I stole this from another message board, but I thought it was well put:

Quote :

"Think of it this way. A poor man benefits from the roads in society, the public education he received, the police and fire which protect him, and the government services which catch him when he falls. The upper middle class man benefits from all the same things as a poor man, but he is paid better for his work because he works for a large company, which functions because of roads to ship goods, and police and fire to protect their assets and make the populace feel safe in ownership to buy its goods, and the economy which is held up by all the workers making goods at all the various levels of income. His higher pay is based more on the network of the economy than the poor laborer thus he pays more back into the society in the form of higher taxes. The rich man owns a business, or owns millions in shares of other businesses his vast wealth is made possible by the public education of thousands or tens of thousands of people, the businesses which pay him dividends make money using public roads and selling goods to people with money provided for their work by other businesses which rely on the same public utility of society to exist. The further up the income web you go the more and more of shared society is needed to provide that income, thus the case for progressive taxation. One man drives to work on public roads, one millionaire is rich because a thousand men drive to work on public roads."

Note that the so-called “Fair Tax” is still a progressive tax, just with a little different structure.

source: http://arstechnica.com/civis/viewtopic.php?p=21061895#p21061895

11/28/2010 12:13:14 PM

Quote :

"Note that the so-called “Fair Tax” is still a progressive tax, just with a little different structure."

Not true, sales taxes are not progressive. The only way to have truly progressive taxation is to base rate off income, it is impossible otherwise.

11/28/2010 12:18:14 PM

fairtax is not progressive because it shifts the burden to the poor, they spend a higher proportion of their income on the fairtax

the fairtax being far idea is based on the fallacy that there is a linear relationship between wealth and what people spend on stuff

[Edited on November 28, 2010 at 12:22 PM. Reason : .]

[Edited on November 28, 2010 at 12:34 PM. Reason : typing fast]

11/28/2010 12:21:05 PM

learn the difference between "progressive" and "regressive," buddy.


btw, that post isn't an argument for a progressive tax structure. it's an argument for the rich paying more money in taxes than the poor, which is easily achieved by a flat-rate-tax. /thread

^and your fallacy is in assuming that money won't eventually be spent, and thus be taxed at the exact same rate. what you are essentially saying is that it is unfair for people to be able to save money

11/28/2010 12:23:46 PM

Quote :

"Not true, sales taxes are not progressive. The only way to have truly progressive taxation is to base rate off income, it is impossible otherwise. "

Fair tax has a pre-bate/rebate thing, which makes it progressive.

Quote :

"btw, that post isn't an argument for a progressive tax structure. it's an argument for the rich paying more money in taxes than the poor, which is easily achieved by a flat-rate-tax. /thread "

This is a good starting point, keep thinking about it a little more.

[Edited on November 28, 2010 at 12:28 PM. Reason : ]

11/28/2010 12:26:15 PM

Quote :

"it's an argument for the rich paying more money in taxes than the poor, which is easily achieved by a flat-rate-tax"

It seems like an argument for the rich to pay a higher rate, not the poor paying a higher rate, which is what a flat tax is.

Quote :

"and your fallacy is in assuming that money won't eventually be spent, and thus be taxed at the exact same rate. what you are essentially saying is that it is unfair for people to be able to save money"

That's irrelevant to tax burden and effective tax rate. The poor spend more of their money and the rich save more, thus you can see how it's unfair to tax spendings while savings goes untaxed.

Quote :

"Fair tax has a pre-bate/rebate thing, which makes it progressive."

The rebate is flat (not based on income) thus it CANNOT be progressive. Progressiveness states that as income goes up, tax rate goes up. It is IMPOSSIBLE to have that relationship without basing some part of the tax structure on INCOME. No part of fairtax bases tax rate on income, thus it cannot be progressive.

11/28/2010 12:42:26 PM

It seems like an argument for the rich to pay a higher rate, not the poor paying a higher rate, which is what a flat tax is. It seems like an argument for the rich to pay a higher rate, not the poor paying a higher rate, which is what a flat tax is.

[Edited on November 28, 2010 at 1:06 PM. Reason : this]

11/28/2010 1:06:41 PM

It would be in effect, as we would have other regressive taxes.

11/28/2010 1:23:33 PM

Quote :

" Progressiveness states that as income goes up, tax rate goes up."

