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The seemingly simple concept of tax is unbelievably complicated in reality. The oft cited example in Australia is that our tax laws/regulation etc. run to 10,000 pages and is growing at a steady rate.
This leads to two main problems: 1. It creates an industry of accountants and lawyers just to fill
out the tax forms (and discover loop holes). 2. It lacks transparency. Everyone becomes suspicious that everyone else is cheating the system, which is demoralising and corrupting.
The main problem, as I see it, is the concept taxing 'net income'. Trying to define vague concepts such as work related expense, liabilities etc. simply leads to loop holes and baffling complexity.
So I propose taxing 'gross income/profit' instead for both individuals and businesses. Tax rates would be adjusted downward accordingly.
In a perfect world individual and business tax would be essentially the same (thus removing other loop holes).
Tax Free: Rupert Murdoch's zero status
http://tinyurl.com/63zsc
News Corp. finds the loopholes [xaviergisz, Feb 24 2005]
[link]
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I wonder if understand correctly. In the Netherlands a business pays tax over the total amount of money they received, AND the pay tax over the total amount of profit they made. Does this mean your idea is baked? |
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payroll taxes are already drawn on a gross basis, so this is in no way new. |
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A flat tax that would eliminate deductions would be the same as well. |
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I think the answer in lowering the tax burden lies somewhere in market dynamics, unseen. |
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I'm pretty convinced, for instance, that if you eliminate certain "tenure" type protections from government workers while at the same time making their pay equivalent to that received on Wall St.(while tying it to performance), government would become more effective and start costing less. |
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Not that Wall St. is necessarily all that effective. But you gotta start somewhere. |
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OK, I was over-reaching with the application to businesses. I admit my knowledge of tax is limited. I guess this was my simplistic approach to making sure the likes of News Corp. pay their dues (see link). |
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"Contributors" ... I like that. |
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The mega corporation that pays no tax is a great headline, but is also absurd myth, and it plays to the rather base human instinct to knock down somewhone who is doing better than you (i.e. a different flavor of tax the rich). |
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Here's a different take on the issue. Take a country's budget. Divide it per capita. That's a "fair" representation of what each citizen needed to throw in. |
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Than compare it to what you paid, and compare it to what Rupert paid. |
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For the US, for instance, this very rough calculation shows about $8,500 if I didn't screw up the spreadsheet formula. |
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the $8500 I just came up with is based on 2004 US budget figures, deficit included, and 270MM population, is that right?, though not counting some supplementals like the war (an extra $300 bucks per citizen on that one). |
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So as a family of 5 I would have paid $42500. |
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Nah, I figure per capita to calculate tax burden -- but then assume that head of household has to make good on it, that's why I posted the 42500 figure as well |
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I'm very intrigued by the sales tax idea being floated here as part of a tax reform effort, especially due to it's ability to pick up most of the underground economy, i.e. the mobster might get the Mercedes underhand but we'll get him when he's buying stuff at the store. The stimulation to the savings rate might also do some good |
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I'd like to add that a family making at the poverty level probably spends the majority of their taxable income on living necessities, while someone achieving $270 million has, in theory,the same cost for living necessities. |
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It seems to me that the complexities of the tax codes are a delicate balance allowing the government to achieve a higher income by holding out a carrot for those with high incomes to divert significant amounts of their income into tax sheltered areas that will allow them to achieve an even higher taxable income. |
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This would seem all good and fair to me if only it would be illegal for politicians to accept contributions from anyone or anything. |
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