The Ryan Tax Brackets

[Bluedog]

Econometrically. Look I can give you a table like the hypotehtical one below, but I don't have the team of econometricians that the CBO or OMB Has. but the goal should be to essentially have a tax rate curve that approximates the Marginal Utility of Income Curve.

Becasue despite the continual arguements about how "the xame percentage is Fair" ... in every Behavioural Econ study where this has been looked at, the vast majority of subjects HAVE AN INHERENT SENSE OF MARGINAL UTILITY... This even applies down to primates (even though some of the experiments were tainted by cheating the researcher did in other studies).

Put 3 chimps in cages together in a room. And delay one feeding by a few hours. Then come in and give one Chimp 10 bannanas, another chimp 4 and the last chimp nothing. the Chimp with 10 will give the chimp with none 2-3 bannanas and the chimp with 4 will give him 1. That's Marginal Uitility of Income in play RIGHT THERE.

Its also FISCALLY the smart thing to do. The Fiscal Multiplier for spending by the lowest Quintile approachs 3.0. So every $1 you take from them Reduces GDP growth by $3.00 and thats about the top end of what Government FMs are

The Fiscal Multiplier for spending by the upper quintile IS BELOW 0.7. So every $1 you take from them Reduces GDP Growth by only 70 cents. And that's EASY for the Government to DOUBLE.



As for "job creation"... CALPERS which is mostly middle class participants, is One Pension Plan, in One Industry in One State. And yet it has MORE INVESTED IN JOB CREATION than the 10 wealthiest Americans... COMBINED. You hear a lot about "institutional investors" "driving the market"... well "Institutional Investors" are the pros who are investing MIDDLE CLASS PENSIONS. THEY ARE THE JOB CREATORS. So again, transferring wealth out of the middle class REDUCES JOB GROWTH.

So what we need is a progressive income tax system that takes into consideration the Laffer Curve and what we know about Marginal Utility of Income (which is quite a lot BTW)
Well the Laffer Curve PEAKS at 70% Marginal Rates sccording to the WSJ. We know that Marginal Utility drops to as low as 1% over $1 mil/yr in income... but we also know that when tax rates exceed 90%, you see capital flight out of the economy.

So you have to be pragmatic. Top marginal rate is 70% and the rest is curved based on Marginal Utility of Income - I've made a wild guestimate based on hiustorical tax rates, but its hardly the real starting point. For that you'd have to dig into OMB and CBO data at a level that I don't have time for.



View attachment 1608

$0-$10k = 0% tax
$10k-$15k = 5% tax
$15k-$20k = 7% Tax
$20k-$30k = 10% tax
$30k-$40k = 15% tax
$40k-$50k = 25% tax
$50k-$70k = 35% tax
$70k-$100k = 40% Tax
$100k-$150k = 50% Tax
$150k-$200k = 60% Tax
$200k-$350k = 65% Tax
$350k+ = 70% Tax

So according to your line of reasoning we cannot have two brackets as a starting point. Lets make an adjustment based on your chart.


0 to30,000 -0%

30,000 to 250,000-10%

250,000 and up -25%

Any objections?

 

[Woolleybugger]

Is English a second language to you? He puts forth valid economic data and justifications for his suggested rates including examples of behavioral tendencies and you come back with this?

 

[Bluedog]

Is English a second language to you? He puts forth valid economic data and justifications for his suggested rates including examples of behavioral tendencies and you come back with this?

If don't agree that's fine. That said, I have a problem with someone making over 70 grand being placed in a 40% bracket. I can disgaree with someone without insulting them, unlike you.

 

[degsme]

LOL! In fact it is "progressive" so you are completely off base in your criticism. And, lets face it, what you REALLY don't like about it is that it discourages consumption and provides incentives for people to save and invest - which leads to accumulation of wealth. And THAT'S what you really hate - the idea that it might stand in the way of your Marxist revolution by making more working class folks investors (and capitalists)...

It has one "progressive" step, but funcitonally it is regressive in that a disproportionate amount of the tax burden is carried by the middle class.

As for the rest.

Once again rather than arguing facts you name call like McCarthy did - with LESS credibility. Calling me a "marxist" is about as laughable as it gets.

 

[degsme]

So according to your line of reasoning we cannot have two brackets as a starting point. Lets make an adjustment based on your chart.


0 to30,000 -0%

30,000 to 250,000-10%

250,000 and up -25%

Any objections?

Yes. two few brackets to accurately come close to the Marginal Utility Curve. QED it is regressive

Too little revenue generated to run a modern government. QED it is econometrically a great way to become a 2nd Rate nation with a struggling economy.

