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Eric Stoner
04-24-2012, 07:47 AM
Well, in theory, the wealthy benefit the most from society, and therefore have the most invested in it.

Get too Darwinistic with taxation and the blowback to the rich becomes considerable.

They also contribute the most.

Life is partly "Darwinistic". Not everybody has the ability to run 100 meters in under 10 seconds. Not everybody can be a Stephen Hawking , Steve Jobs or Ken Jennings.
That is the one essential truth about life that Statists and Liberals refuse to accept : It is inherently UNFAIR ! It is why we will always need a "safety net".

Eric Stoner
04-24-2012, 07:50 AM
I dig it..... The only problem.... 20% with the exemptions mentioned aren't nearly enough (removing Fica taxes included)..... I've done some of this math work..... A much smaller national budget would help though. ;D

Fine. What top rate IS necessary ? How about if we go back to 1986 when we had just two tax rates : 15% and 29% on ALL income ; including dividends and Capital Gains and almost no deductions ?

mikef
04-24-2012, 08:18 AM
Well I would want to remove the Fica taxes and treat all income the same..... Passive and active.... No favorites in the tax code.

Without getting into the spending part of the equation...... As I recall an exeption of $20,000 per houshold no matter the size (ouch) you needed a rate closer to 35%

Keeping in mind my math was done on gross incomes.... No deductions.... Mortgage.... charities (ouch)

It's fair..... Just don't think anyone would run for office on it.

Melonie
04-24-2012, 10:16 AM
Yeah. I'm not crazy about Melonie's argument on this one. In fact I think it is the reverse side of the same "fairness" coin and is just a mirror image of class envy. We ALL use government services and benefit from SOME government duties and functions.

I'm not crazy about it either from a personal standpoint. My intention, though, was to point out the inherent 'social engineering' embedded in any tax scheme other than the original constitutionally authorized 'per capita' apportioned tax ... where every adult citizen paid the same number of dollars in taxes based on their 'per capita' share of the total gov't budget, irregardless of their actual income. Obviously this approach to taxation is 'unmarketable' today, and has been for 100+ years, since it stems from a time when 'social welfare' benefits, retirement benefits, health care benefits, etc. being provided by gov't were unheard of !

However, just to make the record clear, from a purely individual standpoint, a WalMart heir, a middle class professional, a working class laborer, and an unemployed American don't create significantly different costs to the gov't to provide police / fire protection for their personal residence, to provide road maintenance versus the wear and tear created by their personal vehicle, to provide military / border / airline security services, to educate their children etc. Granted that corporations do create MAJOR additional costs to gov't, which is why the world's highest US corporate income tax and hefty commercial property taxes exist separately from individual income taxes and residential property taxes.

With that said, most of the recent posts in this thread are thus political in nature, since they are discussing the relative merits of various tax scheme proposals employing varying factors of 'social engineering' ( under the guise of various 'fairness' concepts ), as opposed to any 'real' economic relationship existing between the dollar 'cost' of gov't services consumed by a particular American versus the dollar amount of taxes paid by that particular American.

eagle2
04-24-2012, 03:17 PM
^^^ the poor and middle class use the same amount, or more, of state highways, police / fire / emergency services, educational services, health care services, law enforcement services etc. as a wealthy American. Thus a 'fairness' argument would involve taxing poor, middle class, and wealthy people the same NUMBER of dollars to accurately reflect the 'costs' they create for gov't !!! This in fact was the original tax structure set out by America's founding fathers.


No it wasn't. When our government was first established, its main form of revenue was tariffs. A tax on distilled spirits was later added.

eagle2
04-24-2012, 03:19 PM
However, just to make the record clear, from a purely individual standpoint, a WalMart heir, a middle class professional, a working class laborer, and an unemployed American don't create significantly different costs to the gov't to provide police / fire protection for their personal residence, to provide road maintenance versus the wear and tear created by their personal vehicle, to provide military / border / airline security services, to educate their children etc. Granted that corporations do create MAJOR additional costs to gov't, which is why the world's highest US corporate income tax and hefty commercial property taxes exist separately from individual income taxes and residential property taxes.