No, it says that as the taxable base goes up, the tax rate goes up. It is most frequently tied to income, but it doesn't have to be. Luxury taxes and the like are a form of progressive taxation that have nothing to do with income. Likewise, a national sales tax with a sizeable "prebate" would function as a progressive tax structure, at least for the poor and middle class. Some high-end luxury and estate taxes may need to be tacked on to make it truly progressive in the upper incomes.

stolen from wiki:

Quote :

"The term is frequently applied in reference to personal income taxes, where people with more income pay a higher percentage of that income in tax than do those with less income. It can also apply to adjustment of the tax base by using tax exemptions, tax credits, or selective taxation that would create progressive distributional effects. For example, a sales tax on luxury goods or the exemption of basic necessities may be described as having progressive effects as it increases a tax burden on high end consumption or decreases a tax burden on low end consumption respectively."

http://en.wikipedia.org/wiki/Progressive_tax

[Edited on November 28, 2010 at 1:36 PM. Reason : 2]

11/28/2010 1:34:01 PM

Having progressive effects != progressive taxation. In addition you didn't address how the flat nature of the rebat shifts the tax burden to the lower middle class. Here is a chart ive used before to illustrate:

11/28/2010 2:28:23 PM

Your chart sucks.

Once again, taxes do not have to be tied to income in order to craft a progressive taxation system.

11/28/2010 2:41:48 PM

Quote :

"It seems like an argument for the rich to pay a higher rate, not the poor paying a higher rate, which is what a flat tax is."

remind me again how EVERYONE paying the same percentage is somehow equal to one paying a higher percentage than another... yeah.

Quote :

"That's irrelevant to tax burden and effective tax rate."

not at all. every dollar earned is eventually spent. and when it gets spent, it gets taxed. You are looking at it only in the instance where the person saves money. Now look at it in the instance where the person spends more than he makes, ie, using savings. At that point, his tax-rate is higher than the poor's. The fallacy is looking at the tax-rate in a fixed-time scale. Looking at the tax-rate in the time-scale of the "dollar earned" shows that the tax is flat across all brackets.

Quote :

"The poor spend more of their money and the rich save more, thus you can see how it's unfair to tax spendings while savings goes untaxed."

I don't see, at all, how it is fair to tax savings. Period. If someone is responsible and saves money, he shouldn't be penalized for it.


moreover, the original post makes other fallacious assumptions: that private roads, schools, and fire and security details can't and don't exist.

[Edited on November 28, 2010 at 7:01 PM. Reason : ]

11/28/2010 6:57:02 PM

Quote :

"fairtax is not progressive because it shifts the burden to the poor, they spend a higher proportion of their income on the fairtax "

That doesn't make it either progressive or regressive. It makes it less progressive than our current system.

Quote :

" the fairtax being far idea is based on the fallacy that there is a linear relationship between wealth and what people spend on stuff "

The FairTax specifically acknowledges and accounts for that exact concern with the "pre-bates".


I would describe the Fairtax as neither progressive nor regressive, but "neutral" or "linear".

11/28/2010 7:16:21 PM

In a dramatically poorer society, the rich would live pretty much the same way they do now. Just compare our rich to the rich of lesser states in South America: life-styles are pretty much the same. A house bigger than they could ever use, a fancy car, jewelry, servants, frequent travel, etc.

What changes, however, is the life-style of the middle-class and poor. They lose their air-conditioned home, they lose the car, they lose the internet/cableTV/cell phone, the list goes on.

It seems to me, if anyone should be desperate to sustain the productivity enhancement of the capitalist system, it should be the poor and middle-class, as it is they that have the most to lose.

11/28/2010 7:18:55 PM

Quote :

"remind me again how EVERYONE paying the same percentage is somehow equal to one paying a higher percentage than another"

Any other invitable tax added on, state sales tax, tarrifs, payroll taxes, tolls, etc.

Quote :

"every dollar earned is eventually spent"

That's not true, most anyone who has had money in the stock market the past few years knows that it isnt. Money is not zero sum, I don't know why you insist on trying to treat it like it is.

Quote :

"Now look at it in the instance where the person spends more than he makes, ie, using savings. At that point, his tax-rate is higher than the poor's."

But that ignores marginal propensity to consume. The more money you make, the less you spend percentage wise.

Quote :

"The fallacy is looking at the tax-rate in a fixed-time scale."

But that's how you look at taxes, we can't see the future.

Quote :

"If someone is responsible and saves money, he shouldn't be penalized for it."

They are rewarded, surely you understand the innate benefits of saving money and forgoing unnecessary spending without any sort of tax reward, right?

11/28/2010 7:19:32 PM

wait, not having a disproportionate amount of your income taken away is now a reward?

11/28/2010 8:11:35 PM

wait, not having a disproportionate amount of income is now a reward?

11/28/2010 8:48:07 PM

Quote :

"I don't see, at all, how it is fair to tax savings. Period. If someone is responsible and saves money, he shouldn't be penalized for it. "

Fair? This makes no sense.

11/28/2010 8:58:53 PM

Quote :

"Any other invitable tax added on, state sales tax, tarrifs, payroll taxes, tolls, etc."

that doesn't make a flat-tax unequal, though, genius.

