IAP Political Forum

I'm not sure what EARN means here... Everybody works hard, some work is more valuable, and they end up having more money even after taxes. That the people making more money don't keep as much of the money they are owed is secondary. You are always better off earning one more dollar, not a whole dollar better off, but still better off.

Alright, for the longest time I didn't have an opinion about this but now I want to better understand the issue and see if this system is acceptable. Also, lucky's sonfession that he changed his mind made me better want to understand this. I have no doubt in my mind that this discussion will spin out of control into a debate about the current system v. fair tax v. flat tax... and I'm prepared for that.

Alright - first I have some background.

I used to understand why the rich were taxed more. My understanding was that if a family earns 6-figure salaries and get taxed, say 30%, you can still afford the cost of living... and afford it rather comfortably. But a family making only 50K a year might not be able to afford the cost of living which is why their taxes are lower.

But on the flip side, unfairly taxing the rich just seems... unfair. I mean, why should the successful, most of which EARN that pay check, pay more into a system they may not actively benefit from (cause chances are good they don't have medicare, rely on SS after retirement or need welfare to survive)?

I just wanted to start a conversation about this in order to help me form an opinion.

I'm not sure what EARN means here... Everybody works hard, some work is more valuable, and they end up having more money even after taxes. That the people making more money don't keep as much of the money they are owed is secondary. You are always better off earning one more dollar, not a whole dollar better off, but still better off.

Okay, some general points here.

* A good tax system is a fair one. One that encourages people to earn more without penalising them, whilst at the same time, ensuring that wealthy income earners contribute their fair share towards public spending.It also means that people who are sick, or fallen on hard times are provided for in a common sense fashion.

* A good tax system is a practical one. For example, if a government adopts a "Tax the rich until it hurts" philosophy and puts a crazy tax rate at say 60%, no problem wealthy income earners just establish tax residence in an offshore country, and the government gets nothing.

* A good tax system should be a good indication of what you are trying to get people to do.

If you want people to invest in the country and set up businesses, then tax breaks for new businesses may be the way to go.

If you are wanting to promote a hard work ethic and for people to strive for success and financial betterment, then a fair tax system rather than an archaic one, is the way to go.

If you want to encourage people to stay on welfare the majority of their life and become totally dependent on the government, then have an unfair tax system.


Wealthy people are just like everyone else. They are happy to pay our fair share of tax. They just don't want to be taken advantage of and discriminated against because of the tall poppy syndrome which is unfortunately pre dominant in many western countries.

There are less rich people hence less people that vote for people that will lower taxes on rich people.

There are more people that are not rich that will vote for people that tax the rich more.

See what I am saying???

If the Dem's came out and said "OK poor folks we will make you actually PAY taxes" (30% or Americans pay zero federal taxes) they would loose their base. 

Its like raising taxes on cigarettes and not gas... everyone uses gas so you piss off too many people.. But with cigarettes...

Ya, following me here?

Tad, it is a good point you make.

But it sort of depends on the situation.

For instance, in the early 90's in Australia, the highest marginal rate was something like 60%. Which means for every dollar you earnt, you got in your hand 40c.

Is this worth going to work for, if you are paying 60% of your hard earned salary to the government? IMO not.

What is a reasonable highest rate then? 50%, 40%, 35%, 30%?

I guess this is the thrust of the tax system theory.

That is why I said in my post above, a tax system should be that the wealthy contribute a fair share to the economy. But it should never be too high to become a disincentive for hard work and earning extra money. If it becomes this, then the government needs to re examine their taxation policy IMO.

But on the flip side, unfairly taxing the rich just seems... unfair. I mean, why should the succesful, most of which EARN that pay check, pay more into a system they may not actively benefit from (cause chances are good they don't have medicare, rely on SS after retiremtent or need welfare to survive)?

I just wanted to start a conversation about this in order to help me form an opinion.

I was trying to better understand the system and the theory behind the system... not make any political point.

But it sort of depends on the situation.

