Taxation

Wow. Great comments! Well thought out, truthful, pertinent, and well worded.

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At the time of typing this comment, you have 236 posts and have received only one good answer.

If your other comments are anything like these, then your lack of GAs is certainly a testament to the unpopularity of the truth and/or things that need to be said.

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I guess I need you help then. There is something I really REALLY don't understand! How is it logical, moral, or 'right' on ANY level for the US goverment to send Trillions (over the years) of our tax dollars in "Foreign Aid" to countries who honestly and truely HATE US, (honest to God HATE), and who's stated goal is world domination? What is your answer to that? And, what exactly am I "not understanding"?

I think we have a moral responsibility to help other countries in times of disaster.

On the other hand, I have a bit of difficulty being told that the US should look to the success of Germany as a model, while at the same time understanding the reality.

US Foreign Aid seeks to buy access, curry favor, and otherwise gain influence.

The aid helps keep in power or put in power officials freindly to the US and US agenda.

It is also a form of subsidy creating revenue through arms sales.

Additionally many agreements are typically extracted in exchange for the aid.

It isn't alway effective or well placed.

Recntly Foreign aid has been about 1.5% of the federalbudget... that is sizable. The military component alone is typically tens of billions of dollars every year.

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So thatisthe answer toyour question, sopleasereturn the favor by answering one for me:

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When you wrote this, ....

'.....to countries who honestly and truely HATE US, (honest to God HATE), and who's stated goal is world domination?....'

..which countries did you have in mind? I particularly interested knowing which countries have declared the goal of world domination....?

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Please don't keep me in the dark on this..

Pakistan, Iran, Saudia Arabia, Afganistan, anywhere radical Muslims run rampant, even if they don't actually 'oficially' run their country it is the stated goal of the Muslim Brotherhood to dominate the world, to answer that question. My main concern about giving away trillions of dollers to anyone especially at this time in or fiscal history, is that we honesty don't have it to give, and the printing of money to give to others is doing nothing to keep us from going under and then we we won't be able to help anybody even ourselves. Besides that, curring favor among these countries is less than a useless pursuit, when they are irrevocably against All Americans regardless of who or what we are.

I've already lingered on this thread too long. I'm definitely not going down this road.

No, the common man in those countries is NOT against the Americans or the Europeans, it's only a handful of ethnic and staunch clergy which hates the Western Intervention in their affairs. For example. the Talibans are condemned for their extremist views yet they are now being released by Pakistan which sounds strange. However, it may be noted that people in these countries want Islam to govern their way of life as opposed to the Western line of thinking. They don't agree that they are 'terrorists' or anything of that sort...what has the war on terror made them hold strongly to the belief that they are fighting an invading force and for that they, being Muslims, regard it as Jihad or holy war. It's just like Bush said he had a dream about waging a 'crusade'. If America stopped interfering in the affairs of these nations it would surely help them rebuild themselves or at least administer them peacefully and if at all America had to fund them that would be for civil and not military purpose. . Sometimes I wonder as to why the US wants weaker nations to follow its so called 'new world order' rather than leave people to themselves???

The military component alone is typically tens of billions of dollars every year.
A billion here a billion there. Sometimes it adds up to real money.

Just pointing at the large amount spent and automatically stating that it is wasteful due to the amount is misleading at best. The next five biggest military organizations still don't equal the whole of the U.S. military machine.

The U.S. military does a lot around the world...this is expensive. Not only do we put fuel in tanks to accomplish missions, but help other countries develop technologies and selling them tools (weapons) at below cost. Moral arguments aside, it's what we do...which costs big time.

We run entire bases in numerous countries around the world for one reason or another. True, we could just make glass factories if anybody really pissed us off but we choose to not do that (anymore)...it's counter-productive.

Freedom isn't free.

'Tis a conundrum of deficit reason.

I propose that everyone pay the government the same proportional fraction, regardless of the source of that money, and also that those who are perpetually on the dole, lose the right to vote. It is the only way to maintain a free society. Otherwise, the democracy will committ suicide as per John Adams.

It is a republic if you can keep it.

I propose that the government stop wasting money and telling us that they are helping us.

They have raided, borrowed, stolen and spent everything that is available to them, and the latest solution is to raise taxes. It doesn't compute.

"Half of the population is subsidized" Well.....................................not sure about that.

100% of the oil companies are subsidized.

