What is the Optimum Tax Rate?

hanno wrote:

parados wrote:
Quote:
I say 6% off the top of all cash flow because it would be maybe a quarter of what we pay now when everything's going right, and if you count two hits on every buck of the GDP it should make half of the 3-trillion we need to run the joint.

If you count 2 hits on every buck for the GDP then you have doubled the GDP.

You got to spend money to make money.

Perhaps, but you don't have twice the money just because you counted each bill twice.

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parados wrote:

hanno wrote:
parados wrote:
Quote:
I say 6% off the top of all cash flow because it would be maybe a quarter of what we pay now when everything's going right, and if you count two hits on every buck of the GDP it should make half of the 3-trillion we need to run the joint.

If you count 2 hits on every buck for the GDP then you have doubled the GDP.

You got to spend money to make money.

Perhaps, but you don't have twice the money just because you counted each bill twice.

I said it would get hit twice, which before it becomes consumption, investment, government, or trade, I think it would be. That's if all transactions were taxed and we still know how to make things out of other things.

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Peasants in the middle ages never paid more than about 15%. Americans prior to just shortly before WW-I never paid income taxes at all.

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hanno wrote:

parados wrote:
hanno wrote:
parados wrote:
Quote:
I say 6% off the top of all cash flow because it would be maybe a quarter of what we pay now when everything's going right, and if you count two hits on every buck of the GDP it should make half of the 3-trillion we need to run the joint.

If you count 2 hits on every buck for the GDP then you have doubled the GDP.

You got to spend money to make money.

Perhaps, but you don't have twice the money just because you counted each bill twice.

I said it would get hit twice, which before it becomes consumption, investment, government, or trade, I think it would be. That's if all transactions were taxed and we still know how to make things out of other things.

Since the GDP includes all goods and services already then what could be provided that isn't a good or service? Nothing that I can see.

You are confusing the money system with the GDP. They are not the same thing. There is far less cash than the total GDP because a single dollar over time buys more than just a single dollars worth of goods and services. But because a single dollar does that much work doesn't mean that the goods and services do double work. They can't because the entire point of the GDP is to count the value of ALL the goods and services in a time period. If you count ALL the goods and services then you can't suddenly have double what you counted just because you wish you did. By the way GDP includes all consumption, investment, government, and trade already. The BEA website has great breakouts of what makes up the GDP.

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gungasnake wrote:

Peasants in the middle ages never paid more than about 15%. Americans prior to just shortly before WW-I never paid income taxes at all.

There was an income tax from 1862-1872. Americans paid it and you can even search the records of those paying it.
http://www.archives.gov/genealogy/topics/tax.html

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gungasnake wrote:

Peasants in the middle ages never paid more than about 15%. Americans prior to just shortly before WW-I never paid income taxes at all.

Peasents never got much for their money either. I doubt you'd want to return the the economic prospects of a pre-WWI US. It takes money to build and maintain a country that spans a continent.

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Government at all levels in the US spends about 28% of GDP

Ideally the taxation should match the spending. States and municipalities are usually required by law to spend no more than they take in. It is the federal government that does most of the borrowing. Bonding issues are ways for entities other than the federal government to borrow money.

When it comes down to spending of tax money, most complaints about where the money is spent boil down to only a small percentage of the overall spending. On the federal level the majority of spending goes to military, interest on the debt, and social security and medicare. The other areas are really minor in the over all budget. For local taxes the majority goes for roads, schools, fire and police.

What the argument comes down to is what do you personally think the government should provide for services.

As a side note, the US spends 16% of GDP on health care. If we had universal health care that cost 10% of GDP it would act like a tax cut of 6% of GDP.

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We should pay for local stuff with local tax monies, which includes roads, schools, fire and police, as Parados points out. Expenditures of more than 50 billion on K-12 by the federal government should be totally eliminated, and make the citizens take full responsibility (and authority) for their own schools.

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parados wrote:

Since the GDP includes all goods and services already then what could be provided that isn't a good or service? Nothing that I can see.

Final goods and services for the GDP my dear. Intermediate goods and services, most of which you need a hardhat to see, make 45% of the gross output, so, not quite two hits.