Unfortunately the people of America really aren't taxed fairly because the wealthy are paying a smaller percentage of taxes than they are earning 

Because the truth is, 1% of this country earns 90% of the wealth...

Now if you want to come up with an opinion that its unfair that the rich have to pay a higher amount in taxes than most people, that's fine, but consider the consequences.

The system is a political point. [insert rant here] seriously, to understand the reasons for the current system would require analysis of hundreds of compromises of hundreds of competing theories.

The European leftist approach is roughly based upon social contract -those who profit more from society must pay back more.

An instance (JUST AS AN ANALOGY):

Let's say that a fire threatens your home. Firefighters come and extinguish the fire before it reaches your home. You are paying for firefighters through your taxes. But, how much should you pay? It would be sensible that it was according to the service they may offer to you. And then, saving 300,000 $ worth of property is not the same as saving 3,000,000 $ worth of property, right? The more expensive the property, the greater benefit you get from the existence of firefighters. And thus the greater benefit you get from your taxes. And so it's logical that you pay more taxes for this greater benefit.

And this is why the ones wiht more to lose should pay more for the means to keep it; the ones who profit more from society must pay back more.

Of course all this si in the context of social contract. It may be different if you fel you would be millioanire the same without society (a very convenint self-deceit). It helps a lot to keep this nonsense alive that the society rarely will flex its muscle to show you how wrong you are, and to which point the individual owes to society...

I'm bad with the math today, because I can't remember what this sliding scale is called (exponential?), but a few years ago I had a boring job filing in a doctor's office and every week I would calculate my paycheck and how many taxes would come out of it (because of the boredom). I would make less money each day, because each day more taxes would come out of the paycheck. Some weeks I would say to myself "Well, there's no reason to show up on Friday because I will make about the same as if I didn't come in at all".

I know that you can't just increase taxes the higher the payscale in a way to where everyone makes the same amount of money, but I understand a system where those people who are no longer struggling can afford to pay a little bit more than the guys at the very bottom. And as far as I know, the only people who don't pay taxes are illegals, some construction workers, busboys, and maybe waiters.

Its a good point you make.

Thats why I always say that the highest marginal rate has to be practicable.

It is easy for people to say, "Yeah, lets tax the rich until it hurts, put the highest tax rate at 55%, that will hurt them"

Truth is, this kind of taxation philosophy doesn't hurt the rich. It hurts the middle class, the employees and the hardworking.

The Rich Business Owner will have taxation status in the Caymans or the Bahamas so he doesn't have to pay tax.

The rich drug dealers, criminals pay no tax anyway, so taxation rates don't affect them.

The rich investor will have his affairs managed by Price Waterhouse or Coopers Lybrand who use legal loopholes to ensure he pays hardly any tax at all.

It is the guy who is constantly doing overtime to save for a house who will get hit by the high tax rates. The middle class employee who earns enough to be taxed at the the highest rate but not paid enough to get professional advisers to minimise it.

So, it basically all comes back to what I said before. The tax system should be fair so everyone pays their fair share, but not too onerous to become a disincentive for hard work, or an incentive for tax avoidance(legal) or tax evasion(illegal).

I believe it is important to look at the history of the income tax.

A quote from Andrew Carnegie: "Of all forms of taxation, this seems the wisest," the mogul wrote in 1889. "By taxing estates heavily at death the state marks its condemnation of the selfish millionaire's unworthy life."

Now this was the attitude that got the income tax started. We need to make the rich pay into the system that helped make them rich.

Sounds good on paper, but the sad fact was, the richest powerful people in the US hid their money in trusts and foundations before the income tax was passed. Carnegie created some of the largest foundations. So much for his hypocritical quote.

When the income tax was first passed, rates were very low.



From 1951-1963 the top rate was 91%. While no one paid this after deductions, it is still a ridiculous rate. When all taxes are added together, many people were paying 70% or more of their income in taxes. That's sickening.


