I'm honestly trying to understand the theories behind the various tax cuts/credits/plans etc... And I've heard the argument from both sides of the 'rich'....and I just don't understand why it makes any sort of impact negatively, on those in lower brackets...and in fact, only impacts those people positively. I just don't get it....

Person A: earns $500,000 -pays $154,064
Person B: earns $250,000 -pays $68,568
Person C: earns $70,000 -pays $13,924
Person D: earns $20,000 -pays $2,609
Person E: earns $0 -pays $0

This means that of the $239,165 that is collected from these 5 people... a total of $1,500 (according to the Obama tax calculator) would be given to people C, D & E and nothing to A & B.


In a simple example: Now let's says that Person A likes the finer things in life...so they take a potential client out to dinner but since they pay such a large percentage to taxes and are going to be shelling out over $150,000 in taxes this year, they decide to take their client out to Applebee's where their bill is say, $100 rather than Chez Luiz where the bill is $500. This means that the waiter who is in, let's say the $20,000 bracket get's a $15 tip rather than say a $100 tip. Six customers over the span of a year and that waiter has already received more money than their entire tax credit.

If Person A ends up paying more, then the money doesn't go into the pocket of Person E...so there is nothing that Person E gains from that. If Person A ends up paying less, then the money will likely go into the pocket of Person E, so there is everything to gain for that person.

Other than NEGATIVE repercussions, what possible POSITIVE repercussion comes TO Person E, FROM Person A paying more?

10/22/2008 7:50:01 PM

More crappy service sector/retail jobs at places that sell luxury goods and offer services to high-end clientele (like high-end car wash joints and such).

If the rich weren't willing to blow so much chowder on silly things, those people wouldn't have those shit-ass jobs!

10/22/2008 7:54:04 PM

IF I WANT A DIAMOND ENCRUSTED HOAGIE THAT'S MY BUSINESS MISTER

10/22/2008 7:55:21 PM

Quote :

"This means that the waiter who is in, let's say the $20,000 bracket get's a $15 tip rather than say a $100 tip. Six customers over the span of a year and that waiter has already received more money than their entire tax credit."

he works at applebee's and chez luiz?



what about all those ppl in c,d, and e who can now go out to applebees instead of eating ramen, thus giving said water more ppl to wait on?

[Edited on October 22, 2008 at 8:15 PM. Reason : eh]

10/22/2008 8:15:02 PM

So is it better then, to give $500 to those people who can eat a nicer meal at Applebee's rather than ramen a few times a year then to give them a job when Person A expands their business?

10/22/2008 8:22:05 PM

Dear god, that is an awful lot of words in that op for what amounts to a strawman. What individual making 500k a year attempting to court a new client is going to take them to Applebees in lieu of a finer restaurant? Your entire scenario is so ridiculous I could barely read much more than that.

[Edited on October 22, 2008 at 8:56 PM. Reason : *your]

10/22/2008 8:56:22 PM

Well as cut and dry of an example as I could think of. The idea behind it is what I'm asking.

10/22/2008 8:58:12 PM

Quote :

"If Person A ends up paying more, then the money doesn't go into the pocket of Person E...so there is nothing that Person E gains from that. If Person A ends up paying less, then the money will likely go into the pocket of Person E, so there is everything to gain for that person."

This was your conclusion based on your entirely manufactured non economics knowledge having scenario.

What likely will happen is person A will continue to hoard their wealth and grow it by investing it until it gets wiped out by another asset bubble burst. At some point person A will give it to his kids so they can repeat the cycle.

10/22/2008 9:02:31 PM

If I'm not mistaken, it was the government's investment strategies that fucked everyone up so bad. It's better for everyone if investments do well and the government is the worst investor of them all.

10/22/2008 9:15:17 PM

schwahhtt?!

The governments investment strategies? Do you mean economic policies maybe? I admire what you are trying to do here, but you're in over your head.

