Black Raven Dragoons

[Damorte]

...but I ain't dumb neither. This article/blog/spew of someone's mind actually kinda makes sense to me. I'm not saying I support it or that I even understand all of the ramifications of this kind of system where a significantly high sales tax replaces income tax. I'm curious to see what you smarty-pants think. Enlighten me with your genius.

[Zancarius]

I'm not an economist, so these are just my opinions and thoughts on the article.

First point: Using taxation as a method of stemming illegal immigration is a bit... odd. I don't see how a national sales tax is going to have much of an impact on immigration at all--you pay tax on what you buy. I suppose you could use it to get drug dealers on tax evasion charges. Plus, his counter to my question sort of bugs me:

You may be right, but a higher sales tax with even higher prebated amounts could be implemented until we get the desired results. The process should be scalable. So try twice 23% or sales tax of 46% and a prebate of $10,140 to a family of four at the poverty level. Again the prebate amounts for those here legally would be adjusted upward with the tax percentage resulting in revenue neutrality for those below the bottom. For those here illegally the fine of $10,140 is a pretty stiff one.

Emphasis mine. The wording here makes me uncomfortable. Oh, and good luck "fining" people who are here illegally. It'll just push them further underground. As it is, we have no hope of directly estimating the number of illegal immigrants in our current system. Changing the tax code isn't going to do a damn thing.

Second point: A national sales tax is going to create a whole slew of other problems that haven't been addressed. The proposals I prefer are flat taxes more or less based on income--not sales tax. The quickest way to render impotent a national sales tax system would be for the wealthy to limit or reduce their consumption (sales tax is a consumption-based tax). Or heck, anyone limiting their consumption will hurt a sales-tax based system. Suddenly, revenues decrease dramatically and the system has to return to an income-based tax. While I think that the anti-income tax groups might be a little too far on the fringe for me, if you consider their argument--that is that property taxes are the only constitutional tax--it makes sense. Owning property and taxing such ownership on the basis of valuation is a great way of obtaining a reasonably fair amount of tax without deviations in personal consumption impacting revenues; wealthy people generally own more highly valued land. That's another rant for another day, however. I'm not strongly for or against either side.

Third point: I do agree that the existing tax code is an awful mess. It'll never change, however, so long as we--the American people--keep voting lawyers in to Congress. This is part of the reason I find it so comical when every election cycle $party_not_in_power complains that $party_in_power isn't progressive enough or does nothing but maintain the status quo. Newsflash: Both parties largely wish to maintain their existing position of power--thus the status quo will never see change without some sort of dramatic external force. Side note: I do think there is some change that those on the left have been pushing, and I'm not so sure I like it.

Disclosure: My mum was a legal immigrant (she's a citizen now) from Australia. As a consequence, I see illegal immigration as something unfair to her. Given that it took literally years for the idiots in the INS to process her paperwork so she could become a citizen, I find that wide-sweeping amnesty would send a very grave message to those who have gone through the legal hoops and received the run-around by one of the most inept institutions in the US today (aside from Congress). I won't debate the issue of legal/illegal immigration here--and I know there are drastic, undesirable consequences for encouraging it and eliminating it--but I think this disclosure is necessary. Living in a border state, I get to see some of the more interesting side effects of immigration that go largely unnoticed by those of you who may never have. (And yes, I know you live in a border state, too, Damorte! I'm mostly poking at those here who don't.)

That said, in our current economic clime, I'm beginning to think and feel that immigration from Mexico and other Central/South American states should be the least of our concerns. Earlier this week, I read an interesting article citing statistics of graduate students from India and China. An estimated 60-70% of them leave within two years of receiving their advanced degrees. In other words, our institutions are educating individuals who will not be maintaining this knowledge here at home. Which has a more startling and frightening (potential) impact on our future? Migrant workers who "take jobs" from Americans by working in fields or advanced students trained in the sciences or engineering--fields that are already seeing poor enrollment--and taking these skills overseas?*

Yes, I know. "American students aren't great!" Or "American students don't qualify." Both excuses are pretty lame when you consider we're educating tomorrow's scientists for other countries. Immigration isn't about people who come across the US-Mexico border. It's about people who come here on student Visa's, too, and I think it's a bit disingenuous to overlook this important distinction. Sure, there's the issue of smuggling and the likes, of social welfare programs, and of the strain placed on border hospitals--all of which are very real. I do think that our economic situation here in the US will largely help to mitigate this problem, but I do not believe that imposing a national sales tax is going to make a damn bit of good. Worse, a national sales tax is something that has the potential to be so horribly abused by the government that it brings to mind the old adage: Better to stick with the devil you know than the devil you don't.

