Well, here’s another story of breathless outrage over a corporation not paying any federal income tax. In this case it was BP writing off the Gulf of Mexico oil spill, which (obviously) was a financial disaster for them in tax year 2010.
Earlier in the month it was GE, which actually recovered several billion dollars on its 2010 federal return.
My response to the BP story is the same as my earlier one to GE: Yeah. And?
Folks, this isn’t hard. As long as U.S. tax law is what it is, which is unfathomably enormous and irretrievably convoluted, there are going to be paths through it. It is a corporation’s responsibility, usually to millions of people, to find its best one.
Don’t rail against big, “evil” corporations. Instead, demand real tax reform.
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Flat Tax. I can’t say it often enough or emphasize it enough – FLAT TAX! Pick a number – 15%? 17%? 20%? Take it from personal income tax, capital gains tax, and dividend tax. EVERYBODY pays it. No exemptions, no writeoffs, no shelters, no loopholes, nada. Any questions?
Fair Tax. Everybody pays it even if they get their money off of the books – black market, drug dealers, prostitutes, illegal aliens, everyone.
Help me out, ‘Seester (or anybody else, for that matter) – I’m still not sure I get the whole Fair Tax thing. What’s the basic gist? How does it work? Why do you favor it over a flat tax?
Falcon, the Fair Tax is a national retail sales tax, not an income tax. That’s the “everybody pays” appeal of which ‘seester speaks. Gangsters still need Tide and Spaghettios, after all.
I’m not sure I can really fly with that, then. Doesn’t that basically incentivize (sp?) people to spend as little as possible? And if that happens, doesn’t that reduce rather than increase federal government revenue?
I never got the Fair Tax either, until I read two books explaining how it works. It works by eliminating ALL income taxes (corporate + individual + payroll) and replacing with a flat rate consumption tax on everything. Does it encourage less spending? I don’t see that. We are a pretty shopping happy society already. Plus, there is NO tax code whatsoever. So there are no “tax credits,” that transfer money from what I pay in over to someone else. (The child tax credit is one. I do not qualify for it. So $2000 of the taxes I pay end up directly in someone else’s pocket).
It’s very well thought out. And there are 0 forms to fill out. Ever.
I’ll grant you that we are a VERY shopping-happy society, but we can also be a very thrifty one, especially if times are tight, and we will look for deals and savings wherever we can find them. Why else are WalMart and Target and eBay so popular? Or, to use a more local example for me, why else do people go to New Hampshire instead of staying in Maine to do their shopping?
Granted, if my near 20% federal income tax is replaced – REPLACED, mind you, not added to – by a 5% or 10% federal sales tax then I’m going to be happy to have more money in my pocket and more choice over where the money I’ve earned is going to.
I’m obviously not a fan of the federal government having as much money as possible to fund whatever boondoggles it wants, but my instinctive reaction to the Fair Tax is that it would generate less revenue for the government and that it would be a less predictable source of revenue, therefore making it more difficult to create an even remotely realistic budget (I’m making to obvious mistake of assuming that at some point in our future a President will create a budget based first on the amount of revenue coming in rather than on whatever s/he wants to spend).
I guess I’d need to see some studies or computer models or something to convince me that a Fair Tax would generate enough money in a predictable enough manner so that I would favor it over a Flat Tax. I’m not against the Fair Tax, mind you, I just need to see more data. Perhaps some book or website recommendations?
It is intended to completely replace income tax, not add to it. And, income tax based on the his/lows of employment are no less predictable than a fair tax. Just because I pay $20,000 into the federal coffers in one year is no guarantee that I will the next year if I am laid off, right?
Of course, fairtax.org is the promotional website. I’ve read both “The Fair Tax,” book by Neal Boortz and… the other guy, as well as the followup that answers questions about how it all would work.
The one thing that hinders the fair tax in my mind is that without a constitutional amendment to abolish the income tax, there’s no yolk on the gov’t to keep them from reinstating a new income tax later. It has to be all or nothing. Of course a consumption tax ON TOP of the current income tax would be far more regressive.
Another plus on the fair tax, is that there are no tiers. In other words, there is no way to single out a small segment of the population and raise their taxes like what happens now. I think a flat tax if implemented truely flat would have the same benefit, but you know there would be tiers, and they would still raise up those top tiers more and more. If the fair tax has to be raised by 1% it’s raised on everyone 1%. I think that goes a long way to the debate of what does the federal gov’t really need to spend $$ on. You can’t pit one class against another.
I think recovering all the taxes from the black market economy would go a long way to buffering any uncertainty caused by unpredictable spending.
Sorry for the random thoughts, here. I don’t have my mouse and do not have enough patience to cut, paste and re-edit.
PS – the employment tax is eliminated, too. So, before figuring out your income basis add back in the 15%+ paid to the gov’t by you and your employer. (I pay my own, and it adds up to a helluva lot).
Thank you for the info, ‘Seester. I’ll have to look into this more closely.
Haha I said yolk.