An Explanation of Progressive Taxation

[PeteEU]

A basic philosophical disagreement. I see it as more than that.

Goverment requires funding and that comes from taxes of some sort.

How much goverment needs funding is the key to everything in this debate. The more requirements by a nations citizens on its goverment, the more funding is needed. Its often defining these requirements that is the problem, plus in Americas case, an often irrational hatred towards goverment itself (thats a whole other debate).

Now using a flat tax, consumption tax or progressive tax system all give some sort of revenue and probally can give enough revenue in depending on what the citizens wants the goverment to do.

But when the debate goes down to people being pissed that a guy who is in the lower tax bracket, gets more out of the "system" than a guy in the higher tax bracket does, then we have a problem. The debate has turned into basicly a childish (no offense to anyone in this debate, speaking more generally) tantrum fit, over one kid got more candy than the other. The debate is never pushed or goes over to the more general issues facing society.

For example. Can a society live with say 10% or 40% living under the poverty line? Can society live with 90% or 40% not having any access to healthcare? At what point does society break down because the basic things that make a society work, such as healthcare, schools, roads, protection (law and order and military) are so erroded? All these contribute to what we want goverment to do, and not to do and ultimatly to how we fund said goverment.

The idea behind a progressive tax system was to share the burden of maintaining and improving a country, a society. That sharing of a burden was to be between all levels of society, with the richer paying relatively more than the poorer because they could. And all this burden sharing would lead to all in society gaining and improving. Another factor many forget, is that a progressive tax has been used for a long time, so we know how it works.

A flat tax would change that balance dramaticly. It would increase the wealth of the wealthy, while the lower and middle class would not be as effected. One can debate if this is good for society as its more fair, but the changes in goverment income would mean massive changes in what the goverment can do. Hence we are back to the debate, what do you want your goverment to do and not to do?

A consumption tax is different as it has many aspects that cant be predicted easily as its never really been tried on its own, but again you come to the same conclusion.. what do you want your goverment to do, and from that you can see what funding and hence what taxes are needed.

But in the end, its the loopholes in all tax systems that are the problem, not the system that is used. A flat tax system would be useless if there was loopholes for the rich, just as the present tax system is so full of holes for the richest part of society to hide or avoid taxes... and this goes for the US and Europe a like. .. After all who writes the tax law.. it aint the poor thats for sure as they often dont involve themselvs in politics...

 

[SFLRN]

what is undeniable, however, is those making less money have a larger voice in the democratic process and have used that voice to shift the burden away from them.

I disagree, in fact, those at the higher levels of income scale have more influence. Those at the higher levels of in the income scale can contribute more to candidates, are more likely to vote and makeup a larger percentage of politicians. Now I am not saying they should not have the freedom to make donations to campaigns, but they do have a much larger impact than the poorer parts of the population, which tend to vote less than the richer level.

 

[SFLRN]

A basic philosophical disagreement. I see it as more than that.

Goverment requires funding and that comes from taxes of some sort.

How much goverment needs funding is the key to everything in this debate. The more requirements by a nations citizens on its goverment, the more funding is needed. Its often defining these requirements that is the problem, plus in Americas case, an often irrational hatred towards goverment itself (thats a whole other debate).
Americans don't irrationally hate government. In fact we are generally considered some of the most patriotic citizens of the 1st World. (That does not necessarily make Americans better but it proves t hey do not hate government). If you are talking about big brother government then that is true.
Now using a flat tax, consumption tax or progressive tax system all give some sort of revenue and probally can give enough revenue in depending on what the citizens wants the goverment to do.

But when the debate goes down to people being pissed that a guy who is in the lower tax bracket, gets more out of the "system" than a guy in the higher tax bracket does, then we have a problem. The debate has turned into basicly a childish (no offense to anyone in this debate, speaking more generally) tantrum fit, over one kid got more candy than the other. The debate is never pushed or goes over to the more general issues facing society.

For example. Can a society live with say 10% or 40% living under the poverty line? Can society live with 90% or 40% not having any access to healthcare? At what point does society break down because the basic things that make a society work, such as healthcare, schools, roads, protection (law and order and military) are so erroded? All these contribute to what we want goverment to do, and not to do and ultimatly to how we fund said goverment.

