QUOTE(Just Leave me Alone! @ Aug 14 2005, 09:28 PM)
QUOTE(overlandsailor @ Jun 18 2005, 08:55 AM)
Another problem I have with these sorts of approaches is the disincentive they create. The problem with creating higher percentage tax rates for higher incomes is that in creates a disincentive to be more productive
Here higher taxes create a disincentive to being productive.
QUOTE(overlandsailor @ Aug 6 2005, 09:40 AM)
I don't agree simply because I think the premise is flawed.
The tax code change, in your example would not motivate productivity at all. Where do you see this motivation for hourly workers?
But here lower taxes would not
be an incentive to be more productive. You are a walking, talking contradiction OLS.
What contradiction? Let me try to make this easier.
If I make 500.00 and I'm say taxed at 20% I take home 400.00 a week (I know this is simplistic, but it is just a theoretical example).
Now, If I make 550.00 a week, I jump a tax bracket and get taxed at 30%. Now I only take home 385,00.
This is a waaaay simplistic example but we see this all the time in America. People refusing Overtime because it could lead to narrowly crossing into the next bracket.
So, HIGHER PERCENTAGES for HIGHER INCOMES does create a disincentive, in some instances.
Now, your next example was a straight tax cut. Why would someone have an incentive to be more productive just from this tax break? They take home more doing the same thing as they did before. Also, they still face the same disincentive if they make enough money to jump a tax bracket.
Now, if you want to address these issues, we need to consider either a flat tax, or only applying the higher percentage rates to the income that exceeded the minimum level to enter that tax bracket.
First of all, the taxes you pay in higher federal tax brackets are only on the dollars earned over the amount that put you in that tax bracket.
That's news to me. When I fill out my taxes I cross reference the table once. Taxable income at such and such dollar amount = this amount due in taxes. Do you have a link for the above statement, perhaps I have been short changing myself on taxes for years. I know I have certainly seen myself take home almost exactly the same money in a week I worked 10 hours OT then a week I worked 40 hours straight. I don't know about you, but I think those 10 hours are work alot more to me then a dollar or two total.
Either way, just because this loophole isn't closed by this proposal does not mean that we are somehow worse off with this than our current situation where such loopholes still are not closed, does it?
Depends on how much you make I guess. I think the system as it stands is flawed, unless of course you are right about the multiple percentage tax rate thing.
Lower income taxes will motivate some people to work more. Second jobs and overtime become more attractive. Do you disagree with this statement?
In some ways yes. For one, most people I know have no idea how much they make before taxes. If they take home more, they will likely spend it, which is good for the economy but whether or not they we be motivated to be more productive will depend on the person. Based on what I see of the people around me I think those motivated in that way would be a very small minority.
What about this statement? Lower income taxes make going (back) to college to increase your earning potential more attractive because the rate of return on your investment in your education increases.
How many people do you know actually look at college as an investment and their future income as a return on that investment. Most, at least most I know see college in one of three lights. Light one: I finally get to get out of the house and away from my folks! party time! Light two: there is no way I can get a good job without college, light three: I wanna be a __________ where the blank is a career that requires an education. No one, not even my brother-in-law that is going to school to become an accountant see college as an investment with a future return being the income from the career the enter because of their degree.
lower income taxes lead to a nation that makes more productive use of its time. The nation becomes more efficient and the economy improves with it. That is one reason why Ireland is doing better economically than the rest of Europe.
OK, well lower taxes benefited me as an alarm installer because more people had more to spend so more bought alarms and I worked frequently, which was worth alot to me financially when I was piece work, and is worth knowing I have job security now that I am hourly. However, no one I worked with jumped and volunteered for OT or weekend work.
So, in my experience, lower taxes increased spending, which increased available work, but most people didn't seek to become more productive to earn even more, they were happy with what they had coming in.
The problem with plans like this, that target the people that make the most in America, is that those people tend to be the ones who invest the most in American companies. Raise their income taxes, you give them an incentive to invest off-shore. If the take their money off-shore, US companies have less to work with, which can lead to many problems at those companies, not the least of which is an need to reduce operating costs, which frequently means reduce the workforce.
Trickle down is not perfect, but it DEFINITELY works in reverse.
Now, why would this proposed plan be better then say a flat tax, on incomes over 30,000.00 a year (below pays nothing) with only two possible deductions. 1> retirement savings, 2> medical insurance premium costs.??