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The Tax FAQ!

Malachi151

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http://www.faireconomy.org/econ/state/Talking_Taxes/short answers only.html#Introduction

Lots of good Q and A, such as:

Common Tax Argument:
The progressive tax is un-American. It punishes success by placing an unfair higher tax burden on wealthier people.


The short answer:
Nothing could be further from the truth than calling the progressive tax un-American. The progressive tax comes directly from one of the democratic values on which America was founded: that excessive concentration of wealth and political power is a threat to democracy. Progressive taxes didn’t come from Karl Marx. They came from people like Ben Franklin, Adam Smith, Louis Brandeis, Theodore Roosevelt, and business leader Edward Albert Filene, and they came from the Bible. Ben Franklin said, “No man ought to own more property than need for his livelihood; the rest, by right, belonged to the state.” Supreme Court Justice Louis Brandeis wrote that “We can have concentrated wealth in the ands of a few or we can have democracy. But we cannot have both.” Progressive taxes were created to live up to these American democratic values.

The progressive income tax was intentionally created in 1862 to replace the regressive excise taxes that placed an unfair burden on most Americans, and to challenge the “unbridled power” of business trusts and powerful monopolies. Moral justification for progressive taxes is contained in the Judeo-Christian ethical principle that everyone should contribute to the common good based on their ability to pay.

Contents

Common tax argument:
The rich are already taxed too much. They pay more than their fair share because a lot of low-income people don’t pay enough in taxes.


The short answer:
The facts contradict this argument.

The least wealthy 60 percent of Americans have less than 5 percent of the wealth in the U.S. but pay more than 14 percent of federal taxes. This means they’re paying nearly triple their fair share. The wealthiest 5 percent, who have 59 percent of the wealth and pay only 41 percent of the taxes, are paying 30 percent less than their fair share.

The bottom 40 percent of taxpayers, with an average net wealth of only $1,100, pay 163 percent of their net wealth in taxes while the wealthiest 1 percent, with an average wealth of $10.2 million, only pay 3.5 percent of their wealth in taxes.
If all taxpayers paid the same 10.5 percent of their wealth in taxes as median income families pay, the taxes of the lowest 40 percent would be cut 94 percent while the taxes of the wealthiest 1 percent would triple.
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What a complete crock of horse shiznit.

Do you lack any skeptical ability whatsoever unless its skepticism of western economics and government?
 
corplinx said:
What a complete crock of horse shiznit.

Do you lack any skeptical ability whatsoever unless its skepticism of western economics and government?
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Hmm.. yes obviusly you fatcs prove this to be true.

Any why exactly would you claim that its incorrect? Do you not like rational straight forwards accessments of the situation, or do you like to continue to have misconceptions that only serve to hurt yourself?
 
I don't care if it is unfair, anti-American or against Biblical teaching - if higher rates of tax damage the overall economy, I'm opposed to them. To me, everyone being poor is worse than most people being well off and some people being rich.

The wealth argument is awful. For example, say two people have the same income but one, Hedonist, chooses to live a wild lifestyle spending all their income on holidays, good food, good wine and generally pampering themselves. The other, Saver, decides they want to have some savings to fall back on should they lose their job/get ill or to enjoy later, so is far more frugal and misses out on some of the luxuries Hedonist enjoys.

For the sake of argument, both earn 100,000, pay 30,000 of tax and Saver has managed to accumulate 150,000 of wealth over the last few years. Hedonist could probably scratch together 30,000 by selling his vintage wine collection.

Therefore Hedonist is paying 100% of his wealth in taxes, while Saver is only paying 20%. Your argument is that somehow Saver is paying less than his fair share, because of the way in which Hedonist chooses to dispose of his income.
 
Jaggy Bunnet said:
I don't care if it is unfair, anti-American or against Biblical teaching - if higher rates of tax damage the overall economy, I'm opposed to them. To me, everyone being poor is worse than most people being well off and some people being rich.

The wealth argument is awful. For example, say two people have the same income but one, Hedonist, chooses to live a wild lifestyle spending all their income on holidays, good food, good wine and generally pampering themselves. The other, Saver, decides they want to have some savings to fall back on should they lose their job/get ill or to enjoy later, so is far more frugal and misses out on some of the luxuries Hedonist enjoys.

