I’m looking for serious answers to understand the mentality. Please avoid the snark. I know it’s low hanging and tempting but I’m pretty sure most, if not all, of use here on Lemmy “get it”.
I just can’t get out of my head how absurd it is that we, in the U.S. anyway, put so much of the tax burden on working class folks instead of those most benefiting from our economic system.
It seems to me the standard deduction should be at least the median personal income (~$40k) if not the mean(~$60k) with progressive tax brackets adjusted to cover costs thereafter and possibly a supplemental wealth tax.
But I’m not an economist so trying to understand why I’m wildly wrong and this would be a terrible idea either from an economic perspective or from a political perspective.
20 years ago, the right wing propaganda machine was focused on (before they went full out fascist) low taxes for the “job creators” such as corporations and rich people, on the basis of that leading to more lucrative job opportunities for everyone else. The thinking was that the people and corporations in this low-tax environment would have incentives for creating jobs “here” instead of moving them overseas.
Not everyone on that side of the isle have realized that this results in jobs still ending up overseas, along with money that could’ve funded schools, roads, libraries, et al. And many of those who have realized it continue along the same path because it’s too profitable for them to do so.
Remember this next time you hear slogans such as “trickle down economy”, or Glitch McConnells favorite: “What’s good for the goose is good for the gander”.
You didn’t tell us what you meant by “shoulder the burden”. Maybe you should have, or at least if you did it would allow more focused answers.
Some people that I have spoken with are fans of a flat tax. They think that income tax should be 10% on everyone, no matter what. They think that is fair.
In order to maintain that belief in fairness, they also need to magically forget about: the ultra rich, passive income, capital gains, the existence of businesses that have a different tax code, and the fact that they probably actually endorse various tax breaks.
On a side note, I think one of the underlying causes of people being willing to try to forget all of these obvious facts of life is the gut assumption that big banks and ultra rich people who are running scams or finding loopholes are doing so in a very complicated way, so there’s no chance we could figure out what’s happening and stop it. But what forensic accountants point out from time to time is that many of the scams and loopholes are new variations on old tricks. We can understand how they work, but it takes effort, because the names change and the money moves in slightly different ways.
There are many and they’re all bad.
Mathematics and Politics.
There are many more people who are “working class” than rich. The argument is that if you take some money from a lot of people, you get more money than if you take a lot of money from some people.
There’s also the argument that if everyone pitches in, the overall burden for each individual is less.
What this fails to address is that the richer you are, the more you can play with your money and end up with nothing to tax. This is why the rich get richer and the rest of us don’t.
Running through all that is a thing called “trickle down economics” which claims that the money from the rich ends up in society, but recent reviews of this have proven this to be nonsense. Politicians use this as an argument for the status quo.
Finally, the rich shape the narrative. Politicians are essentially elected by the rich through their manipulation of the story through their media empires and social media platforms.
The argument is that if you take some money from a lot of people, you get more money than if you take a lot of money from some people.
That’s all dependent on how much you’re taking and from who which I addressed in my comment.
There’s also the argument that if everyone pitches in, the overall burden for each individual is less.
This only makes sense if you define “burden” with a fixed dollar amount. A $6k tax “burden” is going to be a much harder burden on someone who makes $40k than someone who makes $250k
What this fails to address is that the richer you are, the more you can play with your money and end up with nothing to tax.
This could be addressed by the wealth tax I mentioned.
In the end, I do believe it’s politics and the wealthy manipulating people’s perception.
They’ve got us focused on this bullshit culture war when what we need is a good old-fashioned class war.
The standard deduction should be at least the median income…? Wouldn’t that mean that half of people would pay no income tax?
You might say this is what we should do, but I think it’s far from obvious.
If you earn $40k and the first $13k is untaxed, then you’re paying no taxes on about the first third of your income. And from there you begin paying in the lowest bracket.
If you make $100k, and the first $13k is untaxed, that’s the first 13% of your income, not 33%. And some of your income will be taxed at levels higher than anything the $40k earner pays. I just fail to see how this is placing the burden on the poor. It Is structured to do the exact opposite and give them the most breaks.
The fact that there’s one standard deduction for the whole country is insane, since $13k means something extremely different in different places.
