parados wrote:Richard Saunders wrote:parados wrote:The price of gasoline dropped 10 cents here over the weekend.
Does that mean the Fed is not printing enough money?
Heh, cute. But you know what I mean.
No, I don't know what you mean if you don't agree with what I just said. If the Fed printing too much money is the reason the gas prices went up then not printing enough money would be the reason they go down. Or is your original claim wrong? Are you willing to admit you were wrong? I am merely pointing out the stupidity of the claim. If you don't like people pointing out how stupid the claim is then don't make it.
Quote: In 1950 a silver dollar bought 4 gallons of gas. Today, that silver dollar will still buy 4 gallons of gas but the paper dollar will not.
You are confusing the coin with the metal. A dollar coin didn't have a dollars worth of silver in it in 1950. You couldn't buy 4 gallons of gas with the silver in the dollar coin then and you can't buy 4 gallons with the silver in the coin today.
Quote:
Today's highs for gasoline will be lower than tomorrow's lows. Its a real shame. I know theyre advantages to having a flexible currency but I think all its done is allowed us as a country to get fat and lazy.
Price fluctuation has to do with supply and demand of the commodities not the dollar.
the average nationwide price for a gallon of regular gasoline in 1950 was 27 cents.
4 Gallons of gasoline would cost $1.08
Silver Spot price is $13.49
If there is .77 of an ounce in a silver dollar that makes the silver content worth $10.38..
If I divide by 4 that comes out to $2.59 a gallon.. Amazing.. gas has been exactly $2.59 a gallon here for the last couple weeks, though it just went up the other day to $2.63.
Richard Saunders wrote:
the average nationwide price for a gallon of regular gasoline in 1950 was 27 cents.
4 Gallons of gasoline would cost $1.08
Silver Spot price is $13.49
If there is .77 of an ounce in a silver dollar that makes the silver content worth $10.38..
If I divide by 4 that comes out to $2.59 a gallon.. Amazing.. gas has been exactly $2.59 a gallon here for the last couple weeks, though it just went up another day to $2.63.
You made the same mistake. You didn't use the actual silver content for 1950. The silver price in 1950 was 80 cents an ounce. at .77 ounce of silver that made the silver in the dollar worth a little over 2 gallons of gas.
Where do you live that gas was at 2.59 last week. Every region in the US is listed as being over 2.75 for regular last week. They have jumped since then.
Gasoline prices
If you want to us the US average for 1950 then use the same thing for today.
Using the US average for gas prices and the silver content in the dollar I get..
2.3 gallons in 1950
3.6 gallons in 2007
1.82 gallons in 2005
In September 2005 Silver was at $7.18 an ounce. Gas was at $3.03 so that would mean in 2005 you could only get 1.82 gallons of gas for the silver compared to 1950. That kind of blows your entire argument to hell.
parados wrote:Richard Saunders wrote:
the average nationwide price for a gallon of regular gasoline in 1950 was 27 cents.
4 Gallons of gasoline would cost $1.08
Silver Spot price is $13.49
If there is .77 of an ounce in a silver dollar that makes the silver content worth $10.38..
If I divide by 4 that comes out to $2.59 a gallon.. Amazing.. gas has been exactly $2.59 a gallon here for the last couple weeks, though it just went up another day to $2.63.
You made the same mistake. You didn't use the actual silver content for 1950. The silver price in 1950 was 80 cents an ounce. at .77 ounce of silver that made the silver in the dollar worth a little over 2 gallons of gas.
Where do you live that gas was at 2.59 last week. Every region in the US is listed as being over 2.75 for regular last week. They have jumped since then.
Gasoline prices
If you want to us the US average for 1950 then use the same thing for today.
Using the US average for gas prices and the silver content in the dollar I get..
2.3 gallons in 1950
3.6 gallons in 2007
1.82 gallons in 2005
In September 2005 Silver was at $7.18 an ounce. Gas was at $3.03 so that would mean in 2005 you could only get 1.82 gallons of gas for the silver compared to 1950. That kind of blows your entire argument to hell.
I live in New Jersey.
