And what does that number mean when put into context?Quote:
Originally Posted by Lewkowski
Printable View
And what does that number mean when put into context?Quote:
Originally Posted by Lewkowski
350 B of charity compared to a total 4 T ain't peanuts.
Well for starters those 350B given to charity mean that you lose a certain amount in tax revenue.
Now, you might think, "Sweet! The less money our government can mismanage, the better!"
But what's to say the charities are using it more effectively?
You're right, 350B is a lot of money, but obv you need to look not only at the sum but also at where it's going. Over a third of that 350B goes to religious organisations. Granted many of them do a lot of good work, but, even if you were to believe that they are extremely effective and only do necessary and effective charity work, that money may be inappropriately distributed because there is a very large number, they often work at the local level only and they don't all get their money from one large pool. Rather, people donate to the ones they know and care about.
With this approach, you also run risks similar to when you subsidise good things, like paying a lot of money overall but too little to actually make a difference in any particular case. So, instead of having a small number of successes you buy a large number of failures and near-misses. You may also end up buying goods and services that aren't really necessary at a given time and place. Of course, this isn't a big problem if the major reason for giving to charity is to feel good about giving to charity while also reducing your tax liability a little.
I have no doubt the govt. wastes a lot of the money it could otherwise use for important things like social services, helthcare, education etc. but it's wrong to assume that a large number of small unprofessional uncoordinated poorly supervised and heterogenously distributed organisations will do very much better. They each have their problems, even when you disregard things like theft or other forms of fraud.
Lewk mentioned that this 350B number is notable also because he believes people don't donate because they think they pay enough through their taxes. The number however comes from a source that estimates that around 95% of American households give to charity in some fashion. I believe that number may be a bit of an overestimation, but it does challenge the popular conservative notion about taxes making people less generous.
Anyway, maybe you should consider a change of tactics and just try to fund your police forces, schools, healthcare system, etc properly instead of relying on lottery-sales, asset forfeiture, speeding ticket and arrest quotas and uninformed do-gooders.
That logic only holds true if you view the decision to donate money to charity as a binary one. What you seem to be ignoring is that people who have more disposable income might be willing to donate a larger percentage of that income to charity.Quote:
Originally Posted by Aimless
Also keep in mind that Lewk was talking about the poor, and a significant portion of charities are not about that (or have their activities not even in the USA). Charity can be anything from food banks to promoting beliefs*, medical research funds, or animal/environmental organizations. While (generally) laudable, I think it's a bad idea to depend on such organizations or use it as an excuse to abolish forms of social security. Not just out of principle, but charities depend on donations, which depends on popularity, economy, etc. In economic downturns, when there are more poor people who would need assistance, you probably also have fewer donations since people simply have less to spend. Plus the division of money is based on popularity rather than actual needs, and Lewk can see what is problematic about that when he just looks at his own thread about people getting worked up about a single lion. At least government assistence is (supposed to be) consistent and less affected by hypes and PR value of the group they are helping.
* And correct me if I'm wrong, but I think those charities would include the ones pushing for anti-gay legislation in Uganda, and even Westboro church (I think the latter don't get many if any donations, but they are tax exempt which makes them a charity I think?)
Many of those arguments apply to government spending. In economic downturns, almost by definition a government supported by taxation is receiving less revenue. Government spending - at least in the US - is determined by our Congress, the members of which are popularly elected. As you can imagine, the elected leaders who control the purse strings aren't exactly immune from populist pressure. It's the very reason there are periodic outcries about welfare queens, and demand for entitlement reform.Quote:
Originally Posted by Flixy
And The Great Recession showed just how lopsided. Most of the income recovery and wealth growth went to people with 'investment portfolios' (including 401Ks and public pensions) due to monetary policy. But millions more got burned when their home mortgages went into foreclosure (including prime loans) due to fiscal policy.Quote:
Originally Posted by LittleFuzzy
The 'middle class' has been shrinking for decades. It's hardly a surprise --- since wages/salaries have stagnated at 1960's levels of purchasing power, while COL for housing/education/healthcare/infrastructure have risen.Quote:
Originally Posted by Lewkowski
Even if the military is the ONLY legitimate federal agency you'd want to fund...that would still mean "the rich" should pay more in taxes. It's not like their kids are desperate enough to enlist, in order to pay for college, or can't get a cushy position state-side. :bored:
Those are the same reasons Congress has such a horrible reputation. :bored: They're not really elected by "populist pressure" so much as they're installed by lobbyists or Super Pacs with tons of money, who control the political process. Or maybe it's a wealthy news network picking the GOP debate field by "popular polls". :rolleyes:Quote:
Originally Posted by Enoch the Red
I just can't agree with that line of thinking. Remember also that low taxes or outright payments are a form of subsidy for employers. If they didn't exist, employers (at least in local markets) would not offer such marginal jobs, since it would be financially untenable. (And perhaps they shouldn't, and it is detrimental for society to have them.) Further, consider also how much efficiency you gain by significantly cutting back the IRS and the entire tax consulting industry.Quote:
Originally Posted by Loki
By the way, Huckabee said he was for a flat tax during the debate. Might have to vote for him.
