Some of the Wealthy Asking to Be Taxed

[DSpencer]

Re: Some of the Wealthy Asking to Be Taxed

I don't think that the end goal should be to redistribute wealth, but a goal of taxation in a (classical small L) liberal republic is to prevent the familial accumulation of wealth in perpetuity.

I guess my opinion is that the goal of taxation is to obtain funds for services such as the military, police, judicial system etc which protect the rights of the people. It seems reasonable that people with more wealth need these services more in that they have more things to protect and therefore they should pay more in taxes.

Part of the goal of protecting these rights was to allow people to accumulate wealth/capital in order to enjoy a better standard of living. I don't understand why the goal should be to confiscate wealth through taxation. Growth in wealth/capital DOES benefit everyone as can be seen by comparing the poor of America with other countries.

[c1ue]

Re: Some of the Wealthy Asking to Be Taxed

Is entertainment not considered to be disposable income?

If you bothered to look at the link which I provided, you could see for yourself what the relative impact of entertainment has (or doesn't have).

Joe Average: $2,611
Joe 'Thousand'aire: $4,733

It is roughly equivalent to relative spending levels for every other category.

As far as counting it as disposable income - you are welcome to play with that if you want. It isn't going to change any numbers in any significant manner.

For that matter, you can play with the alcohol, tobacco, and various other categories. Again it isn't going to make any significant difference.

The point remains the same: the people who make more money pay less percentage of their available income in taxes even taking into account higher levels of spending.

This isn't some Communist/Leveller proposition - note I'm not asking that everyone live in the same house, eat the same food, drive the same car.

This simplistic proposal merely asks that everyone contributes the same after-actual spending percentage of free cash, even though the relative amount of spending is higher at higher levels of income.

[c1ue]

Re: Some of the Wealthy Asking to Be Taxed

Last year I think I paid north of 10k in fed taxes, and 6K in SS tax (my half). I don't want to divulge too much personal info here, so I am going to be a bit dodgey about actual numbers. But your fed tax paid is way too low.

It depends on your deductions. If you owned a gigantic house with a gigantic mortgage, you probably would be paying a lot less in federal income taxes.

If you're paying $10K in taxes and have no deductions, and are filing married/separately, your income would have to be around $65K with no deductions in order to pay $10K in taxes.

Having 2 kids and $24K in mortgage interest, however, would drop the tax paid on the same income down to $4K range.

25% marginal fed rate.
7% SS.
8% Property tax
5% state tax.
2% sales, utility, fees etc.
===
47% marginal tax rate.

Note that the top marginal rate is only applied to income in that bracket. If your income were the $65K in the example above, the first $34K would be at an effective 13.77%.

If you had no deductions and were paying $10K in federal income taxes, your actual tax rate given this example income would be 15.38%.

Similarly the property tax is a function of both your property value and your income. If you had a really cheap house, you might be paying much, much less in percentage of property tax. More likely you just live in New Jersey

The 47% applies to the first dollar you spend, but not the last or even the middle.

[charliebrown]

Re: Some of the Wealthy Asking to Be Taxed

yes, I know what you are saying, my overall tax rate is lower than 47%, but I don't want to put up too many details on the web. I can easily look at my tax bill and see taxes paid and divide that by my income, but I just don't want to post that.
My point was that for a person making over 100K a 5K tax bill is a large underestimate unless this person has a huge mortage, 10 kids, or gives vast gobs of their money to charity. These are the only large deductions I see on a J6P tax
return.

As someone asked the question at a tea party rally to a candidate, morally what amount of money is the government allowed to take? My first thought right off the top of my head is that a person's total tax should be no more than 50%, and that applies to Mr. Buffet. I don't know what his effective rate is. I do think a progressive system is fair in that the poor pay a smaller percentage than the rich. We need to decide how progressive it is.

I really do think we have a spending problem. Every goverenment through history has had waste and fraud. What is a too wasteful and too fraudulent? Is this gvt too wasteful, if so, by how much? The only really big, big thing I can see cutting is defense spending. there is 700B spent here each year. I do believe we need defense, I'm just not sure we need 700B.
How much of the remaining 2.7T or so can be cut? Most of the rest is SS, Medicare and transfer payments.