Hey look if you want to focus on short term fluctuations thats fine. But the important thing here to me is that not only is this country inflating the currency; it is also debasing it. Both at the same time. The dollar is a former shadow of itself because of this..and this is the reason we have that ever upward spiraling of prices; that will historically end in the ruination of the currency. You can take many examples throughout history where inflation went crazy and economies got ruined all because the govt at the time printed too much money without the underlying wealth to back it up. Eventually the dollar will wind up like the Continental.
I dont want to see it. But since nobody in govt is doing anything to prevent or change it; that is where we are going.
Richard Saunders wrote:
Hey look if you want to focus on short term fluctuations thats fine.
Actually, it's you that is focusing on short term fluctuations by bringing up today's gas price vs silver. Silver is at a high compared to most of its history. It will come back down again. It has been high before.
Quote:
But the important thing here to me is that not only is this country inflating the currency; it is also debasing it. Both at the same time. The dollar is a former shadow of itself because of this..and this is the reason we have that ever upward spiraling of prices; that will historically end in the ruination of the currency. You can take many examples throughout history where inflation went crazy and economies got ruined all because the govt at the time printed too much money without the underlying wealth to back it up. Eventually the dollar will wind up like the Continental.
Yeah, and none of those economic ruinations were caused by the FED. They were caused by the governments acting without the check of a central bank.
Quote:
I don't want to see it.
If you mean you don't want to see facts, I think you have made this abundantly clear as you ignore anything that doesn't fit into your world view.
Quote:But since nobody in govt is doing anything to prevent or change it; that is where we are going.
It's where we have been going for the last 80 years if we listen to your argument yet everything has fluctuated but we haven't arrived yet and I don't see it in the foreseeable future.
Richard Saunders wrote:But the important thing here to me is that not only is this country inflating the currency; it is also debasing it.
How do you debase the dollar? It's a -fiat currency-. It's not "based" in the first place.
^4/30/07: Another Economic Disconnect
By PAUL KRUGMAN
Last fall Edward Lazear, the Bush administration's top economist,
explained that what's good for corporations is good for America.
"Profits," he declared, "provide the incentive for physical capital
investment, and physical capital growth contributes to productivity
growth. Thus profits are important not only for investors but also for
the workers who benefit from the growth in productivity."
In other words, ask not for whom the closing bell tolls; it tolls for thee.
Unfortunately, these days none of what Mr. Lazear said seems to be true.
In the Bush years high profits haven't led to high investment, and
rising productivity hasn't led to rising wages.
The second of those two disconnects has gotten a lot of attention
because of its political consequences. The administration and its allies
whine that they aren't getting credit for a great economy, but because
wages have been stagnant -- the median worker's earnings, adjusted for
inflation, haven't gone up at all since the current economic expansion
began in 2001 -- the economy feels anything but great to most Americans.
Less attention, however, has been given to the first disconnect: the
failure of high profits to produce an investment boom.
Since President Bush took office, the combination of rising productivity
and stagnant wages -- workers are producing more, but they aren't getting
paid more -- has led to a veritable profit gusher, with corporate profits
more than doubling since 2000. Last year, profits as a share of national
income were at the highest level ever recorded.
You might have expected this gusher of profits, which surely owes
something to the Bush administration's pro-corporate, anti-labor tilt,
to produce a corresponding gusher of business investment. But the
reality has been more of a trickle. Nonresidential investment -- that is,
investment other than housing construction -- has grown very slowly by
historical standards. As a share of G.D.P., nonresidential investment
remains far below its levels of the late 1990s, and it has been
declining for the last two quarters.
Why aren't corporations investing, and what does the lack of business
investment mean for the economy?
It's possible that sluggish business investment reflects lack of
confidence in the economic outlook -- a lack of confidence that's
understandable given the bursting of the housing bubble, which has
already caused G.D.P. growth to slow to a crawl.
But as Floyd Norris recently reported in The Times, there is a more
disturbing possibility. Instead of investing in physical capital, many
companies are using profits to buy back their own stock. And cynics
suggest that the purpose of these buybacks is to produce a temporary
rise in stock prices that increases the value of executives' stock
options, even if it's against the long-term interests of investors.
