Tax Cuts Extended to All Americans

[jdw_fire]

What others were trying to say (and I am not anywhere near a fan of this argument) is that because of the US system, your hard work can pay off handsomely and THAT is why you should pay more taxes.... to support that system....

That is not how I've been understanding the argument. I've understood it as the rich benefit more from the government's resources so they should be made to pay for more of those resources.

well what texas proud said is close to the point i was making and it appears that it was in response to my posts that people felt the need to defend that they had been solely responsible for their own success because either they hadnt gotten any direct financial help from the government or had just taken advantage of government programs/subsidies that were available to everyone. that defense was led using the example of state schools and progressed to people taking full credit for their own success due to their own hard work and good decision making. but it showed their apparent total blindness to how much their income depends on them living in this great country whether or not they got some sort of payment from the government.

i made the assertion that their (everyones) income IS a benefit of living in this country (or whatever country they live in). given that assertion is true it follows that people who have a higher income have received a higher benefit and should therefore have a greater responsibility to pay for the continued operation of this country (whether this operation includes every thing it includes now or is changed. i was not talking about how the tax dollars were to be spent, just collected).

i also pointed out that the value of the last dollar earned/spent is less to a person who has a high income/wealth when compared to someone with a lower income/wealth so therefore high income people were paying their taxes with less valuable dollars than their lower income counterparts. this implies that the higher income people are in a position to pay taxes at a higher tax rate while not giving up any more value/utility than the lower income people give up when they pay their taxes albeit at a lower rate.

these two points easily and logically lead to an income tax code that has higher marginal tax rates on higher levels of income and i was saying that i think more of these "higher marginal tax rates" are appropriate on even higher levels of income than are in the current code since we are in such great debt and need more revenue.

 

[Westernskies]

...since we are in such great debt and need more revenue.

Sorry to break the news to you, but-of control spending and a lack of accountability for the taxes we already collect is what got us all into this such great debt. Your tax- and-spend entitlement mentality is only going to make it worse. Half our population doesn't pay any federal income taxes to support the services we all receive. This isn't sustainable. Expecting a very small percentage of our population to pick up the entire tab for the majority is not realistic. Enough is enough! We need to stop spending and expect everyone to participate in the economic recovery; more revenue coming in and less spending going out on failed social progams and earmarked pork-barrel spending bills. We already have a progressive tax code, we don't need a punitive one.

id like to beleve I didnt misquote you this time

 

[zinger1457]

My objection to the current system isn't that it is progressive (I think it should be), but that ~ 50% pay such little in FIT.
-ERD50

I agree that 50% is totally out of whack. The Bush tax cuts didn't only benefit the wealthy although they definitely received the largest chunk, it also caused an estimated 5 million people to be dropped from the tax rolls. Now if they had only attacked spending cuts with the same gusto. What may be more disturbing is that 10% of taxpayers actually make money off of federal taxes, they get more back from credits and refunds then they paid in.

 

[M Paquette]

Sorry to break the news to you, but-of control spending and a lack of accountability for the taxes we already collect is what got us all into this such great debt. Your tax- and-spend entitlement mentality is only going to make it worse. Half our population doesn't pay any federal income taxes to support the services we all receive. This isn't sustainable. Expecting a very small percentage of our population to pick up the entire tab for the majority is not realistic. Enough is enough! We need to stop spending and expect everyone to participate in the economic recovery; more revenue coming in and less spending going out on failed social progams and earmarked pork-barrel spending bills. We already have a progressive tax code, we don't need a punitive one.

Alas, our professional political class gives us two choices:
1) Tax and spend
2) Borrow and spend.

Neither is a very good option, and the first ends tragically, while the second tends to end horribly.

Hey, anybody remember back in the distant past, before the last election, when all those TV ads pledging fiscal responsibility were running? I'm really looking forward to hearing more of that in 2012.

