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Post by supposn1 on Feb 12, 2014 16:04:41 GMT -6
FICA payroll tax; our most regressive tax.
Shifting a portion of FICA payroll tax to a federal sales tax.
Medicare is available to almost all of USA’s elderly and Social security retirement is available to almost all of USA’s elderly that were employed in the USA. No one can foretell their financial future condition with certainty. It’s not unusual for even wealthy persons have found themselves in need of Social Security and Medicare in their old age.
Poverty is directly detrimental to those families lacking minimal incomes but additionally it is detrimental to our entire economy. FICA is the most regressive of all federal taxes. It is proportionally greatest harm upon our working poor.
Except for work related injury) there’s no logical relationship between prior employment and medical need.
I advocate that FICA's portion of revenue earmarked for Medicare be entirely, and half of the social security retirement’s portions of FICA be replaced with a general sales tax.
FICA does not at present fully sustain these social programs, it is our most regressive federal tax and this shift of revenue sources is preferable to the reduction of Medicare or Social Security’s retirement benefits.
Employees generally cannot themselves entirely fund their own lifetime annuity program and employers FICA contributions based upon their payrolls are punishing employers for providing payrolls. I’m opposed to entirely disconnecting the relationship between payroll taxes and social security retirement benefits and I’m opposed to increasing the retirement age. Although people are living longer, most people’ are physically unable to sustain the production rates they achieved in their prime working years. Some compromises are called for.
Respectfully Supposn
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FICA payroll tax; our most regressive tax.
Addendum:
At present, employers’ portions of FICA payroll taxes are imbedded within the prices of all goods and services and passed on their customers. We all pay those employer costs.
Shifting a portion of FICA payroll tax to a federal sales tax.
Each employees’ and employers’ FICA tax would be reduced by 4.65%.
[Medicare’s 0.0145) + (Social Security’s 0.0325) = 4.65%
The 9.1% of payroll that’s reduced from total FICA revenues would be replaced by a 4.65% general sales tax.
The increase of prices due to eliminating 9.1% of USA’s payrolls from FICA’s revenues and enacting a 4.65% sales tax is dependent upon the proportional relationship of payroll subject to FICA and the sales transactions subject to a sales tax.
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If USA’s sales revenues subject to the sales tax are twice our total payrolls subject to FICA, the gross price increases would actually be:
(0.0465)(1/2)[1/1.0465)] > (0.02325)(0.9555) > .0222
the approximate gross price increases would be 2%
and for the working poor a net tax decrease of over 2.5 % .
If USA’s sales revenues subject to the sales tax are triple our total payrolls subject to FICA, the net price
increases would actually be:
(0.0465)(1 - 1/3)[1/1.0465)] > (0.031) (0.9555) > .0296
the approximate gross price increases would be less than 3%
and for the working poor a net tax decrease of over 1.5 % .
Respectfully, Supposn
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Post by unlawflcombatnt on Feb 14, 2014 23:55:04 GMT -6
Supposn,
Welcome back.
I disagree with the idea of replacing part of FICA with a sales tax.
Sales taxes are the most regressive of all taxes.
Since they're at a constant rate on goods purchased, they disproportionately affect those with the least spending power.
A 10% sales tax on all items purchased taxes those at the top end of the income / wealth scale is at the same dollar amount as those at the low end. But it's a much higher % of total income. As such, it takes a larger percentage bite out of those making less money.
10% tax on $1,000-worth of purchases for a worker making $20K per year is 5% of that workers total income.
In contrast,
10% tax on $1,000-worth of purchases for an employee making $200K/year is only ½% of that person's income.
