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Your Take: Bush Era Income Tax Cuts

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Despite what you feel about President Obama, you have to appreciate the sheer amount of work he’s managed to get Congress to do in the few years he’s been in office. Whether or not they’re the right things to do will remain to be seen, but one topic that is sure to take center stage within the next few months, if not weeks, is what we should be doing about the soon-to-be expiring Bush-era tax cuts.

A little history for those of us who weren’t paying taxes before 2001 (that includes myself, at least on any meaningful level). President Bush signed the Economic Growth and Tax Relief Reconciliation Act of 2001 and made one of the largest tax cuts we’ve seen in quite some time. Among other things, the EGTRRA (quite an acronym) lowered every tax bracket, lowered capital gains tax, and effectively lowered the tax burden on every single American. If you remember, this was the boom years of the Internet dot-coms and the economy was doing great. As a way to make the debt and deficit math look more palatable, the cuts were given a sunset provision of December 31st, 2010.

There is no question that the “rich” benefited the most from these tax cuts. Lowering the 36% bracket to 33% does far more than lowering the 28% to 25%, it’s just how the math of tax brackets work.

December 31st, 2010 is not too far away and the debate is growing louder by the day as the November mid-term elections draw closer. Some Democrats and President Obama would like to continue the tax cuts for the lowest four brackets while letting the top two return to 2001 levels. Republicans would like to keep the cuts as they are.

I personally think that raising the top two and maintaining the bottom floor, as I tried to predict for 2011 tax brackets makes the most sense. I think that if you earn $250,000 or more, you aren’t significantly impacted by increasing your taxes a few percentage points. Since I have an understanding of how taxes work for small businesses, I can assure you that this will not affect small business because that tax is on profits, not income (you deduct expenses from income to arrive at profit, or loss). All that talk about how this will kill small business is inaccurate.

The one thing that seems to be overlooked is the fact that keeping the cuts will cost us $3.8 trillion over ten years, with $700 billion of that attributable to cuts for the top 2% of income earners. 18.4% of the cost will benefit 2% of earners… 2% that don’t need it. I’m not a class warfare type of guy but let’s take a page from Warren Buffet, one of the richest people in the world.

Update: Here’s a graphic comparing the two tax proposals.

I’m curious about what you think, should we let it all sunset? Partially? Keep it as is? Dump it for a flat tax? Let’s hear it!

{ 159 comments, please add your thoughts now! }

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159 Responses to “Your Take: Bush Era Income Tax Cuts”

  1. pmulroy says:

    Here is all you need to know: http://www.taxfoundation.org/publications/show/25962.html

    The percentage of working people who end up paying zero federal income taxes has been increasing and over 1/3 of workers owe no federal income taxes each year. This year, they estimate a married couple with two children can make up to $50,250 and not pay a single penny in federal income taxes. This is simply absurd and is unsustainable.

    Do a thought exercise and ask yourself what happens when >50% of workers pay no federal income taxes yet they get to vote and decide how the federal income taxes collected from the rest is spent?

    The sooner we reverse the trend of more and more individuals paying no federal income taxes, the better off we will be. No one questions government spending when they aren’t going to be paying for it. In fact, they will actually support any spending that benefits them in any form no matter what the eventual cost will be because it is other people’s money.

    The government can’t spend a dollar to benefit someone without first taking that dollar from someone else via taxes.

    Obama proposing to roll back only the top two tiers is a step in the wrong direction.

    • NateUVM says:

      “This year, they estimate a married couple with two children can make up to $50,250 and not pay a single penny in federal income taxes. This is simply absurd and is unsustainable.”

      I dunno. That’s only 2.27x the 2010 poverty level. Seems pretty fair to me. After all, seems like a decent goal to keep more people from falling into poverty…

      https://www.cms.gov/MedicaidEligibility/downloads/POV10Combo.pdf

      • pmulroy says:

        Nate,

        In other words: they have 2.27X the resources needed to meet the basic needs (food,shelter, clothing) for healthy living.

