Progressive Nature of Tax Code

[Martha]

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Originally Posted by ERD50 There have been so may threads related to this lately, I forget which one - Obama, this one, or another, but IIRC, somewhere along the line you stated that SS disability payments were only made to people who were totally disabled? Well, it's not that cut and dried. I know someone who has been receiving them for many years, and *no one* who met this person would be thinking 'totally disabled' , or even mildly disabled. True, she may have a hard time holding a 'normal' job, with 'normal' responsibilities and stresses, but that does not fit my description of 'totally disabled'. Everyone that knows her thinks that she must certainly be capable of doing *something*.

The rules require total disability and they are tough on people with mental illness, almost always denying them the first go around. They also review at least every three years. I am sure some people manage to get through even though not completely disabled, but it has to be rare. It also could be that there is more going on with her than her relatives know. So I strongly dispute that disability is not hard to qualify for. Remember, I used to work on SSI and SSD appeals and I am volunteering with people who were turned down for SSI so I have real world experience.

Sorry for the off topic stuff.

Yes, I still support progressive taxes. Oh, and an estate tax too.

[CitricAcid]

OK.... looks like a lot has gone on here since I last checked.

First things first, to veer off the main argument for one second, I think that many who are against the progressive tax nature are more in line with just reducing federal spending. The major reason is that you can lower taxes for everyone. The problem now is, however, that we take spending as a given and then look at how to fund that, which inevitably comes up with different discussions.

To the points about the rich gaining more benefits than the poor from protection of their wealth and the poor with a little extra money being the ones starting jobs that create wealth. These are both explicitly about our legal system, the single (I believe, even though it is flawed) most important and greatest aspect of our country. The firstp oint about gaining more benefits so they should be taxed more is similar to holding them hostage or blackmail by the U.S. Government. You are doing well... well we will TAKE THE RUG OUT FROM UNDER YOU if you don't pay! The poor or less well-off, or underclass or working class, or whatever you may want to call it may create many jobs by starting companies, but:

a.) This is overstated (anecdotally) to the amount of wealth and job creation done by the more wealthy. The wealthy try to become richer, and, in so doing, are able to provide services and jobs to more people

b.) The major reason that the poor or whatever name they are given are able to create jobs, if at all, is because of the structuring of the legal system which PROTECTS their property and legal rights and PROTECTS their wealth. The point about people not paying the lottery (by Frugality of Apathy) was not regarding a lottery... He was saying that starting a business or shooting for the upper echelons of society is like a lottery, a lot of risk and return. If some of the return is taken away, it means less people will take the risk to create jobs and engage in creative destruction, which I believe is the greatest aspect of capitalism.

It all gets back to how you feel you should incentivize the behavior you desire. By spreading around wealth, by starting with the point of we need X amount of dollars how will we raise it I feel is the wrong way. Where the government should start is, we should spend no more than Y amount of dollars (Y<X) and then find a way to fund that. It is all backwards IMO.

To aelighten, empirical evidence has shown that in U.S.A., the subsitution effect barely does dominate the income effect. For men, they are essentially 100% equal (40 hours a week no matter what ), but for enabling women, increased marginal real wages (or decreased marginal tax rates) does increase productivity and working hours.

Flat tax thoughts:

I am not sure I am for it or against it because I am concerned about revenue equality and ability to enforce all parts of the economy, but I would like to mention a few things.

A remarkable amount of American wealth is held overseas for tax purposes alone. If the flat tax is implemented, then it is possible to see up to 11 trillion dollars (Alan Greenspan's estimate) flow into the economy and banking system, which will allow sustainable low interest rates and a more sustainable growth in the housing market (the amount of risk-free, accessible cash in the previous five years was overextended, with the extra cash, much of the oxerextension would be absorbed/necessary). This would help many consumers and, especially, producers have access to more capital.

Much of the price of a final product (what does much mean? ) is hidden in with corporate taxes.
Example:
Ticonderaga pencils require rubber, wood, yellow paint, aluminium, and graphite. The rubber, wood, paint, aluminium and graphite companies each need to post profits to their shareholders/employees/investors. All the money given to them is given in after tax money, in order to post the same amount of money, you will need a lot less actual net income. This will allow for either prices to be lowered, or returns on investment to increase (not a huge jump, don't misrepresent this point), but probably somewhere in between. This effect for all the inputs in different products will allow a lower price of up to 2-4% by some Economists' estimates. Think about what this would mean to American car companies, being able to obtain cheaper steel and other inputs to be able to sell back to the consumer. After this is then when you place the (23%/30% depending on how you look at it) price. This, again, assumes revenue neutrality, and it is yet to be seen how this will be accomplished.

