The State's Ability to Tax

[August1991]

Governments (the Greek government included) do not have debt problems. In theory, governments can tax anyone to collect money. Imagine if you could force your neighbour to pay your credit card statement.

But how can the State (or any government) collect the tax? Many want naively the rich to pay more.

The problem is not debt, or rich/poor or even twinkle up fairness. It is the State's ability to tax.

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Can the Greek government tax?

Or rather, can the US federal government continue to tax? IMV, this is the key question: Can a government tax?

Edited November 6, 2011 by August1991

[bush_cheney2004]

....Or rather, can the US federal government continue to tax? IMV, this is the key question: Can a government tax?

The US government has not taken advantage of existing tax policy, let alone new sources of revenue that are available. State and local governments have already moved ahead on this because they must have balanced budgets.

Consider that the so called "Bush Tax Cuts" need only be abandoned (not extended). Voila! More revenue. But the political problem is that the tax cuts applied to all marginal rates, not just the rich. Selling new taxes is far easier if everybody pays more, not just the rich.

This can will be kicked down the road until after the 2012 election cycle.

[August1991]

The US government has not taken advantage of existing tax policy, let alone new sources of revenue that are available. State and local governments have already moved ahead on this because they must have balanced budgets.

IOW, the US federal government and American state/local governments can still tax people.

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I have always had two definitions of "democracy".

First: In a democracy, it is possible to change peacefully government leaders. That is, a Democratic State chooses a new leader without bloodshed, or death.

Second: People may fiddle but they largely pay their taxes. In a legitimate, civilized democracy - a Democratic State - ordinary citizens stop at red lights, and pay their taxes.

IMV, the compliance to pay taxes meaures a democracy, and is a far better measure of voting patterns.

Edited November 6, 2011 by August1991

[Topaz]

The problem with Greece was the corruption and people not paying their taxes. One wouldn't get away with that here in Canada. I also wonder what impact the countries that have held the Olympics and fighting wars have had on these countries also. Speaking of wars, are we now going to have some peace in the world since most countries are in financial trouble?

[August1991]

The problem with Greece was the corruption and people not paying their taxes. One wouldn't get away with that here in Canada.

Topaz, I hope you are right.

At issue in Greece, and the reason Italian bond prices fell today, is the ability of the Italian/Greek State to tax.

Imagine a State that cannot tax its citizens. Or rather, imagine a State where citizens don't pay taxes. Greece and Italy are about to become Somalia.

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My measure of a civilized society is not the percentage who vote in elections - it is the number who pay their taxes honestly.

I fear that this is the future of Canada: a (Third World) society of people who avoid paying taxes.

Edited November 10, 2011 by August1991

[dre]

The problem with Greece was the corruption and people not paying their taxes. One wouldn't get away with that here in Canada. I also wonder what impact the countries that have held the Olympics and fighting wars have had on these countries also. Speaking of wars, are we now going to have some peace in the world since most countries are in financial trouble?

Well the wealthy dont need to dodge taxes here... they just get the government to change rates, and put in the loopholes they need. Sorta like how they were able to get investment income taxed at a lower rate than labor and wage income.

We actually LEGALIZE all that tax evasion.

[dre]

Topaz, I hope you are right.

At issue in Greece, and the reason Italian bond rates fell today, is the ability of the Italian/Greek State to tax.

Imagine a State that cannot tax its citizens. Or rather, imagine a State where citizens don't pay taxes. Greece and Italy are about to become Somalia.

----

My measure of a civilized society is not the percentage who vote in elections - it is the number who pay their taxes honestly.

I fear that this is the future of Canada: a (Third World) society of people who avoid paying taxes.

You raise a really good point. In North America the wealthy have succeeded in convincing a pretty large percentage of the electorate that taxes are evil. We have a bizzare no-tax religion in our midst. People support all kinds of spending, but not too much funding!

Here's some words on that exact phenomenon.

Tax cutting is a religion. What do you mean by that?" correspondent Lesley Stahl asked Stockman.

