What would you do to revive the US economy?

The 70% argument is a pain. It is the shill argument that people against any sort of progressive taxation tend to make. Mostly because it involves numbers and a little thought, the people whom this argument works against, don’t understand it, and you suddenly have fairly low income people fighting for the very well off! First, of course the top earners will pay the most total gov’t tax receipts, provided that there is a decent pool of top earners. Secondly, this is the oddest argument for fairness of taxation when, thanks to years of tax rate cuts for top earners, they tend to pay lower net effective tax RATES, but still pay the most DOLLARS.

So, let’s simplify.

The population has two taxpayers. Rich makes $300,000 a year and pays 10% taxes, or $30,000, and has $270,000 to live on. He is doing very well, indeed. Poor makes $30,000 a year, pays 10% taxes of $3,000, and has $27,000 to live on. The government is has a strict Constitutionalist policy of just providing for the common defense, and promoting the general welfare (from the Preamble of our Constitution, and this does NOT mean food stamps for baby makers, it means in this case building roads for common use by Rich and Poor). And, in my world a constitutional amendment has been passed that the Federal budget must be balanced.

The total tax pool from Rich and Poor is $33,000. Rich has paid a whopping 90.9% of all taxes!!! The Federal budget is $40,000. $20,000 to fix the road and $20,000 to fix an Air Force plane. THERE IS A $7,000 DEFICIT THAT MUST BE MADE UP. WHO WILL PAY?????

Well, since Rich has already paid over 90% of the total tax receipts, OF COURSE IT IS NOT FAIR TO ASK HIM FOR MORE! Poor must make up the entire $7,000 deficit. His taxes balloon to $10,000, or 33% of his income. He has just $20,000 to live on. After all, he is still only paying $10,000 in taxes, and just 25% of total Federal receipts, and Rich is still paying 75% of the total taxes. (And folks, this is the world we are starting to live in.)

In a Progressive taxation system, which has been around for many years, and tested against our Constitution many times, we would ask Rich to pay 20% of his income. So, he pays $60,000, leaving $240,000 to live on (handsome, indeed) and Poor still pays $3,000. With total tax receipts of $63,000, the gov’t is floating in cash, and has the ability to make repairs to the Capital building next year.

So, the next time you hear “THE TOP PAY 70% OF ALL TAXES,” think about the above for a little bit.

And, the hits on Warren Buffett in some posts are interesting. He advocated both CAP GAINS tax increases, and INCOME tax increases for top earners. As he put it, CAP GAINS were much higher 40 years ago, and people still made investments when they were sensible. And Mr. Buffett was a case in point, and practiced what he preached in the 1970’s. So, he has not advocated for taxes that put him at advantage because he is heavy on cap gains over income. And heck, I get most of my news from Fox News and the Wall Street Journal, and I still figured this one out!!

The problem with all the hokey pokey is, it is just wrong. The examples do not real world compute. One of the big issues is not only the total percentage the top earners pay but also the percentage they earn. This chart shows what was earned compared to what was paid. The top 10% earned 44% of the income and paid 68% of the taxes in 04.

Guess20Who20Really20Pays20the20Taxes.jpg


MM
 
The 70% argument is a pain. It is the shill argument that people against any sort of progressive taxation tend to make. Mostly because it involves numbers and a little thought, the people whom this argument works against, don’t understand it, and you suddenly have fairly low income people fighting for the very well off! First, of course the top earners will pay the most total gov’t tax receipts, provided that there is a decent pool of top earners. Secondly, this is the oddest argument for fairness of taxation when, thanks to years of tax rate cuts for top earners, they tend to pay lower net effective tax RATES, but still pay the most DOLLARS.

So, let’s simplify.

