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The 15% Tax Rate

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Re: The 15% Tax Rate

#111

Post by anamax »

Retric wrote: post #105
anamax wrote: post #92

Earlier quoted context omitted.

> 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.

> Except married people receive dramatically better benefits than single people.

"better benefits" depends on their income distribution. There are folks who don't marry because that would result in smaller social security benefits.

Re: The 15% Tax Rate

#112

Post by Retric »

anamax wrote: post #111
Retric wrote: post #105

Earlier quoted context omitted.

Except married people receive dramatically better benefits than single people.

> Except married people receive dramatically better benefits than single people. "better benefits" depends on their income distribution. There are folks who don't marry because that would result in smaller social security benefits.

It's true that the benefits from marriage A can decrease after marriage B. But, they are still higher than if everyone had been single the whole time.

AKA the only time where X and Y getting married lowers their combined benefits if X or Y was married to someone else z before this and where receiving marriage benefits from this.

Re: The 15% Tax Rate

#113

Post by yummyfajitas »

notahacker wrote: post #110
yummyfajitas wrote: post #103

Earlier quoted context omitted.

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 fr…

...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...

Again, the issue is spending, not loans. Consider two possible uses for the money:

a) You can hire a programmer to do maintenance on the welfare administration system.

b) You can hire a programmer to build Fred Wilson's new venture.

By taxing the money, you devote it to welfare admin apps. By leaving it untaxed, you devote that programmer's labor to Fred Wilson's venture.

The relevant question: is purpose a) or b) a more valuable use of that programmer's labor?

Re: The 15% Tax Rate

#114

Post by phamilton »

mahyarm wrote: post #83
ck2 wrote: post #27

Income is income is income. If you make over six digits I don't care what the source is, no-one should get a special rate. Because once you hit that level, there is no way you could convince anyone you are "suffering" even if you decided to work 12 hours a day. At that level work is a choice, where the millions making 4 or 5 digits have no choice.

A person with a 6 figure income supporting a wife and children and the bills that come with supporting a household vs a single person is very different. Also the rent adjusted difference in places where you can make 6 figures can add 30'000 in before tax income needed to just break even between two regions.

Assuming a family of 4, a 3 bedroom apartment, and living in the valley, your monthly expenses are going to be in the range of 6k/month. A post tax income of 72k a year is essentially a 6 figure pretax salary. I don't see that as an extravagant lifestyle at all.

Re: The 15% Tax Rate

#115

Post by notahacker »

yummyfajitas wrote: post #113
notahacker wrote: post #110

Earlier quoted context omitted.

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 fr…

...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... Again, the issue is spending, not loans. Consider two possible uses for the money: a) You can hire a programmer to do maintenance on the welfare administration system. b) You can hire a programmer to build Fred Wilson's new venture. By taxing the money, yo…

My point is that contrary to intuition debiting (and spending) $84 million from a bank account or invested in the stock market doesn't necessarily correspond to an $84 million short term decrease in the spending power of companies spending revenues generated by borrowing from that bank or floating on that market.

Because of the amount of credit in the system, that $84 million can be simultaneously spent by many people anyway; the government joining the spending party might crowd out rather less or rather more private sector investment expenditure than they collect through tax revenues.

The only certain loser is the rich person.

Re: The 15% Tax Rate

#116

Post by anamax »

Retric wrote: post #112
anamax wrote: post #111

Earlier quoted context omitted.

> Except married people receive dramatically better benefits than single people. "better benefits" depends on their income distribution. There are folks who don't marry because that would result in smaller social security benefits.

It's true that the benefits from marriage A can decrease after marriage B. But, they are still higher than if everyone had been single the whole time. AKA the only time where X and Y getting married lowers their combined benefits if X or Y was married to someone else z before this and where receiving marriage benefits from this.

I'm pretty sure that my wife and I reduced our (future) SS benefits by getting married, and neither of us have been married before. (We definitely increased our income taxes significantly - welcome to AMT.)

