Logic and Taxes

[BigDawg]

I figure I'd post this here as well as on my tumblr. Read past the link to read the whole thing as well.

My tumblr post:
http://goo.gl/4TLXm

Logic and Taxes


People are getting too caught up in the politics of how this whole “class warfare” debate is going. The simple fact of the matter is that the rich people in this country don’t want to pay 3 to 4 percent more in taxes then they already do, as if it’s going to cause them some financial instability. Let’s say you make one million dollars a year, 36 percent of one million is 360,000 dollars. That leaves you with 640,000 dollars left that year. I know I’m not including other obligatory bills, but a cable bill isn’t 500 dollars a month. Your Internet bill isn’t 100 dollars a month. I’m not sure of the exact amount of money is taxed to people who make one million dollars is, but it doesn’t make sense that these rich millionaires and billionaires are complaining about this. They have the tenacity to call it class warfare, as if we are targeting them because they are rich, saying that it will hurt them as job creators. Well of COURSE we are targeting you, you rich son-of-a-bitch!

While, from a purely bureaucratic standpoint, the notion that percentages should be the same makes perfect sense, if you look at the situation logically, it doesn't. I’m not saying that people who make one million dollars should pay the same tax rate as someone who makes 25,000 dollars because it makes absolutely no sense. Someone who brings in a million a year doesn't pay $175 for a meal at Taco Bell, should they decide to stoop to the level of the eating habits of commoners. Those who earn the most money in our country could even be paying 80% and still live very comfortably (of course, I wouldn't put the rate that high — just an example). You don't NEED a mansion to live in — you want one. You don't NEED four BMWs, twelve-star restaurants daily, eight-thousand-dollar prostitutes, monthly vacations in Paris, or shoes that are worth more than my neighborhood. You also don't NEED to do your best to help balance out the economy or show any of the spirit of altruism on which the USA was founded because you have the right not to — it's your prerogative, not ours. But such decisions are quite a shame, and, whether you believe in Buddha, the Tao, Jesus, Donkey Kong, or just PEOPLE, I'd call it a pretty immoral one.

Taxing works, and it works well. And when you reduce taxes on people with ridiculous amounts of money, they don't know what to do with it so they just sit on it. it pulls money out of the economy and then there's problems. One percent owns 36% of all the property and assets in the US. Why the hell would anyone advocate NOT increasing taxes on 1/3 of the country? Simple math: a 10% hike in taxes on everyone immediately increases revenue by greater than 3%, justfrom the top 1%... or 4 trillion dollars. That clears up the budget gap.

The percentage should be different for two reasons. First, the less money you make, the less money you have to spend. Sure groceries are tax free, and so is rent. But fuel, clothes, cleaning supplies, electronic devices, and many other necessities are not. Now sure you could say, they can buy cheap clothes and you don't NEED a TV (except that you really do). You need a computer and a lot of new things that didn't exist a century ago if you want to have a chance to pull yourself up by the bootstraps. If you make less than $30,000 a year you are solidly in the bottom 50% and paying 1%, $300, is a big deal. That is half a month's rent for most working poor, maybe less than half. And almost all working poor already live paycheck to paycheck. Me and both of my parents (who are both attorneys) are living check-to-check, barely able to afford groceries in between paychecks. Paying 9% ($2700), of $30,000, is a massive hardship. When faced with jail for not paying taxes or semi-starvation for not paying for food, which one are you going to skimp out on paying? There is a poisonous myth that the poor are in that state because they are lazy or they deserve it. It's pure Puritan crap. Look at Paris Hilton and you'll see there are worthless sacks of crap at every income level. I watched some TV show the other day, displaying celebrities and the things they buy. Some female celebrity bought a pair of sunglasses for 25,000 dollars! Are you fucking kidding me! Those sunglasses cost more than the house my parents bought. But just like you and your friends, most people at every level are working hard to get by and build a better life for their families.

Second, because the rich benefit more from society. Whether they were born in the bottom 99% (very rare and getting rarer in recent decades) and especially if they were born into it, our powerful army, our education system supplying workers, our transportation system, and most importantly investment in the future of the country. Here's the real secret, high taxes on the rich isn't to get at the money of the rich and give it to the government. When we were taxing the rich 90% from the 1930s to the end of the 1960s, we also created tax loopholes so that they would spend and invest. All that money went back into business as wages and investments. It went into commerce buying goods and services. Which meant better wages for the working class, safer working environments, and better quality goods being made here in America. It’s 2011 and how often do you see the products you buy are being made in America?

Now a lot of economists were saying 90% was too high. Then it lowered to 70%. Then Reagan lowered it to 50%, then later to under 40%. Somewhere in the early 1980s, wages stopped growing and started shrinking. So the right number is probably somewhere in between 50% and 70%. But there is no magic number necessarily (or if there is, we don't have enough data to say for sure). In hard times, the number might need to be higher (because we need the rich to spend to spur growth), in good times it can be lower (because we don't want growth to get out of hand). But despite having good times for parts of the 80's and 90's, we know that below 50% is bad news. And currently it is 36%, and apparently it isn’t doing any good.

Now when you combine equal taxes on rich and poor, you get lower wages, run away power of influence of the wealthy against EVERYONE else in government, and eventually you get a terrible depression because low taxes on the rich has the effect of taking from the poor and giving to the rich, and that is unsustainable. It happened in the 1850s, it happened in the 1890s, it happened in the 1920s, and it happened 3 years ago. How many times do we need it to happen before we start to understand basic economics instead of pretending that things will be better if everyone pays their "fair share"? Even Adam Smith, father of capitalism recognized that the rich would need to pay more than their fair share because they could afford to and it was necessary to keep the burden off the poor and keep society healthy where everyone has some chance of success. Reagan reduced the top tax rate (on $200k) from 70% to 34%. That tax rate was paid for by increasing taxes on the middle class. Suddenly, recession starts. The next thing to happen was reduced revenues, which meant budget cuts. When there's budget cuts what's the first thing to go? Education and social programs (mental infrastructure) and physical infrastructure, not to mention worker protections (Reagan showed it was ok to bust unions when he nearly fired the air traffic controllers) and financial regulation (which lead to 2008's fiasco).

Here we are 30 years later and America consistently ranks in the 30's in world rankings of any field of education. Reaganomics has clearly failed and the only thing these morons can come up with is more of the same thing that got us into this mess in the first place. And Republicans will never take responsibilities for the results of their failed Reaganite policies and will definitely NOT start now. Think of this country as a person with a credit card. We are in debt TRILLIONS of dollars because our last President maxed out his credit card. Now that Obama is in charge of the credit card, everyone expects him to pay off the debt. It simply isn't possible to do in a matter or 4 to 8 years. Can you pay off your credit card bill tomorrow? I highly doubt it. We need to establish a plan to slowly pay off our debt. And having the rich pay less taxes, or pay the current rate of taxes isn’t helping. Tax the rich and get them to create more jobs themselves instead of having us bail them out. You have to spend money to make it. And even though major corporations are STILL making record breaking profits in this time of economic burden on the 99% blows my mind. Use those profits to create jobs with better wages, so we can actually by things we want, and not just the necessities like food and clothing. It is simply illogical to call this whole thing about taxes being raised 4%, when it needs to be even higher, class warfare and you and I and they know it.

[jansob]

How long before this thread gets locked? I'm saying 25 posts before it gets out of hand.

[Mako72]

People are getting too caught up in the politics of how this whole “class warfare” debate is going. The simple fact of the matter is that the rich people in this country don’t want to pay 3 to 4 percent more in taxes then they already do, as if it’s going to cause them some financial instability. Let’s say you make one million dollars a year, 36 percent of one million is 36,000 dollars. That leaves you with 64,000 dollars left that year. I know I’m not including other obligatory bills, but a cable bill isn’t 500 dollars a month. Your Internet bill isn’t 100 dollars a month. I’m not sure of the exact amount of money is taxed to people who make one million dollars is, but it doesn’t make sense that these rich millionaires and billionaires are complaining about this. They have the tenacity to call it class warfare, as if we are targeting them because they are rich, saying that it will hurt them as job creators. Well of COURSE we are targeting you, you rich son-of-a-bitch!

This paragraph is the one that made me stop reading any further.

36% of one million is $360,000. You have to get the math right if you want anyone to read your emotionally driven rant, then when you admit you don't really know how much they pay you lose the basis of any argument you might make because you don't use known facts.

Now here is an article by MSN money on how a family of 4 making $250,000 a year fare on their "Rich" income. Might be an informative read http://money.msn.com/tax-planning/down-and-out-on-250000-dollars-a-year-fiscal-times.aspx .

Jay

[goatee]

i live below the poverty line

[chfair]

about halfway through the second paragraph i had to stop. as pointed out above the math is wrong secondly it was not making any sense by the point i was at and i lost interest.

[cb91710]

This paragraph is the one that made me stop reading any further.
Indeed.
The 2nd paragraph just got worse and I stopped reading there.

Talks about how it's not "class warfare" and then launches into a paragraph loaded with assumptions and uneducated option.

I have a very good friend who clears 3 mill a year.
His home is worth (well, WAS worth) just over 3 million.

8k hookers, monthly vacations in Paris, 4 BMW's, 4-star etc....?????

Complete rubbish.
He has a boatload of money in the bank because he DOESN'T spend money like someone who lives paycheck to paycheck.

We used to go to Cabo to fish once a year. Other than Cabo, Cozumel, and a scuba trip that we took to Club Med in the Bahamas, he's never been out of the USA.

The author is looking at habits of celebrities (who are pulling in several million per month!) and making the extension that EVERYONE who makes more than a million lives like that.

Yes, his home is a lot nicer than mine. Yes, he has a nice boat.
Cars? He drives an '02 325i. His wife drives an '07 Silverado.
We eat together at Taco Bell all the time. Sometimes I buy.

Oh... that home? His property taxes paid to the state of California are more than half of my pre-tax income.

So no, his cable bill isn't $500 and his internet bill isn't $100 (actually, mine is $60)... but he has other expenses that the "class warriors" conveniently ignore... and taxes other than the Federal income tax are one of them.
He's paying 11% income tax to California in addition to his Federal and sales taxes.