Sales tax on a constant amount of goods purchased hurts that $20K/year worker far more than that of one making $200K
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Post by supposn1 on Feb 15, 2014 13:17:57 GMT -6
Supposn, Welcome back. I disagree with the idea of replacing part of FICA with a sales tax. Sales taxes are the most regressive of all taxes. Since they're at a constant rate on goods purchased, they disproportionately affect those with the least spending power. A 10% sales tax on all items purchased taxes those at the top end of the income / wealth scale is at the same dollar amount as those at the low end. But it's a much higher % of total income. As such, it takes a larger percentage bite out of those making less money. 10% tax on $1,000-worth of purchases for a worker making $20K per year is 5% of that workers total income. In contrast, 10% tax on $1,000-worth of purchases for an employee making $200K/year is only ½% of that person's income. Sales tax on a constant amount of goods purchased hurts that $20K/year worker far more than that of one making $200K |
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Post by supposn1 on Feb 15, 2014 13:19:37 GMT -6
Supposn, Welcome back. I disagree with the idea of replacing part of FICA with a sales tax. Sales taxes are the most regressive of all taxes. Since they're at a constant rate on goods purchased, they disproportionately affect those with the least spending power. A 10% sales tax on all items purchased taxes those at the top end of the income / wealth scale is at the same dollar amount as those at the low end. But it's a much higher % of total income. As such, it takes a larger percentage bite out of those making less money. 10% tax on $1,000-worth of purchases for a worker making $20K per year is 5% of that workers total income. In contrast, 10% tax on $1,000-worth of purchases for an employee making $200K/year is only ½% of that person's income. Sales tax on a constant amount of goods purchased hurts that $20K/year worker far more than that of one making $200K |
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Post by supposn1 on Feb 15, 2014 15:27:15 GMT -6
Supposn, Welcome back. I disagree with the idea of replacing part of FICA with a sales tax. Sales taxes are the most regressive of all taxes. Since they're at a constant rate on goods purchased, they disproportionately affect those with the least spending power. A 10% sales tax on all items purchased taxes those at the top end of the income / wealth scale is at the same dollar amount as those at the low end. But it's a much higher % of total income. As such, it takes a larger percentage bite out of those making less money. 10% tax on $1,000-worth of purchases for a worker making $20K per year is 5% of that workers total income. In contrast, 10% tax on $1,000-worth of purchases for an employee making $200K/year is only ½% of that person's income. Sales tax on a constant amount of goods purchased hurts that $20K/year worker far more than that of one making $200K |
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Post by supposn1 on Feb 15, 2014 15:40:26 GMT -6
Supposn, Welcome back. I disagree with the idea of replacing part of FICA with a sales tax. Sales taxes are the most regressive of all taxes. Since they're at a constant rate on goods purchased, they disproportionately affect those with the least spending power. unlawflcombatnt, A sales tax is not progressive or regressive; it’s a flat rated tax that can be drafted to be more progressive to a very limited extent. It can never function in the manner of progressive income taxes; but due to so many exceptions, exclusions, differentiating between sources and/or manner of acquiring incomes, our progressive income taxes ain’t that much progressive. I repeat: Except for work related injury) there’s no logical relationship between prior employment and medical need. I advocate that FICA's portion of revenue earmarked for Medicare be entirely and half of the social security retirement’s portions of FICA be replaced with a general sales tax. FICA does not at present fully sustain these social programs, it is our most regressive federal tax and this shift of revenue sources is preferable to the reduction of Medicare or Social Security’s retirement benefits. President Obama has in the past and continues to indicate future willingness to acquiesce and surrender populist goals rather than permitting his people to negotiate the “best deals they can get”. President Obama accepted reduced food stamps to obtain an agricultural bill that includes commodity price supports. I would have preferred that he’d have “sandbagged”; any cuts in food stamps must be proportionally applied to all other spending authorized within that bill. President Obama indicates his willingness to accept increasing the eligibility ages or other reductions of benefits to acquire greater funding for Medicare and Social Security retirement programs. I prefer he veto such reduction, continue to accept greater budget deficits and that Democrats’ continue arguing this issue in 2015, 2016 and beyond or until the voters determine the outcome of these issues. My lesser but acceptable preference, (considering the significance of Medicare and SS retirement programs) is to accept shifting a portion of revenue source from FICA to a sales tax. Although sales taxes are more regressive than progressive income taxes, they are less regressive than FICA which is “capped” and only levied upon employees and employers. Because the Employers FICA rate’s equally applied to all employers, their FICA payments are equally passed on to the prices of all USA products and behave exactly as a federal sales tax paid by everyone. Formally recognizing this we would in effect reduce wage earners portion of these taxes and spread a greater and uncapped portion of those taxes among all purchasers, investors, corporations, off the books laborers … ect would be the populist and the best interest of our nation. . Respectfully, Supposn |
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twk
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Post by twk on Feb 16, 2014 12:54:38 GMT -6
