Our tax system in simple terms

[CosmicCowboy]

Our Tax System Explained: Bar Stool Economics


Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.

The fifth would pay $1.

The sixth would pay $3.

The seventh would pay $7.

The eighth would pay $12.

The ninth would pay $18.

The tenth man (the richest) would pay $59.



So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20." Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.

But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?'

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.



And so:

The fifth man, like the first four, now paid nothing (100% savings).

The sixth now paid $2 instead of $3 (33%savings).

The seventh now paid $5 instead of $7 (28%savings).

The eighth now paid $9 instead of $12 (25% savings).

The ninth now paid $14 instead of $18 (22% savings).

The tenth now paid $49 instead of $59 (16% savings).



Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.



"I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got $10!"



"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I got"



"That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!"



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



The nine men surrounded the tenth and beat him up.



The next night the tenth man didn't show up for drinks so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!



And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.



David R. Kamerschen, Ph.D.

Professor of Economics

University of Georgia

[gatoloco]

i drink alone.

[Supreme_Being]

I don't drink.

[DarkReign]

<-- drunk

[T Park]

actually it can be put in simpler terms.

THe harder you work and the more you make, the more the govt wants to discourage you from making more.

[Holt's Cat]

Does that include payroll taxes?

[DarkReign]

Does that include payroll taxes?

Nope, people dont have sympathy for employers.

FICA Match, FUTA and SUI.

[tlongII]

I only drink when I'm alone or with somebody.

[T Park]

Nope, people dont have sympathy for employers.

FICA Match, FUTA and SUI.

Ain't that the truth.

[johngateswhiteley]

Our Tax System Explained: Bar Stool Economics


Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.

The fifth would pay $1.

The sixth would pay $3.

The seventh would pay $7.

The eighth would pay $12.

The ninth would pay $18.

The tenth man (the richest) would pay $59.



So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20." Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.

But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?'

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.



And so:

The fifth man, like the first four, now paid nothing (100% savings).

The sixth now paid $2 instead of $3 (33%savings).

The seventh now paid $5 instead of $7 (28%savings).

The eighth now paid $9 instead of $12 (25% savings).

The ninth now paid $14 instead of $18 (22% savings).

The tenth now paid $49 instead of $59 (16% savings).



Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.



"I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got $10!"



"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I got"



"That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!"



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



The nine men surrounded the tenth and beat him up.



The next night the tenth man didn't show up for drinks so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!



And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.



David R. Kamerschen, Ph.D.

Professor of Economics

University of Georgia

...thank you, for posting this. i am so tired of hearing people/posters talk about the tax system, most people don't know shit. fucking idiots.

[RuffnReadyOzStyle]

Yeah, that is a wonderful analogy, and it would make sense if the divide between the rich and poor wasn't continuing to grow (see the GINI index).

"Between 1979 and 2005, the mean after-tax income for the top 1% increased by 176%, compared to an increased of 69% for the top quintile overall, 20% for the fourth quintile, 21% for the middle quintile, 17% for the second quintile and 6% for the bottom quintile."

http://en.wikipedia.org/wiki/Income_inequality_in_the_United_States (don't dismiss this just because it is a wiki - it is well researched from credible sources).

So, actually, unsurprisingly, income earned by top earners is increasing at a far faster rate than that of the majority. Poor rich people! :rolleyes

[RuffnReadyOzStyle]

actually it can be put in simpler terms.

THe harder you work and the more you make, the more the govt wants to discourage you from making more.

That is sooooo naive.

So, the guy who works 60 hours a week in 2 minimum wage jobs just to keep a roof over his family's head is discouraged from working harder because of the tax system? Bullshit, he HAS to work like that because otherwise his world comes crashing down.

Interestingly though, the tax system ends up disadvantaging middle income earners proportionately more than it does high income earners! Here are the 2008 US federal income tax brackets for single income earners (for simplicity):

10% $0 – $8,025
15% $8,026 – $32,550
25% $32,551 – $78,850
28% $78,851 – $164,550
33% $164,551 – $357,700
35% $357,701+

http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Year_2008_income_b rackets_and_tax_rates

When I look at those brackets, it's not the rich who get smacked, it's the MIDDLE INCOME EARNER. Earn over 32K and your marginal tax rate goes from 15% to 25%, a 66% increase. From 79K up to 358K the marginal rate only increases from 28% to 35%, a 25% increase.

