07-18-2011, 05:16 AM
Hi,
The "logic" behind that is mostly that the rich politicians give themselves and their rich buddies a break. There is a school of thought that by taxing investment income at a lower rate, investment is encouraged which, in turn, generates more jobs and a better economy overall. Sometimes that even works a little bit. However, experience teaches us that investment in industry and commerce goes up when things are going well and everybody is happy and goes down when things look bad. The perception of the economy seems to be the biggest factor in the performance of the economy.
The question of state, county, and municipal bonds and federal taxes on them is the last surviving shred of the concept that states are independent and sovereign and that the tenth amendment has any validity.
On that, we are in agreement. That a person paying a mortgage on their home should get a break that another paying rent does not is, IMO, wrong. Similarly, the person who gets a company car to use as their own, or jet, or house, should have a fair market cost for those items included as part of their income. People who chose to have children should not expect a tax break for something that actually increases the cost to society.
Right. because there are so many manufacturing jobs just begging to be filled. And investment? What would these unemployed accountants invest?
I suspect that you know how tax brackets go. So you do know that if one person makes 40k and another makes 60k, the bottom 40k for each is taxed the same (putting aside the question of deductions, loopholes, etc.). So the higher rate, if any, on the top 20k still leaves that person with more money than the other.
As a way of getting into this, consider the case of a traffic ticket, say for speeding. Let's assume that in some jurisdiction somewhere, the fine for 10 above the limit (in some unit of speed) is 50 (in some unit of currency). Now on some given day two people are ticketed for that violation. One person is a rich man for whom 50 is insignificant -- he spends more than that each Friday and Saturday out on the town. The other is a poor man for whom that 50 represents a reduction in the quantity and quality of food for weeks to come.
On the one hand, you could say the law is fair, they both paid the same fine for the same offense. On the other hand, you can claim that the 50 was a punishment to the poor man and no punishment to the rich, and thus unfair. Both viewpoints have merit. If the purpose of the law is to prevent speeding, then the law is a failure -- it only prevents the poor from speeding.
IMO, a similar principle applies to taxation. It is the duty of the citizens to support their government financially. Now, it could be argued that all citizens should pay the same total tax, since they are all equal under the law. In one sense, this would be "fair" although it might be extremely burdensome to the poor and hardly noticeable by the rich. A somewhat less "fair" idea might be to tax everybody at the same rate instead of the same amount. The fairness of this might be called into question when one considers that 20% of 20k might well mean the difference between having a place to live and sleeping in the street while 20% of 200k might only mean the difference of going to Las Vegas three times a year instead of four.
So, my idea? First, all income counts: wages, salaries, dividends, health benefits, etc. Second, no deductions (investment losses are not deductions). Third, an established national poverty level (PL). Income up to the PL is untaxed. Income above the PL but less than 2PL is taxed at some low, yet reasonable, rate (5% to 10%). Tax brackets are in increments of the PL. All income above 10PL is taxed at 90% or more. Also, the minimum wage should be PL/2000 -- anyone working full time should not be impoverished.
Yeah -- it is too simple, so to be practical it would need some adjustments. However, if it gets more complex than can be described in ten pages of 10 point type, then it needs to be simplified.
Not true. Sure, if you live in a log cabin in the Yukon they may not be necessary. Think of a major city (any city with population 1 million or more). Running water is essential, both for drinking and for a level of hygiene sufficient to keep cholera and such at bay. Electricity a bit less so, but the amount of wood, whale oil, and coal needed for warmth, light, and industry would, at the least, make living there unpleasant and probably unhealthy.
A good point.
The bigger the city, the less true that is. Even if all the parks in Manhattan were converted to agricultural fields, I doubt that it could grow enough to feed itself.
No, you are thinking in too small a box. You are thinking in terms of the comparatively sparsely settled, central, agriculturally rich, part of this country. The east coast is almost a solid city from Eastport to Key West. The west coast isn't as bad, however the water situation there might be even worse.
I have a friend who became disgusted with the system about 40 years ago. He lives a simple life, having burned, first, his draft card, then his social security card, and then even his driver's license. He lives completely off the grid, below the radar, etc. He can do it because there's still some room for a few to do it, but if everybody tried, there wouldn't be enough land, enough game, enough spring water, enough wood for all.
Yeah, one can still be a hermit -- but it isn't a viable solution for the entire country.
--Pete
(07-18-2011, 03:39 AM)GhastMaster Wrote: I do not know why dividends are not taxed at the same rate as income. I would like to know the logic behind that.
The "logic" behind that is mostly that the rich politicians give themselves and their rich buddies a break. There is a school of thought that by taxing investment income at a lower rate, investment is encouraged which, in turn, generates more jobs and a better economy overall. Sometimes that even works a little bit. However, experience teaches us that investment in industry and commerce goes up when things are going well and everybody is happy and goes down when things look bad. The perception of the economy seems to be the biggest factor in the performance of the economy.
