White House Proposes "Wealthy Tax" 2115
President Obama is proposing a new tax rate for people making over $1m a year. The new rate is part of a larger plan which seeks to bring in $1.5 trillion in new tax revenue and is sure to meet opposition in congress. From the article: "The core of the president's plan totals just more than $2 trillion in deficit reduction over 10 years. It combines the new taxes with $580 billion in cuts to mandatory benefit programs, including $248 billion from Medicare." GOP Rep. Paul Ryan of Wisconsin said, "Class warfare may make for really good politics but it makes for rotten economics."
Honest Question (Score:5, Interesting)
Once the wealth accumulates to the top only, how will the economy survive without spending by the middle and lower classes? Won't a lot of business just shutdown because people don't have money to spend?
Re:Honest Question (Score:5, Interesting)
I'm more worried that this taxes people on their way to becoming rich.
I'd rather they taxed those who were already rich and living off their savings/company. I'd rather tax those who are sitting on trust funds than those who are aggressively making lots of money, as they are quite likely to be the wealth creators rather than the fat cats doing nothing but sucking money out of the system.
Tax wealth not income, otherwise all you do is keep those who are already rich rich and make it harder for those who are up and coming to get somewhere.
But i doubt you'll get those in power supporting tax on wealth precisely because they know this, it is in their interest to raise the barrier to entry to the upper class.
Re:Honest Question (Score:4, Interesting)
Increased taxes for high income earners are *not* barricades to becoming rich. It's a recognition of the fact that you don't need $1M to survive.
A family of 4 earning $1M and paying $500k in taxes is still *very* rich. A family of 4 earning $22.5k/year (poverty line) who pays $1k in taxes, is technically *living in poverty* as their net income is below $22.5k. Heck, that family of 4 earning $1M could pay $750K in taxes and still go home with $250k in their pocket.
Once family income exceeds 10x the poverty line, they rest is just gravy. That money gets spent (if its not just horded, as is common) on trips overseas and fancy foreign vehicles that do very little to contribute to domestic jobs. There is a misconception that the rich are job creators. The real job creators are the middle class that can't afford lavish trips abroad or expensive goods manufactured offshore and instead spend their money closer to home.
Re:Honest Question (Score:5, Insightful)
How about a tax scale that accounts for the current unemployment rate? Higher unemployment = higher taxes for corporations and rich, lower unemployment is lower taxes for corporations and the rich. Hell of an incentive to create jobs.
Re:Honest Question (Score:5, Insightful)
Inflation may change all that very soon. Bernanke is dumping dollars on the market like there's no tomorrow...
Then why aren't either short or long term interest rates soaring? If there were even a sniff of inflation in the air, the interest rates should be going through the roof. Sadly, models and facts have this odd way of contradicting your morality-based economics.
Re:Honest Question (Score:5, Insightful)
Re: (Score:3)
I'm more worried that this taxes people on their way to becoming rich.
This is about people earning over a million per year.
Tax wealth not income
So I pay taxes on what I earn this year every single year afterwards? No, thanks. Property tax is possibly the most unfair there is.
For the record, I earn about median for the US, a "wealth tax" hits homeowners and renters.
Re: (Score:3)
"Property tax is possibly the most unfair there is."
See there I disagree.
If any tax can be fair then it exists to either provide for common services (such as defence, road and law) or to provide social responsibility for a society (look after the sick, poor and otherwise disadvantaged). In the first case the costs scale with some function of population and land area, if you own a lot of land you need more roads. If you have an expensive property you'll more likely need to call out the police, etc. In the se
Re: (Score:3)
Tax wealth not income, otherwise all you do is keep those who are already rich rich and make it harder for those who are up and coming to get somewhere.
This exists. It commonly goes by the name "inflation". Businesses typically give their middle-class employees "inflationary" raises each year to retain their continued commitment of loyalty. Governments build inflationary increases into their social welfare programs to maintain a steady support for the lower classes they support. As a result, prices generally go up every year or three so low and middle class people can't actually buy more stuff. As a secondary result, any business owner sitting on a pi
Re:Honest Question (Score:5, Insightful)
What's happening right now is not unlike many third world countries where the rulers grab millions from foreign aid while the people live on a dollar a day. Most of those have a somewhat working economy, they just live in separate worlds where you buy and sell products and services to other equally poor people. I don't think we're heading for a permanent jobless economy, just one with much bigger class separations again with an overclass that can be even more lavish with servants and luxuries. Because their money work for them, it's still diverging even if they're spending big.
Re: (Score:3, Insightful)
Re:Honest Question (Score:5, Insightful)
I like hearing about how it is evil for companies to "hoard wealth" and then hearing from the same group how irresponsible companies are that didn't when they suffer an economic fall and don't have the reserves to survive without bailouts.
I save money wherever I can in case something happens such as job loss or other unforeseen hardships. My household includes my wife (who has MS and whose treatments cost a small fortune) and a 12 year old daughter and our household income nets less than 50,000 but I manage not to "easily" spend all my money.
Re: (Score:3)
I call bullshit on your bullshit.
The economy works only when money is flowing. Your end game scenario would have all the "rich" sitting on piles of cash and not spending it. At that point, it's worth less than a sack of warm manure. Money is made and spent. If it's not spent, it can't be made. You don't need a degree in economics to understand that.
Re: (Score:3)
I call bullshit. Wealth transferred to non earners is quickly spent, and usually ends up very quickly back in the hands of the wealthy and large corporations (and the government itself). The rich and corporations on the other hand, are known to hoard wealth, and send it out of the country respectively. Also, "non-earners" vs "earners" is bogus, people go back and fourth if you are measuring annually. Unless you are already rich....
Really? So is poor people who live in mansions, drive exotic, expensive autos, eat at fine restaurants and take vacations that don't involve loading up the station wagon? Wow! And here I thought these people were rich.
