Damn those evil rich people!!!!Follow

Okay, this is what's the biggest problem with your reasoning.

[EDIT] This post ended up WAY longer than it should. You can skip to the end and still get what I was trying to say. The bulk is just numbers, costs of living, etc.[/EDIT]

Compare:

Let's say there's an actual (unavoidable) tax on all income at 10%.

If I make 20,000 dollars a year (9.62 an hour, 40 hours a week, every week, which is more than a LOT of people make a year working full-time jobs), I'd pay 2K in taxes. That makes my usable income 18K (a year). With such a low income, we're assuming I do not own a house, and am living in some crappy little apartment.

Now, for a quick example, say I'm living here. $600 rent a month, 1 bedroom, 1 bath, utilities included (we're assuming that's electric and water).

Right there, just to have somewhere to sleep (with no opportunity for a roommate, unless we want to sleep in the same room), I pay $7,200 a year. That leaves my yearly available income at $10,800.

For food, we'll say I use $50 a week, which is VERY low (especially if we picture me as a single mother). That's $2,600 a week, which means my usable income is $8,200. We are assuming I don't have health insurance, so every trip to the doctor costs me--so I avoid going whenever possible. And god forbid I get really sick or hurt, because that will just be debt and I'll probably lose my job.

Clothing costs per year is about $500, so we are at $7,700. I need to take the subway to work, and that costs me $4 dollars a day, 5 days a week (discounted with a metro card, to be fair, but our estimate for food was really low). That's $1040 in transportation fees (using PUBLIC transportation), so we are at $6660. Hopefully, I don't have debt (and who doesn't), or some of that will have to go to make my minimum payments.

I'll have to pay for a phone, of course. And let's assume I need a cell phone. Let's say $30 a month, and I can't use texting--just a normal phone. That's $360 (and we are down to $6300). Maybe I'll have cable, and my job requires me to have internet, though I have to pay for it. Not even considering the cost of buying a computer. Cablevision has a package that will give me TV, internet and a land-line for $100 a month, so we are down another 1200 to $5100. Take out another $50 for maintenance costs on your apartment, because good luck getting your land lord to do it in the Bronx. So that's $4600. Your toiletries are another $50, and that's now $4K.

Assuming we get by with no other hidden fees or charges, which is unlikely, and none of these will actually cost more (also unlikely), that leaves me with $4,000 a YEAR in money that I don't HAVE to spend for daily life to go on (and I didn't include alcohol in my food bill). So going to work and coming home ONLY I can hope to maybe save a little less than 4K a year (if I have no debt). Oh yeah, and the actual tax bracket is 15%, so that's another 1K lost, so you are at 3K a year in fees not necessary to sustain your pitiful existence. If you live somewhere where you'd need to take a train (say you live in Hoboken, NJ and commute to NYC) or drive, you're paying way more in gas or train tickets, which are huge now (a monthly pass to go from Hoboken to NYC is $111).

Yeah. I'm sure paying %35 in taxes makes the lives of those people
earning a mil every year so much harder. On the other hand, someone who only makes 20K could SERIOUSLY use that 3K.

And you SERIOUSLY think these people who are just scraping by should be thanking the rich people because they have roads? Their homes are probably falling apart around them as they work just to stay alive.

They would much rather be in the maximum tax bracket (even if just barely) than be paying %20 less on their pitiful little income. Sorry, they are perfectly justified in not feeling like the rich are really sacrificing something for them (and face it, they aren't).

And the current system is designed to ***** the lower income people anyway. If you are making 34K a year, you are in the 25% tax bracket. That's INSANE. It's hard enough to live with that kind of income, let alone having to pay such a ridiculous amount in taxes. You have people with large disparities in income living in similar conditions because the middle class gets royally screwed in the current system.

Now, to be fair, this isn't exact math. For instance, the tax paid by singles making 30K is 4,083 (which is the 15% bracket). But that of someone making 34K is 4688 (25%). A 605 dollar difference for just 4K more a year. Yeah, that doesn't ***** the little guy, whose already struggling to pay for his kid's braces.

