News In favor of increasing taxes on the wealthy

[Ivan Seeking]

I only know of two arguments against raising taxes on the wealty. The first is that higher taxes will reduce growth and investment. To that I say that not all taxes are the same. Credits and deductions providing incentives for investment do not exclude taxation on wealth that goes to lifestyle. And the rich can certainly spare a few bucks.

But the argument I want to address here is the issue of fairness. Many people claim it is unfair that almost half of Americans pay no taxes!

Of course that is incorrect. What is correct is that they paid no Federal income tax.

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization...

http://www.msnbc.msn.com/id/3622644...finance/t/half-us-pays-no-federal-income-tax/

To that I respond with this:

If people need any more concrete explanation of this, start with the staff of life, a loaf of bread. The simplest thing; the poorest man must have it. Well, there are 151 taxes now in the price of a loaf of bread–it accounts for more than half the cost of a loaf of bread. It begins with the first tax, on the farmer that raised the wheat. Any simpleton can understand that if that farmer cannot get enough money for his wheat, to pay the property tax on his farm, he can’t be a farmer. He loses his farm. And so it is with the fellow who pays a driver’s license and a gasoline tax to drive the truckload of wheat to the mill, the miller who has to pay everything from social security tax, business license, everything else. He has to make his living over and above those costs. So they all wind up in that loaf of bread. Now an egg isn’t far behind and nobody had to make that. There’s a hundred taxes in an egg by the time it gets to market and you know the chicken didn’t put them there!

http://reason.com/archives/1975/07/01/inside-ronald-reagan/4

The real question is, what pecentage of a person's income goes to all taxes paid, directly or indirectly? And this isn't just a number's game. In the case of the lower end of the income spectrum, the taxes paid may constitute a significant percentage of the minimum cost of survival, less living on the streets. When people are just barely getting by, those taxes are significant percentage of the cost of life [food, water, rent, power], not lifestyle.

We have to balance the budget. On that I think we all agree. The notion that this cost should all be carried by the poor and middle class is, in my view, morally and logically unacceptable, and unjustifiable.

 

[WhoWee]

This might be a good thread to shine a light on all of the hidden permits, fees, and taxes that we pay on utilities and fuel (for example). We should also note the cost of payroll matching taxes, workers comp and other costs incurred by business. This could be a very good discussion.

 

[Evo]

Already off topic, and off topic posts deleted. Let's keep this about *personal income tax" and not businesses. The topic is "In favor of increasing taxes on the wealthy", nothing about business.

 

[mege]

I only know of two arguments against raising taxes on the wealty. The first is that higher taxes will reduce growth and investment. To that I say that not all taxes are the same. Credits and deductions providing incentives for investment do not exclude taxation on wealth that goes to lifestyle. And the rich can certainly spare a few bucks.

But the argument I want to address here is the issue of fairness. Many people claim it is unfair that almost half of Americans pay no taxes!

Of course that is incorrect. What is correct is that they paid no Federal income tax.


http://www.msnbc.msn.com/id/3622644...finance/t/half-us-pays-no-federal-income-tax/

To that I respond with this:


http://reason.com/archives/1975/07/01/inside-ronald-reagan/4

The real question is, what pecentage of a person's income goes to all taxes paid, directly or indirectly? And this isn't just a number's game. In the case of the lower end of the income spectrum, the taxes paid may constitute a significant percentage of the minimum cost of survival, less living on the streets. When people are just barely getting by, those taxes are significant percentage of the cost of life [food, water, rent, power], not lifestyle.

We have to balance the budget. On that I think we all agree. The notion that this cost should all be carried by the poor and middle class is, in my view, morally and logically unacceptable, and unjustifiable.

So what you're saying is taxes on the big bad corporations are what make the poor even poorer?

Additionally - most 'neccessary' items are tax free. I know of very few states that tax foodstuffs.

And actually - paying taxes (of almost any sort) are deductable on your federal tax return - to, in theory, prevent double taxation. Just that the standard deduction is generally better for most people anyhow. Your car fees, your state taxes, your sales tax - all valid deductions currently. So I think the 'stacking taxes hurts the poor' argument for more progressive taxes really needs to be looked at more carefully with this in mind.

Lastly, what is an individuals total net investment to the government as you have different amounts of wealth? The 'payroll' taxes are something that everyone puts in, but expects to get the value out of them. Also, if you consider that there are far more programs that help the less wealthy - many times they're not paying anything to the government, and are getting something back. Child credits, eitc, etc all subsidize the less fortunate tot he point where they're total tax burden is negative - the government is paying out to them. That's even accounting for the double taxation via the standard deduction.

Warren Buffet Is Wrong in this matter

 

[Tosh5457]

Already off topic, and off topic posts deleted. Let's keep this about *personal income tax" and not businesses. The topic is "In favor of increasing taxes on the wealthy", nothing about business.

You could have deleted only the 2nd part of my post then... Now I just made another offtopic post because of that.

 

[Evo]

So what you're saying is taxes on the big bad corporations are what make the poor even poorer?

Additionally - most 'neccessary' items are tax free. I know of very few states that tax foodstuffs.

