The Rich and Taxes: A Debate

[Aradhus]

You might've missed the post about the one you responded to, TGD, can you clarify if I'm missunderstanding the figures you posted.

Personally I disagree about the blame thing. Presidents set agendas. Yes, lots of other peolpe are involved, but he's supposed to be the boss. Ultimately the buck has to stop somewhere and if we don't pinpoint who did what wrong, nobody ever gets held accountable, that person has no disincentive to not take risks or spend the required time thoughtfully considering all the possible unintended repurcussions( Which up until now is Probably governments biggest failings). And I think why regulating the financial industry and installing the correct oversights, checks and balances, etc was the most important issue Obama had since his presidency began.

[thegreekdog]

I'm not suggesting that the government in no way affects the livelihood of the senior partner at a law firm. What I am suggesting is that many would argue, including the senior partner at the law firm, that an increase in taxation would hurt the senior partner, rather than help him/her. In fact, that brings us back to the question of how much responsibility should the government have.

I also don't agree at all that if we reduce the role of government we would get something closer to the 1900s. That suggests that the economic development of the United States from 1900 to 2010 was dependent upon the government.

Yes it would harm the Senior partner, But any rate of taxation harms specific individuals. What I am arguing is that the benefit to society outweighs the harm rendered to individuals in the form of taxes. Would you agree this theoretical partner would be negatively affected by their government defaulting? perhaps more so than a tax rate of 40%.
Right now Government debt is too high, it is quite clear government has overspent and needs to change. To do that it must increase revenue and decrease expenses. Where should the Increased revenue come from? I would argue those most capable of paying it.

On the 1900s I was talking more about social structure rather than purely economic development. Reduce the moderating role of government and I think you would see a narrowing of the middle class and a steeper income pyramid.

I agree that the partner would be negatively affected by the US government defaulting.
I do not agree that an increase in the tax rate is the only option (as you probably already know).
On the last point - how much of a moderating goal do you think the government has right now (at least vis-a-vis the rich)? Many would argue, including almost all staunch moderates and liberals, that the government has virtually no oversight right now, especially over the wealthy. And some would argue, including most liberals (and me), that the government, regardless of party control, does what most benefits the wealthy.

[jimboston]

Here's what a person living in New York City (let's say she is a stock broker) and making over $200,000 per year pays in personal income taxes (based on tax rates).

- Income = $200,000
- US federal - Your tax is $41,754 + 33% of the amount over $171,550 ($9,389) = $51,143
- New York state personal income tax - Your tax is $13,303 plus 7.85% of the excess over $200,000 = $13,303
- New York city personal income tax - Your tax is $3,071 plus 3.648% of the excess of $90,000 ($4,013) = $7,084
- Social security tax - 6.2% on the first $106,800 of taxable earnings = $6,622
- Medicare tax - 1.45% on an employee's wages = $2,900

- Total tax = $81,052

I am sure she will be still very well off on the remaining $120,000

Not the point. Idiot.

Thank you for intelligently contributing to the discussion

Actually... my contribution was "more intelligent" than yours... since you completely avoided the point of GD's premise. My comment was simple to try to put you back on track.

Obviously you missed the point of my comment as well.

[thegreekdog]

Here are the histories of individiual income tax rates (from http://www.ntu.org).

http://www.ntu.org/tax-basics/history-o ... ual-1.html

During the Reagan presidency, Democratic Congress, 1980-1988:

- The poor paid taxes at a lower rate (from 14% to 11%).
- The rich paid taxes at a lower rate (from 70% in 1980 to 38.5% in 1987), but more people were included in the "rich" category.

During the Bush I presidency, Democratic Congress, 1988-1992:

- The poor paid taxes at a higher rate (from 11% to 15%), but with more people included in the "poor" category.
- The rich paid taxes at a higher rate (from 28% to 31%), and with more people included in the "rich" category.

During the Clinton presidency, sometimes Democratic, mostly Republican Congress, 1992-2000:

- The tax rate on the poor stayed flat (15%), but with more people included in the "poor" category (from $35,800 in 1992 to $43,850 in 2000).
- The rich paid taxes at a higher rate (from 31% in 1992 to 39.6% in 2000), but with less people included in the "rich" category (from $86,500 in 1992 to $288,350 in 2000).

