Current US Tax System Promotes Waste and Corruption

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slinches
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Current US Tax System Promotes Waste and Corruption

Postby slinches » Thu Jan 15, 2015 10:10 pm UTC

I apologize if this comes off a bit terse, but I'd like to be as concise and direct as I can to get the discussion started. I'll elaborate on any point you'd like in later replies.

Essentially, my argument is that tax money flows the wrong direction in US government. It currently gets collected as income tax from individuals and businesses across the country then put into the general fund which is spent on the wide variety of federal programs. With the system set up this way, it essentially makes our Representatives' and Senators' job to go to Washington and get as much money as possible from that fund back into our state. The easiest way to accomplish this is to add new federal programs that benefit your home state disproportionately (aka "pork barrel" spending). It also facilitates trading/buying of votes and provides no incentive to limit deficit spending.

I think that many of complaints that people have about congress (excessive federal debt, bridges to nowhere, over/under funding of welfare programs, federal overreach, etc.) as well poor funding for local and state programs stem from this fundamental problem.


I posit that this can be fixed by the abolition of the federal income tax, with the states paying for federal funding out of their treasuries directly. Then when considering the value of federal programs, our representatives can weigh the benefits against how that money could be spent within their state. It would also make the purpose of having two houses of congress much more logical (house to propose bills and otherwise represent the populace and the senate to ensure the states aren't overly burdened by federal programs).

I'm posting this here in SB (and the xkcd fora in general) because most of the people I've brought this idea up with have a similar (somewhat libertarian leaning) political philosophy and I'd like to get opinions from intelligent people with different perspectives.

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Re: Current US Tax System Promotes Waste and Corruption

Postby Mokele » Thu Jan 15, 2015 10:25 pm UTC

What about something with benefits that transcend states? Especially if those benefits can't be partitioned.

If states choose how much to fund the military, can the military say "Sorry Maine, you didn't fund us enough to defend against invasion by the Army Of Nova Scotia"? If not, everyone tries to become a free rider. Ditto for less dramatic examples. If Texas decides science is all evolutionist lies and not to fund any of it, do we prevent patients in Texas from accessing new flu shots or antibiotics? Can the FBI say "Sorry, you didn't pay into the Serial Killer Prevention Fund this year, so this guy's your problem, Nevada"?

Plus, wouldn't this make states MORE self-interested? They'd never propose or fund anything that wouldn't directly benefit them, and any program would need to be pointlessly spread across states to secure support (they already do this with expensive military projects, for exactly this reason).

Also, wouldn't this make the federal government dependent upon the state's taxation changes? If some states cut their taxes, suddenly the federal budget goes down without any consent for the rest of the states, creating further problems for nationwide programs.

It just seems a lot like the Articles of Confederation, which gave the states too much power (minting their own currency, taxing each other's imports/exports, etc.) and eventually went up in flames and was replaced by the more centralized federal government of the current US Constitution.
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Re: Current US Tax System Promotes Waste and Corruption

Postby Tyndmyr » Thu Jan 15, 2015 10:53 pm UTC

slinches wrote:I apologize if this comes off a bit terse, but I'd like to be as concise and direct as I can to get the discussion started. I'll elaborate on any point you'd like in later replies.

Essentially, my argument is that tax money flows the wrong direction in US government. It currently gets collected as income tax from individuals and businesses across the country then put into the general fund which is spent on the wide variety of federal programs. With the system set up this way, it essentially makes our Representatives' and Senators' job to go to Washington and get as much money as possible from that fund back into our state. The easiest way to accomplish this is to add new federal programs that benefit your home state disproportionately (aka "pork barrel" spending). It also facilitates trading/buying of votes and provides no incentive to limit deficit spending.


Well, yes. Federal tax money, at least. The same is true on a smaller scale with state taxes, as there is similar politicking regarding different parts of states.

It's simply not likely that everyone will agree on priorities, and most folks will prioritize their own needs above the needs of others(which they may not even really know about).

I posit that this can be fixed by the abolition of the federal income tax, with the states paying for federal funding out of their treasuries directly. Then when considering the value of federal programs, our representatives can weigh the benefits against how that money could be spent within their state. It would also make the purpose of having two houses of congress much more logical (house to propose bills and otherwise represent the populace and the senate to ensure the states aren't overly burdened by federal programs).

