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post #241 of 263
Quote:
Originally posted by jimmac
Uh, no. It's all related. That's how we got on the subject of taxes in the first place. Check back in the thread if you don't believe me.

If you are unwilling to try the excercise, that means that you are unwilling to examine the "facts" that you are pulling out of your ass. Your outrage is misplaced, and I win the argument.

It is very easy to complain about stuff, much harder to suggest solutions.
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post #242 of 263
Quote:
Originally posted by e1618978
You are wrong-headed, and I think that you know it, because you keep throwing in unrealted facts to throw off the trail. We are not talking about distribution of wealth, we are talking about taxes.

I don't think it's unrelated. You say the poor have it easy and don't pay enough taxes, and I'm saying they don't pay much because they don't have much money. I don't see how you can say it's irrelevant to consider how much money you have when you're looking at how much in taxes you pay. If the top 1% have a third of all the money in the country, I think they should be paying a LOT more taxes than they currently pay. You may disagree, but don't say I'm intentionally being "wrong-headed." I can tell you that I truly, honestly believe that.

Quote:
It is all very well and good to cry "Fire!" and say that there is a problem. I want to know what you would consider ideal, so that we can figure out how far from the ideal things currently are.

The first step is to not give the wealthy a tax cut that puts us into deficits. Unfortunately, both Democrats and Republicans support that because it's the easy thing to do politically. The short-term political benefit will always win over the long-term good of the country.

But my ideal would be to have higher top rates than we have now, along with an expanded standard deduction (which would provide a tax cut for the lower-income groups).

The way we should think about it, IMO, is like this: It takes a certain amount of money to live comfortably. Just to pick an arbitrary amount, let's call it $40,000. But we could decide whatever we want, and once we decide, you should be able to make that amount of money without paying any income taxes at all. Only what you make beyond that basic amount should be taxed, because it's all icing once you get past that.

Fiddle with the specific numbers all you want, but that's not really the point. The point is that we need to pay for what we spend. We should figure out what we want to spend, and then design a plan to pay for it, not the other way around.
Quote:
I will try and figure out the percentile values that are currently in place. Include all taxes - state and federal income tax, sales tax, payroll taxes, property tax, etc.

Don't include estate tax or corporate taxes - they primarily affect the rich and I would have a hard time figuring out how to include them in the formulas.

I posted effective federal rates a couple pages ago. But I think you're going to have a hard time finding effective rates that include sales taxes - I've looked for them over the years with these tax debates, and have never found them. But I'd be really interested in seeing what those numbers are.
post #243 of 263
Quote:
Originally posted by BRussell
According to this, the bottom half, that's HALF, have less than 3% of the total wealth. The top 1% have one third. That's truly sick. I don't see how you can say the "poor" aren't taxed enough.


I'd really like to see anyone defend this horribly imbalanced distribution of wealth as having anything to do with who as "earned" what.

By these numbers, an individual in the top 1% has 48 times as much wealth, on average, as the average person in the lower 99% below him. Such an individual has, on average, 584 times as much wealth as an individual in the lower 50%. God knows how awful these figures would look if we could break out the lower 10% and the upper 0.1%.

Even if this distribution were completely based on some measure of "merit", it's totally out of whack. Most human abilities are distributed on a bell curve of some sort, with most people clustered around the middle, and with the top and bottom 1% not being staggeringly far away from this middle. The top 1% smartest guy, most cunning guy, most charismatic guy, most business-savvy guy, hardest-working guy -- whatever you'd like to measure and to whatever extent you can put such things on linear scales -- is probably no more than 3-5 times better that the bottom 1% guy. Not 48 or 584 or 2000 times better.

Imagine any typical crowd of 100 people you've been in -- you know, when you didn't happen to be at a Nobel Prize ceremony. Can you then imagine, once you strip away the veils of confusion created by long, complex chains of economic transactions, cliquish societal behavior, and the opacity of many business and financial institutions, that you'd come to the conclusion that one particular stand-out guy in this hypothetical crowd deserved the right, had earned the right by sheer power of merit, to live in, say, a sprawling $14,600,000 estate while half of those same people merit no better than a $25,000 hole in the wall?

Was feudalism even this bad?