Sorry, who gets slugged again?????????

Try examining the facts.

[T Park]

Try paying the taxes I have to.

paying 35% that goes wasted is absolute horse shit.

On top of paying California Income, Arizona income......

[Jekka]

actually it can be put in simpler terms.

THe harder you work and the more you make, the more the govt wants to discourage you from making more.
That would make more sense to me if I hadn't had less than $8000 on my 2006 return and still owed $500 because some of that was untaxed contract work for a nonprofit org. Or if I wasn't getting taxed on a federal fucking scholarship this year and consequently getting all of a $3 refund (which I am making the feds pay postage on to mail me, fuck direct deposit) when my real income was less than $14k after living most of the year at $800/mo with AmeriCorps.

Apparently the government just doesn't want me to keep any of my money.

[RuffnReadyOzStyle]

Try paying the taxes I have to.

paying 35% that goes wasted is absolute horse shit.

On top of paying California Income, Arizona income......

So, do you go wanting for anything? I doubt very much that you do.

Unfortunately, there are a lot of people out there who find it hard just keeping up with their bills, and as I have pointed out it is the MIDDLE CLASS who are increasingly being squeezed. Excuse me for not feeling sorry for the rich that they have to pay proportionately more of their high income to fund the infrastructure that keeps society running.

[Nbadan]

So, do you go wanting for anything? I doubt very much that you do.

Unfortunately, there are a lot of people out there who find it hard just keeping up with their bills, and as I have pointed out it is the MIDDLE CLASS who are increasingly being squeezed. Excuse me for not feeling sorry for the rich that they have to pay proportionately more of their high income to fund the infrastructure that keeps society running.

BAAMMM!!....not only that rich corporations like Walmart profit more when they pay low employee wages, then the employees have to go on food stamps, CHIPS, or other govt. sponsored program and that bill gets passed to all of us...

BAMM!! Corporate subsidy!

[TDMVPDPOY]

And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.

Professor of Economics

University of Georgia

Those in the high income bracket, whether they get tax hard or tax breaks, the value in the dollar of their purchasing power is different to someone on the low income scale.
At the end of the day its about good fiscal policy from the govt, where tax increases/breaks should be handed out to.

[travis2]

That is sooooo naive.

So, the guy who works 60 hours a week in 2 minimum wage jobs just to keep a roof over his family's head is discouraged from working harder because of the tax system? Bullshit, he HAS to work like that because otherwise his world comes crashing down.

Interestingly though, the tax system ends up disadvantaging middle income earners proportionately more than it does high income earners! Here are the 2008 US federal income tax brackets for single income earners (for simplicity):

10% $0 – $8,025
15% $8,026 – $32,550
25% $32,551 – $78,850
28% $78,851 – $164,550
33% $164,551 – $357,700
35% $357,701+

http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Year_2008_income_b rackets_and_tax_rates

When I look at those brackets, it's not the rich who get smacked, it's the MIDDLE INCOME EARNER. Earn over 32K and your marginal tax rate goes from 15% to 25%, a 66% increase. From 79K up to 358K the marginal rate only increases from 28% to 35%, a 25% increase.

Sorry, who gets slugged again?????????

Try examining the facts.

You consider 79K to be "rich"?

:rolleyes

[travis2]

So they are worthy of getting punished? :rolleyes

[TDMVPDPOY]

79,000 is upper middle class

79K in australia is top tier if im not mistaken around 42-47% tax bracket,

[johngateswhiteley]

That is sooooo naive.

So, the guy who works 60 hours a week in 2 minimum wage jobs just to keep a roof over his family's head is discouraged from working harder because of the tax system? Bullshit, he HAS to work like that because otherwise his world comes crashing down.

Interestingly though, the tax system ends up disadvantaging middle income earners proportionately more than it does high income earners! Here are the 2008 US federal income tax brackets for single income earners (for simplicity):

10% $0 – $8,025
15% $8,026 – $32,550
25% $32,551 – $78,850
28% $78,851 – $164,550
33% $164,551 – $357,700
35% $357,701+

http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Year_2008_income_b rackets_and_tax_rates

When I look at those brackets, it's not the rich who get smacked, it's the MIDDLE INCOME EARNER. Earn over 32K and your marginal tax rate goes from 15% to 25%, a 66% increase. From 79K up to 358K the marginal rate only increases from 28% to 35%, a 25% increase.

