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SBK
02-07-2005, 02:57 PM
Per drudge

BUSH BUDGET DIRECTOR BRAGS OF SHIFTING TAX BURDEN TO RICH
Mon Feb 07 2005 15:42:56 ET

The White House budget director Josh Bolten on Monday bragged to reporters how the nation most-wealthy will see an increase in tax burden under Bush's new budget.

"If you look at the president's tax cuts as a totality, the income tax, those at the upper end of the spectrum are now paying a larger share of the income tax than they were before," Bolten explained."An example, the top 5 percent in income in this country -- that's people making above about $140,000 -- without the president's tax cuts that top 5 percent would be paying about less than 52 percent of our total income tax revenue.

"After the president's tax cut that group is paying more than 54 percent of our total tax revenue. So the notion that the president's tax cuts have somehow made the code less progressive is wrong. The president's tax cuts have made the tax code more progressive."

Developing...

(since everything has to be "fair" why the heck are 5% of the people in this country responsible for 54% of the tax bill?)

Amnorix
02-07-2005, 04:14 PM
err...cuz that's more or less what the words "progressive tax code" means.

Baby Lee
02-07-2005, 04:31 PM
(since everything has to be "fair" why the heck are 5% of the people in this country responsible for 54% of the tax bill?)
Who said everything had to be 'fair?' Or what 'fair' is? I haven't pulled out the primer on progressive taxation in a while, and there is no search function, so I'll give the overview.

If you do well in a political system, it's in your own interest to fund it. If the way the system is set up, facilitates your ability to make X more money, it is a self-interested move to pay more into it's continued solvency than others who haven't had your fortune.

SBK
02-07-2005, 04:45 PM
Who said everything had to be 'fair?' Or what 'fair' is? I haven't pulled out the primer on progressive taxation in a while, and there is no search function, so I'll give the overview.

If you do well in a political system, it's in your own interest to fund it. If the way the system is set up, facilitates your ability to make X more money, it is a self-interested move to pay more into it's continued solvency than others who haven't had your fortune.

Obviously rich folks pay more, but $146,000 isn't exactly a gigantic income that we are led to believe the "rich" have.

Amnorix
02-07-2005, 05:06 PM
Obviously rich folks pay more, but $146,000 isn't exactly a gigantic income that we are led to believe the "rich" have.

Right, but it is bigger than what 95% of American's make, so it ain't poor, and it ain't middle class.

Donger
02-07-2005, 05:14 PM
Right, but it is bigger than what 95% of American's make, so it ain't poor, and it ain't middle class.

The part of the "progressive tax" code that pisses me off is that "it's okay to tax 'rich' people because they have more money than I do."

Well, shucks, the bank across the street has more money than I do; does that mean I'm being progressive if I go and rob it?

And, yes, I know that "progressive taxation" is a simple fact of life in our version of democracy, but it doesn't mean it's logical.

SBK
02-07-2005, 05:24 PM
The part of the "progressive tax" code that pisses me off is that "it's okay to tax 'rich' people because they have more money than I do."

Well, shucks, the bank across the street has more money than I do; does that mean I'm being progressive if I go and rob it?

And, yes, I know that "progressive taxation" is a simple fact of life in our version of democracy, but it doesn't mean it's logical.

I think the more you pay the more services you should receive. Oh wait, it's the exact opposite.

SBK
02-07-2005, 05:25 PM
Right, but it is bigger than what 95% of American's make, so it ain't poor, and it ain't middle class.

Maybe instead of having a Lexus as an example of what the "rich" are getting in a tax cut, they should include something that someone who makes $146,000 in NYC would get......jack chit.

Cochise
02-07-2005, 05:39 PM
The libs spent two whole campaigns telling me that I was one of the rich. After all, I benefitted from the tax cuts for the rich in the first term. This must mean my taxes are going to go up now. :shake:

mlyonsd
02-07-2005, 06:03 PM
The part of the "progressive tax" code that pisses me off is that "it's okay to tax 'rich' people because they have more money than I do."

Well, shucks, the bank across the street has more money than I do; does that mean I'm being progressive if I go and rob it?

And, yes, I know that "progressive taxation" is a simple fact of life in our version of democracy, but it doesn't mean it's logical.

I never have understood how liberals matter of factly just assume that if you're rich they have a right to helping themselves to your money. I mean they don't even think twice.

Amnorix
02-07-2005, 08:12 PM
The part of the "progressive tax" code that pisses me off is that "it's okay to tax 'rich' people because they have more money than I do."

Well, shucks, the bank across the street has more money than I do; does that mean I'm being progressive if I go and rob it?

And, yes, I know that "progressive taxation" is a simple fact of life in our version of democracy, but it doesn't mean it's logical.

It's perfectly logical and perfectly fair.

If someone makes $25,000 and has a family of 4, then he is basically barely able to feed, clothe and shelter his family.

If that same person instead made $250,000, then food and clothing are NOMINAL expenses in his life, shelter isn't a problem, and the only really tough choice is whether to get a Beamer or a 'cedes. Now there is absolutely nothing wrong with that -- I have little doubt that in nearly all instances the person earning 10x more has made substantial sacrifices in terms of years of schooling, has a better education, has better and more valuable skills, etc. BUT, what is also clearly true is that each incremental additional dollar of income to Mr. 250K is less important to him than it is to Mr. 25K.

That's all it is. It's not punishment for the rich, it's simple realization that the person who makes more is less burdened by paying taxes than the person who makes less.

Amnorix
02-07-2005, 08:13 PM
Maybe instead of having a Lexus as an example of what the "rich" are getting in a tax cut, they should include something that someone who makes $146,000 in NYC would get......jack chit.
State and local taxes are deductible if you itemize, which I would guess that the vast majority of people making $146K/year do. Obviously, $146K doesn't go as far in some parts of the country as others, but then again, the tax code is plenty complex enough without trying to build in a cost of living deduction or something.

Amnorix
02-07-2005, 08:15 PM
The libs spent two whole campaigns telling me that I was one of the rich. After all, I benefitted from the tax cuts for the rich in the first term. This must mean my taxes are going to go up now. :shake:

The Democrats said that the tax cuts favored the rich MORE than the less wealthy. Not that the less wealthy wouldn't get SOME benefit, but they wouldn't get as much.

Of course, then you get into arguments about how "of course the rich will benefit more, they pay more to begin with", etc., and we've argued this point over and over again in the past. I'm not going to bother to go down that road now, but your misleading statement shouldnt' be allowed to stand ignored...

Amnorix
02-07-2005, 08:17 PM
I never have understood how liberals matter of factly just assume that if you're rich they have a right to helping themselves to your money. I mean they don't even think twice.

They're not helping yourselves to the money of the wealthy. Unless you happen to think that liberal congressmen make more money than conservative congressmen.

It's all about differing philosophies in how to finance government spending via a "fair" tax code, meanwhile sprinkling in (1) economic impact, (2) social ramifications, (3) pandering to voters, (4) socio-economic engineering, etc. etc. Both parties fight over this stuff ad nauseum.

siberian khatru
02-07-2005, 08:19 PM
I think we need a progressive Super Bowl system. The Patriots need to give one of those Lombardis to the less-fortunate franchises. Not that I've got any team in mind, but ...

patteeu
02-07-2005, 09:27 PM
It's perfectly logical and perfectly fair.

If someone makes $25,000 and has a family of 4, then he is basically barely able to feed, clothe and shelter his family.

If that same person instead made $250,000, then food and clothing are NOMINAL expenses in his life, shelter isn't a problem, and the only really tough choice is whether to get a Beamer or a 'cedes. Now there is absolutely nothing wrong with that -- I have little doubt that in nearly all instances the person earning 10x more has made substantial sacrifices in terms of years of schooling, has a better education, has better and more valuable skills, etc. BUT, what is also clearly true is that each incremental additional dollar of income to Mr. 250K is less important to him than it is to Mr. 25K.

That's all it is. It's not punishment for the rich, it's simple realization that the person who makes more is less burdened by paying taxes than the person who makes less.

Perfectly fair? It may be fair in some sense (and, of course, fairness is in the eye of the beholder rather than something that can be objectively measured), but it isn't perfectly fair, IMO.

Consider two people who both make $250,000 over the course of 10 years. The first person makes it in $25,000 chunks in each of the 10 years while the second person makes it all in one year and spends the other 9 years without an income (let's say he's volunteering to tend to the sick and infirm at the local nursing home). At the end of the 10 years under a progressive income tax, person 2 has paid more taxes on the same amount of income than person 1. Perfectly fair?

Amnorix
02-07-2005, 09:33 PM
Perfectly fair? It may be fair in some sense (and, of course, fairness is in the eye of the beholder rather than something that can be objectively measured), but it isn't perfectly fair, IMO.

Consider two people who both make $250,000 over the course of 10 years. The first person makes it in $25,000 chunks in each of the 10 years while the second person makes it all in one year and spends the other 9 years without an income (let's say he's volunteering to tend to the sick and infirm at the local nursing home). At the end of the 10 years under a progressive income tax, person 2 has paid more taxes on the same amount of income than person 1. Perfectly fair?

Nobody sets up a tax code for a situation that will only arise 0.000000001% of the time. That's absurd. You set up a tax code to deal with what is going on in nearly all instances.

KCWolfman
02-07-2005, 09:33 PM
It's perfectly logical and perfectly fair.

If someone makes $25,000 and has a family of 4, then he is basically barely able to feed, clothe and shelter his family.

