Barack and Vanilla Ice

[lawryde 0]

When you cut taxes on people that spend 100% of their income on goods and service (i.e. the poor and lower middle class), you automatically stimulate the economy.

They continue to spend 100% of their income, they just have more of it to spend. Cutting taxes on the wealthy and well off you have no guaranty where the money will go.

[usahockey22 0]

When you cut taxes on people that spend 100% of their income on goods and service (i.e. the poor and lower middle class), you automatically stimulate the economy.

They continue to spend 100% of their income, they just have more of it to spend. Cutting taxes on the wealthy and well off you have no guaranty where the money will go.

Lower taxes for everyone stimulates the economy, and that is what I am in favor of.

You don't think the "wealthy and well off" spend their money on goods and services? Are you kidding? The upper 50 percent in total spends much much more money on goods and services than the lower 50 percent. Sure, the upper 50 percent will save/invest a larger percentage of their incomes...but this provides a lot of capital for new and expanding businesses who need the bank loans or direct investment to get their ideas going.

Business expansion and innovation is primarily funded by loans and investments...most firms can't just rely on their retained earnings for these ventures. They need the rich investment groups and speculators to get going.

[kosydar 0]

I think what he meant was that the lower incomes don't invest much, if at all. Obviously the upper class will spend a lot on goods and services (maybe even more than the lower class in sheer total), but its at a lower proportion of their total income as they have a higher propensity to save.

[usahockey22 0]

I think what he meant was that the lower incomes don't invest much, if at all. Obviously the upper class will spend a lot on goods and services (maybe even more than the lower class in sheer total), but its at a lower proportion of their total income as they have a higher propensity to save.

Yes...those are both true, as I did state in my last reply...but as I also said, money for investment is certainly not less important than money used for consumption. If anything, it is more important.

The reason we have such a great economy is because of the incentives that people have to invest and start a business. In a controlled economy, you take away a lot of those incentives by taxing and regulating the hell out of business, thus stifling entrepreneurship, and inspiring people to switch to offshore accounts and investments.

[cxo 0]

Too bad we don't currently have a great economy.

[usahockey22 0]

Too bad we don't currently have a great economy.

Uhhh...we lead the world in producing high quality goods and services. Our unemployment rate and per capita GDP are not the greatest in the world, but have been among the greatest for quite a long period of time (only some smaller, more homogeneous countries with greater potential for growth are ahead of us, and it's expected. but we have been consistent). Foreign investment is still quite high, and "Made in America" is still the brand that everyone wants to buy.

As for the current state of our economy, it is a minor bump in the road that we will recover from soon enough. We haven't entered a recession yet, and most predictions are that if we do, it will be very minor. Saying that we "currently don't have a great economy" because a recent, short-term slowdown has caused us to not experience our normal, incredibly positive economic growth, is simply naive. Its an adjustment that will be made up for in time, as always.

You are like one of many sheep in a flock who will run for cover whenever wall st. or some talk show host pushes the "panic" button. Right now is the time to look for stocks, houses, and other investments that are trading at great discounts, and probably won't be doing so for very much longer.

There's a big difference between market analysis and economic analysis. One deals with hopes, dreams, and fleeting fancies. The other deals with historical reality. If you look through your 2007-2008 market lense, you see a problem. Clearly this is not a wise way to judge the overall state of the economy.

[Chadd 916]

I think what he meant was that the lower incomes don't invest much, if at all. Obviously the upper class will spend a lot on goods and services (maybe even more than the lower class in sheer total), but its at a lower proportion of their total income as they have a higher propensity to save.

Yes...those are both true, as I did state in my last reply...but as I also said, money for investment is certainly not less important than money used for consumption. If anything, it is more important.

The reason we have such a great economy is because of the incentives that people have to invest and start a business. In a controlled economy, you take away a lot of those incentives by taxing and regulating the hell out of business, thus stifling entrepreneurship, and inspiring people to switch to offshore accounts and investments.