And, I actually pay more to the state an local gvt than to the fed's and this number is growing at a good clip.
The fed number is just drifting a bit back and forth over the last decade. So maybe the monster we need to worry about
is the state and locals. Perhaps this growth of s&l taxes is because they more or less have to pay-go, where uncle sam has so far an unlimited credit card.

And by the way, prop taxes in Illionis is only a function of the homes value. And the way it is calculated it does NOT go down if your homes value goes down. The only way it decreases if the taxing bodies decide to tax less, or your house goes down more in value than your neighbors.

Three years after the kaboom in real-estate, my prop taxes are still going up every year.

[c1ue]

Re: Some of the Wealthy Asking to Be Taxed

My point was that for a person making over 100K a 5K tax bill is a large underestimate unless this person has a huge mortage, 10 kids, or gives vast gobs of their money to charity. These are the only large deductions I see on a J6P tax
return.

This is true for a working person, but it isn't necessarily true for everyone in this category.

Note the 'Joe Thousand-aire' category includes everyone who makes more than $80,000

A look at the 2009 IRS publication: http://www.irs.gov/pub/irs-soi/09inalcr.pdf

Taking that data, and using the midpoints of each range as an average income for said range (i.e. $10000 to $20000 = $15000 average, $10000 or less = $5000, $10,000,000 or more = $15,000,000)

Income Range	# returns	Amount tax credit	# returns	Amount tax paid	Percent overall returns	Percent overall federal tax paid	Percent overall income	Percent SS + federal tax paid vs. overall	Federal income tax paid %	Federal + FICA % paid	Total income	SS+federal tax paid
All Returns, total	87,501,186	$110,076	81,890,189	$865,949
Under_$10,000	528,621	$42	2,209,738	$506	0.60%	0.06%	0.16%	0.11%	4.58%	12.23%	$11,048,690,000	$1,351,224,785.00
$10,000 to $20,000	10,429,026	$3,491	7,751,956	$3,364	11.92%	0.39%	1.71%	1.00%	2.89%	10.54%	$116,279,340,000	$12,259,369,510.00
$20,000 to $30,000	14,010,280	$7,999	9,242,848	$11,497	16.01%	1.33%	3.40%	2.37%	4.98%	12.63%	$231,071,200,000	$29,173,946,800.00
$30,000 to $40,000	12,441,678	$10,283	9,589,845	$20,152	14.22%	2.33%	4.94%	3.72%	6.00%	13.65%	$335,644,575,000	$45,828,809,987.50
$40,000 to $50,000	9,610,264	$9,975	8,381,017	$25,404	10.98%	2.93%	5.55%	4.41%	6.74%	14.39%	$377,145,765,000	$54,255,651,022.50
$50,000 to $60,000	7,737,526	$9,907	7,351,218	$29,981	8.84%	3.46%	5.95%	4.95%	7.42%	15.07%	$404,316,990,000	$60,911,249,735.00
$60,000 to $70,000	6,289,690	$9,695	6,199,457	$31,096	7.19%	3.59%	5.93%	5.03%	7.72%	15.37%	$402,964,705,000	$61,922,799,932.50
$70,000 to $80,000	5,413,252	$9,174	5,483,259	$33,137	6.19%	3.83%	6.05%	5.25%	8.06%	15.71%	$411,244,425,000	$64,597,198,512.50
$80,000 to $90,000	4,428,209	$7,819	4,646,803	$32,944	5.06%	3.80%	5.81%	5.13%	8.34%	15.99%	$394,978,255,000	$63,159,836,507.50
$90,000 to $100,000	3,358,211	$6,430	3,755,757	$31,298	3.84%	3.61%	5.25%	4.76%	8.77%	16.42%	$356,796,915,000	$58,592,963,997.50
$100,000 to $125,000	5,354,118	$11,260	6,371,285	$71,588	6.12%	8.27%	10.55%	9.78%	9.99%	16.79%	$716,769,562,500	$120,328,330,250.00
$125,000 to $150,000	3,104,279	$5,544	3,569,441	$57,643	3.55%	6.66%	7.22%	6.90%	11.74%	17.31%	$490,798,137,500	$84,949,223,650.00
$150,000 to $175,000	1,816,098	$2,651	2,099,102	$45,697	2.08%	5.28%	5.02%	5.02%	13.40%	18.10%	$341,104,075,000	$61,755,130,300.00
$175,000 to $200,000	944,308	$793	1,334,725	$37,362	1.08%	4.31%	3.68%	3.87%	14.93%	19.01%	$250,260,937,500	$47,572,646,250.00
$200,000 to $300,000	990,828	$1,871	2,145,256	$90,454	1.13%	10.45%	7.89%	8.68%	16.87%	19.93%	$536,314,000,000	$106,865,208,400.00
$300,000 to $400,000	377,839	$1,299	702,505	$51,512	0.43%	5.95%	3.62%	4.62%	20.95%	23.14%	$245,876,750,000	$56,886,163,250.00
$400,000 to $500,000	187,462	$1,031	330,659	$34,356	0.21%	3.97%	2.19%	3.00%	23.09%	24.79%	$148,796,550,000	$36,885,541,350.00
$500,000 to $1,000,000	307,526	$2,640	489,904	$80,458	0.35%	9.29%	5.41%	6.84%	21.90%	22.92%	$367,428,000,000	$84,205,765,600.00
$1,000,000 to $1,500,000	75,879	$1,214	107,416	$32,756	0.09%	3.78%	1.98%	2.73%	24.40%	25.01%	$134,270,000,000	$33,577,732,400.00
$1,500,000 to $2,000,000	31,886	$841	44,015	$19,393	0.04%	2.24%	1.13%	1.60%	25.18%	25.61%	$77,026,250,000	$19,729,714,750.00
$2,000,000 to $5,000,000	46,017	$2,025	61,535	$46,944	0.05%	5.42%	3.17%	3.85%	21.80%	22.02%	$215,372,500,000	$47,414,742,750.00
$5,000,000 to $10,000,000	11,266	$1,063	14,236	$24,617	0.01%	2.84%	1.57%	2.01%	23.06%	23.16%	$106,770,000,000	$24,725,905,400.00
$10,000,000_and_over	6,923	$3,029	8,211	$53,790	0.01%	6.21%	1.81%	4.38%	43.67%	43.72%	$123,165,000,000	$53,852,814,150.00
Totals				$865,949							$6,795,442,622,500	$1,230,801,969,290
All dollar figures in millions

