Don't you wish we had an income tax, so we could be like California and New York? We could really crank it on the rich. Make them suffer by paying a lot more and reducing the burden on us.
But they can leave and when they do so you can't milk them anymore. And the rich are investros; when they depart, so do jobs. Many academic studies have shown that high state and local taxes send jobs away - more on this below. In New York Thomas Golisano is a Rochester business big wig with strong ties to the community. But Governor Patterson is raising their already high taxes even higher, so Golisano is leaving and New York is going to lose a lot of tax revenue.
Ending any speculation about another possible run for governor, Rochester businessman and Sabres owner B. Thomas Golisano said Thursday he will be moving his legal residence to Florida to escape New York state taxes.And the Wall Street Journal shows that New York is not alone. High tax states are losing people and the lows are gaining. It seems that low-tax is usually synonymous with having no income tax. But we know they are separated in Washington.Golisano told a gathering of Rochester business executives that he will remain as owner of the Buffalo hockey team, but he is fleeing the Empire State to avoid paying $13,000 a day in state income taxes.
WSJ.com: (I don't think a subscription is required.)
With states facing nearly $100 billion in combined budget deficits this year, we're seeing more governors than ever proposing the Barack Obama solution to balancing the budget: Soak the rich. Lawmakers in California, Connecticut, Delaware, Illinois, Minnesota, New Jersey, New York and Oregon want to raise income tax rates on the top 1% or 2% or 5% of their citizens. New Illinois Gov. Patrick Quinn wants a 50% increase in the income tax rate on the wealthy because this is the "fair" way to close his state's gaping deficit.Jobs and income growth also:Mr. Quinn and other tax-raising governors have been emboldened by recent studies by left-wing groups like the Center for Budget and Policy Priorities that suggest that "tax increases, particularly tax increases on higher-income families, may be the best available option." A recent letter to New York Gov. David Paterson signed by 100 economists advises the Empire State to "raise tax rates for high income families right away."
Here's the problem for states that want to pry more money out of the wallets of rich people. It never works because people, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states.
And the evidence that we discovered in our new study for the American Legislative Exchange Council, "Rich States, Poor States," published in March, shows that Americans are more sensitive to high taxes than ever before. The tax differential between low-tax and high-tax states is widening, meaning that a relocation from high-tax California or Ohio, to no-income tax Texas or Tennessee, is all the more financially profitable both in terms of lower tax bills and more job opportunities.
Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas.
We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts.And we know that first it's only the rich and investment, then it's you. The original US income tax was started at 1% (up to 7%) and only on the richest 1% of taxpayers. But soon the workers were ensnared by increases by Woodrow Wilson, then FDR. Posted by Ron Hebron at May 20, 2009 07:06 AM | Email ThisDid the greater prosperity in low-tax states happen by chance? Is it coincidence that the two highest tax-rate states in the nation, California and New York, have the biggest fiscal holes to repair? No. Dozens of academic studies -- old and new -- have found clear and irrefutable statistical evidence that high state and local taxes repel jobs and businesses.
Martin Feldstein, Harvard economist and former president of the National Bureau of Economic Research, co-authored a famous study in 1998 called "Can State Taxes Redistribute Income?" This should be required reading for today's state legislators. It concludes: "Since individuals can avoid unfavorable taxes by migrating to jurisdictions that offer more favorable tax conditions, a relatively unfavorable tax will cause gross wages to adjust. . . . A more progressive tax thus induces firms to hire fewer high skilled employees and to hire more low skilled employees."
More recently, Barry W. Poulson of the University of Colorado last year examined many factors that explain why some states grew richer than others from 1964 to 2004 and found "a significant negative impact of higher marginal tax rates on state economic growth." In other words, soaking the rich doesn't work. To the contrary, middle-class workers end up taking the hit.
Isn't this a free country? Can't I choose the consequences of government policies? Isn't good intentions enough to get by in this world?
Posted by: Jonathan Gardner on May 20, 2009 07:31 AMWhat is it going to take to get my lefty relatives and friends to stand up and fight? At least I can warn them now, as compared to a year ago.
Push comes to shove in elections: Republicans are the party of the rich and the Democrats watch out for the little guy. So far from the truth. So far from the truth and yet, there is no convincing them.
Posted by: swatter on May 20, 2009 07:48 AMAbout time.
Now let's hope we too can see the light?
Texas added more new jobs in 2008 than all of the other 49 states combined. Texas, along with Georgia and North Dakota are the only states cutting taxes this year.
Instead of trying to find more creative ways to increase revenue by shifting the tax burden to the rich, perhaps our state government needs to look at the other side of the equation and find more creative ways to reduce spending?
Posted by: Smoley on May 20, 2009 08:10 AMThat's their problem.
Your question was two words too long.
Posted by: Kent on May 20, 2009 08:54 AMNo it wasn't, you're lying.
Posted by: Libroll on May 20, 2009 09:02 AM
Regressing to an already attempted and miserably failed socialism/communism model of government isn't moving forward. Read a history book for a change.
Posted by: Rick D. on May 20, 2009 09:24 AMIn the last election Bush won big. (3 million+ votes.) Did liberals shut up since Americans didn't agree with their candidate? I don't think so.
Posted by: johnny on May 20, 2009 09:47 AM
The WSJ's editorial does not illustrate any causation.
Posted by: John Jensen on May 20, 2009 10:17 AMSimplistic logic always sounds good to the simple-minded/naive among us. That's the "tax the rich" mentallity in a nutshell.
Posted by: Rick D. on May 20, 2009 10:25 AMIt's a stupid question, Gary. If you cut taxes right now, you'd get less revenue in the short term. If you raised them, you'd get more in the short term. How the long term plays out is honestly irrelevant when you're dealing with a $15bn budget deficit for this year.
Some tax cuts have led to increased revenue, others have led to substantially decreased revenue. Sometimes that has to do with the economy's natural cycles, sometimes it has to do with a cut being too deep. Bush's tax cuts on the top bracket, for example, never came close to raising more revenue for the government and they never will.
On the other hand, Clinton's tax increases raised significantly more revenue, ushered in nearly two decades of unprecedented economic growth, and balanced the budget.
The reason people won't play your "yes or no" game is because it is a game. You're trying to argue on your terms, limit complexity, and argue a partisan point. The real answer is: It depends.
Posted by: John Jensen on May 20, 2009 10:30 AMHow about this? The rich are getting much richer. It doesn't mean we should punish them, God no, but it does indicate that they're one group in America that can contribute a little bit more without it hurting their bottom line.
On a state level, you can argue people will flee. I don't think small business owners have a habit of uprooting their businesses to other states, but sure, make that silly claim. But people aren't going to flee from the country because their marginal rate goes up 3% back to what it was under Clinton and the soaring 90's.
Posted by: John Jensen on May 20, 2009 10:35 AMI'm not ignoring it -- it was never mentioned in the original post. The OP claims that California is infertile for jobs because of its tax rates. Google, Facebook, Twitter, and virtually every other major tech company resides in that state as well as the biggest entertainment sector in the world.
There are a lot of reasons why California is going bankrupt, but income taxes probably aren't one of them. The initiative process has led to dozens of silly propositions that constrain elected officials. It is very difficult to have tax increases in the state, which you might think is good, but it's very easy to force the state to create new, expensive, and unfunded programs through the initiative process. See this LA Times article.
Posted by: John Jensen on May 20, 2009 10:45 AM"...but it does indicate that they're one group in America that can contribute a little bit more without it hurting their bottom line."
Maybe your definition of "punish" is different than mine. While you're perusing statistics, you can break down the percentage of taxes that are payed already by the various income groups. I doubt you will because it will blow your theory out of the water that they don't already carry the burden of the taxes in the country.
"On a state level, you can argue people will flee."
As is happening now, no argument, just a reality.
Posted by: Rick D. on May 20, 2009 10:46 AMTaxes aren't a punishment, they're a way to raise revenue for the government to fund things such as a strong military, transportation, education, and health care.
While you're perusing statistics, you can break down the percentage of taxes that are payed already by the various income groups.
If I make $100,000,000,000 and you make $10, of course I contribute a greater percentage of the government's revenue. How could it be any other way? When you have large income disparity as we see now you're going to get that result.
I doubt you will because it will blow your theory out of the water that they don't already carry the burden of the taxes in the country.
I never claimed that, please don't put words in my mouth again.
The richest have been getting richer and richer. Which is great, I'm happy for them. However, if we have an interest in a sustainable and balanced budget they are the most able to be taxed without undue suffering. This is in contrast to the middle class of America who has been shrinking over the decades.
@35 Currently, New York and especially California are suffering a net loss of populations.
You are wrong (CA, NY). Please do more research before commenting further. Before you change your argument to say that other states are growing faster, note that FL is growing slower than CA and NH is growing less than NY -- which contradicts the argument present in the WSJ editorial.
There has long been a west-ward migratory shift across the country. Let's not try to make up numbers to fit our preconceived political conclusions about why.
Posted by: John Jensen on May 20, 2009 11:03 AMIf I make $100,000,000,000 and you make $10, of course I contribute a greater percentage of the government's revenue.
I see you couldn't find the breakdown chart of who pays the most taxes in this country, I would, but I think the point was made without doing it as it's common knowledge.
I never claimed that, please don't put words in my mouth again.
You implied that they don't carry enough of the burden by your statement that:
..[the rich are]one group in America that can contribute a little bit more without it hurting their bottom line.
The richest have been getting richer and richer.
Your point is? They also contribute a larger percentage of their accumulated wealth. Sounds like a personal grudge against the well to do, John.
...if we have an interest in a sustainable and balanced budget they are the most able to be taxed without undue suffering.
So your theory is that "from each according to their ability, to those according to their need"? Sound about right, John?
This is in contrast to the middle class of America who has been shrinking over the decades.
False. The middle class has been growing in numbers, John.
If that were true, we'd all be taxed at the same rate.
No, a progressive tax is not "punishment" for making more money. It is fair. We've had a progressive tax in this nation ever since we've had an income tax. Eisenhower, Nixon, Reagan, Bush, and W. all had progressive income taxes. Are they Marxist? Certainly not.
A flat tax is foolish and would place a significant undue burden on the middle class. Look, it's simple: the middle class spends a much bigger portion of their income on necessities such as housing and food. Folks making over $250k are doing a little bit better and don't need to worry about their necessities in the same way.
