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View Full Version : Why do we tax the rich at all ?


The Flying Dutchman
07-17-2011, 03:01 PM
I mean, these are the job creators. If we increase their taxes they won't want to create more jobs. Seems to me then we should give them an even better tax break so they'll want to create more jobs then they are presently doing.
I want to create jobs too. Truth be told I'm a small business man/self employed who now and then employs people. I want to employ people because I make money off their labour.

Only thing is, I'm held back at times because the demand for my services doesn't always allow me to have an employee or two. I'm trying to figure out how a tax break on my earnings is going to want me to hire an extra employee, especially when I can write off the cost of his labour as well.


Can you Republicans explain how this actually works to me ?

TriPolar
07-17-2011, 03:14 PM
{Raises hand, waves it wildly back forth}

Ooh, ooh, I know, I know, but I'm not a Republican. Can I answer anyway?

emacknight
07-17-2011, 03:21 PM
You've confused corporate taxes with the top marginal tax rate.

Go back three spaces and roll again.

Polycarp
07-17-2011, 03:30 PM
For the same reason Willie Sutton robbed banks.

The Flying Dutchman
07-17-2011, 03:40 PM
You've confused corporate taxes with the top marginal tax rate.



No I haven't. When looking at my own situation, I'm not a corporation and my understanding regarding eliminating the Bush tax cut for the wealthy has nothing to do with corporate taxes.

The Flying Dutchman
07-17-2011, 03:44 PM
For the same reason Willie Sutton robbed banks.

Taxation of the rich = Robbery ?

I haven't seen this side of you before.

The Flying Dutchman
07-17-2011, 03:45 PM
{Raises hand, waves it wildly back forth}

Ooh, ooh, I know, I know, but I'm not a Republican. Can I answer anyway?

Please do.

TriPolar
07-17-2011, 03:50 PM
Please do.

It's a lie. Republicans think people are stupid and will belive anything. I think they're right.

XT
07-17-2011, 04:07 PM
Well, contrary to popular belief, I'm not a Republican, but I'll answer anyway:

Why do we tax the rich at all ?

Because they are citizens just like everyone else, they use the various services that are the reason for the taxes, and there is no reason why they shouldn't pay taxes.

I mean, these are the job creators.

Assuming you actually believe and understand this, they are amply rewarded for it already. Again, this is no rational reason why they shouldn't pay any taxes.

If we increase their taxes they won't want to create more jobs.

Depends on how much and how you increase the taxes. If you lower the taxes to nothing there might be some non-zero benefit, jobs creation-wise, but not enough to make up the huge loss in government revenue for allowing 'the rich' to not pay taxes. If you raise their taxes to 100% you will certainly have a large drop off in jobs creation and corporations, as well as a decrease in government revenue. Depending on where you set the bar in-between those two extremes you are going to get varied results of jobs creation/capital investment and government revenue.

I want to create jobs too.

Start a viable company that employes people. Seemingly it's easy, based on the answers you generally get in these threads. Of course, luck plays a huge part, again seemingly, so hopefully when someone gives you a company you will also be lucky enough for it to be successful as well.

Only thing is, I'm held back at times because the demand for my services doesn't always allow me to have an employee or two. I'm trying to figure out how a tax break on my earnings is going to want me to hire an extra employee, especially when I can write off the cost of his labour as well.

A tax break right now probably isn't going to change the equation for you. The only thing that would change the equation is for an increase in demand for whatever it is you do. If you were a big corporation, however, a tax break or tax deferment might entice you to expand or shift manufacturing or support services to some new area (that's how my county has lured in several large companies in the past few years...no CORPORATE tax for a period of years), though even at the large scale it's more about demand than anything right now, and there doesn't seem to be anything that's going to spur demand while the economy continues to drag.

-XT

emacknight
07-17-2011, 04:16 PM
I want to create jobs too. Truth be told I'm a small business man/self employed who now and then employs people. I want to employ people because I make money off their labour.

