A Minimum Tax for the Wealthy • Hacker News Board

Re: A Minimum Tax for the Wealthy

#131

Post by MaysonL » Mon, Nov 26, 2012, 12:24 PM UTC

cynicalkane wrote: post #94

jshen wrote: post #84

Earlier quoted context omitted.

http://krugman.blogs.nytimes.com/2012/01/18/the-history-of-c... http://krugman.blogs.nytimes.com/2012/01/19/the-dubious-case...

Lazily posting links without further comment is not really what I think constitutes a good discussion, but I'll bite because I happen to have a link of my own handy. NPR's Planet Money once brought together a bipartisan panel of economists and asked them what they agree on. Consumption taxes as a replacement for investment+income taxes got universal support: https://nathensmiraculousescape.wordpress.com/2012/08/08/pl…

Of course, the melange of changes they come up with is self-contradictory: eliminate the mortgage deduction (deducted from income on which you pay income tax), oh, and then eliminate income tax. ditto employer health care plan deductibility, and corporate income tax. i.e.: it's linkbait blogspam of the radio variety.

Re: A Minimum Tax for the Wealthy

#132

Post by MaysonL » Mon, Nov 26, 2012, 12:28 PM UTC

gwright wrote: post #102

dkarl wrote: post #86

Earlier quoted context omitted.

The notion that taxation should be predicated on whether the government or the person can 'better use' the person's money is damn scary. Why is it scary? Your tax dollars go to the government because other citizens wish their tax dollars to go to the government, because they believe the government is the most efficient way to provide certain goods. Basically, they believe the government can spend their money better t…

Taxes are entirely not consensual. And that is the crux of the matter. Because they are not consensual there needs to be some sort of mechanism to limit the ability for the majority to simply appropriate money and property from the minority. Suggesting that the only limiting factor is whether the government (even a democratically elected one) thinks it can use the money better than you can, really isn't a limit. When…

If you don't like the taxes, go somewhere else, or into the black market.

Re: A Minimum Tax for the Wealthy

#133

Post by MaysonL » Mon, Nov 26, 2012, 12:44 PM UTC

mhartl wrote: post #90

arn wrote: post #57

Earlier quoted context omitted.

This is an absurd (yet common) response. And if you are for a war, why don't you buy a gun and go fight?

A more apt analogy would be, if you're for a war, why don't you enlist? But lots of people in favor of wars do just that. What Buffett is saying is essentially, "Let's institute a draft." Lots of wars have had that, too, of course—which is not necessarily a good thing.

Of course, if there were a US draft (again), there might be fewer American troops overseas, and more protest against the wars we do have. [Disclosure: about 48 years ago, I tore up my draft card and mailed it back to the draft board]

Re: A Minimum Tax for the Wealthy

#134

Post by MaysonL » Mon, Nov 26, 2012, 12:49 PM UTC

rdl wrote: post #108

owyn wrote: post #96

Earlier quoted context omitted.

He donated all of it. Whatever you got isn't that interesting. You know, I've never had a problem with the income taxes that I pay. They're taken out of my check and I work with what's left. I never think "oh man, they're taking my money" any more than I think "oh man, I totally deserve to win the lottery". I do think there's something about earning money through investments that makes paying taxes "feel" more like y…

The main reasons capital gains are taxed at a lower rate are: 1) inflation (if you buy a stock for $100 and sell it 10y later for $120, you actually lost money, at least for every 10y period I know about) 2) invested dollars have a higher multiplier for economic activity than wages earned and then spent, so raising capital gains rates hurt the economy more ("have higher deadweight losses") than wage taxes. Poll taxes…

With the second part of item 3 being the determinant factor.

Re: A Minimum Tax for the Wealthy

#135

Post by gwright » Mon, Nov 26, 2012, 2:59 PM UTC

ianb wrote: post #123

gwright wrote: post #112

Earlier quoted context omitted.

