Progressive Income Tax?

Off Topic Politics & World Issues
61

[quote]hspder wrote:

You seem to have a very poor grasp of basic Math.[/quote]

Think so?

I think I have a firm grasp on what works!

And punishing people who make more does not work as well as rewarding them for making more.

If punishing people for making more worked companies across the country would be paying sales people less for making more for their company.

You need to forget what you have learned regarding the tax system. Think out of the box’ for a while.

Simple, no loopholes or write offs of any kind.

I think I said 20%, not 15%. And the 20% would be good for every current bracket.

62

[quote]ZEB wrote:
skor wrote:
On the simplest level, progressive tax is “more fair” because utility of money is NOT a linear function, but a concave one - marginal utility of money decreases are wealth increases. Doubling your wealth doesn’t double the utility.

What progressive tax “achieves” is a more uniform (across incomes) tax on UTILITY of money, not money itself.

I’m sorry…BULL!
[/quote]

No, it’s not “BULL” at all. That’s the same reason, as someone noted earlier, that a consumption tax hits the rich less than it does the poor and middle class (because they are spending more of their money).

63

[quote]ZEB wrote:
hspder wrote:

You seem to have a very poor grasp of basic Math.

Think so?

I think I have a firm grasp on what works!

And punishing people who make more does not work as well as rewarding them for making more.

If punishing people for making more worked companies across the country would be paying sales people less for making more for their company.

You need to forget what you have learned regarding the tax system. Think out of the box’ for a while.

First, how can a flat tax in the ballpark of 15% only for people that make more than $30k can provide the US Government with 17% of the GDP (that’s how much it is now), especially taking into consideration all the overheads, all the deductible expenses, and all the money that leaves this country?

Simple, no loopholes or write offs of any kind.

Second, do note that currently, even if you JUST consider what you can deduct from your income for Federal Tax Purposes (so, forgetting for a moment about GDP and what part of it leaves our country and what part is lost to overhead), the middle class already pays less than 15% tax (with how much money they are paying for their health insurance and their mortgages, plus the 401k and IRA savings, the deductions pile up like crazy), so your proposal of a 15% flat tax would be in fact an increase for them. Unless you put in the same deductions, in which case they would pay in reality something like 7%.

I think I said 20%, not 15%. And the 20% would be good for every current bracket.

[/quote]

I’m leery of his defense contractors argument, but otherwise hspder is completely right. Again, a flat tax RAISES the tax burden of a middle class that is already struggling to make ends meet. And closed loopholes would not come anywhere close to accounting for the huge revenue deficit that would result if you dropped taxes on the rich that much. It really is simple math.

64

You can argue the other points if you like Zeb, but if you pay 10% income tax or 10% consumption tax (assuming you spend all your income) then you’ll pay the same tax.

Flat tax is flat tax… :stuck_out_tongue:

65

[quote]ZEB wrote:
danmaftei wrote:
I agree with a lot of the things many have said here, i.e. cutting down the size of the government, but I will never agree with a flat tax rate. Progressive rates can get out of hand, but if kept in check, as opposed to the ridiculous percentages they can get up to now, I believe no one gets “robbed.” For Christ’s sake, if you make $2 mil a year, what is $100,000?

If anything, I’m against a flat tax rate because it can harm families that are born into a situation out of which they can barely make out alive. And before you guys jump on me for being overly compassionate, I can only ask that you speak only if you have worked trying to better inner city communities. I think many republicans don’t understand that there are many who try their godamn hardest and bust their asses in school only to emerge out of it in a situation largely resembling the one they were trying to escape. It’s not that they’re all lazy bastards who can’t make anything of themselves. And a flat tax rate that wouldn’t bury low-income families into the ground would certainly not be enough across the states to provide the revenue we need to keep public systems operating well, even if we cut on our spending and reduce the size of the government.

So there are two options, not counting reducing government spending (which I am a huge proponent of). We can either have a progressive tax which hurts rich people, or one which hurts poor people. And frankly, I could give a shit about some dude from New Hampshire not being able to buy another Cadillac cash.

And let me state it for the third time, I think the progressive system we have now is poor, and combined with the amount of spending we’re doing and the size of our government, it makes for a less-than-practical economy. But I still don’t vie for a flat tax rate.

You make some valid points. However, none of them gives reason to “steal” money from someone who does in fact “make it” to give to someone who has not achieved their potential.

This does not do just one harm, but two!

It is inherently wrong to punish someone for their success no matter what the intent). And it is also wrong to reward someone else for their failure.

If the last 40 years has taught us nothing else, it has shown us that “giving” people money NOT to work assures that they will continue not working.

