Increased taxes on high income

Originally posted by JS357
One straightforward reply, thanks.

Another problem with a single flat amount tax is that it might be construed to be a poll tax, which is unconstitutional. Of course, income taxes imposed directly were unconstitutional until the 16th amendment.

Originally posted by Teinosuke
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 ...[text shortened]... ut of the restaurant in a self-righteous huff, and a little later, the restaurant goes bankrupt.

The problem is that #10 has no obligation to keep the restaurant open, nor to feed the other nine. If it closes, so be it.

#10 finds another restaurant, and people who pay their own way.

Originally posted by normbenign
Another problem with a single flat amount tax is that it might be construed to be a poll tax, which is unconstitutional. Of course, income taxes imposed directly were unconstitutional until the 16th amendment.

What if it is not "construed to be a poll tax"?

Originally posted by normbenign
The problem is that #10 has no obligation to keep the restaurant open, nor to feed the other nine. If it closes, so be it.

#10 finds another restaurant, and people who pay their own way.

I think the essence of the story is that #10 just stops going to restaurants. This is an excellent analogy for the realistic scenario where rich people stop working because they don't want to pay taxes.

Originally posted by Teinosuke
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 ...[text shortened]... ut of the restaurant in a self-righteous huff, and a little later, the restaurant goes bankrupt.

"given that the state's financial obligations continue to increase"

Why is this a given? Financial obligations increase because politicians buy votes, by promising benefits. Everyone, or almost everyone like getting something for nothing, a benefit paid for by some unknown sugar daddy known only as "the rich".

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.

The richest guys, have two weapons. Mobility, and representation. They can leave, perhaps not all at once, but over time they can withdraw, stop earning at high income tax rates, or move their operations off shore. They can afford access, lobbying and contributing to candidates elections. For example one of BHO's biggest contributors was CEO of General Electric. Rich Union bosses are also big contributors, mostly out of coerced dues. Other rich folks find means via loopholes, and tax breaks.

"But when the richest guy doesn't want to pay his fair share, we shouldn't cave in and start being nice to him"

No stop pretending. Adding higher rates compensated for by loopholes is perverse. Equal rates still produces a progressive result, where the rich pay far more taxes without rates being higher, and without incentives to phony up records, or behave in certain ways. Same is true of lower income people. Of course a consumption tax eliminates most of those perverse incentives, as well as billions of dollars of compliance and record keeping costs, and the need for an IRS.

Originally posted by quackquack
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 com ...[text shortened]... nyone would not shop in a store that charges too much, some people do the same thing with taxes.

Taxation is the primary cause of the massive underground economy. Lots of legitimate businesses give discounts to people who pay cash, because the cash payments simply never happened.

The only way to address this is a consumption tax. Sure there is still going to be some avoidance, but miniscule compared to income non reporting and under reporting. Enforcement and record keeping costs would save billions.

Originally posted by KazetNagorra
What if it is not "construed to be a poll tax"?

A single flat amount would almost certainly be labelled a poll tax, and challenged as such. Of course it would be even less progressive than a level rate tax.

Originally posted by KazetNagorra
I think the essence of the story is that #10 just stops going to restaurants. This is an excellent analogy for the realistic scenario where rich people stop working because they don't want to pay taxes.

I suppose you could draw that conclusion from the story. I personally know a fellow who was making a medium six figure income, who stopped working a great corporate job, and began offering the same service for cash payments, or barter. He reports his income up to the point it generates taxes, and thereafter works only under the table.

The level of taxation which produces that kind of response differs with each individual, and their mobility, and flexibility.

Originally posted by quackquack
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.

I assure you that I can complain, and loudly too. We were discussing whether particular taxes are fair, not what the legal tax code is for your region.
If tax avoidance by the rich is legal then we should change the laws. The problem is that the rich make the laws. I come from Zambia where the main source of government income is supposed to be tax from copper, however the mining companies have succeeded in avoiding paying most taxes, partly by legal means, but I am sure that a lot of illegality goes into it too, including corruption involved in making the tax avoidance legal (if that makes any sense).

Originally posted by normbenign
No stop pretending. Adding higher rates compensated for by loopholes is perverse. Equal rates still produces a progressive result, where the rich pay far more taxes without rates being higher, and without incentives to phony up records, or behave in certain ways.

You are the one pretending that your particular favourite tax code will somehow make everyone happy to pay their tax. People will try to avoid tax however little it is, and generally the rich feel more entitled to avoid tax than the poor do. Its an aspect of human psychology that the rich and successful think they deserve it.

Originally posted by normbenign
A single flat amount would almost certainly be labelled a poll tax, and challenged as such. Of course it would be even less progressive than a level rate tax.

Why would it be a poll tax?

Originally posted by twhitehead
I assure you that I can complain, and loudly too. We were discussing whether particular taxes are fair, not what the legal tax code is for your region.
If tax avoidance by the rich is legal then we should change the laws. The problem is that the rich make the laws. I come from Zambia where the main source of government income is supposed to be tax from c ...[text shortened]... too, including corruption involved in making the tax avoidance legal (if that makes any sense).

I certainly know nothing about Zambia, but in some ways it probably like all places. Certain groups have more resources than others. Those with my resources are taxed more in dollars and percentage terms. Those with more resources also try more to avoid paying and do so legally, illegally and questionably legally. As long as there are conditions for paying people can and should work to avoid them. There is no reason for anyone to pay a single penny more than they need to. I have not heard you offer to pay more than is legally required. It just seems you want others to support you.

Originally posted by normbenign
I suppose you could draw that conclusion from the story. I personally know a fellow who was making a medium six figure income, who stopped working a great corporate job, and began offering the same service for cash payments, or barter. He reports his income up to the point it generates taxes, and thereafter works only under the table.

The level of ta ...[text shortened]... roduces that kind of response differs with each individual, and their mobility, and flexibility.

Your story of the petty douchebag seems to me like an argument to have an effective and efficient IRS to make those people pay their taxes.

Originally posted by normbenign
Another problem with a single flat amount tax is that it might be construed to be a poll tax, which is unconstitutional. Of course, income taxes imposed directly were unconstitutional until the 16th amendment.

But it would be more fair, right? Why is the same "rate" more fair than the same "amount"?

For a flat tax rate, some people pay more than others = unfair. The only income tax that can be fair is the same amount.