Monday, August 15, 2011

Average Federal Income Tax Rates By Income Group Are Highly Progressive, Not Regressive

Update: This new chart shows the average tax rates for different income groups in 2007 for ALL federal taxes paid (income, payroll, corporate, and excise) based on data from the CBO.  Note that if Warren Buffett is only paying a 17.4% federal tax rate, he's not typical for his group - the top 1% pays an average rate close to 30%, almost double Buffett's rate.  And if Buffett's employees are claiming to pay an average tax rate of 33-41%, there must be something wrong, not even the top 1% pay that high of a rate??



"...Blessings are showered upon [the super-rich] by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places. 

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice."

Dan Mitchell makes several good points today on his blog about the "Oracle of Omaha's" fiscal innumeracy including:

1. Instead of just talking all the time about how he should pay higher taxes, it's time for Warren Buffett to really get serious about "shared sacrifice" by paying higher taxes.  He doesn't have to wait for Congress to change tax rates, he can start sending voluntary tax payments right now to the government at the website that Dan provides.  If Mr. Buffett thinks that he should pay 36% of his income in federal taxes like the employees in his office, he can make that happen immediately by making a $7.4 million gift to the U.S. Treasury.  And he can use his influence to encourage his super-rich friends to do the same. 

2. Dan writes that "Buffett mischaracterizes the impact of the Social Security payroll tax, which is dedicated for a specific purpose. The law only imposes that tax on income up to about $107,000 per year because the tax is designed so that people “earn” a corresponding  retirement benefit (which actually is tilted in favor of low-income workers)."

MP: Using 2008 IRS data, the chart above shows that the U.S. federal income tax system is highly progressive (as it's intended to be, and not regressive as Buffett wants us to believe from his "analysis" of his employees' tax rates) and higher income groups pay taxes at a higher rate on average, as a share of their taxable income.  Although Buffett himself might be an exception, those taxpayers in his "super-rich" group (top 1%) pay federal taxes at the highest rate (23.3%) of any other income group. For the bottom 50% of taxpayers with adjusted gross incomes of $33,000 or less, the average federal income tax rate for that group is only 2.6%.

183 Comments:

At 8/15/2011 2:12 PM, OpenID 76608730-c772-11e0-89ac-000bcdca4d7a said...

I think you might have missed the point, his point is that capital gains should also be should be taxed as much as capital Gains are, so 30% as opposed to 15%. Or at least that's what I thought I read.

 
At 8/15/2011 2:44 PM, Blogger Ron H. said...

"I think you might have missed the point, his point is that capital gains should also be should be taxed as much as capital Gains are, so 30% as opposed to 15%. Or at least that's what I thought I read."

What?

Can you rewrite that in a way that makes sense?

Maybe you should wait until later in the day before you start hitting that bong.

 
At 8/15/2011 2:47 PM, Blogger Jet Beagle said...

Owners of corporate equities were already taxed through corporate income taxes. So the effective tax rate on owners of equities is not the 15% they pay when they cash out their positions. Rather, it is much higher - more like 50%.

If Buffet feels so damned guilty for being so talented and hard-working, then he should pay whatever tax he needs to pay to relieve his guilt. But he's a filthy SOB for advocating that the rest of us should pay more than 50% on our stock earnings.

 
At 8/15/2011 2:48 PM, Blogger Benjamin said...

Buffett is also cognizant of payroll (Social Security and Medicare) taxes. Surely also is Dr. Perry, although on this post Dr. Perry seems to be willfully ignoring such regressive taxes.

But hey--why let payroll tax reality get in the way of a nice bit of sychophancy for the plutocrats?

 
At 8/15/2011 2:49 PM, Blogger Benjamin said...

Jet Beagle-

I think corporate income taxes ought to be wiped out, replaced by a gasoline tax.

 
At 8/15/2011 2:49 PM, Blogger NormanB said...

Meaningless without including Social Security (employee and employer) and Medicare taxes.

 
At 8/15/2011 2:57 PM, Blogger Mark J. Perry said...

1. Buffett is clearly advocating higher federal income tax rates on "the rich" or "super rich," implying that that they don't pay their "fair share" of federal taxes.

2. He is also implying that federal taxes are "regressive," and that middle-income earners shoulder a higher federal tax burden than the super rich.

I don't think either statement/claim/implication is true, and the graph helps to show that.

Further, he acts like he is helpless to do anything until Congress acts. That's not true, he can pay voluntarily right now.

 
At 8/15/2011 3:29 PM, Blogger Hayrack said...

Mr Buffet is also ignoring the fact that he pays accountants and tax professionals a considerable amount of money to keep his rate low. He should download TurboTax and give it try. He could experience the double pleasure of his head and his tax bill exploding.

 
At 8/15/2011 3:32 PM, Blogger morganovich said...

the traditional path of the uber rich is to give back late in life.

endow museums, universities, foundations, whatever.

bill gates understands this.

buffet just sounds like a fool.

so, rather than take the money and put it to good use (as he has spent a career doing) he wants to let the government allocate it (and my money as well)?

that's a sad joke.

private foundations use money much better. and, you get to control upon what.

there is no need to fund wars or absurd social programs that you don't like.

pick somehting useful to do and do it.

surrendering the sovereignty of his money sounds ridiculous to me.

i also question his notions of "fair share".

warren earns more than i do.

if you both go to dinner and eat the same meal, our fair shares of the check are 50/50.

why is buying government so different? suddenly, the wealth are expected to pay more for the same service. this is true even under a "flat" tax, which is nothing of the sort looked at in terms of the price you pay for government.

if you earn $100k and i earn $200k, even under a flat tax, i pay twice the taxes.

for what?

do i get faster mail? better air traffic controllers? special roads with less traffic? better police and courts? better defended borders?

in general, when you pay twice as much for somehting, you expect a better version.

not so with government. you just pay twice as much for the privilege of being demonized.

the whole language of taxation is just wild spin.

a "flat" tax is actually quite progressive. a "progressive" tax is actually way beyond progressive. it's closer to logarithmic.

a real "flat" tax structure would mean we all paid the same, just as we do for other products.

 
At 8/15/2011 3:37 PM, Blogger morganovich said...

norman-

that's a common populist talking point, but totally untrue.

adding in FICA makes no difference to the overall conclusions.

even with it, the US has the most progressive tax system in the developed world.

http://mjperry.blogspot.com/2011/03/us-has-most-progressive-tax-system-for.html

the top 10% pay 45% of taxes on 33.5% of the income.

the OECD average for tax share/income share is 1.11.

we pay 1.35.

that is a MASSIVE difference.

 
At 8/15/2011 3:38 PM, Blogger Benjamin said...

Hard to remember, but the top federal income tax rate used to be 90 percent through much of the 1950s-60s, and 70 percent through the 1970s.

I do not advocate higher federal income tax rates now. We have a plutonomy (Citigroup) and it is dangerous at this juncture to tax the wealthy.

But really--the USA wealthy have much lower tax rates than previous eras, and live better than anyone ever in all history.

Buffett has on many occasions explicitly counted in FICA taxes, which Dr. Perry is willfully ignoring. FICA taxes stop at about the first $100k in earned (wage) income. There are no FICA taxes on capital gains.

I don;t understand this obsequious and acute sensitivity to the grave injustices done to the top 1 percent of Americans, as defined by wealth and income.

In days of yore, lower tax rates on the wealthy might have been an economic boon, in that it helped capital formation.

But now, with global capital gluts, they can pay more taxes. If they invest less, it doesn't matter as capital is abundant.

When the economy recovers, higher tax rates on the super-wealthy may make sense.

As for me, I am a patriot, unless you ask me to pay taxes or serve in the military. Except for that....

 
At 8/15/2011 3:52 PM, Blogger arbitrage789 said...

“..what I paid was only 17.4 percent of my taxable income … other people in our office [paid 41% of their incomes in taxes]”.

^^^^^^^^^^^^^^

Anyone who pays 41% of his income to the Federal government is an idiot. I don’t know why Buffett wants to hire idiots.


Or perhaps Buffet doesn’t understand the difference between marginal tax RATES and total taxes paid.

 
At 8/15/2011 3:56 PM, Blogger morganovich said...

bunny-

that 90% tax rate is nothing like comparable.

it had massive exemptions, did not cover any foreign investment, and applied to very few people.

i'd much rather have that tax code than the one we have today.

i would be in that 90% bracket, but pay far lower taxes than i do now after i made a couple of simple changes to my account domiciles.

i could probably manage to pay zero.

 
At 8/15/2011 3:58 PM, Blogger KPres said...

"Hard to remember, but the top federal income tax rate used to be 90 percent through much of the 1950s-60s, and 70 percent through the 1970s."


There were also tons of loopholes back then, so that even with 70% statutory rates, those in the top bracket were actually only paying ~28%.

The CBO did an analysis of this:

http://www.cbo.gov/ftpdocs/88xx/doc8885/Appendix_wtoc.pdf

 
At 8/15/2011 3:59 PM, Blogger arbitrage789 said...

The other thing that Buffet doesn’t understand is that there is pretty good historical evidence to support the proposition that raising the capital gains tax (from its current level) probably won’t result in higher IRS revenues (for a given GDP growth rate). This is due, in part, to the fact that the decision to initiate a position in a capital gains tax-eligible asset is voluntary, as is the timing of the sale of that asset.

In addition, if the top marginal rate on earned income is raised further, we’re likely to see the introduction of even more loopholes.

If raising the top marginal rate were of benefit to me personally, I might be in favor of it. But I don’t see any benefit.

 
At 8/15/2011 4:03 PM, Blogger Jon said...

We all know that the federal income tax is progressive. But if you look at Buffet's OVERALL contributions to federal taxes (income, payroll, capital gains) he's paying a lower % than everyone that works for him.

So the bottom 50% may pay a rate of 2.6% towards income taxes they pay a lot more OVERALL. You can like that system or hate it, but don't deny it.

 
At 8/15/2011 4:06 PM, Blogger Ron H. said...

"I think corporate income taxes ought to be wiped out, replaced by a gasoline tax."

Well, you have the first part right.

 
At 8/15/2011 4:08 PM, Blogger Benjamin said...

Morgan-

With that response, you are passing gas out of both sides of your cheeks.

Basically, in those days, the word was "Invest it or lose it."

A Cadillac, with a purchase price three time that of a Ford Falcon, was the luxury car.

I am totally on-board with cutting federal outlays to 16-17 percent of GDP. But paying for that? Tax the wealthy. They are living better than anyone ever has in all history.

The GOP Patriot: As long as I don't have to pay taxes or serve in the military, I wave the flag!!!!

 
At 8/15/2011 4:08 PM, Blogger Buddy R Pacifico said...

morganovich states:

the traditional path of the uber rich is to give back late in life.

endow museums, universities, foundations, whatever.

bill gates understands this.

buffet just sounds like a fool"


morganovich, Warren Buffett has pledged 10 million shares of Berkshire Hathaway to the Bill & Melinda Gates Foundation. That puts him about equal in foundation giving to Bill and Melinda.

 
At 8/15/2011 4:12 PM, Blogger Ron H. said...

"But really--the USA wealthy have much lower tax rates than previous eras, and live better than anyone ever in all history."

And, as luck would have it, so do the US poor.

 
At 8/15/2011 4:13 PM, Blogger arbitrage789 said...

Jon @ 4:03


If you want to include FICA taxes, that’s fine, but it complicates the analysis because you then have to include benefits. If a person earns $20K on the sale of a stock, that stock is not going to be receiving any social security benefits.

And if you include FICA taxes, the analysis will be further complicated by the fact that, sooner or later, there’s going to be an overhaul of the whole entitlement system; and we can only guess what it’ll look like.

 
At 8/15/2011 4:20 PM, Blogger Ron H. said...

"the traditional path of the uber rich is to give back late in life.

endow museums, universities, foundations, whatever.

bill gates understands this.

buffet just sounds like a fool.
"

It's clear that Buffett doesn't have a clue. By pledging most of his fortune to the B & M Gates Foundation, he is saying, in effect, "Here, Bill you decide how to spend my money. I don't know what I want to do with it."

 
At 8/15/2011 4:21 PM, Blogger Benjamin said...

Ron H-

All federal agencies are fighting the last war--the war against poverty, large totalitarian regimes or inflation.

So today we have "poor" people who are fat with air-conditioning, a huge military with no worthy opponents (or even pygmy adversaries), and we are trending toward deflation.

The War on Poverty, the War on Drugs, the War on Terror--all wars designed by federal agencies, and the gaggle of grifters attached thereto, to last forever.

That said, who should pay for the feds? The rich, they benefit the most from it. They know best how to snuffle at the lard-buckets.

 
At 8/15/2011 4:25 PM, Blogger Ron H. said...

And, if you doubt the Wisdom of Buffett's claim, here's the worlds top economist agreeing with him.

 
At 8/15/2011 4:33 PM, Blogger Ron H. said...

"Buffett has on many occasions explicitly counted in FICA taxes, which Dr. Perry is willfully ignoring. FICA taxes stop at about the first $100k in earned (wage) income. There are no FICA taxes on capital gains. "

Are you really claiming that the $13.2k Buffett pays or doesnt pay in FICA makes his argument any more sensible?

 
At 8/15/2011 4:34 PM, Blogger arbitrage789 said...

I’d like to see Warren Buffet’s plan for balancing the budget. Pelosi won’t give us one, Harry Reid won’t, and certainly the “O” man won’t.

 
At 8/15/2011 4:40 PM, Blogger morganovich said...

buddy-

i know that.

that makes it seem all the more ridiculous to hear him pimping for taxes.

that's the part making him look foolish.

 
At 8/15/2011 4:46 PM, Blogger morganovich said...

bunny-

with that response, you are just demonstrating your astounding ignorance again.

that 90% rate applied to a TINY portion of people.

getting around it was laughably easy.

NO ONE paid it.

all you had to do was incorporate offshore.

"Basically, in those days, the word was "Invest it or lose it."

is just a crock.

all you had to do was earn it with an offshore entity.

from there, you could spend it, invest it, or stuff it in a mattress all with zero tax consequences.

your "tax the wealthy" plan is just more of your "someone else should pay for me" kleptocracy.

why does someone owe you anything because they are living well?

once more, you spout socialist dogma.

you are about as free market as hugo chavez.

 
At 8/15/2011 4:47 PM, Blogger PeakTrader said...

Warren Buffett: "It’s time for our government to get serious about shared sacrifice."

