Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The 15% Tax Rate

avc.com

Post reply on HN
Print view View original

91–100 of 123 posts

Re: The 15% Tax Rate

#91

Post by bunderbunder »

caw wrote: post #68
bunderbunder wrote: post #42

Earlier quoted context omitted.

Realistically, the two are identical. Each is a bracketed, progressive income taxation system. The only thing that distinguishes them is the number of tax brackets. What's often presented as a "flat tax" actually has two brackets. The first, which starts at $0, has a 0% tax. The second, which starts at $X, has a Y% tax.

There's also the "fair tax" approach. Everyone pays the same tax, but everyone also gets a check from the govt on the amount of tax they're expected to spend up to the poverty level. The "fair tax" is pitched on the basis of a sales tax. I don't see a reason why this couldn't be off income tax as well.

Hmm. That version sounds worse to me. Doesn't it just take the 2-bracket plan, and add a federal mandate that poor people all have to give the federal government an interest-free loan every year?

Re: The 15% Tax Rate

#92

Post by anamax »

orangecat wrote: post #75
Retric wrote: post #70

Earlier quoted context omitted.

Your ignoring 1/2 of Social Security and Medicare taxes. And also not plotting the tax rate of the top 1% or 0.1% both of which are dramatically lower due to not paying Social Security on income over 120k or Medicare on investment income. The bottom quintile pays over 20% if they have a job. Medicare alone is 15.3%. Also, corporate income taxes only apply to US investments, which is rarely 100% of any sane persons in…

Your ignoring 1/2 of Social Security and Medicare taxes. Well, defenders of the current SS and Medicare system keep insisting that they're not really taxes, they're "contributions" for "insurance" that everybody pays into for the purpose of receiving benefits later. I'm all for abolishing those taxes and funding means-testing benefits out of general revenues, but the left hates that idea because they don't want SS an…

> Well, defenders of the current SS and Medicare system keep insisting that they're not really taxes, they're "contributions" for "insurance" that everybody pays into for the purpose of receiving benefits later.

Note that the benefits payouts are incredibly progressive. Folks who don't put much money into SS get a much better return on their money than folks who "contribute" the max each year.

Re: The 15% Tax Rate

#93

Post by anamax »

cluda01 wrote: post #86
thurn wrote: post #85

Earlier quoted context omitted.

Obviously Google Inc. consumes US government services. The point is that Google Ireland Inc. probably doesn't. Google Inc. pays its fair share of U.S. corporate tax on domestic revenue, and Google Ireland pays tax in Ireland. Why should Google Ireland's revenue, which never comes into America, be subject to U.S. tax law? They don't rely on U.S. government services, they rely on Irish government services.

Because they are waiting for a tax holiday so that they can repatriate the profit without paying taxes on it.

You still haven't explained why Google should pay US taxes on Google Ireland's profits. Those profits were made using Ireland's infrastructure and were taxed there.

Re: The 15% Tax Rate

#94

Post by anamax »

cluda01 wrote: post #61
yummyfajitas wrote: post #41

Earlier quoted context omitted.

...Twitter (and google, facebook, etc.) use a bunch of complex tax structures in different countries to legally avoid paying corporate income tax. Yes, many companies use complex tax structures to avoid paying US corporate income taxes on non-US profits. So what? They don't consume any US government services either, and Fred Wilson paid appropriate taxes to whatever nation Twitter Europe lives in. Similarly, my emplo…

>They don't consume any US government services either These sorts of arguments always bother me because they over simplify the complexities of how one benefits from a public good or service. One example would be that Google doesn't have to worry about their engineers getting into a car crash on the way to work because the governments (federal and state) collectively spend billions of dollars ensuring that our roadway…

> the governments (federal and state) collectively spend billions of dollars ensuring that our roadways are safe for vehicles.

Where do you think that "the governments" got that money?

Re: The 15% Tax Rate

#95

Post by notahacker »

yummyfajitas wrote: post #24
nkohari wrote: post #12

Earlier quoted context omitted.

