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Tue May 6, 2014, 12:33 PM

should we be taxing earnings...or should we be taxing wealth?

maybe I'm wrong but I think we are going about taxation all wrong.Instead of taxing earnings I think we should be taxing wealth.
Excluding your primary residence I think we should have a 12 or 15 percent tax on wealth.

Making 10 bucks an hour and working at wallyworld living paycheck to paycheck? your total federal tax for the year would be about 1,600 before exemptions...basically giving you a tax bill of zero after exemptions

You're Bill Fucking Gates and you're worth 50 billion dollars?...your first year tax bill would be 7.5 billion dollars....before personal exemptions of course

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Reply should we be taxing earnings...or should we be taxing wealth? (Original post)
backwoodsbob May 2014 OP
YarnAddict May 2014 #1
leftyohiolib May 2014 #2
YarnAddict May 2014 #9
leftyohiolib May 2014 #34
randys1 May 2014 #79
YarnAddict May 2014 #109
randys1 May 2014 #114
Donald Ian Rankin May 2014 #8
YarnAddict May 2014 #12
Donald Ian Rankin May 2014 #18
AScott May 2014 #24
Donald Ian Rankin May 2014 #26
Jackpine Radical May 2014 #102
AScott May 2014 #103
leftyohiolib May 2014 #35
Donald Ian Rankin May 2014 #44
leftyohiolib May 2014 #57
Donald Ian Rankin May 2014 #65
leftyohiolib May 2014 #82
Erich Bloodaxe BSN May 2014 #68
leftyohiolib May 2014 #88
YoungDemCA May 2014 #22
liberal N proud May 2014 #23
truebluegreen May 2014 #41
Donald Ian Rankin May 2014 #3
leftyohiolib May 2014 #5
Donald Ian Rankin May 2014 #11
leftyohiolib May 2014 #30
pnwmom May 2014 #16
leftyohiolib May 2014 #32
reformist2 May 2014 #58
oldhippie May 2014 #62
reformist2 May 2014 #72
oldhippie May 2014 #77
reformist2 May 2014 #83
oldhippie May 2014 #87
laundry_queen May 2014 #125
Lonusca May 2014 #126
Adrahil May 2014 #112
leftyohiolib May 2014 #4
oldhippie May 2014 #59
leftyohiolib May 2014 #66
oldhippie May 2014 #70
leftyohiolib May 2014 #85
oldhippie May 2014 #89
Erich Bloodaxe BSN May 2014 #71
oldhippie May 2014 #73
Erich Bloodaxe BSN May 2014 #78
oldhippie May 2014 #86
Bluenorthwest May 2014 #94
Erich Bloodaxe BSN May 2014 #116
AScott May 2014 #6
backwoodsbob May 2014 #27
AScott May 2014 #55
backwoodsbob May 2014 #76
AScott May 2014 #92
Bluenorthwest May 2014 #95
oldhippie May 2014 #67
backwoodsbob May 2014 #96
oldhippie May 2014 #100
backwoodsbob May 2014 #110
backwoodsbob May 2014 #97
AScott May 2014 #99
A HERETIC I AM May 2014 #74
backwoodsbob May 2014 #107
A HERETIC I AM May 2014 #115
spinbaby May 2014 #7
The Magistrate May 2014 #10
Donald Ian Rankin May 2014 #14
The Magistrate May 2014 #17
Donald Ian Rankin May 2014 #25
The Magistrate May 2014 #28
msongs May 2014 #48
The Magistrate May 2014 #51
Sgent May 2014 #117
The Magistrate May 2014 #118
Sgent May 2014 #120
The Magistrate May 2014 #121
pnwmom May 2014 #13
Big Blue Marble May 2014 #15
backwoodsbob May 2014 #46
msongs May 2014 #49
brooklynite May 2014 #19
pnwmom May 2014 #20
Erich Bloodaxe BSN May 2014 #75
hack89 May 2014 #21
The Magistrate May 2014 #31
hack89 May 2014 #37
The Magistrate May 2014 #47
FrodosPet May 2014 #106
Nye Bevan May 2014 #29
oldhippie May 2014 #84
hack89 May 2014 #33
reformist2 May 2014 #61
hack89 May 2014 #108
whatthehey May 2014 #36
Yo_Mama_Been_Loggin May 2014 #38
gollygee May 2014 #39
Xithras May 2014 #40
oldandhappy May 2014 #42
MicaelS May 2014 #43
Jeff In Milwaukee May 2014 #45
closeupready May 2014 #50
deathrind May 2014 #52
TBF May 2014 #53
1StrongBlackMan May 2014 #54
AngryAmish May 2014 #56
Savannahmann May 2014 #60
reformist2 May 2014 #63
Savannahmann May 2014 #81
Sgent May 2014 #119
Savannahmann May 2014 #129
Erich Bloodaxe BSN May 2014 #64
Hoyt May 2014 #69
DrDan May 2014 #80
Bonx May 2014 #113
DrDan May 2014 #128
jmowreader May 2014 #90
hughee99 May 2014 #91
moondust May 2014 #93
Marr May 2014 #98
ancianita May 2014 #101
politicat May 2014 #104
Jackpine Radical May 2014 #105
Adrahil May 2014 #111
JHB May 2014 #122
badtoworse May 2014 #123
aikoaiko May 2014 #124
Orsino May 2014 #127
Throd May 2014 #130
mainer May 2014 #131

Response to backwoodsbob (Original post)

Tue May 6, 2014, 12:41 PM

1. I dunno

I think everyone should have a little skin in the game. Maybe if everyone paid something in taxes, they would have a more personal reason to take elections seriously enough to actually get out and vote.

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Response to YarnAddict (Reply #1)

Tue May 6, 2014, 12:47 PM

2. everyone DOES pay something in taxes - you gotta stop watching faux news

 

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Response to leftyohiolib (Reply #2)

Tue May 6, 2014, 12:50 PM

9. Apparently not enough to make them get out & vote in mid-terms.

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Response to YarnAddict (Reply #9)

Tue May 6, 2014, 01:17 PM

34. i dont those two thing are intertwined - unless taxes went crazy high

 

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Response to YarnAddict (Reply #9)

Tue May 6, 2014, 02:29 PM

79. Excellent point, taxing them isnt the answer, but what is?

I say you can either vote or pay a fine maybe?

Or you can vote or be required to do mandatory civil service for a period of time? clean roads or something...

But, voting should be easy and the polls need to be open all day sat sun mon and tues of the week of elections

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Response to randys1 (Reply #79)

Tue May 6, 2014, 04:00 PM

109. I'd hate to see people fined for NOT doing something

I agree that the polls need to be open longer hours, and more days, especially in high-population areas. More voting booths. Maybe more polling stations, too.

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Response to YarnAddict (Reply #109)

Tue May 6, 2014, 04:21 PM

114. I will take that

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Response to YarnAddict (Reply #1)

Tue May 6, 2014, 12:50 PM

8. What does "skin in the game" mean?

Everyone's lives are influenced by the outcome of elections, those too poor to pay income tax (although there are other kinds of tax they do pay) most of all.

