Ok, so that is what you said, but not as absolutely as I stated. And you used this as part of your argument that these people should be taxed more. Which led to my argument that this is ridiculous, as these are already the most taxed people in absolute and relative terms.
I know this is true in Canada, as the tax rate goes up as you go up in income brackets, but is it true in the States? I guess it's hard to pinpoint exactly as there are many types of taxes from many jurisdictions, but aren't a lot of the income taxes flat percentages across the board?
Why should one person receive a stiffer punishment than the next for the same offence ?
Playing devil's advocate here...
The argument in favour of this is that a flat fine for all offenders is, in practice, a lighter punishment to someone who is wealthy. Consider fines for littering, for example. In Calgary, the punishment for littering is a fine between $500-1000. If you make $24k/year ($2,000/month), a $500 fine is 25% of your gross monthly income. Someone in that financial position will definitely notice the loss of $500 and will almost certainly have to make sacrifices to pay the fine (this, of course, is the entire purpose of the punishment).
If you make $192k/year ($16,000/month), a $500 fine is 3.1% of your monthly income. You'll probably think twice before littering again, but the punishment won't have the same affect on you as the other guy who's now struggling to pay the bills because he just lost 25% of his income for the month,.
Now imagine you're an NHL player making $7.5M per year ($625k/month). You probably won't even notice a $500 fine. Even if you were to get a littering ticket every single day for an entire month ($15k), you're paying less money as a percentage of your overall income than the guy making $192k/year who only got a single fine. Your wealth has allowed you to ignore the law because the punishment is effectively meaningless to you.
I'm not saying I agree with sliding scale fines, but that's the logic behind them.
^ I understand the logic of it. But i really disagree with having different fines for different income brackets.
How do they check the income brackets ? What about a guy that makes $45,000 and lives with his mom, vs. a guy making $75,000 that is a homeowner. How does all this factor in ?
I think the only thing you could do would be to make it a stiffer fine across the board, but have an appeal process for people under a certain income.
The argument in favour of this is that a flat fine for all offenders is, in practice, a lighter punishment to someone who is wealthy. Consider fines for littering, for example. In Calgary, the punishment for littering is a fine between $500-1000. If you make $24k/year ($2,000/month), a $500 fine is 25% of your gross monthly income. Someone in that financial position will definitely notice the loss of $500 and will almost certainly have to make sacrifices to pay the fine (this, of course, is the entire purpose of the punishment).
If you make $192k/year ($16,000/month), a $500 fine is 3.1% of your monthly income. You'll probably think twice before littering again, but the punishment won't have the same affect on you as the other guy who's now struggling to pay the bills because he just lost 25% of his income for the month,.
Now imagine you're an NHL player making $7.5M per year ($625k/month). You probably won't even notice a $500 fine. Even if you were to get a littering ticket every single day for an entire month ($15k), you're paying less money as a percentage of your overall income than the guy making $192k/year who only got a single fine. Your wealth has allowed you to ignore the law because the punishment is effectively meaningless to you.
I'm not saying I agree with sliding scale fines, but that's the logic behind them.
No, thats the after thought justification of them, the logic is basically that we have to get the rich #######s, which I am fine with by the way.
I know this is true in Canada, as the tax rate goes up as you go up in income brackets, but is it true in the States? I guess it's hard to pinpoint exactly as there are many types of taxes from many jurisdictions, but aren't a lot of the income taxes flat percentages across the board?
Yeah, not sure of the exact intricacies of the US system. I was just going off general principles that the salary-man bears the bulk of the tax burden...
No, thats the after thought justification of them, the logic is basically that we have to get the rich #######s, which I am fine with by the way.
No, it's not just justification, penalties hurt the poor more than the rich. Depending on just how poor a person is, money can really prevent them from being free. Now one could argue that a fine shouldn't matter, because they had to do something bad to earn it in the first place, but it goes way beyond that.
Take an example from my life. I have to get my licence renewed every 2 years rather than every 5 due to a health condition I was born with. Not only that, I have to have a signed medical, which also costs money. Basically I'm getting penalized for being born with a handicap.
Now that's bad enough by itself, but my handicap has also prevented me from getting many jobs. As well as that, it's been a problem in keeping jobs when I get really ill. So, not only am I able to earn less, but I have to pay more. This is a small example, but there are others. And they add up. And they affect my life in very real ways.
