# What is a fair amount of tax for the rich to pay? **URL:** \ **Category:** Great Debates\ **Created:** [April 26, 2010, 4:52pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416 "2010-04-26T16:52:59Z")\ **Posts on this page:** 20\ **Page:** 14
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [April 30, 2010, 7:29pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/261 "2010-04-30T19:29:43Z")
> [@Ravenman](#): > > That’s probably more or less the ballpark of what the rich person is paying in income taxes. The scenario involving the middle class family would be a tax increase, and probably very sizable. > > [Newt Gingrich](http://www.humanevents.com/article.php?id=20085) claims that the average family of four making $60 grand currently pays about $3,000 in income taxes. In **CosmoDan** ’s scenario they would owe about $2,900 under the Federal income tax, and less if they had mortgage interest or other deductions that exceeded the standard deduction. Like most of the working and middle class, they would pay substantially more in FICA than in income tax. Of course if the money was from interest, capital gains, or dividends then they would not be subject to FICA and would have an effective 4% tax rate which is lower than \*\*CosmoDan’s \*\* non-revenue neutral, pulled out of his ass tax rate. I’d love to see the chants at the next Tea Party rally: “Let’s pay higher taxes and make the deficit worse, pensioners don’t need the money except to pay the hearse”. Followed of course by “Wall Street pays too much, let’s use the middle class as a crutch”. ---
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [April 30, 2010, 7:32pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/262 "2010-04-30T19:32:45Z")
ETA: wrong quote ---
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [April 30, 2010, 7:33pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/263 "2010-04-30T19:33:49Z")
> [@Damuri\_Ajashi](#): > > Most notions of fairness and equity support at least some progressivity in the system. The most popular flat tax systems not only contemplate that there will be people that pay nothing, they contemplate that there will be people who get net tax disbursements. What your flat tax system would do is simply move the burden from the rich to the middle class. That can’t be right. If it were, then a bunch of rich people would be setting up phony grass root organizations to advocate for a flat tax. 😉 ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 30, 2010, 7:41pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/264 "2010-04-30T19:41:10Z")
> [@DanBlather](#): > > My rough calc shows that to match our current spending, a flat rate tax would be about 50%. That does not take into account any exemption for the first \*n \*dollars as many proponents suggest. To match our current revenue, the tax rate would be a little more than 30%. I think that would mean more than 90% of Americans would see their taxes rise. Please, Republicans, run on that plank. I don’t want Republicans to lose, I want Republicans to stop coming up with stupid ideas because there is always a chance that some of those ideas become law. ---
**Author:** ![cosmosdan](https://avatars.discourse-cdn.com/v4/letter/c/a6a055/32.png) [@cosmosdan](https://boards.straightdope.com/u/cosmosdan)\ **Post date:** [April 30, 2010, 7:43pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/265 "2010-04-30T19:43:55Z")
> [@DanBlather](#): > > It is a completely absurd number, as my figures show. Please show me your calculations. All the info is out there for the taking. In exactly what way is it an absurd number? There are countries right now [using flat tax that hover around 20%](http://www.cato.org/pubs/policy_report/v29n4/cpr29n4-1.html) the interesting part is as prosperity grew the tax rate was able to be lowered for everybody. > [@](#): > > Your argument seems to be this: if we lowered taxes, then taxes would be lower. That’s called a tautology. Strangely, you seem to oppose a progressive tax system and then propose a progressive system by exempting a large amount of income. Now you’re putting words in my mouth. Don’t bother. I’m proposing a different tax structure not opposing any form of progressive tax. Have you forgotten the title of the OP? > [@](#): > > But maybe I’m wrong and there is some shred of factual content behind your assertions. I’f love to be educated. I’ve provided links and you haven’t mentioned them. I just provided another. If you have anything to offer in the way of actual discussion please present it. Your blanket dismissal and assertions without discussion aren’t very interesting or informative. ---