I'm posting this here in SB (and the xkcd fora in general) because most of the people I've brought this idea up with have a similar (somewhat libertarian leaning) political philosophy and I'd like to get opinions from intelligent people with different perspectives.


This really just seems like an extra step. You seem to have an implied step here that you're not fully describing as well. You seem to imply that federal tax levels will be then determined by the states, rather than by the fed. This seems unlikely to work out. For a historical example, examine that articles of confederation time period, during which states had extremely strong powers of the purse, and the fed did not. Basically, the states mostly sucked at paying at all.

I'm libertarian, sure, but the fed has legitimate needs that require money(some level of military expenditure is a fairly uncontroversial example), and it would be a bit strange for all states to benefit from this, when any could elect to not pay. We'd quickly get a tragedy of the commons situation.

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Re: Current US Tax System Promotes Waste and Corruption

Postby slinches » Thu Jan 15, 2015 10:55 pm UTC

Mokele wrote:If states choose how much to fund the military, can the military say "Sorry Maine, you didn't fund us enough to defend against invasion by the Army Of Nova Scotia"? If not, everyone tries to become a free rider. Ditto for less dramatic examples. If Texas decides science is all evolutionist lies and not to fund any of it, do we prevent patients in Texas from accessing new flu shots or antibiotics? Can the FBI say "Sorry, you didn't pay into the Serial Killer Prevention Fund this year, so this guy's your problem, Nevada"?

Mokele wrote:Also, wouldn't this make the federal government dependent upon the state's taxation changes? If some states cut their taxes, suddenly the federal budget goes down without any consent for the rest of the states, creating further problems for nationwide programs.

I was envisioning that the individual states could not legally withhold funding for specific programs, rather they would collectively pass a budget in congress which stipulates how much each state is to pay into the federal treasury. A system for penalizing underpayment would need to be set up to cover this eventuality.

Mokele wrote:Plus, wouldn't this make states MORE self-interested? They'd never propose or fund anything that wouldn't directly benefit them, and any program would need to be pointlessly spread across states to secure support (they already do this with expensive military projects, for exactly this reason).

Well, the intent is to limit nation wide federal programs to only those that can't be better accomplished more effectively within a state (as defined by the people in that state). There may be some selfish behavior involved, but I don't see any reason for it to be worse than it is now. At least the discussion will be around whether it's a net benefit to each state rather than just grabbing as much funding as possible.

Mokele wrote:It just seems a lot like the Articles of Confederation, which gave the states too much power (minting their own currency, taxing each other's imports/exports, etc.) and eventually went up in flames and was replaced by the more centralized federal government of the current US Constitution.

Actually, I was targeting something between the two. The Articles of Confederation were too weak to be sustainable, but the Constitution has proven to be ineffective against the concentration of power at the federal level.

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Re: Current US Tax System Promotes Waste and Corruption

Postby maydayp » Thu Jan 15, 2015 10:57 pm UTC

I would like to see a more bottom to top approach on taxes (And this doesn't just effect the US, but most countries). But I have a hard time seeing this *not* being abused by over spending and corruption. Like, I would love for the municipalities to get the first bite. Then the next level, and so one. But I can see each step not controlling their spending, and then poof, when you get to the top, there wouldn't be enough to fund the important country wide issues. The one way I could see it, is through the budgeting, and only requiring each area to send the difference between what they send and what they receive. For example, say both the country and state/province are responsible for road conditions. rather then the gov. getting 200mil from the state, and sending 90mil back the state should only be required to send the difference on (110mil). Then the places that need more money would get it. And the difference would be spent where needed. (the math. Say the tax is set at 10%, and promises the equivalent of 50% back to each state/province, there would still be 50% to funneled back to the states as needed.) It might work this way already. But I don't think it does (at least not in canada)

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Re: Current US Tax System Promotes Waste and Corruption

Postby Tyndmyr » Thu Jan 15, 2015 11:27 pm UTC

maydayp wrote:Then the places that need more money would get it. And the difference would be spent where needed.


Everyone would say they need more money.

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Re: Current US Tax System Promotes Waste and Corruption

Postby slinches » Thu Jan 15, 2015 11:43 pm UTC

Tyndmyr wrote:This really just seems like an extra step. You seem to have an implied step here that you're not fully describing as well. You seem to imply that federal tax levels will be then determined by the states, rather than by the fed. This seems unlikely to work out. For a historical example, examine that articles of confederation time period, during which states had extremely strong powers of the purse, and the fed did not. Basically, the states mostly sucked at paying at all.

