Increased taxes on high income

Originally posted by normbenign
Progressive taxation is neither sensible, nor rational. It is the basis of political division of people into economic groups, each disliking the other irrationally.

Flat taxation is fair, uncomplicated, and not political. It still results in significantly higher taxes being paid by the wealthy, but lacks the coercive and pejorative attacks on the suc ...[text shortened]... e income, or the best way to eliminate income as the basis for taxation and move to consumption.

Flat taxation is unfair.

Originally posted by moon1969
Flat taxation is unfair.

Having only have of the population paying the most burdensome tax is unfair.

Originally posted by quackquack
Having only have of the population paying the most burdensome tax is unfair.

Why aren't the flat tax supporters pressing for a flat dollar amount per taxpayer, instead of a flat percentage of income? Wouldn't that be right?

After all, the military spending, for example, is used to protect American lives and our way of life, and the money spent protects CEOs and janitors equally, right? A bullet is a bullet and who it protects is, all of us equally. Should a CEO have to pay more taxes to protect his life with those bullets than the janitor in his company does? Can you explain this?

Originally posted by moon1969
Flat taxation is unfair.

"Suppose a group of ten people all gathered together at a restaurant every week for dinner. Suppose further that they had decided that they would split the check according to their incomes, with the person who made the most money paying the most, and the person who made the least money paying the least. To make the math simple, we’ll assume that every week, the dinner bill for the ten people comes out to an even hundred dollars. The people split the check like so:

--the first four, with the lowest incomes, paid nothing;
--the fifth paid $1;
--the sixth paid $3;
--the seventh paid $7;
--the eighth paid $12;
--the ninth paid $18;
--the tenth person, with the biggest income, paid $59

They continued in this arrangement for many weeks, until one day, the restaurant manager visited their table to deliver the check himself. He told his ten guests, “You folks have been great customers, and we appreciate your continued patronage. To show our appreciation, I’m going to knock $20 off the price of your meal. I’ve already worked out your individual payments, according to your original agreement.”

The payments worked out like this:

--as before, the first four people paid nothing;
--the fifth person now paid nothing instead of paying $1;
--the sixth person now paid $2 instead of $3;
--the seventh paid $5 instead of $7;
--the eighth paid $9 instead of $12;
--the ninth paid $12 instead of $18;
--leaving the tenth with a bill of $52 instead $59

Every person was better off than before, but after leaving the restaurant, they all started comparing their savings.

“Hang on a sec,” says Number 6, “I only got a buck out of the $20 reduction, and he got $7!”

“Hey, you’re right!” says Number 5. “Why should Number Ten get seven times what we got?”

“Yeah, I’m with you guys,” says Number 7. “Number Ten got more than double what I got.”

And One through Four chime in, “And we didn’t get anything at all! No fair!”

To make his dining companions feel better, Number Ten divides his $7 savings amongst the group, leaving each person (except Number Ten!) with $0.70 more of refund money.

The following week, Number Ten didn’t show up to the dinner group. The remaining nine people sat down to dinner as usual. But when the check came, they discovered that they were now $52 shy of paying their $80 bill.

And that, friends, is why the wealthiest taxpayers benefit the most from a tax cut: they pay the most in taxes. Tax them too much, punish their success, redistribute their wealth, and they just may not show up at the table anymore."

Flat tax unfair? What seems unfair is the more successful being punished for success. We punish success with taxes and award failure with welfare and redistribution.

Democrats = Socialists, call it how it is.

Originally posted by King Tiger
Suppose a group of ten people all gathered together at a restaurant every week for dinner. Suppose further that they had decided that they would split the check according to their incomes, with the person who made the most money paying the most, and the person who made the least money paying the least. To make the math simple, we’ll assume that every week ...[text shortened]... sh their success, redistribute their wealth, and they just may not show up at the table anymore.

They will still expect us to send them money for leasing the table though.

And if we light the table on fire they are the ones who lose money.

Originally posted by Teinosuke
The real establishment consists of wealthy corporate interests, who sometimes (especially in America) co-opt politicians but in general have done their best simply to render them powerless. The Tea Party is a classic case of the corporate establishment co-opting the poor and lower middle classes too, getting them to vote and campaign against their own economic interests. An astroturf movement, I think they call it.

"An astroturf movement, I think they call it."

Easy to use pejorative language that simply doesn't apply. The TEA party movement is finally the unification of many different "patriot groups" and hardly pawns of the corporate establishment.

The real pawn of corporate interests is BHO. Both parties accept big corporate money, but government debt combined with Fed buying up as much debt as treasury issues, is fundamentally to prop up Wall Street and debt Zombie corporations which would fail without their support.

Originally posted by JS357
Why aren't the flat tax supporters pressing for a flat dollar amount per taxpayer, instead of a flat percentage of income? Wouldn't that be right?

