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When the Rich Said No to Getting Richer

nytimes.com

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Re: When the Rich Said No to Getting Richer

#211

Post by gasbag »

splintercell wrote: post #168
openasocket wrote: post #132

Earlier quoted context omitted.

This is the Nirvana fallacy. Because we can't fix everything, there's no point in trying to fix anything. For example: "what's the point in having seatbelts? People still die in car crashes." The reality is, just like a seatbelts reduce the number of fatalities in car crashes, each loop hole closed makes things a little more difficult for people to shelter their assets.

But at what point, OP's criticism is a qualitative criticism of the approach being advocated? For instance, if someone says that alternative medicine fails for n different reasons, would you say that the person is committing Nirvana fallacy or that there is something to say about the fundamental failures of alternative medicine? The qualitative fault I'm trying to point out is that trying to tax 'rich people' is a fa…

> no matter how effective you can implement your tax measures, at the end of the day people can move to other countries and your own country starts to suffer more than it benefits from the increased taxes.

The first half of this--that rich people can move to other countries if they think they are being taxed too much--is certainly true, but I have doubts about the second half.

There are people who have as part of their drive a desire to see humanity as a whole better off than we were before, and there are people whose primary drive is "eff you, I got mine." That's the kind of rich person who will be the first to abandon a high-tax country in droves, and in my opinion we are better off without them: they are the profiteers who make life for those working under them hellish, who feel no responsibility for polluting and underpaying and ignoring externalities and racing to the bottom. What we want, who we should hope to see become successful, are principled people who understand that the riches which come their way are only possible within the context of a healthy society, and who are willing to part with a larger share of their fantastic revenues to ensure its continued improvement (while of course still being able to enjoy the fruits of their labor).

To argue otherwise, as it looks to me at least, is to argue that (1) the only way to make a lot of money is to be selfish and unethical, and (2) we still need that money in taxes (at a lower tax rate) to maintain a healthy society. I am sure I'm simplifying things.

Re: When the Rich Said No to Getting Richer

#212

Post by ghostbrainalpha »

openasocket wrote: post #109
chirau wrote: post #72

Earlier quoted context omitted.

A "flat rate" can also be tiered. In this case I'd take it to mean a flat rate on all money earned during a time period. Whether income or capital gains, dividends, assets or whatever, you are still giving up x% of whatever you earned that year. So even when tiered, a person earning under some amount in total might get a lower tax rate than a person earning a higher amount but it is still flat. The "flat tax" would b…

Wait, how do you make the flat tax tiered? Isn't that an oxymoron?

You are correct it is an oxymoron, but the most realistic Flat Tax proposals do just that.

They say there should be a 20% tax, on any income above the $35,000 a year threshold. While it still does effect people on the lower end more, the first part of their income is at least partially untaxed.

And the bar is low enough that the super rich will not be able to create schemes to keep there income under that bar.

Re: When the Rich Said No to Getting Richer

#213

Post by aianus »

ch4s3 wrote: post #208
aianus wrote: post #170

Earlier quoted context omitted.

> Then why not hold stock, realize no gains by not selling it, and take out a loan with stock as collateral. You can already do this today. Eventually you will need to sell and pay the taxes, eg. if interest rates rise and it's no longer worth it or when you die and have to pay the loans off. > Or, you could leave it all in a company that you own, draw no income and have the company pay for your housing, meals, trave…

>If your company pays for your personal expenses like housing, it's taxable as income. Sure, but it can be a strategy to reduce taxable income. My point is that people at the top end are highly incentivized to avoid taxes and will find ways to do so. I'm not making any policy prescription, tax policy is hard and I don't claim to know what's optimal or even necessarily better.

Explain how you're reducing taxable income? The taxes on the free rent are the same as the taxes you're saving by reducing your company profits with the extra expense.

Re: When the Rich Said No to Getting Richer

#214

Post by turc1656 »

dageshi wrote: post #206
msla wrote: post #171

Earlier quoted context omitted.

A lot of people would consider that flatly immoral, and as evidence that the poor aren't paying their fair share. Remember that Flat Tax is also called Fair Tax. The concept of fairness is central.

If everyone receives the same tax free allowance then it certainly is fair. Fairer and simpler.

I think what msla is saying is that people who are at or below the threshold for taxation would contribute nothing to taxes, which would be unfair in theory because they consume public goods and services like the rest of us.

Re: When the Rich Said No to Getting Richer

#215

Post by openasocket »

ghostbrainalpha wrote: post #212
openasocket wrote: post #109

Earlier quoted context omitted.

Wait, how do you make the flat tax tiered? Isn't that an oxymoron?

You are correct it is an oxymoron, but the most realistic Flat Tax proposals do just that. They say there should be a 20% tax, on any income above the $35,000 a year threshold. While it still does effect people on the lower end more, the first part of their income is at least partially untaxed. And the bar is low enough that the super rich will not be able to create schemes to keep there income under that bar.

