Taxes

[Bengalzona]

Question: Could we eliminate taxes for the poor and middle classes and retain our current level of national services if we re-instated a 70% income tax on the wealthy and raised capital gains taxes (the exact opposite of what we have done over the past 35+ years)?

[*TheLeonardLeap*]

Question: Should people be singled out and punished for being more successful in life than others?

(Yes, I know there will be people who mention the rich who were born into money and never had to work hard or earn anything, but there are plenty of wealthy people who are self-made.)

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People like to talk about paying "fair" shares. Well the only actually fair way is one single flat-rate federal income tax rate for all sources of income (working, capital gains, lottery, etc).

No loopholes, no returns, no deductions. No sales tax. Just a singular % for each level.

No idea what that % would be, though. Something like 12.5% Federal, 5% State, 2.5% County? No clue, but once it was set, then it would be upon the institutions to work within their means and budget.

[Bengalzona]

(03-22-2019, 06:13 PM)TheLeonardLeap Wrote: Question: Should people be singled out and punished for being more successful in life than others?

(Yes, I know there will be people who mention the rich who were born into money and never had to work hard or earn anything, but there are plenty of wealthy people who are self-made.)

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People like to talk about paying "fair" shares. Well the only actually fair way is one single flat-rate federal income tax rate for all sources of income (working, capital gains, lottery, etc).

No loopholes, no returns, no deductions. No sales tax. Just a singular % for each level.

No idea what that % would be, though. Something like 12.5% Federal, 5% State, 2.5% County? No clue, but once it was set, then it would be upon the institutions to work within their means and budget.

"Fairness" in life is a very relative and subjective concept. Is life really fair? Particularly taxes, when have they been 'fair'? Moreover, is life even supposed to be fair?

[CJD]

I think we could.

I don't think it'd be fair to the rich people though.

I'd much rather they just make it so that tax loop holes are closed and people are taxed on what they actually make.

[Bengalzona]

Not surprisingly, the question morphs from "could we do it" into "should we do it". And that is okay. It is also a worthwhile discussion, IMO.

But let me ask this: Would there be enough money to cover federal government expenses if we only billed, say, the income of the top 25% at 70% along with capital gains tax raises?

Thoughts?

[fredtoast]

(03-22-2019, 06:21 PM)Bengalzona Wrote: "Fairness" in life is a very relative and subjective concept. Is life really fair? Particularly taxes, when have they been 'fair'? Moreover, is life even supposed to be fair?

[fredtoast]

(03-22-2019, 06:43 PM)Bengalzona Wrote: Not surprisingly, the question morphs from "could we do it" into "should we do it". And that is okay. It is also a worthwhile discussion, IMO.

But let me ask this: Would there be enough money to cover federal government expenses if we only billed, say, the income of the top 25% at 70% along with capital gains tax raises?

Thoughts?

Remember that when we talk about a 70% bracket that is only 70% of earnings over a certain amount ($250K?).

Billionaires pay the same tax rate on the first $50K they earn as everyone else.

If we do create a 70% bracket it should just be for earnings in excess of a very large amount like $5 million.

[Benton]

(03-22-2019, 06:13 PM)TheLeonardLeap Wrote: Question: Should people be singled out and punished for being more successful in life than others?

(Yes, I know there will be people who mention the rich who were born into money and never had to work hard or earn anything, but there are plenty of wealthy people who are self-made.)

- - - - - - - - - - - - - - - - -

People like to talk about paying "fair" shares. Well the only actually fair way is one single flat-rate federal income tax rate for all sources of income (working, capital gains, lottery, etc).

No loopholes, no returns, no deductions. No sales tax. Just a singular % for each level.

No idea what that % would be, though. Something like 12.5% Federal, 5% State, 2.5% County? No clue, but once it was set, then it would be upon the institutions to work within their means and budget.

Equal is not equivalent. Access to lawmakers, courts, etc is totally different based on income.

If you're poor and get arrested with drugs, you go to jail and burden .the state. If you're rich and caught, you go to rehab. If you're poor and negatively inpacted by a law, you can spend years volunteering and never see if changed. If your rich,you call up the guy you bought.

Flat taxes are great, but they overlook that it's not flat for everybody.

[*TheLeonardLeap*]

(03-22-2019, 06:43 PM)Bengalzona Wrote: Not surprisingly, the question morphs from "could we do it" into "should we do it". And that is okay. It is also a worthwhile discussion, IMO.

But let me ask this: Would there be enough money to cover federal government expenses if we only billed, say, the income of the top 25% at 70% along with capital gains tax raises?

Thoughts?

