HFBoards

Go Back   HFBoards > NHL Western Conference > Central Division > Nashville Predators
Mobile Hockey's Future Become a Sponsor Site Rules Support Forum vBookie Page 2
Notices

State Senate votes to ban income tax in Tennessee

Reply
 
Thread Tools
Old
03-15-2011, 12:49 AM
  #51
PredsV82
Puckaroni and cheese
 
PredsV82's Avatar
 
Join Date: Aug 2007
Location: Outside
Country: Scotland
Posts: 14,245
vCash: 400
nice topic, kudos to all who have posted sensibly on both sides so this thread doesnt get closed/deleted.

Im from KY so I dont have a dog in this specific fight, but I do want to make a comment about a progressive income tax(meaning, a higher percentage is taken from higher incomes)

regardless of whether you believe a progressive tax is "fair"(which is a point of debate and by no means a "settled" question) it is absolutely a fact that a progressive tax is a disincentive to working harder and earning more.

For instance, if your family income is $69,000 or less, your federal tax rate is $15%, and you would owe $10,350 in taxes, for an net income of $58,650 . However if you busted your butt and made an extra $5,000, your $74,000 income would be taxed at 25% and thus you would owe $18,500 in taxes for a net income of $55,500.

How crazy is that??


A flat tax rate would not be a disincentive to productivity. A slightly less attractive alternative is a progressive tax but the higher rate only applies to the dollars in the bracket itself, Thus in the example above the taxpayer would pay 15% of the $69,000 and then pay 25% of the extra 5K. Its not perfect, but it doesnt go back and take more from the first dollar

looking forward to other comments on this

PredsV82 is offline   Reply With Quote
Old
03-15-2011, 09:23 AM
  #52
lstcyr
Registered User
 
Join Date: Jul 2002
Posts: 1,975
vCash: 500
I agree that the topic has been kept reasonable and a healthy debate. Kudos to all.

I think you have your information wrong though. Assuming a person married filing jointly, the tax at $69K is $9,619 or 13.9% and at $74K the tax is $10,869 or 14.7% effective rate. (See http://www.irs.gov/pub/irs-pdf/i1040tt.pdf.) So, the advantage of making $5,000 extra is an additional $3,750 in cash to spend. Granted the extra $5K is taxed at a 25% bracket, but still a plus and should be an incentive for people to work.

At a higher level, let's say $100K tax, is $17,363. Make an extra $10K and the tax is $19,862 or you get to pocket an additional $7,501 or 75% of the amount. That's because the tax tables do not go back to dollar one when the rates change. It's just the incremental dollars over the break that are taxed at the higher rate. See the example in the tax rate schedules further down in the link I added here.

lstcyr is online now   Reply With Quote
Old
03-15-2011, 09:43 AM
  #53
PredsV82
Puckaroni and cheese
 
PredsV82's Avatar
 
Join Date: Aug 2007
Location: Outside
Country: Scotland
Posts: 14,245
vCash: 400
Quote:
Originally Posted by lstcyr View Post
I agree that the topic has been kept reasonable and a healthy debate. Kudos to all.

I think you have your information wrong though. Assuming a person married filing jointly, the tax at $69K is $9,619 or 13.9% and at $74K the tax is $10,869 or 14.7% effective rate. (See http://www.irs.gov/pub/irs-pdf/i1040tt.pdf.) So, the advantage of making $5,000 extra is an additional $3,750 in cash to spend. Granted the extra $5K is taxed at a 25% bracket, but still a plus and should be an incentive for people to work.

At a higher level, let's say $100K tax, is $17,363. Make an extra $10K and the tax is $19,862 or you get to pocket an additional $7,501 or 75% of the amount. That's because the tax tables do not go back to dollar one when the rates change. It's just the incremental dollars over the break that are taxed at the higher rate. See the example in the tax rate schedules further down in the link I added here.
good chart. I was just using a table of the brackets and and the income levels where they cut off not the actual tax table, so there is obviously a 'fudge factor" in there somewhere.

but I can tell you from personal experience with the Alternative minimum tax, that there are disincentives to earn more built into the tax code. they arent as dramatic as they used to be, but they are still there.

