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Ten men in a bar, rewritten to encompass todays economy

Started by mnphysicist · 8 months ago

A friend sent me the 10 men in a bar story to show how progressive taxes as well as increases are damaging to the economy. Being I strongly disagree with such a model, I rewrote it and sent it back.
Increasing taxes on the rich?? Here is a twist on that to think [...] ... Continue reading »

2 comments

  • Eric

    8 months ago

    This is ridiculous. Your joke doesn't work in either situation because neither exists nor will exist under either candidate. The original DOES work because it is fairly accurate. Do you know any fast food workers that pay tax? NO. Under any proposed scenario will their taxes increase? No! The current tax rates aren't truly indicative of what people pay because of exemptions. That's why the bottom 40% don't pay any income tax at all.
    reply
  • mnphysicist

    8 months ago

    Everyone pays taxes, excluding those who have the ability to use avoidance strategies to the max. Even the fast food worker, who is eligible for the EIC ends up paying the income taxes of others plus multipliers through the inflated prices on US based goods and services (not so on offshore goods, but thats another matter entirely). Tax policy at the bottom of the economic scale doesn't lend itself to sound bites, just as foreign deferment doesn't at the high end. With everything so buried, it makes for a real mess to unravel the true flow of money. Case in point, the rich man will be really soaked via the bailout bill with its changes in offshore deferment (which no one talks about it seems). In many ways, a change in the marginal rates would likely have been a lot less costly to the top 1%, than the deferment changes... on the other hand, changes to deferment tax policy are a somewhat silent way to raise govt revenue by many billions. Don't get me wrong, I always thought offshore deferment was a bad thing, just having it submarined in another bill does not seem a very good approach.

    As far as proposed scenarios and tax increases, likely you are correct, although I must admit McCain's health care proposal and its associated tax scheme will raise taxes on any user of the health care system. The question then is whether those in the lowest economic strata would be able to pay or not.

    I also agree re: exemptions, the whole marginal tax rate structure ends up being a facade... 30 years ago, when the top marginal rate was at 70%, we didn't have folks rushing to move offshore, but we did have a lot more creative accounting and tax avoidance strategies... I don't see what the fuss is about changing the marginal rates... even if the top marginal rate were to go to 50% as it was in 85, there wont be a mass exodus of wealth going offshore esp with the deferment provisions now in effect, albeit there would be a multitude of unintended consequences.

    A couple references... marginal tax rates by year, and tax demographic data.
    http://www.truthandpolitics.org/top-rates.php
    http://www.taxfoundation.org/news/show/250.html
    reply

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