# Tax the rich and save the poor. **URL:** \ **Category:** Great Debates\ **Created:** [May 16, 2017, 9:33pm UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790 "2017-05-16T21:33:22Z")\ **Posts on this page:** 20\ **Page:** 6
**Author:** ![Hocus\_Pocus](https://avatars.discourse-cdn.com/v4/letter/h/41988e/32.png) [@Hocus\_Pocus](https://boards.straightdope.com/u/Hocus_Pocus)\ **Post date:** [May 17, 2017, 11:05pm UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/101 "2017-05-17T23:05:49Z")
> [@Rick\_Sanchez](#): > > After all, who in their right mind would put themselves through all the years of sacrifice and training necessary to be an elite athlete for a measly hundred grand a year? First off, lots of Olympic athletes do it for even less. And $100k is “measley?” Unless one lives in NYC, SF, or Orange County, CA $100k will go a long ways, and would be upper middle class to rich in many parts of the country. The statement above sounds extremely silver spoonish! ---
**Author:** ![D\_Anconia](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@D\_Anconia](https://boards.straightdope.com/u/D_Anconia)\ **Post date:** [May 17, 2017, 11:13pm UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/102 "2017-05-17T23:13:41Z")
> [@Trinopus](#): > > What are you disputing, exactly? That customers/tenants are paying the owner’s expenses. This is Accounting 101. ---
**Author:** ![Slash1972](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slash1972/32/6461_2.png) [@Slash1972](https://boards.straightdope.com/u/Slash1972)\ **Post date:** [May 17, 2017, 11:47pm UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/103 "2017-05-17T23:47:27Z")
> [@D\_Anconia](#): > > That customers/tenants are paying the owner’s expenses. > > This is Accounting 101. Well then, who IS paying the owner’s expenses? And where does that person get the money to pay for those expenses? ---
**Author:** ![D\_Anconia](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@D\_Anconia](https://boards.straightdope.com/u/D_Anconia)\ **Post date:** [May 18, 2017, 12:13am UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/104 "2017-05-18T00:13:47Z")
> [@Slash1972](#): > > Well then, who IS paying the owner’s expenses? The owner. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [May 18, 2017, 12:22am UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/105 "2017-05-18T00:22:20Z")
> [@D\_Anconia](#): > > The owner. And where does the owner get the money to pay those expenses? ---
**Author:** ![Slash1972](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slash1972/32/6461_2.png) [@Slash1972](https://boards.straightdope.com/u/Slash1972)\ **Post date:** [May 18, 2017, 12:26am UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/106 "2017-05-18T00:26:40Z")
That was my second question ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [May 18, 2017, 12:27am UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/107 "2017-05-18T00:27:45Z")
> [@Whack-a-Mole](#): > > And where does the owner get the money to pay those expenses? The same place that corporations get the money to pay income tax. At least I’m glad we’re all now in agreement that corporations don’t pay taxes! 🙂 ---
**Author:** ![igor\_frankensteen](https://avatars.discourse-cdn.com/v4/letter/i/839c29/32.png) [@igor\_frankensteen](https://boards.straightdope.com/u/igor_frankensteen)\ **Post date:** [May 18, 2017, 12:39am UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/108 "2017-05-18T00:39:35Z")
> [@D\_Anconia](#): > > Why, and on what grounds? Because it doesn’t work, obviously. The current system requires heavy and repeated modifications, and even with the regulations that we have, it fails to address the problems that it directly causes. Such as, it completely ignores that human beings are used up and discarded before they are ready to die, and therefore society has to “cope” with their being discarded, by declaring callousness to be a virtue. ---