100% of the tobacco industries are subsidized.

100% of our political leaders are subsidized. Man, I wish I had their perks and free health care.

Your point escapes me.

Accountants do not make profit, they only tally profit.

Stock boys do not make profit, they only distribute product onto a shelf.

Salesmen do not make profit, they only find customers.

Machinists do not make profit, they just fabricate widgets.

This ridiculous argument can be made for every gainfully employed individual.

Whoops, I'm sorry you were talking about subsidies not profit.

Well I'm certain I can find some accountants, stock boys, salesmen and machinists that their lives are subsidized by at least one government agency or another. I even think that one can make an argument that all of these professions get a subsidy at some time in their lives. I'll be even more bold and reckless and say that one can make the argument that every person obtains directly or indirectly a government subsidy.

So why is this a bad thing if everyone is doing it and those with authority agreed to it?

You've completely lost me.

One more reason come to light (though it was never in the 'dark') that reflects upon the taxation and general policy of the US is that it should keep the world busy fighting. Here is an interview which discusses the reasons behind why America is 'greedy' and 'capitalistic' and why it NEEDS to subsidize half of its population. Just imagine, yes imagine, what fate would an average American suffer if America seriously opted for world peace??? http://www.countercurrents.org/ziabari181112.htm

Opting for world peace: WHAT, and let the Jihadists take over the world. If we all turned away from all other religions and all became followers of Muslim religion then the Muslims would not have convert anyone by the sword anymore. Appeasement, that is what we need. Just let them take over the world and we could have world peace. We would no longer need to have any army or navy or air force or marines and our women could all wear burkas and we could beat them if they got out of line and we could keep our female population from ever becoming educated and we could carry our little rug around to bow to Mecca every day. Of course the world would become a one world government under some tyrannical dictator who would have complete power over the world's population. We would have world peace though. So, I guess it would be worth it.

And do you have any evidence that "jihadists" will take over the world? Most of the extremists are illiterate morons. For example, some say that the number left in the Taliban are in the range of a few dozen to a hundred. Obviously they are hard to count though.

Turning away from all other religions would do just that: make more atheists. Look at Europe. Only a small fraction considers itself religious. Extremist muslims haven't taken over Europe yet lol. You're making crazy generalizations. If you knew anyone from the middle east you'd probably know the number of extremists is relatively small. There are also extremists in the US as well.

Black or white fallacy: where two alternative states are presented as the only possibilities, when in fact more possibilities exist (we will all be muslim if we give up militarism) which leads me to:

False cause fallacy: presuming that a real or perceived relationship between things means that one is the cause of the other (people forgetting about religion will create more "jihadists") which leads me to the following:

Slippery slope fallacy: asserting that if we allow "A" to happen, then "Z" will consequently happen too, therefore A should not be allowed to happen (getting rid of military will therefore be letting them take over the world so they can abuse women) which leads me to:

Appeal to emotion fallacy: manipulating an emotional response in place of valid or compelling argument (saying all women will be wearing burkas etc etc).

Now I know your type. Your next reply will be an "ad hominem" fallacy: attacking your opponent's personal character or personal traits instead of engaging with their argument.

Also, it will likely be laced with the anecdotal fallacy: using personal experience or an isolated example instead of a valid argument, especially to dismiss statistics to generalize.

I just committed a small ad hominem as well since I just made a little attack saying that I know your type.

And no, I'm not advocating for getting rid of the military. There is a such thing as a middle ground where we can have a strong military but use it intelligently so as not to continuously create more enemies which we must fight in the future.

Nick,

And do you have any evidence that "Most of the extremists are illiterate morons"?

To what does your example pertain?

You state "If you knew anyone from the middle east you'd probably know the number of extremists is relatively small." Why would you presume Byron does not know anyone from the middle east? Did he state the number of extremists?

When you post "lol", are you really laughing out loud?

Just wondering,

Ace

Well looking how the taliban came from Afghanistan and how they still have an illiteracy rate of 70% it's reasonable to assume that many of the extremists are as well??? I'd be willing to place bets that the majority of the extremists come from countries which are less educated. Look at that underwear bomber. Clearly he was a moron. And not very good at making bombs either. He just burned his balls off. And that's the best that they can do? If that's the best they can do, I'm not very worried. We have more domestic terrorists than that (gang violence or in europe that crazy norwegian guy who shot all those kids).