See table for historical changes to FICA rates. bradfordtaxinstitute.com/Free_Resources/Self-Employment-Tax-Rate.aspxLets suppose that someone wants to get off of welfare and wants to start a small auto repair operation in their home garage. Now lets say they make only $10,000 as a self employed person in the first couple years. That self employed person pays their portion and the employer's (themselves) portion of FICA. So they pay around $15% of their income in FICA tax, not 7.5%. That is a very regressive tax on the small business or self employed person. A small startup business has lots of issues to overcome and does not have much of a chance paying a 15% FICA tax. My understanding is that FICA is also paid before your standard deductions like mortgage interest etc. If the self employed try say an s-corporation to reduce their tax burden: 1) they will have to have at least one employee 2) they will have to have an accountant to handle the complex paper work 3) plus lots of other stuff So a small startup business does not have much of a chance getting up and running. No wonder you do not see very many "startups" in people's garages any more. Note: Amazon and Google are recent exceptions but I think they were making a lot more than say $10,000/year, and there are not a lot of other examples in recent history. But I thought the majority of the new jobs come from small business. "Houston, We've Got a Problem." |
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Post by unlawflcombatnt on Feb 16, 2014 23:39:32 GMT -6
unlawflcombatnt, A sales tax is not progressive or regressive; it’s a flat rated tax that can be drafted to be more progressive to a very limited extent. It can never function in the manner of progressive income taxes; but due to so many exceptions, exclusions, differentiating between sources and/or manner of acquiring incomes, our progressive income taxes ain’t that much progressive. Yes, technically a sales tax is neither progressive nor regressive. However, based on % of income, it is THE most regressive tax possible. If one person is making $6,000/month and another is making $24,000/month, and both are spending $6,000/month of food, housing, etc, a 10% sales tax on that $6,000 amounts to 1/10th of the $6K/month earners income, .................................but only 1/40th of the $24/month earner's income. In terms of % of income being taxed, the sales tax is extremely regressive. The Social Security tax problem has a very simple (technically) solution. Remove the cap on income that is taxed. At least then it will become a flat tax, instead of the regressive one it currently is. No argument there. He's abandoned every populist goal he ever claimed to advocate. I couldn't argree more. I see your point on FICA & sales taxes. But the lesser of 2 evils is still evil. Removing the cap on FICA contributions should be no-brainer for a Populist, Progressive, or any politician with a sense of basic fairness. |
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twk
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Post by twk on Feb 18, 2014 9:53:33 GMT -6
In Kentucky, there is no sales tax on basic unprepared foods. Milk, eggs, bread, potatoes, etc. This makes the sales tax less regressive. My major, major concern is that tax sources are typically never eliminated or reduced. If a new tax is implemented, the old taxes will typically be kept in place. ==================================================== Things are getting out of control and something needs to change. My wife has been laid off for 8 months now, no unemployment extension, no income. Last year, I was self employed but no income for the last 3 months. Masters in Electrical Engineering, 20+ years of programming experience, can not buy a regular job. If I can not get a job, maybe I can create one. Getting the government off my back, by first reducing the self employment FICA tax for low incomes would help me a lot. I also had to apply for Medicaid to pay for the Obama Care mandate. ==================================================== I do believe that the FICA tax is way too large. The percentage should be a gradually increasing rate, especially for self employed individuals. To pay for this I think we need to reduce the size of the federal government. Maybe allow Federal workers to volunteer for a 10% pay reduction, 4 day work week, 9 hour days. They need some kind of carrot to volunteer for a pay reduction. ==================================================== Adding more debt to the Federal Government is not a solution. I personally think the real numbers are worse than these CBO graphs depict.   |
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Post by supposn1 on Feb 18, 2014 13:23:39 GMT -6
unlawflcombatnt, A sales tax is not progressive or regressive; it’s a flat rated tax that can be drafted to be more progressive to a very limited extent. It can never function in the manner of progressive income taxes; but due to so many exceptions, exclusions, differentiating between sources and/or manner of acquiring incomes, our progressive income taxes ain’t that much progressive. Yes, technically a sales tax is neither progressive nor regressive. However, based on % of income, it is THE most regressive tax possible. If one person is making $6,000/month and another is making $24,000/month, and both are spending $6,000/month of food, housing, etc, a 10% sales tax on that $6,000 amounts to 1/10th of the $6K/month earners income, .................................but only 1/40th of the $24/month earner's income. In terms of % of income being taxed, the sales tax is extremely regressive. The Social Security tax problem has a very simple (technically) solution. Remove the cap on income that is taxed. At least then it will become a flat tax, instead of the regressive one it currently is. No argument there. He's abandoned every populist goal he ever claimed to advocate. I couldn't argree more. I see your point on FICA & sales taxes. But the lesser of 2 evils is still evil. Removing the cap on FICA contributions should be no-brainer for a Populist, Progressive, or any politician with a sense of basic fairness. |
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Post by supposn1 on Feb 18, 2014 13:26:33 GMT -6
UnlawflCombatnt said:
I see your point on FICA & sales taxes. But the lesser of 2 evils is still evil.