That's why we need to freeze government spending and freeze tax rates, until the budget is balanced, through GDP growth.

Americans don't need to consume less and work more, like 19th century farmers and factory workers.

 
At 8/15/2011 4:52 PM, Blogger Ron H. said...

"So the bottom 50% may pay a rate of 2.6% towards income taxes they pay a lot more OVERALL. You can like that system or hate it, but don't deny it."

You are correct. A person in the bottom 50%, paying 2.6% income tax is also paying 15.3% in total FICA, for a total federal tax rate of 17.9%. A much higher percentage than Buffett at 17.4 %. No wonder they are upset. [/sarc]

Keep in mind that Buffett's claim is about federal tax rates. It's hard to believe anyone in his office actually pays the high percentages he claims.

Buffett can't possibly be as ignorant as he pretends to be. He has shown that he's extremely good with numbers, and it can't all go out the window when he mentions taxes. He is trying to make some other point, but it's not clear what it is.

 
At 8/15/2011 4:56 PM, Blogger Ron H. said...

"Or perhaps Buffet doesn’t understand the difference between marginal tax RATES and total taxes paid."

Of course he understands rates. Consider how he makes his living. There's some other reason he makes such a stupid claim.

 
At 8/15/2011 5:05 PM, Blogger Jet Beagle said...

Long term capital gains taxes in a few nations:

Mexico .... 0%
Thailand ...0%
Singapore ..0%
India ......0%
Netherlands.0%
Belgium ....0%
Hong Kong ..0%
Japan ......7%
Canada.....14.5%
U.S. ......15%
Brazil ....15%
U.K. ......18%

Source: American Council for Capital Formation

So, yeah, let's jack up capital gains tax rates and see what our capitalists do with their money. That's a tactic sure to increase U.S. employment.

 
At 8/15/2011 5:09 PM, Blogger Benjamin said...

"all you had to do was incorporate offshore."-Morgan on how to dodge taxes.

Morgan-I realize that patriotism is a sucker's game, but I am glad to know that America's wealthy perfected the art of being Benedict Arnold Billionaires a long time ago.

 
At 8/15/2011 5:17 PM, Blogger Benjamin said...

Ron H.-

No, I am saying that Buffett is aware that his secretary pays FICA taxes, and they may eat up 7.2 percent, or 14+ percent of her income, depending on how you calculate employer payroll taxes.

Some economists say that since employers think of payroll taxes as benefits, they consider that part of the employee's compensation.

Another way to word it is that some guy makes $50,000 a year, all of it is taxed at a 14+ percent rate for FICA purposes, and then the wage-earner pays an income tax on top of that.


Actually, I am fine with lower capital gains taxes, if offset by consumption taxes, an idea Milton Friedman liked. Friedman thought that military outlays should be paid for by progressive consumption taxes.

Basically, even if we get federal outlays as fraction of GDP down to 16 percent as I would wish, someone has to pay for it.

As long as it is not me, and I don't have to serve in the military, than I am a patriot.

Oddly enough, a flat tax, with no deductions puts the fear of Satan into rich people. No home mortgage deductions, and funding Social Security through a flat tax would push tax burdens upwards, not downwards.

 
At 8/15/2011 5:22 PM, Blogger Ron H. said...

"Morgan-I realize that patriotism is a sucker's game, but I am glad to know that America's wealthy perfected the art of being Benedict Arnold Billionaires a long time ago."

Well, there it is, bunny, with that one you slipped past any possible relevance to the subject at hand.

 
At 8/15/2011 5:28 PM, Blogger Jet Beagle said...

Benjamin: "No home mortgage deductions, and funding Social Security through a flat tax would push tax burdens upwards, not downwards."

That will never get done, of course. As I see it, elected officials have three sources of real power:

1. manipulating the tax code;
2. channeling government spending;
3. regulating consumers and business.

I cannot see them ever voting to give up one of those three sources.

 
At 8/15/2011 5:41 PM, Blogger Benjamin said...

Ron H-

Oh, have I?

How do we define patriotism?

By fervent flag-waving? The size of your lapel pin?

Should there be zero social contract? If so, what is wrong with Brit-style rampaging?

How do we define taxation? By leaving out FICA taxes? How about sales taxes?

Hey, I know: Let's run a chart of who pays capital gains taxes. What a tremendous tax burden those people pay.

 
At 8/15/2011 6:03 PM, Blogger Ron H. said...

"No, I am saying that Buffett is aware that his secretary pays FICA taxes, and they may eat up 7.2 percent, or 14+ percent of her income, depending on how you calculate employer payroll taxes.

Some economists say that since employers think of payroll taxes as benefits, they consider that part of the employee's compensation.
"

Well, it IS part of employee compensation. If it weren't sent directly to the IRS, it would be in the employees paycheck. that 50/50 BS is just a trick to make FICA contributions look smaller.

"Another way to word it is that some guy makes $50,000 a year, all of it is taxed at a 14+ percent rate for FICA purposes, and then the wage-earner pays an income tax on top of that."

Yes, for a combined rate of about 28%. The FICA deduction for SS stops at $106,800. so it is a smaller percentage of tax for incomes in excess of that, but the supposed retirement benefit it pays for is also capped at that rate, so as a percentage of income, it is proportional to the percentage of contribution. It's not unfair that "the wealthy" contribute a smaller percentage to FICA, because they also get a smaller percentage of benefit.

Believing as he does, I'm sure Buffett hasn't been drawing SS retirement checks either.

 
At 8/15/2011 6:08 PM, Blogger Ron H. said...

"How do we define patriotism? "

Well, it certainly has nothing to do with paying taxes you aren't required to pay.

 
At 8/15/2011 6:41 PM, Blogger Benjamin said...

Ron H-

"Well, it certainly has nothing to do with paying taxes you aren't required to pay."

Especially if you are powerful enough to get the tax laws written in such a way that your taxes are lower!

Really, have you ever seen such sniveling and whimpering as among America's wealthy today?

You would think they had their dicks cut off and were working in coal mines.

A guy who makes $1 million a year in the USA: What is his life like?

You know, one time my wife called me to tell me how rough it was on her. She was in an air-conditioned salon at the time. I expect that from my wife.

But to build a political movement around people like my wife?

 
At 8/15/2011 7:29 PM, Blogger Marko said...

It's interesting that the mega rich donate huge amounts of money to charities and charitable trusts, but don't pay any extra money to the government. In fact, they generally do the best they can to minimize their tax burden while at the same time donating these often huge sums.

This strongly implies to me that they believe their money works harder or does more good in the private sector than in the public sector. If they really thought that higher taxes were good, they would stop donating funds to schools and cancer research etc. and start just giving all that money to federal and local governments (where they know it will be wasted on baseball museums, bike paths and free bike helmets).

 
At 8/15/2011 7:45 PM, Blogger NormanB said...

What makes Buffett such a hypocrite is not that he doesn't donate to the US Treasury but that his insurance business and other shenanigans are set up to avoid taxes. (To say nothing of Buffett's thinly disguised insider dealings.) Always remember with these guys, including Gates and Soros, that whatever they pontificate on is strictly to line their own wallets. They are not trustworthy.

 
At 8/15/2011 7:46 PM, Blogger Jon said...

arbitrage, it's true that if we look at government expenditures compared to revenue things get complicated. But Buffett is only talking about revenue. If you focus on that only it's not too complicated. He pays a lower rate than most others.

RonH, it may be true that the bottom 50% pays a similar % to Buffett. But not the middle class and the upper middle class. They pay a lot more as a % than he does. I think that's worth noticing. Why are we as a nation doing that when we have problems associated with government revenue? When rates were a lot higher for the upper income groups the economy performed much better.

 
At 8/15/2011 8:07 PM, Blogger Buddy R Pacifico said...

Jet Beagle, thanks for providing a sample of capital gains taxes in various nations. I had no idea they were so low. When some say that countries don't compete, they are not recognizing the differences in economies such as cap gain rates or corp income taxes.

 
At 8/15/2011 8:31 PM, Blogger Hydra said...

It takes chutzpa to charge Buffet with fiscal innumeracy.

 
At 8/15/2011 8:32 PM, Blogger Hydra said...

Our stock earnings?

Who is it that makes the money your stock earns?

 
At 8/15/2011 8:35 PM, Blogger Hydra said...

private foundations use money much better. and, you get to control upon what.

=====================

Right, like you can make good decisions reaching out of the grave.

 
At 8/15/2011 8:43 PM, Blogger Hydra said...

the OECD average for tax share/income share is 1.11.

we pay 1.35.

that is a MASSIVE difference.

================================

Bogus. The tax share per income share is a false attempt at normalization. In OECD countries the top percentiles don't earn as much of the total income.

Anyway what matters is total tax paid, and their structure is much different, with large gas taxes going to the general fund, aand other structural differences. Focusing only on the income tax gives a false picture. Payroll taxes etc. should also be considered, including, as pointed out corporate income taxes attributed to shareholders.

Even then the true picture is not shown, because wealthy persons are able to transfer more of their post expense income into assets, which grow in value without taxation, until and if they are redeemed.

 
At 8/15/2011 8:46 PM, Blogger Hydra said...

i would be in that 90% bracket, but pay far lower taxes than i do now after i made a couple of simple changes to my account domiciles.

i could probably manage to pay zero.

============================

It matters not what the bracket rate is, it matters what is actually paid. You make a good case for tqax reform to eliminate exemptions and poopholes.

 
At 8/15/2011 8:49 PM, Blogger Hydra said...

Well, it certainly has nothing to do with paying taxes you aren't required to pay.


==========================

But but but but, being required to pay taxes is stealing.

 
At 8/15/2011 8:50 PM, Blogger T J Sawyer said...

Buffett is including both sides of FICA in his calculation. And why not, they are "federal taxes." Earn $1000 a week? You don't get $1000 and your employer doesn't pay $1000. What does the $1000 represent? A total fiction!


Taxing capital gains? Say you bought a second house 30 years ago for $50,000 and sell it now for $250,000. You will owe capital gains tax on the $200,000 difference. But guess what? You didn't make any money. The $250,000 is worth exactly what the $50,000 was worth 30 years ago. It will buy one house in that same neighborhood. The government is taxing you for their inflation!

Buffett just wants to see high tax rates so that more people will use life insurance to avoid them.

The Life Insurance lobby is the most effective tax lobby in the country. And Buffett owns how many insurance companies?????

 
At 8/15/2011 8:56 PM, Blogger Hydra said...

How many of those countries with 0% capital gains rate tax capital gains as ordinary income?


Point at this, point at that, and never see the truth.

How about total tax paid divided by total increase in wealth? Anybody want to bet that stat gets smaller as you move up the income deciles?

 
At 8/15/2011 8:58 PM, Blogger Hydra said...

It will buy one house in that same neighborhood.

Good point.

 
At 8/15/2011 9:41 PM, Blogger Mark Holder said...

People seem to not understand the purpose of FICA. These aren't true taxes, they are pre-payments for retirement expenses. The intent is for payments to cover that individuals expenses later in life. The rich aren't suppose to covering the poor in this case.

As fas as income taxes, Buffett needs to get off his high horse and send a billion over to the govt and give up his foolish comments. Agree that the super rich should pay more, but we're talking $10M+ not $250K.

 
At 8/15/2011 11:46 PM, Blogger Che is dead said...

"Buffett just wants to see high tax rates so that more people will use life insurance to avoid them ... The Life Insurance lobby is the most effective tax lobby in the country. And Buffett owns how many insurance companies?????" -- TJ

“The report highlights the contrast between the public perception of estate tax proponents as fighting to break up wealthy, almost oligarchic families and the reality that a key force behind the tax is an industry for which ten percent of its revenues depend on maintaining the status quo. One of the most outspoken voices urging a higher estate tax, Warren Buffet, owns six life insurance companies, the report says.”

DailyCaller

 
At 8/16/2011 2:06 AM, Blogger Ron H. said...

Jon - "...it may be true that the bottom 50% pays a similar % to Buffett. But not the middle class and the upper middle class. They pay a lot more as a % than he does. I think that's worth noticing. Why are we as a nation doing that when we have problems associated with government revenue? When rates were a lot higher for the upper income groups the economy performed much better."

The middle class and upper middle class only pay more federal taxes as a percentage of income because of FICA. To use that argument you need to acknowledge that those folks get a proportionally higher percentage of of their retirement income from the government also. It isn't a very good argument for taxing the wealthy more. If anything, it's an argument for taxing the middle class less.

Here's the thing: for Buffett to argue that he should be taxed more, means he believes that someone in government knows better than he does, how his money should be spent. I have a lot of trouble believing he really feels that way.

The thing he does best is creating wealth. That means jobs and prosperity for others. Giving billions to the B & M Gates Foundation, although noble, isn't likely to do as much overall good in the world as it is currently doing. Just about the least efficient use of it is to give more of it to the IRS. He knows that, and so does almost everybody else, so saying "tax me more" is pure BS.

 
At 8/16/2011 4:33 AM, Blogger HHK said...

Buffet explicitly says he would leave the rates for 99.7% of households untouched, meaning he's not referring to the top 1%, only the top 0.3%.

Not sure what the relevance of the stats provided here to the Buffet article is.

 
At 8/16/2011 6:26 AM, Blogger FactsAreFriendly said...

Mr. Buffet says that legislators seem compelled to protect the super-rich.

What a nice euphemistic way to describe a system founded on paying off "campaign contributors".

I wonder how much he and his interests pay to politicians, either directly or through lobbyists and lawyers, not to mention accountants and other consultants.

 
At 8/16/2011 7:02 AM, Blogger morganovich said...

hydra-

"Right, like you can make good decisions reaching out of the grave."

that's just stupid.

vanderbuilt university doesn't work? carnigie mellon?

the gates foundation is going to need bill?

about a zillion scholarship endowments don't work?

you are being ridiculous.

 
At 8/16/2011 7:08 AM, Blogger morganovich said...

"Morgan-I realize that patriotism is a sucker's game, but I am glad to know that America's wealthy perfected the art of being Benedict Arnold Billionaires a long time ago."

bunny-

nice fascist, collectivist dogma.

and here i thought we were free.

apparently, in your world, we are not. we work for you and owe you somehting and seeking your own wealth is evil and traitorous.

for all your claims to be free market, every time you open your mouth you show your true stripes. you are fascist and socialist.

you would have loved life under Mussolini.

seriously, do you even listen to yourself?

your class envy and overwhelming sense of entitlement are astounding.

it's traitorous to seek and protect wealth? you think that's the american way?

wow.

you really are a lost cause.