So you did a little work on the side, made good money and paid 10% of it in taxes. It meant more money in your pocket and that's a good thing. You did a good job so there is more demand allowing you to put in more hours, but each hour was then taxed at 15% meaning you took in less money for your efforts. Your first 10 hours of work per week paid $8,350 less 10% in taxes, your second 10 hours paid $8,350 less 15% in taxes.

There was still enough demand that you decided to hire help, but now the next 10 hours are taxed at 25%. Each person you hire requires more work on your part, brings in more revenue, but that gets taxed at an increasingly higher rate.

Is there ever a point where you'd say, "screw it, I'm not taking another job if I only get 50% of the pay."

TriPolar
07-17-2011, 04:37 PM
So you did a little work on the side, made good money and paid 10% of it in taxes. It meant more money in your pocket and that's a good thing.

It's a good thing for him. That doesn't have anything to do with tax rates

You did a good job so there is more demand allowing you to put in more hours
Based on what? The GoodJob Fairy?
, but each hour was then taxed at 15% meaning you took in less money for your efforts. Your first 10 hours of work per week paid $8,350 less 10% in taxes, your second 10 hours paid $8,350 less 15% in taxes.

If he's making $835 an hour, and he's got a market to stay in business with, he's paying the top rate any way. A little more business isn't changing his tax rate at all.


There was still enough demand that you decided to hire help, but now the next 10 hours are taxed at 25%.
Again, no, and no.
Each person you hire requires more work on your part, brings in more revenue, but that gets taxed at an increasingly higher rate.

You hire people because they are going to generate more revenue than you can with your time. And again, its the top rate already, it doesn't increase.


Is there ever a point where you'd say, "screw it, I'm not taking another job if I only get 50% of the pay."

Sure. Luckily, even though I pay the top rate, it isn't 50%.

Sitnam
07-17-2011, 04:40 PM
Drinking a glass of red wine a day is healthy, why not drink 6 bottles a day?

Voyager
07-17-2011, 05:36 PM
Taxation of the rich = Robbery ?

I haven't seen this side of you before.

Oh these children, they know so little of American culture.

Hint: When Willie Sutton was asked why he robbed banks, he answered "because that is where the money is." Kapeesh?

Voyager
07-17-2011, 05:40 PM
Only thing is, I'm held back at times because the demand for my services doesn't always allow me to have an employee or two. I'm trying to figure out how a tax break on my earnings is going to want me to hire an extra employee, especially when I can write off the cost of his labour as well.


Can you Republicans explain how this actually works to me ?

The business columnist (who usually drifts right) made this exact point in the paper today, basically that the notion that tax increases on the rich will hurt job creation is bullshit, even for business people like you. I am also eagerly awaiting a real response to your question as opposed to a response to your thread title.

The Flying Dutchman
07-17-2011, 05:41 PM
Oh these children, they know so little of American culture.

Hint: When Willie Sutton was asked why he robbed banks, he answered "because that is where the money is." Kapeesh?

Ah.

Got it.

TimeWinder
07-17-2011, 05:42 PM
I mean, these are the job creators. If we increase their taxes they won't want to create more jobs.

Cite (not seriously)? I know this is Republican dogma, but we've been running the experiment for 12 years now, and job creation is at it's lowest level in eighty years, and unemployment is at it's highest since WWII. We've given all of these rich folks huge tax breaks, and kept them on the books for over a decade, when is it supposed to start working?

The Hamster King
07-17-2011, 06:39 PM
I mean, these are the job creators.No they're not. What a silly thing to say.

Desert Nomad
07-17-2011, 07:10 PM
No they're not. What a silly thing to say.

How many employees does the average welfare recipient have?

carslzpro
07-17-2011, 07:16 PM
Typically a larger company with more employees will provide the owner with a greater income than a smaller company with fewer employees.

If the government raises a business owner's taxes, the best way for him to maintain the same income would be to expand and hire new employees, not shrink and lay people off.