The Social Security data is assumed 7.65% of income up to $100,000

You can see here the federal income tax paid disparity noted by 'Starve the Beast' advocates everywhere.

However, if you look instead at the percentage of income vs. percentage of federal+SS tax paid, the disparities shrink considerably.

In fact the over-payment that starts at $175K is only modest, as is the underpayment relative to income for income levels under $175K. I'm guessing the $10M and above income number of $15M I assumed is way too low.

And as to your point, CB, the numbers here certainly seem to indicate that the BLS numbers are low.

[Ghent12]

Re: Some of the Wealthy Asking to Be Taxed

Interesting - so you believe the rich are also fighting in Afghanistan and Pakistan? There are Rockefellers, Kennedys, Frickes, Pritzkers, Bushs and so forth battling the Taliban?

Or are you asserting that the middle class is fighting to make ends meet?

Are you asserting that Rockefellers, Kennedys, Frickes, Pritzkers, and Bushes are the only rich people in the US? The upper income quintile makes up greater than 20% of the personnel in the armed services, so "the rich" and "the well-off" are statistically doing more than "their share" of military service. The reason you don't see many Rockefellers or Kennedys in the service is probably mostly because there are simply not very many of them. You'll see the sons of their business partners in uniform--significantly more, proportionally, than those from poor neighborhoods, in fact.

Buffett doesn't know what he's talking about in many of the things he talks about, and I have no reason to believe he is credible on any political issue.