The idea behind a progressive tax system was to share the burden of maintaining and improving a country, a society. That sharing of a burden was to be between all levels of society, with the richer paying relatively more than the poorer because they could. And all this burden sharing would lead to all in society gaining and improving. Another factor many forget, is that a progressive tax has been used for a long time, so we know how it works.

A flat tax would change that balance dramaticly. It would increase the wealth of the wealthy, while the lower and middle class would not be as effected. One can debate if this is good for society as its more fair, but the changes in goverment income would mean massive changes in what the goverment can do. Hence we are back to the debate, what do you want your goverment to do and not to do?

It would make the wealthy wealthier; the question is then how would the wealthy spend their money and how would that impact an economy.

A consumption tax is different as it has many aspects that cant be predicted easily as its never really been tried on its own, but again you come to the same conclusion.. what do you want your goverment to do, and from that you can see what funding and hence what taxes are needed.

But in the end, its the loopholes in all tax systems that are the problem, not the system that is used. A flat tax system would be useless if there was loopholes for the rich, just as the present tax system is so full of holes for the richest part of society to hide or avoid taxes... and this goes for the US and Europe a like. .. After all who writes the tax law.. it aint the poor thats for sure as they often dont involve themselvs in politics...

 

[Iriemon]

It would make the wealthy wealthier; the question is then how would the wealthy spend their money and how would that impact an economy.

More precisely, the question is how the wealthy would spend additional money they retain from tax cuts versus who the poorer would spend additional money they retained from tax cuts.

Generally, the wealthy invest a higher percentage of their income than the poorer, who have less income after spending on necessities. Thus, one mihgt expect that a tax change that increased the tax on the wealthy and decreased the tax on the poorer to have the effect of increasing gross spending on goods and services and decreasing the amount invested.

Conversely, a tax like the flat tax that increased the burden on the poorer and decreased the burden on the wealthier would have the expectation of reducing gross spending on goods and services and increase the amount invested.

 

[Voidwar]

I think they should pay more taxes because they can afford to pay more in taxes without affecting their standard of living as much.

Why would they give you any right to a say in the matter of what they can and can't afford ?

The reasoning you use here would apply just as well to anyone who made a large charitable contribution last year. This year, tax it out from under them because last year's 1040 showed you they can "afford" it.

Essentially, the reason you are in the wrong here is you are claiming to know what someone else can afford. You do not, and the issue is not really the business of a person with manners.

You don't know where they are spending that money, so you have nothing on which to base your claim that they can "afford" it. How do you know the entire extended family isn't saving for an operation for a cousin ? You don't, just as you don't know what someone else can afford.

 

[Real Korimyr #9]

Why would they give you any right to a say in the matter of what they can and can't afford ?

For the same reason I give them the right to tell me what government services I don't need; because that is how laws are made in a democracy, whether they like it or not.

The reasoning you use here would apply just as well to anyone who made a large charitable contribution last year. This year, tax it out from under them because last year's 1040 showed you they can "afford" it.

You could, except that the goal is not to tax everyone what they can afford; it is to fund government programs in the least socially detrimental fashion we can manage. And that, regardless of how many billionaires complain about how "unfair" it is, is the progressive income tax.

You do not, and the issue is not really the business of a person with manners.

You have no cause to disparage my manners, and I will thank you not to do so again.

 

[Voidwar]

For the same reason I give them the right to tell me what government services I don't need; because that is how laws are made in a democracy, whether they like it or not.

This would be justification for just about anything the majority wanted to vote to do to the minority, wouldn't it ? Too bad we have individual rights stopping the tyranny of the majority espoused here. ("Secure in their property and person" ring a bell ?)

You could, except that the goal is not to tax everyone what they can afford;

funny, because this is how you justify it right here . . .

This is it in a nutshell. I'll be the first to admit that my concern is not what is "fair"-- fair for the poor or fair for the rich-- but what I consider most stable and most conducive to the health and prosperity of society.