A fair flat tax is the only way to go.
[/quote]

Exactly right! And you help out the poor by giving companies and corporations tax incentives to train workers. Private business can fix this problem given the right incentives.

66

[quote]hspder wrote:
vroom wrote:
With a consumption tax, you can exempt the basics of survival.

[…]

Yeah, okay, I’m in dreamland, but it’s nice here! Headhunter, you still think I’m making this up just to mislead you as to my actual position? Hello, McFly?

Well, I usually don’t disagree with you, and you even had a BTF quote (one of my favorite movies of all time), so I’ll try to be extra nice. :wink:

You are in dreamland. :slight_smile:

OK, that wasn’t nice. Let me rephrase that: it has been attempted before, and it fails in a Capitalist economy.

If you focus a lot on Consumption Tax, you provide incentives for a type of behavior that a) Makes a reliable budget close to impossible (you can’t predict as safely how much money you’re getting – a dilemma most US counties have with their reliance in Sales Tax) b) Defeats the purpose of Capitalism, which is to keep the money flowing through “layers of added value”

and c)studies have proven that it actually creates an even bigger assymetry in wealth – because in fact people who become wealthy generally tend to save and invest rather than spend – and when they spend, find the cheapest possible source of the goods or service, even if it’s on the other side of the planet – and people who are not wealthy tend to over-spend on goods; an increase in consumption tax, as shown in European countries (which made that mistake a few times), AUGMENTS that behavior, in the sense the poor continue to spend money on “bling” – even with the added tax on top of it, even if it means that they’ll be in debt – while the rich will basically get on their yacht or private jet and go buy stuff somewhere else where they don’t have to pay the tax.

Any tax policy has to take into account several assumptions:

  1. It has to be predictable
  2. People are stupid / irrational
  3. Rich people will find ways to beat it

[/quote]

I think looking at the economic and social base of Washington State and Nevada would and has proven you wrong. They are doing and have been doing what you are saying is not feasible for many years.

So your point is invalid!

(Here I’m standing up for vroom, what the @#$%^& is wrong with me?)

67

[quote]ZEB wrote:
You need to forget what you have learned regarding the tax system. Think out of the box’ for a while.[/quote]

I am. I simply cannot think outside of the boundaries of basic math.

[quote]ZEB wrote:
Simple, no loopholes or write offs of any kind.

I think I said 20%, not 15%. And the 20% would be good for every current bracket.[/quote]

What part of “the middle class is now actually paying 15%” do you not understand?

It would be, in fact, higher. And not enough.

Let me go through the Math again:

Currently, the US Government is getting 17% of the GDP.

Currently the middle class (people earning between $30k and $80k) is paying 15% of their income in Federal Income Tax. Although they might be in a higher bracket, between mortgage interest, 401k / IRA contributions, health insurance and other assorted stuff, that’s how much they’re paying.

In order to maintain those 17% of the GDP as income, you propose imposing a 20% flat tax on everybody that makes over $30k.

145 Million people work in this country. They make an average of $37k a year. That’s about US$5.35 T total income, or about 50% of the GDP.

(yes, there is that much of a gap between the GDP and what people make. Check the numbers yourself if you don’t believe me)

You propose that people that make less than $30k pay no tax, which removes about 10% of the total income from the table, lowering it to about 45% of the GDP.

The US government’s income is 17% of the GDP, or about a third of total people’s income, i.e. 38% of the income of the people who would pay for the tax.

Again, explain to me HOW ON EARTH can you collect JUST 20% of these people’s incomes?

68

[quote]Lorisco wrote:
I think looking at the economic and social base of Washington State and Nevada would and has proven you wrong. They are doing and have been doing what you are saying is not feasible for many years. [/quote]

You really need to look up at the laws in those States a little better.

People there still pay Federal Income Tax. And Medicare. And Social Security. That’s why they manage to survive – thanks to the Federal Government which pays those bills.

69

[quote]skor wrote:
On the simplest level, progressive tax is “more fair” because utility of money is NOT a linear function, but a concave one - marginal utility of money decreases are wealth increases. Doubling your wealth doesn’t double the utility.

What progressive tax “achieves” is a more uniform (across incomes) tax on UTILITY of money, not money itself.[/quote]

True, but putting in controls for those at the lower end of the scale for basic needs would fix that inequity. You could do this by lower end tax cuts. But aside from that, it is all about social architecture.

70

[quote]GDollars37 wrote:
I’m leery of his defense contractors argument[/quote]

I wasn’t talking just about “defense contractors”.

Specifically over here in the Silicon Valley, basically every large software and hardware company has the Federal Government and/or DoD as their biggest customer.

