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In the U.S., the percentage of households, which pay no income tax whatsoever, has gone up to 40%.

The top 20% of taxpayers pay 80% of taxes.

It sounds like a proof of the simple law of economy that both Ronald Reagan and John Kennedy (by the way) knew to be true.

High taxes, and high progressive taxation stifes the creation of wealth. That makes for less income to tax, and more difficulty people actually have in exiting poverty, because real jobs aren't created.

End result: less poverty, shorter periods when people are in poverty, higher standard of living *across the board*, more wealth, lower taxes **but higher and more stable government revenue**, more government revenue with which to assist the least capable, those with disabilities, ant to those who society owes a debt to.

All people need to undertand, is that economy is not a zero-sum-game. One person's gain IS NOT another person's loss, as socialists who rattle on about 'social justice' think.

In 2002, the top 10 percent of German taxpayers contributed 54 percent of the federal income tax. The lower 50 percent of households contributed 8.4 percent of German income tax revenues (http://www.bundesfinanzministerium.de/Anlage18035/Datensammlung-zur-Steuerpolitik-in-Zahlen.pdf).

However, federal income tax is only one out of many tools of a society's income re-distribution system. You need to look at the bigger picture. Also, the portion of each group's total income tax depends on its share of the total Adjusted Gross Income. The quoted numbers do not take that into account.

Note from David: Jo, the German 2002 figures you quote hardly change the conclusions drawn by Gersemann for 2001. Also, what sense does it make to compare 2002 German tax data with 2001 US tax data?

As to the "bigger picture" you want us to look at - that's making things even worse for Germany. The most important German tax is the VAT, and that's a tax that's even more harmful to the lower income folks. On comparison, the US VAT is way lower, as a percentage of total revenue income (I didn't check data, but that's a given). So taking VAT into account ("bigger picture") underscores Gersemann's hypothesis that Germany's tax system is unfairly biased against the lower income groups.

As to your last point: I think it's completely valid to analyze tax share data in comparison to the size of groups, rather than taking into account their income. Income based approaches are, of course, possible. But they have their own fallacies, like the definition of income. I'd rather stick with hard data, like tax revenues and number of people.

Hello there. This is my first time commenting. I know nothing about economics. Could any of you recommend books to read? (I'm in the U.S..) I'm a recent ex-liberal (now Independent) but my friends are all still uber-liberals and spout out the typical socialism garbage. I used to be very moved by communist 'ideals' until I realized, and embarrassingly so, that I didn't really understand how American economics works in the first place or how this country basically stays afloat because it does so pretty well. Anyway, thank you in advance if you know of any good books!

Novice: It's this simple - what ideas have worked to repair failed notions, and what were the ideas of the people who drove them?
Think of the decade of social spending and economic malaise before Reagan, and imagine that with a few bold moves, shocking ones that hurt people temporarily, things were better for everyone. And very frankly, the people who fund the best and most charitable work that society does.

Novice: I guess the kool-aid is wearing off. It did for me too. I couldn't take their anger anymore - their eternal desire for a world to become what it should be, according to the fantasies of the young. They're unaware that experience teaches humanity and decency to people, and that the young are still growing and learning.
I guess the key for me, is that I never thought of myself as the great font of wisdom - so much so as to think that I would parade down the street with a sign. As if I was absolutely certain that I knew better than people who I knew had a great deal of common sense!
Then again, there's also the romance the left has with murderous causes which have that skin-deep 'egaliterian look'. I saw Communism first hand - it's nasty, and it's soul sucking - worse than any sort of poverty. If only the 'communitarians' understood that - the guy trying to sell you on something that hard HAS to be a liar.

Novice - that's easy.

Dr. Thomas Sowell's Basic Economics, a Citizen's Guide to the Economy.


http://www.tsowell.com/

Friedman thinks he's a genius.

He's black and a conservative. You might not have heard of him for those reasons.

http://www.tsowell.com/basicecon.htm

Also, start reading Econopundit, Arnold Kling's Econolog, Bill Hobbs is fun, The Conspiracy to keep you poor and stupid - Luskin goes after Herr Doktorprofessor (Krugman) constantly and Marginal Revolutions for starters, good blogs all.

And don't forget the weekly Carnival of the Capitalists roundup!

For balance, Dr. Brad DeLong, he was in Clinton's administration. Oh, and Megan McArdle/Jane Galt. There's an Adam Smith blog, too, now, Samizdata links to it.

And novice, you might want to start checking in at Roger L. Simon's place, you will be welcome there.

When you start challenging their vision, no matter how gently, you are off the reservation and they won't discuss other alternatives with you, they might even cut you out of their lives.

You will either toe the line or you're gone. There's a couple of other sites for recovering liberals, redstate.org has one. And check out Instapundit and Vodkapundit's recent archives for ABC's The Note where they couldn't find anyone who voted for Gore who's now voting for Bush (even if you aren't). There's some other links there where you will be welcomed.