[Sharky]

Re: Some of the Wealthy Asking to Be Taxed

It seems like this will be a key issue for a long time. Many threads on itulip and issues in the media keep coming back to it. With that in mind I have some questions for the community:

1. Why is the Obama "plan" being referred to as the "Buffett tax"? Doesn't Buffett want to raise the capital gains tax? Doesn't the Obama plan raise personal income taxes?
2. Ignoring the capital gains issue for a moment - for those who support raising personal income taxes on "the rich": what percent of federal income tax revenues should be paid by the top 5% of income earners? And what tax rate would accomplish this?
3. Is there some kind of objective definition of the rich paying their "fair share"? Is there even a subjective definition?
4. If all personal revenue was taxed as income and everyone paid the same rate would that be fair?
5. Can taxing the rich actually do much to solve our problems or is it symbolic?
6. If you think we should raise taxes and cut spending: what is the right ratio between a dollar of tax increases to spending cuts?

I would start with the answer to #5: it's symbolic. The following video gives a good summary of why that's true:

I think the real goal of the Left is not to address "inequality" or "injustice" -- it's to destroy the wealthy; to destroy the good precisely because they are good.

The Left try to keep the discussion focused on the criminal wealthy, while ignoring the fact that most people who are wealthy are honest, hard-working people. Yes, criminality is bad: fraudsters and others like them should be chased down and prosecuted. Unfortunately, that group includes many of the same people who create our laws.

The Right, on the other hand, are running ahead at full-speed in suicide mode. They feel guilty for having wealth, and have bought into the whole "give something back" line, rather than admitting that they have helped to create tremendous wealth and prosperity, not just for themselves, but for their employees and customers as well.

So, the answer to how much tax on the wealthy will be enough is that there's no limit; the endgame is to have it all taken away, probably through nationalization of some kind. Both sides will get their wish, and the middle class will be destroyed along with them.

[mesyn191]

Re: Some of the Wealthy Asking to Be Taxed

I think the real goal of the Left is not to address "inequality" or "injustice" -- it's to destroy the wealthy; to destroy the good precisely because they are good.

So wealth makes right? I wonder how you feel about Madoff, or heck Gaddaffi. Both of those guys were fantastically rich.

The Left try to keep the discussion focused on the criminal wealthy, while ignoring the fact that most people who are wealthy are honest, hard-working people.

Given the way their (the rich) wealth keeps growing while everyone else's shrinks proportionately I'd say the evidence is against this. You cannot seriously discuss the "goodness" and "honesty" of the rich in a system that favors them at the expense of most everyone else.

The Right, on the other hand, are running ahead at full-speed in suicide mode. They feel guilty for having wealth, and have bought into the whole "give something back" line, rather than admitting that they have helped to create tremendous wealth and prosperity, not just for themselves, but for their employees and customers as well.

Well that last part is totally false, I'm sure you know the wealth distribution has been skewed massively towards the rich while productivity has risen. So people in general do more for less. Given the way the rich in general have rejected Buffetts call to pay more taxes (I think he only has like 50 guys who signed his petition) I think its safe to say neither the Right (read: FIRE, most of the so called Left in the government are included in this BTW) nor the "honest" rich feel anything like remorse or guilt about being rich.

So, the answer to how much tax on the wealthy will be enough is that there's no limit; the endgame is to have it all taken away, probably through nationalization of some kind. Both sides will get their wish, and the middle class will be destroyed along with them.

I believe C1ue already suggested putting taxes to back what they were under Regan. Personally I'd like them higher, which for some they take to mean "eat the rich", but there would still be plenty of rich people even if taxes were effectively 80 or 90% for the top earners (ie. those who make millions per year).

[Sharky]

Re: Some of the Wealthy Asking to Be Taxed

So wealth makes right? I wonder how you feel about Madoff, or heck Gaddaffi. Both of those guys were fantastically rich.

Gaddafi is a murderer and a thug who should be shot on sight, and Madoff committed fraud in the extreme, and should be locked up forever.

You're doing exactly what I said the Left usually does: trying to turn the conversation towards criminals who are wealthy. They aren't the norm.

Given the way their (the rich) wealth keeps growing while everyone else's shrinks proportionately I'd say the evidence is against this. You cannot seriously discuss the "goodness" and "honesty" of the rich in a system that favors them at the expense of most everyone else.

How do most honest rich (like Steve Jobs) get that way? By producing something of value -- and that's also why their wealth continues to grow.

