The Benefits of the Fair Tax
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15-02-2014, 09:33 AM
RE: The Benefits of the Fair Tax
(15-02-2014 08:03 AM)Cathym112 Wrote:  If I offered you a raise and a promotion, and you turned it down because you would naturally now be required to work more and pay more taxes, I would actually begin to phase you out of a job with my company.

Seriously, you still don't get it???? While YOU, as the employer, focus on the GROSS (what you pay), your EMPLOYEE's only incentive is the NET (what he takes home to feed his family).

Say your employee right now is taking home $50k/year for a 40hr/wk job. You offer him a promotion that will require him to work 60hr/wk, but his take home will only go up to $55k/year. The employee turns it down, figuring an extra $5k/year isn't worth working 50% more and having less time with his family. So you're going to fire him. You are the worst employer because you cannot see it from your employee's perspective.

Say the employee's GROSS pay is $100k, with a 50% income tax rate, explaining why his take home is $50k. BUT, it's a progressive income tax rate of 95% on all income over $100k. So, with this promotion you're offering him, YOU as the employer may be offering to pay twice as much GROSS ($200k), but, because of the income tax your employee's NET TAKE HOME only goes from $50k to $55k. According to you, then, this is a bad employee because he bases his efforts on what he RECEIVES, rather than what you PAY. That's moronic.

Conversely, it's equally moronic when employees can't see it from the employer's view, and the employees don't understand why their jobs get outsourced overseas because of high employer-paid payroll taxes. They, too, need to be able to see it from the employer's view, that all the employer cares about its the GROSS, the total cost, not what the employee takes home. So, if they vote for an employer-paid 100% payroll tax, OF COURSE, to the employer that means he's paying his employee twice as much, even if the net pay remains the same.

(15-02-2014 08:03 AM)Cathym112 Wrote:  As an employer I bend over backwards to make my employees happy.

Here's a tip. Step #1: force yourself to see things from the employee's perspective. The employee's ONLY incentive is the after-tax net take-home pay. The higher the income tax, the less take-home pay, and thus the less incentive. The employee doesn't really care how much you're paying gross.
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15-02-2014, 10:24 AM (This post was last modified: 15-02-2014 10:41 AM by Cathym112.)
RE: The Benefits of the Fair Tax
(15-02-2014 09:33 AM)frankksj Wrote:  
(15-02-2014 08:03 AM)Cathym112 Wrote:  If I offered you a raise and a promotion, and you turned it down because you would naturally now be required to work more and pay more taxes, I would actually begin to phase you out of a job with my company.

Seriously, you still don't get it???? While YOU, as the employer, focus on the GROSS (what you pay), your EMPLOYEE's only incentive is the NET (what he takes home to feed his family).

Say your employee right now is taking home $50k/year for a 40hr/wk job. You offer him a promotion that will require him to work 60hr/wk, but his take home will only go up to $55k/year. The employee turns it down, figuring an extra $5k/year isn't worth working 50% more and having less time with his family. So you're going to fire him. You are the worst employer because you cannot see it from your employee's perspective.

Say the employee's GROSS pay is $100k, with a 50% income tax rate, explaining why his take home is $50k. BUT, it's a progressive income tax rate of 95% on all income over $100k. So, with this promotion you're offering him, YOU as the employer may be offering to pay twice as much GROSS ($200k), but, because of the income tax your employee's NET TAKE HOME only goes from $50k to $55k. According to you, then, this is a bad employee because he bases his efforts on what he RECEIVES, rather than what you PAY. That's moronic.

Conversely, it's equally moronic when employees can't see it from the employer's view, and the employees don't understand why their jobs get outsourced overseas because of high employer-paid payroll taxes. They, too, need to be able to see it from the employer's view, that all the employer cares about its the GROSS, the total cost, not what the employee takes home. So, if they vote for an employer-paid 100% payroll tax, OF COURSE, to the employer that means he's paying his employee twice as much, even if the net pay remains the same.

(15-02-2014 08:03 AM)Cathym112 Wrote:  As an employer I bend over backwards to make my employees happy.

Here's a tip. Step #1: force yourself to see things from the employee's perspective. The employee's ONLY incentive is the after-tax net take-home pay. The higher the income tax, the less take-home pay, and thus the less incentive. The employee doesn't really care how much you're paying gross.