 

[Bluedog]

Yes. two few brackets to accurately come close to the Marginal Utility Curve. QED it is regressive

Too little revenue generated to run a modern government. QED it is econometrically a great way to become a 2nd Rate nation with a struggling economy.

It seems like we can go one of two ways: Properly funding the government revenue vs maximizing take home pay. I prefer emphasis on the latter first. I understand your position, but I think the people should come first. Imho

 

[OldGaffer]

Clinto was collecting around 20% of GDP in taxes, he had a surplus, Obama is collecting around 15% in taxes, he has a deficit. Do the math, tax rates must go up or we are going to have to keep borrowing.

 

[degsme]

It seems like we can go one of two ways: Properly funding the government revenue vs maximizing take home pay. I prefer emphasis on the latter first. I understand your position, but I think the people should come first. Imho

What you don't seem to get is that maximizing "take home pay" as a percentage of your full wage, vs. maximizing your PURCHASING POWER are two different things

90% of $10,000 is a helluva lot less than 30% of $100,000 assuming parity in purchasing power.

YOUR approach has been shown throughout history to give us 90% of $10,000.

Me? I'd rather have 30% of $100,000 Because that means I have THREE TIMES as much ability to EXERCISE my liberties.

Its not a question of "fully funding government revenue"... it is instead

1. Maximinizing FAIRNESS (as perceived by pretty much all primates as well as demonstrated ecoomically
2. Maximizing economic productivity of the economy (rising tide lifts all boats)
3. Maximizing job creation (middle class investment and spending is what does that, not upwards wealth transfer)
4. Maximizing opportunity for income mobility
5. Maximizing PURCHASING POWER

How that is not about "People Coming First" is ather beyond me. Particularly since your approach has historically ALWAYS lead to

• Lower economic growth
• The evisceration of the middle class
• Greater income disparity
• Lower median PURCHASING POWER
• Less liberty for the majority

 

[degsme]

Yes, the phrase "baffle folks with bullsh*t" comes to mind.

That pretty much describes anyone who runs around calling someone like me a "marxist".

All this "marginal utility of income" and "redistributing income up" and "fiscal multipliers" and "lack of demand" is just cover for Marxist economic philosophy. It can't stand on its own as it has been proven to fail again and again

No Lukey the track record IS EXACTLY THE OPPOSITE.

You are the one making Sh!t up here. You cannot point to a single example of it "failing" of it being in any way "marxist" or how it fails to "stand on its own".... that's why you have to call it "Marxist"...

Because like McCarthy, you aint got nothing but bullshit here.

 

[Bluedog]

Clinto was collecting around 20% of GDP in taxes, he had a surplus, Obama is collecting around 15% in taxes, he has a deficit. Do the math, tax rates must go up or we are going to have to keep borrowing.

I don't disagree with you, but part of the problem is that the federal budget is too large. Raise taxes to pay down debt while finding ways to lower the spending.

 

[OldGaffer]

I don't disagree with you, but part of the problem is that the federal budget is too large. Raise taxes to pay down debt while finding ways to lower the spending.

Clinton cut the military, the single biggest item in the general budget, I am down with that. Social Security and Medicare have their own funding sources, the payroll taxes, not income taxes. The rest of federal spending is comparatively "small potatoes", and defunding planned parenthood and NPR is not going to do a damn thing toward balancing the budget.

 

[Bluedog]

What you don't seem to get is that maximizing "take home pay" as a percentage of your full wage, vs. maximizing your PURCHASING POWER are two different things

90% of $10,000 is a helluva lot less than 30% of $100,000 assuming parity in purchasing power.

YOUR approach has been shown throughout history to give us 90% of $10,000.

Me? I'd rather have 30% of $100,000 Because that means I have THREE TIMES as much ability to EXERCISE my liberties.

Its not a question of "fully funding government revenue"... it is instead

1. Maximinizing FAIRNESS (as perceived by pretty much all primates as well as demonstrated ecoomically
2. Maximizing economic productivity of the economy (rising tide lifts all boats)
3. Maximizing job creation (middle class investment and spending is what does that, not upwards wealth transfer)
4. Maximizing opportunity for income mobility
5. Maximizing PURCHASING POWER

How that is not about "People Coming First" is ather beyond me. Particularly since your approach has historically ALWAYS lead to

• Lower economic growth
• The evisceration of the middle class
• Greater income disparity
• Lower median PURCHASING POWER
• Less liberty for the majority

If under the brackets I suggested lower middle incomes have more take home pay, explain how the wealth transfers upward.

 

[Bluedog]

Clinton cut the military, the single biggest item in the general budget, I am down with that. Social Security and Medicare have their own funding sources, the payroll taxes, not income taxes. The rest of federal spending is comparatively "small potatoes", and defunding planned parenthood and NPR is not going to do a damn thing toward balancing the budget.

