Governments in the U.S. (all levels) collect 27% of GDP in tax revenues, which is just about the lowest of any major developed country. Why do you think that is? Because poor people don’t pay income taxes?
Where are these statistics semore?
Google “Laffer curve”… This is what you’re referring to. The highest marginal rate is at historic lows, the 90% rate used pre- Regan is more communist than anything going on today, IMO. But 50% over x amount of income is probably appropriate at some level? jcole21 Wrote: ------------------------------------------------------- > Income tax makes up roughly 1/3rd of federal > revenues. It is the single biggest component. > > The truth is, I’m not smart enough to know what > the right percent to cap out on these guys is. > What do people on both sides think? > > I’m a fiscal conservative / social moderate - I’d > say mid-30’s maybe on income tax - maybe low 40s? > There has to be a point of diminishing overall > income tax receipts. I don’t think historical > receipts can be regressed with certainty because > there are so many variables outside of marginal > income tax rates which impact these. I also don’t > think you could drop taxes to zero or jump them to > 90% and have things change for the better. > > I’m not asking philosophically what’s right, I’m > asking economically what maximizes npv of tax > receipts (and I know there isn’t a definitive > answer driven by data that will be irrefutable, > just looking for people’s thought processes).
@jcole, Here are the numbers to back up what Seemorr is asserting: 2010 US GDP = $14.66 Trillion (CIA Factbook) FY 2011 US Tax Receipts = $2.174 Trillion (US Budget; GPO) 2010 Total State/Local Tax Revenue = $1.295 Trillion (US Census Bureau) ($2.174 + $1.295)/$14.66 = 23.66% Total Tax(Federal, State, Local) / GDP So Seemorr is roughly correct with his 25% figure (noting that the govt. budget figures are from Oct. 2010 to Sept. 2011, but GDP and State/Local Tax data are from Jan. 2010 to Dec. 2010)
So what are other countries, say, g7’s?
Without even intensely examining the quality of the statistics, you can deduce that the rich pay most of the taxes since they receive most of the income (slightly less since they have overall lower tax rates IIRC). It’s not extremely surprising.
@Jcole, This is from the Heritage Foundation via Wikipedia: Tax Revenue as a percentage of GDP -France 46.1% Germany 40.6% Italy 42.6% Japan 27.4% UK 39% Russia 36.9% Canada 32.2% Again, so yes, this validates Seemorr’s assertion
@99 cannon, as a percentage of income the rich do not; please read full thread.
Purely from a Devil’s Advocate point of view, what’s the moral argument you would make to counter the following? Assuming all tax loopholes have been closed and the rich do not unfairly pay a different tax rate than the poor. Assuming also that the progressive tax rate is done away with and EVERYONE pays a 30% rate: Rich person making $1 Mln: Why am I having to fork up $300K a year for public goods when my neighbor [making $100K] is only having to fork up $30K? From a moral point of view and from mere common sense, the answer is obvious. You earn more, you have to contribute more to the society. Helping the poor is the moral obligation of living in a western, modern society. And more importantly, as mentioned in this thread, this is more telling of income inequality than anything. But from an economic point of view (and from the point of view of the CFAI curriculum), this creates inefficiencies, does it not?
Zesty I wasn’t disputing him - I’m genuinely trying to formulate my own opinion on this topic. I’ve always taken the stance that simply because someone earns more doesn’t mean they should pay proportionally more of their income; that this is punitive and serves as a disincentive to productivity. I still am for capitalism et all, and still believe in the principles of smaller governnment/do for oneself/hand up not hand out, but I’m trying to develop a greater level of knowledge regarding taxes and the economy, as the current track we’re on (even with cuts in spending) are unlikely to get the United States back on a fiscally responsible/solvent track. I think we need reform on entitlement programs as well as in defense spending potentially… I don’t know what I’m trying to say - I guess I just enjoy good dialogue regarding this topic that has solid data behind it (from both sides, once again). The government revenue figures bother me in that the timeframes are not apples to apples, and I appreciate you being up front about that. What does the source you listed the other countries from list the US as?
taxes, quotas, tariffs all create inefficiencies.
@jcole, Gotcha. Also, on the Wiki page, it states that the Heritage Foundation list US as 26.9% and the OECD lists the US as 24%. So I think if you do an apples to apples comparison (which I hope/assume is what the Heritage Foundation did) the US will probably be closer to 27%. Honestly, I think we need to get rid of the Bush Tax Cuts for everyone; lower corporate rates but get rid of loopholes. Reform Medicaid, Medicare, SS. Decrease Defense Spending. Also, I think the US should look into instituting a constitutional balanced budget amendment. If we were to do these few things; we would be able to turn our fiscal situation around. But these things must be done at the appropriate time.