Since everyone wants to see a strong America, there is an understanding that some of your money will go to paying taxes. No one likes paying taxes, but it isn't "punishment" like a speeding ticket is. Clearly, we need revenue to fund our military, our schools, social security, and other vital American institutions.
It's simple class warfare and the left always tries to stir it up any chance they get.
Going from a 35 percent marginal tax to a 39.6 percent marginal tax on income over $250,000 isn't class warfare. It's what we had under Clinton and I don't remember any tea bags back then. Bush's tax cuts left the government on an unsustainable path. We all agree that large deficits are unsustainable. Well, we need more revenue.
Americans didn't elect Obama and democratic majorities to cut vital government services. The opposite, in fact: Obama ran on health care reform and a strong government that is able to help when the private sector is weak.
You implied that they don't carry enough of the burden by your statement that
Again, I never said that. Please do not speak for me again. What I wrote is very clear and doesn't merit further partisan interpretation.
Your point is? They also contribute a larger percentage of their accumulated wealth. Sounds like a personal grudge against the well to do, John.
That's factually inaccurate. They have not been contribution a larger percentage of their wealth since George W Bush cut their taxes significantly.
So your theory is that "from each according to their ability, to those according to their need"? Sound about right, John?
Do you really expect me to believe that we've been operating as a Marxist society since 1916? Grow up.
False. The middle class has been growing in numbers, John.
That means nothing. In terms of percentage of the population, the middle class is shrinking. That is not good for this country because it means that the American dream is falling out of reach of many. I'm not arguing that taxation is the means to fix this, but you certainly don't bolster the middle class by taxing them more.
Posted by: John Jensen on May 20, 2009 11:49 AMHa, Ha, are you kidding or just ignorant of the facts? People are NOT moving there. Both NY and CA have had negative domestic migration for years. Both states have had positive INTERNATIONAL migration, but NY has not had enough positive international migration to offset their negative domestic migration in their recent history. CA has not had enough international IN migration to offset their negative domestic OUT migration in most of the last 5 years.
So, no, domestically people are NOT moving to CA and NY. Check the census figures.
Posted by: Bill H on May 20, 2009 12:24 PMAt the federal level it is much more difficult to avoid an increase than at the state level. A successful small or medium size business may not have the resources to pick up and leave the country to avoid taxation. Even large businesses have to plan that carefully. At the state level though it is much easier to move your business a couple hundred miles to a state with a more favorable tax structure. There have been a number of studies that prove just that. MD is a state that is dealing with this right now and has been somewhat prominent in the news in their surprise that tax revenue from their higher tax bracket went down instead of up when they raised the percentage on it.
Posted by: Mr RcGuy on May 20, 2009 12:33 PMYou can look at state by state numbers here:
Posted by: Bill H on May 20, 2009 12:49 PMYou're right. There isn't any momentum here for a state income tax, though so we don't really have a way to discuss that. I think a 1% tax on income over $500,000, for example, wouldn't really merit people moving to Idaho.
I have no idea what subset of businesses can afford to just cross state lines willy-nilly. Are we talking corporations or small businesses? Certainly any sort of retail business can't move. Ones that require skilled labor would have to have their employees move too, which seems like a hard sell.
I can understand new investments or businesses being created elsewhere after a move, but it seems illogical to me that successful businesses would move. If you make $250k of profit and give that to yourself as income, you are indeed a very, very successful small business owner.
I'd be interested in reading some of the studies you mention. Any links that you can find easily? I think if I search I'll just find partisan blog entries and the like.
@43 Both NY and CA have had negative domestic migration for years.
Look, I said the state's are growing and I cited numbers that prove I was correct. If people want to keep on changing the metric, they can do that but I don't have to argue on ever-changing terms.
Separately, I have to wonder -- do international migrants not contribute money to an economy? Does the skilled Indian computer programmer Google or Microsoft hire not represent an additional job? And is the reasoning for this [as of yet unproven] domestic migratory pattern directly related to state income taxes?
Posted by: John Jensen on May 20, 2009 12:50 PMI don't know what is so hard to understand. I really don't.
Posted by: swatter on May 20, 2009 12:58 PMNo, a progressive tax is not "punishment" for making more money. It is fair.
Emotional argument, but I'll bite. How is punishing someone for making more money "Fair" in your mind, John?
We've had a progressive tax in this nation ever since we've had an income tax.
Does that make it, to use your word, "fair"? No, it doesn't.
A flat tax is foolish and would place a significant undue burden on the middle class.
No, it would be fair and equitable without punishing one group over another.
Look, it's simple: the middle class spends a much bigger portion of their income on necessities such as housing and food.
The rich have these same needs don't they, John?
Folks making over $250k are doing a little bit better and don't need to worry about their necessities in the same way.
Who are you or anyone for that matter to claim what others "need" or "don't need"?
No one likes paying taxes, but it isn't "punishment" like a speeding ticket is.
::crickets::
no, it's worse since it is vastly more expensive than a speeding ticket. On that note, should speeding tickets be assessed to the driver according to their income as well John?
Clearly, we need revenue to fund our military, our schools, social security, and other vital American institutions.
So how do the rich benefit from those things that others don't equally? Same Services/ Different rates applicable for those services = punishment
Going from a 35 percent marginal tax to a 39.6 percent marginal tax on income over $250,000 isn't class warfare.
Sure it is, unless it is expected from all income groups alike.
Well, we need more revenue.
That argument is limitless. How much revenue is enough for liberals?
Again, I never said that. Please do not speak for me again. What I wrote is very clear and doesn't merit further partisan interpretation.
Sure, John. What you said is that because they (the rich) have more, they should be contributing more. Who decides where "a little more" stops anyway? Also, how is this "fair"?
That's factually inaccurate.
No, that's a reality. I don't see your proof refuting it.
Do you really expect me to believe that we've been operating as a Marxist society since 1916? Grow up.
Is this the same John that was complaining about "jerkiness" not being civil by simply using your stated name above?
That means nothing.
It means you were incorrect about the middle class declining. I simply corrected your false statement.
Oregon has an income tax. Colorado has an income tax. Delaware has an income tax. Georgia has an income tax. Idaho has an income tax. Kentucky has an income tax. Louisiana has an income tax. Montana has an income tax.
New Mexico has an income tax. North Carolina has an income tax. Oklahoma has an income tax. South Carolina has an income tax. Utah has an income tax. Virginia has an income tax. West Virginia has an income tax.
Alaska has no income tax. Florida has no income tax. New Hampshire has no income tax. Tennessee has no income tax. (Both NH and TN tax only dividends and interest.)
I'm really not seeing the pattern here.
Posted by: John Jensen on May 20, 2009 01:06 PMYes, correct, and entirely irrelevant to the post. The idea of the post is that people can move from high tax states to low tax states. Just because a state is (very slightly) growing because their births are exceeding their deaths, does not mean that it is a healthy state economically.
"Separately, I have to wonder -- do international migrants not contribute money to an economy?"
Again, irrelevant to the post. But even so, according to a study in 2004, it was estimated that illegal immigrants cost California $10.5 Billion per year. Since the illegal alien population has grown in CA since then, it is likely that the cost today would be somewhat higher.
I'm all for bringing more highly educated and highly paid immigrants into the country, but as far as illegal immigrants contributing to the economy, not so much.
And your MS argument about skilled labor is slightly off (or way). MS has been steadily moving it's programming out of the US to both India (they call it the IDC for India Development Center) and to China. MS has moved almost all support programming for their legacy OS's (W2K, XP, soon Vista) to the IDC and distribution support to China (I know a bit about this). Why? Because support (outside of large corporate agreements) is a cost center. Dev's in India and China cost much less. So if you talk about bringing in a $17-$25 per hr tester from India but compare that to outsourcing $100k/yr dev jobs for pennies on the dollar your comparison stinks.
Bill H already posted one link. MD is all over the news depending where you look. ALEC has an interesting paper on migration patterns. Although ALEC is certainly a conservative organization.
Posted by: Mr RcGuy on May 20, 2009 01:14 PMEastman Kodak was a major employer who has shrunken due to the change from film to digital medium
Posted by: Friend was from Rochester on May 20, 2009 01:18 PMAlso, John Jenson, you sited Twitter as a big business in SoCal. Twitter has never made any profit. Ever. Not a business you want to point to. As for Google and Facebook, their profit is largely generated by ad revenue, not from actually producing something. Not that there is anything wrong with it... but a search engine or social network is not the same as a construction company or retailer or something dealing tangible items. Completely different business model that is going to be a little more immune to higher taxes than most other businesses
Posted by: Mike H on May 20, 2009 01:34 PMAbsolutely, if it gets too high. But when a CEO is offered $100,000 raise ($60,000 after taxes), he would be stupid not to take it. The money left over after taxes is still money; it is still an incentive. I'm not saying we need to tax more and more and more: we shouldn't. But our tax code is not sustainable, and we can't continue to have deficits. At the same time, the people expect government to deliver expensive things like a world-class military, strong health care, quality education, etc.
@48 How is punishing someone for making more money "Fair" in your mind, John?
It isn't, which is why we don't punish people for making more money.
RE: Flat tax: No, it would be fair and equitable without punishing one group over another.
A flat income tax would significantly favor the rich over the middle class and the poor. It is a regressive tax. Every commenter in this thread would see their taxes rise significantly. People would literally go under, requiring significant government aid for shelter and food. The middle class wouldn't be able to climb their way up the social ladder and send their kids to school for a better next generation.
A flat tax is a naive approach which is why no western nation in the world has implemented it. No Republican administration nor congressional leadership has pushed for it either.
Look, it's simple: the middle class spends a much bigger portion of their income on necessities such as housing and food.
The rich have these same needs don't they, John?
Yes, that is what I said. The difference is that the rich have to spend a much smaller portion of their income on these necessities. So, given we need to have taxes for a functional government the most comfortable group is in the best position to pay a little bit more on their top margins.
On the other hand, high income earners don't have to pay Social Security/FICA taxes past a certain point. Folks with expensive houses can deduct their interest payments. The rich can contribute more to charity -- which is a good thing, of course -- and deduct that from their taxes. I'm not convinced the extremely well-off are suffering now or will be once their marginal rates increase slightly.
No, that's a reality. I don't see your proof refuting it.
