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  1. #31
    Per Ardua Metamorphosis's Avatar
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    1. I'm lost on what "fairness" has to do with taxes.

    2. I like how people in America act like the rich owe them something because they have more. Well, you don't see the middle class and lower class in America contributing to the rest of the world all of their excesses just because they have more.
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  2. #32
    ^He pronks, too! Magic Poriferan's Avatar
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    Quote Originally Posted by Metamorphosis View Post
    1. I'm lost on what "fairness" has to do with taxes.
    So am I.

    Quote Originally Posted by Metamorphosis View Post
    2. I like how people in America act like the rich owe them something because they have more. Well, you don't see the middle class and lower class in America contributing to the rest of the world all of their excesses just because they have more.
    Maybe that's what some American's think. I don't think poorer people are owed money, nor do I think someone having more money means they should automatically give it away. I do think that wealth (particularly income) over a certain threshold is just a waste that's bad for the economy, and people with income below certain level are weak links that are also bad for the economy, and every dollar piled beyond the upper threshold and absent below the lower threshold is an inefficiency. I'm concerned with our society as a system, and how to make it operational and optimal for producing prosperity.

    It's on that note that I say there's no point in brining up giving money to people in Sub-Saharan Africa. Realistically, how effective would it be to just have people in this country chuck money haphazardly into zones of chaos? Of course, even if did, the people who'd have the most responsibility to do that would be the rich because they have most of the wealth and the greatest room to give up wealth without suffering for it. So they have the most to pay to people in Sub-Saharan Africa. It would make no sense to leave it just to the poor and middle class. Somehow I suspect few rich people that made this suggestion would be willing to step up to the plate if it were taken seriously.
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  3. #33
    Analytical Dreamer Coriolis's Avatar
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    Quote Originally Posted by gasoline View Post
    or do they pay less? just want to establish this point is true or false on this forum because the opinion seems mixed.
    That depends on what one's measure of fairness is. If it is Marx's "from each according to his ability; to each according to his need", then no. If it is some fixed percentage, like the traditional church tithing, then also no. I'm sure measures could readily be devised by which the answer is "yes", however.

    People have asked whether fairness is even important in taxation. It is important, but effectiveness is even more important. By that I mean the government requires a certain amount of money to operate, and to provide those functions needed and expected by the governed. The tax burden should be distributed in such a manner as to raise as close to the required amount as possible with the least impact on the lives of taxpayers. (We can ask whether the amount the government claims to need is too high, but that is a different, albeit related, debate.)

    Quote Originally Posted by Lateralus View Post
    Then your Economics 101 professor was wrong. Humans are not rational calculators, they make irrational, emotional decisions quite often. As for people responding to incentives, that is true only for a narrow scope of activities (simple/repetitive...like working at a cell phone kiosk). When it comes to complex and/or creative activities, incentives fail.
    And both industry and politicians have made a science of taking advantage of these tendencies.
    Last edited by Coriolis; 01-21-2013 at 12:24 AM. Reason: Fixed important incorrect word.
    I've been called a criminal, a terrorist, and a threat to the known universe. But everything you were told is a lie. The truth is, they've taken our freedom, our home, and our future. The time has come for all humanity to take a stand...

  4. #34
    Administrator highlander's Avatar
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    Quote Originally Posted by gasoline View Post
    or do they pay less? just want to establish this point is true or false on this forum because the opinion seems mixed.
    In the US, for the most part, if you cut through all of the noise and political BS, it comes down to how much income is taxed as ordinary income (e.g., salary and tips) vs. capital gains (investment income). Capital gains are taxed at a lower rate to spur investment. If you buy into that, then yes they pay their fair share. You can lose money on investments as well as gain money, which is why they get write-offs to reduce their taxes. Because of this, it ends up that wealthier people are paying an overall lower percentage of taxes as compared to their overall income. I see nothing wrong with that because I do agree that taxing capital gains at a lower rate is a good idea. It's a debatable position though.