I'd assume that he doesn't know anyone from the middle east because my perceptions of the people I've met have been more positive than I expected. I've had a several Iranian professors and classmates in the past and I've had the chance to meet people from Syria, Pakistan and Iraq as well. Granted, it's a fairly small sample size of maybe 15 people who I actually spent a fair amount of time with, but I was actually impressed with how open minded and friendly they were. Actually, I think it's quite possible I met more Germans whom I didn't like on a personal level than people from the middle east. I don't know. That's just my personal experiences. Not ALL of them are bad people.

I don't know, I just put 'lol' for fun when I find something just slightly amusing. What's wrong with that? It's part of the english language now ;)

Speaking as someone who has been to several Muslim countries I can tell you that most of the civilians I met in Iraq, Dubai, and Turkey (I spent several years between these three places) ARE even minded knowledgeable people.

I advise you to get a little more experience under your belt before you make statements like "I'd be willing to place bets that the majority of the extremists come from countries which are less educated."

You seem to mistake education for knowledge. I bet if you were placed in an environment outside your scope of experience you would see just as much a moron. As for that being the best they can do...look around a bit more and I am sure you will find just how dangerous an uneducated person with the right knowledge and experience can be.

Again, most of the people I met in the Middle East were pleasant and even welcoming to a foreigner of a different faith. I did meet some who were resentful to my presence and even rude...but probably not as poorly treated as many from that region are treated in our Educated Western countries.

Drew K

....."where does an actual dollar equal a dollar of worth? $60,000???".....No, because 'where' is a place.... so it must be North Korea.

Maybe I should inflate the words: "Where along the continuum of income does . . ."

The original question - while reflective of most of the muddled thinking done in our time - is un-economical, and un-answerable in its original form. As there is no equivalency between an economic measure of things, and a moral measure you might feel be compelled to do, or worse you might feel to compell the rest of us to do.

You see, subsidy does not happen out of the thin air. Normally, it is done with other people's production, extracted from them. Otherwise it would happen by FM (f** magic). A surprising number of people believe, that to be the motive force in economics.

A prime example to such thinking is the slowly dissolving European Union. That greek tragedy was set from its beginning. It allowed 3% deficit spendings (plus what the locals were capable hiding from the feds, and they were capable, plenty). So, guess what? When the outgo consistently exceeds the income, something will give. And that will make all of them and us poorer and miserable to boot. Lesson learned? Maybe for a generation. The next?

The hardest rule in economics is: to leave it well enough alone. For humans -as an inherently meddling species - that is the hardest lesson. The market, in total, will set the price, at what the market will bear. That sets the conditions for new developments, that again will lead to an entirely new market set point. Example. A few centuries ago indigo was an essential non-fading coloring agent for textiles, produced mainly in India. Western powers fought over it. During a nasty blockade a chemist discovered ALL colors made from coal chemistry. A new economic set point was reached, and indigo never recovered economic power.

All that leads straight to interventions. You say, your fair haired boys have special magic to navigate troubled waters? I do not believe it, not for a minute. Any mutt can muddy the waters, but it takes a real genius to provide simplicity and clarity. And I definitely include the market in toto in that, and fair haired boys not.

The concept of subsidy is full of magic in its most negative sense. It presumes, that the fair haired boys (and I give plenty of space to women meddlers too) do know better, than you and me, what they do. There is absolutely no proof to such magical thinking. A city council member, or a federal bank chairman are equally susceptible to the fair haired boy magic thinking.

Additionally, nobody bothers, and almost nobody is capable of thinking thru of the secondary and tertiary consequences of the decisions today. Examples are plenty. Policies are fixed, markets (in any and all sense) are open and fluid. Giving the best answers we can have.

Parting question:

You subsidize something. I mean you, yourself, count me out. You succeed agains expectations. You now own the tar baby. Now, what next, and next...???

"the rich should pay higher taxes"

How about just making the rich pay their fair share now instead of being able to right-off thousands in untold deductions.

Whats the use in charging the rich at a higher tax rate if they can use the taxes laws to not pay any.

0% of 25% tax rate is the same as 0% of a 15% rate.

The tax laws need to be changed not the tax rate for the rich.

