patrick.net

kentm says

I'll happily entertain a ton of discussion points on this subject if we agree to keep it in context and also discuss how much individuals have personally after taxes to spend.

Sure, that's what I'm hoping for.

By base tax rate, regardless of the level of income earned? Or does that vary?

See if it varies with income earned, then the person earning more does not have the incentive to work harder because he'd jump into the higher tax bracket which he wants to avoid.

A flat tax regardless of income earned makes sense. If we eliminate income tax totally, then may be following Henry George's advice on taxing possession of land makes sense.

bob2356 says

Of course govenment collects and spends fica right away. What doesn't get spent in the current year budget of Social Security and Medicare gets loaned to the general budget where it is spent

Why on earth would the fixed income earners want Social Security, if the Govt. is acting irresponsible and spends it off immediately? Isn't this pay-as-you-go scheme really then a ponzi?

austrian_man says

See if it varies with income earned, then the person earning more does not have the incentive to work harder because he'd jump into the higher tax bracket which he wants to avoid.

That is ridiculous. You would stop working because you have to pay 31% instead of 28% on the additional income only? You're still keeping 69%! Nobody behaves this way. NOBODY.

austrian_man says

A flat tax regardless of income earned makes sense.

It makes no sense at all. It's regressive and will create a society of haves (few) and have nots (many), eventually destroying the economy.

austrian_man says

Isn't this pay-as-you-go scheme really then a ponzi?

Where would you suggest the surplus get invested? Under your mattress?

tatupu70 says

You would stop working because you have to pay 31% instead of 28% on the additional income only? You're still keeping 69%! Nobody behaves this way. NOBODY.

It all depends on how much of what you earn, you get to keep. If I get to keep much lesser than what I earn at a higher bracket, there is no incentive to work harder. So it is not ridiculous at all. Makes sense.

tatupu70 says

Where would you suggest the surplus get invested? Under your mattress?

well Govt. spending is not really efficient, if you don't realize it already. See the chart posted on the home page today of Fannie/Freddie.

austrian_man says

If I get to keep much lesser than what I earn at a higher bracket, there is no incentive to work harder.

Doesn't actually work that way in the US though. The upper middle class pays the highest rates, because they're actually working and getting high incomes (doctors, lawyers). So they are the ones that pay the highest marginal rates.

Once you become of the non-productive rent-seeking overlords though, your tax rate falls dramatically in spite of your higher income, because most of your income is capital gains and dividends. Or just unrealized capital gains, and can compound without any taxes at all. It's like 401k's for the ultra-rich.

Once you become of the non-productive rent-seeking overlords though, your tax rate falls dramatically in spite of your higher income, because most of your income is capital gains and dividends.

This rent seeking overlord pays taxes on his rental income as ordinary income at ordinary income tax rates. Where exactly in the tax code do you find rental income taxed at capital gains rates? I want to get into that.

Patrick, do you even know what capital gains are? Where does it say that capital gains is all rents or even close. The bulk of capital gains taxes paid are from the stock and bond markets. Care to explain how unrealized capital gains never pay taxes? If you want the money then you have to sell the asset and take the capital gains. That's just silly. It would be like saying you never have to pay income taxes as long as your employer doesn't actually pay you. Sooner or later you have to take the money.

Why don't you and bellingham silly give it a rest. It just sounds like massive sour grapes after a while.

austrian_man says

Isn't this pay-as-you-go scheme really then a ponzi?

Not really, no, since pay-as-you go means the working generations pay the pensions of the retired generations.

Being worried about social security's ownership of treasury bonds is literally UNAMERICAN.

“The validity of the public debt of the United States, authorized by law . . . shall not be questioned.”

bob2356 says

Where exactly in the tax code do you find rental income taxed at capital gains rates? I want to get into that.

http://www.google.com/finance?q=NYSE%3AAVB

Patrick was speaking of rent-seeking in general though, so you can look here too:

https://www.google.com/finance?client=ob&q=NYSE:XOM
http://www.google.com/finance?gcx=c&q=humana

Why don't you and bellingham silly give it a rest. It just sounds like massive sour grapes after a while.

LOL.

http://www.nizkor.org/features/fallacies/ad-hominem.html

The argumentation always go there when one side's arguments are destroyed.

Reading my hero's (some Georgist guy up in Canada) old arguments on usenet, the pro-property people always eventually wheeled out the 'sour grapes' thing.