When money is just rolled into the stock market it really doesn't benefit the "real economy" unless the shares are beung purchased directly from the company. It fuels an alternate economy that thrives on cutting domestic jobs and damaging the "real economy". Making a stock go up a point for a quarter isn't a good thing when domestic jubs are cut and there are fewer Americans making money and rolling that money back into more goods and services. I support

1. A flat tax with a floor to prevent putting anyone below the poverty line

2. Very limited deductions, one home and no more than 10% deduction for charitable donations and lower rate on inheritance.

3. All income is income. No capital gains tax, you pay full taxes when you realize profits from capital gains

4. I don't know what that percentage is, but it should be a lot easier to figure out than the current system.

As for the current state of our economy, it is a minor bump in the road that we will recover from soon enough. We haven't entered a recession yet, and most predictions are that if we do, it will be very minor. Saying that we "currently don't have a great economy" because a recent, short-term slowdown has caused us to not experience our normal, incredibly positive economic growth, is simply naive. Its an adjustment that will be made up for in time, as always.

You are like one of many sheep in a flock who will run for cover whenever wall st. or some talk show host pushes the "panic" button. Right now is the time to look for stocks, houses, and other investments that are trading at great discounts, and probably won't be doing so for very much longer.

The middle class is being pulled apart. A few are holding steady, a few are moving up and a very large percentage are going into lower tax brackets. That's not a good economy. Are they blowing it out of proportion on TV? Absolutely. Something does have to be done to stem the tide of white collar jobs leaving the US though. We cannot continue to grow the economy when more people are working service jobs with less buying power than a few years ago.

[usahockey22 0]

I support

1. A flat tax with a floor to prevent putting anyone below the poverty line

2. Very limited deductions, one home and no more than 10% deduction for charitable donations and lower rate on inheritance.

3. All income is income. No capital gains tax, you pay full taxes when you realize profits from capital gains

4. I don't know what that percentage is, but it should be a lot easier to figure out than the current system.

Yes, I agree with you on all of these points. I'm not pro-business or pro-rich, but I do think we should allow the market to operate as freely as is feasible. Most people associate the "free market" with big business and wall street, but in reality, most of the policies we have in place now, in theory, help to redistribute income to the poor (tax system, social security, welfare, etc). But these programs have been gutted to essentially do the opposite. I don't want either one.

A flat tax with a floor is basically a negative income tax. This is what Friedman proposed years ago, in order to replace a progressive system of taxation and welfare programs. There is a big difference between helping all people to have equal opportunity in this country, and helping all people to have equal results. The first is a simple duty of government...the second is socialism. There is also a big difference between just helping people get to be upper middle class or rich (I think this idea is ridiculous), and helping people who are in serious distress.

When you give handouts to people in the lower class, you eliminate their incentive to improve. Welfare and progressive tax systems do this. If you are working in the lower class and worried about getting a promotion in your job because then your welfare will be cut off, there is a problem.

A flat, negative income tax basically means that everyone pays a flat percentage rate of their earnings, and along with this, gets a check from the government each year for some amount of money. Basically this would guarantee all of the low-wage earners a minimum income if they are struggling...the wealthy would still get this same amount of money back, but of course on a percentage basis, they would not get the benefit of the lower class (the idea is to mainly help those in distress, who might be living on less than 15k per year). Of course you also have to eliminate the many deductions available, the capital gains tax, and minimum wages for this to work. This policy of a guaranteed minimum income would be much better than the illusion of minimum wages helping the poor. What minimum wages really do is prevent businesses from hiring people whose services are not worth a certain amount. Thus only helping increase the unemployment rate. A poor person with a job at McDonald's is still better off than a poor person with no job.

Capital Gains is another nice perk for investors and big business, but yet again works against the idea of a free market. In the way that it is setup, you are helping big business continue to stay as big business, as opposed to helping smaller companies with needed investments. Investors and companies know that if they keep reinvesting their money, they will only be subject to capital gains instead of the normal income tax...so it just creates a policy of trapping the money in the retained earnings of some large company, when if it were taxed the same as income, many more people would have the incentive to invest in smaller companies. It helps monopolies.

