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Author Topic: More on Taxing the Rich  (Read 10146 times)

Jon Hodgson

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Re: More on Taxing the Rich
« Reply #15 on: September 26, 2007, 12:32:20 pm »

bblackwood wrote on Wed, 26 September 2007 16:51

danickstr wrote on Wed, 26 September 2007 10:46

1 million a year 45%
10 million a year 50%
100 million a year 60%

works for me Shocked

Maybe, but it's unnecessary. The problem lies in the fact that currently, anyone making $200k/year that has a decent accountant will pay a lower percentage than someone making $50k/year. It's not a matter of making the wealthy pay a higher percentage, it's about making the wealthy actually pay the same percentage.


One thing to bear in mind though, is that the wealthier someone gets, the more taxation becomes a buyer's market.

Rich people can chose where they live and what taxes they pay, far more so than poor people, so governments have to settle for a smaller percentage of a lot, than a bigger percentage of nothing.

It's the middle earners who often get screwed, the ones who are trying hard to lift themselves up, have achieved some success, but haven't reached the level where they can so easily say "screw you, I'm taking myself and my tax revenue somewhere else"

In the UK at one time the highest rate of taxation was 90%... the problem was that anyone who could earn that sort of money could usually earn it just as well elsewhere, so we had the "brain drain". Tax revenues went up when they reduced those taxation levels.

There's a lot about taxation that really gets my back up, for example I worked out of the UK for a couple of years, how's this for crazy? If you leave the UK on the 4th of April and come back the next year on the 6th, you're deemed to have been non resident for a year, but if you leave on the 6th and come back on the 8th, you're deemed resident!

There is no logic to that rule except that they're looking for extra excuses to tax people.

I rather like the look of flat tax systems, from what I can see you get rid of a huge number of civil servants who's job it is to work out ways to get money out of people, and a huge number of accountants who's job it is to work out ways to keep the money, and then free up the time that the ministers use up trying to find ways to screw the accountants, and then everybody's better off!
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CCC

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Re: More on Taxing the Rich
« Reply #16 on: September 26, 2007, 02:06:01 pm »

Two points; flat taxes primarily benefit the wealthy (which is fine with me), and; there will never be a flat tax because governments do more through fiscal legislation than raise revenues through taxes - they also implement social and economic policy.
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Jon Hodgson

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Re: More on Taxing the Rich
« Reply #17 on: September 26, 2007, 02:49:24 pm »

JS wrote on Wed, 26 September 2007 19:06

Two points; flat taxes primarily benefit the wealthy (which is fine with me), and; there will never be a flat tax because governments do more through fiscal legislation than raise revenues through taxes - they also implement social and economic policy.


Several countries already have a flat tax system.

Strictly speaking I guess it isn't a FLAT tax, since there is an initial allowance so the poorest pay no tax, and those with less money pay a smaller percentage of their income (since that allowance makes up a larger percentage of their income than would be the case for a rich person), it's perhaps more accurately described as a simplified flatter tax system.

But from what I can see it is a system that I like.
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el duderino

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Re: More on Taxing the Rich
« Reply #18 on: September 26, 2007, 02:55:31 pm »

RPhilbeck wrote on Wed, 26 September 2007 11:20

In another thread we talked about, "rich" being a relative term.  Apparantly, anything over $97,000 a year is rich.  So now we know.




wow. this is hilarious.

if this happened, someone making 98k a year in NYC would be taxed as rich but still qualify for low income housing!

fucking brilliant! Laughing
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Jay Kadis

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Re: More on Taxing the Rich
« Reply #19 on: September 26, 2007, 03:30:01 pm »

"blimey, this redistribution of wealth is trickier than I thought. ..."
                                                               -Dennis Moore

CCC

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Re: More on Taxing the Rich
« Reply #20 on: September 26, 2007, 04:03:30 pm »

Jon Hodgson wrote on Wed, 26 September 2007 14:49

JS wrote on Wed, 26 September 2007 19:06

Two points; flat taxes primarily benefit the wealthy (which is fine with me), and; there will never be a flat tax because governments do more through fiscal legislation than raise revenues through taxes - they also implement social and economic policy.


