A question for Republicans and other Right Wingers ?

A question for Republicans and other Right Wingers I always hear that after the tax cuts for the Wealthy by JFK Reagan and the Bush tax cuts that the Wealthy pay more money in taxes can any Conservative explain the reasons for this ? I don't understand how the Wealthy would pay most of the taxes if they are paying a lower tax rate. I also want to know if the economy is good and the government gets more revenue do the Wealthy pay more taxes ?

A Brief Guide to the Flat TaxBy Daniel Mitchell, Ph.D.
July 7, 2005

Frequently Asked Questions

Q: Should the rich pay more?

A: Under a flat tax, the rich do pay more than the poor. A wealthy taxpayer with 100 times more taxable income than his neighbor will pay 100 times more in taxes. However, a flat tax does not impose special penalties on those who contribute the most to the nation's prosperity by subjecting them to punitive and discriminatory tax rates. For those who think the "rich" should pay a higher percentage of their income, the generous family allowance effectively creates a modest level of "progressivity." For instance, a family with an annual income of $20,000 faces a tax rate of zero. Wealthy taxpayers also benefit from the family allowance, but the effective tax rate on an income of $1 million will be only a tiny fraction below the statutory tax rate.

This approach is much fairer than the current system, which penalizes investors, entrepreneurs, and others who create wealth for the American economy while simultaneously providing myriad deductions, credits, exemptions, and other preferences that are much more likely to be exploited by upper-income taxpayers. The flat tax eliminates these special-interest loopholes, ensuring that the rich play by the same rules as other taxpayers.

www.heritage.org...

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It doesn't matter. Left wing or right wing, both doors lead to the slaughterhouse. There's a quote in a book called: The hidden hand: Britain, America, and Cold War secret intelligence. It's toward the end. This man works for the National Security Council and he talks about two versions of politics. An esoteric and exoteric world. The esoteric world of politics is hardly ever even written down on paper, but it's the real version of the world. Only a select few know about it, and if you get high up enough on the social ladder of life, or you become too much of an asset or liability, you will be exposed to this esoteric world.

reply to post by mikejohnson2006


There is a specific formula and function for the optimal tax rate, but in general, raising taxes up to a certain point increases revenue, and everything after that point lowers overall revenue.

At this time, if we lowered taxes on corporations, and lowered the overall tax rate on everybody (including the wealthy), we could increase the total revenue by making it cheaper for corporations to pay taxes instead of paying lawyers and accountants to avoid taxes. We make it profitable for corporations to bring their money home from the overseas shelters and invest it here. We make it profitable for successful small business owners to expand and hire more people and generate more revenue.

I am personally a big fan of a Flat Tax or a Fair Tax. I personally think they should have let all the tax exemptions and loopholes expire a few months ago, and that would have raised taxes in a roundabout way, but it was the right thing to do.

BUT, at the same time, I believe the overall tax rate is exorbitantly high! It is outrageous to think anybody in the US should pay 55% taxes, when we don't have free healthcare, or free education, and we pay additional taxes for roads and infrastructure. Everything we do is taxed individually, and then they still want an income tax on top of all that?

It is outrageous, and our Founders would rise up and fight it again if they were able. We have let ourselves be taken advantage of, and we should be ashamed.

I don't know if my politics fit into your categories, but I can take a shot at answering you. (Heritage, by the way, is a great place for researching answers. Hit their home page and look up just about anything you want.)

Why would the wealthy pay more when taxes are cut? Let me give you an extreme example that may be the start of an answer.

If you know that your taxable income will be hit with a 90% tax bite, it's natural to try to reduce your taxable income. Maybe by earning less, maybe by hiring accountants and working tax dodges. Now, when it's announced that your tax rate will fall to 10%, you may start thinking that earning extra money is really worth it, after all you get to keep nearly all of it. There's less reason now to try to hide your income or avoid making it.

The effect is taking 90% of a very small pie versus 10% of a huge pie.

By the way, look up the Laffer curve for a graphic description of how this works. If you want, I can try to explain it.

Tax cuts for the rich do work, if done intelligently and in proportion. The thinking and logic on it are fairly simple really. If the rich feel good about the economy and positive about future wealth and profit, they tend to spend a steady flow of their wealth to ..well, frankly, feel wealthy.