Yeah, I didn't fully describe the system and I didn't mean to imply that the states would separately be able to determine how much they contribute to the federal budget. They would do so collectively through the federal legislature and fortunately congress is already set up to handle that, with one house representing the people and the other representing the states. The only change I really intended is that the states would be able to keep any tax revenue that isn't allotted in the federal budget. That way the senate has to answer the question of if the bill in front of them is something that is best done at the federal level or could better achieved by spending that money within the state. And things like the military shouldn't be adversely affected since most people would agree that pooling our resources for the common defense is justified.

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Re: Current US Tax System Promotes Waste and Corruption

Postby BattleMoose » Fri Jan 16, 2015 12:32 am UTC

They would do so collectively through the federal legislature and fortunately congress is already set up to handle that, with one house representing the people and the other representing the states.


How is this different from the current situation? (Not an American)

The only change I really intended is that the states would be able to keep any tax revenue that isn't allotted in the federal budget.


Where does this tax revenue come from?
State tax goes to the State, surely?
And we don't have a federal income tax anymore.

Not much of this makes sense to me, might be because I don't live in the USA.

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Re: Current US Tax System Promotes Waste and Corruption

Postby maydayp » Fri Jan 16, 2015 12:35 am UTC

Tyndmyr wrote:
maydayp wrote:Then the places that need more money would get it. And the difference would be spent where needed.


Everyone would say they need more money.

The places that need more money means: states who's taxes were less then the amount they would have been given. (for example the tax earned 20 mil but they were promised 90 mil, they'd get 70 mill). The rest would be up for debate yes. But there are times/issues that make things clearer. Like natural disasters. Obviously most organizations usually *do* need more money for roads and other things. There is *never* enough money floating around. (and I do mean that seriously, I'm not being sarcastic). I'm just not going to split hairs and say who needs more money, who doesn't etc. Especially since that's a very subjective matter.

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Re: Current US Tax System Promotes Waste and Corruption

Postby slinches » Fri Jan 16, 2015 1:49 am UTC

BattleMoose wrote:
They would do so collectively through the federal legislature and fortunately congress is already set up to handle that, with one house representing the people and the other representing the states.


How is this different from the current situation? (Not an American)

That part is essentially the same. Although, originally US Senators were appointed by the state legislatures instead of by popular vote. Changing back to that may be better if the federal government couldn't levy income taxes.

Where does this tax revenue come from?
State tax goes to the State, surely?
And we don't have a federal income tax anymore.

State taxes are paid to the State by its citizens. Then the State must pay federal taxes from that tax revenue.

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Re: Current US Tax System Promotes Waste and Corruption

Postby BattleMoose » Fri Jan 16, 2015 2:16 am UTC

slinches wrote:Then the State must pay federal taxes from that tax revenue.


Okay.

If you want to posit a change to things that's fine. But you actually have to explain what that change will be. What are the details of this "federal tax" that you just referenced and that you want the change to be?

What is the rate? On what is it based? Who decides? et cetera. The discussion cannot really start until we (or I) actually understand what it is you are actually proposing.

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Re: Current US Tax System Promotes Waste and Corruption

Postby mcd001 » Fri Jan 16, 2015 3:05 am UTC

How about this:

No federal tax on individuals. instead, each State pays a portion of the annual federal budget that's proportional to their population. So the States collect taxes from their citizens and some of that revenue goes to the federal government. The rest stays in the States.

I see numerous advantages to this method. No need to monitor millions of individuals for compliance (taxes are paid by just 50 entities), so the IRS goes away. And (as slinches pointed out) the inefficient practice of money going from citizens to feds then back to States (with all sorts of strings attached) would come to a screeching halt. And all the millions of hours of time and effort, and all the money and resources spent by citizens trying to understand and comply with the thousands of pages in the tax code could be put to better use.
It makes a lot of sense to me.

Which is why it will never happen.

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Re: Current US Tax System Promotes Waste and Corruption

Postby slinches » Fri Jan 16, 2015 5:16 am UTC

I don't have any delusions that there's a chance to change from the status quo any time soon, but if anything is to ever change we have to at least recognize the root of the problem. And once we do that we can start to speculate on corrective actions.

On that note, I didn't see much disagreement with the basic premise that the current direct federal income taxation system creates incentives for wasteful spending and a poor balance between state and federal interests. If anyone sees a flaw in that, please point it out. I want to make sure we really are addressing a fundamental issue and not just arguing hypotheticals with no basis in reality.