Several countries already have a flat tax system.

Strictly speaking I guess it isn't a FLAT tax, since there is an initial allowance so the poorest pay no tax, and those with less money pay a smaller percentage of their income (since that allowance makes up a larger percentage of their income than would be the case for a rich person), it's perhaps more accurately described as a simplified flatter tax system.

But from what I can see it is a system that I like.


Fair enough. Certain former east-bloc countries with emerging economies have adopted somewhat flat tax systems.

I guess I should say that the definition of "flatness" may be up for debate. For instance:

If you enjoy a capital gain should it be taxed at full pop, and is that fair considering the effects of inflation? If  you enjoy a capital gain on the disposition of your principle residence when you are required to move for business purposes should that amount be taxable? If a corporation owes debt to a trust how should the payment of interest by the corp to the trust be treated? Should trusts be taxable if they disburse their income to beneficiaries? What about situations in which people earn passive income in foreign countries? What about pension plan contributions? What about pension plans that hold units in trusts to which corporations owe debt? What should the tax treatment of partnerships be?

Should we tax benefits conferred on employees the same was as we tax income? What about gifts? What about lottery winnings?

Things like this keep certain people awake at night.
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Andy Peters

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Re: More on Taxing the Rich
« Reply #21 on: September 26, 2007, 04:55:42 pm »

RPhilbeck wrote on Wed, 26 September 2007 08:20

In another thread we talked about, "rich" being a relative term.  Apparantly, anything over $97,000 a year is rich.  So now we know.

by Neil Boortz


Well, there's one problem right there.  Boortz is an idiot.   And he doesn't understand how the Social Security tax is handled.  Nor do you, it seems.

Quote:

SOCIAL SECURITY 'FIX'

Barack Obama's great idea for saving Social Security? Easy ... eliminate the earnings cap. Just go ahead and tax every penny someone makes – no matter how much that is – at the full Social Security rate. wants to impose a 12.4% tax on all income above $97,000 per year. He says that by taxing the rich we can eliminate the entire Social Security shortfall.


Already, EVERY WAGE EARNER pays FICA (Social Security).  The employee pays 6.2% of salary (income), up to $94,200, and the employer pays another 6.2% of salary (income), again up to $94,200.  (That cap is adjusted upwards every year.) (If you are self-employed, then you are responsible for paying the entire 12.4%.)  Earnings over this cap are not taxed for Social Security purposes, if your income exceeds the cap, so once you pay the $5,840, you do not pay any more FICA taxes for the rest of the year.

The cap makes the FICA tax regressive, in the sense that the person making $200k per year pays proportionally less into FICA than someone making $40k per year.

Obama's recommendation (and it's not his idea) is to eliminate the $94,200 cap.  In other words, you and your employer will continue to contribute to FICA at the same percentage regardless of income level.  This makes the tax less regressive, in other words, more fair, and has the desired effect of putting more money into the Social Security trust fund.

Quote:

Robert Bixby is the executive director of the Concord Coalition, a non-partisan group advocating a balanced budget. He says that this would be a radical change from how Social Security was originally designed, because "it would end the contributory idea of Social Security, where you get back something for what you put in."


Robert Bixby is an idiot and doesn't understand how Social Security is funded.  Your current contributions have ALWAYS gone to pay for the CURRENT retirees, and when you retire, your payment will come from the deductions of future workers.

Quote:

SOLUTION?

Simple .. the FairTax. The economic growth that would come from the expansion of business and our economy from the enactment of the FairTax would protect Social Security for generations.


Seems to me that taxing ALL income at the same percentage is the very defintion of "Fair Tax."

Quote:

Tourists. When the come to this country and spend their billions of dollars on everything from ash trays to second homes, do they pay any Social Security tax?