Speaking of both the income tax and the new estate tax, one congressmen stated........

Sen. George Oliver mounted a strong but unsuccessful attack. "The trouble with this bill is that it aims to extort as large an amount of money as possible out of the pockets of as few people as possible," he declared, targeting the income tax as well as the estate tax. "It aims to make a few people bear the entire expense of running the government and to exempt at least nine- tenths of our citizenship from contributing anything. It is an injustice to those whom it aims to punish and an insult to those whom it aims to favor."25

http://www.taxhistory.org/thp/readings.nsf/cf7c9c870b600b9585256df80075b9dd/880f5b5e62fe817f852571b0006851ca?OpenDocument






A good example of how unfair the current system is.......

The distribution of the tax burden was even more skewed in California, which has the country's most steeply progressive income tax. Just 44,000 millionaires were paying more than one-third of the state income tax in 2000, right before the bubble burst.

While these were dream scenarios for progressive-taxation enthusiasts, they led to the fiscal nightmare these states are experiencing. In New York, revenue from capital gains dropped from roughly $3.7 billion to barely $1 billion in a couple of years. In California, taxes derived from capital gains and stock options plummeted from $18 billion to $8 billion in a single year. Connecticut and New Jersey experienced similar declines on a smaller scale. So did Massachusetts, although it has the group's only flat-rate income tax.

More......

Recent history doesn't bode well for states that raise taxes in a recession. California, Connecticut, Massachusetts, New Jersey and New York all enacted significant increases from 1990 through 1992. During that span, they collectively lost 1.2 million jobs. Their job growth lagged far behind the national rate until they began rolling back taxes in the decade's latter half.

http://www.manhattan-institute.org/html/_barrons-why_soaking_the_rich.htm

A really good piece on the income tax can be found here........

http://mwhodges.home.att.net/tax-history.htm

One last little tidbit........

So, in 1916, off we go with the income tax. It’s supposed to solve all our fiscal ills, and it’s supposed to make the rich pick up most of the tab. Of course, as might be expected it didn’t quite do that, and the more the rates were increased, collections didn’t go up for the rich, although they did go up for everyone else. In 1916, with a top rate of 7% the treasury reported 206 people with incomes over one million dollars. Five years later, when the tax rate went up 1100 percent, from 7% to 77%, there were only 21 people with an income of a million dollars or more. What happened? Simple arithmetic shows that 9 out of 10 million-dollar earners had vanished, as if by magic. Well, maybe they moved to some low tax country. We don’t know, but they obviously rearranged their lives or finances so they no longer had million dollar earnings that were taxable. As for a 77% tax rate, I think that’s just plain plunder, or you can call it stealing. It is certainly not in keeping with the ideals of the Framers that taxes had to be "common to all."

http://www.lewrockwell.com/orig2/adams7.html

You see, the original goal of the income tax didn't work. It didn't soak the rich, as the rich hid their money and found loopholes to avoid a large percentage of what they owed to the government.

Instead, the middle class has been burdened heavily by the current tax system, since most of them can't afford expensive tax lawyers and to set up trusts and foundations. While many upper middle class citizens have learned about trusts and used them to their advantage, this mostly helps with estate taxes and not so much for annual income taxes.

Here is an interesting tidbit......

Federal Workers Owe Billions in Unpaid Taxes
January 17, 2007 - 10:26am
Mark Segraves, WTOP Radio

WASHINGTON - As the 2006 tax season approaches, the federal government is still trying to recover nearly $3 billion from its own employees who failed to file income tax returns for 2005.

More than 450,000 active and retired federal employees did not voluntarily comply with federal income tax requirements for the 2005 tax year, according to documents obtained by WTOP through the Freedom of Information Act. (See Excel spreadsheets in the Related Links below.)

The total balance owed is $2,799,950,165.

The documents show that every federal agency has employees who failed to comply with federal tax laws.

