Tax Cuts Extended to All Americans

[Danmar]

Sigh. You had a little help. Healthcare, nutrition, education, safety, security. Clean water, public utilities, infrastructure. Legal process. Just to name a few.

Hard work and personal choice matter but our individual achievements are enabled by the efforts of others, and we each have the obligation to enable others in kind. The greater the success the greater the obligation. That’s how the system works.

Good for you. I totally agree.

 

[ERD50]

Sigh. You had a little help. Healthcare, nutrition, education, safety, security. Clean water, public utilities, infrastructure. Legal process. Just to name a few.

Hard work and personal choice matter but our individual achievements are enabled by the efforts of others, and we each have the obligation to enable others in kind. The greater the success the greater the obligation. That’s how the system works.

Well, even a flat % tax does that. At a straight 10% tax, no deductions, someone earning $30,000 pays $3,000. Someone earning $300,000 pays $30,000.

$30,000 > $3,000. So, now that we've solved that little problem...

So the question is not whether the high income earners should pay more, they already do, and they pay disproportionately more since we have a progressive tax system. Is it too progressive, or not enough? I don't know. I do know that people are not going to agree on what it should be. So who gets to decide? What gives one person's opinion more weight than another's?

Look back at that table I posted. Is it really 'fair' that the top 50% of the filers pay ~ 98% of the FIT? Heck, forget about what is 'fair', that's all subjective. Does it support a good working democratic society? Like my earlier posts, I think not. Those bottom 51% can vote in whoever they want and let the other guy pay for the costs of programs. They just don't have to care. I think that is bad for the country.

All this talk about whether a rich or a poor person 'benefited' from the government infrastructure is circular. It's easy to make a case from any view. Are TV manufacturers benefiting from consumers buying their TVs, or are consumers benefiting from the manufacturers providing superior value products? It's all part of the same loop. And I think it distracts from the real issue:

How do we determine what services the Govt should provide, and how do we pay or them?

-ERD50

 

[SunsetSail]

Sigh. You had a little help. Healthcare, nutrition, education, safety, security. Clean water, public utilities, infrastructure. Legal process. Just to name a few.

Hard work and personal choice matter but our individual achievements are enabled by the efforts of others, and we each have the obligation to enable others in kind. The greater the success the greater the obligation. That’s how the system works.

I find it hard to believe that reasonable and intelligent people actually believe that wealth redistribution is helping the people receiving the benefit. It creates wards of the state. It hurts these people. Those in favor of wealth redistribution are the biggest obstacle to the advancement of socio-economically disadvantaged people. If that is your intent, hats off to your Machiavellian ruthlessness.

This type of system has been tried before and it failed. Why doom our country to the same fate?

 

[Danmar]

I find it hard to believe that reasonable and intelligent people actually believe that wealth redistribution is helping the people receiving the benefit. It creates wards of the state. It hurts these people. Those in favor of wealth redistribution are the biggest obstacle to the advancement of socio-economically disadvantaged people. If that is your intent, hats off to your Machiavellian ruthlessness.

This type of system has been tried before and it failed. Why doom our country to the same fate?

It works pretty well in Scandinavia and Canada?

 

[SunsetSail]

The vast majority of the SBA small businesses are "C" Corporations, and file corporate tax returns at corporate rates. They are unaffected by any deals being done involving the individual/joint rates for 1040 filers.

Shareholders of subchapter C corps pay tax at the corporate level so they don't care how high their individual tax rates are...If the owners of C corps have to pay higher individual rates, they are going to direct the businesses to lower expenses to maintain their after-tax dollars. Lower expenses mean lower employment.

The difference between whether a business kicks off K-1 income, Sch. C income, or div distributions (i.e., SBA vs. IRS def of small business for total numbers) is irrelevant other than potentially for just disputing that one particular chart.

 

[snodog]

It works pretty well in Scandinavia and Canada?

Worked pretty well for the US too.

 

[Texas Proud]

In-state Tuiton costs, financial aid guidelines, and course requirements were the same for everyone at the state university that I attended, and openly available to everyone, regardless of race, gender or financial means. In fact, financial aid opportunities were available for those who couldn't afford the tuition.

How did I get a benefit that people who chose not to attend not get? The opportunities were the same.

