Progressive Income Tax
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Progressive Income Tax

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The philosophical underpinning of the current American progressive tax system (aka marginal utility theory for beginners). We’ll look at data on who’s actually ...

The philosophical underpinning of the current American progressive tax system (aka marginal utility theory for beginners). We’ll look at data on who’s actually
bearing the tax load, where actual income growth has occurred over the last several decades, and data on changes in the New York tax system over the last several decades. We’ll talk about the impact of unchecked inequality on the US political system, the economic inefficiency of the growing inequality, and address concerns about progressive taxation, ”fleeing millionaires” and the myth of layoffs at “small” businesses.

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Progressive Income Tax Progressive Income Tax Presentation Transcript

  • Progressive Income Tax
  • What do you think?1. Everybody should pay the same dollar amount of tax (regardless what they earn).
  • What do you think?1. Everybody should pay the same dollar amount of tax (regardless what they earn).2. Everybody should pay the same percentage of their income.
  • What do you think?1. Everybody should pay the same dollar amount of tax (regardless what they earn).2. Everybody should pay the same percentage of their income.3. We should have income tax brackets with increasing percentages.
  • What sort of society do you want?What percentage share of the total wealth pieshould the top 20% have?
  • Well, how about that?Sweden is the nation with wealth distribution that mostclosely resembles what most Americans want.
  • What are we talking about (income)?
  • What are we talking about (income)?
  • What are we talking about (wealth)?
  • What are we talking about (wealth)?
  • What are we talking about (income)?
  • Progressive taxation – The History
  • Progressive taxation – The Assault "I dont want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub." - Grover Norquist, Americans for Tax Reform
  • Progressive taxation – The Assault “We are not the successor of, we are not a continuation of Western civilization. We are a unique and different civilization. - Grover Norquist, Americans for Tax Reform
  • Progressive taxation and inequality
  • Redistribution – other tools• Earned income tax credit• Food Stamps• Medicaid• Supplemental Security Income• Housing assistance (Section 8 etc.)• Estate Tax
  • Why Progressive Income Tax?1. Theory of Marginal Utility2. Helps avoid plutocracy3. Egalitarian economies are healthier4. Americans are healthier5. Founding Fathers wanted a Republic, not Aristocracy
  • 1. Marginal Utility That third piece of pie at Thanksgiving doesn’t taste as good as that first piece. And that 99th stack of $10,000 isn’t as valuable to you as the first 5 stacks.
  • 2. PlutocracyGetting elected is expensive. Who are ourelected leaders listening to?
  • 2. PlutocracyGetting elected is expensive. Who are ourelected leaders listening to?
  • 2. PlutocracyGetting elected is expensive. Who are ourelected leaders listening to?
  • 2. PlutocracyGetting elected is expensive. Who are ourelected leaders listening to?
  • 2. PlutocracyGetting elected is expensive. Who are ourelected leaders listening to?
  • 2. PlutocracyGetting elected is expensive. Who are ourelected leaders listening to?
  • Aw, c’mon!This helps explains the occupy movement.
  • 2. PlutocracyGetting elected is expensive. Who ARE ourelected leaders?
  • 3. Healthier EconomySpurring economic growth is one thing. Sustaining it isanother. Income equality is a critical factor.
  • 3. Healthier EconomySpurring economic growth is one thing. Sustaining it isanother. Income equality is a critical factor.
  • 3. Healthier Economy“But the rich are ‘job creators’ and we need to give them tax breaks to make more jobs!”
  • 3. Healthier Economy“But tax cuts for the rich will stimulate the economy!”
  • 3. Healthier Economy“But tax cuts for the rich will stimulate the economy!”
  • 3. Healthier Economy“But higher marginal tax rates will hurt small business owners!”
  • 3. Healthier EconomyActually small business owners were 7 times more likely to use the EITC.