10/22/2008 9:22:25 PM

Welll.......considering that the return on the ubersafe 3 month T-bill is better than the return on ss, I'm thinking that even the safest of investors can invest better than the government.....

10/22/2008 9:26:15 PM

or, the rich guy doesn't want to go to Applebees so he still goes to Chez Luis, but the poor guy doesn't have the money to go out at all, so the waiter at Chez Luis gets the big tip, but there aren't any customers at Applebees so the restaurant goes out of business.

10/22/2008 9:28:25 PM

No the rich getting richer isn't better for everyone.

That's one of the failed elements of the Reagan trickle-down theory.

But, over taxation of bracketed income isn't any better either. It places a major disincentive for climbing the financial ladder and only INCREASES the measures that the wealthy will go to in order to shelter, redirect and avoid reporting income and paying the taxes owed.

The only real solution is to move from an income tax toward a consumption tax, but good luck ever getting that to happen.

10/22/2008 9:37:22 PM

No free lunch

10/22/2008 9:48:21 PM

Quote :

"so they take a potential client out to dinner but since they pay such a large percentage to taxes and are going to be shelling out over $150,000 in taxes this year, they decide to take their client out to Applebee's where their bill is say, $100 rather than Chez Luiz where the bill is $500."

you're not really looking at it the right way.
More likely, the guy making $500k a year will look at his paycheck and say "I have a takehome salary of $350,000. .... I think I will take my client out to a nice dinner. no need to skim at applebees".


overall, though, you're making a terribly elementary argument for supply-side economics and making a lot of unfounded assumptions.

oh, and btw:

Quote :

"No the rich getting richer isn't better for everyone. That's one of the failed elements of the Reagan trickle-down theory. "

10/22/2008 9:56:35 PM

Quote :

"So is it better then, to give $500 to those people who can eat a nicer meal at Applebee's rather than ramen a few times a year then to give them a job when Person A expands their business?"

look, if you give me a dumb scenario, im going to come back with a completely sensible but equally stupid counter-scenario.

in this case im going to say there are significantly more people in C,D,and E than there is in A. so maybe giving A all the money creates 1 job while giving C,D,and E the breaks makes them all go to applebees more often thus making far more than 1 job.

you see how this works yet?

10/22/2008 10:00:54 PM

... "And with those tax breaks, the rich people will have enough money to hire the poor to shine their shoes ... Isn't that better for everyone?"

[Edited on October 22, 2008 at 10:08 PM. Reason : *~<]Bo]

10/22/2008 10:07:59 PM

Quote :

"This means that of the $239,165 that is collected from these 5 people... a total of $1,500 (according to the Obama tax calculator) would be given to people C, D & E and nothing to A & B. In a simple example: Now let's says that Person A likes the finer things in life...so they take a potential client out to dinner but since they pay such a large percentage to taxes and are going to be shelling out over $150,000 in taxes this year, they decide to take their client out to Applebee's where their bill is say, $100 rather than Chez Luiz where the bill is $500. This means that the waiter who is in, let's say the $20,000 bracket get's a $15 tip rather than say a $100 tip. Six customers over the span of a year and that waiter has already received more money than their entire tax credit. "

BOO HOO you make more and have to pay more taxes. Get over it.

The only truly fair Income tax is a flat tax. You are analyzing taxes as an absolute when it needs to be analyzed as a proportion to income. If I buy a car I pay 3% car tax regardless of rather or not I buy a Kia or a Porsche.

What you have to realize is as a high income bracket earner a lot of the money you are paying is almost "insurance" on maintaining social stability and the status quo. You need the roads to move your goods and transport yourself to work. Essentially you have more 'at stake' in the event of a hostile invasion so you pay a greater amount of dollars in taxes that go into defense spending. Civil unrest (see French/Russian Revolution) is bad for your estate. So you toss out a few bread crumbs to keep the plebes in complacence. The problem with I have with liberal economic policies is that they advocate steepening progressive income taxation while increasing social services. I think it should be either or.