During the Bush II presidency, 2000-2008:

- The tax rate on the poor went down (15% to 10%), but with less people included in the "poor" category (from $45,200 in 2001 to $16,050 in 2008).
- The rich paid taxes at a lower rate (39.6% to 35%) and with less people included in the "rich" category (from $288,350 to $357,700).

If they lower the tax rate for the top bracket, obviously more people will be in the top bracket, considered "rich". I don't quite get the poor thing, are you saying that people in 2001 earning 45200 or less were considered in poverty, and in 2002 people earning 12000 or less were considered in poverty?

I'm not sure what is considered "poverty" in any one year in the United States. I was simply supplying data. If the link works, you should go there (I try not to post just links because I think people are more likely to read a post than click a link). The people earning below $X were paying X% in taxes. This also ignores credits (so in 2008 people paying 10%, were actually probably paying closer to 0%, if not 0%).

[thegreekdog]

You might've missed the post about the one you responded to, TGD, can you clarify if I'm missunderstanding the figures you posted.

Personally I disagree about the blame thing. Presidents set agendas. Yes, lots of other peolpe are involved, but he's supposed to be the boss. Ultimately the buck has to stop somewhere and if we don't pinpoint who did what wrong, nobody ever gets held accountable, that person has no disincentive to not take risks or spend the required time thoughtfully considering all the possible unintended repurcussions( Which up until now is Probably governments biggest failings).

I'm not sure if the buck stops with the president. Sure he has to sign bills and he can set the agenda (assuming his party is in control of Congress), but Congress writes the laws and passes them. To further complicate matters, we should consider the effective dates of legislation. For example, there is a New Jersey bill signed by the former governor that does not take effect until 2011 that would effectively lower corporate taxes, but increase New Jersey's budget deficit. So, the outgoing governor "helped taxpayers," but the current governor is going to have to find a way to pay for it. So, if the New Jersey economy performs poorly under the new governor, whose fault is it?

To even further complicate matters, sometimes we won't see the negative or positive effect of a policy for many years, regardless of the effective date of the measure.

So, I think it's difficult for anyone to blame economic conditions on any particular president or any one person or group of people. I think we can narrow it down to a few groups of people (like I did with the housing bubble), but I wouldn't say it was Bush II's fault only. If I had to choose one over any of them, I would have chosen the banks and lenders because they lobbied Congress and the president and then were bailed out by the same Congress they lobbied.

[thegreekdog]

Baron - related question:

What is the difference between an investment banker drone who makes $200K (or $250K) and a union carpenter making $100K and a teacher making $50K and a janitor making $30K with respect to their "use of the government" as a means to their wealth?

I don't think there is a difference - they are all "workers." They work to achieve their wealth.

I do think that the "boss" who makes $800K is a different animal entirely, however. I wanted to get your thoughts on this.

[Baron Von PWN]

I agree that the partner would be negatively affected by the US government defaulting.
1.I do not agree that an increase in the tax rate is the only option (as you probably already know).
2.On the last point - how much of a moderating goal do you think the government has right now (at least vis-a-vis the rich)? Many would argue, including almost all staunch moderates and liberals, that the government has virtually no oversight right now, especially over the wealthy. And some would argue, including most liberals (and me), that the government, regardless of party control, does what most benefits the wealthy.

1. Of course, but It is a useful measure.
2. Stated goal? Very little, allot of this has to do with the vitriol associated with taxes. de-facto it has a slight moderating effect due to progressive tax rate and various social programs. I agree that government often does things which benefit the rich but that makes sense. It would be very foolish for government to realy harm the rich as then they start to destroy the wealth generating system, which would harm society as a whole. The tax rates being discussed wont be doing that.

[thegreekdog]

I agree that the partner would be negatively affected by the US government defaulting.
1.I do not agree that an increase in the tax rate is the only option (as you probably already know).
2.On the last point - how much of a moderating goal do you think the government has right now (at least vis-a-vis the rich)? Many would argue, including almost all staunch moderates and liberals, that the government has virtually no oversight right now, especially over the wealthy. And some would argue, including most liberals (and me), that the government, regardless of party control, does what most benefits the wealthy.

