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should high-income earners get taxed more than everyone else? (pg. 4)
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| Moral Hazard |
| Income tax is a terrible system of taxation... far too complicated, too many loop-holes, etc. A far better system of taxation is consumption tax. Replacing income tax with consumption tax eliminates the problem of not being able to tax persons with undisclosed income, makes the system very straight forward, closes loop-holes, and is by nature a progressive tax as persons who earn higher incomes generally spend more money. I would imagine there needs to be a method of exempting people who earn a subsistance or below poverty income; however, this should not be too difficult to figure out. |
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| Silky Johnson |
| I miss being a student at tax time, oh man. :( |
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| Vector A |
| quote: | Originally posted by Moral Hazard
Income tax is a terrible system of taxation... far too complicated, too many loop-holes, etc. A far better system of taxation is consumption tax. Replacing income tax with consumption tax eliminates the problem of not being able to tax persons with undisclosed income, makes the system very straight forward, closes loop-holes, and is by nature a progressive tax as persons who earn higher incomes generally spend more money. |
The term "progressive" typically means an increasing rate, not just an increasing amount. People who earn more generally do not spend a higher *percentage* of their income -- just the opposite. So a consumption tax would not be progressive with respect to income at all, and would in most cases be regressive. |
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| DJ RANN |
| quote: | Originally posted by Vector A
The term "progressive" typically means an increasing rate, not just an increasing amount. People who earn more generally do not spend a higher *percentage* of their income -- just the opposite. So a consumption tax would not be progressive with respect to income at all, and would in most cases be regressive. |
Very good point. It would also be incredibly easy, more so than income, to hide the real figure of what you spend or "consume".
Does everyone realize that all the recent fuss about the taxes going up, was simply a change of 3.9% for people who earn more than $400,000 a year?
And it going up to a *shock*horror* 39.6% makes it the lowest, top marginal rate in the developed world. You could raise it another 10% and it still wouldn't mean a mass exodus of people. They'd be running to any other country that has the same if not higher taxes.
If anyone is up for a long-ish read this NY'er piece about Eric Cantor articulates where the current financial policies have gone so badly wrong and why fiscal conservatism, at least the brand we have now, along with trickledown economics is doomed.
http://www.newyorker.com/reporting/...a#ixzz2MQ4mHDrq |
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| Moral Hazard |
| quote: | Originally posted by DJ RANN
Very good point. It would also be incredibly easy, more so than income, to hide the real figure of what you spend or "consume". |
I agree, Vector had a good point; however, that is why I stated the very poor would need to be exempt. I am confused by your post though. How would it be easier to hide your consumption than your income. We're talking sales tax here... it would be tacked onto everything one purchases (perhaps excluding certain grociery items and other necessities like heating fuel, etc). If you're charging the tax at the register (sort of speak) it is way more difficult to avoid the tax than say setting up tax shelters or incorporating and reporting your personal income as dividends, no? |
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| DJ RANN |
| quote: | Originally posted by Moral Hazard
I agree, Vector had a good point; however, that is why I stated the very poor would need to be exempt. I am confused by your post though. How would it be easier to hide your consumption than your income. We're talking sales tax here... it would be tacked onto everything one purchases (perhaps excluding certain grociery items and other necessities like heating fuel, etc). If you're charging the tax at the register (sort of speak) it is way more difficult to avoid the tax than say setting up tax shelters or incorporating and reporting your personal income as dividends, no? |
There's a million ways to hide consumption (which I'll get in to), and the problem with your idea is that it would shift the tax burden even moreso to the consumer or individual, and unfortunately poor or at least normal earners are the ones who suffer in these instances, because they can't afford expensive CPA's and financial advisers to get around it, unlike the rich (in the same way wealthy people now can avoid taxes etc).
We already have sales tax (and fuel tax and gov surcharges etc etc etc), and there is evidence to suggest that beyond a certain point it does actually affect spending and negatively harms the economy. I know whenever I go back to the UK, I really curb my shopping on the things I can't claim the VAT back on as 21% is a bitter chunk of change out of my pocket.
The heavy consumption tax model also massively benefits, and even encourages, businesses and people to circumvent sales tax. It heavily benefits cash only trading and money laundering as they never report and this in turn encourages grey or black markets to thrive which opens up another whole can of worms. It's incredibly difficult to regulate especially with complex organizations and in that respect income/earning/capital gains tax is far easier to regulate and enforce.
Sure, I think there should be a sales tax (as we already have) but as a general replacement for income tax? No. It's also still unfair in one respect; the poor or middle earners would still have to pay it as a flat % fee and proportionately to the rich another 10% on goods is nothing, especially as they could find ways to avoid the tax (buying through companies that are exempt, importing good from othr countries etc).
The problem is not the idea of income tax;
At the moment our tax system is biased towards burden on the citizen. GE, a multi-billion dollar company have managed to pay zero taxes for several years by smart accounting, loopholes and tax incentives, because simply put, they can afford to hire an army of CPA's and lawyers.