[jazzman]

Are we supposed to feel sorry for the $250K family that is saving for retirement and the kids' college and the $3 mil family that isn't traveling the world because they decided to buy a $3 mil house and put a boatload of money in the bank? Hard-working, educated people can't find jobs. Others have taken major reductions in income. The lucky ones who have kept jobs paying $60,000 to $100,000 aren't worrying about saving hundreds of thousands for college tuition or putting boatloads in the bank. They're the ones trying to get by and hoping their jobs don't evaporate because of the dishonesty and recklessness on Wall Street.

I haven't heard anyone on the left complaining about 2-income families earning $250K. That has nothing to do with any alleged class warfare. As for people who earn $3 million dollars every year, why shouldn't they pay the same tax rates they were paying in the 1990's on the second and third million? They were doing just fine then, and they'll do just fine in the future. And a very small increase on the rates paid on the second and third million would go a long way towards making the US economy strong. This is not class warfare. As our president said, it's math. The politicians who are saying no tax increase on any person or any business under any circumstances are hurting this country.

[xXClockwork]

Clearly the way to get people to see your side of the story :biggrin1:

[raisindot]

I think your poll needs to be expanded to provide a clearer relationship between the respondent's demographics and their opinion.

I'd have the choices be:

1. I'm rich and I believe the rich should be taxed more
2. I'm rich and I believe the rich should be taxed the same or less
3. I'm not rich and I believe the rich should be taxed more
4. I'm not rich and I believe the rich should be taxed the same or less
5. I'm rich and I believe those who aren't rich should be taxed more
6. I'm rich and I believe those who aren't rich should be taxes the same or less
7. I'm not rich and I believe those who aren't rich should be taxed more
8. I'm not rich and I believe those who aren't rich should be taxed the same or less
9. I believe everybody should be taxed more
10. I believe everybody should be taxed the same or less
11. I think Tabac smells like a babboon's armpit.

[mmack66]

I think they should scrap the income tax and come up with an equitable form of a national sales tax, consumption tax, or flat tax.

[rajagra]

Wow. That's a lot of words just to say that you would like the rich to be taxed more than you.
Some observations:



The USA was not founded on a spirit of altruism. It was founded on a desire to STOP paying so much tax to their (British) government.
It isn't the rich who bang on about class warfare, it's the poor/working class/Socialist Worker types.
You complain about rich people sitting on their money depriving the economy of its use, then you complain that they spend $25,000 on sunglasses. Do you want them to pass on the money or not? Please make up your mind.
You think it's immoral to not balance out the economy and be altruistic. Well, I hope you are consistent in that logic, because YOU are insanely wealthy compared to people in many other countries. I suggest you start giving away what money you have in line with your professed beliefs.

[Antique Hoosier]

I think they should scrap the income tax and come up with an equitable form of a national sales tax, consumption tax, or flat tax.

YES! This is exactly where we need to go. Tax consumption PERIOD

[JellyFox]

The USA was not founded on a spirit of altruism. It was founded on a desire to STOP paying so much tax to their (British) government.

The slogan that they used was "no taxation without representation". It wasn't the taxes that they revolted against, it was their lack of representation in parliament. Considering the wealthiest few in America have more representation than everybody else combined, I think it stands to reason that they should be taxed more.

[professorchaos]

I don't mind being taxed so long as that money is efficiently/well used within the scope of the government's mandate. The money I earn is my money, not the government's. If there is waste, which there is in abundance, then taxes are too high. It is that simple.

[ackvil]

I don't mind being taxed so long as that money is efficiently/well used within the scope of the government's mandate. The money I earn is my money, not the government's. If there is waste, which there is in abundance, then taxes are too high. It is that simple.

Exactly. Some politicians seem to think that it is THEIR money to spend as they see fit.

I wish I were rich enough to be in the top bracket - but I'm not. However, I do not begrudge those folks. For me the flat tax is the fairest tax with a certain amount of those in the lowest bracket who don't earn enough to pay much in the way of taxes.

One would get the impression from reading some of the above comments that lower income wage earners are supporting the high income earners when this is simply not true. In fact, the top 25% of all wage earners pay 83% of all federal income taxes with the top 1% paying an incredibly high 35%. The bottom 50% of wage earners pays only 4%. Tax brackets range from 10% all the way up to 35%. In fact, about 47 % of citizens paid no federal income taxes at all for 2009 because their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. Credits for low- and middle-income families have grown so that a family of four making as much as $50,000 owed no federal income tax for 2009, as long as there were two children younger than 17 in the household.

In my opinion, high income tax earners - which unfortunately I am not - already pay more than their share.

[devorenm]

You know you could have simply used the Quinnipac poll which is far more scientific than this one and avoided another messy thread about taxes and socialists.

[Amer]

Now here is an article by MSN money on how a family of 4 making $250,000 a year fare on their "Rich" income. Might be an informative read http://money.msn.com/tax-planning/down-and-out-on-250000-dollars-a-year-fiscal-times.aspx .


Why on earth would any couple $62,858 in debt from student loans take on a mortgage? No wonder they are "in the red".

[Mako72]

The slogan that they used was "no taxation without representation". It wasn't the taxes that they revolted against, it was their lack of representation in parliament. Considering the wealthiest few in America have more representation than everybody else combined, I think it stands to reason that they should be taxed more.

This always cracks me up. How do the wealthiest few have more representation than the vast majority?

In the US everyone(generally) gets a vote and therefore equal representation.

Look at how it works, in 2006 Dems controlled 2 and Repubs 1, 2008 Dems controlled all 3 branches of Govt, 2010 Dems controlled 2 and Repubs 1, come 2012 who knows. The point is its a constantly changing sea, so to argue that the rich have more representation is a joke.

Now you can make the argument that Democrats sign off on Legislation that the rich support, but that is their own fault. The reality is both sides introduce and pass pet legislation that they want. In order to do it the make deals behind the scenes, offer bribes to other Senators or House Members. In general nobody is ever happy with the end result.

But in the end when nearly half of the country pay no taxes to the Federal Govt(Excepting FICA & Gas taxes at the pump) to argue that those that do should just buck up and pay some more is just plain silly, IMO.

And no, I'm not in the upper bracket, was making about $39k. When I made $39k I paid about 30% in taxes between California and the Feds. This year $14k+/- due to the economy(working on a second job to earn more). So I don't have a dog in the hunt so to speak. Does it suck to go from $39K to $14K?, yup. But ya know what I have worked my way up before and I don't feel jealous or begrudge those making more than me. I know that when things improve I can move back up, or I can work two jobs it I want more money.

Jay

[Mr. Scruffy]

Bar Stool Economics

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100 and if they paid their bill the way we pay our taxes, it would go something
like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.)

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20." So drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free...but what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?'. They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each
end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now paid $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before...and the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

"I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got $10!"

"Yeah, that's right," exclaimed the fifth man who was now paying nothing, along with the first four. "I only saved a dollar, too. It's unfair that he got ten times more than I!"

"That's true!!" shouted the seventh man. "Why should he get $10 back when I got
only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first five men in unison. "We didn't get anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia

[Mako72]

Why on earth would any couple $62,858 in debt from student loans take on a mortgage? No wonder they are "in the red".

No clue. I am not in their earning bracket and never bought a home because A)couldn't afford it & B)never felt enough job security. Probably for the same reason someone make $30-40,000 would buy a $500,000 house, they got told that home ownership was a right and they got approved because Fannie and Freddie agreed to securitize their loan.

Jay

[JellyFox]

This always cracks me up. How do the wealthiest few have more representation than the vast majority?

In the US everyone(generally) gets a vote and therefore equal representation.

They have more representation because they have more money. Being able to vote means nothing when somebody else can bribe your elected officials.

[Amer]

Yes but what about when the 10th man, through totally legal loopholes and means, pays almost nothing at all, leaving the bulk of the bill on those men in the middle?

Or when the 10th man wants to buy a cheap and common barfood, pretzels, for $1. Pretzels are a requirement really. Who goes to a bar and doesn't get pretzels? How can you drink beer and not have pretzles? It's ridiculous! He has plenty enough money to provide pretzels for the entire group just on his 16% savings on the beer tab alone, but everyone is on their own for food. Unfortunately men 1-4 cannot afford pretzels, as they don't have the money whatsoever. The fifth man could buy them with his new break on the beer, but then he'd have nothing left. That's not very smart, so he also skips the pretzels. Now you have half the men without the basic requirement of pretzels!

[NBKA1BM]

"And almost all working poor already live paycheck to paycheck. Me and both of my parents (who are both attorneys) are living check-to-check, barely able to afford groceries in between paychecks."

Maybe your parents should sell a BMW or the vacation home. I find it very hard to believe two attorneys are living paycheck to paycheck, seeing how much my family pays to our attorney each year.

This sounds like a rant from a person who was raised in an upper middle class family and is pissed because the world was not handed to him.

[Blade Boy]

It is not one of the option in the poll but I think we should be taxed ONLY on what we buy, no other taxes, that IMO would be fair.

[NBKA1BM]

Why on earth would any couple $62,858 in debt from student loans take on a mortgage? No wonder they are "in the red".

for the tax breaks of home ownership. Hehehe

[jazzman]

Exactly. Some politicians seem to think that it is THEIR money to spend as they see fit.

I wish I were rich enough to be in the top bracket - but I'm not. However, I do not begrudge those folks. For me the flat tax is the fairest tax with a certain amount of those in the lowest bracket who don't earn enough to pay much in the way of taxes.

One would get the impression from reading some of the above comments that lower income wage earners are supporting the high income earners when this is simply not true. In fact, the top 25% of all wage earners pay 83% of all federal income taxes with the top 1% paying an incredibly high 35%. The bottom 50% of wage earners pays only 4%. Tax brackets range from 10% all the way up to 35%. In fact, about 47 % of citizens paid no federal income taxes at all for 2009 because their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. Credits for low- and middle-income families have grown so that a family of four making as much as $50,000 owed no federal income tax for 2009, as long as there were two children younger than 17 in the household.

In my opinion, high income tax earners - which unfortunately I am not - already pay more than their share.