After all, the military spending, for example, is used to protect American lives and our way of life, and the money spent protects CEOs and janitors equally, right? A bullet is a bullet and who it protects is, ...[text shortened]... protect his life with those bullets than the janitor in his company does? Can you explain this?

If strict fairness was the criteria, you are probably right, but a flat rate without a bunch of loopholes, deductions and shelters, produces a progressive result without a punitive method. It is as fair as it gets other than ditching income as a basis for taxation.

Originally posted by King Tiger
"Suppose a group of ten people all gathered together at a restaurant every week for dinner. Suppose further that they had decided that they would split the check according to their incomes, with the person who made the most money paying the most, and the person who made the least money paying the least. To make the math simple, we’ll assume that every wee ...[text shortened]... nd award failure with welfare and redistribution.

Democrats = Socialists, call it how it is.

It is a great anecdote, and illustrates what I said about the mobility of the uberwealthy. When they feel they are being screwed, they have options. The question is how long will they take the screwing, before they take their ball and decide to play elsewhere. Already high corporate tax rates have most major international corporations declaring their income elsewhere.

Originally posted by normbenign
If strict fairness was the criteria, you are probably right, but a flat rate without a bunch of loopholes, deductions and shelters, produces a progressive result without a punitive method. It is as fair as it gets other than ditching income as a basis for taxation.

One straightforward reply, thanks.

Originally posted by King Tiger
"Suppose a group of ten people all gathered together at a restaurant every week for dinner. Suppose further that they had decided that they would split the check according to their incomes, with the person who made the most money paying the most, and the person who made the least money paying the least. To make the math simple, we’ll assume that every wee ...[text shortened]... nd award failure with welfare and redistribution.

Democrats = Socialists, call it how it is.

Fine, although the real situation, given that the state's financial obligations continue to increase, is more like the price of the meal has been increased from 100 dollars to 120 dollars and Number 10 is refusing to pay more than the 59 dollars he used to pay. The others don't have the money to make up the shortfall, so they can't pay the bill. Number 10 walks out of the restaurant in a self-righteous huff, and a little later, the restaurant goes bankrupt.

Originally posted by quackquack
Having only have of the population paying the most burdensome tax is unfair.

Here's an answer to the widespread canard that most people in the US pay no tax:

http://www.cbpp.org/cms/?fa=view&id=3505

Misconceptions and Realities About Who Pays Taxes
By Chuck Marr and Chye-Ching Huang
Updated September 17, 2012

Contrary to "Entitlement Society" Rhetoric, Over Nine-Tenths of Entitlement Benefits Go to Elderly, Disabled, or Working Households

Close to half of U.S. households currently do not owe federal income tax. The Urban Institute-Brookings Tax Policy Center estimates that 46 percent of households will owe no federal income tax for 2011. A widely cited figure is a Joint Committee on Taxation estimate that 51 percent of households paid no federal income tax in 2009. (The TPC figure for 2009 also is 51 percent.) These figures are sometimes cited as evidence that low- and moderate-income families do not pay sufficient taxes. Yet these figures, their significance, and their policy implications are widely misunderstood.

The 51 percent and 46 percent figures are anomalies that reflect the unique circumstances of the past few years, when the economic downturn greatly swelled the number of Americans with low incomes. The figures for 2009 are particularly anomalous; in that year, temporary tax cuts that the 2009 Recovery Act created — including the “Making Work Pay” tax credit and an exclusion from tax of the first $2,400 in unemployment benefits — were in effect and removed millions of Americans from the federal income tax rolls. Both of these temporary tax measures have since expired.

In 2007, before the economy turned down, 40 percent of households did not owe federal income tax. This figure more closely reflects the percentage that do not owe income tax in normal economic times.

These figures cover only the federal income tax and ignore the substantial amounts of other federal taxes — especially the payroll tax — that many of these households pay. As a result, these figures greatly overstate the share of households that do not pay federal taxes. Tax Policy Center data show that only about 17 percent of households did not pay any federal income tax or payroll tax in 2009, despite the high unemployment and temporary tax cuts that marked that year. In 2007, a more typical year, the figure was 14 percent. This percentage would be even lower if it reflected other federal taxes that households pay, including excise taxes on gasoline and other items.

Most of the people who pay neither federal income tax nor payroll taxes are low-income people who are elderly, unable to work due to a serious disability, or students, most of whom subsequently become taxpayers. (In years like the last few, this group also includes a significant number of people who have been unemployed the entire year and cannot find work.)

Moreover, low-income households as a group do, in fact, pay federal taxes. Congressional Budget Office data show that the poorest fifth of households paid an average of 4.0 percent of their incomes in federal taxes in 2007, the latest year for which these data are available — not an insignificant amount given how modest these households’ incomes are; the poorest fifth of households had average income of $18,400 in 2007. The next-to-the bottom fifth — those with incomes between $20,500 and $34,300 in 2007 — paid an average of 10.6 percent of their incomes in federal taxes.

