Income redistribution tradeoffs and how they impact you

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Sunday, November 21. 2010

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By William Beranek

Augusta Chronicle

Analysis of efforts to redistribute wealth and income through tax and regulatory policies reveal a surprising insight regarding current policies. It reinforces the belief that reducing current tax rates would provide strong incentives for more individual work, more risk-taking investments and, hence, enhanced employment.

ALL ARE AWARE OF the dictum that nature is unfair. Moreover, all recognize that talents, skills, IQs and genes are unevenly distributed. Yet no one has seriously proposed a breakthrough, human-genome study, which might lead to a more equitable distribution of talent.

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#1 Don Brown on 11/21/10 at 05:15 PM

The comments on this opinion piece ought to be interesting.

He sure went the long way 'round just to bash quantitative easing. But riddle me this...

If taxes are so low... (and they are http://en.wikipedia.org/wiki/File:Income_Taxes_By_Country.svg)

And banks are "flooded with liquidity"...

Then why do we have 10% unemployment? As a matter of fact, how did we get into this mess to start with? Wasn't it those "individuals with unique capacities to satisfy human wants" who sold the mortgages to people that couldn't afford them? You know, the folks that knew better selling them to the folks that didn't know any better?

Only in America. We've gone from "junk binds" to "liar loans" and we still haven't figured out that greed is not good.

Don Brown

#2 fat bass tard on 11/23/10 at 07:58 AM

don, you are blaming the banks for the lack of integrity of individuals who don't meet their obligations? seriously?

you do realize that organizations such as your hero obama participated in are the reason why banks made many of these loans. they were forced through threats of discrimination to provide loans for people who they knew would most likely not pay them back.

the only place that i might agree with you is on interest only loans. that was without a doubt a crock...; but, did this come from the greed of bankers or the need to come up with a way to satisfy the "community organizers"?

in either case, not a single person was forced to accept a loan. they entered into the contracted voluntarily and promised to pay the money back. were they so uneducated that they couldn't look at their income and determine that they couldn't afford the house?

business, big and small, are good things for america. liberals need to get over the class warfare and we will all be able to prosper. as long as the government is out to punish business, we will fail economically (as we are now).

Note in your graph that personal income tax is amongst the lowest but business taxes are amongst the highest.

#3 Yeah Right on 12/01/10 at 08:00 AM

If business taxes are among the highest why didn't giant corporations, CitCorp, GM, et-al pay little or no taxes the last decade? Even with bailouts no taxes were collected. Also, those that are screaming the loudest about abolishing the bush tax cuts for the rich have incomes way in excess of the 250k minimum. It's not redistribution of wealth, it's fairness in the tax laws. The new speaker of the house raised hell about Pelosi and her excesses, while he flies in private corporate jets, calls lobbyists from major insurance companies his close friends, and also back in January voted with the majority another $3000 per annum cola for Congress, And in the same breath voted down unemployment benefits for 10 million unemployed citizens.

#3.1 fat bass tard on 12/01/10 at 09:49 AM

business taxes - please cite your source, i think you are mistaken.

tax cuts - if you want fairness, the government would lose about 40% of it's current tax revenue. taxes are paid on percentages. 10% of 30,000 = 3,000; 250,000 = 25,000 so even if everyone paid the same percentage, people who EARN more money pay more money. now, we also have a graduated tax scale (i don't feel like looking up the exact numbers but for simplicity lets use the following:

0-30,000 10%
30 - 60,000 15%

and the highest tax bracket i believe is 27%, we'll use 25% for the sake of argument.

so at 30,000 you pay 3000 in taxes
at 60,000 you pay 9000 in taxes

and at 250,000 you pay 37,500 in taxes.

so, since you want fairness, do you want all of us to pay 3000, 9000 or 37,500 in taxes?

you don't want fairness, you want punishment for the people who've been able to do better than you have.

there is no "new" speaker of the house so you can't say what he is doing. in january we will see what the SOH elect does. he has promised to fly commercial. and it's your boy obama that's caused my insurance rates to increase, they were fine before obummercare.

