America: A Failing Marriage - Page 27 - Talk About Marriage
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post #391 of 525 (permalink) Old 03-12-2017, 09:46 PM
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Re: America: A Failing Marriage

Use fees don't take into account positive externalities. Building a new road makes traveling easier for some people and they will pay to use it. It also makes new areas available for construction of housing or industry, but the people who will benefit from those are not yet users of the road and so won't be paying. In principal the organization that built the road might hope for future profits from more use, but those can be very long term and uncertain. You can also have a situation where each individual road does not have enough value, but the network does. That the company building a single road won't see a profit unless other companies build their part of the network.

There also seems to be a tendency in the free market to concentrate wealth. Progressive taxes counter that, user fees enhance it because of the relative amounts paid by wealthy and poor. Whether or not you think there is anything immoral about having a small number of very wealthy people and a large number of very poor, it many cases it is very dangerous from the wealthy when the poor revolt.

I'm quite happy to redistribute some of my wealth to poorer people so that they don't rise up and take all of it.







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My answer to your question John is that income tax is not the best way to finance roads that can be tied to usage. (roads are complicated because the federal, state, local government, and some cases private industry are involved) A better method is a user tax (fuel tax) which is the primary method. My problem with that is a tandem dump truck loaded with sand does a lot more road damage than a mini cooper and the tax on 10-12 times the fuel usage doesn't off set the wear and tear on the highway. So folks driving cars and pick-ups, even my 7,000 pound Duramax, subsidizes the trucking industry. (I know there are other taxes involved. I use to practice and teach tax law)


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post #392 of 525 (permalink) Old 03-12-2017, 10:46 PM
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Re: America: A Failing Marriage

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Whether or not you think there is anything immoral about having a small number of very wealthy people and a large number of very poor, it many cases it is very dangerous from the wealthy when the poor revolt.

I'm quite happy to redistribute some of my wealth to poorer people so that they don't rise up and take all of it.
Which, in essence, is what pragmatism is all about.

There's no free lunch anywhere. Texas has no state income tax, yet the place my daughter is visiting later this week in San Antonio has pretty steep property taxes. Like, nearly 3 times what I'm paying here for a similar McMansion. And their sales tax is ugly as well.

There ain't no such thing as a free lunch...
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post #393 of 525 (permalink) Old 03-14-2017, 01:31 AM
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Re: America: A Failing Marriage

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There also seems to be a tendency in the free market to concentrate wealth. Progressive taxes counter that, user fees enhance it because of the relative amounts paid by wealthy and poor.
Really? Progressive income taxes are a serious barrier to becoming wealthy. Progressive taxes protect the existing class of wealthy.

Joe Bigshot has a fortune of $100 million. Maybe he started the latest dotcom darling, maybe his grandfather was an oil baron. Whatever. He actually has very little income, but he is very wealthy. His wealth is invested in ways which provide him with a great lifestyle. He has a yacht, some nice cars, a few beautiful homes. All owned by the family trust or the family corporation naturally. Joe gets some relatively small pay for running the businesses, around $200k, which is taxed.

Billy Burgerman is a whiz bang business builder. He is hired by restaurants to come in and make them profitable. He is paid about $500k per year. Not bad.

Sam Skid is a professional truck driver, earning about $50k. Sam works hard.

Under a highly progressive tax system, Sam pays virtually no income tax. Billy pays a butt load of taxes, upwards of $350k per year. Because, you know, Billy is a high earner and that must be bad or something.

What are the chances of Sam or Billy ever being rich? Zero. Sam just doesn't have the earning power. He may be comfortable if he lives within his means. Billy will live nicely but not extravagantly. He can never amass vast wealth and be truly rich. He can be upper middle class.

But Joe is wealthy and stays that way. Regardless of income he still has more money in the bank than he ever needs even with a lavish lifestyle.

If you want to create a more equal outcome you would have to tax accumulated wealth not income. A low rate flat tax, or similar, gives the best chance for gaining wealth. The small business owner, inventor, creator, or highly paid skilled professional can keep their earnings to become wealthy.
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post #394 of 525 (permalink) Old 03-14-2017, 09:42 AM
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Re: America: A Failing Marriage

Both your examples are looking at the wealthy (1% is about $450K/year).

Fred has 2 kids, and works as a salesman making about $20K/year (bottom 20th percentile). Carl is a software engineer and makes about $150K/year (top 10th percentile). Progressive taxes mean that some of Carl's money goes to Fred, which gives Fred's kids a better chance at being able to get into and afford college.

Tax breaks help Carl, not Fred. $20/day road tolls are a little annoying to Carl, but out of Fred's reach (and Carl probably lives closer to his work than does Fred).

It might be nice if Fred did home schooling and got a better job, but Fred is not really smart or really motivated, in fact he is below median. The problem is that half the population is below median- and no policies are going to change that.

