JamieH

January 8th, 2016 at 3:00 PM ^

Don't you think that if you didn't pay taxes, your employer would probably figure out that he/she could pay you less money overall? 

Salaries tend to gravitate in different areas based on cost-of-living.  If taxes didn't exist, the cost of living would be lower everywhere and I have to think salaries would adjust accordingly.

All just IMO of course.  I'm not pro high-taxes or anything.  I just suspect getting rid of taxes wouldn't be the panacea it would seem to be. 

For example, I just bought some equipment from Europe and got it cheaper than I could get it from the US, because I didn't have to pay the VAT (value-added tax).  The store had discounted the price on the goods because they knew the people in Europe had to pay a huge tax on top of the retail price.  So the retail price in Europe was much lower than it was here in the US.

Of course, I then had to pay huge shipping to get it to the US, so it was all a wash in the end, but it was sold out here, so.....

My point is, the market tends to balance things out over time, so eliminating taxes would probably have a downward effect on salaries in the long-run, assuming it significantly lowered the cost of living.

Joined: 09/05/2009

MGoPoints: 28331

SituationSoap

January 8th, 2016 at 3:14 PM ^

Counter-intuitively, removing all taxes would actually increase cost of living in a lot of places, unless the assumption is that we simply stop having the things that taxes purchase. Assuming we still need roads, water service, fire protection, sewer service, schools, etc, removing taxes means that you'd have to pay for those things individually. If we removed the Government's ability to eschew a profit motive and their very long Government ROI timelines for infrastructural projects, most things that we take for granted in modern society would become very expensive very quickly. 

 

I mean, if every elementary school class needed to cover the ~$80K in pay and benefits that an elementary school teacher is paid, the average class size would need to become much, much larger or people would need to pay through the nose to fund their child going to school. This is why private schools are so much more expensive than public schools. 

 

That tax number on your paycheck might feel bad, but in reality you're generally getting a very, very good deal out of it. Most of us would be able to afford a lot less if taxes stopped existing.

Joined: 09/22/2012

MGoPoints: 4976

bgoblue02

January 8th, 2016 at 3:20 PM ^

which way it would go.  It depends on whether or not you think that the government is provided goods and services at an efficient cost or not; and whether or not providing those goods and services privately could be subsidized with debt funding that was as cost efficient as the US gov't

Overall I am willing to bet it comes close to a wash.  

Private companies operate more cost effective than governemnt

Government can finance / leverage more 

Government has a lower cost of debt financing

Joined: 11/12/2009

MGoPoints: 4493

JamieH

January 8th, 2016 at 4:00 PM ^

I was intentionally ignoring the side-effects of the removal of taxes on the world around you and just pretending that that was all going to taken care of some other way, which is of course, preposterous. 


My basic point was simply that, my personal belief is that salaries to a certain degree (at least professional ones, I'm not talking minimum wage here) are based on overall cost of living.  So they balance out more on people's take home pay than their overall pay.  If people suddenly had ridiculously more take hope pay, I suspect busineses would quickly move to pay everyone less money, not becase they are dicks, but because they COULD.  Businesses only pay us what they have to to retain our services.  They aren't doing it to be nice to us.

I could be full of it.  But I tend to look at the taxes I pay as being paid as much by my employer as by me. 

Of course, if you are self-employed that doesn't help you.  You are paying all of your own taxes and that sucks.  But then the argument about society requiring taxes to maintain infrastructure comes into play and while I agree with that, I don't want to go down that road because it requires too much political talk.

 

Joined: 09/05/2009

MGoPoints: 28331

SituationSoap

January 8th, 2016 at 5:00 PM ^

Fair points, and I agree, I'm not going to dive in any further because we're into an area that's really murky in terms of forum appropriateness. I agree with your core hypothesis, that you'd get paid less if taxes went away. :)

Joined: 09/22/2012

MGoPoints: 4976

Muttley

January 8th, 2016 at 3:16 PM ^

like the University of Michigan, a defense department that defeated Hitler for Western Europe and Japan for Asia, roads, you know, stuff we use and rely upon every day.

Now I'm a conservative and think we're well past the point of declining marginal returns to government spending, but zero is anarchy and stupid.

Joined: 07/07/2009

MGoPoints: -73245

Wolverine Devotee

January 8th, 2016 at 3:27 PM ^

Since my opinions and what I say mean nothing to you since I can't control that I was born in 1995, you sure do spend a lot of time replying to them.

I would think you have better things to do than always putting down someone on the internet who was born when you probably graduated college. 

Joined: 06/29/2009

MGoPoints: 31528

TIMMMAAY

January 8th, 2016 at 3:44 PM ^

That wasn't putting you down, man. I'm just speaking as someone who pays a fair amount of taxes, and have for a while. It gets worse as you make more. That was my point here. 

