Would you have bought a Powerball ticket with Bernie’s tax on it of 90%

[Broomstick]

@davida03801

A very simple question. Would you purchase Powerball tickets for a 1.5 billion jackpot lottery if the tax rate was 90% on the jackpot ?

Well, yeah - 10% of 1.5 billion is still a crapload of money. I’d take it.

[Fubaya]

The question is faulty and I’ve never bought a lottery ticket anyway, but…

The powerball winners that took a lump sum are only going to receive about $187 million after taxes, or 11.84% of the 1.58 Billion jackpot. So far, they’re not complaining.

[Dajn]

Bernie for president. Fuck hillary. Let’s go bernie.

[drachillix]

@puddleglum

His point is that what is true for lotteries is also true for other things like starting a business. If you make the payoff smaller by increasing taxes, then fewer people will do it. Fewer businesses started means fewer jobs, fewer innovations, and a reduced standard of living.

Small sole prop business owner here

High federal taxes on 200-300K in taxable income levels are not what we hate. Most businesses have no meaningful profit to tax for at least a year or two anyway.

SSI for self employment is the killer. Having a crappy year and making $20K take home, and having a $3K bill despite your final taxable income after dependents/mortgage/etc and such being $7K

[samclem]

@drachillix

Small sole prop business owner here

High federal taxes on 200-300K in taxable income levels are not what we hate. Most businesses have no meaningful profit to tax for at least a year or two anyway.

SSI for self employment is the killer. Having a crappy year and making $20K take home, and having a $3K bill despite your final taxable income after dependents/mortgage/etc and such being $7K

I’d be surprised if ANY candidate would change things as regards the SSI. I sympathize, but it won’t change.

[septimus]

@drachillix

SSI for self employment is the killer.

During the 1980’s, the self-employed SSI tax was only 1.4 (or so) times the employee-contributed SSI for regular employees. Now it is 2.0 times. Just rolling that back would be a boon.

(Also note that SSI taxation on foreign earned income is NOT subject to the foreign earned income exclusion.)

[Little_Nemo]

@adaher

That’s comparing like to like though. Where people make tax decisions is when engaging in new economic activity. For example, is the spouse working worth it when her effective wage is 25% less than it otherwise would be because every dollar she makes adds to your taxable income? Is it worth it to invest if when you lose, you lose, but when you gain, the government taxes 25% of that gain away? That’s a “house always wins” situation, especially when you add in inflation.

Of course, no one turns down a raise because of the taxes, or declines to go into business for themselves because of taxes(unless business taxes are higher than ordinary income). But you’d be crazy not to consider how much net you’d get for a new activity vs. the effort and risk of engaging in that new activity.

But nobody makes a hundred dollars a year more and suddenly finds their taxes have doubled. Tax rates don’t work like that; they’re intentionally designed to be incremental. The only way you can have a substantial increase in your tax rate - which is the topic of this thread - is if you have an even larger increase in your income.

To go off on a tangent, if we really wanted to encourage entrepreneurship we’d adopt a public health care system. How many people are afraid to start up their own business because they’re afraid to leave the health insurance they have as an employee? Especially when you have to put your family in the same risk. If people knew there was a public health system underneath them even if they happened to fail, they’d be more willing to take risks and do things like start up a new business.

[DrDeth]

@adaher

Is it worth it to invest if when you lose, you lose, but when you gain, the government taxes 25% of that gain away? .

Capital Losses are deductible.

[DrDeth]

@Fubaya

The question is faulty and I’ve never bought a lottery ticket anyway, but…

The powerball winners that took a lump sum are only going to receive about $187 million after taxes, or 11.84% of the 1.58 Billion jackpot. So far, they’re not complaining.

They also split it three ways.

[Fubaya]

@DrDeth

They also split it three ways.

Yeah, I included that. With the 3-way split, a reduction for taking a lump sum instead of annuity and then taxes, they were left with nearly 12% of that 1.6 billion (187 million).

Of course, if the taxes really were 90%, they would have ended up with a lot less, only 39 million, which is 2.5% of the entire jackpot. But the 3-way split was up to chance. They could have had to split it 6 ways with current taxes (116M take home) or 0 ways with 90% taxes (117M take home), or any combination of those.

But nobody thinks about those things so I think people would still play if taxes were 90%.