Updated on 07.31.14

The Simple Dollar Weekly Roundup: Kids of Carcassonne Edition

Trent Hamm

My four year old son and three year old daughter have been playing the board game Kids of Carcassonne almost constantly the last several days. They’ve roped grandparents into playing it, parents into playing it (I’ve played it countless times), and are even playing it just against each other.

I couldn’t be prouder.

This week, I tried to link to some blogs that I haven’t linked to before. There are a lot of good people out there writing personal finance stuff and I tend to link more to sites of the people I read frequently. This week, I made an effort to explore some other sites.

10 Key Characteristics of Debt-Free People (of Modest Means) I think nine of the ten apply to me. The one I disagree with is self-confidence – I really don’t have much because I have a very hard time reading other people and understanding where they’re coming from. (@ len penzo)

What does Bush Tax Cuts mean to an average Joe? What did I get out of this article? The people that really benefited from the Bush tax cuts were people making more than $68,000 a year. Everyone else got … pretty much nothing. (@ wealth informatics)

10 Reasons Not to Buy a New Car I’ve become fairly ambivalent on the new vs. used issue, assuming that neither choice causes you to go into any sort of debt. (@ grad money matters)

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  1. lurker carl says:

    We teach the kiddies to play cards, dozens of different games from a single deck of cards. Inexpensive and portable, great for toddlers learning numbers and reinforcing basic arithmetic skills with the older children.

  2. Johanna says:

    Trent, you’ve written about tax brackets before, so I know you understand how they work, so surely you realize that the author of the Bush Tax Cuts article doesn’t. The creation of a 10% bracket at the bottom of the 15% bracket means that *everybody* pays less in taxes on their first $16K or so of taxable income ($8K for single people). On the campaign trail in 2000, Bush often repeated that under his plan, “if you pay taxes, you get tax relief.” He was correct. (However, the bulk of the tax cuts still went to the richest of the rich.)

    At the time the tax cuts were enacted, the numbers were more like $12K for married couples and $6K for single people, so the tax cut worked out to $300 per person. That $300 tax cut for the 2001 tax year (for which taxes would normally be filed in April 2002) was sent out as a check sometime in mid 2001. Everyone was excited about what to do with their $300 checks. Surely I am not the only person who remembers this?

  3. Len Penzo says:

    Hi Trent,

    Thanks for the link!

    You’re not alone regarding a lack of self-confidence. It doesn’t come naturally to a lot of people – it certainly didn’t come naturally for me, that’s for sure. I learned that with “practice” it can be self-instilled over time.

    I hope your readers enjoy the article. :-)

    All the best,

    Len Penzo dot Com

  4. Aloysa says:

    Thank you for linking to my blog! It was a very nice surprise. I am glad you liked my article! You made my day! :-)

  5. Trent Hamm Trent says:

    Johanna: you’re absolutely right. However, most Americans do not have income high enough to reach the real tax cuts – those over about $65K a year got those and they escalated as you made more. The average American makes a lot less than that. The “tax cut for everyone” was largely a campaign talking point.

  6. Lauren says:

    I commented on the “Average Joe” article. The Bush tax cuts let me keep an additional 5% of the first 16,750 of my taxable income, or $837.50. They also let me keep an additional $500 per child. The Bush tax cut makes a $153/month difference in the tax burden of a family with 2 children making less than $68,000. That’s hardly nothing! While I think that the tax cut was ill-advised 10 years ago, letting it expire “cold turkey” would cause very significant pain for middle-class families. (That’s why I don’t think they’ll be allowed to expire.)

  7. Dan says:

    I’m very tired of hearing how the rich got the most benefit…blah blah blah.

    I found the analogy below and really liked it as it pretty clearly explains how taxation works.

    Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

    The first four men (the poorest) would pay nothing.
    The fifth would pay $1.
    The sixth would pay $3.
    The seventh would pay $7.
    The eighth would pay $12.
    The ninth would pay $18.
    The tenth man (the richest) would pay $59.

