Going by income and tax rates The Canadian calculation for the tax ar $800,000 would be $269,300.
If your income is $16,000, does that mean you pay $4000.
The effective rates for the higher incomes are, thus,
Income Tax Rate Tax
Person B: $40,000 15.86%
Person C: $80,000 20.4725%
Person D: $200,000 25.8755%
Person E: $400,000 29.65%
These rates may still be too high, but let us not inflate them.
Forget it.
Everyone gets the refund, that’s how the scheme works. The point is that your incentive to earn the next dollar is the same as your incentive to earn the last dollar. This is important to me.
As for how much, I really can’t say. The example wiki gives is $10,000 with a 25% tax rate, but I do not have enough data to say whether this is good or silly. It is probably too low, but I don’t intend to wade through government data to figure it out, and honestly, I’m not sure wading through government data for the purposes of an SDMB post would be enough, because of tax avoidance issues, and arguments over what counts as income when, and so on.
Well, of course there is something unfair about it. That doesn’t mean it’s necessarily bad or needs to be remedied, but it is clearly, by definition, unfair that some people are legally entitled to much more wealth than others when they’ve done nothing more to deserve it. That’s exactly the sort of thing we mean when we say “life is unfair”, which is a truism that everybody recognizes.
Your attempt at a distinction between “voluntary giving” and receiving government funds is nonsense. The institution of government does voluntarily give refundable tax credits to the working poor, just as corporate institutions voluntarily give large salary and benefit packages to CEOs.
Sure, many taxpayers think that the working poor aren’t entitled to the money they get from the government. But then, many workers and shareholders think CEOs aren’t entitled to everything they get, either.
The mere fact that somebody out there thinks you’re getting money you’re not entitled to doesn’t make your money automatically illegitimate. Refundable tax credits in accordance with the tax code are a legal source of income, and attempting to classify them with profits of criminal activity is an ignorant insult.
Horseshit. It is no more unfair than the fact that the government sets economic and fiscal policies that sometimes benefit the non-poor at the expense of the poor (for example, trying to maintain a certain minimum unemployment rate to discourage upward pressure on wages).
Sure. Put a flat tax on “discretionary income”, and leave everything else tax free. Let me know how that works out for you.
False. Your original $100, I assume you worked for this? When you invest, you’re risking what you worked hard for. It’s called a risk premium for a reason. You stand to possibly lose 99% of your investment in something that isn’t a sure thing. When you profit $40 from your investment, it doesn’t mean that you didn’t work hard for your original $100. The $40 is really just hazzard pay for risking your principal.
I don’t work particularly hard. I don’t have a college degree. I put in about 40 hours a week. There are probably one or two people working at the local convenience store that are smarter than I am. My AGI is somewhere around the top 8%, give or take. Some of us just got lucky in one manner or the other. In my case, it was enjoying doing a job that at one time didn’t pay very well, but happens to pay extremely well today. I wouldn’t even notice if that $100 went poof. The guy at the convenience store probably would. Feel free to tax me at a higher rate than him.
Not sure where you got the idea that I want to tax you at a higher rate.
I was simply making the point that money earned in something such as stocks isn’t “easy money” in the sense that it takes “less labor” to achieve.
My point was that, at least in my case, it is. I work a hell of a lot less “hard” for $100 than the vast majority of people.
Ah! I see now… you take issue with the “working hard” part. No doubt, there are people who do little with much reward, and those who do a lot with little reward as far as work is concerned.
Could we trade “worked hard” for compensation for our “skill set”, or “time” away from family, friends, and our hobbies?
I never really thought that pay should be based on what you do, but a combination of what you do, and if you’re in demand for whatever work you’re assigned. More demand for you to get the work needed to be done = more pay. Want me to work outside a normal shift? I get a shift differential, regardless of the amount of work involved. I might even do less work on a weird shift compared to my first shift peers, but if there is a demand for someone to work a weird shift, an employee will request more in compensation. Regardless of the actual physical/intellectual drain for doing the work. So, someone can be paid more for less actual work if the demand is high enough.
You say you didn’t work as hard for your $100 compared to most. What is it you do that you don’t work so hard for it? You must be giving up something, or have a skill set that others don’t have to be able to easily earn $100 compared to most. If it is skill based, or demanding on your time, you’re probably compensated just fine. If not, are you hiring? 
