Why Do We Have Such A Low Personal Savings Rate?

[tripods68]

True, but this is a whole different topic than the point of this thread which is the national savings rate.

I think a consumption tax instead of an income tax is an interesting idea. I don't know enough about the details to say firmly what I think but I do agree that the current tax system really needs an overhaul.

Consumption tax does not penalize savings (it actually help increase savings rate) But it is consider a 'regressive tax' to lower income tend to spend it all.

But I do think it will force people to be creative, spend less, budgeting, etc. as a consequences.

[sv2007]

That's the underground world where very little taxes are reported. T

That's why I vote for "consumer spending Tax", rather the income tax we currently have. The more you spend the more you pay in taxes even the undocumented.

Although I like sales tax over income tax,
just playing the devil's advocate: what makes you think business will be more honest?


How about free market? cut taxes to 0 and make most services private funded. So, everything funded by bonds. Disagree with gov defence policy, don't buy defence bonds. Don't want to pay for k-12 free education, don't buy edu bonds. etc.

[Singuy]

Although I like sales tax over income tax,
just playing the devil's advocate: what makes you think business will be more honest?


How about free market? cut taxes to 0 and make most services private funded. So, everything funded by bonds. Disagree with gov defence policy, don't buy defence bonds. Don't want to pay for k-12 free education, don't buy edu bonds. etc.

Uhhh..are you forced to buy these bonds? If not then you'll have 0 dollars in defense and 0 dollars in education and 0 dollars in anything because Americans rather buy stupid crap than pay for anything they don't have to. I mean just look at all the criers for obamacare. What?..force me to buy health insurance to protect me from bankruptcy?!@ What a bunch of A-holes in the white house!

[disneysteve]

Uhhh..are you forced to buy these bonds? If not then you'll have 0 dollars in defense and 0 dollars in education and 0 dollars in anything because Americans rather buy stupid crap than pay for anything they don't have to.

Economics would kick in. Defense bonds might need to pay a much higher interest rate if they didn't attract investors. Realistically, it wouldn't be a problem because most of the money would probably come from corporate sources, pension plans, retirement accounts, etc.

[tripods68]

Although I like sales tax over income tax,
just playing the devil's advocate: what makes you think business will be more honest?

Have you heard Tax Inversion, Tax Evasion, Corporate fraud. Its happening legally already. How about this tax haven state like: 1209 North Orange, WILMINGTON, Delaware is the legal address of no fewer than 285,000 separate businesses. Its occupants, on paper, include giants like American Airlines, Apple, Bank of America, Berkshire Hathaway, Cargill, Coca-Cola, Ford, General Electric, Google, JPMorgan Chase, and Wal-Mart. These companies do business across the nation and around the world. Here at 1209 North Orange, they simply have a dropbox.

Big corporations, small-time businesses, rogues, scoundrels and worse — all have turned up at Delaware addresses in hopes of minimizing taxes, skirting regulations, plying friendly courts or, when needed, covering their tracks. Federal authorities worry that, in addition to the legitimate businesses flocking here, drug traffickers, embezzlers and money launderers are increasingly heading to Delaware, too. It’s easy to set up shell companies here, no questions asked.

http://www.nytimes.com/2012/07/01/business/how-delaware-thrives-as-a-corporate-tax-haven.html?_r=0

OR

How about 47% of population that don't pay income tax? How come the other half pay and others don't.

The point is thousands of businesses and millions of taxpayers already cheats the system.


Consumption tax is better tax system IMO. It taxes everybody even the mob.

[Singuy]

Economics would kick in. Defense bonds might need to pay a much higher interest rate if they didn't attract investors. Realistically, it wouldn't be a problem because most of the money would probably come from corporate sources, pension plans, retirement accounts, etc.

But then the public will be profiteering off defense which leads to a significant amount of money not actually going toward defense but towards interest.

[disneysteve]

How about 47% of population that don't pay income tax?

How many of those 47% don't pay taxes because they simply don't owe any taxes? There are a lot of poor folks out there.

But then the public will be profiteering off defense

How would it be any different than folks buying Boeing stock or Lockheed-Martin or Grumman or Raytheon? We already invest in defense contractors.

[phantom]

Consumption tax does not penalize savings (it actually help increase savings rate) But it is consider a 'regressive tax' to lower income tend to spend it all.

That's why proposals like the Fair Tax (which, admittedly, is the only consumption tax proposal with which I am familiar) include a rebate to return taxes up to the poverty level.

[tripods68]

That's why proposals like the Fair Tax (which, admittedly, is the only consumption tax proposal with which I am familiar) include a rebate to return taxes up to the poverty level.

Consumption Tax & Fair tax can be combined to exempt low income/welfare/Food consumptions, except alcohol or illegal drugs (nonprescription).

[corn18]

Consumption Tax & Fair tax can be combined to exempt low income/welfare/Food consumptions, except alcohol or illegal drugs (nonprescription).

And cigarettes.

[tripods68]

How many of those 47% don't pay taxes because they simply don't owe any taxes? There are a lot of poor folks out there.

http://www.factcheck.org/2012/09/dependency-and-romneys-47-percenters/

So that’s half of Romney’s 46.4 percenters. The rest pay no federal income tax due to tax benefits and credits. Here’s the rest of the breakdown:
◾22 percent receive senior tax benefits — the extra standard deduction for seniors, the exclusion of a portion of Social Security benefits, and the credit for seniors. Most of them are older people on Social Security whose adjusted gross income is less than $25,000.
◾15.2 percent receive tax credits for children and the working poor. That includes the child tax credit and the earned income tax credit. The child tax credit was enacted under Democratic President Bill Clinton, but it doubled under Republican President George W. Bush. The earned income tax credit was enacted under Republican President Gerald Ford, and was expanded under presidents of both parties. Republican President Ronald Reagan once praised it as “one of the best antipoverty programs this country’s ever seen.” As a result of various tax expenditures, about two thirds of households with children making between $40,000 and $50,000 owed no federal income taxes.
◾The rest ended up owing no federal income tax due to various tax expenditures such as education credits, itemized deductions or reduced rates on capital gains and dividends. Most of this group are in the middle to upper income brackets. In fact, the TPC estimates there are about 7,000 families and individuals who earn $1 million a year or more and still pay no federal income tax.

[phantom]

Consumption Tax & Fair tax can be combined to exempt low income/welfare/Food consumptions, except alcohol or illegal drugs (nonprescription).

I'm afraid I have no idea what you are trying to say here. What is a a "low income consumption?"

[tripods68]

I'm afraid I have no idea what you are trying to say here. What is a a "low income consumption?"

exempt low income folks so they don't pay taxes food.

[Singuy]

How would it be any different than folks buying Boeing stock or Lockheed-Martin or Grumman or Raytheon? We already invest in defense contractors.

Hmm, I think the difference is huge.

Boeing is paying out interest on the money they borrow for R&D hoping to create something the government will spend a stupid amount of money on and make their money back + some.

Vs.

Government pays interest on borrowed money just to feed their soldiers and buy things from Boeing?...no idea how the government can ever pay the bonds back since the military doesn't make the U.S any money(but actually just leaks money). Maybe you can make a case that with the military other countries cannot invade us and take our corporations' profits so it works like an insurance company? But how much military is enough of an insurance?

[LivingAlmostLarge]

typically consumption tax hurts the lower income people since necessities take a larger portion of their salaries.