Thursday, February 26, 2009

Overheard in Sunday School

While reading in Mosiah 11 about wicked King Noah and how he burdened his people:

And he laid a tax of one fifth part of all they possessed, a fifth part of their gold and of their silver, and a fifth part of their bziff, and of their copper, and of their brass and their iron; and a fifth part of their fatlings; and also a fifth part of all their grain.

"One fifth? wouldn't that be nice"

20 comments:

Curt Hostetler said...

I've had that exact same thought multiple times while reading that chapter.

Big fan of the blog, rants, etc.

Rachel H said...

AMEN SISTER!

Janell said...

So true, the government takes a third of my earnings. . .

Steve said...

Ha, I love how people complain, yet we have lower taxes than most countries of the world; at least countries most of us would be willing to live in! Taxation has proven itself to be an effective way to raise the overall economic prosperity of every industrial country over the past 100 years.

Emily said...

:) That is, actually, very funny.

Salt H2O said...

Steve,
Maybe you can help me with my world history here- when has any country taxed itself into prosperity?

ray said...

Steve, thank you for pointing out that our nation has some of the lowest taxes in the world. Now remember that we are also the most prosperous nation in the world. Think there's a correlation??

Steve said...

Salty and Ray - The point here is that there has to be somewhere in between. Too little and society fails. Look anywhere in the third world. The governments have no money to do the needed infrastructure programs. For instance, our electric grid is bordering on 3rd world levels. The grid in Iraq is better than ours! If you like brown outs and eventually rolling black outs, then by all means, get rid of taxes! And I agree, obviously too high of taxes does take away some incentive. But capitalism basics still prefer that you have something over nothing, ie the notion that people will stop competing or producing to not get their extra 60% is ludicrous and goes against the basic notions of capitalist theory, which people tend to tout as the reason we need low taxes.

What we are discussing her is personal income tax; how many of you are going to go outside the country to earn your income? Very, very few, even if you wanted to. So you will stay and pay 10, 20, 28, 35, and if Salty is right, 50% b/c that is more practical than leaving. And people that would be in the 35% rate, have the financial means to move their money to tax advantage places. If they are "smart" enough to make over $250k a year, but not how to lower their tax bill, then they don't deserve to keep that extra 10%, haha.

ray said...

Steve, the consequences of high taxes are not that people will leave the country and earn money elsewhere, the consequence is they will have less money to spend right here in this country. That stifles businesses that then cut back on employees and limits their investments in future developments and innovations. (further depleting their competitiveness and ability to employ more people) That is what keeps nations poor - the inability to reap the benefits of innovation and hard work.

Steve said...

Ray, what you are talking about and what, I presume, Salty is talking about are two different things, the individual tax rate and the corporate tax rate. For what it's worth, we've had one of the highest tax rates for businesses in the world for about 10 years now, yet you never heard many people complain about it under Bush....

Plus, what you are saying makes it sound like people in other countries don't work as hard or try to make more with themselves? Have you worked in the 3rd world? I have and those people are nine times out of ten more impressive than most Americans.

The problem here that many people, on both sides but mostly conservatives, complain about is this entitlement complex, usually in conjunction with people getting something from the government. But not paying your taxes or complaining about paying a higher tax rate, but typically NOT a higher percentage of your expendable income, is the same thing. No one ever said you are entitled to X% of what you make or do when you want to be a part of a functioning society.

Salt H2O said...

"No one ever said you are entitled to X% of what you make or do when you want to be a part of a functioning society."

Steve, that comment is down right communist!

I'm confused, so are you saying that the reason the hardworking people in 3rd world countries are in a 3rd world country is because they aren't taxed enough? That capitalism is what lead them to be in such a state?

Steve said...

Ha, no, but thanks for blowing a hole in my argument! :)

They come here for opportunity, which I 100% admit exists here way more than anywhere else I have been in the world. Do individuals have the ability to go from "rags to riches" here more than anywhere else, YES! My point, howerve, was society as a whole, which is who pays and benefits from taxes. Obviously broken down at the individual level, taxes hurt you, me, and Jim X, Y and Z%, but they also help her, him, and even us A, B, and C%. Taxes ARE what makes a progressive society function.