Nowhere in any American tax code have the words 'fair' or 'fairness' or 'Fare Share' ever appeared. This too raises the specter of who decides what 'Fair Share' actually means. I don't want anybody but ME deciding what is fair for me, and it certainly isn't what this regime considers fair! Epecially, to fund all the blatently immoral things they want to waste my tax dollars on! That is unfairness on stilts, if you ask me! Whether you know it or not, our tax system is a opt-in system, and the only reason that they have a 'right' to steal your money at any level they consider fair, is because you signed a pice of paper when you were hired, which allows them to. The Tax code actually says the words at the top that this is a 'volentary tax system', though I question the word 'volentary' when it is enforced at the tip of a gun!

'.....Nowhere in any American tax code have the words 'fair' or 'fairness' or 'Fare Share' ever appeared.....'

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26 USC § 6304 - Fair tax collection practices

'Fair' is all over the place in the US tax Code.

'Fairness is not easy to find, and off course 'Fare share' is unlikely to be found..but I couldn't find 'fair share' either.

I originally looked at this equation from the aspect of tithes to your Church; that is, 10% tithe to a "normal" person would "hurt" the same as 30% to a rich person (rich then was $100000.) So, this may define "fair share." But I don't yet know what the rate will come out for a million dollars; I need to reevaluate the constants first.

How to modify the tax code to prevent so many deductions is out of the ballpark I am considering. Seems that is the realm of politicians.

By the way, the equation also provides an income below which the income should be supplemented.

All I'm saying is a person or business should pay taxes on a portion of any monies they earn and not be able to use deduction after deduction so they don't pay any taxes at all.

How about a tax rate of 0% on incomes up to $200,000 and 100% on all amounts over that? That's marginally wilder than most other proposals.

I think most here miss the point. The only truely "fair" rate is a Flat percentage with everyone paying the same. If you want to help the poor then you set a large deduction like equal to the minimum wage. Everything up to the minimum wage is tax free. A person making three times the minimum wage would still be paying only 67% of the tax rate. At 10 times the minimum wage he would still be at 90% so it would be progressive. The major reason why a graduated income tax is bad is because it allows congress to skew the economics to favor their re-election and hence the mess we are in now. With a graduated system congress can selectively raise the rate in a single bracket and appear to be providing the benefit to all at the expense of a few who will not have a voting majority to vote them out at the next election. Look at the current tax the rich demogoguery. That way lies ruin as our current economic situation proves.

It's pretty obvious that a dollar doesn't mean as much to a rich man as a poor man. I don't see that justifies making him a poor man. If you take his money away, he won't spend it or provide jobs for other people who could earn an honorable living rather than depend on the nanny state for subsistence.

Since Daniel Bernoulli died in 1782, I think it's quite likely that his words are being taken out of context.

GA from me.....................although this entire subject is outside of the scope of something this forum can grasp.

'......although this entire subject is outside of the scope of something this forum can grasp.....'

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I take this statement to be unquestionably true....within the scope of, that portion of the forum for which you have intimate and ultimate insight...

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...although the entire subject, outside of that scope, does not appear to be something you can grasp.

I'm gonna go ahead and eject myself from this thread.

I will be patiently waiting for the wave of prosperity and happiness to wash over us. Surely it will be here within the next four years.

I gave you a GA for the first two paragraphs.

The third paragraph supposes that then rich investor can persuade the companies to increase prices to increase profits to increase dividends to make up for the extra taxes he has to pay. I don't think so. Taxing companies will do that.

I have a problem with:

"The rich guy that holds stock in the oil company put up the money so that the oil could be discovered and eventually brought to market. So why not tax the rich guy so he doesn't have enough money to invest in oil discovery companies. The end result of drying up investments by taxing the rich more will be the nationalization of the oil companies and more government power. as if they didn't have enough already. We are the only modern country that taxes dividend"

This is a stretch. They are only speaking of a small increase in taxes, not enough to take them out of the game. Dividends are, in fact, taxed in most other countries to varying extent, sometimes flat taxes are withheld by the payer, sometimes they are paid by the recipient.

GA. I wish I could have said it that well.

If he reinvests his profit instead of taking it as income; does he pay income taxes on that? If not does the higher income tax act as an incentive or decentive to investment?

Any profit remaining at the end of the year is taxed. If before the end of the year he buys new equipment the depreciation on that equipment can be deducted from the income as an expense but that depreciation depends on what equipment he buys. If it is realestate it is 1/15th the purchase price. If a motor vehicle it is 1/5th to 1/7th. I think the last I heard computer equipment could be expensed in 2 years but I could be wrong there. At any rate a higher income tax leaves less for him to reinvest so it is a disincentive.

