Conference nyoss1::market_investing

    
    
      My simple rule:
    
      If you file long form for anything other than Mortgage interest
    deductions,  then the govt. doesn't consider you to be middle
    class.
    
    						-al
    

    
    I recently read a brief article on this subject (don't remember where). 
    The gist of it was that the gov't doesn't have a definition of
    "middle class."  That's why the politicians (especially the Democrats)
    fool so many people into believing they'll be getting a tax break,
    when in fact their taxes go up because the gov't doesn't consider them
    middle class.
    
    The author of this article proposed that a workable definition of
    middle class would be the middle three-fifths of the population based
    on annual income; one fifth is rich and the other one fifth is poor.
    
    Based on this definition, if I remember correctly, transition from
    middle class to rich occurs at around $60,000 for a single person
    and $75,000 for a married couple.
    
    Theoretically, this seems pretty reasonable, but practically speaking,
    a $60,000/year earner probably feels a lot closer (class-wise) to
    his $50,000/year friends than to CEOs and sports stars who make
    in the millions or hundreds of thousands.
    
    -Michael

    
    
    The Congressional Budget, in their infinite wisdom, has taken a swag
    at defining the middle class.  Don't read on until you've formed your
    own opinion:
    
    (spoiler)
    
     The CBO says the middle class might be the middle three fifths of
     the population, by income. (Source: WSJ, 2/13/92, p. A2, col3)
    
    This works out to (pre-tax) incomes of $15,000 to $60,000 (using a 
    family of 3). (same source)
    
     This means the median engineer ($41,000) married to the median
     Registered nurse/health therapist ($30,000) are not middle class.
     (source: Fortune, 2/24/92, looks like p. 58 on my photocopy). 
    They are obviously rich and must be punished. :-)
     

.0>  2)  Many "tax cuts for the middle class" impose a higher tax on the 
>        "rich" and then give the money to the middle class.  
>    		2a) How does this put money into the economy?
>    
>    		2b) Why not give it to the poor instead?
    
    The long and short of it is the middle class votes more.  It has
    *nothing* to do with the economy.  Class warfare, redistributionist
    politics of envy is a game of political power.
    
    Anywhere you look around the world, when countries go the "Robin Hood"
    route they quickly decay.  Witness the vast majority of Africa, or even
    Argentina post WWII.  Compare that to the Pacific rim which went the
    capitalist route instead; there is where all the money is, too.  Recently
    Latin America has gone more free-enterprise and behold, their markets are
    starting to sparkle.
    
    One hypothesis is that the rich are more productive and taking money from
    them reduces their ability to provide employment to others, and reduces 
    the incentive for working people to work harder for that extra pay.  
    At the same time, giving money to the poor reduces their incentive to 
    find work and become productive members of society.  But if you prefer 
    that your citizens all live in poverty, then tax away and give away.
    
      John

    
    	Re: .0
    
    	There are probably an equal number of definitions of "middle class"
    as there are politicians arguing some point in a class-versus-class
    issue.
    
    							-craig

    Money Magazine also has an article (I think it was the Feb. issue)
    saying something close to .3. The "middle class" in American to day has
    an average FAMILY INCOME of about (if I remember correctly) $25K to
    $50K. I guess that made alot of folks working in DEC to be the "rich
    class". So, don't think when the politicians talking about sutting tax
    for the "middle class" they meant it to be you....
    
    Mike

    So what you're all saying is that this isn't about economic policy,
    it's about buying votes.  And that about one third of the people 
    who consider themselves middle class are really not (by government 
    terms).
    
    More stats:  Taxing the rich (1987 figures, 1990 statistical abstract,
    US Census Bureau):
    
    
    The ultra-rich (over a million $ a year): There are 36,000 of them and
    they make $75 billion a year.  They pay $25 billion in taxes.  If we 
    taxed millionaires at a rate of 100%, we'd have $50 billion more for 
    the budget - a slight dent in the deficit or $500 apiece for the 
    middle class.
    