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  5. #35
    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by Magic Poriferan View Post
    So am I.



    Maybe that's what some American's think. I don't think poorer people are owed money, nor do I think someone having more money means they should automatically give it away. I do think that wealth (particularly income) over a certain threshold is just a waste that's bad for the economy, and people with income below certain level are weak links that are also bad for the economy, and every dollar piled beyond the upper threshold and absent below the lower threshold is an inefficiency. I'm concerned with our society as a system, and how to make it operational and optimal for producing prosperity.

    It's on that note that I say there's no point in brining up giving money to people in Sub-Saharan Africa. Realistically, how effective would it be to just have people in this country chuck money haphazardly into zones of chaos? Of course, even if did, the people who'd have the most responsibility to do that would be the rich because they have most of the wealth and the greatest room to give up wealth without suffering for it. So they have the most to pay to people in Sub-Saharan Africa. It would make no sense to leave it just to the poor and middle class. Somehow I suspect few rich people that made this suggestion would be willing to step up to the plate if it were taken seriously.
    This is a very good point about the amount of money circulating within the economy and also about the (I think stupid) suggestion that altruistic giving (nationally or globally) would have any effect what so ever upon the problem.

    As many as there are people moving fictious amounts of money around computer screens and calling it "wealth" there is "dead money" which does nothing other than sit in off shore accounts or sits dormant and achieves nothing.

    I've read some hilarious, fictious but intriguing alt. economics which would appear to correct that particular problem, in the Warhammer universe the goblin basic unit of currency is teeth, which disappear due to decay, I read another science fiction novel in which all currency had "use by" dates after which it became null and void.

    Though that said the whole criticism or direction of approaching this topic that you're talking about MP isnt one that I'd wager many people are acquainted with or interested in, from this thread and most discussions of this kind I've ever read everyone has bought hook, line and sinker most of the neo-liberal/normative schools of thought in economics, people either like or dislike it but they dont disagree with its essential framing of the discussion in the first place.

  6. #36
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by Lark View Post
    I've read some hilarious, fictious but intriguing alt. economics which would appear to correct that particular problem, in the Warhammer universe the goblin basic unit of currency is teeth, which disappear due to decay, I read another science fiction novel in which all currency had "use by" dates after which it became null and void.
    I remember the "use by" dates and someone (on some forum... which I had saved it) actually talked about how it would work. It was a really fascinating look at tiered inflation. Basically all money is a bond (FV: 0 at a fixed date), causing each year's issuance to slowly decay in value. You could trade old currency for new currency, but of course you'd "lose" money. The reality is that it wouldn't work because money is suppose to represent physical capital - ultimately all it does is remove the incentive for savings and increase the drive towards real capital.

    In a similar way, giving money from savings (ie: altruistic giving) isn't inherently neutral - you are putting it into circulation, possibly into a high multiplier situation (ie: giving people enough to buy a car) and possibly with very high value (ie: allowing them to get to work). It's roughly the same concept of investing it in a factory; one from the bottom-up, the other top-down.

    ---

    (Nothing to add to the thread; fairness is subjective.)

  7. #37
    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by ptgatsby View Post
    I remember the "use by" dates and someone (on some forum... which I had saved it) actually talked about how it would work. It was a really fascinating look at tiered inflation. Basically all money is a bond (FV: 0 at a fixed date), causing each year's issuance to slowly decay in value. You could trade old currency for new currency, but of course you'd "lose" money. The reality is that it wouldn't work because money is suppose to represent physical capital - ultimately all it does is remove the incentive for savings and increase the drive towards real capital.

    In a similar way, giving money from savings (ie: altruistic giving) isn't inherently neutral - you are putting it into circulation, possibly into a high multiplier situation (ie: giving people enough to buy a car) and possibly with very high value (ie: allowing them to get to work). It's roughly the same concept of investing it in a factory; one from the bottom-up, the other top-down.