#3.2 Brad Cobb on 12/01/10 at 11:41 AM

A corporation pays taxes on its profit. If it does not make a profit at the end of the year, its tax liability will be minimal.

Why should a corporation pay taxes is my question. Say what you want, but all taxes are paid at the consumer level, if you tax a corporation it is just passed onto the consumer.

Why is it societies place to pay someone unemployment? Whatever happened to personal responsibility and saving money for your unemployment if you become unemployed?

I work for a small business that is an S-corporation. Without a shadow of a doubt I can tell you that the increase in the owners taxes will cause their to be less money in the company for bonuses, etc. let me break down a simplistic explanation of how this works.

their are two owners, each owner gets paid 125k a year.

The company makes 2 million in profit that year.

Each owner has to pay income tax on 1.125 million $371,250.00

The company then writes a check to each owner for that amount, now the owners income shows to be 496,000.00.

Raising taxes on these individuals will decrease money available for growing the company. It is basic economics.

#3.3 TheRichGetRicher on 12/01/10 at 05:20 PM

FBT isnt worried about those big businesses and their billion dollar tax breaks. He is worried about people on welfare getting $200 worth of foodstamps every month. FBT desnt understand that the largest retailer in America "walmart" has such terrible health insurance that employees go without and rely on public assistance when it comes to health care. Thats right, tax payers are paying for walmarts employees to get health care. Big businesses are a fraud. The rich can rob the hell out of America. Just dont let the underprivileged get anything and FBT is happy.

#3.3.1 fat bass tard on 12/02/10 at 06:01 AM

like the rest of the uneducated you spout your vitriol about the wealthy and those nasty corporations.

here is a news flash for you corporations DO NOT PAY TAXES. that's right, whenever you raise taxes on a corporation, all you do is increase the price of their product. this in turn increases inflation and decreases the ability of the corporation to compete with foreign companies that have lower tax rates.

i know this is difficult for you to see through your haze of hatred for successful people but if you and people like you don't educate yourself, this country is going to continue to decline.

#3.3.1.1 DuhHuh on 12/03/10 at 05:06 PM

tell the IRS which ones dont pay taxes. operators are standing by waiting for your call.

#3.3.1.1.1 fat bass tard on 12/04/10 at 06:26 AM

there you go again showing exactly how ignorant you really are.

i'll try this once more and i'll try to make it real simple for you.

corporations do not pay taxes. they simply increase the price of their product to maintain their profits. when YOU buy the product YOU are paying the taxes.

i understand your lack of intelligence is making it difficult for you to grasp.

#3.3.1.1.1.1 FBTwrong again on 12/05/10 at 11:34 AM

that is again one of your opinions. the FACT is they do pay taxes. and it it based on their profit. if you do not believe me call the IRS. congress actually gives them tax breaks on the taxes you claim they do not pay. christians.......

#3.3.1.1.1.1.1 fat bass tard on 12/06/10 at 08:06 AM

it's ok. i know it's a difficult concept to grasp.

maybe a question that you can answer simply will help you understand. i'll even make it multiple choice.

how do companies get money?
a - people give them money for a product
b - people give them money for a service
c - the government takes the peoples money and gives it to a corporation
d - all of the above

if you can't figure this one out, you are on your own(i feel sorry for you).

#3.3.1.1.1.1.2 brad on 12/06/10 at 11:15 AM

You seem to miss the point. As a business, taxes are an expense you figure into the cost of your product. The consumer then pays the cost. The corporation just collects it and pays it to the government.

#3.3.1.1.1.1.2.1 fat bass tard on 12/06/10 at 01:16 PM

thanks for the backup brad. this guy seems to be purposefully obtuse. either that or he just simply does not understand much.

#3.3.1.1.1.1.2.2 Simple Facts on 12/06/10 at 03:40 PM

whats that brad? they pay taxes? tell FBT. and while your at it tell him the Sabbath is not on Thursday. fact is they pay taxes. FBT needs to save his stories and interpretations for Sunday.

