Fair Share?

[SmartyPants]

There is alot of rhetoric about certain Americans not paying their fair share.  How much of your paycheck should the government take for you to be considered paying your "fair share"?

Please don't tell me the Democrats' or the Republicans' view on the issue.  I rather hear your view on what is "fair".

[Ertxiem]

It depends on what the government (local and national) is supposed to do.
I wouldn't mind paying over 50% taxes if the following were free (or at least cheap) and of high quality: health care, education, security (such as "enough" police departments and fire departments), transportation (fast public transportation, good infrastructures), culture (good public TV, radio, free or cheap entrances in museums, theatres), cheap food (or cheap quality food, in the nutritional sense), environment friendly policies, human rights being followed... For that I wouldn't mind paying 90% taxes.
Yeah, I know, I got a bit carried away for an utopia.

My point is: if you don't define what we would get, I can't determine how much I would be willing to pay. ;)

[Deagonx]

There is alot of rhetoric about certain Americans not paying their fair share.  How much of your paycheck should the government take for you to be considered paying your "fair share"?

Please don't tell me the Democrats' or the Republicans' view on the issue.  I rather hear your view on what is "fair".

I'd like to participate in this discussion. But I hold no Job, have never held a job, and do not know what it feels like to have x percent of my paycheck taken.

[Steelfist]

Ditto, but nonetheless, I would say that taxation wouldn't be such a drag if the payers didn't feel like they were simply throwing their money into a bottomless pit. Which, now I come to think about it, they basically are.

Nevertheless, I think if people could see and feel an effect people would be more willing to pay higher amounts. I suppose this is in a similar vein to Ert's point - if we got more (Or felt like we got more) out of paying taxes, people would be willing to pay higher amounts.

[ArtDrake]

Fair share? That's a strange concept. If the definition, "An amount proportionate to the returns one recieves from the system," which I believe would be a good one, is chosen, then it would make sense to calculate the approximate value of the services rendered by the government, plus or minus a coefficient determined by economic prosperity (and thus, ability to provide for the government services rendered those who cannot afford them, such as in the case of welfare and related programs).

[SmartyPants]

I wouldn't mind paying over 50% taxes if the following were free (or at least cheap) and of high quality: health care, education, security (such as "enough" police departments and fire departments), transportation (fast public transportation, good infrastructures), culture (good public TV, radio, free or cheap entrances in museums, theatres), cheap food (or cheap quality food, in the nutritional sense), environment friendly policies, human rights being followed... For that I wouldn't mind paying 90% taxes.

You know they have those type of socialist welfare states in Scandinavia and Demark?  The government takes about 50% of your income and then uses taxpayer money to give everyone free services and to redistribute the wealth.  Since the government controls much of the market, everything becomes inefficient and costly.  That means everyone has less money to spend, while the price of each good costs more.  The idea of living in this type of country is literally nauseating to me.  It is disheartening to imagine that the money I work hard to earn will be taken away and given to someone else.  I also have a hard time visualizing being forced to rely on the government to that extent.  In Texas, we learn that it is better to struggle then to ask for handouts.  Many Texans like my mother took jobs with less pay after the recession, because Texans rather be underemployed then be lazy bums who lives off of endless unemployment checks from the government.  Maybe Texans are weird for their sense of independence and pride?

Nevertheless, I think if people could see and feel an effect people would be more willing to pay higher amounts. I suppose this is in a similar vein to Ert's point - if we got more (Or felt like we got more) out of paying taxes, people would be willing to pay higher amounts.

That is why I would rather choose which charities get money from me instead of politicians and bureaucrats taking my money and deciding how to use it.  After Hurricane Rita, the government program FEMA wasn't much help to my neighbors and I, so charities such as the Red Cross stepped up to help bring us what we needed.  Money that could have been donated to the Red Cross was taken away by taxes to be given to incompetent government programs such as FEMA.  Since people can spend their money more wisely then the government, Americans get large tax deductions for charitable contributions (Those tax reductions will be gone if the American Jobs Act passes). Due to the success of Texas food banks, many Texans don't have to rely on government food stamps.

