A conversation about taxes

They sure do ..... and here is one of yours  ... and it is affecting your thinking even though it has no basis whatsoever

Honestly ... who says that? .... and if "he/she" exists ... then they dont deserve to live in a capitalistic democracy ... they should go live in Cuba or somewhere like that.

please read my comments on ID's thread regarding Redistribution and one of them is a reply to your comments.

in short here is the situation:

people like you provide product and some people buy it and others CAN NOT. and you make a profit. good for you and for the country.

for the country and you to grow ... we must get those who CAN NOT buy things including yours ... to be able to afford those things including yours ... in order that you can make more things and in the process make more money and the country as a whole get richer.

then how do we do that?

the only way is to increase the money available to those people so they can buy more ...

we can do this through two ways:

1- you give them raises

and

2- Gov. make it less expensive for them to get certain essential services like education, healthcare, transportation, housing, utilities... etc.

your taxes are an integral part of your continued busn growth ... just like your skills were an integral part of you starting and succeeding in your busn in the first place

take your taxes out of the pic ... things are not going to go well for your busn ... or for the country as a whole

yes you will make more without taxes .... but just  for a short period of time ... to make your growth sustainable it must be cut a little in order for it to continue uniterrupted.

hiring more people or expanding your busn is not dependant on how much money you have ... it depends on the market demand and on your skills ... if those two exist ... banks provide the capital needed for more people and/or more equipment. (the Banks get the money from savings of ALL rich people including yours of course ... and if needed they get more from the Fed Res Bank and they pay it back when you pay them back from your new or expanded busn )

PLEASE >>>>>>>> answer these arguments and show me where any of the above points are wrong.

forget about the empty-headed people, if they exist, who say you pay more taxes because you dont need the money .... that is stupid ... that is not the reason for higher taxes on the rich ...

you cant get healthy educated people who can travel easily to work for you and then buy your product without YOUR HIGHER TAXES. lower income people cant provide the capital required for that... they provide some of it .. but you provide the bulk of it ... that is why you get a lot more than anyone who is an employee.

i think this is as clear as i can amke it.

The gov. wants you to make money

poor and middle income people want you to make more money

consistently ... not just for a short time

please tell me what is the downside of this system?

how does this hurt you? The country gets hurt when you get hurt ... but how is this hurting you in the long run?

your arguement is that you can make money now if you dont pay taxes .... that is very true ..... BUT IT IS ONLY FOR A SHORT PERIOD

after a year or so ... your business will lose the customers and your income will decrease permanently ... and may disappear alltogether .... you dont want that ... do you? neither do we .

So now, you are being pressed into slavery and demand reparation? You admitted you and your family will not be affected by it, yet you will retaliate spitefully by not hiring or worse laying off. Won't that in the long run be bad for your business and further reduce your wealth? 

As I mentioned elsewhere I think, taxes aren't an expense like others - they will go up if you make more profit, and go down if you make less (and go away if you make 0 profit, and give you a refund in the future if you make a loss). Hence if you're making a profit with lots of workers and tehre's a tax rise, you'll still make a profit. You just won't make quite as much. However prior to the tax rise you would have likely been working to maximise profit, hence wouldn't have employed a worker if they were costing you more than they were producing. After the tax rise this wouldn't have changed - each worker would still be producing the same as before, and costing the same, hence making you a profit. The tax would then come in and reduce the amount of profit made by each worker, but not affect whether they're making a profit or not, hence firing them would hurt your profits.

Now if you were firing them because the profit being brought in by the workers was no longer generating a sufficient rate of return to justify your investment in their work for the given level of risk (and you'd be better off investing elsewhere, and/or not taking on so much risk), then that'd be a different matter altogether.