(here's an example: http://groups.google.com/group/alt.fan.rush-limbaugh/msg/dfa7d28c028fc913?hl=en)

It's not sour grapes to want to remove one of the major wealth sucks on the middle quintiles right now.

It's not sour grapes to want to prevent this country from falling further into the neofeudalism of Brazil or Mexico.

It's not sour grapes to want to mitigate if not eliminate a primary locus of ongoing economic injustice in this country.

bob2356 says

Patrick, do you even know what capital gains are? Where does it say that capital gains is all rents or even close. The bulk of capital gains taxes paid are from the stock and bond markets. Care to explain how unrealized capital gains never pay taxes?

Silly Bob doesn't even know that rent seeking means more than actually acting as a landlord collecting rent from a tenant.

Think about this for one second here Bobby - Patrick created this site - it has been going strong for 5+ years and has been a tremendous resource from the beginning on some fairly complex economic and financial topics. It is pretty safe to say that Patrick has an understanding of capital gains.

By the way, unrealized capital gains never pay taxes through the estate tax exemption for one. This is currently $10 million for married couples. There is a step up in basis upon transfer to heirs.

They are also untaxed through rent seeking. You see, when one purchases an asset (lets just say a house so you don't get confused by the term rent seeking) in 1940 for $15,000, then passes it to his heirs who rent it out for $15,000 (net) per year, they are reaping the benefit of the unrealized capital gain without ever having to pay taxes on it.

There is a step up in basis upon transfer to heirs.
Thankfully, there is no free lunch (no estate tax means that heirs don't get total tax avoidance through a stepped up basis on large estates). There is, however, an exemption that allows you to step up to $1.3million on the estate. Okay, maybe I should have said REALLY large estates as surviving spouses can also step up to $3million.

EBGuy says

Thankfully, there is no free lunch (no estate tax means that heirs don't get total tax avoidance through a stepped up basis on large estates).

This is the 2010 rule I think. In 2011, there is no limit to how much basis can be stepped up. All falls under the 5 million (10 million for a married couple) exemption rule though. That is, the estate owes tax based upon 35 percent of its value in excess of 5/10 million.

1st, I don't believe any graph, poll or information for which I cannot see the data used to create it

I have been demanding for years that all city, county, school, state and Federal budgets and actual revenue and expenses be posted on the internet in laymans terms with no aggregates over $100.00

My FOIA requests have been denied.

That's a great idea. If we taxpayers are paying for something, we should have the right to see exactly where the money is going.

uomo_senza_nome says

well Govt. spending is not really efficient, if you don't realize it already. See the chart posted on the home page today of Fannie/Freddie.

Government's ability to be efficient has been under attack for four decades. Regulatory departments have their workloads increased at the same time their budgets are slashed. Lobbists write laws then bribe with campaign contributions to get them passed, so that government agencies have their hands tied in doing their jobs. The revolving door between public and private service has errodes the idea of being accountable to the people who elected you to serve them, and all this mischief doesn't even include the hard core anti-government idealogues who just plain sabotage government to further their world view. If American government is inefficient it's because it was deliberately made to be that way, not because it is inherently that way. If it always had been so badly functioning, our country would not have survived one century, much less well into its second.

I wonder what the situation looks like when you compare share of National WEALTH to share of Taxes paid.

The problem is Math. The simplest solution is to either 1) stop teaching math to the underclass or 2) redefine the basic rules of mathematics based on religious faith.

I favor option 1 but if history is a guide we should do 2. Rather than toil at meaningless labor, the dim-witted American underclass prefers to have their children in "school". So let's make Jesus Math.

Example: if a worker puts in 100 hours of work in a week, and the boss keeps 99 hours as pure profit, then the worker is entitled to five minutes of pay, minus taxes.

(100 - 99 - 7/8ths)/75 = full pay + God loves you

thunderlips11 says

I wonder what the situation looks like when you compare share of National WEALTH to share of Taxes paid.

Homo Economicus. Like Bigfoot, reported to exist in fantasy books, but never seen in the wild.

Good point. The distribution of wealth is way more unequal than the distribution of income.

The right thing to do is to tax assets and not income or sales.

A 2% tax on asset could replace all other taxes:

http://patrick.net/?p=1133205

In fact, if we don't tax assets, we will definitely soon have a heretitary aristocracy, and then eventually a violent revolution.

So if we tax assests, doen't that mean the same money is getting taxed year after year? If I inherit a sh*t load of money from a rich relative, will I have to pay the 2% tax year after year even if my net worth does not increase during those years?