There seems to be a trend of thinking one can disagree with facts. It's a fact that a consumptiom tax and a flat tax benefits the rich at the expense of the middle class. It's basic math.
I really suggest you research the Fair Tax. A monthly pre-bate on the national sales tax to cover basic needs alleviates that concern.
No, it doesn't. That helps the poor, not the middle class.Quote:
Originally Posted by Veldan Rath
Let's say we have three households: A making $20k, B making $70k, and C making $1 million. Let's assume the flat tax is 10% (the number doesn't really matter). Furthermore, let's assume assume that every one gets $15k free of taxes (again, the number itself doesn't really matter).
Family A ends up paying taxes on $5k. That means it pays $500 in taxes, which comes out to 2.5% of taxes.
Family B ends up paying taxes on $55k. That means paying $5.5k, or about 8% of income.
Family C ends up paying taxes on $985k. That means paying $98.5, or roughly 10% of income.
The poor do pretty well under this system. The rich and the middle class pay virtually the same taxes. Now let's compare that to our current regressive system.
Family A gets various exemptions and deductions, which means it effectively pays no income tax at all.
Family B ends up paying about 15% on most of its income, which works out to $7k or so (or 10% of income).
Family C ends up paying most of its taxes at the highest income ladder, which means about 35% of income (granted, it will get it down through various deductions).
So under the current system, the tax rates paid are 0%, 10%, and 35%. Under a flat tax, those numbers would start with 2.5%, 8%, and 10%. I think anyone with some math skills would notice the problem here. The rich are now paying 10% instead of 35%. The math doesn't add up. Someone has to pay to make up for the shortfall. So what happens? The flat tax doubles for everyone. To come anywhere close to breaking even, the poor will have to pay perhaps 5%, the middle class will have to pay close to 20%, and the rich will pay a bit over 20%. And this is just the federal income tax.
A consumption tax leads to an even worse outcome for the middle class. Let's assume we have those same families and the same 10% tax, with the same exemption for the poor. The only assumption I'm adding is that the less you make, the larger portion of your income you spend.
Family A still pays taxes on $5k, because it will spend that entire $5k. That means it pays $500 in taxes, or 2.5%.
Family B might spend 80% of its income and save the rest. That means it's paying $4k in taxes, or roughly 8%.
Family C might spend 30% of its income and save the rest. That means it's paying $30k in taxes, or roughly 3%.
Same problem here as before. We're now collecting far too little in tax revenue. Except in this case, doubling the tax rate hits the middle class even more.
Family A now pays $1k in taxes (20% of $5k), which is 5% of income.
Family B now pays $8k, which is 12% of income.
Family C now pays $60k, which is 6%.
That's clearly not enough to cover the current spending levels. So we have to double that again (40% consumption tax).
Now Family A pays $2k, which is 10% of income. Family B pays $16k, which is 23% of income. Family C pays $120k, or 12% of income. Chances are, this still won't be enough. Do you see where I'm going? The middle class consistently comes out at the bottom here. There's no mechanism inherent to this tax to change that.
loki specifically mentioned the middle class, not the poorest households.
http://www.forbes.com/sites/beltway/...h-the-fairtax/
Thanks for the link.
http://blogs-images.forbes.com/beltw...2758737233.png
Looks like my random spending estimates were pretty reliable.
Total misrepresentation of the Fair Tax. Ballyhoo.
Which part? The fair tax is basically the consumption tax in my post.
Your math is probably correct if you consider that "rich" people spend less money as a percentage of their earnings. However, it doesn't matter. What matters is what is spent, not what is earned, you see! :mad::up:Quote:
Originally Posted by Loki
Edit: so, looking at your math post above, you do demonstrate that according to your accounting, to keep the same level of spending with the current tax system means that the rich will get an effectively lower tax rate and that will make everyone else poorer. But then remember that taxes are an impediment to supply meeting demand. There is a deadweight loss. So, consider that the deadweight loss is now fully erased from the earnings on wages picture. You will have, then (probably), more employment, and although you'll have a bigger deadweight loss on the sales side of the equation.
You can also still tax things other than tangible or intangible goods. Tax services -- just do it at the point of sale. Tax things that rich people spend more of to make up any shortfall. Yachts... real estate...
