Taxing The Rich and Business.

[John Smith]

But why is it silly to charge 15% on the the first $25,000 of income, 25% on the next $25,000, 28% on the next $50,000 and 30% on the next million and then 35% on everything above that?
What's silly is that this system measures one's obligation to the state by the one's level of financial success. This is as silly as asking the customer in the department store to show his W-2 to determine the price he should pay for a TV set.

[Michael Ernest]

Originally posted by Eugene Kononov:
What's silly is that this system measures one's obligation to the state by the one's level of financial success. This is as silly as asking the customer in the department store to show his W-2 to determine the price he should pay for a TV set.

Financing defense, transportation, employment development, social services, entitlement programs such as social security, etc., are really very different in concept from retail and commodity price structures.
But with a little tweak in perspective, our retail markets work out usually the way you describe anyway. Rather than showing up at Circuit City with your W-2, however, Circuit City shows you an array of different TV sets. It's up to look at your own W-2 and figure out what price you should pay. Most people are going to pay for the 'best' set they can afford.
Your model example would seem more Soviet in style -- if you belong to the Party and have the right contacts, you can then enter certain stores that carry products the average non-Partygoer has no access to.

[Thomas Paul]

Originally posted by Eugene Kononov:
What's silly is that this system measures one's obligation to the state by the one's level of financial success. This is as silly as asking the customer in the department store to show his W-2 to determine the price he should pay for a TV set.

To some extent we do that. My mom gets a discount when she shops because she is over 65. But of course, there is a huge difference between your obligation to the state and your obligation to Macy's.

[Rufus BugleWeed]

This weekend's NYT takes aim at your tax misconceptions

Meanwhile, wealthy Americans have seen a sharp drop in their tax burden. The top tax rate -- the income-tax rate on the highest bracket -- is now 35 percent, half what it was in the 1970's. With the exception of a brief period between 1988 and 1993, that's the lowest rate since 1932. Other taxes that, directly or indirectly, bear mainly on the very affluent have also been cut sharply. The effective tax rate on corporate profits has been cut in half since the 1960's. The 2001 tax cut phases out the inheritance tax, which is overwhelmingly a tax on the very wealthy: in 1999, only 2 percent of estates paid any tax, and half the tax was paid by only 3,300 estates worth more than $5 million. The 2003 tax act sharply cuts taxes on dividend income, another boon to the very well off. By the time the Bush tax cuts have taken full effect, people with really high incomes will face their lowest average tax rate since the Hoover administration.

Read the whole story.
Why do people keep comparing that liar George Bush to Herbert Hoover?
[ September 12, 2003: Message edited by: Rufus BugleWeed ]

[Paul Stevens]

Originally posted by Rufus BugleWeed:
This weekend's NYT takes aim at your tax misconceptions

Read the whole story.
Why do people keep comparing that liar George Bush to Herbert Hoover?
[ September 12, 2003: Message edited by: Rufus BugleWeed ]

The rate may have been near 70% but with all of the loop holes they paid nowhere near that. In many cases nothing at all. The marginal rates dropped. Many loopholes closed and the actual tax collected rose.
Of course you still aren't comparing apples and oranges. The "wealthys'" total income tax share as a percentage has steadily risen. The stats are there (all you have to do is read). Why do want to keep bringing up things that have nothing to do with that. Then say I am wrong.
What that means is the percentage that the non-wealthy pay has shrunk. In many cases it has went negative (Earned income tax credit).
Where is any of that wrong?

[John Smith]

This weekend's NYT takes aim at your tax misconceptions
What is NYT? Some communist underground publication distributed in the metropolitan areas among the discontent poor? What's the credibility of the author? I wouldn't be surprised if he/she plagiarized the material from some other untrustworthy source and distorted the facts.

[Axel Janssen]

Originally posted by Rufus BugleWeed:
This weekend's NYT takes aim at your tax misconceptions
Read the whole story.

*GREATEST ARTICLE* I have read for years about economics. Thanks Rufus.
I am by no means left wing regarding economic politics. But to all the state-is-allways-bad dreamers, who think they are economic realists:
You might be dreamers in that and I am afraid the super-rich may use you.
[ September 13, 2003: Message edited by: Axel Janssen ]

[John Smith]

You might be dreamers in that and I am afraid the super-rich may use you.
Only the super-rich, or also the moderately- and mildly-rich?

[Axel Janssen]

Originally posted by Eugene Kononov:
Only the super-rich, or also the moderately- and mildly-rich?

