Raise income tax EXCEPT for the richest of the rich?

Discussion in 'Budget & Taxes' started by wgabrie, Aug 11, 2017.

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  1. wgabrie

    wgabrie Well-Known Member Donor

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    What would happen if we raised income taxes from 38% to 68% for the lower income brackets, anything above the poverty line, and, to take care of the laffer curve we drop income taxes for those who earn 5 million or more to 7%???
     
  2. OldManOnFire

    OldManOnFire Well-Known Member

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    Will depend on what your goal might be? The lower income brackets currently pay little to no actual income taxes so don't see your scheme raising much taxation. And, your laffer curve also applies to lower wage earners as well...the more you try to squeeze the less they will pay. When we consider 60% (?) of Amerians live pay check to pay check there is no possible way to extract more taxation out of them...
     
  3. Iriemon

    Iriemon Well-Known Member Past Donor

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    The richest would get richer at the expense of middle class people.

    Hasn't that happened enough for you already over the past 30 years?

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    What does this have to do with the Laffer curve?
     
  4. wgabrie

    wgabrie Well-Known Member Donor

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    I was under the impression that the rich have their income tucked away in a foreign bank account, and they aren't showing their higher income anyway because they don't want to pay tax.

    Lowering the ultra high income tax bracket should, according to the Laffer curve stop penalizing people for reporting their income, thus leading to higher tax revenue, and reward success for people who want to go to a higher income bracket.


    I suppose we could even raise the poverty line to cover more of people's incomes at the bottom, because people's wages are stagnant and they probably can't pay 50-60% income taxes.

    But we need to get more working class people to pay higher taxes for the goods and services we need funding for. Lowering the taxes of the rich is just what is called running out of other people's money. According to theory we'll get more income out of that anyway.
     
  5. wgabrie

    wgabrie Well-Known Member Donor

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    I'm under the impression that according to the Laffer curve we can't tax the rich.
     
  6. Iriemon

    Iriemon Well-Known Member Past Donor

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    The "Laffer curve" has nothing to do with the rich. It is a theoretical postulate that contends that there is an optimal rate of effective taxation that maximizes the amount of revenue a government takes. The basic theory is that a tax rate of 0% brings in 0 revenue, while a tax rate of 100% will also bring in 0 revenue because people will have no incentive to work. As the rate rises above 0, more revenues are brought into the government. However, as some rate of taxation, the disincentive to work will outweigh the additional revenues from the higher rate of taxation. The rate at which the disincentive outweigh the greater taxation from the higher rate is the peak point of taxation. After that, the total revenues received will decline.

    It's a theory, and while the optimal rate is often portrayed at 50%, it could be anywhere between 0 and 100%. But it doesn't say we can't tax rich, they are theoretically as effective by the Laffer curve as anyone else.
     
  7. Iriemon

    Iriemon Well-Known Member Past Donor

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    Tax avoidance is certainly one reason. Other reasons would include keeping their money away from creditors, diversification, and privacy.

    See above. You have to weigh any increased revenue from the lower "penalty" against the decrease in revenues from a lower tax rate.

    I imagine people trying to get by on minimum wage incomes would be terribly burdened by a 50-60% tax increase.

    See above. That is not necessary true at all.
     
    Last edited: Aug 14, 2017
  8. wgabrie

    wgabrie Well-Known Member Donor

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    I was all for raising taxes to pay for our current government expenditures, but then I learned about the Laffer curve from PragerU and I learned that not only does higher taxes NOT provide revenue, but the peak, the optimal tax rate, is at significantly less than 50%. And there are indicators that the peak is at less than the current tax rate.
     
    Last edited: Aug 14, 2017
  9. CourtJester

    CourtJester Well-Known Member

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    There is no evidence to support the Laffer curve. It is a theory with absolutly no real world support. None.
     

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