For example, if they rail about tax cuts to the rich, I'll bet they got a lot of satisfaction ripping up the check. Or sending it back to the IRS, possibly instructing it to be applied against the deficit, or donating it.

Oh, you mean you didn't do any of those things???

You didn't walk your talk????

You think you should pay more in taxes? What has ever prevented you from doing that voluntarily?

It's going to get ugly.

Sorry to go off-topic.

Joe: "They're unaware that experience teaches humanity and decency to people, and that the young are still growing and learning."

Yup. My mistake was thinking humanity and life were things you can figure out if you read, emote, sit down and think long enough. And yes, the constant anger was the reason I got fed up too. The whole concept of communism is based on the most negative view of humanity and if there is anything I've learned in my short life, what you assume about people has a huge impact on how they will behave. And really, that is just a dangerous thing to do. I'm tired of constantly being on attack mode.

Sandy P.: Thank you for the recommendations! Those should be more than enough to start.

Sorry for the thread hijacking, folks!

Sandy P.: Thank you for the other sites! Actually, I'm already starting to let them go. They're really nice people and fun and I know they mean well but it's time to move on, grow up I guess.

Oh one more thing, I have no idea whether or not I should challenge their ideas. Y'know, really, they are so impressionable, I don't want to be their new leader. They would pretty much believe anything and that's not what I want for them. I hope they become strong, self-sufficient people and right now, I don't think facts and politics are the issue. I think what's hurting them is their emotional baggage and maybe the pains of growing up.

Okay, enough digressing! Sorry again!

Don't you even read your own 'economics' textbooks?

Neither the distribution of income nor the amount of taxes is regarded as a measure of 'capitalism' in a modern economy. Instead have to analyze the distribution of total net assets (including claims into the future like pension, public heath care etc.).

In a communist country you will get a more linear, in a capitalist country a more exponential function.

(X-axis 0 - 100% of inhabitants, Y-axis 0 - 100% of total assets).

--I don't think facts and politics are the issue. I think what's hurting them is their emotional baggage and maybe the pains of growing up. --

Just like the 60s boomers.

My friend's a lineman and a union pubbie. Most of his garage aren't. He told us tonite they were laying cable in a new $300K+++ subdivision, we live in IL.

The guy he was laying cable with started talking about what a bad economy we have. My friend looked around, pointed out the homes w/the price tag, well, we're doing well but the rest of the country isn't.

Right.

The top 20% of taxpayers pay 80% of taxes.

Surely you mean federal income taxes? There's a lot more to taxes than federal income tax.

On comparison, the US VAT is way lower

Excuse me? When did the US get a VAT?

Note from David: No need for excuses, Pete. Your sales tax - I know it differs regionwise - has the same distributional characteristics as the German VAT system. 1000 $ income of a rich person has a lower share of VAT/sales tax as the 1000 $ income of a poor person. It's called a regressive tax, as compared to a progressive tax such as the typical income tax.

Sorry but sales tax rates are the same percentage for everyone. The more one spends the more one pays in tax. By definition that means that they are "flat" not "regressive". No Orwellian economic Newspeak allowed. It can even be argued that since the rich are buying more expensive items like steak and lobster vs. hamburger and fish sticks that sales taxes are "progressive". Everyone needs to eat, even "the rich", and they are paying higher taxes to do so. If rich and poor alike paid the same dollar amount in taxes that would be "regressive".

In the U.S., the top tier of income earners pay almost all federal income taxes. Far too many people are getting a "free ride".

Note from David: rjsasko: Of course, a sales tax is "is the same percentage for everyone" related to consumption expenditures (or sales). But I related it to income. Example: of 1000 $ income, Bill Gates spends about (let's assume) 500 $ for food or any other consumption. The rest goes into savings. Of any 1000 $ income of an average Joe, 900 $ go into consumption, and (at best) 100 $ are saved. Now you apply the same percentage (sales tax) to the 500 $ Gates pays and the 900 $ Joe pays - what you get is more sales taxes payd by Joe than by Gates. And that's why it's called a regressive tax - it burdens relatively more on the low-income guys.

It's taught in Economics 101.

@David and Pete:

Just a note:

John Kerry's home state, Massachusetts, had a "tax holiday" on Saturday. What this means is that Massachusetts decided that they would suspend their 5% sales tax for just one day, to encourage people to shop in Massachusetts.

Massachusetts merchants lose many sales to New Hampshire merchants, where there is no sales tax, or to the out-let malls in Maine, where clothing and other items are greatly discounted.

To my knowledge, Kerry had nothing to do with the idea and there will not be a National tax holiday in a Kerry administration.

@David and Pete:

Just a note:

John Kerry's home state, Massachusetts, had a "tax holiday" on Saturday. What this means is that Massachusetts decided that they would suspend their 5% sales tax for just one day, to encourage people to shop in Massachusetts.

Massachusetts merchants lose many sales to New Hampshire merchants, where there is no sales tax, or to the out-let malls in Maine, where clothing and other items are greatly discounted.

To my knowledge, Kerry had nothing to do with the idea and there will not be a National tax holiday in a Kerry administration.

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