Does not raising the debt ceiling = US defaults on its debt?
Poll
 | 10 votes (35.71%) | ||
| | 18 votes (64.28%) |
28 members have voted
Quote: s2dbakerthat sounds a lot like that crazy liberal Nancy Pelosi scheme called Pay-Go. Why do you hate America?
What is so radical about a pay as you go policy? Currently we spend 60% more than we collect in tax revenue (source). That is not sustainable. If you suddenly raised taxes 60% there would be real political will to cut spending. It has become too easy to keep borrowing, for the next generation to pay the tab.
Quote: WizardWhat is so radical about a pay as you go policy? Currently we spend 60% more than we collect in tax revenue (source). That is not sustainable. If you suddenly raised taxes 60% there would be real political will to cut spending. It has become too easy to keep borrowing, for the next generation to pay the tab.
Other than being bad economics nothing. We have a long run budget problem and a short term recision problem. Once the economy picks back up the difference will be more like 30%. Of course that's still not good. Take out some war spending, a bit more efficiency and tweak a few programs and things will be OK.
Austerity leads to less revenue and prolongs the slump. So we need a long term solution now that doesn't involve cuts for a few years.
In short commit to surpluses when times are good and deficits when they are bad to smooth things out through the ups and down.
Quote: MathExtremistThe economic conservatives in this country have long argued for the relaxation of market regulations, restrictions that could have prevented banks from giving mortgages to homebuyers who could clearly not afford to repay them.
I have worked in the development business for over 20 years. Banks that did not lend to these people were acused of "redlining" and threatened with the loss of their charter. The government (Fannie Mae and Freddie Mac) readily bought up this paper. No one that I have worked with would have invested in these without a ready market for all the paper.
This started under Clinton and continued under Bush. When people finally realized that this was a problem waiting to explode, remedies were proposed. Who lead the oposition? Barney Frank, whose live in boyfriend was making a fortune as an executive with Fannie Mae! Our politicians, once again, lining their pockets at our expense.
Quote: timberjimThis started under Clinton and continued under Bush.
This is exactly right. You can't find a better example of the terrible danger of allowing liberal ideas to come to fruition. The people in the lending industries knew it was insanity. Some are now calling what has happened "the affordable mortgage depression."
Quote: s2dbakerthe rate that we (yes i'm very well off too) were paying under Clinton/Gore would be fine.
Any person is free to send a "gift to the Treasury" on their tax form or just send a check. Why don't you show how great higher taxes are and send in the cut you received? I'm sure your accountant could give you the number.
Liberals are so funny. Let gasoline go up 10% and they want hearings. Let there be a call for taxes (usually someone else's) to be raised 10% and they think it will somehow help the economy.
I don't see your point here. How can I, alone, by sending a gift to the treasury of a few thousand dollars, eliminate the deficit?Quote: AZDuffmanAny person is free to send a "gift to the Treasury" on their tax form or just send a check. Why don't you show how great higher taxes are and send in the cut you received? I'm sure your accountant could give you the number.
Liberals are so funny. Let gasoline go up 10% and they want hearings. Let there be a call for taxes (usually someone else's) to be raised 10% and they think it will somehow help the economy.
Federal, Local , and State Government spending per capita in 1992 was 9,216 / year. In 2000 it was 11,483. In 2008 it was 17,586. Revenue was 8,228 in 1992, 13,026 in 2004, and 15,502 in 2008.
You can't go on year over year increasing spending without increasing revenue. You increase revenue by increasing the GDP so that more taxes are naturally paid or raise the tax rate to bring in more revenue.
Clinton was successful in raising revenue through an increase in the GDP. He was lucky that there was a .com boom at the time and that the world's economy was humming along. GWB, not so lucky, but he and his congress and senate pushed through major spending initiatives (that had nothing to do with 9/11) without the supporting revenue which ended with a major bailout. Obama and the accompanying sentate and congress is completely reckless, so far.
To generalize, Republicans have got to accept that raising taxes is a necessary evil and Democrats have got to accept a trillion dollars or so in spending cuts. Will the economy shrink as a result of the cuts in spending: absolutely. But the monetary policy that is currently in place is absolutely unsustainable.
The only way that the united states will get out of your mess, I believe, is to let people solve their own problems, and to put in the necessary incentives for new industries to grow. Despite China and India's advances in leaps and bounds, there is no better place to start an idea and bring it to fruition than the United States (well, except Canada).
Do you need my mailing address ? ?