[Tirian]

I'm going to cherry pick my response here...

On Thal's last point about educating people who then go home. I largely agree with your point, even though I think there's more going on there. For example, international students who pay for their degrees are a great income source for universities. Those who are funded provide, like domestic students, sources of labor for teaching classes and assisting research professors that are vastly cheaper than hiring "qualified" staff for research or teaching -- international or domestic, the universities take massive savings on these students.

Consider, for instance, that my university pays TAs and RAs $13,000/year (balancing our pay with our still required student fees). On top of that, they provide us with tuition remission of about $10,000 per year -- which isn't really all money that they're "spending" on us, because the combined costs to the university are significantly less. So, in a worst case scenario, the university comes out with paying us $23,000/year to do the same work that a junior professor would otherwise do for not less than $40,000/year, probably closer to $50,000/year starting. So funded grad students -- who may have no job prospects when graduating with their PhDs to begin with -- are massively cheaper than hiring qualified professors, whether they're American or not.

So that said, what does bother me to some degree is that, in the past, these students -- grad or undergrad -- often wanted to work in America afterward. They had a complicated set of goals involving A) receiving an education, B) using that education not only to become skilled but also to become skilled in ways that would allow them to receive skilled workers' visas here, C) live here for a period of several years to the rest of their lives, contributing to our country while advancing themselves. That is the part that is fading away, and I think we need to consider why. Our standing among the developed countries of the world in quality and costs of education and health care, our shockingly increasing economic inequality, and our often convoluted immigration policies are all to blame, though not the only causes. One can make moral arguments about brain draining poor countries, etc., but if one agrees to look at this from an "America First" angle, we should be asking why visiting students have become much less likely to want to commit their skills to work here, and how this reflects on where our country has gone as a whole.

On the tax issue... well, I'm with everyone else in saying that our current systems at federal, state and local levels is convoluted and crazy. I don't favor a flat tax, though I do favor a much more streamlined but still progressive (i.e. wealthier people pay a higher percentage of income) system. However, the key here is that a switch to sales tax is very regressive (poorer people pay a higher percentage of income) -- as the lower and middle classes pay much higher percentages of their income on products than do the wealthy, a system based on sales tax would target their income, percentage-wise, much more. Unfortunately, this fact has not been considered many times when a major basis on sales tax has been proposed. Disturbingly, other times people in the upper class have proposed it knowing full well that this is the case.

The other problem with sales tax is that it threatens our economic model. The current structure of our economy needs people to buy products and services. Liquidity and exchange drive our economy at all levels. Increasing sales tax depresses people's desire to buy and increases their desire to save. The irony is that saving is, of course, better overall for the individual, but not for the system. On a small scale, I actually see this effect here in Boulder. With a sales tax that totals over 8%, many of my friends and I avoid spending money both generally (things we would normally buy, we just don't) and specifically here in town (high-cost items that we really need, we go to other towns). If we need to make major purchases, we often wait and leave town to do it. It's a bit crazy.

/rant

[Zancarius]

So that said, what does bother me to some degree is that, in the past, these students -- grad or undergrad -- often wanted to work in America afterward. They had a complicated set of goals involving A) receiving an education, B) using that education not only to become skilled but also to become skilled in ways that would allow them to receive skilled workers' visas here, C) live here for a period of several years to the rest of their lives, contributing to our country while advancing themselves. That is the part that is fading away, and I think we need to consider why. Our standing among the developed countries of the world in quality and costs of education and health care, our shockingly increasing economic inequality, and our often convoluted immigration policies are all to blame, though not the only causes. One can make moral arguments about brain draining poor countries, etc., but if one agrees to look at this from an "America First" angle, we should be asking why visiting students have become much less likely to want to commit their skills to work here, and how this reflects on where our country has gone as a whole.

IIRC, the students interviewed who were educated here and planning to return home cited a better standard of living given their US degrees and the growing economies overseas. Take that as you will, but I found that particular tidbit rather interesting. Given the local economic clime, I can't really blame them. Evidently, we can't even keep foreigners here.

Unfortunately, this fact has not been considered many times when a major basis on sales tax has been proposed. Disturbingly, other times people in the upper class have proposed it knowing full well that this is the case.