 
At 8/16/2011 7:11 AM, Blogger dlr said...

What would the rates be for each income group if you included payroll taxes? That takes a an enormous bite out of most peoples salary. It is misleading to just look at Income Taxes.

 
At 8/16/2011 7:12 AM, Blogger Mark J. Perry said...

The top chart DOES include payroll taxes.

 
At 8/16/2011 7:14 AM, Blogger morganovich said...

"To use that argument you need to acknowledge that those folks get a proportionally higher percentage of of their retirement income from the government also"

actually, if you use lifetime net taxes, FICA makes the tax system even more progressive.

those at the bottom end get back far more than they pay in. those at the top get less.

my SS payouts are never going to even equal what i pay in. i get negative nominal interest on it. those earning $30k will get back far more then they pay.

this whole FICA is regressive argument is just a statistical crock.

the tellers of that lie look at contributions, but not benefits.

on a net lifetime basis, FICA is extremely progressive, perhaps even more so than income tax.

you can earn $20k and pay $1200 a year and get the same medicare as a guy who paid $6300 a year.

if that's not progressive, i don't know what is.

 
At 8/16/2011 7:39 AM, Blogger morganovich said...

"How about total tax paid divided by total increase in wealth? Anybody want to bet that stat gets smaller as you move up the income deciles?"

i'll take your bet.

you are totally wrong.

the tax rates paid call you a liar.

so does the ratio of % of taxes paid relative to income earned.

http://mjperry.blogspot.com/2011/03/us-has-most-progressive-tax-system-for.html

you do not have even a tiny shred of evidence for your position.

you are also dead wrong about your "normal income" argument.

there are a great many places that do not tax cap gains at all, especially as they do not tax foreign income, so it's easy to avoid even if they do.

my wealthy european friends keep their money in the US. they pay NO tax on gains.

it is you who are not looking at the facts.

there are only 2 countries that tax all global income:

the US and north korea.

the US has the most progressive and extensive tax regime in the developed world.

there is absolutely no contest.

it's one of the reasons that so many people (myself included) have been acquiring dual citizenship.

capital is more mobile that at any time in history.

the wealthy are not milchcows. they will leave.

i don't want to, but there's a price at which i will.

if 10% of the top 1% leave or incorporate offshore, you're looking at a 7% drop in income taxes.

contrary to benji's notions, we don't owe the nation nor you anything.

trying to squeeze us will just make us leave.

we'll take our spending and investment with us.

try reading this:

http://www.heraldsun.com/view/full_story/9639874/article-Dinner-for-ten--A-parable-of-tax-cuts

if you doubt this is what will happen, then i question your sense.

 
At 8/16/2011 9:17 AM, Blogger Jet Beagle said...

Hydra: "How many of those countries with 0% capital gains rate tax capital gains as ordinary income?"

According to the source I cited, none.

If you have information to the contrary. please provide it.

 
At 8/16/2011 9:20 AM, Blogger Hydra said...

I have no information to the contrary. It was a pure question without agenda.

 
At 8/16/2011 9:23 AM, Blogger Jet Beagle said...

T J Sawyer: "Buffett just wants to see high tax rates so that more people will use life insurance to avoid them."

Excellent point. I'm sure that influences his recommendation, either deliberately or subconciously.

 
At 8/16/2011 9:28 AM, Blogger Hydra said...

you do not have even a tiny shred of evidence for your position.

========================

You assume I have a position I do not. I merely raised a question, and your resopnse is that I am wrong.

The question I asked has not been answered. I ihave not looked up the data, but hee is my reasoning: The wealthiest part of the population is gaining wealth faster than the rest, in spite of paying higher taxes.

I am guessing (postulating) that this suggests that if you divide the taxes paid by the gain in net assets for each decile, you will see that statistic decline in value as you go up the decile.

I do not know the answer, and you have not provided one. I merely presented the questiona as something to think about. The answer to the question will be what it is, and whether I am right or wrong in my guess makes no difference: I won't be offended either way.

 
At 8/16/2011 9:37 AM, Blogger Hydra said...

the tax rates paid call you a liar.

so does the ratio of % of taxes paid relative to income earned.

==============================

Neither of those have anything to do with the total taxes paid divided by the growth in net assets.

What matters here is the amount of many left over after expenses, which can be reinvested, and contributes to the growth in net assets.

Sure, the poor are getting richer, but the rich are getting richer faster. I'm suggesting that relative the rate they are geting richer the taxes they pay are smaller.


This is only a different way of normalizing than dividing by income earned. Since you claim I am wrong in thinking that was a bogus way of normalizing, then you must agree this one is also valid.

I would argue that it is more to the point, since it goes to the ultimate results of earning income, not the process of earning income.

 
At 8/16/2011 9:40 AM, Blogger Hydra said...

we don't owe the nation nor you anything.

==============================

You are not willing to pay for a saqfe and reliable environment in which to operate? Try Mogadishu, we goat a lot of multinationals headquartered there.

 
At 8/16/2011 9:40 AM, Blogger Paul said...

Morganovich,

"for all your claims to be free market, every time you open your mouth you show your true stripes. you are fascist and socialist."

As I've said many times, I think it's more a case of, "what's in it for Benji?" On matters he benefits not a whit, he considers himself a free market ideologue.

 
At 8/16/2011 9:43 AM, Blogger Hydra said...

my wealthy european friends keep their money in the US. they pay NO tax on gains.

==========================

I'm guessing they keep it here so they won;t be taxed at higher rates at home, and they figure it is safer here.

That must be worth something, yet you think you owe nothing.

If you think you owe nothing, when the government sends you a bill, you can always contest it in court.

 
At 8/16/2011 9:46 AM, Blogger morganovich said...

hydra-

now you are moving the goal posts.

growth in net assets?

do you expect to pay taxes every year that your home appreciates?

that's an absurd metric.

 
At 8/16/2011 9:54 AM, Blogger Jet Beagle said...

hydra: "The wealthiest part of the population is gaining wealth faster than the rest, in spite of paying higher taxes."

As I see it, many risk takers among us are gaining wealth faster than those who prefer not to take risks. At the same time, many risk takers are losing wealth faster than those who prefer not to take risks.

If one focuses on only those risk takers who win, one might believe that entrepreneurs are not taking risks commensurate with their rewards. The dumb-as-bricks mass media ignores all those who lost life savings chasing a dream that didn't pan out. and, by doing so, incites "class" envy.

 
At 8/16/2011 9:54 AM, Blogger morganovich said...

hydra-

"You are not willing to pay for a saqfe and reliable environment in which to operate?"

what an absurd straw man.

that's not what i said at all.

i said i don't owe you or them anything.

you get the same environment i do.

but you pay MUCH less for it.

i have probably paid more taxes in a single year than you will pay in your lifetime and that's before we net out all the SS and medicare you will get.

that seems fair to you?

what gives you the entitlement to get the same government that i do for 1/50th the price?

what is it you think i owe you or the country?

they did not create my wealth. you had every benefit and opportunity from them that i did.

so i am to be punished for making more of the opportunity?

how are you not a massive free rider on me?

what would make me want to pay for you?

 
At 8/16/2011 9:58 AM, Blogger morganovich said...

"As I see it, many risk takers among us are gaining wealth faster than those who prefer not to take risks"

and let's keep in mind that taking risks is risky.

2008 was not kind to risk takers.

funny, i don't recall a lot of sympathy for them when they bore 90% of the hit.

 
At 8/16/2011 10:00 AM, Blogger Paul said...

Benji,

"The GOP Patriot: As long as I don't have to pay taxes or serve in the military, I wave the flag!!!!"

but earlier you said, "As for me, I am a patriot, unless you ask me to pay taxes or serve in the military."

Does you hypocrisy have any limitations?

 
At 8/16/2011 10:00 AM, Blogger Hydra said...

i don't want to, but there's a price at which i will.

=======================

It is a free market. The government is correct in trying to ascertain the price that maximizes revenue at minimum cost.

If you leave, that is part of the cost, bt it does not mean the government still comes out ahead.

You do believe in supply and demand, no?

 
At 8/16/2011 10:06 AM, Blogger Hydra said...

you get the same environment i do.

but you pay MUCH less for it.

==============================

If that environment is damaged I will lose al lot less, too.

You get more insurance, more protection, and more use of the infrastructure, and you pay more for it. A good bit of protection is protection against the little guys, who cannot afford the regulatory burdens that are often requested by big business, to raise barriers to entry.


It is no straw man. If you want a nice office building to work in, instead of a warehouse storefront, you will pay more.

 
At 8/16/2011 10:07 AM, Blogger Jet Beagle said...

hydra: "Sure, the poor are getting richer, but the rich are getting richer faster."

I got wealthier much faster than did any of my seven siblings, currently aged 48 to 62. Half of them have zero or negative net worth. So I'm likely in the top 10 percent while they're definitely in the bottom 10 percent of households.

Why did that happen? Because they made very poor choices throughout their lives. Not because of any inherited advantage. Not because of luck. Not because of deceit. Simply because of decisions they made.

Can you give me any reason why my wealth should be redistributed to my siblings who made bad decisions all their lives?

IMO. we can find examples such as mine throughout most families in America.

So why all the class envy, hydra? If you want to be wealthy, make the decisions which lead to wealth. And quit trying to destroy incentives to achieve.

 
At 8/16/2011 10:11 AM, Blogger morganovich said...

"If you think you owe nothing, when the government sends you a bill, you can always contest it in court."

come on hydra, seriously?

that's stupid even for you.

moral obligation is not the same as legal obligation.

the law on what i owe is clear.

that doesn't make it right, nor desirable to me.

you are also dead wrong on the europe thing.

they don;t do it to be safer, they do it to avoid taxes.

hold an account in switzerland, andora, or the BVI.

invest here.

bingo. no tax.

there is no way to do so in the US.

you are confusing being willing to pay a fair share for things that benefit me with paying a massively outsized share to pay for a bunch of crap guys like you are too irresponsible/unindustrious to provide them for yourselves.

to talk about upping my tax when i pay 50 times what you do is absurd.

pay for your own stuff.

just being wealthier does not obligate me to buy you a 2nd TV.

i have no problem keeping people fed, but i'm not up for buying lobster and designer sneakers.

asking me to pay 50X what you do for the same stuff seems like a pretty outlandish definition of "fair".

name any other good or service that works that way.

 
At 8/16/2011 10:13 AM, Blogger DeansDesk said...

If Buffets plan were enacted (and > $1MM earners actually paid the higher rates) the federal government would collect in revenue roughly two days worth of their expenses. Two DAYS! How does that address the spending habits of elected officials? This should be the narrative, not trying to fight the learned behavior of class warfare.

 
At 8/16/2011 10:14 AM, Blogger Jon said...

RonH, you're again talking about how the money is distributed. You say the upper income groups benefit more from Social Security and Medicare. I'm not denying that. What I am saying is that we have to be truthful about where the revenues are coming from. Buffett is paying less as a % than the upper middle class and middle class. Maybe that's right or maybe that's wrong based on the way revenues are distributed via Social Security and Medicare. But it is a fact. That's the point here.

Buffett is not saying the government is a wiser spender of his money. He's saying that there are things the government can do by pooling money that he just can't do.

So take computers. There's a reason nobody in the 50', 60's, and 70's provided the capital needed to fund the R&D that lead to the creation of computers. An investor doesn't operate on a multi decades long R&D time horizon. But a government can. They can say that yeah, maybe this generation won't reap the rewards. But a future generation will. So let's do it.

It's about being practical. We kind of need a government at this point. Maybe in some future world we won't, but at present we do. Buffett needs it. I mean, he's not interested to moving to small government countries, like Haiti, countries in Latin America, or Africa. So since it needs to be funded who should do it? The suffering poor or the rich that won't even notice the money taken? So it's not that the government is wise in the way it spends. It's that we kind of need government in our state of affairs.

If you don't think you need it go live in Nigeria and see how you like it.

 
At 8/16/2011 10:22 AM, Blogger morganovich said...

"You get more insurance, more protection, and more use of the infrastructure, and you pay more for it. "

what a load of crap.

large accounts are NOT FDIC insured.

your are.

just what "insurance" do i get.

none. zero. hedge funds do not get bailed out. nobody writes down chunks of my mortgage. my money is not protected at all.

you are just delusional.

i make more use of infrastructure?

BS.

what, i drive more? go to court more? BS.

i get less use of government.

i never get unemployment. i never get medicaid or food stamps. i don't use public schools. you get the same military i do. the same police and fire.

you get back more social security than you pay. i get less.

you are completely wrong on this in every respect.

where is all this infrastructure i get to use?

to i get special low traffic lanes on roads for paying so much more?

a special line at the passport office or DMV. nope.

they give me less that they give you but i pay 50X more.

"A good bit of protection is protection against the little guys, who cannot afford the regulatory burdens that are often requested by big business, to raise barriers to entry."

this is even more absurd. i have never, ever gotten anything like that.

the government hamstrings my business with limitations and expenses. there is no helping hand of any kind.

your febrile rantings are just absurd.

the government does ZERO to help me. they go out of their way to hurt hedge funds. they don't bail us out.

i think you need to take a long hard look at your class envy.

you, who pay virtually nothing, demand to freeride on me. it's easy for you to call the wealth of others undeserved, but have you considered that the reason you have none is that you don't see how hard the work to get it is.

you act like the wealthy lucked into it or somehow got it at your expense.

i made every penny i have, starting from nothing and have worked 100 hour weeks to do it.

to listen to you want to sit back and sponge off me is just infuriating.

go create your own wealth or accept the results of being lazy.

but don't feed me, who pays more in taxes that 50 of you, the line that i owe you for being lazy and unindustrious.

 
At 8/16/2011 10:25 AM, Blogger Jet Beagle said...

Jon: "Buffett is paying less as a % than the upper middle class and middle class."

He pays less because almost all of his income is from capital gains.

The U.S. cannot effectively tax capital gains at very much higher rates than do other nations. If we did, capital would get invested in other nations instead of here, and jobs will get added in other nations instead of here.

If you want Warren Buffet to pay the same tax rate that most Americans pay the solution is very simple: drop the total tax burden to the capital gains rate of 15%.