Quote: boymimboTo generalize, Republicans have got to accept that raising taxes is a necessary evil and Democrats have got to accept a trillion dollars or so in spending cuts. Will the economy shrink as a result of the cuts in spending: absolutely. But the monetary policy that is currently in place is absolutely unsustainable.
The conclusion is correct, but it's not as simple as Republicans vs. Democrats. Most sensible Republicans do understand that taxation to pay for spending is a necessary evil, but the dogmatic fringe controlling the national stage right now doesn't accept that. Similarly, both Democrats and Republicans are going to have to accept massive spending cuts, but the easiest place to find that money is not in nickel-and-dime projects, it's in the Big Three entitlements that nobody is willing to touch. I particularly like this example by Philip Greenspun:
from Philip Greenspun's blog.Quote: Philip GreenspunWe have a family that is spending $38,200 per year. The family’s income is $21,700 per year. The family adds $16,500 in credit card debt every year in order to pay its bills. After a long and difficult debate among family members, keeping in mind that it was not going to be possible to borrow $16,500 every year forever, the parents and children agreed that a $380/year premium cable subscription could be terminated. So now the family will have to borrow only $16,120 per year.
Sometimes you have to stop looking for ways to cut corners on little things and admit you either (a) have to move into a smaller house or (b) make a *lot* more money. Congress hasn't shown a willingness to do either, alone or in combination, and there's no indication that repeated fiddling with the tiny edges of the budget will make any difference whatsoever.
Quote: s2dbakerI don't see your point here. How can I, alone, by sending a gift to the treasury of a few thousand dollars, eliminate the deficit?
Point is you say you don't mind higher taxes and in fact want to pay more. So why not send a gift to the Treasury?
You are saying the same as Obama, the Clinton's, and others, "I'm so rich I don't need the tax cut." So put your money where your mouth is and send the "extra" in.
Quote: boymimboTo generalize, Republicans have got to accept that raising taxes is a necessary evil and Democrats have got to accept a trillion dollars or so in spending cuts. Will the economy shrink as a result of the cuts in spending: absolutely. But the monetary policy that is currently in place is absolutely unsustainable.
Low taxes are not the problem. Taxes are not particularly low. Spending is now at 25% of GDP were 19-20% of GDP has been normal post-WWII. We need to cut that spending first. $856 billion wasted on a "stimulus" that did nothing and now they say they can't do it by just cutting spending?
Quote: AZDuffmanLow taxes are not the problem. Taxes are not particularly low. Spending is now at 25% of GDP were 19-20% of GDP has been normal post-WWII. We need to cut that spending first. $856 billion wasted on a "stimulus" that did nothing and now they say they can't do it by just cutting spending?
I thought I read somewhere recently that our tax levels are historically low...I gotta find that piece I read. Also, isn't spending higher as a percentage of GDP because we produce next to nothing and we have more folks to pay for.
We will rue the day (very soon) when the dollar ceases to be the world's reserve currency. Hope you got those seeds handy.....
Quote: avargovI thought I read somewhere recently that our tax levels are historically low...I gotta find that piece I read. Also, isn't spending higher as a percentage of GDP because we produce next to nothing and we have more folks to pay for.
We will rue the day (very soon) when the dollar ceases to be the world's reserve currency. Hope you got those seeds handy.....
Don't confuse MARGINAL RATES with tax LEVELS. Liberals seem to think there is somenting wrong with a low tax rate so they spre this nonsense that int he 1970s we had a 70% rate and now a 31% rate so somehow "the rich" are getting a break. Back then there were many more tax shelters that distorted investment out of the best productivity to tax-favored things. This helped the S&L collapse of the 1980s.
We have a 36% corporate rate, second highest in the world. Tax revenue is in line with historical levels. It is just that the left can't take that Bush lowered Clintons confiscitory rate and it is all they focus on.
We do not "produce next to nothing." We still produce plenty. In addition, GDP includes services. Spending is high because Obama has ramped spending up 28% since the Bush years and wants to load up even more on high-speed rail and other "green jobs" waste.
Spending is out of control, but you gotta bring revenue in line to balance the budget. That requires raising taxes. There's no reason why all working Americans are making an extra automatic 2 percent this year due to a cut in social security taxes, yet Americans claim that the pension fund will be going broke. This is stimulus, being paid by your government. There's no reason to continue the Bush tax cuts on the rich. What have the rich given back to the economy as a result of the break. It's all of these broad based tax cuts that have to come to an end.
I'm Canadian, and I file tax returns in both countries. The personal tax rate is much lower in the States than in Canada but it has the highest corporate rate as AZ confirms. Add to that the incredible high (and climbing) burden of health care that the corporations are passing on to its employees and I would contend that the US has to balance its tax structure.