    So, that’s what they decided to do.

    The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20.”Drinks for the ten now cost just $80.

    The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men? The real paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share?’
    They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

    And so:

    The fifth man, like the first four, now paid nothing (100% savings).
    The sixth now paid $2 instead of $3 (33%savings).
    The seventh now pay $5 instead of $7 (28%savings).
    The eighth now paid $9 instead of $12 (25% savings).
    The ninth now paid $14 instead of $18 (22% savings).
    The tenth now paid $49 instead of $59 (16% savings).

    Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

    “I only got a dollar out of the $20,”declared the sixth man. He pointed to the tenth man,” but he got $10!”

    “Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than I!”

    “That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”

    “Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”

    The nine men surrounded the tenth and beat him up.

    The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

    And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

  8. Johanna says:

    @Trent: It sounds like we agree. But there’s so much misinformation out there about the Bush tax cuts and tax brackets and taxes in general that I think some clarification is in order, and it does not come from that article.

    Another thing: the $68K refers to taxable income, not total income. Taxable income is your income after you subtract out all your deductions and exemptions. For a married couple, with no kids, taking the standard deduction, the deductions and exemptions add up to almost $20,000. So they’d have to earn more than $88K to reach the “real tax cuts.”

    And of course, for those with incomes barely over the income threshold, the tax cut still amounts to very little. For a married couple with a taxable income of $68,001, their total benefit from the “real tax cuts” is 3 cents.

    So when Obama says he wants to let the tax cuts expire for taxable incomes over $250K, keep in mind that people with taxable incomes of $250,001, or even $251,000 or $260,000, will be almost entirely unaffected. You have to be earning much, much more than $250K for the expiring tax cuts to make any real difference.

  9. Johanna says:

    @Dan: Those numbers refer to federal income taxes. Throw in state and local income taxes, which are much less progress, and sales taxes, property taxes, excise taxes, and payroll taxes, all of which are regressive, and suddenly you get a very different distribution. Take into account how much more money the tenth man has than the first (why are they all men – are there no women in this bar?), and it’s hardly out of proportion at all.

  10. Johanna says:

    (for “much less progress,” read “much less progressive.”)

  11. Courtney says:

    The expiration of the Bush tax cuts will hit small businesses hard, which will lead to even less hiring and even more job losses. Just what our economy needs right now.

  12. Johanna says:

    “The expiration of the Bush tax cuts will hit small businesses hard, which will lead to even less hiring and even more job losses.”

    Even more misinformation.

    First, the only small businesses that will be hit at all are the ones whose owners make more than $250K a year ($200K for unmarried individuals). And remember, that’s personal, taxable income, so that’s *after* all the expenses of running the business have been subtracted out.

    Second, for the expiration of the Bush tax cuts to increase a small business owner’s taxes by an amount equal to the cost of creating one minimum-wage job, the owner would have to be making something more like $550K a year.

    Third, businesses (small or large) don’t generally make decisions of whether to expand or not, whether to hire or not, based on the owner’s personal income tax rate. They decide based on whether the expansion is likely to be profitable – that is, whether it will bring them more customers and more money in the long term. That happens not when rich people have more money (unless it’s a business that specifically caters to rich people), but when the Average Joes do.

    But you won’t hear any of this on Fox News.

  13. Sherry says:

    Love your site, I visit everyday. I disagree with your comment about the Bush tax cuts. When your tax bracket changes from 10 to 15%, you will notice. When your child credit gets cut if half, I think you’ll notice. When the marriage penalty comes back, it will penalize you. When high earners have to give more money to the government they will have less to spend and the economy (and job growth) will slow. Get last years taxes out and refigure using the new rates. It affects all.

  14. Johanna says:

    (And if you think help for small businesses is what we need, surely you’re in favor of the business tax incentives Obama just proposed, right?)

  15. Courtney says:

    @ Johanna: “And remember, that’s personal, taxable income, so that’s *after* all the expenses of running the business have been subtracted out.”