If that same person instead made $250,000, then food and clothing are NOMINAL expenses in his life, shelter isn't a problem, and the only really tough choice is whether to get a Beamer or a 'cedes. Now there is absolutely nothing wrong with that -- I have little doubt that in nearly all instances the person earning 10x more has made substantial sacrifices in terms of years of schooling, has a better education, has better and more valuable skills, etc. BUT, what is also clearly true is that each incremental additional dollar of income to Mr. 250K is less important to him than it is to Mr. 25K.

That's all it is. It's not punishment for the rich, it's simple realization that the person who makes more is less burdened by paying taxes than the person who makes less.
Perfect for those who don't pay as much and aren't considered for every new tax. Being well off is like being a cigarette or booze - expect to be taxed for no reason other than the people who aren't wealthy think you need more taken.

A flat tax system or a national tax would alleviate any issues the impoverished have with class envy that you note above. Funny how the less well to do never want such a logical premise.

Amnorix
02-07-2005, 09:37 PM
Perfect for those who don't pay as much and aren't considered for every new tax. Being well off is like being a cigarette or booze - expect to be taxed for no reason other than the people who aren't wealthy think you need more taken.

A flat tax system or a national tax would alleviate any issues the impoverished have with class envy that you note above. Funny how the less well to do never want such a logical premise.
No, a flat tax isn't progressive, nor does this have anything to do with "class envy" (since I, for example, hardly envy the class I am more or less in). It has to do with the realities of how difficult it is to shoulder a tax burden with each incremental additional dollar of income.

I'm uncertain what you mean by "national tax", so I can't speak to it.

Anyway, off to bed. G'night all. Glad to pick this up tomorrow if the thread is active.

Cochise
02-07-2005, 09:53 PM
The Democrats said that the tax cuts favored the rich MORE than the less wealthy. Not that the less wealthy wouldn't get SOME benefit, but they wouldn't get as much.

Of course, then you get into arguments about how "of course the rich will benefit more, they pay more to begin with", etc., and we've argued this point over and over again in the past. I'm not going to bother to go down that road now, but your misleading statement shouldnt' be allowed to stand ignored...

Actually it was designed to be a pest to you and not really to be serious :p

Donger
02-07-2005, 11:14 PM
No, a flat tax isn't progressive, nor does this have anything to do with "class envy" (since I, for example, hardly envy the class I am more or less in). It has to do with the realities of how difficult it is to shoulder a tax burden with each incremental additional dollar of income.

I'm uncertain what you mean by "national tax", so I can't speak to it.

Anyway, off to bed. G'night all. Glad to pick this up tomorrow if the thread is active.

Bottom line, Amnorix: the 'rich' are taxed more because they have more. It's a form of punishment, whether you call it 'progressive' or something else.

You can drape it in whatever flowery rhetoric you wish, but it is what it is.

To argue that "the rich" don't pay their fair share of taxes is ludicrous. I sure hope that you're not suggesting otherwise.

ExtremeChief
02-08-2005, 05:51 AM
Why wouldn't a national sales tax work?? The more you make, generally the more you spend. The more you spend, the more tax you pay. Is this just too simple?

bkkcoh
02-08-2005, 06:25 AM
Why wouldn't a national sales tax work?? The more you make, generally the more you spend. The more you spend, the more tax you pay. Is this just too simple?

That is part of the problem, DC can't handle something simple. :banghead:

The problem with that is the fact the people are going to freak out because of no deductions. Also, do you really think that the government is going to give up their power with the IRS?

I can't imagine what type of debate would take place to abolish the IRS, you know what type of debate there was when they were talking of a flat tax!



I am thinking a national sales tax might be better, but it would and should not include food items....

Amnorix
02-08-2005, 06:29 AM
Actually it was designed to be a pest to you and not really to be serious :p

Ah. In that case NICELY DONE! :toast:

:LOL:

Amnorix
02-08-2005, 06:32 AM
Bottom line, Amnorix: the 'rich' are taxed more because they have more. It's a form of punishment, whether you call it 'progressive' or something else.

You can drape it in whatever flowery rhetoric you wish, but it is what it is.

To argue that "the rich" don't pay their fair share of taxes is ludicrous. I sure hope that you're not suggesting otherwise.

Nobody says they don't pay their fair share, but I would argue that a flat tax, as opposed to a progressive tax, is neither good tax policy nor fair.

"Punish", to me, includes the concept of penalizing or imposing negative consequences upon something FOR THE PURPOSE of deterring such behavior in the future. That is clearly not the concept behind the progressive tax code. Therefore, it's not punishment.

bkkcoh
02-08-2005, 06:34 AM
Nobody says they don't pay their fair share, but I would argue that a flat tax, as opposed to a progressive tax, is neither good tax policy nor fair.

"Punish", to me, includes the concept of penalizing or imposing negative consequences upon something FOR THE PURPOSE of deterring such behavior in the future. That is clearly not the concept behind the progressive tax code. Therefore, it's not punishment.

Amnorix,

Don't pay your taxes and see what kind of punishment you receive..

Amnorix
02-08-2005, 06:38 AM
Why wouldn't a national sales tax work?? The more you make, generally the more you spend. The more you spend, the more tax you pay. Is this just too simple?

Sales taxes are generally regressive. You could probably try to structure it to make it considerably less so (carve out clothing under X dollars, food, basic staples of life, etc.), but I note that our economy is largely based on incredibly high consumption. This tax would deter consumption.

Amnorix
02-08-2005, 06:43 AM
Amnorix,

Don't pay your taxes and see what kind of punishment you receive..

You're smarter than this dumb statement and you know it.

Boozer
02-08-2005, 06:53 AM
Bottom line, Amnorix: the 'rich' are taxed more because they have more. It's a form of punishment, whether you call it 'progressive' or something else.

You can drape it in whatever flowery rhetoric you wish, but it is what it is.

To argue that "the rich" don't pay their fair share of taxes is ludicrous. I sure hope that you're not suggesting otherwise.

So I take it you, personally, have declined to earn a higher income because of the punishment that would ensue? Do you know anyone who has?

Sounds like it's a pretty ineffective punishment, if that's what it's supposed to be.

bkkcoh
02-08-2005, 06:57 AM
You're smarter than this dumb statement and you know it.


Amnorix,

Come on now, you have heard the horror stories of the gestapo-like actions of the IRS. They come after you full force if you make a mistake, but they have no accountabilty at all if they make a mistake..

Have you ever have any true dealings with the IRS, other than paying your taxes?

Amnorix
02-08-2005, 07:03 AM
Amnorix,

Come on now, you have heard the horror stories of the gestapo-like actions of the IRS. They come after you full force if you make a mistake, but they have no accountabilty at all if they make a mistake..

Have you ever have any true dealings with the IRS, other than paying your taxes?

Apples and oranges.

I'm saying that the tax code is not designed to be punitive. In other words, the fact that the tax code is progressive is not punitive.

Failure to pay your taxes has nothing to do with what kind of tax code we have. That's tax evasion, and whether it's a flat tax or what, the IRS will come down on you like a ton of bricks.

One has absolutely nothing to do wiht the other.

bkkcoh
02-08-2005, 07:10 AM
Apples and oranges.

I'm saying that the tax code is not designed to be punitive. In other words, the fact that the tax code is progressive is not punitive.

Failure to pay your taxes has nothing to do with what kind of tax code we have. That's tax evasion, and whether it's a flat tax or what, the IRS will come down on you like a ton of bricks.

One has absolutely nothing to do wiht the other.

I thought part of the tax code was the payment, isn't it? :Poke:

Ok, different twist here. Where the tax rates prior to Ronald Reagan a punishment since they were almost confiscatory?

How much tax is too much?

Cochise
02-08-2005, 07:21 AM
Ah. In that case NICELY DONE! :toast:

:LOL:

Come on, everyone has been round and round with you about this stuff. You don't think you're actually going to convince anyone, do you? :hmmm: :)

jiveturkey
02-08-2005, 07:23 AM
How much tax is too much?When there's a surplus.

bkkcoh
02-08-2005, 07:24 AM
When there's a surplus.


Did you pay more than what you were supposed to pay?

Amnorix
02-08-2005, 07:37 AM
I thought part of the tax code was the payment, isn't it? :Poke:

Ok, different twist here. Where the tax rates prior to Ronald Reagan a punishment since they were almost confiscatory?

How much tax is too much?

You will be punished if you don't pay your taxes. That has NOTHING to do with whether the system of taxation itself is punitive.

The rest invites a wholly philosophical debate that doesn't seem very interesting to pursue. :shrug: At some level, a tax code could become punitive, I'd agree with that, but it really depends on circumstances. The highest tax bracket during World War II was something like 85%, but those were unusual times.

Amnorix
02-08-2005, 07:38 AM
Come on, everyone has been round and round with you about this stuff. You don't think you're actually going to convince anyone, do you? :hmmm: :)

Let's say it's about as likely as someone convincing me. :shrug: :)

jiveturkey
02-08-2005, 07:42 AM
Did you pay more than what you were supposed to pay?About $2000 more but I'm getting it back and will adjust accordingly this year.

headsnap
02-08-2005, 07:49 AM
Within the next 5 posts Amnorix will mention 'dynastic wealth.'



:p

Amnorix
02-08-2005, 07:51 AM
Within the next 5 posts Amnorix will mention 'dynastic wealth.'



