Some of the Wealthy Asking to Be Taxed

[c1ue]

Re: Some of the Wealthy Asking to Be Taxed

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.

I would say that this statistic by itself isn't necessarily meaningful. The 'military family' tradition among the career military - significantly officers and military bureaucrats - itself comprises a large group of people with top quintile incomes.

There's no question there are a whole lot of officers...

http://www.bls.gov/oco/ocos249.htm

Officers, who make up the remaining 18 percent of the Armed Forces, are the leaders of the military, supervising and managing activities in every occupational specialty.

Add in specialists like pilots and I'd have to say that a lot more analysis would be needed before you could say that the civilian rich people are in any way contributing more manpower to the military than their demographic representation.

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.

This is a ridiculous statement.

I could say the same for the Right: their real goal is to destroy all other forms of wealth besides their own; to destroy the middle class as potential competitors and to oppress the lower classes as serfs.

Both statements are certainly true for some in both sides, but are not true overall.

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.

I'd say the only way to tell is once the hot money leaves. Certainly no other nation in the Asia Pacific region has ever weathered a significant hot-money exodus well.

As for higher interest rates - that itself is a sign a huge hot money flows. Were interest rates to fall due to an NZ recession, or perhaps some other GFC type effect ensure, the resulting 'call' of the national debt might be quite traumatic.

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.

This statement is false. While there are some people like Gates, Jobs, Ellison, Buffet, and so forth who can be said to have created wealth, the reality is the top 400 wealthiest people are dominated by 'free rent' types: real estate, banksters, and what not.

http://www.faireconomy.org/press_roo...997_forbes_400

42 % Born on Home Plate ó inherited sufficient wealth to rank among the Forbes 400. This percentage is higher than that listed by Forbes for inheritors. The reason: Forbes listed as "self-made" people who actually inherited substantial sums or property and then later built that stake into a greater fortune. One example is Philip Anschutz (1997 net worth: $5.2 billion) who is listed as "self-made" even though he inherited a $500-million oil and gas field.

6 % Born on Third Base ó inherited substantial wealth in excess of $50 million or a large and prosperous company and grew this initial fortune into membership in the Forbes 400.

7 % Born on Second Base ó inherited a medium-sized business or wealth of more than $1 million or received substantial start-up capital for a business from a family member.

14 % Born on First Base ó biography indicates wealthy or upper-class background that was to our knowledge less than $1 million, or received some start-up capital from a family member. Due to the study team's conservative coding rule, it is likely that some of those listed as born on first base actually belong on second or third base.

31 % Born in the Batter's Box ó individuals and families whose parents did not have great wealth or own a business with more than a few employees.

Clearly the use of the technology titans as fronts for 'wealth creation' is not an accurate description of the overall class.

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.

The problem is you're forcing the solution to be binary: either too high a tax or nobody wealthy works.

Reality holds many more options: a fair but higher tax, for example.

Another option might be to have a very high (90%) tax rate on passive investment, but exemptions for income used for new business development.

One point which is not addressed well is that low tax rates inherently discourage wealthy people from risking their wealth in new business development - why bother when you can make money just being safe?

[Ghent12]

Re: Some of the Wealthy Asking to Be Taxed

I would say that this statistic by itself isn't necessarily meaningful. The 'military family' tradition among the career military - significantly officers and military bureaucrats - itself comprises a large group of people with top quintile incomes.

There's no question there are a whole lot of officers...

http://www.bls.gov/oco/ocos249.htm



Add in specialists like pilots and I'd have to say that a lot more analysis would be needed before you could say that the civilian rich people are in any way contributing more manpower to the military than their demographic representation.

More analysis, maybe, but at that point you are really splitting hairs and beginning a snobbish and irrelevant categorizing of professions in the military that has no bearing on reality (did you really just suggest that pilots don't contribute manpower to the military?).

The fact remains that Buffett is completely wrong in suggesting that "the poor go to war" while the rich do not. Maybe the uber-rich, the top 0.05% of the population, don't serve--or maybe they do, who actually has data on that? It cannot be reasonably disputed, however, that "the rich" in the income bracket is pulling their weight (or more) in these wars.