    Econ 101: If I own a corporation, it doesn’t matter if I am taxed at the corporate or the personal level, I still don’t get to keep my money. Money I don’t get to keep cannot be used to buy equipment, hire new employees or increase the pay of existing employees.

    “businesses (small or large) don’t generally make decisions of whether to expand or not, whether to hire or not, based on the owner’s personal income tax rate”

    If businesses aren’t influenced by tax rates, why are so many corporations, large and small, moving income to this year, before the tax rates go up? (See Steve Moore, Wall Street Journal for details on this) When Reagan lowered tax rates in the early 80’s, why did the economy and purchasing take off? Why did tax receipts go up, even with lower tax rates? Could it be that people had incentives to work harder?

    All microeconomic theory is based on incentives. If I don’t get to keep the fruits of my labor, I’m not going to labor much. Conversely, if I’m given free money to do nothing, I’m not going to labor much. Sadly, both of these things are happening under Obama’s policies.

    Empirically, the economy right now is in terrible shape – so please don’t tell us how great these policies are.

  16. Suba says:

    Johanna and Lauren

    I apologize for not being clear. I have added an update. What I meant to say was the lowest bracket will see the most increase. This is how

    [ Update (9/8/2010) : Reading Lauren’s comment below and re-reading my post I see what I had written previously can be misunderstood. Sorry I was not clear. I do understand marginal tax rates. Let me give an example of what I meant to say – Person A earns $16,750 and Person B earns $68,000. Person A’s tax bill will go up by $837.5 (5% increase of $16,750) and he will pay $2512.5 total. Person B’s tax bill will be $2512.5 (15% of 16,750) + $7687.5 (15% of $51250) totaling $10200. So Person B’s tax bill also goes up only by $837.5. Which means Person A’s increase would be 5% , person B’s increase would be 1.2% , if I am earning $137,300 my increase would be 1.5% and so on. That is what I meant by the lowest income bracket will see the most increase. Again, sorry about the confusion.]

    Trent, Thanks for linking my article.

    @everyone. Thanks for pointing out the mistake.

  17. Katie says:

    Sadly, both of these things are happening under Obama’s policies.

    Yes, you’re right, the economy was going swimmingly until Obama came along. The correlation is sure clear there!

  18. Wes says:

    Seriously, Katie? Courtney’s comment was referring to the economics of incentives relating to taxation and welfare, not the general state of the economy.

  19. Dorothy says:

    lurker carl’s post made me chuckle.

    When DH was in kindergarten the teacher asked if anyone knew how to count.

    Little Billy waved his hand in the air, and when the teacher called on him he proudly counted, “Ace, two, three, four, five, six, seven, eight, nine, ten, jack, queen, king!”

  20. Johanna says:

    “Econ 101: If I own a corporation, it doesn’t matter if I am taxed at the corporate or the personal level, I still don’t get to keep my money.”

    What I mean to emphasize is that the $250K refers to personal income, not corporate revenue. Your corporation would have to be taking in much, much more than $250K for your personal income taxes to go up.

    “If businesses aren’t influenced by tax rates”

    I didn’t say that businesses aren’t influenced by tax rates. I said that their hiring decisions aren’t generally influenced by the owner’s personal income tax rate. And you haven’t refuted that.

    “When Reagan lowered tax rates in the early 80’s, why did the economy and purchasing take off?”

    When Clinton raised tax rates in 1993, why did the economy also take off?

    “Why did tax receipts go up, even with lower tax rates?”

    Inflation and population growth, mostly.

  21. Courtney says:

    @Katie: “Yes, you’re right, the economy was going swimmingly until Obama came along. The correlation is sure clear there!”

    This depression is largely caused by the housing crisis. The housing crisis was caused by the government forcing banks to lend money to the “disadvantaged” even though most had no hope of repaying. Of course, the banks knew that the government (or in other words, my taxes) would pick up the bill once the loans went bad, so they were happy to lend away.

