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Tradable Taxes
allow corporations to "buy" tax rates from lower income folks. | |
I know, this is an absolutely bizarre idea. But it may do some good.
First, imagine a ficticious place called "Taxmania" Where...
-People pay 0% on the first $25,000 of income
-People pay 10% on income from $25,000-50,000 of income
-People pay 25% for 50,000-100,000 of income
-People
pay 50% on income past $100,000.
Examples:
Person A earns $40,000. He is taxed 10% on $15,000 of income, and thus pays $1500 in taxes.
Person B earns $20,000. He is not required to pay any tax whatsoever.
Person C earns $140,000. He must pay $2,500, (25-50) plus $12,500 (50-100) plus $20k (100-140), for a total tax burden of $35k.
Now, let's say we permit person C to "Buy" 5,000 of tax free income for person B. It's a good deal for person C as long as he pays less than $2500 for it. Let's say person B is a fair person and sells his tax-free income for $1250, splitting the savings.
Well, He gets $1250, and person C gets to keep $1250 extra. The government is out $2.5k, but rich people and poor people are working together to stick it to the IRS.
Now what about person B? He has $10,000 of 10% tax income to sell. If he sells this 10% tax income to person C, $10,000 would be taxed for $1,000 instead of $5,000. Thusly, Persons B and C each get a $2,000 benefit. Person C pays person B $3,000, and B pays the government a $1,000 of that $3,000 on C's behalf.
In this way, wealth redistribution occurs as a conscious act of the taxpayers, rather than passing through the government's silly bureaucracies.
Assuming person A, B, and C all live in the same area, the money stays near the community rather than being flung to the far corners of Taxmania.
The tax rate can be further tinkered with to make sure rich people keep "buying" lower tax rates from the poor, and the government gets enough money to function.
The market in emission reduction credits
http://www.rachel.o...in.cfm?Issue_ID=683
[robinism, Feb 12 2005]
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Slight amendment:
Person C earns $140,000. He moves to somewhere with a less brutal tax regime, leaving a note suggesting that the IRS look up the meaning of "Laffer curve" sometime soon.
All you're doing here is positing a fanciful tax system and suggesting a method of avoidance. Amusing as a thought experiment, but not much else, I'm afraid. |
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I'm well aware of the laffer curve, Angel. However, while the 50% tax rate looks brutal, Person C's real tax rate, before bartering, is 25%. 35k out of 140k is not that harsh. Plus there is no guarantee of him getting a job elsewhere that pays nearly as good. |
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//The government is out $2.5k, but rich people and poor people are working together to stick it to the IRS.// |
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Bad economic/political science. |
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Bad economics? It's all about wealth redistibution... expediting the flow of money from the rich to the poor, whilst giving the rich more control over the process. |
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I'm looking for the Priceline taxation system. I just tell them what I'm willing to pay. |
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Keeping it simple: I was taught not to spend more than I had, and that throwing money at a problem was never so satisfying as using my brain. Oddly enough, we have quite a lot of folks in positions of power who never learned that. |
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In a brief fit of temporary dyslexia, I read the title of this
idea as "Tradable Texas", a concept which would
definitely have far-reaching benefits. |
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Texas... hmm... I have some pocket lint and a couple of M&Ms I'll give ya for it! |
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//Bad economics? It's all about wealth redistibution//
You make it sound as though wealth distribution is good economics, which is only true if you're a socialist. I suggest that you read up on recent implementations of flat tax. |
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Angel, I am not opposed to some ideas which are downright socialistic. However, history has shown us that in an unregulated capitalist market, the rich get richer while the poor get poorer. One prime example is entertainment. |
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When a $100 million dollar movies grosses $200 million, there's gonna be a few people walking away with several million dollars. |
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Or if someone invents a medicine which does not cure an illness but takes the symptoms away, so that someone has to take it for the rest of their lives, wealth will flow to the manufacturers. |
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It takes money to make money, and money tends to pool into the hands of the few. |
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Now, there are obvious benefits to capitalism-- it is the most efficient way to ensure supply and demand find a happy medium, and it encourages innovation. |
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However, while innovaters deserve rewards, they DO NOT deserve the right to screw the rest of us over. |
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Enter the well-intentioned government, which taxes the people and businesses, and gives money to other people and businesses. |
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I'm not a socialist just because I think it's wrong we have several billionaires on the planet, and several more who can barely afford to live. |
