There’s no such thing as a “small business tax”- :rolleyes: Small Businesses either pay taxes at the Corp or Indiv rate, depending on ownership. Nor does your cite mention such a thing.
Next your own cite sez “Obama wants tax rates on capital gains and dividends to rise from the current 15 percent rate to perhaps as high as 28 percent, the rate under former President Ronald Reagan.” That’s 28% not 40%. Same with dividends.
I’ve never understood the difference between a tax increase and a rollback of a tax cut. There are no objectively correct tax levels, so when taxes are raised, even to previous levels, well, that’s a tax increase. If someone were to re-institute the 90% tax brackets we had back in the 60s, would that be a roll back of a tax cut or a tax increase?
No, apparently that figure was made up by the poster as there is no such tax anyway.
John- effectively they are the same, as far as the $ in your pocket goes. But I think that morally and ethically it’s really that the rich have been getting an unfair special cut and now it’s time to roll that back. After all, the proposed “increase” is only going back to the (now-nearly deified) Reagan years. 
The problem isn’t really that you’re using examples, but that you’re proffering examples that aren’t even very realistic at supporting the point that higher taxes mean less incentive to work. In each of your examples, someone is putting a dollar figure on what their time means. People don’t do this, which I believe you’ve already acknowledged.
But more importantly, if higher taxes meant less people wanted to earn money, then our system already punishes success, and has since the inception of the income tax. And yet, if you look at the pattern of income distribution in the US, there’s more people becoming wealthy, more people becoming poor, and fewer in the middle. If higher taxes were a true disincentive to earning more, then you’d probably see a larger and growing middle class.
Are folks getting poor – even at the margins – because of tax law? That’s silly. If middle class people are disincentivized to earn an additional dollar because they don’t want to be taxed more on that dollar, then I don’t understand why more of them are getting wealthy. I do agree with the point that higher tax rates can drive more work under the table, but that would imply that it is simply method of payment, not incentive to work, that is being affected by higher taxes.
Again, I don’t think people actually make that many job decisions (esp. those that relate to upper-middle to upper income levels) because of tax policy. First of all, people don’t put prices on how much it is worth to spend time with their family; and second of all, I think there are a lot of misconceptions about how much tax some people actually pay (witness the periodic claims that Poster X pays more than 50% of his salary in taxes – theoretically possible if one is the worst possible preparer of taxes, like taking a standard deduction instead of deducting state income or sales taxes).
I think it refers to the inheritance tax which is something that greatly affects family owned businesses.
He’s retired, and would have a very low tax rate with or without them, so for him it makes no sense. I have some also, I need to check the return of the fund. In my 401K and IRA, where most of my money is, municipal bonds don’t make a lot of sense. But I’m pretty sure they weren’t as attractive last year.
I’m not knocking them - when the bubble burst, my father looked pretty smart.
A stunning rebuttal, my man. Perhaps you are aware of what else she has done for Pittsburgh? What other zillionaire parks all of his or her money in munis? Are you saying she’s a better investor Warren Buffett? A nice sentiment, but I doubt it.
You mean the ones who don’t incorporate, are worth more than the deductible, and where the owner doesn’t turn it over to heirs before his death? Got any statistics on how many people are affected? If you remember, the last time this got brought up to “save” the family farm, no one could find any lost because of it.
Nope, don’t have statistics, do you? But according to your post it would be necessary to transfer prior to death.
It wasn’t a rebuttal, is was acknowledgment of something funny. I wasn’t aware that Pittsburgh had a patron saint of tax dodging.
But I love your logic. She’s deliberately buying municipal bonds (because apparently nobody else will) in an attempt to bolster the city instead of earning the high dollars you claim she could make and then… donate it to the city, along with the tax money she would owe. If there was an award for spin she would get an Oscar.
And that, if you chose to read what I have posted in this thread, is **exactly **the empirical evidence I discussed.
I can’t even work out what you mean by this. Again, I came into this thread to add a comment to the actual research I have seen done on this. That, in the 1980s at least, the effects on work incentives of changes in the marginal tax rates were minimal, that overall higher marginal tax rates lead to increased work, but that for the wealthy, there was a (very small) decrease in work, and for the working poor and middle income people, there was a (very small) increase in work.
I never mentioned Obama’s plan. Not once. Nope, not at all. I supplied research information I thought was relevant to the thread. I don’t see what is so hard for you to understand about that.
