living in country with high income taxes/high tax exemptions

[Warren Dew]

Steven Bell:

Boing builds and designs many (most, all?) of the US military aircraft, but they also supply commercial aircraft to many companies around the world.

Many, but I think not most. I believe General Dynamics, which is almost purely a military supplier, does more.

I can remember a couple decades ago when Boeing got out of the military aircraft business completely. Their primary competitor at the time, McDonnell-Douglas, continued to do both. Over time, McDonnell-Douglas nearly went bankrupt, while Boeing did well enough to eventually buy them out.

Possibly that's an argument for the greater efficiency of the private sector. Possibly it's also an argument that Boeing's acquiring McDonnell-Douglas was a mistake....

[Steven Bell]

That's right, I forgot boeing dumped most of it's defense work. General Dynamics is mostly a government contractor, for serveral governments, although they do make those nice gulfstream jets so popular amongst big business and hollywood celebrities.

[Jeroen Wenting]

GD no longer exists as an aircraft manufacturer. They sold that entire division to Lockheed-Martin quite a few years ago.

As it is Boeing still does substantial defense related work, it's just less visible.
There's a lot of missiles, aircraft systems, maintenance and upgrades that Boeing performs for the military.

They did loose the last 2 fighter competitions (ATF and JSF), but they are building EAW aircraft (though currently none for the US), MRSP aircraft, the Airborne Laser (YAL-1), the MV-22, and the C-17, plus they are involved in the KC-135 replacement competition (and have secured contracts from several countries for tankers recently).
Then there's the 737s delivered to the US Navy as crew trainers and fast transports.

It's less visible, less glory, but it's a lot of work.

[Alan Wanwierd]

Originally posted by Frank Silbermann:
You're not one of those "Creationists", are you?

errr.. no - Tree-hugging, hippy communist perhaps - but not a creationist!

I accept that some of your points are valid -
1) Career criminals tend to end up less well off than average
2) Ultimately perhaps the only reason we do anything is to attract a mate
3) Penal system is more effective at deterring wealthy from criminal activity and relatively ineffective at deterring the poor from offending (Hey this could be the launchpad for yet another discussion of how ineffective for society it is to lock people up? - We could argue that one until we're both blue in the face as well! )
4) Lack of understanding of "Deferred Gratification" is likely to increase the chances of both poverty and theft behaviour.

but..

re: crime and Victorian England - You are suggesting that crime in inequitable victorian england was not a huge problem compared with more equitable USA of same period. This seems to me to be a questionable assumption - but for a bit of fun I'll run with it...

Stage coach and Train crime was higher in USA... perhaps because gun ownership was so much higher (hee hee hee - now I'm looking for a fight again! ) Perhaps stage coach and train robberies were rarer in England because its quite difficult to pull off such crimes without firearms and its the American obsession with the right to posses weapons that caused its overly high stats in the particular area? Maybe the criminal elements of victorian Britain were more interested in petty theft to feed themselves - A much easier set of crimes to commit without requiring equipment like horses and guns. My knowledge of victorian England is pretty poor - but if the works of Dickens are anything to go by (and ignoring the story lines theres no reason to assume the historical contexts are not 'reasonable') then poverty stricken Londoners were indeed involved with massive amounts of theft from the powerful rich. Just looking at the history of Australia shows that theft of food for survival was common (most common crime for which people were deported to Australian penal camps was petty theft)


Ultimately I stand by the assertion that social inequality and poverty increases the likelyhood of criminal activity. Of course it cant be proven - the number of variables is too big. But I accept that its not the only factor by a long way and teh factors you mention are probably significant too.

Can we call this debate closed now? Shake hands, have a beer and agree to disagree?

oh - btw: I'm sure the guy who took my jacket in Peru was not directly after the ladies (although I accept that by surviving and being better fed he would stand a better chance of attracting a mate). It was taken from my pack on the roof of a minibus in the remote Andes where the guys riding the bus on the roof were all dirt poor. He probably wanted some warm clothing for a couple of days, the US$ from my pocket to buy a good meal and a few beers. When you're scratching around for a living like these guys a warm jacket and decent feed is more important than impressing the local chicks. After a couple of days the jacket would have looked too conspicuous on him so I would expect he would have sold it or exchanged for woven clothing and more food & drink.

[Frank Silbermann]

Originally posted by Adrian Wallace:
I accept that some of your points are valid -
1) Career criminals tend to end up less well off than average
2) Ultimately perhaps the only reason we do anything is to attract a mate
3) Penal system is more effective at deterring wealthy from criminal activity and relatively ineffective at deterring the poor from offending (Hey this could be the launchpad for yet another discussion of how ineffective for society it is to lock people up?)

Indeed. I think corporal punishment (e.g. lashings) is highly underrated. It would be fairer than prison (which has less impact on the poor) or monetary fines (which has less impact on the rich).

Originally posted by Adrian Wallace:
re: crime and Victorian England - You are suggesting that crime in inequitable victorian england was not a huge problem compared with more equitable USA of same period. This seems to me to be a questionable assumption - but for a bit of fun I'll run with it...

Stage coach and Train crime was higher in USA... perhaps because gun ownership was so much higher (hee hee hee - now I'm looking for a fight again! )

Until after WWI and fear of a Bolshevik revolution, there was no gun control in England. England made fine pocket revolvers (e.g. the small but powerful Webley .455 caliber Bulldog), and it was perfectly legal for anyone to lay down the cash, load, and be on your way. Maybe only the well-to-do could afford them (does this mean that poverty sometimes works to suppress crime?) I'm told that one difference is that in England criminals gangs ensured that their cohorts were gunless -- because if one gangster killed a Bobbie, then all participants in the operation were hanged.

