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I'm not rich and not a proponent of tax cuts for the rich, but there's one bit of insight that ideologically flavored reviews of tax reforms often seem to miss:
by stdbrouw 5y ago
I'm not rich and not a proponent of tax cuts for the rich, but there's one bit of insight that ideologically flavored reviews of tax reforms often seem to miss: almost any imaginable (income) tax cut will disproportionally favor the rich in absolute terms, even if proportionally they pay more. For example, even if the only change you make is to drop the rate on the very lowest tax bracket from 10% to 0%, the rich will benefit more than the very poorest because the rich will max out that tax bracket but the poor won't. Therefore, if someone proposes a tax cut and it turns out that it benefits the rich, that doesn't mean they have some nefarious scheme in mind, more likely they genuinely believe that lower taxes help the economy or that a smaller government works better. I'm a bit of a leftie myself, but this is one area where I think it'd be nice to have some mutual understanding between different ideologies.
- deleted 5y ago[deleted]
- bcrosby95 5y agoThe lowest tax bracket in the USA is $9k. That is below the poverty line in the USA at $12k for one person. Most people max out $9k. Even poor people. The rich will never benefit more from a tax cut there than the poor. Where they do benefit is when you, say, lower every bracket by 2%. But that is fundamentally different from your proposition.
- jimbilly22 5y agoyea. they media knows exactly what they are doing when they zero on those metrics. It's part of a larger ideological push. It's extremely disingenuous.
- stdbrouw 5y agoI don't necessarily find it disingenuous because at the end of the day the result is that the rich do in fact benefit most, and there's nothing wrong with reporting this. But I agree that it is rather silly that this is sometimes seen as a shocking revelation when it's really just how tax cuts work.
- tstrimple 5y agoThis seems like a lot of words to obfuscate the fact that not only do the rich receive the largest benefit of tax breaks, they pay a lower effective tax rate than the middle class. It's not just word games. https://www.washingtonpost.com/business/2019/10/08/first-time-history-us-billionaires-paid-lower-tax-rate-than-working-class-last-year/ https://www.washingtonpost.com/business/2019/10/08/first-tim...
- stdbrouw 5y agoWell, but that's a very different issue: the rich have an incredible amount of options to optimize their taxes that us mere mortals don't, and can shift their income so that it doesn't incur income taxes. You don't fight that with income tax hikes or by refusing to countenance any and all tax cuts.
- PaulDavisThe1st 5y agoa 95% top marginal rate (say, on income over $1M/yr) would certainly discourage "shifting their income so that it doesn't incur income taxes". Why? Because they'd have less money that they could afford to shift around in that way.
- stdbrouw 5y agoNot sure if you're joking, but... the taxes on your salary are subtracted at source in most countries so there's no way to avoid them no matter how highly you're taxed, but things are quite different when you can decide what to pay yourself in salary vs. what ends up at a company you control vs. what ends up in some kind of trust, and so on and so on.
- PaulDavisThe1st 5y agoI'm not joking at all. We used to have tax rates just like that. Let's say that you've got a nice little setup for yourself. $1.5M/yr in personal income, with another US$8M or so flowing into things you indirectly (in time or space) will benefit from. Now let's bump up the top marginal rate to 95% on amounts over $1M. You're personal income is reduced by an amount on the order of $400-500k per year. You're not likely to just accept that, and live on less. Instead, you're going to rearrange things so that you're back to the same "take home" personal income, while the "diversions that benefit you" drop a corresponding amount.