U.S Income Tax - Page 2

August 9, 2008, 3:08 AM

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Originally Posted by Magic Dirt

Because they don't. It's kind of naive to assume that the rich are rich because they work harder, or are smarter.

I don't see why that's so naïve. Now before I go sounding overly idealistic, I don't think that every single wealthy person got to where they are with good old-fashioned hard work. However, I think it's somewhat unfair to say that none of them really earned their income. Certainly there are plenty of example of people who took simple ideas and made them into piles of money.

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Originally Posted by Magic Dirt

Also the rich need to pay the mos taxes so that the government has a lot of revenue. That means they they will have more to spend on healthcare, education, roads, infrastructure, then they would with a flat tax.

Why is it the duty of the rich to provide the majority of the government's revenue? Besides, the government gets plenty of revenue as is. For instance (using the US as an example, it's what I know), if the government collected a mere $100 from even HALF of the U.S. population (~150 million) that would provide a raw revenue of $150 billion from income tax alone, not even counting the other taxes that we pay (Social Security, Medicare, etc). It's safe to say that most income tax payers actually pay more than this amount, so what's the problem with revenue? Also, education and roads should be a state-to-state issue, but that's another thread... =P
Furthermore if we tax the poor as the same as we tax the rich, how are they going to be able to afford to buy goods? Firstly is would be morally wrong to tax the poor at such a level that they can't afford to buy food, clothes etc. Secondly, if they aren't buying goods then any econom would collapse.

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Originally Posted by Magic Dirt

Free markets don't exist. They can have very little government intervention, but they are still mixed markets.

This is an unfortunate fact. Indeed, there probably will never be such a thing as a pure free market, because human beings will usually try to take shortcut to get what they want, hence the need for government regulation. I'm not claiming that a free market exists (quite the opposite actually), but that's no reason to hope for a better system. The less the government is involved with the economy, the better the economy can run.

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Originally Posted by Magic Dirt

Also it has always been a goverment's duty to allocate money efficiently.

I still don't fully understand why this is the case. You simply stating that this is a duty of government does not make it so. Also, "allocating money efficiently" and "allocating income evenly" are two very different concepts.

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Originally Posted by Magic Dirt

Yes. The list of countries with flat tax rates are pretty much all former soviet countries, whose economies don't work. Coupled with a couple of south American countires and a couple of African countries. Surely that fact that no countries with reasonable economies have a flat tax rates is proof that they don't work.

Just because countries with reasonable economies do not use flat tax systems is absolutely NOT proof that they don't work. It's simply proof that their current system works acceptably.

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Originally Posted by Magic Dirt

Flat taxes may sound like a nice idea on paper, a bit like communism. However communism can have positive effects, flat taxes don't. They simply don't work.

What positive effects can Communism bring? Can you state positive things that Communism has done throughout history? I find the comparison between the flat tax and communism to be kind of ironic, since the current graduated income tax is actually a socialist measure...

Speaking of socialism vs. Communism: Socialism is an economic policy, Communism is a political system. They are related, but not the same; and Communism shouldn't play much of a role in this discussion.

August 9, 2008, 4:07 AM

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Originally Posted by Ness

I don't see why that's so naïve. Now before I go sounding overly idealistic, I don't think that every single wealthy person got to where they are with good old-fashioned hard work. However, I think it's somewhat unfair to say that none of them really earned their income. Certainly there are plenty of example of people who took simple ideas and made them into piles of money.

And there are millions of people who work extremely hard, and still earn minimum wage. There is child labour, these people work harder than anyone else and het paid less. They have no opportunity for education, and sure one or two people do manage to make themselves rich. But that is the exception not the rule

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Why is it the duty of the rich to provide the majority of the government's revenue? Besides, the government gets plenty of revenue as is. For instance (using the US as an example, it's what I know), if the government collected a mere $100 from even HALF of the U.S. population (~150 million) that would provide a raw revenue of $150 billion from income tax alone, not even counting the other taxes that we pay (Social Security, Medicare, etc). It's safe to say that most income tax payers actually pay more than this amount, so what's the problem with revenue?