    Who were these “disadvantaged”? The Democratic voting base, which is why Democratic politicians (and a few liberal Republicans) pushed for this. (See Barney Frank, Chris Dodd, etc.)

    Huge government corrupts.

    So yes, things were rocky when Obama took office, but that was because of liberal, Big Government policies – the government standing on the neck of business. And Obama sure is doing everything in his power to make things a lot worse.

  22. Hope D says:

    After reading here about Carcassonne, My husband and I gave it to our daughter for Christmas. She really likes it, as did all her cousins. I would like to get “Ticket to Ride” and a few others you mention. They are all expensive games, but Christmas is coming.

  23. Hope D says:

    I would like to add that Carcassonne, Ticket to Ride, and Settlers of Catan are used in many gifted programs.

  24. valleycat1 says:

    Trent- going by the blogger’s definition of self-confidence, I think you’ve got it in abundance, as evidenced by this blog & the way you live your life.

  25. Dan says:

    @johanna, the premise of the story is that the wealthy man is already paying a huge amount of the bill and when a “tax break” is given of course in dollars the wealthy man “benefits” the most even though he is still paying a disproportionate amount of the bill (such as now) (How much money he has does not and should not matter). However without the wealthy man showing up to participate in the bar visit everyone is hurt by it.

    I know arguing with you is pointless as you clearly have no common sense and you quickly employ a common defense strategy…… quick change the subject.

    Why else would you have brought up state, property, excise taxes….they have nothing to do with the argument and only serve to deflect attention away from the argument being made.

  26. Johanna says:

    @Dan: “How much money he has does not and should not matter”

    Wow. Are you seriously saying that the amount of income a person has should be irrelevant to the amount of taxes they pay? That we should scrap the income tax and replace it with a head tax?

    I don’t even know what to say about that, except that absolutely no one thinks that’s a possibility worth taking seriously.

  27. Katie says:

    This depression is largely caused by the housing crisis. The housing crisis was caused by the government forcing banks to lend money to the “disadvantaged” even though most had no hope of repaying. Of course, the banks knew that the government (or in other words, my taxes) would pick up the bill once the loans went bad, so they were happy to lend away.

    Hilarious. Have you read Too Big to Fail or another reputable book about the recent economic woes? The behaviors exhibited by banks and others was not about Democrats pushing them to lend to disadvantaged members of society.

  28. Courtney says:

    @Katie: Why don’t you read the balance sheets of Fannie Mae and Freddie Mac? That’s the humungous elephant in the room that Mr. Sorkin conveniently left out of his book.

  29. Jules says:

    @ Johanna: Actually, a flat tax rate (everybody gets taxed 25%, or something like that) is used to great benefit in Estonia and several other countries. Of course, in Europe they believe in socialism, so if you’re making below-living-wages after taxes, then you get government aid, which kinda defeats the point of a Republican government. Frankly, I think it’d be worth considering.

    And way to miss the point of Dan’s analogy.

  30. Amy B. says:

    It sure would be nice to use this “crisis” (media’s word, not mine) to write a tax code that is fair and requires neither lawyers nor accountants to decode.

    Warren Buffet has it right that it’s not right for him to pay a lower marginal tax rate than his employees. But neither is it fair to shoulder the rich with excessive taxes.

  31. Wes says:

    Jules is right, Johanna. Dan’s argument was against a progressive tax system, and you came to the illogical conclusion that therefore he must be pro head tax, when in fact there are a variety of other systems available that aren’t progressive.

    But politics aside, your attack of Dan and Katie’s attack on Courtney were both mudslinging: you knew you didn’t agree with them, so you thought you might distort their argument with an easy cheap shot. Unfortunately for you, that’s a childish way to make a point and no one will really take you seriously if that’s how you respond to an opponent’s argument.

