Tax cuts, but for who?
 

Tax cuts are popular amongst the people and many politicians for obivious reasons, and in most cases the cuts actually increase tax revenues in the form of increased consumption and employment situation. But what group of people should first and foremost receive tax cuts? Do you believe that tax cuts endanger public services or right on the contrary? Discuss.

I believe in a flat tax system. I think a properly organized and run government could probaly survive on a flat income tax of as low as 5%, which would be perfectly fair for everyone. It's all a matter of having the government properly organized and streamlined. As it is now I think these massive taxes exist primarily because half the revenue gathered is probaly lost in bureaucracy.

So I think everyone should receive and equal amount of tax cuts, there shouldn't be a staggered system. But I suppose if I had to pick one class to get tax cuts it would be the middle class to encourage increased spending by them. The increased spending would in turn send some money both up and down, helping all three classes. It would send it up because it is from the high class that the middle class will be buying more then likely, and it sends it down because it is likely the low class who will now be able to find jobs in factory or retail because of the increased middle class spending.

I usually see tax cuts as presented as a party's political agenda with a fair amount of scepticism.
I think in many cases it's just a popularistic tactic to gain support, and hoping that the public doesn't notice the consequences. Because if taxes are cut, obviously there's going to be less money somewhere.

If taxes are cut, it should be the low-incomers that benifit. But I think that hoping increased income from consumption and whatnot will offset the reduced tax revenue is a kind of unreliable political move.

Less taxes for the poor, more taxes for the rich. Simple really.

Instead of tax cuts, the citizens should be getting adequate public service.

That would effectively turn a country into night-watchman state with just a couple of social programs if even that, I wouldn't like to live in that kind of society. 5% Income tax would be fair only for wealthy people who can fully buy their services unlike low-income people or lower middle-class: I don't believe totally free market actually works when it comes to people as a whole.

I seriously doubt that any western government is that ineffective and surely it would have been noticed & reported.

Not necessarily. Economic growth brings in more tax income in the form of increased consumption which leads to bigger enterprise profits, better employment and more tax money through enterprise & sales taxation, not to mention income tax revenues from newly employed people and reduction in social benefit expenses. This is what has happened in Finland for years: cuts on income taxation have actually raised tax revenues at longer term. Cutting down certain taxes have positive effects not only on private economy (enterprises, individuals) but also on public economy (government). Raising taxes on the contrary reduces tax revenues at longer term.


I think taxes should be cut down in all income brackets for the sake of public economy & social justice but if I have to choose just one group (like in the poll), then I say the low-incomers. Middle-class gets by and wealthy people already have satisfied their basic needs & much more while low-incomers are not in as good position. Lowering taxation from low-incomers also motivates people to work as it's more beneficial than living on the dole or making crimes, and it also has balancing social effects.

Rather than have an income tax it would be better to be taxed on the amount you consume in goods and services and such. I don't remember what type of tax it's called though.

There should be an other catagory.

It's in general called a "Consumption Tax", though specific taxes might be called Goods and Services Tax (GST), Value Added Tax (VAT) etc. Most of them run between 10% and 15%; the major issue being they don't collect a lot of money (compared to income tax), and if it is set to high then it can make basic necessities unaffordable.

See this is what gets me though, think about it. 10 cents here 7 cents there 35 cents there (for gas [every gallon you buy] which is already a reality in most places) adds up. Additionally the less you buy the more money you save. There for essentially low income families could save more money than if it was taken out in imcome tax.

This tax system would also sponser a less bloated government and help it to streamline itself. The less money you give to the government the less money it has the potential to waste.

Sometimes the anwser isn't in tax cuts or raising taxes it's simply in controlling spending, something the govoner of my state doesn't understand.

Quite right, the loss of direct tax revenue may be made up for indirectly by increased spending, although this is not always a necessary consequence, making in imprudent to plan on such a condition.
It is also highly dependent on the economical situation as a whole; if people are generally more in the mood to consume & invest or to save.

That depends about the level of sales & enterprises taxes in addition to employment rate. Generally giving tax cuts is simple, basic economics: decrease in taxes leaves more money for people to use and in western consumption societies, the money gets into circulation pretty fast which gives positive boost on the economy. Tax cuts have been succesfully used to boost the economy not in just Finland but also in Great Britain, Germany, Italy and USA to mention few examples.

