Tax the Rich

Discussion in 'Business & Economics' started by madanthonywayne, Oct 18, 2007.

  1. pjdude1219 The biscuit has risen Valued Senior Member

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    based on per an hour worked europe compares well to the us mainly because they are healthy and less stressed in absolute term the us is considered more productive but that is misleading beacuse the average american has to work more hours
     
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  3. kmguru Staff Member

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    When you are starting from the bottom, a high number is just natural. Look at Dell, how it grew the first few years. Even Namibia which does not have an engineering college is growing at 4.5% while 60% are unemployed.

    On the other hand Latvians are hard working, I am sure they will do great.
     
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  5. Pandaemoni Valued Senior Member

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    I work, every single day, with people earning upwards of $50 million a year, and I've really never heard anyone suggest that only the "suckers" work hard enough to make it to the higher tax brackets.

    Even with the higher marginal tax rates, the "suckers" still have more money than the "canny" individuals who earn less. I'd suggest that if you can find someone who tells you that he is limiting his income because he's trying to avoid the higher marginal tax rate, then you just found someone who doesn't understand how marginal tax rates work. I can't even imagine what I would think of someone who asserted, "I could be rich, but then I'd have to pay more taxes, so I prefer to remain poor." I'd probably assume he was kidding...or an idiot.

    Again, if you make more money, then after taxes you will have more money to spend. There is no point, in a marginal tax system, where earning more money leaves you with less after tax income, nor has anyone suggested that people who earn more should receive no benefit from that.

    In my experience, by the way, the ultra-rich do not really work for the money. The money for them is a nice way of keeping "score" but, at the end of the day, they just throw it on the pile that they previously accumulated. They work for the feeling of power, influence, prestige and because they enjoy the process of closing deals. The government did start taxing them at a 100% marginal rate (after they threw a hissy-fit) they'd go back to work...because sitting around not working is not really an option for them. Some of them might start working on more philanthropic or otherwise different things, but they're not the sort of people to sit idle.

    In a 100% marginal tax rate world, I think many of them would start competing to acquire the coolest assets (especially companies). They already do that to a large extent (especially when it comes to yachts aand aircraft), but I suspect that would be the new benchmark my which score was kept.
     
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  7. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    I agree with most of your post, especially why the very rich continue to work, but as a "registered senior" you should appreciate more than most that one "spends time" also.

    Some are happiest when at their work. I liked mine so much I would have done it for free, but some others get more pleasure from other activities. For example, my first wife, a Norwegian, could only go to her dentist in the even months. In those six months he earned more than he really needed and did not get much joy from fixing cavities etc. all day. If he were to work all year, the marginal rate taxes being so high, it seem to him that would be like becoming a slave working for the government, so he spent his time more wisely fishing, hunting, and sking in the mountains mainly, I think.

    As they say: You can't take it with you. I am giving regularly to my chidren and grand children now. It will not spoil them as until they were in their 40s I let them know they were on their own - told everything I had would go to my university as I never paid a cent of tution. One daugher is like you - an invstment adviser to clinets with at least 10 million to invest. Prior to that she managed 4 Billion (yes billion) for Delta Airlines fixed benefit retirement plan. She wisely took an "early out option" before they went bankrupt, but as it was the fixed benefit (not fixed contribution) plan, the gains and losses went directly to Delta's bottom line. Several years she was the greatest profit maker for Delta - more than their airplane operations brought in.

    When she was about 11 she wanted badly a new thing called a "skate board" - dinky little thing for $20 back then. I did not want here to have one, but agreed that I would pay her a dollar for every bucket of small stones she dug out of the yard. After 16 buckets, in a month or two of after school working she asked if she could dig in the neighbor's yard as we had no more stones. I relented and gave her the last 4 dollars after extracting the promiss that it would only be used on our dead end street, with knee pads, etc. - I am sure that was the most productive $20 I ever spent.
     
    Last edited by a moderator: Nov 1, 2007
  8. abu_afak Banned Banned

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    218
    The Flat Tax, to me, is an obvious Fraud.

    Assuming revenue Neutrality/we need 'X' amount of dollars to run the country...

    If Bill Gates, Michael Eisner, and everyone else over 150,000 pays less.. WHO Pays more?

    'Tax simplification' Schemes are all Top Down proposed by the Rich.

    Bod Dole (R) "The Flat Tax gets rid of all the little Loop holes and Replaces them with one Giant one."

