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Good. Given a fair tax system would be proportional / flat, perhaps a little imbalance in the other direction evens it all out towards flat / proportional tax (

Good. Given a fair tax system would be proportional / flat, perhaps a little imbalance in the other direction evens it all out towards flat / proportional tax (everyone at the same percentage)

jorblumesea 8y ago
So, the people with the most money pay the same tax as those with a low income? That...doesn't sound fair at all. It's equality but not equity.
- throwawaysea 8y ago
  The parent comment talked about a flat percentage tax. So the people with more money would not be paying the "same tax". They would still be paying a lot more. A truly fair tax would have everyone paying the same flat fee for the same public services rendered.
  - arcticbull 8y ago
    It isn’t, though, because of the marginal utility of money. Someone making $10k/yr sees much more value from an extra $10k than someone making $10M. For one it’s a lifeline and for one a rounding error. While a flat tax is fair in numbers it’s not fair in marginal value or utility. IMO that’s a much bigger deal. There are other macroeconomic advantages to giving the little guy the extra, though I don’t want to repeat myself so I’ll keep that in my sister reply. FWIW we’ve already got regressive taxes in the form of payroll tax, which kick in from $0 and cap out once you earn enough. So unless you’re unemployed, you’ve paid taxes even if your marginal income tax rate is 0%.
    - throwawaysea 8y ago
      I feel you are reinventing definitions. The “same tax” would be very literally giving up the same value. The only common definition of value in society is currency - that is literally its role, to serve as a common measure (and storage) of utility. It does not confer net utility in and of itself (goods and services do), and therefore this argument of marginality doesn’t apply to it. I understand that goods and services acquired with currency can experience diminishing returns. But unless you think the rich and poor should be paying different amounts for every good and service (for example a cup of coffee), then I don’t think this is a consistent, principled argument. And once again, let me point out that GP’s comment on a flat tax would STILL mean the rich give up more value than the poor, and it would still not be a truly ‘fair’ tax. And on a side note, ‘progressive’/‘regressive’ are made up terms used to play rhetorical games by leveraging the negative connotation of the term ‘regressive’. A better set of neutral terms would be ‘uniform’ or ‘fair’ or ‘flat’ versus ‘non-uniform’ or ‘unfair’ or ‘graduated’.
      - int_19h 8y ago
        "Regressive" is not a synonym for "flat" - a flat tax is neither progressive nor regressive. And these terms are purely descriptive, defined via their effect on the effective tax rates.
        deleted 8y ago
        [deleted]
      - arcticbull 8y ago
        The rich already pay different amounts than the poor for goods and services in pre-tax dollars. That's kind of the idea, IMO. If my average tax rate is 28% and a poor person pays an average 5% then the same $5 SF coffee costs me $6.94 and them $5.26. The dictionary definition is quite clear: A progressive tax is a tax in which the average tax rate (taxes paid ÷ personal income) increases as the taxable amount increases. [Google] A regressive tax is a tax applied uniformly, taking a larger percentage of income from low-income earners than from high-income earners. It is in opposition to a progressive tax, which takes a larger percentage from high-income earners. [Also Google] As such, Medicare taxes are regressive because they are capped at some amount of earned income, whereas the ordinary income tax rate is progressive because your marginal rate increases as you earn more money. You are correct that a flat tax is neither progressive nor regressive with respect to dollars, but it is regressive with respect to marginal utility of those dollars to the earner. "Fair" is a value judgement and colors the conversation.
        throwawaysea 8y ago
        And labels of ‘progressive’ and ‘regressive’ aren’t value judgments? IMO they are subjective judgments much more so than calling a true flat tax “fair”. Equal value contribution is fair, after all. The dictionary definitions you are quoting are in existence simply due to common use in modern times, but I am claiming they are nevertheless bad definitions that were engineered to color the discourse on this topic.
        kenneth 8y ago
arcticbull 8y ago
Right so those least able to pay, the ones who spend all they get — which is what keeps the economy moving btw, pay the same amount as people who are most able to pay and least likely to spend, slowing down the economy. How can I lose?!
AntiTechTechie 8y ago
Good point...I'd like to see a flat income tax of 0% and then have taxes based on consumption