If your question is merely a "could" rather than a "should", then my answer is: Yes. At least at first.

I am assuming you mean 70% with no loopholes or ways to reduce it? Because if we are talking 70% and people using all the offshore/tax haven/loophole/etc, probably not because they will find a way to reduce it a ton (as they did in the past when there was a huge tax rate, nobody actually paid at that rate). 

If you closed off all loopholes and such and it was a straight 70%, it would probably stop working because people would get tired of working for $1m and only coming home with $300k. Or earning $250k and only actually getting $75k. 

Meanwhile a house earning $75k get to go home with $75k.

People would get tired of that real quick And I don't think it would be sustainable.

[Belsnickel]

Doubtful. It would not be a sustainable system in my opinion.

[Bengalzona]

(03-22-2019, 07:47 PM)TheLeonardLeap Wrote: If your question is merely a "could" rather than a "should", then my answer is: Yes. At least at first.

I am assuming you mean 70% with no loopholes or ways to reduce it? Because if we are talking 70% and people using all the offshore/tax haven/loophole/etc, probably not because they will find a way to reduce it a ton (as they did in the past when there was a huge tax rate, nobody actually paid at that rate). 

If you closed off all loopholes and such and it was a straight 70%, it would probably stop working because people would get tired of working for $1m and only coming home with $300k. Or earning $250k and only actually getting $75k. 

Meanwhile a house earning $75k get to go home with $75k.

People would get tired of that real quick And I don't think it would be sustainable.

(03-22-2019, 08:41 PM)Belsnickel Wrote: Doubtful. It would not be a sustainable system in my opinion.

What do you think, 2 years? 4 years? Theoretically, of course.

[Belsnickel]

(03-22-2019, 08:53 PM)Bengalzona Wrote: What do you think, 2 years? 4 years? Theoretically, of course.

I'd see you getting maybe one year out of it before people figure out a way to avoid taxes.

[*TheLeonardLeap*]

(03-22-2019, 08:53 PM)Bengalzona Wrote: What do you think, 2 years? 4 years? Theoretically, of course.

(03-22-2019, 09:04 PM)Belsnickel Wrote: I'd see you getting maybe one year out of it before people figure out a way to avoid taxes.

See, I was going to go 2, maybe 3 years on my guess.

That number because that's probably about how long it'd take to make the new factories/headquarters/etc in other countries and move their best qualified folks over there with them.

The middle of our medical field would likely get crushed. Taking 10 years and ~half a million dollars of debt to become a Doctor, and working 60 hours a week just to give away 70% of their $300-400k/yr probably isn't conducive to producing a great medical field. I think the lower end doctors would still stick around, and the high tier doctors would still be around because they would be private doctors to the ultra wealthy, but that middle tier of doctors would get demolished. Doctors from other countries would stop coming here, and ours would head elsewhere.

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EDIT: We'd probably also have to massively upscale the size of the IRS, because tax evasion would likely be rampant.

[BmorePat87]

As other have said:

Could? Yes, for a while.

Should? No. I understand that for the ultra wealthy, a 70% income tax wouldn't mean a 70% tax rate on all earning. I'd have to know what the capital gains tax rate is. I'm not in favor of more than 50% of someone's earnings being taxed. It just seems wrong.


I'm also not in favor of a flat tax. The poor need 25% of their income more than the wealthy does. Flat sales taxes also affect the poor a lot more.

[Bengalzona]

(03-22-2019, 09:27 PM)TheLeonardLeap Wrote: See, I was going to go 2, maybe 3 years on my guess.

That number because that's probably about how long it'd take to make the new factories/headquarters/etc in other countries and move their best qualified folks over there with them.

The middle of our medical field would likely get crushed. Taking 10 years and ~half a million dollars of debt to become a Doctor, and working 60 hours a week just to give away 70% of their $300-400k/yr probably isn't conducive to producing a great medical field. I think the lower end doctors would still stick around, and the high tier doctors would still be around because they would be private doctors to the ultra wealthy, but that middle tier of doctors would get demolished. Doctors from other countries would stop coming here, and ours would head elsewhere.

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EDIT: We'd probably also have to massively upscale the size of the IRS, because tax evasion would likely be rampant.

Interesting. But historically, that wasn't what happened. As I recall, we had a top rate of 70% for about 60 years and really didn't have mass migrations of wealthy people.

Also, I think the lowest incomes of the top 25% here far exceeds the $300K to $400k range.

I'm not so sure about increasing the IRS. After all, the number of returns they would need to look at would decrease 75%. However, it could play havoc on professions like tax attorneys and CPAs.