I personally know a number of very wealthy people -- they have had to struggle against massive hurdles for most of their careers. The system doesn't favor the rich; if anything, it favors criminals, particularly criminals who get into bed with government. Two very different things.

Well that last part is totally false, I'm sure you know the wealth distribution has been skewed massively towards the rich while productivity has risen. So people in general do more for less. Given the way the rich in general have rejected Buffetts call to pay more taxes (I think he only has like 50 guys who signed his petition) I think its safe to say neither the Right (read: FIRE, most of the so called Left in the government are included in this BTW) nor the "honest" rich feel anything like remorse or guilt about being rich.

I hear wealthy people talk all the time about "giving back." I have no reason to doubt them -- although I think their premise is seriously mistaken.

I believe C1ue already suggested putting taxes to back what they were under Regan. Personally I'd like them higher, which for some they take to mean "eat the rich", but there would still be plenty of rich people even if taxes were effectively 80 or 90% for the top earners (ie. those who make millions per year).

Why not just take it all? That's what you really want, isn't it? To destroy the wealthy? Maybe you should just line them up and shoot them. The State would get everything they have that way.

[mesyn191]

Re: Some of the Wealthy Asking to Be Taxed

You're doing exactly what I said the Left usually does: trying to turn the conversation towards criminals who are wealthy. They aren't the norm.

You're the one equating wealth with goodness and such not me, its not my fault its so easy to shoot holes through that concept. I've also already brought up the wealth disparity and the work vs. wages which you totally ignored, and the issue isn't necessarily that all the rich are criminals, its that many or most of them are benefiting at the expense of others through unethical business practices some of which were once illegal but changes have been lobbied into place to "fix" that. So technically you couldn't really call most or many of the rich criminals, but you could legitimately call them Gilded Age Era Fat Cats.

How do most honest rich (like Steve Jobs) get that way? By producing something of value -- and that's also why their wealth continues to grow.

Jobs is a complete asshole and his company treats its workers in China terribly. That is how he got rich as he is. He could've gotten fairly wealthy producing his products here in the US, he just would be less wealthy. Can't have that right?

I personally know a number of very wealthy people -- they have had to struggle against massive hurdles for most of their careers. The system doesn't favor the rich; if anything, it favors criminals, particularly criminals who get into bed with government. Two very different things.

So you believe that the system favors the "criminal rich" yet still believe most of the rich got their wealth through hard work and good + moral decision making? Also if you're gonna trot out some anecdotes then I'd point out I know some rich people who are complete scum bags. Mind you not all the rich people I've met are like that but they're the exception IME and not the norm.

I hear wealthy people talk all the time about "giving back." I have no reason to doubt them -- although I think their premise is seriously mistaken.

I'm sure you do, I'm also sure the amount they give back is nowhere near what they take in and that even if it was it doesn't even come close to addressing the wealth disparity. I'm also sure these people write off most of their donations on their taxes, assuming they aren't donating back to themselves or some other form of fraud.

Why not just take it all? That's what you really want, isn't it? To destroy the wealthy? Maybe you should just line them up and shoot them. The State would get everything they have that way.

I already said what I want and so have c1ue and others and it in no way or form even approaches destroying or shooting the wealthy. So if you'd please address what is said rather than beating down some straw men? To give you some perspective: 80-90% tax on someone making $2 million a year would leave them with a take home pay of $200-100k a year. So even after some very very high taxes these people would still be very very well off to say the least. After all, most people still only make around $1-1.6 million in their entire lifetime, so these people would would earn that after taxes in just 5-10 years. With some prudent investment and careful spending, which they could afford done for them by competent money managers, it'd be possible for them to retire before they're 50 while also paying for their kids' schooling and such. If they did very well possibly earlier.

[Sharky]

Re: Some of the Wealthy Asking to Be Taxed

The question is how much of this prosperity is organic - i.e. permanent change to New Zealand's economy - vs. hot-money inflows.

Thailand is a fine example how hot-money inflows reversing can fundamentally change the direction of economic progress.

From what I can tell, the majority of the prosperity is organic, and not due to hot-money inflows.

