Economy, taxes, paint, sleep
Oct. 19th, 2005 11:55 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
drscottI picked up three pints of paint in the colors we were planning to use on the house and tried them out yesterday. All three needed tweaking, so I'm glad I spent the money on samples.
I've cut back on Valerian root partway, suffering one really awful night of limited sleep so far (out of two.) Tonight I'll reduce it further. This is not a lot of fun, but at least I don't have anything critical going on so I can afford to be out of it for awhile. Hope![[livejournal.com profile]](https://www.dreamwidth.org/img/external/lj-userinfo.gif)
excessor doesn't mind having a groggy partner.
I read up on the tax reform committee's proposals this morning. They seem poorly thought out and designed to punish high-cost, high-tax coastal regions (largely "blue states.") The more radical proposal, which purports to tilt toward a consumption tax, is somewhat better, but neither is simple enough to be worth the pain of changing the system.
It should be clear to everyone who studies the problem that the looming reversal in Social Security cashflows will require some radical rethinking to avoid disaster. There are a lot of voices plumping for one idea or other, but as with the energy problem, all measures which help to resolve the problem will have to be taken -- 1) cuts in nonessential government services like ag and business subsidies, careful limitation of social services like low-cost college education to those who truly could not afford them otherwise, smarter and cheaper regulation, scrapping the NASA manned spaceflight boondoggles, eliminating pork barrel spending; 2) increased revenues through flatter, more consumption-oriented taxes; 3) accelerating investment and savings to increase growth over time, making the debts less onerous by comparison.
The baby boom generation has been benefiting from lower taxes, and the forward end of it is the last group that will receive much of a return from their Social Security payments. It may seem slightly unfair to them (that is, me!), but they will have to pay twice: first when earning their money, and second when spending it in retirement. The entire burden of fixing the US' fiscal problems cannot be borne by later generations, and people retiring now have more money than following generations are likely to be able to save.
It's too bad that Europeans have sullied the otherwise excellent idea of the VAT (Value Added Tax) by using it to increase the total tax take while retaining hefty income taxes. The version used in Canada, the GST, is well-designed and relatively easy for even small businesses to comply with -- you can handle it with almost any accounting software. The devil is in the details, and in Canada they also promised to reduce income taxes as the GST came in, but they lied; they also cleverly arranged it so the value of all land and raw materials in existence at the start of the system would be subject to the full tax, which was a staggering stealth tax on wealth. So with this history, it will be very difficult to get a good VAT-like tax implemented in the US without some ironclad way of eliminating the personal income tax at the same time.
The reason why a VAT is particularly desirable has to do with our trading partners' tax systems. A Euro-style VAT is levied as a percent -- say 20% -- on the increase in value at each stage of production. Say I take Part A which costs $2 and combine it with Part B which costs $3, pay my labor $4, and sell the resulting widget for $10 plus $2 VAT. I paid 20% VAT to buy the parts but it is rebated to me; so I forward the $2 VAT paid to me by the buyer, minus the $1 VAT I paid on parts, to the government. I'm left with $2 profit, and both my profit and labor costs were taxed at the VAT rate. In international trade, however, the full value of the VAT collected at all stages of production is returned when an item is exported, and all items imported are charged a full VAT rate on their value; all goods in commerce between countries are shorn of the tax burden of the country of origin, and bear only the VAT burden of the country of consumption. This ideal for European purposes because it removes distortions due to the differing taxation levels in different parts of Europe. However, it has a pernicious effect on a country like the US with no VAT: our goods and services exported to Euro-zone countries suffer double taxation, bearing both the full burden of US income and wage taxes and the VAT of the country consuming our goods. This amounts to a high tariff on our goods and reduces US manufacturing competitiveness. The only likely solution to this disparity is to harmonize our system with theirs, which will have positive effects on our growth rate while properly encouraging savings and investment over current consumption.
Here's some interesting further reading on manufacturing, jobs, and globalization.
