Richard,

I have a comment trapped in moderation. It has no links, no block quotes, no discernible reason for it to be trapped.

Would you be so kind as to approve it?

Okay Richard,

You say there is an income inequality…so at what point do you, not an economist, but simply you who say there is an inequality; what point is income “equal”?

Do you agree with Obama that we have to “spread the wealth” around?

thanks for retrieving the comment, it is appreciated.

Richard,

I haven’t read his speech. I’m trying to nail down what everyone who wants to resolve “income inequality” considers to be “equal”. So far I’m not having much luck. Why is that?

Obama’s plans from what I have read on his campaign site are just government controlled forms of robbery. The “wealthy” have money and the “poor” don’t have enough so Obama is going to change that. Call it tax credits, health care initiatives, etc; it’s still robbing from those that have more.

I want to know from those that support reducing the “income inequality” 3 things.
1. What level of income would be “equal”? Is it a single point, is it a range?

2. Are the people who support resolving the “income inequality” doing something about it now or are they waiting until they can use the government guns to take other people’s money?
I don’t think it is too much to ask for those that support resolving the problem to live up to their principles. So far, I’ve heard from Glenden and Cliff. Neither of them are living up to their principles.

3. What do we do about people who don’t or won’t work?
Their income effectively consists of only what the government provides. Should those capable of working be made to work?

I respectfully request you stop ducking the issue. You say there is an “income inequality”, so what is the point where income is equal?

Richard,

Yes, it is too much to ask because it punishes people for succeeding.

It’s not absurd. I’ve read over and over again on this site there is an income inequality…what is wrong with the people deciding what is an acceptable income?

Those rich people have worked for their money (rare cases have inherited it) but that money is being taxed already. It’s being taxed at rates that are higher then what lower income people make, why?

Want to reform the income tax system, fine. I’m there on that idea. Do you think it’s fair that some people make money and then don’t have to pay taxes on it?

Bob, I get all the sublties of your question, but let me flip the situation on its head and ask (with the sme sincerity): What’s wrong with greater and greater accumulation of wealth in fewer and fewer hands?

When is enough…enough?

Cav,

Nothing is wrong with the accumulation of wealth, absolutely nothing.

As far as when is enough enough, that is for each person to decide.

It is not for you, Richard or other on this site or across America to say “Sorry, you’ve done too well. Hand over half, three quarters of what you’ve made”.

What is important that we provide the education and opportunities for people to try. Equality of opportunity not income, is the answer.

Richard,

Yes, I’m libertarian in nature but don’t confuse that with not caring about others.
My problem is the using the government to solve problems.

I saw a bumper sticker that summed up part of it
National Healthcare: The efficiency of FEMA and the Compasson of the IRS.

America has had some form of socialism for 70 years now: New Deal, Great Society, Welfare state, etc, etc.

I have a question for those that want a country that is even more socialistic; Name one truly socialist/Marxist/Communistic country that has provided its citizens the continued level of prosperity America has?

“Do you think it’s fair that some people make money and then don’t have to pay taxes on it?”

I’ll bite. Yes, I do think it’s fair. In fact, I think it’s fair for all people to make some money and then not have to pay taxes on it. Interestingly enough, that’s how it already works.

So Larry?

Are you suggesting that wealth is a zero sum game?

James,

If Richard won’t define it, will you? What is an “equal” income?

When is a person wealthy enough not to get hand outs from those wealthier?
If the wealth a person has been accumulated legally, paying those working with him/her a fair wage for the job and risk, how is that “earned on the backs of others”?

Want to get more money, earn it, be the business owner. Take the chances and risks, the hours put in that the owner does. That is the advantage of our current system, it doesn’t stop people from moving from worker to owner.

The owner of a business, whether it is Bill Gates, Tiger Woods, or Joe the local plumber; earns the money. What right do you or anyone else have to say, you’ve earned too much?

Larry,

I enjoy your hypothetical scenarios, the situations are always so absurd.

Let’s take it a little bit at a time:

Let’s say you became so rich that you didn’t have to work every day like all other Americans and you could use your great wealth and unlimited time to sway political leaders to send even more money your way.

This is why we have a government that should be answerable to the public. IF the government is sending me money, is it money that I’m providing a service or product for? If so, what is the problem?
If I”m providing a product, it is likely that I’m employing others. Providing that income that helps people provide for their families. Remember basic business school, the owner only gets paid if there is a profit, employees get paid regardless.

If not, then the problem isn’t just me, it’s the political servants. Your choice of the word “leader” betrays your mind set. The people we elect are our servants, not our leaders. The people in the capitals are supposed to be doing our business, not their own. If they are lining their pockets, throw them out and throw them in jail.

Or let’s say you are still amassing your great wealth, but pay people to hang around capitol hill and persuade the politicians to send more money your way.

See above….employing people is wrong? Petitioning the government for business is wrong? Wait a minute, I just realize that you are describing liberals…people sitting around, persuading the government to give them more money…welfare, income redistribution, national healthcare. I finally get it.

Let’s say the media never reports on your great advantage to the point that all the other Americans lose everything they have and then end up on the 6 o’clock news for acting out of desperation to protect their families or friends.

Wow, simply wow. Having more money then others is a “great advantage” that will cause the collapse of the American economy unless I’m outed by the media?
As JD said, it’s not a zero sum game. I can’t collect all the money in a vault ala Scrooge McDuck. It just isn’t possible. Wealthy people put some of their money in banks….who then loan it out again. What was the ratio 10 to 1 loans for assets on the books? So wealthy people having money in the bank actually allows the people making less money to get loans. Wealthy people also invest in stocks….ownership in companies that use that money to pay salaries, buy more equipment.

Also, my having money will force others to break the law because being poor forces people to break the law? Wait, I thought we had already covered the zero sum game. Let’s address the poor breaking the law; why isn’t the crime rate higher then? The level of poverty has been rising I’m told here. So why isn’t every poor person out there looting, stealing, robbing? Maybe because they have a choice and are intelligent people.

