Why do people think that high taxes on the wealthy are a good thing?

[HillGoose]

It's pretty common sense to me that if you give more money to wealthy people and corporations, they'll have more money to give opportunities to less fortunate people, as well as increase innovation funding to kick anti-American nation's asses. Plus raising taxes on the poor would bring in a lot more money than raising taxes on the rich.

[YE]

Money doesn't grow on trees. In order to fund a welfare state, we need to raise revenues somehow without screwing over the people that actually need a welfare state.

[HillGoose]

Money doesn't grow on trees. In order to fund a welfare state, we need to raise revenues somehow without screwing over the people that actually need a welfare state.

i think social security should just be ended tbh. Young people get to opt-out, after 5 years everyone will get a lump sum of half of what they paid in, if they're smart they'll put it in the stock market.

[○∙◄☻¥tπ[╪AV┼cVê└]

Money doesn't grow on trees. In order to fund a welfare state, we need to raise revenues somehow without screwing over the people that actually need a welfare state.

Money always grows on trees when it comes to the bloated military budget.

[HillGoose]

Money doesn't grow on trees. In order to fund a welfare state, we need to raise revenues somehow without screwing over the people that actually need a welfare state.

Money always grows on trees when it comes to the bloated military budget.

it's not bloated enough

[Karpatsky]

It's pretty common sense to me that if you give more money to wealthy people and corporations, they'll have more money to give opportunities to less fortunate people, as well as increase innovation funding to kick anti-American nation's asses. Plus raising taxes on the poor would bring in a lot more money than raising taxes on the rich.

The rich have a hugely higher marginal propensity to save than the poor, because there is diminishing increases in spending as income goes up. The poor may spend close to 100% of their disposable income just to survive, while the rich will never do so. Money that is spent goes back into the economy to provide income for businesses, while money that is saved (and not invested) does not - especially with the increasing divergence between the financial sector and the real sector. So in terms of job creation and economic growth more money in the hands of the poor is more effective than more money in the hands of the rich. This is why most civilized countries have a progressive taxation system.

[Boss_Rahm]

It's pretty common sense to me that if you give more money to wealthy people and corporations, they'll have more money to give opportunities to less fortunate people, as well as increase innovation funding to kick anti-American nation's asses. Plus raising taxes on the poor would bring in a lot more money than raising taxes on the rich.

The rich have a hugely higher marginal propensity to save than the poor, because there is diminishing increases in spending as income goes up. The poor may spend close to 100% of their disposable income just to survive, while the rich will never do so. Money that is spent goes back into the economy to provide income for businesses, while money that is saved (and not invested) does not - especially with the increasing divergence between the financial sector and the real sector. So in terms of job creation and economic growth more money in the hands of the poor is more effective than more money in the hands of the rich. This is why most civilized countries have a progressive taxation system.

This. Additionally, capitalism always tends to create concentrated wealth (see Picketty's R>G). Progressive taxation attenuates the increasing concentration of wealth in the hands of a few.

[Cold War Liberal]

It's pretty common sense to me that if you give more money to wealthy people and corporations, they'll have more money to give opportunities to less fortunate people, as well as increase innovation funding to kick anti-American nation's asses. Plus raising taxes on the poor would bring in a lot more money than raising taxes on the rich.

The rich have a hugely higher marginal propensity to save than the poor, because there is diminishing increases in spending as income goes up. The poor may spend close to 100% of their disposable income just to survive, while the rich will never do so. Money that is spent goes back into the economy to provide income for businesses, while money that is saved (and not invested) does not - especially with the increasing divergence between the financial sector and the real sector. So in terms of job creation and economic growth more money in the hands of the poor is more effective than more money in the hands of the rich. This is why most civilized countries have a progressive taxation system.

[TPIG]

It's pretty common sense to me that if you give more money to wealthy people and corporations, they'll have more money to give opportunities to less fortunate people, as well as increase innovation funding to kick anti-American nation's asses. Plus raising taxes on the poor would bring in a lot more money than raising taxes on the rich.

A tax cut is not giving someone money; it's letting them keep more of their own. Taxes should remain low on ALL income sectors, as they each tend to different things with their money. Tax cuts for the top increases rates of investment, as well as savings (which are then loaned out by banks back into the economy). Tax cuts for the bottom end of the income spectrum increase direct consumer spending in the economy, jolting the economy from the demand side. People should not be punished with high taxes because they are rich, and certainly not because they're poor, as you suggest.