Almost all of your numbers are misleading. You correctly point out that you are talking about federal income taxes, but the numbers ignore federal "payroll taxes," i.e., Social Security (FICA) and Medicare. FICA taxes hit lower income people much harder than higher income people because there is a fairly low cutoff on the income that is taxed. The numbers also ignore gasoline and other federal taxes that are included in the purchase prices of various goods and the prices of services from businesses that pay such taxes. Those taxes also hit lower income people harder because they spend a much higher percentage of their incomes on goods and services. The numbers also ignore state and local taxes, largely sales taxes, which also hit poor people harder as a percentage of total income. Finally, those of us "lucky" enough to be footing the bill for federal income taxes on our wages and salaries pay a much higher rate than people who get large incomes from capital gains and dividends.

In my opinion, the high income folks were paying closer to their fair share in the 1990's, when the economy was doing well, rich folks were doing well, and jobs really were being created. The idea that low taxes on rich folks will create jobs has been disproven throughout the period of the current, extended, "temporary" Bush tax cuts.

[fccexpert]

I'm a flat tax man myself, I believe everyone should pay the same percentage with possibly some exemption for the very lowest incomes (say less than $20,000 single $30,000 joint) and no deductions, credits etc. I also believe money should only be taxed once as opposed to multiple times.

[Mako72]

Bar Stool Economics

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100 and if they paid their bill the way we pay our taxes, it would go something
like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.)

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20." So drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free...but what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?'. They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each
end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now paid $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before...and the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

"I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got $10!"

"Yeah, that's right," exclaimed the fifth man who was now paying nothing, along with the first four. "I only saved a dollar, too. It's unfair that he got ten times more than I!"

"That's true!!" shouted the seventh man. "Why should he get $10 back when I got
only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first five men in unison. "We didn't get anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia

This Sir, may be the most plainly written example of how our tax system works I have ever seen. It is pure genius, know if you could just get people to read it. Unfortunately most won't or will find an emotionally driven reason that its still not fair.

Jay

[Mako72]

They have more representation because they have more money. Being able to vote means nothing when somebody else can bribe your elected officials.

Perhaps thats how Government Officials in Australia are but I put a little more trust in ours.

Jay

[JellyFox]

Perhaps thats how Government Officials in Australia are but I put a little more trust in ours.

Jay

http://www.opensecrets.org/lobby/

[Mako72]

http://www.opensecrets.org/lobby/

Yup, thats how the system works. Everyone from Acorn to Chevron to SEIU to Smith & Wesson, pays lobbyists. Some lobbyists represent the poor, some represent the rich, some represent churches, some represent enviromentalists.

I think this is probably a more telling list. http://www.opensecrets.org/lobby/lobby_contribs.php?cycle=2010&type=P

Top 10
Dem=6
Rep=3
IND=1

Second 11-20
Dem=7
Rep=3

Third 21-30
Dem=9
Rep=1

But again this stuff changes every election. When Republicans are in power then they will have more people in the Top 30 getting lobbied. If we ever get a solid viable Third Party, they will have people on the list. Thats how is works.

Jay

[JellyFox]

Yup, thats how the system works. Everyone from Acorn to Chevron to SEIU to Smith & Wesson, pays lobbyists. Some lobbyists represent the poor, some represent the rich, some represent churches, some represent enviromentalists.

I think this is probably a more telling list. http://www.opensecrets.org/lobby/lobby_contribs.php?cycle=2010&type=P

Top 10
Dem=6
Rep=3
IND=1

Second 11-20
Dem=7
Rep=3

Third 21-30
Dem=9
Rep=1

But again this stuff changes every election. When Republicans are in power then they will have more people in the Top 30 getting lobbied. If we ever get a solid viable Third Party, they will have people on the list. Thats how is works.

Jay

This isn't a partisan issue - the point was that the rich have more power because they have the resources to lobby. The poor might do it too, but they're damn sure not paying as much as the wealthy (probably a good five orders of magnitude or so less), and if I were an unscrupulous congressman taking money from lobbyists, I'd be trying to remain on good terms with the ones who were shovelling wads of cash into the back of my car, not the ones who pay me with food stamps.

[jazzman]

This isn't a partisan issue - the point was that the rich have more power because they have the resources to lobby. The poor might do it too, but they're damn sure not paying as much as the wealthy (probably a good five orders of magnitude or so less), and if I were an unscrupulous congressman taking money from lobbyists, I'd be trying to remain on good terms with the ones who were shovelling wads of cash into the back of my car, not the ones who pay me with food stamps.

I agree with you, but the disproportionate influence of the very wealthiest Americans goes beyond direct, registered lobbying. Political advertising and other activities are sponsored by the wealthiest Americans and by organizations that pool their members' resources. The Tea Party/Parties have been sponsored and controlled by billionaires and managed by political insiders since shortly after they were formed. The Supreme Court recently removed most controls over campaign financing, and the other controls are easily skirted. And one of the largest media companies is more or less a mouthpiece for one wing of one party, controlled by a billionaire and managed by an insider. We all get one vote, but that's where the equality ends.

[bamafan64]

if I were an unscrupulous congressman taking money from lobbyists, I'd be trying to remain on good terms with the ones who were shovelling wads of cash into the back of my car, not the ones who pay me with food stamps.

More likely, you'd take the money from lobbyists then keep lying to the people on food stamps to vote for you.

[bamafan64]

I agree with you, but the disproportionate influence of the very wealthiest Americans goes beyond direct, registered lobbying. Political advertising and other activities are sponsored by the wealthiest Americans and by organizations that pool their members' resources. The Tea Party/Parties have been sponsored and controlled by billionaires and managed by political insiders since shortly after they were formed. The Supreme Court recently removed most controls over campaign financing, and the other controls are easily skirted. And one of the largest media companies is more or less a mouthpiece for one wing of one party, controlled by a billionaire and managed by an insider. We all get one vote, but that's where the equality ends.
That works both ways. Both parties have the same game going, not just the GOP.

[jazzman]

Yup, thats how the system works. Everyone from Acorn to Chevron to SEIU to Smith & Wesson, pays lobbyists. Some lobbyists represent the poor, some represent the rich, some represent churches, some represent enviromentalists.

I think this is probably a more telling list. http://www.opensecrets.org/lobby/lobby_contribs.php?cycle=2010&type=P

Top 10
Dem=6
Rep=3
IND=1

Second 11-20
Dem=7
Rep=3

Third 21-30
Dem=9
Rep=1

But again this stuff changes every election. When Republicans are in power then they will have more people in the Top 30 getting lobbied. If we ever get a solid viable Third Party, they will have people on the list. Thats how is works.

Jay

I think those numbers are not as meaningful as they seem. Lobbyists for all causes would like to influence both parties and will give money to the most influential representatives. Democrats control the Senate (by one vote) and have a large minority in the house. Therefore, all lobbyists would like to get their attention. It may even be that a purchased Democratic vote is more valuable to the donors than a purchased Republican vote because the Republicans will support most of the donors on ideological grounds, regardless of contributions, while the Democrat might be tempted to vote against the potential donor.

I'm more interested in where the money comes from:http://www.opensecrets.org/industries/index.php
Labor ranks 10th. A wide variety of issue-based organizations rank among the leaders, but industry and very wealthy individuals pay the lion's share to the politicians. They are not in the habit of spending money unwisely.

[ackvil]

I agree with you, but the disproportionate influence of the very wealthiest Americans goes beyond direct, registered lobbying. Political advertising and other activities are sponsored by the wealthiest Americans and by organizations that pool their members' resources. The Tea Party/Parties have been sponsored and controlled by billionaires and managed by political insiders since shortly after they were formed. The Supreme Court recently removed most controls over campaign financing, and the other controls are easily skirted. And one of the largest media companies is more or less a mouthpiece for one wing of one party, controlled by a billionaire and managed by an insider. We all get one vote, but that's where the equality ends.

How about lobbying groups like labor unions, AARP, Bar Associations, Trial Attorneys, so called public interest groups, etc. Why restrict only the corporate voice and not these?

President Obama goes to Hollywood and raises millions and there is not a peep. A corporation makes a political donation and all of a sudden the response is different.

[bamafan64]

How about lobbying groups like labor unions, AARP, Bar Associations, Trial Attorneys, so called public interest groups, etc. Why restrict only the corporate voice and not these?

President Obama goes to Hollywood and raises millions and there is not a peep. A corporation makes a political donation and all of a sudden the response is different.

Not to mention tax payer funded money launderers like Solyndra. No telling how many millions are going back into campaign coffers from that scam, and no telling how many just like it are out there yet undiscovered. There wasn't much complaint from the left when General Motors was found to be donating funds to one party's candidates before paying for their tax payer funded bailout, either.

[Mako72]

This isn't a partisan issue - the point was that the rich have more power because they have the resources to lobby. The poor might do it too, but they're damn sure not paying as much as the wealthy (probably a good five orders of magnitude or so less), and if I were an unscrupulous congressman taking money from lobbyists, I'd be trying to remain on good terms with the ones who were shovelling wads of cash into the back of my car, not the ones who pay me with food stamps.

No Sir, wasn't trying to make it partisan. Trying to point out that all the parties are involved. But every group wants a say and that means they put money with a lobbying group either individually or collectively to get their message heard. I just think of it as campaigning in reverse.


I agree with you, but the disproportionate influence of the very wealthiest Americans goes beyond direct, registered lobbying. Political advertising and other activities are sponsored by the wealthiest Americans and by organizations that pool their members' resources. The Tea Party/Parties have been sponsored and controlled by billionaires and managed by political insiders since shortly after they were formed. The Supreme Court recently removed most controls over campaign financing, and the other controls are easily skirted. And one of the largest media companies is more or less a mouthpiece for one wing of one party, controlled by a billionaire and managed by an insider. We all get one vote, but that's where the equality ends.

Yes Sir, you are correct. But again it happens on both sides. MSNBC is the counter to Fox, Coffee Party vs Tea Party, Koch Bros vs Soros. Thats why they, collectively, are after independents in every election.

If you get bored go through the Forbes 400 look at some of the donations, it will suprise you how cheap the rich are when it comes to politics.

Jay

[JellyFox]

More likely, you'd take the money from lobbyists then keep lying to the people on food stamps to vote for you.

Even better (keep in mind we're talking about the hypothetical unscrupulous congressman version of me, not the real me).