England had a very low crime rate in the (later?) Victorian era because of a recent Methodist religious revival, and the banishment of many petty criminals to Australia.

America had a high crime rate for a few decades after the Civil War because so many boys then had to grow up without fathers. (The Civil War was far costlier for us, proportionally, in terms of lives lost, than either world war.)

Originally posted by Adrian Wallace: My knowledge of victorian England is pretty poor - but if the works of Dickens are anything to go by (and ignoring the story lines theres no reason to assume the historical contexts are not 'reasonable') then poverty stricken Londoners were indeed involved with massive amounts of theft from the powerful rich.

I'm thinking of the later Victorian era, e.g. from D'israeli to WWI. Crime was high when Dickens was writing, but it declined greatly over the next fifty years, only to gradually begin rising again in the 1960s.

oh - btw: I'm sure the guy who took my jacket in Peru was not directly after the ladies (although I accept that by surviving and being better fed he would stand a better chance of attracting a mate).

Latin American males are always after the ladies! :-)

It was taken from my pack on the roof of a minibus in the remote Andes where the guys riding the bus on the roof were all dirt poor. He probably wanted some warm clothing for a couple of days, the US$ from my pocket to buy a good meal and a few beers.

Crime among the hungry is due to poverty, but I believe crime among Australians and Americans is usually motivated by desires higher on Maslow's hierarchy.
[ January 06, 2005: Message edited by: Frank Silbermann ]

[Max Habibi]

Max Habibi:

It's a cinche the vast amount of tax fraud, as measured by the amount of money involved, is committed by the higher income earners, and I'm betting they have a higher proportion of tax fraud as well.

I don't think it's so obvious, for two reasons:

(1) Higher income earners have proportionately more to lose from going to jail, since their life style starts out better but they go to the same jails.



This is a pretty gymnastic argument. It presumes a great deal about the about of benefit lack thereof), gained by committing crimes from either social class, and seems to assign a fairly randomized (and unexplained) algorithm for deciding how that benefit is measured.

(2) The complexity of the tax code gives people with more money lots of ways to game the system and reduce their taxes without having to actually commit fraud.


This is misleading, but probably unintentionally so. While the complexity of the tax code is a minor factor, the actual letter of the law is the big culprit in allowing the more wealthy to get away paying less than their fair share of taxes.

A simple example: I can write of the gas for my super SUV, and chances are pretty good that you can't do the same with you car, because you don't own a super SUV. These are not simple issues, and sound bites will not adequately address them. This is why we need smart people in government, because they have real, complex issues to work through. Anyone who's working under a smart boss and and dumb one during some point in their career will appreciate the difference.

M

[Steven Bell]

[no politics, please-MH]
[ January 06, 2005: Message edited by: Max Habibi ]

[Warren Dew]

Frank Silbermann:

Latin American males

I would note that poor people high up in the Andes in Peru are as likely to be pure native Americans as Latin Americans.

I think Adrian brings up a valid point that some groups of people - including possibly that group - may be so poorly off economically that they steal for survival reasons.

I don't think that's at all a significant factor in theft in the U.S. I believe the majority of the value of stolen property in the U.S. is automobiles, which are typically then joyridden and abandoned. I suspect similar personal use motives apply to most other theft in the U.S.
[ January 06, 2005: Message edited by: Warren Dew ]

[Warren Dew]

Max Habibi:

This is a pretty gymnastic argument. It presumes a great deal about the about of benefit lack thereof), gained by committing crimes from either social class, and seems to assign a fairly randomized (and unexplained) algorithm for deciding how that benefit is measured.

I give a reason for believing that the costs of tax fraud is disproportionately higher for people with higher incomes, which would tend to disproportionately deter those people. If you want to present an argument that the benefits are also disproportionately higher, feel free to do so.

[tax code complexity benefiting the rich]

This is misleading, but probably unintentionally so. While the complexity of the tax code is a minor factor, the actual letter of the law is the big culprit in allowing the more wealthy to get away paying less than their fair share of taxes.

I agree that the specifics of the law are important as well. However, just the complexity benefits those with more money, for two reasons:

(1) they have more flexibility to take advantage of complexity because their transactions costs are a smaller proportion of the amount of money they throw around, and

(2) hiring help to understand and take advantage of the complexity costs them a smaller fraction of their money.

I don't at all agree that the argument is misleading.

A simple example: I can write of the gas for my super SUV, and chances are pretty good that you can't do the same with you car, because you don't own a super SUV.

Actually, you can't, unless you are rich enough to keep an SUV for work only. The U.S. tax code requires you to use a standard mileage deduction for vehicles that are used both for work and for other purposes so we both get the same deduction irrespective of what vehicles we use.

If you can afford to keep an SUV for work purposes only, though, you can not only write off the fuel, but also the maintenance, as well as depreciating the actual cost of the vehicle itself. This of course requires you to be rich enough to have separate vehicles for work and for personal use, which most people can't afford to do. It's a good illustration of what I mean by the rich having more flexibility to take advantage of complexities in the tax law.
[ January 06, 2005: Message edited by: Warren Dew ]

[Frank Silbermann]

Originally posted by Max Habibi:
the actual letter of the law is the big culprit in allowing the more wealthy to get away paying less than their fair share of taxes.

That's a rather presumptuous statement. You must have the wisdom of Solomon to be able to deduce what is a person's fair share of taxes. Maybe you mean that the law allows them to pay less than you'd like them to pay.

Alternately, one might say that compared with the middle-class, the rich are unfairly overtaxed much less.