I don't agree with your numbers, as I've told you a million times. 20 more hours a week would not net him a measly 5k a year. Tax brackets don't jump in 20% increments. 34-36, 36 to 38. And so on. So at most you will pay a 3% increase only on the additional earnings. So usually a raise is 20-30% increase to base. At most, you would NET 18% more of your paycheck.

Your numbers are completely illogical and your examples are asinine since they bare so resemblance to real world examples.

When you can talk to me in terms of realistic numbers, then you won't sound so stupid

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15-02-2014, 11:11 AM
RE: The Benefits of the Fair Tax
(15-02-2014 10:24 AM)Cathym112 Wrote:  When you can talk to me in terms of realistic numbers, then you won't sound so stupid

The reason I use such big numbers is because you're too dense to realize that when you're talking about billions of people, even the tiniest increments have an effect. If you raise the tax rate 1%, even that will be the tipping point for some people.

But since you can't seem to get your head around this concept, I use BIG jumps, like from 50% to 95% because then the effects are so unmistakable that even you can see them. Remember, a BIG jump is really just a bunch of LITTLE jumps put together. If the little jumps had no effect, neither would the big jump. Since we know the big jump has an effect nobody can deny, then, someone capable of reason and logic would realize the little jumps must also be having an effect, even if it's small enough to be hard to measure. So will a 1% hike be the tipping point for one of your 65 employees? Maybe, but probably not. However, out of a country of 300m it certainly will be the tipping point for some.
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15-02-2014, 12:52 PM
RE: The Benefits of the Fair Tax
(15-02-2014 11:11 AM)frankksj Wrote:  
(15-02-2014 10:24 AM)Cathym112 Wrote:  When you can talk to me in terms of realistic numbers, then you won't sound so stupid

The reason I use such big numbers is because you're too dense to realize that when you're talking about billions of people, even the tiniest increments have an effect. If you raise the tax rate 1%, even that will be the tipping point for some people.

But since you can't seem to get your head around this concept, I use BIG jumps, like from 50% to 95% because then the effects are so unmistakable that even you can see them. Remember, a BIG jump is really just a bunch of LITTLE jumps put together. If the little jumps had no effect, neither would the big jump. Since we know the big jump has an effect nobody can deny, then, someone capable of reason and logic would realize the little jumps must also be having an effect, even if it's small enough to be hard to measure. So will a 1% hike be the tipping point for one of your 65 employees? Maybe, but probably not. However, out of a country of 300m it certainly will be the tipping point for some.

Sorry. I disagree. 1% increase as a tipping point for very few people. Especially if it means to get an additional net 19% is a no brainer.

Sure when you make anything a big jump it has an impact, but it loses it's illustrative effect when it no longer resembles reality. Who pays 50% tax? Or 95% tax? No one. That's idiotic.

Further,
Your argument that little jumps have the same effect as big jumps is again, idiotic. Are you saying losing an ounce of blood has as much effect as losing more than a pint? No. Even though you lose that blood in increments, the cumulative effect is not as drastic as losing it through an artery.

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15-02-2014, 01:29 PM
RE: The Benefits of the Fair Tax
(15-02-2014 12:52 PM)Cathym112 Wrote:  Your argument that little jumps have the same effect as big jumps is again, idiotic. Are you saying losing an ounce of blood has as much effect as losing more than a pint? No. Even though you lose that blood in increments, the cumulative effect is not as drastic as losing it through an artery.

Let's fix your comparison to blood. With taxes we're not talking about a 1 time tax like your blood example, we're talking about a percent of the total that's taken every single time, and we're debating if raising the % taken has an effect.

So, back to blood. Start by taking 1% of everybody's total blood supply each day. This may kill a few people who were near death anyway. Now up it a notch, and take 2% of everybody's total blood each day. A few more deaths. Keep raising it a notch, 1% at a time. Every single notch will result in a few more deaths until you reach a point where it's so high that nobody can live anymore.

So, YES, you can pick any analogy you want, from blood to taxes, to anything at all that triggers human reaction and you'll find everybody's thresh-hold is different. Perhaps for your most valuable employee the precise tipping point where he'll just quit his job is when the income tax rate hits 47.8%. If he's currently paying 47.7%, you'll argue that 1/10% will have no effect on his behavior. But there certainly IS a tipping point. And it's not an instant change, either. While 47.8% may be the breaking point where he quits working, at every point below that he will be incentived to work less and less.