I agree with you, but the disproportionate influence of the very wealthiest Americans goes beyond direct, registered lobbying. Political advertising and other activities are sponsored by the wealthiest Americans and by organizations that pool their members' resources. The Tea Party/Parties have been sponsored and controlled by billionaires and managed by political insiders since shortly after they were formed. The Supreme Court recently removed most controls over campaign financing, and the other controls are easily skirted. And one of the largest media companies is more or less a mouthpiece for one wing of one party, controlled by a billionaire and managed by an insider. We all get one vote, but that's where the equality ends.

Not to mention that if you can't change the law, as long as you're wealthy enough, you can often break it anyway (or coast in a grey area), and rely on your team of Harvard lawyers to keep you out of trouble.


How about lobbying groups like labor unions, AARP, Bar Associations, Trial Attorneys, so called public interest groups, etc. Why restrict only the corporate voice and not these?

President Obama goes to Hollywood and raises millions and there is not a peep. A corporation makes a political donation and all of a sudden the response is different.

Indeed. Just to reiterate - my point wasn't about left or right wing causes, what I was saying was that for any given cause, if the position of the group with the most money conflicts with the position of the majority, the ones with the money are going to have their position represented with much more weight.

[ackvil]

Almost all of your numbers are misleading. You correctly point out that you are talking about federal income taxes, but the numbers ignore federal "payroll taxes," i.e., Social Security (FICA) and Medicare. FICA taxes hit lower income people much harder than higher income people because there is a fairly low cutoff on the income that is taxed. The numbers also ignore gasoline and other federal taxes that are included in the purchase prices of various goods and the prices of services from businesses that pay such taxes. Those taxes also hit lower income people harder because they spend a much higher percentage of their incomes on goods and services. The numbers also ignore state and local taxes, largely sales taxes, which also hit poor people harder as a percentage of total income. Finally, those of us "lucky" enough to be footing the bill for federal income taxes on our wages and salaries pay a much higher rate than people who get large incomes from capital gains and dividends.

In my opinion, the high income folks were paying closer to their fair share in the 1990's, when the economy was doing well, rich folks were doing well, and jobs really were being created. The idea that low taxes on rich folks will create jobs has been disproven throughout the period of the current, extended, "temporary" Bush tax cuts.

I love the words "fair share" or "economic justice."

Some points that should be noted:

1. Dividends are taxed twice - once when the corporation earns it and again when it is paid out as a dividend. Isn't this enough to make it a "fair share."

2. Capital gains are applicable only to stocks held for more than one year. Anything less than one year is taxed at regular rates.

3. Capital losses are limited to only $3,000 on a joint return even if your capital loss is $100,000. Is this fair or "economic justice."

4. You don't see the difference in the amount of total tax the wealthy in income tax and what a "poor person" pays on gasoline? If people take advantage of roads, defense, etc. shouldn't they pay something?

5. A wealthy person who pays FICA, medicare, etc. taxes gets the same economic benefit that a person in a lesser income tax bracket pays. If you want that individual to pay more shouldn't he be entitled to more of a benefit? Or is this another form of income distribution cloaked in the words "economic justice."

6. If you change the capital gains rates and tax dividends even more where is the economic incentive to invest? When you invest you take a risk with your investment and you expect to get some gain for it. If the government continues to take more the wealthy will invest in tax free municipal bonds or as happened in other countries go to more tax friendly venues. Mr. Scruffy has hit the nail on the head. Keep on taxing these individuals and they will leave.

7. I hear some wealthy individuals who say they want to pay more taxes. Nothing is holding them back - they can do it if they want. For example, Warren Buffett made a huge contribution to the Bill Gates Foundation and then took a charitable deduction. He could have made the contribution without taking the tax deduction. However, when tax deduction for charitable contributions comes under the microscope, these are the first people to cry foul.

Unfortunately, many politicians, media types, and people of a particular political persuasion are victims of class envy: the hate the rich because they are not rich or use this issue for their own gain. It cracks me up when a union president talks about the wealthy - when they draw huge paychecks. For example:


The president of the NEA made $397,721.
The President of the S.E.I.U. was paid $306,388.
The United Food and Commercial Workers Union paid its presdient $709,000 in 2004 and after a hue and cry over that sum paid its current president $360,737 in 2009.
Jimmy Hoffa from the IBT was paid $362,869 in 2009.
The American Federation of State, County, and Municipal Employees Union paid its president $479,328.
The American Federation of Teachers paid Randi Weingarten $428.284.


But as for me my only envy is that I can't play basketball like Michael Jordan did, I can't hit a baseball as good as Pujols, or that I don't earn as much as Sean Penn even though my wife says I am a better actor and better looking than him! :001_tongu

[doug1066]

The 16th Amendment should be repealed and the Federal government should receive its income from property taxes, excise taxes and tariffs just as the Founding Fathers envisioned.

[bamafan64]

Even better (keep in mind we're talking about the hypothetical unscrupulous congressman version of me, not the real me).

Sorry, I didn't mean to insinuate that the real you is an unscrupulous congressman :wink2:

..

[rajagra]

Count me as another who thinks taxing purchases of luxury items is the perfect tax.

Essential purchases like food shouldn't be taxed.
You shouldn't be taxed just for existing (poll tax/council tax).
You shouldn't be taxed just for having posessions or savings or a home. Taxes like that are designed to drag people into poverty and wage slavery.
Tax on income is messy to calculate and set up fairly. Why bother when you can just transfer the process to luxury purchase tax, which 'automagically' shifts the tax burden to those who can afford it?

[BigDawg]

"And almost all working poor already live paycheck to paycheck. Me and both of my parents (who are both attorneys) are living check-to-check, barely able to afford groceries in between paychecks."

Maybe your parents should sell a BMW or the vacation home. I find it very hard to believe two attorneys are living paycheck to paycheck, seeing how much my family pays to our attorney each year.

This sounds like a rant from a person who was raised in an upper middle class family and is pissed because the world was not handed to him.

My father has been an attorney since the 70's, and recently got fired from his job a few years ago. My mother was only practicing for a few years before she wasn't able to work anymore due to health and physical problems. I won't lie and say that I wasn't spoiled when I was younger. But now my dad has been looking for a job since he got a fired, and not even as an attorney, because most firms do not want to pay him for all of his experience, and end up hiring a young person just out of law school. My dad is being paid social security now that he retired, and my mom is being paid disability. Combined they make 30K a year or less now. Back in the 90's, my dad was making 100K plus a year. Now between the three of us, I've got 5 dollars in my pocket and my mom and dad are in the same boat as I am now.

The point of this article is to get people to realize that the rich need to be taxed more than they are now. And as far as me talking about how rich people sit on their money and a celebrity buying a 25,000 dollar pair of sunglasses: Both of these reasons were to say that the money isn't being used correctly. No one needs a pair of sunglasses that expensive. And when you make hundreds of thousands of dollars a year or more, than you need to be taxed more.

My family and I have a large range of extended family, and because we were the rich ones at the time, they all called to us for help, and we would answer. We never had BMW's. We never had a vacation house. We had a 4 bedroom, single story, in the suburbs.

[rajagra]

The point of this article is to get people to realize that the rich need to be taxed more than they are now.
They don't need that. You want that. You might possibly argue that society needs it. But to provide a decent argument you need to be precise.
This isn't specifically aimed at you, but it seems that everyone demanding this kind of thing falls into the same trap.

[bamafan64]

The point of this article is to get people to realize that the rich need to be taxed more than they are now. And as far as me talking about how rich people sit on their money and a celebrity buying a 25,000 dollar pair of sunglasses: Both of these reasons were to say that the money isn't being used correctly. No one needs a pair of sunglasses that expensive. And when you make hundreds of thousands of dollars a year or more, than you need to be taxed more.


More tax dollars with this government=more tax money wasted. Every week there are new allegations of stimulus money wasted. It will not go where you think it will. Also, when a person earns a dollar, it is up to that person to spend it how they wish. Having the government decide how much money we need and how we spend it will be the end of the Republic, if we aren't already there.

[mmack66]

I hope Phil is doing okay. 2 active political threads can't be good on the old diastolic/systolic.

[BigDawg]

More tax dollars with this government=more tax money wasted. Every week there are new allegations of stimulus money wasted. It will not go where you think it will. Also, when a person earns a dollar, it is up to that person to spend it how they wish. Having the government decide how much money we need and how we spend it will be the end of the Republic, if we aren't already there.

Watch this video and tell me that your entitled to every dollar you earn.

[mmack66]

Obviously folks can't keep all of their money. There has to be some form of taxation if we are to exist as a nation.

Basing your tax burden on the amount of money you make is as dumb as tying healthcare to your job.

[jazzman]

:001_tongu
I love the words "fair share" or "economic justice."

Some points that should be noted:

1. Dividends are taxed twice - once when the corporation earns it and again when it is paid out as a dividend. Isn't this enough to make it a "fair share."

2. Capital gains are applicable only to stocks held for more than one year. Anything less than one year is taxed at regular rates.

3. Capital losses are limited to only $3,000 on a joint return even if your capital loss is $100,000. Is this fair or "economic justice."

4. You don't see the difference in the amount of total tax the wealthy in income tax and what a "poor person" pays on gasoline? If people take advantage of roads, defense, etc. shouldn't they pay something?

5. A wealthy person who pays FICA, medicare, etc. taxes gets the same economic benefit that a person in a lesser income tax bracket pays. If you want that individual to pay more shouldn't he be entitled to more of a benefit? Or is this another form of income distribution cloaked in the words "economic justice."

6. If you change the capital gains rates and tax dividends even more where is the economic incentive to invest? When you invest you take a risk with your investment and you expect to get some gain for it. If the government continues to take more the wealthy will invest in tax free municipal bonds or as happened in other countries go to more tax friendly venues. Mr. Scruffy has hit the nail on the head. Keep on taxing these individuals and they will leave.

7. I hear some wealthy individuals who say they want to pay more taxes. Nothing is holding them back - they can do it if they want. For example, Warren Buffett made a huge contribution to the Bill Gates Foundation and then took a charitable deduction. He could have made the contribution without taking the tax deduction. However, when tax deduction for charitable contributions comes under the microscope, these are the first people to cry foul.

