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There is something very strange about the GOP tax plan

trickle down is more of a coke bender than a sugar high.
 
Rogue Valley said:
There is something very strange about the GOP tax plan

Illuminating read on the alarm bells being raised by economists and financial-sector think tanks.

Related: Wall Street to Washington: Tax cuts are 'sugar high' that don't promote long-term growth
Click to expand...

I'm not rich, and I never expect to be unless I win the Lottery (and I don't play the Lottery).

Still, I've always wondered why so many people feel that merely having more money requires that a person must pay more?

What is wrong with a flat tax for everyone?

Let's for example say 10%.

If I live at the bottom tax bracket earning $100.00, I'd pay $10.00.

Middle of the bracket earning $500,00, and I'd pay $50.00.

Top of the bracket earning $100,000.00 and I'd pay $10,000.00.

The argument I always hear is "Well giving up $10.00 is harder on the low end because it is a significant portion of their income when faced with every day living expenses." Followed by, "The rich can afford to pay more!"

While this may be true; it is also true that each amount is a "fair share" of the tax burden one should bear if they expect to reap the benefits from the pot of money collected for the social good. Much of that pot is redirected at the poorest members anyway. (Isn't that what taxes are for?)

So the "rich" get a tax break? They are still paying multiples more in taxes than the lower brackets. So what's the beef?
 
Captain Adverse said:
I'm not rich, and I never expect to be unless I win the Lottery (and I don't play the Lottery).

Still, I've always wondered why so many people feel that merely having more money requires that a person must pay more?

What is wrong with a flat tax for everyone?

Let's for example say 10%.

If I live at the bottom tax bracket earning $100.00, I'd pay $10.00.

Middle of the bracket earning $500,00, and I'd pay $50.00.

Top of the bracket earning $100,000.00 and I'd pay $10,000.00.

The argument I always hear is "Well giving up $10.00 is harder on the low end because it is a significant portion of their income when faced with every day living expenses." Followed by, "The rich can afford to pay more!"

While this may be true; it is also true that each amount is a "fair share" of the tax burden one should bear if they expect to reap the benefits from the pot of money collected for the social good. Much of that pot is redirected at the poorest members anyway. (Isn't that what taxes are for?)

So the "rich" get a tax break? They are still paying multiples more in taxes than the lower brackets. So what's the beef?
Click to expand...

Another is having a max on tax deductions- one I read of was 150 K.
 
Captain Adverse said:
I'm not rich, and I never expect to be unless I win the Lottery (and I don't play the Lottery).

Still, I've always wondered why so many people feel that merely having more money requires that a person must pay more?

What is wrong with a flat tax for everyone?
Click to expand...
Because the left is interested in taxation only as a means of wealth transfer. They don't want everyone to pay a fair share of the burden. They want those who have to pay so that they can spread it around to those they think deserve it.
 
JANFU said:
Another is having a max on tax deductions- one I read of was 150 K.
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I'm already on record as supporting the elimination of "deductions."

Flat tax means exactly that, i.e. 10% and not a penny more unless Congress votes to raise it. Then they'd have to finally do their job and justify increases or short-term special taxes very clearly...or lose their jobs to someone who will.

Seems to me it would be much easier to stay on budget when you know you only have so much income to depend on. (Like WE are forced to do every pay period.) :shrug:
 
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Rogue Valley said:
There is something very strange about the GOP tax plan

Illuminating read on the alarm bells being raised by economists and financial-sector think tanks.

Related: Wall Street to Washington: Tax cuts are 'sugar high' that don't promote long-term growth
Click to expand...

It is certainly true that the economy is chugging along fine and tax reduction is best introduced, when the chugging gets tougher. When rates are low and growth and employment strong, cutting spending is the way to go.
 
Captain Adverse said:
I'm already on record as supporting the elimination of "deductions."

Flat tax means exactly that, i.e. 10% and not a penny more unless Congress votes to raise it. Then they'd have to finally do their job and justify increases or short-term special taxes very clearly...or lose their jobs to someone who will.

Seems to me it would be much easier to stay on budget when you know you only have so much income to depend on. (Like WE are forced to do every pay period.) :shrug:
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flat tax on what?
gross revenues?
net revenues?
net profit?
 
