Free Ebook.

Enter your email address:

Delivered by FeedBurner

« 26 Ways to Make More Money | Main | 10 Ways to Save on Prescription Drugs »

June 10, 2008


Feed You can follow this conversation by subscribing to the comment feed for this post.

I would think, regardless of tax laws, it's always better to earn more money. Unless maybe you're on the fence between brackets. But I'm no economist.

If it really isn't worth their time, the rich blokes can take time off and enjoy the fortunes they've worked so hard to amass. Good for them. And I'm sure it will have a trickle down effect as well and make the entertainment and leisure industries that much more worth getting into. :)

Obama won't cut middle class taxes, because that's where the money is to pay for the socialist utopia he's promised. To the contrary, if he's elected, we can expect him to attempt to pass a gigantic tax increase.

Neither Obama nor McCain can be counted on to deal with the impending ruin of social security and Medicare, which is understandable. Those boondoggles won't be dealt with until the pain of not dealing with them outweighs the financial pain they are causing.

obama has said all of bushs' tax cuts would expire. that means:

-nearly 50 million couples pay between 3-4 thousand a year more;
-most seniors will see a $2000/year increase;
-11 million low income earners will be forced to pay income taxes; and,
-most families in the $50-75k range will see a 191% jump in their tax liability.

btw, let's not forget his $900 billion UN poverty tax languishing in the senate at the present...

those "higher earners" can always choose to take a pay cut if all that extra money is too much of a burden.

I've been around small business owners for 10 years now as a CPA and I've never heard one want to make less money for ANY reason, including taxes. Unless the tax rate is 100% or very close to it there is always incentive to earn more.

Seriously, though. We've TRIED the "trickle-down" technique throughout the 80's and now the better part of this decade. I think we all agree it hasn't worked all that well for the country at large. The gap between rich & poor has grown exponentially. Why should you care? Look where "let them eat cake" got the last person who said it. Vast gaps in social status are the hallmark of elitist, class-based societies. America was founded on social mobility. That fundamental principle is being eroded by the plutocrats of the Bush administration.

It's time for something different. Before you ask, yes, I'll be paying EVEN MORE in taxes under Obama, and I'm not thrilled about it, but I'm mad as hell at where this country is right now. We're bankrupt fiscally, physically and morally. Our infrastructure is crumbling: schools are in terrible shape, first responders are undermanned and under-equipped, our bridges are collapsing, and we're trailing the world in broadband penetration (and that's calling both fiber and copper broadband, a world of difference).

Any sources for your data?

You know Obama is going to eliminate income tax for seniors making < $50, which pretty much eliminates point #2.

Regardless of the amount we all pay in taxes, I think it's important to make a serious push toward transparency and accountability in government spending. I don't mind paying taxes; private enterprise isn't the Lord's magic bullet for all ills everywhere, any more than government enterprise is. I DO mind when the money I pay in gets sucked into the black hole of private contracting (I joke that I've closed the loop on this by taking a job with a government contractor).

Waste and irresponsibility is what I see as the larger issue here; fighting over who has to pay and how much is too much is starting to look like a diversion. No amount of tax revenue will ever be the right amount if the people entrusted with it aren't going to be responsible (and we keep re-electing them anyway).

M. Blackburn:

(1) The greatest amount of social mobility and increase in the across-the-board standard of living happened in the US during times of the least regulation and lowest taxes [post-Civil War to pre-WWI and post-Carter to pre-9/11]. If you really want to increase social mobility and wealth -- and are intellectually honest, historically mindful, and not economically illiterate -- then you would be screaming for an end to government spending, bureaucracy, regulation, and taxes. If, instead, you want to maintain the status quo and placate the clueless masses, you would advocate for Senator Obama's [and to a large extent Senator McCain's] proposals.

