Why the Federal Budget can NEVER BE BALANCED

[Texas Contrarian]

Originally Posted by Dawgs

The Fair Tax yes--Hell no to a VAT

I agree with the "hell no to the VAT" statement, but I'm afraid that's where we'll eventually be headed. And in additon to, not instead of, the income tax, unlike the FairTax was intended to be (as originally described by its early supporters back in the 1990s).

Originally Posted by joe bloe

Haven't they had the VAT in Europe for years? It doesn't seem to be working too well.

If you'll read my post, you will see that I didn't say it would "work very well." (At least with regards to its effect on the economy.) I merely said that it would get us closer to balancing the budget, if you don't mind setting the rate at a high enough level, and if you don't mind slowing the economy to very low rates of growth for many years. Those are two very different things.

[dilbert firestorm]

Originally Posted by Dawgs

The Fair Tax yes--Hell no to a VAT

bleah meahuh

fair tax -- no
VAT -- NO!!!
National Sales Tax -- Yes!!!

[waverunner234]

Almost lunch time in London

[waverunner234]

Originally Posted by waverunner234

Almost lunch time in London

Oh sorry, that was meant for another forum

[pyramider]

All a VAT or National Sales Tax would supply would be more revenue for the government to squander and would not get us any closer to a balanced budget.

[Dawgs]

Originally Posted by dilbert firestorm

bleah meahuh

fair tax -- no
VAT -- NO!!!
National Sales Tax -- Yes!!!

Fair tax would eliminate the income tax and April 15th would just be another day on the calendar and bassically is just like a National sales tax.

VAT ads tax every time value is added and just keeps growing.

National Sales Tax, bad idea as we would still have the income tax.

[dilbert firestorm]

Originally Posted by Dawgs

Fair tax would eliminate the income tax and April 15th would just be another day on the calendar and bassically is just like a National sales tax.

VAT ads tax every time value is added and just keeps growing.

National Sales Tax, bad idea as we would still have the income tax.

I don't like parts of the Fair Tax, its the pre-bate refunds I have issues with.

its basically an income tax in reverse. Politicians can play games with the prebates to buy votes and favors. and there's the bureaucratic overhead involved in administering refunds.

the National Sales Tax is the only fair method as everyone pays regardless of income. a max cap can be put on it prevent abuse.

you are right about that as long as the current income tax system is in place, NST is not a good idea at this time.

[Dawgs]

Any tax is going to be fodder for the politicians to play with. They can set it up so it has a cap and a new legislation come in and remove the cap or add in special taxes.

[CuteOldGuy]

Dilbert, please read up on the FairTax. How could politicians ever play with the prebate the way they play with the income tax? It's not possible.

[joe bloe]

Originally Posted by waverunner234

Oh sorry, that was meant for another forum

Don't apologize. It makes about as much sense as the rest of your posts. Actually, it was one of your better ones.

[Texas Contrarian]

I mentioned the VAT only because adding it to the current income tax structure could bring the budget into balance or near-balance if politicians also restrain the growth of spending. But that's a mighty big "if", and it seems to never work out that way in the real world. Just look at Europe. When politicians find that they can raise a lot of money by adding new taxes, their appetites for even more vote-buying schemes are whetted. Tax increases chase ever-higher levels of spending. In France, for instance, the state now spends about 56% of GDP. The new Holland government decided to respond by pushing the top-bracket rate on high incomes to 75% (Like that's really going to go very far toward solving the problem.)

It's fun to muse about what a pleasant world we'd have if, for instance, we could repaeal the Sixteenth Amendment, get rid of the income tax once and for all, and implement something like the FairTax. But that's a fantasy world. The probability that it will happen is zero. In order not to continue to run crushing budget deficits, we'd have to radically slash Medicare and the defense budget, just for starters.

The very rapid increases in government spending over the last ten years virtually guarantee years of slow growth, unless some series of miraculous technological innovations makes a sudden appearance. (Technological innovation is the only real driver of economic growth over time.)

We spent years gorging on a huge meal that has to be digested and then paid for, in one way or another. That's why I've suggested that investors had better be positioned for a long period during which we will have average year-over-year growth rates not even remotely close to those we bacame accustomed to during the 1983-2000 period.

[SEE3772]

A Tobin Tax on trading derivatives contracts would balance the budget.
Then ban Credit Default Swaps and Synthetic Collateralized debt obligations.

[Texas Contrarian]

Originally Posted by SEE3772

A Tobin Tax on trading derivatives contracts would balance the budget.

That idea has been tossed around for some time, but it's going nowhere, either here or in Europe.

One key problem is that it would simply drive trading from New York and London to Asia and other places. The big finance guys know how and where the pennies add up.

And in the form envisioned by its supporters, it wouldn't raise more than a fraction of one percent of GDP -- even assuming no distortions or market migrations.

[waverunner234]

Originally Posted by joe bloe

Don't apologize. It makes about as much sense as the rest of your posts. Actually, it was one of your better ones.

Glad you liked it

[SEE3772]

Originally Posted by CaptainMidnight

That idea has been tossed around for some time, but it's going nowhere, either here or in Europe.

One key problem is that it would simply drive trading from New York and London to Asia and other places. The big finance guys know how and where the pennies add up.

And in the form envisioned by its supporters, it wouldn't raise more than a fraction of one percent of GDP -- even assuming no distortions or market migrations.

I'm not talking about Options and Futures derivative transactions. I'm talking about non reportable Over The Counter derivative contracts that were illegal from 1936 - 1982. Credit Default Swaps, Structured Investment Vehicles and Synthetic Collateralized Debt Obligations. These private contracts are not taxed and the banks are not required to report them on their balance sheets. 1.5 quadrillion worth of derivatives. A 1% Tobin Tax. Also illegal Wash Trades. Where through High Frequency Trading contracts are bought and sold simultaneously. If the Credit Default Swaps are not banned in the future they will destroy the US T Bonds.