When Joseph became second to Pharoah in Egypt, he bought up food surplus during the seven years of plenty, and sold it during the following seven years of famine. When the farmers became too utterly impoverished even to buy food, in exchange for food they sold themselves as slaves. (A later generation overthrew the Hyksos dynasty and enslaved Joseph's people. But that's getting ahead of the story.) As slaves to Pharoah, the farmers under Joseph continued to live the same as before, except that now they owed 20% of every harvest to the government.

OK, so maybe Joseph, being a God-fearing Hebrew, was more compassionate than the average slavemaster. But still, a tax rate of far more than 20% seems excessive for people who presumably are not slaves.
[ January 06, 2005: Message edited by: Frank Silbermann ]

[Steven Bell]

Originally posted by Frank Silbermann:

Alternately, one might say that compared with the middle-class, the rich are unfairly overtaxed much less.
[ January 06, 2005: Message edited by: Frank Silbermann ]

One thing here. While wealthy people are generally able to 'work the system' more, they still end up paying a larger percentage of their income in taxes in most cases due to the fact that their tax rates are so much higher.

IMHO (in the US) the tax burden is to high across the board and their are way to many 'hidden' taxes. We still have a tax that was put into place to fund the Spanish American War.

[Marc Peabody]

Originally posted by Frank Silbermann:
[QB]
OK, so maybe Joseph, being a God-fearing Hebrew, was more compassionate than the average slavemaster. But still, a tax rate of far more than 20% seems excessive for people who presumably are not slaves.
[QB]

How much of that 20% the slaves paid would you say is disposable income? Little-to-none I imagine. They couldn't give more.

Now how about the rich?
Even at 33%, the rich are giving up mostly disposable income.

I do agree with your idea to let a whip-slapping serve as a punishment for the guy with the laser. That way is better for society and the guy doesn't have his life ruined to learn a lesson.

[Max Habibi]

Max Habibi:

This is a pretty gymnastic argument. It presumes a great deal about the about of benefit lack thereof), gained by committing crimes from either social class, and seems to assign a fairly randomized (and unexplained) algorithm for deciding how that benefit is measured.

I give a reason for believing that the costs of tax fraud is disproportionately higher for people with higher incomes, which would tend to disproportionately deter those people. If you want to present an argument that the benefits are also disproportionately higher, feel free to do so.



Your reasons depend on an undefined criteria of benefit, or lack thereof, gained by committing crimes from either social class(how much do the rich lose? How much do the poor lose? gain? Who judges the relative worth of these? You? Me?) Thus, the reasons are as invalid as the non-definition they rely on. Hence, the valid moniker of gymnastic argument.

It's clear to me, as someone who benefits from the tax cuts, that they are disproportionately advantageous to people in my socioeconomic class. However, if we start debating that, then this thread will be trashed, probably by me. Let's just assume our experience and conscience will be our personal guides in this area, and leave it at that.


[tax code complexity benefiting the rich]

This is misleading, but probably unintentionally so. While the complexity of the tax code is a minor factor, the actual letter of the law is the big culprit in allowing the more wealthy to get away paying less than their fair share of taxes.

I agree that the specifics of the law are important as well. However, just the complexity benefits those with more money, for two reasons:


I disagree that the complexity of that tax code hurt those with 'less' money.(btw, where should we draw that line? What's average? Does $50,000/year for a family of four seem fair?), and I disagree strongly that it does so to any significant degree. By and large, the tax code is simple for people who don't have to itemize. It's those of us who do itemize that have to deal complexity: and when we do, it's to our benefit.
[/qb]

A simple example: I can write of the gas for my super SUV, and chances are pretty good that you can't do the same with you car, because you don't own a super SUV.

Actually, you can't,

Actually, I can.

It's tax break designed for farm equipment. It stated that vehicles over a certain weight get a tax break. Well some lawyer figured out that SVVs are heavy too. Hence the tax break. I can't find the site right now, and my super heavy SUV is theoretical, but the facts are there to be known, if you care to know them.

Frank Silbermann:That's a rather presumptuous statement. You must have the wisdom of Solomon to be able to deduce what is a person's fair share of taxes:

And the strength of Hercules, as I can bench press 385 lbs. I'll tell you why that's relevant in a minute.

A progressive tax rate is based on two basic principles.

The first that the rich became so through the help of the community to a large degree (because, say, the community built the roads on which they drive their trucks, or the public land on which they graze their cattle, or the forests they hull their lumber on), and that the rich are obligated to give something more to the community.

That those who can do more should do more. Hence, if I saw your no-doubt lovely wife struggle with a heavy object, I would help her carry it, because it's fairly light for me.

Now, both of these arguments are open to very valid counter arguments, and it would be remiss not to point that out. For example, how do we know that a rich person didn't contribute more to society then they benefited from? Who's to say, some bean-counter @ the IRS? And why should the state obligate me to help your wife carry heavy stuff? Why turn an act of otherwise compassionate charity into a drudgery and obligation? These are valid points, and there are many others, as there are counters to those in turn.

The point is, a progressive tax is not some conspiracy by the ner-do-wells to steal property from the hard working. Right or wrong, there is a logic and sense of fairness behind it.

M
[ January 06, 2005: Message edited by: Max Habibi ]

[Frank Silbermann]

Originally posted by Max Habibi:
The point is, a progressive tax is not some conspiracy by the ner-do-wells to steal property from the hard working. Right or wrong, there is a logic and sense of fairness behind it.

Of course. But the tax rates today are progressive, and under the current laws the rich do pay a higher percentage than others. So I was just wondering how you concluded that what the law currently requires is less than their fair share.

