Regressive Taxes

[Johnny_L.A]

@greenslime1951

Didn’t this “on the backs of the workers” trope become stale by, oh, 1907 or thereabouts?

If you’d bothered to look at the link, you would have seen that the chart starts in 1948, and not 1907.

@greenslime1951

The flaw in your statement is in assuming that the sole beneficiaries of that increased productivity are the eeeeeevil rich Simon Legrees/Mister Burns who rub their hands together gleefully as the sweating slaves toil on the factory floor below.

In reality, increased productivity means lower prices and greater availability of goods–to the consumer.

You might say that the Abolistionists’ flaw in their reasoning is that the sole beneficiaries of slavery were the eeeeeevil plantation owners. After all, the slaves had food and shelter, which they would not have been provided without their jobs.

The flaw in your reasoning is believing that stagnant wages are OK because things have gotten cheaper. Only they haven’t overall. When I was making minimum wage, an brand new Cessna Skyhawk represented about 10,000 hours of labour. Now that I make considerably more than minimum wage, a new Skyhawk represents about 15,000 hours of labour. So that thing was more affordable when I was making minimum wage than it is now at a middle class salary. If I wanted to replace my watch, I’d have to come up with $7,000. Ten years ago it was half that. (It’s a good think I don’t like gold!)

But airplanes and watches are luxury items. Have you bought gasoline lately? I know I’m paying a lot more now than I was 10 or 20 years ago. Have you rented an apartment? When I did, the rent went up every year or two. Been to the grocery store recently? I used to be able to buy a loaf of bread for 99¢. Now the cheapest bread is $1.49. And in terms of dollars, I’m making slightly less than I was 10 years ago. (Of course the job is much better.)

And there’s the problem. Wages have remained stagnant, while prices have gone up. Sure, you can buy a new TV for a lot less than you could in the '90s, and it would be a much better TV to boot; but how often does a family buy a new TV? Or refrigerator? Or computer? Gasoline, utilities, food, tuition, rent, and a host of other things people buy every month or every week cost a greater part of a person’s income now, so there is less money for the average person to invest, to spend on other things that stimulate the economy, and so on.

Meanwhile, the increased productivity makes huge profits for the business owners. Millions of workers do not receive benefits, since the corporations can shift the costs of benefits to the government or to the public. These ‘job creators’ are sitting on trillions of dollars in cash, but they won’t create jobs. Since the people who benefit most from increased productivity are not using their increased profits to hire more people, and since purchasing power has declined forcing more people to use public services, they should be taxed more to pay for more people to be put to work and to pay for the services that people need.

[Voyager]

@greenslime1951

My God, what an oversimplification/distortion.

If you tax the rich less, you don’t automatically have to tax the non-rich more. Not all government revenue is collected via income taxes, not by a long shot.

Immaterial. If you hold other things constant, and reduce taxes on the rich, they can only be made up by the middle class or the poor. Unless you want to raise the tariff.

I would also point out that planned spending can be reduced if the prior year’s tax revenues weren’t up to snuff, in anticipation that this year’s revenues will similarly fall short. Just because our government doesn’t seem inclined to do this doesn’t mean it can’t be done. There are two things that can be done when revenues don’t meet expenditures.

Working really well in Europe, huh? And a substantial amount of our unemployment problem comes from states and cities doing exactly this. State spending goes to jobs or consumption, and if you cut that the situation gets worse.

A tax on the rich, who are the most productive, is indeed a disincentive to growth and investment. It does, in fact, appear to work that way.

Why? Will they stop working? Might I point out that only a cretin invests when there is no market, and the rich are not cretins. Because of the slow growth in consumption, businesses are sitting on piles of money. Adding to their piles is going to help how?
Taxes on the rich are at historic lows, so by your theory we should be in great shape, In the '90s taxes were where they would be if the Bush tax cuts expired, and we managed to muddle along pretty well.
As far as productive goes, Gates and Jobs were pretty productive. The Bank CEOs and execs who made their money by destroying the economy, not so much.