But across the board I’d probably agree that the floor on the deduction should come up, and we should raise taxes on extreme wealth to make it up. But at least in its most essential form, income tax is already progressive.
So I don’t really get your question. But who am I fooling? I’m going to be downvoted into oblivion for going against the popular narrative on this.
The standard deduction should be at least the median income…? Wouldn’t that mean that half of people would pay no income tax?
Half or more depending on mean or median. But that’s just a starting point for the discussion.
You might say this is what we should do, but I think it’s unreasonable to say that it’s a total head scratcher why we don’t already.
That’s not what I was intending to ask. Sorry if I phrased it poorly. I’m trying to understand the arguments against it because it’s what makes sense to me.
I just fail to see how this is placing the burden on the poor. It Is structured to do the exact opposite and give them the most breaks.
I think the logical thing is to have those who most benefit from the infrastructure our taxes pay for be the ones who contribute the most. And those that are seeing the least benefit be exempt.
I’d probably agree that the floor on the deduction should come up, and we should raise taxes on extreme wealth to make it up. But at least in its most essential form, income tax is already progressive.
This is almost exactly what I suggested. I think we’re basically on the same page.
I think you need to take a step back and stop talking about income tax. Instead, talk about wealth distribution overall. What about businesses? What about corporations? What about passive income? What about savings that’s passed to children? What about inheritance tax? What about tax fraud and tax evasion? And I meant to separate those explicitly, because there are many weak points in the tax code that allow for companies to take advantage of the ability to send money overseas, for example.
If all you’re doing is adjusting the standard deduction or the base exemption or the top threshold for social security payments, you’re ignoring the gigantic high-dollar figures that are happening with the billionaires and the largest corporations in the world. And if you ignore them, then there’s no way you can fix the corruption that’s plaguing modern society.
Of course I think you were trying to keep your focus narrow, which is a reasonable thing to do, but it’s also worth noting in at least one comment that the big picture involves much more important questions about how we should allow wealth to be redistributed.
Yeah I think we may only differ on degree, and yes some of my confusion about your post came from phrasing. There are still some phrasing points I’m struggling on.
I think the logical thing is to have those who most benefit from the infrastructure our taxes pay for
The poor benefit from roads, schools, firefighters, Medical/Medicaid, and utilities as much as anyone. But I think you had the super wealthy in mind. “Those who benefit from infrastructure” is an odd way to pinpoint the super wealthy.
be the ones who contribute the most.
This part is already true. Progressive tax brackets have them contributing the most as a proportion of pay, and far and away the most in absolute numbers.
And those that are seeing the least benefit be exempt.
The entire lower 50-60% of the economy is an extremely inclusive notion of “those who benefit the least.”
Again, phrasing.
I think the logical thing is to have those who most benefit from the infrastructure our taxes pay for
The poor benefit from roads, schools, firefighters, Medical/Medicaid, and utilities as much as anyone. But I think you had the super wealthy in mind. “Those who benefit from infrastructure” is an odd way to pinpoint the super wealthy.
Those who “most benefit” would be those who have been able to leverage the infrastructure and security provided to profit wildly. Not those who are just scraping by.
I think we do agree on all but degree like you said. And maybe mean/median income is too high. I was just trying to come up with a somewhat natural but objective breaking point. I think a more reasonable but also more subjective one might be the “living wage” which will certainly be much lower than mean/median but also much higher than $13k.
P.S. Tangentially related, I found this living wage calculator which put my current LCOL residence at ~$42k and my previous HCOL residence at ~$57k. Turned out to be much closer to Mean/median than I expected.
Just from a game theory perspective, a distributed group of people who are unorganized are unable to get their concerns addressed properly when it comes time to writing tax laws.
The rich and powerful, by virtue of being rich and powerful, have a voice in writing the tax laws. The distributed poor, do not. So it’s much easier to satisfy income goals by taxing the group who has no feedback loop to the politicians
The isn’t snark. The answer is simply greed. The rich want to be richer. They want it all. The mentality is, “I don’t care about anyone else, I want it all.”
Edit: removed a redundant sentence
Rich people have special access to the legislative machinery that you and I don’t. Through
bribes“contributions” they can craft laws that let them avoid paying their fair share of the tax burden. They can also “modify” pending legislation to remove the penalties for breaking those laws. It must be nice to live in a consequence-free environment.The sad truth is that this is exactly the answer. Rich people have more power by virtue of being rich.