:p

Not unless someone brings up the inheritance tax. :harumph::)

Donger
02-08-2005, 08:20 AM
Nobody says they don't pay their fair share

Perhaps you don't, but some within your party do.


"Punish", to me, includes the concept of penalizing or imposing negative consequences upon something FOR THE PURPOSE of deterring such behavior in the future. That is clearly not the concept behind the progressive tax code. Therefore, it's not punishment.

Whatever floats your boat.

Donger
02-08-2005, 08:24 AM
Sales taxes are generally regressive. You could probably try to structure it to make it considerably less so (carve out clothing under X dollars, food, basic staples of life, etc.), but I note that our economy is largely based on incredibly high consumption. This tax would deter consumption.

Interesting.

So, you think that an extremely high tax rate for "the rich" is not a form of punishment (it doesn't deter the rich) and yet a national sales tax WOULD deter consumption?

Donger
02-08-2005, 08:27 AM
So I take it you, personally, have declined to earn a higher income because of the punishment that would ensue? Do you know anyone who has?

Sounds like it's a pretty ineffective punishment, if that's what it's supposed to be.

Of course not. The ultra-rich are still rich. It's just that they seem to be viewed as a bank for the the federal government to take from as they choose.

Let's put it this way: how would you feel if you suddenly started making tons of money and you saw 75% of said income disappearing? Would you not consider that "punishment?"

Amnorix
02-08-2005, 08:27 AM
Perhaps you don't, but some within your party do.

Well, there's what -- 60 million Democrats or something? Nearly 300 in Congress? I'm sure alot of 'em say alot of things. :shrug:

Donger
02-08-2005, 08:31 AM
Well, there's what -- 60 million Democrats or something? Nearly 300 in Congress? I'm sure alot of 'em say alot of things. :shrug:

And, when the timings right, they invariably try to raise those taxes on the rich. Usually while pontificating that "the rich don't pay their fair share!"

Clearly, they do.

Amnorix
02-08-2005, 08:38 AM
Interesting.

So, you think that an extremely high tax rate for "the rich" is not a form of punishment (it doesn't deter the rich) and yet a national sales tax WOULD deter consumption?

No. I said that a progressive tax regime is not per se punitive. If the system imposed REALLY high taxes on the high compensated, then it certainly could in theory be punitive. Let's say the tax code was something like this (simple example):

0-$100K in income -- 5% tax rate
$100K-$1M in income-- 35% tax rate
$>1M in income -- 90% tax rate

I'd call that punitive.

And I also said a national sales tax COULD (not would) deter consumption. I don't know, haven't seen any studies, etc., but it's possible, and that's not likely to be desireable.

Amnorix
02-08-2005, 08:39 AM
Let's put it this way: how would you feel if you suddenly started making tons of money and you saw 75% of said income disappearing? Would you not consider that "punishment?"

When has this been the case during your lifetime? Or even anywhere near 75%?

jiveturkey
02-08-2005, 08:45 AM
Does anyone know what the actual tax brackets/percentages are?

Amnorix
02-08-2005, 08:51 AM
Does anyone know what the actual tax brackets/percentages are?


2005:

http://www.fairmark.com/refrence/index.htm

2004:

http://www.fairmark.com/refrence/2004rate.htm

For '04, the top rate is 35% for AGI of $319+K

Donger
02-08-2005, 09:13 AM
No. I said that a progressive tax regime is not per se punitive. If the system imposed REALLY high taxes on the high compensated, then it certainly could in theory be punitive. Let's say the tax code was something like this (simple example):

0-$100K in income -- 5% tax rate
$100K-$1M in income-- 35% tax rate
$>1M in income -- 90% tax rate

I'd call that punitive.

And I also said a national sales tax COULD (not would) deter consumption. I don't know, haven't seen any studies, etc., but it's possible, and that's not likely to be desireable.

Actually, the 35% bracket falls within that range.

Donger
02-08-2005, 09:13 AM
When has this been the case during your lifetime? Or even anywhere near 75%?

Sorry. Typo. I meant 35%

Amnorix
02-08-2005, 09:22 AM
Actually, the 35% bracket falls within that range.

Let me be more clear -- of my example, I would consider only the 90% bracket at $1M+ to be punitive.

Amnorix
02-08-2005, 09:30 AM
Sorry. Typo. I meant 35%

In that case, no. 35% is not a punitive tax. I think this becomes even more obviously true when you recognize that the 35% is the highest possible bracket, does not apply to certain significant sources of income for the wealthy (cap. gains), and is lower than that the highest tax bracket in most of the "first world" countries. England, for example, has a relatively simple 10%, 22%, 40% system, where the 40% applies to anything above about 30K pounds (something like $55,000).

In France the top tax rate is 48%

Germany 45%

Japan 37%

Now, of course, just setting forth these percentages is overly simplistic, since each country has may or may not have multiple levels of taxation (i.e. federal on top of state taxes), and different rules regarding exemptions and deductions from income, or special tax rates for certain sources of income.

But to say that 35% is punitive definitely appears inaccurate to me.

Soupnazi
02-08-2005, 09:34 AM
Wow. I was rich last year and didn't even know it.

SBK
02-08-2005, 09:40 AM
People that make lots of money typically employ folks that don't make so much money. Good policy is to tax those "rich" folks to the teeth, so that they have a tax bill high enough they can't pay the salaries of those who aren't "rich."

The current tax system is a sham, and needs to be changed. Becoming financially successful, and employing others should be rewarded, not punished. I don't care what anyone says, if someone pays 0% taxes, and you pay 35% you'll view that as punishment for making money.

I'll also bring up the inheritance tax. Why can the gov't tax what you make, save, spend, invest, and then when you die take 50% of what you leave to your family. That is another policy that punishes someone for being successful. Here is Iowa it punishes farmers big time, because they aren't rich but that farm they have is worth quite a bit of money. So dad dies and can't give the farm to the kids because they have a 6 or 7 figure tax bill and a less than 6 figure income.

Donger
02-08-2005, 09:41 AM
I'll also bring up the inheritance tax. Why can the gov't tax what you make, save, spend, invest, and then when you die take 50% of what you leave to your family. That is another policy that punishes someone for being successful. Here is Iowa it punishes farmers big time, because they aren't rich but that farm they have is worth quite a bit of money. So dad dies and can't give the farm to the kids because they have a 6 or 7 figure tax bill and a less than 6 figure income.

Ding, ding, ding! In this corner, ....

RINGLEADER
02-08-2005, 09:48 AM
Obviously rich folks pay more, but $146,000 isn't exactly a gigantic income that we are led to believe the "rich" have.


Especially if you're married and filing together. The takehome would be something like $49K each. A tidy sum, to be sure, but that's what the definition of "rich" is to the Dems.

patteeu
02-08-2005, 09:53 AM
Nobody sets up a tax code for a situation that will only arise 0.000000001% of the time. That's absurd. You set up a tax code to deal with what is going on in nearly all instances.

You said "perfectly" fair.

Besides, there are plenty of unfairnesses in our tax code that aren't uncommon. That example was just one of the easier ones to articulate and understand. It's not uncommon at all for some people (salespeople of luxury goods come to mind) to have incomes that fluctuate annually while many other people have stable incomes. The marriage penalty/benefit is another VERY COMMON unfairness built into our tax code and created by progressivity. (I realize that the marriage penalty has been addressed in recent tax code changes, but I'm not sure of the details so I can't comment on the new scheme).

I know you are a smart guy, but by narrowly interpreting my illustrative example as if I were suggesting that my specific scenario is the only example of unfairness in the progressive tax system you are showing that you have blinders on.

Donger
02-08-2005, 09:54 AM
In France the top tax rate is 48%

Germany 45%

Japan 37%

Which just makes me thankful that I don't live in any of those socialist ratholes. Nor do I want to see my country go in that direction.

RINGLEADER
02-08-2005, 09:57 AM
The Democrats said that the tax cuts favored the rich MORE than the less wealthy. Not that the less wealthy wouldn't get SOME benefit, but they wouldn't get as much.

Of course, then you get into arguments about how "of course the rich will benefit more, they pay more to begin with", etc., and we've argued this point over and over again in the past. I'm not going to bother to go down that road now, but your misleading statement shouldnt' be allowed to stand ignored...


Well, it's proven to be such a winning theme for the Dems the past few elections...I only hope they keep making it a cornerstone of their economic policy. I particularly like how they spend the "tax cut for the rich" four or five times. Kerry, if you remember, was using that revenue to do everything from pay down the deficit, to keep a broken social security system going, to paying for national defense, to just having more money for more programs. The default for the Dems is, remarkably, that we can spend more and cut the deficit...if only we can get that damn tax cut for the rich "rolled back" (I love it when Russert confronted Kerry and Kennedy with this terminology over the past two weeks).

RINGLEADER
02-08-2005, 10:01 AM
Why wouldn't a national sales tax work?? The more you make, generally the more you spend. The more you spend, the more tax you pay. Is this just too simple?


My concern would be that we would have a national sales tax to replace the income tax and then, if the Dems ever regained control, they'd reinstitute the income tax on top of the national sales tax...of course targeting just the "rich" at first...but then again it's pretty much just the rich paying most of the tax now.

RINGLEADER
02-08-2005, 10:07 AM
When there's a surplus.


Unfortunately there hasn't been a surplus in decades, notwithstanding what the Dems want you to believe. The national debt went up every single year under Clinton despite hundreds of billions in tax revenues that probably should never have existed to begin with.

