It's the appropriations and reallocation of funds that would otherwise not be spend in the real economy to be spent in the real economy. The issue with taxes arises when individuals are taxed in gross excess a certain threshold within their marginal propensity to save. The lowest 3 tax brackets are taxed too heavily, and the bracket transitions above those income levels (there are only 4) are too few and too large to adequately reflect the changes in marginal propensity to save as income levels grow.
You call it reallocation, I call it theft. I'm currently getting taxed at 28%. Which in my opinion is 28% too high. If I had that extra money, I'd be spending it and putting it to use in the economy.
You're in the 28% federal tax bracket? ****in' noice! But I agree, even at that income level, 28% is too high. Personally, I think we need more than 7 brackets in the system, and a slower more gradual increase of the tax level as income levels grow.
See, you assume here that the public is perfectly rational and will act in its collected self interest.... That simply is not the case. It is the role of the government in healthy economic governance to facilitate and ensure the allocation of capital that would otherwise not be spent in the real economy to be spent in the real economy.
I do understand I'm not getting taxed 28 on my entire paycheck, only the portion in that bracket. However, at what % do you draw the line? 70? 80? At a certain point the people in those brackets will determine it's not worth their time to work for 30 cents on the dollar and they will then stop producing and being productive until the next year. Honestly, I don't really have an issue with the govt dealing with roads and infrastructure. I wish they were better at it. They should be repairing the service roads with pot holes, instead of repaving my street that was perfectly fine. Not only that, they did such a **** job at it and destroyed people's curbs, sloped the street incorrectly, and a neighbor of mines water main broke the very next day. I'd actually think it's a good idea for them to maintain and improve the internet lines to increase competition between ISPs and destroy the monopoly they currently have. Even google is doing away with fiber because of the cost.
There's an upper threshold that absolutely can not be crossed because of that exact worry. As for what is the ideal level of income that brackets should be defined and the tax rate they should be charge, that is something that would require much more research... The important part is that the tax rate is based on the change in marginal propensity to save as income levels grow, and that it never exceed a particular percentage (or nominal level in the lower brackets) of the marginal propensity to save. A person of sufficient means such as yourself should be able to put away enough money into their savings (investment portfolio) each month to have a liveable income to retire on when they reach a certain age.
Yes, but I'm also lucky with the fact that I have low monthly expenses and zero debt. I can imagine someone making just as much as myself and having a hard time saving, let alone trying to take risks which would have the potential of increasing their income.
Oh trust me, it's rough. A year of fighting the good fight to chase the entrepreneurial dream has no been fun. Next year I'll be sitting up with you at the 28% bracket (I'll be starting up at the EPA soon), and as my startup grows, so will my income and consequentially, my tax burden. Fortunately though, even with $80k in student debt, I have a very low monthly expense. Funny enough, as my company grows, I'm thinking of reclassifying it as a C-Corp and capping the salaries of myself and my partners and setting it up so that we pay out most of our earnings via dividends, which would be taxed at 15%. Dividends aren't taxed the same as income.
Always looking, but for a pre-revenue company and still developing our API, you might be turned off by our stock valuation. Investing in startups is always risky business.
The Government is supposed to be the manifestation of the public acting in it's collected self interest. Not taking your money via taxes, but you pooling your money with all of the other citizens to have nice things like roads. It used to be, Pre-Reagan, that accountants of people starting to inch towards the highest tax bracket would be advised to reinvest in their businesses rather than pay themselves more. This resulted in the business flourishing and higher wages, when the advice was taken. Others simply looked for loopholes or ways to tear it down so they didn't need them. Note: Not disagreeing with points made, simply adding to them.
Tell me about it. My house payment is $800 a month, my 2012 Ford Expedition payment is $800 & thanks to Obamacare (have I told you how much I hate Obamacare yet?) I have to pay for insurance on my entire family at $1000 per month. I take home about $4500 a month after taxes and such (including a 3 percent untaxed going into a simple IRA) so add in the other bills like gas, electric & water & there isn't much to spend after that now. It's crazy because 5 years ago if you told me I'd be making $75k-$80k a year I'd be like, "I'm all set!" But here I am, not enough. It's enough to support my family but geez I can't take them on a fancy Disney cruise or anything like that, like ever.
Ouch, that's rough man. Sorry to hear. That makes it especially hard to plan for retirement and budget in savings for family trips. Reaffirms my belief that the bottom 3 to 4 tax brackets are taxed too heavily. And meanwhile, a SJW on here is probably thinking "must be nice". :/
Yeah. Car will be paid off in 3 years so then there will be some more room. Hopefully by then health insurance comes down with the repelling of Obamacare. That will give me some more breathing room. My wife wants to go back to work but I'd rather her not. It's not necessary but she'd like to bring in some play time money. I think she's just ready to get out after being a stay at home mom for 7 years. Kids make you WANT to go to work lol.
I've got bad news for you bub, Obamacare ain't going no where. Maybe a good bit of it will get repealed, but there are two core tenets that Trump said he's keeping, and those are part of what drives up the cost. Trump campaigned on repealing it. Since winning he's changed his tune to replacing. Now it's looking like he's going to change his tune to modify.