  32. Johanna says:

    @Jules: Head tax, not flat tax. Under a flat tax, as you said, everyone owes 25% (or some other percentage) of their income. Under a head tax, everyone owes $15,000 (or some other dollar amount), regardless of income.

    If I’ve missed the point of Dan’s analogy, then please explain it to me: How should the bar tab be divided, so that the wealthiest man is not paying a “disporportionate amount of the bill”?

  33. Courtney says:

    I think that Johanna actually understands the point that Dan is making – it just doesn’t bother her or strike her as unfair. She doesn’t have empathy for the productive members of our society, the ones who pull their own weight.

  34. Johanna says:

    @Wes: “Dan’s argument was against a progressive tax system”

    That’s incorrect. There’s no way of determining whether the system described in Dan’s argument is progressive, flat, or regressive without knowing the incomes of the ten men. But Dan also said that income “does not and should not matter.” The only tax system in which income does not matter is a head tax.

    @Courtney: Again I ask: If the situation Dan describes is unfair, then what would a fair division of the bar tab be?

  35. Wes says:

    Your right, Johanna. When I read Dan’s post a bit closer, I see that he does essentially favor a head count. I appologize for calling you out on that, especially since it was my fault for not reading your critique of his post as close as I should have.

    That said, Dan’s argument is, in a way, against a progressive tax system. He obviously doesn’t like any systems which consider an individual’s income, and that includes progressive systems.

    Your right to point out that his statement that no one should have to pay a “disproportionate amount of the bill” basically rules out everything except a head tax. I can’t agree with him there, but I do believe his illustration accurately points out the irrationality of hating on top earners whenever they receive tax breaks. They are, after all, still paying more (both in terms of total dollars and proportion of their income) than everyone else.

    Unfortunately, what’s a “fair” amount for them to pay is normative, and there will be as many lines drawn as there are people in the discussion. That’s why, in my opinion, the most fair division would be a flat rate for everyone. A flat rate is extremely more practical than what we have now, it’s objective, and it does not give any special deference to politically relevant demographics such as income.

  36. Wes says:

    I mean “You’re.”

    Also, Johanna, what do you think is a fair amount for the rich to pay?

  37. Johanna says:

    @Wes: I accept your apology.

  38. Johanna says:

    “what do you think is a fair amount for the rich to pay?”

    Good question. I do think that the tax system as a whole should be progressive. Until this morning, I would have thought that that was a fairly uncontroversial thing to think. And by “as a whole,” I mean all taxes taken together: federal income taxes, state and local income taxes, sales taxes, etc., which is why I brought those things up earlier. As for how progressive it should be, I’d think that should be based more on what yields the best results (for some definition of “best” that takes everyone’s well-being into account) than on how I personally feel about rich people.

    What I do think is unfair about the current system is that while the country as a whole has gotten vastly wealthier over the years, basically all of that extra wealth since about 1980 or so has gone straight to the richest few percent – inflation-adjusted wages for the middle and working classes have remained basically flat. And I’ve seen no good reason why this should be so; the rich don’t seem to have done anything special to make themselves more deserving of an increasing standard of living than the rest of us. (And I don’t count the tautological “If you were paid the money, you must deserve it” as a good reason.)

    Not that I think the government’s role is to play Robin Hood. But I do think it could do a lot more to offer services and programs to help ensure equality of opportunity. And if the money for those things comes from a progressive tax, I think that’s appropriate.

    (It is worth noting that many proposals for a “flat” income tax are also secretly progressive, since they would exempt income up to a certain amount. So you have a 0% tax bracket for income up to $30K (or whatever), and a 25% tax bracket for income above that.)

  39. Courtney says:

    @Johanna: “And I’ve seen no good reason why this should be so; the rich don’t seem to have done anything special to make themselves more deserving of an increasing standard of living than the rest of us.”

