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Old 02-27-2009, 12:03 PM   #41
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If, once our income passes $250K, it gets taxed at a much, much higher rate, then in effect I will be working for a dramatically lower hourly rate than I am right now. Why should I strive to maximize my income if it ends up benefiting the government more than it benefits me? At this point, I might see it more worthwhile to work less and enjoy other leisurely activities.
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Old 02-27-2009, 12:10 PM   #42
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If, once our income passes $250K, it gets taxed at a much, much higher rate, then in effect I will be working for a dramatically lower hourly rate than I am right now. Why should I strive to maximize my income if it ends up benefiting the government more than it benefits me? At this point, I might see it more worthwhile to work less and enjoy other leisurely activities.
Exactly what every small business wner in America is thinking right now. I predict government revenues will drop 15% this year, minimum.........
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Old 02-27-2009, 12:16 PM   #43
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If, once our income passes $250K, it gets taxed at a much, much higher rate, then in effect I will be working for a dramatically lower hourly rate than I am right now. Why should I strive to maximize my income if it ends up benefiting the government more than it benefits me? At this point, I might see it more worthwhile to work less and enjoy other leisurely activities.
This goes back to what I said before about the incremental value of work. Beyond the income level needed to maintain a reasonable standard of living, if you have to bust your butt to keep only small incremental gains in standard of living, it no longer becomes worth the sacrifice.
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Old 02-27-2009, 12:20 PM   #44
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I pay plenty in taxes.

And I live in Northern CA so I know about CA tax rates. I've looked at how much lower property, sales and income taxes are in NV and AZ.

Not to mention lower housing.

But the employment opportunities just aren't there. TX has lower taxes and their economy was booming last year, at least when oil was way over $100 a barrel. But it's TX.

Hey, Mexico has lower tax rates too. And Monaco has no income taxes. People who are earning that much should have some socked away and they can live where they like.

As for what most of the people who earn might do, if there are studies showing that for each incremental increase in the marginal rates, x percent of high earners quit their jobs and thus, leads to lower tax revenues, I'd like to see it.
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Old 02-27-2009, 12:27 PM   #45
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As for what most of the people who earn might do, if there are studies showing that for each incremental increase in the marginal rates, x percent of high earners quit their jobs and thus, leads to lower tax revenues, I'd like to see it.
Nobody said they will quit their jobs. They will work less.
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Old 02-27-2009, 12:29 PM   #46
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... the $250k household would pay a few thousand more in taxes.

Does that really break the camel's back and get people to say, "Screw it, I'm not going to work for the Man anymore" and walk away from that income?
Well, since you didn't seem to absorb my previous answer about how the laws of Supply & Demand have not been repealed, and how it is a slope and not a brick wall, I'll give you the SIMPLE ANSWER you seem to want:

Yes, they will.

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...

The "taxes are going to kill the incentive to work and create jobs" warning has been cried far too often.
Well some anecdotal evidence to illustrate (not prove):

I've known several bright ,motivated people who started their own small businesses and were very successful At some point, they got frustrated how much went to taxes, and how much risk they were taking to make that money. So they sold their businesses.

The people/companies that bought their business were not the same hard-working, motivated, bright people that started the business. Not too surprisingly, the businesses failed, people were let go, and Uncle Sam stopped collecting any taxes at all (and paid unemployment). I think this story plays out all across the country.

So my simple answer is: YES.

Just think about it, we want businesses to create jobs - that is what is going to grow the economy. So why de-motivate that very thing you want to encourage? We should be jumping up and clapping when some entrepreneur makes over $250,000, because he very likely had to be providing a valuable service/product to do it, and hire people to support the business. Yet, the govt wants to de-motivate that?

OK, I won't ask you to believe me. Just look at the market, and see what they think about this "stimulus" plan. If it seemed likely to grow the economy, wouldn't the market rise in anticipation of this growth?

Again, the simple answer is: YES. Yet, it keeps falling.

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Old 02-27-2009, 12:31 PM   #47
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Nobody said they will quit their jobs. They will work less.
And take fewer risks, which saps the entrepreneurial spirit which creates so many of the small businesses that create the most new jobs in our economy today. When the risk stays the same but the reward declines, the incentive to take the risk starts to vanish.

I'm not denying that some tax increases may be necessary because of the crushing mountain of debt our grandkids are inheriting, but let's not pretend that it isn't a drag on economic activity.
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Old 02-27-2009, 12:33 PM   #48
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As for what most of the people who earn might do, if there are studies showing that for each incremental increase in the marginal rates, x percent of high earners quit their jobs and thus, leads to lower tax revenues, I'd like to see it.
I don't claim to be typical, so who knows how other high income earners will respond. But for us, $250K is a lot of money and we live on less than 1/4 of that amount. So we have choices. Our jobs are stressful, and if our options are to keep busting our butts for less money or enjoy life a little more, then the choice is super easy. Of course if you make $250K a year and spend all of it (and more), you may not have much of a choice at all.

