Budget Cut Protestors - Help Me Understand

[David Floyd]

I don't know about that. I'm firmly middle class and according to my last paystub, I had quite a bit taken out in federal taxes, Medicare, and some by some ******* named FICA.

[Hauldren Collider]

I would think that the marginal utility of income always decreases as income increases. Why would the marginal utility not decrease before a certain point?

No, I doubt it is so continuous. Think about it--once you have basic living expenses covered, marginal value of additional income probably drops dramatically, and once you have a certain amount of disposable income (probably very high), it drops even more. Sure, it probably drops slightly with every marginal increase but I'm sure there are some discontinuities.

Anyway I'm not inclined to speculate further as I don't really know that much about this.

[Hauldren Collider]

I don't know about that. I'm firmly middle class and according to my last paystub, I had quite a bit taken out in federal taxes, Medicare, and some by some ******* named FICA.

Do you own a house, send kids to college, have health insurance, and all sorts of other middle class goodies that are tax-deductible? And yeah, payroll taxes hit everyone, I'm talking about the actual "income tax".

[Egbert]

Assume it's not a stunt. Assume it's a real proposal. Are you still against it?

Assuming it was real. I would need to do a very great deal of thinking and studying of the proposal.
OTH I wouldn't bother because it wouldn't get passed anyway. I would just say no and give it very little thought. If it increases revenue then taxes have gone up overall.

I see people here talking about "closing tax loopholes". The area between legitimate business deduction and "loophole" comes in varying shades of gray. This is my biggest problem with flat tax. Tax law is far from simple and the devil lies in the detail of it. We have had tax simplification efforts that have increased the complexity of the tax laws. Any proposal about flat tax must include detailed proposals about a detailed overhaul of the tax law. eg. Deductions incurred earning an income can not realistically be abolished.

This is not just an economics problem. It is also a problem with the construction and wording of the income tax act.

Sorry, I just couldn't be bothered with blathering about tax laws.

[David Floyd]

No, thank the **** Christ no, and yes.

And I'm all for getting rid of that, by the way. A flat tax with no loopholes, no exemptions, and no tax credits seems like the way to go.

[giblets]

And again, "the public" you are referring to is by and large the lower and middle class. Of course they think they pay too much and the rich pay too little. Ask the rich the same question and you likely get the opposite result.

I think if you put ten average guys in a room in order to ask them about tax policy, they would all be lower and middle class.

I don't think people give a flying **** about terms like "progressive tax rate" and "flat tax". They do care about how much they pay in taxes, and many of them care about how much they pay vis-a-vis others, especially the much-villified (by the media and the left) rich. However, I do think that the majority of the voting public ARE stupid sheep who can be manipulated into saying whatever a pollster wants, that's true. The flip side is that I see no way they would be against a tax system with no downside to them - ie, the flat tax.

I don't see how lowering the current rates for top earners would help anyone else.

Yes, naturally a flat tax on it's own would not increase revenues, and naturally you could increase revenues by closing loopholes in the current system. My argument is simply that a flat tax is far more fair, especially to the middle and upper classes, than is a progressive tax system, and as long as loopholes are closed would be a better alternative, revenue-wise, to our current system of a progressive system with loopholes.

Certainly, our current system with no loopholes would generate more income than a flat tax with no loopholes - however, such a plan is just as pie-in-the-sky as a flat tax. Furthermore, I believe a progressive tax system to be fundamentally unfair. A flat tax with no loopholes provides the best of all worlds - more revenue, more clarity/simplicity, and more fairness in the tax system.

I don't see anything intrinsically fair about the income people receive, considering how much of it depends on factors beyond their control like genetics and upbringing.

[David Floyd]

I see people here talking about "closing tax loopholes". The area between legitimate business deduction and "loophole" comes in varying shades of gray. This is my biggest problem with flat tax. Tax law is far from simple and the devil lies in the detail of it. We have had tax simplification efforts that have increased the complexity of the tax laws. Any proposal about flat tax must include detailed proposals about a detailed overhaul of the tax law. eg. Deductions incurred earning an income can not realistically be abolished.

This is not just an economics problem. It is also a problem with the construction and wording of the income tax act.

Oh, I agree. The real opponents of tax simplification are, naturally, tax attorneys, followed closely by tax preparation agencies.

[David Floyd]

I think if you put ten average guys in a room in order to ask them about tax policy, they would all be lower and middle class.

Obviously. I don't think I've ever disputed that, in fact, I think I made that point myself.

I don't see how lowering the current rates for top earners would help anyone else.

You're not just lowering the rates for the top earners, but also for people like me. As to how it helps, it generates additional tax revenue by closing loopholes and exemptions. Does this mean some people would be more in absolute terms in taxes? Yes. But those people aren't all poor - they fall in every socio-economic category. Same for the people who would pay less. Honest rich people and middle classers without a house and kids (ie, myself) would end up paying less, for instance.

I don't see anything intrinsically fair about the income people receive, considering how much of it depends on factors beyond their control like genetics and upbringing.

Perhaps, but there's also nothing intrinsically fair about a third party (ie, the government) making blanket redistributive decisions, either.

[Hauldren Collider]

Oh, I agree. The real opponents of tax simplification are, naturally, tax attorneys, followed closely by tax preparation agencies.

Not really. They don't even need to lobby. The opponents are people like GE, and everyone in the charity fraud, environmental and farm industries.

[Egbert]

The whole tax system right now is a stunt by the middle class to pay virtually nothing. Honestly, the tax base is so narrow right now it would be funny if it weren't infuriating. Anyone saying that the rich don't pay their share should probably go **** himself, preferably with something sharp.

You astonished me with this "a stunt by the middle class to pay virtually nothing".

On every extra dollar I earn I pay just under 50 cents in tax, the top marginal tax rate. I am middle class.

[Hauldren Collider]

You also live in Australia, right? I'm talking about the US tax code here.

[David Floyd]

Not really. They don't even need to lobby. The opponents are people like GE, and everyone in the charity fraud, environmental and farm industries.

Very true. I am more talking about federal income tax, rather than corporate tax. I agree that corporations get screwed by the tax code, which is why they need to find ways to get around it. I'm all for simplifying and reducing corporate taxes, too, but that's a different topic.

[Egbert]

Not really. They don't even need to lobby. The opponents are people like GE, and everyone in the charity fraud, environmental and farm industries.

Nope. Complicated tax laws are good for tax lawyers and tax preparers.

[Egbert]

You also live in Australia, right? I'm talking about the US tax code here.

True. I shall await comment from a working middle class American adult who has had tax taken out of his weekly pay cheque.

[David Floyd]

You mean, like me?