Do market forces counter changed income tax rates?

[CCS]

If the lower earners were taxed more, and the high earners taxed less, would the higher earners then be pushed by market forces to pay the low earners more, so that the take home pays were back to where they were before? I mean if the change occured gradually enough not to have a rough transition period.

I'm sure that anyone looking at the tax rebate they got would say they needed it. But my question is whether their take home pay would have been higher had their boss not been taxed as much. I think it takes a few months for a company to fully respond to new tax rates, so employees may draw inaccurate conclusions from initial changes.

 

[CCS]

Re: income redistribution...

If it is true that they would redistribute it, then what point is there in instituting the "fair tax"? It would seem that only the total money taken by government is what matters. If they would not redistribute it, then it seems taxing the lower income levels more would really hurt them, at least in the short run. I'm sure the richer people would invest more of their money, but would also spend more on luxuries too.

 

[The Gardener]

Re: income redistribution...

This income redistribution claim has really been over exaggerated by the conservative media mouthpieces.

Fact of the matter is that ALL taxation is a form of income redistribution. Remember the stimulus checks that Bush sent out earlier this year? That's income redistribution. Remember the tax cuts that Bush gave to the oil industry? That's income redistribution. It's funny that when these actions were taken, the conservative media mouthpieces weren't jumping up and down calling Bush a socialist.

Even more egregious was this banking bailout. You want to talk about "income redistribution", how about taking seven hundred BILLION in taxpayer money and "redistributing" it to the banking industry.

In a nutshell, all administrations engage in redistribution to some extent or another, usually in the name of economic stimulation. Obama's NOT introducing a policy that is new to American government, he is merely making the point that the Bush Administrations "income redistribution" seemed to be unfair, from his perspective, to the middle class.