I’m going to go ahead and assume you meant how many more people could Microsoft employ if Gates saved 500k in taxes every year, and my answer is:
None. What on earth would Bill Gate’s personal income tax burden have to do with the corporation he runs, other than the fact that’s who pays his salary? He’d still get the exact same income, he’d just pay a different amount of taxes.
So we should give Bill Gates a personal tax break because after making more money than an entire pantheon of gods, he’s decided to “give something back”?
You are aware that charitable donations are tax deductible, right? (disclaimer: I have no idea about tax laws, but I assume it would apply in some way)
LOTS of rich people give to charity, and claim deductions from it…in other words, they’re really already getting a tax break by donating to charity.
Are you sure about that? Did you ever collect a pay check? If so, take a look at your last pay stub and see if there’s a line marked “FEDERAL” or something similar. If you filled out a W-4 form when you were hired, the numbers you entered determines how much is taken out of each pay check for Federal Income Tax. If you mean you’ve got a refund each time you’ve filed your income tax return, that doesn’t mean you’re not paying income tax; it means the amount deducted from your pay checks was more than the amount you actually owed. I’m far from an expert on taxes and money, but I don’t see how one could possibly have an income deprived from work, as opposed to child support, welfare benefits, etc. and not pay any income tax.
Noone is claiming that Bill doesn’t pay more taxes in absolute dollar terms. What is usually looked at is how much people pay as a percentage of income. And, unless Bill is smokin’ a million packs a day and getting really drunk, I doubt his cigarette and beer habit lead him to pay as high a percentage of his income in cigarette and beer taxes as you do.
Yes, but again, you are failing to account other ways in which this $500,000 might be used. If it is used to give 500 middle class people a $1000 tax cut, they’ll go out and spend it, stimulating demand, growing the economy, and likewise increasing employment. Plus, in the process, you have given some money in tax breaks directly to people who really need it.
Blush Thanks! (And that goes for kimstu’s comments too.)
Bummer! But, hey, I am honored that you put me in your sig line! Can’t recall my ever being in a sig line before!
I would disagree, I hear people complaining all the time that companies are not hireing anyone and just pressing the current workers to work harder and longer. I would say that trend is because we are overtaxed. I’m sure we would like a work environment that is a bit less demanding, would like it if comapnies could pay more for certain jobs. Well those taxes are killing this. Lower taxes and to some extent productivity will go down, but workers (the little guy) will have a happier work environment and might make a few extra $'s too, perhaps enough to buy a muffler.
As for the OP, I have heard that statement made before in a slightly different form, over 95% of fed tax revinue is paid by the top 50% of wage earners, and less then 5% of fed tax revinue is paid by the lower 5% of wage earners.
I beleive taxes on an activity slows down that activity, and I think history has shown that. From that I think the tax code should tax activities we would want to reduce and not tax or even subsidize activities you wish to increase. We want employmnet, so we should get rid of the employment tax, we don’t want cigaretts, so we should tax then heavly, etc.
Also you have to take into account the regressivness of taxes. One of the most regressive taxes is tax on gas. a poor person barely keeping his old car running getting 17 mpg is paying the same tax in dollars per gal as a rich guy with his 17 mpg mercadies suv.
Of course, whether or not you pay any federal income tax in a year depends on the particulars of your situation, e.g., in regards to whether single or married and whether you have children or not. For example, according to the 1040 instruction booklet you are potentially eligible for the earned income tax credit in 2003 if you are:
single & no kids with adjusted gross income of <$11,230.
single & 1 kid with adjusted gross income of <$29,666.
single & 2 kids with adjusted gross income of <$33,692.
(If married filing jointly, add $1000 to all of those limits.)
I agree that it is regressive. However, there are many issues to consider in regards to a tax. In this case, a gas tax is justified because in our economy, there are many costs of gasoline (environmental, subsidies for production, military adventures in the Middle East) that are not reflected directly in the cost of the gas but are instead shared by all of us. In such a situation, gasoline is priced too low and, as a result, more of it is used relative to the efficient amount that would be used if its full costs were reflected in its price.
