Fairness

Much of the debate on the Buffet rule, taxes, the budget deficit, etc centers around the argument about fairness.

President Obama has admitted that the Buffet rule has little to do with the deficit or the national debt, but has to do with fairness.

In 2008 the top 10% of earners in the US paid 73% of the total income taxes. Is this a fair number?

If, not, give us a number, Mr. Obama.

 

Where did Obama admit that? Link and quote please.

1) That assumes your assertion is accurate. What is your source?
2) Why are you only considering income taxes, which only make up about 43% of all tax revenue?
3) How can you determine the fairness of that number without considering the share of total income that group takes?
3) What difference does it make for fairness purposes to look at the statistics for a group if certain

He did. I think it is 30%. Which is still below the top marginal income tax rate of 35%.

 

I did make an error, kudos to you. in 2006 the top 20% paid 72.19% while the top 10% paid 58.22%


http://www.cga.ct.gov/2008/ofarpt/2008OFA-0468.htm

If you google income taxes by decile you will find charts and tables from a variety of sources which indicate that in 2008 the top 10% paid 60.1% of all income taxes while earning 35.7% of total gross income.

I have no problem with raising the rate on incomes over 1 million,which is where Mr. Obama's 30% comes from, although it will be interesting to see the decline in the number of incomes reported over this figure if it is done, and it would not necessarily increase total tax receipts.

 

A fairness comparison cannot be made with that figure, even if it was correct. You have to refer to marginal rates

 

What does fairness have to do with anything anyway ? Since when was life fair to begin with ?
His whole arguement is designed for class warfare, to devide people. It has nothing to do with the finances of the country....which he should be more concerned over. Maybe the Buffet rule should mean you get 10+ years to pay your taxes. Old Warren owes over a billion in taxes that he keeps fighting, yet says he wants to pay more. How about you cough up what you already owe pal.

How about this idea. Since Obama is so worried about the middle class paying more than the upper class as a percentage, how about lowering the taxes for the middle class then, wouldn't that be fair ? Or how about having the 47% who pay nothing have some skin in the game, wouldn't that be fair ?

All a political side show from the worst mistake this country has ever seen. His whole administration is just one clown shy of a circus.

 

Class divides are pre-tax policy. See, for example, the lack of social mobility. Given the high poverty (and lack of social opportunity), you are right though that this is more than about equity concerns. Its very much efficiency and individualism linked. Progressive tax is a must for policies that enable mobility and induce individual opportunity

 

Fairness should not be a goal or even a role of government. People are not equal. Nevertheless the government should treat them as equal, or at least the same in terms of laws and programs. The government has no business pitting one citizen against another or making laws that don't apply the same to everyone. That is defined in the declaration of independence. The government has messed this up along with most of the other things it has done.

 

To ignore equity isn't rational. It often goes hand in hand with efficiency and economic opportunity (e.g. a greater safety net can, due to the consequences of risk, encourage greater entrepreneurial behaviour)

 

Yes, and since we already have a progressive tax system, whats the huppla again ?

The concern is not so much the tax system per say, it's the fact that tax breaks can be bought or even handed out to those willing to throw enough lobbying cash at legislators. Once apon a time tax breaks were used to kick start segments of the economy, but then never went away once the good times rolled. Some will go as far as to say thats the benefits of being rich, it affords you certain benefits the middle class simply can't compete with. That may be true to a certain extent, but not at the cost of the public trough.

If you did away with the majority of tax breaks, the tax brackets would take care of themselves in a sense and we wouldn't be argueing over fair shares and equal outcomes.

 

You have a tax system with progressive elements. Once we consider equity and efficiency criteria, one can argue that the progressivity should be deeper

 

Half the people pay all the income tax and the other half pays none. They feed at the proverbial trough. I can't even imagine what a lot of progressiveness would be like.

 

Income tax should be abolished. It is an invention of progressives to expand government so they can socially engineer their Utopian vision.

 

Given the need for a safety net, if anything we should be going the other way: integrating income tax with the benefits system (ensuring thereby the avoidance of unemployment and poverty traps)

 

There are two schools of thought on fairness when it comes to income taxes.

1: A flat tax is fairest because it ensures that everyone contributes an equal part of their income to the society.
2: A progressive tax is fairest because it ensures that taxes come mostly or completely from disposable income and not from the part of their income needed for survival.

I'd like to see a mix of the two. A simple two-bracket system with no deductions, exemptions or credits. The first bracket would be a zero tax bracket and would cover all income up to the poverty line - ensuring that no money needed for survival would be taxed. The second bracket would be about 12% to ensure that we got the same revenue we do today - much lower than the current marginal rate.

But, since this will take away the politicians' ability to manipulate the public through taxes, it will never pass.

 

Which, of course, it never has. After spending trillions on "The War on Poverty" we have about the same rate of poverty (as measured by the government to make sure we keep pumping money into the pit).

 

You're not making sense (in terms of the response to the quote). The US doesn't have a generous welfare system. However, that's not the point. If you want to have an effective welfare state then that will include an income tax (by ensuring integration with the benefit system we can ensure incentives are maximised)

 

Incentives not to work are maximized.

 

You'll find that its countries with high inequality and/or ineffective welfare states that tend to exhibit class structures and phenomena such as an 'underclass' (permanently stuck on low income).

 

Who needs a safety net ? The people or the government ? Avoiding unemployment is more so an individuals doing, usually rooted in bad career choices/paths. The economy plays into it as well but thats when government policy is supposed to take place and help out, which is sorely absent these days. The idea is to NOT foster a welfare state.

 

Basic economic rationality demands it. We've known that since the likes of Churchill were forced to introduce social insurance because of the perceived threat of German competition.

 

False dichotomy fallacy.

Which basically ignores all considerations of fairness, as it does not distinguish between income obtained by contributing to production and income obtained by privilege, without any commensurate contribution to production.

Which also basically ignores all considerations of fairness, as the income above survival level is not separated into earned and unearned.

Your "two schools of thought" on income tax fairness are thus in fact the same school: ignoring considerations of fairness.

A genuine concern for fairness would begin by distinguishing between income earned by commensurate contributions to production and income obtained through privilege, as a welfare subsidy giveaway from society, without any commensurate contribution to production by the recipient. It is not fair to tax the former at all, as it makes the producer pay for having made a contribution to the wealth of society. It is fair to tax the latter away entirely, as it recovers what the recipient took from society.

These facts are not disputable. Those who oppose tax fairness must simply refuse to know them.

 

What is missing in this discussion is governments ever increasing demand for money. The current budget of $3.6T, is $28,000 for each taxpayer, with an average income of $50,000.

The lack of fairness, is that we get no where near that level of benefit.