The population has two taxpayers. Rich makes $300,000 a year and pays 10% taxes, or $30,000, and has $270,000 to live on. He is doing very well, indeed. Poor makes $30,000 a year, pays 10% taxes of $3,000, and has $27,000 to live on. The government is has a strict Constitutionalist policy of just providing for the common defense, and promoting the general welfare (from the Preamble of our Constitution, and this does NOT mean food stamps for baby makers, it means in this case building roads for common use by Rich and Poor). And, in my world a constitutional amendment has been passed that the Federal budget must be balanced.

The total tax pool from Rich and Poor is $33,000. Rich has paid a whopping 90.9% of all taxes!!! The Federal budget is $40,000. $20,000 to fix the road and $20,000 to fix an Air Force plane. THERE IS A $7,000 DEFICIT THAT MUST BE MADE UP. WHO WILL PAY?????

Well, since Rich has already paid over 90% of the total tax receipts, OF COURSE IT IS NOT FAIR TO ASK HIM FOR MORE! Poor must make up the entire $7,000 deficit. His taxes balloon to $10,000, or 33% of his income. He has just $20,000 to live on. After all, he is still only paying $10,000 in taxes, and just 25% of total Federal receipts, and Rich is still paying 75% of the total taxes. (And folks, this is the world we are starting to live in.)

In a Progressive taxation system, which has been around for many years, and tested against our Constitution many times, we would ask Rich to pay 20% of his income. So, he pays $60,000, leaving $240,000 to live on (handsome, indeed) and Poor still pays $3,000. With total tax receipts of $63,000, the gov’t is floating in cash, and has the ability to make repairs to the Capital building next year.

So, the next time you hear “THE TOP PAY 70% OF ALL TAXES,” think about the above for a little bit.

And, the hits on Warren Buffett in some posts are interesting. He advocated both CAP GAINS tax increases, and INCOME tax increases for top earners. As he put it, CAP GAINS were much higher 40 years ago, and people still made investments when they were sensible. And Mr. Buffett was a case in point, and practiced what he preached in the 1970’s. So, he has not advocated for taxes that put him at advantage because he is heavy on cap gains over income. And heck, I get most of my news from Fox News and the Wall Street Journal, and I still figured this one out!!
iagree.gif
 
With the start of Tax Filing Season upon us, I have a challenge for all the guys here that believe they should be paying more taxes. When you file your 2011 taxes, how about claiming no deductions and claim 0 dependants to raise your taxable income? It is getting really old hearing all these Warren Buffet types who, like him, probably use every legal loophole they can find, claim every possible deduction and excemption on their tax filing then run around saying "they should be paying more taxes and would not mind doing so".
 
The problem with all the hokey pokey is, it is just wrong. The examples do not real world compute. One of the big issues is not only the total percentage the top earners pay but also the percentage they earn. This chart shows what was earned compared to what was paid. The top 10% earned 44% of the income and paid 68% of the taxes in 04.

Guess20Who20Really20Pays20the20Taxes.jpg


MM

How/why do you feel it was refuted?

nuff said. MM
 
Really?

All you are demonstrating is that the U.S. has a *progressive* tax code. DUH. Nobody is debating the progressive nature of the tax code.
If the top 1% earned 40% of the income and paid 40% of the taxes. . .that would imply a *flat* tax code. Has the income tax ever been flat?
I bet if the tax code was a flat 28%, the "right" would be complaining that this was unfair and be arguing for per capita taxes.


The question on the table is *how progressive* and *how fair* the taxes are today. There is a perception that if you have enough money, you can buy a local congressman and carve yourself a special deduction. Or just buy the entire congress and flatten the entire curve. SURE looks that way, doesn't it?

Jason: Not a question of volunteering to pay more. It is a question of *everyone* paying their fair share. I agree that many talk from both sides of the issues.
 
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Really?

There is a perception that if you have enough money, you can buy a local congressman and carve yourself a special deduction. Or just buy the entire congress and flatten the entire curve. SURE looks that way, doesn't it?
Yep. Just watch how GE has been operating over the last 40 years! Sure looks like they have it figured out!
 