Quote :

"That's not true, most anyone who has had money in the stock market the past few years knows that it isnt."

If I "permanently" lose money in the stock-market, it would then be as if I never had it in the first place, so there is no difference.

Quote :

"But that ignores marginal propensity to consume. The more money you make, the less you spend percentage wise."

Irrelevant. It will someday be spent. And when it is, it is taxed. Again, at the point where I spend more than I earn, I am effectively taxed more than others in your misguided definition of a tax-rate. Or, if Burro Jr inherits my money and spends it, then the money is taxed then.

Quote :

"But that's how you look at taxes, we can't see the future."

Yes, that's how you look at it if you want to distort the truth. We CAN know that the money will eventually be spent somehow. it might be spent by me, it might be spent by Burro Jr, it might be spent by Swifty T Swindler who steals my identity and clears out my bank accounts. But it will be spent. And when it gets spent, it gets taxed.

11/28/2010 9:21:38 PM

One of the problems with the OP is that it assumes that the wealthy business owners are the only ones (or at least the majority of the ones) who benefit from average people learning in public schools/driving to work on public roads/et cetera. An average person benefits from having a job just as much as the CEO benefits from having them as an employee. I never understood why people in general have the idea that a mutually agreed upon contract is somehow always more beneficial to the "big guy", and leaves the "little guy" out to dry.

That said, the FairTax has too many problems. With that said, I'll take it if it means no more income tax.

[Edited on November 28, 2010 at 9:27 PM. Reason : forgot words]

11/28/2010 9:27:06 PM

I agree with aaronburro and theDuke866 with the Flat Tax. It's something I've been in favor of for years, before I knew there were countries that implemented a Flat Tax or that we have politicians who are in favor of it.

I understand the reasoning behind the progressive tax, and it's unlikely that a flat tax will be implemented any time soon, but I just can't agree with the progressive tax system in which the rich are taxed more simply because they make more. The argument in the OP is that the rich should be taxed more because they make use of the utilities more than that of poorer folk. But the fact is, even with a flat tax, they will still pay more than the poorer folk.

I agree with aaronburro's assessment that the money will be spent.

I'm still try to get what the hell Kris is trying to say against a flat tax. If everyone is being taxed 30%, what's the problem? Yeah, the poor people will still have less money. But I don't think a tax system should be set up in some Robin Hood setup, where everyone makes the same amount of money. If this is the case that anyone supports, then our current system does a shit job of it.

It seems like everyone is trying to come up with a way to get more money out of rich people while trying to be fair about it. I suppose a "fair" tax is a decent way to go, but it's not fair when you start getting rebates or whatever the fuck they'll do so that an astronomically high sales tax doesn't make necessities, or every little "luxury" and put it out of reach of the poor.

If you want more money out of rich people, I would appreciate it if people would just come out and say it, instead of trying to come up with some convoluted system that doesn't directly take more money from rich people, but the end result has rich people paying more than anyone else.

11/28/2010 10:29:30 PM

Quote :

"Your chart sucks. Once again, taxes do not have to be tied to income in order to craft a progressive taxation system."

You suck, it does have to be tied to income either indirectly or indirectly.

Quote :

"wait, not having a disproportionate amount of your income taken away is now a reward?"

People who prosper more through the system that facilitates their growth have to pay for more of it.

Quote :

"that doesn't make a flat-tax unequal, though, genius."

I didn't say it did, I said "[fairtax] would be [regressive] in effect, as we would have other regressive taxes."

Quote :

"If I "permanently" lose money in the stock-market, it would then be as if I never had it in the first place, so there is no difference."

And if you gain?

Quote :

"Irrelevant. It will someday be spent. And when it is, it is taxed. Again, at the point where I spend more than I earn, I am effectively taxed more than others in your misguided definition of a tax-rate. Or, if Burro Jr inherits my money and spends it, then the money is taxed then."

Then your problem is the regressiveness of the system, as MPC would dictate that the rich are taxed less.

Quote :

"An average person benefits from having a job just as much as the CEO benefits from having them as an employee. I never understood why people in general have the idea that a mutually agreed upon contract is somehow always more beneficial to the "big guy", and leaves the "little guy" out to dry."

There is a reason why the believe it. They know it to be true from just real world experience, and they are not able to state why, but I know the reason why, and its a logical economics one, "market power". That company (let's not say CEO, because he is an employee as well in most cases) is one entity, buying from a pool of potential sellers. When the number of buyers and sellers gets uneven, the market begins to fail to price. When we have more sellers than buyers, we have monopsony, when we have the reverse, we have monopoly. In most instances of labor market, we have fewer buying entities than selling entities, thus it tends to shit on the "little guy".

