Americans what a Swedish economic system (if asked the right questions)

[GhostWriter16]

Why is it fair that a subset of our population pay a higher percentage than others? What you explained would be more logically covered by the fact that even if the same percentage is paid, rich people still contribute a lot more money than the poor do.

 

[Truronian]

Why is it fair that a subset of our population pay a higher percentage than others?

a) Everyone has base costs. The rich need food as much as the poor do, but for the poor basic necessities take up a much larger percentage of their income, so under a flat tax system the rich would just get richer (as they can reinvest their excess cash) while the poor stay just as poor.

b) Living is more expensive for the poor. The poor have various expenses that the rich don't: rent being the obvious one. Why is it fair to expect the poor to pay a higher rate for having a roof over their head than the rich, despite taxing them at the same rate?

c) Making money is a lot easier when you're rich. It's a lot easier, quicker for Bill Gates to make a thousand dollars than it is for Jonathan Poordude. It also requires a lot less work for Bill Gates. If you tax them the same percentage then that will simply enable Bill to get incredibly rich while Jonathan just about breaks even.

d) The rich benefit an awful lot more from the society offers than the poor do. A rich man needs the police and courts to protect his safety and assets. The rich have a lot more flammable property for the fire services to extinguish. The rich stand to lose the most in the event of foreign invasion, and so benefit greatly from the military.

These are all issues counteracted by a progressive tax system that a flat tax fails to sufficiently address or in some cases actively exacerbates.

What you explained would be more logically covered by the fact that even if the same percentage is paid, rich people still contribute a lot more money than the poor do.

Explain the logic.

 

[GhostWriter16]

Yes, and the rich do pay more. If everyone pays, say, 10 percent (Random number) the rich will actually pay significantly MORE money than the poor will.

What I'm wondering is why that's not enough and we actually have to increase the percentage as well. That's what I don't think I agree with.

 

[Ziggy Stardust]

never mind.

 

[Borachio]

<snippit>

 

[NedimNapoleon]

Yes, and the rich do pay more. If everyone pays, say, 10 percent (Random number) the rich will actually pay significantly MORE money than the poor will.

What I'm wondering is why that's not enough and we actually have to increase the percentage as well. That's what I don't think I agree with.

Because free healthcare, education and other social services are very nice to have. Even if the poor give in percentage lets say 20% while the poor give 10%, they will be left with enough to live in luxury, but the poor will notice the benefits of that tax increase on the rich, thus improving their lives.

 

[GhostWriter16]

OK, so its still unfair but apparently worth it. Got it.

No wonder its never worked for me

 

[NedimNapoleon]

I dont see it unfair, I see it as very fair, and I like nice paved roads.

 

[GhostWriter16]

Because free healthcare, education and other social services are very nice to have. Even if the poor give in percentage lets say 20% while the poor give 10%, they will be left with enough to live in luxury, but the poor will notice the benefits of that tax increase on the rich, thus improving their lives.

Actually this is pretty significantly "Better" than we have now. Right now just under half pay no income tax at all. And the wealthiest pay over 30%. Middle class pay quite a bit as well, when you throw all the sales tax in.

I think its just too much when, once putting all taxes together, the middle class pays almost half their money to the government and the rich are (At least theoretically, I honestly couldn't speak for how many tricks they have to get out of it) paying even more.

 

[NedimNapoleon]

wait, GW, I made a type, lemme correct it, dunno if you noticed it
Because free healthcare, education and other social services are very nice to have. Even if the rich give in percentage lets say 20% while the poor give 10%, the rich will be left with enough to live in luxury, but the poor will notice the benefits of that tax increase on the rich, thus improving their lives.

 

[Truronian]

Yes, and the rich do pay more. If everyone pays, say, 10 percent (Random number) the rich will actually pay significantly MORE money than the poor will.

What I'm wondering is why that's not enough and we actually have to increase the percentage as well. That's what I don't think I agree with.

These are all issues counteracted by a progressive tax system that a flat tax fails to sufficiently address or in some cases actively exacerbates.

What I'm wondering is why that's not enough and we actually have to increase the percentage as well. That's what I don't think I agree with.

Well, let me explain each one then. I will use your 20% for the purposes of these examples.

a) Everyone has base costs. The rich need food as much as the poor do, but for the poor basic necessities take up a much larger percentage of their income, so under a flat tax system the rich would just get richer (as they can reinvest their excess cash) while the poor stay just as poor.

