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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Tenchusatsu who wrote (749754)	10/27/2013 11:09:16 AM
From: SilentZ	Read Replies (1) \| Respond to of 1574061

>Z, I already know about the Keynesian argument against excessive savings. But IMO, his arguments should be taken abstractly, i.e. more theoretically than as a practical rule for setting policy. >In any case, it seems like liberals advocate policies that punish savings because they think that money would be put to better use if it were "redistributed." You told me a few posts ago that progressive income taxes aren't redistributionist. But either way, that's only one aspect, and it's not the one I've been discussing. It's about keeping up the amount of money going through the economy. Aggregate demand is what drives business expansion and job creation. Reducing that amount by a couple of percent is disastrous. By shifting a large portion of annual income from people who spend 90-95% of what they make to those who spend 20%, you make a sizable dent in that aggregate demand which only government can fill. Whether you like it or not, government spending is spending. >Progressive income taxes are an example. Sure, I get it, people who make $5M/year probably can afford having 45% of it confiscated by the government. But those aren't the only people affected by the anti-savings policies. >Let's say you are making a steady income of $50K/year, but one year thanks to good (or lucky) investing, you make a windfall of $500K. Guess what? That income gets taxed as if you just won the lottery. It would have been better if, instead of making that windfall in one year, you got that money spread out over 10 years. But we all know that most of the time you can't structure such income that way. 1. If we're talking investing, that's capital gains, which is not taxed that way (it should be, IMO, but it isn't). 2. Even if it were taxed that way, that person would only get taxed on the portion he/she decided to cash out on that year. Most people don't just close up shop on their portfolios after one big year. 3. Right now, with the structure being the way it is, if you make $500K one year and you're single, well, you'll probably have $100K in deductions, and then you won't have anything over $400K to be taxed at the highest rate. And if it were a million, and you had $200K in deductions, then you'd only have $400K to be taxed at the highest rate, and $400K taxed at lower rates. >Why do I bring up the windfall example? Because for most people who make it big, the money comes in spurts. Their income is highly uneven, and that is true for most of the so-called "one percent." (The exception, of course, are the truly rich who don't have to work hard for their money, but whose money works hard for them.) >Guess what the progressive income tax rates punish the most? That's right, those whose income isn't steady, but comes and goes. OK, well, let's set parameters here instead of playing in hypotheticals. Who are the people we're really talking about? People that make, say, between $0 and $200K in most years and suddenly make, in income (not capital gains), between $750K and $2 million in a single year? Let's establish what we're talking about. >Now you can tell me that I'm arguing too much over this, and that the alternatives like a flat tax are not much more desirable. But this is one of the many reasons why I believe in limited government. Progressive tax rates should only be structured to fund the primary services of government. To use them as a vehicle for "wealth redistribution" is silly, because you might as well just pay people to dig holes that others fill up. If we had taken care of all of this country's needs and there was nothing left to spend money on than paying people to dig holes that others fill up, we'd be in some utopia, and we're so far from that. -Z