Here Comes the Tax Increase

[Red Arrow]

USRufnex, H2O Boy,
OK, I got your attention.

Marginal rates in the 1950s were in the 90% range for the top $ makers. Using Waterboy's logic, returning to 90% is not a tax increase, just a return to what once existed. The place were the top rate starts is an arbitrary number. Then it was $400,000.  Today it may be $250,000.  Tomorrow it may be $100,000. I read in the paper (or maybe MSNBC on line) that the tax rebate will start to be tapered off for single taxpayers at incomes above $80,000. Hardly $250,000.  JFK had the top marginal rates cut to 70%. Explain the prosperity of the 60s. We can obviously afford to sock it to the rich.  Rich is relative. Today's USA "Bolsheviks and French Revolutionaries" working 2 jobs to make $50,000 will see no sympathy for anyone making a 6 figure (left of the decimal point) income. That's pancakes I'm talking about.

http://www.truthandpolitics.org/top-rates.php

I just used this site as a reference for the top marginal rates.

[Red Arrow]

quote:Originally posted by USRufnex
what did the children of Sam Walton actually do to earn that extra money?... and how did that money benefit the general economy...

I'm sure they stuck the money under their mattress or buried it in the back yard so no one else could benefit from their good fortune. Who really cares what they did to earn it?  It's what they do with it that counts.

I guess you are in the group of people that advocate a 100% inheritance tax.  I disagree.

[guido911]

A little off topic, but here is a total a## ripping of an ACORN rep over her perceived "right" to taxpayer money to prevent banks from foreclosing on deadbeat homeowners:

http://www.thehopeforamerica.com/play.php?id=388

[Conan71]

quote:Originally posted by Red Arrow

quote:Originally posted by USRufnex
what did the children of Sam Walton actually do to earn that extra money?... and how did that money benefit the general economy...

I'm sure they stuck the money under their mattress or buried it in the back yard so no one else could benefit from their good fortune. Who really cares what they did to earn it?  It's what they do with it that counts.

I guess you are in the group of people that advocate a 100% inheritance tax.  I disagree.

Red- a lot of people suffer with a certain myopia that doesn't allow them to realize that wealthy investors do as much for the economy as the guy running a tire molding machine at Goodyear.

People who tolerate the most risk and put up the money for corporate expansion (which equates to jobs) earn their money as an investor.

I dare say a good percentage of us posting on this board have jobs because of investors like the Walton heirs.

[guido911]

quote:Originally posted by Conan71

quote:Originally posted by Red Arrow

quote:Originally posted by USRufnex
what did the children of Sam Walton actually do to earn that extra money?... and how did that money benefit the general economy...

I'm sure they stuck the money under their mattress or buried it in the back yard so no one else could benefit from their good fortune. Who really cares what they did to earn it?  It's what they do with it that counts.

I guess you are in the group of people that advocate a 100% inheritance tax.  I disagree.

Red- a lot of people suffer with a certain myopia that doesn't allow them to realize that wealthy investors do as much for the economy as the guy running a tire molding machine at Goodyear.

Red- a lot of people suffer with a certain myopia wealth envy that doesn't allow them to realize that wealthy investors do as much for the economy as the guy running a tire molding machine at Goodyear.

FIFY

[USRufnex]

RA, quit playing hyperbole games... nobody has proposed a 100% tax on ANYONE... to argue otherwise is dishonest... boy, eliminating the inheritance and estate taxes sure made the banks solvent over the last eight years... not... but you guys do what you always do... blame unions and workers...  I find it bizarre that folks on this site consistently defend people who have far more money and unrestricted power than they know what to do with... and scapegoat the hardworking people I get to talk to EVERY DAY who have had to cut their budgets and would highly value the paltry $13 per week coming back to them in the form of tax cuts...  geez.

[we vs us]

Conan, it isn't wealthy individuals who drive the economy, it's the funds and the banks that they contribute their capital to that do all the heavy lifting

Warren Buffet, for instance, doesn't give his own money to startups.  He puts Berkshire's to work, instead.  Name any similarly successful investor, and you'll find that their personal fortunes aren't anywhere near the front lines of capital funding. They use their company's instead.  

And even though that's a relatively small semantic difference, it's crucial to tax policy.  If the primary economic driver in terms of investment isn't individual capital but corporate capital, then the grease should be on the latter, not the former.

