Bill to end the taxation of work more than investment income

[ModernDiogenes]

I know some people who have invested their wages carefully for decades to provide for retirement and medical care if needed. Would that just be treated as income when they start cashing it in? How about Roth IRA's?

Income is income is income and would be treated the same. The second you start making carve outs the whole thing falls through the floor. It becomes, “Well, if this person’s carve out is special why isn’t mine.”, and you have given people the right to complain they aren’t among the privileged being treated “special”.

That may have some effect on the willingness to invest in new business.

I might very well do do. However I doubt it. People like to make money. If investment makes money in a way that produces desired result folks will continue to do it.

I was thinking of all those people having work while the new system is being out onto paper.

Since it’s a massive simplification of the process I believe the rollover into understanding and ease of compliance would be very short lived

Sounds lovely, but there are very wealthy interests (including unions whose members have retirement plans) who will be busy as beavers making sure it doesn't come out that way.

Like anything else it depends on what people actually want. If enough want something to reach a critical mass required for change than it takes place. If not, you realize it’s not there so either you push harder to effect the change or you shut up about it.

I’m a practical person. Things are what they are. One works within the scope of reality. To do otherwise is to spun one’s wheels in place and never get anywhere.

 

[CimpleMan]

I know some people who have, over the last 30 years, accumulated over a million dollars through careful management of IRS's. Will their retirement be cut down as part of that plan?

We're talking about the very top of the food chain. Top 1% median worth is between $11.6 to $13.7 million. Democrat candidates have talked about raising taxes on those making over $400,000. Makes no sense to lower tax burden on those who can afford to pay taxes and shift more of the burden to those who can't.

The part of the article I read on that subject made no mention of productivity increases as the result of the employers making investments in productivity tools, like automation.

Businesses have been able to deduct a good amount of expense of equipment from their taxes. Through the big beautiful bill businesses can now deduct the FULL COST of qualifying equipment. Automation can eliminate jobs so why should businesses get rewarded for doing so?

Corporations have seen their top rate reduced greatly and have used tax breaks to buyback their stock. Great for investors and executives who get compensation through stock options, not so much for employees and those who have very little or nothing left over to invest in stock market.

Sounds like "fair share" is just a fib to justify taking more taxes from the people who already pay most of the cost of running the government. How about we start with a Balanced Budget Amendment to the Constitution, instead?

Again, fair share question can't be answered with a fixed percentage or exact $ amount. Have shown you how effective tax rates for top 1% and top corporate tax rate have been reduced from where they were since the late 70's. Rates need to be raised which would result in more of a fair share.

Balance the budget by increasing taxes not by cutting funding to help those who live paycheck to paycheck.

 

[RetiredAtLast]

If you don't want to discuss the fact that there used to be lots of family farms owned by black people, but they have mostly gone away, then that's just ignoring history and ignoring reality. There is a reason those black family farms are gone. Racism.

No, I'm not going to discuss racism.

 

[RetiredAtLast]

Not much. The claim that it would is oligarch propaganda. 'If you don't let the oligarch take huge wealth without paying taxes, he'll lose interest in making huge wealth'.

Oh, boy. "Oligarchs," huh? I'll bet you never used that word in your life until Sanders and OAC used it, did you?

Anyway, the bit about "not paying taxes" is BS. The top 5% get about 23% of total earnings, yes, but they pay 61% of the taxes. That's 3 times their "fair share."

Republicans largely fall for that scam, because they are conditioned to mindlessly hate taxation and worship the oligarchs.

Did AOC tell you that, too? We pay our taxes, but we don't like paying for trans programs in some East European country. And what has been learned from tax cuts by Kennedy and Reagan and even by Trump is that reducing the tax rates for everyone causes more spending, drives more demand, creates more jobs and that creates more total tax revenue to the government.

 

[RetiredAtLast]

Income is income is income and would be treated the same. The second you start making carve outs the whole thing falls through the floor.