And just as an aside; nothing that I say toward you has anything to do with the fact that you are young. There are plenty of other young posters here (and elsewhere that I frequent) that you don't see me getting after. Just saying. 

Joined: 09/08/2008

MGoPoints: 56284

Wolverine Devotee

January 8th, 2016 at 3:42 PM ^

I'm just entering a rough patch of my life where I'm not living in the greatest of places most of the year and fighting for everything I get in terms of money. 

Gonna be a lot tougher once that safety net of college is over in a few years and I have to go out and enter the career field and dump the part time jobs. 

Why do I play the lottery? Because it's an automatic bid to bypassing everything I mentioned above save college.

Oh it won't happen. You won't win. Until you do. Someone is winning that thing.

Don't know how people can live life saying "I can't do this/won't get this". Why even get out of bed with that weakling attitude?

Joined: 06/29/2009

MGoPoints: 31528

ak47

January 8th, 2016 at 4:10 PM ^

If you are struggling finnancially playing the lottery is an even worse choice than if you are stable.  Work your ass off on things you can control, believing in yourself doesn't mean shit in the lottery.  I firmly believe that the lottery shoudln't exist because it acts as a regressive tax that exploits this exact mindset and that playing the lottery is the equivalent of setting money on fire.  And yet if I play you and I have the exact same chance of winning regardless of whether you believe it could happen and I don't because you can't control it.

Joined: 05/05/2011

MGoPoints: 33614

Muttley

January 8th, 2016 at 5:35 PM ^

Get a little better today than yesterday.  A  little better tomorrow than today.

Financially, that would be making moves with positive expected Net Present Value, not negative expected Net Present Value.

Joined: 07/07/2009

MGoPoints: -73245

East German Judge

January 8th, 2016 at 2:53 PM ^

From a state tax perspective:

Of the 44 states participating in Powerball, six–Florida, New Hampshire, Tennessee, Texas, South Dakota and Washington —don't have a state income tax. Two others, Pennsylvania and California, exempt lottery winnings from their income taxes, although California requires that you buy the winning ticket in state.

Joined: 10/05/2014

MGoPoints: 190461

SoDak Blues

January 8th, 2016 at 3:15 PM ^

Whoa! Now you are talking. SD may be the place for you - are you in Iowa? No income tax is pretty damn nice. I am a transplant to SD from Ann Arbor/Detroit. Pretty state with good hunting and fishing. I have really enjoyed fishing since I moved here, but haven't gotten into the hunting yet. I also like beer. 

Joined: 09/24/2015

MGoPoints: 17693

A Fan In Fargo

January 8th, 2016 at 2:32 PM ^

Every clown around the country pouring money in when the amounts get high like this. I wonder what they make in ticket sales each time there is a drawing? Probably double. Bet that money isn't going to charity.

Joined: 02/16/2014

MGoPoints: -9997722

gremlin3

January 8th, 2016 at 3:06 PM ^

The Expected Value of a Powerball Ticket is basically :

-price + jackpot value/jackpot odds

To solve for the break-even point:

-price + jackpot value/jackpot odds = 0

jackpot value/jackpot odds = price

jackpot value = price*jackpot odds

For the powerball, that would be:

jackpot value = 2*292.2 million

jackpot value = 594.4 million

Now, I've left out a few things, like the odds and amounts of lesser prizes, but the concept is the same. What really wrecks the model is that when the jackpot gets really high, the odds of a split pot go up such that you have to halve or third the jackpot value you will get. For example, a winner would likely not get the entire $800MM, but more likely $400MM or $233MM, at which point you fall short of the break-even amount. 

Another major negative is that the government is going to tax around half of your winnings.

Mathematically, it is virtually impossible to have a non-negative Expected Value for a ticket. You would need your after-tax share to be about $600MM. With a tax rate of around half and sharing with approximately five other winning tickets, the jackpot would have to be around $6Bn for a ticket to have a non-negative expected value.

Joined: 10/02/2015

MGoPoints: 8383

Red is Blue

January 8th, 2016 at 3:31 PM ^

Not sure how Powerball works, but normally the "face value" of the jackpot signficantly overstates the actual present value.  The pot is normally paid out in equal amounts over 20 years with no interest.  So the $800 M is actually a series of 20 annual $40 M payouts.  Because of interest, I could invest something significantly less than $800 M today to generate that stream of payments.

Joined: 05/13/2010

MGoPoints: 23889

SoDak Blues

January 8th, 2016 at 2:32 PM ^

I hope this doesn't become another "what would you do with the money" thread. 1484 killed it yesterday with his response. Not sure that could ever be bested. 

Joined: 09/24/2015

MGoPoints: 17693