 

[jdw_fire]

... Your tax- and-spend entitlement mentality is only going to make it worse.
...
id like to beleve I didnt misquote you this time

well 1st i dont have a "tax and spend entitlement mentality" (i guess you dont get what you'd "like to believe"), so please stop accusing me of such. i have a mentality that "we the people" need to pay for the government we have. by all means ( and if you would go back and look i said something like this multiple times) we need to cut spending. i think our government spends on things it shouldnt. but i also think we need to collect enough revenue to cover what we are spending on and now pay down the debt too. as i have said multiple times in this discussion (please read it this time) i am talking about how to collect that revenue. i believe this is the appropriote way to collect the revenue needed to run this country, no matter how much it costs to run it.

Sorry to break the news to you, but-of control spending and a lack of accountability for the taxes we already collect is what got us all into this such great debt.

...

We need to stop spending and expect everyone to participate in the economic recovery; more revenue coming in and less spending going out on failed social progams and earmarked pork-barrel spending bills.

just because we got in such debt by "out-of control spending and a lack of accountability for the taxes we already collect " doesnt mean we dont have that debt. i think it is way too large and needs to be reduced if not eliminated and that wont come close to being done with spending cuts alone, hence the discussion on how to collect those additional taxes necessary to get the budget in a surplus position.

...
Half our population doesn't pay any federal income taxes to support the services we all receive. This isn't sustainable. Expecting a very small percentage of our population to pick up the entire tab for the majority is not realistic. Enough is enough!
...

you are wrong about "half our population doesn't pay any federal" "taxes to support the services we all receive". most people who have low incomes get said income via wages and they therefore pay federal taxes (FICA) that directly "support the services we all receive" (SS is a huge part of our national spending). and guess what, these low income earners pay a larger percentage of their income to FICA than high income (>$150k/yr) people do.

a little aside: it is interesting that when there is a discussion about the SS trust fund on this board the majority of the posters say there isnt 1, they say that money has already been spent on running the government. well if that is the proper position then the FICA these low income people paid goes to cover other fed spending also.

We already have a progressive tax code, we don't need a punitive one.

we are a very long way away from having a punitive tax code for the high income people and my suggestions wouldnt make it one

 

[lets-retire]

i made the assertion that their (everyones) income IS a benefit of living in this country (or whatever country they live in). given that assertion is true it follows that people who have a higher income have received a higher benefit and should therefore have a greater responsibility to pay for the continued operation of this country (whether this operation includes every thing it includes now or is changed. i was not talking about how the tax dollars were to be spent, just collected).

I don't believe that assertion to be true. People made whatever "money" was available even before there were countries to allow for people to make money.

 

[myself]

A more fundamental reason is that society winds down without homegrown children. If you don't believe this, just manage to live another 50 years or so and you will see.

Ha

That may just happen, if I last as long as my paternal grandmother (she made it to 95 ... a few weeks short of 96).

 

[myself]

..although I do see one member here refers to himself as a moron...

Hey ... I resemble that remark.

 

[Texas Proud]

The argument for taxing the rich more than the poor, as I've understood it, is that they have received more benefit from society. The specific example of going to a state funded college was brought up and how tax money is used to partially fund the state colleges. I was simply pointing out that if a person goes to a private college, that doesn't receive aide from state coffers, the argument that they should be taxed more on their success because the state helped them achieve that success loses it's point. And what about those who never go to college, should they be taxed more because they consumed more state resources?



I was actually having this discussion with my kid the other day. I agree that people don't become successful by themselves. That does not mean they use state funded programs or resources provided to society more than the poor to become successful. Why should the state be able to confiscate more of their money because they were able to grab their bootstraps and make themselves successful without consuming more state resources?



That is not how I've been understanding the argument. I've understood it as the rich benefit more from the government's resources so they should be made to pay for more of those resources.