Friedman once did a calculation of the amount of money that is spent in the department of education, health, and welfare, and showed that if we instead just took all of that money and sent it out directly to the people, the lower 10% of the population would have become above average in income. He also did show that a flat-tax rate would yield just as much income as our current system, and eventually much more so due to the fact that we would have a much higher rate of reported income than we do now...the laffer curve idea.

[Neal 41]

A flat, negative income tax basically means that everyone pays a flat percentage rate of their earnings, and along with this, gets a check from the government each year for some amount of money.

This is the part I'm having difficulty understanding - why does this check go out to anyone but those below a certain threshold? Why tax me, then give me some of my money back? Tax me appropriately and then use some of that money to bring the low earners to a minimum income level.

[lawryde 0]

A poor person with a job at McDonald's is still better off than a poor person with no job.

You're a very intelligent person with well thought out ideas, but I question if you've ever not had money.

Have you ever worked at a shit job, or two, or three at the same time so you could just pay rent and buy groceries? Have you ever told someone not to cash this check until next week because you wouldn't get paid until Friday? You make it sound so simple and easy, and you classify all poor people as lazy and not wanting to get out of their current predicaments.

I think you'd find more are actually just struggling to survive and aren't just gaming the system.

[usahockey22 0]

You're a very intelligent person with well thought out ideas, but I question if you've ever not had money.

Have you ever worked at a shit job, or two, or three at the same time so you could just pay rent and buy groceries? Have you ever told someone not to cash this check until next week because you wouldn't get paid until Friday? You make it sound so simple and easy, and you classify all poor people as lazy and not wanting to get out of their current predicaments.

I think you'd find more are actually just struggling to survive and aren't just gaming the system.

I've worked shit jobs before, but no, I'll admit that I've never been in a situation where I need 2 or 3 bad jobs at once just to make ends meet...though I've worked with quite a few people who have been in that situation, and I know what it involves, and it's not pretty. Never did I say that poor people are lazy...I'm not trying to say that at all. Most middle-lower class people I have known are also some of the hardest workers I have known. But it happens to be that service jobs are worth more than traditional blue collar jobs, and the necessary training/college degree is a huge burden on those with little income and/or net worth.

I'll also be the first to admit that I am very lucky concerning the country and family I was born into, at least from an economic standpoint. I'm not wealthy at all, but not struggling either...I consider this to be lucky, as most Americans should. I don't think it's the government's obligation to tax the hell out of rich people just so I can get a bump in income. I personally see that attitude as being dangerously close to socialism.

It is important to distinguish between relative poverty and absolute poverty. Consider that your chances of being born American are about 1/20 in this world, and we have it better off, in terms of economic and political freedoms, and potential for success, than almost anywhere else in the world. If you are born in America, you are already upper class from a global, absolute standpoint. There are very few Americans who actually cannot feed themselves, or who are living in sheer filth. Compare that to the rest of the world, and our system is really quite excellent..but it can be better.

I am sure that poor people want to get out of their predicaments, and maybe they don't have any good options by which they can accomplish this. I am in favor of eliminating welfare, not because I don't care about the poor, but because I think it's a broken system. Why create a system which gives someone an incentive to not work harder? This is not a flaw inherent in poor people, it is a flaw in the system. If you know that if you take a promotion which would cut you off from welfare benefits, and that while you are moving up in the work force, your net economic change in the deal is a negative, then you would be an idiot to take the promotion and hence less money if you are really strapped for cash, feeding kids, and so forth.

The reason I like a negative income tax is because I really do think it would help poor people better than our current system, as well as everyone else. It eliminates most of the waste that occurs simply by having bureaucratic control of the money, new buildings, employees to allocate the money, mismanagement, fraud, etc. Everyone benefits.

Here is a quick example that I was too lazy to do myself, so copied from wikipedia:

Consider for example a flat tax 25% and a government payment of $10,000. A person earning only $4000 per year would pay $1000 in taxes for a net income of $13,000.

$10,000 + $4000 - $1000 = $13,000 net income (Overall, they would receive a net gain of $9,000 from the government.)

A person making $40,000 would be at the break-even point, essentially paying no taxes.