[Thailandnotes]

Re: Some of the Wealthy Asking to Be Taxed

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).

Actually, I moved to Asia, where for a long stretch it was impossible to buy a new computer with licensed software even if you ordered it direct from the HP factory.

The issue of inherited wealth and what's best for society was widely debated during the passage of the so-called “Mickey Mouse Protection Act.” Sonny Bono wanted to extend copyright protection forever. Jack Valenti said he would compromise at “forever minus one day.”

The Gershwin's are happy (for now)

http://www.therestisnoise.com/2011/0...-and-bess.html

[Sharky]

Re: Some of the Wealthy Asking to Be Taxed

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.

I doubt that.

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.

Then why was the death tax not made permanent until 1916?

• 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.

The underlying issue is one of property rights -- which include the right of disposal. If I cannot dispose of my property as I see fit, then I do not truly own it.

Being able to pass along my estate to the heirs of my choice is a form of disposal (as are gifts).

Feudalism requires the use of force by the "lords" against the "serfs." There is no use of force with inheritance -- in fact, the taxation itself is a use of force against the original owner.

Someone earned those funds through competition. Why should that person not be able to do as they wish with their earnings?

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.

Reasonable? Forcing someone to do anything along the lines you've suggested is clearly immoral.

Egalitarianism is evil, plain and simple.

[Sharky]

Re: Some of the Wealthy Asking to Be Taxed

I'd say the only way to tell is once the hot money leaves. Certainly no other nation in the Asia Pacific region has ever weathered a significant hot-money exodus well.

As for higher interest rates - that itself is a sign a huge hot money flows. Were interest rates to fall due to an NZ recession, or perhaps some other GFC type effect ensure, the resulting 'call' of the national debt might be quite traumatic.

During the recent recession, the OCR (official cash rate; similar to the Fed funds rate in the US) fell from a peak of 8.25% in 2007 to a low of 2.5%, where it still stands. The economy seems to have weathered the change without any undue difficulties. As one indicator, the New Zealand dollar is about 10% stronger against the USD than it was 5 years ago.

This statement is false. While there are some people like Gates, Jobs, Ellison, Buffet, and so forth who can be said to have created wealth, the reality is the top 400 wealthiest people are dominated by 'free rent' types: real estate, banksters, and what not.

The top 400 wealthiest people are not representative of wealthy people in general. And even if they were, the original source of most inherited money was still someone providing a value to others.

The problem is you're forcing the solution to be binary: either too high a tax or nobody wealthy works.

Reality holds many more options: a fair but higher tax, for example.

Any tax is unfair, so the choice is really unfair or more unfair. We either have freedom and support of individual rights, or we don't.

Another option might be to have a very high (90%) tax rate on passive investment, but exemptions for income used for new business development.

Would passive investments include home ownership? I remember reading that something like half of the people in the top 1% income bracket in a given year are there because they sold their house. Should they be taxed at 90% too?

One point which is not addressed well is that low tax rates inherently discourage wealthy people from risking their wealth in new business development - why bother when you can make money just being safe?

Why is it better for someone to risk their resources on new business development than to hold those funds in some form of savings? It's precisely those savings that help keep true, manipulation-free interest rates low. Those savings also help provide the foundation upon which business creation and expansion loans to others can be provided.

[Thailandnotes]

Re: Some of the Wealthy Asking to Be Taxed

“The Pittencrieff Estate was a 76–acre plot in the center of town, open to the townspeople one day a year. As a child growing up in Dunfermline, Andrew Carnegie was forbidden from playing in the grounds by the Laird even on the one day it was open to the public. After becoming a successful industrialist, Andrew Carnegie bought the estate, and donated the property to the town as a public park.”

Perhaps Nader was right with his goofy anti-Ayn Randian novel, “Only the Super Rich Can Save Us.”

[dcarrigg]

Re: Some of the Wealthy Asking to Be Taxed

I doubt that.

Based on what, exactly? Reply back with a source document from the time.

Then why was the death tax not made permanent until 1916?

