Bar Stool Economics

[guido911]

I think we vs us was being sarcastic... and yet in his sarcasm is a grain of truth

I know. I was attempting to acknowledge that.  I guess I failed.

[Red Arrow]

And yes, a wealthy individual can own multiple cars but they can only drive one at a time.

I own two cars, the newest is a 1998.  Whenever I need to take them both somewhere I actually use more than my fair share of state resources since I also need a sidewalk.

I drive one car a mile. Then I walk back to the second car, drive it a mile past the first car, then walk back to the first car and repeat the process.

JUST KIDDING!   

[guido911]

While I am not sure I am totally with you that taxes should not be tied to income we both point to the same issue about the number of Americans who do not pay income tax.

That's okay that we may differ about taxes being tied to income. But you are spot on with the rest of your post. Those 40%ers vote is their method of earning a living.

Here are videos of the "Nathans" in this country:

[Red Arrow]

I know. I was attempting to acknowledge that.  I guess I failed.

If you aren't sure someone will catch your intentions (frequently around here and not just your replies) use a stupid smiley face.

[nathanm]

Nathan, does the concept of one man on vote ring a bell? In excess of 40% of our populace pays no income taxes and yet their vote counts just as much as the person making a gazzillion dollars a year. Those at the top are not running the show..or better put, are periously close to having no say whatsoever. The second that the non tax payers of this country exceed's 50.1% we are screwed. You have huge numbers of people that are entirely unaffected by tax policy, as it now stands, shouting to the heavens that our tax code is unfair. What they are really saying is do something to make my status even more secure. and they have the power to vote to make it so and that makes elected officials pander to their vote.

Income taxes are not the only form of tax. Almost everyone pays something.

And the terrible irony of the people shouting about the unfairness of the income tax system is that the majority of them aren't the ones paying the majority of the income tax. I don't think guido is a one percenter, given that he claims to be "middle class."

And a large part of the reason that so many end up paying no income tax is because we as a society have decided it's a good idea to give tax breaks to people with kids. Were it not for the EITC and related credits, nobody would get more than $8000 or so tax free. Even then, it takes a ridiculously low income to not have to pay any income tax. Is it really reasonable to complain about people living below the poverty line not paying income tax? Moreover, the 47% don't pay any income tax meme is quite misleading, as there are more than a few older folks with Roth IRAs that were taxed in the year they earned the IRA money but aren't taxed now, among other ways people get away without paying income tax yet still have a positive cash flow.

That number shows, quite starkly, that a lot of my fellow citizens are in bad financial shape. Rather than complain that they get to not pay income tax, I both think how lucky I am to be better off than them and wonder how it is that we can help them improve their lot in life so they too can start paying income tax.

Besides, in bad years plenty of rich people don't pay a dime in income taxes. Should we complain about them? I don't begrudge them being allowed to deduct losses, just like I think it's crappy when they have to pay income tax on unrealized gains from stock options.

Anyway, I think we can all see (or at least most of us, guido is too busy acting a fool) that the typical pithy statements made by some on the right who try to argue that higher income earners pay more than their fair share aren't accurate. The underlying issues are far more complex than either side would like to admit.

[heironymouspasparagus]

There was a reason an income tax was specifically prohibited in the US Constitution.  It is a lousy way to tax.  But what you got that's any better?  (Well, send all taxes through corporations, but that is in a different thread.)

And the edge the richest have is the FACT that they not only can, but have had undue influence on the tax laws of the country.  It is a grotesque mockery when Warren Buffet pays a lower rate of taxes than his secretary.  As he will tell you.

This whole discussion centers around the rather naive idea that someone making 2 million per year is likely to pay anything anywhere near the "tax table" numbers.  In fact, I will go one step further and submit that no one making $2 million per year is allowing anywhere near that amount to end up on their W-2.  I certainly won't if get to that point, and the law is the same as today.  Even people like the Abercrombie and GM CEO's will only show several hundred of thousands on the W-2.  It's ALL about the ISO!!  (Incentive Stock Option)

It's those sticky little points like the "tricks" that Red mentioned (ISO is one) that make such a grotesque mockery of taxation in this country.  It's all about the tricks and games.  If those little games weren't played, there would be no deficit.  There would be no debt.  There would be much lower REAL tax rates across the board.  Wouldn't need a VAT.  No class warfare as it exists today.  There would be no Social Security crisis. 

And likely no pain of psoriasis!

But there would also be no special treatment for the rich.  It would cost them a little more - as a percentage.

And in the interest of attempting to prove the willingness to listen, I will ask again;  what system would be fair?  How would it be structured?  (Let it stay like it is, but give Guido a 100% deduction?)