And actually - paying taxes (of almost any sort) are deductable on your federal tax return - to, in theory, prevent double taxation. Just that the standard deduction is generally better for most people anyhow. Your car fees, your state taxes, your sales tax - all valid deductions currently. So I think the 'stacking taxes hurts the poor' argument for more progressive taxes really needs to be looked at more carefully with this in mind.

Lastly, what is an individuals total net investment to the government as you have different amounts of wealth? The 'payroll' taxes are something that everyone puts in, but expects to get the value out of them. Also, if you consider that there are far more programs that help the less wealthy - many times they're not paying anything to the government, and are getting something back. Child credits, eitc, etc all subsidize the less fortunate tot he point where they're total tax burden is negative - the government is paying out to them. That's even accounting for the double taxation via the standard deduction.

Warren Buffet Is Wrong in this matter

Wow, I need to let you do my taxes. I pay through the nose. Yes, poor people and a lot of middle class people pay high taxes because they can't itemize. Obviously those that are wealthier have a lot of deductions that make it more lucrative to itemize than take the standard deduction.

 

[Evo]

You could have deleted only the 2nd part of my post then... Now I just made another offtopic post because of that.

First half? The entire post is about corporations.

PM me if you want a copy of it.

 

[russ_watters]

The notion that this cost should all be carried by the poor and middle class is, in my view, morally and logically unacceptable, and unjustifiable.

Saying that taxes should not be increased on the weathy is most certainly not equivalent to saying that all the cost of debt reduction should be borne by the poor and middle class. This is a strawman argument.

I am opposed to raising taxes on those who create jobs at a time when the thing most needed in the economy is jobs. That said, as the economy recovers, taxes on everyone will need to be raised.

And the rich can certainly spare a few bucks.

Who are the wealthy and how much do you think they can spare?

 

[RudedawgCDN]

Studies show that wealthy Americans have seen their purchasing power increase dramatically while lower wage and middle income earners have seen their purchasing power decline.

So in the face of facts, why would anyone have a problem with millionaires going back to what they were paying before the Bush cuts?

I would also argue that most small business owners are not millionaires. (A common Republican talking point).

I wish the US had a central political party - one based on reason and common sense. Not one that pits one economic class against another.

 

[WhoWee]

Studies show that wealthy Americans have seen their purchasing power increase dramatically while lower wage and middle income earners have seen their purchasing power decline.

So in the face of facts, why would anyone have a problem with millionaires going back to what they were paying before the Bush cuts?

I would also argue that most small business owners are not millionaires. (A common Republican talking point).

I wish the US had a central political party - one based on reason and common sense. Not one that pits one economic class against another.

Welcome to PF - please provide a source for your information.

 

[mege]

Wow, I need to let you do my taxes. I pay through the nose. Yes, poor people and a lot of middle class people pay high taxes because they can't itemize. Obviously those that are wealthier have a lot of deductions that make it more lucrative to itemize than take the standard deduction.

But remember what the function of the standard deduction actually is: to account for all of your double-taxation possibilities. So your deduction is already accounting for that 'lack of itemization' - and generally over estimates if you're reporting <$100k and didn't have a large purchase.

 

[WhoWee]

I only know of two arguments against raising taxes on the wealty. The first is that higher taxes will reduce growth and investment. To that I say that not all taxes are the same. Credits and deductions providing incentives for investment do not exclude taxation on wealth that goes to lifestyle. And the rich can certainly spare a few bucks.

But the argument I want to address here is the issue of fairness. Many people claim it is unfair that almost half of Americans pay no taxes!

Of course that is incorrect. What is correct is that they paid no Federal income tax.


http://www.msnbc.msn.com/id/3622644...finance/t/half-us-pays-no-federal-income-tax/

To that I respond with this:


http://reason.com/archives/1975/07/01/inside-ronald-reagan/4

The real question is, what pecentage of a person's income goes to all taxes paid, directly or indirectly? And this isn't just a number's game. In the case of the lower end of the income spectrum, the taxes paid may constitute a significant percentage of the minimum cost of survival, less living on the streets. When people are just barely getting by, those taxes are significant percentage of the cost of life [food, water, rent, power], not lifestyle.

We have to balance the budget. On that I think we all agree. The notion that this cost should all be carried by the poor and middle class is, in my view, morally and logically unacceptable, and unjustifiable.

I'm really not sure what part of this to respond to Ivan - care to clarify Russ's question and guide us a bit?

 

[mege]

Studies show that wealthy Americans have seen their purchasing power increase dramatically while lower wage and middle income earners have seen their purchasing power decline.

So in the face of facts, why would anyone have a problem with millionaires going back to what they were paying before the Bush cuts?

I would also argue that most small business owners are not millionaires. (A common Republican talking point).

I wish the US had a central political party - one based on reason and common sense. Not one that pits one economic class against another.

The alternate source of a change in buying power is: lack of consumers. Less rich people meaning less demand for high ticket items meaning lower prices = more buying power for those that still have their wealth. Even if the total number of rich people haven't decreased, their spending habbits have tightened for sure.

But I am interested where you're getting these 'facts' that we're supposed to face?

 

[WhoWee]

The real question is, what pecentage of a person's income goes to all taxes paid, directly or indirectly? And this isn't just a number's game. In the case of the lower end of the income spectrum, the taxes paid may constitute a significant percentage of the minimum cost of survival, less living on the streets. When people are just barely getting by, those taxes are significant percentage of the cost of life [food, water, rent, power], not lifestyle.