For example, what percentage of income would be fair for the rich to pay? Alternatively, what percentage of income tax revenue should be paid by, say, the to 10% of earners. I'm looking for concrete numbers, not some vague "more than they pay right now" answer.

Otherwise, what would be the basis for concluding that the rich pay less than their fair share under today's already progressive rates?

[Steven Bell]

I find the argument that the rich get more from society than what they give rather ridiculous. How many jobs have you gotten from a poor person?

In a free market rich people get, and stay, rich by providing a service or product that is benifitial enough to others that they are willing to pay money for it. This usually requires paying other people to produce/support/service the company and customers.

Why is it fair to forceibly take 50% of the money from somebody who makes, say, more than $250,000 when the money that person makes would provide more benefit to the community if he were allowed to keep and invest it.

In order to believe this you have to think that government knows how to better spend money than individuals when those individuals have already shown their ability to grow money.

[Axel Janssen]

Originally posted by Steven Bell:

In a free market rich people get, and stay, rich by providing a service or product that is benifitial enough to others that they are willing to pay money for it.

Steven,

don't know about United States or whatever country you are from, but I have seen rich people with power, about whom I allways wondered how strange this world could be that they made it to this position.
I am pro Market Economies, but I don't think that market is fair. I earn 10% less than 2 years ago and I do provide a lot more better service than then.
How can this be fair?
Or there is a guy who studies a lot in a certain field, because market predictions said that there will be a lot of work in that field and in the end there isn't. And the lazy neighbour wins in lottery. This is not fair.
Or I am more closer to customers with lots of money than guy in Pakistan, so its easier for me to get more money for my services even if he is better.
And a rich guy do uses more the public goods offered by the state. So its a valid argument.
Market economies is the most efficient and unfortunatedly we have to live with it, because whenever men start to interfere big way in the market all gets messed up in the end. But a little adjusting here and there is ok. Provide support for education from people from poorer families for example is 100% ok.

Axel
[ January 07, 2005: Message edited by: Axel Janssen ]

[Steven Bell]

Originally posted by Axel Janssen:

Steven,

don't know about United States or whatever country you are from, but I have seen rich people with power, about whom I allways wondered how strange this world could be that they made it to this position.

Perhaps they worked their *ss off to get there. Maybe they have a particular talent that is very valuable to somebody. In a free market people may be able to make some money by bluffing abilities or cheating, but they can't stay their that way.

I am pro Market Economies, but I don't think that market is fair. I earn 10% less than 2 years ago and I do provide a lot more better service than then.
How can this be fair?

Markets are dynamic. You make what the market will yield, if you don't like it, up your skills or change professions.

Or there is a guy who studies a lot in a certain field, because market predictions said that there will be a lot of work in that field and in the end there isn't.

Same as above. Markets are dynamic. That is what makes them so great, but also what makes them so hard to predict.

And the lazy neighbour wins in lottery. This is not fair.

Oh please. A lottery is a rip off, and if anything is an unfair tax on the poor. A fool and his money are easily parted. If that 'lazy neighbour' won't be able to keep that money if he continues to be lazy. He may be ok for several years, but that money will be spent and pumped back into the market.

Or I am more closer to customers with lots of money than guy in Pakistan, so its easier for me to get more money for my services even if he is better.

If his services are that much better than yours people will generally find a way around the overhead of distance. I'm sorry but you can't just rewrite geography to suit your economical needs. There is no solution to that. Why do you think so many people move around for better jobs and pay.

And a rich guy do uses more the public goods offered by the state. So its a valid argument.

Ok, and they pay more in taxes, even without a progressive tax system. So as a percentage it's really no different, and the 'rich guys' provide so much more good in the form of economic growth.

Market economies is the most efficient and unfortunatedly we have to live with it, because whenever men start to interfere big way in the market all gets messed up in the end. But a little adjusting here and there is ok. Provide support for education from people from poorer families for example is 100% ok.
Axel

[ January 07, 2005: Message edited by: Axel Janssen ]

Unfortunatly??? The free market is the best thing around for all involved. I go back to one of my favorite quotes: 'The perfect is the enemy of the good.' The only thing the goverment should really be involved in as far as the free market goes is ensuring competition. As far as schools go the governemt screws that up so bad. Private schools produce far better results with much less money. If we would just let parents chose where to send their kids the system would fix itself. I don't have a problem with public funded education, it's public run education that is just pathetic.

[Axel Janssen]

Fair can be interpreted in different ways. There is also a lot of luck involved.
Maybe from bird perspective a lot of things are fair.
From frog perspective a lot of luck is involved.
Today, here they informed me that they are thinking about extending my contract from 100 to 200 days and with more interesting tasks (sounds at least such at first). I don't say that for self-bragging. Price could be higher anyway. But in our still sluggish german economy. Kind of great.
So many customers where they did not extend and I don't think that I have done a better job here.
External factors like people who have left their job play an important role.

But we don't see things much different, I guess

Axel

[Jerry Young]

No tax system, I suspect, has been made for the purpose of fairness. And no makers of any tax systems haven't claimed that their system is the fairest.

The trick, of course, is it's them who define what is fair.

And the intersting question now is, who is "them"? Secret is nowhere but in this question.

For this "them", their purpose, no matter what their rhetorics sound, is nothing but to extract as much as possible from OTHERS and as little as possible from themselves, to the extent that it's bearable by OTHERS.

This "them" might not be one person or one group of the same goal. This "them" might be a group with the same interest in some aspects and conflicting interests on some aspects.

But who is them?