Sorry, who gets slugged again?????????

Try examining the facts.

huh? i disagree. furthermore, http://www.thesimpledollar.com/2007/04/27/dont-fear-the-higher-tax-bracket-or-why-a-reader-needs-more-cowbell/

[Holt's Cat]

79,000 is upper middle class

I hope you are joking.

[Holt's Cat]

Apparently the government just doesn't want me to keep any of my money.

Welcome to reality.

[Holt's Cat]

Nope, people dont have sympathy for employers.

FICA Match, FUTA and SUI.


Well, I was referring to SS and Medicare taxes paid by employees.

[2centsworth]

the analogy was good for what it was. Of course many of you have a hard time reading. The analogy was meant to point out the foolishness of class warfare when it comes to tax cuts. On a percentage basis the wealthy usually get less than everyone else. Percentages are all that should matter.

As far as Ruff's commentary, I stopped reading once I saw Wikipedia as a source. You may have some good points, but you shot your credibility.

[1369]

the analogy was good for what it was. Of course many of you have a hard time reading. The analogy was meant to point out the foolishness of class warfare when it comes to tax cuts. On a percentage basis the wealthy usually get less than everyone else. Percentages are all that should matter.

Well shit, I thought it was all Bush's fault.

[01Snake]

So, do you go wanting for anything? I doubt very much that you do.

Unfortunately, there are a lot of people out there who find it hard just keeping up with their bills, and as I have pointed out it is the MIDDLE CLASS who are increasingly being squeezed. Excuse me for not feeling sorry for the rich that they have to pay proportionately more of their high income to fund the infrastructure that keeps society running.

So if paying your taxes doesn't put you in a bind or prevent you from paying your bills they must not be taxing you enough. Great logic.

[T Park]

according to Ruff,

the rich are supposed to fund the entire country.

Socialism at its best.

"When I'm elected, I'm going AFTER THE PROFITS OF THE OIL COMPANIES" - Hillary

[AZLouis]

http://www.snopes.com/business/taxes/howtaxes.asp

[RuffnReadyOzStyle]

the analogy was good for what it was. Of course many of you have a hard time reading. The analogy was meant to point out the foolishness of class warfare when it comes to tax cuts. On a percentage basis the wealthy usually get less than everyone else. Percentages are all that should matter.

As far as Ruff's commentary, I stopped reading once I saw Wikipedia as a source. You may have some good points, but you shot your credibility.

Well, that's entirely unreasonable. As I stated, the Wiki entries I sourced are themselves well sourced from government data, and well written. They are not a collection of bullshit like some wikis. I know that wiki is not a primary source, but in this case it is a good collection of primary sources that I could not easily find elsewhere. If you'd bothered to look at them you'd see what I mean.

T Park, I don't believe the wealthy should "fund the entire country", I believe in a fair tax system where each pays according to his/her ability to do so. Under your system, those with money (top 2%) continue to get richer (which happens anyway), while everyone else goes to hell. Oh, and BTW, as I already pointed out, the MIDDLE CLASS are the ones slugged in your tax system, not the rich. And if you are rich and paying the top bracket of income tax you don't have a very good accountant. Kerry Packer, richest man in Australia, uses loopholes in the law and high-powered number crunchers to pay a pittance in tax. You're just not very good at being a robber-baron! :lol

As for going after oil company profits, a-freakin-men. Oil companies have been polluting the world without paying a cent for the damage they've done for over 100 years - about time they paid the piper. But I'm sure you're all for corporations doing whatever they please, environmental and social consequences be damned... :rolleyes

[spurster]

Ah, yes, I understand.

The rich have received no benefit for doing business in this country. They got rich in spite of it. It's only patriotism that keeps them here even though they are being taxed into near bankruptcy.

Oops, don't look at the statistics behind the curtain.

[2centsworth]

Ah, yes, I understand.

The rich have received no benefit for doing business in this country. They got rich in spite of it. It's only patriotism that keeps them here even though they are being taxed into near bankruptcy.

Oops, don't look at the statistics behind the curtain.
again, what does that have to do with the original premise of the thread? the left can be so funny when it comes to simple points of fact.