The country can grow whether those people who "CAN NOT" buy the goods can or can't. Lets say the government has the choice of taking $1% extra from the rich, and giving it to the poor, which at face value would yield $100k (numbers made up; in reality they'd be higher). However this leads to a reduction in the tax base due to the rich no longer producing as much (see my post in the othe thread where I gave you an example of why increased taxes will have a negative impact on effort), meaning after factoring in the reduced tax base they only get $80k which they give to the 'CAN NOT's'. So, instead of having $100k spent (ignoring imports etc.), they only have $80k spent, meaning the country shrinks.

The reasons for redistribution are more along the lines of $1 being worth more to the very poor than the very rich, as well as arguments that if you reduce income inequality you can reduce problems such as crime which can benefit everyone. There may even be a small argument that by providing 'insurance' to people if things go badly (i.e. a businessman takes a risk, it doesn't pay off, and they're left with no income) the government is helping ensure that businesses try and not be quite so risk averse, but more risk neutral, and hence will undertake projects that would be expected to produce a gain on average, which overall would benefit the economy. The downside is if it went too far it would make businesses risk lovers, and the bankers have recently shown what can happen when you encourage people to take on excessive risk without sufficient return.

Would you work harder and pay a higher tax rate if you could be Sir Bradley of Michigan?

What I'm getting at in a roundabout way is that there is more to the pursuit of wealth than wealth itself. Status and pride can be effective motivators. If you think the rich don't get enough in exchange for their taxes, perhaps the US needs to make better use of soft motivators in convincing the well-off to part with their cash.

That way you could modify your conversation to say that, in exchange for paying $1 million more in tax, you are also entitled to be addressed as Sir Bradley, or if it's more than $20 million (just picking figures here at random), as Baron or Lord Bradley. You get a hefty payoff in status, which demonstrates your wealth to the world in an appropriate way, while still extracting the maximum amount of cash for government coffers.

What do you think?

Not trying to be too harsh here, but I'd say that your decision to not put forth sufficient effort to formulate coherent capitalized sentences is probably going to mean that Brad won't be taking the effort to respond.

that is true ... no one is advocating going back to 70% tax or even to 100% tax on higher incomes as it used to be ...

at around 35-40 %, i dont think we are even close to the level that kills the incentive to invest and keep growing.

you are really amazing !!!!

those $100 as the article says were not going into the market they will go into savings ... we are talking about high-income people who already buy what they like whether they paid that extra $100 in taxes or not ...

the question which you intentionally ignore is this:

which is better, putting those $100 into savings where they will be sitting there with no larger market to invest them into, or get those $80 into the market so you create investment opportunities for the rest of the savings?

it is either just accumulate all savings into the banks with no chance to invest or take some of those savings (as taxes i.e. the $100) to create larger market and investment opportunities.

yes there are expenses involved and that is why not all the $100 go into the market ... the Gov job is to minimize those expenses to  maximize market expansion ...

i already answered your argument about reducing incentives ... at very high tax levels it is true ... there is a point at which you can maximize the benefits of higher taxes for high incomes ... beyond that the benefits are reduced of course ... but no one is talking abiut that prohibitive tax level.

of course .. when you have no convincing response all you can do is focus on the language and the format ... (sorry if my writing deosn't live up to your standards ... however, the argument still stands)

There's a third thing that can also be done to get more people to buy his product.  He can invest or spend his money elsewhere.

If he invests money somewhere, that money invested, will often find its way into hiring more people for jobs (or increase the pay of those already employed) which will then give them the option of either spending their money or likewise investing it.

If Brad instead spends his money, then that money is used to help fund other businesses and individuals who are selling their goods and services to him.  This spent money can now either be invested or spent. 

Basically, unless Brad gets all of his money together and burns it, or otherwise not uses it in some way, he's going to be helping the economy with the money that he has earned, and thus help make it so that more people can afford to buy his product.

He does this, in addition to making most of the people that bought his products better off.  I mean, when you decide to spend 50 dollars on a game that his company made, you made that trade because you feel that the game is worth more to you than the 50 dollars you had. 

you didnt read the answer to that above? here it is copied from my previous comment:

Okay, sorry, I must have missed that comment, wasn't there when I was writing my post.