Do you want hard working Americans to lose everything they have even though it’s not at all fair, just to make sure nobody gets a dime of yours?

I think this is the most asinine thing I’ve read from you yet. Every dollar or dime I make doesn’t cause anyone else to loss money. Get real. Life isn’t fair, we can’t make it fair. Some people will always work harder, come up with better ideas, work longer and they should be rewarded for their efforts. Rewarding those people does not cause anyone else to be driven into poverty. Tiger Woods winning multiple tournaments didn’t affect your earning this year did it?

If money doesn’t represent a fair measure of a persons true contribution to his/her society, what is it for?

I’m not sure how to fully answer this one let me think about it. But I will tell you that not all contributions to society can or should be measured in money but the contributions to the success of a business or service is what measured by the salary a person earns.

James,

A contract it is but it shouldn’t be enforced at the point of the government’s guns. That is what I’m arguing. Shouldn’t each of us determine how and when we support those “less fortunate”?

I agree that 100% free market doesn’t work and 100% socialism won’t work. We already “redistribute” money. People are already paying taxes and those making more are already paying more then those that make less, right?

What I’m arguing is that before we step down the road to greater socialism, isn’t it the responsibility of those advocating greater redistribution of wealth to live there principles? To voluntarily redistribute their wealth and show us that it isn’t working before forcing others to practice their beliefs?

I will keep asking until I get an answer; where do we draw the line at “equal” income?

Convince me that what you and others are proposing is reasonable, practical and greatly address the problems. I’ve posted before how welfare is actually creating greater poverty and dependence then it is moving people to independence. Why should we continue a system that is broken?

As far as funding the Iraq War, that is the role of the citizen to let their representatives, their servants in Washington know their opinions. Telling the senators and representatives how to vote is how we decide what to fund. That is what I’m doing, telling my representatives I don’t want to fund an ever increasing welfare class.

Bob:

First, I never told you what you can talk or not talk about. You are reading into my comments something that isn’t there.

Second, I never said I don’t like how much people are making; again, you are reading words into the comments.

As to your questions, let’s just assume that Obama’s figures are on the mark. You can run with that.

Larry,

I have worked VERY hard for my employers since I was 17 years old and I resent your Hannitized characterization of liberals.

I never said that you or anyone else doesn’t work hard, but that same type of characterization has been applied to conservatives on this board. Now you whine when the shoe is on the other foot. So you sit around thinking of ways after you come home from a long days work, doe it make it any less accurate?
It should not be the government’s job to re-distribute money. Show me authorization in the Constitution for any of the re-distribution schemes.

Why don’t the wealthy in America understand that when they make 400 or more times what their highest paid employee makes, set up offshore tax shelters or get no-bid contracts from politicians, it kills opportunity for the greater population.

Have any evidence to this statement?

If this country has to come up with some kind of horrible legislation to equal things out, it is the direct fault of the people who couldn’t reign in their greed and self-importance

So, greedy people have taken all or vast amounts of the money and left little for others? Wrong again, it is not a zero sum game. People making less can still make more without having to take from those making more. People making less just have to have the opportunities to make more and…here is the important part…are you reading….they will to take those opportunities.

Because of the people you support in office our country is at the brink.

In a very real way, you are right about this. I’ve supported both the Democrats and the Republicans in office, so this is partly my fault and partly your fault and everyone else. The is plenty of blame to go around, it not just the conservatives or the liberals. We’ve supported for too many years people who aren’t doing what is best for this country as a whole, but supporting more welfare isn’t the answer either.

There is a very real possibility that millions upon millions of us are going to fall right through the cracks whether we worked like ants or fiddled like grasshoppers.

Larry, I’ll ask again. For those that believe we should implement greater income re-distribution; are you living your principles before you try to force others to live them?
Are you sending all you “excess” money to Washington to let the redistribute ?
Show me that voluntary compliance isn’t enough before you try to use the government’s guns to make me live your ideology.

So far, not one person on this board who supports income redistribution has stated they are living their principles.

Richard,

I’ll continue my argument here, I disagree that is authorization to redistribute income. The personal income tax should be used for further the duties and responsibilities laid out in the Constitution. The closest that I could see to anything authorizing income redistribution isn’t the 16th amendment but in Article 1 Section 8.

Section 8. The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States…..

But note that is talking about the general welfare of the United States, not the individual people. There is no guarantee of security from hungry or from bad decisions in the Constitution.

The rest of Section 8 reads:

; but all duties, imposts and excises shall be uniform throughout the United States;

Even if the “general welfare” clause allows income redistribution, doesn’t that requirement that all duties, imposts and excises be uniform rule out progressive taxation?

Certainly doesn’t it sound fair if we imposed a 10% or 15% income tax on everyone; minimal deductions. Isn’t it fair that everyone pays the same percentage instead of some people paying no taxes at all?
Weren’t people on this blog arguing that it wasn’t fair that some of the rich used loopholes to pay less taxes then the “middle class” ?

Bob S.

Richard,

What is wrong in arguing in absolute terms?
Your contention is the income redistribution has been going the wrong way, fine. I can agree, so let’s stop all income redistribution. That would stop the problem of it going in the wrong way.

So, are you arguing that the federal government has responsibility for the safety and security, physical and economic, of each and every individual as part of the “general welfare”?

Let’s look at what the Wall Street Journal has to say about Obama’s tax plan:

The Tax Foundation estimates that under the Obama plan 63 million Americans, or 44% of all tax filers, would have no income tax liability and most of those would get a check from the IRS each year. The Heritage Foundation’s Center for Data Analysis estimates that by 2011, under the Obama plan, an additional 10 million filers would pay zero taxes while cashing checks from the IRS.

The total annual expenditures on refundable “tax credits” would rise over the next 10 years by $647 billion to $1.054 trillion, according to the Tax Policy Center. This means that the tax-credit welfare state would soon cost four times actual cash welfare. By redefining such income payments as “tax credits,” the Obama campaign also redefines them away as a tax share of GDP. Presto, the federal tax burden looks much smaller than it really is.