Which is funny, because the current Congress was mulling over the idea of a 10% national sales tax earlier in the year. Since Pelosi cited they were going to run the most ethical Congress yet, I'm sure they had the poor people in mind--they're not paying their fair share!

On a small scale, I actually see this effect here in Boulder. With a sales tax that totals over 8%, many of my friends and I avoid spending money both generally (things we would normally buy, we just don't) and specifically here in town (high-cost items that we really need, we go to other towns). If we need to make major purchases, we often wait and leave town to do it. It's a bit crazy.

This is kinda funny, too, because the local towns here have been approaching 8% sales tax. It's funny to me precisely because they're trying to encourage people to shop local--support your local vendors--and goods/services here are far more expensive than they are elsewhere. New Mexico is one of the poorest states in the union, so you have to wonder what their motivation is (besides shortsightedness--to the city commissioners, raising the local sales tax is the only way to increase revenue, right?). Although, I'm not sure which is worse--the fact that Las Cruces is just a few percentage points below 8% even though the town, while wealthy for a New Mexico city, is still quite poor compared to many of our neighboring states OR the fact that Alamogordo is attempting to be like LC and has been increasing its taxes in kind. No joke--our city commissioners think that if they follow the fiscal policies of Cruces, we'll be just like them.

I'm also reminded of another humorous mistake the city commissioners made. More interestingly, they didn't even see it coming.

Over seven years ago, the city commissioners struck a deal with flowers.com to bring a call center in to Alamogordo. They cited that it would help the local economy by bringing in jobs. Although the details of the deal weren't advertised, it was discovered that they gave the company a tax break so long as they signed a contract that they'd stay for 7 years to employ some of the local population. Unsurprisingly, guess what happened when the contract was up? That's right--Flowers packed up and left. The commissioners? Well, they were shocked and appalled that their generosity to Flowers wasn't returned by them staying longer!

There is a tremendous disconnect in the powers that exist in this country and how things actually are. Worse, this disconnect starts at the local level and grows exponentially as the governance district size increases.

[Damorte]

On a small scale, I actually see this effect here in Boulder. With a sales tax that totals over 8%, many of my friends and I avoid spending money both generally (things we would normally buy, we just don't) and specifically here in town (high-cost items that we really need, we go to other towns). If we need to make major purchases, we often wait and leave town to do it. It's a bit crazy.

My city has an 8.05% sales tax rate based on a statewide 5.6%, and Maricopa County adds on .7% sales tax to support roads and jails, and the city adds the remaining amount. Now because I live in a metro-city setup the cities do not have any separation we are all one giant city with certain streets being the "border" between two cities and Metro-Phoenix contains a dozen or so cities, I can drive 2 miles down the road in any direction and have a completely different sales tax. In my city, Mesa, we do not have a grocery tax, however if I go the Walmart closest to me, I pay 2.2% grocery sales tax on top of the state and county taxes. This forces me to drive an additional 4 miles to a Walmart in Mesa to avoid the grocery tax.

Now this isn't a big stink yet, but try this one on: I live at the edge of a county "island", a chunk of land not designated to any city and managed by the county. They are usually primarily residential but the one by me has a CVS who has so far charged me two different grocery taxes, one time nothing based on Mesa's tax and another time 2.2% based on Apache Junction's tax system. So, it got me thinking, who regulates this, and if they aren't part of a city how are they able to tax me as if they are in the city limits? And how do they keep switching cities? I am totally baffled by this and a flat federal tax terrifies me. If it all started with this HUGE 20% or whatever federal tax rate and each gov't level plopped their piece of the pie on top of that we would end up paying more taxes than the product was worth. No one could afford to live here. Shit, I couldn't afford to live here, I'd move to Canada or something. This wouldn't lead to stopping illegal immigration, in my opinion, it would stop ALL immigration. While that may be fine and dandy for some, its not fine and dandy with me. We're a country founded by immigrants, populated by even more immigrants coming through Staten Island, and we're maintained by the generations that sprung off from there. We're not "native", well unless your Native American, in that case, ya you're native. Me? I'm Scot-Irish, British, and Cherokee, so I suppose I'm partially native. But I'm getting off-topic... =P,so I'll move on to the education battlefield.

Consider, for instance, that my university pays TAs and RAs $13,000/year (balancing our pay with our still required student fees). On top of that, they provide us with tuition remission of about $10,000 per year -- which isn't really all money that they're "spending" on us, because the combined costs to the university are significantly less. So, in a worst case scenario, the university comes out with paying us $23,000/year to do the same work that a junior professor would otherwise do for not less than $40,000/year, probably closer to $50,000/year starting. So funded grad students -- who may have no job prospects when graduating with their PhDs to begin with -- are massively cheaper than hiring qualified professors, whether they're American or not.