1. Of course, but It is a useful measure.
2. Stated goal? Very little, allot of this has to do with the vitriol associated with taxes. de-facto it has a slight moderating effect due to progressive tax rate and various social programs. I agree that government often does things which benefit the rich but that makes sense. It would be very foolish for government to realy harm the rich as then they start to destroy the wealth generating system, which would harm society as a whole. The tax rates being discussed wont be doing that.

Your response to #2 confuses me. Why would tax rates not harm the rich? Because they have so much to spend that an incremental increase to the tax rate would not harm them? I have to think about a suitable response, otherwise I agree.

[Phatscotty]

Roughly 70% of Americans wanted the bush tax cuts on the rich to expire. Roughly the same number wanted a public option. Unless you exert pressure on these guys, they'll never do what people want.

I doubt that is true in regards to the tax cuts or the public option, but if it is it is only because they were ill informed. People who support class warfare are low information voters.

People who use meaningless phrases that they have been taught like "class warfare" instead of analysing the situation are low information voters.

I find arid's statement highly unlikely. To single out a small part of the most successful people for punishment, when everyone else gets to keep their tax cuts, is very unfair. Given that those same people already pay a much higher rate and infinitely more total taxes than everyone else, it's even more harsh. Don't forget, these people get taxed again up to 50% when they die. LEAVE THEM AND THEIR FRUITS OF THEIR LABOR THE f*ck ALONE!

This Looter Class demand for more of other people's money makes me absolutely sick to my stomach. It's disgusting. These people earned that money!

If you are dating someone, and for every dollar your partner makes you make 100$. You and your partner go out to dinner, do you split it down the middle? I would suggest you probably wouldn't. I view Tax rates on the rich in a similar matter. Their wealth is so much greater it seems reasonable they should pick up a larger portion of the bill.

sure, but I would never start asking my partner to buy me dinner(just a man thing), because then of course, after a while, he would come to believe I expected him to pay for me (as you suggest "he has more...so...", and pretty soon he would choose not to even have dinner with me in the first place.

If I was the rich partner, that's what I would be thinking. "why cant they ever pay, just once?" "have they done anything to show appreciation? or just demand desert too?" After a while, I wouldn't go to dinner with them anymore. And guess what else happens the first time I decline to pick up the tab? I get called names right? I get yelled at and shamed right? not only that, the lesser to do partner gets the crowd behind them right?

[BigBallinStalin]

Their taxes fund what creates the possibility for their wealth.

Some would argue differently. I would argue that 40% of their wealth was not made possible by the federal government in most instances (but we're not basing tax rates on that). I would further argue that the rich are going to take care of themselves. For example, let's we have a partner making $800,000 a year. Let's say he currently has 5 employees. In Year 2, instead of paying 30% of his income to taxes, the partner pays 40%. Do you think he will (a) pay the taxes without complaint or (b) fire an employee so that he can increase his income which "covers" the taxes. It's almost always going to be (b).

I don't have a solution for this, but, well, I'm a believer in trickle down economics.

This all depends on how big a role you think the government plays in shaping your society and the way it functions. If we had no government at all would the same senior partner have the same standard of living? I suspect not, government creates a secure environment for the basic stuff of economics to function.

The legal system does--not necessarily the government.

What if he was operating under about half the size of government as it exists in the USA right now. He personaly would probably be much better off, but what about the rest of society? what would that do to median income? Drastically reduce the role of government and I suspect you would get something closer to the 1900's, ie. large majority low income.

This depends on a large variety of factors.

The government itself doesn't keep people rich or prevent poverty. People themselves do; they provide the opportunities and lack thereof to materially benefit themselves and others.

The government's main function is to engage in diplomacy (in order to represent all the politically united States--which I feel isn't necessary), to demand involuntary contributions with the threat of coercion, and to spend on public goods, which it deems can't be provided by the private sector.

The federal government is here to prolong its necessity. If things were decentralized, we'd still be fine---just less intrusive in world affairs.

Anyways i think government supports the rules which create the environment for the wealth and well being of society . Currently government has way too much debt, this is a threat to the system of rules which allows society to function. I think the benefits of raising Taxes to the highest earners will outweigh the negatives which inevitably occur as a result of taxes.

By raising taxes, you'll inhibit economic growth and development. Where do you think the money goes? Back into inefficient and unnecessary government-run programs because many within the government feel no need to balance the budget. It's not like they're some privately run corporation that will suffer the consequences of such a policy; therefore, there's no immediate incentive for them to correct things.