(2) The "gap between the rich and poor" is a fundamentally meaningless concept without a comparison to absolute welfare and standards of living, which, of course, have been steadily increasing. [Please, please, please point me to the roots of a lower-class revolution festering in the US; if anything, it's the opposite: The only organized groups are libertarians (and gun-owners) who are getting fed up with the policies of G.W.B. and Congress and terrified of what a Woodrow Wilson/Jimmy Carter-esque Obama presidency would bring.]

Like it or not, our "Live beyond our Means" economy means that 2/3 of it is generated by consumer spending. The middle and lower brackets spend nearly all their income, whereas the higher brackets have the option to save or invest most of it (some overseas where it does us little good).

If Uncle Sam gives someone making $50,000 a $5,000 tax cut, it will make it back into our economy almost immediately, generating more jobs and prosperity. If we give someone making $300,000 the same $5,000, and they don't spend it in the US, or don't expand their business to create another job, then the impact on our consumer economy is much lower. The super rich can send those tax cuts to the Turks and Caicos, or take a trip to St. Moritz, but unless they give it back in the form of domestic spending, it does no good for the US economy. Give $5000 to a family of four making $50,000 and they can buy new appliances. The family making $300,000 might do the same, but there are far fewer of them to make a significant impact.

I wish our economy did not rely on 2/3 consumer spending, and I wish there were more job creation and capital investment tax credits for the rich, but we're not there yet. Giving tax relief to the middle class spenders is getting far more bang for the buck.

It is unlikely there will be any tax increases until the economy improves and there could well be further tax cuts. While we may continue to have deficits as far as the eye can see, and it is difficult not to without military expenses ending, the democrats have generally been more fiscally conservative than the republicans. Perpetual war is very expensive, and much less benefit to the economy than spending on more productive enterprises. The performance of the last 8 years have been quite poor, but if you want more of the same, you know who to vote for.

Unless we have a terrorist attack, Obama is likely to win, but I don't think he will do anything to fix the economy. He talks about cutting tax in one sentence and talks about handing out money to everyone in the next sentence. It's all talk, the numbers don't add up. After he wins, he will be saying, 'I would like to cut tax and give out the money that I promised, but the government is broke - sorry'.

As the economy continues to weaken, I think he is going to get creative like Nixon did in the 70's - with wage freezes, price controls and a lot of other crazy things that are not going to change the fundamental problems in the economy. I'm afraid we are in for a brutal four years and economic hardship.

I would agree with several of the comments: there is always incentive to make more money. I don't think taxing the wealthy would discourage that. They will only work harder to find the legal loop holes to maximize their tax breaks. This is understandable.

I do think that rebalancing the wealth through government intervention is necessary. Capitalism allows for empire’s and as everyone with some level of net worth knows it is much, much easier to make money when you have money. Without some rebalancing (i.e. taxing wealthy) this gap will get perpetually larger and larger. This large inequality is why immigrants will risk their lives to come to America. We can’t ignore the less fortunate in our country and more importantly this is a global economy and we can’t ignore the less fortunate from other countries. Why are crime rates high? Look at countries with high social and economic inequality.

Without question, my vote is for Obama. No one can do as badly as Bush with foreign relations, taking the country to war for no reason, and racking up a gigantic deficit. Also, if McCain is even remotely aligned with the Bush policies (and he is), this is an easy choice.

I agree with a couple comments above about the impact of higher taxes on high income earners. Returning the marginal rate for the wealthy back to 39.6% from the current max of 35% is NOT going to cause the rich people to stop trying to make money. Whether you take home 65% or 60% of each additional $ made, people will still strive for more.


People seems to get all crazy about the possibility of increased taxes when they should really be focusing on increased government spending. To me that has been one of the greatest faults of the Bush administration (among many) . . . trying to placate people with reduced taxes while spending at a rate unseen before in our country. Somebody, sometime is going to have to pay for the deficit of those lowered taxes.

This is also why I'm so against the principle of tax rebates. Your not really paying lower taxes . . . the government is just taking what amounts to a high-interest payday loan in your name and giving it back to the taxpayers. Once again, this is going to need to be repaid at some point, either by your elder self or your children.