PredsV82 is offline   Reply With Quote
Old
03-15-2011, 10:00 AM
  #54
utmfisher19
Registered User
 
utmfisher19's Avatar
 
Join Date: Nov 2005
Location: Nashville, Tn
Country: United States
Posts: 937
vCash: 500
Send a message via AIM to utmfisher19 Send a message via MSN to utmfisher19 Send a message via Yahoo to utmfisher19
Quote:
Originally Posted by PredsV82 View Post
nice topic, kudos to all who have posted sensibly on both sides so this thread doesnt get closed/deleted.

Im from KY so I dont have a dog in this specific fight, but I do want to make a comment about a progressive income tax(meaning, a higher percentage is taken from higher incomes)

regardless of whether you believe a progressive tax is "fair"(which is a point of debate and by no means a "settled" question) it is absolutely a fact that a progressive tax is a disincentive to working harder and earning more.

For instance, if your family income is $69,000 or less, your federal tax rate is $15%, and you would owe $10,350 in taxes, for an net income of $58,650 . However if you busted your butt and made an extra $5,000, your $74,000 income would be taxed at 25% and thus you would owe $18,500 in taxes for a net income of $55,500.

How crazy is that??


A flat tax rate would not be a disincentive to productivity. A slightly less attractive alternative is a progressive tax but the higher rate only applies to the dollars in the bracket itself, Thus in the example above the taxpayer would pay 15% of the $69,000 and then pay 25% of the extra 5K. Its not perfect, but it doesnt go back and take more from the first dollar

looking forward to other comments on this
Kudos to everyone having a civil discussion on this. We all understand that there is no 'correct' answer to any of this. It is about seeing the other side and discussing those points.

I respect your opinion on the subject, but disagree that it has that affect on a human. Every economist in this country argues to the contrary. Everyone wants to make more money -- there is no denying that. So, if your tax rates are correct, then that person making 75k would work harder to make more money (therefore having more take-home pay) in the 25% tax bracket. You can NOT honestly say that you wouldn't work as hard knowing that if you get paid more, you get taxed higher (P.S. we are debating about personal income tax anyways, corporate income taxes are a different breed altogether. Those companies will ALWAYS try to make more money).

But to play the devil's advocate here, do you agree that income inequality in a country hurts that country's economy? I suggest you read Robert H. Frank's book on Economics and Behavior or his book Falling Behind: How Rising Inequality Harms the Middle Class. Frank is a New York Times columnist, economics teacher at Cornell, and also was a lead economist in both the Clinton and Bush administrations. In these books, he not only proves that 'the rich get richer' hurt the country in the long-run, but also proves that the dollar is worth less to someone who makes more. So if you are taxed 28 cents on every dollar you make over (as you stated above) 75k, and someone who makes 69k is taxed 25 cents, the one who is "punished" more is the one making 69k because those 3 cents to the dollar mean more to them than the person making 75k. Aka, it is not fair to the person making 69k to get taxed at the same rate as someone that makes 75k because the "cents on the dollar" mean more to the person making 69k than the one making 75k.


Last edited by utmfisher19: 03-15-2011 at 11:00 AM.
utmfisher19 is offline   Reply With Quote
Old
03-15-2011, 10:55 AM
  #55
PredsV82
Puckaroni and cheese
 
PredsV82's Avatar
 
Join Date: Aug 2007
Location: Outside
Country: Scotland
Posts: 14,245
vCash: 400
Quote:
Originally Posted by utmfisher19 View Post
Kudos to everyone having a civil discussion on this. We all understand that there is no 'correct' answer to any of this. It is about seeing the other side and discussing those points.

I respect your opinion on the subject, but disagree that it has that affect on a human. Every economist in this country argues to the contrary. Everyone wants to make more money -- there is no denying that. So, if your tax rates are correct, then that person making 75k would work harder to make more money (therefore having more take-home pay) in the 25% tax bracket. You can NOT honestly say that you wouldn't work as hard knowing that if you get paid more, you get taxed higher (P.S. we are debating about personal income tax anyways, corporate income taxes are a different breed altogether. Those companies will ALWAYS try to make more money).

