Why not cut spending AND TAXES? (Commerce: mattress, loan, brokers)

[Vascodagama]

Graph: Tax Burden of Top 1% Now Exceeds That of Bottom 95%
http://www.taxfoundation.org/files/fed_incometax_ff183graph3-2.jpg (broken link)

[Majin]

Do you guys realize a flat tax system is actually regressive since the poor and middle class spend most of their incomes on necessities and the rich save or invest (tax free) the majority of their incomes?

[TimC2462]

Originally Posted by Don9

Graph: Tax Burden of Top 1% Now Exceeds That of Bottom 95%

Yes... but the rich will still be left with a good sum of disposable income.

[CarawayDJ]

Originally Posted by nullgeo

However, there is a small segment of the population -- a self-proclaimed / self-created elite -- whose earnings are extraordinary by any measure, who in many cases take in as much money in a year than most people could earn in many multiple lifetimes, yet who pay very little - to nothing - in taxes. They are an elite who enjoy benefits of living in our society that are beyond the wildest imaginings of 90% of the citizens who pay taxes. They live this by leveraging the labors of the taxpayers -- yet refuse to support their own privileged position in our country. Charge them ... collect from them ... and control their speculations which drive the expenses the rest of us have to struggle to pay. Problems solved.

My first reaction was to throw the BS flag. You usually can cite your sources though so I'll ask:

1. What percent of the wealthy elite pay little to no taxes? The FACT that the overwhelming majority of the income taxes are paid by wealthy Americans seems to be contrary to this. These numbers fluctuate, but the top 1% of income earners represent a 19% share of the income and pay about 37% of the US income tax bill. The top 5% represent a 33% share of income, but pay 57% of the US income tax bill. This is fairly undisputed. You may find numbers that vary by a point or two, but the message is the same. Maybe a few lucky or "guilty" individuals are getting away with something, but the numbers would seem to question your statement.

2. How much of a dent in our debt will it make if we catch these guys and make them pay a fair share. Indeed, if there are wealthy people paying little or no taxes, we should catch them. I suspect the definition of "little" is where the gotcha is. Maybe that means 20%, 30%, 50%?

I don't think you are a socialist, but remarks like "They live this by leveraging the labors of the taxpayers -- yet refuse to support their own privileged position in our country" come pretty close. Yes, it's fair to say that any successful person or business MUST leverage the work of others to get to where they are. It would be hard to get there without anyone else's labor. Maybe Bill Gates could have cranked out one or two PC's a year... However, let's be clear that "leverage" is not a negative word. Some might read your remark and incorrectly interpret that to mean the wealthy got there by taking advantage of others. These taxpaying workers they leveraged were provided a paying job. Depending on the industry they were involved in to get that wealthy, it's fair to say that these uber wealthy people employed hundreds to thousands of employees. Some might have made minimum wage and many probably made a darn good living.

Please explain "yet refuse to support their own privileged position in our country". In what way? Is it related to your belief they pay little or no taxes? They don't give to charities?

I grew up dirt poor and do just fine now. I grew up hearing the same wealthy bashing you speak of. I grew up to believe they were all greedy and only got rich off of the backs of the poor. As I became successful myself and started to actually meet and know these people, I was stunned to learn that most treated their employees quite well. Most gave generously to charities. Most were darn good people. Indeed, many charities would fold if it weren't for the donations from the wealthy. Many parks and museums would not exist without the wealthy. Many hospitals owe a ward or two to the wealthy. Many of our universities owe many of their facilities to the wealthy.

I've said this before. There are probably as many greedy poor people as there are greedy rich people. Nobody can tell me they didn't know greedy poor people too growing up. I can think of some real tight wads that wouldn't part with a 5 dollar bill without a fight. Many people even know folks working under the table jobs that pay no taxes.

[hoffdano]

Originally Posted by Majin

Do you guys realize a flat tax system is actually regressive since the poor and middle class spend most of their incomes on necessities and the rich save or invest (tax free) the majority of their incomes?

The flat tax systems that have actually been proposed by economists and politicians exempt people below certain income levels from income taxes. This reduces the regressive nature of flat tax systems.

But I have no inherent difficulty with regressive taxes. People who make less spend more to live and have less left over for other things. That is how it should be.

These lower income people also consume government services at a far greater rate vs their contribution to the services. They use the same roads, go to public schools, get drivers licenses, etc. yet pay almost nothing for them.

