Tag Archives: taxation

estate tax and pants on fire

Donald Trump’s pants are on fire when he talks about the estate tax, according to Politifact.

How about small businesses and farms? The center projected that only about 80 small farms and closely held businesses would pay any estate tax in 2017. That would amount to about 1 percent of all payers of the estate tax that year. And the estate tax revenue from small businesses and farms, the center said, would amount to fifteen-hundredths of 1 percent of the total paid under the estate tax in 2017.

So, getting rid of the estate tax would hardly “protect millions of small businesses and the American farmer,” as Trump put it.

Trump’s claim doesn’t hold up even if you account for small businesses and farms that would potentially benefit from elimination down the road. The number from the Tax Policy Center (80) only refers to the number of small businesses and farms that would have to pay the tax this year.

When Donald Trump opens his mouth, all I see is diarrhea coming out. His words mean nothing to me. He has no interest in even trying to find out if the things he is making up are true. Is it possible he thinks they are true because he says them? It is a sad and embarrassing time to be an American.

value added tax

Here is a Fresh Air interview with T.R. Reid explaining how great the VAT is.

This is the most important innovation in taxation in the last 60 years. This is a tax that’s like a sales tax on steroids. It’s a tax – our sales tax is called a retail sales tax. The tax is only collected when the retailer sells you the book. But on a value-added tax, a tax is collected when the paper mill sells the paper to the publisher and when a publisher buys ink from an ink company and then the publisher sells it to a wholesaler and a wholesaler sells it to a distributor, distributor to the bookstore and the bookstore to you.

That tax is collected at every level, and every time you pay the tax to the other guy, you report it to the government to get a credit for the tax you paid which means every penny of tax that’s paid is reported to the government. So the VAT turns out to be a very easy tax for government to collect and a very hard tax for taxpayers to avoid. And so if you put in a value-added tax, they’re very steady collections, and it’s hard to cheat on.

And you could use that money to reduce the rate of the corporate or the personal income tax. So 176 countries have adopted this innovation. It’s a great idea. The only countries that don’t have it are a bunch of countries so poor they have no taxes and the United States of America. So I say in my book in taxation, Americans are still banging out letters on a typewriter and dropping them in a mailbox, and everybody else is texting and using Instagram.

So let’s do it. There are actually some signs the Trump administration might consider it. But instead of eliminating income tax, they may be thinking of going after the Social Security payroll tax.

personal carbon trading

I heard “personal carbon allowances” mentioned recently, and hadn’t heard of it before, so I grabbed this from Wikipedia:

Personal carbon trading is the generic term for a number of proposed emissions trading schemes under which emissions credits would be allocated to adult individuals on a (broadly) equal per capita basis, within national carbon budgets.[1] Individuals then surrender these credits when buying fuel or electricity. Individuals wanting or needing to emit at a level above that permitted by their initial allocation would be able to purchase additional credits from those using less, creating a profit for those individuals who emit at a level below that permitted by their initial allocation.

Sounds good in principle, although I think a carbon-based sales tax would be simpler and more straightforward. This concept assumes that people have time and motivation to sit around, do research, make rational choices, and engage in transactions to maximize financial gain. Busy people balancing careers, families, and the minuscule leisure time left over don’t necessarily have time to do this. For this to work, I think it would have to be pretty automated. Maybe a future of automated, computer-controlled financial transactions and markets could pull this off.

housing vouchers for all?

This article argues that if the U.S. took away the mortgage interest tax deduction, it could provide a housing voucher to everyone below the median household income. That’s hard to believe, but the key is probably that the median is well below the average, because of course the income distribution is skewed toward the top. I like my mortgage interest deduction. It is an important part of my retirement strategy and as I am a bit above the median (but hardly rich) it would be hard for me to support this policy.

Here’s another article on BillMoyers.com that says if you took away the mortgage interest tax deduction, the cap on social security deductions, the lower rate on capital gains, and tax-advantaged retirement accounts, you could double Social Security benefits for everyone. There’s a bit of a trick here – these ideas are presented as revenue neutral, because you can think of all these tax breaks as money the government is spending, rather than money it is not collecting compared to what it could be collecting or what it has collected under some past policy. It would be very easy to paint these as tax increases instead, of course. Still, I could be more easily persuaded to support this policy that the first one, because I would be guaranteed to get a portion of the higher taxes I am paying now back when I am older, and I wouldn’t have to worry so much about savings or home equity now. I would know that people who are both richer and poorer than me would all get the same share I would get, which I might be able to accept on grounds of fairness. I’m not out in the streets campaigning for this policy yet, I have to think about it.

Philadelphia soda tax

Taxes on sugary drinks have been tried and failed in a few cities, partly because the soda industry has mounted big ad campaigns against them. Now a tax has passed in Philadelphia, partly because Michael Bloomberg funded a pro-tax ad campaign. I watched this unfold in Philadelphia in real time and never heard about the Bloomberg thing until I read it in the national media just now. I guess it’s a victory over special interests, of sorts. I generally support the idea of taxing things that hurt people and using he revenue to help people. That should be what taxation is all about. It should replace less productive taxes on good things like work, saving and investment. That’s not the case in Philadelphia. They just keep raising and raising and raising, and it can’t go on forever.