NationStates Jolt Archive

Peter Costello recently delivered his tenth budget. The budget included larger tax cuts for high income earners. The Labor party kicked up a stink saying that the low income earners should be entitled to greater tax relief.
The reason jobs are high paying is because there is a certain amount of skill needed that not just anyone can aquire, eg: pro-golfer, prime minister. Also because of danger, eg: miner. If these people have a skill they can offer to the rest of society, which is either rare or difficult to aquire, shouldn't they get more money for their contribution? ie, a greater tax cut.

Peter Costello recently delivered his tenth budget. The budget included larger tax cuts for high income earners. The Labor party kicked up a stink saying that the low income earners should be entitled to greater tax relief.
The reason jobs are high paying is because there is a certain amount of skill needed that not just anyone can aquire, eg: pro-golfer, prime minister. Also because of danger, eg: miner. If these people have a skill they can offer to the rest of society, which is either rare or difficult to aquire, shouldn't they get more money for their contribution? ie, a greater tax cut.
No.

Peter Costello recently delivered his tenth budget. The budget included larger tax cuts for high income earners. The Labor party kicked up a stink saying that the low income earners should be entitled to greater tax relief.
The reason jobs are high paying is because there is a certain amount of skill needed that not just anyone can aquire, eg: pro-golfer, prime minister. Also because of danger, eg: miner. If these people have a skill they can offer to the rest of society, which is either rare or difficult to aquire, shouldn't they get more money for their contribution? ie, a greater tax cut.

They do get more money for their contribution. Namely, their wages.

Peter Costello recently delivered his tenth budget. The budget included larger tax cuts for high income earners. The Labor party kicked up a stink saying that the low income earners should be entitled to greater tax relief.
The reason jobs are high paying is because there is a certain amount of skill needed that not just anyone can aquire, eg: pro-golfer, prime minister. Also because of danger, eg: miner. If these people have a skill they can offer to the rest of society, which is either rare or difficult to aquire, shouldn't they get more money for their contribution? ie, a greater tax cut.

Capitalist. :D

They do get more money for their contribution. Namely, their wages.

*agrees*

Suppose that ten people go together to the local restaurant for lunch every day at noon. The total bill for all ten comes to $100. If it was paid the our federal income taxes are paid, the first four people would pay nothing; the fifth would pay $1; the sixth would pay $2; the seventh $5; the eighth $8; the ninth $18. The tenth person (obviously the richest) would pay $66. (This info alone should shock you.)

The ten people ate lunch in the restaurant every day and seemed quite happy with the arrangement until the owner threw them a curve. "Since you are such good customers," he said, "I'm going to reduce the cost of your daily meal by $20. Now lunch for the ten only costs $80!

Oh, but what should they do with this "extra" money that would be "fair"? The first four should be unaffected; they still eat for free. Can we figure out how to divvy up the $20 savings among the remaining six so that everyone gets their fair share? The people realize that $20 divided by 6 is $3.33, but if they subtract that from everybody's share, then the fifth person and the sixth person would end up being paid to eat their meal, and this will surely not be acceptable to the rest. The restaurant owner suggested that it would be fair to reduce each man's bill by roughly the same amount where possible, and he proceeded to work out the amounts each should pay. And so the fifth person paid nothing, the sixth person paid nothing, the seventh paid $2, the eighth paid $5, the ninth paid $15, leaving the tenth person with a bill of $58 instead of $66. Outside the restaurant, the people began to compare their savings.

"I only got $2 out the $20," declared the sixth person pointing to the tenth, "and they got $8!"

"Yeah, that's right!" exclaimed the fifth person. "I only saved a dollar, too. It's unfair that they got eight times more than I did!"

"That's true!" shouted the seventh person. "Why should he get $8 back when I got only $3? The wealthy get all the breaks."

"Wait a minute!" yelled the first four people in unison. "We didn't get anything at all. This system exploits the poor."

The nine people surrounded the tenth and beat him up. The next day the tenth person didn't show up for lunch, so the nine sat down and ate without him. Besides, now they did not really want his company anyway. But when it came time to pay the bill, they discovered something important—they were $58 short!