Fear Itself
07-17-2011, 07:42 PM
How many employees does the average welfare recipient have?Exxon employs over 81,000 worldwide (http://seekingalpha.com/news-article/1233678-exxon-mobil-plans-to-build-houston-area-campus). That's going skew the curve among the other welfare recipients.

emacknight
07-17-2011, 08:30 PM
Cite (not seriously)? I know this is Republican dogma, but we've been running the experiment for 12 years now, and job creation is at it's lowest level in eighty years, and unemployment is at it's highest since WWII. We've given all of these rich folks huge tax breaks, and kept them on the books for over a decade, when is it supposed to start working?

Is it at all possible that the world today is even just slightly different than it was after WWII?

Max the Immortal
07-17-2011, 08:50 PM
I mean, these are the job creators. If we increase their taxes they won't want to create more jobs. Seems to me then we should give them an even better tax break so they'll want to create more jobs then they are presently doing.

I think it's worth remembering that no country is a closed system. Less taxes on the rich does leave more money in the hands of investors, but there's no guarantee that they'll invest that extra money where we want it invested. If building a toy factory on the other side of the world is more profitable than building it in one's home town, the rational thing to do is to build it on the other side of the world. This provides the most benefit to the investor, and it may do the most to raise the worldwide standard of living, but it won't necessarily do very much to raise the standard of living in the country that cut taxes in the first place.

Polycarp
07-17-2011, 08:55 PM
For the same reason Willie Sutton robbed banks.

Taxation of the rich = Robbery ?

I haven't seen this side of you before.

My point, such as it was, was that just as the banks are assumed to be the places where cash is by the typical member of the public, the rich are the ones assumed to have the most taxable money.

Actually, I don't have an issue with tax shelters for the rich -- but IMO make such shelters things that advance public policy. Need new economic development in the Rust Belt? Make it advantageous to invest there. Want to have a new sports stadium? Don't build it with bonds paid off with tax money, have a joint venture build it and run it at a profit. Want research into renewable fuels? Make it financially beneficial for ExxonMobil and BP/Amoco to do that research and benefit from it.

emacknight
07-17-2011, 08:57 PM
How many employees does the average welfare recipient have?

Exxon employs over 81,000 worldwide (http://seekingalpha.com/news-article/1233678-exxon-mobil-plans-to-build-houston-area-campus). That's going skew the curve among the other welfare recipients.

Don't forget farmers. They employ lots of people, or is talking about farm subsidies still taboo?

Fear Itself
07-17-2011, 09:00 PM
Don't forget farmers. They employ lots of people, or is talking about farm subsidies still taboo?Not with me. That whole program needs cutting way back.

TimeWinder
07-17-2011, 09:09 PM
Is it at all possible that the world today is even just slightly different than it was after WWII?

I don't see how that has anything to do with my point. The plain facts on the ground are that lowering taxes on the rich for the last 12 years has not produced the large number of jobs that the Republicans said it would (quite the opposite), and that it has locked away a large amount of wealth, just like the Democrats said it would. In other words, we've actually run the experiment, and the results are quite plain, but one party keeps arguing that it's "obvious" that lowering taxes on the rich creates jobs.

That level of obliviousness to actual data just irritates me no end.

Happy Lendervedder
07-18-2011, 09:04 AM
Profits are up, hiring is still non-existant, unemployment and underemployment is still high.

Maybe corporations are taking advantage of this low-tax situation to sit on their profits and earn tons of interest. After all, there's nothing to encourage them to actually spend the money on job creation.

On the other hand, if we were to raise corporate taxes, companies would have two options: spend their profits on expansion/hiring/new factories/etc. Or pay more of their money to the government. Which do you think most companies would choose?

This pig-headed idea that we MUST keep taxes low on the job creators is a bad, bad thing.

RTFirefly
07-18-2011, 09:45 AM
We've given all of these rich folks huge tax breaks, and kept them on the books for over a decade, when is it supposed to start working?In the year 2525...

Hey, it's working just fine for the rich folks already! Isn't that all that matters? :p

Kearsen
07-18-2011, 09:54 AM
Typically a larger company with more employees will provide the owner with a greater income than a smaller company with fewer employees.

If the government raises a business owner's taxes, the best way for him to maintain the same income would be to expand and hire new employees, not shrink and lay people off.

