1. Eliminating deductions
2. Lowering the progressive income tax and flattening the system
No tax deductions, period. If you have a dependent or something, then you get placed into one lower bracket. That's it. Higher taxes, pay off the deficit. Fiscal personal responsibility.
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I propose we eliminate corporate taxes in their entirety and impose a flat tax across the board, while eliminating numerous deductions and tax shelters.
I see no reason to impose corporate taxes, which results in double taxation of profits made, when we can simply tax more effectively the final result when individuals receive their income.
Moreover, a flat tax across the board would be more beneficial across America. Though the argument might be made that the flat tax is regressive and hurts the lower income brackets, I contend that the state of affairs right now is that the wealthy are paying lower tax rates than many middle class people anyway.
It's simple. If I were a rich executive with millions in the bank, I would goto my company and tell them, pay me in shares of stock. This way I pay the capital gains rate of 15%.
Thus we have corporate executives with nominal salaries $1, raking in millions a year, paying 15% in taxes on stocks.
That option is simply not available to the vast majority of Americans. Who among you here can tell their employer to pay them in shares of stock as opposed to a normal salary. It certainly isn't within my power to take advantage of that option. Your average Wal-mart worker cannot either. They get paid in dollars per hour, not shares of stocks that have been held for over a year.
A simple flat tax across the board would eliminate such loopholes and would recover more in taxes for America.
I propose we eliminate corporate taxes in their entirety and impose a flat tax across the board, while eliminating numerous deductions and tax shelters.
I see no reason to impose corporate taxes, which results in double taxation of profits made, when we can simply tax more effectively the final result when individuals receive their income.
Moreover, a flat tax across the board would be more beneficial across America. Though the argument might be made that the flat tax is regressive and hurts the lower income brackets, I contend that the state of affairs right now is that the wealthy are paying lower tax rates than many middle class people anyway.
It's simple. If I were a rich executive with millions in the bank, I would goto my company and tell them, pay me in shares of stock. This way I pay the capital gains rate of 15%.
Thus we have corporate executives with nominal salaries $1, raking in millions a year, paying 15% in taxes on stocks.
That option is simply not available to the vast majority of Americans. Who among you here can tell their employer to pay them in shares of stock as opposed to a normal salary. It certainly isn't within my power to take advantage of that option. Your average Wal-mart worker cannot either. They get paid in dollars per hour, not shares of stocks that have been held for over a year.
A simple flat tax across the board would eliminate such loopholes and would recover more in taxes for America.
As with previous suggestions, I don't see what the flatness gets you here. Closing loopholes and eliminating deductions can be done regardless of what slope you decide to put on the tax formula.
I propose we eliminate corporate taxes in their entirety and impose a flat tax across the board, while eliminating numerous deductions and tax shelters.
I see no reason to impose corporate taxes, which results in double taxation of profits made, when we can simply tax more effectively the final result when individuals receive their income.
Moreover, a flat tax across the board would be more beneficial across America. Though the argument might be made that the flat tax is regressive and hurts the lower income brackets, I contend that the state of affairs right now is that the wealthy are paying lower tax rates than many middle class people anyway.
It's simple. If I were a rich executive with millions in the bank, I would goto my company and tell them, pay me in shares of stock. This way I pay the capital gains rate of 15%.
Thus we have corporate executives with nominal salaries $1, raking in millions a year, paying 15% in taxes on stocks.
That option is simply not available to the vast majority of Americans. Who among you here can tell their employer to pay them in shares of stock as opposed to a normal salary. It certainly isn't within my power to take advantage of that option. Your average Wal-mart worker cannot either. They get paid in dollars per hour, not shares of stocks that have been held for over a year.
A simple flat tax across the board would eliminate such loopholes and would recover more in taxes for America.
As with previous suggestions, I don't see what the flatness gets you here. Closing loopholes and eliminating deductions can be done regardless of what slope you decide to put on the tax formula.
You are correct. I just state it as an opportunity to overhaul the entire tax system. But certainly loopholes can be closed regardless of the kind of tax curves we choose.
I would contend that the existence of loopholes has less to do with the complication of a progressive tax rate, and more with the way politicians can be 'convinced' by corporate america to allow it to happen.
I would also advise the mathjaxes here to not stare themselves blindly at the negative effects of tax. In a classical model, any form of tax is inherently 'bad' for the overall state of the market, but there is something like a public good and our need for them. Everytime I see a somone rage against taxes in that it 'hurts the economy' with a completely one sided monologue, I die a little bit inside.
I think that anyone who looks objectively at the market must understand that it is impossible to realize the perfect efficiency the market brings.
The invisible hand is a guiding generalization, but the market left to itself has shown historically to engage in a number of behaviors which hurt itself.
For instance,
1. the market has no care about wealth inequality whereas history shows large inequalities in wealth disrupt the social environment for economic activity.
2. individual market actors do not efficiently use shared resources creating negative externalities. Pollution being the major one. Regulation is therefore necessary as are the taxes to support such regulation.