I got into this argument about what caused the supposed surpluses of the late 90s with Amnorix a few days ago and I have yet to see him or any liberal explain how the 93 vote to raise taxes (which the Dems cling to as the cause of the $5 trillion surplus they "handed off" to Bush) actually contributed in any meaningful way to debt reduction. The truth is there were never any surpluses and the $5 trillion number comes from projections of receiveables into the treasury that were never going to happen.

I continue to ask this, BTW, because the Dems continue to say (pretty much verbatim here): "We just want to roll-back the tax cuts for the top 33% to the same levels as they were under Bill Clinton...and we all know that people did pretty well during that time." It's the Dems that are equating those times with higher taxes and I'd love for Amnorix or any liberal (or anyone else for that matter) to connect the dots between higher taxes and economic prosperity. Because I can point to the Kennedy, Reagan and Bush tax cuts to show how lower taxes create higher revenues for the treasury.

patteeu
02-08-2005, 10:09 AM
My concern would be that we would have a national sales tax to replace the income tax and then, if the Dems ever regained control, they'd reinstitute the income tax on top of the national sales tax...of course targeting just the "rich" at first...but then again it's pretty much just the rich paying most of the tax now.

If we were to ever replace the income tax with a different tax (and I don't think it will happen), the 16th Amendment needs to be repealed as part of the process. Otherwise what you suggest will surely come to pass.

RINGLEADER
02-08-2005, 10:09 AM
No. I said that a progressive tax regime is not per se punitive. If the system imposed REALLY high taxes on the high compensated, then it certainly could in theory be punitive. Let's say the tax code was something like this (simple example):

0-$100K in income -- 5% tax rate
$100K-$1M in income-- 35% tax rate
$>1M in income -- 90% tax rate

I'd call that punitive.

And I also said a national sales tax COULD (not would) deter consumption. I don't know, haven't seen any studies, etc., but it's possible, and that's not likely to be desireable.



So what wouldn't be punitive and who do you feel comfortable with deciding these thresholds?

This reminds me of the minimum wage arguments.

RINGLEADER
02-08-2005, 10:11 AM
In that case, no. 35% is not a punitive tax. I think this becomes even more obviously true when you recognize that the 35% is the highest possible bracket, does not apply to certain significant sources of income for the wealthy (cap. gains), and is lower than that the highest tax bracket in most of the "first world" countries. England, for example, has a relatively simple 10%, 22%, 40% system, where the 40% applies to anything above about 30K pounds (something like $55,000).

In France the top tax rate is 48%

Germany 45%

Japan 37%

Now, of course, just setting forth these percentages is overly simplistic, since each country has may or may not have multiple levels of taxation (i.e. federal on top of state taxes), and different rules regarding exemptions and deductions from income, or special tax rates for certain sources of income.

But to say that 35% is punitive definitely appears inaccurate to me.


And we see how well their economies are doing.

You really walked into that one Amnorix...

SBK
02-08-2005, 10:33 AM
My concern would be that we would have a national sales tax to replace the income tax and then, if the Dems ever regained control, they'd reinstitute the income tax on top of the national sales tax...of course targeting just the "rich" at first...but then again it's pretty much just the rich paying most of the tax now.

I would be for a national sales tax, if we made it so that the scenario you have here could NEVER friggin happen. If there was a loophole for Washington to have both I would never support it. :thumb:

Amnorix
02-08-2005, 12:08 PM
Wow. I was rich last year and didn't even know it.

You, like many others, just think that the average income in America is much higher than it actually is.

Amnorix
02-08-2005, 12:09 PM
People that make lots of money typically employ folks that don't make so much money. Good policy is to tax those "rich" folks to the teeth, so that they have a tax bill high enough they can't pay the salaries of those who aren't "rich."

The current tax system is a sham, and needs to be changed. Becoming financially successful, and employing others should be rewarded, not punished. I don't care what anyone says, if someone pays 0% taxes, and you pay 35% you'll view that as punishment for making money.

I'll also bring up the inheritance tax. Why can the gov't tax what you make, save, spend, invest, and then when you die take 50% of what you leave to your family. That is another policy that punishes someone for being successful. Here is Iowa it punishes farmers big time, because they aren't rich but that farm they have is worth quite a bit of money. So dad dies and can't give the farm to the kids because they have a 6 or 7 figure tax bill and a less than 6 figure income.

I have no problem carving out small family businesses, especially farms from the inheritance tax.

Going back to your first point -- I'm shocked and amazed to learn that nobody can run a business in America anymore! I mean, we're only the richest country in the history of Planet Earth....

Amnorix
02-08-2005, 12:11 PM
Especially if you're married and filing together. The takehome would be something like $49K each. A tidy sum, to be sure, but that's what the definition of "rich" is to the Dems.

No, that's what the top 5% of income earners in America earned last year according to the OMB or whoever it was.

"Rich" involves more than one year worth of salary at a top 5% income level. If, however, you consistently made the top 5%, then I think you'd clearly be very well off or rich, unless you were really stupid with your money.

Amnorix
02-08-2005, 12:13 PM
You said "perfectly" fair.

Besides, there are plenty of unfairnesses in our tax code that aren't uncommon. That example was just one of the easier ones to articulate and understand. It's not uncommon at all for some people (salespeople of luxury goods come to mind) to have incomes that fluctuate annually while many other people have stable incomes. The marriage penalty/benefit is another VERY COMMON unfairness built into our tax code and created by progressivity. (I realize that the marriage penalty has been addressed in recent tax code changes, but I'm not sure of the details so I can't comment on the new scheme).

I know you are a smart guy, but by narrowly interpreting my illustrative example as if I were suggesting that my specific scenario is the only example of unfairness in the progressive tax system you are showing that you have blinders on.

The theory is perfectly fair.

Any actual tax code as complex as ours (and it is inarguably extremely complex) will have elements of unfairness in it, especially in unusual circumstances or to a minority of the population who have incomes that fluctuate wildly, etc.

Amnorix
02-08-2005, 12:14 PM
Which just makes me thankful that I don't live in any of those socialist ratholes. Nor do I want to see my country go in that direction.

Feel free to ignore my point. It's NOT punitive.

Amnorix
02-08-2005, 12:15 PM
Well, it's proven to be such a winning theme for the Dems the past few elections...I only hope they keep making it a cornerstone of their economic policy. I particularly like how they spend the "tax cut for the rich" four or five times. Kerry, if you remember, was using that revenue to do everything from pay down the deficit, to keep a broken social security system going, to paying for national defense, to just having more money for more programs. The default for the Dems is, remarkably, that we can spend more and cut the deficit...if only we can get that damn tax cut for the rich "rolled back" (I love it when Russert confronted Kerry and Kennedy with this terminology over the past two weeks).

Hint -- the election did not turn on tax matters. I'm sure you knew this, but I'd like to remind you of it.

Donger
02-08-2005, 12:17 PM
Feel free to ignore my point. It's NOT punitive.

Not if you're a socialist, I guess.

Amnorix
02-08-2005, 12:26 PM
And we see how well their economies are doing.

You really walked into that one Amnorix...

Don't be absurd. My statement is EXTREMELY limited. The US tax code as currently constituted is NOT punitive. Punitive by definition involves the concept of deterring repeat future behavior. The tax code is NOT designed to deter people from making mroe money.

Or, as someone asked previously, have you turned down a raise lately, ro do you know anyone who turned down a raise, because they were worried they would move from the middle to a higher tax bracket.

(note, I know KCWolfman has stated that people have turned down raises to stay eligible for various forms of welfare, but that doesn't address the HIGH end of the tax bracket, which is what we're discussing here).

Soupnazi
02-08-2005, 12:29 PM
You, like many others, just think that the average income in America is much higher than it actually is.

Actually, I'd argue that those who like to say "the rich" should pay the taxes don't even realize that the people they're talking about is me (rather than their preconceived notion of some guy w/ a porsche, a speedboat, and a $3M home).

Amnorix
02-08-2005, 12:31 PM
Unfortunately there hasn't been a surplus in decades, notwithstanding what the Dems want you to believe. The national debt went up every single year under Clinton despite hundreds of billions in tax revenues that probably should never have existed to begin with.

errr....what?! There were surpluses from 1998-2001. Or so says the morons at the Congressional Budget Office. :rolleyes:

http://www.cbo.gov/showdoc.cfm?index=1821&sequence=0

The truth is there were never any surpluses and the $5 trillion number comes from projections of receiveables into the treasury that were never going to happen.

I agree that PROJECTED surpluses never happened, which has many causes. Downturn in the economy (with a big assist from 9/11), Bush's tax cuts, etc.

I continue to ask this, BTW, because the Dems continue to say (pretty much verbatim here): "We just want to roll-back the tax cuts for the top 33% to the same levels as they were under Bill Clinton...and we all know that people did pretty well during that time." It's the Dems that are equating those times with higher taxes and I'd love for Amnorix or any liberal (or anyone else for that matter) to connect the dots between higher taxes and economic prosperity. Because I can point to the Kennedy, Reagan and Bush tax cuts to show how lower taxes create higher revenues for the treasury.

The level of taxation right now seems fine to me. I would not argue for a tax increase at this point in time as the economy is still on a shaky footing and attempting to rebound.

As long as the military continues to consume an ever-increasing amount of our federal dollars (increase of over 8% in Bush's latest proposed budget, and that does NOT include alot of expected "special" budgeting for the Aghanistan and Iraq situations), then in the long, long run the federal budget and income/outlays will need to be closely analyzed.

