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Comment by hugh3 | Hacker News Reader

While I feel sorry for the guy whose taxes are about to go up substantially, he shouldn't be trying to claim that $500K a year isn't rich. It is rich.

Instead he should be pushing the argument "Why the hell should I have to pay for all these government just because I'm more productive than other people? If I use $10,000 a year worth of government services why am I paying $200,000 for it while some other guy using $10,000 a year of government services pays nothing? Why can't the burden be spread more equally among all those who use government services instead of lumped almost entirely on the top 10%?"

That's the argument he should be pushing. Of course there are possible responses to that, but it's a better starting point for debate than "I only make $500K a year, you should tax the real rich, who are making $800K a year!"

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I'm not sure $10,000 is a fair-market value for the government services. Probably the biggest single service a government provides to well-off people is protection for their property and person, via policing, military defense, and a centralized property register and court system willing to enforce their ownership of assets. The value of that guarantee goes up with your level of asset ownership.

   While I feel sorry for the guy whose taxes are about to go up substantially

that's where you lost me.

His taxes aren't going to go up...his tax CUTS are about to expire...as they were supposed to. The sunset clause was part of the original bill...instead of bitching that his taxes are going to go back to normal...he should be happy he got to enjoy this tax break for all these years.

And "substantially"? His taxes are only going up by ~3%

> His taxes aren't going to go up...his tax CUTS are about to expire

That isn't a meaningful distinction for individuals. It only means something for the government's budget outlook. It is a little silly for the law professor to complain about a tax increase without considering the alternatives, which are insolvency or drastic budget cuts. Regardless of the merits of the latter option, it's clearly not politically feasible.

Well, based on his salary, he's probably been in the workforce for 10 years, he voted 10 years ago and he should've been paying attention.

We just witnessed one of the greatest free rides in world history, and this guy was a passenger - I'm not exactly brimming with sympathy.

And "substantially"? His taxes are only going up by ~3%

Which is, like, $15,000 a year. That's substantial -- in fact it's more than most people pay in taxes at all!

We should start from the fundamental question: why should this guy pay more than Joe Schmo at all? Why shouldn't the tax bill be spread equally over everybody, so it's (say) ten thousand dollars per head? That would be what I call "fair".

It's also not possible because some people just aren't getting off their butts and earning $10K per head, but that should be considered a deviation from fairness. We should look down upon those with below-average incomes as jerks who aren't working hard enough to pay their share.

> Which is, like, $15,000 a year.

No, it isn't. That not how taxes work. His marginal rate for the highest bracket will go up, for his first 250k his taxes will be exactly the same. It's hard to take an argument seriously from someone about taxes being too high if they don't even know how they're computed.

> We should look down upon those with below-average incomes as jerks who aren't working hard enough to pay their share.

You need help, serious mental help.

Oh, that's easy.

If everyone is taxed at 15k a head, then the minimum that anyone can work for jumps to 30k a year, or 20k part time. That means hyper-inflation or mass unemployment. That means that college would incur an additional 60,000 in opportunity cost, costing this country a skilled labor base.

You still need people to man the circle Ks. If you suddenly have to mechanize all of these positions (because the price of labor has doubled or tripled), you end up with even higher unemployment. And I promise you, when you have 30% unemployment and people coming for your head, you will see armed revolt.

It's simple. You do not press on poor people because they are the foot soldiers in a revolution, and your soldiers are their brothers.

"We should start from the fundamental question: why should this guy pay more than Joe Schmo at all? Why shouldn't the tax bill be spread equally over everybody, so it's (say) ten thousand dollars per head? That would be what I call "fair"."

Let us leave aside "fair" or "unfair" for a moment.

The problem with a poll tax is that you can only raise the amount of money you can charge the poorest people you are taxing multiplied by the number of people you are taxing.

A tax scheme that operates on a percentage of income (or even increases that percentage as income increases) allows the government to maximize its income in the same way that having higher margin 'premium' products and lower margin "economy" products so rich people can pay more and poor people can pay less allows a business to maximize it's income.

Progressive taxes are approximations of flat taxes that are based on utility rather than nominal dollars.

maybe so. But even without the relationship you describe between what you pay and what you get, a progressive tax system still maximizes the government's income vs a poll tax.