You forgot about foreign aid.

 

[degsme]

You forgot about foreign aid.

No he didn't. He said

the rest of federal spending is realtively small potatoes

Foreign Aide budget is about $13 Billion at the outside. Roughly 1.6% of the Pentagon budget and roughly 1% of what we spend on Defense. SMALL POTATOES
Another way to look at ti is

That it works out to be about $1.13/Week for every tax filer. about a can of soda per week.

 

[degsme]

If under the brackets I suggested lower middle incomes have more take home pay, explain how the wealth transfers upward.

Do you really not understand it? Seriously?

They take home a LARGER PERCENTAGE of pay. That is

• NOT THE SAME AS "more takehome pay".
• NOT THE SAME AS "More purchasing Power"
• NOT THE SAME AS "Less unemployment"

Your approach is a bit like saying that because the top speed limit int he USA is 70mph and the average car is capable of doing 120mph, our solution should be to make gasoline that is 40% more dilute. Because that way tasoline will cost less and the average car will be running tat Top Speed MOST of the time.

This of course ignores that running a car at max revs is not very good for the engine and also increadibly fuel inefficient. So even though the cars will be operating at close to their top speed, they will consume more fuel and last less long.

Alternatively the wiser drivers will now drive around 45mph instead of 70mph...

Its just dumb.



To answer your question directly - and I don't know that you will understand this since you don't seem to understand the economic factors in play.

Yes you take home a larger percentage of your income. BUT you get DRAMATICALLY FEWER SERVICES for it.

• Roads now are not paved or maintained because Highway transportation money is gone.
  
  • so you spend more on car maintenance and repairs
  • you spend more time commuting
  • your business sees less traffic (because people are spending more time driving
  • your income goes down
• Schools are now much more poorly funded which means that
  
  • Either you take much of that extra take home pay to send your kids to dubious private schools that have no consistent standards
  • Or you lump it with dramatically lower education for your kids which means their earnings potential goes down
• Organizations like the EPA don't exist so you spend even more of your income
  
  • Spending money in court trying to protect your propertay from the depradations of large corporations
  • Cleaning up or compensatng for the increased pollution buy buying more air filtration, repainting your house more often etc. etc.
• The list goes on...

Additionally, since The Government spends less - the GDP Growth is dramatically down. Because MORE wealth accrues tot he Wealthy - WHO ARE ECNOMICALLY LESS EFFICIENT THAN GOVERNMENT:

When REagan cut the top marignal rates for the upper quintile earners...top 20%.... FOR EVERY $1 IN TAXES NOT COLLECTED from this top quintile GDP LOST thirty cents.

GDP and GDP Growth is what keeps the middle class alive. When you reduce the size of GDP Growth, you reduce the middle class.


The thing is BD, we have a solid track record of experimental data on this. The MIDDLE CLASS in the USA thrived when tax rates were HIGHER. That's just the reality of it. And when Reagan started cutting tax rates - letting middle incomes "take a larger percentage of their pay home"... what happend was that they had less pay to take home because their pay DECLINED MORE than the tax cut benefit

THAT'S The part you don't seem to understand.

 

[degsme]

If don't agree that's fine. That said, I have a problem with someone making over 70 grand being placed in a 40% bracket.

And what ECONOMIC PROBLEM do you have with that?

 

[Sgt Staples]

90% of $10,000 is a helluva lot less than 30% of $100,000 assuming parity in purchasing power.

10% of $10,000 ($1000) is a hell of a lot less than 70% of $100,000. ($70,000.)

SEVENTY TIMES LESS. So according to you, a person that works hard to advance himself should pay SEVENTY TIMES MORE than a person who sits on his ass most of the time.

Why the hell would anyone work to make 10 times more in income if he had to pay SEVENTY times more in taxes?

Answer: he wouldn't. And that means the revenues would fall, not rise, as they do when the tax rate becomes increasingly progressive.

That's why the USSR failed. That's why North Korea and Cuba are crap holes, like that which you and your fellow ideologues are trying to turn the US into.

You may want to live in a 3rd world Marxist pigsty, (you are supporting a 3rd rate Marxist agitator,) but I sure as hell don't.

 

[Bluedog]

and what economic problem do you have with that?

less take home pay.

If government has to cut services so people can keep more of what they earn, so be it.

You are the one who does not get it. A person making 70, 000 will take home less money to support his family if he goes from the 25 to 40% bracket under the chart you provided. Raising taxes on lower middle incomes benefits the government before the worker. This is called less purchasing power, because a person has less money.

 

[degsme]

Originally Posted by degsmeand what economic problem do you have with that?

less take home pay.

100% of 1/2 Your Salary is LESS THAN 60% of your Current Salary

How do you not get this?

