US Fiscal cliff explained

The wealthy largely don't pay taxes. They never have and never will because any examination of wealth reveals that that income is derived from supplying goods and/or services to consumers. So, when you slap a rich surgeon or businessman with another 5% tax, he just raises the cost of his product by 5%. The consumer pays the tax, not the wealthy person. Taxes are just overhead and all overhead is passed to the customer.

"Taxing the rich" is a euphemism for "Taxing the consumer."

 

Oh don't worry I quickly learned that after 4 hours and not getting anywhere =) Only thing I could come across was the total across the bored taxes collected with has apparently hovered around the 25% mark more years (WWII I believe, Before that I couldn't find anything).

 

I wouldn't say all would be past on, perhaps a portion of it but not the full lot but in any case why is it assumed that the full tax will be passed on to the customer? The US has never tried it so has nothing to back the claim up, Yet here in Australia people frequently try and not pass the cost on to the consumer.

 

Because that's the way capitalism works. Taxes are overhead; just like power, labor costs, packaging, insurance, etc. When overhead rises, you raise the price of the product to maintain your profit margin.

We have tried it and continue to try it and always get the same result. It's no different in Australia - no sane businessman would eliminate his profits to "be a nice guy." There's a name for nice guys in the business community and that name is "bankrupt."

I once had a similar discussion with an English friend, with me trying to make the point that even though the average wage was similar in our respective countries, Americans actually had more money in real terms because lower taxes made consumer goods much cheaper. He refused to believe that until we price matched identical goods via the Internet. I no longer remember the exact models, etc, but everything from a toaster to a flat screen TV to a dozen eggs was about 50% more expensive in the UK.

Capitalism is a pretty simple and linear machine. At each stage from raw material to transportation to manufacture to sale, an exchange of money is made. If you tax a mine that produces the material to make a widget, that buyer pays more and then passes that added cost to the next person in the chain, who passes that cost (and his tax) to the widget factory who passes those costs (and his tax) to the widget retailer who passes that cost (and his tax) to the guy who walks into the store and buys that widget.

The consumer pays all taxes because that's how capitalism works.

Politicians know this. Economists know this. It's only voters who don't get it, and those voters call out for more taxes on "the rich" to get more government services. Politicians are happy to give "free stuff" to their constituents because that's how they stay in office.

 

Right. It works that way across the board. Regulations have the same effect by simply increasing the overhead, all of which is passed to the consumer. The lower your income, the larger your personal burden.

 

The pew poll showed many of the rich believed they should pay more taxes, as Warren Buffet stated.....I personally know rich who simply maintain incomes from a very large inherited source of different investments quite separate and independent sources. They have no goods or services connected to their amassed incomes. It is foolish to assume they have a way of passing on the tax as they have no idea how it was put together in the first place. They simply collect some very large incomes. They are very wealthy due to inherited sources of income that were developed long before their time. The mother of this bunch has a hard time spending it all as it comes in and she engages in investing in travel for the whole family to try to get it spent. I simply have laughter for your post as a surgeon or businessman which you quote as examples are not the filthy rich but people working for their salaries. A surgeon will tell you he cannot increase his salary too because he can only collect the amount insurance may allow him to be paid in most cases. Also the businessman knows he must develop his marketing in such a way that he can compete..........if he passed everything on to the consumer he simply takes his goods up higher in price reducing his ability to compete. Get real.......those talking points from the right are not absolute conditions simply something that could exist in some cases.

 

Yes, such people exist but they are the exception rather than the rule. Warren Buffet can say "raise my taxes" because he knows damned well his money is in offshore holdings that will be exempt from such taxes. Warren Buffet is a hypocrite.

Obama called for higher taxes on those making 250K a year. Those people are not the "filthy rich." They are your doctor or the guy who owns a local business. You and I will pay those taxes.