I'd like to participate in this discussion. But I hold no Job, have never held a job, and do not know what it feels like to have x percent of my paycheck taken.

Since you pay $0 in federal income taxes, then answer me this.  Does it sound reasonable for people who lose 0% to 15% of their income to federal income taxes to say that the people who lose 28% to 35% of their income aren't paying their fair share?

Fair share? That's a strange concept. If the definition, "An amount proportionate to the returns one recieves from the system," which I believe would be a good one, is chosen, then it would make sense to calculate the approximate value of the services rendered by the government, plus or minus a coefficient determined by economic prosperity (and thus, ability to provide for the government services rendered those who cannot afford them, such as in the case of welfare and related programs).

You must have a conservative view of taxes if you think "fair share" is "an amount proportionate to the returns one recieves from the system".   The top 10% of earners pay over 70% of the federal income taxes, while the bottom 50% payes 3% of the income taxes.  Unless the top 10% are receiving over 70% of the benifits of government, by your definition the top 10% are paying more then their "fair share".

[CraigStern]

Fun fact: Denmark has a higher average life expectancy than the United States. So do Finland, Norway, and the Netherlands. ((Source: https://www.cia.gov/library/publications/the-world-factbook/rankorder/2102rank.html))  The CIA World Factbook notes: "Life expectancy at birth is also a measure of overall quality of life in a country and summarizes the mortality at all ages. It can also be thought of as indicating the potential return on investment in human capital and is necessary for the calculation of various actuarial measures."

On pure economic grounds, if you look at per capita GDP, Norway and Denmark actually beat the U.S. handily, with the Netherlands beating us more narrowly and Finland essentially tying us. ((Source: http://unstats.un.org/unsd/demographic/products/socind/inc-eco.htm#tech))

These countries are clearly doing just fine, high tax rates and all.

[ArtDrake]

I'm going to apologize for this in advance. Sorry.

That's just one more reason that I love Denmark. I have a half-Danish friend, Danish food tastes good, Denmark is ranked by some as both the happiest and least corrupt country in the world, they don't have nearly as much of an obesity problem (you just try to get very fat when your body's working overtime, trying to maintain homeostasis), and it's such an awesome country that I decided to learn the language. Denmark rant over.

Aside from that, I wish to insist that the first definition is merely a broad generalization. I did mention that those who are unable to pay their "fair share" can be relieved of some of their financial burden by those who are priveleged, but not, perhaps, to the extent that they are today.

[SmartyPants]

Fun fact: Denmark has a higher average life expectancy than the United States. So do Finland, Norway, and the Netherlands.

A) That seems irreverent to this topic
B) Due to America's obesity problem, alot of developed countries have higher life expectancies.

On pure economic grounds, if you look at per capita GDP, Norway and Denmark actually beat the U.S. handily, with the Netherlands beating us more narrowly and Finland essentially tying us.

Those countries' GDP grows at a slower rate then most capitalist countries (US for example).  The Nordic countries are trying to privatize some of thier industries, because they realize it is doomed to fail in the near future.  Norway has went through massive growth in the last few years due to a massive increases in inflation.  Inflation helps a economy expand in the short term, but will become devastating in the long term (It is for this reasoning that Obama is printing a large amount of currency).   Sweden, Denmark, Finland, and Norway have been funding their welfare states by selling their diminishing supply of oil.  When their oil wealth runs out, the Nordic countries are going to become underfunded socialist states like Greece and Venezuela.

I have three friends (two of them are twins) from Denmark who's parents left because they couldn't make much money there.  They all perfered America over Denmark to the point where they rather pay for college here, then go to college for free in Denmark.

Aside from that, I wish to insist that the first definition is merely a broad generalization. I did mention that those who are unable to pay their "fair share" can be relieved of some of their financial burden by those who are priveleged, but not, perhaps, to the extent that they are today.

Are you saying that the "priveleged" hold too much of the tax burden, that the poor rely too much on other people's tax dollars, or something completely different?