I'm having trouble seeing a flat tax proposal that doesn't massively decrease tax revenue. Also, a tax on what, exactly? Income? Capital Gains? Sales? Property?

Re: When the Rich Said No to Getting Richer

#216

Post by charlesdm »

jazzyk wrote: post #202
charlesdm wrote: post #147

Earlier quoted context omitted.

Because most loopholes are in fact deductions that are there for a reason. The overall tax rate is too high (or it would be too expensive to lower the overall rate), so politicians give certain people sweetheart deals on certain things because they consider it relevant, thus offering someone, somewhere a tax break. Others are then free to use the same deduction for their benefit. The wealthy aren't stupid. They're ge…

Most loopholes are aimed at big corporations and high-income people ($1M+). You and I cannot take advantage of them easily. Loopholes: - obfuscate the fact that "certain" people, who should be paying 35% are not, in fact, paying a penny. - give incredible power to the people who decide what "certain" group to reward with them or threaten to withdraw them

You can actually use them, but probably are not, since you're a high income, high income tax paying person? If you can earn $300k a year as an entrepreneur, vs $300k as an employee, then it's a lot more likely you'll be paying significantly less taxes when going the self employed route.

Re: When the Rich Said No to Getting Richer

#217

Post by ch4s3 »

aianus wrote: post #213
ch4s3 wrote: post #208

Earlier quoted context omitted.

>If your company pays for your personal expenses like housing, it's taxable as income. Sure, but it can be a strategy to reduce taxable income. My point is that people at the top end are highly incentivized to avoid taxes and will find ways to do so. I'm not making any policy prescription, tax policy is hard and I don't claim to know what's optimal or even necessarily better.

Explain how you're reducing taxable income? The taxes on the free rent are the same as the taxes you're saving by reducing your company profits with the extra expense.

If you own a company and would take a salary of 1 million you get taxed on that 1 million. If instead the company pays 70k that year for rent on your condo, 35k on the lease of your vehicle, and another 20k on food and you draw no salary, so your taxable personal income is 125k. You keep the other 875k in the company until you can find more preferable tax treatment for that money.

Obviously this is a terribly contrived example, but it is somewhat descriptive of the type of strategy used to reduce taxable income. Things are obviously more complicated when you have numerous types of income from domestic and foreign sources.

Re: When the Rich Said No to Getting Richer

#218

Post by aianus »

ch4s3 wrote: post #217
aianus wrote: post #213

Earlier quoted context omitted.

Explain how you're reducing taxable income? The taxes on the free rent are the same as the taxes you're saving by reducing your company profits with the extra expense.

If you own a company and would take a salary of 1 million you get taxed on that 1 million. If instead the company pays 70k that year for rent on your condo, 35k on the lease of your vehicle, and another 20k on food and you draw no salary, so your taxable personal income is 125k. You keep the other 875k in the company until you can find more preferable tax treatment for that money. Obviously this is a terribly contriv…

I thought we were talking under the assumption that the corporate tax rate was the same as the personal tax rate (ie a flat tax).

Keeping it in the company would then be irrelevant (the more you keep in the company by not paying yourself a salary, the higher the corporate taxes).

Re: When the Rich Said No to Getting Richer

#219

Post by ch4s3 »

aianus wrote: post #218
ch4s3 wrote: post #217

Earlier quoted context omitted.

If you own a company and would take a salary of 1 million you get taxed on that 1 million. If instead the company pays 70k that year for rent on your condo, 35k on the lease of your vehicle, and another 20k on food and you draw no salary, so your taxable personal income is 125k. You keep the other 875k in the company until you can find more preferable tax treatment for that money. Obviously this is a terribly contriv…

I thought we were talking under the assumption that the corporate tax rate was the same as the personal tax rate (ie a flat tax). Keeping it in the company would then be irrelevant (the more you keep in the company by not paying yourself a salary, the higher the corporate taxes).

Not if you have foreign holdings and don't repatriate all of the profits.

I also don't think you could easily manage raising the effective corporate tax rate very much without seeing further offshoring of profits, which is the present situation. We presently live in a world where capital movement has been liberalized and the movement of people(Schengen notwithstanding) has not. So even if you have some sort of profit/income agnostic flat tax, any business that can seek lower tax rates abroad will.

Re: When the Rich Said No to Getting Richer

#220

Post by acuozzo »

program_whiz wrote: post #121

Guess I'm the only one that thinks you should just keep your money if you earn it? The article begins by talking about Romney's character and how he didn't try to take every possible dollar, then tries to attribute this to progressive tax codes. Maybe the "problems" we have are due to the erosion of basic virtues, and trying to make an airtight "system" where no one trusts anyone and we assume total greed and power h…

> keep your money if you earn it

Earned? My ass.

A fortune amassed from profits skimmed off of HFT isn't earned and produces nothing of value.

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