And "substantially"? His taxes are only going up by ~3%
Which is, like, $15,000 a year. That's substantial -- in fact it's more than most people pay in taxes at all!
We should start from the fundamental question: why should this guy pay more than Joe Schmo at all? Why shouldn't the tax bill be spread equally over everybody, so it's (say) ten thousand dollars per head? That would be what I call "fair".
It's also not possible because some people just aren't getting off their butts and earning $10K per head, but that should be considered a deviation from fairness. We should look down upon those with below-average incomes as jerks who aren't working hard enough to pay their share.
No, it isn't. That not how taxes work. His marginal rate for the highest bracket will go up, for his first 250k his taxes will be exactly the same. It's hard to take an argument seriously from someone about taxes being too high if they don't even know how they're computed.
> We should look down upon those with below-average incomes as jerks who aren't working hard enough to pay their share.
If everyone is taxed at 15k a head, then the minimum that anyone can work for jumps to 30k a year, or 20k part time. That means hyper-inflation or mass unemployment. That means that college would incur an additional 60,000 in opportunity cost, costing this country a skilled labor base.
You still need people to man the circle Ks. If you suddenly have to mechanize all of these positions (because the price of labor has doubled or tripled), you end up with even higher unemployment. And I promise you, when you have 30% unemployment and people coming for your head, you will see armed revolt.
It's simple. You do not press on poor people because they are the foot soldiers in a revolution, and your soldiers are their brothers.
"We should start from the fundamental question: why should this guy pay more than Joe Schmo at all? Why shouldn't the tax bill be spread equally over everybody, so it's (say) ten thousand dollars per head? That would be what I call "fair"."
Let us leave aside "fair" or "unfair" for a moment.
The problem with a poll tax is that you can only raise the amount of money you can charge the poorest people you are taxing multiplied by the number of people you are taxing.
A tax scheme that operates on a percentage of income (or even increases that percentage as income increases) allows the government to maximize its income in the same way that having higher margin 'premium' products and lower margin "economy" products so rich people can pay more and poor people can pay less allows a business to maximize it's income.
maybe so. But even without the relationship you describe between what you pay and what you get, a progressive tax system still maximizes the government's income vs a poll tax.
I'm just pointing out that even before you get to talking about what's fair or what's right, you simply could not support a government as expensive as ours on a poll tax. - so there is a reason why we have a progressive tax rate that has nothing to do with perceived fairness.
"We should look down upon those with below-average incomes as jerks who aren't working hard enough to pay their share."
In a distribution as heavily skewed as US income, "below-average" would probably be around 80% - 90% of the population. Perhaps you meant 'median' or something else other than 'average'.
You do realize that 48% of all Americans pay $0 dollars in Federal Income tax. The top 10% pay 40% of the pie. I'm for the tax cuts expiring but I do also agree with the whole "equality" argument. I'm of the generation where I'll probably never see any Social Security but I do know that I'm paying for it.
First, the primary driver of this "inequality" is the widening gap between the rich and the poor in the US. The top 10% of earners in the US take home nearly 50% of the country's total income. Under a "flat tax" system (i.e. everyone pays 20%), they would still pay nearly 50% of the country's total income tax. Under our system they actually pay 70% of all taxes. Do you think it's "unequal" for people who take home more income to pay proportionally more income taxes?
Second, even people paying zero income tax pay ~15% of taxes on income for social security + medicare, as well as a disproportionate share of their income on regressive taxes, like sales tax and gas tax.
Nope, I don't think it's unfair that the people who earn more pay more. In fact, I'm for it. However, what I'm against is even a small group not paying for it. This "small" group right now is nearly half of the population.
The argument for regressive taxes is also poor. Come to New Hampshire where there is no sales tax or W-2 income tax. The air is clean, the mountains well hiked and the people friendly. Take a look at the state's finances too. The regressive taxes there are on inheritance, dividends, investment income and a few things else I can't remember. That hits the rich far more than the poor.
This is the key point (or should be) in this discussion. The foolish spending that Delong accuses Henderson of supporting would never have been approved if the average taxpayer had to pay even $10 out of pocket for it.
The general public can only be convinced to vote for grandiose schemes when there is zero perceived cost. Since most US citizens pay nearly nothing in taxes, it's easy to get them to vote for such schemes. The tax system is designed to facilitate consent for such schemes, or at least to minimize the natural skepticism that any reasonable person would have about the ROI of most government endeavors.
Of course, you can't have negative ROI if your investment was $0, so why not cheer on the blow dried politicians and hope it works, after all someone else is paying for it.
They're going up 3% on the amount over $250,000. It's $7500. If you didn't give him access to accounting software, he would be unable to detect the presence or absence of that money.
* That would be what I call "fair".*
When I made $50,000/yr, the primary value I got from the government was some physical safety, some education, and roads so I could go to work and buy things.