Food, heat, water and other basic needs have a minimum cost which has to be covered. These make up a much greater percentage of a poor person's income than they do a rich person's. As such, you either:

a) Have to use a progressive tax system to relieve a poor person's outgoings in another area.
b) Have these things be provided by the state or a mixture of both.
c) A mixture of both.

To put that another way: living costs are regressive, a progressive tax system is needed to address this.

b) Living is more expensive for the poor. The poor have various expenses that the rich don't: rent being the obvious one. Why is it fair to expect the poor to pay a higher rate for having a roof over their head than the rich, despite taxing them at the same rate?

Similar to above. The poor have additional necessary expenditure compared to the rich. Once again, living costs are regressive, a progressive tax system is needed to address this.

c) Making money is a lot easier when you're rich. It's a lot easier, quicker for Bill Gates to make a thousand dollars than it is for Jonathan Poordude. It also requires a lot less work for Bill Gates. If you tax them the same percentage then that will simply enable Bill to get incredibly rich while Jonathan just about breaks even.

It takes one of the TAs at my school a month of solid work to earn make a thousand pounds. It takes Bill Gates seconds and no work to earn a thousand pounds through investments and the like. Without a progressive system of taxation in place, the TAs at my school are never going to be able compete with Bill Gates. The rich would just get richer and the poor get poorer, because making money is easier when you're rich.

d) The rich benefit an awful lot more from the society offers than the poor do. A rich man needs the police and courts to protect his safety and assets. The rich have a lot more flammable property for the fire services to extinguish. The rich stand to lose the most in the event of foreign invasion, and so benefit greatly from the military.

Without the police, the fire services, the courts, the military and so on, there would be nothing stopping a rich man from losing all his wealth and possessions to thieves and bandits, nor is there anything to stop the man with a big club taking his house. A man poor man, by comparison, has little to lose. His house isn't his in the first place, it's rented, and he has few possessions.

The rich get a very good deal under a progressive tax system: if they didn't then they'd probably all be on the next flight to Somalia and planning on paying for their own security, firemen and militias.

You still need to justify you assertion that a flat tax is inherently fair in some way. What is fair about everyone paying the same proportion?

 

[GhostWriter16]

Well, you certainly know more about economics than I do

You are right about the rich having more property to protect. This is partially changed by, as you say, they could hire personal security to protect their stuff if they wanted to, not that they really get that choice.

That said, the likes of Bill Gates will be paying, if his assets are 30 billion (I think they're actually higher than that, but I don't think its quite 60 and my math works better with a multiple of 3, and besides, I'm just making a point) he'll be paying approximately 10 billion dollars for all that stuff overall. In contrast, a poor person probably won't pay anything at all (He'll pay sales taxes, but a rich man will as well in addition to everything else he already paid.)

That doesn't strike me as equitable. In a flat tax system with everyone paying ten percent, Bill Gates would pay three billion, while the poor guy, say he makes 30,000 a year, would contribute three thousand. Bill Gates is paying a million times as much. But he also makes a million times as much, and has a million times as much spending power to be protected, so fair enough to me.

What your saying is that's insufficient. The rich should not only pay more cash, but a higher proporton. I don't necessarily see what they gain from just being rich as sufficient for this.

The fact that once you do get rich you can just keep getting rich does deserve to be addressed though. I'm not really sure how to address it. I don't think a progressive tax system does anything to actually make this more fair so much as it tries to artificially correct the situation, but it still exists so it doesn't matter.

If everyone had an equal chance to get rich, this wouldn't be a problem either. For some reason, they seem not to. To be honest, if we had a true free market, I believe there would be, but our government seems to support the status quo. I could be wrong about that as well.

I don't know

 

[Truronian]

Well, you certainly know more about economics than I do

You are right about the rich having more property to protect. This is partially changed by, as you say, they could hire personal security to protect their stuff if they wanted to, not that they really get that choice.

That said, the likes of Bill Gates will be paying, if his assets are 30 billion (I think they're actually higher than that, but I don't think its quite 60 and my math works better with a multiple of 3, and besides, I'm just making a point) he'll be paying approximately 10 billion dollars for all that stuff overall. In contrast, a poor person probably won't pay anything at all (He'll pay sales taxes, but a rich man will as well in addition to everything else he already paid.)

