Re: Tax cuts and US citizen responses
> > Koushik Sekhar wrote: > > > > Can anyone explain why ordinary Americans are not objecting to tax > > cuts (such as dividend tax cuts) that will only favour the top > > percentiles of the wealthy ? Bryan Caplan wrote: > Among other things, this assumes that people's views on tax policy are > driven by self-interest. Most of the empirical evidence finds that this > is false. For a good summary, see Sears and Funk's chapter in Jane > Mansbridge, ed., *Beyond Self-Interest*. Bryan, Could we rephrase that as, "Americans are not as selfish as Democrats would like them to be?" ;-) Keep in mind that a huge percentage of Americans own stock. I don't know the latest figures, but it's at least a third, maybe a half. Certainly not just the "top percentiles of the wealthy." As others have pointed out, dividend tax cuts may not favor the wealthy at all. Lots of older people (including my grandmother) are not rich, but live off the dividends from stocks they or their spouses got from their employers decades ago. (Putting aside the advisability of holding stock in one's own employer... .) Generally speaking, the richer you are, the more you will prefer capital gains rather than other income, since the gap between the capital gains tax rate and the regular income tax rate is larger. Since rich people are more likely than others to sit on corporate boards of directors that determine dividends, this may results in dividends being too low for ordinary (non-rich) shareholders. On other words, taxing dividends more than capital gains makes rich people transfer wealth from my grandmother to her broker (if she has to sell stock, and therefore pay a commission, to get her money). --Robert
RE: Tax cuts and US citizen responses
Despite what you may read in the press, the overall effect of the President's previous round of tax cuts was to make the tax system more progressive, not less progressive. In other words, those with high incomes end up contributing a higher percentage of tax revenues after the cuts than they did before the cuts. Regarding the current round of tax cuts, I would like to see an analysis of the expected net effect on progressivity (not that I am advocate for progressivity). While some provisions make the system more progressive, others make it less progressive, but what is the net effect on progressivity? Walt Warnick -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]] Sent: Monday, January 13, 2003 8:51 AM To: [EMAIL PROTECTED] Subject: Re: Tax cuts and US citizen responses In a message dated 1/13/03 7:33:09 AM, [EMAIL PROTECTED] writes: << Can anyone explain why ordinary Americans are not objecting to tax cuts (such as dividend tax cuts) that will only favour the top percentiles of the wealthy ? Koushik >> In absolute terms, the tax cut would favor those with higher incomes (rather than "the wealthy") because those with higher incomes pay much larger absolute amounts of actual taxes. The top half of the income distribution in the US pays almost 100% of the taxes. If the government cuts the amount by which it taxes everyone by the lesser of his or her actual tax and, say $1,000 to simplify, the people paying $1,000 and above will obviously get much larger tax cuts than those paying less than $1,000. Proprotionally, however, everyone playing $1,000 or less gets a larger percentage tax cut (100%) than everyone paying more than $1,000. Someone paying $100,000 a year gets only a 1% tax cut. With my low income--let's say I'd have to pay $200 in tax otherwise--I get a 100% tax cut, which pays for weeks of groceries for me, I don't care that someone who pays $100,000 in taxes get times as large a tax cut as I do. Someone might say, "hey, the rich got a tax cut five times as large as yours" to try to get me angry, but meanwhile I get my100% tax cut and buy my groceries. I'm reasonably happy. If I compare myself at all with the person paying $99,000, I'm envious not of his or her 1% tax cut, but of his or her ability to earn so much income that he pays more in taxes than I earn in income. As a CPA tax-professional at the now-imfamous Arthur Andersen back in the 1980s I often prepared tax returns for clients who paid more in taxes than I earned in salary. :) David Levenstam
Re: Tax cuts and US citizen responses