Seems to me the people that support higher taxes on the so called rich, don't have to shell out more money, so higher taxes do not affect them. While the so called rich do not use any of the perks of goverment and still be forced to pay higher taxes, don't sound fair to me at all.

see That is one of my pet peeves so to say. All these people for the tax increase it would not really affect them at all. Refusing to think outside of the box.

When I was watching some news they were talking about the raise in the taxes and one guy flatly said that he would cut jobs in order to keep more money in his pocket, in fact he said that these so called middle class people ( i guess he pays his people well ) , would have less middle class and infact more unemployed middle class people if this was to go into affect. I ve been saying this time and time again... while there are a very few people that fit into this higher class... thier voices are not heard.

I dont care anymore to be honest let the country kill itself.  All this extra spending the BO is taking on, and not even gonna attempt to balance the budget but instead "SPEND SPEND SPEND" is just gonna make this country worse off

And no... if these guys earned the money NO ONE HAS THE RIGHT TO TAKING MORE FORM THEM. just because they have more does not intitle anyone to it except who ever these people chose to give it to.

How about this.... all of you for more taxes take a ride down in your town... find someone that has a crappier car than you and give them yours... because you have "more" than they do... how you like that? Or go and find a poor person making 200 bucks a week and you "donate" an amount of your paycheck to them soo that you and him/her are equals? Afterall your making more than they are and you are better off then them so yeah its fair right?

Stevendedalus, it has nothing to do with spite.

Let's look at it from a different perspective:

You're working and make $1000 a week. You use that money to pay your bills - house, car, food, etc.

But you also might take some of that money and invest it or build on to your house or some other non-essential things.

Then one day, you get a reduction in pay and now you only make $800 a week. 

So what do people do? Their first move certainly isn't to sell the house or car. They still pay the usual "essentials" from their perspective.

What they do instead is put less into their 401K and put off building on to the house.

They don't do that out of "spite". 

It's no different with the people who make $250k a year.  As I've mentioned elsewhere, most people who have taxable income of over $250k a year are small business owners. That's how they get paid is through either salaries to themselves, disbursements, etc.

So when they end up with less money - regardless of the reason - whether it be less income after taxes, higher energy bills, whatever, their first instinct isn't to downsize their house or get a cheaper car. They just invest a little less in their business whether it be in the form of workers or buying equipment or whatever.

Thinkaloud: Your response is difficult to read because it is so incoherent.

But there's no question to answer because your underlying premise if flawed. You see the economy as a zero sum game. It's not. If that were the case, our standard of living would never improve.

Your economic outlook is premised on the assumption that there are N dollars out there and the government taking it and handing it out is just the same as the person who earned it keeping it. That at the end of the day, there will still be N dollars. That's not true at all.

While the average person who gets $1 may only produce $1 in wealth, that ratio -- 1 to 1 -- is just that, an average. There are people who get $1 and can make $1000 out of it. There are people who can get $1 and end up with nothing (hence all those lottery stories where the guy ends up broke 2 years later).

The problem for society is that even if you assume, which is a big assumption, that the government that takes $1 and re-distributing results with $1 in wealth being created (despite ample evidence that the government destroys wealth), you are still ultimately taking $1 from peopel who could have taken that $1 in wealth and turned it into $1.50 or $1000.

No.  A job is a means to an end.  I work so that I can earn money to support my family. Pretty much like everyone else.

Even taking the underlying unfairness aside for a moment. What people don't realize is the effect it has on everyone else.

The single biggest problem with our society is how few people understand economics. Look at what ThinkAloud said in comment #1. It really highlights the lack of understanding about wealth creation.

The phrase "make money" is well known in our society but apparently not understood.

People who are rich are people who get $1 and can produce a lot more than $1 in wealth.  The greater the ratio, the richer they are.  I'm not super-rich by any standard. I'm a little fish.  But there are people who can take $1 and turn it into $1000's.