11/28/2010 10:42:08 PM

just think of how many IRS agents, HnR Block employees, lawyers, and accountants would become unemployed if everyone was just taxed 40% or some other stable known number.

11/28/2010 10:45:21 PM

Quote :

"I understand the reasoning behind the progressive tax, and it's unlikely that a flat tax will be implemented any time soon, but I just can't agree with the progressive tax system in which the rich are taxed more simply because they make more. The argument in the OP is that the rich should be taxed more because they make use of the utilities more than that of poorer folk. But the fact is, even with a flat tax, they will still pay more than the poorer folk."

What you're not understanding is that measuring it and comparing it by dollars is bad way to do it. It's about the rate. Let's say P1 makes $30k and is taxed $3k, let's say P2 makes $100k and is taxed $5k. P1 is taxed less in dollars, but twice as much relative as he is taxed 10% and P2 is only taxed 5%.

Now your follow-up question might be "why use rate rather than amount?". The reason is purely economic, by encouraging spending and taking loans to start or expand businesses, we speed up the circulation of money, creating more of it.

11/28/2010 11:22:09 PM

Quote :

"Let's say P1 makes $30k and is taxed $3k, let's say P2 makes $100k and is taxed $5k. P1 is taxed less in dollars, but twice as much relative as he is taxed 10% and P2 is only taxed 5%. "

When has anyone advocated such a plan for taxation?

11/28/2010 11:28:36 PM

^^ Or how many IRS agents could be fired if half the population went un-taxed. It seems to me, it is revenue maximizing to not tax the poorest among us, as they are least likely to pay on time and we don't get much out of them, so it should cost more to tax them than than what they wind up paying. Well, this position scales. As such, I say go ahead, give in to the progressive tax code, and declare half the population no longer needs to file tax returns. Then, at least some of us can enjoy income privacy.

[Edited on November 28, 2010 at 11:32 PM. Reason : .,.]

11/28/2010 11:31:18 PM

Quote :

"Let's say P1 makes $30k and is taxed $3k, let's say P2 makes $100k and is taxed $5k. P1 is taxed less in dollars, but twice as much relative as he is taxed 10% and P2 is only taxed 5%."

Why are you even bringing this up when I'm talking about a flat tax, in which everyone is taxed the same rate.

Quote :

"Now your follow-up question might be "why use rate rather than amount?""

I am promoting using rate. More specifically, I am promoting that everyone be taxed the same rate. Do you even know what a flat tax is? I'm pretty sure you do, but it seems as though you're not really addressing a flat tax.

What you quoted of mine was just addressing the OP's quote in which it reasons why we should have a progressive tax, because the rich are utilizing the public utilities more than the poor. But this doesn't really doesn't push me to the side of progressive taxation, but rather to for me to agree that the rich should pay more, which they would do under both a flat tax and a progressive tax. If anything, it reasons that we should be against a regressive tax.

11/28/2010 11:34:24 PM

Quote :

"When has anyone advocated such a plan for taxation?"

It was an example.

Quote :

"Why are you even bringing this up when I'm talking about a flat tax, in which everyone is taxed the same rate."

Then you tax people who spend more of their income. You deincentivise spending and money growth.

Quote :

"I am promoting using rate. More specifically, I am promoting that everyone be taxed the same rate. Do you even know what a flat tax is? I'm pretty sure you do, but it seems as though you're not really addressing a flat tax."

Then I admit I misunderstood you earlier, but the rest of what I said after what you quoted applies either way.

11/28/2010 11:44:23 PM

A pole tax is awesome because it eliminates any effects from tax avoidance behavior. Tax everyone $20k a year. The more you pay, the less of next year must be spent behind bars.

Quote :

"You deincentivise spending and money growth."

We own a printing press. As such, money growth is irrelevant to all government policy, including tax policy. Let the people burn money on the 4th of July, we can just print more.

[Edited on November 28, 2010 at 11:50 PM. Reason : .,.]

11/28/2010 11:47:59 PM

Quote :

"The more you pay, the less of next year must be spent behind bars."

And we get to replace all of the IRS accountants with medieval tax collectors, sounds wonderful.

Quote :

"We own a printing press. As such, money growth is irrelevant to all government policy, including tax policy."

Money doesn't grow by the government printing it, it grows by people using it.

11/29/2010 12:07:23 AM

The most recently legislated poll tax I can think of was Great Britain in 1990.

And both will grow the money supply. A given stock of money can move faster, or a greater stock of money can move the current rate, both would have the same effect.

11/29/2010 12:56:10 AM

Wrong, one increases supply, the other increases demand.

11/29/2010 11:19:02 PM

Increases supply of what and demand for what? Increasing monetary velocity leads to inflation if not countered, just as increasing monetary supply leads to inflation if not countered.