There are 300 million people in the US. So if we have $150billion, that is 50 dollars to spend on everyone. A government needs a lot more. Education and healthcare cost a hell of a lot more. Governments also offer grants to businesses etc. Governments normally try to maximise their revenues.

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This is an unfortunate fact. Indeed, there probably will never be such a thing as a pure free market, because human beings will usually try to take shortcut to get what they want, hence the need for government regulation. I'm not claiming that a free market exists (quite the opposite actually), but that's no reason to hope for a better system. The less the government is involved with the economy, the better the economy can run.

That's subjective. Some people would argue that government intervention is necessary, and can be beneficial. But that is neither here nor there.

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I still don't fully understand why this is the case. You simply stating that this is a duty of government does not make it so. Also, "allocating money efficiently" and "allocating income evenly" are two very different concepts.

Evenly and efficientlty are the same here. It is more economically efficient to allocate money evenly.
It is the duty of the government because otherwise, the health of the poor will decrease, crime will increase as will social unrest.

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Just because countries with reasonable economies do not use flat tax systems is absolutely NOT proof that they don't work. It's simply proof that their current system works acceptably.

If a flat tax works well, why do no economically strong countries(except for Russia, which is a mess) use flat tax rates? They just don't work.

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What positive effects can Communism bring? Can you state positive things that Communism has done throughout history? I find the comparison between the flat tax and communism to be kind of ironic, since the current graduated income tax is actually a socialist measure...

Speaking of socialism vs. Communism: Socialism is an economic policy, Communism is a political system. They are related, but not the same; and Communism shouldn't play much of a role in this discussion.

Pre 1917 Russia was a pathetic excuse for a country no industry, just horrible. However 30 years of communism, and the USSR(not Russia yes, but mainly Russia) was one of the world's only two superpowers.
Also China, has the world's fastest growing GDP and will overtake the US soon.
Communism can have advantages, a flat tax just means the rich have to pay less taxes.

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you say that a flat tax doesn't work. you worry about the poor. that's why if people make lower than a certain amount annually, i said they should become exempt. so they can afford the bare necessities

How can you justify that amount of income that people earn, so they that don't have to pay tax? It'll probably be an arbitrary decision. Also poor people need more money that just the bare minimum.

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you mention that the government has to tax people the way it does in order to have enough revenue to fund schools and relief programs and whatnot. the government spends ridiculous amounts of money on miscellaneous bureaucratic agencies that only satisfy a small margin of the population's needs if any. the corruption of government spending is out of control. if that's cleaned up, then maybe the government wouldn't need so much revenue.

But that isn't the fault of a progressive tax system. It's the government being inefficient. Which I agree is a problem. However, a flat tax rate won't change that.

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oh and lets not forget the whole national debt...glad to see we're paying that sucker off using our tax money.

National debt isn't necessarily bad. However when it had been used for consumption it is. Which is mostly the case, and since it is the consumers who create the debt, it makes sense that that some of the tax revenue is used to pay it off.

August 9, 2008, 11:10 PM

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Originally Posted by Magic Dirt

And there are millions of people who work extremely hard, and still earn minimum wage. There is child labour, these people work harder than anyone else and het paid less. They have no opportunity for education, and sure one or two people do manage to make themselves rich. But that is the exception not the rule

Where in the US does child labor take place? Perhaps you're describing a different country, but unless a parent refuses to enroll their child in school, public education is open to everyone. Furthermore, labor laws are quite strict regarding minimum working age. Sure, there are many people who work hard and earn minimum wage, but in the context of tax reform, what does that fact have to do with anything?

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Originally Posted by Magic Dirt

There are 300 million people in the US. So if we have $150billion, that is 50 dollars to spend on everyone. A government needs a lot more. Education and healthcare cost a hell of a lot more. Governments also offer grants to businesses etc. Governments normally try to maximise their revenues.

It would be $500 dollars per person. The point was that, based on the size of our population, the government does not need to collect that much from people to have plenty of money. A government's budget should not be measured on how much it has per capita, but how much it needs to run its basic functions. Yes, part of the problem is a bloated bureaucracy that needs serious spending reform, but that's not the issue here. Also, scratch "healthcare" off the list of things government should be paying for. We don't have socalized healthcare (not yet, at least).