Captain Adverse said:
What is wrong with a flat tax for everyone?
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For two reasons.

It is a tax increase for those with the lowest savings rates... meaning it must lead to a decrease in consumption. Remember, the 47% who do not pay federal income tax do consume goods and services.

Secondly, there won't be much of an income effect from tax cut proceeds, because those who will get the majority of the tax cuts can already afford to consume at that additional level without budgetary substitutions.

consump21.gif


The consumption and savings function allows for visualization of my statement.
 
justabubba said:
flat tax on what?
gross revenues?
net revenues?
net profit?
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Income.

Since Corporations are "paper people," tax them like we tax other people.

The Fed and States deduct money for income taxes before we get paid. (Then they get to slap on sales taxes, which need to be debated too IMO).

In the case of Corporations, that would be off the top of any profit which is their "income."
 
Kushinator said:
For two reasons.

It is a tax increase for those with the lowest savings rates... meaning it must lead to a decrease in consumption. Remember, the 47% who do not pay federal income tax do consume goods and services.

Secondly, there won't be much of an income effect from tax cut proceeds, because those who will get the majority of the tax cuts can already afford to consume at that additional level without budgetary substitutions.

consump21.gif


The consumption and savings function allows for visualization of my statement.
Click to expand...

Just another argument based on "you've got more money so you can afford to give up more." :shrug:

I've got an idea. Instead of going through all this tax malarkey, why not just pass a "rich people assessment" law. If you make over a certain amount, you have to give 50% to charity.

That should fund all the social welfare programs society requires.
 
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Captain Adverse said:
Just another argument based on "you've got more money so you can afford to give up more." :shrug:
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No.

Why are you so quick to assume changes to wealth and income will be a net positive with respect to foregone tax liability? In other words, the rich might be less-well-off than they would be under our current mixed tax regime.
 
Kushinator said:
No.

Why are you so quick to assume changes to wealth and income will be a net positive with respect to foregone tax liability? In other words, the rich might be less-well-off than they would be under our current mixed tax regime.
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I am not arguing that at all.

I am arguing "fair share."

Somehow people seem to think that the more money you have the more percentage your fair share should be.
 
Captain Adverse said:
Just another argument based on "you've got more money so you can afford to give up more." :shrug:
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The point is this....ours is a consumer economy. It is driven by people buying stuff. People buy stuff with the income they have left after taxes, food, rent, health care, etc.

Now, thought experiment for you.

Two people, one with 40,000 annual income, the other with 4,000,000 annual income.

Who's spending habits will change, with less money? Will 4K less annually reduce the excise purchases of the 40k a year person? Will 4K less per year stop them from getting their windows replaced, or maybe take one less vacation, or in some other way, affect their spending decisions?

How about the 4mil person? Will 400k less income cause this person to cancel the window replacement job? Or take one less vacation? How about if we double it? Will 800k less cause this? Taking home 3.2 million, instead of 3.6 million?

What say you?
 
Captain Adverse said:
I am arguing "fair share."
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If you really believe taxing the first dollar earned the same as the first million earned is fair... well, it's unlikely you'll accept the economics behind taxation.

Somehow people seem to think that the more money you have the more percentage your fair share should be.
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The more money you earn, the more of an advantage you have for subsequent earnings.
 
Captain Adverse said:
I am not arguing that at all.

I am arguing "fair share."

Somehow people seem to think that the more money you have the more percentage your fair share should be.
Click to expand...

Fair never entered into it. Instituting fairness would destroy the world, let alone the US. That's life. Not fair.
 
Fletch said:
Because the left is interested in taxation only as a means of wealth transfer. They don't want everyone to pay a fair share of the burden. They want those who have to pay so that they can spread it around to those they think deserve it.
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Not quite. The left uses the tax as a populist instrument. More voters believe the intuitively good feel of rich paying more. This is also why we haven’t a VAT, which is a very efficient tax compared to income or asset taxation.
 
joG said:
Not quite. The left uses the tax as a populist instrument. More voters believe the intuitively good feel of rich paying more. This is also why we haven’t a VAT, which is a very efficient tax compared to income or asset taxation.
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We don't need a VAT because we can borrow with less economic opportunity cost. Implementing it will create an initial shock that's a negative for the economy, as it would likely fill the budget gap.
 