Stuff from operating systems (Microsoft makes a LOT of money with the Feds), anti-virus and other types of security software (firewalls, anti-spam, etc.), computer storage (hard drives and network storage), backup software and hardware, all kinds of applications (from CAD to control) – the list is endless.

More specifically, if you look at Silicon Valley companies that are mid-cap or higher, each of them gets at least 30% of their revenue from the Federal Government (DoD and others).

Finally, it is interesting to see that the major customers of the small companies are the bigger companies that get their revenue from the Feds. So the smaller companies end up surviving – indirectly – thanks to the Feds too…

71

[quote]Lorisco wrote:
skor wrote:
On the simplest level, progressive tax is “more fair” because utility of money is NOT a linear function, but a concave one - marginal utility of money decreases are wealth increases. Doubling your wealth doesn’t double the utility.

What progressive tax “achieves” is a more uniform (across incomes) tax on UTILITY of money, not money itself.

True, but putting in controls for those at the lower end of the scale for basic needs would fix that inequity. You could do this by lower end tax cuts. But aside from that, it is all about social architecture.
[/quote]
Well, there is no qualitative difference between progressive tax and tax cuts for the “poor”. Relatively it’s all the same, given that enough of taxes is collected to support necessary (and unnecessary;) )operations.

It IS all about social architecture and some value-decisions are to be made. I just do NOT understand people who feel that flat tax rate is a “fair” thing. Because is flat rate is fair, it has to be applied to utility, not amount of money itself.

72

[quote]ZEB wrote:
skor wrote:
On the simplest level, progressive tax is “more fair” because utility of money is NOT a linear function, but a concave one - marginal utility of money decreases are wealth increases. Doubling your wealth doesn’t double the utility.

What progressive tax “achieves” is a more uniform (across incomes) tax on UTILITY of money, not money itself.

I’m sorry…BULL!
[/quote]

Zeb, you’d better be sorry. Screaming BULL without providing a single economic counter-argument is, well, BULL.

Nowhere in economic theory money by itself goes into the equation. It’s always its utility. Otherwise people would never buy insurance.

What flat tax will do, in the current situation, is redistribute the tax burden towards middle class if we try to sustain the same total. Not a good thing. Some other poster described this problem in much better detail. You told him to forget math. Ha!

Also, can anyone make ANY argument to why Tax = k*Income for some k<1 is a “fair” tax formula? This formila is NOT inherently different from progressive tax enforced at the moment.

73

[quote]hspder wrote:
Headhunter wrote:
I still chuckle when I someone says things are ‘free’. They are not free to the productive people who were forced to provide the ‘free’ gravy train.

‘Free’! Arrrrgggghhhh!

If you stopped speculating on your assumptions and actually looked at the numbers, you’d see that the amount of money that the “productive people” in Denmark are “forced” to give away for those services PALES in comparison to ANY health insurance you can get here – or of any bill you might get from an hospital if you decide to go the “I don’t need a health insurance” insanity route.

So, it’s OK to fill the pockets of the pharmaceutical companies, health providers and/or the insurance companies, but it’s NOT OK to pay taxes?

You keep failing to realize that, whatever it is, if you don’t pay it in tax, you’ll pay more of it somewhere else. Unless you decide to live alone in a bubble and kill yourself at the first sign of disease.
[/quote]

You mean that, through taxation, one is able to spread their burdens throughout an entire population? What a wonderful idea!!

74

[quote]vroom wrote:
With a consumption tax, you can exempt the basics of survival.

For example, food, which all people must have, including the poor, can be exempt from consumption tax.

Similarly, if perhaps rent and mortgage payments are exempt, you have a vehicle of savings and home purchase which is not made harder for the poor.

Above and beyond that, buying fancy clothes, fancy cars, walkmans, ipods, 27" TV’s, walk in freezers and so on will be taxed.

Anyway, sure, many things to work out, but don’t assume a consumption tax has to be all that regressive.

Not mentioned, but again, the biggest thing to consider, is that as a consumer we have a lot of control over what we purchase. We’ll factor in the entire cost of the purchase and make our decisions accordingly.

Also, if our income isn’t taxed, we can invest our entire income, not just the after tax portion. Whether or not anyone actually does is another story, but the advantage of doing so should be quite apparent. Depending on your investment return you may find your taxes are payed by appreciation when it comes around to be time to actually spend your cash.

Yeah, okay, I’m in dreamland, but it’s nice here! Headhunter, you still think I’m making this up just to mislead you as to my actual position? Hello, McFly?[/quote]

Hello, McFly? Wasn’t the guy who says that in Back to the Future an asshole? McFly eventually coldcocks the guy.

Man, unroll the dollar bill and flush that shit down the crapper!!

