Tax on rich will bring in 63.67B per year

[atlas888]

Increasing the taxes on people who has attitude issues are not going to teach them humility, nor would it entice people who use welfare as a way of life to show appreciation. So often nowadays, taxation , especially for many voters , becomes punitive based on class envy.

[eridanus]

Quote:

Originally Posted by Jay_Gatsby In New York, she formed a group (jokingly designated "The Collective") which included future Federal Reserve chairman Alan Greenspan, a young psychology student named Nathan Blumenthal (later Nathaniel Branden) and his wife Barbara, and Leonard Peikoff, all of whom had been profoundly influenced by The Fountainhead.

Alan Greenspan? That whole "less regulation" thing worked out well for us.

Atlas Shrugged has one of the funniest monologues in American fiction.

[eridanus]

Quote:

Originally Posted by atlas888 Increasing the taxes on people who has attitude issues are not going to teach them humility, nor would it entice people who use welfare as a way of life to show appreciation. So often nowadays, taxation , especially for many voters , becomes punitive based on class envy.

The poor don't vote. The middle class doesn't like higher taxes either.

We increase taxes because we're running a deficit, and no one can agree on how to cut the budget.

[HornedToad10]

Federal taxes can be raised without *too* much issue, but state taxes are worse and cause more problems for the state. California tax rate is going up "temporarily" to the 10-11% range, so where is the incentive to start a new company in California instead of Oregon, Washington, etc. You personally have to pay higher taxes, and you have to pay higher salaries to get and keep good employees.

I've already had friends who got multiple job offers and it was financially beneficially to take a lower pay job in Washington than one in California. One friend had 85k California, 75k California and 75k Washington and he took the Washington job because, adjusted for Cost of Living and taxes, it is higher paying than the 85k California job.

This is less of a problem for the Federal government since moving out of the U.S. is more inelastic than just switching states, but it is something to consider.

I'd have less issues with the raising taxes bit if it wasn't such a blatant attack on the "rich". It's not like the government is saying, "We have a huge deficit and so everyone's taxes are going up and we are all sacrificing. Or at least some people's taxes are going up and some are staying the same.

Instead, it's a straight out vote-grab of: We're taxing the rich and lowering the taxes of everyone else. If you raise the taxes on 20% and lower the taxes of the other 80%, then the 80% who are getting all the benefits will vote for you....Potential Tyranny of the Majority. Just need to be careful that raising taxes, government policies, etc. don't go too far.

[Independent]

Quote:

Originally Posted by samclem "Surely not a view shared by the other, less [fortunate] productive, 80% of the population." Edited portion in bold

Sam, I see that you replaced "fortunate" with "productive". I think this goes to much of the disagreement I see on this topic.

Some people think that:
A. Hard Work => High Productivity => High Income

I think that:
B. ( Hard Work +- Dumb Luck ) => Productivity, and that ( Productivity +- More Luck ) => Income

You seem to be putting yourself in the group that endorses "A". i.e. higher incomes are proof of higher productivity and harder work.

I'm sure that hard work does not translate directly into more productivity and income. I've worked with people who were paid $250k per year, and others who were paid $25k. I'm sure that the $250k people didn't work 10x as hard as the $25k. At most, it may have been 2x, but I'm being generous with that estimate. Even if they contributed 10x as much to the company's profits, it's clear to me that most of the extra came from the good luck of being born with more talent, more support from family, better schools, being the the right place when the company was bought out or the department was reorganized, or whatever.

I'm not even sure that Productivity => Income. I have trouble believing that the different income levels between CMOs and CEOs really reflects higher productivity, rather than the customary way we set CEO compensation.

If I expand "Productivity" to include "what you do for society" (which seems like the right measure when I think about tax policy), the link is even less certain. Imagine the lawyers who litigate a complex mineral claim disagreement. They may be very well paid, and the winning team might well be "worth" their pay in terms of adding profit to the winning company. But I'm not sure that they really added any value our society. I could go on to think about the CEO of Bear Stearns @ $50 million per year, or hedge fund managers @ $100 million, and compare them to electricians at $50k or engineers at $100k. I have trouble believing the ratio of incomes reflects the ratio of value added.

This doesn't mean I think we should confiscate all incomes above x, it simply means that I think "fortunate" deserves a significant place in the discussion.