I always believed that wealthy people invested their money so that they might make more of it so they could buy more nice things. Who knew that they were living in $20/night hotels with all their cash stuffed into duffle bags stuffed under their beds.
Re:Honest Question (Score:5, Insightful)
1. Stay in school and at least get a H.S. degree.
2. DON'T have kids if you can't afford them. The cause of pregnancy is well known.
3. DON'T blame your problems on others.
And don't give me any crap about "disadvantages". See Herman Cain.
Your life is what you make of it.
Re: (Score:3, Insightful)
Transferring wealth from earners to non-earners just makes the economy contract as less money is put to accomplishing real work.
I have a sneaking suspicion that your definition of an "earner" would turn the stomach of any fair minded individual.
Re: (Score:3, Insightful)
To quote Ayn Rand in a manner neither she nor the Tea Party she's apparently taken over the role of economic authority for would probably like...
"Americans were the first to understand that wealth has to be created. The words 'to make money' hold the essence of human morality."
To put it simply, the fact you have money does not mean you created value represented by that money. Managers qua managers do not create wealth. Investors do not create wealth. Engineers create wealth, by multiplying the value of l
Yeah, class warfare. That's right. (Score:5, Insightful)
It is class warfare to increase tax rates in the highest income brackets to a level that is about half that of the 1950s http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#1913_-_2010 [wikipedia.org]. The current tax rate for the highest income brackets is 33%. In the 1950s and 1950s the highest tax rate was 91%. One can also argue that the proposed increased tax rate won't even restore the high tax rate to the same extent, since the historical tax rates were for income of at least $250,000, whereas this will apply to income of at least a million dollars but this would be slightly misleading since adjusting for inflation $250,000 in 1960 dollars is around a 2 million now. But even given that, the general point should be clear: This is far less than the historic tax rate during a time period that is often considered to be one of the most stable and prosperous.
The other problem with labels like class warfare is how much they miss the point of what actual class warfare is. If one wants to see actual class warfare look at the French Revolution where aristocrats and clergy got executed and this eventually spread to wealthy merchants. Or look at the Russian Revolution and the following years where people were punished and exiled for simply being farmers who owned their own land and equipment. That's class warfare. Voting to increase tax rates to levels well below historical levels is just regular economic policy. One can discuss whether such taxes are a good or bad thing, but it is pretty clear that such discussion isn't going to go very far when people like Ryan are using this sort of ridiculously inflammatory rhetoric.
Re:Yeah, class warfare. That's right. (Score:5, Insightful)
You're giving the phrase too much credit. The term "class warfare" is just an advertising slogan. It's what conservatives say in response to any program which might raise revenues on the upper class. It's not something that can be torn apart and dissected - it's just a phrase meant to evoke a gut response and get people to vote the other way. History means nothing to a slogan.
Re:Yeah, class warfare. That's right. (Score:5, Insightful)
The other problem with labels like class warfare is how much they miss the point of what actual class warfare is.
There's plenty class warfare going on, not just your extremes. Most people vote in interest of themselves and thus by extension their class, it's the wolf class and sheep class deciding what's for dinner. That the rich "shop around" for the biggest incentives and highest tax breaks is class warfare. Raising taxes on the rich saying "you can help pay too" is class warfare. Every time you talk about the burdens and benefits of living in society will run into this. And it's usually not a matter of what's right or wrong it's about power. The masses have strength in numbers, but the rich have strength in lobbyists and moving jobs. It's never going to be an evenly pitched battle because the tools are different, but it absolutely happens. All the time.
Re:Yeah, class warfare. That's right. (Score:4, Insightful)
Funny how class warfare is such a one way street to the right. For some reason it's never class warfare when "job creators" lobby federal and state officials to end all the ground gained by organized labor since the industrial revolution.
Ryan is ignorant of economic history (Score:5, Informative)
Remember how awful the economy was when Clinton was president? Eight horrible years of peace and prosperity, thank God that's long gone.
Going back as far as 1950, higher top marginal rates are (weakly) correlated with improved economic growth, not reduced economic growth ( http://golem.ph.utexas.edu/~distler/blog/archives/002279.html [utexas.edu] ).
Re:Ryan is ignorant of economic history (Score:4, Interesting)
That is the other side of the argument - if you raise taxes on high incomes sufficiently, you encourage re-investement and deferral of the income.
Whatchathink, /.ers?
i will gladly (Score:3)
Class warfare...makes for rotten economics (Score:5, Interesting)
Yes, that's true. However, I wonder why this comment is usually directed at the working classes, when they are the ones upon whom the warfare is being waged. The rich have been conducting class warfare in the US since the Reagan administration, and they are now beginning to reap what they have sown.
I now make more than twice what my father earned at the height of his career in the early 80's, but I have less actual purchasing power. Rotten economics indeed.
Military spending? (Score:5, Interesting)
Might it not be better just to cut say military spending in half? Nobody is going to invade the US, without coming home to a glass parking lot anyway, and all that money is just thrown down a hole. Yes military spending is to an extent recycled back into the economy, but surely we can come up with something more constructive to spend it on if one must spend that money?
The Fruit of Thirty Years (Score:4, Interesting)
For the past thirty years we have held up the image of the put upon rich person who would love to invest in the US but can't because of our terrible tax burden. So the tax code has been modified to take the burden off the most wealthy [our top tax rate used to be 50% now it is 35%]. We did this in hopes that the wealthy would let the rest of the economy have more. This has not happened. In fact, the money has become more concentrated at the top while wages have stagnated at the bottom and in the middle. Instead of investing in industry, the Giant Pool of Money at the Top has bought US debt [we don't owe our soul to the Chinese, we owe it to the wealthy] and, because T-bills have had lousy returns for a decade, the money also went to fuel speculative bubbles [including the global housing bubble].
