All Forums > General Discussion > Non-Sports > What Is A "Fair Share" When It Comes To Taxes?
7/29/2011 11:53 AM
I'm admittedly biased about this, not because I'm rich (I'm not), and not because I want to be rich (I wouldn't mind it but it's not my life's goal).

"We need to raise taxes so the rich will 'pay their fair share'".

"We need to raise taxes so that governmental revenues will increase and 'reduce the deficit'".

"We need a 'balanced approach' to this budget crisis (i.e. raise taxes)".

My questions are these:

1.  How much is a "fair share"?

2.  What tax rate would you want the rich to pay at the highest level?  What would the income level be to qualify for the highest rate?  (This assumes a progressive tax structure like we have now, i.e. what is the tax rate on the very next dollar earned above that threshold?)

3.  Knowing that if your tax rate = 0% => $0 revenue, and if tax rate = 100% => $0 revenue, it MUST follow that there is a peak somewhere in between where you maximize revenues to the government.  Where would that rate be?

4.  If spending is above that peak, no amount of tax will ever cover the spending.  What should government do?  (This is obviously a leading a question). 

Have at it.
7/29/2011 12:26 PM
I think everyoneshould pay a flate rate. The only deductions would be for dependents. If you own rental property you could take out for money spent not depreciation. The same would be true for large companies.
Of course there isn't a snowballs chance in hell that any of this would come to pass because the politicians like to be in the contributors back pockets.
7/29/2011 1:27 PM
Flat tax is another giveaway to the rich.
7/29/2011 2:11 PM
Maybe we should ask Warren Buffet (and his secretary) this question:

www.freakonomics.com/2008/05/01/taxes-warren-buffett-and-paying-my-fair-share/

These "I'm not rich, but I worry so about their plight" posts are hilarious.


7/29/2011 2:37 PM
Can't read the link (I'm sure it's fine, but I can't get to the site), but if Buffet thinks he's not paying his fair share, whatever that is, no one is stopping him from contributing more.  Does your link address the issues I asked?  What does "fair share" mean? 

And to be brutally frank about this, I am not "worried about their plight".  I am, however worried about the ability of people to create wealth.  Whether it's me or my employer.  I'm not sure what's 'hilarious' about that...perhaps you can enlighten me? 
7/29/2011 2:51 PM
Posted by stinenavy on 7/29/2011 1:27:00 PM (view original):
Flat tax is another giveaway to the rich.
You have zero way of knowing this.  The economy is not, and never has been static.  If the evil rich make more money because of it, chances are they will pay more in taxes.  How exactly is that giving money away?

For example, if I make 250K now and pay 20% total in taxes (50K).  My ability to make the same money compared with the same effort goes down on further dollars because they are taxed at 35% (currently).  Lets say my rate gets cut to flat rate of 17%.  My incentive to produce more is constant no matter what I make.  So I invest more, expend more effort and make 350K the next year (and thereafter).  I may be able to provide another job to someone else while doing so.  If I do this, my tax paid is 59.5K.  Whatever it is, that's hardly a "give away", it's just taking less per dollar, but in the example actually taking more.  Is it certain that behavior will be this way?  Not necessarily.  But as the evil rich make more, guess what?  Their share of the burden goes up with them

I can't remember where I read this study because it was years ago, but it's been shown that rates do correspond negatively to dollars risked (as in expansion of companies, etc) because the marginal return is less.  If the risk of further investment isn't as lucrative, at some point, the pace of it slows.
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7/29/2011 3:32 PM
If the goal is to have 'the rich' pay their 'fair share' then the tax needs to be on wealth / assets not income.   Once you have a big enough pile you can generate most / all of your income from tax free or tax advantaged sources.
7/29/2011 4:21 PM
Stick to tanking in Cooperstown repug ;)
7/29/2011 4:40 PM
Addressing #3, specifically: you are referring, of course, to the Laffer Curve. As to where the rate should be, economists vary widely on that score, but our tax rates seem well below what would maximize revenue. Not that it should necessarily be our only concern, but many economists would argue that to maximize revenue, rates should be much, MUCH higher.

A column from a few years ago on the matter:

http://finance.yahoo.com/expert/article/economist/4065
7/29/2011 10:52 PM
Posted by silentpadna on 7/29/2011 11:53:00 AM (view original):
I'm admittedly biased about this, not because I'm rich (I'm not), and not because I want to be rich (I wouldn't mind it but it's not my life's goal).

"We need to raise taxes so the rich will 'pay their fair share'".

"We need to raise taxes so that governmental revenues will increase and 'reduce the deficit'".

"We need a 'balanced approach' to this budget crisis (i.e. raise taxes)".

