Modified:
18 Feb 2010
by Admin
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DEBATE: BASIC INCOME TAX SHOULD BE ABOLISHED
Posted by: AshburtonGroove
Karma:
256
It is time to scrap the entire system of income tax and more to a sales taxed system, the more you buy the more tax you pay.
Executive Summary
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All the Yes points
All the No points
BASIC INCOME TAX SHOULD BE ABOLISHED
Income Tax encourages illegal behaviour
Any direct form of taxation, such as a tax on income, encourages the avoidance or outright evasion of payment. People lie about what they earn or accept cash for jobs, older people put money into trusts to avoid death duties, or companies fiddle the books to ensure their liabilities are low.
People will always seek to avoid paying tax whether it is a tax on income or on sales. Besides, we can’t abolish tax just because some people don’t pay it. Instead we should look at cracking down on the loopholes, seeking greater punishment for lawbreakers, and giving support and encouragement for those who do pay their taxes.In the case of Spain, till today both employers and employees and especially the real estate business tend to declare wages and house prices cheaper than what they are worth. They do so to evade taxes, although not completely. The additional money in the transaction is therefore free of tax, typically called money under the table, or B money. Interestingly enough, this has given the Spanish people that bit of extra money to spend. Taking the multiplier effect into consideration, even if this form of tax evasion is illegal, it may be claimed that it had a beneficial effect on the market.
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BASIC INCOME TAX SHOULD BE ABOLISHED
Indirect tax, such as VAT or sales tax, is fairer
Any tax levied on purchases is inherently fairer. In the current system much of the burden falls on the poor, for the rich can afford accountants to help them find ways to avoid paying tax. A tax on sales can be adjusted so that goods which appeal to the poor are taxed less than goods bought by the rich: for example, Bentleys would be taxed greater than Beetles.
A variable tax on sales would be incredibly hard to manage. Imagine the pressure that ‘luxury’ goods owners would put on the government to have their products classed differently. Imagine the complexity of deciding what is a luxury product and what is not.For all the merit of the idea, the difficulty in administering it makes it a non-starter. The higher the level of sales tax imposed on high-priced luxury items, the more likely the rich would be to import such items, avoiding the tax and placing a higher overall tax burden on the poor.
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BASIC INCOME TAX SHOULD BE ABOLISHED
Indirect taxes allow us to modify public behaviour
Any tax on sales provides society with a way to prevent the type of behaviour we dislike but cannot ban, for example drinking or smoking. The need to encourage certain forms of behaviour has never been more urgent thanks to the danger of global warming. If people want to drive more, let them pay more in petrol duty. If we want them to use energy saving light bulbs, let’s set the tax at zero, and filament light bulbs at 20%.
The more that goods have an excessive duty levied upon them, the more illegal behaviour is encouraged.This is evidently true with the war on drugs. If you increase prohibition all that happens is the price of drugs increase to the point at which criminals have a major financial incentive to take the risk of supplying them. Taxing products has proven to be ineffective. If it were, then every time petrol duty was increased, people would drive less - it doesn't happen.Even if it were effective, the debate is about abolishing income tax, not the merits of a sales tax.Therefore the point is somewhat irrelevant.
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BASIC INCOME TAX SHOULD BE ABOLISHED
Income Tax is unjust - none of it goes to any public service
Income Tax is unjust as the tax does not contribute anything positive towards any public service. The Income Tax simply pays off the national debt we owe to private banks. The private banks (Fed, Bank of England, ECB, most central banks) create the money out of thin air (i.e. they just print it when someone signs a mortgage, credit agreement etc). The problem here is that we (the general public) are paying with our real sweat equity (our general work and labour) to pay off a debt that has been created out of nothing. This is unjust as the debt goes into the coffers of the owners of the private banks and does not contribute to any social good.The solution would be to have a nationalised bank run by the government. Governments would then be voted in and out, judged on how economically productive they were for their citizens. This is an issue of momentous importance, so much so that the Constitutionalist Republican Presidential Candidate Ron Paul is running on a manifesto to scrap the Income Tax in America, as it is an unjust tax which does not serve the majority of the population, and furthermore is unconstitutional.To help you understand this problem in more detail, a good number of documentaries have been produced on this issue. The best in my opinion are called 'Money as Debt', 'The Money Masters' and 'Aaron Russo: Freedom to Fascism'. I would suggest that you take a quick look at these films before you attempt to rebut this proposition - as many of the initial questions you may potentially have are likely to be addressed and answered by those films. Better yet, these films are free for anyone on Google video. In response to the counter argument opposite...to clarify, this point is extremely relevant to the debate. The debate is 'Basic Income Tax Should Be Abolished', and this is a very important point to stress in such a debate - income tax does not contribute to the public good. If the goal of government is to produce the most favourable public good for the majority, then it therefore follows that the Income Tax is a tax which should be abolished as it does not meet this criteria.