Looking at it now, the evidence I posted referred to suggests the tax plan will potentially have a small disincentive effect on the rich. There has been NO evidence to show it reduces productivity, if you know what productivity is. In fact, if it leads to wealthy people working shorter hours, it would probably lead to an increase in their productivity, as people tend to be more productive (a measurement of work done per time unit) if they work for shorter periods.
This is just so colossally ignorant that my mind boggles.
Let’s take an imaginary company, XYZ Widgets. When XYZ went public, people bought shares in that company. XYZ used that money to grow - investing in people and machinery etc - and what was $50 of shares in XYZ now trade for $75. Now, that initial investor could have lost everything. It’s not a bet on a slot machine or the horse races; the initial investor put their own money at risk, and that risk was rewarded. Now the initial investor is seeking to realise that profit and tries to sell the shares. I, as a potential investor, need to research the company and see if the company really is worth $75. That is real work. I do my sums, and figure that actually it’s worth $76 to me, so I buy. Or maybe I find it’s actually worth $73 now, so I don’t. Either way XYZ is still putting the original $50 to (hopefully) good use.
How is this different from a fish trader who buys their stock in the morning and sells it later in the day? Hopefully at a higher price, of course, but equally, he may have misjudged the price his prospective customers are willing to pay and sell much less, thereby losing money. Just because you can’t see a physical product doesn’t make the risk less real.
Right, and it said no, they wouldn’t.
Obama’s tax plan was mentioned in the first line of the OP.
Actually, we were talking about productivity overall, not per unit time. Or at least I was. If I work forty hours a week and produce $1000 in revenue, and you work twenty hours and produce $600, you are more productive per hour but I am more productive overall. That’s why we were discussing your proposal that poor people have a target income that they have to reach, even if they have to work more hours to reach it (thus reducing their overall productivity). Rich people, however, don’t have to do that, because they don’t have a target income (which is a measure of overall productivity).
It sounds very much like you are trying to argue against your own position. The question of the title of the OP is, “Will taxing the rich cause them to work less?” To which your answer seems to be Yes, it will, although the effect is small. What happens to the poor is not all that relevant, since Obama’s tax plan is designed to reduce their taxation, not raise it. So the small effect of causing the poor to increase (or at least, maintain) their overall production (even at the expense of a reduction of their productivity per unit time) is supposed not to occur.
But your position (whether you like it or not) makes sense. People who are not forced to spend all their income on food and necessities can tolerate higher taxes, because they have a margin to operate in.
It’s pretty straightforward. Consider Joe Sixpack. He works forty hours a week at Acme Consolidated making computerized ear cleaners. He has two goals:[ul][li]He wants to pay his bills, and []he wants to spend time with his family.[/ul]His regular forty hours will cover his food, mortgage, he gets health care thru his union, etc. His boss asks him to do some overtime - 12 hours a month. He doesn’t want to, but he has a choice -[ul][]he can spend the time at his daughter’s softball game (she is starting short stop for Our Lady of the Bleeding Statue Grade School Wildcats), or [*]he can work the overtime, save the money, and take the family to Yarn World for a vacation.[/ul]The company will pay him time and a half for overtime, and if he banks it all, he and the family can go to Yarn World next summer - he will have saved up enough by then. [/li]
So he works the overtime. Time and a half is just enough to compensate him for the loss of time watching softball.
However, now the government raises taxes. He can manage his regular bills still, but the reduced rate means that he is really earning time and a quarter for his overtime. So now he won’t be able to go on vacation with the family until a year from August (he can only get time off in the summer). So now he has to decide - is it still worth losing the time with his daughter?
Well, next Saturday is the big game with their traditional cross-town rivals, Father Damien’s Molokai Maulers, and she is batting clean up. And his wife has made it clear that if he doesn’t make it to the game, he is going to be spending Saturday night with Rosy Palm and her five sisters instead of with his wife.
So the choice is Yarn World a year and a half from now, or softball on Saturday and a chance at playing hide-the-salami with the little lady. And his daughter is looking at him with those big, trusting eyes, and he knows his wife recently attended a lingerie party with that slut sister of hers to celebrate her second divorce and his wife wouldn’t show him the receipts.
So he decides the heck with it, and doesn’t sign up for the overtime.
Overall, his production has dropped. He didn’t produce anything for the company on Saturday, and he delayed spending his money on vacation trips to Yarn World.
But on Saturday night, with his daughter safely in bed, as he tips the last of the $4.98 bottle of wine they bought to ease the sting of the narrow 7-6 loss to the Molokai Maulers into his Welch’s Grape Jelly glass with Bert and Ernie on it they got five years ago at Christmas, and his wife disappears into the bedroom with a package and the admonition “see you in five minutes and I got a surprise for you, studmuffins”, Joe reflects that there is more to life than merely earning money.