The fact of life is that the people who pay the highest taxes will get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, throw up so many barriers that they cannot maintain or accumulate wealth, and they just may not show up at the lunch table anymore. There are lots of good restaurants in Switzerland, Bermuda and the Caribbean.

They'll be lots of happy CEOs, lawyers, businessmen, pollies and friends of the Liberal party out there.

Most of the middle class get $6 per week or less.
The way fuel prices are rising, you get a few Litres of fuel (and most of the fuel price is tax anyway).

Suppose that ten people go together to the local restaurant for lunch every day at noon. The total bill for all ten comes to $100. If it was paid the our federal income taxes are paid, the first four people would pay nothing; the fifth would pay $1; the sixth would pay $2; the seventh $5; the eighth $8; the ninth $18. The tenth person (obviously the richest) would pay $66. (This info alone should shock you.)

The ten people ate lunch in the restaurant every day and seemed quite happy with the arrangement until the owner threw them a curve. "Since you are such good customers," he said, "I'm going to reduce the cost of your daily meal by $20. Now lunch for the ten only costs $80!

Oh, but what should they do with this "extra" money that would be "fair"? The first four should be unaffected; they still eat for free. Can we figure out how to divvy up the $20 savings among the remaining six so that everyone gets their fair share? The people realize that $20 divided by 6 is $3.33, but if they subtract that from everybody's share, then the fifth person and the sixth person would end up being paid to eat their meal, and this will surely not be acceptable to the rest. The restaurant owner suggested that it would be fair to reduce each man's bill by roughly the same amount where possible, and he proceeded to work out the amounts each should pay. And so the fifth person paid nothing, the sixth person paid nothing, the seventh paid $2, the eighth paid $5, the ninth paid $15, leaving the tenth person with a bill of $58 instead of $66. Outside the restaurant, the people began to compare their savings.

"I only got $2 out the $20," declared the sixth person pointing to the tenth, "and they got $8!"

"Yeah, that's right!" exclaimed the fifth person. "I only saved a dollar, too. It's unfair that they got eight times more than I did!"

"That's true!" shouted the seventh person. "Why should he get $8 back when I got only $3? The wealthy get all the breaks."

"Wait a minute!" yelled the first four people in unison. "We didn't get anything at all. This system exploits the poor."

The nine people surrounded the tenth and beat him up. The next day the tenth person didn't show up for lunch, so the nine sat down and ate without him. Besides, now they did not really want his company anyway. But when it came time to pay the bill, they discovered something important—they were $58 short!

The fact of life is that the people who pay the highest taxes will get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, throw up so many barriers that they cannot maintain or accumulate wealth, and they just may not show up at the lunch table anymore. There are lots of good restaurants in Switzerland, Bermuda and the Caribbean.

A point well made, very well made.

Litres of fuel (and most of the fuel price is tax anyway).

Which seems really unfair to the poor in a country the size of australia.

Which seems really unfair to the poor in a country the size of australia.

Where I am we pay up to $OZ 1.20 per litre and even $1.40 in remote areas.
Tax cuts are great, but don't keep up with the cost of living for some lower incomes. Insurance rising, utility prices rising, health costs rising and cost of education rising. What's $6 in this context?

What I like here in the US is the booming real estate market.

Lots of people in the middle class had the opportunity to buy houses, and now the value of the houses is going UP.

Unfortunately, even if the percentage remains the same, the property tax bill goes up - because the value of the house went up.

If you're looking at a 60 percent increase in the value of your house over a few years, it's a real shock.

And local politicians love the surplus, which they're more than willing to blow on pet projects.

And to assauge the angry homeowners, they proclaim a "tax cut" of 2 cents on the dollar.

What I like here in the US is the booming real estate market.

Lots of people in the middle class had the opportunity to buy houses, and now the value of the houses is going UP.

Unfortunately, even if the percentage remains the same, the property tax bill goes up - because the value of the house went up.

If you're looking at a 60 percent increase in the value of your house over a few years, it's a real shock.

And local politicians love the surplus, which they're more than willing to blow on pet projects.

And to assauge the angry homeowners, they proclaim a "tax cut" of 2 cents on the dollar.

Australia's real estate boom is coming to end but it seems the US one is starting? It means home owners are more in debt as house prices rise and people go broke if they can't keep up payments. When house prices crash, it will be unpleasant.

