Questions for economists/libertarians

[Zardnaar]

In the United States the rich do not get taxed more than the middle class as a percentage of their pay.

Most countires have a progressive tax system and IIRC that included the USA. The ultra rich who don't get their income from paychecks can avoid tax or pay the 15% rate on investments IIRC. Here that tax rate is 33% on investments methinks, 17% income tax if you're poor and if you have children the government gives you money and in effect you either don't pay tax or very little (less than 10% depending on income and number of kids you have).

What is the tax rate in the USA for someone on 100 000, 200000 etc compared to a lower wage of 20 000-40 000. Even if it is lower I would bet they still end up paying more tax than someone on a lower income. I think you will find most of the tax income in every "western" country (Europe, USA, Aussie, NZ, Canada etc) something like half the income tax is collected form the top 10-20% of the population. Most tax will be payed by corporations and sales taxes (state, GST, VAT etc), or taxes on consumption- fuel, booze and tobacco in paticular.

Socialists who claim the rich are screwing the poor make me laugh- and I'm poor ATM btw. Hell I get less than half the US poverty line LOL.

 

[Cutlass]

Thtas true but that was a bump on the otherwise Top 5% always control the majority of the worlds resources. It was also a result of WW2 and with competitiors like Germany and Japan being literally flattened. In effect the dead of WW2 were also removed from the labout market and there was alot of reconstruction required in Europe and food to be grown to feed the world as in the immediate post WW2 era there was a shortage of food worldwide. IN 1951 New Zealand had less than 100 people unemployed and wages were high. The population of the world has tripled since then, resources have not. WW3 would need to kill around 150-195 million people.

Changes in society have also resulted in more women entering the workforce which results in a higher % of the population looking for work- someone is gonna miss out. Finaly in several countries minorities were excluded from work- New Zealand and Australia had whites only immigration policies in the 1st half of the 2oth century whose effects were still in effect in the post WW2 era. End result is even more people on the labour market compared to the early 50's.

Its a bit pointless pointing to the postwar prosperity era which was essentially abnormal mostly as a result of the war. Larger population, more people as a % of the population looking for work, people wiling to live in smaller houses than modern McMansions and less consumer goods as TVs computers and the like were essentisally unavailable to the population at large. TV, radio, car were really the only consumer goods you "needed".

The tax rates were also fairer. That ended with Reagan.

Most countires have a progressive tax system and IIRC that included the USA. The ultra rich who don't get their income from paychecks can avoid tax or pay the 15% rate on investments IIRC. Here that tax rate is 33% on investments methinks, 17% income tax if you're poor and if you have children the government gives you money and in effect you either don't pay tax or very little (less than 10% depending on income and number of kids you have).

What is the tax rate in the USA for someone on 100 000, 200000 etc compared to a lower wage of 20 000-40 000. Even if it is lower I would bet they still end up paying more tax than someone on a lower income. I think you will find most of the tax income in every "western" country (Europe, USA, Aussie, NZ, Canada etc) something like half the income tax is collected form the top 10-20% of the population. Most tax will be payed by corporations and sales taxes (state, GST, VAT etc), or taxes on consumption- fuel, booze and tobacco in paticular.

Socialists who claim the rich are screwing the poor make me laugh- and I'm poor ATM btw. Hell I get less than half the US poverty line LOL.

The thing is, that those people who say the rich pay more only consider the personal income tax. Which the rich can largely avoid paying. They pay far less in all other taxes. Most people pay more in property and sales tax then they do in income tax. The rich pay a very low part of their incomes in that.

 

[Zardnaar]

I'm willing to bet your concept of fair tax evolves into "Rich pay more because they earn more than me". After Reagan cut taxes I'm almost sure that without looking at the tax rates that the rich still pay more.

The biggest tax evaders are generally those who own small business and farmers- in my experience anyway. Any small business that provides a service is really honesty based about how much income they declear to the government, and theres numerous ways to bring your icome down low and pay less tax while increasing equity. The so called "business expense" that lets you buy cars or improve the business by spending your pre tax income. I doubt its any different in America with the exception of the ultra rich who don't get their income from wages.