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Response to Donald Ian Rankin (Reply #8)

Tue May 6, 2014, 12:54 PM

12. So why don't most people vote, especially in mid-terms?

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Response to YarnAddict (Reply #12)

Tue May 6, 2014, 12:59 PM

18. Any number of reasons.


One very obvious and wholly rational one being how small the odds of your vote changing the outcome are.

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Response to Donald Ian Rankin (Reply #18)

Tue May 6, 2014, 01:03 PM

24. That doesn't keep people from challenging equally daunting odds and paying for the privilage of

 

doing so by playing the lottery.

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Response to AScott (Reply #24)

Tue May 6, 2014, 01:06 PM

26. Congratulations! You have discovered that humans are not rational self-interested agents!

You are now ahead of quite a number of professional economists in your understanding of humanity, sadly.

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Response to AScott (Reply #24)

Tue May 6, 2014, 03:34 PM

102. What % of the pop plays the lottery?

I don't know anyone in my close circle who does. The lottery is disproportionately played by the poor, I guess on the perfectly rational theory that a minuscule chance is better than none.

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Response to Jackpine Radical (Reply #102)

Tue May 6, 2014, 03:41 PM

103. I recall a story that said the poor spend (on average) 9% of their income on the lottery.

 

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Response to Donald Ian Rankin (Reply #18)

Tue May 6, 2014, 01:19 PM

35. plus alot of people are lazy - they dont think their vote maters - they feel the 2 parties are

 

the same\. there are as many excuses as there are voters but it's just lazy and stupid

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Response to leftyohiolib (Reply #35)

Tue May 6, 2014, 01:46 PM

44. Is it stupid to think your vote doesn't matter?


If your seat is totally evenly balanced, then the odds of your vote changing the outcome scale roughly with the square root of the number of voters. But if it's even slightly uneven, that chance drops exponentially in the expected difference.

So the odds of your vote changing anything are usually very, very small indeed.

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Response to Donald Ian Rankin (Reply #44)

Tue May 6, 2014, 02:09 PM

57. yes i believe it is stupid to think your vote doesnt matter -

 

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Response to leftyohiolib (Reply #57)

Tue May 6, 2014, 02:14 PM

65. Why?

Is it because you think that there is a significant chance of your vote changing the outcome of an election? Or do you think it matters for symbolic reasons, even when the chance of it changing the outcome is negligable?

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Response to Donald Ian Rankin (Reply #65)

Tue May 6, 2014, 02:35 PM

82. i never questioned the reason to vote it seems to me that you have only one way

 

to effect the rules by which you must live and that's to vote b/c the people who want you to live under their rules WILL be voting, giving that up is dumb.

if youre refering to just yourself not voting, if everyone but you voted odds are youre one vote may not make a difference but you know that's not the case. not voting is like a virus. one viral cell in your body wont make a difference but there's never only one. so you dont vote and your neighbor doesnt and a thousand people in your county dont and 100,000 in your state dont and when the election is over you end up with george bush and that's just stupid

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Response to leftyohiolib (Reply #57)

Tue May 6, 2014, 02:16 PM

68. Tell that to the people who gerrymander.

Who create districts to make absolutely sure certain people's votes don't matter.

n an ideal world, yes, everyone's votes would matter. In reality, certain people's votes will never matter unless they move to 'purple' districts.

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Response to Erich Bloodaxe BSN (Reply #68)

Tue May 6, 2014, 02:48 PM

88. areas get gerry-mandered BECAUSE people sat home in census years like 2010. but just sit

 

back throw your hands in the air and say '"oh well nothing could have been done about that" (except voting even when it's enormously inconvenient) perhaps that'll make you feel better but it's still a lie

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Response to YarnAddict (Reply #12)

Tue May 6, 2014, 01:02 PM

22. Here....

"Even when America's underclass isn't formally stripped of its ballot, a slew of barriers come between them and full representation and participation."


Article: http://www.theatlantic.com/politics/archive/2014/01/why-are-the-poor-and-minorities-less-likely-to-vote/282896/

There are many obstacles to voting for a lot of people-especially poor people, who are disproportionately minorities.

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Response to YarnAddict (Reply #12)

Tue May 6, 2014, 01:02 PM

23. Many don't vote because they have been convinced that their vote doesn't matter

The propaganda and anti-voting measures have literally driven many voters from the polls. Just what the right wing, who could never win an election otherwise, wants

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Response to liberal N proud (Reply #23)

Tue May 6, 2014, 01:29 PM

41. And many of us have been voting for effing ever,

and watching our votes/public opinion count for nothing, and think "why bother?"

That said, of course I vote.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 12:49 PM

3. How would you tax wealth?

It's something I've wondered about; in principle it sounds like a good idea.

But income is objectively-defined and measurable. Wealth, conversely, is based purely on guesswork - how much *would* that house change hands for if it were offered for sale?

So, short of hiring assessors to go around everyone's homes totting up the value of their stuff, and getting into endless arguments with people claiming their goods were worth less than they'd be valued at, how would you tax wealth?

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Response to Donald Ian Rankin (Reply #3)

Tue May 6, 2014, 12:49 PM

5. off their 1040 ?

 

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Response to leftyohiolib (Reply #5)

Tue May 6, 2014, 12:51 PM

11. Do you mean adjusted gross income?

If so, isn't that just taxing income, not wealth?

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Response to Donald Ian Rankin (Reply #11)

Tue May 6, 2014, 01:16 PM

30. yes that is what i meant and youre correct it's just income and now to quote gov perry "oops"

 

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Response to leftyohiolib (Reply #5)

Tue May 6, 2014, 12:57 PM

16. 1040's don't show wealth, they show income. n/t

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Response to pnwmom (Reply #16)

Tue May 6, 2014, 01:16 PM

32. yes you are correct - i goofed up

 

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Response to Donald Ian Rankin (Reply #3)

Tue May 6, 2014, 02:10 PM

58. Measuring wealth is far easier, imo.


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Response to reformist2 (Reply #58)

Tue May 6, 2014, 02:11 PM

62. How so?

 

How you gonna do that?

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Response to oldhippie (Reply #62)

Tue May 6, 2014, 02:18 PM

72. Periodic appraisals of real estate, bank account and mutual fund balances, cars...


For most people, that's the vast majority of their "wealth" right there. Anyone who owns a business can have it valued as well.

The real time saver, though, is that families won't have to deal with all these pages of tax code to recoup what they spent. If they're spending all their money on health care, home mortgage interest payments, etc., it all shows up on the bottom line as zero wealth!

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Response to reformist2 (Reply #72)

Tue May 6, 2014, 02:23 PM

77. That's a pretty limited definition of "wealth" .....

 

You'll get most of the little people that way, but not me with my art and other collections that I guess I will store in my villa in the Cayman Islands. And my houses and accounts in the US will be held in the name of a business in the Isle of Man. Now what are you going to do?

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Response to oldhippie (Reply #77)

Tue May 6, 2014, 02:37 PM

83. It's way harder to hide assets than income, imo.

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Response to reformist2 (Reply #83)

Tue May 6, 2014, 02:44 PM

87. Really? OK, I guess you must not be ....

 

... an accountant. Or an IRS agent.

