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Comment by rsync | Hacker News Reader

"Nobody likes paying high taxes, but I don’t mind."

I think there's an important distinction to be made between two different sorts of "high taxes".

One is a high absolute amount of taxes - you made millions of dollars in a year and therefore your absolute tax payment is relatively quite high.

The other is a high percentage tax rate.

I don't mind paying a high absolute rate of taxes - I think that is the scenario in which one can think fondly of all the things that government provides - things like:

"It's a repayment for all those years I was poor and the government paid for me to live and go to school."

However, there comes a point in percentage tax rates where basic fairness comes into question. I'm sure it varies from person to person, but I think an effective tax rate north of 40% is getting in the danger zone.

As a US citizen who lives in California, in Marin, and owns land, my effective tax rate is 50%, give or take, and I think that's a problem. It's very difficult to rationalize that every 60 minutes I work, ~30 minutes of that work product is appropriated by government.

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every 60 minutes I work, ~30 minutes of that work product is appropriated by government

How about every 60 minutes you work, 30 minutes of that is spent establishing the world around you? From the opportunities you had as a young person, and those of your children, to the safety and security of your adult life.

Half of your product is yours to spend freely, the rest goes towards the idea that you don't even have to think about mashlovs piramid. Well in a perfect euro-socialist utopia maybe, perhaps not in the U.S., but that's the general idea of high taxes.

"How about every 60 minutes you work, 30 minutes of that is spent establishing the world around you?"

I am perfectly happy to look at it that way, and indeed I do.

Please don't deploy the "I'm arguing with the anti-tax guy" toolkit here - I am not that guy.

The problem I have, and that I think many people have, is that fraction:

30/60 = 1/2 = getting a bit silly.

YMMV.

That's the American right propaganda sinking in. Times of higher tax burden have been economically more productive. It's already the government's money. Redistributive taxation is parsimonious use of funds.

Great chart in here about USA tax burden being below average: https://taxfoundation.org/comparison-tax-burden-labor-oecd-2...

Right propaganda or freedom propaganda?

You are entitled of what you've done, period.

Anything above 10% is theft.

"Times of higher tax burden have been economically more productive" -> this is just false, a falacy. Prove it somehow.

Sweden was a very rich nation before high taxes, now it's just rich, net jobs after high taxation in 50 years is ZERO. They are just letting go now, cutting taxes more and more.

I wonder why US economy is booming right now, maybe because Trump is going to cut taxes?!

Oops...

Well, the government has defended you from foreign threats, protected the monetary system that lets you earn in the first place, provided for your public education, established your infrastructure, and been a check against your home burning down or being robbed. If everyone's entitled to what they've done, what are they entitled to?

Capitalism is a system, like any other, created by humans and not found in nature. "Ownership" is not some property of matter; what it means to own something is that there is a legal system that supports that deed and an armed police and military to enforce it. There is no concept of ownership except for a truly anarchic "everything I own is in a box that I have the key to" idea that does not require other people to guarantee your property rights.

Oops my ass. The US economy is not booming - the US stock market is artificially inflated because investment speculators are betting that companies are going to use this obscene period in time to take advantage and do whatever they want to increase corporate profits in further concentrate the wealth in smaller and smaller circles.

If you're going to that abstract level, what does the dollar amount of the money you're "earning" even mean? Everything is part of a huge system.

The problem I have, and that I think many people have, is that fraction: 30/60 = 1/2 = getting a bit silly.

But why? I mean, are you just rationalizing? "I think 50% taxes is a lot just because I do, therefore I think it's bad policy." Or is there a logical reason that 50% is "a bit silly" but, say, 30% (or whatever your number is) is fine?

This is something that Nobel prize-winning economists fight over -- exactly how high a tax rate is too high? -- so I kind of doubt we're going to resolve it here on HN. My point is that we all have feelings ("I don't like the color mauve", "50% taxes rubs me the wrong way"), but these have to be separate from motives for enacting policy.

You're only 1/2 way away from slave labor at that point.

And when you factor in other taxes, you pay more than 50%, it's too much.

And if I choose not to pay those taxes, my freedom is taken away, so don't tell me the slave point is invalid.

His point is that the same things apply to 30% tax: you are only 2/3 away from being a slave, if you don't pay your 30% your freedom is taken away.

There isn't a rational difference between 30 and 50, the only difference is "I feel that it is too much", right?

There is absolutely a rational difference between 30 and 50%.

The numbers are clearly different, but not in the "one is slavery and the other is not" kind of way right?