The flat tax allows many different aspects of the economy which go untaxed (not sure how large a segment this is, however) to be brought in eventually. This is primarily in regards to illegal immigration. I am generally for more open borders, as long as it is not a security risk, and feel that one of the problems with this is the ability of immigrants to take part in our schooling system, our healthcare system or legal system without paying into it. This will at least change some of that.

Transparency. Perhaps the most important aspect of the flat tax will be increased fiscal responsibility that this will hopefully entail. When you find out that the tariff rates on Colombian oranges have increased by 2%, you do not know how that will effect local orange prices or specifically you. So many different deductions, tax rebates and hidden taxes are in the present tax codes that it is tough to see how the federal government is getting tax from you. If you find out, however, that a certain plan (let's say national health care) will increase the sales tax from 23/30 to 27/35, you will be able to fully see how the benefits will be funded. It will allow you to make a more educated and functional decision. Whether that decision is one you want to undertake is up to you, but it is a lot more clairvoyant (one of the reasons I think that withholding has made it easier for the government's spending to get out of control).

In this way, all wealth does eventually get taxed in the way that money spent whether now or tomorrow will have the same tax on it. Save today, spend tomorrow... no taxes today, taxes tomorrow. Oh my God, does this actually ENCOURAGE saving!?!?!!?



One more point I find about increased inequality that many bring up. I will bold it because I feel it is very important.

Is it more important to find out how much of the wealth went to the rich or poor or to look at each segment and figure out did the poor get better? Did the rich get better?

I feel that many of the rich getting more rich does not "outweigh" the poor also getting richer. Recent energy and commodity price jumps notwithstanding, the real income the middle class has increased, even though as many point out the numbers have decreased and the rich are getting richer faster. Should this matter? Up to you to decide.

Don't remember who said it, but what makes inequality and protection of the rich lead to a stagnant and non-growth economy? I don't think so... many jobs are sustainable only by the ridiculous spending habits of the rich. Rolls-Royce cars, clothes for pets, private cooks, butlers and drivers, the housing market 8) ... the list goes on and on...

[Texarkandy]

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Originally Posted by CitricAcid .... It all gets back to how you feel you should incentivize the behavior you desire. By spreading around wealth, by starting with the point of we need X amount of dollars how will we raise it I feel is the wrong way. ......

Seems to me the government should cut back on the business of "incentivizing behavior"

The government has a proper role to restrict certain unacceptable behaviors & enforce contracts - but to go around with a proactive agenda to "incentivize behavior"?

Consider that the flip side of the coin of "incentivizing" behavior is to "disincentivize" it - which is akin to oppression.

(I started to write "disincentivizing" - but it just sounded wrong! Try saying that word three times really fast )

[armor99]

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Originally Posted by ladelfina I guess I was thinking of the UK and European countries as to safety. I don't believe rights can be abused. That's just illogical. Something either is a right, or it isn't. Following this logic, the place with the most people locked up is the most "free"? I don't want to derail this into whole 'nother discussion.. I was more thinking about taxation and what benefits people actually percieve for the monies spent. The statistics might indicate that: - people in the US are 5x more violent/dangerous/criminal than anywhere else? - people are 5x safer in the US than than anywhere else? - people are wasting 5x as much money on prisons as anywhere else? - a combination? It's just one area of expenditure that might be questionable and should be examined, given its stark overemphasis.

The point that I was attempting to make... perhaps not at my most elloquent, was that even within the Bill of Rights... certain things were always implyed, but never stated. This gets into the whole, "spirit of the law", vs. "letter of the law" arguement.
Yes.... we have freedom of speech in the US to verbally or in writing, disagree with anyone's point of view. Even to criticize the govt. when the citizens feel a wrong decision was made. But... does that mean that it is right and proper for folks to randomly curse out people on the street? Or harass mourners going to a funeral? Or print things about elected officials that are intended to be a vicious personal attack, and not a simple criticism of what policy decision they have made? Freedom of speech always did have the implyed caviat of "while being respectful to others". It was never writen that way, because at the time people generally had the good taste not to "abuse" their freedoms in this way.
Originally in England you could be arrested, executed, or "dissappeared", for speaking out against the King... even in the most respectful way possible. This is the sort of thing that I am talking about.

