Let’s put tax cuts in terms everyone can understand.
Suppose that every day, ten men go out for dinner.
The bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men-the poorest-would pay nothing;
The fifth would pay $1:
The sixth would pay $3;
The seventh $7;
The eighth $12;
The ninth $18.
The tenth man-the richest-would pay $59.
[…]
The people who pay the highest taxes get the most benefit from a tax reduction.
Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.
Unfortunately, Liberals cannot grasp this straight-forward logic!
[Moderator Hat ON]
Do not quote the full text or large excerpts of copyrighted works. Small quotes or a link only, please. The full text of the example is here: http://www.floydandersonforcongress.com/tax_cut_analogy (and if Floyd is quoting without permission, on his own head be it). --Gaudere
I don’t disagree at all, Biggie, but you might want to attribute this to the author, which is certainly not you. This has been making the rounds of the Internet, and William F. Buckley Jr. put it into print.
If you saw it on the Net, say so and then invite discussion.
Well Mr. Moto I did find it on the internet and could not find the original link or I would have posted that. They say the author was apparently Kenneth Wangler and I have no idea who who this Buckley guy is your talking about. I figured the content was more important than beating my brains out to find it’s origin. Suffice to say I certainly did not write it but I agree with the points it makes. BTW, why did you choose the name Mr. Moto and why does everyone on this BB correct everyone else. I have never seen anything like it.
Cute story, but it carefully omits any question of how much richer the tenth man is than the other men, doesn’t it? We’re just supposed to assume that he’s shouldering an unfair amount of the burden because he’s paying the most.
So, the rich are being “taxed too much” and “attacked for being wealthy”? My my, all these poor rich people being physically beat up :eek: by greedy freeloaders who aren’t as rich as they are!
You’d never know from such a fable that in fact, the ratio of the share of the income tax paid by the richest to the share of the income received by the richest has actually been declining in this country. That is, the wealthiest part of the population has been acquiring a steadily larger share of the income. Yes, it’s also been paying a larger share of the taxes, but the increase in tax share has not kept pace with the increase in income share.
So wealth and income inequality is increasing, and the richest taxpayers are getting a bigger increase in income than in tax burden, and if anyone suggests not cutting taxes on the richest taxpayers quite so much, the OP and its ilk rush to proclaim that the unfortunate rich are being assaulted and defamed. Seems to me that rich folks around here have got it pretty good!
And why is there always one of these? The debate would be tax cuts being proportionate to the amount being taxed to begin with.
There is always a bunch of yahoos saying the rich are getting the majority of the tax breaks and it’s unfair. I was just pointing out that it should be that way because they pay more taxes and was looking for a reply.
But the dude who paid $59 was some 1000 times richer than even the next, thus as a % of what he earns, his payment is even smaller. Thus, for him to shell out $59 is FAR easier than for the dude paying only a dollar.
Besides, the richest dude also ate more than anyone else (although not 10 times more), and ordered the caviar (which only he ate), so why shouldn’t he pay more?
And then, you forget about the tax, tip & drinks they ordered (various FICA & such taxes)- where they split that amount equally (Social Security WH tops out very early), despite the disparity in their incomes.
BD:There is always a bunch of yahoos saying the rich are getting the majority of the tax breaks and it’s unfair. I was just pointing out that it should be that way because they pay more taxes and was looking for a reply.
They pay more taxes because they have more money. Furthermore, as I pointed out above, the increase in their share of income is currently rising faster than the increase in their share of taxes. Cite (New York Times article):
Unless you’re arguing that the only fair tax is a flat tax, i.e. taxing the same percentage of income across the board (and many people do, but that’s a whole different debate), why should you argue that the only fair tax cut is a flat tax cut?
To paraphrase Will Rogers, “It’s not what he doesn’t know that worries me, it’s what he does know that just ain’t so.”
I’ll dig up the link when I get to my home computer that has it bookmarked, but just to give you the raw numbers:
The richest 1% received 8.5% of the AGI (adjusted gross income) in 1980 and 20.8% in 2000. During the same time period, their share of the tax revenues went from 19% to 37.4%. So, their share of the AGI went up by a factor of almost 2.5 whereas their share of taxes increased by a factor of 2.