The current ever-increasing budget deficit system cannot continue indefinitely.

Amnorix
02-08-2005, 12:33 PM
Actually, I'd argue that those who like to say "the rich" should pay the taxes don't even realize that the people they're talking about is me (rather than their preconceived notion of some guy w/ a porsche, a speedboat, and a $3M home).

So you didn't realize you were rich before, but now you do.

I'll give you a hint -- I could give a rat's ass about you and your tax bill (or me and mine, for that matter) when discussing what makes sense in terms of POLICY. You vote your wallet, I'll vote my conscience.

Soupnazi
02-08-2005, 12:43 PM
You vote your wallet, I'll vote my conscience.

:shake: Lame. If you think that having a ever-increasingly smaller portion of the population as the largest base of income providers to the federal government is a good thing, then there's not much we can discuss.

You vote your wallet? Is that what I'm doing when I gave thousands to charity last year? Or is it only your conscience when the federal government gets their greasy hands on it and confiscates it from me before I have a chance to spend it?

There's considerable danger economically when the lower half of society (wage-wise) consumes a majority of the government's resources and provides no input to the funding of said resources.

It's people voting with their wallet that shifted 90% of the total burden to the top 50% of wage earners.

Oh yeah, and BTW, congrats on your team's success, again, a-hole. (Jealousy)

Amnorix
02-08-2005, 12:48 PM
:shake: Lame. If you think that having a ever-increasingly smaller portion of the population as the largest base of income providers to the federal government is a good thing, then there's not much we can discuss.

Actually, I don't. A tax code can certainly be too progressive.

I do worry about having an ever-increasingly small portion of this nation's wealth in the hands of an ever-decreasing percentage of the population. There's considerable danger economically when the lower half of society (wage-wise) consumes a majority of the government's resources and provides no input to the funding of said resources.
I strongly approve of using a number of means to increase the productivity of all Americans. I believe welfare should not be a permanent entitlement, but rather an interim measure as part of a package designed to transfer people to self-sufficiency.

Amnorix
02-08-2005, 12:51 PM
It's people voting with their wallet that shifted 90% of the total burden to the top 50% of wage earners.

I missed this part. Question -- what percentage of the total income made by all Americans was earned by the top 50% of wage earners? I'd hardly be surprised if it was 90%...

Oh yeah, and BTW, congrats on your team's success, again, a-hole. (Jealousy)

err....thanks! :)

Soupnazi
02-08-2005, 12:55 PM
Actually, I don't. A tax code can certainly be too progressive.

I do worry about having an ever-increasingly small portion of this nation's wealth in the hands of an ever-decreasing percentage of the population.
I strongly approve of using a number of means to increase the productivity of all Americans. I believe welfare should not be a permanent entitlement, but rather an interim measure as part of a package designed to transfer people to self-sufficiency.

Fair enough. For me, I do think the threshold for the top bracket comes in a little too low, I think the lower brackets need to pay a little more. I also fear the common mental mindset of having "the rich" pay for it all. During Margaret Thatcher's time as PM, the British were forced to learn that lesson the hard way.

Amnorix
02-08-2005, 12:59 PM
Fair enough. For me, I do think the threshold for the top bracket comes in a little too low, I think the lower brackets need to pay a little more. I also fear the common mental mindset of having "the rich" pay for it all. During Margaret Thatcher's time as PM, the British were forced to learn that lesson the hard way.

The 35% hits only those with AGI of $319+K in income. That number wouldn't even apply to cap gains, etc., of course. Seems to me that that's not unreasonable.

Soupnazi
02-08-2005, 01:02 PM
I missed this part. Question -- what percentage of the total income made by all Americans was earned by the top 50% of wage earners? I'd hardly be surprised if it was 90%...

Can't be 90%. That would imply a flat tax based on income. Therefore, the remaining 10% of all wages earned would be taxed at a rate equal to the 90% value. As we know, that's not the case.

Soupnazi
02-08-2005, 01:05 PM
The 35% hits only those with AGI of $319+K in income. That number wouldn't even apply to cap gains, etc., of course. Seems to me that that's not unreasonable.

I suppose my bigger frustration is not the structure, but simply the amount of cash required to fund operation of the federal government. Seems to me the Boston Tea Party was thrown over a tax of 10% on tea, imagine what they'd think of this system. (Representation argument not withstanding)

Amnorix
02-08-2005, 01:07 PM
Can't be 90%. That would imply a flat tax based on income. Therefore, the remaining 10% of all wages earned would be taxed at a rate equal to the 90% value. As we know, that's not the case.

Not income, but this is interesting:

Underscoring the concentration of wealth among the very rich, a study last fall by Arthur Kennickell of the Federal Reserve Board shows the nation's wealthiest 1% owned about $2.3 trillion in stocks, or about 53% of all individually or family-held shares. The wealthiest 1% owned 64% of bonds held by families or individuals, and 31% of total financial assets held by families or individuals, which includes everything from stocks to bonds to cash.

http://www.globalpolicy.org/socecon/inequal/2004/0615millionaires.htm

Amnorix
02-08-2005, 01:10 PM
I suppose my bigger frustration is not the structure, but simply the amount of cash required to fund operation of the federal government. Seems to me the Boston Tea Party was thrown over a tax of 10% on tea, imagine what they'd think of this system. (Representation argument not withstanding)

:shrug: Different world. The special military financing bills for this Iraq situation alone are mind-boggling. IIRC, it's costing us $3 billion per week to be there.

Soupnazi
02-08-2005, 01:11 PM
Not income, but this is interesting:

Underscoring the concentration of wealth among the very rich, a study last fall by Arthur Kennickell of the Federal Reserve Board shows the nation's wealthiest 1% owned about $2.3 trillion in stocks, or about 53% of all individually or family-held shares. The wealthiest 1% owned 64% of bonds held by families or individuals, and 31% of total financial assets held by families or individuals, which includes everything from stocks to bonds to cash.

http://www.globalpolicy.org/socecon/inequal/2004/0615millionaires.htm

Interesting. I'm surprised by that the bond portion isn't higher. I must confess that I don't understand why someone is allowed to make millions in income off of tax-free muni's without having to pay anything.

Amnorix
02-08-2005, 01:14 PM
Interesting. I'm surprised by that the bond portion isn't higher. I must confess that I don't understand why someone is allowed to make millions in income off of tax-free muni's without having to pay anything.

I'm no expert on bonds, but I assume it allows governmental organizations to give a slightly lower rate while still offering an attractive product. In other words, if one governmental entity is taxing interest earned off a bond purchased from another governmental entity, then all you're really doing is redistributing money from the bond issuing governmental entity to the taxing entity.

That was complicated, and just a guess, but it seems to make sense.

Soupnazi
02-08-2005, 01:24 PM
I'm no expert on bonds, but I assume it allows governmental organizations to give a slightly lower rate while still offering an attractive product. In other words, if one governmental entity is taxing interest earned off a bond purchased from another governmental entity, then all you're really doing is redistributing money from the bond issuing governmental entity to the taxing entity.

That was complicated, and just a guess, but it seems to make sense.

That's basically right, the other reason being an early states right issue, and it allows the government to fund things through bond measures at a cost that is reduced to the taxpayer, who is ultimately paying off the debt.

Here's what I'm talking about though. Say you have a $1 billion portfolio, all to go into bonds. Muni's are say 5%, nontaxable, while corporates or govt's of similar duration are 7.7% taxable. With the munis, you've just made a $50 million, untaxable. With the corporates, you've made $77 million, taxed at 35%, it comes to $50 million, and the government taking $27 million. Seems to me they would've closed that by now, but I guess the attractiveness of getting revenue into local projects is enough that congress stays away from it.

Anyway, I digress.

patteeu
02-08-2005, 01:30 PM
The theory is perfectly fair.

Any actual tax code as complex as ours (and it is inarguably extremely complex) will have elements of unfairness in it, especially in unusual circumstances or to a minority of the population who have incomes that fluctuate wildly, etc.

By use of the word "perfectly," I took your original assessment of progressivity to mean that there was nothing unfair about it. Obviously that is not the case and if you didn't intend it that way then I'll let that point rest.

Of course, by the same token, the flat tax is perfectly logical and perfectly fair.

Amnorix
02-08-2005, 01:32 PM
By use of the word "perfectly," I took your original assessment of progressivity to mean that there was nothing unfair about it. Obviously that is not the case and if you didn't intend it that way then I'll let that point rest.

By the same token, the flat tax is also perfectly logical and perfectly fair.

IMHO a good progressive tax is more fair than a flat tax. Flat taxes (without many loopholes) are regressive and essentially unfair, IMHO.

A progressive tax that was overly progressive would tip over into unfair, punitive or what have you. The debate over where the tipping point would be isn't very interesting, however.

Donger
02-08-2005, 01:34 PM
Flat taxes (without many loopholes) are regressive and essentially unfair, IMHO.

Unfair to whom?

Amnorix
02-08-2005, 01:37 PM
Unfair to whom?

Inherently unfair, as they are regressive in effect. Again, you could probably create loopholes (clothes, food, other basic staples) to remove alot of the regressiveness.

patteeu
02-08-2005, 01:39 PM
No, that's what the top 5% of income earners in America earned last year according to the OMB or whoever it was.

"Rich" involves more than one year worth of salary at a top 5% income level. If, however, you consistently made the top 5%, then I think you'd clearly be very well off or rich, unless you were really stupid with your money.

