Is It Really Belt Tightening

[a completely inoffensive name]

...in a discussion about the Bush era federal tax cuts. Why in the world would such a discussion have anything to do with state sales taxes? Why would that need to be spelled out?

You made an incorrect assumption. Don't even try and cover it up.

Except that isn't the context in which you put it in. You said it partly comes down to ideology. That you could say that poor don't pay into any social programs. When you link that to an ideology, it gives the impression that you making an overarching ideological assumption and are applying it. Yeah, you can back track and say "well of course I was talking specifically about federal government." but it is easy to talk about what you meant when it wasn't specific in the first place. I don't know any ideology (and lets be honest, it's the conservative ideology that looks down on poor like that), that says that the poor are freeriders who don't pay anything for federal government programs. Oddly specific for a broad ideology.

But whatever, this isn't what the topic is about at all. If you want to make vague statements and then claim afterward that it all applied to the main topic of the thread, go ahead.

You are aware that state sales taxes a) have nothing to do with federal taxes and b) vary by state, correct?

Again, you are trying to back track and say that your sentence was about something specific when you know by now that I had interpreted it as a broad generalization. So this whole attempt at making me lose "face" by portraying me as "off topic" fails miserably. Also, your b makes no sense. Only 3 states have no sales tax at all. Alaska, Delaware and Montana, hardly where most of the poor are. Vast majority of poor still pay some amount of sales tax, thus they pay into state services, thus your b is invalid.

Of course they do. There are also far, far more middle class people than there are rich people, yet they pay only 3% more of the total tax receipts.

Exactly. And of course anyone who has taken basic econ courses know that the standard of living for someone living on $50,000 is much more impacted by having to contribute 30% of the taxes than it is for someone living on $1.5 million who has to contribute 27% of the total taxes.

The idea that the system is "fair" when all parties are paying the same dollar amount is flawed. The value of the dollar is not standard for all "players"(the taxpayers) in the system.

Let's say there are two people. One has $5, one has $500 dollars. The amount needed to be payed for the "bill" is $4. It is not fair for each to have to pay $2 into the system because while the rich man has 99.6% of his money left the poor man has 60% of his money left. It doesn't matter if there was 1 rich man and 100 poor people. If they split it evenly the poor (relative to the rich person) is going to take a bigger hit if they all have to pay the same dollar amount towards the bill as the 1 rich person.

This apples to the graph you posted. The middle class should be paying 3% more of the bill than the rich, the rich should be paying 10% more than all the middle class because the burden that the rich will take from paying a lot more will be equal to the burden of the middle class, because even though the middle class pays less they make substantially less money to begin with.

You're making more assumptions. I never said the poor are making off like bandits. I simply disagree with the talking point that the Bush tax cuts were exclusively for the rich. Great efforts were made (overreach in my opinion) to ensure that everyone benefited from them, even those that pay no taxes.

The relative of burden was largely in the rich's favor. As Ice said, the tax cuts ended up cutting hundreds of thousand for the rich, a couple thousand for the poor and middle class. Taxes on capital gains went down a lot for all incomes levels, but the vast majority of capital gains to be taxed on are held by the rich, so that by itself gave the rich much, much more money than the poor or middle class could ever hope to receive.

[PanzerJaeger]

Except that isn't the context in which you put it in. You said it partly comes down to ideology. That you could say that poor don't pay into any social programs. When you link that to an ideology, it gives the impression that you making an overarching ideological assumption and are applying it. Yeah, you can back track and say "well of course I was talking specifically about federal government." but it is easy to talk about what you meant when it wasn't specific in the first place. I don't know any ideology (and lets be honest, it's the conservative ideology that looks down on poor like that), that says that the poor are freeriders who don't pay anything for federal government programs. Oddly specific for a broad ideology.

But whatever, this isn't what the topic is about at all. If you want to make vague statements and then claim afterward that it all applied to the main topic of the thread, go ahead.