The political left defends “refundability” on grounds that these payments help to offset the payroll tax. And that was at least plausible when the only major refundable credit was the earned-income tax credit. Taken together, however, these tax credit payments would exceed payroll levies for most low-income workers

If you don’t think it’s fair when the money is flowing in one direction, what makes it fair when it’s flowing in the other direction? Because those people really, really, really need it?

If you think the people need the money, give it to them. What is stopping you? Otherwise, I still don’t see an authorization in the Constitution for it.

The difference between conservatives and liberals is that conservatives give their own money, liberals give other people’s money.

Conservatives give a larger share of their income to charity.

• Although liberal families’ incomes average 6 percent higher than those of conservative families, conservative-headed households give, on average, 30 percent more to charity than the average liberal-headed household ($1,600 per year vs. $1,227).

• Conservatives also donate more time and give more blood.

• Residents of the states that voted for John Kerry in 2004 gave smaller percentages of their incomes to charity than did residents of states that voted for George Bush.

• Bush carried 24 of the 25 states where charitable giving was above average.

• In the 10 reddest states, in which Bush got more than 60 percent majorities, the average percentage of personal income donated to charity was 3.5. Residents of the bluest states, which gave Bush less than 40 percent, donated just 1.9 percent.

• People who reject the idea that “government has a responsibility to reduce income inequality” give an average of four times more than people who accept that proposition.

“In 2000, brows were furrowed in perplexity because Vice President Al Gore’s charitable contributions, as a percentage of his income, were below the national average: He gave 0.2 percent of his family income, one-seventh of the average for donating households. But Gore “gave at the office.” By using public office to give other people’s money to government programs, he was being charitable, as liberals increasingly, and conveniently, understand that word. ”

Get your hand out of my pocket.

Bob:

Be more flexible with your interpretation of the Constitution and you will not sound so silly in your comments. By the way, your entire argument crashes anyway because of your principle assumption that Americans are already paying too much in taxes.

Says who that too much in taxes are being paid given the instant circumstances and says who that Americans cannot afford to pay more, particularly those at the top?? Too much conclusory rhetoric coming from you and jd.

Try and tone it down with a bit of common sense. It will be good for you!

Nah – it’s the same old class-warfare trope.

It’s funny. I’m looking at all the various propositions that are appearing on this year’s ballot. So many of them seek to levy a new tax on one group for the benefit of another.

One of my true favorites is the hotel and rental car tax. Of course, the money will go toward some truly sage and worthy cause. And what could be an easier decision than levying an exhorbant tax on folks who’s opinion doesn’t have any weight.

My rule, when it comes to taxes and other forms of income distribution, is that unless I’m willing to tax myself for the same benefit – I’m voting against it.

JFarmer,

Be more flexible with your interpretation of the Constitution and you will not sound so silly in your comments.

Your welcome to your opinion about me. It doesn’t change what I believe or how I argue to be told I’m sounding silly. I see it as you being forced to attack the person not the argument.

By the way, your entire argument crashes anyway because of your principle assumption that Americans are already paying too much in taxes.

Show me where I’ve said people are paying too much in taxes? I’m arguing that people shouldn’t have to pay more in taxes to support people making less money.

Says who that too much in taxes are being paid given the instant circumstances and says who that Americans cannot afford to pay more, particularly those at the top?? Too much conclusory rhetoric coming from you and jd.

Could you translate that out of gibberish and into something I can understand?

The only portion I caught in that is about those making more being able to afford more. I agree they can afford more, but I disagree that they should be forced to pay more because of your beliefs. If their beliefs dictate they should pay more, let them.

Try and tone it down with a bit of common sense. It will be good for you!

Thanks for your concern about me, it’s misplaced as I think I’m the one making sense here.

“Even if the ‘general welfare’ clause allows income redistribution, doesn’t that requirement that all duties, imposts and excises be uniform rule out progressive taxation?”

No, it doesn’t. Progressive taxes are uniformly applied. Everyone pays the same amount of taxes on the same amount of taxable income. It’s surpisingly simple . . .

JFarmer,

I’ve heard that claim before, but nobody has provide any evidence to it.

Are you claiming those that make more money are driving more then those who make?

That the people making more are receiving greater border security then those that are paying less?

Those using the government expenditures also pay for it, taxes on trucks transporting goods, port taxes, etc.

How about showing some evidence that the wealthy are deriving more benefit from government expenditures?

Don,

I disagree with your basic premise. Because tax brackets are applied to everyone, that means the tax is uniform. That simply isn’t true.

The percentages changes as the amount of income increases.
A person making 30,000 a year pays 4,099 in taxes but a person making 4 times as much 120,000 pays 27,578 in taxes. That is 6.728 times as much in taxes, not 4 times as much in taxes. So the person earning more is penalized more for that success and it still isn’t enough for some.

Let’s put a flat tax on the income. 30,000 at 15% pays 4,500; 120,000 at 15% pays 18,000. Four times as much in taxes for 4 times as much money. No additional penalty for success.

How is that not fair? Just because someone can afford to pay more, should we make them. How is it fair to say, you’ve worked hard, done well; now pay a portion of your money to someone else only because they haven’t met someone else’s arbitrary standard of success.

Don– just to make sure we are using the same word, here are 3 meanings for the word uniform:
1 : having always the same form, manner, or degree : not varying or variable
2 : consistent in conduct or opinion
3 : of the same form with others : conforming to one rule or mode

Tell me how a tax rate that increases as income increases is uniform.

Well Bob, I disagree with your basic premise that equally applied progressive tax brackets aren’t uniform. I’m guessing the constitutionality of progressive tax brackets has been challenged . . . I wonder how that turned out?

The percentages do not change within the particular brackets. What you have presented is a case of using statistics to prove your point. Just because you can show that the effective tax rate changes as income changes that doesn’t mean the tax itself isn’t uniformly and fairly applied.