Of course, it's not simple because of entitlements. As long as we have Medicare and Social Security, and as long as we have to compete globally for capital, Warren Buffet will continue to get taxed less than most Americans.

 
At 8/16/2011 10:25 AM, Blogger morganovich said...

"It is no straw man. If you want a nice office building to work in, instead of a warehouse storefront, you will pay more."

do you seriously think this is an analogy?

what special "nice office" do i get from the feds for all my extra payment?

it's a total straw man.

they provide nothing of the sort.

for the money, i get subjected to more regulations, more taxes, constant threats to my livelihood, and public vilification.

you think i'd willingly buy that?

 
At 8/16/2011 10:45 AM, Blogger morganovich said...

"The U.S. cannot effectively tax capital gains at very much higher rates than do other nations. If we did, capital would get invested in other nations instead of here, and jobs will get added in other nations instead of here."

jet-

a decade ago, that may have been true, but not any longer.

you pay US taxes on foreign cap gains just like you would if they were domestic.

one of the things that makes me so nervous is the way they are locking all the exist from the US for capital.

you cannot get away from the taxes.

even giving up your citizenship is taxable. every asset you own is market to market and treated as sold. pay up, or you cannot leave.

if they suspect you are leaving for tax reasons, they can actually deny you the ability to surrender citizenship, which is astoundingly totalitarian.

it's a special berlin wall that only the rich cannot cross.

 
At 8/16/2011 11:14 AM, Blogger Hydra said...

for the money, i get subjected to more regulations, more taxes, constant threats to my livelihood, and public vilification.

=============================

For the money you get more taxes? Take a deep breath and calm down.

Many of those regulations protect you as much as they hurt you. the ones that do not shold be done away with, on this we agree.

Many of those regulations were put there because free enterprise screwed up and cheated people or caused public nuisances.

Many others were put ther at the request of business, as barriers to entry and other anticompetitive reasons.

Others are there so some jackass does not swap the location of the gas and brake or make electrical outlests with five prongs.


Threats to your liveliehood? You talking competitors, or gangs with guns extorting you at the office door?

Give me a break. You are rich. You can stop working tomorrow if you like. And still live better than someone working to earn $25k a year. Convert everything to triple tax frees, and pay virtually no tax, but don't try and convince me you are treated unfairly.


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

what special "nice office" do i get from the feds for all my extra payment?

it's a total straw man.



No it isn't. If you could get a better office and environment to work in, in Mogadishu, you would move there, or Russia, or India, if you think we have too much regs here.

What, are you still here?

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

Public Vilification?

Get yourself a new PR guy. But before you waste the money, try looking in the mirror and listening to yourself. It is just possible that if thousands of people don't like you, or how they think you or your business treat them, maybe there is a reason for it.

Hint: it may not be a valid reason according to economic texts.

 
At 8/16/2011 11:19 AM, Blogger Hydra said...

this is even more absurd. i have never, ever gotten anything like that.

============================

I did not say you got that, I said a good bit of regulation works that way.

Are you in a totally unregulated business, where any tom dick and harry can open the doors and compete?

If you are not, then my point is taken. If you are, then why complain about regulations?

 
At 8/16/2011 11:26 AM, Blogger Hydra said...

"You get more insurance, more protection, and more use of the infrastructure, and you pay more for it. "

what a load of crap.

large accounts are NOT FDIC insured.

=============================

My broker automatically breaks large accounts up and distributes them to many banks, so that they are insured.

Brokerage accounts are not FDIC insured, or insured against market loss, but they are insured against broker fraud.

I wasn't speaking about actual insurance, I was thinking more like the marines and the police, We each share the same number of each, but since you have more to protect, you get more "insurance" from them.

If you don't think they are doiing anything for you, try Mogadishu.

 
At 8/16/2011 11:59 AM, Blogger morganovich said...

hydra-

that's just absurd ratings.

what regulations help me as a hedge fund?

i have limits on who i can take money from, have to archive every communication for 5 years, and am subjected to constant tax and behavioral scrutiny.

so where's all this help you describe?

and regulations don't cost anything. why do they need so much money to impose them.

threats to my livlihood come in the forms of taxes, regulations, and outright threats.

a few years back, all hedge funds had to become RIA's. it cost me $600,000 to comply. then the law was overturned. did i get my money back? nope.

when hedge funds upset the government (as the holders of GM debt did) they are threatened with extinction.

and every time i turn on the TV i hear about how evil wall streeters are taking advantage, not paying their share, and calls to tax the hell out of us.

then clowns like you show up who want to coast on my taxes.

regarding the "what you still here" comment, as i said, i'm looking at leaving.

the real question is what are you going to do if i do and do you really want to force it?

and you keep ducking the question:

what am i getting that ought to cost me 50 times what you pay?

"Are you in a totally unregulated business, where any tom dick and harry can open the doors and compete?"

yes.

anyone can open a hedge fund.

it's just a limited partnership.

there are lots of rules about what we can do and from whom we can take money and rules that cost me money to operate, but virtually none for entry.

you need no licensing, no approval, nada.

any clown with a LP doc can enter.

 
At 8/16/2011 12:08 PM, Blogger Jet Beagle said...

morganovich,

If what you say is true, that Berlin Wall taxation would only apply to the wealth of U.S. citizens. But the capital gains tax applies to everyone who earns capital gains taxes in the U.S. borders. So a higher capital gains tax would still result in a flight of capital from the U.S. - unless, of course, the higher capital gains tax applied only to U.S. citizens.

 
At 8/16/2011 12:09 PM, Blogger morganovich said...

"Brokerage accounts are not FDIC insured, or insured against market loss, but they are insured against broker fraud."

hedge funds aren't.

the more institutional you get, the less protection.

"i have more to protect?"

not really.

i live in a town with damn near zero crime.

my money is not protected, nor are my assets except the one i buy private insurance on. to the extent that it is, it's the FDIC, paid for by the banks out of interest and fees.

your whole argument is totally wrong.

i pay for safety nets, schools, and all manner of other infrastructure that i will NEVER use.

i get less protection than you do, and such protection as i have, i pay for.

you can give up citizenship tax free.

i cannot.

you even have more rights than i do.

i have dual citizenship in st kitts.

i don't need to go to the armpit of africa.

that passport lets me live anywhere in the former british commonwealth. income taxes would be ZERO.

i like living in the US. i'm willing to pay somehting for it.

what pisses me off is entitled crybabies like you wailing that i need to pay them more.

i am paying the fair share for 50-100 people.

i'm not getting any more for it, in fact, i get less.

you are a classic example of the spoiled brat entitlement culture that will ruin the US fiscally.

go get your own wealth.

i do not owe you mine.

 
At 8/16/2011 12:11 PM, Blogger morganovich said...

jet-

that is not so at all.

we run an offshore fund. it invests entirely in US equities. americans are not allowed to invest in it. all the investors are european or asian.

they pay no US cap gains tax at all.

it's quite easy for the rest of the world to invest in the US and not pay US taxes.

only americans cannot avoid it.

 
At 8/16/2011 12:40 PM, Blogger Ron H. said...

"I have no information to the contrary. It was a pure question without agenda."

No agenda? I read the next part of your comment as questioning either the intelligence or integrity of the commentator.

Here's your original comment:

"How many of those countries with 0% capital gains rate tax capital gains as ordinary income?


Point at this, point at that, and never see the truth.

How about total tax paid divided by total increase in wealth? Anybody want to bet that stat gets smaller as you move up the income deciles?
"

 
At 8/16/2011 12:43 PM, Blogger Hydra said...

i think you need to take a long hard look at your class envy.

you, who pay virtually nothing,

===============================

You know nothing about my class envy or lack thereof, nor what I pay.

Talk about febrile.

 
At 8/16/2011 12:51 PM, Blogger Hydra said...

go get your own wealth.

i do not owe you mine.

=================================

I am not asking for yours. I think you should pay more for what you get in return, and nothing for what I get.

Don't try to confuse the issue of what is a fair amount to pay for the services and protection you get, which I submit is worth a lot more than what I get, by interjecting the false premise that I am trying to steal from you.

And by extension, dont forget the services and protection that your customers get, that allow them to make enough to be your customers.


Would you rather I pay more taxes, or would you rather that I earn enough to become one of your customers, so you can pay more taxes?


We can agree to disagree about what is the proper amount for you to pay to govern and defend the society that has allowed you to gain great wealth, despite what you claim are the handicaps it slaps on you.


But don't insult me by claiming I am stealing from you, or advocating stealing. That is not only a false argument, but a bad one.

 
At 8/16/2011 1:14 PM, Blogger morganovich said...

hydra-

i know a great deal about your class envy.

you show it to us all the time.

despite overwhelming evidence to the contrary and you complete inability to express your view on fairness based on any kind of first principles, you insist on demanding more from others to benefit yourself and others like you.

 
At 8/16/2011 1:17 PM, Blogger Ron H. said...

"You assume I have a position I do not. I merely raised a question, and your resopnse is that I am wrong."

That's funny. Your position is obvious, based on your many comments, and it is, that "the wealthy", whoever they are, are becoming wealthier at a higher rate than "the poor", whoever they are, and that this is somehow just wrong, and something that MUST be corrected.

To suggest that you are only posing questions for others to consider, is just silly.

Admit it: you are a collectivist, pure & simple, and individual achievement cannot be allowed to advance the fortunes of some, relative to other members of the group. Redistribution must be used to keep this from happening.

"Tax the rich", you say. "Make them pay their fair share".

 
At 8/16/2011 1:22 PM, Blogger Jet Beagle said...

morganovich: "they pay no US cap gains tax at all."

I had no idea. Does that really mean that, under U.S. law, a foreigner can realize capital gains and avoid taxation but a U.S. citizen cannot? Is your offshore fund off limits to American citizens or to American residents? IOW, can a Russian citizen live in the U.S., enjoy the benefits of this nation, invest in your offshore fund, and avoid capital gains taxes?

 
At 8/16/2011 1:26 PM, Blogger morganovich said...

"I am not asking for yours. I think you should pay more for what you get in return, and nothing for what I get."

no hydra, you are asking me to pay for what WE get.

you are always the free rider in this situation.

i pay for your police, your military, your courts, and your safety net.

i pay orders of magnitude more than you do .

thus, you are free riding on me.

if we go to dinner, and you pay $2 and i pay $98 when we ate the same food, who is free riding?

how is that not you demanding to use my wealth and taxes for your purposes?

you frame this whole argument is a completely bogus way.

there is no way i get anything like what i pay for in return.

you, on the other hand, get far more than you pay because i am paying so much.

i'd love to only pay for what i get back.

but that's not anything like the case.

you are free riding on me, and want me to pay more so you get a better ride.

your whole argument is internally inconsistent.

you claim i should pay more for "what i get in return". that's the same as saying i subsidize you.

we both get the same FAA, but i pay 50 times what you do.

you then say i should not pay anything for what you get.

but you've just told me i have to.

what, do i get special air traffic controllers and better air lanes?

your whole argument falls flat on it's face here.

you are basically saying that you are entitled to subsidization by me.

if we both walk into costco and buy toilet paper, we both pay the same. THAT is fair. we both pay for what we use.

what you are calling fair is we both walk in, you pay 20 cents, i pay $19.80, and we both get the same toilet paper.

that's what i mean when i say you are demanding to take what's mine.

i'm already paying a massive subsidy to you and you are demanding to only pay 10c instead of 20.

 
At 8/16/2011 1:32 PM, Blogger morganovich said...

jet-

the us tax system around foreign investment is a bit complex.

my offshore fund is off limits to US citizens and it quite precisely means that foreigners can invest tax free in the US (and their home country) tax free, but US citizens cannot. the US is actually the largest tax haven on earth.

residency gets a bit more complex.

there is a controversial (and yet untested) US law that creates the designation "US personhood".

if you spend more than 180 weighted days in the US, you are a US person.

this year is weighted 1:1, last year, 1:3, the year before 1:6.

it comes out to about 110 days a year on a consistent basis.

spend more than that, and the US tries to claim you are under their tax regime.

thus, a french college student in his sophomore year who has never worked here and whose parents have never even been here, could be liable for US inheritance tax on the french estate if his parents die.

as you can imagine, this law is quite controversial in the rest of the world. it's unclear it can be enforced or even upheld under international law.

 
At 8/16/2011 1:42 PM, Blogger Hydra said...

"How many of those countries with 0% capital gains rate tax capital gains as ordinary income?

That is a qustion, not a comment.


What follws was a comment: Point at this and point at that and never see the truth, was merely my way of suggesting that capital gains, or income tax is not the whole picture, a point that was also made by others.

But whatever the answer is to the previous question is, does not change the idea that considering only one thing and then only another thing is not a good way to see the whole picture. But this is a common trait of these discussions: someone holds up a fact, and says "here is the truth", and someone else says, no it isn't, here is a counter fact.

More often, someone holds up what they think is a cleverly distorted fact and use that to defend some political position. Such a person is not seeking the truth, but attempting to make a sale.


I have no stake in this one way or another, and don't care what the answer is, but when i see someone making what I think is a bad sales pitch, I say so. I take no position on whether they are selling a good product, just whether AI think they are doing a good job of selling it.


So, the argument goes that the top ten percent in country A earn 20% of the country income and they pay 22% of the country income taxes. in country B the top ten percent earn 30% of the country income and pay 35% of taxes. Therefore the top ten% in country B are getting robbed because 22/20 is a smaller number than 35/30.

Without regard to what is being sold or what idea is being promoted, this is a lousy argument. Country A may be less wealthy overall, or have different revenue needs. It only considers income taxes. It depends on an unproven premise, that tax burdens calculated this way ought to be equal.

You cannot convince me the rich are being somehow cheated by trotting out this argument. I don't think you conivnce anybody with that argument, except those who already agree with you. I think you can do better than that.

 
At 8/16/2011 1:42 PM, Blogger Ron H. said...

"You are not willing to pay for a saqfe and reliable environment in which to operate? Try Mogadishu, we goat a lot of multinationals headquartered there."

Although this is difficult to read due to your apparent lack of control of your keyboard, I will make some assumptions about what I think you intended to write.

As to a safe and reliable environment, you must be aware that many people, Morganovich included, can operate their enterprises from anywhere in the world. There are plenty of places that are safe. To suggest that a high price must be paid to the US government for such safety, is ridiculous.

I will assume that your Mogadishu comment is sarcasm, but you should be aware - preferably before you write such nonsense - that your presumption that Somalia is hostile to business is wrong.