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Originally Posted by Magic Dirt

That's subjective. Some people would argue that government intervention is necessary, and can be beneficial. But that is neither here nor there.

Of course it's subjective. But there's a fine example of overspending in government. The government could save a lot of money by not having the regulatory agencies that it has.

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Originally Posted by Magic Dirt

Evenly and efficientlty are the same here. It is more economically efficient to allocate money evenly.

That's not the difference I was referring to. You went from saying "allocate incomes evenly", which I took to mean personal incomes not governments' (if you meant something different, please let me know). Then you said "allocate money efficiently", which I agree, governments should be fiscally responsible.

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Originally Posted by Magic Dirt

It is the duty of the government because otherwise, the health of the poor will decrease, crime will increase as will social unrest.

So you're saying that crime will increase and the health of the poor will decrease if government utilizes a flat tax? (I know I'm drawing a connection that you haven't drawn yet, but that's the next logical step. That's why I'm asking you a question, not making a statement.)

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Originally Posted by Magic Dirt

If a flat tax works well, why do no economically strong countries(except for Russia, which is a mess) use flat tax rates? They just don't work.

You're saying the same thing that you said in the last post. All that this proves is that the systems in place work acceptably. You're drawing an unfair conclusion here.

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Originally Posted by Magic Dirt

Pre 1917 Russia was a pathetic excuse for a country no industry, just horrible. However 30 years of communism, and the USSR(not Russia yes, but mainly Russia) was one of the world's only two superpowers.
Also China, has the world's fastest growing GDP and will overtake the US soon.

The Soviet Union's economy was still garbage all through the 1900s. Just because it was a military superpower doesn't mean that it's economy was strong and robust (quite the contrary, in fact). This continuation of socialist economic policies and military hyper-spending actually led to the collapse of their economy.

China's economy is on the upswing because they are inacting capitalistic measure in their economy (they learned from USSR's mistakes). Furthermore, you also seem to be saying that the US's economy is weaker or weakining. Do you think that has anything to do with over-regulation domestically and higher tax rates?

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Originally Posted by Magic Dirt

Communism can have advantages...

And what would those advantages be?

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Originally Posted by Magic Dirt

...a flat tax just means the rich have to pay less taxes.

And what did the rich do to deserve such a punishment?

August 10, 2008, 11:42 AM

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Originally Posted by Ness

Where in the US does child labor take place? Perhaps you're describing a different country, but unless a parent refuses to enroll their child in school, public education is open to everyone. Furthermore, labor laws are quite strict regarding minimum working age. Sure, there are many people who work hard and earn minimum wage, but in the context of tax reform, what does that fact have to do with anything?

Child labour, I was talking about generally. However the poorer people often have their children working when they can. At ages like 14.
Also technically speaking, education isn't a public good, as it can be excludable.

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It would be $500 dollars per person. The point was that, based on the size of our population, the government does not need to collect that much from people to have plenty of money. A government's budget should not be measured on how much it has per capita, but how much it needs to run its basic functions. Yes, part of the problem is a bloated bureaucracy that needs serious spending reform, but that's not the issue here. Also, scratch "healthcare" off the list of things government should be paying for. We don't have socalized healthcare (not yet, at least).

You only get $500 per person if you taxed half the population $1000. As healthcare isn't completely private there are still healthcare costs. Education and infrastructure alone are going to cost a lot more than $50 or %500 per person.
The size of the population significantly effects the amount of tax needed. It works both ways having many citizens to take revenue from means a large budget. However having a large population means a lot of taxes are needed.

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That's not the difference I was referring to. You went from saying "allocate incomes evenly", which I took to mean personal incomes not governments' (if you meant something different, please let me know). Then you said "allocate money efficiently", which I agree, governments should be fiscally responsible.

By efficiently, I meant personal incomes. It is more efficient for incomes to be equal.

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So you're saying that crime will increase and the health of the poor will decrease if government utilizes a flat tax? (I know I'm drawing a connection that you haven't drawn yet, but that's the next logical step. That's why I'm asking you a question, not making a statement.)

Quite possibly, yes. I'm not saying it will happen, but it is more likely. A flat tax widens the gap between 'the haves' and 'the have nots'. No one can say with 100% accuracy that crime will increase and living and health standards will decrease. But it is the obvious cocnclusion to draw.