Things like boats, planes, nice meals and everything else the truly rich folk have and consume on a regular basis. Basically, anything they want. lol....When the economy stinks, they feel over-taxed and prospects for future wealth are uncertain or outright negative, they don't do anywhere near as much of that spending.

How does that effect us little people who will never see money on the scale of the people we're talking about? Well, millions of us work in one form or fashion is areas of the economy that lead to supporting that spending at the top. Boats and Yachts need everything from glass for their windows, to foam for their cushions to engines for their ability to BE something other than a giant row boat. Likewise, everything else the rich buy and do to get richer requires stuff being made.

So, very simply and within the equations of what really has been shown to work in the actual U.S. economy in the past, the rich can either spend the money that flows up from us on things we get jobs and work to make or support....OR they can be made to give the same money to Uncle Sam and we can trust people like George Bush, Barack Obama or Newt/Romney with that money.... Of course, the government will use it to benefit us, right? When have THEY ever taken in money that didn't really help people with work and quality of life the same way the other direction does?

Originally posted by mikejohnson2006
However, a flat tax does not impose special penalties on those who contribute the most to the nation's prosperity by subjecting them to punitive and discriminatory tax rates.

And that is the real crux of the issue. The assumption that the the rich contribute more to the nation's prosperity. But, in truth, who really contributes more?

The rich politicians who start the wars, or the lowly, poorer soldiers on the ground actually fighting the battle and doing the dirty work?

The board of directors who sit in meetings all day, or the actual people on the ground making the product?

Who contributes more to your company? You, or your boss who sits around pushing papers all day?

Certainly the rich do contribute, but to say that they contribute most is utterly ridiculous.

I would like to explain why the Wealthy would still pay more money under a flat tax and tell me if you agree. First off I agree with you charles1952 are you saying that a Wealthy person would want to earn money and would have more of a reason to pay taxes if the rates are low but when the tax rates are high the Wealthy have less of a reason to make money since it would be taxed so he trys to hide the income and find tax loopholes ?


If you know that your taxable income will be hit with a 90% tax bite, it's natural to try to reduce your taxable income. Maybe by earning less, maybe by hiring accountants and working tax dodges. Now, when it's announced that your tax rate will fall to 10%, you may start thinking that earning extra money is really worth it, after all you get to keep nearly all of it. There's less reason now to try to hide your income or avoid making it.

reply to post by AnIntellectualRedneck


Who cares who does more or less? A Flat tax is the most fair way.

I'd say we set a minimum poverty limit. Say $15,000 per adult and $7,500 per dependent or child. No taxes on that first portion of any wage. So, a family of four making less than $45,000 wouldn't pay any tax.

Then, if we tax all income above that amount by 12 or 15 percent, the total tax revenue of the country would explode, and people would be happy, and it wouldn't take 15,000 pages of tax code to do it!

We would have to also eliminate all tax "credits" to make it truly fair. We don't need to be sending money back to people that didn't pay it in in the first place. Last year the non-profit that I volunteer for is tax-exempt, and at the end of the year they got back $2,500. They weren't counting on it, it didn't figure into budgeting, it didn't cause them to hire anybody or expand or spend in extra money, it was just a flat out waste by the Federal Govt.

Flat tax and No Credits or Loopholes.

reply to post by mikejohnson2006


To answer your question on how a person with a lower rate pays more taxes, the best illustration would be mathematically, where a 10% rate on 1 million is $100,000 compared with a 30% rate on $35,000= $12,250. the 10% rate paid is much higher as 100,000>12,250.
Of course this is based on an individual paying taxes.

I agree that a flat tax for everyone is the only fair tax, but i hesitate to say that i am paying more than a guy making a couple of million a year.

Here is a video that kind of illustrates that even with a lower tax rate some guys pay more than their fair share or at least more than my share.
T. Bone Pickens pays more than me

The very rich are not taxed enough. Period. Their corporations are not taxed enough. Period.
The country earns enough wealth by its assets ALONE to fund a limited and constitutional government. It is the desire of the biggest corporations, and the wealthiest people to have something other than a constitutional government, they want servants. They want a police state to protect them. They purchase our government.
They want to make sure they stay wealthy, and actually INCREASE their wealth, and they are doing a very good job.
This has nothing to do with conservatism. Conservatives don't think this way. A conservative may want to conserve their wealth and pay less taxes, but we all do. This entire premise that it is conservatives that are trying to get a free ride is horse #.
This country has wealth, plenty of wealth. It is being pissed away paying big corporations to make vaccines that are poisonous, weapons and NGO's to destroy countries, and surveillance on its own citizens.
Income taxes barely pay for the cost of collecting them, and interest on a bogus debt.
I say, tax ONLY the very rich, at this point. And make them make do with whatever other revenues the state makes off of its assets. Without taxes, we working people can choose our OWN charities, instead of the damn government doing it for us.

reply to post by mikejohnson2006

Dear mikejohnson2006,

Thanks for the question. Yes, basically, that is what I'm saying. Incentives, reasons for doing something, are important.