The idea of less than 100% owndership, ie private property, has been around for millenia longer than Communism, as proven by your Biblical quote. Private property itself is a relatively new principle in the age of mankind and economies. I don't want to get into a debate on that here, and admit that great economies thrive under some extent of private property, but just that 100% isn't required for successful capitalism. In fact, by definition, 1% should be enough to encourage a Capitalist to produce.

Cameron said...

Steve, a few quick thoughts...

I've lived in a third world country and its government's revenue problems did not stem from under-taxing its citizens but from over-corruption of its government leaders. I think that's fairly prevalent in other 3rd world countries as well.

Also, the key component you seem to be missing is the idea of marginal tax rates. It's the theory that if earning an extra dollar costs you more in taxes, then there is a disincentive to earn more. With Obama's announcement that anyone earning over $250k will see their taxes shoot up there is a real movement among earners to ensure they do not make over that limit.

Della Hill said...

I have to add that 100 years ago the United States was not taxing it's citizens, yet had minimal debt and was the fastest growing and thriving country in the world.
Where have our taxes gotten us?
As Salty said, countries do not tax themselves into prosperity.
-Della

Steve said...

Della, that just isn't true. Our country wasn't a prominent country in the world until WWI. WWII cemented "the American Dream". When was the 19th Amendment passed, Feb 1913.

Cameron, you actually make my point! If you are making $249k and paying 35% taxes, then making $250K will only raise your taxes by 10% on that ONE dollar. The way the tax system works is a graduated ladder. You don't pay your tax bracket on ALL your income. You pay 10% on the first bit, then 15% on the next ladder, 20% on the next, up through, etc. So in essence, if I went from having $249k to $250k, I would only being paying the higher tax rate on that extra $1! So if the rate at $250k was 40% instead of 35%, I'd only be out 5 cents more than if I was going from $248 to $249. I do not believe this is nearly enough disincentive from someone that wants to make more than $250k?

Do you plan to stop making money at $20k a year b/c if you go to $35k your tax rate almost doubles? I didn't think so...

Steve said...

Sorry, meant to say 16th Amendment. As important as women voters are, they aren't germane to this argument! :)

Cameron said...

Actually, yes. If I'm making $20k a year, then I'm likely getting $6k a year in EIC tax payments, as well as myriad other government benefits like housing, food and health care. If I start making $35k a year, all those things go away.

Here's an example of marginal tax rates at work.

And about that 1/5th thing. It's eerily not that far from the truth. (See page two, and the revenue and outlays as a percentage of gdp.)

Steve said...

If that were the case, Cameron, then why do any of us make more than $20k a year?!?! It proves my point that for even 1% more, most people will try to get it!

Cameron said...

Frankly, there are those that remain in the lower income levels because after you figure in all the non-cash benefits I listed previously, it's more advantageous to be poor.

I have a good friend who was faced with this very situation. He was out of work for some time, was on food stamps, had Medicaid, as well as other forms of aid. He eventually began receiving disability checks - which then put his income too high to receive the non-cash benefits. He is now worse off for earning more money.

To make it worthwhile to earn more money, you have to make enough to jump a couple levels all at once, otherwise it just isn't financially smart.

As for those that are already in the higher income brackets, the marginal tax rate is around 50%, and likely to increase in the near future. Many people will simply deem it not worth the time or resources to pursue further income because the actual return is so low.

Basically, high marginal tax rates make producers produce less. And that's bad for the economy.

ray said...

Sorry to back pedal a few comments, but I'd like to make it clear that I did not say that workers in third world countries do not work as hard as we do. What I said was that they are unable to reap the benefits of their hard work. If you remove the carrot, the donkey doesn't walk. That is where Obama's understanding of capitalism is bass ackward. He wants to take the carrot, give it to the guy riding the donkey, then wonders why the donkey stops walking.