The great majority of people will never be rich - because we define wealth relative to others. I want Fred to be able to raise a family and for his kids to have a realistic chance to do better. I want Sam in your example to have a comfortable life. Your Billy will do a lot better than either Fred or Sam, despite the taxes, at $500K/year he can live a very nice life. [that's more than my family income and we own an airplane and travel all over the world].

Your Joe is welcome to his wealth. I hope taxes encourage him to invest his money wisely, but he will be wealthy under almost any tax scenario, but if he doesn't use his money carefully he will stay wealthy, but never join the ultra-rich.


I want a tax plan that benefits the majority of people and which provides incentive for everyone to work.



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Really? Progressive income taxes are a serious barrier to becoming wealthy. Progressive taxes protect the existing class of wealthy.

Joe Bigshot has a fortune of $100 million. Maybe he started the latest dotcom darling, maybe his grandfather was an oil baron. Whatever. He actually has very little income, but he is very wealthy. His wealth is invested in ways which provide him with a great lifestyle. He has a yacht, some nice cars, a few beautiful homes. All owned by the family trust or the family corporation naturally. Joe gets some relatively small pay for running the businesses, around $200k, which is taxed.

Billy Burgerman is a whiz bang business builder. He is hired by restaurants to come in and make them profitable. He is paid about $500k per year. Not bad.

Sam Skid is a professional truck driver, earning about $50k. Sam works hard.

Under a highly progressive tax system, Sam pays virtually no income tax. Billy pays a butt load of taxes, upwards of $350k per year. Because, you know, Billy is a high earner and that must be bad or something.

What are the chances of Sam or Billy ever being rich? Zero. Sam just doesn't have the earning power. He may be comfortable if he lives within his means. Billy will live nicely but not extravagantly. He can never amass vast wealth and be truly rich. He can be upper middle class.

But Joe is wealthy and stays that way. Regardless of income he still has more money in the bank than he ever needs even with a lavish lifestyle.

If you want to create a more equal outcome you would have to tax accumulated wealth not income. A low rate flat tax, or similar, gives the best chance for gaining wealth. The small business owner, inventor, creator, or highly paid skilled professional can keep their earnings to become wealthy.
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post #395 of 525 (permalink) Old 03-14-2017, 11:11 AM
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Re: America: A Failing Marriage

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Both your examples are looking at the wealthy (1% is about $450K/year).

Fred has 2 kids, and works as a salesman making about $20K/year (bottom 20th percentile). Carl is a software engineer and makes about $150K/year (top 10th percentile). Progressive taxes mean that some of Carl's money goes to Fred, which gives Fred's kids a better chance at being able to get into and afford college..
Ok right there you are 100% wrong. Unless of course Carl's kids can check some boxes on applications for colleges and finaid other than white male.

Fred's kids will get all kinds of grants, gifts, scholarships, and preferred selection simply due to their financially disadvantaged situation. Even their academic achievements won't matter much at all. Even better if they are non-white or are female.
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post #396 of 525 (permalink) Old 03-14-2017, 11:13 AM
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Re: America: A Failing Marriage

I'm liking the example scenarios you guys are giving. helps "Joe Everyman" like me to understand the perspectives that you guys are coming from. Very interesting.

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post #397 of 525 (permalink) Old 03-14-2017, 11:23 AM
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Re: America: A Failing Marriage

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It might be nice if Fred did home schooling and got a better job, but Fred is not really smart or really motivated, in fact he is below median. The problem is that half the population is below median- and no policies are going to change that.

The great majority of people will never be rich - because we define wealth relative to others. I want Fred to be able to raise a family and for his kids to have a realistic chance to do better. I want Sam in your example to have a comfortable life. Your Billy will do a lot better than either Fred or Sam, despite the taxes, at $500K/year he can live a very nice life. [that's more than my family income and we own an airplane and travel all over the world].

Your Joe is welcome to his wealth. I hope taxes encourage him to invest his money wisely, but he will be wealthy under almost any tax scenario, but if he doesn't use his money carefully he will stay wealthy, but never join the ultra-rich.


I want a tax plan that benefits the majority of people and which provides incentive for everyone to work.
The best tax plan then is zero income tax. Any tax on income reduces quality of life. Heavily taxing the software engineer so that some other guy pays little to no taxes does nothing more than reduce the quality of life for the software engineer without advancing the prospects of the lower income guy.

Now if we're talking about a top tax rate of 10% vs a bottom rate of zero, yeah the software guy still has incentive to work harder and his standard of living isn't deeply damaged. But if we're talking 50%+ tax rates, then there is a definite disincentive to work harder. That not only reduces the standard of living of the worker, but it reduces overall productivity and societal quality of life.

But I think you value equal outcomes far more than you value individual rights to one's own labors.
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post #398 of 525 (permalink) Old 03-14-2017, 11:26 AM
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Re: America: A Failing Marriage

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Ok right there you are 100% wrong. Unless of course Carl's kids can check some boxes on applications for colleges and finaid other than white male.