75

What’s the matter Headhunter, unable to attack the position so you have nothing better to do than throw jibes at the people involved instead?

Is that how you teach your students to deal with issues? If you don’t know what you are talking about and you are looking like a chump, just go on a tangent about some minor point and be insulting.

Good plan teach!

Now, do you have anything remotely intelligible to say about a consumption tax at all?

76

[quote]Headhunter wrote:
You mean that, through taxation, one is able to spread their burdens throughout an entire population? What a wonderful idea!![/quote]

No, do the math.

What I mean is that taxation is the cheapest way, even INDIVIDUALLY – WHOEVER you are you’ll pay less for Government-provided healthcare like they have in Europe than for a private-insurance-based system like we have here.

Again, do the freakin’ math: the administrative overhead of private health insurance companies, plus their profit, is higher than the one of any government-based system but at least an order of magnitude.

… and if you’re one of those “who needs insurance, dude?” types, we’ve already discussed very thoroughly that’s even MORE expensive for everybody and that, for cultural reasons, it will never be acceptable for us as a society to simply abandon the sick if they cannot pay for their health. We’ll just pay for it anyway as a society. If you really believe that abandoning the sick and poor would be the way to go, get on the DeLorean and go back pre-Historic times. I’m pretty sure you’d be much happier there.

77

[quote]GDollars37 wrote:
ZEB wrote:
skor wrote:
On the simplest level, progressive tax is “more fair” because utility of money is NOT a linear function, but a concave one - marginal utility of money decreases are wealth increases. Doubling your wealth doesn’t double the utility.

What progressive tax “achieves” is a more uniform (across incomes) tax on UTILITY of money, not money itself.

I’m sorry…BULL!

No, it’s not “BULL” at all. That’s the same reason, as someone noted earlier, that a consumption tax hits the rich less than it does the poor and middle class (because they are spending more of their money).[/quote]

I’m sorry but you are wrong.

78

[quote]GDollars37 wrote:
ZEB wrote:
hspder wrote:

You seem to have a very poor grasp of basic Math.

Think so?

I think I have a firm grasp on what works!

And punishing people who make more does not work as well as rewarding them for making more.

If punishing people for making more worked companies across the country would be paying sales people less for making more for their company.

You need to forget what you have learned regarding the tax system. Think out of the box’ for a while.

First, how can a flat tax in the ballpark of 15% only for people that make more than $30k can provide the US Government with 17% of the GDP (that’s how much it is now), especially taking into consideration all the overheads, all the deductible expenses, and all the money that leaves this country?

Simple, no loopholes or write offs of any kind.

Second, do note that currently, even if you JUST consider what you can deduct from your income for Federal Tax Purposes (so, forgetting for a moment about GDP and what part of it leaves our country and what part is lost to overhead), the middle class already pays less than 15% tax (with how much money they are paying for their health insurance and their mortgages, plus the 401k and IRA savings, the deductions pile up like crazy), so your proposal of a 15% flat tax would be in fact an increase for them. Unless you put in the same deductions, in which case they would pay in reality something like 7%.

I think I said 20%, not 15%. And the 20% would be good for every current bracket.

I’m leery of his defense contractors argument, but otherwise hspder is completely right. Again, a flat tax RAISES the tax burden of a middle class that is already struggling to make ends meet. And closed loopholes would not come anywhere close to accounting for the huge revenue deficit that would result if you dropped taxes on the rich that much. It really is simple math.[/quote]

Maybe one of us (I vote for you) should check exactly how much people save on loopholes each year.

You might be right. But I doubt it.

79

[quote]vroom wrote:
Being taxed once in a flat fair way is far better than being taxed over and over again based upon how much you purchase.

You can argue the other points if you like Zeb, but if you pay 10% income tax or 10% consumption tax (assuming you spend all your income) then you’ll pay the same tax.

Flat tax is flat tax… :P[/quote]

Assuming I spend all of my money?

Now that’s just crazy. Zeb is a saver.

80

hspder:

There are some things that you are not taking into consideration because you are not thinking outside the traditional “tax box.”

First, there is a huge underground economy. Those folks pay NOTHING! The new system, being fair would encourage those people to come forth, and many would.

Secondly, It would set off a boom by letting people keep more of what they earn and by lowering barriers to risk taking. Allowing people to keep more of their money would encourage people to invest in business and this would expand the economy thus creating more jobs and more people paying a flat tax.

Thirdly, When I say no loopholes I mean just that. There are no exceptions to this. I don’t think you (or I) understand the enormous amount of money that is in this category.

There are other reasons but for now stew on these.

A fair flat tax of 20% is the way to go and I’m going to do it so don’t try to stop me.

:slight_smile: