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Progressive Taxation watch

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    I regard progressive taxation as arrogance on the part of the government; that they think they have a right/duty to redistibute income, and know best how to do so.
    (Note: I am not talking about wealth here, as that is rather different.)

    I will do anything to prevent (left-wing) deluded idealists getting their hands on my money and throwing it at people who can only be described as lazy. If this means off-shore accounts etc. then so be it.

    "Why?" I hear you all cry..

    I will decide how I can most effectively spend my money to benefit society. If it is thrown at the economic issue "poverty", it does nothing to solve the social issues that underly it. Giving people money doesn't make them more likely to get a job and contribute properly to society. Therefore benefits are "wasted" on large numbers of people. Benefits would actually be better used fufilling the admittedly inefficient purpose of "creating" jobs for these people to do, and paying them wages. This would make the next step into a job actually created by the market a natural one.

    The cases of people who don't work and receive benefits should be individually assessed. That's cumbersome, but it's the only way get these lazy and often stupid people out of their sedentary lifestyle.

    "Too much tax" is also a lower level than most people acknowledge:

    There is optimum level of taxation, which this government is exceeding (by stealth), and it will harm this country as a whole, which will not make poor people richer in the long term...
    This level is described by the "Laffer Curve":
    http://www.heritage.org/Research/Tax...s/bg1090c1.gif
    [NB: That is a simple one, but easy for non-economists ]

    I don't think many people can disagree with that lot.
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    (Original post by happysunshine)
    But it's not just the rich people who give away their hand earned money. Working class people give some away (maybe not as much, but still that money could be used for other things) which will not benefit them.

    At the end of the day, the rich are still rich and there are people who often contribute more to society which need paying etc.
    You what? of course taxes will benefit the poor, taxes don't go down a black hole, they are put back into the economy by government spending on public goods and merit goods. Public goods by defenition are non-excludable, therefore the poor and rich have equal access to them, however the rich pay (much) more towards them. Therefore, on average, the rich lose out and the poor gain.

    (Original post by mobbdeeprob)
    Progressive taxation is not a disincentive to work for the rich.
    Yes it is. The more you earn, the higher rate you pay tax at. Therefore you are getting less of a raise than you should be getting, therefore the benefit of a raise is less, and the incentive to work for a raise is therefore less.
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    (Original post by mik1a)
    Yes it is. The more you earn, the higher rate you pay tax at. Therefore you are getting less of a raise than you should be getting, therefore the benefit of a raise is less, and the incentive to work for a raise is therefore less.
    Quite right.

    Also, if taxes are too high, honest people are driven to evasion, and this hurts society through the harm to worthy things that taxes are spent on, and the loss of respect for this country's laws, which harms society.
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    The reason for progressive tax is simple: inequality of income, and wealth. The distribution of income and wealth amongst citizens isnt perfect if it is left to the market alone. Government intervention in form of progressive tax for example may help redistribute income. It is the central goal of centrally planned economies. The major restribution method is the taxation system, another large one is transfer payments[wealfare,and old age pensions for example]. For example if we left it all to the market those who couldn't afford it would not go to school at all.
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    (Original post by Sony)
    I support progressive taxation 100%. Its essential tool in creating equality in society, redistributing income between rich and poor people. Not everyone has been given opportunity to get a well paid job, how many people inherit businesses (it doesnt mean that they worked for it). Its easier for rich to get richer but for poor to get richer its real tough in this country, no matter how hard they try. Progressive taxation is amazing tool in ensuring greater equality in society. Whats the point of people earning millions and just wasting money for some ridiculous extravaganzas, while some people are starving, homeless and etc. I am not saying that progressive taxation will solve this but in combination with other techniques it has amazing power! It doesnt take away all income from rich its just a small proportion, besides as you earn more each spent pound yelds less satisfaction, people tend to save more (because consumption falls as proportion of income). Why money should be saved when it could invested in more productive and beneficial way to society?! :rolleyes:
    No, the government shouldn't take money for the purpose of redistribution, because it spends it wrongly.
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    (Original post by Gwarwick)
    The reason for progressive tax is simple: inequality of income, and wealth. The distribution of income and wealth amongst citizens isnt perfect if it is left to the market alone. Government intervention in form of progressive tax for example may help redistribute income. It is the central goal of centrally planned economies. The major restribution method is the taxation system, another large one is transfer payments[wealfare,and old age pensions for example]. For example if we left it all to the market those who couldn't afford it would not go to school at all.
    You are mixing all sorts of unrelated issues here. :rolleyes:

    An argument against progressive taxation is NOT an argument against state provision of education.