Although "we" don't "goat" a lot of multinationals headquartered there, many foreign firms, including Coca Cola, operate in Mogadishu.

 
At 8/16/2011 2:12 PM, Blogger morganovich said...

"More often, someone holds up what they think is a cleverly distorted fact and use that to defend some political position."

and that person is you hydra.

you trot out this line about "pay for what you get" then demand that i pay more for it.

that's just a distorted fallacy. you are really asking me to subsidize you.

your whole fundamental premise is distorted.

if you make 20% of income and pay 20% of taxes and i make 40% and pay 40%, THAT is already unfair.

what other good or service is priced that way?

fair is pay for what you use. you've said it yourself.

so why, if we use the same government, must wealthier people pay more, even with a flat tax?

a real "flat tax" would be each of us paying $15k. that's flat.

your whole premise is skewed because at root level you think the wealthy owe you and others like you and should subsidize you.

i use fewer services than you do, not more.

but you demand that i pay far more.

thus far, you have been utterly unable to posit and even rudimentarily consistent view of what is fair.

i doubt you can.

your ideas are a muddle of convenience, distortion, and greed.

 
At 8/16/2011 2:13 PM, Blogger Ron H. said...

"It is a free market. The government is correct in trying to ascertain the price that maximizes revenue at minimum cost.

If you leave, that is part of the cost, bt it does not mean the government still comes out ahead.
"

It is not a free market, but what I read here, is that, in your view, the function of government is to maximize its own revenue at the expense of individuals. If they leave, oh well, so be it.

Whatever happened to the notion that the role of government was to serve people? You know: "...that to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed."

Does that sound at all familiar?

 
At 8/16/2011 3:02 PM, Blogger Hydra said...

if we both walk into costco and buy toilet paper, we both pay the same. THAT is fair. we both pay for what we use.

================================

OK, but you are in the hedge fund business, you know that risk and reward is not linear. Say you earn ten times what I do, and have for the past ten years. You are going to own 100 times what I own at the end of that time.

You trying to tell me you should pay the same for the protection you get as I do, based on salary?

Your house is woth a hundred times what mine is. We should pay the fire department the same amount? We each get one house protected. We should pay equally based on salary, even though you have a lot more house to lose?


I want to put a 500lb package in space, and it costs me $3000 a pound. You want to put a 500,000 lb package n space. You think you are going to get it up for the same price as me? I'm guessing yours is going to cost a lot more per lb.

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

If you are going to use buying and selling as an example, it is not a very good one to convince anyone there is some reason for linear tax rates.

Whether I think they should be liner or not.


Point to this point to that, and never see the truth.

 
At 8/16/2011 3:27 PM, Blogger morganovich said...

"You trying to tell me you should pay the same for the protection you get as I do, based on salary?"

what extra protection?

you make it sound like i need guards for my money or get special privileges.

i already pay for private home insurance, security, car insurance, and health insurance.

we get the same fire trucks to our houses. they'll make the same effort to put it out. what does the value of my house (privately insured) have to do with it? my house has a state of the art fire system and even halon in my server room. it's MUCH less likely to burn than most.

you act like the fire department pays for the damage. they don't. my private insurance does. THAT may cost more, but why should the fire department? the response time, equipment, manpower, and likely efficacy is EXACTLY the same as for the cheaper house next door.

the service we get is absolutely identical. why should it cost me more? my neighbor an i get access tot he exact same public schools. why do i have to pay more?

as you already know, most of my assets are not protected at all, while yours are. hell, our prime broker isn't even a US bank.

what is it that i have that needs all this protecting anyway? seriously. you make it sound like i have a pile of treasure than needs guards and dragons to keep it safe.

you are making a whole raft of faulty assumptions.

you space example is just senseless.

it's far more difficult to boost 500,000 pounds.

it is no more difficult for me to drive on a road or get the FAA to guide my plane than anyone else's.

what basis do you have to assume that providing services to me is more difficult?

i cannot even tell what you are trying to say i that last bit. it's just gibberish.

you still seem to think that it's "fair" for you to pay 20 cents for $10 of toilet paper while i subsidize you by paying $19.80.

i'm terribly curious, what is your definition of fair? lay it out from first principles.

i doubt you can do so without repudiating all you have argued unless you resort to totalitarian doctrine.

 
At 8/16/2011 3:34 PM, Blogger Hydra said...

It is not a free market, but what I read here, is that, in your view, the function of government is to maximize its own revenue at the expense of individuals. If they leave, oh well, so be it.

=================================

It wouldnot be a free market if you ae prevented from leaving, as you said you might.

It is not a free market. There are only so many models of country to choose from, and not many new suppliers are going to jump in, on the supply side. On the demand side, not everyone is in the market to change countries, or allowed to in any case. But you are the one who said they wold leave if the price got too high.

If you were a business, you would set the price as high as you can to maximize revenue, If you lose a few customers, so be it. As a busiess you think that is a rational strategy, but as a country you don't?

When your company maximizes revenue this way, no one asks (much) what you will do with it. Sure the board wants to know what the plan is, and all kinds of internal departments will be squabbling over the funds they need, and there is never enough, but of course that is nothing like government.

Of course the government wants to maxmize its revenue: it is the same as any other self perpetusating organism. but the government has a very long term view (except for politics). But what can government do with that revenue? It can only invest it in those things it thinks will assist its ciizens in making more money in the future. To enhance future revenues, to invest more in the people, etc.

Obviously there is no point in fleecing individuals to the point they can no longer produce. Unlike a corporation, a government does not get to keep its revenue. It all goes back to the individuals - even the parts that we think are government waste go back to individuals. The government has no revenues it gets to keep. It is a co-op.

Isn't it conservatives who say we can INCREASE REVENUES by decreasing taxes? The goal does not seem to be an issue, only the method.

And of course the priorities of how they should be spent, same as any company.

What happened to the notion that government should serve the people is that people figured out they could get more service if government had more revenue.

AS for the consent of the governed, that is a collective consent, not the unanimous consent. I don't suppose there is anyone in your company that is unhappy with how resources got allocated last year.

You are the one that brought up leaving. All I asked was why should the government care.



By the way, are you going to retire whne you get there, or do you think the government there will grant you a work permit and licenses?

 
At 8/16/2011 3:36 PM, Blogger Hydra said...

you space example is just senseless.

it's far more difficult to boost 500,000 pounds.

============================

Then you senselessly agree with me.

Not everything is linear, why should tax rates be?

 
At 8/16/2011 3:38 PM, Blogger Ron H. said...

Jon

"RonH, you're again talking about how the money is distributed. You say the upper income groups benefit more from Social Security and Medicare. I'm not denying that."

Maybe I wasn't clear. I'm not at all saying that upper income groups benefit more from SS and Medicare. In fact, just the opposite is true.

Everyone who pays FICA gets the same benefit AMOUNTS from those programs. High earners pay a smaller PERCENTAGE of their earnings for SS, but as it is capped at $107k, they also get a smaller PERCENTAGE of their retirement income from SS, as the max benefit reflects the max contribution.

Medicare, on the other hand, has no cap on contributions. A high earner pays the same PERCENTAGE of their earnings as a low earner, but it's a higher AMOUNT. The benefits are the same for everyone, so high earners pay much more for the same benefit. So, based on his 2009 compensation from Berkshire Hathaway of $519k being subject to 2.9% medicare tax, he paid $15k for the same benefit a person making $52k pays $1500 for. This is highly regressive.

"What I am saying is that we have to be truthful about where the revenues are coming from. Buffett is paying less as a % than the upper middle class and middle class. Maybe that's right or maybe that's wrong based on the way revenues are distributed via Social Security and Medicare. But it is a fact. That's the point here."

Without judging whether it's right or wrong, there IS no point here, only an interesting statistic.

Buffet says there is something wrong with the fact that his effective tax rate is lower than that of people making much less. That is a bogus complaint, and he knows it.

As has been mentioned several times on this thread, he is welcome to make a gift to the IRS of any amount he wishes. Anyone who feels as he does can do the same, but until he actually does pay more, his call to tax other at a higher rate is hypocritical BS.

"Buffett is not saying the government is a wiser spender of his money. He's saying that there are things the government can do by pooling money that he just can't do."

Like what, other than national defense? Are those things the rest of us actually want government to do?

Again, he can gift whatever amount he wants, to help fill that government pool. The fact that he instead gave billions to the Gates Foundation tells me he is a liar.

He is suggesting that others should be forced to contribute to that government pool.

"So take computers. There's a reason nobody in the 50', 60's, and 70's provided the capital needed to fund the R&D that lead to the creation of computers."

OK, let's. Do you mean computers in general, or personal computers?

Surely you agree that PCs were envisioned by Gates, Jobs, Wozniak, and a few others, not government visionaries.

Early government involvement was in developing machines that could more quickly break enemy codes than hundreds of people with pencils. There was little thought to how civilians could benefit in the far future.

You must also be unaware that IBM produced electro-mechanical business machines long before WW2. Through constant R&D and developement, these evolved, over the years, as technology did, into truly useful, labor saving, multipurpose business computers.

-continued-

 
At 8/16/2011 3:46 PM, Blogger Hydra said...

i'm terribly curious, what is your definition of fair? lay it out from first principles.

=================================

Don't do anything to someone else you would not be willing to have them do to you.


You don't like a graduated tax and your suggestion is (seems to be) a flat tax on total income. But the reality is that this amounts to a regressive tax on free cash flow.

 
At 8/16/2011 3:56 PM, Blogger morganovich said...

"Then you senselessly agree with me.

Not everything is linear, why should tax rates be?"

no, i don't. that's even more senseless than the last time.

moving 500k pounds is a bigger task than 300.

sending fire engines to my house is the exact same task as to the neighbors.

so why do i have to pay more?

i get the exact same public school as my neighbor too.

why do i pay more?

you have yet to provide a single valid example of something i do that cost more in government services.

i have given you many in which i cost less.

 
At 8/16/2011 4:03 PM, Blogger morganovich said...

"i'm terribly curious, what is your definition of fair? lay it out from first principles.

=================================

Don't do anything to someone else you would not be willing to have them do to you."

translation:

you're right. i can't. my ideas are an inconsistent mess.

here, i'll even go first:

fairness is paying for what you use, cleaning up your own mess, and not asking others to shoulder your burdens. we pay the same for the same treatment. the price of the same goods are the same for all.

a flat % income tax is nothing like fair.

it would be more fair than what we use, but it's not fair.

fair is you and i each pay $10 for $10 worth of toilet paper.

we're never going to have perfectly fair government, but that's no reason not to try to get closer.

51% paying no net tax and voting that the other 49% should pay more to provide them with things sure doesn't meet any definition of fair i know of.

ok, your turn, how is my paying 50X what you do for the same services fair?

can i hand a bad of groceries to someone bigger and stronger than i am when coming out of the store and tell him he has to carry mine against his will because he's bigger and that's fair?

can i get you to pay for 95% of the cost of my toilet paper and call it fair?

 
At 8/16/2011 4:05 PM, Blogger morganovich said...

also:

your whole notion of "regressive" is absurd.

is mcdonalds charging us both $1.39 for a cheesburger regressive to you?

no.

it's fair. we pay the same, for the same.

this whole "regressive" notion is a flawed concept rooted in socialism. it supposes that somehow you are entitled to pay less for more than i am.

it's a popular political canard, but that doesn't make it meaningful, just useful in class war and wealth redistribution.

 
At 8/16/2011 4:22 PM, Blogger Ron H. said...

-continued-

"An investor doesn't operate on a multi decades long R&D time horizon. But a government can."

I think you have this exactly backwards. You are talking about people, whether in private business or government. They respond to incentives.

You must be aware that most large corporations spend millions attempting to forecast the future. Exxon Mobil, for example, forecasts both 25 and 50 years into the future, in an attempt to steer their business in a profitable direction.

Those in government, on the other hand at least those who are elected, focus on little beyond the next election.

In any case, I'm not sure that long term planning by government is in anyone's best interest. Both Stalin and Mao had great 5 year plans that cost the lives of millions of people.

"They can say that yeah, maybe this generation won't reap the rewards. But a future generation will. So let's do it."

When I repeat that to myself it makes me giggle. I picture a visionary, messiah like government bureaucrat wistfully gazing at the ceiling above his cubicle as he whispers those words.

Besides, it's not the job of anyone in government to decide that my money should be spent on things I get no benefit from, but that future generations might.

It's about being practical. We kind of need a government at this point. Maybe in some future world we won't, but at present we do.

I'm not arguing for NO government, just a lot less government.

The Founders created a constitution for a republican form of government that clearly enumerated and limited the powers of a government, intended to serve the needs of the people, not the other way around. we no longer have anything remotely like that. Many, yourself included, seem to feel that the role of individuals is to serve the government.


"So since it needs to be funded who should do it?"

First of all, I don't agree that it needs to be funded. Most Federal government programs and agencies shouldn't exist.

"...The suffering poor or the rich that won't even notice the money taken?"

Then, I can't believe you actually wrote that. If I stole a dollar from your pocket you wouldn't likely miss it either, but that's hardly the point. It's certainly not my call to decide that for you.

"If you don't think you need it go live in Nigeria and see how you like it."

Why should I move? I live here. I don't have to like what others are doing to me or my wallet. Government should serve us, not the other way around.

 
At 8/16/2011 4:35 PM, Blogger Ron H. said...

"Others are there so some jackass does not swap the location of the gas and brake or make electrical outlests with five prongs."

Do you really not understand that these are examples of industry standards that have been developed by private businesses and have nothing to do with government regulation?

 
At 8/16/2011 5:36 PM, Blogger Ron H. said...

"So, the argument goes that the top ten percent in country A earn 20% of the country income and they pay 22% of the country income taxes. in country B the top ten percent earn 30% of the country income and pay 35% of taxes. Therefore the top ten% in country B are getting robbed because 22/20 is a smaller number than 35/30."

As usual you are having trouble with numbers. In your example the top 10% of both countries are being robbed. Both pay a higher percentage of taxes than their percentage of income. How is that fair? A flat tax rate in both countries would solve that problem.

 
At 8/16/2011 5:39 PM, Blogger Hydra said...

I don't have to like what others are doing to me or my wallet.


You don't have to like it. You are free to advocate anything you like.

Just don't expect everyone to agree with you.

=================================

Do I not understand industry standards? You mean like half of Japan has one ectrical system and half another? Or mismatched train systems in Europe?