        Yes, I am aware their life is far from luxurious and they may struggle to make ends meet sometimes, but they have sufficient income for their basic needs and more. So yes, I expect a family in such a situation to pay at least some federal income taxes. And no, paying some federal income taxes is not going to drive them into poverty.

        Look, my point is that if the federal government is collecting income taxes to provide services that benefit everyone, then everyone who works and earns more than what their basic needs require should be contributing an appropriate amount to the pot.

        Unfortunately we are going in the opposite direction in which fewer and fewer people are contributing to the pot. When you reach the point where the majority of the group do not contribute to the pot, yet they are able to dictate what the pot is spent on, the pot will be mismanaged and spent frivolously.

        • NateUVM says:

          I would debate the contention that “poverty level” means you have the ability to provide for your “basic needs and more.” That, though, might take us too far off topic….

          • Scott says:

            If $50k makes you able to not pay taxes, there will be many more of these families coming as companies are hiring or future hiring back at lower rates. That means less income tax revenues even if unemployment goes down. They will still get sales tax and SS tax…but not much more.

            If people do not have kids, there will be fewer future payers into SS for everyone, so I’m not totally opposed to helping families with children…

            I’m only talking from a business standpoint, don’t want to sound too much like a stone cold person…

          • pmulroy says:

            Nate,

            You seem to be having trouble with definitions. When a term such as “poverty threshold” or “regressive” is used, they have a defined meaning. You can’t simply decide on your own what you feel a term means and expect everyone else to accept your definition.

            Now, since the poverty threshold is defined as the level at which earning less than this amount would be too little to meet your basic needs, I am very confident in stating that if you make 2.27X this amount, you can meet your basic needs and more.

            Perhaps you can argue that the method of calculating this level is flawed, but I doubt the current method would underestimate the “correct” level by a factor of 2.27.

            In any case, you seem to be convinced that 2.27X the poverty threshold is still too low of an income to be expected to contribute a single penny to federal income taxes. Humor me and let me know at what level you think it is acceptable to start asking our hypothetical family of four to start contributing. 3X the poverty threshold? 5X? 10X?

          • NateUVM says:

            @ pmulroy – I’m not trying to change definitions. But I could honestly care less what they are. I care more about what kind of impact they have in the real world.

            Take “poverty level,” for instance. I KNOW what it is supposed to mean. Per its definition, it’s SUPPOSED to be the bare level of what is needed to provide a basic lifestyle where necessary needs are met.

            But there are criticisms, both ways, on how it’s being calculated. Some say it overstates poverty, others say it understates it. In either case, the calculation has been kept the same since 1963. It could probably use some updating. The person who created the original measure (Mollie Orshasky) has been calling for its update for a decade, saying that it’s been under-stating poverty. But that’s just her opinion….

            The DEFINITION of “poverty level” is fine. It’s how we calculate it that should be questioned. Do you see the difference?

            However, my comment was “I dunno.” As in I don’t know how “absurd and unsustainable” the current effective exemption on paying taxes for a family of 4 making under $50k is. I just figured we don’t need more people falling into poverty (why take money away from people who are just above poverty level). I’d rather tax the people who can afford it more (and that probably includes me, though I am NOWHERE near the top bracket of wage earners).

          • pmulroy says:

            Nate,

            Read my comment and you will see I wrote the method of calculating the poverty threshold has flaws, but I sincerely doubt it is underestimating the poverty threshold by a factor of 2.27. Unless you have compelling proof to show how the the calculation could be so far off, I’m still going to believe a family of 4 making $50,250 has enough money for their basic needs and more.

            How exactly would asking this hypothetical family to pay federal income taxes drive them into poverty? Unless the tax rate was 100% of income above the poverty threshold, this would not happen. Lets say we ask them to pay $1,000 a year, leaving them with $49,250. They are now at 2.23X the poverty threshold, still no where near the poverty level.

            Let’s try and see where we can find some common ground:

            1) Can we agree that there is some level of income X, where above that income this family should begin paying federal income taxes?

