Wars without funding

Originally posted by Eladar
[b]The economy is sucky, but a 1% sales tax won't hurt it.

It is impossible to raise a significant amount of money without taking a significant amount of money out of the economy. Simply if taxes were raised everyone would (1) less money to spend (2) every product would be more expensive and therefore less desirable.
Or, in other terms, if you think you can tax enough to pay for a war, then there would be at least that amount of money not in the economy.

Originally posted by quackquack
It is impossible to raise a significant amount of money without taking a significant amount of money out of the economy. Simply if taxes were raised everyone would (1) less money to spend (2) every product would be more expensive and therefore less desirable.
Or, in other terms, if you think you can tax enough to pay for a war, then there would be at least that amount of money not in the economy.

This is one of the biggest fallacies of conservative economic thinking. Taxes, if spent, do not take money out of the economy. There is nothing magical about a private dollar spent which makes it more productive than a public dollar, and in fact government spending on infrastructure is about as stimulative as you can get.

However, I would oppose the revenue by sales taxes, which are inherently regressive. The wealthy right now are sitting on loads of money. Prying some out of them and turning it over to consumers so that the investors have to scramble for it would be productive. But it won't happen under the current climate where deficits trump jobs.

Originally posted by Kunsoo
This is one of the biggest fallacies of conservative economic thinking. Taxes, if spent, do not take money out of the economy. There is nothing magical about a private dollar spent which makes it more productive than a public dollar, and in fact government spending on infrastructure is about as stimulative as you can get.

However, I would oppose the reve ...[text shortened]... would be productive. But it won't happen under the current climate where deficits trump jobs.

Well-said.

Originally posted by Eladar
I find it rather strange that no one is talking about how GW started (and Obama continues) wars that are unfunded!

Our soldiers risk their lives, but no one is being asked to foot the bill. No one is being asked to contribute to the war. I find that rather strange.

Why has no one figured out exactly how much we've spent on these wars (Lybia included) ...[text shortened]... a 1% national sales tax that will expire once the total cost for the wars has been collected.

Why pick on the wars? 35% of government spending these days is unfunded.

Originally posted by Kunsoo
This is one of the biggest fallacies of conservative economic thinking. Taxes, if spent, do not take money out of the economy. There is nothing magical about a private dollar spent which makes it more productive than a public dollar, and in fact government spending on infrastructure is about as stimulative as you can get.

However, I would oppose the reve ...[text shortened]... would be productive. But it won't happen under the current climate where deficits trump jobs.

I agree with your first sentence, but a sales tax is not regressive. Rich people spend more than poor people... much more, usually. This is especially true since food and rent are generally exempt from sales tax. Many states also have exemptions for clothing or clothing up to a certain price.

The sales tax is a very progressive tax.

Originally posted by sh76
I agree with your first sentence, but a sales tax is not regressive. Rich people spend more than poor people... much more, usually. This is especially true since food and rent are generally exempt from sales tax. Many states also have exemptions for clothing or clothing up to a certain price.

The sales tax is a very progressive tax.

I don't think so. Progressive means higher percentage, not the same percentage.

The sales tax is not progressive in structure in the sense that it is the same percent for poor and rich, in contrast to a progressive structure with income tax, for example, where higher incomes are taxed at a greater percentage.

Further, the sales tax is actually regressive. Indeed, the poor generally pay a greater percentage of their income in sales tax than do the rich. In other words, the more rich one is, the more likely they save (not spend) a portion of their income, whereas the poor generally spend all of their income. Thus, as a percent of income, the poor pay a greater percent of their income on sales tax. For example, for a 6% sales tax, if a rich person spends only half of their income, then 3% of their income is being collected as sales tax. In contrast, for a poor person spending all of their income which is usually the case, then 6% of their income is being collected as sales tax. A regressive tax.

Moreover, the rich and poor both get the same exemptions on food, clothing, prescriptions, other items, rent, etc., if such exemptions exist.

The poor do generally rent more than the rich, which a rent exemption could offset the regressive nature of a sale tax somewhat. With that said, most states collect sales tax on rental personal property, and even some states such as Arizona collect sales tax on rent for apt/homes.

It is open to debate, as indicated in a comment in wikipedia:

"Some people consider sales taxes to be regressive; that is, they believe that the tax imposes a greater burden on low-income families than wealthy families. However, it has been suggested that any regressive effect of a sales tax could be prevented, e.g., by excluding rent, or by exempting "necessary" items, such as food, clothing and medicines."

http://en.wikipedia.org/wiki/Sales_tax

Originally posted by sh76
Why pick on the wars? 35% of government spending these days is unfunded.

Because the wars are a short term new expenditure which should be taken into account. Expenditures need to be balanced with revenue. New expenditures means new taxes.

Originally posted by moon1969
I don't think so. Progressive means higher percentage, not the same percentage.

The sales tax is not progressive in structure in the sense that it is the same percent for poor and rich, in contrast to a progressive structure with income tax, for example, where higher incomes are taxed at a greater percentage.

Further, the sales tax is actually regre ...[text shortened]... ry" items, such as food, clothing and medicines."

http://en.wikipedia.org/wiki/Sales_tax

Richer people spend a higher percentage of their expenditures on goods and services that are subject to sales tax. Rent, food, medical care are not subject to sales tax. Yachts, vacations, restaurant bills and luxury goods are.

In any case, I never advocated replacing the income tax with a sales tax, so the issue of who spends more of their income is irrelevant. A sales tax taxes consumption and the exclusions of many basic necessities from sales tax makes it a very fair tax, as taxes go.

Originally posted by Eladar
Because the wars are a short term new expenditure which should be taken into account. Expenditures need to be balanced with revenue. New expenditures means new taxes.

The stimulus packages are also supposedly "short term expenditures." In any case, money is fungible. A specific tax to pay the war debts makes no sense given that it's one big pot being spent regardless. A "War" tax would be a political maneuver to drum up antipathy for the war, just as a "stimulus tax" would be a political maneuver designed to drum up antipathy for the stimulus.

Originally posted by sh76
The stimulus packages are also supposedly "short term expenditures." In any case, money is fungible. A specific tax to pay the war debts makes no sense given that it's one big pot being spent regardless. A "War" tax would be a political maneuver to drum up antipathy for the war, just as a "stimulus tax" would be a political maneuver designed to drum up antipathy for the stimulus.

The stimulus package is deficit spending which is supposed to be paid back when the economy is good. In other words it should be paid back with the business cycle.

Wars are supposed to be short term and not part of some cycle. Wars are a short term drain on the budget. The normal budget does not take wars into consideration. Since this is an unplanned for expense, you need to generate new moneys to balance out the budget.

It is exactly the kind of thinking that we don't have to pay for new expenses that put us in the hole we are in today.

Originally posted by Eladar
The stimulus package is deficit spending which is supposed to be paid back when the economy is good. In other words it should be paid back with the business cycle.

Heh.

Yeah; that'll happen.

Originally posted by sh76
Heh.

Yeah; that'll happen.

Yeah, it's a bit idealistic, but that's the way it is suppposed to work.

I suppose a realistic way of doing it would be to require a rainy day fund like they do in Oklahoma. Once that fund is in place, any deficit spending would come out of the money saved.

Emergency war debt would be allowed, but a tax would be created to pay off that debt. When the debt gets paid off, the tax automatically expires!

Anything to end a war that doesn't directly concern our existance as a nation is a good thing. If extra taxes makes it incovenient enough that people want the war to come to an end, that's great.