Seventy-one employees in the Executive Office of the President, which includes the White House, owe $664,527 in taxes for 2005. About 20 of those employees have entered into an IRS payment plan, bringing the EOP balance down to $455,881owed by 50 employees.

The White House did not respond to repeated requests for comment.

In fact, about one third of the delinquent employees, or 149,500, entered into a payment plan, but the total owed is still more than $2 billion.

At the IRS, employees can be fired for failure to pay federal income taxes. But an IRS spokesperson tells WTOP it's no easier to collect from federal employees than it is to collect from the general public.

In the past, IRS officials have been quick to compare the federal workers' rate of compliance with the general public's. But this year, the IRS is not able to track the compliance rate for the general public. The percentage of federal employees who still owe back taxes for the 2005 year is 3.3 percent of the workforce including retirees.

The federal agency with the highest number of delinquent taxpayers is the United States Postal Service, where 56,652 employees owe more than $320 million. So far, about 22,000 of those employees have agreed to a payment plan.

A spokesperson for the Postal Service says the agency hopes all of its employees follow the law, but will leave enforcement to the IRS.

The agency with the best compliance rate is the Department of Treasury, which includes the IRS. Fewer than 2 percent of Treasury employees failed to pay their taxes. About 3,000 Treasury employees owed $13,489,683 -- 1,437 of those feds also have made payment plans.

The IRS tracks the compliance rate of federal employees each year in an effort to increase compliance. Agency directors are made aware of their department's compliance rate and then memos are sent to staff encouraging them to file their taxes.

(Copyright 2007 by WTOP Radio. All Rights Reserved.)
Mark Segraves, WTOP Radio

WASHINGTON - As the 2006 tax season approaches, the federal government is still trying to recover nearly $3 billion from its own employees who failed to file income tax returns for 2005.

More than 450,000 active and retired federal employees did not voluntarily comply with federal income tax requirements for the 2005 tax year, according to documents obtained by WTOP through the Freedom of Information Act. (See Excel spreadsheets in the Related Links below.)

The total balance owed is $2,799,950,165.

http://www.wtop.com/?nid=428&sid=1034585

I will end with a few quotes ...........

James Madison
"I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents..."

Plato
"When there is an income tax, the just man will pay more and the unjust less on the same amount of income."

Winston Churchill
"We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle."

Benjamin Franklin, Poor Richard's Almanac
"It would be a hard government that should tax its people one-tenth part of their income."



And the LAST QUOTE SAYS IT ALL........

"Our federal tax system is, in short, utterly impossible, utterly unjust and completely counterproductive [it] reeks with injustice and is fundamentally un-American... it has earned a rebellion and it's time we rebelled".

-President Ronald Reagan, May 1983, Williamsburg, VA

Very good post. I totally agree. I wrote a rather long post for this thread, but of course, it can only be read when one clicks on the reply button. The bug that infects this forum doesn't see to like long posts.

I believe it is important to look at the history of the income tax.

A quote from Andrew Carnegie: "Of all forms of taxation, this seems the wisest," the mogul wrote in 1889. "By taxing estates heavily at death the state marks its condemnation of the selfish millionaire's unworthy life."

Now this was the attitude that got the income tax started. We need to make the rich pay into the system that helped make them rich.

Sounds good on paper, but the sad fact was, the richest powerful people in the US hid their money in trusts and foundations before the income tax was passed. Carnegie created some of the largest foundations. So much for his hypocritical quote.

When the income tax was first passed, rates were very low.



From 1951-1963 the top rate was 91%. While no one paid this after deductions, it is still a ridiculous rate. When all taxes are added together, many people were paying 70% or more of their income in taxes. That's sickening.

Speaking of both the income tax and the new estate tax, one congressmen stated........

