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Well, given how the bottom 50% of earners pay negligible taxes compared to the upper 50%, both in terms of total dollars and as a share of their income, it seems pointless. Here's some shocking stats for you.
In 1980, the top 1% paid 19.29% of all Federal taxes. Today, earning around 21% of the total AGI, they pay around 38% of their income.
In 1980, the bottom 50% paid 7.02% of all Federal taxes. Today, earning around 11% of the total AGI, they pay 2.78%. That means, the top 50% of earners pay roughly 97% of all Federal taxes.
I realize that most people's notion of the rich is formed from old Richie Rich comic books, but people who are screaming about the wealthy not paying their fair share just aren't paying attention to the facts.
New research paper indicates tax cuts for lower income people generates higher economic activity.
I found this study to be quite interesting.
Tax Cuts For Whom? Heterogeneous Effects of Income Tax Changes on Growth and Employment
Owen M. Zidar
NBER Working Paper No. 21035
Issued in March 2015
what i find most interesting is that research studies can prove every side of every argument and they still believe that people should respect any of their conclusions.
Well, given how the bottom 50% of earners pay negligible taxes compared to the upper 50%, both in terms of total dollars and as a share of their income, it seems pointless. Here's some shocking stats for you.
Your stats (and your understandings) are shockingly incomplete. In the real world, tax burden has been disproportionately left behind as the incomes of top earners have disproportionately advanced.
This used to be common knowledge, as this is why use progressive tax rates.
We do not use progressive tax rates for economic stimulus. Every now and then we have a tax cut in the name of stimulus under both Democratic and Republican administrations & Congresses, but that is more the politics of being seen as doing something in the face of a recession, especially when that recession is largely caused by the federal government in the first place.
The real reason we have a progressive tax rate is punitive. Many lower income people just don't think it is fair that those in the upper income segments actually make high incomes, ignoring that those with high incomes earn those incomes (that is, they are paid their value to the economy) while they themselves have a much lower value to the economy. Politicians respond with populist actions in return for votes.
Quote:
Originally Posted by bigman123
...Funny thing is the Right argues for a flat tax, which would raise taxes on those who earn less, while lowering taxes for those who earn more. All while making the argument that the more money people keep in their pocket, the better it is for the economy. They make this argument while at the same time they are asking for a tax increase on those who earn less, who are the majority of people in the country.
The call for a Flat Tax is based on fairness, simplicity, and a reduction of the power of special interests.
Fairness. It is fundamentally unfair for some people to pay more and others pay less. The only fair scheme is for everyone to pay something, and the flatter the better. It is fundamentally unfair for those with lower incomes to gang up & vote penalties on those with a higher income just because they have a higher income. The Tyranny of the Majority is fundamentally unfair.
Simplicity. Everyone agrees that the tax code is a ridiculous hairball of complexity and the Flat Tax is a call to make it simpler.
Just how complex is it? The actual statutes passed by Congress and signed by the President run well north of 1 Million words (By way of comparison, the King James Bible has 788,280 words; War and Peace runs 560,000 words; and the entire Harry Potter series is just over 1 million words.)
The statutes plus the IRS Regulations implementing the statutes runs north of 4 million words
The statutes plus IRS regs plus relevant case law determined by the Tax Court runs over 70,000 pages. (Remember: in Tax Court the presumption is the IRS is correct and it is up to you to prove otherwise). Here is a useful chart on the growth in complexity:
Special interest power. The main reason the tax code is so complex is because Congress "sells" tax law changes to the highest bidder in return for campaign contributions.
How does this happen? In plain sight: if a Senator or Congressman sees that her re-election campaign fund is low, she contacts special interests to collect viewpoints and information for possible tax law changes. This is thinly-veiled extortion of law-abiding corporations & businesses. Corporations have no practical choice but to donate. It isn't just elected representatives who do this: I recall over a decade ago when my employer (a Fortune 500 company) was instructed by the Democratic National Committee that all campaign contributions must go the the DNC so the DNC could focus the re-election funds into districts that were competitive rather than to the specific elected representatives in the home districts in which my company operated, as those were "safe" districts and those representatives didn't need more re-election cash. Imagine that: the DNC calls the CEO of a Fortune 500 company and issues instructions - some might call them demands on how much & where it must contribute (some might call it pay tribute). Our CEO objected, saying it would choose who it supports based on the locations in which it operates and the issues that are important, and the DNC replied in essence "you don't understand: this is not a request, and it is not negotiable. Here is how you will contribute. These are your instructions. Don't you dare pi$$ us off or you will regret it, as we will bury you.