A reduction in the size of government doesn’t necessarily mean that we fire all the firefighters, teachers, policemen, etc.–to say that is ridiculous, because those are essential services; it would be like a cash-strapped family trying to save money by cutting off the electricity and water. There are myriad ways to cut spending without causing pain to the non-rich. Getting the hell out of Afghanistan would seem to suggest itself, but there are plenty of more prosaic solutions, such as actually (as opposed to the recent feeble gestures) cutting waste and fraud in entitlement programs, and eliminating government programs such as the Federal Walnut Board and the Tarantula Eradication Program. (I made those up, but wouldn’t be surprised if they actually existed.)

You are aware that police and firefighters are getting fired, right? I trust you give Obama credit for cutting spending on Iraq - the war for no reason?
I’d like to see your magical cure for waste and corruption. Money floating around leads to people trying to steal it - deal with it. More people fighting it would be good, but that would lead to an increase in the size of government, so you know who is against it.
But like I said, all these things are voted on by our representatives. The US is a major producer of walnuts, says “On Food and Cooking” by Howard McGee, p.512. If we export lots of walnuts, maybe some government support makes sense. (I don’t know if there is any.) If tarantulas killed hundreds of children … but you get the picture. It is easy to make fun of things you don’t understand like Proxmire did of SETI.

Even if you believe somehow that the rich are an endless source of funds, and that it’s fair to bleed them more or less indiscriminately, the fact remains that if you take x% of someone’s money, at some value of x, that person won’t see the point in earning the same amount next time. He also won’t make speculative or risky investments if a large marginal tax distorts his risk/reward ratio. “Rape the rich” is oh so appealing, but in the long run, it not only doesn’t work, but produces the exact opposite effect from that which was intended.

Bull shit, and from personal experience. First of all, the rich had no trouble being inspired in the 1950s with tax rates no one is even dreaming of imposing.
We’re just talking of going back to the '90s. I was lucky enough then to get bumped into a higher bracket through stock sales, and I had no trouble at all staying motivated. You still get to keep most of it, and it is not like the money is coming from back-breaking labor.
A increase might discourage a marginal investment. A risky one had better pay a big return, big enough so that the small marginal tax increase we’re discussing won’t make a difference. But you are welcome to give cites on the vast increase of venture capital versus the '90s after the Bush tax cuts. The '90s, to repeat, had the awful high taxes you hate, and there was no risk taking or investment then at all. But of course.

If your are arguing against 90% marginal tax rates, I’m with you. I wasn’t arguing for them.Calling a return to '90s tax rates “raping the rich” is nonsense.

[Voyager]

@greenslime1951

Didn’t this “on the backs of the workers” trope become stale by, oh, 1907 or thereabouts?

Read up on sweatshops, why don’t you? The reason we don’t have them today, here at least, is the evil government and its evil regulations.

The flaw in your statement is in assuming that the sole beneficiaries of that increased productivity are the eeeeeevil rich Simon Legrees/Mister Burns who rub their hands together gleefully as the sweating slaves toil on the factory floor below.

In reality, increased productivity means lower prices and greater availability of goods–to the consumer.

If the wages of the average worker are not keeping up with inflation, then by definition this is not true.
And stop with the absolutes already. You are claiming we are being absolute when we aren’t, and that is a dishonest argument.

[Voyager]

@greenslime1951

Now, that’s funny.

When I’m being funny, you’ll know it. I don’t know if I’d recognize you saying something true about economics, since you haven’t yet. And if you think that the rich have it tough, you have totally lost touch with reality. I’m not really rich, but I’m doing okay, and when I read stories of actual Dopers who have to struggle for money, I damn well know how well off I am.

[iamthewalrus_3]

@Voyager

If the wages of the average worker are not keeping up with inflation, then by definition this is not true.

Are the wages of the average worker not keeping up with inflation?

