State Technology Taxes Face Stiff Resistance 167
SonicSpike writes "As the nation moves from a tangible goods-based economy to a service-based economy, a few states are trying to keep revenues robust by taxing technological services such as software upgrades and cloud computing. But a backlash from the high-tech industry has quashed most efforts. As a result, the U.S. has a patchwork quilt of state taxes on technological services. Some states that have tried to impose such taxes have failed spectacularly, and most have not tried at all. According to the Tax Foundation, a nonpartisan think tank that studies taxes, only 10 states (Connecticut, New Mexico, Hawaii, South Dakota, Mississippi, Missouri, Nebraska, Tennessee, Texas and West Virginia) and the District of Columbia tax all writing or updating of software. Only New Mexico, Hawaii and South Dakota levy their general sales taxes on all software services. States with sales taxes do, however, levy those taxes on software that is sold on CDs or other hard storage materials. About half the states also tax 'canned' (non-altered) software that can be downloaded, according to the Tax Foundation. Elia Peterson, an analyst with the foundation, said in a recent paper that states are reluctant to tax computer services in large part because it 'is an especially mobile industry and could easily move to a lower tax state.'"
"nonpartisan think tank" (Score:5, Insightful)
There ain't no such animal, Jim.
Nonpartisan? (Score:4, Informative)
Re:Nonpartisan? (Score:4, Informative)
Did you get the info from your MSM pimp?
From Wikipedia:
Former directors: Wayne Gable (Koch Industries), Joseph Luby (Exxon), Pam Olson (Bush-Cheney campaign), current director Bill Archer (former Texas Republican congressman)
"criticized by other think tanks, such as the Center on Budget and Policy Priorities (CBPP)[31] and Citizens for Tax Justice (CTJ),[32] citing repeated "methodological errors" and "reliance on early projections without hard data."
"Krugman has also accused the Tax Foundation of "deliberate fraud" in connection with a report it issued concerning the American Jobs Act.[47]"
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Nonpartisan means that they aren't affiliated with any political party; it doesn't mean that they agree equally with either party. In fact, given the level of crony capitalism and failures the current administration and Democrats are responsible for, it's rather hard to agree with anything Obama or the Democrats are doing unless you are com
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I'm sure you edited the page yourself...
I don't see why these facts upset you so much. If you believe in the no tax, no regulation agenda pushed by these Republicans, including support for Paul Ryan's budget, then you should proudly shout them from the rooftops. Just don't expect people to believe their self proclaimed line of "nonpartisan think tank".
Re: Nonpartisan? (Score:2, Insightful)
Paul Ryan has never advocated for either no taxes or no regulation. His budget cut spending growth to balance the budget against expected future revenue over a 10 year timeline. It was about as aggressive as Bill Clinton's budget cuts in the 1990s.
Perhaps you should spend more time reading the facts and less time reading DailyKos. The left just doesn't listen to reason.
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In Canada (Score:4, Informative)
In Canada, all goods and services are subject to the GST (Goods and Services Tax.) In many provinces, they're subject to HST (Harmonized Service Tax), which basically takes the rules of GST and adds on a provincial percentage.
It hasn't caused our software industry to implode because the taxes are applied across the board throughout the country.
Unlike the US, you can't just lobby your way to a tax exemption here. The goobermint is gonna get their share come hell or high water.
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In Australia and New Zealand we also have a GST system just like Canada. And Simgapore.
It's what a sensible country does. Your state based tax system is pretty brain damaged and only going to cause more and more problems as time goes on..... goodluck with that.
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Simgapore
Is that your latest creation in Sim City?
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It would be a great improvement if it was just state-based. There's nearly 10,000 sales tax jurisdictions in the US, and each jurisdiction can have multiple categories for taxable goods based on product or service type. Taxes can be flat rate or progressive. It's a nightmare.
Re:In Canada (Score:5, Insightful)
I live in Washington DC and went to go buy some soup at a Vietnamese takeout place the other day.