Which brings up another unintended consequence of the current tax code (coupled with the presence of a Social Security retirement system). There is an incentive to spend money "on wine, women, and song" rather than save because over a lifetime the taxpayer who provides for his/her own future will not only live a lower-standard-of-living lifestyle (lower consumption) but they will also pay higher taxes (paying once on the income and again on the growth with the notable and positive exceptions of retirement savings accounts and step ups in basis when transfered at death). I guess it's a matter of debate and values as to who is being stupid with their money.

Donger
02-08-2005, 01:39 PM
Inherently unfair, as they are regressive in effect. Again, you could probably create loopholes (clothes, food, other basic staples) to remove alot of the regressiveness.

Come on Amnorix. If they are unfair, unfair to whom?

Amnorix
02-08-2005, 01:42 PM
Come on Amnorix. If they are unfair, unfair to whom?

Those with lower incomes.

Amnorix
02-08-2005, 01:43 PM
Which brings up another unintended consequence of the current tax code (coupled with the presence of a Social Security retirement system). There is an incentive to spend money "on wine, women, and song" rather than save because over a lifetime the taxpayer who provides for his/her own future will not only live a lower-standard-of-living lifestyle (lower consumption) but they will also pay higher taxes (paying once on the income and again on the growth with the notable and positive exceptions of retirement savings accounts and step ups in basis when transfered at death). I guess it's a matter of debate and values as to who is being stupid with their money.

I truly doubt anyone looks at their finances and decides to spend money for the reasons you indicate.

patteeu
02-08-2005, 01:55 PM
I truly doubt anyone looks at their finances and decides to spend money for the reasons you indicate.

You are right. I shouldn't have described it as an incentive because it probably doesn't really affect behavior that much. Instead, I should have framed it as an issue of fairness. Is it fair that the saver pays more taxes on a lower-standard-of-living lifestyle than the higher-lifestyle spender? I don't think it is.

Amnorix
02-08-2005, 02:04 PM
You are right. I shouldn't have described it as an incentive because it probably doesn't really affect behavior that much. Instead, I should have framed it as an issue of fairness. Is it fair that the saver pays more taxes on a lower-standard-of-living lifestyle than the higher-lifestyle spender? I don't think it is.

Every tax methodology has both intended and indirect (and unintended) consequences. So long as the unintended consequences don't dramatically affect behavior in negative ways, or are otherwise very negative, I'm not too worried about them.

Frankly, the question is a bit too esoteric for me. Nor would it be solved by a flat tax (assuming it taxed all forms of income). Meanwhile, would a national sales tax be "fair" in penalizing those who spend their money and thereby help the economy grow. :shrug: Damned if I know (or care, really :) )

patteeu
02-08-2005, 02:24 PM
IMHO a good progressive tax is more fair than a flat tax. Flat taxes (without many loopholes) are regressive and essentially unfair, IMHO.

A progressive tax that was overly progressive would tip over into unfair, punitive or what have you. The debate over where the tipping point would be isn't very interesting, however.

Fairness is in the eye of the beholder. I think a flat tax is fair, in part, because it doesn't allow one group of taxpayers to raise the rates on another group of taxpayers simply because it is a majority. In addition to this fairness advantage, a flat tax would avoid issues of complexity introduced by progressivity.

I don't think there is a lot of reason to have food-handout programs or government housing in the first place, but if we are going to give aid for basic necessities of life then we should be doing it on the spending side of the ledger in programs that are re-evaluated from budget to budget (unlike tax code provisions) and where benefits can be needs-tested if desired (needs-testing in the tax code is limited to crude measures like annual income rather than more robust evaluations used in spending programs).

This would have the added benefit of stripping the complexity of determining the winners and losers in the wealth redistribution process away from the tax code and moving it over to the spending side where it falls on the benficiaries of the transfer (who have a positive incentive to navigate that complexity instead of the negative incentive taxpayers have to navigate the system in order to avoid tax liability).

This is all my opinion of course.

SBK
02-08-2005, 02:52 PM
I have no problem carving out small family businesses, especially farms from the inheritance tax.

Going back to your first point -- I'm shocked and amazed to learn that nobody can run a business in America anymore! I mean, we're only the richest country in the history of Planet Earth....
The whole purpose of a business is to make a profit. You can't hire more employees than your bank account will pay for. When the gov't takes less, theres more room for employees, which in turn will make more money for both business and gov't thru more profits and employee taxes. When you take money from that business in the form of higher taxes the business can't hire more emlployees, doesn't grow, thereby shrinking the tax base that the gov't can draw from.

We are great at running business here. Too bad for the folks, like me, that do run our own business, the folks responsible for taxing us for the most part have no idea how it works. (Bush does, hence all the tax breaks and pro business policy)

Also, the richest country in the world didn't get that way from any socialist type attitudes, it was our CAPITALISM. :thumb:

Good discussion though, I don't know too many fair folks from the other side of the isle, so I do enjoy reading most of your posts. :p

Amnorix
02-08-2005, 03:07 PM
The whole purpose of a business is to make a profit. You can't hire more employees than your bank account will pay for. When the gov't takes less, theres more room for employees, which in turn will make more money for both business and gov't thru more profits and employee taxes. When you take money from that business in the form of higher taxes the business can't hire more emlployees, doesn't grow, thereby shrinking the tax base that the gov't can draw from.

We are great at running business here. Too bad for the folks, like me, that do run our own business, the folks responsible for taxing us for the most part have no idea how it works. (Bush does, hence all the tax breaks and pro business policy)

Also, the richest country in the world didn't get that way from any socialist type attitudes, it was our CAPITALISM. :thumb:

Good discussion though, I don't know too many fair folks from the other side of the isle, so I do enjoy reading most of your posts. :p

Most of your statements above are general comments, platitudes, etc. that I don't disagree with. They have nothing to do with whether a particular tax system, or the levels of taxation, make the most sense, however.

I'm also a capitalist, but no country in the world practices "true" capitalism, nor would any country that did survive for long. People can rant about "socialistic" policies, but "true" capitalism isn't anything to strive for.

Gary
02-08-2005, 06:15 PM
Also, the richest country in the world didn't get that way from any socialist type attitudes, it was our CAPITALISM. :thumb::p

So capitalism bred the ever increasing disparity in wealth in this country (ie: the rich get richer & the poor get poorer)?

KCWolfman
02-08-2005, 06:46 PM
So capitalism bred the ever increasing disparity in wealth in this country (ie: the rich get richer & the poor get poorer)?
When did the "poor get poorer"? We have one of the wealthiest "poor" people in the world.

Perhaps only the rich are accounting for record sales in new homes, new cars, mobile technology, etc. Even if they are, are they only buying from other rich people and employing only the rich?

RINGLEADER
02-08-2005, 07:42 PM
Don't be absurd. My statement is EXTREMELY limited. The US tax code as currently constituted is NOT punitive. Punitive by definition involves the concept of deterring repeat future behavior. The tax code is NOT designed to deter people from making mroe money.

Or, as someone asked previously, have you turned down a raise lately, ro do you know anyone who turned down a raise, because they were worried they would move from the middle to a higher tax bracket.

(note, I know KCWolfman has stated that people have turned down raises to stay eligible for various forms of welfare, but that doesn't address the HIGH end of the tax bracket, which is what we're discussing here).


Absurdity is raising the upper-brackets of the foreign income tax (like what French or Germans pay is supposed to be more correct than what we pay) and then retreat when it's pointed out that the French/German economies that you were just pimping have performed terribly.

Maybe if they lowered tax rates they'd have more growth. Or perhaps its the fact that they riot when they have to work for more than 35 hours a week.

RINGLEADER
02-08-2005, 07:44 PM
errr....what?! There were surpluses from 1998-2001. Or so says the morons at the Congressional Budget Office. :rolleyes:

http://www.cbo.gov/showdoc.cfm?index=1821&sequence=0

Then why did the national debt rise each of those years?

RINGLEADER
02-08-2005, 07:46 PM
So you didn't realize you were rich before, but now you do.

I'll give you a hint -- I could give a rat's ass about you and your tax bill (or me and mine, for that matter) when discussing what makes sense in terms of POLICY. You vote your wallet, I'll vote my conscience.


I hope you didn't vote for Kerry then because his plans (at least those he was kind enough to share with us) would have upset both your wallet and your conscience. Unless spending the Bush tax cut for the rich to finance more entitlements while leaving those not working intact is your idea of wisdom.

Boozer
02-08-2005, 07:49 PM
Quick, semi-related question: People on this board always seem to talk about one benefit of a flat tax or national sales tax regime being reduced collections cost. Doing some quick calculations, it appears that the IRS costs the tax payers one cent for every two dollars it collects. How does this compare with private collections efforts (KCW, aren't you in some sort of billing? Is a .5% collection cost good?) Can anyone find stats for sales tax collection costs?

SBK
02-08-2005, 07:55 PM
So capitalism bred the ever increasing disparity in wealth in this country (ie: the rich get richer & the poor get poorer)?

Actually, the reason people are rich, and people are poor has everything to do with what they do with what they have. This is one of the few nations in the world where you can truely change your station in life. How many folks were born poor and die insanely rich. The gov't doesn't determine your wealth, and never will. There will always be rich and poor, no matter how many entitlements are given out. If people would educate themselves, (financially, not college per say), and go out and take risk we'd have way more rich people here than we do now.