It's not a far-fetched idea. Researchers at the Federal Reserve have
found evidence that company decisions about stock buybacks are strongly
influenced by "agency conflicts," a genteel term for self-dealing by
corporate insiders. In the 1990s that kind of self-dealing often led to
excessive investment, which at least left a tangible legacy behind. But
today the self-interest of management may be standing in the way of
productive investment.
Whatever the reasons, we now have an economy with incredibly high
profits and surprisingly low investment. This raises some immediate,
short-run concerns: with housing still in free fall and consumers ever
more stretched, optimistic projections for the economy depend on
vigorous growth in business investment. And that doesn't seem to be
happening.
The bigger issue, however, may be longer term. Mr. Lazear was right
about one thing: business investment plays an important role in raising
productivity. High investment in equipment and software was one major
reason for the productivity takeoff that began in the Clinton era, and
continued in the early years of this decade.
And low investment may be one reason productivity growth has slowed
dramatically over the last three years -- another development that hasn't
received as much attention as it should.
In any case, next time someone tells you that any action that might
reduce corporate profits a bit -- like actually enforcing health and
safety regulations or making it easier for workers to organize -- will
reduce business investment, bear in mind that today's record profits
aren't being invested. Instead, they're being used to enrich executives
and a few lucky stock owners.
----------------------------------------------------------------
parados wrote:Richard Saunders wrote:
Hey look if you want to focus on short term fluctuations thats fine.
Actually, it's you that is focusing on short term fluctuations by bringing up today's gas price vs silver. Silver is at a high compared to most of its history. It will come back down again. It has been high before.
Quote:
But the important thing here to me is that not only is this country inflating the currency; it is also debasing it. Both at the same time. The dollar is a former shadow of itself because of this..and this is the reason we have that ever upward spiraling of prices; that will historically end in the ruination of the currency. You can take many examples throughout history where inflation went crazy and economies got ruined all because the govt at the time printed too much money without the underlying wealth to back it up. Eventually the dollar will wind up like the Continental.
Yeah, and none of those economic ruinations were caused by the FED. They were caused by the governments acting without the check of a central bank.
Quote:
I don't want to see it.
If you mean you don't want to see facts, I think you have made this abundantly clear as you ignore anything that doesn't fit into your world view.
Quote:But since nobody in govt is doing anything to prevent or change it; that is where we are going.
It's where we have been going for the last 80 years if we listen to your argument yet everything has fluctuated but we haven't arrived yet and I don't see it in the foreseeable future.
There have been ruinations of currency with and without central banks... If you think central banks are a protector youre deluding yourself. They are the abuser.
Avatar ADV wrote:Richard Saunders wrote:But the important thing here to me is that not only is this country inflating the currency; it is also debasing it.
How do you debase the dollar? It's a -fiat currency-. It's not "based" in the first place.
well, Ill tell you how you can debase it. You can debase it based upon gold currently held by the govt. And although currencies arent redeemable for gold anymore it is still used by govts to maintain an asset on their books. So as a treasury's stock of gold dwindles it debases the currency.
Wrong, wrong, wrong, wrong.
The entire point of a "backed" currency is that you can actually go to the government (or a private entity - plenty of banks used to issue their own "bank notes") and exchange the paper for whatever the currency is backed by. This used to mean precious metals, gold or silver. Sometimes a nation will "peg" its currency, effectively backing it by a reserve of a foreign currency - the exchange rate is maintained, so long as the government stockpile holds out, because the government will exchange x of their currency for y of the foreign currency.
"Fiat" currencies are completely different. They're not backed by anything. (Well, you could cynically note that we have seven carrier battle groups and thousands of nuclear weapons. While that is indeed an excellent backing, it's not one for which you can exchange your money! ;p) If you go to the Federal Reserve and say "I would like to exchange my dollar for a dollar's worth of gold, please," they will laugh at you and suggest you go to a private gold exchange. The government doesn't -guarantee- that the dollar can be exchanged for a fixed amount of anything; it's all a market, man.
There's no big pile of gold in Fort Knox holding up the value of the US currency. There once was, and if the government printed more bills than it had gold to redeem, that could "debase" the currency. In practice, though, debasement means changing the official exchange rate of a backed currency (either by putting less precious metal in the coins, or just swapping less for a given amount.)