I'm just pointing out that even before you get to talking about what's fair or what's right, you simply could not support a government as expensive as ours on a poll tax. - so there is a reason why we have a progressive tax rate that has nothing to do with perceived fairness.

"We should look down upon those with below-average incomes as jerks who aren't working hard enough to pay their share."

In a distribution as heavily skewed as US income, "below-average" would probably be around 80% - 90% of the population. Perhaps you meant 'median' or something else other than 'average'.

It doesn't really matter what he meant, any way you slice it that comment is simply disgusting.

True. I didn't think I needed to reiterate that, but maybe I should have just to be clear I wasn't agreeing with it.

You do realize that 48% of all Americans pay $0 dollars in Federal Income tax. The top 10% pay 40% of the pie. I'm for the tax cuts expiring but I do also agree with the whole "equality" argument. I'm of the generation where I'll probably never see any Social Security but I do know that I'm paying for it.

This is a wildly misleading figure.

First, the primary driver of this "inequality" is the widening gap between the rich and the poor in the US. The top 10% of earners in the US take home nearly 50% of the country's total income. Under a "flat tax" system (i.e. everyone pays 20%), they would still pay nearly 50% of the country's total income tax. Under our system they actually pay 70% of all taxes. Do you think it's "unequal" for people who take home more income to pay proportionally more income taxes?

Second, even people paying zero income tax pay ~15% of taxes on income for social security + medicare, as well as a disproportionate share of their income on regressive taxes, like sales tax and gas tax.

Nope, I don't think it's unfair that the people who earn more pay more. In fact, I'm for it. However, what I'm against is even a small group not paying for it. This "small" group right now is nearly half of the population.

The argument for regressive taxes is also poor. Come to New Hampshire where there is no sales tax or W-2 income tax. The air is clean, the mountains well hiked and the people friendly. Take a look at the state's finances too. The regressive taxes there are on inheritance, dividends, investment income and a few things else I can't remember. That hits the rich far more than the poor.

This is the key point (or should be) in this discussion. The foolish spending that Delong accuses Henderson of supporting would never have been approved if the average taxpayer had to pay even $10 out of pocket for it.

The general public can only be convinced to vote for grandiose schemes when there is zero perceived cost. Since most US citizens pay nearly nothing in taxes, it's easy to get them to vote for such schemes. The tax system is designed to facilitate consent for such schemes, or at least to minimize the natural skepticism that any reasonable person would have about the ROI of most government endeavors.

Of course, you can't have negative ROI if your investment was $0, so why not cheer on the blow dried politicians and hope it works, after all someone else is paying for it.

They're going up 3% on the amount over $250,000. It's $7500. If you didn't give him access to accounting software, he would be unable to detect the presence or absence of that money.

* That would be what I call "fair".*

When I made $50,000/yr, the primary value I got from the government was some physical safety, some education, and roads so I could go to work and buy things.

When I made $500,000/yr, the primary value I got from the government was protection of my assets, access to an educated labor pool, and roads so I could transport my goods, so my workers and customers could get to them.

The value received from government doesn't correlate perfectly to income, but it does correlate strongly, and as such is a reasonable approximation of a fair price.

We should look down upon those with below-average incomes as jerks who aren't working hard enough to pay their share.

This is possibly the most disgusting thing I've ever seen. It's wrongheaded in so many ways that I hope you're a troll.

If you are not a troll you are a sociopath, and to be frank... your comments are so nonsensical that I doubt you'll ever have the "problem" of paying taxes that you fear.

your comments are so nonsensical that I doubt you'll ever have the "problem" of paying taxes that you fear

Like Joe the Plumber, in this guy's imagination he has to deal with the burdens of a progressive tax system. Reality is a different story.

(replying to myself)

One point I'd make to up and coming entrepreneurs: taxes aren't going to be the burden you fear. When you're growing your company you'll pay relatively little personal or corporate income tax.

Personal income tax will be relatively low because most entrepreneurs would rather reinvest in their business than buy a $20,000 watch.

