How is Chipageddon affecting you?

[TimFox]

"What the market will bear" is the appropriate phrase for a monopolistic market.
See Upton Sinclair's muckraking 1901 novel "The Octopus, a Story of California" about the Southern Pacific Railroad's golden days, when ethics were appalling.
Extra points for the allusion.
Although the novel did not invent that phrase, it certainly popularized it during the early 20th century.

[IDEngineer]

That seems to imply just on the numbers alone that the tax would need to be close to 100%

That obviously cannot be true. Taxation cannot be 100% of anyone's economy. So there's something wrong with the numbers. If you simply replace the existing system with an NST that is revenue-neutral (collects the same number of dollars) then we know for certain it cannot be 100% because it's not 100% today.

Note that the NST would actually be revenue POSITIVE if you collected the same number of tax dollars because it is so much more efficient than an income-based tax system. Or, you could lower the NST tax rate to compensate for the increased efficiency and STILL have the same bottom-line tax revenue with a lower tax rate. Efficiency is a huge, huge benefit of the NST.

My 17% figure comes from a detailed analysis a while back. I wish I still had the paperwork but have looked several times and cannot find it. But it was well detailed and I came way convinced that it was within range. Let's say 20% for some margin. That's the federal sales tax rate, to which state and local sales taxes would be added. Here that would total 26%. ALL other taxes are eliminated.

Increasing it much beyond 20% would punish poorer people who disproportionally spend money on goods compared to their income

No, the basics of life (food, shelter, medical) are exempt. The poor pay zero for the basics of life. As they, or anyone else, start climbing the economic ladder and have discretionary dollars to spend, only those discretionary dollars are taxed. In this way the truly poor bear no burden at all, and as you gain ground you participate commensurate with your proportion *above* poverty. Very fair, and automatically scales to remain fair.

As to the "rich": Yes, investment dollars aren't taxed. But investment dollars, by definition, are poured back into the economy which generates economic activity that "lifts all boats". When rich people indulge themselves and buy something that is for their personal use, those dollars are taxed just like everyone else's. Fancy car = more tax. Private plane = more tax. Et cetera.

you can eliminate the 200 million tax returns by having the taxation service work it out automatically from payroll

You're presuming everyone is an employee, and further presuming that all employees are "above the table" with proper reporting to the government. Neither of those things is true. On the wealthy end, lots of people have income that isn't payroll. On the poorer end lots of laborers, illegal immigrants, etc. are paid off-the-books with no paper trail at all. The NST completely eliminates dependency upon paperwork and reporting, and treats every single individual the same no matter rich or poor, legal or not, employee or self-employed, under or over the table - because everyone spends money. Tax at the point of retail sale and you get maximum efficiency and maximum fairness with zero individual paperwork, and you still have progressive taxation where the poor pay less/zero and the rich pay more. No other revenue system delivers all of those benefits.

[tom66]

That seems to imply just on the numbers alone that the tax would need to be close to 100%

That obviously cannot be true. Taxation cannot be 100% of anyone's economy. So there's something wrong with the numbers.

No, you could have a 100% sales tax.  It would double the price of everything.  So it's probably not sustainable, but it's mathematically conceivable.  There are some countries which have 100-200% taxes on 'luxury' goods.  I seem to recall Vietnam and Singapore for instance do that for cars. 

My 17% figure comes from a detailed analysis a while back. I wish I still had the paperwork but have looked several times and cannot find it. But it was well detailed and I came way convinced that it was within range. Let's say 20% for some margin. That's the federal sales tax rate, to which state and local sales taxes would be added. Here that would total 26%. ALL other taxes are eliminated.

Back of the envelope maths:  US fed budget $4.4tn in 2019 (so pre COVID as lots of stimulus cash then.)  Assume 26% tax on all goods, that's ~$17tn of retail sales per year that are needed to fund that.  (In other words, sales that generate a tax: as you state, you would exempt any 'essentials'.)  That would be an average 'luxury goods' spend of ~$65k pa for every adult American (~258 mio pop.)

You would almost certainly need a very large 'discretionary' income to achieve that or a very broad definition of what 'luxury' is (plain bread OK, but sesame-seeded bread is taxed? etc.)

