Soda for Food StampsFollow

Sigh. Those are two different things. What makes a tax "flat" is whether the tax rate changes based on the amount of earnings being taxed.

Treating all earnings the same is a separate issue which has absolutely nothing to do with whether a given tax is flat. I'm just not sure how much more clearly I can say this.



So no sales tax then? No import tariffs? What about corporate taxes? There are a host of different types of taxes, all with different rules. Arguing to scrap the whole system and just treat every dollar of economic activity exactly the same is a legitimate argument to make, but at the risk of repeating myself, has nothing to do with arguing for a flat tax within the context of a discussion about tax deductions on regular income.

Capital gains *is* taxed as regular income. Unless the gain is a "long term gain" (meaning the investment was held for at least a year before selling it). There are very good reasons why we tax long term capital gains at a lower rate than short term gains (and income itself). It encourages investors to actually invest in things that build and grow and make products rather than play quick gambles on the market trends. We want that. Eliminating the reduced tax rate for capital gains would hurt our economy and absolutely hurt job creation.

Payroll taxes are also managed separately, for their own reasons. We can have a discussion about this, but it's not the same as simply saying "I want a flat tax". A flat tax means you think every dollar of a given set of earnings should be taxed at the same rate. No deductions. No credits. No manipulation. No loopholes. Everyone pays X% on their earnings. I really don't think that's what most liberals actually want.

Here it's a risk, elsewhere it's a badge of honor. Only consistency seems to be is you do it no matter what.

No. You mean: Not equal. You're using the wrong word. The word "flat" in the phrase "flat tax" refers to the graph of rate versus volume. There is no equivalent concept of "flat" when comparing tax rates on payroll or tax rates on long term investment to tax rates on direct compensation. They really are completely different things. I get that some people use the phrase "flat tax" as a talisman to mean whatever ideal and fair tax system they'd like to implement, but that's more a matter of people misusing the phrase than any rational implementation of its actual meaning.


Look though. Having said all this, if we want to discuss tossing all our different taxes into one bucket, we can discuss that. However, I also don't think that most liberals really want that. The outcomes would be almost completely opposite of the kinds of tax policies that liberals push for. I just find it incredibly amusing because despite liberals constantly insisting that our current tax system is unfair, that system itself is largely the result of their own political agenda and desires. The very things that make our taxes "non-flat" (in whatever context you want to use), are things that overwhelmingly benefit the social agenda of the left over the last century. When liberals complain about our tax system, it's not because it's not flat, but because it's not "unflat" enough for them. They want more of the tax burden borne by the rich and more of the benefits of those taxes spent on the poor. Any argument for any sort of flat tax system would go in the opposite direction.


Payroll taxes are already "flat" (to a point). What liberals want isn't to make other income that poor people pay flat, but to make payroll taxes more like regular income (ie: progressive). That way the poor can reap the benefits of social security and medicare, without having to pay for it (or pay less for it). Liberals love our progressive tax rates on regular income. This is why I keep wondering why any liberal would argue for a "flat tax". That's not really what you want, no matter what language you use. You don't want all earnings consolidated into one lump and then taxed at the same flat rate regardless of volume and without any deductions. You want all earnings consolidated into one lump and then taxed progressively with as many deductions and credits for those in the lower income brackets as possible.

You can call that a "flat tax" but at that point the label ceases to have any meaning.

Different axis of income though. I already explained this. There's a difference between the method of earning and the amount of earning. It's quite consistent to say you believe that we should not treat income differently based on volume, but we should treat it differently based on type. Why should the thousandth dollar I earn be taxed at a different rate than the first? If I provided the same amount of value to my customers/boss while earning that dollar, why does the government feel I should pay a higher tax rate on it?


I've also already explained why long term capital gains should be taxed at a lower rate then income taxes. While you may not agree, there really is a difference between the guy who invested money into some venture, which then increased in value by $10,000, versus the guy who worked at said venture and was paid $10,000. One is a return on direct labor, the other is a return on investment. We need both, obviously, but each is a different side of the equation. The guy who invested the money created wealth for others. That means that if his investment increased in value, it also had to provide other taxable economic events in addition to the gain itself. This is why some argue that capital gains should not be taxed at all (but that's a whole different discussion).


