Tax Tips

The Progressive Income Tax: A Tale of Three Brothers

“The Progressive Income Tax” is one of those economic terms that gets bandied about, but few actually know what it means or how it works. This tale of three …
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32 Replies to “The Progressive Income Tax: A Tale of Three Brothers

  1. This oversimplification is so egregious as to be more than just
    disingenuous – I’d go so far as to say it is dishonest. Not all income
    disparity comes down to choices and work ethic. What rubbish.

  2. what a complete BS. Even more BS than a minimum wage video.
    I live in a country with progressive income tax with a max of 45%. I pay
    34% income tax + 7% social security + 5 % health tax. And guess what, it’s
    fine to pay more when you are capable of earning more. At the end, you will
    have more money anyway. Yes, there are leeches in a society, but that’s
    another issue and should be treated by education.

  3. Prager university, I challenge you to have the guts to make a video about
    rich kids who inherited capital in trust fund and do absolutely nothing
    with their parasitic lives excpet living off the yeilds derive from capital
    funds. Capital ownership type of deadbeat layabout spongers that feed off
    the efforts, the sweat, the hard work of others because of “capital
    ownership” or “private property rights”. Compare them with the rest of the
    hard working productive producing population. Both middle class and working

  4. So let me get this straight, the Tom and Dicks of this country just aren’t
    working hard enough? This is an interesting example but it oversimplifies
    and there by is not applicable to the real world. In this instance, what
    Tom and Dick are doing is wrong. To equate this exact scenario with the US
    economy simply doesn’t work.

  5. This video just assumes that the majority of poor people will take
    advantage of the system even though the system favors the rich. All this
    video has taught me is a rich person’s view of a poor person. 

  6. Liberals…. They think, Rich people *Earned* there money (80% of
    Millionaires are first generation rich) by coming up with great ideas or
    starting small businesses that grew. The problem with a “Progressive Tax”
    is that it promotes people to stay poor and forces rich people to give the
    money they have earned to people who have done nothing to earn it. It
    essentially promotes laziness and gives no incentive to come up with great
    ideas or start a business. The idea of a progressive tax only makes it
    more profitable to move businesses overseas. Essentially, you give the
    upper class incentives to move there businesses away and by doing that you
    receive a less advanced society as, ideas go to different areas of the
    world. Essentially Progressive tax is not only anti rich, *A Progressive
    tax is Anti-Business and only hurts and economy. It doesn’t build one* 

  7. Holy cow… what an utterly dishonest narrative to argue against a
    progressive tax.

    In the US, the wealthy are NOT hundreds of times wealthier because they
    work hundreds of times the hours. Almost invariably, they are wealthier
    because of capital gains (which are taxed at a LOWER rate than normal
    income tax). They also don’t live in “Identically priced houses”: the
    difference in housing standards between rich and poor is enormous .

    On the flip side, there are obvious reasons to use a graduated income tax:
    wealthy (and especially capitalist) industries benefit much more monetarily
    from publicly funded infrastructure than your average middle-class worker.
    There’s also the concept of utility: the income taxed from poor people
    would otherwise be spent on basic living necessities, while the income
    taxed on rich people is much more likely to be spent on luxury.

  8. You know why rich people should pay more taxes? Because they can afford
    more taxes and still live a lavish life. Not only that, we use our
    taxdollars to bail them out.

  9. This is why our tax system in the United States needs to be changed. It
    penalizes savers, it penalizes hard workers, and it makes it difficulty for
    business. Taxes in the United States is creating barriers to expansion,
    hiring, and improvement for many businesses.



  11. What if Harry gets 331 times as much money for the same amount of working
    hours as Dick and Tom (“Top CEOs Make 331 Times the Average Worker”)
    because of the fact that Harry had inherited a company from his wealthy
    father. While Tom and Dick grew up under poor conditions, could not afford
    to go to collage and ended up working twice as many hours as Harry but
    earning a 100 times less money.

    The fact is that people are not born with the same opportunities, they are
    not given the same blessings and do most certainly not get the same fair
    chance of earning money. This is why we need both a minimum wage and a
    progressive income tax. If we all had the same opportunities to earn money
    however I would be all for it, but this is simply not the case.

  12. Then Harry looses heart in his work and cuts his hours cos there’s no
    incentive and then next time the other 2 brothers havent got anyone to prop
    them up and end up paying more…..

  13. 1. How the hell could a guy making only $25 an hour at 20hrs a week ($400 a
    week) afford the same house that the 50 hrs a week?
    2. You messed up because the one making more money could AFFORD to put away
    money for the future, the others couldn’t. All of them should have been
    pooling money into this, what does it have to do with the story?
    3. The brothers CHOSE to build this new neighborhood security, no one
    CHOOSES to pay taxes, we are forced.
    4. Why didn’t these brothers talk about the idea before they did it? The
    one that makes more money feels at ease because he can afford this, the
    other brothers can’t.
    5. This isn’t reality, in real life shit happens causing families to go
    from $30k a year to $0 in an instant. Some families can BARELY afford food
    on the table, why should they be forced to pay the same amount as the ones
    that make a ton of money. 

