Taxes And Fair Shares
From an @AHMalcolm tweet:
Let's see: 47% of Americans pay no federal taxes. 2% of Americans pay 45% of all taxes. And Obama wants them to pay their fair share. What planet's he on?
Economist Veronique de Rugy explains the problem with this:
It's important to remember that, fairness aside, raising the marginal tax rates on any group, especially those already paying the highest rates, could reduce GDP and income across the board, not just for the people paying the initial tax bill. Why? Because the burden of higher taxes on capital formation falls largely on labor in the form of lower wages and hours worked.The same is likely true of an increase in the capital-gains tax, which is what the president seems to have in mind with the Buffett tax. This move would increase the double taxation of corporate income and would seriously reduce capital formation and wages. And for these reasons, it is unlikely to raise much revenue.
De Rugy suggests we move to a consumption tax:
One option people sometime talk about would be to eliminate the corporate income tax, the capital-gains and dividend taxes, and other wealth taxes and simply roll all income into one category taxed at a low rate (the idea being that if there is going to be double taxation of income, it should be done at a lower rate).But this system still penalizes savings and over consumption. A much better alternatively is to eliminate the corporate income tax, the capital-gains and dividend taxes, and other wealth taxes and replace the whole thing with consumption-based tax system. Economically, taxing consumption makes more sense. I would prefer a flat rate; Sumner argues for a progressive consumption tax.
A criticism of the flat-rate consumption tax is that it is regressive. I have a limited problem with that. As I explained yesterday, much of the government spending goes to the middle class and I think they should pay for most of it. That's how the Europeans do it; they use regressive taxes to pay for their government spending. (Their government spending is more progressive than our middle-class-centric system, I should add.) Besides, no matter how we look at it, raising taxes only on the rich won't pay for all our spending on Medicare, Social Security, and Medicaid. And if it is true that many voters are only in favor of symbolic cuts (to foreign aid, government waste, etc.) and opposed to reforming Medicare, then they should have to pay for it.
Obviously, I find it weird that people would rather get the government to provide most of these services than the private sector or that people would want to be taxed to get their money back in the form of relatively crappy government services. Yet if that's what voters want, those who consume the services should pay for it (not counting the genuinely poor), not push the bill onto future generations.







I would prefer a flat, capped national sales tax excluding unprocessed food and medical supplies. Short of that, a capped flat tax would be better than what we have now.
momof4 at August 3, 2012 5:39 AM
I've never understood Obama's claims about people paying their "fair share". To my mind, it would be fair if everyone paid the same percentage of money they earned. If everyone paid one dollar for every ten they earned, then that would be fair. To say that, instead, richer people have to pay three dollars out of every ten, and really rich people have to pay five out of ten seems the antithesis of fairness to me. I mean, can anyone seriously doubt that this is a purely mercenary move? They're not doing it ease the tax burden on the poor (contra Democrats) and they're not doing it to punish the successful (contra Republicans): they're doing it because it gets more money in the government's coffers. And that's all.
Jim S. at August 3, 2012 6:22 AM
And Jim steps on the biggest problem: no matter how you raise the money, you have to figure out how to get an entitled cow out of the road.
I say this as a Federal contractor employee. I have a 36" commercial inkjet printer, retailing for $9900, in my office and I can't get it fixed. Ten feet outside the gate, three companies would be done in two hours. Inside the gate, I have to find one person that knows our procurement computer system, explain what the gadget is and what has to be done to it in the peculiar argot the process has, then arrange with another guy in the group to box it up and ship it. I have to do that, because for a repairman to come in the gate, he has to have a two-hour orientation class and be positively identified, and I have more forms to protect the contractor, one of which certifies that I won't be approaching a high-voltage power line.
It's an inkjet printer. Just a very good one, apart from its 5VDC power supply.
And everyone gets paid the same whether it gets fixed or not.
Radwaste at August 3, 2012 9:07 AM
"Let's see: 47% of Americans pay no federal taxes. 2% of Americans pay 45% of all taxes. And Obama wants them to pay their fair share. What planet's he on?"
It's not that hard to figure out. Economic inequality is at it's highest point since 1929. If the people at the top are making tons of money, they're going to have to pay taxes on that money; and thus pay a larger percentage of Federal Taxes.