$10,000 + $40,000 - $10,000 = $40,000 net income

A person making $1,000,000 per year would pay close to the full 25% tax.

$10,000 + $1,000,000 - $250,000 = $760,000 net income.

This is still a redistributive system, where the poor benefit more than the middle and upper class relative to their earnings...yet it would primarily give a large boost to those who are truly destitute, or close to it, and it wouldn't deter these people from seeking better paying jobs. Our current system allows for much waste and fraud. This would save money, and get government assistance to the people who truly need it.

[Chadd 916]

I'm not in favor of a system that gives people a salary for doing nothing. If you're collecting a check from the government, you should be doing something to benefit society. Things like cleaning parks and highways, working after school programs or serving food in homeless shelters. If you require people to work for their government money, they're much more likely to look a little harder for a "real" job.

[usahockey22 0]

I'm not in favor of a system that gives people a salary for doing nothing. If you're collecting a check from the government, you should be doing something to benefit society. Things like cleaning parks and highways, working after school programs or serving food in homeless shelters. If you require people to work for their government money, they're much more likely to look a little harder for a "real" job.

Same here, but our current welfare system already does this...it's just that negative tax would do it more efficiently, helping the people who are rock-bottom the most. A person would have to at least have some job in order to file the return and get the money back in this case, and they would know that same money is there regardless of a better job they may get. So while it is still essentially a handout, it would make sure that the person has a job, and would also give them help without creating an incentive to stagnate. It wouldn't be a perfect system, but would be an improvement...the amount of tax dollars spent on this would be far less than is currently used on similar programs that intend to accomplish the same thing.

[Chadd 916]

A flat tax of 25% would be a massive increase in what most people actually pay. If you eliminate most, if not all, deductions it could probably be done close to 10%. I'm a big fan of the government taking as little as possible and not creating huge programs and the infrastructure to run them.

[usahockey22 0]

A flat tax of 25% would be a massive increase in what most people actually pay. If you eliminate most, if not all, deductions it could probably be done close to 10%. I'm a big fan of the government taking as little as possible and not creating huge programs and the infrastructure to run them.

I agree completely. That example I posted with the 10,000 dollars and 25% was purely an example. Currently, I believe you need to be making around $33k/year (individual return) in order to become a member of the >25% tax bracket. With this negative flat tax example, this person would pay no taxes, and would receive a check for $1,750 from the government.

In this one example though, you can see that someone making $50,000 (well above the national average) would have a real rate of taxation of only 5% (12,500-10,000=2,500). You essentially take away special deductions, and give everyone a flat amount of cash back in addition to their flat tax rate. The $200,000/year person would be paying 20% of their income, and the $400,000/year person would be paying 22.5% of their income, which would be significantly less than those current tax brackets (though with deductions could easily be more in the net effect).

There are definitely some considerations that would be needed as to the optimal rate and refund, but of course I agree that the less tax the better.

[Jason Harris 31]

When Steve Forbes ran for President, his flat tax proposal was for 17%, with people earning in the mid-$30's being exempt from taxes. I believe the premise has been that there isn't enough political will to eliminate all deductions, particularly the mortgage interest deduction, since doing so would likely negatively impact real estate values. I believe the deduction for children would also remain.

When I was younger I considered myself a libertarian; in a perfect world, I'd probably still classify myself that way. However, one thing I've learned is people, particularly corporations beholden to stockholders, do a poor job of policing themselves; consequently, I believe there is a point at which a government can be too minimalist for our collective interest. What I mean is there have been numerous examples over the past 100+ years when corporations -- most famously Ford with the Pinto -- placed a monetary value on human life and were willing to accept deaths to protect their bottom line. Were it not for rules, laws, regulations, enforcement, etc, it's obvious many of these corporations wouldn't have stopped without government involvement.

I'm not looking to have a government that is actively involved in private economy or life, but there are things a government does better than the individual, so over the years I've realized I wouldn't want to neuter our government as much as the strict libertarian seeks.