I realize that much of the wealth of the wealthy is in the form of stocks -- shares of ownership of businesses -- not tangible private belongings like homes and cars. This wealth is still wealth, however, it is power, and at any time, with varying degrees of care, a person with such wealth can make as much of it as they'd like as liquid as they'd like it to be. Only the very wealthy -- the Bill Gates of this world and the like (top 0.01%? 0.001%? 0.0001%?) typically would have to worry that the very act of liquidating their assets would cause such a panic as to severely devalue those assets.

So to the idea that idea that progressive taxes "punish" people for success I say "hah!". Progressive taxes do nothing more than compensate to a minor degree for the wild distortions in the distribution of wealth that our economic system creates. Redistribution of wealth? When it's originally distributed this badly, you betcha. You don't have to be a radically egalitarian socialist -- and I'm certainly not -- to say enough's enough at a certain point. An individual in the top 1% has, on average, 584 times as much wealth as an individual in the lower 50%! There's quite a bit of room here to reign in bit of such excess without even coming close to hurting the incentive values in a capitalistic, market-driven economy.
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post #244 of 263
Quote:
But my ideal would be to have higher top rates than we have now, along with an expanded standard deduction (which would provide a tax cut for the lower-income groups).

The way we should think about it, IMO, is like this: It takes a certain amount of money to live comfortably. Just to pick an arbitrary amount, let's call it $40,000. But we could decide whatever we want, and once we decide, you should be able to make that amount of money without paying any income taxes at all. Only what you make beyond that basic amount should be taxed, because it's all icing once you get past that.

I would be fine with that. In fact, if you include the home morgage interest deduction, what you want is essentially what we already have, but only for those that own a house.

I am in favor of getting rid of the home interest deduction, getting rid of taxes on lottary and contest winnings, and having the current tax system with a 40K deduction. I think that you would have to have slightly higher tax rates than now, but that would be fine too.

My basic point is that jimmac does not actually look at the tax system when he decries it. If you wanted the tax system to level the playing field between the net worth of rich and poor, then you would have to confiscate resources from the rich - income tax is not the solution for that, as most of the net worth in this country is real estate that does not generate income.

Confiscating resources means that you have communism - a system without the sanctity of personal property. If you do it as a one time thing, then it will be back to unbalanced in just a few years after you stop forcing redistribution.
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post #245 of 263
Quote:
Originally posted by e1618978
If you are unwilling to try the excercise, that means that you are unwilling to examine the "facts" that you are pulling out of your ass. Your outrage is misplaced, and I win the argument.

It is very easy to complain about stuff, much harder to suggest solutions.


Which facts am I pulling out of my ass? You haven't proven anything or addressed my links. You win nothing.


You sir are in denial!
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post #246 of 263
Quote:
Originally posted by e1618978
I would be fine with that. In fact, if you include the home morgage interest deduction, what you want is essentially what we already have, but only for those that own a house.

I am in favor of getting rid of the home interest deduction, getting rid of taxes on lottary and contest winnings, and having the current tax system with a 40K deduction. I think that you would have to have slightly higher tax rates than now, but that would be fine too.

My basic point is that jimmac does not actually look at the tax system when he decries it. If you wanted the tax system to level the playing field between the net worth of rich and poor, then you would have to confiscate resources from the rich - income tax is not the solution for that, as most of the net worth in this country is real estate that does not generate income.

Confiscating resources means that you have communism - a system without the sanctity of personal property. If you do it as a one time thing, then it will be back to unbalanced in just a few years after you stop forcing redistribution.


This : " Confiscating resources means that you have communism " is B.S.

What do you think taxation is now?


This is also B.S.

" as most of the net worth in this country is real estate that does not generate income. "


What do you think a rental is ( I happen to be a landlord )? Also most large property is a tax write off or it's differed. All you have to do is plant something or turn it into a business. My family did this when handling my late uncle's estate.

You see I know all about how people can manipulate the tax system to make it work for them.


However how to change it so it's more fair as to addressing the tax problem I'm not sure what the answer is. I'm not an expert in this area and it sounds like neither are you. But anything's got to better than the way it's set up now.
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post #247 of 263
Quote:
Originally posted by jimmac
Blather

Fill in the table, jimmac, to suggest an alternative tax system. Until you do that you have nothing of value to add to the conversation.