Sen. George Oliver mounted a strong but unsuccessful attack. "The trouble with this bill is that it aims to extort as large an amount of money as possible out of the pockets of as few people as possible," he declared, targeting the income tax as well as the estate tax. "It aims to make a few people bear the entire expense of running the government and to exempt at least nine- tenths of our citizenship from contributing anything. It is an injustice to those whom it aims to punish and an insult to those whom it aims to favor."25

http://www.taxhistory.org/thp/readings.nsf/cf7c9c870b600b9585256df80075b9dd/880f5b5e62fe817f852571b0006851ca?OpenDocument






A good example of how unfair the current system is.......

The distribution of the tax burden was even more skewed in California, which has the country's most steeply progressive income tax. Just 44,000 millionaires were paying more than one-third of the state income tax in 2000, right before the bubble burst.

While these were dream scenarios for progressive-taxation enthusiasts, they led to the fiscal nightmare these states are experiencing. In New York, revenue from capital gains dropped from roughly $3.7 billion to barely $1 billion in a couple of years. In California, taxes derived from capital gains and stock options plummeted from $18 billion to $8 billion in a single year. Connecticut and New Jersey experienced similar declines on a smaller scale. So did Massachusetts, although it has the group's only flat-rate income tax.

More......

Recent history doesn't bode well for states that raise taxes in a recession. California, Connecticut, Massachusetts, New Jersey and New York all enacted significant increases from 1990 through 1992. During that span, they collectively lost 1.2 million jobs. Their job growth lagged far behind the national rate until they began rolling back taxes in the decade's latter half.

http://www.manhattan-institute.org/html/_barrons-why_soaking_the_rich.htm

A really good piece on the income tax can be found here........

http://mwhodges.home.att.net/tax-history.htm

One last little tidbit........

So, in 1916, off we go with the income tax. It’s supposed to solve all our fiscal ills, and it’s supposed to make the rich pick up most of the tab. Of course, as might be expected it didn’t quite do that, and the more the rates were increased, collections didn’t go up for the rich, although they did go up for everyone else. In 1916, with a top rate of 7% the treasury reported 206 people with incomes over one million dollars. Five years later, when the tax rate went up 1100 percent, from 7% to 77%, there were only 21 people with an income of a million dollars or more. What happened? Simple arithmetic shows that 9 out of 10 million-dollar earners had vanished, as if by magic. Well, maybe they moved to some low tax country. We don’t know, but they obviously rearranged their lives or finances so they no longer had million dollar earnings that were taxable. As for a 77% tax rate, I think that’s just plain plunder, or you can call it stealing. It is certainly not in keeping with the ideals of the Framers that taxes had to be "common to all."

http://www.lewrockwell.com/orig2/adams7.html

You see, the original goal of the income tax didn't work. It didn't soak the rich, as the rich hid their money and found loopholes to avoid a large percentage of what they owed to the government.

Instead, the middle class has been burdened heavily by the current tax system, since most of them can't afford expensive tax lawyers and to set up trusts and foundations. While many upper middle class citizens have learned about trusts and used them to their advantage, this mostly helps with estate taxes and not so much for annual income taxes.

Here is an interesting tidbit......

Federal Workers Owe Billions in Unpaid Taxes
January 17, 2007 - 10:26am
Mark Segraves, WTOP Radio

WASHINGTON - As the 2006 tax season approaches, the federal government is still trying to recover nearly $3 billion from its own employees who failed to file income tax returns for 2005.

More than 450,000 active and retired federal employees did not voluntarily comply with federal income tax requirements for the 2005 tax year, according to documents obtained by WTOP through the Freedom of Information Act. (See Excel spreadsheets in the Related Links below.)

The total balance owed is $2,799,950,165.

The documents show that every federal agency has employees who failed to comply with federal tax laws.

Seventy-one employees in the Executive Office of the President, which includes the White House, owe $664,527 in taxes for 2005. About 20 of those employees have entered into an IRS payment plan, bringing the EOP balance down to $455,881owed by 50 employees.

The White House did not respond to repeated requests for comment.

In fact, about one third of the delinquent employees, or 149,500, entered into a payment plan, but the total owed is still more than $2 billion.