    You clearly haven't read my long post, and aren't considering the actual issue here, which is whether or not redistribution should be a goal and how efffective it's likely to be...
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    (Original post by -mb-)
    No, the government shouldn't take money for the purpose of redistribution, because it spends it wrongly.
    Ya they tend to spend it incorrectly they should use transfer payments more[though it is quite costly, and the governements revenue originates from taxes so have arrived at the same problem again], as well as goods + services in kind. Arthur Okun once accurately compared income redistribution to transferring water from one bucket which leaks to another. The issue is extremely complicated.
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    (Original post by mik1a)
    Yes it is. The more you earn, the higher rate you pay tax at. Therefore you are getting less of a raise than you should be getting, therefore the benefit of a raise is less, and the incentive to work for a raise is therefore less.
    But would a rich person be willing to forgo the standard of living to which they were accustomed prior to progressive taxation? No, they wouldn't necessarily. Incentives to work are less of an issue for those in the higher echelons of an economy than those in the lower echelons anyway.

    An overriding assumption of economics is that all economic agents are maximisers - looking to gain as much utility as possible from consumption. If, by increased taxation, the individual is faced with declining consumption (and a consequent decrease in their standard of living) - they may well work harder to compensate for this.

    Few economists would be so obstinate as to suggest that progressive taxation can only serve as a disincentive to work (for those higher up in the economic hierarchy).
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    (Original post by -mb-)
    You are mixing all sorts of unrelated issues here. :rolleyes:

    An argument against progressive taxation is NOT an argument against state provision of education.

    You clearly haven't read my long post, and aren't considering the actual issue here, which is whether or not redistribution should be a goal and how efffective it's likely to be...
    You didn't create the thread the original question was;

    'I just learnt about this today - it's insane. How can you justify taking more money of people who earn more?'

    I also do not recall stating that an argument against progressive taxation is an argument against state provision of education.
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    (Original post by Gwarwick)
    You didn't create the thread the original question was;

    'I just learnt about this today - it's insane. How can you justify taking more money of people who earn more?'

    I also do not recall stating that an argument against progressive taxation is an argument against state provision of education.
    Whoops, sorry, didn't read your post properly.

    I agree that you didn't say that...

    However, on the other point, I think it is fair to ask you to follow the line of the discussion, and "resolve" one issue at a time. It is clear what the main issue at stake here is.
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    (Original post by mik1a)
    You what? of course taxes will benefit the poor, taxes don't go down a black hole, they are put back into the economy by government spending on public goods and merit goods. Public goods by defenition are non-excludable, therefore the poor and rich have equal access to them, however the rich pay (much) more towards them. Therefore, on average, the rich lose out and the poor gain.

    But they don't really loose out, they are never going to meet in terms of car, house and possessions. The rich should pay that extra bit, if you made rich and poor alike pay equal amounts the poor would become incredibly poorer and the rich would become even richer. Society functions better when the poor have a little more, we can't take all their money off them, surely crime and employment would suffer?
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    (Original post by mobbdeeprob)
    But would a rich person be willing to forgo the standard of living to which they were accustomed prior to progressive taxation? No, they wouldn't necessarily. Incentives to work are less of an issue for those in the higher echelons of an economy than those in the lower echelons anyway.

    An overriding assumption of economics is that all economic agents are maximisers - looking to gain as much utility as possible from consumption. If, by increased taxation, the individual is faced with declining consumption (and a consequent decrease in their standard of living) - they may well work harder to compensate for this.