Even if it was the case that we had a backed currency, inflation is a separate issue. Take Spain in the sixteenth and seventeenth centuries, for example; they had a significant gold influx from their colonies the entire time, yet they also ran into high inflation. (Well, and several wars, disastrous financial policies, and lots of other problems you can read up on in a history book.)
There certainly is the chance that a central bank could run up inflation; a government with large expenses and few sources of tax receipts might, for example, print money and pay workers with it. Or it might pay off debts with fresh dollars. (Theoretically we could use this method to clear the national debt -tomorrow-. It would be amazingly stupid, but it's an option.)
However, OUR central bank doesn't play like that. Basically, it tries to keep us in the "sweet spot" of real growth, where actual growth is greater than inflation, but not so much that the growth drives up inflation significantly. It's tough, and they have to be pretty cagey about it, because billions of dollars are staked on people trying to out-guess what the Fed is going to do next. The Fed chairman could probably start a recession in half an hour, should he suddenly get pessimistic. (This is why part of his job is to not get pessimistic.)
The Fed is set up like it is so that people can think "tomorrow's financial climate will be pretty much like today's." No big changes means stability, stability means less risk, which means more people put more money into investment than would happen in an environment with more uncertainty and risk. Nobody goes to sleep worried that the US Mint will suddenly go into overdrive mode tomorrow, and well, that's a pretty important job.
Avatar ADV wrote: Nobody goes to sleep worried that the US Mint will suddenly go into overdrive mode tomorrow, and well, that's a pretty important job.
I think Richard goes to sleep worrying about that and wakes up worrying about that and spends half his day worrying about that.
Maybe you should change "Nobody" to "Nobody of importance."
Avatar ADV wrote:
There certainly is the chance that a central bank could run up inflation; a government with large expenses and few sources of tax receipts might, for example, print money and pay workers with it. Or it might pay off debts with fresh dollars. (Theoretically we could use this method to clear the national debt -tomorrow-. It would be amazingly stupid, but it's an option.)
What I want to bring up to your attention is that this option really doesnt exist. The mere issuing of fresh dollars automatically drives our country's debt up because the money has to be bought by the govt. If the fed issued $1 Trllion of money to pay off the debt it would automatically make our debt go up by $1 Trillion. It is an impossibility for debt to go down like this.
Avatar ADV wrote:
Nobody goes to sleep worried that the US Mint will suddenly go into overdrive mode tomorrow, and well, that's a pretty important job.
Im hoping the Mint goes into overdrive. I wish they issued $20 coins. With lack of legislation to remove the federal reserve it is the only way for the govt to issue money at a discount.
Richard Saunders wrote:What I want to bring up to your attention is that this option really doesnt exist. The mere issuing of fresh dollars automatically drives our country's debt up because the money has to be bought by the govt. If the fed issued $1 Trllion of money to pay off the debt it would automatically make our debt go up by $1 Trillion. It is an impossibility for debt to go down like this.
Uh, no. It's not merely "not impossible", but has been done before, just not by us (or anyone who can foresee the consequences).
Honestly, I'm done with this line of the conversation - you really don't understand how the fed works, or monetary policy in general, so there's no point in discussing individual points with you. Go find a textbook. Not a book discussing policy, an actual textbook.
Avatar ADV wrote:Richard Saunders wrote:What I want to bring up to your attention is that this option really doesnt exist. The mere issuing of fresh dollars automatically drives our country's debt up because the money has to be bought by the govt. If the fed issued $1 Trllion of money to pay off the debt it would automatically make our debt go up by $1 Trillion. It is an impossibility for debt to go down like this.
Uh, no. It's not merely "not impossible", but has been done before, just not by us (or anyone who can foresee the consequences).
Honestly, I'm done with this line of the conversation - you really don't understand how the fed works, or monetary policy in general, so there's no point in discussing individual points with you. Go find a textbook. Not a book discussing policy, an actual textbook.
It *IS* impossible if they try to pay off the debt by issuing paper money.
It could ONLY be done if the Mint Issued Coins. Imagine $1 trillion coins.. interesting eh?