            2) I believe that X should be the calculated poverty threshold. You believe this calculation is flawed, but presumably, if the calculation was reworked and done “correctly”, would you also agree that any income above the corrected poverty threshold should be assessed federal income taxes? Or should X be set at some other value other than the poverty threshold?

            Finally, what is the correct way of calculating the poverty threshold? You seem to have an idea in your head of who can and can not afford to pay federal income taxes, please tell me there is some reasoning and logic (rather than just a gut feeling) behind your belief that a family of 4 earning $50,250 can not afford to pay federal income taxes. At what level of income should we expect this family to start paying federal income taxes?

          • NateUVM says:

            1) Yes, there is some level of income where federal taxes should start to be paid.

            2) No, I do not think that level is right at the poverty level.

            Poverty is NOT a good thing. Why would we ever want to maintain that level of living amonst ANYONE? Point is, we shouldn’t want for “poverty” to be the base level that people maintain. We want them to be better off than that, right? As such, I don’t think it’s a good idea to tax people who are “just above” poverty level.

            So, really the question here is, how far above poverty level does “just above” extend? You seem to think 2.27x is more than enough. I think, especially given how, in my view, low $50k is for a family of four, that 2.27 probably isn’t enough.

            (As for your last question, the errors that the current poverty calc has and how if could be fixed… Well, let’s update the basket of goods that someone is supposed to be able to purchase if the are earning poverty level income. The basket of “necessary” items has changed a LOT since 1963 and merely indexing them to inflation isn’t good enough. We need them to continually reflect the same standard of living that “poverty” reflected in 1963.)

  2. Agreed with some commenters: some sort of tax increase has to happen to keep the nation and the states from going broke.

    As an unemployed old bat who was forced into retirement by the recession, though, the prospect of higher taxes on investment income scares me. I’m barely, and I mean BARELY getting by on Social Security and scrounged-together joblets. Anything that can be passed off as contract work gets paid through my S-corporation, protecting me from the rather cruel penalty Social Security inflicts if you earn more than poverty-level wages but still remain at the poverty level.

    When I take a drawdown from my pension funds or a payout from the S-corporation, I’m taking money that will be eligible for even higher taxes than I’m already paying. If more money from my savings is confiscated when I take out funds to live on, then I have a significantly lower standard of living — one that removes me from the middle class.

    From the tenor of some of the comments that come into my site, I’m quite sure I’m not alone in this.

    IMHO, it’s not the people who have worked hard at productive jobs and now find themselves un- or underemployed who should be hit with tax increases. The folks whose machinations helped to bring about this depression and got rich while they watched the rest of us go down the toilet not only CAN afford higher taxes, they SHOULD have higher taxes. Why? Because they have profited mightily on the destruction of our economy and the pain of their fellow citizens.

    If there’s such a thing as a “more fair” tax, then surely the flat tax is less regressive than the VAT.

    I lived for some time in England and observed the effect of the VAT on the standard of living. The most ordinary goods are extravagantly expensive, because the price is jacked up at every step along the way, from raw material through fabrication through distribution through retailing via every leg of transportation along the way. As a result, junk that you and I would buy at Target is often beyond the reach of the middle and lower-middle class. Goods of Ikea’s throw-away quality are sold in relatively upscale stores. The gigantic flea markets in London are popular not because Londoners so love to buy second-hand stuff but because they can’t afford to buy things new. That’s the direct result of the VAT.

    Get rid of FICA and our young folks can build shacks in the backyard to house the in-laws. Great plan, eh? Which spouse is going to quit his or her job to stay home and care for the old folks when they get really infirm?

    The fairest tax probably is a flat tax, providing there are no loopholes and the cost is not more than about 10 percent of income. It would be harder on the poor, but 10 percent of all those bankers’ earned and passive income would go a long way toward refilling the Treasury.

  3. Mike says:

    Did you ever consider that “not profitable” ventures were losing money because the Government runs them?

    In Europe, the postal services are profitable because they are allowed to offer services that our own USPS is denied by Congress. Congressional oversight and imposed beauracracy forces the USPS down one road only – raising rates instead of cost cutting (firing staff, closing unneeded stations) or more non-standard services like ATMs in the lobby of a post office.