    Few economists would be so obstinate as to suggest that progressive taxation can only serve as a disincentive to work (for those higher up in the economic hierarchy).
    After a while I've finally deciphered all this... you are basically saying that higher taxes on a person will cause that person to work harder to make up their gap in disposable income? This does not make sense. Because of the progressive taxation, if they do this, their wage to productivity ratio will be lower than if they work at a lower productivity in a lower tax band. I made up the term "wage to productivity ratio", so if it's not obvious I mean the amount of pounts someone earns relative to the amount of pounds they produce for the firm they work for.

    Why will it be lower? Because of progressive taxation, even though they are earning more, they will be working even harder. The harder they work, the more they earn. But the rate of their increase in earning is dropping due to progressive taxation. Relative to workload, the higher up the ladder someone goes, the less they earn. Therein lies the disincentive.
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    (Original post by mik1a)
    After a while I've finally deciphered all this... you are basically saying that higher taxes on a person will cause that person to work harder to make up their gap in disposable income? This does not make sense. Because of the progressive taxation, if they do this, their wage to productivity ratio will be lower than if they work at a lower productivity in a lower tax band. I made up the term "wage to productivity ratio", so if it's not obvious I mean the amount of pounts someone earns relative to the amount of pounds they produce for the firm they work for.

    Why will it be lower? Because of progressive taxation, even though they are earning more, they will be working even harder. The harder they work, the more they earn. But the rate of their increase in earning is dropping due to progressive taxation. Relative to workload, the higher up the ladder someone goes, the less they earn. Therein lies the disincentive.
    But what do you suggest would be the actual effect on labour productivity amongst the rich?

    Progressive taxation kicks in, the rich lose a portion of their income compared to before and consequently experience a decrease in living standards.

    They respond to this decline in real income (and therefore consumption) by working reduced hours/not working at all? :confused: I wouldn't think so.
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    (Original post by -mb-)
    There is optimum level of taxation, which this government is exceeding (by stealth), and it will harm this country as a whole, which will not make poor people richer in the long term...
    This level is described by the "Laffer Curve":
    http://www.heritage.org/Research/Tax...s/bg1090c1.gif
    [NB: That is a simple one, but easy for non-economists ]

    I don't think many people can disagree with that lot.
    Your an idiot, someone who is stright out of an AS level economics lecture, whoops class.
    What level are you studying Eco? i'm in my 2nd year at Uni, The Laffer curve is basic, there is not stats acutally given with this theory. Infact why am i qualifying it as a theory its not.
    The laffer curve is common sense and discredited if you further your study of Eco.
    It states the bloody obvious, just one reason it is tought at AS Level.
    You shall realise towards the end of you rcourse at AS about the Gini coff. Thats the first area which is important NOT the level of taxation. By having a large G Coff. it is detremental to society, (You'll learn this at BA level) therfore this must be corrected through a progressive tax.
    Thus the reason why VAT is regressive form of taxation.
    So please don't spout the most basic Eco terms just because you believe they are correct when there are further fields you have not yet covered.

    Just like at PHD level what i am learning will be incorrect
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    (Original post by happysunshine)
    But they don't really loose out, they are never going to meet in terms of car, house and possessions. The rich should pay that extra bit, if you made rich and poor alike pay equal amounts the poor would become incredibly poorer and the rich would become even richer. Society functions better when the poor have a little more, we can't take all their money off them, surely crime and employment would suffer?
    You are forgetting that without progressive taxation, the rich still pay more. An equal percentage of a larger amount is larger. Perhaps I could go one step futher and say "scrap ad valorum tax, we should all pay £5000 a year to the government and that's it". After all, all income group recieve about the same from the government on average, why shouldn't they pay the same? This is the argument you are responding to when you say:

    "if you made rich and poor alike pay equal amounts"

    Of course, this is going over the top - despite it being completely fair at first sight, it does not account for people born into poverty who cannot help the fact that they are poor.

    Besides, the rich do lose out because of progressive taxation because their outgoings due to tax are greater than their incomes due to government spending. Besides, we aren't taking all their money, in the UK, someone earning a very low salary of £7,000 only pays £200 of that to tax. With normal taxation there will still be a band where the first, say, £5,000 is not taxed at all.