There have been lots of interesting off-the-subject replies; some quite lengthy. But no one has answered my question which is in the last line.

What is moral income?

That's hard to explain! I tried a bit in #26, but didn't do well. If your physical income is x dollars, the moral income for a normal person would be the same. But for a rich person the moral income would be less than x dollars, because the money is worth less to him/her because he/she has so much. Using "moral" is a carryover from starting my thinking about a tithe to the Church; a better term hasn't come to mind yet. Maybe in this context I could use "physical" and "taxable." What I am looking for is an estimate of when the physical and moral/taxable incomes are the same. My initial guess (WAG method) is $60000; is this low, high, or OK?

I did answer it in #16, as un-economical, and un-answerable question in its present formulation, as it mixes economics with moral imperatives, as you see it. Later mention of tithes still does not compute. #16 goes into some length explaining why. Maybe others can provide more to your taste.

"Daniel Bernoulli deduced a formula from <an> assumption".

How does this equate to anything in real life? He took a wild a#s guess and postulated something.

It doesn't matter if the "moral and physical income is the same". The answer is different in sub-Saharan Africa Sub-Saharan Africa - Wikipedia, the free encyclopedia than it is in Boston.

It doesn't matter if the "moral and physical income is the same". The answer is different in sub-Saharan Africa Sub-Saharan Africa - Wikipedia, the free encyclopedia than it is in Boston.

True, the numbers will be quite different, but I think the principle will still be true.

The question has only one answer. Morality has nothing to do with taxes and the poverty level changes from year to year. The poor in America are not really "poor" in the true sense of the word. When I was only 6 I had no new clothes but my parents bought a pair of shoes for me at the start of each school year and I was required to carry them to school and put them on when I got there so they would last the whole year. There was no welfare, no food stamps no free telephone, no indoor plumbing no electric lights, etc. These people do not know what real poverty is. At one time in my youth I had nothing to eat for three weeks except pancakes three meals a day. There are poor people in South America that scrounge in garbage dumps for scraps of food and we have 57 million people that have an EBT card. Wow, they sure need the moral income of the rich don't they.

Marx (I think) said "from each according to his ability, and to each according to his needs." Sounds nice, but makes no account for greed.

I think it should have been said as... "from each according to his ability, and to each in equal share."

Not that anyone would ever get an equal share, but rather the life basics should be freely available to everyone. Food, clothing, accommodation, medical aid, transport, and essential utilities. (water and electricity) Everyone, from the state to the individual, has to recognise they have a vested interest in maintaining his fellow man. Materially, morally, socially, and physically.

If only everyone could embrace this fact the world could be a far better place. No more "beggar thy neighbour." Rich and poor, excess and squalor, territorial or racist wars, or strife. If every one helped others, to achieve the other persons wishes and aims, what a better world we could all live in.

If you have a lot more than anyone else, possibly more than you ever need (you can only wear one suit at a time) and your neighbour has far less, does it hurt you to help the less fortunate? Or would it win you friends and gratitude for your help to them?

This is subsidy on a state and individual level. The state collects taxes and uses them specifically for the benefit of all, not just selective help (subsidy) according to the influence of a few. Accountability for all.

Yes, on a personal level some "unconverted" will think the giver a fool, possibly detract from (con) them, but that does not make them clever or right. They will have to live with their actions as more people see them for the destructive attitude they adopt. Eventually for them to see that their personal gain, to the detriment of others, is a short term gain, only suited because of our life span. But you cannot take it with you.

Simply, to change the whole, you need to change the attitude of the cell. (person) Through education, motivation, and their realisation of their better life. This human structural change cannot take place while we all allow, condone, and actually connive, to maintain the corroding forces of greed, material gain, for the benefit of our self interest. We should not want to take from the other person. The rich need them to ask, "how can you help us to achieve what you have peacefully?" And help them to do it. Material standards (needs) are set by the individual, what profit a man to own the world and lose his soul?

The reward of helping others is an inner joy that can make friends and build a better world, and to help others achieve what they want will be reciprocated to you also. What goes around comes around, eventually. A win - win. To a better world for all.

jt.

A little paper bag was feeling unwell, so he took himself off to the doctors.