We as a society went to war with companies over how much time they can require of us. Nowadays companies can only require us to work roughly 23% of the hours in a week.

50% is 84 hours/week, we as a society have already deemed the difference between those to be significant enough to fight about.

The difference between 50% of your income and 30% of your income is significant.

No, you're just 1/2 away from the point where your return on investment is not justified. And that's fine; there's a lot of perfectly valid reasons a situations where working is not worth it.

>You're only 1/2 way away from slave labor at that point.

No one getting taxed at an effective 50% tax rate in the United States is anywhere near a slave. The minimum wage McDonald's worker with a 15% tax rate is the slave.

"But why? I mean, are you just rationalizing? "I think 50% taxes is a lot just because I do, therefore I think it's bad policy." Or is there a logical reason that 50% is "a bit silly" but, say, 30% (or whatever your number is) is fine?"

No, I don't think I am rationalizing or being irrational.

Note: I don't make any claims to know what the right overall tax rate is - if you're asking me about 32% vs. 38% vs. 29% ... I am as lost as you, and those economists, are.

However I think that 1/2 is not an arbitrary point on that scale - I think there is a qualitative difference between more than one half and less than one half.

If I am assessed more than one half of what I earn, that's unfair in a way that I believe appeals to innate concepts of fairness that we all share, rather than "I just don't like that number".

Laffer Curve.

10% will be enough in the future, except for those countries in war, like US always will be.

what about passive income i.e. 0/60? Should that be taxed at 99% since you're not spending any time working for it? Conflating time worked with a tax rate seems like a red herring to me.

I always think it's interesting how we actually tax capital gains much less than normal salaries. It's weird that that income doesn't need to contribute to our society and help pay for things like Medicare but income that you work for does. My understanding is that there is some fancy economic theories that say this is the right way to do things that I don't have the knowledge to confirm nor deny. Economists aside it still feels wonky™.

Especially at an income level where you will be paying 50%, you should be able to save enough for the future/rainy day AND live quite comfortably.

That's the problem. You should never be responsible to judge how he spends his money, that's his problem.

You never know. You don't know if it was only 10%, he could use those 40% much better than the "government", oh hell, be damn sure he would.

He could create companies, could fund companies, could put this money in funds, those funds would have to fund companies to earn money, these would generate jobs, education, etc.

Man, why does everyone assume that rich people just take their money and start companies? Do you realize how risky it is to start a business? You are highly likely to lose EVERYTHING you invest, as well as ruin your reputation, if you start a business from scratch and it fails to take off.

Almost all wealthy people just invest their money in stocks, hedge funds, VCs, and other intangible assets that don't immediately produce a noticeable economic impact, aside from a rise in the stock market.

What do you think the purpose of stocks and venture funds are? They are for starting and growing businesses. He/She doesn't have to start the business themselves.

Except for here in the states 25% of the taxpayer money is going to military, intelligence and debt from past wars we know to have been bad ideas and knew all along were bad ideas.

And let's just say another 25% is misspent. In a country this big and bloated, that's also likely a low ball figure. But overall, only 50% of taxpayer money is going to anything remotely properly executed and needed.

That said, our public schools suck, we invest nothing in research, we don't provide healthcare until your old, and our interstate highways were built 70 years ago, and state and local governments handle needed construction now, yet they take the smallest percentage of our taxes. Some states like Nevada don't even charge state income tax.

In my view I'd be way happier paying taxes if this was managed right. That means cut military spending by 90% knowing we are never going to need an aircraft carrier again while completely evacuating the Middle East, and the state local government's charge more since they will be more effective at putting it to use.

Taxes should be no more than 30% total (federal, state + local) like the Apple App Store.

Yea, likely not happening any time soon. But that's what is correct imho.

Don't forget all that debt service. That's literally redistributing tax dollars to people and organizations with wealth.

Paying high taxes makes more sense if debt service was rather trivial.

> That said, our public schools suck, we invest nothing in research, we don't provide healthcare until your old, and our interstate highways were built 70 years ago, and state and local governments handle needed construction now, yet they take the smallest percentage of our taxes. Some states like Nevada don't even charge state income tax.

Don't forget we build highways with the wrong material which causes a cheaper initial cost and higher future cost. (Concrete rather than asphalt)

On what basis do you think that you think you can write off 25% of non-military non-debt government spending? Is that just a hunch?

I would suggest trying it sometime. Look at the US government budget, and try to cut out 25% of it. It is a lot harder than just getting rid of "bloat".

I can believe that some people might be able to find 25% that they personally don't care about. Maybe you don't drive, so (you think) you don't care about highways. Or, you're not poor, so you don't care about medicaid. And so on. But could you cut 25% of the federal budget without causing a large fraction of the American populace to become very, very angry (and vote you out of office, git reset --hard your budget in two years, etc)?

I don't mean to say that the government could not be more efficient. It certainly could. But 25% of the budget is a lot of money, and not everyone has the same priorities as you.

> Except for here in the states 25% of the taxpayer money is going to military, intelligence and debt from past wars we know to have been bad ideas and knew all along were bad ideas.

I don't disagree with your point (about wasteful spending on the military), but your number is substantially inflated and you're wrong on the financial conclusion.

The federal + state spending is $6.x trillion, soon to be $7 trillion. Closer to 10% of tax payer money is going to the military + intelligence. Federal debt service is closer to 5%-6% of the US Government's revenue year to year; less than half of that net cost is due to war.

Entitlements are by far the largest budget problem the US has, there isn't anything else even remotely close at this point. Within ten years those entitlements will balloon the US budget deficit back above $1 trillion, the military spending increases - which I disagree with - are comical next to the entitlement costs inbound. Unless you're planning to abolish the entire US military, you're not going to be able to financially resolve the truly epic entitlements funding shortfall just through military reduction. Even slashing the US military in half won't come close to fixing the problem (~$300 billion versus an inbound $1 trillion annual entitlement shortfall).

I admit my numbers were rough guesses. That said, I don't think really anyone can know--e.g. "black budgets" etc. But basically if your numbers are somewhat correct, I was only 2x off. You're stating 12.5% goes to essentially military. That's a lot. In addition, it seems that veterans are one of the biggest, if not The biggest entitlement--again, more military.

...a quick search shows this article saying 16% is going to defense:

http://www.cbpp.org/research/federal-budget/policy-basics-wh...

I also read recently something to the tune of: 70% of our national debt comes from military related expenditures from the 2 Bush presidents, and by 2020 interest payments will go from 5/6% to 10/12%. What about the principal? When does that get factored in?

I admit I'm not an expert on these matters (as i chose to focus on what i can change). However, there does seem like there are various discrepancies here--so what if the number is closer to 18% vs. 25% or 12.5%. It's way way way too much and would make a difference--more importantly in the lives and hatred abroad we would be sparing. We didn't fix or help anything in Vietnam and no matter what they say, we haven't in Iraq or the Middle East--our selfish financial losses aside.

However, now imagine instead of taking out credit for those wars, we invested. That would be paying major dividends that would further counteract these numbers. Now imagine we invested in ourselves (not just financial instruments)--the potential is far higher.

Military spending without a doubt has put a damper on our progress and perhaps the sole reason America may never reach the potential it once had. America was never great--rather, it had potential to be great. Now it's mediocre, and other countries are eating our lunch, and rightfully so. Not that the world is zero sum--but we'd stand to benefit from taking a page from their playbook (e.g. nordic countries, etc). We have shitty education. We are well on our way to becoming idiocracy. We unfairly lock up way too many people for far too long in shitty prison conditions (and then let corporations exploit them for cheap labor!). We have plenty of money but we spend $11 Billion on the Airforce One and Marine One fleet. That would put $33 in every american's pocket. Our expenditures from the Middle East since 9/11 would put like $30k in each american's pocket. If that was $5k over 6 years, that's life-changing money for half of america. ..This country is just ridiculous. Paying 50% of your earnings as taxes in California is absurd. It's a crime. There's no point owning (why pay that 1% property tax), there's no point making lots of money. Just rent, make far less, and work way less hard--what sort of incentive is that! That said we have a problem of working too hard and too much in this country (at least for people of a certain class)--so from that perspective perhaps it's a good thing. I rather make whatever that sweetspot income is from a taxation point of view ($75k?), rent, not try to make billions from my startup and live a simple life.

And yes, we should cut 90% of our military. Instead, we maintain an arsenal of super modern nukes and a small extremely efficient elite navy-seals-like task force. + Yes, the best cyber-security outfit on the planet (while somehow keeping surveillance on citizens to a minimum). But fire most people in camouflage uniform.

Gun-to-your-head "peace" is not peace. There is no world peace. This "peace" we have enforced will not less forever. As soon as china knows they can beat us they will make us pay for our sins in one way or another. We need to become more cooperative now and show the world how to act NOW while we're on top, cuz once we're not we won't be able to set such examples. We aren't cooperative. We are forceful. Again, it's gun-to-your-head peace. The lessons of history clearly indicate to me that it's a recipe for disaster as those hungry come up from behind you and use the ugly strategies they learned from you against you. These are basically life laws we're talking about here. So we aren't setting a good example. We haven't created true peace. It's temporary peace. And things could get catastrophic unless America completely changes its ways. I'm not even saying gun-to-your-head "peace" wasn't needed to get to this point, i.e. the most peaceful point in human history. I'm saying it's run its course, and if we continue to operate that way, we'll regress--and regress bad!

So why not save some money (AND SOME LIVES) and show some real leadership. Real leadership is about taking risks. Risks and faith are what it's all about. As powerful as the US is, it has an opportunity to set that stage. That would be the turning point in human history that civilization has been looking for. It's the next evolution. We have that opportunity right now. We are on the precipice of a turning point while things are still relatively stable. Cut the military, we don't need it. Save us some dollars and focus on education.

> How about every 60 minutes you work, 30 minutes of that is spent establishing the world around you?

Sure, if by "establishing the world around you" means government spending on fighting climate change, supporting clean energy initiatives and helping the underserved people instead of spending on wars, on weapons; AND everyone pays the same rate including our current president, then YES!

Wrong.

If he pays 50% because he wants, OK.

But he is FORCED to pay.

This is confiscatory payment, it's theft.

Opportunities as a young person costs 50% of what he makes?! Please don't pretend to be naive.

I thought it was common sense by now that this tax money goes to highly payed politicians, corruption, bad public administration, bad public programs, lazy people, etc.

A 10% tax should be the maximum a citizen should pay in any country.

And it will be in the future, distant future, but you can be damn sure that it will be.

Wrong, they should be happy it's not 90% or 100% of what he makes. Don't be naieve, why would you deserve anything when there are people who could wipe your life away with the stroke of a pen. Don't pretend you've deserved anything you've worked for. It has been granted to you by those in power as they have seen fit. Your petty idealism has no place in the real world.

I think this post was meant in sarcasm but sadly it is a more accurate reflection of the world...

I meant it as hyperrealism. It's not really constructive, just venting a little frustration with people calling me naieve.

You meant is a your utopian society. People who can make money can survive. People who can't are left to die. People who can protect themselves can survive. People who can't won't.

See people cheering the cutting of funding for Meals on Wheels make me want to vomit.

The problem is that those other 30 minutes are _not_ establishing the world around the person, but rather sustaining irresponsible worlds filled by others aggravatingly often, no?

I'm sorry, no knock against you, but that's the stupidest thing I've read in a long time. It starts at 35, than 40, than 45 than 50 and on and on until eventually 75% is towards everything else while your neighbor contributes nothing. Doesn't seem like a formula for success.

It starts at 15% and then 30% and then 50% and then everything you do ends up in one big pot and you have communism. And your neighbour is happily doing nothing while you slave away, who is stupid then?

So don't look at it as percentages. Look at it as a question of how comfortable is your situation. I'm in roughly the same position as you tax wise. We pay slightly less, about 48%, to taxes of one form or another. However we're comfortable. Minus the mortgage we're debt free, our lifestyle isn't extravagant but we rarely can't do or have the things we want due to money. Solidly upper-middle-class (for SF).

I'm perfectly happy to pay more than most to support others, because I make more than most in income. I can't honestly say that in my day-to-day life I work harder than the person delivering the mail, or someone unloading crates. I was given the advantage of good and cheap education and a safe environment to grow up in (Marin) due in part to high taxes on the wealthy. I feel it's important to do what I can to return the favor.

I also strongly believe that those above a certain threshold of wealth, especially those who hoard that wealth, are doing damage to the economy through income inequality. If taxes are the means to undo some of that damage then again, I'm happy to contribute.

I guess you could rationalize that with:

During my 60 minutes of work I was able to: breath clean air, have potable water, be surrounded by an orderly society, and in the event of danger have access to emergency services.

I'd counter that all of that together represents a very small portion of that 50% overall tax rate.

Well, you also got to wage wars in various countries via drones and residual troop deployments and special operations. That takes up quite a bit.

Also, you got to enjoy having a basic pension after retirement, as well as free healthcare for the elderly and poor. Who wants to live in a country with a bunch of poor and old sick people who can't afford food and healthcare? That sounds depressing as hell.

If you are in high a tax bracket you are actually paying way more to pension than you get back. If you saved the money yourself you would be better off.