[gxc999 7]

When I was younger I considered myself a libertarian; in a perfect world, I'd probably still classify myself that way. However, one thing I've learned is people, particularly corporations beholden to stockholders, do a poor job of policing themselves; consequently, I believe there is a point at which a government can be too minimalist for our collective interest. What I mean is there have been numerous examples over the past 100+ years when corporations -- most famously Ford with the Pinto -- placed a monetary value on human life and were willing to accept deaths to protect their bottom line. Were it not for rules, laws, regulations, enforcement, etc, it's obvious many of these corporations wouldn't have stopped without government involvement.

I'm not looking to have a government that is actively involved in private economy or life, but there are things a government does better than the individual, so over the years I've realized I wouldn't want to neuter our government as much as the strict libertarian seeks.

I think you said it perfectly. The truth of the matter is, if you make $100 million a year, you shouldn't be paying the same 35% rate that someone making $50k is, and that's basically what's happening now. I'm not going to have any pity on someone who's netting a "mere" $60 million a year because of a 5% tax bump and I won't ask anyone to have pity for me if I'm ever in that situation.

Is something like a 60% rate too high? Yes, it is but people consistently seem to forget that there is a middle ground. Even worse is when extremely wealthy people pay almost nothing in taxes, thanks to clever accountants and tax attorneys, and this happens more often than you might think...

[usahockey22 0]

My dad told me that when he worked at his law firm in Boston as a tax lawyer, their average rate of taxation for their business clients, after all the deductions and including the lawyer fees, was 2%.

I think Warren Buffet said it well in an interview, that there is something wrong here when his rate of taxation is lower than his secretary's.

[Chadd 916]

The more money you have, the more loopholes are available to you.

When Steve Forbes ran for President, his flat tax proposal was for 17%, with people earning in the mid-$30's being exempt from taxes. I believe the premise has been that there isn't enough political will to eliminate all deductions, particularly the mortgage interest deduction, since doing so would likely negatively impact real estate values. I believe the deduction for children would also remain.

You have to leave a couple deductions if you want to have any chance of passing the changes. One for your primary residence, and one for some amount of charitable contribution. My number of choice there is no more than 10% of your total income. I think giving a tax break simply for making use of your reproductive organs is one of the worst possible reasons to give someone a break.

Coupled with a redifinition of "income" to include capital gains, as that really is income, I think something like 10% flat tax is a possibility. Of course that would also require reductions in overall government spending, but the savings from eliminating 90% of the IRS should help.

[usahockey22 0]

Coupled with a redifinition of "income" to include capital gains, as that really is income, I think something like 10% flat tax is a possibility. Of course that would also require reductions in overall government spending, but the savings from eliminating 90% of the IRS should help.

Given the elimination of capital gains, and many of the deductions, I think a 10% flat tax would yield more revenue on its own. Government spending...well, I am always in favor of slashing that.

[Jason Harris 31]

I think giving a tax break simply for making use of your reproductive organs is one of the worst possible reasons to give someone a break.

Especially since I'm willing to use those for free...... :D

[lawryde 0]

I think giving a tax break simply for making use of your reproductive organs is one of the worst possible reasons to give someone a break.

Why? You're expanding the future tax base, work force, social security contributors, etc., etc. The tax break you get is tiny compared to the overall contribution another American can provide to the economy and country. You're also pumping more money into the economy to buy goods and services for the child.

[Chadd 916]

I think giving a tax break simply for making use of your reproductive organs is one of the worst possible reasons to give someone a break.

Why? You're expanding the future tax base, work force, social security contributors, etc., etc. The tax break you get is tiny compared to the overall contribution another American can provide to the economy and country. You're also pumping more money into the economy to buy goods and services for the child.

It's something people are going to do whether you give them the tax break or not Granting a tax break for something people are going to do, even if you don't give them the break, is poor fiscal policy. To do so in the scheme I suggested is even more insane as the plan is to reduce the number of overall deductions to a bare minimum. The two exceptions I listed are simple, direct and address sectors that would have significant problems under a tax scheme with no deductions.

[TheBert 0]

Most relevant thread I could find to post this

[mack 44]