If people did not live on income redistribution government assistance than a slightly progressive income tax would be reasonable. Essentially ensuring access to food and housing for those hard working americans that may lack intelligence or means to excel. With an increase in social services I think the income tax should become flatter. Which is one of the things Bush has done that I commend him for as president. The increase in social services at this point have become almost "insurance" on financial hardships that people have no been responsible enough to save or prepare for. Than why should those were more responsible have to pay proportionally more for the mistakes of others; when in reality those in the lower echelons should be paying more into the system that acts as financial insurance.

I have no sympathy for the aristocrat who has cancel his yacht club membership b.c taxes go up. These taxes than paying for the infrastructure or other services that allow him to make money. On the flip side i have no sympathy and highly resent the welfare queens of society who make no attempt at being productive and live welfare check to welfare check.

The responsibility of our politicians is to find a happy medium in between.

[Edited on October 22, 2008 at 10:14 PM. Reason : l]

10/22/2008 10:11:39 PM

Quote :

"In a simple example: Now let's says that Person A likes the finer things in life...so they take a potential client out to dinner but since they pay such a large percentage to taxes and are going to be shelling out over $150,000 in taxes this year, they decide to take their client out to Applebee's where their bill is say, $100 rather than Chez Luiz where the bill is $500. This means that the waiter who is in, let's say the $20,000 bracket get's a $15 tip rather than say a $100 tip. Six customers over the span of a year and that waiter has already received more money than their entire tax credit."

hmmm... I've got hundreds of thousands of dollars per year in disposable income, but I can't afford to eat any place other than applebee's. yea, great example. I guess the solution is to make it so poor people can't afford to eat at all.

10/22/2008 10:13:16 PM

The rich get richer because they buy assets. The poor get poorer because they buy liabilities, a tax cut for the poor or middle class means they will have more money to buy more liabilities.

You can tax the smart class all you want but they will always be rich because they choose to be.

The poor choose to be poor

10/22/2008 10:18:00 PM

Quote :

"The rich get richer because they buy assets. The poor get poorer because they buy liabilities, a tax cut for the poor or middle class means they will have more money to buy more liabilities."

I think you are over-looking the professional/'upper middle' class who end up getting screwed over the most by society.

10/22/2008 10:26:42 PM

I am not overlooking them and I agree they get screwed. Im just tired of the rich getting a bad rap.
The poor need to change the way they think and so do the middle class. All the tax cuts in the world wont help them, neither will a new president.


[Edited on October 22, 2008 at 10:40 PM. Reason : 1]

10/22/2008 10:39:33 PM

i spent a good part of the summer on here arguing this same shit with grumpy

Quote :

"so they take a potential client out to dinner but since they pay such a large percentage to taxes and are going to be shelling out over $150,000 in taxes this year, they decide to take their client out to Applebee's where their bill is say, $100 rather than Chez Luiz where the bill is $500."

if you pay attention to the magnitude of the prices and how much money they have the scale doesn't change that much to where they would have to go to applebees. In other words, they can still afford chez luiz.

Quote :

"his means that the waiter who is in, let's say the $20,000 bracket get's a $15 tip rather than say a $100 tip. Six customers over the span of a year and that waiter has already received more money than their entire tax credit."

You're forgetting that the waiter at applebees makes a lot less than the waiter at chez.

Quote :

"what possible POSITIVE repercussion comes TO Person E, FROM Person A paying more?"

healthcare
social security
education
energy/science
roads/infrastructure
decreasing the deficit
I could go on and on

but I am sure that is more important than Person A having diamond studded ceilings in their bedroom.

Quote :

"The rich get richer because they buy assets. The poor get poorer because they buy liabilities, a tax cut for the poor or middle class means they will have more money to buy more liabilities. You can tax the smart class all you want but they will always be rich because they choose to be. The poor choose to be poor"

After the poor pay for their necessities they spend what little they have left on liabilities to keep them happy/make life not quite as hard.