So, I’d rather see the same or even higher taxes on gasoline and then have the regressivity/progressivity issue addressed through making other taxes more progressive.
Yes…I discussed this above although I think it is strictly true only of federal personal income tax revenues. This CBO study shows that the estimated shares of total federal tax liabilities are 6% for the bottom 40% and 16% for the bottom 60%. (They don’t have the numbers to allow determination of what the bottom 50% is paying, but by interpolation it is probably something like 9 or 10%.) For comparison, the shares of pre-tax income are estimated by the CBO at 13.4% and 27.6% for the bottom 40% and 60%, respectively. Some (but very likely not all) of this progressivity at the federal level would be erased by the regressive nature of most state and local tax systems once you considered adding them to the mix to look at all taxes paid.
Judging by what I’ve seen here, adding another member to one’s sig line seems to be the ultimate form of flattery. You’ve earned it, bud! Keep up the good work
agreed but IMHO far outweighed by the productivity increase across the board with lower energy costs in general. We want people to be able harness this chemical energy to be productive. We want people able to get around and spend money. The willingness to spend money for desired goods and services and the availability of such goods and services is the basis for our eccomony. Taxing fuel raised the price of these goods and services (goods are shipped using fuel, services also usually involve fuel), so people find them less attractive, and less willing to circulate their money. Also the consumer has less due to these taxes.
Maybe as an alternative limited access roads should be taxed (electronic tolls), this way more local roads can be taken and businesses patronized.
kanicbird: *I hear people complaining all the time that companies are not hireing anyone and just pressing the current workers to work harder and longer. I would say that trend is because we are overtaxed. I’m sure we would like a work environment that is a bit less demanding, would like it if comapnies could pay more for certain jobs. Well those taxes are killing this. Lower taxes and to some extent productivity will go down, but workers (the little guy) will have a happier work environment […] *
The trouble with this reasoning, though, is that the trends you mention of workers being pressured into more hours, resistance to new hiring, frequent layoffs, etc., have been increasing at the same time that corporate taxes have been decreasing. See the Buffett letter I linked to above, as well as the stats in Apos’s recent post. Corporations are now paying less in total tax, in tax as percentage of income, and in percentage of total revenue, than they have for decades. Yet the tendency towards tougher schedules for existing workers and sluggish hiring for new ones is still going strong.
For Og’s sake, as Apos noted, in recent years some two-thirds of American companies paid zero federal taxes! If your hypothesis about low corporate taxes producing vigorous hiring were correct, we ought to be in the middle of a severe labor shortage right now.
kanicbird:Kimstu I did not say corporations are overtaxed, we as a people are on a personaly level.
Oh. But in that case, as Cerri pointed out, why should we assume that a cut in personal income taxes will affect corporate hiring policies? Bill Gates’s personal income isn’t an asset on his company’s balance sheet, nor is that of any other CEO.
And I know it’s almost blasphemy in the US to say this, but I gotta tell you, I personally do not really feel overtaxed by my government: what I worry about more is being over-indebted by the ballooning deficits that the current slash-taxes-while-increasing-spending policies are producing. Nor do I feel that someone like jshore, currently pulling down three to four times my lower-middle-class income, is particularly overtaxed. I certainly don’t feel Bill Gates is overtaxed. And I don’t think saving an extra $100 for me or $500 for jshore or $100000 for Bill Gates on our tax payments is worth the price we as a society are paying for it, in terms of accumulating debt and cutting services.
Well, sure, cheap transportation may seem like a nice thing. But, when we effectively subsidize something it is used wastefully. And, you can just look around you at all the big honkin’ vehicles that get poor mileage and all the people who drive less than a quarter of a mile to get places in them, etc., etc. to see how we are encouraging inefficiency. And, of course, this encouragement of inefficiency is having detrimental effects on our environment, encouraging urban sprawl, and all sorts of things.
Well, yes, ideally we would have no taxes and still have great government services! However, in the real world, we can’t have both. And, you haven’t demonstrated to us what services should be cut in order to lower taxes on people. Note also that our taxes are fairly low relative to most of the other developed nations.