We have to balance the budget. On that I think we all agree. The notion that this cost should all be carried by the poor and middle class is, in my view, morally and logically unacceptable, and unjustifiable.

The EITC was designed to return the Social Security payroll deduction to lower wage earners - then the President cut the actual deduction (for the employee but not the employer) by about 12% and we have a making work pay credit (that I'll have to read up on before posting further). My point is this - to have an honest debate, we need to consider everything.

 

[Astronuc]

I've been hearing several economists and financial experts indicated that the debt must be reduced through reduced spending and revenue increases. The revenue increases would come from increased tax receipts, which could come from increase in tax rates or through increased employment. However, increased employment looks problematic in the near term.

John Mauldin: The U.S. Must Cut $10 Trillion in 10 Years, or Taxes Will Skyrocket
http://finance.yahoo.com/blogs/daily-ticker/john-mauldin-u-must-cut-10-trillion-10-193254628.html

I would prefer to see those with substantial capital invest in new businesses.


I also heard tonight that the top 5% by wealth account for 30% of spending at present. Spending on high end, luxury items increased in July.

 

[Evo]

I also heard tonight that the top 5% by wealth account for 30% of spending at present. Spending on high end, luxury items increased in July.

That usually means very high end, non-american designer stuff. Isn't most of what the very rich buy outside of the US? How much is spent on American items?

I would prefer to see those with substantial capital invest in new businesses.

As long as those businesses don't outsource most of their jobs outside the country, or buy most of their goods from China. A lot of companies just exist as importers, and most of their workers aren't American. I worked with these companies when I worked with US Customs. I'm under non-disclosure, so no, I can't give any statistics.

One of my clients was one of the biggest "made in America" sports clothing companies. The workers were prison inmates. When you see the label "made in USA" it's actually made in US prisons. I've set up many of these prison worker networks for companies, they have certain restrictions in transmitting data that I handled. The owners are millionaires, one was my neighbor.

 

[russ_watters]

Welcome to PF - please provide a source for your information.

And explain the connection between the "facts" and the conclusions...

Also:

So in the face of facts, why would anyone have a problem with millionaires going back to what they were paying before the Bush cuts?

I would also argue that most small business owners are not millionaires.

This is why I asked for clarification on who the "wealthy" or "rich" are. And you added the term "millionaire". All of these terms are misleading, since it isn't wealth that is taxed, it is income. You can be a rich/wealthy millionaire with no income and therefore paying no taxes.

 

[Tosh5457]

First half? The entire post is about corporations.

The OP speaks about riches creating jobs, so I had to talk about corporations.

 

[WhoWee]

That usually means very high end, non-american designer stuff. Isn't most of what the very rich buy outside of the US? How much is spent on American items?

As long as those businesses don't outsource most of their jobs outside the country, or buy most of their goods from China. A lot of companies just exist as importers, and most of their workers aren't American. I worked with these companies when I worked with US Customs. I'm under non-disclosure, so no, I can't give any statistics.

One of my clients was one of the biggest "made in America" sports clothing companies. The workers were prison inmates. When you see the label "made in USA" it's actually made in US prisons. I've set up many of these prison worker networks for companies, they have certain restrictions in transmitting data that I handled. The owners are millionaires, one was my neighbor.

Let me guess - there were significant tax advantages for hiring the prison workers? The wage is (probably) state minimum and the start up subsidized by state/federal in some manner - maybe loan guarantees?

This is an example of both the power of tax incentives for investment and job creation and (perhaps) misplaced direction of those programs. I presume misplaced becase the job ends when the prisoner is released.

 

[Evo]

Let me guess - there were significant tax advantages for hiring the prison workers? The wage is (probably) state minimum and the start up subsidized by state/federal in some manner - maybe loan guarantees?

This is an example of both the power of tax incentives for investment and job creation and (perhaps) misplaced direction of those programs. I presume misplaced becase the job ends when the prisoner is released.

This has been going on in prisons for ages. It teaches the prisoner a "trade" that they can use on the outside in countires like china, since they're unlikely to find employment sewing clothes in the US. Prisoners have the option to work in the prison factories, you've probably seen this on tv.

The company can charge a premium price because they can put a "made in the USA" label on the garments.

Factories Behind Fences: Do Prison ‘Real Work’ Programs Work?

http://www.nij.gov/journals/257/real-work-programs.html

 

[Physics-Learner]

until people are smart enough to figure out that the goal of our political system is not the betterment of its people, said people will always bear the brunt of the problems.

reduction of govt on major scales is what is really needed. if we did this, taxation would solve itself.

as with any problem, the only way to fix it is at its source. i will cite my leaky boat example. no matter how many pails of water you throw out of the boat, the boat will continue to get wet until you fix the hole where the water is initially entering the boat.

 

[WhoWee]

This has been going on in prisons for ages. It teaches the prisoner a "trade" that they can use on the outside in countires like china, since they're unlikely to find employment sewing clothes in the US. Prisoners have the option to work in the prison factories, you've probably seen this on tv.

