Palin Resigning as Governor

Originally posted by sh76
[bAssume I buy 10 loaves of bread each week and you buy 5. The baker cuts the price of a loaf from $3 to $2. You now go and complain that his price cut favors me because I save $10 a week and you only $5. Obviously, that is ludicrous. I saved more only because I buy more, not because the cut favors me.
[/b]

A classic response but this response fails to even understand on a basic level how our tax systems work.

Taxpayers DON"T PAY ONE SET TAX RATE. The tax rate changes increases with the higher incomes. In your example, the price of bread is constant. The tax rate is not constant. It is not a true comparison.

Worse, governments do not make decisions like bakers do. A baker doesn't care how much money you make. He just charges a FLAT FEE. Governments DO NOT CHARGE CITIZENS flat fees. If they did, we would have a flat tax. But we don't.

Your example only works if the government taxed ALL income at the SAME FLAT TAX rate. If the gov had a 20% flat tax and reduced it by 19% then fine, your example is perfectly good. But we don't have a flat tax so your example is perfectly crap.

Unlike bakers, governments can make decisions based on targeted relief to taxpayers. They can inject cash into the economy during recessionary times by not taking as much tax from people.

The argument is that if a government think a Trillion dollars is needed to prop up the economy, then give back a trillion dollars. The most equitable way to do that is to give EVERYBODY THE SAME amount of money back. You add up how many taxpayers there are and then divide 1 trillion dollars. If that number turns out to be say, $1000, then only lower the first few tax levels so that everyone gets $1000 back.

Instead, what we do now is say, "ok, for middle class guy and you rich guy that makes 2 people. We have an average of 1000 bux per person to give out for a total of $2000 but you middle class guy, i'm giving you 200 bux and this rich guy will get $1800 instead"

The reason rich people don't like it when the upper tax levels aren't reduced is it means that a higher percentage of the tax money collected by the government comes from rich people. Even though rich people would receive the exact same amount of money back from the government as the middle class person does, it's a phillosophical argument for them. They don't want to accept that the rich dude and the middle class dude are each paying $1000 less in taxes. They think when the government deems tax cuts are necessary to stimulate the economy that they are ENTITLED to more money than everyone else. They forget the fact that it is NOT THEIR MONEY. It's the taxman's money.

Originally posted by shorbock
embryo are not babies

Irrelevant

It's ok to kill arabs but it's not ok to kill embryos.

It's still selective moralism regardless of how you label the unborn.

If Palin looked like Golda Meier, would we even be talking about her?

I really doubt it.

Originally posted by uzless
Irrelevant

It's ok to kill arabs but it's not ok to kill embryos.

It's still selective moralism regardless of how you label the unborn.

Didn't Jesus say "thou shall kill all your enemies, invade their country and take their oil " ?

Originally posted by shorbock
Didn't Jesus say "thou shall kill all your enemies, invade their country and take their oil " ?

Who's Jesus?

Originally posted by uzless
Who's Jesus?

his moustached mexican gardener, didn't you know?

Originally posted by uzless
A classic response but this response fails to even understand on a basic level how our tax systems work.

Taxpayers DON"T PAY ONE SET TAX RATE. The tax rate changes increases with the higher incomes. In your example, the price of bread is constant. The tax rate is not constant. It is not a true comparison.

Worse, governments do not make decisions ...[text shortened]... e else. They forget the fact that it is NOT THEIR MONEY. It's the taxman's money.

I'm going to try one more time and then I give up.

You have staggered brackets.

You have a 10% bracket and a 15% bracket and a 22% bracket and a 28% bracket and a 33% and a 35% (give or take).

Lower income people are taxed at 10 or 15% on their marginal dollar. Higher income people have higher taxes on their marginal rate.

If you lower the 35 to 33 and the 33 to 31, then you have cut taxes for the rich only.

If you cut the 10 to 8 and 15 to 13, you have cut taxes for everyone. You have benefited the low income people more than high income people from a percentage perspective because the low income person has his tax cut affect his entire tax base, while the high income person has only the low end of his income be subjected to lower taxes.

If you cut all the rates, then you are proportionately cutting taxes for everyone. That is an across the board tax cut.

Your argument that it's equitable to give everyone back the same amount of money is fine so far as it goes, but has one small problem. That's not a TAX CUT. It's a handout. If I go over to you and give you $100, I'm not cutting your taxes. I'm giving you money.

Another thing to remember that the Bush tax cut was not a stimulus, but a tax cut based on a philosophy that taxes ought to be lower.

===hey think when the government deems tax cuts are necessary to stimulate the economy that they are ENTITLED to more money than everyone else. They forget the fact that it is NOT THEIR MONEY. It's the taxman's money.===

That's just bizzarre. If I cut taxes for future years, I am not giving people money. I am letting them keep more of the money that they make. You want to argue high taxes are good? Knock yourself out. But don't tell me that it's all really the government's money. Please.


Your assertion that I fail to "to even understand on a basic level how our tax systems work" is laughable. I forget more tax law in a year that you'll know in your lifetime. I prepare complex income tax returns for trusts and estates as part of my job.