**Author:** ![Iggy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/iggy/32/3364_2.png) [@Iggy](https://boards.straightdope.com/u/Iggy)\ **Post date:** [May 18, 2017, 12:47am UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/109 "2017-05-18T00:47:26Z")
> [@Trinopus](#): > > Agreed…and so what? The renters are still paying the property tax, and the customers are still paying for the avocado. \*\* If the costs go up, so do the prices. \*\* No one said the relationship is exactly one-to-one and linear. > > What are you disputing, exactly? **bolding** mine If costs go up, so do the prices but only to the extent the market with bear. If the cost of ingredients for that cheeseburger goes up by 5 cents it is not a given that the business can raise the price 5 cents without affecting how many cheeseburgers the public will buy. So the business may be stuck with some portion of the cost increase, thus reducing profit and income taxes they pay. In the extreme perhaps the business can no longer sell cheeseburgers at a profit so they take them off the menu. The property tax goes up by $1200 per year so the landlord tells me my rent is increasing $100 per month. Maybe I am ok with that. Maybe not. If I am a good tenant and threaten to move out maybe the landlord agrees to only raise my rent $50 per month rather than incur the costs to find a new reliable tenant and the risk of having the property go vacant. You cannot simply tweak one variable and not expect there to be other reactions in the market. You cannot reasonably expect the .1% of income earners to sit idly by while you raise the income tax to confiscatory rates. They have the resources to examine their options and may make different decisions based upon the new tax regimen. ---
**Author:** ![igor\_frankensteen](https://avatars.discourse-cdn.com/v4/letter/i/839c29/32.png) [@igor\_frankensteen](https://boards.straightdope.com/u/igor_frankensteen)\ **Post date:** [May 18, 2017, 12:49am UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/110 "2017-05-18T00:49:21Z")
> [@octopus](#): > > Yes I am and yes I have. What should a painter be paid? Can you come up with a dollar value? No, and you can quote me on that. I am pointing out that basing the pay of , for example, a painter, on how desperate that person is to get some sort of income at all, rather than on how much it costs to keep him/her alive and to enable him/her TO paint, isn’t logical. It’s no different than basing the calculated cost of raw materials, not on what is actually required to acquire them, but on what you calculated back from your target sales price is. Every time the ACTUAL cost of something is ignored, that cost remains in existence, and shows up eventually. In the current era, we have repeatedly had to deal with the costs which were avoided in the past (i.e. dumping raw sewage and poisons into the water table for later generations and people downstream to deal with) , allowing large profits to be taken back then, showing up now, as a drag on current productivity, and an even greater cost of living for us to try to wrestle with. It isn’t JUST a matter of looking at the rest of the current pricing structure, and RETAINING all of it, while changing JUST the cost per hour for a painter. It requires looking at the totality of our entire economy, and changing how EVERYTHING is priced out. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [May 18, 2017, 1:01am UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/111 "2017-05-18T01:01:44Z")
> [@John\_Mace](#): > > The same place that corporations get the money to pay income tax. At least I’m glad we’re all now in agreement that corporations don’t pay taxes! 🙂 You’re not really wrong. Expenses are always, ultimately, borne by the end consumer. Like water expenses will always find a way to trickle to the bottom (which is the consumer in this case). (Note the consumer is the end user…whoever that may be.) Well, if expenses get so high the consumer will no longer buy the product then they are not paying for it and the company goes out of business or figures something else out. That said corporate income taxes are levied on profits (so not strictly an expense). ---
**Author:** ![Trinopus](https://avatars.discourse-cdn.com/v4/letter/t/2bfe46/32.png) [@Trinopus](https://boards.straightdope.com/u/Trinopus)\ **Post date:** [May 18, 2017, 1:17am UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/112 "2017-05-18T01:17:52Z")
> [@Iggy](#): > > . . . If costs go up, so do the prices but only to the extent the market with bear. > > If the cost of ingredients for that cheeseburger goes up by 5 cents it is not a given that the business can raise the price 5 cents without affecting how many cheeseburgers the public will buy. So the business may be stuck with some portion of the cost increase, thus reducing profit and income taxes they pay. In the extreme perhaps the business can no longer sell cheeseburgers at a profit so they take them off the menu. > > The property tax goes up by $1200 per year so the landlord tells me my rent is increasing $100 per month. Maybe I am ok with that. Maybe not. If I am a good tenant and threaten to move out maybe the landlord agrees to only raise my rent $50 per month rather than incur the costs to find a new reliable tenant and the risk of having