@greengrape, how can you provide essential national services (highways, defense, health, property rights recordation/management, eliminating fraud, policing possible monopolies, maritime protection of commerce etc) without taxes or tariffs? What would be a more efficient means of accomplishing this?
naturallight Wrote: ------------------------------------------------------- > man, talk about a smack down. good to see there’s > some educated people on this board. Yeap. There’s got to be some educated people if the board has been “serving the Back Office Monkey Community Since 19xx.” – quote from fellow AFer equity_analyst.
Back to the subject. The question is still: why should you pay 35% tax on every dollar you earn and I pay ZERO on every dollar I earn? More importantly, why someone like B.O. even say something like, you the wall street fat cat should pay your fair share of the taxes, while you are paying 35% already? How fair is that to you? Wouldn’t it be fair for a zero tax paying guy like me to pay something.
Answer is simple, the guy who makes a high income and pays 35% needs to pay more because well he can. It’s not about “fair share”, it’s about optimizing the revenue stream. Increasing the tax burden on poor people is going to hurt aggregate demand, income inequality, and general poverty. Why you keep sticking to this notion of “fair” is beyond me. On one hand you want to reduce budget deficits, but don’t want to milk high earners for their money, can’t have it both ways…
Palantir Wrote: ------------------------------------------------------- > Answer is simple, the guy who makes a high income > and pays 35% needs to pay more because well he > can. It’s not about “fair share”, it’s about > optimizing the revenue stream. Increasing the tax > burden on poor people is going to hurt aggregate > demand, income inequality, and general poverty. > Why you keep sticking to this notion of “fair” is > beyond me. > > On one hand you want to reduce budget deficits, > but don’t want to milk high earners for their > money, can’t have it both ways… The word “fair” was first menitoned by B.O. in his remarks that those fat cats should pay their “fair share”. That’s where I picked it up. Is it still beyond you now? The economics you cited makes some sense, to a certain degree only. The bigger picture is that the high tax payer like you have been subsidizing zero tax payer like me. Why incentives do I have to make more money to make my life better. I’ve got some fat cats paying my bills indirectly…
AlphaSeeker Wrote: ------------------------------------------------------- > Palantir Wrote: > -------------------------------------------------- > ----- > > Answer is simple, the guy who makes a high > income > > and pays 35% needs to pay more because well he > > can. It’s not about “fair share”, it’s about > > optimizing the revenue stream. Increasing the > tax > > burden on poor people is going to hurt > aggregate > > demand, income inequality, and general poverty. > > Why you keep sticking to this notion of “fair” > is > > beyond me. > > > > On one hand you want to reduce budget deficits, > > but don’t want to milk high earners for their > > money, can’t have it both ways… > > The word “fair” was first menitoned by B.O. in his > remarks that those fat cats should pay their “fair > share”. That’s where I picked it up. Is it still > beyond you now? > > The economics you cited makes some sense, to a > certain degree only. > > The bigger picture is that the high tax payer like > you have been subsidizing zero tax payer like me. > > > Why incentives do I have to make more money to > make my life better. I’ve got some fat cats paying > my bills indirectly… This has been beaten to death why can’t you understand? High income individuals DO NOT pay a higher effective tax rate than lower income individuals. This inequality makes it more difficult to attain wealth and is reason that a small percentage of individual pay such a high percentage of taxes – it’s a measure of income inequality. Four hundred individuals (enough to fill a medium size trading floor) have as much wealth as half the population.
LBriscoe Wrote: > This has been beaten to death why can’t you > understand? High income individuals DO NOT pay a > higher effective tax rate than lower income > individuals. This inequality makes it more > difficult to attain wealth and is reason that a > small percentage of individual pay such a high > percentage of taxes – it’s a measure of income > inequality. Four hundred individuals (enough to > fill a medium size trading floor) have as much > wealth as half the population. It’s definately not dead and it will be a key subject in 2012 election. So we might as get the facts straight… You make $300k/year. You pay an effectively tax rate of 30%. I make $40k/ year, my effective tax rate is a 0.00%. How can you say your effective tax rate is NOT higher than mine?
You do realize that there is payroll taxes, income taxes, property taxes, sales taxes, capital gains taxes, etc, right? I’m not sure if you’re just trying to irrate people or if you really believe the stats you posted. Either way I’d advise you to review the code, you can start here: http://en.wikipedia.org/wiki/Taxation_in_the_United_States