Income Taxes and what is fair
Per AMI, which is a Republican think tank, the top 5% of Americans pay well over half of all income taxes. Of course, this isn't a big surprise given that the top 5% of Americans own 73% (roughly) of all U.S. wealth. It would be almost impossible for them not to pay the most in taxes, because of the vast disparity in wealth.
The wealthy would seem to be more valuable when using taxes as the barometer. Though, their wealth is disproportionate to what they produce.
This kind of imbalance is obviously unsustainable. Just one more piece of our problem.
I would argue that "A couple of percentage points doesn't mean a tremendous amount to an average wage earner but could be huge to a wealthy person", the opposite is true. If you are making $1 million off of dividends every year and have your taxes doubled from the current 15% to 30% you would barely notice going from $850k to $700k. Maybe you buy a Mercedes S-class instead of Maybach, but that's not much of a sacrifice.
It's kind of like the Chris Rock divorce joke. He says, "If you are worth $30 million and she is going to take half, you will be all right. If you are worth $30,000 and she is going to take half, that b@#$% has to die!"
The wealthy would seem to be more valuable when using taxes as the barometer. Though, their wealth is disproportionate to what they produce.
This kind of imbalance is obviously unsustainable. Just one more piece of our problem.
I would argue that "A couple of percentage points doesn't mean a tremendous amount to an average wage earner but could be huge to a wealthy person", the opposite is true. If you are making $1 million off of dividends every year and have your taxes doubled from the current 15% to 30% you would barely notice going from $850k to $700k. Maybe you buy a Mercedes S-class instead of Maybach, but that's not much of a sacrifice.
It's kind of like the Chris Rock divorce joke. He says, "If you are worth $30 million and she is going to take half, you will be all right. If you are worth $30,000 and she is going to take half, that b@#$% has to die!"
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> Who's more valuable, the guy that pays a million in
> taxes (albeit discounted), or the 200 people who it
> would take to pay in the same amount at $5,000
> apiece?
From a systems perspective, the 200 people are more valuable as if one of them croaks, then gov't income is still close to $1M. If the millionaire taxpayer passes, then the income is lost.
> taxes (albeit discounted), or the 200 people who it
> would take to pay in the same amount at $5,000
> apiece?
From a systems perspective, the 200 people are more valuable as if one of them croaks, then gov't income is still close to $1M. If the millionaire taxpayer passes, then the income is lost.
People tend to neglect talking about the total tax picture when talking about fairness. I seldom hear anyone talk about the effects of non income related taxes. Taxes like sales tax and property taxes can boost the total tax rate of the poor and middle class to much higher levels than the rich pay. $5000 (which is a low number for a middle class house in NYS) in local tax on a 30k income is 16%. While a wealthy person might have a house that costs 3 or more times as much, his income could be hundreds of times higher which would add only a trivial amount to his total tax rate.
Democrats use to talk about recessive taxes, but I have not heard any politician mention them in a long time. On the other hand, I don't listen to them very much any longer.
Democrats use to talk about recessive taxes, but I have not heard any politician mention them in a long time. On the other hand, I don't listen to them very much any longer.
To tackle the "fairness" argument, you have to also look at benefits received. The millionaire is most assuredly getting far more services than the average worker. Take for example this article:
http://www.rollingstone.com/politics/ne ... t-20110411
Is it fair they're only paying 15% tax on income they "earned" by borrowing from the Federal Reserve at 0% and re-lending back to the U.S. Treasury at 3%? Fuck no.
But guess what. Life is not fair.
http://www.rollingstone.com/politics/ne ... t-20110411
Is it fair they're only paying 15% tax on income they "earned" by borrowing from the Federal Reserve at 0% and re-lending back to the U.S. Treasury at 3%? Fuck no.
But guess what. Life is not fair.
I'm curious to see the specifics of some of these returns where rich people pay extremely low rates. I'd just like to know how they can manage it. Obama's doesn't look too sneaky... around 25%.
http://www.whitehouse.gov/sites/default ... _taxes.pdf
http://www.whitehouse.gov/sites/default ... _taxes.pdf
The simple answer to the math -- no, that millionaire is not 200X more important because a true free market will create another millionaire to replace him. That millionaire is generating his money from buy/selling goods to/from the ordinary people. If he takes his ball and go home, somebody else will start providing those goods and generate the same tax income.
It total self-glorification, self-masturbation to pretend otherwise.
It total self-glorification, self-masturbation to pretend otherwise.
I think most are missing the point, Taxes are theft.
It is you duty as a citizen, to do your upmost to avoid paying them.
This is what one of Australia's most richest men had to say when questioned by the political class.
www.youtube.com/watch?v=Pf0gj_ezbc8
Enjoy
It is you duty as a citizen, to do your upmost to avoid paying them.
This is what one of Australia's most richest men had to say when questioned by the political class.
www.youtube.com/watch?v=Pf0gj_ezbc8
Enjoy
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It ultimately boils down to the difference between
1) Who earns the money/creates the wealth.
2) Who gets to spend the money/use the wealth.
Taxes is a mathematical function that transforms (1) into (2). In other words, it is redistribution run by the government.
Arguing whether taxes are fair or not clouds the issue because it is secondary to the real issue which is (2).
[This discussion is similar to the recent budget gridlock. I noticed that the primary interest of either side was to cut only budget entries they disagreed with politically rather than do a wide cut of everything, say.]
* I sometimes wonder how many problems/complexities are created by having essentially two different systems of distribution operating at the same time viz. political and economical, instead of just one. *
1) Who earns the money/creates the wealth.
2) Who gets to spend the money/use the wealth.
Taxes is a mathematical function that transforms (1) into (2). In other words, it is redistribution run by the government.
