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The 15% Tax Rate

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Re: The 15% Tax Rate

#101

Post by yummyfajitas »

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.

Yes, Google Ireland is choosing not to invest money in the USA because of the hostile business environment in the US. So what? Is Google Ireland somehow obligated to do business in the US in an effort to pay more US taxes?

Is the Guinness Brewing Company or Tata similarly obligated to do business in the US just so the US government can tax them? And on the flip side, is GM obligated to do business in India so that India can tax them?

Re: The 15% Tax Rate

#102

Post by mattgreenrocks »

icebraining wrote: post #59
mattgreenrocks wrote: post #22

Earlier quoted context omitted.

What if we special-cased the essential consumables a bit? Not very elegant, and probably a bit exploitable, but I can't think of any glaring holes (yet). As for your second objection, I don't see the issue. If they don't want to be taxed, they can forego buying something.

As for your second objection, I don't see the issue. If they don't want to be taxed, they can forego buying something. That's parent's point: if I one buys less because of the tax, that's means someone or some company has lost a sale, which means they'll need to cut back on spending, etc. In a consumption based economy, you want money to be constantly re-injected into the economy to prevent stagnation.

Then perhaps it's time to move past a consumption based economy.

We already have too much crap.

Re: The 15% Tax Rate

#103

Post by yummyfajitas »

notahacker wrote: post #95
yummyfajitas wrote: post #24

Earlier quoted context omitted.

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 b…

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

The "ability to choose when to work and on what terms" is nothing but the ability to purchase goods.

The issue is not allocation of green pieces of paper at all. Moving numbers around in computers somewhere at the Fed or BankAm's data center doesn't affect the world at all.

The issue is spending. Real resources are allocated based on where the money is spent. If Fred Wilson spends the money, then real resources will be allocated towards a social network/gaming platform for people trying to get in shape. If the government spends the money, those resources will instead be devoted to making bling bling for welfare recipients.

If you want to argue that the latter case is a good thing, then go ahead and argue it. But the issue is whether the money should be spent on Fred Wilson's venture rather than Obama's venture, not whether to increase or decrease Fred Wilson's consumption.

Incidentally, if you are concerned by investors putting money into foreign companies (note: I'm not), why are you not concerned by welfare recipients consuming goods that are made in China?

Re: The 15% Tax Rate

#104

Post by [deleted] »

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…

[deleted]

Re: The 15% Tax Rate

#105

Post by Retric »

anamax wrote: post #92
orangecat wrote: post #75

Earlier quoted context omitted.

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.

Except married people receive dramatically better benefits than single people.

Re: The 15% Tax Rate

#106

Post by yummyfajitas »

Retric wrote: post #99
yummyfajitas wrote: post #98

Earlier quoted context omitted.

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…

Assuming you are right about social insurance, that means the lowest quintile pays 12.8% of income in taxes and the top 1% pays 32.8%.

You can't assume that non US companies are going to be paying US style income taxes.

True. For example, a company based in Gurgaon pays fairly little in taxes. On the other hand, they need to provide their own roads, water and police services. (This is partly why Gurgaon is thriving - corporations seem to do a much better job of this than the Indian government.)

You might be right that some nations provide a better benefit/tax ratio. But the solution is not for the US to tax their corporations, the solution is for the US to provide more cost effective government services.

I agree that we should equalize taxes across income sources. My simple proposal? We should eliminate all corporate income taxes, dividend taxes, cap gains, etc, and put all income into the same bucket. But this is unpopular since it makes it more difficult to raise taxes - individuals immediately see higher taxes and blame politicians, rather than merely seeing their jobs go overseas and blame investors, or seeing prices rise and blaming walmart.

Re: The 15% Tax Rate

#107

Post by pacala »

waqf wrote: post #97
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 inc…

Re 2. You have not lost any money. You gained money proportional to the money you invested. Your capital gains have not been taxed. What is your point?

Re: The 15% Tax Rate

#108

Post by icebraining »

mattgreenrocks wrote: post #102
icebraining wrote: post #59

Earlier quoted context omitted.

As for your second objection, I don't see the issue. If they don't want to be taxed, they can forego buying something. That's parent's point: if I one buys less because of the tax, that's means someone or some company has lost a sale, which means they'll need to cut back on spending, etc. In a consumption based economy, you want money to be constantly re-injected into the economy to prevent stagnation.

Then perhaps it's time to move past a consumption based economy. We already have too much crap.

Well, consumption doesn't have to be physical stuff you buy. Paying for services or digital content is still consumption.

Re: The 15% Tax Rate

#110

Post by notahacker »

yummyfajitas wrote: post #103
notahacker wrote: post #95

Earlier quoted context omitted.

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 b…

The ability to choose when to work and on what terms is a vastly greater benefit than mere consumption goods. The "ability to choose when to work and on what terms" is nothing but the ability to purchase goods. The issue is not allocation of green pieces of paper at all. Moving numbers around in computers somewhere at the Fed or BankAm's data center doesn't affect the world at all. The issue is spending. Real resourc…

The "ability to choose when to work and on what terms" is nothing but the ability to purchase goods.

And the ability to be able to enjoy more of that wonderful tax-free benefit: leisure. A person living a life of leisure off the proceeds of their lottery win benefits more from society than a person who works 4000 hours a year to fund exactly the same consumption habits. That advantage accrues to the lottery winner from the day they receive the income.

The issue is not allocation of green pieces of paper at all. Moving numbers around in computers somewhere at the Fed or BankAm's data center doesn't affect the world at all.

On the contrary, numbers moving around in computers makes a huge difference. I don't think we disagree with the basic intuition that taxing the supply of cash going into Fred's fund will reduce the real resources allocated by his fund. But the dynamics of the economy overall are a little more complicated, especially when instead of the investor actively allocating to new ventures a la Fred Wilson, investments are fed into the world of finance where the inherited real resources of Schlage Lock Company have the same purchasing power as newly-created credit to most market participants.

As several of the comments in your linked article pointed out, it's not a true representation of reality to suggest that taking $84 million out of the bank will result in the cancellation of $84 million in business loans, unless the US were to switch to a 100% reserve system. Instead, banks have a large degree of choice in the quantity of money they loan out, which is ultimately based on whether they anticipate earning enough real interest to repay the loans: they've already allocated a multiple of Mr Kendrick's money to real resources and if the government wants to start consuming it that's fine and dandy until the reserves look a little low. If the recent upswing in the bling market is looking sustainable, and the demand for yachts remains resilient they may even decide to extend more credit than they were previously so more people can get to work creating resources.

Sure, the government isn't omnipotent and clumsy fiscal stimuli might boost little more than inflation and do more damage to the economy than good. But moving numbers around and multiplying them does a lot more for the economy, especially when it's not doing too well. And Mr Kendrick would doubtless greatly appreciate being taxed less even if his bank manager notices the difference less than him.

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Most of the profit in selling Chinese-made goods is made by US companies (or multinationals employing sizeable US workforces). Selling and distributing foreign-made goods to US consumers is always going to generate incomes in the US, even if its creatively destroying domestic manufacturing industries at the same time. On the other hand, US investors can invest the untaxed portion of their income anywhere in the world with a few strokes of a keyboard. In the event of the US government offering the investment stimulus of income tax cuts but balancing them with domestic-demand-depressing consumption taxes, it's a fair bet a sizeable portion of that investment stimulus might find its way to London, Frankfurt or Tokyo.

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