At the IRS, employees can be fired for failure to pay federal income taxes. But an IRS spokesperson tells WTOP it's no easier to collect from federal employees than it is to collect from the general public.

In the past, IRS officials have been quick to compare the federal workers' rate of compliance with the general public's. But this year, the IRS is not able to track the compliance rate for the general public. The percentage of federal employees who still owe back taxes for the 2005 year is 3.3 percent of the workforce including retirees.

The federal agency with the highest number of delinquent taxpayers is the United States Postal Service, where 56,652 employees owe more than $320 million. So far, about 22,000 of those employees have agreed to a payment plan.

A spokesperson for the Postal Service says the agency hopes all of its employees follow the law, but will leave enforcement to the IRS.

The agency with the best compliance rate is the Department of Treasury, which includes the IRS. Fewer than 2 percent of Treasury employees failed to pay their taxes. About 3,000 Treasury employees owed $13,489,683 -- 1,437 of those feds also have made payment plans.

The IRS tracks the compliance rate of federal employees each year in an effort to increase compliance. Agency directors are made aware of their department's compliance rate and then memos are sent to staff encouraging them to file their taxes.

WASHINGTON - As the 2006 tax season approaches, the federal government is still trying to recover nearly $3 billion from its own employees who failed to file income tax returns for 2005.

More than 450,000 active and retired federal employees did not voluntarily comply with federal income tax requirements for the 2005 tax year, according to documents obtained by WTOP through the Freedom of Information Act. (See Excel spreadsheets in the Related Links below.)

The total balance owed is $2,799,950,165.

http://www.wtop.com/?nid=428&sid=1034585

I will end with a few quotes ...........

James Madison
"I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents..."

Plato
"When there is an income tax, the just man will pay more and the unjust less on the same amount of income."

Winston Churchill
"We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle."

Benjamin Franklin, Poor Richard's Almanac
"It would be a hard government that should tax its people one-tenth part of their income."



And the LAST QUOTE SAYS IT ALL........

"Our federal tax system is, in short, utterly impossible, utterly unjust and completely counterproductive [it] reeks with injustice and is fundamentally un-American... it has earned a rebellion and it's time we rebelled".

-President Ronald Reagan, May 1983, Williamsburg,

I do think a progressive income tax structure should be maintained. In our case, America is a good place to do business, even if that business is just selling your labor. This is no accident. It's the result of, among other things, massive investment on the part of the taxpayers. Without the infrastructure, security, freedom and substantial resources provided by tax funds it would be considerably harder to make money. Earners in the upper brackets are receiving more benefit from the taxpayer's investment, and I don't think it's at all unreasonable to have them contribute at a higher rate.

The European leftist approach is roughly based upon social contract -those who profit more from society must pay back more.

An instance (JUST AS AN ANALOGY):

Let's say that a fire threatens your home. Firefighters come and extinguish the fire before it reaches your home. You are paying for firefighters through your taxes. But, how much should you pay? It would be sensible that it was according to the service they may offer to you. And then, saving 300,000 $ worth of property is not the same as saving 3,000,000 $ worth of property, right? The more expensive the property, the greater benefit you get from the existence of firefighters. And thus the greater benefit you get from your taxes. And so it's logical that you pay more taxes for this greater benefit.

And this is why the ones wiht more to lose should pay more for the means to keep it; the ones who profit more from society must pay back more.

Of course all this si in the context of social contract. It may be different if you fel you would be millioanire the same without society (a very convenint self-deceit). It helps a lot to keep this nonsense alive that the society rarely will flex its muscle to show you how wrong you are, and to which point the individual owes to society...

I'm bad with the math today, because I can't remember what this sliding scale is called (exponential?), but a few years ago I had a boring job filing in a doctor's office and every week I would calculate my paycheck and how many taxes would come out of it (because of the boredom). I would make less money each day, because each day more taxes would come out of the paycheck. Some weeks I would say to myself "Well, there's no reason to show up on Friday because I will make about the same as if I didn't come in at all".

