Does Taxing the Wealthy Hurt the Lower Class ?

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Then a lot of people would be receiving unemployment payments.

Define "a net gain for society," in public sector decision making terms.

It's very easy to put a price tag on the cost of public sector spending programs, but how do you quantify their value? One of the reasons that government takes on some tasks that are inappropriate for the private sector is that there is no meaningful way to quantify their value, and hence it is in no one's direct commercial interest to do these things.

Primary and secondary education free at the point of delivery is clearly beneficial to society. But what is it worth? How can we decide if we are getting "value for money" on the services that government is providing? Policing and military defence are beneficial to society--but how do you put a value on these things? Until you can start to look at the public sector through a set of analytical lenses that are appropriate to the task, your rehetoric is a bit empty.

Now, i don't disagree that government bloats. It is in the nature of the beast that when politicians ask us to do something new, the first question is, "how many people do we need to do it?" But that's why politicians are equipped with the pointy scissors. My own department is obliged to shed 10% of its workforce this fiscal--my own job was one of those potentially on the block. Once these people are out the door, we will have to realign our business priorities. There may come a point where we are obliged to say to the Minister, "I'm sorry, but we do not have the resources to deliver this to you," and the Minister will have to make the decision about what priorities he wants his department to meet first.

No. The historical record proves it.

Proves what? Try using the quote function.

ruveyn

Actually, when people talk about a flat tax plan, reducing, and/or eliminating deductions, credits, and exemptions, are a big part of it. In that instance, I was referring mostly to the deductions, credits, and exemptions part of it. Flat tax plans combine fairness and simplicity. With this plan, the intention is to reduce the overall tax rate, which would make it easier for lower income people to pay. Also, with a simpler tax code, efficiencies should increase, which would mean less time and money is wasted.

Also, having everybody paying the same percent isn't the same as paying the same exact amount.

Example at a 10% flat rate:

Person A makes $20,000 per year - they would pay $2,000
Person B makes $200,000 per year - they would pay $20,000
person C makes $2,000,000 per year - they would pay $200,000

A simplified example of our current tax code:

Person A makes $20,000 per year in a 15% tax bracket - they are paying around $2,565 (around 13%)
Person B makes $200,000 per year in a 33% tax bracket - they are paying around $50,528 (around 25%)
person C makes $2,000,000 per year in a 35% tax bracket - they are paying around $676,761 (around 34%)

Our current code is basically equal to tax rate of around 24% (on the people that pay), but that doesn't really include most of the deductions, credits, and exemptions. If we were to spread that out over a larger tax base, streamline the code and increase efficiencies, this number could probably be dropped to around 10-15%.

The flat tax plan is pretty fair, but is it beneficial for lower income people? Not really in the short term, but in the long term, it should be, but I guess it would have to be tested in the real world to determine that. Tax rates aside, the biggest problem I see with the tax code is the deductions, exemptions, and credits part of it. Not only does it cause the rates to increase (to pay for them), but it also wastes a lot of time and money.

Also, considering the top 20% holds 85% of the wealth in this country, this is definitely a problem that needs dealt with, but I don't think it's necessarily a tax collection problem.

you can't squeeze blood from a turnip. the poor already are socked by plenty of state and local taxes which take up a greater portion of their income, than that of the higher classes.

Money is power. Power is a zero-sum game. Some say no harm is done when the upper classes say double their wealth and income whilst everyone else's remain the same. Actually, very serious harm is done. They double their power and that power is taken, stolen if you will, from everyone else who are effectively eventually disenfranchised.

riffing on lord acton, i say that money is power, that power corrupts, and that absolute power corrupts absolutely.

It seems we are told that it's an absolute right to become a Bond villain! So much wealth and power that one can bribe governments to turn a blind eye as one builds a private army, builds a death ray to blackmail the world... to not let that happen is to punish success, is to stifle innovation, to destroy the incentive to work and to save!

Where the hell is the 'like' button?

On that note, the tax system desperately needs to be changed to support savings, investment and production.

We need to make savings non-taxable, instead of punishing it. There's really not a very good incentive to save when tax rates are so much higher than interest rates?

all the more reason for keeping the government as unpowerful as possible consistent with peace and order within the domain.

ruveyn

no its only an argument for a balance between the two, no private nor public ideology is good on its own and maintaining that fallacy doesnt really help anyone.

Once your taxes are paid, you have three options with your after tax money: you can spend it; you can invest it; or you can save it.

Remember, we already incentivize savings with the tax system. Pension and retirement savings contributions are generally made with pre-tax income, and only become taxable upon withdrawal. These tax deferral systems serve to maximize savings growth for individuals. Why on earth would we need to do more than that?

Outside of the tax system, we already have an incentive for savings--it's called recession. When the stock market drops, people start putting their money in dollars--buying up treasury notes and GICs. Savings are good, in the sense that they provide a liquidity cushion that makes recessions less dramatic, but ironically, people who can save tend to do so more in recessions, which actually makes them worse, because of the loss in consumer confidence that this represents. Over the last three years, I have been pouring money into buying cheap investments--which is good for market liquidity--but which means that I am not spending anything close to what my income would support in consumer spending.

So while you are advocating for the tax system to incentivize savings and investment, bear in mind that you are also advocating for the tax system to disincentivize spending. And that is something that you need to think about carefully.

There are other factors in the savings rate drop. Like a generational shift in attitudes. By the 1970-80s a lot of frugal people who had seen the Great Depression were dropping dead. My grandmother would save and fold up wrapping paper from each present at Christmas for re-use. She'd wince when people tore paper. Today impulse spending is tied up with self-worth.

They've been trying to close these for half a century or more. They never get closed. Obama took a swing in 2010 but was fillibustered.

Maybe economists need to start thinking outside the box and come up with new solutions. It seems to me the decrease in savings and increase in the amount of GDP tied up in asset bubbles and private debt (both personal debt and corporate debt in the form of "leveraging" for profit) is a form of compensation for a much more fundamental structural weakness. It's not an accident at all that people are buying more and saving less. Corporations benefit through this mechanism and actively encourage it. It seems a modern absurdity that entire nations rely on frivolous and excessive consumption (in the name of Keynesian stimulus) just to keep jobless rates down and people off the streets. I don't see any absence in the ability of our society to produce vast material wealth. The problem is we are not interested in distributing the wealth we produce in a functional way.

Do you know why this is even an article? Because it's meant to look like a complex and intellectual ISSUE. It shouldn't even be up for discussion. Who do you expect to pay for all of the crap that poor people can't pay for? The birds and the bees and the fish in the sea? No! The people who make more than their fair share! The people who have enough for everyone. Remember in kindergarden when you had more than one or two? You were told to give one to your friend. I guess that lesson some how went out the window once people realized that crime pays. But what does it pay? Material wealth, which is scientifically proven to not make people feel complete.