The sales tax is 6% here, but it's 10% on food. (It's an "entertainment tax"). Fine, I knew about that. But the check didn't add up.
There's a nickel tax on plastic bags: the city claims that it's to protect the Anacostia River from being polluted with bags. (Nobody has ever considered trying to get the folks who live by the river in Southeast from throwing their damned bags into the streets.) But I knew about that too, and the check still didn't add up.
Turns out there is also a quarter tax on to-go containers of any kind, including the little thing my soup came in.
Meanwhile, the last time Massachusetts Ave. was paved, it was paved by Barney Rubble. So these soup taxes sure aren't going to anything useful.
Urban tax codes are ridiculous.
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> Heard on NPR more whining about the medical costs of smoking, yet massive
> cigarette taxes, and most of the smoking settlement money from 15 years ago, is spent on other BS.
The two statements do not appear to be connected in any way in your post.
In any event, VAT style taxes, like GST, are the way to go.
Here in Canuckistan, they were introduced by the *conservative* government, specifically to help eliminate the odd sorts of multi-taxing others have posted about in this thread.
There was considerable
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If it's calculated on a value added basis (that's the VA in VAT) then it's still paid by the final consumer. Who collects & remits it is a different issue.
Note that sales taxes and VAT are not the same thing, though unless you're in business reselling things they look pretty much the same.
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Just because you don't understand how somehting works, or it's the way it is doesn't make it brain damaged.
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What's an income tax?
43 of 50 states have them. That you are too stupid to know about it doesn't make it unusual. I've never lived in a state that has income tax, but I know how they work. Slashdot, where people honestly use the "I'm too stupid to understand, so you must be wrong" argument.
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In Australia and New Zealand we also have a GST system just like Canada. And Simgapore.
It's what a sensible country does. Your state based tax system is pretty brain damaged and only going to cause more and more problems as time goes on..... goodluck with that.
State taxes (or provincial ones in Canada) are bad enough but manageable due to limited numbers, and you usually know if you're in one state/province or another.
But the US goes even further and has county/district sales and use taxes, adding thousands of slightly different tax rates across the country. Check out California's [ca.gov]... and that's just for locations starting with "A"! Texas has an an equally ridiculous long list of slightly different rates [state.tx.us].
This means that the shop down the street, but in a different
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It's what a sensible country does. Your state based tax system is pretty brain damaged...
It might be sensible from some perspectives but not others. The Australian Federal Govt. collects the GST but the total take must be returned to the States and Territories (part of a deal for notionally retiring a bunch of State taxes, duties etc.). Australia has just six States and two Territories but still manages a serious pile of bullshit, petty squabbles when dividing up the GST take. States have still managed to hold onto some of the so-called retired taxes and introduce new ones as well. Using
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that's how it is in most of the world, unless you're dodging taxes.
I mean, surely haircuts are taxed in USA? and plumbers? manicures, makeup sessions and cosmetic surgery surely is taxed under services taxes.. soooo what the fuck is so hard about enforcing the tax laws?
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Has this changed recently? I worked on an H1-B and I paid tax.
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"It hasn't caused our software industry to implode because the taxes are applied across the board throughout the country.:
The thing is that software, and other stuff that is data,(Ebooks, game downloads, music etc) can be purchased outside a country or state, and delivered via the internet. The country or state doesn't have jurisdiction to tax the transaction.
Of course if the purchase is of something that thte buyer is going to claim as a business expense, then they may have to pay taxes on it. If its somet
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"The country or state doesn't have jurisdiction to tax the transaction."
Actually they don't tax the company, the tax is paid by the individual, so the individual is required to pay.
Of course, people are cheap whiny short sighted bastards, so they don't pay their share if they can save some pennies.
And there is not reason a country can't create a treaty with other countries in that the country of origin collects taxes and then send it to the country.