OK, I'll accept that you weren't intending to suggest that the government has primary claim on your income but you seem unaware of how your framing has been used by others to actually make that claim. I can accept theoretically that you can separate the progressive structure of the federal income tax from spending decisions but in reality it is pretty hard to solve our budget problems by simply taxing the 'rich'--at…

Now we're demanding that progressivity must balance the budget too? This is car salesman accounting, muddling unrelated choices together to distract from individual choices that can be rationally considered. You keep giving these pundit talking points – the talking points of pundits have been rehashed enough, we shouldn't be using them here, it's not a productive form of discussion. Are we men or are we pundits? I, s…

Huh? I'm not at all suggesting that the budget deficit can/should be solved by tweaking the progressivity of the federal tax system. In fact I'm saying the opposite--it is very hard to solve the budget deficit in that way because what we have a spending problem, not a revenue problem.

Re: A Minimum Tax for the Wealthy

#136

Post by gwright » Mon, Nov 26, 2012, 3:09 PM UTC

MaysonL wrote: post #132

gwright wrote: post #102

Earlier quoted context omitted.

Taxes are entirely not consensual. And that is the crux of the matter. Because they are not consensual there needs to be some sort of mechanism to limit the ability for the majority to simply appropriate money and property from the minority. Suggesting that the only limiting factor is whether the government (even a democratically elected one) thinks it can use the money better than you can, really isn't a limit. When…

If you don't like the taxes, go somewhere else, or into the black market.

Really? You think that tax policy is some verboten topic that is outside the scope of public debate and that anyone who dares to question the 'government' should 'leave' (or become a criminal)?

Re: A Minimum Tax for the Wealthy

#137

Post by hackinthebochs » Mon, Nov 26, 2012, 3:52 PM UTC

gwright wrote: post #103

hackinthebochs wrote: post #85

Earlier quoted context omitted.

I am a fan actually, and I don't think my views are incompatible with his. I do have reservations of the typical use of "natural law" arguments though. One can construct a natural law argument for just about any premise one wants.

> I am a fan actually, and I don't think my views are incompatible with his. I'm unable to reconcile your comment with what I understand to be John Lock's theory regarding property rights. They seem incompatible to me.

My recollection of his work is nothing but vague memories at this point, so there's a good chance I'm completely off in my assessment.

Re: A Minimum Tax for the Wealthy

#138

Post by AnthonyMouse » Mon, Nov 26, 2012, 4:55 PM UTC

ianb wrote: post #105

AnthonyMouse wrote: post #93

>But what I really hate is the class warfare and populist messages driving fiscal policy. This. The thing that really gets me are the people who should know better, like Warren Buffet. You read the article and he's making straw man arguments about billionaires stuffing their cash in mattresses because their taxes are too high -- nobody is arguing that. The real problem is that taxation is economically distortionary a…

I'd kind of dismissed the idea of a consumption/sales tax as terribly regressive, but it doesn't have to be, and lately I've been wondering what the distribution might look like. To make a sales tax more progressive, you might in effect say that the first $20,000 you spend is tax-free. If you have a 10% tax, then you just give every individual $2,000 cash (and ignore that some people spend less than $20,000 – that's…

>Given a system like that I'd be curious what the numbers might really look like. How high a tax would we need? What would the actual tax burden look like for different amounts of cash-back?

It seems like the math is fairly straightforward, but dependent on how much money you need to raise. The big question is to what extent you would want something like that to displace other taxes. If you wanted to displace all other federal, state and local taxes then a sensible rate would likely have to be in the nature of 20-30% (depending on the size of the exemption and how much money the government is to spend).

>Could we replicate something similar to the progressivity we have now?

It seems to me you could achieve an arbitrarily large degree of progressivity by playing with the size of the exemption. In the extreme case you pay everyone something like $50,000/year and then have an extraordinarily high tax rate, but then you get a different kind of distortion where people quit their jobs because they can live off the tax rebate.

On the other hand, having a substantial unconditional rebate (not that large, but say $5000-$10,000/year) would eliminate the call for many need-based programs, because those in need would then have that money with which to buy food and shared accommodations, etc. That would significantly reduce government expenditures for those programs and allow such a large rebate to be had without the need for a prohibitively high tax rate. (It would also eliminate several redundant government bureaucracies dedicated to administering now-redundant need-based programs.)