The big assumption: Demand stays at the same rate for your product, right?

gonzomax
07-18-2011, 10:32 AM
If money were just money it would still be wrong to let the rich escape any taxes. Money is also power. As the money started trickling up, then became a river flowing up, more and more political power went with it. We are allowing a new ruling class to get richer and more powerful every day. The rich own our politicians .
The argument that the rich will hire is wrong. Hiring is spurred by demand. Demand to the poor will help the economy. Giving the tax breaks to the rich has been going on since Reagan. The jobs have been getting scarcer and scarcer as the rich have gotten more and more money.That theory has been tested thoroughly and proven wrong.

Sailboat
07-18-2011, 11:28 AM
Oh these children, they know so little of American culture.

Or to quote (http://www.straightdope.com/columns/read/2493/who-was-phoebe-snow) the Master, "People nowadays have the historical awareness of squirrels. "

Voyager
07-18-2011, 02:46 PM
The big assumption: Demand stays at the same rate for your product, right?
If it does, and you don't expand, money goes to the government who can funnel it to those who will spend it. Which will increase demand, eventually.
Is the owner going to expand with taxes kept low or cut? Cutting taxes further means government workers are laid off, or unemployment payments and other programs to put money into the hands of people without much decrease, which cuts demand still more. How does that help?

Happy Fun Ball
07-18-2011, 03:37 PM
Hmmm, I usually agree with Cecil, but I don't have any knowledge of what squirrels did historically.






What?

Omg a Black Conservative
07-18-2011, 04:09 PM
If the government raises a business owner's taxes, the best way for him to maintain the same income would be to expand and hire new employees, not shrink and lay people off.

No, the best way for him to maintain the same income would be to outsource.

Anyway, the Bush tax cuts should be rescinded when the bottom 40% or whatever it is of people who don't pay Federal income taxes start to pony up. I think that's fair. I find it odd how the, as I'd like to call them, "tax-the-rich" people don't have a problem with the fact that the U.S. has become more progressive in that the rich shoulder more of the burden than they did years ago. Why should some people get the proverbial "free ride"?

Ravenman
07-18-2011, 04:25 PM
Anyway, the Bush tax cuts should be rescinded when the bottom 40% or whatever it is of people who don't pay Federal income taxes start to pony up. I think that's fair. I find it odd how the, as I'd like to call them, "tax-the-rich" people don't have a problem with the fact that the U.S. has become more progressive in that the rich shoulder more of the burden than they did years ago. Why should some people get the proverbial "free ride"?I like your style: raise taxes on the poor, cut taxes for the rich.

It also just occurred to me: poor people also don't pay the estate tax. Do you think we should also start taxing the $52.17 cents that Hobo Joe had in his pocket when he expired while panhandling on the street?

Omg a Black Conservative
07-18-2011, 04:31 PM
I like your style: raise taxes on the poor, cut taxes for the rich.

Huh? Rescinding the Bush tax cuts would be an effective tax hike on the rich. How is that "raise taxes on the poor, cut taxes for the rich"? That's more "raise taxes for everyone", though that idea won't be too popular. Everyone is for tax hikes unless it requires raising your own. That's kind of why I always find it funny when I see liberals demand tax hikes on the rich. Why aren't they, as a whole, willing to shoulder tax hikes instead of hoisting those tax hikes on someone else?

It also just occurred to me: poor people also don't pay the estate tax. Do you think we should also start taxing the $52.17 cents that Hobo Joe had in his pocket when he expired while panhandling on the street?

No, but we should definitely cut stuff like EITC and other welfare programs to the poor, since they tend to cause the poor to receive more than they pay out in (combined) taxes.

;)

Ravenman
07-18-2011, 04:49 PM
That's kind of why I always find it funny when I see liberals demand tax hikes on the rich. Why aren't they, as a whole, willing to shoulder tax hikes instead of hoisting those tax hikes on someone else?You are assuming liberal = poor. There are plenty of well-off people who believe that taxes should be raised on the wealthy.