If you replaced all taxes with a simple sales tax, it'd be even more regressive, since a gallon of milk (for example) has a higher relative cost to someone who makes $20,000 than someone who makes $2,000,000. Also, it could have an unintentionally bad effect on our (now very consumer-driven) economy. You don't want to discourage people from spending money.

On the other hand, a consumption tax taxes people proportionally to the benefits they receive from society. It might be less progressive w.r.t. income than our current system, but it is arguably more fair. It's also hardly clear that the tax burden is even felt by the rich. Consider an investor with millions in investments who only consumes $50k/year. He would like to invest in his new venture, a medical search engin…

The ability to choose when to work and on what terms is a vastly greater benefit than mere consumption goods.

Your link is really unhelpful to the idea of consumption taxes and I'm actually surprised to see you post a line of reasoning that suggests allocation of fiat money is zero sum in the medium term, especially in response to someone making a point about the economy being driven by consumption.

The $84 million belonging to Mr Kendrick might have been invested in US businesses providing valuable services (although if his private wealth managers are competent, he'd have been better off investing in foreign companies or shorting the housing market in the last few years. Earlier on, maybe, or maybe he'd have done fine placing speculative bets on asset bubbles that create nothing except liquidity for malinvestment and problems afterwards). But given the existence of fiat money created by the fractional reserve system, taxing Mr Kendrick's wealth shouldn't result in a reduction in the supply of bank loans unless the banks are running low on reserves. The government has a whole host of non-fiscal policy instruments to encourage more loans if that's the problem.

It's not a straight opportunity cost decision since the government isn't consuming the money out of existence, even if their spending is utterly devoid of foresight. Welfare check recipients and pointless bureaucrats consume much greater proportions of their income, which ultimately returns via a flows back into the hands of private investors via the mechanism of people actually buying products. Investors, especially passive ones apparently indifferent to returns, don't create profit; consumers buying things do. Shifting the burden from income to consumption taxes discourages that spending, especially if the government has to recoup the revenues Mr Kendrick's $84 million from people that actually get put off by higher prices. If consumers buy less, even Fred Wilson isn't going to get good returns from his investments.

Re: The 15% Tax Rate

#96

Post by caw »

bunderbunder wrote: post #91
caw wrote: post #68

Earlier quoted context omitted.

There's also the "fair tax" approach. Everyone pays the same tax, but everyone also gets a check from the govt on the amount of tax they're expected to spend up to the poverty level. The "fair tax" is pitched on the basis of a sales tax. I don't see a reason why this couldn't be off income tax as well.

Hmm. That version sounds worse to me. Doesn't it just take the 2-bracket plan, and add a federal mandate that poor people all have to give the federal government an interest-free loan every year?

My idea may be flawed. The real "fair tax" is a pre-bate each month for the sales tax you'll pay in the month. Which in that way is an interest free loan to you.

Re: The 15% Tax Rate

#97

Post by waqf »

Bricejm wrote: post #58

The argument that taxes on capital gains is a double tax is crazy. The original principal isn't taxed, just the gain - no double tax. There's no reason why capital gains shouldn't have a progressive marginal tax rate like ordinary income.

That's a reasonable point of view, but here are two (different, independent) possible rebuttals:

1. You ignored inflation. Your argument gives a justification for taxing the real gain, but current CGT taxes the nominal gain, which is generally greater. So the difference between the two is taxed twice.

2. Let's do some math. For simplicity let's consider a world with no CGT at all, only income tax.

Say I earn $10k income and pay 40% income tax, leaving me with $6k. Then I invest it and gain 400% on my investment, so I have $30k.

If I had not been subject to income tax, I would have taken home the entire $10k I earned; I would have invested it and gained 400%, leaving me with $50k.

But in fact I only have $30k. Since, out of my total (admittedly hypothetical) tax-free profit of $50k, I have lost $20k owing to the imposition of a 40% income tax, how can you say my capital gains have not already been taxed?