Tax rates decreased in the last decade -- I trust you don't need me to cite something for that. Every single person in the country has seen a smaller percentage of their income go toward federal taxes, including the wealthy. The wealthy, in fact, benefited more in pure dollar terms than any other group from Bush's tax cuts.
It means you were incorrect about the middle class declining.
The percentage of Americans who are middle class is shrinking. More and more Americans are moving into poverty, in both percentage and absolute terms. Your flat tax idea would move much of the middle class toward poverty at an accelerated rate. You might believe that poverty is the American dream, but you're wrong.
Posted by: John Jensen on May 20, 2009 01:37 PMYou mention FL as not having an income tax and suggest that they have been on the losing end of domestic migration. Sure, they were slightly negative in 2008 due to the Real Estate collapse, but the 9,000 negative in 2008 is WAY offset by the millions of IN migration in the previous 10 years.
What is really interesting is that the only traditionally "Blue" states that have had net domestic IN migration in recent years, have been WA (no income tax), OR (no sales tax), DE (very friendly to the establishment of corporations), and NH (no income tax). All of the other "Blue" states have had TERRIBLE net OUT migration--with MI, NY, CA and NJ the worst of them.
I am one of those who is a net IN migration to NC and OUT migration from WA. I can tell you that the vast majority of the domestic IN migration from around the Western part of NC has come from NY and NJ--fleeing the high taxes in the Northeast. They even have a local name for people who moved first from the Northeast to Florida and then to North Carolina--they call them "halfbacks" (moved halfway back to the Northeast).
Posted by: Bill H on May 20, 2009 01:37 PMFirst of all, sales tax is applied at the point of sale and not at the location of Corporate HQ. Even online orders will have be charged sales tax if the customer is in a state where the company has any presence. That's why you have to pay sales taxes on apple.com.
But what do we do? No sales tax so retail stays put? No income tax so small businesses stay put? What about property taxes -- doesn't that affect medium-sized businesses?
The secret isn't a dearth of taxes, it's keeping them in check and at a responsible and reasonable level. People vote all the time to tax themselves for transit investment or better schools -- those are the trade-offs we make with government all the time. One way to lower sales taxes is to deeply cut services. If people don't want that, another way is to institute a small income tax.
@50 The idea of the post is that people can move from high tax states to low tax states
See comment 49 -- there are many examples of states breaking these "rules."
@54 Also, John Jenson, you sited Twitter as a big business in SoCal. Twitter has never made any profit. Ever. Not a business you want to point to. As for Google and Facebook, their profit is largely generated by ad revenue, not from actually producing something. Not that there is anything wrong with it... but a search engine or social network is not the same as a construction company or retailer or something dealing tangible items. Completely different business model that is going to be a little more immune to higher taxes than most other businesses
I was citing various tech companies. California has a very strong tech sector.
Construction companies and most retail locations are examples of things that cannot actually be located outside of the state and do their job. Gas stations and post offices can't move out of state, either. All of these things necessitate locality. I think you meant that with your own post, so I'm not sure what your point is? A significant amount of businesses can't just up and move which sort of undermines the point of this blog entry.
@53 Did anyone here notice Rick D. saying John Jensen's name in a jerky, condescending way? In fact, did anyone "hear" Rick "say" anything at all? I don't think one can imply jerkiness or condescension from the "writing" of a person's name. Or maybe John's hearing voices?
What, are you guys both ten years old? Obviously Rick is being an asshole. "Nuh-uh, prove it!" That's the civility we've come to expect in the Rush age. So much for defending your principles politely -- being a dick is more fun!
Posted by: John Jensen on May 20, 2009 02:01 PMYes, you're right. Which is why a 1% income tax in WA state wouldn't bankrupt business or cause a dramatic shift.
The original post said: It seems that low-tax is usually synonymous with having no income tax. Only 5 states in the country have no income tax, and I think that was simply a flawed statement to make. You can have a significantly smaller median tax burden with an income tax compared to excessive sales and property taxes. North Carolina is an example of that, and it is experiencing tremendous growth. I do not that you have to quote "red." North Carolina went for Obama, after all. :)
The traditionally red states, Texas especially, usually have a much higher percentage of poor and working poor. They're hardly a utopia. I think there are larger reasons for demographic changes than just the tax rate. Drawing a causation from correlation is always tempting.
However, it is mostly a straw man. No one has argued that WA should start aggressively taxing everything. A small income tax would help relieve the burden our sales tax create, and restore funding to things valuable institutions like UW and our transportation infrastructure.
Posted by: John Jensen on May 20, 2009 02:13 PMA flat income tax would significantly favor the rich over the middle class and the poor.
No, as the name implies, it would be an proportional perentage across the board.
Such a tax would still have the rich paying substantially more than the poor, only it would be "fair and equal" among all income groups. I thought you believed in fairness?
It is a regressive tax.
Only in your mind.
Every commenter in this thread would see their taxes rise significantly.
Not if they demand the government quit their out of control spending habits. Your fundamental flaw in thinking is that at some point, the government will be content with its growth- It will not. Pretty soon, you'll determine 39% isn't enough and it will be 43%, followed 2 years later by 47%...see a pattern forming? At some point, the rich will just find a comfort level and stay there since working 67 hours a week will them the same that working 40 hours a week will. Progressive taxes kill productivity, which is why liberals embrace it so much.
The middle class wouldn't be able to climb their way up the social ladder and send their kids to school for a better next generation.
You mean the next generation that Mr. Obama saddled with 3 Trillion dollars additional debt (in his first 100 days in office) upon being born? You're kidding right?
Camel's nose under the tent. The original income tax instituted in 1913 originally only applied to the VERY rich and only at a rate of 1% to a maximum of 7%. It's a little higher than that now, wouldn't you say? How long do you think it would take for WA to increase the rate and apply it to ever lower incomes?
"I do not that you have to quote "red." North Carolina went for Obama, after all. :)"
Irony noted, but I did say "traditionally 'Red'". NC did BARELY go for Obama in 2008 (and against a loser of a candidate in McCain), but had not been "Blue" since Carter in 1976.
"Drawing a causation from correlation is always tempting."
But there is a helluva correlation between net OUT migration from traditionally "Blue" states and net IN migration to traditionally "Red" states.
#59 do you have anything intelligent to offer, or just more blather. I can disagree with John Jensen but he is at least making an argument for his point. You don't even seem to have a point.
Sounds like someone didn't get their nap today. I asked you to point to where I was being uncivil and you couldn't...then you go into full tantrum mode because you're losing the argument. Priceless.
Posted by: Rick D. on May 20, 2009 02:39 PMThat would significantly favor the rich over the middle class and the poor. No western nation in the world has a flat tax. You do have one country on your side, though: Russia.
Russia isn't known for its economic mobility. We're the richest, most successful nation in the world. We should be following own our model: sensible, progressive taxation. Just like every other western nation.
Not if they demand the government quit their out of control spending habits.
No one supports wasteful spending. In terms of universal health care, a strong military, and federal support of education -- the public has no desire to take steps backwards in history.
Of course a flat tax would be less expensive if cut spending, but so would a progressive tax. And that progressive tax wouldn't launch people into poverty the same way your fringe idea does.
At some point, the rich will just find a comfort level and stay there since working 67 hours a week will them the same that working 40 hours a week will.
Maybe at some point, but not at 39.6% which is what we had under Clinton.
You mean the next generation that Mr. Obama saddled with 3 Trillion dollars additional debt (in his first 100 days in office) upon being born? You're kidding right?
Well, that is completely misleading. What is factual is the $5 billion in debt and an unsustainable deficit that President Bush saddled the nation with. And where were all the budget hawks and teabags? You guys just don't have credibility on the issue. You pretend we can just cut taxes, keep spending on things people want, and everything will just fix itself.
Rolling back Bush's generous tax cut for the wealthy is necessary to begin the long process of restoring the budget to sustainable levels.
Obama's stimulus was expensive, but the human suffering as well as the long-term government revenue losses that would likely happen in a depression-type scenario were too much to bear. We're already seeing signs that the economy is recovering in anticipation of new construction projects and the like. Good luck telling voters that everything was just a coincidence.
Posted by: John Jensen on May 20, 2009 02:53 PMWe all know that it won't stop at 1% or at the top earners. (You've built some credibility with this audience. Don't even pretend that you believe otherwise or you'll lose that credibility.)
It would be foolish to think that an income tax would stop at $250,000. I know it. You know it. Anyone old enough to pay taxes in this state knows that any form of revenue the state goverment finds is exploited until Tim Eyeman creates a citizens initiative to stop it.
As for other assertations you've recently made:
Yes John, companies do move based on taxes and business climate. I moved to Seattle with 400+ other highly paid employees about 15 years ago with one employer and now the company I presently work for is moving out of Washington to Texas in a few months. Another regular poster to this board moved his company overseas for similar reasons.
-and-
No John, the fact that enterainment and tech industries are based in California is no proof that a high tax environment provides good soil for growing business.
Take a look at tech and you see that while many businesses are based there because they started there, they often have their largest payrolls elsewhere. Google -which you mentioned - has hundreds of employees in this state as a for instance.
(I do credit the university system in California for being a breeding ground for high-tech start-ups. I give credit where credit is due.)
On the entertainment front, saying that mass entertainment is in hollywood because of favorable business conditions is like saying cars are made in Detroit because of good business conditions. That might have once been true, but not anymore. (Thanks, mostly, to the unions going past fair to obnoxiously greedy.)
A quick look at the business shows that nowadays most filming is done whereever the local film commissions give the best tax breaks and the union is weakest. (When was the last time you saw a "seattle-based" tv show actually filmed in Seattle for instance? Theres a reason all the street scenes are done in Vancouver.)
The big studios are like Sony (as in Sony Japan), Universal (as in Vivendi Universal from France), etc. tend to be foreign owned and highly diversified. It's hard to say they are really U.S. businesses anyway and certainly would be difficult to prove that there's anything that has happened in CA or NY in the last 20 years that has actually contributed to their success.
As a mash-up of this just for fun, look at computer and video game entertainment business. It's true that EA, Activision, Blizzard, etc. are all based in California where they began, but at a closer look you'll find their most productive studios and higher paid employees and contractors almost always live elsewhere - many of them right here in Washington. (Though that could change fast.)
I really do enjoy your posts John, and it's pleasant to see an alternate position well articulated. (Something I'd note that you aren't even allowed to see when you look at the left wing blogs.)