[hoffdano]

Originally Posted by NewToCA

The article was a little eye opening to me. It is one of the few articles I've read that made me reconsider some of my long held political/economic positions.

For example, I've long favored a flat tax system with decent standard exemptions. Back in the early 1980's reasonable guys from both political parties, such as Jack Kemp and Bill Bradley proposed various forms of flat income taxes, with sizable standard income exemptions. I generally supported those proposals, and have done so for decades.

However, seeing the current income data I now favor a limited progressive tax system. The income data indicates that money is much more skewed today, so I think higher income folks should be charged a higher rate, regardless of standard deductions (both at the state and national levels)

A radically simplified tax system, essentially flat, would likely collect more taxes from the rich because exemptions, deductions, loopholes, etc. would be eliminated. The rich have access to accountants, lawyers, and foreign resources that others don't - so they can manage the system better than everyone else.

[CarawayDJ]

Originally Posted by TimC2462

Yes... but the rich will still be left with a good sum of disposable income.

As it should be. They earned it. Except for the lucky "few" who were born into wealth, most of these people earned their wealth.

And what do they do with their disposable income? I hear pundits from the left on talk shows tell me the rich don't invest when they have more take-home income. Yet, I and probably anyone else who knows any wealthy person also knows that they invest heavily. While all of them maintain a safe amount in liquid assets, they put the majority of their money in various investments. Heck, they aren't dumb. Keeping their money in a savings account that pays barely over 1% is dumb. They invest. Their moneys funds corporations so that they can expand. They provide VC funding for startups. They invest and fund new technologies. And yes, sometimes they invest into their own companies. The one thing the wealthy do not do is just sit on their money.

Even when they "waste" their money they help someone. When they buy a yacht they are employing some folks in some obscure boatyard who rely on the wealthy to buy their yachts. When they build their mansions they are employing people.

[CarawayDJ]

Originally Posted by NewToCA

Interesting analysis I saw just last week:

It's the Inequality, Stupid | Mother Jones

Don't those charts just point out the obvious; the rich have more than the poor? Yes, Bill Gates will have a lot more than us folks. He has more for good reason though. If you trace the history of most wealthy people, for every greedy person who got rich by methods less than noble there are several who got rich by working harder, being smarter, taking significant risk, and providing great benefits to society in the form of the products and/or services their businesses produce. I thank Bill Gate and Steve Jobs for their innovation. I thank the founders of Google for how they have enhanced our lives. I thank the guys at Qualcomm. I thank.... The people who got uber wealthy didn't get there by creating things nobody wanted or were of little benefit to anyone. Perhaps everyone has Gordon Gekko in mind when they think of a rich person...

[TimC2462]

Originally Posted by CarawayDJ

As it should be. They earned it. Except for the lucky "few" who were born into wealth, most of these people earned their wealth.

And what do they do with their disposable income? I hear pundits from the left on talk shows tell me the rich don't invest when they have more take-home income. Yet, I and probably anyone else who knows any wealthy person also knows that they invest heavily. While all of them maintain a safe amount in liquid assets, they put the majority of their money in various investments. Heck, they aren't dumb. Keeping their money in a savings account that pays barely over 1% is dumb. They invest. Their moneys funds corporations so that they can expand. They provide VC funding for startups. They invest and fund new technologies. And yes, sometimes they invest into their own companies. The one thing the wealthy do not do is just sit on their money.

Even when they "waste" their money they help someone. When they buy a yacht they are employing some folks in some obscure boatyard who rely on the wealthy to buy their yachts. When they build their mansions they are employing people.

"Earn" is very subjective these days when it comes to soaring income level for the wealthiest Americans. I have no problem with people earning their wealthy income as long as the playing field is level.

[CarawayDJ]

Originally Posted by hoffdano

A radically simplified tax system, essentially flat, would likely collect more taxes from the rich because exemptions, deductions, loopholes, etc. would be eliminated. The rich have access to accountants, lawyers, and foreign resources that others don't - so they can manage the system better than everyone else.

And despite all of those accountants, lawyers, loopholes and deductions, they still pay an overwhelming majority of the US income tax bill. The top 5% of income earners pay 57% of the US income tax bill. Makes me wonder how high that number would be if they didn't have those accountants, lawyers, loopholes, and deductions

But yeah, I favor a flat tax too. I'd love to see it someday. I probably won't though.