Here is the table, to refresh your memory:

10%tile: X% tax
20%tile: X% tax
30%tile: X% tax
40%tile: X% tax
50%tile: X% tax
60%tile: X% tax
70%tile: X% tax
80%tile: X% tax
90%tile: X% tax
99%tile: X% tax

Here is my current gustimate about the current US tax system:

10%tile: -5% tax
20%tile: 5% tax
30%tile: 10% tax
40%tile: 15% tax
50%tile: 20% tax
60%tile: 30% tax
70%tile: 40% tax
80%tile: 50% tax
90%tile: 55% tax
99%tile: 50% tax

Which is also just about right to me with the current level of government spending. I would like much less government spending, though, and lower taxes.

Also, if you propose going beyond an income tax, and suggesting a confiscation of principal tax, please provide the details.
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post #248 of 263
Quote:
I'm not an expert in this area and it sounds like neither are you.

I agree that you know nothing about taxes - but how can you complain so much about something you don't understand?

As for me, I live and breathe taxes, because I was on the thin edge of disaster for so long.

My federal income tax return is a stack of paper 2" thick, and I have learned about the US and Australian tax systems via the school of hard knocks.

As for the loopholes that you family used to avoid paying taxes, I agree that they should be closed. Why don't you figure out how much tax your share was and donate that much to the poor?
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post #249 of 263
Quote:
Originally posted by e1618978
Fill in the table, jimmac, to suggest an alternative tax system. Until you do that you have nothing of value to add to the conversation.

Here is the table, to refresh your memory:

10%tile: X% tax
20%tile: X% tax
30%tile: X% tax
40%tile: X% tax
50%tile: X% tax
60%tile: X% tax
70%tile: X% tax
80%tile: X% tax
90%tile: X% tax
99%tile: X% tax

Here is my current gustimate about the current US tax system:

10%tile: -5% tax
20%tile: 5% tax
30%tile: 10% tax
40%tile: 15% tax
50%tile: 20% tax
60%tile: 30% tax
70%tile: 40% tax
80%tile: 50% tax
90%tile: 55% tax
99%tile: 50% tax

Which is also just about right to me with the current level of government spending. I would like much less government spending, though, and lower taxes.

Also, if you propose going beyond an income tax, and suggesting a confiscation of principal tax, please provide the details.



Blather.........


Yes, we know that's the way you look at it.


I've brought this up before. I used to have a book titled " How to Lie With Statistics ". The premise of the book was that you could make anything look the way you wanted by omiting certain details like how much these people make in a year and why the tax burden is really not as burdensome for them as it would be for the middle class or poor.

Some of these people can't even afford an accountant or have the resources to write something off like the rich.


In the future please save the insults for the sandbox.
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post #250 of 263
Quote:
Originally posted by jimmac
Blather.........


Yes, we know that's the way you look at it.


I've brought this up before. I used to have a book titled " How to Lie With Statistics ". The premise of the book was that you could make anything look the way you wanted by omiting certain details like how much these people make in a year and why the tax burden is really not as burdensome for them as it would be for the middle class or poor.

Some of these people can't even afford an accountant or have the resources to right something off like the rich.


In the future please save the insults for the sandbox.

You are still willing to endlessly complain about the tax system without being willing to stick you neck out and propose an alternative. weak.
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post #251 of 263
Quote:
Originally posted by e1618978
Jimmac - I question what you would consider a fair tax system. Please fill out the following:

10%tile: X% tax
20%tile: X% tax
30%tile: X% tax
40%tile: X% tax
50%tile: X% tax
60%tile: X% tax
70%tile: X% tax
80%tile: X% tax
90%tile: X% tax
99%tile: X% tax

But remember the following things when you fill it out:

1. If you have the poor paying no taxes at all, then they will not have any ownership, and people do not respect what they get for free.

2. If you put the taxes too high on the rich, #1 they will flee to tax heavens, but #2 you will be making it much harder for middle class people to become rich

The biggest problem here is assuming your point 2 must always be true. If we assume that it's an inescapable given that the rich can always game the system to evade taxes with tax shelters and sweetheart laws from purchased politicians, why even bother to fill out the chart of percentile tax rates above? Assuming point 2 is to assume defeat from the start.

If we have any hope of creating a fairer tax system and a less feudalistic distribution of wealth in this country we'd need to strip away the fat-cat tax shelters and special treatment of the rich so we can really see how much wealth and income we have to deal with. (Yes, I know. Much easier said than done.)