**Author:** ![cosmosdan](https://avatars.discourse-cdn.com/v4/letter/c/a6a055/32.png) [@cosmosdan](https://boards.straightdope.com/u/cosmosdan)\ **Post date:** [April 30, 2010, 7:50pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/266 "2010-04-30T19:50:40Z")
[QUOTE] > [@Ravenman](#): > > That’s probably more or less the ballpark of what the rich person is paying in income taxes. You mean it’s not absurd? > [@](#): > > The scenario involving the middle class family would be a tax increase, and probably very sizable. > > [Newt Gingrich](http://www.humanevents.com/article.php?id=20085) claims that the average family of four making $60 grand currently pays about $3,000 in income taxes. I’d want to see a more independent source. I can’t imagine that a $6,000 tax bill for a family of four earning 70,000 a year is that huge a burden. Of course there are lots of other factors to consider but the single issue under discussion here is the tax system. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 30, 2010, 7:53pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/267 "2010-04-30T19:53:58Z")
> [@cosmosdan](#): > > was there a point you were making? I guess my point was that it is ridiculous to compare a tax system used in a country with a population that is about half the size of Brooklyn to a tax system for the largest economy in the world. The flat tax is largely used in former Soviet states, their ability to reduce taxes has more to do with their economic growth (which most people attribute more to their conversion to capitalism) than their tax structure. > [@](#): > > It may be, but you didn’t hear it from me. I said our tax system was complicated. I didn’t claim that it being progressive was what made it complicated. In post 202 you say: "Our current tax system is complicated to the point of being ludicrous. A flat tax makes it very simple for anyone with basic math skills to figure it out. " Maybe I read too much into your statement. ---
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [April 30, 2010, 8:06pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/268 "2010-04-30T20:06:32Z")
> [@cosmosdan](#): > > In exactly what way is it an absurd number? There are countries right now [using flat tax that hover around 20%](http://www.cato.org/pubs/policy_report/v29n4/cpr29n4-1.html) 10 seconds of Googling showed up that Estonia has a flat tax of 22% _and_ a VAT of 20% _and_ a social tax of 33% paid by the employer _and_ a 2.8% unemployment tax shared equally by the employee and employer. ETA: just a word of advice, if a well known conservative says something just assume it’s a lie until you can confirm it otherwise. ETA 2: and Hong Kong has graduated tax rates. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [April 30, 2010, 8:08pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/269 "2010-04-30T20:08:16Z")
[quote=“cosmosdan, post:266, topic:537416”] > [@](#): > > You mean it’s not absurd? > > I’d want to see a more independent source. I can’t imagine that a $6,000 tax bill for a family of four earning 70,000 a year is that huge a burden. Of course there are lots of other factors to consider but the single issue under discussion here is the tax system. It’s not absurd so long as you also do not eliminate payroll taxes or corporate taxes. As long as we’re only talking income taxes, I’d say 20% is in the ballpark. As far as a more independent source, I’m going to link for like the fifth time in this thread to the CBO study. [Here.](http://www.cbo.gov/doc.cfm?index=5746&type=0&sequence=1#table2) A $70,000 income will put you right between the middle and fourth quintile. If you go to the second table on “Effective Individual Income Tax Rate,” you’ll see that the average rate paid would be between 4.7% and 8%. For a family, the number would be on the lower end, and for a single person, toward the higher. Let’s call it 5% of $70,000 pretax income, and that would come out to be about $3,500 in income taxes as an average tax paid for that income level. ---
**Author:** ![cosmosdan](https://avatars.discourse-cdn.com/v4/letter/c/a6a055/32.png) [@cosmosdan](https://boards.straightdope.com/u/cosmosdan)\ **Post date:** [April 30, 2010, 8:09pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/270 "2010-04-30T20:09:55Z")
> [@Damuri\_Ajashi](#): > > Most notions of fairness and equity support at least some progressivity in the system. The most popular flat tax systems not only contemplate that there will be people that pay nothing, they contemplate that there will be people who get net tax disbursements. What your flat tax system would do is simply move the burden from the rich to the middle class. I’ve seen that written several times. Would someone please demonstrate how that is true? What are we considering the middle class? [Benefits](http://www.cato.org/pubs/policy_report/v29n4/cpr29n4-1.html) > [@](#): > > While the simplicity and low tax rate were obvious selling points, the flat tax also eliminated various forms of double taxation, ending the bias against income that was saved and invested. In other words, the IRS got to tax income only one time. The double tax on dividends would have been completely eliminated. The death tax also was to be wiped out, as was the capital gains tax, and all saving would have received “Roth