Why 9-9-9 is dead-dead-dead:

[dcarrigg]

[astonas]

Re: Why 9-9-9 is dead-dead-dead:

Ah, dcarrigg, you underestimate the U.S. populace's ability to vote counter to their own best interests!

You have provided important information on why the plan SHOULD be dead. But Caine's surge in the polls shows that mere facts (however inconvenient) are not what people consider when they make decisions. It could be argued that if voters had rationally pursued their own economic self-interest, we wouldn't be in this mess in the first place!

[dcarrigg]

Re: Why 9-9-9 is dead-dead-dead:

Ah, dcarrigg, you underestimate the U.S. populace's ability to vote counter to their own best interests!

You have provided important information on why the plan SHOULD be dead. But Caine's surge in the polls shows that mere facts (however inconvenient) are not what people consider when they make decisions. It could be argued that if voters had rationally pursued their own economic self-interest, we wouldn't be in this mess in the first place!

It's amazing what you can do with $1M. With 1 attack ad. When you're 2 weeks from ad season. 9-9-9 will be an albatross. Romney will hang him with it. If by some far-out chance he doesn't, Obama will.

Polling at 26 points in the Republican primary does not give you the leeway to propose raising taxes on 99% of everyone. He signed his political death warrant with this plan.

[BK]

Re: Why 9-9-9 is dead-dead-dead:

Its frightening to see that the politics of Fiat paper inflation haven't changed in 212 years - is it possible that the People would be better off with the 9-9-9-9 plan. We have a pretty massive underground economy - but, the same old tactics of focusing on the wealthy as a scourge on our economy are being used as they were used in France in the early 1790s.

In the early 1790s during France's second Fiat paper experiment - Bertrand Barčre said the following :

"Monarchical commerce which only sought wealth," while what she needed and what she was now to receive was a "Republican commerce--a commerce of moderate profits and virtuous."
France, he said, has something better, and he declared in conclusion, "The needs of the people will no longer be spied upon in order that the commercial classes may arbitrarily take advantage."[49]

White, Andrew Dickson (2004). Fiat Money Inflation in France (p. 32). Public Domain Books. Kindle Edition.

White, Andrew Dickson (2004). Fiat Money Inflation in France (pp. 31-32). Public Domain Books. Kindle Edition.

[c1ue]

Re: Why 9-9-9 is dead-dead-dead:

Its frightening to see that the politics of Fiat paper inflation haven't changed in 212 years - is it possible that the People would be better off with the 9-9-9-9 plan.

Given that the 9's plan will increase the deficit by an order of magnitude, or more, I can completely guarantee that overall people will not be better off with it.

The only people who will benefit are as is noted by the graph put up by dcarrigg: those who already have tons of money. As the economy continues to worsen even as the wealthy get wealthier, clearly giving more money to rich people doesn't work.

We have a pretty massive underground economy - but, the same old tactics of focusing on the wealthy as a scourge on our economy are being used as they were used in France in the early 1790s.

A nice, unsupported statement.

Here are some facts to put this ridiculous statement in context.

One of the largest portions of the 'underground economy' as you put it is wait staff in restaurants. A significant portion of their pay comes from tips which are chronically under-reported.

http://www.bls.gov/oes/current/oes353031.htm

Total number of waiters: 2,244,480
median wage: $18,330

If we assume that tips are 100% equal to their wages, then the annual underground tax free 'take' is: $41.1 billion

The top 25 hedge fund managers last year made a total of $22.07 billion.

There are a total of 4,700 some hedge funds, so it is safe to say that the $22+ billion is doubled or tripled.

Or in other words, 4,700 hedge fund managers, itself a small portion of the bankster industry, makes more than the official income of more than 2.2 million people.

But yeah, keep on thinking that somehow it is the little guys fault because they pay too little tax.

[BK]

Re: Why 9-9-9 is dead-dead-dead: - The Tax Gap - the Cash Economy

Please don't attack - I'm not pro-hedgefund Manager. But, there is massive growth in the under ground cash economy. This is an International problem and I think is just an outgrowth of all our other Financial problems. Unreported income increases during times of inflation - people are trying to survive and paying taxes is a drain of family resources.