[Conan71]

quote:Originally posted by we vs us

Conan, it isn't wealthy individuals who drive the economy, it's the funds and the banks that they contribute their capital to that do all the heavy lifting

Warren Buffet, for instance, doesn't give his own money to startups.  He puts Berkshire's to work, instead.  Name any similarly successful investor, and you'll find that their personal fortunes aren't anywhere near the front lines of capital funding. They use their company's instead.  

And even though that's a relatively small semantic difference, it's crucial to tax policy.  If the primary economic driver in terms of investment isn't individual capital but corporate capital, then the grease should be on the latter, not the former.

I don't really see the point in creating a chicken v. egg issue here, but if you must...

[cannon_fodder]

Ruf:

I don't understand the logic of "they have enough, so it is OK to take it from them."  I really don't.  If someone has $1,000,000,000,000 because their grandfather invented the cure for cancer or TNT, who cares?  Why does that give the government more of a right to take their property than to take your property?

Could you take $50 Billion of Bill Gates' fortune without really effecting him?  Sure.  But the more important question is:  does that violate fundamental property rights?

Wealth is created and owned by the individual.  Wealth does not belong to the State.  The State exercises it's authority to take wealth from individuals.  I believe the taking of wealth because a bureaucrat or public opinion determines a person "has enough" is a violation of that persons property rights.  In America, I should be able to be as wealthy as I please without being punished.

By the same token, EFFECTIVE tax rates on wealthy Americans are disproportionate to middle income Americans (don't bother mentioning the "working poor" who are effectively a net loss to the government.  Taking more from the system than they pay in.  Hence, their effective tax rate is negative).  Middle income Americans see real tax rates in the 30-45% range after deductions, local and state taxes.   The wealthiest of Americans have effective tax rates on their income below 20%.

Raise the income tax rate to 110% on people "earning" over $1mil.  Hell, put it to 600%.  It wouldn't matter.  Because the compensation packages would simply change to avoid making the compensation "income."  Either that or the best and the brightest would simply leave the United States - starting with sports stars and quickly moving into business, banking, and industry.    Very frankly, the best are hired guns.  They will go where the money is.  

Now, I don't think the USA will gain anything scaring off the top 1% of talent in the planet.  Even if we scare off just 50% of the top earners.  What good has that produce for the rest of us?

So from both a property rights and a practical economic standpoint, I don't see ultra high tax brackets helping us.

And what good does an inheritance tax do?  The "ultra rich" you are so worried about taking wealth away from again don't pay this tax.  They transfer assets well ahead of time.  Set up a non revocable trust.  Set up a charitable foundation and pay the kid $10,000,000 a year to run it.  

The common effect of an inheritance tax is to destroy a small business.  When dad starts Tulsa Manufacturing and eventually builds it to be of some value he is contributing to the Tulsa economy, lets say he employs 25 people, builds parts using materials from a few local contractors, occupies some structures and pays taxes on them, exports on the trucking companies around town or from the port.  Dad dies, the company is worth $10,000,000.  Now Child gets to come up with $4,000,000 to pay to uncle Sam or he can just fold the shop, send Sam his check and walk away with his $6mil.

Uncle Sam gained $4 mil, Tulsa lost 25 direct jobs and probably a few ancillary positions.  All in all a net loss.  Sure he can take a bank loan, take on partners, or otherwise try to avoid it (say transferring shares annually or otherwise avoiding the tax) ... but anyone who does any small business or tax planning will tell you the above is the most common result of an estate tax.  Without taking steps to avoid the tax, the business will probably die.

Why make people go through the motions to continue contributing to the economy?  How will the workers gain from Uncle Sam taking the $4mil and closing down the shop?
- - -

Removal of tax breaks, deductions, or the expiration of cuts = tax increase.  Just like additional tax deductions, credits, or reducing the brackets = tax decrease.
- - -

No, I am not anti tax.  I think we should have a balanced budget at the Federal level.  If we want to fight a war, we need a war tax (national sales tax at .5% of whatever is needed to fund it).  

If we want meaningful national retirement they need to dictate nationwide contributions at a reasonable (read: sustainable) rate.   If everyone contributed 10% of their income and the formula was setup to pay at least 75% of contributions to each wage earner it would leave 25% for more liberal wealth redistribution programs (may as well be honest with it).  Social security is not a "safety blanket" it is a subsistence retirement plan - treat it like one.

The Federal Government should be granting proportional loans for road work or other earmark favorite, not overt handouts based on how powerful your Senate contingent is.  If Alaska wanted a bridge to nowhere, they should be willing to pay off at least 50% of it in tolls over 20 years.  If Tulsa thinks the Gilcrease needs to be finished we should be willing to pay for at least a portion of it over a time period.  Suddenly half the pet projects wouldn't be so needed.