Add to that the archaic sales tax system that only the United States has (all other western countries have a form of VAT) and it becomes difficult to own a successful corporation and be headquartered in the United States.
Quote: boymimboSigh. Tax revenue is down because the rate is down on the highest 2 percent and because the production of the economy is not there to support the tax base.
Spending is out of control, but you gotta bring revenue in line to balance the budget. That requires raising taxes. There's no reason why all working Americans are making an extra automatic 2 percent this year due to a cut in social security taxes, yet Americans claim that the pension fund will be going broke. This is stimulus, being paid by your government. There's no reason to continue the Bush tax cuts on the rich. What have the rich given back to the economy as a result of the break. It's all of these broad based tax cuts that have to come to an end.
I'm Canadian, and I file tax returns in both countries. The personal tax rate is much lower in the States than in Canada but it has the highest corporate rate as AZ confirms. Add to that the incredible high (and climbing) burden of health care that the corporations are passing on to its employees and I would contend that the US has to balance its tax structure.
Add to that the archaic sales tax system that only the United States has (all other western countries have a form of VAT) and it becomes difficult to own a successful corporation and be headquartered in the United States.
First, it is not "the Bush tax cuts for the rich" it is "the Bush tax cuts for all taxpayers." All taxpayers got a cut, some of 100%.
What "have the rich given back?" What are they supposed to "give back?" But they do run businesses, hire people, buy lots of products and services, and still pay about 40% of all individual income taxes. What more do you want? Should Steve Wynn give away rooms for free to "give something back" for his tax cut even after employing thousands of people?
Tax revenue is down because the Obama Administration is the greatest wet blanket to business and job creation in 70 years. (borrowed from Steve Wynn)
Here are some numbers. Constant dollars in billions:
2000 2,053
2001 1,991
2002 1,854
2003 1,782
2004 1,880
2005 2,154
2006 2,407
2007 2,568
2008 2,524
2009 2,105
2010 2,163
2011 2,174 (est)
Revenue went down 2001-2003 with the dot0com bust, recession, and 9-11. After 2003 the Bush tax-cuts-for-all-taxpayers revenue went UP in 2004-2007. In 2007 the democrats took congress and had a very anti-business attitude, but it didn't really fall until 2008 and the mortgage meltdown. Under Obama and flat tax rates revenue has grown slower than under Bush who cut taxes.
The Bush cuts drive Obama, democrat party members, and their greedy supporters nuts. Why someone would be so hateful to say to someone paying an already confiscatory 40%+ combined tax rate "NOT ENOUGH, DO YOUR PART!" escapes me.
Why someone would actually want higher taxes escapes me, but if you want, make a gift to the Treasury. You can do so here:
http://www.treasurydirect.gov/govt/reports/pd/gift/gift.htm
Nope it wouldn't bother me at all to take a 50% rate. You?
Quote: rxwineIf I'm offered a 1,000,000 dollars a year job at 50% tax rate, or a $30,000 dollar a year job at 1%.
Nope it wouldn't bother me at all to take a 50% rate. You?
The 50% rate would bother me every paycheck, why on earth does the government have a right to that much of a person's money?
If you want to pay 50%, pay 50% of what you are currently making. I gave the link earlier.
But I don't get the point of the question? Who has a choice between such job offers?
A flat tax is still the best idea. And everyone pays no matter how low their income.
Quote: boymimboSigh. Tax revenue is down because the rate is down on the highest 2 percent and because the production of the economy is not there to support the tax base.
.
How about you give us some real numbers on the revenue collected from the top 2%? You pick the time span. I suggest the time since 2000, since that is what most of us have been talking about. Has it been going up or down?
While you are at it, why don't you tell us all how much of the total income the top 2% earn and how much of the total taxes they currently pay? What percentage should they pay to be "fair"?
You have very strong opinions, so you must already have these facts at hand. I look forward to seeing your answer.
Wouldn't bother me in the slightest. Although I already pay at the top rate, I can afford to pay a lot more.Quote: rxwineIf I'm offered a 1,000,000 dollars a year job at 50% tax rate, or a $30,000 dollar a year job at 1%.
Nope it wouldn't bother me at all to take a 50% rate. You?
Quote: AZDuffmanThe 50% rate would bother me every paycheck, why on earth does the government have a right to that much of a person's money?
A flat tax is still the best idea. And everyone pays no matter how low their income.