    I live in the DC area with a subway (Metro) system. It is losing money every year because they maintain a maintenance staff that is 3 or 4 times larger than necessary. Why would non-revenue generating divisions of Metro (maintenance) need to be larger than revenue generating divisions (drivers, train conductors)?

    In the private world, business tend to be more streamlined and avoid excess personnel costs in areas that are unnecessary – blame technology for this one in many cases.

    Government involvment brings Government regulation which creates unnecessary inefficiencies that wouldn’t exist in private companies.

    Lastly, remember that those who are good at managing get paid to do so. Government managers tend to make less than their private manager counterparts for a reason!

  4. Drew says:

    Here’s an interesting idea from a well-reasoned article:

    Add another tax bracket to apply to the super rich. Why should Labron James and LaBron James’ dentist pay at the same rates?

    http://www.newyorker.com/talk/financial/2010/08/16/100816ta_talk_surowiecki?

    • cdiver says:

      I like this idea. Most would agree that $250k a year is a lot of money, but I can understand the argument of those making that kind of income. I can not nunderstand the argument of those whose annual take are in the multi millions.

  5. Aaron says:

    NateUVM,

    I’m very very opposed to the flat tax, but in the ideological sense of the term, it is not regressive. If you truly taxed everyone 5% of their income, you cannot call it regressive just because 5% to someone making less money means more to them than 5% to a millionaire.

    I think you’re thinking of the classification of another “flat” tax implemented by states in the sales tax. Sales tax, or a consumption tax, while X% for everyone on whatever they purchase, is not flat, but rather regressive because the less income you earn, the higher percentage of your money must be spent in order to survive, because basic needs cost the same for everyone, regardless of income, so poorer people must spend a higher % and therefore are taxed more than the rich in that scenario.

    A tax that truly taxed everyone at X% of the income they earn is truly flat, not progressive or regressive.

    I’m against a true flat tax as well, and I think that would inevitably destroy the economy. But obscuring the truth and calling it regressive because you don’t like it or sympathize with middle to lower income people over the rich is still obscuring the truth. A true flat tax is neither progressive nor regressive.

    • NateUVM says:

      I’ve already addressed this above, the confusing that is defining “flat tax” vs. defining “regressive,” so please refer to that discussion.

      But to recap the conclusion…. A flat tax IS regressive, in effect. It may not meet the strictest definition of “Regressive,” because it doesn’t decrease, in an absolute sense, as in the income base increases. But it DOES have a disproportionate effect on lower income earners.

      That’s why it’s referred to as being regressive, because that’s the effect. And I’m not sure what other way you’d want to discuss such things, other than how they would effect the taxpayers, in this case.

      • Scott says:

        If you institute a flat tax when unemployment is low, it will increase sustantially if it gets better. I would think government would love that…more money to spend.

        Then when they get “maxxed out”, they can switch it back to the current system and the trillion page tax law and employing the IRS’s 101,054 emplyees. Lincoln is probably rolling in his grave knowing what he created…

        • Scott says:

          fyi…we are sooooo progressive.

          The Revenue Act of 1862 was passed as an emergency and temporary war-time tax. It copied a relatively new British system of income taxation, instead of trade and property taxation. The first income tax was passed in 1861:

          The initial rate was 3% on income over $800, which exempted most wage-earners.
          In 1862 the rate was 3% on income between $600 and $10,000, and 5% on income over $10,000.
          In 1864 the rate was 5% on income between $600 and $5,000; 7.5% on income $5,000–$10,000; and 10% on income $10,000 and above.
          By the end of the war, 10% of Union households had paid some form of income tax, and the Union raised 21% of its war revenue through income taxes.[1]

  6. Jeff says:

    “The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

    Economics in One Lesson – Henry Hazlitt 1946.

    If you wonder what will be the outcome of government spending read this book.

