How do we fix the economy???

Reagan's tax cuts were the right thing to do. He just took it a little too far. (Fair nuff it would be a hard point to hit first try)
It was those who followed him that took tax cuts for the rich as gospel good economics.

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Annachie wrote:Reagan's tax cuts were the right thing to do. He just took it a little too far. (Fair nuff it would be a hard point to hit first try)
It was those who followed him that took tax cuts for the rich as gospel good economics.

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Taxcuts for the rich have NEVER been an effective economic tool.

Ill say that some of what he did was positive, but overall definitely not the "right thing to do".

They are when the rates are too high, and they were too high at the time.
Rates for the lower brackets were probably too high as well. (Might go look at that)

Part of why I support a flat tax.

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Annachie wrote:They are when the rates are too high, and they were too high at the time.
Rates for the lower brackets were probably too high as well. (Might go look at that)

Too high according to what evaluating criteria?

Part of why I support a flat tax.

Flat taxes are always horrible ideas. The first thing tht happens is you run into the problem that at the bottom of the income scale people have no disposable income. So you're giving them a choice of paying their taxes or eating.... or paying rent... or clothing their children.

So you either start carving out exceptions based on income level and voila! You're right back to a progressive income tax again.... or you say "oh well, starving homeless citizens are just what happens in a 'fair' tax structure" and your rates of homelessness and poverty start to skyrocket.

gcomeau wrote:

Annachie wrote:They are when the rates are too high, and they were too high at the time.
Rates for the lower brackets were probably too high as well. (Might go look at that)

Too high according to what evaluating criteria?

Part of why I support a flat tax.

Flat taxes are always horrible ideas. The first thing tht happens is you run into the problem that at the bottom of the income scale people have no disposable income. So you're giving them a choice of paying their taxes or eating.... or paying rent... or clothing their children.

So you either start carving out exceptions based on income level and voila! You're right back to a progressive income tax again.... or you say "oh well, starving homeless citizens are just what happens in a 'fair' tax structure" and your rates of homelessness and poverty start to skyrocket.

Most of the serious flat tax proposals that I have seen have a floor (exact $ of floor varies). ONLY THE AMOUNT ABOVE THE FLOOR IS TAXED.

So say if the floor was $40,000 for a family of 4.

- Make $35,000 Tax = $0
- Make $45,000 Pay tax on $5000
- Make $100,000 Pay tax on $60,000
- Make $1,000,000 Pay tax on $960,000

Tax rates on such schemes generally range from 15-25%. No (or only minimal) exemptions/deductions.


The floor keeps the poor from being socked. The not quite poor only have to pay on the small % of their income which is above the floor, so they have to pay a little but don't get hammered. The rich don't get to pay games with deductions/exemptions.

biochem wrote:

gcomeau wrote:
Flat taxes are always horrible ideas. The first thing tht happens is you run into the problem that at the bottom of the income scale people have no disposable income. So you're giving them a choice of paying their taxes or eating.... or paying rent... or clothing their children.

So you either start carving out exceptions based on income level and voila! You're right back to a progressive income tax again.... or you say "oh well, starving homeless citizens are just what happens in a 'fair' tax structure" and your rates of homelessness and poverty start to skyrocket.

Most of the serious flat tax proposals that I have seen have a floor (exact $ of floor varies).

ONLY THE AMOUNT ABOVE THE FLOOR IS TAXED.

THEN THEY'RE NOT FLAT.

They're just a variety of progressive (A pretty bad one). If income at level A is taxed at one rate (even if that rate is 0%) and income at higher level B is taxed at another that is a progressive income tax structure, not a flat income tax structure.

So say if the floor was $40,000 for a family of 4.

- Make $35,000 Tax = $0
- Make $45,000 Pay tax on $5000
- Make $100,000 Pay tax on $60,000
- Make $1,000,000 Pay tax on $960,000

Tax rates on such schemes generally range from 15-25%. No (or only minimal) exemptions/deductions.


The floor keeps the poor from being socked.

And then all you're doing is screwing the slightly less poor and the middle class...

Look, any proposal for a move from a more progressive marginal income tax structure in the direction of a flat structure is only saying one thing:

"The richest people don't have enough money, they need to keep more of it".

Hello accelerated income and wealth inequality.

As for deductions and exemptions, if that's what you want to get rid of then advocate for getting rid of them. Whether they exist or not has nothing to do with the underlying income tax structure. If you think just imposing a flat tax would stop people from legislating exemptions and deductions to said tax to incentivize whatever they want to incentivize you're dreaming. Those two things are completely independent of each other.

