tag:blogger.com,1999:blog-28353717.post5198005294401477023..comments2023-10-30T04:09:45.910-04:00Comments on Letters and Surveys: The Invisible Hand, Distribution of Wealth, Marginal Tax Rate, Economics of the Candidates, and Economists on the Candidates (Whew!)brdhttp://www.blogger.com/profile/09999205528107936871noreply@blogger.comBlogger14125tag:blogger.com,1999:blog-28353717.post-86103395621974870792008-10-24T19:10:00.000-04:002008-10-24T19:10:00.000-04:00This was a great addition to the discussion. Becau...This was a great addition to the discussion. Because of the complexitites and loopholes I fear that much of the time the discussion that we laymen have is really just theoretical because you can say "Corporations should not pay 39% tax rate", but if they are able to avoid a good portion of that, the we are talking about apples and oranges. I like the statement...and the thank you too!cadh 8https://www.blogger.com/profile/16229405846825667683noreply@blogger.comtag:blogger.com,1999:blog-28353717.post-42768049463843287242008-10-24T05:53:00.000-04:002008-10-24T05:53:00.000-04:00Josh,Thanks so much for the clarification. This he...Josh,<BR/><BR/>Thanks so much for the clarification. This helps quite a bit. I think that your idea for a simplified tax system would be something that most of us "middle" people would really appreciate. Plus the end-of-year statement would be helpful. The government could even say, "Thank you!"<BR/><BR/>BRDbrdhttps://www.blogger.com/profile/09999205528107936871noreply@blogger.comtag:blogger.com,1999:blog-28353717.post-91346339600398594102008-10-23T22:39:00.000-04:002008-10-23T22:39:00.000-04:00OK. So here’s my thoughts—I don’t mind if the top ...OK. So here’s my thoughts—I don’t mind if the top tax bracket is higher. After all, if .40 of each dollar above $250,000 gets taken by the tax man, you’re still making a heck of a lot of money. I’m generally fine with the rich folks paying a bigger chunk of the tax burden, especially if it is from income taxes.<BR/><BR/>What I don’t agree with is the way Obama is giving a ‘tax cut’ to the middle class. It’s not really a ‘tax cut’ at all (eg. A decrease in the marginal tax rate for a given income level), but rather a series of ‘tax credits’ for various reasons. The Wall Street Journal does a pretty good job of explaining it. http://online.wsj.com/article/SB122385651698727257.html<BR/><BR/>Really, what I’d like to see is a simplification of the tax code (which neither candidate is doing, unfortunately). Corporations pay X% of profits, no matter what (end loopholes). Rather than 3 or 4 or 5 different deductions from a paycheck, plus a filing for additional taxes at the end of the year (April 15), have 1 income tax that you pay. Marginal (progressive) taxes are ok, and probably preferable to a flat tax (which hurts low-income families more since they have less discretionary income). Capital gains for individuals should be taxed, and possibly at a higher rate if your income is higher (this prevents the rich from being paid low wages, but making more money through investments that are not subject to payroll taxes).<BR/><BR/>Also, the government needs to give you a clear statement at the end of the year that goes something like this: “You/your household made $XX dollars this year through income, capital gains, etc. Of this, you paid $XX in federal taxes, which means that your tax rate was X%. Thank you for supporting the operations of the Federal Government.” This can help people understand if their taxes actually go up, down, or stay the same from one year to the next, and give them a basis for evaluating whether a politician’s claims during a campaign were actually carried out. Right now, all we can do is guess, and hope that the politicians are telling the truth. <BR/><BR/>Since I’m from Chicago, my experience leads me to believe that the surest way to tell if a politician is lying is to see if his/her lips are moving. Let’s make this whole thing more transparent, and perhaps we’ll have a better way to fix what ails us.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-28353717.post-90266650040439240102008-10-23T22:38:00.000-04:002008-10-23T22:38:00.000-04:00Geez, we're talking taxes and it's not eve...Geez, we're talking taxes and it's not even April yet!<BR/><BR/>So here's the rundown on marginal vs. average tax rate. A very simplified example for illustration purposes only.<BR/><BR/>Say there are these tax brackets: 0% for income less than $20, 50% for income between $20 and $60, 75% for income over $60.<BR/><BR/>Say you make $100. Your last dollar would fall in the 75% tax bracket, so we’d say that your “Marginal Tax Rate” (aka, the tax rate for the last dollar) is 75%.<BR/><BR/>However, your average tax rate is only 50%. Here’s how:<BR/>Tax rate x (income at that tax rate) = Taxes<BR/><BR/>0% x $20 = $0 paid for income less than $20<BR/>50% x ($60 – $20) = $20 paid for income between $20 & $60<BR/>75% x ($100 – $60) = $30 paid for income over $60<BR/><BR/>0 + 20 + 30 = $50 = Total Taxes Paid<BR/>$50 / $100 = 1/2 or 50% as your average tax rate<BR/><BR/>If you made $50, your marginal tax rate would be 50%, and your average tax rate would be 30% (you pay $15 taxes for $50 earnings). If you made $21, your marginal tax rate would still be 50%, but your average tax rate would only be 2.38% ($.50 taxes on $21 earnings). If you made $61, your marginal tax rate would be 75%, but your average tax rate would be 34% ($21.75 paid on $61 earnings).