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You're missing his point. At the point of sale, states have no rights to collect taxes if it's on an out of state sale. Then, once the product is given/delivered to the end user, their home state doesn't have that information to collect the tax normally, since the seller is from another state. The end user is supposed to declare this spending and pay taxes on it, but nobody does, and it's really rough trying to figure it out from the state's point of view. They don't have access to the financials from compa
Make your mind up (Score:5, Insightful)
Are you a country, or are you a federation of states? If you are a country, then get your taxes sorted out. Your states seem to be willing to deprive another state of $100 in order to get $10 themselves, that way has just led to a crisis in state finances.
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And yes, we have something of the same problem over here in Europe, we've removed the trade borders without harmonizing taxes. So a company operating out of Ireland into the UK pays no corporation tax in either. We need to sort that out too.
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It was originally a federation of states (or a United States), however, our current majority political party is working to eliminate that distinction and centralize power in a single federal government (when you hear about that other party trying to "defund" this and "defund" that, they're really trying to get the heck out of business that should be handled at the state and local level - it's not like they think nobody should get healthcare or kids shouldn't go to school).
One of the few powers explicitly gr
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It's not about strong vs. weak federal system. It's about checks and balances. In this case, the states and the federal government were meant to balance each other and provide a system of checks against each other.
It's about making it so that one small group of people (politicians) don't have total control over the nation, its economy, its military, etc. Imagine what a madman could do with that kind of power today.
Well, that was the intent, but now I fear we have given the group in D.C. irrevocable contr
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Waiting for a madman to step into office?
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Republicans may be dirty rotten crooks, but your democrats are much, much worse.
They aren't *my* democrats. I don't like either, but forming false statements about either doesn't help. Finding which is worse is a waste of time and counter productive. The best solution is vote in 3rd parties. But people who hate democrats vote republican and vice versa, so the problem will only get worse.
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Half of us want to turn us into a European-style country, the other half prefers a loose federation of states.
Europe and the EU haven't gotten this sorted out either.
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Ever heard of a rhetorical question?
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> Are you a country, or are you a federation of states?
If you have to ask then you don't have enough of a clue to be a meaningful part of the conversation.
His question is rhetorical in nature, and your answer is not a logical reply but a veiled invective.
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Of course. Your points are all valid, and are worth discussing.
The corollary, however, is that freedom taken to an extreme leads to anarchy and anarchy inevitably leads to feudalism, feudalism takes centuries of social reform to turn into a functioning and stable democracy, and that's how we got where we are now.
There needs to be a balance between freedom and regulation, because only regulation can provide freedom. Regulation requires some kind of governance, and that required taxes. I don't see any alterna
Flawed premise (Score:5, Funny)
As the nation moves from a tangible goods-based economy to a service-based economy
Because in the future, we will all move out of our houses to live in the cloud, we'll forego food in favor of HTTP cookies and email spam, and we will transport ourselves to our destinations not with cars but with through internet traffic.
Now, I know what you're thinking--we'll still need to buy computers to make this magic happen. But, you see, in the future, all of our computers will be virtual machines.
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How do you put a value on what's produced until someone buys it?
New meaning of "as". (Score:2)
I wasn't aware that "as" meant "three decades after".
Sales tax (Score:4, Insightful)
There should be only a single tax. Sales tax. It should apply to all sales equally. There should be no loopholes and it shout not be "progressive" (i.e. higher rate for the rich) There should be no deductions or tax deadlines. It would be very simple and fair. Lastly it would encourage savings rather than consumption which is something we need desperately right now. Our current "progressive" system results in the rich paying less than the poor in many cases because they are better equipped to use the system in their favor. In a sales tax only system they would naturally pay more in taxes because they have more discretionary income.
There is absolutely no reason we need separate little "mini" taxes on every product, sales event, and service there is. The sole purpose of all of our tax mess is to obfuscate the real percentage we're all paying in taxes.
