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Super Tax The Super Rich. An Idea Whose Time Has Come. Again.


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2012 Mar 1, 1:09pm   29,167 views  76 comments

by marquismark   ➕follow (0)   💰tip   ignore  

http://johnsroom.wordpress.com/2012/01/21/super-tax-the-super-rich-an-idea-whose-time-has-come-again/

Super-tax the super-rich: an idea whose time has come. Again.
Posted on January 21, 2012

Warren Buffett, one of the wealthiest men in the world, is famous for saying that his tax rate (17.7%) is lower than his secretary’s (30%).* Mr. Buffett makes a valid point. Right now, multi-multi-millionaires in the USA are paying their lowest tax rates since the Great Depression. Fiscal conservatives insist that lower taxes spur job growth and stimulate the economy. They are only partly right. As I will show here, lowering taxes can improve the economy, but only if you lower taxes on the middle class. Not the very rich.
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55   SFace   2012 Mar 6, 4:33pm  

oliverks1 says

So the simple answer to your questions is, income from investments, be it capital gains or profits should be taxed, because it represents new income (assuming inflation adjustment for the capital basis). Why should this be free, because as I explained it has not been taxed yet.

Thomas is technically correct.

There's really two types of business for tax purpose, There's taxable entity and disregard entity.

Taxable entity, mostly C corporations or other entities treated as C Corporations are taxed at the entity level. A 1M taxable income for the corporation means the Corporation pays 35% federal tax and whatever state tax. The retained earnings is net of tax. Dividends and or other release of capital (Capital gains or dividends which are essentially the same thing) are taxed at the shareholder level. The retained earnings (booked after tax is included) are already taxed at the corporate level so the release of equity represents taxation on the same income.

In theory that is why there is preferential treatment. Most of the world don't try to tax the same income twice. Without the capital gains break, 100 earned by the Corporation can be taxed at $40 at the entity level, leaving $60 retained earnings. Upon release of the $60 taxed at 40% again fed and state or $24. That means of the $100 in pre-tax income, uncle fed and Auntie State took $64 bucks. The BUSH tax cut relieve some of that.

In the case of a disregard entity or more commonly known as pass-thru entity, there is no tax at the entity level. However, if the business earned 1M in taxable income, 100% of the taxable income is passed to the shareholder(s). It's more commonly known as getting a "K-1" which is filed with the fed so they know exactly how much you made. There is no reduced rate as that is essentially income from your share of the partnership. There is no retained earnings in a partnership, the 1M income is allocated to partners capital and can be released upon cash draw. (based on partnership agreement). But as the partners capital increased, the K-1 means the partner have to pick up the income on the reporting year. If you manage to sell your share of the partnership higher than the basis, that gain is taxed at full as well.

56   oliverks1   2012 Mar 7, 1:12am  

thomas.wong1986 says

Income from Interest and Dividends are already taxed at Individual tax rates even for S-Corp and Partnerships LLP.
Capital gains/losses are transfered and taxed accordingly as short term .. Ordinary and Long term ... I have no idea what your trying to sell.. and it makes no sense.. Take time out and learn REAL Tax Accounting at your local community college.

All I am "selling" is the idea that taxes on earning and capital gains are not unjust. You keep complaining about you get taxed for this and that and you don't like it. I can't do much about that. In terms of REAL Tax Accounting, you keep trying to introduce new subjects. Reread my post and try to find a real error.

57   oliverks1   2012 Mar 7, 1:26am  

SFace says

In theory that is why there is preferential treatment. Most of the world don't try to tax the same income twice. Without the capital gains break, 100 earned by the Corporation can be taxed at $40 at the entity level, leaving $60 retained earnings. Upon release of the $60 taxed at 40% again fed and state or $24. That means of the $100 in pre-tax income, uncle fed and Auntie State took $64 bucks. The BUSH tax cut relieve some of that.