This point is irrelevant to this particular debate. The question is not about how tax should be spent, rather it regards how that tax should be collected.Income tax revenue is not ring-fenced to be spent on national debt, even if the two figures may be roughly equitable. To draw a link between the two is patently false.Even if this were the case, then other (indirect) taxes would have to be increased so as to maintain a balance of payments with the treasury- this would mean that, instead of income tax paying for national debt, other taxes would pay for it instead!
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BASIC INCOME TAX SHOULD BE ABOLISHED
Indirect taxes can be used to motivate change
The government can stimulate change by using indirect taxes to increase prices so that demand is limited. This is already being done for petrol, alcohol and tobacco, but it could be used much wider if, at the same time, direct taxes were cut.
This is difficult at present when the government has lost financial control and is therefore desperate to increase taxation in any form. But fuel taxes could be further increased if the basic allowance of income tax and certain social payments were increased at the same time. Then only those who persisted in using fuel excessively would actually pay more.
This does not deal with those for whom money is most relevant: the poorest in society, who do not even pay income tax, due to unemployment or very low paid employment. The history of taxation in the UK has shown that, with products like alcohol and tobacco, tax increases have done very little to change consumer behaviours in these groups, and indeed smoking rates among this demographic have fallen significantly less in the past two decades than among better-off individuals.Any shift from an income tax system to a greater tax on goods would harm these individuals, whose overall tax contribution is based to a larger proportion on goods.
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BASIC INCOME TAX SHOULD BE ABOLISHED
VAT is an empowering tax
This is fundamentally a tax on consumption, the more resources in our society you consume the more you contribute to that society.The more material benefit you choose to gain from our society the more you give to it in return.You gain no material benefit by having a million pounds in the bank - only when you or someone else spends that money do you benefit - and you are then taxed on that benefit.At every stage your personal choice is involved in whether you pay tax.When was the last time you could phone up your local tax office and say "Times are tough at the moment - can we pay less tax for the next 6 months, we're trying to save for a house deposit". Never?Now you can.
BASIC INCOME TAX SHOULD BE ABOLISHED
Income Tax is a cause of inequity in society
1) Sales Tax taxes you on the benefit you gain from society. Those who gain the least pay the least.2) Expensive Tax Accountants don't exist for fun. They save the wealthy a significant proportion of the tax they might (should?) have paid.3) Why should a poor family fund the tax deductions of a millionaire? If he gives a million pounds to charity - he pays a million pounds less in tax. The poor family have just paid their taxes for his "generosity" .4) Off shore bank accounts & tax havens mostly exist because of income tax.5) The "Benefit" you get from living in our society is the only ethical and equitable way to expect someone to contribute in return.
BASIC INCOME TAX SHOULD BE ABOLISHED
Abolishing Income Tax will grow the economy
BASIC INCOME TAX SHOULD BE ABOLISHED
Abolishing income tax empowers families
Many families have either both parents working, or a single parent working excessively to pay for their children and especially their childcare.We have a massive shortfall of childcare places in the UK, along with the trained staff we need. The places we do have have are either expensive and/or government subsidised.By abolishing income tax the average families income would increase by ~30% providing a real choice on whether to work or care for their children.
BASIC INCOME TAX SHOULD BE ABOLISHED
Yes Reasons
At least 22% more in your pocket
No expense to employers
22% more to save or spend (save we win, spend we win.)
V.A.T. is more adjustableNo reasons;
It can only be done once.(And thats why it's never been done)There would be no carrot to dangle at election times.
BASIC INCOME TAX SHOULD BE ABOLISHED
Take money out of Politics
With Abolishing the Income Tax for a VAT consumption tax you also take much of the corruption that is abused to reward friends and punish enemies of a politician through the income tax codes. It also reduces the amount of money contributed to politicians for special favors for tax breaks. If a corporation is not paying corporate income tax there is no reason to pander to the politicians. The politicians then have to find other sources to run their campaigns and will not be as beholden to corporate interest.
BASIC INCOME TAX SHOULD BE ABOLISHED
Reduces the price of goods
If income tax is eliminated and a consumption tax is enacted, an immediate reduction in cost of goods is received. To put it simple, think of the amount of income tax taken out in corporate and personal tax to build let's say a car. Not only is the consumer paying income tax on his income, the persons and corporations up and down the assembly line do also. The engine maker, chassis, bumpers, tires, steel, wiring, etc... All of these income taxes will not be part of the cost. Therefore a vehicles cost would be reduced according, this would be the same rather it be a home, camera or a number 2 pencil. Most estimates have been around 25% to 32% overall. So a vehicle costing $20,000 to produce would now only cost $15000, now how much more competitive will American goods be, and the consumer would be getting a much better deal on goods and services when this is passed on.
