Bar stool economics

[Fidel_Castronaut]

Heywood,
I don't think you're giving enough consideration to some of the criticism. Take for instance the obvious criticism that the bar stool economics lesson only takes into account income tax rates.

Income taxes make up about 41% of total tax revenue. Excise, payroll, and corporate income taxes are embedded in the price of all goods and services and are paid by everyone. The fact that this was ignored in an attempt to portray the bottom 40% of wage earners as getting a free ride with no tax liability is simply disingenuous.

Quite so. Indirect taxation impacts on poorer consumers to a much larger degree than it does richer consumers, for obvious reasons. Indeed, raising the indirect tax levels of (for example, in the UK, VAT) can have a massive impact on the MPC of poorer demographics, more so perhaps than raising/lowering direct taxation (eg Income Tax).

[Heywood]

The main conclusion about the percentages saves comes from applying a flat tax cut to a non-flat tax rates. To keep things fair, you should not apply a flat tax cut but a marginal one that matches the current system.

Even if you reduce the marginal rates across all brackets the rich are still going to receive the greatest reduction in dollars terms because they pay more. That is the point of the argument.

Some of the other claims of the critique you provided are just plain wrong. The claim that the rich would be ordering more expensive beers or going to higher end bars and therefore the analogy doesn't follow is just silly. The bar which is paid represents the government. Rich and poor alike are all customers of the same government so its an appropriate to analogy to have the rich and poor all drinking at the same bar.

[Surgenator]

The main conclusion about the percentages saves comes from applying a flat tax cut to a non-flat tax rates. To keep things fair, you should not apply a flat tax cut but a marginal one that matches the current system.

Even if you reduce the marginal rates across all brackets the rich are still going to receive the greatest reduction in dollars terms because they pay more. That is the point of the argument.

Can you do the math and show this? I doubt this will result if you do a marginal tax cut that matches the tax rate.

Some of the other claims of the critique you provided are just plain wrong. The claim that the rich would be ordering more expensive beers or going to higher end bars and therefore the analogy doesn't follow is just silly. The bar which is paid represents the government. Rich and poor alike are all customers of the same government so its an appropriate to analogy to have the rich and poor all drinking at the same bar.

Even though it comes from the same government, it doesn't mean they're using all the same services or access to the same deals. That's what the critique was pointing out.

[Heywood]

Can you do the math and show this? I doubt this will result if you do a marginal tax cut that matches the tax rate.

How are you defining "marginal tax cut"? I take it you mean a reduction in the marginal tax rate?

Even though it comes from the same government, it doesn't mean they're using all the same services or access to the same deals. That's what the critique was pointing out.

The rich and poor all get medicare, they all get social security, the all get access to public education, they all get military protection, they all get state department services, they all get access to the highway system. If anything the poor get more cause they get access to the ragbag of goverment safetynet programs. The truth is the rich and poor are basically at the same bar drinking the same beer. That counter argument is not compelling.

[Surgenator]

Can you do the math and show this? I doubt this will result if you do a marginal tax cut that matches the tax rate.

How are you defining "marginal tax cut"? I take it you mean a reduction in the marginal tax rate?

Whatever the percent pay distribution was for the $100, apply that same percent distribution to the $80.

Even though it comes from the same government, it doesn't mean they're using all the same services or access to the same deals. That's what the critique was pointing out.

The rich and poor all get medicare, they all get social security, the all get access to public education, they all get military protection, they all get state department services, they all get access to the highway system. If anything the poor get more cause they get access to the ragbag of goverment safetynet programs. The truth is the rich and poor are basically at the same bar drinking the same beer. That counter argument is not compelling.

Yes, the rich and poor do share some services. Here are some that they don't.
http://business.time.com/2013/01/30/bad-...oure-rich/
http://www.mercurynews.com/business/ci_2...gage-rates

[Cato]

The rich and poor all get medicare, they all get social security, the all get access to public education, they all get military protection, they all get state department services, they all get access to the highway system. If anything the poor get more cause they get access to the ragbag of goverment safetynet programs. The truth is the rich and poor are basically at the same bar drinking the same beer. That counter argument is not compelling.

So, after all your blustering you agree that the government is required to give the poor some semblancce of benefit? Could you possibly imagine what the poor would be like if it weren't for the government wasting resources on 'ragbag of safetynet programs'?

Since you've already proven yourself to be an economic dimwit, allow me to use the socratic method...

If laissez-faire capitalism is so great, why does Wal-mart intentionally hire would-be full time employees at part time hours to avoid the expense of benefits? Looks as if the invisible hand of the market has made a fist and penetrated the poor.

You still haven't explained why the free-market thinks it is acceptable that human beings work 40 hours a week and not be able to provide for basic necessities? If the unfettered market worked as you claim it would, this wouldn't be an issue.

[Heywood]

[quote='Heywood' pid='795026' dateline='1415767000']

How are you defining "marginal tax cut"? I take it you mean a reduction in the marginal tax rate?

Whatever the percent pay distribution was for the $100, apply that same percent distribution to the $80.

So if the richest man paid $60 dollars when the bill was $100 he should pay $48 dollars when the bill is $80? The richest man still gets the biggest refund or biggest liability drop in dollar terms looking at it from that way.