And, I agree with kimstu in saying that I don’t personally feel overtaxed. One thing I do feel is excessively bombarded with messages trying to get me to part with my money…i.e., to convince me that I need more material possessions. Fortunately, I think I have been moderately well-inoculated against buying into the idea that more material possessions equals more happiness but there seem to be many people who have not and I think that this might be diminishing the quality of their lives more than the taxes they pay.
For those of you who feel that you are not overtaxed, I think there is a way for you to give extra money to the gov’t
I own a small corp, I pay myself a base salary, then after expenses what is left over goes into my pocket as a dividend, I don’t see how gates would be any different except for the amount of digits. My desision to hire someone is based on my need for their service and the amount the company can afford to pay (taking into account the expected gain from this person)
Mine too, but because it is a subchapter S corp, I wonder how many of the corps in the 2/3rds are sub S?
You are not alone in your worry, it is the action that must be taken to recify this that is in dispute. Quite frankly I see your concept as very short sighted. Yes you may be able to balance the buget by rasiing taxes but at an extreme long term cost. I would rather see us grow our GPD so that this debt is a much smaller fraction of GDP to such a point that it is insignificant.
THis is interesting, it does have some pros and cons. Yes SUV’s are consuming more fuel and providing a advantage to the SUV occuipants at the direct detriment of the drivers of oter vehicals. Do we want SUV’s, they are nice and do support many workers. I think I would like everyone to be able to have one, or more correctly the ability to get one if they want it. How? I don’t think imposing an everyone who wants one gets one SUV tax will work, so how about grow the eccomony so that the opportinity exists for people to get it on their own.
I live in about the worst urban sprall there is, the NYC area, with commuting times going as much as 2 hrs all the way from PA. The proble is people want some space to call their own and willing to put up w/ these commutes. Who are you to deny them from living where they want to live.
I think we both can come up with thing to cut, that’s not the point, basic ecconomics is. Grow the eccomony by keeping taxes low ('bout as much as gov’t can do) and taxes will increase as the gpd grows.
And we are the only world superpower, need I say more. In short that is their problem, not ours.
We are, and though I hate it too, it is the basis for our eccomony…
Lets take a very simple example. Farmer John has an apple farm, Fred eats apples and poops a lot and sells his poop as fertilizer.
This is the entire country. When things are slow Fred does not want to buy many apples because he doesn’t know if and when he will sell his poop, also John doesn’t pick the apples because he doesn’t think he will be selling many. Apples are waisted and rot on the ground. Productivity is low, GDP is low and both Fred and johns income is low.
When things heat up, john goes the extra mile to get every apple over to fred, does whatever he can to get the most out of his trees, and Fred is more then willing to buy all he can eat for he knows that John will buy every last bit of poop he can produce. Productivy is high, GDP is high and both incomes are high.
NOTE - BOTH CASES ARE WITH THE SAME AMOUNT OF (WHATEVER) CURRENCY THEY ARE USING IN CIRCULATION, THE ONLY DIFFERENCE IS ONE CIRCULATES FASTER.
So by you beign exposed to advertizing you are encouraged to circulate money, your willingness to spend money has to do with yoru want for the thing/service offered and your ability to replace that money.
Lets take a very simple example. Farmer John has an apple farm, Fred eats apples and poops a lot and sells his poop as fertilizer.
This is the entire country. When things are slow Fred does not want to buy many apples because he doesn’t know if and when he will sell his poop, also John doesn’t pick the apples because he doesn’t think he will be selling many. Apples are waisted and rot on the ground. Productivity is low, GDP is low and both Fred and johns income is low.
When things heat up, john goes the extra mile to get every apple over to fred, does whatever he can to get the most out of his trees, and Fred is more then willing to buy all he can eat for he knows that John will buy every last bit of poop he can produce. Productivy is high, GDP is high and both incomes are high.
NOTE - BOTH CASES ARE WITH THE SAME AMOUNT OF (WHATEVER) CURRENCY THEY ARE USING IN CIRCULATION, THE ONLY DIFFERENCE IS ONE CIRCULATES FASTER.