11/29/2010 11:50:15 PM

A person with enough capital to meaningfully trade stocks and bonds can earn 90% of their yearly income without breaking a sweat. When you have more money, it's easier to make more money (remember "You have to spend money to make money"?). It's a situation where the whole is greater than the sum of its parts, money is increasingly self-generative as it grows. This is facilitated by the economic infrastructure that the entire population works together to maintain. The more money you're making, the more dependent your wealth is on the populace as a whole maintaining the institutions.

Mostly restating the original post, but it goes beyond roads and sewer systems. The higher you go, especially with stocks, bonds, and other capital investments, the less "earning" is done by the earner and instead is a manifestation of collective production. Wisely predicting which stock is going to rise is not "work", it's vampirism, and a higher portion of that ought to go back to the society-at-large which maintains that rising level of production.

11/30/2010 2:49:15 PM

Quote :

"A person with enough capital to meaningfully trade stocks and bonds can earn 90% of their yearly income without breaking a sweat."

They can also lose 90% of their yearly income too.

Quote :

"This is facilitated by the economic infrastructure that the entire population works together to maintain. The more money you're making, the more dependent your wealth is on the populace as a whole maintaining the institutions."

Yeah. Your point? You're saying that because they make use of more of the infrastructure than poor people, they should pay more? I'm not disagreeing with you, but you don't need a progressive tax system to do this. A flat tax will also have rich paying more than the poor as well in terms of absolute dollars.

I'm sorry, but there really is no justification for charging higher tax rates to the rich than the poor, outside of the reasoning of, "we can get more money from them."

Quote :

" The higher you go, especially with stocks, bonds, and other capital investments, the less "earning" is done by the earner and instead is a manifestation of collective production."

But without their investment, we wouldn't have the production. If you're going to use the reasoning that we should take more from the rich because their wealth is made off of other people's work, you're forgetting that your logic can easily go both ways, the people's work is made possible by the rich.

Quote :

"Wisely predicting which stock is going to rise is not "work", it's vampirism, and a higher portion of that ought to go back to the society-at-large which maintains that rising level of production."

Why should a person's luck be penalized and have it go back into the poor? That investment in the stock itself goes back into the company to allow the people to have a job. The benefit of the investment in a company's stock is mutual. And you can call it whatever you want, but the fact is, it's luck. If the rich lose out on their investment because a stock fails, does the poor give back their money? Seems to me like you're touting Robin Hoodism (yeah, I made that up). You're either ignoring the benefit of people's investment into a company, or you're just trying to distort how things work to hype up our progressive tax code as being "necessary."

11/30/2010 3:30:39 PM

Quote :

" Seems to me like you're touting Robin Hoodism (yeah, I made that up). You're either ignoring the benefit of people's investment into a company, or you're just trying to distort how things work to hype up our progressive tax code as being "necessary.""

Actually there was a bit more depth to it that you ignored or similarly simplified to mischaracterize. I'll try again:


Let's apply a flat sales tax to everything. What does that flat rate mean to people in different groups, how does it relate to their sources of income?

A poor person might spend 90% of their income on food, housing, goods like clothing that need replaced periodically, in other words, things they have no choice but to spend their money on.

For someone on the rich end of the spectrum, these necessities might be 10% of their income at best. The rest of it might go into capital investments or other means of making more money. The point is that money is worth different things at different levels of accumulation. At higher levels, income itself becomes a tool of income-creation. Someone can purchase property or factories or any other manner of items that retain their value (or increase) or produce more wealth.

When you put a flat tax simply on income, you are ignoring that very real compounding nature of large sums of money. When you adopt a flat tax system, you are letting people get away with scoring extra income through capital gains, property ownership, and accumulating possessions. Again, the point is that money compounds itself after a certain level, and that income must be accounted for if it's really a flat tax.

If you're proposing a flat tax for income, AND capital gains, property, and inheritance, we might be able to talk. But if your idea of a fair, flat tax doesn't take into account the fact that 6% of 10,000 is school clothes, whereas 6% of 100,000,000 is just one of many stock investments, there's nothing to discuss. Support for a flat tax can only be held if you don't understand how wealth accumulation works. Wealth accumulation itself is progressive, and the tax system needs to match it or else you're giving a break to the people who need it least. We've all heard the phrase "make your money work for you", so is it really fair to the people who work for every cent to pay the same tax rate as someone whose money is working for them?



[Edited on November 30, 2010 at 4:41 PM. Reason : If you read nothing else, read the part I bolded]

11/30/2010 4:26:33 PM

And as far as the value of investments go, there's no guarantee that the benefits will trickle down. Someone may invest in a company so the board of directors can buy machines to replace half of their workforce and increase productivity, and put the saved money and increased returns into CEO coffers. Profits are up, so the stock rises, and the investor makes out like a bandit because he put people out of work and lined his wealthy friends' pockets.