We are not talking opportunities here... but benefits received... you received a benefit from the state.. that cost other taxpayers real money...

I agree that in state costs were the same.... but you seemed to indicate that you paid 100% of your tuition... good for you... but I am saying that your tuition did not cover the full cost of your education... the state paid money for your education... period... YOU got a benefit from the state... someone who did not go to university did not get that benefit even though it was offered...

Heck, if you get rid of all your money and get a low paying job, you have the benefit of food stamps and other programs... the 'opportunity' is there for you... (I know, not the same... just throwing it out there)...

 

[SunsetSail]

It works pretty well in Scandinavia and Canada?

What precisely 'works well'?

 

[samclem]

I find it hard to believe that reasonable and intelligent people actually believe that wealth redistribution is helping the people receiving the benefit. It creates wards of the state. It hurts these people.

This brings up an interesting point. If one believes that people are the best judge of their self-interests, that people in government don't know as much as individuals do about what benefits them, then there's a problem with simultaneously arguing that these wealth distribution programs are injurious to those who receive the spoils. After all, they are free to turn it down, but they don't, so they apparently believe they benefit from taking the money/etc.

If, on the other hand, one is prepared to argue that a person's life circumstances (wealth vs. poverty, happiness vs. unhappiness, etc) is in some significant part a reflection of their ability to make good choices, then one might also argue that poor people, in general and not in each specific case, may be expected to be less able to know what is good for them. That argument is incendiary.

 

[haha]

. It's a flat rate that is universally applied, and that reinforces the fact that it's everyone's obligation to support these common tasks.

That is the very reason we will never get this. Government, and many people who are net gainers from the current system will always want the power to discriminate, to soak the rich, to favor the homeowner, to push money toward charities, etc.

To make things simple and straightforward, someone has to give up power that they now have. These are people who like power, and in fact wield it to help keep them in power- again, think how popular this soak the "rich" spin on proposed tax changes is, even with many well off people on this board. Nothing quite compares with getting goods and services and having someone else forced to pay for them.

History and direct life experience proves that the human soul often has a dark streak that really gets off on bending others to one's will.

Ha

 

[FreqFlyer]

The folks who consumed the benefits provided by the government haven't paid for those benefits yet, at least not in full. The bill is about $14T not including what's been borrowed from the SS trust fund. I think adding the money borrowed from OASDI is another $2.2T.

IMHO the people who consumed the benefits should pay for them. Any other type of system (where we enjoy a lifestyle greater than we can afford) seems entirely too enticing to people running for office.

 

[myself]

You're wasting your breath. We've had similar conversations here before. The median household income in the U.S. is $50,221 but somehow making 5 times the median never qualifies as "rich" on these boards (and as pointed out above, you probably need to make six or seven times the median to have taxable income of $250k once all of the breaks are figured in). I suspect the disconnect is because this is a well-to-do lot that sees themselves as "middle-class" even when they aren't.

Small caveat. I believe this same income level is also applies to small businesses, which could easily see that much in income. Although I may stand corrected on this point in the future.

 

[M Paquette]

The folks who consumed the benefits provided by the government haven't paid for those benefits yet, at least not in full. The bill is about $14T not including what's been borrowed from the SS trust fund. I think adding the money borrowed from OASDI is another $2.2T.

IMHO the people who consumed the benefits should pay for them. Any other type of system (where we enjoy a lifestyle greater than we can afford) seems entirely too enticing to people running for office.

Good point. We also don't want to produce that nasty moral hazard that progressive taxation (higher rates on high income earners) and it's implicit wealth redistribution places on low income folks.

Given that, and the fact that many people reporting high incomes on their 1040s are small business owners, and that small businesses create by far the most jobs in this country, I think we can arrive at a reasonable tax policy to encourage growth of jobs and upward mobility among workers.

The highest tax bracket should be applied to the lowest income range, and all income past a certain point should be tax free. Say, 40% for 0-35,000, 25% for 35-70,000, and 10% for 70-100,000. I'll need to refine these numbers a bit, but you can see the intent here.

This acts as an incentive for low income earners to strive for more income, and minimizes the taxation drag on high income earners so they'll be more inclined to create or expand jobs.

I've talked this over with Lovey, and she agrees that under such a taxation model she would be interested in having Raoul the pool boy work more hours. Raoul would be willing, as his tax rate on those additional hours would be lower, and his after-tax income would jump.