Some of those people include Warren Buffett, Reed Hastings of Netflix, these folks (http://wealthforcommongood.org/patrioticmillionairespressconf/), and Barack Obama, to name just a few. Oh yeah, even odds that I'd pay higher taxes if the Bush tax cuts for the well-off were rescinded, and I'd be happy to.

Meanwhile, fiscal conservatives continue to snooker people who would never pay the estate tax into thinking that they will, just by mislabeling it the scaaaaaary death tax. (http://press.princeton.edu/titles/7919.html)

Fear Itself
07-18-2011, 05:41 PM
I find it odd how the, as I'd like to call them, "tax-the-rich" people don't have a problem with the fact that the U.S. has become more progressive in that the rich shoulder more of the burden than they did years ago. Why should some people get the proverbial "free ride"?No they don't; they pay much lower taxes as a percentage of their income than at any time since WWII.

randomface
07-18-2011, 05:53 PM
Those are two different claims. One is that they pay a greater percentage of the burden, the other is that they pay a lower percentage of their income. Both can be true at the same time.

The Hamster King
07-18-2011, 06:03 PM
I find it odd how the, as I'd like to call them, "tax-the-rich" people don't have a problem with the fact that the U.S. has become more progressive in that the rich shoulder more of the burden than they did years ago.Only because they control a vaster larger percentage of the nation's wealth than they did years ago.

Clearly it's unfair to ask the wealthy to shoulder such a burden. The obvious solution is to divest them of their huge holdings and spread the wealth around so the tax burden can be shared more equitably.

Voyager
07-18-2011, 06:12 PM
No, the best way for him to maintain the same income would be to outsource.

How does a decision to outsource depend in any way on his personal tax burden?

Anyway, the Bush tax cuts should be rescinded when the bottom 40% or whatever it is of people who don't pay Federal income taxes start to pony up. I think that's fair. I find it odd how the, as I'd like to call them, "tax-the-rich" people don't have a problem with the fact that the U.S. has become more progressive in that the rich shoulder more of the burden than they did years ago. Why should some people get the proverbial "free ride"?

When a friend has lost blood and you need to find someone to donate more, do you commonly approach stones?

Plus, this is the first time I've heard the rich getting an increasing share of the income called progressive. Progressivity is a function of marginal tax rates, not the absolute amount paid.

The Hamster King
07-18-2011, 06:21 PM
Plus, this is the first time I've heard the rich getting an increasing share of the income called progressive.Don't be ridiculous. We've always been at war with Eastasia.

Sage Rat
07-18-2011, 10:45 PM
For the same reason Willie Sutton robbed banks.

I presume you to mean this in the sense of "that's where the money is". But technically speaking, though the wealthy make more money than most people, they're a sufficiently small percentage of the population that it's the middle class who ends up paying the bulk of (non-corporate) taxes.

Polycarp
07-19-2011, 12:44 AM
I presume you to mean this in the sense of "that's where the money is". But technically speaking, though the wealthy make more money than most people, they're a sufficiently small percentage of the population that it's the middle class who ends up paying the bulk of (non-corporate) taxes.

When the OP proved not to be familiar with the Willie Sutton quote, I added this post (http://boards.straightdope.com/sdmb/showpost.php?p=14033180&postcount=23) to clarify -- I refer you to the first paragraph. Whether or not it's true, the common perception is that the rich collectively have much more disposable income -- i.e., that not needed for survival and rudimentary comfort -- than either the poor or the middle class. Just as a given high-end restaurant or department store may actually have more cash on hand than a typical bank branch, perception may not equate to reality. But the common public view is that Warren Buffett, Bill Gates, Rob Walton and his siblings, the Rockefeller cousins, etc., have a plethora of potentially taxable income between them -- whether or not this is true.

