Out Tax System, Explained with Beer

Here is an explanation of our tax system using beer. The only thing missing is that the rule book makes encyclopedias seem small.

Rich vs. High Income

Periodic Ramblings of a CPA has a nice post on the distinction between being rich and having a high income. Much of the political rhetoric this season has focused on taxing the rich when in reality they mean taxing those with a high income. It’s not the same and thing and it does affect the economy differently. Read the post, I don’t have time today to summarize.

A Real Breakdown of Who Pays Taxes

Too many journalists are mathematically challenged. If you’ve ever been involved in a news story you know that many are factually challenged as well. Periodic Ramblings of a CPA takes a look at who really shoulders the tax burden in America. Here’s a hint, it isn’t the middle class as the press would have you believe.

Higher taxes on the rich often reduce incentives. Reagan commented that at his maximum tax rate as an actor (90%), it didn’t make sense to make more than a certain number of movies per year. At a certain level, he was working to keep only 10% of his take. But if he doesn’t make more movies, his lifestyle doesn’t change but lots of other people don’t get paychecks as well (all those guys at the bottom of the credits).

Not impressed by Reagan? How about JFK:

Our
true choice is not between tax reduction, on the one hand, and the
avoidance of large Federal deficits on the other. It is increasingly
clear that no matter what party is in power, so long as our national
security needs keep rising, an economy hampered by restrictive tax
rates will never produce enough revenues to balance our budget just as
it will never produce enough jobs or enough profits… In short, it is a
paradoxical truth that tax rates are too high today and tax revenues
are too low and the soundest way to raise the revenues in the long run
is to cut the rates now.

A More Reasonable View of the Bailout

Gary Becker, in the Wall Street Journal (via Execupundit) has a more reasonable view of the bailout.