2000 years ago in China, people were in 2 classes: slaves and masters. There was no tax or tax system. There was even no "law". The masters took away whatever they wanted from slaves, to the extent that they could.

Later, there were "dynasties": an emperor with his governing force as "governing class" and farmers as "governed class", while the governance was more skillful. During those years, the struggles had been "tax against head" or "tax against land", or some mixture of the 2, and what kind of misture. As could easily understood, "tax against head" meant thew tax rate applied to person regardless of his wealth (how many acres of land he owned). "Tax against land" was on the contrary: tax rate applied to the land no matter who owned it. Some mixture system was like this: per person was taxed x dollars a year; per acre of land was taxed y dollars a year.

All the wonderful stories were about how to get these x and y in place. These x and y represented so much interest that for them people sacrificed their sweats and bloods and even their heads themselves.

Fast forward to the modern democratic days. Now, tax law makers are more senstive to representing their congruents. We can see the tax codes as a result of the comprises of all voting people. Again, we should not be drwoned by rhetorics.

By looking at this "them" we can explain why and how we have a particular tax system, and predict what it will become based on demographic and political cimate changes. We don't want to discuss what it should be --- it's a nonsense in some sense.

Many years ago in some places, voting right was limited to those who finacially contributed to the "country". One can naturally assume in such a political system its tax system will be very different from that of a society which allows, say, for hypothetical purpose, only "poor people" to vote.

And we can reasonably imagine that such kind of 2 systems might not be well balanced and so the society itself might not be stable, and so they might not be able to exist for very long. For the former, the threat was that the lack of representation of the poor in the system might cause the poor, who usually greatly outnumbered the "not-poor" and who usually cared less about "being decent" and so were more willing to do dangerous things, to be pure negative factor the society and eventually the society would fall in chaos. For the latter, the threat was nobody would be want to be productive and so the sociey would also eventually die by itself.

So even in a voting society, they need to find the "x" and "y" too: it's the modern version of blending of x "tax by head" and y "tax by land".

Fairness consideration? nothing like that. It's all about praticality under certain circumstances.

Ethical or moral argument has always been used to justify something one party advances; but fairnedd has never been anyone's considerartion when it's time to write tax codes.

Let's remember:

Before Wilson, there had been NO federal personal income tax.

Before FDR, there had been no social security tax.

Before LBJ, there had been no mdicare tax.

The mystery has been how they were able to get these taxes into place in the first place...

Normally, I would imagine it would be extremely hard to introduce such taxes to such a people as American people.

So there must have been something extraordinary going on around those times that helped them accomplish that.

Such as terrorism that scared people, or "great society" that excited people.

When people are too scared or excited, they can be used.

Great politicians know how to make people easy to be used. Like Wilson and FDR.

[Max Habibi]

Frank Silbermann:what percentage of income would be fair for the rich to pay? Alternatively, what percentage of income tax revenue should be paid by, say, the to 10% of earners. I'm looking for concrete numbers, not some vague "more than they pay right now" answer.

If you want my opinion, than you'll have to provide a concrete basis for the estimate. Are we talking independent earners, or companies? What's the medium salary in this scenario? What's the national debt? schools? the state of the armed forces? health insurance?

Frank Silbermann:
Otherwise, what would be the basis for concluding that the rich pay less than their fair share under today's already progressive rates?

Personal observation seems like a reasonable basis on which to build personal opinions, and scale has a lot to do with it. For example, if I make $500,000 a year and I am given a speeding ticket for $50, it's a much smaller fine for me than if might be for someone who makes $25,000 a year.

Depending on your perspective, it's either fair that everyone is fined the same amount, or it's unfair that rich pay so much less, relatively speaking. Taxes are a similar beast.

If there are people who are starving, do you have a right to withhold food from them that you don't need(to live comfortably?). A progressive would say no, a libertarian would say yes. Then they would bicker over what comfortably means.

It's a complicated issue, and deserves a lot of personal reflection, soul-searching, and hard-heading thinking. Hopefully, we'll all make decisions that we can sleep with.

Steven Bell:I find the argument that the rich get more from society than what they give rather ridiculous.

That's fine, you have a right to your opinion. But there are many people who do not find it ridiculous. A lot of people feel that richness can be a accident of birth, luck, or influence. For example, TV stations make money by broadcasting over public airwaves. That is, they use our airwaves. You could argue that we, as a society, are free to charge them as much as we please for that usage. They don't have to buy it: they can always do something else.

This is a trival example, of course, and easily counterd. The argument has merit, and the counter arguments also have merit. But in my opinion, it's not a ridiculous conversation at all.

M
[ January 07, 2005: Message edited by: Max Habibi ]

[Jerry Young]

Taxing, by nature, is coerscive. That means people usually will not like to pay voluntarily, but they will want to VOTE to coece themselves to pay!

That is strange. How could that happen?

Suppose I WANT to pay 90% of my income to goverment. The only reason that I don't do it is others don't do it and I feel unfair if only I do it. So I somehow use some political tricks to have the tax law passed such that everyone pays 90%.

Except providing commonly needed services such as defense, nowadays what government does is more and more about wealth re-distribution.

Wealth re-distribution is a 2-way train. It's not necessariliy just from rich to poor, as usually assumed.

Wealth re-distribution is the major way for politicians to create their dependents and so congruents.

After all, except a few, everyone feels poor. Anything a representative does for him makes him feel that he GAINed something from others and so he feels good.

Everyone can make some calculation about his gives to others (primarily government) and takes from others (primarily government), except a few such as Bill Gates who might give more to charity than to government. It's hard to figure out, but people can be divedied into 2 classes: givers and takers.