But to play the devil's advocate here, do you agree that income inequality in a country hurts that country's economy? I suggest you read Robert H. Frank's book on Economics and Behavior or his book Falling Behind: How Rising Inequality Harms the Middle Class. Frank is a New York Times columnist, economics teacher at Cornell, and also was a lead economist in both the Clinton and Bush administrations. In these books, he not only proves that 'the rich get richer' hurt the country in the long-run, but also proves that the dollar is worth less to someone who makes more. So if you are taxed 28 cents on every dollar you make over (as you stated above) 75k, and someone who makes 69k is taxed 25 cents, the one who is "punished" more is the one making 69k because those 3 cents to the dollar mean more to them than the person making 75k.

I know I will lose when arguing money with an accountant

I cant even begin to talk macroeconomic theory.

And I admit I was mistaken about how the brackets work.

All I can tell you is personal experience.

there comes a point at which it isnt worth it to me to make more money, because of the percentage of that extra money that just goes to taxes. Id rather have a week off.

I know of multiple other people in my situation.


Again, Im not arguing if its fair or not, Im just stating that a progressive tax is a disincentive to work harder. It makes it less rewarding to earn the last dollar than it was to earn the first. It may not discourage everyone, but it does discourage some. What effect that has on total tax revenue or the economy is not something I can say, and it may be that the benefit of the progressive tax outweights the negative.

PredsV82 is offline   Reply With Quote
Old
03-15-2011, 11:37 AM
  #56
deanwormer
Registered User
 
deanwormer's Avatar
 
Join Date: Nov 2009
Location: Nashville
Country: United States
Posts: 1,024
vCash: 437
Quote:
Originally Posted by utmfisher19 View Post
I respect your opinion on the subject, but disagree that it has that affect on a human. Every economist in this country argues to the contrary. Everyone wants to make more money -- there is no denying that. So, if your tax rates are correct, then that person making 75k would work harder to make more money (therefore having more take-home pay) in the 25% tax bracket. You can NOT honestly say that you wouldn't work as hard knowing that if you get paid more, you get taxed higher (P.S. we are debating about personal income tax anyways, corporate income taxes are a different breed altogether. Those companies will ALWAYS try to make more money).
A company's incentive to earn income is based on it's responsibility to owners/stockholders, it doesn't have an "emotional" input into the decision making process. So yes, a company will always try to make the most money it can. However, a company is a legal entity, not a person, and it doesn't earn "wages" that are taxed, it receives revenue (money) in exchange for goods or services it provides. It establishes the income level (net profit) it requires to exchange its goods or services based on the cost to provide them, then adjusts it's prices charged to get enough revenue to make that income.

One input to that cost structure is taxes; so, if you charge that entity a higher tax rate, it will ultimately increase the price it charges you or me for it's goods and services, so that it's revenue allows it to reach the target income level.

Simple terms - companies don't pay taxes, those of us who buy things from companies pay them. (and yes, I realize that's a bit simplistic cause companies can't always just pass on increased costs. however, over time, they either pass them on or figure out how to cut other costs to get to that target income - and we're all feeling huge effects of that right now, cause one of those other inputs to cost is people and their wages.)

As for your other point about foregoing a higher income because of higher taxes, I absolutely think that people get to a point where increased taxes is a contributing factor in someone deciding to pass on earning more income. I think the failure of economists in analyzing this is not fully considering what it takes to actually earn more money. Sure, if all it means is in the 50 hours I now work, I can just work harder/smarter and generate more income, I'll do it, cause I'm already putting in the 50 hours. However, if it's gonna' mean I have to put in 60 hours to get that increase, and then on top of it I actually get to keep less of that increased wage, I'm likely to pass once I have achieved what I consider to be a reasonable lifestyle.

Simplified - I think progressive marginal rates can be a disincentive, depending on other factors.

Smart taxation of consumption is superior to any taxation scheme that taxes income, except maybe a flat tax, because it minimizes, if not eliminates, unexpected consequences/variables. (and no, I don't think our sales tax equates to smart taxation of consumption)

I guess philosophically, as well as being economically rational, I think it's better to tax the results of the success (consumption) rather than the success (income) itself.

deanwormer is offline   Reply With Quote
Old
03-15-2011, 12:17 PM
  #57
lstcyr
Registered User
 
Join Date: Jul 2002
Posts: 1,975
vCash: 500
Quote:
Originally Posted by deanwormer View Post
One input to that cost structure is taxes; so, if you charge that entity a higher tax rate, it will ultimately increase the price it charges you or me for it's goods and services, so that it's revenue allows it to reach the target income level.

