The Firefly Challenge: Prove 40% tax rate!

Great Debates
81

Tax breaks? What tax breaks? You’ve heard of the “marriage penalty” tax, I presume? My husband and I would pay less in income taxes if we were not married. Because of my income, he cannot deduct an IRA contribution, or the money he spends on union dues and continuing education in his career as a teacher, or a host of other things which he COULD do if he were single. Further, we end up in a higher tax bracket together than we would be singly.

Married folks might] have a tax break if one of them doesn’t work; been awhile since I crunched those numbers, so I’m not sure anymore. But it doesn’t happen when they are both employed.

Homosexuality and marriage is irrelevant to the question of the deductibility of children. The supporting parent can claim the child as a dependent whether that parent is gay or straight, single or married.

-Melin

82

No, but the argument that preceded it did.

First of all, let’s look at the obvious evidence. There are lots of stores out there, and a lot of shopping sites on the Web, and the stuff we buy comes from here and abroad. We cn buy from anywhere and anybody with a click of the mouse.

If domestic taxes were creating prices that were ‘bloated beyond all reason’, don’t you think the US economy would be a wreck? But it’s not; it’s the envy of the world. What you say is happening just isn’t happening. Open your eyes. Just because your beliefs say it’s happening doesn’t mean anything.

Of course, you’re forgetting that raw materials, parts, and whatnot come from all over the globe. How can you even pretend to talk about a manufacturing process as if it all takes place in America, and American taxes apply to each step? You’re back in your platform shoes and bell-bottoms.

Still, you’re forgetting one basic free-market premise, and that’s that prices are set by the free market, not by adding stuff up. When competition is global, our companies are competing against companies with completely different taxation systems. The price - regardless of country of origin - is set by the market. Do you think that if we reduced taxes on businesses, that that would change that fact?

Our companies, by and large, are making huge profits, and their executives are receiving dazzling compensation packages. If they had to lower prices, they could. If they wanted to lower prices, they would. They don’t. So the taxes may be reducing one executive’s salary from $1.2 mil to $1 mil, and another’s from $800,000 to $650,000; and the dividends may be a little less astoundingly high than would otherwise be the case. But by free-market theory, we’re not paying those taxes. *They * are. And the evidence of the real world, the one I encounter every time I go shopping or look through the ads, supports that theory.

83

I might add that while the adding-stuff-up aspect doesn’t set prices in a free market economy, it does determine whether a firm can produce and sell its product at the market price, and stay in business.

By and large, American companies are having no problem with that, and still have plenty left over for executive salaries and healthy dividends. So not only are the taxes not setting the price, but they aren’t hurting our firms’ health and competitiveness.

84

Thank you, Melin. That was a stupid example on my part. I retract it, and give you leave to insert instead some other loophole from the tax code.

God knows that finding one is easy enough.

No, I don’t. When wages are bloated too, it’s a zero sum.

I’m surprised you asked me that, knowing that I’m an Austrian.

Free market? :smiley: :smiley: :smiley: What free market?

And for heaven’s sake, man, if you can’t at least recoup your costs — which you have to “add up” to determine — and make a profit besides, how will you survive as a business?

85

Re the ‘marriage penalty’: it’s real, for those of us whose incomes are fairly close to our spouse’s. The greater the disparity, the less the penalty - in fact, if only one spouse works, or the second spouse’s is small compared to that of the main breadwinner, getting married is a tax break.

According to this Washington Post story, about 48% of married couples are penalized, about 41% get a bonus, and the remaining 11% pay roughly the same, relative to what their taxes would be as two single people.

Among those who are penalized, the average (no, they didn’t say which average ;)) penalty is $1141; the average bonus, for those who get that, is $1274. So it’s almost a wash, overall - but for most of us, it’s either a break or a penalty.

86

Isn’t that up for discussion now by the politicians? But isn’t that something they have talked about since Cotton was a monkey?

87

Re: my previous post.

Chuckle all you like.

You pay state and local taxes (which usually aren’t too onerous compared to Federal taxes)

State attracts business

Business gives you job

you pay taxes to state

You’ve received value and benefitted. The state has benefitted and the company has beniefitted. This is an example of one of those few things that works the way it’s supposed to.

Okay you argue, say I don’t get a job with that business?

Well, the overrall economy benefits, and there is more money to be spent in whatever business you’re involved in.

Yes, it’s funded by taxpayers, but those same taxpayers generally get their value back several times over in terms of wages, and economic benefits by having a business located near them.

What’s so funny?

88

Actually, I must’ve missed your saying that. I know your taxes there are substantially higher than ours here in the US.

In your country, I expect wages may be artificially propped up. Bloated wages in the US have been the exception, not the rule, for the past couple of decades, except in the managerial suite. If the average (median!) American’s wages had kept up with executive salary increases (ignoring stock options, etc. altogether) over the past decade, then Joe and Jane Sixpack would be bringing home $118,000 per year, not $39,000.

So bloated executive compensation may be keeping the stock market higher than would have occurred otherwise, but bloated wages haven’t been generating some sort of artificial boom in retail sales here.