My questions are these:

1.  How much is a "fair share"?

2.  What tax rate would you want the rich to pay at the highest level?  What would the income level be to qualify for the highest rate?  (This assumes a progressive tax structure like we have now, i.e. what is the tax rate on the very next dollar earned above that threshold?)

3.  Knowing that if your tax rate = 0% => $0 revenue, and if tax rate = 100% => $0 revenue, it MUST follow that there is a peak somewhere in between where you maximize revenues to the government.  Where would that rate be?

4.  If spending is above that peak, no amount of tax will ever cover the spending.  What should government do?  (This is obviously a leading a question). 

Have at it.
The "fair share" argument is a silly one. For too many people the only "fair" taxes are on other people.

That said, I'm in favor of keeping a progressive system simply because, in real terms, richer people can take the hit. If you're making $20K a year, you feel every single dollar you have to pay out. When you're making $200K, your basic needs (and even not-so-basic) can be met without any trouble. When you're making $20m basic needs aren't even on your radar as something to worry about.

The peak tax rates argument, by the way, isn't borne out by the numbers. Gross income tax revenue has been ridiculously steady, all things considered, for the last 50 years regardless of what the rates were. Instead of chasing some phantom "ideal iincome tax rates" that may not even exist we should be looking elsewhere for more revenue - namely, in corporate tax revenue, which has been plummeting over that same period to no appreciable gain in the GDP's rate of increase.

Note I'm not saying increase corporate tax rates, which are already pretty damn high relative to the rest of the first world (although the amount of revenue lost through loopholes, the prevalence of S corporations, etc. makes that a fairly moot point).
7/30/2011 8:39 AM
Posted by silentpadna on 7/29/2011 2:51:00 PM (view original):
Posted by stinenavy on 7/29/2011 1:27:00 PM (view original):
Flat tax is another giveaway to the rich.
You have zero way of knowing this.  The economy is not, and never has been static.  If the evil rich make more money because of it, chances are they will pay more in taxes.  How exactly is that giving money away?

For example, if I make 250K now and pay 20% total in taxes (50K).  My ability to make the same money compared with the same effort goes down on further dollars because they are taxed at 35% (currently).  Lets say my rate gets cut to flat rate of 17%.  My incentive to produce more is constant no matter what I make.  So I invest more, expend more effort and make 350K the next year (and thereafter).  I may be able to provide another job to someone else while doing so.  If I do this, my tax paid is 59.5K.  Whatever it is, that's hardly a "give away", it's just taking less per dollar, but in the example actually taking more.  Is it certain that behavior will be this way?  Not necessarily.  But as the evil rich make more, guess what?  Their share of the burden goes up with them

I can't remember where I read this study because it was years ago, but it's been shown that rates do correspond negatively to dollars risked (as in expansion of companies, etc) because the marginal return is less.  If the risk of further investment isn't as lucrative, at some point, the pace of it slows.
Taxable income for the richest individuals is around 30%. Any flat tax idea has rates well below 30%, thus this is another giveaway for the rich.
7/30/2011 8:44 AM
Posted by moosep on 7/29/2011 3:01:00 PM (view original):
Posted by stinenavy on 7/29/2011 1:27:00 PM (view original):
Flat tax is another giveaway to the rich.
When companies make 10's billions of dollars and get money back from the gov't and don't pay a penny, something is wrong. As a matter of fact I heard today that 18,850 some companies call a single building in the cayman islands home and don't pay any taxes. These loopholes have to be closed. I don't care how they go about it as long as it is done.
I don't disagree with this at all. I have to believe that there is a way to reform the situation, even if the flat tax would close the loophole. (would it?)
7/30/2011 10:08 AM
Whatever the solution, take your time.

Hugs and kisses,

$1 CDN = $1.05 US
7/30/2011 3:24 PM
Posted by stinenavy on 7/30/2011 8:44:00 AM (view original):
Posted by moosep on 7/29/2011 3:01:00 PM (view original):
Posted by stinenavy on 7/29/2011 1:27:00 PM (view original):
Flat tax is another giveaway to the rich.
When companies make 10's billions of dollars and get money back from the gov't and don't pay a penny, something is wrong. As a matter of fact I heard today that 18,850 some companies call a single building in the cayman islands home and don't pay any taxes. These loopholes have to be closed. I don't care how they go about it as long as it is done.
I don't disagree with this at all. I have to believe that there is a way to reform the situation, even if the flat tax would close the loophole. (would it?)
I don't know but it could be explored. The problem is both sides  are posturing to beat the band. They want to show how tough they are.
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All Forums > General Discussion > Non-Sports > What Is A "Fair Share" When It Comes To Taxes?

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