Let me throw another one in for you: since the rich make most of their money on "investment", just tax that more, or increase corporate tax rates. Don't we agree that we need to have better incentives for work? What better way than to reduce the tax rate for it to 0?
You know that the Laffer curve was discredited, right?
Source? The Laffer curve makes perfect sense. at 100% tax rate you get near 0 revenue. At 0% tax rate you get 0 revenue. At 1% tax rate you get some revenue and it climbs until it reaches a median and then it descends once work outside of the underground economy is sufficiently disincentive by punitive tax rates.Quote:
Originally Posted by Loki
http://business.time.com/2012/08/09/...all-is-a-foul/Quote:
Originally Posted by Lewkowski
No, it doesn't make sense. It makes sense that lower taxes lead to higher national income. It doesn't make sense that the additional income will rise so much as to offset the decrease in revenue. It has never worked that way. Where it might work is where taxes were previously prohibitive.
Your source talks more about deficit spending and stimulus then it does about optimal tax rate.
Use some logic. Let's say I'm paying a 1% tax. Do you think that if I no longer need to pay that 1% tax, I will somehow increase my production by more than 1%? The Laffer Curve works only when the previous tax rate was so prohibitive that people weren't willing to produce much at that rate. Or perhaps they were delaying production waiting for the tax rate to go down. It doesn't work when existing tax rates allow reasonable levels of investment.
I don't think you understand the Laffer Curve. If you no longer pay the 1% tax, revenues go down because it is on the left side of the slope. It is only if the tax rate is higher than the optimal tax rate that tax revenue would go up if tax rates are reduced.Quote:
Originally Posted by Loki
No, he does. He said the same thing you just did. But Loki knows what you don't, that the tipping point between left and right sides falls at a much higher level of taxation, a prohibitive level of taxation, than you think it does.
The example used was 1%.Quote:
Originally Posted by LittleFuzzy
Yes, so? It doesn't matter if the example was 1% or 35%, it goes the same either way, because that "optimal" tax rate you refer to is much higher than you think it is, much higher than taxation is now for anyone in the US.Quote:
Originally Posted by Lewkowski
I'm just glad to see someone else call our current tax schemes regressive!Quote:
Originally Posted by Loki
Indeed, there are still shortfalls, and the math doesn't add up.Quote:
Family A gets various exemptions and deductions, which means it effectively pays no income tax at all.
Family B ends up paying about 15% on most of its income, which works out to $7k or so (or 10% of income).
Family C ends up paying most of its taxes at the highest income ladder, which means about 35% of income (granted, it will get it down through various deductions).
So under the current system, the tax rates paid are 0%, 10%, and 35%. Under a flat tax, those numbers would start with 2.5%, 8%, and 10%. I think anyone with some math skills would notice the problem here. The rich are now paying 10% instead of 35%. The math doesn't add up. Someone has to pay to make up for the shortfall. So what happens? The flat tax doubles for everyone. To come anywhere close to breaking even, the poor will have to pay perhaps 5%, the middle class will have to pay close to 20%, and the rich will pay a bit over 20%. And this is just the federal income tax.
....and it's not like the "middle class" has a way to change things outside the entrenched two-party political process.Quote:
A consumption tax leads to an even worse outcome for the middle class. Let's assume we have those same families and the same 10% tax, with the same exemption for the poor. The only assumption I'm adding is that the less you make, the larger portion of your income you spend.
Family A still pays taxes on $5k, because it will spend that entire $5k. That means it pays $500 in taxes, or 2.5%.
Family B might spend 80% of its income and save the rest. That means it's paying $4k in taxes, or roughly 8%.
Family C might spend 30% of its income and save the rest. That means it's paying $30k in taxes, or roughly 3%.
Same problem here as before. We're now collecting far too little in tax revenue. Except in this case, doubling the tax rate hits the middle class even more.
Family A now pays $1k in taxes (20% of $5k), which is 5% of income.
Family B now pays $8k, which is 12% of income.
Family C now pays $60k, which is 6%.
That's clearly not enough to cover the current spending levels. So we have to double that again (40% consumption tax).
Now Family A pays $2k, which is 10% of income. Family B pays $16k, which is 23% of income. Family C pays $120k, or 12% of income. Chances are, this still won't be enough. Do you see where I'm going? The middle class consistently comes out at the bottom here. There's no mechanism inherent to this tax to change that.
Agreed. I don't dispute that at some tax levels reducing taxes does reduce total revenue... case in point i a user-submitted piece on Kasich's Ohio policy. (also ties in nicely with the issue of policing sales versus personal income taxes):Quote:
Originally Posted by Loki
http://www.forbes.com/sites/realspin...-income-taxes/
No one is suggesting that ALL reductions in tax rate = increase in tax revenue. That's where its a curve.