As for the #2 part of point 2: Does that really necessarily follow? If by "harder for middle class people to become rich" you mean harder to become one of those people with 584 times the wealth of the average bottom 50-percentile guys, I see absolutely no problem with making such wealth disparities harder to achieve. Getting that rich should be damned hard and damned rare -- not at all a one-out-of-one-hundred thing.
Quote:
3. The democratic party will spin whatever changes you propose into a partisan class-struggle battle cry.

From the looks of BRussell's pie chart, a class struggle is just what we need. Something is terribly wrong here. We should get the lower 50% to realize that every time they earn enough for cab fare that the top 1% guy gets a brand new car, wake them up from their American Idol-induced slumber and get them out to vote based on their real economic interests rather than based on some pipe dream they might have of being that 1% guy themselves any day now. We could then effect real change and end the perceived inevitability that the rich will always find a way to slip through the tax code relatively unscathed.

There's a great line in an episode of Star Trek: Deep Space Nine, in a scene where someone is trying to convince a group of Ferengi of the benefits of forming an employees' union: "Ferengi don't want to stop the exploitation, we want to become the exploiters!" I often wonder how many voters vote for tax-cuts-for-the-rich politicians based on thinking something much the same.
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post #252 of 263
Quote:
Originally posted by shetline
The biggest problem here is assuming your point 2 must always be true. If we assume that it's an inescapable given that the rich can always game the system to evade taxes with tax shelters and sweetheart laws from purchased politicians, why even bother to fill out the chart of percentile tax rates above? Assuming point 2 is to assume defeat from the start.

If we have any hope of creating a fairer tax system and a less feudalistic distribution of wealth in this country we'd need to strip away the fat-cat tax shelters and special treatment of the rich so we can really see how much wealth and income we have to deal with. (Yes, I know. Much easier said than done.)

As for the #2 part of point 2: Does that really necessarily follow? If by "harder for middle class people to become rich" you mean harder to become one of those people with 584 times the wealth of the average bottom 50-percentile guys, I see absolutely no problem with making such wealth disparities harder to achieve. Getting that rich should be damned hard and damned rare -- not at all a one-out-of-one-hundred thing.

From the looks of BRussell's pie chart, a class struggle is just what we need. Something is terribly wrong here. We should get the lower 50% to realize that every time they earn enough for cab fare that the top 1% guy gets a brand new car, wake them up from their American Idol-induced slumber and get them out to vote based on their real economic interests rather than based on some pipe dream they might have of being that 1% guy themselves any day now. We could then effect real change and end the perceived inevitability that the rich will always find a way to slip through the tax code relatively unscathed.

There's a great line in an episode of Star Trek: Deep Space Nine, in a scene where someone is trying to convince a group of Ferengi of the benefits of forming an employees' union: "Ferengi don't want to stop the exploitation, we want to become the exploiters!" I often wonder how many voters vote for tax-cuts-for-the-rich politicians based on thinking something much the same.



Exactly! Thank you.


I remember that episode. I've had bosses that were just like Quark.
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post #253 of 263
Quote:
From the looks of BRussell's pie chart, a class struggle is just what we need

No, that is exactly what we DONT need. Class struggles like you are talking about make things worse for everyone, as they saw in Russia. North Korea = your vision, South Korea = my vision. Attempts to correct imbalances between the rich and poor result in disaster.

You are still not realising that the poor in this country have a much easier life than the poor ever have had in the history of the world.

In order for the bitter revolutionaries to have any power, the masses must really be opressesed. As a result of the industrial revolution, things got a whole lot worse for the poor, and that caused the union movement in the US and the chineese and russian revolutions overseas. Nothing equivalent is happening now - everyone is rich, including the poor, on a historical scale.

The entrepreneurial class are optimists, who believe that the world is a good place, and that there are opportunities to be had. This kind of person will generally, maybe after a few tries, get rich.

Most of the rest of the world is not comfortable taking entrepreneurial risks. They want to keep their safer jobs, and spend time with their families.

It is only when the welfare of the general population drops dramatically, which is not hapenning and will not happen, that bitter revolutionaries get any power. Until then, people like me rule the world, and the world is better off for our rulership.

If you look at things with some introspection, I think that you will see that calling for revolution and a pessimistic negative attitude are self feeding phenomon. You want the world to go to shit so that you will come into power, and because that is what you want, you see shit on everything.

Its a half-full, half-empty kind of thing.
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post #254 of 263
Quote:
Originally posted by e1618978
No, that is exactly what we DONT need. Class struggles like you are talking about make things worse for everyone, as they saw in Russia.