If you want to tax the rich more, then give a legitimate reason why.  Maybe you believe that taking away the wealthy's money will have little impact on them because they will still have plenty of money left over.  Maybe you belong to the lower-to-middle class and you want more government spending, yet you personally don't want to be taxed more, so you want the rich to pay more instead.   Even if I don't agree with the legitimate reasons, I could still understand why you believe them.  What I don't understand is all this "fair share" crap.  The country's top earners pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.  To demonize a group of Americans by falsely claiming that they don't pay their "fair share" seems immoral.  I personally prefer a progressive tax, but I believe that if you want to increase taxes, then you should increase it at all tax brackets (Like allowing the Bush Tax Cuts expire for everyone).  If you are going to ask someone else to pay more taxes, then you should pay your "fair share" too.

[CraigStern]

Smarty, you're the one who brought up European countries with high tax rates, claiming that they're miserable places to live because of it. The fact that people in those countries actually live longer and have higher income per person than we do suggests that they have a superior quality of life there. Also, it seems that they're quite highly regarded as places to do business:

"It's that old myth that social protection requires more business regulations and hurts business," said Caralee McLeish, a co-author of the World Bank survey. "In fact, we found that social protection is good for business, it takes the burden off of businesses for health care costs and ensures a well-trained and educated work force."

The World Economic Forum came up with the same answer, although it was couched in economic terms.

"The Nordic countries are characterized by excellent macroeconomic management over all," said Augusto Lopez-Claros, director of the global competitiveness program of the World Economic Forum. "They are all running budget surpluses, they have extremely low levels of corruption, with their firms operating in a legal environment in which there is widespread respect for contracts and the rule of law, and their private sectors are on the forefront of technological innovation."

You can surely make an argument about the benefits of lower taxes that doesn't require you to pointlessly demonize perfectly nice countries with a superior economic track record. That's all I'm saying.

As for reasons to raise taxes on the rich, there is one tax in particular that almost inarguably needs to be raised, in my view: the capital gains tax. The wealthiest Americans make millions through gambling on the stock market, and pay a flat 15% tax on it. It's absurd that someone can make so much from gambling and pay so little in taxes when people with real jobs who do real work have to pay so much more by comparison. (And that, incidentally, is what Warren Buffett was talking about in his opinion piece, "Stop Coddling the Super-rich.")

[SmartyPants]

As for reasons to raise taxes on the rich, there is one tax in particular that almost inarguably needs to be raised, in my view: the capital gains tax. The wealthiest Americans make millions through gambling on the stock market, and pay a flat 15% tax on it. It's absurd that someone can make so much from gambling and pay so little in taxes when people with real jobs who do real work have to pay so much more by comparison. (And that, incidentally, is what Warren Buffett was talking about in his opinion piece, "Stop Coddling the Super-rich.")

Raising the capital gains tax is a seriously stupid idea.  Obama doesn't even directly say he wants to raise the capital gains because it is such a bad idea.  First, a company gets income that is taxed at about 35% and then the companies pay their stockholders dividends which is taxed at 15%.  That means that the money is taxed at 50% which some people apparently don't think is high enough.  Like Craig said, people are "gambling on the stock market".  Investing or "gambling" in the stock market is inherently risky, so to encourage investment and lower risk of loss, the capital gains tax rate is low.  America has some of the biggest, most successful companies in the world partly due to easiness to get investments due to the profitability of stock.  If you increae the capital gains tax, then there will be a drastic drop in the value of stock, because each stock earns less income without lowering the risk losing money on your investment.  When I say the value will drop drasticly, I don't mean it will cause another recession.  Increasing the capital gains will cause a depression.  Also, Warren Buffett is full of shit.  He claims that his secretary pays at a higher tax rate then he does, but an administrative assistant's tax bracket can't be higher then 15%.  Buffet also claims he pays 17% tax rate which according to my math is higher then 15%.  Plus, if he thinks he needs to pay more taxes then he can easily write a check to the government.  Warren Buffet is just trying to get close to the White House so get insider knowledge to invest more wisely.

You can surely make an argument about the benefits of lower taxes that doesn't require you to pointlessly demonize perfectly nice countries with a superior economic track record. That's all I'm saying.