  7. Aaron says:

    “A flat tax IS regressive, in effect. It may not meet the strictest definition of “Regressive,”…

    Then it’s not regressive. Regressive means regressive, not what you nor I deem is unfair. I agree with you that it’s unfair, and a bad idea. That’s our opinion. But neither of us get to redefine what a regressive tax is to negative stereotype a true flat tax just because we don’t like it.

    • NateUVM says:

      Okay. Fine. You win the “definition” argument surrounding “regressive.” Congratulations.

      Now, let’s talk about what a flat tax means… IN EFFECT (which is all I was ever saying), a flat tax IS regressive. Not by the strict definition of regressive, but IN EFFECT. Whether it is (as defined) regressive tax or not, a flat tax is regressive in its impact on the various tax classes.

      And the effect is all that should ever be considered. Low income earners could care less what the dictionary says about the relative scale of taxes across tax bases. They would only care about how a tax impacts their lives.

      • JoeTaxpayer says:

        Nate –
        I’ll ignore the definition debate for now, I think it’s all been said.
        Most flat tax proposals include an exemption. The $50K family getting a $50K exemption, and every dollar after getting taxed at the flat rate. No deductions, nothing else. Your 1040 says “take your gross, deduct $50K, and multiply by flat rate. Is that fair?

      • Aaron says:

        Dude, I *AGREE* with you that the tax is unfair and would be destructive to the middle and lower classes in particular, and to frankly everyone, as it would lead to an over concentration of wealth.

        But it’s not even IN EFFECT regressive. It does not in effect cause people of lower income pay a higher percentage of their income in taxes than anyone else if it’s truly a flat tax, period. It helps no one when someone uses a term that has negative connotations to slur another idea.

        Turn the tables around a bit…

        Since you’re in favor of helping the poor out, what if I called your idea communist because in my opinion “IN EFFECT” that’s what the idea does? But it’s not, is it? At no point did you advocate abolishment of private property, total control of economic decisions by the gov’t, nor did you advocate an oppressive gov’t that Communism is often associated with today. That kind of crap goes on all the time in political debate, and it doesn’t matter if people you agree or disagree do it. All that does is inhibit real debate and an honest discussion of ideas.

        You can get upset with me all you want, but you’re barking up the wrong tree. I agree with you on the issue. I simply disagree with your tactics of persuasion because it perverts the truth.

        • NateUVM says:

          Aaron, this has nothing to do with labels and such. I’m not trying to color anything so that it has a more or less favorable bent. But a straight flat tax, with no exemption, IS regressive in effect.

          You aregue that the rate doesn’t decrease as the tax base grows. That is true. But, as we’ve been over about 50 times at this point, that is merely the literal definition of “regressive.” It has nothing to do with how it actually effects the taxpayers.

          The example I’ve already used was a flat tax of 5%. For an earner making only $1000 a year, the $50 they have to pay in taxes would have MORE OF AN IMPACT on them than the $5,000 that someone making $100,000 would have to pay. It would hurt the lower income taxpayer MORE to pay their tax than it would for the higher wage earner.

          And THAT is how a flat tax is regressive.

          Which is why I am more in favor of a tax structure where people pay more of a percentage on their income as their income base rises. Where the impact of paying the tax is graded out evenly over the taxpayer populace. Something with brackets, I think, might work… ;)

          As for Joe’s mention of the assumption of an exemption…I’m not an economist, by trade. I haven’t taken a look at what threshhold would make sense so that it wouldn’t end up being regressive (in effect, of course). However, none of this discussion is based on that assumption as that was not what was mentioned in the OP. That’s why I haven’t really been talking about it. I would agree that an exemption would make it LESS regressive.

          • Aaron says:

            “tax that imposes a smaller burden (relative to resources) on those who are wealthier; its opposite, a progressive tax, imposes a larger burden on the wealthy”

            http://www.britannica.com/EBchecked/topic/496192/regressive-tax

            The resource here is based on a percentage of income. A true flat tax is an equal burden of percentage of income for everyone. That’s not regressive.