The average employee can not, so they get ed.
Same thing goes with the very wealthy. I know one businessman that runs one of his companies at a loss on purpose, so he can offset all his other earnings, as that business has all sorts of weird write offs, much more than his other profitable businesses. Again, he already takes full advantage of buying things through this company to avoid sale tax so your idea of consumption tax would benefit him even more.
The problem is the loop holes & deductions and the fact that tax is not applied to overall income. Why you or I pay double the tax rate of someone like Mitt Romney is inexcusable.
The only sensible model (and I have no idea why people have such a hard time grasping this) is that people that earn more can afford to pay more and those that earn less should have less burden. |
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| Nrg2Nfinit |
| quote: | Originally posted by DJ RANN
The only sensible model (and I have no idea why people have such a hard time grasping this) is that people that earn more can afford to pay more and those that earn less should have less burden. |
they already do pay more. you just believe that they should be taxed at a higher rate.
mit romney pays much more tax in 1 year than a majority of people will probably pay in their lifetime.
1.94 MILLION in 2011
That was just 1 year.
you make investments, take capital losses, make donations you better damn right get some tax deductions.
I completely disagree with taxing investments thoruhg the nose. Especially since a majority of investors do not have much to contribute to the markets, you're going to nail them with normal marginal brackets? I'd say investing at that point and might as well the economy. |
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| DJ RANN |
| quote: | Originally posted by Nrg2Nfinit
they already do pay more. you just believe that they should be taxed at a higher rate.
mit romney pays much more tax in 1 year than a majority of people will probably pay in their lifetime.
1.94 MILLION in 2011
That was just 1 year.
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HE MADE $42,000,000 THAT YEAR!
He paid an unbelievably low rate of just 13% tax. That's not "more:. That's less than you or I pay relative to our income.
You're doing that annoying republicVnt thing of repeating a fallacy in the hopes that it comes true.
| quote: | Originally posted by Nrg2Nfinit
you make investments, take capital losses, make donations you better damn right get some tax deductions.
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Sure capital losses. Sure deductions for investing. Even Donations (although I think only about 5% of organizations that receive charity status should actually qualify but that's a different matter.
But let's stop that myth right here - when you understand his tax returns, you'll see he's not shaving his tax rate with donations and capital losses.
He works the system by making sure his earnings are 95% capital gains which is taxed at an incredulously low 15% before deductions.
He then uses a bunch of loopholes, offshore transactions and profit hiding to knock another 2% off that.
So tell me why, when we both earn six figures, we pay higher taxes than someone earning eight figures?
It's honestly bizarre that people like you think it's OK for people that earn this much to pay such a little relative amount. And bear in mind that $42,000,000 (and note I'm writing out all the digits to remind you just how ing big that number is) is the official figure. That does not include the offshore assets he has in the caymens (which is legally only allowed for foreign (non US) investors yet he somehow gets to keep it) or the swiss accounts which to this day have never been revealed. And again, that's only the secret stuff we were allowed to know about.
| quote: | Originally posted by Nrg2Nfinit
I completely disagree with taxing investments thoruhg the nose. Especially since a majority of investors do not have much to contribute to the markets, you're going to nail them with normal marginal brackets? I'd say investing at that point and might as well the economy. |
If this economic downturn taught us anything, it's that investors do all for the market anyway. They drove the economy off a cliff with terrible investment, and then they couldn't "invest" us out of it. Instead they went running to the government for a subsidy. Even now, investors, financial insitutions and major companies are sitting on more cash than ever before (which is actually a good thing), so lets not pretend that investors drive the market. They feed off the market and make money from it.
It's not a good idea to tax investments themselves, but gains of which? most certainly. You make money from them. Ridiculous sums if done right, why would you not pay tax on it of that is how you earn?
Do people stop going to work because they have to pay tax? |
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| Nrg2Nfinit |
| quote: | Originally posted by DJ RANN
HE MADE $42,000,000 THAT YEAR!
He paid an unbelievably low rate of just 13% tax. That's not "more:. That's less than you or I pay relative to our income.
You're doing that annoying republicVnt thing of repeating a fallacy in the hopes that it comes true.
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I don't think you give enough weight to a dollar being a dollar.
He made that dollar fair and square AND he is contributing more money towards taxation than over 130 people making 50,000 dollars lets say on an average tax rate of 30%
130 ing people! Now sure that marginal rate seems low, but if all his money is comming from investments that's fair.
If you did the same thing with less money you as well would be paying an even lower rate than you currently pay.
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Sure capital losses. Sure deductions for investing. Even Donations (although I think only about 5% of organizations that receive charity status should actually qualify but that's a different matter.
But let's stop that myth right here - when you understand his tax returns, you'll see he's not shaving his tax rate with donations and capital losses.