I sense, though, that you must either work for the government or many in an industry closely involved in the government. I've found that people involved in the government invent their own reality that makes it okay to take money out of the pockets of those that produce.
No one here minds paying our fair share, but when the % of our paycheck that we spend on federal taxes, sales taxes, usage fees, social security that we'll never see, etc. grows so high, we have to say enough is enough.
And - trying to play the "but it's only the rich" game doesn't work when we saw the "rich" defined as anyone that makes over $45K a year during the Clinton administration.
Posted by: johnny on May 20, 2009 03:05 PMIs it completely lost on folks that the slippery slope is a logical fallacy?
The answer is: You don't know. You don't know if the income tax would ever apply to all incomes. You don't know how the rate would climb or fall. You don't know, and why should I?
All increases or changes would be approved by the legislature, governor, and the public. I'm not very fearful. The alternative is government revenues that fluctuate wildly and a reliance on a regressive sales tax. A good combination of property, income, and sales taxes would still yield a business-friendly environment. Instead, we rely too much on property, sales, and B&O taxes to have a health foundation for government revenues.
Posted by: John Jensen on May 20, 2009 03:11 PMWe're the richest, most successful nation in the world. We should be following own our model.
Marxism isn't a viable model to follow, as the U.S.S.R found out.
No one supports wasteful spending.
Really? Is that why not one member of congress, nor the President read the 870 billion dollar "swindle us" bill before signing it into law? Right. We do that in our daily lives all the time,right?
Of course a flat tax would be less expensive if cut spending, but so would a progressive tax.
No, a progressive tax would only affect a small percentage of Americans and would increase exponentially. A flat tax on everyone would have people up in arms and demand more accountability in their government. A win/win process for everyone. Think about it.
And that progressive tax wouldn't launch people into poverty the same way your fringe idea does.
Just the word progressive means it will increase, agreed? As for fringe, equal taxes for equal services is an American concept, not a "fringe" one.
Maybe at some point, but not at 39.6% which is what we had under Clinton.
Sure it is. At some point they'll just use your argument that "we aren't generating enough revenue" and uptick it to help pay for their pork. You are entirely too trusting in government.
What is factual is the $5 billion in debt and an unsustainable deficit that President Bush saddled the nation with.
Wrong on all counts. The Deficit is actually 11 TRILLION with a T, and while Bush added to it, I believe it is projected that Obama will surpass Bush's 8 years in his first complete year. So much for climbing out of debt, eh?
Rolling back Bush's generous tax cut for the wealthy is necessary to begin the long process of restoring the budget to sustainable levels.
Yeah, afterall, we all know the wealthy don't employ everday Americans. Even if they did though, that's what government welfare and unemployment offices are for, taking care of the average American.
Obama's stimulus was expensive, but the human suffering as well as the long-term government revenue losses that would likely happen in a depression-type scenario were too much to bear.
Emotional argument. We've had recessions before and come out of them before- they're cyclic. Obama cried "the sky is falling" and everyone panicked sending generations of debt onto your kids and grandkids that will be unsustainable.
We're already seeing signs that the economy is recovering in anticipation of new construction projects and the like.
Since only 4% of the "stimulus" money has actually gone into the economy, it would appear we treated a slight cough with Pennecillin and an IV drip of morphine. You should really look into how much interest we pay per hour on the National debt, John. You'd see that we aren't playing an imaginary game of monopoly.
Good luck telling voters that everything was just a coincidence.
Since most "recessions" last on average 18 months, we're emerging exactly on the time table that economists projected. We would have done the same thing without spending a damn dime, but this reality is lost on the left.
No, indeed it is not. If you made a study of income tax rates across the country, as well as the income tax rate of the federal government, I would guarantee that you would find that the rates, in the VAST MAJORITY of cases, started out lower and applying to less than they do now. That is how government progresses--they always move toward more and higher taxes, until someone or some group steps in to stop them (e.g. Howard Jarvis in CA, Ronald Reagan at the federal level, or Tim Eyman in WA). But even then, they are almost univerally still higher than where they started.
"The answer is: You don't know. You don't know if the income tax would ever apply to all incomes. You don't know how the rate would climb or fall. You don't know, and why should I?"
Common sense should answer this question. Where is the state sales tax now vs where it was 25 years ago? It wasn't nearing 10% when I moved to WA in 1984, I'll tell you that!
Posted by: Bill H on May 20, 2009 03:38 PMI would prefer a progressive income tax over a sales tax. Taxing only the very high earners in the state isn't really the best way to do things, but it does capture a lot of revenue that is impossible to get through a consumption tax and doesn't put an undue burden on families.
I think it opens the door because once an income tax begins people will realize it's not the end of the world. Our constitution says that tax increases/changes have to be put up for voter approval -- so nothing here would be done in the cloak of darkness.
I'm not convinced that an income tax is a bad thing just because it has the word tax in it. If we see corresponding cuts in sales, property, and B&O taxes, who's to say we couldn't have a more fair taxation system for people and business?
No John, the fact that enterainment and tech industries are based in California is no proof that a high tax environment provides good soil for growing business.
Right, but CA is hardly devoid of a private sector. If it's the example of taxes run amok -- well, let's just say that WA could use their GDP.
Yes John, companies do move based on taxes and business climate.
I'm sure it happens but it's not something you do overnight or without expecting to lose a lot of employees, I imagine. I mean, some people move to Washington because they like rain and then they start businesses here -- is that a real and measurable effect?
And taxation isn't just about businesses, of course: Do we want to have the poverty rate, the poor social services, the poor education, and some of the other negatives that come with a government like Texas has?
As a mash-up of this just for fun, look at computer and video game entertainment business. It's true that EA, Activision, Blizzard, etc. are all based in California where they began, but at a closer look you'll find their most productive studios and higher paid employees and contractors almost always live elsewhere - many of them right here in Washington. (Though that could change fast.)
I hope that doesn't change any time soon... :)
EA LA and Blizzard are very successful studios, though. I'm not sure you mean by "most productive" and "higher paid." Game studios in CA pay more specifically because of the state income tax -- which is the way income taxes affect businesses.
I really do enjoy your posts John, and it's pleasant to see an alternate position well articulated. (Something I'd note that you aren't even allowed to see when you look at the left wing blogs.)
Appreciated.
I sense, though, that you must either work for the government or many in an industry closely involved in the government. I've found that people involved in the government invent their own reality that makes it okay to take money out of the pockets of those that produce.
Your spidey sense is wrong. I'm a software engineer at a video games company. I make good money. I went to a private college. I just have a different political philosophy than you. Most people in the Puget Sound region do too, and they don't work for the government.
I do not want to "take money" from people. Taxes should be an exchange of money for some services or rules not delivered effectively by the private sector. Transportation, policing, firefighting, a right to health care, a right to education, a strong military, a parks system, environmental protection, strong social safety nets, etc. are examples of things I think the private sector is incapable of delivering.
And - trying to play the "but it's only the rich" game doesn't work when we saw the "rich" defined as anyone that makes over $45K a year during the Clinton administration.
"Rich" may not be the word I should use. But the definition I accept of "well-off" or "comfortable" is a single person earning greater than $200,000-250,000. That may not be rich, but it's something that ain't middle class. A small business owner who takes that much money home is a very, very successful small business owner since of course you aren't taxed on money you spend on your employee's health care, paychecks, or any business expenses.
The top 1% -- I think they're rich. And there is large income disparity in this country. The lack of economic mobility is a huge problem not just for the poor, but for the middle class too.
Posted by: John Jensen on May 20, 2009 03:47 PMYes, but even though we all receive the same basic services in Government, John believes a small minority of the population should shoulder the bulk of the cost for these services.
...afterall, some are more equal than others.
Posted by: Rick D. on May 20, 2009 03:59 PMThe US has been practicing Marxism since 1916? That's not a fringe argument at all!
Bill H: Common sense should answer this question. Where is the state sales tax now vs where it was 25 years ago? It wasn't nearing 10% when I moved to WA in 1984, I'll tell you that!
I don't get it, so? It's important if the over-all tax burden is higher. If every increase in income taxes matches a decrease in sales taxes we end up with a more fair and equitable system (which we can accurately deduct from our federal income taxes). If income taxes raise more revenue or increase the tax burden, then we should see something in return -- even if that means holding the line on education spending that'd otherwise fall. Obviously the government shouldn't raise taxes just for the fun of it.
I don't get why new revenue from an income tax is so much more dastardly than revenue from sales, property, and B&O taxes.
Income taxes have risen, yes, but so has the exception of government services. For example, we voted to increase sales taxes locally because we want to build a light rail network.
Sure it is. At some point they'll just use your argument that "we aren't generating enough revenue" and uptick it to help pay for their pork. You are entirely too trusting in government.
Oh, another slippery slope fallacy. I can't support a balanced budget today without supporting communism tomorrow? Goodness, I guess nuance and sound policy analysis is dead!
Bush's tax cuts on the top 1% severely constrained the government's revenues. We can wait for the utopia when spending magically goes away, or we can try to close the revenue gap so we don't have a long-term deficit crisis. The rising deficit is a huge problem.
One that you may not understand is Obama's long-term priority; his team says that health care is a looming spending crisis. Medicare will bankrupt the US without changes.
Anyway, to say that taxes aren't part of the government's financial picture is naive. We have revenues and spending. If people want spending on the military, education, and health care -- which they do -- then revenues need to match. Or at least match more than they do now.
Wrong on all counts. The Deficit is actually 11 TRILLION with a T, and while Bush added to it
Bush added at least $5 trillion in debt -- I mistyped billion.
The number you're attributing to Obama's first hundred days is reflected in this chart. Guess what? The 2009 budget, TARP, etc were established under the Bush administration. It is completely dishonest to attach that $1.3 trillion 2009 budget deficit to Obama. He didn't submit a budget for 2009. He didn't sign TARP into law.
Certainly the 2010 deficit is scary, but we're in the worst economic disaster in 60 years. We're seeing decreased revenue. Obama passed a stimulus plan to make up for decreased private sector activity. He had to prop up banks, even though no one wants to line their pockets. We had to make touch decisions to prevent disaster, and it looks like it's working.
Yeah, afterall, we all know the wealthy don't employ everday Americans.
We had better paying jobs under Clinton's tax rates.