The "value" that you claim investors make to society is a highly, highly idealized one and is not nearly as guaranteed as the value reaped by the investors and board of directors. Further, when that company goes under, the board and the investors are likely all insulated from those effects because of wealth they've stockpiled through the company's growth, while the workforce is out of a job entirely.

Trying to paint investors as benevolent guiders of industry who risk it all to help create jobs is just laughable, every move they make is hedged, and the interests of society and the people at the bottom is the absolute last thing on their mind. Every single person knows this to be true but some people cling to a mythology that if we make sacrifices (tax cuts) to the gods (wealthy) they'll reward us with a bountiful harvest (jobs). We've been sticking with tax rates close to Reagan's for 30 years now, and the income gap has only grown (and is growing at an increasing steepness). Face it, they're spending the saved money on assembly lines and sweatshops in East Asia, not jobs or public works, and the only thing that trickles down to the middle and lower classes is piss.



Maybe Adam Smith can say it better in The Wealth of Nations

Quote :

""The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion." "

[Edited on November 30, 2010 at 4:56 PM. Reason : added smith quote]

11/30/2010 4:51:19 PM

progressive property taxes would be a far more fair and enforcable tax system than income.

[Edited on November 30, 2010 at 5:09 PM. Reason : .]

11/30/2010 5:09:05 PM

What about taxing illegal sources of incomes, black markets, drug trades, etc? FairTax or a Federal Sales Tax that replaces the traditional income tax would capture this income at the time the money was spent.

What about international tourism dollars? How many billions would that add to the tax base under the same schema?

Is progressiveness or regressiveness defined by the AMOUNT of taxes you pay or the rate at which you pay taxes. If you decide that point the discussion is moot.

[Edited on November 30, 2010 at 6:04 PM. Reason : .]

11/30/2010 6:03:22 PM

Quote :

"Increases supply of what and demand for what?"

Money.

Quote :

"Increasing monetary velocity leads to inflation if not countered, just as increasing monetary supply leads to inflation if not countered."

Growth in money velocity (ceteris paribus) denotes a growth of confidence in an economy. This indicates real growth, which battles inflation.

Quote :

"I'm sorry, but there really is no justification for charging higher tax rates to the rich than the poor, outside of the reasoning of, "we can get more money from them.""

Wrong, extremely wrong. Not only, as Str8Foolish has pointed out, is money accumulation progressive, but there are far more important reasons. The most important is that progressive income tax is an automatic stabilizer, one of the few free lunches (or at least very cheap ones) in establishing economic stability. In addition to that progressive income taxes stimulate the economy. The other more humanitarian arguments like the OP and others based on income inequality fall far behind these economic ones, and then finally your argument that it is the only way of maximizing tax revenue while keeping tax burden reasonable falls way farther back along with the other "painfully obvious" ones.

Quote :

"progressive property taxes would be a far more fair and enforcable tax system than income."

Property ownership is not as progressive as income, as MPC would indicate. It would put an additional burden on the middle class as someone who makes twice has less than twice as much property.

Quote :

"FairTax or a Federal Sales Tax that replaces the traditional income tax would capture this income at the time the money was spent."

Certainly not from black markets, which could easily avoid charging the tax. The problem with fairtax is in how it differs from a VAT, namely that it puts ALL of it's weight on being able to clearly define an "intermediate good". This definition can easily be moved one way or another to avoid taxation, it's not done now because of the costs associated with incorporation and the nearly non-existent tax incentive for doing so. But fair tax would add an enormous incentive and add no cost for doing so.

Quote :

"Is progressiveness or regressiveness defined by the AMOUNT of taxes you pay or the rate at which you pay taxes."

By the DEFNITION of progressive taxation, it's the rate. That's not really up for debate, you can not like the word, or not use it, but you can't completely change the meaning.

[Edited on November 30, 2010 at 6:35 PM. Reason : ]

11/30/2010 6:32:47 PM

Quote :

"The rest of it might go into capital investments or other means of making more money. "

And this has already been discussed. the money WILL be spent at some point. and when it is, it's taxed.

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"When you put a flat tax simply on income,"

I don't recall anyone here saying to put a flat-tax on income.

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"In addition to that progressive income taxes stimulate the economy."

*cough*evidence?*cough*

11/30/2010 6:42:32 PM

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"Property ownership is not as progressive as income, as MPC would indicate. It would put an additional burden on the middle class as someone who makes twice has less than twice as much property. "

current property taxes are not rated on a progressive scale. the middle class tax rate would be much lower thant the upper class tax rate. ex: tax a $100,000 home at 5% and a $1,000,000 home at 10%. Or whatever the proper scale would be.

income taxes are a retarded way to collect taxes because the poor dont pay them and the rich can afford to hide them. income taxes result in the middle class paying the most as a percentage of total wealth.

