Raising Taxes

[Wiploc]

If people focused on the things that they believe are undesirable and taxed those undesirable things, then I think we'd have a much more efficient and fair tax system.

And that looks like it might be the forth reason for taxation. (I'm assuming this is the thread where I listed the other three reasons.)

Why do people dislike people holding onto a lot of wealth?

I don't see that this is under discussion. If a few people have enough economic power to make a mockery of democracy, that doesn't mean we dislike them.

Ah, reading again, I see that you could have meant,
"dislike (for people to be) holding onto,"
rather than,
"dislike people (who are) holding onto."

My point, however remains. You hang onto all the money you can, and I won't disapprove of you doing that. But I still don't want too much power concentrated into too few hands, which seems to me a different thing.

If it is because they can influence the political system, then one must ask how they can influence it? Through campaign donations? If so, than tax campaign donations heavily. Though setting up PACs? If so, then tax contributions to PACs heavily. Through lobbying efforts? Then tax amounts spent on lobbying. Because they can buy things like luxury yachts, using up society's resources on frivolous things? Than implement a progressive consumption tax.

To the extent that that would work, I don't expect they'd allow it.

... Holding wealth in and of itself and not spending it, making that wealth available for capital investment, not getting involved in politics, etc. seems to be a positive thing for the economy. Why worry about that?

It would, if taken to extremes, give non-governmental entities supergovernmental powers. Imagine, for instance, if one family had eighty percent of the nation's wealth. Could the Fed calm an overheated economy if they didn't want to allow that? Imagine the scion's daughter is caught driving drunk. Are you going to arrest her?

Couple of examples that at least borrow from real life:

- Microsoft got sued (I don't remember civil or criminal) for abusing monopoly powers, and dragged the suit out for over ten years, long enough to change the law and make the issue moot.

- Ross Perot's daughter was stopped by police, who found a gun on the passenger seat. This was Texas, though, so that was maybe okay. But the two cops didn't let her go immediately. They kept her there for half an hour or 45 minutes before releasing her.

Ross Perot ordered the cops to show up at his office at a given time. They showed up not knowing what it was about, but expecting to be congratulated or something. Ross Perot berated them, ordered them to never do any similar behavior.


- The firearms manufacturers got the NRA to get Congress to pass a law that says firearms manufacturers---alone of all the businesses in the country---cannot be sued for negligence.


- My dad had a business involving chartered airplanes. The town was, I don't know how big, let's say it had a population of 30,000. People said that seven rich people controlled it. When dad tried to get fuel for his planes, the supplier refused. He (the supplier) explained that the people with power had enough power to keep him (the supplier) from getting fuel if he was to be so rash as to supply their competitors with fuel.

The people with concentrated wealth didn't order the supplier not to supply dad. The supplier was just recognizing what they could do to him if they wanted to, so he was reasonably protecting himself, by enforcing a quasi-monopoly on behalf of stronger people.

Now that was just one town. But you wouldn't want similar problems at a national level.


Now there was a time when I was very enthusiastic about Ross Perot. And I certainly admire Bill Gates. And I have nothing against the community leaders in the town I grew up in. But I recognize that the concentration of wealth can tend to cause some unfairness.

I'm not saying wealth should be divided evenly; that would cause problems too. I am saying that there are limits to how concentrated we ought to let wealth get.

If wealth is highly concentrated, and tending to become more concentrated, then that suggests that the playing field is tilted too much in the favor of the wealthy. We ought to tilt it back a bit.

This is not a matter of being hostile to people with money. Nor is it a matter of thinking they shouldn't gather all the money they can.

 

[Jimmy Higgins]

Taxes -> The new red herring?

The US currently spends roughly 14.5 boatloads more than it receives in taxes. A quick retort is, "Just cut spending." And that is usually said with a straight face. No seriously. They say "We need to have smaller government." Still... with a straight face.

Taxes are required to pay for the stuff the Congress/President says needs to be paid for through legislation (and the signing of the legislation). Should taxes be higher for the rich? Should the Middle Class™ pay less in taxes?

We aren't paying enough in taxes. We haven't paid enough in taxes in what, half a century? Spending won't be cut dramatically. That would require a massive cut back on the military, Medicare, or Social Security... today. Not 30 years from now. And if we recognize that Foreign Aid, earmarks, EPA all represent minor parts of the budget, we can move on from the whimsically ignorant idea that cutting discretionary spending (short of just eliminating it) will save our fiscal butts.