ERD--I am in a position where my pay is a bit below one of the tax increase cutoffs. Just about everyone I work with is in the same boat. We all know how much O/T we can work before we start to see diminishing returns. We have the good fortune to be able to turn down O/T jobs and once we hit the point where our taxes go up we shut off the O/T spigot. The general consensus is it makes no sense to work an extra 6 hours O/T when we will only see pay for 2-3 hours work because we worked too much O/T. The extra money is not worth our time once we hit that point because of the tax increase. Granted this is only local, but I personally know of approximately 30 people who stop working after they hit a specific earning point, solely because the tax increase means we work just as hard and long for less take home pay. Kind of like the simplistic military retirement pay issue, where people see that they are working for half pay if they stay in the military passed 20 years.

I guess we are understanding what others are putting down differently... but that is one of the great things about these kind of discussions... we can go back and forth and get a better understanding.... and so far it has not gotten to the point of the pig


As for you stmt to ERD.... that has been shown to be true in economics... increasing work and pay has a positive correlation until a certain point and then people start to think they have enough and it become negative (at least that is what was taught when I got my MBA).... so unless you are trying to put someone through college, save for something etc. etc... you are right... most people will start to give up OT so they can live their lives....

 

[Texas Proud]

Sorry to break the news to you, but-of control spending and a lack of accountability for the taxes we already collect is what got us all into this such great debt. Your tax- and-spend entitlement mentality is only going to make it worse. Half our population doesn't pay any federal income taxes to support the services we all receive. This isn't sustainable. Expecting a very small percentage of our population to pick up the entire tab for the majority is not realistic. Enough is enough! We need to stop spending and expect everyone to participate in the economic recovery; more revenue coming in and less spending going out on failed social progams and earmarked pork-barrel spending bills. We already have a progressive tax code, we don't need a punitive one.

id like to beleve I didnt misquote you this time

One of the problems is that we can not close the spending gap with the income gap by just reducing the programs you listed.. we need to reduce the programs that most on this board would scream if we reduced them... such as SS and Medicare.... I am all for not getting more income with higher rates... heck, if we can get the economy humming again revenue will go back up to the 19 or 20% range instead of the current 14 or so %.... but to get real spending cuts.... we have to hit some of the sacred programs...

And since most do not want to touch them at all..... and the ones who will say we need to touch them have very different opinions on who should bear the brunt of the cuts.... we will not do anything.... except small things on the margin and raise taxes....

 

[haha]

but to get real spending cuts.... we have to hit some of the sacred programs...

And since most do not want to touch them at all..... and the ones who will say we need to touch them have very different opinions on who should bear the brunt of the cuts.... we will not do anything.... except small things on the margin and raise taxes....

People have a deep fairness gene- and here is one of the things that sets off fairness alarms when people want to reduce SS and Medicare. Proponents of balancing the budget by cutting Medicare and SS are mostly people who will never have to rely on either- usually because they are government workers. Here is the governor of a bluest of the blue states on the unfairness of overgrown public sector compensation and benefits.


Tim Pawlenty: Government Unions vs. Taxpayers - WSJ.com

 

[Westernskies]

People have a deep fairness gene- and here is one of the things that sets off fairness alarms when people want to reduce SS and Medicare. Proponents of balancing the budget by cutting Medicare and SS are mostly people who will never have to rely on either- usually because they are government workers. Here is the governor of a bluest of the blue states on the unfairness of overgrown public sector compensation and benefits.


Tim Pawlenty: Government Unions vs. Taxpayers - WSJ.com

I hear the clatter of hooves on the rooftop...

 

[lets-retire]

People have a deep fairness gene- and here is one of the things that sets off fairness alarms when people want to reduce SS and Medicare. Proponents of balancing the budget by cutting Medicare and SS are mostly people who will never have to rely on either- usually because they are government workers. Here is the governor of a bluest of the blue states on the unfairness of overgrown public sector compensation and benefits.


Tim Pawlenty: Government Unions vs. Taxpayers - WSJ.com

I have no problem losing my SS or Medicare benefits. That is not because I am a government worker. It's because since I was a kid I worked under the impression that those programs would not be there for me when I was old enough to use them. I still don't use any of those benefits in my retirement calculations and figure if they are still around when I'm old enough to collect then it's gravy.