For some reason a rich guy not being able to buy his third boat doesn't upset me.

Australia's real estate boom is coming to end but it seems the US one is starting? It means home owners are more in debt as house prices rise and people go broke if they can't keep up payments. When house prices crash, it will be unpleasant.
Our prices have consistently gone up since 1960.

The boom accelerated in the last few years. I have my fingers in my ears.

Our prices have consistently gone up since 1960.

The boom accelerated in the last few years. I have my fingers in my ears.

The trouble is, what follows a boom? A bust! The cycle of market life and death. 60% in a short period is insane even compared to Australian one.

Where I am we pay up to $OZ 1.20 per litre and even $1.40 in remote areas.
Tax cuts are great, but don't keep up with the cost of living for some lower incomes. Insurance rising, utility prices rising, health costs rising and cost of education rising. What's $6 in this context?

More to the point, fuel costs effect the price of everything else; from food to a new house. When the government taxes fuel, it is raising the price of nearly everything that is purchased. Naturally this effects lower income earners the most.

Don't get me wrong, I am all for tax cuts, in any way shape or form. But the most immoral taxes of all are energy taxes. (Not to mention they lead to double and triple taxation where there are value added or sales taxes.)

Our prices have consistently gone up since 1960.

The boom accelerated in the last few years. I have my fingers in my ears.

I heard some speculation the other day that the fed may try and burst the real estate bubble.

Houses in my neighborhood have tripled in price in the last ten years. Go figure. (It's a nice neighborhood and all, but really, :confused: ) I am sure there are parts of northern VA that are even more ridiculous.

More to the point, fuel costs effect the price of everything else; from food to a new house. When the government taxes fuel, it is raising the price of nearly everything that is purchased. Naturally this effects lower income earners the most.

Don't get me wrong, I am all for tax cuts, in any way shape or form. But the most immoral taxes of all are energy taxes. (Not to mention they lead to double and triple taxation where there are value added or sales taxes.)

I agree, fiddling with income taxes doesn't do much really. It's those horrid invisible taxes you raise the cost of living (including the GST which is a VAT). What's worse? Pre-paid or provisional taxation.

I heard some speculation the other day that the fed may try and burst the real estate bubble.

Houses in my neighborhood have tripled in price in the last ten years. Go figure. (It's a nice neighborhood and all, but really, :confused: ) I am sure there are parts of northern VA that are even more ridiculous.

I'm in Herndon, and the rise is bad, but it's far worse in Ashburn. I can't believe any of the prices they have there, or in Burke.

Suppose that ten people go together to the local restaurant for lunch every day at noon. The total bill for all ten comes to $100. If it was paid the our federal income taxes are paid, the first four people would pay nothing; the fifth would pay $1; the sixth would pay $2; the seventh $5; the eighth $8; the ninth $18. The tenth person (obviously the richest) would pay $66. (This info alone should shock you.)

The ten people ate lunch in the restaurant every day and seemed quite happy with the arrangement until the owner threw them a curve. "Since you are such good customers," he said, "I'm going to reduce the cost of your daily meal by $20. Now lunch for the ten only costs $80!

Oh, but what should they do with this "extra" money that would be "fair"? The first four should be unaffected; they still eat for free. Can we figure out how to divvy up the $20 savings among the remaining six so that everyone gets their fair share? The people realize that $20 divided by 6 is $3.33, but if they subtract that from everybody's share, then the fifth person and the sixth person would end up being paid to eat their meal, and this will surely not be acceptable to the rest. The restaurant owner suggested that it would be fair to reduce each man's bill by roughly the same amount where possible, and he proceeded to work out the amounts each should pay. And so the fifth person paid nothing, the sixth person paid nothing, the seventh paid $2, the eighth paid $5, the ninth paid $15, leaving the tenth person with a bill of $58 instead of $66. Outside the restaurant, the people began to compare their savings.

"I only got $2 out the $20," declared the sixth person pointing to the tenth, "and they got $8!"

"Yeah, that's right!" exclaimed the fifth person. "I only saved a dollar, too. It's unfair that they got eight times more than I did!"

"That's true!" shouted the seventh person. "Why should he get $8 back when I got only $3? The wealthy get all the breaks."