[Bengalzona]

(03-22-2019, 09:34 PM)BmorePat87 Wrote: As other have said:

Could? Yes, for a while.

Should? No. I understand that for the ultra wealthy, a 70% income tax wouldn't mean a 70% tax rate on all earning. I'd have to know what the capital gains tax rate is. I'm not in favor of more than 50% of someone's earnings being taxed. It just seems wrong.


I'm also not in favor of a flat tax. The poor need 25% of their income more than the wealthy does. Flat sales taxes also affect the poor a lot more.

But we did have a rate of 70% or more for over 60 years and society (including the wealthy) prospered like no other period in our history. You would think a 70% income tax would cripple wealthy people. But it doesn't. This is because of the difference between income and wealth. A lot of the wealthiest people in our country can still make money even with no income.

[BmorePat87]

(03-22-2019, 11:01 PM)Bengalzona Wrote: But we did have a rate of 70% or more for over 60 years and society (including the wealthy) prospered like no other period in our history. You would think a 70% income tax would cripple wealthy people. But it doesn't. This is because of the difference between income and wealth. A lot of the wealthiest people in our country can still make money even with no income.

No, I just think it's wrong to tax that much. 

[Benton]

(03-22-2019, 11:01 PM)Bengalzona Wrote: But we did have a rate of 70% or more for over 60 years and society (including the wealthy) prospered like no other period in our history. You would think a 70% income tax would cripple wealthy people. But it doesn't. This is because of the difference between income and wealth. A lot of the wealthiest people in our country can still make money even with no income.

Well, that's just greed, and the misinformation campaign to keep it. 

Used to, higher incomes were taxed at a higher rate because the people making those kinds of salaries got what was theirs and left something for the next guy. But since the 70s (ish) it's been more about stockpiling. I think the mega wealthy know it's not going to last, even with the misinformation campaign. It's just a cash grab until then to get as much as you can.

[*TheLeonardLeap*]

(03-22-2019, 10:56 PM)Bengalzona Wrote: Interesting. But historically, that wasn't what happened. As I recall, we had a top rate of 70% for about 60 years and really didn't have mass migrations of wealthy people.

Also, I think the lowest incomes of the top 25% here far exceeds the $300K to $400k range.

I'm not so sure about increasing the IRS. After all, the number of returns they would need to look at would decrease 75%. However, it could play havoc on professions like tax attorneys and CPAs.

Yes, we had a top rate of 70% for about 60 years, and not a single soul ever actually paid 70%. My scenario was if you removed all the loopholes, deductions, and the like and actually forced them to pay 70%. If you maintain all the loopholes, it wouldn't work, because people would simply find ways to not have to pay anywhere near that much in taxes, and we couldn't maintain current standards. If you look it up, there are people who did research. When the tax rate was at 70% in 1980, the top 1% only *actually* paid about 23%.

https://www.wsj.com/articles/how-wealthy-americans-like-jack-benny-avoided-paying-a-70-tax-rate-11547807401
(It's a subscribe article, but the fact that it exists at least tells you I am not just making it up, lol.)

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Also, you are in for a world of shock if you think the top 25% far exceeds the $300-400k range.

https://www.investopedia.com/personal-finance/how-much-income-puts-you-top-1-5-10/

Top 5% in 2017 had an average wage of $299,810.
To break into the top 10% in 2017, you needed to earn $118.400.
To break into the top 1%, $716,766.
To break into the top 0.1%, $2,756,865.

Now those numbers don't include capital gains and such, and is just income, but the point remains. Your scenario would involve taxing 70% on people making less than $100k/yr. That means people making $100k/yr would be only getting $30k/yr. According to the poverty line, if the $100k job was their only income, and it was a family of 5, 70% tax rate would leave them right at the poverty line ($29,420 in 2018).

Where reach people get real rich is stock worth and the like, which isn't "income". That could probably be adjusted, but you sure don't want to go 70% there, or people are going to stop investing in the economy and just hoard all of their wealth like Scrooge McDuck in a vault, rather than put it back into circulation.

[Bengalzona]

(03-22-2019, 11:22 PM)Benton Wrote: Well, that's just greed, and the misinformation campaign to keep it. 

Used to, higher incomes were taxed at a higher rate because the people making those kinds of salaries got what was theirs and left something for the next guy. But since the 70s (ish) it's been more about stockpiling. I think the mega wealthy know it's not going to last, even with the misinformation campaign. It's just a cash grab until then to get as much as you can.

I'm less optimistic. I don't think the wealthy do think it will end. In fact, I think the greater emphasis of the wealthy on politics during the past 40 years is an indication that this is a complete power grab and a bisection of society into a medieval two class society.