@BattleMoose, the precise form of the change I'm proposing would likely have to be in the form of a constitutional amendment. It would repeal the 16th and in its place add the ability for the federal government to levy taxes on the states. What those taxes would look like would need to be decided upon and written into law by congress itself. Though I can make a few suggestions. Welfare type programs could be paid proportional to population while something like border control might be split evenly among the states. Others could be relative to each state's GDP or based on the amount of federal land falls within their borders. Actually, the way I envision it, that would be one of the primary points of debate in the legislature. Since there are only 50 entities to draw tax revenue from, there's much more room for creative solutions to funding.

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Re: Current US Tax System Promotes Waste and Corruption

Postby Zamfir » Fri Jan 16, 2015 10:12 am UTC

Mcd001, why would there be less monitoring and compliance issues if states levy a tax, than if the federal government levies a tax?

If anything, you increase the potential for complications, since people then have to study the details of various states to figure out if they can benefit from paying taxes in another state.

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Re: Current US Tax System Promotes Waste and Corruption

Postby HungryHobo » Fri Jan 16, 2015 10:30 am UTC

slinches wrote:On that note, I didn't see much disagreement with the basic premise that the current direct federal income taxation system creates incentives for wasteful spending and a poor balance between state and federal interests. If anyone sees a flaw in that, please point it out. I want to make sure we really are addressing a fundamental issue and not just arguing hypotheticals with no basis in reality.



That's a pretty easy position to support, the problem is that some problems are emergent, it's easy to show your new system doesn't have some of the existing problem, it's really hard to prove that your new system doesn't have even worse problems with incentives.

To me though the system you describe sounds a little like how the EU is organised and it has it's own problems.
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Re: Current US Tax System Promotes Waste and Corruption

Postby Zamfir » Fri Jan 16, 2015 11:55 am UTC

It's how the EU's budget is arranged, indeed. For that comparison, it's important to realise that the EU does not in fact have that much budget, compared to a serious government layer. About a hundred billion euros, compared to several thousand billion for the US federal government, and even more than that for the cumulative national governments of the EU itself.

Most of the EU's influence does not work through budget policy. Which means that the details and mechanisms of its budget are of minor importance compared to other debates. That makes it easier to agree on a budget policy: if someone has strong objections, they can be compensated in one of the other policy arenas. Perhaps country X feels they are overpaying to the budget, but they got a deal on the oversight regime for cross border insurance policies, so it works out OK for them.

That's obviously not the case for the US federal government. A much larger share of its policies have a strong budgetary component, so states will be less likely to compromise on the budget details. There are not enough alternative pathways to create compromise. An EU style budget at that relative importance would be a recipe for eternal budget gridlock, or for deep grievances in states that feel shortchanged.

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Re: Current US Tax System Promotes Waste and Corruption

Postby HungryHobo » Fri Jan 16, 2015 12:16 pm UTC

And the EU does have it's own problems and has no army of it's own and has a weird obsession with farmers due to it growing out of a load of trade agreements rather than a military alliance.

In terms of budget it's smaller than greece.
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Re: Current US Tax System Promotes Waste and Corruption

Postby Zamfir » Fri Jan 16, 2015 1:46 pm UTC

There is a good reason that the CAP is such a large part of the EU budget: it took so much protracted negotiation, that later policies were designed to work without a serious common budgetary component.

The Regional Development Fund is the main exception, and that one works because people accept that it is a transfer fund. The RDF explicitly contains the inter-country transfers that people are willing to put up with. They don't want implicit transfers as a side effect of other programs, and the CAP only survives on a grandfathered status.

All in all, it's not a promising example for the OP. Theoretically, states could negotiate their contributions to every federal policy. In practice, such negotiations are incredibly hard. Everyone plays hardball, because the opposition has such clear numerical values to rally against. And every year they want to renegotiate. Think Thatcher and her rebate, but then about more than symbolic amounts of money.

If you want common policies on a federal level with significant budgets, then you need an income stream on the federal level.

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Re: Current US Tax System Promotes Waste and Corruption

Postby leady » Fri Jan 16, 2015 2:56 pm UTC

Strangely as much as is wrong with the EU budget (the endemic fraud...), the general principle of agreed negotiation and transfer payments isn't that bad at constraining the overall budget without being paralysing. Also I don't think there are any major budget fluctuations either (in fact they are much lower than national government income which borrow to smooth).