We both have decent incomes, so there's no "he'd have benefited from the low-income subsidy".

Re: The 15% Tax Rate

#117

Post by waqf »

pacala wrote: post #107
waqf wrote: post #97

Earlier quoted context omitted.

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?

My point would be that since I already have 40% less money than I would have had in the absence of taxation, it seems that I have already endured my fair share of the tax burden. (For simplicity, forget about progressive taxation and assume that flat taxes are fair. Just compare me with the guy with a $50k salary who also gets to keep $30k of it.)

As with everything, it comes down to an argument about what's "fair".

Re: The 15% Tax Rate

#118

Post by mahyarm »

phamilton wrote: post #114
mahyarm wrote: post #83

Earlier quoted context omitted.

A person with a 6 figure income supporting a wife and children and the bills that come with supporting a household vs a single person is very different. Also the rent adjusted difference in places where you can make 6 figures can add 30'000 in before tax income needed to just break even between two regions.

Assuming a family of 4, a 3 bedroom apartment, and living in the valley, your monthly expenses are going to be in the range of 6k/month. A post tax income of 72k a year is essentially a 6 figure pretax salary. I don't see that as an extravagant lifestyle at all.

Exactly. It's equivalent to someone having half that income in many regions of the USA. Most people who make 6 figures make it in regions where it's about worth half typically than it would be in let's say Reno, NV.

Re: The 15% Tax Rate

#119

Post by cluda01 »

yummyfajitas wrote: post #101
cluda01 wrote: post #86

Earlier quoted context omitted.

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 In…

The shareholders of Google own stakes in Google, Inc. which is an American company not Google Ireland. Google Ireland is a subsidiary of Google, Inc. Ultimately the end goal of Google, Inc. is to maximize profit for shareholders. To pretend that Google Ireland is some independent company company that makes its own decisions where to do business isn't particularly prescient in my opinion.

Given the billions of dollars that is building up in parking spaces overseas for major tech companies such as Google indicates to me here that the motivation isn't to re-invest in business overseas but to wait patiently for a tax holiday and repatriate the capital at next to tax free. And this is what I disagree with.

We can come up with all sorts of points and counter points about why our particular positions are correct but my issue is as follows:

1. I suppose that Google has built all these complicated transfer pricing agreements so that they can accumulate capital with out being taxed and wait for a tax holiday to repatriate the capital at next to no cost.

If 1 is true then I believe that this is wrong and Google is not paying their fair share.

Which part of this do you disagree with?

Re: The 15% Tax Rate

#120

Post by Retric »

anamax wrote: post #116
Retric wrote: post #112

Earlier quoted context omitted.

It's true that the benefits from marriage A can decrease after marriage B. But, they are still higher than if everyone had been single the whole time. AKA the only time where X and Y getting married lowers their combined benefits if X or Y was married to someone else z before this and where receiving marriage benefits from this.

I'm pretty sure that my wife and I reduced our (future) SS benefits by getting married, and neither of us have been married before. (We definitely increased our income taxes significantly - welcome to AMT.) We both have decent incomes, so there's no "he'd have benefited from the low-income subsidy".

No, it does not work like that. The math on benefits are really simple you can take either your SS benefit or 50% of your living spouses or 100% of your dead spouses. Taking 50% of your spouses is a proxy for the 'low-income' subsidy where a single worker is supporting 2 people. There is a minor 'penalty' for taking SS early which is supposed to even out the expected benefit but this is calculated for each benefit separately.

So, let's say you decide to retire at 62 and not wait till 68. You have 2 choices you can take your normal befit and gain nothing, or you can take your 50% your spouses benefit at 62 wait until 68 take your benefit calculated as if you had revived zero benefits. Net result your ahead.

PS: Feel free to use there calculators to check this out: http://www.ssa.gov/planners/benefitcalculators.htm

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