"Wait a minute!" yelled the first four people in unison. "We didn't get anything at all. This system exploits the poor."

The nine people surrounded the tenth and beat him up. The next day the tenth person didn't show up for lunch, so the nine sat down and ate without him. Besides, now they did not really want his company anyway. But when it came time to pay the bill, they discovered something important—they were $58 short!

The fact of life is that the people who pay the highest taxes will get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, throw up so many barriers that they cannot maintain or accumulate wealth, and they just may not show up at the lunch table anymore. There are lots of good restaurants in Switzerland, Bermuda and the Caribbean.

Excellent and spot-on. I have always found it ironic that so many people hate the rich when

a)They desire to be rich themselves... would they hate themselves one day?
b)The rich pay BY FAR THE MOST taxes of any income level in this country (and probably most other countries)... yet still it isn't enough. "You need to turn your other pocket inside-out, rich guy! I want your hard-earned money!"
c)The rich support so many businesses and are responsible for providing so many jobs. This is forgotten by those who hate the rich. Unions come to mind.

I'm not saying you need to kiss the rich man's ass, but for what he does for you via all the taxes he pays (if you're not rich, he pays a higher percentage of his income than you do...), the jobs he provides, all the ways he stimulates and drives our economy, etc., you could at least not denigrate him merely for being successful. If you do so, it may diminish the drive toward success and the American dream.

Suppose that ten people go together to the local restaurant for lunch every day at noon. The total bill for all ten comes to $100. If it was paid the our federal income taxes are paid, the first four people would pay nothing; the fifth would pay $1; the sixth would pay $2; the seventh $5; the eighth $8; the ninth $18. The tenth person (obviously the richest) would pay $66. (This info alone should shock you.)
What you seem to be forgetting is that, if the wealth of those 10 people is distributed like wealth in the USA, then the tenth person has almost as much wealth as the other nine put together. So it makes perfect sense that he should be paying more for that meal than the other nine put together.

Rich people should be taxed more because they have far more disposable income. What does that mean? Well, let me put it this way:

Let's say we have a group of five people who think of how to spend their money. The first person has $10, the second $20, the third $60, the fourth $180, and the fifth $540. This is the same kind of distribution of wealth that exists in highly capitalist countries like the USA. The five people can spend their money on six things: food, housing, health care, savings, entertainment and luxuries.

Food costs between $5 and $20.
Housing costs between $5 and $40.
Health care costs between $10 and $20.
You can spend as much or as little as you want on savings, entertainment and luxuries.

So, how do the five people spend their money?

The first person, with his $10, can only afford the cheapest food and the cheapest housing, and nothing else.
The second person, with his $20, can also afford health care.
The third person, with his $60, can afford better food ($15), better housing ($20), better health care ($15), and he can save $10 or spend it on entertainment and luxuries.
The fourth person, with his $180, can afford the best food ($20), very good housing ($30), the best health care ($20), and has $110 left for savings, entertainment and luxuries.
Finally, the fifth person, with his $540, can afford the best food ($20), the best housing ($40), the best health care ($20), and has a whooping $460 left for savings, entertainment and luxuries.

A flat tax of 20%, for example, would force the poorest person to go hungry in order to afford the $2 that he has to pay in taxes, while the richest person would have no problem taking $108 (his 20%) out of the $460 that he spends on savings, entertainment and luxuries.

What you seem to be forgetting is that, if the wealth of those 10 people is distributed like wealth in the USA, then the tenth person has almost as much wealth as the other nine put together. So it makes perfect sense that he should be paying more for that meal than the other nine put together.

Rich people should be taxed more because they have far more disposable income. What does that mean? Well, let me put it this way:

Let's say we have a group of five people who think of how to spend their money. The first person has $10, the second $20, the third $60, the fourth $180, and the fifth $540. This is the same kind of distribution of wealth that exists in highly capitalist countries like the USA. The five people can spend their money on six things: food, housing, health care, savings, entertainment and luxuries.

Food costs between $5 and $20.
Housing costs between $5 and $40.
Health care costs between $10 and $20.
You can spend as much or as little as you want on savings, entertainment and luxuries.

So, how do the five people spend their money?