11/30/2010 6:46:04 PM

the only thing prgoressive income taxes stimulate is the creative finance economy

11/30/2010 6:50:17 PM

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"Certainly not from black markets, which could easily avoid charging the tax"

I believe you misunderstood where I was making the point.

The fact that there is a black market implies that someone is selling something without charging or paying tax on that item. But once someone sold some drugs (to support their living) and then went to the car dealership and purchased a new Hummer, they would then pay tax on what they bought.

11/30/2010 7:09:27 PM

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"The more money you're making, the more dependent your wealth is on the populace as a whole maintaining the institutions"

Not true. The more money you make, the less you need well maintained institutions, as you can now buy justice, buy security, and buy liberty.

To put it in concrete terms, good police protection does nothing for those already living in gated communities.

Quote :

"Growth in money velocity (ceteris paribus) denotes a growth of confidence in an economy. This indicates real growth, which battles inflation."

History disagrees. Growth in money velocity far more likely implies a loss of confidence in the currency. While Zimbabwe is certainly running the printing press, much of the inflation comes from the people refusing to hold the local currency any longer than they absolutely have to (rushing with their paycheck to spend it before it loses even more of its value).

11/30/2010 9:40:59 PM

Quote :

"When you put a flat tax simply on income, you are ignoring that very real compounding nature of large sums of money. When you adopt a flat tax system, you are letting people get away with scoring extra income through capital gains, property ownership, and accumulating possessions."

So, what you're telling me is that a progressive tax code is setup to play Robin Hood? Right? Afterall, those demons... rich people, are making all that MONEY!

It seems to me like you're concerned with how rich the rich are. You think that taxing the rich is going to make the poor less poor somehow? So what if they're making bank off of the money they earned? That's not a bad thing. It's not like anyone else is being fucked over in the process.

Quote :

"If you're proposing a flat tax for income, AND capital gains, property, and inheritance, we might be able to talk. But if your idea of a fair, flat tax doesn't take into account the fact that 6% of 10,000 is school clothes, whereas 6% of 100,000,000 is just one of many stock investments, there's nothing to discuss. Support for a flat tax can only be held if you don't understand how wealth accumulation works. Wealth accumulation itself is progressive, and the tax system needs to match it or else you're giving a break to the people who need it least. We've all heard the phrase "make your money work for you", so is it really fair to the people who work for every cent to pay the same tax rate as someone whose money is working for them? "

I'm talking about a flat tax on income. I'm not talking about abolishing capital gains, property or inheritance tax.

My idea of fair is to treat people the same. Taxing people at different income brackets isn't treating anyone fair. Again, why should the rich be taxed more than a poor person? You went from the rich should be taxed more because they use the public utilities that everyone pays into more than the poor to make their money, but even at equal income tax rates, the rich will still pay more than the poor. Now you're making the argument that the rich should be taxed a higher rate because the poor sacrifice more necessities/luxuries than the rich, therefore, we need to adjust the tax rates at certain income levels so that they are also making similar sacrifices as the poor people, which seems to be the wrong way to approach poverty to me. Instead of trying to make the poor people's lives better, you're just trying to make the rich people's lives worse. And this money that is being taken from the rich, does that just go into the government's coffers, or are you suggesting that it be redistributed amongst the poor? If that's the case, lets just call a spade a spade and say that you're advocating a Robin Hood tax system, take from the rich, give to the poor.

And absolutely wealth is progressive. What's wrong with that? Why shouldn't it be? Unless you just think that it's "unfair."

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"And as far as the value of investments go, there's no guarantee that the benefits will trickle down. Someone may invest in a company so the board of directors can buy machines to replace half of their workforce and increase productivity, and put the saved money and increased returns into CEO coffers."

This is a pretty shit example, as you're ignoring the fact that people have to maintain the machines, and someone has to design build the machines, and someone has to install the machines. Maybe it doesn't trickle down the same company, but to say that investment doesn't trickle down is just narrow sighted.

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"The "value" that you claim investors make to society is a highly, highly idealized one and is not nearly as guaranteed as the value reaped by the investors and board of directors."

All you're doing is just demonizing investors. Just because I'm capable of looking at a larger picture to see the net benefits of an investor giving their money to a company to use, doesn't mean my view is "idealized." What about the hiring of technicians who will make more money than the unskilled laborers? What about the company who designs and builds the machines and are paid by the investor's money? What about the engineering support staff that is needed to install the machinery? What about the people who manufacture replacement parts for the machinery? Stop being so short sighted and try looking at a bigger picture. Meanwhile, the people laid off from the transition will get unemployment, and there are opportunities out there for them to educate themselves and to get a better paying job, or they can change fields.