[bokworker]

I have heard Warren Buffet make the claim about his income taxes and other "millionaires" claim they feel they should pay more in tax. I suppose I would aska couple of questions....

Warren, are you, or your CPA's pursuing any investment strategies where the primary benefit is lower or reduced taxation? If so, based on how you feel, why are you doing that?

Various wealthy that say they should pay more tax, same as Warren above but in addition, can you not write a check payable to the IRS so you feel better?

My take, close the damn loopholes that allow for an investment strategy where the primary benefit is tax savings. Using the tax code to encourage savings or investment in a particular sector or industry does nothing but cause a misallocation of capital that results in future economic dislocation. We have been on this road for so long that the solution will hurt but not doing it is like staying on a bad drug habit that you know will eventually kill you.

[Gaspar]

These are easy to answer.

Warren, are you, or your CPA's pursuing any investment strategies where the primary benefit is lower or reduced taxation? If so, based on how you feel, why are you doing that?

Last year Warren paid 17.7% in taxes on income.  He employs several strategies to shelter his income including sheltering money outside of the United States.

Various wealthy that say they should pay more tax, same as Warren above but in addition, can you not write a check payable to the IRS so you feel better?

Not a chance.  That would be foolish.  Basically what he is saying is "force me to pay more, and I will, but I will make more off of the resulting turmoil and market fluctuation anyway." 

Changes in the tax code cause vast fluctuations in the market and the valuation of companies.  Powerful, wealthy investors with the capital and resources to take advantage of these fluctuations make a lot of money from such changes.  We simply suffer, because the companies that are affected negatively are our employers.

The worst of these offenders are people like George Soros who made his fortune and continues to make vast amounts of money betting on currency values. They have become so powerful that when they open their mouths and make comments they can affect the world markets.  Economic upheaval and a loss of value in the US Dollar is how George Soros became a billionaire.  If he could affect that change again, I believe he would. 

[RecycleMichael]

The worst of these offenders are people like George Soros who made his fortune and continues to make vast amounts of money betting on currency values.

The entire stock market is gambling on values.

I think the worst offenders are the Koch Brothers (tea party puppeteers).

They are listed annually as one of the top ten polluters. They have been found guilty of dumping millions of gallons of pollutants into the Mississippi River and streams all over the country. Their pipeline have had as many as 300 major spills a year and last year they admitted guilt in 680 environmental violations. In 1999, they were found guilty of stealing oil from government and Indian lands and court records showed they lied about the oil purchases 24,000 times.

Lying, stealing and polluting should be the Koch Brothers slogan. 

[we vs us]

Various wealthy that say they should pay more tax, same as Warren above but in addition, can you not write a check payable to the IRS so you feel better?

This is the standard comeback, but (purposefully?) misunderstands Buffet's argument. Taxes work because everyone pays them regularly, not because one guy or gal donates a one time lump sum to the government.  He's not arguing that he, individually, should pay more.  He's arguing that he and other like him should pay more. It's a policy argument, not a personal "gee-I-feel-bad-because-I'm-sooo-stinking-rich" argument.

I know, I know . . . it's heresy amongst some of the conservative set to volunteer your cohort for MORE taxes, but that's what he (and others) are doing.

[we vs us]

Good reason to reduce economic inequality . . . more people with $$ means more people sharing the burden.

[Gaspar]

The entire stock market is gambling on values.

I think the worst offenders are the Koch Brothers (tea party puppeteers).

They are listed annually as one of the top ten polluters. They have been found guilty of dumping millions of gallons of pollutants into the Mississippi River and streams all over the country. Their pipeline have had as many as 300 major spills a year and last year they admitted guilt in 680 environmental violations. In 1999, they were found guilty of stealing oil from government and Indian lands and court records showed they lied about the oil purchases 24,000 times.

Lying, stealing and polluting should be the Koch Brothers slogan. 

We should tell the EPA and local organizations to stop giving them Environmental, health, and safety awards.  They won 185 of them last year.

[Gaspar]

Good reason to reduce economic inequality . . . more people with $$ means more people sharing the burden.

How do you do that?

[bokworker]

Good reason to reduce economic inequality . . . more people with $$ means more people sharing the burden.

And that we vs us is a completely different discussion. To what I think Gaspar's point is, I am not sure how we do it but I feel pretty strongly that the tax code is NOT how you reduce economic inequality. I would agree that income equality is a major issue for us. But rather than trying to tax your way to equality our time would be better spent on how indivduals are compensated. In other words, taxing comes after earning, the solution to this problem is with the earnings not the taxation.

[Gaspar]

I am not sure how we do it but I feel pretty strongly that the tax code is NOT how you reduce economic inequality.

+1

Get out of my head!