 

[samclem]

Given that, and the fact that many people reporting high incomes on their 1040s are small business owners, and that small businesses create by far the most jobs in this country, I think we can arrive at a reasonable tax policy to encourage growth of jobs and upward mobility among workers.

A Modest Proposal. Finally, someone talking some sense!

 

[myself]

We are not talking opportunities here... but benefits received... you received a benefit from the state.. that cost other taxpayers real money...

I agree that in state costs were the same.... but you seemed to indicate that you paid 100% of your tuition... good for you... but I am saying that your tuition did not cover the full cost of your education... the state paid money for your education... period... YOU got a benefit from the state... someone who did not go to university did not get that benefit even though it was offered...

Heck, if you get rid of all your money and get a low paying job, you have the benefit of food stamps and other programs... the 'opportunity' is there for you... (I know, not the same... just throwing it out there)...

I hope that you take this with the intention of being informational as opposed to confrontational.

I believe that Westernskies is alluding to the fact that EVERYONE that went to the state schools received the same benefit of tuition. Much like if someone attends public school they also received a benefit of that education from the state.

But the reality is that if Westernskies went to the same public university, and paid the same amount of money as John Doe, but made better choices of not drinking so much, or wasting so much, and working to help keep his college tuition from building up to a large loan to be paid at a later date, that would be one of the differences. The other may happen to be in the same place at the same time, or being able to recognize opportunity more so than the miserable John Doe who chose to not take advantage of the what the state was offering, and using that to increase his income.

Both individuals received the exact same benefit. They both paid the same amount of taxes while they were using the services that the state rendered, therefore they are both even. Lest Westernskies happen to earn more and pay more taxes than the miserable John Doe who decided to drink a lot during college, stay up partying at night instead of getting enough sleep to make it to class on time, not fool around so much while attending college, etc.

FYI. I never graduated college. 99.9% of the people that I work with have either 4 year - 12 year degrees. I worked my tail off to get to my income level, although I paid only 2.4%-2.5% in FIT last year (with a 6 figure salary) because my wife and I planned on her being at home with our children, allowing me to focus on work and increasing my income (i.e. networking, etc.). The fact that we have 4 eligible children for the child tax credit helps a lot, as does the pre-tax healthcare that I have (along with my colleagues), FSA, and pre-tax 401k (just like my colleagues), mortgage interest deduction, and high property taxes, thanks to the state of NJ and our own decision to remain here. Choosing to work within the tax guidelines (and not even remotely trying to really stress our tax filings in the least).

The reason to mention the above about my life is merely to point out that there aren't that many people who can generate that kind of income without a degree, and sometimes even with a degree. Does that require my taxes to be increased automatically because I'm using the guidelines that were presented to me and allowed me to make my decision. I don't think so.

 

[myself]

We are not talking opportunities here...

Oh, and if it helps any, I don't mind paying too much more in taxes. However I (just like EVERY other red-blooded American), will work within the guidelines that the gov't set aside called the tax code to keep my taxes down.
If they go to a flat tax, that's fine, but I think the gov't needs to curb their spending habits instead of labelling it as a justification to promote economic spending. That's like saying we should just borrow another trillion and give everyone on unemployment and SS a raise, just to increase spending on the American economy.

IMHO, I think that people have finally started cutting out the "fluff" in their spending habits that they got used to. It's about time people started saving more for the "rainy day", and less frivilous spending.

 

[Westernskies]

Sigh. You had a little help. Healthcare, nutrition, education, safety, security. Clean water, public utilities, infrastructure. Legal process. Just to name a few.

Re-read my post, I mentioned most of these services. I fully understand that infrastructure costs money; my folks paid their share when I was a minor, and I'm paying my share now as an adult. The contention was that I somehow received or am receiving a disproportionate share of these services, and therefore I need to pay more for them.

The greater the success the greater the obligation.

No, actually the greater the success, the greater the tax bill was going to be. Thankfully it was derailed by common sense, economic reality, and a newly demonstrated political awareness.

 

[Westernskies]

and yet again you say i said something i didnt say. i said "benefitting the most from this country" and nothing about "any additional benefits from the government". please dont misquote me.

I didn't misquote you, since I used capital letters and apostrophes.