And despite this he's still in a much better position to make more money than a poor person is. Arguably the US tax system could stand to be more progressive as it was (IIRC) in the fifties and sixties.

That doesn't strike me as equitable. In a flat tax system with everyone paying ten percent, Bill Gates would pay three billion, while the poor guy, say he makes 30,000 a year, would contribute three thousand. Bill Gates is paying a million times as much. But he also makes a million times as much, and has a million times as much spending power to be protected, so fair enough to me.

...but that doesn't imply that it will cost a billion times to to enact said protection. This is where I think you're falling down. Maybe it will cost a lot more than a billion times more, maybe it will cost a lot less.

The fact that once you do get rich you can just keep getting rich does deserve to be addressed though. I'm not really sure how to address it. I don't think a progressive tax system does anything to actually make this more fair so much as it tries to artificially correct the situation, but it still exists so it doesn't matter.

There is not 'non-artificial' way to correct this, it's a natural consequence of free market economics. Compound interest is the most powerful force in the universe after all.

If everyone had an equal chance to get rich, this wouldn't be a problem either. For some reason, they seem not to. To be honest, if we had a true free market, I believe there would be, but our government seems to support the status quo. I could be wrong about that as well.

If you want everyone to have a equal chance to get rich, then you need a few things:

- 100% inheritance tax.
- Massive investment in state education, or a ban on private education.
- Thorough anti-discrimination laws.
- Some kind of genetic engineering to make all babies have equal smarts.

I'm certainly in favour of the first three. I don't like the last one (or even think it's possible), which is why I favour having a welfare state to support those that haven't been lucky enough to be born capable.

 

[bhsup]

Why does everyone deserve an equal chance of getting rich? Want to make something of your life? Well great, go do it, make something of your life. That's not the government's responsibility.

Regarding the flat tax, just make an exemption of base income untaxable up to whatever level makes the pinkos happy. The taxable income for everyone can still be taxed at the same flat rate. This should include, btw, all income, capital gains, and so forth.

(and if anyone argues that it isn't really a flat tax anymore becuase of an initial deduction, I'm gonna reach through the tubes and slap you with a wet noodle)

 

[GhostWriter16]

And despite this he's still in a much better position to make more money than a poor person is. Arguably the US tax system could stand to be more progressive as it was (IIRC) in the fifties and sixties.

We already have a high income tax on the rich, and they also pay huge amounts of property tax and sales tax. Any more would arguably make them slaves to society, which is wrong.

...but that doesn't imply that it will cost a billion times to to enact said protection. This is where I think you're falling down. Maybe it will cost a lot more than a billion times more, maybe it will cost a lot less.

I think it was million, but it doesn't matter, your point may be right.

- 100% inheritance tax.

Really? 100%? So should I be prohibited from keeping ANYTHING my family passes down? Heck, technically family pictures or family keepsakes would be "Taxed" under this system....

(and if anyone argues that it isn't really a flat tax anymore becuase of an initial deduction, I'm gonna reach through the tubes and slap you with a wet noodle)

Devil's Advocate: Fine, we'll make the income tax 100% flat on any income over whatever the median income is

I am fine with a certain exemption, but I wouldn't give them "Any exemption we want" or they'll give us Marxism fairly easily

 

[Truronian]

Why does everyone deserve an equal chance of getting rich? Want to make something of your life? Well great, go do it, make something of your life. That's not the government's responsibility.

Regarding the flat tax, just make an exemption of base income untaxable up to whatever level makes the pinkos happy. The taxable income for everyone can still be taxed at the same flat rate. This should include, btw, all income, capital gains, and so forth.

(and if anyone argues that it isn't really a flat tax anymore becuase of an initial deduction, I'm gonna reach through the tubes and slap you with a wet noodle)

Does it look flat to you...?

Spoiler :

That's real terms percentage rate for a 20% 'flat' tax with £5000 deduction. Ignore the bit on the left.

 

[Angst]

I certainly think it is unfair that some people have to pay up to a third of their income in taxes, and then more on property, and then more anytime they buy something, and then... the list goes on and on in the US. That the rich should pay absurdly high taxes while the rest of us shouldn't just because they were more successful sounds very self-serving to me (And I'm not rich either, nor are my parents.)