The company can charge a premium price because they can put a "made in the USA" label on the garments.

http://www.nij.gov/journals/257/real-work-programs.html

My assumption was that a minimum wage would be the norm - coupled with employment tax credits. I'm not familiar with these programs - but there are $Billions of unused tax credits available in the private sector to encourage companies to hire minorities, welfare recipients, convicts, and veterans. The greatest opportunity for credits are in (typically inner-city) Empowerment Zones.

 

[WhoWee]

until people are smart enough to figure out that the goal of our political system is not the betterment of its people, said people will always bear the brunt of the problems.

reduction of govt on major scales is what is really needed. if we did this, taxation would solve itself.

as with any problem, the only way to fix it is at its source. i will cite my leaky boat example. no matter how many pails of water you throw out of the boat, the boat will continue to get wet until you fix the hole where the water is initially entering the boat.

I'll assume your intent would be to save the boat - not let it sink and blame your partner.

 

[WhoWee]

I only know of two arguments against raising taxes on the wealty. The first is that higher taxes will reduce growth and investment. To that I say that not all taxes are the same. Credits and deductions providing incentives for investment do not exclude taxation on wealth that goes to lifestyle. And the rich can certainly spare a few bucks.

But the argument I want to address here is the issue of fairness. Many people claim it is unfair that almost half of Americans pay no taxes!

Of course that is incorrect. What is correct is that they paid no Federal income tax.

http://www.msnbc.msn.com/id/3622644...finance/t/half-us-pays-no-federal-income-tax/

To that I respond with this:

http://reason.com/archives/1975/07/01/inside-ronald-reagan/4

The real question is, what pecentage of a person's income goes to all taxes paid, directly or indirectly? And this isn't just a number's game. In the case of the lower end of the income spectrum, the taxes paid may constitute a significant percentage of the minimum cost of survival, less living on the streets. When people are just barely getting by, those taxes are significant percentage of the cost of life [food, water, rent, power], not lifestyle.

We have to balance the budget. On that I think we all agree. The notion that this cost should all be carried by the poor and middle class is, in my view, morally and logically unacceptable, and unjustifiable.

I just happened across this little analysis by Dave Ramsey - the guy who wants everyone to get out of debt.
""If the US Government was a family, they would be making $58,000 a year, they spend $75,000 a year, & are $327,000 in credit card debt. They are currently proposing BIG spending cuts to reduce their spending to $72,000 a year. These are the actual proportions of the federal budget & debt, reduced to a level that we can understand."
- Dave Ramsey "

If we convert the credit card debt to a mortgage (national debt is long term like a mortgage and at a lower rate than a credit card) for discussion and assume this was an actual family - what would their options be?

First, the gap between actual income and actual expenses would need to close. This would require either cutting unnecessary and wasteful expenses, increasing revenues, or a combination. The difference of $17,000 would represent 22.67% reduction of spending or require a 29.31% increase in revenue to close the gap - both are probably difficult.

Now, upon closer inspection, we determine that only 1 adult is employed and 1 teenager. All of the income is derived from the wife's job, the 16 year old son, and the husband's father subsidizes with his pension.

Does anyone have any ideas for these poor folks?

 

[Oltz]

Does anyone have any ideas for these poor folks?

Maybe stop giving 25,000 a year to charity?

Taxing the wealthy is like taking the money from the father so he can not buy a car that the teen can use to go to work.

Sure a car payment is another expense (like decreased revenue) but another income more then covers it.

Dont get me wrong we can let the tax cuts expire, But people need to remember they were scheduled to expire in 2010 and Obama and His party extended them for EVERYONE. They can no longer be called Bush's tax cuts as they were only ment to last a few years and we all knew that.

I am ok with letting them expire but they all need to go.

 

[WhoWee]

Maybe stop giving 25,000 a year to charity?

Taxing the wealthy is like taking the money from the father so he can not buy a car that the teen can use to go to work.

Sure a car payment is another expense (like decreased revenue) but another income more then covers it.

Dont get me wrong we can let the tax cuts expire, But people need to remember they were scheduled to expire in 2010 and Obama and His party extended them for EVERYONE. They can no longer be called Bush's tax cuts as they were only ment to last a few years and we all knew that.

I am ok with letting them expire but they all need to go.

I see your point, but there are lot's of hungry folks out there and the neighborhood block watch and police/fire/ambulance help keep them safe.

 

[WhoWee]

I have an idea - what if all of the able-bodied people in the house try to get jobs and help contribute? If they can each add to the total revenue it will help close the gap - then they won't have as much time to sit around and order pizza delivery - that will save as well. To make up the difference, I guess dad will have to pay more - unless a rich old uncle dies?

 

[Oltz]

Last I knew Police and Fire were funded by Local taxes and Ambulance service is normally run by a "private" Hospital. None of those are what I would call charity nor would I include them in this analogy for federal funding.

I was thinking more like Welfare real redistribution programs

Not Payrol deduction funded programs those "should" be solvent at least for now.

 

[WhoWee]

Last I knew Police and Fire were funded by Local taxes and Ambulance service is normally run by a "private" Hospital. None of those are what I would call charity nor would I include them in this analogy for federal funding.

I was thinking more like Welfare real redistribution programs

Not Payrol deduction funded programs those "should" be solvent at least for now.

(I was anticipating defense cuts)

 

[Evo]

and Ambulance service is normally run by a "private" Hospital.