If someone isn't making any money. Or is making very little. Then their Federal income tax bill will be very small or non-existent. If the rich are so put upon I'd be more then happy to take the extra money they're making and pay the 35% tax bill on it while putting the rest in my pocket.
Also notice that this claim which is routinely trumpeted by pundits and politicians ignores all of the other taxes paid most of which are regressive! If you take into account the total tax bill paid then the numbers look very different. Not to mention the billionaire hedge fund managers, or trust fund babies that end up paying only 15% in taxes on their income because the money comes from dividends or capital gains. Does anyone really think that a multimillionaire like Mitt Romeny should only pay 13.9% in taxes while a firefighter has to pay 25%?
"Because the burden of higher taxes on capital formation falls largely on labor in the form of lower wages and hours worked."
"...the idea being that if there is going to be double taxation of income, it should be done at a lower rate.
Ahh the old corporate income tax catch 22. We shouldn't raise the corporate income tax because the burden will fall on workers. Unless of course we want to bitch about "double taxation" in which case the burden will fall all the owners of capital (rich guys). But wait I've changed my mind taxation of capital will fall on the poor, no I mean the owners of capital.
You better get your story straight if you want to be taken seriously guys. It's gotten so bad that people are now using contradictory arguments in the same article.
"Yet if that's what voters want, those who consume the services should pay for it."
Unless people view reducing income inequality as a valid government function. You may disagree with their views, but then make that argument instead of just attacking a straw man.
Mike Hunter at August 3, 2012 9:08 AM
Who even wants to hear this shit from a woman who thinks gays shouldn't be taxed?
Crid [CridComment at gmail] at August 3, 2012 10:03 AM
Any type of government activity, whether it is your local condo association, your city, county, or state government, or the federal government, ALL amount to the same thing: cost pooling.
People get distracted arguing about what government should do or what it should not do. The argument boils down to whether it is better for an individual to bear a cost by himself, or whether it is better for a group of people to all get together, pitch in, and pool their money for the cost.
Whether you pay for something by yourself or whether you pool your money with other people to pay for it, you still have to pay for it! Our views about government and taxation are wildly distorted right now, because we get a bunch of "free shit" but we don't pay for it. The unborn aren't in the room to vote, so we're happily passing them the trash.
One observation: In my condo association, everyone pays dues, and they pay the same amount. You don't get out of paying dues just because your income is lower. The snow gets plowed out of your driveway same as everyone else's. The interior hallways get cleaned, and the trash gets hauled away, for you just like everyone else. So everyone pays the same amount, and - more to the point - EVERYONE PAYS.
At the federal level, a married couple with two kids, a mortgage, and a household income of $45,000 a year do not pay any income tax. That's an awful lot of people. By the time the rest of us are done paying them to get into debt for their house and paying them to breed, they end up with no tax liability left.
In my condo, where everyone pays, it's pretty obvious that it saves everyone money to have a single contractor come out and blade away all the snow, as opposed to each resident coming out and shoveling off their tiny share of the sidewalk and parking lot. Since everyone pays, we all save money on our insurance, too.
At the federal level, where we have so many free riders, things get wonky. Does it really save everyone money when your neighbors have to pay for your failure to save money for your old age? Does it really save everyone money when your neighbors have to pay your medical bills? No, it doesn't. You get a free pass and your neighbor gets hosed. Except that your neighbor can't actually afford to pay for his own retirement and medical bills AND yours, so the money is just borrowed.
Thanks, kids!
Pirate Jo at August 3, 2012 10:08 AM
Amy Alkon
http://www.advicegoddess.com/archives/2012/08/03/fair_share.html#comment-3295166">comment from Crid [CridComment at gmail]Who even wants to hear this shit from a woman who thinks gays shouldn't be taxed?
Um, no...I think that if gays and lesbians don't get the same rights as other adult citizens, why should they not get a discount on their taxes. It might, for example, help make up for the money they get screwed out of in estate taxes because they can't marry their partner.
Amy Alkon
at August 3, 2012 10:11 AM
And instead of making the point (as others are) that this tax code is absolutely inequitable and immoral to everyone (income taxes were thought to be immoral by our founders because they could be ABUSED too easily), there are some amoung us that derrive no greater pleasure than demanding equal comiseration of shackling as many people to this system as possible, and believe enforcing the tax collection of Olympic prize winnings (and MEDALS) of little girls in leotards.
