent in my very simple form, signing up for monthly payments and giving them an account number to bill me monthly. The state tax collection department took six months to do the data entry on that one page of paper. In the meantime, they tried to send me to collections, mailed me notices, spent an hour on the phone with me, sent out another form for me to set up an auto-pay account, got to my first form in the pile and entered that, then had a phone call with me over that confusion to avoid setting up two accounts. A great deal of inefficiency resulted because they were not staffed appropriately. I would've happily paid $105 for every $100 I owed either that year, for the privilege of setting up monthly payments without all that stress, or every year, to know that the state isn't throwing away my money having its tax department looking for people's lost forms under mile-high piles of paper. As in any company, not properly funding a department will also result in inefficiency.
posted by slidell at 10:22 PM on June 9, 2011 [2 favorites]
There is a flip side to that too: because you pay taxes, you care more about government. Look at a stereotype of a welfare recipient. He/she will not care how the government is run, or whether any policies enacted is sensible. He/she will only care about the welfare check. Responsible, tax-paying citizens are those who care about good government, and good policies.
Wow. I just...wow.
Did you think about this at all before you wrote it? Because with two seconds of mental effort you might realise some really, astoundingly obvious truths, like:
- many people on welfare give an enormous fuck about what the government does, because they're utterly dependent on government services, and because, you know, they're citizens who can vote and even *gasp* run for office; and
- many rich people give less of a fuck about what the government does, because they don't rely on the government for food, shelter, transport, education, medical care, etc.
Your equating 'tax-paying' with 'responsible' and 'citizens' and claiming that we should all want to pay tax because it's the only way we can 'engage' with government is the most offensive fucking thing I'll read this month, and I visit 4chan occasionally, so that's saying something.
posted by obiwanwasabi at 2:10 AM on June 10, 2011 [1 favorite]
Wow. I just...wow.
Did you think about this at all before you wrote it? Because with two seconds of mental effort you might realise some really, astoundingly obvious truths, like:
- many people on welfare give an enormous fuck about what the government does, because they're utterly dependent on government services, and because, you know, they're citizens who can vote and even *gasp* run for office; and
- many rich people give less of a fuck about what the government does, because they don't rely on the government for food, shelter, transport, education, medical care, etc.
Your equating 'tax-paying' with 'responsible' and 'citizens' and claiming that we should all want to pay tax because it's the only way we can 'engage' with government is the most offensive fucking thing I'll read this month, and I visit 4chan occasionally, so that's saying something.
posted by obiwanwasabi at 2:10 AM on June 10, 2011 [1 favorite]
ARGH! Taxes in the US (including federal/state/local) are very, very low for the developed world! In fact our taxes are on par with semi-developed countries like Turkey!
Most of our tax money (probably 2/3rds of yours, unless you're super-rich) goes to Medicare and Social Security! Of the rest, the biggest chunk goes to defense (including defense and veterans affairs). The classic government activities -- schools, roads, cops, regulatory agencies -- is paid for mostly through property taxes, and is a tiny, tiny percentage of your overall tax bill.
It IS annoying that we have a really complicated multilayered system of taxes that takes a lot of time to figure out, and has a ton of unintended consequences. But I'm guessing you'd be even more angry about switching to a simple tax structure like Canada's.
posted by miyabo at 5:54 AM on June 10, 2011
Most of our tax money (probably 2/3rds of yours, unless you're super-rich) goes to Medicare and Social Security! Of the rest, the biggest chunk goes to defense (including defense and veterans affairs). The classic government activities -- schools, roads, cops, regulatory agencies -- is paid for mostly through property taxes, and is a tiny, tiny percentage of your overall tax bill.
It IS annoying that we have a really complicated multilayered system of taxes that takes a lot of time to figure out, and has a ton of unintended consequences. But I'm guessing you'd be even more angry about switching to a simple tax structure like Canada's.
posted by miyabo at 5:54 AM on June 10, 2011
Also, we don't have "welfare" in the US at this point. Unless you're disabled, you'll only get short-term help (even if you have a gaggle of young kids...). I don't understand how the trope of "welfare moms" can even exist when there is no such thing anymore.
posted by miyabo at 5:57 AM on June 10, 2011
posted by miyabo at 5:57 AM on June 10, 2011
I'm just curious if there were any taxes that really make economists blood boil that are still in use for some inexplicable reason.
For some economists the term for those are "taxes", but I think that in general economists would prefer taxes without deadweight loss, although that's hard to do. Examples of such taxes would be land value tax or an estate tax. Oddly, the people for whom the first is popular generally do not like the second (and, for the matter, vice versa), thus proving that economists are human.
posted by It's Never Lurgi at 6:53 AM on June 10, 2011
For some economists the term for those are "taxes", but I think that in general economists would prefer taxes without deadweight loss, although that's hard to do. Examples of such taxes would be land value tax or an estate tax. Oddly, the people for whom the first is popular generally do not like the second (and, for the matter, vice versa), thus proving that economists are human.
posted by It's Never Lurgi at 6:53 AM on June 10, 2011
Response by poster: Thank you all for the amazing reply's. You've changed my mind on the issue of all the different taxes and how most of them do serve a legitimate purpose.
And to clear up more things, as some of you seem to have been frustrated by my question:
I never meant to imply that I thought the total taxes were too high compared to the rest of the world. As for if I think taxes are too high without comparing, yes. That's for another thread I'm sure has been made 1000 times. But you can't tell me that the amount spent for defense in general, the TSA, the drug war, some social programs, etc... is necessary to keep the country running smoothly or safe. Or on the state level how some gov'ts seem to be wasting their taxpayers money by endlessly debating ridiculous things like abortion or civil unions or whether they should teach creationism in school or limit biology.
Or, how the schools are being forced to standardise their curriculum more and more which churns out a very small amount of great students at private schools, and a huge amount of mediocre ones compared to other industrial nations. But I digress...
There are so many good answers here I won't pick a favorite because the thread would be littered with highlights. I hope you understand.
posted by penguinkeys at 7:10 PM on June 10, 2011
And to clear up more things, as some of you seem to have been frustrated by my question:
I never meant to imply that I thought the total taxes were too high compared to the rest of the world. As for if I think taxes are too high without comparing, yes. That's for another thread I'm sure has been made 1000 times. But you can't tell me that the amount spent for defense in general, the TSA, the drug war, some social programs, etc... is necessary to keep the country running smoothly or safe. Or on the state level how some gov'ts seem to be wasting their taxpayers money by endlessly debating ridiculous things like abortion or civil unions or whether they should teach creationism in school or limit biology.
Or, how the schools are being forced to standardise their curriculum more and more which churns out a very small amount of great students at private schools, and a huge amount of mediocre ones compared to other industrial nations. But I digress...
There are so many good answers here I won't pick a favorite because the thread would be littered with highlights. I hope you understand.
posted by penguinkeys at 7:10 PM on June 10, 2011
This thread is closed to new comments.
posted by 2N2222 at 3:40 PM on June 9, 2011 [3 favorites]