I haven't even considered the non-fed budgets, like for each state.  What about states currently in the 'budgetary red' - some states contribute more than they pull back, others don't.

As to the "rich": Yes, investment dollars aren't taxed. But investment dollars, by definition, are poured back into the economy which generates economic activity that "lifts all boats". When rich people indulge themselves and buy something that is for their personal use, those dollars are taxed just like everyone else's. Fancy car = more tax. Private plane = more tax. Et cetera.

Trickle down economics, you should know better.

You're presuming everyone is an employee, and further presuming that all employees are "above the table" with proper reporting to the government. Neither of those things is true.

Of course not everyone is on payroll, but the vast majority of people are.  A personal tax return is still necessary for contractors, businesspeople, etc.  However there's really no disadvantage in having the IRS or whomever calculate taxes from payroll automatically and send a pre-calculated tax return which you sign and approve. (Or it just gets automatically deducted at source, like in the UK.)

[IDEngineer]

As to the "rich": Yes, investment dollars aren't taxed. But investment dollars, by definition, are poured back into the economy which generates economic activity that "lifts all boats". When rich people indulge themselves and buy something that is for their personal use, those dollars are taxed just like everyone else's. Fancy car = more tax. Private plane = more tax. Et cetera.

Trickle down economics, you should know better.

No, the much-maligned trickle-down theory is that if you make the rich richer, they will generously spread largess to the unwashed masses. This is different. Here, we're simply talking about normal life. Dollars can be coarsely divided into two categories: Those you spend to live another day, and those which are discretionary. By definition the poor have zero discretionary dollars because they are just surviving. The rich, on the other hand, presumably have lots of discretionary dollars. The question then becomes what the rich do with those discretionary dollars. If they spend them, in general it benefits only themselves so it's consumption and the NST should tax them. If they invest them, though, that's stimulating the broader economy (money for companies to make capital investments, hire more employees, expand factories, etc.). The NST presumes the latter benefits the "general welfare" and so should not be taxed since they are not for solely personal benefit.

If your argument is that the wealthy could accumulate "vast oceans of invested dollars that evade taxation" then you're not talking about an income tax, you're talking about a wealth tax. In addition to a wealth tax being blatently unconstitutional (e.g. you'd have to pass a Constitutional Amendment to impose a wealth tax, the 16th Amendment refers only to "income") it is also literally impossible to implement. The idea of a wealth tax has been getting a lot of press lately and even its staunchest proponents don't have answers for countless implementation details. As just a really easy one, how do you fairly tax an illiquid asset that hasn't gone through a recent transaction? Say some rich guy owns a Picasso painting... how do you tax it based on value? What if you impute (say) $20M this year, then next year he finds a licensed appraiser who deems it only $10M... does the IRS send him a refund? How many cycles does that go back and forth?

Now extend this to the family home... or farm... or cars... or whatever. The only thing that doesn't generate arguments is unencumbered cash in the bank. Everything else that hasn't sold lately is someone's guess (and if it sold recently then it's not "wealth" anyway). A wealth tax wastes even MORE money on compliance while tax accountants and tax attorneys dicker over the minutia of valuations on holdings. It's literally one expert's opinion against another's, while all the attorneys get rich arguing about it in court. Utter insanity. By comparison an income-based system looks fair and reasonable.

Bottom line: All taxation systems are imperfect. The NST is the least imperfect of them all. It wastes the least amount of money on collection and compliance, and virtually eliminates the ability for people to hide from the system, while eliminating personal paperwork and reporting requirements. If you can find another system that checks all those boxes I'm anxious to hear about it.

[SilverSolder]

That's true up to a point, though 'what the market will bear' depends on the price of competing products as much as any other factor.

If you're making a thing that people deem necessary (ie. there's relatively little elasticity in the price-demand relationship), then if your competitors all put up their prices 20%, so can you.

It's why price fixing cartels are illegal, of course, but if its not you that's increasing the price but instead it's a tax being applied, the end customer is still worse off.

Manipulating the market is of course a "Bad Thing" (TM) under our system.  Nevertheless, the world is shades of grey and we know it goes on, to a greater or lesser extent.

"What the market will bear" is indeed a wide concept and includes snake oil salesmen etc. -  shades of grey again!