Put another way, lower taxes on capital gains is why we have an investment market accessible to more than just the already rich in the first place. If you tax gains as income, then there's no reason for the rich to use a public share based system to invest in business ventures. They'd just form partnerships with other rich people directly and reap all the benefits themselves. Now if you want to create an ivory tower with the rich on one side and the rest of us on the other, then by all means, tax capital gains the same as income. But I don't think that's what most people really want.


It's just simpler to look at people earning money and paying a lower rate of taxes on it and declaring it to be unfair. But the issue isn't that simple.

I believe that's the wrong way to look at it. The value of what someone does is based on the benefit it provides to others, not the cost to the person doing it. You (and many people) have this strange idea that it's the other way around. If I could save 1 million people from hunger by pushing a button, would that minimal amount of work not be just as valuable as a host of relief workers handing out food? If the outcome is identical, then the "value" is the same.

How hard someone works is irrelevant to the equation. That sort of thinking is what leads some people to think that we can create economic growth by employing people just for the sake of creating jobs rather than for the value of what their labor produces. They think if we just increase wages for the same labor that this will magically improve people's economic fortunes. They think that the value of a executive signing papers in his office is less than that of a worker in his factory. Those are all grossly false assumptions though.

Dollars of wealth represent savings of past value assessment of labor. If I work for 20 years and save up a million dollars, when I invest that million dollars, I'm not doing "no work", I'm investing the fruits of a whole lot of work I already did and for which I've received nothing in return. While the action of investing it may not seem like it's something I should earn money on, that's because you're failing to see the whole picture. You're failing to see that in order to have the money to invest in the first place, I had to provide a million dollars more in value to others than I took for myself first. Also, in order to earn anything off that investment, the thing I invested in has to also increase in value (again to others) equal to the amount my investment grows. It's not magic. I only make money on investments if the value of the investment grows. This means that someone else has to be willing to pay more money for the thing after I invested in it, than they would have paid for it prior to my investment.

There's also a risk factor. The employee working a shift at his job doesn't risk anything. It's a straight exchange of labor for pay. The investor is risking past pay to invest. That's a choice. He could have taken that past pay and simply bought stuff for himself to enjoy. This is a choice anyone can make, but many simply choose to benefit themselves directly instead. That's also their choice. But don't suggest that the person who decided to invest is somehow cheating the system. He's not. The returns on his investment are as fairly earned as if he'd sweated at some labor. Again, the value is based on the benefit to others, not the cost to oneself. Thinking otherwise is completely backwards and will lead you to some bizarre and unworkable outcomes.

Of course. No one has ever died in a workplace accident, ever.

I'm sure a lot more people have died while dialing up their stock broker than in a mine, or in a factory... etc.

So, you finally agree that the a waiter's tip is *supposed* to be based off of the service provided?

Sorry. I thought it was clear what context I was speaking in. He doesn't risk anything economically. If a store goes belly up, the owner loses every dime he invested in his business, which may represent decades of his own savings (and perhaps those of his family as well), loans taken out on his house, property, etc. The employee loses a job, which cost him the time to fill out the application to get. Seriously. The employee is paid for every hour of labor as he works it (subject to pay schedule of course). Everything he "spends" (his labor) is rewarded. If the business goes down, no one reaches into his bank account and takes back all the paychecks he received while employed there or makes him pay it back if he doesn't have it any more.

And master takes real good care of him. Why the employee would probably die left to his own devices. He needs master to shelter and feed him and the work master demands in exchange is a small small price to pay. Oh mammy. MAMMY!

Workers are always taking economic risks. If a store goes belly up, they've lost all the gains they've made in terms of wages/working hours/seniority (if it applies) and often any pension they may have had, not to mention health insurance in America. Many workers "lose everything" when companies, for example, choose to move their operations offshore. I wouldn't have to look very hard to find people telling stories of losing their homes because of a decision made by a corporation to fire them all so they could pay someone else less somewhere else.