Unfortunately, many politicians, media types, and people of a particular political persuasion are victims of class envy: the hate the rich because they are not rich or use this issue for their own gain. It cracks me up when a union president talks about the wealthy - when they draw huge paychecks. For example:


The president of the NEA made $397,721.
The President of the S.E.I.U. was paid $306,388.
The United Food and Commercial Workers Union paid its presdient $709,000 in 2004 and after a hue and cry over that sum paid its current president $360,737 in 2009.
Jimmy Hoffa from the IBT was paid $362,869 in 2009.
The American Federation of State, County, and Municipal Employees Union paid its president $479,328.
The American Federation of Teachers paid Randi Weingarten $428.284.


But as for me my only envy is that I can't play basketball like Michael Jordan did, I can't hit a baseball as good as Pujols, or that I don't earn as much as Sean Penn even though my wife says I am a better actor and better looking than him! :001_tongu

Thanks for changing the subject from the question of whether 47% of the people don't pay federal taxes.:wink2: They do.

You raise some interesting points. I simply disagree that eliminating all federal income taxes on dividends would stimulate the economy or add fairness to the system. The current, lower, rate on dividends isn't preventing people from investing, and the unfairness of taxing wages while not taxing dividends seems plain.

As for the salaries paid to union presidents, they are in line with those of other officers of non-profit organizations of similar sizes. They are chump change in comparison to officers' salaries in profit-making corporations of similar sizes, and they are so small as to be meaningless in the context of current controversies. The members who voluntarily pay dues can vote them out of office much more easily than a small investor in a publicly traded corporation. Closely held corporations, some of which are quite large, don't have to bother with all that democracy stuff.

[ackvil]

:001_tongu

Thanks for changing the subject from the question of whether 47% of the people don't pay federal taxes.:wink2: They do.

You raise some interesting points. I simply disagree that eliminating all federal income taxes on dividends would stimulate the economy or add fairness to the system. The current, lower, rate on dividends isn't preventing people from investing, and the unfairness of taxing wages while not taxing dividends seems plain.

As for the salaries paid to union presidents, they are in line with those of other officers of non-profit organizations of similar sizes. They are chump change in comparison to officers' salaries in profit-making corporations of similar sizes, and they are so small as to be meaningless in the context of current controversies. The members who voluntarily pay dues can vote them out of office much more easily than a small investor in a publicly traded corporation. Closely held corporations, some of which are quite large, don't have to bother with all that democracy stuff.

You are not correct about taxes on dividends. From the IRS: "Ordinary dividends are the most common type of distribution from a corporation. They are paid out of the earnings and profits of the corporation. Ordinary dividends are taxable as ordinary income unless they are qualified dividends. Qualified dividends are ordinary dividends that meet the requirements to be taxed as net capital gains."

Qualified dividends usually come from mutual funds and result when the mutual fund makes a capital gain and distributes that capital gain to individuals in the form of a dividend. That dividend is a qualified dividend and has the same tax rate as a capital gain. Seems "fair" to me.

Where are you getting your information about dividends not being taxed at all? As I said, dividends are taxed TWICE. Once as corporate profits and again as income to the individual. That doesn't fit my concept as "economic justice." Nor does my sense of "justice" limit my ability to claim capital losses to $3,000 when they are far in excess of that.

IMO, it is naive to think any union member can raise enough money to vote out a union officer. If you really believe this, then I am relatively confident you never attended a union meeting. And for your information over the years I belonged to two different unions and had a first hand look at union "democracy" in action. If you think politicians are entrenched when they reach office, you have seen nothing when it comes to union officers. Further, I am also glad to hear that you think $400,000 to $700,000 is chump change to you.

My point was that 47% of the nation pays no income taxes. The wealthy get the same amount of benefits under FICA or medicare as anyone who pays less into the system. I guess my concept of "fairness" differs from yours. You believe that because 47% of the population pay a gas tax, into FICA, and social security - for which they get a benefit- they should be excused from paying any income taxes.

The largest investors in large corporations are mutual funds and institutions. If they think a corporate officer is not getting results for what they are paid, they do something about it.

I don't understand your point about a closely held corporation. If anything there is more democracy among the holders of a closely held corporation than any other organization. Under almost all closely held corps, a majority or super majority of shareholders must vote for any significant proposals.

[TonyH]

They are chump change in comparison to officers' salaries in profit-making corporations of similar sizes, and they are so small as to be meaningless in the context of current controversies.


Further, I am also glad to hear that you think $400,000 to $700,000 is chump change to you.

Stupid context, getting in the way of a perfectly good talking point.

[jazzman]

You are not correct about taxes on dividends. From the IRS: "Ordinary dividends are the most common type of distribution from a corporation. They are paid out of the earnings and profits of the corporation. Ordinary dividends are taxable as ordinary income unless they are qualified dividends. Qualified dividends are ordinary dividends that meet the requirements to be taxed as net capital gains."

Qualified dividends usually come from mutual funds and result when the mutual fund makes a capital gain and distributes that capital gain to individuals in the form of a dividend. That dividend is a qualified dividend and has the same tax rate as a capital gain. Seems "fair" to me.

Where are you getting your information about dividends not being taxed at all? As I said, dividends are taxed TWICE. Once as corporate profits and again as income to the individual. That doesn't fit my concept as "economic justice." Nor does my sense of "justice" limit my ability to claim capital losses to $3,000 when they are far in excess of that.

IMO, it is naive to think any union member can raise enough money to vote out a union officer. If you really believe this, then I am relatively confident you never attended a union meeting. And for your information over the years I belonged to two different unions and had a first hand look at union "democracy" in action. If you think politicians are entrenched when they reach office, you have seen nothing when it comes to union officers. Further, I am also glad to hear that you think $400,000 to $700,000 is chump change to you.

My point was that 47% of the nation pays no income taxes. The wealthy get the same amount of benefits under FICA or medicare as anyone who pays less into the system. I guess my concept of "fairness" differs from yours. You believe that because 47% of the population pay a gas tax, into FICA, and social security - for which they get a benefit- they should be excused from paying any income taxes.

The largest investors in large corporations are mutual funds and institutions. If they think a corporate officer is not getting results for what they are paid, they do something about it.

I don't understand your point about a closely held corporation. If anything there is more democracy among the holders of a closely held corporation than any other organization. Under almost all closely held corps, a majority or super majority of shareholders must vote for any significant proposals.

Regarding taxing dividends: Several politicians are now proposing eliminating all federal income taxes on dividends. You did not say you favored that, so I apologize if I read more into it than you intended. Neither of us said that they are not taxed now. So it looks like we agree with each other that individuals should continue to pay federal income taxes on dividends.

Closely held corporations don't have to worry about internal democracy because the same small number of individuals who own the stock also hire the managers and serve on the boards. You are entitled to view that situation as being a great deal of democracy, but I don't, and my point was to contrast internal operations of unions (the subject you brought up) with internal operations of employers.

As for publicly traded corporations, they don't have to worry about democracy much because the votes are about as diluted as they are in political contests. When was the last time, if ever, that small shareholders were able to replace officers or reduce their salaries? It happens in local unions all the time, and international unions must follow a vast set of regulations regarding internal elections and disclosures of salaries and benefits. Organized reform efforts in large international union have happened, and they have had significant impacts. Each member gets a vote. For obvious reasons, each shareholder in a publicly traded corporation does not get the same vote. As for your "relative confidence" regarding my experience with unions, you are wrong.

P.S. Thanks, thubbard76. Couldn't have said it better.

[ackvil]

Regarding taxing dividends: Several politicians are now proposing eliminating all federal income taxes on dividends. You did not say you favored that, so I apologize if I read more into it than you intended. Neither of us said that they are not taxed now. So it looks like we agree with each other that individuals should continue to pay federal income taxes on dividends.

Closely held corporations don't have to worry about internal democracy because the same small number of individuals who own the stock also hire the managers and serve on the boards. You are entitled to view that situation as being a great deal of democracy, but I don't, and my point was to contrast internal operations of unions (the subject you brought up) with internal operations of employers.

As for publicly traded corporations, they don't have to worry about democracy much because the votes are about as diluted as they are in political contests. When was the last time, if ever, that small shareholders were able to replace officers or reduce their salaries? It happens in local unions all the time, and international unions must follow a vast set of regulations regarding internal elections and disclosures of salaries and benefits. Organized reform efforts in large international union have happened, and they have had significant impacts. Each member gets a vote. For obvious reasons, each shareholder in a publicly traded corporation does not get the same vote. As for your "relative confidence" regarding my experience with unions, you are wrong.

P.S. Thanks, thubbard76. Couldn't have said it better.

I guess we can respectfully disagree. It's a matter political philosophy. Obviously you are a liberal, I am conservative. Liberals will agree with you, conservatives with me.

Not to change the subject, but if you really want to stir up the pot -----what do you think of Feather blades? :bored:

[Doc4]

what's the over-under on this thread making it to the third page?? :ohmy:




I think your poll needs to be expanded to provide a clearer relationship between the respondent's demographics and their opinion.

I'd have the choices be:

1. I'm rich and I believe the rich should be taxed more
2. I'm rich and I believe the rich should be taxed the same or less
3. I'm not rich and I believe the rich should be taxed more
4. I'm not rich and I believe the rich should be taxed the same or less
5. I'm rich and I believe those who aren't rich should be taxed more
6. I'm rich and I believe those who aren't rich should be taxes the same or less
7. I'm not rich and I believe those who aren't rich should be taxed more
8. I'm not rich and I believe those who aren't rich should be taxed the same or less
9. I believe everybody should be taxed more
10. I believe everybody should be taxed the same or less
11. I think Tabac smells like a babboon's armpit
12. Art is King.

FTFY.

(you should know better by now. :001_unsur)


about halfway through the second paragraph i had to stop.

I looked at how much the OP had written, and didn't even bother starting. :ohmy:

(Anyone wanting his message to change the world, needs to be able to put his message on a postcard.)


Wow. That's a lot of words just to say that you would like the rich to be taxed more than you.


See? someone agrees with me on the essay-length thing. :wink2:

[bamafan64]

Watch this video and tell me that your entitled to every dollar you earn.

I meant that if you earn your money, you should spend it as you see fit. If a Hollywood star wants to buy an ungodly priced pair of sunglasses, it should be up to them and not anyone else. It doesn't mean it is wise or practical, but it's their money to spend. I don't see the hyperlink to the video you've posted, either.