We don't have a choice about paying tax, the only influence we have is an election every few years - if all the parties are in favour of raising taxes, we have zero influence in reality.

[IDEngineer]

Manipulating the market is of course a "Bad Thing" (TM) under our system.  Nevertheless, the world is shades of grey and we know it goes on, to a greater or lesser extent.

Manipulating the market is only "illegal" unless government is the one doing the manipulating. Governments manipulate markets all the time. Think tax breaks, subsidies (electric cars), bans of some products in favor of others (lightbulbs, limited flow showerheads). The list is endless and every single one "manipulates" the market in some way. We can argue about whether each one is good or bad, but they're all artificial influences on markets. Government doesn't like competitors, though, so it forbids such manipulation unless it's the one doing it. Please note that "special interests" can still get their desired market manipulation by bribing lobbying the correct politicians to implement the desired manipulations, though they'll be described in flowery language that seeks to rationalize them.

[coppice]

We don't have a choice about paying tax, the only influence we have is an election every few years - if all the parties are in favour of raising taxes, we have zero influence in reality.

History shows this is not true. We have little choice about paying taxes when they are not extreme. However, if a government makes them too high it becomes beneficial for the rich to use some of their money to lobby the tax regulation documents up to several times their normal size to suit their needs. If you look at periods when the top rates of tax were very high. especially in the US, the tax regulations expanded into massive documents. Any smart super rich people had bought an exclusion in there to ensure what they actually paid was reasonably low.

[IDEngineer]

If you look at periods when the top rates of tax were very high. especially in the US, the tax regulations expanded into massive documents. Any smart super rich people had bought an exclusion in there to ensure what they actually paid was reasonably low.

Another advantage of the NST. When sales taxes are collected at the retail level, opportunities for "special tax breaks" are minimized. The cash register doesn't care if you're rich or poor, young or old, citizen or not, employer or employee or retired. There's no one to lobby to give you an unfair advantage. Any "breaks" (such as those on life's fundamentals to insure the poor pay nothing) are totally transparent and equally available to everyone without having to hire staffs of tax attorneys and estate planners. Just live your life.

Indeed, that's probably one reason some people oppose the NST: It eliminates their ability to manipulate the tax system to favor some over others. I view that as a positive feature.

[tom66]

I'm not rich and I'd oppose a NST because it plainly wouldn't work - the calculation I did showed that you'd need ridiculously wide definitions of what counted as luxury to actually obtain the required federal funding.  So much so that it would then start disproportionately impacting the poor.

That is, unless you believe the budget would also be halved at the same time.

A wealth tax is not impractical but would need to be explicit in the assets it targeted, for instance property, expensive cars, luxury watches etc.  Anything that is very illiquid like artwork would need to be treated differently, e.g. based on the last sold value.  The later sale or disposal via will could trigger a charge in that case.  However, a wealth tax is probably not necessary if income taxes are just implemented correctly.

[VK3DRB]

As to the "rich": Yes, investment dollars aren't taxed. But investment dollars, by definition, are poured back into the economy which generates economic activity that "lifts all boats". When rich people indulge themselves and buy something that is for their personal use, those dollars are taxed just like everyone else's. Fancy car = more tax. Private plane = more tax. Et cetera.

Trickle down economics, you should know better.

That's rubbish. Trickle down economics is pretty much . A rich man in the US said that having obscenely rich people not paying their taxes is counterproductive. His argument was a very wealthy person might only buy two pairs of jeans a year... not many more. Total sales of jeans = 2 per year. But if some of his wealth was shared between 2,000 poor people by redistributing wealth using taxation, to the point the poor people have some level of disposable income, they might each buy two pairs a jeans per year.  Total sales per jeans per year = 4,000. You can see how the economy overall is benefiting from sharing wealth more. It is simplistic, but in essence it is true.

In any case, Chipageddon is a different argument. It is effecting everyone, but much more so the poorer people than the filthy rich and ultra-greedy.

[Kasper]

Some good news on the mining front, I think.

Canadian miners say Ottawa’s plan to spend $3.8 billion to boost domestic production of lithium, copper and other strategic minerals should help propel the country’s efforts to become a key part of the global electric vehicle supply chain

https://financialpost.com/commodities/mining/canadian-miners-cheer-ottawas-critical-minerals-budget-plan

[IDEngineer]

That is very good news indeed. Wish the USA would take the opportunity to benefit from more of its own domestic resources instead of hoping the far east will continue their exports.