According to the IRS
"As you know, the gross “tax gap” – the amount of tax that is not voluntarily and timely reported and paid – stood at an estimated $345 billion in 2001 and remains a serious problem.51 As a result, households that comply with their tax obligations effectively pay a “surtax” averaging about $2,680 per year to subsidize noncompliance by others.52 "
Find this data source here: http://www.irs.gov/pub/irs-utl/ntate...p081604cor.pdf

Keep in mind that this is data from 2001 - I would guestimate that there has been an increase in this number due to inflation and under employed. Many start a business as a hobby and avoid taxes until they can't.
There is also an explosion of UNBANKED Americans - 7.7% of American Households don't use a Bank or are unbanked.
http://www.fdic.gov/householdsurvey/

[c1ue]

Re: Why 9-9-9 is dead-dead-dead: - The Tax Gap - the Cash Economy

Please don't attack - I'm not pro-hedgefund Manager. But, there is massive growth in the under ground cash economy. This is an International problem and I think is just an outgrowth of all our other Financial problems. Unreported income increases during times of inflation - people are trying to survive and paying taxes is a drain of family resources.

Fair enough, and I apologize for my tone. I am just getting very tired of the many instances of astroturfing on this subject for ideological reasons.

According to the IRS
"As you know, the gross “tax gap” – the amount of tax that is not voluntarily and timely reported and paid – stood at an estimated $345 billion in 2001 and remains a serious problem.51 As a result, households that comply with their tax obligations effectively pay a “surtax” averaging about $2,680 per year to subsidize noncompliance by others.52 "
Find this data source here: http://www.irs.gov/pub/irs-utl/ntate...p081604cor.pdf

The tax gap needs to be put in context. The amount of revenue collected by the IRS mentioned in the report is $2.4 billion - which means the extent of the 'underground economy' is only 12.6%.

Surely you would agree that the IRS estimates are likely to be high, especially given that the document you referred to was a request by the IRS to Congress for budget appropriations?

If the underground economy is only 12.6% of the overall economy by the IRS' own figures, this hardly constitutes a huge gap, especially when you consider that Spain for example has an estimated 40% of its economy underground.

Again I refer to the hedge fund industry as a reference point: total assets under management is roughly $2.5 trillion. Since they all get at least 2% of this every year, this equates to over $50 billion in income just from management fees. Given that 20% of growth is the upside, the actual revenue is probably closer to the $100 billion dollar range than the base.

Many start a business as a hobby and avoid taxes until they can't.

Unless they're selling watermelons by roadside, it is quite difficult to operate a business without having some type of licensing: whether it is a trade license, a business license, sales tax, or whatever.

There is also an explosion of UNBANKED Americans - 7.7% of American Households don't use a Bank or are unbanked.

Not having a bank account only helps if an employer doesn't deduct employee salaries as a business expense. Even being paid in cash doesn't help if FICA is extracted by the employer and pay is adjusted before ever touching the employee's hands.

I'd also note that it is quite unclear to me if the 'tax gap' is not in some way compensated for by IRS practices on the late/caught evading side.

When I was much younger, I used to run credit reports for prospective renters. Perhaps 1 in 20 were people who had some type of tax dispute with the IRS, and the credit reports would show how the unpaid tax would grow literally geometrically.

One person who started with a $150K or so tax lien had it jump to $750K in just 4 years. This type of thing is not at all atypical. While certainly a good lawyer and accountant would slash the humonguous ending number down, it is quite certain it won't be anywhere as low as it was originally.

[astonas]

Re: Why 9-9-9 is dead-dead-dead: - The Tax Gap - the Cash Economy

Please don't attack - I'm not pro-hedgefund Manager. But, there is massive growth in the under ground cash economy. This is an International problem and I think is just an outgrowth of all our other Financial problems. Unreported income increases during times of inflation - people are trying to survive and paying taxes is a drain of family resources.