Yes, the rich and poor do share some services. Here are some that they don't.
http://business.time.com/2013/01/30/bad-...oure-rich/
http://www.mercurynews.com/business/ci_2...gage-rates

I skimmed these and they aren't about government services. One claimed rich people pay less for auto insurance and another claimed rich people get better interest rates on mortgages.

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So, after all your blustering you agree that the government is required to give the poor some semblancce of benefit? Could you possibly imagine what the poor would be like if it weren't for the government wasting resources on 'ragbag of safetynet programs'?

Yes the government is wasting money with a rag bag of safety nets. They should just give poor people money in the form of a universal basic income.

Since you've already proven yourself to be an economic dimwit, allow me to use the socratic method...

No Cato...you're the dimwit....I'm done talking to you.

[Surgenator]

How are you defining "marginal tax cut"? I take it you mean a reduction in the marginal tax rate?

Whatever the percent pay distribution was for the $100, apply that same percent distribution to the $80.

So if the richest man paid $60 dollars when the bill was $100 he should pay $48 dollars when the bill is $80? The richest man still gets the biggest refund or biggest liability drop in dollar terms looking at it from that way.

Why did you change your standard of what was considered fair? You first measure of what was considered fair was how much % savings each person got. Now your considering the total amount saved. You have to be consistent if we want to get anywhere. That was one of the criticism in the link I gave you about this bar stool economics.

This is what a marginal tax cut would look like if you matched it the % spend.

Original Cost -> New Cost -> % Savings
$59.00 -> $47.20 -> 20%
$18.00 -> $14.40 -> 20%
$12.00 -> $9.60 -> 20%
$7.00 -> $5.60 -> 20%
$3.00 -> $2.40 -> 20%
$1.00 -> $0.80 -> 20%

Yes, the rich and poor do share some services. Here are some that they don't.
http://business.time.com/2013/01/30/bad-...oure-rich/
http://www.mercurynews.com/business/ci_2...gage-rates

I skimmed these and they aren't about government services. One claimed rich people pay less for auto insurance and another claimed rich people get better interest rates on mortgages.

I already gave you links in my previous post on how the rich get tax deductions that are not avaliable to the rest of the population. A tax deductions is effectively a tax cut. These other links show how business are unfairly burdening the poor.

You have to ask yourself, Heywood, what should be the standard which we base our tax rates on? For me, it is effort+ability = financial mobility. And there has to be a minimum effort+ability that gives you a living wage.

[Heywood]

Why did you change your standard of what was considered fair? You first measure of what was considered fair was how much % savings each person got. Now your considering the total amount saved. You have to be consistent if we want to get anywhere. That was one of the criticism in the link I gave you about this bar stool economics.

This is what a marginal tax cut would look like if you matched it the % spend.

Original Cost -> New Cost -> % Savings
$59.00 -> $47.20 -> 20%
$18.00 -> $14.40 -> 20%
$12.00 -> $9.60 -> 20%
$7.00 -> $5.60 -> 20%
$3.00 -> $2.40 -> 20%
$1.00 -> $0.80 -> 20%

Some people on the left would say this scheme that you proposed is unfair because the richest guy gets more money back from the government then the poorest guy.

I already gave you links in my previous post on how the rich get tax deductions that are not avaliable to the rest of the population. A tax deductions is effectively a tax cut. These other links show how business are unfairly burdening the poor.

You have to ask yourself, Heywood, what should be the standard which we base our tax rates on? For me, it is effort+ability = financial mobility. And there has to be a minimum effort+ability that gives you a living wage.

I saw those links...but they do not back the claim that the rich pay less taxes then the poor....when we know the opposite is true. They do not back the claim that the rich receive substantially different benefits from the government than poor people do.

[Surgenator]

---

Why did you change your standard of what was considered fair? You first measure of what was considered fair was how much % savings each person got. Now your considering the total amount saved. You have to be consistent if we want to get anywhere. That was one of the criticism in the link I gave you about this bar stool economics.

This is what a marginal tax cut would look like if you matched it the % spend.

Original Cost -> New Cost -> % Savings
$59.00 -> $47.20 -> 20%
$18.00 -> $14.40 -> 20%
$12.00 -> $9.60 -> 20%
$7.00 -> $5.60 -> 20%
$3.00 -> $2.40 -> 20%
$1.00 -> $0.80 -> 20%

---

Some people on the left would say this scheme that you proposed is unfair because the richest guy gets more money back from the government then the poorest guy.

I've yet to meet these guys. The people on the left I meet are more complaining about percent than total amounts. And if I did meet them, I would tell them they are full of shit.

I already gave you links in my previous post on how the rich get tax deductions that are not avaliable to the rest of the population. A tax deductions is effectively a tax cut. These other links show how business are unfairly burdening the poor.

You have to ask yourself, Heywood, what should be the standard which we base our tax rates on? For me, it is effort+ability = financial mobility. And there has to be a minimum effort+ability that gives you a living wage.

I saw those links...but they do not back the claim that the rich pay less taxes then the poor....when we know the opposite is true. They do not back the claim that the rich receive substantially different benefits from the government than poor people do.

Percent-wise, the rich pay less. A good measure of what should be payed is the percent of the total profit minus cost of living. The riches cost of living is a very tiny percantage of their income. The poors cost of living is a large portion of their income.