Yes, I know the meaning of the word “uniform”. Please explain how progressive tax brackets do not fit the definitions you provided.

JFarmer,

Sorry, but saying again that someone benefits from it isn’t proving it.
Show me how the CEO benefits more from the infrastructure then an hourly worker?

The CEO is paid more because of the impact of his or her job on the performance of the company is more….not necessarily because of some greater benefit.

How exactly does this happen, spell it out?

… but the top brackets are still way too high.

As I asked Bob, says who?

James – says me.

Don – maybe. I think a $50K per family exemption is too high.

Part of the benefit of spreading taxes around is the sense of ownership.

Like I said before, I won’t vote for taxes that others have to pay. Exempting that high of an amount gives a large (huge) swath of society government that the other guy pays for. Under your plan more than half of families wouldn’t pay any taxes at all.

I just want the top bracket dropped to 30%.

Hey Richard – Social Security only takes 6.2% out of each paycheck. Not 12.2%.

jd:

As I suspected, “says you” based on your personal beliefs and nothing more. The entire US economy should be subject to the fiscal whims of jdberger.

We are in deep doo-doo!

JFarmer

As I suspected, “says you” based on your personal beliefs and nothing more. The entire US economy should be subject to the fiscal whims of jdberger

Isn’t that exactly what you and the rest of the people who want to increase the tax on the wealthy are doing? Basing it on your personal beliefs and nothing more?

You don’t like that people are making X amount of dollars and only paying Y amount of taxes, so you whine it’s UNFAIR. Even though it’s more taxes dollar wise and percentage wise, it’s still not enough….you want to punish them more. For what, making more then you think they should while people aren’t making as much. Isn’t that more of a whim then saying let’s make the tax percentages the same across the board?

The entire US economy should be subject to the fiscal whims of jdberger.

That’s the most intelligent thing you’ve posted all day.

Thanks for the complement.

Bob:

Isn’t that exactly what you and the rest of the people who want to increase the tax on the wealthy are doing? Basing it on your personal beliefs and nothing more?

Ummm. Not exactly, Bob. Indeed, most economists on either side of the political spectrum agree with Obama’s plan to increase taxes on the wealthy!

$43k, for a family of five? Yeah, I think that’s a reasonable level of subsistence income and doesn’t leave a lot of room, if any, for many extravagances. Would you care to offer a different amount? Do you think it’s moral to tax people on subsistence levels of income?

I think I’ve given enough information to get a good idea of what that entails, but since you asked, and even though you seem not to want answer my questions, I’ll expand a little.

A reasonable subsistence level would include having the income needed to have safe, clean and appropriate shelter. It would include being able to provide sufficient nourishment for you and your family. It would include the ability to save a little each month for emergencies as well as for retirement. It would include being able to provide some forms of entertainment, not necessarily expensive and certainly not extravagant, so that the joy of life is not lost just trying to live.

If my estimates are high I’m certainly willing to look at someone else’s, as I’ve already shown by coming down from $7500 to $4500 on the dependent exemption. Would you or jd like to share a different plan? Do you believe people should be taxed on subsistence levels of income?

jd,
$35k for a family of five? Yeah, it would be doable of course. But what are the individual deductions? I guess you could go 10k for each personal exemption/standard deduction ($1050 more than the current amount) and then 5k for each kid with a flat cut off after three. But is $10k really enough for a single person to have a reasonable level of subsistence?

I just can’t buy into the theory that subsistence level income should be taxed, even progressively. Even at levels as low as 5% a person making $15k/year would owe $750 in income tax (and that’s on top of the $1147.50 already paid in payroll taxes). Taking almost $1900 in taxes from someone making only $15k/year just doesn’t seem right to me.

Don – keep in mind that the $35K per family kind of overlaps (I’m phrasing this wrong but I just ran out of coffee….).

I’m not sure what rents are like in your part of the world – but let’s say that a 3 bedroom house goes for $900/mo (that’s what I’m currently renting out a house at)…

Yearly amounts….
$10,800 rent
$2,400 electric & water
$2,500 fuel (based on a weekly $50 fill-up – I use a 50 week year)
$8,000 groceries
——————————
$23,700 which leaves $12k for clothing, incidentals, bourbon, and a teeny bit to squirrel away.

It’s not luxurious living by any standard. Major purchases would have to be planned and saved for. Folks would have to be frugal. Prada is out of the question. But it can be done.

The true joy of payroll and witholding taxes is that the taxee never really sees the money. They don’t know it’s gone. (”Who is this FICO guy?’) And yet, they still get the sense that they contribute. They can sincerely say to the cop who pulls them over for speeding, “Hey, I pay your salary!”

Just curious – I’ve noticed that you like to cut dependent deductions at 3 children. Any particular reason for that?

James – the related paragraph from The Economist states:

The economists also prefer Mr Obama’s tax plans. Republicans and respondents who do not identify with either political party see Mr McCain’s tax policies as more efficient but less equitable. But the former prefer Mr McCain’s plans—43% of Republicans say they are good or very good—and the latter Mr Obama’s. Of non-affiliated respondents, 31% say Mr Obama’s are good or very good.

which doesn’t support your conclusion.

Don – I rounded randomly. I figure that these are just “back of the envelope” numbers. I rounded up on groceries based on what I spend when I’m in a frugal frame of mind.

I figured car maintainance into gas costs. Again, I used personal petrol usage as a baseline. I do drive every day. I don’t drive a fuel efficient vehicle. My annual gas costs are less.

A monthly bus pass in SLC $74.50 which comes out to around $900/yr. Still less than your $1500.

Yes it’s a frugal life. Would 2% income tax be better for you?

Finally, I’ve never quite bought into the idea that people have babies for additional tax deductions. Just like I don’t buy into the idea that people have babies for additional welfare benefits (though I have met some males who see a woman with a bunch of kids as a welfare goldmine)…

Some folks like larger families. Some don’t like kids at all. If you look at national statistics, we’re still looking at an average of about 2 kids born to each woman of childbearing age in the US. Penalizing folks for fertility doesn’t fly with me.