'Doctor, I don't feel too good,' said the little Paper bag.

'Hmm, you look OK to me,' said the Doctor, 'But I'll do a blood test and see what that shows. Come back and see me in a couple of days.'

The little paper bag felt no better when he got back for the results.

'What's wrong with me ?' asked the little paper bag.

'I'm afraid you are HIV positive!' said the doctor.

'No, I can't be - I'm just a little paper bag !' Said the little paper bag.

'Have you been having unprotected sex ?'asked the doctor.

'NO - I can't do things like that - I'm just a little paper bag !'

'Well have you been sharing needles with other intravenous drug users ?' asked the doctor.

'NO - I can't do things like that - I'm just a little paper bag !'

'Perhaps you've been abroad recently and required a jab or a blood transfusion ?' queried the doctor.

'NO, I don't have a passport - I'm just a little paper bag !'

'Well', said the doctor, 'Are you in a homosexual relationship ?'

'NO ! - I can't do things like that - I'm just a little paper bag !'

'Then there can be only one explanation.' said the doctor...

'Your mother must have been a carrier!'

go rent Dr. Zhivago, and learn the ugliness of the revolution.

I took another look at the question at the end of your OP, and I don't think it's answerable.

The number will be different for different people. But I also think the equation itself is flawed.

The problem with increasing the tax rate as income increases, is that most people will reach a point that they will stop trying to earn more, because the tax rate won't justify the extra work. What this would do, is to put an artificial, government installed cap on individual productivity.

I'm no economist, but it sure seems to me that encouraging people to shoot for the moon, make as much money as they can, and pay a constant 20-25% on all income, would bring in more revenue in the long term, than incrementally increasing the tax rate to the point that people stop trying to earn more.

I also think that jacking up the tax on capital gains is going to discourage investment, but that's another subject.

The problem with increasing the tax rate as income increases, is that most people will reach a point that they will stop trying to earn more, because the tax rate won't justify the extra work. What this would do, is to put an artificial, government installed cap on individual productivity.

I suspect not, because the value of the tax rate appears to be asymptotic to some value I don't know yet. With my old numbers and $100000 max, it seemed to be around 30%. I don't know yet what will happen with new numbers and evaluation at $1000000 or more.

Seems many have no meaningful knowledge of the US Federal Revenue collected from the various Adjusted Gross Income brakets. Fact is well more than 1/2 of the US Federal Revenue was collected from those in the >5% AGI group in 2009. The complete breakdown for 2009 (latest available) is as follows:

Its just my opinion, but the above seems quite fair to me. I might also add that the nation needs to ensure there remains a sufficient standoff from oppressive taxation of the investors of the nation in order to ensure the American Dream is kept alive and well. After all it's that dream that keeps our economic system going and makes this country greatest in the world. With that said we the people must watch our next step very, very carefully. Especially, now that we've stubbed our toe again.

That table only deals with income tax. Payroll taxes add up to almost the same total, in 2010, 42% of revenue came from income tax and 40% from payroll taxes. The payroll taxes, Social security, Medicare, unemployment insurance and federal government pension contributions etc, are much more evenly spread.

I don't have the time now, but it would be an interesting to see the percentage of income paid by each level.

It is a joke, a myth to say that America is subsidizing the poor. It happens in other countries too - but much more so in USA.

Take the example of a medicine costing say $1/- being sold in retail at US$10/- which a poor man cannot afford. So Government comes to his help and subsidizes to the extent of US$9/- so he can buy it for US$1/-. In reality where did US$ 9 /- come from and where did it go?

Take the case of a doctor charging US$50/- for his consultation as compared to in India about US$ 2/- for same equivalent care. Why did the doctor charge so much - because - if something goes wrong - the patient runs to a lawyer who sues the doctor US$1 million- so that when he wins the aces - he takes away say 0.8 million and the patient actually gets US$0.2 million. So the doctor insures himself and to pay premium - he charges US$48/- extra. Now US Government will subsidize the poor to pay US$ 48/- as subsidy so that the poor patient can get care worth US$ 50/-. Who has been really subsidized?

As an outsider - we watch American economy is dominated by Pharma companies charging exorbitant prices - in the name of patent protection, lawyers charging hefty sums and insurance companies making merry with premiums- as long as really do not have to payout. When the day arrives to settle big payout- insurance companies will find all excuses.- we all know what happened when that big storm hit USA a few years ago destroying large coastal city.