Re: The 15% Tax Rate

#98

Post by yummyfajitas »

Retric wrote: post #70
yummyfajitas wrote: post #8

Fred Wilson chooses non representative numbers to make his point: But there is a bigger issue here and that is whether it is good policy for someone of Mitt Romney's or my wealth to pay a lower tax rate than the average hard working american citizen. Mitt Romney and Fred Wilson are atypical cases. The bottom quintile pays 4.3% of income in tax, assuming they have any income. The middle quintile pays 14.2%, the nation…

Your ignoring 1/2 of Social Security and Medicare taxes. And also not plotting the tax rate of the top 1% or 0.1% both of which are dramatically lower due to not paying Social Security on income over 120k or Medicare on investment income. The bottom quintile pays over 20% if they have a job. Medicare alone is 15.3%. Also, corporate income taxes only apply to US investments, which is rarely 100% of any sane persons in…

False. Did you even read my link? "Social insurance, or payroll, taxes are attributed to households paying those taxes directly or paying them indirectly through their employers"

The bottom quintile also receives things like EITC, which dramatically reduce their taxes.

It's true that US corporate income taxes apply to US investments. Similarly, Irish income tax applies to Irish investments, Japanese income tax to Japanese investments, etc. So what?

Re: The 15% Tax Rate

#99

Post by Retric »

yummyfajitas wrote: post #98
Retric wrote: post #70

Earlier quoted context omitted.

Your ignoring 1/2 of Social Security and Medicare taxes. And also not plotting the tax rate of the top 1% or 0.1% both of which are dramatically lower due to not paying Social Security on income over 120k or Medicare on investment income. The bottom quintile pays over 20% if they have a job. Medicare alone is 15.3%. Also, corporate income taxes only apply to US investments, which is rarely 100% of any sane persons in…

False. Did you even read my link? "Social insurance, or payroll, taxes are attributed to households paying those taxes directly or paying them indirectly through their employers" The bottom quintile also receives things like EITC, which dramatically reduce their taxes. It's true that US corporate income taxes apply to US investments. Similarly, Irish income tax applies to Irish investments, Japanese income tax to Jap…

http://www.cbo.gov/publications/collections/tax/2010/graphic...

Page 2, Social Insurance Taxes is ~8% on that graph.

Also, the bottom quartile includes people that don't work. I specifically said those in the bottom quartile who do.

As to non US companies paying non US taxes, there is no universal corporate tax rate. You can't assume that non US companies are going to be paying US style income taxes.

As to promoting investment. Getting a Masters is a huge investment in time and money but I don't get to tax my extra earnings at 15% or use pretax money to pay for it etc.

PS: Not that corporate income tax really falls on the owners of a company. You could just as easily say it's the workers that end up paying corporate income tax as it reduces the value of their output work which reduces their income.

Re: The 15% Tax Rate

#100

Post by yummyfajitas »

cluda01 wrote: post #61
yummyfajitas wrote: post #41

Earlier quoted context omitted.

...Twitter (and google, facebook, etc.) use a bunch of complex tax structures in different countries to legally avoid paying corporate income tax. Yes, many companies use complex tax structures to avoid paying US corporate income taxes on non-US profits. So what? They don't consume any US government services either, and Fred Wilson paid appropriate taxes to whatever nation Twitter Europe lives in. Similarly, my emplo…

>They don't consume any US government services either These sorts of arguments always bother me because they over simplify the complexities of how one benefits from a public good or service. One example would be that Google doesn't have to worry about their engineers getting into a car crash on the way to work because the governments (federal and state) collectively spend billions of dollars ensuring that our roadway…

One example would be that Google doesn't have to worry about their engineers getting into a car crash on the way to work because the governments (federal and state) collectively spend billions of dollars ensuring that our roadways are safe for vehicles.

This applies only to Google USA. Google USA pays US income tax. Google India does not pay US income tax and does not receive these benefits.

The summary of my problem with your argument is that you benefit from all the things that America provides (government services, easy access to higher education, educated working class, pro-business climate, etc) but don't think that you should have to pay for any of this because "you didn't consume it."

My employees were educated mostly here: http://www.nifdpune.co.in/ and here http://www.softpune.com/index.shtml. I didn't ask where my devs went to school, but it was probably an IIT. Explain again how I'm consuming US government services?

Post reply on HN