the property go vacant. > > You cannot simply tweak one variable and not expect there to be other reactions in the market. You cannot reasonably expect the .1% of income earners to sit idly by while you raise the income tax to confiscatory rates. They have the resources to examine their options and may make different decisions based upon the new tax regimen. Total agreement: that’s why I took care to note that no one is claiming that the relationship is exactly linear. You’re right that it isn’t “ceteris paribus” either – you can’t just change one thing and expect all others to remain as they were. (One of my very favorite ceteris paribus jokes is, “If Karl Marx had been a goat, Das Kapital would have been written entirely without vowels.”) On the other hand, remember that the highest tax rates were very high under Eisenhower…and there were still plenty of millionaires and no shortage of really big corporations. Taxes were high under Kennedy, and, in fact, still fairly high after Regan got through playing games. Only a very few radicals want a 100% tax rate for income over $100,000 (or whatever figure they propose.) Most of the rest of us would be pretty happy if they reverted to Reagan-era numbers. Another straw-man claim bouncing around here is that anyone imagines that a higher tax rate would pay for the entire budget. Obviously, no, it won’t. We’ll still be stuck borrowing money, even if the rates went to Eisenhower-era rates; everyone here knows this. We’d just have to borrow less money; the deficit would bleed a little less. Which would be a good thing. Trump’s fantasy that a massive tax cut will pay for itself by a gigantic spurt in the economy is just that: fantasy. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [May 18, 2017, 1:21am UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/113 "2017-05-18T01:21:55Z")
> [@Whack-a-Mole](#): > > You’re not really wrong. How is that different from being right? > [@](#): > > Expenses are always, ultimately, borne by the end consumer. Like water expenses will always find a way to trickle to the bottom (which is the consumer in this case). (Note the consumer is the end user…whoever that may be.) > > Well, if expenses get so high the consumer will no longer buy the product then they are not paying for it and the company goes out of business or figures something else out. > > That said corporate income taxes are levied on profits (so not strictly an expense). It’s exactly the same analogy. If you raise their tax “X” amount, then they must raise their prices “X” amount. At least according to the logic of some of the posters here. Same for Min Wage, btw. Raise the MW that people pay their workers and the product price must increase to the customer. If it does’t, then you can’t say that rents automatically go up when property taxes go up. Anyway, **Iggy** said it fine. Pricing is a complex equation and anyone who thinks you simply pass all costs along to the customer has never run a business. Or never run one that lasted very long. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [May 18, 2017, 1:24am UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/114 "2017-05-18T01:24:11Z")
> [@igor\_frankensteen](#): > > No, and you can quote me on that. I am pointing out that basing the pay of , for example, a painter, on how desperate that person is to get some sort of income at all, rather than on how much it costs to keep him/her alive and to enable him/her TO paint, isn’t logical. It’s no different than basing the calculated cost of raw materials, not on what is actually required to acquire them, but on what you calculated back from your target sales price is. > > Every time the ACTUAL cost of something is ignored, that cost remains in existence, and shows up eventually. In the current era, we have repeatedly had to deal with the costs which were avoided in the past (i.e. dumping raw sewage and poisons into the water table for later generations and people downstream to deal with) , allowing large profits to be taken back then, showing up now, as a drag on current productivity, and an even greater cost of living for us to try to wrestle with. > > It isn’t JUST a matter of looking at the rest of the current pricing structure, and RETAINING all of it, while changing JUST the cost per hour for a painter. It requires looking at the totality of our entire economy, and changing how EVERYTHING is priced out. Then tell us the ACTUAL cost of the painter is that you claim we’re ignoring and how you propose to change how EVERYTHING is priced out. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [May 18, 2017, 2:31am UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/115 "2017-05-18T02:31:55Z")