Many ambulance companies are privately owned and not part of a hospital. Some are part of the fire department, it just depends.

 

[Fredrik]

taxes on the wealthy

Didn't you get the memo? They're called "job creators" now.

Taxing the wealthy is like taking the money from the father so he can not buy a car that the teen can use to go to work.

Only if rich people care about poor people as much as fathers care about their children. Are you saying that they do?

 

[Physics-Learner]

I'll assume your intent would be to save the boat - not let it sink and blame your partner.

LOL - you have described politicians well.

 

[RudedawgCDN]

Dont get me wrong we can let the tax cuts expire, But people need to remember they were scheduled to expire in 2010 and Obama and His party extended them for EVERYONE. They can no longer be called Bush's tax cuts as they were only ment to last a few years and we all knew that.

I am ok with letting them expire but they all need to go.

This really makes me mad when people who act like they know what they are talking about deliberately leave out key facts in discussions.

Obama extended the Bush cuts in order to extend Unemployment benefits. His back was up against the wall by Republicans.

The same Republicans who would not extend health care for emergency 911 first responders.

So STOP saying Obama extended the Bush tax cuts as if it's something he wanted to do or that he endorsed.

Pay attention, get the facts before you post.

This is how the lies continue, from misinformed or poorly informed people posting as if something is true when it's not.

 

[CAC1001]

Studies show that wealthy Americans have seen their purchasing power increase dramatically while lower wage and middle income earners have seen their purchasing power decline.

I think you are confusing income brackets with being fixed classes of people. Actual people move into and out of these income brackets all the time.

I wish the US had a central political party - one based on reason and common sense. Not one that pits one economic class against another.

IMO, class warfare tends to be something the Democrats try to exploit, not the Republicans. And both parties think they are based on reason. IMO, they both have areas they are very reasoned in, and they both have areas they are both ideologues and/or idiots in.

 

[CAC1001]

One thing about increasing taxes on anyone is to make sure the government at the same itmes works to at least keep spending under control.

I am curious about the statistic about the top 5% are 30% of spending because that would imply a literal trickle-down policy might work as part of economic stimulus if tax rates were punitively high for the top 5% (they aren't right now). If they were, one could cut the tax rates for the higher-earners, increase the demand from them hopefully, and all that spending creates a trickle-down effect to some degree. But the idea behind tax cuts for higher-earners and businesses from my understanding, while it may create some type of trickle-down effect, as a policy, the idea is to increase investment in businesses and the economy overall.

That usually means very high end, non-american designer stuff. Isn't most of what the very rich buy outside of the US? How much is spent on American items?

Is the highest-earning 5% the "very rich" though? For example someone making $400K a year I'd definitely not call rich, but within the top 5% I'd think and definitely very affluent.

As long as those businesses don't outsource most of their jobs outside the country, or buy most of their goods from China. A lot of companies just exist as importers, and most of their workers aren't American. I worked with these companies when I worked with US Customs. I'm under non-disclosure, so no, I can't give any statistics.

What if the company's goods that it sells are mostly made outside of the country though? By selling the goods here in the USA and growing their business, they will create jobs here and contribute to GDP growth.

One of my clients was one of the biggest "made in America" sports clothing companies. The workers were prison inmates. When you see the label "made in USA" it's actually made in US prisons. I've set up many of these prison worker networks for companies, they have certain restrictions in transmitting data that I handled. The owners are millionaires, one was my neighbor.

"Made in America" is a lot of times a sham. It appeals to our sense of patriotism, but it's really difficult to determine, because you could have something designed in the U.S., assembled in Taiwan with components, some designed and manufactured in the U.S., others from other countries, with materials themselves that come from all over, and so forth. So it's often a mis-leading term, and then there are other variables such as the one about using prison labor you mentioned.

America does make tons of stuff, but mostly high-margin, technologically-advanced stuff. Things like clothes, iPods, toys, sneakers, etc...low-margin, simpler stuff, will tend to be made overseas (although much of it is designed here in the U.S.---Nike for example conducts all that research and design in the U.S., and Apple designs its things here).

 

[ThomasT]

I only know of two arguments against raising taxes on the wealthy. The first is that higher taxes will reduce growth and investment.

If there's money to be made via investment or business startups or expansions, then I don't think that a few points increase in taxation is going to discourage anybody from participating. But US tax increases would tend to increase the probability that individual entrepreneurs and companies would look to countries other than the US, and whether taxes are increased or not it doesn't seem that the US can compete with some rather large overseas labor markets.

To that I say that not all taxes are the same. Credits and deductions providing incentives for investment do not exclude taxation on wealth that goes to lifestyle. And the rich can certainly spare a few bucks.

That's true, but suppose that taxes were increased or decreased some number of points, say, across the board. My guess is that neither action would make much difference, either to the rich or the poor and middle classes, or to the country's economic problems.

But the argument I want to address here is the issue of fairness. Many people claim it is unfair that almost half of Americans pay no taxes!

Politicians have been so busy trying to appear to be fair, as well as appeasing their benefactors, that they've created a self-defeating system of myriad tax credits and deductions and exemptions and loopholes. Imho, they would do well to just abolish the whole thing and start from scratch with a flat tax and no credits, deductions, exemptions and loopholes. (But of course that's not going to happen.)

