Can Trump seize this once-in-a-lifetime opportunity to fix the tax code?

[DB]

Milton Friedman wrote a book called, "Free to Choose" which I recommend to anyone who is interested in trade/tariffs.  In it, he makes a policy proposal that is absolutely stunning.  It pretty much flies in the face of every discussion on tariffs I've ever read, from either side of the issue.  And he backs it up well.  Even if you don't agree with his staunchly free trade stance, I think you'll appreciate the experience of reviewing his arguments if you like to think about this stuff.

You know, I just realized I haven't been called a Free Traitor once since I came here.  It's almost like we can look at the issues, discuss our views, come to different conclusions, and yet still not be forced to resort to calling each other names.

Yes indeed.

[Bigun]

What?  I thought you were all about consumption taxes as the antidote to the dreaded income tax.

I think it's probably fairer, especially when revenues for general expenditures are required, to tax income rather than consumption.     

I am! Tariffs are HIDDEN from consumers in prices. The tax proposal I support is anything but!

Then you support continuing the cottage industry in Washington which is: Reward your friends and punish your enemies via the tax code!  Not to mention all the social engineering that can be done with the income tax and cannot with a point of retail sale only sales tax.

[Bigun]

Milton Friedman wrote a book called, "Free to Choose" which I recommend to anyone who is interested in trade/tariffs.  In it, he makes a policy proposal that is absolutely stunning.  It pretty much flies in the face of every discussion on tariffs I've ever read, from either side of the issue.  And he backs it up well.  Even if you don't agree with his staunchly free trade stance, I think you'll appreciate the experience of reviewing his arguments if you like to think about this stuff.

You know, I just realized I haven't been called a Free Traitor once since I came here.  It's almost like we can look at the issues, discuss our views, come to different conclusions, and yet still not be forced to resort to calling each other names.

Milton and Rose Freeman have long been my heroes and will always remain so!  BTW: IIRC "Free to Choose" was a joint effort between those two.. 

[Smokin Joe]

What?  I thought you were all about consumption taxes as the antidote to the dreaded income tax.

I think it's probably fairer, especially when revenues for general expenditures are required, to tax income rather than consumption.     

Define income.

Is it income if I trade you a dozen eggs for a loaf of bread?

Is it income if I offer to fix your car if you clean my gutters?

Is it income if I give you some round pieces of metal to help me shovel my driveway?

Is it income if I give you some pieces of paper instead, in exchange for your help?

Every one of those transactions is an exchange of goods for goods, labor for goods, skills for labor, or labor for money. According to the tax people those are all income taxable transactions. But they aren't a gain per se, they are an exchange, even up.

If I put money in a bank account and get interest, that is income.
If I buy something for x dollars and sell that same thing for y dollars, and the difference between y and x is a positive number, that is income. (like a share of stock).
If I loan money and get paid back with interest, that is income.
If I rent you my snow shovel, that rent is income (provided I get the shovel back).

So I guess it depends on how you define "income"

I know the nearly $450,000 I paid in taxes for the privilege of working 14 hour days and being away from home for most of 5 years wasn't a welcome intrusion into my economic situation, especially because in a year afterward when I made less than I paid in taxes the previous year, not a dime of that comes back.

As it stands, we pay income tax, SS FICA, sales tax, excise taxes, corporate taxes (written into the prices of the things we buy) and taxes on those taxes when we buy whatever, fuel taxes, all the little taxes and 'fees' on your cell phone bill or landline bill, access charges (as if it cost the FCC anything to put in the electromagnetic spectrum), and others.

I'm Taxed Enough Already.

While I console myself with the Fedgov picking up the cost of this person's medications or that person's medications, I also recognize that part of the reasons those meds are so expensive are Federal Regulations.
Otherwise, I can't say how I'd react to the thought that the 2/5 of my income gone in taxes in those good years went to pay for a study of the sex lives of pre-pubescent butterflies somewhere, or something I regard as equally arcane and useless. Money which would sustain me and my family for, literally, years, if I still had it.

The only way to reduce the tax burden, though, is to hammer the Federal Government back into its Constitutionally delineated boundaries, and to handle the resultant issues at the State level, as the feds are forced to abandon the usurped power over things which rightfully should be the province of the States and Local Government. There is no economy of scale when everything is one size fits all, and most situations deviate by some degree from average.

There are many different schemes out there to tax people. They range from a consumption tax to a modified consumption tax, with or without subsidies, to a flat tax on revenue, to the gradational tax system we have today, with its myriad loopholes, shelters, and other devices to avoid it. No matter which one is used, it is pouring money into an increasingly leaky bucket.