> Koushik Sekhar wrote: > > Can anyone explain why ordinary Americans are not objecting to tax > cuts (such as dividend tax cuts) that will only favour the top > percentiles of the wealthy ? Among other things, this assumes that people's views on tax policy are driven by self-interest. Most of the empirical evidence finds that this is false. For a good summary, see Sears and Funk's chapter in Jane Mansbridge, ed., *Beyond Self-Interest*. > > Koushik > > > -- Prof. Bryan Caplan Department of Economics George Mason University http://www.bcaplan.com [EMAIL PROTECTED] Mr. Banks: Will you be good enough to explain all this?! Mary Poppins: First of all I would like to make one thing perfectly clear. Banks: Yes? Poppins: I never explain *anything*. *Mary Poppins*
Re: Tax cuts and US citizen responses
Koushik Sekhar wrote: Can anyone explain why ordinary Americans are not objecting to tax cuts (such as dividend tax cuts) that will only favour the top percentiles of the wealthy ? Perhaps because they recognize that to be cut the tax had to have been imposed in the first place, and they don't think it vital to lay special taxes on the wealthy. Or perhaps they've bought into the Republican line that tax cuts for the rich (let's face it, the left will paint *any* change in tax policy that doesn't make it more punitive^W progressive as "a handout to the rich") make us all richer in the long run. -- Anton Sherwood, http://www.ogre.nu/
RE: Tax cuts and US citizen responses
Perhaps some feel the double taxation of corporate profits is inherently unfair. At least that is my feeling on the matter. Lynn -Original Message-From: Koushik Sekhar [mailto:[EMAIL PROTECTED]]Sent: Monday, January 13, 2003 6:04 AMTo: [EMAIL PROTECTED]Subject: Tax cuts and US citizen responses Can anyone explain why ordinary Americans are not objecting to tax cuts (such as dividend tax cuts) that will only favour the top percentiles of the wealthy ? Koushik
Re: Tax cuts and US citizen responses
> Can anyone explain why ordinary Americans are not objecting to tax cuts > (such as dividend tax cuts) that will only favour the top percentiles of > the wealthy ? > Koushik Dividend tax cuts also favor retired folk whose income comes from dividends and interest. Some ordinary Americans also recognize the unfairness of taxing corporate profits twice. They also favor that corporations will borrow less and be less vulnerable to a collapse. They also think that paying more dividends will make give the shareholder more of the profits and make the company less vulnerable to looting by the directors and executives. Some believe that lower marginal tax rates will lead to more investment. Fred Foldvary = [EMAIL PROTECTED]
Re: Tax cuts and US citizen responses
In a message dated 1/13/03 7:33:09 AM, [EMAIL PROTECTED] writes: << Can anyone explain why ordinary Americans are not objecting to tax cuts (such as dividend tax cuts) that will only favour the top percentiles of the wealthy ? Koushik >> In absolute terms, the tax cut would favor those with higher incomes (rather than "the wealthy") because those with higher incomes pay much larger absolute amounts of actual taxes. The top half of the income distribution in the US pays almost 100% of the taxes. If the government cuts the amount by which it taxes everyone by the lesser of his or her actual tax and, say $1,000 to simplify, the people paying $1,000 and above will obviously get much larger tax cuts than those paying less than $1,000. Proprotionally, however, everyone playing $1,000 or less gets a larger percentage tax cut (100%) than everyone paying more than $1,000. Someone paying $100,000 a year gets only a 1% tax cut. With my low income--let's say I'd have to pay $200 in tax otherwise--I get a 100% tax cut, which pays for weeks of groceries for me, I don't care that someone who pays $100,000 in taxes get times as large a tax cut as I do. Someone might say, "hey, the rich got a tax cut five times as large as yours" to try to get me angry, but meanwhile I get my100% tax cut and buy my groceries. I'm reasonably happy. If I compare myself at all with the person paying $99,000, I'm envious not of his or her 1% tax cut, but of his or her ability to earn so much income that he pays more in taxes than I earn in income. As a CPA tax-professional at the now-imfamous Arthur Andersen back in the 1980s I often prepared tax returns for clients who paid more in taxes than I earned in salary. :) David Levenstam
Tax cuts and US citizen responses
Can anyone explain why ordinary Americans are not objecting to tax cuts (such as dividend tax cuts) that will only favour the top percentiles of the wealthy ? Koushik