Obviously, you can interpret “average worker” in a couple of ways, but here are some cites I found with quick searches:

Wage growth over time. The chart is adjusted for inflation, and it never dips into the negative. So, over time, the total wages have gone up faster than inflation since we’ve been measuring them. Obviously, they’re not growing gangbusters right now, but “weak growth” is very different form “not keeping up with inflation”.

Of course, that’s the total wages, so maybe it’s unbalanced by the fact that high wage earners are getting more while the median wage-earner is getting less.

Wikipedia page on Income Inequality in the US. Under the “Measurement” section, it says:

@Wikipedia on Income Inequality

The report found that real household income after federal taxes and including government transfers (payments from Social Security, unemployment insurance, etc.[44][45]) grew by 62%.
However, income of households in the top 1 percent of earners grew by 275%, compared to 65% for the next 19 percent, just under 40% for the next 60 percent, 18% for the bottom fifth of households.

So, while inequality is increasing, even the bottom fifth of the country is experiencing real income growth. Pretty meager growth, but growth nonetheless.

Are there cites that say otherwise? Or do you have another definition of “average worker” who is actually not keeping up with inflation?

ETA: This post, on rereading, came off more confrontational than I had planned. Don’t have time to rewrite in the edit limit, but I’m genuinely interested in this question, don’t claim to know the answer for sure, and I don’t have an emotional investment in the outcome. Cheers!

[Rhaegar]

@ITR_champion

Taxes on tobacco are another example of regressive taxes. A fixed amount is charged per pack, the poor are more likely to smoke than the rich, so on average the poor pay more tobacco taxes than the rich.

Likewise with a tax on soda that’s a reality in a few places and proposed in many more. Lawmakers often identify soda as a health threat, but actually in terms of calories and sugar it has a lot less than many other drinks. However, lawmakers show much less interest in taxing drinks that are more popular among the upper class, while soda is more popular among the poor.

If we want to make the tax burden more progressive, we could focus on eliminating regressive taxes rather than making the income tax more progressive.

Seriously? With that kind of thinking, I’m wondering where you draw the line? May be we can enact a tax on people who eat at restaurants which serve Foie Gras and caviar. There is already a “luxury tax” on cars, but we can put an additional tax on people who drive BMWs, Mercedes and Lexus. And, as you suggested, we can add extra tax to people who buy bottles of Chateau LaFite and Dom Perignon! Later on though, if we don’t have enough money to meet the budget, the taxes are going to start coming on people who eat at Olive Garden or drink Heineken. Any time you start on a plan to specifically target a small group of people for taxation, it becomes a slippery slope.

[fumster]

@puddleglum

You can say the same for government programs, but at least people who donate to charity are using their own money to alleviate guilt. Those who advocate for higher taxes are using other people’s money to alleviate their guilt.

That’s better than using other people’s children to fight a war, but somehow you don’t hear conservatives whine about that.

[fumster]

@Rhaegar

Any time you start on a plan to specifically target a small group of people for taxation, it becomes a slippery slope.

I think the same about lowering taxes. Lower it on a few people and then “whee” we have slid all the way down to Somalian-level government services.

[fumster]

@greenslime1951

If you tax the rich less, you don’t automatically have to tax the non-rich more. Not all government revenue is collected via income taxes, not by a long shot.

42% individual income tax, 9% corporate income tax, and 40% payroll tax. If we cut individual and corporate tax revenue by 10% we’d need to almost double all other non-payroll tax revenue. And that, of course, would still leave us with less revenue than we spend.

[greenslime1951]

@fumster

That’s better than using other people’s children to fight a war, but somehow you don’t hear conservatives whine about that.

Liberals voted, and have repeatedly voted, to fund both the Iraq and the Afghanistan wars. Of course, this must be an aberration since liberals are all about peacelovedope and would never do something so mean as to send other people’s children–and puppies–off to war.

And liberals justly complain, but conservatives whine.

Nothing like a balanced point of view

[fumster]

@greenslime1951

Liberals voted, and have repeatedly voted, to fund both the Iraq and the Afghanistan wars.

But that would just make them consistent, not hypocrites, so what’s your point?