The problem with all the hokey pokey is, it is just wrong. The examples do not real world compute. One of the big issues is not only the total percentage the top earners pay but also the percentage they earn. This chart shows what was earned compared to what was paid. The top 10% earned 44% of the income and paid 68% of the taxes in 04.

Guess20Who20Really20Pays20the20Taxes.jpg


MM

Mike, I think this just proves my point. Even in a flat rate tax, (as in my example), the top earners will always pay a LOT more taxes. If you believe that taxes should be at least somewhat progressive (and they are much less progressive now than they were in the past), the top earners will tend to pay much more in taxes in DOLLARS.

The 70% argument almost seems focused on the idea that taxes should be like fees for local garbage pick-up. Everyone pays the exact same DOLLAR amount rather than rate.

And, you are an informed guy. You know exactly the history of how top rates started dropping precipitously in the 1960's and another round of this came in the 1980's, and another round in the early 2000's. And, the gov't has been flat broke for a decade now.

And this is working beneficially for us as a Nation how?
 
I do not think the tax codes is the problem.
Maybe you should compare the entitlements and the foreign aid and all the pork barrel spending today against the same 1990's.
I think you will be amazed at the handouts we are giving away everyday.
If you really want to get exicited see (it is public record) what the daily interest in dollars not % we pay out 365 days a year.
Check out the above items and you will see where the real problem lies.
Bob

I think your reply is the frustration so many of us have with politics today. We all stand around our favorite issues, but never look at all of the problems as a whole. You bring up different and valid issues, points I agree with in many cases. But, you don't really lay out a case for whether my ideas are valid or not.

Had to add this edit: I am completely with you on the gov't interest expense issue. It drives me bananas that we have an unbalanced budget, and we waste so much on interest! Nothing is worse than living ahead of your revenues. You can only go so far ahead, and then you get into trouble as we are now, and you can’t borrow anymore without collapse. Borrowing money, unless for very specific, strategic purposes and with a plan to pay it back, is a terrible thing in most cases.

If you think interest expense is bad now, it will be a nightmare if interest rates go back up. This is one big issue I have with the Federal Reserve; rates are artificially low for various reasons, not the least of which is keeping our gov’t from going under.

Solutions to our budget problems will have to be both spending control and revenue increases.
 
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[h=1]How Germany Builds Twice as Many Cars as the U.S. While Paying Its Workers Twice as Much[/h]"against all mainstream wisdom of the neo-liberals. We have strong unions, we have strong social security systems, we have high wages. So, if I believed what the neo-liberals are arguing, we would have to be bankrupt, but apparently this is not the case. Despite high wages . . . despite our possibility to influence companies, the economy is working well in Germany."

http://www.forbes.com/sites/frederi...-while-paying-its-auto-workers-twice-as-much/
 
You obviously don't have a firm grasp of math or statistics...


I was hoping for something more substantive. At least point out that I have a typo in paragraph 3, sentence 4. Or that I have the wrong form of Capitol. I can't rule out a math error, but I don't see one, and I don't get the tie of the word statistics to this. This is basically a long form of crazy ol' Ross Perot's charts outlining an idea!
 
Mike, I think this just proves my point. Even in a flat rate tax, (as in my example), the top earners will always pay a LOT more taxes. If you believe that taxes should be at least somewhat progressive (and they are much less progressive now than they were in the past), the top earners will tend to pay much more in taxes in DOLLARS.

The 70% argument almost seems focused on the idea that taxes should be like fees for local garbage pick-up. Everyone pays the exact same DOLLAR amount rather than rate.

And, you are an informed guy. You know exactly the history of how top rates started dropping precipitously in the 1960's and another round of this came in the 1980's, and another round in the early 2000's. And, the gov't has been flat broke for a decade now.