"Well it's become in a sense an absolute. Something that can't be questioned, something that's gospel, something that's sort of embedded into the catechism and so scratch the average Republican today and he'll say 'Tax cuts, tax cuts, tax cuts,'" he explained.

"It's rank demagoguery," he added. "We should call it for what it is. If these people were all put into a room on penalty of death to come up with how much they could cut, they couldn't come up with $50 billion, when the problem is $1.3 trillion. So, to stand before the public and rub raw this anti-tax sentiment, the Republican Party, as much as it pains me to say this, should be ashamed of themselves."

These frank words come from Ronald Reagan's old budget director. Stockman was the architect of the largest tax cut in American history.

But he doesn't let the Democrats off the hook. He says he cringes when he hears President Obama say things like this: "I believe we ought to make the tax cuts for the middle class permanent."

"We have now got both parties essentially telling a big lie," he told Stahl. "With a capital 'B' and a capital 'L' to the public: and that is that we can have all this government, 24 percent of GDP, this huge entitlement program, all of the bailouts. And yet, we don't have to tax ourselves and pay our bills. That is delusional."

Thats not your average liberal talking either. Thats Ronald Reagans Budget Director the architect of the largest tax cut in US history.

Edited November 10, 2011 by dre

[August1991]

dre, it's one thing to cut taxes. It's another thing to avoid paying them altogether. Tax evasion is rife in some countries.

Overzealous Revenue Quebec restaurant inspectors have given a $2,500 fine to a local pizzeria owner for not having updated his cash registers with sales-recording-modules (SRMs), The Gazette has learned.

They also threatened that unless he had them installed within 14 days, the fine would grow to $14,000.

But the restaurant owner says they completely ignored the fact he had a signed contract with a Revenue Quebec-approved company to install the equipment by the Nov. 1 deadline and that it was the installer who had erred.

"They don't care if you have a contract with somebody or not," said John Xenos, the owner of Restaurant Woodland, a Verdun pizzeria that has been serving the local community for more than 40 years.

Montreal Gazette

[August1991]

Thats not your average liberal talking either. Thats Ronald Reagans Budget Director the architect of the largest tax cut in US history.

When Ronald Reagan "cut" taxes in the early 1980s, he merely returned tax rates to their pre-inflation level. In Canada, we had already fixed the "real" tax rate.

David Stockman, as Reagan's budget chief, was frustrated with Washington's inability to cut spending. It is another thing to raise the money (other people's money) to pay for it.

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In a sense, it is the Bush Jnr tax cuts of 2001 that have provoked this fiscal "crisis" in the US. Knowing that Washington politicians have alot of problems to cut spending, Bush Jnr cut taxes and raised the ante in this poker game. The 2008 recession - since it collapsed tax revenues - has made the game more sobering.

Washington now has a choice: raise taxes or cut spending. IMV, the US still has lots of room to raise taxes, and its citizens will pay the taxes. US bond rates are still very, very low. But whadda I know.

[bush_cheney2004]

...In a sense, it is the Bush Jnr tax cuts of 2001 that have provoked this fiscal "crisis" in the US. Knowing that Washington politicians have alot of problems to cut spending, Bush Jnr cut taxes and raised the ante in this poker game. The 2008 recession - since it collapsed tax revenues - has made the game more sobering...

Agreed, as there has always been a "starve the beast" strategy as the only way to really curtail spending, since there is no political will to do so. America cannot put its fiscal house in order with just more tax revenue.

[Michael Hardner]

Agreed, as there has always been a "starve the beast" strategy as the only way to really curtail spending, since there is no political will to do so. America cannot put its fiscal house in order with just more tax revenue.

I'd like to see a 'shopping list' presented so that people could pick what they wanted - same as doing groceries for a family.

Of course, mom & dad (the government) do have the final say, so there will always be necessities on the shopping list (vegetables, milk, a measure of defense and infrastructure spending) and the kids can't decide to buy $100 worth of Oreos for the week.

[blueblood]

I'd like to see a 'shopping list' presented so that people could pick what they wanted - same as doing groceries for a family.