NZ had a tax surplus from 1994 to 2008. Although a recession and the global financial crisis affected Kiwis as elsewhere, which decreased revenues in 2009 and 2010, they went ahead with several new tax reforms and still expect to be back in surplus again within less than five years (even after accounting for the significant impact from the quakes in Christchurch).

During the 1970s and 80s, inflation in NZ ranged between 10 and 15% per year. Real economic growth from 1971 to 1990 was low, averaging 2.0% per year. Total unemployment remained over 7% from 1989 to 1994, peaking at 10.4% in 1992. Since NZ's economic reforms, those trends have reversed; unemployment has ranged from about below 3 to about 6.5% (currently toward the top of that range).

One of the reasons NZ has been receiving investment funds from other countries is because real interest rates are positive (nominal rates are higher than inflation). As a curious accounting anomaly, much of the country's so-called "national debt" is actually in the form of deposits made by residents of other countries in NZ banks -- as opposed to the more usual purchases of government debt.

[Sharky]

Re: Some of the Wealthy Asking to Be Taxed

You're the one equating wealth with goodness and such not me, its not my fault its so easy to shoot holes through that concept.

I am not saying that all wealthy people are good, or that wealth equals goodness. My position is that most people who are wealthy get that way by providing a service or product that generates more aggregate value for their customers and employees than they receive in exchange. If you freely buy an orange from me, then you wanted the orange more than your money, and I wanted your money more than the orange; it's win-win.

I've also already brought up the wealth disparity and the work vs. wages which you totally ignored

I don't have any data one way or the other with regard to your earlier claim. Even if it's true, I don't see anything morally wrong with an increasing wealth disparity or with getting paid less to do more. If people feel they aren't getting paid enough, then they should quit and go work somewhere else, or start their own business (perhaps even competing with their former employer).

and the issue isn't necessarily that all the rich are criminals, its that many or most of them are benefiting at the expense of others through unethical business practices some of which were once illegal but changes have been lobbied into place to "fix" that. So technically you couldn't really call most or many of the rich criminals, but you could legitimately call them Gilded Age Era Fat Cats.

Where you say "many or most of them," I claim it's a tiny minority. Otherwise, I agree with part of what you said, in the sense that companies manipulating government for their benefit is wrong -- except I blame government for this (since they are the ones in a position of power), not the companies or wealthy people.

Jobs is a complete asshole and his company treats its workers in China terribly. That is how he got rich as he is. He could've gotten fairly wealthy producing his products here in the US, he just would be less wealthy. Can't have that right?

Being honest doesn't mean you have to be a nice guy. So what if Jobs is an asshole? You want to tax him more because of his personality?

I have no idea how Apple treats employees in China. Many so-called sweat shops in China offer much better conditions and higher wages than the alternatives that are available to those workers. If the choice is between a sweat shop and starvation, then I don't see anything wrong with a sweat shop.

Regarding manufacturing Apple's products in the US, it's not as simple as the author of the blog post you referenced makes it out to be. I worked for Microsoft at a time when they were looking for high-volume manufacturers for a hardware product of theirs. They solicited bids from US companies, but none of them could even do the job -- much less do it at a reasonable price or within the time frame required.

Even if the blog author was correct, the idea that companies can just charge a higher price or accept a lower profit indicates that they don't understand basic business. Product prices drive penetration and adoption rates; slightly higher prices can give competitors a big edge or even kill a product entirely. Profits help drive research and innovation; slightly lower profits can mean a short product lifetime with no improvements over time.

So you believe that the system favors the "criminal rich" yet still believe most of the rich got their wealth through hard work and good + moral decision making?

Yes.

I'm sure you do, I'm also sure the amount they give back is nowhere near what they take in and that even if it was it doesn't even come close to addressing the wealth disparity. I'm also sure these people write off most of their donations on their taxes, assuming they aren't donating back to themselves or some other form of fraud.

My point was that, in my experience at least, they often feel guilty, not that they always act on that guilt or that they don't write off their deductions.

I already said what I want and so have c1ue and others and it in no way or form even approaches destroying or shooting the wealthy. So if you'd please address what is said rather than beating down some straw men? To give you some perspective: 80-90% tax on someone making $2 million a year would leave them with a take home pay of $200-100k a year. So even after some very very high taxes these people would still be very very well off to say the least.