Removing the cap on FICA contributions should be no-brainer for a Populist, Progressive, or any politician with a sense of basic fairness.
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The less acceptable alternatives are for Obama to accept increasing the age of retirement or in any other manner decreasing Social Security and Medicare benefits. Eliminating the FICA’s payroll tax cap will not be enough. Unless we can find a method to reduce medical costs, we really can’t keep medical insurance costs from continuing to sky-rocket.
Why am I no longer able to quote when replying to this forum group?
Respectfully, Supposn
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Post by supposn1 on Feb 18, 2014 23:20:56 GMT -6
unlawflcombatnt, A sales tax is not progressive or regressive; it’s a flat rated tax that can be drafted to be more progressive to a very limited extent. It can never function in the manner of progressive income taxes; but due to so many exceptions, exclusions, differentiating between sources and/or manner of acquiring incomes, our progressive income taxes ain’t that much progressive. Yes, technically a sales tax is neither progressive nor regressive. However, based on % of income, it is THE most regressive tax possible. If one person is making $6,000/month and another is making $24,000/month, and both are spending $6,000/month of food, housing, etc, a 10% sales tax on that $6,000 amounts to 1/10th of the $6K/month earners income, .................................but only 1/40th of the $24/month earner's income. In terms of % of income being taxed, the sales tax is extremely regressive. The Social Security tax problem has a very simple (technically) solution. Remove the cap on income that is taxed. At least then it will become a flat tax, instead of the regressive one it currently is. No argument there. He's abandoned every populist goal he ever claimed to advocate. I couldn't argree more. I see your point on FICA & sales taxes. But the lesser of 2 evils is still evil. Removing the cap on FICA contributions should be no-brainer for a Populist, Progressive, or any politician with a sense of basic fairness. |
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Post by supposn1 on Feb 18, 2014 23:37:34 GMT -6
TWK, employers pass their FICA 7.65% payroll tax onto ALL purchasers of USA goods and service products. All purchasers include foreign purchasers of USA exports, all product producers includes government provided goods and services but excludes any production by employees not subject to the FICA payroll taxes.
Excluding employees not subject to FICA taxes and those working illegally off the books, employees additionally directly pay 7.65% of their gross earnings for FICA payroll taxes. Thus employees that spend all they earn are paying the equivalent of 10% to 11.2% of their gross earnings for these taxes.
I’m proposing we reduce FICA revenues by 9.1% of payroll and replace that with a 4.55% sales tax. This will reduce employees FICA taxes by 4.55% of their gross wages and their actual prices net increases will be 3% to 3.2%. Employees who spend everything they earn will experience a net tax decrease of 1.3% to 1.5%.
Respectfully, Supposn
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twk
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Post by twk on Feb 19, 2014 9:19:32 GMT -6
Here is what I Posted on another forum on Oct 27, 2010 Subject: America’s economic decline www.phpbbplanet.com/damessageboard/viewtopic.php?t=22934&sid=e62ebe77ae9c5f1e679625617b02f6f4&mforum=damessageboard============================================================================== There always seems to be resistance to even the mention of tariffs. What if we converted all medicare and social security taxes to a retail sales tax? I am not advocating the complete flat tax, just a small portion of it. Small changes are easier to implement than large changes. This takes the payroll tax off the back of the wage earner and the manufacturer and puts the tax on all retail goods both domestic and foreign. This will: 0) be similar to a tariff without it being a tariff. 1) get rid of the payroll tax and make it easier and cheaper to have employees. 2) simplify the tax code and make it easier on the self employed and small business. 3) not be a complete overhaul of the tax code and will probably be easier to implement. 4) reduce arguments about how much social security tax you paid in and how much you are owed, ( i.e. this is not a 401k plan ) Does this makes sense? ================================================================================= Quote:
Are you advocating abolition of all current income taxes and go to a VAT tax or just a goods tax?