No, because Social Security is a payroll tax, not a sales tax.

Quote:

No, not a penny. But under the FairTax every dollar a tourist spends on a hotel room in New York or a ticket at Disney World would see 23% sent to the federal government.


So has anyone calculated the effects this would have on tourism?  And though the idea is to extract money from foreign visitors, doesn't it also extract money from American vacation and business travelers?

Quote:

Ditto for the underground economy and the money spent by our wonderful, hard-working illegal aliens. Just how much do you think they're paying into Social Security now?


But they're also not getting any of the benefits of Social Security.  If the illegal immigrant gardener lives to be 65 and "retires." do you really think he's going to claim his benefits?

Please ... just learn to think things through, rather than parroting the bullshit claims of know-nothing conservative commentators.

-a
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mgod

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Re: More on Taxing the Rich
« Reply #22 on: September 26, 2007, 05:15:29 pm »

Andy Peters wrote on Wed, 26 September 2007 13:55


Well, there's one problem right there.  Boortz is an idiot.

Not necessarily. Like O'Reilly and Limbaugh, like Kristol and the Heritage Foundation people, he earns a good living spreading dis-information and reasons to fear and distrust others. So while he may be an idiot, he may simply be "paying the mortgage" by  creating idiots.

DS
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PookyNMR

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Re: More on Taxing the Rich
« Reply #23 on: September 26, 2007, 07:01:40 pm »

bblackwood wrote on Wed, 26 September 2007 09:51

danickstr wrote on Wed, 26 September 2007 10:46

1 million a year 45%
10 million a year 50%
100 million a year 60%

works for me Shocked

Maybe, but it's unnecessary. The problem lies in the fact that currently, anyone making $200k/year that has a decent accountant will pay a lower percentage than someone making $50k/year. It's not a matter of making the wealthy pay a higher percentage, it's about making the wealthy actually pay the same percentage.


Exactly.

I believe that a lot of the stats are skewed.  Folks who are very wealthy can do their accounting in such a way as to leagally minimize reportable income and drastically lower their taxes.  

2 of my siblings are successful business owners.  With good accounting they are able to keep their taxes very low (percentage wise) in comparison to the actual increase in wealth that they are accumulating.

Facts are, it's the middle class that's getting hit the hardest.  Due to the ways the current tax laws work (at least in my country), there are lots of folks who are very wealthy even though they may not 'officially' on reports appear to be so.
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Nathan Rousu

Jon Hodgson

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Re: More on Taxing the Rich
« Reply #24 on: September 26, 2007, 07:22:02 pm »

JS wrote on Wed, 26 September 2007 21:03

Jon Hodgson wrote on Wed, 26 September 2007 14:49

JS wrote on Wed, 26 September 2007 19:06

Two points; flat taxes primarily benefit the wealthy (which is fine with me), and; there will never be a flat tax because governments do more through fiscal legislation than raise revenues through taxes - they also implement social and economic policy.


Several countries already have a flat tax system.

Strictly speaking I guess it isn't a FLAT tax, since there is an initial allowance so the poorest pay no tax, and those with less money pay a smaller percentage of their income (since that allowance makes up a larger percentage of their income than would be the case for a rich person), it's perhaps more accurately described as a simplified flatter tax system.

But from what I can see it is a system that I like.


Fair enough. Certain former east-bloc countries with emerging economies have adopted somewhat flat tax systems.

I guess I should say that the definition of "flatness" may be up for debate. For instance:

If you enjoy a capital gain should it be taxed at full pop, and is that fair considering the effects of inflation? If  you enjoy a capital gain on the disposition of your principle residence when you are required to move for business purposes should that amount be taxable? If a corporation owes debt to a trust how should the payment of interest by the corp to the trust be treated? Should trusts be taxable if they disburse their income to beneficiaries? What about situations in which people earn passive income in foreign countries? What about pension plan contributions? What about pension plans that hold units in trusts to which corporations owe debt? What should the tax treatment of partnerships be?