    Who pays the taxes ?  (Dow Jones - Irwin Business and Investment
    Almanac -1990, p. 545)  If the middle class were the middle 50% of
    taxpayers, that would be those with incomes between $7800 and $34000.
    They make 36% of the money and pay 22.6% of the taxes.  The upper class
    pays 76.7% of taxes, with more than half of that coming from those
    making over $71000.
    
    I'm sorry, but I can't see where the so-called "upper class," those 
    making over $60000 or $70000 per household, are so rich or deserve 
    to pay more taxes.  It could be that I live in the Greater Boston
    Area, where the median home price is $171,000. 
    
    I would sure welcome the chance to discuss this with a group of
    politicians.  (Congress - $129000 a year, puts them in the top 2%). 
    
    

    
    I believe I heard that the Middle Class, wrt Congress's current $400
    proposed credit, ends at families earning more than $80,000.  Those
    families that do, therefore, must be rich, and naturally their taxes
    are to be raised.
    
    It's the typical congressional hocus-pocus.  Like allowing full tax
    adjustments for IRAs only to those people who can't afford to use
    it.
            
    	Dave

    
    	Re: .7
    
    >So what you're all saying is that this isn't about economic policy,
    >it's about buying votes.
    
    	Well, I won't speak for anyone else, but I don't consider any
    election year antic to be anything _but_ the buying of votes in one way
    of another.  And, sad to say, I'm rarely disappointed.  :-(
    
    	Look at Bush's plan, for instance.  Skipping the argument of
    whether it will actually work or not, why did he wait until the State
    of the Union Address to announce it?  Ever since November, he kept
    saying "wait until the State of the Union Address, wait until..."
    If he really had the plan worked out in November (as his comments
    seemed to indicate), why did he wait?  Any positive effects of his plan
    were simply delayed by two months; two months of slipping further into
    the recession.  Now you tell me if that sounds like pure "economic
    policy" or whether it was timed for maximum political benefit (ie.
    buying votes)...
    
    	Oh, about those stats.  Would you give more details on those
    figures that the highest paid people made a total of $75 billion and
    paid a total of $25 billion in taxes?  Given that the top tax bracket
    is only 31%, right off the bat the numbers don't add up.  (And yes, I'm
    skipping the 33% zone of wiping out the lower-bracketed money.  The 33%
    money wipes out the 15% and 28% taxed money to bring the average up to
    31%, so the "amount paid versus taxable income" can't exceed 31%.)  All
    I can presume is that the income figure of $75 billion counts earned
    income (such as salaries) only while the $25 billion tax figure is the
    total bottom line taxes -- which would include the taxes on the interest,
    dividends, capital gains, etc., etc. that these people had.  To keep this
    as an apples-to-apples comparison, I'd like to see the sum total of the
    adjusted gross incomes plus the deductions taken and _then_ compare it to
    the $25 billion in taxation figure.  That should yield a more accurate
    figure on what effective percent income tax the extreem upper class
    pay.  (I'm not saying, incidently, that the US Census Bureau numbers
    are individually incorrect.  I just think that the wrong numbers are being
    compared against each other.)
    
    								-craig

    The current plan put forth by the Democrats calls for the upper limit
    to the middle class to be $185,000 for a two income family. So if that
    comes to pass then most of us can breath a little easier.
    

    Re 9.  I did have numbers slightly confused.
    
    In 1986, millionaires had 72.5 billion in AGI (which includes interest,
    dividends, etc), 57 billion in taxable income, and paid 29 billion in
    taxes.
    
    In 1987, millionaires had 87.2 billion in income, 75 billion in 
    taxable income, and paid 25.5 billion in taxes.
    
    You'll note a large change between years - taxable income went up 
    dramatically while taxes actually went down.  Must be that tax cut
    for the rich everone talks about.
    
    Re 10.  Where did you read that - I'd like to check it out.  If the
    middle class includes those making up to 185000, that includes 98%
    of us - which is about how many of us consider us middle class.  The
    other thing is that in that proposal, Congress is now in the middle
    class!
    
