First off, this analogy is spending all of its time talking about how much of the budget is provided by the wealthy, not looking at how much of anyone's INCOME is being taken away. For all we know, $59 represents 1% of the tenth man's income, while $1 represents 5% of the fifth man's income. For all we know, he's already getting an obscenely sweet deal, and the anger/frustration of the other nine is understandable (if not excusable).
This analogy also leaves out the part where the 10th man pays an accountant/lawyer to set up his payment arrangement/corporate structure in such a fashion that he only pays $10 for his beer in the first place.
(I used random numbers, just like the original analogy - the current top marginal tax rate is only 35% of one's income after , and according to http://www.allegromedia.com/sugi/taxes/#Head-3.htm the top 10% of wage earners were only responsible for 48% of the budget in 1995, as opposed to the 59% presented here)
Also, commonly bandied numbers state that the top 20% of the income earners possess 80% of the wealth. If that is true, it would be reasonable to expect them to foot 80% of the bill, yeah? This example has them footing almost that much (77%), so I think it's pretty fair to assume that in the given analogy the tenth man possesses roughly 60% of the wealth, at which point I am baffled as to why he would expect to pay less than that (aside from aforementioned accounting and legal resources). Obviously, if they're paying their $59 to start with, getting beat up by the other nine is totally unreasonable. But the accountant/lawyer thing makes it less likely than one might hope.
This all is why I have for ever and ever wished for a flat tax - that way no one can cry "Foul!", and any even marginally competent individual can do the math.
35% is the federal tax, at least here in CA, we have 9% state tax then for the First $100k you have 13% SSI(6.5% employee contribution, 6.5% employer contribution).
And that 35% changes when you fall under the Alternative min. tax, where your ability to take deductions.
Like I've said elsewhere that this analogy is brought up, it's not a very good analogy, but it is based on how our system works nominally. But like Obama did vote to raise taxes on households over $47k in income by virtue or voting against the extension of the AMT exemption. It's all true from one point of view and all absolute bull from another.
Entirely. It's a matter of seeing it one way when talking percentages, and another when talking absolute dollar amounts. No matter what, SOMEONE's gonna be pissed off...
Stacy, I enjoy debating with you, I just saw one thing that I didn't catch earlier.
Also, commonly bandied numbers state that the top 20% of the income earners possess 80% of the wealth. If that is true, it would be reasonable to expect them to foot 80% of the bill, yeah?
So by this logic, because you have $100k in equity in your house, you should subsidize out of your pocket all the people that you know that rent? You have the wealth after all.
Having Wealth, should not be penalized. it goes back to the ant and grasshopper Aesop Fable. Those that save should not pay for the privilege.
Taxing regular income earnings I'm okay with, I'm a lot less okay with taxing dividend and interest income. I truly have a problem with estate taxes, So after you have saved all your life, your kid gets to give roughly 1/3 to 1/2 of your estate to the government. That's messed up. But in our society of Mother Government and Equality by hammer ax and saw, that's how it is.
The quote was written with the intended connotation of "earned wealth for that year", be that earned via business profit, interest, dividends, whatever - as long as more cash wound up in the account (stock and equity not being cash), a fair proportion of it should be coming back out in taxes.
Death taxes are a problem. I fully agree that estates should be passed on without taxation. It's ridiculous.
Income, in the form of capital gains or interest, I am perfectly fine with taxing. My investments earn some every year (both interest and dividend forms), much of which is automatically reinvested, but I would expect to have to turn a fair share of it over in taxes. The whole concept of Roth IRAs and other tax-protected investments still makes my brain hurt, despite the engineering math geek in me using them as much as possible to help secure my own retirement.
Equity, obviously, is not income until the property is divested/sold, so equity should never be taxed. But rollover exemptions, etc., I have a problem with because they're often so hard to track/prove.
I am split on how we do property taxes here in CA - while I don't necessarily think property taxes should stay at date-of-purchase levels while the civil services rendered to that site suffer from inflation, I also don't believe we should necessarily be taxing based on "market value" every year - what a serious pain in the ass, and infeasible as far as being able to assess/calculate it all the time. Perhaps basing it on a sq ft calc so that those who own 1% of the land in the county are paying for 1% of the services typically covered by property taxes? Then the tricky part is not just inflating that calc every year in a ridiculous or unpredictable fashion... Property taxes are a complicated problem.
What is objectionable is having some people pay $0.50/$1 if other people are paying $0.30/$1 on account of exemptions, deductions, loopholes, regressive structures, and creative accounting. I'm a homeowner and parent. I still object in principle to the fact that my taxes get slashed because of those things. I take those deductions every year because I'm not STUPID, and if there's an advantage you might as well take it, but I would still rather see EVERYONE pay the same rates on income dollars across the board - no deductions or credits. I'm very all about fiscal responsibility on a micro level, and allowing those who are smart enough to earn more to keep more. If the higher classes are earning $80 every time I earn $20 (well, the hubby earns it anyway) then I would expect they pay $8 into the system every time we put in $2. But I also expect that those making $1 to my $20 will pay in their $0.10 every time we put in our $2.