As FMF is constantly reminding us, the Government needs to spend less than it earns.

Obama is at least knowledgeable on economics and intelligent. McCain doesn't know much but how to make endless promises. He is already on record for $3T in tax cuts and only $18B in spending cuts.

It may take being out of office for republicans to rediscover their raison d'etre. Either that or another party to displace it. Someone once said the best way to elect republicans is to vote democratic. That may never be truer than now.

I would not like a return to the Carter years. This country is almost to the point where half the population pays no income taxes. In our political system the non-taxed majority could be voting to tax the minority at ever increasing rates.

Obama is part of the problem (and to a lesser extent McCain). Many of you seem to believe government can spend your money more effectively than you yourself while you disagree with current policies (I assume you disagree with both the Congress and the President). There are many outcomes with giving government too much money, very few of them positive.

since these people often control/run businesses, the implications could be that they'll hire fewer people -- not something that benefits our country's economy

Why is it people think only the rich can start and build businesses? Why can't the less affluent be encouraged to, or even more?

Gavagirl - I agree. I wish the government had independent audits. I am not a betting person, but I'd bet real money that if they just eliminated waste, they could save a lot. Starting with the ridiculous "you may get a rebate" letter. 50-something million savings and nobody would've noticed the difference.

A cousin of mine who lives in Germany has a job that involves saving money for the company she works for. She has a degree in economics and engineering. Her department gets a proposed design with an estimate of how much implementing it may cost. They then try to figure out a way to make it cost less without sacrificing quality - change the design if there are ways to do it more efficiently, find way to buy same quality but cheaper parts, etc. They get paid bonuses based on money they saved. I've been thinking for a while, that our government needs to hire my cousin to help them implement their pet projects for less. She is really good at what she does and likes doing it.

Still deciding about who I will vote for, not that it matters much in NY state. I was leaning towards McCain until he said he wants to eliminate tax breaks companies get for health insurance. Sorry, but I like the health insurance I get from IBM. Now I am not sure. At the same time I am a bit afraid of the return of Carter days.

Does anybody knows if Obama is talking about 250K per family or 250K per person?

Obama can increase the tax rate but he should also cut gov't spending, cut the pensions and benefits of gov't workers and address the elephant in the room that is Social Security & Medicare. I would be in favor if tax cuts if there was a plan to pay off the national debt and carry a budget surplus each year. I'd rather not leverage our childen to pay interest payments on swelling debt. I fear that he will raise taxes and use it to fund more programs without addressing the large gov't spending today and the mounting debt.

-BC enough said

I agree.... Fair Tax!!!!!! It is time for real change... Vote for the third party of your choice!!!!


It's not an all-or-nothing kind of situation. All good economic decision making occurs at the margins. Putting the top marginal rate back to 39.6% rather than 35% will cause some (probably most) people in that bracket to forgo some of the income they could have made. In the aggregate, a loss of output is the predictable result.


When the government takes on tasks to which it is ill-suited (pretty much anything outside law & order, national defense, and public goods like fire departments and flood control measures) waste will result. It's not so much a matter of more auditing or oversight. We already have one of the least corrupt governments in the world. Even when everything is done perfectly ethically and in accordance with legislative intent, massive waste still occurs because the schemes the legislators design are so inherently wasteful (though that wasn't their intent, obviously).


I think you're right about how the future will play out. Obama will recycle Nixon and Carter's horrible ideas from the 70s. It will take an already bad situation and make it far worse.

Micheal Blackburn,

FYI, we don't all agree that trickle-down economics was a failure. I don't. If you think it was a failure, that's fine, but it's presumptuous to speak for all.

Another thing: why should the GAP between rich and poor matter so much? Suppose some policy would close the gap between rich and poor, but would lower the absolute standard of living of the poor. Would that be desirable? If the answer is yes, why? Do the poor suffer more from envy of the rich than from material deprivation? Or have you fallen for the fallacy that economics is zero-sum, that there's a law of conservation of wealth?

i choose to vote with my dollars, same as with supporting a company.

i do not approve of the government's wanton spending, so i do everything in my power to pay as close to $0 taxes as possible (through investment properties, etc). not a nickel ideally.