Sure, but I believe in a progressive tax structure, so allowing wealthier folk to contribute even more to their retirement isn't anywhere near my top concern.

The amount of money you need to live on decreases relative to your income, as your income goes up. A wealthy person doesn't contribute 30%+ of their monthly income to housing, typically, nor could they come anywhere near spending that amount on food. But a poor family of 4 certainly could.

You believe in theft.

You believe in getting other people money in a forced manner and put in what YOU believe is better.

No, I don't make the decision on what to spend it on, the democratically elected legislature does. And if money is misspent, take it up with your elected officials.

Do you honestly believe that taxation is theft? It's existed as a fundamental requirement of civilization for millennia.

Utopian libertarianism is utterly unrealistic. For a philosophy that is wholly meritocratic, you would think the fact that no civilization adopted it as a fundamental principle would make it obvious how infeasible the concept is.

You could move. Oh, what's that, Marin is really great and a lot better than taking the tax cut and moving to rural Nevada?

Exactly.

Is 50% your ETR if you only look at INCOME taxes (federal and state)? If so, you're probably an extreme outlier.

Or are you including payroll "taxes" (social security, medicare), sales taxes etc also?

IIUC, if you add up health insurance premiums (employer share + employee share) + all income taxes + all payroll taxes of US and compare it to the same quantity of other DEVELOPED countries, the tax burden on the US is not unreasonably high.

Keeping a developed country developed is hard/expensive. :)

> I think an effective tax rate north of 40% is getting in the danger zone.

I think it varies mostly depending on the services you get for it and the percieved values of it. If you get higher education, healthcare and very social safety net possible then you tolerate a higher tax level, presumably.

If the tax is percieved as being spent on things you don't agree with (some random war etc) then it's harder to accept.

> It's very difficult to rationalize that every 60 minutes I work, ~30 minutes of that work product is appropriated by government.

If you consider that money to be appropriated then obviously there is a political problem. The money isn't spent on the services you need or want, or it's (seems to you at least) a lot of it is wasted. But there is no point discussing an absolute limit of fairness without discussing which tax paid services you would like to cut in order to lower taxes. Taxes could be 90% or 99% and there would be nothing inherently unfair about it - it would just proably be a very inefficient society.

> my effective tax rate is 50%

For this to be true, your income must be in the realm of $10 Million / year. If that's the case, congratulations—that is phenomenal. But pardon me for not crying you a river ;-)

Not if you include CA state taxes and property taxes. You can pretty easily hit 50% somewhere north of 250k, which for a 2 income household in the bay isn't outlandish.

"For this to be true, your income must be in the realm of $10 Million / year."

No, the threshold is lower than that.

Of course I don't count assessed property tax, since that is based on assets, not income.

But I do count parcel taxes[1] which occur per-parcel, regardless of value. USA + CA + Marin County.

Note, I am not losing sleep over any of this and I don't identify myself as anti-tax, by any means. I just think it's worth considering that a qualitative change in taxation has occurred once you go north of the 40% number.

[1] https://en.wikipedia.org/wiki/Parcel_tax

Ahhh. I'd never ever heard of Parcel Tax. Thanks for the info. I stand corrected!

I agree and think that total tax rates should be capped at a far lower amount.

At some point in running your own business you realize that large portions of the tax code exist to throttle back the rate of growth of smaller companies while giving away money (tax breaks etc.) to large behemoths.

I feel the same. I would have no problem with this rate, but I would like to see some things done better. How money is spent, how gov contracts are given out.

It feels like there is a huge amount of money lost on inefficient markets and efforts.

It feels like there is a huge amount of money lost on inefficient markets and efforts.

It's a feeling. But is it reality? That's a question for spreadsheets and numbers, not our feelings.

Are there countries that are 25% more efficient in government spending than the US? If so, how do they do it?

Just look at the cost overruns for the F-35 Joint strike fighter. This one project cost us a trillion dollars

Isn't it 50% above a certain level. So your first hour worked you're not paying 50% to the govt, but your last hour worked you are.

I agree with you. The poor can be affected by this as well, in the case of fines. A $150 speeding ticket isn't more of an inconvenience to most of us, but a poor person could be ruined by it. Nobody should escape consequences entirely, but I think the poor should be given some exemption from the governments iron-fist policy with fines, penalty fees, and bench warrants when you dont pay them.

There's a simple solution: here in Scandinavia at lot of monetary punishments are based on your income. E.g. your speeding ticket costs you a week's pay.

(Yes, tax evaders get off too easy with this system)

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