Here is the whole statement:

There is a lot of ideology in this. One could also point out that the poor, who use by far the most public services, pay absolutely nothing for them. Should 'we' be paying them for the privilege through direct subsidies in the tax system? Would it really be a smart precedent to set to give the poor not a few thousand but tens of thousands of dollars simply for existing? I suspect we have differing views on that subject, as I don't even agree with the current subsidies.

You'll note that not only was the quote I was responding to about the subsidies in the Bush tax cuts, but last three sentences in my reply refer directly to the subsidies in the Bush tax cuts, which had been the subject of the discussion between Ice and myself. So if you had any doubt about the first two sentences, the last three - being in the same paragraph - should have cleared up your confusion.

Just face it, you either skimmed my post or just read Jbarto's and incorrectly believed I had been caught in an 'ah ha!' moment and decided to pile on. I really don't mind. I have enough real 'ah ha!' moments that you would be forgiven for believing you'd caught me in another.

Again, you are trying to back track and say that your sentence was about something specific when you know by now that I had interpreted it as a broad generalization. So this whole attempt at making me lose "face" by portraying me as "off topic" fails miserably. Also, your b makes no sense. Only 3 states have no sales tax at all. Alaska, Delaware and Montana, hardly where most of the poor are. Vast majority of poor still pay some amount of sales tax, thus they pay into state services, thus your b is invalid.

I'm not attempting to make you lose face. It was simply a misunderstanding.
My 'b)' statement:

You are aware that state sales taxes ... b) vary by state, correct?

I'm not sure how the statement could be valid/invalid.

State sales tax does in fact vary and I was simply asking if you know that. You keep repeating the 9.25% number as if it is the number instead of a number, but instead of assuming () that is what you meant, I asked.

Also, iirc, Oregon and New Hampshire have no sales tax.

Exactly. And of course anyone who has taken basic econ courses know that the standard of living for someone living on $50,000 is much more impacted by having to contribute 30% of the taxes than it is for someone living on $1.5 million who has to contribute 27% of the total taxes.

I think you're logic is a bit off as far, far more people contribute to that 30% pool than to the 27% one.

For example, if you have 500 people who earn $10 a year who have to pay 30% of a $1000 tax burden and 5 people who make $100 who have to pay 27%, members of the 500 pay .60 cents each and the 5 people have to pay $54 each.

Math is not at all a personal strength, so that little equation could be the 'ah ha!' moment you've been looking for.

The idea that the system is "fair" when all parties are paying the same dollar amount is flawed. The value of the dollar is not standard for all "players"(the taxpayers) in the system.

Let's say there are two people. One has $5, one has $500 dollars. The amount needed to be payed for the "bill" is $4. It is not fair for each to have to pay $2 into the system because while the rich man has 99.6% of his money left the poor man has 60% of his money left. It doesn't matter if there was 1 rich man and 100 poor people. If they split it evenly the poor (relative to the rich person) is going to take a bigger hit if they all have to pay the same dollar amount towards the bill as the 1 rich person.

This apples to the graph you posted. The middle class should be paying 3% more of the bill than the rich, the rich should be paying 10% more than all the middle class because the burden that the rich will take from paying a lot more will be equal to the burden of the middle class, because even though the middle class pays less they make substantially less money to begin with.

I haven't taken the position that the rich should pay less taxes, only that the Bush tax cuts were not exclusively for the rich and were, in fact, favorable to the poor.

The relative of burden was largely in the rich's favor. As Ice said, the tax cuts ended up cutting hundreds of thousand for the rich, a couple thousand for the poor and middle class. Taxes on capital gains went down a lot for all incomes levels, but the vast majority of capital gains to be taxed on are held by the rich, so that by itself gave the rich much, much more money than the poor or middle class could ever hope to receive.