But it is quite funny that in order for you to demonize the investors and CEOs, you have to resort to demonizing automation.

Quote :

"Further, when that company goes under, the board and the investors are likely all insulated from those effects because of wealth they've stockpiled through the company's growth, while the workforce is out of a job entirely."

"likely." Arguments based off of speculation. They have a nasty habit of discrediting themselves.

Unfortunately, it's not uncommon for investors and the board to have their personal finances wrapped up in their own company. Not to mention the wealth that they had accumulated will likely run dry. But I love how you read Forbes list of top 20 richest CEOs, see what they're making, and come to the generalizations that ALL CEOs are filthy rich.

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"Every single person knows this to be true but some people cling to a mythology that if we make sacrifices (tax cuts) to the gods (wealthy) they'll reward us with a bountiful harvest (jobs)."

So, what do you hope to accomplish by fucking the rich some more with the long dick of the law? Because obviously, the more we jam it up their ass, the better it gets for the rest of us. How is taking their money, limiting how much they can invest (by taking more of their income), help the poor again? Last time I checked, jobs are still being sent to Asia and automation is still taking place.

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"We've been sticking with tax rates close to Reagan's for 30 years now, and the income gap has only grown (and is growing at an increasing steepness)."

Which, correct me if I'm wrong, we've had a progressive tax system for over 100 years, and the income gap has always been growing.

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"Face it, they're spending the saved money on assembly lines and sweatshops in East Asia, not jobs or public works, and the only thing that trickles down to the middle and lower classes is piss."

Sounds to me like the problem is with the US if the rich are sending their money overseas. And I already thrashed your assembly line argument (LOL though for trying to demonize assembly lines).

But, honestly, you're making your argument from an emotional stand point, while trying to add some rationality to it, but trying to add rationality to an emotional argument is like trying to mix oil and water. Fact is, a progressive tax system hasn't really done shit for the poor, middle class or wealthy. It's just added government waste through a complex tax code. Many Eastern European countries who have gone to a flat tax system for their income tax have seen an increase in government revenues and economic growth

11/30/2010 9:42:02 PM

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"*cough*evidence?*cough*"

It's a fairly well known argument. As income goes up MPC goes down, thus if you want more spending, you tax those who spend proportionally less of their income.

Quote :

"current property taxes are not rated on a progressive scale. the middle class tax rate would be much lower thant the upper class tax rate. ex: tax a $100,000 home at 5% and a $1,000,000 home at 10%. Or whatever the proper scale would be."

I guess you're right, it's possible a system like that could be implemented, and I definately see the benefits

Quote :

"I believe you misunderstood where I was making the point."

I understood it, but the point I was trying to make is that the black market dealer is more likely to go to the chop shop to pick up that hummer.

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"The more money you make, the less you need well maintained institutions, as you can now buy justice, buy security, and buy liberty."

But you can't buy a thriving economic system that is dependent on those things being provided for everyone.

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"History disagrees."

Picking zimbabwe as an example completely disregards the context of our discussion. In a reasonably stable economy, people hold on to money when there is economic uncertainty. You know it's true, just look at money markets during the last recession.

Quote :

"But, honestly, you're making your argument from an emotional stand point, while trying to add some rationality to it, but trying to add rationality to an emotional argument is like trying to mix oil and water."

Use my argument, it's what he's trying to say without the emotional aspects.

11/30/2010 10:00:48 PM

Quote :

"It's a fairly well known argument. As income goes up MPC goes down, thus if you want more spending, you tax those who spend proportionally less of their income."

I don't understand how taxing the rich stimulates spending? And it seems MPC seems to be the bucket you throw every argument into regarding the rich and their wealth without really applying it in any meaningful way to the discussion.

11/30/2010 10:08:13 PM

MPC is marginal propensity to consume. Each additional dollar you make, you spend less of. The idea works out something like this, you need to collect $10 in taxes. If you take that $10 from a poor man, you prevent him from putting $9 of it into circulation in the economy. If you take that $10 from a rich man, you only prevent him from putting $1 of it into circulation in the economy. That's the idea, but that's only one smaller part of it, and it's really only valuable during a recession, the automatic stabilizer is the much more effective and beneficial part of it. That works like so: as the economy is doing poorly and incomes drop, tax rate drops, as the economy is doing better and incomes rise, tax rate rises. This assists in stabilizing the economy to some degree and helps to soften recessions and such.

11/30/2010 10:20:22 PM

I know what MPC is. Maybe I should go back and read more of the thread but you seemed to imply a generic taxing of the rich would stimulate the economy...did you mean to say "taxing the rich during good times such that you can spend that money during recessions will stimulate the economy"?

11/30/2010 10:26:27 PM