Any flat fee, or fine, or whatever, can become a major headache to those who don't have much money. And it's not always a choice of being able to do without. And really, in a lot of situations, it shouldn't even be a question of having to do without.
This is how all these fees truly affect someone who is sick and or poor, where they would not affect a person earning an average amount, and definitely would not even bother a person earning an obscene amount.
On the other side of the argument, we have all heard of wealthy people who have flaunted the law, because the penalties simply do not affect their lifestyle.
Yeah, not sure of the exact intricacies of the US system. I was just going off general principles that the salary-man bears the bulk of the tax burden...
Well see, then that's probably what many posters are saying. If it is flat for the most part, (and I'm saying if, cause I don't know for sure) then once you add in any loopholes, or any societal advantages the rich have, they really aren't paying their proportional share. Sure the absolute is higher, but the burden is much much less.
Well see, then that's probably what many posters are saying. If it is flat for the most part, (and I'm saying if, cause I don't know for sure) then once you add in any loopholes, or any societal advantages the rich have, they really aren't paying their proportional share. Sure the absolute is higher, but the burden is much much less.
It's progressive in the US, but not as progressive as ours, so the top bracket pays more rate-wise than the lower brackets. But when you factor in the various exemptions, the lower end pays no taxes at all. So, I fail to see the validity of the argument. Because someone making $250K can afford to send their kids to university is not a reason to jack the tax rate for them (and them alone).
P.S. To flip it on its head, a whole bunch of banks, and Fannie and Freddie thought the non-tax-paying bottom end should get mortgages to buy houses, which is a large reason for the current mess. Why not say, if you can own a house, you can pay taxes? Same logic.
It's progressive in the US, but not as progressive as ours, so the top bracket pays more rate-wise than the lower brackets. But when you factor in the various exemptions, the lower end pays no taxes at all. So, I fail to see the validity of the argument. Because someone making $250K can afford to send their kids to university is not a reason to jack the tax rate for them (and them alone).
P.S. To flip it on its head, a whole bunch of banks, and Fannie and Freddie thought the non-tax-paying bottom end should get mortgages to buy houses, which is a large reason for the current mess. Why not say, if you can own a house, you can pay taxes? Same logic.
Ok, well the rate thing was the thing I was asking about to begin with. As I said, I wasn't sure if it was progressive like ours, less progressive, or more or less flat. I was just saying that if it was flat, or if the higher income earners did pay less percentage wise (loophole or not), that would be what a lot of the posters were asking about and or arguing against.
As for exemptions, and paying little to no taxes, you are talking about the lowest of the low classes. Not middle class, heck, probably not even lower middle class. As well, as I explained a little higher up, the poor do get taxed anyway. Through fees associated with living and going to work and such which drain a much larger percentage of their income, than a person in a better financial position.
I'm not saying that the tax should be jacked up on those making over 250,000, just that care should be taken that it is at least the same percentage. That the spirit of the idea of people paying their fair share is not lost. As far as the comment about advantages goes, I meant simply that those in better financial positions have the advantages which allow them to stay in their position or improve it, while those in worse financial positions do not have such luxuries. In fact, it's often a battle not to slip lower. No, no one should be punished for being able to send their children to university, but care should be taken that there is a way out for those who cannot. Which is probably the crux of the whole argument, considering it will be the poor who pay for it more in the face of massive spending cuts. They will lose more opportunity and freedom. Simply because they cannot afford to lose any possible 'advantages' or exemptions they have by being in their situation
I guess it all depends on how you look at who has money and how you think they got it. Now I know the prevailing belief in America is that if you work hard, and pursue the American dream, you will be rewarded and you will make it to that top 2%. However, we'd all have to be very naive to believe that. Yes hard work is a big factor, probably the most important factor, but it's nowhere near the defining factor. So much has to do with situation and dumb luck. There are people who just never get the shot, whether it be society problems, family problems, health problems, whatever. As well, we all know of people who got to the top 2% just because of the situation they were born into, the family they were born into, the talents, money, or luck they were born into.
