Logic and Taxes

[ackvil]

Almost all of your numbers are misleading. You correctly point out that you are talking about federal income taxes, but the numbers ignore federal "payroll taxes," i.e., Social Security (FICA) and Medicare. FICA taxes hit lower income people much harder than higher income people because there is a fairly low cutoff on the income that is taxed. The numbers also ignore gasoline and other federal taxes that are included in the purchase prices of various goods and the prices of services from businesses that pay such taxes. Those taxes also hit lower income people harder because they spend a much higher percentage of their incomes on goods and services. The numbers also ignore state and local taxes, largely sales taxes, which also hit poor people harder as a percentage of total income. Finally, those of us "lucky" enough to be footing the bill for federal income taxes on our wages and salaries pay a much higher rate than people who get large incomes from capital gains and dividends.

In my opinion, the high income folks were paying closer to their fair share in the 1990's, when the economy was doing well, rich folks were doing well, and jobs really were being created. The idea that low taxes on rich folks will create jobs has been disproven throughout the period of the current, extended, "temporary" Bush tax cuts.

I love the words "fair share" or "economic justice."

Some points that should be noted:

1. Dividends are taxed twice - once when the corporation earns it and again when it is paid out as a dividend. Isn't this enough to make it a "fair share."

2. Capital gains are applicable only to stocks held for more than one year. Anything less than one year is taxed at regular rates.

3. Capital losses are limited to only $3,000 on a joint return even if your capital loss is $100,000. Is this fair or "economic justice."

4. You don't see the difference in the amount of total tax the wealthy in income tax and what a "poor person" pays on gasoline? If people take advantage of roads, defense, etc. shouldn't they pay something?

5. A wealthy person who pays FICA, medicare, etc. taxes gets the same economic benefit that a person in a lesser income tax bracket pays. If you want that individual to pay more shouldn't he be entitled to more of a benefit? Or is this another form of income distribution cloaked in the words "economic justice."

6. If you change the capital gains rates and tax dividends even more where is the economic incentive to invest? When you invest you take a risk with your investment and you expect to get some gain for it. If the government continues to take more the wealthy will invest in tax free municipal bonds or as happened in other countries go to more tax friendly venues. Mr. Scruffy has hit the nail on the head. Keep on taxing these individuals and they will leave.

7. I hear some wealthy individuals who say they want to pay more taxes. Nothing is holding them back - they can do it if they want. For example, Warren Buffett made a huge contribution to the Bill Gates Foundation and then took a charitable deduction. He could have made the contribution without taking the tax deduction. However, when tax deduction for charitable contributions comes under the microscope, these are the first people to cry foul.

Unfortunately, many politicians, media types, and people of a particular political persuasion are victims of class envy: the hate the rich because they are not rich or use this issue for their own gain. It cracks me up when a union president talks about the wealthy - when they draw huge paychecks. For example:

• The president of the NEA made $397,721.
• The President of the S.E.I.U. was paid $306,388.
• The United Food and Commercial Workers Union paid its presdient $709,000 in 2004 and after a hue and cry over that sum paid its current president $360,737 in 2009.
• Jimmy Hoffa from the IBT was paid $362,869 in 2009.
• The American Federation of State, County, and Municipal Employees Union paid its president $479,328.
• The American Federation of Teachers paid Randi Weingarten $428.284.

But as for me my only envy is that I can't play basketball like Michael Jordan did, I can't hit a baseball as good as Pujols, or that I don't earn as much as Sean Penn even though my wife says I am a better actor and better looking than him!

 

[doug1066]

The 16th Amendment should be repealed and the Federal government should receive its income from property taxes, excise taxes and tariffs just as the Founding Fathers envisioned.

 

[bamafan64]

Even better (keep in mind we're talking about the hypothetical unscrupulous congressman version of me, not the real me).

Sorry, I didn't mean to insinuate that the real you is an unscrupulous congressman

..

 

[rajagra]

Count me as another who thinks taxing purchases of luxury items is the perfect tax.

Essential purchases like food shouldn't be taxed.
You shouldn't be taxed just for existing (poll tax/council tax).
You shouldn't be taxed just for having posessions or savings or a home. Taxes like that are designed to drag people into poverty and wage slavery.
Tax on income is messy to calculate and set up fairly. Why bother when you can just transfer the process to luxury purchase tax, which 'automagically' shifts the tax burden to those who can afford it?