The government (our government, anyway) has the rights accorded to it by the people. If the people collectively decide that a progressive tax structure is how they want to fund their government, and that tax structure has a 50% bracket, *that* is the right the government has to that much of a person's money.
A flat tax is perhaps the worst-conceived fiscal policy idea ever. It is underpinned by the flawed assumption that the marginal value of a dollar is equal for everyone. It's not, and it never can be unless we move to a pure centrally-managed economy (and that won't happen). If I make $180,000 per year, the next dollar I make is worth a whole lot less to me than if I made $18,000 per year. If you tax me at the same rate on both dollars, I'm screwed if I only make $18,000. The flat tax is a populist ruse dressed up in the garb of "fairness", but in reality is promulgated by those much wealthier than you who would just as soon see your taxes rise so theirs can shrink. Don't fall for it.
Yet they do fall for it every single time.Quote: MathExtremistThe flat tax is a populist ruse dressed up in the garb of "fairness", but in reality is promulgated by those much wealthier than you who would just as soon see your taxes rise so theirs can shrink. Don't fall for it.
Quote: MathExtremistA flat tax is perhaps the worst-conceived fiscal policy idea ever....
Not that I'm a flax-taxer, but the proponents say the idea would actually benefit the middle class, and disadvantage the rich. They site as evidence the many loopholes only within reach of the rich and tax caps on such things as Social Security. Even Warren Buffet said he pays a lower ratio of taxes to income than his secretary. Not saying I agree or disagree, but would be interested to see a non-biased look into the effects.
Sounds pretty awesome if you make $30,000, heck, even people making $60,000 only pay 20% over all.
But what about your mortgage interest? Are you willing to give up that deduction? What about small businesses and sole proprietorships? Are they willing to let go of their amortized deductions on office equipment? What about stock losses? If you're allowed to deduct stock losses again stock gains then what other deductions are allowable? What if you have five children and only make $40,000? Should you get a tax break for more offspring? Who pays the tax on Alimony? Is that another deduction that goes down the slippery slope?
Flat tax is just the first step in getting back to where we are right now.
Quote: WizardNot that I'm a flax-taxer, but the proponents say the idea would actually benefit the middle class, and disadvantage the rich. They site as evidence the many loopholes only within reach of the rich and tax caps on such things as Social Security. Even Warren Buffet said he pays a lower ratio of taxes to income than his secretary. Not saying I agree or disagree, but would be interested to see a non-biased look into the effects.
Loopholes exist, yes, but those aren't a compelling reason to create a fundamentally regressive flat tax structure. They're just a compelling reason to get rid of the loopholes. Warren Buffett pays less in tax/income than his secretary? Why is making that ratio *equal* the right call? Shouldn't he be paying more?
I say yes, based on an over-arching concept of economic utility. And Warren Buffett agrees with me (or really, I agree with him, because he's Warren Buffett and I'm not). Consider an economy with two earners, A and B. A earns $25,000/year, B earns $75,000/year. Suppose the government needs $20,000/year to operate. Total earnings are $100,000, so the flat-tax approach would be 20% for both. A pays $5000, B pays $15,000. Fair, right? Under the ratio definition perhaps, but I submit that the $5000 tax burden has hurt A's finances far more than the $15000 tax has hurt B's finances. In other words, the utility of A's $5000 is far greater than the utility of B's $15,000. I further submit that being truly "fair" means that the utility of each household's tax burden be equalized, not that the ratio of tax to income be equalized. Why? It is the use (utility) that one derives from money that makes it valuable. At the end of the day, you can't spend a ratio, so why focus the design of a taxation scheme around it?
Here's an Arizona example:
http://ktar.com/category/local-news-articles/20110325/Proposed-flat-tax-would-cost-more-for-many/
Quote: s2dbakerFlat tax is just the first step in getting back to where we are right now.
And worse, it gives us far fewer levers to make adjustments down the road. Brackets (or, more elegantly, a continuous function!) are definitely the way to go, in conjunction with those deductions which serve to further socioeconomic policy. For example, I donate a lot to Goodwill every year because I get a charitable deduction. If I didn't, I'd be much more likely to post it on Craigslist or eBay. Do we really want to do away with fiscal incentives to fund non-profit organizations?
Note, I do not necessarily condone tax breaks for corporate jets. But the fact that we can give them is indicative of the flexibility in our current tax system which would be entirely gone if we moved to the flat tax proposed by some. I'm not sure why a rigid and inflexible tax system would appeal to anyone.