But again, the mere issuance of paper money by the fed automatically increases the debt. I understand how the fed works - thats why Im against it. What *YOU* need to do is stop regurgitating all the bullshit that is fed to you that the fed reserve is some great benevolent agency that works hard to keep inflation down. It is a complete charade. Go look up monetizing the debt in any economics book and educate yourself.
Minting $1 trillion in coins would be monetizing the debt. Go look it up in any economics textbook.
The one that needs to stop regurgitating bull **** is you Richard. You don't seem to know the first thing about economics or monetary policy.
Quote:The process of debt monetization is too complicated to summarize in a 10-second sound bite on the TV news, so most people don't understand it. However, it's essentially no different from the historic practice of "coin clipping," whereby kings would reduce the amount of gold or silver in a country's coins and keep the extra gold or silver for themselves. When that happened, the coins were worth less, so the people lost purchasing power and it was transferred to the king.
http://en.allexperts.com/q/Economics-2301/Monitizing-Debt.htm
parados wrote:Minting $1 trillion in coins would be monetizing the debt. Go look it up in any economics textbook.
The one that needs to stop regurgitating bull **** is you Richard. You don't seem to know the first thing about economics or monetary policy.
Quote:The process of debt monetization is too complicated to summarize in a 10-second sound bite on the TV news, so most people don't understand it. However, it's essentially no different from the historic practice of "coin clipping," whereby kings would reduce the amount of gold or silver in a country's coins and keep the extra gold or silver for themselves. When that happened, the coins were worth less, so the people lost purchasing power and it was transferred to the king.
http://en.allexperts.com/q/Economics-2301/Monitizing-Debt.htm
No, there is no monetization of debt in minting coins, because there is no debt created in the issuance of coins.
Thats a good link Parados, and it proves my point; thank you.
Parados's Link wrote:
Answer
Dear Tim:
Debt monetization is one of the two main ways that national governments pay for their budget deficits.
When the US national government, for example, wants to spend more money in a given year than it has received in taxes, it must borrow the extra money. One way is to go into private capital markets to borrow the money. However, this means that the government is competing with private-sector businesses for a scarce pool of available loan funds. This can result in a "crowding out" effect, as government draws investment capital away from productive private-sector borrowers to pay for its own largely worthless programs.
As an alternative, the government can "monetize its debt" by borrowing from the US Federal Reserve system, which is nominally under private control but is really just another part of the government. In this case, the government sells its bonds to the Federal Reserve, which creates new bank deposits out of thin air and uses them to pay for the bonds. This process creates new money and expands the money supply: hence it is called "monetizing" the government's debt.
The process of debt monetization is too complicated to summarize in a 10-second sound bite on the TV news, so most people don't understand it. However, it's essentially no different from the historic practice of "coin clipping," whereby kings would reduce the amount of gold or silver in a country's coins and keep the extra gold or silver for themselves. When that happened, the coins were worth less, so the people lost purchasing power and it was transferred to the king.
Likewise, when a modern national government monetizes its debt, it reduces the value of the country's money, thereby -- in a sneaky way -- taking money out of the pockets of working people and giving it to government officials in a kind of "hidden tax."
This is a pretty good link. And the fact that this guys wrote it pretty concisely shows that its not some esoteric mystical thing. Its math. Its 2 + 2 = 4... All this stuff is math and it really is not that complicated. It doesnt take a rocket scientist to realize the country is getting the short end of the stick in this process. But you first have to be aware that it is going on.
parados wrote:okie wrote:parados wrote:So okie.. When are you going to answer about your sales tax idea based on the spending per quintile? Or did you forget about it because the numbers don't support you?
No, I did not forget about it. The last thing I posted per that argument was asking you to clarify something for me before proceeding. But you never answered. This is how it went:
parados wrote:okie wrote:No, I have not read Adam Smith, but I believe I am correct to say that it can be made to be generally progressive in nature, at least progressive in the income or wealth brackets that are important, and that most modern economists would agree with that.
Which modern economists? I have asked you a couple of times to cite your sources for your economic theory. You don't seem to have any other than to claim you haven't read anything but you believe you know what they said in spite of not reading them.
okie wrote:Parados, before tackling that, to follow up on what I asked Avatar, a couple of questions.