“Conservatives” are always telling us that it’s wrong to tax the big $$ guys, because then the rest of us would lose the incentive to work hard to become one of the big guys.

The assumption from the right is almost always that those who are rich worked hard for it, and those of us who aren’t didn’t — which is utterly false.

To become rich, you need a combination of hard work, brains, and most importantly luck (or the ability to be in the right place at the right time). I resent that I’m treated as lazy because my family struggles financially — this is simply a lie that enables the rich to keep getting richer at our expense.

It’s at our expense because we have to make up for in taxes what the rich don’t pay.

How would it work if we all paid the same percentage? Let’s use some example figures (these are all made up figures and do not reflect real tax percentages of real cost of living):

Two women live in an alternative universe in a country called A.S.U. Sarah Six-Pack makes $20,000 per year and Ellie Elite makes $1,000,000 per year. Both need a house to live in, both need food to eat. Let’s just say for gigles that we taxed everyone at the same percentage rate of 15%. That would mean that Sarah pays $3,000 in taxes and Ellie pays $150,000. So after taxes, Sarah has $17,000 for everything else, and Ellie has $850,000. Let’s say the average mortgage in A.S.U. is about $1000 monthly, and Sarah pays the average. Ellie wants something nicer, she could go with the $1000 per month house, but let’s say she has one worth 4 times as much as Sarah’s house. After mortgage payments, Sarah has just $5000 left for all expenses for the year, while Ellie still has $802,000. Sarah’s food bill is $300 per month and Ellie, who does eat more expensive food is about twice that or $600 a month. Sarah’s down to $400, but Ellie, despite spending more on housing and food, still has a whopping $794,800. Sarah is not frivolous with her money, but very basic expenses take nearly all of it. Ellie has much more disposable income.

No one is suggesting that Ellie should be taxed to the point of having as much income as Sarah. Ellie, even being taxed at a higher rate than Sarah, still comes out way ahead of Sarah. If we tax Ellie at a lower rate, the rest of the country (the bottom 95% of us) have to make up the difference, so we get taxed at a higher rate than we can afford in order to give a break to Ellie and those like her – at least if you live in a country that tries to balance the budget.

What I meant to say is that most economists – including economists on both sides of the isle – prefer Obama’s tax plans. What I did not intend to say is that most republican economists and most Democrat economists agree with Obama.

Yet, this would still be incorrect according to your linked article.

A total of 142 responded, of whom 46% identified themselves as Democrats, 10% as Republicans and 44% as neither. This skewed party breakdown may reflect academia’s Democratic tilt, or possibly Democrats’ greater propensity to respond. Still, even if we exclude respondents with a party identification, Mr Obama retains a strong edge—though the McCain campaign should be buoyed by the fact that 530 economists have signed a statement endorsing his plans.

530 is greater than 142, no matter how you slice them.

Come on Bob, don’t put words in my mouth . . . please. Just take what I say at face value. I never said anyone should be subsidized to the level where I feel income should not be taxed. Welfare is an entirely different subject.

You sure seem to be fond of asking questions, but not too fond of answering them. I’ll try one more time. Do you believe it is moral to tax people on subsistence levels of income?

Bob, maybe I’m not being clear when I ask the question. The “numerous tax deductions and credits that offset taxes” do not factor into answering the simple philosophical question of whether or not it is moral to tax people on subsistence levels of income. If you exempt income or give tax credits then you’re not taxing them, right?

Maybe it will be easier to use an example, you seemed to like Jenni’s. Let’s say Jack and Olivia are a couple in their mid-twenties with two kids. Jack’s in school and works part-time from home making $10k/year. Sarah works full-time making $20k/year. Their monthly expenses are as follows:

Rent – $750
Transportation – $200
Food – $600 (20 bucks a day, is that reasonable for a family of four?)
Utilities – $150
School (tuition/student loans/books, etc.) – $200
Payroll taxes – $191.25

So far we’ve accounted for almost $2100 of their monthly $2500 income. That doesn’t leave much to spend on other incidentals, clothing, retirement, savings, etc.

Do you think it is moral to tax this couple’s income? If so, how much should they be paying in order for it to be “fair” that they are “benefitting from the services taxes provide”?

Bob,

Thank you for finally answering the question without equivocating. I disagree wholeheartedly with your view that each and every dollar earned should be taxed. Here is why:

Jack and Olivia are young. They are trying to make a better life for themselves and their young family. Could they have chosen differently? Of course. But aren’t they doing many of the things we as a society encourage young people to do? I don’t believe we should tax them now for trying to better themselves and society as a whole. Hopefully, in a few years, Jack will be working full-time and making much more than he is making now. The kids will be in school, Sarah may still be working, maybe she’s a stay-at-home mom, maybe she is now going to school. In any case, Jack’s making enough for them to have the luxury to make those decisions based on wants, not on what they need just to keep providing for their family. He’s also now making enough to start paying back his “debt” to society for providing benefits and services to his family while he was still in school. In the long run, if Jack is lucky enough, he’ll more than pay back for the few years he spent mooching (since that’s how you see it) off the system.

If Jack’s brother is already making $100k/year, then good for him. I would hope that he’d be happy to contribute to an arguably well-educated, but certainly stable society where most people have the opportunity to work hard and provide for themselves and their family. I would hope that John would realize that the alternative is a society where the majority of people depend on welfare and/or crime just to survive.

Progressive taxation is a kind of social contract. When you can’t afford to pay, because you need your money just to survive, you don’t. When you can afford to pay, because you’ve worked hard and maybe even had a little luck, you do. I’m always open to arguments about how much those who can pay, do pay, but I will never support the idea that subsistence levels of income should be taxed.

A final note, I’d like to thank you and jd for discussing this with me. This is the first time I’ve really thought about and put down on “paper” why I favor the tax policies of liberals over those of conservatives. It’s helped to solidify my own viewpoints and reinforced my belief that “we’re all better off when we’re all better off.”