It is time to fix the leaks, to cut government and costs, just as those of us who have been subject to economic downturns have had to do the same.

And it just might be time to define income so it reflects a gain, and not just an exchange.

[IsailedawayfromFR]

I am! Tariffs are HIDDEN from consumers in prices. The tax proposal I support is anything but!

There are a lot of taxes hidden from consumers.

How about the gasoline tax at the pump?  This used to be almost non-existent and now is 18.4 cents per gal.

How about the income taxes paid by business?  Do consumers see this when they purchase virtually anything?

Utilities?
Most taxes are hidden from consumers.  Otherwise, people would rebel.

The point is that a tariff is not anymore hidden than a slew of other taxes.

[Hoodat]

Define income.

Is it income if I trade you a dozen eggs for a loaf of bread?

Is it income if I offer to fix your car if you clean my gutters?

Is it income if I give you some round pieces of metal to help me shovel my driveway?

Is it income if I give you some pieces of paper instead, in exchange for your help?

Every one of those transactions is an exchange of goods for goods, labor for goods, skills for labor, or labor for money. According to the tax people those are all income taxable transactions. But they aren't a gain per se, they are an exchange, even up.

If I put money in a bank account and get interest, that is income.
If I buy something for x dollars and sell that same thing for y dollars, and the difference between y and x is a positive number, that is income. (like a share of stock).
If I loan money and get paid back with interest, that is income.
If I rent you my snow shovel, that rent is income (provided I get the shovel back).

So I guess it depends on how you define "income"

I know the nearly $450,000 I paid in taxes for the privilege of working 14 hour days and being away from home for most of 5 years wasn't a welcome intrusion into my economic situation, especially because in a year afterward when I made less than I paid in taxes the previous year, not a dime of that comes back.

As it stands, we pay income tax, SS FICA, sales tax, excise taxes, corporate taxes (written into the prices of the things we buy) and taxes on those taxes when we buy whatever, fuel taxes, all the little taxes and 'fees' on your cell phone bill or landline bill, access charges (as if it cost the FCC anything to put in the electromagnetic spectrum), and others.

I'm Taxed Enough Already.

While I console myself with the Fedgov picking up the cost of this person's medications or that person's medications, I also recognize that part of the reasons those meds are so expensive are Federal Regulations.
Otherwise, I can't say how I'd react to the thought that the 2/5 of my income gone in taxes in those good years went to pay for a study of the sex lives of pre-pubescent butterflies somewhere, or something I regard as equally arcane and useless. Money which would sustain me and my family for, literally, years, if I still had it.

The only way to reduce the tax burden, though, is to hammer the Federal Government back into its Constitutionally delineated boundaries, and to handle the resultant issues at the State level, as the feds are forced to abandon the usurped power over things which rightfully should be the province of the States and Local Government. There is no economy of scale when everything is one size fits all, and most situations deviate by some degree from average.

There are many different schemes out there to tax people. They range from a consumption tax to a modified consumption tax, with or without subsidies, to a flat tax on revenue, to the gradational tax system we have today, with its myriad loopholes, shelters, and other devices to avoid it. No matter which one is used, it is pouring money into an increasingly leaky bucket.

It is time to fix the leaks, to cut government and costs, just as those of us who have been subject to economic downturns have had to do the same.

And it just might be time to define income so it reflects a gain, and not just an exchange.

Awesome post!

[Bigun]

There are a lot of taxes hidden from consumers.

How about the gasoline tax at the pump?  This used to be almost non-existent and now is 18.4 cents per gal.

How about the income taxes paid by business?  Do consumers see this when they purchase virtually anything?

Utilities?
Most taxes are hidden from consumers.  Otherwise, people would rebel.

The point is that a tariff is not anymore hidden than a slew of other taxes.

Exactly!  And they should not be!  In fact, we will NEVER get a handle on government overspending until the average Joe realizes what he is REALLY paying for all that government.

[Smokin Joe]

There are a lot of taxes hidden from consumers.

How about the gasoline tax at the pump?  This used to be almost non-existent and now is 18.4 cents per gal.

How about the income taxes paid by business?  Do consumers see this when they purchase virtually anything?

Utilities?
Most taxes are hidden from consumers.  Otherwise, people would rebel.

The point is that a tariff is not anymore hidden than a slew of other taxes.

State and federal fuels taxes are posted on the pump with a notice that the price includes them, at least around here. Those taxes a business doesn't accept as an expense, ti will pass on to consumers, even if they are listed. Look at a phone bill some time.