IRA” treatment. > > Another key feature of the flat tax was the repeal of special tax breaks. With the exception of a family-based allowance, there would have been no tax preferences. Lawmakers no longer would have been able to swap loopholes for campaign cash. It also would have encouraged businesses to focus on creating value for shareholders and consumers instead of trying to manipulate the tax code. Last but not least, the flat tax would have created a “territorial” system, meaning that the IRS no longer would have been charged with taxing Americans on income earned—and subject to tax—in other jurisdictions. > [@](#): > > Moreover, politicians are influenced by real-world evidence. Nations that have adopted flat tax systems generally have experienced very positive outcomes. Economic growth increases, unemployment drops, and tax compliance improves. > [@](#): > > It is also worth noting that countries with flat taxes are now competing to lower their tax rates. Estonia’s rate already is down from 26 percent to 22 percent, and it will drop to 18 percent by 2011. The new prime minister’s party, meanwhile, wants the rate eventually to settle at 12 percent. Lithuania’s flat rate also has been reduced, falling from 33 percent to 27 percent, and is scheduled to fall to 24 percent next year. Macedonia’s rate is scheduled to drop to 10 percent next year, and Montenegro’s flat tax rate will fall to 9 percent in 2010—giving it the lowest flat tax rate in the world (though one could argue that places like the Cayman Islands and the Bahamas have flat taxes with rates of zero). ---
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [April 30, 2010, 8:14pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/271 "2010-04-30T20:14:28Z")
And Latvia: > [@](#): > > In 2008, the employer’s contribution to national insurance is 24.09% and that of the employee - 9%. > Self employed pay 28.02% for national insurance. > A Latvian resident who is employed in Latvia by a non-Latvian company pays national insurance at the rate of 33%. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [April 30, 2010, 8:30pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/272 "2010-04-30T20:30:55Z")
> [@cosmosdan](#): > > I’ve seen that written several times. Would someone please demonstrate how that is true? What are we considering the middle class? That progressive taxation is good is essentially a value statement, not a fact that can be demonstrated. Rich people should pay higher rates than poor. Why? Because it is fair. If you don’t agree, fine. I find it very strange that you respond to that statement with a Cato screed against “double taxation.” Can you demonstrate why double taxation is wrong? I get double taxed all the time. My income is taxed, then my purchases are taxed, then my property is taxed… There’s nothing whatsoever wrong with the latest conservative boogeyman, double taxation. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 30, 2010, 8:53pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/273 "2010-04-30T20:53:44Z")
> [@Sam\_Stone](#): > > That’s your opinion. In my opinion, nothing could be healthier for the world than a ‘race to the bottom’ in taxation. How would a race to the bottom be good? Do you still think that starve the beast tactics can work? > [@](#): > > But I reject your premise anyway. The world now has individual tax rates, and I’m not seeing a race to the bottom. Weren’t you arguing that people will take their million dollar jobs and move to low tax rate jurisdictions and therefore we should reduce our taxes? > [@](#): > > Countries that have flirted with tax brackets in the 70% and up range have suffered for it. You mean like America during the 50’s and 60’s? Aside from the one extreme poster who thinks 99% tax rates can work, I think most posters are talking about returning to Clinton or early Reagan tax progressivity. > [@](#): > > I’d be happy to. Means-test social security and medicare. Where would you make the threshhold because most social security recipients? We currently exempt social security from income if there is less than $25K in “other income” The overwhelming majority of social security recipients fall into this category and do not pay taxes on their social security income. In fact the average social security check of $1000/month accounts for about 40% of the average retiree’s total income. Where would you draw the line? Medicare is even more of a problem because the retirees who can afford health care without medicare are vanishingly small. Where would you draw the line in medicare? I’d also like to point out that none of your suggestions are particularly politically viable but lets ignore that and see what sort of society you want to live in. > [@](#): > > Start offering private retirement investment alternatives to young people, and scale back their SS entitlements accordingly. Social security is a form of Ponzi scheme. Todays contributors are paying last generations contributors. Once