No!! I am NOT advocating the complete "flat tax" or "fair tax", just a small portion of it. Small changes are easier to implement than large changes. I am only discussing social security and medicare taxes, maybe unemployment insurance. i.e. the extra stuff that makes employees expensive to hire. the extra stuff that working man/woman pay directly or is paid in behalf by the employer. Quote:
Will this be national? What about state sales taxes?
National but collected by the states. The states already have the infrastructure to collect sales taxes. Quote:
Sales tax is very regressive - poor spend greater portion of their income this way than rich people, who save a lot.
The lefties would never go for that.We still have the normal income tax for now, which keeps the lefties happy. The poor are hurt the most by social security and medicare taxes anyway. Especially if they are self employed, they pay around 14% on everything they make. Also leave the tax off of things like bread, milk etc. Quote:
At any rate, an income tax is tax on a person's labor. This is fundamentally immoral.
Yes it is. We need to start fixing the problems and the best way is to start and start relatively small. We can wait for the economic collapse and get nothing done now. Look how difficult it is just with this small idea. How much harder will it be after the whole system fails. Remember new systems are many times built from pieces of the old system. Better to have some good pieces in place from which to build the new system. ================================================================================= |
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Post by supposn1 on Feb 19, 2014 15:29:13 GMT -6
Here is what I Posted on another forum on Oct 27, 2010 Subject: America’s economic decline www.phpbbplanet.com/damessageboard/viewtopic.php?t=22934&sid=e62ebe77ae9c5f1e679625617b02f6f4&mforum=damessageboard============================================================================== There always seems to be resistance to even the mention of tariffs. What if we converted all medicare and social security taxes to a retail sales tax? I am not advocating the complete flat tax, just a small portion of it. Small changes are easier to implement than large changes. This takes the payroll tax off the back of the wage earner and the manufacturer and puts the tax on all retail goods both domestic and foreign. This will: 0) be similar to a tariff without it being a tariff. 1) get rid of the payroll tax and make it easier and cheaper to have employees. 2) simplify the tax code and make it easier on the self employed and small business. 3) not be a complete overhaul of the tax code and will probably be easier to implement. 4) reduce arguments about how much social security tax you paid in and how much you are owed, ( i.e. this is not a 401k plan ) Does this makes sense? ... TWK, Social Security retirement entitlement is not distributed equally among all retired persons but the extent of its benefits are significantly dependent upon those individuals’ lifetime earnings subject to the FICA payroll tax. Although the SS retirement program’s not a “pure” insurance program, it is logically, politically and financially preferable that we retain to some extent its insurance characteristic. SS retirement entitlement is in aggregate of great net financial benefit to elderly wage and salary earning individuals and their families and additionally it’s of significant net economic benefit to our entire nation. Eliminate that insurance characteristic and you provide a political wedge that better enables conservatives to undermine if not eliminate the SS retirement program. For the same reason I’m firmly opposed to putting an income cap upon beneficiaries other sources of incomes. We can assume that persons who earned more, paid greater taxes and it would be penny foolish to deny them their equal entitlement to the program’s benefits. By denying the wealthy of what should be their equal entitlement, you’ve slightly decreased the portion of our population, the per capita and aggregate budgeted costs due to the entitlement; but you’ve created an additional political wedge between most voters and the politically most influential segment of voters. Among the best method of retaining a viable SS retirement program is to enable the greatest numbers and proportion of our population to participate and benefit from that program. [That’s the PRIMARY REASON why conservatives are so upset about the Affordable Care Act; too many and to great of our population benefit from any viable medical insurance program]. These populist programs that are of net economic and social benefit to our nation are proportionate to income of greater benefit to those with lesser incomes. I do not want to give conservative additional opportunities to undermine such programs. I advocate equally sharing the funding of our two most expensive federal social programs between FICA and a general sales tax. Because employers’ FICA taxes are in effect a federal sales tax, this method in effect funds ¼ of these federal economic and social programs, (i.e. Medicare, SS retirement and SS disability insurance), by taxing employees directly, ¼ by taxing all sales transactions indirectly, and the remaining 1/2 of by directly taxing all USA domestic sales of both USA and foreign products. Reform of our major tax revenue souses, (our income taxes) are a separate issue and should not be co-mingled with the funding of Medicare, SS retirement and SS disability. Respectfully, Supposn |
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twk
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Post by twk on Feb 20, 2014 10:43:10 GMT -6
I do agree with much of what you said but I think I am talking apples and you are talking oranges.
If one person is making $6,000/month and another is making $24,000/month,
and both are spending $6,000/month of food, housing, etc,
You are living in a different world. I am not talking about the higher wage earners.