[samclem]

Quote:

Originally Posted by Independent If I expand "Productivity" to include "what you do for society" (which seems like the right measure when I think about tax policy) . . .

I sure hope it never comes to this, but I suppose it might. The government decides that the occupational code for "mason" is especially meritorious and income will be taxed at 5%, while "litigator" is less meritorious and income from this activity should be taxed at 35%.

Quote:

Originally Posted by Independent it simply means that I think "fortunate" deserves a significant place in the discussion.

Maybe we can agree on

"Surely not a view shared by the other, less well compensated 80% of the population."

We may disagree on the value society does or should place on an activity and an individual's particular performance of this activity, but "compensation," which takes into account all aspects of supply and demand, is the final cold metric, all boiled down to one number. How lucky you are, how hard you work, how talented you are, how rare your skill is, how much people are willing to pay for your services--it's all there, mixed together, in that single number. Beautiful, simple, and arrived at by mutual agreement between the individual and the rest of the world.

[haha]

Quote:

Originally Posted by samclem I sure hope it never comes to this, but I suppose it might. The government decides that the occupational code for "mason" is especially meritorious and income will be taxed at 5%, while "litigator" is less meritorious and income from this activity should be taxed at 35%.

No that you mention it, this one may be OK.

Ha

[FIREd]

Quote:

Originally Posted by Independent This doesn't mean I think we should confiscate all incomes above x, it simply means that I think "fortunate" deserves a significant place in the discussion.

Well, let's tax "good fortune".

Todd was born in America (+5%) with good genes and a good brain (+5%). He grew up in an upper middle class family (+5%). Todd's Papa and Mama lived in a safer and nicer neighborhood (+5%) which allowed Todd to attend a good high school (+5%) which fostered Todd's natural abilities. Due to his good grades, Todd attended Harvard (+5%) which his family was able to afford (+5%) to become a doctor with an annual income of $350,000 (+5%). Therefore Todd should pay 40% in taxes on his income.

Mike was born in America too (+5%), but was unfortunately not as genetically gifted as Todd (+0%). He grew up in a poor family (+0%), living in a poor, rural area (+0%). His high school sucked (+0%) and it didn't foster his natural abilities. Therefore Mike didn't go to college (+0%). Mike found a job, bagging groceries at the Piggy Wiggly (+0%) making $20,000 a year with overtime.

So Todd should pay 40% in taxes on his income and Mike should pay 5% in taxes on his income... Which is similar to what they would be paying under our current tax code (give or take).

In other words, we already tax "good fortune".

[Texarkandy]

Quote:

Originally Posted by FIREdreamer Well, let's tax "good fortune". Todd was born in America (+5%) with good genes and a good brain (+5%). He grew up in an upper middle class family (+5%). Todd's Papa and Mama lived in a safer and nicer neighborhood (+5%) which allowed Todd to attend a good high school (+5%) which fostered Todd's natural abilities. Due to his good grades, Todd attended Harvard (+5%) which his family was able to afford (+5%) to become a doctor with an annual income of $350,000 (+5%). Therefore Todd should pay 40% in taxes on his income. Mike was born in America too (+5%), but was unfortunately not as genetically gifted as Todd (+0%). He grew up in a poor family (+0%), living in a poor, rural area (+0%). His high school sucked (+0%) and it didn't foster his natural abilities. Therefore Mike didn't go to college (+0%). Mike found a job, bagging groceries at the Piggy Wiggly (+0%) making $20,000 a year with overtime. So Todd should pay 40% in taxes on his income and Mike should pay 5% in taxes on his income... Which is similar to what they would be paying under our current tax code (give or take). In other words, we already tax "good fortune".

No, no, no, no, no - you've got it half wrong here - Those six zeros should each be -5% for Mike. So Mike should get a tax "refund" of $6,000 by your example above!

[HFWR]

Ok, I confess. My real name is "Mike"...

[laurence]

Quote:

Originally Posted by samclem I sure hope it never comes to this, but I suppose it might. The government decides that the occupational code for "mason" is especially meritorious and income will be taxed at 5%, while "litigator" is less meritorious and income from this activity should be taxed at 35%. Maybe we can agree on "Surely not a view shared by the other, less well compensated 80% of the population." We may disagree on the value society does or should place on an activity and an individual's particular performance of this activity, but "compensation," which takes into account all aspects of supply and demand, is the final cold metric, all boiled down to one number. How lucky you are, how hard you work, how talented you are, how rare your skill is, how much people are willing to pay for your services--it's all there, mixed together, in that single number. Beautiful, simple, and arrived at by mutual agreement between the individual and the rest of the world.

