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stui magpie Gemini

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PostPosted: Thu Oct 30, 2014 8:27 pm
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Way back in the 80's, when the tax rates were worse than now, I knew plenty of blue collar types who would knock back overtime because it would push them into the next tax bracket.

You hypothesise about things you have no direct experience of.

If you're earning $20 per hour and you're asked to work back. You get paid time and a half (150%) so your hourly rate becomes $30, less tax for the overtime.

The less tax is the crucial bit. If that bumps you on the tax rates from 30% to 50% you are getting paid less for doing the overtime net than for your ordinary hours.

That's why the progressive tax margins IMO is bullshit and is should be a flat rate with an indexed tax free threshold and rely on the GST to suck in revenue.

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David Libra

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PostPosted: Thu Oct 30, 2014 8:40 pm
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^ I hear you. I'd definitely support a much more gradual rate so as to avoid such anomalies.

TP, Rinehart's the richest person in Australia, so of course she's the first that comes to mind. You could replace her name with that of James Packer, Andrew Forrest, Clive Palmer or whoever else if you prefer.

http://www.forbes.com/australia-billionaires/

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stui magpie Gemini

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PostPosted: Thu Oct 30, 2014 8:47 pm
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Get over the Billionaires FFS. the don't earn a salary, they're the tiny minority.

Get the overall tax system right at the company level and they pay their fair whack even if it doesn't look like it.

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David Libra

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PostPosted: Thu Oct 30, 2014 8:52 pm
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I'm not just talking about billionaires, though. Just used Rinehart's name as an example of someone who could easily pay a, say, 90% tax rate. 75%+ for millionaires might be reasonable, for instance, or even just for those earning tens of millions. The figures are abstract; it's the idea I'm trying to focus on here.
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stui magpie Gemini

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PostPosted: Thu Oct 30, 2014 9:12 pm
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Yeah but your idea is based on a false premise.

Gina's worth as publicised by the media is the company worth. She doesn't actually earn billions in direct wages herself each year. She may actually personally earn less than most middle managers if you want to tax her direct income, but she has access to all sorts of things via the company.

Get a grip about what you're talking about instead of just regurgitating socialist cant. You make the tax rate for her 90%, she'll pay less tax than now.

The solution isn't income tax, it's other taxation.

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Member 7167 Leo

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PostPosted: Thu Oct 30, 2014 9:23 pm
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One of our biggest issues are companies with complex overseas ownership that either pay no tax or pay tax at a reported rate of 1%. If these companies want access to the Australia market place they need to contribute. My suggestion is that they pay turnover tax the same way a bookie does. That will ensure they contribute or feck off.
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Mugwump 



Joined: 28 Jul 2007
Location: Between London and Melbourne

PostPosted: Thu Oct 30, 2014 10:21 pm
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David wrote:
I'm not just talking about billionaires, though. Just used Rinehart's name as an example of someone who could easily pay a, say, 90% tax rate. 75%+ for millionaires might be reasonable, for instance, or even just for those earning tens of millions. The figures are abstract; it's the idea I'm trying to focus on here.


Yes, but you've not addressed the fundamental issue that they will then decamp to places that recognise that 40% tax rate on a large income is better than 0 on an exiled income. your idea that they won't notice if you do it slowly doesn't really hold water.

Britain had a rate of 90% in the 60s and 70s. See lyrics to "Taxman" by The Beatles, "Sunny Afternoon" by the Kinks, see why "Exile on Main Street" was recorded in France, why Lennon went to live in the US ... and consider why the Uk was an under-invested, deficit-ridden IMF-begging dump by 1978.

I donlt like the Rineharts of this world - and she seems to me a particularly unlovely and undeserving specimen - but cutting off your nose to spite your face just leaves you poorer and noseless.

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pietillidie 



Joined: 07 Jan 2005


PostPosted: Thu Oct 30, 2014 10:42 pm
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stui magpie wrote:
David wrote:
Mugwump wrote:
^ David, taxes at the top marginal rate are ca 50%. I'm not sure how much more you'd like to raise them, but until you've actually built a business yourself, amd learned how hard it is to take that risk, make it work, keep it afloat on changing seas, meet a payroll.... Or until you've actually climbed the greasy workplace pole for enough years with enough distinction to pay that 50% tax rate, i'd be a little sceptical about the justice of taking it away from those that do.

The problem with the Left, I think, is the assumption that the people who earn good money somehow achieved it effortlessly and don't deserve it. In my experience, that is true of some (most real estate agents, lots of financial services and the general cartel called the medical profession spring to mind), but it's not true of many. I don't like what CEOs are paid, but I've seen the business world up close for long enough to know that very few people can do that job in a large company. A lot think they can, but funnily enough, that envious conviction is mostly proportional to the degree of ignorance about, and unsuitability for, the relentless pressures, self-control and skills that such a job entails.