So that takes us to the point. We aren't paying enough in taxes and haven't been for several decades. Unless we substantially cut spending (not going to happen), taxes must be raised on everyone. The proportions to raise them would be subject to analysis and study to determine which would positively affect the economy verses negatively affect the economy.

What are you basing the "not enough collected in taxes" assessment on? A debt to GDP ratio of 60%-80% is sustainable, and we haven't gone over that range until recently. It is also starting to go back down again.

Wait, so we aren't supposed to pay for all the stuff anymore?

 

[Axulus]

What are you basing the "not enough collected in taxes" assessment on? A debt to GDP ratio of 60%-80% is sustainable, and we haven't gone over that range until recently. It is also starting to go back down again.

Wait, so we aren't supposed to pay for all the stuff anymore?

Borrowing for things that will have benefits for longer than one year is a prudent thing to do. This would include things like buildings, infrastructure, research, universities, etc. It better balances the timing of the expense with the timing of the benefits as they are received. This is also more equitable as those in the future who receive the benefits share a fair portion of the cost of the thing.

 

[Jimmy Higgins]

Wait, so we aren't supposed to pay for all the stuff anymore?

Borrowing for things that will have benefits for longer than one year is a prudent thing to do. This would include things like buildings, infrastructure, research, universities, etc.

Yes, and all of that will account for about 15% of our budget in the near future, as Medicare and Social Security start to dwarf the other spending.

 

[laughing dog]

Because if you are taxing income, you tax income. If you are specifically referencing inheritance taxes, inheritance taxes can have multiple rationales. For example, taxing inheritances heavily reduces the transfer of potential political power.

But if a gift is to be treated as income by the giftee, then wouldn't the giftor have a reduction in income and thus have less income to report and have taxed?

Nope. Income is earned it is taxed. Income is received it is taxed. That is the basis of an income tax.

Why not tax the exercise of that political power instead if that is what is undesirable? Why should those who have no desire to exercise any political power be taxed just as heavily as those who make every effort to use their wealth to maximize their political power?

How does one tax "political power"? You do realize that the very wealthy are powerful not just because they may donate money. The very threat of using their wealth or moving their business interest can motivate others to accommodate them.

 

[Loren Pechtel]

1) Your argument doesn't apply to inheritance as it's not income. It's money that was already taxed when it was earned.

Wealth is potential income and it is certainly a form of income to the recipients.

What part of "already taxed" do you not get?

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But taxing only those things we want to discourage is somewhat self-defeating. If our tax revenue base is generated primarily through taxes on cigarettes, what happens when everyone stops smoking? We need to have a relatively stable tax base that closely mirrors the general health of the economy while simultaneously remaining insulated from the variable whims of society. Income meets all of these criteria.

aa

Yup--exactly why I oppose sin taxes. I do not have a problem with taxing them to cover the costs they impose on society but they should not be taxed for revenue. The government should not be in a position to be bettered by such things.

 

[Loren Pechtel]

Yes, but why do we care if person A goes on a fancy vacation or person A gives money to person B so that person B can go on a fancy vacation? Why should scenario 2 be taxed more heavily than scenario 1?

Because if you are taxing income, you tax income. If you are specifically referencing inheritance taxes, inheritance taxes can have multiple rationales. For example, taxing inheritances heavily reduces the transfer of potential political power.

You can make an argument for inheritance taxes but Rhea's post does not make a viable argument for them.

 

[Loren Pechtel]

I don't dislike people holding on to wealth. That is not what it is about. The problem is, if I make $100,000 a year, and end up paying out $25,000 a year in taxes, I would expect the guy making $100,000,000 a year to pay $25,000,000 a year in taxes, but he isn't paying anywhere near that. He is maybe paying $15,000,000 a year at most, more likely paying far less.

You're seeing the effects of social security--which is a separate issue. That guy making $100M isn't going to get much at all more in social security than you will with your $100k.

Remove social security from the picture and the guy $100M pays a higher tax rate than you do.

 

[Loren Pechtel]

What are you basing the "not enough collected in taxes" assessment on? A debt to GDP ratio of 60%-80% is sustainable, and we haven't gone over that range until recently. It is also starting to go back down again.

Wait, so we aren't supposed to pay for all the stuff anymore?

Debt isn't automatically a bad thing.

A basic test of debt: Will the item you are borrowing for outlast the loan?