So kindly analyze and let me know who is being subsidized.

In India a few decades ago we had a highest income tax bracket of 96% and there were maximum defaulters and that is how black money got generated and many hid income earned, stashed it abroad. Now this bracket is down to just 30%. So taxing rich more in % terms is not a solution.

What puzzles me is the greed level of the rich. I have read that Warren Buffet is an example who stays in a modest house in spite of being a billionaire. After all Billionaires also eat limited food, sleep on same bind of bed with same kind of mattress like an ordinary middle class person. Why can't humanitarian feeling arise in them to say- stop- it is enough - at a level- and cut costs on products sold- rather than earn by exorbitant profiteering and that show off as philanthropists etc etc.

Make sure you are getting the entire story. Stories like this don't make front page news, because they don't fit the narrative that only government can help, and that rich people are greedy.

http://www.reuters.com/article/2012/06/19/us-usa-charity-idUSBRE85I05T20120619

I want to reevaluate the constants in this equation. The Federal poverty level for a family of 4 is $23000. But what is the income at which moral and physical income is the same--where does an actual dollar equal a dollar of worth?

I think I may have come up with the reason that this question is unanswerable............

I think the value of a dollar is directly proportional to the amount of time and effort put into earning it.

Three scenarios:

1) A Hollywood actor that is able to make $20 million in 6 months.

2) The owner of a company, that makes $8 million a year, and has to work 12 hours a day, 6 days a week to earn it.

3) A fast food worker that makes $9.50 an hour.

Each of those people hold the value of a dollar differently.

The movie star and the company owner are both rich, but the movie star is going to have less of a problem with a new tax penalty than the company owner.

The fast food worker associates a ten dollar bill with an hour of labor, therefore, the ten dollar bill has a lot more perceived value than it does for the other two, with the movie star placing the least value on it.

I never have agreed with a blanket tax increase on the rich. And without accounting for how those dollars were earned, it will never be fair. Particularly since the new definition of rich, is people that make over $200K a year.

I think this theory can be evidenced by what happens to many lottery winners.............

Their preset notion of the value of a dollar is destroyed, and rather than making their lives better, their new found wealth actually has the opposite effect, and makes them miserable in the long term.

I have discovered that it really does not matter whom is in power in USA, I will still have to pay for it. Nuff said!

The reality will be though that nothing will change even if the tax rate for the "richer" is increased.

They will (as they do now) obtain the professional services necessary to hide/divert/reclassify their incomes and avoid paying taxes, while the rest of us just get on with it.

The reality will be though that nothing will change even if the tax rate for the "richer" is increased.

I agree. but for different reasons, with the higher tax revenues being collected, increased spending will more than offset it.

From Politico, the value of the top ten "loopholes". Will they survive the re-hash?

Bernoulli (maybe not this one) also came up with the well-known behavior of producing vacuum (or at least a lower pressure) from a high velocity nozzle of gas (or liquid) flow. This sort of rhymes with Washington, D.C. where the amount of hot air issuing forth from Congress (and the White House) is proportional to how much our lives out in the real world suck.

Moving on from that statement, everyone wants the ice cream, but who will pay for the cow, feed the cow, clean up after the cow, etc. Free stuff should be limited (including a free ride from the government from cradle to grave) to those who are unfortunate enough to really need (not just want) free stuff. Our Congress cannot agree with the White House as to what the elephant (or 500 pound gorilla in the room) looks like, much less on how to deal with it. One thing is clear, without real cuts in spending, the taxation side of the argument is meaningless.

Galileo, in considering the acceleration due to gravity, speculated that the rate of acceleration was proportional to the velocity of the object. After a while, he realised that that cannot be true because the object starts at rest, has no velocity and therefore would not accelerate.

Supposing that an absolute value could be calculated, it would break down for someone who had not acquired his first dollar.

The value of money must be based on what one wants to do with it, some people have modest needs while others have more expansive plans. Additionally, we need to save for the future some place high value on this, others less so, but the actual value to the individual must vary with an undefined future, we might kick the bucket before retirement or live to be a hundred.

An interesting distraction.

$1 is a dollar's worth, especially if all you want is a $1 meal at McDonald's. If, however, you want to build a new automobile protype, or maybe even a whole new production plant, then $1,000,000 only is enough to buy off the congressman who would block the construction.