In this situation, where the top earners [about 5% of the population] have over 85% of the wealth, to whine about horrible confiscatory tax and wave the class warfare banner is beyond absurd. In order to have class war you need to have class, is the GOP saying that we still have class in the democratic United States?
We've needed another tax bracket or two... (Score:5, Interesting)
...for a long time now. IIRC, the 250K top tax bracket dates back to almost the beginning of the income tax system, when 250K was legitimately rich, and the earner of 250K would likely be a millionaire due to cash reserves from earning that kind of money for years.
Nowadays, 250K is still a very, very good income, but inflation has curtailed its spending power significantly. New brackets every so often that account for inflation, or else a periodic adjustment of all brackets for inflation would probably be good for the country.
As far as those who want to argue that "job creators" in the form the of the wealthy wouldn't create jobs if their personal income were taxed higher, the simple solution would be to offer tax breaks for the demonstrable creation of jobs. This mainly would affect small companies where only a handful of people actually own the companies in question, as they could say, "I didn't take $XX salary because instead I reinvested $XX in the company for salaries for workers" with the ability to produce those figures from the payroll books...
Total Lack of Cognitive Dissonance (Score:5, Insightful)
For those of you who are going to dispute my point, here are some preemptive replies. First, I know that folks on the left do this shit all the time too. I remember Kerry's "flip flopping" helping cost him the 2004 election. But pointing to the other side and saying "See, they do the same reprehensible thing we do" does not actually make it okay. It's still downright disingenuous. My point is simple: How much money does it take to be rich? Because the conservatives in America have two different definitions that depend not on the amount income, but essentially on class. The fact that these same conservatives are the first to scream "Class Warfare!" at this kind of proposal is deliciously ironic and the whole thing would be fucking hilarious if the stakes weren't so high.
Reality check: to solve the long-term debt crisis, two things need to happen. Taxes need to go up, and spending needs to go down. Either side that says you can do one but not the other is living in some magical fairy-tale land where facts are superseded by what they wish were true.
Re:Total Lack of Cognitive Dissonance (Score:5, Insightful)
Small business (Score:5, Insightful)
The important thing is to spare small businesses from the tax increase. A lot of small businesses are either simple proprietorships/partnerships or LLCs, for which the profits are taxed as an addition to personal income. Proprietors and partners will pay these taxes from the cash on hand of the business, meaning that the business has fewer resources to expand and hire more employees.
So go ahead and tax the $20M CEOs and such, but try to avoid placing the additional burden on small businesses.
Re: (Score:3)
This.
I get the value of economies of scale with large corporations, but with technology in play, it isn't as big of an advantage as it used to be. We really should be investing in small to medium-sized businesses and have very few large corporations. The latter rarely do a good job of creating new technologies or really, new wealth. Up-and-coming businesses come up with the new ideas and generally are more efficient (because they have to be to survive). Of course, large companies have the ability to, sa
Re:Small business (Score:4, Insightful)
A Warren Buffet said himself (Score:3)
There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning
Cap Gains vs. Income (Score:5, Interesting)
In that light, creating a new, higher income tax bracket is unlikely to have quite the intended impact that many would like to see: having the ultra-wealthy pay at least as great a percentage of their annual income as taxes as their secretaries, minions, and housekeepers. Much as I prefer a simplified tax code, it seems to me that we may want to instead add this provision: If more than 50% of your adjusted gross income comes from long-term capital gains, then count it as ordinary income, because that's what it is to them.
Yes, some will find ways around that (and goodness knows the ultra-wealthy have tax planners aplenty), but it seems more equitable than what we have currently. Please don't trouble us with the strawman argument of "If the ultra-wealthy have their investments taxed so heavily, then they won't invest." What else are they going to do with all their extra money? Save it at ~0% interest?
Re:Cap Gains vs. Income (Score:4, Insightful)
Re:Cap Gains vs. Income (Score:5, Insightful)
That's only true for capital gains from dividends. Capital gains from changes in the share price are only taxed at 15%.
For this reason many companies do not make a profit. Instead they spend the money on either capital items or investments and pay $0 tax. These uses of the money increase the assets of the company, which is then reflected by a corresponding (sometimes even amplified) increase in the share price. If a stockholder then sells enough stock to make up the difference in price, they effectively pay themselves dividends at a total tax rate of 15%.
Personally, I think the best way to solve this is to make dividends a before-profit outlay for corporations, and then make all capital gains count as income. Of course, good luck getting something like that implemented...
still an income, not a wealth tax (Score:5, Insightful)
Note that this is still an income tax -- not a wealth tax. Those who are already wealthy can and will always game this such that they report little income, thereby preserving their wealth. If necessary, they'll just keep their money offshore.
If he had any sense, he'd offer an amnesty to the wealthy. Allow them to repatriate their funds from overseas at a reduced tax rate so that money comes back to the US. The money the treasury makes on that smaller percentage would still be more than the zero they get from it today.
Class warfare (Score:3, Insightful)
"Class warfare may make for really good politics but it makes for rotten economics."
Hey, that's actually true! Why didn't you shout out during the Bush administration?
Tax cuts for the rich, huge public deficit, enormous public debt, continued private indebting of the middle class, withering away of the public school system and other government systems that the American middle class and lower classes depend on...
Terrible acts of class war that lead to terrible economics, especially in the long term when the debt is going to be paid off, or alternatively when the US decides to default.
So you're right. Of course, if you don't want a class war the first thing to do is to remember to not start one.
