Inequality in American Income ... Something Wrong Here.

[Twin Fist]

and it IS fair becasue it IS equal

and I dont seek that which i did not earn

Not commenting on rich vs poor. More of an elementary school English lesson. Fair doesn't mean equal. Fair means equitable. Something that is equitable is, by definition, fair. On the other hand, many things that are equal are not fair.

Take a relative scale, for example. You earn $20,000 last year and pay $200 in taxes. I earn $200,000 and pay $2000 in taxes. Woohoo for me! Daddy Warbucks earns $2 million and pays $20,000 in taxes. Would you consider that fair?

While not equal, I would consider this very fair. The above is, essentially, a 1% flat tax. Daddy Warbucks paid as much in taxes as you earned all year. But it was equitable because, as a percentage of his income, he paid the same amount.

This is the point I'm making.

 

[Sukerkin]

Attempting to not disincentivise the individually entrepreneurial whilst at the same time trying to stop society collapsing into a neo-feudal mess (which is what capitalism will give you) is the tricky tight-rope which is the fashioning of a tax system.

What is consistently being missed is that progressive taxation is NOT about punishing the individual who, by dint of hard work or clever ideas, made a bob or two. It is about trying to keep society functioning as corpate activities hoover up all the wealth.

Sadly, because of the sheer fiscal power of the corporations, they are able to play the system in their favour, to the extent that companies like Vodaphone simply 'cut a deal' not to pay 80% of the £6 billion they legitmately owed.

Oddly enough, that is about the amount the present government is trying to save by cutting the jobs of tens of thousands of ordinary workers in the public sector, thus causing real pain and misery in real lives. At the same time, such evasions damage the economy as a whole by reducing actual demand for goods and services and increasing the burden on the social support system when all those people end up on the dole.

 

[Steve]

All over the world flat tax doesn't work. The simple thing in this example is that person one on $20,000 a year is living below the poverty line. Yet they still have to pay the $200 tax that they can't afford. You earn your $200,000 and pay $2,000 Woohoo! You have heaps to spend. Daddy Warbucks earns the $2M and invests $1m in an enterprise that generates $20,000 of tax savings and pays no tax. The people in the middle pay the most tax in most places.

BTW, tax is normally closer to 20-30%. 25% applied to your example of the minimum wage of $20,000 takes $5,000 and already on the poverty line that person now has not enough money to live. You pay $50,000 WooHoo! but can live on $150,000. Daddy Warbucks structures his money to get the deductions, because he can, and pays nothing.
Sorry, that's the real world. :asian:

Nothing's ever as simple as that, but I think it's a little funny that you invented tax incentives in an example strictly intended to explain the difference between "equal" and "equitable." And now I'm getting it from both sides. What is it about equity that you guys don't get? Can't we at least agree that it is desirable that everyone pay their fair share? If we can agree on that, then we can begin to discuss what we think is fair.

 

[Empty Hands]

Can't we at least agree that it is desirable that everyone pay their fair share? If we can agree on that, then we can begin to discuss what we think is fair.

"Fair" seems to have an ever-shifting definition that coincidentally seems to help the argument being made at the time. When it's convenient for a percentage to be "fair", then that is fair. When it is convenient for the nominal amount to be "fair", then that is fair. When it is convenient for the percentage paid of all revenue to be "fair", then that will be fair. When none of that works, change the subject and accuse your opponent of being a hater. It works for Congress, why not here?

 

[Steve]

"Fair" seems to have an ever-shifting definition that coincidentally seems to help the argument being made at the time. When it's convenient for a percentage to be "fair", then that is fair. When it is convenient for the nominal amount to be "fair", then that is fair. When it is convenient for the percentage paid of all revenue to be "fair", then that will be fair. When none of that works, change the subject and accuse your opponent of being a hater. It works for Congress, why not here?

Don't be a hater, Empty Hands! I'm trying to find common ground here!

 

[Empty Hands]

Don't be a hater, Empty Hands! I'm trying to find common ground here!