We don't have the world's highest corporate income tax. Some corporations don't pay any income tax at all.

Zofia
04-24-2012, 07:19 PM
Good point, Eagle2. GE for example did not pay any corporate income taxes for 2009 and 2010. However, they did employ almost 1000 people in their tax departments so the cost of avoiding taxes was very high. Cummins Engine Company paid a lot more in various income taxes during those two years and surprisingly enough, their stock performance was much better. Go figure!

On the other end of the size spectrum is my company. Last year we paid no income taxes. Though we did pay considerable property, sales, use, employment and other taxes. However, we did manage a tiny operating profit in Q4 of 2011. My business partner and I decided to organize the company as a LLC meaning the company won't pay any state or federal income taxes. However, my business partner and I will soon, hopefully, become officially rich and thus "fair game" in the class warfare that passes for economic discussion in the US.

I am fully aware, that we need to pay for government and we are not doing so now. In fact, we are paying for only about 2/3 of what the federal government costs. That is a big part of the tax problem in this country. GE spends money on almost 1000 employees to avoid taxes. My little company pays its CPAs very well to comply with the tax code. I don't really care much about the tax rate. I do care about the costs of compliance. High or low, I can live with whatever the rate might be. But, it needs to be cheap to comply with. Cheap and easy.

Z

Frenchie
04-24-2012, 09:30 PM
We don't have the world's highest corporate income tax. Some corporations don't pay any income tax at all.

That's because of the CARRYFORWARD provision. It's not a loophole. It's available to everyone, and if you pick out a company that is recovering from a horrible year, you can say they "paid no income taxes."

Even individuals are allowed to "income average" for several years if they reap a sudden windfall. I see nothing wrong with the practice. Does anyone disgree?

I also think that if we give one more dollar to the poor, that the global financial system will collapse, there will be rioting in the streets, food and water shortages, and absolute lawlessness.

eagle2
04-24-2012, 10:29 PM
Believe it or not, you and I are actually inching toward a bit of common ground and partial agreement. Please see my previous response re : the proper purpose of our Tax Code. Let me ask you a hypothetical question: If you were convinced that a flat tax system of say 20% on ALL income , after a hefty personal exemption ( say $30,000- $40,000 for a family of four ) would result in BOTH increased tax revenues and increased economic growth, would you suppport it ? Or would you still more concerned about "fairness" ? I ask because I will never forget Obama's "deer in the headlights " reaction when Charlie Gibson told him that CLINTON's Capital Gains tax cuts resulted in INCREASED revenue. Obama finally stammered that he'd still want to increase the rates to promote "fairness".

How do you know a flat tax would increase tax revenues and economic growth? Wouldn't making the tax rate 30% on income above $300k increase revenue more than a flat tax rate of 20% on all income? We had very strong economic growth in the 1960's when we had many tax brackets, and government had enough revenue that they didn't need to run up debt to pay for spending.

eagle2
04-24-2012, 10:36 PM
Good point, Eagle2. GE for example did not pay any corporate income taxes for 2009 and 2010. However, they did employ almost 1000 people in their tax departments so the cost of avoiding taxes was very high. Cummins Engine Company paid a lot more in various income taxes during those two years and surprisingly enough, their stock performance was much better. Go figure!

On the other end of the size spectrum is my company. Last year we paid no income taxes. Though we did pay considerable property, sales, use, employment and other taxes. However, we did manage a tiny operating profit in Q4 of 2011. My business partner and I decided to organize the company as a LLC meaning the company won't pay any state or federal income taxes. However, my business partner and I will soon, hopefully, become officially rich and thus "fair game" in the class warfare that passes for economic discussion in the US.

I am fully aware, that we need to pay for government and we are not doing so now. In fact, we are paying for only about 2/3 of what the federal government costs. That is a big part of the tax problem in this country. GE spends money on almost 1000 employees to avoid taxes. My little company pays its CPAs very well to comply with the tax code. I don't really care much about the tax rate. I do care about the costs of compliance. High or low, I can live with whatever the rate might be. But, it needs to be cheap to comply with. Cheap and easy.

