Incomes and Politics

[Daisy]

The numbers you have provided defeat your own point that this is not a progressive tax system. It's just not progressive enough to suit you and it probably never will be.

My point, as I have mentioned twice before, is that the article defined "highly progressive" erroneously; furthermore, it did not successfully dispute that the rising disparity in revenues collected from the higher income percentiles isn't simply because the rising disparity in actual incomes of the various percentiles.

The article didn't even address the tax rates on the various incomes, but focused solely on the differences in the total amounts collected. "Progressive" refers to the rate structure, not to the dollar amounts collected.

I never said we do not have a progressive tax rate system; I said that it is less progressive in 2006 than it was in 2000 in that the top rate dropped 5%, the middle three rates only 3% and the bottom rate split with the higher half not dropping at all and the lowest of the low dropping 5%. This 2006 lowest amount is finite, between $0 and $10,750 after deductions and exemptions, while the highest amount is $336,550 to hundreds of millions - so the brackets are stratefied at the low end but not at the high end. It is progressive, yes, but not "highly progressive."

However your numbers do point out the fallacy of your thinking. The lower tax rate produced more tax revenue.

My numbers didn't include the dollar amount of tax revenues collected and the highest rate produced the greatest percentage, so that fallacy is yours.

What are the total revenues, adjusted for inflation, collected in the last ten years?

I suspect that a total redistribution of income may be what it takes to make you happy.

Hardee har har.

But America did not become as economically powerful as it is today by not rewarding initiative and risk taking.

That's a bit simplistic, don't you think? If you want to play that game: America didn't become the economic powerhouse it is until after a progressive income tax was imposed.

I do recall when there was a 50% tax bracket and I believe even a 70%. But there were all kinds of deductions that are no longer available.

When was that?

 

[The Galatian]

And, as has been shown repeatecly, I know the material

You seemed astonished to learn that if poor people don't have jobs they pay less in taxes. That's a rather fundamental hole in your understanding.

and you live in a fantasy world in which the successful are punished for being successful and somehow everyone benefits.

Apparently, you completely fantasized that. I didn't say it, nor do I believe it.

 

[billwald]

Most discusions ignore the fact that the social security tax is nothing but a plain old flat, capped income tax that goes into the same, old pot that all taxes collected by the Feds go into and is used to pay the same old cuuent expenses that all Treasury funds go to pay. The average tax payer - not just the poor people - pay more income tax disguised as the SS tax than they do the income tax.

 

[Pastor Larry]

I didn't say it, nor do I believe it.

I don't think he said either of these did he? I think his point was not about what you said, nor what you believe, but rather about what the real outcome of your position is in his view.

To him (and others), in your position, a person who makes more money pays a higher percentage. Therefore, they are being "punished" for being more successful, and everyone else benefits because they make less, and therefore pay a lower percentage.

You did not say that they were being punished, and you probably don't beleive that they are. The question is, Is your belief correct? He says it's not.

As for me, I am up in teh air on this one. I think it is fundamentally unfair for a rich person to pay more for the same services than a poor person. Pretend for a moment that a restaurant works like public services do. A person who makes under $50K a year can get a prime rib for $12.99. If you make $50k-$100K, you get the same prime rib for $15.99. If you make more than $100K, you get the same prime rib for $19.99. How long would you eat at such a restaurant? Probably a lot if you make less that $50K and not much if you make more.

The truth is that having more doesn't obligate you to pay more. The firetrucks don't get to your house faster, and the roads are not smoother. The only argument in favor of progressive tax rates is philanthropy. You should pay more because you are a nice person.

I still want someone who thinks they don't pay enough taxes to pay mine. Send me a PM if you would like to. I would appreciate it, as would my wife and little boy.

 

[Daisy]

Why is it unworkable?

I explained - that tax plan is less than just a sales tax. Did you read it?