In fact if we could kill off the German to French "bribes" otherwise known as the CAP - then a lot of my annoyances with the EU go away (so long as it takes a decade or two and stabilse its size).

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Re: Current US Tax System Promotes Waste and Corruption

Postby Adam H » Fri Jan 16, 2015 3:10 pm UTC

slinches wrote:Essentially, my argument is that tax money flows the wrong direction in US government. It currently gets collected as income tax from individuals and businesses across the country then put into the general fund which is spent on the wide variety of federal programs.
I don't think the problem is that the money moves the wrong way (from fed to state), but that it moves at all. Just have federal taxes pay for things the feds should pay for, and have the state taxes pay for things the state should pay for, with as little overlap as possible. The easy way to differentiate between the two is this: would any state be willing to fund the thing all by themselves? If not, then the feds should fund it, assuming it's necessary.

Having the states pay a portion of their state taxes to the federal government proportional to their population is very biased against states with more poor people (or states where the cost of living is low). To do it fairly would mean creating a system as convoluted as the IRS, more or less.
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Re: Current US Tax System Promotes Waste and Corruption

Postby Tyndmyr » Fri Jan 16, 2015 3:12 pm UTC

BattleMoose wrote:
slinches wrote:Then the State must pay federal taxes from that tax revenue.


Okay.

If you want to posit a change to things that's fine. But you actually have to explain what that change will be. What are the details of this "federal tax" that you just referenced and that you want the change to be?

What is the rate? On what is it based? Who decides? et cetera. The discussion cannot really start until we (or I) actually understand what it is you are actually proposing.


This. It is easy to find flaws in the existing system. It is flawed, and always has been to at least some degree. But finding the flaws is not the end of the search for improvement, it's merely the beginning. The vast majority of the work still lies after that point.

You've got to produce an alternative system that provides a net increase, and provide a reasonable argument/evidence for why this should be expected to be the case. When you have a system as complex as our tax system, accurately determining net benefit is often challenging and complex. This is why most tax reformation systems fall into one of two categories:

A. a relatively limited, focused change. Allows for simple A/B examples.
B. A massive overhall with simplicity heavily prioritized, such as flat tax examples. These are significantly easier to describe and predict than systems as complex as our current one.

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Re: Current US Tax System Promotes Waste and Corruption

Postby mcd001 » Fri Jan 16, 2015 4:21 pm UTC

Zamfir wrote:Mcd001, why would there be less monitoring and compliance issues if states levy a tax, than if the federal government levies a tax?

The various States are already monitoring compliance of their revenue collection systems (State tax, sales tax, property tax, etc...). Those mechanisms would still exist, but we would eliminate one (the biggest, most cumbersome one) in the IRS. Hence less monitoring and compliance issues.

Zamfir wrote:If anything, you increase the potential for complications, since people then have to study the details of various states to figure out if they can benefit from paying taxes in another state.

Not so. As a resident of Texas, I don't have to know or care about New York's tax system, or any other State's. I only need to delve into those complications if I *want* to. And if I did, I can go online and get the benefit of other people's research. There are already people making decisions on where to move, work and live based on the relative tax and regulatory climate in the various States. This would not change that.

Adam H wrote:Having the states pay a portion of their state taxes to the federal government proportional to their population is very biased against states with more poor people (or states where the cost of living is low). To do it fairly would mean creating a system as convoluted as the IRS, more or less.

If you think States paying a proportion of federal revenue based on population is unfair, then I would be okay with making a State's contribution proportional to it's annual revenue. Not convoluted at all. A different metric, but just as simple to implement.

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Re: Current US Tax System Promotes Waste and Corruption

Postby HungryHobo » Fri Jan 16, 2015 4:44 pm UTC

mcd001 wrote:If you think States paying a proportion of federal revenue based on population is unfair, then I would be okay with making a State's contribution proportional to it's annual revenue. Not convoluted at all. A different metric, but just as simple to implement.


So if there are 2 states with similar profiles and similar amounts of wealth in the populations of the states and one drops taxes while the other doesn't then the firsts bill from the fed is cut and their neighbour ends up subsidizing them?

That just sounds like a way to abuse higher-tax states.
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Re: Current US Tax System Promotes Waste and Corruption

Postby mcd001 » Fri Jan 16, 2015 4:59 pm UTC

HungryHobo wrote:So if there are 2 states with similar profiles and similar amounts of wealth in the populations of the states and one drops taxes while the other doesn't then the firsts bill from the fed is cut and their neighbour ends up subsidizing them?