I did make an argument besides pointing out the nordic countries' economic shortfalls, but you ignored those parts so you can focus on promoting Scandinavia.  Superior economic track record is a stretch.  The same people who thought the 90s was greatest economic boom in American history are now reallizing that much of the increase in GDP was artificially created by financial and housing bubbles.  Many of those countries artificially increased their economy which we all know has disastrous impacts.  It is reasonable to say Nordic countries face issues such as high inflaction, dependence on a declining amount of oil exports, and some of the highest cost-of-living rates in the world.  Luckly the Nordic countries have small populations, little immigration, low birth rates, high-skilled workforce, and lots of resources, because the system would have failed a long time if they didn't.  The United Kingdom tried to imitate the nordic model, but trying to fund a welfare state for a large, growing population ruined the UK economy.  (It is for similar reasons why experts say Romenycare will work for a wealthy state with a high-skilled workforce such as Massachusetts, while a nationwide program such as Obamacare won't work because the United States as a whole has a more diverse, growing population.)

[CraigStern]

An administrative assistant could very easily end up paying more than 15% in income taxes: currently, any income above $34,900 gets taxed at a rate of 25% or higher. As such, if you earn a normal middle class wage, you are practically guaranteed to pay more in income taxes than Warren Buffett and other professional investors do.

I sincerely, sincerely doubt that raising capital gains taxes to a rate like that paid on normal income will result in a depression. Depressions are based on a positive feedback loop caused by lack of demand. Fewer than one in 10 Americans filing for taxes reports having any capital gains at all; and even then, the vast majority of all stocks are owned by investment institutions and wealthy professional investors that either do not have discretionary income to speak of (investment institutions) or have so much discretionary income that there is no sense in worrying about a reduction in it (professional investors). I can think of nor scenario in which raising capital gains rates is realistically likely to spark a depression.

The worst thing that could happen is that it would hurt middle class families that have been suckered into throwing their money at a giant roulette wheel in the hope of beating inflation. But even there, there is no reason why we couldn't implement a progressive tax structure on capital gains similar to that on normal earned income, which would largely avoid any negative effects on those people (and, in many cases, would actually afford them a better tax rate).

[Ertxiem]

To start with, anyone "gambling" in the stock market or in the commodities market will have a low chance of getting a nice profit out of it if his/her knowledge on the market is not high. This means that the experts are more likely to win more money than the non experts. In my view, it's like many people playing poker. The best players are likely to win more than the others. Or, quoting a phrase I saw somewhere: "lottery is a tax for the people that are bad at maths".

Furthermore, these gambling cause artificial fluctuations of the prices, like the financial, dot net and housing bubbles, oil price and cereals. I say artificial because these fluctuations aren't driven by offer and demand but by speculation instead. And, the thing most people seem to forget, is that: if you're not producing anything and you are winning money, then somebody else is (or will be) loosing it (just like lottery).

The income we have is dependent of our skills and of the skills of the people we work with in the broader sense (if I'm more productive because I use a PC, then my income is also dependent of the people who made/ transported/ sold/ are maintaining the PC). However, not always is my productivity reflected on the income of the people I work with, again in the broader sense.
(Sometimes it appears to be the other way around: if the PCs last less time, then all those people are more likely to keep their jobs, at least apparently.)

Another thing to take in consideration is: how much does it benefits me the taxes I'm paying. Let's take an example of an employer. The taxes he pays will have a direct impact on the health care he may need, the education of his children, infrastructure he may need. But it will also have an impact on his employees. And healthy employees with better education will be more productive, hence, the employer will also benefit indirectly from the taxes he's paying.

So, in my opinion, all individual income should be taxed the same way. Evidently, all changes to taxation should be smooth to give time to the market to adapt.

I haven't thought about how much should the firms be taxed, but that's a different question from the 1st post.

Regarding the Scandinavian countries, I would prefer that my country would be more like those (except in the climate) than most European countries and the USA.

[SmartyPants]

Furthermore, these gambling cause artificial fluctuations of the prices, like the financial, dot net and housing bubbles, oil price and cereals. I say artificial because these fluctuations aren't driven by offer and demand but by speculation instead. And, the thing most people seem to forget, is that: if you're not producing anything and you are winning money, then somebody else is (or will be) loosing it (just like lottery).