Let's take a real concrete example: the R&D Investment Tax Credit. R&D investment is regarded by essentially everyone as a good thing - in fact, the US Constitution recognizes the value of R&D through the creation of the US Patent System:
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Article I, Section 8, Clause 8 of the United States Constitution, known as the Copyright Clause, empowers the United States Congress: To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.
The R&D Investment Tax Credit is a temporary credit under Internal Revenue Code section 41 for companies that incur research and development (R&D) costs in the United States. Since the credit's original expiration date of December 31, 1985, the credit has expired eight times and has been extended fifteen times. The current extension expired on December 31, 2014. However, it may be renewed again for 2015, as it has been 16 times since 1981, usually retroactively to when the credit last expired.
So... what happens? Most corporations want the R&D tax credit made permanent; the exceptions are a handful of businesses who just don't care at all. No one is against it. Congress talks about making it permanent or extending it for another year or two in order to then call up corporations and extort campaign contributions. Corporations ask for it to be made permanent, but of course Congress has zero interest in doing so because it likes to have deep pocketed corporations they can extort campaign contributions from. This is why the credit has been renewed 15 times -- each of those cycles is a fund-raising cycle for corrupt politicians.
This is the same reason why Congress has not gone after a Constitutional Amendment to either make abortions a fundamental right or to restrict them: In the absence of such an amendment, candidates can go extort campaign contributions from relevant special interests on either side of the issue. If the issue were settled, it would dry up campaign contributions. What incentive does Congress have to cut its own throat?
Clearly, a Flat Tax can help reduce the ability of Congress to extort special interest groups.
what i find most interesting is that research studies can prove every side of every argument and they still believe that people should respect any of their conclusions.
That's why you need to look at sources. NBER and the Heritage Foundation for instance would be two completely different things.
It's obvious. You don't need a study to know that. ... tax cuts make no sense at this time, period. Rather we need to correct the many decade old policies that got us into this situation of a handful of people taking all the economic gains.
Rruff, I like actual data and actual economic analysis. This is an Economics forum, and that is why I posted the study in the first place. Your words are those of a strict narrow-minded idealogue. I don't find them valuable in a discussion of Economics.
Clearly, a Flat Tax can help reduce the ability of Congress to extort special interest groups.
What a bunch of blather. A flat tax shifts tax burden off of more wealthy people and dumps it instead onto less wealthy people. The whole notion is a gigantic fraud perpetrated by a most corrupt and undeserving special interest.
Rruff, I like actual data and actual economic analysis. This is an Economics forum, and that is why I posted the study in the first place. Your words are those of a strict narrow-minded idealogue. I don't find them valuable in a discussion of Economics.
Really? What does the number of pages in the tax code have to do with economics? I would suggest that the tax code is complicated only because the economy itself is complicated. Also that only a tiny number of all the pages in the tax code actually apply to any individual taxpayer.
Sounds like you shouldn't be in business or just crazy. If you're in business, one would assume you want to make money. You cant make money hoarding because you must invest in your business or fail
You are assuming I'm the only small business that is hoarding cash? lol... To re-invest is to risk money and the only reason to risk money is the business owner must see a payoff. Do you risk your money and invest without seeing a potential payoff?
Accumulating a stash of cash after a recession is normal conduct for business owners waiting for the right opportunity. Companies also pay down debt improving their balance sheets. Companies are not investing because they see an economy that is limping along. They see an anti-business administration who does not understand the basics of business who wants to keep plowing higher costs onto them via higher taxes, regulations, an administration and their supporters who think businesses are social institutions ... it's hard to see the payoff.
It's going to be difficult to give additional tax cuts to the 38% of lower income Americans who don't pay any income tax at all.
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