What country are you in? In the US, that's basically the opposite of reality.

In the US, low- and lower-middle-class income households often do face very high effective marginal tax rates - sometimes north of 60% - due to the combination of direct taxes and benefit cliffs and phase-outs. State income taxes and benefit programs can exacerbate this. Slightly dated reference (2012) but [0] is still pretty representative.

[0] https://www.cbo.gov/sites/default/files/cbofiles/attachments...

Loss of benefit is not a tax.

It functions like a tax in that it decreases the net amount that you receive for working (more). If you lose 40 cents' worth of benefits for every additional dollar that you earn, it doesn't matter that your "real" marginal tax rate is only 25% - earning an additional pre-tax dollar only makes you 35 cents richer, just as it would if your marginal tax rate were 65%.

Also, while some of those benefits are less fungible, others have phase-outs that are functionally identical to taxes at the margin. For example, if you get subsidized health insurance through healthcare.gov, every additional dollar that you earn directly reduces your tax refund by up to ten cents, on top of your marginal tax rate.

I believe OP wanted to say that work gains are taxed way higher than capital gains but didn’t know how to phrase it.

Average sallaries are obscenously taxed. In my country having a cheap rental/airbnb grants you a better income than an average full time job..

Capitals gains aren't income earners though?

He distinguished between workers and "incomers".

I hate to give a video [1] as a proof of something, but at least this one is short and well-made.

[1] https://www.youtube.com/watch?v=kXCGbAv8YPw

That is an interesting video but I think it is engaging in a lot of sleight of hand. Let me go over some examples of what I mean -

1. If you take the video at its word, then it is still the case that the richest are paying more taxes. In the final graph the richest decile is paying over 30% while the poorest is in the mid 20's. The curve is slightly crescent shaped, with the poor 20-30% paying less than the poorest, but beyond that the trend holds that richer pay more. The video summarizes this slope as "mostly flat".

2. The video adds 15% for payroll taxes to the poorer deciles even though the video says that 7.5% is paid by the employee and 7.5% is paid by the company. The video explains that "economists have found that in practice companies pay their part of the payroll tax by just paying workers less." The video doesn't offer any source for this claim. If you Google the claim you see it is, not surprisingly, disputed by economists. It's not a plausible claim in the first place, and if you are allowed to support a claim because some economist somewhere might have said something kind of like it then you could really claim anything. Once you adjust the 15% the video incorrectly added to every lower decile back to 7.5% then the trend of the rich paying more, which was always present, becomes even more prominent.

3. The chart shows the richest 400 Americans as a column on par with the other deciles. This is visually deceptive because it causes you to think of this category as being a similar kind of thing - but it is not, it's a much smaller and extreme group. These people made massive amounts of money from stock in huge companies, gains which are often unrealized, and so taking this small group and graphing it next to deciles distorts what is being shown. How would the graph look if we added on the 400 poorest Americans? And why would we do that except as some rhetorical trick?

4. The video is uninterested in net taxation. That is, poor Americans get significant transfers of money back from the government. For some groups this is substantially more than they pay in taxes which would make their net interaction with government profitable. I can't really agree that a group "pays" X% in taxes if they receive from government transfers more than they paid.

5. The video description says that "All of their data, which we used to produce this video, is available on their website." But it's not. At least, I hope it's not all the data they used to produce this video. There are a few unexplained Excel sheets with some unsourced and unexplained data on the "Tax for Justice" website, but nothing like what I would expect to underlie the claims made in these figures. For example, I wanted to look at how they calculated the sales tax rates, since those varied by state and I thought that the poorest people might be spending more in categories that have no sales taxes (e.g. food) - but... maybe I didn't look hard enough, but I couldn't find anything like this. Just some random tables with numbers.

6. The top decile earns about half the income for the country. They also pay the highest tax rate. So, it's pretty obvious that, in objective terms, most of the taxes are paid by the rich. Even if, pre-benefits, the poor paid tax rates that were only ~10% lower than the richest decile, the richest decile would still be paying substantially more objective dollars in taxes.

7. It's also a bit weird to me that Vox, nominally a news organization, would just uncritically repeat the work of left wing activists out of Berkeley. Is regurgitating advocacy what a news organization is supposed to do?

2. This is the term if you want to find more results: https://en.wikipedia.org/wiki/Tax_incidence

Employers pay taxes + net wages and employees only receive net wages no matter who the government says is paying a tax; it should mostly be shared based on price elasticity

Although most people don't understand that well, which likely affects behavior irrationally:

https://blogs.lse.ac.uk/businessreview/2017/11/15/economists...

Another consideration is that wages are sticky, so while tax burden might be shared more based on price elasticity for new offers, new taxes probably would actually fall upon the side the government says (since employers are unlikely to adjust pay up/down for existing employees just because one side has to pay more taxes)

How are they wrong? If you got paid $100 this week and are taxed 20% you are left with only $80 to live with and make do with. If you got paid $100,000 this week and are taxed 80% life is great because you have $20k in your pocket this week you didn't have before. Sure the rich pay a higher proportion to taxes perhaps if they aren't skirting the rules, but they make so damn much already that they could stand to be taxed even more and not see much of a shift in their lifestyles, whereas people on the bottom end of the ladder are pretty tapped out.

