Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
EITC is very different than a pure negative income tax. The amount of EITC goes down as the person's income differs from a specified amount. If your income is too high or too low, you get less.
Basic income, negative income tax, and any other scheme that gives cash to people who don't work, has a big flaw. Instead of using the money to improve their lives, their children's lives, their futures, etc., too many of them will use the money for drugs and other wasteful recreations, to take their minds off how painful and meaningless their lives are.
A much better system would be a well-designed safety net. By well-designed, I mean something very different from what we have now. It should never give cash to anyone for any reason. The money that goes to pay for drugs for unemployed people should completely dry up. No food stamps or anything else that can be sold to get money for drugs.
Instead, we should define poverty to be the level at which people need the safety net, and make it lower than it presently is. It should be the point at which they're homeless, without income or assets. Then we should do away with all the cracks that people fall through. The safety net should be so solid that it isn't possible to fall through it.
We should make poverty unpleasant enough that people wouldn't voluntarily present themselves as impoverished unless they were desperate. And we should make sure nobody falls through the cracks, by assuming anyone motivated to present themselves as impoverished, really is. If some turn out not to be, it won't be a major problem, so we should just overlook it, for the sake of keeping the safety net solid.
To accomplish all this, we should put 100% of our welfare budget into a new kind of homeless shelters. Unlike present homeless shelters, these would have enough space to be sure of never having to turn anyone away. Residents would get basic Spartan room and board, job training, transportation to job interviews, etc. They would have no money for drugs. Cops would take homeless people there, because vagrancy would be illegal. Panhandling would also be illegal, because people need to be looking towards a better future, by doing job training, etc., not wasting their time being parasites forever.
There would be no paperwork requirements for such homeless shelters. People would be segregated into sections. A family section, a section for single men, a section for single women, etc. The only requirement to be a resident would be to show up. If anyone becomes obnoxious, they get segregated into their own section for obnoxious people. Etc.
But any such system can be ruined by incompetent people running it, and by people misappropriating its budget. As is the case with our present system. But that's no excuse to keep doing things wrong. We only need competence. Incompetence is the root cause of most of our problems now and in the future, including our social safety net and everything.
So what do you do about the people who don't spend their 11,000 wisely - what mechanisms will be in place to prevent this? Believe it or not, many "poor" people are also poor money managers.
I know, I'm the unicorn and rainbows destroyer - I should be banned!
No this is a perfectly reasonable question, and one we currently deal with in regards to social security recipients. And the answer is-it depends.
Laws will be in place to make it "untouchable" income-ie it cant be garnished ala social security. Additionally if people cant manage their money due to mental issues, or disability someone will be appointed to manage their money-ie pay their bills, and then hand them the balance. This has worked for social security. Its not always perfect but...shrug.
And for many more-so what? The overwhelming VAST majority understand that you pay : food, water, then housing. Its not horribly complex.
No this is a perfectly reasonable question, and one we currently deal with in regards to social security recipients. And the answer is-it depends.
Laws will be in place to make it "untouchable" income-ie it cant be garnished ala social security. Additionally if people cant manage their money due to mental issues, or disability someone will be appointed to manage their money-ie pay their bills, and then hand them the balance. This has worked for social security. Its not always perfect but...shrug.
And for many more-so what? The overwhelming VAST majority understand that you pay : food, water, then housing. Its not horribly complex.
But just exactly who decides on this income? What is enough, not enough, too much?
If people start spending more or irresponsibly,then they would want to raise the income, wouldn't they? And then that encourages them to spend more, since more income is coming.
Income tax is not the only form of tax. To say he is "not contributing" is simply not true.
Did you read my comment? I did not say he did not contribute, I said he doesn't pay INCOME TAX!
Your first sentence is not true either. The guy at McDonalds on a low wage is paying taxes. His net benefit ends up being greater than his contribution. That does not mean taxes are not taken out of his pay!
NOPE! He does NOT pay INCOME TAX. I cited SS, FICA taxes as taxes he WOULD pay! You keep creating strawman and bashing them mercilessly!
Yes, you also conveniently ignore payroll, sales, and property tax. Those alone can consume 15% or more of a person's income.
Again, I cited all those taxes as something he would pay. I am back to my question, did you even read my comments?
Growing the economy happens under higher tax rates. Tax cuts do not grow the economy, sorry. Voodoo economics was a failure.
If I cut taxes, one of two things happen. Money is saved or money is spent outside of government spending. For business owners, if it's enough, they may choose to expand, creating a job. If they invest the money, than someone else will have capital to expand. Either way, the economy expands through trade. If an unemployed worker is hired, he now pays into the SS and FICA, may or may not pay income taxes, and STOPS getting unemployment benifiets (lowering government spending by the amount of the unemployment benifiet. The above is admitted a simplistic model, but is accurate enough to show the concepts of how a growing economy lowers government spending and increases government revenue.