Then they could focus on the big wastes in medicare, medicaid, social security, defense, foreign aid, etc. How to cut these expenditures, say, in half without creating real hardships, or real national security problems? Wrt social security I think it can be done. Wrt other programs I have no idea.

Anyway, wrt the thread's title, yes I'm in favor of increasing taxes on the wealthy ... just for a certain period. Why not? It's not going to cause the wealthy any undue discomfort. Yes, the wealty already pay most of the taxes, but then the wealthy have most of the money. So I say do it and see if it helps. My guess is that it won't. But it's an empirical question, so we should try it and see.

We have to balance the budget. On that I think we all agree. The notion that this cost should all be carried by the poor and middle class is, in my view, morally and logically unacceptable, and unjustifiable.

We might need to balance the budget, but it appears doubtful that that's ever going to happen. And as the US declines we can keep in mind that for several generations it's 'poor' enjoyed a much higher standard of living than most of the people in the rest of the world. Unfortunately, there's a real possibility that several generations from now that might not be the case.

 

[WhoWee]

This really makes me mad when people who act like they know what they are talking about deliberately leave out key facts in discussions.

Obama extended the Bush cuts in order to extend Unemployment benefits. His back was up against the wall by Republicans.

The same Republicans who would not extend health care for emergency 911 first responders.

So STOP saying Obama extended the Bush tax cuts as if it's something he wanted to do or that he endorsed.

Pay attention, get the facts before you post.

This is how the lies continue, from misinformed or poorly informed people posting as if something is true when it's not.

my bold
It might be best for you to read the forum rules brfore posting - please support your statements.

 

[hagopbul]

corruption is eating every one

 

[WhoWee]

I only know of two arguments against raising taxes on the wealty. The first is that higher taxes will reduce growth and investment. To that I say that not all taxes are the same. Credits and deductions providing incentives for investment do not exclude taxation on wealth that goes to lifestyle. And the rich can certainly spare a few bucks.

But the argument I want to address here is the issue of fairness. Many people claim it is unfair that almost half of Americans pay no taxes!

Of course that is incorrect. What is correct is that they paid no Federal income tax.


http://www.msnbc.msn.com/id/3622644...finance/t/half-us-pays-no-federal-income-tax/

To that I respond with this:


http://reason.com/archives/1975/07/01/inside-ronald-reagan/4

The real question is, what pecentage of a person's income goes to all taxes paid, directly or indirectly? And this isn't just a number's game. In the case of the lower end of the income spectrum, the taxes paid may constitute a significant percentage of the minimum cost of survival, less living on the streets. When people are just barely getting by, those taxes are significant percentage of the cost of life [food, water, rent, power], not lifestyle.

We have to balance the budget. On that I think we all agree. The notion that this cost should all be carried by the poor and middle class is, in my view, morally and logically unacceptable, and unjustifiable.

In an effort to get back on topic - I'll respond to the OP - with an even longer post (sorry).

We clearly have a serious long term debt problem - as evidenced by the credit downgrade of the US on 8/5/2011.

We all agree there are 2 points of attack on the debt - spending controls and revenue management. The discourse revolves around who should pay and how much? Regardless of ongoing debates, how we got to this point is irrelevant to the creditors - they just want to be paid.

To engage in a fair discussion of how to manage the finances of the State- the total liabilities of the US must be taken into consideration. The total includes unfunded liabilities and all contractual obligations. In business, the total debt is carried on the balance sheet as a liability - there is no reason not to use the business model to analyze the problem.

Once the total liabilities are determined, a projection of when those amounts are due and payable must also be determined. This will serve as the framework - the "what" and "when" parts of the problem.

Next we need to look at actual cash flows. This includes current source and use of funds and models to predict short term variables.

When all of this data is scored and inserted into the framework - the specific differences between revenues and spending will be plotted over time (and subject to the known variables). The difference or gap between spending and revenues over time is the problem to solve.

The management of cost controls is a never ending task - an ever-present task to eliminate duplication and waste - and IMO - show be a priority of managers at every level of Government. The decisions to increase spending must be made within the available budget - not mandate spending first and then figure out how to pay the bill at some future date.

The management of revenues should also be measured and fair. IMO - the burden of payment should be spread evenly amongst all US citizens and legal entities subject to taxation.

America is the land of opportunity - anyone can become successful and/or wealthy. Accordingly, the Government has made every effort to balance the playing field and eliminate barriers to success and minimum wage and benefit standards wherever possible.

Unless stricken by disease or accident or some other special circumstance, it is typically a matter of personal choice for an individual to not make an effort to succeed to their full personal potential. It is a reality that some individuals choose to break laws, depend on others for support, or just "get by" any way possible. This is not a judgment - if that's their plan - they should be fully aware of the potential consequences of their actions. These people that plan to avoid the law and to not succeed should also not be counted on to pay their fair share - IMO - they should be discounted.

The second group of people (working people) are the ones who follow the rules and do their best to earn a living and live the American dream. These person earn anywhere from minimum wage to (President Obama's amount) $250,000. This group more than likely has a mortgage, revolving credit, education related debt, and other debt - possibly living on a monthly budget or even paycheck to paycheck. A predictable net income and expenses are very important to this group.