BTW, Bob, under my scenario, if John is making $100k/year, he won’t pay 33% in taxes. He’ll get about $40k in deductions/exemptions and be taxed at the following rates (based on my original brackets, which I’ve doubled because John is married):

$500 (5% of 1$ – $10000)
$1000 (10% of $10001 – $20000)
$3000 (15% of $20001 – $40000)
$4000 (20 % of $40001 – $60000)

His total income tax bill would be $8500 for an effective rate of 8.5%. For comparison’s sake, under the real 2008 IRS brackets he would have a taxable income of $82100 and pay $13212.50 or an effective rate of 13.2%. Neither of those is too bad for someone making $100k a year, is it?

Don,

Now you are doing what I accused of doing. You asked if I thought all income should be taxed; I said yes and talked about deductions. Now you are doing the same…shame.

I agree with your tax rates it wouldn’t be too bad, but the current system is higher then that. Figures given rounded off for clarity, not accuracy

0 – 8,000 – 10%
8,000 – 32,000 – 15%
32,000 – 79,000 – 25%
79,000 – 164,000 – 28%
164,000 – 357,000 -33%
357,000 and up 35%

And it still doesn’t answer if it is fair to tax success more.

Why not keep the tax rates the same, the government will know how much it is receiving from each person. As a person gains income, the amount the government gets increases but in proportion to the amount of income increase.

As I said before; a person making 30,000 a year pays 4,099 in taxes but a person making 4 times as much 120,000 pays 27,578 in taxes. That is 6.728 times as much in taxes, not 4 times as much in taxes. So the person earning more is penalized more for that success and it still isn’t enough for some.

Think about that….what is fair in saying, you’ve made decisions that bring you greater income then someone else….so we are going to take an even greater portion?

Bob,
If you say that all income should be taxed then you inherently believe that there should be no deductions or exemptions, right? Income that is deducted or exempt isn’t taxed, right? Is it not clear that when I say that subsistence level income shouldnt’ be taxed that all I am doing is voicing support for income deductions and exemptions up to a certain level?

From the way you go back and forth in your talking points, I don’t think it’s clear what you believe. You say all income should be taxed, but then you seem to be okay with deductions and exemptions. Which is it?

Don,

I think the current system makes sense but is not fair. I do think that it makes sense to tax all income.

When you can pay more, you do. When you can’t, you don’t.

This is part of the problem as I see it. Other people get to decide who can afford to pay more, not the person making that money. You don’t know that person’s situation or activities but are saying solely based on income, it’s all right for the government to extort additional money.

How about the people making $100K but are providing support for aged parents, have medical problems, helping out other family members? Not all of that is deductible but is definitely part of the social contract.

The is a limit on the amount of money a person can donate to charity and write off their taxes, which decreases as income levels rise. Should a person be able to direct his or her money to the cause of their choice?

The fundamental philosophy that I’ve seen from the liberals on this board is that “income inequality” is wrong and that people should be forced to give up “extra” income to reduce that inequality.

People should be allowed to decide where to spend their money, not other people in the form a majority vote.

Don,

Just to add on, I want to make sure you understand that I feel taxation is appropriate. There are things that the government is supposed to do and paying taxes to insure those items are accomplished is acceptable.

What I question is the acceptability of taking additional money, over and above what is needed to those items and providing that money to people to reduce the “income inequality”.

A blog I read had a great point; my money is a representation of my time, energy and effort. When that money is taken from me, it is the same as forcing me to work that much more time.

X number of dollars is represented as Y number hours of my life.

So when forced by the government to pay additional money to someone who hasn’t earned that money, it’s literally forcing a person to be a slave for that person. Isn’t that what we call it when someone is forced to work for another person without receiving a wage for that work; slavery?

The person making a lower wage probably is hard working, earns their income, contributes to society and deserves respect, but shouldn’t it be an individual choice on who to support?
As many as there are of people deserving assistance, there are also some that should be allowed to fully face the consequences of their choices.

Most people didn’t want to bail out the banks and other financial institutions because of their poor choices, but are perfectly willing to bail out individuals regardless of their poor choices or how many times they’ve made those choices.

This is what I mean when I talk about it being fair; the forced labor for other people with the money being partitioned by others.

Who should have control of a person’s money; the government or that person?

LOL – I must have been composing this as you were composing your reply to me Don.

Bob – by electing our current representatives, we elect how to tax ourselves. Majority (or in some cases supermajority) vote is the only rational way to do it. Some things that taxes contribute toward provide an outsized benefit to the populace.

Public Schools
Prisons
Defense spending
Law enforcement
Fire
Infrastructure maintainance

I agree that the top rate is way too high. I also agree that the folks on the lowest rungs should pay something…

But, the poor in some ways actually do pay more, as a proportion of their income, taxes. Sales taxes are flat.

“What I question is the acceptability of taking additional money, over and above what is needed to those items and providing that money to people to reduce the ‘income inequality’.”

Okay Bob, I think I get where you’re coming from now. You don’t like welfare and you don’t like it when liberals talk about reducing “income inequality”. If the real, and only, reason for progressive taxation was to reduce income equality then I’d probably agree with you. But income inequality is just a symptom. I don’t really care if the rich get richer as long as it’s not at the expense of what is best for society as a whole. $10 trillion debts, $500 billion deficits and paying for wars on credit don’t exactly seem like a benefit to society to me. Rich people were doing just fine under the Clinton era tax brackets and we actually had more money coming in than going out.

I see providing welfare to those who really need it as a responsibility for all of us. It’s a price we pay for living in a relatively stable, healthy, prosperous society. How welfare is administered and what kind of welfare is given is certainly up for debate, but I truly believe that the luckiest among us have an obligation to help others when needed. The government doesn’t steal from us in order to provide welfare; the government is us. And we have decided that certain types of welfare are not only necessary, but are fair and appropriate to be provided by the government (i.e. “us”). If enough of us thought as you do then welfare would probably go away based on who we voted into office.