Is an estate tax, which exempts tax up to an amount to a certain threshold, considered to be a progressive tax, yes or no?
Is the estate tax based on wealth or income?
Do you consider the property tax to be a progressive, flat, or regressive tax, and according to what reasoning?
In other words, is the judgement of whether any and every tax is progressive or not by definition always determined by income?
The answer to the above question bears heavily on the relative progressivity of property taxes or sales taxes, as a couple of examples. I wanted to see how you answered this, and I also asked Avatar the same questions, but neither of you have given an answer.
This is easily dispensed with. Who ultimately pays the tax? Who gets the left over money and property after the tax is paid? The tax is based on a transfer not on someone keeping the property. The tax is paid by the person or persons receiving revenue from the estate.
Nice dodge of my questions. You dispensed with nothing. Isn't it correct that who ultimately pays the tax is the estate, Parados, before what is left is allocated or passed on to the heirs? So the tax has nothing to do with the income of the heirs, nor does it have anything to do with the income of the estate before the holder died. So I think the relative progressivity of an inheritance tax has nothing to do with income. You asked the right question as pertains to who pays the tax, but came up with the wrong answer.
Quote:Quote:
Regardless of the answer to the above, back to this post of yours:
Parados wrote:http://www.bls.gov/cex/csxann05.pdf
The top 20%(quintile) earn 15 times more than the lowest 20% but only spend 4.5 times more.
The spend roughly the same on tobacco. The rich spend 4.5 times for alcohol. (Alcohol taxes are based on number of gallons, not the price per gallon.) They spend 2.5 times for utilities. They spend 5.5 times more for entertainment. They spend 5 times as much in eating out.
The only area where the top quintile comes close to spending 15 times the bottom quintile is in insurance and retirement savings.
Based on the numbers it appears there is NOTHING you could tax with a flat sales tax that would cost the top 20% more than the bottom or middle. We are not talking about a couple of millionaires here okie. We are talking about the average of everyone earning over $142,000 would not pay more in sales taxes in any general category than the bottom or middle earners. Your sales tax would have to be graduated based on earnings or very selective like yachts or other high end items that the middle class would never buy.
If you base the judgement of progressivity solely upon income before taxes and perhaps donations to charity for the poor and other adjustments,which I don't buy,
Oh? what do you base it on? What source tells you that this is an accurate measure?
Quote: and if you base it upon income only, which I don't buy,
Source?
Quote:and if you base it upon buying habits across the board, which I don't buy as being representative of what it could be,
That doesn't even make any sense. Across the board habits ARE representative simply by the definition. Because you don't like the facts doesn't mean they aren't facts.
Quote: then technically I will concede the point. But I do not concede because of many reasons.
I see the comparison of the ratio between the bottom 20% and the top 20%, as compared before taxes and other things as having several problems. One example being that if income tax is continued along with a sales tax, then the actual ratio of incomes is going to narrow.
You are now arguing that we MUST include the income tax in order to judge progressivity. That is a direct contradiction with what you argued earlier. I have never said that a sales tax can't be part of a progressive tax policy only that a sales tax isn't progressive.
Quote:
The second point relates to the first part of my post. I do not see how you can base the progressivity of a sales tax solely upon income.
And you haven't shown what else we should base it on or a valid source that shares that viewpoint.
Quote: It is fair to base the income tax on it, because that is what it measures, and that is what it is levied from. Property taxes do not measure income, they measure property holdings, which relates more to wealth than income.
Yes, but it ignores that a lot of elderly people can be house rich but not be able to afford the tax on that house. Property that earns income is more valuable than property that doesn't.
Quote: Estate tax does not measure income, it measures value of estate. If the estate tax is considered to be progressive, and is not based on income,
Show me the dead guy that keeps his estate after the tax is paid. I can't seem to find any. The estate tax comes out of what the heirs will get. It is based on the transfer.
The dead guy don't get the money, but he still paid the tax, the way I see it, as explained above. This is a clear example of a progressive tax that is not based on income, no way around it, Parados, so why can't other types of taxes be classified as progressive or regressive on something besides income?
