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Financial Planning / Tax Strategies
|Subject: Re: FairTax||Date: 9/28/2012 7:13 PM|
|Author: JAFO31||Number: 116714 of 119651|
ferjen: "I think it's unfair that nearly half of Americans pay no income taxes whatsoever. 23% of a lot is a lot more than 23% of a little."
FairTax will not change that much.
According to the Tax Foundation, the AGI cutoff for the bottom 50% is barely above the rebate amount, see Table 7, http://taxfoundation.org/article/summary-latest-federal-indi...
"As you pointed out, if you are poor or lower middle class, it will be neutral to you. But, we the consumers get to decide WHEN to pay the tax as opposed to the federal government demanding it from us. I like that a lot. I also like that money not currently taxed in underground economies, illegal aliens, etc. will get taxed with the Fair Tax. This would be extremely lucrative."
Liek the seller's of drugs and other illegal products will collect sales taxes?
OP (peter, IIRC): <<<And I don't like regressive taxes. I believe they are unfair.>>>
"I don't like progressive taxes. I believe they are unfair."
"This whole "tax the rich" thing is a load of crap. You and I both know if you seize all of the assets of the "rich", it wouldn't make a dent in the deficit or the debt."
First, no no one is seriously arguing for seizing all of the assets of the rich. Second, the assets and incomes of the rich are substantially larger than the assets of the poor.
The top 1% report between 16.12% to 22.83% of AGI per year for the ten years 2000-2009), See Table 5, previously provided, while the bottom 50% reprot between between 12.26% and 14.23% of AGI per year for the same period. IOW, the top 1% always had more AGI than the bottom 50%, and at the wosrt year for the top 1%, they still reported 13.28% more income than the bottom 50%; and in the best year for the top 1% they reported almost twice as much AGI as the bottom 50%, 86.22% more AGI.
"There is an optimal tax rate at which people are willing to pay that maximizes revenue to the Federal government. Above this rate, people will dodge it and below this rate, people are more than willing to pay it but might be willing to pay a little more."
The Laffer curve.
"This is Economics 101."
No, it is further aong the chain that Econ. 101.
Of course, you cannot produce any evidence that we are above the inflection point of the Laffer curve, the evidence from the both the Reagan tax cuts and the Bush tax cuts show that real revenue fell for several years and did not surpass pre-cut revenue for 5 years for Reagan (including 1986 tax inscrease) and never exceeded during the entire GWB administration. I have not looked for 2010 or 2011, so I cannot comment on those years, but from 1980 trhough 2009, the year with the largest real FIT revenues was 2000.
And all of this ignores the GINI C coefficient for Wealth in the USA, which has become more and more concentrated.
"In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers)."
If you look at the graphic, it really is:
Top 1% - 35% of Net Worth
Next 4% - 27% of Net Worth --- IOW, Top 5% owns 62% of Net Worth
Next 5% - 11% of Net Worth --- IOW, Top 10% owns 73% of Net Worth
Next 10% - 12% of Net Worth
Bottom 80% - 15% of Net Worth
" The problem is taxing the "evil rich" as proposed pushes that group of folks into the former condition."
Hardly. Look at Tables 7 & 8 of the Tax Foundation link and do a little math.
Top 1% - AGI at least $343,927, Average FIT tax rate 24.01$, Net after tax, at least $261,350, which is considerably larger than th cut-off for the top 5% - $154,643 AGI.
"I believe the optimal rate is lower, not higher than current rates."
You may well "believe" that to be true, but you have marhsalled no evidence to support, it runs contrary to the evidence from the Reagan and GWB tax cuts, and it runs contrary to most economists thinking and reserach on the subject.
"The government needs to maximize revenue."
Really? That is easy, revenue would be minimized if the tax rate was zero. Are you really a closet anarchist? If not, you statement makes no sense.
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