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I think if you add all taxes at every level, it approaches 40 to 50%, at least I have read that in places, after all when is tax freedom day, sometime in May?

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Just remember that Bill Clinton got elected in 1992 partly by promising a tax cut for the middle class. As soon as he got in office he changed his mind.

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According to this site, tax freedom day is April 30 in 2007, which translates into 33% tax, but that still probably doesn't include all taxes.

http://www.taxfoundation.org/UserFiles/Image/Tax-Freedom-Day/2007/figure3large.jpg

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cjhsa wrote:

Just remember that Bill Clinton got elected in 1992 partly by promising a tax cut for the middle class. As soon as he got in office he changed his mind.

Would you please provide the authority for this.

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http://query.nytimes.com/gst/fullpage.html?res=9E0CE0DA1F3FF930A15755C0A964958260

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cjhsa wrote:

http://query.nytimes.com/gst/fullpage.html?res=9E0CE0DA1F3FF930A15755C0A964958260

Thanks for the link, which basically contradicts your assertion. Clinton withdrew the proposal DURING the campaign. He didn't renig on a campaign promise after taking office.

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Remember that's the NY Times version....

And $350 per family... what a generous SOB! Laughing

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bm

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okie wrote:

According to this site, tax freedom day is April 30 in 2007, which translates into 33% tax, but that still probably doesn't include all taxes.

http://www.taxfoundation.org/UserFiles/Image/Tax-Freedom-Day/2007/figure3large.jpg

Tax freedom day is based on tax/income not tax/GDP.

Income listed on income tax returns is NOT the same thing as the GDP.

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hanno wrote:

parados wrote:

Since the GDP includes all goods and services already then what could be provided that isn't a good or service? Nothing that I can see.

Final goods and services for the GDP my dear. Intermediate goods and services, most of which you need a hardhat to see, make 45% of the gross output, so, not quite two hits.

What, pray tell, are "intermediate goods and services"? Unless you are trying to count the parts required to make products as a separate taxable event there is no such thing as "intermediate goods and services."

Companies don't as a rule sell products they are losing 45% on.
If you want to do a tax on all steps of production then your final tax rate is a far cry from the 6% you think is enough. The tax would only get added to the final cost and be paid for by the consumer. If I need 2 wookies at $1 to make a widget that I sell at $4 the production that counts for the GDP is $4. If you want to count the two wookies and tax them at 6% then that means I need to charge $4.12 and the customer now pays $4.36 with tax instead of the $4.24. It's no longer a 6% tax. But then if the wookies require a dohinky that costs .50 there would be tax on that as well so my wookies would now cost me $1.03. Then the tax on anything required to make the dohinky and so on and so on. Pretty soon the consumer is paying close to 12% taxation which isn't a 6% tax rate at all.

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parados wrote:

hanno wrote:
parados wrote:

Since the GDP includes all goods and services already then what could be provided that isn't a good or service? Nothing that I can see.

Final goods and services for the GDP my dear. Intermediate goods and services, most of which you need a hardhat to see, make 45% of the gross output, so, not quite two hits.

What, pray tell, are "intermediate goods and services"? Unless you are trying to count the parts required to make products as a separate taxable event there is no such thing as "intermediate goods and services."

Ah, I see, I must have hallucinated the concept and the wikipedia article on it.

parados wrote:

Companies don't as a rule sell products they are losing 45% on.

More like 90%. You think they just spontaneously generate a product and sell it?

parados wrote:

If you want to do a tax on all steps of production then your final tax rate is a far cry from the 6% you think is enough. The tax would only get added to the final cost and be paid for by the consumer. If I need 2 wookies at $1 to make a widget that I sell at $4 the production that counts for the GDP is $4. If you want to count the two wookies and tax them at 6% then that means I need to charge $4.12 and the customer now pays $4.36 with tax instead of the $4.24. It's no longer a 6% tax. But then if the wookies require a dohinky that costs .50 there would be tax on that as well so my wookies would now cost me $1.03. Then the tax on anything required to make the dohinky and so on and so on. Pretty soon the consumer is paying close to 12% taxation which isn't a 6% tax rate at all.

If you knew what you were talking about you could use pre-existing words.

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What is the Optimum Tax Rate?

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