[mdevine]

Count me as another who thinks taxing purchases of luxury items is the perfect tax.

Essential purchases like food shouldn't be taxed.
You shouldn't be taxed just for existing (poll tax/council tax).
You shouldn't be taxed just for having posessions or savings or a home. Taxes like that are designed to drag people into poverty and wage slavery.
Tax on income is messy to calculate and set up fairly. Why bother when you can just transfer the process to luxury purchase tax, which 'automagically' shifts the tax burden to those who can afford it?

I agree that some form of consumption tax makes sense. The devil, as always, is in the details. Who gets to determine what a "luxury" item is? Several years ago, I had a Haitian student spend time with me. He had a hard time empathizing with the "poor" patients that he saw in the clinic. To me, these people were those that I've always considered poor. I grew up in a "poor" neighborhood and certainly have no interest in returning there. He, on the other hand, had an entirely different perspective. Patients would complain to him about how bad they had it. His comment to me was that they had their own house, cars, television(s), air conditioning, Nintendo, cell phones etc. Few that he grew up with had any of this, and if they had, would have been thought of as "rich". He had little sympathy for those who chose not to work. Unfortunately, the clinic had a relatively large volume of patients trying to obtain disability, often for specious reasons. He, on the other hand, was working incredibly long hours and making many sacrifices to advance his career. When, at age 30, he finally has the training needed to make an admittedly good living, he was bothered by the fact that his money could be taken to maintain a standard of living for people that he felt didn't deserve it. I had to concede that he had a point, although I was able to get him to understand some of the benefits of our social safety net. In his opinion, our family responsibilities are largely ignored. I lost track of him and would love to know if he stayed here, whatever misgivings he had, or returned back to Haiti/

[Slim1023]

When JFK took office in 1961, the highest marginal tax rate was 90%. It's 35% now.

That being said one of my instructors always tells us (I'm a financial planning major) that there are 2 tax codes: one for the informed, and one for the uninformed.

[oc_in_fw]

11. I think Tabac smells like a babboon's armpit.

Okay, them there's fighting words :biggrin:

[jazzman]

I guess we can respectfully disagree. It's a matter political philosophy. Obviously you are a liberal, I am conservative. Liberals will agree with you, conservatives with me.

Not to change the subject, but if you really want to stir up the pot -----what do you think of Feather blades? :bored:

Only an uninformed, morally depraved, and otherwise evil person would disagree with my clearly well thought out opinion on Feathers.:wink2:

Each of us is looking for fairness and effectiveness within the confines of our excellent but flawed system of government. Our agreements far outnumber our disagreements.

[oc_in_fw]

Perhaps thats how Government Officials in Australia are but I put a little more trust in ours.

Jay

I wouldn't. What do you think all those jackals on K street are doing? K street is where legislation is written and politicians are bought.

[BigDawg]

Watch this video and tell me that your entitled to every dollar you earn.

here is the video i meant to post:
http://www.youtube.com/watch?v=htX2usfqMEs

[BigDawg]

When JFK took office in 1961, the highest marginal tax rate was 90%. It's 35% now.

That being said one of my instructors always tells us (I'm a financial planning major) that there are 2 tax codes: one for the informed, and one for the uninformed.

I agree with this. I stated this in my "essay" about the tax margins up until the 70's.
I will say that I wrote this essay out of anger, but I tried to be as truthful to the facts as possible. I went all the way back to the 1920's and up till today. I'll say it again though: People who think the rich aren't taxed enough just need to research what happened in the 30's through the 60's to see that it was a good thing for this country, and when Nixon and Reagan took office, it all went downhill.

Jon Stewart was correct to say that it's idiotic to call a 4% increase on taxes on the rich as class warfare. Especially since all it would be doing is putting that tax rate back to what it was during the Clinton administration.

But I understand people have different opinions on the subject at hand and I respect that. I was just posting about it here because I know there are many people on this forum of different backgrounds, and it's good to hear the opposing side's story.

[professorchaos]

here is the video i meant to post:
http://www.youtube.com/watch?v=htX2usfqMEs

Oh, come on. She's just awful. By her logic, how does she justify the amount in taxes Harvard - who signs her paycheck - pays? Does Harvard not benefit by those same government services?

Government provided services are universal - rich and poor alike use them. They don't determine outcomes, success or poverty. The reality is that the factory she refers to pays more for that road, the cop and public school.

Where is the limit - how much taxation is too much? Does our social contract with the government demand no accountability for how tax dollars are spent?


Okay, them there's fighting words :biggrin:

That's it. Thread's closed :wink2:

[Fileroman]

That's why I love this country, even though I b**tch and moan about. If I want/need to buy a $25,000 pair of sunglasses or $1,000 cased, mint toggle (to make it shave related) that's my business. Even in this economy people who have the drive and determination are making money. The point is you can still do very well in this country. Think about this: an ex-partner said he would like to pay no tax to any entity. His alternative would be, if you want to drive somewhere, you pay a toll to drive on the public street; you have a heart attack, you pay for the ambulance/ET to take you to the ER; your house catches fire, you pay the fire department, etc. I'd rather pay taxes. Makes it much easier, but that's just me.

Ron

[oc_in_fw]

That's it. Thread's closed :wink2:

Hey, raisindot started it :001_smile

[cb91710]

Considering the wealthiest few in America have more representation than everybody else combined
Not exactly.

A family of four making less than $36,000 gets more back on their tax refund than they paid in withholdings.

They get the same Senator and Representative that everyone else gets... and those votes are bought and paid for.

So the politicians pushing the socialist agenda are buying votes that will keep them in power, while they turn around and sell their own votes to both the corporations, and the lobbying groups that represent the various groups that are not paying taxes.

Ya, everyone should pay their fair share.
It's wrong for someone making $36,000 to pay no taxes, when a person making a million pays more every year than my home was worth in 2005.

The top 10% already pay 95% of the taxes and the bottom 40/50% pay no Federal taxes other than fuel tax and SSI... what more do you want?

[cb91710]

They have more representation because they have more money. Being able to vote means nothing when somebody else can bribe your elected officials.
We have 20 million illegal aliens who pay no taxes and have plenty of political representation... especially in California.

[Mako72]

Only an uninformed, morally depraved, and otherwise evil person would disagree with my clearly well thought out opinion on Feathers.:wink2:

Each of us is looking for fairness and effectiveness within the confines of our excellent but flawed system of government. Our agreements far outnumber our disagreements.

Aahhh.

But I only have 2 Feather Blades and can otherwise only afford Astras, so in the interest of "Fairness" you need to give us an accounting of how many Feathers you have and then the Mods will decide how many you can keep and how many you must redistribute to those of us who can't afford Feathers. All in the interest of "Fairness" you understand.:001_tt2:

Jay

[noahpictures]

here is the video i meant to post:
http://www.youtube.com/watch?v=htX2usfqMEs

Elizabeth Warren for president! :thumbup:

[JellyFox]

Ya, everyone should pay their fair share.
It's wrong for someone making $36,000 to pay no taxes, when a person making a million pays more every year than my home was worth in 2005.

The top 10% already pay 95% of the taxes and the bottom 40/50% pay no Federal taxes other than fuel tax and SSI... what more do you want?

We could argue about this until the cows come home, but I really don't think we're going to get anywhere. Some people believe a consumption based tax only is fair, some people believe a flat tax is fair, and I believe that a fair tax is one that has an equivalent tangible effect on everybody.

[Masterkova]

As someone who has been in both the top and bottom tax brackets at various times in my life, I offer the following personal reflections.

When in the top tax bracket, an increase in my tax bill of 3-4% would mean virtually nothing – just $X,000 less to add to existing savings. (N.B. Whatever people tell you, tax breaks on the rich do NOT lead to significantly increased consumption or job creation – unless a second nanny for the summer in the Hamptons is the type of job you want to create, or the purchase of a Swiss watch is the type of consumption you want to encourage.)

When in the bottom, the extra few thousand dollars I had due to a progressive tax rate meant the world to me. It can mean having health insurance, funds for further education to get a better job, giving your children experiences so that they have a better chance in the future, or a new pair of shoes for a job interview – all things that others take for granted.

From a personal perspective, I was very glad to have been taxed more when I had more in order to have a bit more when I was less fortunate. It is not difficult to extrapolate this to society as a whole.

Not having money is not a moral failure - people in dire straits don't necessarily deserve to be - stuff happens.

It is obvious that the success of the wealthy is predicated on the hard work of millions of others, be they factory workers, subway operators, coal miners or firemen. To me it’s a no-brainer that the fortunate should give a relatively painless bit to help prevent those they depend on from enduring unnecessary hardship. It’s the ethical thing to do and, if you swing that way, the Christian thing as well.

As for higher taxes being a de-motivator for the wealthy, this is a complete canard. I have never met a banker, trader, or CEO who would work any less hard if his taxes went up a few percent. Bonuses in this stratum can easily vary 50% or more year-to-year depending on performance and/or market conditions. Multi-millionaires are not motivated by small amounts of money.

Just some personal observations…

[jazzman]

As someone who has been in both the top and bottom tax brackets at various times in my life, I offer the following personal reflections.

When in the top tax bracket, an increase in my tax bill of 3-4% would mean virtually nothing – just $X,000 less to add to existing savings. (N.B. Whatever people tell you, tax breaks on the rich do NOT lead to significantly increased consumption or job creation – unless a second nanny for the summer in the Hamptons is the type of job you want to create, or the purchase of a Swiss watch is the type of consumption you want to encourage.)

When in the bottom, the extra few thousand dollars I had due to a progressive tax rate meant the world to me. It can mean having health insurance, funds for further education to get a better job, giving your children experiences so that they have a better chance in the future, or a new pair of shoes for a job interview – all things that others take for granted.

From a personal perspective, I was very glad to have been taxed more when I had more in order to have a bit more when I was less fortunate. It is not difficult to extrapolate this to society as a whole.

Not having money is not a moral failure - people in dire straits don't necessarily deserve to be - stuff happens.

It is obvious that the success of the wealthy is predicated on the hard work of millions of others, be they factory workers, subway operators, coal miners or firemen. To me it’s a no-brainer that the fortunate should give a relatively painless bit to help prevent those they depend on from enduring unnecessary hardship. It’s the ethical thing to do and, if you swing that way, the Christian thing as well.