The first person, with his $10, can only afford the cheapest food and the cheapest housing, and nothing else.
The second person, with his $20, can also afford health care.
The third person, with his $60, can afford better food ($15), better housing ($20), better health care ($15), and he can save $10 or spend it on entertainment and luxuries.
The fourth person, with his $180, can afford the best food ($20), very good housing ($30), the best health care ($20), and has $110 left for savings, entertainment and luxuries.
Finally, the fifth person, with his $540, can afford the best food ($20), the best housing ($40), the best health care ($20), and has a whooping $460 left for savings, entertainment and luxuries.

A flat tax of 20%, for example, would force the poorest person to go hungry in order to afford the $2 that he has to pay in taxes, while the richest person would have no problem taking $108 (his 20%) out of the $460 that he spends on savings, entertainment and luxuries.

You have not explained how to do the tax cut in the lunch story, without everyone EXCEPT the richest person thinking it's a screw job.

The tax paid by each individual is irrelevant without giving the matching income statistics. The example states that the tenth person is "obviously the richest", but doesn't state HOW much more they make. It's possible that every person in this scenario is paying the EXACT same tax rate! Imagine that the tenth person has an adjusted gross income of $66k/yr, the ninth $18k/yr, the eigth $8k/yr, etc.

To compare the effects of tax rate changes between groups, you have to look at the effect on the tax burden (as a percentage of total taxes). Any tax rate change that perserves the status quo would have the exact same tax burden before and after the change, meaning that all parties shared in the tax break (or tax increase) in the same proportions.

In the example given, the tax burden actually INCREASES for the top two individuals, meaning that they now pay an even higher percentage (91.25% compared to 84%) of the total taxes. The next two people pay slightly less than they used to (8.75% compared to 13%) and the middle quintile no longer has any tax burden.

Far from claiming that these figures support the case of giving more tax breaks to the rich, I simply claim that the numbers in the example don't accurately represent what is happening in the real world. According to CBO numbers (http://www.cbo.gov/showdoc.cfm?index=6133&sequence=0) between 2000 and 2002, the tax burden changes have been:

First Quintile (median income $14,400)
1.1 to 0.9 = -0.2%
Second Quintile ($33,600)
4.8 to 4.8 = +0.0%
Third Quintile ($51,100)
9.8 to 10.2 = +0.4%
Fourth Quintile ($75,900)
17.5 to 19.1 = +1.6%
Fifth Quintile ($175,900)
66.6 to 64.8 = -1.8%

Top 10% ($244,500)
52.2 to 49.0 = -2.2%
Top 5% ($350,700)
41.4 to 37.3 = -4.1%
Top 1% ($938,100)
25.5 to 21.1 = -4.4%

So clearly the recent tax breaks have not only given more to the rich in pure $$ (which is to be expected), but they also reduced the portion of all taxes that are paid by the weathly. The effect only gets more pronounced as you look at higher incomes.

I have always found it ironic that so many people hate the rich when

a)They desire to be rich themselves... would they hate themselves one day?
b)The rich pay BY FAR THE MOST taxes of any income level in this country (and probably most other countries)... yet still it isn't enough. "You need to turn your other pocket inside-out, rich guy! I want your hard-earned money!"
c)The rich support so many businesses and are responsible for providing so many jobs. This is forgotten by those who hate the rich. Unions come to mind.

I'm not saying you need to kiss the rich man's ass, but for what he does for you via all the taxes he pays (if you're not rich, he pays a higher percentage of his income than you do...), the jobs he provides, all the ways he stimulates and drives our economy, etc., you could at least not denigrate him merely for being successful. If you do so, it may diminish the drive toward success and the American dream.
a) I have no desire to be rich. I am a proud member of the working class.

b) The rich own BY FAR THE MOST wealth in this country (and almost every other country on Earth). The richest 10% own more wealth than the bottom 90% put together. Are taxes "turning their pockets inside-out"? Hardly! More like making them think twice about buying their 10th yacht. Furthermore, their enourmous wealth is NOT their hard-earned money. It's our hard-earned money. Paris Hilton comes to mind as the most extreme example of someone who never worked a second in her life yet spends more money in a day than you and I will earn in a lifetime, but the vast majority of the wealth of all rich people is extorted from workers like us, not earned. Which leads me to...

c) The rich "provide jobs"? And who works in those jobs? We do. Rather than being grateful to the rich for "providing jobs", you should ask yourself why we don't have control over our own labor-power, and must wait for the rich to "provide jobs" to us. You see, the rich control the means of production - the things we need in order to work and earn a living. They let us use them in exchange for our servitude - in exchange for us giving the products of our labor to them. That is how they got rich. What we get are wages, which have nothing to do with the quality or quantity of our work. A wage is simply the minimum amount of money that an owner must pay his workers in order to keep them on the job.