I am not excited about either candidate. I look at both as my enemies, as indeed almost all politicians are.

Addressing a couple of issues . . . I'd note that tax rates clearly do influence economic behavior. One need only look at the 1997 cut in the capital gains rate, which increased revenue from that source.

As for the gap between rich and poor, it will always exist in a free society. Smart and industrious people are going to make more, while the stupid and lazy will remain poor. Since I'm not responsible for their being stupid and lazy, I don't see why I should be taxed to support them.

Obama will, if elected and if he can garner the support in Congress (both big ifs, of course), raise taxes significantly, most obviously through letting the Bush tax cuts expire but in other ways as well. More taxes mean more government, more derelicts looking for a handout and less individual freedom. Pass.

So... why do people think Obama = Carter? Are we just dredging up a bogeyman?

And there's no way that raising taxes on the rich will result in them working less hard. It will probably do things: Make them work harder; and make them work harder looking for tax breaks. :)

There are no such things as tax cuts anymore, only tax deferral, that is, future tax increases.

More important tnan taxes is growth. Some are irrational and would rather lose money than pay taxes, but I am not one of them. I would be more than willing to pay more if I earned more.

I guess Obama = Carter means McCain = Nixon, which since we have just had the worst president since Nixon may be fitting. Mostly it is just a lame attempt at criticism of those incapable of thinking up something honest and valuable to say.

I agree with Matt and Todd's posts. Wealth distribution is not what this country is all about. We are a capitalist society and I for one do not want a Socialist society.

Income Avg. tax bill Avg. tax bill
Over $2.9M -$269,364 +$701,885
$603K and up -$45,361 +$115,974
$227K-$603K -$7,871 +$12
$161K-$227K -$4,380 -$2,789
$112K-$161K -$2,614 -$2,204
$66K-$112K -$1,009 -$1,290
$38K-$66K -$319 -$1,042
$19K-$38K -$113 -$892
Under $19K -$19 -$567

I will save around $1000 under either plan. I do not believe a tax plan that targets the 2/3 of our population that make up the engine of our consumer economy is either wealth-redistribution, or socialism. It is smart capitalism to help those who need it most.

Correction: I will save $1000 under Obama's plan, whether this is taxable income or gross income.

URL for Mark's figures:

While I wholeheartedly agree with the "vote with your dollars" approach, I hope you are comfortable with having to:
* Home school your children
* Never call police or fire departments
* Avoid driving on roads, walking on sidewalks or riding public transportation
* perform health inspections on any restaurant you visit
* grow and inspect your own food
* perform your own basic science research
* inspect every product you purchase for inflammability, toxicity and choking hazards

And on & on. Granted, most of these are not funded by federal dollars, but they're a few of the more obvious intersections of life & gummint.
My opinion is that paying taxes is a moral obligation, "dues" for being a member of society. Shirking them while taking advantage of the services and protections they provide is stealing.

If you don't agree with how the government is being run, it's your government. You can get on the phone with your congresscritter. Run for office yourself. Work on behalf of a candidate you believe will advocate for reform. I'm not thrilled with the reaming I got this past April, and I will work to avoid overpaying taxes wherever possible, but I will just have to pay my share.

Note of clarity, OSHA does not itself inspect products, it recognizes a number of outside laboratories, such as UL.

A few comments.

First, most of the functions that Michael lists immediately above are the functions of local and state governments. As a result, one can move from the municipality or state if he doesn't like paying for those services. Unfortunately, one cannot "move" from this country, or at least not very easily. And renouncing one's citizenship does seem a bit of a burden, IMO.

Second, most of the types of functions which Michael mentions above, to the extent they are provided for by the federal government, are minuscule in cost compared to social security, Medicare and welfare, which make up over half the federal budget.