Can we say most givers actually are NOT willing to give, so there must be some law to force tham to give? But to have such laws, their representatives must somehow make givers minority, or at least, make more people feel they are takers than givers? Or maybe in real world, there are realy more takers than givers in this wealth-redistribution system?

I have no numbers.

The fantasic thing might be, axctually in this system more poeple are givers, but somehow they are made to believe they are takers, which makes it possible to have such a system in a demoncracy.

I have a psychological explanation about this. When one pays out tax, one does not think of it as his money any more. He is already mentally preared
to get nothing back from it. So whatever he gets back, as long as it's more than zero, he feels good and he thinks he gets a better deal than others.

[Marcus Green]

"After all, except for a few, everyone feels poor"

Where are you referring to that everyone feels poor? everyone in the world?

[Jerry Young]

And that goes to the second part: why this wealth re-distribution actually might be at least from the poor to rich than the other way around.

Due to that kind of psychology that people don't care as much about how tax money is used as they care about the money still in their pockets, tax money spending usually lacks accountability. Representatives can do many tricks to use the tax money to feed those they want to feed, while make most people feel they are beneficiaries. So they give some to the real poor, let's call it "first type takers", making the real poor their dead-meat supporters. And when they do this, they shout, cry, and make press conferences --- by all means they want you to know. But this is just part of the story. They probably might give more to those other, --- you know who they are... let's call them "seconf type takers", --- and they do it so quietly that you'll never know it happened.

Now the question: Amonge those 2 types of takers, who gets more?

And another question: compared the vast number of true givers who get back nothing or very little from their tax money, the second type takers are richer or poorer? I dare to assume they are much richer than most true givers.

So it's really hard to say about the nature of the re-distribution system.

One side-efect about this system, which the real poors don't understand, is its effect on morality of general people. People by nature are charitable. Now, average people would assume charity is a government business, so they may give to charity less than they would without government re-distribution.

SO the real poor might receive less from current government re-distribution channel than they would directly from people'e direct charity contribution without government re-distribution. Or at least, this possibility is arguable.

[Jerry Young]

"Everyone feels poor" in the sense that human beings by nature are greedy and they always look at the ones who have more

[Thomas Paul]

[dammit! Sorry Tom, I meant to hit reply and hit edit instead: I tried my best to recreate your message, but I flubbed that too-MH]

Depending on your perspective, it's either fair that everyone is fined the same amount, or it's unfair that rich pay so much less, relatively speaking. Taxes are a similar beast.

If there are people who are starving, do you have a right to withhold food from them that you don't need(to live comfortably?). A progressive would say no, a libertarian would say yes. Then they would bicker over what comfortably means.

Then I guess the goverment should take %100 of everyone's money, and redistrubute it to that we're all getting the same amount. Or you can just eat the rich.
[ January 07, 2005: Message edited by: Max Habibi ]

[Steven Bell]

Originally posted by Jimmy Chen:

Can we say most givers actually are NOT willing to give, so there must be some law to force tham to give? But to have such laws, their representatives must somehow make givers minority, or at least, make more people feel they are takers than givers? Or maybe in real world, there are realy more takers than givers in this wealth-redistribution system?

I have no numbers.

The fantasic thing might be, axctually in this system more poeple are givers, but somehow they are made to believe they are takers, which makes it possible to have such a system in a demoncracy.

Here are some numbers from 2001 for US taxes.

Out of wage earners (anybody making money).

The top 50% of wage earners pay 96.03% of the taxes while earning 86.19% of income.
The top 25% of wage earners pay 83.9% of the taxes whil earning 65.23% of income.
The top 10% of wage earners pay 64.89% of the taxes while earning 43.11% of income.
The top 5% of wage earners pay 53.25% of the taxes while earning 31.99% of income.
The top 1% of wage earners pay 33.89% of the taxes while earning 17.53% of income.

This covers all income except for social security and calendar year 2001.

In order to make it into the top 1% you have to make $293,000+ per year.

P.S. the number of self made millionairs in the US far outnumber those who where born into it.

[Jerry Young]

Continue on the second-type takers:

These are the real force behind all government coercive impetus --- and the biggest beneficiaries of government actions. The more government activities, the more chances for them to make themselves money.

These are the strong "narrow interests" that always prevail over "broad ones".

They have been there from day one of any government.

And How many of true givers are there whose money is legally made from unnecessary government activities? Without those unncesary government spending, they'll be very likely poorer than real poors? Hint: government current and former workers and officials, and contractors. How big an influence do they have on the society?
maybe much bigger than we have realized.

[Max Habibi]

Depending on your perspective, it's either fair that everyone is fined the same amount, or it's unfair that rich pay so much less, relatively speaking. Taxes are a similar beast.

If there are people who are starving, do you have a right to withhold food from them that you don't need(to live comfortably?). A progressive would say no, a libertarian would say yes. Then they would bicker over what comfortably means.

Then I guess
[/qb]

Your guess is as good as mine, but I don't think what you're proposing is going to fly: it doesn't seem like a reasonable conclusion, based on the discussion so far.

Or you can just eat the rich.

But I like the prime-minister-to-be.

[Max Habibi]

Originally posted by Steven Bell:


Here are some numbers from 2001 for US taxes.
...

This covers all income except for social security and calendar year 2001.

I wonder what the numbers are without this omissions? For that matter, I wonder how much(and what percentage) the people making over 1 M pay? I wonder how the numbers have changed by '04? The rate of change(or lack thereof) might make interesting reading. Can you provide an objective link where you got your data?