  • Let’s say a small business (less than 100 employees) has net profits of $250,000.Under Obama’s proposal that business would have paid an extra 3% tax onincome above $174,400. That’s an extra $2268.
  • 3. Healthier Economy“During the 1970′s, for every dollar of new investment in plants and equipment, $1.30 in stockswere traded on the U.S. exchanges… But from 1998 to 2007, $27 in stocks were traded… forevery dollar of corporate investment in plant equipment. Such a rapid stock turnover hasdiverted the attention of managers of enterprises from long-term planning.” - John Miller, D&S
  • 4. Healthier AmericansInequality causes shorter, unhealthier and unhappier lives; it increases the rate ofteenage pregnancy, violence, obesity, imprisonment and addiction; it destroysrelationships between individuals born in the same society but into different classes.- Wilkinson & Pickett, The Spirit Level
  • 4. Healthier AmericansInequality causes shorter, unhealthier and unhappier lives; it increases the rate ofteenage pregnancy, violence, obesity, imprisonment and addiction; it destroysrelationships between individuals born in the same society but into different classes.- Wilkinson & Pickett, The Spirit Level
  • = $60,000? 4. Healthier Americans“Below 60,000 dollars a year, people are unhappy, and they get progressivelyunhappier the poorer they get. Above that, we get an absolutely flat line. I mean I’verarely seen lines so flat.” – Daniel Kahneman, Nobel Laureate
  • Entail and primogeniture “concentrate the property of the country, and with it the power and influence of a few.” Senator James Barbour5. Founding Fathers wanted a Republic, not AristocracyEuropean primogeniture and entail laws enabled the aristocracy to pass on theirfortunes, undivided, the their firstborn male heirs. Our revolutionary leaders wantedto avoid these concentrations of wealth.
  • “The balance of power in a society… accompanies the balance of property in land.”5. Founding Fathers wanted a Republic, not AristocracyEuropean primogeniture and entail laws enabled the aristocracy to pass on theirfortunes, undivided, the their firstborn male heirs. Our revolutionary leaders wantedto avoid these concentrations of wealth.
  • But…
  • “But the rich pay more taxes!”
  • “But the rich pay more taxes!”
  • “But the rich pay more taxes!”
  • “But the rich pay more taxes!”
  • “But the rich pay more taxes!”
  • “But you could be rich some day!”
  • “But that’s human nature!” (aka “The poor will always be with us)
  • “But that’s human nature!” (aka “The poor will always be with us)
  • “But big gov’t isn’t the answer!”
  • “Well, I don’t want my tax dollars going to ‘those people’!” "The share of benefits flowing the least affluent households, the bottom fifth, has declined from 54 percent in 1979 to 36 percent in 2007“ – NY Times, 2/12/12The placard reads “Keep the government out of my Medicare!”
  • “Well, I don’t want my tax dollars going to ‘those people’!” Entitlement spending that goes to healthy adults accounts for 9% of total entitlement spending.
  • “Well, I don’t want my tax dollars going to ‘those people’!” Of the $1.1 trillion in tax expenditures (mortgage interest deduction, employer-paid health benefits, favorable tax treatment for capital gains and stock dividends) two- thirds of those benefits go to the wealthiest top fifth of households and 24% to the top 1%.
  • “But millionaires will flee!”
  • “End the Death Tax!”
  • “End the Death Tax!” “To keep farms in the family we are going to get rid of the death tax.” - President Bush
  • “End the Death Tax!”When asked to find examples of “To keep farms infamilies that had lost farms to the family we are going to get rid ofthe estate tax the American the death tax.”Farm Bureau Federation could - President Bushnot find one family. The Estate Tax is 35%. The first $5 million is exempt.
  • Welcome to the U.S.In the United States, the top 1 percent controls roughly40 percent of the nation’s wealth. According to astudy, which examined Roman ledgers, pre-imperialedicts, and Biblical passages, Rome’s top 1 percentcontrolled less than half that at the height of itseconomic power.
  • Welcome to NY
  • The Good News HEADLINE 68% Of Millionaires Support Raising Taxes On Millionaires POLLAbout three-quarters (73%) of Democrats say that what bothers themmost is that the wealthy dont pay their fair share; this compares to just38% of Republicans who say the same. Independents side with theDemocrats -- 57% say the wealthy dont pay their fair share of taxes.