Why earn money if the government is going to take almost all of it? Why spend time and resources dodging taxes if you're only going to save a few per cent? Especially if you have to worry about whether your scheme will be upheld in court.

With respect,
Charles1952

I think the most fair way is No Direct Tax on Income at all by the Federal Government. Not hourly wages nor capital investments, nor inheritance.

Then the tired old argument of how do we pay for police, schools, roads hospitals, etc. The answer is by how we did beforehand and how we do now. The local level and consumption taxes. For example the Federal Sales Tax on gasoline is 18.4 cents per gallon (Ohio has 26 cents per gallon for a total of 44.4 cents).

Like most things, it started with Hoover in 1932 as a tax to help balance the budget. Now, it is interesting to note that the Federal gas tax was at 4 cpg until 1982 when Reagan bumped it to 9 cents, then later 9.1 GHW Bush bumped it up to 14.1 (with 2.5 cpg to go directly to the deficit) And then Clinton in 1993 added another 4.3 (making it 18.4 cpg) with the entire 4.3 cents going to the deficit (a total of 6.8 cpg), then in 1997 Clinton redirected that 4.3 away from the deficit towards the Highway Fund.

Now my most current data is that the US consumed 286 million gallons of gas per day in 2005 which would be (104.39 Billion gallons or $19.2 Billion in Federal Taxes--$2.6 Billion to the deficit provided the Bush tax is still in place in 2005 alone)

Keep in mind this is just gasoline, diesel is another matter. And while the numbers are small compared to the $15 Trillion that is the current deficit, this is just gasoline. There are mostly hidden Federal Taxes on electricity, phone service, cigarettes, alcohol and sorts of other little things as well.

Frankly, give all these operation taxes that also pay on the deficit, I don't see why exactly we should be paying any percentage of personal profit for the sweat of our labor to the Federal government. Last I checked, neither the President nor the Congress hired nor signed the paycheck of any local police officer or fire fighter... but they sure seem to think they know what curriculum a teacher should teach.

Personally, I am in favor of the progressive tax we now have, only simplified. Let me explain my reasons:

Capitalism itself has one major flaw: the more money one has, the easier it becomes to make more; the less money one has, the harder it becomes to make more. Someone working for, say, $15,000 a year while raising a family is impoverished and unable to invest or even to save more than a few cents here and there. Options become limited. There is no way such a person can afford nice clothes for an interview or tuition and books for an education. On the other hand, someone who is making ten times that, $150,000 per year, and raising the same family is capable of affording a nice home, decent transportation, professional clothing, and a college education. Go farther up the ladder to $1,500,000 per year and you are looking at someone who has almost unlimited investment opportunity as well.

Under a deduction system, the person making $15,000 per year would pay no tax, which I have no problem with. He is barely able to make ends meet. Assuming the figures another poster proposed and a family of four, the others would get a deduction of $45,000 per year, leaving the one making $150,000 with $105,000 taxable income and the one making $1,500,000 a taxable income of $1,455,000. At a tax rate of 10%, the former would have $139,500 left after taxes, while the latter would have $1,354,500.

The former would pay $10,500 on their income of $150,000, for an effective rate of 7%. The latter would pay $144,500 on their income of $1,500,000 for an effective rate of 9.63%. So far so good, right?

Wrong. If you look at the ease with which the two make their money, that progressive increase does not equal the regressive increase in time spent earning the money. Someone making $150,000 is probably working a minimum of 40 hours per week, while the one making $1,500,000 is working maybe 30 at most. That kind of income comes more from investment than from service to an employer. So, according to those numbers, the guy making $150,000 is paying 145.6 hours of labor, or 7% of his working hours to pay taxes. the guy making $1,500,000 is paying the equivalent of 92.6 hours of labor, or 5.94% of his working hours.