Don:

Extremely well put. This is the argument I have been trying, unsuccessfully, to make to Bob vis-a-vis the social contract theory. Unfortunately, Bob will have none of it.

Don,

Here is the link to where I found this information

The top 1% of income earners pay 39.4% of all the income taxes
Next 2 to 5% pays 20.3%
6 to 10% pays 10.6%
11 – 25% pays 15.7 percent

Top 25% of the income earners pay 86% of all the income taxes paid in the country. Isn’t that progressive enough?

To continue the 26 – 50% of the income earners pay only 10.9% of the taxes and the bottom 50%….fully half the people paying income taxes only pays 3.1%

How much more regressive should it be? Read the comments, some of the people here are saying that still isn’t enough.

Yes, I’ve seen those figures (or something similar) many times. That’s not evidence of actual wealth transfer is it? It’s more evidence of just how much more money rich people make than middle-class and poor people. How much is actually taken from rich people and given, illegitimately in your mind, to poor people?

I don’t consider taxes used for legitimate purposes as wealth transfer, do you? Of course, I’m guessing we probably disagree on what constitutes a “legitimate purpose” as well, but that’s why we elect people to represent us.

Bob:

Gee, and all the time I have been contributing to SS I thought I was working and contributing to SS through wages from such work – after all, regardless of my employer, the sum was taken from my paycheck. And now you are telling me that the SS I expect to receive a few years from now is wealth transfer. Shucks!

In all seriousness, Bob, I am comforted in knowing that the percentage of folks in this country who think like you – at least on economic terms – is a minority and shrinking.

Bob:

You (and/or jd) have challenged Cliff and others on this blog to voluntarily pay more in taxes if we think the tax rates should be higher.

My question to you is: will you be voluntarily refusing your SS check when that time comes because it is an entitlement to which you do not deserve (see, for example, your comment above)?

I also wonder: have you have instructed your wife to refuse all SS benefits that might come her way upon your untimely death (a situation I hope does not occur) because such would be an entitlement to which she does not deserve?

Yes or no should do the trick.

Bob,

It’s an interesting concept that you have about entitlement programs being a transfer of wealth, especially considering the taxes that pay for entitlement programs are flat and not subject to income deductions or exemptions (at least not on the low end in the case of Social Security). True, the money current wage earners put in is given to current retirees in the form of benefits, so technically, I guess it is a transfer of dollars. But those retirees did the same thing while they were working. Similarly, future earners will do the same thing when we are retired and receiving benefits. This is another example of the social contract. It’s not really a transfer a wealth from rich to poor but rather generation to generation. I assumed we were talking about transferring wealth from rich to poor.

Don,

The comment was that the rich are getting richer at the expense of everyone else, right?
If Ellie Elite doubled her salary, does that harm Sarah? No, she pays the same. Jenni’s example used a flat tax something that I advocate.

Put in deductions or credits, let’s call it 20,000. Sarah pays 15% on 10,000 1,500 but Ellie Elite’s only goes down to 12,000. Double Ellie’s salary to 200,000 and her taxes rise to 2,700 (180,000 taxable because of the deduction). Now that Ellie’s is getting rich is it at the expense of Sarah? Has Sarah’s taxes changed at all? No

How is Ellie not having to pay taxes? In Jenni’s example both pay a fair fixed flat rate of taxes. In reality, Ellie’s tax rate goes up to 28% while Sarah’s stays the same.

Sarah isn’t harmed by paying a portion of her income into taxes, that is part of the social compact, right? Shouldn’t people have to pay into the system, become part of it, have ownership of the system?

Sarah pays taxes for the roads she drives on, so does Ellie. Sarah pays a portion of the defense budget, Ellie does too and a large amount then Sarah does. Progressive taxes increases both the raw amount and the percentage.

If you were paying more for the something, wouldn’t you expect better service then the person paying less? That is one of the problems with progressive taxation, it gives a sense of entitlement to those paying more, much more. Remember the bottom 38% of the population pays no income taxes at all. Let’s make it a flat percentage rate that everyone pays. It would then allow everyone to be equal in relative terms.

What I get out of this line:

Are you really trying to say that Sarah is better off, or at least not suffering, when she is paying $3000 of her income in taxes just so Ellie doesn’t have to?

Because Ellie can afford to pay her taxes and Sarah’s taxes, Ellie should be forced to do that. Is that what you are saying?
Isn’t it everyone’s responsibility to their taxes?

Call me what you want, we are all hypocrites to a degree.

I’m being honest. Can Joe the Plumber, JFarmer, Cliff and others say the same thing?

I’m not advocating increasing the taxes of the wealthy so even more money can be transferred. That is how all these got started, remember?

If tomorrow Social Security went away, I wouldn’t mind. I’ve tried to set up my finances so that my family won’t need money from the government. If there is any money left for us when that time comes around.

Call me names if you want, but I’ve been fairly consistent in my positions. We should not raise taxes in order to reduce the “income inequality”.

I notice not a single person advocating reducing the “income inequality” is doing more on a direct personal financial level then what the law requires or have I missed someone’s saying otherwise?

How many of people advocating reducing the income inequality are giving their money to the government, bringing their income level down to what they think everyone should have?

There is a saying in the bible about a splinter in someone else’s eye but a plank in yours. I’ll admit that if taking the benefits based on the money that I’ve paid in makes me a hypocrite so be it. I haven’t taken any money yet. Can those that advocate reducing the income inequality say they have lived up to their principles?

Bob,
It has nothing to do with how much Ellie is making. It has to do with how much Sarah is paying in taxes just so Ellie can be richer, even though she can afford to pay more.

For example, using Jenni’s assumptions, Sarah is paying $3000 and Ellie is paying $150k in taxes. Lets also assume we have a balanced and lean budget (all cuts/efficiencies have been realized). If we implement a $20k exemption/deduction to alleviate taxes on subsistence levels of income then Sarah now pays nothing and Ellie pays $147k. Unfortunately we have a $6k shortfall. If we implement a progressive tax where Ellie pays 15% on the first 100k and 25% on everything else, then she now pays $235k. Ellie’s increased tax burden (which she can easily afford) helps alleviate a much greater burden (in terms of real life) on about 27 Sarahs and we can still balance our budget. If we revert back to the flat tax with no exemption/deduction then Ellie gets richer at the expense of those 27 Sarahs.

