Tax query

[sunnyside]

This came up in a different thread. But I find the one response I got very interesting and I'm curious how others feel.

Take a simple three person system of rich person A, "regular" person B, and person C who would be dead of starvation or exposure but for the support they get from the government.

A pays $100,000 in taxes
B pays $20,000 in taxes
C pays nothing

They each collect $40,000 worth of benifits (health care, police, infrastructure etc).

Would it be correct to say that person B is supporting person C with their tax dollars?

Please post with your response and if you have time your reasoning.

[IanKennedy]

No, person B is $20,000 up on the deal. They gain from the system not loose. A is funding both B and C (to differing amounts). Assuming there's only three people as provided in your question.

[stitch626]

I say yes.

If he wasn't, then only $100,000 would go to supporting the three people. Yet the need would be for $120,000. Without Person B's taxes, there isn't enough to go around. Therefore, even if B's money only goes back to himself, he is still paying that $20,000 so that C can get his $40,000.

[IanKennedy]

No, the math is trivial:

Code: Select all

    Pays    Gets    Net
A   100k    40K     -60k
B   20K     40K     +20K
C   0       40K     +40K

it's as if A is directly paying 20K to B and 40K to C.

[kostmayer]

I think Stitch's point is that if B didn't pay tax, then there would only be 100k between the 3 of them, therefore B is contributing 6,667k to C.

Therefore, with rounding :-

Code: Select all

    
     Pays    Gets    Net
A   100k    33K     -67k
B   0       33K     +33K
C   0       33K     +33K

[IanKennedy]

I think Stitch's point is that if B didn't pay tax, then there would only be 100k between the 3 of them, therefore B is contributing 6,667k to C.

Therefore, with rounding :-

Code: Select all

    
     Pays    Gets    Net
A   100k    33K     -67k
B   0       33K     +33K
C   0       33K     +33K

No if you change the tax system to say that B doesn't pay then A has to pay more, or your tax system goes bankrupt.

If you are saying that they fail to pay when they should then C still gets the $40K and B gets nothing and we have a surplus of $20K in the system. After all B is a criminal and will end up in jail.

[sunnyside]

I was hoping Graham would come by. He is of the "yes" opinion if I understand correctly and I was hoping he'd elaborate.

[Lazar]

I was hoping Graham would come by. He is of the "yes" opinion if I understand correctly and I was hoping he'd elaborate.

Well, you're making the assumption that Graham receives more value in government services than he pays in taxes, which may or may not be true. You're also assuming that all of the money that people pay in taxes is redistributed to the population in the form of benefits and services.

[sunnyside]

I was hoping Graham would come by. He is of the "yes" opinion if I understand correctly and I was hoping he'd elaborate.

Well, you're making the assumption that Graham receives more value in government services than he pays in taxes, which may or may not be true.

?

I mean he's of the "yes" opinion regarding the question in this poll. I think he's single and employeed so there is a distict chance he pays more than he draws. But that doesn't have anything to do with the poll answer.

You're also assuming that all of the money that people pay in taxes is redistributed to the population in the form of benefits and services.

Well, creative accounting is a seperate question that muddies the waters. i.e. can you say things like "the taxes paid by the wealthy fund the military while my taxes feed the needy?