3. individual market actors sometimes find it in their self interest to win not by competing with the best product, but by engaging in anticompetitive behvior. Monopolies and Oligopolies.
4. Individual market actors find it in their best interest not to compete with the best service, but by exploiting those of weaker economic power taking advantage of the fact that corrective legal action is expensive. ex. Phone companies charging you for services they never rendered.
5. Individual market actors find it in their best interest to suppress information to allow rational economic actors to render a decision. Example. Car companies suppressing information about the danger of their cars.
6. Potential damages too high or actions too infrequent to permit rational economic decision making. Example, the market for brain surgeons. The next time I have a stroke I promise you I will look for a better brain surgeon is many times not an option.
7. Firms able to socialize costs by closing shop. I am Junk Car company. I sell terrible cars. I sell 5000 cars. Tons of people die. I make money. They sue me. I go bankrupt. Then i reopen a new car company and start again. Market advocates say...well, now we know! Dont buy cars from Junk Car company. What about the tons of people who have died? What about the fact that I can reopen another car company? How is the market going to solve this problem? my company is already bankrupt and I anticipated that from the outset.
All these require taxes to uphold regulation to ensure efficiency and gains in the market at large.
Where I differ significantly from you, I think, is that I think the "high" tax rate shouldn't exceed 33%, and shouldn't be triggered until you've exceeded the minimum income by 300K. People making 150-250K are "rich", yes. But they aren't super rich to the point where taxing them an exorbitant amount won't impact them really harshly.
This should be accompanied by a removal of the differentiation between capitol gains and other income. If you earned the money, it is taxed regardless of whether it was from employment or from stock sales. I also htink this would hit a lot of your issues about the tax rate on the super rich being too low -- the reason their effective tax rate is low is because the majority of their income is usually from capitol gains. *not income*.
People earning 150 to 250k are, actually, very rich. No, they're not in the stonkingly rich multi-millionaires club, but they are in the top couple of percent of total household incomes (Less than 4% of *households* in America in 2011 earned 150k; so a lot less than 4% of individuals).
Anyway, that aside, I think everyone is in pretty firm agreement; there is no real reason to allow the number and generosity of tax loopholes that currently exist. Many (although clearly not all) come from a well intentioned place, but they make it so that doing your taxes is an unnecessary burden on average people, and the extremely rich and corporations get away with economic murder. In particular, a lot of companies just never pay any real tax in the countries they do a lot of business in. In Australia, Apple and Google do billions of dollars of business but both pay essentially (or actually) zero tax; the money is all moved around via shell companies to other countries.
I think people need to be clear here what they mean by 'flat tax', as some people are using it when they mean 'tax reform', but what it means to the rest of us is a single set tax rate across the board.
People earning 150 to 250k are, actually, very rich. No, they're not in the stonkingly rich multi-millionaires club, but they are in the top couple of percent of total household incomes (Less than 4% of *households* in America in 2011 earned 150k; so a lot less than 4% of individuals).
Their place in the percentile of American Household Income is irrelevant, the reality is that at $150k, you're still budgeting your money, and are living a lifestyle similar to anyone in the $80k-$149k range. You're probably able to take better/more vacations and have a little more leeway, but you're living in the same neighborhoods as someone making $80k a year. Maybe in a three bedroom instead of a two bedroom, but you're daily lifestyle won't be much different.
You're forgetting that people in those brackets have usually incurred a significant amount of debt in order to get into that bracket. For example, at minimum an American doctor is looking at $300k in debt when they graduate, with many doctors owing much more than that. And it's not the kind of income where you can afford to just pay off huge chunks of your debt, either. Not to mention, where most of these jobs are located the cost of living is going to be much higher than elsewhere. For instance, suburban housing around the DC Metro area is at least double what it is most other places (the DC Metro area, FYI, is where 3 of the 5 richest counties in the nation are located, the other two being in NY and CA if I remember correctly). And they still don't make enough to take advantage of the various tax shelters out there.
That said, when we look at tax reform, we have to realize those with enough money that it becomes influence are always going to be able to circumvent paying their full taxes. We may elect our leaders, but these rich pay for their campaigns (and this applies to both the Democrats and the Republicans). Expecting reform to come in a way that doesn't look out for the best interests of the wealthy is foolish until we get some real campaign finance reform in place. That has got to be step one before any real tax reform can take place.
The other thing to realize is that tax policy is predatory. You're never going to get a completely flat system because states (both in the domestic and international contexts) are going to use taxes to compete with one another. So the moment we reform all the current loopholes, they'll just start building up again.
People earning 150 to 250k are, actually, very rich. No, they're not in the stonkingly rich multi-millionaires club, but they are in the top couple of percent of total household incomes (Less than 4% of *households* in America in 2011 earned 150k; so a lot less than 4% of individuals).