  14. Do more of these… I’m ADHD, i wish all educational material was dumbed
    down like this … its great and i understand much better , loved it . 

  15. UK starbucks doesnt have to pay more tax due to profits drained by the
    interests paid to US starbucks.
    but the US starbucks have to pay tax on the money(in the form of interest)
    they make by lending huge capital on UK starbucks??

  16. Hey people, don’t get wrapped up in Corporate envy or be fooled, the UK is
    better off with Starbucks in the UK for many reasons, consumer choice,
    employment, and good coffee and tea. The Starbucks business model, brand,
    supply chain, and all intellectual property was developed OUTSIDE of the
    UK, so Starbucks should not be taxed in the UK on profits attributable to
    assets developed outside the UK. Starbucks business in the UK is similar to
    a retailer of coffee, similar to a retailer of anything, like grocery
    store, like hotdog stand. Retailers in the UK make a 3% profit, so 3
    dollars profit for every 100 dollars of sales. Starbucks pays taxes in the
    UK on roughly a 3% operating profit which is similar to all retailers in
    the UK. All is well with the world, and by the way, corporations are
    people, people like you and me own the stock of Starbucks through our
    retirement accounts. This person should spend his time adding truth and
    cheer to the world rather than the opposite. Cheers!

  17. I just wanna say how fantastic these MoneyWeek videos are. Everything is
    explained perfectly clearly and makes self-teaching an easy thing to do.
    Thanks again. 

  18. Tax optimization is one area where there is a ridiculous amount of savings
    that can be made. Startups often cut corners on researching or investing a
    bit in financial planning, and in turn lose thousands of dollars that would
    go the long mile in helping them invest in better assets. Over time, as the
    company scales up, more and more revenue is lost due to lack of planning
    from day 1. Clearly, one can be defeated by competitors without proper
    financial planning.

  19. Don’t pay it because they print that money out of this air.. only suckers
    pay taxes. You’re paying double for everything. I guess I should file my
    past taxes as losses.

  20. This video claims to reveal something exciting but actually does not show
    any Doggery(I quess that’s a UK term). The fact is that Starbucks would
    never move profits to the United states through any of these 3 examples
    this instruction gives because the USA has a higher tax rate of 35% vs UK
    at 25%. This video only shows that a global company can use its size to
    organize its finances based on the cost to do business including
    corporation’s tax rate. I challenge that every tax payer that ever lived
    does the exact same thing! The fact is if you tax something you get less
    of it. Does the teacher of this video even realize that if there is 0%
    corporate tax rate and all of the profit was untaxed it would go to the
    share holders of the business and these share holders are PEOPLE who then
    file an income tax return on 100% of the profits they take home! 

  21. Lots of replies from SB corporate PR types in the comments, probably
    annoyed they have to pay any corp tax at all. Personally I vote with my
    wallet, I don’t and never will purchase anything at a SB, plenty of local
    small businesses I can get my caffeine fix at.

  22. I don’t see how carrying loss forward is bad or wrong. If you lose a bunch
    of money on a business it wouldn’t be fair for a company to charge you for
    just reclaiming your original investment. Just like if you buy a stock for
    $100 and sell it for $120 2 years later it wouldn’t be fair for them to
    charge you taxes on the full $120.

  23. Net operating losses carry forward 7 years. The greatest invention for
    corporations since sliced bread. Ones he forgot were accelerated
    depreciation, capital investment losses, and LIFO/FIFO differences.
    Absolutely brilliant!!

  24. If UK Company pays Interest to its USA HQ, will it not be subjected to with
    holding taxes in UK? If US HQ lends lots of money to UK Company, will it
    not be treated as External Commercial Borrowings and whether this ECBs not
    be subjected to any government norms, rules and regulations in UK and USA?
    If the Company receives royalty from other countries from the franchises
    for using the brand name, will those amounts not be taxed in the name of
    with holding tax in the respective countries from where the company is
    receiving the royalties. As far as Set off and Carry forward of Loss is
    concerned, It doesn’t seems to be a trick as the company is entitled to
    adjust its prior years losses as per tax laws. In whatever way we look
    around, the company will end up paying tax in any of the countries. If we
    see collectively and in totality the Starbucks will be paying Income-tax
    (Corporation tax) one or the other way in any of the country. May be it is
    possible to achieve little amount of tax savings due to tax rate / with
    holding tax variance in different countries.

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