And we ALL benefit from those people because they get their wealth by producing things we all want and ultimately can have the opportunity ourselves to create our own wealth by leveraging what those big fish have produced (like me making computer software - I stand on the shoulders of giants who broughts us today's consumer-centric Internet, personal computers, friendly operating systems, etc.).

Fortunately, the government didn't take so much from those men and women that they didn't have enough to risk and invest in promising new endeavors. And so they took their dollars and created vastly more of them.

That is why we're so much richer today -- all of us in the US -- than people were 100 years ago.

It's also worth wondering how much better off we could have been if the government hadn't taken so much of the nation's wealth to re-distribute it.

It is delivered every April 15th.

In actual fact then you're not like everyone else. There's a study cited here http://www.accel-team.com/motivation/ (I couldn't make a link for some reason) which ran from 1945 to 1965. What it discovered was that while security was the highest factor in work motivation (and therefore presumably money for the family), advancement, the type of work and the reputation of the company were also important.

From the last three factors we can see that recognition of effort, the desire to be in a certain industry and acknowledgement of good employment choices are important.

The government may only be able to get more money from you through coercion because you have no interest in working beyond the bottom line, but the evidence suggests they should be able to get more from others through appealing to the non-monetary motivators. Titles are simply an effective method of recognition. Higher taxes for popular industries and positions might also be an option.

EDIT: I've neglected to mention the psychological toil of unemployment here. You say that people only work because they need the money, but the societal influences are also heavily biased towards working. This is one of the factors behind the high level of depression among the unemployed.

The government's agenda seems a bit unclear to me.  But it doesn't seem to be doing a very good job at it.

Certainly people like to DO things.  I enjoy my job and all the factors you mention are certainly motivators.  But at the end of the day, people get up and go to work first and foremost to trade their labor/abilities for other things that they want.

It's not about materialism. The point is that when people have less to spend, the first thing they do is zap any spending they deem non-essential.  Less on that 401K. Less vacationing. Less NEW things right?  Well, business owners are the same way. If they have less to spend, they invest less (hiring new workers), they may cut unnecessary expenditures (those employees that they don't really absolutely need - and anyone who has a job probably has coworkers that they know aren't really essential).

In short, it's a falacy when someone argues that the "rich can afford it" because that's not the right way to look at it. The question is whether the middle class can afford it?  I'd say right now, not bloody likely.

I guess so, but then you look at the truly wealthy and this doesn't appear to be the case. I'm not sure if you're at this stage yet, and really it's none of my business, but eventually you will reach a level of wealth where you don't make much of your money from actually working. You're mostly just reaping the rewards of investments. At that stage - when your work isn't particularly relevant to your ability to trade for things you want - the fascinating thing is that most people still work.

If we can find a way to harness that by making them pay more taxes in exchange for something they want, we can boost revenue streams without alienating them or reducing their productivity. It's just a matter of finding the right trigger.

The middle classes are the bedrock of a nation and the wealthy its financial heart, sure. But I think it's more a question of how to get money out of people without breeding the creative resentment you argue is the inevitable result. In the current political and economic climate, I think you can do this by offering a product you can't get any other way which offers prestige in spades but costs government little. I think many wealthy people would pay to be able to have "financial saviour", "patron" or somesuch after their name on official correspondence.

I suggest this because it sidesteps your valid argument against raising taxes and creates value for money where in a tax rise the value can be hard to see.

C'mon now ... you can understand machine language and an unedited comment (btw, because of your editor doesnt work unless it is in the mood ... please fix it ) with few lines is hard for you to understand?... i dont believe that ...

anyway ... my argument still stands and so far i have not seen any response, from anyone, to disprove it ...

all responses so far is about totally different points not directly related to your article or to my response to it.

your article is about HIGHER TAXES on high-incomes, not about wealth creation or hard work or feeding the poor or fairness ...etc.

my responses give details about how those higher taxes on high-incomes sustain and increase that wealth and in the process make the country richer and better and without them the wealth is not sustainable and in fact decreases .... and the country regresses ....

regardless of anything ... please ask your team to fix the editor ...