That just sounds like a way to abuse higher-tax states.

That's why I think population is the best metric. (It's also the metric used to determine how many Representatives a State has in Congress, so there's some precedent there)

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Re: Current US Tax System Promotes Waste and Corruption

Postby HungryHobo » Fri Jan 16, 2015 5:13 pm UTC

I believe in the EU it's partly based on GDP.
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Re: Current US Tax System Promotes Waste and Corruption

Postby morriswalters » Fri Jan 16, 2015 10:25 pm UTC

slinches wrote:A system for penalizing underpayment would need to be set up to cover this eventuality.
It's one thing to go after 1 person who chooses not to pay, how do you penalize the behavior of a state? We have a pretty major example of how it was done in the past.

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Re: Current US Tax System Promotes Waste and Corruption

Postby Adam H » Fri Jan 16, 2015 10:48 pm UTC

HungryHobo wrote:
mcd001 wrote:
Adam H wrote:Having the states pay a portion of their state taxes to the federal government proportional to their population is very biased against states with more poor people (or states where the cost of living is low). To do it fairly would mean creating a system as convoluted as the IRS, more or less.

If you think States paying a proportion of federal revenue based on population is unfair, then I would be okay with making a State's contribution proportional to it's annual revenue. Not convoluted at all. A different metric, but just as simple to implement.


So if there are 2 states with similar profiles and similar amounts of wealth in the populations of the states and one drops taxes while the other doesn't then the firsts bill from the fed is cut and their neighbour ends up subsidizing them?

That just sounds like a way to abuse higher-tax states.
Actually, I love that it punishes higher-tax states. I would support this! :)

Seriously, I think doing it by population is a much worse idea. Mississippians would pay twice as much as New Yorkers relative to salary. It's basically a regressive tax system.
-Adam

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Re: Current US Tax System Promotes Waste and Corruption

Postby duckshirt » Sat Jan 17, 2015 3:42 am UTC

Congressmen have the incentive to help their state, but they also need to cooperate to get bills passed. If a bill is needlessly unfair to my state, it gets shot down. The reason "pork" spending passes is because it gets attached to bills that are passing anyways, and there's an understanding that everyone will get a fair piece of the corruption.

Everyone pays their agreed upon share of taxes, regardless of who gets the benefit. If a bill favors senior citizens (ergo favors Florida), you don't raise taxes on old people, and contrary to your suggestion, you don't raise Florida's tax burden either. Also as mentioned, a welfare bill would favor Mississippi, but it would defeat the purpose of a welfare bill if you raised their taxes because of it.
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Re: Current US Tax System Promotes Waste and Corruption

Postby Tyndmyr » Tue Jan 20, 2015 6:21 pm UTC

mcd001 wrote:
HungryHobo wrote:So if there are 2 states with similar profiles and similar amounts of wealth in the populations of the states and one drops taxes while the other doesn't then the firsts bill from the fed is cut and their neighbour ends up subsidizing them?

That just sounds like a way to abuse higher-tax states.

That's why I think population is the best metric. (It's also the metric used to determine how many Representatives a State has in Congress, so there's some precedent there)


That'd end up being painfully regressive. I'd suggest some sort of flat tax system before jumping all the way from a progressive system to a regressive one. That just seems unduly risky.

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Re: Current US Tax System Promotes Waste and Corruption

Postby mcd001 » Thu Jan 22, 2015 6:05 pm UTC

Tyndmyr wrote:That'd end up being painfully regressive. I'd suggest some sort of flat tax system before jumping all the way from a progressive system to a regressive one. That just seems unduly risky

I'd be perfectly happy with a flat tax. Or a fair tax. Almost ANYTHING would be an improvement over the current system. In the case of this proposal, I don't see how it would necessarily be regressive. For example, New York's portion of the federal budget could come from revenue collected by their state income tax, which is highly progressive. Other States could use other means, which might be more or less regressive. It would be up to the individual States and what made sense there, or was politically and economically feasible.

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Re: Current US Tax System Promotes Waste and Corruption

Postby BattleMoose » Thu Jan 22, 2015 11:44 pm UTC

Almost ANYTHING would be an improvement over the current system.