 

[BigDawg]

"And almost all working poor already live paycheck to paycheck. Me and both of my parents (who are both attorneys) are living check-to-check, barely able to afford groceries in between paychecks."

Maybe your parents should sell a BMW or the vacation home. I find it very hard to believe two attorneys are living paycheck to paycheck, seeing how much my family pays to our attorney each year.

This sounds like a rant from a person who was raised in an upper middle class family and is pissed because the world was not handed to him.

My father has been an attorney since the 70's, and recently got fired from his job a few years ago. My mother was only practicing for a few years before she wasn't able to work anymore due to health and physical problems. I won't lie and say that I wasn't spoiled when I was younger. But now my dad has been looking for a job since he got a fired, and not even as an attorney, because most firms do not want to pay him for all of his experience, and end up hiring a young person just out of law school. My dad is being paid social security now that he retired, and my mom is being paid disability. Combined they make 30K a year or less now. Back in the 90's, my dad was making 100K plus a year. Now between the three of us, I've got 5 dollars in my pocket and my mom and dad are in the same boat as I am now.

The point of this article is to get people to realize that the rich need to be taxed more than they are now. And as far as me talking about how rich people sit on their money and a celebrity buying a 25,000 dollar pair of sunglasses: Both of these reasons were to say that the money isn't being used correctly. No one needs a pair of sunglasses that expensive. And when you make hundreds of thousands of dollars a year or more, than you need to be taxed more.

My family and I have a large range of extended family, and because we were the rich ones at the time, they all called to us for help, and we would answer. We never had BMW's. We never had a vacation house. We had a 4 bedroom, single story, in the suburbs.

 

[rajagra]

The point of this article is to get people to realize that the rich need to be taxed more than they are now.

They don't need that. You want that. You might possibly argue that society needs it. But to provide a decent argument you need to be precise.
This isn't specifically aimed at you, but it seems that everyone demanding this kind of thing falls into the same trap.

 

[bamafan64]

The point of this article is to get people to realize that the rich need to be taxed more than they are now. And as far as me talking about how rich people sit on their money and a celebrity buying a 25,000 dollar pair of sunglasses: Both of these reasons were to say that the money isn't being used correctly. No one needs a pair of sunglasses that expensive. And when you make hundreds of thousands of dollars a year or more, than you need to be taxed more.

More tax dollars with this government=more tax money wasted. Every week there are new allegations of stimulus money wasted. It will not go where you think it will. Also, when a person earns a dollar, it is up to that person to spend it how they wish. Having the government decide how much money we need and how we spend it will be the end of the Republic, if we aren't already there.

 

[mmack66]

I hope Phil is doing okay. 2 active political threads can't be good on the old diastolic/systolic.

 

[BigDawg]

More tax dollars with this government=more tax money wasted. Every week there are new allegations of stimulus money wasted. It will not go where you think it will. Also, when a person earns a dollar, it is up to that person to spend it how they wish. Having the government decide how much money we need and how we spend it will be the end of the Republic, if we aren't already there.

Watch this video and tell me that your entitled to every dollar you earn.

 

[mmack66]

Obviously folks can't keep all of their money. There has to be some form of taxation if we are to exist as a nation.

Basing your tax burden on the amount of money you make is as dumb as tying healthcare to your job.

 

[jazzman]

I love the words "fair share" or "economic justice."

Some points that should be noted:

1. Dividends are taxed twice - once when the corporation earns it and again when it is paid out as a dividend. Isn't this enough to make it a "fair share."

2. Capital gains are applicable only to stocks held for more than one year. Anything less than one year is taxed at regular rates.

3. Capital losses are limited to only $3,000 on a joint return even if your capital loss is $100,000. Is this fair or "economic justice."

4. You don't see the difference in the amount of total tax the wealthy in income tax and what a "poor person" pays on gasoline? If people take advantage of roads, defense, etc. shouldn't they pay something?

5. A wealthy person who pays FICA, medicare, etc. taxes gets the same economic benefit that a person in a lesser income tax bracket pays. If you want that individual to pay more shouldn't he be entitled to more of a benefit? Or is this another form of income distribution cloaked in the words "economic justice."

6. If you change the capital gains rates and tax dividends even more where is the economic incentive to invest? When you invest you take a risk with your investment and you expect to get some gain for it. If the government continues to take more the wealthy will invest in tax free municipal bonds or as happened in other countries go to more tax friendly venues. Mr. Scruffy has hit the nail on the head. Keep on taxing these individuals and they will leave.