Now we're splitting hairs. The Stamp Act of 1797 was the beginning of the estate tax (it doesn't tax death - just 35% of everything more than $10M left to your kid). It required stamps be affixed to wills and contractual documents of wealth transfer. These acts were on-again-off-again and not permanent until 1916 - but few taxes were back then. Tariffs were the primary tax vehicles of the day. I assume you also are a fan of free trade, right? You cannot have a government with no taxes. Remember the saying of the revolution was:

• No taxation without representation

It was not:

• No taxation

The underlying issue is one of property rights -- which include the right of disposal. If I cannot dispose of my property as I see fit, then I do not truly own it.

Being able to pass along my estate to the heirs of my choice is a form of disposal (as are gifts).

Feudalism requires the use of force by the "lords" against the "serfs." There is no use of force with inheritance -- in fact, the taxation itself is a use of force against the original owner.

Someone earned those funds through competition. Why should that person not be able to do as they wish with their earnings?

Me me me. That's all I read here. This is your belief. I understand that.

But if their earnings are taxed in the first place (income tax) doesn't that violate your principle of ownership?

So now I wonder this:

From where do you propose taxes come? Are you antithetical to the very concept of taxes?

(And if so, how about the concept of death? - 'cause you ain't gettin' rid of that either).

Reasonable? Forcing someone to do anything along the lines you've suggested is clearly immoral.

Forcing someone to work for their meals and survival is something nature does. Entropy's a bitch, but you can't stop thermodynamics. Everyone is forced to eat. It is not immoral.

Egalitarianism is evil, plain and simple.

I didn't say:

• Everyone would be equal.

I said:

• Everyone would get to have an equal opportunity at life, liberty and the pursuit of happiness and property.

These, my friend are two very different concepts. If you cannot understand the difference - that Jefferson was by definition not a Marxist, because the manifesto had not come out yet - I do not know how to debate with you.

[mesyn191]

Re: Some of the Wealthy Asking to Be Taxed

He is either trolling or refusing to consider the information you're giving him based on some sort of personal world view that he holds as the end all be all that you can't debate with him which is why I stopped replying. You can't debate with someone who won't consider anything you say that doesn't comply with their world view as true.

[Sharky]

Re: Some of the Wealthy Asking to Be Taxed

The Stamp Act of 1797 was the beginning of the estate tax (it doesn't tax death - just 35% of everything more than $10M left to your kid). It required stamps be affixed to wills and contractual documents of wealth transfer.

The Stamp Act of 1797 was passed to raise funds to start the US Navy, and it was promptly repealed afterward, in 1802. If estate taxes were an important goal of the Founding Fathers, I don't see why they would have been repealed.

My understanding of the goals of the founders was that they wanted to prevent a recurrence of monarchy. From what I've read, they were strongly in favor of property rights.

You cannot have a government with no taxes.

I disagree.

But if their earnings are taxed in the first place (income tax) doesn't that violate your principle of ownership?

The taxation itself does, yes.

From where do you propose taxes come? Are you antithetical to the very concept of taxes?

I'm against all forms of taxation. Government can and should be funded through voluntary payments.

You say impossible, I say it's the only moral solution.

I didn't say:

• Everyone would be equal.

I said:

• Everyone would get to have an equal opportunity at life, liberty and the pursuit of happiness and property.

What do you mean by "equal opportunity"? Your argument so far seems to be that people should have an opportunity to advance or improve or be happy, but only to a certain level -- which is decided by government. Or have I misunderstood?

[Thailandnotes]

Re: Some of the Wealthy Asking to Be Taxed

Government can and should be funded through voluntary payments.

You're pretty far out there, Sharky. Not a personal attack at all. Just curious how you got there.

[Raz]

Re: Some of the Wealthy Asking to Be Taxed

I figured I'd address this first. I believe that I can be best classified philosophically as a pragmatist. As such, my philosophical stance cannot be separated from what is politically feasible.



In your scenario, without further information, I would say no (and hence agree with you).

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. There is a difference between that and the dictatorship of the proletariate (direct wealth transfer).

It is the old dichotomy between equality of opportunity and equality of result. Some on the extreme end of the libertarian scale may add a third option - elimination of equality all together in favor of pure social darwinism.

