Raising Taxes For Fairness

[amarone]

@Dangerosa

You sure? I’m pretty sure that when I did my taxes, my interest income was taxed at the dividend rate. But I could be misremembering it. I also remember that tax provision was set to expire, but I could be misremember that as well.

Yep, I’m sure.. Historically, all dividends and interest have been taxed as income. Currently, qualified dividends are taxed at a lower rate, which is the same as the LTCG rate. That situation is set to expire in 2011, so that may be what you are thinking of. Interest and non-qualified dividends are taxed as income at your standard marginal rate.

[foolsguinea]

@magellan01

Taxes are a necessary evil.

If taxes are evil because they’re extorted, are police evil because they’re intimidating? Is imprisonment morally equivalent to kidnapping?

In order for the country to work the government has to get/take/confiscate money from the citizenry. The only moral obligation is that they 1) take as little as possible

What about parties who take less than they require, borrow the rest, & then promise to collect more in tax later to cover the interest? If you believe in “as little as possible”, I hope you agree with me that consistently collecting too little ultimately violates this.

and 2) they take equally from everyone.

:dubious: A head tax?

There are some people who are destitute, so we draw a line and say, okay you don’'t have to pay anything. (Though I think we should ask them to “pay” with some kind of volunteering.)

Technically, the very poor do pay some, but Earned Income Credit gives a lot of it back. Even Steve Forbes’s plan gave everyone an exemption of so much not taxed rather than saying, “You pay nothing, everyone else pays x%.”

Hence the fairness of a flat tax. People pay the same percentage. Whatever the rate, if it’s fair it’s equally fair for us all. If it’s unfair, it’s equally unfair for us all.

OK, you want that, here’s how it would have to work. NO cap on how much income is subject to payroll tax. And in principle, NO earned income credit. And if we take your other ideas, NO personal exemptions, NO level below which one does not pay, & those who cannot afford to pay work it off with public service.

That would be truly flat.

…Meanwhile, in the real USA, nobody pays a standard proportion of their whole income, & no proposed bill espouses them paying that. Exemptions are subtracted, credits are applied, & even Forbes’s system was very slightly progressive.

And there are, I have come to realize, good reasons for taxing people at different rates. Not just at the range between the self-supporting & the destitute, but at the range between the merely comfortable & those wealthy enough to be tsunamis of public influence.

What some politicians don’t seem to understand, particularly those with a “D” next to their names, it is NOT THEIR MONEY.

It is after they collect it. No, that’s not what you meant. The point is, it is the state’s money inasmuch as you are part of the state. And they are duty-bound to govern the state.

[foolsguinea]

@magellan01

Something is fair or it isn’t fair. You evidently think that a more progressive system is fair. I think it is offensively unfair. It takes money from the pocket of Peter and gives it to Paul.

Technically, it puts money in the gov’t’s pocket, but I get what you mean about changing persons’ relative wealth by tax policy.

So, you think that the government should refuse to have any effect (at least via tax policy) on the market? You do realize that people are growing proportionately richer/poorer all the time in the private sector by other processes? Are those processes also unfair? What’s so special about taxation, that it should be completely void of effect? And if it should be, doesn’t that mean everyone should pay flat tax on all income of whatever kind, with no exemptions, no floor, & certainly not your suggested idea of work to substitute for unavailable funds? Putting people to work for the state has an effect on their lives after all.