The question of state, county, and municipal bonds and federal taxes on them is the last surviving shred of the concept that states are independent and sovereign and that the tenth amendment has any validity.
(07-18-2011, 03:39 AM)GhastMaster Wrote: I do not believe in any form of a tax break or credit.
On that, we are in agreement. That a person paying a mortgage on their home should get a break that another paying rent does not is, IMO, wrong. Similarly, the person who gets a company car to use as their own, or jet, or house, should have a fair market cost for those items included as part of their income. People who chose to have children should not expect a tax break for something that actually increases the cost to society.
(07-18-2011, 03:39 AM)GhastMaster Wrote: The accounting profession is consuming a lot of unnecessary people and money that could be applied to manufacturing and investment.
Right. because there are so many manufacturing jobs just begging to be filled. And investment? What would these unemployed accountants invest?
(07-18-2011, 03:39 AM)GhastMaster Wrote: Why do you think there should be a graduated income tax Pete? Who would you tax more? What rate? I know life is not fair, but setting a higher percentage on higher earners seems a little mean.
I suspect that you know how tax brackets go. So you do know that if one person makes 40k and another makes 60k, the bottom 40k for each is taxed the same (putting aside the question of deductions, loopholes, etc.). So the higher rate, if any, on the top 20k still leaves that person with more money than the other.
As a way of getting into this, consider the case of a traffic ticket, say for speeding. Let's assume that in some jurisdiction somewhere, the fine for 10 above the limit (in some unit of speed) is 50 (in some unit of currency). Now on some given day two people are ticketed for that violation. One person is a rich man for whom 50 is insignificant -- he spends more than that each Friday and Saturday out on the town. The other is a poor man for whom that 50 represents a reduction in the quantity and quality of food for weeks to come.
On the one hand, you could say the law is fair, they both paid the same fine for the same offense. On the other hand, you can claim that the 50 was a punishment to the poor man and no punishment to the rich, and thus unfair. Both viewpoints have merit. If the purpose of the law is to prevent speeding, then the law is a failure -- it only prevents the poor from speeding.
IMO, a similar principle applies to taxation. It is the duty of the citizens to support their government financially. Now, it could be argued that all citizens should pay the same total tax, since they are all equal under the law. In one sense, this would be "fair" although it might be extremely burdensome to the poor and hardly noticeable by the rich. A somewhat less "fair" idea might be to tax everybody at the same rate instead of the same amount. The fairness of this might be called into question when one considers that 20% of 20k might well mean the difference between having a place to live and sleeping in the street while 20% of 200k might only mean the difference of going to Las Vegas three times a year instead of four.
So, my idea? First, all income counts: wages, salaries, dividends, health benefits, etc. Second, no deductions (investment losses are not deductions). Third, an established national poverty level (PL). Income up to the PL is untaxed. Income above the PL but less than 2PL is taxed at some low, yet reasonable, rate (5% to 10%). Tax brackets are in increments of the PL. All income above 10PL is taxed at 90% or more. Also, the minimum wage should be PL/2000 -- anyone working full time should not be impoverished.
Yeah -- it is too simple, so to be practical it would need some adjustments. However, if it gets more complex than can be described in ten pages of 10 point type, then it needs to be simplified.
(07-18-2011, 03:39 AM)GhastMaster Wrote: Things like electricity and running water are nice, but not necessary.
Not true. Sure, if you live in a log cabin in the Yukon they may not be necessary. Think of a major city (any city with population 1 million or more). Running water is essential, both for drinking and for a level of hygiene sufficient to keep cholera and such at bay. Electricity a bit less so, but the amount of wood, whale oil, and coal needed for warmth, light, and industry would, at the least, make living there unpleasant and probably unhealthy.
(07-18-2011, 03:39 AM)GhastMaster Wrote: Makes me think, maybe being a U.S. citizen is a luxury in and of it's self. Something some people forget.
A good point.
(07-18-2011, 03:39 AM)GhastMaster Wrote: ...food is necessary, however it can be acquired from places other than the open market.
The bigger the city, the less true that is. Even if all the parks in Manhattan were converted to agricultural fields, I doubt that it could grow enough to feed itself.
(07-18-2011, 03:39 AM)GhastMaster Wrote: My parents do not pay a tax for water. They use a cistern. Am I thinking too far outside the box?
No, you are thinking in too small a box. You are thinking in terms of the comparatively sparsely settled, central, agriculturally rich, part of this country. The east coast is almost a solid city from Eastport to Key West. The west coast isn't as bad, however the water situation there might be even worse.
I have a friend who became disgusted with the system about 40 years ago. He lives a simple life, having burned, first, his draft card, then his social security card, and then even his driver's license. He lives completely off the grid, below the radar, etc. He can do it because there's still some room for a few to do it, but if everybody tried, there wouldn't be enough land, enough game, enough spring water, enough wood for all.
Yeah, one can still be a hermit -- but it isn't a viable solution for the entire country.
--Pete
How big was the aquarium in Noah's ark?