Figures show that the average tax burden for the higher middle class did not change significantly over the last 30 years, but for the very rich. All I've read about the tax cuts of Bush government indicates that it did favour the guys who are richer than you Eugene, I fear.
You know better. How much did you earn from Bush gov. tax cuts. Imaterial goods like warm fuzzy feeling of having a government which allegedly rewards personal accomplishments (and in reality seems to favours created privileges) not included.

The reality is that the core measures of both the 2001 and 2003 tax cuts mainly benefit the very affluent. The centerpieces of the 2001 act were a reduction in the top income-tax rate and elimination of the estate tax -- the first, by definition, benefiting only people with high incomes; the second benefiting only heirs to large estates. The core of the 2003 tax cut was a reduction in the tax rate on dividend income. This benefit, too, is concentrated on very high-income families.
According to estimates by the Tax Policy Center -- a liberal-oriented institution, but one with a reputation for scrupulous accuracy -- the 2001 tax cut, once fully phased in, will deliver 42 percent of its benefits to the top 1 percent of the income distribution. (Roughly speaking, that means families earning more than $330,000 per year.) The 2003 tax cut delivers a somewhat smaller share to the top 1 percent, 29.1 percent, but within that concentrates its benefits on the really, really rich. Families with incomes over $1 million a year -- a mere 0.13 percent of the population -- will receive 17.3 percent of this year's tax cut, more than the total received by the bottom 70 percent of American families. Indeed, the 2003 tax cut has already proved a major boon to some of America's wealthiest people: corporations in which executives or a single family hold a large fraction of stocks are suddenly paying much bigger dividends, which are now taxed at only 15 percent no matter how high the income of their recipient.
from NYT article by Paul Krugman, link posted by Rufus above.

regards Axel
[ September 13, 2003: Message edited by: Axel Janssen ]

[Rufus BugleWeed]

What is NYT? Some communist underground publication distributed in the metropolitan areas among the discontent poor? What's the credibility of the author? I wouldn't be surprised if he/she plagiarized the material from some other untrustworthy source and distorted the facts.

EK, I was beginning to respect some of your points in the Baghdad Diaries threads. This tirade shakes my faith. The credibility of the NYT and the credentials of a Princeton Prof meet MD standards.

[Paul Stevens]

Is it that difficut to understand?
In 2000, the top 50% of wage earners paid 96% of income taxes. That means that the bottom 50% only paid 4%. The majority of the 4% will fall in the wage earners closer to the 50% number. So any tax cut has to go to those paying taxes. Meaning the top 50%. The top 1% paid 37%.
With me so far? A cut in marginal rates is an equal percentage cut across the board.
Person A paid 100,000 in taxes and person B paid 50,000 in taxes. A 10% tax reduction is 10% for both. Person A receives 10,000 but B gets 5,000. What that article does is say not only is that not "fair" but also lumps the lower 50% into the equation. Many of the lower 50% do not pay income tax. It is then claimed to be unfair because they did not recieve an income tax cut. How can you receive an income tax cut when you don't pay income tax?
The arguement goes that person a got 2X as much as B. This is invalid in multiple ways. First they both received a 10% reduction. The amount is irrelevant. Second by claiming that A got 2X as much is saying that the government earned the money and gave it to A. A earned the money paid the taxes and got to keep some of it.

[John Smith]

RB: I was beginning to respect some of your points in the Baghdad Diaries threads. This tirade shakes my faith. The credibility of the NYT and the credentials of a Princeton Prof meet MD standards.
Well, you see Rufus, if God says something sensible, I am all for it. But if God is full of shit, I will say that it is B.S. If you read Paul Stevens' posts without locking yourself, you will see it in its beauty, -- your Princeton Professor just played with the statistics to play the erotic games with his audience. The trick here is to let him play, but do not allow him to have the intercourse with you.

[Axel Janssen]

Paul,
you are more expert in american taxes than I am, cause you actually pay them. I pay german taxes and (very high) social security contributions.
The article says that the centerpies of the american tax cuts in 2001 and 2003 were a reduction in the top income-tax rate. So income tax hasn't been reduced for everybody, but only for those paying the top rate.
Another tax was estate tax (only the very top percentage of estates are taxed). And yet another is dividend income tax. Don't know how you earn your money, but my dividend income is really very low compared to my work-income.

in 1999, only 2 percent of estates paid any tax, and half the tax was paid by only 3,300 estates worth more than $5 million. The 2003 tax act sharply cuts taxes on dividend income, another boon to the very well off.