Re:Sales tax (Score:5, Insightful)
You can have your flat tax when you have a guaranteed minimum income for every man, woman, and child in the country. Until then, all you're doing is massively, massively increasing the burden on the poor. There are basic requirements to live, levying a 25% sales tax (more realistic would be 40% or more to maintain current funding levels) on poor people who already don't meet those requirements is just incredibly stupid.
Re:Sales tax (Score:4)
What would you say to a flat sales tax (or VAT or goods+services tax or similar) combined with a national income?
25% tax (or whatever) on everything, everyone gets a check for $thousands per year, which they can spend on ice cream, rent, food, or whatever else they please, replacing all other handout/welfare programs. It's been proposed by quite a few people.
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They're already rich enough. I don't think it's in society's best interest to further increase the current disparity in wealth distribution. If you feel that greater disparity in wealth distribution is better for society, feel free to explain the basis for that belief.
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I was about to post a mathematical rejection of that idea, but you know, the numbers aren't really that crazy. Someone correct me if I've made a big mistake somewhere, but I've used the poverty level income from here: http://aspe.hhs.gov/poverty/13poverty.cfm [hhs.gov], used the GDP as roughly the total spending we can tax (found here: http://www.tradingeconomics.com/united-states/gdp [tradingeconomics.com]) and used the 2012 budget figures from here: http://en.wikipedia.org/wiki/2012_United_States_federal_budget [wikipedia.org]
Basically, if you want to p
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They promised us that the money would be collected federally, and returned to the states, with the states cutting all of their sales taxes/stamp duty/other crap. As you might imagine, the federal government used their new power to put pressure on the states, so the states couldn't afford to get rid of all their taxes and we're left with a big mess. I don't have any hopes that the US would do better...
That is a very interesting comment, and a very good point. I never thought about that, but it would almost certainly be a huge problem in the US as well. It would have to be collected at the state level. Thanks
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I agree, and so did Churchill: democracy is indeed retarded.
We need to look to another of the Yalta trinity here. As Stalin said, [citation needed
Re: Sales tax (Score:2)
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There are some big advantages to replacing the income tax with a sales tax: Cost of compliance and Personal Privacy. Your personal cost to comply now would be zero. You are no longer have to send a report to the government every year. Because it is none of their business how much you make.
Yes if you are in a business which sells things, you have to pay the tax, but in most states you are doing that already. And your burden to report everyone's income is gone so you are saving time and money there.
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Tax work best when the tax happens when the money moves.
The only time money has value is at the moment it changes hands.
Everything else it point scoring and project potential.
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There's that idea, though, that if you tax something you get less of it.
It's more correct to say that money only creates value when it changes hands; the point of a medium of exchange is to enable barter-by-proxy where everyone comes out better in the end. Since exchange of money for goods and services is the key activity that creates value in an economy, taxing it puts a damper on economic activity. (Suppose someone has a business idea that runs at a margin of 5%: I can make a widget for $10 that people wo
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Tax work best when the tax happens when the money moves.
Not really. Taxes works best when they target production directly at the source as it is being produced.
Targeting the sale means that you are targeting the wealth production way too late in the chain. In any sufficiently advanced society you end up with large amounts of wasted production capacity.
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I don't follow your logic. Does a factory lay off its workers just because the final consumer is going to pay 7% on top?
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So, based on the size of the US economy and the US governments, you like the idea of a 20-25% sales tax? Because that's what it would take to pay the various government's bills...
Just curious.
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So, based on the size of the US economy and the US governments, you like the idea of a 20-25% sales tax? Because that's what it would take to pay the various government's bills... .
No opinion here........The theory, as it goes, is that if you do away with income and corporate taxes, the price of an individual item would drop by some amount before that 20% or more sales tax is added. So if, for example, 20% of the 'delivery cost' of an item is due to corporate and income taxes, and you added 20% sales tax, the end cost would be the same. I think most would predict that the item would probably wind up costing some amount more to the consumer. Some folks would have more money to spend s
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The theory seems to ignore the fact that corporations buy things too, and thus would be paying the sales tax as well. Which will offset (to an unknown degree) the savings from lack of income/corp taxes.