Should we tax benefits conferred on employees the same was as we tax income? What about gifts? What about lottery winnings?

Things like this keep certain people awake at night.


These things are never as simple as we'd hope are they?

I do suspect that if they simplified and made taxation more consistent, and passed the savings made on the government side through simpler administration back to the taxpayers, then we could all be better off.

For example why is it that in the UK we effectively pay three different lots of income tax? We have income tax, employee's national insurance, and employers national insurance (I pay them all because I employ myself, which means I really feel the pain!!)? Once upon a time national insurance was specifically for pensions and medical, so it made sense, but these days it isn't, so why don't they put all three together and save on two lots of admin?

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rollmottle

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Re: More on Taxing the Rich
« Reply #25 on: September 26, 2007, 07:38:09 pm »

PookyNMR wrote on Wed, 26 September 2007 16:01

bblackwood wrote on Wed, 26 September 2007 09:51

danickstr wrote on Wed, 26 September 2007 10:46

1 million a year 45%
10 million a year 50%
100 million a year 60%

works for me Shocked

Maybe, but it's unnecessary. The problem lies in the fact that currently, anyone making $200k/year that has a decent accountant will pay a lower percentage than someone making $50k/year. It's not a matter of making the wealthy pay a higher percentage, it's about making the wealthy actually pay the same percentage.


Exactly.

I believe that a lot of the stats are skewed.  Folks who are very wealthy can do their accounting in such a way as to leagally minimize reportable income and drastically lower their taxes.  




a couple of you have said this now, but i don't get it. only wealthy people can do this? how do you figure? maybe it's different up in Canada, who knows.

i can drastically and legally reduce reportable income because i hire somebody to make sure that i keep what's rightfully mine. it's there in the tax code. if i was a tax code and tax law expert, i would do it myself. just as if i was a car transmission expert or a refrigerator repair expert or an electrician, i'd do it myself. but i'm not so i hire out the service. this is not something unavailable to everybody. anybody who has a vested interest in the well-being of their finances SHOULD be doing whatever they can to maximize the money that stays in their pocket. there's no "wealthy privilege" here... it's just SMART.

as i stated above, i've paid for this service at all different levels of income throughout the years. 400 - 750 dollars a year for services that can potentially save you thousands and 10s of thousands of dollars every year is well within the reach of almost everybody.
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danickstr

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Re: More on Taxing the Rich
« Reply #26 on: September 26, 2007, 08:28:36 pm »

the loopholes are there because the rich people's politicians put them there.  That is the other part of the problems.  it is a two-part problem that can be solved in two steps.  
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rphilbeck

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Re: More on Taxing the Rich
« Reply #27 on: September 26, 2007, 08:37:26 pm »

danickstr wrote on Wed, 26 September 2007 20:28

the loopholes are there because the rich people's politicians put them there.  That is the other part of the problems.  it is a two-part problem that can be solved in two steps.  



If those evil rich people were really that influential than they would not be paying 90% of the taxes the U.S. government takes in every year.  
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Andy Peters

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Re: More on Taxing the Rich
« Reply #28 on: September 26, 2007, 08:42:36 pm »

rollmottle wrote on Wed, 26 September 2007 16:38

PookyNMR wrote on Wed, 26 September 2007 16:01

bblackwood wrote on Wed, 26 September 2007 09:51

danickstr wrote on Wed, 26 September 2007 10:46

1 million a year 45%
10 million a year 50%
100 million a year 60%

works for me Shocked

Maybe, but it's unnecessary. The problem lies in the fact that currently, anyone making $200k/year that has a decent accountant will pay a lower percentage than someone making $50k/year. It's not a matter of making the wealthy pay a higher percentage, it's about making the wealthy actually pay the same percentage.


Exactly.

