Saturday, December 15, 2007

Put Your Tax Money Where Your Political Mouth Is

Challenge: If taxes increases for "the rich" are a good thing, members of Congress and presidential candidates (all part of either "the rich" or "super-rich") don't have wait for the Bush tax cuts to expire or for Congress to pass new tax legislation, they can immediately raise taxes on themselves voluntarily by making a gift to the U.S. Treasury.

Here is the link to the Treasury's website with instructions for politicians, presidential candidates, or any citizen like Warren Buffet who wish to make a general donation to the U.S. government into an official account called "Gifts to the United States."

Question: What if Edwards or Clinton proposed legislation to force everybody to "donate" 5 pints of blood every year. Wouldn't it be a lot more credible if they were already donating blood themselves right now voluntarily, and not waiting until they were forced to "donate" blood by their own legislation?

This is from a previous CD post, and I mentioned on Larry Kudlow's radio program today that I would re-post instructions on how politicians and Warren Buffet can pay extra taxes to the U.S. Treasury.

15 Comments:

At 12/15/2007 5:22 PM, Anonymous bob wright said...

Lot's of people also think that higher taxes are good for the economy.

For those who do, how about signing up right here for making your voluntary contribution. Get your friends to contribute also.

If nothing else, do it for the children.

 
At 12/16/2007 6:28 AM, Blogger Kevin said...

I am not sure your point except that it is a "funny little quip". What is the proposal for getting rid of the deficit without raising taxes?

Also, do you really believe that hedge fund managers who are making $100's of millions a year should be taxed at the personal income tax rate on capital gains of 15%??

Finally, as far as estate taxes go, one of the great things this Country used to have is a lack of huge discrepancy between the rich and the poor. The estate tax ensured that people of privilege were not just "born". Do you suggest that we no longer have this ?

 
At 12/16/2007 6:28 AM, Blogger Kevin said...

I am not sure your point except that it is a "funny little quip". What is the proposal for getting rid of the deficit without raising taxes?

Also, do you really believe that hedge fund managers who are making $100's of millions a year should be taxed at the personal income tax rate on capital gains of 15%??

Finally, as far as estate taxes go, one of the great things this Country used to have is a lack of huge discrepancy between the rich and the poor. The estate tax ensured that people of privilege were not just "born". Do you suggest that we no longer have this ?

 
At 12/16/2007 8:28 AM, Anonymous Anonymous said...

kevin-

i think the point is fairly straightforward. buffett (and others) call for the more taxes coming from the richest people, and they base this position on the benefits the government could provide to middle and lower class citizens (and to our progeny, as they wouldnt be burdened with the debts we are leaving to them). yet neither buffett, nor anyone else, is willing to "step up" and voluntarily contribute their own wealth. if they truly believed in the message they preached, why would they need a law requiring everyone else to give up his/her share? why would they not also do their part without seeing everyone else has to do it? what is the logic behind lobbying for mandatory higher taxes without being willing to voluntarily give up your own? i hate to make this comparison, but the leading people on this tax push (the liberals) are the same ones who make the case that republicans shouldnt be so quick to start a war if they wouldnt have their children sign up for the military.

finally, as far as estate taxes go, do you have any statistics on how the estate tax would bring down the discrepancy between the "rich" and the "poor" in this country? i dont think there is such evidence available because the discrepancy in wealth is created by a host of other factors having nothing to do with taxes. in fact, one could argue that a high estate tax might actually increase the income discrepancy- wealthy americans would higher more estate lawyers to find the loopholes in the tax system. thus the money ends up in the hands of those relatively well off.

when you think of questions like these, ask "and then what?" because i think one thing we ought to have learned over the years is that its never a simple one-way causation towards our goal. we cant dictate what level of social inequality we have, its something determined by the individual actions of every single american in the aggregate.

 
At 12/16/2007 8:29 AM, Anonymous Anonymous said...

obviously the word "higher" should be "hire"

sunday morning mistake.

 
At 12/16/2007 8:45 AM, Anonymous bob wright said...

The problem with the deficit has never been income; the problem has always been outgo.

No matter how much income Congress gets, it spends $1.10 for every $1.00 it gets.

Income is not the problem.
Spending is the problem.

Higher taxes won't change this.

Kevin, There has always been rich and poor in this country. And the discrepency has been large. Just think Rockefeller.

 
At 12/16/2007 9:27 AM, Blogger Kevin said...

First, i do not know what Buffet's estate planning is and, my guess is, neither do you. So you do not know if he gives money away or if he plans to give money away or what. I do know that with the philanthropic organization through the Gates foundation both Buffet and Gates are doing incredible things with their money. Unfortunately, they are in the minority.

Another way to look at this is whether a guy like Buffet is taking advantage of all potential tax schemes or not. If he isn't then that may be the way he "gives" to the Government. For example, could he incorporate BH in Bermuda and avoid taxes? Could he do other things like that but decides not to because he thinks paying his fair share is the right thing to do.

My point here is that unless you are his personal auditor you have no idea and no facts to support your claims that he does not "voluntarily" give. I personally believe in the honesty and truthfulness of WB, you may not. That is OK.

Please do not compare Rockefeller to the "rich" of now. Rockefeller actually built something and produced. Most of the "Super rich" today are trading paper on wall street (as Pat Buchanan likes to say) and are probably more disruptive than helpful.