I do not believe that the rich should pay more taxes because they've had more opportunities, or because they've been luckier, or any of the other "class warfare" nonsense that some progressives like to peddle. I think they should pay more taxes because they can afford to pay more in taxes without affecting their standard of living as much.

it is to fund government programs in the least socially detrimental fashion we can manage. And that, regardless of how many billionaires complain about how "unfair" it is, is the progressive income tax.

I disagree that a classist tax code is not societally detrimental.
Flat tax is fair and that should be reflected in U.S. law, if for no other reason than "fair play" being an old mom n apple pie style american value.

20 cents to uncle sam on the first dollar, 20 cents on the millionth dollar, no deductions, and cap gains/dividends ARE income, as any fool knows. That is what is fair to any and all.

You have no cause to disparage my manners, and I will thank you not to do so again.

Do you consider it rude to ask an acquaintance how much money they make , or not ? I think miss manners will side with me on this one. Its like asking a woman's age, people with manners do not ask. Same with another person's income. I do not mean to start any personal animosity with you, as I enjoy your posts and I think you show some keen insights, I meant for my post to convey that anyone asking about that subject is broaching good etiquette, I did not mean it to come off as slamming you personally for being ill-mannered.

 

[Real Korimyr #9]

I'm sorry. I mistook your intent.

In any case, I must be off to work now. I'll reply soon.

 

[ARealConservative]

I disagree, in fact, those at the higher levels of income scale have more influence. Those at the higher levels of in the income scale can contribute more to candidates, are more likely to vote and makeup a larger percentage of politicians. Now I am not saying they should not have the freedom to make donations to campaigns, but they do have a much larger impact than the poorer parts of the population, which tend to vote less than the richer level.

You clearly misunderstand.

Yes, 1 wealthy person can have more influence then 1 poor person. That isn't what I claim though. I claimed that the poor, given their strength in numbers, have more influence then the wealthy on the election process.

You can disagree all you want, but to do so requires ostrich like tendencies.

In the last century the lower class in America has successfully implemented a strong social platform at the utter horror of the upper class. Outside of defense matters, very little the government engages in is approved of by the wealthy.

So to claim money is enough to sway politicians away from attaining the necessary votes to remain in office is completely absurd.

 

[Iriemon]

You clearly misunderstand.

Yes, 1 wealthy person can have more influence then 1 poor person. That isn't what I claim though. I claimed that the poor, given their strength in numbers, have more influence then the wealthy on the election process.

You can disagree all you want, but to do so requires ostrich like tendencies.

In the last century the lower class in America has successfully implemented a strong social platform at the utter horror of the upper class. Outside of defense matters, very little the government engages in is approved of by the wealthy.

So to claim money is enough to sway politicians away from attaining the necessary votes to remain in office is completely absurd.

I agree on voting power, but not influence. Statistics show that campaign $$ available is a very strong predictor (but not 100%) of who wins the race.

 

[Voidwar]

In any case, I must be off to work now. I'll reply soon.

The WAITING, is the hardest part ~ Tom Petty

 

[brewmenn]

I work sixty hours a week now and I'm still below the federal poverty line. Do you honestly think that someone who is working forty hours a week in an office, and is thus making three or four times my income, is working harder than I am?

I'm not going to ask you to reveal details but, based on my math, your pay rate is well below the minimum wage.

Access Project: 2006 HHS Poverty Guidelines

9800/(60x52)=$3.14 an hour.

Even less if you figure time and a half after 40 hours.

Something just doesn't add up here.

 

[Real Korimyr #9]

I'm not going to ask you to reveal details but, based on my math, your pay rate is well below the minimum wage.

You're right. Re-checked my math, and my claim that I was under the poverty line was based on when I was working less.

My apologies.

 

[SFLRN]

You clearly misunderstand.

Yes, 1 wealthy person can have more influence then 1 poor person. That isn't what I claim though. I claimed that the poor, given their strength in numbers, have more influence then the wealthy on the election process.

You can disagree all you want, but to do so requires ostrich like tendencies.

In the last century the lower class in America has successfully implemented a strong social platform at the utter horror of the upper class. Outside of defense matters, very little the government engages in is approved of by the wealthy.

So to claim money is enough to sway politicians away from attaining the necessary votes to remain in office is completely absurd.