So by you beign exposed to advertizing you are encouraged to circulate money, your willingness to spend money has to do with yoru want for the thing/service offered and your ability to replace that money.
Well, Microsoft is a publicly-trading corporation, which is quite a bit different. Even in a partnership, you have to start being very careful about having a firewall between person money and the partnership’s money.
What you seem to be endorsing here is supply-side economics, in fact, supply side theory in its strong form where the government lowers taxes and ends up with more revenue. (Or, maybe you claim the revenue isn’t actually higher but the GDP is so much higher that the debt as a ratio of GDP drops.) There is no evidence I know of to actually support this supply-side notion and, in fact, the evidence from when it has been tried suggests that it doesn’t work.
Why exactly do we want more people owning SUVs getting poor mileage, polluting the environment, and contributing more to climate change? More is not always better.
Well, what we are doing now is subsidizing them to live “where they want to live”, i.e., further away. This subsidization takes many forms from the mortgage deduction, to the subsidization by building of new roads and sewage lines etc., to subsidizing gasoline in direct and indirect ways.
Well, people like to make big claims about it being easy to cut government spending. But, in practice, it seems to be much harder…Even conservatives like Bush don’t seem to be able to find good ways to cut it significantly so we just end up with tax cuts and ballooning deficits.
As for the economy thing…Again, that is just supply-side religion.
This sounds to me like it is written by someone who has never lived outside the U.S. and experienced what some of the rest of the world has to offer…although you can correct me if I am wrong. (To put it a bit more bluntly than I like, but for which I can’t think of a better way, it sounds like an attitude of arrogance that is based on ignorance.)
Perhaps part of the reason why our economy is based on this is that GDP is an imperfect measure of quality of life. For one thing, it neglects “natural capital” so if one does things that destroy or use up natural resources, they are not generally fully accounted for. It also devalues other things that are not easily integrated / quantified in a market economy.
Why would you want to deny people the choice to own SUV’s. THe problem I see with your reasoning is that you will acheive a situation where only the rich will be able to have SUV’s, while the middle class will have a much limited choice. Also I take great issue with SUV’s or man for that mater causing global climate change, I have seen both sides, and it’s funny how it goes along political lines, which in short leads me to beleive it’s only a political issue and not a real one.
Again you are suggesting taking away a persons right to chose where they want to live, again you are trying to set up a system where only the rich will be able to live in the country and work in the city. As for things like mortgage deductions, well it is the interest which is deductable, but even so we want home ownership so why not subsidize it. People who own their home usually go into retirement in much better shape finantially then those who rent.
Now for roads, I wonder why grayhound pays for it’s feet of buses and gets to almost ride the roads for free while amtrak has to pay for it’s trains and the rail system, no wonder it’s loosing money.
Agreed except for the conservative comment about Bush, Bush has shown himself not to be a conservative, I would accept a republican. I think a lot of the problem is the incumbant advantage, I would like to see a total turnover of elected officials very so often.
True I never held a residense outside the US, does that invalidate my opinion? There are advantages to haveing other countries and workign with them, notice the current talk about outsourcing and insourcing. I never understood the point just do it this way becasue everyone else does, especally if the way you have been doing it all a long has proven itself to yeild better results.
Above all other things, I think this hints of the differences we have. I have a optimistic view of humanity and the resources we have been given by our Creator. These include the natural ones and the ones insdie the human mind. We have abundant natural resources that we haven’t even dremt up ways to even find them all YET, but we will. Will we use up all the oil in X years, I don’t see it, I see that we will contine to discover new reserves and new cheaper ways to extract it, or a shift to a new technology that will outmode burning oil. There is some talk about mining He(3) from the moon for energy on earth, when we can figure how that darn fusion thing works without blowing up a city that is.
iamme99 I read your link, it seems to just throw out unsubstianciated fact after unsubstinaciated fact. One I do find interesting is it even goes into the seminars to avoid paying taxes. It does menton a Bush ‘stealth’ tax, which is a very hard thing to prove or disprove ’ there’s a stealth tax, no you can’t see it, you can’t figure it out, but it’s there, and Bush put it on the middle class’.
