Taxation, progressive or otherwise

[plural]

Several recent posts have gotten me thinking about taxation in general, while most of the discussions have been focused on the income tax, there are a number of other taxes which one must take into account if one is to discuss the burden/fairness of the tax system.

I would posit that the core effect and duty of government is to prevent the have nots from forcibly taking the possessions (or lives) of the haves. Originally the necessity for possessing a military was to prevent a neighboring tribe from walking in and stealing your cattle and women. Police started as a way to prevent your neighbor from doing the same. Welfare keeps the impoverished masses fat and satiated on cable television so they do not revolt or otherwise fuck up the system.

There are widely varying degrees of have's in our society (by that I mean primarily the American society, but it holds true in most first world countries) from the comfortably middle class to the ultra-wealthy, pretty much anyone who has more than the most basic necessities of life, is invested in maintaining the status quo so that they can hold on to whatever it is they have managed to accumulate, and the poor are kept in line with fear of losing their handouts.

In raw dollar amounts, which I understand is not the best measure of tax burden, the rich pay by far more in taxes, however they receive far more services from government, so to me it seems fair. When I call the police, I know they will be there in less than five minutes and ending their sentences with "sir", and somehow I get the impression that someone in the ghetto doesn't get the same service. The wealthy get far more access, privilege and benefit from government than the poor ever will. So to me, sticking us with the majority of the burden seems entirely fair, after all the entire system is designed to protect that wealth and privilege.

However, there has to be an orderly way of going about it, with some sense of fairness to each class, not so much because I believe in fairness, but because it promotes stability across the system. Personally I am tired of hearing people bitching about getting a raw deal, when in fact, even the poor in this country have it pretty damn good by any worldwide standard.

For example, with regard to income tax, I have no problems paying the government a large chunk of change four times a year, because every time I pay them, it means my wallet got a little thicker that quarter. From my perspective, I do not look at taxes paid as money lost, but money gained. The only way I incur the tax is by making money, and I like making money. The death tax however rubs me the wrong way, for the same reasons. Instead of taking a cut whenever I make a profit, which means that I still end up better off than before, the death tax feels like kicking me when I am down dead. Instead of the government taking a cut of profits they are taking away half of what I have built to leave to my family. (granted with proper estate planning much of that can be avoided, but my point is that it should not need to be avoided.)

Personally, I would like to see a system of taxation based on consumption. I would accomplish this through two mechanisms. The first being a sales tax, the rate being graduated in such a way to reflect the necessity of an item, for example groceries would not be taxed, gas and clothing would have a smaller tax, and that Ferrari would be heavily taxed. The second being property tax, also graduated in such a way that the tax rate for a small family home would be significantly smaller than a ten million dollar mansion. Even though such a system would probably increase my personal tax burden, it gives me the freedom to determine my tax obligation.

The problem with this sort of scheme is that in penalizes consumption, and encourages people to make do with less, which could be problematic for our economy. Secondly while the wealthy really wouldn't care, the middle class would never stand for it, because it would make those showy items they cant really afford like 60 inch televisions, that they buy on obscene credit terms, that much more expensive and harder to afford.

For Debate:

1) What advantages/disadvantages do you see with a consumption based taxation system similar to the one I have described above?

2) What in your mind would be method to fairly spread the tax burden over the socio-economic strata of society?

3) What core values should a tax system incorporate in order to promote stability and prosperity in a society?

Comments

[budhaboy.livejournal.com]

i don't know, it's sort of sad really... it's motivated by a belief that their cashflow will solve all their problems. Tragically, since they are idiots, it's only solved the ones that didn't matter, leaving them with the stark reality that they really are assholes.