Quote: WizardIf the object were to maximize utility, and we assume no change in behavior, then the optimal tax solution would be to tax all income above $x at 100%, and all income below it at 0%. It would just be a matter of finding $x so that all income above it equaled government spending.
It's not that simple either. If you live in Manhattan or San Francisco and make $50,000/year, you're a pauper. If you live in Greene County, Alabama, you're rich. It's all relative. Utility isn't computed in a vacuum. That's why it's a hard thing to figure out. But that doesn't mean we should all give up and just go with a nice steady ratio instead. Lazy is dangerous.
More to the point, I present the following chart for the top 1 percent of tax earners:
| Year | 1984 dollars | AGI (000s) | Tax (000s) | Tax Rate |
|---|---|---|---|---|
| 1986 | 108411 | 285197 | 94491 | 33.13 |
| 1987 | 122614 | 346635 | 91559 | 26.41 |
| 1988 | 132828 | 473527 | 113841 | 24.04 |
| 1989 | 132152 | 468079 | 109259 | 23.34 |
| 1990 | 128096 | 483252 | 112338 | 23.25 |
| 1991 | 124919 | 456603 | 111267 | 24.37 |
| 1992 | 129654 | 523586 | 131156 | 25.05 |
| 1993 | 128522 | 520586 | 145836 | 28.01 |
| 1994 | 132069 | 546700 | 154337 | 28.23 |
| 1995 | 137406 | 619610 | 178035 | 28.73 |
| 1996 | 145026 | 736545 | 212626 | 28.87 |
| 1997 | 156222 | 872826 | 241239 | 27.64 |
| 1998 | 164427 | 1010245 | 274009 | 27.12 |
| 1999 | 176119 | 1152820 | 317419 | 27.53 |
| 2000 | 182038 | 1336773 | 366929 | 27.45 |
| 2001 | 165394 | 1094296 | 300898 | 27.5 |
| 2002 | 158657 | 985781 | 268608 | 27.25 |
| 2003 | 160595 | 1054567 | 256340 | 24.31 |
| 2004 | 173663 | 1306417 | 306902 | 23.49 |
| 2005 | 186716 | 1591711 | 368132 | 23.13 |
| 2006 | 192860 | 1791886 | 408369 | 22.79 |
| 2007 | 197827 | 2008259 | 450926 | 22.45 |
| 2008 | 176662 | 1685472 | 392149 | 23.27 |
The 1984 dollars column represents the income level, in 1984 dollars, to reach that top 1 percent. The CPI is 215.3 for 2008 or $380,353 to make it to the top 1 percent.
For me this shows a few things: The richest Americans pay well under the marginal tax rate of 35 percent and closer to the capital gains tax rate of 15 percent. In 1996 the top marginal tax rate was 39.6 percent and the capital gains tax was 25 percent. In 2000 Capital Gains tax was mainly 20 percent. In 2008 the capital gains tax is 15 percent and the top marginal tax rate was 35 percent.
It is clearly the capital gains tax rate that is giving the wealthiest of Americans their lower tax rate and if you want to look at the charts here, please feel free to educumacate yourself and stop buying into the Sean Hannity / Chris Matthews bull.
So, let's rephrase: If I was making 500,000 a year, I only pay an average of 116K in taxes in 2008. Not bad.
Reduce government spending. Bring the tax rate up on ALL Americans (the bottom 75 percent of income earners pay an average tax rate of 5.13 percent in 2008, down from 7.43 percent in 2000) to balance the budget just up to 2000 levels.
Do you like apples?
Quote: s2dbakerWouldn't bother me in the slightest. Although I already pay at the top rate, I can afford to pay a lot more.
Just for the record, it is considered rude to keep bragging about all the money one makes.
Quote: WizardIf the object were to maximize utility, and we assume no change in behavior, then the optimal tax solution would be to tax all income above $x at 100%, and all income below it at 0%. It would just be a matter of finding $x so that all income above it equaled government spending.
If you did this, revenue to the government would be $0.
At a tax rate of 0% or 100% revenue = $0. The key is finding the right rate since after a point when you raise rates total income falls as people stop earning. (Laffer Curve) Lately much above 30% and you kill incentive to earn and invest.
Quote: s2dbakerHere's how a flax tax might work, every dollar that you make over $30,000 gets taxed at 40% and no one gets any deductions on anything else, even interest and dividend income.
Sounds pretty awesome if you make $30,000, heck, even people making $60,000 only pay 20% over all.