Of course, mom & dad (the government) do have the final say, so there will always be necessities on the shopping list (vegetables, milk, a measure of defense and infrastructure spending) and the kids can't decide to buy $100 worth of Oreos for the week.

The problem is that your letting the kids decide what should be on that list instead of mom and dad. In our society, kids pick mom and dad, not what goes on the list.

[Michael Hardner]

The problem is that your letting the kids decide what should be on that list instead of mom and dad. In our society, kids pick mom and dad, not what goes on the list.

Like I said, mom and dad have the final say.

[bush_cheney2004]

I'd like to see a 'shopping list' presented so that people could pick what they wanted - same as doing groceries for a family.

Of course, mom & dad (the government) do have the final say, ...

In this scenario, mom and dad are a bigger problem than the kids who only want a box of sugar coated cereal.

[Michael Hardner]

In this scenario, mom and dad are a bigger problem than the kids who only want a box of sugar coated cereal.

I see your point. Still, ya gotta eat, right ?

[bush_cheney2004]

I see your point. Still, ya gotta eat, right ?

Ya don't gotta eat too much. Being obese AND poor must really suck.

[August1991]

Agreed, as there has always been a "starve the beast" strategy as the only way to really curtail spending, since there is no political will to do so. America cannot put its fiscal house in order with just more tax revenue.

"Starve the beast" is an apt phrase. Bush Jnr's economic/political advisors decided that only a "starve the beast" policy could control spending.

This meant that Bush Jnr always had government deficits that became gargantuous with the 2008 recession (and fall in tax revenues) combined with the stimulous package.

Obama, ever the Democrat in this poker game, called the Republicans' bluff by instituting State health care with future expenses.

This is high stakes poker!

I'd like to see a 'shopping list' presented so that people could pick what they wanted - same as doing groceries for a family.

As Krugman likes to say, the US federal government is a tank with a pension plan - and a growing health plan. Between the military, social security and medicare/medicaid/Obamacare, where do you see a change in the grocery list?

Steyn argues that - like Canada and Europe - America will likely cut its military budget. I reckon that someone will institute a federal VAT at some point.

Edited November 11, 2011 by August1991

[Michael Hardner]

As Krugman likes to say, the US federal government is a tank with a pension plan - and a growing health plan. Between the military, social security and medicare/medicaid/Obamacare, where do you see a change in the grocery list?

If I were American, I would say 'Military, please'. What a colossal waste of money that is.

Where do I see it happening ? I don't.

[bush_cheney2004]

If I were American, I would say 'Military, please'. What a colossal waste of money that is.

Then obviously...you are not American.

Where do I see it happening ? I don't.

Then where will Canada buy it's military hardware?

[August1991]

If I were American, I would say 'Military, please'. What a colossal waste of money that is.

As the Australian PM said: "Be careful what you wish for. You may just get it."

Michael, imagine a world where the US military was not dominant.

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I'm old enough to have lived in a world where the Soviet military were a challenge. (That was like the Hell's Angels challenging the SQ.)

But imagine a world where young men spray paint wherever they want, and no one stops them.

Edited November 11, 2011 by August1991

[August1991]

Then obviously...you are not American.

Just wait. You Americans will succumb to the siren call of State health care. You're already in thrall to Social Security and Medicare.

[blueblood]

Just wait. You Americans will succumb to the siren call of State health care. You're already in thrall to Social Security and Medicare.

Then Marx that buffoon may have had a point. People will eventually fall for big gov't/socialism. So many people drank the kool-aid...

[bush_cheney2004]

Just wait. You Americans will succumb to the siren call of State health care. You're already in thrall to Social Security and Medicare.

No...as an American, I have the right to die.

[August1991]

No...as an American, I have the right to die.

But your wife and children will want your fellow Americans to pay for a dignified death.

As I say, just wait. Alexis de Toqueville made this plain.

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I'm more fearful of the young men with spray paint cans. I saw them mostly in the West, but grafitti exists in the East too.

These young men do not pay taxes, and they don't care about society.

Edited November 11, 2011 by August1991

[bush_cheney2004]

But your wife and children will want your fellow Americans to pay for a dignified death.

Nah...my cremation is already paid for.