For the sake of argument, both earn 100,000, pay 30,000 of tax and Saver has managed to accumulate 150,000 of wealth over the last few years. Hedonist could probably scratch together 30,000 by selling his vintage wine collection.

Therefore Hedonist is paying 100% of his wealth in taxes, while Saver is only paying 20%. Your argument is that somehow Saver is paying less than his fair share, because of the way in which Hedonist chooses to dispose of his income.
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Umm.. what are you talking about? The bulk of US taxes are INCOME taxes. Very little taxes are paid on property. The fact that one has less than the other later on would have virtually no impact on taxes. In your example the headonist would have paid more taxes because he spent more money, and that's perfectly fine.

Your taxed primarily on income and spending.
 
I have to agree with Jaggy. If you base a tax not on income, but on wealth, as the article proposes, you are taking away the savings of retired, non-income earners. Not fair at all. It would force everyone to always be earning income, and punish those who save.

The argument should be that it is fair for the rich to pay a higher proportion of income in taxes, because the poor would suffer more if their taxes were higher, and the rich receive proportionally more governmental service (including the protection of their wealth from all the poor).
 
Do I really have to spell this out for you Malachi? Use your own skeptical powers son. Give me other reasons why the tax could be considered unamerican. You must have realized that his "faq" leads your to one reason for it being unamerican and then dismisses it poorly. I can think of better and more fundamental reasons why a progressive tax is, can you?


Seriously, you should at least be able to play both sides on any issue. It is one the most basic tools for being a political skeptic.

Look at this statement:

"The progressive tax is un-American. It punishes success by placing an unfair higher tax burden on wealthier people."

I think the very intent of this statement is to mislead. For instance, I think are "progressive taxes unfair?" is a faq. I have heard it asked at least rhetorically. However, the "unamerican" part seems to have been thrown in for effect. The people who call things unamerican are people like Joe McCarthy after all.

Since they speculated in their FAQ that the tax was unamerican, I can think of at least 3 reasons why. Can you Malachi?
 
Michael Redman said:
I have to agree with Jaggy. If you base a tax not on income, but on wealth, as the article proposes, you are taking away the savings of retired, non-income earners. Not fair at all. It would force everyone to always be earning income, and punish those who save.

The argument should be that it is fair for the rich to pay a higher proportion of income in taxes, because the poor would suffer more if their taxes were higher, and the rich receive proportionally more governmental service (including the protection of their wealth from all the poor).
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The article does not propose at all to base a tax on wealth instead of income. What are you reading?
 
Malachi151 said:


The article does not propose at all to base a tax on wealth instead of income. What are you reading?
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The article does however accidentally or mischeviously use wealth and income interchangeably.

Many of hte wealthy do not have particularly large incomes (just a lot of assets) just as some people who have large incomes aren't wealthy (some of my best friends earn well but are significanlty in debt).

The impossible thing to do is to tax well. In essence, there are three things you can tax:

- Income
- Assets
- Expenditure (including savings)

Whichsoever you chose, you can always come up with a group which will be unfairly hit by such a tax. Income tax unfainrly hits the "average Joe" who hasn't incorporated himself, asset taxes generally hit the elderly particularly hard, expenditure related taxes hit the poor (who spend the greatest proportion of their income).

Of course the answer is to spend less, but of course there's no agreement on what to cut. You can always get elected offering to reduce waste, but no-one ever manages it.

If you increse taxes on the wealthy, they'll just find ways of getting around it. IMHO the best tax regime is one in which everybody complains cos then you're getting it about right
 
corplinx said:

Since they speculated in their FAQ that the tax was unamerican, I can think of at least 3 reasons why. Can you Malachi?
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I am having to spell this out for Malachi since he is unable to reason from a different perspective on his own.

The reason that a progressive is "unamerican" (dontcha love mccarthy era references?) is not because it isn't "fair". Lot's of thing aren't "fair". "Fair" is mostly subjective. It wasn't fair that I was born the son of a railroad worker eating 39 cent frozen pot pies for dinner. That doesn't mean its wrong or unjust.

The reasons a progressive tax is unamerican:
A. it violates equal protection, fair can go suck an egg, we are concerned with blind treatment
B. in more modern common law, it violates the right of the privacy since a progressive tax puts the government in the business of monitoring your income


The thing that really bothers me is that usually your progressive tax advocates go around yelling loudest about alleged violations of equal protection and privacy, yet they turn a blind eye when it fits their agenda.
 