Sorry, I'm in a grumpy mood.

 

[K-man]

Nothing's ever as simple as that, but I think it's a little funny that you invented tax incentives in an example strictly intended to explain the difference between "equal" and "equitable." And now I'm getting it from both sides. What is it about equity that you guys don't get? Can't we at least agree that it is desirable that everyone pay their fair share? If we can agree on that, then we can begin to discuss what we think is fair.

I agree totally. As I said before, I don't have the answers. Although I was accused of being 'bitter' earlier in the thread, I have no reason for bitterness. I consider myself one of the more fortunate and I am truly thankful for the hand fate has dealt me. That does not prevent me from seeing the desperate situations that some people find themselves in, often through no fault of their own. I wouldn't for one minute suggest that everybody has the same income. That just wouldn't work. There will always be those that work harder or work smarter and they deserve recognition and reward. There are also a number of people in this world who stuff up big time, ruin lots of little people and walk away with millions to get rid of them. I can see that a person's earning capacity might be two or three times another, but I will never accept that one person's labour is worth 100 or up to 500 times another's for the same hours worked. That is not fair and not equitable. The tax systems in the first world are generally structured to address this anomaly but greed steps in and people seek to evade tax by not declaring income or using tax havens to conceal income.

http://www.smh.com.au/news/national...-over-tax-fraud/2007/07/19/1184559956966.html

This is just one of a number of high profile people caught up in a tax office investigation that is ongoing.

Personally, I have availed myself of every opportunity the Government has offered to minimise the tax I pay and this is the incentive the government provides for me to provide for my future as a self funded retiree.

The Government still wins because the more we spend, the more consumption tax we pay and that evens the field a little. In Australia basic foods (unprocessed) and medicines are exempt from tax.

Fair is only fair when everyone plays by the rules. Unfortunately it is normally the people that can afford to pay tax who evade it the most thereby putting more pressure on those in the middle.

 

[5-0 Kenpo]

"Fair" seems to have an ever-shifting definition that coincidentally seems to help the argument being made at the time. When it's convenient for a percentage to be "fair", then that is fair. When it is convenient for the nominal amount to be "fair", then that is fair. When it is convenient for the percentage paid of all revenue to be "fair", then that will be fair. When none of that works, change the subject and accuse your opponent of being a hater. It works for Congress, why not here?

You beat me to it.

Not only that, but I would question how anyone who pays nothing into the system is "paying their fair share", but they aren't paying anything. So, as a counter-argument for those who have no sympathy for those who have a great deal of money after paying taxes, I have little sympathy for those who don't pay into the system at all complaining about how little the system is giving them and demanding more.

I was also thinking along another line as well. What is the "fair" distribution of the government services for which the various parties are paying. Who gets more out of the federal government's budget? Is it fair for someone who is allowed to get less out of the government to pay more then those who gain more out of it.

But, we could also argue that those who pay more, by dint of their wealth, have more access to the law makers who legislate tax laws, or other laws, to enact regulation in their favor. But then, they are paying for that access, while others are not.

These are complicated arguments. The question that ultimately must be asked and answered is what is the role of the government, and on what principles is it based. Unless these questions are answered, then we will continue to have these arguments, and fall further into the trap that we already find ourselves.

 

[Xue Sheng]

Don't be a hater, Empty Hands! I'm trying to find common ground here!

Well I’m a hater and proud of it…. But at least I hate everyone equally :uhyeah:

 

[Empty Hands]

These are complicated arguments. The question that ultimately must be asked and answered is what is the role of the government, and on what principles is it based. Unless these questions are answered, then we will continue to have these arguments, and fall further into the trap that we already find ourselves.

I agree. Generally what I see is that those on either side of the argument have fundamentally different premises, and the premises usually are not discussed. People just end up talking past each other. Part of the reason for that is the premises are supposed to be broadly agreed upon (opportunity, fairness, equality, etc.) and yet in practice they mean different things to different people. People tend to view philosophy as worthless (hell, sometimes I even do) but that sort of training to think helps you to address fundamental issues instead of getting hung up on the consequents. We need more of that sort of thinking as a nation. We also need to root out the dishonest and disingenuous from the conversation, because they are making it that much harder.