[TDMVPDPOY]

yeh but when you look at the income data, its fukn skewed cause you got the ppl earning millions who are pushing up the avg salary earners wages, which doesnt represent what is the ACTUAL avg, due to guys who are outliers pushing up the national avg. If you take out those guys, you will get a clear identification of the real actual avg earners income....

[T Park]

As for going after oil company profits, a-freakin-men. Oil companies have been polluting the world without paying a cent for the damage they've done for over 100 years - about time they paid the piper. But I'm sure you're all for corporations doing whatever they please, environmental and social consequences be damned

Sorry to tell you, but thats straight out communism.

Seriously.

[T Park]

btw

national sales tax

no loopholes, no cheating. Everyone pays equally, everyone even the drug dealers pay.

[2centsworth]

yeh but when you look at the income data, its fukn skewed cause you got the ppl earning millions who are pushing up the avg salary earners wages, which doesnt represent what is the ACTUAL avg, due to guys who are outliers pushing up the national avg. If you take out those guys, you will get a clear identification of the real actual avg earners income....:dizzy

just use the median.

[RuffnReadyOzStyle]

Sorry to tell you, but thats straight out communism.

Seriously.

Yeah, trying not to kill the planet that sustains us, and working for some modicum of social justice = communism. :rolleyes

The fossil fuel industry has benefited modern human civilisation enormously by providing a piggy bank of non-renewable energy that sparked the industrial revolution and enabled us to reach the living standards we have today. In doing so, fossil fuels also polluted, and continue to pollute, the atmosphere, land and water which sustains all life on the planet.

Fossil fuel companies have paid very little for the damage they have done to life-sustaining natural systems on local and global scales, damage that will affect, into the future, public and common goods and thus the lives of everyone alive today and for generations to come.

Please explain to me why companies which damage the environment we ALL live in shouldn't be: a) forced to minimise the environmental damage they do, and, b) forced to pay compensation to the public for their pollution. And then explain to me how raising those issues makes me a Communist.

Stick to basketball commentary. You are out of your depth.

[RuffnReadyOzStyle]

btw

national sales tax

no loopholes, no cheating. Everyone pays equally, everyone even the drug dealers pay.

We already have one in Australia (10%), as does most of Europe, but by their nature and without proper compensation to low income earners through the rest of the tax system, consumption taxes are regressive (ie. affect the poor more than the rich).

Actually, I'm for vastly increasing consumption taxes in an effort to slow down consumption, but that's another kettle of fish.

If you'd bother to read about these issues you'd know they are complex problems and require involved, complex solutions. Occam's razor does not apply to intervention in most human systems.

[Holt's Cat]

We already have one in Australia (10%), as does most of Europe, but by their nature and without proper compensation to low income earners through the rest of the tax system, consumption taxes are regressive (ie. affect the poor more than the rich).

Actually, I'm for vastly increasing consumption taxes in an effort to slow down consumption, but that's another kettle of fish.

If you'd bother to read about these issues you'd know they are complex problems and require involved, complex solutions. Occam's razor does not apply to intervention in most human systems.


So raising consumption taxes on those with low incomes is good because...?

[Holt's Cat]

Yeah, trying not to kill the planet that sustains us, and working for some modicum of social justice = communism. :rolleyes

The fossil fuel industry has benefited modern human civilisation enormously by providing a piggy bank of non-renewable energy that sparked the industrial revolution and enabled us to reach the living standards we have today. In doing so, fossil fuels also polluted, and continue to pollute, the atmosphere, land and water which sustains all life on the planet.

Fossil fuel companies have paid very little for the damage they have done to life-sustaining natural systems on local and global scales, damage that will affect, into the future, public and common goods and thus the lives of everyone alive today and for generations to come.

So it's the impersonal "fossil fuel companies" that have caused the problem and not the demand of the peoples of the earth for reliable energy sources to generate the power to heat and cool their homes, to cook, to use the internets and tell us that fossil fuel companies have paid very little for the damage they have done to life-sustaining natural systems on local and global scales, to provide on a mass scale what was previously not even available to kings, to travel so they can hold down jobs and make money to provide for their families, to make it to hospitals before they croak, and the other mundane and necessary parts of our lives? Not to mention to make the plastics that provide for safe and sanitary food storage among a million other worthwhile uses.



