Should Homeownership Mean Homeownership?

[riverwed070707]

[QUOTE=LivingAlmostLarge;n750248]VAT is a tax on goods so it disproportionately taxes poor who use a great percentage of their income for necessities. That being said I'd pay a flat tax. Everyone pays no matter what type of income the same tax capital gains, income, etc. We'd be trapping everyone who lives off investments the same as workers.

[/QUOTE]

Disagree that it disproportionately taxes the poor. For starters we already pay sales tax on top of income tax. Secondarily, while yes there is VAT on necessities, the amount you pay is still directly proportional to how much you spend. Buying a $24M yacht? Cool pay a social tax on it that is more than most people will pay in taxes in their lifetime. Take home $100k and spend every penny? More tax revenue. Make $100k and save 50%, less taxes for you. I don't have any delusions we're going to change peoples consumerism mindset, but I'd rather see tax paid on spending decisions rather than an overly complex system that is designed with loopholes for the wealthy with the largest burden falling on the middle class. Additionally, right wingers should love it because it would also increase tax revenue from undocumented workers and those paid under the table

[disneysteve]

[QUOTE=riverwed070707;n750263]

Disagree that it disproportionately taxes the poor. For starters we already pay sales tax on top of income tax.

[/QUOTE]
Yes, but in large part we don't tax necessities. There's no sales tax on food or clothing, at least around here.

Lower income people spend most or all of their income to live. They don't have a big surplus, if any. They don't have a bunch of fat they can trim from their discretionary spending. If you add another layer of taxes onto everyday items, including necessities, you're going to destroy them. They're living on the edge already. I'm okay with the concept of a national sales tax but it would need to be tiered somehow by income so that the poor aren't stuck paying it.

[riverwed070707]

[QUOTE=disneysteve;n750269]
Yes, but in large part we don't tax necessities. There's no sales tax on food or clothing, at least around here.

Lower income people spend most or all of their income to live. They don't have a big surplus, if any. They don't have a bunch of fat they can trim from their discretionary spending. If you add another layer of taxes onto everyday items, including necessities, you're going to destroy them. They're living on the edge already. I'm okay with the concept of a national sales tax but it would need to be tiered somehow by income so that the poor aren't stuck paying it.
[/QUOTE]

I don't think we're saying the same thing here. I'm not suggesting another layer of taxes, I'm suggesting a sensible single VAT to replace everything from the current state and local sales tax to income tax. We are taxed to pieces in this country at low and middle class tiers, including on used goods. The current system certainly isn't benefitting the underprivileged, and VAT has shown to benefit everyone from consumers to suppliers. Example: right now in the US, if I'm a supplier and I order my product wholesale for $1,000 and sell it for $2,000, I'm going to pay $80 sales tax on my wholesale purchase, an unknown amount of income tax on my $1,000 earnings that I likely have to pay an employee or professional to figure out for me, and my customer is going to pay $160 sales tax on their purchase. With a VAT, it makes it so that each vendor along the supply chain only pays tax on what they've contributed to the value of the product and eliminates the cost of tax being layered in and driving cost up each time it changes hands. Our current system still tries to make trickle down economics work even though we've demonstrated enough proof that TDE doesn't work - time for us to shift the burden to corporations, suppliers, and high spend individuals.

Another example PLEASE explain to me why when I buy a used car, I have to go to the county clerk and pay them 5% sales tax on the cost of the vehicle PLUS a registration fee that's based on the MSRP of the vehicle even if its 10 years old? It's theft. Tax the people that are buying $50-150k new cars.

Also definitely not the norm that there is no sales tax on clothing - some places do a tax free weekend before back to school but as far as I'm aware its not typical to never tax clothing, only food.

[disneysteve]

[QUOTE=riverwed070707;n750272]

I'm not suggesting another layer of taxes, I'm suggesting a sensible single VAT to replace everything from the current state and local sales tax to income tax.[/quote]
That's an interesting concept, as long as it is sensibly adjusted based on income so that it doesn't target the poor. For example, people earning up to a certain amount currently pay little to no income tax. If you impose a flat tax on them, that would grossly increase their tax burden.
[QUOTE]
Example: right now in the US, if I'm a supplier and I order my product wholesale for $1,000 and sell it for $2,000, I'm going to pay $80 sales tax on my wholesale purchase[/QUOTE]
This is not true. You wouldn't pay any sales tax on your wholesale purchase. That's tax-exempt. When I buy items to resell, I don't have to pay sales tax on them. When my wife buys supplies for her needlework business, she doesn't have to pay sales tax on them. Only the final consumer pays sales tax.