    My gathering of these articles started a year or so ago when I ran 
    across an article entitled "The Myth of Soaking the Rich" in the 
    magazine Across the Board.  The obviously conservative columnist 
    showed that soaking the rich could do ONE of the following:  help the
    poor, health care for the elderly, boost education, slight reduction
    in the deficit. Since then national health care has become another big
    rage.  His point was that the rich can pay for one of these.  Guess
    who pays for the rest???

    Here is a brief analysis of a Bill Clinton plan, although I have seen
    different versions of it and I use 1987 numbers.
    
Bill Clinton proposes a 10% tax break for the middle class and a tax
increase for those making over $100,000 (Boston Globe, 2/17/92).

The Numbers: (1987 data, US Stat. Abs)
______________________________________________________________
                   Number        Total Income      Total taxes
The Middle Class
(middle 3/5 ths)   64.2 million   $1.115 tri        92.5 bil     
______________________________________________________________

Those making        1.6 million   $0.464 tri        117.6 bil 
over $100,000
______________________________________________________________

10% tax cut for middle class = 9.25 billion dollars = $144 each (avg)
for people with incomes from $6000 to $36000.

Made up for by 9.25 billion on "rich" = $5781 each(avg).

Middle class tax as a percent of AGI goes from  8.3% to 7.5%.

High income tax as a percent of AGI goes from 25.3% to 27.3%.

A word of advice to the middle class from presidential candidate Dave
Barry "If you're going to take a bribe, hold out for top dollar."

$144 a year isn't going to allow the middle class to help the auto or
housing industry very much.  However, it is enough for a couple of trips
to WalMart.  Sam Walton, richest man in America, backs Bill Clinton.
Makes you go 'Hmmmmmmmmmm'. 

  Yes but they are both from Arkansas!!!

If you're Bush supporter, you can go to JC Penney's, or better yet, to your
local supermarket to marvel at the scanners.  If you're an admirer of
Donald Trump, you can spend your $144 at K-Mart.

    re your 'filing long form for any reason other than mortgage interest'
    
    you overlooked those who file long form for medical reasons

    I now have the data on who takes what itemized duductions.  I'll 
    look into it, but looking only at the rich (over $100,000) per year:
    
    Most dollars deducted in that group is taxes (esp state & local)
                     # 2 deduction is interest paid (remember, it's 1987)
                     # 3 is contributions.
                        
    If I could get this all in a spreadsheet, I could tell who (poor,
    middle, or rich) took the most deductions (per person and as a 
    percent of income) for each type of deduction.  But, that'll be
    for non-work time...

We have analyzed the Clinton middle class tax plan as a simple 
redistribution of wealth in an effort to buy votes.  To be fair,
we shall analyze Pat Buchanan's capital gains tax cut in terms of
it being a tax break for rich Republicans.

Who has capital gains?  According to 1986 returns (US Stat Abst),
roughly 4 million people show net gain less loss from sale of
property and other capital assets.  Half of those people made
under $50,000 - Buchanan would exempt them from capital gains
taxes.  Those making over $50,000 would pay a reduced rate.

Those making under 50k realized a gain of about $20 billion, so the
tax break for them would be 100% of the taxes on $20 billion. 

Those making over 50k realized a gain of $114 billion.  So a capital 
gains tax elimination would help the rich in terms of more dollars
or more dollars per person in taxes saved.  So Buchanan proposes 
that their rate be reduced, but not to zero.  This plan has the illusion
of being "fair" (taxing the rich more) but not really eliminating much of the
capital gains tax base (only 20 of the 134 billion would pay no taxes), thus
reducing the burden on the deficit.  This would depend on just how much taxes
are paid on these gains now and what the proposed rate isfor those making 
over 50000, and that I don't know.
    
Anyone care to summarize current capital gains tax rates???