That's why I don't think it'll ever happen. Every pressure group that has a lobbyist will push for an exemption. Charities will want their donations exempted. Labor unions will want their dues exempted, and the income from their retirement plans treated somehow differently. The Legislators that would make the laws won't risk losing a single vote.

I might very well do do. However I doubt it. People like to make money. If investment makes money in a way that produces desired result folks will continue to do it.

Maybe. But the nice thing about being rich is having choices. They can do whatever they want with their money, or nothing at all. And they can put it wherever they want to.

 

[Peacenik]

No, I'm not going to discuss racism.

If its a touchy subject then so be it. 'Nuff said.

 

[RetiredAtLast]

We're talking about the very top of the food chain. Top 1% median worth is between $11.6 to $13.7 million. Democrat candidates have talked about raising taxes on those making over $400,000. Makes no sense to lower tax burden on those who can afford to pay taxes and shift more of the burden to those who can't.

The Trump tax cuts lowered the rate for everyone and even made some people at the lower end have no tax liability at all. But the issue shouldn't be who we can get more tax money from. The issue should be to control spending so that everyone can keep more of what they earn.

Businesses have been able to deduct a good amount of expense of equipment from their taxes. Through the big beautiful bill businesses can now deduct the FULL COST of qualifying equipment. Automation can eliminate jobs so why should businesses get rewarded for doing so?

Automation can produce higher quality products at lower cost. That means (a) more people can afford to buy better products and (b) the manufacturer increases his profit. But then, that's what he's in business for, isn't it? Businesses that exist solely for the benefit of workers are called "charities."

Corporations have seen their top rate reduced greatly and have used tax breaks to buyback their stock. Great for investors and executives who get compensation through stock options, not so much for employees and those who have very little or nothing left over to invest in stock market.

It's not bad for workers who own stock through their 401(k), and that's somewhere around 35%-40% of all stock.

Have shown you how effective tax rates for top 1% and top corporate tax rate have been reduced from where they were since the late 70's.

Did you know that the "effective tax rate" for the lower 50% of taxpayers is 3.3%? The object should be to lower everyone's tax bills! Democrats are just looking for an excuse and a way to tax more and spend more.

BTW, your chart shows that, at the median, families are 50% better off IN REAL TERMS!

 

[CimpleMan]

The Trump tax cuts lowered the rate for everyone and even made some people at the lower end have no tax liability at all. But the issue shouldn't be who we can get more tax money from. The issue should be to control spending so that everyone can keep more of what they earn.

Automation can produce higher quality products at lower cost. That means (a) more people can afford to buy better products and (b) the manufacturer increases his profit. But then, that's what he's in business for, isn't it? Businesses that exist solely for the benefit of workers are called "charities."


It's not bad for workers who own stock through their 401(k), and that's somewhere around 35%-40% of all stock.


Did you know that the "effective tax rate" for the lower 50% of taxpayers is 3.3%? The object should be to lower everyone's tax bills! Democrats are just looking for an excuse and a way to tax more and spend more.

BTW, your chart shows that, at the median, families are 50% better off IN REAL TERMS!

Did my best to explain what fair share means and how to increase tax rates on Corporations and top 1% to increase fair share.

Also tried to explain why it makes no sense to increase taxes on middle and lower classes. If you want them to pay more in taxes you have to pay them more.

Those who have the highest incomes and wealth have the burden to pay for whatever money it takes to keeping society running including supplementing parts of society that don't earn enough to provide for basic necessities or not much more than the basics. Just the realty of the situation.

If taxes don't get increased at the Federal level they'll have to be increased at the State level.

 

[WorldWatcher]

Did my best to explain what fair share means and how to increase tax rates on Corporations and top 1% to increase fair share.

Also tried to explain why it makes no sense to increase taxes on middle and lower classes. If you want them to pay more in taxes you have to pay them more.

Those who have the highest incomes and wealth have the burden to pay for whatever money it takes to keeping society running including supplementing parts of society that don't earn enough to provide for basic necessities or not much more than the basics. Just the realty of the situation.