Obviously those who pay more taxes are more sensitive to changes in the tax code either way. Strike's initial post seemed to imply that the GOP was proposing hurting the poor in favor of helping the rich. My whole involvement in this thread has been to argue that 'leaving the Bush tax cuts', as he put it, in fact helps the poor. And if we are going to use the marginal value of a dollar argument that the progressive tax system is based on, removing the Bush tax cuts will hurt the poor far more than the rich.

[a completely inoffensive name]

Here is the whole statement:

You'll note that not only was the quote I was responding to about the subsidies in the Bush tax cuts, but last three sentences in my reply refer directly to the subsidies in the Bush tax cuts, which had been the subject of the discussion between Ice and myself. So if you had any doubt about the first two sentences, the last three - being in the same paragraph - should have cleared up your confusion.

Just face it, you either skimmed my post or just read Jbarto's and incorrectly believed I had been caught in an 'ah ha!' moment and decided to pile on. I really don't mind. I have enough real 'ah ha!' moments that you would be forgiven for believing you'd caught me in another.

Ahh shoot. I do apologize, I had read your post but then after reading Jbarto's I had gotten the wrong impression of what you had said.

I'm not attempting to make you lose face. It was simply a misunderstanding.
My 'b)' statement:

I'm not sure how the statement could be valid/invalid.

State sales tax does in fact vary and I was simply asking if you know that. You keep repeating the 9.25% number as if it is the number instead of a number, but instead of assuming () that is what you meant, I asked.

Also, iirc, Oregon and New Hampshire have no sales tax.

I had assumed that you were bringing up the fact about varying sales taxes to make a point that the poor are able to get out of paying for services on the state level. My statement was to bring up the fact that only a very few states with small populations don't have sales tax.

Checking wikipedia, Oregon and New Hampshire have no sales for everything except a category called "prepared food" which are taxed at 5% and 9% respectively.

I think you're logic is a bit off as far, far more people contribute to that 30% pool than to the 27% one.

For example, if you have 500 people who earn $10 a year who have to pay 30% of a $1000 tax burden and 5 people who make $100 who have to pay 27%, members of the 500 pay .60 cents each and the 5 people have to pay $54 each.

Math is not at all a personal strength, so that little equation could be the 'ah ha!' moment you've been looking for.

Well, your example is correct in that your example does show the "richer" people paying more relatively to the poor in terms of a burden. But there are a couple of things which I think makes your particular example not applicable to the reality of the country as a guideline for tax policy.

1. In your example the rich are making only 10 times more than the poor, whereas in reality the top 1% are making at least 18.9 times more from your chart, at the bare minimum, the realistic number would probably be 25 times more.
2. The burden is still more on the poor than the rich.

Say there is a middle class man making $50,000 and a rich man making $1.5 million. Let's say for simplicity that the poverty line for a single person is $14,000.

14,000/50,000= 28% so the middle class man has 28% of his income going to surviving.
14,000/1,500,000= .9% so the rich man has .9% of his income going to surviving.

Now lets say in order for both men to contribute their amount, that the middle class man only has to pay 15% of his income because there are lots of middle class people. The rich man has to pay 33% of his income because there are much fewer rich people.

50,000-15% is $42,500
14,000/42,500 is now 32.9%. The middle class man now has surviving necessities taking up 32.9% of his (remaining) money. The ratio has increased by 4.9%.

1.5 million-33% is 1 million.
14,000/1,000,000 is now 1.4%. The rich man now has surviving necessities taking up 1.4% of his (remaining) money. An increase of .5%.

So even when you have the rich paying a lot more per person than the middle class or poor person, the burden is going to be bigger on the middle class man than the rich man unless you drastically up the taxes on the rich to make it more equal. This is why a few rich people paying a lot more than millions of middle class people is not a bad thing.

In order for the rich man to be undergoing the same burden, the difference between the poverty line/income amount ratios needs to be the same as the middle class person: 4.9%.

For this to take place, the rich man would need to be taxed, 83% of his income, so his income goes from 1.5 million to about $241,000.

14,000/241,000=5.8% 5.8-.9=4.9% which is roughly the increase that the middle class man had to experience.