As Margaret Thatcher (boo, hiss) once said - the trouble with socialists is that they always run out of other peoples' money....


I reckon some of the bigger earners in our society could be taxed 75% plus and still enjoy a ridiculously comfortable lifestyle. Thatcher's quote is about a system that doesn't provide any incentives and thus has little to no productivity. Nobody's suggesting that.


You're suggesting taxing people at 75% and you don't think that's not providing an incentive an actually providing a massive disincentive? WOW. Shocked What colour is the sky on your planet?

The problem with the right, I think, is its world ignorance and the extent to which it filters out reality in favour of children's-story-level claims it is spoon fed by authority.

Postwar US boomed on much higher tax rates than we have today. Is there no Earth section in your planet's library?

Moreover, you do have the maths to understand why 30% of a $100M is somehow a lot more preferable than 70% of $100,000, right?

Two of the world's most respected economists, if that's not an oxymoron, in the WSJ in 2012 wrote:


Diamond and Saez: High Tax Rates Won't Slow Growth
We're not close to the top of the Laffer Curve. Raising tax rates is part of a sensible deficit reduction strategy.

The share of pre-tax income accruing to the top 1% of earners in the U.S. has more than doubled to about 20% in 2010 from less than 10% in the 1970s. At the same time, the average federal income tax rate on top earners has declined significantly. Given the large current and projected deficits, should the top 1% be taxed more? Because U.S. income concentration is now so high, the potential tax revenue at stake is large.

But will taxable incomes of the top 1% respond to a tax increase by declining so much that revenue rises very little or even drops? In other words, are we already near or beyond the peak of the famous Laffer Curve, the revenue-maximizing tax rate?

The Laffer Curve is used to illustrate the concept of taxable income "elasticity,"—i.e., that taxable income will change in response to a change in the rate of taxation. Top earners can, of course, move taxable income between years to subject them to lower tax rates, for example, by changing the timing of charitable donations and realized capital gains. And some can convert earned income into capital gains, and avoid higher taxes in other ways. But existing studies do not show much change in actual work being done.

According to our analysis of current tax rates and their elasticity, the revenue-maximizing top federal marginal income tax rate would be in or near the range of 50%-70% (taking into account that individuals face additional taxes from Medicare and state and local taxes). Thus we conclude that raising the top tax rate is very likely to result in revenue increases at least until we reach the 50% rate that held during the first Reagan administration, and possibly until the 70% rate of the 1970s. To reduce tax avoidance opportunities, tax rates on capital gains and dividends should increase along with the basic rate. Closing loopholes and stepping up enforcement would further limit tax avoidance and evasion.

But will raising top tax rates significantly lower economic growth? In the postwar U.S., higher top tax rates tend to go with higher economic growth—not lower. Indeed, according to the U.S. Department of Commerce's Bureau of Economic Analysis, GDP annual growth per capita (to adjust for population growth) averaged 1.68% between 1980 and 2010 when top tax rates were relatively low, while growth averaged 2.23% between 1950 and 1980 when top tax rates were at or above 70%.

Neither does international evidence support a case for lower growth from higher top taxes. There is no clear correlation between economic growth since the 1970s and top tax-rate cuts across Organization for Economic Cooperation and Development countries.

For example, from 1970 to 2010, real GDP annual growth per capita averaged 1.8% and 2.03% in the U.S. and the U.K., both of which dramatically lowered their top tax rates during that period, while it averaged 1.72% and 1.89% in France and Germany, which kept high top tax rates during the period. While in no way does this prove that higher top tax rates actually encourage growth, there is not good evidence from the aggregate data supporting the view that higher rates slow growth.

One cannot evaluate the ultimate growth effects of raising more revenue without identifying what is done with the revenue. If part of the revenue is used to reduce the federal debt, more of savings go into capital investment, enhancing growth. The fact that those paying higher taxes will reduce their savings somewhat does not fully offset this effect as some of their higher taxes would come out of consumption.

If some of the additional revenue is used for public investments with a high return, such as education, infrastructure and research, it raises growth further. The neglect of public investment over the last few decades suggests that the returns could be quite high.

Large losses in efficiency come when people are limited in their ability to finance good investment opportunities. Surveys show difficulty of borrowing as an issue for start-ups. And higher education is influenced by the finances of parents, and the earnings premium for higher education is very high. Access to investment financing is a much bigger issue for low earners than for high earners. By the time Bill Gates got rich, Microsoft was not likely to have trouble financing investments. Hence, increasing tax rates on the already rich might not hurt growth as much as increasing tax rates on the soon-to-be rich.