You are now talking about hedge funds which is a little different then the stock market.  Unlike increasing the capital gains tax, increasing taxes on hedge fund managers has little economic inpact.  It would only increase a little more revenue, slightly stabilize the commonities market, and reduce campaign contributions to both parties.

Another thing to take in consideration is: how much does it benefits me the taxes I'm paying. Let's take an example of an employer. The taxes he pays will have a direct impact on the health care he may need, the education of his children, infrastructure he may need. But it will also have an impact on his employees. And healthy employees with better education will be more productive, hence, the employer will also benefit indirectly from the taxes he's paying.

A) Shouldn't the employer decide himself, if he wants to help to help pay for his employees' health insurance?
B) Education is best left to state and local governments because they are better intuned to their own children.
C) The federal government neglects infrastucture spending because most of the money goes towards entitlement programs and defense.

So, in my opinion, all individual income should be taxed the same way. Evidently, all changes to taxation should be smooth to give time to the market to adapt.

So you believe in a flat tax?

Regarding the Scandinavian countries, I would prefer that my country would be more like those (except in the climate) than most European countries and the USA.

Again, it doomed to fail like the Soviet Union and Greece and welfare states only function for small populations.

[Ertxiem]

[...]

Another thing to take in consideration is: how much does it benefits me the taxes I'm paying. Let's take an example of an employer. The taxes he pays will have a direct impact on the health care he may need, the education of his children, infrastructure he may need. But it will also have an impact on his employees. And healthy employees with better education will be more productive, hence, the employer will also benefit indirectly from the taxes he's paying.

A) Shouldn't the employer decide himself, if he wants to help to help pay for his employees' high insurance?
B) Education is best left to state and local governments because they are better intuned to their own children.
C) The federal government neglects infrastucture spending because most of the money goes towards entitlement programs and defense.

A) No. I would tend to agree a bit more if the employer together with the employees chose the benefits. However, in my example I was thinking of a larger time window. The children's education that we're paying for now will be the future workforce. And, perhaps, there will be some jobs in 20 years time that nowadays don't exist. I doubt that most employers and employees would care to pay for that education today.
B) I don't have enough information on how the tax money (and I'm speaking about all taxes) is distributed between the central and the local government in the USA. I suspect that it might be like in my country: most of it stays in the central government. Nevertheless, it seems that we agree that public education is important.
C) Again, my country is different from the USA because we spend less in defence, but both the central and the local government are known for wasting money. The thing is: we don't really have an option regarding who will build infrastructure.

So, in my opinion, all individual income should be taxed the same way. Evidently, all changes to taxation should be smooth to give time to the market to adapt.

So you believe in a flat tax?

Sort of. I would prefer simple function like this linear function:
Tax = t * (Income - I₀)
The Tax (in $) would be computed as the fraction t (a fixed number between 0% and 100%, say 35%) of the Income (in $) above a minimum value I₀ (in $). Evidently, incomes lower than I₀ wouldn't pay taxes.

Regarding the Scandinavian countries, I would prefer that my country would be more like those (except in the climate) than most European countries and the USA.

Again, it doomed to fail like the Soviet Union and Greece and welfare states only function for small populations.

I don't really think that any country is perfect in that sense. And I find that extremes usually are not the best choices. In many things, the USA and the former USSR were opposites. One of the reasons for the collapse of the USSR was that there is no real incentive to be more productive if you get the same. Other reasons were also important like being an oppressive dictatorship where corruption existed and a little fraction of the population lived significantly better than the rest (not exactly the Greek scenario). However, in terms of welfare, the USA are far from being perfect in my view. There is poverty, the access to good health care is difficult (expensive), the public education isn't of the highest quality. Take the PISA 2009 profiles by country/economy. Go to mean and distribution of students -> reading (USA=500), mathematics (USA=487) or science (USA=502) -> histogram. The USA are generally in the middle of the other OECD countries.
Scandinavian countries do better with their welfare states than other countries because, in my opinion, their education level is higher and people are better informed when they choose their government. Furthermore, they work more for the community than in other countries because they see the revenue of doing so. Therefore, I don't really think that they're doomed.