    ---

    (Nothing to add to the thread; fairness is subjective.)
    Well the idea in the book which I mentioned was that money would only have "exchange value" or "use value" as opposed to "intrinsic value" or as something to possess and own in itself, the sci fi story was a sort of socialists in space story, different colonies had adopted different ideas and the one in question had adopted different ideas by Proudhon, who was big into a lot of different micro finance, credit union, local economic token systems that kind of thing.

  8. #38
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    Quote Originally Posted by highlander View Post
    In the US, for the most part, if you cut through all of the noise and political BS, it comes down to how much income is taxed as ordinary income (e.g., salary and tips) vs. capital gains (investment income). Capital gains are taxed at a lower rate to spur investment. If you buy into that, then yes they pay their fair share. You can lose money on investments as well as gain money, which is why they get write-offs to reduce their taxes. Because of this, it ends up that wealthier people are paying an overall lower percentage of taxes as compared to their overall income. I see nothing wrong with that because I do agree that taxing capital gains at a lower rate is a good idea. It's a debatable position though.
    You forgot to mention that the money being paid for capital gains income is already being double-taxed (first at the corporate income tax level, and next at the individual capital gains rate [which, when short-term, is the same as the income tax rate, so it's actually being taxed much higher than normal income {and is being taxed higher than normal income anyway, whether short-term or long-term}]).

    The rate also increased from 15% to 20% in the most recent deal.

  9. #39
    Administrator highlander's Avatar
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    Quote Originally Posted by Zarathustra View Post
    You forgot to mention that the money being paid for capital gains income is already being double-taxed (first at the corporate income tax level, and next at the individual capital gains rate [which, when short-term, is the same as the income tax rate, so it's actually being taxed much higher than normal income {and is being taxed higher than normal income anyway, whether short-term or long-term}]).

    The rate also increased from 15% to 20% in the most recent deal.
    Yes those are good points. Absolutely correct.

    What tends to happen with middle class these days in the US is that they put the vast majority of their savings in tax deferred investments - like 401Ks, IRAs, which when they are distributed are taxed at ordinary income levels. So a lot of people don't have that much in the way of investments that are getting taxed as capital gains. It ends up further distorting the % paid in taxes by middle class vs. those on the higher end of the spectrum. You do get a significant advantage of the tax deferral though.

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  10. #40
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    Quote Originally Posted by highlander View Post
    What tends to happen with middle class these days in the US is that they put the vast majority of their savings in tax deferred investments - like 401Ks, IRAs...
    There, and in their houses.

    Quote Originally Posted by highlander View Post
    ...which when they are distributed are taxed at ordinary income levels.
    Depends on how much you choose to have taken out, tho, right?

    You get some from social security, and then some from your 401k/IRA.

    You cross that 20% capital gains level pretty quickly, tho, don't you?

    Quote Originally Posted by highlander View Post
    So a lot of people don't have that much in the way of investments that are getting taxed as capital gains. It ends up further distorting the % paid in taxes by middle class vs. those on the higher end of the spectrum.
    Interesting point.

    I hadn't thought of this before.

    Many of the affluent still put their money into 401ks and IRAs as well.

    But they also probably have investment accounts in addition to these that have the more advantageous tax treatment.

    Oh, but those accounts are being taxed every year, which will lower the post-tax rate of return of the portfolio.

    Hmm... I wonder which ends up being the better post-tax investment, assuming equal rate of return...



    Quote Originally Posted by highlander View Post
    You do get a significant advantage of the tax deferral though.
    If the tax rate at the end is the same as the tax rate at the beginning, the deferral doesn't do anything tho.

    It's the exact same as putting it into a Roth.

    I see the two different options mostly as a tax-risk mitigation strategy.

    Considering where taxes are likely to be heading, tho, Roth would seem to be the better option.

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