<BR/><BR/>Simple, right? Remember, the actual tax code is much MUCH more complex. I think 6 or 7 different tax brackets (referring to marginal tax rate), plus you have to factor in tax credits, tax refunds, income deductions, etc etc etc. Also, this illustration is JUST for income taxes. It does NOT include payroll taxes (aka Medicare, Social Security, Unemploymen, etc), which are partly paid by your employer and partly deducted from your paycheck. It’s pretty darn complex.<BR/><BR/>The explanation gets its own post. My thoughts on the different tax breaks comes shortly.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-28353717.post-55688984811430942532008-10-22T16:52:00.000-04:002008-10-22T16:52:00.000-04:00Loved the Marketplace schtick about wealth redistr...Loved the <I>Marketplace</I> schtick about wealth redistribution. All that he said is true. And I think that no matter what they say about taxation, it is the expenditure of government that drives taxation. Bush has been dandy at that. And one could remind ourselves that Clinton did pretty well with budget balancing. (I understand that it is more complex than which party they belonged to.)<BR/><BR/>We probably should talk about education. But my head hurts when I think about it. One certainly would think that with 18,000 to spend, or even 6 or 7,000, we ought to be able to get some educating done. And perhaps that is where the exaltation of ignorance plays its part. When are American children going to return to the days of eager learning? Not, I think, if they while away their evening hours watching South Park and playing violent video games.brdhttps://www.blogger.com/profile/09999205528107936871noreply@blogger.comtag:blogger.com,1999:blog-28353717.post-41768735123840955582008-10-22T16:09:00.000-04:002008-10-22T16:09:00.000-04:00http://marketplace.publicradio.org/display/web/200...http://marketplace.publicradio.org/display/web/2008/10/22/wilkinson/<BR/><BR/>This story was great and touches on these topics in a both cynical and bipartisan way. Perfect. <BR/><BR/>:) I think you may enjoy it.cadh 8https://www.blogger.com/profile/16229405846825667683noreply@blogger.comtag:blogger.com,1999:blog-28353717.post-10163164986949848202008-10-22T15:52:00.000-04:002008-10-22T15:52:00.000-04:00Yes, maybe I will write a post on education addres...Yes, maybe I will write a post on education addressed "Dear Bart Simpson" or "Dear Boy meets World" and could then discuss the exaltation of ignorance. :)<BR/><BR/>I think we are both right. I think there are some who won't work hard enough and some who can't find work enough to provide. We are both talking to the "some people". And I am glad we can discuss these two sides this way. Both need work, that is for sure, and intelligent discussions on these topics will be imperative no matter who gets elected. <BR/><BR/>On education, one comment. Did you know that in Chicago the cost PER YEAR of the average student is $18,000 for public school? I got this info from someone who lives there, but I don't think this is much more than numbers from around the country. Even the more prestigious private schools cost less per person. So how can our schools continue to fail when SO much money is dumped in? Why are our public schools not as prestigious as the private ones, when they are getting as much, if not more, money per person? Could it be that "more money" (remember, it is for the children, says Bredesen every time he wants to add another tax)won't solve this problem? Because I agree that, as long as the education system is weak, you will have employment problems all the way up the food chain. And we as taxpayers should be getting more for our money, I think.cadh 8https://www.blogger.com/profile/16229405846825667683noreply@blogger.comtag:blogger.com,1999:blog-28353717.post-27044488992431863742008-10-22T05:48:00.000-04:002008-10-22T05:48:00.000-04:00Then there is television and the exaltation of ign...Then there is television and the exaltation of ignorance!brdhttps://www.blogger.com/profile/09999205528107936871noreply@blogger.comtag:blogger.com,1999:blog-28353717.post-18134156248325503252008-10-22T05:47:00.000-04:002008-10-22T05:47:00.000-04:00I agree that a total revamp of the system of taxat...I agree that a total revamp of the system of taxation might indeed bring clarity to the system while clearing legislators' desks. I'd be game to see if a flat tax would work. (No cheating for the fat cats though.)<BR/><BR/>I do think that you are naive about available jobs at the low end of the scale. But I am willing to admit that I may be naive about how intransigent some of the poor are in their refusal to work hard. Some. <BR/><BR/>And much of this points back to inadequacies in the experience of education in the US. (Note: I say experience of ed rather than the education system because I don't know whose fault it is.) How can it be that people spend 12 years in school and can't read well? Whose fault is that? If a student really wants to learn, they can, but many don't. They choose not to and somehow the system allows it.brdhttps://www.blogger.com/profile/09999205528107936871noreply@blogger.comtag:blogger.com,1999:blog-28353717.post-59364626199221646342008-10-21T21:32:00.000-04:002008-10-21T21:32:00.000-04:00Oh, and I remembered one thing lost in my first po...Oh, and I remembered one thing lost in my first post. The flat or fair tax. I won't get into all the details, but what I like is that it still makes allowences for the poor while fairly taxing the rest of us. Under some versions the rich would be taxed much more because it is a consumption tax and they spend more. But the big thing is the millions...maybe billions saved in expense and in man hours preparing taxes, managing