And, yes, we know that the fact that their share of taxes is higher than their share of AGI shows that the federal income tax is progressive (the rich pay a larger percentage of their income in taxes than the poor). However, one must bear in mind that it is the most progressive tax we have other than the estate tax. Once all federal taxes (e.g., including payroll taxes) are thrown into the mix, the progressivity is much milder. Once you consider state taxes (and particularly the fact that sales taxes imposed by states are regressive because the poor spend more and save less of their income than the rich do), much of this remaining milder progressivity is apparently lost. I believe the most comprehensive analyses have shown that the total tax structure is then pretty close to flat (i.e., neither particularly progressive or regressive).
But without some sort of idea of what is fair or equitibale this doesn’t tell us if we are moving from a “correct” state to an "incorrect’ one or vice versa, and that is assuming we can even make those distinctions.
Here’s a challenge to anybody who thinks the current income tax structure is unfair: Design your own. Include the tax brackets, and the tax paid in each bracket. Explain why you think this is fair. This will give a chance for those who complain that the wealthy get screwed, or that the poor are the pawns of evil rich fatcats, to design their preferred system, rather griping from the safety of generality. Assume that the revenue you need to generate is the same as that currently generated by the existing US income tax system.
Extra credit: After discussing your ideal tax system, discuss how you would handle any tax breaks you wanted to implement further down the line.
Jeff
Don’t forget about this piece of fiction. The restaurant’s costs magically went down $20? It remains down in the current economy? What they don’t tell you is that they will need to cut back on the free refils and the bread. This won’t effect the richest, who send their kids to private restaurants.
Really? Where will they go, I wonder? No, I think they are staying right where they are, slipping the maitre’d a couple of bucks to “forget” to mark down some bottles of wine on their bill.
Here it is. The relevant data are in the last 2 tables. The year 2000 data, which was apparently just recently released by the IRS, is from a Wall Street Journal editorial last month. (It is always fun to use your opponents statistics…and actually the Tax Foundation is no liberal group itself, but at any rate the numbers are all from the same IRS tax return data!)
By the way, here are a few other interesting links, from admittedly partisan sources (but with good reputations for getting the numbers and facts straight): http://www.cbpp.org/4-16-02tax.htm
Note that none of us here are arguing the fact that in a flat across-the-board tax reduction by a given fraction of the tax paid, the rich will get the lion’s share of the benefit. However, what we are noting is that:
(1) By focussing on cuts to the estate tax and the federal income tax, you are cutting the most progressive taxes and conveniently ignoring the effect of the less progressive taxes.
(2) We are questioning whether we need to design tax cuts that give an equal share of the income taxes paid back to everyone. We are considering the fact that we live in a time when income inequality has exploded so that the top 1% have seen their real incomes sky-rocket in the past 20-odd years whereas the median households have seen only modest increases (even less once you consider hourly wages) and the poor have seen still less…or even lost ground. To quote from the above CBPP link:
And, it’s not like the rich were actually making out all that badly back in the late 1970s either.
Well, “what is fair and equitable” is admittedly more of a question of opinion than of demonstrable fact, which is why we need to argue this out in the political sphere. However, it is important to have the facts right first and also to combat efforts by the libertarian-types and the rich to define any sort of tax distribution that they don’t like as “stealing” and thus violating their rights and not even allowed to be considered in the political sphere.
Do you mean that you are keeping less as a percentage of your gross income, or do you mean that you are keeping less in terms of actualy take-home pay?
If you are taking home less dollars every year, then you’re working in a bad job. Gotta get out and get another one.
If you’re taking home more money, but feel that you’re paying a larger percentage of your income, that’s entirely probable. It’s called a “progressive tax” as others have said. But you really don’t get hammered on percentage until you make the big bucks.
Actually, you’re probably keeping more every year. It just feels good to rant.
By the way, I agree with samclem’s point that we don’t really have enough information or understanding of the OP’s statement about his own tax burden to understand if his knowledge was correct or not. Thus my Will Rogers’ quote was meant to apply to this in the context of the implication about whether kimstu’s facts were true…And, at any rate, it was meant in good spirit. (I too have been guilty of “knowing things that just ain’t so.” Dispelling such ignorance is what the SDMB is all about!)
[sup]Actually, very good story.[/sup][/ul]