Friday, February 11, 2005

Tax rant cont.

Three things are certain: death, taxes and more taxes.

The closer you get to death the more in taxes you are going to pay.

As I outlined before, if your income doubles you are going to pay about double the amount of tax.

This is the society's definition of fair since taxes act to redistribute money from one group of society to another; i.e. from the rich to the poor.

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As I also outlined before, America has a major problem with saving. The government and the citizens it represents don't like doing it.

If an individual is short of savings they go to a bank to borrow money.

The government goes to the public, by way of taxation. The more money the government needs, the higher taxes go.

The problem facing the U.S. government is an increasing need to fund expenditure by way of taxation. This means taxes will need to rise further.

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A commonly heard argument is that people with higher incomes (let's call them 'companies') should be taxed more than those with lower incomes.

This is considered a fairer way to raise the extra money the government needs.

However, since it's companies that hire people on lower incomes, then taxing the rich indirectly taxes the poor.

A company that loses a higher share of it's income to the government will have less left over to hire more people.

You can only go to the well so many times before it eventually runs dry.

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The economy runs in a circle: companies make things, people work for companies, people spend money on things companies make.

If one part of this cycle is taxed more than another then it takes away from all other parts as well.

If the government needs to raise more money by increasing taxes it does not benefit any part of society by focusing those increases on certain groups.

**Afterthought**

In light of the comments to this blog, perhpas this is the best 3D representation of how wealth is distributed amongst various groupings of the economy..

7 comments:

Iestyn said...

This all assumes that 'the' circle is the only circle worth thinking about. Money cycling about doing nothing of actual value is only worth so much, hmm? Reducing the size of the circle may be anathema to enconomists (who don't like to think 'outside the circle', a-haha - no, I don't really mean that, I just couldn't stop the pun), but most people lie outside the circle (or should I say the inner edge? should I call it a spiral?), so it always irritates me when the circle's value is spoken of as if it is of prime, intrinsic importance.

So now you explain to me why it's a sad fact that we can't live without the circle and without giving the circle everything it asks for :o/

Wesley Fogel said...

The circle works on one level, since it captures the idea of money moving between different groupings. The rich give to the poor by way of employment and the poor give to the rich by way of spending.

A cone works at another level, since the height and shape of the cone reflects the way the wealth within the width of the circle is being shared around. It can't, however, capture the idea of wealth moving naturally from the lower echelons up. Similarly with the spiral.

Hmm, maybe there's a shape I haven't thought of that would do the job. Or maybe the shape is changing as is the slant? Maybe the world is like a big bowl that is shaken by some overarching force over which we humans have no real control...

Iestyn said...

A surface of revolution ought to do it... take a curve (similar to 1/x) that has population (or probably log population) as the domain and wealth as the range. Rotate that about the Y axis in 3D and you can imagine money spiraling around the surface, moving up and down from the upper to the lower classes and back again.

If you then coloured the surface (let's choose varying brightnesses of red) according to the level of 'activity' (i.e. how often the spiral of money exchange passes through a given point on the surface) then I imagine it'll look not dissimilar to a volcano. Which is to say burning hot at the top and a whole lot dimmer down below, around the edges.

*That* oughta send those fat cats down City Hall a message...

Iestyn said...

Nice diagram.
Mmmm.... skiiing.....
Aaarchrhchrrchchrr....

Iestyn said...

Nice diagram.
Mmmm.... skiiing.....
Aaarchrhchrrchchrr....

Iestyn said...

Nice diagram.
Mmmm.... skiiing.....
Aaarchrhchrrchchrr....

Iestyn said...

*So* nice, in fact, I had to say it no less than three times.