Does Taxing the Wealthy Hurt the Lower Class ?

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How True!! !

The rich, poor, middle class, and government employees, are all dependent on each other. The problem is, when a large percentage of people are taking more money out of the system than they are putting in, this places a larger burden on everyone else. This is unsustainable.

A couple soultions to fix this would be:

*Reduce the size of government, and place more of the government workers in the private sector. Government employees actually put some of the money we give them back into the system, but in general, I think they consume more than they produce. This is basically like a private company that forces you to buy their product, whether you want, or not.

*Go to a lower flat rate tax, and reduce, or eliminate credits, deductions, and exemptions. This can be done in the form of an income tax, or a sales tax. Many will argue that this will increase the taxes on the poor (which it does), but many of them aren't paying any income taxes. They should have at least some skin in the game.

My first question is, what government functions do you suggest could be privatized? What is the business model for private businesses to deliver these programs? Can that business model deliver these programs more effectively than government while still ensuring their universality?

My next question is, why should public services be evaluated on a cost/productivity basis? What is the productivity of a crime prevented? Or a person making a healthy lifestyle choice? Or a child completing secondary school? The public and private sectors are two completely different things, with two completely different measures of success. We do not expect private business to conform to government decision making practices, so why should we expect government to conform to private sector decision making practice?



When you earn $20,000 per year, how much of your income do you need to spend on the necessities of life: food, clothing, shelter, transportation and the like?

When you earn $100,000 per year, how does that proportion change? Now it is certainly the case that you can afford a bigger home, and better quality food and clothing. But these are luxuries of choice--your basic needs as distinguished from your wants take up a much smaller proportion. Progressive income taxation demonstrates that principle.

I am, however, entirely with you on the subject of a sales tax, on two provisos: first is an exemption from sales tax for groceries, rent, medical/dental care, and education expenses. These should be zero rated for the end user in order to ensure that sales taxes aren't regressive. Second, a rebate of sales taxes for low income families (below the poverty line) should be in place to protect the lowest earners.

visagrunt,

To answer your questions:

Cutting the size of government - I wasn't actually talking about privatizing national programs. What I was referring to, was cutting out the waste, unnecessary programs, and streamlining the government. What jobs that are lost in the process, would then be transferred to other industries in the private sector. I know this isn't as easy as it sounds, and can't happen overnight, especially with the economy being in the shape that it's in, but I think that it is necessary.

About the taxes - As far as any flat tax goes, the aim is to streamline the code, and to prevent unfairness in the system. It's not really the government's job to manipulate the code and pick and choose who gets extra money, and who doesn't. The government should be neutral on these things. Like you said, with a national sales tax, the only things that should be exempted, are the basic necessities of life, nothing more. Adding tax rebates to people below the poverty line does help many people, but it also creates a lot of people that are entitled and dependent on the government, so I am not sure that's would be a good idea.

Also, with a flat tax, the burden on everybody is equal (everybody pays the same %), but the rich will still pay more than poor people, simply because they make more.

not universally so, or you wouldnt find a higher fincancial freedom, social mobility or personal freedom in countries where the government plays a larger role in some services like healthcare and education, loads of scandinavian countries to choose from adn probably others elsewhere.

How typical is Tom the businessman?

What if someone's only contribution to job creation is spending money on goods and services, and storing it in bank accounts and stocks? Those are all things people in other income brackets do.

Name two.

Governments the world over have been looking for the easy cuts and were all made, long ago. There are no easy cuts left.



Flat taxes penalize the poor, because they have to spend a larger proportion of their income on necessities of life. I don't disagree with you on simplification, but flat tax is enormously unfair and wrongheaded.

First of all, I never said any cuts were easy, and there are plenty that won't be easy, but they will probably be necessary. A couple areas here in the US would be defense, the IRS (simplifying the tax code would probably do this anyways), and government pensions.

When you say that a flat tax is enormously unfair, you are only looking at it from a single perspective. I will ask you this. Is it fair for a single person making $30,000 to be taxed at 25%, while another person making the same amount, with two kids, doesn't pay anything? Why does the person with two kids deserve more money over a single person? What if that single person can't have kids, or has social problems that interfere with them finding a mate, to even have kids with? Is that fair to them? Who is the government to make that decision? Like I said, the government should remain neutral on these things.

Also, I think we both agreed that basic necessities would be tax exempted, so this would kind of void the argument about them spending more for these things.

How does that void the argument? A larger portion of their budget still goes to food.

The deficit is ~1.2 trillion. The budget is ~3.5 trillion. That would be quite a cut.

It simply cannot be balanced without a better economy (more revenue) and higher taxes, in addition to some cuts. And that's just stopping the bleeding. You've still got 18-20+ trillion to pay back by the time it's sorted out. Unless Jesus comes back real fast, that's going to require taxes too. We didnt pay our way out of the depression and WWII by wishing for ponies at some future date.

Levy a flat tax on incomes over $100,000 / year. Everyone below pays nothing. A ten percent tax should take care of all necessary operations. We should also eliminate most of our military budget.

ruveyn

i actually like that idea, the ammount is high enough to allow plenty of living and if a lower percentage is possible when taxes are simplified it would be brilliant.

it reminds me of guaranteed annual income with a higher personal responsibility

I agree with you their.

When the federal income tax was initially levied it was two percent on incomes over $5000. Back in 1914 $5000 was equivalent to over $250,000 in todays inflated dollars. Back then gold was pegged at $20.00 a troy ounce.

ruveyn

that was then, the world evolves. not that taxes at that level wouldnt be brilliant, i simply cant see it as possible now.
we barely have a comparable economy today.

but i think its crucial to remember that most people dont argue for taxes for their own sake, they do so because they think there is a neccesary level of service required for a society to function,
where people disagree is on whats neccesary.

Why do Americans tax everything?