    You’re right! I bet Steve Jobs and Bill Gates sat on their butts all day watching Oprah and the jobs and wealth they created just magically fell out of the sky. :)

    If you want to be a part of the American dream, get off your butt and produce something that people want to purchase. You don’t need a government program to do that. Otherwise, get out of the productive people’s way. Those of us who are pulling the wagon get annoyed when the passengers complain about the free ride.

  40. Becca says:

    There is a small flaw in Dan’s tax/bar story. He said 4 men paid no taxes. Actually I believe it is nearly five of ten. I believe that 49% of people who file a tax return pay no income tax. It is a little spooky to think what will happen when 51% pay no income taxes.

    One of the reasons why the wages of the middle class have stagnated is because their employers are paying more for health insurance benefits. Why has health insurance gone up? It is easy to target insurance companies, but few people are aware that the health insurance industry as a whole has only a 3% profit margin… yup. Look it up. Health insurance mainly goes up because we expect more services while we are becoming less healthy. It is advancements in technology and expensive medicines drive this. A lot is also the cost-shifting from those who don’t pay, or when the government underpays. A few years back I had a biopsy done via day surgery. Everything was fine. The tab for this half-inch incision was $18,000. Hard to pin that on insurance companies.

  41. Johanna says:

    @Courtney: You have a very strange definition of “productive.” Is a teacher not productive? Or a waitress? Or a farm laborer? Or an engineer? Or a janitor? Or an electrician? Or a nurse? Or a bus driver? Or a hotel maid? Do all these people sit on their butts all day?

  42. Wes says:

    It’s interesting, Johanna, that you think the best tax structure “should be based more on what yields the best results (for some definition of “best” that takes everyone’s well-being into account).” I can’t factor this subjective idea of “best” into our discussion (nobody really can, which I think is a good reason to leave out such considerations), but aside from that, what you are describing is the Laffer Curve, which economically determines the optimal tax rate to maximize revenues. This model is often associated with Reaganomics and supply-side economics, and was used to justify the Bush Tax-cuts. (As is often the case, though, some critics argued that we were actually on the wrong side of the curve at that point, and should have actually raised taxes. But that point wasn’t necessarily the consensus among economists.)


  43. Courtney says:

    @Johanna: Nope, and I know that firsthand. I was a both a waitress and a maid. My husband worked concrete and laid sewer pipe for years. We worked our butts off and worked our way up and now own three businesses. We did it on our own and we didn’t whine about inequality and we didn’t expect the government to help us.

    Please correct me if I’m wrong, but I believe that you have previously written about your privileged upbringing – parents paid for your college, gave you cash in exchange for your scholarships, you had the luxury of quitting your 8 hours per week job – am I remembering this correctly?

    Knowing that, it gets a bit tiresome to hear you complain about inequality and the undeserving rich. When privileged liberals, who have been given every opportunity to succeed, spend their time whining about those who work hard and are rewarded accordingly, it gets annoying.

  44. Johanna says:

    @Courtney: Not that this is relevant to this discussion AT ALL, but: I got a full-tuition scholarship for academic merit. My parents had saved enough to cover room and board, and when I got enough additional scholarships to cover even that, they let me keep the money. (I found out later that most of it was in accounts in my name anyway, so it’s not like they had a choice.) And I did not quit that particular part-time job (which was 12 hours a week, not 8), but in retrospect, I wish I hadn’t taken it in the first place. OK?

    Has it ever occurred to you that when I talk about equality of opportunity, I don’t mean for myself? That what I want is for everyone to have the same opportunities as I had?

  45. Becca says:

    Johanna, you got a full scholarship for academic merit. Are you suggesting that people who didn’t work as hard as you also get the same scholarship?
    How can their be equal opportunity for education if scholarships are rewarded only to those with the best grades?

    I think that is Courtney’s point. People who work harder (and smarter) should get rewarded for their effort.

  46. Courtney says:

    @Johanna: “Has it ever occurred to you that when I talk about equality of opportunity, I don’t mean for myself? That what I want is for everyone to have the same opportunities as I had?”