you privatize social security for young folks, we are left with an almost immediately insolvent social security trust fund and the governemnt must either wither cut benefits almsot overnight or go deeper into debt. > [@](#): > > Raise the retirement age for social security benefits. I would point out that social security is largely paying for itself so unless you intend social security to be a revenue generator for other budget items you wouldn’t raise the retirement age by very much. > [@](#): > > Stop giving government benefits to people making over $25,000 per year. A family of 4 must make less than 27K/year to be leigible for food stamps. We have been cutting these social safety net payments for decades, the growing income inequality has put more people on the foodstamp rolls but I’m not sure I would call the benefits particularly generous. What benefits were you talking about?. > [@](#): > > End the mortgage deduction tax break. Yeah this never made much sense except to the extent that it promoted home ownership, which has some societal ebenfits but not nearly the level of benefit that the National Association of Realtors would have us believe. > [@](#): > > Eliminate farm subsidies and other subsidies of industry. I generally agree that we should get rid of about 10,000 pages of special deductions. But what if that means our entire agricultural industry moves to Brazil, thats OK with you? What about the R&D tax credit? What about the oil and gas depletion regime? What about special tax treatment for insurance companies (life insurance death benefits are not taxable and insurance companies get to take a current deduction for the present value of their insurance liabilities)? What about accelerated depreciation for small businesses? Should we elminate tax exemption for municipal bonds? > [@](#): > > Eliminate the federal Department of Education, and give the money back to parents in the form of school vouchers. Aside from the fact that school vouchers are generally a stupid idea, the Department of Education spends about 60 billion/year. Two thirds of that goes to subsidize colege educations in the form of Pell grants, work study and guaranteed student loans but lets just assume that people would prefer the vouchers. There are about 75 million school age children in America. That means a voucher for $800 for every student in America if we get rid of the Dept of Education and access to college educations by a pretty large segment of the population. > [@](#): > > Kill the health care bill. I agree. We need a single payer system to reduce societal health care costs, especially medicare costs. > [@](#): > > Stop spending the bailout money - the recession is over according to the government, so why are they still stimulating the economy? Maybe, because we are still at 10% unemployment? OK we do all that stuff, how much does that save us? I don’t see anywhere near enough to balance the budget never mind cut taxes. > [@](#): > > Peg the size of growth of government to the rate of GDP increase - 1%, so government shrinks by 1% of GDP per year, even though it’s increasing in size. You can’t do that without telling me exactly where you cut. That’s just another way of saying “pay for it with spending cuts” without identifying the spending cuts. > [@](#): > > But first, you are making an assumption that higher taxes means lower deficits. Its not an assumption. Its what has happened through our history. rasise taxes and you get more taxes, lower taxes and get less taxes. This may not hold true at the extremes but in the meaty middle its true (e.g. Tax increases during Clinton’s administration (along with significant spending cuts) resulted in the only budget surplus we have had since Reagan took office). ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [April 30, 2010, 8:57pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/274 "2010-04-30T20:57:53Z")
[QUOTE=Ravenman] I get double taxed all the time. My income is taxed, then my purchases are taxed, then my property is taxed. [/QUOTE] Double taxes would be if you got taxed on a purchase and then taxed again on the same item every year as part of a luxury tax (like in Virginia). You might not have a problem with that (as you say, it’s all a value statement), but that’s why I never lived in Virginia…I thought it was ridiculous and unfair. Different strokes. > [@](#): > > There’s nothing whatsoever wrong with the latest conservative boogeyman, double taxation. Well, as you say, that’s a value statement that depends on how one looks at such things. -XT ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 30, 2010, 9:07pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/275 "2010-04-30T21:07:47Z")