Anything that fails this test is highly suspect and should only be done if absolutely necessary.

 

[laughing dog]

Wealth is potential income and it is certainly a form of income to the recipients.

What part of "already taxed" do you not get?

The part where it is relevant. Lots of sources of income are taxed more than once. There is nothing sacrosanct about taxing a dollar of income once.

[

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Because if you are taxing income, you tax income. If you are specifically referencing inheritance taxes, inheritance taxes can have multiple rationales. For example, taxing inheritances heavily reduces the transfer of potential political power.

You can make an argument for inheritance taxes but Rhea's post does not make a viable argument for them.

Depends on the one's viewpoint. You certainly have not made a viable argument against them.

 

[NobleSavage]

I believe that ALL INCOME whether earned by labor, by investment, by financial dealings or by inheritance, ALL INCOME should be taxed. And it should be taxed progressively such that the more you make, the harder it is to make it. Not by a lot, just by a little. Because if ALL INCOME, no matter how you get it, is taxed as income, then the civilization we build will be a stable one.

There is no "way of earning" that is somehow more honorable and hence less taxable than others. The data is unambiguous that tax breaks for non-labor income does not result in advantages for the overall economy. It gets hoarded. Let's stop encouraging that and just make it neutral. Not a flat tax, because that harms the economy, too. A progressive tax that only taxes that which is above subsistence, and increases the further you get from subsistence.

I get the logic of collective action, but the part I put in bold I have a hard time swallowing. Stable would not be the word I'd use. Progressive taxes, hell yes, but our collective stupidity might do something like wipe out the human race. I'll buy the idea that a tribe is more stable than an individual in a state of nature. However, nation states are just too new to say much about (19 Century?). The odds of the USA turning into a fascist, human, meat grinder don’t seem crazy to me. If you want stability and safety I’d think a more distributed system would be better. Yeah, we have that to some extent with federalism, but other than marijuana the trend seems to be moving in the opposite direction. Monocultures are a bad idea in the plant world and I don't see why you couldn't say the same about governments. I'd rather pay 50% of my taxes to my state government and Piketty’s idea of a global tax on wealth just seems like a really stupid idea.

 

[NobleSavage]

I grew up in a conservative Republican family. When I lost my religion the social conservatism evaporated. Then I slowly moved to economic liberalism (in the colloquial sense; not classic liberalism). Now I'd say I'm a militant moderate.

On the topic of raising taxes (assume it's on the correct group of people in your mind), I against it. First, we scale back the stupidity and if we accomplish that then we can raise taxes. Before you say X president or Y congress did that, is doing that, or did the opposite, I mean this in a universal sense. Even if the tax increase was appropriated for ONLY a good cause, I'll bet dollars to donuts that part of it will get channeled into paying for someone's militaristic or law enforcement hard on.

You don't feel that the military or law enforcement are valid areas for government expenditures? I would disagree.

Military and law enforcement are valid.

Do I believe that the government spends too much money on the military and law enforcement? I would agree.

Agreed.

Probably half of the defense budget is a corporate welfare/jobs program that is a stunning waste of resources and productive capacity.

Agreed. Our safety net is the same way. I've been helping someone get government assistance that deserves it and hell if that isn't one huge complicated mess. I don't have any idea how someone could possibly have a job, kids, and keep up with the bullshit involved in public assistance. At this point I'd rather the government just cut people checks on the honor system, but that would put too many people out of work.

 

[NobleSavage]

Taxes are patriotic. (Joe Biden)

Taxes aren't so much patriotic as they are the cost that has to be paid to have a modern society. Even the most irrational idealists among us concede that we need a government, even if it is only to "enforce contracts." Of course, we need a government for much more than just that, but since everyone agrees that a government is needed, the only open questions are how much do we need and what form should it take?

Taxes are the price of having a government. We have an economic system based on having to pay for the things that we need (as well as getting paid for the things that we provide.) Why is a government any different?

How would you feel about a constitutional amendment that limited government based on a percentage of GDP? I realize this is impractical because there would always be an emergency that requires more spending, but when do we say enough?

 

[NobleSavage]

What are you basing the "not enough collected in taxes" assessment on? A debt to GDP ratio of 60%-80% is sustainable, and we haven't gone over that range until recently. It is also starting to go back down again.