Are you for real? Where is 150K "very rich"? My wife and I together probably get close to 100K for the year and I can't imagine a 50K boost would bump us into "rich" land. After taxes around here that would be an extra... 30K? so roughly an extra 2k a month to spend? That's cool... I suppose instead of living 45 minutes away from work I could afford to live much closer (currently I own a 3br 2 bath fixer upper, my co-worker lives much closer and his mortgage is 150% of mine for a smaller older house), instead of driving an 08 pontiac I could have a nicer car... my wife could have gotten a nicer car too but her new car is already $500 a month. I guess I'd go ahead and get a smart phone at that point since the extra $30-$50 a month wouldn't be as big of a deal anymore... We'd go on nicer vacations sure... we could stay at a Hilton instead of a Holiday Inn but I don't see that as a "rich" only perk. And we live in a pretty low cost of living area... I have a buddy who lives in San Fran and cost of living out there is significantly higher than here (my awesome apartment was a couple hundred dollars cheaper than his room in a shared house an hour out of the city).
Are you for real? Where is 150K "very rich"? My wife and I together probably get close to 100K for the year and I can't imagine a 50K boost would bump us into "rich" land. After taxes around here that would be an extra... 30K? so roughly an extra 2k a month to spend? That's cool... I suppose instead of living 45 minutes away from work I could afford to live much closer (currently I own a 3br 2 bath fixer upper, my co-worker lives much closer and his mortgage is 150% of mine for a smaller older house), instead of driving an 08 pontiac I could have a nicer car... my wife could have gotten a nicer car too but her new car is already $500 a month. I guess I'd go ahead and get a smart phone at that point since the extra $30-$50 a month wouldn't be as big of a deal anymore... We'd go on nicer vacations sure... we could stay at a Hilton instead of a Holiday Inn but I don't see that as a "rich" only perk. And we live in a pretty low cost of living area... I have a buddy who lives in San Fran and cost of living out there is significantly higher than here (my awesome apartment was a couple hundred dollars cheaper than his room in a shared house an hour out of the city).
It's very easy to look at your own situation and think of what you don't have or what you can barely afford and think you don't have it well off.
But realize that over 90% of Americans make less than you make. You hypothesized getting a 50% pay boost and proceeded to list a bunch of luxuries that you'd be able to afford. For most families, a 50% of pay boost would mean that they'd be able to afford necessities that they're currently going without. Maybe they'd maybe be able to be able to pull themselves out from their crippling credit card/medical/student loan debt. Or they'd maybe be able to put a meaningful amount towards their retirement
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Are you for real? Where is 150K "very rich"? My wife and I together probably get close to 100K for the year and I can't imagine a 50K boost would bump us into "rich" land. After taxes around here that would be an extra... 30K? so roughly an extra 2k a month to spend? That's cool... I suppose instead of living 45 minutes away from work I could afford to live much closer (currently I own a 3br 2 bath fixer upper, my co-worker lives much closer and his mortgage is 150% of mine for a smaller older house), instead of driving an 08 pontiac I could have a nicer car... my wife could have gotten a nicer car too but her new car is already $500 a month. I guess I'd go ahead and get a smart phone at that point since the extra $30-$50 a month wouldn't be as big of a deal anymore... We'd go on nicer vacations sure... we could stay at a Hilton instead of a Holiday Inn but I don't see that as a "rich" only perk. And we live in a pretty low cost of living area... I have a buddy who lives in San Fran and cost of living out there is significantly higher than here (my awesome apartment was a couple hundred dollars cheaper than his room in a shared house an hour out of the city).
It's very easy to look at your own situation and think of what you don't have or what you can barely afford and think you don't have it well off.
But realize that over 90% of Americans make less than you make. You hypothesized getting a 50% pay boost and proceeded to list a bunch of luxuries that you'd be able to afford. For most families, a 50% of pay boost would mean that they'd be able to afford necessities that they're currently going without. Maybe they'd maybe be able to be able to pull themselves out from their crippling credit card/medical/student loan debt. Or they'd maybe be able to put a meaningful amount towards their retirement
I understand that perfectly fine. I was just disputing his claim that $150K was "very rich". Aaron Rodgers is "very rich". I'm doing well. My boss (probably close to the $150K mark) is well off.
You are correct. "Very" rich is not the best modifier here. You are relatively (to the vast majority of Americans) rich.
Which, is exactly what I said in the post that was initially disagreed with.
*My* point was that the tax penalties crafted toward the ultra rich with the flippant "meh, they're super rich they can afford it" attitude are dramatically overly harsh on people who are in the low six figure bracket. Most families making 200k a year really can't afford to keep working the hours they do, if everything they make in excess of 100K is taxed at 75%.
The ultra-rich can avail themselves of shady tax dodges, and captiol investments to reduce their tax burden. People in the low six figures *CAN'T*. Drawing the line there effectively enforces the barrier between middle class and rich because anyone straddling or just over the barrier gets hit hard, whereas people significantly past the line don't.
You are correct. "Very" rich is not the best modifier here. You are relatively (to the vast majority of Americans) rich.
I don't know that I can agree with you here though... at 100K my wife and I don't buy designer apparel, we typically buy generic food, we stick to basic cable, only 1 smart phone, we have a very cheap house and luckily have very little student debt, one of my co-worker's wives makes a decent bit more than mine but they also pay a student loan bill that is almost as much as my mortgage. If I classify as "rich", what are the people with lake houses, that shop at Wholefoods, and have Louie Viton hand bags?