I also am in favor of direct-project taxes, like taxing gasoline to pay for related environmental cleanup programs, or cigarettes/alcohol for affiliated health/safety programs. I actually had a post back in 2003 that engendered some good discussion on the whole taxation topic if you're interested in more details about what I think on taxes. http://stacymckenna.livejournal.com/13776.html
I think a lot of the anger and resentment on BOTH ends of the spectrum on taxes is caused by the lack of transparency in our system. Everyone thinks everyone else is paying an unfair amount in comparison with them. If the math were simple enough for a child to perform, it would be MUCH harder for people to point fingers about unfair burdens.
This analogy also leaves out the part where the 10th man pays an accountant/lawyer to set up his payment arrangement/corporate structure in such a fashion that he only pays $10 for his beer in the first place.
(I used random numbers, just like the original analogy - the current top marginal tax rate is only 35% of one's income after , and according to http://www.allegromedia.com/sugi/taxes/#Head-3.htm the top 10% of wage earners were only responsible for 48% of the budget in 1995, as opposed to the 59% presented here)
Also, commonly bandied numbers state that the top 20% of the income earners possess 80% of the wealth. If that is true, it would be reasonable to expect them to foot 80% of the bill, yeah? This example has them footing almost that much (77%), so I think it's pretty fair to assume that in the given analogy the tenth man possesses roughly 60% of the wealth, at which point I am baffled as to why he would expect to pay less than that (aside from aforementioned accounting and legal resources). Obviously, if they're paying their $59 to start with, getting beat up by the other nine is totally unreasonable. But the accountant/lawyer thing makes it less likely than one might hope.
This all is why I have for ever and ever wished for a flat tax - that way no one can cry "Foul!", and any even marginally competent individual can do the math.
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And that 35% changes when you fall under the Alternative min. tax, where your ability to take deductions.
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Also, commonly bandied numbers state that the top 20% of the income earners possess 80% of the wealth. If that is true, it would be reasonable to expect them to foot 80% of the bill, yeah?
So by this logic, because you have $100k in equity in your house, you should subsidize out of your pocket all the people that you know that rent? You have the wealth after all.
Having Wealth, should not be penalized. it goes back to the ant and grasshopper Aesop Fable. Those that save should not pay for the privilege.
Taxing regular income earnings I'm okay with, I'm a lot less okay with taxing dividend and interest income. I truly have a problem with estate taxes, So after you have saved all your life, your kid gets to give roughly 1/3 to 1/2 of your estate to the government. That's messed up.
But in our society of Mother Government and Equality by hammer ax and saw, that's how it is.
Reply
Death taxes are a problem. I fully agree that estates should be passed on without taxation. It's ridiculous.
Income, in the form of capital gains or interest, I am perfectly fine with taxing. My investments earn some every year (both interest and dividend forms), much of which is automatically reinvested, but I would expect to have to turn a fair share of it over in taxes. The whole concept of Roth IRAs and other tax-protected investments still makes my brain hurt, despite the engineering math geek in me using them as much as possible to help secure my own retirement.
Equity, obviously, is not income until the property is divested/sold, so equity should never be taxed. But rollover exemptions, etc., I have a problem with because they're often so hard to track/prove.
I am split on how we do property taxes here in CA - while I don't necessarily think property taxes should stay at date-of-purchase levels while the civil services rendered to that site suffer from inflation, I also don't believe we should necessarily be taxing based on "market value" every year - what a serious pain in the ass, and infeasible as far as being able to assess/calculate it all the time. Perhaps basing it on a sq ft calc so that those who own 1% of the land in the county are paying for 1% of the services typically covered by property taxes? Then the tricky part is not just inflating that calc every year in a ridiculous or unpredictable fashion... Property taxes are a complicated problem.
What is objectionable is having some people pay $0.50/$1 if other people are paying $0.30/$1 on account of exemptions, deductions, loopholes, regressive structures, and creative accounting. I'm a homeowner and parent. I still object in principle to the fact that my taxes get slashed because of those things. I take those deductions every year because I'm not STUPID, and if there's an advantage you might as well take it, but I would still rather see EVERYONE pay the same rates on income dollars across the board - no deductions or credits. I'm very all about fiscal responsibility on a micro level, and allowing those who are smart enough to earn more to keep more. If the higher classes are earning $80 every time I earn $20 (well, the hubby earns it anyway) then I would expect they pay $8 into the system every time we put in $2. But I also expect that those making $1 to my $20 will pay in their $0.10 every time we put in our $2.
I also am in favor of direct-project taxes, like taxing gasoline to pay for related environmental cleanup programs, or cigarettes/alcohol for affiliated health/safety programs. I actually had a post back in 2003 that engendered some good discussion on the whole taxation topic if you're interested in more details about what I think on taxes. http://stacymckenna.livejournal.com/13776.html
I think a lot of the anger and resentment on BOTH ends of the spectrum on taxes is caused by the lack of transparency in our system. Everyone thinks everyone else is paying an unfair amount in comparison with them. If the math were simple enough for a child to perform, it would be MUCH harder for people to point fingers about unfair burdens.
Reply
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