#3.3.1.1.1.1.2.2.1 brad on 12/07/10 at 02:43 AM

Yes, corporations write a check to the IRS for taxes. Unless it is a Chapter S corporation, then the shareholders pay tax on the profit of the corporation. A very large portion of small businesses (i would venture to say "most") are Chapter S corps and pay at a personal level. Who writes the check is not the what FBT is referring to.

When people say "corporations do not pay taxes, they collect them" they are pointing to the fact that the tax is just passed directly on to the consumer.

If i sell hamburgers for 1 dollar and make 10 cent per burger, I pay tax on the 10 cent, so I only make 6 cent at the end of the day. if you raise my tax 10 percent, i will then charge 1.01 for the burger. The tax increase does not cost me, it cost the guy buying the burger. I am going to make my 6 cent for my 90 cent investment.

#3.3.1.1.1.1.2.2.1.1 fat bass tard on 12/07/10 at 07:34 AM

give it up brad, this guy is so desperate to be right, he can't even see that you are disagreeing with him.

#3.3.1.1.1.1.2.2.1.1.1 time4yourmedicine on 12/07/10 at 10:02 AM

whats that brad? they write a check to the IRS for taxes. FBT says they dont. wrong again FBT. i dont need your interpretations. save them to uphold your fiction religion!

#3.3.1.1.1.1.2.2.1.1.1.1 fat bass tard on 12/07/10 at 02:01 PM

once again, you are too stupid to read a post and understand what it says.

business have a set profit that they WILL make. the consumer pays for any increase in corporate taxes.

#3.3.1.1.1.1.2.2.1.1.2 Anonymous on 12/07/10 at 12:28 PM

when someone says yes they are agreeing. when they say no they are not. and if you forgot green means go and red means stop.

#3.3.1.1.1.1.2.2.1.2 TheBurgerDeduction on 12/07/10 at 10:45 AM

Too bad in America there is always someone willing to do the job or sell the item for less. I heard this argument before. It could only work in a monopoly. The IRS is rough on business owners. Maybe you should write a book on your burger strategy. You make it sound so easy. You can go to a local liquor store and pay his taxes for him also if you would like. I prefer to ride up the road and not just save change but dollars. I like your simple thinking. Reminds me of FBT.

#3.3.1.1.1.1.2.2.1.2.1 brad on 12/07/10 at 01:28 PM

No, if you raise my taxes you raise his also. both of us will increase our prices because we are not going to voluntarily loose profit due to some arbitrary tax rate.

If the cost of beef went up 20 percent, do you think hamburger cost would stay the same or would they pass that cost on to the consumer?

If the cost of gas goes up, you will see a cost increase.

If corporate taxes go up, the cost of goods and services go up.

unless you are a monopoly, you are probably working on as small of a profit margin as you can. You can not afford to not pass on cost when it is increased.

30 years of experience in this matter let me know that I am right.

#3.3.1.1.1.1.2.2.1.2.1.1 H&R Brad on 12/08/10 at 09:43 AM

Very well put. Now being a experienced man like you truly seem to be, what percent of businesses do you believe operate on a small profit margin?

#3.3.1.1.1.1.2.2.1.2.1.1.1 brad on 12/08/10 at 06:04 PM

Depends on the definition of small. Estimates are around 45 percent. 50 percent fail and 5 percent are just money sinks. I have been on both sides of spread. My first company failed because I did not understand business economics. I was in my mid 20s and thought I knew enough. After I picked myself back up and dusted off, I decided that school was not enough and started listening to successful small business men.

I am talking about small businesses by the way, not large companies.

#3.3.1.1.1.1.2.2.1.2.1.2 Anonymous on 12/08/10 at 10:26 AM

who's a monopoly? home depot, lowes, freds, kmart, sears, ingles, krogers, GM, toyota, kia, walmart. all these people have competitors. thats why it is not easy to raise prices to cover your taxes. because someone is always there to undercut you.