 

[Independent]

My objection to the current system isn't that it is progressive (I think it should be), but that ~ 50% pay such little in FIT. It's the shape of the curve that bothers me (lingering near zero for half the filers, than a slope up), not so much the overall end-to-end slope.

Related to all this, it sure would be a tough road at this juncture to get our tax revenues to match our spending (even with some real cuts in spending).

Hey, are we agreeing too much? Is it time to throw in some name-calling and get this thread closed?

Yes, it does look like we're agreeing too much. I selected the only point where we may differ. You are emphasizing FIT, but not mentioning SS/Medicare. I don't think we tax the middle "to little", I think we hide the taxes they pay. Middle income wage earners pay 15.3% of their wages in SS/Medicare, but they only see half of this. (For comparison, the highest income hedge fund managers pay 15% of their incomes in FIT, and virtually none in SS/Medicare.) I believe we've had "too much" support for SS/Medicare spending due to the fact that people don't see the full cost.

Similarly, I think that much of the cost of corporate income tax is shifted to workers, but the workers don't believe this. So there's another hidden tax. And I already mentioned EITC.

I think if we're expecting voters to favor reductions in gov't spending, it's important that they understand the taxes they are already paying. That's why I specified "visible" in a couple earlier posts. I'd rather make all taxes visible then shift a lot of FIT to lower income people.

I noticed that the poll on Simpson/Bowles was overwhelming in favor (no surprise given the LBYM attitude on this board). But I agree with you that it will be a "tough road" with the great majority of voters. The "compromise" in OP was that the D's get to increase the deficit in their favorite ways iff the R's get to raise the deficit in their favorite ways. This isn't progress a month after an election where we heard a lot about the evils of the deficit, but I expect you agree with that, too...

 

[Texas Proud]

I think if we're expecting voters to favor reductions in gov't spending, it's important that they understand the taxes they are already paying. That's why I specified "visible" in a couple earlier posts. I'd rather make all taxes visible then shift a lot of FIT to lower income people.

I will throw out a proposal that will go nowhere...

Get rid of all taxes except individual income taxes..


Now, that is not something that makes a lot of sense to most people... but think about it... if every tax was removed (I am not talking 'fees' such as airline landing fees etc. etc...) and gvmt was run on basically individual income tax we would all know how much tax if really being taken from our pocket... I think a lot more people would decide to reduce gvmt spending...

To be clear... this means no corporate tax, not gas tax, no exicse tax on the 1,000s of items that are taxed.... and we can get rid of all those 'fees' on our phone that are not used to do anything related to our phone...

Right now, we pay so much in hidden taxes we really do not have a feel for the true cost of gvmt.... and it would be good to know...

 

[winger]

Glad to see the thread moving toward total taxation. FIT is a straw villain. I'm fairly certain it's not even the highest tax I pay, but it is the easiest to collect.

FWIW, I paid less than 11% FIT in 2009. On adjusted income of $49K.

 

[Westernskies]

I will throw out a proposal that will go nowhere...

Careful, you'll get dizzy trying to watch it circle the drain.

 

[samclem]

(For comparison, the highest income hedge fund managers pay 15% of their incomes in FIT, and virtually none in SS/Medicare.)

Yabut . . . Re: "virtually none" . . . this is only true if expressed as a % of income. They pay much more than the average Joe into SS and Medicare, and they receive absolutely zero benefit for this high payment for Medicare, and very little additional benefit when they collect SS. Seen another way, the thing that's closest to "virtually none" is the "return" they receive for SS and Medicare taxes they pay as they approach the cap.

 

[rescueme]

Yabut . . . Re: "virtually none" . . . this is only true if expressed as a % of income. They pay much more than the average Joe into SS and Medicare, and they receive absolutely zero benefit for this high payment for Medicare, and very little additional benefit when they collect SS. Seen another way, the thing that's closest to "virtually none" is the "return" they receive for SS and Medicare taxes they pay as they approach the cap.

I would have to agree on your statement. Having "more" is different than "getting more", IMHO...