Ultimately, it should be a wash, since you're just replacing the revenue from many taxes with one tax.
On the other hand, I've
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The theory, as it goes, is that if you do away with income and corporate taxes, the price of an individual item would drop by some amount before that 20% or more sales tax is added..
No, the theory actually includes that, but I did fail to mention it.
Some worry about the lower income folks paying more than they are now, but that would be easy to remedy with refunds, exemptions, or other means. A bigger challenge I think would be to deal with out of country purchases, and things that are used f or incentives, whereas before you would get tax break, under flat sales tax, you would almost have to finance things the government wanted to incentive.
The greatest challenge might simply be
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PS: Sorry, I quoted the wrong sentence above.
Re:Sales tax (Score:5, Insightful)
Sales Tax is actually a reverse progressive tax. Depending on the percentage of your income spent each month, you are taxed more or less. The most at 100% income spent, which is poor and lower middle class. Then middle class gets to about 95% spending, upper middle class 85% spending and then you get the rich, which spend generally at 10% or less. So their tax burden is 10 times lower than the poor and middle class. There is nothing fair about a sales tax.
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There is nothing fair about a sales tax.
I agree 100% that sales taxes are inversely progressive as a percent of income. I don't agree that there is nothing fair about sales tax. In the sense that everyone pays the same tax for the same purchase, they are completely fair. Progressive taxes are necessary and I believe they are good in proper balance, but it really doesn't have much to do with "fair". I don't like the term 'fair' because it means different things to different folks. Most people agree 'fair' is good.
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y fair, he doesn't mean money, he means impact to the persons actual life.
A millionaire is still likely to eat, cloths and get around with a 10% sales tax. The lower the income the more it restricts the person.
Frankly, the first thing I would like to see done is removal of dedication from donations/tithing. .5% tax on all 'wall street' trades trades.
Then I want the tax on the wealthiest to go back to 1999 rates.
Then I want a
Then I want interest deductions removed.
Than I want a blessings of unicorns for my d
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But they don't pay the same tax for the same purchase. The only REAL commodity we have in this life is our time. Money is just a mental construct. If you paid the same amount of time in tax for the same purchase, we could talk about some fairness. But you don't. You pay same amount of some made up number, which for one person could mean a day, for another an hour and for another just a fraction of a second.
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Not really fair (Score:2)
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Because a recession is not bad enough already, let's discourage economic activity and turn it into Greater Depression!
Then again, much of the country can't save up because they're already living paycheck to paycheck, so I guess they'd end up paying more taxes and going into deeper debt. But I guess kicking people who are already down is some people's idea of "fair". W
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This, again?
It' been complete destroyed. There are many reason why.
Assuming your goal is ACTUALLY to maintain tiered class system with ways to move between the classes.
If you want 2 classes, Workers and the wealthy, then go right ahead, it would work extremely well.
Are system can be adjusted, loopholes can be removed. Over all it's a good system, just get involved to make change happen.
" The sole purpose of all of our tax mess is to obfuscate the real percentage we're all paying in taxes.
false.
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"Lastly it would encourage savings rather than consumption"
No it wouldn't, since you would have to pay the tax when you seventually take the money out of the bank and spend it.
A new or increase in sales tax encourages you to spend the money before the tax comes into force, rather than saving the money up to buy something later.
I think that only the following items should have sales applied
Tobacco and other smoking substances (Some of the money go to fund healthcare and quit smoking programs
Alcohol for recre
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Actually, the best single tax would really be a tax on land. It has pretty much all of the properties you want a fair tax system to have, and it ensures that land is put to the best use.
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Fair means each group pays the same percentage of the overall taxes. Not 1 person pays more then another person.