And I still assert that I don’t want to tax you more because you “work less”. I don’t think a tax decision should be based on whether you’re Guss the custodian, or Rudolph the mainframe guy. Yeah sue me, I’m tired of Joe having all the work. 
Both guys have very important work to do, but one is one in which many can do, and the other is one with high demand for a specific skill set. The job with the more demand for skill set will pay more, regardless of actual work. That’s just how it is.
…pay more in salary, I didn’t mean pay more taxes here.
I’m not going to address your other comments because you missed my point and I don’t know how to make it clearer.
But in what universe does trying to maintain a minimum unemployment harm the poor ?
That pretty much is how it works. Except it also works both ways and people don’t like it. Less demand, less work for you. Not enough work, you get laid off. This is especially true in professional services firms where your skill and experience are the product.
Actually, the purpose of doing that is to control inflation which hurts poor and non-poor alike.
What the government needs? To do what? The role of the government is to serve the people’s needs.
And what if the government can’t meet those needs with your flat tax which is overly burdensome to those in the lower income ranges?
I don’t think wealth should just be taken from the wealthy and handed to the poor. But I do think the wealthy should pay a greater portion of the tax burden than the poor simply because they can.
What is the deal with people in this country so afraid to do anything to keep the rich from getting as rich as they like?
It’s not a specious argument. Of course the rich use the government more than the poor. I don’t even think that it could be credibly argued that Bill Gates relies less on the government than I do. Microsoft employs several thousand people, who without which Bill Gates could not make money. Almost all those people use public roads, education, etc. Bill Gates’ wealth rests on the strength of the dollar and his ability to enforce contracts. I rely on all these things too, but to a far less extent. It’s like if both are us are at a casino betting with all our money, who has a greater stake in making sure the rules are enforced?
Sometimes, but they also tend to have more people. Regardless, that is a minute portion of government spending. It’s myopic to focus on just that one thing.
Who is more likely to have the SEC protect their interests? Who is more likely to receive a government contract? Who is more likely to receive a mortgage interest tax deduction? Everybody receives welfare; we just don’t call it welfare when non-poor people get it. Food, like damn near everything else you mentioned is subsidized for regular folks too.
No, you are not self-policing. You can’t be this naive given the work you claim to do. What do you think enables you to make these deals? The underlying principles are those laid out by contract laws, and our ability to enforce them. Your company would not have a litigation dept. if there where not a common venue and rules to litigate. That’s what prevents anyone from just running off with your money. That’s what a contract is, “an exchange of promises between two or more parties to do or refrain from doing an act which is enforceable in a court of law.” What you do does not exist in a society where there is little financial stability or legal recourse.
How are you differentiating active and passive?
Bill Gates couldn’t pay for anything if the government broke down because his paper money and stocks would be worth nothing. That’s why he relies more on government to protect the value of our currency and maintain law and order. How exactly is your scenario feudalism by the way?
You missed the point re: Reggie Bush. The work Bush did as a USC player was not dramatically different from what he does as a NO Saint. He produces, more or less, the same product. What changed is his ability to make money from his skills.
When people make the argument that the rich should be valued because of the work they do (their product), they often neglect to mention that their product often has far less to do with their compensation than laws, trends, and other circumstances. That’s not to say that rich people don’t deserve their compensation or that they should be taxed more, just that we need to drop this idea that compensation is directly related to anything but what people are willing to pay you. There no need to romanticize the work they do advocate for a more regressive tax policy.
Again, this is all passive. When I negotiate a contract, I don’t bring an army (police, privately hired, or otherwise) with me to show that I intend to enforce my contract. We are all civilized. How can you measure how much government services I’ve used when in order to enforce my contract I’ve never had to: call the police, show any type of governmental force, never used the court system, and any other type of government agency. IOW, cite that the cost of these things to Bill Gates or to any other citizen. You think rich people use more of these things because the value of their transactions are worth more? What about the poor person calling the firemen, the police, or the ambulance because their life is threatened? How much is that worth?
Again, I’m not arguing for a flat tax (though, arguably, that would be most fair and efficient). I’m just saying that they should not be exempt. The free rider problem creates enough of a market distortion already.