Reflections of Paul Ryan's Notion of Class Warfare (Score:5, Informative)
Number of households in the United States filing tax returns: 140,494,127
Number of households in the United States filing tax returns with incomes of $1,000,000 or more: 236,883
Percentage of households in the United States filing tax returns with incomes of $1,000,000 or more: 0.19959471529%
Percentage of households in the United States filling tax returns with incomes of less than $1,000,000: 99.80040528471%
Number of people in the US living at or below the poverty line in 2001: 34,570,000
Number of people in the US living at or below the poverty line in 2010: 46,200,000
Percentage of US population living at or below the poverty line in 2001: 12.1%
Percentage of US population living at or below the poverty line in 2010: 15.1%
Of those living at or below the poverty line in 2010, the percentage that are 18 years old or younger: 35.5%
Of those living at or below the poverty line in 2010, the number that are 18 years old or younger: 16,401,000
Total number of people living in the United States, as of September 19, 2011: 312,204,000
Maximum number of people living in the United States who would be affected by President Obama’s proposal to impose a minimum tax rate on those earning more than $1 million a year : 450,000
Highest possible percentage of people living in the United States who would be affected by President Obama's proposal to impose a minimum tax rate on those earning more than $1 million a year: 0.144136526118%
Number of people in the United States who would not be affected by this tax increase: 311,754,000
Lowest possible percentage of people living in the United States who would not be affected by President Obama's proposal to impose a minimum tax rate on those earning more than $1 million a year: 99.855863473882%
All stats derived by me from Census.gov using 2010 and 2011 census data, and from IRS.gov data using 2009 data, the most recent year for which reporting, especially Adjusted Gross Income (AGI) information, was available.
The first person to invoke Census.gov or IRS.gov conspiracy theories will receive my 1st Annual Stannous Fedora Trophy. Please reply with your mailing address, so I'll know where to send this very special award.
Only Thing Being Taxed Here (Score:5, Insightful)
Goddamn Republicans beating the same fucking drum they've been beating for 10 years "Lower taxes and remove regulations so corporations can compete!" Ignoring the fact that that's what got us into this mess to begin with.
And Goddamn Democrats incapable of showing anything resembling leadership. Hook up that vagisil IV drip because they're just a bunch of vaginas.
Vote them out. Vote them all out. And keep doing it until we find some representatives who are more interested in solving the nation's problems than playing political games with American lives as the pieces.
We're in TWO WARS. (Score:5, Insightful)
Grover Norquist (Score:5, Insightful)
This bill is dead on arrival that the House, which is Republican controlled. Too many there have signed Grover Norquist's pledge to NEVER raise any taxes of any kind.
I'm sorry to say this, but the radicals are now in control. Just like the Taliban, they have an extreme ideology and will not compromise or make "common sense" decisions because they carry a radical philosophy.
As such, there is no longer any 'bargaining" going on. The bill will be flat out struck down or filibustered into oblivion. I'm not sure if you've noticed, but our Congress has passed almost no legislation of any kind since taking office 18 months ago. All they've done is argue.
This is the Congress that campaigned on a platform of "jobs", came in and immediately wasted two days reading the Constitution, then tried to repeal Obamacare and abortion rights, and since then, hasn't done anything except destroy the nation's credit rating.
Good luck getting this through.
WTF (Score:4, Funny)
Why do people that aren't rich defend people that are? The problem is very simple, just about everyone reading this is not rich. If we would like to live better lives, and build small and medium businesses we need capitol to do this. If the rich have it all, we can't. The only way for our lives to get better is if the rich have less of the money and we have more. It really is just that simple. We can't have more unless the rich have less!
Now, for those that are not rich defending policies that benefit the rich at your expense? WTF? Do you think the rich will read your post and like you? This is like President Obama pandering to the Republicans. It's just dumb. You aren't one of the club.
George Carlin said it best: http://www.youtube.com/watch?v=Dpcd0woY2KY [youtube.com]
What?? (Score:4, Insightful)
GOP Rep. Paul Ryan of Wisconsin said, "Class warfare may make for really good politics but it makes for rotten economics."
The GOP has been waging a class war on the middle class for over a decade and guess what, the middle class lost. Since 2000 the median income level has been dropping, while the top 1% of income earners has seen a 20% increase. The shift of income from the middle class to the most wealthy has already taken place. Now the GOP wants to assure the top earners do not lose what they stole from the middle class. It is the height of unmitigated gall for Rep. Ryan to use the "class warfare" meme.
GDP v. Gini (Score:5, Interesting)
GOP Rep. Paul Ryan of Wisconsin said, "Class warfare may make for really good politics but it makes for rotten economics."
Class warfare, in the strict sense of guns and bombs, is -- like all civil war -- bad for the economy. Labor resources spending time shooting at each other, and getting shot, is potential productivity lost. Similarly, spending time on arguments that have no basis in reality is a waste of resources. There is evidence, however, that reducing the Gini (a measure of income disparity -- higher Gini means higher disparity) in the United States would increase the GDP growth rate. Here is one example set of data:
http://beach.traxel.com/img/gdp-gini-4.png [traxel.com]
America's Gini has been rising steadily since the early 1970's (it started before Reagan, because the tax brackets didn't keep up with the rapid inflation resulting from the oil embargo). Our Gini is now high enough to make our PPP (GDP per capita) an outlier. Most nations with our level of income disparity are third world nations. Only Hong Kong and SIngapore -- hybrid economies which mix successful free market economies with the stark poverty resulting from communism -- are in the first world ballpark and have Ginis as high as ours.
One possible reason is this: In any economic system there is an optimal market price to pay for any resource. If that economic system overpays for some resource or class of resources, it will operate less efficiently. There may be systemic biases in place which cause us to pay more for the labor (and/or capital lending) of our wealthy than their labor (and/or capital lending) is worth. Of course the chart above is insufficient to show the causal relationship, but it would explain why our PPP (GDP per capita) growth rate has fallen during the same period that our Gini has been increasing (I have more charts that show the temporal relationship, but they are not yet ready for publication).
If, in fact, the increasing Gini is a cause of falling PPP, then increasing the taxation on upper income brackets would increase the GDP growth rate. If that is the case, and assuming one believes (as I do) that the ideal free market is GDP maximizing, there is only one possible explanation: some degree of progressive taxation actually increases the accuracy of our approximation of the free market, by offsetting a systemic bias.