I said, so some jackass doesn't do something LIKE ..... they are rhetorical invented examples to make a point.


===========================

I do not have a position on what is a fair tax structure. I don't think that an excessively graduated or progressive tax is fair, nor do I think a flat tax is fair.

Both have a major failing in that they focus on income only. I have not seen arguments either way that I think are credible. I don't see any reasoning devoted to finding some ground that is generally accepted as fair, just position statements.

If we agree that we cannot solve the deficit situation by taxing only the rich, then surely we must agree it cannot be done by taxing the poor.

We hear a lot of noise about the 47% that pay no taxes. Would conservatives agree to a 25% tax increase on just those folks? Would that make their no tax pedge a farce?

How much money would such a tax increase get us? We claim that increasing taxes is a disincentive to the job creators to do their excellent work: what do we think it will do to those who need every penny for basic expenses?

(Yes, i know, these "poor folks" have air conditioners, for gods sake. Let's turn those off and let them live in sweltering conditions, that will make them want to work.)


Sorry, I don't see any arguments on either side of this discourse that lead me to thnk anyone wants what is fair. I don't see any that are not self defeating, even.

 
At 8/16/2011 5:41 PM, Blogger Hydra said...

Although this is difficult to read due to your apparent lack of control of your keyboard, I will make some assumptions about what I think you intended to write.

=========================

Lack of control of fingers, actually. I know it is annoying, Sorry. you are smart enough to get the gist.

 
At 8/16/2011 5:45 PM, Blogger Ron H. said...

"I want to put a 500lb package in space, and it costs me $3000 a pound. You want to put a 500,000 lb package n space. You think you are going to get it up for the same price as me? I'm guessing yours is going to cost a lot more per lb."

Why should his cost more per pound? that is the type of muddled thinking that makes your comments nonsense.

 
At 8/16/2011 5:55 PM, Blogger Hydra said...

As usual you are having trouble with numbers. In your example the top 10% of both countries are being robbed.

==============================

That might be, but the argument proposed had to do with the relative rate of taxes paid by the top ten percent, relative to the total income earned in that country.

There is nothing wrong with the numbers or the example. The argument (which I did not make) was that some countries (the US in particular) were robbing their top earners more than others were.

Which eventually led Morganovitch to claim he was thinking about leaving.

A flat tax is not a flat tax if you consider free cash flow, or cash after expenses. It is therefore no more fair than a graduated tax is, if flat is the goal.

After all, we tax corporations on income after expenses, right? if corporations are treated the same as individuals, how is it fair to tax individuals on gross income (minus a few preordained deductibles), when you tax corporations after expenses?

But but but, poor people can't control their expenses, and they will never pay taxes. What, businesses don't do that?

 
At 8/16/2011 6:04 PM, Blogger Hydra said...

A flat tax rate in both countries would solve that problem.
=========================

I can't agree that a flat tax is fair, that it would solve the problem in both countries, or even that there is a problem.

For all we know the people who gain 20% of the income in country A may be far richer than the people who earn 35% of it in country B.

Neither income nor percentage of total earnigs tes us anything about what is fair, so it is ridiculous to claim the flat tax is any more fair than.

The speed of light is different when it is near a massive body, and travels in a different direction. I submit the fairness of taxation behaves differently in the presence of a massive economic body.

 
At 8/16/2011 7:55 PM, Blogger Ron H. said...

"It wouldnot be a free market if you ae prevented from leaving, as you said you might."

You are confused. I didn't say I was leaving, morganovich did.

"If you were a business, you would set the price as high as you can to maximize revenue, If you lose a few customers, so be it. As a busiess you think that is a rational strategy, but as a country you don't?"

A country, or more precisely a government is not a business, and it isn't a sentient being with wants and views.

"Of course the government wants to maxmize its revenue: it is the same as any other self perpetusating organism. but the government has a very long term view (except for politics). But what can government do with that revenue? It can only invest it in those things it thinks will assist its ciizens in making more money in the future. To enhance future revenues, to invest more in the people, etc."

Reread that nonsense. You are attributing human thoughts and intrests to an abstract concept called government. You have described a monarchy or a dictatorship.

 
At 8/16/2011 10:23 PM, Blogger Hydra said...

eread that nonsense. You are attributing human thoughts and intrests to an abstract concept called government. You have described a monarchy or a dictatorship.

======================

Nice try.


There are times when a business may voluntarily liquidate. Seldom happens to governments. Governments take a longer view, and that changes the dynamic of Revenue, expenses, debt and assets.

Governments are comprised of people, same as corporations, which are also abstractions.

What makes one less sinister than the other?


A business maximizes revenue, even if it means it loses some customers ( who disagree with the value proposition, as you do with the government). Why is government any different?

Try not to change the subject this time.


I'm open to anything that makes sense, and is arguably fair. You are the one arguing a single dictatorial position, and badly I might add.

 
At 8/16/2011 10:32 PM, Blogger Hydra said...

You are confused. I didn't say I was leaving, morganovich did.
============

Sorry. You are correct. I am multitasking so this argument only gets partial attention. I amalgamated arguments from several posters ( and previous threads) to create a larger picture of how the argument might be seen.

I don't see that who said it changes the argument. However, I suspect if Obama came here and quoted morganovich, then morganovich would claim Obama was wrong!

 
At 8/16/2011 11:42 PM, Blogger Ron H. said...

"There is nothing wrong with the numbers or the example. The argument (which I did not make) was that some countries (the US in particular) were robbing their top earners more than others were."

The argument you are trying to remember is that the US already taxes the "rich" at a higher rate than any other country, yet you call for still higher taxes on the rich. Why you would think it's an argument for leveling tax rates in all country is beyond me.

To pretend you don't have a position on this is just plain dishonest. It's incredible, based on your comments, that you can pretend to be so impartial and reasonable. You are anything but.


You haven't seen a "fair" tax proposal from either side? As far I as I can see, there are a several people proposing lower taxes, and then there's you.

 
At 8/16/2011 11:47 PM, Blogger Hydra said...

You are confused. I didn't say I was leaving, morganovich did.
============

Sorry. You are correct. I am multitasking so this argument only gets partial attention. I amalgamated arguments from several posters ( and previous threads) to create a larger picture of how the argument might be seen.

I don't see that who said it changes the argument. However, I suspect if Obama came here and quoted morganovich, then morganovich would claim Obama was wrong!

 
At 8/16/2011 11:58 PM, Blogger Ron H. said...

"Do I not understand industry standards? You mean like half of Japan has one ectrical system and half another? Or mismatched train systems in Europe?"

Surely even you can understand how separate countries and regions might develop their own industry standards. The point is that they are standards developed by private industry, not government dictates. Has government regulation corrected any of those mismatches?

"I said, so some jackass doesn't do something LIKE ..... they are rhetorical invented examples to make a point. "

Then your point wasn't made. It has been private industry developing sandards and preventing incompatability issues, not government.

 
At 8/17/2011 12:13 AM, Blogger Ron H. said...

"I do not have a position on what is a fair tax structure. I don't think that an excessively graduated or progressive tax is fair, nor do I think a flat tax is fair."

But you DO think people with more income and/or more wealth should pay more in taxes for what they get, than what lower income people pay for the same thing, right?

"Both have a major failing in that they focus on income only. I have not seen arguments either way that I think are credible. I don't see any reasoning devoted to finding some ground that is generally accepted as fair, just position statements."

If not income, what would you tax? Assets? When I buy an asset, I do so with money that has already been taxed. Would you tax me again year after year if I hold that asset instead of spending all my income? That's where I believe your argument was going when you suggested that a higher income person could accumulate more assets.

 
At 8/17/2011 12:25 AM, Blogger Hydra said...

Well, you have never seen my comments to my liberal friends, pointing out their errors in railing about global warming, gmo food, wind farms, excess profits from giant faceless corporations, speculators, no right to pollute and bunch of other mindless 60s era hippie crap.

What you see is objection to certain arguments and styles of argument which I claim are faulty regardless of which side they are used on.

Sorry, I don't find this argument for lower taxes to be necessarily more fair.

Nor is it sufficient, because no boundary is implied. Lets see, lower taxes bring higher revenues. We don't want higher revenues because we want smaller government, so let's lower taxes again.

You don't see a problem with that?

We have abundant evidence that some people are incapable of learning and unwilling to work, as if someone would hire them. Yet liberals and some conservatives insist on investing more in them than they can ever return. Makes no sense to me. Up to a point, I would rather set aside the projection of my work ethic on them, and just pay them to stay out of my way. Yet, I knew a Guy who built a successful business by hiring only ex cons.



Try this for a definition of fair taxes: when you are willing to trade your salary and your taxes for my salary and my taxes. If the claim is that the poor are getting a free ride, we should be happy to change places, right?

 
At 8/17/2011 12:44 AM, Blogger Ron H. said...

"There are times when a business may voluntarily liquidate. Seldom happens to governments. Governments take a longer view, and that changes the dynamic of Revenue, expenses, debt and assets."

Businesses, unlike government, have no power to tax. They depend on voluntary contributions.

You should probably wait for a year or two before you claim that governments seldom liquidate.

"Governments are comprised of people, same as corporations, which are also abstractions.

What makes one less sinister than the other?
"

The fact that you actually asked that question tells me what your problem is. Do you really not understand the difference?

A business has no power to force anyone to do anything. They depend on people voluntarily coming in to spend their money on a product or service. Competition from other businesses keep prices low, and drives innovation.

Government is nothing like this. No one can start up a competitive government to provide cheaper goods and services. There is no real incentive to provide good service to the customer. Government can force people to do, or not do, all sorts of things, and takes money whether anyone wants the services provided or not.

In the private sector, a good or service people don't want enough to pay for, disappears from the market. Companies who can't provide a good value for money spent - as determined by the customer - go out of business.

None of that is true of government. The only way I can avoid dealing with the one and only government is to leave the country.


"A business maximizes revenue, even if it means it loses some customers ( who disagree with the value proposition, as you do with the government). Why is government any different?"

I just explained that. There's a world of difference. If I don't agree with the "value proposition", whatever you think that means, I can get what I believe to be better value somewhere else. Not so with government. I am forced to pay for services whether or not I want or need them.

"Try not to change the subject this time. "

I didn't change the subject, it's clear you didn't understand the subject.

 
At 8/17/2011 1:09 AM, Blogger Hydra said...

I get taxed on my car and my boat and my airplane every year.

When I lived in north Carolina all personal property was subject to taxes and you had to inventory it all every year, right down to your shirts. However, you could opt for a tax on income instead. The way that was calculated most people would be better off doing the inventory, but it was such a pain in the ass no one did. Government through aggravation.

No I don't think you should pay tax for holding assets bought with tax paid dollars and then pay capital gains if you sell them for a profit.




But thoeir might be some argument for taxing the gain in assets rather than income. Think of it like a roth. Pay tax on the way in, nothing coming out.


Now you have a choice. Would you rather spend the income, or invest it in an asset thlat is taxed once, and then generates income?

 
At 8/17/2011 1:20 AM, Blogger Ron H. said...

"If we agree that we cannot solve the deficit situation by taxing only the rich, then surely we must agree it cannot be done by taxing the poor."

Taxing anyone, in any amount, will not eliminate the deficit. Federal tax revenue is only 60% of spending, the other 40% is borrowed. An increase of 67% on all taxes would be required to balance the budget. Only drastically reduced spending can accomplish the needed reduction in deficit.

"We hear a lot of noise about the 47% that pay no taxes. Would conservatives agree to a 25% tax increase on just those folks? Would that make their no tax pedge a farce?"

The problem with so many people paying no taxes is that it costs them nothing to vote for increased taxes on those of us who do.

If everyone paid some amount, no matter how small, they would stand to pay more if they lobbied for higher taxes.

"How much money would such a tax increase get us? We claim that increasing taxes is a disincentive to the job creators to do their excellent work: what do we think it will do to those who need every penny for basic expenses?"

A tax increase on the poor would have no measurable effect on the deficit, but as those folks aren't creating jobs in any case, the disincentive argument doesn't apply.

How about eliminating all taxes of every kind and replacing them with a single rate consumption tax?
Those wealthy bastards would pay more because they buy more. Would that be fair?

There is such a plan that has been introduced in Congress for the last 3 years, and has a number of supporters. I Can't really see it ever succeeding, as it would eliminate influence peddling and lobbying. Who would want that to happen?

 
At 8/17/2011 1:24 AM, Blogger Ron H. said...

"I don't see that who said it changes the argument. However, I suspect if Obama came here and quoted morganovich, then morganovich would claim Obama was wrong!"

Do you mean that morganovich doesn't have a serious position on these issues, and only disagrees with your nonsense comments to be unpleasant?

Give me a break. You are a real piece of work.

 
At 8/17/2011 1:48 AM, Blogger Ron H. said...

"Sorry, I don't find this argument for lower taxes to be necessarily more fair.

Nor is it sufficient, because no boundary is implied. Lets see, lower taxes bring higher revenues. We don't want higher revenues because we want smaller government, so let's lower taxes again.

You don't see a problem with that?
"

No one is arguing for lowering taxes so that tax revenue will rise. Although that is possible at certain levels of taxation, it's probably a higher level than the current one.

But, in no case are we going to discuss that, because as I recall you have a complete inability to understand the Laffer curve.

What IS being argued is for lower everything: taxes, revenue, and most of all, spending.

A fairer tax rate structure would also be an improvement. It's NOT reasonable that high income earners pay more in taxes for what they get than low income earners who get essentially the same thing. You haven't presented a single coherent piece of support for the opposite argument except for pure class envy.

And it doesn't matter what high income earners do with their take home pay. Whether they spend it, how they spend it, or whether they buy assets is no longer to be considered by those, like you, who would like to squeeze more out of them.

 
At 8/17/2011 2:09 AM, Blogger Ron H. said...

"We have abundant evidence that some people are incapable of learning and unwilling to work, as if someone would hire them. Yet liberals and some conservatives insist on investing more in them than they can ever return. Makes no sense to me. Up to a point, I would rather set aside the projection of my work ethic on them, and just pay them to stay out of my way."

Why concern yourself with them at all unless they are your children? You aren't responsible for them. There is no obligation to spend money on them at all, unless you want to.

Anyone who can dress themselves can do some kind of work. the trouble is, in many cases they aren't allowed to because of minimum wage laws. Any one who can but won't, will get hungry.