[cdev]

Papa may have, mama may have but God bless the child who's got his own, as the song says.

That is very good news indeed. Wish the USA would take the opportunity to benefit from more of its own domestic resources instead of hoping the far east will continue their exports.

[cdev]

Some US states are changing their laws to attract the very rich to move there.. they are becoming "secrecy jurisdictions" that keep the ownership info secret. Florida and Texas both allow debtors owing lots of money  keep homes worth up to $10M completely safe from creditors in bankruptcies. Other states do other things. Huge numbers of corporations register their addresses as a nondescript building in Delaware for some reason.

Author Nicholas Shaxson has written extensively on these "treasure islands"
Recently Ive been getting heavily into the fascinating histories of many of these island places. Did people know that one of them, Kilwa, a very old fortified settlement on the Swahili Coast, (or coins from one, Kilwa, Kisingani, from around 900 AD anyway) may have been there at the discovery of Australia long before Captain Cook?

As to the "rich": Yes, investment dollars aren't taxed. But investment dollars, by definition, are poured back into the economy which generates economic activity that "lifts all boats". When rich people indulge themselves and buy something that is for their personal use, those dollars are taxed just like everyone else's. Fancy car = more tax. Private plane = more tax. Et cetera.

I am sure rich people see that "fancy" car as necessary in their business.

Trickle down economics, you should know better. Trickle down economics has been debunked but some people keep acting as if it never was. They think that if they do that, (pretend nothing has changed) many people will never realize that it has been. Maybe they are right, but I doubt it.

That's rubbish. Trickle down economics is pretty much . A rich man in the US said that having obscenely rich people not paying their taxes is counterproductive. His argument was a very wealthy person might only buy two pairs of jeans a year... not many more. Total sales of jeans = 2 per year. But if some of his wealth was shared between 2,000 poor people by redistributing wealth using taxation, to the point the poor people have some level of disposable income, they might each buy two pairs a jeans per year.  Total sales per jeans per year = 4,000. You can see how the economy overall is benefiting from sharing wealth more. It is simplistic, but in essence it is true.

In any case, Chipageddon is a different argument. It is effecting everyone, but much more so the poorer people than the filthy rich and ultra-greedy.

Am I correct in thinking that some players in the electronics industry are using it as a PRETEXT to extract extortionate prices and waits out of people that have no basis in fact as the rationale?

[floobydust]

Some good news on the mining front, I think.

Canadian miners say Ottawa’s plan to spend $3.8 billion to boost domestic production of lithium, copper and other strategic minerals should help propel the country’s efforts to become a key part of the global electric vehicle supply chain

https://financialpost.com/commodities/mining/canadian-miners-cheer-ottawas-critical-minerals-budget-plan

Mining appears the same as semiconductors - nothing is expanding until the government grants, tax credits appear and only then do corporations take interest. Without incentives, these MBA's are content to sit on their laurels.

Rare-earth mining is extremely toxic, you need a leaching pond with chemicals to seperate the metals. china's domination is due to lax environmental regs.
"...Both methods produce mountains of toxic waste, with high risk of environmental and health hazards. For every ton of rare earth produced, the mining process yields 13kg of dust, 9,600-12,000 cubic meters of waste gas, 75 cubic meters of wastewater, and one ton of radioactive residue. This stems from the fact that rare earth element ores have metals that, when mixed with leaching pond chemicals, contaminate air, water, and soil. Most worrying is that rare earth ores are often laced with radioactive thorium and uranium, which result in especially detrimental health effects. Overall, for every ton of rare earth, 2,000 tons of toxic waste are produced."
https://hir.harvard.edu/not-so-green-technology-the-complicated-legacy-of-rare-earth-mining/

Look at lithium prices still at a record high as well. I think if you look at how many kg of lithium each household requires to "go green"... it's not going to happen. At some point we probably need to realize different battery tech perhaps sodium-ion will become viable. Then what happens to all the lithium mines?

[SiliconWizard]

And we still use large amounts of cobalt for those batteries until something better comes up.
Take a look at how and where cobalt is currently mined.