According to the IRS
"As you know, the gross “tax gap” – the amount of tax that is not voluntarily and timely reported and paid – stood at an estimated $345 billion in 2001 and remains a serious problem.51 As a result, households that comply with their tax obligations effectively pay a “surtax” averaging about $2,680 per year to subsidize noncompliance by others.52 "
Find this data source here: http://www.irs.gov/pub/irs-utl/ntate...p081604cor.pdf

Keep in mind that this is data from 2001 - I would guestimate that there has been an increase in this number due to inflation and under employed. Many start a business as a hobby and avoid taxes until they can't.
There is also an explosion of UNBANKED Americans - 7.7% of American Households don't use a Bank or are unbanked.
http://www.fdic.gov/householdsurvey/

There are other nations that do deal with underground markets more effectively than the U.S. does, and it may indeed be worth considering some of their approaches. However, they are highly unlikely to be implemented in our current political climate, since there is already great tension over the current level of government interference in business, and this approach would significantly increase it.

One other approach is to not require an income tax return at all: simply deduct all income taxes directly from payroll, and permit no deductions that cannot be trivially simple for an employer to verify (if any deductions are permitted at all). Of course for this to work, very heavy (effectively, business-ending) fines are levied on any corporation failing an audit of deductions, or failing to report paid income of any sort. As stated, a policy that is less threatening is simply not to permit any deductions at all, minimizing the enforcement role of business.

As for sales taxes, a Value-Added Tax (VAT) is more unavoidable than a sales tax, since the tax occurs traceably at all level of production, and thus may be more easily compared up and down the supply chain. In other words, to dodge taxes, you have to collude with your suppliers, or your customers, to their own financial detriment.

If taxes are thus imposed in a sufficiently systematic manner, underground transactions become less beneficial, and more risky.

Such systematization of taxation is one reason why Switzerland has for many decades been able to sustain its reputation as a location for foreign tax-evasion. In their system, it is virtually impossible to actually EVADE (illegally dodge) local Swiss taxes that are implemented, since they are completely integrated in the system. Consequently, they are able to be very loose with tax AVOIDANCE (which is legal).

If you take a system that requires individual self-reporting (as in the U.S.) and make available to it the tools of a system that does not (as in Switzerland), it becomes very easy to evade taxes in the self-reporting state by transferring assets to the non-reporting-based system.

Of course, if you think business is worried about government interference NOW, just try suggesting a system including elements like this, and watch the fireworks fly. And not without reason: the relative simplicity and non-intervention of the U.S. system has indeed led to far greater economic growth. The advantages of the more socialized system, to the extent it has them, is not in growth, but in stability and universality.

My read on the situation is that our culture is not anywhere close to a point where stability and universality is valued over growth. I'm curious what you think. Would you still want to crack down on underpaid taxes if it means a considerable reduction in economic growth?

[BK]

Re: Why 9-9-9 is dead-dead-dead: - The Tax Gap - the Cash Economy

No Reduction of economic activity is not what we need. But, it seems clear to me that there is a huge amount of off the Books Income occurring in the USA. Someone has to make up for this loss of Tax Revenue. Its very Politically expedient to talk about targeting the Hedge Fund Managers or Investor class. Sure there is a case to be made for Money Managers who get to skirt income taxes because the Tax Code treats their Income as Long term capital gains. But, if we the politicians target this class how long before the Investor class finds a way to get around the new tax code.

Whats one of Greeces - Big problem - people don't pay their taxes. Perhaps the USA is in the early stages of lower and lower payment of taxes.

[dcarrigg]

Re: Why 9-9-9 is dead-dead-dead: - The Tax Gap - the Cash Economy

Perhaps the USA is in the early stages of lower and lower payment of taxes.

http://communities.washingtontimes.c...rs-wall-shame/

[Polish_Silver]

9-9-9 defended by Kotlikoff !

I don't understand the 999 plan, or Kotlikoff's reasoning, but he says it is actually a good idea,
and not a regressive tax, as the opponents claim.

http://www.nytimes.com/roomfordebate...rious-proposal