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Response to oldhippie (Reply #87)

Wed May 7, 2014, 10:56 AM

125. LOL that made me laugh

accounting student here (nearly done). There are so many nefarious things a sneaky accountant could do to minimize income AND assets...seriously as I take each new course, I'm appalled at the ability of accountants to manipulate numbers at their discretion. Sure, you gave to take an oath that you are going to be ethical...but there is always someone...especially if you work for a large accounting firm run by *those* 'someones' (see Arthur Andersen) it can be easy to just do as you are told (we are taught not to, but it happens).

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Response to reformist2 (Reply #83)

Wed May 7, 2014, 11:08 AM

126. You have that backwards

And if you want a catalyst for people sending money out of the country this would be it.

Not that it would be right or even moral - but that's what would happen.

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Response to reformist2 (Reply #58)

Tue May 6, 2014, 04:08 PM

112. Wealth is much easier to hide than income.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 12:49 PM

4. there is alot of wealth in this country and the u.s. should go after it - the u.s. created the

 

playing field upon which they got so rich, so why not.

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Response to leftyohiolib (Reply #4)

Tue May 6, 2014, 02:10 PM

59. So, again, how would you assess wealth?

 

How do you calculate a person's wealth? How much is my house worth if I don't plan to sell it? How much are my cars worth if I don't plan to sell them? How about my guns/ My fountain pen collection? My Rolex watch collection? Artworks, especially when very thinly traded? You going to send a tax assessor experienced in every field to each person's house and assess their collection?

If you did, those collections and much of other wealth would "disappear" to somewhere you won't see them.

Really, how you gonna do that?

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Response to oldhippie (Reply #59)

Tue May 6, 2014, 02:15 PM

66. idk but i refuse to think it cant be done -records of sales are kept and could be recorded in a data

 

base like a lot of things are. maybe you are required to list them on 1040's idk it's beyond my pay grade but like i said i refude to believe it cant be done

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Response to leftyohiolib (Reply #66)

Tue May 6, 2014, 02:18 PM

70. That's what I thought .....

 

I swear, sometimes the level of economic ignorance on a supposedly enlightened and educated site just scares the hell outa me.

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Response to oldhippie (Reply #70)

Tue May 6, 2014, 02:42 PM

85. you were expecting a soultion to this problem in 5 minutes from people on a discussion board?

 

i think THAt should scare the hell out of you. i never claimed to have an answer so why you would try to badger an answer to this problem out of me, and your disappointment about my not having an answer is something you should think about
lastly just b/c I dont have an answer is no reason to give up on an idea and start with the insults.

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Response to leftyohiolib (Reply #85)

Tue May 6, 2014, 02:54 PM

89. You're right. And I am sorry.

 

I shouldn't have done that.

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Response to oldhippie (Reply #59)

Tue May 6, 2014, 02:18 PM

71. It's already done.

But only when somebody dies, and only if they're rich. Then they get assessed for 'estate taxes'. Sure, some probably gets hidden first, but most people don't actually know when they're going to die, and most assets get tallied up.

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Response to Erich Bloodaxe BSN (Reply #71)

Tue May 6, 2014, 02:19 PM

73. Once in a lifetime .....

 

What about on-going revenue needs?

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Response to oldhippie (Reply #73)

Tue May 6, 2014, 02:23 PM

78. People die every day.

And, over time, it all averages out. Sure, some years more rich people die than others, but over the long haul it's probably pretty even. I'd just put it in a 'special fund', and not really base spending off of assumptions of what would be generated each year, but on what was already generated in prior years. Ie, you can't spend it til it's showed up.

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Response to Erich Bloodaxe BSN (Reply #78)

Tue May 6, 2014, 02:42 PM

86. I don't think you have run the numbers .....

 

How many trained agents will it take to run probate and calculate the tax on every person that dies? Only "rich" people you say? How much is "rich"?

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Response to oldhippie (Reply #86)

Tue May 6, 2014, 03:15 PM

94. Several countries have a wealth tax including France and Spain. So to find out 'how' a person

can look to see how Switzerland does it or the other countries that do it. It is also possible to look at countries that ceased the practice and one that stopped then started again.

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Response to oldhippie (Reply #86)

Wed May 7, 2014, 08:08 AM

116. Um, I'm talking about something that exists NOW.

We HAVE estate taxes. They exist.

Do I know where they kick in? Well, wikipedia says it's somehere just over 5 million atm. If you die leaving an estate worth at least 5.5 million, it WILL be hit with estate taxes. They're what Republicans want to abolish, and call 'death taxes'.

And I would consider myself 'rich' if I was worth over a million dollars. Your mileage may vary. So even by my definition, you'd have to be 5.5 times 'rich' to have to pay such.

So there's no 'numbers for me to run'. They ALREADY exist.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 12:49 PM

6. So anyone who's rich would be worth 15% less each year?

 

After 10 years, that would translate to a confiscation of 80% of someone's wealth, not taking yearly income into account. After 25 years, 98%.

Brilliant.

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Response to AScott (Reply #6)

Tue May 6, 2014, 01:13 PM

27. that is assuming they never make a penny

Do you really believe Mittons or Gates or the Kochs will make zero wealth over a 25 year period?

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Response to backwoodsbob (Reply #27)

Tue May 6, 2014, 02:07 PM

55. Granted, but do you really believe that 98% of someone's previously owned wealth should be taken

 

from them over the course of 25 years?

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Response to AScott (Reply #55)

Tue May 6, 2014, 02:22 PM

76. of course not

and do you really believe that the obscenely rich would EVER lose that much?
Gates was once asked if he saw a twenty laying on the ground would he pick it up

he said no and the reason was that in the time it would take to bend over and pick it up he had already made more than twenty

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Response to backwoodsbob (Reply #76)

Tue May 6, 2014, 03:12 PM

92. A 98% confiscation of wealth over 25 years is exactly what your OP proposes, so...

 

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Response to AScott (Reply #92)

Tue May 6, 2014, 03:19 PM

95. In countries that have wealth taxes the rates are in the 1-2% range

nt

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Response to backwoodsbob (Reply #27)

Tue May 6, 2014, 02:15 PM

67. So if I retire at 65 and have saved $ 1 million .....

 

.... in wealth in an IRA and other assets you're going to take most of it away from me?

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Response to oldhippie (Reply #67)

Tue May 6, 2014, 03:20 PM

96. no...of course not

I stated elswhere that 401(k) and IRA accounts would be exempt...hell..make it so your first 5 mill or whatever is exempt...whatever.
That's details...I'm talking big picture here

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Response to backwoodsbob (Reply #96)

Tue May 6, 2014, 03:29 PM

100. Your OP, which we were to discuss ....

 

.... made no mention of exemptions for anyone.

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Response to oldhippie (Reply #100)

Tue May 6, 2014, 04:03 PM

110. you're right...it is perfect as it is

Let's just leave everything as is......rich people making a mill a day while we work for barely sustainable

wages is just peachy to some I guess

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Response to oldhippie (Reply #67)

Tue May 6, 2014, 03:22 PM

97. I'm getting ready to eat the penalty and cash out

so I can move to SC....of course I don't want to take peoples life savings.