I work at a community college, or a junior college as some call it. We offer 2-year degrees and transfer options, but not a 4-year or higher degree. The students that attend here pay significantly less than at a university, and the majority are financial aid or grant students. Personally, I was able to get so much money from grants alone, I was PAID to get my degree. I don't owe a dime for my Associates. My bachelor's however is a completely different story, but that's neither here nor there. Foreign student's come here to take their basic 101s and such and learn enough English to transfer into their college at the university (no, I'm not kidding or being cruel about this, this is completely true and verified by my International Education dept). We do not have TAs or RAs, we employ full-time or part-time professionals, with legal status in the country whether it be citizen or green card, usually citizen, based on the district's pay scale, of which none are as low as $13k as Tirian mentioned. So honestly, if these students are receiving some kind of grant or aid because they are here on an education visa, yes foreign students get free money too as long as they are on a visa, we just got the shaft because we didn't benefit a lick from that student. The college did not benefit from cheap labor, and since we are technically a government entity, we financed their short but expensive educational experience with us. They pumped the government for money, ran off to a university as fast as their legs could carry them, and, as Thal pointed out and Tirian confirmed, they book it after graduation.

They had a complicated set of goals involving A) receiving an education, B) using that education not only to become skilled but also to become skilled in ways that would allow them to receive skilled workers' visas here, C) live here for a period of several years to the rest of their lives, contributing to our country while advancing themselves. That is the part that is fading away, and I think we need to consider why.

I agree with Tirian. Why are we attracting illegal unskilled workers from Mexico but can't retain the students with the skills to benefit the country? We have had a huge influx of illegal immigrants over the past decade, does this mean our quality of life dropped so much that the only foreign workers we can attract are the ones that brave the desert for weeks and end up hiding in an abandoned house or stealing someone's SS# just to stay here? We're running a slum here, we're too trailer trash for the educated people to stay, and as Tirian already stated, there are so many reasons this is happening, it can't be narrowed down to one as many would like to believe. My kinda-in-laws think everything is caused by "the Mexicans." I think their ignorant and close-minded, but hey, who am I to argue politics with my boyfriend's parents.

Basically, as I stated in my original post, some of the arguments make sense, but it seemed WAY too simple and had WAY too many holes in it. I love hearing you smarty pants type people's opinions on these. You help me see so many different sides of issues. Thanks! =)

[Zancarius]

I agree with Tirian. Why are we attracting illegal unskilled workers from Mexico but can't retain the students with the skills to benefit the country? We have had a huge influx of illegal immigrants over the past decade, does this mean our quality of life dropped so much that the only foreign workers we can attract are the ones that brave the desert for weeks and end up hiding in an abandoned house or stealing someone's SS# just to stay here? We're running a slum here, we're too trailer trash for the educated people to stay, and as Tirian already stated, there are so many reasons this is happening, it can't be narrowed down to one as many would like to believe. My kinda-in-laws think everything is caused by "the Mexicans." I think their ignorant and close-minded, but hey, who am I to argue politics with my boyfriend's parents.

Unfortunately, that might be closer to the truth than you may imagine. Those foreign students who are leaving the US are citing a better quality of life overseas. I finally took the time to dig up some of the stuff I was reading that got me onto this rant:

First, if you're a US citizen and want to work for IBM get ready to leave for parts unknown. Plus, some universities are suggesting that hiring US students is bad. No, it's not 'cause they're dumb; you as a company have to pay more to maintain those citizens! (Some of these links may be anti-immigration, so take them with a grain of salt; a few of the claims don't seem completely true to me.) And finally, here is the one I meant to link earlier. To quote from the article:

We learned that these workers returned in their prime: the average age of the Indian returnees was 30 and the Chinese was 33. They were really well educated: 51% of the Chinese held masters degrees and 41% had PhDs. Among Indians, 66% held a masters and 12% had PhDs. These degrees were mostly in management, technology, and science. Clearly these returnees are in the U.S. population’s educational top tier—precisely the kind of people who can make the greatest contribution to an economy’s innovation and growth. And it isn’t just new immigrants who are returning home, we learned. Some 27% of the Indians and 34% of the Chinese had permanent resident status or were U.S. citizens. That’s right—it’s not just about green cards.