As a group, yes the poor pay more. 12% of taxes come the the bottom 20%
7.9% come from the top 1%
The top 1% pays the least percentage of tax revenue then any other group.
http://www.cbpp.org/cms/?fa=view&id=3505 [cbpp.org]
10% of 8000 has a hell of a lot bigger impact on a person. / family then 39% of 400,001
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Fair means each group pays the same percentage of the overall taxes.
Only if every person owns the exact same amount of production capital. Otherwise it is incredibly unfair.
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Can we stop arguing over what "fair" means and instead focus on what's best for the country and its population, both socially and economically?
Disparity of wealth distribution is near an all-time high in this country. We should be asking ourselves not "is this fair", but "is this good".
If you can think of a way to remedy this situation without getting into tax policy, I'm open to suggestions. Until then, we should consider how to redistribute wealth from the wealth
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That and the top income earners (like Paris Hilton) have no earned income, and instead it's all capita
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Do you seriously believe that the rich pay less in tax than the poor?
In absolute dollars the rich pay far more, but in terms of percent of income they pay much less than the poor when you add up all taxes. The poor are paying little Federal income tax, but in Illinois the state income tax is flat. The poor spend a far higher percentage of their income on taxable goods than the rich, especially when you add in road taxes and other excise taxes. They're paying property tax for their landlords when they pay re
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Long term, savings is better for the people. Saving is not no spending.
You're thinking logically ends in a spiral of un-need consumption.
If we save a consume moderately, we have a more stable growth situation, as well as fewer people in situation where they lose everything.
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Anything that stifles consumption (especially among the poorest) is in my opinion economic sabotage. ... The consumption in itself is not the evil here, consumption is the way out of this mess.
If you want to increase consumption sustainably, you need to encourage people to save and invest in the short term to increase their available resources in the long term. Over-consumption on credit amounts to "eating your seed corn"; it solves your immediate hunger problem, but you won't have anything to eat next year.
The mess in (parts of) Europe is the result of economies bankrupted by years of out-of-control consumption. It's the inevitable end result of exactly the policies you advocate. People want to
Tech and State Taxes (Score:3)
Long term we might simply be looking at a situation where it is pointless to even try to tax some industries at a local level.
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Simply don't sell the software.
The game engine can be gratis.
You want the art and level assets that go with it? I'll charge for those.
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Adam Smith vs. Service Economy (Score:3, Informative)
Read "Wealth of Nations" by Adam Smith and take microeconomics 101.
Service economy is a transitionary state where you have no creation of value, and the money hasn't yet been drained, and poverty. People pass around the same dollar bills, but only a tiny minority actually create value. Given the natural system perturbations that must come - that is an unsustainable model. It is the glass vase on the top of the wobbly table. It must crash.
Limit Taxation (Score:2)
As it stands every little thing seems to attract a tax. We even do things that are counter to our announced intentions just to find a new source to tax. For example some states now apply a special tax to electric vehicles under the excuse that they don't pay gasoline taxes. You can bet that some governmental idiot is thinking about taxing bicycles as they also pay no gasoline taxes. That makes as much sense as taxing people who walk rather than drive as they also do not pay gasoline taxes and afte
I'm libertarian and I say, increase taxation (Score:2)
Bicyclists ought to pay for all the bike lanes they are forcing on us. Those are expensive to build!
The cost for sidewalks for pedestrians is hopefully already covered by a property tax.
I think we should tax home owners with a luxury tax if they have a car or boat in their driveway. As I'm sick of looking these toys on every suburban street.
Electric vehicles should pay an EV tax or agree to a GPS recorder and millage tax to pay for public roads. I would be OK with suspending the gas tax entirely and switchi
No more software "licenses"? (Score:2)
let me make this really simple (Score:2)
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The problem is that if you want public services you have to tax something.
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Goverment does a lot for us! 6. Best health care in the world... um... O'h that obamacare disaster brewing..
You have not been paying attention. In the 1950's US health care was the best. But since then it fell dramatically in the world list. A change that has been widely reported. We are now way down the list, and have been for 20 years and more. Not a recent fall at all.