I think it's important to realize there is a huge difference between someone making $100K and $10 million. One of these groups can basically buy anything they could possibly want... the other still has to budget and be careful about their spending, they just happen to be able to buy some luxury items. When talking about taxes this is incredibly important... Typically people making money in the hundred of thousands area are working very hard for that money (or at least were before to get promotions), they are not athletes, trust fund babies or celebrities. If making 50% more money doesn't translate into any kind of bump in standard of living, why do the work to make 50% more money? Why deal with the stress of upper management versus being an engineer when all it would do is let me afford a slightly nicer car?
You are correct. "Very" rich is not the best modifier here. You are relatively (to the vast majority of Americans) rich.
Which, is exactly what I said in the post that was initially disagreed with.
*My* point was that the tax penalties crafted toward the ultra rich with the flippant "meh, they're super rich they can afford it" attitude are dramatically overly harsh on people who are in the low six figure bracket. Most families making 200k a year really can't afford to keep working the hours they do, if everything they make in excess of 100K is taxed at 75%.
The ultra-rich can avail themselves of shady tax dodges, and captiol investments to reduce their tax burden. People in the low six figures *CAN'T*. Drawing the line there effectively enforces the barrier between middle class and rich because anyone straddling or just over the barrier gets hit hard, whereas people significantly past the line don't.
I absolutely agree with this (DUN-DUN DUNNNNN!). The only thing I would add is that, when taxes like this are discussed, it's these people in the upper middle class who are hit hardest by tax increases on the 'wealthy', simply because people hear six figures and think they're rich. But these are still people who need to budget and save for retirement like everyone else and whose only investments are their retirement plans.
Granted 'hit hardest' is relative, but having gone from qualifying for food stamps as a kid to having parents in that lower six figures class, tax increases on the wealthy almost always hit the upper middle class more than the truly rich, because they can't take the same dodges.
When OP says "flat tax" is that to mean X% across the board for all incomes (bad), $X for all incomes (worse), or simply eliminating deductions on the current progressive tax system? Because there's the flat tax and the Flat Tax.
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What's the big deal? You could have played multiple Righteous Avengers for years now.
When OP says "flat tax" is that to mean X% across the board for all incomes (bad), $X for all incomes (worse), or simply eliminating deductions on the current progressive tax system? Because there's the flat tax and the Flat Tax.
Mostly I meant eliminating the deductions, but also carrying a corresponding reduction in taxed percentage. It's more from a "this is maddeningly difficult to figure out" perspective than it is an actual attempt to save myself money.
In other words if we had three categories: money below $X, money above $y, and money between $X and $Y. each assigned their own tax rate. Presumably below $X would be 0%, and X would be set at the poverty line based on your number of dependents. X-Y would run up to about $250K, above Y would be money after $250K.
So basically, everyone gets their money up to the poverty line tax free. Then money through middle class at a moderate percentage. Then money after the arbitrary middle class cut off at a second rate, higher than the first rate.
The rates themselves, and the number of brackets could be configured of course, but the main idea is to make it possible for me to figure out my tax burden, without needing to hire an accountant or buy a specialized computer program.
People earning 150 to 250k are, actually, very rich. No, they're not in the stonkingly rich multi-millionaires club, but they are in the top couple of percent of total household incomes (Less than 4% of *households* in America in 2011 earned 150k; so a lot less than 4% of individuals).
Are you for real? Where is 150K "very rich"? My wife and I together probably get close to 100K for the year and I can't imagine a 50K boost would bump us into "rich" land. After taxes around here that would be an extra... 30K? so roughly an extra 2k a month to spend? That's cool... I suppose instead of living 45 minutes away from work I could afford to live much closer (currently I own a 3br 2 bath fixer upper, my co-worker lives much closer and his mortgage is 150% of mine for a smaller older house), instead of driving an 08 pontiac I could have a nicer car... my wife could have gotten a nicer car too but her new car is already $500 a month. I guess I'd go ahead and get a smart phone at that point since the extra $30-$50 a month wouldn't be as big of a deal anymore... We'd go on nicer vacations sure... we could stay at a Hilton instead of a Holiday Inn but I don't see that as a "rich" only perk. And we live in a pretty low cost of living area... I have a buddy who lives in San Fran and cost of living out there is significantly higher than here (my awesome apartment was a couple hundred dollars cheaper than his room in a shared house an hour out of the city).
When I say "people" who earn 150 plus are rich, I mean individuals, not couples. And I stand by what I said (ok, maybe "very" is a step too far); an individual making 150k is more than comfortable. Yes, they still have to consider where they spend their money*, but the notion that they cannot afford to chip in slightly more *on money earned over that 150k* is, frankly, absurd given the current american tax brackets.
* because if you're earning that much and can't budget, you're probably being overpaid.