> [@Sam\_Stone](#): > > I can give you reasons all day long. …having different countries with different laws is a _good_ thing. I can cite you a list 100 pages long that should not be handled on a global basis but I can also identify a few things that seem to amke more sense to handle on a global basis. I mentioned three: financial regulations, environmental regulations, tax coordination, > [@](#): > > You need to read up on Asian economic history. The rise of the Asian Tigers began when government retreated from economic life. Free trade and lowering regulatory barriers were what kicked off the Asian economies - not government intervention. China’s big move up started when it began to embrace free markets and abandon central planning. > [@](#): > > They _absolutely_ do worse. There is a clear relationship between economic growth and smaller government. The strongest economies in Asia are the ones that have the freest markets. I’m pretty familiar with Asian economic history and I’m not saying these were command economies but these coutnries had HUGE amounts of government interference in economic decisions. Japan was famous for their various ministries that basically told companies what to do. China still has huge amounts of central planning. Korean real estate development is all done centrally, Taiwan didn’t naturally become and almost unnatrually export oriented as it had become, Singapore is one step from being a fascist state, I don’t think these economies were more free market than we are here and yet they seem to have done just fine. But like I said I think that the free market is (on average) better for consistently creating wealth and innovation over the long run than any other system out there. If that’s not enough for you and you want to say that free amrket economies ALWAYS do better than less free market economies then fine but you would be wrong. ---
**Author:** ![cosmosdan](https://avatars.discourse-cdn.com/v4/letter/c/a6a055/32.png) [@cosmosdan](https://boards.straightdope.com/u/cosmosdan)\ **Post date:** [April 30, 2010, 9:19pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/276 "2010-04-30T21:19:19Z")
> [@Ravenman](#): > > That progressive taxation is good is essentially a value statement, not a fact that can be demonstrated. Rich people should pay higher rates than poor. Why? Because it is fair. If you don’t agree, fine. fair enough. > [@](#): > > I find it very strange that you respond to that statement with a Cato screed against “double taxation.” Can you demonstrate why double taxation is wrong? nope. > [@](#): > > I get double taxed all the time. My income is taxed, then my purchases are taxed, then my property is taxed… There’s nothing whatsoever wrong with the latest conservative boogeyman, double taxation. Isn’t it often a matter of who is taxing you and where that money is going? I think the point may be that simplifying, limiting deductions and special cases, not using tax code to court votes and reward allies, might create a more free and more prosperous economic picture. I’d agree that simplifications can be put in place while maintaining a progressive tax system. The question is how tax systems stimulate or slow the economy, encourage business and growth. I wouldn’t claim to know that answer. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 30, 2010, 9:52pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/277 "2010-04-30T21:52:18Z")
> [@Sam\_Stone](#): > > The top 5% in the U.S. has maintained a remarkably consistent percentage of wealth in the U.S. since 1929. The only time it really went down a lot was during the 70’s, because it was eroded by inflation. Once inflation ended, the wealth held by the top went right back to where it had been historically. How are you defining consistent? The welath held by the top 5% has gone from 50% to 60% from 1989 to 2001 and my understandign is that wealth concentration has accelerated since then. [http://solutions.powersimsolutions.com/Ranking/HistoricalPerspective.aspx](http://solutions.powersimsolutions.com/Ranking/HistoricalPerspective.aspx) I don’t particularly mind increasing income disparity if everyone is doing better. IOW, I would rather have people unequally rich than equally poor. But, thats not what we have been seing recently. The rich have been getting richer and the poor have been getting poorer. Its not like we’re vassals or anything but we are experiencing concentration of wealth and incomes. > [@](#): > > I wouldn’t complain as much if all the government was trying to do was to lift up the desperately poor. But modern liberalism is about so much more than that - more and more it’s not about helping the poor, but about redistributing wealth through all strata of society. So you have a health care plan that gives government benefits to families making $80,000 per year, and Medicare and Social Security programs paying benefits to retired millionaires. Modern liberalism’s stances on Medicare and Social security were legislated between 70 and 40 years ago. There is nothing modern about modern liberalism but your notion that it is something new. > [@](#): > > Social programs to help the poor are affordable. Social programs aimed at making life easier for the middle class will