If you see what I mean.
Regards,
Shodan
This is what my adviser told me to do too, but I insist I am too young to put more into bonds than into growth or value stocks. AFAIK, my sister has me in an annuity that guarantees 6% (I bought this last year, with some of my money I was going to Roth…I look like a genius now), and has been returning 9%. I’m not sure what backs it.
Additionally, municipal bonds do not grow the economy as direct investment does. What does a town or municipality produce? Safe roads, public works, firemen and police, etc. Nice and all, but these don’t return a profit or increase GDP and don’t increase competition. What we should want as a country is to increase productive growth in the economy and encourage others to work and be productive, and then, have the government fairly (and by fair, I mean not stealing disproportionately from those who could afford it) increase its tax coffers and use that money to provide services (social, public or otherwise).
Don’t you people know anything about supply and demand? Cities have to borrow money, and the municipal bond’s tax free status allows them to get a lower interest rate than for normal bonds. So, the little bit of tax money they lose is more than made up for by lower costs in borrowing. The Feds have decided to support municipalities by offering this tax break. That’s a tax cut - are you against it?
Her buying so many bonds probably increases demand and thus makes them cheaper also, but I doubt she has a significant impact.
If you think that municipalities lose money on bonds, please give some evidence that most governments in the country are stupid.
The donations would be odd if her purpose were to rip off the government. But that should be obvious.
Like I said, she is going against best investment practices by not diversifying, in doing this. She is probably losing money. There are only two explanations - either she’s doing it to support the city she clearly loves, or she has the stupidest financial advisors on the face of the planet.
Bingo.
Besides, we’ve already run an experiment with the Clinton-era tax rates. Looks to me like during his Presidency, people worked hard and made money. The people in that 39.6% bracket made tons of money.
I don’t see what this thread’s about. We’ve been there, done that, got the T-shirt, and had time for it to get buried in the bottom of the drawer. Anyone who thinks the incentives are somehow different now needs to explain why people would be significantly less eager to make big bucks now than they were in 1999.
But bonds shouldn’t be used for ongoing expense, but are used for capital improvements. A bond support widening of a highway can decrease traffic congestion, and reduce the time a business needs to get products from point A to point B (and save gas also.) The interstate highway system improved productivity a ton.
Actually, they do, but indirectly. A safer environment attracts people and businesses, and both groups can then be taxed. Quick check: do you prefer to live and work in a low crime area or a high crime area? Notice how countries with the rule of law are vastly better off than those where law (or the enforcement thereof) is absent; just compare Mexico with the U.S.A. Similarly, good roads mean safer and faster tranport of goods and services.
So the plan is clear. We tax very high earners at a high rate. The government collects a lot of money. The very high earner reduces the amount of work he does. He drops back to a low or mid level income. At that point, the tax rate is lower and ambition kicks in. He starts working to his full potential again. Government revenue and worker production both reach their max.
The problem with most economic models is that they usually have a little fine print in them somewhere that reads “all other factors being equal”. Consider this scenario; the Democrats go wild and really raise taxes on the rich - let’s call it 90%. To thank their labor support, they cut taxes on union members down to 5%. Now you have some CEO who earns $1,000,000 a year and only takes home $100,000. Is he pissed? Damn straight. But is he so pissed that he’s going to resign his position and take a job on the line that pays him $90,000 a year and is only taxed for $4500? Which factor do you think will weigh heavier in his decision; reducing his tax burden by $895,500 or reducing his take home income by $14,500?
The reality is that most of us want to have more money. If the government increases your taxes, you don’t say that it’s no fun being a millionaire anymore and you quit.
Well, actually what would happen is that he’d cut his own salary to $95K, and arrange to have the rest of his compensation in the form that the taxes wouldn’t hit - like in stock. Which is why confiscatory taxes aren’t a good idea.
I wonder why so many people in this thread have this hourly wage model of high income people. I’ve hung out with lots of high paid VPs in my day, and none of them is measuring work vs compensation. First of all, they are inwardly motivated, and respond to lots of things more than just pay. Second of all, they work long hours due to demands on their time from both superiors and subordinates. They’re not producing widgets, and aren’t in a situation where they can decide to make fewer widgets for less pay. Maybe, in the long run, if they slack off they will get a smaller bonus and less stock, but more likely they’d get their asses booted at the next reorg. So, I see no reason to doubt the results villa cited.