If the government "creates" a job, the economy does not expand, but puts a coresponding demand on the private sector equal to all pay and benifiets. If the government expands too much, the drain on the private sector to support the government actually contracts the economy - sort of like what we're seeing right now. If the government "spends" money - like hiring private sector companies to build a road - the economy expands.
Government employees should be limited to doing and managing functions that can't properly or more effeciently be done by the private sector. There is a CLEAR AND NECESSARY ROLE FOR GOVERNMENT AND GOVERNMENT WORKERS (highlighted so you will notice I am not anti-government), but to the extent possible, most things should be done by the private sector.
If Laffer says 36%, why is the right-wing trying to abolish income tax or settle for a 15% tax?
36% is what generates maximum tax revenue, I would prefer a much lower tax rate, because that would expand the private sector economy faster - but that doesn't generate the maximum tax revenue for the government. The point is, taxation above 36% causes chenges in economic behavior that result in LESS government revenue. So if you want higher than 36% tax rates, then I must assume this is about envy, not effective and efficient social policy.
It is not arguable. If your $1.00 becomes $1.20, that $0.20 is income. There is no way in hell that income should be exempted from tax. No amount of voodoo logic can justify that.
Watch. If I earn $100, and am taxed at 36%, I have $64 to invest. I invest the money, and it grows to $100. I sell, but am now taxed $15, leaving me with $85. An argument CAN be made that the money was taxed twice, because the investment must be made with AFTER tax dollars, and is still BELOW the initial amount (gross) earned.
If I earn $100, and am NOT taxed because I invest the money and it grows to $136, when I sell if Iam taxed at capital gains (or income tax levels - 36%), then the money is taxed once, and I am ahead by $2!
You don't agree, OK, but that doesn't mean there is not an argument that can be made for double taxing the money.
The fact that the earnings offset the tax burden and were still profitable is not the point, and is different than Warren doesn't use preferred investments that allow tax avoidance. By the way, Buffet doesn't pay his taxes, so obviously HE TOO has an issue with taxation rates when it is his personal money!
ME either, but this "punish the rich" mentallity is counterproductive and hurts the middle class. The American yacht industry, and the jobs that were part of that iindustry left the US precisley because of this "get the rich" sort sighted mentallity. A lesson from the yacht tax | Nealz Nuze | www.wsbradio.com
Did you read my comment? I did not say he did not contribute, I said he doesn't pay INCOME TAX!
NOPE! He does NOT pay INCOME TAX. I cited SS, FICA taxes as taxes he WOULD pay! You keep creating strawman and bashing them mercilessly!
Again, I cited all those taxes as something he would pay. I am back to my question, did you even read my comments?
You know the rebuttal is hot air when it is reduced to semantics. If $100 is witheld from his check, that is his "contribution" His $100 goes into the pool of $1,000, but his net return could be $2 when he receives $102 back.
Quote:
Originally Posted by Tuck's Dad
If I cut taxes, one of two things happen. Money is saved or money is spent outside of government spending. For business owners, if it's enough, they may choose to expand, creating a job. If they invest the money, than someone else will have capital to expand. Either way, the economy expands through trade. If an unemployed worker is hired, he now pays into the SS and FICA, may or may not pay income taxes, and STOPS getting unemployment benifiets (lowering government spending by the amount of the unemployment benifiet. The above is admitted a simplistic model, but is accurate enough to show the concepts of how a growing economy lowers government spending and increases government revenue.
If the government "creates" a job, the economy does not expand, but puts a coresponding demand on the private sector equal to all pay and benifiets. If the government expands too much, the drain on the private sector to support the government actually contracts the economy - sort of like what we're seeing right now. If the government "spends" money - like hiring private sector companies to build a road - the economy expands.
This entire premise is incorrect.
You are making the assumption that the government needs tax revenue to operate. Currency issuing governments are not currency users. All government spending is done through money creation. Taxation is money destruction. Your taxes don't actually pay for anything the government uses. Your taxes are purely to deflate currency expansion.
Quote:
Originally Posted by Tuck's Dad
Government employees should be limited to doing and managing functions that can't properly or more effeciently be done by the private sector. There is a CLEAR AND NECESSARY ROLE FOR GOVERNMENT AND GOVERNMENT WORKERS (highlighted so you will notice I am not anti-government), but to the extent possible, most things should be done by the private sector.
Why? Because you say so?
The government should be as big as it needs to be to carry out its function in society. Yes, the government has waste. However, a government worker is better than an unemployed citizen.
Quote:
Originally Posted by Tuck's Dad
36% is what generates maximum tax revenue, I would prefer a much lower tax rate, because that would expand the private sector economy faster - but that doesn't generate the maximum tax revenue for the government. The point is, taxation above 36% causes chenges in economic behavior that result in LESS government revenue. So if you want higher than 36% tax rates, then I must assume this is about envy, not effective and efficient social policy.
That is a strawman argument. For starters, no one in this country pays 36% effective rates in taxes. If they do, they have terrible accountants.
