News In favor of increasing taxes on the wealthy

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1. Aug 4, 2011

Ivan Seeking

Staff Emeritus
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.

Last edited by a moderator: Apr 26, 2017
2. Aug 4, 2011

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.

3. Aug 4, 2011

Staff: Mentor

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.

4. Aug 4, 2011

mege

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' arguement 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

5. Aug 4, 2011

Tosh5457

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

6. Aug 4, 2011

Staff: Mentor

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.

7. Aug 4, 2011

Staff: Mentor

First half? The entire post is about corporations.

PM me if you want a copy of it.

8. Aug 4, 2011

Staff: Mentor

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

Last edited: Aug 4, 2011
9. Aug 4, 2011

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.

10. Aug 4, 2011

WhoWee

11. Aug 4, 2011

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. 12. Aug 4, 2011 WhoWee I'm really not sure what part of this to respond to Ivan - care to clarify Russ's question and guide us a bit? 13. Aug 4, 2011 mege 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? Last edited by a moderator: Aug 5, 2011 14. Aug 4, 2011 WhoWee 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. 15. Aug 4, 2011 Astronuc Staff Emeritus 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.

16. Aug 4, 2011

Staff: Mentor

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.

Last edited: Aug 4, 2011
17. Aug 5, 2011

Staff: Mentor

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

Also:
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.

Last edited: Aug 5, 2011
18. Aug 5, 2011

Tosh5457

19. Aug 5, 2011

WhoWee

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.

20. Aug 5, 2011

Staff: Mentor

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