You don't have to go as far as the Russian Revolution to have a class struggle.

The only struggle I'm advocating here is one that would take place at the ballot box, by getting the majority of voters to vote more like they're in the 99% that they're in, rather than voting time and time again for policies that benefit the interests of the top 1% more than their own interests.

I'd like people to start asking themselves: "What's more important to me? Dependable, affordable health care that I can count on even when I change jobs or become unemployed? Or knowing that if/when I get rich someday, my taxes will be low enough that I can afford the 60 ft. yacht instead of only the mere 55 ft. yacht? Hmmmm... lemme think..."
Quote:
You are still not realising that the poor in this country have a much easier life than the poor ever have had in the history of the world.

I'm quite well aware that the bottom tier is better off than they have been throughout much of history -- at least in this country. There are still very primitive levels of poverty elsewhere in the world.

That poverty might not be so miserably grinding any more isn't, however, good enough an excuse to explain away or accept the vast inequities in the distribution of wealth we have in the US.
Quote:
In order for the bitter revolutionaries to have any power, the masses must really be opressesed. As a result of the industrial revolution, things got a whole lot worse for the poor, and that caused the union movement in the US and the chineese and russian revolutions overseas. Nothing equivalent is happening now - everyone is rich, including the poor, on a historical scale.

Like I said, I'm not looking for mobs with pitchforks to storm the Bastille. All it should take is a little more awareness -- including shaking up the poor among the Religious Right to realize that supply-side economics wasn't among the teachings of Jesus -- that having politicians who were more responsive to their economic needs than those of the very wealthy would result in a better, more secure life for themselves and their families.
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The entrepreneurial class are optimists.

Ah, yes! Let us once again sing the praises of the Mighty Entrepreneur!
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who believe that the world is a good place, and that there are opportunities to be had. This kind of person will generally, maybe after a few tries, get rich.

I'm not sure how much real evidence there is for this. After all, this is very much the kind of history which most especially written by the victors. You're not going to find many books in the bookstore on the theme, "How I tried to become rich, failed miserably, and never had the wherewithal to try again". I have heard of statistics -- please correct me if I'm wrong, as I'm relying on vague memory here -- that the majority of businesses fail. Such statistics would tend to belie the triumphalist anecdotes of the Mighty Entrepreneur.
Quote:
Most of the rest of the world is not comfortable taking entrepreneurial risks. They want to keep their safer jobs, and spend time with their families.

So exactly how reward-worthy is such risk taking?

Worthy of 584 times the wealth of someone working a low-wage job which the entrepreneur's success still ultimately depends upon? Will we utterly crush the risk-taking derring-do of the Mighty Entrepreneur if we raise his taxes such that he only ends up with, say, a mere 200 times the wealth of his bottom-tier employee? Will we severely diminish the general over-all increase in societal wealth because the Mighty, Incredibly Deserving, Risk-Taking Entrepreneur pays more in taxes?

Besides, don't forget the old corporate business mantra, "Socialize the risk, privatize the gain". These glorious risk-takers often let society as a whole pay for their failed risks, through the distributed burden of unpaid corporate bankruptcy debts, while greatly limiting their own personal risk. Such noble bravery.
Quote:
It is only when the welfare of the general population drops dramatically, which is is not and will not do, that bitter revolutionaries get any power. Until then, people like me rule the world, and the world is better off for our rulership.

Forgive me if I spoke out of turn, your Highness.
Quote:
If you look at things with some introspection, I think that you will see that calling for revolution and a pessimistic negative attitude are self feeding phenomon.

If you pay attention you'll notice you're totally overstating and misreading what's being discussed here. But then again, who am I to question your sage perception, upon which all good things which I enjoy depend?
Quote:
You want the world to go to shit so that you will come into power, and because that is what you want, you see shit on everything.

Its a half-full, half-empty kind of thing.

And you, apparently, desperately want to believe in your own self-aggrandizing mythology.
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post #255 of 263
Well, then I would say that you were mis-representing yourself in previous posts. I also support socialised medicine, and I think that we could afford it with the existing tax structure if we were not wasting so much money on useless government expenditure. Calling socialised medicine a "class struggle" is a farce.

I would also like socalised dentistry. When I grew up on welfare in Canada, socalised dentistry was the only thing that I needed (not what I wanted, but what I needed) that I did not have.