If faced with these three options:
1. Equality of Opportunity
2. Equality of Results
3. Social Darwinism

I will go with Number 1.

You and I might be closer than we think, dcarrigg, politically speaking.

I suppose I'm "libertarian" as opposed to "totalitarian" since socialism always end up with a huge statist bureaucracy and diminished freedom, and in a country such as ours a general lower standard of living.
But I'm NOT a Libertarian, and not only because it's impractical but because I don't believe in Darwinism of any sort, even though there is some truth to be found in the theory of evolution.
A beehive works efficiently and well, but it's not the type of society in which I'd want to live.

The philosophy to which I am vehemently opposed is radical egalitarianism - to my mind the 'nuclear' opposite of social darwinism - and it seems to hold sway among many on the Left.

[c1ue]

Re: Some of the Wealthy Asking to Be Taxed

More analysis, maybe, but at that point you are really splitting hairs and beginning a snobbish and irrelevant categorizing of professions in the military that has no bearing on reality (did you really just suggest that pilots don't contribute manpower to the military?).

The fact remains that Buffett is completely wrong in suggesting that "the poor go to war" while the rich do not. Maybe the uber-rich, the top 0.05% of the population, don't serve--or maybe they do, who actually has data on that? It cannot be reasonably disputed, however, that "the rich" in the income bracket is pulling their weight (or more) in these wars.

Your assertion is that the rich - defined as the top quintile - contribute more than their share of military manpower.

I pointed out that there is a hereditary component within the military - both higher level officers and specialists like pilots - which skew the ratio. A 3 generation line of colonels and generals can hardly be said to be a regular part of the population even if they are all in the upper quintile in income. Ditto pilots: does the data you point to refer to income while in/after the military or before? This makes a very big difference as well as flight pay pushes pretty much all pilots in the military into the upper quintile for income.

So while your point might be correct, on the other hand you've not yet showed that Buffet was wrong.

For that matter if we looked at the top 400 richest families - is there a single member in the military among them? After World War II, of course, and perhaps even up to excluding Vietnam due to the draft.

The top 400 wealthiest people are not representative of wealthy people in general. And even if they were, the original source of most inherited money was still someone providing a value to others.

In saying so, you are also saying you have countervening data.

Please provide it.

Given that all of your examples: Gates, Jobs, Buffet are all among this grouping, you're also disproving your own statement that wealth is built upon value creation, since your examples equally are not representative.

Any tax is unfair, so the choice is really unfair or more unfair. We either have freedom and support of individual rights, or we don't.

You're welcome to your belief.

But you in a society where you have to pay taxes. So while you're welcome to have this opinion and even to push for this view to become law, at the same time you presumably have to accept that you will have to pay taxes.

Either way, simply asserting taxes are against individual rights is a belief - and clearly beliefs are a waste of time to debate.

Would passive investments include home ownership? I remember reading that something like half of the people in the top 1% income bracket in a given year are there because they sold their house. Should they be taxed at 90% too?

I'd say this data is incorrect for several reasons:

1) Present tax policy gives gigantic tax breaks for capital gains from selling a home, and furthermore excludes all capital gains if a more expensive home is bought. Thus to say that a top 1% income came from taxed capital gains from selling a house - I'm sure it does happen, but I'm equally sure it isn't common at all.

2) While it is possible that the income used to pay for a $2M home was that of a hotel maid, in reality this is beyond extremely unlikely. There are $400K homes in the Bay Area which were paid off by hotel maids, but the $2M homes were too expensive as $200K homes in the 1970s as much as they are too expensive for 'average Joes' to afford now.

Why is it better for someone to risk their resources on new business development than to hold those funds in some form of savings? It's precisely those savings that help keep true, manipulation-free interest rates low. Those savings also help provide the foundation upon which business creation and expansion loans to others can be provided.

Because money that just sits around and collects more money to itself doesn't do anything for anyone beyond the immediate possessor.

And if there isn't credit available for new businesses, some other entity must provide it.

Would you prefer the Fed, TBTF banks, or the government to do so?