I never claimed money is enough. However, what I am saying, is that those with money tend to have more influence on government. This is both indirect and direct. Campaign donations would be a rather direct way in which the rich can affect politics. However, the most important indirect way is by the fact that they vote more than the poor do and thus have a disportionate influence relative to their actual numbers. This is not necessarily a bad thing, because they do indeed deserve their vote, but it proves that those who are better off have more sway both directly and indirectly.

 

[Voidwar]

My apologies.

You forgot to address my post, not to disparage your manners or anything

 

[ARealConservative]

I never claimed money is enough. However, what I am saying, is that those with money tend to have more influence on government. This is both indirect and direct. Campaign donations would be a rather direct way in which the rich can affect politics. However, the most important indirect way is by the fact that they vote more than the poor do and thus have a disportionate influence relative to their actual numbers. This is not necessarily a bad thing, because they do indeed deserve their vote, but it proves that those who are better off have more sway both directly and indirectly.

If this were even remotely true, then it would fly in the face of progressive taxation and every new deal program enacted in the last century.

 

[Real Korimyr #9]

For the same reason I give them the right to tell me what government services I don't need; because that is how laws are made in a democracy, whether they like it or not.

This would be justification for just about anything the majority wanted to vote to do to the minority, wouldn't it? Too bad we have individual rights stopping the tyranny of the majority espoused here.

What "tyranny of the majority" are you referring to? The income tax was instituted democratically early last century-- and must not be "tyrannical" in principle if you still support it-- and then the rates and methods of determining that tax burden have been controlled democratically since then.

Both the increasing tax rates leading into the 1950s-- the time of greatest American prosperity and the steepest progressive taxes-- and the tax cuts of the 1960s, 1980s and this century were democratically implemented.

If my proposal is tyrannical, it is tyranny that our nation has lived-- and thrived-- under for longer than either of us has been alive.

("Secure in their property and person" ring a bell ?)

Income is not property. Income, of all forms, is a series of transactions, which may be lawfully and legitimately taxed by government.

If you would exempt property from recurring taxation-- such as automobile registrations and especially land taxes-- I would happily agree with you. Not only are these taxes societally detrimental, but they are also an encroachment on property rights.

I disagree that a classist tax code is not societally detrimental.

And I would disagree that the progressive income tax is "classist" and that it is unfair. (Though I am not primarily concerned with fairness.) It places the tax burden upon those capable of shouldering it with the least impact to their standard of living; you mention things that wealthier people might not be able to afford... but ignore that placing a heavier tax burden on people making less money would cut into their ability to survive and function as productive citizens.

I would also disagree that imposing a flat income tax would lead to everyone actually paying the same percentage of their income in taxes. It does not account for other taxes, such as the sales tax or property taxes, and I think it is somewhat naive to believe that all of the deductions and tax shelters could be removed.

Especially without extensive reform of corporate law, which advocates of the flat tax have very little interest in exploring.

Do you consider it rude to ask an acquaintance how much money they make, or not?

The government has to ask this question regardless of whether the income tax is flat or progressive. It is also expected to keep this information confidential, with the exception of people running for or holding public office.

I'd like to reiterate my apology for mistaking your intent, as well. This was a valid point.

 

[Real Korimyr #9]

If this were even remotely true, then it would fly in the face of progressive taxation and every new deal program enacted in the last century.

Except that those programs were created-- and supported-- by very wealthy people in the first place. The Roosevelts and the Kennedys were powerful, influential families long before either of them gave us a President.

Whether their motives were the good of society or political expediency is a moot point; it wasn't the poor who created the taxes we're discussing. For the most part, they didn't even bother voting for the people who did.

 

[ARealConservative]

Except that those programs were created-- and supported-- by very wealthy people in the first place. The Roosevelts and the Kennedys were powerful, influential families long before either of them gave us a President.

Whether their motives were the good of society or political expediency is a moot point; it wasn't the poor who created the taxes we're discussing. For the most part, they didn't even bother voting for the people who did.

Reality alert can be found here Fifth Party System - Wikipedia, the free encyclopedia

 

[Real Korimyr #9]

I'm not seeing anything that contradicts my post.

 

[ARealConservative]

I'm not seeing anything that contradicts my post.

The new deal coalition and the people that made up the largest voters in that group, directly contradicts your post.