Again, the "filthy rich" have their money offshore or in shell corporations that remain unaffected. It's rather like Hollywood limousine liberals who stridently call for higher taxes, while knowing that the first 15 million dollars of every film or TV production remain exempt from federal taxes - Obama extended that exemption (google section 181,US tax code). In addition, Hollywood film and TV productions gets a 25% exemption from California state taxes.

 

Frankly I think democratic governments everywhere snigger when their stupid citizens complain about the level of income tax.

Buy a house and I pay Stamp Tax, buy anything but food and I pay 20% value added tax, sell anything but a house at a profit and I pay Capital gains tax, pay for my TV licence and road fund licence, pay for landing at an airport more tax - plus the special UK tax laughing called National Insurance (originally to pay for the medicine - National Health) 11%, plus the Company I work for pays another 13% National Insurance to employ me etc etc bloody etc.

And at every twist and turn there is a Civil Servant employed to make sure I obey some rule I am only dimly aware of.

Why don't we all get together and demand all Governments dump the lot and just charge us Income Tax and then we would know exactly what we are paying?

 

I'm all for it.

 

The difference between 1950 and now is that the US was then an industrial powerhouse while the rest of the world was in ruins. Raising taxes to that level today (when we have to actually compete against foreign business) would turn us into a 3rd world country.

 

True, raising taxes to that level would cause a vastly negative effect (that or it would cripple China ) but none the less we have a few simple fact's that can not be over looked.

The US tax revenue is smaller then what you spend so you have 2 choices, Increase the taxes or cut spending heavily. Doing either one will anger different groups but one or both have to be done, You raise your taxes and the Military many American's so heavily defend to keep its budget will be able to survive with little or no budget cuts or if you cut taxes that Military will shrink on a severe scale (I reckon at least 1/3rd of all asset's being mothballed)

 

Increasing taxes actually decreases government revenues. All money, all revenue, all taxes, all jobs - the entire economy of every capitalist nation - can be traced to one source. That source is a consumer buying a product. If those consumers have less money, it affects every level of that shaky pyramid, including incomes of people who produce that product who get laid off and have no income. Their welfare is shifted to the public dole which necessitates more taxes. And on and on and on...

Obviously, the answer is to cut spending.

 

You don't like the post.....I will edit it........the point is right wing talking points get repeated over and over on this subject and there is only one point on the many where those talking points are supported.....and the rise in revenue was already on the way up prior to the cut in taxes.....this is a chart showing the many instances it could have been proven true and failed to do what you claim in the talking points you use.

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Victor,

If your going to do a "copy pasta". at least cite the source correctly, you didn't get it from the CBO, you got it here: Do Tax Cuts Increase Revenue

 

I'm puzzled by the text because the graph shows a dip followed by a rise as the economy takes off after each tax cut. After the tax increase in 93, it shows a rise then a massive dip. The graph indicates that it takes at least two years for that extra money in the economy (or less money in the case of the tax increase) to pay off in increased income or drops in income followed by a rise or drop in tax revenues. This makes absolute sense because if I cut your taxes in 2013, you won't really see the benefit until April 2014, at which point you have extra money to buy or invest. That spent or invested money won't show up in the tax revenues until the April following that one.

It looks like somebody took a graph and then attached their own bizarre interpretation to it.

 

I dont think that chart confirm's nor denies either argument, But here is one question.. If taxes are to be cut who should they really be cut for? Cut for the rich so that they can gain more profit's while 'hoping' that they invest it back into the economy or cut them for the poor and middle income group? Allowing them to lift them selves back up out of poverty to a point that they can actually afford to buy the products the rich are trying to sell.. Personally I would think the later would give the best gains.

 

Would it not made sense to dangle the tax cuts like a worm, those who earned it would receive it? Let's say for the individual through years of work or how they have given back to society. For business for those who have generated the most new jobs, etc.

Use it as a reward rather than a gift.

Funny system to bribe someone before they perform, like giving a waitress her tip before she serves you.

KTK