#3.3.1.1.1.1.2.2.1.2.2 fat bass tard on 12/07/10 at 02:03 PM

your ignorance knows no bounds.

do you think that the taxes only increase on certain companies? man you are either the most ignorant person on the face of the planet or you just get off on pretending to be.

#3.3.1.1.1.1.2.2.1.2.2.1 Mayhem on 12/08/10 at 10:20 AM

Think? Certain businesses get tax breaks. When these large corporations get tax breaks you think they give Wing's & Thing's the same tax cut. I know plenty of business owners that can not just pass their taxes off on the consumer. Read Brads post. Maybe he can get it through your thick skull. You still will swear up and down that the Sabbath is on Wednesday just to disagree with me. Shows how stupid you are!

#3.3.1.1.1.1.2.2.1.2.2.1.1 fat bass tard on 12/09/10 at 07:20 AM

Brad is disagreeing with you. that's the really funny part. you are so convinced that you are right when you are nothing but wrong you can't even see when someone is disagreeing.

you are so desperate to be right, and consistently wrong, that you will take anything and try to pretend it supports what you are saying.

corporations, big or small, only get money from the consumer, just as the government only gets money from the taxpayer. corporations base their profits on costs. as costs go up so do prices.

when you grow up, you will understand. now go back and play in your daddy's shop. but stay out of everyone's way.

#3.3.1.1.1.1.2.2.1.2.3 fat bass tard on 12/07/10 at 06:33 PM

yes, those companies are known as bankrupt.

#3.3.1.1.1.1.2.2.2 anon on 12/08/10 at 02:46 PM

Three friends check into a motel for the night and the clerk tells them the bill is $30, payable in advance. So, they each pay the clerk $10 and go to their room. A few minutes later, the clerk realizes he has made an error and overcharged the trio by $5. He asks the bellhop to return $5 to the 3 friends who had just checked in. The bellhop sees this as an opportunity to make $2 as he reasons that the three friends would have a tough time dividing $5 evenly among them; so he decides to tell them that the clerk made a mistake of only $3, giving a dollar back to each of the friends. He pockets the leftover $2 and goes home for the day! Now, each of the three friends gets a dollar back, thus they each paid $9 for the room which is a total of $27 for the night. We know the bellhop pocketed $2 and adding that to the $27, you get $29, not $30 which was originally spent. Where did the other dollar go????

#3.3.1.1.1.1.2.2.2.1 Anonymous on 12/08/10 at 04:05 PM

It did'nt go anywhere.

25 is in the cash drawer 3 was given back to the men and the bell hop has 2 ,,, 30 all day long.

#3.4 Anonymous on 12/01/10 at 05:48 PM

Amen and praise the lord.

#4 fat bass tard on 12/01/10 at 10:09 AM

also, there was no COLA for congress according to factcheck for 2010 so you are full of it there too.

please stop reading the huffington post and believing every e-mail you see.

get your facts straight

#4.1 Yeah Right on 12/02/10 at 07:04 AM

If you would take the time to read yhe congessional record you would have seen in january another "secret" after hours vote was taken by Congress for a $3000 salary increase. And you are right, for once, it wasn't a cola. If you enjoy paying your elected representatives $174,000 base per annum, which, by the way, they have increased almost yearly since the 80's then enjoy away. I for one believe in payment for service. So far Congress has done almost nothing to earn that sort of salary. And as far as Boehner and his friends that did not come from Huffington Post, which is more factual than Fox's entertainers, but from documents listed under the freedom of information act. Ok, fat, have at me

#4.1.1 fat bass tard on 12/02/10 at 11:02 AM

please provide links to these so called documents. i'm betting you won't.

#4.1.2 fat bass tard on 12/02/10 at 11:12 AM

i will try to give you a few facts i know when i do, you will come back with a completely different set of wild allegations so this will be my last attempt to educate you.

in the 90's, congress voted themselves an automatic pay raise that occurs every year. in past years, they have voted to place a hold on that automatic raise.

however, in 2009 (not 2010), the super-majority (that's when one party controls enough of the house and/or senate that they don't need any votes from the other party to pass bills) DEMOCRAT party voted down a republican sponsored measure to place a hold on congressional raises. it was at this time that the democrats accepted a $4700 raise to $174,000.

as i said, stop reading the huffington post and all these silly conspiracy e-mails and take a few minutes to verify facts. that way, you won't look foolish AGAIN.

