Quote from: Julie Marie on November 22, 2011, 10:16:54 PM
Kat, I agree with you in part or in whole on all but one point - one tax rate for all. It won't work.
At the bottom end of earnings, people are having a hard time paying for the basics - food, clothing and shelter. Taxing them would only further increase their hardship and ensure many of them will never escape poverty. Plus those on the bottom and low middle rungs spend everything they earn. Not so with the wealthy. A healthy economy needs a healthy influx of cash to keep it going. We need to keep money in the hands of people who will spend.
Honestly, I'm not entirely convinced that an Income Tax is the best way to fund the government anyhow, but I could see exempting the first $xxx of personal income where $xxx is some value a bit higher than poverty level wages plus an allowance for entertainment and savings (the exact amount is open for debate, but should be indexed to inflation). I also agree that the obscenely wealthy do not pay their fair share of taxes, but that is largely due to loopholes and exemptions. Then there are those rich people who say they want to pay more, but don't write a check for more than is due (legal) and don't even pay the taxes they are liable for. Take those "workarounds" away and government income from taxation would dramatically increase, even on a flat tax basis. The problem with a progressive tax rate is that if you raise the upper rates high enough to actually pay for the kind of spending our government has become accustomed to, the rich start selling off businesses, laying off workers, and pulling in investments with the attitude of "if all this income is going to get sucked off by taxes, why bother?"
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Like it or not, a graduated tax rate does more than increase the tax revenue this country needs to operate. It also is an equalizer. Rob from the rich, pay to the poor. And as noted above, that's good for the economy.
I would argue that job creation is even better for the economy. Poor people don't create jobs. Rich people who start businesses, invest in businesses, and pump money into expanding existing businesses are the job creators. If you simply take money from the rich, you provide a disincentive against creating jobs. If you give that money to the poor, it gets spent on today's necessities and is gone tomorrow, whereas a job would feed the family today
and tomorrow.
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Not every poor person is lazy and good for nothing. Most of them would gladly take a job if it gave them even a sliver of satisfaction and paid them enough to get buy and maybe have a little fun too. Until we figure out a way not to penalize the poor, we have to have an imbalance in tax rates.
Today especially, I think there are plenty of poor people who are hard-working honest people who have fallen on hard times and just need a little help. No argument there. I deeply sympathize. I've been there.
However, I do know from personal experience, having been a poor person living in several different poor neighborhoods for a while, that there are also plenty of poor people who complain about not having work but then turn down a job when offered because the government handouts are easier. I have known these people. I've talked with them. I've lived next to them. I've heard them talk
openly (they just assumed I was like-minded since I lived there) of ways to scam the system for more free money and benefits. Heck, there used to be a burrito van about a mile from my current neighborhood that sold fake IDs, including drivers' licenses and social security cards. They periodically got shut down by the authorities, but would be back a week or two later, run by a relative or friend of the previous owner. I haven't seen it for a while now, so they may have run out of unjailed friends and family members.
These are the poor for whom I can find little compassion in my heart. I can't imagine actually
wanting to live that way, but there are people who will go to almost
any length to avoid real work.
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And along with this we have to put an end to politicians using tax revenue to pay back their campaign supporters.
Absolutely! The coziness between government and business
needs to be ended. It only damages the nation.
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There's something I would like to add to your list - we need to put an end to the belief social security, medicare and medicaid are entitlements. Yes, they are not entitlements nor are they social programs.
From the very first day we begin to earn an income, the government is taking money out of our earnings and putting it aside for our retirement. (That's what I was told back in 1968, when I saw the deductions on my first paycheck.) In the private sector its called an IRA or a pension or an annuity. Not only do we contribute but our employers do too. And employers know they have to pay this and deduct that when they figure how much they can afford to pay us. In other words, it's all our money.
Same with medicare and medicaid.
I ran the numbers. If I took what my employers and I have contributed over the years and just figured minimal interest, what a low risk CD would generate. I could buy myself an annuity today that would give me more than what SS will pay me when I retire plus have another $600/mo to put towards health insurance premiums.
What no one will admit is the SS fund was completely solvent back in the 80's and could support itself forever. And then our politicians started "borrowing" from it and they never paid it back. Now they tell us it was a broken system. BULL!
I want my money back!
We definitely need to find a way to keep government fingers out of the SS/Medicare/Medicaid funds (I would go to prison for engaging in such tactics in my fledgling small business but it is legal for the government to do - that really burns me up). To the extent that we pay in money, I would call these "entitlements"; we are entitled to receive the benefits of our own money.
I would argue that any fund where all contributions go into a common pool from which expenses are paid without regard to percentage contributed per participant is a social program. If someone pays in $1000 and gets only $1000 of benefit, not a social program... if someone pays in $1000 and can get $4000 of benefit while someone else paid $3000 and claimed no benefits but cannot ever get that money back, social program. Also, if government contributes funds on a general basis (as opposed to "per contributor" basis) to caver payout overruns, social program.
The issue I have with SS specifically (besides it being nothing but a box of IOUs right now) is that it was set up so that one generation pays for the next generation's retirement. At least, that's what we were taught in the 80s in high school when studying FDR and his New Deal programs - I am prepared to reconsider if presented with scholarly evidence to the contrary.
With that in mind... Technically, that money you are paying in is no longer yours; it belongs to your children (abstractly speaking). It's fine as long as the pool of donors is expanding, but really sucks when the pool shrinks. This is mighty similar to how a pyramid scheme is set up. I would much rather see my paycheck contributions go into a fund managed by a financial manager of my designation and escrowed so that the only people who can touch it are me, my spouse, my heirs, and my designated medical/retirement providers. The government wouldn't even need to be involved except to mandate that it happen. We do it for 401k accounts, why not medical payments and disability/retirement funds?