Good. Given a fair tax system would be proportional / flat, perhaps a little imbalance in the other direction evens it all out towards flat / proportional tax (everyone at the same percentage)

jorblumesea 8y ago

So, the people with the most money pay the same tax as those with a low income? That...doesn't sound fair at all. It's equality but not equity.

throwawaysea 8y ago
The parent comment talked about a flat percentage tax. So the people with more money would not be paying the "same tax". They would still be paying a lot more. A truly fair tax would have everyone paying the same flat fee for the same public services rendered.
- arcticbull 8y ago
  It isn’t, though, because of the marginal utility of money. Someone making $10k/yr sees much more value from an extra $10k than someone making $10M. For one it’s a lifeline and for one a rounding error. While a flat tax is fair in numbers it’s not fair in marginal value or utility. IMO that’s a much bigger deal. There are other macroeconomic advantages to giving the little guy the extra, though I don’t want to repeat myself so I’ll keep that in my sister reply. FWIW we’ve already got regressive taxes in the form of payroll tax, which kick in from $0 and cap out once you earn enough. So unless you’re unemployed, you’ve paid taxes even if your marginal income tax rate is 0%.
  - throwawaysea 8y ago
    I feel you are reinventing definitions. The “same tax” would be very literally giving up the same value. The only common definition of value in society is currency - that is literally its role, to serve as a common measure (and storage) of utility. It does not confer net utility in and of itself (goods and services do), and therefore this argument of marginality doesn’t apply to it. I understand that goods and services acquired with currency can experience diminishing returns. But unless you think the rich and poor should be paying different amounts for every good and service (for example a cup of coffee), then I don’t think this is a consistent, principled argument. And once again, let me point out that GP’s comment on a flat tax would STILL mean the rich give up more value than the poor, and it would still not be a truly ‘fair’ tax. And on a side note, ‘progressive’/‘regressive’ are made up terms used to play rhetorical games by leveraging the negative connotation of the term ‘regressive’. A better set of neutral terms would be ‘uniform’ or ‘fair’ or ‘flat’ versus ‘non-uniform’ or ‘unfair’ or ‘graduated’.
    - int_19h 8y ago
      "Regressive" is not a synonym for "flat" - a flat tax is neither progressive nor regressive. And these terms are purely descriptive, defined via their effect on the effective tax rates.
      - deleted 8y ago
        [deleted]
    - arcticbull 8y ago
      The rich already pay different amounts than the poor for goods and services in pre-tax dollars. That's kind of the idea, IMO. If my average tax rate is 28% and a poor person pays an average 5% then the same $5 SF coffee costs me $6.94 and them $5.26. The dictionary definition is quite clear: A progressive tax is a tax in which the average tax rate (taxes paid ÷ personal income) increases as the taxable amount increases. [Google] A regressive tax is a tax applied uniformly, taking a larger percentage of income from low-income earners than from high-income earners. It is in opposition to a progressive tax, which takes a larger percentage from high-income earners. [Also Google] As such, Medicare taxes are regressive because they are capped at some amount of earned income, whereas the ordinary income tax rate is progressive because your marginal rate increases as you earn more money. You are correct that a flat tax is neither progressive nor regressive with respect to dollars, but it is regressive with respect to marginal utility of those dollars to the earner. "Fair" is a value judgement and colors the conversation.
      - throwawaysea 8y ago
        And labels of ‘progressive’ and ‘regressive’ aren’t value judgments? IMO they are subjective judgments much more so than calling a true flat tax “fair”. Equal value contribution is fair, after all. The dictionary definitions you are quoting are in existence simply due to common use in modern times, but I am claiming they are nevertheless bad definitions that were engineered to color the discourse on this topic.
        kenneth 8y ago

arcticbull 8y ago

Right so those least able to pay, the ones who spend all they get — which is what keeps the economy moving btw, pay the same amount as people who are most able to pay and least likely to spend, slowing down the economy. How can I lose?!

AntiTechTechie 8y ago

Good point...I'd like to see a flat income tax of 0% and then have taxes based on consumption