[CitricAcid]

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Originally Posted by Texarkandy Seems to me the government should cut back on the business of "incentivizing behavior" The government has a proper role to restrict certain unacceptable behaviors & enforce contracts - but to go around with a proactive agenda to "incentivize behavior"? Consider that the flip side of the coin of "incentivizing" behavior is to "disincentivize" it - which is akin to oppression. (I started to write "disincentivizing" - but it just sounded wrong! Try saying that word three times really fast )

I don't really buy this argument. I am as anti-environmentalist as the rest (not that I hate the environment, it's that I hate the policy decisions/intentions of the environmentalist), but to say that disincentivizing littering is oppression is a tough case to sell. Fines for littering are disincentivizing. Crime is the major thing for disincentivizing... we disincentivize crimes, but isn't that oppression. Similarly, income and education levels are negatively correlated with crime rates. Maybe the country wants more people going off to college, thus paying the interest on federal student loans would be incentivizing higher education. There are many things that the government should stay out of 100%, but to say that there should be no government-imposed incentives, I don't buy.

(Think about a toll road as another example)

[Marquette]

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Originally Posted by Abreutime This makes sense. I just have a couple points to make, with which you may not be in complete agreement. First, I think the US has become less "free" in recent years. The War on Drugs, the War on Terror, and the the War in Iraq (hey, I needed a third war to lament) have slowly chipped away at our freedoms. This came about after 9/11, as more and more people seemed quite willing to give up freedom for security. I'm not going to quote Benjamin Franklin here (just reference his quote ), but my hope is that people re-evaluate what it means to be a citizen of a country, and the role that government should play in their lives.

"Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety." - Franklin.

We should examine what constitutes essential liberty and then determine if we have impinged upon those liberties with our current policies or if we are on a reasonable trajectory to do so.

So far, we've given up some privacy and some convenience but I'm not sure that we've given up essential liberty. For example, security checks at the airport, surveillance cameras all over Chicago, bizarre restrictions on money transfers are all, in my opinion, sacrifices in the vein of privacy and convenience but don't come anywhere near a reasonable definition of oppression.

That said, we do need to remain vigilant against those that would be happy to see us lose those essential liberties. In that regard, I find this a suitably fitting quote as well:

"The great masses of the people will more easily fall victims to a big lie than to a small one." - Hitler

[Independent]

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Originally Posted by ERD50 So for those in favor of a progressive tax system, what do you think about a state run lottery? IIRC, lotteries take money disproportionately from the poor, and give little in return. Sounds like a regressive tax to me. Are the Dems ready to abolish lotteries?

I'll bite. I'd lump tobacco, alcohol, marijuana, and gambling into roughly the same category. "Things that aren't really good for you, and are addictive to some people, but that the gov't shouldn't be prohibiting."

For all of them, I wouldn't try to get any extra tax revenue unless 100% of the extra tax is spent on services for the users (such as help quitting or help with medical expenses) or to offset identifiable external costs.

However, I would prohibit advertising. While it's not wise to prohibit using these things, it's not wise to use all the techniques of Madison Avenue to promote them either.

[ladelfina]

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does that mean that it is right and proper for folks to randomly curse out people on the street? Or harass mourners going to a funeral? Or print things about elected officials that are intended to be a vicious personal attack, and not a simple criticism of what policy decision they have made? Freedom of speech always did have the implyed caviat of "while being respectful to others". It was never writen that way, because at the time people generally had the good taste not to "abuse" their freedoms in this way.

armor, I think you should read some more history or historical novels or something if you think that somehow past generations inherently had more "good taste".

here are some fun bon mots:
http://www.telegram.com/article/2008...30396/0/COLUMN

[Texas Proud]

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Originally Posted by NW-Bound An emphatic YES. Our tax code is so complicated that each time I discovered or read about a "special treatment", it raised my blood pressure. I'd rather we, as a nation, spend more time finding cure for cancer, alternative energy, or just fishing, then to confer with accountants and tax attorneys to play the shell game with the IRS. ....

I am not singling your post... just that it was the one I read first with something like this....

As an individual.... I do not have very many options to play the game... yes, they do give special treatment for mortgage, charity, schools etc... some deducts some credits.... but WE are telling them to do it... Look at the scream for a gas tax holiday...