We've had recessions before and come out of them before- they're cyclic. Obama
This is more than your typical recession. The financial sector collapsed. Bear Sterns, Lehman Bros, and major banks don't usually run the risk of failing during your cyclic recession. You're out of touch with reality, and when republicans claim that this is just some minor recession they lose serious credibility.
we're emerging exactly on the time table that economists projected.
Not from what I've read (in publications like The Economist), but you can provide sources for your claim. Either way, it's going to be tough sell to voters: "Oh, it was just a coincidence!"
Your 4% claim is ridiculous. Already, medicaid funding to states has prevented many public sector layoffs, public service, and safety-net benefit cuts. Food stamps and unemployment benefits among the best ways for the government to stimulate the private sector -- the stimulus package funding expansions of those vital safety net programs. If you know someone unemployed right now, you know what a big deal that is. Finally, we are all seeing a tax credit reflected on every paycheck.
Long term, we're going to have to pay this back, of course. But without a recovery package, we could have seen much worse debt in the long-term because of the failing economy depressing government revenues.
Posted by: John Jensen on May 20, 2009 04:21 PMI can't support a balanced budget today without supporting communism tomorrow? Goodness, I guess nuance and sound policy analysis is dead!
So you're claiming that the excuse of "there's not enough revenue in the system" will never be uttered again within our government structure by a politician looking to increase spending and expand government in the process?
You are one hell of an optimist, if not completely lost with reality.
Bush added at least $5 trillion in debt -- I mistyped billion.
That's not the case, but don't let the facts get in the way of your partisan position.
The 2009 budget, TARP, etc were established under the Bush administration.
Tarp 1 was, Tarp 2 wasn't. Obama voted in approval of both and requested TARP 2 specifically. Bush would not have signed TARP 2 without Obama's explicit ascent to do so since he was the incoming president. Sorry, John, no wiggle room on that line.
Sure, but in this case we need the additional revenue to prevent lower the budget deficit.
Bush added at least $5 trillion in debt -- I mistyped billion.
On January 21, 2009 the Federal debt stood at $10,625,053,544,309.79. It increased $4,897,276,806,005.15 over his term. So, the debt under Bush grew by $4.9 trillion.
That's not the case, but don't let the facts get in the way of your partisan position.
Tarp 1 was, Tarp 2 wasn't. Obama voted in approval of both and requested TARP 2 specifically. Bush would not have signed TARP 2 without Obama's explicit ascent to do so since he was the incoming president. Sorry, John, no wiggle room on that line.
President Bush requested the money from Congress, however you want to dice it. His administration proposed, signed into law, and managed TARP. I know you want to pawn it on Obama, but that is misleading.
Similarly, the 2009 budget which had nothing to do with Obama also gets pawned onto him. Why can't you just make an honest argument without trying to mislead people?
Posted by: John Jensen on May 20, 2009 05:02 PMAs we all know, the goverment is always responsibile with additional revenue,right? How do you lower a budget deficit without reigning in out of control spending, John? You can't, as both Washington state and California found out as of late.
The financial sector collapsed. Bear Sterns, Lehman Bros, and major banks don't usually run the risk of failing during your cyclic recession.
Sure they failed. That's what happens when government tries to secure loans for people that can't pay those loans back, yet forces banks to take them under the CRA started under Carter and expanded under Clinton. These programs started under Democrats and yet, when the house of cards came falling down, where was the accountability from them for it? The sound of crickets is deafening.
Debt on Jan 20, 2009: 10,626,877,048,913.08
Debt on May 20, 2009: 11,293,355,611,258.51
_________________________________________
650 Billion racked up in a mere 5 months under Obama. What is that per year? 1.4 trillion per? If you think that's bad, wait till he implements his policies.
It increased $4,897,276,806,005.15 over his term.
Actually from Jan.20,2001- Jan 20, 2009 it was 4.4 Trillion. At least half of which was for spending on 2 wars to protect our country as approved by Congress.
I know you want to pawn it on Obama, but that is misleading.
http://www.npr.org/templates/story/story.php?storyId=99259307
At Obama's Request, Bush Seeks Bailout Money
The White House says President Bush, at President-elect Barack Obama's request, has asked Congress to release the remaining $350 billion intended to help the nation deal with its financial crisis...
"I have talked to the president-elect about this subject and I told him if he felt he needed the $350 billion that I would ask for it," Bush said at a news conference earlier Monday. "He hasn't asked me to make the request yet and I don't intend to make the request unless he specifically asks for it."
Shortly after the news conference, the White House announced Obama had made the request.
Why can't you just make an honest argument without trying to mislead people?
Who's misleading whom? You say TARP 2 isn't Obama's when we all know it is.
Also,Is this the same John that claimed earlier I was [using]"Jerkiness" and not acting civil and then went on to call me an 'asshole' and 'a dick' at 57? Can't be.
It's one of the things I don't understand about the requirements for receiving a stimulus check from the federal government. There was a cut-off of around $70K and anyone making over that got no stimulus check. Someone making $50K in Del Rio, Texas is in far less need of a stimulus check than someone making the same amount that lives in San Francisco.
In the end, the problem is that the government is spending too much, not that it doesn't collect enough revenue. It will be interesting to watch what gets cut in California now that the voters have said that they want a smaller government instead of more taxes.
Similarly, the 2009 budget which had nothing to do with Obama also gets pawned onto him.
He signed it, didn't he?
David
Posted by: David on May 20, 2009 06:05 PMAny tax you care to name has gone up. Can you tell me an exception? Also, tell me any tax you've sene that has "gone away" when another tax was initiated?
Those that don't learn from history are doomed to repeat it. Casual dismissal of government waste is like dismissing gravity. Just because you don't care to acknowledge it doesn't mean it's not real.
As for your other point, about people getting their moneys worth, if people over $250K are supposed to be getting their moneys worth from a tax increase, what are they getting?
Their cars don't have more wheels or damage the pavement more than those of people making less. They probably have welfare or foodstamp benefits, don't need english as second language classes, etc. Anything that is bigger (such as a house) they already pay a lot more for? So what are you doing other than taking money out of their pockets when you tax them more?
I had to take my kid in to get braces the other day. $5K for that. The other kid in the room didn't speak english and his parents didn't either.
His braces - for a kid that's obviously an immigrant (legal or illegal) from Mexico or South America - are being funded by the state. Where does that make sense or make my life better?
This state has no money for new roads, but they have spent the last two years putting up electronic "emergency message" billboards all over town and now they have electric speed limit signs on the freeway? No money for basics, but tons of money for gizmos? How does that make sense or make my life better?
(The only thing I've seen that emergency billboard do in 18 months is tell me about a street festival. They did that for 10 years with a sign they probably still have in a storage area somewhere.)
I estimate my property taxes are about 60% more than they were 10 years ago. (And where I live we didn't really get the housing bubble that other long-term home owners up here have suffered through.) That's about $2500 a year.
(Never mind additional sales taxes, usage fees, fees on my saturday night martinis, added tax to take my wife to dinner, etc.)
Are the schools here in Issaquah better? No, but they are certainly a lot more overcrowded. Those kids parents have mostly big houses and pay a lot of taxes, but where's the new schools? There aren't even any on the drawing board that I've heard about.
Are the roads better? Not that I can see. Worse in fact and more crowded. Where have all the taxes from all those new houses and additional car gone to?
Are our services better? Again, show me where I'm getting that extra couple of thousand dollars in value. We have a new court house, but it isn't any bigger. (Just more opulent, but how does that help.)
Are my police services better? There's a new police station out here that looks real nice, but hey just CUT our police services in the county. (I sure wish they spent less on all that brick and more on services we care about.) I mean really, shouldn't something as basic as cops on the street be budgeted for FIRST?
Is our library better? It's not as good as the Bookstore down the street, and when I figure out what this place costs versus the amount of people who use it in this town, I can't say I think I'm saving money on books.
Is there anything you could say that would make me believe that the additional taxes we're spending has turned into anything but money that can be used by politicians to buy votes?
Posted by: john on May 20, 2009 06:13 PMCalifornia has a income tax and how are they doing??? Your facts betray you.
They pretty much tax everything... again HOW are they doing,.
Nobody gets out of paying sales tax.
No income tax, not ever.
Posted by: JoeBandMember on May 20, 2009 09:17 PMHere is the data on that measure for top 14 states as per 2009 statistical abstract of US:
State Dollars Rank
United States 38,611 (X)
California 41,571 7
Colorado 41,042 10
Connecticut 54,117 1
Delaware 40,608 12
Maryland 46,021 5
Massachusetts 49,082 3
Minnesota 41,034 11
Nevada 40,480 13
New Hampshire 41,512 8
New Jersey 49,194 2
New York 47,385 4
Virginia 41,347 9
Washington 38,414 14
Wyoming 43,226 6
I venture to say of these the top five have income tax: CT NJ MA NY MD, also no. 7 (CA), and MN (I think). Virginia, not sure.Also would venture if you multiplied their rank by their populations, the income-tax states are represented much more than the non income tax states on this list because in general NY CA NJ MA etc. are more populous than WY NV CO NH etc.
So, in sum, no evidence that income tax causes a state to become poor.
(Query: is NH on this list solely due to commuters from neighboring MA who moved to NH in last 20 years? If so (a) yes people move if can keep their job in the income-tax state with the healthier, bigger economy, and (b) despite this drain the wealthier, bigger economy of the income-tax state can put it (MA) and ANOTHER state (NH) in the top 14. Confirming the main conclusion: income tax does not eat up the state economy or drive business away or lead to confiscatory 90% tax rates or cause generalized poverty. In fact, you could conclude from this data that an income tax possibly causes more wealth per capita. (Insert normal caution about correlation/causation etc.))
Here is the data on that measure for top 14 states as per 2009 statistical abstract of US:
State Dollars Rank
United States 38,611 (X)
California 41,571 7
Colorado 41,042 10
Connecticut 54,117 1
Delaware 40,608 12
Maryland 46,021 5
Massachusetts 49,082 3
Minnesota 41,034 11
Nevada 40,480 13
New Hampshire 41,512 8
New Jersey 49,194 2
New York 47,385 4
Virginia 41,347 9
Washington 38,414 14
Wyoming 43,226 6
I venture to say of these the top five have income tax: CT NJ MA NY MD, also no. 7 (CA), and MN (I think). Virginia, not sure.Also would venture if you multiplied their rank by their populations, the income-tax states are represented much more than the non income tax states on this list because in general NY CA NJ MA etc. are more populous than WY NV CO NH etc.