Let me put this another way: if you choose to, under the traditional progressive taxation system, only new income would be heavily taxed. Your opportunity cost in return for safety is low growth via passive investments, and over time that's why the Vanderbilts aren't the richest people around anymore.

On the other hand, if you take risks and gain capital/income via growth, your gains are huge in order to offset risks. In this instance I would fully endorse a lower tax rate to compensate for said risks, with obvious controls of course (Bill Gates' fortune clearly no longer falls into the risky category).

What do you mean by "equal opportunity"? Your argument so far seems to be that people should have an opportunity to advance or improve or be happy, but only to a certain level -- which is decided by government. Or have I misunderstood?

Equal opportunity means exactly what it says: that no one is disadvantaged due to lack of education, lack of health, lack of the ability to gain a living wage, etc to being enabled to be successful.

The outcome of each person's life isn't legislated, only that they have the opportunity.

Outside of minority representation programs and a slim percentage of scholarships, equality of opportunity in the United States is rapidly disappearing.

[dcarrigg]

Re: Some of the Wealthy Asking to Be Taxed

You and I might be closer than we think, dcarrigg, politically speaking.

I suppose I'm "libertarian" as opposed to "totalitarian" since socialism always end up with a huge statist bureaucracy and diminished freedom, and in a country such as ours a general lower standard of living.
But I'm NOT a Libertarian, and not only because it's impractical but because I don't believe in Darwinism of any sort, even though there is some truth to be found in the theory of evolution.
A beehive works efficiently and well, but it's not the type of society in which I'd want to live.

The philosophy to which I am vehemently opposed is radical egalitarianism - to my mind the 'nuclear' opposite of social darwinism - and it seems to hold sway among many on the Left.

I am absolutely with you here. The more I read your posts, the more I come towards that conclusion. The 'idiot left' and the 'idiot right' are both very real - they both hate math and source documents - and they both are fueled by a form of philosophical faith in the golden calf of their choosing.

The funny thing to me is that this debate never goes away. Radical egalitarianism is, I think, now less popular than radical social darwinism. Both are inadvisable.

It is curious to me that the last time serious arguments for ending taxation entirely and for pure social darwinism were made was during the gilded age in the 1880s. There are lots of political similarities to today. Republicans almost disappeared from the Northeast after the 'mugwumps' from the region were not considered party-loyal, 20 years of ineffective, marginal, forgettable presidents ensued, and the long depression of 1873-96 is something akin to what we're doing now. History doesn't repeat, but it sure seems to rhyme.

We're still probably a decade away from the next Teddy Roosevelt.

I think we have one big crash to go before the radical leftists really decide to organize against this growing influence and another after that before all is said and done. I expect this to be a very bumpy 50 years - not at all like the Pax Americana of the preceding 60.

The radicals always find time to come out of the woodwork when things are going to hell. Often times, they make it worse. But the appeal is salient. When you're on a sinking ship led by a crew who refuses to admit it, panic ensues. Radical reactionaries feed off that panic. Their numbers grow.

[Sharky]

Re: Some of the Wealthy Asking to Be Taxed

You're pretty far out there, Sharky. Not a personal attack at all. Just curious how you got there.

Mostly by taking the time to thoroughly understand the nature of morality in a political context, including what it takes for a system to be consistent (without contradictions).

FWIW, I don't think I'm that far out there. Ron Paul supports the idea of phasing out the IRS and income taxes, as do many Libertarians (although I don't support RP as a candidate, nor am I a Libertarian).

I'm also not suggesting that zero taxation will happen anytime soon -- but that doesn't mean it shouldn't still be the ultimate goal.

[mesyn191]

Re: Some of the Wealthy Asking to Be Taxed

There are next to no radical leftists in the US and there is no sign of them popping up in numbers any time soon ever. The public narrative is very far right from a recent historical perspective, very nearly fascist IMO, certainly anti labor at the very least. The most likely political group to come to power out of that political environment in a major crisis of government are the fascists. The only historical yardstick we have for what is going on right now is probably the very late 1800's/very early 1900's. If that time period is anything to go by we have 30 years or so of bad times ahead of us before enough of the stupidity and corruption in the government and rich is wrung out of the country and for things to start to get better.