Omar Little
07-19-2011, 10:18 AM
It's not about current corporate profit levels. It's about returns on future investment. Every investor wants to make a satisfactory return on their investments. Given the alternative of investing in country A with a stable tax and regulatory environment the investor can reasonably expect to earn a risk adjusted return of 15%. Sounds good. Now his other alternative is investing in country B with a volatile tax environment, unknown regulatory environment that is constantly changing. In country B his risk adjusted return may be as high as 15%, but if taxes increase and regulatory costs increase, his return could fall to 8%. Which future investment is the corporation likely to make for their shareholdes? Probably in country A. Country B is the US. Without further corporate investments in the US, employment levels will not rise to where we would like them.

Voyager
07-19-2011, 11:39 AM
It's not about current corporate profit levels. It's about returns on future investment. Every investor wants to make a satisfactory return on their investments. Given the alternative of investing in country A with a stable tax and regulatory environment the investor can reasonably expect to earn a risk adjusted return of 15%. Sounds good. Now his other alternative is investing in country B with a volatile tax environment, unknown regulatory environment that is constantly changing. In country B his risk adjusted return may be as high as 15%, but if taxes increase and regulatory costs increase, his return could fall to 8%. Which future investment is the corporation likely to make for their shareholdes? Probably in country A. Country B is the US. Without further corporate investments in the US, employment levels will not rise to where we would like them.

Oh, they should go to a really stable country - like Egypt, say? Or China, with rampant piracy, a housing bubble, and a government who can change the rules at any time? Or Greece? Europe has far more regulations than we do. Companies don't move for stability, they move for labor costs.
As for the US, raising taxes on the wealthy back to 1990s levels is hardly unstable, and companies have lived with changes in regulations for the entire last century. Any instability we see is totally due to Republicans willing to push us to the brink for their extremist anti-tax views. If Republicans really cared about stability, they'd vote for the debt ceiling increase today.

Wesley Clark
07-19-2011, 11:40 AM
How many employees does the average welfare recipient have?

Welfare creates demand since people on the bottom of the economic scale spend their money. I can't find the study but a study done a few years ago found wealth redistribution downwards does more for job creation and GDP growth than supply side tax cuts. Right now, from what I know in my amateur knowledge of economics, the big issues holding back the global economy are lack of security/stability and lack of demand. Supply side tax cuts will do nothing to promote either.

I think the contemporary GOP has re-entered the philosophy of social darwinism and believes that the rich are morally superior to everyone else. Plus the wealthy are big financial backers of the GOP and GOP think tanks (to be fair democrats and liberals have wealthy backers too). So combine all of that and you have a political movement devoted to empowering the wealthy.

For the most part when the GOP says anything about economics what they are really saying it 'this policy will directly and immediately benefit the wealthy and powerful which is the real intention, but in order to win popular support from voters and the public, the majority of whom are not and never will be wealthy, I'm going to try to frame this policy so it sounds like it'll benefit the working class indirectly'. So supply side tax cuts create jobs, environmental regulations destroy them. etc. Its all smoke and mirrors.

The dems are better, but not perfect.

Wesley Clark
07-19-2011, 11:45 AM
Profits are up, hiring is still non-existant, unemployment and underemployment is still high.

Maybe corporations are taking advantage of this low-tax situation to sit on their profits and earn tons of interest. After all, there's nothing to encourage them to actually spend the money on job creation.

On the other hand, if we were to raise corporate taxes, companies would have two options: spend their profits on expansion/hiring/new factories/etc. Or pay more of their money to the government. Which do you think most companies would choose?

This pig-headed idea that we MUST keep taxes low on the job creators is a bad, bad thing.

My impression was that interest rates were at all time lows. So saving money isn't really doing much to grow it.

Then again during the worst of the recession was probably a great time to invest in stocks, raw materials and housing since most of those have gotten better (except housing). I believe that is what China did, when the worst was happening they were buying up raw materials on the cheap and making long term trade deals since they had short term cash and nobody else did.

gonzomax
07-19-2011, 01:50 PM
The rich are sitting on about 3 trillion dollars that investment bankers would love to get their hands on. The bankers are thieves but they would invest in businesses and innovations to get on the potential gravy trains.
http://www.huffingtonpost.com/2010/07/11/worlds-wealthy-sitting-on_n_641012.html Across the globe it is 10 trillion.