Giving tax cuts gives not just more money on people's hands but also positive signal to consume more while people's every-day needs and advertising by enterprises takes care of the rest.

I see giving tax cuts as a good & reliable way to boost the economy while not cutting necessary public services as health care & education. Only through work, enterpreuning and economic growth more welfare can be created for all and more money to be used on public services. Raising taxes is good only for short-term gathering of money but also for directing people's consumption habbits. However giving tax cuts must not be the only way to boost the economy: education & research must always be well-funded, establishing enterprises made more convenient, motivating people to work instead of living on the dole & finding the most effective ways to employ people, to name few means.

I am middle class, so obviously I voted for a tax break on the middle class. But I also think that more money to spend for the consumer class is beneficial to all groups.

In many cases, income tax on the wealthy has no application. Many of the wealthiest people in the western world have no "job" from which income can be taxed. The bulk of their money comes from capital gains. This is why a flat income tax would not work. Most of the rich would not pay any taxes!

Perhaps elliminating the income tax (and the IRS along with it) and reverting to a (much higher) flat sales tax would work. The theory is, the more money you have, the more money you spend, and therefore the more taxes you pay. A flat sales tax would be fair across the board if you ask me.

However flat sales tax at meaningful rate would mean very radical reduction on public services (and even on military) which would hit the low-income people and lower middle-class the hardest. If you set sales tax rate too high, buying basic goods such as food & clothes will be just too expensive for a lot of people.

If people want new tax system in place, they also have to tell where the cuts would come from and what percentage figures we're talking about when it comes to sales tax.

In most places in the US, food (unserved) and certain other necessary goods and services are not taxed. If you consider that there would be no taxes coming out of your paycheck, I think a generous hike in sales tax would not make basic goods too expensive.

I would venture a guess that adding 30-35% to existing state sales tax rates would not require a reduction in public services. Yes, that would make some goods staggeringly more expensive, but once again when you consider the average income would raise by the same percentage, it would not be so bad.

I don't see such a thing as ever happening. However, I cannot think of a more "fair" way of taxing the people.

Well tax cuts are very good but only in certain situations. I would probably place tax cuts on companies and businesses first that way consumers benefit.

our goverment is like Steam, its got good stuff but crashes alot

The Problem with a flat tax is that even though its equal, the poor still get the bad end of the stick. If someone makes 100 dollars a week, and someone makes 10,000 dollars a week, a 5% tax on both of them has a very adverse effect. The poor person now only has $95. This is barely enough for groceries in some cases. The person that makes $10,000 now has $9,500 (Not sure on my math, still summer :P) which is still a lot of money.

Your not going to be able to stretch 100 dollars a week much more then 95 dollars a week. At a ridiculously low income tax level of something between 2% and 5% you're never going to be so poor that the 5% of your check will mean the difference between life and death or between having a home and not having one. Now if we're talking the current tax rate as a flat tax rate then yeah that's gonna be killer but I'm making the assumption that a minimalistic government could operate on a 5% income tax.

Alternatively something like a 5%- 10% sales tax would also be sufficient I would think. As long as the tax doesn't apply to food and water.

According to the Armey-Shelby Tax Reform proposal, if there were to be a flat tax system introduced it would be at a 17% rate across the board with exemption based on family size (a family of 4 would receive a $33,000 exemption for example). The tax on all other income, including interest, dividends, rents, royalties, and business profits, would be withheld and paid at the business level - tax on capital gains and estates would be eliminated.

The Tauzin-Lugar sales tax bill would eliminate the individual and corporate income taxes, along with estate and capital gains tax in favor of a 17.65% national sales tax. Households below the poverty level would receive rebate checks across the course of the year equal to $18,500 worth of taxes (or about $3000). To prevent tax preference for government output, this legislation would place an excise tax on goverment payrolls.

Unfortunately, neither of these plans covers Medicare or Social Security. Those rates would have to be much higher to pay for those. The upside being no more lengthy tax forms or itemizing deductions. The former plan would require a small, post-card sized form to fill out.