Exempt the first million..or 5...whatever.

I just want the obscenely wealthy to start paying their fair share

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Response to backwoodsbob (Reply #97)

Tue May 6, 2014, 03:26 PM

99. Is 98% of accumulated wealth being confiscated a "fair share" over the course of 25 years?

 

99.8% over the course of 40 years, BTW.

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Response to backwoodsbob (Reply #27)

Tue May 6, 2014, 02:20 PM

74. The thing is, if you start taking "wealth", which in Bill Gates's case would mean his shares of....

Microsoft, you will quickly grind him down to zero. Yes BTW, that is how the majority of his net worth is held. In spite of what many on this board seem to think, he doesn't have $60 billion held in a bank in stacks of 100 dollar bills. His net worth changes, both up and down, every day based on the share price of Microsoft.

So as you take his shares of Microsoft, the fewer he owns and the less they pay in dividends and the less total value they have given any raise in share price.

So, sooner rather than later, such a scheme would render the 2nd wealthiest man on the planet....penniless. I know that has appeal to many on DU, but it is a profoundly stupid idea.

No, don't tax wealth. (edited out an inaccurate statement) Tax income. Just change the brackets and make the highest one $20,000,000 or so and set it at say...75%

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Response to A HERETIC I AM (Reply #74)

Tue May 6, 2014, 03:56 PM

107. again....you assume his money is just laying in a mattress

do you really believe Gates will make no money in the next twenty years?

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Response to backwoodsbob (Reply #107)

Tue May 6, 2014, 04:48 PM

115. No, in fact I think I made it explicitly clear that I DON'T think his money is under his mattress

And what remains after this first year of taxation being suggested, of course, will continue to make money, BUT, as I said, the majority of that money is in the form of shares of Microsoft stock. (Sentence edited to be clearer. Thoughts got jumbled!)

The real question you might consider pondering is what rate of return would be required to sustain such a taxation scheme so that you don't turn the very wealthy into paupers.

Want to see Bill Gates fortune crash real quick? Find a way to make MS go from the $39 a share it is now to $8 or pick a figure. That will do it or at least have a major effect. I'm sure that he is a bit diversified, BTW. He would be a damned fool if he didn't have a significant portion in Treasury Bonds. Gates isn't known as a huge landowner like Ted Turner is, as an example. Real Estate is a notoriously illiquid asset class.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 12:50 PM

7. What kind of wealth?

A multi-billion-dollar fortune? A few million? $200,000 in a 401k? $800 in a bank savings account collecting about 0.00001% interest?

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 12:51 PM

10. I Support A Wealth Tax, Sir

Mr. Smith of old made a sound point that it was pretty nigh impossible to assess what a man was worth at any given moment, which in the eighteenth century certainly was the case, and therefore argued for taxes on inheritance, since at the point of death, worth could be fixed at the act of transfer to the heir.

Nowadays, it is quite possible to fix what an individual's wealth, the sum of real properties, securities, etc. that he owns, on practically a second by second basis. So a tax levied on a quarterly basis, say, would be quite feasible. Regulations would have to be drawn with some ingenuity to hamper attempts to write-down or otherwise disown the value of assets a person continued to control, and a fairly high threshold for liability established, to avoid netting much out of people owning a home or a decent retirement fund or a genuine 'mom and pop' business. The rate would have to be pitched rather lower than you seem to suggest, unless one is willing to face up to it and say the intention is confiscatory. I can see sound arguments for confiscatory rates, certainly, but there would need to be a major restructuring of the economic and social system for that....

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Response to The Magistrate (Reply #10)

Tue May 6, 2014, 12:56 PM

14. I don't think that you can determine what an individual's wealth is.


I am deeply sceptical of your claim that "it is quite possible to fix what an individual's wealth, the sum of real properties, securities, etc. that he owns, on practically a second by second basis".

If that were true, it would be possible to predict the outcome of, say, auctions and house sales with much more accuracy than it actually is.



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Response to Donald Ian Rankin (Reply #14)

Tue May 6, 2014, 12:58 PM

17. Market Value Of Most Assets Can Be Established Readily, Sir

There may be some variability, but nothing that would preclude saying an individual owned assets worth Y dollars on a given date.

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Response to The Magistrate (Reply #17)

Tue May 6, 2014, 01:05 PM

25. I'm afraid I think the evidence shows otherwise.

Estate agents and auctioneers often fail to predict what value things will or won't sell at. If it can be done reliably, why aren't they doing it, and what makes you think the government would/could do so more accurately (without massive expenditure)?

Yes, in an ideal world, taxing possessions would probably make more sense than taxing transactions. But the great virtue of taxing transactions is that you can see precisely how much benefit someone got out of them; if you tax possessions then you risk screwing people over when they turn out to be unable to sell their house, say, for as much as the taxman valued it at.

You assert that that won't happen, and that the taxman will always be able to predict how much things will sell for. But I'm afraid that I think the evidence suggests otherwise.

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Response to Donald Ian Rankin (Reply #25)

Tue May 6, 2014, 01:14 PM

28. You Ignore Items Like Stocks, Bonds, Notes, And The Like, Which Are the Bulk Of Wealth, Dir

You are pressing a strategy similar to people who argue in favor of disparate income with illustrations drawn form sports or other entertainment industries, things which have nothing to do with value produced by application of labor, and its division between workers, managers and financiers.

I stated, had you bothered to read instead of trotting out a ready-made reply, that a high threshold should be set to ensure people owning a home, a 'mom and pop' business, or a good retirement fund, etc., were unaffected.

Your line of concentrating on estate sales of possessions and such bears no relation to the question of wealth in capital goods, which is what wealth really consists of: you might as well try and present Antiques Roadshow as a primer for the functioning of the national economy.

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Response to The Magistrate (Reply #28)

Tue May 6, 2014, 01:52 PM

48. the wealthy hide their assets behind multiple layers of dummy corporations nt

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Response to msongs (Reply #48)

Tue May 6, 2014, 01:54 PM

51. Government Could End That, Sir, Handily

A such 'shelters' are based on government regulations of ownership and taxation. What government gives, it can certainly take away....

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Response to The Magistrate (Reply #28)

Wed May 7, 2014, 08:21 AM

117. How do you fix

the value of my non-transferable minority interest in an office building? My ownership of a copyright on a book that's out of print? The value of an option on a piece of Jamaican beach front property? All this doesn't even get close to valuing things like private companies -- retail is easy, factories are not.

The death of a wealthy person triggers hundreds of thousands if not millions of appraisal fees, auctions, and everything else -- and often time a sale is the only way to value something. These costs are born by both the taxpayer, and often the IRS itself if they don't trust the taxpayer's numbers. You want to repeat this every year (not just on death)?

In general I agree with asset based (rather than income) taxes. It keeps assets in economic circulation, and even Adam Smith preferred it. The problem is fixing the value of assets becomes exponentially hard when your dealing with more than publicly traded securities.

Finally, unless you start it by exempting huge portions of the tax base, you are going to dramatically increase taxes on the elderly.

