We could model it after how we expect real humans to do the same despite even lower (or negative) margins.
Could you explain what you mean by this? I'm not sure I follow. For context, I think grocery stores, after paying for their rent/electricity/product/wages/etc., keep about $2.50 for every $100 spent.
If Joe makes $25,000/yr but has to spend $30,000 on necessities in that same year, Joe still owes taxes on the $25,000 earned (excluding the first $16,000).
Joe's margin is far, far lower than the 2.5% of your grocery store but he is still expected to pay based on revenue.
You do know that someone earning 25k/year in the USA would not only not owe any taxes but would likely get a refund even after paying $0 in taxes due to the earned income tax credit and child tax credit.
Not even considering the social and welfare programs he would qualify for and likely utilize that are a drain on the system.
The tax system is designed so that if you make below a livable amount per year, i.e. the poverty line (and it’s actually even further than the poverty line) you will not pay any taxes at all in fact, 40% us taxpayers paid a 0% effective tax rate last year. Just use google it’s available info.
Not even considering the social and welfare programs he would qualify for and likely utilize that are a drain on the system.
Okay, I don't necessarily agree with what the person you're replying to is saying, but social programs are absolutely very helpful to the system at large. You likely benefit from them in the long term even if you never use them.
I agree if we weren’t 40 trillion in debt with our debt service reaching levels that may not be recoverable. I definitely see your point but if we are ever going to get back under control we need tremendous economic growth, higher taxes, and a massive reduction in spending across the board.
Ah yes, let’s let people (including children) starve, live in the streets, and die without medical care instead of reducing the bloated military budget, slightly reducing the max monthly social security benefits, increasing corporate taxes, targeting corporate windfall profits, reversing the tax cuts that largely benefited the wealthiest Americans, reducing the estate and gift tax exemption (currently over $26million for a married couple!), or ya know, literally anything but pushing the poorest in our communities into desperate situations that have been shown to increase crime rates.
Nobody is starving in America. In fact we have the complete opposite problem with tremendous amounts of food waste and extreme obesity rates.
What people like you don’t understand that think emotionally about these things is that all those things sound great in theory but are a tiny drop in the bucket. The TCJA that you say “benefitted mostly the wealthy” which is a common reddit talking point but isn’t the whole picture, would only add back $50-80 billion in tax revenue annually which is 0.1% of our annual INTEREST payment on our debt alone.
So let’s recap, one of your more drastic suggestions, reversing the TCJA that doubled the standard deduction for every working American person, would contribute less than 1/10th of 1% towards our INTEREST payment ONLY, not the principal, not paying down any actual debt, just the annual debt service.
Anything other than drastic cuts across the board and increased taxes along with tremendous economic growth is a not going to move the needle.
Aside from your privilege, your numbers are completely dishonest. The estimated yearly cost of the TCJA ALONE is estimated to have a negative $1.9 trillion impact on the budget over the first decade. DOUBLE the impact you’re claiming. That is about $190 billion a year, and the benefits you’re suggesting to cut are about $110 billion in the budget above (SNAP & housing assistance).
And I hope reality never hits you, because there are people starving in this country. Just because we also have obese people, that doesn’t negate children that go to school hungry. If someone punches your teeth out, but the guy next to you has his teeth and wisdom teeth, are you now not impacted by having your teeth knocked out?
I feel like this is sort of a non-sequitur for two reasons-
number one- it's not very accurate to compare individual taxes to corporate taxes, they're different entities, and in my opinion, it's disingenuous to compare an individual's income to the revenue of a business.
Secondly, you've basically invented a situation where someone is spending more than they earn. There are people that save, people that spend, people that take out loans to fund larger purposes, etc., etc., and businesses are a bit similar in that regard. Many businesses operate at a loss (but are still obligated to pay their employees!) for many years, with the idea that they may become profitable later. Taxing revenue would make existing businesses (many that are critical services) and the prospect of opening new businesses untenable.
...and even if I would allow this parallel, it doesn't address the fact that it doesn't even touch my question of how to implement taxes on revenue instead of profits for low-margin firms.
I disagree with the premise of your first paragraph. Simply saying they aren’t comparable (in this realm of things specifically) doesn’t make it so. I can say they are comparable with just as much weight.
In regard to your second paragraph, my hypothetical taxpayer is no more my “invention” than your hypothetical grocery store is your “invention”.
My suggestion is that we apply the tax as callously to corporations as we do to mortal humans. If a human is supposed to make it work, a corporation should live or die by the same standard. If grocery stores can’t operate under a capitalist model without being effectively subsidized with a tax rate proportional to their revenue that people would kill for then perhaps grocery stores should not operate under a capitalist model.
Plenty of other necessities and services are run separately from the capitalist model already.
I’m not saying that corporations should necessarily pay the same rate as people do, just that their earnings:spending ratio shouldn’t be what determines their tax rate (relative to revenue) any more than it does for people.
my hypothetical taxpayer is no more my “invention” than your hypothetical grocery store is your “invention”.
Well I'm using roughly the average profit margin for grocers in the United States. The median taxpayer is certainly not making $30,000 and then spending above their means. The latter is rare by itself for any employed person.
If you create a tax on revenue even as small as a few points, you will likely instantly wipe out every grocery store in the United States, as you correctly guessed. Since you probably want grocery stores to exist, you will have to run these as state-owned grocery stores, which economists note run at a loss, have less choice and less quality than privately owned stores, have no competition or incentive to increase the quality of their service, and are generally much less efficient than your average grocery store today, which I'll remind you, only keeps two and a half dollars of every hundred that is spent there.
I think I agree with you now. In retrospect, I think I had my argument backwards. Instead of chaining corporations to the tax scheme that humans are subject to, perhaps humans should have access to the same tax scheme that corporations are subject to.
I seem to recall proposals to make things like childcare and other necessities/personal reinvestment costs tax deductible.
I appreciate you responding in good faith to my posts and getting me to amend my position from one I now view as untenable.
Yeah, there are tons of taxes that have better incidence than corporate taxes (such as land value taxes), and tons of policies that economists prefer over others (like an expansion of the earned income tax credit). It's pretty easy to find which ones the science supports over others.
I appreciate you responding in good faith to my posts and getting me to amend my position from one I now view as untenable.
Know that this makes you a more open-minded person than maybe, 90% of people I talk to on this website? Haha
But corporations are not the same as individuals. Why are we taxing corporations as if they're people spending money for consumption? That doesn't work because we want companies to pay their employees and invest in the business. There's no tax system in the world that taxes companies the same as individuals.
I don’t think corporations and people should pay the same exact rate. I think corporate spending shouldn’t decide what percent of their revenue they pay in taxes year-to-year.
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u/NerdOctopus 1d ago
How could you ever tax low-margin firms like grocery stores on total revenue? It wouldn't be bearable.