> [@John\_Mace](#): > > Same for Min Wage, btw. Raise the MW that people pay their workers and the product price must increase to the customer. If it does’t, then you can’t say that rents automatically go up when property taxes go up. It’s a big circle. Raise wages. Raise prices to cover that. Wages too low to buy stuff so raise wages. Raise prices. Rinse and repeat. I think there is a word for this: Inflation ---
**Author:** ![Bone](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bone/32/407_2.png) [@Bone](https://boards.straightdope.com/u/Bone)\ **Post date:** [May 18, 2017, 3:43am UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/116 "2017-05-18T03:43:16Z")
> [@Trinopus](#): > > Agreed…and so what? The renters are still paying the property tax, and the customers are still paying for the avocado. If the costs go up, so do the prices. No one said the relationship is exactly one-to-one and linear. > > What are you disputing, exactly? I think at best you can say there is a correlation. But skipping to the phrasing “renters are paying the property tax” elides much of that, and allows framing the conversation in a way that’s typically favorable to the one making that claim. Rents are typically much more elastic than property taxes, so at any given time rental income could fluctuate much more than property taxes, and passing those costs to renters may not be possible given market rents, nevermind when property is vacant. ---
**Author:** ![D\_Anconia](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@D\_Anconia](https://boards.straightdope.com/u/D_Anconia)\ **Post date:** [May 18, 2017, 5:12am UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/117 "2017-05-18T05:12:11Z")
> [@igor\_frankensteen](#): > > Such as, it completely ignores that human beings are used up and discarded before they are ready to die, and therefore society has to “cope” with their being discarded, by declaring callousness to be a virtue. This is Great Debates. Cite, please. ---
**Author:** ![Chimera](https://avatars.discourse-cdn.com/v4/letter/c/8e8cbc/32.png) [@Chimera](https://boards.straightdope.com/u/Chimera)\ **Post date:** [May 18, 2017, 5:48am UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/118 "2017-05-18T05:48:32Z")
> [@Whack-a-Mole](#): > > It’s a big circle. > > I think there is a word for this: Inflation Except for the fallacy wherein wages are 100% of the price of items and thus, raising wages means a 1:1 rise in the price of whatever those people produce. ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [May 18, 2017, 1:03pm UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/119 "2017-05-18T13:03:28Z")
> [@HurricaneDitka](#): > > Do you have a cite for “a dollar in a wealthy person’s bank account stimulates the economy far far less than when it is in a working class person’s hand”? I consider this to be basic economic theory. The less money someone has, the greater portion of it they will spend if you give them more. Here are a [few](https://www.theguardian.com/business/2015/jun/04/better-economic-growth-when-wealth-distributed-to-poor-instead-of-rich) [articles](http://www.slate.com/articles/business/moneybox/2013/05/unconditional_cash_transfers_giving_money_to_the_poor_may_be_the_best_tool.html) [about](http://www.newstalk.com/IMF:-Giving-money-to-poor-families-is-the-best-way-to-boost-growth) [it.](http://www.economist.com/blogs/democracyinamerica/2010/12/tax_cuts) To be fair, this is not a settled matter, and economists do disagree on the best methods of stimulating the economy, so if you are looking for absolute proof, then I suppose that it difficult to come by, but it would be just as, if not more, difficult to come by cites that show that tax cuts for the rich stimulate the economy more. > [@John\_Mace](#): > > How is that different from being right? > > It’s exactly the same analogy. If you raise their tax “X” amount, then they must raise their prices “X” amount. At least according to the logic of some of the posters here. If you raises taxes by X amount per unit, then they will be getting X per unit less in revenue for costs, maintenance, and profit. They will need to raise the average rate of rent by X in order to maintain their current profit, or reduce services by X, or increase surcharges by X, or take an X in loss. This doesn’t mean that every unit will go up by X, but it does mean that the average renter in the unit will be bearing an additional burden of X in increased costs or decreased services. > [@](#): > > Same for Min Wage, btw. Raise the MW that