From a national economic standpoint, it would be stupid to raise the taxes on the poorest anyway. I'm not talking about the middle class, but the poorer classes. Not only would you not make very much, but you would cause greater problems. Need for more programs would increase, crime would probably increase, etc. So while it's nice to say it should be fair across the board, it really only works to go for the money from the people who can afford it.
In a perfect world, where everything was fair, we could have a flat tax rate. But that would be a world where bad things didn't happen to good people and everyone got paid exactly what they were worth. That doesn't happen. Until then, we have to make it easier on the lower classes. And I guess, in a roundabout way, even though it's not aimed that way, that makes it a little 'tougher' on the richer classes.
But when I say tougher, they still have it easier than the lower classes. You don't think anyone making 24,000/yr wouldn't take 250,000 even if they had to pay 5% more tax? Or realisitcally 15% more? 30% more?
Yeah paying for someone else doesn't seem fair, and it's definitely not the 'American Way,' but logically it makes the most sense, and it helps those paying as well. In societies that take care of their poor there is less crime fewer societal problems, etc.
Apologize for going a bit in a circle there, but I think you know what I'm trying to say. If we're dealing in absolutes I don't know what the solution is. It's probably going to be a lot of things from looking at tax policy, to making important cuts in bloated areas, to doing their best to revamp the government or at least the culture of combatitiveness it has taken in the last 15 years or so.
But if we're talking in figuratives and ideals, I don't think there is really anything wrong in asking the top 2% to contribute a little bit more. Whether it's closing some loopholes, changing the tax rate, or some other more inventive idea.
EDIT: Oh, and about Fanny and Freddie, well I can't disagree that there was some serious irresponsibility on many of the would be home owners. But I would argue the greater responsibility was still on the banks. 1. they knew the mortgages had a high risk of failure, and they thought the could beat the system by increasing the customers and leveaging the risk. And of course all the craziness that happened after that. There were about 4 separate bad ideas in the whole plan and it just got worse as you went along. They were supposed to know better. The people on the bottom just wanted to own a house. And if you give someone that chance, who normally doesn't have it, they will take it.
Again, it's part of the desperation in being poor. On having that thumb on you your entire life. There is a good portion of the public that can't even imagine that. And that's probably why they get so riled up about a small tax increase.
Every tax 'loophole' is for some laudable purpose, they are all there to encourage something or other, investment, savings, getting people to buy houses etc, they are all still loopholes though.
Oh absolutely.
Some even have the simple purpose of helping a corporation get out from paying taxes.
How is allowing companies to use a tax haven a good 'loophole?'
It's progressive in the US, but not as progressive as ours, so the top bracket pays more rate-wise than the lower brackets. But when you factor in the various exemptions, the lower end pays no taxes at all. So, I fail to see the validity of the argument. Because someone making $250K can afford to send their kids to university is not a reason to jack the tax rate for them (and them alone).
P.S. To flip it on its head, a whole bunch of banks, and Fannie and Freddie thought the non-tax-paying bottom end should get mortgages to buy houses, which is a large reason for the current mess. Why not say, if you can own a house, you can pay taxes? Same logic.
Well they obviously couldn't afford the house, nor could they afford to pay taxes.
Actually, they very easily could pay taxes, and they might have been able to afford a house, just not the $1.5 million dollar one that they got at super low mortgage rates.
Here is the breakdown of how the money is spent for the Jones's. It includes:
* $35k to $47k on housing
* $18k to $23k on cars
* $8292 on utilities
* $8650 eating out (inc. takeout and lunch at work)
* $41k in savings for retirement & children's college
Housing + utilities alone is ridiculous. If you are spending that much, you should be taxed more. For those that are ahead, they can clearly afford it. For those that are not keeping up, consider it a tax on the stupid.
Just getting back in...
Unfortunately that sounds about right for housing for major cities on the coasts. People at that income level should bear the full brunt of their costs but instead the opposite happens. You have a tax policy that encourages you to buy the biggest house and take out the biggest loan you can afford because Uncle Sam will subsidize you.
Your net after tax(mortgage interest and property tax deduction) cost on the average of that figure (assuming the 41K is just the interest and taxes and the Jone's 35% tax rate) is a more "reasonable" ~26K/year or ~15K saved on interest portion/property tax plus your principal amount.