[EDIT]

And it isn't like all tax money goes to the poor, which you seem to think it does. Actually, very little of it goes to them (and a lot goes to the rich nowadays, without even considering the examples other people have given such as roads).

Edited, Apr 8th 2010 9:24pm by idiggory

I'm still not buying anyone dinner.

It's not as though they're doing so out of the goodness of their hearts. The next time someone cuts the local town board a check for $5,000 out of a strong civic desire, I'll be sure to give them a hearty atta-boy.

This doesn't make them good people or bad people or anything else. They're just more heavily taxed people based on our scaling tax system. I'm personally paying taxes each year (as in I'm not a family a of four and we're making well over $50k a year) and yet I never once felt sad that less wealthy (and less taxed) people aren't giving me love-eyes and picking me flowers on account of me paying a greater share of their road usage than they are.

Then again, I'm not ten years old either where I need to pout and feel unappreciated.

Want a job?

Sure. But that misses the point. You went off on a tirade about how working minimum wage sucks. Um... Yes. It does. That's why it's called "minimum wage". It's intended to be the absolute minimum amount someone can earn per hour, and in most cases is limited to jobs with little or no skill requirements at all. Would you agree that the biggest problem for a person making 20k a year isn't the taxes he does or doesn't have to pay, but the fact that he's working a job that only pays 20k a year?

I would. It's kinda obvious that the route out of that sucky situation is a better job. Getting to keep that extra 2k isn't nearly as significant as getting a new job which pays 30k, or 40k, or more. Obvious. Right?

Here's where you have to take a kind of leap of faith. But it's not a hard one to make if you stop and think about it. First, ask yourself how one obtains a better paying job? Who is going to employ you for 30k instead of 20k? How about 50k? Who's going to pay someone that much for their labor? Other people in the same financial condition? Or people who own businesses? What about corporations? Aren't they the most likely to pay good salaries?

Overwhelmingly, those higher paying jobs come from employers who themselves make large amounts of money. Whether we're talking about privately owned businesses, or collectively owned corporations, this is almost universally the case. So. What impact on employment does higher taxes on those companies have?

Let's ignore tax rates for a moment, and look at this from the perspective of government revenue. Let's zero in on a single company. Let's imagine that the government currently obtains 1m in taxes from this company, and the company currently employs 400 people making an average of 50k/year. Now, let's imagine that we restructure the tax structure so that each of those people pay 1k more per year in taxes, but the company pays 500k less in taxes. Wait! That doesn't add up, right? Except that with the 500k less the company is paying in taxes, it can afford to hire 100 more people at 50k/year, right?

The point is that by shifting the tax burden slightly from the employer to the employee, we allowed for more jobs to be created. Where this matters is that if you are that guy making 20k a year and paying nothing in taxes, the money you are "saving" is costing you a potential job. You could be one of those 100 people who get new jobs paying 50k/year, and I'm sure you'd be more than happy to pay 1k more in taxes than those making 50k/year did before. Because you are still much much much much much better off...




Honestly? No. I think it's moronic that we have a culture in this country which seeks to attack "the rich" in the first place, as though they are the enemy or something. It's not that I think it's a good thing that we tax them so much in the first place (I think it's a bad idea), but that despite this, there are many who continue to think that they should be blamed for the fact that they are poor, and don't have jobs, and don't seem to have a way out. And that blame gets turned into anger, and they then allow themselves to be used to impose yet more taxes and fees and whatnot on those evil rich people in some sort of insane desire to punish them for their sins.

I think we should acknowledge that we overtax this segment of our economy, and that our reasons for doing so are horribly flawed. The very people who use the rich as a fountain of funds which they use to "help" those in need, not only don't realize that they're hurting more than they are helping, but don't even have the decency to give credit to where the funds come from at all. They place the praise on big government, and pat themselves on the back for a job well done.