The higher the tax the fewer rich people there will be. The more entitlements the MORE poor people there will be, because they won't feel the need to get out and do something.

RINGLEADER
02-08-2005, 07:57 PM
I'm no expert on bonds, but I assume it allows governmental organizations to give a slightly lower rate while still offering an attractive product. In other words, if one governmental entity is taxing interest earned off a bond purchased from another governmental entity, then all you're really doing is redistributing money from the bond issuing governmental entity to the taxing entity.

That was complicated, and just a guess, but it seems to make sense.


As someone who has a few bonds I would say that you're both right and wrong. If the tax breaks weren't there it wouldn't make a lot of sense to invest in many of the things that local government can make more attractive via the tax-free bonds...like schools at such The interest rate paid by the issuer is adjustable to some extent based on the call-date of the bond so there's still protection for the bond issuer (if they raise the money at 8.0% they can call them back when the rate is much lower). But the bottom-line is that there are better ways to get 5.0% for your money...but 5.0% tax-free is obviously more attractive. There's a market in bonds and their price as well as the premium value of the bond (the amount you pay above the face-value) can change based on its rating, it's yield and it's maturity date.

You can look at it as unfair that purchasing a bond entitles the holder to a revenue stream that is tax-free...but without it the ability of government to raise money at the state and local levels would be curtailed. Also, don't forget that there are bonds out there that will pay much higher returns (such as Blackrock or others tied to the tobacco settlement that paid out much higher unless the outstanding lawsutis came back against the tobacco companies at which point it was widely assumed they'd go bankrupt and default on the bond), but they carry much more risk.

RINGLEADER
02-08-2005, 07:59 PM
That's basically right, the other reason being an early states right issue, and it allows the government to fund things through bond measures at a cost that is reduced to the taxpayer, who is ultimately paying off the debt.

Here's what I'm talking about though. Say you have a $1 billion portfolio, all to go into bonds. Muni's are say 5%, nontaxable, while corporates or govt's of similar duration are 7.7% taxable. With the munis, you've just made a $50 million, untaxable. With the corporates, you've made $77 million, taxed at 35%, it comes to $50 million, and the government taking $27 million. Seems to me they would've closed that by now, but I guess the attractiveness of getting revenue into local projects is enough that congress stays away from it.

Anyway, I digress.


Your math seems right SN, but good luck finding a AAA-rated tax-free muni that's delivering anything close to 5%.

KCWolfman
02-08-2005, 08:01 PM
Quick, semi-related question: People on this board always seem to talk about one benefit of a flat tax or national sales tax regime being reduced collections cost. Doing some quick calculations, it appears that the IRS costs the tax payers one cent for every two dollars it collects. How does this compare with private collections efforts (KCW, aren't you in some sort of billing? Is a .5% collection cost good?) Can anyone find stats for sales tax collection costs?
Why would any private collections have to occur with a flat tax? The IRS employs tens of thousands, if not more. Even in collections, I know the most expensive business expense is salary - if the company can cut hours paid, the company makes more money. Perhaps the reason it is .5% is that they are collecting over what is required to feed a dinosaur that needs to be extinct?

patteeu
02-08-2005, 09:10 PM
I'm no expert on bonds.

One interesting aspect of tax free bonds that is related to the progressivity issue is that they generally only make sense as an investment for those in the highest tax brackets. Because they are tax free, municipalities can offer them at a rate below market value compared to taxable bonds (e.g. corporate bonds) and still generate an after tax benefit for the bondholder that is competitive. But that is only true for the highest marginal tax rates. At the lower marginal tax rates, the after tax return is lower than the competitive taxable bonds.

That's the reason people like Ross Perot are so heavily invested in tax free municipal bonds. It's also means that most people would be foolish to invest in tax free bonds. In other words, tax free bonds are a bargain for the rich but very expensive for the poor. Just another complication (and some might consider it a fairness issue too) brought to us by the insidious magic of progressivity.

bkkcoh
02-08-2005, 09:19 PM
I hope you didn't vote for Kerry then because his plans (at least those he was kind enough to share with us) would have upset both your wallet and your conscience. Unless spending the Bush tax cut for the rich to finance more entitlements while leaving those not working intact is your idea of wisdom.


I am almost positive Amnorix voted for Kerry because Kerry is from MA...


:p

Saggysack
02-09-2005, 04:39 AM
Chris: I figured why should just the poor kids go out in the war and the rich kids always get away with it?

King: Oh, I see. What we got here is a crusader.

Crawford: [laughing] Sounds like it.

King: Shit, you gotta be rich in the first place to think like that. Everybody know, the poor always being ****ed over by the rich. Always have. Always will.

Amnorix
02-09-2005, 05:48 AM
Then why did the national debt rise each of those years?

err...it didn't... Column on the far right indicates "Debt Held by Public" reduced from $3,772B in 1997 to $3,319B in 2001.

See also: http://archives.cnn.com/2000/US/09/07/debt.clock/

Amnorix
02-09-2005, 05:49 AM
I hope you didn't vote for Kerry then because his plans (at least those he was kind enough to share with us) would have upset both your wallet and your conscience. Unless spending the Bush tax cut for the rich to finance more entitlements while leaving those not working intact is your idea of wisdom.

My support for Kerry was always lukewarm at best. He was not an impressive candidate, and was certainly not my preferred choice.

I voted for him as the lesser of two evils. It's that simple.

RINGLEADER
02-09-2005, 09:44 AM
err...it didn't... Column on the far right indicates "Debt Held by Public" reduced from $3,772B in 1997 to $3,319B in 2001.

See also: http://archives.cnn.com/2000/US/09/07/debt.clock/


Um, Amnorix, you're not including the spending of trust fund surpluses that aren't included as part of the general government. The fact is that the national debt increased every year to new highs during the Clinton years.

RINGLEADER
02-09-2005, 09:45 AM
My support for Kerry was always lukewarm at best. He was not an impressive candidate, and was certainly not my preferred choice.

I voted for him as the lesser of two evils. It's that simple.


But if your concerns were truly as you stated here (at least on economic issues) he wasn't the lesser of two evils. And you can go to his own statements and those of his economic advisers to come to that conclusion.

Amnorix
02-09-2005, 01:00 PM
Um, Amnorix, you're not including the spending of trust fund surpluses that aren't included as part of the general government. The fact is that the national debt increased every year to new highs during the Clinton years.

Look, the feds (pushed by the Republicans if I remember right) moved social security onto the budget, during the Reagan era. I'd prefer it to be moved back off, but that ain't gonna happen until SS runs a deficit. Then I'm sure it will ahppen immediately.

You can't have your cake and eat it too. Either the damn thing is on the budget or it isn't.

The fact is that the government paid down the outstanding federal debt, as shown by the chart I linked to.

Amnorix
02-09-2005, 01:01 PM
But if your concerns were truly as you stated here (at least on economic issues) he wasn't the lesser of two evils. And you can go to his own statements and those of his economic advisers to come to that conclusion.

Right -- my vote for Kerry would have been for non-economic issues anyway.

Truly, I wasn't impressed with either candidates views with regard to economic matters. They both sucked, in my mind. Therefore, no surprise, I went with other issues that matter to me.

If a socially liberal / economically conservative Republican ran for President, I'd probably be on that like white on rice. Good luck to me that that will ever happen....

RINGLEADER
02-09-2005, 05:21 PM
Right -- my vote for Kerry would have been for non-economic issues anyway.

Truly, I wasn't impressed with either candidates views with regard to economic matters. They both sucked, in my mind. Therefore, no surprise, I went with other issues that matter to me.

If a socially liberal / economically conservative Republican ran for President, I'd probably be on that like white on rice. Good luck to me that that will ever happen....


Don't be like so many others and let partisanship cloud your judgement. For me the best name I've seen so far of possible 08 candidates is still a Democrat.

RINGLEADER
02-09-2005, 05:22 PM
Look, the feds (pushed by the Republicans if I remember right) moved social security onto the budget, during the Reagan era. I'd prefer it to be moved back off, but that ain't gonna happen until SS runs a deficit. Then I'm sure it will ahppen immediately.

You can't have your cake and eat it too. Either the damn thing is on the budget or it isn't.

The fact is that the government paid down the outstanding federal debt, as shown by the chart I linked to.


Actually, raiding social security was the bright idea of the Dems. Under Lyndon Johnson if I remember correctly.

<I>On edit:</I> To be fair though, I can't remember many Republicans aiming to change that status quo.

<I>On second edit:</I> The unification of the various government trust accounts did take place during Johnson's final year in office so that he could deliver a mostly balanced budget by counting the surpluses paid into the various trusts (not just social security) as part of the overall budget. The first direct raiding of the social security surplus happened under the Democratic House/Republican Senate in 1985 - the Reagan-era reference you made - and was supposed to be a one-time thing. Unfortunately, we know how easily restrained the federal government was back then.

Lbedrock1
02-09-2005, 07:10 PM
I don't feel sorry for the rich and the taxes they will have to pay and I'm on my way to getting there, but the simple truth is that percentage wise the rich pay less than the middle class. When you have money you can buy yourself tax breaks. A man making a million a year gets a $160,000 a year tax break through his 401k and that is before he takes a loss on that business he sets up that will lose somewhere close to 75% of whatever he earns in another busness that makes money and it is legal to do. So now that the 160 thou has been remove he will be paying about $294,000 which puts him at 29.4% of the million. Now don't forget clothes, charity, church, non-profits that he or she can contribute to, the writeoff of the cars, business lunches and it goe on and on. Now when the accountant is finish the rich person is somewhere around 12-15% in taxes. Don't beleive it read the Rich DAD Poor DAD series of books and let a rich man tell you himself. Im gonna be there and Bush is gonna help me get there, because everything he seems to do puts customer right in my lap......GO BUSH.