This is so obvious and so simple, it's shocking that you're labeled a "professional economist" and you just can't grasp it. Even Cjlr conceded the point.
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15-02-2014, 01:33 PM (This post was last modified: 15-02-2014 01:38 PM by Cathym112.)
RE: The Benefits of the Fair Tax
(15-02-2014 01:29 PM)frankksj Wrote:  
(15-02-2014 12:52 PM)Cathym112 Wrote:  Your argument that little jumps have the same effect as big jumps is again, idiotic. Are you saying losing an ounce of blood has as much effect as losing more than a pint? No. Even though you lose that blood in increments, the cumulative effect is not as drastic as losing it through an artery.

Let's fix your comparison to blood. With taxes we're not talking about a 1 time tax like your blood example, we're talking about a percent of the total that's taken every single time, and we're debating if raising the % taken has an effect.

So, back to blood. Start by taking 1% of everybody's total blood supply each day. This may kill a few people who were near death anyway. Now up it a notch, and take 2% of everybody's total blood each day. A few more deaths. Keep raising it a notch, 1% at a time. Every single notch will result in a few more deaths until you reach a point where it's so high that nobody can live anymore.

So, YES, you can pick any analogy you want, from blood to taxes, to anything at all that triggers human reaction and you'll find everybody's thresh-hold is different. Perhaps for your most valuable employee the precise tipping point where he'll just quit his job is when the income tax rate hits 47.8%. If he's currently paying 47.7%, you'll argue that 1/10% will have no effect on his behavior. But there certainly IS a tipping point. And it's not an instant change, either. While 47.8% may be the breaking point where he quits working, at every point below that he will be incentived to work less and less.

This is so obvious and so simple, it's shocking that you're labeled a "professional economist" and you just can't grasp it. Even Cjlr conceded the point.

NO ONE PAYS 47% IN FUCKING TAXES!!!!! Of course there is a tipping point for some things but 1% increase in taxes to receive a net increase to base pay for 18% is not a tipping point for the majority of people. And that's what we are talking about. The majority of people for the majority of taxes (47.8 is unheard of).

And ps - at no point did CJ say I didn't understand economics

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15-02-2014, 02:02 PM
RE: The Benefits of the Fair Tax
(15-02-2014 01:33 PM)Cathym112 Wrote:  NO ONE PAYS 47% IN FUCKING TAXES!!!!!

Of course they do. If you're an unmarried, salaried employee in a high tax area like NYC, by the time you add up all the taxes you pay, it can easily reach 47%. However, the actual number is irrelevant.

You have to look for the upper & lower limits of the 'range of influence'. I'll bet there is no upper limit. Even if the income tax rate was 100%, some people love to work and would do it without any pay. Conversely, we KNOW there is no lower limit. Even with an income tax rate of 0% there are still some people who will not work because the incentive isn't enough. So, everything from 0% to 100% is within the range of influence. There is no upper limit where you can say you reduced the incentive enough so that NOBODY will work, nor is there a lower limit where you can say EVERYBODY will work. Whether we're talking about raising the tax rate from 5% to 6%, or 45% to 46%, within a population of 300m there are bound to be some whose tipping falls within that range.

This isn't rocket science. Ask a mathematician, since that's a pure science not driven by ideology like economics.
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15-02-2014, 02:48 PM
RE: The Benefits of the Fair Tax
(14-02-2014 06:16 PM)frankksj Wrote:  
(14-02-2014 06:11 PM)GirlyMan Wrote:  Once you have enough and the marginal utility of anything more is disinteresting and in the noise, incentives change. They evolve.

True. All I'm asking is a concession that everybody's different. While you and your colleagues may have no desire to earn more than $150k/year, to some people $150k isn't even to refuel the jet. So, will you concede that in a population of 300m there will always be SOME people who change their behavior as their incentives are reduced? I imagine you're not advocating public policy based on the assumption that everybody reacts the same way you do to incentives, right?

Again, ridiculous analogy. If it takes them 150k just to refuel the jet, then their net worth is considerably larger. They probably earn 5 times that in interest payments from their bank accounts. So instead of using block numbers, it's easier in terms of percentages. Earning 20% more is earning 20% more, no matter how much you make.

As girly said, the marginal utility of earning more money is diminished since they already earn more than enough.