    
    	Re: .17
    
    >We have analyzed the Clinton middle class tax plan as a simple
    >redistribution of wealth in an effort to buy votes.  To be fair,
    >we shall analyze Pat Buchanan's capital gains tax cut in terms of
    >it being a tax break for rich Republicans.
    
    	Who is this "we" you're referring to?  "We" as in "us noters" or
    "we" as in some other group that is giving you this data?
    
    							-craig

Capital gains rates are the same as ordinary income rates.

I believe only one of the candidates (one of the Democrat also-rans) backs
the capital gains treatment that's equitable and reasonable, namely indexing
for inflation.

.19> I believe only one of the candidates (one of the Democrat also-rans) backs
> the capital gains treatment that's equitable and reasonable, namely indexing
> for inflation.
    
    IYO.  IMO, the only "equitable and reasonable" approach is a rate of ZERO
    for both gains and losses.  That permits market forces, not tax policy,
    to determine the best place for me to invest my capital.
    
      John

    Re .20
    
    Interesting. And how about interest on bank CD's and bonds?
    What if I decide that the best place for my money for the next
    25 years is three-month T-bills? Surely, it helps the Government
    cut its borrowing costs if there are many people around who still 
    want to lend money? Or are fixed-rate instruments somehow 
    not considered "investments"?
    
    Personally, I don't care what "method" the Government uses
    to decide what my gains are - as long as the same logic
    applies to stocks, bonds, cash, real estate, and Twinkies to boot.
    Many features of the current tax nightmare (sorry.. system),
    e.g. the "double taxation" of stock dividends, the mess that
    passes for all the things one can claim "deductions" for, 
    and the substantial break on mortgage interest, 
    have caused considerable distortions in the capital markets.
    Not to mention created a living for entire corporations
    full of people - many of them very intelligent and quite capable 
    of other more productive work - who do nothing but sit around 
    trying to figure out for you what the latest edition of the 
    tax books have to say.
    
    *The* major tax reform I'd like to see would involve
    drastic simplification of the tax codes. Politically
    unrealistic, but that's what I want.
    
    Ganesh.
                                

    .21
    
    I'm with you.  Dividends and interest must necessarily be tax-free in
    order to compete with capital gains.  And taxation must be simplified
    in order to free up unproductive bookkeeping.  In a related story, hell
    froze over last night.
    
      John

re .20:

It's highly unlikely that capital gains will cease being taxed.  Of the
various plans to change the capital gains tax, I think that indexing is
the fairest and the one that distorts the market the least.

      RE: .21 & .22
      
      Gentlemen, please, *NO* simplification!
      
      Remember the last "tax simlification"?
      
      Our  politicians  are  quite capable of "simplifying" this country
      completely out of existence.

      (Smiley face intentionally omitted.)

    re:18 (who is the "we")
    Sorry about the "we" - I meant the editorial "we", meaning basically me
    putting in statistics and asking for comments.
    
    I wish there were more groups doing such analysis. The proliferation 
    of talk about middle class tax cuts without defining the numbers is
    amazing, and the whole topic is a response to that.  However, there 
    are investing implications.  Wouldn't short term bonds (popular with
    some financial radio talk shows) be affected by changes in tax policy?
    
    Also, certain tax reform groups must have data available on things
    like tax simplification and a flat tax.  I can't imagine that really
    happening, though.

.23> It's highly unlikely that capital gains will cease being taxed.  Of the
> various plans to change the capital gains tax, I think that indexing is
> the fairest and the one that distorts the market the least.
    
    There is the small but significant matter of distinguishing between
    facts and opinion.  Unlike my .20, your .19 seemed to imply that there
    was a foregone conclusion that indexing was The Right Thing to do,
    ranking right up there in certainty with the fact that the earth orbits
    the sun, the square root of 2 is irrational and JFK was assasinated by
    [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX (deleted, national security)].
    
    I don't mind disagreeing on tax policy; disagreement often leads to
    enlightenment, at least among open minds.  Let's just remember to 
    identify opinions as such, and cite appropriate sources for facts.
    