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Response to Sgent (Reply #117)

Wed May 7, 2014, 08:26 AM

118. What Is The Market Value Of the Building, Sir?

Your interest is worth whatever your percentage of that comes to.

What is the beach property worth, and what is your option price?

The copyright is probably worthless.

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Response to The Magistrate (Reply #118)

Wed May 7, 2014, 08:39 AM

120. You forget

the non-transferable minority interest part. A huge number of office buildings, hotels, etc. are owned in this manner.

Its only worth what I can sell it for -- and if I go to sell my interest on the open market I'll get almost nothing. I can't force the sale of the building, nor can I force that profits be paid to me. Presumably I'll get paid my percentage at some indefinite point in the future, so I have to estimate the value of the property not today but in 10, 20, 30 or some other arbitrary number of years and then discount it back to today. What discount rate do I use -- treasury rate, what a bank will loan me money for, some number taking taking into effect the cost of capital and illiquidity?

And real estate is very easy compared to intangibles are assets with no / little intrinsic value. How do you value an artist who paintings sell 1 -2 a decade? The factory above may have income of 1,000,000 a year, but is it worth the 10 million in investment costs 20 years ago, the 500,000 the land and equipment would sell for today, or some other number based on expected future cash flows? These are hard issues that lead to court fights every day just for the purposes of a once in a lifetime valuation for estate tax purposes.

As for the copyright, talk to any number of writers / artists who were discovered late in life.

The compliance cost and intrusiveness of an asset tax would be insanely high.

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Response to Sgent (Reply #120)

Wed May 7, 2014, 08:43 AM

121. It Is Worth Its Proportion Of The Building's Current Value, Sir

That you do not control whether the building is sold, and cannot sell your interest in it, does not affect the matter at all.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 12:55 PM

13. So, assuming a moderate return on investment, in 10 years all the "wealth" would be gone.

That will go over big.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 12:56 PM

15. To some extent, wealth is taxed already.

If you own real property,it is taxed each year. In my state, all business must
pay a tax on all their assets. And everyone is to pay taxes on any intangibles (stocks and bonds, etc).

Your rates are not taxes; they are confiscation! They would discourage savings and investments.
You would not be able to save for your retirement. And anyone who did, would soon be penniless.

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Response to Big Blue Marble (Reply #15)

Tue May 6, 2014, 01:49 PM

46. not really

we already have tax deferment for such things as 401(k) accounts...that is easily managed.
Or do you believe Bill Gates is going to put 50 billion dollars in his 401(k)?

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Response to Big Blue Marble (Reply #15)

Tue May 6, 2014, 01:53 PM

49. I love saving for my retirement especially with the interest on savings of 0.000000000000001% lol nt

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 01:00 PM

19. So because I don't have children I should be taxed more?

Consider - I intentionally choose not to have children; I therefore have approximately $500,000 (before interest) more than someone with two kids. Should I be taxed more?

Now, your response will be: "I only mean REALLY rich". The question then is: what is your threshold amount, and how is that not completely arbitrary?

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 01:01 PM

20. Your proposed method of taxation would reward people for wasteful spending, accruing nothing,

and penalize them for saving.

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Response to pnwmom (Reply #20)

Tue May 6, 2014, 02:20 PM

75. In an economy that has been based almost entirely on

wasteful consumer spending, that would certainly keep the economy humming.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 01:01 PM

21. And when all their wealth is gone who will you tax? nt

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Response to hack89 (Reply #21)

Tue May 6, 2014, 01:16 PM

31. Rather Depends On What Is Done With The Tax Revenue, Sir, Does It Not?

The things of actual value, the capital equipment, the establishments devoted to trade, the land and rental properties, the debts owed, would not disappear, after all....

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Response to The Magistrate (Reply #31)

Tue May 6, 2014, 01:22 PM

37. Only if state and local property and business taxes go away

if I am left property rich and cash poor, how exactly do I pay those local taxes without selling assets?

And while we are at it, how do I save for retirement or my kids education if the tax rate exceeds my return on investment? You are arguing for a system to discourage saving or investment.

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Response to hack89 (Reply #37)

Tue May 6, 2014, 01:51 PM

47. Not Necessary To Arrange A Tax In Cash Terms, Sir

Taxes can be paid in kind, and in the case of a tax on capital assets, by giving a portion of the assets held to the government. One means of absorbing this could be a national trust, employed to a good many possibilities, such as pensions, education of the young, assistance to persons come upon dire straights by disaster or infirmity.

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Response to hack89 (Reply #21)

Tue May 6, 2014, 03:56 PM

106. Stop making sense!

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 01:14 PM

29. With this approach, the very rich would end up holding their wealth as gold bars in basement vaults,

along with fine art, jewelry, and so on. Would you have IRS agents forcibly search people's residences looking for valuable paintings etc.?

Business structures would become vastly more obfuscated, with even more layers of foreign holding companies, multiple cross-ownership, and registration in havens of secrecy abroad, than there are now, to make the determination of the true value of many companies virtually impossible. Overnight, wealth tax avoidance strategies would become literally a multibillion dollar business, and many of the smartest accountants and tax lawyers in the country would devote themselves to devising such strategies.

And many rich people would of course simply move their residences to places such as Bermuda or the Cayman Islands which would be extremely happy to open their arms to wealthy people fleeing from such a wealth tax.

And then of course there's Bitcoin and the other cryptocurrencies.......

Of course Joe Average with his $40,000 in a savings account and maybe $90,000 in his 401k, both of which are fully and automatically reported to the IRS, would not be able to use any of these strategies and would be taxed in full.

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Response to Nye Bevan (Reply #29)

Tue May 6, 2014, 02:38 PM

84. Exactly .....

 

It's amazing how many here are not capable of thinking this through. The current huge IRS, with all its employees and agents can barely audit 2% of the current returns, which are almost all based on data that is already reported to the IRS for cross checking. How in hell would they ever be able to go to every rich person's house (if they even knew about it) and audit their art collection or find the gold bars in the basement. It boggles the mind how much worse it would be.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 01:17 PM

33. What if my assets are not growing faster than the tax rate?

how do I save for retirement or my kids education?

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Response to hack89 (Reply #33)

Tue May 6, 2014, 02:11 PM

61. You'd probably have no tax. A flat tax on wealth would free the middle class of all taxation.

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Response to reformist2 (Reply #61)

Tue May 6, 2014, 03:59 PM

108. How much wealth is too much wealth? nt

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 01:20 PM

36. Both as we do.

Income is easier as the mechanisms and processes for that are firmly established. Most states tax homes and cars as property, most often at a higher rate based on value.

To expand the idea of taxing wealth there would have to be a similar system to assess and levy takes on other property. It's tough to hide a house, and you have to register cars to use them. It's right now a bit tougher to assess bank balance or value held in stocks, bonds etc but probably doable although privacy advocates would gripe. It's much harder to assess wealth in jewels, precious metals, etc without Gestapo-like tactics. And what if your wealth is in business ownership? A hotel or restaurant, say, may be "worth" many millions but only generate a modest net profit. How can you tax the former beyond the latter without forcing sales, a clear overarching grasp of government?