Moreover, even these figures greatly understatelow-income households’ totaltax burden because these households also pay substantial state and local taxes. Data from the Institute on Taxation and Economic Policy show that the poorest fifth of households paid a stunning 12.3 percent of their incomes in state and local taxes in 2011. When all federal, state, and local taxes are taken into account, the bottom fifth of households pays about 16 percent of their incomes in taxes, on average. The second-poorest fifth pays about 21 percent.

It also is important to consider who the people are who do not owe federal income tax in a given year.

TPC estimates show that 61 percent of those that owed no federal income tax in a given year are working households. These people do pay payroll taxes as well as federal excise taxes, and, as noted, state and local taxes. Most of these working households also pay federal income tax in other years, when their incomes are higher — which can be seen by looking at the low-income working households that receive the Earned Income Tax Credit (EITC).

The leading study of this issue found that the majority of households that receive the EITC get it for only one or two years at a time, such as when their income drops due to a temporary layoff, and pay federal income tax in most other years. The study examined the filers who claimed the EITC at least once during an 18-year periodand found that they paid a net of several hundred billion dollars in federal income tax over that period. This finding shows that while some households will receive refundable tax credits in a given year whose value may exceed their payroll tax liability, they pay significant federal income taxes over time in addition to the payroll and state and local taxes they pay each year.

The remainder of those who pay no income tax are primarily elderly, disabled, or students.

The fact that most people who don’t owe federal income tax in a given year pay substantial amounts of other taxes — and also are net income taxpayers over time — belies the claim that households that do not owe income tax in a given year will form bad policy judgments because they “don’t have any skin in the game.”

Furthermore, although the federal tax system is progressive overall, state and local tax systems are regressive and undo a significant share of that progressivity. There is nothing wrong with having one part of the overall tax system shield low- and moderate-income households, who pay substantial amounts of other taxes and generally pay federal income tax as well in other years.

To substantially increase the share of households that owe federal income tax, policymakers would have to take such steps as: lowering the personal exemption or standard deduction — which would tax many low-income working families into, or deeper into, poverty; weakening the EITC or Child Tax Credit, which would significantly increase child poverty while reducing incentives for work over welfare; or paring back the tax exclusion for Social Security benefits, which would subject more seniors with modest fixed incomes to the income tax.

Originally posted by Teinosuke
Here's an answer to the widespread canard that most people in the US pay no tax:

http://www.cbpp.org/cms/?fa=view&id=3505

Misconceptions and Realities About Who Pays Taxes
By Chuck Marr and Chye-Ching Huang
Updated September 17, 2012

Contrary to "Entitlement Society" Rhetoric, Over Nine-Tenths of Entitlement Benefits Go to Elderly, Disabled, ...[text shortened]... rity benefits, which would subject more seniors with modest fixed incomes to the income tax.

Excellent description

Originally posted by Teinosuke
Here's an answer to the widespread canard that most people in the US pay no tax:

http://www.cbpp.org/cms/?fa=view&id=3505

Misconceptions and Realities About Who Pays Taxes
By Chuck Marr and Chye-Ching Huang
Updated September 17, 2012

Contrary to "Entitlement Society" Rhetoric, Over Nine-Tenths of Entitlement Benefits Go to Elderly, Disabled, ...[text shortened]... rity benefits, which would subject more seniors with modest fixed incomes to the income tax.

I'd love to pay only 16% on my income as taxes. I pay payroll tax and income tax. I commute an hours each way to get to my job. I want my kids to go to a good public school so I live in area where there is very large property taxes. People like me pay more than their fair share in both percent and certainly in dollars. Nothing in your article clears up any misconception. Simply put taxes should be broader based so everyone feels the pain and then cut because no one wants to pay. If we have less services from the government people will use their money to get the ones they want. It will be more efficient and more responsive to the customer.

Originally posted by King Tiger
Tax them too much, punish their success, redistribute their wealth, and they just may not show up at the table anymore."

Yes, tax avoidance is a big problem. But when the richest guy doesn't want to pay his fair share, we shouldn't cave in and start being nice to him, we should make him pay.
In your analogy your richest guy, by not coming, no longer benefits and is no longer responsible, but when the richest person doesn't pay tax, he still uses government facilities and services and is still responsible.

Originally posted by twhitehead
Yes, tax avoidance is a big problem. But when the richest guy doesn't want to pay his fair share, we shouldn't cave in and start being nice to him, we should make him pay.
In your analogy your richest guy, by not coming, no longer benefits and is no longer responsible, but when the richest person doesn't pay tax, he still uses government facilities and services and is still responsible.

If someone illegally fails to pay taxes there are legal consequences and we should enforce them. (Lets include cash payments like waitresses/ restaurants/ handymen/ bars/ baby sitters because they are the ones making money, not paying taxing and then tapping into welfare programs).

If you can avoid taxes legally, then there is literally nothing to complain about. Tax laws change peoples behavior. Just as anyone would not shop in a store that charges too much, some people do the same thing with taxes.