Here where I live, there is no state sales tax, but even in my borough, which has the second highest rate in the state, they cap sales tax at $500 of sales. So, the most sales tax I pay on any single purchase is $32.50. What an incentive to buy more consumer goods, eh? Need a washer? Buy the dryer, dishwasher, and oven at the same time and pay no extra sales tax. When I sell large ticket items, I often sell a second and third one because there's no additional sales tax.

No state sales tax and no state income tax - so, how is Alaska's revenue collection, dependent as it is on oil royalties and petroleum taxes, applicable to Federal revenue collection? Is your borough financed solely by its sales taxes or does it also get a cut of the oil revenue?

It seems to me that the sales tax cap is regressive as the wealthy can better afford to buy several big ticket items in a single purchase and thus pay less in taxes on the same items that the less well-off have to save up to buy one at a time.

The economy booms, and so do tax revenues, even at lower rates. That's why the higher brackets pay more, even at a lower rate. They're not getting punished for being successful, so it's an incentive to spend (and therefore make) more instead of a disincentive.

Are you saying the wealthy loose the will to earn in a booming economy if they have to pay at a higher rate, even though it would mean that they would still take home more after-tax moola?

Oh, and amen to what pastor Larry said.

Isn't it because less money given to the government is more money at work making money, thus enlarging the taxable income of an individual. Cutting capital gains also had this affect in that lower rates encouraged people to take gains, thus paying a lower tax on capital gains taken rather than paying nothing because the tax rate was a disincentive to taking the gain.

Somehow the individuals whose incomes are being enlarged, seem to be concentrated in the higher brackets, so more money is collected on their enlarged - some might say engorged - incomes.

How do you collect more money from the top 5% at a lower rate?

The sister question is why is so much less of the total being collected from the bottom when their rates haven't fallen as far?

 

[The Galatian]

You did not say that they were being punished, and you probably don't beleive that they are.

Although I make more money than most Americans, I don't feel punished for paying more taxes. I don't like it, but I don't think it's wrong.

The question is, Is your belief correct?

Everyone thinks that their beliefs are correct.

He says it's not.

He doesn't understand economics. Let's recap.

• Under Clinton more of the poor were working, more hours each.
• They were, understandably, making more money.
• People who make more money, pay more taxes.
• And therefore, they paid a higher percentage of total tax revenue.

What part of this is hard to understand? I don't see how this is "punishment" for being successful, any more than not paying much in taxes is a "reward" for not having a job.

 

[carpro]

Quote:
Originally Posted by carpro
I do recall when there was a 50% tax bracket and I believe even a 70%. But there were all kinds of deductions that are no longer available.


When was that?

Top marginal rates for married filing jointly:

1971-1980 70%
1982-1986 50%
1993-2000 39.6%

 

[Daisy]

Thanks, carpro.

 

[carpro]

That particular scheme eliminates all income tax and replaces it with a national sales tax on new retail items. Resold items exempt from the tax and corporations are exempt from paying the tax.

Should that become law, I envision a lot of families and individuals suddenly incorporating and providing furnishings, clothing, equipment, etc. to its officers and employees either free or at cost. I also see a humongous market for corporations reselling 'lightly used' goods. The corporation provides its officers and executives with a brand spanking new car for a week or a month (whatever the law necessitates), then sells it as used without a sales tax. That should be a huge business.

Liberals tend to hate and fear corporations.:laugh:

 

[Daisy]

Liberals tend to hate and fear corporations.:laugh:

That is an asinine, irrelevent remark - not to mention false. I have nothing against corporations as such nor am I aware that other liberals "tend" to. Some of my best friends are incorporated. I've even been an officer of one as have many liberals of my acquaintance.

My point, which you seem to have glossed over in favor of a snide remark, is that if corporations are exempt from the sales tax which ordinary consumers are charged, why would an ordinary consumer buy anything new as an ordinary consumer?

 

[The Galatian]

Well, there are many who hope that this consumption tax would permit the sort of tax avoidance that family foundations did and still do in many cases. They key is that very poor people would be less likely to know about such dodges, or lack the means to use them.