But socialised medicine has nothing to do with re-distribution of wealth, it is just a government expenditure choice.

So shetline - I'll extend the same offer that I made to jimmac - fill in the table, show us your ideal tax distribution, and let us see what you actually want the taxes to look like.

Based on your last post, I don't see how you want to change the tax system at all.
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post #256 of 263
Quote:
Originally posted by e1618978
So shetline - I'll extend the same offer that I made to jimmac - fill in the table, show us your ideal tax distribution, and let us see what you actually want the taxes to look like.

Based on your last post, I don't see how you want to change the tax system at all.

I can't fill out exact figures, or even rough figures, without a lot more economic data than I have available. The best I can do is roughly characterize what that tax table would look like:

First of all, the tax system would be designed to meet the needs of a balanced budget while generating a small surplus, to be accumulated and used in times of emergency, or perhaps to be drawn upon when a tax decrease is deemed useful for economic stimulus.

The size of the budget would be determined by a realistic acceptance of all of the demands society, through a democratic process, places upon government. "Starve the beast" ideology would have no place. If you want the budget to be smaller, you would first have to find the political will to cut the budget instead of driving up deficits in hopes of eventually forcing an ideological outcome on that budget.

People would have to accept the fact that government budgets are always compromises, and in order to please enough people to get a budget passed, a final budget will no doubt contain at least a little bit of spending for everyone to dislike. If you point to every bit of spending you personally don't like and label that portion of the budget "waste", you fail to understand the nature of budget compromise.

Once the size of the budget is determined, tax rates would be set to meet that goal. The tax system would be progressive, starting at 0% for those with very low incomes (who would still pay some taxes via sales taxes and other usage taxes for what few non-essentials they can afford), and work its way up to... to whatever was needed to meet the budget, once the majority of ways to evade and avoid taxes are removed. Cut out enough loopholes, and who knows? Maybe the 39%(?) top tax bracket we currently have is too high.

I don't think we'd want to, or have to, have anyone paying more than half of their income in all kinds of taxes (state and federal income, sales, property, etc.), if very few were managing to evade those taxes, to end up with a good balanced budget which would still allow markets to flourish while things like universal health and dental care were available to all, all at the same time. (I'd shed few tears for the very wealthy if a 60% top rate happened to make things work out best, however.)

A host of considerations would have to be taken into account to come up with the best slope and shape for the tax rate curve (an S-curve of some description, I imagine), and this curve would have to be adjusted by real-world data as needed once put into practice, with diligent care taken to keep tracking down and closing loopholes as they might appear.
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Peter came out and gave us medals
Declaring us the nicest of the damned -- They Might Be Giants          See the stars at skyviewcafe.com
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post #257 of 263
Quote:
Originally posted by shetline
I can't fill out exact figures, or even rough figures, without a lot more economic data than I have available. The best I can do is roughly characterize what that tax table would look like:

First of all, the tax system would be designed to meet the needs of a balanced budget while generating a small surplus, to be accumulated and used in times of emergency, or perhaps to be drawn upon when a tax decrease is deemed useful for economic stimulus.

The size of the budget would be determined by a realistic acceptance of all of the demands society, through a democratic process, places upon government. "Starve the beast" ideology would have no place. If you want the budget to be smaller, you would first have to find the political will to cut the budget instead of driving up deficits in hopes of eventually forcing an ideological outcome on that budget.

People would have to accept the fact that government budgets are always compromises, and in order to please enough people to get a budget passed, a final budget will no doubt contain at least a little bit of spending for everyone to dislike. If you point to every bit of spending you personally don't like and label that portion of the budget "waste", you fail to understand the nature of budget compromise.

Once the size of the budget is determined, tax rates would be set to meet that goal. The tax system would be progressive, starting at 0% for those with very low incomes (who would still pay some taxes via sales taxes and other usage taxes for what few non-essentials they can afford), and work its way up to... to whatever was needed to meet the budget, once the majority of ways to evade and avoid taxes are removed. Cut out enough loopholes, and who knows? Maybe the 39%(?) top tax bracket we currently have is too high.

I don't think we'd want to, or have to, have anyone paying more than half of their income in all kinds of taxes (state and federal income, sales, property, etc.), if very few were managing to evade those taxes, to end up with a good balanced budget which would still allow markets to flourish while things like universal health and dental care were available to all, all at the same time. (I'd shed few tears for the very wealthy if a 60% top rate happened to make things work out best, however.)