            You’re bending the definition of regressive. A flat *comsumption* tax can truly be claimed as in effect regressive, as I outlined earlier. This simply cannot be called that even in effect. It’s more regressive than our current system, but again, calling it regressive on an objective scale is the equivalent to calling for example Obama’s health care reform bill that passed, regardless if you agree with it or not, socialist or communist when it’s simply a bit more socialist than the system before, but still overall largely the same system we already had with a few tweaks.

            You can believe it’s regressive all you want, but it’s not.

          • NateUVM says:

            Aaron, you’ve ONCE AGAIN, pointed out the mere DEFINITION of “regressive.” You DID read my earlier post where I ceded that point to you, right?

            This has NOTHING to do with the definition of regressive, so you can keep your little link to Britannica.

            Come back when you have something new to contribute.

          • Aaron says:

            I’m apologize. I have a nasty habit of backing my points up with facts and reason instead of making up definitions to words to suit my arguments. It’s a nasty habit of mine.

          • NateUVM says:

            Nice passive-agressive reply. It’s no wonder the country is in the mess we’re in. We can’t even discuss topics without getting offended over minutae.

            I’ll try one more time…

            YOU ARE RIGHT! Your “facts” regarding the textbook definition of “regressive” is SPOT ON! YOU WIN! (By the way, this is something I’ve agreed with from VERY early on, here…)

            Now, as for the ability to reason… Just because a tax isn’t regressive in structure, doesn’t mean it isn’t regressive in effect. You have failed to demonstrate otherwise. All you keep talking about is how the tax rate is the same no matter what you earn… So, yes. The structure is, by no means, regressive.

            Can you step outside that box of stubborn that you’re stuck in and try to discuss the effect…? I wonder.

          • Aaron says:

            Can I ask why you’re insisting on calling it regressive when you agree it’s not? Why wouldn’t you call it “unfair”, or something like that?

            It’s like arguing a table is black if it’s actually through and through brown undeniably brown. Well, it’s black *in effect*! So just call it brown!

          • NateUVM says:

            Because….while it isn’t regressive in structure, it’s regressive in effect.

            Regressive implies that it has a higher impact on lower income earners than it does on higher income earners.

            A strict flat tax (again, with no exemptions) isn’t regressive in structure.

            A flat tax does, however, it DOES have a greater impact on lower income earners than it has on higher income earners(due to the decreasing marginal value of income). As such, it may as well be regressive in structure, as that’s the effect that it has. Thus the “in effect” statement.

            I’m not going to be subjective about it and say that it’s “unfair.” How fair is it that higher wage earners have to pay more than poor people in our current system? I’m not making any value judgements here.

            But to deny that a flat tax is regressive in effect is to get bogged down in semantics.

            Using your example, say it’s a brown desk…what if everyone is wearing black shaded glasses(if that’s even possible…but work with me, it’s your example)? Doesn’t matter that the desk is brown. The only thing that matters is how people experience its color. They see it as black… It may as well be a black desk.

          • Aaron says:

            Thank you for making my point. Not everyone wears shades in this room. Poorer people would be wearing the shades only. That’s the problem. Now you get people bickering about what color the table instead of having a real honest discussion because you interjected the sunglasses on the poor people. That gets everyone, rich and poor, nowhere.

            “Regressive implies that it has a higher impact on lower income earners than it does on higher income earners.”

            By percentage of resources only, not by how much they feel. What you’re doing is a slippery slope. How do you define then when a progressive tax isn’t regressive? You’ve already stated above proposals of flat taxes, which actually are progressive tax plans, are still regressive. So a progressive tax is regressive, unless it’s progressive enough for your liking?

            That’s what I’m getting at here. There’s varying shades of regressive/progressive/flat. But you’re insisting apparently to call a true flat tax regressive, and some progressive tax plans regressive. Now there’s absolutely no meaning to the terms “regressive”, “progressive”, and truly “flat”.

            It completely makes sense to say “flat taxes aren’t progressive enough” even if someone disagrees with the statement. They at least can understand the statement. I would even understand if you said the above flat tax proposal, which is actually progressive, is effectively flat, or too flat, and would cause unnecessary hardship on lower classes. That implies a lack additional needed progressive elements to the structure. That means something.

