Happy Progressive day!!

Originally posted by spruce112358
Nobody on the left wants to take a swing at this one?

Let's put it another way. I am really rich. I make a hundred times more than you. I also pay precisely a hundred times over what you pay in taxes.

But, to a man I think, you on the left are of one voice that this situation would represent a huge "tax break for the wealthy".

I've never unders ...[text shortened]... 'X' were (in the proposed case) 100 -- as a lot of conservatives think it should be.

Progressive taxes, as far as I understand, have their ideological roots in the idea that taxes should only be raised on discretionary income, not on total income. Therefore, somebody with a greater discretionary income to nondiscretionary income ratio would incur a greater tax rate than somebody with a lower ratio.

Admittedly, the trick is defining discretionary income, but I'll leave that for other people.

Originally posted by spruce112358
Let start with you, KN. Do you believe in progressive taxation? If so, that is far enough to the left to count. Give a whirl justifying it in the context described.

That's a strange definiton of being "on the Left", but alright.

Progressive taxation is a good idea, mainly for four reasons.

First of all, the law of diminishing returns. Each additional dollar earned will improve someone's living standard less. Mathematically it is then not hard to see that utility is increased by taxing higher nominal income at a higher rate. One should do this until things like tax evasion become a serious issue - I believe this is roughly around 70% for the top rate (note that in US history, the top rate has been 70% or higher for around 50 years).

Secondly, taxing the working poor significantly makes it harder for employers to hire low-paid personnel. The lowest paid workers, I believe, should pay no income taxes, so that employers can hire them at a lower cost (given some fixed net minimum wage - you need a minimum wage if you have some kind of social security, since the minimum wage needs to be significantly higher than welfare benefits). This increases employment.

Also, crime is related to income inequality. Progressive taxation reduces crime as it reduces income inequality compared to a flat tax (or flat amount).

Finally, the "poor" tend to spend a higher portion of their income domestically, while the wealthy tend to import more luxury goods from abroad. Progressive taxation will thus increase the trade surplus and increase employment.

Originally posted by KazetNagorra
That's a strange definiton of being "on the Left", but alright.

Progressive taxation is a good idea, mainly for four reasons.

First of all, the law of diminishing returns. Each additional dollar earned will improve someone's living standard less. Mathematically it is then not hard to see that utility is increased by taxing higher nominal income at ...[text shortened]... abroad. Progressive taxation will thus increase the trade surplus and increase employment.

1. Any sort of pricing scheme can be progressive. For example, to poor people, a pizza could be 50 cents, while to the richest of the rich, it could be $1,200. We could regulate (there is your favorite word again!) the economy so that the rich would have no chance of getting a pizza for less, for instance by cross-indexing tax returns before allowing any purchases. Would that also be fair by the same reasoning, since whatever price was asked would reflect how “marginal” the utility of money was to that person? If not, why is progressive pricing fair for taxation (e.g. paying for government) but not when paying for other goods and services?

2. The working poor pay social security and Medicaid, so they already have deductions. Are you saying this makes it harder to hire them? Besides which, progression isn’t really needed to address this. One could funnel money back to the poor so that they can accept lower wages (!?) That is just a government expenditure and can be done regardless of how the money is collected.

3. Crime is not related to tax rates. The closest the US got to a flat tax was in 1988, but crime dropped steadily from 1990 to at least 2001. The only thing this drop in crime has been reliably related to is Roe v. Wade.

4. One could achieve the same effect with increased tariffs.

Originally posted by spruce112358
The only thing this drop in crime has been reliably related to is Roe v. Wade.

I see we have at least one (other) Freakonomics fan here.

🙂

Originally posted by spruce112358
1. Any sort of pricing scheme can be progressive. For example, to poor people, a pizza could be 50 cents, while to the richest of the rich, it could be $1,200. We could regulate (there is your favorite word again!) the economy so that the rich would have no chance of getting a pizza for less, for instance by cross-indexing tax returns before allowing an ...[text shortened]... iably related to is Roe v. Wade.

4. One could achieve the same effect with increased tariffs.

1. If nothing else it would be too bureaucratic.

2. Well, handouts to the poor are equivalent to taxing them less. I'm not getting your point here?

3. Yes it is. Crime is consistently low in countries with heavily progressive taxation.

4. But this would have several negative consequences.

Originally posted by whodey
Whodey has made it official. April 15, which is when income taxes are due, is to be a day of celebration for progressives!! This is your time to shine and take pride in all that you have accomplished.

I only have one question. Why is it that the government knows everything about me, but needs me to file taxes at the end of the year? I mean, they can tr ...[text shortened]... eople one-tenth part of their income.
- Ben Franklin

Hilarious!! You crack me up Ben!! 😵

I oppose the deal but I'm sure for different reasons than you. I too want to reduce the deficit but not to the extent that endangers the welfare of the citizens of this country. Constitutionally the gov't must promote the general welfare of the citizens. The tact that the tea party types want to take IS unconstitutional.

Originally posted by KazetNagorra
1. If nothing else it would be too bureaucratic.

2. Well, handouts to the poor are equivalent to taxing them less. I'm not getting your point here?

3. Yes it is. Crime is consistently low in countries with heavily progressive taxation.

4. But this would have several negative consequences.

1. We are debating whether making some people pay more for the same services is a good thing or not. The bureaucratic angle could easily be solved -- and should be IF it were the right thing to do.

The government doesn't promise the rich any more justice, any more health care, any more education, or defense or anything than it does to the poor. The US Army will defend the homes of poor people as stoutly as they defend the homes of the rich. A rich man accused of murder or needing an ambulance -- again same services as a poor one. The public schools are equivalently open to all kids.

