Bribe the rich

I read an article today suggesting that those who earn >$1 million per year add so much to society by creating jobs that we should reward them with tax free status so that they have even more money to create even more jobs.

I'm willing to go with this with one big caveat. Sure some of the rich will take their tax breaks and use them to hire more people (especially the entrepreneurs who are in the middle of growing their business) but others earn that kind of money while driving their companies into the ground (negative job creation). So my modification would be to give them the tax break AFTER they create the jobs. Say if a person or their company increases payroll by 10% than that person or CEO gets a 100% tax break. If they want the tax break the next year they need to increase jobs by another 10%.

It's most likely cheaper than TARP, quantitative easing, etc and will probably work better.

biochem wrote:I read an article today suggesting that those who earn >$1 million per year add so much to society by creating jobs that we should reward them with tax free status so that they have even more money to create even more jobs.

I'm willing to go with this with one big caveat. Sure some of the rich will take their tax breaks and use them to hire more people (especially the entrepreneurs who are in the middle of growing their business) but others earn that kind of money while driving their companies into the ground (negative job creation). So my modification would be to give them the tax break AFTER they create the jobs. Say if a person or their company increases payroll by 10% than that person or CEO gets a 100% tax break. If they want the tax break the next year they need to increase jobs by another 10%.

It's most likely cheaper than TARP, quantitative easing, etc and will probably work better.

Is that the same article which proposes giving the top earner of the year the CMOH?

It's a rather big assumption that job creation si due solely to the people who earn over $1 million are doing it solely due to their own efforts, rather than their underlings who probably earn less. Not to mention people who earn that wealth mainly from investments or various "moving money around" methods.

It's a rather big assumption that job creation si due solely to the people who earn over $1 million are doing it solely due to their own efforts, rather than their underlings who probably earn less.

It probably is true especially in big business where the vast majority of CEOs are seriously overpaid for their mediocre performance. But it does encourage the CEO to instruct said underlings to hire people. And a 10% increase in FTEs is huge a lot more than is typical. So if you want an economic stimulus package that actually impacts jobs, this may work. It's worth trying at least.

Maybe my hidden socialist is coming out but it doesn't seem ethical or just to give tax free status to those who are already getting more money than any reasonable person needs. So the welder or shop assistant on $40k a year has to pay tax out of their limited money that is needed for food and shelter in order to fix national infrastructure and so on, while someone who would have $500k plus a year above their basic needs wouldn't pay their way?
In my experience those getting over $1m a year have smart accountants ensuring that they pay little tax anyway, so they are already bludging off the average person.
Most such millionaires would use the excess money to update their Porsche or yacht, with no extra jobs provided.

My own thought is that taxes should be equitable as the goal of a fair tax is impossible. Thus all share the burden of government equally and be less inclined to allow government to waste their tax money. Everyone pays the same percentage of net income. We don't need tax codes that would take a person a year to read. Keep It Simple Stupid!

Poker

Most such millionaires would use the excess money to update their Porsche or yacht, with no extra jobs provided.

That's my objection to the original idea, which is why I proposed paying for performance. They get the deal only AFTER they have created the jobs.

I agree it's not fair. But we're in a world wide recession and the jobs picture is showing now signs of improving any time soon. The government is trying scheme after scheme, most of which have been very expensive wastes of money. Bribing the rich might work. It's at least cheaper than all of their other schemes.

pokermind wrote:My own thought is that taxes should be equitable as the goal of a fair tax is impossible. Thus all share the burden of government equally and be less inclined to allow government to waste their tax money. Everyone pays the same percentage of net income. We don't need tax codes that would take a person a year to read. Keep It Simple Stupid!

Poker

The problem with a flat tax is that it doesn't affect everyone equally. Let's say the tax rate is 10% of income; for someone making $10/hour, it's going to be much more of a hardship than for someone making $200/hour.

And while proportional tax systems might be more complicated than flat ones, it's certainlu possible to make a fairly simple proportional taxation code; the US' tax code is, AFAIK, much more convuluted than such a code needs to be. What's making most of the complications are loopholes and special cases, which can exist in a flat tax regime as easily as in a proportional one.

biochem wrote:

Most such millionaires would use the excess money to update their Porsche or yacht, with no extra jobs provided.

That's my objection to the original idea, which is why I proposed paying for performance. They get the deal only AFTER they have created the jobs.

I agree it's not fair. But we're in a world wide recession and the jobs picture is showing now signs of improving any time soon. The government is trying scheme after scheme, most of which have been very expensive wastes of money. Bribing the rich might work. It's at least cheaper than all of their other schemes.

Let's add another clause - if they lsoe jobs, their tax burden rises.

You said the CEO gets a tax break, what about for public or private companies. Will share holders get a tax break too?

Eyal wrote:

pokermind wrote:My own thought is that taxes should be equitable as the goal of a fair tax is impossible. Thus all share the burden of government equally and be less inclined to allow government to waste their tax money. Everyone pays the same percentage of net income. We don't need tax codes that would take a person a year to read. Keep It Simple Stupid!

Poker

The problem with a flat tax is that it doesn't affect everyone equally. Let's say the tax rate is 10% of income; for someone making $10/hour, it's going to be much more of a hardship than for someone making $200/hour.

And while proportional tax systems might be more complicated than flat ones, it's certainlu possible to make a fairly simple proportional taxation code; the US' tax code is, AFAIK, much more convuluted than such a code needs to be. What's making most of the complications are loopholes and special cases, which can exist in a flat tax regime as easily as in a proportional one.

That is why places with flat tax rates, like Alberta where I live, have a flat 10% tax rate with the first $37500 free. While we still have to pay federal taxes which graduate from $10,500 free up to a maximum of 29.5% for those making over $135,000 with deductions to keep everything fair and equal with people earning less. The flat system works better and is really easy.

A flat tax rate of 10% with $35000 free base rate and no deductions of any kind would cut paper work way down and save bundles of cash processing everything.

Alberta is great because we don't have any provincial (state) sales taxes. We do have a 5% federal sales tax but something's can't be helped.

Perhaps until you can balance a budget the USA should introduce a federal GST of 5%. Which affects everyone fairly. In Canada it was 7% but our Alberta based Conservative federal government, lowered it. In England it was 15% VAT when I moved there in the early nineties. They raised it to 17% when I was leaving and if I'm not mistaken it is up to 20+% now. Crazy. Plus their up to 40% income tax. Crazy taxes there.

Oh and Balancing a budget is step one. Paying off a debt. Means you need to take in more money than you spend. Alberta before King Ralph took over had a big debt. About what you have in the USA scaled for population. Ralph (also remembered affectionately as fat Ralph) Klein our Premiere (like a Governor) RIP. Was fondly remembered and took to cost cutting and fixing debt problems. He was immencly popular ruled with an absolute majority. 96%? Something like that. While two weak leaders later we are back to deficit spending popularity has shifted from our rebuplican like rulers, to the more tea totallers who want to stop spending and give the money back.

Side note Alberta has a Heritage fund around 16 Billion Dollars if you scaled that up the your whole country population wise that would be about 1.6 trillion dollars. But other than not paying into it lately nobody touches that. Although we should follow Norway and start paying into it again.

Alberta is also rat and roach free, aside from politicians. We even have rat patrols that patrol the boarders in key Areas and will go and hunt down and kill any rat anywhere in the province, except for politicians. Can't even have a pet rat. $15,000 fine and then someone comes and kills the rat. No exceptions.

But yes flat rate taxes do work, with a large tax free base. And yes our health care is 100% free for hospital stuff. Dentist, chiropractor, ... Is still extra and you have to pay for it or have insurance.