It's not self-serving at all. It's more effecient as an economy.

 

[bhsup]

Truronian: A flat tax on TAXABLE income. Taxable income being everything besides the initial deduction.

Sorry, but I'm sensitive about that because it's a damned if you do, damned if you don't thing. If I don't include the deduction, then I'm flayed for brutally punishing the poor. If I include the deduction, then i have people screaming that it isn't flat anymore, even though the deduction aids the poor.

My point is, the RATE on taxable income is flat. That's what is important because being successful in life should not be punished.

 

[Truronian]

We already have a high income tax on the rich, and they also pay huge amounts of property tax and sales tax. Any more would arguably make them slaves to society, which is wrong.

Slaves to society? What do you mean by that?

Really? 100%? So should I be prohibited from keeping ANYTHING my family passes down? Heck, technically family pictures or family keepsakes would be "Taxed" under this system....

Well, I'm personally in favour of a very low exemption (so it wouldn't be 100% as such). Something like £5000 would allow individuals to pass down items of sentimental value.

Devil's Advocate: Fine, we'll make the income tax 100% flat on any income over whatever the median income is

I am fine with a certain exemption, but I wouldn't give them "Any exemption we want" or they'll give us Marxism fairly easily

VRWC may not like it, but exemptions of any kind so make a tax system progressive and not flat.

Truronian: A flat tax on TAXABLE income. Taxable income being everything besides the initial deduction.

Sorry, but I'm sensitive about that because it's a damned if you do, damned if you don't thing. If I don't include the deduction, then I'm flayed for brutally punishing the poor. If I include the deduction, then i have people screaming that it isn't flat anymore, even though the deduction aids the poor.

My point is, the RATE on taxable income is flat. That's what is important because being successful in life should not be punished.

A well structured progressive tax system does punish success. It is always beneficial to make earn more.

I think these reason you find yourself stuck between a rock and a hard-place on this issue is because of your belief that a flat tax is inherently fair. When people scream that you're proposed system isn't flat any more, that's a compliment.

 

[GhostWriter16]

Slaves to society? What do you mean by that?

At their point more of their work is actually going to society than is actually going to them.

Well, I'm personally in favour of a very low exemption (so it wouldn't be 100% as such). Something like £5000 would allow individuals to pass down items of sentimental value.

Alright fair enough, so at least nobody's family keepsakes are getting taken away

That said, couldn't Bill Gates still just give a bunch of money to his kids while he's still alive? Thus rendering the inheritance tax unenforceable?

VRWC may not like it, but exemptions of any kind so make a tax system progressive and not flat.

I can see this, but I think what VRWC is proposing is much more "Flat" than what you'd probably propose or what our current system is.

That said, my point does show that its not "Completely" flat. I think it should probably exist though, in spite of this. If the taxman is forcing people to starve on the street, there is something wrong. Plus, I'd rather them not collect the money in the first place than collect it and have to give it back anyway via welfare. I'm not sure how large the exemption should be.

A well structured progressive tax system does punish success. It is always beneficial to make earn more.

I think these reason you find yourself stuck between a rock and a hard-place on this issue is because of your belief that a flat tax is inherently fair. When people scream that you're proposed system isn't flat any more, that's a compliment.

It does punish success, because if you earn a million dollars a year, taxed at 50%, half of your year's work went to the state. Basically, you worked January-June for everyone else's benefit and then you worked July-December for your own. Basically, only half the work you did directly benefits you.

If you make 100,000 dollars a year, and are taxed at 25% (Realize I'm just picking numbers here to make the point) you make a lot less, and yes, you'd rather make more money as above, but now you are actually getting to keep 3/4 (75,000 dollars) of the money you earned. Thus nine months out of the year, you get to work and keep the fruits of your own labor, only one fourth of your work does not directly benefit you.

Now, say you only make 20,000 dollars a year. Since your so close to the poverty level, you pay no income tax at all. Now you get to keep ALL of your income. All twelve months of the year's income go to you.

I'd still rather be the first guy, obviously, but he is being punished for his succeess by having to give back disproportionally, and now less of the fruits of his labor are actually his. Perhaps you could provide an argument of why this is good and right, but it still is punishing his success.