 

[Real Korimyr #9]

Voters, not candidates. You're still dealing with wealthy citizens from wealthy families raising their own taxes.

 

[ARealConservative]

Voters, not candidates. You're still dealing with wealthy citizens from wealthy families raising their own taxes.

Well yes voters. When is the last time we had a candidate from a modest background?

 

[Voidwar]

What "tyranny of the majority" are you referring to?

Essentially, I was asking about the justice of what you are espousing, and not the legality. It might be legal, if all the white voters chose to erase the CRAo'64, and vote that every 8 white people in America get one Korean person as a slave, and if you got the whites to vote in their numbers, repealing contradictory laws, and instituting this one, it might be legal, but it would not be just.

The thrust of my point was that when we make laws, we should be coming from a mindset of what can we all agree on, and not a mindset that thinks the state is always right. Citizens who aren't treated fairly, then gain a legitimate reason to resist or rebell. To walk out of the town hall meeting, as it were.

This is a free society, so we should legislate with the thought in the back of our heads, that we only have so much say over our fellow citizen before he has every right to leave your town hall meeting, and reject your control, by withdrawing his consent. Recall the consent of the governed ? Recall also that the idea of a town meeting was all the citizens high and low, acting it the interest of the whole town, all getting a say. The positive ring that "town hall meeting" has to it is that it is a meeting of everyone, where all get their say. Plotting together to out-vote, and then steal from, the rich is not a very noble action to take at a town meeting.

Income is not property. Income, of all forms, is a series of transactions, which may be lawfully and legitimately taxed by government.

If you would exempt property from recurring taxation

I don't really want to engage in semantics regarding income / property, though I completely disagree with the underlined above. I find it an issue we can sidestep entirely , since I completely agree regarding property taxation. It is blackmail to be allowed to keep one's property, or "effects", and thus expressly contradicts my previously paraphrased slice of the U.S. Constitution, specifically . .

Amendment IV
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

And I would disagree that the progressive income tax is "classist"

ok, but you lose the argument in the definitions phase. . .

class·ism (klszm)
n.
Bias based on social or economic class.

and that it is unfair.

Main Entry: 1bi·as
Pronunciation: 'bI-&s
Function: noun
Etymology: Middle French biais
1 : a line diagonal to the grain of a fabric; especially : a line at a 45 degree angle to the selvage often utilized in the cutting of garments for smoother fit
2 a : a peculiarity in the shape of a bowl that causes it to swerve when rolled on the green in lawn bowling b : the tendency of a bowl to swerve; also : the impulse causing this tendency c : the swerve of the bowl
3 a : BENT, TENDENCY b : an inclination of temperament or outlook; especially : a personal and sometimes unreasoned judgment : PREJUDICE c : an instance of such prejudice d (1) : deviation of the expected value of a statistical estimate from the quantity it estimates (2) : systematic error introduced into sampling or testing by selecting or encouraging one outcome or answer over others

Main Entry: un·fair
Pronunciation: "&n-'fer
Function: adjective
1 : marked by injustice, partiality, or deception : UNJUST
2 : not equitable in business dealings

(Though I am not primarily concerned with fairness.) It places the tax burden upon those capable of shouldering it with the least impact to their standard of living;

I have already mentioned, that we do not know what another man can afford. Rephrasing your earlier assertion, but using the phrase "standard of living" does not change my earlier rejection of this line of reasoning. You don't know whether or not this man and his whole extended family are saving for a cousin's operation. Neither you, nor I, nor the government have a right to say what one citizen can "afford", and for the same reasons, we do not know enough details of his life, and his commitments, to speak on his standard of living.

you mention things that wealthier people might not be able to afford... but ignore that placing a heavier tax burden on people making less money would cut into their ability to survive and function as productive citizens.