Z

I agree the tax code should be made cheap and easy to comply with. I'm not very familiar with business or corporate taxes, but for personal taxes, there is good software available. I was very worried about doing my taxes this year, because I had invested in master limited partnerships, but I was able to find software that just let me key in the numbers from the forms I was sent, and the software calculated everything for me.

Melonie
04-25-2012, 03:02 AM
We don't have the world's highest corporate income tax

In terms of the US corporate tax rate, I see you missed the memo ... from


(snip)On April 1st, 2012, the United States enjoyed the dubious honor of achieving the highest corporate income tax rate in the developed world.

Japan, which had “led” the world rate sweepstakes by a nose, cut its rate below America’s. There’s no hiding from it anymore--our tax system is sending every clear signal it can to larger employers that they should take their capital and jobs elsewhere.(snip)

(snip)How high is our rate? In order to compare countries, you have to factor in state corporate rates (since some countries have states, and some do not). Using that metric, the OECD reports that the United States has an integrated corporate income tax rate of 39.2 percent. The average among developed nations is 25 percent and falling.

Every year, countries continue to cut their corporate tax rate. These countries include our major trading partners. Japan’s rate cut lowered its corporate rate from 40 to 35 percent. Canada is close to reaching its goal of a 25 percent rate. Reports swirl that the United Kingdom and Germany are not far behind. This will have a direct impact on the ability of U.S. companies to compete in a global economy, and will likely result over time in capital and jobs flowing from high-tax America to lower tax rate jurisdictions in the developed world.(snip)


^^^ thus bringing the US economy another mile closer to that proverbial 'Iceberg' ...



I am fully aware, that we need to pay for government and we are not doing so now. In fact, we are paying for only about 2/3 of what the federal government costs. That is a big part of the tax problem in this country.

an equally valid argument from an economic standpoint is that gov't spending needs to be reduced by 1/3rd overall in order to match future spending with future tax revenues collected at existing tax rates.



GE for example did not pay any corporate income taxes for 2009 and 2010.

That's because of the CARRYFORWARD provision.

Indeed, the losses carried forward by GE which were applied against 2009 and 2010 tax obligations were primarily the result of losses incurred by it's GE Capital financial arm. See . In terms of an overview, when NINJA loans, green startups ( ex-Solyndra et all who got direct gov't loans ), etc. began to go belly-up, GE Capital as underwriter of such 'risky' loans wound up having to book huge losses in the form of 'write-downs' on the mortgage, yacht, private jet, business capital equipment, and other loans whose 'paper' had declined significantly in market value.

Or viewed another way, GE paying zero income taxes was actually yet another form of US taxpayer subsidies toward certain borrowers, with GE / GE Capital acting as a 'stealth' conduit. And that of course doesn't address the second issue that when GE didn't have to pay income taxes on a particular $1 million of 2009 income, that $1 Million could in turn be lent out to GE Capital to a medium sized business for, say, the installation of a green energy system, resulting in additional sales / profits for GE as supplier of a wind generator and electrical equipment. That sale gets booked regardless of whether that medium sized business goes bankrupt in the near future and stiffs GE Capital on loan repayment. If / when that medium sized business does go belly-up, GE will again simply subtract that 'loss' from taxes due on other highly profitable GE business sectors, thus transferring the actual 'loss' to US taxpayers.

Frenchie
04-25-2012, 06:53 AM
In terms of the US corporate tax rate, I see you missed the memo ... from


(snip)On April 1st, 2012, the United States enjoyed the dubious honor of achieving the highest corporate income tax rate in the developed world.

Japan, which had “led” the world rate sweepstakes by a nose, cut its rate below America’s. There’s no hiding from it anymore--our tax system is sending every clear signal it can to larger employers that they should take their capital and jobs elsewhere.(snip)

If one oversimplifies such a far-reaching decision on the basis of a few percentage points. Of course, once they relocate, the problems they ran from will just follow them overseas, plus our own Congress can react. Really, some of these anti-tax arguments sound like twelve year-olds whining about their allowance.