But at the end of it all, the guy making 20k a year isn't helped at all, is he? The math doesn't work going the other way. He's having his opportunities for success taken away, and being handed government benefits as a replacement. Instead of his worth being determined by the value of his own labors, it's determined by some government bean counter. Instead of him being able to decide how to spend his money, he has none to spend, but has a government daddy who decides what to spend money on his behalf.

That's not freedom. It's the opposite. Most people in this country would be vastly better off if taxes were distributed more evenly across the population. Not only because of the direct jobs generating aspects, but also because then more people would feel the effects of government spending and would make some effort to reign it in. When it's someone else paying the bill for something, it's a lot easier to agree to the expense, isn't it? But it's not really someone else. It's you and me. It's just that most people don't realize it. We think the money is coming out of the rich man's pocket, but it's really coming out of ours in the form of jobs we don't have, raises we don't get, cost's which don't come down, etc...


The entire idea that we should "punish" people for being successful is stupid. We're really just punishing ourselves.



Yup. But in order to get to that point, you need a job opportunity, don't you? You're looking at what helps the 20k guy while he's making 20k. I'm looking at what will help the 20k guy make more than 20k. Think about it.



Remember, income tax is based on percent per bracket. So the first X dollars you earn is taxed at one rate, then the next X at another higher rate, then the next at a higher rate, etc. That's why a 25% bracket doesn't actually cost you the full 25% of your income in taxes. I'm not specifically arguing against a progressive tax structure (although there are alternatives which make sense as well). My main point here is that we probably tax too progressively in our brackets, and we dump a whole lot of extra taxes on just the highest brackets (how often have you heard Obama say something like "Only people making over X dollars a year will be affected by this tax"?).

I think that the sense that this is a good way to go is a mistake. I think we ought to recognize that when we tax "the rich" we're really just taxing away our own prosperity. We need to realize that no amount of government help actually helps us not be poor, it just makes poverty more comfortable. Now, if you want to live at 20k for your entire life and make up the difference in government benefits, then that's your choice. But I suspect that most people would rather be able to gradually earn more money over time. The key is to recognize that every time you levy more taxes on "the rich" you decrease your odds of personal financial advancement.



I don't agree with that. Other than some conspiratorial assumption that "the rich" are somehow gaming the system, why do you think this? I think a very strong case can be made that the average person earning 20k receives many times more dollars worth of government services than the average person earning 100k, for example. Public services alone make up a huge difference. When you consider how little police and emergency services cost in the 100k neighborhood compared to the 20k neighborhood, and then look at who pays for the roads, and the buses, and the city libraries, and court houses, and the who uses them the most. I think it's hard to argue even on a flat dollar basis. And while that "trucks owned by businesses put more wear on the roads" thing sounds great, where do you think all the food in the poor neighborhoods comes from? Did it just magically appear? Do you think the taxes raised in that neighborhood paid for the roads and rails on which the people rely to survive? Or do you think that the guy in the 100k neighborhood not only pays for his own roads, but also for the lions share of the roads and infrastructure in the poor neighborhood as well?


It's just that I keep hearing this assumption that the rich get more than the poor from government, but I can't for the life of me see where that happens. As someone who lives in one of those wealthy neighborhoods, I can tell you that the volume of privately paid services would shock you. Most of the roads are not paid for by the city, but by the developers of the properties in the area (which are all private). You'd be surprised how many of the street lights and signs are as well. Same deal for private security forces. Funny thing. There is a CHP and a SDPD office literally within 2 blocks in opposite directions from where I live. I *never* see them patrolling the area. The people in my area paid for the buildings and the parking lots and maintenance of their vehicles, and they then drive out to the freeway to other parts of the city to patrol and do their work. Meanwhile, I see private security vehicles patrolling our streets.


So no. I don't buy that idea at all.

Hah! Math is hard!!! ;)

Made a mistake in my numbers above. Assume the company has 490 employees, taxes are cut to the company by 500k/year, allowing for 10 more employees to be hired at 50k/year, with taxes per employee going up by 1k/year. Not only does the math add up, it's more sensible to expect a ~2% increase in employment in the short term rather than a 25% increase...

The point being that whatever the numbers are specifically, if taxes are lower on companies, they're going to tend to use that extra money to expand their business in some way, which usually entails hiring additional employees and/or paying the ones they have more money. Obviously, the primary point here is that we should be trying to find ways to lower taxes in total, not just shift the burden around. The best way to do that is to not create those taxes in the first place, which of course, means not creating the programs which need the funds. I just think that the whole "pay for goodies by taxing the rich people" is a mistake in the long run. It hides the true cost of those goodies from the people who support them. They think they're getting a freebie, but they're really the ones paying for it in the long run.

Yes. If we made $250,000, and we were taxed at 75%, leaving us with 62500, it would be more than my husband makes right now, and about what we would be making if I was still working full time myself instead of trying to write novels.

(My husband is the lowest paid professor in the state, he learned.)

Or they hire 3 people, the CEO gets a small increase to his bonus and the shareholders walk off with the rest. Or the shareholders walk off with everything.

I like this game. Speculating is fun.

That would be counter to the purpose of investing, wouldn't it?


The problem is that most people are consumers. They have been taught their entire lives via example that money exists to buy things. Thus, they assume that if someone has access to money, they'll take it and spend it on themselves. But somewhat by definition, the majority stockholders in a company don't think like this. They invest their money. They understand that if instead of spending the money on themselves today, they invest that money in some venture, that they'll have more tomorrow.

BTW, that's *also* why having so much of the cash in a few hands is good. It's only when people have sufficient amounts of wealth beyond that needed to survive day to day that they'll invest the excess. It's a good thing that this happens. Eliminate the "gap" between rich and poor, and no one invests. Opportunities disappear, and the economy stagnates and eventually collapses under it's own weight.

And heck. Even if we assume that for some reason the stockholders decide to cash out with that extra money. What do you think they're going to do with the cash? Buy lotto tickets? Nope. They're going to re-invest that somewhere else. Which puts the money back in some other company. Assuming their reason for cashing out of one and investing in another was a belief that the second company is a better target for potential profits, we're left in the same place. That potential is almost always going to be realized via increased employment of some kind. Ergo, the money is going to end out in someone's hands in some way.

Or they use the money to buy robotics and automate production, reducing the labor force, and cutting employees. Not a bad thing (I work in Electrical Engineering, so that's just more work for me) but an outcome that ends in less employees.

There ya go putting words in someone's mouth again... You proposed that a company would hire people if they got a tax cut. I proposed that there were other things that they may do with that money, besides hiring people.

By your posting, you seem to believe that "what's good for corporations is good for the country". I don't buy into that.

Where did I ever sat that the govt should keep all that money?

So giving the company a tax break won't necessarily increase the employment in your company here in the US... but over in China where they built that robot, those Chinese people will have to work a few more weeks of unpaid overtime to build that robot for you!

And what does the robot do? What effect does it have on the cost of the goods it manufactures? How does that affect standard of living?


You're focusing on individual jobs, while missing the big picture. Where there is labor willing to work, someone will find something for them to do. Assuming that there are enough "someone's" in the economy with the resources to employ them, they will be employed. Look at the current economic troubles. Was unemployment caused because companies just choose not to employ people? Or did it occur because they no longer possessed the economic resources to employ them?

It was the latter. The events of the last couple years should serve as clear evidence that employment is related to the ability of "the rich" to employ people. I know it's easier for your arguments to assume that it's all about being mean and controlling people. But it's really not. They want to employ people. That's how they make money. And while you can point to specific single examples of jobs lost for this reason or that reason, in a healthy economy where those evil rich people have plenty of cash, the unemployment rate will tend to stay low.

When "the rich" lose their money, and big businesses are strapped for cash, unemployment goes up. It's a pretty clear and obvious connection. I'm not sure how you missed it since it just happened to us. You're looking at a long history of this, yet for purely indoctrinated dogmatic reasons, you insist that it doesn't really work that way. Of course it does. And if you stop and look at the world around you, you'll realize it as well.