Envy has nothing to do with this discussion. Stick to public policy.
Quote:
Originally Posted by Tuck's Dad
Watch. If I earn $100, and am taxed at 36%, I have $64 to invest. I invest the money, and it grows to $100. I sell, but am now taxed $15, leaving me with $85. An argument CAN be made that the money was taxed twice, because the investment must be made with AFTER tax dollars, and is still BELOW the initial amount (gross) earned.
That $36 growth was income. You don't get taxed; income does.
(The tax would be 15% of $36, not $15)
Quote:
Originally Posted by Tuck's Dad
ME either, but this "punish the rich" mentallity is counterproductive and hurts the middle class.
I said nothing about punishing the rich. The rich should be paying their fair share. The loopholes available to them have barriers to entry, which is my biggest problem. I have no objection to the current tax rates. My issue has always been capital gains being taxed differently, and the different loopholes that favor corporations over labor. Labor is an economic asset, not a liability.
But just exactly who decides on this income? What is enough, not enough, too much?
If people start spending more or irresponsibly,then they would want to raise the income, wouldn't they? And then that encourages them to spend more, since more income is coming.
So we are back to the old problem again.
No we are not. Basic income should cover the average price of the basics to live. not the max, not the min. the average in the US. We have very specific ways of calculating this, and have done so for a long time. The idea behind this is not to make people rich, etc. its to say "Heres enough to survive". It may mean moving someplace cheaper. For example if I lost my job, I could not afford to live in my current city. I COULD however move elsewhere. People often pick a number, but thats preference. Pegging it to inflation means it shouldn't need to change.
You know the rebuttal is hot air when it is reduced to semantics. If $100 is witheld from his check, that is his "contribution" His $100 goes into the pool of $1,000, but his net return could be $2 when he receives $102 back.
It's not semantics, I was pretty specific in my statement and you changed it to make your argument.
This entire premise is incorrect.
You are making the assumption that the government needs tax revenue to operate. Currency issuing governments are not currency users. All government spending is done through money creation.
Taxation is money destruction. Your taxes don't actually pay for anything the government uses. Your taxes are purely to deflate currency expansion.
You obviously have never worked in budgeting for a government. Trust me, the government buys all kinds of things it uses. As for taxation being used for currency management, what's the role of the central bank?
To your assertion about governments creating money: Money represent value. ALL value is created in the private sector first, through either trade and/or value additions, and can be re-directed (taxation, tarrifs, etc.) by governments, but not created by them.
Why? Because you say so?
Nope. The constitution has roles, responsibilities and limits spelled out pretty clearly.
The government should be as big as it needs to be to carry out its function in society. Yes, the government has waste. However, a government worker is better than an unemployed citizen.
I agree with the first statement, but a better question is "How is a government worker different than an unemployed citizen?" From the perspective of cost to the treasury, it's pretty simular, but government workers do add value to many processes or do things the private sector can't or won't do - that is why, as I said, I agree with your first statement.
That is a strawman argument. For starters, no one in this country pays 36% effective rates in taxes. If they do, they have terrible accountants.
OK, change it to 18% and rerun the numbers. Doesn't change the concept outlined.
Envy has nothing to do with this discussion. Stick to public policy.
I have been, I keep asking and you aren't answering, Are you looking for the most effective revenue generation policy, or to punish the rich through excessive taxation? Pretty straightforward question, really.
That $36 growth was income. You don't get taxed; income does.
(The tax would be 15% of $36, not $15)
Really? So, If I told the IRS I don't owe them taxes, my income does, who goes to jail, me, or my income?
I said nothing about punishing the rich. The rich should be paying their fair share. The loopholes available to them have barriers to entry, which is my biggest problem. I have no objection to the current tax rates. My issue has always been capital gains being taxed differently, and the different loopholes that favor corporations over labor. Labor is an economic asset, not a liability.
So is capital. The policies you are proposing are punitive without the benifiet you clainm to be after, hence my thought that you want to punish the rich.
Your theory about government not needing tax revenue to operate, and taxes simply being a mechanism to deflate currency is a bit out there IMO and experience as a guy who has worked teh DoD portion of a couple of Program Objective Memorandum (input into the Federal/Presidential budgets presented to Congress for spending authorization).
That is a strawman argument. For starters, no one in this country pays 36% effective rates in taxes. If they do, they have terrible accountants.
With the top tax bracket being 39.6% surely some people have effective rate at 36% or more and it's not because they don't have a good accountant. Ordinary income of 4mm would put you above the 36% effective mark
Tuck's Dad, I hate to tell you, but if we are talking about direct taxation and direct spending, the federal government can basically do as much as it wants to. The "general welfare" clause has been held to relate to spending (and only to spending). While the government can't make laws pursuant only to the general welfare clause as far as restrictions on behavior, etc..., it CAN spend any money it takes in. And its power to tax is essentially plenary.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