80 to 90% would be a confiscatory tax rate, and would therefore be destructive. Plus, who the hell are you to say that $100 to 200K a year is enough for what someone does for a living, much less that they would be "well off"?

I recall Reagan and others talking about what successful people did when rates used to be that high, saying that they would work until their income hit the top tax rate, and then take the rest of the year off. Many wealthy people add value to my life; it would not be a good thing for me (and many others) if they just stopped working.

From a moral perspective, taxes at any level are theft, and a violation of property rights. The only legitimate role for government is to protect individual rights. Egalitarianism is evil, plain and simple.

[Thailandnotes]

Re: Some of the Wealthy Asking to Be Taxed

When it comes to discussions about the wealthy and the amount of taxes they should pay, I always reflect on Bill Gates and Microsoft. He had vision, but he became really really wealthy because of monopoly…same as how all rich people become super rich. We’ve all bought 6-10 computers since our first one, and, unless you were a first adopter of Linux, have paid 300-400 dollars per computer for basic software that should have cost 49.95. Should Bill Gates be taxed at 80-90 %? Absolutely! Would the money be squandered by the federal government or better spent by The Bill Gates Foundation? I don’t care. Carnegie, Rockefeller, J.P. Morgan all knew and admitted in some fashion that their wealth was obscene. Gates and Buffett may seem more avuncular, but I bet they feel the same.

[Sharky]

Re: Some of the Wealthy Asking to Be Taxed

We’ve all bought 6-10 computers since our first one, and, unless you were a first adopter of Linux, have paid 300-400 dollars per computer for basic software that should have cost 49.95.

It should have cost 49.95 based on what? If that's all you were willing to pay, then why did you spend more? You can get Linux for free (in spite of the fact that it's full of violations of Microsoft patents).

Should Bill Gates be taxed at 80-90 %? Absolutely! Would the money be squandered by the federal government or better spent by The Bill Gates Foundation? I don’t care.

I have the opposite view. As an interim step to abolishing income taxes, I think all income above, say, $1M should be tax-free, as a reward for people who have added that much value to the world -- and hopefully as an encouragement to add even more.

Bill Gates' vision and work has added tremendous value to my life and to the lives of many people I know. I am thrilled that he did what he did, and have no desire to interfere with the ongoing process of innovation. In fact, I'd like to encourage more of it.

Carnegie, Rockefeller, J.P. Morgan all knew and admitted in some fashion that their wealth was obscene. Gates and Buffett may seem more avuncular, but I bet they feel the same.

This gets back to what I was saying earlier about the wealthy often feeling guilty. For me, it's that guilt that's obscene, not their wealth (except to the extent, if any, that it was obtained through the use of force or fraud, which includes manipulation of government in their favor).

[dcarrigg]

Re: Some of the Wealthy Asking to Be Taxed

I guess my opinion is that the goal of taxation is to obtain funds for services such as the military, police, judicial system etc which protect the rights of the people. It seems reasonable that people with more wealth need these services more in that they have more things to protect and therefore they should pay more in taxes.

Part of the goal of protecting these rights was to allow people to accumulate wealth/capital in order to enjoy a better standard of living. I don't understand why the goal should be to confiscate wealth through taxation. Growth in wealth/capital DOES benefit everyone as can be seen by comparing the poor of America with other countries.

Structuring tax laws to encourage equal opportunity (discouraging the accumulation of wealth in perpetuity passed along familial lines) was a founding principal of the United States as a liberal republic. There can be no doubting this.

Half of the point of the Wealth of Nations and a large part of the "growth in wealth/capital" in America was achieved through the decentralization of wealth and tax structures designed to tax land, holdings, and estates more heavily than labor to prevent them from laying fallow and being managed by the sometimes lazy or incompetent children of the wealthy who may or may not have any drive of their own.

Put another way, the American tax code was uniquely and originally designed to maximize work, labor, and output and thereby maximize the wealth of the nation. It was assumed that maximum capital creation and maximum output would be linked (since this was far before FIRE took over).