Spending needs to be cut first in order to balance the budget.

[Baron Von PWN]

I agree that the partner would be negatively affected by the US government defaulting.
1.I do not agree that an increase in the tax rate is the only option (as you probably already know).
2.On the last point - how much of a moderating goal do you think the government has right now (at least vis-a-vis the rich)? Many would argue, including almost all staunch moderates and liberals, that the government has virtually no oversight right now, especially over the wealthy. And some would argue, including most liberals (and me), that the government, regardless of party control, does what most benefits the wealthy.

1. Of course, but It is a useful measure.
2. Stated goal? Very little, allot of this has to do with the vitriol associated with taxes. de-facto it has a slight moderating effect due to progressive tax rate and various social programs. I agree that government often does things which benefit the rich but that makes sense. It would be very foolish for government to realy harm the rich as then they start to destroy the wealth generating system, which would harm society as a whole. The tax rates being discussed wont be doing that.

Your response to #2 confuses me. Why would tax rates not harm the rich? Because they have so much to spend that an incremental increase to the tax rate would not harm them? I have to think about a suitable response, otherwise I agree.

I'm saying a tax increase, while it will obviously "harm" the rich, will do so only marginally. In absolute terms they still have allot of money. 60% of 250k$ is still allot of cash, and they will continue to live at the same if not very similar standard of living. The largest negative to these high rates of taxes is the likely reduction in investment/savings which would likely result. Which is why If i were king I would like to see such an increase be a temporary measure which would be rolled back once State finances were under control.

OT: I'm really enjoying this discussion everyone and I promise to respond to everyone but I really need to study for my Russian exam, so It might take me a while.

[Phatscotty]

I agree that the partner would be negatively affected by the US government defaulting.
1.I do not agree that an increase in the tax rate is the only option (as you probably already know).
2.On the last point - how much of a moderating goal do you think the government has right now (at least vis-a-vis the rich)? Many would argue, including almost all staunch moderates and liberals, that the government has virtually no oversight right now, especially over the wealthy. And some would argue, including most liberals (and me), that the government, regardless of party control, does what most benefits the wealthy.

1. Of course, but It is a useful measure.
2. Stated goal? Very little, allot of this has to do with the vitriol associated with taxes. de-facto it has a slight moderating effect due to progressive tax rate and various social programs. I agree that government often does things which benefit the rich but that makes sense. It would be very foolish for government to realy harm the rich as then they start to destroy the wealth generating system, which would harm society as a whole. The tax rates being discussed wont be doing that.

Your response to #2 confuses me. Why would tax rates not harm the rich? Because they have so much to spend that an incremental increase to the tax rate would not harm them? I have to think about a suitable response, otherwise I agree.

I'm saying a tax increase, while it will obviously "harm" the rich, will do so only marginally. In absolute terms they still have allot of money. 60% of 250k$ is still allot of cash, and they will continue to live at the same if not very similar standard of living. The largest negative to these high rates of taxes is the likely reduction in investment/savings which would likely result. Which is why If i were king I would like to see such an increase be a temporary measure which would be rolled back once State finances were under control.

OT: I'm really enjoying this discussion everyone and I promise to respond to everyone but I really need to study for my Russian exam, so It might take me a while.

40% of 250k is still a lot of cash. the #1 problem, IMO, is all the people who will stop earning/working when they get to 249,999.99. You probably would end up with more taxes and benefits if you let that person earn over 250k to their hearts desire. You clamp down with a 60% tax rate, you will find less and less people making enough to hit that rate. and it's bad for liberty too.

Lincoln would probably freak

[rockfist]

The people who argue for higher taxes on the rich are more concerned with what they perceive as "equality" than they are with Liberty. Its not my definition of equality, but it some peoples' minds its ok to compel one person to provide something to another if they perceive that the person could not provide it for themselves. Makes perfect sense for parents to be compelled to provide for their children, but adults well that's a whole different ballgame.

[Phatscotty]

equality in birth. not in life. that is to say that your actions do have consequences and hard work always pays off

[Aradhus]

The people who argue for higher taxes on the rich are more concerned with what they perceive as "equality" than they are with Liberty. Its not my definition of equality, but it some peoples' minds its ok to compel one person to provide something to another if they perceive that the person could not provide it for themselves. Makes perfect sense for parents to be compelled to provide for their children, but adults well that's a whole different ballgame.

