Who REALLY pays income taxes?
- Thread starter HarrySchell
- Start date
Again, not necessarily. Not all forms of investment are productive. Some of the wealthy are just lucky, some of them merely inherited their money. But being rich does not inherently mean one has worked harder, just like being poor does not inherently mean one is lazy.
The progressive income tax does not "create" poverty. I agree that it doesn't necessarily help to end it but sure as hell doesn't create it or inherently make it worse. It could certainly be tweaked to help end it.
Yes, but the table uses AGI (before deductions and exemptions) and NOT taxable income.
If you have significant income you may have a decent pile of itemized deductions, further skewing tables like this.
This is why there are so many 'rates; hidden in the tax code.
Be in the wrong income area and you get your itemized deductions curtailed, but earn a little more and it goes away.
Or we can look at final tax rates on the last dollar earned, after all adjustments, deductions, and exemptions are taken. Table X,Y,Z when you are past the tax tables.
The gaming is on what number to base the tax on.
BoringAccountant
New member
How would you define wealthy? Is it greater than $100k, $1 mill, what? And what is that number based on income, wages, net worth, ?
To say that the wealthy pay a less percentage of tax than those in the middle class, I would need to be on the same page as you as to who qualify as the wealthy in your case.
And I am glad you are at least comparing the wealthy to the middle class and not the low income poor class, they pay no income tax as it stands anyway.
It was the most defining moment in human history. The most important thing our species has done in its entire two hundred thousand year history.
But aside from that, I've already pointed out that the computer you're posting on exists because of the space program as does the medical technology that will keep you alive decades longer than the previous generation. Firefighters have the space program to thank for the material that keeps them safe. The entire airline industry would be in utter chaos without the advances in radar tracking and control derived from the space program.
Essentially the space program created the modern age. Without it we could be living in a world without instant global communication. Without it there wouldn't be the myriad of ways to save lives and extend the human lifespan that we enjoy today. Without that government spending the world would be a much less advanced place.
So yeah, we've gotten a benefit from it. A far greater one than the money that was put into it in the first place and far greater than the initial reason; to beat the "commies".
All of the productive ones are. Those would be the ones that create wealth and income on which the progressive income tax is paid.
Money inherited from people productive enough to produce value and wealth.
Granted, but irrelevant.
Indeed. I was very poor as a student, but not especially lazy. I was also economically unproductive, hence the poverty.
Of course it does. Discouraging productivity reduces economic resources. If poverty is a lack of resources, then the taxation of productivity increases the amount of poverty in any system.
This is easily seen in economic comparisons of the old west and east Germany. One system vigorously discouraged productivity and accumulation of wealth, while the other didn't.
Which was poorer?
Every dollar taken from a productive investor is diverted from likely productive use in society, and diverted to government or redistribution. If the government were genuinely good at creative, remunerative investment, it wouldn't need to tax us.
Well....hard to pin down really. The whole concepts of upper class and middle class are fuzzy and tend to change with time and region. I'd say once you're in the seven or eight figure income range or into the nine or ten figure asset range you could be considered wealthy.
I wouldn't consider six figure incomes wealthy but certainly far from struggling (and if someone is struggling on six figures then that's just bad financial planning). Upper-middle class? Assets into the low millions could be considered wealthy but then there are cases where people have businesses worth that much but those businesses cost them that much or more to run.
And I'm not saying that all the wealthy take advantage of these legal loopholes or that they all pay less than the middle class, merely that they don't all pay that 35% of the bracket they belong to. As for how many - well, who knows? But even at 35% I don't consider them overtaxed. They get a greater benefit from the government's biggest expense so there's nothing wrong with making them pay for that greater share of the benefit.
As for the lower class, it depends on the income. Some are low enough not to pay any tax but I know when I was 18 and making under twenty grand a year I still paid income tax. It wasn't much but I still paid it plus all the other taxes associated with living in the US. Having to do so while feeding a family would have been a nightmare. I'm not too concerned with people making below that 20 or even 25 grand point not paying taxes. I don't necessarily think they should be getting benefits (and you don't often get "welfare" when you're making that much anyways) but I also don't believe in punishing the kids of poor people because their parents can't bring enough money home to feed them.