Every time a worker takes one job, they are foregoing the opportunity to work elsewhere or otherwise occupy themselves. Every single hour worked is a lost opportunity to do something else. I'd argue that time, which is irreplaceable, is a lot greater thing to risk than money, which can be made again.

So when a worker decides to commit to a company, especially if they make that a long term commitment, they are risking lots. If they lose that job, in all likelihood they are going to be in an economically worse position than they would have been if they had chosen to "invest" their career in a more successful/caring company.







Edited, Jan 23rd 2013 5:04pm by Olorinus

FTFY

None of which even comes close to the economic risk by the employer. The worker does not lose all the gains they've made. If they advanced from entry level cart pusher to senior level machine operator while working at the job for 5 years, that goes on their resume and gives them good odds of getting another job in the same field with similar pay/benefits. They lose only the security of that job, not the experience they gained. Pensions and health care are different matters (and subject to a whole bunch of variables outside the scope of this discussion).



No. Very few workers lose much at all when this happens. The only workers that are significantly negatively impacted are those who didn't have the job skills to justify their pay in the first place. Do you understand that if your labor is actually worth what you're earning, then you can get another job somewhere else for the same/similar pay? If a company chooses to move their operations and were not forced to due to inefficient labor costs, then the labor should be able to relocate to other similar jobs easily. If the move wasn't a choice, but was due to external economic factors (like say that it's really not cost effective to pay someone $15/hour to do a job they could pay someone $5/hour to do), then that's not about the company failing, but the worker failing.



I'm sure you could find lots of people making that claim. Lots of people claim to see Elvis. But usually, when you dig into those stories you find out the person was a crappy worker, and they weren't let go because of some evil corporate plot to punish them for being them, but because the corporation took the first legal opportunity they could to let go of excess baggage.

And btw, this still has nothing to do with loses when a business actually fails. You're shifting the discussion to businesses not failing, but deciding to fire people. Well that can suck for the person fired, but still has nothing to do with the relative risk. Again, you losing your job means you need to go find another job. Assuming your labor was actually worth what you were being paid, that shouldn't be much of a problem. When the business goes belly up, the owner/investors lose everything. This is often millions of dollars lost. There's just no comparison.



I'm not sure how that's the employer problem, or how that somehow equates to an economic risk taken by the worker. I suppose you could argue that working at a low advancement low training job would cost the worker over time, but that's his choice. Surely you can't blame the employer for that. And that's not risking something you have in any case.

There's simply no comparison between those two in terms of economic risks.



Same argument made above. Same response. I'm still not seeing it. If the owners company goes bankrupt, he also loses all the potential difference between having started a successful company versus an unsuccessful one. But he also loses all money he invested in it as well. To make the same comparison you'd have to have the worker pay the employer a half a million dollars before getting hired, then spend 10 years working there, and then if the company fails, he loses his job and the half million dollars. That would maybe make it equivalent. As it is, all he loses is the 10 years working there, during which he presumably got raises, promotions, and was paid money (which he gets to keep as opposed to the owner who's lost it all).

Additionally, that the worker still retains whatever experience he gained while working there. The business owner maybe learned some things as well, I suppose, but it's probably not as significant a gain. 10 years working in a field will give you a pay advantage with any new employer. 10 years running a business before failing probably wont increase your own marketability much at all, and if you're self employed anyway, who are you going to impress with that?


Sorry. I just don't see it. Workers receive constant and nearly immediate benefits in return for their labor. They don't have to pay anything up front go get this. To say that the time/training or whatever is risked is somewhat silly. He's got to work somewhere, right? The presumption is that the worker will try to find the best job he can, so what is he really risking? It's not like he could stay at home and not work and "save" his training/experience by not working. Working doesn't represent a risk to those things. It does represent the potential to increase those thing even beyond his pay though. So it's win/win for the worker.