As for higher taxes being a de-motivator for the wealthy, this is a complete canard. I have never met a banker, trader, or CEO who would work any less hard if his taxes went up a few percent. Bonuses in this stratum can easily vary 50% or more year-to-year depending on performance and/or market conditions. Multi-millionaires are not motivated by small amounts of money.

Just some personal observations…

And you are an excellent writer: clear and concise.

[ackvil]

As someone who has been in both the top and bottom tax brackets at various times in my life, I offer the following personal reflections.

As for higher taxes being a de-motivator for the wealthy, this is a complete canard. I have never met a banker, trader, or CEO who would work any less hard if his taxes went up a few percent. Bonuses in this stratum can easily vary 50% or more year-to-year depending on performance and/or market conditions. Multi-millionaires are not motivated by small amounts of money.

Just some personal observations…

I have to disagree with that statement that higher taxes are not a "de-motivator."

Before I retired completely I did consulting work for two years. When my income kicked me into a higher tax bracket (NJ and Fed taxes) I decided it was no longer worth it to me to take on more business since I was paying so much more in taxes. In effect, my "Hourly Wage" went down too much so I decided to hang it up completely.

Further, prior to the Bush tax cuts I knew of a number of individuals who took steps to minimize their taxable income. Their R.O.I may have been less but their "take home" pay was higher.

There are accountants and tax lawyers who make a very nice living giving people advice on how to minimize taxes. The wealthy set up irrevocable trusts, for example. Others switch to municipal bonds instead of investing in stocks and regular bonds. Various tax shelters are used by these individuals. I know of three professionals who are now "independent contractors" for companies they previously worked for. They get paid an hourly amount for work they perform with no benefits. They have set up Keogh Plans and other investment vehicles that result in lower income and taxes. They have set up home offices and take deductions that they could not take when they were "employees." All of these steps were taken to minimize their federal and state tax bills because they were highly compensated and felt they were paying too much in taxes.

Corporations have set up elaborate devices to reward their executives with compensation plans that minimize taxes. Keep in mind a 5% increase on $300,000 is $15,000. One of the companies I worked for at one time had international operations. The tax free executive packages that were put in place in the U.K., Germany, and Spain were solely to minimize the high tax rates of these countries. For example, at that time certain upper executives were given the use of autos, company employees cleaned their homes, the were offered free hair cuts and many other personal items. In turn, they took less of a salary to avoid taxes.

Some seem to feel it is the moral and ethical to pay higher taxes. I, for one, disagree since I see so much government waste and useless government programs. I, for one, would rather give more to a charity that I approve of than to a government that spends funds so lavishly. As I said previously, I find it ironic that some individuals - such as Warren Buffett, Bill Gates, etc. - say they want to pay more in taxes, which they are free to do, and then take huge charitable deductions to minimize their taxes.

[devorenm]

I have to disagree with that statement that higher taxes are not a "de-motivator."

Before I retired completely I did consulting work for two years. When my income kicked me into a higher tax bracket (NJ and Fed taxes) I decided it was no longer worth it to me to take on more business since I was paying so much more in taxes. In effect, my "Hourly Wage" went down too much so I decided to hang it up completely.


I don't quite understand this. You don't really get "kicked" into a higher tax bracket the more you make - rather once your taxable income passes a certain threshold that portion of your income gets taxed at the higher rate. Say for example the threshold is 150K. The first 150k you makes gets taxed at the lower rate, only the amount over 150k gets taxed at the higher rate. Are you saying you decided the effective 3 percent pay cut on your income above the bracket threshold was enough to make you quit altogether or that you stopped taking on work that would put you above the bracket threshold?

[devorenm]

Oh, come on. She's just awful. By her logic, how does she justify the amount in taxes Harvard - who signs her paycheck - pays? Does Harvard not benefit by those same government services?

Government provided services are universal - rich and poor alike use them. They don't determine outcomes, success or poverty. The reality is that the factory she refers to pays more for that road, the cop and public school.

Where is the limit - how much taxation is too much? Does our social contract with the government demand no accountability for how tax dollars are spent?



That's it. Thread's closed :wink2:

I don't think this statement is completely accurate. Harvard like other public institutions likely pays a significant amount in taxes and "fees". Besides the obvious payroll taxes and the like large non-profits typically negotiate an assessment amount with municipalities because they recognize that even though they technically don't have a tax liability they occupy large amounts of prime urban real estate and it costs the municipality money to maintain the relevant infrastructure.

[ackvil]

I don't quite understand this. You don't really get "kicked" into a higher tax bracket the more you make - rather once your taxable income passes a certain threshold that portion of your income gets taxed at the higher rate. Say for example the threshold is 150K. The first 150k you makes gets taxed at the lower rate, only the amount over 150k gets taxed at the higher rate. Are you saying you decided the effective 3 percent pay cut on your income above the bracket threshold was enough to make you quit altogether or that you stopped taking on work that would put you above the bracket threshold?

Keep in mind this was back in 2000. My tax rate, as I recall, went up 5% on the federal, 4% in NJ, and 3% in NY. I don't recall the NYC tax rates at the time. And yes, after I paid all of these taxes plus FICA, S.S., and other expenses, I did not think it was worth the effort.

[jazzman]

Keep in mind this was back in 2000. My tax rate, as I recall, went up 5% on the federal, 4% in NJ, and 3% in NY. I don't recall the NYC tax rates at the time. And yes, after I paid all of these taxes plus FICA, S.S., and other expenses, I did not think it was worth the effort.

Everyone's free to decide whether to have more money in his pocket under those circumstances. But, as devorenm noted, the higher tax rates only applied to that potential extra income; the tax rate on the dollars you received up to that point did not go up. And FICA (Social Security) taxes would not have been collected on even one dollar after you passed the maximum for that particular tax. It's easy for me to see a person turning down a small consulting job because the total taxes on that income would make the project unattractive; I have been in that situation myself. But a slightly higher tax bracket for that last project would not be the deciding factor for me.

In the context of the current political discussion, I really can't see how anyone making more than a million dollars a year would decide not to take the next million because of a slightly higher rate on the next million, which would not apply to the first million. Unfortunately, I am not faced with the choice of whether to earn a second million every year--I'm still trying to figure out how to get the first million without becoming left-handed and learning how to pitch--but I'd like to think that I would if I could, considering the fact that my tax rate on the second million still would be small in comparison with other countries or the US in the recent past, and considering the fact that I would still have hundreds of thousands of dollars to use as I pleased.

[StillShaving]

Logic and Taxes? Isn't the tax system and tax rates (up or down) and appropriations defined by politicians? When did logic enter discussion?

[proxymoron]

+1 Unlike death or, um, taxes, logic clearly isn't eternal.

[cb91710]

I don't quite understand this. You don't really get "kicked" into a higher tax bracket the more you make - rather once your taxable income passes a certain threshold that portion of your income gets taxed at the higher rate. Say for example the threshold is 150K. The first 150k you makes gets taxed at the lower rate, only the amount over 150k gets taxed at the higher rate. Are you saying you decided the effective 3 percent pay cut on your income above the bracket threshold was enough to make you quit altogether or that you stopped taking on work that would put you above the bracket threshold?
Yes and no.

If that higher bracket subjects you to AMT, then you lose significant (and legitimate) business related deductions.
AMT is not something that will ever impact me, because my only deduction is for my mortgage interest and state/local taxes.

But he was retired, while operating as a consultant.
He had significant deductions for the business.
If his retirement income was $80,000, and his consulting work brought in $40,000, no problem.
However, if his consulting work brought in another $80,000, then AMT would eliminate most of the deductions, which would have the effect of being a much higher total tax rate on the entire $160k.

Yes, the effective hourly wage could indeed fall.

[ackvil]

Yes and no.

If that higher bracket subjects you to AMT, then you lose significant (and legitimate) business related deductions.
AMT is not something that will ever impact me, because my only deduction is for my mortgage interest and state/local taxes.

But he was retired, while operating as a consultant.
He had significant deductions for the business.
If his retirement income was $80,000, and his consulting work brought in $40,000, no problem.
However, if his consulting work brought in another $80,000, then AMT would eliminate most of the deductions, which would have the effect of being a much higher total tax rate on the entire $160k.

Yes, the effective hourly wage could indeed fall.

Thank you Rich. The AMT is what killed me. I failed to make that clear. This goes back a number of years so I don't recall all of the details. However, I do remember that I was not able to claim certain interest expenses, depreciation, medical expenses, state income taxes, and I could not use some loss carryovers. The result was that my taxes were significantly higher than prior years.

[cb91710]

Thank you Rich. The AMT is what killed me. I failed to make that clear. This goes back a number of years so I don't recall all of the details. However, I do remember that I was not able to claim certain interest expenses, depreciation, medical expenses, state income taxes, and I could not use some loss carryovers. The result was that my taxes were significantly higher than prior years.
OTOH, if you paid AMT, you're practically audit-proof for that year.

My buddy has been audited a number of times. They go back 3 years, if they find evidence of fraud, they can go back 5.
His audits are normally painless. If he pays AMT, they skip that year. The audit goes both ways. AMT was intended to disallow deductions that are commonly abused... during an audit, those deductions are verified and if they are found to be legit, the agent will issue a refund for the overpayment. This happened to him twice when rookie agents did the audits.

[goatee]

Bar Stool Economics

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100 and if they paid their bill the way we pay our taxes, it would go something
like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.)

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20." So drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free...but what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?'. They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each
end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now paid $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before...and the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

"I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got $10!"

"Yeah, that's right," exclaimed the fifth man who was now paying nothing, along with the first four. "I only saved a dollar, too. It's unfair that he got ten times more than I!"

"That's true!!" shouted the seventh man. "Why should he get $10 back when I got
only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first five men in unison. "We didn't get anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia

i want to party with these guys!

