Make your own deficit reduction plan

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BlackSails
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Re: Make your own deficit reduction plan

Postby BlackSails » Wed Nov 17, 2010 3:07 am UTC

alphawolf29 wrote:For all you people saying "tax the rich" Are you retarded? If you start taxing the rich, they will leave the country, Then who've you got to tax? no one.


Over-taxing the rich is the worst idea possible


I think this risk is definitely real, but also definitely overstated. Most people are NOT going to move out of the country to avoid taxes, since if they were willing to move, they could easily at the very least move states, which they generally do not.

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mmmcannibalism
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Re: Make your own deficit reduction plan

Postby mmmcannibalism » Wed Nov 17, 2010 3:50 am UTC

BlackSails wrote:
alphawolf29 wrote:For all you people saying "tax the rich" Are you retarded? If you start taxing the rich, they will leave the country, Then who've you got to tax? no one.


Over-taxing the rich is the worst idea possible


I think this risk is definitely real, but also definitely overstated. Most people are NOT going to move out of the country to avoid taxes, since if they were willing to move, they could easily at the very least move states, which they generally do not.


Did we have a wave of token conservativism; I seem to recall a lot of one liner talking points from the right on the forum this week.
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Dark567
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Re: Make your own deficit reduction plan

Postby Dark567 » Fri Nov 19, 2010 7:29 pm UTC

BlackSails wrote:
alphawolf29 wrote:For all you people saying "tax the rich" Are you retarded? If you start taxing the rich, they will leave the country, Then who've you got to tax? no one.


Over-taxing the rich is the worst idea possible


I think this risk is definitely real, but also definitely overstated. Most people are NOT going to move out of the country to avoid taxes, since if they were willing to move, they could easily at the very least move states, which they generally do not.

The real risk is that they just stop working. If a vast majority of your income was going to the government what motivation do you have to work? After about 65%-70% rate on income taxes, it seems most people will just quit working(Source). Granted the rates suggested are much lower than this so its not really a problem in this instance(although there probably will be a small number of people who quit), but there is a limit to how much you can tax any group and still be revenue maximizing.

Also as far as military spending goes, we spend the most nominally, not as a percentage of GDP which is a much better measure. The US spends about ~4.5% of GDP with the world average being around 2.7%. So spending is high, but by this measure, it's not twice as much as the average.
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Re: Make your own deficit reduction plan

Postby nowfocus » Fri Nov 19, 2010 7:46 pm UTC

Dark567 wrote:The real risk is that they just stop working. If a vast majority of your income was going to the government what motivation do you have to work? After about 65%-70% rate on income taxes, it seems most people will just quit working(Source). Granted the rates suggested are much lower than this so its not really a problem in this instance(although there probably will be a small number of people who quit), but there is a limit to how much you can tax any group and still be revenue maximizing.

Just want to point out that that paper is theoretical. With the parameters he choose, not estimated, then people stop working at about 70% income tax.

Correct me if I'm wrong, but isn't 'taxing the rich' in this case bringing taxes back to where they were during the Reagan administration?
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Bubbles McCoy
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Re: Make your own deficit reduction plan

Postby Bubbles McCoy » Fri Nov 19, 2010 8:08 pm UTC

nowfocus wrote:Just want to point out that that paper is theoretical. With the parameters he choose, not estimated, then people stop working at about 70% income tax.

Correct me if I'm wrong, but isn't 'taxing the rich' in this case bringing taxes back to where they were during the Reagan administration?

Some of the tax choices go a bit further - if you stick a millionaires tax, the Bush tax rates on the rich, the new tax plan w/ an additional $136B in revenue, a national sales tax, a carbon tax, a bank tax, and a higher capital gains rate, you end up with a considerable increase in the effective tax rate.

As to the model, it's hard to criticize or defend without looking at it - it's unlikely that the model has no grounding in reality, it probably extends some other econometric methods to existing data and implicates the result Dark mentioned.

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Re: Make your own deficit reduction plan

Postby Dark567 » Fri Nov 19, 2010 8:10 pm UTC

nowfocus wrote:
Dark567 wrote:The real risk is that they just stop working. If a vast majority of your income was going to the government what motivation do you have to work? After about 65%-70% rate on income taxes, it seems most people will just quit working(Source). Granted the rates suggested are much lower than this so its not really a problem in this instance(although there probably will be a small number of people who quit), but there is a limit to how much you can tax any group and still be revenue maximizing.

Just want to point out that that paper is theoretical. With the parameters he choose, not estimated, then people stop working at about 70% income tax.

Correct me if I'm wrong, but isn't 'taxing the rich' in this case bringing taxes back to where they were during the Reagan administration?

Depends when. When Reagan took office taxes for the highest earners were cut to 50% from 70%, than 50% to 39%in '86, than finally to 28% in 1988.
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Re: Make your own deficit reduction plan

Postby LaserGuy » Fri Nov 19, 2010 8:17 pm UTC

alphawolf29 wrote:For all you people saying "tax the rich" Are you retarded? If you start taxing the rich, they will leave the country, Then who've you got to tax? no one.


Over-taxing the rich is the worst idea possible


Well, that depends. People aren't the same as corporations--a corporation can put its offices in Antigua for low tax rates and still operate the majority of its business out of the United States; a person can't do that so easily, since, if they spend most of their time in a foreign country, then they will lose their citizenship and will have trouble working in the U.S.; if they spend the majority of their time in the United States, then the tax code will apply to them because their "country of residence" will still essentially be in the United States. Many of the proposals presented here don't, anyway, target the people who are so rich that they can afford to just pick up everything and leave.

More to the point, if your marginal tax rates are still below countries of a comparable standard of living, there's no problem. If the tax rate in the United States is (making these numbers up) 35% and it's 40% in Canada, 55% in France, 50% in the UK, etc. then there is little impetus for them to move if you bump the rate in the U.S. up to 39%. You could probably even go higher, allowing that some people will leave, but that people will probably also factor things like climate, language, etc. into their calculations for such matters. Yes, they could just as well go live in some country with a significantly lower tax rate, but they'll probably be doing so at a significant sacrifice to quality of life. For instance, the UAE already has among the lowest tax rates in the world (effectively zero), but that doesn't mean that there's a huge rush of rich Americans planning on leaving the country to take advantage.

These tax increases are hardly at the level that will cause a mass exodus of the rich from the United States. As others have mentioned, they're effectively just undoing some tax reductions that had occurred in the last few decades.


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