But what about your mortgage interest? Are you willing to give up that deduction? What about small businesses and sole proprietorships? Are they willing to let go of their amortized deductions on office equipment? What about stock losses? If you're allowed to deduct stock losses again stock gains then what other deductions are allowable? What if you have five children and only make $40,000? Should you get a tax break for more offspring? Who pays the tax on Alimony? Is that another deduction that goes down the slippery slope?
Flat tax is just the first step in getting back to where we are right now.
40%! You must be crazy. 15-20% starting on the first dollar earned would be high but fair.
You are missing the point on deductions. The $500/child tax credit is a deduction we could kill. But office equipment being ammortized would still happen as it would be an expense against income on an income statement. Alimony could be deducted revenue-neutral as tax would be paid on it by the recipient.
A flat tax is the most fair tax. What is more fair than everyone paying the same percent?
And again, it would stop politicians from proposing handouts when working people see their rate go up.
Quote: AZDuffman
A flat tax is the most fair tax. What is more fair than everyone paying the same percent?
I think a pretty good job of increasing the disparity of the concentration of wealth between haves and the have-nots has been accomplished over the decades with a tax code where a bunch of the bottom half doesn't pay enough, or too little (according to the complaint).
Somewhat like Monopoly, (even before there's a clear winner in the game) the person with the most houses and hotels leverages quite a bit of power.
But we are not being fair? Okay. Whatever.
Quote: boymimboThe IRS has this information online.
More to the point, I present the following chart for the top 1 percent of tax earners:
Year 1984 dollars AGI (000s) Tax (000s) Tax Rate 1986 108411 285197 94491 33.13 1987 122614 346635 91559 26.41 1988 132828 473527 113841 24.04 1989 132152 468079 109259 23.34 1990 128096 483252 112338 23.25 1991 124919 456603 111267 24.37 1992 129654 523586 131156 25.05 1993 128522 520586 145836 28.01 1994 132069 546700 154337 28.23 1995 137406 619610 178035 28.73 1996 145026 736545 212626 28.87 1997 156222 872826 241239 27.64 1998 164427 1010245 274009 27.12 1999 176119 1152820 317419 27.53 2000 182038 1336773 366929 27.45 2001 165394 1094296 300898 27.5 2002 158657 985781 268608 27.25 2003 160595 1054567 256340 24.31 2004 173663 1306417 306902 23.49 2005 186716 1591711 368132 23.13 2006 192860 1791886 408369 22.79 2007 197827 2008259 450926 22.45 2008 176662 1685472 392149 23.27
The 1984 dollars column represents the income level, in 1984 dollars, to reach that top 1 percent. The CPI is 215.3 for 2008 or $380,353 to make it to the top 1 percent.
?
So your chart shows the steady increase in revenues collected from the top 1% even after the Bush tax cuts. Thanks for proving my point.
I can only assume you ignore the other very simple, straight forward questions because the actual facts do not fit your views.
I would be happy to continue this discussion if you are able to continue without adding childish remarks and stick to the facts that support your view.
Quote: AZDuffman40%! You must be crazy. 15-20% starting on the first dollar earned would be high but fair.
A flat tax is the most fair tax. What is more fair than everyone paying the same percent?
Even the most ardent flat-taxers don't propose something as draconian as taxing someone's first dollar. That's just mean.
You're confusing "fair" with "simple". It's simple to enact a flat tax. It's hardly fair, using any rational measurement of the value of money. If boymimbo's stats are correct, the top 1% in this country are paying 23.27% tax on income while the bottom 75% are paying 5.13% (or were, in 2008). Your proposal is equivalent to almost quadrupling the tax paid by the bottom 3/4 of taxpayers in order to reduce the tax on the top 1/100 by 3.27%.
That's not fair at all. First off, the world isn't fair: if it were, we'd all be equally good-looking and equivalently intelligent, but we know that's not the case. Moreover, even if you subscribe to a folksy notion of "fair", you can't define it by something as divorced from reality as "ratio of tax to income". What's truly fair is if everyone pays an equally-affordable burden. In other words, given that taxes are painful, being fair would mean spreading the pain evenly to everyone. But there is an inverse pain function with a flat tax as income increases because the marginal utility of a dollar decreases with income. Fair, therefore, must be a tax rate that rises with income so as to make the pain felt by all taxpayers equal. Forking over $500,000 to the IRS when you make $2,500,000 is far less painful than forking over $5,000 when you make only $25,000.
If it's the former, people can debate what services are essential, and devise whatever means of taxation serve that end. If it is the latter, what matters is that whomever is in charge takes enough money and redistributes it to make sure everyone is more or less equal, and gets enough money to do Good Things for everyone.