A host of considerations would have to be taken into account to come up with the best slope and shape for the tax rate curve (an S-curve of some description, I imagine), and this curve would have to be adjusted by real-world data as needed once put into practice, with diligent care taken to keep tracking down and closing loopholes as they might appear.

Hmmm - then I don't know what we are arguing about. We agree on everything but the 60% top tax bracket (which was not one of your main points). Note that making the 60% bracket point less than $1M will result in more businesses going under (mine would have), which in turn results in lost jobs, and lost revenue to the government.

I don't understand what you mean by S-shaped curves. Do you mean something like this:

10%tile: 0% tax
20%tile: 5% tax
30%tile: 10% tax
40%tile: 20% tax
50%tile: 30% tax
60%tile: 50% tax
70%tile: 40% tax
80%tile: 30% tax
90%tile: 40% tax
99%tile: 50% tax

If so, I don't understand why you would want that at all.

Anway, note that nothing you just stated would effect BRussel's pie chart. As I understand them (except for the stuff I disagree with or don't understand above) they are actually within a few percentage points of what we already have right now.
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post #258 of 263
Has teaching of math really hit rock bottom...

An S shaped curve is as follows:
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post #259 of 263
OK - I get the S-curve. But I don't like it, it looks too vertical - as soon as you get above the first bend, your tax rate goes up dramatically. I think that this kind of tax curve would increase the social stratification, because it would be "almost illegal" to earn more than the knee value ($80k, or whatever you set it to). You would have a much harder time getting past that - and people who wanted to become rich would try to do so in a different country.

If I was earning $80K, and I was about to start jumping up the tax charts, I would look at the tax tables of other English speaking countries pretty carefully before setting up a business. Particularly in this age of globalisation and offshore businesses.

Anyway, taxation is not able to change the pie chart. You can do a lot of damage with the wrong tax mix, but that damage hits all of the social classes. If you hurt a rich person, you are also usually hurting the hundreds or thousands of middle class and poor people that work for that rich person.

There is no force that will convince the poor to take the risks nessessary to make them rich. At one point we talked to our employees about selling them the business - a seller financed loan that they would have been able to pay back in 8 years, which would have been near-guarenteed to make them rich, was too much risk for them.

Also, they liked the freedom of being able to leave at any time. If you own the business, you are stuck there - changing jobs or moving is a multi-year process. If you try to re-structure and you screw it up, you end up as a "taxible event" and have to sell everything to pay your taxes. You are subject to all kinds of business risk, and have a large number of people dependant on you. If you screw up, you just screwed up the lives of 100 people (or whatever) and their families.

Most people would rather just have a job, and go play basketball after work. If they don't like the job, they get a different one. If they want to move to a different town, they get a job there - no problem. If they want to go back to school, fine. You lose all these freedoms if you have your own business.
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post #260 of 263
Quote:
Originally posted by e1618978
Hmmm - then I don't know what we are arguing about. We agree on everything but the 60% top tax bracket (which was not one of your main points). Note that making the 60% bracket point less than $1M will result in more businesses going under (mine would have), which in turn results in lost jobs, and lost revenue to the government.

I don't understand what you mean by S-shaped curves. Do you mean something like this:

10%tile: 0% tax
20%tile: 5% tax
30%tile: 10% tax
40%tile: 20% tax
50%tile: 30% tax
60%tile: 50% tax
70%tile: 40% tax
80%tile: 30% tax
90%tile: 40% tax
99%tile: 50% tax

If so, I don't understand why you would want that at all.

Here's an example of an S-curve:



Just imagine that the vertical axis is a marginal tax rate and the horizontal axis is either raw income level or percentile income level. At any rate, I only suggested an S-curve because it's one kind of curve that you can have where you start low, go up, then level out at some point.
Quote:
Anway, note that nothing you just stated would effect BRussel's pie chart. As I understand them (except for the stuff I disagree with or don't understand above) they are actually within a few percentage points of what we already have right now.

The numbers on the tax tables and the taxes actually paid are two different things. The biggest difference between what I'd like to see and what we have now is fewer tax dodges for the rich, tax laws that keep the effective upper rates high regardless of what creative accountants can cook up.