 

[EllisWyatt]

Few here seem to question the validity of the premise that, as jdw_fire said, “people who have a higher income have received a higher benefit, and therefore have a greater responsibility to pay for the operation of the country.”
I would argue that the basic premise is fallacious, in that people who have a higher income are already providing a higher benefit to the country. And, to a large extent, this higher benefit is what is being affirmed by the higher compensation.
This is not meant to minimize the contributions of teachers, plumbers, etc.,etc.,etc., who make a significant contribution to society, but I will maintain that – as an example – the results of Bill Gates’ work has had a significantly more profound effect on society today than has my plumber’s work, and he has been compensated accordingly.
On a personal level – yes, I have benefitted greatly by our society. But I have definitely given more than I got. Schooling has been brought up repeatedly – mine was private high school and college (on scholarship). Graduate school at a State school, initially paying out-of-state tuition. Note: the costs to the state of my later stipend and in-state tuition have been paid back many-fold by the royalties the University receives on the patents on my research.
Fast forward thirty years. I am highly compensated because I have successfully made A LOT of money for the companies I have worked for. But not only did I make money for the companies, I made money for the government – 8.75% royalties on every offshore oil and gas field I’ve found. These royalties are not inconsequential. As an example, from one discovery alone, the government will be receiving $18.5 billion dollars in royalties over the next decade, as well as providing fuel for our country and reducing our dependence on foreign oil. (Full disclosure – there were 4 geo.s from 2 companies working on this prospect – but the other 3 were higher income as well!)
In my in-artful way, the point I’m trying to make is that – even without progressive taxation – higher earners are already fulfilling their responsibility by the results of their hard work and are already providing disproportionately more to the operation of the country than are the middle or lower income earners.
As an aside, I'm not sure lawyers (obviously other than Martha) or hedge fund managers fit this veiwpoint , but every rule needs an exception.
I fully expect enthusiastic disagreement with my premise. If I offended any (every?)one, I apologize in advance. I will confess, however, I know which side of the Laffer curve I am on, and if my taxes continue to rise, I will be taking my name-sake’s path within a short timeframe.

 

[RustyShackleford]

There will be tax increases. The question will be: who pays. There will be spending cuts, the question is: what gets cut.

Normally this is an area where there are no easy answers, but this is an exception. The answer in both cases is: those with the least political power.

 

[Westernskies]

Normally this is an area where there are no easy answers, but this is an exception. The answer in both cases is: those with the least political power.

Hopefully, it won't affect essential services like law enforcement.

 

[GregLee]

Few here seem to question the validity of the premise that, as jdw_fire said, “people who have a higher income have received a higher benefit, and therefore have a greater responsibility to pay for the operation of the country.”

I don't know about that "few", having noticed little agreement here, myself, with that premise. But I don't agree with it, as a reason for progressive taxation. I think it's just not a proper reason. We don't try to design our system to be maximally just (as the socialists and communists attempted to do), but rather, we want our system to work. We need money for public purposes, rich people have got money to spare, so let's take it. That's my rationale for progressive taxes. It's like Willie Sutton's reason for robbing banks.

 

[EllisWyatt]

"We need money for public purposes, rich people have got money to spare, so let's take it. That's my rationale for progressive taxes. It's like Willie Sutton's reason for robbing banks."

LOL - I like your honesty! That's the most straight-forward justification I've read for the progressive tax rate, and best of all, doesn't have one iota of "touchy-feely" rationalization. Thanks!

Good point about the word "few". Probably should have substituted "IMHO, too few..."

 

[samclem]

We need money for public purposes, rich people have got money to spare, so let's take it. That's my rationale for progressive taxes.

While there are many proponents of very "progressive" taxation, there are few willing to state their reasons in such a straightforward manner.

In general (there are many exceptions), wealthy people get that way due to the rewards they earn from our economy. They produce a lot. It's at least possible that taking capital from those who have demonstrated an ability to be most productive may do more harm to all of us than if we share the burden more equally.