people pay their workers and the product price must increase to the customer. If it does’t, then you can’t say that rents automatically go up when property taxes go up. Raising MW will mean that prices go up. The debate is whether prices go up more than wages at the bottom end, making it unproductive. I am of the opinion that costs will go up slower than wages in that case, but I am certainly under no impression that costs would not go up at all. > [@](#): > > Anyway, **Iggy** said it fine. Pricing is a complex equation and anyone who thinks you simply pass all costs along to the customer has never run a business. Or never run one that lasted very long. I really think that you need to work on that last paragraph. If you do not pass all of your costs along to your customer, who exactly is going to be paying them? I do run my own business, and I have done so for over 4 years, and it has grown from 3 people to 12, and it does not look like I am going anywhere anytime soon. I assure you that I pass all of my costs along to my customer. I am certainly not going to eat them. Not saying that pricing is not a complex equation, I’ll agree to that, but it is not so complex that I will be able to operate at a loss due to my costs going up, and not passing those costs along to my revenue stream, my clientele. Same as in the case of rent. If the property taxes on your rental unit go up by $1000 a year (a pretty high amount for property taxes to increase over the course of a decade, much less a year), then the landlord would have to charge $100 more a month to that unit in order to not lose money on renting that property. Now, he could instead decide to only increase the rent by $50, and make up the money elsewhere, like in less maintance, or more surcharges for pool or laundry use. Point is, renters do, in one form or another, assume the burden of the property taxes levied against the properties in which they reside. Indirect it may be in some cases, but in no cases is it meaningless. If there were no property taxes on a unit, then rent would be less, by at least [15%.](http://www.nmhc.org/Research-Notes-Apartments-and-Property-Taxes-May-2005/) > [@Bone](#): > > I think at best you can say there is a correlation. But skipping to the phrasing “renters are paying the property tax” elides much of that, and allows framing the conversation in a way that’s typically favorable to the one making that claim. > > Rents are typically much more elastic than property taxes, so at any given time rental income could fluctuate much more than property taxes, and passing those costs to renters may not be possible given market rents, nevermind when property is vacant. I take it that you two would not consider that people buying gas pay gas taxes for the same reasons then? The cost of the tax is built in to the price you pay at the pump. If the gas tax goes up by 10 cents, do you think that the price of gas will go up by 10 cents? The price of gas is often much much more elastic than the taxes, so the price could fluctuate much much more than gas taxes, so passing those costs to gasoline buyers may not be possilbe. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [May 18, 2017, 1:34pm UTC](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790/120 "2017-05-18T13:34:55Z")
> [@Chimera](#): > > Except for the fallacy wherein wages are 100% of the price of items and thus, raising wages means a 1:1 rise in the price of whatever those people produce. Wages (and benefits) are pretty close to 100% of the cost of labor, so raising wages means a nearly identical rise in the price of that labor. You are correct that wages are not 100% of the cost of manufactures, nor even in the cost of services, but they are a significant factor. And the higher proportion of the cost of doing business in a given industry, the more effect a rise in the cost of labor has. It’s a point made in discussions about raising the MW. In the child care industry labor costs make up a majority of the cost of doing business (I can dig up a cite if necessary) and child care is a major expense in most families who use it (likewise). Daycare workers make, on average, less than $15 an hour (ditto). Raise the MW to $15 an hour, and the cost of child care needs to rise. (Profit margins in child care are [about 3-6%](http://money.cnn.com/2001/06/04/sbstarting/q_childcare/index.htm) so it isn’t generally a matter of “just squeeze it out of profits”). Regards, Shodan [Previous page](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790.md?page=5) [Next page](https://boards.straightdope.com/t/tax-the-rich-and-save-the-poor/786790.md?page=7)