    Why not Bottom -up 'simplification'?
    Starting with no one under $50,000 pays any Taxes.
    This would even incentivize many non-workers to move and make the economy more productive.
    It would also give those at the bottom more disposable income to spend and stimulate the economy/Growth; the 'growth' the Top seems so concerned about when justifying their cuts.

    That's much simpler and would eliminate 1/3 of the IRS paperwork by just plain dropping loads of people off the roles, saving Billions.

    But-- no one with that income has a Lobby to buy congressman with.

    In the last 8 years..
    Capital Gains tax has gone DOWN from 28 to 15%.. for the Rich.
    Tax on Dividends the same -- down to 15%.
    Estate Tax on inheritance over 2 Million has dropped dramatically- for the Rich.

    IOW, if you earn income by Working you pay a much higher rate than by sitting collecting Interest.

    Since even Democratic Senators are usually Millionaires.....
     
    Last edited: Nov 3, 2007
  9. iceaura Valued Senior Member

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    30,994
    It is generally true, under the normal meaning of "productivity" as output per manhour.

    The US leads in total product, but only as a consequence of having a higher percentage of our citizenry employed, more citizens with multiple jobs, and many more hours worked per job per year on average.

    In per hour productivity, several European countries have caught up and passed the the US in the past twenty five years or so.
     
  10. john smith Tongue in cheek Registered Senior Member

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    833
    I thought so. does this include the E.U as a whole or what though?
     
  11. Jeff 152 Registered Senior Member

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    Eliminate the IRS and income tax--make a national sales tax.

    And if you really want to help out the poor, dont tax necessities like bread, water, etc. That way we make sure the poor arent throwing all their money away on booze.
     
  12. maxg Registered Senior Member

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    710
    I have no problem with this in theory, but I fear the transition would cripple the US economy. Perhaps if there were some way to implement the change from an income based tax to one based on spenfing slowly it might work. BTW, it's Mike Gravel's position on tax reform and he wisely adds a tax refund for people earning under a certain amount.
     
  13. Gudard Ramin Banned Banned

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    25
    I personally think what we should do is slaughter the middle class and use the meat to feed our lower class slaves!
     
  14. iceaura Valued Senior Member

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    30,994
    Because taxing the poor more heavily than the rich is just one of those ideas whose time has come ?

    Or is it that introducing the complexities and hassles of tax formulation into every aspect of everyone's daily life is something no ambitious bureaucrat can resist ?
     
  15. pjdude1219 The biscuit has risen Valued Senior Member

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    16,479
    i say tax the rich for all their worth i doubt most of them got their money ethically any way
     
  16. maxg Registered Senior Member

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    710
    If done properly it would not tax the poor more than the rich--a rebate based on income would compensate. The fact is that the rich spend more and so they would be paying the bulk of the tax. It would also have the benefit of encouraging savings and helping stop the vast levels of personal debt that are crippling the middle class and poor.

    Such a tax would also be no more of a hassle (and probably less) than the current tax code. There is already a system in place in every state except Deleware for sales tax and all businesses are able to handle it OK. It would require a new enforcement system but I think it would be less intrusive and complex than that of the IRS.
     
  17. iceaura Valued Senior Member

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    30,994
    So you are giving tax advantage to people who can more easily delay or avoid expenditures - the rich

    and multiplying the already significant economic advantages of large retail corporations over smaller, higher margin concerns,

    and leaving in place the hassle of having to calculate and verify one's income - the major hassle of the current system, and the major area of IRS activity

    and reducing still further the discretionary income of the lower classes, from which all savings must be drawn, as your way of encouraging savings

    and glossing over the major features: mortgage interest deduction? - on a furnished or unfurnished version of the house? Do the rich have to pay sales tax on services ? On purchase of things like corporations, machinery, infrastructure, buildings, and business vehicles?

    Aside from the immediate creation of a huge black market in everything, and a large reduction in the percentage of income paid as tax by the very rich, the effects of such a bureaucratic and regulatory nightmare are hard to imagine - but they don't look pretty.
     
  18. maxg Registered Senior Member

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    710
    No. As I said before I don't support the change from an income tax to a sale tax because I believe it would "cripple the US economy." The US economy relies too much on consumer spending and the attempt to curtail it would cause too much damage. Also States would probably eliminate their sales taxes and increase their income taxes to compensate. It would probably also cause major problems for the US tourist industry but to compensate would improve foreign investment.

    However, I was objecting to your reasons for slamming it.

    The rich are much more capable of manipulating the tax code to their benefit than the poor. The rich also spend substantially more on non-essentials & I don't see any reason why they would stop doing so (otherwise what's the point of being rich). As I suggested, if done properly the poor would be given a prebate or rebate to cover taxes on the first $35,000 of expenditures (or whatever figure would be appropriate).