Home ownership rates in Canada and the US are about same at about ~66% so comparatively wouldn't either Canadian homeownership spike with a similiar deduction or the US plummet without? I doubt either would happen of course.
I just think it is a specific example of how one of many, many tax policies actually benefit the few or some lobby either through tax avoidance, loopholes or, in this case, amount to a gov't subsidy.
Mortgage deduction benefits the housing and mortgage special interest and incentivizes those at the higher marginal tax rates to get the biggest house they can afford with the biggest mortgage as is the case of the JOnes. They get the most bang for their gov't buck.
Of course it collatorally benefits millions of homeowners with mortgages from all income ranges but all of it in the end at the expense of govt revenue which probably didn't accomplish the "laudable purpose" of increasing home ownership. I don't think the point was to encourage people to buy more house for their money with gov't help.
I know this is true in Canada, as the tax rate goes up as you go up in income brackets, but is it true in the States? I guess it's hard to pinpoint exactly as there are many types of taxes from many jurisdictions, but aren't a lot of the income taxes flat percentages across the board?
Just to add some more detail to Vlad's response:
- Taxes are indeed progressive in the US, both at the Federal and State levels.
- Social security is a flat ~6% tax on the first ~100K of gross salary (going off the top of my head).
- Medicare is about 1.5% with no limit on the gross salary that is taxable.
Ways to reduce Federal taxable income:
- mortgage interest
- contribute to a 401K or 403b... annual limit is currently 16500.
- contribute to a traditional IRA (Roth IRA takes after tax income)
- if you make enough money and are an "officer" at a corporation, you may also qualify for the 457 plan. This allows another 16500 to be deposited as deferred compensation and is contingent on the solvency of the business.
- procreate
Things change if you're a hedge fund manager. Chuck Schume... er... The hedge fund managers have lobbied to have their salary considered as basically an at-risk investment, and have managed to have their salary treated like a long term capital gain at ~15%. This is ridiculous and is nothing but a payoff to the rich. But whatever.
The Following User Says Thank You to Flames Fan, Ph.D. For This Useful Post:
Subsidizing home-ownership is crazy. I'd wager the net effect on the economy is negative, i.e. the cost of the subsidy does not outweigh the stimulating effect. Can't be good for labour mobility either.
John Boehner believes people in Ohio will be better off if we leave the bridges unrepaired, leave the workers unemployed, and wait a few years on those infrastructure repairs until such time as they cost more to execute.
- Taxes are indeed progressive in the US, both at the Federal and State levels.
- Social security is a flat ~6% tax on the first ~100K of gross salary (going off the top of my head).
- Medicare is about 1.5% with no limit on the gross salary that is taxable.
Ways to reduce Federal taxable income:
- mortgage interest
- contribute to a 401K or 403b... annual limit is currently 16500.
- contribute to a traditional IRA (Roth IRA takes after tax income)
- if you make enough money and are an "officer" at a corporation, you may also qualify for the 457 plan. This allows another 16500 to be deposited as deferred compensation and is contingent on the solvency of the business.
- procreate
There is also flexible spending accounts for (many medical/daycare) expenses which are pretax.
Also, phd, it is progressive at the state level assuming there is a state income tax which WA, FL, TX, NV to name a few off the top of my head don't. WA has a regressive system which is mostly dependent on sales tax.
And of course, those states' citizens successfully lobbied to have sales tax be included as a federal deduction because it wasn't fair that states with income tax were able to deduct.
There is also flexible spending accounts for (many medical/daycare) expenses which are pretax.
Also, phd, it is progressive at the state level assuming there is a state income tax which WA, FL, TX, NV to name a few off the top of my head don't. WA has a regressive system which is mostly dependent on sales tax.
And of course, those states' citizens successfully lobbied to have sales tax be included as a federal deduction because it wasn't fair that states with income tax were able to deduct.
Sublime...
You're right of course. I didn't want to delve too much into state taxes because of those fancy states that don't have an income tax.
I wonder if Obama is getting trampled on so regularly as part of an agenda to drive the right-wing to the extreme - so he can run against Michelle Bachmann or some other caricature for president.
I'm really reaching for things to defend Obama with.
And you used this as part of your argument that these people should be taxed more. Which led to my argument that this is ridiculous, as these are already the most taxed people in absolute and relative terms.