If you think rich don't buy liabilities you are crazy. They buy their necessities, then buy loads of liabilities and still have plenty of money left to buy assets and increase the income to buy more liabilities and assets. Even the extreme case of a rich person that doesn't buy as many liabilities is because their life isn't as stressful as the average person who works 10 hours and has to worry about how they will make it day to day and keep their family healthy.

10/22/2008 10:46:15 PM

you are also forgetting that Obama's tax breaks are only for those who are actually working.

Person D or E or whatever who makes 0 wont get shit because his ass aint working.

10/22/2008 10:54:36 PM

^^The rich buy their liabilities with money that is generated from their assets. The money they earn from the work they do is put to work by buying more assets.


the only difference between the rich and the poor is the way they think.

[Edited on October 22, 2008 at 10:57 PM. Reason : 1]

10/22/2008 10:57:07 PM

Quote :

"The rich get richer because they buy assets. The poor get poorer because they buy liabilities, a tax cut for the poor or middle class means they will have more money to buy more liabilities. You can tax the smart class all you want but they will always be rich because they choose to be. The poor choose to be poor"

umm.. yea, okay richdad/poordad

I guess you're rich? or stupid? or you enjoy not being rich? which one?

10/22/2008 11:02:38 PM

that post makes no sense to me, what do you not understand about what I said. It cannot be argued

10/22/2008 11:05:32 PM

Do you know what an oversimplification is? Yea, of course you do. Some rich people are rich through inheritance. Some rich people are rich because they make a shitton of money through their profession (disregarding assets completely) and a lot of poor people are poor through no fault of their own.

I'm sorry you cannot understand my post. Maybe it's because you're dumb/not rich. Or maybe you're bill o'reilly and those aren't words on the monitor.

10/22/2008 11:09:47 PM

Quote :

"umm.. yea, okay richdad/poordad "

that makes no sense to me

10/22/2008 11:10:49 PM

what you're spouting off reminds me of:

Quote :

"Rich Dad, Poor Dad is Robert Kiyosaki's and Sharon Lechter's first best-selling book. It advocates financial independence through investing, real estate, owning businesses, and the use of finance protection tactics."

I'm pretty fucking surprised you've never heard of it because you could probably pull your posts verbatim from one of his books.

10/22/2008 11:14:06 PM

Quote :

"I'm pretty fucking surprised you've never heard of it because you could probably pull your posts verbatim from one of his books."

I dont read those get rich quick books, but he must be smart if he sounds like me

financial independence through investing, real estate, owning businesses, and the use of finance protection tactics are the words I live by

10/22/2008 11:17:20 PM

right, so how's the rich life working out for ya?

10/22/2008 11:19:46 PM

I never said I was rich.
I just posted pure common sense, surely you don't disagree



haha, Robert Kawasaki got a board game. Even rappers haven't done that yet

[Edited on October 22, 2008 at 11:27 PM. Reason : 1]

10/22/2008 11:21:48 PM

You've said, essentially, that not being rich stems from two reasons:
a)choosing not to be rich
b)being dumb

you're not rich, so... either you're dumb or you've chosen not to be rich?

or is it:

c)you made a whole bunch of vast over simplifications that don't really have any impact on a real world debate.


^yes, I find that pretty funny. btw, I've never read his books. I think he's a hack.

10/22/2008 11:28:10 PM

Quote :

"^^The rich buy their liabilities with money that is generated from their assets. The money they earn from the work they do is put to work by buying more assets. the only difference between the rich and the poor is the way they think."

you can't buy assets if you don't have disposable income to begin with. Its not like the average family that is sruggling paying doctor bill, rugs, and other basic things like filling the ole gas tank can all of a sudden take their paychecks and buy up a bunch of real estate, sit on it for ten years and profit.

10/22/2008 11:28:42 PM

For every 3 welfare queens there is one wealthy person who made his money by cheating, stealing, or exploiting other people

10/22/2008 11:28:53 PM

^^ If they were given "disposable income" what would said family do with it?