      John

    
    	Re: .18
    
    	Thanks for defining who you were referring to with that "we". 
    Would you do us all a favor and do a similiar analysis of the Bush
    proposals off of the same base numbers?  Thanks.
    
    
    	Re: .general discussion re: capital gains rates
    
    	The tax simplification that I favor (and no, I'm not holding my
    breath waiting for it to be passed!) is to eliminate the entire
    personal and corporate income tax behemoths and replace it with an XX%
    VAT on everything.  That encourages earnings, savings and investments by
    making those acts 100% tax-free (and removes all the tax-code-induced
    distortions of the various markets) and places the tax disincentive on
    consumption.  And if the national politics dictates that this is too
    regressive, I'd favor the gov't selecting an amount of expenditure per
    person that should be VAT-less (enough to cover whatever they define as
    "the essentials"), multiply that by the VAT rate and simply mail a check
    to everyone for that amount on their birthday.  (Not as a B-day present,
    but to spread out the outgoing cashflow... :-)  Unless you happen to
    run a business on the side that buys raw materials and sells finished
    products, _no_ tax reporting requirements or document saving would be
    needed at all.
    
    	Now, of course, its possible to argue that this will immediately
    throw us into a depression caused by people dramatically slowing down
    their purchases given the new XX% tax.  I doubt that will happen since
    simultaniously, everyone will stop having federal income tax withholdings
    taken from them which should at least equal, if not exceed, the amount of
    extra tax that people will be paying on purchases.
    
    							-craig

    
    	Sorry, the reference in .27 to .18 should be to .25.
    
    							-c

Craig did not mention another advantage of a VAT.  It falls equally on imports
and domestically produced goods.  This would remove the current tax advantage
imports now have.  A VAT should decrease imports and therefore our trade 
deficit.

Note that most of our large trading partners have VATs.

> Note that most of our large trading partners have VATs.
    
    As well as a zero capital gains rate...

    There is an organization (that I heard on the radio) that is pushing
    for a national sales tax to replace income taxes. The organization
    is called Citizens for Alternative Taxation. I sent for information
    because it sounded interesting but I haven't received the info yet.
    
    Their spokesman advocated such a tax on grounds of simplicity,
    increased productivity due to reduced overhead of record keeping,
    individuals having no interaction with the IRS, level playing field
    between imports and domestic goods, etc.
    
    They claimed a 16% tax would work with no exemptions for food or
    shelter. Deciding to exempt such things would increase the rate but
    would take some of the wind out of the sails of those who would claim
    that a national sales tax would be too regressive.
    
    One other benefit cited was that it would be difficult for states to
    retain an income tax since they could not depend on the national level
    regulations of the IRS. States that required businesses to track such
    information would be at a competitive disadvantage with other states
    that did not with respect to keeping and/or attracting business leading
    to a disincentive to have a state income tax.
    
    Greg
    

re .26:

Whatever I say here is my opinion.  I don't feel a need to identify it as such.

	Re: .31

	Good, then the incentive is for the states to drop the income tax also
and rely on the state sales tax.

								-craig

    Bush proposes lowering the capital gains tax to 15.4% on assets
    held more than three years (from the current top of 28%).  I calculate
    the impact by income as follows:
    
    	Average $20000-$30000 return saves $1032    (affects 500000 people)
    	Average $40000-$50000 return saves $2263        "    285000   "
    	Average $50000-$99999 return saves $2167        "   1072000   "  
    	Average $100000+      return saves $11152       "   1084000   "
    
    1986 returns, only those reporting gains included.   Not all income
    levels included.  The rich, who get 27% of their income from capital
    gains, get a bigger tax break than the 20-30 $k folks, who get only 
    1% of their income (as a group) from sale of assets.
    