The idea of a "wealthy person" getting to leave all of his holdings tax-free to children who did not have to work would have been antithetical to the philosophy of the founders of this country.

They may not have liked free handouts for the poor from government (Franklin questioned this), but they didn't like to let "wealthy people" get away without working for their money and competing either.

And this is the crux of where we are not agreeing, I think.

• You claim that it is "confiscation" to set up a tax structure that taxes ones children on land, holdings, and estates. (Even if it ensures that ones children, grandchildren, etc. must work and compete to maintain the wealth handed down to them).
  
  
• I claim that it is "feudalistic" to allow someone great wealth, unearned by them, without any competition, simply by birthright.

I believe that this thought was common around the time the US was formed.

I submit as evidence, Thomas Jefferson's letter to James Madison dated 10/28/1785:

The property of this country is absolutely concentered in a very few hands, having revenues of from half a million of guineas a year downwards. These employ the flower of the country as servants, some of them having as many as 200 domestics, not labouring. They employ also a great number of manufacturers, and tradesmen, and lastly the class of labouring husbandmen. But after all these comes the most numerous of all the classes, that is, the poor who cannot find work. I asked myself what could be the reason that so many should be permitted to beg who are willing to work, in a country where there is a very considerable proportion of uncultivated lands? These lands are kept idle mostly for the aske of game. It should seem then that it must be because of the enormous wealth of the proprietors which places them above attention to the increase of their revenues by permitting these lands to be laboured. I am conscious that an equal division of property is impracticable. But the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children, or to all the brothers and sisters, or other relations in equal degree is a politic measure, and a practicable one. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise. Whenever there is in any country, uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a common stock for man to labour and live on. If, for the encouragement of industry we allow it to be appropriated, we must take care that other employment be furnished to those excluded from the appropriation. If we do not the fundamental right to labour the earth returns to the unemployed. It is too soon yet in our country to say that every man who cannot find employment but who can find uncultivated land, shall be at liberty to cultivate it, paying a moderate rent. But it is not too soon to provide by every possible means that as few as possible shall be without a little portion of land. The small landholders are the most precious part of a state.

And so comes arguments in favor of labor vs. economic rent and inheritance. The old European nobility systems would pass all of the wealth on to the eldest son, and thereby maintain wealth and power. Jefferson actively calls for the promotion of laws to ensure that those who do pass on wealth split it between children to break it up over time.

This was supposed to be a difference between the US and other countries. Article 1 Sections 9 and 10 of the constitution specifically prohibit states and the federal government from issuing titles of nobility. They were not joking about this.

One of the very first proposed amendments to the constitution was the titles of nobility assessment, which would strip one of their citizenship, corporate office, and profits if they were to declare themselves noble or take money from a foreign power for being noble.

The USA was not just meant to be a place where one is born into great wealth through no work of ones own and gets to be great and powerful. If it were the Horatio Alger American Dream would completely die and this country would disintegrate at the seems (probably along racial lines). This is also why Marxism was and is so unpopular in the USA - because it got liberal republican capitalism down the right way without the baggage of trust fund children (nobility) ruling over the working person. There was no need to rise up and kill the factory owner if the owner was some recent immigrant who bootstrapped the product, raised the capital and built the factory. There was a good reason for it if the owner inherited it by fiat and treated workers like dirt because of an entitlement mentality that is often handed down with unearned wealth.

So this was a point of the estate tax and land tax. It was not meant to punish the children of the wealthy for their parents' success, but rather to force them to compete for success and thereby have the hardest working and most ingenious in a society rise to the top rather than have a top consisting of entirely those lucky enough to have been born there.

Now I think this makes a reasonable point. It is different from the one that you normally hear.

• It is more respectable to have earned wealth than to have inherited it.
  
  
• Those who earn their wealth directly through the ownership or renting of property (capital gains) or through labor (income) should be taxed at no less (preferably more) than those who acquire wealth through inheritance (estate).
  
  
• Since all governments require tax money it is better to tax forms of economic rent (Finance/Estates/Land) than to tax forms of labor or consumption (Income/Use/Sales) because one creates real improvements in the national economy where the other does not.

I cannot back off that argument, because to do so is to throw out one of the original tenets of capitalism.