The "current system" funds the largest armed forces that exist today, and the USA armed forces budget is greater than the next 10 countries combined. Supports 1.4M active personnel, boasts the most modern equipment available and has by far the worlds largest Navy and air force. As well as running all other federal programmes.

Of course there are inefficiencies. Every system has inefficiencies. But it works, and there are almost an infinite number of variations of systems that won't work.

Suggesting that the current system is near one of the "worst possible" options is just, nonsense.

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Re: Current US Tax System Promotes Waste and Corruption

Postby Tyndmyr » Fri Jan 23, 2015 5:22 pm UTC

mcd001 wrote:
Tyndmyr wrote:That'd end up being painfully regressive. I'd suggest some sort of flat tax system before jumping all the way from a progressive system to a regressive one. That just seems unduly risky

I'd be perfectly happy with a flat tax. Or a fair tax. Almost ANYTHING would be an improvement over the current system. In the case of this proposal, I don't see how it would necessarily be regressive. For example, New York's portion of the federal budget could come from revenue collected by their state income tax, which is highly progressive. Other States could use other means, which might be more or less regressive. It would be up to the individual States and what made sense there, or was politically and economically feasible.


Could is not would. By taxing each state on a per capita basis, you are guaranteeing that in proportion to income, those who live in lower income states are taxed heavier. This, by definition, is regressive.

Yes, other portions of tax law are/could be progressive. That does not change what your proposal is.

In addition, you should be making the case that your way provides an improvement, not relying on the existing system fixing problems your system introduces. The latter is a VERY unconvincing reason to adopt something.

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Re: Current US Tax System Promotes Waste and Corruption

Postby EMTP » Thu Jan 29, 2015 1:34 am UTC

On that note, I didn't see much disagreement with the basic premise that the current direct federal income taxation system creates incentives for wasteful spending and a poor balance between state and federal interests. If anyone sees a flaw in that, please point it out.


I don't think we're at the stage where flaws need to be found in your hypothesis; that stage comes after you've made a convincing argument for the proposition, and I don't think you've done that.

Since federal revenues are far too low, relative to other developed democracies, it seems that we do not have enough spending, let alone too much "wasteful" spending.

You have not defined the optimal balance between state and federal "interests" (which, since only people have interests, I take you to mean the balance of power.) Since the primary concrete objective of "states rights" advocates has been to keep fellow human beings in slavery, and more recently to deny citizens their rights to vote and to equal protection under the law, and more recently have busied themselves obstructing women's constitutional right to control their own bodies, I am very comfortable with the fact that state governments have limited authority vis-a-vis the federal government.

I think you should articulate your argument on these points more thoroughly, being in mind that for non-libertarians, a crippled and ineffectual government you can "drown in a bathtub" is not a self-evidently desirable thing.
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Re: Current US Tax System Promotes Waste and Corruption

Postby duckshirt » Thu Jan 29, 2015 3:17 am UTC

EMTP wrote:
On that note, I didn't see much disagreement with the basic premise that the current direct federal income taxation system creates incentives for wasteful spending and a poor balance between state and federal interests. If anyone sees a flaw in that, please point it out.


I don't think we're at the stage where flaws need to be found in your hypothesis; that stage comes after you've made a convincing argument for the proposition, and I don't think you've done that.

Since federal revenues are far too low, relative to other developed democracies, it seems that we do not have enough spending, let alone too much "wasteful" spending.

I think you should articulate your argument on these points more thoroughly, being in mind that for non-libertarians, a crippled and ineffectual government you can "drown in a bathtub" is not a self-evidently desirable thing.

I think it's fair to say eliminating wasteful spending is good regardless of other democracies' revenues

EMTP wrote:You have not defined the optimal balance between state and federal "interests" (which, since only people have interests, I take you to mean the balance of power.) Since the primary concrete objective of "states rights" advocates has been to keep fellow human beings in slavery, and more recently to deny citizens their rights to vote and to equal protection under the law, and more recently have busied themselves obstructing women's constitutional right to control their own bodies, I am very comfortable with the fact that state governments have limited authority vis-a-vis the federal government.

Classic guilt by association fallacy... I'm sure the federal government has abused its power over states at times too? I don't even agree with him, but I know slavery has nothing to do with it.
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Re: Current US Tax System Promotes Waste and Corruption

Postby Zamfir » Thu Jan 29, 2015 11:46 am UTC

I think it's fair to say eliminating wasteful spending is good regardless of other democracies' revenues

Eliminating wasteful spending is like making everyone richer. It's a goal, not a policy.