Because people making even 500 dollars a week essentially are only taxed for social security. Complaining about the poor being taxed too much just doesn't make sense in America. You can complain they are exploited by employers and the government doesn't protect them, etc. But high taxation? That's just not the problem.

This example of course only seems reasonable if you focus on the level of extremes you chose

No, it's correct in the US too. Unless you are in the absolute lowest tax bracket, you're paying a larger percentage of your income via various taxes than billionaires are.

No, it's not, and no, you aren't. Tax brackets only increase in rate. Tax rates don't start coming back down for the super rich. If your income was in capital gains you would pay the capital gains rates. If the billionaire's income came in through salary they would pay income tax.

But they mostly don’t get paid in salary do they so it’s a strawman. The amount of tax paid is proportional to the general utility of the money (wrt day to day living), rather than the inverse. It’s dumb

Perhaps you might want to learn how people actually get taxed before complaining about brackets. There are plenty of taxes out there that have jack squat to do with income brackets, and poor people pay a higher percentage of their income towards those than many other people while also having a much higher opportunity cost per hour worked.

The richest take out loans though. Those aren't counted as income or capital gains

But I can't choose whether my income is in cap or income and the people with the most in capitalism pay the lowest effective tax rate.

Who cares how you came by the money? It is fungible.

I dunno, this type of thinking about taxes strikes me the same as a guy who watches the news and spends the whole week angry over a story which, had he never heard it, it would have never been known to him. I.e. because it was an event half way across the world.

In this case, taxes and how much anyone pays are irrelevant because you're not those people and because the real consideration with work is to ignore the immutable circumstantial limitations and decide if the exchange of time and toil is worth the post tax currency you'll be compensated with and what you can do with that money.

If I'm living at home and soon going backpacking in Southeast Asia with my $4/hr(post taxes assuming minimum wage of $7) for 6mos, it'll give me a ton of utility. Meanwhile the guy who smokes 3 packs a day at NY state rates and pays $2000/mo for a studio apartment, much less so.

what kind of taxing scheme would make it so you want to work again?

> what kind of taxing scheme would make it so you want to work again?

I stopped wanting to push my business forward when my govt has forced me to get computers and internet access in my grocery store for sending info about each transaction. That equipment slows down a number of people which I can serve per minute. The software I have bought is ugly as hell and prints 5cm of advertisement on each paper check I use to give to a client. Excuse me trees, I do not know how to fix that.

In a perfect world, RMS' advice about tax rate based on the fraction of any given market that the company controls seems a good start.

How's the government supposed to know your market share without those computers though?

The way they did it for hundreds of years before computers

Replace need-based welfare programs with universal basic income. Everyone survives, but you always have an incentive to earn more money. Plus you eliminate layers of bureaucracy that does need testing, poorly.

UBI is constantly touted as a panacea to everything, but it only seems to work when not everyone gets it.

When everyone gets it, it becomes baked into rents or mortgage payments, and I've never heard a convincing argument about how the money just doesn't go to rent seekers over time

Time for nationwide rent control to keep prices from surging past UBI then. The argument against rent control has always been that investment will go where there isn't rent control since this maximizes profit for the investor. However if you give the investor no alternative then the law of TINA suggests that if they would like to have exposure to the U.S. housing market the only option is to invest in the U.S. housing market, and if the entire market is under rent control then there will be no winners and losers based on having local rent control ordinances in place or not.

Another solution is to invest more in our public housing stock. Private apartments could march up sure, but they'd be competing with the government building with subsidized rents designed to be affordable under the UBI plan, which would put downwards pressure on prices.

Plus you have a flood of unskilled/uneducated migrants from abroad, that are aware that they can get it if they cross the border and get residency or birth a child after. This continues until the whole system "suddenly" collapses.

Are the immigrants receiving ubi?

If so how?

If not, how are they cheaper than somebody who only wants to work for fun?

> When everyone gets it, it becomes baked into rents or mortgage payments

True, unless there’s a land value tax. But a man can dream.

Then the land value goes up to match rents and thus the ubi.

The ubi receiver still loses and needs other support

Land value taxes lower the value of land. The UBI recipient can conserve his share of land and rent it out to someone who needs it. That will result in an overall increase in economic efficiency and that surplus can in theory be used to buy products and services to meet the basic necessities of the recipient.

Alternatively, the recipient can run a homestead on his share of land.

You can increase the land value tax all the way to 100%. In the limit the UBI can be paid for entirely by land value taxes, which leave no surplus for land owners. It’s very easy for a UBI to end up benefiting only the non-working and land owning classes but it’s avoidable.

I don’t follow. Why would UBI make GP want to work when taxation is the cited issue? Don’t they already have an incentive to earn more money?

That’s basically what happened with the stimulus checks, and big surprise now we have massive inflation.