So, in sum, no evidence that income tax causes a state to become poor.
(Query: is NH on this list solely due to commuters from neighboring MA who moved to NH in last 20 years? If so (a) yes people move if can keep their job in the income-tax state with the healthier, bigger economy, and (b) despite this drain the wealthier, bigger economy of the income-tax state can put it (MA) and ANOTHER state (NH) in the top 14. Confirming the main conclusion: income tax does not eat up the state economy or drive business away or lead to confiscatory 90% tax rates or cause generalized poverty. In fact, you could conclude from this data that an income tax possibly causes more wealth per capita. (Insert normal caution about correlation/causation etc.))
Evidence: top five states in per capita income are large population states with income tax.
Response: "Why do you all argue with the trolls. They are only here to provoke. Don't bother. Note the comment styles. It's the same trolls posting over and over under different names."
Reply to response: (a) The response implictly accepts the conclusion I suggested; many of the top states in per capita income have an income tax so there's no evidence an income tax leads to general decline. (b) "trolls"? I simply disagreed, with facts. You are free to label. (c) comment styles: I tried to have a nice style, using facts, be a bit guarded as to conclusions, and not calling names; also note I did not disagree with the thesis that some people do move, to avoid taxes, that is clearly true, it's just not enough to pull down a whole state economy. (Maybe you get something for the taxes?) (d) Same trolls different names: I rarely post here and have not done so for about 1.5 years perhaps.
If we had income taxes, they'd probably go up over time. However, any tax change would be voter approved so I am not understanding what the fundamental problem is. If the income tax goes up, and we link that with massive cuts in other taxes, our net tax burden could even decrease.
The mode of tax has nothing to do with the burden.
Any tax you care to name has gone up. Can you tell me an exception? Also, tell me any tax you've sene that has "gone away" when another tax was initiated?
Yes, car tab taxes have almost entirely gone away in WA. Property taxes can grow at only 1%. These were voter initiatives, which could also control any sort of income tax excess if need be.
They probably have welfare or foodstamp benefits, don't need english as second language classes, etc.
Voters believe that having these things in a society helps everyone. What would happen if we didn't fund foodstamps and ESL? Starving people and American children not being able to learn.
His braces - for a kid that's obviously an immigrant (legal or illegal) from Mexico or South America - are being funded by the state.
How would you know who is paying for this kid's braces? Did you grab his insurance card? How would know that the kid is an immigrant? Did you check his birth certificate after verifying his insurance? Any person born in America is an American, even if they live in a Spanish-speaking household and have olive skin.
If he is getting braces through Medicaid -- which you certainly would have no knowledge of -- there is a lot of paperwork and it is an uphill battle to get the government to pay for or an orthodontist to accept it. The kid probably needs them.
Where does that make sense or make my life better?
Because you live in a society that takes care of its poor, even if they look differently than you. That is the society that most Americans want to live in.
As an aside, I wonder if single men look at your son and wonder why they have to pay for his education? How does that benefit them?
This state has no money for new roads, but they have spent the last two years putting up electronic "emergency message" billboards all over town and now they have electric speed limit signs on the freeway? No money for basics, but tons of money for gizmos? How does that make sense or make my life better?
Transportation money comes exclusively from the gas tax, not any other revenue source. Those variable speed limit"gizmos" prevent accidents and thus prevent congestion. Active traffic management is a great tool that you should read more about.
Are the schools here in Issaquah better? No, but they are certainly a lot more overcrowded. Those kids parents have mostly big houses and pay a lot of taxes, but where's the new schools?
I have no idea if Issaquah has good schools or not but right now teachers are being laid off because we cut school budgets again this year. We had to cut the budget because tax revenues are down. Sales taxes are an unreliable source of revenue.
Are the roads better? Not that I can see. Worse in fact and more crowded. Where have all the taxes from all those new houses and additional car gone to?
Again, roads are funded by the gas tax and not "houses" and "cars." Gas tax revenues are falling because people are driving less. Also, congestion is down significantly over the last year because of the financial downturn.
Are our services better? Again, show me where I'm getting that extra couple of thousand dollars in value.
Personally, I am proud that this region is building light rail. And every day I ride the bus to work, and I'm happy that I have an alternative to driving. These are services/projects I'm taxed for and I'm happy with the service they provide.
Are my police services better? There's a new police station out here that looks real nice, but hey just CUT our police services in the county. (I sure wish they spent less on all that brick and more on services we care about.) I mean really, shouldn't something as basic as cops on the street be budgeted for FIRST?
It takes years to build a station and minutes to lay someone off. Perhaps the fluctuations of revenue that come with a sales tax is the precise justification for an income tax.
Is our library better?
Are all conservatives against libraries or is it just you? Education is the foundation of our future, and last I checked libraries are a great source of free knowledge.
Is there anything you could say that would make me believe that the additional taxes we're spending has turned into anything but money that can be used by politicians to buy votes?
No, there is nothing I could say, because you have a never-ending resentment of the government and the poor. A never-ending chorus of "NO NEW TAXES!" and then you're puzzled that schools are over-crowded and police service is cut. Your logical conclusion, 'It must be that little Mexican boy's teeth!' Come on.
Posted by: John Jensen on May 21, 2009 01:04 AMBecause right now, the "rich" - the top 20% in terms of income - pay 86% of all income taxes. Is that fair enough? Does it need to be all 100%?
Go ahead, give us a number - how much is enough?
Posted by: Shanghai Dan on May 21, 2009 01:23 AMPeople are getting tired of ever increasing taxes and getting NOTHING for it, except more taxes and more excuses why the gov still can't make it work with what they have.
And yes it means that the poor need to move up in life, instead of living off the people who do make an effort to move up. You should not suck on the baby bottle for life because your LAZY and expect others to pay for it.
Posted by: Medic/Vet on May 21, 2009 06:25 AMTruth is, California has been bankrupted by decades of Dem/Rino failed social programs, the primary beneficiaries being illegal aliens and indolent urbanites. Entrepreneurs, business owners, ranchers and other successful people have been exiting that state in droves over the past few years.
New Yorkers are migrating to Florida and other havens to escape the oppressive taxation required to bankroll the NYC political and welfare machines.
Heavy industry continues to flee unsustainable union contracts in rust-belt states like Michigan, Ohio and Illinois....and next.....Washington.
Posted by: Saltherring on May 21, 2009 07:18 AM
He does, where?
All we have seen is YOU people don't pay enough.
Yeah that's the answer.
Jezzzz
Posted by: Medic/Vet on May 21, 2009 08:50 AMKOMO 1000's "the commentators" is sans Schramm today (filling is the proprietor of liberal blog/ HA waste treatment facility ,David Goldstain) and they're debating the state income tax issue.
Of course, when you're Goldy and not earning an income, it's always a little easier to be a proponent of and have an opinion on taxing others while you skate out of your societal obligation for services you receive altogether.
Posted by: Rick D. on May 21, 2009 10:13 AMNo, it's not coincidence; nor is it meaningful. CA and NY also have the largest budgets and (along with TX) the largest population. The states with the highest deficits as a percentage of their general funds are Nevada and Arizona. (http://blog.educationvoters.org/2009/02/19/washington-among-budget-deficit-leaders/)
Oh, and the Journal's claim that CA and NY are "the two highest tax-rate states in the nation" is equally specious. They don't say what tax rates they're counting, but a better measure is total government spending per capita (http://www.taxfoundation.org/research/show/287.html). That list is led by the socialist outposts of Alaska and Wyoming.
As of February of this year, Texas is one of only six states not facing a budget deficit. Even with the second highest population in the nation, they've managed to accomplish this with NO STATE INCOME TAX.
TX should be used as a model of budgetary restraints and the spendthrift mentallity of both NY and CA that have both an income and sales tax.
This has to be the stupidest chart I've ever seen. First of all, a flat tax would look pretty similar because people who make more money are always going to pay more in absolute dollar if you tax things on a percentage. Second, it ignores regressive or flat taxes like FICA/Social Security, property taxes, sales taxes -- it doesn't illustrate the overall tax burden.
This chart doesn't begin to address the true economic disparity we have in this country. Do you know what that chart accurate reflects? The richest getting richer, and thus having more income to pay taxes on.
@89 Syrupy, emotional arguments fail on merit
His comment was a list of silly emotional resentments, how do you expect my reply to be constructed?
@91 Truth is, California has been bankrupted by decades of Dem/Rino failed social programs, the primary beneficiaries being illegal aliens and indolent urbanites.
Could you make that racism a little more blatant? That'll help us a lot in 2010. What social programs in CA are your referring to?
The largest problem with CA is the initiative process. Voters pass programs without funding and pass restrictions on how revenues can be raised and how they are spent.
Heavy industry continues to flee unsustainable union contracts in rust-belt states like Michigan, Ohio and Illinois....and next.....Washington.
Those jobs are disappearing, not moving. It would be wise to note what the term "rust belt" refers to.
@94 And yes it means that the poor need to move up in life, instead of living off the people who do make an effort to move up. You should not suck on the baby bottle for life because your LAZY and expect others to pay for it.
Yep, they need to pull themselves by their bootstraps!
This resentment of the poor is difficult for me to understand. Maybe it's because my father raised me for a bit while he was on unemployment and my mother a bit while she was on welfare and food stamps. After that I went into a foster home, a public program that obviously benefits the poor more than the well-off. Look, I never slept on the streets and I don't often view these events through a political lens but my father got laid off during a recession (sound familiar?) and my mother had a disability that prevented her from working. Because we had a social safety net, we were all able to "work" ourselves out from these conditions.
Not only is it humane to support programs like this, but it makes financial sense for a society: each of us went on to make revenues for the government which likely made up for our costs to taxpayers. In particular, I went on to become a well-educated member of society in a high-tech field. I will contribute vast amounts of revenue to society.
I share these details not to appeal to emotion, but because you need to get a sense of something: not many enjoy living below the poverty line, and your resentment really needs to be balanced with more well-reasoned thought. I do not resent the rich at all, but they simply aren't at risk of falling through the cracks and going without food, health care, or education in the same way that poor people are. So if we have to raise revenues to fund a program we the people think is important, I do not think we should place an addition tax burden the middle class or the poor.