[mileslunn]

Living in Canada where raising taxes on the rich is very popular, here are some of the reasons I think it is (note I don't support raising taxes on the rich, at least not in Canada where top rates are 47.5% to 54% depending on province.  I would support if we had a very low top marginal rate like Hong Kong does of 15%).

1.  People want a more equal society.  Most accept there will be some inequality, but many find it offensive some make 1,000 or 10,000 times what the average person makes so feel higher taxes on the rich will redistribute it more and help reduce poverty (it doesn't as there aren't enough rich people to provide a lot of revenue).

2.  People wrongly believe the rich pay less taxes than the middle class due to all the loopholes so they feel raising it will end this even though this happens a lot less than many think.

3.  It's politically easy to do.  There aren't enough rich people to cost a party an election over this whereas you raise taxes on any other group, you lose a lot of votes.  So if you want more revenue it's an easy group to go after without losing a lot of votes

4.  Envy and resentment.  There are a fair number who resent those who have more so its an emotional way at getting back at them.

Now there a few sound economic arguments, although these are more for a progressive tax which almost every developed country already has to begin with not necessarily raising it more for the rich.

1.  Poor people have a much higher marginal propensity to consume so they will spend any tax cut you give them whereas rich will save much.  Likewise a tax hike on the poor will damage growth more than a tax hike on the rich even though both are economically harmful.

2.  The poor have enough trouble just meeting the basics so higher taxes on them would cause undue hardship whereas for the rich, it might mean fewer luxuries but won't cause undue hardship.

Personally I believe top marginal rates for the rich of all levels of government combined should be at least 30% (this is before deductions) and ideally around 40% (this is below most OECD countries).  45% is pushing it, but I can live with that if absolutely necessary (This is what it is in the UK, Spain, Italy etc.).  Anything over 50% I see as confiscation (7 out of 10 provinces in Canada, California, some but not all Western European countries, Israel and Japan all have top marginal rates exceeding 50%) and should be limited only to severe debt crisis or war and should automatically expire once those conditions end. 

According to the OECD table; Canada, Sweden, Denmark, Finland, Netherlands, Belgium, France, Austria, Portugal, Greece, Slovenia, Israel, and Japan all have top rates over 50% while if you include payroll taxes, Ireland and Estonia exceed 50% too.  In the high 40s, you have United States, Iceland, Germany, United Kingdom, Ireland, Spain, Italy, and Australia while if including payroll taxes you also have Norway and Luxembourg.  For low 40s, you have Chile, Luxembourg, Switzerland, and South Korea.  Under 40% you have Mexico, Norway (that excludes payroll taxes), Latvia, Poland, Czech Republic, Slovakia, Hungary, Turkey, and New Zealand so even though 40% seems excessive most below 40% are those on the lower end of the OECD.  Mind you this is the top marginal rate, not effective rate and excludes any deductions so I suspect many rich pay less than 40% even in countries with top rates over 50% as they hire accountants to find every loophole and deduction possible.

[buritobr]

Why do people think that high taxes on the wealthy are a good thing?
Because it is a good thing

[mileslunn]

Why do people think that high taxes on the wealthy are a good thing?
Because it is a good thing

Not necessarily, if you put them too high they just move elsewhere.  When Francois Hollande tried raising the top rate to 75% he lost revenue as many left.  In the UK, when Gordon Brown raised the top rate from 40% to 50% they lost revenue, while gained when the coalition dropped it back to 45%.  Where you live in Brazil it might work as the top rate is only 27.5% so could certainly go higher, but where I live in Canada, it is 47.5% to 54% depending on province so raising it further would just lead to a bigger brain drain which we are already seeing and saw in the past in the 90s thus why the feds and most provinces cut their top rates and the recent rises have brought in far less revenue than anticipated.  Otherwise it makes sense to raise it if below the peak on the Laffer Curve, but once past the peak it does more harm than good.

[catographer]

i think hillgoose is trolling

[Adam Griffin]

A tax cut is not giving someone money; it's letting them keep more of their own.

If the government is currently spending more money on behalf of the people than it is bringing in (which has been the case for the entire existence of supply-side), then a "tax cut" by itself absolutely is giving somebody money.

That money has to come from somewhere. If it's not in the coffers, then it has to be borrowed. If it has to be borrowed, then it means that it has to be paid back at some point by others. Whether you like it or not, a tax cut while running a deficit is structurally no different whatsoever than the most blatant forms of welfare.