Constructive gadfly
Published on April 30, 2009 By stevendedalus In Politics

 

Exchanging ideas is essential to a free society. However, when on the tax system a letter writer who is a math teacher says the government ought not to penalize taxpayers who are wealthy owes to free speech the entire equation. The tax system does not nor should it consider a simplistic proportion as the writer advocates, for it is just another flat tax scam that sees no unfairness to one percentage fits all. Progressive tax is based on taxable income meaning income after one has had the ability and means to take care of himself reasonably well.

It is this differentiation between minimum essentials and play money left over that drives the concept of progressive tax. High income brackets are being taxed theoretically on nonessential income—income beyond basic creature comfort— but this is not as severe as it reads. In an enlightened society, even during the 90+% FDR era, loopholes were abundant for such things as capital gains, second homes, mortgage interest and real estate taxes, but primarily for business large and small to reinvest in their activity to maintain and create jobs, thus growing the economy.

As for charities the writer is worried about, FDR implied if you don’t extend the benefactor hand, the government will. That is why since then there have been so many partnerships of government and foundations that have substantially made life better for those in need.


Comments (Page 1)
9 Pages1 2 3  Last
on Apr 30, 2009

"progressive" taxation is no different than any other bigoted class warfare scheme.

You can't have class warfare without bigotry. 

on Apr 30, 2009

I'm a bit puzzled why you (rightly) point to disposable income being a key reason for a progressive tax system, yet then describe a flat rate as being "just another flat tax scam that sees no unfairness to one percentage fits all". The flat rate, if executed properly, is in some ways the best implimentation of the disposable income argument.

That is, as people we need to spend a certain amount of money to survive. Thus a tax system that will tax you on income earned above this level (i.e. non-essential/luxury income) but won't take away the essential stuff you need to survive is generally seen as a good thing. It's the reason for progressive taxes - the rich can afford to pay more than the poor, since with the rich it may mean they have to cut back on a luxury, while with the poor it'd mean they'd have to cut back on things they need for survival. However if this is the main focus, a flat rate achieves this better. With a flat rate, if you put in a tax-free initial amount that is equal to the amount a person needs to survive, then you won't tax any 'essential' income, and will then equally tax everyone's 'luxury' income at the same rate.

Sadly though progressive tax rates are also I think down to envy. In some cases people would rather see a rich persons income lowered even if it has no effect on their own income, just because it means the difference is less. Similarly, because the rich can pay far more, it is thought they should pay far more, without full realisation of the implications (the rich can pay more, but if they do they're less likely to make as much money in the first place, hurting everyone).

Another argument for progressive taxes is that while the biggest difference in the value of $1 to a person will be between the 'essential' level of income and the 'luxury' level (i.e. someone still needing to obtain an essential will place a much higher value on that $1 than someone who has all the essentials and now wants to obtain a luxury), there is again a difference between the luxuries - someone who just has enough to cover the essentials and can afford almost no luxuries will value the $1 more than someone able to afford lots of luxuries. Hence progressive taxes can try to take that into account by increasing the tax on those earning the most far beyond the level needed to take into account essentials. It can mean that on aggregate people are better off (when weighting the value of those $1's for each person), even if the aggregate $ between all those people is less.

on Apr 30, 2009

Our definitions of words like 'poor' and 'necessity' and 'essential' have become rather skewed.  If you ask me, cell phones & big screen TV's fail to qualify as either essential or necessary, but a helluva lot of the 'poor' have them.

And it's going to be increasingly tough finding enough rich folk to tax in an economy that is shrinking by 6.1%.  Until BO removes the threat of confiscatory taxes, those with the fuel for an economic recovery are gonna be pretty much sittin on it.

on Apr 30, 2009

why do all of you continue to permote an out of date tax system there is no way to make the united states tax system proper and fair to anybody or for anybody todays tax system needs to be replaced checkout the videos at you tube.com then listen to jdcriveau and hear what he is saying about our tax system then think would that be a man i would want; who would protect me from the voltures within washington d.c.  yes listen to jdcriveau at youtube.com and then ask your self who do i want to work for this country a politician a lawyer or an americian that is your choice you all have a nice day

jdcriveau

on Apr 30, 2009

Another argument for progressive taxes is that while the biggest difference in the value of $1 to a person will be between the 'essential' level of income and the 'luxury' level (i.e. someone still needing to obtain an essential will place a much higher value on that $1 than someone who has all the essentials and now wants to obtain a luxury), there is again a difference between the luxuries - someone who just has enough to cover the essentials and can afford almost no luxuries will value the $1 more than someone able to afford lots of luxuries. Hence progressive taxes can try to take that into account by increasing the tax on those earning the most far beyond the level needed to take into account essentials. It can mean that on aggregate people are better off (when weighting the value of those $1's for each person), even if the aggregate $ between all those people is less.
This is a fine stance.