I'm getting really sick of everyone acting like the *privilege* of living and doing business in America is just so worthless. If so, how about we just apply American tax rates and wage laws to any corporation that wishes to do business in the United States?

I'm equally sick of wealthy, privileged people who seem completely obsessed with whether or not someone on welfare in the ghetto just purchased a new PlayStation. Would you rather they go to bars every night? One study showed that the poor often splurge on things like stereos and televisions because they have to stay home a lot more, and the bump in their quality of life more than justified the expense over time.

Melonie is a perfect example of this. Sure, she's saving money, but she had to LEAVE AMERICA to do it. You couldn't pay me all the money in the world to do that.

Frenchie
04-25-2012, 07:01 AM
an equally valid argument from an economic standpoint is that gov't spending needs to be reduced by 1/3rd overall in order to match future spending with future tax revenues collected at existing tax rates.

Growth would skew those numbers favorably. We won't be in recession forever.

Let those who leave this country spend one night in a foreign prison, or one incident without the protection of the American constitution and military, and then they can tell me how great all that extra money is for them.

No matter how some here try to coat it, it sounds like they are people with money who want to keep it, who resent social welfare, as if dollars are the only thing of value, and as if being such a hardass on those less fortunate won't change the equation, beginning with the "less fortunate" deciding to exclude, ostracize, and do no favors withoutpayment for a bunch of smug, rich jerks who seem to think they'll never need another friend, never help out family in need, or who could never go broke because they are just SOOOOO much smarter than nature or fate.

Reminds me of the people who think we don't need socialized medicine, despite the rest of the world having it, because they just happen to not need it at the present moment, and, therefore, should not have to pay their fair share of the lifetime cost of caring for them. Surely they won't mind refusing emergency treatment if they miscalculate.

Eric Stoner
04-25-2012, 02:56 PM
How do you know a flat tax would increase tax revenues and economic growth? Wouldn't making the tax rate 30% on income above $300k increase revenue more than a flat tax rate of 20% on all income? We had very strong economic growth in the 1960's when we had many tax brackets, and government had enough revenue that they didn't need to run up debt to pay for spending.

First, because those countries that use a flat tax have solid economic growth and are raising enough revenue.

It is interesting that you point to the 60's. LBJ got JFK's TAX CUTS through Congress and government spending as a % of GDp was much lower than it is now. Defense spending as a % of GDP was actually much higher THEN than it is now.

I don't have a problem with a 30% rate on incomes over $300,000 so long as we eliminate all the credits, deductions and other Tax Code chicanery.

If we look at revenue under Reagan, it peaked AFTER his signing of Bradley's Tax Reform which left us with two brackets, 15 and 29%.

Melonie
04-25-2012, 06:06 PM
Growth would skew those numbers favorably. We won't be in recession forever.

You might want to talk to a generation of Japanese about that point ... where their early 90's recession became a 'new normal' for the next 20 years !!! Of course, the Japanese gov't also had the 'luxury' of being able to borrow money from willing domestic investors / savers, as opposed to the US going 'hat in hand' to the Chinese, Saudi's, Japanese etc. - a fact that arguably made Japan's outcome less negative than that of Greece, Spain, Italy and eventually the USA. It's never a pretty result when, as Margaret Thatcher put it, 'sooner or later you run out of other people's money'.



Melonie is a perfect example of this. Sure, she's saving money, but she had to LEAVE AMERICA to do it. You couldn't pay me all the money in the world to do that.

In the final analysis, the amount of legal tax savings available to me down here way south of the border makes the difference between being able to 'retire' on passive investment earnings, versus still working full time as a Respiratory Therapist in New York with > 40% of my paychecks plus ( soon ) ~31% of my passive investment earnings going to fed / state / local taxes. The end result is that I wind up having nearly the same amount of after tax dollars in both scenarios - especially so when adjusted for local cost of living differences ( which are higher in New York primarily due to high business / property taxes inflating retail / rent price levels ).

The blunt way to express the alternate situation in New York would literally be 'working for nothing'. In reality, it wouldn't be 'working for nothing', but working to support the 'career' social welfare benefits of two NY families whom I will never meet, working to support the bonuses of Solyndra / GM / Wall St 'fat cats', working to support the hot tub adventures of GSA gov't employees, working to support the build-up to another mideast war, etc. Forgive me if I don't apologize for 'not paying my fair share' !!!