The third group are those persons that are very successful (executives) and reach or exceed their dreams. This is a group that leverages a higher return on assets and has an ability to pay taxes - the ones President Obama refers to when he talks about person who earn over $250,000 per year up to millions and billions. The likely hood of personal debt as a percentage of income (should) decrease as income increases.

The last group of persons are those who had a head-start on wealth and strive to maintain their position - sometimes growth is not realistic and instead they live off sales of (previously taxed) assets or returns on productive assets and passive investments. This group is an easy target of rhetoric due to "wealth" - but quite possibly a disappointing source of income tax.

Every group pays sales tax (about 7% average?) and imbedded taxes (fuel and utilities) - unless 100% dependent upon Government support (possible given re-distribution combined with benefits). The "working people" pay up to the maximum Social Security limits and other payroll taxes, might be eligible for redistribution (up to about $50,000 gross), and are subject to federal income taxes. The "executive group" is subject to all forms of taxes and ineligible for income redistribution programs - including Social Security maximum limit.

Given all of the above, the revenue management decision involves maximizing tax collections in a fair manner that doesn't favor one group over the other - correct? Under our current system, lower income "working people" might be eligible for redistribution but can also reach a maximum Social Security threshold. High income individuals receive special consideration to account for re-investment and charitable contributions.
******************
The question Ivan posed is what is fair and who should pay what - IMO - that is valid.
First, the EITC was designed to offset the Social Security payroll deduction for lower income “working people”. I’m not sure this is fair – given this group will most rely on Social Security benefits and previous groups of tax payers at this same income level were not excluded. As for the SS maximum – I think it’s fair to eliminate the cap on both contributions and disbursements – the more you contribute the more you collect – SS benefits were taxable as regular income over $32,000 married in 2010.
Next, the Medicare contribution to Part A needs to be increased for everyone asap - deductibles and co-insurance amounts are already under review on the spending side.
State and Federal unemployment deductions will probably also need an increase if the extensions are made permanent or additional jobs re-training programs are added.
IMO – we need to consider a standardized (no fault) Workers Comp/Supplemental Income plan funded through payroll deductions – but not likely.
Switching gears a bit, both “working people” and “executives” have made financing decisions on real property with a mortgage interest deduction factored in – it should be continued.
Continuing, if the threshold for “poverty” is established at $30,000 for a couple with 4 children (there are charts every family size) – might we assume 100% of the earnings are consumed at this level – and the tax redistributions back to the family are the annual major purchase or mad money? If so, this might be a good starting point for tax policy (standard deduction)?
Why not (in addition to removing caps on SS contributions and keeping the mortgage deduction) set a flat tax THAT WILL PAY CURRENT OBLIGATIONS OF US AND RETIRE DEBT OVER TIME (perhaps) 20% (for example) for all income (and benefits) above this level – for everyone?
If the family with 4 kids has an income of $60,000 and paid $5,000 in interest mortgage they would pay income taxes on (60,000 – 30,000 – 5,000 = 25,000 @ 20% = $5,000) 5000/60000 = .083% plus payroll deductions. On $300,000, they would pay (300,000 – 30,000 – 5,000 = 265,000 @ 20% = 53,000) 53000/300000 = .1767% plus payroll deductions.

Would this be fair?

 

[jduster]

the bush tax cuts cost $3 trillion per decade.

this is a generous estimate (which includes the middle class tax cuts which democrats vow to keep).

300 b per year savings is a lot!

but in a 1.5t yearly debt, that's not much.

if we raise taxes on EVERYBODY, that will cure 20% of the problem.

 

[WhoWee]

the bush tax cuts cost $3 trillion per decade.

Bush wasn't even in office for a decade.

 

[Physics-Learner]

i favor the position of those who first came to our country - learn to take care of yourself.

the real purpose of govt is to give the wealthy a way to control the population.

so while all of you are talking about what the govt should do about the budget and revenue, i am still clamoring that getting rid of most of govt IS THE ONLY THING THAT IS NECESSARY.

that is the leak in the boat. arguing about which tax to reduce and who is going to pay for it is like arguing about which pail to use to bail out the water. meanwhile, the leak in the boat keeps increasing, with more water getting in.

sorta sound familiar ?

 

[Evo]

i favor the position of those who first came to our country - learn to take care of yourself.

the real purpose of govt is to give the wealthy a way to control the population.

so while all of you are talking about what the govt should do about the budget and revenue, i am still clamoring that getting rid of most of govt IS THE ONLY THING THAT IS NECESSARY.

that is the leak in the boat. arguing about which tax to reduce and who is going to pay for it is like arguing about which pail to use to bail out the water. meanwhile, the leak in the boat keeps increasing, with more water getting in.

sorta sound familiar ?

What part of the Government would you do away with, what would take over the current functions, and what effect would it have?

 

[Physics-Learner]

hi evo,

first, your question implies a very fundamental mistake in the average person's understanding. and that is that there is an equivalence to the money spent and the "goods given". this simply isn't true. if i was king, i could give you the same amount of goods for less than half of what is currently spent, and still have money left over.

the corruption in govt is something fierce. i have always "believed" this to be true, but i have become personally aware of this due to property ownership in sacramento (capital of california). it is ridiculous. and this is just at a state level. i am sure i would vomit if i actually knew all the details at the federal level.

second point - as much as possible, there would be 2 main springboards emanating from a govt that i would set up -

1) people pay for what they use.