BASIC INCOME TAX SHOULD BE ABOLISHED
Indirect taxes are unenforceable
‘Booze cruises’ actually prove the validity of indirect taxes. Yes, they take place, but the vast majority of alcohol bought in this country comes through legal means. For most people, the hassle of buying the goods from a different country totally outweighs any money which might be saved. And this even applies to highly in-demand goods and where the difference between the taxes levied is great. Indirect taxes are actually much easier and cheaper for governments to collect as most of the administrative burden falls on businesses rather than individuals. Accordingly, the government in the UK needs far fewer inspectors in relation to VAT than it does in relation to income tax.
The internet, the EU and the global economy make it impossible for one country to enforce a different tax on goods to anyone else. Witness the ‘booze cruises’ which take people every day over the channel to stock up on alcohol, which is cheaper in France. You don’t have to live in the EU or need to travel to another country either- goods can easily be found on the internet and shipped overseas.
What do you think? Vote on this point below.
BASIC INCOME TAX SHOULD BE ABOLISHED
Income tax is the price we pay for living in an equitable society
Why should childless people pay for educating the children of others? Why should people who take care of their health pay for those who drink and smoke and eat to excess? We should pay for the resources we consume (with a safety net provided for those who cannot, through no fault of their own, pay for these goods themselves). Direct tax is much less fair and provides no incentive for people to use less of society’s resources.The response fails to understand that the debate is about how tax should be collected, rather than how much tax should be collected. Contrary to the arguments in the response, it would be possible to fund the NHS, run public transport etc through indirect taxation; the amount of revenue lost by abolishing direct taxation could be replaced simply by increasing indirect taxation
There are many things we consume but can’t be measured, healthcare, national defence and education, for example. How do we decide how much everyone should pay for them? To answer just one of the points raised, the childless should pay for other people's children to be educated because education does not just benefit the individual - the benefits a literate worker brings to the economy are such that everyone benefits. A direct tax is fair and progressive, because it demonstrates that we all have equal responsibility for the welfare of others. We live in a state where we believe in helping each other, rather than being selfish and helping only ourselves. That is why we have free public transport for the over-60s and the disabled, that's why we have state education, and why we formed the NHS sixty years ago. None of these would be possible without direct taxation.
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BASIC INCOME TAX SHOULD BE ABOLISHED
A sales tax is regressive
VAT targets only 'luxury' items, which poorer people aren't going to be able to afford anyway, so this tax is actually fairer on poorer people. Just because they might spend a greater percentage of their income on goods, doesn't mean it will all end up in the government's coffers.
Poorer people spend a greater percentage of their income on basic goods, and richer people (particularly the 'affluent middle classes') a greater percentage on luxury goods.This would have the effect of almost completely removing the tax burden on poorer people, and hefting it onto the middle classes who are already taxed additionally with road taxes and so on. While this might seem to be a good thing, it is entirely unfair.Everyone in society should be paying taxes according to their relative wealth.Effectively removing the tax burden on one sector of society and replacing it with a higher tax burden on another is simply not the way forward.
What do you think? Vote on this point below.
BASIC INCOME TAX SHOULD BE ABOLISHED
Disincentives to spend spell economic disaster
"In boom or recession, one of the worst things a government can do is encourage its citizens NOT to spend."It is difficult to know how to interpret this. a) Perhaps the writer simply means that it would be terrible for an economy if everyone stopped trading altogether. This is, of course, true. But basic income tax *doesn't* stop people trading altogether. All other things being equal, it simply makes consumers spend *less*. So, if this is what the writer means, then he is correct, but his point is irrelevant.b) But perhaps the writer is (correctly) pointing out that, all other things being equal, the greater the income tax, the less consumers spend. He then suggests (incorrectly I suggest) that one should encourage consumers to spend as much as possible. And therefore, he concludes, income tax is bad because it reduces consumer spending.I suggest that he is mistaken in his claim that governments ought to encourage consumers to spend as much as possible. Economists may disagree on many things, but they all agree that if consumers spend too much the economy is threatened by "inflation": prices start rising very quickly, salaries rise to keep up, prices rise even faster. Money becomes worthless. Periods of hyperinflation, e.g. Germany in the early 1930s, are disastrous.It is also worth noting another error in the adjacent argument:The money that consumers can't spend, because the state has taken as tax, is actually spent by the state. In fact, since (firstly) states tend to overspend, and (secondly) some consumers would save some of their money rather than spend it, taxation normally ensures that more money is spent than otherwise would be. In fact, this point is the basis of Keynsian economic theory.
In boom or recession, one of the worst things a government can do is encourage its citizens NOT to spend. It is the flow of cash that keeps the economy alive, increasing liquidity and preventing the need for cash injections which spell inflation.If taxation became focused purely on spending, as soon as things looked bleak spending would grind to a halt, and the economy could easily collapse. The last thing we need is a disincentive to spend - especially with a recession likely to be on its way.The opposing argument fundamentally misunderstands the point being made here. It claims that 'the writer is (correctly) pointing out that, all other things being equal, the greater the income tax, the less consumers spend'. In fact, the point that has been made in this column is that indirect taxation would discourage spending to a greater degree than income tax
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