The rich do nothing for us, we do everything for them.

You're still not addressing the point brought up by the story.

With either my figures (from the mid-1990s) or your figures, the same situation occurs - just with slightly different percentages.

In either case, I'm leaving out the feelings of the tenth man (the richest).

How do you cut taxes without the other nine feeling like they're being screwed over?

I'm still waiting for an answer.

You don't cut taxes. ;)

But seriously, as Lepus Rex has shown, in the real case of Bush's tax cuts, the poor are being screwed over, since they now pay a greater % of the total tax burden.

You're still not addressing the point brought up by the story.

With either my figures (from the mid-1990s) or your figures, the same situation occurs - just with slightly different percentages.

In either case, I'm leaving out the feelings of the tenth man (the richest).

How do you cut taxes without the other nine feeling like they're being screwed over?

I'm still waiting for an answer.

Couldn't tell if this was in response to my post or someone else, but:

On a pure numbers basis, I'd say that any tax break that preserves the tax burden for everyone would be "fair". This would still result in the rich getting more back in $$, but that's fair since they paid more to begin with.

Outside the numbers, however, even a "fair" tax cut hurts the poor more. One reason is that tax cuts require service cuts, which disproportionally affect the poor who actually need those services (ie: Social Security, public education...).

The government shouldn't take more money than it needs, but that's hardly the case right now. Therefore I'd have to say the fairest tax cut would be to raise them back to pre-2001 levels.

And that brings up an interesting flip-side to the original example: What would be an example of a tax INCREASE that wouldn't have the rich feeling screwed over?

Couldn't tell if this was in response to my post or someone else, but:

On a pure numbers basis, I'd say that any tax break that preserves the tax burden for everyone would be "fair". This would still result in the rich getting more back in $$, but that's fair since they paid more to begin with.

Outside the numbers, however, even a "fair" tax cut hurts the poor more. One reason is that tax cuts require service cuts, which disproportionally affect the poor who actually need those services (ie: Social Security, public education...).

The government shouldn't take more money than it needs, but that's hardly the case right now. Therefore I'd have to say the fairest tax cut would be to raise them back to pre-2001 levels.

And that brings up an interesting flip-side to the original example: What would be an example of a tax INCREASE that wouldn't have the rich feeling screwed over?

Actually increases hit the lower income earners harder than higher income earners, as they tend to less educated and their money already spend when they get it. They don't have the ability to get their income in way to reduce tax. The rich say they are overtaxed but put their money in schemes which effectively reduce tax burden and even manuipulate tax systems to provide a a return. In the end, the poor keep on paying tax while the rich are always finding nice loopholes in tax law to avoid it.

Actually increases hit the lower income earners harder than higher income earners, as they tend to less educated and their money already spend when they get it. They don't have the ability to get their income in way to reduce tax. The rich say they are overtaxed but put their money in schemes which effectively reduce tax burden and even manuipulate tax systems to provide a a return. In the end, the poor keep on paying tax while the rich are always finding nice loopholes in tax law to avoid it.

That is certainly a valid point. My post and question were assuming that the tax burden would remain equitable on the basis of "actual taxes paid". I was simply pointing out that while the rich claim that the poor are making out equally under tax cuts, they do their own fair share of complaining when tax raises are proposed.

That is certainly a valid point. My post and question were assuming that the tax burden would remain equitable on the basis of "actual taxes paid". I was simply pointing out that while the rich claim that the poor are making out equally under tax cuts, they do their own fair share of complaining when tax raises are proposed.

Or when the tax departments get sick of dodgy tax schemes and make them illegal. Then they go find another one to invest in. The lower and middle class don't have the money to do this, as these schemes are only for the rich - people with money, lots of it.