To me the current setup works well as a process; it simply needs to be more progressive in such that not only should people making higher incomes pay higher rates as they theoreticall do now but in practice often not, but people owning higher end homes and cars should pay a higher rate, not just higher amount, of property taxes. Add that to luxury taxes on high end purchases such as say clothing over $500 or meals over $50 or cars over $100,000. and a finacial transaction tax of just a few pennies per buy or sell on any traded financial instrument and we'll be doing ok.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 01:25 PM

38. How about taxing dividends and capital gains as income?

Right now they're taxed at a lower rate. That to me seems more politically feasible.

As was pointed out earlier, how does one define wealth? It's not necessarily tangible assets ie cash.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 01:26 PM

39. I'm not sure exactly how this works

but I'm afraid it would discourage people from saving from retirement if your savings (wealth) were getting taxed every year, year after year. I don't know if the same dollar should get taxed over and over again each year.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 01:27 PM

40. Wealth isn't cash. Few wealthy people keep their money liquid. It wouldn't work.

And liquidating that amount of property (land, art, cars, private jets, skyscrapers, etc) each year would utterly destroy the American economy. The massive and continuing influx of that much land onto the market would make our last real estate crash look like a day at the park. Land values would crash through the floor, completely destroying housing prices nationwide and doing massive damage to the American economy.

Not to mention the fact that the most likely BUYERS in that scenario would be overseas investors. After all, who are the wealthy going to sell their wealth to for cash? The other American wealthy? Nope, they have to pay the tax man too. So it will be bought by the Chinese, and the Japanese, and the Russian's, and the Oil Sheiks in the Middle East, and anyone else who has the cash to buy property at the Great American Fire Sale. It won't take long at all for them to buy up most of the good stuff.

And then you get into the fact that, unlike income, the value of wealth itself fluctuates wildly. If you own 5000 shares of a company worth $1000 a share, you own $5 million worth of stock, and have to pay taxes on $5 million in wealth, right? So what happens when every American investor puts 15% of those shares up for sale on the same day? Price crash. Now it's worth $200 a share. You pay taxes on its new $1,000,000 value ($150,000). Without the pressure to sell after tax day, the value shoots back up again and the investor has just reduced his tax bill by 80%. Congratulations, you've just created a system that encourages the wealthy to keep their wealth in a volatile medium that can be manipulated to reduce their tax load. And they didn't even have to use any loopholes.

But at least they have that. What If I own 7 acres of land in Napa, worth a million dollars an acre? To pay my tax bill, I'd have to sell off an acre of land. Problem is, every other ag land owner in the Valley is also doing the same thing. Why are they going to pay me a million bucks if the guy next door will sell it for $750,000? And the guy next door to him for $500,000? Much American wealth is tied up in land value, and land value is driven almost exclusively by scarcity. By forcing annual sales, you eliminate the scarcity and permanently devalue the very wealth you're trying to tax. Devaluing means less tax $$, hyperinflation, and government austerity.

We don't tax wealth because there is no effective way to do it without causing massive economic harm.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 01:38 PM

42. Ahhh Excellent question

I do not know the balance. Will be interested in following the comments.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 01:45 PM

43. A tax on capital? No way that would ever fly.

So if I have a high yield 12 month $100,000 CD, and its drawing 2.3 % interest, that means I'm making a profit of $2,300 after 1 year. Yet you would propose to tax me at a rate of $12-$15,000 a year. So know I have $90,000-$87,000. After 20 years or so it is all gone.

No way, bob. You would be better off with a Minimum Income Tax based on a percentage of Gross Income. Go for all the deductions you can, but you know you going to pay at least a certain amount, unless you have a gross income of less than $31,200. ($15 hr x 40 hours x 52 weeks, which I consider a living wage.)

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 01:47 PM

45. I believe that's the point of the Estate Tax...

However, we could render the point moot by having a progressive tax steep enough to prevent the accumulation of inordinate wealth.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 01:53 PM

50. Since millionaires can't be bothered to pay on their earnings, wealth

is the metric upon which we should be levying taxes, IMHO.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 01:59 PM

52. We should be closing loop holes...

...and exemptions that allow for US based corporations to park earnings offshore in order to avoid paying the taxes that should be paid on those earning.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 02:03 PM

53. One way we get at that is capital gains tax -

and you can see how well that has worked as each administration since Reagan has cut the rate of the capital gains tax (it used to be equal to income tax and now is about 1/2 of that):

http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States

(hint - it has benefited the wealthy far more than middle or lower classes who have no $$$ to invest)

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 02:05 PM

54. The numbers don't work for your taxation structure ...

In order to sustain the current level of governmental spending, we would have to do some combination of the two ... For example, tax W-2 (and 1099) earnings at "X" (progressive rate) and tax passive earnings at "X+" (progressive rate) and tax inheritances at "X+++" (progressive rate).

I think many are conflating two separate policy goals: taxation to fund government versus taxation to address income inequity concerns.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 02:07 PM

56. Violates the takings clause

Need a Constitutional amendment, like the 16th for income tax.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 02:11 PM

60. That would cause nothing but a rapid devaluation of property

The resultant collapse of the banks would not be a great thing either.

People would list the value of their property at garage sale or pawn shop prices. Those are based upon what someone is willing to pay for it. No one would buy things that are worth much because then their "wealth" would be taxed. Money would flee the nation like it was going out of style, houses in Aspen would be dumped for a handful of loose change, showing that the rich guy didn't have the wealth you would otherwise claim he would.

Then the surrounding "primary residences" would devalue overnight, and all homeowners would be underwater, owing more money than the house is worth. That would cause another rash of bank failures, which would be the death nail in the banking industry.

Of all the ideals I've heard, this is perhaps the most ill considered of them all.

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Response to Savannahmann (Reply #60)

Tue May 6, 2014, 02:13 PM

63. I'm sure we could manage a transition. The key question is whether a wealth tax is fairer. It is.

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Response to reformist2 (Reply #63)

Tue May 6, 2014, 02:34 PM

81. Transition?

Even the suggestion of such a move would destroy real estate, cause a fire-sale of homes destroying the real estate market around the nation in weeks, if that long. The purchaser would have to show that the house was worth a fraction of the tax base, so buying the house would be a headache of epic proportions, even if they wanted to. Then they couldn't get a loan, so there would be nothing to stop the downward spiral of devalued property.

Then let's go look at cars. The rich guy driving around in his Ferrari with his trophy wife. Who would buy the car if he offered to sell it knowing that they would be taxed for having the car? Nobody, so the car market would similarly collapse. They would list their items at these fire sale prices. Do you have a painting that was in the family for generations? Value $1, because nobody is buying.

Value is not at this time determined by the labor that went into it. It is derived by the amount someone is willing to pay for it. A house can be listed at $10 Million. But if nobody will buy at $10 Million it is not worth that. A Bugatti Veyron may retail for $3 Million dollars, but if nobody buys it, it's not worth that. Eventually the prices start to drop until the buyer is willing to pay the asking price. Taxing wealth means that that price is going to be much much lower. The $10 million mansion might sell for ten cents on the dollar, or less. The current owner desperate to get it out of his portfolio, the new owner willing to take it on, but only if he can get it for a fraction of the current price for the tax issue.