"Yet, I knew a Guy who built a successful business by hiring only ex cons. "

What is there about being an ex cons that would affect a person's ability to be a productive worker?

What's your point?

"Well, you have never seen my comments to my liberal friends, pointing out their errors in railing about global warming, gmo food, wind farms, excess profits from giant faceless corporations, speculators, no right to pollute and bunch of other mindless 60s era hippie crap."

Well, that wonderful, but you're a pure socialist whan it comes to economics.

 
At 8/17/2011 2:22 AM, Blogger Ron H. said...

"When I lived in north Carolina all personal property was subject to taxes and you had to inventory it all every year, right down to your shirts. However, you could opt for a tax on income instead. The way that was calculated most people would be better off doing the inventory, but it was such a pain in the ass no one did. Government through aggravation.

That has to be the most easily circumvented tax of all time. With income, you and your employer both tell the IRS what you earned. That's easy reconciliation. Personal property? Almost impossible to verify.

You could use the same inventory list every year. I don't think any assessor can afford the army of inspectors needed to verify everyone's inventory, even if you allowed them into your house. nor can they reasonably verify that your list changes from year to year.

 
At 8/17/2011 2:27 AM, Blogger Ron H. said...

"I get taxed on my car and my boat and my airplane every year."

Not by the Feds.

"No I don't think you should pay tax for holding assets bought with tax paid dollars and then pay capital gains if you sell them for a profit. "

Well then what was your complaint that someone with 10 times your income could accumulate 100 times your wealth in 10 years? Didn't you want to tax them at a higher rate because of this unfair accumulation of wealth?

Which is it? Fair or not fair? It can't be both.

 
At 8/17/2011 8:09 AM, Blogger Jet Beagle said...

This comment has been removed by the author.

 
At 8/17/2011 8:43 AM, Blogger morganovich said...

hydra-

let's demolish your theory once and for all.

you claim that the wealth should pay more in actual dollars for the same government.

you have yet to provide a single example of a service it costs the feds more to supply to the rich than the poor. most go the other way.

so, if my paying 50X what you do for government is "fair" (and i note you still have not defined fair) then it would also be "fair" for say, hamburgers to be priced that way.

let's work through and example.

let's say you and i have the same job. it pays $10/hr.

you work 40 hours a week and i work 80. thus, i make twice the money you do.

we go to burger barn to get dinner.

a burger is $5 for you, and $10 for me, just as if there were a flat tax.

let's think about what that means.

it means you work 30 minutes to buy a burger and i work 60.

i am being punished in real terms for working more.

not only can that not possibly meet any sane definition of fair (as we do the same work) but it provides a horrific set of incentives.

if everyhting were priced that way, the winning solution would be to only work one hour a week.

then a burger would only cost me a dime.

i'd get 39 extra hours of free time, and lose no buying power.

clearly, this is an absurd way to price burgers and other goods and services. it's damaging and wildly unfair.

so what makes government so magical that it ought to work that way?

you have said over and over that i use more, but that is just not so.

i use less.

let's focus just on federal for the time being.

we use the same FBI, FAA, FDA etc.

we are protected by the same military, border patrol, and customs officials.

i don't even qualify for unemployment though i still have to pay for yours (welcome to self employment), i will never use mediciad, i will pay more into social security than i will ever get out. we will get the same medicare.

i am paying 50X what you do and getting less than you will.

you are getting a double cheeseburger for 2% of what i pay for a single hamburger.

we've clearly seen in the burger example why paying for burgers as a % of income is both unfair and destructive to thrift.

so how are you going to justify it?

there is simply no way to justify your position without resorting to socialism and the belief that you are entitled to subsidization by me.

there is no "right" to subsidization by me. a right cannot require others to exercise. there is not "right" to healthcare. if there were, doctors would be slaves. they would have to give it to you and you would have power to compel them. there can be no "right" to have a nice house and a new TV. it violates the self determination of others. to create one is totalitarian.

so, how can you justify your beliefs? i don't think you have a leg to stand on without first admitting that you believe that you are entitled to the fruits of others labor which amounts to a form of indentured servitude.

 
At 8/17/2011 9:36 PM, Blogger Hydra said...

you claim that the wealth should pay more in actual dollars for the same government.

=====================
I never said that.
Since your rant begins with a lie, the rest is not worth responding to.


you have said over and over that i use more,

Never aside that either.

You run a hedge fund and let Yuri preconceptions cloud your vision that way?

Look you are promoting a vision for a tax code you think is fair.

I have said I don't believe it is fair and I think we can do better if we think about it.


You don't want to think about it.

You could try a different better argument, or modify your position. But you cannot convinnce me there is not a better answer by repeating the same argument for the old one.

Particularly if you start by Mister representing the position you think I have.

Suppose we set out to measure each persons use of government. What metrics would you suggest?

 
At 8/17/2011 10:10 PM, Blogger Hydra said...

Not by the feds.

============

You are restricting the argument, and therefore the solution. The feds affect local taxation many ways.

This question is how we would or should go about determining what is fair taxation.


You want to stamps out a position and defend it, fine, but that is no way to search for the correct position.

Even if events transpire such that your team carries the day, yoou and everyone else will be worse off if the position you defended is the wrong one.

If you are unwilling to look anyplace else, how do you expect to convince me you have some how found the best place?

 
At 8/17/2011 10:42 PM, Blogger Hydra said...

Didn't you want to tax them at a higher rate because of this unfair accumulation of wealth?

===================

I never said accumulation of wealth was unfair. I merely suggested that, maybe, considering only income tax is no way to discover what is fair.

MJP has pointed out that the population of the income quintiles is highly mobile. How then do we discover what is fair by comparing one class against the other? What is wrong with allowing the lowest class a little more incentive to move to the next class, to the extent utterly reduces the chance they will need some other kind of support?

When I was disabled that is exactly how my (private) disability insurance worked. How much I collected Was a sliding nonlinear scale of what I earned. Private enterprise came up with that plan, not to help me or give me something I did not deserve: it was to keep their cost down.

 
At 8/17/2011 11:19 PM, Blogger Hydra said...

What has easily circumvented got to do with being fair. Cheating is never fair.

That was the law, probably still is.
But people did not do as you suggest. Most avoided the aggravation and paid on income, even though it cost more.

What I thought was unfair was they charged you on personal property, tangibles, but not the cash in your bank account.

Earn money, it gets taxed. Buy something, the transaction is taxed. Own something, the value is taxed. Sell it for a profit, and get taxed again.

I'm telling you what happened, and you are arguing that it cannot be. Not a good argument.

=======_=========

We have the same FBI. You have a million times more propert and cash flow than I have.

If the FBI prevents a terrorist attack, there is a million times the chance that your property is protected as mine. If they fail there is a million times the likeliehood that your property and customers are damaged than mine. Type FBI handles kidnap. Families of wealthy people are That more likely to be kidnapped.

You only earn a thousand times what I do.

Try to convince me that a flat tax on income is a fair way to pay for our respective use for the FBI.

 
At 8/17/2011 11:28 PM, Blogger Hydra said...

Well, that wonderful, but you're a pure socialist whan it comes to economics.

============
wrong. I Margie against their socialist economics and utter disregard for property rights.

Their bad arguments have the same form as your bad arguments , just change the nouns and adjectives.

They cannot see and will not look for a better answer, because they are too busy defending the one they have.

 
At 8/17/2011 11:40 PM, Blogger Hydra said...

My point is that one person gave those cons a chance, where most people would not. A little extra incentive for people on the bottom. Suppose he paid them the same and made the same profit from their labor as he would anyone else.

The cons are still a better deal for him, because he does not have to pay the cost of supporting them in jail. It was a cost saving to provide a non linear incentive, same as the disability insurance example.

 
At 8/17/2011 11:53 PM, Blogger Hydra said...

They are allowed to work for minimum wage. Employers are not allowed to pay less than minimum wage. That's because there was this little problem caused by employers who used the workers energy and did not pay them enough to replenish it.
Employers are also prohibited from beating their employees. I suppose you would argue they are not allowed to be beaten.

 
At 8/18/2011 12:10 AM, Blogger Hydra said...

How about we eliminate the minimum wage and replace it with a maximum profit. Anything above 25% has to be distributed among employees.

With no minimum wage I could let my workers wage approach zero, and watch my profit on their work approach infinity. All I gottka do is feeds them and give them a hutch.


Oops, we tried that once.

 
At 8/18/2011 2:20 AM, Blogger Ron H. said...

"What has easily circumvented got to do with being fair. Cheating is never fair."

When something is blatantly unfair, as you claim the personal property tax is, people lose respect for it, and will try to circumventing it to avoid the unfairness. I can't blame them, it's human nature. In such a case it's only fear of getting caught that makes people pay at all.

Rather than agonizing over how much they think they can get away with, and worrying they will get caught, they take the easy way out, and pay an income tax.

 
At 8/18/2011 2:28 AM, Blogger Ron H. said...

"You are restricting the argument, and therefore the solution. The feds affect local taxation many ways.

This question is how we would or should go about determining what is fair taxation.
"

The subject is federal tax rates on income. it's necessary to limit the subject to that, as it would be impossible to discuss every form of taxation. There is little or no common ground on even that narrow issue, so it's pointless to widen the subject further.

The "solution" or what's "fair", may be different for different taxes, so there isn't a common solution to be found.

 
At 8/18/2011 3:30 AM, Blogger Ron H. said...

Here's some of the things you have said about tax fairness and other stuff that is irrelevant to the discussion:


"How about total tax paid divided by total increase in wealth? Anybody want to bet that stat gets smaller as you move up the income deciles?"

"The wealthiest part of the population is gaining wealth faster than the rest, in spite of paying higher taxes.

I am guessing (postulating) that this suggests that if you divide the taxes paid by the gain in net assets for each decile, you will see that statistic decline in value as you go up the decile.
"


And what is your point? Is there something wrong with this? If you aren't pointing out a problem, why do we care about this statistic?


"Neither of those have anything to do with the total taxes paid divided by the growth in net assets.

What matters here is the amount of many left over after expenses, which can be reinvested, and contributes to the growth in net assets.
"


Why does it matter? Do you have a point?


"Sure, the poor are getting richer, but the rich are getting richer faster. I'm suggesting that relative the rate they are geting richer the taxes they pay are smaller."


So what? What is your point here about taxes?


"OK, but you are in the hedge fund business, you know that risk and reward is not linear. Say you earn ten times what I do, and have for the past ten years. You are going to own 100 times what I own at the end of that time.

You trying to tell me you should pay the same for the protection you get as I do, based on salary?

Your house is woth a hundred times what mine is. We should pay the fire department the same amount? We each get one house protected. We should pay equally based on salary, even though you have a lot more house to lose?
"


You are missing something important here. Try to pay attention. Most of the protection he gets is from things he pays for out of his higher salary, and not from taxes.

For his house worth 100 times what yours is, he pays 100 times as much for insurance, which is to protect against financial loss due to damage to the property, not to put a fire out. He also likely has paid far more than you for alarms systems, and companies that monitor those alarms, and maybe even fire suppression systems you don't have. None of this comes from paying taxes.

When the 911 call comes in, the tax paid fire department will respond in pretty much the same manner and in the same number of people and pieces of equipment whether the fire is at your house or his. They will spend pretty much the same amount of time at the fire scene, and the total expense for that fire call will be pretty much the same whether it's your house or his. For the same amount of service, you should both pay the same amount in taxes. His DAMAGE may be much higher, but his much higher insurance cost is covering that, not his taxes. Got it?

The same applies to police protection. wnen the 911 call comes in to report a crime at his house, a burglury perhaps, a police car will show up with two officers, who will take the same information, and make the same report at your house and at his. There is no real difference in cost. The police don't protect him, they just show up after the fact.

Again, his high insurance premium covers financial loss, and any actual protection comes from his expensive alarm system, camarasa, locks, gates, and detectors. He may even hire someone to provide immediate onsite security. all this, at his expense, not from taxes.

-continued-

 
At 8/18/2011 3:31 AM, Blogger Ron H. said...

-continued-

FBI? Same thing. Preventing a terrorist attack protects his life as much as yours, which we can assume are of equal value. He gets no more property protection than you, and again, his high priced insurance protects against financial loss.

I can think of no federal agency that provides morganovich with way more of something than they do you, unless you want to count the IRS, which may spend more working with his tax return than with yours.

So, why is it again, that he should pay way more taxes than you?

 
At 8/18/2011 9:33 AM, Blogger dougfoot said...

Why should anyone care what another person earns? The government is not the arbitrator of a person's income - unless they have some involvement with said government - i.e.: employed or receive some type of "entitlement".
Why is it that in a down economy, the only thing growing is the size of government?
Here's a thought, let everyone keep what they earn and cut government.
There used to be a time when neighbors would help each other out, elder parents were taken care of by their children and we didn't have an income tax...
The only "income" the government has is that which they take, in the form of taxes, fees and levies.
The more they take, the more it stiffles the private sector.
With close to 50% of the population not paying taxes, asking the top earners to pay more will not solve the issue. Cutting the size of government will.

 
At 8/18/2011 2:11 PM, Blogger Hydra said...

The more they take, the more it stiffles the private sector.

=============================

You think highways stifle the public sector?

 
At 8/18/2011 2:13 PM, Blogger Ron H. said...

"wrong. I Margie against their socialist economics and utter disregard for property rights."

Well, you lost me with that one.

"My point is that one person gave those cons a chance, where most people would not."

That sounds like a baseless assumption. Can you support it, or is it something we all know to be true, that needs no explanation.?

"A little extra incentive for people on the bottom. Suppose he paid them the same and made the same profit from their labor as he would anyone else."

OK, I'm supposing. What's your point?

"The cons are still a better deal for him, because he does not have to pay the cost of supporting them in jail."

Wait! I thought these were EX cons. Why would he have to support them in jail? Are they not now out of jail, having paid their debt to society?


"It was a cost saving to provide a non linear incentive, same as the disability insurance example."

What could you possibly mean here? I can't tell. You might want to consider putting away that hand held device you use, before you start hitting the bong.

 
At 8/18/2011 2:30 PM, Blogger Ron H. said...

"They are allowed to work for minimum wage. Employers are not allowed to pay less than minimum wage."

Do you mean that employees are not allowed to offer to work for less than minimum wage?

"That's because there was this little problem caused by employers who used the workers energy and did not pay them enough to replenish it."