As for your other point about foregoing a higher income because of higher taxes, I absolutely think that people get to a point where increased taxes is a contributing factor in someone deciding to pass on earning more income.

However, if it's gonna' mean I have to put in 60 hours to get that increase, and then on top of it I actually get to keep less of that increased wage, I'm likely to pass once I have achieved what I consider to be a reasonable lifestyle.

Simplified - I think progressive marginal rates can be a disincentive, depending on other factors.
Very nice comments. As far as companies are concerned, there is a limit to how much revenue can be adjusted in the case of pricing. There is a supply and demand effect. For example, as the price of gas goes up, people tend to find ways to purchase less though the oil companies will make more money. As the price goes down, it's possible that the higher volume sold will alllow the oil company to show an increased net income. Agreed that companies will try to maximize their profit even when they are being taxed but I would rather the money be available in taxes to the government where (at least theoretically) it's under the control of people I can vote for than give companies lower taxes so they can spend it the way they want. (The Koch brothers are a good example. We can disagree with their politics.)

As far as your statement about working 60 hours to earn the additional income, the critical part to me is the fact that you're comfortable at a certain level. If you were working 50 hours a week and your family needed additional money for something (medical, housing, etc.), I'm sure you'd work the additional 10 hours for the additional money. If you didn't need it, then the incentive for the additional money is lessened.

lstcyr is online now   Reply With Quote
Old
03-15-2011, 12:34 PM
  #58
utmfisher19
Registered User
 
utmfisher19's Avatar
 
Join Date: Nov 2005
Location: Nashville, Tn
Country: United States
Posts: 937
vCash: 500
Send a message via AIM to utmfisher19 Send a message via MSN to utmfisher19 Send a message via Yahoo to utmfisher19
Quote:
Originally Posted by deanwormer View Post
[snipped...]

As for your other point about foregoing a higher income because of higher taxes, I think the failure of economists in analyzing this is not fully considering what it takes to actually earn more money. Sure, if all it means is in the 50 hours I now work, I can just work harder/smarter and generate more income, I'll do it, cause I'm already putting in the 50 hours. However, if it's gonna' mean I have to put in 60 hours to get that increase, and then on top of it I actually get to keep less of that increased wage, I'm likely to pass once I have achieved what I consider to be a reasonable lifestyle.

Simplified - I think progressive marginal rates can be a disincentive, depending on other factors.
[snipped...]
Well structured post. I know about the companies/organizations part. Which is why I said it was a different thing all-together and didn't elaborate. So, I will skip that part of your post because that is a different conversation altogether.

To me, you can't factor how people "feel" into facts. Only outcomes. While you say economists don't factor it, they say they do factor it and use outcomes/results as a backup. Their results show that no matter how high the taxes are, people continue to still try and make more money if there is an incentive. Reasoning is, because those people will always want more (either bigger houses, better cars, more land, etc.) and will work for it. While the tax rate progressively gets higher, their take home pay will always still be higher even if they make more.

Regardless if you think people have more/less incentive to make more money if tax rates are higher, it is a FACT that it affects the middle class. If the upper class continues to make the ceiling wages go up, while the middle and lower classes wages stay the same, the economy will continue to decline. Why? Housing prices will rise, private school prices rise, land value rises, etc. But if you tax people based on how much a dollar is worth to them, not only is that fair to everyone, but it helps the economy. It lowers housing prices, lowers cost of land, lowers the cost of anything that is considered to be a "splurge". That way, the upper-middle class is able to live in good areas and send their kids to good schools.

Please tell me, you agree with the law of diminishing marginal utility. If you don't then you disagree with the fundamental aspect of economics. Economics is built around this law. Fact is, a higher tax rate does the SAME to someone that makes more money as it does to someone who makes less. To someone who makes $30,000 (let say 15% tax bracket), the $4,500 in taxes may mean not having a car at all. But to someone who makes $3M (I'll go really high and say 50% tax bracket), the $1.5M lost is the difference between a Porsche and a Lamborghini.