O.k. this thread wasn't mainly focussed first on the actual tax cuts of the Bush government. Tomas Paul brought up convincing arguments, that its absolutely o.k. that the riches are paying more taxes than the poor. They are simply well off in the system and the taxes finances the system.
Looking at the demographic situation of the U.S. of A. does not suggest tax cuts.

As the baby boomers retire, spending on Social Security benefits and Medicare will steadily rise, as will spending on Medicaid (because of rising medical costs).

Im am not speaking about the current situation of my country, but examples like Sweden, Denmark or Ireland show that its possible to have relatively high income tax and strong growth rates.
Paul Krugman is more than a hmm lets say "simple" Princeton profesor. I would count him under the top 5 economists. He's far from being socialist and this book is an *very* important text book in economic studies in universities all over the world. Those profesors requiring their students to buy this book really aren't known as enemies of free markets and proponents of socialism. I have 5th edition here on my book shelf. I have my doubts regarding everything I read, but I know that Krugman has such prominence in economic theory and politics that anything he says is under close scrutinity in academia-space.
@Eugene: I prefer to live in a pluralistic society than one where reliable media institutions are discriminated against as "communist underground media". One could easily interpret such postings as Breshnievism which has changed flag but not basic patterns of thought.
I am no socialist. I am big friend of societies where personal acomplishments are rewarded. I see lots of attitudes of people in my country which aren't o.k. in my view. There is that german students in my current company who is constantly complaining about his university, the company and programming in general. He is doing very simple Lotus Notes programming.
5 meters to the left are 3 russians who are doing the technologically challenging stuff like Websphere and Eclipse plug-in dev. I am happy to work together with them. And I have learned the hard way that its stupid to waste a single second to try to convince guys like the german student towards a more constuctive attitude.
Axel
[ September 14, 2003: Message edited by: Axel Janssen ]

[Paul Stevens]

That is a myth Axel. The rates were reduced for all INCOME TAX payers. Again playing with numbers. Since the top 1% make a more money. An equal percentage rate reduction amounts to more in $$$$. So what? The percentage reduction was still the same. Explain how the bottom 50% can get an INCOME TAX reduction when they pay just 4% of income taxes. Many in the bottom 50% actually get more money than they pay in. Again so what?
But to claim somehow that it is not FAIR to give an income tax cut to those who actuall pay income taxes is wrong.
With social security taxes I feel that the cap should be removed. If the bottom tax payers pay 7.5% the top ones should as well.
Let's modify the example I give just a little to show how they are playing class warfare.
Person A pays 1,000,000 and B pays 30,000. A gets a 10% reduction 100,000. B gets a 20% reduction 6,000. Who got the bigger rate reduction. What the article is trying to make you believe is that B can get the same dollar reduction. How? Even if B got a 100% reduction. The author of that article and many others would still claim that A got an unfair reduction because the $$$ where more.

[Axel Janssen]

Paul,
I believe you that the income tax were reduced percentually for all equally. The richer you are, the more you get out of the reduction in absolute terms.
Social security contributions are caped in Germany, also. They augmented substantially the yearly income, at which the cap comes into effect.
I am big friend of simplifying tax systems, but changes in the tax systems should be seen globally. They are pure politics. Some people gain more others less, some loose, because of more pressure on budget. Not to pick out a single messure.
The other reduced taxes like estate tax and dividend income tax are clearly taxes for the very rich. One has to own really a lot of stock that dividends (not earnings from rising stocks) play a significant part of the income.
So on the whole the very rich gain most from those reforms.
In the late 70ties and the 80ties we had that phase of I think justified critics against the Keynesian principles which dominated economic policies from the big deal to the 70ties. Hardcore welfare states like Sweden got into serious trouble in the 80ties. A lot have been changed in Western Europe, U.S. of A., South and East Asia and Latin America.
But I am more and more thinking that we should question some simplifying concepts of supply side economics. Some poor might misuse social welfare. But things like Enron scandal are showing that the guys with the italian shoes aren't allways playing fair neither as we all know very well.
I've read an article in International Harold Tribune about young lawyers are fleeing public jobs, because they can't repay their students debts with that little they earn. Someone has to defend the poor before the court and they like their job, but they are driven towards the prestigious lawyer firms for rich, because not earning enough money. I have lots of sceptisism regarding stuff I read, but I have impression that Bush gov might be way to rich-friendly in my opinion.
And Sweden shows quite solid growth figures these years. They still have quite a big public sector. But they are really thinking seriously about how to invest money in things like public education, ect. Not like in my country where they adopt some poorly conceived messures, say everything will be fine and in the end the outcome is a disaster.
[ September 14, 2003: Message edited by: Axel Janssen ]