Disagree? Good, I'd love to see your empirical evidence. Show me the data.
Class warfare? (Score:5, Insightful)
I still think the ol' U S of A is the greatest country in the world, and I feel fortunate to have been born here and be doing alright, but I recognize that a lot of things are broken. People here enjoy a lot of freedom, but if we are as civilized as we claim, don't you think we can still do better? If you make a million dollars a year, you should be doing just fine, and you can afford to pay a little bit more to fix America. Stop whining, since with all your tax breaks and loopholes you don't truly pay a higher rate than those of us who only "earn" $30,000 or $60,000. You will need a strong middle class in the future or it won't be long before our nation's time as the world superpower comes to a close, which will be bad for all of us. If we maintain the status quo, with the rich getting richer, the poor staying poor, and the middle class vanishing, your wealth will evaporate in time, floating away overseas, or we'll rise up and take it from you. Rich people have a chance to fix things now before it is too late, if they are not so greedy as to insist on hoarding every last nickel now. The status quo is class warfare, and prolonged class warfare is our road to doom.
Vote for me. I'll work to keep wealthy people wealthy, by convincing them to invest in our future, which will also benefit all in our society. You can keep the power, if you choose to, but you can't have all of everything.
Re:Class warfare? (Score:5, Interesting)
Eating Ramen 3 times a day in a bad part of the neighborhood with no car, etc. etc. is not really "living."
If you ran up CC debt, you *didn't* make it through college without borrowing.
Everyone knows what the American Dream is and that it's unobtainable by the majority (at all, or without major financial consequences), stop being a moron.
Re:Tax planning and rich people (Score:5, Insightful)
Who cares how 'large' the incentive is? There will always be incentive for people to cheat to keep their money. It's our patriotic duty to make sure they pay their fair share for this country. This is a step in that direction.
Re:Tax planning and rich people (Score:5, Insightful)
Keeping the money that you earned and worked for is cheat
BWAHAHAHAHAHAH. LOL.
The vast majority of this income in this range is "Unearned Income." People aren't earning nor working for multi-million dollar annual incomes, they are enjoying the benefits of others work by collecting dividens and stock profits.
-Rick
Re:Tax planning and rich people (Score:4, Insightful)
Precisely.
Republicans have always been the party of class warfare - the rich beating up on the poor. Every time the Republicans get into power they want "tax cuts" that they say will "spur economic growth." NEVER in history has this actually worked as they claim it did - voodoo economics was terrible.
Paul Ryan and the Republican liars scream about Reagan "cutting taxes"... they always forget that Reagan RAISED taxes again in 1983 and 1986 when the Democrats in congress demanded it, because it was evident that keeping taxes low just increased the deficit and the debt.
Re:Tax planning and rich people (Score:4, Informative)
Um, Clinton had a dot-com and post-soviet bubble. Not to mention the beginnings of the housing bubble. Not to mention his policies were much more moderate than Obama's and the military at the time had a lot more that could be cut without utterly destroying it. Not to mention that his insistence for SigInt over HumInt(because SigInt is cheaper and looks flashier in sound bites) was probably what allowed both the 9/11 attackers to get through and the crap intel from Iraq.
As for Romney, a republican in Mass. with both houses controlled by Dems, who is by far the Republican equivalent of the most right Blue Dog democrats, is a really fucking stupid appeal to authority.
As for the supposed war debt being off the books, how big of an idiot are you? While the wars were never in the projected totals for defense at the start of the year, at the end of each year their cost was certainly accounted for. The biggest expense signed over to Obama was the first stimulus and bank bailouts.
Re:Tax planning and rich people (Score:4, Insightful)
While the rich "work", it's mainly having money work for them.
Even if everybody had the means to and greed to get a face job, tan, tailored suit and the right club memberships, and enough money to invest after that, society would fall apart if everybody were investors and canape pushers, and no-one were workers. Reward skill, not greed.
Re:Tax planning and rich people (Score:5, Insightful)
You had some resources, clearly, to fall back on when you failed. You may diminish them or deny them here, to defend your ideology. But whenever one pokes at these Horatio Alger stories, one finds a network of social capital behind it: family members, spouses, friends, couches, investors taking irrational leaps of faith, etc.
And most importantly, you have the infrastructure of an entire society which makes the kind of business you have possible. You have an educated populace that can read; you have basic public health and transportation infrastructure; you have an economic system that produces money, protects investments, and so on. Without these things, you would be lucky to make it as a subsistence farmer. You are just so accustomed to the things that make your business possible - and will cover your ass if it fails (inc. limited liability) - that you take them as if they were part of the natural order.
Re:Tax planning and rich people (Score:5, Insightful)
Re:Tax planning and rich people (Score:5, Insightful)
No, using public services to make money, then hiding your earnings so that you don't have to pay for those public services is CHEATING. EVERYONE in this country benefits from tax-funded services. But the rich seem to think that because they make millions, they don't have to contribute.
Let's put it this way: I am one car on the road, and I have to pay taxes for road upkeep. Mr. Millionaire has a fleet of 1000 semi trucks to deliver his product, but he doesn't have to pay for road upkeep? Does that seem fair to you?
Re:Tax planning and rich people (Score:5, Insightful)
No, using public services to make money, then hiding your earnings so that you don't have to pay for those public services is CHEATING.
Then why does the US tax every dollar you make overseas, even if you are overseas for the entire year? If I live in Thailand the entire year and earn my salary over there, I still have to pay US taxes on it - even though I didn't use any US public services. It's not about paying for what you use - it's about paying for what Government wants.
Let's put it this way: I am one car on the road, and I have to pay taxes for road upkeep. Mr. Millionaire has a fleet of 1000 semi trucks to deliver his product, but he doesn't have to pay for road upkeep? Does that seem fair to you?