And this is working beneficially for us as a Nation how?
never mind, it was covered
 
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With the start of Tax Filing Season upon us, I have a challenge for all the guys here that believe they should be paying more taxes. When you file your 2011 taxes, how about claiming no deductions and claim 0 dependants to raise your taxable income? It is getting really old hearing all these Warren Buffet types who, like him, probably use every legal loophole they can find, claim every possible deduction and excemption on their tax filing then run around saying "they should be paying more taxes and would not mind doing so".

This is an argument that gets brought up a lot. And because it has a somewhat valid ring, I have a hard time answering it. So, here goes:

I work as an independent contractor, and a small business owner. My CPA lays out an aggressive plan for me every year - because as for most of us, margins are slim and competition is tough. If I start paying extra taxes willy nilly by myself, I'll never balance the gov't budget single handedly, and I'll put myself at a disadvantage to the competition.

But, if we are all on a level playing field, my business will survive, and as a pool of citizens we can get our budget and economy back on track.
 
This is an argument that gets brought up a lot. And because it has a somewhat valid ring, I have a hard time answering it. So, here goes:

I work as an independent contractor, and a small business owner. My CPA lays out an aggressive plan for me every year - because as for most of us, margins are slim and competition is tough. If I start paying extra taxes willy nilly by myself, I'll never balance the gov't budget single handedly, and I'll put myself at a disadvantage to the competition.

But, if we are all on a level playing field, my business will survive, and as a pool of citizens we can get our budget and economy back on track.

I do understand what you are saying to a certain extent and get your point but I don't think you paying several thousand dollars a year more in tax is going to put you at much of a disadvantage to your competetion. It is in fact your personal income we are talking about, correct? So maybe you have to get rid of the boat or another "luxury" item that you have worked hard for? I am not sure what side of the fence you are on but if you are a higher tax guy, that should not matter as long as the goverment gets more money to spend.

What exactly is the level playing field? Are you suggesting a flat tax? If so, then I am in full agreement.

Also, it has already been analyzed time and time again that even if you tax the rich at 90%, it is not going to put a dent in the current government spending anyway. Warren Buffet is out running his mouth about this but I have not seen him come forward offering to pay the govermnent back the 500 million they lost from Obama's loan to Solyndra. Maybe he should kick in a few million to help if he is that passionate about paying more tax.

It just grates on my nerves when some people (like him) constantly complain about them not paying enough tax but rather than just paying more tax themselves, they say they want everyone else to do it. The old Limousine Liberal "Do as I say, not as I do" mentality. I give to charitys on a regular basis, although I would like to see more people give money, I don't refuse to do so just because everyone else is not.

Here is my position on it. When the government stops wasting the billions of dollars we are already paying to them, if they still need more, I would have no problem paying more tax. Something tells me though, if all the wasteful spending is cut, I would actually get a decrease. I mean, what the higher tax guys are asking for here is like an individual running up all their credit cards and loans on junk, vacations, bars, or whatever and then keeps going back to the bank "needing" more and more money for the same things, all the while saying "I will try to see what I can do to cut spending at some point".
 
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Mike, I think this just proves my point. Even in a flat rate tax, (as in my example), the top earners will always pay a LOT more taxes. If you believe that taxes should be at least somewhat progressive (and they are much less progressive now than they were in the past), the top earners will tend to pay much more in taxes in DOLLARS.

The 70% argument almost seems focused on the idea that taxes should be like fees for local garbage pick-up. Everyone pays the exact same DOLLAR amount rather than rate.

And, you are an informed guy. You know exactly the history of how top rates started dropping precipitously in the 1960's and another round of this came in the 1980's, and another round in the early 2000's. And, the gov't has been flat broke for a decade now.

And this is working beneficially for us as a Nation how?

It is not working for us as a nation. There is a central question when it comes to taxation; will it raise the revenue? I personally do not like a progressive tax as it leads to class exploitation by the powerful from politicians to dictators. It has been proven time and time again that tax rates have little to do with revenue. The Bush years saw greater receipts, as did the Reagan years, than higher rate periods. Most of us for lower tax rates know it brings a better economy and more money into the Federal coffers. MM
 

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