Please explain to me why companies which damage the environment we ALL live in shouldn't be: a) forced to minimise the environmental damage they do, and, b) forced to pay compensation to the public for their pollution. And then explain to me how raising those issues makes me a Communist.



Does that not translate to some penalty on individuals for their impact on the planet's environment? Humans release collectively an enormous amount of gases and other material harmful to the environment. We should begin to eradicate the useless ones and then perhaps shoot their bodies into interstellar space.

[TDMVPDPOY]

So raising consumption taxes on those with low incomes is good because...?

AUSTRALIA has a (gst) goods + services tax 10% something along the lines same as canadas GST. Only some stuff has tax inc, while some stuff are tax exempt, but ppl dont go through the fuss of identifying each item has GST attached to it.

The only problem i have with the collection of GST from the fed govt, is the redistribution of it to other states. Some states contribute jackshit all, but collect alot of funds back, while the state that contributes alot, gets the less back, its fokn lame.

[Ed Helicopter Jones]

I think CC's story is a good analogy for anyone advocating a flat tax to think about. The majority of Americans who support a flat tax have no idea that the poor and the middle classes will all end up paying significantly more tax with a flat tax according to most of the models that are out there.

What's actually hurting upper middle class taxpayers right now is the AMT tax, which basically is a flat tax, and because of changes to the regular tax structure, AMT is kicking in for folks a lot more regularly than a few years back.

[Ed Helicopter Jones]

If you think about all the tax you are subject to either directly or indirectly through your employer or the things you do/buy/visit it's staggering actually..


Federal income tax
State income tax (most states)
Social security (essentially a tax)
Medicare
Futa
Suta
Workman's comp assessments
Sales taxes
Property taxes
Personal property taxes
City taxes (in many areas)
Compensating taxes
Special use taxes
Hospitality taxes
Excise taxes

I'm sure I'm forgetting some....

Interestingly there were some folks in the 1700's who had grown tired of paying so many taxes and started their own country.

[Holt's Cat]

Taxes aren't a big concern and tax cuts are "giveaways to the rich" when you don't have to pay them. A federal income tax rate of 10%? Oh noes.

[Holt's Cat]

I think CC's story is a good analogy for anyone advocating a flat tax to think about. The majority of Americans who support a flat tax have no idea that the poor and the middle classes will all end up paying significantly more tax with a flat tax according to most of the models that are out there.

What's actually hurting upper middle class taxpayers right now is the AMT tax, which basically is a flat tax, and because of changes to the regular tax structure, AMT is kicking in for folks a lot more regularly than a few years back.


No kidding. We barely missed having to pay the AMT this year. That would have added $2K more to the $32K we already paid to Uncle Sam.

[TDMVPDPOY]

Federal income tax
State income tax (most states)
Social security (essentially a tax)
Medicare
Futa
Suta
Workman's comp assessments
Sales taxes
Property taxes
Personal property taxes
City taxes (in many areas)
Compensating taxes
Special use taxes
Hospitality taxes
Excise taxes

I'm sure I'm forgetting some....

registration/stamp duty

[T Park]

Yeah, trying not to kill the planet that sustains us, and working for some modicum of social justice = communism

Going after the profits of a company, is communism yes.

Any company it doesnt matter.

Thats straight out communism, not liking a company cause they make money and wanting to take away their profits is straight from the book of Karl Marx.

[inconvertible]

you pay federal income tax, so the gov can give handouts to farmers, poor people, illegal aliens(they get free health care), civilian contractors(that have strong political ties), foriegn countries, and stupid wars........the time to end the federal income tax law is coming soon, and it won't be pretty.

[Wild Cobra]

The majority of Americans who support a flat tax have no idea that the poor and the middle classes will all end up paying significantly more tax with a flat tax according to most of the models that are out there.

First of all, any model that shows a significant increase would never fly. Some models show very little change. Most models have the same or similar standard deduction and exemption levels we currently use, but only have one marginal tax rate, and all other deductions are removed. It could be said, the middle class and rich are affected more by it. Some will pay more, some will pay less. The poor will seldom pay anything different. The rich have deductions up the yin-yang they take off then pay taxes at a higher margin, but on less of a percentage of their income. The middle class also often deduct retirement plans, medical, education, interest on loans, etc. They also generally pay a 25% or higher margin. The idea of a flat tax is to make things simpler and more fair.