I am talking about a self employed person making $1,000/month or $2,000/month.
It is ridiculous for them to pay around 14% to 15% of their income as a FICA payroll tax.
This is a very, very regressive flat tax on low income, self employed people.
My gross revenues were less than $1,000/month in 2013 and my profits are looking close to zero, if not negative.
My point is, you should not be paying any taxes, fees, etc., if you are making only $1,000/month profit.
My wife's unemployment ran out in 2013, all she got was 26 weeks worth.
She is having a hard time finding work.
I use to be one of those "highly skilled" people making $6,000/month, at one time $10,000/month,
but now I am 54, unemployed, with a masters in electrical engineering,
also 20+ years of programming experience,
and I can not buy a job as this point.
I would like the ability to create my own job and
it is not easy, especially with the regressive FICA tax on my back.
The FICA tax on low income, self employed people, needs to be fixed, somehow, and NOW.
Why would anyone with a low income or on government assistant, try to start a business in this environment?
But, I say again, small business is the job engine of our economy.
"Houston, We've Got a Problem."
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Post by unlawflcombatnt on Feb 22, 2014 14:23:15 GMT -6
I used large numbers previously to illustrate a point.
Let's say worker #1 is making $4,000/month, and worker #2 is making $2,000/month.
Lets assume they're both paying about the same $1500/month on rent & food (I know--an unrealistically low number)
Let's assume we've removed all taxes on income--including Social Security.
If both workers are paying a 10% sales tax/month, that uses up another $150-worth of income.
That leaves the $2,000/mo worker with $350.
But it leaves the $4,000/mo worker with $2,350.
That's the effect of the sales tax.
You can't get more regressive than that.
But if you tax both workers income at just a flat rate of 7%, and have 0 sales tax,
then the $2,000/month worker has $360 left over,
while the $4,000/month worker has $2,220 left.
So even a flat rate tax on income (including SS) is less regressive than a sales tax.
So as I stated earlier, replacing taxes on income with sales taxes is more regressive.
The lower income person is hurt more by sales taxes than the higher income person.
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Post by supposn1 on Feb 24, 2014 3:05:03 GMT -6
Things are getting out of control and something needs to change. I do believe that the FICA tax is way too large. The percentage should be a gradually increasing rate, especially for self employed individuals. To pay for this I think we need to reduce the size of the federal government. Maybe allow Federal workers to volunteer for a 10% pay reduction, 4 day work week, 9 hour days. They need some kind of carrot to volunteer for a pay reduction. ///////////////////////////////////////////////////////////////////////////////////// If the proposal described within this thread were enacted the taxes paid by the self-employed would be reduced from 14.71% to be 5.93% . If you’re self employed and accept the contention that employer’s pass their FICA tax onto their customers, your employer portion of FICA is defrayed by being passed onto your customers, and 9.1% of payroll derived from FICA revenue were shifted to be 4.65 % federal sales tax revenue, both the directly paid employer and employee portions of FICA would each be reduced from 7.65% to 3% of payroll and a 4.65% federal sales tax would be enacted. Due to the employers’ FICA imbedded within all prices, present prices of USA goods are increased between 2.44% to 3.252% . If USA sales transactions are triple our payrolls, our net increase of purchase prices would be increased by 1.38% and their payroll tax would be reduced by 4.65%. Employees’ net taxes upon their spent earnings would be (0.0765 - + 0.0325) reduced to (0.03 + 0.0325 + 0.0138) (0.109) reduced to (0.0763) which is a net tax reduction of 3.27% employees’ spent incomes. If USA sales transactions are double our payrolls, our net increase of purchase prices would be increased by 0.00912 and their payroll tax would be reduced by 4.65%. Employees’ net taxes upon their spent earnings would be (0.0765 - + 0.0244) reduced to (0.03 + 0.0244 + 0.00912) (0.109) reduced to (0.06352) which is a net tax reduction of 4.548% employees’ spent incomes. Self-employed taxes would also be reduced by only 3.27% to 4.548% because the employers’ payroll taxes were and remain passed on to customers in the form of prices greater than otherwise. Respectfully, Supposn |
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Post by unlawflcombatnt on Feb 24, 2014 13:15:27 GMT -6
I'll have to come back to this later.
To begin with, I don't accept that 100% of employers' contribution to FICA is tacked on to the price of goods.
Increased costs are never passed on 100%, because it reduces sales income more than the cost savings.