Fred's kids will get all kinds of grants, gifts, scholarships, and preferred selection simply due to their financially disadvantaged situation. Even their academic achievements won't matter much at all. Even better if they are non-white or are female.

There are four primary source of financial aid:

Federal Government (58% of federal aid is in the form of loans for students and parents).
State Government
College and Universities
Private organizations/foundations

Given that the current administration feels the need cut 4% (education) of discretionary spending to increase military spending (currently 49% of discretionary spending) those checkboxes will likely not be available to anyone.

If we want to build our economy (even in manufacturing, which has become more high tech) we need a more educated workforce. This does not suggest everyone needs to go to university, but making it harder does not make for a better economy.


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post #399 of 525 (permalink) Old 03-14-2017, 11:46 AM
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Re: America: A Failing Marriage

Fred's kids will get advantages that give them a hope of going to college despite their poverty. Carl can afford to send his kids to college - barely.

Things may have changed greatly, but I grew up white and poor and was able to go to a good school because my academics were good enough, and I was willing to take on a lot of debt - which I paid off when I got out.

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Ok right there you are 100% wrong. Unless of course Carl's kids can check some boxes on applications for colleges and finaid other than white male.

Fred's kids will get all kinds of grants, gifts, scholarships, and preferred selection simply due to their financially disadvantaged situation. Even their academic achievements won't matter much at all. Even better if they are non-white or are female.
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post #400 of 525 (permalink) Old 03-14-2017, 11:49 AM
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Re: America: A Failing Marriage

All taxes do is support the government and what has the government ever done for us


Almost all my money is from simple income, and I'm taxed at roughly the maximum rate. Somehow I'm still motivated to work hard, and somehow I have plenty of money to enjoy life.


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The best tax plan then is zero income tax. Any tax on income reduces quality of life. Heavily taxing the software engineer so that some other guy pays little to no taxes does nothing more than reduce the quality of life for the software engineer without advancing the prospects of the lower income guy.

Now if we're talking about a top tax rate of 10% vs a bottom rate of zero, yeah the software guy still has incentive to work harder and his standard of living isn't deeply damaged. But if we're talking 50%+ tax rates, then there is a definite disincentive to work harder. That not only reduces the standard of living of the worker, but it reduces overall productivity and societal quality of life.

But I think you value equal outcomes far more than you value individual rights to one's own labors.


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post #401 of 525 (permalink) Old 03-14-2017, 12:59 PM
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Re: America: A Failing Marriage

The conservative's wet dream is a sales tax to replace the income tax... Only because it's so regresive. Guess what, not one country has done that, and those who rely on sales tax are facing massive tax evasion. Been there...
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post #402 of 525 (permalink) Old 03-14-2017, 01:31 PM
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Re: America: A Failing Marriage

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Again, in a utopian world this would be the case. Unfortunately greed is the human condition and any such society would quickly devolve into a might makes right environment leading directly to an oligarchy. I appreciate the anarcho-capitalistic opinion but it relies to heavily on ideals that simply don't exist in the real world. The fact is, as long as there are weak and/powerful humans will always create states to either enforce or protect them from others.
I don't see how giving some people the power to rob and kill others protect those others from being robbed and killed.

In fact, it doesn't.

Who is the utopian here?

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post #403 of 525 (permalink) Old 03-14-2017, 01:47 PM
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Re: America: A Failing Marriage

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Fred's kids will get advantages that give them a hope of going to college despite their poverty. Carl can afford to send his kids to college - barely.

Things may have changed greatly, but I grew up white and poor and was able to go to a good school because my academics were good enough, and I was willing to take on a lot of debt - which I paid off when I got out.
there are very few academic scholarships. Trust me, I know. $50K doesn't get you much other than reduced loans. At the price of college today, it is tought on lower and middle middle class to afford college than ever, probably.
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post #404 of 525 (permalink) Old 03-14-2017, 01:53 PM
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Re: America: A Failing Marriage

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there are very few academic scholarships. Trust me, I know. $50K doesn't get you much other than reduced loans. At the price of college today, it is tought on lower and middle middle class to afford college than ever, probably.


How does eliminating or drastically reducing the DOE budget (4% of discretionary spending and proposed by 115th congress) help to reduce this individual burden?


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post #405 of 525 (permalink) Old 03-14-2017, 01:55 PM
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Re: America: A Failing Marriage

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I don't see how giving some people the power to rob and kill others protect those others from being robbed and killed.

In fact, it doesn't.

Who is the utopian here?
You still. Because typically in a civilized society the power to rob and kill come with certain responsibilities and protections for those who do not have those powers (for instance in the US Constitution) where as in your Utopian world, that power would just be assumed by some with no regard for the rights of others or with any responsibility towards others.

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