Last time I saw a calculation of it, the rate was 17%. That was in the early 90's however. The standard deduction and exemptions for a family of four was at $30,000 also. More than what was in place at the time. This was to account for the 2% increase in the marginal rate, and then some to make it attractive. I don't advocate making more people pay nothing however. When 51% of the population pay no extra money on tax increases, watch your wallet and arm yourself. Time for a revolution.

Speaking of the poor paying taxes, I say they should. Not because I want them to pay more, but because I want them to have a reason not to raise taxes on the rest of us. It's just not fair to have 47% of the tax payers pay no income tax, and be voters who can say "yes, raise taxes" when tax increases are talked about.

Some thing I have advocated more than once is to do a one time mandatory wage increase on all workers who pay payroll taxes (social security and medicare). Most of us see the 6.2% and 1.45% come out of our checks. What some of you don't know is that the employer matches this to the federal government, so they get 15.3% of your wage level. Say you make $100 per day. (simple for calculation) After you pay the payroll taxes, you have $92.35 per day. You would now get enough more with a mandatory wage increase to still make the $92.35. This would make a mandated wage increase of 7.65%. This 7.65% would take that $100 to $107.65. Once both sides of the tax are paid, and seen by the employee (taxpayer,) they see what they really pay. Oh, I forget. When you apply the new rate of 14.213% to the $107.65, the payroll tax is now $15.3 per $100 instead of $7.45. The employee still gets the effective $92.35 per day, but now sees nearly all the tax paid that goes to the feds on his or her behalf.

This concept also needs a change in name. We rename the tax to something like "Social Tax." We can maintain the current income tax system, go to a flat tax, etc. However, what ever we do. When tax rates are to be raised or lowered, the other systems stay the same, and this new social tax increases or decreases so that everyone has a share of burden. We need some type of restrain on the voters to beep taxes manageable, because we all know.... Congress won't!

I didn't double-check my math, but I think you all get the idea.

[Aggie Hoopsfan]

As for going after oil company profits, a-freakin-men. Oil companies have been polluting the world without paying a cent for the damage they've done for over 100 years - about time they paid the piper. But I'm sure you're all for corporations doing whatever they please, environmental and social consequences be damned.

Shell had a profit of 30 billion last year. They are spending 4 billion to expand their refining capability in Port Arthur. That's 13% of their profit for the year already tapped for new infrastructure, not accounting for any other new expenditures (for sake of argument, drilling a new deep water well costs about 100 million for every mile of water they go down.

There's lots of other companies out there that on a comparison of percentage of profits pocket more than what the oil companies do when you factor in their costs of doing business.

But by all means, don't let those facts stop your fucking witch hunt of big oil. Demos and Republicans both have big oil money in their pocket, this is nothing new. The fact is demand is increasing world wide, and until people come up with some good alternatives (and the bullshit ethanol mandate isn't an improvement or quality alternative), we're all stuck with big oil.

But big oil isn't a drop in the bucket compared to the 800 pound gorilla that is SS, Medicare, and Medicaid. Big oil doesn't have the potential to bankrupt the USA in our lifetimes. The other three do, but you won't hear a fucking word from our elected (or potentially elected) leaders about how to address those issues, just tired rhetoric from hos like Hillary wanting to go Robin Hood on big oil.

I fucking hate the leadership in this country.

[T Park]

hammer and fucking nail.


Awesome post Aggie :tu

[Ed Helicopter Jones]

First of all, any model that shows a significant increase would never fly. Some models show very little change. Most models have the same or similar standard deduction and exemption levels we currently use, but only have one marginal tax rate, and all other deductions are removed. It could be said, the middle class and rich are affected more by it. Some will pay more, some will pay less. The poor will seldom pay anything different. The rich have deductions up the yin-yang they take off then pay taxes at a higher margin, but on less of a percentage of their income. The middle class also often deduct retirement plans, medical, education, interest on loans, etc. They also generally pay a 25% or higher margin. The idea of a flat tax is to make things simpler and more fair.

Last time I saw a calculation of it, the rate was 17%. That was in the early 90's however. The standard deduction and exemptions for a family of four was at $30,000 also. More than what was in place at the time. This was to account for the 2% increase in the marginal rate, and then some to make it attractive. I don't advocate making more people pay nothing however. When 51% of the population pay no extra money on tax increases, watch your wallet and arm yourself. Time for a revolution.