    You have not been advocating equality of opportunity. Your wealth distribution rhetoric advocates equality of outcome, not of opportunity. There is a huge difference. You want everyone equal at the finish line, not at the starting line.

  47. Johanna says:

    @Becca: No, not the same scholarship. But I do think that good-quality higher education should be available at an affordable price to anyone who wants it. That’s actually a great example.

  48. Johanna says:

    @Courtney: You really are very funny. Had the waitressing gig not worked out, you could have gone for stand-up comedy.

  49. Amanda says:

    I really liked the article on 10 qualities of medium wage non-debt people. I fit them all!

  50. kristine says:

    Wow. I guess landscapers who work their rear-ends off all day, and are in high demand, ought to be rich! Ditto nannies, and waitresses, and Chinese political prison labor- who produce all day, long hours, leaving little time to learn other skills.

    Is there a difference between services and producing product as a measure of productivity? Why would one be considered more valuable than another? Think just anyone can be a good nanny? A good construction worker? They are skilled labor positions, in high demand, invaluable, and hardly make one rich.

    I see a lot of money being made in shuffling paper, numbers, and each hand that touches the contract gets to keep a little off the top. I see no productivity in this, just an expensive rearrange. Nothing of value is created- things merely moved around, columns cut and pasted. The true innovators are few and far between. Most people, rich, and poor, seem pretty average on the productivity scale. If you have a race where everyone is going the same speed, but some started further down the track, they will end up ahead.

    I have no problem with people making good money. But it is the unkind person who blanket belittles the working class and/or the poor. There are plenty of “working poor”. They are called the working class for a reason, and it is not butt-sitting all day.

    And if you happen to be born wealthy enough to live off of passive income, then you enjoy the fruits of our land without the labor. Accident of birth, nothing more. Again, I have no problem with this, but even the Royals knew the value of noblesse oblige, as opposed to dismissive contempt. The French Revolution was rather sobering in this regard.

    As far as quality of opportunity… unless you can give children parents of equal educational background, equal cultural awareness and temperment, and equal access to outside help and supplies, it’s hardly likely.

    If you really want that, then change school funding to the same amount for every child, in every school, not based on property taxes, which is fascist in nature. Have the same tech resources. Develop a teacher “rating system” that assigns points for qualifications, and allot every school the same number of “quality points” in each subject. Offer the same classes to everyone. Nationally.

    Oh, and make it so that every citizen is required to use the public school system, even Congress. If they could guarantee no more educational opportunity for their own child than for any other child in the country, then the school system would become a high priority, and improve overnight.

  51. Morgan D. says:

    I play the Xbox Live Carcassonne game which I find to be extremely fun and totally relaxing, especially on easy mode versus one computer (hehe). I tend to like puzzle-type games anyway so it’s totally up my alley. I highly recommend it.

  52. AndreaS says:

    @ Johanna, college it IS available to anyone who wants it. It is called community college, and it is affordable. Agreed it is not as good at Harvard, but a college education is available at $3,000 per year.

    Of my four kids, they run the spectrum of effort and grades. One daughter completed high school and a year of college BEFORE she went to college, and one son couldn’t be bothered to ever do his homework, and took almost five years to finish high school. We have an excellent school system, but it is sickening to me how many kids just blew this off, as my son did.

    The really great thing about community college is that it is a second chance for kids like my son. He could go there, improve his grades, and transfer to a four-year school.

    I don’t know if there is such a thing as “equal opportunity” as we don’t all start out at the same place, with the same abilities, with the same birth advantages. But we do live in a country with AMPLE opportunities.

    BTW, both of my grandfathers went to Harvard. Both lost their fathers when they were small children, and both so grew up as sons of poor widows.

  53. Johanna says:

    @AndreaS: Where do you think community colleges get their money from that allows them to be so affordable?