M
[ January 07, 2005: Message edited by: Max Habibi ]

[Steven Bell]

Originally posted by Max Habibi:


I wonder what the numbers are without this omissions? For that matter, I wonder how they've changed by '04? The rate of change(or lack thereof) might make interesting reading. ?Can you provide the link where you got your data?

M

I got the data from the CBO awhile back, don't know on the social security as that is done seperately and I didn't go through the work of combining them. I don't know how it's changed in 2004 (I think the latest data available may be from 2002) I think I have 2000 around for comparison. If I find it I'll post it.

[Steven Bell]

OK. Here are some numbers from 2000 for US taxes.

Based on same as the first set

The top 50% of wage earners pay 96.09% of the taxes while earning 87.01% of income.
The top 25% of wage earners pay 84.01% of the taxes whil earning 67.15% of income.
The top 10% of wage earners pay 67.33% of the taxes while earning 46.01% of income.
The top 5% of wage earners pay 56.47% of the taxes while earning 35.30% of income.
The top 1% of wage earners pay 37.42% of the taxes while earning 20.81% of income.

This covers all income except for social security and calendar year 2000.

[Max Habibi]

Steve, unless you can provide a site, these numbers are just not credible. For all we know, these are adjusted gross income numbers, which means they're the number after tax deductions. So no more numbers without backup, ok?

[Jerry Young]

Let me try to define fairness here .

There are 2 types. The fairness of money making process; and the fairness of tax paying process.

To make a logical argument, we must not use the first type to justify the second type; i.e., "we tax one who makes more in a progressive way because he makes his money in some way I don't approve", even though in history or even now, in many places of the world, this has been and is a valid point, so valid that people don't only want to tax rich more but also want to punish them in more ways than financially --- especially many of the rich make their fortunes by being so closely associated with a very coercive and hated government and by being the second-type takers as described above.

So we assume generally people make their money equally legally and hard, regardless of the amount of money they make.

Now define fairness of tax paying: one's tax share is fair if he is neither
a giver nor a taker after all(as defined in above), assuming there is a way to calculate it mathematically.

Based on this definition, let's see if we can justify a progressive taxing system.

Someone above argued the rich consume more resources, so he needs pay more taxes. But I am afraid it's not a relevant argument. Cunsumption is governed by consumption tax, not by personal income tax. Otherwise logically we have trouble here explaining we we don't tax "borrowed money" that is also spent on consumptions; on the contrary, we give out tax breaks to encourage people to borrow money to spend. Also logically we have trouble filling the gap between personal income and consumption --- which might become bigger when one's income is bigger (well, after income is bigger than a certain amount, maybe).

Even we accept this justification, we still have to explain why it must be progressive. From common sense, one's comsuption of social resources, at some point, should be maginally decreasing with respect to his income. We don't spend more defense money on my boss than me, I guess, while he may makes 20K more than I do and pay 6K tax more than I do. About spending or driving, I am not convinced that Bill Gates eat or drive so much more than a normal person does. Common sense seems to tell me that one's consumption of social resources does not increase so progressively.

So judged against the above definition of fairness, progressive taxing seems to be not so fair to me.

Judging it by other definitions, such as "bigger social responsibility argument", is totally another topic. Persoanlly I beliebe the rich has a bigger stake at the society, so it's to their benefit to maintain the current society's order, including to appease the poor's feelings by sacrificing something.

But I am not sure "I think something is in one's best interest" is equal to "so I must force him to do it".

[Steven Bell]

http://cbo.gov/

I can't just give you a link to the stats, they have to be pulled from the raw data. I used raw income, not AGI.

[Max Habibi]

Thanks Steve, I'll take a look @ it this weekend.

All best,
M

[Warren Dew]

Steven Bell:

One thing here. While wealthy people are generally able to 'work the system' more, they still end up paying a larger percentage of their income in taxes in most cases due to the fact that their tax rates are so much higher.

This is only true up to a point. Very wealthy people - I'm talking billionaires here - are able to shield most of their income by keeping it "unrealized" and thus untaxed.

You would think that they'd have to pay taxes on this income eventually before they could use it, but there are some loopholes that can be used to avoid that. Two examples are the rules for charitable donations of appreciated property - they get a deduction for the income even though they don't have to recognize the income, so they can use the deduction to shield other income which they can spend without any taxes on it - and the way inheritance works, because estates are revaluated from invested basis to market value on death without the gains counting as income.

[Warren Dew]

Max Habibi responding to me:

Your reasons depend on an undefined criteria of benefit, or lack thereof, gained by committing crimes from either social class(how much do the rich lose? How much do the poor lose? gain? Who judges the relative worth of these? You? Me?) Thus, the reasons are as invalid as the non-definition they rely on. Hence, the valid moniker of gymnastic argument.

Max, you're defending a blatant assertion stated as if it were fact - you said "It's a cinche", with no qualification. I'm just arguing that your assertion isn't as obvious as you stated, and that contrary opinions may be just as reasonable.

I find it amusing that while you nitpick my reasons for thinking that some people might reasonably hold a contrary opinion, you've provided no reasons at all for thinking that they can't.

Would you like to go back and qualify your original statement as just your opinion, or do you still think it's factual, as it was stated?

It's clear to me, as someone who benefits from the tax cuts, that they are disproportionately advantageous to people in my socioeconomic class.

It's clear to me that they are not. I've actually been both substantially above and substantially below your proposed $50,000 breakpoint in the last five years, and I can assure you that the recent tax cuts, despite being much smaller in magnitude for me when I was below that breakpoint, meant more to me because I needed the money much more.