I think trying to figure out who pays what within an inherently unconstitutional and unjust tax system (income tax) will only perpetuate the continual shifting of tax privileges from one group to the other.... over and over and over. It is a loosing situation. That will never, ever, ever change.
The entire thing needs to be thrown out and rewritten. Instead of griping over who gets to pay what amounts, rich or poor, we should be focused on how to remove this tax system altogether and replace it with a more equitable system - like the one in Singapore for instance. Or a consumption tax (which at least is voluntary).
"To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical." Thomas Jefferson
"It would be a hard government that should tax its people one-tenth part of their income." Benjamin Franklin
Feebie at August 3, 2012 10:15 AM
So ANYONE with a grievance gets a discount?
This is going to be grea This is going to be pathetic.
Crid [CridComment at gmail] at August 3, 2012 11:16 AM
Why am I supposed to be concerned about little girls in leotards?
AIIIIIIIEEEEEEEEEEEEEEEEEEEEEEEEEEeee
Crid [CridComment at gmail] at August 3, 2012 11:17 AM
lol
Feebie at August 3, 2012 11:52 AM
@Mike Hunter:
Do people view reducing income inequality a valid government function? How is government supposed to do that?
Old RPM Daddy at August 3, 2012 11:56 AM
Do people view reducing income inequality a valid government function? How is government supposed to do that?
The answer to your first question is: Yes.
The answer to your second question is here:
http://www.zerohedge.com/article/entitlement-america-head-household-making-minimum-wage-has-more-disposable-income-family-mak
Pirate Jo at August 3, 2012 2:50 PM
PJ, liberty is about more than maximizing revenue.
People often get confused on this point.
Crid [CridComment at gmail] at August 3, 2012 4:06 PM
"Do people view reducing income inequality a valid government function? How is government supposed to do that?"
Easy: make everybody poor. Presto! Equality!
Cousin Dave at August 3, 2012 4:09 PM
Hi Crid!
I'm not confused on that point, but not sure why you are bringing it up. Also, I'm not sure which of my posts you are referring to.
Pirate Jo at August 3, 2012 4:27 PM
Redistribution of wealth is not a legitimate govt function, it is not an enumerated power listed in the constitution.
Assuming, as alleged by one person, there is a greater disparity in income than every before, is it not an odd correlation that federal intervention in every aspect of human endeavor is greater than ever before. Might not this correlation actually be a causal relationship?
Bill O Rights at August 3, 2012 4:32 PM
"People get distracted arguing about what government should do or what it should not do."
That's not the distraction, that's the issue. For example, arguing over whether or not gays should be allowed to marry is the distraction. The real issue is whether the government should decide who may or may not get married, and then require those whom it deems qualified to first seek its written permission (i.e. license) before their marriage is valid.
"Any type of government activity... ALL amount to the same thing: cost pooling."
Any type of government activity... all amounts to the same thing: Force. Free individuals forming voluntary associations with other free individuals to more economically acquire things they want may include cost pooling. Free individuals have all different kinds of ideas about the best way to go about that in their lives. When the government becomes involved things like mandates, prohibitions and force become part of the equation, and then some individuals are no longer free.
"The argument boils down to whether it is better for an individual to bear a cost by himself, or whether it is better for a group of people to all get together, pitch in, and pool their money for the cost."
And who should decide what's best for each individual? The individual, or the group? What if 50%-1 decide it's better for them to resolve that argument differently than the 50%+1? Perhaps they they think it would be better to form a different group with people who think more like they do, or go it alone? Should the police, guns, courts and jails of the government be used to force the 50%-1 to comply?
"Whether you pay for something by yourself or whether you pool your money with other people to pay for it, you still have to pay for it! Our views about government and taxation are wildly distorted right now, because we get a bunch of "free shit" but we don't pay for it. The unborn aren't in the room to vote, so we're happily passing them the trash."
Amen, Sister... or Brother... whichever you are! And that is a greedy, selfish, immoral way to live.
Ken R at August 3, 2012 6:48 PM
The answer to your first question is: Yes.
The answer to your second question is here:
Pirate Jo: You'd have to be retarted to actually believe that propaganda. There's no way a single earner 3 person household making $14,500 a year has more buying power then a family making $60,000 a year.