            But to call a flat income tax regressive destroys the meaning of regressive/progressive/flat. There has to be some objective scale here, or I could call a socialist tax plan regressive simply because I don’t think it’s progressive enough. The truth is it’s progressive, regardless if it’s progressive enough for me.

          • NateUVM says:

            Aaron, you’re confusing a metaphor that involved sunglasses with the premise that someone is trying to color an argument and is wearing fill-in-the-blank-colored sunglasses. They’re not the same thing… Again, you’re getting lost in the nuance. Again.

            Furthermore, I have yet to make ANY valuation on any REAL flat tax proposal. It is true, with their various suggestions for exemptions, most flat tax discussions are more progressive than not.

            But that has NEVER been what I have been discussing here. I have ONLY been talking about a strick, straight flat tax.

            Given that you are so confused as to what we are actually talking about… Why don’t we just call it a day?

          • Aaron says:

            I completely understand what you’re trying to say. You’re not confusing me in the slightest, nor would you confuse anyone who actually understands what a regressive tax is. You’re just confusing other people who may not, thereby slanting the discussion, and reducing honest debate and understanding about this topic. While I agree with your opinion that a true flat tax is unfair, I’m not onboard with redefining concepts to make a better argument.

            Feel free to post back if you’d like, but I’m done.

          • NateUVM says:

            And here I thought that a regressive tax was a tax that imposes a smaller burden (relative to resources) on those who are wealthier; its opposite, a progressive tax, imposes a larger burden on the wealthy. That’s the only definition we’re working with here. To the best of my knowledge, that’s exactly what you believe it to be, too, so….

            Maybe it’s you who is getting in the way of honest debate by getting lost in nuance, getting hung up on definitions that don’t apply to the heart of the matter and thus missing the point?

            Yeah. That might be what’s going on here… Have a good one, though.

  8. Scott says:

    I would look at parts of the government that are going down in need (postal service for sure) and either reduce the workforce in headcount or in # of days delivered to meet the need.

    I, for one, would not miss Sat delivery or even if it went to 3 days a week. Everyone would still get there sales ads on Monday and all the credit card offers the other 2 days.

    The market would adjust to this and no one would suffer (except the overpaid, underworked mail carriers)…

    This is only one example; I’m not singling out the postal service, just an easy choice.

    If you do not do the above, at least make people pay a fair cost for mailing, say $.99 for a stamp to ship something across the country is not expensive people.

  9. Drew says:

    Prior to the creation in 1913 of the national income tax, about a third of Uncle Sam’s annual revenue came from liquor taxes.

    Prohibition became more feasible in 1920 because income tax revenues swelled Federal coffers. But, when income tax revenues plummeted in the Great Depression, congress needed the liquor taxes again. That helped drive repeal of the 18th amendment.

    Today in California local govts look to end marijuana prohibition to gain tax revenue.

    http://www.pittsburghlive.com/x/pittsburghtrib/news/s_518872.html

  10. Pedro says:

    Good info and lots of good responses. The bottomline regarding taxes is very rarely are new taxes or tax increases good for taxpayers or the economy. By cutting or lowering taxes there is more money pumped into the economy by you and I spending it on various items and services.

    • Scott says:

      But Pedro, more taxes would allow more people to get government jobs and for every $1 spent, we’d get $1.60 back into the economy…

      I just love it when “they” say that one…

  11. Wendy says:

    I am 57 and have been retired for almost 4 years and my husband for almost 7 years. We are not part of the (rich) we are just comfortable and will never work again,Lord willing. This is what happens when you increase taxes. We were never in the top brackets but with payroll , cap gains and dividend taxes and having to save for our retirement …we lived on half our income for a long time. Now we pay little or no taxes. Could I be a producer… no incentive….above 140 IQ many will follow our lead.