 

[Revmitchell]

We should go to a flat tax of 10% and do away with the IRS. No loopholes, everyone pays and equal amount. Takes the possibility of corruption right out of the equation. No one can fail to pay.

 

[Daisy]

No one can fail to pay.

How do you figure that, especially without an IRS?

 

[carpro]

My point, which you seem to have glossed over in favor of a snide remark, is that if corporations are exempt from the sales tax which ordinary consumers are charged, why would an ordinary consumer buy anything new as an ordinary consumer?

Then you should have said so.

BTW "Liberals tend to hate and fear corporations" is still a true statement.

Maybe you're one of the exceptions:thumbs:.

 

[Hope of Glory]

He doesn't understand economics. Let's recap.

• Under Clinton more of the poor were working, more hours each.
• They were, understandably, making more money.
• People who make more money, pay more taxes.
• And therefore, they paid a higher percentage of total tax revenue.

What part of this is hard to understand? I don't see how this is "punishment" for being successful, any more than not paying much in taxes is a "reward" for not having a job.

The only part that's hard to understand are the facts about unemployment that you're making up. Unemployment is almost non-existent. Almost anyone who wants to work has a job.

The wealthy, at a lower tax rate, pay more, both in terms of real dollars and a percentage of the tax revenue because they are not afraid of investing. If they are afraid of being punished for being successful, they are far more likely to hide their money, invest it offshore, etc.

An example is the luxury tax that the liberals wanted to soak the rich with. "If they have the money, they deserve to pay more in taxes!" Hate-mongering, class-warfare at its lowest. Well, what was the result? The rich simply spent their money in countries that were more friendly and Americans who were working in things such as yacht building found themselves out of work.

 

[Hope of Glory]

You should really look over this fair tax. Corporations don't "avoid" the tax; it's not applied at that level. Because all the middlemen are cut out, the prices remain about the same at the retail level. (By "middlemen", I'm referring to all the hidden taxes aloung the route to the retailer that jack up the prices of everything.) There's no dodging it for anyone, whether rich or poor. No one is punished for being successful. If you don't want to pay the tax, you don't buy the item. It's simple.

So, you could save and invest money all day long, without paying a penny in taxes, but it's useless until you spend it. But, you're not punished for making it and contributing to the growing economy.

No class warfare, no tax cheats, no disincetives to investing and being successful.

These are all reasons that I like the fair tax over the national sales tax, although the national sales tax is much fairer than the current regressive (and unconstitutional) income tax.

 

[Daisy]

Then you should have said so.

I did. Don't you read the quotes you cite?

BTW "Liberals tend to hate and fear corporations" is still a true statement.

No, it's just more unthinking, misinformed slander on your part.

 

[Hope of Glory]

No state sales tax and no state income tax - so, how is Alaska's revenue collection, dependent as it is on oil royalties and petroleum taxes, applicable to Federal revenue collection? Is your borough financed solely by its sales taxes or does it also get a cut of the oil revenue?

Most of our operating budgets come from property taxes and local sales taxes. But, we don't have a bunch of whiny crybabies looking to suck off the teat of the government. We don't have governmentally operated soup kitchens, and a bloated educational beuracracy, and all that junk. We run our schools locally, we expect people to work for what they have, etc. We also realize that cable TV is not a basic right; people live without the things in life that are necessary, unless they choose to pay for them. 96% of the houses here in town have running water and electricity, but there are many who choose to live outside of town without those things, much less, cable TV, jacuzzis, new cars every couple of years, etc.

But, those who choose to buy all those things, are willing to pay the sales tax on them. Many people do buy new cars every couple of years, because they don't get soaked with a ridiculous 9% sales tax on a $20,000 car.

We don't have layer upon layer of administration for the schools. We have principals and teachers that teach the kids, and the quality of education is much higher than in most places. Now, admittedly, during the economic boom we had a few years ago, we were smart enough to invest our money in education, so we can pull off the investments to provide for our children in slower times without having to ask for tax increases.