....Thats my whole argument

Quote :

"either you're dumb or you've chosen not to be rich?"

I used to think I was dumb, but now you tell me Im writing best selling book material. Damn TheWolfweb, Im gonna go holler at Amazon



[Edited on October 22, 2008 at 11:43 PM. Reason : time to write my memoirs]

10/22/2008 11:39:17 PM

and you have no fucking clue what they'd do with it is the point. you don't know their circumstances.

10/22/2008 11:41:20 PM

why do most lottery winners return to their original financial state 10 years after winning?

10/22/2008 11:44:37 PM

Quote :

"financial independence through investing, real estate, owning businesses, and the use of finance protection tactics are the words I live by"

I remember growing up and dreaming of the day I could become a tax-evading land-lord who owns a string of dry cleaning stores.

IT'S JUST SO CLASSY!

10/22/2008 11:47:34 PM

ahh damn, not you

im out

[Edited on October 22, 2008 at 11:50 PM. Reason : after all these years I can still get yall bitches pissed off ]

10/22/2008 11:48:45 PM

you can have some (as you said, some and not all return to their original state) insight into the thought process of people that buy lottery tickets.

the same can't be said just because someone is poor.

and the two aren't the same.

[Edited on October 22, 2008 at 11:49 PM. Reason : ^haha, lulz]

10/22/2008 11:48:47 PM

one day bridget might lemme hit that


I just spent my last 1.49 on some Wild Irish Rose, you wanna cum over briget?

[Edited on October 22, 2008 at 11:55 PM. Reason : 1]

10/22/2008 11:51:57 PM

Quote :

"why do most lottery winners return to their original financial state 10 years after winning?"

People who make their money through "hard work" frequently do this as well. I'd even argue that rich people are just as irresponsible with their money as poor people.

10/23/2008 12:24:51 AM

Nah, I'm strictly Mad Dog these days.

I gotta have standards, you know?

10/23/2008 12:26:35 AM

Quote :

"In a simple example: Now let's says that Person A likes the finer things in life...so they take a potential client out to dinner but since they pay such a large percentage to taxes and are going to be shelling out over $150,000 in taxes this year, they decide to take their client out to Applebee's where their bill is say, $100 rather than Chez Luiz where the bill is $500. This means that the waiter who is in, let's say the $20,000 bracket get's a $15 tip rather than say a $100 tip. Six customers over the span of a year and that waiter has already received more money than their entire tax credit."

Person A's take home pay is more then person B, C, D and E combined. I'm pretty sure they aren't so destitute that they have to go to applebees.

This is the dumbest example tax example I've ever seen in my life.

Seriously.

10/23/2008 1:35:59 AM

It is stupid. The best argument that the rich getting richer is good for the rest of us is that the rich will now comfortably shoulder a larger share of government without increasing perverse incentives.

10/23/2008 12:58:22 PM

your logic is flawed. person A will go to the more expensive establishment because they will be able to count the dinner as a deduction on their taxes....duh.

10/23/2008 2:24:16 PM

My only conclusion is that mytwocents is either naive, stupid, or both.

10/23/2008 2:26:10 PM

Quote :

"you are also forgetting that Obama's tax breaks are only for those who are actually working. Person D or E or whatever who makes 0 wont get shit because his ass aint working."

From what I understand, this is actually incorrect. This was pointed out recently at some point in the media, so Obama changed his tax plan so non-working individuals wouldn't receive the last 2% of one of his tax credits.

It should also be noted, that, under Obama's tax proposal, people paying no or little income taxes, could receive checks for thousands of dollars.

I'm ok with tax deductions, but this welfare disguised as refundable tax credits is pure income redistribution for redistribution's sake.

The purpose of tax collection should be to fund the operation and necessary functions of the federal government. That's it. Obama will be the first president in history to use the tax system purely for income redistribution.

Scares the hell out of me.

10/23/2008 3:39:21 PM