I know because before I graduated and got a professional job I WAS head of a three person household and my earnings that last year were $14,300. I have since graduated and have a professional job making less then $60,000; but have significantly more disposable income.
Mike Hunter at August 3, 2012 7:48 PM
For all those who want a consumption or sales tax, please consider that the Sixteenth Amendment was required to implement it. Now consider that the IRS exists and what it can do to you. And if you work for a small company what it can do to them. Especially by mistake.
So now you want these same congressmen to come up with a new amendment that touches every business from the roadside fruit stand to a Fortune 10 company.
Add in what do you do about the company/person that is nothing but a consulting/service company. The maid and the landscaping company produce nothing but a service. Are they going to be taxed?
Are you only going to tax the original sales, or is the Salvation Army, Goodwill, etc. going to have to pay sales tax.
What about the states that have excise taxes on alcohol and tobacco? Will the sales tax be applied before or after?
What about business to business sales?
Jim P. at August 3, 2012 7:56 PM
Rock on, Ken R
Feebie at August 3, 2012 8:01 PM
Do people view reducing income inequality a valid government function? How is government supposed to do that?
Obviously some people do. The government can simply tax the rich at higher rates and give the money to lower income individuals. We already do it with the 'earned income tax credit'. A program Ronald Regan called: "The best anti-poverty, the best pro-family, the best job creation measure to come out of Congress." We just need to increase the amount of the EITC and pay for it by taking the money from the rich via taxes. That would help narrow income inequality nicely. Passing more pro-union legislation would help as well. As would increasing equality of opportunity by making higher education more accessible to middle class and low income individuals.
"Redistribution of wealth is not a legitimate govt function, it is not an enumerated power listed in the constitution."
Welcome to the modern era. The Federal government does hundreds of things that aren't in the constitution. We weren't suppose to have a national police force (FBI), the Constitution doesn't say anything about the Feds regulating airspace (Federal Aviation Administration), nor does it say anything about space (NASA), the environment (EPA), or education (DOE).
When a majority of people start demanding that the federal government stick strictly to its original role, then talk to me about the constitutionality of wealth transfers. Until then a the fact that we have a stronger federal government then originally intended is just one of the facts of life.
Mike Hunter at August 3, 2012 8:04 PM
The Supreme Court Is Deliberately Misinterpreting the Constitution on Taxes
http://www.businessinsider.com/supreme-errors-2012-7
Feebie at August 3, 2012 8:50 PM
and those nasty athletes like Joe Louis, who were penalized for not following the charitable donations rules and taxes at 90% of there winnings!
Those bastards!!!
http://m.theatlantic.com/entertainment/archive/2010/04/how-taxes-changed-boxing/38949/
Feebie at August 3, 2012 9:09 PM
Mike Hunter, when you were head of a 3-person household, making $14,500 a year, did you apply for those benefits that were listed?
Ken R, I'm not disagreeing with you. When someone in the condo association stops paying dues, they will eventually wind up in small claims court and end up getting their wages garnished, or a lien placed on their property.
But if they don't agree with how the dues are spent (say, for example, they don't want to use the swimming pool and don't want to help pay for it), they have a choice - they don't have to live here. They can go live in the condos one block to the north, which don't have a pool.
That's why I say the more local a government is, the better. We've got way too much of this stuff going on at the federal level. Most of it, if it occurs at all, shouldn't be going on at anything higher than the state level.
Because yes, of course - people DO have all kinds of different ideas about what the government should do. People who want the government to provide "X" can all get together and live in a state where the government provides it - and they will pay higher taxes for it - but that is quite reasonable, and to be expected.
Pirate Jo at August 4, 2012 9:20 AM
Every year, around tax time, I often wonder about a few things.
You see, I have a step-brother in prison, been there my entire life and most of his. We were both brilliant children in our own ways. In school, he chose to put himself in a Learning Disabled class, where he could get by with doing as little work as possible. He'd ace every test until the teacher would remark that the test he took meant whether he would remain in the class or not. Then, he'd get every single question wrong. My father would remark on statistically speaking that even if he was guessing he'd have gotten fifty percent right, but the teacher continually looked at him as if he was a horrible parent thinking his kid was fooling them all.
I didn't. I chose to excel.
Come tax time, I pay taxes to support a grown man in prison (because of our war on drugs). What I was taught growing up is not true in the equation, I am not smart at all.
Cat at August 4, 2012 3:51 PM
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