As for studies, there is no better place than Western Europe to see what happens in the real world when you tax the heck out of the "rich" people. Lack of entrepreneurship, lack of innovation, lack of risk-taking, lack of hunger for upward social mobility, lack of ambition, lack of jobs, lack of private capital... I lived there many years and I don't need studies to point out to me the damage high taxes have done to some European economies. America's strength is its people's hunger to succeed and incredible belief that the sky's the limit if you work hard enough. Bring the sky low enough, and America might lose its competitive advantage.
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Old 02-27-2009, 12:37 PM   #49
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As for what most of the people who earn might do, if there are studies showing that for each incremental increase in the marginal rates, x percent of high earners quit their jobs and thus, leads to lower tax revenues, I'd like to see it.
If you are looking for "real world" studies, the trouble with that is, this is not a laboratory where we can do controlled A-B experiments. IF anyone presents a study, it will be criticized for not taking, x,y,z into account. It will go no where.

So let's turn it around. Everything we know says that yes, if you decrease the reward, you will decrease the demand for that reward. It's common sense.

I suggest you go to your boss and ask for a pay cut, after all, it really does not motivate you. It will save the company money, they can be more successful and that is a good thing. And send the taxes you would have paid at the higher income as a donation to Uncle Sam, because that doesn't matter either.

Let me guess, it's different when we apply it to you? It's just those "high income" guys that don't care if you take their money away? How did they get to such a high income with that attitude?


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Old 02-27-2009, 02:44 PM   #50
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I pay plenty in taxes.

And I live in Northern CA so I know about CA tax rates. I've looked at how much lower property, sales and income taxes are in NV and AZ.

Not to mention lower housing.

But the employment opportunities just aren't there. TX has lower taxes and their economy was booming last year, at least when oil was way over $100 a barrel. But it's TX.

Hey, Mexico has lower tax rates too. And Monaco has no income taxes. People who are earning that much should have some socked away and they can live where they like.

As for what most of the people who earn might do, if there are studies showing that for each incremental increase in the marginal rates, x percent of high earners quit their jobs and thus, leads to lower tax revenues, I'd like to see it.
Are you willing to work for 30 cents on the dollar? How about 10 cents?
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Old 02-27-2009, 03:48 PM   #51
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Guys (and gals), let's not forget - all Obama is doing here is allowing the Bush tax cuts of 2001 and 2003 to expire, for those workers earning over $250,000 joint income ($200,000 individual). He was very clear during the campaign that he intended to do this if elected, and he is now simply following through. Apparently enough people (me included) thought it was a good idea, because he got elected. You can complain/speculate all you want about how this is going to destroy the entrepreneurial spirit in America, but I don't recall the years prior to 2001 being noticeably lacking in entrepreneurial spirit. Let's face it - the Bush tax cuts did not work. Trickle-down economics has been tried, and it has failed miserably. I support Obama's decision.
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Old 02-27-2009, 03:59 PM   #52
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Guys (and gals), let's not forget - all Obama is doing here is allowing the Bush tax cuts of 2001 and 2003 to expire, for those workers earning over $250,000 joint income ($200,000 individual). He was very clear during the campaign that he intended to do this if elected, and he is now simply following through. Apparently enough people (me included) thought it was a good idea, because he got elected. You can complain/speculate all you want about how this is going to destroy the entrepreneurial spirit in America, but I don't recall the years prior to 2001 being noticeably lacking in entrepreneurial spirit. Let's face it - the Bush tax cuts did not work. Trickle-down economics has been tried, and it has failed miserably. I support Obama's decision.
I understand Mr Obama won the election. However, I think you and other like-minded individuals need to understand is that tax rates matter. I, and many other people in similar situations, will simply choose to work less. I will probably even have to let people go. Maybe that will cause you to vote for even higher taxes, but that will cause me to work even less.
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Old 02-27-2009, 04:04 PM   #53
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Let's face it - the Bush tax cuts did not work.
what newporttony said. Plus...

How can you say that the tax cuts did not "work"? As I stated above, there are so many variables in play, that it is tough to isolate cause/effect.

Explain to me how Obama (or anyone) is going to suspend the laws of Supply & Demand?

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Old 02-27-2009, 04:22 PM   #54
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Let's face it - the Bush tax cuts did not work.
Ok, here is some data for you. Now explain to me what you mean by "did not work".

http://www.irs.gov/pub/irs-soi/05in05tr.xls

When I sum the individual tax collections for the 5 years from 2001-2005 (last year with data), I get:

4,199,276 Million dollars collected.


When I sum the individual tax collections for the 5 years from 1996-2000 , I get:

4,031,692 Million dollars collected.

So tell me, is 4,199,276 not larger than 4,031,692?

What didn't work?