Arguing whether taxes are fair or not clouds the issue because it is secondary to the real issue which is (2).
[This discussion is similar to the recent budget gridlock. I noticed that the primary interest of either side was to cut only budget entries they disagreed with politically rather than do a wide cut of everything, say.]
* I sometimes wonder how many problems/complexities are created by having essentially two different systems of distribution operating at the same time viz. political and economical, instead of just one. *
@ademac,jacob: I disagree with the notion that taxes are theft or redistribution. Taxes fund service such as police, army, fire department, education, courts, streets... There are countries that do not have these. I do not want to live in one.
I do not know what is fair way to fund the above. But I think that a flat tax rate on all income (employment, dividend, capital gain) of around 20-25% with no deductions is the most fair proposal that I have seen.
I do not know what is fair way to fund the above. But I think that a flat tax rate on all income (employment, dividend, capital gain) of around 20-25% with no deductions is the most fair proposal that I have seen.
Before talking about what's fair, I think it's more important to come to an understanding of what one derives value from. Suppose I am a rich person. I derive a great deal of value from publicly provided potable water, education, etc. Not just for myself, but because I do not have to create those things for my employees, the people whose labor I buy.
Now suppose I am a poor person. Publicly provided services for everyone else still provide me some value, but not as much as for the rich person. As a poor person, I will be buying less of other people's labor. In an ideal world, the poor person would still be able to create and keep capital produced from their labor, or sell the capital for the value of the labor. In the real world, poor people are forced to sell for less than the value of the labor. I think this is the bigger problem.
Now suppose I am a poor person. Publicly provided services for everyone else still provide me some value, but not as much as for the rich person. As a poor person, I will be buying less of other people's labor. In an ideal world, the poor person would still be able to create and keep capital produced from their labor, or sell the capital for the value of the labor. In the real world, poor people are forced to sell for less than the value of the labor. I think this is the bigger problem.
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@DVDend - Taxes are certainly taken from you and given to someone else and if you resist you go to jail. That's the definition of [forced] redistribution.
You can take the money based on earned income, non-earned income, assets, head toll/tax, consumption, trade. Each form of taxation will hit some more than others. (For instance, as far as I'm concerned you could increase earned-income taxes to 100% since I'll get along fine without it.)
Similarly, you can give the taxes back but different people will benefit differently. Someone with $1M in assets will benefit more from police and fire protection than someone without any assets. People with children will benefit more from education. People with cars and industry will benefit more from streets. (I benefit heavily from public libraries.)
I need a good definition of "fair" to proceed with this. For instance, to an individualist, fair means taking care of himself and not burdening others. To a collectivist, fair means to each according to their needs and from each according to their abilities.
You can take the money based on earned income, non-earned income, assets, head toll/tax, consumption, trade. Each form of taxation will hit some more than others. (For instance, as far as I'm concerned you could increase earned-income taxes to 100% since I'll get along fine without it.)
Similarly, you can give the taxes back but different people will benefit differently. Someone with $1M in assets will benefit more from police and fire protection than someone without any assets. People with children will benefit more from education. People with cars and industry will benefit more from streets. (I benefit heavily from public libraries.)
I need a good definition of "fair" to proceed with this. For instance, to an individualist, fair means taking care of himself and not burdening others. To a collectivist, fair means to each according to their needs and from each according to their abilities.
@jacob: You can avoid taxes easily without going to jail. Just stop participating in the economy and have no income! I see tax as a "transaction fee" for participating in a functional economy. Redistribition is where something is taken from you. Correct! Taxes are only taken on transactions. Therefore it is not redistribution.
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@DVDend - However, the economy is a monopoly. For example, you and I can't trade in our own two-man economy without getting taxed by a third party. Hence participation is not voluntary. Due to nationality/visas/immigration policies, it is also not possible to just "move out".
(We should be careful not to argue specific details over the principles. Taking the specifics into account, it is certainly possible to earn a low income and yet pay little or nothing in taxes, thus getting a free ride. Stay under the deductible, get qualified dividends, etc.)
(We should be careful not to argue specific details over the principles. Taking the specifics into account, it is certainly possible to earn a low income and yet pay little or nothing in taxes, thus getting a free ride. Stay under the deductible, get qualified dividends, etc.)
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@DVDend - This is not true. If, say, 5 of us or even two of us got together and started trading with or working for each other, we would participate in an economy/market independent and outside of THE economy. In other words, we are free to start our "own club".
Despite not participating or using any services of THE economy (the other and much larger club), we would still have to pay taxes to THE economy. The only way out of taxes is not to do things that get taxed. Running a household-economy (I don't get taxed on the work I do when I cook for myself) is one such way and one of the underlying tenets of ERE.
We need to distinguish between "the economy" and "an economy".
Despite not participating or using any services of THE economy (the other and much larger club), we would still have to pay taxes to THE economy. The only way out of taxes is not to do things that get taxed. Running a household-economy (I don't get taxed on the work I do when I cook for myself) is one such way and one of the underlying tenets of ERE.
We need to distinguish between "the economy" and "an economy".
@jacob: You are absolutely correct. Starting your own club would be avoiding taxes. However, I don't believe we could work/trade independend of THE economy. We would still utilize THE economy for our club (roads, police etc.). Without THE economy, the club could not exist.
In addition to the household economy, there are other ways to work together and avoid paying taxes. I used to live in a coop where we had to work to maintain the house, cook etc. The rent was very low as we did almost everything by ourselves.
In addition to the household economy, there are other ways to work together and avoid paying taxes. I used to live in a coop where we had to work to maintain the house, cook etc. The rent was very low as we did almost everything by ourselves.