If government has to cut services so people can keep more of what they earn, so be it.

Even if it means

• FEWER PEOPLE KEEP THEIR JOBS
  [*]Those who have jobs EARN LESS?
  

Again, what part of it do you not get?

You are the one who does not get it. A person making 70, 000 will take home less money to support his family if he goes from the 25 to 40% bracket under the chart you provided.

Well not quite - because those are single payer rates. And that is AGI not Gross.

But even so yes that is true..... SO WHAT? If that is the price of STILL HAVING THAT JOB IN THREE YEARS vs NOT HAVING IT... what is wrong with that?

Raising taxes on lower middle incomes benefits the government before the worker.

Simply not true! Cutting Goverment Spending WILL ELIMINATE MIDDLE CLASS JOBS

How do you not understand that? Even Romney gets that part.

This is called less purchasing power, because a person has less money.

That is one form of less purchasing power
SO IS

• LOSING THE JOB
  
  [*]Having the salary underpeform Inflation
• Having GDP grow slower than it would otherwise
• Having US GDP growth LAG OTHER NATIONS

ALL of those are ways of reducing purchasing power a well.

And guess what? The first three are what happens when you cut government spending. (note the 2nd and third one means your pension evaporates as well)

When you increase wealth transfer to the wealthy, you add in the fourth one.



Why are you so anti-Middle class?

 

[degsme]

10% of $10,000 ($1000) is a hell of a lot less than 70% of $100,000. ($70,000.)

SEVENTY TIMES LESS. So according to you, a person that works hard to advance himself should pay SEVENTY TIMES MORE than a person who sits on his ass most of the time.

Why the hell would anyone work to make 10 times more in income if he had to pay SEVENTY times more in taxes?

First of all, you are mixing two differnt issues here. The percentage example you are talking about is what happens to that $70k income WHEN YOU CUT GOVERNMENT SPENDING


Now lets assume FOR YOUR ARGUMENT'S SAKE,, that we had a Marginal rate of 10% up to $40k (slightly above median income) and 70% after that. In which case the person earning $10k would "take home" $9k.
And the person earning $100k would take home 90% of $40k PLUS 30% of $60k. = $54k. So that's a NET tax rate of 46%. Which is less than Five times the tax rate.

The problem with your BELIEF is that the FACTS contradict your claims that:

a person that works hard to advance himself should pay SEVENTY TIMES MORE than a person who sits on his ass most of the time.

You have no basis to assume that the person earning $100,000k "Works hard to advance himself" and that the person earning $10k "sits on his ass most of the time.

NOT ONE.


Now as to your point:

[Why the hell would anyone work to make 10 times more in income if he had to pay SEVENTY times more in taxes?

First off your math is wrong. The high earner would pay the same marginal rate as the low earner on the first income bracket. Lets pretend the WORST CASE, that the bracket is $10k. In which case the High earner would pay 70% of $90k and 10% of $10k. For a NET TAX BILL of $64,000.

Secondly why would someone do that? Because $36k is still FOUR TIMES AS MUCH AS $9k. And that buys more services a better life style, etc.

That's why the USSR failed.

Really clueless now. Because if that was what caused the USSR to fail, they would have failed within 10 years (look at the Articles of Confederation). Yet they lasted close to 80.
What Killed the USSR is the same thing that is killing Greece, but in a slightly different form. Russia's accounting system was a lie (as was Greece's) As a result, the USSR could not come close to adequately allocating resources within the economy in a way that was remotely efficient.

North Korea is different. North Korea is a slave state. Essentially a modern feudal monarchy. And like the feudal monarchies of history, Most of the peasantry lives in abject misery, and a few elite do fine. And everyone struggles to get into the elite. And the elite GET REWARDED FOR THEIR STRUGGLE IMMENSELY.

That's actually the system YOU ADVOCATE

Cuba's economy sucks because the most powerful trading partner in the region punishes trade with Cuba. No different than what happened to South Africa with the investment boycotts - except that Cuba had a lot of cash coming in from Russia for many years and when that went away, there wasn't the indigenous regional economy that South Africa managed to cobble together

NONE of those are/were marxist in any meaningful way. They ALL are basically dictatorships.
Russia had the same form of government it had had for 500+ years: An autocratic Oligarchy where the Autocrat was beholden to a small central oligarchy which ruled the economic functions of the regions from Moskva

Cuba has been a dictatorship under Castro mainly because of the Red Scare of McCarthyism and the red-baiting of short-sited naifs like you

North Korea has been a Divine Right Kindom indistinguishable from that of the Pre French Revolution Sun King.


None of which have anything to do with marxism. Nor does managing a hybrid modern economy that blends EFFICIENT Market Capitalism with Government Services in areas where market competition has been shown not to work.