    I'm not sure of the effect on corporate taxes but I can't believe that it would be any worse than the current imbalance in which huge corporations get away with small tax bills.

    Your biggest problem with the tax code is having to add up and verify your income? Mine is the fact that people can manage to manipulate deductions and hide income so they don't pay a fair share of the tax.

    A national sales tax wouldn't reduce spending by the poor--they wouldn't be paying any tax on the majority of their expenditures. If they earned anything above that they might be less likely to spend it but that, believe it or not, would encourage savings.

    You can still give a rebate for 1st time homebuyers and of course services, business investments, etc. should be taxed.


    A sales tax might lead to a black market in some areas but it would also manage to tax people who are currently involved in activity that isn't taxed (people working under the table, people involved in the drug trade, etc., etc.).

    I used to believe that a sales tasx was inherntly regressive too but it depends on how it's administered. While the tax structure is certainly regressive in that the poor pay a much larger percentage of their actual wealth.
     
  19. iceaura Valued Senior Member

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    30,994
    The rich are also far more capable of arranging the circumstances and situations of their discretionary expenditures than the poor.

    And these are lots harder to track and monitor than sources of income.

    The only reason sales taxes work now, anywhere, is that the percentages are small and tolerance of beating them is great. Otherwise even these little demo taxes would be a regulatory and bureaucratic morass, on top of the burden they place on the cash-strapped poor.

    The central issue is that the rich spend less of their income, as well as having more control over expenditures than income. So if you tax expenditures rather than income, you are giving the rich a serious structural tax advantage - and all the rebates, etc, will just complicate the matter.
     
  20. Jeff 152 Registered Senior Member

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    Just on a side note, who decided to call the graduated income tax a "progressive" tax?

    As if penalizing the people who make a positive impact on society with a higher tax rate encourages progress...

    the problem i see with any kind of system where the rich pay a higher percentage is that it encourages mediocrity and failure while penalizing success. It is like something straight out of Atlas Shrugged or socialism.

    The "progresive" income tax is a manifestation of the "From each according to his ability, to each according to his need" philosophy, which I believe is the most destructive idea to progress as any ever imagined.
     
  21. quadraphonics Bloodthirsty Barbarian Valued Senior Member

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    Progressives came up with that name, but the concept is generally attributed to Adam Smith.
     
  22. madanthonywayne Morning in America Registered Senior Member

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    I agree here. I think a national sales tax at a level high enough to replace income tax would foster a huge black market. And the "prebate" sounds like a major pain in the ass.

    I favor a flat tax with no taxes at all below a certain level (20k or something like it) with zero deductions. Play with the deduction and the rate to get to the amount of funding you need. Also, a balanced budget ammendment with a mechanism for across the board cuts in all programs if the budget is not balanced (in the amount necessary to balance the budget.)
     
  23. Pandaemoni Valued Senior Member

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    3,634
    There is an element of that too it, but, guess what? So is the income tax in general. If that's your problem you should be arguing for *really* flat taxes: per capita taxes, like $8,000 per person per year, assuming we tax every man woman and child. (And why should children have it easy, just because they don't have the means? Spreading their tax to others is a punishment to the childless.

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    )

    No one is suggesting straight egalitarian ideals for distribution. Or doing it to such an extreme that it "punishes" the wealthy.

    I don't want to publish my annual compensation, but suffice to say that if you took away 60% of it, pre-tax or post-tax, it wouldn't really impact my consumption all that much, except at the margins. It might significantly impact my future consumption (as much of that 60% would cut into my retirement savings), but mostly it would cut into my future kids' overly large inheritance. (If you want an economic disincentive of nightmarish proportions, look at what inheritances do to families.)

    It would not greatly affect my day-to-day behavior, and in that sense it would have limited economic consequences.

    Take even 20% of the post-tax income of someone earning $50,000, though and he's likely to feel that pinch very acutely. Imagine that you raised my 70% figure though, to say 90%. at that point there would be more significant sacrifices for me. I'd still have more money than the guy who went from 50K to 40K (by a lot), but the pain I'd feel at the constraint on my consumption would be somewhat more comparable.

    I'd still be flying first-class, mind you, and he would not. I'd still be attending the U.S. Open on days where he has to work. I'd still be sending my kids to college where's he'd be living hand-to-mouth in Manhattan and praying his kids get financial aid. I'd still be better off, even though we both grumbled about taxes equally.
     

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