Third, with regard to Mark's comments, they are typical of the re-distribution crowd, to wit: he's not going to see his taxes increase, but it's fair that taxes increase for others. Uh, sure.

Personally, I'd like to see Mark bear our entire federal tax burden. :)


Unless you support a Flat Tax, with NO deductions/credits, you ARE part of the re-distribution crowd. As long as there are income tax brackets, there will be some who pay more, some who will pay less. As long as there are tax credits and deductions, there will be groups that will benefit and some that won't depending on how they behave.


I don't support a flat tax. Indeed, I don't support any federal income tax at all. I'm in favor of a national sales tax. Thus, I am NOT a member of the re-distribution crowd, except insofar as I believe that peoples' money should be redistributed into their own pockets. So there.

Where do you live that has no sidewalks, police or schools? You're just undermining your own argument with ridiculous assertions.

I wasn't using those examples to discuss the budgetary value of one service or another, but to point out that there are services we must rely on the government to provide, and they extend beyond national security.

God knows, don't get my ex-big-pharma wife started on the evils of our for-profit healthcare system. That's what's given us boner and balding pills, but no vaccine for HIV.

Now, about the "flat" or "fair" tax.

We all must eat, sleep somewhere warm, clothe ourselves, etc. There is a minimum price below which you cannot supply those goods. Let's make up some numbers, say for a "family of four":

Food/month = $100
Housing/month = $400

Now, if you make $1000/month, that's half your income. If you're making $5000, it's only 10%.

Let's say there's a 10% VAT on all goods; that 10% VAT on $500 represents 5% of the poor person's income, but only 1% of the middle class income.

How is it fair that the most vulnerable should pay an additional 5% of their income in taxes when the wealthy only pay an additional 1%?

Yes, yes, it's all about "personal choice" and "freedom."

The rationale behind a progressive taxation system: lower income earners pay a lower percentage in taxes because a greater proportion of their income goes to pay for the fixed costs of life. Once you're past the level of earning enough to make yourself comfortable, you are expected to shoulder a greater portion of the cost of maintaining society. If you MUST have it spelled out in terms of your self-interest, it is those with higher incomes (and presumably, capital and real property) that have the most at stake were society to crumble.

Michael, those things you mentioned (sidewalks, police and schools) are paid for with property taxes, not federal income taxes. I am not opposed to paying for sidewalks and police, but education should be paid for by those who use it. 2/3s of my $8,000 annual property tax bill, however, goes to cover the education of other families' children. They should pay for their own children if they want to have them.

We as a people are currently facing what appears to be the worst worldwide financial disaster this planet has ever seen. You may as well call it by its name "The Economic Threshold of Hell" Now maybe I'm being pessimistic in labeling it the way I have, but it sure seems that is how these things are going. The silver lining on all of this, is that when your all the way down, the only way to go is "up up and away." (I know lame superman Quote) But thankfully, we have truly elected hope for change, and for a change, I feel a great deal of hope.

I am confident that if we will stay the course as a people, and follow the lead of our soon to be great leader, we will come forth triumphant and be proud to tell future generations that WE were the ones who helped form a New America. We were the ones that answered the prophetic call from JFK "Ask not what your country can do for you, ask what you can do for your country"

In record numbers we have voted, as well the young voters of this nation have made their voices heard loud and clear. It is truly a great day and age to be alive in the history of mankind, let us leave a noble legacy to those who will come after us for all generations to come. We can only accomplish this great task if we once again answer the call of our new President-elect and show our true colors, RED, WHITE, and BLUE...

The comments to this entry are closed.

Start a Blog


  • Any information shared on Free Money Finance does not constitute financial advice. The Website is intended to provide general information only and does not attempt to give you advice that relates to your specific circumstances. You are advised to discuss your specific requirements with an independent financial adviser. Per FTC guidelines, this website may be compensated by companies mentioned through advertising, affiliate programs or otherwise. All posts are © 2005-2012, Free Money Finance.