I agree with this statement. The double taxation on C corporation earning is a problem, but I think the BUSH tax cut are a terrible solution. Now I like the Bush break as much as the next guy come tax time, but the reason the Bush break doesn't work is that big companies are not double taxed. Most large C corps pay no or little tax, via the Double Irish or other corporate structures. Hence your argument above does not hold for large publicly traded companies (and even if it did your tax rate example is wrong even for high tax states).

A better approach would be to - a eliminate the tax on C corp earnings or - b allow corporations to tax deduct any dividend payments. The former comes with a whole host of problems, because of other tax distortions, so the later is probably preferable.

However what is more important is what started this thread. Thomas was arguing about new business creation and double taxation. My argument remains that raising the marginal tax rate will not hurt new business creation, in fact I claim it might well help new business formation.

58   Honest Abe   2012 Mar 17, 6:01am  

Tax the super rich...great! Right out of the Communist Manefisto!!

Like the irresponsible baffoons in DC (District of Corruption) need MORE taxpayer money to waste and squander.

Before DC was developed it was a swamp. It still is.

59   marquismark   2012 Mar 17, 1:19pm  

Abe, You have absolutely nothing to add to any discourse. I have asked you repeatedly to give me examples, detail your logic (if there is any) and you never can. Just a series of dumb, over-the-top, unsupported rants. You, my friend, are being played by Fox News (oxymoron if ever there was one) and its wealthy masters and they are laughing at you and they screw you up your red, white and blue butt. I just feel sorry for you.

Anyway, this will be the last time I ever hear from you because your are now on ignore.

60   Honest Abe   2012 Mar 19, 4:51am  

Marquis, (1) You are aware "a heavy progressive income tax" is one of the planks of the Communist Manifesto, aren't you? If not I respectfully request you research and read it for yourself. [Tax the super rich = a heavy progressive income tax]

(2) You don't actually think the crooks in DC, with a PROVEN track record of financial mismanagement. should have MORE taxpayer money, do you?

(3) Washington does waste and squander taxpayer money, isn't that correct?

(4) DC was a swamp before it was developed.

(5) The reference to DC still being a swamp is a euphemism to the corruption that is obvious to both the 99%'rs and the Tea Party.

The only people who are not outraged about whats been going on are those who have not been paying attention.

BTW, what have you been reading lately? What are you putting into your mind. I'll bet you'll be like the rest of the "progressives" here who refuse to divulge what they read.

My guess is that they are:(1) not reading, or (2) not proud of what they are reading and therefor refuse to discuss it.

What about you Marquis, are you up to the challenge??? What have you been reading?

61   freak80   2012 Mar 19, 5:15am  

I have also permanently tuned-out Dishonest Abe's noise.

62   thomas.wong1986   2012 Mar 19, 6:22am  

Honest Abe says

Tax the super rich...great! Right out of the Communist Manefisto!!

Thats all they know.. they have no idea what it takes to make a robust economy... jobs, growth, empowering the entrepreneurial spirit to go from nothing to making a better life.

All they can say is nanananana ! im not hearing you as our industries start to crumble.

63   freak80   2012 Mar 19, 6:29am  

Big Business crushes the entrepreneurial spirit just as much as Big Government does.

The fight is not between "Socialists" and "Capitalists." Quit falling for that particular "us vs. them" trap.

The real fight is between the Crony Capitalists (Mega-Corporations and other special interests that own our Big Government) and the rest of us who are totally skrewed by this unholy alliance.

64   Honest Abe   2012 Mar 19, 7:44am  

Wthfkr80, I think you hit the nail on the head when you said Big Government crushes the entrepreneurial spirit.

In a survey I recently heard about, when asked the question: "Is government helping, not helping, or hurting your ability to get ahead" [From memory - not necessarily an exact quote] Only 33% said government was helping...whereas 67% said big government was either not helping, or actually hurting their chances of getting ahead. Big, constantly growing, intrusive government is not the solution - its the problem.

Limited, constitutional government would go a long way in solving our countries current problems.

65   marquismark   2012 Mar 19, 10:09am  

wthrfrk80 says

I have also permanently tuned-out Dishonest Abe's noise.