He works the system by making sure his earnings are 95% capital gains which is taxed at an incredulously low 15% before deductions. |
so why cry about it? why don't you do the same thing. See how easy it is to make your earnings 95% capital gains. Try to make them even 10%; and you'll realize the necessity of having investments taxed at a low rate.
We have the right idea in canada where we can actually have accounts which we can invest TAX FREE.
thats right. I can turn 25,000 to 50,000 to 100,000 without paying a dime in tax. Why does the canadian govt do this? because they want to stimulate the economy with investments.
If everyone just sat there and hoarded their money in their pocket, there would be no opportunity, no demand for goods and probably a load of deflation.
I think people need to stop harping on those that do well and make a good life for themselves and instead look at some of those people who truly are destroying the economy; Particularily those who are severely living beyond their means.
Those who declare bankrupcy and drain their debts on society; those who hold tens of thousands of dollars in credit card debts. Those who drain the welfare system buy the newest iphone and then complain about corporations and unfair taxrates slothing around in their burkenstocks.
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He then uses a bunch of loopholes, offshore transactions and profit hiding to knock another 2% off that.
So tell me why, when we both earn six figures, we pay higher taxes than someone earning eight figures?
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I don't earn six figures, i earn 5. And i can sometimes get an overall tax rate of less than 11 % (last year) that's my total taxes paid divided by my total income earned after investments as well (which was 30% of my annual income).
I can't live off investing income, but i'm damn happy that the government doesnt gouge me to with taxes to the point where i'm unable to diversify my income.
I also pay a mortgage which i don't write off, so the extra income comes in handy.
So there you have it. 2012 i paied less income tax than mitt romney; i don't see him complaining.
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It's honestly bizarre that people like you think it's OK for people that earn this much to pay such a little relative amount. And bear in mind that $42,000,000 (and note I'm writing out all the digits to remind you just how ing big that number is) is the official figure. That does not include the offshore assets he has in the caymens (which is legally only allowed for foreign (non US) investors yet he somehow gets to keep it) or the swiss accounts which to this day have never been revealed. And again, that's only the secret stuff we were allowed to know about.
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still more taxes than i paid (and i'm talking about RATE). and you talk about it like its some illegal . You can do that too, not to that extent, but you can do it. He EARNED that money, he didnt ing steal it.
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If this economic downturn taught us anything, it's that investors do all for the market anyway. They drove the economy off a cliff with terrible investment, and then they couldn't "invest" us out of it. Instead they went running to the government for a subsidy. Even now, investors, financial insitutions and major companies are sitting on more cash than ever before (which is actually a good thing), so lets not pretend that investors drive the market. They feed off the market and make money from it.
It's not a good idea to tax investments themselves, but gains of which? most certainly. You make money from them. Ridiculous sums if done right, why would you not pay tax on it of that is how you earn?
Do people stop going to work because they have to pay tax? |
The mortgage holders who are partially the victims are also to blame for the downturn (Don't forget that). You are ing leveraging yourlself to with your house thinking that it can only go up in value? Thats like thinking the stock market only goes up. Your house is 1 big ing stock that you live in. No more no less.
Then when the going gets tough and your mortgage is worth more than hte value of the house - you default? Well thank you very much; had i knew what i ing knew now then i would have shorted the ing dow all the way to 7k. back in 08
anyways a bit of a rant here. Just want to vocalize that there are two sides to the story here. And the fact is that mitt romney still paid a load of taxes; more than that of 130 medium to high income earners combined.
Do i think we need some more regulation ? yes. Higher marginal tax rates? perhaps. Higher investment taxation? definitely not. |
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| Joss Weatherby |
There needs to be a significantly higher tax burden in the US for those making over a million a year in salary income.
Even more so there needs to be significantly higher taxes on capital gains over 500k to a million a year. There is no need to be making that much money as an individual or a family and capital gains is money that requires no direct labor (and I use that term broadly to include services) from the person receiving that income. It is money for money's sake and should be taxed at rates close to 80-90% on individuals.
I don't understand this obsession with hording money in this country. It boggles my mind. We could have so much more ing awesome stuff and a much more equitable and stable and wealthy middle class, that in turn could spend much more of their money on the goods and services that make the rich even more rich (or at least able to enjoy a significantly more easy life).
Government spending is the answer to economic doldrums and problems, austerity has NEVER worked. The proof is in the pudding and we have to many idiots who eat the Austrian economic tripe and follow cult leaders like Rothbard and crew.
Thank god Thatcher is dead, I hope she joins zombie Reagan on a quest to up whatever after life that probably isn't. |
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| Vivid Boy |
| quote: | Originally posted by Nrg2Nfinit
you make investments, take capital losses, make donations you better damn right get some tax deductions.
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100 percent agree. their spending is what fuels the ecnomony, not our 100 dollar purchase of an ipod. These are the guys that spend the money on physical capital and financial capital that are used to produce the goods and services that drive our economy. They should definitely get tax breaks aka incentives to do more of it. |
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