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PS: It will facilitate discussion if you don't put words in my mouth:

You can complain/speculate all you want about how this is going to destroy the entrepreneurial spirit in America,

I don't think anyone said "destroy" or "they will all quit working". We said it will negatively impact it. At a time when we need POSITIVE reinforcement.
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Old 02-27-2009, 04:48 PM   #55
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Okay i'll admite that this is just jealousy because i'll never make a base income of more than $55K, in todays dollars, but if you make over a quarter of a million $ a year you don't have anything to complain about. Even if you have to pay an extra couple percent in taxes you still make more than 90% of the US population where the average individual income is under $50K and the average household income is under $70K. Yes you may work hard for that $250K/yr but I work hard too for 12+ hrs a night and nobody earns 5x what I earn... nobody.
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Old 02-27-2009, 05:05 PM   #56
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Okay i'll admite that this is just jealousy because i'll never make a base income of more than $55K, in todays dollars, but if you make over a quarter of a million $ a year you don't have anything to complain about. Even if you have to pay an extra couple percent in taxes you still make more than 90% of the US population where the average individual income is under $50K and the average household income is under $70K. Yes you may work hard for that $250K/yr but I work hard too for 12+ hrs a night and nobody earns 5x what I earn... nobody.
Yes, but have you taken the financial risks most successful entrepreneurs who make over 250k took to get there (& continue to take)?

The people I know making over 250k mostly have their own businesses and, pretty much without exception, have at one time or another put their entire financial lives (& financial future) on the line to make a go of it. (not to mention countless 16 hour days)

Building a business (like high stakes investing) has a significant amount of risk, and risk should have it's reward - if it doesn't why should anyone take it on?

(Not trying to be snide or anything (I'm a "wage earner" too) - but, pretty much anybody can work long hours with little risk - now, I don't know what it is you do to earn money from the "investment" of your labor, but perhaps you might want to re-think that if you're unhappy with the return your getting vs. risk)
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Old 02-27-2009, 05:11 PM   #57
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Okay i'll admite that this is just jealousy because i'll never make a base income of more than $55K, in todays dollars, but if you make over a quarter of a million $ a year you don't have anything to complain about. Even if you have to pay an extra couple percent in taxes you still make more than 90% of the US population where the average individual income is under $50K and the average household income is under $70K. Yes you may work hard for that $250K/yr but I work hard too for 12+ hrs a night and nobody earns 5x what I earn... nobody.

First, I appreciate that you acknowledge this is an emotional response. OK, but let me ask you to consider a few things:

1) I often hear this "they" can afford to give more, they're rich! But, where does it end? And why? It's always, more, more, more. You could raise the marginal rate to 98% and someone would say make it 99%, they can afford it! Is it really right that just because it is there, it should be taken? Those people (most of them anyway) worked hard for it, and they already give a disproportionally large %.

2) I always like to turn it around and ask why the bottom 50% of filers pay less than 3% of the total fed income tax. That seems awful low to me to share in the services we all get.

3) Let's not forget that many of those making $250,000 or more are business owners who create jobs. They take the risk, put in the effort and create real jobs. Whenever we increase income tax rates on those people, we are reducing incentives. Would you want to put in the kind of effort and risk it takes to run a small business when you see the rewards being chipped away? That is not going to help the economy, and I thought that was the point.

4) Again, if these plans were seen as helping the economy, wouldn't the market be responding positively? SPY down another 2% today

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Old 02-27-2009, 05:15 PM   #58
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Yes, but have you taken the financial risks most successful entrepreneurs who make over 250k took to get there (& continue to take)?

The ones I know, pretty much without exception, have at one time or another put their entire financial lives (& financial future) on the line to make a go of it. (not to mention countless 16 hour days)

Risk should have it's reward - if it doesn't why should anyone take on any significant amount of risk?
I agree that small business owners who take on great risk, those with extensive education(ex-lawyers), and those with special skills(ex-doctors) should be rewarded but they shouldn't make more than twice what any other hard working american makes. I just don't see how an extra couple percent in taxes makes it not worth working towards a $250K+ job.
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Old 02-27-2009, 05:21 PM   #59
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If, once our income passes $250K, it gets taxed at a much, much higher rate, then in effect I will be working for a dramatically lower hourly rate than I am right now. Why should I strive to maximize my income if it ends up benefiting the government more than it benefits me? At this point, I might see it more worthwhile to work less and enjoy other leisurely activities.
Um, because it's not that dramatic. Someone working 50hrs / week making $250,000 / yr makes $65 / hr after tax at the margin. If he works an additional hour and gets taxed at 40% instead of 35% his after-tax hourly rate for that hour only goes down to $60.
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Old 02-27-2009, 05:26 PM   #60
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I agree that small business owners who take on great risk, those with extensive education(ex-lawyers), and those with special skills(ex-doctors) should be rewarded but they shouldn't make more than twice what any other hard working american makes.
And who is going to determine what someone "should make"? A salary czar? Do you really think people are going to take risk, if some govt official gets to chose their salary?

We have a free market to determine what someone can earn. What could be better than that?


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I just don't see how an extra couple percent in taxes makes it not worth working towards a $250K+ job.
This does not seem to be getting through. No one said it won't be worth it. But it will be worth less. So you will get less of it.


It's a matter of degrees. As I said, we want to encourage business owners to create jobs. Increasing their taxes will do the opposite. It doesn't make sense, and the market is reacting to that.

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