Any thoughts on this argument over taxes?

[zeos3]

I got the "tax system explained in beer" email from a friend of mine. I sent the debunk that I found on DU as a reply. Here's the link:

http://www.democraticunderground.com/discuss/duboard.ph...

Here is the response I got back:

"The problem is, when the rich guy leaves, he takes the jobs he creates with him, so everyone is even worse off.

I am amazingly irritated that I lose over a third of my income and people think I should give more or that is is somehow unfair. I work at least 6 days a week, more than 12 hours everyday (it is not uncommon for me to pull an all-nighter multiple times in a month or even week) and I incurred over $150,000 in loans to make a decent living (not to mention that $100K my parents needed to pay out of their own pocket). If I now need to share even more than what I currently do, what is the motivation for me to work this hard or to incur the debt that I did? Everyone looks at the end salary, but no one is looking to give me credit for the cost (both financially and the opportunity cost of me being out of the work force for 7 years). I could have stopped with a college degree and work a whole lot less and then I can cry that it is unfair that those who do more, have more.

In all seriousness, I had a friend from college who after his pay raise made LESS money after taxes than before. He went to his boss and got his salary reduced to the pre-raise level. So the government actually LOST money because of their unfair tax policy.

And if their tax policy was fair, he would have actually been making more and funneling that back into the economy and created jobs every time he went out to dinner or bought a shirt.

I hate to sound like some of those people on conservative radio, but where did our work ethic go? My parents work every single day other than Christmas and Thanksgiving. They are in the store at 7AM and leave at 10PM. EVERY DAY. And guess what? Because of their work ethic, they have a nice home, savings and have no financial worries. Now, is it fair that their taxes should go up because someone else makes a lifestyle choice to only work one 9 to 5 job? Before this sense of entitlement hit everyone, people worked multiple jobs to have what they had. They did not stand in line waiting for the government to redistribute wealth.

Guess what? If my taxes go up, I start to re-analyze my job. Is my post-tax salary worth the work? Maybe, maybe not. It is going to depend on the final number. If I move to a lower tax bracket where my after-tax salary will be close, it is a NO BRAINER. And If I make a little less (either because I have to pay more in taxes or because I take a lower paying job deciding its not worth it), I'll just spend a little less. So, that corner store that waited for me and my kind to pay the bills will be screwed.

The problem with tax policy, especially liberal tax policy, is it assumes all other things are equal, without taking into account human emotion. Obama and company think "hey if we raise taxes, we will net more money." NOT TRUE. Like what happened with my friend, they may make less. I may quit and work at a smaller firm with less hours because my end salary may not be worth the stress, time and effort. Companies leave (and leave behind their workers) because they can save by moving to England or Ireland. Businesses that can't leave start to see where they can cut costs (usually the biggest cost for a company is rent and salaries - so guess what happens). You now have what used to be tax-generating workers getting an unemployment check from the government - that is a cash NEGATIVE policy. People who may have sold their stock at one period hold it longer waiting for a bigger gain, because the after-tax reward is not worth the risk they take (or they do not invest at all because they need to make a larger amount than they previously have thought to cover their costs). Look at ANY major company. Deals are often structured for no other reason than to cut back on their costs and taxes."

These are good friends of mine. I just never realized how sensitive tax issues are for them.

[SharonAnn]

1. It's an old canard, that someone "makes less money after a raise because of taxes"

I call "B.S."

[zeos3]

4. It seems like it would be

but my girlfriend has told me about a couple of instances where her coworkers have put in over time and have made the same or less on their paychecks. She's a nurse and I'm not exactly sure how their pay scale works. I'm also not sure how much of this money will be returned in the form of a refund. I'll have to ask her later.

[Bill McBlueState]

2. Maybe some people do work too hard.

"I could have stopped with a college degree and work a whole lot less"

That may actually be healthier in the long run.

Or, one could view the work as its own reward instead of expecting to be rewarded by tax policy.

[HughBeaumont]

3. Start with this thread, first of all . . .

The right love to repeat this very incorrect and crapola meme and it makes me sick that no one calls them on this . . .

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=4055386

[zeos3]

5. Thanks eom

[Poseidan]

6. government is not a corporation

It is not interested in 'netting money'.

[zeos3]

7. Good point, don't mind if I use it eom

[TomClash]

8. "Deals are often structured for no other reason than to cut back on their costs and taxes."

Ridiculous. Deals are often structured to take advantage of lower tax options but deals are rarely done only for tax purposes. GM and Chrysler are not exploring a merger for tax reasons. Buffet did not invest in Goldman for tax reasons. Kenny Lewis didn't covet Merrill for the tax breaks.

There are two questions I would ask your friends: 1) do they think capital should be taxed at a lower rate than labor, as it is today? Cash out your investment in a company and you pay less in taxes on your haul than the manager and his workers who works 60 hours per week building and running the company. 2) what federal programs do they want to cut and by how much?

No one pays more in taxes than they get in a raise when they get a raise - tax rates are marginal. For example, when you hit the 33% tax rate at $200,000, married, filing jointly, you pay 33% more in federal taxes for the amount above $200,000 - but you still pay at a lower rate for the amount below that. You don't pay at a 33% rate for the entire $200,000.

Barack is basically talking about going back to 1990s tax rates. Did mommy and daddy working 120 hours a week (I don't buy it,, but let's assume this is true) live well and work 120 hours per week then? I'm sure they did.

I call BS on this entire post.