I know that people on this board have a phobia of the phrase "for the children" but I don't give a frak. Children are worth that sacrifice.
Well yes,
Productive forms of investment are productive. Very astute.But there are investments that make money which wouldn't necessarily be called "productive" if the only benefit goes right back into their pockets.
For something to be productive it has to have some benefit to the whole, not just to one individual.
Maybe we're not on the same page on what it means to be productive; if so, I apologize for misunderstanding and ask for clarification.
And again, not necessarily. A lot of old money in the south came from slavery. A lot of old money in the north came from crime. A lot of old money in the west came from thievery and stealing land from natives.
There are plenty of families that rose up from nothing but I think we'd be hard pressed to prove which ones fall into which category and which category is more prevalent. However the point remains that people who inherited money did not work for that money nor did they do anything productive for it. That's not to say they shouldn't get it - I certainly don't have a problem with people passing along their money to whoever they choose - but it's another factor to dispel the myth that rich people are harder workers or provide a greater benefit to society.
I think it's very relevant on a forum where people constantly yell about how the hard working rich are being stolen from to give to the lazy poor.
Well here's an idea, why not help more people become students and get the higher education that will allow them to be more productive?
It doesn't "discourage productivity". If we were taxing people 75% for being wealthy then I'd agree that it does such a thing but it's nowhere near that point. A progressive system doesn't have to discourage productivity, especially if it's a system in which the productive have ways of getting around paying what everyone thinks they're paying.
Well I agree on the second part but the first still doesn't mean that a progressive tax system creates poverty. The government doesn't do everything wrong regardless of what the distrustful naysayers believe. It can do things right and in some cases does when we put the right people in charge of it. Government is made up of people just like you and I.
Now while that dollar may have been taken from a productive investor it could be going toward feeding and educating other future productive investors that will eventually produce three dollars each for every dollar they got from the government.
Redworm
For lack of a better word, reasoning like that is downright "scary". If someone makes an investment which benefits themselves, and only themselves, whose business is it? Their goal certainly needn't be to benefit "the whole".
But that doesn't stop you from wanting to tax the crap out of that "old money" in order to "benefit the whole", does it?
For lack of a better word, reasoning like that is downright "scary". If someone makes an investment which benefits themselves, and only themselves, whose business is it? Their goal certainly needn't be to benefit "the whole".
But that doesn't stop you from wanting to tax the crap out of that "old money" in order to "benefit the whole", does it?
Sarcasm aside, it addresses your observation that investment is not productive. I assumed you meant to address something relevant to the topic.
That doesn't make sense. What specific form of investment makes money, but is unproductive.
This is a dubious proposition. Whether an act creates wealth is not logically dependent on how the resulting wealth is distributed. That standard is, on its face, irrational.
I suggest that an activity is productive if it creates wealth and makes money, our best metric for wealth. Do you have a better definition?
Slavery was unjust, but productive, though not optimally. I dispute your conclusion that "a lot of old money in the north came from crime." If you mean from the era of prohibition, the example shows that providing a service illegally still has value, and is a form of productivity. Settling the west for greater productivity had obvious value.
Yet, impugning the source of capital does not mean that the current investment of the capital provides income unjustly or unproductively. The descendants of slave holders can invest money current, and that investment can create wealth.
I thought we agreed that how hard a person works is not relevant to his productivity.
You write that you do not object to inherited wealth, but your reflex appears to treat it as an improtant difference.
Whether you worked very hard to accumulate your wealth, or it was inherited, it is just as much yours, and your right to it is every bit as indisputable, correct?
We do that.
If results of one man's efforts are taxed at 35% and the resluts of another man's efforts are not taxed at all, which has the greater incentive to produce?
A system that decreases the incentives for its most productive members discourages productivity. Stated differently, things you tax, you get less of. Things you subsidise ,you get more of.
I will suggest that a system that teaches people they can't keep the results of their investments will create relatively few investors.
That was referring to what should be considered "productive", not a limitation on what people should be allowed to do.