> Why are goods taxed but not services? I've never been clear on that.

I think it's jurisdiction dependent. But as to why, it's almost certainly only because that's what has been successfully lobbied for by someone. There isn't any sound economic rationale unless you want to encourage the purchase of services over goods for some reason, at the cost of exactly the sort of distortions you're talking about.

Re: A Minimum Tax for the Wealthy

#139

Post by a5seo » Mon, Nov 26, 2012, 5:49 PM UTC

r00fus wrote: post #110

a5seo wrote: post #69

Earlier quoted context omitted.

not precisely what you asked, but a useful approximation: "If the IRS grabbed 100 percent of income over $1 million, the take would be just $616 billion. That’s only a third of this year’s deficit." [2012] -- http://www.forbes.com/sites/danbigman/2012/04/03/john-stosse...

That's exactly not what I was saying - I was talking about capital gains which isn't taxed as income. Currently that sits at 15%, but will rise to 25%.

Fair point, presumably "income" would just be earned income and dividends.

The challenge is that when you change the rate, people change their behavior.

Here's some interesting data showing the historical relationship between behavior and capital gains policy over time:

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...

If you assume currently capital gains collections are $150B, increasing them 33% will add $44B.

From a pragmatical pov, that just doesn't seem like much. And that's assuming there's not a contraction in capital gains harvesting, which wouldn't square with history.

Look, I'll admit, I'm not unbiased here. I generate 80% of my income from churning long-term assets.

I sold a company that I bootstrapped a few years ago, and we got a good price.

I'm able to generate about $120k per year after-tax. My goal is to never touch the principal and live off returns.

Now, I'm bootstrapping my next startup... The $120k allows me to work 1 day a week consulting to "plug" the gap between my family's spending and my income. The other 4 days, I work on bootstrapping my startup.

If taxes go up, that will cost me an addl $6700 per year in taxes.

So my choices are...

1) take more consulting work -> Won't do this because my startup needs my time and I'm already working 60 hr days

2) try to generate higher returns, -> Not going to do this because I'm already maxed out with the risk I feel comfortable with

3) cut back my personal spending, -> Yes, this is what will happen.

For the affluent retired, I suspect many of them will choose to cut back too.

From where I'm sitting, the tax policy is going to hit me fairly hard, will only produce an additional $44B in taxes, and will probably cause a recession. So it doesn't seem very wise.

Re: A Minimum Tax for the Wealthy

#140

Post by rdl » Mon, Nov 26, 2012, 5:52 PM UTC

dkarl wrote: post #126

gwright wrote: post #102

Earlier quoted context omitted.

Taxes are entirely not consensual. And that is the crux of the matter. Because they are not consensual there needs to be some sort of mechanism to limit the ability for the majority to simply appropriate money and property from the minority. Suggesting that the only limiting factor is whether the government (even a democratically elected one) thinks it can use the money better than you can, really isn't a limit. When…

You're arguing the old maker versus taker canard, which doesn't reflect reality at all. Taxation would not exist without the consent of a large number of economically productive taxpayers. If you think politics in the United States is run by poor people, or by mysterious forces that somehow nullify and overcome the economic power of a preponderance of American taxpayers, you are kidding yourself. You'd be better off…

I don't think the majority of people who politically support the current tax code are currently making as most of their income and a sizable portion of net worth 50-500k/yr in wage income from non-government (direct or one level removed) sources, however.

(it's primarily retirees who are now a combination of state beneficiary and investment income earners, people who work for government or direct vendors to government, and is funded by people who make most of their money as capital gains or carried interest.)

This is true for both major parties, and has been true for at least 40 years, though.

Socially and intellectually, the people I mostly identify with are professionals and other middle to upper class wage earners (doctors, lawyers, engineers); the exception being startup equity. And the people who earn wages (vs. capital gains) in this bracket pay the highest marginal taxes of anyone.

If tech people weren't able to shift income into capital gains, 50%+ taxation would be a much bigger deal.