Speaking of the poor paying taxes, I say they should. Not because I want them to pay more, but because I want them to have a reason not to raise taxes on the rest of us. It's just not fair to have 47% of the tax payers pay no income tax, and be voters who can say "yes, raise taxes" when tax increases are talked about.

Some thing I have advocated more than once is to do a one time mandatory wage increase on all workers who pay payroll taxes (social security and medicare). Most of us see the 6.2% and 1.45% come out of our checks. What some of you don't know is that the employer matches this to the federal government, so they get 15.3% of your wage level. Say you make $100 per day. (simple for calculation) After you pay the payroll taxes, you have $92.35 per day. You would now get enough more with a mandatory wage increase to still make the $92.35. This would make a mandated wage increase of 7.65%. This 7.65% would take that $100 to $107.65. Once both sides of the tax are paid, and seen by the employee (taxpayer,) they see what they really pay. Oh, I forget. When you apply the new rate of 14.213% to the $107.65, the payroll tax is now $15.3 per $100 instead of $7.45. The employee still gets the effective $92.35 per day, but now sees nearly all the tax paid that goes to the feds on his or her behalf.

This concept also needs a change in name. We rename the tax to something like "Social Tax." We can maintain the current income tax system, go to a flat tax, etc. However, what ever we do. When tax rates are to be raised or lowered, the other systems stay the same, and this new social tax increases or decreases so that everyone has a share of burden. We need some type of restrain on the voters to beep taxes manageable, because we all know.... Congress won't!

I didn't double-check my math, but I think you all get the idea.

That's a nice post. I'd love to see it. But we're talking about a country where you can get a small credit for installing energy efficient windows or water heaters, but then still gives you a tax break for buying a 6,000 pound vehicle! Heck, an additional $8,000 write off for luxury vehicles just passed last week. :lol That's just one example of the special interests at play throughout our tax system. Let's give a tax break for going green...oh, and if you celebrate your newfound efficiency by buying a Chevy Suburban we'll give you a tax break as well. :lol Half the taxes, credits, deductions, etc., don't make a lot of sense when you boil them down, but somewhere, somehow, someone or some special interest had to be satisfied.

Honestly, I'd be shocked if we ever go to a true flat-tax. I'd be shocked if we ever adopt a system in this country where the average taxpayer has any clue how much tax they're actually paying. I'd love to see the employer portion of taxes be made more evident to the employees. Heck, why not add FUTA and state unemployment to the employee side as well. That'll be an extra 0.8% of the employee's first $7,000 of wages for FUTA and let's estimate 2.0% of the employee's first $19K of wages for SUTA, then we can gross up the pay for those and then recalculate the tax effect on the social security and medicare gross up as well so the employee still gets the same net check. If we ever go to a national health care system that tax can just get added on as well and do the multiple gyrations to determine how much the employee still need to be paid to earn the same amount. We could iterate that bad boy out so that the average employer would never figure out how much someone needs to be paid.

And then, when individuals get around to filing taxes we'll need credits for those of us with children, and childcare credits for daycare expense because that won't be fair to not give a break to families. Oh, and those of us paying student loan interest will deserve a credit on our interest paid. And since we're talking interest let's not forget that homeowners will still want to deduct mortgage interest and our property taxes (unless we figure out how to add property taxes to our gross payroll :)). And state income tax deductions for those of us living in states that tax our income would be nice as well. Let's not forget the influence that religion has on national politics. Those of us who tithe will absolutely want that 10% of our income we give the Church credited back to us as a reduction of our taxable income. And if I donate appreciated property I'll want that deduction as well. If I'm selling a long-term asset it sure would be nice to pay a lower capital gains rate, plus I'm stimulating the economy by turning over assets several times rather than holding them to avoid tax. If I'm over a certain age (but still able to vote remember!) I'll need a special tax break too! And the list goes on and on.

Pretty soon, once we've satisfied everybody we're right back where we started.

I will never see a flat tax in my lifetime in the U.S. It won't happen. It's a pipe dream for anyone who thinks otherwise.

[T Park]

Agreed Ed.

The powers that be in the government would'nt want to give the american people that knowledge or that kind of power.

any of the candidates this year included.