  12. Society is paid for with taxes. says:

    Some years ago I bought 100% of a dying sub-S company. Two years later I had turned the tide and was making a substantial profit, which, I came to learn would be taxed at ordinary income to me. Worse, the dollars I put back into the company to solidify and continue its growth would be with after-tax dollars. After consulting my accountant, I contacted my lawyer, and POOF!… I was incorporated. The whole deal took less than a week, most of that time was spent educating myself on tax consequences.

    My first two years I didn’t pay a dime in income taxes, but I wasn’t happy. X% of zero is still zero. Subsequently, intoxicated by success, I became one of those obnoxious, woe-is-me moaners about his tax bill. Honestly, that’s simply a not particularly subtle way of bragging. In fact, it became my goal to achieve the highest tax rates.

    IMHO higher tax rates for small business should not be an issue.

    As far as inheritance taxes, I side with Buffett and Gates — educate your kids, provide for them a reasonable nest egg, return the bulk of your estate back into the ‘pool’. It makes for a better society when those at the top, do so on merit.

  13. JC says:

    This article is WAY out of touch with reality. The bottom line is that the BUSH TAX CUTS BENEFITED THE LOWER-MIDDLE CLASS THE MOST.

    Percentage-wise, a reduction of the lowest bracket from 15 to 10 percent is much more substantial than lowering 36 to 33 percent. A 5 percent reduction in the 15 percent bracket is a 33% decrease, while a 3 percent reduction in the 36 percent bracket is an 8% decrease in taxes.

    Who does that help out most? The middle and lower class, hands down! Add to that a doubling of the child tax credit, and MANY lower-middle class families have done much better tax-wise, including myself.

    -JC

  14. Steve-o says:

    We don’t have a tax problem in this country, we have a SPENDING PROBLEM. Keep taxes low. Stop spending and stop talking about how much we can stick it to the rich. Ugh.

    • Scott says:

      We don’t have a tax problem in this country, we have a SPENDING PROBLEM. Keep taxes low. Stop spending and stop talking about how much we can stick it to the rich. Ugh.

      I couldn’t just put “agreed”…too few letters for the blogging gods…repetition is the father of learning, mother of retention.

  15. Henry says:

    What is so wrong with a flat tax,,,,everything here in the US is supposed to be equal,,, why not income,,,Buffet said,, He paid less than his secretary. What’s wrong with a straight FLAT tax of 10%,,, people,corp’s,,etc.no deductions,,,,We need to Graph that one and see….

  16. Yosemite Sam says:

    Mr. Wang I stopped reading your article after your writing revealed you do not have even a grade school grasp of math. A 3 percent tax rate reduction on what was a 28% rate is a 9.33% reduction. A 3 percent tax rate reduction on what was a 36% rate is an 8% reduction. A 9.33% reduction is greater than an 8% reduction thus those in the 28% tax bracket did indeed receive a relatively greater benefit from these tax rate reductions than would those in the 36% bracket.

    Further is it obvious that you earn less than $250k a year by your willingness to make those that do, shoulder an even greater tax burden than they already do. That by the way is 67% of all taxes paid. That is more than enough. The tax rates reductions during the Bush Administration reduced rates for all Americans, but as a matter of fact and mathematics those with the lowest incomes received the greatest relative decreases. Exactly the opposite of your erroneous statement.

  17. Paul @ Shady Grove says:

    While I am not an economist and my math skills are sub-par, I do wonder about tax breaks for the rich. I keep hearing the Re-pubic-ans blabbing about how jobs won’t be created if we raise the taxes on the super rich. These tax breaks have been in place for 10 years now and where are the jobs??? Is this their brand of the Reagan trickle down economics ??? You people, yes I said “you people” will not support president Obama even when he puts forth ideas that “you people” supported in the very recent past. I think the main problem is that most of “you people” are racist to the core. Mitch McTurtle & Eric Cantor are easily the worst of your bunch. They will let the poorest of the poor suffer the most only for their politcal gain. What is wrong with “you people”??? “You people” make me sick with all the lies you manufacture and your constituency believes them because they are basically to ignorant of the truth and don’t want to hear anything that resembles fact!!! Shame on all of “you people”. Again you make me sick !!!


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