(It’s easier to say what isn’t happening than what is responsible for the US economic expansion; even Alan Greenspan, the Yoda of the US economy, isn’t sure he understands it. But we’ve had remarkable productivity gains, and US workers’ wages and salaries haven’t kept pace with the productivity increases - so there’s a good argument that American workers are underpaid.)

And whose government, exactly, is setting prices in a global economy?

89

RT:

:smiley: :smiley: :smiley:

That is just too precious!!! Not a citizen of Austria, but of the Austrian School of Economics! You know, Ludwig von Mises, F. A. Hayek, those guys.

:smiley: :smiley: :smiley:

Oh, Lordy, my friend. Thank you. I really, really needed that.

A market that is regulated beyond the supression of coercion is Fabianist by definition, and therefore not free.

90

Hey, Lib, you’re welcome to speak to yourself in whatever code you want - but the rest of us might be slow on the uptake. Glad to bring some merriment to your day! :slight_smile:

Speaking of talking in code…TANSTAAFM!

91

Austrian school of economics?

Isn’t that just yodelling for $?

92

Whenever Lib makes an enigmatic remark, I have taken to reading it as saying “Gee, you’re right and I’m wrong, Gaudere. You’re so smart. I bow before your superior wisdom.” Barring further explication on said comment by Lib, I shall continue to do so. It eases mind strain and lowers blood pressure tremendously. :smiley:

(Still wondering if he ever got my point in the “is God a Libertarian?” thread or if he simply dodged it…)

93

I dunno, Gaudere. He’s just informed me there that the God he worships is Jesus. I expect this remark has some extremely obscure interpretation in the Austrian school of theology that is a smashing rebuttal to everything I’ve said on that thread, but I’m too dense to pick up on it. :wink:

94

Top marginal tax rate in
Austria: 50%
UK: 40%
US: 39.6%
Approx income level at which top marginal rate is applied (in USD, converted at 1/1/00 rates):
Austria: 51,000
UK: 44,000
US: 278,000
It’s not really that US rates are much different than rates in other countries, it’s the income level at which those rates are applied. If you earn more than about USD45,000 in the UK, you’re in the upper tax bracket.

95

Isn’t this a thread about an economic matter?

If I said I was a Keynesian [gag…] what would you have thought I meant, that I was from the island of Keynes?

I dodged nothing, Gaudere. I left you a response there.

96

Lib: hills like white elephants.

97

Uhhh Lib, saying your an Austrian means your from Austria no matter what the #@$$&ing context of the conversation.

98

This thread’s about what the overall tax rate is for the American family with median income. Glad your amusement gives you an excuse to avoid the actual content of my posts, but I’m not surprised.

Now, where were we? Oh yes, revising the figures because VA was a low-tax state. We’re replacing it with MD, which the Tax Foundation says is in the middle of the pack.

Otherwise, everything’s the same as on p.1.

Upfront taxes: Federal, MD, local income; payroll (SS/medicare).

Fed: $3956
MD: $1473
Loc: $782
SS/M: $2975
Total $9186

Other costs that sales tax doesn’t apply to: rent, power bill, gasoline (taxed at higher rate).

Rent: 6516 Power: 648
Gas: $1000
Total: $8164

Total expenses not subject to sales tax:
$9186 + $8164 = $17350.

Total expenses subject to sales tax:
$38885 - $17350 = $21535.

5% sales tax on $21535 is $1077.

Taxes: income and payroll (totaled above), sales, gas.

I&P: $9186
Sales: 1077 Gas: 500
Total $10763

Overall tax percentage: 10763/38885, or 27.7%.

99

Well, Gaudere, maybe you should change your name to Airavanna. :slight_smile:

$10,763?! Ay, ye gods! It’s a larceny.

100

Scylla had been wondering what the tax burden on a family with mean household income ($53,000 in 1998) looked like. So let’s replay the numbers. But first, some new assumptions:

(1) They own, rather than rent. That’s far more typical in that income bracket.

(1A) Since their income is well above the median, their mortgage probably is too. I’m giving them a house that they pay $10,000/year on - $1500 in property taxes, $500 toward principal, and $8500 interest.

(2) I’m upping their electric bill to $70/month.

Upfront taxes: Federal, MD, local income; payroll (SS/medicare), property tax:

Fed: $5261
MD: $1967
Loc: $1035
SS/M: $4055
Prop: $1500
Total $13818

Other costs that sales tax doesn’t apply to: mortgage, power bill, gasoline (taxed at higher rate).

Mort: 9000 Power: 840
Gas: $1000
Total: $10840

Total expenses not subject to sales tax:
$13818 + $10840 = $24658.

Total expenses subject to sales tax:
$53000 - $24658 = $28342.

5% sales tax on $28342 is $1417.

Taxes: incom, payroll, property (totaled above), sales, gas.

I,P&P: $13818
Sales: 1417 Gas: 500
Total $15735

Overall tax percentage: 15735/53000, or 29.7%.

Almost 30%, but still nowhere near 40. Sorry, Scylla. :slight_smile:

Time to close the ‘challenge’ aspect of this thread down - I hereby declare my $50 safe.

This was a lot more work than I intended - it had been my intent that the challengers do this number-crunching. Ah well - if I do my own numbers, I know they’re correct, and there’s something to be said for that. :slight_smile: