Need arguments for tax debate with friend

[legion]

To me the argument is this:

If a tax is progressive, it will discourage some people from producing all that they can because their incremental gains can become so small they are not worth the effort. If they were subject to a flat tax, they would be more inclined to produce as much as they could as they see the same gain on the first and the 10,000th thing they produce. This robs the economy of more of the product and of tax revenue.

Also, no one has the right to anything from the government, other than to be left alone. No one has the right to healthcare. This is like saying I have the right to a doctor's labor. I'm a computer programmer. No one has the right to my labor. If I'm not fairly compensated, I have the right to withhold my labor.

The way I define a "right" is simple. Before there were governments and modern technology, was this something that could be done freely? Was it something the cavemen could do unimpeded? Healthcare clearly does not fall into this, but freedom of speech, the right to ingest anything I may find, and the right to wander off into the forest to be left alone (privacy) do...

[Nathans_Dad]

Jim makes a good point about inner city schools and this is usually the argument made by those against school vouchers. I look at it this way:

If schools are privatized, many if not all inner city schools will close. Those schools that have poor conditions and don't teach well will close. I think that is a GOOD thing. That means that a new group of people can come in and try and make that school profitable. Meanwhile the inner city kids get bused over to a school that actually teaches them something. Will the better schools be crowded? Yep. Will there be waiting lists? Yep. These are all short term problems until the system matures and the level of education at ALL schools rises due to competition. And, oh by the way, the good teachers will be paid better salaries to teach at the better schools. Everyone always talks about paying teachers what they are worth, privatization will accomplish that.

Our educational system has a cancer. The question is do we all the cancer to continue to grow or do we accept our surgery and chemotherapy in hopes of a cure?

[Jim Richards]

I'm in favor of giving it a try, but hope the approach doesn't leave kids out on the streets. We already have enough bums and panhandlers on the street...don't want to see juvenile delinquents roaming the streets, too.

[legion]

I love all this hubbub about inner city schools. My wife worked for a rural school for a year. All of their tax money in this state is taken away and given to the "inner city schools" because they need it more.

[Superman]

Originally posted by Wayne at Pelican Parts


Progressive taxing (it's not *really* progressive) hurts incentive, and also decreases drive and tax revenue in the long run. This country was built upon entrepreneurs, capitalism, and the puritan work ethic. While the work ethic may be waning just a bit, the growth of our nation and the American dream is that anyone can make it if they try hard enough. "Progressive" taxing runs counter to this, and hurts the country in the long run. By taxing the heck out of everyone, especially the ones who have "made it", there is little incentive - both for the ones who have indeed "made it" and also the ones that are striving to get there from the bottom. Bottomline - it makes the country and society as a whole more 'lethargic' - to coin a phrase.

-Wayne

Sorry Wayne, but I'm calling "bull****" on this. Even if you did go to MIT, and generally seem like a smart and principled fellow.

This it the old argument that says if you tax entrepeneurs more, it will make them stop wanting to make money. That's like pretending that if you increase the distance between fish, sharks will stop being interested in eating. Entrepeneur notices that for $100,000 in income, he'll pay $15,000 in taxes instead of just $13,500. And so, dejected by the extra $1,500 in taxes, he stops engaging in commercial behavior and watches Oprah instead?

[Nathans_Dad]

No, but it does occur that you won't make that extra X dollars because it will throw you into a higher tax bracket. Hell, I have looked at that just in the last two years.

If you pull the cart with your strongest oxen while the younger or weaker oxen ride in the cart, the strong ones will eventually tire out.

[Superman]

Here's another concept I think some of you should chew on: There is a HUGE difference between positive and negative motivation. Where your basic security needs are safe, it is wonderful for an economic system to encourage us to reach for that "brass ring." Truly wonderful. Even commie pinkos like me can appreciate and vigorously support some of the motivational mechanisms in our economic system. Truly.

People respond positively to opportunities. But they generally respond negatively to threat. Sure, you can expect some efforts toward protecting oneself from a threat........but you can also expect some anger and some hoplessness and some attacks toward the threat itself, and the system that creates the threat. The worker who is motivated toward independence and wealth is productive. The worker who is motivated out of fear is chattle. Fodder. And he knows it. He's cheap labor and if he doesn't see the brass ring....he's dangerous.

The reason there is public assistance.......is not because a bunch of commies are hijacking your taxes. It's for your safety, fellas. It's WAY less expensive to provide this security to everyone......than to let them find their own ways to protect themselves and their families from death and disease. Take away those safety nets, and you'd need a LOT more cops. A LOT MORE COPS. And you'd buy more insurance policies and the stock market would pretend the economy is white-hot. But then, that's another discussion.

[Superman]

I don't think they are mutually exclusive, Rick. Part of my point is that I'm not so interested in those strong oxens' plights as I am in the absence of effective motivations for the weaker and younger ones. The place where greater commercial opportunities and motivations are more sorely needed........is at the bottom. Not the top. A guy making a quarter-mil in earned income and another quarter-mil in investments is already across the finish line. The poor sap with the wife and four kids who makes $45,000 per year is the guy I want to invest in.

[Nathans_Dad]

And you want to "invest" in him how? Specifics?

[JSDSKI]

For me - taxes are an annual license fee to be an American. I consider myself lucky to have such a cheap price to pay. I think most people are motivated by winning rather than money itself. If money were the real reason - then most people would stop when they had enough. Some people never have enough and money is just their way of measuring wins. Our progressive tax system is a pretty cheap way to maintain the country.

Privatization is not always the best way to fix things. Sure, it is a powerful motivating force - but it necessarily focused on personal need and desire - not cultural or social need and the benefit to society is often accidental. Sometimes it meets the "law of unintended consequences". Case in point - the decade long restructuring in DOD to privitize non-combat roles. Makes economic sense until you see the bills in a war. Makes manpower utilization sense until you realize that truck drivers and cooks are being paid more than software engineers while privates are killed for a couple of thousand a month. Not good for morale. Then you have the problem of keeping highly skilled and expensively trained troops in force rather than re-up for private companies. But when those plans were being drawn up in peace time it all made perfect sense.

My point, there are some things created for the general good and purposeful cultures and societies maintain them because those enterprise that are interested in profit have no real motivation to do so. Not all things can be privitized because not all things produce enough ROI.

[Moneyguy1]

Oh come on with the idea that the capitalists (please define) need tax breaks. The lack of experience with the real financial world is appalling.

As for "being thrust into a higher tax bracket" argument. To a true entrepreneur, the concept of "part of something is far better than all of nothing" is what drives them. After a certain level of income is reached, extra income is not the basic force behind their actions. The difference between an income of 10 mil and 11 mil is virtually meaningless.

You are NOT going to discourage business activity by higher taxes in every case. If that were true, most businesses would have shut their doors decades ago when taxes were much higher.

[Rick Lee]

Bob, plenty of businesses have relocated because of greener tax pastures in other states or even countries. So yes, $10 million vs. $11 million does make a huge difference. It can be the difference between laying off a few hundred people to move out of state and those folks keeping their jobs.

And since no poor person has ever given me a job, I don't know why Superman wants to "invest" (translation: redistribute someone else's money) in the poor schmuck who decided to have four kids when he couldn't afford to. I also can't stand the fact that I have to support people with kids by paying for someone else's child tax credit. Would Americans stop having kids if they didn't get $1000 per child tax credit? I doubt it, but it wouldn't be bad thing if they did.

[Jim Richards]

($11,000,000 - $10,000,000) / 300 = $3,333.

$3,333/2080 work hrs/year = $1.60/hr. Hmmm, someone isn't paying minimum wage.

RL, you work in the financial industry?

It can be the difference between laying off a few hundred people to move out of state and those folks keeping their jobs.

BTW, I'm stunned that you are worried about "those folk." How altruistic.

[Rick Lee]

Where did you get 300? By your math, it looks like you would never be bothered by the gubmint telling you to increase your workers' hourly wage, as long as it was only $1.60 or so each time.

If I stood to pay $1 million more in taxes by staying put than I would have to pay to move to the next county, assuming the moving costs were not prohibitive, I wouldn't hesitate to leave.

[Jim Richards]

you said "a few hundred people." Three makes a few, so three hundred people it is.

edit: my point is that you're making wild claims about layoffs of hundreds of people that, if you were paying them even the minimum wage, wouldn't be the case.

I'm not a fan of progressive tax rates; although they aren't as bad as they used to be. It'd be nice to shrink Federal spending one of these days. Elective wars mean we all pay more taxes. You just haven't been handed your bill yet.

[Bill Verburg]

Last I looked Federal Income tax, SS tax and Medicare tax was the same in all parts of the country, State and local(county/school/city) tax is another discussion.

I agree w/ the faction that doesn't believe that someone stops being productive because the tax rate goes up. When rates were much higher for the wealthy the country's business didn't stop in fact as I recall the 50s and 60s were a very prosperous time for most segments of society.

I do believe that taxes on investment income i.e. dividends and capital gains should be taxed at as low a rate as possible. In that area increased taxation does disincentive growth.

I have never understood why interest is not taxed at a lower rate, that is another area where it disincentives savings. My only thought relevant to this is that the rich(who write the rules) don't derive a great deal of income from bank savings accounts, the not rich don't derive a great deal of income from this source either but it is certainly a more significant factor in their lives than dividends and capital gains.

I won't say that it amazes me how some, that were aparantly born w/ a silver spoon in their mouths, have a total lack of empathy for those less fortunate that surround them. It does disappoint me a lot.

[Jim Richards]

Originally posted by Bill Verburg
I do believe that taxes on investment income i.e. dividends and capital gains should be taxed at as low a rate as possible. In that area increased taxation does disincentive growth.

+1 Excellent point, Bill.

[Bill Verburg]

Here's a little factoid for those of you that think there isn't a war on the middle class being waged by our elected leaders. This is just a sample.
Marginal Tax on a Single individual per 2006 Federal tables

Income	               0 - 7150  - 2905    - 70351   - 94200	- 146750  - 319100

marginal tax rate	  10%	   15%	      25%	25%	   28%	     33%

SSI+Medicare	        15.30%	  15.30%     15.30%   15.30%	    0%        0%	

Total Marginal Tax rate	 25%	   30%	      40%	40%	   28%	     33%

Of course there is the standard deduction but that affects all single earners equally

[pwd72s]

Originally posted by Nathans_Dad
And you want to "invest" in him how? Specifics?

Liberal newspeak translation:

Taxes are now "contributions"

Spending these taxes is "Investment"

No newspaper would publish my words...

[livi]

Several very insightful points here. Thanks ! Will come in very handy.

IMO, this is a very important and interesting democracy topic. Maybe I should change career, go politician instead of pediatrician.