Are you for real? Where is 150K "very rich"? My wife and I together probably get close to 100K for the year and I can't imagine a 50K boost would bump us into "rich" land. After taxes around here that would be an extra... 30K? so roughly an extra 2k a month to spend? That's cool... I suppose instead of living 45 minutes away from work I could afford to live much closer (currently I own a 3br 2 bath fixer upper, my co-worker lives much closer and his mortgage is 150% of mine for a smaller older house), instead of driving an 08 pontiac I could have a nicer car... my wife could have gotten a nicer car too but her new car is already $500 a month. I guess I'd go ahead and get a smart phone at that point since the extra $30-$50 a month wouldn't be as big of a deal anymore... We'd go on nicer vacations sure... we could stay at a Hilton instead of a Holiday Inn but I don't see that as a "rich" only perk. And we live in a pretty low cost of living area... I have a buddy who lives in San Fran and cost of living out there is significantly higher than here (my awesome apartment was a couple hundred dollars cheaper than his room in a shared house an hour out of the city).
Look at this guy, who's both not rich yet making more than 96% of all Americans. There is no :eyeroll: Big enough. A bloo bloo my 08 car is so old, he said completely oblivious.
People earning 150 to 250k are, actually, very rich. No, they're not in the stonkingly rich multi-millionaires club, but they are in the top couple of percent of total household incomes (Less than 4% of *households* in America in 2011 earned 150k; so a lot less than 4% of individuals).
Are you for real? Where is 150K "very rich"? My wife and I together probably get close to 100K for the year and I can't imagine a 50K boost would bump us into "rich" land. After taxes around here that would be an extra... 30K? so roughly an extra 2k a month to spend? That's cool... I suppose instead of living 45 minutes away from work I could afford to live much closer (currently I own a 3br 2 bath fixer upper, my co-worker lives much closer and his mortgage is 150% of mine for a smaller older house), instead of driving an 08 pontiac I could have a nicer car... my wife could have gotten a nicer car too but her new car is already $500 a month. I guess I'd go ahead and get a smart phone at that point since the extra $30-$50 a month wouldn't be as big of a deal anymore... We'd go on nicer vacations sure... we could stay at a Hilton instead of a Holiday Inn but I don't see that as a "rich" only perk. And we live in a pretty low cost of living area... I have a buddy who lives in San Fran and cost of living out there is significantly higher than here (my awesome apartment was a couple hundred dollars cheaper than his room in a shared house an hour out of the city).
When I say "people" who earn 150 plus are rich, I mean individuals, not couples. And I stand by what I said (ok, maybe "very" is a step too far); an individual making 150k is more than comfortable. Yes, they still have to consider where they spend their money*, but the notion that they cannot afford to chip in slightly more *on money earned over that 150k* is, frankly, absurd given the current american tax brackets.
* because if you're earning that much and can't budget, you're probably being overpaid.
Comfortable sure... but I take offense to the idea that I am somehow rich. Rich is being able to just wake up in the morning and decide to take a trip to Hawaii for giggles. Being able to afford a "decent" home, car, clothes is what I would call middle class. Just because only 4% of people make that much does not make them rich. Unfortunately we have a situation where there is a steep drop off from what I consider to be rich, to what I consider to be middle class. CEO's, Business owners, models, celebs, athletes are all rich.... some doctors and lawyers are rich. I highly doubt too many engineers and sales staff are living the "rich" life but would be quite close to your $150K cut off. Keep in mind I live "near" Minneapolis which compared to cities like NY, San Fran or Washington is dirt cheap... I'm guessing there are people living in those areas that make well over $150K and don't live all that much better than I do.
And owlington... I am not at all oblivious to the fact that I make significantly more then most people. But my wife and I making triple minimum wage is not even close to the same as a backup pro-athlete making 100 times minimum wage. So if someone wants to call 5x minimum wage "very rich" I want to know what we call 100x minimum wage.
So you're not rich because you were able to name the other 3% of people who are richer than you? Rich doesn't mean winning at capitalism (which, at top 97% you are anyways) it means not having to worry. It means having the ability to choose between the Hilton and the Holiday Inn when the rest of us don't even get the vacation. Rich is having the ability to get that new car and instead settling on the one that's only 5 years old while the rest of us trade in our 15 year old one in for a 10. Tell us more about your struggle.
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What's the big deal? You could have played multiple Righteous Avengers for years now.
So you're not rich because you were able to name the other 3% of people who are richer than you? Rich doesn't mean winning at capitalism (which, at top 97% you are anyways) it means not having to worry. It means having the ability to choose between the Hilton and the Holiday Inn when the rest of us don't even get the vacation. Rich is having the ability to get that new car and instead settling on the one that's only 5 years old while the rest of us trade in our 15 year old one in for a 10. Tell us more about your struggle.
I never said I was struggling... But I don't think my manager's life should be classified as being rich (remember I don't break the magical $150K barrier that started this discussion). It should be classified as upper middle class... my life should be the norm. Norm should not be 1 or 2 promotions from rich and it also should not be choosing between going to a movie or getting to eat, poor.