Interesting discussion on taxes! I just created a simple Excel spreadsheet (as I am wont to do) to wrap my head around the immediate effects of tax cuts.

My baseline model includes the following:

Rate A ($0 to $10,000) = 10%
Rate B ($10,000+ to $20,000) = 20%
Rate C ($20,000+ to $85,000) = 35%
Rate D ($85,000+ to $200,000) = 50%

I assumed these rough rates and brackets based on several sources related to the poverty threshold in the US, federal and provincial taxes here in Ontario, and a few other things. I've made my model fairly flexible, so if anyone has any strong objections to these starting numbers I can change them relatively easily. Next, I found some information on income percentiles in the US from 2005. The data suggests:

10% of the population make under $10,000
20% of the population make under $20,000
50% of the population make under $45,000
80% of the population make under $85,000
90% of the population make under $120,000
95% of the population make under $155,000

I also assumed a hard cap of $200,000 just so I could complete the calculation (not true, but it shouldn't skew the numbers much considering the extreme tailing off in the upper percentiles). Working backwards, and assuming a flat distribution of salaries for each percentile range (again, not true, but it shouldn't affect the numbers too much), I came up with a crude income distribution curve that, funnily enough, actually looks a lot like this graph of electron probabilities in a hydrogen atom:

http://images.encarta.msn.com/xrefmedia/AEncMed%5CTargets%5CIllus%5CIFG%5CT373960A.gif

However, for the calculations I used the raw numbers. I partitioned the salaries in $1,000 increments, and multiplied the absolute tax revenue for each increment by the population density for that increment to find the contribution of that increment to the total tax revenue. Once that was all set up, it was time to play with the numbers!

I considered two scenarios to compare to the baseline: (1) each tax bracket rate is cut by 2%; and (2) only the lowest income bracket was cut by a total of 8%. The results were as follows:

Total Taxable Income: 5730450

Baseline Scenario

Total Tax Revenue: 2039107.5
Percentage of Total Taxable Income: 35.6%

Poor (under $20,000) paid 1.3%
Middle ($20,000+ to $85,000) paid 44.3%
Rich ($85,000+) paid 54.4%

All Bracket Rates Cut By 2%

Total Tax Revenue: 1902760.5
Percentage of Total Taxable Income: 33.2%

Poor paid 1.2%
Middle paid 43.8%
Rich paid 55.0%

Lowest Income Bracket Cut By 8%

Total Tax Revenue 1962787.5
Percentage of Total Taxable Income: 34.3%

Poor paid 0.7%
Middle paid 43.6%
Rich paid 55.7%

To clarify the above, each group receives some immediate benefit from any tax cut (i.e. all individual's taxes are lowered), and the rich get more money back from the poor in absolute terms. In relative terms (i.e. how much the tax cut is worth as a percentage of gross income), I got the following maximum reductions by group:

Poor
Scenario (1) gives each poor earner a 2% reduction, scenario (2) gives a maximum reduction of 8% for those earning less than $10,000.

Middle
Scenario (1) gives a maximum reduction of 2.7% for someone earning $30,000, scenario (2) gives a maximum reduction of 3.8% for those earning $21,000.

Rich
Scenario (1) gives a maximum reduction of 2.6% for someone earning between $104,000-$109,000, scenario (2) gives a maximum reduction of 0.9% for someone earning $86,000.

So it seems that a cut to the lowest tax bracket alone does in fact shift the tax burden away from the poor more effectively than an "across the board" cut, and provides the largest tax reduction relative to income for the poor and middle class. It also results in more taxes being collected by the government relative to the 2% across-the-brackets tax cut. It seems like a win-win for everyone except the rich, which is perhaps why it's not done more often (I assume that the rich have more time, money and more powerful connections than the middle class or the poor, and use them to great effect when lobbying the government).

Originally posted by PBE6
So it seems that a cut to the lowest tax bracket alone does in fact shift the tax burden away from the poor more effectively than an "across the board" cut, and provides the largest tax reduction relative to income for the poor and middle class. It also results in more taxes being collected by the government relative to the 2% across-the-brackets tax cut. It han the middle class or the poor, and use them to great effect when lobbying the government).

Of course a cut to the lowest tax bracket alone shifts the tax burden away from the poor more effectively than an "across the board" cut. I would think that would be obvious.

As you said, that's not an "across the board" cut. It's a cut that benefits the poor and hurts the rich by allocating a higher share of the tax burden to the rich. I'm not saying that's inherently wrong or anything, but it's not an across the board cut.

An "across the board" but lowers the tax burden proportionately among all classes. People who think the rich should be paying more won't like it, but it's still an across the board cut.

That, of course, is what the Bush cut was- an across the board cut.

Incidentally, I was not in favor of the Bush tax cut. I voted against him in 2000 specifically because I thought his tax cutting ideas were reckless because the unnecessarily reduced incoming revenue for the government. But, this whole idea that the tax cut was a "tax cut for the rich" is simply incorrect.

Originally posted by shorbock
embryo are not babies

So you believe abortion is right?