The fool that assumed some "mexican" kid must be on medicaid and an immigrant -- there's an implied assumption that this kid won't amount to anything, won't actually be saved by a social safety-net or ESL, and won't end up contributing vast revenues to the government -- he's one of those poor who are just using the system. And I'll tell you something very plainly: when I mention to people that my single mother was on welfare, and I was in a foster home, and I had state-provided health insurance, they seem to make a different judgment about my use of the social safety net because of my skin color, white. I shudder to think that if my mother was black I'd be stereotype or that if I was Mexican I wouldn't have deserved dental care.
@98 As of February of this year, Texas is one of only six states not facing a budget deficit. Even with the second highest population in the nation, they've managed to accomplish this with NO STATE INCOME TAX.
Texas has a poverty rate of 16.4% (census.gov), the third highest of all the states. Hardly a utopia...
Posted by: John Jensen on May 21, 2009 04:14 PMYour ignorance is showing! The facts are that the top 10% pay 70% of all income taxes, and make 47% of all income. The bottom 50% pay 3% of income taxes and make 12% of all income.
THAT'S the real disparity!
But tell me - how much is enough? How much money - or percentage of income - should the Government take from you? When is enough, enough?
Posted by: Shanghai Dan on May 21, 2009 05:40 PMIs it really fair that I'm paying 83% of all the income taxes?
It is valid to compare the number 70% vs. 47% -- but you cannot look at the 70% number naked. Unless you're advocating for a flat tax, which is a ridiculous policy decision that would make people hurt seriously, then you cannot expect those numbers to be equal.
Posted by: John Jensen on May 21, 2009 07:52 PMYou realize, I hope, that that is a specious argument. There is a greater fluctuation in income taxes in a recession than there is in sales taxes. People that don't earn money because they lost their job still buy things and pay sales taxes, but people who don't earn money do not pay income taxes.
#83 "California is no. 7 in personal income per capita. That's how they are doing."
This data that you quoted is totally irrelevant. HOW MUCH one makes is only half of the equation. Someone who lives in San Francisco or Manhattan and makes $150,000/yr is doing MUCH more poorly than someone in "flyover country" who is making less than $100,000/yr. You also have to look at the cost of living in those states. For example, Western North Carolina (where I moved TO) has a cost of living which is about 25% less than the Seattle area (where I moved FROM). Similarly, $40,000/yr in Mexico will buy you MUCH more than in most anyplace in the U.S.
#95 A pretty lame argument against Art Laffer and Steve Moore's WSJ piece. To paraphrase the response, ITEP's rebuttal to the Laffer/Moore piece doesn't hold much water. The chart they presented actually BACKED UP Laffer and Moore's claim! And this over a period of time where there were lots of Wall Street millionaires being created. As I said, pretty lame.
But I do agree with your statement that "We should all be careful to draw conclusions from people motivated by ideology." (although I think you meant to say "be careful NOT to draw conclusions"). ITEP has been identified as a liberal think tank.
#100 "regressive or flat taxes like FICA/Social Security..."
I tire of people disingenuously referring to Social Security as "regressive", when they ignore the benefit side of the equation. For low income workers, social security is a MUCH better deal than it is for high income workers. Look at the bend points on social security benefits
The combination of taxes and benefits is extremely PROGRESSIVE, not REGRESSIVE.
You really can't think, can you? Here, I'll lay it out for you REALLY EASY:
- The bottom 50% of all wage earners make 12% of all income. They pay 3% of all income taxes. The ratio of income to tax is 4.
The top 10% of all wage earners make 47% of the income, and pay 71% of all taxes. The ratio of income to tax is 0.67.
That means the ratio is 6:1 in terms of taxation load, rich to poor. It's NOT flat at all, and in fact the rich pay not just more in absolute dollars, but more in terms of percentage of their own income AND in terms of the total taxation relative to their own income.
So how much more do you need? How much more should the "rich" pay, given they are already paying a disproportionate amount relative to their share of total income?
Posted by: Shanghai Dan on May 22, 2009 12:22 AMYou know, that's a pretty good point Bill, thanks for presenting it. The tax in isolation is by definition regressive, though. My point is that we shouldn't ignore those taxes when calculating a group's tax burden.
Dan: It is stupid -- yes, stupid -- to look at a linear chart as any guide to tax policy. That chart, which started this disagreement, mentions no where that the top 10% earn half of the country's wealth. Even in a flat tax, if the top 10% earned 47% of the wealth then they'd have 47% of the burden and it'd look "unfair" in a chart like that. You need to compare the relative wealth, which you ended up doing, for an actual discussion.
The bottom 50% of all wage earners make 12% of all income. ... The top 10% of all wage earners make 47% of the income.
And these facts are not at all reflected in the earlier chart. But these facts are important. They show that there is great income disparity in this country and issues with economic mobility.
A regressive tax which taxes the poor more than the wealthy is the only way to have each 20% group of earners share 20% of the tax burden. That chart is stupid, indefensible, and should never be linked to. It ignores most taxes and ignores the share of income of each group. Take a look at this chart, it looks a lot different, right? (src) Yep, the poor pay a little bit less percentage-wise, and the rich pay a little bit more. But it is a little bit.
Now look, to me the top 10% earning half of the country's wealth indicates that those folks are doing a little bit better than the average American.
How much more should the "rich" pay, given they are already paying a disproportionate amount relative to their share of total income?
I've answered this question multiple times -- to Clinton levels. But have you stopped beating your wife yet?
The top 10% give a disproportionate amount and they always will. Why? Because a flat tax is insane. What else do you want me to say? We have a progressive income tax. You are ignoring every other form of tax which typically affect the poor far more. So, really, what is your solution? A flat tax? Higher taxes on the middle class? Stop asking me trite, leading questions and propose a way to fix the problem.
Posted by: John Jensen on May 22, 2009 01:56 AMNo, A flat tax is fair and equitable for equal services received. The current progressive taxation is unsustainable and highly undemocratic (and I would add Unamerican) because it punishes productivity and rewards sloth.
The fact is, if everyday citizens had to actually pay equally for the services they received they'd demand more accountability and efficiency from the government that provides those services. The current system cloaks these realities from the Average "Ham and egger" by simply soaking the rich and having them pay a larger percentage, thereby causing a certain apathy on the part of Americans as to the huge amount of wasteful spending, pork projects and overall inefficiency of government. Conservatives believe the government closest to the people is the best type of government in terms of efficiency and accountability. Liberals believe the opposite is true. A simple glance at the National debt and the state of California (and our own for that matter) would indicate that the former is true.
John Jensen's argument is less about "fairness" and more about "class warfare". He says he wants a more efficient government but discards the notion of instituting the mechanisms that would make this possible. By irrationally labeling it "insane", he's decided that the old clumbsy way of unaccountable government ran by unaccountable politicians is the superior model of governance. To which I say "insane"? You bet.
Posted by: Rick D. on May 22, 2009 06:50 AMFalse. That statement in itself is laughable and you know it. You can't point to one hole in my assertion above that a flat tax would ensure a streamlined, more effective government because everyone would have a reason to ensure this accounability across the board. Everyone has a stake in it's ultimate success or failure.
Also John, while we're playing "progressive taxation", what if we did the same using "productivity" as the standard and not "income amount". Would you support the less productive among us pay more to account for not producing to the same extent as the productive among us? Would you tax someone that only works 40hrs/wk more than someone that works say 65hrs/wk? If not, why not? they say time is money right?
If you are consistent, you would say "yes", because all i've done is substitute one variable with another. My position would be "no", which is consistent that I want one equal standard of taxation, i.e. a flat or equal percentage for equal services.
I await your answer though I can already guess that it will not be consistent with your "progressive taxation" point of view even though we've only changed the one variable.
Posted by: Rick D. on May 22, 2009 10:37 AMAnd taxing based on hours worked: One stupid hypothetical doesn't make another stupid hypothetical any less stupid.
Productivity is not "hours worked." It is economic output divided by hours worked. If you suggest we tax based on the "economic output" of an individual, then perhaps you can propose a way to make that work? In the end, if you have a good amount of economic output in a free market you should be well-compensated. We tax that compensation already.
The "less productive" are generally those without a job or bad jobs, or those lacking a good education. Effectively, you are proposing to tax the poor at a higher rate. I understand that is your core resentment, but how much revenue do you expect to make from the poor? And how much suffering do you intend to cause?
This is the second time you've talked about working more than "only" 40 hours a week. If that's your metric for laziness, then you need some more perspective.
As for whether it's equivalent, no absolutely not. Many janitors work 40-45 hour weeks and many of the richest in America have no specific job to speak of and earn much of their money through capital rather than labor. Similarly, much of the poor do not have full-time jobs. Your tax is regressive, not progressive. Adjusted Gross Income is the best measure wealth, not hours worked.
Posted by: John Jensen on May 22, 2009 11:48 AMThese programs should be completely eliminated and replaced by charities. Make the charitable contribution deduction MORE liberal than it is now (Obama wants to make it LESS liberal). Charities do a MUCH better job of reducing dependency than the government does--the very term "charity" as opposed to "entitlement" does wonders in reducing dependency because of the "expectations" it puts on the recipients. Those that can work have a lot more expectations on them to do so if relying on charity rather than on "government programs".
Government programs breed dependency...
Posted by: Bill H on May 22, 2009 04:41 PMAnd what happens if charities don't make up the difference? Are homelessness, starvation, and death an acceptable outcome in this libertarian utopia?
You make the incorrect assumption that each person would be able to find a high-paying job. We do not have zero percent unemployment at all times, of course.
What about the old and infirm? Will charities take care of a dismantled social security/medicare-dependent population or will we simply accept that those who didn't accumulate wealth during their lifetimes don't deserve access to the prescriptions they need to survive?
Make the charitable contribution deduction MORE liberal than it is now (Obama wants to make it LESS liberal)
A flat tax -- which is what I was talking about -- has no deductions. Charities would instead rely on your good will to fund programs for those living in poverty (formerly those in the middle class who were bankrupt by this flat tax).
I can see you have great empathy for those struggling in poverty so I'm sure your contributions to charities would be high.
Government programs breed dependency...
So do charity programs. Unless they are rationed based on a lack of sufficient funds, and if charity programs are rationed because they do not have as much money as they need, people will literally die on the streets.