I get the impression that you want me to feel bad for having a decent job and not working minimum wage. I'm not going to apologize for going to school in a field I knew would be profitable and doing well.
Here's what i don't get about progressive taxing: If person A and person B are both citizens living in the same country. So therefore they both use the same resources (government, military protection, police, fire department, water, gas) from the same country. Let's say they live close to one another within the same state. The difference is they are in different tax brackets. Why should one be taxed higher than the other if they are using the same amount of resources? Does the richer use more resources (if you use more, you should pay more). I'm assuming they both live in moderate sized homes.
I understand the whole argument that 10% from the poor has a bigger impact than 10% from the rich and I agree with it as well.
If everyone around you is poor, what does that make you?
Owlington -- there is a distinction to be made between "rich" and "very rich". I'm not going to contend that someone making $250K a year isn't rich. They are. They are not, however "very rich".
The point made earlier in the thread was that onerous tax burdens premised on "meh, the very rich can handle them, besides they have all those ways they use already to hide their money form taxes anyway" is far too burdensome on someone who is at the $250K level, and is hardly a burden at all on someone who is at the 2,500K level.
Tax shelters are not available to people who make 350-500K, they just aren't economically viable until you're making over a million a year. As a result, those onerous tax burdens are *extremely* harsh on people who just barely cross into being rich, and hardly burdensome at all on the very rich. In effect, what you are doing is forcing a divide that cannot be crossed. It's not worth someones time to work extra hard to make another 100K, when you are going to tax it at 75%. The current structure enforces a divide between the very rich and the middle class, by making placing the crux of the tax burden on the "rich".
Basically, if you think that people making between 350 and 500 thousand a year are the ones using tax shelters to avoid paying their share of taxes, you are deluding yourself.
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1. Eliminating deductions
2. Lowering the progressive income tax and flattening the system
No tax deductions, period. If you have a dependent or something, then you get placed into one lower bracket. That's it. Higher taxes, pay off the deficit. Fiscal personal responsibility.
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I see no reason to impose corporate taxes, which results in double taxation of profits made, when we can simply tax more effectively the final result when individuals receive their income.
Moreover, a flat tax across the board would be more beneficial across America. Though the argument might be made that the flat tax is regressive and hurts the lower income brackets, I contend that the state of affairs right now is that the wealthy are paying lower tax rates than many middle class people anyway.
It's simple. If I were a rich executive with millions in the bank, I would goto my company and tell them, pay me in shares of stock. This way I pay the capital gains rate of 15%.
Thus we have corporate executives with nominal salaries $1, raking in millions a year, paying 15% in taxes on stocks.
That option is simply not available to the vast majority of Americans. Who among you here can tell their employer to pay them in shares of stock as opposed to a normal salary. It certainly isn't within my power to take advantage of that option. Your average Wal-mart worker cannot either. They get paid in dollars per hour, not shares of stocks that have been held for over a year.
A simple flat tax across the board would eliminate such loopholes and would recover more in taxes for America.
As with previous suggestions, I don't see what the flatness gets you here. Closing loopholes and eliminating deductions can be done regardless of what slope you decide to put on the tax formula.
You are correct. I just state it as an opportunity to overhaul the entire tax system. But certainly loopholes can be closed regardless of the kind of tax curves we choose.
I think that anyone who looks objectively at the market must understand that it is impossible to realize the perfect efficiency the market brings.
The invisible hand is a guiding generalization, but the market left to itself has shown historically to engage in a number of behaviors which hurt itself.
For instance,
1. the market has no care about wealth inequality whereas history shows large inequalities in wealth disrupt the social environment for economic activity.
2. individual market actors do not efficiently use shared resources creating negative externalities. Pollution being the major one. Regulation is therefore necessary as are the taxes to support such regulation.
3. individual market actors sometimes find it in their self interest to win not by competing with the best product, but by engaging in anticompetitive behvior. Monopolies and Oligopolies.
4. Individual market actors find it in their best interest not to compete with the best service, but by exploiting those of weaker economic power taking advantage of the fact that corrective legal action is expensive. ex. Phone companies charging you for services they never rendered.
5. Individual market actors find it in their best interest to suppress information to allow rational economic actors to render a decision. Example. Car companies suppressing information about the danger of their cars.
6. Potential damages too high or actions too infrequent to permit rational economic decision making. Example, the market for brain surgeons. The next time I have a stroke I promise you I will look for a better brain surgeon is many times not an option.
7. Firms able to socialize costs by closing shop. I am Junk Car company. I sell terrible cars. I sell 5000 cars. Tons of people die. I make money. They sue me. I go bankrupt. Then i reopen a new car company and start again. Market advocates say...well, now we know! Dont buy cars from Junk Car company. What about the tons of people who have died? What about the fact that I can reopen another car company? How is the market going to solve this problem? my company is already bankrupt and I anticipated that from the outset.
All these require taxes to uphold regulation to ensure efficiency and gains in the market at large.
People earning 150 to 250k are, actually, very rich. No, they're not in the stonkingly rich multi-millionaires club, but they are in the top couple of percent of total household incomes (Less than 4% of *households* in America in 2011 earned 150k; so a lot less than 4% of individuals).