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You're saying the same thing that you said in the last post. All that this proves is that the systems in place work acceptably. You're drawing an unfair conclusion here.

They aren't working acceptably though. Large numbers of these people are leaving, and the ones who can afford to, send their children overseas for an education.

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The Soviet Union's economy was still garbage all through the 1900s. Just because it was a military superpower doesn't mean that it's economy was strong and robust (quite the contrary, in fact). This continuation of socialist economic policies and military hyper-spending actually led to the collapse of their economy.

China's economy is on the upswing because they are inacting capitalistic measure in their economy (they learned from USSR's mistakes).

I'm not arguing that. However it doesn't help that they were too stupid to realise collectivisation didn't work, and didn't do anything about it.
Yes Deng Xiaoping introduced economic reforms, but China still is a communist country. The point I was making was that Russia went from being a backwards country to a superpower. You didn't mention that the USSR was supporting Cuba, Eastern Europe, Angola and other assorted communist regimes across the world.
Also there was the pressure of the cold war.
But nevermind.

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Do you think that has anything to do with over-regulation domestically and higher tax rates?

I see what you're trying to do.
No I wouldn't. I wouldn't say the US is weakening, It has a normal increase in GDP. China is just out preforming it.
Though I'm interested as to which parts of the domestic market are over-regulated in your opinion.

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And what did the rich do to deserve such a punishment

This is also subjective. You could say it is a moral obligation. Those who made themselves rich most likely went to a public school, so really they are repaying a debt.

Others would say it is due to the fact that the rich have often exploited their workers etc.

August 11, 2008, 2:43 AM

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Originally Posted by Magic Dirt

Child labour, I was talking about generally. However the poorer people often have their children working when they can. At ages like 14.

Most labor laws require workers to be at least 15. If you work before that, it's under the table, which is not the norm by a good stretch. Policy should not be build on exceptions.

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Originally Posted by Magic Dirt

Also technically speaking, education isn't a public good, as it can be excludable.

What do you mean when you say 'excludable'?
No one can be rejected from a public school institution on the basis of their income. How is this not a public good? Besides, education funding comes from individual states, for the most part. Federal government doesn't have as much say in education.

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Originally Posted by Magic Dirt

You only get $500 per person if you taxed half the population $1000.

Check your math again.

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Originally Posted by Magic Dirt

As healthcare isn't completely private there are still healthcare costs. Education and infrastructure alone are going to cost a lot more than $50 or %500 per person.

You're missing my point. I'm not trying to quantify the amount of money a government needs to have per person. I'm saying that by taking a relatively small amount of money from only half of the population (tax base is more than likely larger than 50% of the population), a good deal of income can be provided.

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Originally Posted by Magic Dirt

The size of the population significantly effects the amount of tax needed. It works both ways having many citizens to take revenue from means a large budget. However having a large population means a lot of taxes are needed.

Sure, the larger a country is, the more money its government will need to run efficiently. However, the size of a population also increases the size of a tax base. The size of a nation has nothing to do with graduation of the tax rate.

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Originally Posted by Magic Dirt

By efficiently, I meant personal incomes. It is more efficient for incomes to be equal.

Can you expound on this further? Why is it more efficient for incomes to be equal? And if so, why use a bloated, inefficient tax code to equalize incomes? Why not use government edict? Wouldn't that be more...efficient?

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Originally Posted by Magic Dirt

Quite possibly, yes. I'm not saying it will happen, but it is more likely. A flat tax widens the gap between 'the haves' and 'the have nots'. No one can say with 100% accuracy that crime will increase and living and health standards will decrease. But it is the obvious cocnclusion to draw.

Is there proof that a flat tax rate would widen this gap? Furthermore, even if there is such proof, is it the government's role to close this gap?
It's an unpleasant truth, but society will always be composed of "haves" and "have nots". No amount of government correction will ever change that. A country's economy would collapse before it could achieve this goal (Soviet Union!).

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Originally Posted by Magic Dirt

They aren't working acceptably though. Large numbers of these people are leaving, and the ones who can afford to, send their children overseas for an education.