By itself, a suitable increase in the taxation of top earners will not solve our unsustainable long-term fiscal trajectory. But that is no reason not to use this tool to contribute to addressing this problem.

Mr. Diamond is professor emeritus at MIT and a Nobel laureate in economics. Mr. Saez is a professor of economics at UC Berkeley and a John Bates Clark medalist.

http://online.wsj.com/article/SB10001424052702303425504577353843997820160.html
(Sorry if you get locked out, but that link was good for at least one view for me)

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Mugwump 



Joined: 28 Jul 2007
Location: Between London and Melbourne

PostPosted: Fri Oct 31, 2014 4:12 am
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^1980 and 2010, timed perfectly to cover three significant world recessions - 1980-84, 1991-94, and the great recession of 2008+.

This is then compared to a period with one major recession (1974-75), and the longest global expansion of demand in world history as shattered cities across the developed world were repaired after aerial bombardment. That the growth rates were comparable across the two periods amply the supports the argument that high taxes injure growth, in my eyes.

Even nobel prizewinners have an ideological agenda, I guess.

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pietillidie 



Joined: 07 Jan 2005


PostPosted: Fri Oct 31, 2014 6:13 am
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Mugwump wrote:
^1980 and 2010, timed perfectly to cover three significant world recessions - 1980-84, 1991-94, and the great recession of 2008+.

This is then compared to a period with one major recession (1974-75), and the longest global expansion of demand in world history as shattered cities across the developed world were repaired after aerial bombardment. That the growth rates were comparable across the two periods amply the supports the argument that high taxes injure growth, in my eyes.

Even nobel prizewinners have an ideological agenda, I guess.

Unless this is not one of your finer moments in sport!

You're referring to the wrong study they're basing their serious findings on, and your recession years don't hold for the US where the other study is concerned. The onus is on you to make sure you're not the one, through premature reaction, who is engaging in the mischief here. (What in the name of god possessed you to think people of that standard of rigour wouldn't have taken that into account is beyond me).

First, you are referring to the US Dept. of Commerce's findings, not the findings of the Nobel Prize winners in their "analysis of current tax rates and their elasticity", who don't mention that shorthand argument in their actual research at all (see: http://eml.berkeley.edu/~saez/diamond-saezJEP11opttax.pdf). Good luck finding issues with their assumptions in that paper; very few others have in what is an almost universally-praised, very carefully argued study.

Second, in the US Dept. of Commerce study which you do refer to, the period 1950-1980 includes a very singular external oil shock, the Iranian Revolution and Volcker appointment of 1979 and 1980—one of the worst years of a recession which began in January 1980, no less. Moreover, the US economy was recovering by late 1982, so to throw in 1983 and 1984 for good measure, as you've done, and to gloss over the study's inclusion of 1980, is the real mischief here, even if an unintentional one.

Third, are you really saying you don't think 1950-1980 was a long enough period to test your capital flight theory at 70%+ top tax rates, regardless? I mean, really? Draw the lines wherever you like according to the high tax rates concerned and your claims still look outlandish.

Fourth, implying that recessions are beamed down from the misty moons of Jupiter and do not reflect any fundamental correction at all is not even something Keynesians adhere to, with what actually happened supporting the exact opposite of your complaint. That is, both the early 1980s and late 00s recessions were heavily based on over-leverage and dumb financial regulatory loosening. And you don't get to take the exaggerated stimulus before those types of recessions and leave out the correction during them. So that's a further mischief in your own claims you may not have even noticed.

The fact is, at the end of the day, there is absolutely no empirical evidence to support the view that very high upper-income tax rates have a negative effect on the economy, while we know even small transfers of income have massive utility in the lives of the poor, the struggling working class, and above all the lives of their children.

As many others have pointed out in literature elsewhere, given you have no empirical evidence to support your claims in this instance, you're really being guided by a fundamentalist ideology which grossly overrates the competitive validity, individual utility, and social utility of additional capital to the super rich; ignores the utility of transfers to the working class and poor in favour of ignorant moral accusations; and deems the children of the poor as worthless slugs deserving of their lot in life by fate of birth.

I don't for a minute think that deep down you hold those things or you're a bad person, but I do think you've accidentally snookered yourself into a fundamentalist logic and conclusion on this and related topics, and are playing a game of divorced, abstract pub chess which bears little connection to people's actual, lived lives, and their individual hopes, aspirations, struggles, moral capacities, creativity, contribution and value as fellow human beings in this ironic endeavour known as life.