Relativity matters. At the rate this country is spending now, we will be the irresistable force that meets the immovable object. In other words, I do not see a financial cliff so much, as a financial implosion looming on the horizon and growing larger (nearer) by the minute.

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Good analogy! I have seen this before but just wanted to add that this has literally been proven to be true. In the UK last year they raised the top tax bracket by 10% and voila! they now are receiving less revenue than before. The previous year 16000 people paid taxes at the top rate and last year only 6000 now paid at the top rate. 10,000 of Britains top earners either moved or slowed down significantly. And it is happening in France as well.

'... 10,000 of Britains top earners either moved or slowed down significantly.....'

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Be careful with the assumption based on this. Correlation does not imply causation. This may have occurred as a result of things that have nothing to do with Great Britain's changes to tax policy.

By the same tokes, the existence of alternative possible causes doesn't mean the changes to tax policy weren't the main cause either. I'm only suggesting it is important to not overstate the implication of something like this

If not it is an amazing coincidence.

Not necessarily.

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The observation is not the equivalent of a carefully designed experiment wherein other variables are held constant or accurately accounted.

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I'm not privy to sufficient information off hand to make the call, but perhaps you are. For any reasonable assessment to be made, at least the following would need to be known:

- In addition to increasing the tax on highest bracket, were other changes to the bracket made? Specifically did the criteria for qualifying for the top bracket change?

-What are the other changes to the tax code that could affect the tax bracket in which an individual falls?

-Have there been changes in rules regulating compensation at industries with high representation in the group of highest earners?

-Has the economic downturn had a significant impact on the number of highly paid individuals, or on the amounts they are paid?

-Have other forms of tax advantaged alternative payment been implemented recently, such as increased deferred payment, non-fully vested restricted stock, or long term stock options?

-Did a deadline pass in the last couple years that would create and advantage to realizing income for tax purposes last year or the year before...thereby leading to an unusually high number as compared to the most current year?

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The list could go on and on.

The point is, just because some first thing comes right before some second thing in time, it doesn't mean the first thing caused the second thing...

....even when the first and second thing seem related

....especially when there are numerous factors some of which may lie beyond our current notice or comprehension.

In this case I will invoke Occom's razor. The simplest explanation is usually the right one.

That is not the meaning of Occam's razor, though it is a common misunderstanding.

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Occam's razor does not suggest that 'the simplest explanation is usually the right one'.

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Occam's razor urges first evaluating the most simple theories or the theories that require the least assumptions.

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I'm not sure your explanation requires less assumptions than ones I have suggested. Even if it does, Occam's razor will lend no support to its veracity.

You report only on the taxation. What about the income?

#10 must be the executive CEO. Without him the company wouldn't exist right? His job is to govern the direction the company goes and ensure it's profitability.

#'s 7 through 10 are the investors who backed the investment that started the company. Many of the 7 through 9's don't actually work for the company and only provide capital for improvements.

#1 through 6 are the laborers and managers who actually put effort into generating the product that earns everyone the profit.

Now...why don't the first 4 get paid enough to buy their own beer? Because too much of the profits go to #6 up!

My point is if you paid the workers what they needed to afford to live in the economy that produces AND uses the product there will be no need to raise taxes on any one group, a flat tax would be sufficient. A sales tax would be sufficient because the masses of people who fall in the 1 through 6 would be spending their surplus earnings and supporting the Govt. The rest from 7 up would continue to invest capital and create new companies with their slightly lower earnings, but would get along just fine.

You wonder why we are in the economic slump right now? We have lowered wages to such an extent that not enough people can afford to buy what they need much less what they want! We have exported slavery to third world countries where workers get paid pennies for products that earn corporate investors millions! We cannot export our goods to the countries that make them because the population cannot afford them...and neither can the working class in our countries.

It is the #10's that saw opportunity to give jobs to the poor third world workers (and save a bundle in manufacturing costs) by exporting the jobs. They did lower prices so many of their working class countrymen could afford luxuries they had never before had. But now that saturation is occurring and income has not even kept close to inflation for 90% of income earners we are in this economic slump so bad that the President of America borrowed billions of dollars to give (UNEARNED) to his masses of underpaid working class people.

If the greedy corporate elite had been willing to keep wages up and actually manufacture goods locally (providing jobs) then we wouldn't be where we are today...waiting for the next economic collapse.

Drew K