Posted by: John Jensen on May 22, 2009 06:09 PMDan: It is stupid -- yes, stupid -- to look at a linear chart as any guide to tax policy. That chart, which started this disagreement, mentions no where that the top 10% earn half of the country's wealth. Even in a flat tax, if the top 10% earned 47% of the wealth then they'd have 47% of the burden and it'd look "unfair" in a chart like that. You need to compare the relative wealth, which you ended up doing, for an actual discussion.
Thankfully, we do not tax wealth; we tax income. Thus your whole statement here is moot. We tax income at a highly regressive rate with the top income earners paying a very disproportionate share of all income taxes, and the bottom 50% of income earners paying effectively none.
They show that there is great income disparity in this country and issues with economic mobility.
The former is true; as Winston Churchill said, "Capitalism guarantees the unequal distribution of success; communism guarantees the equal distribution of misery".
The latter, however, is NOT shown. In fact, economic upward mobility is REAL. There is, in fact, a DOWNWARD mobility if you look at the median change in income; those at the bottom quintile nearly doubled their income over the last 10 years, while those at the top 5% saw a DROP in their income.
So, in fact, your assertion is not just wrong but COMPLETELY wrong.
A regressive tax which taxes the poor more than the wealthy is the only way to have each 20% group of earners share 20% of the tax burden.
We don't have that now. In fact, the ONLY group that come close are the "rich", who actually pay MORE than their share of income taxes; they pay more tax on every dollar they make than the poor. Nearly an order of magnitude more!
I've answered this question multiple times -- to Clinton levels.
I see. So tax increases on every single tax payer in America. EVERYONE will get a tax increase. And note that in the Clinton years, the tax/income ratios were skewed AGAINST the poor, and favored the rich.
Sounds like you want tax cuts for the rich, and you want the poor to pay for it - bully for you!
The top 10% give a disproportionate amount and they always will. Why? Because a flat tax is insane.
You've claimed that, and have shown nothing to back it up. In fact, most countries that have implemented flat taxes have prospered, including those with a 30+ year history of a flat tax (like Chile).
So, really, what is your solution? A flat tax? Higher taxes on the middle class? Stop asking me trite, leading questions and propose a way to fix the problem.
My solution? A flat tax, and cut spending. I simply refuse to accept that the Government should account for nearly 4 out of 10 dollars spent inside the US. That is insane, that is rediculous, and that is an absolute generational theft.
Posted by: Shanghai Dan on May 22, 2009 07:09 PMSuppose that every day, ten men go out for beer and the bill for all ten comes to $100.
If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing. The fifth would pay $1. The sixth would pay $3. The seventh would pay $7. The eighth would pay $12. The ninth would pay $18. The tenth man (the richest) would pay $59.
So, that's what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.
'Since you are all such good customers, he said, 'I'm going to reduce the cost of your daily beer by $20. Drinks for the ten now cost just $80. The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But
what about the other six men - the paying customers?
How could they divide the $20 windfall so that everyone would get his 'fair share?'
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would
each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so: The fifth man, like the first four, now paid nothing (100% savings). The sixth now paid $2 instead of $3 (33%savings). The seventh now paid $5 instead of $7 (28%savings). The eighth now paid $9 instead of $12 (25% savings). The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
'I only got a dollar out of the $20,'declared the sixth man. He pointed to the tenth man,' but he got $10!' 'Yeah, that's right,' exclaimed the
fifth man. 'I only saved a dollar, too. It's unfair that he got ten times more than I!' 'That's true!!' shouted the seventh man. 'Why should he get $10 back when I got only two? The wealthy get all the breaks!' 'Wait a
minute,' yelled the first four men in unison. 'We didn't get anything at all. The system exploits the poor!'
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most
benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start
drinking overseas where the atmosphere is somewhat friendlier.
David R. Kamerschen, Ph.D.
Professor of Economics, University of Georgia
First of all, remind yourself of this chart. We have nearly flat tax burdens already.
A flat tax is simply stupid policy. I've explained why multiple times in this thread: it hurts the middle class more than any other class and moves them toward poverty. Not a single mainstream republican at the federal level supports a flat tax. Not a single state has a flat tax. It's fringe policy, and you should really start understanding what it'd mean for this country before parading around advocating so strongly for a tax increase on 95% of Americans yourself included.
Consider that the same budget that creates a flat tax wouldn't cut spending by 50%, because Washington is a slow vehicle. Nearly everyone's taxes would skyrocket, you'd eliminate the mortgage deduction and the charitable contribution deduction. People would slip into poverty. People would lose their homes. Charities would have less money -- almost everyone would have less money expect the top 5%. And that's exactly what the failed economic policies over the last eight years were about: helping the top 5%. Look where that got us.
Also, I was saying "Clinton level" to the highest bracket and not the lower brackets, just as Obama has proposed. If I were in charge, I'd introduce a new marginal rate of something like 41% on income >= $2,000,000 a year to help close the budget cap.
Posted by: John Jensen on May 23, 2009 01:11 AMIt is interesting how the left THINKS they have the moral high ground in defending the "homeless, the starving and the dying", but they are the least likely to contribute to charities to help these people. Oh yes, they are all for taking money at the point of a gun from "the rich" and the not so rich to support their causes, but they are not so apt to willingly give of their own resources to help through charities. It is conservatives who are the greatest supporters of charities, NOT liberals. You have no high ground in this debate, so don't try to pretend that you do. These "government programs" that you have described have done NOTHING to reduce poverty, they have only increased dependency--that is not compassion, that is not empathy, that is just immoral.
Was there more or less poverty after the welfare reform pushed by Congressional Republicans in the 1990's? I would posit that there would be LESS homelessness, poverty and starvation if we GOT RID of the government programs. A lot more people would be willing, and able, to give to charity if the government were not taking a pound of flesh from them in taxes.
" You make the incorrect assumption that each person would be able to find a high-paying job. We do not have zero percent unemployment at all times, of course."
I, of course, made no such assumption at all. But look at Europe, with all of their social programs, they have a constant unemployment rate of 10% or higher--much higher than we have in this country, typically.
"What about the old and infirm? Will charities take care of a dismantled social security/medicare-dependent population or will we simply accept that those who didn't accumulate wealth during their lifetimes don't deserve access to the prescriptions they need to survive?"
The old an infirm will continue to rely on Social Security and Medicare, but the sooner we could phase out these loser programs, the better for everyone. Social Security has been a huge Ponzi scheme since it's inception. It was sold as "old age insurance" but has morphed into just another welfare program. Had it been sold originally as a welfare program, it would never have passed.
"A flat tax -- which is what I was talking about -- has no deductions."
These two items are NOT mutually exclusive. Most flat tax proposals don't charge any tax on the first $X of income and then charge a flat rate above that. Others maintain certain deductions. I would maintain that charitable deductions should be maintained.
"I can see you have great empathy for those struggling in poverty so I'm sure your contributions to charities would be high."
Yes, they would, as would those of most conservatives, contrary to most liberals. If there was a drop off in support of the truly poor, as noted above, it would be more likely to be the fault of liberals rather than conservatives.
"...if charity programs are rationed because they do not have as much money as they need, people will literally die on the streets."
This is a silly proposition. There are enough people in this country that are compassionate that this would be extremely unlikely, unless the liberals continue to be extremely stingy with their charitable contributions.
What WOULD be more likely to happen is that a distinction would be made more often between the "deserving" poor and the "undeserving" poor. The deserving poor being those who fell on hard times through no fault of their own vs the undeserving who are simply lazy or willing to sponge off others rather than work for a living. Most conservatives are very willing to give a helping hand to those who are sick, mentally deficient or have just fallen on hard times. We are less willing to subsidize those who are simply "working the system" rather than working for a living.
Posted by: Bill H on May 23, 2009 09:17 AM@88, let me ask you -- what rate would you like to see? No income tax? Flat income tax?
Higher rates for the poor and lower rates for the rich, to encourage industry and effort by the poor? What about a "fair rate" that's based on equality, that is, every single person must contrubite $15,000 even if their income is only $15,000, leaving them with nothing except the knowledge they are pullling their own weight, they are equal to better off people who had the foresight and responsibility to make more money?
What if they can't pay it, maybe they can work it off?
Ok, yes, you are being baited, but really that's where that argument leads to about how the rich pay 50% of the total revenue. It's implicitly based on the notion every person should pay an equal amount.
To some, that's morality, but as you can see it would lead to tax slavery for some, literally, if literally enacted.
Anyway, better than debating things in the abstract, why not point us to a nation that has the rates or tax structure you like?
Then we could see what kind of government and society you get with that kind of tax rate or tax structure.
I pointed to five US states with income taxes to show it does not lead to general economic decline.
Can you point to five nations with the tax structure you like, then we can see how it works in the real world?
We'll never have ceterus paribus conditions but it's a starting point for discussion.
Posted by: Census datatroll on May 24, 2009 10:46 AMIdeally, I'd say zero income taxes; it should be a sales tax only. Fundamentally, I believe that if you are going to tax, then tax consumption, not wealth creation. Taxing income is a disincentive to savings, higher incomes, and the like.
BUT, if you are going to tax income, I would say taxation like Chile, Hong Kong, Singapore, or Slovakia would be best. Hong Kong is great - relatively flat, and capped at a maximum of 16%.
Right now, we have a very progressive (or regressive, depending upon your end of the chain) tax system and the demand is to make it even more unbalanced. The wealthiest 10% pay the lion's share of all income taxes, well out of balance with the income they make. Fully 50% of all tax payers pay ZERO income taxes - half the people have zero income tax load!
So for those 5 nations, I would say Chile, Hong Kong, Singapore, Russia, and Slovakia are great examples of flat (or greatly reduced "progressive") taxes working and working well. I've lived and done business in 3 of them, and seen first hand how it works.
I guess the more fundamental question is this:
How much of the GDP should the Federal Government consume? Right now, Obama's 2009 budget has the Federal Government spending 27% of the entire GDP. And he wants to take that to nearly 30% with his additional taxes. And then take that to 47% with nationalization of healthcare.
How much of the national GDP should the Federal Government be directly responsible for? I think it is reprehensible that the Feds spend more than 1 out of 4 dollars; it should be less than 1 out of 15...
Posted by: Shanghai Dan on May 24, 2009 07:11 PM