[scottish steve]

I agree with many of the points raised in this thread and I'm very happy that it has maintained a respectful and thoughtful tone. It is quite hard to justify taking a higher percentage of a person's income simply because they've done well, but at the same time, even the US has a redistributive bias and few people would like to think they don't contribute more than their share. Bill Gates has done so much good recently, with his enormous charitable donations and I think this should be a model for other ubercrats. It was his choice- certainly he wasn't obligated to do it, but I would like to bet he feels more satisfaction in seeing the enormous benefit he has accomplished, than in the 5 or 10 years previously. One of the problems with having a very low income despite working hard is, it's quite easy to assume those on a much higher salary than you don't deserve it; "How can they make 25 times what I do, when I can hardly keep my eyes open after dinner because I'm so tired?". It's also very easy to assume, if you work hard and have a large income, that those who don't make very much money somehow deserve it; "I did it, so they're obviously lazy, stupid, dysfunctional or in some way to blame for their state in life.". Every one of us is aware of the dreadful states of existence a huge proportion of our fellow human beings have to suffer every day, but it's far too easy to ignore it or do nothing about it. I feel everyone could make a difference, not just the top earners, but less help is given than is needed, because, frankly, we are all a little bit selfish and more importantly, do not have to see the reality of child labour etc. My take on it is, not that taxes are too low on the highest earners, but that salaries are too high and the drain to the top is badly altering the complexion of our societies. In the 1970s in The UK, the average Managing Director's pay compared to the shop-floor worker was, I think ten times. We all know that the remuneration of the highest earners has increased many times more than that of the average worker. I think it now stands at 35 times. I believe there are very few instances in which this is just, especially if the tenure of those managers produce little increased profit or even a loss and especially if those profits came directly from the cutting of the benefits or even the jobs of those whom he was paid to manage. At the moment, managerial rhetoric seems to have only one Holy Truth; more money is better at any cost. I do not believe this is true. I believe a society which maintains the dignity of those on the lowest rung is a healthier, more productive place to live. I believe that the affirmation of human happiness and dignity should be the raison d'etre of our self-organisation.
So I feel all civilised countries should enact laws to give us caps on managerial pay, bonuses and share options, closure of tax-avoidance loopholes, electoral reform which makes buying a politician's favour of gratitude impossible, except with good works and/or argument and the framing of minimum working conditions regardless of immigration status.
Put simply, you can keep what's your gentlemen, as long as we can do the same.

[Stubblefield]

More tax dollars with this government=more tax money wasted. Every week there are new allegations of stimulus money wasted. It will not go where you think it will. Also, when a person earns a dollar, it is up to that person to spend it how they wish. Having the government decide how much money we need and how we spend it will be the end of the Republic, if we aren't already there.



Some seem to feel it is the moral and ethical to pay higher taxes. I, for one, disagree since I see so much government waste and useless government programs. I, for one, would rather give more to a charity that I approve of than to a government that spends funds so lavishly. As I said previously, I find it ironic that some individuals - such as Warren Buffett, Bill Gates, etc. - say they want to pay more in taxes, which they are free to do, and then take huge charitable deductions to minimize their taxes.

Might make a great related thread. How much do we waste on Military spending (my personal peeve), and how much do we give away in public and private entitlements?

Carry on.

[Doc4]

I believe a society which maintains the dignity of those on the lowest rung is a healthier, more productive place to live. I believe that the affirmation of human happiness and dignity should be the raison d'etre of our self-organisation.

So I feel all civilised countries should enact laws to give us caps on managerial pay, bonuses and share options, closure of tax-avoidance loopholes, electoral reform which makes buying a politician's favour of gratitude impossible, except with good works and/or argument and the framing of minimum working conditions regardless of immigration status.


Agree and disagree.

I'm totally on board with the general concept of making sure the lowest rung on the ladder is above the 'water' line in the ceptic tank ... and to those out there who can't muster the altruism to agree, well, look at it this way: it prevents revolution, rioting and anarchy.

I don't like the idea of 'flat-top laws' that would say no one can earn more than $insert-number-here ... it's a complex problem that isn't fixed with simple solutions. The approach needs to be far more nuanced than that ... but generally I think it would be good for society to work toward bringing the two ends of the spectrum closer together, rather than seeing how far the top end can go without caring what happens to the bottom end.

[Mako72]

OTOH, if you paid AMT, you're practically audit-proof for that year.

My buddy has been audited a number of times. They go back 3 years, if they find evidence of fraud, they can go back 5.
His audits are normally painless. If he pays AMT, they skip that year. The audit goes both ways. AMT was intended to disallow deductions that are commonly abused... during an audit, those deductions are verified and if they are found to be legit, the agent will issue a refund for the overpayment. This happened to him twice when rookie agents did the audits.

Sounds like Govt Blackmail... Pay a little more and you get protection from the IRS, pay a little less and we will see what we can find.

That is part of why I think so many see a Flat Tax(used generically) of some sort with no deductions or loopholes as attractive. Our tax system is realy set up to reward any number of people or groups while ensuring that it punishes others. Its guaranteed to anger somebody, right or left, at how it can be used and abused.

Jay

[cb91710]

Sounds like Govt Blackmail... Pay a little more and you get protection from the IRS, pay a little less and we will see what we can find.

That is part of why I think so many see a Flat Tax(used generically) of some sort with no deductions or loopholes as attractive. Our tax system is realy set up to reward any number of people or groups while ensuring that it punishes others. Its guaranteed to anger somebody, right or left, at how it can be used and abused.
The problem with the flat tax is it would be a huge benefit to the wealthy, and absolutely hammer the poor.
Over the past 15 years, my income has ranged from $40k to $85k, and my effective tax rate after deductions (mortgage interest, and we had one child here until 2000) has been in the range of 10% to 14%.
Cain's 9-9-9 would put my rate at around 15% due to the sales tax.
Below my income level, effective tax rates are lower, even without deductions, and as mentioned, a high percentage of taxpayers (I heard 53%, but others here have indicated it's closer to 40%) pay no federal income tax.
9-9-9 and any other flat tax could not eliminate SSI, Medicare, and the other taxes that are pulled from our paychecks (that everyone pays regardless of income or deductions).
Those above my income level would receive a huge tax break. Regardless of Warren Buffet running his mouth about paying a lower percentage than his secretary (his secretary probably makes $200k and probably rents an apartment and has no children), the vast majority of "the wealthy" pay a higher percentage than the "flat tax" would impose.

Okay, so the new POTUS is able to institute a flat tax.
First time people file their returns under the new system, there will be an outcry from advocates for the working poor, and along will come Congress to the rescue, making modifications to the tax code that will begin to bring deductions back into the picture.
The "99%" will discover that their "flat tax" isn't what they thought it was and we'll be taking rapid steps back to a progressive system.

[scottish steve]

Agree and disagree.

I'm totally on board with the general concept of making sure the lowest rung on the ladder is above the 'water' line in the ceptic tank ... and to those out there who can't muster the altruism to agree, well, look at it this way: it prevents revolution, rioting and anarchy.

I don't like the idea of 'flat-top laws' that would say no one can earn more than $insert-number-here ... it's a complex problem that isn't fixed with simple solutions. The approach needs to be far more nuanced than that ... but generally I think it would be good for society to work toward bringing the two ends of the spectrum closer together, rather than seeing how far the top end can go without caring what happens to the bottom end.

I meant as a multiple of the lowest-paid worker. I have no problem with a CEO earning 10 million dollars a year if every one of his employees can live decently. This is also difficult to quantify, but to be able to say, support a spouse and 1 child reasonably and drive a modest, small car plus live in clean, sanitary accomodation on only 1 income earned over not more than 45 hours per week. I have a big problem with the CEOs of multinational drinks corporations making tens of millions of dollars a year, while employing children to cut sugarcane with machetes for $1 a day.

[Mako72]

The problem with the flat tax is it would be a huge benefit to the wealthy, and absolutely hammer the poor.
Over the past 15 years, my income has ranged from $40k to $85k, and my effective tax rate after deductions (mortgage interest, and we had one child here until 2000) has been in the range of 10% to 14%.
Cain's 9-9-9 would put my rate at around 15% due to the sales tax.
Below my income level, effective tax rates are lower, even without deductions, and as mentioned, a high percentage of taxpayers (I heard 53%, but others here have indicated it's closer to 40%) pay no federal income tax.
9-9-9 and any other flat tax could not eliminate SSI, Medicare, and the other taxes that are pulled from our paychecks (that everyone pays regardless of income or deductions).
Those above my income level would receive a huge tax break. Regardless of Warren Buffet running his mouth about paying a lower percentage than his secretary (his secretary probably makes $200k and probably rents an apartment and has no children), the vast majority of "the wealthy" pay a higher percentage than the "flat tax" would impose.

Okay, so the new POTUS is able to institute a flat tax.
First time people file their returns under the new system, there will be an outcry from advocates for the working poor, and along will come Congress to the rescue, making modifications to the tax code that will begin to bring deductions back into the picture.
The "99%" will discover that their "flat tax" isn't what they thought it was and we'll be taking rapid steps back to a progressive system.

Like I said, I was just using the term generically. But I agree and that is why our current tax code is a nightmare, because everyone who moaned and groaned got their loophole. We have deductions for children, deductions for homes, deductions for green cars, home farming deductions, union dues deductions, etc. And I am not even familiar with all the business tax deductions! Unfortunately I don't think we can fix the mess of a tax code we have, and I just say this as a guy who does his own taxes.

Jay

[Doc4]

I meant as a multiple of the lowest-paid worker. I have no problem with a CEO earning 10 million dollars a year if every one of his employees can live decently. This is also difficult to quantify, but to be able to say, support a spouse and 1 child reasonably and drive a modest, small car plus live in clean, sanitary accomodation on only 1 income earned over not more than 45 hours per week. I have a big problem with the CEOs of multinational drinks corporations making tens of millions of dollars a year, while employing children to cut sugarcane with machetes for $1 a day.

I think that, broadly speaking, you and I agree on the proportionality issue. I would look at it more as a society-wide issue rather than within one corporation, so that we can get rid of the extreme examples of poverty and wealth.

I have no simple solutions to accomplish this ... it is, after all, a complex problem.

[kwk285]

The best thing concerning our poorly written tax laws is the fact that it treats every one differently. It is a tax code that is so tough to understand the the Secretary of the Treasury is incapable of paying his taxes properly.

The reason why I think it is so wonderful is that my Wife's CPA business will always have a lot of business. Her business increases everytime our government simplifies the tax code. She has clients from Boeing, Microsoft, Medical offices that have no clue on how to properly pay their taxes.