[QUOTE]PLEASE explain to me why when I buy a used car, I have to go to the county clerk and pay them 5% sales tax on the cost of the vehicle PLUS a registration fee that's based on the MSRP of the vehicle even if its 10 years old?[/QUOTE]
I've never heard of that so that must be unique to your area. Registration here is not in any way linked to the price or value of the car. It's a flat figure. Everybody pays the same amount based on the type of vehicle.

[quote]Also definitely not the norm that there is no sales tax on clothing [/QUOTE]
I checked. 11 states have no sales tax on clothing. The other 39 do, so it is more common than not to tax clothing.

[LivingAlmostLarge]

But necessicities take a larger part of lower income people's income. The problem is that food and housing and medical take up larger chunks of the $3k income a month. A VAT on anything costs a bigger percentage of my income. At least that's the problem I see with a VAT. You bought a $10k car, and yes a rich person buys a $100k car. But what if the poor person doesn't $10k but $1k car

[ua_guy]

Car registrations are untenable in a lot of populated areas.

Here in populated areas of western WA State we have what they call RTA or Regional Transit Authority tax. It funds mass transit, in essence.

Not only do you pay 9.5-10% in sales tax, depending on where you buy the car, you also pay 1.1% of its calculated value every year to register the car, kind of like Blue Book.

On a $40k car, that's $4,000 just to the state in sales tax.

And another $400 per year to register it, before all the other registration and use fees (typically $100-$200). The registration RTA tax goes down over time with the car's value, but geez...they get to collect RTA based on value for 30 years!

How else would transit get funded, though? It's needed... but IMO it's also unfair to put so much of the burden on vehicle owners.

[riverwed070707]

You absolutely are supposed to pay tax on income earned from reselling of used items, even if they are your own but especially if you're operating a business. I'm not an expert on handmade goods but struggling to see how you'd avoid paying sales tax - surely you're paying it at the craft store and even if the cost is a write off, that offsets the income tax you'd pay on profits but I wasn't under the impression you got a refund for the sales tax.

[disneysteve]

[QUOTE=riverwed070707]You absolutely are supposed to pay tax on income earned from reselling of used items, even if they are your own but especially if you're operating a business.[/QUOTE]
Correct, but you are only taxed on profit, not on sales. If you bought a toaster a few years ago for $50 and resold it now for $15, you wouldn't owe any tax on that sale since there was no profit. You need to report the income but that doesn't mean you will owe any tax.

[QUOTE]I'm not an expert on handmade goods but struggling to see how you'd avoid paying sales tax - surely you're paying it at the craft store and even if the cost is a write off, that offsets the income tax you'd pay on profits but I wasn't under the impression you got a refund for the sales tax.[/QUOTE]
This might vary by state. I can only speak to NJ law. Here, items purchased for resale are sales tax exempt if you have a tax license. When my wife goes to JoAnn and buys yarn which she uses to crochet items she will sell, she does not pay sales tax on that yarn purchase. When I go to our local auction house and buy a set of china to resell, I do not pay sales tax on that purchase. There's no "refund" of sales tax. It isn't paid in the first place at the point of purchase.

[Petunia 100]

The poor don't pay income taxes; they do pay sales tax. Moving from our current system to VAT only absolutely disproportionately hurts the poor. The only way to avoid that is to exempt necessities and/or refund VAT based on income.

[disneysteve]

[QUOTE=Petunia 100;n750646]The poor don't pay income taxes; they do pay sales tax. Moving from our current system to VAT only absolutely disproportionately hurts the poor. The only way to avoid that is to exempt necessities and/or refund VAT based on income.[/QUOTE]

Exactly. A tax on purchases is extremely regressive. It would crush folks struggling to get by.