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A balance must be achieved via progressive taxes, safety nets for people in unfortunate situations, and employment by the government itself. |
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History also shows that in an unregulated market, everyone can get richer. A prime example is Hong Kong. |
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Of course, we can trust politicians and b-crats with our money! Oddly enough, many of them are quite wealthy. Hmm... I'll take care of myself, thankyouverymuch. |
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//However, history has shown us that in an unregulated capitalist market, the rich get richer while the poor get poorer// |
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History has shown us nothing of the sort. If history has shown anything, categorically, it is that money always finds a way. |
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It has also shown, after more than a 100,000 years of human history, including 10,000 or so recorded, that in a mere 500 years a larger percentage of the human population has been lifted out of misery than ever before. That has largely been due to market economies. |
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Regulating money flow and markets is about as useful as regulating gravity. |
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Regulating human behavior should not be confused with regulating markets -- outlawing slavery or child labor is not a question of regulating markets -- it's a question of implementing a moral society. |
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The US government encouraged this kind of trading in emission reduction credits. (see link) |
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//When a $100 million dollar movies grosses $200 million, there's gonna be a few people walking away with several million dollars.//
... and the Studio will claim it hasn't made enough profit (if any at all) to pay a penny in royalties to the writer. |
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Lol... so I suppose you all would rather live in a country with no economic safety nets? No unemployment, no government programs to help the homeless, no subsidies for farms, no government research grants, no student loans, and so on and so forth? |
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I agree... we're all helpless waifs who need Government or we'll wither away. How else are we going to afford our tax bill? |
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"Regulating money flow and markets is about as useful as regulating gravity." |
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Gravity would have us all at sea level, and markets would have us all slaves to profit. |
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We build tall buildings and airplanes that usefully regulate gravity's effect on our position. |
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We enact laws that usefully restrict the things people (and corporations) can do for profit. Laws against child labor have a direct effect on markets. I don't understand the importance of your distinction between "regulating human behavior" and "regulating markets." |
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I have an idea... trade productive behavior for some form of compensation! Any services from any entity (government included) may be purchased at the going market rate! Insurance, for instance, may be purchased for health, unemployment, etc.
In this way, if the people REALLY support a program, it will be covered. If not, it was probably just political bribery designed to attract a group of potential voters. |
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A... job? What's that? But... I voted for that other guy! I don't have to work! You insensitive morons! I'm sure I'm a member of some protected group, and they'll use your tax money to sue your pants off! wait a minute... Oh, I agree, Bubba! |
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Let's see: Conspiracy to defraud the government, tax evasion, money laundering, false swearings on a legal document, circumventing the reporting requirements of the Bank Secrecy Act. That's just for your accountant to consider in a month or so. |
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[robinism], in the same way laws against murder are not market regulation laws, laws against child labor are not market regulation laws. |
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And btw, such laws (child labor) only occured after a substantial amount of the population became sufficiently wealthy to exercize political power -- guess how -- by living off the fruits of the markets. |
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As to gravity, regulation typically impedes, rather than improves progress, with space tourism being the best recent example. |
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Of course, if your business enjoys a great deal of political protection, you can get away with much more. Much of my family is into farming, and 14 year old kids are worked all the time. But, you should 'never cuss a farmer with your mouth full', so disregard this post. |
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Laws against murder and manslaughter do affect markets. |
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There is a market for snuff films. If there were no laws against murder, the market would demand that snuff films be made. |
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People can profit from the death of someone they owe money to. They can profit from the death of an ex-spouse they pay alimony to. They can profit from the death of a competitor. If murder were not illegal, then people would kill people who cost them money.