A progressive tax base works to curb wealth accumulation after a point... not stop it, but curb it. And in the process, it provides funding for necessary government activities.

Now, here's the problem: we do not have a progressive tax base! In theory, perhaps, but in reality all the various tax credits and deductions allow those with disposable income to reduce their taxable income. Thus, I agree with others that the loopholes must be eliminated... including the various tax credits that are used to redistribute wealth to those who do not even pay into the system. Despite their status, it is their responsibility to improve their lot in life, not the government's place to pay them for being poor. It is the government's place to allow them the opportunity to improve their lot in life, but that is quite different from paying for poverty.

But more importantly, we must stimulate the economy and curb spending... and reducing overregulation would do both at the same time. By reducing regulations on businesses to only those things the Federal government is mandated to do (interstate commerce, establishment of standards such as truth in advertising), businesses can thrive again, providing jobs to people and producing wealth for the government to tax, and the money now spent to do little more than control people's lives and strangle business practices would be saved for more pressing concerns. Who knows, maybe we could actually afford a real public healthcare system instead of the insurance requirement about to be forced on us.

Cutting spending is the key, and reducing regulation is one way to do just that and stimulate economic growth at the same time.

Oh, and before I forget... we need to drop the corporate tax! Corporate earnings are divided among the shareholders, who then pay taxes on them as income. Corporate tax is then a double tax on a single income. Just imagine if you had to pay income tax on your paycheck once when you got it and again when you deposited it in a bank or cashed it.... you would be livid! But that happens every day to every corporation in America. I also think the inheritance tax should be abolished and made illegal. Why should the government get a portion of the results of income they taxed when it was earned? Why should they be able to take the things a person has earned during their life in order to leave to their children because that person died?

TheRedneck

Originally posted by charles1952
I don't know if my politics fit into your categories, but I can take a shot at answering you. (Heritage, by the way, is a great place for researching answers. Hit their home page and look up just about anything you want.)

Why would the wealthy pay more when taxes are cut? Let me give you an extreme example that may be the start of an answer.

If you know that your taxable income will be hit with a 90% tax bite, it's natural to try to reduce your taxable income. Maybe by earning less, maybe by hiring accountants and working tax dodges. Now, when it's announced that your tax rate will fall to 10%, you may start thinking that earning extra money is really worth it, after all you get to keep nearly all of it. There's less reason now to try to hide your income or avoid making it.

The effect is taking 90% of a very small pie versus 10% of a huge pie.

By the way, look up the Laffer curve for a graphic description of how this works. If you want, I can try to explain it.

The Laffer Curve was derived on the back of a napkin, to get some rethoric for the "lower taxes more revenue"-nonsense.
Seriously, look it up. It was literarily the back of a napkin (Though laffer claims he actually got it from Keynes in "Of Employment, Interest and Money")

Let me give you another extreme example:
I sell claps.
So I need people to clap their hands, to have products to sell. I offer you 100$ for clapping once.
You are currently in the 99% income tax bracket. Will you clap your hands for 100$, knowing that you will only be able to keep 1?
That's the thing about the laffer curve. It isn't a bell curve, It rises up to 99,9% and then drops down to 0. Even cons usually guesstimate that the drop doesn't come until 78%

Dear narwahl,

Very kind of you to respond. Let me try to explain my thinking.

I knew the curve was drawn on a napkin. It probably could have been done on the back of a postage stamp. It only says that tax revenue is zero if the tax rate is either 0% or 100%. A simple idea, but one we needed to be reminded of. I don't understand how sketching it out on a napkin says anything about it's validity. (I have never heard of any economist questioning that the Laffer curve exists, the only argument is over what is the shape of the curve.)

That's the thing about the laffer curve. It isn't a bell curve, It rises up to 99,9% and then drops down to 0. Even cons usually guesstimate that the drop doesn't come until 78%

Well, here there is some disagreement. Ezra Klein at the Washington Post, certainly not a right wing paper, asked experts from the left and the right where the drop was. where does the Laffer curve bend? The people on the left said the bend was between 60 and 70%, maybe a little higher. The experts on the right said between 20% and 50%.

Forgive me for questioning you, but I didn't find any evidence to support your claims that the bend is at 99.9%, or that conservatives thought the bend was at 78%. Perhaps you can clear that up for me.

With respect,
Charles1952