Annachie wrote:
Part of why I support a flat tax.

Flat tax is one of those things that sounds GREAT. Until you take a look at what tends to happen when it´s actually used.

End result is usually that the rich quickly becomes MUCH richer and starts hoarding their money, while the not rich ends up having to either pay more in taxes than they can handle, or a big chunk of them have to pay a lot for things that the public sector can no longer afford.

After that, the rich idiots hoarding tends to cause economic decline.

There is no "trickledown effect", that´s just complete bullshit ripoff.

They are when the rates are too high, and they were too high at the time.
Rates for the lower brackets were probably too high as well. (Might go look at that)

No, compare tax rates here and USA and then compare development of those compared to development in general.
Reducing taxrates for the rich did not get a good result either in USA where the rates were much lower, or here where if you fiddled around with weird cases you could in theory reach a marginal taxrate ABOVE 100%.
Not in reality and it was mostly just a "oh look how dreadful!" thing used by the rightwing and some others, but if you really worked hard at it, you could achieve it.

I don´t have the numbers right now but public part of GDP was at most something over 70% here, IIRC USA has never been above 50%, but in both cases, everytime there´s been big reductions in tax progressiveness, it has ended up NOT achieving what was promised, and causing trouble and being overall ineffective, especially compared to projections made.

A weakness of democracy is the way big business can influence government, by political donations or funding advertising campaigns.
This leads to corporations like goggle and orange paying virtually no tax anywhere. Billionaires like Warren Buffet pay less tax than their PA (his words), and shell companies deliberately fold without meeting their obligations on workers entitlements, the environment, and taxes.

When I'm world dictator I intend to make the profession of tax avoidance and shifty business practices a capital offence.
While that is obviously a (weak) joke, such practices cause the premature death of millions from lack of services and infrastructure, with the resources being locked up in unproductive status symbols.

You do realize that there were 17 tax brackets for income tax in the US when Reagan was elected, topping out at 70%, just for singles alone. (I just went and checked)

Anything that simplifies that mess was good, and 70%really is too high.

As for flat tax, technically, a tax free threshold is a deduction not a tax bracket (surprised me) so it's still a flat tax.

I'd have the tax free threshold at over the minimum wage, actually over the poverty line as well which should be less than the minimum wage but might not be.

Get rid of company tax (the big boys don't pay it anyway) and a bunch of other taxes.


The problem it would create is removing some of the economic controls currently available to the government, and a lot of unemployed taxation specialists

I'd love to be able to get it modeled and see where the numbers end up.




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Annachie wrote:You do realize that there were 17 tax brackets for income tax in the US when Reagan was elected, topping out at 70%, just for singles alone. (I just went and checked)

Anything that simplifies that mess was good, and 70%really is too high.

1. Who gives a crap how many brackets there were? 3, 7, 35... None of that would qualify as a complicated "mess". A progression of brackets is a simple and orderly thing. The number of brackets adds no significant complexity or room for confusion in the tax code.

"Pay X% tax on all income between Y and Z dollars" isn't freaking complicated or a "mess" regardless of how you carve up the brackets.

2. I ask you *again". 70% top marginal rate is too high according to *what* evaluating criteria? Because 70% just feels big to you?

As for flat tax, technically, a tax free threshold is a deduction not a tax bracket (surprised me) so it's still a flat tax.

It should surprise you... in the same way as if someone told you that the lakes in Canada were all filled with maple syrup should surprise you. Because that's nonsense. It's a bracket. "All income between X and Y dollars gets taxed at this rate" is a bracket.Nothing about that is a "deduction".

I'd have the tax free threshold at over the minimum wage, actually over the poverty line as well which should be less than the minimum wage but might not be.

Get rid of company tax (the big boys don't pay it anyway) and a bunch of other taxes.

Do you have any idea how much revenue you're talking about dissapearing?

Corporate taxes alone are something like 20% of total US government revenue. Obama may have cut a Trillion dollars off the annual deficit but there's over 400 billion to go and between corporate taxes vanishing and income taxes being gutted byvyour flat tax proposal you're talking about probably 600 to 700 billion a year dissapearing from the revenue stream.

You know the single good thing I credit Reagan with?

When he slashed taxes and the deficit exploded he *recognized his screwup* and tried to start raising taxes again. He did it all weasely to avoid admitting he was doing it but he did it. Not enough to make up the loss but he at least moved in the right direction. If he had been more up front about it maybe I could credit him with two things and tax cuts wouldn't have become an article of religious dogma with the GOP that came after him.