Is his still yapping even after I put him ignore? He's like a turd that just won't flush...

66   Honest Abe   2012 Mar 19, 10:44am  

Hahaha, you very vocal, but weak minded liberals love to hurl your derogatory (often sexual) slurs at those who are mentally and emotionally superior to yourselves. Hahaha.

Your crude remark reveals you to be my inferior. Go ahead, block me all you want. Hahaha.

BTW, what have you read lately? Or are you too chicken to say. I double dog dare you. You won't, coward, will you?

Big hat, no cattle. Big wind, no substance. Big head, no mind.

And just to be clear, you sir, are in the minority. The very vocal minority.

67   Honest Abe   2012 Mar 20, 3:07am  

Nomo, why do you constantly play the "Am talk radio" card? Is that all you got?

Todays book: The Anti Capitalist Mentality, by L.V. Mises

BTW, no matter how you attempt to disguise it, A HEAVY PROGRESSIVE INCOME TAX is one of the planks of THE COMMUNIST MANEIFSTO...COMRADE.

68   freak80   2012 Mar 20, 3:12am  

Oh no. Abe is using the Chewbacca Defense!

69   bob2356   2012 Mar 20, 3:36am  

Honest Abe says

Hahaha, you very vocal, but weak minded liberals love to hurl your derogatory (often sexual) slurs at those who are mentally and emotionally superior to yourselves. Hahaha.

Flushing turds is a sexual slur? I really don't want to know what goes on behind your bedroom door.

70   Honest Abe   2012 Mar 20, 4:06am  

Bob, having trouble reading? I said "weak minded liberals love to hurl derogatory (often sexual) slurs".

Then you end with another dig, hahaha, is that all you got?

When only one entity has a monopoly on the use of violence to enforce rules, funded by taxpayer dollars, it is called government.

Have a good day.

71   MisdemeanorRebel   2012 Mar 20, 5:20am  

thomas.wong1986 says

Chances of them falling into the Soviet block without Soviet Red Army occupation very little.

Not just Soviet Block, electing a Socialist or Trotskyite party that would drop out of NATO and kick out US troops and close US bases. This was the danger with Greece and Italy in particular.

72   bob2356   2012 Mar 21, 4:53am  

Honest Abe says

Bob, having trouble reading? I said "weak minded liberals love to hurl derogatory (often sexual) slurs".

Then you end with another dig, hahaha, is that all you got?

When only one entity has a monopoly on the use of violence to enforce rules, funded by taxpayer dollars, it is called government.

Have a good day.

I might as well do digs. You have never in all the years I've read Patrick.net actually offered any type of suggestions how things could be better. You have only one trick, government is bad. But no suggestion whatsoever what would be good. Not that you ever answer other than to spew anti government am radio regurgitations, but what is your vision of how society should function?

73   Honest Abe   2012 Mar 22, 9:12am  

Bob, my vision is stated in my book: "Is Government the Problem?" but I won't publish it. I don't want to be on the government kill list, but I probably am already.

All of my suggestions get trashed because they are based on freedom, liberty, sound money and the constitution. All the things necessary for a healthy society.

Government is like fire, a necessary evil. If you don't contrtol it, it will destroy you.

74   thomas.wong1986   2012 Mar 23, 2:16pm  

Milton Friedman: Why soaking the rich won't work.

http://www.youtube.com/embed/Wi-D24oCa10&feature=related

75   Honest Abe   2012 Mar 24, 12:04am  

Patrick, If I get LESS when the 1%'rs make MORE, do I get MORE when they make LESS?

I'm going to buy stock in those companies who financially rape and pillage America, then I'll have the right to complaign how much the CEO makes. My stock profit wouldbe directly related to expenses (salaries), right?

Otherwise its none of my business (I'm not a lib, and as such I don't have a busy-body, entitlement mentality).

76   Vicente   2012 Mar 24, 1:26am  

Honest Abe says

If I get LESS when the 1%'rs make MORE, do I get MORE when they make LESS?

Historically speaking, yes you do.

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