To the other point, however, it's not about the net tax reduction or spending power effect on American consumers.
It's about who it effects the most--the lower income consumers who spend a higher fraction of their income, or the higher income consumer who spend a smaller fraction of their income.
And converting SS contributions into sales tax will reduce aggregate spending, because it will take spending power away from lower income-higher% spenders, and give it higher income-lower% spenders.
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Post by supposn1 on Feb 25, 2014 22:23:56 GMT -6
I'll have to come back to this later. To begin with, I don't accept that 100% of employers' contribution to FICA is tacked on to the price of goods. Increased costs are never passed on 100%, because it reduces sales income more than the cost savings. To the other point, however, it's not about the net tax reduction or spending power effect on American consumers. It's about who it effects the most--the lower income consumers who spend a higher fraction of their income, or the higher income consumer who spend a smaller fraction of their income. And converting SS contributions into sales tax will reduce aggregate spending, because it will take spending power away from lower income-higher% spenders, and give it higher income-lower% spenders.
Unlawflcombatnt, the figures I provided are for the portion of employment income entirely spent; not invested or transferred in any other method. Sales taxes may be to a limited extent drafted as a more progressive.
Without reducing funding for these economic and social programs, this proposal introduces greater financial funding derived from other than wage and salary earners. The present payroll tax is much more regressive than a general sales tax.
When the Democratic Party fails to hold true to their populist character and populist continue to vote for Democrats despite their betrayal of populist principles, the alternative to a sales tax is to watch Obama acquiesce and surrender. He has displayed a willingness to accept reduced Social Security, Medicare and Medicaid benefits. A federal sales tax is preferable to benefit reductions.
I’m pleased that Obama has indicated he’s removing modification of the cost-price index calculations from the discussion table. I’m opposed to reducing the updating of SS retirement benefits.
Respectfully, Supposn
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Post by supposn1 on Apr 21, 2014 8:24:32 GMT -6
Yes, technically a sales tax is neither progressive nor regressive. However, based on % of income, it is THE most regressive tax possible. If one person is making $6,000/month and another is making $24,000/month, and both are spending $6,000/month of food, housing, etc, a 10% sales tax on that $6,000 amounts to 1/10th of the $6K/month earners income, .................................but only 1/40th of the $24/month earner's income. In terms of % of income being taxed, the sales tax is extremely regressive. The Social Security tax problem has a very simple (technically) solution. Remove the cap on income that is taxed. At least then it will become a flat tax, instead of the regressive one it currently is. No argument there. He's abandoned every populist goal he ever claimed to advocate. I couldn't argree more. I see your point on FICA & sales taxes. But the lesser of 2 evils is still evil. Removing the cap on FICA contributions should be no-brainer for a Populist, Progressive, or any politician with a sense of basic fairness. |
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Post by supposn1 on Apr 21, 2014 8:46:43 GMT -6
Feb 24, 2014 at 2:15pm unlawflcombatnt said:
I see your point on FICA & sales taxes.
But the lesser of 2 evils is still evil.
Removing the cap on FICA contributions should be no-brainer for a Populist, Progressive, or any politician with a sense of basic fairness.
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UnlawflCombatnt, removing the cap from Social Security’s portion of the FICA payroll tax would create a flatter but not a flat tax.
FICA tax is levied upon the employers and employees based upon payroll amounts; there is no FICA levied upon incomes not itemized within payrolls.
Sales taxes would be levied upon all (sales transactions (i.e. sales of imported and domestic products sold to customers within the USA’s jurisdiction; all purchasers within USA’s jurisdiction would be subject to sales taxes.
Under a Vat method, enterprises pass their sales tax costs directly to the purchasers of their products and their incomes subject to income taxes are reduced by the amounts of any VAT expenses they have not yet directly passed on.
Regardless of individuals’ income sources and regardless of their employment on or “off the books”, all products sold or imported into the USA would be subject to a federal sales tax.
Sales taxes are truly flat taxes, and they’re significantly less regressive than our FICA payroll tax.
Elimination or reduction of Medicare or Social Security benefits is of greater financial detriment to persons and families of lesser incomes.
There is no logical relationship between incomes and Medical needs but it is desirable to retain at least some of FICA’s relationship between employment derived incomes and employees Social Security retirement benefits.