    Bush proposed increasing the exemption from 2150 to 2650 per child.
    This proposal gives 17 Billion in exemptions to the middle class and 
    9 Million in exemptions to the millionaires if kids are evenly 
    distributed at the rate of 0.58 per tax return using 1986 figures of
    61 million in the middle class and 32000 making over a million a year.
    
    There is a proposed $5000 tax credit to first time homebuyers. The 
    problem in analyzing this is you need to know who can buy a home,
    and regional differences in the housing market affect how this benefit
    is distributed.  For example, the 1989 median price in metropolitan 
    areas I have lived in ranges from 
    	Atlanta    $81,000
    	Boston    $178,000  (I realize these have changed.  Boston is 
    	Dallas     $88,400              now closer to 171000)
    	Raleigh   $102,000 
    
    If the CBO defines the middle class as those making between 15000 and
    60000 a year (family of three), then the tax credit is a great boon
    to those in the south, but most of the "middle class" folks in Boston
    still can't qualify for the median house.  Thus comes the regional
    difference problem when we try to define the middle class.  The per
    capita income varies by almost a factor of three between Mississippi
    and Connecticut.  But so does the cost of living.  So that's another
    problem in this so called "tax fairness" issue.

    
    	Re: .34
    
    	Thanks.  A question, though, how can the average folks in the $20K
    to $30K range "saves $1032" if in the next paragraph you say these
    folks only get, on average, 1% of their income from the sale of capital
    items?  1% of the high end of the range is only $300, and 12.6% of that
    (28% - 15.4% proposed) is only $37.80.  Even if we double the number to
    account for the $20K-30K range being post-deductions (I'm taking a
    wild guess here that these ranges are the bottom-line taxable incomes) and
    apply the 1% to the overall income (ie. make it $40K-60K), the savings is
    still only $75.60.
    
    							-craig

    RE. 35
    
    Good question.  The 1% of income from capital gains is as a group.
    Of all the income reported by people in that range, 1% is from
    capital gains.  But, only 3.1 % of people in the 20-30K range 
    reported capital gains.  So I took that 1% of all that groups
    income (they had about 4 billion in gains) and divided by the 
    3% of the gropu that reported gains (3% of 16 million is 480,000).
    So 4 billion/480000 = about $8000 * 12.6% is around 1000 in savings.
    
    By contrast, 1.5 million people made over 100,000.  As a group they
    made 358 billion, 96 billion of which was capital gains.  70% of
    the group reported such gains, so the calculation follows as above.
    
    Source: US Statistaical Abstract, 1990, quoting 1986 IRS data.
    
    I believe the current Fortune has one of those "Where to Invest" 
    articles which mentions the implications of some of these proposals.
    But to be honest, I wouldn't stake my investment strategy on 
    election-year politics.  What should we do?  If we think Bush's
    proposals will fly, we should have kids and buy a house?  If we 
    think the tax fairness Democrats will win out, find a lower-paying
    job? :-)   And if we think Tsongas will win, buy a nuclear car.
    

Could we please change the title of this topic to "Middle income Americans and
tax policy"?  The United States is supposed to be a classless society.  The 
differentiations referred to in this topic are solely based on income, thus
my proposed topic title.

Elaine

re: .37
    
> tax policy"?  The United States is supposed to be a classless society.  The 

If you believe that, I have a piece of land to sell you in Florida.  Like you, 
I don't mean to bring this good topic down to a rathole. But, this society is 
just like many other societies, it HAS classes! It's just that people here may 
not like to think so.

    The title is not meant to comment on American society.  It reflects
    a common term used in the mainstream media.
    
    Although the term "middle income" would be more proper, many people
    use "middle class."  It's like a "hot water heater."  A more proper
    term would be "water heater," since we don't actually heat water
    that is already hot.  But every day millions of Americans say "hot
    water heater" and we know what they mean.    

	Re: .36

	Thanks for explaining where the numbers came from.  May I make a 
suggestion of recalculating the numbers _without_ excluding the folks who
don't report capital gains?  As is, the numbers look like the $100K+ folks
make out "only" 11 times better than the folks in the $20K-30K range while
factoring back in all the folks without capital gains would give, IMO, a
better perspective on who benefits from Bush's plan.