By and large, the tax code is simple for people who don't have to itemize. It's those of us who do itemize that have to deal complexity: and when we do, it's to our benefit.

And that's exactly my point. People with lower incomes are far less likely to itemize, so they aren't able to benefit from the itemization that people with higher incomes generally benefit from. As I said, complexity works to favor the rich.

Actually, I can.

It's tax break designed for farm equipment. It stated that vehicles over a certain weight get a tax break. Well some lawyer figured out that SVVs are heavy too. Hence the tax break. I can't find the site right now, and my super heavy SUV is theoretical, but the facts are there to be known, if you care to know them.

Sounds like the facts is that you don't have a super heavy SUV, so the fact is that you can't deduct anything related to one.

I'm also pretty sure 18 wheelers are even heavier than the heaviest available SUV, and I'm pretty sure they don't qualify for farm equipment deductions. (Most probably qualify for other deductions, especially since they tend to be used only for business.)

[Warren Dew]

Jimmy Chen:

Taxing, by nature, is coerscive. That means people usually will not like to pay voluntarily, but they will want to VOTE to coece themselves to pay!

That is strange. How could that happen?

Maybe it doesn't!

Take a look at Steven Bell's figures. Almost all income taxes - well over 90% - are paid by less than 50% of the population. I think a more credible explanation is that 51% of the population is voting to coerce the other 49% to pay taxes.

[Max Habibi]

Originally posted by Warren Dew:
Max Habibi responding to me:

Your reasons depend on an undefined criteria of benefit, or lack thereof, gained by committing crimes from either social class(how much do the rich lose? How much do the poor lose? gain? Who judges the relative worth of these? You? Me?) Thus, the reasons are as invalid as the non-definition they rely on. Hence, the valid moniker of gymnastic argument.

Max, you're defending a blatant assertion stated as if it were fact - you said "It's a cinche", with no qualification.


Fact beats logic, no matter how gymnastic the logic. It's a matter of observation. If you do just the smallest bit of research, as Thomas Paul obviously did, you'll find that the vast amount of tax fraud, as measured by the amount of money involved, is committed by the higher income earners.


I'm just arguing that your assertion isn't as obvious as you stated,and that contrary opinions may be just as reasonable.


I understand what you're saying Warren, but you're incorrect. A contrary opinion to what I said would be that

the vast amount of tax fraud is not committed by the higher income earners, as measured by the amount of money involved.

This is clearly incorrect.



I find it amusing that while you nitpick my reasons for thinking that some people might reasonably hold a contrary opinion, you've provided no reasons at all for thinking that they can't.

You're statement here is so broad that I can't really address it. Can you narrow it down a bit? When did you state that some people might have a contrary opinion? When did I state that they could not? As I understand it, we were discussion one idea that you suggested, and another that I suggested.


It's clear to me, as someone who benefits from the tax cuts, that they are disproportionately advantageous to people in my socioeconomic class.

It's clear to me that they are not.

Again, I'm not really sure what you're saying here. Are you talking about the $50,000 for a family of four figure? The $293,000 cut of to be in the top %1? Are you talking how much you might have needed X amount of tax refund at a given point in your life, and using that as model for how others might feel about those tax cuts at different point in their lives?


By and large, the tax code is simple for people who don't have to itemize. It's those of us who do itemize that have to deal complexity: and when we do, it's to our benefit.

And that's exactly my point. People with lower incomes are far less likely to itemize,


It seems I've failed to be clear.

Less income -> less itemization - > no complexity.

more income -> more itemization - > more benefit -> more complexity.

The point is that people with lower incomes are less likely to run into complexity, as the total amount of their itemization(which leads to complexity), will not benefit them.

Actually, I can.

It's tax break designed for farm equipment. It stated that vehicles over a certain weight get a tax break. Well some lawyer figured out that SVVs are heavy too. Hence the tax break. I can't find the site right now, and my super heavy SUV is theoretical, but the facts are there to be known, if you care to know them.

Sounds like the facts is that you don't have a super heavy SUV, so the fact is that you can't deduct anything related to one.


Than I've failed to be clear, or perhaps my metaphors were overly complex for the conversation. The point was that the rich can expense the gas for some vehicles that they can afford, while the poor cannot do likewise for the vehicles that they can afford. I used myself as hypothetical example, in order to make the example more immediate. That seems to have caused more confusion that illumination.


I'm also pretty sure 18 wheelers are even heavier than the heaviest available SUV, and I'm pretty sure they don't qualify for farm equipment deductions.

I don't know what you're saying here. Are you accepting my assertion, or rejecting it? Are you implying that because rigs qualify for one tax break, they couldn't qualify for an alternative one? Either's fine, just please clarify.

All best,
M
[ January 08, 2005: Message edited by: Max Habibi ]

[Thomas Paul]

If you do just the smallest bit of research, as Thomas Paul obviously did, you'll find that the vast amount of tax fraud, as measured by the amount of money involved, is committed by the higher income earners.

Actually, that isn't quite what I found. Most tax fraud by dollar value is committed by corporations, small businesses, and the self-employed (actual income level is irrelevant). People with earned income actually find it hard to commit tax fraud because all their income (wages, dividends, and interest) is reported to the IRS. Also most of their deductions are either reported (mortgage interest, state and local taxes) or can be guestimated by the IRS. For my taxes, the only thing the IRS doesn't know is my charitable deduction but the IRS has algorithms to determine what a likely number would be.

Most tax fraud by individuals (both number and dollar value) is committed by low-wage earners (IRS estimate of 20% and about $4 billion) who cheat in order to qualify for the Earned Income Tax Credit.