+1 Isn't there a saying, "Don't confuse effort for work?". The guy pounding nails into 2x4's may have worked hard all day, but the value, as evidenced by the price paid for his labor, is less than that of the Doctor who saw patients all day. Any alternative to letting the market decide the value of labor is fraught with peril and potential for perversion/corruption.

[samclem]

Quote:

Originally Posted by Sambuca . . . but I really like investing, so if I pay taxes to make better returns, I'm all for it, plus I can feel good about other people that my taxes helped.

So your idea is that somehow by paying more taxes, rather than investing that same money in the market right now, your overall return will be better and this is a good thing primarily because you'll be able to pay yet more taxes later and thereby help other people which will make you feel good.

Noted.

Umm . . .Welcome to the board.

[atlas888]

Quote:

Originally Posted by Sambuca I'm proud that I can provide extra taxes..... so if I pay taxes to make better returns, I'm all for it, plus I can feel good about other people that my taxes helped.

I just came back from the supermarket, and I had to go up to the customer service counter there. I was glad to see your tax dollars at work , paying for the lottery tickets for people lined up to play the lottery and scratch tickets. They are quite obviously recipients of taxpayers largess. They asked me to thank you and hope you would give more.

[ERD50]

Quote:

Originally Posted by Independent Some people think that: A. Hard Work => High Productivity => High Income I think that: B. ( Hard Work +- Dumb Luck ) => Productivity, and that ( Productivity +- More Luck ) => Income

Nah, that does not compute.

Sure, dumb luck (good and bad) plays into individual success/failure. But so what? Tax laws are based on the total population, not individuals.

So, take 10,000 people who graduated in the top 5% of their High School class. Take 10,000 people who graduated in the lowest 5% of their class. Fast forward 20 years. I'm pretty sure the top 5% group median income will be significantly higher than the bottom 5% median income. Some of it will be determined by luck. And I chose "median" rather than "average" - maybe one of those bottom 5% won the lottery, or succeeded despite a poor early start. You never can tell.

Quote:

Originally Posted by FIREdreamer Well, let's tax "good fortune". Todd was born in America (+5%) with good genes and a good brain (+5%). ....Therefore Todd should pay 40% in taxes on his income. Mike was born in America too (+5%), but was unfortunately not as genetically gifted as Todd (+0%). ....Mike found a job, bagging groceries at the Piggy Wiggly (+0%) making $20,000 a year with overtime. So Todd should pay 40% in taxes on his income and Mike should pay 5% in taxes on his income... Which is similar to what they would be paying under our current tax code (give or take). In other words, we already tax "good fortune".

Excellent illustration and analysis FIREdreamer (and good add-on by Texarkandy)! I think that pretty well sums up why I am in favor of moderately progressive taxes. I'm not in favor of how some people twist that to be something it isn't, or just don't appreciate it.

Well done.

-ERD50

[kumquat]

Quote:

Originally Posted by laurence Any alternative to letting the market decide the value of labor is fraught with peril and potential for perversion/corruption.

Unions representing Canadian government employees like to ask for "Equal pay for work of equal value". Don't your's?

[samclem]

Quote:

Originally Posted by kumquat Unions representing Canadian government employees like to ask for "Equal pay for work of equal value". Don't your's?

Yes, that's been the mantra of many labor groups. In general it translates to "Distort market forces to pay this special class more than the market rate."

[Independent]

Quote:

Originally Posted by samclem I sure hope it never comes to this, but I suppose it might. The government decides that the occupational code for "mason" is especially meritorious and income will be taxed at 5%, while "litigator" is less meritorious and income from this activity should be taxed at 35%. Maybe we can agree on "Surely not a view shared by the other, less well compensated 80% of the population."

I'm always frustrated by the suggestion that the only reason anyone would favor progressive taxes is that their own taxes would be lower because of this. I think that I was in the top 10% of wage earners for 31 years (I've never sat down to check the stasitics for all years). I can honestly point to reasons why my higher income relates to "more effort" than the average person. I also have to honestly say that I can point to reasons that amount to better-than-average luck. Yet, I favor progressive taxes (so does Warren Buffet).