Of course not, because money doesn't simply disappear. Now I'm not saying that people who have money because of the sins of their ancestors need be punished for it. They shouldn't be taxed any more than anyone else with that same amount of money regardless of the source.
The point, ONCE AGAIN, is that not all of those wealthy people are hard workers nor earned their money. Some of them got rich by sheer luck, some of them got rich by ripping other people off, some of them got rich by being born into the right family and sometimes those families didn't earn their wealth either.
The only reason for pointing this out is because the repetition on this forum of the myth that the rich are all hard workers that earned their money and the poor are all lazy that just sit around watching Springer all day between popping out babies.
I didn't say investment is not productive, I said not all forms of investment are productive.
Ok I see what you're saying.
I understand. Again, I'm simply pointing out that not all of the rich are hard workers or earned their lot in life. The only reason to point this out is because of the constant mantra from the right that the poor are lazy and the rich all work hard. It's a crock of bull.
Yes, but I think being productive shouldn't be the only goal. If creating wealth is all we're about then I will be terribly disappointed in our species. Creating wealth for use to better society is wonderful but creating wealth for the sake of creating wealth is meaningless. If one does not benefit society then what does it matter how productive he is?
Either way, taxation isn't dependent on any of this. It's dependent on how much money a person has or makes.
I know, not nearly efficiently enough though.
The one man being taxed at 35% is still encouraged to be productive because when he's taxed that much it means he still enjoys a hell of a lot more luxuries than he would in a lower tax bracket. If having to buy an $80k Mercedes instead of a $120k Mercedes in some way discourages him from producing any more than I will laugh. Taxation doesn't necessarily stop people from trying to get rich.
If it's ridiculously high then it will but 35% is not ridiculously high in my opinion. And again, the man being taxed 35% is getting a greater share of the benefit from the government's existence than the man not being taxed at all or even the man receiving welfare.
The man who gets taxed nothing still has incentive to produce but he has a much harder time getting to a position in which that is possible.
It can be easy to trivialise the purchases of others. Remember that someone makes high end cars and boats, and that a surcharge on yachts virtually destroyed an industry that employed thousands. That kind of class antagonsim has no principled end.
I think your reaction fails to accept a very basic economic principle.
Do you dispute that taxing something increases its cost and results in less of it?
Frank Ettin
Administrator
obxned,
By your analysis, no one pays any taxes.
I get money from my employer and pass some of it on to the IRS.
My employer got money from its customers, and passed some of it on to the IRS.
Those customers got money from their employers and passed some of it on the IRS.
As it was in the beginning, is now, and ever shall be : world without end.....
Edit: Oops, I wasn't fast enough. I see sasquatch beat me to this.
By your analysis, no one pays any taxes.
I get money from my employer and pass some of it on to the IRS.
My employer got money from its customers, and passed some of it on to the IRS.
Those customers got money from their employers and passed some of it on the IRS.
As it was in the beginning, is now, and ever shall be : world without end.....
Edit: Oops, I wasn't fast enough. I see sasquatch beat me to this.
It's not class antagonism. I'm not suggesting higher taxation on those industries or on yachts or fancy cars, merely that having to buy slightly cheaper toys does not discourage anyone from being productive. If anything it encourages them to be even more productive so they can have the fancier toy and keep up with the Joneses.
But yes, it's a lot easier to trivialize someone's purchase of a luxury car over someone's purchase of basic food and shelter for their family.
It depends on the item. We have a sizable tax on cigarettes but it's not like they're going away any time soon. But we're not talking about taxing goods, we're talking about taxing income. And taxing someone 35% does not make a single person go "well screw that, I'll just stick with being in the middle class".
I know of no economic theory that holds as you assert that high marginal tax rates are an incentive to productivity.
I think you are terribly mistaken. It does not matter whether the taxation is on a good or a service. Taxation discourages the activity or transacting either purchase. The following are instructive.
http://www.heritage.org/Research/Taxes/bg1765.cfm
http://www.youtube.com/watch?v=fIqyCpCPrvU
http://www.youtube.com/watch?v=YsB_rnzBA08&NR=1