Mr. Millionaire's company probably pays those taxes on those 1000 trucks. Unless you're suggesting he personally owns them? Do those trucks pay fuel taxes, excise taxes, and State registration taxes? How are they not paying for road upkeep - they pay fuel costs...
Re:Tax planning and rich people (Score:4, Informative)
Actually, Mr. Millionaire probably has the corporation chartered in Scotland, where there is no taxes on business. Therefore all earnings made by the trucks are taxed at scotland's rate of 0%. So no he probably doesn't pay taxes on those trucks.
In the US, if you earn the dollar here then you get to pay taxes here. Now, on those trucks registered in Scotland, he doesn't have to pay US taxes on income earned overseas - but he would if those trucks were registered in the US and used in Scotland.
Any dollar earned in the US is subject to taxation - regardless of the domicile of the company. The only benefit to forming an overseas shell corporation is to defer US taxation on money earned abroad; that's what Google, Apple, Microsoft and the like have foreign offices - they can keep the earnings overseas without paying US taxes. But for money earned in the US - regardless of the country of incorporation - there are US corporate income taxes to be paid. And if you're a US company, you also have to pay US taxes on money earned overseas. Thus you can see why companies set up overseas offices and subsidiaries.
I've looked at this stuff in depth - it's a big concern for all US expats.
Re:Tax planning and rich people (Score:4, Informative)
They do far more than that level of damage to the road. Road wear us a function of axle loading and goes up by the forth power. This means those trucks are being subsidized by small cars.
Re:Tax planning and rich people (Score:5, Insightful)
Keeping the money that you earned and worked for is cheating...
Only true if you did not in any form, directly or indirectly, benefit from society. Say, by ever buying anything that used any sort of public infrastructure (and benefitting from the reduced price).
"Money you earned and worked for" is not as simple a term as you might think - tied in with that work and its value are layers upon layers of additional worth, all stemming from the society you live in. Society is not robbing you - even if you paid 90%, you would still be getting a bargain, compared to how you much you and your time is worth sans society.
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Re:Tax planning and rich people (Score:5, Insightful)
But, earning money is not a side affect of society, it is the primary purpose of society to provide order and mechanisms for economic growth
No, it isn't. The primary purpose of society is to continue the existance of the society. Economic growth is a result of our current growth rates and stability of social interactions. Consolidation of wealth however leads to threats to the continuation of society as we know it. The challenge though, is that many of those with wealth believe they would benefit more from a new society in which more wealth was consolidated. So they can use their wealth to influence people who aren't in their wealth class to believe that there isn't a threat to social stability.
It is a masterful art, but it will not lead to a better America.
That isn't to say that we need to get all commie and make everyone equal. A progressive tax program is hardly full on commie though.
And to counter your political jab: We all know what happens when Republicans propose tax cuts and spending cuts. Taxes decrease on the rich and the poor die in wars. :P
-Rick
Re:Tax planning and rich people (Score:4, Insightful)
Based on your argument, they should cut the taxes on the low and middle class to at most half of what they currently are, since that's about what the wealthy are currently paying. If Warren Buffet, one of the richest men in the world, says that it's not fair that he pays less in taxes than the middle-class people who work for him, why are you arguing? Or are you one of those few wealthy elites who is going to suffer from the tax changes that would otherwise benefit the vast majority of us slashdotters?
I don't like paying taxes any more than you do, but it's something we all have to do to contribute to our communal well-being. If you really don't want to pay taxes, go buy yourself a private island and run the entire thing autonomously. I bet you'll pay a lot more in "upkeep" and "maintenance" than you're currently paying in "taxes", and get a hell of a lot less for it. I'm not saying that all of our tax money is being used in the best way possible all the time, but I like having roads to drive on, emergency services to call if there's a problem, and all the other benefits of living in this country that are paid for by taxes. And while there's a ton of services that I currently DON'T use, that doesn't mean I won't pay my share now so that (in theory) they'll be there for me when I do need them. But it's a crime, morally and ethically if not legally, that the wealthiest members of our society who have the GREATEST ABILITY to pay their taxes, also have the most loopholes to get around paying them. If they don't want to pay their share, how about we strip them of their citizenship and let them move to some other country whose tax laws are probably a lot worse for them than even the proposed changes here. And since IIRC there are laws about taking money out of the country, they'd end up paying a lot of that in taxes when they left anyway.
To anyone who makes over $1M/year and claims that raising their taxes is unfair, SUCK IT UP. Those of us who make a LOT less than that are finding perfectly good ways to live our lives within our means, and if you can't afford to live within yours, CHANGE YOUR LIFESTYLE.
Re:Tax planning and rich people (Score:4, Insightful)
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Odd. My government has an (in percent of the GDP) much bigger spending amount on social, teaching, public transport and so on, and yet we make ends meet (well, mostly, at least better than the US does).
Maaaaybe one of the reasons is that we don't spend half our GDP on military.
Re:Tax planning and rich people (Score:4, Insightful)
The amount of waste in our goverment both through pet projects and inefficiency is unbelievable, and our entitlements are completely off the scale. Our grandparents saved money for retirement. That concept is completely foreign to the vast majority of Americans, and in fact they are looked at with skepticism by creditors and the IRS if they arent heavily in debt. Now those people who have nothing but dedt are looking to the government to secure their retirements, and you want the people who are actually good and making and keeping money to be the cure. It's pathetic.
Re:Tax planning and rich people (Score:5, Insightful)
"The US right now has THE MOST progressive tax system in the world"
The extra caps doesn't make this statement any less ridiculously false.
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...It's our patriotic duty to make sure they pay their fair share for this country...
Define fair share.
To some people that means they need to pay a higher percentage. To others that means they need to pay the same percentage.
I'll settle for same percentage.