Quote:Quote:
Quote: why should other types of taxes be required to be based upon income instead of the money that is being measured?
Sales tax does not measure income, it measures buying power.
It doesn't measure buying power. It measures EXPENDITURES. Someone can have a LOT of buying power but not have any expenditures. Others can have little buying power but a lot of expenditures.
Okay, but buying power and expenditures are usually linked. So it measures expenditures. Rich people spend more. Your own figures show that.
Quote:Quote: It is levied upon purchases, not income, and purchases are a result of the relative buying power of people. If anything, a sales tax would seem to be flat, in the same spirit that property taxes might be considered as a flat tax, and further if sales tax on necessities are exempt, it is made more progressive. As Avatar once pointed out, as the most poor more commonly do not own property, the property tax has a progressive aspect to it. Similar principle would apply to sales tax. The argument that the rich place more money in savings and investments, thus escaping sales tax, fine, because those investments will incur taxes in other ways as a substitute for sales tax. Each and every tax does not need to account for the overall economic condition of every citizen to be progressive. It should only apply to the aspect of money stream that it is applied to.
Another objection is that some of the bottom 20% income earners spend on luxuries instead of necessities. If I recall correctly, Adam Smith did not consider tobacco a necessity, but instead a luxury. So there is just one example of many things that the poor are spending on that are not necessities. If you knock out the spending by the poor on things not considered necessities, the ratio of spending by the rich would increase from the 4 to 5 times ratio that the figures appear to show now. If a luxury tax is considered to be progressive, then just because some of the poor would buy luxuries does not justify reclassifying a luxury tax as regressive.
What entertainment expense do consider to be a necessity? Tobacco is broken out and you are free to tax it. Alcohol is broken out. I am curious what category you think is a luxury that the highest quintile uses equivalent to its income compared to any other quintile.
Quote:
The last point is that even if technically according to your definition, a sales tax alone could not be made progressive according to your chosen definition, you would still have to admit that the proponents of the fair tax, the consumption tax, have proposed rebates to the lowest incomes as part of the sales tax legislation, which would surely force you to even admit the overall program of sales tax and rebates would be progressive by almost anyone's measure.
Being less regressive doesn't make it progressive.
I think we are disagreeing about semantics here. I think I have demonstrated one clear example of a tax that is considered to be progressive, that is not based on income, that being the estate tax. I see the term, "progressive," as simply a term that implies that in general taxes more wealthy people, or those more able to pay tax, more than those that are less able to pay. This can be done a number of different ways, examples being on income, value of estate, or increased expenditures by those that spend more because of their wealth. For those people that insist it must be based on income, I have shown one clear example where it is not, the estate tax.
okie has never heard of a "living trust."
Wrong, cicerone. How does a living trust change anything I've said, in practice?
Any tax is paid by whoever keeps the money left after the tax is paid, Adam Smith again.
An estate tax comes out of the inheritance and is paid by those inheriting.
Again, you are playing with semantics, but if I understand it correctly, the estate pays the tax prior to the assets being distributed to the heirs. Technically and practically, the heirs do not pay the tax. True, their inheritance is reduced by the tax before they receive it, but they do not receive it and then personally pay it after receiving it.
Again, the tax is not based on income, not the income of the person that died, nor is it based on the income of the heirs.
For example, if a person owns land and also accounts with money in banks, when that person dies, the land is appraised, and together with all assets, if the amount exceeds the threshold for either the state they reside in or for federal tax thresholds, the tax due is paid from the assets, probably first with the cash held in the bank rather than having to sell the land. After that, the assets are divided according to the will, land and cash, and other assets as specified from what is left.
I am no expert, but this is the way it has been explained to me. And I did dredge up this link that says:
WHO PAYS THE ESTATE TAX?
With an estate tax it is the responsibility of the Administrator, or Executor, of the estate to pay the taxes. The taxes are calculated based on the entire value of the estate, and if the Administrator cannot pay the taxes out of the estate's value then it becomes the responsibility of the heirs to pay the taxes. The federal government will impose this tax according to established guidelines which include the value of the estate.
http://ezinearticles.com/?Inheritance-Tax-vs-Estate-Tax,-Inheritance-Tax-Exemptions&id=536645