P.S. It will have no affect on housing prices for the upper class as housing prices are based on demand. If the top 1% of homes in Nashville sell at $1.5M right now, the top 1% of homes in Nashville's prices will decline with what that top 1% rich people in Nashville can afford. Therefore, you would own the same house, just at a decreased value that go along with your decreased net pay.


Quote:
Originally Posted by lstcyr View Post
As far as your statement about working 60 hours to earn the additional income, the critical part to me is the fact that you're comfortable at a certain level. If you were working 50 hours a week and your family needed additional money for something (medical, housing, etc.), I'm sure you'd work the additional 10 hours for the additional money. If you didn't need it, then the incentive for the additional money is lessened.
I agree. This is another point that I wanted to make, but I don't feel like writing a novel on the subject. I touched lightly on the incentive subject, but it can go into great detail.

I guess my entire point is that the top 5% of Americans should not be the ones upset by progressive tax rates. But it is the middle class, (the 55-60% of them) that really are hurt by not having one because of inequality. I think we can all agree that inequality kills the economy and their countries.


Last edited by utmfisher19: 03-15-2011 at 12:45 PM.
utmfisher19 is offline   Reply With Quote
Old
03-15-2011, 12:48 PM
  #59
KINGS17
Smartest in the Room
 
KINGS17's Avatar
 
Join Date: Apr 2006
Country: United States
Posts: 15,994
vCash: 500
Quote:
Originally Posted by ThirdManIn View Post
Depends on the area, but around Nashville it's just shy of 10%.
You all should be happy that the state income tax is not coming to Tennessee. Governments always find ways to spend the "revenue" (that's money they TAKE from you) they collect. In California the top rate for state income tax is around 9%.

For those of you with the argument that well it's progressive and the rich pay it. WRONG. That rate kicks in at $45,000 for a single person and $90,000 for married couples. That is virtually anyone and everyone that has a decent job.

On top of that the sales tax in most areas is approaching 9%. If we didn't have a constitutional amendment protecting us from raising our property taxes we would get screwed there as well. Be glad TN has a constitutional amendment banning income taxes.

KINGS17 is offline   Reply With Quote
Old
03-15-2011, 03:19 PM
  #60
lstcyr
Registered User
 
Join Date: Jul 2002
Posts: 1,975
vCash: 500
Quote:
Originally Posted by KINGS17 View Post
You all should be happy that the state income tax is not coming to Tennessee. Governments always find ways to spend the "revenue" (that's money they TAKE from you) they collect. In California the top rate for state income tax is around 9%.

For those of you with the argument that well it's progressive and the rich pay it. WRONG. That rate kicks in at $45,000 for a single person and $90,000 for married couples. That is virtually anyone and everyone that has a decent job.

On top of that the sales tax in most areas is approaching 9%. If we didn't have a constitutional amendment protecting us from raising our property taxes we would get screwed there as well. Be glad TN has a constitutional amendment banning income taxes.
You're correct about the California income tax but you should note that over a certain amount ($243,000) the amount that can be deducted is reduced (as also happens in the federal income tax) and, as a result, high income individuals do pay a higher effective rate than middle class folks.

I hate to continue to harp on this issue but your comment about government spending every dollar that is taxed should be tempered with a couple of facts: 1) the people elect the officials who run "the government" and the people can change who runs the government and 2) usually what the government "spends" the money on is some item or service that a majority of our elected officials vote for. The money doesn't get spent unless our representatives vote for it and they vote for it because they believe people want it and it will help them get reelected. Finally, what is a waste of money to you might not be a waste of money to someone else. Perfect example is the Titans football stadium. Some folks would have preferred that money to go to education or some other area of community concern. It's never simple.

lstcyr is online now   Reply With Quote
Reply

Forum Jump


Bookmarks

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off



All times are GMT -5. The time now is 09:21 AM.

monitoring_string = "e4251c93e2ba248d29da988d93bf5144"
Contact Us - HFBoards - Archive - Privacy Statement - Terms of Use - Advertise - Top - AdChoices

vBulletin Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.
HFBoards.com is a property of CraveOnline Media, LLC, an Evolve Media, LLC company. ©2014 All Rights Reserved.