I know that you can't just increase taxes the higher the payscale in a way to where everyone makes the same amount of money, but I understand a system where those people who are no longer struggling can afford to pay a little bit more than the guys at the very bottom. And as far as I know, the only people who don't pay taxes are illegals, some construction workers, busboys, and maybe waiters.

Abolish the Federal Reserve, end the Income Tax, Restore the U.S. Constitution.  Then tell people to get to work...problem solved.

Cutting taxes brings in more money.

More than 450,000 active and retired federal employees did not voluntarily comply with federal income tax requirements for the 2005 tax year, according to documents obtained by WTOP through the Freedom of Information Act.

What is sad is that a lot of middle income people are eligible for these subsidies, (the classic is fafsa) and no one even bothers to apply for them because they think "they already make enough money to be eligible."  Not true.  My dad makes over $100,000 a year and I got a grant from fafsa for my academic performance that pretty much gave me a free ride!

The genius in this is that it keeps the poor from just living off the government and still be productive members of society.  The government will be there to help with the necessities like food, health, education, etc... if you need it. Some don't know that they are eligible for these programs and some even take the even more idiotic road and thinking that living off the government goes against their pride as an American or something.

Whether or not you think that is a bad thing I guess would be a personal issue.  But, remember the crazy dude with that colorful book in those late-night infomercials that has all the secrets about all the money the government gives away is actually true.  The government gives a whole lot away and the problem is people just don't take advantage of the opportunity.

Something I want to note to you guys that as a student studying economics, our tax base is one of the most interesting and one part of the field I will most likely enter in...

I will be posting a topic shortly on the discussion of lowering corporate income taxes and it's tradeoff in comparison to the already new leglislations offered in the EU and what it would mean for America and how it could be implemented.  Keep your eyes open!

Great topic Abraxas, one last applaud.  ;D

Pond Scum Taxation Post part 1

Pond Scum wrote:

OMG!  :o The laffer curve is a myth! Ask me why...

They benefit the most from the government, they ought to pay for the priviledge.

However they, like every other American, should be taxed fairly.

Should they pay more taxes than a poor person? Absolutely. Should they pay a higher percentage of their money? Absolutely not.

A national sales tax.

A tax on income is bad. Always.

Instead, tax spending - everybody spends. Money saved isn't taxed, profits made aren't taxed.

Instead, tax is at purchase time with a low, flat national tax and EVERYBODY PAYS THE SAME TAX ON EVER DOLLAR THEY SPEND.

Drug dealers buy cars, clothes, etc. Hey, we get a chunk of their money.

Rich people buy more stuff, but they don't have to - they can libve frugally and pay less tax, or they can spend it like water.

We would pay less, the IRS could be abolished and we capture income from criminals much better than we do now.

This has been something I have liked in the past, but the rumor is that this tax would be, like, 30%.

note: I don't know this for sure.


Very good points.

*applaud*

And welcome to IAP.

Thanks, but you knew me as "Impaired" my choice of login since Toaster was taken.

I think 30% is a bit high.

$5,446,374,604,000 in consumer spending in 2005.

The IRS collected $2.5 billion or so in 2006 (2005 wasn't easily available, sorry for mixing years)

1% is $54.4 billion in revenue.

Yeah, I got like $70 one year from FAFSA toward a $1000+ semester.

I understand the pride thing. But these programs' funding have been cut from time to time. One of my neighbors was a single mother with 1 child in a 2 bedroom apartment on housing, but she said that the housing authority changed their policies and she had to move to a 1-bedroom. It was based on how many children you have, 1=1 bedroom, 2=2 bedroom, etc... which makes no sense. Obviously there aren't a lot of places out there with more than 3 bedrooms, but still the ratio made no sense. It was because the budget just wasn't big enough, so that was their solution. I'm not sure what they do now, I don't live around all those single mothers anymore. The only thing I don't like about welfare from what I have seen is how it rewards those who don't work at all (because they would qualify) and favors them over people with jobs who are at least trying (who would not qualify because when they make anything at all they make too much).

btw, I am a little confused. You gave kudos to someone who supports maintaining the progressive/communist income tax and also to me, even though I am totally against the communist/progressive income tax.