In addition, I'd like to see more transparency and accountability in corporate finances. There are people who produce net losses for the companies they work for who still float away on golden parachutes worth more than I'll earn in my whole life as an employee.

While there may be a few bold risk-taking entrepreneurs out there whose risk taking brings broader benefits to everyone -- say, championing a new technology or new process no one else wanted to gamble on -- a lot of that risk-taking is nothing more than high-stakes gambling, often in a rigged game, a game that only changes which players win the most money, without much effect on or regard for production of useful goods and services. I think we can all feel pretty certain that for every told story like Enron there are plenty of untold stories, stories where the corporate parasites are simply lucky enough or smart enough to stop short of killing the host organism while they leach away profits.

Does the CEO who makes $10,000/hour really benefit the bottom line for his company and for the shareholders 1000 times as much for every hour of schmoozing and report-reading and contract-signing he does than does the assembly line worker who makes $10/hour? When sales are down 25% from last year, who's going to get laid off first, regardless of who had more power over preventing that sales slump?

A few years back the company I work for went through Chapter 11. This being a small company, there was "only" about three million dollars of debt that needed to be settled. By time we emerged from bankruptcy, legal fees totaled to around two million dollars.

Two million dollars on lawyers to figure out how to settle three million dollars worth of debt.

Because the debt was settled for something like 35 cents per dollar plus stock, the lawyers got more than the debtors did. It was all so stupid and inefficient. Without so much squabbling over who got what, there'd have been much, much more to go around for all of the debtors, and our company would have come out of bankruptcy stronger and better able to create jobs and useful products.

Why do I bring this up? Because this is my jaundiced view of much of what goes on in the world of big money. Did those lawyers do a damned thing to make the world a better place? Looks more like a game of lawyer vs. lawyer, where all the lawyers and only the lawyers win.

We're so often told to "trust the market", and to believe that individuals acting in their own supposedly enlightened self-interest is the best way to reach optimal outcomes. But the above is a clear counter-example. Each debtor wishes to maximize his share of the debt. Each chooses the strategy of obtaining a lawyer to fight for a maximum share. If all had been "enlightened" enough, however, to choose a cooperative strategy rather than a competitive one, there'd have been more money to go around for everyone -- for everyone except, of course, the parasitic lawyers.

While I have no way of knowing what percentage of wealth is gained by being a parasite rather than being a real contributor to the overall productivity of the economy, I'm quite convinced that a goodly portion of wealth is obtained parasitically, often by people who in a narrow scope might appear to have been productive or useful (Without my lawyer fighting for me, I'd have gotten nothing!), but who are really just taking advantage of inefficient financial machinations in self-serving ways.
We were once so close to heaven
Peter came out and gave us medals
Declaring us the nicest of the damned -- They Might Be Giants          See the stars at skyviewcafe.com
Reply
We were once so close to heaven
Peter came out and gave us medals
Declaring us the nicest of the damned -- They Might Be Giants          See the stars at skyviewcafe.com
Reply
post #261 of 263
Quote:
While I have no way of knowing what percentage of wealth is gained by being a parasite rather than being a real contributor to the overall productivity of the economy, I'm quite convinced that a goodly portion of wealth is obtained parasitically, often by people who in a narrow scope might appear to have been productive or useful (Without my lawyer fighting for me, I'd have gotten nothing!), but who are really just taking advantage of inefficient financial machinations in self-serving ways.

I don't think that we disagree on anything then.

Even though the legal profession is out of hand, the profits those guys make is IMHO still small compared to the profits reaped by real innovators and risk takers. Things must be balanced more towards the good side of things, or else the standard of living for all our population would not be getting better the way it is.

Also, keep in mind that your nightmare scenerio of the worms feeding on the rotting corpse of your company gets more common as you start raising the higher end tax rates up.
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post #262 of 263
Let's not leave the accounting profession out of this.

Do you think they want to see the tax code simplified and the arcane loopholes closed?
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post #263 of 263
Quote:
Originally posted by FormerLurker
Let's not leave the accounting profession out of this.

Do you think they want to see the tax code simplified and the arcane loopholes closed?

The accountant I go to makes $150.00 an hour. When I was settling my mom's estate that was more than the attorney. I'll give you 3 guesses.
Without the need for difference or a need to always follow the herd breeds complacency, mediocrity, and a lack of imagination
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Without the need for difference or a need to always follow the herd breeds complacency, mediocrity, and a lack of imagination
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