Why raising taxes on the rich fails

[aegsm76]

[QUOTE=jfrog;1035829]Here's an example of my math:

99(people)* 100,000(average income) = 9,900,000(total income) * 10%(tax) = 990,000
1(person) * 10,000,000(average income) = 10,000,000(total income) * 10%(tax) = 1,000,000

One question would be what if top 1% were only making on average 50 times more than the other 99%.
99(people)* 100,000(average income) = 9,900,000(total income) * 10%(tax) = 990,000
1(person) * 5,000,000(average income) = 5,000,000(total income) * 10%(tax) = 500,000
In this case the top 1% would be responsible for about 33% of all taxes.

jf - you actually are ok with numbers, surprising!
I don't know if your assumed numbers line up with reality, though.
We also have to remember that the income tax is based on what your income was for that year, not for any accumulated wealth.

[jfrog]

[QUOTE=aegsm76;1035836]

Originally Posted by jfrog

Here's an example of my math:

99(people)* 100,000(average income) = 9,900,000(total income) * 10%(tax) = 990,000
1(person) * 10,000,000(average income) = 10,000,000(total income) * 10%(tax) = 1,000,000

One question would be what if top 1% were only making on average 50 times more than the other 99%.
99(people)* 100,000(average income) = 9,900,000(total income) * 10%(tax) = 990,000
1(person) * 5,000,000(average income) = 5,000,000(total income) * 10%(tax) = 500,000
In this case the top 1% would be responsible for about 33% of all taxes.

jf - you actually are ok with numbers, surprising!
I don't know if your assumed numbers line up with reality, though.
We also have to remember that the income tax is based on what your income was for that year, not for any accumulated wealth.

Well I know a few that are off. The very rich usually get taxed with a higher tax rate. And the average person in the lower 99% probably makes less than 100,000. The average is probably closer to 70,000 (maybe less). This means the top 1% would actually need to average quite a bit less than 10,000,000 to stay near that 43% the article cited.

However, even though we can't totally gauge reality, I think my math does show that 43% of the tax burden being on 1% of the population doesn't necessarily show anything abnormal is going on.

[aegsm76]

I would agree with this on a theoretical basis.
But, I would also say that when a state raises taxes on high earners, they encourage these people to re-locate.
And that usually happens, then driving their tax situation into a worse spiral than it was!

[jfrog]

Originally Posted by aegsm76

I would agree with this on a theoretical basis.
But, I would also say that when a state raises taxes on high earners, they encourage these people to re-locate.
And that usually happens, then driving their tax situation into a worse spiral than it was!

It isn't necessarily that taxes are raised. It is that there is a high descrepency in taxes from state to state. You can blame the states who try to lure such people to their states with low taxes just as much as the states who drive them away with high taxes.

This reminds me of "the prisoner's dilemma." If all states try to lower taxes on rich people to lure them then all states will be losing out on money. If all states keep high taxes on them then that is probably the best solution for the most money.

[deacon blues]

Originally Posted by jfrog

If all states try to lower taxes on rich people to lure them then all states will be losing out on money. If all states keep high taxes on them then that is probably the best solution for the most money.

Except that the FACTS and history prove otherwise. Lower taxes fuel more economic activity. Higher taxes squelch it. Lower taxes give individuals and businesses more capital to hire, to research and develop, to innovate, to generate more economic activity. Higher taxes cause individuals and businesses to layoff workers, freeze hiring, cut back on inventory, etc.

Kennedy cut taxes and tax revenues increased. Reagan cut taxes and tax revenues increased. Clinton cut taxes and tax revenues increased. Bush cut taxes and tax revenues increased.

The problem is when with the increased revenues government won't cut spending to generate a surplus. They oftentimes get spend happy and run up greater deficits. Then come the cries for raising taxes on the rich---so gov't can keep up the spending, rather than cutting the fat and controlling their appetite for spending.

Taxing the rich hurts everyone. They are the creators of jobs and economic activity.

[coadie]

[QUOTE=jfrog;1035857]

Originally Posted by aegsm76

Well I know a few that are off. The very rich usually get taxed with a higher tax rate. And the average person in the lower 99% probably makes less than 100,000. The average is probably closer to 70,000 (maybe less). This means the top 1% would actually need to average quite a bit less than 10,000,000 to stay near that 43% the article cited.

However, even though we can't totally gauge reality, I think my math does show that 43% of the tax burden being on 1% of the population doesn't necessarily show anything abnormal is going on.

You don't appparently have an economics class in your background.

Good economists offer real data instead of just a couple of arithmetic equations.

You also have no accounting background. When you comment on tax for the "very rich" Tax is on income and not on wealth. Buffet has extremely high wealth but not so high income. Do you realize there is a difference?

[deacon blues]

Which is why "tax the wealthiest 1%" language works for the Dems as hyperbole but fails as smart economic philosophy.

It gets Dems elected but it tanks our economy.

[Pressing-On]

Originally Posted by deacon blues

Except that the FACTS and history prove otherwise. Lower taxes fuel more economic activity. Higher taxes squelch it. Lower taxes give individuals and businesses more capital to hire, to research and develop, to innovate, to generate more economic activity. Higher taxes cause individuals and businesses to layoff workers, freeze hiring, cut back on inventory, etc.

Kennedy cut taxes and tax revenues increased. Reagan cut taxes and tax revenues increased. Clinton cut taxes and tax revenues increased. Bush cut taxes and tax revenues increased.

The problem is when with the increased revenues government won't cut spending to generate a surplus. They oftentimes get spend happy and run up greater deficits. Then come the cries for raising taxes on the rich---so gov't can keep up the spending, rather than cutting the fat and controlling their appetite for spending.

Taxing the rich hurts everyone. They are the creators of jobs and economic activity.

Exactly!

Personally, I believe the thought is that it is easier to govern people if you keep them uneducated and on the government dole.

[jfrog]

Originally Posted by coadie

You don't appparently have an economics class in your background.

Good economists offer real data instead of just a couple of arithmetic equations.

You also have no accounting background. When you comment on tax for the "very rich" Tax is on income and not on wealth. Buffet has extremely high wealth but not so high income. Do you realize there is a difference?

Do you have any real data on the average income of the top 1% in New York? If not then hush up. And yes I realize there is a difference between income and wealth. What kind of a dummy doesn't? Yes I know your going to throw my term "richest 1%" up in my face. So what? Maybe I did use the wrong term, but the thing is I got my point across, aegsm understood me and everyone else that reads my posts will. If you want to nitpick then be my guest, but I really could care less about your personal attacks mr. know it all coadie.

[jfrog]

Originally Posted by deacon blues

Except that the FACTS and history prove otherwise. Lower taxes fuel more economic activity. Higher taxes squelch it. Lower taxes give individuals and businesses more capital to hire, to research and develop, to innovate, to generate more economic activity. Higher taxes cause individuals and businesses to layoff workers, freeze hiring, cut back on inventory, etc.

Kennedy cut taxes and tax revenues increased. Reagan cut taxes and tax revenues increased. Clinton cut taxes and tax revenues increased. Bush cut taxes and tax revenues increased.

The problem is when with the increased revenues government won't cut spending to generate a surplus. They oftentimes get spend happy and run up greater deficits. Then come the cries for raising taxes on the rich---so gov't can keep up the spending, rather than cutting the fat and controlling their appetite for spending.

Taxing the rich hurts everyone. They are the creators of jobs and economic activity.

My post was solely on taxes causing relocation which was one of the major points of the article aegsm cited. Sorry for not taking on a question which wasn't asked: "whether lower taxes cause higher revenue through methods other than relocation?"