When I made $500,000/yr, the primary value I got from the government was protection of my assets, access to an educated labor pool, and roads so I could transport my goods, so my workers and customers could get to them.
The value received from government doesn't correlate perfectly to income, but it does correlate strongly, and as such is a reasonable approximation of a fair price.
We should look down upon those with below-average incomes as jerks who aren't working hard enough to pay their share.
This is possibly the most disgusting thing I've ever seen. It's wrongheaded in so many ways that I hope you're a troll.
If you are not a troll you are a sociopath, and to be frank... your comments are so nonsensical that I doubt you'll ever have the "problem" of paying taxes that you fear.
One point I'd make to up and coming entrepreneurs: taxes aren't going to be the burden you fear. When you're growing your company you'll pay relatively little personal or corporate income tax.
Personal income tax will be relatively low because most entrepreneurs would rather reinvest in their business than buy a $20,000 watch.
Corporate will be relatively low because you won't be sitting on the cash, you'll be hiring people, spending on infrastructure or advertising and otherwise growing the business. This means your annual profits will be tiny.
The vast majority of the value you accrue will be in the business itself, and you won't have to pay on those gains until you liquidate.
Frankly, I think these discussions are bad for HN not because it's a bad idea to discuss politics or economics, but because nearly everybody on this site would get more value from an article about marketing, productivity, coding, testing, launching products, or any other topic that can actually help an entrepreneur build their business, today.
>One point I'd make to up and coming entrepreneurs: taxes aren't going to be the burden you fear. When you're growing your company you'll pay relatively little personal or corporate income tax.
That's an extremely important point.
I tell people: If you want to help startups, the tax rate does not matter hardly at all. While you are still a 'starup' you will pay very little in taxes, just 'cause you will make very little money that is not re-invested. The tax complexity makes a huge difference, though. Now, I'm sane so I pay an expert to deal with that sort of thing, but a complex tax code is worse than the costs of paying another expert.
A complex tax code, first, massively increases my risk. I know two people who will likely be in debit for the rest of their lives because they tried to do their taxes themselves while running a business. Now, I've got a professional, but there is always a chance they will screw it up. I'm on the hook for the money, no matter what. I can get out of my building lease and loans through bankruptcy, but tax debit is forever.
Next, a complex tax code makes it harder for me to plan out how to allocate my resources. With a complex tax code, it's often more profitable to play accounting games than to actually build something people want more efficiently than the competition, and I think that impoverishes us all.
(Total nitpick that I wasn't initially going to post, but it's now appeared in several of your posts and it's driving me crazy: you're using "debit" where I think you mean "debt". A debit is an accounting entry indicating something has been deducted from an account; it's basically part of an income statement, reflecting a one-time payment. A debt is money that's owed to someone else; it's part of a balance sheet, and is permanent until paid back.
Confusion is somewhat understandable when you consider that the opposite for both is "credit". When used with an article ("a credit"), it's the opposite of debit, a one-time addition to an account. When used without an article ("banks extend credit to borrowers"), it's the opposite of debt, a sum that is owed to you by other parties. English is a funny language.)
you are correct, of course, it's a mistake I make often. It's funny, I think mistakes that are not made obvious by the spell check actually make you look dumber than mistakes that would have been caught by the spell check.
It's obnoxiously difficult to identify all of the taxes (especially state and local) that are relevant to your business, let alone to actually file and pay them (both of which can be harder than you'd think.)
Until there's an easy way to verify you're compliant, I don't think there's any viable option except to hire an accounting firm to ensure compliance. If you use standard accounting software (like quickbooks) and just want them to deal with filing and paying the taxes, the bill will be small.
>If you use standard accounting software (like quickbooks) and just want them to deal with filing and paying the taxes, the bill will be small.
I make more use of the accountant than that.. It's almost like having an experienced business person on 'pay by the hour' basis. A typical contract accountant has worked with more businesses than your typical businessperson. I mean, the accountant is not much help on marketing, product development, etc... but as for the mechanics of running the office, payroll, insurance, keeping the government officials besides the taxman at bay, etc... an accountant can be really, really useful, especially when you just want to know "how do other businesses solve this problem?"
I use more than that as well, and you're right. My life got simpler when I switched to a regional accounting firm that specialized in smaller businesses.
I was simply trying to note that tax compliance is cheap enough that there's really no reason not to do it.
Which is, like, $15,000 a year. That's substantial -- in fact it's more than most people pay in taxes at all!
We should start from the fundamental question: why should this guy pay more than Joe Schmo at all? Why shouldn't the tax bill be spread equally over everybody, so it's (say) ten thousand dollars per head? That would be what I call "fair".
It's also not possible because some people just aren't getting off their butts and earning $10K per head, but that should be considered a deviation from fairness. We should look down upon those with below-average incomes as jerks who aren't working hard enough to pay their share.