No you missed the point about risk. Reggie Bush at USC is not proven as a NO Saint. I can name countless players in any sport who do not transition well into the professional leagues.
When I go to Target there are on-duty NYPD officers protecting the Target. I don’t see that in other smaller stores.
Then of course there is eminent domain where a real estate developer can get the city to make you sell your property in order that they build more profitable condos. Of course they buy it from you at ‘market value’, market value being determined by the fact that you can no longer sell it freely so that is below what you might have sold it for if there was no condo being built.
Well, other than national defense, infrastructure, a fair and robust legal system, and a few other things, I’d say that the role of government is to provide an environment in which the people can fulfill their own needs.
Raise the percentage. But I think the key is defining those “needs” and what the government’s role is in fulfilling them. If everyone got taxed for them, a lot of those those “needs” would disappear pretty darn quick.
It’s kinda the same thing. But the key is first defining what that overall burden should be. Not everything that sounds like a good idea stays a good idea when people have to pay for it. Also, when talking about fairness the question doesn’t revolve around “can”, but “should”. A bully can take a smaller kids lunch money, but he clearly shouldn’t. The government can have a progressive tax reaching to over 90%, as we once did, but we shouldn’t. And that’s for two reasons. One is the gross unfairness of it, the other is that by lowering the rate the government actually took in more revenue.
Your wording aside, two things: wealth creates job, both directly and indirectly. And there is the issue of fairness. As I’ve stated before: why should one person spend 35% of their time working for the government and someone else 20% or 10%, or 0%?
Why does anyone think that “trickle down economics”, even if it actually worked as stated, is a good way to do things?
Does extreme wealth in the hands of a few actually create middle-class jobs? Are we looking to create a society of a handfull of hectomillionares and billionares while the rest of us scrape by with dead-end jobs in their corporations or work as their lawyers, accountants, maids, au pairs and drivers?
Increasing overall wealth can be a good thing, but not if that increase is focused in only a small portion of the population.
I’m not sure why you think a flat tax is any more or less fair than a progressive tax. The wealthier still pay more than the poor. If two people go into a restaurant and the bill for the guy making $40,000 a year is $60 and the bill for the guy making $200,000 a year is $300 (same % of income), you wouldn’t think that was fair. If we believe it’s fair to institute a system where your tax burden is based on your income, it doesn’t seem to be that far of a stretch to adjust that system further so those with less income have less of a burden. Enabling more people at the bottom to purchase more also increases overall wealth.
As to why the rate shouldn’t go up to 90% for the wealthiest, I think we can all agree that is unfair for the same reason taxing anyone 90% of their income is unfair. It’s unreasonable and counterproductive.
Don’t underestimate the value of having jobs available. Being gainfully employed is the first step to becoming wealthy. In the meantime, you get to eat.
I basically agree with that; I would temper a bit, though, because having the wealth concentrated is better then having no wealth at all. And I have no doubt that the very wealthy have taken advantage of things, including the tax code itself. That’s actually one reason I like a flat tax or a consumption tax: no loopholes. There is something very wrong when someone who makes a LOT of money can game the system and not pay his fair share.
I’ve talked about this very point earlier. Yes, a flat tax is “progressive” in that the rich pay more. Fine. A purer road to fairness would mean that everyone pay the same dollar amount. But since that would be impractical, we look to balance fairness and practicality. A flat tax taxes people in direct proportion to the degree that they attain wealth. It is “more fair” for the very reason that it aligns perfectly with one’s degree of wealth (well, income). I think it also sends a message to the rich and poor alike: you are all equal, none more deserving, none less deserving of the benefits of living in the U.S.
But that’s what happens when you have a progressive tax rate. It’s always easy to piss off a few people at the end of the scale. Heck, why not just tax the Forbes 400 (the Americans, obviously) 99%? They certainly can afford it. Or tax everyone with over 100 million, or 25 million, or 10 million? How much you tax and where you draw the line becomes the product of whim. A flat tax has the benefit of each of us feeling the pain a little for every dollar our government wants to spend. If, in essence, they had to get the approval of the vast majority of Americans every time they wanted to increase spending, that would do much to keep spending down. As it is, everyone seems to find it very easy to spend other people’s money. Anything we can do to remind people that the government doesn’t have ANY money is a good thing. Every dollar they spend they have to extract from us.