I don't think that large numbers of people are emigrating from the United States. And if you're referring to other nations, I doubt it's the system of taxation that's drawing them away. Again, emigration isn't really an acceptable way of proving the success/failure of an economic policy.

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Originally Posted by Magic Dirt

I'm not arguing that. However it doesn't help that they were too stupid to realise collectivisation didn't work, and didn't do anything about it.

Well, you did argue that the Soviet Union was a great superpower for proof that Communism can have positive effects. Russia had plenty of problems before the Bolsheviks, no doubt about that. However, Communism certainly didn't help them.

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Originally Posted by Magic Dirt

Yes Deng Xiaoping introduced economic reforms, but China still is a communist country.

The point is that standard Communist economics (read: socialism) don't do anything but send a nation's economy into stagnation, at best.

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Originally Posted by Magic Dirt

The point I was making was that Russia went from being a backwards country to a superpower. You didn't mention that the USSR was supporting Cuba, Eastern Europe, Angola and other assorted communist regimes across the world.

You're right, I didn't. But if you want to provide more examples of socialist regimes that required economic backing from their ideological "mother country", then that is fine. Such examples are Cuba, Eastern Europe, Angola, and other assorted Communist regimes across the world.

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Originally Posted by Magic Dirt

Also there was the pressure of the cold war.
But nevermind.

The straw that broke the camel's back. The Cold War (specifically Reagan's foreign policy) turned a stagnant economy into a broken one.

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Originally Posted by Magic Dirt

I see what you're trying to do.

What's that? Argue against graduated income tax? You got it.

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Originally Posted by Magic Dirt

No I wouldn't. I wouldn't say the US is weakening, It has a normal increase in GDP. China is just out preforming it.

If that's the case, then what does a difference in economic performance have to do with anything? China wins because American businesses are outsourcing, nevermind the fact their population is about three times our size.

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Originally Posted by Magic Dirt

Though I'm interested as to which parts of the domestic market are over-regulated in your opinion.

The parts that lead American businesses to outsource to countries like China and India (causing their GDPs to skyrocket, how about that). Basically, just about everything. I certainly couldn't formulate a single list, it would be far too long.

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Originally Posted by Magic Dirt

This is also subjective. You could say it is a moral obligation. Those who made themselves rich most likely went to a public school, so really they are repaying a debt.

Saying it's a moral obligation is subjective. I'll agree that my point is subjective, but so is yours.
Also, you're saying now that rich people likely went to public schools? Wouldn't that mean that they worked hard and were smarter to earn their higher incomes? Odd, I thought that most rich didn't work any harder or better than anyone else...

Others would say it is due to the fact that the rich have often exploited their workers etc.[/quote]

**Battle Royale: Profiles** · August 11, 2008, 4:54 AM

My father is an accountant, and my boyfriend is aiming to become one as well, so I know my way around taxes. I just wish to make a few additional comments to what was said so far, as well as what I think should be done with taxes.

1. It seems that everyone in this thread is only concerned with personal taxes, which is understandable since this is about the 'income tax.' But, I just want to mention that the money that the government receives from personal taxes is not that big of a number compared to what the government receives from small businesses, corporations, the lottery, etc.

2. As mentioned earlier, because the tax-money received from personal taxes is not entirely paramount, the arguments about 'why do the rich have to pay all the taxes?" is relatively minor when you consider the whole picture. It's really those wealthy person's companies that are dishing out the tax-money.

But, as an answer to this question...the answer is simple: the top 5% of the United States comprise 50% of the country's wealth. With such a small percentage having that much money, they should be taxed more heavily.

As for what I feel should be done about the U.S. Income Tax:

1. The taxes on labor-based income, should be much smaller. Instead, taxes for income that come from investments, gambling, and the stock-market...should be taxed more heavily. Simply put: the money you WORK for should not be taxed as much as the money you DO NOT work for.

2. I do believe that the top 5% of the United States, personal-tax-wise, should be taxed more heavily than they are. Instead of buying 5 mansions, 4 yachts, and 2 private jets...those that are wealthy can suffer with having to pay a couple more million a year in taxes. Not to sound too cynical, but most of them are blowing their money away, anyway. If the rich do not wish to pay those taxes, then they are more than capable of moving to another country with their riches.