7. I hear some wealthy individuals who say they want to pay more taxes. Nothing is holding them back - they can do it if they want. For example, Warren Buffett made a huge contribution to the Bill Gates Foundation and then took a charitable deduction. He could have made the contribution without taking the tax deduction. However, when tax deduction for charitable contributions comes under the microscope, these are the first people to cry foul.

Unfortunately, many politicians, media types, and people of a particular political persuasion are victims of class envy: the hate the rich because they are not rich or use this issue for their own gain. It cracks me up when a union president talks about the wealthy - when they draw huge paychecks. For example:

• The president of the NEA made $397,721.
• The President of the S.E.I.U. was paid $306,388.
• The United Food and Commercial Workers Union paid its presdient $709,000 in 2004 and after a hue and cry over that sum paid its current president $360,737 in 2009.
• Jimmy Hoffa from the IBT was paid $362,869 in 2009.
• The American Federation of State, County, and Municipal Employees Union paid its president $479,328.
• The American Federation of Teachers paid Randi Weingarten $428.284.

But as for me my only envy is that I can't play basketball like Michael Jordan did, I can't hit a baseball as good as Pujols, or that I don't earn as much as Sean Penn even though my wife says I am a better actor and better looking than him!

Thanks for changing the subject from the question of whether 47% of the people don't pay federal taxes. They do.

You raise some interesting points. I simply disagree that eliminating all federal income taxes on dividends would stimulate the economy or add fairness to the system. The current, lower, rate on dividends isn't preventing people from investing, and the unfairness of taxing wages while not taxing dividends seems plain.

As for the salaries paid to union presidents, they are in line with those of other officers of non-profit organizations of similar sizes. They are chump change in comparison to officers' salaries in profit-making corporations of similar sizes, and they are so small as to be meaningless in the context of current controversies. The members who voluntarily pay dues can vote them out of office much more easily than a small investor in a publicly traded corporation. Closely held corporations, some of which are quite large, don't have to bother with all that democracy stuff.

 

[ackvil]

Thanks for changing the subject from the question of whether 47% of the people don't pay federal taxes. They do.

You raise some interesting points. I simply disagree that eliminating all federal income taxes on dividends would stimulate the economy or add fairness to the system. The current, lower, rate on dividends isn't preventing people from investing, and the unfairness of taxing wages while not taxing dividends seems plain.

As for the salaries paid to union presidents, they are in line with those of other officers of non-profit organizations of similar sizes. They are chump change in comparison to officers' salaries in profit-making corporations of similar sizes, and they are so small as to be meaningless in the context of current controversies. The members who voluntarily pay dues can vote them out of office much more easily than a small investor in a publicly traded corporation. Closely held corporations, some of which are quite large, don't have to bother with all that democracy stuff.

You are not correct about taxes on dividends. From the IRS: "Ordinary dividends are the most common type of distribution from a corporation. They are paid out of the earnings and profits of the corporation. Ordinary dividends are taxable as ordinary income unless they are qualified dividends. Qualified dividends are ordinary dividends that meet the requirements to be taxed as net capital gains."

Qualified dividends usually come from mutual funds and result when the mutual fund makes a capital gain and distributes that capital gain to individuals in the form of a dividend. That dividend is a qualified dividend and has the same tax rate as a capital gain. Seems "fair" to me.

Where are you getting your information about dividends not being taxed at all? As I said, dividends are taxed TWICE. Once as corporate profits and again as income to the individual. That doesn't fit my concept as "economic justice." Nor does my sense of "justice" limit my ability to claim capital losses to $3,000 when they are far in excess of that.

IMO, it is naive to think any union member can raise enough money to vote out a union officer. If you really believe this, then I am relatively confident you never attended a union meeting. And for your information over the years I belonged to two different unions and had a first hand look at union "democracy" in action. If you think politicians are entrenched when they reach office, you have seen nothing when it comes to union officers. Further, I am also glad to hear that you think $400,000 to $700,000 is chump change to you.

My point was that 47% of the nation pays no income taxes. The wealthy get the same amount of benefits under FICA or medicare as anyone who pays less into the system. I guess my concept of "fairness" differs from yours. You believe that because 47% of the population pay a gas tax, into FICA, and social security - for which they get a benefit- they should be excused from paying any income taxes.