How government gets the money is just nuts and bolts.
Quote: CalderArguing tax rates and methods puts the cart before the horse. It seems to me the discussion is ultimately about the proper role of government; whether taxes are intended only to provide essential services to the population, or whether they are a means to achieve and enforce economic equality and social good.
If it's the former, people can debate what services are essential, and devise whatever means of taxation serve that end. If it is the latter, what matters is that whomever is in charge takes enough money and redistributes it to make sure everyone is more or less equal, and gets enough money to do Good Things for everyone.
How government gets the money is just nuts and bolts.
Achieving and enforcing economic equality is not and never has been the goal, but one of the founding principles of the U.S. is to achieve social good ("promote the general Welfare" -- preamble, U.S. Constitution). So "whether" is not really an issue. The issue is "how much", that is, how far the government should go in promoting general welfare. There are many philosophical debates on that, but the question of how you tax the population doesn't really change as a result. As a practical matter, the entirety of tax receipts in the U.S. will fail to cover just Social Security, Medicare, and Medicaid (plus related expenses) within my lifetime, so something has to change about the status quo. Social Security ran at a deficit last year -- for the first time since 1983. And that's going to be the case from now on...
All of these issues would gradually smooth themselves out if we'd just let all our laws have expiration dates and require Congress to regularly refresh them. But that's a different discourse entirely.
Quote: AZDuffman
A flat tax is the most fair tax. What is more fair than everyone paying the same percent?
How about everyone paying the same AMOUNT? Does the war in Afghanistan benefit me more than you because I earn twice as much? Do traffic lights protect me twice as much as you? Of course in the real world we live in likely 3/4 of Americans could not afford that definition of 'fair'. Some say, and it is hard to argue, that the whole concept of an INCOME tax is silly. A NET WORTH tax would be fairer. When I soon retire having accumulated enough to live on comfortably, I will be then paying close to no taxes. Why should the dollar I am collecting from work be taxed more than the dollar I already have? Its a dollar to me either way. And ME's discussion about evening the 'pain' of taxes would clearly lead to a Net Worth Tax, not an income tax. A billionaire who now is making little could afford millions a year with little pain, Someone who is on their first job with big student loans, a mortgage, 2 kids, etc... will feel 'pain' very low on the tax scale.
Quote: AZDuffmanJust for the record, it is considered rude to keep bragging about all the money one makes.
s2dbaker is stating some facts as they pertain to him. You can choose to interpret it as bragging but I look at it as informational. This is a gambling forum where every day people discuss their big wins, how much they bet on a hand, their bankrolls, etc... It brings together people from all levels of income, age, gender (and even transgender). Our beloved Wiz has blogged about hours of play at hundreds of dollars per hand. I take that as interesting and informative, not bragging.
Quote: MathExtremistAchieving and enforcing economic equality is not and never has been the goal, but one of the founding principles of the U.S. is to achieve social good ("promote the general Welfare" -- preamble, U.S. Constitution).
The preamble to the US Consitution states why a constitution is being set up, not what the purpose of government is. Nor is "to promote the general welfare" the only clause in the preamble. There's also "To form a more perfect Union" and "To secure the blessings of Liberty." Furhter, any actions by the government must conform to the limits, checks and balances set up in the Constitution.
And in the end, whether or not the government respects the law, it can't spend more money than it takes in forever. Sooner or later it runs out, and then there will be hell to pay.
Quote: NareedAnd in the end, whether or not the government respects the law, it can't spend more money than it takes in forever. Sooner or later it runs out, and then there will be hell to pay.
Actually, it can. As long as revenue doesn't exceed debt service, running a modest deficit is a decent way to grow the economy. It's just borrowing against anticipation of future income (GDP growth and corresponding tax receipts growth, in the government's case), and it happens all the time from individuals to corporations to nations. The problem is that right now our deficit is highly immodest.
And if the recent, or some would argue current, housing crisis is any indication, if the U.S. does default on its mounting debts then there will indeed be hell to pay. But how? It's not like China can foreclose and take over ownership of California. Or can it?
Problem really seems to be that getting back to that small over spend is always "next years" problem.
Tax rate for average wage earner (Single, no children) :
UK - 33.5%
US - 29.1%
Canada - 31.6%
Tax rate for average wage earner (married, two children) :
UK - 27.1%
US - 11.9%
Canada - 21.5%
Seems like a huge tax break for having spouse and children in the US.
These are based on not just income tax, but other forms of taxation like Employment Insurance, Canadian Pension Plan, National Insurance (UK) and so forth (I know my current absolute rate of federal income tax is around 15%).