They would soon perish, wouldn't they? I see where that could be a problem. Employee turnover is bad enough as it is.

Don't people have a choice these days as to who they work for?

If I recall what I learned in school, that Lincoln fellow ended slavery when he instituted the minimum wage.


"Employers are also prohibited from beating their employees. I suppose you would argue they are not allowed to be beaten."

No, no. Beating them is fine. I frequently beat my employees when they slack off, or when they grumble about the low pay. I use a rubber hose, as it leaves no marks. I didn't realize it was prohibited.

You are really starting to make me laugh. Please don't stop.

 
At 8/18/2011 2:35 PM, Blogger Ron H. said...

"I suppose you would argue they are not allowed to be beaten."

No, employees are permitted to request a beating any time they feel they aren't working hard enough. Mine often do so, when they think I haven't noticed some infraction.

 
At 8/18/2011 2:43 PM, Blogger Hydra said...

When something is blatantly unfair, as you claim the personal property tax is, people lose respect for it, and will try to circumventing it to avoid the unfairness.

========================

Ron, you missed the whole point. The only reason I brought up the NC thing is to point out that there is such a thing as a tax on assets.

I do not believe we reach a "fair" situation through a flat tax on income. I have no suggestions as to what is better, nor any predilections. I am only throwing out suggestions on how we might try to begin to think about what is fair.

I suspect that if we ever find it, we will recognize it immediaely, and ask why we did not think of it sooner.

Every entity has to balance income and expenses, debt and assets. In some cases debt allows an entity to increase income and assets faster than otherwise, in spite of the increased expense of debt service.

The best solution set is the one that increases income and assets the fastest possible. If every entity could find that solution set, we would have the maximum possible growth. Call it financial light speed we cannever go faster than that.

But every entity has a different solution set and they live at a different place on that acceleration curve. Poor people rich people, businesses and government all have different solution sets and different accelartion rates.

Whatever the best combination is, I think it is in our personal interest to disrupt that acceleration, that optimum collection of growth rates, with the deceleration caused by taxes.

That suggests to me that one size fits all is not the best policy. Even flat tax advocates propose that it start above some minimum level, so that basic living expenses are not taxed.

In turn, that suggests that some poeple will pay no taxes. Yet we have just seen the recent hullaballoo over reports thatt 47% of households pay no tax.

That suggests that there are people who think everyone should pay some tax even if it means they can no longer meet the cost of basic living needs. Even if it means they can no longer accelerate their own growth.

 
At 8/18/2011 2:44 PM, Blogger Hydra said...

"I suppose you would argue they are not allowed to be beaten."

No, employees are permitted to request a beating any time they feel they aren't working hard enough. Mine often do so, when they think I haven't noticed some infraction.

========================

;-)

At least you see the point.

 
At 8/18/2011 2:47 PM, Blogger Hydra said...

"wrong. I Margie against their socialist economics and utter disregard for property rights."

Well, you lost me with that one.

===========================

Sorry, damn speller alters a correctly spelled word after I have exited the word.

should have read

"wrong. I argue against their socialist economics and utter disregard for property rights."

 
At 8/18/2011 2:52 PM, Blogger Hydra said...

"My point is that one person gave those cons a chance, where most people would not."

That sounds like a baseless assumption.

===========================

For the first part:

I know (knew) the guy, now deceased. He is one person and he gave them a chance.

I never met anyone else who went out of his way to hire cons. It is generally difficult for cons to find work.

I don't think that is baseless. In fact I think it is almost a given.

 
At 8/18/2011 3:01 PM, Blogger Hydra said...

Wait! I thought these were EX cons. Why would he have to support them in jail

===================================

Now you are being deliberaely obtuse.

In fact some of his guys wee cons, who came to him on some kind of special work release. Beyond that, the assumption is that if someone does not hire them,there is a good chance they wind up back in jail.

Through his extra efforts he reduced the jail population (very marginally) and created a benefit for himself and everyone else who hired people and did not make the effort.

 
At 8/18/2011 3:14 PM, Blogger Hydra said...

They are allowed to work for minimum wage. Employers are not allowed to pay less than minimum wage."

===============================

What is your problem?

I can work for myself, and if I don't earn as much as minimum age, that is my problem. I am allowed to work for less., But as an employer you are not allowed to pay less.

It is misleading to claim that they are not allowed to work and the minimum wage law is directed at them.

When I encounter a misleading statement, I tend to discount whatever comes next.

 
At 8/18/2011 3:25 PM, Blogger Ron H. said...

"How about we eliminate the minimum wage and replace it with a maximum profit. Anything above 25% has to be distributed among employees."

Great idea! Stockholders might not like it, but company executives would love it. To keep the company from exceeding 25% profit, they would have to pay themselves huge bonuses.

"With no minimum wage I could let my workers wage approach zero, and watch my profit on their work approach infinity."

This would only work if your other expenses were high, relative to your labor cost. You wouldn't want to exceed that dratted 25%.

"All I gottka do is feeds them and give them a hutch.

Oops, we tried that once.
"

You may have missed it, but even though slavery still exists in some parts of the world, The US isn't one of those places. Employees are now free to leave when they don't like their current conditions. They may not have great alternatives, but they are not chained to their workstations.

At some point at or above subsistence, workers will leave for greener pastures, or at least for less brown pastures.

You may not be aware, but even slaves in the US were often paid money for special skills they acquired, as they otherwise had no incentive to do more than the bare minimum.

It's still universally true that employers must pay more for skilled employees.

While slavery in this country was ended, as it should have been, for moral reasons, there was also an economic reason as well. People who only subsist, and have no hopes of a better future, have no incentive to work harder than they are forced to do.

People who have choices, determine their own futures, and are paid for their work, make much better employees.

So, unless you can physically prevent your employees from leaving, you idea of allowing their wages to decrease won't work.

 
At 8/18/2011 3:26 PM, Blogger Hydra said...

Do you mean that employees are not allowed to offer to work for less than minimum wage?

============================

That argument has been tried before. You are a little out of date.



1923, the Supreme Court struck down a Washington, D.C., minimum-wage law, finding it impeded a worker's right to set his own price for his labor. That argument was superceded by the Fair Labor Standards Act in 1938.

Lincoln had nothing to do with it, but you are correct that the reductio ad absurdium of eliminating the minimum wage would be zero wage, with maybe food and hovels supplied. A situation where a worker has no economic acceleration, and he becomes essentially a slave. With a flat tax he would hae to pay tax on the grits he gets, too.

 
At 8/18/2011 3:29 PM, Blogger Hydra said...

"Employers are also prohibited from beating their employees. I suppose you would argue they are not allowed to be beaten."

You are really starting to make me laugh. Please don't stop.

==============================

I am glad to see that you appeciate how rdiculous your own argument sounds.

 
At 8/18/2011 3:32 PM, Blogger Ron H. said...

"In fact some of his guys wee cons, who came to him on some kind of special work release. Beyond that, the assumption is that if someone does not hire them,there is a good chance they wind up back in jail."

Your original comment stated that they were ex-cons. Now it's something different?

 
At 8/18/2011 3:34 PM, Blogger Hydra said...

With close to 50% of the population not paying taxes, asking the top earners to pay more will not solve the issue. Cutting the size of government will.

================================

How do you propose taxing the 50% that do not pay now? If you are not proposing to tax them, why bring it up?

How about if we start by cutting the size of the (partial) government we provide to Iran and Iraq?

 
At 8/18/2011 3:42 PM, Blogger Hydra said...

They may not have great alternatives, but they are not chained to their workstations........

So, unless you can physically prevent your employees from leaving, you idea of allowing their wages to decrease won't work.

==================================


You theory is right but history shows the flaw. With no minimum wage requirement employers can start a rush to the bottom. As you observe their options get worse and worse, until there are virtually none.

That is how we got where we are. With all its flaws, it is still better than what came before.

 
At 8/18/2011 3:43 PM, Blogger Hydra said...

Your original comment stated that they were ex-cons. Now it's something different?

=======================

Obtuse, both statements are true, but it makws no difference for the purpose of the example.

 
At 8/18/2011 3:46 PM, Blogger Hydra said...

What he pays for insurance has nothing to do with the property protection he gets from FBI.

I stand by my example.

 
At 8/18/2011 3:48 PM, Blogger Ron H. said...

"It is generally difficult for cons to find work.

I don't think that is baseless. In fact I think it is almost a given.
"

So, that's something we all know to be true, that needs no explanation.?

Reference please.

 
At 8/18/2011 4:07 PM, Blogger Ron H. said...

"I can work for myself, and if I don't earn as much as minimum age, that is my problem. I am allowed to work for less., But as an employer you are not allowed to pay less."

Talk about misleading! Even you know that min wage doesn't apply to a self employed person, to bring that up at this point is to be deliberately obtuse. You also know the definition of the word "employee". If you structured your business to pay yourself as an employee, it couldn't be for less than min wage.

"It is misleading to claim that they are not allowed to work and the minimum wage law is directed at them."

The min wage forbids both employer and employee from agreeing to a lower wage, even if both desire it. So no, it's not misleading to point out that an employee cannot offer to work at less than min wage.

"When I encounter a misleading statement, I tend to discount whatever comes next."

I can understand, then, why you allow so many of your own to arrive here without proof reading.

 
At 8/18/2011 4:22 PM, Blogger Ron H. said...

"1923, the Supreme Court struck down a Washington, D.C., minimum-wage law, finding it impeded a worker's right to set his own price for his labor. That argument was superceded by the Fair Labor Standards Act in 1938."

Which made it illegal for a worker to set his own price for his labor.

"Lincoln had nothing to do with it, but you are correct that the reductio ad absurdium of eliminating the minimum wage would be zero wage, with maybe food and hovels supplied. A situation where a worker has no economic acceleration, and he becomes essentially a slave. With a flat tax he would hae to pay tax on the grits he gets, too."

That's a really stupid argument. The min wage already sets a zero wage for some people who would like to work, but aren't allowed to. They don't even get food and a hovel, except for another arm of the octopus that takes money from productive people to supply non workers with things they would earn if they were allowed to.

You need to learn some economics.

 
At 8/18/2011 4:38 PM, Blogger Ron H. said...

"You think highways stifle the public sector?"

Do you mean private sector? Let's hope so, or else you don't make sense.

Yes, unless paying for highways was already the first priority of those who had money taken from them for that purpose, by some higher authority that knows best how other peoples money should be spent.

Those who had better ideas how they should spend their money have been stifled.

Highways is a bad example, as they are mostly paid for by user fees, as it should be.

 
At 8/18/2011 5:07 PM, Blogger Hydra said...

GOP Candidates: Too Many Americans Pay No Taxes

A new orthodoxy has emerged in recent days on taxes: Not enough people are paying them.

“We’re approaching nearly half of the United States population that doesn’t pay any income taxes,” he responded. “And I think one of the ways is to let everybody, as many people as possible, let me put it that way, to be able to be helping pay for the government that we have in this country.” - Rick Perry

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

So, that 47% that pay notaxes is the same 47% that earns a whopping 4 to 6% of all US income. Assuming the GOP raises txes on these people, how much do they think they can get?

If they raise taxes on these people and keep their pledge of no new taxes how much relief will accrue to those that ean the other 95% of income?

Rick Perry says he wants to get more people pulling the wagon and fewer people riding in it. But if the ones in the wagon are theri because they are weak and inneffective, having them pull won't help much.

 
At 8/18/2011 5:42 PM, Blogger Ron H. said...

"What he pays for insurance has nothing to do with the property protection he gets from FBI."

That's what I said, moron. Your getting confused.

The greater value of his property is protected by his insurance. He gets no more protection from terrorists than you do.

"I stand by my example."

what example was that? Most of the ones that contain the letters FBI are pretty garbled. No doubt written after you started hitting the sauce.

One of them contains the word "kidnap", but the point isn't clear. Do you think morganovich gets more services from the FBI related to kidnapping? How much do you think this miniscule amount of additional risk is worth as opposed to yours? Is it more than the medicare and medicaid he has paid for but will never use?


Such straw reaching is laughable. Your socialist views prevent you from thinking logically about these things.

 
At 8/18/2011 5:49 PM, Blogger Ron H. said...

"Rick Perry says he wants to get more people pulling the wagon and fewer people riding in it. But if the ones in the wagon are theri because they are weak and inneffective, having them pull won't help much."

No, it won't, but it will keep them from sitting in the wagon shouting at those who actually do the pulling, to pull harder and faster.

 
At 8/18/2011 5:58 PM, Blogger Ron H. said...

"So, that 47% that pay notaxes is the same 47% that earns a whopping 4 to 6% of all US income. Assuming the GOP raises txes on these people, how much do they think they can get?"

Very little, but that's not the point. Any small amount would be important to those paying it, and with some skin in the game, they would not be so eager to call for higher taxes on the rest of us, and might even be interested in lowering everyone's burden. Surely even you understand the value of such an incentive.

"If they raise taxes on these people and keep their pledge of no new taxes how much relief will accrue to those that ean the other 95% of income?"

Same as above.

 
At 8/22/2011 5:27 PM, Blogger VangelV said...

I think you might have missed the point, his point is that capital gains should also be should be taxed as much as capital Gains are, so 30% as opposed to 15%. Or at least that's what I thought I read.

Capital is mobile. If you tax more of it, it will simply go to countries where it is taxed at a much lower rate.

 
At 8/23/2011 12:38 AM, Blogger MarkBark said...

I am amazed: Ron H. comes off as a douche in his first post, and continually reaffirms it right through his final post.

And Ron, you have the knowledge of an idiot, as evidenced on this point: "Highways is a bad example, as they are mostly paid for by user fees, as it should be."

How stupid are you? Is every highway you drive on a toll road, and are nearly all highways in the nation toll highways?

In case you haven't been out of your gold-gilded cardboard box lately, in many states you can drive hundreds or thousands of highway miles and never pay a single toll.

I'm not sure if you can comprehend the simplicity of it, but the only "user fees" directly paid for by users for highway upkeep are known as "tolls."

You're an idiot, and I enjoy pointing it out because of how you treat virtually every other poster you disagree with. Douche. Now get out there and lie about taxes some more!

 
At 8/23/2011 12:49 AM, Blogger VangelV said...

How stupid are you? Is every highway you drive on a toll road, and are nearly all highways in the nation toll highways?

The gasoline that you buy contains a tax that is used to build the highways. That tax is a form of user fee because each user of gasoline who drives on those highways pays it.

 

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