Monday, December 27, 2010

Thinking Clearly About Taxes

The first thing to get straight is the different types of taxes
income tax
capital gains tax
property tax
Payroll tax
Sales tax
Estate tax
Corporate taxes
State and Federal fees for X,Y, and Z

The next thing to get straight is the different types of income tax systems
Progressive
Flat
(the only alternative to income tax systems is a sales tax system)

The third thing to get straight is tax history.
We used to be taxed at much higher rates at some points.
There were some times with incredible growth under this system.
We used to be taxed at much lower rates at some points.
There were some times with incredible growth under this system.

The fourth thing to get straight is what happens when tax rates are changed.
Republicans believe it will increase economic growth and (perhaps) tax revenues. They believe that the top earners are the investors in new businesses that spur economic growth. Therefore they would (probably) prefer to cut the top rates and leave others unchanged.
Democrats believe that targeted tax cuts are more effective at this than across the board rate drops. Dems believe that taxes are more like dues.
Everyone intelligent accepts that poor and rich people will react to having additional money in different ways. The poor spend it locally. The rich may spend it, save it, or invest it.

The fifth thing to get straight is who you can trust about taxes.
Neither party.
Snopes.com, politifact.com, factcheck.com
The tax policy institute and the Club for Growth are informative but dangerous. They both have an agenda.
The CBO, GAO, and the OMB are more reliable.
Media matters, fair.org - can be trusted to bust republican lies about em
MRO.org, drudge report - can be trusted to bust liberal lies about em

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