Property taxes collected would plummet. Because everyone would point out how the houses are worth a fraction of the estimated value. Here it gets worse. That would cause drastic shortfalls in the County Budgets.

It is, without a doubt, the dumbest idea I've ever heard of. That wealth when the person dies, is passed on, and taxed, at that time. Property is taxed, based upon it's value, regarding property. Yachts pay taxes, planes pay taxes, car tags cost money, and property tax cost money. What is being talked about is cranking it up from a few mills of a percent, to actual percentages of their value. Do you really think that people would just fork over the money and be silent?

Let's say that the law allows me to own two cars and one house. The house down the street used as a Hunting Club by a dozen good old boys would not be protected. Those good old boys would dump that house in a second, which would show a huge loss in property value. I would use that to show that my property taxes are too high, because the house down the street sold for pennies on the estimated value. It would cascade out of control in days, or weeks at most. Banks would be taken over, which would cause a flood of foreign investors to pull their money out in a panic. The dollar would be worthless in no more than two months.

In the yard I have four cars. One for me to drive to work is an economical gas sipping car. One for the wife to drive, and one that I am lovingly restoring as a hobby. The fourth car is a pick up truck that I use for chores around the rural area I live in. The hobby car is now worthless because I can't afford it. I try to sell it to find that nobody wants it. I end up accepting pennies for the car because it is worth it to me to get the tax burden off my back. Now, I need the truck for the chores, and the wife needs to drive her car for the kids. That leaves my gas sipping econobox to be gotten rid of. Used car prices plummet, causing used car dealers to go bankrupt, which results in more lost jobs... Do you get the point now?

Value is determined not by the labor that has gone in, but by what someone is willing to pay for it. If you tax these things at actual percentages instead of mills, you will see the value plummet, and the people will not support you, they will revolt. Leftist policies would be banned by law in the resulting nation.

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Response to Savannahmann (Reply #81)

Wed May 7, 2014, 08:26 AM

119. Gotta disagree

I think an asset based tax is a terrible idea for a lot of reasons -- but devaluation of real estate is not one of them. Take a look at your next property tax bill.

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Response to Sgent (Reply #119)

Wed May 7, 2014, 03:01 PM

129. As I mentioned

Property tax is based upon value, but it is in mills, in other words, very low percentage. What the OP was about was taxing wealth, in which he mentioned primary residence as being excluded.

The dumping of other properties would be almost instantaneous. Because no one would risk it. That would cause a huge drop in property values. Let's say you live on a street. On your street are other single home owners, and two houses that are summer homes for retirees like my Grandparents who spent winters in Florida and Summers in Michigan. That second house would be too expensive to keep, and they would dump it. Investment property which you rent out would be taxed because that is part of your wealth, and it would destroy your earnings rather than supplement it. All of those would be dumped on the market at once, the asking price dropping like a rock every couple weeks.

Those houses on your street would be worth much much less as soon as any of those houses started to sell. Now, you're making payments on a house that is covered by a $125k loan. The other houses on the street are very similar. In a couple months the average value of a house on your street would be well under half. The tax risk would be too great to keep those houses. You would demand that your house valuation on your property tax reflect this reduced value. You might even resent making the payments on a house that is worth half what you are paying for it. A lot of people did resent that fact, the underwater mortgages of not too long ago. You might have heard President Obama talking about it.

People, even rich people, don't keep their money in cash, electronic or otherwise at the bank. They buy and sell stocks, bonds, real estate, and other property. When you threaten to tax their "wealth" they will dump the property, fire-sale prices will result rather quickly. This will devalue the property that the bank is using to secure loans, like the aforementioned home loan. Your house is no longer worth $125k. It is barely worth $75k. You can't refinance, because the banks aren't loaning money. Even if you did, you couldn't get an assessor to agree that the house is worth $125k anymore with the houses on the street dumping for less than $75k. You would get disgusted, many people did, and walk away from the loan, signing the house back over to the bank. The bank has a loss of half the value already, and it's only going to get worse.

Cars, art, and any other property with a perceived value. Now the rich guy that the OP wants to get, he is going to be arguing that his property isn't worth a tenth of what you think it is, using the fire-sale prices that he helped cause to prove his point. Stocks will be dumped, causing the market to crash. So thats the stock market and the banks all completely screwed. Who is hurt? Not the rich guy, he shuffled his money offshore and got out of dollars and into Yuan, Yen, Euro's, or Pound Sterling. Who is left completely screwed? The people like you in my scenario, people trying to live the dream.

Now, quick question. If the Democratic Party led the fight to get the Rich guys, and destroyed the value of your home, your retirement, and destroyed your job, how likely would you be to vote for them ever again? You would vote for anyone who promised to put things back the way they were.

Economically, the plan is suicidal. Politically, the plan is suicidal. To get the trifecta, you would have to commit suicide socially, and this plan comes mighty close to that. It would make Liberalism and Progressive policy a pariah, one that no one would vote for until a generation, or more, had passed. By then, we'd be a good little group of fascists.

There is nothing good about this plan. Nothing smart, nothing wise, and nothing to be gained. The plan comes pretty close to winning the triple crown of stupidity.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 02:13 PM

64. Both.

But wealth is a lot harder to quantify, unless you're going to create 'loopholes' like not counting art, jewelry, clothing, transportation, etc etc etc. Sure, if you only count money in banks, certificates of deposit, etc, etc you can keep it simple, but that just encourages people to keep 'value' in things that don't get counted.

That's why estate taxes are so important - the general problem is not individuals hoarding wealth in a single lifetime, but the intergenerational concentration of wealth. Rather than a percentage, I'd like to see a flat cap. The most any one person can inherit from anyone else being something like 10 mill of today's value. Everything else gets taxed away. That would allow the wealthy kids to continue to be drones if they wanted, but would also keep money in circulation, and still give them incentive to invest if they wanted to be able to pass on 10 mill a pop to their own kids.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 02:16 PM

69. I'm with you in concept, but much of "wealth" is based on paper -- like value of stocks or real

estate.

If you begin taxing that at high levels, the value will fall immediately -- perhaps precipitously causing an economic collapse worse than we have seen before.

Again, I don't disagree with changing the way we tax folks and think the wealthy have gotten a big pass in recent years.

But, in our zeal to get them, we can't screw up the whole system unless we are prepared to go back to living like those in the 1930s (outhouses, few social programs, etc.). Personally, I'm not opposed to that at my point in life. But you think unemployment and stagnation is bad now, think what it will be like if this house of cards we've built crumbles.

Plus, I don't think taxing the rich will produce as much money as some believe. It will certainly help, but it won't relieve the rest of us from having to work, pay significant taxes, etc. If you took every penny of wealth, it wouldn't pay everything we need to pay for more than a few years. After that, we'll be eating dirt because the system will have collapsed and all of us trying to eke out a living won't produce what is needed to provide health care, welfare, education, roads, etc.