Somewhere else i did write that I support a flat tax, that is, however incrementally progressive too. The reason is that there should be a surtax above and beyond the greater tax of a luxury item  precisely to dramatize the essential and non-essential. 

on Apr 30, 2009

And it's going to be increasingly tough finding enough rich folk to tax in an economy that is shrinking by 6.1%. Until BO removes the threat of confiscatory taxes, those with the fuel for an economic recovery are gonna be pretty much sittin on it.
How is it Ike was comfortable with 90+% taxation?--not that anyone ever really paid that much.  I guess he was shell-shocked on D-Day. I have come around to the flat tax without any tax shelters whatsoever, along with a slight bump in marginal rates.

on Apr 30, 2009

How is it Ike was comfortable with 90+% taxation?

Different time, different everything.

I have come around to the flat tax without any tax shelters whatsoever, along with a slight bump in marginal rates.

I'd be fine with that - anything to make paying taxes simple & transparent (being the term du jour).  It's a lock, however, that if such a plan ever came to pass, there would be supplicants at the Capitol steps begging for exceptions within a gnat's heartbeat.

on Apr 30, 2009

So why bother working? Work harder, get an education for what? T give it to someone that won't do the same? The government will make sure we have all we need. Or here's an idea, just make everyone a slave so their is no disposable income. Just like the Democrat plantation owners  (yeah their still around in DC, their plantations are just nationwide now and the new slaves get entitlements) Pre-Civil War, master will give us all we can handle and if we is good we is not gonna get a whippin. Mater knows best. Happy days are here again.

It's kind of like in the movie the "Matrix". The one character wanted to be hooked back into the illusion of the matrix, where all his needs were met, all in ignorant bliss. It's amazing how many people vote for the government to do their thinking, provide food/shelter, keep them healthy. It's a zombie culture we have today, Do just the minimum to get by and hope somebody is paying my share.

on Apr 30, 2009

As someone who worked 87 hours last week, it kind of sucks knowing that 40+ of those hours were for the government. 

Of course, no one forces me to work 87 hours but if I didn't I'd have to lay off quite a few people because of the "wealth" I generate due to my particular skillset that is required during those occasional crunch weeks.

on Apr 30, 2009

The reason why we have the progressive taxes we do now and why the taxes are as high as they are on the rich is that they are much more likely to find every loophole in the book in order to get out of paying taxes, which there are quite a few. The only way a flat rate tax would work is if you didn't allow these loopholes in the first place. Tax all income over x amount equally all the way up with no way to duck out of it and it might work. However, then you'll run into the problem of people just not reporting income at all.

Realistically the current system is the best at the moment. Hopefully a better system can be devised, but until then this is our best option. I would love to see everyone taxed equally all across the board, and the government would get more from taxes as well, but it won't work unless we have the means to enforce it which is currently beyond their capabilites.

on Apr 30, 2009

there would be supplicants at the Capitol steps begging for exceptions within a gnat's heartbeat.
yeah, especially interest on home mortgages.

on Apr 30, 2009

The reason why we have the progressive taxes we do now and why the taxes are as high as they are on the rich is that they are much more likely to find every loophole in the book in order to get out of paying taxes, which there are quite a few.
Agreed, a very big problem, especially in light of the average bloke can barely meet the IRA deduction, let alone big ticket shelters. 

on Apr 30, 2009

Of course, no one forces me to work 87 hours but if I didn't I'd have to lay off quite a few people because of the "wealth" I generate due to my particular skillset that is required during those occasional crunch weeks.
It's nice to see someone doing so well in these trying times. Still, I think you are entitled to a vacation.

on Apr 30, 2009

where all his needs were met, all in ignorant bliss. It's amazing how many people vote for the government to do their thinking, provide food/shelter, keep them healthy. It's a zombie culture we have today, Do just the minimum to get by and hope somebody is paying my share.
Oh, my such cynicism. Lions, and tigers and bears out there, oh, my!

on Apr 30, 2009

tax only spending (high sales tax), and make that differ based on the item being purchased. a person with more "non essential income" according to the charts might end up buying more food because he eats a lot, while the other with supposedly lower income spends most his money on cigarettes for example.

If you REALLY want to go for the essential, have a REALLY heavy tax rate and give food coupons and housing stamps to EVERYONE (from poorest to richest), the assumption is that everyone is gonna pay for housing and food, they might as well be guarenteed those two for "progressiveness" while maintaining a flat taxrate.

EX: cigaretes, yachets, booze, jewlery, will have a high tax rate. other items will have medium tax rate, groceries and college will have no tax. All those will be flat percent taxes, so they cost the same no matter how rich you are, but every person gets 500$ in coupons a month towards food and housing. Enough to SHARE an apartment and buy groceries. You work to have luxuries like a place for yourself or nicer stuff or TV, computer, etc... to avoid it being a harmful wealth redistribution scheme, you CANNOT Tax people based on income brackets, and YOU MUST give that basic service to ANYONE, even bill gates gets 500$ a month towards basic necessities. (which you can obviously add to)

But you can just say to hell with "progressiveness" and do away with the coupons

9 Pages1 2 3  Last