The largest investors in large corporations are mutual funds and institutions. If they think a corporate officer is not getting results for what they are paid, they do something about it.

I don't understand your point about a closely held corporation. If anything there is more democracy among the holders of a closely held corporation than any other organization. Under almost all closely held corps, a majority or super majority of shareholders must vote for any significant proposals.

 

[TonyH]

They are chump change in comparison to officers' salaries in profit-making corporations of similar sizes, and they are so small as to be meaningless in the context of current controversies.

Further, I am also glad to hear that you think $400,000 to $700,000 is chump change to you.

Stupid context, getting in the way of a perfectly good talking point.

 

[jazzman]

You are not correct about taxes on dividends. From the IRS: "Ordinary dividends are the most common type of distribution from a corporation. They are paid out of the earnings and profits of the corporation. Ordinary dividends are taxable as ordinary income unless they are qualified dividends. Qualified dividends are ordinary dividends that meet the requirements to be taxed as net capital gains."

Qualified dividends usually come from mutual funds and result when the mutual fund makes a capital gain and distributes that capital gain to individuals in the form of a dividend. That dividend is a qualified dividend and has the same tax rate as a capital gain. Seems "fair" to me.

Where are you getting your information about dividends not being taxed at all? As I said, dividends are taxed TWICE. Once as corporate profits and again as income to the individual. That doesn't fit my concept as "economic justice." Nor does my sense of "justice" limit my ability to claim capital losses to $3,000 when they are far in excess of that.

IMO, it is naive to think any union member can raise enough money to vote out a union officer. If you really believe this, then I am relatively confident you never attended a union meeting. And for your information over the years I belonged to two different unions and had a first hand look at union "democracy" in action. If you think politicians are entrenched when they reach office, you have seen nothing when it comes to union officers. Further, I am also glad to hear that you think $400,000 to $700,000 is chump change to you.

My point was that 47% of the nation pays no income taxes. The wealthy get the same amount of benefits under FICA or medicare as anyone who pays less into the system. I guess my concept of "fairness" differs from yours. You believe that because 47% of the population pay a gas tax, into FICA, and social security - for which they get a benefit- they should be excused from paying any income taxes.

The largest investors in large corporations are mutual funds and institutions. If they think a corporate officer is not getting results for what they are paid, they do something about it.

I don't understand your point about a closely held corporation. If anything there is more democracy among the holders of a closely held corporation than any other organization. Under almost all closely held corps, a majority or super majority of shareholders must vote for any significant proposals.

Regarding taxing dividends: Several politicians are now proposing eliminating all federal income taxes on dividends. You did not say you favored that, so I apologize if I read more into it than you intended. Neither of us said that they are not taxed now. So it looks like we agree with each other that individuals should continue to pay federal income taxes on dividends.

Closely held corporations don't have to worry about internal democracy because the same small number of individuals who own the stock also hire the managers and serve on the boards. You are entitled to view that situation as being a great deal of democracy, but I don't, and my point was to contrast internal operations of unions (the subject you brought up) with internal operations of employers.

As for publicly traded corporations, they don't have to worry about democracy much because the votes are about as diluted as they are in political contests. When was the last time, if ever, that small shareholders were able to replace officers or reduce their salaries? It happens in local unions all the time, and international unions must follow a vast set of regulations regarding internal elections and disclosures of salaries and benefits. Organized reform efforts in large international union have happened, and they have had significant impacts. Each member gets a vote. For obvious reasons, each shareholder in a publicly traded corporation does not get the same vote. As for your "relative confidence" regarding my experience with unions, you are wrong.

P.S. Thanks, thubbard76. Couldn't have said it better.

 

[ackvil]

Regarding taxing dividends: Several politicians are now proposing eliminating all federal income taxes on dividends. You did not say you favored that, so I apologize if I read more into it than you intended. Neither of us said that they are not taxed now. So it looks like we agree with each other that individuals should continue to pay federal income taxes on dividends.

Closely held corporations don't have to worry about internal democracy because the same small number of individuals who own the stock also hire the managers and serve on the boards. You are entitled to view that situation as being a great deal of democracy, but I don't, and my point was to contrast internal operations of unions (the subject you brought up) with internal operations of employers.