Now a reasonable tax on identifiable (not paper) wealth, transaction taxes on stock sales and the like, increasing income tax rates on those with larger incomes, etc., are OK with me.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 02:30 PM

80. so tax the same dollars over and over and over again . . . nonsense

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Response to DrDan (Reply #80)

Tue May 6, 2014, 04:12 PM

113. But... we want their money ??

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Response to Bonx (Reply #113)

Wed May 7, 2014, 12:09 PM

128. we should be promoting saving, not spending

this suggestion does just the opposite

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 02:58 PM

90. Tax earnings. Wealth is too hard to calculate.

It's also too easy to manipulate. If you taxed stocks based on their book values on December 31, expect the stock market to crash on December 31 every year, and recover by January 10.

On edit: The biggest problem we've got is not that we don't tax wealth, it's that we don't correctly tax income. Seriously rich people get paid in "stock options" - the currency of choice for the man who can afford to wait two years for his paycheck. The difference between the price you paid for the stock and the price you sold it for is taxed at the capital gains rate, not the ordinary-income rate. Profits on the sale of stock purchased with incentive stock options should be taxed at the ordinary income rate; if I have to pay the ordinary-income rate on my paycheck, Jamie Dimon should pay the ordinary-income rate on his.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 03:06 PM

91. This will be fun. Each year the poor people can sell off any valued posessions

to pay the "wealth tax" on them.

Hey kid, you can catch someone's record breaking homerun, but you only get to keep the ball until tax season. Don't worry about that antique lamp you inherited, you can sell it at tax season when you can't cover the wealth tax on it.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 03:14 PM

93. GWT

I think Piketty has proposed a "global wealth tax" but I don't know the details.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 03:24 PM

98. Wouldn't this problem be best dealt with through taxing capital gains and inheritance taxes? /nt

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 03:29 PM

101. ALL bonuses in transnational corporations. ALL tax haven money collected on pain of prison.

ALL capital gains. ALL tax subsidies removed for fossil fuel companies of any size. I wish I could think of more.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 03:44 PM

104. Ummm... It depends.

My grandmother and I are good examples of how both systems screw both.

My grandmother is in the 15% income tax bracket (not quite poverty, but not comfortable by American standards. She has had to choose between insurance/meds/electric bill et cetera.) her income comes from Social Security and some rental income. Taxing her income hurts her a little because she has barely enough to make ends meet, but she's low income enough that her income tax is pretty insignificant.

On the other hand, she has inherited wealth in the form of land, which has become very, very valuable recently. If we tax her land wealth, she is screwed. She will have to sell the land to pay the taxes, which reduces her income further (because then she's not getting the rent on it.) I would have far fewer issues with a wealth tax that exempted the first $1M of land (and land only) value, because land isn't a liquid asset, and it's hard to turn dirt dollars into paper dollars -- a land sale costs a minimum of $2000 in agent and legal fees, and that has to be paid upfront. For someone who is land rich and cash poor, a wealth tax is devastating. If her wealth was in the form of say, stocks or mutual funds, I'd have far fewer issues with a wealth tax (because selling stock doesn't come with significant legal fees.)

I have a moderately high income (not 1% but in the top 10%) but very little wealth (401k, half-paid mortgage.) it makes sense to tax my income because first, I really don't notice it until February when I do my taxes, and what I don't notice, I don't miss. It doesn't cost me anything to have my taxes paid before I get my paycheck. On the other hand, taxing my wealth would be great for me, because I don't have much and I'd be likely to spend the difference, which would stimulate the economy.

Personally, I'd be happy to add a wealth tax over a certain dollar figure that excluded the primary family home (because some people who bought their house 30 years ago for a reasonable sum are now living in a multimillion dollar space. -- think urban apartments) and excluded a value around $1M to 5M if the person's income was below $40K. Rural cash poverty is a thing, even if some of those rural poor are actually sitting on hundreds of thousands of dollars in acreage.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 03:50 PM

105. I think you might have something in theory, but

how are you ever going to get accurate information on someone's wealth? You'd probably force more of it into deeper hiding, which might end up intensifying the problem of the rich sitting on their capital instead of investing it at home.

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Response to backwoodsbob (Original post)

Tue May 6, 2014, 04:06 PM

111. well... there are issues to consider.

Once a person is retired, do we really want to be taking a huge chuck out of their retirement savings every year? We would need to make certain kinds of retirement savings exempt.

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Response to backwoodsbob (Original post)

Wed May 7, 2014, 08:50 AM

122. And how do you calculate wealth? Inventory everyone's belongings?

When I was a teenager I collected comic books. Still have most of the collection, boxed up and in storage. There are some in there that could be sold for decent money, but I haven't really taken the time to go through it in recent years.

Would I have to assess every one of them for tax purposes? Pay someone else to do it? And then pay 10-15% of something that's basically been sitting around for two decades?

My brother has a nice little fancy table in his house. It was our grandmother's, and had all sorts of delicate designs carved into the wood. After she died it was kept, but sat in our parents' garage for over 10 years. Eventually he took it to his house and restored and revarnished it. Would his taxes go up thanks to his putting in the work to take Grandma's old table and turn it into an antique worth much more in dollar terms?

That seems more intrusive than taxing income.

And what about dodges? Would it work out for me taxwise to form a business -- say, and online comic book store -- and count my old collection as inventory? Will inventory be taxed the same way, at the same rates? And if not, won't there be a growth industry in exploiting the difference?

It's not as simple or easy as you seem to think.

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Response to backwoodsbob (Original post)

Wed May 7, 2014, 08:51 AM

123. I doubt such a tax would be constitutional

 

And if it was, I do not believe it could be applied progressively without a constitutional amendment. In any case, I wouldn't support it.

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Response to backwoodsbob (Original post)

Wed May 7, 2014, 09:29 AM

124. Intuitively, this sounds like a bad idea.


Taxing wealth means that if I put $100,000 in bank after I paid taxes on earned income, taxes on wealth would just eat this away.

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Response to backwoodsbob (Original post)

Wed May 7, 2014, 11:43 AM

127. Why not both?

Well, obviously, because the wealthy won't let us tax wealth, just as they are the ones who selectively define "earnings."

Their answer is our earnings, of course, along with the health, jobs, homes and happiness they also steal. We should indeed be taxing the rich, but it's not like we have that choice anymore. These are the hard years between fairly equitable taxation and our dawning realization that that equitability has vanished. What follows is not going to be pretty.

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Response to backwoodsbob (Original post)

Wed May 7, 2014, 03:59 PM

130. Then I would screw myself by restoring my classic car, for example.

Better just leave it rusty and crusty so I can at least afford to keep it.

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Response to backwoodsbob (Original post)

Wed May 7, 2014, 04:41 PM

131. Wow, talk about expanding an intrusive govt workforce

You'd have to hire (and pay for) an entire army of wealth estimators. And there'd have to be spies everywhere to make sure people aren't hiding valuable paintings in underground bunkers. And the government would have to be admitted into everyone's houses, to case your joint. And they'd demand sales receipts for every major item you buy, because you have to add the fancy fridge to your wealth estimate, don't you?

By the time the government finished collecting all those wealth taxes, it'd be broke from paying all those spies and estimators and enforcement people who came to confiscate all those paintings.

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