Anyway, that aside, I think everyone is in pretty firm agreement; there is no real reason to allow the number and generosity of tax loopholes that currently exist. Many (although clearly not all) come from a well intentioned place, but they make it so that doing your taxes is an unnecessary burden on average people, and the extremely rich and corporations get away with economic murder. In particular, a lot of companies just never pay any real tax in the countries they do a lot of business in. In Australia, Apple and Google do billions of dollars of business but both pay essentially (or actually) zero tax; the money is all moved around via shell companies to other countries.
Their place in the percentile of American Household Income is irrelevant, the reality is that at $150k, you're still budgeting your money, and are living a lifestyle similar to anyone in the $80k-$149k range. You're probably able to take better/more vacations and have a little more leeway, but you're living in the same neighborhoods as someone making $80k a year. Maybe in a three bedroom instead of a two bedroom, but you're daily lifestyle won't be much different.
You're forgetting that people in those brackets have usually incurred a significant amount of debt in order to get into that bracket. For example, at minimum an American doctor is looking at $300k in debt when they graduate, with many doctors owing much more than that. And it's not the kind of income where you can afford to just pay off huge chunks of your debt, either. Not to mention, where most of these jobs are located the cost of living is going to be much higher than elsewhere. For instance, suburban housing around the DC Metro area is at least double what it is most other places (the DC Metro area, FYI, is where 3 of the 5 richest counties in the nation are located, the other two being in NY and CA if I remember correctly). And they still don't make enough to take advantage of the various tax shelters out there.
That said, when we look at tax reform, we have to realize those with enough money that it becomes influence are always going to be able to circumvent paying their full taxes. We may elect our leaders, but these rich pay for their campaigns (and this applies to both the Democrats and the Republicans). Expecting reform to come in a way that doesn't look out for the best interests of the wealthy is foolish until we get some real campaign finance reform in place. That has got to be step one before any real tax reform can take place.
The other thing to realize is that tax policy is predatory. You're never going to get a completely flat system because states (both in the domestic and international contexts) are going to use taxes to compete with one another. So the moment we reform all the current loopholes, they'll just start building up again.
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Are you for real? Where is 150K "very rich"? My wife and I together probably get close to 100K for the year and I can't imagine a 50K boost would bump us into "rich" land. After taxes around here that would be an extra... 30K? so roughly an extra 2k a month to spend? That's cool... I suppose instead of living 45 minutes away from work I could afford to live much closer (currently I own a 3br 2 bath fixer upper, my co-worker lives much closer and his mortgage is 150% of mine for a smaller older house), instead of driving an 08 pontiac I could have a nicer car... my wife could have gotten a nicer car too but her new car is already $500 a month. I guess I'd go ahead and get a smart phone at that point since the extra $30-$50 a month wouldn't be as big of a deal anymore... We'd go on nicer vacations sure... we could stay at a Hilton instead of a Holiday Inn but I don't see that as a "rich" only perk. And we live in a pretty low cost of living area... I have a buddy who lives in San Fran and cost of living out there is significantly higher than here (my awesome apartment was a couple hundred dollars cheaper than his room in a shared house an hour out of the city).
It's very easy to look at your own situation and think of what you don't have or what you can barely afford and think you don't have it well off.
But realize that over 90% of Americans make less than you make. You hypothesized getting a 50% pay boost and proceeded to list a bunch of luxuries that you'd be able to afford. For most families, a 50% of pay boost would mean that they'd be able to afford necessities that they're currently going without. Maybe they'd maybe be able to be able to pull themselves out from their crippling credit card/medical/student loan debt. Or they'd maybe be able to put a meaningful amount towards their retirement
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I understand that perfectly fine. I was just disputing his claim that $150K was "very rich". Aaron Rodgers is "very rich". I'm doing well. My boss (probably close to the $150K mark) is well off.
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Which, is exactly what I said in the post that was initially disagreed with.
*My* point was that the tax penalties crafted toward the ultra rich with the flippant "meh, they're super rich they can afford it" attitude are dramatically overly harsh on people who are in the low six figure bracket. Most families making 200k a year really can't afford to keep working the hours they do, if everything they make in excess of 100K is taxed at 75%.
The ultra-rich can avail themselves of shady tax dodges, and captiol investments to reduce their tax burden. People in the low six figures *CAN'T*. Drawing the line there effectively enforces the barrier between middle class and rich because anyone straddling or just over the barrier gets hit hard, whereas people significantly past the line don't.
I don't know that I can agree with you here though... at 100K my wife and I don't buy designer apparel, we typically buy generic food, we stick to basic cable, only 1 smart phone, we have a very cheap house and luckily have very little student debt, one of my co-worker's wives makes a decent bit more than mine but they also pay a student loan bill that is almost as much as my mortgage. If I classify as "rich", what are the people with lake houses, that shop at Wholefoods, and have Louie Viton hand bags?