Re:Tax planning and rich people (Score:5, Insightful)
Re:Tax planning and rich people (Score:5, Insightful)
"What would have happened if you got a major illness during this time?"
I had a lesion on my larynx. LA County picked up the tab.
"Or your parents did and you had to drop out of college to support the family?"
Father died when I was 17. I didn't go to college right away to help my mother pay the mortgage. I did that for 4 years.
What I *DIDNT* do was blow off high school, get someone pregnant or get involved with drugs/alcohol. I also didn't pick a major with virtually no chance of an economic payout. (Well, I did at first... Philosophy -- but switched that when I realized that I'd most likely be unable to repay any loans I would assume).
What's silly is someone with a degree in 16th century literature and a $100,000-$200,000 debt is upset that they cant find a job that will help pay their student loans... Sounds to me that they would have been better off picking a different major/career path. A little "expected income" research when planning a major would have helped.
Re:Tax planning and rich people (Score:4, Insightful)
Well, that's the short version. The long version is: Buffet is right, but his remarks are being misconstrued by nearly everybody. Deliberately so, by the politicians.
The rich have higher income tax rates than the poor. This is absolutely the case. If you're arguing that the tax rates should be increased on the rich because you think they're less than the poor, you're simply misinformed.
Now, there are other types of taxes. Estate taxes, tariffs, capital gains taxes. Those are charged at different rates. Capital gains are charged at a rate ranging from 0 to 15%, Note that rich people pay a higher rate on gains than poor people, also. However, if a person makes 90% of his income from capital gains, and you average together the different types of taxes he pays, the overall tax burden on the rich guy might be lower.
This is deliberate. Capital gains taxes are low on purpose, because those drive investment. However, if the situation is unacceptable, the solution is not to adjust the base rates, the solution would be to raise the capital gains taxes. I don't believe Obama's plan does this; instead, it's using Buffet's statement as a marketing point for other tax increases.
Re:Tax planning and rich people (Score:5, Informative)
Apparently Obama will propose that people earning more than $1 million a year pay at least the same tax rate as middle-class earners. That's aiming mighty low.
America's median income is about $50,000. The typical taxpayer at that level pays approximately 20 percent in taxes.
Granted, that's a higher rate than most of today's super rich pay because of countless deductions, credits, and loopholes -- including, especially, their ability to take their incomes in the form of capital gains, taxed at 15 percent. That's a big reason Buffett's hundreds of millions a year are taxed at just over 17 percent -- a lower rate than his secretary faces, as Buffett often says.
But a 20 percent rate is still ridiculously low compared to what millionaires and billionaires ought to be paying. Officially, income over $379,150 is supposed to be taxed at 35 percent....
Robert Reich [salon.com]
So there you have it. Somehow Obama will end up proposing a tax change that will have the millionaires paying a proportionally equivalent share of income, and the Republicans will scream that this qualifies as "redistribution of wealth", and in the end, Buffet will end up with a massive windfall. Warren's a canny one, I'll grant you that.
Re:Tax planning and rich people (Score:5, Insightful)
So instead of giving them "reason" to seek tax loopholes, you suggest giving up that tax revenue without a fight? How is that going to result in a revenue increase?
Some rich people (and wannabes) always bring up the "they (yeah right) will leave and go to tax havens. I say good riddance. If they like it better in those countries, what's stopping them? Or do they just want to stay here and twist our arms, because they actually like it here, you know, with the jobs and the infrastructure, and just don't want to pay as much taxes?
Re:Tax planning and rich people (Score:4, Informative)
Warren Buffet wants wealthy people (like himself) to pay at least the same percentage of their income as the middle class do in taxes. I find it difficult to argue with that logic.
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Isn't his "official" rate already higher? And yet he is described as actually paying less. If you raise his "official" rate but he ends up paying the same amount as now and so still pays less, how does that help?
I still think neither side of this debate puts all of the cards on the table when explaining their position.
all the best,
drew
Re:Tax planning and rich people (Score:5, Interesting)
I think that most of Buffet's income is in capital gains which are taxed (inexplicably) at a much lower rate than income. This is such an absurd concept. If a baker sells a loaf of bread, he's taxed on his profits at the income tax rate, but if a trader sells some financial instrument, he's taxed on the proceeds at a much lower rate. The baker (arguably) has contributed more to the economy but is discriminated against, tax wise.
Re:Tax planning and rich people (Score:4, Insightful)
No. The idea that he's lying when he tells us his tax rate is just another falsehood that Fox News throws out there because their audience tends not to understand their own taxes, much less his. The tax on dividends and capital gains is far less than half what tax on regular income is. The rich play games to get essentially all of their income classified as capital gains. It's not like the burger flippers at Mcdonalds are allowed to work for the option to buy a share an hour at $8 below the market price.
Fox News, and CNBC, and Fox Business will tell you that the capital gains tax rate should be zero. And the inheritance tax, too. That's because they don't want to be taxed at all.
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I would even argue that the wealthy can afford to pay a higher percentage than the middle class. The middle class and lower need most of their money to pay for their food, housing, transportation, energy, healthcare, tuition, etc. If you're talking about the real middle class, they often do have the income to save some, go on a holiday or buy an iPad. But it's nothing compared to those that can afford multiple homes, yachts, business jets, etc.
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So because people will play games with taxes we should just set all taxes to 0%, right?
The whole idea for upping the rate is because those on such incomes will be doing such things with their taxes. So since you are only going to get to a tax some portion of their income you have to use a higher rate to get the same end amount. And yes that sucks for the people who don't want to bother tax planning.
And do you really think anyone is going to say - well I was fine with the federal income tax taking $3,500,000
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"So because people will play games with taxes we should just set all taxes to 0%, right?"
That's not what happens. The higher your make the tax rate, the more people will find ways to not pay it and you will generally collect less. The lower the tax rate, the less incentive people have to find ways to not pay taxes. Somewhere along that curve is an "zone" that maximizes revenue...