#4.2 Anonymous on 12/08/10 at 06:46 PM

REPEAT......REPEAT.........REPEAT....bla bla bla

#4.2.1 fat bass tard on 12/09/10 at 07:24 AM

you must be the smartest on in your family.

#5 JC on 12/01/10 at 05:14 PM

There you go again! Clam down and let the system work. President Obama has not been in office for 2 years yet. He inherited all Bush could stack on him. The dust will settle as President Obama draws his Carzs plans. Yous peoples listen to me and time will tell, otherwise we could wind up with Hillary in 2012. I know us Democrats don't want that.

GOD BLESS THE US

#5.1 fat bass tard on 12/02/10 at 07:41 AM

the only thing that is going to work is that republicans are back in charge of the purse strings.

already the stock market is improving and the job market is increasing in anticipation of the republicans returning our government to more conservative principles.

next step, republican president in 2012 and we can get the country completely back on the right track and see if we can't get businesses back in the US.

#6 Don Brown on 12/03/10 at 05:32 AM

http://baselinescenario.com/2010/11/17/why-our-tax-code/#more-8271

"But if you are the rich people in a democratic society where most people believe in reduced inequality, what kind of tax code do you want? You want to start with an overall progressive structure (so the people won’t revolt), and then you want a boatload of exceptions to that structure that (a) favor the rich and (b) can be individually defended on plausible (and sometimes even reasonable) grounds. Which is what we’ve got:"

I always thought it was self evident that the rich can take care of themselves. They have the money to hire lawyers, influence policy, etc. Is envy a more powerful force than greed?

"Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration." -- Abraham Lincoln

In other words, before rich people can complain about their wealth being "redistributed", they must first extract that wealth from the people that earn their wealth through their labor.

Don Brown

#6.1 fat bass tard on 12/03/10 at 09:47 AM

so don, you think that when someone risks their money to start a company, creates jobs for say 100 other people, pays a large portion of the tax burden for the country, they should be punished for making a profit?

the top 50% of wage earners pay 97% of the taxes for the country.

http://www.ntu.org/tax-basics/who-pays-income-taxes.html

understand this, i don't make more than $250,000 per year and i am not directly affected by the tax increase that the dems are proposing. raising taxes while continuing to spend out of control is bad for the country.

#7 Yeah Right on 12/05/10 at 07:42 AM

It's hard to debate someone who graduated from everything school. Apparently you only failed humility and common courtesy

#7.1 fat bass tard on 12/06/10 at 01:13 PM

let me get this straight, your first post to me was "Yeah Right" and you then proceed to tell me how wrong i am. then, when i prove myself right and you WRONG, i am discourteous.

i guess you can't take a little of your own medicine, huh?

#7.1.1 Hacker jacker on 12/06/10 at 02:32 PM

tightness in the chest, fat bass fart?

#7.1.1.1 fat bass tard on 12/06/10 at 04:36 PM

nope. it's just amazing to me how much people can't stand someone who is consitently right. i guess being wrong and stupid is "cool".

#7.1.1.2 Sheila Tolley on 12/06/10 at 04:36 PM

You are dealing with someone much smarter than you, HJ. Read some previous posts, this person knows his facts, logic and history.

#7.1.2 Yeah Right on 12/06/10 at 03:44 PM

that guy proved you wrong about the sabbath and you proceeded to tell him he was wrong also. looks like me and you suffer from the same mental deficit.

#7.1.2.1 fat bass tard on 12/06/10 at 05:12 PM

go ahead, prove me wrong if you can.

and by the way, repeating yourself over and over as NameOfTheDay does, does not make you right. it simply makes you boring.

#7.1.2.1.1 brain matters on 12/06/10 at 06:15 PM

intelligence combined with arrogance makes BORING!

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