KCWolfman
02-09-2005, 07:33 PM
I don't feel sorry for the rich and the taxes they will have to pay and I'm on my way to getting there, but the simple truth is that percentage wise the rich pay less than the middle class. When you have money you can buy yourself tax breaks. A man making a million a year gets a $160,000 a year tax break through his 401k and that is before he takes a loss on that business he sets up that will lose somewhere close to 75% of whatever he earns in another busness that makes money and it is legal to do. So now that the 160 thou has been remove he will be paying about $294,000 which puts him at 29.4% of the million. Now don't forget clothes, charity, church, non-profits that he or she can contribute to, the writeoff of the cars, business lunches and it goe on and on. Now when the accountant is finish the rich person is somewhere around 12-15% in taxes. Don't beleive it read the Rich DAD Poor DAD series of books and let a rich man tell you himself. Im gonna be there and Bush is gonna help me get there, because everything he seems to do puts customer right in my lap......GO BUSH.
The Middle Class can't write off clothes, charity, tithes, business lunches, etc? Damn, I must be rich and didn't know it!

patteeu
02-09-2005, 11:06 PM
The Middle Class can't write off clothes, charity, tithes, business lunches, etc? Damn, I must be rich and didn't know it!

This is an example of the tax code being changed to benefit the lower income classes (by expanding the standard deduction again and again) and then being criticized because it no longer makes sense for the lower income classes to take these deductions individually. LOL.

Lbedrock1
02-09-2005, 11:21 PM
The Middle Class can't write off clothes, charity, tithes, business lunches, etc? Damn, I must be rich and didn't know it!

Thats not what Im saying. It's just that what the rich can afford to write off a lot more than than middle class which helps them go from 30% all the way down to about 15% and I don't know any middle class person that has those kind of resources without an inheritance (which means they are not middle class anymore) that can do that legally unless they are living way below their means which most people don't.

patteeu
02-10-2005, 12:28 AM
Thats not what Im saying. It's just that what the rich can afford to write off a lot more than than middle class which helps them go from 30% all the way down to about 15% and I don't know any middle class person that has those kind of resources without an inheritance (which means they are not middle class anymore) that can do that legally unless they are living way below their means which most people don't.

I don't see the problem.

Amnorix
02-10-2005, 05:34 AM
On second edit: The unification of the various government trust accounts did take place during Johnson's final year in office so that he could deliver a mostly balanced budget by counting the surpluses paid into the various trusts (not just social security) as part of the overall budget. The first direct raiding of the social security surplus happened under the Democratic House/Republican Senate in 1985 - the Reagan-era reference you made - and was supposed to be a one-time thing. Unfortunately, we know how easily restrained the federal government was back then.

Kudos on identifying when the unification of the trust accounts took place. Dems take the rap for that one.

Reagan in '85 was RIGHT after the '84 election, with Reagan having utterly dominated Mondale. You can't blame that one on the Democrats (or, more appropriately, you can't blame us 50/50 on that).

KCWolfman
02-10-2005, 06:18 AM
Thats not what Im saying. It's just that what the rich can afford to write off a lot more than than middle class which helps them go from 30% all the way down to about 15% and I don't know any middle class person that has those kind of resources without an inheritance (which means they are not middle class anymore) that can do that legally unless they are living way below their means which most people don't.
The rich can write off more because they earn more. There is a max percentage of all that you listed that can be written off. That percentage is the same for rich, middle class, and poor.

Amnorix
02-10-2005, 08:58 AM
The rich can write off more because they earn more. There is a max percentage of all that you listed that can be written off. That percentage is the same for rich, middle class, and poor.

So what's the lowest effective tax rate that could apply to the wealthiest income earners?

patteeu
02-10-2005, 09:41 AM
So what's the lowest effective tax rate that could apply to the wealthiest income earners?

I don't know, but for those who are concerned that the rich are paying a lower effective rate than the middle class due to their access to deductions/loopholes, I recommend a flat tax with minimal deductions.

bkkcoh
02-10-2005, 09:43 AM
I don't know, but for those who are concerned that the rich are paying a lower effective rate than the middle class due to their access to deductions/loopholes, I recommend a flat tax with minimal deductions.


4 - 5 % on any income over $50,000................ :toast: :hmmm:

RINGLEADER
02-10-2005, 09:57 AM
So what's the lowest effective tax rate that could apply to the wealthiest income earners?

Depends on what the economy is doing at the time and where it's trending. Frankly, I'd rather have local government have more control over the taxes, but under the current system I think it entirely depends on the state of the economy.

Amnorix
02-10-2005, 10:04 AM
I don't know, but for those who are concerned that the rich are paying a lower effective rate than the middle class due to their access to deductions/loopholes, I recommend a flat tax with minimal deductions.

This is like using a shotgun to cure a headache. No thanks.

patteeu
02-10-2005, 10:19 AM
One thing to keep in mind when you class-warriors get your panties in a bunch over tax breaks for the wealthy (which decrease their effective rates) is that they aren't necessarily pocketing the tax savings. For example, in the case of tax free municipal bonds, the return on the bonds is significantly less than that of taxable bonds. The after tax return is somewhat better for those in high tax brackets (or no one would invest in them), but that tax savings goes in large part to the municipalities (in the form of reduced cost of issuing bonds) rather than the taxpayer. In other words, the high tax bracket investor is effectively paying a slightly smaller tax to the municipality than what they would otherwise have paid to the federal government rather than no tax at all.

Lbedrock1
02-10-2005, 11:05 AM
The rich can write off more because they earn more. There is a max percentage of all that you listed that can be written off. That percentage is the same for rich, middle class, and poor.
Yeah but writng off that 1200 dollar suit is alot different from writing off that 150 dollar suit from JC Penney. You see who that percentage benefits right. So now if the rich get back more of a percentage because they have the resources to write off more who does a tax cut benefit the most? I not just talking about the amount as a whole Im talking about the percentage that is paid be each person. This is why the rich do not want a Flat Tax of any sort.

Amnorix
02-10-2005, 11:09 AM
One thing to keep in mind when you class-warriors get your panties in a bunch over tax breaks for the wealthy (which decrease their effective rates) is that they aren't necessarily pocketing the tax savings. For example, in the case of tax free municipal bonds, the return on the bonds is significantly less than that of taxable bonds. The after tax return is somewhat better for those in high tax brackets (or no one would invest in them), but that tax savings goes in large part to the municipalities (in the form of reduced cost of issuing bonds) rather than the taxpayer. In other words, the high tax bracket investor is effectively paying a slightly smaller tax to the municipality than what they would otherwise have paid to the federal government rather than no tax at all.

So the difference between the income on a tax free bond and a taxable bond is effectively itself a tax? :spock:

Reduced earnings due to employing tax aviodance methodologies are not a tax. Sorry.

patteeu
02-10-2005, 11:55 AM
So the difference between the income on a tax free bond and a taxable bond is effectively itself a tax? :spock:

Reduced earnings due to employing tax aviodance methodologies are not a tax. Sorry.

No, I'm sorry you are wrong. You are too caught up in the idea of explicit taxation. I am assuming that you don't need the following explanation and are just making a weak semantic argument but just in case:

If I stand to make $100 on a taxable investment before tax and $75 after tax, a municipality can lure me into their tax free investment at a cost to them of only $76. That's a $24 benefit to the municipality and a $1 benefit to me. I'm still missing out on $24 of my maximum pretax return and the municipality is benefitting by the same amount. There isn't a bit of difference in result between this and a direct tax reaping that $24.

Amnorix
02-10-2005, 12:11 PM
No, I'm sorry you are wrong. You are too caught up in the idea of explicit taxation. I am assuming that you don't need the following explanation and are just making a weak semantic argument but just in case:

If I stand to make $100 on a taxable investment before tax and $75 after tax, a municipality can lure me into their tax free investment at a cost to them of only $76. That's a $24 benefit to the municipality and a $1 benefit to me. I'm still missing out on $24 of my maximum pretax return and the municipality is benefitting by the same amount. There isn't a bit of difference in result between this and a direct tax reaping that $24.

How is it that it's a $24 benefit to the municipality? Especially when it's usually another organization (the feds) that would've gotten nearly all of that $24?

patteeu
02-10-2005, 12:58 PM
How is it that it's a $24 benefit to the municipality? Especially when it's usually another organization (the feds) that would've gotten nearly all of that $24?

Since the municipality gets to offer tax free bonds, they can do so at a lower rate of return than a normal borrower. That's a financial benefit. In my example, the municipality had to offer a tax free bond that returned $76 to beat taxable bonds offering $100 pretax and $75 aftertax. The $24 is the difference between the $100 that municipalities would have to offer if their bonds were taxable and the $76 they have to offer since they are not.

It's true that it's a different governmental entity benefitting from that $24, but that's an understood consequence of building the federal tax code that way. The federal tax code is, in effect, subsidizing the municipality to the tune of $24 in my example.

My point isn't about the actual ratio of benefit between the municipality and the taxpayer but just that they share that benefit (rather than the taxpayer getting it all as is the general perception IMO).