Corporate will be relatively low because you won't be sitting on the cash, you'll be hiring people, spending on infrastructure or advertising and otherwise growing the business. This means your annual profits will be tiny.

The vast majority of the value you accrue will be in the business itself, and you won't have to pay on those gains until you liquidate.

Frankly, I think these discussions are bad for HN not because it's a bad idea to discuss politics or economics, but because nearly everybody on this site would get more value from an article about marketing, productivity, coding, testing, launching products, or any other topic that can actually help an entrepreneur build their business, today.

>One point I'd make to up and coming entrepreneurs: taxes aren't going to be the burden you fear. When you're growing your company you'll pay relatively little personal or corporate income tax.

That's an extremely important point.

I tell people: If you want to help startups, the tax rate does not matter hardly at all. While you are still a 'starup' you will pay very little in taxes, just 'cause you will make very little money that is not re-invested. The tax complexity makes a huge difference, though. Now, I'm sane so I pay an expert to deal with that sort of thing, but a complex tax code is worse than the costs of paying another expert.

A complex tax code, first, massively increases my risk. I know two people who will likely be in debit for the rest of their lives because they tried to do their taxes themselves while running a business. Now, I've got a professional, but there is always a chance they will screw it up. I'm on the hook for the money, no matter what. I can get out of my building lease and loans through bankruptcy, but tax debit is forever.

Next, a complex tax code makes it harder for me to plan out how to allocate my resources. With a complex tax code, it's often more profitable to play accounting games than to actually build something people want more efficiently than the competition, and I think that impoverishes us all.

(Total nitpick that I wasn't initially going to post, but it's now appeared in several of your posts and it's driving me crazy: you're using "debit" where I think you mean "debt". A debit is an accounting entry indicating something has been deducted from an account; it's basically part of an income statement, reflecting a one-time payment. A debt is money that's owed to someone else; it's part of a balance sheet, and is permanent until paid back.

Confusion is somewhat understandable when you consider that the opposite for both is "credit". When used with an article ("a credit"), it's the opposite of debit, a one-time addition to an account. When used without an article ("banks extend credit to borrowers"), it's the opposite of debt, a sum that is owed to you by other parties. English is a funny language.)

you are correct, of course, it's a mistake I make often. It's funny, I think mistakes that are not made obvious by the spell check actually make you look dumber than mistakes that would have been caught by the spell check.

I can't agree more thoroughly.

It's obnoxiously difficult to identify all of the taxes (especially state and local) that are relevant to your business, let alone to actually file and pay them (both of which can be harder than you'd think.)

Until there's an easy way to verify you're compliant, I don't think there's any viable option except to hire an accounting firm to ensure compliance. If you use standard accounting software (like quickbooks) and just want them to deal with filing and paying the taxes, the bill will be small.

>If you use standard accounting software (like quickbooks) and just want them to deal with filing and paying the taxes, the bill will be small.

I make more use of the accountant than that.. It's almost like having an experienced business person on 'pay by the hour' basis. A typical contract accountant has worked with more businesses than your typical businessperson. I mean, the accountant is not much help on marketing, product development, etc... but as for the mechanics of running the office, payroll, insurance, keeping the government officials besides the taxman at bay, etc... an accountant can be really, really useful, especially when you just want to know "how do other businesses solve this problem?"

I use more than that as well, and you're right. My life got simpler when I switched to a regional accounting firm that specialized in smaller businesses.

I was simply trying to note that tax compliance is cheap enough that there's really no reason not to do it.

I'm not sure I agree that calculated evil is preferable to well-intentioned ignorance.

"Life is hard for me, too" is a lot easier to sympathize with (even if it's complete bullshit) than "I don't care if life is hard for you."

The government providing those services is what allows jobs that pay so well to exist. Most of the function of government is protecting property rights, and the largest part of that is creating a stable society where the poor don't have an incentive to murder the rich.

There are things that guy could do with his money that would give him tax breaks - like using that excess wealth to create jobs, donate to charities, etc.

If his burn rate is $500k a year then he's not financially any different from anyone else who's burning theorugh their paycheck - he's just got different hobbies - he's not contributing more meaningfully to society or anything like that - so why not higher taxes?

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