    Crime is a problem because of this, because people who are unproductive want more money. These selfish people will go to prison. (and should be forced to work during their stay to pay for their trial and police wages, although this is another issue)
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    (Original post by Checkey)
    And what a pointless response that was.
    such self awareness is rare on these fora.
    I commend you.
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    (Original post by mobbdeeprob)
    But what do you suggest would be the actual effect on labour productivity amongst the rich?

    Progressive taxation kicks in, the rich lose a portion of their income compared to before and consequently experience a decrease in living standards.

    They respond to this decline in real income (and therefore consumption) by working reduced hours/not working at all? :confused: I wouldn't think so.
    Yes. Because of this incentive, they work less. They get paid more relative to their workload compared to if they were working harder. Progressive taxes basically say "look, the harder you work, the higher the rate at which we take your wages". Therefore there is an optimum - a trade off between working too little to live in luxury, and working too much to get an unfairly small (and unproportional) amount of wages.
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    (Original post by Yogafan)
    Your an idiot, someone who is stright out of an AS level economics lecture, whoops class.
    What level are you studying Eco? i'm in my 2nd year at Uni, The Laffer curve is basic, there is not stats acutally given with this theory. Infact why am i qualifying it as a theory its not.
    The laffer curve is common sense and discredited if you further your study of Eco.
    It states the bloody obvious, just one reason it is tought at AS Level.
    You shall realise towards the end of you rcourse at AS about the Gini coff. Thats the first area which is important NOT the level of taxation. By having a large G Coff. it is detremental to society, (You'll learn this at BA level) therfore this must be corrected through a progressive tax.
    Thus the reason why VAT is regressive form of taxation.
    So please don't spout the most basic Eco terms just because you believe they are correct when there are further fields you have not yet covered.

    Just like at PHD level what i am learning will be incorrect

    Well, my friend, actually I have also covered the Gini Coefficient.

    As I stated, I was keeping things simple, so as to allow those who are not studying economics to understand my point. It is true that I am only at A-level though.

    It would be utterly absurd to exclude everyone who is below a BA level of Economics from this discussion. If fact (note this is two words) it is morons like yourself who cause voters in this country to become disengaged with key socio-political issues such as this one.

    If the public at large was better informed about different ways of tackling issues that impact on their lives, then they might feel they had enough understanding to vote, or might vote in a way that would better serve their interests. This would be an enourmous social improvement; to have popular engagement with these important debates.

    Back to the point:

    About the Gini coefficient:
    You are simply making an assumption that without progressive taxation we will have greater inequality, and therefore a larger Gini coefficient. The part of my post that you chose not to quote tackled the point about the ineffectiveness of the way in which the goverment spends our tax i.e. the revenue gained through progressive taxation...:rolleyes:

    So your post is actually far less intelligently simplified than mine, as it brushes over the huge assumption that progressive taxation is the way to correct inquality, which it is clearly not for reasons discussed, that you can read further back.

    Is it really taken for granted at degree level that progressive taxation is how to lower a country's Gini coefficient? Where the hell do you do economics?

    btw.
    What the hell is "discreted common sense"??? :confused:
    If the Laffer curve "states the bloody obvious" - how is it not valid?

    Sure, things are always more complicated, but you can't factor in everything in economics, and anyway, as a "general rule" or "trend in taxation revenue" (my words, quoted to be clear) it is certainly valid, and probably pertinent to what we are discussing here.
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    (Original post by -mb-)


    Is it really taken for granted at degree level that progressive taxation is how to lower a country's Gini coefficient? Where the hell do you do economics?


    If the Laffer curve "states the bloody obvious" - how is it not valid?
    At Durham, and do you not understand Gini the, look at what it is, work out what the purpose of Porgresive tax is then put the two together, reults = welfare = redistrubution. GOD I HATE FECKING A LEVEL STUDENTS THINK THEY KNOW IT ALL!
    REMINDS ME OF ME!
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    (Original post by Checkey)
    % taken from each income group should be the same - But that's Labour for you, screw the rich, feed the poor.
    Screw the rich, feed John Prescott.
 
 
 
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