University here is full of "poor" students who qualify for government assitence but whose parents can afford to subsidise their studies, or buy them laptops but whose income by the books is about what someone gets on minimum eage and yet they all drive late model cars as well. Everyone works the system to the best of their abilities if its a welfare handout, paying tax, avoiding tax. The ones who get screwed are usually the low earning wage earners who don't qualify for government assitence, but can't hide their income due to getting a wage. And in a progressive tax system the "rich" get screwed most of all in both tax % and real tax payed. They have the advantage of if they live a modest lifestyle their expenses will be about the same as a poorer persons (or marginally more due to better quality food) and they can invest the difference.

More than a few paper millionaires drive older cars and don't binge on consumer debt. I'm a right winger but I can at least understand why someone votes left or even extreme left like communist/greens. I had an interesting conversation with one of my liberal friends and he couldn't even grasp the concept of why someone would vote National (NZ version of Republicans but they are more to the left than the Democrats).

 

[Princeps]

Its a bit pointless pointing to the postwar prosperity era which was essentially abnormal mostly as a result of the war.

No. The middle class was born largely due to deliberate depression era policies that predate the second world war. Also, higher education became more available to the general population.

 

[Zardnaar]

I'm sure that the average wage in the USA during the war years doubling had nothing to do with it right?

 

[Cutlass]

I'm willing to bet your concept of fair tax evolves into "Rich pay more because they earn more than me". After Reagan cut taxes I'm almost sure that without looking at the tax rates that the rich still pay more.

The biggest tax evaders are generally those who own small business and farmers- in my experience anyway. Any small business that provides a service is really honesty based about how much income they declear to the government, and theres numerous ways to bring your icome down low and pay less tax while increasing equity. The so called "business expense" that lets you buy cars or improve the business by spending your pre tax income. I doubt its any different in America with the exception of the ultra rich who don't get their income from wages.

University here is full of "poor" students who qualify for government assitence but whose parents can afford to subsidise their studies, or buy them laptops but whose income by the books is about what someone gets on minimum eage and yet they all drive late model cars as well. Everyone works the system to the best of their abilities if its a welfare handout, paying tax, avoiding tax. The ones who get screwed are usually the low earning wage earners who don't qualify for government assitence, but can't hide their income due to getting a wage. And in a progressive tax system the "rich" get screwed most of all in both tax % and real tax payed. They have the advantage of if they live a modest lifestyle their expenses will be about the same as a poorer persons (or marginally more due to better quality food) and they can invest the difference.

More than a few paper millionaires drive older cars and don't binge on consumer debt. I'm a right winger but I can at least understand why someone votes left or even extreme left like communist/greens. I had an interesting conversation with one of my liberal friends and he couldn't even grasp the concept of why someone would vote National (NZ version of Republicans but they are more to the left than the Democrats).

No, in the US, the rich do not pay more as a percent of income. They do in raw dollars, because they have most of the raw dollars. But they absolutely do not as a share of income. Warren Buffet pays half the rate as his secretary. By his calculation.

And that is because of the structure of the taxes. Capital is taxed very lightly. And that allows massive tax avoidance, because most people with a very high income can design their income to fall in the less taxed areas.

The strawman is the income tax. That's what all the people who claim the rich pay more focus on. They discount all the other taxes. But by doing that, you do not get a picture of the US tax system as a whole.

The tax system pre Reagan had plenty of flaws. And to his credit, Reagan's tax reforms were intended to fix a number of those flaws. But when all was said and done, it turned into a massive giveaway to the rich. The justification for that was it was supposed to increase investment. That didn't happen. So the rest of us pay the price for nothing.

 

[Zardnaar]

I did say the ultra rich can avoid taxes as they aren't reliant on wages as a source of their money and I have read that the rate is only 15%. Here its 33% so it depends on what country you live in. The ultra rich only make up a small fraction of the US taxpayers, so most people who are wealthy and vote Republican will be business men or high earners.

Here you get taxed each week- PAYE (Pay As You Earn), in the USA do you get taxed differently? Low income earners who get government support in effect pay no tax and even if you're ultra rich you're not gogin to think its fair you have to pay millions in taxes and starving johny only pays in effect 0-20%. Why is it fair that the rch should pay more, why not ap the total tax rate that the governemnt can actually take off you?