I believe that a lot of the stats are skewed.  Folks who are very wealthy can do their accounting in such a way as to leagally minimize reportable income and drastically lower their taxes.  




a couple of you have said this now, but i don't get it. only wealthy people can do this? how do you figure?


Most non-wealthy people earn a straight salary, either hourly or weekly, and they are paid by check by their employer on a regular basis.  All taxes are deducted by the employer, according to standard tables, from each paycheck.  At the end of the year, the employer fills out W-2 forms for each employee and sends a copy off to the IRS.

Because the IRS knows exactly how much you are making, and they know exactly how much your employer withheld from your paycheck for the payroll taxes, they know exactly how much tax you owe and how much you have already paid.

If you own a home, they also get the property tax statement from your local gov't, and if you have a mortgage, they get the interest statement from the lienholder.

In other words, for most non-wealthy people, there's very little wiggle room in terms of deductions.  If you (and your spouse, if applicable, each) have only one job, then your 1040 each year is pretty straightforward and it shouldn't take more than an hour to deal with.  If you have a second job or you're self-employed, it's worth hiring an accountant to make sure you don't screw up.

On the other hand, wealthy people don't get paid the same way the non-wealthy do. They may draw a salary from their employer, but in many cases that salary is a minor part of the total compensation package.  The total take-home may be stocks, stock options, things like company cars/homes/etc.  Other income may be derived from trusts, or from the sale of real estate or other big items.  It's all a lot more complicated and the IRS reporting rules are widely different for different things, and a good accountant can do clever (but legal) things to reduce the income on paper.

And this is where the issue of tax rates for capital gains comes in.  Capital gains are taxed at a much lower rate than salary income, and no Medicare/FICA taxes are paid on that money either.  So if a wealthy person's primary income is in the form of capital gains, then clearly they pay less tax than someone who gets a W-2.

-a
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rollmottle

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Re: More on Taxing the Rich
« Reply #29 on: September 26, 2007, 08:56:38 pm »

Andy Peters wrote on Wed, 26 September 2007 17:42



Most non-wealthy people earn a straight salary, either hourly or weekly, and they are paid by check by their employer on a regular basis.  All taxes are deducted by the employer, according to standard tables, from each paycheck.  At the end of the year, the employer fills out W-2 forms for each employee and sends a copy off to the IRS.

Because the IRS knows exactly how much you are making, and they know exactly how much your employer withheld from your paycheck for the payroll taxes, they know exactly how much tax you owe and how much you have already paid.

If you own a home, they also get the property tax statement from your local gov't, and if you have a mortgage, they get the interest statement from the lienholder.

In other words, for most non-wealthy people, there's very little wiggle room in terms of deductions.  If you (and your spouse, if applicable, each) have only one job, then your 1040 each year is pretty straightforward and it shouldn't take more than an hour to deal with.  If you have a second job or you're self-employed, it's worth hiring an accountant to make sure you don't screw up.

On the other hand, wealthy people don't get paid the same way the non-wealthy do. They may draw a salary from their employer, but in many cases that salary is a minor part of the total compensation package.  The total take-home may be stocks, stock options, things like company cars/homes/etc.  Other income may be derived from trusts, or from the sale of real estate or other big items.  It's all a lot more complicated and the IRS reporting rules are widely different for different things, and a good accountant can do clever (but legal) things to reduce the income on paper.

And this is where the issue of tax rates for capital gains comes in.  Capital gains are taxed at a much lower rate than salary income, and no Medicare/FICA taxes are paid on that money either.  So if a wealthy person's primary income is in the form of capital gains, then clearly they pay less tax than someone who gets a W-2.

-a


good points.

also, i guess i'm speaking from the perspective of a self-employed person. even when i was employed through a company though, i always hired an accountant because i was always doing other gigs on the side (which IS one hell of a tax shelter)

i always thought the capital gains tax was something in the realm of 40%? guess not...if you're not confused by income taxes, be prepared to be confused by the capital gains laws: http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United _States
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