I've cut back on Valerian root partway, suffering one really awful night of limited sleep so far (out of two.) Tonight I'll reduce it further. This is not a lot of fun, but at least I don't have anything critical going on so I can afford to be out of it for awhile. Hope
excessor doesn't mind having a groggy partner.I read up on the tax reform committee's proposals this morning. They seem poorly thought out and designed to punish high-cost, high-tax coastal regions (largely "blue states.") The more radical proposal, which purports to tilt toward a consumption tax, is somewhat better, but neither is simple enough to be worth the pain of changing the system.
It should be clear to everyone who studies the problem that the looming reversal in Social Security cashflows will require some radical rethinking to avoid disaster. There are a lot of voices plumping for one idea or other, but as with the energy problem, all measures which help to resolve the problem will have to be taken -- 1) cuts in nonessential government services like ag and business subsidies, careful limitation of social services like low-cost college education to those who truly could not afford them otherwise, smarter and cheaper regulation, scrapping the NASA manned spaceflight boondoggles, eliminating pork barrel spending; 2) increased revenues through flatter, more consumption-oriented taxes; 3) accelerating investment and savings to increase growth over time, making the debts less onerous by comparison.
The baby boom generation has been benefiting from lower taxes, and the forward end of it is the last group that will receive much of a return from their Social Security payments. It may seem slightly unfair to them (that is, me!), but they will have to pay twice: first when earning their money, and second when spending it in retirement. The entire burden of fixing the US' fiscal problems cannot be borne by later generations, and people retiring now have more money than following generations are likely to be able to save.
It's too bad that Europeans have sullied the otherwise excellent idea of the VAT (Value Added Tax) by using it to increase the total tax take while retaining hefty income taxes. The version used in Canada, the GST, is well-designed and relatively easy for even small businesses to comply with -- you can handle it with almost any accounting software. The devil is in the details, and in Canada they also promised to reduce income taxes as the GST came in, but they lied; they also cleverly arranged it so the value of all land and raw materials in existence at the start of the system would be subject to the full tax, which was a staggering stealth tax on wealth. So with this history, it will be very difficult to get a good VAT-like tax implemented in the US without some ironclad way of eliminating the personal income tax at the same time.
The reason why a VAT is particularly desirable has to do with our trading partners' tax systems. A Euro-style VAT is levied as a percent -- say 20% -- on the increase in value at each stage of production. Say I take Part A which costs $2 and combine it with Part B which costs $3, pay my labor $4, and sell the resulting widget for $10 plus $2 VAT. I paid 20% VAT to buy the parts but it is rebated to me; so I forward the $2 VAT paid to me by the buyer, minus the $1 VAT I paid on parts, to the government. I'm left with $2 profit, and both my profit and labor costs were taxed at the VAT rate. In international trade, however, the full value of the VAT collected at all stages of production is returned when an item is exported, and all items imported are charged a full VAT rate on their value; all goods in commerce between countries are shorn of the tax burden of the country of origin, and bear only the VAT burden of the country of consumption. This ideal for European purposes because it removes distortions due to the differing taxation levels in different parts of Europe. However, it has a pernicious effect on a country like the US with no VAT: our goods and services exported to Euro-zone countries suffer double taxation, bearing both the full burden of US income and wage taxes and the VAT of the country consuming our goods. This amounts to a high tariff on our goods and reduces US manufacturing competitiveness. The only likely solution to this disparity is to harmonize our system with theirs, which will have positive effects on our growth rate while properly encouraging savings and investment over current consumption.
Here's some interesting further reading on manufacturing, jobs, and globalization.
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Date: 2005-10-19 10:20 pm (UTC)no subject
Date: 2005-10-19 11:00 pm (UTC)no subject
Date: 2005-10-19 11:26 pm (UTC)no subject
Date: 2005-10-20 04:05 am (UTC)I agree with you on the medical plan; that sounds like a frustrated situation. Kaiser?
This has been a bad year for medical insurance for everyone I've talked with. The insurance carrier my company's using this year (HealthNet) has been dismal at best - to the tune of an extra $200 to $600 out of my pocket every month for expenses that used to be covered.
We're considering moving to a PEO (preferred employer option) model just to be able afford better health and dental insurance for our employees...because the insurance companies are telling smaller companies such as ours, "No lube. Bend over."
Can you get better health insurance through Paul's employer as a spousal benefit?