When people like me talk about taxing the "super wealthy" I am only talking about taxing a guy who makes $500M per year at the same rate I am taxed. Is that fair? Do you agree? So, this year, I will be taxed at roughly 28% (counting the infamous AMT).

A hedge fund owner/manager, according to Cramer, will be taxed at the capital gains rate of 15%. Tell me how that makes sense.

We had a mix of tax increases and spending decreases under Clinton and managed to balance the budget. 8 years of "supply side" and we are right back to where we were under Reagan.

It is not as simple as saying "no taxes" or "tax everyone". It is far more complicated and any attempt to simplify it (i.e. "The problem with the deficit has never been income; the problem has always been outgo.") makes the argument less impactful.

The Command T.O.C.

Beyond The MBA

 
At 12/16/2007 9:38 AM, Blogger Kevin said...

Here is a far better explanation of what I am talking about and why this is so complicated.

 
At 12/16/2007 9:56 AM, Anonymous Anonymous said...

When people like me talk about taxing the "super wealthy" I am only talking about taxing a guy who makes $500M per year at the same rate I am taxed. Is that fair? Do you agree? So, this year, I will be taxed at roughly 28% (counting the infamous AMT).

A hedge fund owner/manager, according to Cramer, will be taxed at the capital gains rate of 15%. Tell me how that makes sense.

---------------------

1) yes, i think it is fair to tax everyone the same regardless of income. it might not be plausible politically, or functionally, but as a concept of "fairness" i think my answer to your question would be "yes" and this is the problem with using the fairness doctrine for policy. no one can agree so our platonic guardians must impose "fairness" on the rest.

2) it "makes sense" because our nonsensical congress set it up that way. again, another failure to ask "and then what?" when it comes to formulating policy.

finally, the point about buffett and my lack of insight into his estate planning is true only to the extent that i do not know about his estate planning. you mention the wonderful work he does with the gates foundation. this is the product of a voluntary action taken by buffett. you cannot compare making a 36 billion donation to charity, which can be written off, to a mandatory tax imposition. there is nothing charitable or voluntary about a tax law. if you dont pay you face consequences. also, your point about whether buffett "donates" by whether or not he takes advantage of all the loopholes is interesting, but it ignores buffetts commentary about how his secretary pays a higher tax rate than he because of all the tax advantages he gets from his investments and sources of income(this was talked about much last year when he decided to start campaigning). i guess my problem is that buffett and others conflate the idea of charity with imposing tax laws on others. there is nothing similar about the two. its a mistaken idea that the end product of both is adequately similar which causes the confusion, i think.

 
At 12/16/2007 10:02 AM, Anonymous Anonymous said...

if we really want to get rid of inequality, lets just tax everyone making over $50,000 at a 100% and subsidize everyone making under $50,000 so their income arrives at $50,000.

i dont think america used to be great because of the lack of inequality. i think america has been and its still great because it allows for 1) class mobility more than any other country, 2) an opportunity to do what you wish wiht your acquired wealth once you attain it, including leaving it to children or donating it to the gates foundation!

 
At 12/16/2007 9:17 PM, Anonymous Anonymous said...

The idea that the United States *ever* resembled an egalitarian paradise is laughable. Even more so when the myth is posted by an MBA holder. Nothing could be further from the truth, and it is pernicious to the concept of a free market economy to propagate such BS.

Thanks for your service to the country, Kevin, but your vote for Obama Hussein will do more to hurt this country than any of the bugbears that you blather on about.

 
At 12/16/2007 9:25 PM, Blogger Kevin said...

Response to the last statement:

Spoken like the true coward who signs "anonymous". First, I never said the Country should be egalitarian.. merely that there is a valued interest that we do not become like Mexico, Brazil et al. where the difference in wealth is so pronounced that the rich need armed guards to get their kids back and forth to school.

Second, why don't you expose yourself? Tell us of your background so we can have an honest debate. Your insults mean very little and they mean absolutely nothing coming from someone who is "Anonymous".

Your changing Obama's name also shows the racist you are.

 
At 12/17/2007 7:28 AM, Anonymous Anonymous said...

MP, Great post. Clearly shows the hypocrisy of the left, and how they are dependent on keeping people ignorant and scared in order to secure votes. Thanks.

 
At 12/17/2007 1:08 PM, Blogger Thomas Blair said...

This comment has been removed by the author.

 
At 12/17/2007 1:10 PM, Blogger Thomas Blair said...

Kevin,

You said:

A hedge fund owner/manager, according to Cramer, will be taxed at the capital gains rate of 15%. Tell me how that makes sense.

It makes sense because those realized gains are capital gains, not ordinary income.

What's so difficult to understand about the difference between capital gains and ordinary income? Hedge fund managers' pay is set up to provide the right incentives to the managers. They are given a percentage of the capital gains realized by the fund to encourage them to manage it well. If they were being paid a flat fee where the performance of the fund had no impact on the pay of the manager, the funds wouldn't perform as well. It serves the same purpose as commission does to a vacuum saleseman; only the mechanism is different. The managers are being paid with stock in the fund. If the fund does well, they realize the capital gains from their ownership in the fund.

You may not like it, but it's not difficult to understand.

 

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