You really think the $1200 we got two years ago has made any impact at all on the prices we see on supply constrained goods today? Most of that money probably evaporated into paying off credit card debt or allowing for some breathing room from rent.

We got $1200. The people who didn’t work at all got $30k plus in unemployment.

30k plus while you are unemployed is not a very significant amount of money in many places in America these days. Not enough to make a dent in inflation imo compared to the wider supply chain crisis that is driving inventory shortages and price hikes on goods.

It’s a year of salary for an enormous amount of people. Insane how out of touch or intentionally misleading you are.

People were also getting $10K, $20K, $60K in unemployment.

Well yeah, when 25% of households have a wage earner who lost their job due to COVID that will send a much larger hit to the economy than those unemployment payments ever could. Even then they merely helped people float along.

https://www.pewresearch.org/social-trends/2020/09/24/economi...

Taxes on liquidity and land value taxes.

Low qualified workers don't pay any taxes though?

Income maybe not, but consumption taxes affect them disproportionately.

This only hurts you.

You don't work because of this than you don't gain new skills than the chance you are getting hired is even less.

Then you are imprisoned with the little money you get and be more and more dependent while it gets harder and harder for you to get out of.

And why? Because you think it's not fair that you work for your own part of the taxes everyone needs to pay.

If the total effective tax rate was higher for higher earners and lower for lower earners we could collect the same total tax and leave more money in the hands of people with less. This is only one way to achieve making work pay more, of course.

If we did that, GP might be willing to work since the effective pay rate would be higher.

Nah, they'd find someone else to blame for their problems

That might or not be the case. That doesn't matter in my argument.

And I'm not even against your idea.

Not working costs you money indirectly and keeps you were you are.

Of course it works against it. Yes, there is an opportunity cost to not-work. That cost gets higher as work is better compensated.

You seem to have missed the “having/owning nothing” part. It’s an admirable goal.

One important point I realized is that each of us costs 20.000€ per year (France) to the state, for sidewalks, prisons, police, politics, etc.

If you are poor and provide less than 20k€ to the state, you’re making others work for you.

Focusing on the percent of income paid in taxes is a trick to convince poor people to vote to raise taxes.

Income = Rough approximation of your contribution to society.

Income Taxes = Penalty for contributing, but also another contribution to society.

Not only are poor people not contributing (by definition of being poor), they're also convinced their tax contribution is too high.

Poor person: "My taxes are too high, I contributed a whole $20 to society through a 20% tax on my $100 income. That's not fair, the guy who contributed $100k through tax only gave 10%."

If I'm being radical, I'd propose a flat tax amount (not flat rate). Everyone pays $20k/year. Don't have $20k? Take out a loan and get another job.

This is one of the most short-sighted views on taxation I've ever read.

Tax enabled the infrastructure and social structure that made your income possible in the first place.

Tax is a fee that the government uses to invest in its country to stimulate economical ans social development. Paying tax will in the long term benefit your net. income.

Effectively, the 'poor person' is netting $80,- for their time. The 'other guy' nets $90.000,- for their time. Those are the only figures that count, and they look very bad for the 'poor guy'.

Some people think they are 'better' persons because they pay more taxes. I argue, they are persons who took home way more income: the tax is just a fee that they pay for being allowed to live and work in their country. The price for the opportunity that they received to earn $100k.

If you feel "better than others" because you pay more taxes, you are a very sad individualistic person.

Why do you frame work as a reward and not a chore?

Yes, contributers are better than freeloaders.

By your logic, a dog walker is equivalent to a doctor, and given only enough resources to save one of their lives, we should toss a coin.

>Not only are poor people not contributing (by definition of being poor), they're also convinced their tax contribution is too high.

By this logic sending a job overseas to lower paid workers makes the exact same job contribute less to society. It also means all unpaid work contributes nothing to society. This is particularly absurd with opensource software that generates millions or billions for big corporations.

Correct, once the labor pool is expanded to include those people, the value of the work is re-adjusted, since value is relative to all options available.

I did mention income being a rough approximation, implicitly acknowledging unpaid work. Yes, I agree that open-source contributions should be counted as charity donations in regards to taxes.

>Don't have $20k? Take out a loan and get another job.

hahahah oh my god hahahaha. Nah I can't even argue with this, it's so backwards.

?woH

Think of the percentages in terms of time instead. So, for example, a 20% tax means you work one day a week for the government and the remaining 4 days of the workweek for yourself. It doesn't matter how much you make during that time - it's a "best effort"-based system.

That's an insightful way to think about it. I just realized we're operating under large scale Feudalism?

Poor people work 1 day/week (or so inefficiently that it should be considered 1 day/week), and therefore should be paying a 100 tax. Exactly what I was saying.

Continued:

Poor person: "I don't buy from McDonalds because it's unfair their prices as a percentage of income are higher for me than for rich people."

That's how retarded it sounds to me hearing people talk about taxes as percent of income. Yet that's somehow the dominate narrative.

Good point. Does the poor person have a choice not to eat? To not pay for health care? In your attempts at sarcasm you quite clearly indicate what's wrong in US society.

Yes, those are choices.