2) localize govt as much as possible. this makes govt more accountable.

our country was doomed when the federalists basically won out over the states. i would have a very small federal govt. it would only be involved with things that really affected everyone. such as some sort of national military, english as our language, dollar as our currency. it would be very limited, such that no greedy person would even be interested in serving, because there would be little room for graft.

the state of california is way too big. it would be much better served to at least divide it into northern, central, and southern. the smaller the section, the more common is the needs of the population.

and of course, the more localized the spending, the more apt one pays for what one uses.

obviously, this sort of change can't happen over night. it might take many decades to fully revamp our govt, so that its purpose is truly to help its constituents. but it has been stinking for much longer than that.

 

[Evo]

hi evo,

first, your question implies a very fundamental mistake in the average person's understanding. and that is that there is an equivalence to the money spent and the "goods given".

Wrong, I don't think that at all.

I'm only asking you this since you brought up getting rid of parts of government, just curious, and if you don't have answers, just say so, this isn't an inquisition. I've seen some ridiculous suggestions thrown out, and was curious on your take.

the corruption in govt is something fierce. i have always "believed" this to be true, but i have become personally aware of this due to property ownership in sacramento (capital of california). it is ridiculous. and this is just at a state level. i am sure i would vomit if i actually knew all the details at the federal level.

So #1 get rid of corruption. Great, except that's pretty pie in the sky, and you get rid of one corrupt politician and get another. So I don't see this as a viable solution, although it's a nice thought.

second point - as much as possible, there would be 2 main springboards emanating from a govt that i would set up -

1) people pay for what they use.

Meaning what? If someone breaks into my home and I call the police, I get a bill?

2) localize govt as much as possible. this makes govt more accountable.

Explain what you mean by localize.

our country was doomed when the federalists basically won out over the states. i would have a very small federal govt. it would only be involved with things that really affected everyone. such as some sort of national military, english as our language, dollar as our currency. it would be very limited, such that no greedy person would even be interested in serving, because there would be little room for graft.

So goodbye to interstate highways, and caring for the poor, elderly and ill, scientific research, customs to control quality of imported goods, NIH, NIMH, FDA gone? FBI, FAA, DOT, just to name a few, I agree costs could be cut from the latter, and waste curtailed from the former. How about politician's salaries capped at $50,000 a year for the following

The current salary (2011) for rank-and-file members of the House and Senate is $174,000 per year.

http://usgovinfo.about.com/od/uscongress/a/congresspay.htm

We'll address these issues mentioned above first, that is if you feel like it.

 

[Physics-Learner]

sure, i am to happy to discuss.

i gave you general answers.

why not just give me one direct question at a time, if you have specifics.

were you being sarcastic, regarding the police call ? i will assume that you werent, and answer accordingly. we (within a localized area) all benefit from police protection. so we all pay for it, much like an insurance policy. everyone pays a small amount to counter the large risk that we know a few will hit.

however, insurance rates vary by area. so too our payments of police. the greater need for police, the greater the localized population pays.

this is a generalized principle. something that we attempt to apply to everything as much as possible.

as far as explaining localize, i don't know how i can be more explanatory. but as a general type of principle, deal with things on as small a scale as possible.

perhaps an easier way to think of it would be - handle it on a city district level. if not, then on a city-wide basis. if not, then at a sub-county basis. if not, then on a county basis. etc.

 

[mheslep]

Didn't you get the memo? They're called "job creators" now.

I don't know of any poor people signing pay checks. You?

 

[Evo]

perhaps an easier way to think of it would be - handle it on a city district level. if not, then on a city-wide basis. if not, then at a sub-county basis. if not, then on a county basis. etc.

Let's tackle this first, do you see the US being broken up into small city-states? How would this be cheaper?

 

[OmCheeto]

...
as far as explaining localize, i don't know how i can be more explanatory. but as a general type of principle, deal with things on as small a scale as possible.

perhaps an easier way to think of it would be - handle it on a city district level. if not, then on a city-wide basis. if not, then at a sub-county basis. if not, then on a county basis. etc.

Even at the city level though, things can go wrong:

http://washingtonexaminer.com/blogs/beltway-confidential/angry-public-hounds-obscenely-overpaid-city-official-out-job-he-still-gets"
...
The Times revealed city manager Robert Rizzo made $787,637 a year, with 12 percent annual pay increases as part of his contract. (Rizzo's last raise was $84,389.76.)
...
Normally, council members in a city the size of Bell would be paid about $400 a month, Demerjian said.

 

[Physics-Learner]

Let's tackle this first, do you see the US being broken up into small city-states? How would this be cheaper?

yes, i would much prefer that. the more localized the govt, the more accountable it must be. the easier it is for the citizen to see what is going on, etc.

i prefer the idea of a federation, such that all "sections" are part of the United States on certain federal issues.

there would be much less govt involved, since there would be less overhead. and you would eliminate much of the ability for graft, so again much less govt involved.

it might be somewhat comparable to compare the greater efficiency, etc. a small business has, when compared to its gigantic corporate monstrosity.

so much of govt is involved in making the wealthy, wealthier. all we need to do is look around us, and the horrible economic situation that we are in. it didnt occur overnight.