Yet you seem to assert that rich people should pay proportionally more for government services, not other goods and services. I am just wondering under what moral authority you assert that?

2. That a flat tax rate could achieve the same result. It doesn't require a progressive tax system.

3. Which could be related to many things, but taxation was clearly not the cause in the US or crime rates would have gone up after 1988 (the closest we got to flat tax).

4. As does progressive taxation.

Originally posted by sh76
I see we have at least one (other) Freakonomics fan here.

🙂

Yep!

Originally posted by spruce112358
1. We are debating whether making some people pay more for the same services is a good thing or not. The bureaucratic angle could easily be solved -- and should be IF it were the right thing to do.

The government doesn't promise the rich any more justice, any more health care, any more education, or defense or anything than it does to the poor. The U ...[text shortened]... have gone up after 1988 (the closest we got to flat tax).

4. As does progressive taxation.

1. No, it could not be easily solved. An income tax is easy to collect and hard to evade.

Yet you seem to assert that rich people should pay proportionally more for government services, not other goods and services. I am just wondering under what moral authority you assert that?

You are saying the same thing by arguing for a flat tax. In a flat tax system, the rich pay more taxes than the poor. I already explained my reasons, what are yours?

2. No, it couldn't. I don't see how.

3. Post hoc ergo propter hoc.

4. Like what?

The defocit should be looked at as a pct of the GDP. With growth we could bring it inder 6% which doesn't seem to alarm any economists. what we have is a growth problem, deficits can be dealt with later and would be with significant growth.

Originally posted by badmoon
The defocit should be looked at as a pct of the GDP. With growth we could bring it inder 6% which doesn't seem to alarm any economists. what we have is a growth problem, deficits can be dealt with later and would be with significant growth.

But you can't always have growth. You have good times and bad, but the nanny state does not take this into account. A better way of doing things would be to say that a certain percentage of the GDP goes to health care or defense etc.

Originally posted by KazetNagorra
1. No, it could not be easily solved. An income tax is easy to collect and hard to evade.

[b]Yet you seem to assert that rich people should pay proportionally more for government services, not other goods and services. I am just wondering under what moral authority you assert that?

You are saying the same thing by arguing for a flat tax ...[text shortened]... urs?

2. No, it couldn't. I don't see how.

3. Post hoc ergo propter hoc.

4. Like what?[/b]

1. It is easy for pickpockets to take money in crowds and hard to protect oneself. That doesn't make it right. (Nor do we ban crowds because they "create an environment for illegal activity" -- see "Prison Farms" thread).

2. I'm not going to make your argument for you. You want the rich to pay proportionally more than the flat tax rate. Why?

For me, a flat tax rate approximates the EVEN BETTER solution. What is that, you ask? Well, that would be pay-as-you-go for government services. Pay-as-you-go would require that many things, for example the defense budget, would be paid for out of property taxes. School and healthcare would be largely out-of-pocket for most people. These changes would drive costs down precipitously. We can talk more about that in another thread if you want to.

But for now, you need to explain the moral underpinnings of going in the other direction -- e.g. soak the rich "because we can and it is very easy to do."

Originally posted by spruce112358
1. It is easy for pickpockets to take money in crowds and hard to protect oneself. That doesn't make it right. (Nor do we ban crowds because they "create an environment for illegal activity" -- see "Prison Farms" thread).

2. I'm not going to make your argument for you. You want the rich to pay proportionally more than the flat tax rate. Why?

For m ...[text shortened]... in the other direction -- e.g. soak the rich "because we can and it is very easy to do."

...another good reason spruce is that rich folk are a minority, and this means pollies can buy votes with other peoples money.

Originally posted by spruce112358
1. It is easy for pickpockets to take money in crowds and hard to protect oneself. That doesn't make it right. (Nor do we ban crowds because they "create an environment for illegal activity" -- see "Prison Farms" thread).

2. I'm not going to make your argument for you. You want the rich to pay proportionally more than the flat tax rate. Why?

For m ...[text shortened]... in the other direction -- e.g. soak the rich "because we can and it is very easy to do."

1. I didn't say progressive income taxation was justified because it is fairly easy to administer. What I'm trying to say is that any measure that is extremely difficult to administer is useless.

2. I did explain why - the four points, remember? The moral framework is utilitarianism.

I'm interested in why you think a flat tax rate is the optimum. The rich pay more than the poor in a flat tax system. What is your justification for this? You could easily have everyone pay the same amount of taxes - those without income would simply accumulate debt until they can pay it off. Milton Friedman, for example, believed taxes should be regressive.

Originally posted by KazetNagorra
That's a strange definiton of being "on the Left", but alright.

Progressive taxation is a good idea, mainly for four reasons.

First of all, the law of diminishing returns. Each additional dollar earned will improve someone's living standard less. Mathematically it is then not hard to see that utility is increased by taxing higher nominal income at ...[text shortened]... abroad. Progressive taxation will thus increase the trade surplus and increase employment.

The effective tax rate, when marginal rates were near 90% was around 20% of GDP actual revenue. Regardless of marginal rates, actual collected taxes hovers under 20% of GDP.

In quite a number of documented cases, raising tax rates on upper incomes resulted in diminished revenue, either due to reduced economic activity, or to moving away from the oppressive taxation.

The arguments you present in favor of progressive taxation are all pragmatic. Can you morally justify taking the product of the successful, and gifting it to the "less fortunate, or less ambitious".