It’s the same as in every business: those making decisions think that the decision making is the hardest and most important part of the equation. Not only that, they believe that it is their right and that they worked very hard to get where they are.
There are two reasons they have to believe that:
- if they didn’t, they’d feel that they didn’t deserve it
- it also explains (to them at least) why there is inequality
The common argument that is brought up against change now is capital flight: “if businesses and rich people were taxed too much, they’d leave the country”. There is a great fear that they will leave and take all the good jobs with them. The counter argument to that is: they aren’t the only ones with brains to get a business going. Rich people aren’t smarter than non-rich people, businesses that leave did employ people from whence they left and they also probably sold to the people in that area or country.
Now, of course the speed of departure, the political reaction, and the location are important.
Speed: instant departure can have a serious impact as the jobless might not be able to find other employment quickly. A graduated departure allows that however and also makes it possible for people to focus on other jobs/specialisations in the first place.
Political reaction: depending on where you are, providing recertification and training courses, having good welfare programs, and most importantly having an exit tax can help soften the blow of departure
Location: A big employer leaving a small town can be devastating. A small employer leaving a city, less so. A big employer leaving a city can burden the city, but the other factors are important.
Because fucking over the poor is how the rich stay rich.
This is political science 101
If you can convince the lowest white man he’s better than the best colored man, he won’t notice you’re picking his pocket. Hell, give him somebody to look down on, and he’ll empty his pockets for you.
-Lyndon B. Johnson
The argument is that the rich and powerful are rich enough and powerful enough to corrupt the system and not have to pay taxes.
IMO the most valid argument is that there are way more people making a middling income than people making a high income, so any reduction in taxes for those people would need a proportionally much larger increase in the upper brackets to maintain the same level of tax revenue, if it’s possible to make the numbers work at all depending on how much of a tax break you want to give. The minimum amount to be taxed is set based on where the tail end of the bell curve is, the number of people who are poor enough not to be taxed is small.
Of course there’s also the fact that the richest people don’t get their money from having a job at all, it’s all in investments, so messing with income tax rates doesn’t even affect them.
I often wonder this myself. Why do rich people, who have so much wealth that it is unimaginable to us, not want to pay any taxes? It hampers the economy, makes it less adaptable to contractions, and makes the lives of the vast majority of the population much more difficult. At a macro level, I really don’t see any benefits to it. So, here’s my best guess.
- Power & control. A poor and uneducated population is much easier to control than a financially stable and educated population. If people are fighting each other for survival and minimal luxuries, then they can’t organize to improve their lives as a whole. Add to that being uneducated, they get their “education” via the media and are easily manipulated via propaganda.
- Strength. Similarly, they want to feel strong by manipulating the system to get what they want. By getting the government to do what they want and finding loopholes to reduce their burden, they feel stronger than others. This gives them a sense of strength that they seek, which ultimately means safety for them.
- Greed. They just want the numbers on their bank statements to be higher. Some people are proud of numbers, so the larger the number, the more proud they are. It doesn’t matter if the number is relative, so the value doesn’t really have any practical impact on their lives. They just want a larger number. I swear, sometimes we should just print fake bank statements wich ridiculous numbers, give them to the wealthy, and congratulate them. That’s what they want: to be envied.
- Lack of care. They literally do not care about others. It’s not even an issue that fits in their heads. Find someone that is politically right-leaning and ask them what they think about the economic situation in a poor and war torn country. Their response would be indictive of how the wealthy think about us.
- Narrow & short sighted. They can’t see the whole picture. They’re focused solely on their own relative position on the hierarchy and can’t consider how their desires will impact the whole system in the long-term. They can’t see that if the lower classes are complacent and uneducated, their products and creativity suffer. Look at Russia where people contribute just enough to get paid and all creativity is to please the elites. This stifles academic and scientific progress while also damaging integrity. People don’t contribute to the economy because they have a personal drive. They contribute to please their superiors. This results in a terrible economy full of corruption and lack of ingenuity. The wealthy can’t see that because they don’t care about it. They just want to feel strong and in control.
It’s very clear to me that everyone substantially richer than me should be paying the taxes, and everyone else and I should pay no taxes.
This attitude works pretty well at all but the very highest income levels.