Of course, if we had a bunch of societal leeches that got all the handouts they wanted, we'd have to have all the high taxes too.

It seems to me that the sales tax cap is regressive as the wealthy can better afford to buy several big ticket items in a single purchase and thus pay less in taxes on the same items that the less well-off have to save up to buy one at a time.

And just who do you think is going to pay for the economic prosperity? The homesteaders? The wealthy can afford to buy a new houseful of appliances, thereby saving themselves quite a bit in taxes, but it also provides an economic boon to those who provide transportation, installation, construction, etc., so they can afford to buy the new oven, new car, etc.

And, guess what? The wealthy also pay as much in taxes on the pack of gum, sodas, food, etc., as everyone else.

Are you saying the wealthy loose the will to earn in a booming economy if they have to pay at a higher rate, even though it would mean that they would still take home more after-tax moola?

They will never lose the will to earn, just the will to invest in something for which they're going to get taken to the cleaners. They will invest it in something that if successful, they won't get punished for. Look at the history of investments: When they get tax breaks for losses, and lower tax rates on gains, they invest much, much more into the system. When they get soaked with an excessive luxury tax, they go to Liberia to buy a yacht.

I make stained glass windows, and I'm getting ready to travel outside to stay on-site for a couple of months. I'm much more willing to take this investment risk because of the amount of return that I am expecting. If you were to remove the amount of return, or punish me upon successful completion, or reduce the tax breaks that I get, I would be much less likely to make the investment. And, the investment is much more than just my time, it's money as well. Multiply this effect by millions upon millions of people, and you get a recession, or at least stifle growth.

Somehow the individuals whose incomes are being enlarged, seem to be concentrated in the higher brackets, so more money is collected on their enlarged - some might say engorged - incomes.

That makes simply mathematical sense. If you're making $10,000 per year, and Joe Snob is making $10,000,000 per year, and you both get a 1% increase, which one you gets more money? By the same token, if you lower taxes by 1% on both groups, guess which one saves more money? By the same token, guess which one has more money to invest in jobs, etc.?

The sister question is why is so much less of the total being collected from the bottom when their rates haven't fallen as far?

There aren't as many people in the bottom bracket, and the amounts covered in the bottom bracket are higher. The duductible amount has been raised. In my case, the amount that I get to deduct for mileage has been increased. (The amount that I save in taxes is more than offset in the amount I spend on fuel, BTW.) When I make my 10,000 mile roundtrip, I get to deduct a lot more than I would have last year.

 

[The Galatian]

A flat tax sounds like a good idea. So why did Forbes get buried when he tried to sell it? For a number of reasons. Look at the numbers...

There are about 108,000,000 households in the US, with a median household income of about 43,400 dollars. About half the households would pay less than $4340 and about half would pay more. That would mean a 10% flat tax would bring in about...
$4,687.2 Billion

Federal expenditures in 2005 were about:
2,479.4 Billion

Sounds pretty good, um? Now, anytime taxes change, someone wins and someone loses. Who wins? The upper middle class mostly, and the upper class people who actually didn't use various legal dodges to avoid paying taxes.

Who loses? The rich who did use legal dodges to avoid taxes. And, of course, the poor, many of whom previously paid no income taxes at all.

Both of whom have political constituencies to protect them. We won't have any "deductions" in the new tax, of course, but there will be perhaps "adjustments."

Oh, and possibly your social security witholding might have to go up... and....

 

[carpro]

Top marginal rates for married filing jointly:

1971-1980 70%
1982-1986 50%
1993-2000 39.6%

Just one observation about the numbers.

In the 70's the economy was terrible in almost every way imaginable.

In the 80's it was better, but not great.

Even tax and spend liberals believe the economy in the 90's was good.

I't's great now, as well.

I wonder if there is a correllation between lower maximum marginal tax rates and a robust economy?

Sure seems to be.