[coppice]

Mining appears the same as semiconductors - nothing is expanding until the government grants, tax credits appear and only then do corporations take interest. Without incentives, these MBA's are content to sit on their laurels.

The semi industry invests a huge amount most years, without being cajolled. I find it rather worrying that investment is going crazy right now, as that signals a catastrophic bust is in the pipeline. You might question where the industry invests, seeking out the best tax breaks, rather than long term stability, but the fact that supply and demand are in balance for a good percentage of the time clearly means long term investment levels have been about right.

Rare-earth mining is extremely toxic, you need a leaching pond with chemicals to seperate the metals. china's domination is due to lax environmental regs.

The US built a huge pile of thorium from its rare earth mining, which was a key reason they left it to the Chinese. If they'd developed and deployed reactors which make use of that thorium, there might have been only a modest amount of nasty waste to deal with.

[madires]

And we still use large amounts of cobalt for those batteries until something better comes up.
Take a look at how and where cobalt is currently mined.

Nickel

[SilverSolder]

"What the market will bear" is the appropriate phrase for a monopolistic market. [...]

It is true of a competitive, well functioning market too.  In a market with multiple sellers of comparable products, the concept that higher price leads to reduced demand is true.  Where there is a monopoly (or oligopoly), the price discovery mechanism of the market is rendered ineffective.

There aren't really that many "real" competitive, well functioning markets left.  People hate real markets...   sellers hate unpredictable selling prices, and so do buyers (whatever they say!).

For example, when there is a gasoline shortage - in a free market, the price would shoot up and the volume of fuel sold would go down to cope with the new reality of a shortage.  In the real world, the fuel companies get accused of price gouging and politicians threaten them with consequences for their greed....

[SilverSolder]

[...]
Am I correct in thinking that some players in the electronics industry are using it [Chipageddon] as a PRETEXT to extract extortionate prices and waits out of people that have no basis in fact as the rationale?

Not only players in the electronics industry...

"They" hate deflation much more than inflation...   deflation (and even low inflation) means that the mountains of debts "they" have amassed actually have to be repaid with real money, instead of devalued garbage.

So, how do you maintain high prices in the middle of a pandemic with reduced demand? ...  well, one way would be to constrain supply...    it could be done pretty easily by buying up essential commodity parts that nobody cares about normally....   this would cause constraints all the way down the line,  and you could tell the long suffering consumers that mysterious shortages in far away lands is to blame.   Conspiracy theory territory?  -  hmmmm......

[Karel]

For example, when there is a gasoline shortage - in a free market, the price would shoot up and the volume of fuel sold would go down to cope with the new reality of a shortage.  In the real world, the fuel companies get accused of price gouging and politicians threaten them with consequences for their greed....

Pay attention, when politicians step in and put some embargo's, it's not really a free market anymore...

[nigelwright7557]

I am finding myself PIC hopping at the moment.
I used PIC16f753 as that was cheapest for a while.
Then out of stock.
So moved to PIC16f1823 for a while.
Then out of stock
So moved onto PIC16F1623.
But bought a few of those to keep me going for a while.

The SMD PIC32's are a no go as all out of stock.

[tom66]

Distributor stock for PIC32's is rocky, but Microchip Direct isn't too bad.  Lead times for the PIC32 we use are only going out until September, which is really not that far away at all in comparison to the typical market behaviour.  They also give or sell small quantities reserved for samples so if you need those to complete a design you can go that way, might need to email the local FAE though.

[mikeselectricstuff]

I am finding myself PIC hopping at the moment.
I used PIC16f753 as that was cheapest for a while.
Then out of stock.
So moved to PIC16f1823 for a while.
Then out of stock
So moved onto PIC16F1623.
But bought a few of those to keep me going for a while.

The SMD PIC32's are a no go as all out of stock.

Digikey are showing about 10% of PIC32 parts in stock, which is pretty good as MCUs go these days...

[tom66]

PIC16 and PIC18 and possibly some PIC24's shouldn't be as badly affected by fab capacity issues. They're made on generally large process nodes*.  I'd imagine the shortage there is more due to hoarding and panic buying than anything.

*Newest generation XLP/3.3V parts may vary from this broad statement