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Mugwump 



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Location: Between London and Melbourne

PostPosted: Fri Oct 31, 2014 8:41 am
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Nice try, but I just looked at the graph of Us GDP per capita from 1929 to 2010 again. It's wiki, so could be wrong, but it accords with my practical memory of years in the workforce, and i doubt it is :

http://commons.m.wikimedia.org/wiki/File:US_GDP_per_capita.PNG

Very clear, three large recessions marked by GDP drops since 1980, including the mother of all GDP recessions in 2008 - as big as almost all of the others put together, until the recovery started in 2010. One oil price shock in 1973-74. I learned a long time ago that the time period selected for comparison is the most critical variable important element in nearly all comparative economic history.

That said, I did skim the article at work, and indeed I mistook the fact that this is not the Nobel Prize work. That is sad, as I was about to find the coupon and send off for one myself, if it was. I will read that paper, as it is an important subject.

On the subject of children and welfare, i think most decent people want a welfare state that helps prevent and alleviate poverty and misery. I have no problem with cutting back on the vast middle-class employment subsidy called the civil/public service bureaucracy, and diverting a good chunk of the savings to front-line children's services. Good luck with that one.

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pietillidie 



Joined: 07 Jan 2005


PostPosted: Fri Oct 31, 2014 9:54 am
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Mugwump wrote:
Nice try, but I just looked at the graph of Us GDP per capita from 1929 to 2010 again. It's wiki, so could be wrong, but it accords with my practical memory of years in the workforce, and i doubt it is :

http://commons.m.wikimedia.org/wiki/File:US_GDP_per_capita.PNG

Very clear, three large recessions marked by GDP drops since 1980, including the mother of all GDP recessions in 2008 - as big as almost all of the others put together, until the recovery started in 2010. One oil price shock in 1973-74. I learned a long time ago that the time period selected for comparison is the most critical variable important element in nearly all comparative economic history.

Nope, sorry; if you're going to call on recessions as an escape clause you'd better research your "recessions" at a much better resolution than that. 1980 was a major part of the early 1980s recession which is almost universally cast as a 1980-1982 phenomenon; by 1983 things had changed substantially, and 1984 was after the fact. How many more years do you need to cut out of the lower tax period to get your imaginary data that doesn't exist for irrelevant calculations you're never going to run?

And if you're going to exclude recessions as if they miraculously fly down from Mars, the least you can do is also mention the pre-correction inflation before them, something which was likely a much bigger part of the late 00s recession.

And yet, still: Even that is a red herring because no matter where you bother drawing the line in the 70%+ tax period you won't find meaningful evidence that high tax rates at the very top of incomes slow growth because it doesn't exist. Like angels, like ghosts and like the tooth fairy; it just doesn't exist. Run the numbers as many times as you like.

The fact that tax rates of 70%+ shocks people today is not evidence of some hidden mischief in the data everyone until you including Nobel Prize winning economists have failed to spot; rather, it's evidence of just how potent the perpetual brainwashing carried out by the sponsored media over a person's lifetime can be. Even with a person as intelligent as yourself.

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stui magpie Gemini

Prepare for the worst, hope for the best.


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PostPosted: Fri Oct 31, 2014 6:18 pm
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pietillidie wrote:

The problem with the right, I think, is its world ignorance and the extent to which it filters out reality in favour of children's-story-level claims it is spoon fed by authority.


As usual you have that backwards

Quote:

Moreover, you do have the maths to understand why 30% of a $100M is somehow a lot more preferable than 70% of $100,000, right?


Nah, I'm just a dumb uneducated trog who spends his day telling people with degrees what to do. Can you google a link for it?

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think positive Libra

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Joined: 30 Jun 2005
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PostPosted: Fri Oct 31, 2014 6:24 pm
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stui magpie wrote:
pietillidie wrote:

The problem with the right, I think, is its world ignorance and the extent to which it filters out reality in favour of children's-story-level claims it is spoon fed by authority.


As usual you have that backwards

Quote:

Moreover, you do have the maths to understand why 30% of a $100M is somehow a lot more preferable than 70% of $100,000, right?


Nah, I'm just a dumb uneducated trog who spends his day telling people with degrees what to do. Can you google a link for it?

LOL! Lots!

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pietillidie 



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PostPosted: Fri Oct 31, 2014 8:52 pm
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stui magpie wrote:
pietillidie wrote:

The problem with the right, I think, is its world ignorance and the extent to which it filters out reality in favour of children's-story-level claims it is spoon fed by authority.


As usual you have that backwards

Quote:

Moreover, you do have the maths to understand why 30% of a $100M is somehow a lot more preferable than 70% of $100,000, right?


Nah, I'm just a dumb uneducated trog who spends his day telling people with degrees what to do. Can you google a link for it?

More like an angry young man, I'd say, still seeking dad's approval Wink

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