States have every potential to waste spending. just as much as the federal government. The OP claims that states will have less wasteful spending if they get more budget from their own taxation.

That's far from obvious, to put it mildly. Political pressures at the federal level are replicated at lower levels. The people who push for project X at the federal level will also push for it at the state level. The countervailing pressures to limit budgets and taxes are not stronger on a lower level either. Politicians are not clearly more capable or less corrupt at lower levels. In individual cases they are better, in other cases they are worse.

The OP says, if we move taxation to the states AND magically fix many issues of government, then government will have less issues. Therefore, let's move taxation to the states.

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Re: Current US Tax System Promotes Waste and Corruption

Postby CorruptUser » Thu Jan 29, 2015 3:04 pm UTC

Let's say for example Pooraid is financed 50% federally, 25% state, 25% county. Alice is defrauding Pooraid. For every dollar she steals, her neighbors pay an extra 25 cents, the rest of the state pays 25 cents, and the rest if the country pays 50 cents. But Alice uses those stolen dollars to buy stuff from her neighbors. So for every 25 cents that Alice steals from her neighbors, her neighbors get $1 in revenue. For every 25 cents the state pays 50 cents flows into the state. Why would her neighbors want to stop this?

In simple terms, Pooraid fraud is a net benefit for the local economy, but a drain on the country as a whole.

Forcing Pooraid to be state financed, it'd be 50% state and 50% local. Suddenly it's not such a great deal for the neighbors or the state. Forcing it only on the county would see every neighbor up in arms whenever someone is abusing the system.

Of course, we don't finance these systems locally because then only people in rich communities would have welfare, and there'd be a HUUGE incentive for communities to make poor people disappear. Which they already do with the homeless. Where did the Bowery Bums go?

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Re: Current US Tax System Promotes Waste and Corruption

Postby Zamfir » Thu Jan 29, 2015 3:31 pm UTC

That example would work, if pooraid fraud only happened in 1 county in 1 state, and all the other counties were fraud-free.

But there is fraud in every state and every county, so people have every reason to support nation-wide measures to reduce fraud. Exactly as they would support state-wide measures if it was funded on a state basis, and county-wide measures if it was funded per county.

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Re: Current US Tax System Promotes Waste and Corruption

Postby CorruptUser » Thu Jan 29, 2015 3:58 pm UTC

And there are pork barrel projects in every state. Everyone hates pork except when it's for them. The issue is that while the locals would like to eliminate fraud in other locations, they want to preserve the fraud in their own. And they have little power to get rid of fraud in locations other than their own. So, prisoners dilemma with thousands of prisoners...

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Re: Current US Tax System Promotes Waste and Corruption

Postby EMTP » Thu Jan 29, 2015 4:50 pm UTC

duckshirt wrote:I think it's fair to say eliminating wasteful spending is good regardless of other democracies' revenues


Nope, you still need to demonstrate that. I can eliminate wasteful leg fat by amputating your leg, but despite the elimination of waste, that is still a bad deal.

Now, if you can eliminate waste whilst growing federal spending and expanding and strengthening the social safety net, we might have something to talk about.

Classic guilt by association fallacy...


Nope, that's also incorrect. As is sadly often the case when someone claims a "classic fallacy" you're not using the term correctly. It is not a fallacy to attend to the past behavior of a pressure group when they are asking for support for their current aims. The "states rights" movement has been at the forefront of the battles to preserve and extend the most evil abuses of humanity and liberty of which our nation has been guilty. That is a good reason to mistrust their proposals to hobble the federal government and move more power back to the states.
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Re: Current US Tax System Promotes Waste and Corruption

Postby Zamfir » Thu Jan 29, 2015 5:37 pm UTC

CorruptUser wrote:And there are pork barrel projects in every state. Everyone hates pork except when it's for them. The issue is that while the locals would like to eliminate fraud in other locations, they want to preserve the fraud in their own. And they have little power to get rid of fraud in locations other than their own. So, prisoners dilemma with thousands of prisoners...

To the contrary, it's as easy as it gets to stop pork barrel projects in other states. They are, by definition, projects that have to be approved by a congress of full of representatives that do not benefit from them. If people wanted to stop them, they would stop tomorrow.

People still approve them. As part of the deal-making of politics. They get something in return, that they consider worth more than the price. Win-win, you know. You think there's no deal making on the state level?


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