I think it's important to realize there is a huge difference between someone making $100K and $10 million. One of these groups can basically buy anything they could possibly want... the other still has to budget and be careful about their spending, they just happen to be able to buy some luxury items. When talking about taxes this is incredibly important... Typically people making money in the hundred of thousands area are working very hard for that money (or at least were before to get promotions), they are not athletes, trust fund babies or celebrities. If making 50% more money doesn't translate into any kind of bump in standard of living, why do the work to make 50% more money? Why deal with the stress of upper management versus being an engineer when all it would do is let me afford a slightly nicer car?
I absolutely agree with this (DUN-DUN DUNNNNN!). The only thing I would add is that, when taxes like this are discussed, it's these people in the upper middle class who are hit hardest by tax increases on the 'wealthy', simply because people hear six figures and think they're rich. But these are still people who need to budget and save for retirement like everyone else and whose only investments are their retirement plans.
Granted 'hit hardest' is relative, but having gone from qualifying for food stamps as a kid to having parents in that lower six figures class, tax increases on the wealthy almost always hit the upper middle class more than the truly rich, because they can't take the same dodges.
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Mostly I meant eliminating the deductions, but also carrying a corresponding reduction in taxed percentage. It's more from a "this is maddeningly difficult to figure out" perspective than it is an actual attempt to save myself money.
In other words if we had three categories: money below $X, money above $y, and money between $X and $Y. each assigned their own tax rate. Presumably below $X would be 0%, and X would be set at the poverty line based on your number of dependents. X-Y would run up to about $250K, above Y would be money after $250K.
So basically, everyone gets their money up to the poverty line tax free. Then money through middle class at a moderate percentage. Then money after the arbitrary middle class cut off at a second rate, higher than the first rate.
The rates themselves, and the number of brackets could be configured of course, but the main idea is to make it possible for me to figure out my tax burden, without needing to hire an accountant or buy a specialized computer program.
When I say "people" who earn 150 plus are rich, I mean individuals, not couples. And I stand by what I said (ok, maybe "very" is a step too far); an individual making 150k is more than comfortable. Yes, they still have to consider where they spend their money*, but the notion that they cannot afford to chip in slightly more *on money earned over that 150k* is, frankly, absurd given the current american tax brackets.
* because if you're earning that much and can't budget, you're probably being overpaid.
Look at this guy, who's both not rich yet making more than 96% of all Americans. There is no :eyeroll: Big enough. A bloo bloo my 08 car is so old, he said completely oblivious.
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Comfortable sure... but I take offense to the idea that I am somehow rich. Rich is being able to just wake up in the morning and decide to take a trip to Hawaii for giggles. Being able to afford a "decent" home, car, clothes is what I would call middle class. Just because only 4% of people make that much does not make them rich. Unfortunately we have a situation where there is a steep drop off from what I consider to be rich, to what I consider to be middle class. CEO's, Business owners, models, celebs, athletes are all rich.... some doctors and lawyers are rich. I highly doubt too many engineers and sales staff are living the "rich" life but would be quite close to your $150K cut off. Keep in mind I live "near" Minneapolis which compared to cities like NY, San Fran or Washington is dirt cheap... I'm guessing there are people living in those areas that make well over $150K and don't live all that much better than I do.
And owlington... I am not at all oblivious to the fact that I make significantly more then most people. But my wife and I making triple minimum wage is not even close to the same as a backup pro-athlete making 100 times minimum wage. So if someone wants to call 5x minimum wage "very rich" I want to know what we call 100x minimum wage.
I never said I was struggling... But I don't think my manager's life should be classified as being rich (remember I don't break the magical $150K barrier that started this discussion). It should be classified as upper middle class... my life should be the norm. Norm should not be 1 or 2 promotions from rich and it also should not be choosing between going to a movie or getting to eat, poor.
I get the impression that you want me to feel bad for having a decent job and not working minimum wage. I'm not going to apologize for going to school in a field I knew would be profitable and doing well.
Rich people can afford to get away from us smucks
I understand the whole argument that 10% from the poor has a bigger impact than 10% from the rich and I agree with it as well.
Owlington -- there is a distinction to be made between "rich" and "very rich". I'm not going to contend that someone making $250K a year isn't rich. They are. They are not, however "very rich".
The point made earlier in the thread was that onerous tax burdens premised on "meh, the very rich can handle them, besides they have all those ways they use already to hide their money form taxes anyway" is far too burdensome on someone who is at the $250K level, and is hardly a burden at all on someone who is at the 2,500K level.
Tax shelters are not available to people who make 350-500K, they just aren't economically viable until you're making over a million a year. As a result, those onerous tax burdens are *extremely* harsh on people who just barely cross into being rich, and hardly burdensome at all on the very rich. In effect, what you are doing is forcing a divide that cannot be crossed. It's not worth someones time to work extra hard to make another 100K, when you are going to tax it at 75%. The current structure enforces a divide between the very rich and the middle class, by making placing the crux of the tax burden on the "rich".
Basically, if you think that people making between 350 and 500 thousand a year are the ones using tax shelters to avoid paying their share of taxes, you are deluding yourself.