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15-02-2014, 02:55 PM
RE: The Benefits of the Fair Tax
(15-02-2014 02:02 PM)frankksj Wrote:  
(15-02-2014 01:33 PM)Cathym112 Wrote:  NO ONE PAYS 47% IN FUCKING TAXES!!!!!

Of course they do. If you're an unmarried, salaried employee in a high tax area like NYC, by the time you add up all the taxes you pay, it can easily reach 47%. However, the actual number is irrelevant.

You have to look for the upper & lower limits of the 'range of influence'. I'll bet there is no upper limit. Even if the income tax rate was 100%, some people love to work and would do it without any pay. Conversely, we KNOW there is no lower limit. Even with an income tax rate of 0% there are still some people who will not work because the incentive isn't enough. So, everything from 0% to 100% is within the range of influence. There is no upper limit where you can say you reduced the incentive enough so that NOBODY will work, nor is there a lower limit where you can say EVERYBODY will work. Whether we're talking about raising the tax rate from 5% to 6%, or 45% to 46%, within a population of 300m there are bound to be some whose tipping falls within that range.

This isn't rocket science. Ask a mathematician, since that's a pure science not driven by ideology like economics.

Nope. http://taxfoundation.org/blog/2013-tax-brackets

Most a single man will every pay in NYC is 43%. Not 47%.

I know. Because as of 3 years ago, I was single living in NYC making the highest tax bracket.

But...again when you make up numbers I prove your point....

Further, mathmaticians do not consider psychology into their formulas. There is no way to make a mathematical formula tht will correctly depict how *everyone* will act

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15-02-2014, 04:04 PM
RE: The Benefits of the Fair Tax
(15-02-2014 02:55 PM)Cathym112 Wrote:  
(15-02-2014 02:02 PM)frankksj Wrote:  Of course they do. If you're an unmarried, salaried employee in a high tax area like NYC, by the time you add up all the taxes you pay, it can easily reach 47%. However, the actual number is irrelevant.

Most a single man will every pay in NYC is 43%. Not 47%.

Jeez, you're seriously bickering over 4%? AND, it's especially absurd because my statement was "by the time you add up all the taxes you pay"... Your claim that the highest tax bracket is 43% is ONLY counting income tax. What about sales tax, the NYC city tax, etc. So, if you accounted for 43% in income tax only, surely by the time you add up all the taxes, it is at least 47%, and once again, my statement was correct, and yours was wrong. Please rescind your claim I made up numbers. My top of the head ballpark for NYC taxes was quite close, and probably understated.

However, nit picking over 4% is irrelevant. Whether the total tax burden is 30% or 60% isn't the point. The point is all humans are different and have their own threshholds. For some, "even" 43% is too much.

Additionally, you're wrong about ever other point too, such as "Earning 20% more is earning 20% more, no matter how much you make." WRONG. That's assuming the tax rate is flat--not progressive. With a progressive tax, once you hit the new tax bracket, earning 20% more gross is NOT 20% more net.

Further proof that you're wrong is that the Sweden is arguably the most liberal country with a strong focus on income equality. Guess what Sweden's progressive income tax rates are? There's only 2 income tax brackets: 20% and 25%. That's it. Essentially, it's flat for everybody, rich and poor. In fact, the rest of the taxes that contribute to Sweden's overall tax burden of 60% or so are actually regressive, like VAT. And, like the rest of the developed world, income from investments is LESS than earned income. So, like in the US, the super rich actually pay LESS in tax than the masses. Why would uniformly liberal country focused on equality do that? Because decades ago they USED to have steep progressive rates like the US, and their economy was terrible as people wouldn't work. They learned their lesson, and realized steeply progressive income tax rates that punish hard work cause less people to work hard.

Look it up on the OECD site. The US has the most progressive tax rates in the world. Further, download from taxpolicy the LTCG rate vs. the tax paid. Every time they raise the tax rate, the amount of tax collected goes DOWN, and vice-versa, proving the tax rates are already high enough that investors simply stop working every time the rates are raised. So, with the government complaining they need more tax revenue, why are so many people arguing for higher CG taxes, given that the proof is indisputable it will result in LESS revenue? It's simply an emotional jealousy of wanting to see the rich suffer, and people are willing to shoot themselves in the foot and sacrifice their own wellbeing to indulge their schadenfreude.
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