EDIT: My original error was is in subtracting 15% from the 32.9% instead of the 28% that I had calculated right before it. But even correcting for my error, the tax rate under this idealistic tax system gives a tax rate that is more than double what the top 1% already pay. If anyone wants to tell me that $241,000 for a single person is not enough to live by, feel free to give me your name, city and address and I will come by to chill in your mansion inspect your house's structural integrity for free.

I haven't taken the position that the rich should pay less taxes, only that the Bush tax cuts were not exclusively for the rich and were, in fact, favorable to the poor.

I see, my mistake than.

Obviously those who pay more taxes are more sensitive to changes in the tax code either way. Strike's initial post seemed to imply that the GOP was proposing hurting the poor in favor of helping the rich. My whole involvement in this thread has been to argue that 'leaving the Bush tax cuts', as he put it, in fact helps the poor. And if we are going to use the marginal value of a dollar argument that the progressive tax system is based on, removing the Bush tax cuts will hurt the poor far more than the rich.

Perhaps, I need to look at the numbers again to double check that. Capital gains taxes are always overlooked when talking about the amount of money that the rich pay in taxes. If capital gains taxes are increased again, the burden might be more on the rich than the poor.

[a completely inoffensive name]

LOLOLOL, made huge calculation error. need to fix.

[Ice]

LOLOLOL, made huge calculation error. need to fix.

For this to take place, the rich man would need to be taxed, 83% of his income, so his income goes from 1.5 million to about $241,000.

While this might be true in theory, good luck trying to collect 83% of his income. This will cause a massive capital flight out of the country. I believe that although the Bush tax cuts were bad, taxing anyone 83% is about the worst thing you can do.

[jabarto]

While this might be true in theory, good luck trying to collect 83% of his income. This will cause a massive capital flight out of the country. I believe that although the Bush tax cuts were bad, taxing anyone 83% is about the worst thing you can do.

This is a stupid myth that really needs to stop. In the 1940's through the 1950's we had a top marginal tax rate of ~90%. The rich didn't "go galt" then and they sure as hell won't do it now.

[Beskar]

This is a stupid myth that really needs to stop. In the 1940's through the 1950's we had a top marginal tax rate of ~90%. The rich didn't "go galt" then and they sure as hell won't do it now.

Yes, the mega rich will run to Somalia and China!

[Jolt]

This is a stupid myth that really needs to stop. In the 1940's through the 1950's we had a top marginal tax rate of ~90%. The rich didn't "go galt" then and they sure as hell won't do it now.

In the 40's there wasn't WTO or freedom of movement of capital. You would see a large capital flight that's for sure. Considering the colossal debt the US has, that isn't probably one of the best decisions to do.

[a completely inoffensive name]

While this might be true in theory, good luck trying to collect 83% of his income. This will cause a massive capital flight out of the country. I believe that although the Bush tax cuts were bad, taxing anyone 83% is about the worst thing you can do.

Yes, I agree about that. Taxing 83% is much too high for people's taste nowadays. But this information shows that in order for taxes to get near to "fair" we must break the silly notion of never having taxes above 50% out of some weird "last stand" to make sure that government isn't taking more than half of someones "hard earned" money.

I feel that a more reasonable tax rate for the rich lies in between the 35-40% nowadays and the 83% I calculated. I think 60% would be a good middle ground.

[jabarto]

we taxed the rich successfully in the past, but it can't work now because

[Ice]

Yes, I agree about that. Taxing 83% is much too high for people's taste nowadays. But this information shows that in order for taxes to get near to "fair" we must break the silly notion of never having taxes above 50% out of some weird "last stand" to make sure that government isn't taking more than half of someones "hard earned" money.

I feel that a more reasonable tax rate for the rich lies in between the 35-40% nowadays and the 83% I calculated. I think 60% would be a good middle ground.

I think 45%-50% would also be an appropiate number. 60% is too high.

Of course, the top rate would be over 1 million dollars.