A flat sales tax is comparatively more regressive than progressive income taxes but due to exceptions and exclusions, (i.e. special strokes for special folks), our “progressive income taxes ain’t that progressive. Although populists such as I would prefer that funds be created by more progressive income taxes, that is politically less achievable and if achieved, is particularly vulnerable to repeal or reduction.
Respectfully, Supposn
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Post by unlawflcombatnt on Apr 21, 2014 23:12:19 GMT -6
Supposin,
I don't see how you're arriving at the conclusion that FICA taxes are more "regressive" than sales taxes.
FICA taxes are only on the first $100-105K of income (I don't know what the current cap is at present).
There's no FICA on income over that amount.
That means the more that an individual makes over the $100-105K cap,
the lower their FICA tax % as a portion of their total income.
A person making $1 million/year is not paying any more FICA than someone making $110K/year.
That makes the FICA part of taxes about as regressive as you can get.
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Post by supposn1 on Apr 22, 2014 10:57:45 GMT -6
Supposin, I don't see how you're arriving at the conclusion that FICA taxes are more "regressive" than sales taxes. FICA taxes are only on the first $100-105K of income (I don't know what the current cap is at present). There's no FICA on income over that amount. That means the more that an individual makes over the $100-105K cap, the lower their FICA tax % as a portion of their total income. A person making $1 million/year is not paying any more FICA than someone making $110K/year. That makes the FICA part of taxes about as regressive as you can get. /////////////////////////////////// UnlawflCombatnt, we do not agree upon the definitions of “progressive” or “regressive” taxes? USA’s income taxes are described as progressive because (in theory) the tax rate increases as the incomes increase; (i.e. individuals’ taxes proportion’s of taxes relative to their incomes increase if their income amounts increase. FICA taxes are described as regressive because individuals FICA taxes are reduced from 7.65% to 1.45% after the annual incomes reach the capped amount. Thus beyond employee’s annual earning's capped amounts, employees proportions of FICA taxes relative to their total incomes decrease. Furthermore only incomes itemized upon payrolls are subject to any FICA taxes. The working poors’ incomes are almost entirely due to incomes itemized upon payrolls. Wealthier individual deriving incomes from other than employment are not subject to any FICA taxes. Respectfully, Supposn |
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Post by unlawflcombatnt on Apr 28, 2014 11:56:06 GMT -6
Supposin, I don't see how you're arriving at the conclusion that FICA taxes are more "regressive" than sales taxes. FICA taxes are only on the first $100-105K of income (I don't know what the current cap is at present). There's no FICA on income over that amount. That means the more that an individual makes over the $100-105K cap, the lower their FICA tax % as a portion of their total income. A person making $1 million/year is not paying any more FICA than someone making $110K/year. That makes the FICA part of taxes about as regressive as you can get. /////////////////////////////////// UnlawflCombatnt, we do not agree upon the definitions of “progressive” or “regressive” taxes? USA’s income taxes are described as progressive because (in theory) the tax rate increases as the incomes increase; (i.e. individuals’ taxes proportion’s of taxes relative to their incomes increase if their income amounts increase. FICA taxes are described as regressive because individuals FICA taxes are reduced from 7.65% to 1.45% after the annual incomes reach the capped amount. Thus beyond employee’s annual earning's capped amounts, employees proportions of FICA taxes relative to their total incomes decrease. Furthermore only incomes itemized upon payrolls are subject to any FICA taxes. The working poors’ incomes are almost entirely due to incomes itemized upon payrolls. Wealthier individual deriving incomes from other than employment are not subject to any FICA taxes. Respectfully, Supposn Supposin, You're right. I got turned around on what I was saying. FICA taxes ARE more regressive than sales taxes. But both are very regressive, compared to income taxes. |
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Post by supposn1 on Apr 29, 2014 9:31:43 GMT -6
You're right. I got turned around on what I was saying. FICA taxes ARE more regressive than sales taxes. But both are very regressive, compared to income taxes. ///////////////////////////////////////////////////////////////////////////////////////////// Unlawflcombatnt, excerpted from my post of Apr 21, 2014 at 10:46AM. A flat sales tax is comparatively more regressive than progressive income taxes but due to exceptions and exclusions, (i.e. special strokes for special folks), our “progressive income taxes ain’t that progressive. Although populists such as I would prefer that funds be created by more progressive income taxes, that, [to replace the reduced revenue due to reduction of FICA’s payroll tax rate] is politically less achievable and if achieved, is particularly vulnerable to repeal or reduction. Respectfully, Supposn |
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