How do we know that 60%-80% is sustainable? Growth seems like the more important factor. What the hell is substantiate growth? Do we even know? How far back do we have good data? When you put that data on an anthropological time like what does it look like? In my mind about 200 hundred years ago the curve started going exponential.

 

[maxparrish]

That is true, of course, but is it relevant? I chose the figures to give two people who were in the same position after 2 periods at 0% tax, and showed they were no longer in the same position if there was equal tax on all kinds of income.

At 0% tax, these people would no longer be in the same position after 4 periods or 10 periods, and the investor would be drawing ahead exponentially - so it is no surprise that that would also happen at 50% tax.

Well, any cutoff point is arbitrary, so...

The point I think you are missing, is why should an investor earn the same number, or greater widgets than the laborer (whose labor is also directly contributing to the investor's purchasing power)? If anything, he ought to be earning less (but only does so over a short timeframe). We can play games all day with the parameters of the mathematical model you are using. Eventually, the compounding of returns and deferral of tax payment will always eclipse simple interest (which is what annual taxes amount to).

aa

One the shortcomings of discussing a highly simplified example is that only addresses a few factors, and as such can be misleading. Let's try...

Suppose we have two individuals: Joe Six Pack and Jane Frugal. Joe and Jane work at the same sweat shop, and make 10,000 a year doing the same work for the same hours. After taxes it leaves them with 8,500 (they pay 1500 a year in taxes, a 15% rate).

Joe spends 100 percent of his income. He could save 10% of his take home pay and invest 850 a year in a lump, but he would have to give up his beer and Cable TV. He is not willing to cut back forgo the entertianment, so he consumes it every day for 15 years.

Jane is willing to give up beer and cable TV for 15 years, she will drink water and listen to her table clock-radio. She invests 850 a year for the next 15 years.

Fifteen years later Joe has spent a total of 11,900 and Jane has save 11,900. And she "rented" her 15 years of sacrificed consumption and earned 6% per year (rolling it over). Now she has $18,934.

Now she can spend the whole amount and buy 50% more beer and cable entertainment than Joe already spent. Is that fair? Yes.

First, Jane is being paid for waiting for 15 years. She sacrificed current consumption for added future consumption. Present consumption, for the same dollar spent, is more valuable than future consumption. However, the offset is that the future value will be and should be higher to compensate for 15 years of lost consumption.

Second, Jane worked as hard and paid as much in income tax as Joe at the same job. Why, after sacrificing her well being in beer and cable TV for 15 years, should she be expected to pay more in total taxes than Joe? Her capital and dividend gains are her reward for 15 years of making do.

So no, not all income is the same NOR should they be taxed the same.

 

[arkirk]

Well, any cutoff point is arbitrary, so...

The point I think you are missing, is why should an investor earn the same number, or greater widgets than the laborer (whose labor is also directly contributing to the investor's purchasing power)? If anything, he ought to be earning less (but only does so over a short timeframe). We can play games all day with the parameters of the mathematical model you are using. Eventually, the compounding of returns and deferral of tax payment will always eclipse simple interest (which is what annual taxes amount to).

aa

One the shortcomings of discussing a highly simplified example is that only addresses a few factors, and as such can be misleading. Let's try...

Suppose we have two individuals: Joe Six Pack and Jane Frugal. Joe and Jane work at the same sweat shop, and make 10,000 a year doing the same work for the same hours. After taxes it leaves them with 8,500 (they pay 1500 a year in taxes, a 15% rate).

Joe spends 100 percent of his income. He could save 10% of his take home pay and invest 850 a year in a lump, but he would have to give up his beer and Cable TV. He is not willing to cut back forgo the entertianment, so he consumes it every day for 15 years.

Jane is willing to give up beer and cable TV for 15 years, she will drink water and listen to her table clock-radio. She invests 850 a year for the next 15 years.

Fifteen years later Joe has spent a total of 11,900 and Jane has save 11,900. And she "rented" her 15 years of sacrificed consumption and earned 6% per year (rolling it over). Now she has $18,934.

Now she can spend the whole amount and buy 50% more beer and cable entertainment than Joe already spent. Is that fair? Yes.

First, Jane is being paid for waiting for 15 years. She sacrificed current consumption for added future consumption. Present consumption, for the same dollar spent, is more valuable than future consumption. However, the offset is that the future value will be and should be higher to compensate for 15 years of lost consumption.