Quote:

We may disagree on the value society does or should place on an activity and an individual's particular performance of this activity, but "compensation," which takes into account all aspects of supply and demand, is the final cold metric, all boiled down to one number. How lucky you are, how hard you work, how talented you are, how rare your skill is, how much people are willing to pay for your services--it's all there, mixed together, in that single number. Beautiful, simple, and arrived at by mutual agreement between the individual and the rest of the world.

Yep, I'm not suggesting that the gov't tell employers what they can pay. I know that's on the agenda for some Obama supporters ("comparable worth"), but I think it's a very bad idea.

Progressive taxes are a different story.

[Independent]

Quote:

Originally Posted by FIREdreamer Well, let's tax "good fortune". Todd was born in America (+5%) with good genes and a good brain (+5%). He grew up in an upper middle class family (+5%). Todd's Papa and Mama lived in a safer and nicer neighborhood (+5%) which allowed Todd to attend a good high school (+5%) which fostered Todd's natural abilities. Due to his good grades, Todd attended Harvard (+5%) which his family was able to afford (+5%) to become a doctor with an annual income of $350,000 (+5%). Therefore Todd should pay 40% in taxes on his income. Mike was born in America too (+5%), but was unfortunately not as genetically gifted as Todd (+0%). He grew up in a poor family (+0%), living in a poor, rural area (+0%). His high school sucked (+0%) and it didn't foster his natural abilities. Therefore Mike didn't go to college (+0%). Mike found a job, bagging groceries at the Piggy Wiggly (+0%) making $20,000 a year with overtime. So Todd should pay 40% in taxes on his income and Mike should pay 5% in taxes on his income... Which is similar to what they would be paying under our current tax code (give or take). In other words, we already tax "good fortune".

I think this is correct. The progressive taxes that we already have partially (that is, on average) amount to a higher tax on good luck than on hard work. To me, that's a "feature, not a bug".

[Independent]

Quote:

Originally Posted by ERD50 Nah, that does not compute. Sure, dumb luck (good and bad) plays into individual success/failure. But so what? Tax laws are based on the total population, not individuals. So, take 10,000 people who graduated in the top 5% of their High School class. Take 10,000 people who graduated in the lowest 5% of their class. Fast forward 20 years. I'm pretty sure the top 5% group median income will be significantly higher than the bottom 5% median income. Some of it will be determined by luck. And I chose "median" rather than "average" - maybe one of those bottom 5% won the lottery, or succeeded despite a poor early start. You never can tell. -ERD50

This is odd. I can agree with the 10,000 people example. I think it fits the part of my post that you quoted. However, I'm at a complete loss with "Tax laws are based on total population not individuals." I'm not saying I agree or disagree with that statement, I'm just saying I don't know what it means. Do you have a couple examples?

[Texarkandy]

Quote:

Originally Posted by FIREdreamer Well, let's tax "good fortune". Todd was born in America (+5%) with good genes and a good brain (+5%). He grew up in an upper middle class family (+5%). Todd's Papa and Mama lived in a safer and nicer neighborhood (+5%) which allowed Todd to attend a good high school (+5%) which fostered Todd's natural abilities. Due to his good grades, Todd attended Harvard (+5%) which his family was able to afford (+5%) to become a doctor with an annual income of $350,000 (+5%). Therefore Todd should pay 40% in taxes on his income. Mike was born in America too (+5%), but was unfortunately not as genetically gifted as Todd (+0%). He grew up in a poor family (+0%), living in a poor, rural area (+0%). His high school sucked (+0%) and it didn't foster his natural abilities. Therefore Mike didn't go to college (+0%). Mike found a job, bagging groceries at the Piggy Wiggly (+0%) making $20,000 a year with overtime. So Todd should pay 40% in taxes on his income and Mike should pay 5% in taxes on his income... Which is similar to what they would be paying under our current tax code (give or take). In other words, we already tax "good fortune".

Quote:

Originally Posted by Independent I think this is correct. The progressive taxes that we already have partially (that is, on average) amount to a higher tax on good luck than on hard work. To me, that's a "feature, not a bug".

Because we all know Todd doesn't work nearly as hard as Mike. Right?

How about Todd's colleague Sally, who grew up poor, was the 1st college grad in her family, worked her way through State Univ & borrowed her way through Med School, & works 80 hour weeks to make her 350k. Should her "excess earnings" be taxed at progressively higher rates on account of her "good fortune" too?