KevinKohler said:
The point is this....ours is a consumer economy. It is driven by people buying stuff. People buy stuff with the income they have left after taxes, food, rent, health care, etc.

Now, thought experiment for you.

Two people, one with 40,000 annual income, the other with 4,000,000 annual income.

Who's spending habits will change, with less money? Will 4K less annually reduce the excise purchases of the 40k a year person? Will 4K less per year stop them from getting their windows replaced, or maybe take one less vacation, or in some other way, affect their spending decisions?

How about the 4mil person? Will 400k less income cause this person to cancel the window replacement job? Or take one less vacation? How about if we double it? Will 800k less cause this? Taking home 3.2 million, instead of 3.6 million?

What say you?
Click to expand...

I say that the guy with 4 million is more likely to buy a yacht worth $200,000.00 than you or I am. They are also more likely to donate $200,000.00 to charity than you or I am.

I am more likely to buy things I need and not things I'd like.

I recognize this legal wealth redistribution is designed to protect the wealthy from forced redistribution like the French and Russian Revolutions...which in both cases didn't turn out all that well for the needy in the long run either.

But just call a spade a spade and stop bitching every time we hear the rich are getting a tax cut, or have bought Congressmen so they give them so many special deductions anyway.

It's human nature to want to keep as much of yours as you can.
 
Captain Adverse said:
I am not arguing that at all.

I am arguing "fair share."

Somehow people seem to think that the more money you have the more percentage your fair share should be.
Click to expand...

The problem with “fair share” is not a very economic concept. While as a populist battle cry, it may be effective enough, if it is, it will reduce the availability of goods in later periods. This will harm be poor more than the rich, who can better adjust.
 
In the USA:

In 1983 the top 1% owned 33.8% of the weath and the bottom 80% of the people owned 18.7% of the wealth.
By 2010 the top 1% owned 35.4% of the wealth and the bottom 80% only owned 11.1%.

The rich are getting richer and the bottom 80% are getting poorer.


The Wealth Distribution

From the following:
In the United States, wealth is highly concentrated in a relatively few hands. As of 2010, the top 1% of households (the upper class) owned 35.4% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 53.5%, which means that just 20% of the people owned a remarkable 89%, leaving only 11% of the wealth for the bottom 80% (wage and salary workers).

In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.1%. Table 1 and Figure 1 present further details, drawn from the careful work of economist Edward N. Wolff at New York University (2012).
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Who Rules America: Wealth, Income, and Power
 
Captain Adverse said:
I say that the guy with 4 million is more likely to buy a yacht worth $200,000.00 than you or I am. They are also more likely to donate $200,000.00 to charity than you or I am.

I am more likely to buy things I need and not things I'd like.

I recognize this legal wealth redistribution is designed to protect the wealthy from forced redistribution like the French and Russian Revolutions...which in both cases didn't turn out all that well for the needy in the long run either.

But just call a spade a spade and stop bitching every time we hear the rich are getting a tax cut, or have bought Congressmen so they give them so many special deductions anyway.

It's human nature to want to keep as much of yours as you can.
Click to expand...

You espouse the basis of trickle down economics. Which we've endured for over 30 years.

How's that working out? Nothin but rainbows and butterflies for yacht builders?
 
Capitalism ( profits for businesses ) creates goods and services. If the owners ( think top 1 percent) keep all the money than that prevents new things from being created.


Money is like water-- it's only powerful when it's in motion.
 
KevinKohler said:
You espouse the basis of trickle down economics. Which we've endured for over 30 years.

How's that working out? Nothin but rainbows and butterflies for yacht builders?
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I do NOT "espouse the basis of trickle down economics." :roll:

I recognize that wealth held in the hands of a few is mostly wealth not spent.

Although an argument can be made that it is investments by wealthy that fund advancements.

No...I espouse the idea that my property is MINE, however much or little it may be.

It should be MY choice how much or how little I wish to share with others.

I believe in Democratic principles...but I do not believe in pure democracy which always turns into a tyranny of the majority...leading to redistribution of wealth (i.e. legal robbery) by "fair voting."
 
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