But, corporations have a LOT more options... and it is to try and make them 'do' somthing that they might not do.... alternative energy is a big one... but there are many more... earlier this year I was in a class talking about some employee salary credit if you hire someone from underutilized counties... YES, there is a list of places... if you hire someone from 'here' instead of 'there'.... you get a tax credit... because 'here' is deemed to be the place for today where we will give a break...

We will never get rid of all the tax breaks... it is the grease that is used to get political donations... and to also get votes...

[Texas Proud]

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Originally Posted by Martha The rules require total disability and they are tough on people with mental illness, almost always denying them the first go around. They also review at least every three years. I am sure some people manage to get through even though not completely disabled, but it has to be rare. It also could be that there is more going on with her than her relatives know. So I strongly dispute that disability is not hard to qualify for. Remember, I used to work on SSI and SSD appeals and I am volunteering with people who were turned down for SSI so I have real world experience. Sorry for the off topic stuff. Yes, I still support progressive taxes. Oh, and an estate tax too.

Off topic with SS payments.... but I have relatives through a BIL that are getting them.... and I can not see any disability at all... except they are... how can I say this... stupid... and have been taking drugs for 20 plus years, so even more so now... I saw some of them at a wedding last year and they were running around with no problem, drinking the beer like water... and having a grand old time...

Oh... not sure how this one happened... but I was told that one is getting it for her brother's kids she is taking care of while he is in jail... sounds fishy to me... but it might be true...

[Independent]

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Originally Posted by CitricAcid Flat tax thoughts: I am not sure I am for it or against it because I am concerned about revenue equality and ability to enforce all parts of the economy, but I would like to mention a few things.

You talk about "the flat tax". I'm not sure which one you mean. We already have multiple taxes with flat rates - property tax, sales tax, medicare tax, gasoline tax. Are you talking about all of them?

There have also been proposals for "flat taxes" to eliminate the FIT. Steve Forbes spent a lot of money promoting one, the people at FairTax.org are promoting a national sales tax with a flat rate. I expect I could find others. Are you talking about a specific proposal?

[aenlighten]

And I would buy it if we were at the opposite end of pendulum, but we're not. Real incomes of the P0-99 percentile have largely stagnated since the late 60s, bouncing up or down with the economy but not really growing. On the other hand, the real income of P99-100 percentile has more than doubled in the last 20 years. See Income Inequality, for example. We have reached income shares of the top 0.01% not seen since 1929. Forty or even twenty years is a long time to wait for trickle down.

One can incentivize investment, but one can't make it happen here. One can reward savings, but one couldn't increase it as much as China and the oil exporters already have. I don't doubt the wealthy create jobs, they just have better places to create them than here. We shouldn't confuse the baubles of the rich with investment. I agree though the focus should be on reducing spending, although probably not at the current moment due to the economy.

[samclem]

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Originally Posted by Texarkandy Why should income above 50K-single 100k-married be taxed at a higher rate? This is still a progressive income tax & discriminatory.

As I said, this proposal is not perfect. Lets not compare it to a perfect system--lets compare it to the present system.
1) It is entirely transparent. There are no hidden loopholes or gimmicks. No government sticks and carrots to prompt certain behaviors (I like this a lot, and I recall that this very point was a big one with you as well. Okay--here's a plan that allows taxpayers to avoid government coercion.)
2) It might have a reasonable chance of being enacted. A flat rate will never gain approval with the present public sentiment (unless the "flat rate" is a tax of 90% and starts at $500K of income).

Don't let the perfect be the enemy of the good. This is simple, do-able, and much "flatter" than the present system. And very much flatter than what we are about to experience if BHO is elected with Democratic majorities in the House and Senate.

Regarding "discrimination"--discrimination is fine. It is not a dirty word. We all do it all the time--discriminating between honest people and dishonest ones, between competent people and incompetent ones. There are only a few classes of people who enjoy special protection from "discrimination" under very special circumstances (housing, employment, public accommodation, etc). Unfortunately, "wealthy" and "poor" are not protected classes of people, and "tax policy" is not one of the special circumstances.

[Martha]

SamClem, my favorite conservative; I like your line "don't let the perfect be the enemy of the good." I'll use it in my arguments, it makes a lot of sense.

[HFWR]

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Originally Posted by Texas Proud We will never get rid of all the tax breaks... it is the grease that is used to get political donations... and to also get votes...

Per Dr. Ruth: Use a lubricant...

Per Zappa: Keep it greasy, so it'll go down easy...