the IRS, and other tax collection costs. Also, it would remove some of the power that the lobbyist groups have over the Congress. Right now, Congress can use complicated tax laws to give favors and penalize others. A more fair system would refocus Congress on other things and remove this point of manipulation. <BR/>Anyway, just another thought...cadh 8https://www.blogger.com/profile/16229405846825667683noreply@blogger.comtag:blogger.com,1999:blog-28353717.post-9193140056281855012008-10-21T21:13:00.000-04:002008-10-21T21:13:00.000-04:00I don't disagree with your point that someone who ...I don't disagree with your point that someone who works full time and is a good and hard worker should be able to support their family by the work of their hands. My disagreement is that this hypothetical person would actually be stuck at a minimum wage job. And I confess, maybe I am naive, but here in Columbia, TN at least, a barely passible worker can make $8 an hour today. A good worker can make ten, plus overtime, just to start with no skills at all. Not that this is a wonderful wage, and to do all the things you are talking about it is not enough. But I am basically saying that it is not up to the government alone to set these wage standards. It is OK for a 15 year old to get paid $5/hour to help at a day care, while a 40 year old can't support a family on that. But a 40 year old should not be left with only this one job option. So I guess I am saying that the government would be better served to train those without training and give additional assistance (as they already do) to the fatherless and the widow (and the single mother or father). Do what the private sector cant, and monitor the private sector to ensure that there is not corruption or abuse. Again, maybe I am naive, but my underlying philosophy is that people, no matter where they are now, have the strength and power to better themselves. I fear that if the government starts to take over...to control us all...then none of us will be able to do that.cadh 8https://www.blogger.com/profile/16229405846825667683noreply@blogger.comtag:blogger.com,1999:blog-28353717.post-79346287804704831702008-10-20T22:12:00.000-04:002008-10-20T22:12:00.000-04:00Thanks for enduring the whole of this article CaDh...Thanks for enduring the whole of this article CaDh8! I know we disagree, but not disagreably! <BR/><BR/>I must defend one concept. If the working poor are working fulltime and not earning a living wage, how, pray tell, will they ever be able to get ahead. Will they ever be able to save enough money to go to college? No. Will they be free of the humility of forms of public assistance? No. Whatever it takes, a living wage for the working poor must be achieved. If necessary, it could be done with a government subsidy to some small businesses, but people who work full time at a legitimate employment should be able to pay for basic necessities. If they cannot, then their employers are scoundrels and oppressors and can look forward to a peoples revolution.brdhttps://www.blogger.com/profile/09999205528107936871noreply@blogger.comtag:blogger.com,1999:blog-28353717.post-29779023823162186832008-10-20T17:52:00.000-04:002008-10-20T17:52:00.000-04:00Also, you say it is unfair that people inherit so ...Also, you say it is unfair that people inherit so much wealth, but again, even if you don't think the situation is fair, the fact is that someone worked to earn that money, paid taxes, invested it in American companies, passed the money on to their family (because that is what inspired their work in the first place) and hoped that their family would have a better life. In order for those who inherit to make use of the money, they must either spend it or invest it. THis benefits them, but it also benefits the market and society. Why should they be taxed at rates like 35-55% upon their death?<BR/><BR/>Maybe I am an idealistic capitalist...<BR/><BR/>CaDh 8cadh 8https://www.blogger.com/profile/16229405846825667683noreply@blogger.comtag:blogger.com,1999:blog-28353717.post-23019939324898532132008-10-20T17:47:00.000-04:002008-10-20T17:47:00.000-04:00OK, I just wrote this whole long rebuttal to your ...OK, I just wrote this whole long rebuttal to your post. I guess it was too long because when I went to post it just said "Could not process" and deleted everything. <BR/><BR/>Here is the gist. I think you are not a simple socialist, but an idealistic one. You want the best for all, but that does not make it right to take things away from the rich. If people in this country would just stop wishing things were different and start doing something to change their own lives, we would not need to take wealth away from the rich. Instead, those who are now "poor" would earn that wealth. No one has to stay at minimum wage (barring a disability or addiction, which would need treatment). If you work hard and make good choices you will move up. We need to reinforce good behavior in this country, and allow bad behavior to be punished (aka not bailing out those who make poor investments). We have messed with the invisible hand, as well as having entered the global society (where not everyone is guided by capitalism). One example is forcing banks to loan money to people who can't pay. This is messing with the invisible hand, and we have seen what has happened. <BR/><BR/>OK, well this is nothing like my first post, but it will do for now. I may have more to say as I think about this post. <BR/><BR/>Also, good explanation of the plans and of the marginal tax rate...cadh 8https://www.blogger.com/profile/16229405846825667683noreply@blogger.com