Adults are interested in a functioning society.

I find it hard to believe that raising tax marginally on people that earn x amount will have any negative impact on society. Their income will be a little less, they will still have significant bank.. in the bank, which they tend to save, significant assets, significant positive impact on society.

[BigBallinStalin]

The people who argue for higher taxes on the rich are more concerned with what they perceive as "equality" than they are with Liberty. Its not my definition of equality, but it some peoples' minds its ok to compel one person to provide something to another if they perceive that the person could not provide it for themselves. Makes perfect sense for parents to be compelled to provide for their children, but adults well that's a whole different ballgame.

Adults are interested in a functioning society.

I find it hard to believe that raising tax marginally on people that earn x amount will have any negative impact on society. Their income will be a little less, they will still have significant bank.. in the bank, which they tend to save, significant assets, significant positive impact on society.

Like Phatscotty mentioned earlier, when taxes are raised for the "rich" ($250,000? ... please), they have that much less money to spend. Where would that money have gone? Into the economy, one way or another.

What happens when the government takes it? It goes into their government-run programs, which on average are inefficient in providing goods and services. (It most likely won't go towards balancing the budget, because the government has no immediate incentive to do so. They're a corporation immune from bankruptcy.

tl;dr:
What people need to realize is that for the government to put something into the economy, it must also take something out.

[Phatscotty]

The people who argue for higher taxes on the rich are more concerned with what they perceive as "equality" than they are with Liberty. Its not my definition of equality, but it some peoples' minds its ok to compel one person to provide something to another if they perceive that the person could not provide it for themselves. Makes perfect sense for parents to be compelled to provide for their children, but adults well that's a whole different ballgame.

Adults are interested in a functioning society.

I find it hard to believe that raising tax marginally on people that earn x amount will have any negative impact on society. Their income will be a little less, they will still have significant bank.. in the bank, which they tend to save, significant assets, significant positive impact on society.

just ask Obama, Clinton, and half of the democrats, as well as an overwhelming majority of economists.

The part you don't see is the job cuts. raising taxes directly affects bottom lines. bottom lines affect if a company is hiring/growing or not. Don't really need to say much more on that

[Aradhus]

Big business in the US is sitting on 2 trillion dollars...

Demand creates hiring.

[Aradhus]

Most partisan hack economists agree with what you're saying...

Most unbiased economists agree that tax cuts for the wealthy has the lowest multiplier effect for the economy. In other words its literally the worst thing the government can waste money on to try to stimulate growth.

[Phatscotty]

Big business in the US is sitting on 2 trillion dollars...

Demand creates hiring.

for good reason...

big biz and King Kong aint got shit on small businesses when it comes to job creation

[Phatscotty]

Most partisan hack economists agree with what you're saying...

Most unbiased economists agree that tax cuts for the wealthy has the lowest multiplier effect for the economy. In other words its literally the worst thing the government can waste money on to try to stimulate growth.

funny, you say "unbiased" the very same words that Clinton and Obama used in the press conference the other day.....

Clinton - "Every single unbiased economist judges these tax cuts are good for the economy"

you speak about the gov'ts money as it if is theirs. You truly do not see what this is all about, which explains a lot of

Not holding their words as gospel or throwing it in your face. Just showing you the overwhelming majority, in their own words, that disagree.

[Aradhus]

I repeat: Adults care about a functioning society.

[Phatscotty]

I repeat: Adults care about a functioning society.

okay, so when was America at it's peak of functioning? according to adults? when was it's weakest? what policies have contributed to better functioning society? Please keep it in the realm of "we want your shit" or "you dont keep to keep your own shit"

[thegreekdog]

Aradhus and Baron - at what income level should we raise taxes? $100K? $250K? $500K? And when you pick your number, please indicate why. Thanks.

Good luck on your exam Baron.

[rockfist]

I repeat: Adults care about a functioning society.

okay, so when was America at it's peak of functioning? according to adults? when was it's weakest? what policies have contributed to better functioning society? Please keep it in the realm of "we want your shit" or "you dont keep to keep your own shit"

Our country was at its peak in terms of economic and military might relative to the rest of the world just prior to the outbreak of WWI in 1913.