As for publicly traded corporations, they don't have to worry about democracy much because the votes are about as diluted as they are in political contests. When was the last time, if ever, that small shareholders were able to replace officers or reduce their salaries? It happens in local unions all the time, and international unions must follow a vast set of regulations regarding internal elections and disclosures of salaries and benefits. Organized reform efforts in large international union have happened, and they have had significant impacts. Each member gets a vote. For obvious reasons, each shareholder in a publicly traded corporation does not get the same vote. As for your "relative confidence" regarding my experience with unions, you are wrong.

P.S. Thanks, thubbard76. Couldn't have said it better.

I guess we can respectfully disagree. It's a matter political philosophy. Obviously you are a liberal, I am conservative. Liberals will agree with you, conservatives with me.

Not to change the subject, but if you really want to stir up the pot -----what do you think of Feather blades?

 

[Doc4]

what's the over-under on this thread making it to the third page??

I think your poll needs to be expanded to provide a clearer relationship between the respondent's demographics and their opinion.

I'd have the choices be:

1. I'm rich and I believe the rich should be taxed more
2. I'm rich and I believe the rich should be taxed the same or less
3. I'm not rich and I believe the rich should be taxed more
4. I'm not rich and I believe the rich should be taxed the same or less
5. I'm rich and I believe those who aren't rich should be taxed more
6. I'm rich and I believe those who aren't rich should be taxes the same or less
7. I'm not rich and I believe those who aren't rich should be taxed more
8. I'm not rich and I believe those who aren't rich should be taxed the same or less
9. I believe everybody should be taxed more
10. I believe everybody should be taxed the same or less
11. I think Tabac smells like a babboon's armpit
12. Art is King.

FTFY.

(you should know better by now. )

about halfway through the second paragraph i had to stop.

I looked at how much the OP had written, and didn't even bother starting.

(Anyone wanting his message to change the world, needs to be able to put his message on a postcard.)

Wow. That's a lot of words just to say that you would like the rich to be taxed more than you.

See? someone agrees with me on the essay-length thing.

 

[bamafan64]

Watch this video and tell me that your entitled to every dollar you earn.

I meant that if you earn your money, you should spend it as you see fit. If a Hollywood star wants to buy an ungodly priced pair of sunglasses, it should be up to them and not anyone else. It doesn't mean it is wise or practical, but it's their money to spend. I don't see the hyperlink to the video you've posted, either.

 

[mdevine]

Count me as another who thinks taxing purchases of luxury items is the perfect tax.

Essential purchases like food shouldn't be taxed.
You shouldn't be taxed just for existing (poll tax/council tax).
You shouldn't be taxed just for having posessions or savings or a home. Taxes like that are designed to drag people into poverty and wage slavery.
Tax on income is messy to calculate and set up fairly. Why bother when you can just transfer the process to luxury purchase tax, which 'automagically' shifts the tax burden to those who can afford it?

I agree that some form of consumption tax makes sense. The devil, as always, is in the details. Who gets to determine what a "luxury" item is? Several years ago, I had a Haitian student spend time with me. He had a hard time empathizing with the "poor" patients that he saw in the clinic. To me, these people were those that I've always considered poor. I grew up in a "poor" neighborhood and certainly have no interest in returning there. He, on the other hand, had an entirely different perspective. Patients would complain to him about how bad they had it. His comment to me was that they had their own house, cars, television(s), air conditioning, Nintendo, cell phones etc. Few that he grew up with had any of this, and if they had, would have been thought of as "rich". He had little sympathy for those who chose not to work. Unfortunately, the clinic had a relatively large volume of patients trying to obtain disability, often for specious reasons. He, on the other hand, was working incredibly long hours and making many sacrifices to advance his career. When, at age 30, he finally has the training needed to make an admittedly good living, he was bothered by the fact that his money could be taken to maintain a standard of living for people that he felt didn't deserve it. I had to concede that he had a point, although I was able to get him to understand some of the benefits of our social safety net. In his opinion, our family responsibilities are largely ignored. I lost track of him and would love to know if he stayed here, whatever misgivings he had, or returned back to Haiti/

 

[Slim1023]

When JFK took office in 1961, the highest marginal tax rate was 90%. It's 35% now.

That being said one of my instructors always tells us (I'm a financial planning major) that there are 2 tax codes: one for the informed, and one for the uninformed.

 

[oc_in_fw]

11. I think Tabac smells like a babboon's armpit.

Okay, them there's fighting words