  54. deRuiter says:

    Tax the rich enough and they will 1. Spend all their time and effor avoiding taxes legally to protect their wealth instead of growing busineses and 2. They will move to a more tax friendly area which is what is happening to upstate New York, NJ, Connecticut. These areas are losing wealthy citizens who are being replaced by illegal aliens. Texas, Florida, and other low tax states are gaining from the flow of well to do people seeking to shield income from greedy governments which confiscate taxes to redistribute wealth. Jan 1. America will experience the largest tax increase in history. Get ready for the depression folks.

  55. marta says:

    Those of you concerned about the rich should go to Slate and read Timothy Noah’s article – “The United States of Inequality”.

    Land of opportunities, indeed.

  56. Ajtacka says:

    @Jules (#29): I’m currently in the Czech Republic. Here every working person pays a flat rate of 15% tax. Health and social insurance are not included in the tax – they’re paid for separately by the employer. eg Someone earning 10000 a month (roughly half the average, for easy maths) will have 1500 in tax subtracted and receive 8500. The employer will pay a % of the salary for the insurance on top of the 10000. (Just for interest: the state pays insurance for all people who don’t work, including children)

    @Johanna: I’ve always thought that the progressive system makes sense, and the bar example is contrived. But after seeing that the system does (appear to) work, I now think that perhaps it doesn’t really matter either way. The bar example is still contrived though!

    And my 2c in the discussion:
    Is it “fair” to take money from someone struggling to pay bills just so that someone living the high life contributes no more than their “fair share”?

    To me, the point is that for someone earning very little (say, a poorly-paid janitor) an extra percent of tax could be the difference between eating and not. To someone earning a lot of money, that same percent of tax won’t be noticeable, but when used by the state to provide services to all can make a big difference. Possibly not directly to a wealthy person (eg if they send their kids to private not public school), but indirectly by improving the society in which they live and from which they make their profit.

    Yes, even the wealthy benefit from taxes even if they don’t directly use the services.

    I don’t about anyone else, but if I was an employer I would prefer to have educated employees who are able to focus on the job and be productive, rather than uneducated ones who are more concerned about their house being broken into or bankruptcy due to an illness or falling into a pothole on the trip to work or …

  57. John says:

    Most small businesses are organized as S-corps; company profits flow directly onto the owner’s tax return and are taxed at his or her personal tax rate.

    Most of the small businesses which earn less than $200k per year do not make enough money to employ many people.

    Most of the “small businesses” which employ the majority of people are those S-corps which earn more than $200k per year.

    Change the personal tax rate of a small businessman making $300k per year and you WILL change his business practices, including but not limited to, hiring decisions.

    Johanna is right that businessmen make hiring decisions based on will it or won’t it be profitable.

    What she misses, however, is that raising his taxes makes it *more difficult* for a new hire to be profitable. This, obviously, makes it more difficult to justify bringing on the new person.

    Overall effect? Larger “small” businesses will produce fewer jobs.

  58. Johanna says:

    @Wes: Yes, I know about the Laffer curve. And I don’t think there’s anyone who disputes that the basic premise is sound: Obviously, a 0% tax rate won’t yield any revenue, and a 100% tax rate won’t yield much, so the optimal tax rate must be somewhere in the middle. Where in the middle is it? That’s the question.

    I know that the Laffer curve was used to justify reducing the top marginal tax rate from 39.6% to 35% under Bush, and that some people are trying to use it to justify keeping the rate at 35% now. My (admittedly non-expert) view is that this justification was/is either dishonest or mistaken. But if I’m wrong about that, and it’s really true that a top marginal rate of 35% yields more federal revenue than a top marginal rate of 39.6%, then sure, of course it makes more sense to go with the 35% rate.

    I’m neither prepared nor inclined to argue about what effect the Reagan and/or Bush tax cuts actually had on federal revenues. I’ll just say that it’s a lot more complicated than noting that revenues went up in a year that taxes went down. You also have to account for inflation and population growth (both of which are fairly easily quantified) as well as how the economy is affected by factors other than tax rates (not so easily quantified). I’ll leave that discussion to the economists.

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