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So all they did was give even larger incentive for rich people to start playing games with taxes. Remember that tax planning isn't illegal, nor is forming offshore companies...
Er, root-cause analysis? Perhaps these things SHOULD be illegal. Perhaps when we realize that "tax planning" is simply a nice way of re-defining "tax dodging"...
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Re:Tax planning and rich people (Score:5, Interesting)
Then how about we tell the multinationals where to get off and push heavy incentives to actual local businesses, who make up more of the economy than the huge companies and can't hold regions hostage when they throw a tantrum about not getting treated special?
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Re:Tax planning and rich people (Score:4, Insightful)
While we're at it, why don't we eliminate the EPA and the minimum wage?
Government exists to cater to its citizens, not to corporations. Corporations can feel free to GTFO and make room for someone else who won't require us to race to the bottom with regards to our standard of living, environmental regulations and so forth.
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Corporations do not pay taxes at all.
That's economics from junior high school.
All corporations do is pass their tax costs on to the price of their goods.
Well, that's a silly argument. You might just as well say individuals don't pay any taxes, it just goes on their wage bill.
Re:Tax planning and rich people (Score:5, Insightful)
Sorry, but that's just stupid. You could as easily say that working people aren't taxed, they just pass the costs to their employers.
You can't pass the cost to your customers if your competitor doesn't. I have no choice in my personal taxes, but I choose whether or not I pay Kraft's taxes.
Re:Tax planning and rich people (Score:5, Informative)
While I didn't take economics in Junior High, my High School course taught me that the supply of most goods is not perfectly price elastic [wikipedia.org]. It taught me that in theory taxes are only partially passed on to the consumer except in cases of perfect price elasticity. It taught me that in theory, except in cases of perfect price inelasticity of supply, higher taxes on businesses will result in higher prices and fewer goods being sold in that market. Apparently this concept is called tax incidence [wikipedia.org], though I don't remember that from High School. It also taught me that a tax on individuals is not the same as the tax on corporations. Therefore, based on what I learned many years ago in high school economics, in the case you're talking about, which has very little to do with the proposed tax on individuals, it's true that the consumer bears some of the burden of those taxes. However, it's also true that corporations do in fact pay taxes. That is, ceteris paribus [wikipedia.org], assuming things like that they don't totally avoid the taxes by using loopholes.
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Nol, the government gets that revenue from other taxpayers. Me, for instance. And perhaps you.
Again, the equaton shouldn't be how much in taxes we pay, it should be how much we need to pay for a well-functioning government. It's the well-functioning part where the argument bogs down. Too much? Too little? Wrong things?
We're in a bind now that was inevitable - economic conditions warrant goverment expansion, but both the tax base and debt load make that counterproductive. Our fault. Our fix. Painful
Re:Tax planning and rich people (Score:4, Informative)
This smells like more class warfare shit.
The only class waging war in this country on other classes is the rich.
Re:Tax planning and rich people (Score:5, Insightful)
First, there isn't enough money in million+ income hands to balance the budget.
That's no reason why they shouldn't contribute to balancing it.
This smells like more class warfare shit,
Yeah, and the middle class is losing the war. We should start fighting back.
and now they'll tax the remaining producers into moving their assets out of the country. Maybe it'll get him re-elected, right? We'll worry about the economy in the 2nd term.
Nice disingenuous straw man there, Mr. Koch. This isn't about corporate taxes, this is about personal income tax. Why should Warren Buffett pay half the rate his secretary does? Buffet vs his secretary IS class warfare.
Re:Anti-Rich People Rhetoric (Score:5, Insightful)
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The only thing that makes this economy thrive is spending.
- the US economy is not thriving, it's nowhere near thriving. The only thing that makes any economy thrive is production capacity, and USA has an unsurmountable debt and a 53Billion USD/month trade deficit. That's not thriving, when you are vendor financing all of your purchases.
Who is getting richer when you spend counterfeit currency to buy Chinese made products? It's not the Chinese, so they will come to their senses one of these days and then what?
One person having a billion dollars in the bank isn't going to make Target's quarterly numbers,
- USA doesn't need more consumption, it needs real rec
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Give rich people in your country incentives to actually grow their business via local employment instead of offshoring to more attractive labour markets.
Companies with money to spend don't expand their number of jobs if it is far cheaper and less liable to be sued when you spend the money to develop a robot, or pay shipping from the other side of the world from production based in china where the labor rate is less artificially inflated.
If your job market is so fucked that it is cheaper to pay people o
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Re:Work hard, become successful, prosper... (Score:5, Insightful)
If by "work hard" you mean go to a business school where they will give you a adress book of other self content bastards who will exclusively hire you instead of someone competent and teach you how to maximize short term profit until you can use your golden parachute (only to be hired the next month by another rogue corporation's board), then that's what you deserve. This is about 50% of the rich, "hard working people". Add to that the 45% of lucky sperms, and you have 95% of the rich out there.
Working hard is by far no guarantee to get wealthy.
Being rich is by far no proof to have worked hard.
Taxes are built into everything (Score:3)
Federal taxes are built into gas, phone bills, any product you purchase. Taxes are built into everything. They do this in such a way that the true cost of government is hidden from populace. After all, if you got a bill at the end of the year that said "You owe us 60% of everything you made this year", people might get testy.
So please dont think that the poor are not paying taxes. They are, and they are probably paying a fairly large portion of their meager incomes to boot.
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Poor often don't pay federal income taxes, but they do pay other taxes, and considerably more, relative to what they make and the wealth they have, than the middle and upper classes.
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Maybe that's because those liberals only consider people with an actual personal income of a million or more to "make $1M". Nobody actually says "Dan the contractor", who grossed $1M last year before taking into account his business expenses and labor costs is a millionaire, unless they're trying to scor