Killing is difficult as well as illegal. So if murder were legal, people would WANT to hire specialists to kill for them. This desire for specialist killers would create a market for specialist killers. So the law against murder affects the market in specialist killers. |
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People can profit by bullying and coercing their employees, constituents, neighbors, customers, etc. A useful tool in coercion is murder, to scare people by making an example of someone. If it weren't for laws against murder, corporations could increase their profits by coercion and commiting such murders, and stockholders would reward corporations who increase profits by doing this. In fact, stockholder pressure would REQUIRE corporations to commit murder as much as they need to to MAXIMIZE PROFITS. |
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I could think of lots more examples. Think of countries where life is cheap, think of war profiteering, the Mafia. Think of chemical companies and drug companies who could operate much more cheaply if they didn't have to worry about human life. |
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[robinism]: The laws you cite do indeed affect markets, but they are not in place *in order* to regulate markets; that is simply a happy accident. If there were no market for snuff films, murder would still occur, as it did for several centuries before the invention of snuff films. The market in specialised killers is not, in any sense, a legitimate market, and its regulation, by whatever means, cannot be regarded in the same way as regulation of a market in legal goods or services. |
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I think I see the distinction now. You think laws that regulate markets without relating to non-market morality are bad. But what about laws against insider trading? What about banking laws that protect deposits? Those laws relate only to markets. If it weren't for markets, those regulations wouldn't exist. Yet you must admit those are good laws. |
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[expediting the flow of money from the rich to the poor, whilst giving the rich more control over the process.] |
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Don't we already have the rich in control of the process? Would that make this rising, if not baked? |
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Banking laws that protect deposits relate not to markets but to theft. |
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robinism -- not bad -- just either futile as regulating gravity, or worse, truly impeding progress. |
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Actually, insider laws ensure that the market operates MORE efficiently, so I view them differently then, for instance, farm subsidies |
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Without wanting to debate the politics, there will always be richer, poorer, fair, unfair. |
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Capitalism has been good to us up to a point, but I'm not so sure that it still fosters innovation and competition as much as it used to. Innovation can make you $$$, but so can agressive brand protection, product dumping, patent law abuse, market segmentation and opt-out contracting. |
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Madai has proposed an adjustment to the system -- let's not attack the idea. |
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When there are more than 15 brands of water, colours and shapes can be lawfully trademarked, and living species are the property of multinationals, it is a good time to see if we can't alter the system to encourage ways of working that are even better than democratic capitalism. |
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That doesn't mean handing out little red books. It could be as simple as trading emissions, patent reform and (heaven forbid!) tax trading. |
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By the way, when you make a tax-deductible donation you are doing exactly the kind of tax trading Madai suggests. Crazy? I don't think so. |
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"insider laws ensure that the market operates MORE efficiently" |
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Doesn't that call into question the wisdom of the market, and the benefits of unfettered capitalism? The fact that unregulated markets morph into inefficient markets? I think that formation of monopolies is another example of this. |
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We had over a hundred years of "progressive" market regulation, enforcing spreads, etc. |
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We then had about 10 years of internet brokers. |
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Despite the horror stories (either of people who lost money or the enron type stories), the market force of the internet brokers forever changed how Wall St. works and drastically lowered costs of trading, in a way that just wasn't possible before this competition existed. |
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So laws can certainly have an occasional beneficial effect, but the market can "REALLY CHANGE THINGS". |
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More on anti-trust after dinner :) |
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Interesting, [UnaBubba] -- I hadn't thought about immigration control vs work force demands in that way, but I wonder if the problem of cheap work hours will continue to have such an impact on ecomony in a future, more automated world. |
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I haven't the slightest clue how money would/should/could work in an almost-automated manufacturing environment, but now I can buy a fully operational DVD player for under $50, and I'm starting to think we might need to come up with the answer sooner rather than later. |
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I do hope, in the spirit of HalfBakery, innovators and inventors find ways to be rewarded as much, if not more than, market traders and corporate insurers. |
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To (roughly) quote Homer Simpson "You don't need to invent something new. Just find an existing product and put a clock in it!". |
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Seems like everything the large corporations do which could be construed as unfair or even evil, is done with the blessing of Government. Capitalism is competition, B'crats and the threat of deadly force are the corrupting elements. |
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