Quote: thecesspitI couldn't quickly find a list of absolute tax rates based on income for the UK, Canada and the US, but did find this info on wikipedia, which is good enough for me right now :
Tax rate for average wage earner (Single, no children) :
UK - 33.5%
US - 29.1%
Canada - 31.6%
Tax rate for average wage earner (married, two children) :
UK - 27.1%
US - 11.9%
Canada - 21.5%
Seems like a huge tax break for having spouse and children in the US.
There are amazing tax breaks and credits for having kids in the US Tax Code. If you have 2 kids and make less than $40K it is almost impossible to pay any income tax. This may be a reason the USA is one of the only developed countries with a replacement birth rate.
Quote: SOOPOOs2dbaker is stating some facts as they pertain to him. You can choose to interpret it as bragging but I look at it as informational. This is a gambling forum where every day people discuss their big wins, how much they bet on a hand, their bankrolls, etc... It brings together people from all levels of income, age, gender (and even transgender). Our beloved Wiz has blogged about hours of play at hundreds of dollars per hand. I take that as interesting and informative, not bragging.
I look at it as low-class bragging. Like the relative or friend you don't like who keeps reminding you of how much they make and the new cars and house they have. Liberals do this all the time saying, "hey, I make so much money I don't need a tax cut."
I guess he and guys like him who do not mind having their taxes raised had their money given to them. Because the wealthy people I know work hard 50+ hour weeks for every cent.
Quote: MathExtremistEven the most ardent flat-taxers don't propose something as draconian as taxing someone's first dollar. That's just mean.
I don't see why. You have to pay sales tax no matter what you make. I see it as a way to make more careful voters. The next time a Hillary Clinton proposes a $5,000 grant for every newborn child for college more people will say, "WHOA! Who will pay for all that?!"
Quote:You're confusing "fair" with "simple". It's simple to enact a flat tax. It's hardly fair, using any rational measurement of the value of money. If boymimbo's stats are correct, the top 1% in this country are paying 23.27% tax on income while the bottom 75% are paying 5.13% (or were, in 2008). Your proposal is equivalent to almost quadrupling the tax paid by the bottom 3/4 of taxpayers in order to reduce the tax on the top 1/100 by 3.27%.
To me "fair" is everyone giving the same %. You are stating that "fair" has to be engineered so it is some kind of equality of outcome. That gets us into all kinds of problems. The bottom 75% paying just 5.13% shows the problem. A dirty little secret is that if "revenue enhancements" are to have an effect on the deficit they will have to be broad-based. The top 1% doesn't have the cash to make the big difference. Take 50% of their income and the next Steve Jobs or Bill Gates will say, "Who is John Galt?" instead of keeping building strong businesses.
I can tell that you do a lot of guessing.Quote: AZDuffmanI guess he and guys like him who do not mind having their taxes raised had their money given to them. Because the wealthy people I know work hard 50+ hour weeks for every cent.
Quote: s2dbakerI can tell that you do a lot of guessing.
I can say for sure that people who don't care what things cost, including taxes, never worked for their money which is why they don't mind giving it away. People who work for their money protect it. Hence your statements about wanting higher taxes makes me guess you probably made your money easy or had it handed to you.
Quote: AZDuffmanThere are amazing tax breaks and credits for having kids in the US Tax Code. If you have 2 kids and make less than $40K it is almost impossible to pay any income tax. This may be a reason the USA is one of the only developed countries with a replacement birth rate.
This was part of my disbelief in the very low actual rates of taxation you guys have mentioned... however, there are various incentives for Child Credits which don't form part of the deductions directly, as far as I can tell, so I'd need to find a better calculator to compare with the US. I've found a US one that puts a $40,000 earning household at a total federal tax of $855 (~2.1%) if married with two children, and $4,705 (~15%) if single.
Someone earning 16k a year ($8/hour, 40 hours per week, 50 weeks a year) will pay $1,105 assuming no other credits. That suggests that their are other credits that i didn't look at or that the lowest earners are paying -something- (6.91% of earnings in this case).
In a flat tax world, that same person would pay be paying twice as much tax if it was on every dollar. In a flat sales tax world (no income tax) that person would also being paying tax on pretty much every dollar, as 16k pa doesn't allow much in the way of savings to accumulate.
I'd suggest the child tax breaks are probably disproportionately large. But I don't pay US tax, I don't have kids, and I don't have a problem with the tax system in Canada either.... though elimination of the property transfer tax would be nice, but that's a different story.