 

[modhatter]

The long and short of this is the money must come from somewhere. The debt is so high it will take both more tax revenue and serious across the board cuts. It is feared that due to the shaky economy raising taxes on the masses now is untimely, but the wealthy can weather the increase much easier. As we don't have five or ten years to wait, we must start to act now in the most reasonable manner possible. Eventually, however if we get stronger as a nation, those taxes will need to be taken from everyone.

As far as where the cuts are going to be made, there lies the tricky question. No one wants it to effect them, and that is not possible. It will effect all of us, if we are ever going to get out from under this debt, we will need to feel the pain.

We are not alone. Many countries are teetering on the edge of disaster. Wall Street and Banking Industry anyone? Any significant reforms in those arenas to change the outlook for the future?

To me, until we can truly reform campaign financing and take money out of politics, we will never see American citizens represented honestly.

 

[Martha]

I find it hard to believe that reasonable and intelligent people actually believe that wealth redistribution is helping the people receiving the benefit. It creates wards of the state. It hurts these people. Those in favor of wealth redistribution are the biggest obstacle to the advancement of socio-economically disadvantaged people. If that is your intent, hats off to your Machiavellian ruthlessness.

This type of system has been tried before and it failed. Why doom our country to the same fate?

So, you must think I am stupid and unreasonable? Or just a former ward of the state?

I know I benefited from what you call wealth redistribution. I got into college with grants and loans. I had a work study job. I got the advantage of a minimum wage increase in my summer job during college. My father finally got social security disability so I didn't have to worry about supporting him and could continue with school. No wonder I favor wealth distribution, it helped me leave poverty and become very successful.

 

[Nords]

Full disclosure: My taxes would go up under this plan.

Lemme clarify that statement for my situation:
My taxes would go up under this plan a lot.

 

[ERD50]

I know I benefited from what you call wealth redistribution. I got into college with grants and loans. I had a work study job. I got the advantage of a minimum wage increase in my summer job during college. ...

Let's compare this to some of the stories we here from people who got a cancer screening, caught it early and it saved their life, and now they preach to everyone to go for screenings. Seems reasonable.

But when you analyze it, you may find that to have the same success, everyone would need this screening every 6 months (just making up numbers here). And there is a risk to the screening. So overall, there may be more harm than good. And 99.6% would never get that cancer anyhow.

So we have to look at the big picture. And I think it is reasonable to question if many of these programs don't just create a dependency. I know there are conflicting studies, but it is possible that raising minimum wage has a negative effect, reducing the number of jobs, encouraging out sourcing, etc.

I think we need to be very careful that we provide safety nets for those who can't help themselves, and that other programs do the best they can to help people help themselves, and not create dependencies (as best we can, there will be people who manage to take advantage).


I'll try to find the link, but there was an interesting study on some country (Norway?) that over the years was decreasing the length of unemployment benefits. In every case, the rate of people finding jobs increased as the benefits were about to expire. So was that really the best use of public funds?

-ERD50

 

[ERD50]

Full disclosure: My taxes would go up under this plan.

Lemme clarify that statement for my situation:
My taxes would go up under this plan a lot.

Me too, and I'd still be for it. I think it would be likely to be good for the long term. I'm seeing increasing violence in these other countries, and that might be a greater risk to my retirement than a rise in FIT.

-ERD50

 

[Gumby]

Actually, if we get beyond mere repetition of our respective ideological positions, we might find that unemployment benefits are actually a mixed bag when it comes to their effect on the economy. Certainly, some individuals may be tempted to slack off the job search given the availability of UI, but a contrary effect is that they will spend all the UI benefits they get and that will stimulate the economy, leading to more jobs for other people. Here is an interesting discussion on this very issue.

The effect of unemployment insurance on unemployment | Analysis & Opinion |

look especially at this Council of Economic Advisors study cited in Mr. Salmon's blog

http://www.whitehouse.gov/sites/def...02-cea-economic-impact-temp-ui-extensions.pdf

 

[devans0]

One of the biggest awakenings to me was as I transition from working class to investor class was the tax disparities. Working at MegaCorp, I made a median salary. Top tax at 25% federal 6% state, 6% local/state sales, 4% property, and 8% FICA.
As an investor my rate has dropped off. 20% long term capital gain and sales tax.
J