>    I believe the current Fortune has one of those "Where to Invest" 
>    articles which mentions the implications of some of these proposals.
>    But to be honest, I wouldn't stake my investment strategy on 
>    election-year politics.  What should we do?  If we think Bush's
>    proposals will fly, we should have kids and buy a house?  If we 
>    think the tax fairness Democrats will win out, find a lower-paying
>    job? :-)   And if we think Tsongas will win, buy a nuclear car.

	In political funny-seasons like this, I wouldn't make _any_ decision
based upon what any candidate (including Bush in this category) says to get
votes either.  Once a bill is proposed and passed into law, fine, then I'll
use it as input for decisions.  Now?  Nah, no way...

							-craig

Is Bush proposing a 45% reduction in capital gains tax, or a 15.4% capital
gains tax?  If the latter, it's an *increase* for people in the 15% bracket.

    re - 1
    Perhaps the 15.4% is the maximum rate under his proposal.  I assumed
    constant rates in the earlier examples for simplicity.
    
    Anyway, the big news.  Yesterday, the House passed its certain-to-be-
    vetoed tax bill with the vaunted MIDDLE CLASS TAX CUT (for two years)
    and the SURTAX ON MILLIONAIRES (permanently).  If reflected in lowered
    withholding rates, it could mean up to $8 a week for a family.
    
    I was glad to hear that Representative Barney Frank (D. - Taxachusetts)
    said on WBZ radio that the cut "doesn't stimulate the economy" and in
    fact nothing in the overall bill represented any short-term help.  The
    whole thing was mostly an exercise in "fairness."  
    
    In his commentary on the subject, well-known commentator Joe Bob
    Sorrells said the whole thing was an exercise in "politics."
                                                                 

    Re .27? (nationwide VAT)
    
    But Bush et al (polititions) want to "put money in our pockets"
    to INCREASE consumption to revitalize the economy.
    
    Having a saving ethic, and a rational, which VAT (if that was all)
    could be, easier to administer and harder to cheat tax, and reduced
    government spending ( would need to lay off most of the IRS),
    why, "That's positivly un-American,
    
    I better run out and get  a few more credit cards, gotta make next
    months payments some how }8-)}
    
    --------
    
    Really, a simple tax, requiring less points of administration (not x
    billion personal returns, just a few million business returns) would
    probably straighten out a lot of this mess.  But, the govenrment system
    would have to be rational also.  Any suggestions there ?
    
    Bill
    

    re .43
    
    VAT sounds good on paper.  If it replaced the income tax, it would
    replace a lot of the BS that goes into tax preparation, catching tax
    fraud, writing and re-writing the tax laws, etc.  The problem is that
    our govt is far from rational, and if a VAT was imposed it would be in
    addition to the income tax, so the total tax rate goes up, the govt has
    to spend more money for people to collect the VAT, in addition to the
    whole IRS system, and the whole thing gets more complicated.
    
    The VAT is basically an income tax, only collected as the income is
    going out.  If it was introduced without eliminating the income tax, it
    would basically give the govt another hidden means of hiking the
    already outrageous taxes that we pay now.
    
    
    Bob

         <<< SUBWAY::DISK$D1:[NOTES$LIBRARY]MARKET_INVESTING.NOTE;1 >>>
>Note 62.44               The middle class and tax policy                44 of 44
>STOKES::NEVIN                                         The problem is that
>    our govt is far from rational, and if a VAT was imposed it would be in
>    addition to the income tax, so the total tax rate goes up, the govt has
>    to spend more money for people to collect the VAT, in addition to the
>    whole IRS system, and the whole thing gets more complicated.
    
     Bob has correctly revealed the logic used in the United States 
     Government (all branches & parties).  And to add insult to injury,
     they would probably call the thing "The Tax Fairness and
    Simplification For the Forgotten Middle Class Act of 1994"