I'll refrain from commenting on the other aspects, since they are almost entirely political in nature.

eagle2
04-25-2012, 07:52 PM
In terms of the US corporate tax rate, I see you missed the memo ... from http://www.breitbart.com/Big-Government/2012/04/19/US-Has-Highest-Corporate-Tax-Rate-in-the-World


(snip)On April 1st, 2012, the United States enjoyed the dubious honor of achieving the highest corporate income tax rate in the developed world.

Japan, which had “led” the world rate sweepstakes by a nose, cut its rate below America’s. There’s no hiding from it anymore--our tax system is sending every clear signal it can to larger employers that they should take their capital and jobs elsewhere.(snip)

(snip)How high is our rate? In order to compare countries, you have to factor in state corporate rates (since some countries have states, and some do not). Using that metric, the OECD reports that the United States has an integrated corporate income tax rate of 39.2 percent. The average among developed nations is 25 percent and falling.

Every year, countries continue to cut their corporate tax rate. These countries include our major trading partners. Japan’s rate cut lowered its corporate rate from 40 to 35 percent. Canada is close to reaching its goal of a 25 percent rate. Reports swirl that the United Kingdom and Germany are not far behind. This will have a direct impact on the ability of U.S. companies to compete in a global economy, and will likely result over time in capital and jobs flowing from high-tax America to lower tax rate jurisdictions in the developed world.(snip)


Tax rates aren't nearly as important as the percentage that is actually paid. On average, American corporations pay approximately 12 percent of their income in federal taxes.



^^^ thus bringing the US economy another mile closer to that proverbial 'Iceberg' ...

Just because the US government doesn't follow your ideology, doesn't mean we're heading for an "iceberg". Iceland and Ireland have two of the lowest corporate income tax rates in the world. How did that work out for them?





an equally valid argument from an economic standpoint is that gov't spending needs to be reduced by 1/3rd overall in order to match future spending with future tax revenues collected at existing tax rates.


We're also coming out of the worst economic downturn in 80 years. As the economy improves, tax revenue will increase. Also, expenses related to the downturn, such as unemployment benefits will decrease.

eagle2
04-25-2012, 08:16 PM
First, because those countries that use a flat tax have solid economic growth and are raising enough revenue.

Which countries are you referring to?



It is interesting that you point to the 60's. LBJ got JFK's TAX CUTS through Congress and government spending as a % of GDp was much lower than it is now. Defense spending as a % of GDP was actually much higher THEN than it is now.


By the 1960's, much of the debt from World War II had been paid down, so tax cuts made sense. I have nothing against tax cuts if the government can afford it. What I'm against is, tax cuts which result in huge budget deficits and a government unable to carry out its responsibilities, such as maintaining our infrastructure.



I don't have a problem with a 30% rate on incomes over $300,000 so long as we eliminate all the credits, deductions and other Tax Code chicanery.

If we look at revenue under Reagan, it peaked AFTER his signing of Bradley's Tax Reform which left us with two brackets, 15 and 29%.

I would like to see our government go through the tax code and get rid of a lot of the credits and deductions that benefit only a small number of people, who happened to have a lot of influence with Congress.

We still had deficits during Reagan's entire presidency. The tax rates we had in the 90's seemed to work. China's tax rate for the highest earners is 45%, and that seems to be working well for them.

Frenchie
04-25-2012, 11:11 PM
They also contribute the most.

Three words explain why we have our safety net:

NOTHING TO LOSE.

I would argue that the poor contribute a great deal more to society by tolerating their existence, period. The wealthy could not function or benefit without this, plus many wealthy don't contribute anything, and are just living off their ancestors' wsealth.

How about we abolish inheritances, with money reverting to the government when someone dies? The rich would have to endow their relatives while they (the rich) were still alive, and would not be able to use the threat of disinheritance to control their lives.