One point on what you mentioned earlier about those who pay in not receiving. Many governmental benefits tend to be invisible, or at least taken for granted. Take Bill Gates. He doesn't get food stamps or medicaid or help paying his heating oil bill, so he doesn't get anything from the government, right? Well, in order to help make himself the richest man in the world, Bill Gates took advantage of court and law systems to protect his intellectual property, national infrastructure to deliver his products, police and law systems to protect his physical property, and many other benefits, all of which cost money. Something to keep in mind. No one can live in the United States without driving on a government paid road, be protected by government paid police and law, have recourse through government paid courts, etc.

 

[Steve]

You beat me to it.

Not only that, but I would question how anyone who pays nothing into the system is "paying their fair share", but they aren't paying anything. So, as a counter-argument for those who have no sympathy for those who have a great deal of money after paying taxes, I have little sympathy for those who don't pay into the system at all complaining about how little the system is giving them and demanding more.

I was also thinking along another line as well. What is the "fair" distribution of the government services for which the various parties are paying. Who gets more out of the federal government's budget? Is it fair for someone who is allowed to get less out of the government to pay more then those who gain more out of it.

But, we could also argue that those who pay more, by dint of their wealth, have more access to the law makers who legislate tax laws, or other laws, to enact regulation in their favor. But then, they are paying for that access, while others are not.

These are complicated arguments. The question that ultimately must be asked and answered is what is the role of the government, and on what principles is it based. Unless these questions are answered, then we will continue to have these arguments, and fall further into the trap that we already find ourselves.

Remember that the genesis of this particular conversation is the fact that there are some people who are extremely wealthy who pay no income tax, and my specific point, which you reiterate here. If someone isn't paying anything, how can they be considered to have paid their "fair share?" The Eye of Saruman tends to turn toward the bottom 30% or so, but we can ALSO find people at every level, even among the most wealthy, who pay less than their fair share.

Regarding who benefits most, everyone benefits. Empty hands articulated this very well. Libraries, State Colleges and Universities educating qualified job applicants, roads, parks, and a slew of other things we tend to take for granted. Caring for the soldiers who protect our country when they are disabled. While some of the people at the top of the food chain went to Harvard, Yale or other private universities, many of the geniuses who are making them their fortunes went to college on Pell grants, the GI Bill (where does that money come from?), without which, no one gets rich.

We live in a complicated ecosystem and everyone, even the wealthiest among us, benefits to a large degree from the services and systems provided by the government at every level.

I completely agree with you guys that things get tricky (to say the least) when we begin to discuss what "fair" means. However, if we can't even agree in principle that things are unfair, or for whom, we'll never even get to the discussion of "how."

 

[5-0 Kenpo]

Let me just reiterate that I didn't say that the wealthy received no benefits due to their tax dollars. What I was trying to bring together with the idea of "fairness" is what are the "payouts" on the taxed "investments".

For instance, if I and another person start a company together, and he invests $10,000 and I invest $20,000, for every $3 in profit made I would, for fairness sake, expect to receive $2. The question is, is that the way it works with taxes? I think that we could pretty much say that it does not. By way of example, Nevada receives $0.65 for every $1 in federal taxes paid. So is that "fair"?

I am not arguing whether the rich or the poor receive more of the payout, just the fairness, or lack thereof, of a non-equal distribution of the tax dollars. Nor am I saying that the unequal distribution (in real dollars) of taxes isn't fair either.

And I included the "invisible benefits", after all, the rich and poor both receive the protection of the police and the use of the roads. So though not specifically enumerated in my comment, I accounted for it. (Though one could also certainly argue that some people receive more police services, or benefit of police services, or road services, then others, which only further complicates the issue of fairness.)