What Could Raising Taxes on the 1% Do? Surprising Amounts

[bone]

The flaw in that article is that they mention only the current fiscal year's budget deficit and not the total outstanding US fiscal balance deficit. If you look at IRS data, you could tax the top 1% at a 100% rate (take ALL of it) and it would still take you about 15 years to pay off the current total deficit.

The answer is to cut spending and institute a modestly progressive flat tax without exemptions deductions or loopholes.

 

[Sig]

The flaw in that article is that it does not take into account the smaller productivity growth that would result in taxing the wealthy more. If you taxed those groups more, they would have less to save and invest, the government would have more. Usually, government investments are not as productive as the private sector. This would have long-term implications to GDP growth and hence tax revenue growth. The 'net' gain in tax revenues would be smaller as a result.

That said, I have no doubt they will do that at some point (whether the president is a Democrat or Republican). The fiscal hole in the US is so large that is almost impossible to close it without raising taxes

So I own a business and taxes are what incentivize me to reinvest. If I hire another employee or improve my software with my profit, I defer the tax on that profit. If I keep it for myself I pay taxes. As a result, cutting my tax rate would actually lead me to spend less on growing my business and more on things like a bigger (French made) sailboat. Maybe I think differently than most, but I never understood the argument that cutting top marginal individual tax rates leads to more investment in growing the U.S. economy because my decision making process as a business owner lead in the opposite direction.

 

[ETcallhome]

So I own a business and taxes are what incentivize me to reinvest. If I hire another employee or improve my software with my profit, I defer the tax on that profit. If I keep it for myself I pay taxes. As a result, cutting my tax rate would actually lead me to spend less on growing my business and more on things like a bigger (French made) sailboat. Maybe I think differently than most, but I never understood the argument that cutting top marginal individual tax rates leads to more investment in growing the U.S. economy because my decision making process as a business owner lead in the opposite direction.

You can't have it both ways. If you don't buy a sailboat, a sailboat employee may be laid off. If you do buy a sailboat the sailboat maker may upgrade his software. I guess it just depends on who you want making the decision how you should spend your money.

 

[Sig]

You can't have it both ways. If you don't buy a sailboat, a sailboat employee may be laid off. If you do buy a sailboat the sailboat maker may upgrade his software. I guess it just depends on who you want making the decision how you should spend your money.

That's why I mentioned the French happen to make most sailboats!
I'd say me investing in growing my business helps the economy a lot more than the second order trickle down effect of me buying a consumer product, even if made in the U.S. For example if it was a powerboat I bought instead most of my money would go into gas, which is a really inefficient way to make a really small number of jobs when compared to me directly hiring a new employee with that money.

 

[ETcallhome]

That's why I mentioned the French happen to make most sailboats!
I'd say me investing in growing my business helps the economy a lot more than the second order trickle down effect of me buying a consumer product, even if made in the U.S. For example if it was a powerboat I bought instead most of my money would go into gas, which is a really inefficient way to make a really small number of jobs when compared to me directly hiring a new employee with that money.

So you tell the government, "If you don't tax me I won't invest, I will just buy a sailboat."? Perhaps reinvesting in your company is not such a good idea and buying a sailboat may be a better use of your money. Only you will know for sure.

 

[Sig]

I don't tell them anything, per se, it's just that making the marginal personal income tax rate higher drives business owners toward reinvesting in their business rather than taking the money out to spend on whatever they chose. Neither is a "better" use of money, as better is subjective and I'd certainly rather get to choose what I spent my money on. If you're talking about the extent to which U.S. tax policy drives job creation and the economy in the U.S. however, it unquestionably creates more jobs in the U.S. if I use the extra $100,000 my company is going to make this year to hire an employee than if I use it to buy a $100,000 Beneteau.
Ergo my original point that raising top marginal personal tax rates on the 1% doesn't necessarily lead them stop investing in the economy, and may actually incentivize them to more directly invest more in the economy if they are a business owner. The debate of if tax policy should be used to drive behavior is another thing entirely. I'm just pointing out that the interpretation of the impact of this particular tax policy is incorrect, at least in this particular case.

 

[SunTrader]

Flat tax, flat tax, flat tax.

Never happen though.

 

[Fractals 'R Us]

Flat tax, flat tax, flat tax.

Never happen though.

Consumption tax, consumption tax, consumption tax. Way, way better. Much harder to avoid paying. The wealthy will pay more because they consume more. Currently if one donates to enough politicians one can have a complete tax exemption for oneself written into any bill at all... So a lot of small businesses don't pay anything. Large businesses don't pay anything, they use politicians to get corporate welfare. Those things won't change with a flat tax. With a consumption tax calculated at the point of sale manufacturing an exemption would be impossible. How are you going to get that into the software of all the terminals? The IRS could go after people that were not forwarding tax they collected instead of the people not paying it and thus kill many birds with one stone.

Consumption tax is just a very practical answer to a complex problem therefore every know-it-all-introvert-academic will hate it, people on the left will hate it and find a negative term for it like "regresssive" and shout down anybody that mentions it, maybe firebomb them etc...

I'd love it if Donald Trump came out in favor of consumption tax replacing the income tax. He could challenge the privacy advocates to fight intrusion by the IRS at tax time. Hee hee, the ACLU is against police asking criminals questions but they never say anything about the IRS asking all the invasive questions they demand answers to.

 

[SunTrader]

Trump comes up with whatever gets him attention from those who .... have to save up to pay attention.

 

[Sig]

Consumption tax, consumption tax, consumption tax. Way, way better. Much harder to avoid paying. The wealthy will pay more because they consume more. Currently if one donates to enough politicians one can have a complete tax exemption for oneself written into any bill at all... So a lot of small businesses don't pay anything. Large businesses don't pay anything, they use politicians to get corporate welfare. Those things won't change with a flat tax. With a consumption tax calculated at the point of sale manufacturing an exemption would be impossible. How are you going to get that into the software of all the terminals? The IRS could go after people that were not forwarding tax they collected instead of the people not paying it and thus kill many birds with one stone.

Consumption tax is just a very practical answer to a complex problem therefore every know-it-all-introvert-academic will hate it, people on the left will hate it and find a negative term for it like "regresssive" and shout down anybody that mentions it, maybe firebomb them etc...

I'd love it if Donald Trump came out in favor of consumption tax replacing the income tax. He could challenge the privacy advocates to fight intrusion by the IRS at tax time. Hee hee, the ACLU is against police asking criminals questions but they never say anything about the IRS asking all the invasive questions they demand answers to.

What's wrong with introverts?