You could also kill the cap on income tax...or at least raise it substantially. That would only raise taxes for people making more than somewhere around $250K...
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You could also kill the cap on income tax...or at least raise it substantially. That would only raise taxes for people making more than somewhere around $250K...
Patrice, these are all valid points you bring up. Thank you for expounding on the topic. One thing I would like to point out though, as it relates to the income tax cap, is that the super wealthy in the US, pay a lot less in taxes than their counterparts in Europe, for example. In addition, there is a cognitive cost associated with moving one's family to a completely different language, culture, geography, etc. Therefore, there is an amount that the cap on the income tax could be raised, without losing so much of the base that it becomes a deleterious action. Sort of like the elasticity of taxation, I suppose...lulz
You're welcome. I enjoy a good debate/conversation. I would be interested to see if a VAT tax would be feasible (if modeled after europe and in conjunction with lower corporate taxes along with basic needs exemptions). I also think that it could solve a number of environmental concerns connected to consumption and waste.
One of the things to note about taxes in most European countries is that while they have higher individual income tax rates they have a territorial taxation system and a lower corporate tax rate. How much lower depends on whether you are comparing multinationals or domestic companies in the US. They also have a rather high VAT tax compared to the US sales tax and higher capital gains tax.
In 2010 the UK was facing a high number of corporate inversions and companies leaving the UK. Since the UK changed to a territorial rate and started lowering corporate taxes the unemployment rate declined while the participation rate increased. Both of those things are important to note since the US has seen a decline in unemployment but we have not seen a significant increase in participation.
In 2014 someone in the top 1% in the UK took home 57.28% of their pay compared to someone in New York that took home 60.45%. On an average salary someone in the UK paid a tax rate of 24.9% compared to the US's 10.4%. So their tax rates are higher across the board and of course there are other apple to orange factors such as healthcare.
So while I wouldn't say all top earners in EU countries pay significantly more, I believe that the majority do. And more are likely to in the form of "voluntary" taxes such as the VAT.
How about tariffs on imports? Nothing as drastic as some idiots are calling for, but just enough to help level the playing field in some sectors the US can excel at and compete with when it comes to countries like China? While it might be a declining tax base in some instances as the US produces more goods, there will always be areas we do not excel at. Half a percent, one percent, would that generate tax revenue for a basic income along with some type of VAT? Maybe.
To put the problem in simpler terms, the people and companies with wealth have the means to leave the country when the cost of staying becomes more expensive than paying the "exit tax" and moving to another country reducing the our tax base.
The challenge to providing a "basic income" is doing it with a minimal amount of wealth redistribution as a percentage per person "tax" and increasing the tax base. For any continuing long term program backed by tax dollars to work you need several things, primarily a growing tax base willing to pay those taxes and an economy that grows steadily with the population rate to keep paying those taxes.
Especially when you live in a country like the that has spent years making it more profitable to not do business in.
Taxes on tobacco products are a prime example. It's a declining revenue base. Every year fewer people use tobacco products and every increase of taxes on tobacco products dives the use down even more. While this isn't a bad thing in terms of public health, it is a problem when these tax dollars are used to fund programs like children's health insurance. At some point these programs will need to find a new revenue source. It also impacts the labor force. As sales decline, so do jobs, and tax revenue from both the companies and the individuals.
If people really want a basic income in the US, for it succeed there would have to be major change if it were to succeed and not cause an economic disaster. As kooshikoo below pointed out, I think it actually could cause an increase in "startups". Just not when the red tape, permitting processes, taxes, and regulation make it too difficult and to costly.
Ideally I think a country that is rich in natural resources could make it work if the resources were nationalized. Provided the government wasn't greedy and invested the money from those resources wisely. Unfortunately most countries that have nationalized resources are poor. Mostly due to greed, corruption, and mismanagement.
Venezuela is an example. What could have been a boon for its citizens in the form of one or two well run nationalized businesses based on natural resources instead has brought the country close to economic collapse. I believe that the government's corruption, mismanagement, price setting, and short sightedness in "de-industrializing" in favor of a truer socialist model and relying heavily on imports of basic necessities has caused an economic crisis where as the country could have had a basic income and private sector growth to support more people and a better way of life.