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Originally Posted by aceventura3
This is not correct. Think about your behavior. If your marginal tax rate was 100%, how much effort would you put into tax avoidance? Or, would you simply not putting any effort into making an additional dollar? Either way taxes collected from you might be less than if your marginal tax rate was 50%, 25%, 10%, at a lower rate you may put little or no effort into avoiding taxes or you may work X times harder to make X times more dollars which would be taxed.
-----Added 22/7/2008 at 11 : 12 : 19-----
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i hear this used a lot... but how many rich people do you know who are actually doing their own taxes? i doubt many. if you're paying someone to do your taxes, you want them to squeeze every last cent they can, make it so you pay as little as possible.
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No system is perfect and has flaws. Our current system allows a man like Warren Buffet to increase his net worth by $10 billion in a year and pay no tax on it (and he will pay no tax on it upon his death), but as he says his secretary pays a higher percent of her income than he does. Buffet does not live the lifestyle of a typical billionaire but his tax avoidance strategies are typical. In my view the first step in developing a "fair" system is to agree on the underlying principles. do we want to tax work, savings and investment or do we want to tax consumption or the goods and services actually used by people?
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so what you're saying is we should get rid of loopholes allowing investments and capital gains to avoid taxation? if we don't fix the loopholes that the wealth holders use, then lowering the tax rate for lower income earners doesn't really do much to change the problem. get rid of loopholes that favor the rich, then drop the taxes for the poor and middle class. but you'd be acting foolishly to cut your income without knowing it's replaced (when you're already spending more than you actually make).