Second, Jane worked as hard and paid as much in income tax as Joe at the same job. Why, after sacrificing her well being in beer and cable TV for 15 years, should she be expected to pay more in total taxes than Joe? Her capital and dividend gains are her reward for 15 years of making do.

So no, not all income is the same NOR should they be taxed the same.

.......and poor Jane has not had a beer in 15 years, or a hobby, or a vacation, or any education or anything else that costs money for those same fifteen years. Neither one of these people could live on their take home pay. To make matters worse, she has invested it all in oil stocks and lost most of her savings. You assume that her savings has helped her, but it has instead locked her into a form of self denial for the paltry sum of $18,000. Your scenario is based on false parameters...go ahead and have a beer my friend.

 

[Medicine Man]

I believe that ALL INCOME whether earned by labor, by investment, by financial dealings or by inheritance, ALL INCOME should be taxed.

That was the flat-tax $cam "Sweet" Stevie Forbes tried to sell....that all income would be equally taxed....UNLESS that income was dividend$ (payed-out), thru market-investments!!!

Somehow, he figured investments were a more-laborious pursuit....than actually WORKING-for-a-living.



I'm guessing he preferred not to get his dainty, lil' claws dirty.​

 

[Medicine Man]

I grew up in a conservative Republican family. When I lost my religion the social conservatism evaporated. Then I slowly moved to economic liberalism (in the colloquial sense; not classic liberalism). Now I'd say I'm a militant moderate.

On the topic of raising taxes (assume it's on the correct group of people in your mind), I against it. First, we scale back the stupidity and if we accomplish that then we can raise taxes. Before you say X president or Y congress did that, is doing that, or did the opposite, I mean this in a universal sense. Even if the tax increase was appropriated for ONLY a good cause, I'll bet dollars to donuts that part of it will get channeled into paying for someone's militaristic or law enforcement hard on.

You don't feel that the military or law enforcement are valid areas for government expenditures? I would disagree.

Do I believe that the government spends too much money on the military and law enforcement? I would agree.

Probably half of the defense budget is a corporate welfare/jobs program that is a stunning waste of resources and productive capacity.

....And, who'd know that, BETTER, than the folks who got/get to do the dirty-work....​

....FOR Corporate America??!!!

 

[AthenaAwakened]

It is longer than a Facebook meme, but worth the read.

Thom Hartmann | Roll Back the Reagan Tax Cuts

So we have to help Americans realize that “no new taxes” is a mantra that is meaningful to the very rich but largely hurts average working people.
Only when the current generation relearns the economic and tax lessons well known by the generation (now dying off) that came of age in the 1930s through the 1960s will this become politically possible. Americans need to learn what Europeans know about income taxes—that they really matter only to the rich.

We need to remind people that it was not that long ago when we had the rich paying top marginal tax rates of 70 percent (at the start of the Reagan years); and if we want to go further back, we used to have top marginal tax rates above 90 percent in the Eisenhower years. Our current tax rates and the antitax fever are the result of relentless right-wing propaganda that began during the so-called Reagan revolution and has continued ever since.

If we really want our country to recover its financial footing, we must roll back the Reagan tax cuts that took the top marginal rate from above 70 percent down into the 30 percent range. To stop the “casino economy” that always emerges when the very highest-income people are allowed to keep whatever they can get, regardless of how they got it (so long as it’s legal), there has to be a collective notion of “how rich is too rich for society to afford” and income above that rate is taxed at the old 70 to 90 percent rate.

In addition to rolling back the Reagan tax cuts so that millionaires and billionaires have little incentive to plunder their companies and slash (or export) their workforces, we must also ban the use of stock options as a form of compensation for top corporate executives. This will shift the focus of CEOs and senior managers from stock price and dividends (a focus that has destroyed numerous companies, from Enron to Lehman Brothers to BP) to the long-term health of the company itself.

If we want to keep the stock options as compensation, we must at the least tax those stock options at the same top marginal tax rates as the salaries of the rich by considering capital gains as ordinary income.

We have a lot of educating to do. And so long as the rightwing machine of the über-rich continues to “lose” (i.e., “invest”) millions of dollars a year in their ongoing disinformation campaign, it’s going to require all of us reciting the mantra: “Roll back the Reagan tax cuts!”

 

[laughing dog]

So no, not all income is the same NOR should they be taxed the same.

Lots of people agree with that sentiment which is why they think non-labor income ought to be taxed at a higher rate than labor income. Your point is based on a morality not economic analysis.