I dont particuly agree with that arguement but I can at least see why someone would make that arguement. If you get a million dollars a year and pay 100K and someone only pays 5-8K or whatever in taxes you are going to think thats unfair.

In any event putting up the tax on the super rich can backfire. In the early 90's they put up tax on yachets built in the USA. They thought they would get several million extra intax but the net result was they got less because the rich sourced their boats over seas and less tax was collected. In New Zealand they cut the top tax rate in the 80's from 66% to 33% and the tax intake went up. People stopped avoiding paying tax through various means.

Even if the government put the super rich tax take up they would just move their money somewhere else and the tax collected would go down as you can't get a tax law like that passed overnight giving plenty of notice even if the tax took immediate effect, and they had a 100% tax rate on any money moved out of the country. 15% of a billion dollars earned is better than nothing on 20% where the money is moved.

This is a nasty thing called "reality" alot of left wingers don't fundamentally understand. Is it fair? Probably not, but thats what will happen regardless. Its harder to dodge tax on consumption which is why gas, booze and tobacco is heavily taxed and demand is inelastic. Thats why a flat tax while on the surface is unfair would probably collect more tax money and remove legal loopholes and wiggle room, although I'm sure people will figure out some way of avoiding paying that if they can get away with it..

 

[Cutlass]

In the US there are many different taxes. The federal government collects income taxes on wages, taxes on capital, taxes on businesses, dedicated taxes for Social Security and Medicare. And many miscellaneous taxes. States mostly tax income and sales. Local governments mostly tax property.

It's a very complex system, if you look at the whole of it. And that complexity allows for a lot of legal evasion. You could even say it was designed that way.

Yes, you cannot tax too high. Evasion and fraud increase when taxes are too high. And any tax imposed which is easily avoidable will be.

However, most of the benefit of government goes to the rich. So it's only fair for them to pay the most. Plus there is the argument that they can afford it, where lower income people have a real hardship paying it.

Property tax, sales tax, and many others hit people the hardest as they get poorer. Middle income people can easily be paying 10% of their income in property taxes alone. Rich people certainly don't.

 

[Zardnaar]

Thats just because they earn more money. Capitalism isn't perfect but I think a pro business enviroment like the US with a bit more regulation around the finance market and less military spending with the money redirected to effective would be the way to go. Universal welfare would exist but with tighter controls around who can get it and for how long. In a globalisation environment you basiclly need loopholes as its very easy to just take your money elsewhere.

Ironically Nazi Germany limited corporate profits to 5% and taxed them at 20% of the profitd and could seize the assets of corporations who wouldn't play along. Its was inefficent and the state had to gurantee orders. There is no perfect way you're gonna get a better distribution of wealth. Resources are ultimately limited. God isn't making anymore land/water/oil available or at least on a scale that matches consumption.

 

[Cutlass]

But the justification for changing the distribution of wealth in the US, and it was a deliberate policy, not a market result, was that if the rich had more, the rich would invest more.

That didn't happen. So the policy of making the rich have more just ended up screwing everyone else.

 

[Zardnaar]

mOne could argue the rich were getting screwed in the first place by having to pay more just because they are rich. Its not perfect but no ones come up with a better ystem that works.

 

[Cutlass]

Why are they getting screwed in paying for what benefits them the most?

 

[MagisterCultuum]

The benefits of government go mostly to those who already own the most, not those who are currently earning the most. A fair tax system would have no tax on wages/income, a flat tax on property (or at least on Land, i.e., natural resources), and a basic income through citizen dividends. Pigouvian taxes on negative externalities like pollution are also justified, and market capitalization taxes in exchange for the limited liability protections given to corporations may be worth consideration. In such a system there would be no disincentive for hard work and rich would likely pay more in taxes while also being forced to invest more just to break even. It would tend to increase socioeconomic mobility, both up and down.

 

[Cutlass]

The ownership of land and natural resources is no longer the determining factor of wealth ownership now compared to earlier stages of economic development. It would have to be on business ownership as well. And that would be more easily manipulated.

 

[Merkinball]

No. The middle class was born largely due to deliberate depression era policies that predate the second world war. Also, higher education became more available to the general population.

Actually, the middle class was born about a century before FDR came along and turned millions of middle class people back into poor ones.