Michael Redman said:
Maybe you see something there I don't see.
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No, I saw that, but they never said that they promoted a tax on wealth, that was just a demonstration of the situation. In the link they later outline an "agenda" of sorts, and it says nothing about basing taxes on wealth.
 
from their document:

Magic tricks only work when you don’t know how the magicians do it. But knowing how conservatives create the illusion of broad-based tax cuts to hide the reality of unfair narrow tax giveaways helps provide a strategy for moving towards a tax system that is fairer for the vast majority of the American people.


An Agenda for Fair Taxes


End corporate welfare as we know it and make corporations pay their fair share of federal, state, and local taxes.

Increase personal exemptions so working families who are having a hard time making ends meet pay taxes on a smaller portion of their income.

Reduce the lowest tax rates, which everyone pays, rather than cutting the highest tax rates, which only a small minority of very rich people pay.

Reform payroll taxes so working people don’t pay a significantly higher percentage of their earnings than wealthier people.
Stop shifting spending from the federal government to state and local governments to pay for federal tax giveaways.

Stop cutting progressive income taxes while raising more regressive payroll and state and local taxes.

Tax capital gains and dividends at the same rate as income people earn from hard work.

Reform the estate tax so it affects only the richest of the rich, rather than eliminating it.

Make regressive state and local taxes more progressive so they are fairer for most of the people.

Don’t impose a hidden “children’s tax” that will in the future force our children to pay for unfair tax giveaways to corporations and a small minority of very rich people.
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corplinx said:
The reasons a progressive tax is unamerican:
A. it violates equal protection, fair can go suck an egg, we are concerned with blind treatment.
Click to expand...
Progressive income taxation does not violate Equal Protection. The set of rules determining tax liability is applied to everyone equally, regardless of who they are. That's blind treatment. Just because the result is different for different people does not mean that the anyone is suffering from an EP violation.
B. in more modern common law, it violates the right of the privacy since a progressive tax puts the government in the business of monitoring your income.
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Can you give any examples of this "modern common law" recognizing keeping your income secret from the government as a privacy right? I think it's pretty clear that traditionally you do not have such a right.
 
Malachi151 said:

The article does not propose at all to base a tax on wealth instead of income. What are you reading?

No, I saw that, but they never said that they promoted a tax on wealth, that was just a demonstration of the situation. In the link they later outline an "agenda" of sorts, and it says nothing about basing taxes on wealth.
Click to expand...

The original figures for percentage of wealth paid in taxes was used to argue that the rich don't pay their fair share of taxes. There was then a claim that if there was a wealth tax, people with low wealth would benefit (which must have surprised everybody!).

Both of these link tax to wealth, not income.
 
Michael Redman said:
Progressive income taxation does not violate Equal Protection. The set of rules determining tax liability is applied to everyone equally, regardless of who they are. That's blind treatment. Just because the result is different for different people does not mean that the anyone is suffering from an EP violation.Can you give any examples of this "modern common law" recognizing keeping your income secret from the government as a privacy right? I think it's pretty clear that traditionally you do not have such a right.
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You are right and right. In "theory" a blind progressive tax that uses a curve or steps would not violate the letter of equal protection (although I think the spirit of the law is debatable) or violate your privacy.

However, the current implementation of progressive taxation violates both in practice due to implementation.

Unfortunately, I do not hear progressive tax advocates clammering for tax reform and a blind system put in place. To have a truely blind progressive tax, we would need to remove all tax deductions and lower the rate since the standard deduction wouldnt exist. Each side wins.

Personally, I find flat tax advocates to be fighting the wrong fight. If they fought for a blind progressive versus the current "tell my what you gave to charity" system, I think that is the first brick in the wall.
 
Virtually all taxation in American history up to WWII was progressive. Prior to WWII virtually all taxes were directed at the wealthy only and the poor and middle classes lived relatively tax free.

In addition, even if you used a flat tax you still have to report income. The only way around letting the government know your income is to have no income tax at all of any kind. You could also have no property tax because that would require that the government know what you own. You could also have no sales tax beause that requires that the government is aware of bsiness transations. So, in short you can't have any taxes of any kind, you want total anarchy, no thanks, I'll pass on your extremism.
 
Malachi151 said:
So, in short you can't have any taxes of any kind, you want total anarchy, no thanks, I'll pass on your extremism.
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Did we switch usernames?
 
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