Still though, I am more interested in how money is created.

It's existsence is a myth, or that we were at an appropriate point on the curve for a tax cut (at the time of Bush's cut) is a myth?

I took a public sector economics class last semester. The instructors opinion was that the Laffer curve does exist, but that we shouldn't have cut taxes because we were below the peak.

Please do explain. My knowledge of tax policy and it's effect on the economy is a little lacking to put it mildly.

Alright, for the longest time I didn't have an opinion about this but now I want to better understand the issue and see if this system is acceptable. Also, lucky's sonfession that he changed his mind made me better want to understand this. I have no doubt in my mind that this discussion will spin out of control into a debate about the current system v. fair tax v. flat tax... and I'm prepared for that.

Alright - first I have some background.

I used to understand why the rich were taxed more. My understanding was that if a family earns 6-figure salaries and get taxed, say 30%, you can still afford the cost of living... and afford it rather comfortably. But a family making only 50K a year might not be able to afford the cost of living which is why their taxes are lower.

But on the flip side, unfairly taxing the rich just seems... unfair. I mean, why should the succesful, most of which EARN that pay check, pay more into a system they may not actively benefit from (cause chances are good they don't have medicare, rely on SS after retiremtent or need welfare to survive)?

I just wanted to start a conversation about this in order to help me form an opinion.

Well, the system isn't perfect.  Are you an independent or dependent upon someone else? (or Who pays your taxes?)

At the time I was a dependent, just out of high school. I think that had something to do with it.

No matter how sad I am, watching Carlton dance always cheers me up.

btw, I was looking for A TINY BIT MORE DETAIL IN HOW MONEY IS CREATED.

If you were the only child going to school and your parents were paying for it, certain persons in your household, how much your parents made, type of savings, debit and credit accounts, academic history, blah, blah, blah... 

This the reason why many people don't bother applying.  So many variables go into the decision that it makes the results unpreditable and we may never know why.  Maybe the person doing the fafsa form had a bad day.  Who knows.  You never know though until you actually do it.  How could it hurt?  A few less hours for you to watch Fresh Prince of Bel-Air re-runs?

btw, I was looking for A TINY BIT MORE DETAIL IN HOW MONEY IS CREATED.

Do you ask because you don't know or because you wish to test my knowledge?

If it is the latter, then banks should be sufficient.

In answer to the question posed in the title of this thread: because that's where the money is.

JPN, I am interested in what you think should be:

1)The top marginal tax rate for individuals

2)The company tax rate

No right or wrong answer. I am just interested in how far apart(if at all) we are on this line of thinking.

The Federal Reserve, granted the direct right to provide the supply of currency by the purchases and sale of US Government backed securities, take old currency out of circulation and prints new ones to be lent out as non-interest bearning notes for the American public to use.  Through fractional reserve banking, the Federal Reserve grants Banks the right to base their operations around the holding of these non-interest bearing notes, in turn for the right to exchange them into private backed securities as well as exchange US Government backed securities, but are mandated by the Federal Reerve to hold a certain amount of reserves so that not all securities are lent out.  As each bank lends to another, money is created and is involved on all levels from M1 (hard currency) to M2 and beyond (soft currency, securities, illiquid assets, etc...) and this is considered the money supply. 

Please do not preach to me the fallacies of the fiat money system, why the issuance of the gold standard was replaced, (and why it must be reinstated) how the Federal Government uses inflation as a form of taxation, how the Federal Reserve is the creator of inflation, as well as deflation, and the captian of our economic ship that traverses (or causes) the great ride of business cycles.

If you want to discuss the role of the central bank in monetary policy please by all means create another topic on it and I will debate it with you.  It is definetly a most interesting debate however most confusing for those who do not understand our monetary system.