bankrupt the country, there isn’t enough of other people’s money to maintain giving large payments to the middle class. Universal health care and public schools strike me as things we can’t afford NOT to provide. > [@](#): > > It does when you start talking about 90% tax brackets. See Britain’s experience in the 1970’s. > > And while it may not reduce their desire to produce, it will certainly reduce their desire to produce _in America_. Canada’s a lovely place right next door. If we have tax rates half of yours, the result is predictable. The US had marginal tax rates between 70% to 94% during the 50’s and 60’s our economy did fine. We did not suffer from a lack of good CEOs, good lawyers or good bankers. With that said, there was a LOT of tax planning. > [@](#): > > This is not theoretical. We Canadians have watched the flow of money and human capital to the South our entire lives. Now that trend is going to reverse. Yeah cuz tax rates are what all decisions are based on. pfft. > [@](#): > > At the very least, you can expect the flood of immigrants seeking opportunity to stop. Instead, you’ll get a flood of immigrants seeking your social programs. Have fun with that. Other than universally mandated health care, what social programs do we have today that we did not have 40 years ago? > [@](#): > > And most of them do so with the promise of making it big. Take that away from them by capping income, and fewer will take the risk. I will refer you back to our experience during the 50’s and 60’s when marginal tax rates were obnoxiously high, we seemed to do just fine and we seemed to have decent CEOs. Perhaps if the rewards were not so great that one year’s compensation could make your family wealthy for generations, there would not be the temptation to engage in the type of behaviour we have seen in the last couple fo decades. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 30, 2010, 9:54pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/278 "2010-04-30T21:54:08Z")
> [@cosmosdan](#): > > You’re right except in those cases where the tax rates change for certain income groups every time the controlling party changes. I did not mean that the progressive tax was what made our tax system so ridiculous. Well if the republicans would stop cutting taxes for the rich,w e wouldn’t have this whipsaw effect. > [@](#): > > You’ll have to explain this to me. A flat tax can be adjusted from year to year depending on the state of the nation as it dropped in Estonia as business and the economy flourished. As a whole how is it unfair and a progressive tax more fair. How is gaining tax percentage points as your income goes up, more fair than paying more simply because you earn more. He’s talking about marginal utility ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 30, 2010, 10:07pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/279 "2010-04-30T22:07:38Z")
> [@Sam\_Stone](#): > > You seem to think these are different people. Tell me: Who are the people who are ‘capturing the most value from production’ without actually helping produce? Other than politicians, that is. Tell me what the billionauire hedge fund managers produce? Tell me what the Credit default swap traders at AIG produced? What did the Synthetic securities bankers at Goldman produce? Did Frank Mozzillo really produce billions of dollars of value when he ran Coutnrywide? If you have afull time job making less than $20K/year you are probably producing more than take home, if you make $100,000/year, you probably produce that much, if you make $1,000,000 you MAY be producing that much value but if you are making much more than that, your income is the result of leveraging capital or labor, that capital or labor is doing much of the production and you are getting much of the value of production. > [@](#): > > And I’d disagree with you - to the extent that people are paid based on such things as the rarity of their talent and how many people they affect. Professional athletes and movie stars fall into this category and there you have an argument but there are a thousand people that can do what Fabrice Tourre did, he doesn’t have some peculiar talent. > [@](#): > > A smart venture capitalist with a good eye for the qualities that make up a valuable start-up can be indirectly responsible for the creation of billions of dollars in real value. Jack Welch saved GE from becoming an old-world industrial dinosaur like Zenith or Philco or Bethlehem steel, and turned it into a profitable, modern multinational corporation. Steve Jobs rescued Apple from oblivion. How much are these people worth to society? And all rich people get their money like this? > [@](#): > > As for investment bankers - good ones are worth their weight in gold. Don’t believe the stereotypes. I’m going to guess that I personally know more investment bankers than you do. They are as a whole, very smart and very hard working but they do nothing that a lot of other people couldn’t do but the dollars are so large that they make astronomical amounts of money by breaking off a little crumb from the deals they work on. > [@](#): > > And an American laborer’s wage is not solely because of his labor, but because he is the beneficiary of millions of dollars of capital invested and risked to magnify his productivity. Both sides win from that arrangement. Not for much longer. The American standard of living cannot be supported by capital much longer when the cost of labor in places like China are so cheap. But that doesn’t really address your contention that everybody basically deserves what they earn. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [April 30, 2010, 10:09pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/280 "2010-04-30T22:09:46Z")
> [@cosmosdan](#): > > You’re right except in those cases where the tax rates change for certain income groups every time the controlling party changes. I did not mean that the progressive tax was what made our tax system so ridiculous. Okay, but the tax rate changes hardly cause churn, and it seems that you are willing to change them every year anyway. > [@](#): > > Oh I know. But regardless, isn’t a more simplified system much more preferable? Not necessarily. If you are opposed to the tax code being used to encourage or discourage behavior, then maybe. But if you favor the government encouraging saving, or encouraging sending children to college, or encouraging home ownership or charity, then no. The way we do it today, there is one form and one time that you apply, as it were, for your home owning or college incentive, and it is all done on one form. One government agency processes everything. Isn’t this simpler than requesting your mortgage incentive from one agency and your college incentive from another. And the incentives are going to happen. Call it a high minded attempt to do good, or a low minded bribe to constituents, but it will happen. > [@](#): > > That’s why I can support a high individual and per child {with limits} deduction. That way those on the low end are covered. > when I talked with US citizens working in the Chech republic as teachers they said the tax rate was very high. around 40%, but they had UHC and other benefits. They said you simply adjust to the money you have and make decisions accordingly. I think living wage, minimum wage and those issues are at least somewhat separate from the tax code. Look, assume that the government needs a certain amount of money and that the flat tax is revenue neutral. You make sure that the poor get a break, fine. Who else gets a break? Unless you tax the middle class at the same average tax rate as the rich, which would raise their taxes a ton and not be revenue neutral, you clearly cut the taxes on the rich and to be revenue neutral increase taxes on the middle class. That sounds like a terrible idea to me. > [@](#): > > You’ll have to explain this to me. A flat tax can be adjusted from year to year depending on the state of the nation as it dropped in Estonia as business and the economy flourished. As a whole how is it unfair and a progressive tax more fair. How is gaining tax percentage points as your income goes up, more fair than paying more simply because you earn more. Nothing to do with year to year changes. The incremental value of making a dollar diminishes with each dollar you make, this is called [the marginal utility of money](http://answers.google.com/answers/threadview/id/175473.html). You recognize this yourself - you don’t want to tax the poor because the value of each dollar they have is very high. If you make $30K, getting an extra $1k is very significant. If you are Bill Gates it isn’t worth noticing. I got an unexpected $1,000 bonus, it was cool, and I think I bought a book to celebrate (for $10) but it went into my investments and was hardly noticed. If you or I won the lottery it would change our lives - if Gates won the lottery he’d just give it away. Similarly, a tax of $1,000 extra would be a killer for the poor, a pain but not a disaster for me, and hardly noticeable for the rich. If we want to be fair we need to adjust the tax rate to more or less match the marginal utility of the money to each income level. We can’t do this perfectly, but it is the only way to be fair. Of course I understand that marginal utility must be less than linear for this argument to work. [It is.](http://homepage.newschool.edu/het//essays/uncert/bernoulhyp.htm) Certainly the tax rate can be adjusted based on spending and national income; what we are discussing is how to distribute taxes for a given tax requirement. I’m paying a higher percentage in tax now than when I started to work, but I feel it less, so the higher percentage is fair to me. During the bubble I shot into the highest bracket and I wish I was there still. [Previous page](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416.md?page=13) [Next page](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416.md?page=15)