Bah!

I'm not trying to be a jerk.  I really don't understand the mindset of "they have enough, I can take it from them."  I'm damn glad no one has decided that a nice home, a couple of decent cars, and cable TV is enough that they can start taking things from me.
- - -

Lets talk about a national sales tax.  Something that would set the real tax bracket for people at or below the poverty level to absolute zero (no FICA even) and have the highest tax bracket for wealthy Americans actually near that 30% mark.  Most of us, those making 50-100K a year would see an actually tax rate of around 18% (around what the rich pay now).
- - -

WEVUS:

Buffet is worth $60 BILLION.

Where do you think that money is?  That money is mostly held by Berkshire Hathaway as you allude to.  When Berkshire makes an investment in a start up (they generally invest in existing businesses to revive them on a value investing model, but...) his wealth is on the line.  If they lose, his shares lose a proportional value and his wealth dissipates. When they win, the corporation pays taxes on the profits and he pays taxes on capital gains when those profits are exchanged.

The effective tax rate on corporate profits + capital gains tax > income tax.  

Clearly it is more complex than that, but you see what I cam getting at.

/monster ramble.

[USRufnex]

CF, progressive taxation has been with us forever... how do you think wars get paid for?... 2% of small business owners will pay more taxes under Obamas plans... I have no problems paying a substantially higher tax rate than a single mom who waits tables... or a higher rate than a struggling small business owner... btw, I^d rather see the federal govt spending money paying off the wars in Iraq and Afghanistan than the $10mil paid by the Channels geniuses to design three islands in the middle of the Arkansas...

[guido911]

What about the $900M to Gaza residents that Obama is pledging?

http://news.yahoo.com/s/nm/20090223/pl_nm/us_palestinians_clinton_4

[Red Arrow]

quote:Originally posted by USRufnex

RA, quit playing hyperbole games... nobody has proposed a 100% tax on ANYONE... to argue otherwise is dishonest... boy, eliminating the inheritance and estate taxes sure made the banks solvent over the last eight years... not... but you guys do what you always do... blame unions and workers...  I find it bizarre that folks on this site consistently defend people who have far more money and unrestricted power than they know what to do with... and scapegoat the hardworking people I get to talk to EVERY DAY who have had to cut their budgets and would highly value the paltry $13 per week coming back to them in the form of tax cuts...  geez.

Rufnex:

I didn't see any posts from you for a while.  Your first couple of posts recently seemed like maybe you had been ill. I hope not.  Now that you are back in form...

Who said anything about unions and workers in this thread?  I have called out unions in other threads but I have also called out bad management and golden parachutes for "leaders" that led their companies to ruin.  "and scapegoat the hardworking people I get to talk to EVERY DAY ". Wow does that sound condescending? Have some "best friends" of other races or religions too?

Inheritance.  I am of the group that believes that someone should be able to pass their estate on to whoever they want without taxes.  In most cases, that money has already been taxed. Probably several times. I might make an exception for estate funds that grew tax free but that would only add more complexity to the already burdensome tax code. I agree with C-F's analysis of families transferring a business.

Someone (in addition to Reagan taking away your Pell Grant to give it to someone more needy) must have really rained on your parade sometime in your life. Perhaps you, as some others, believe there is a finite amount of wealth and the only way for you to get some is to take it from someone else.  I don't believe that way.

[USRufnex]

gee RA, if you decided to try to hit below the belt, you have succeeded... one of my favorite Obama speeches is the one he gives to colleges about the Empathy Deficit... good read, hint hint... I think congress should be replaced by a consortium of Oklahoma Democrats and Massachusetts Republicans... Oklahoma Republicans and Massachusetts Democrats need not apply...

[TURobY]

quote:Originally posted by USRufnex

gee RA, if you decided to try to hit below the belt, you have succeeded... one of my favorite Obama speeches is the one he gives to colleges about the Empathy Deficit... good read, hint hint... I think congress should be replaced by a consortium of Oklahoma Democrats and Massachusetts Republicans... Oklahoma Republicans and Massachusetts Democrats need not apply...

In other states, they call those Moderates.

[Red Arrow]

quote:Originally posted by USRufnex

gee RA, if you decided to try to hit below the belt, you have succeeded...

Not my intention. I apologize if you took it that way. I've been hit with a sucker punch (real one, black eye and all) so I'll be watching.