Like it or not, that’s how the system works. Luckily, more people agree with the philosophy that when you can afford to pay more you should pay more. I think even most of the Ellies in the world agree because they realize that having a bunch of Sarahs out there who can’t afford the basic necessities just to live is not going to be good for anybody.

Bob,
It’s simple. Assuming government revenue stays constant (maybe this is the point you are missing), with a flat tax Ellie is richer, Sarah is poorer. With a progressive tax and a subsistence level income exemption Ellie is less rich and Sarah is less poor. I don’t know how else to explain it.

BTW, Jenni’s numbers were $1 million for Ellie and $20k for Sarah.

The question that I keep asking is should the people making more be required to pay more that is sent to those making less — the definition of income redistribution.

Yes, Bob! The answer is yes!! A necessary incident to the infrastructure where people make more – and that allows people to make more – is that some will fall behind. Those who fall behind must be taken care of, at least at subsistence level. It’s really that simple, Bob.

Geesh, Bob. What happened during your life to make you so angry and bitter??

PS. So, I ask you again, do you run around calling your neighbors who receive social security checks welfare cheats – or, to use your words, wealth transfer recipients?

PPS. McCain takes a SS check every month. We don’t hear you calling him a welfare cheat, do we?

PPSS. You are so buried up to your neck in hypocrisy, Bob!!

JFarmer,

A necessary incident to the infrastructure where people make more – and that allows people to make mosalre

Are you saying that the system allow only some people to make more money? That the system doesn’t allow those making less money then the rich to make more?

The system allows everyone to make more or are you saying the system should tell people how much they are allowed to make?

Do you want to have the government setting wages, salaries, bonuses?
How about Tiger Woods, should the government step in and say that “Tiger, you’ve already won 10 tournaments this year, stop playing so someone else can win”?

- is that some will fall behind. Those who fall behind must be taken care of, at least at subsistence level.

Gee, I thought we were already doing that. The argument has been and will continue to be at what level should the government theft by taxation be increased to reduce not starvation, but to reduce the income inequality. Remember how the argument started, I’ll remind you again. I think it is wrong for the government to increase taxes to reduce the income inequality.

We already have a system in place, at the tax levels that we have, that takes care of people at the subsistence levels. That isn’t good enough for some people on this board. The argument is the rich are making more money then some people think is right. That is a personal opinion on those people’s part.

So, my argument has been and continues to be this; shouldn’t those people who believe income inequality is a problem be contributing their excessive money before using the government to take even more money from the ‘wealthy”?

Calling me names, attacking my honesty is just a distraction to this issue. Have fun doing it, it doesn’t matter to me.

is that some will fall behind

Some people will fall behind? Behind what the average income, the national consensus on how people should live? Why not have everyone give the government all the money and let the government tell people how much they deserve or don’t deserve? Is that the answer?
Maybe the government can also build houses to make sure that everyone has the amount of housing that they “deserve”?

This idea that I’m reading here sounds familar.

From each according to his ability, to each according to his need (or needs) is a slogan popularized by Karl Marx in his 1875 Critique of the Gotha Program.[1] The phrase summarizes the principles that, under a communist system, every person should contribute to society to the best of their ability and consume from society in proportion to their needs, regardless of how much they have contributed. In the Marxist view, such an arrangement will be made possible by the abundance of goods and services that a developed communist society will produce; the idea is that there will be enough to satisfy everyone’s needs.[2][3]

James,

That is the problem, I’ve never made the argument that social security is bad for the economy. Show me anywhere I’ve said that.

What I have said, repeatedly is that is it not fair to expect others to pay more because they make more. It may be that people are willing to do that as part of the social contract but it isn’t fair.

I’ve also stated, repeatedly, that it isn’t fair to increase the amount of taxes, note that word, increase so that an arbitrary point of income equality can be reached. That is using the government guns to force everyone to agree to your philosophy. It is not a voluntary decision.

I’ve also stated repeatedly that if people want a Marxist society, nothing is stopping them from voluntarily living it, right? I’ve stated that it is hypocritical for those people who want a marxist society not to be living their principles before they take more money out of my pocket or others.

Social Security isn’t bad for the economy, but too much welfare is bad for society. Please note what I said….not that welfare is bad for society, but too much is bad.

I was accused by James Farmer of making this all about me and the point is valid. The problem with welfare is it creates a society of what others do for me.
Shouldn’t everyone be responsible for their own finances? Their own planning for retirement, for unemployment, for disability?
Now, greater numbers of people are being told not only to depend temporarily for food, shelter but even a basic level of income.

Think about that, that not only as a society should we make sure that everyone has shelter, food, medical care but that we OWE them a certain level of income. I argue that we don’t owe anyone a level of income. Should we choose to help them achieve that, it should be voluntary.

And if people feel it is right to guarantee a certain level of income, who should provide it? I who don’t agree with that philosophy or should those that advocate provide that income?

Don,

Do the people have a right to keep the money they make?

Do the people who make less have a right to the money the wealthy make?

You (and/or jd) have challenged Cliff and others on this blog to voluntarily pay more in taxes if we think the tax rates should be higher.

My question to you is: will you be voluntarily refusing your SS check when that time comes because it is an entitlement to which you do not deserve (see, for example, your comment above)?

Jim/Nephi/Albert….

I can only answer the first question. Yes.
And for the record, I’ve encouraged everyone I know that has a planned retirement where they won’t need the money that they’ve banked with SS to do the same.

When I was poor, I didn’t pursue food stamps. I didn’t pursue government programs that would give me a discount on transportation. I didn’t take handouts. I simply made due with less. I didn’t then. I won’t now.

Do you gentlemen have the courage of your convictions?