I do not ignore it, it just now came up. Now that it has, I do not agree with your prediction. I think the lower end of the labor market would respond, under a semi-free market situation like the U.S., to a change in the tax code, probably by wanting more for a day's work. Either way, it matters more to me that the change would mean that the poor american, would now be able to say he was contributing his bit too, rather than knowing he was getting a pass. I think not taxing the poor takes away their dignity and the moral validity of their political voice to a certain extent. If we ask that everyone pay 20 cents to the government when they make a dollar under its umbrella, for the maintainance of said umbrella, why isn't it fair to tax the man who made 10,000 of them this year but it is fair to tax the one who made 100000 of them? How can a fair answer on when to begin taxation fall on any arbitrary line of dollars per year??? But, the same percentage of every dollar, the first and the hundred thousandth ??? How can one call that anything but fair ?

I would also disagree that imposing a flat income tax would lead to everyone actually paying the same percentage of their income in taxes.

This is a hollow argument.
We do not CARE if they "pay the same percentage of their income in taxes"
it only matters that they pay the same percentage of "taxes on their income".

What they do with their income after paying income tax on it, is not relevant to the income tax.

 

[Real Korimyr #9]

The thrust of my point was that when we make laws, we should be coming from a mindset of what can we all agree on, and not a mindset that thinks the state is always right.

Then there would be no law at all.

And I am not arguing that the State is always right, or that it must always be obeyed. I am arguing that the progressive income tax is not something imposed upon the country by a parasitic majority, but a social institution that has been accepted and upheld by the vast majority of American citizens-- including those you claim are currently being unfairly taxed.

We have fought for years over what the tax rates should be, and how they should be calculated, but we have generally agreed that the basic premise of progressive taxation is sound.

And, unlike ridiculous policies like the minimum wage, there is no economic evidence to suggest that the progressive income tax is in any way damaging to the economy. (The overall tax burden itself is, of course, but the progressive tax is the least damaging method of bearing it.)

Citizens who aren't treated fairly, then gain a legitimate reason to resist or rebell. To walk out of the town hall meeting, as it were.

And rebellion gives government legitimate reason to crush them. If your rebellion does not have enough popular support to succeed, you may wish to reconsider whether or not your grievance is legitimate.

In any case, America's wealthy have just as much ability to "walk out of the town hall meeting" as the poor-- moreso, since they can afford the transportation. And yet, they seem to think that conditions in this country are still more than good enough for them to stay.

Forbes could easily move to a country with fewer and flatter taxes. As a matter of fact, he could probably purchase such a country.

Plotting together to out-vote, and then steal from, the rich is not a very noble action to take at a town meeting.

Especially when the rich themselves betray their brethren and their own enlightened self-interest by voting to steal from themselves. Disgusting, really.

I have already mentioned, that we do not know what another man can afford. Rephrasing your earlier assertion, but using the phrase "standard of living" does not change my earlier rejection of this line of reasoning.

And your rejection does not change the fact that taxing $2000-- twenty percent-- from a man who makes $10000 a year is going to affect his ability to pay for food, housing and transportation more than taxing $10000 from a man making $50000 will affect his.

And $50000 a year is less than one-sixth of the annual income required to enter the highest tax bracket. Not to mention, a person making $50000 a year pays slightly less than twenty percent of their income according to the current tax brackets.

Neither you, nor I, nor the government have a right to say what one citizen can "afford", and for the same reasons, we do not know enough details of his life, and his commitments, to speak on his standard of living.

This argument is faulty. We know that a person who makes more can afford more-- because this is simple logic-- and thus we know that if extraordinary circumstances mean that he cannot afford as much in taxes, the same extraordinary circumstances would make his poorer counterpart even less capable.

I think not taxing the poor takes away their dignity and the moral validity of their political voice to a certain extent. If we ask that everyone pay 20 cents to the government .... why isn't it fair to tax the man who made 10,000 of them this year but it is fair to tax the one who made 100000 of them? ... But, the same percentage of every dollar, the first and the hundred thousandth ??? How can one call that anything but fair ?

Funny you should mention the "moral validity" of the poor's political voice... when the people who pay more in taxes also have a far greater say in the course of government. Not only are they individually more influential, but they are more influential as a class.

How is it fair to tax the poor the same amount for less influence?

What they do with their income after paying income tax on it, is not relevant to the income tax.

It certainly is, because the money they have after they've paid their income tax is all the money they have to live on-- it's the money they use to support themselves, and the money they spend on our businesses.

You cannot make any sound, reasonable economic policy while ignoring the effects of your policies.