I also believe every American should be given say $10,000 the day they turn eighteen, as a few would turn it into huge fortunes, and it would give every American at least one chance at success. The problem of course would be companies that would front the money to a child, but the child could not be forced to pay it back since it couldn't enter into a binding contract.

Frenchie
04-25-2012, 11:20 PM
You might want to talk to a generation of Japanese about that point ... where their early 90's recession became a 'new normal' for the next 20 years !!!

This was preceded by a huge boom. We had a similar problem in the 1930s. The piper must still be paid.




In the final analysis, the amount of legal tax savings available to me down here way south of the border makes the difference between being able to 'retire' on passive investment earnings, versus still working full time as a Respiratory Therapist in New York with > 40% of my paychecks plus ( soon ) ~31% of my passive investment earnings going to fed / state / local taxes. The end result is that I wind up having nearly the same amount of after tax dollars in both scenarios - especially so when adjusted for local cost of living differences ( which are higher in New York primarily due to high business / property taxes inflating retail / rent price levels ).

The blunt way to express the alternate situation in New York would literally be 'working for nothing'. In reality, it wouldn't be 'working for nothing', but working to support the 'career' social welfare benefits of two NY families whom I will never meet, working to support the bonuses of Solyndra / GM / Wall St 'fat cats', working to support the hot tub adventures of GSA gov't employees, working to support the build-up to another mideast war, etc. Forgive me if I don't apologize for 'not paying my fair share' !!!

I'll refrain from commenting on the other aspects, since they are almost entirely political in nature.

People can retire to other countries on their social security and/or pension checks. They don't need passive incomes on your level. The reduced cost of living where you are has as much to do with this as the tax savings. To say you'd be working for nothing in New York is to say that living in New York is not at all superior to living in whichever country you are in (say Panama or Antigua or the DR or South America or whatever). The people, culture, legal protections, and a host of other things I'd lose by leaving NY would not be worth it to me, but obviously you disagree.

The remark about "supporting two families" goes back to what I said about how the position reminds me of the rich kid in school who didn't want to share, but still wanted everyone to like him. Can't have both. Some people value money more than people, and others value people over money. I know starving musicians who will refuse to play for free for the wealthy, on principle, because the wealthy count every cent, yet expect others to just give away things that do not have a measurable dollar value in the name of being "nice."

Nice people don't cut off the poor. Tough love works both ways. If you want to keep "your" money, and make sure some welfare family isn't getting it, may you and your cash be happy for all eternity. Just don't count on a threesome.

Eric Stoner
04-27-2012, 07:02 AM
Which countries are you referring to?



By the 1960's, much of the debt from World War II had been paid down, so tax cuts made sense. I have nothing against tax cuts if the government can afford it. What I'm against is, tax cuts which result in huge budget deficits and a government unable to carry out its responsibilities, such as maintaining our infrastructure.



I would like to see our government go through the tax code and get rid of a lot of the credits and deductions that benefit only a small number of people, who happened to have a lot of influence with Congress.

We still had deficits during Reagan's entire presidency. The tax rates we had in the 90's seemed to work. China's tax rate for the highest earners is 45%, and that seems to be working well for them.

Hong Kong for one. Almost ALL of Eastern Europe. There are of course multiple variants.

We are going in a circle again. We have proven to you over and over again that the Reagan deficits resulted far more from too much SPENDING. Talk about "ideology" ! Whenever there is a deficit you REFUSE to look at the spending side of the ledger. We have SHOWN you that after Reagan's tax cuts, revenue went down at first BUT by the end of his second term, revenues had almost doubled and the deficits were declining both in real terms and as a % of GDP.

China's system is a very bad example. Their government gets billions directly from exports and has nothing resembling our social spending. Infrastructure -Yes but they don't have Food Stamps, Medicare, Medicaid , Disability etc. etc.

For the last time, Clinton did NOT go back to Carter's tax rates. What he DID do was follow Bush the Smarter's lead and start cutting and pasting the Tax Code to revive crony capitalism.

I will be posting another thread about the illustrative and educational example of Illinois which has both raised taxes and INCREASED debt.
You seem to think that higher tax rates are some sort of "magic bullet" that cure deficits all by themselves.