If taxes don't get increased at the Federal level they'll have to be increased at the State level.

Whenever someone mentions "effective tax rate" and "lower 50%"...

People can tell they are talking exclusively about Federal Income Tax as if that was the only tax.

They don't want to look at "total tax burden as a function of economic status". The won't include things like:

• State Income Taxes,
• State Sales Taxes,
• Local Sales Taxes,
• Property taxes,
• Embedded taxes (such as State and Federal embedded taxes in fuel and other consumables),
• And of course the increase in Import Taxes with the new Administration (commonly referred to as Tariffs which the consumer pays).

All of course impacting the Total Tax Burden of lower income people more.

WW

 

[CimpleMan]

Whenever someone mentions "effective tax rate" and "lower 50%"...

People can tell they are talking exclusively about Federal Income Tax as if that was the only tax.

They don't want to look at "total tax burden as a function of economic status". The won't include things like:
* State Income Taxes,
* State Sales Taxes,
* Local Sales Taxes,
* Property taxes,
* Embedded taxes (such as State and Federal embedded taxes in fuel and other consumables),
* And of course the increase in Import Taxes with the new Administration (commonly referred to as Tariffs which the consumer pays".

All of course impacting the Total Tax Burden of lower income people more.

WW

Right, it's ignored. Those who spend every dime or most of their income on living expenses can't afford to pay more in taxes.

People can complain all they want about who pays the bulk of the taxes and how unfair it is, but reality someone has to pay and those who have the income and wealth are the ones who will have to pay whether it's individuals or corporations.

You can't get blood from a stone seems apt.

 

[RetiredAtLast]

Also tried to explain why it makes no sense to increase taxes on middle and lower classes. If you want them to pay more in taxes you have to pay them more.

And I agree with you. Who's suggesting raising taxes on middle and lower income folks?

Those who have the highest incomes and wealth have the burden to pay for whatever money it takes to keeping society running including supplementing parts of society that don't earn enough to provide for basic necessities or not much more than the basics. Just the realty of the situation.

They already pay most of the money it takes to keep society running. But raising taxes is only one of several ways to keep the government running and, while it can be avoided on the lower and middle income folks, it does nothing to raise their incomes. So what do you actually want to do?

1. Increase lower and middle incomes in real terms?
2. Give Congress whatever money the majority party wants?
3. Tax wealthy people more because they can afford it?
4. ???

If taxes don't get increased at the Federal level they'll have to be increased at the State level.

Or, here in California, we could stop spending billions of dollars for things like a high speed train to nowhere. But please tell me why taxes HAVE to be raised anywhere? To do what?

 

[ModernDiogenes]

That's why I don't think it'll ever happen. Every pressure group that has a lobbyist will push for an exemption. Charities will want their donations exempted. Labor unions will want their dues exempted, and the income from their retirement plans treated somehow differently. The Legislators that would make the laws won't risk losing a single vote.

Agreed, that is likely to take place.

Maybe. But the nice thing about being rich is having choices. They can do whatever they want with their money, or nothing at all. And they can put it wherever they want to.

Yes, but the thing about the rich is they like won't let a little thing like not getting precisely what they wanted get in the way of a decent return. So as long as their ROI makes sense they will continue to invest. Regardless of it not being precisely what they wanted.

 

[CimpleMan]

And I agree with you. Who's suggesting raising taxes on middle and lower income folks?

Well, the complaint on fair share is the bottom half doesn’t pay their fair share compared to top half correct? So to fix you'd have to increase. Guess you could decrease taxes for the top half to make more fair to those who are complaining.

They already pay most of the money it takes to keep society running. But raising taxes is only one of several ways to keep the government running and, while it can be avoided on the lower and middle income folks, it does nothing to raise their incomes. So what do you actually want to do?

1. Increase lower and middle incomes in real terms?
2. Give Congress whatever money the majority party wants?
3. Tax wealthy people more because they can afford it?
4. ???

Right, very limited solutions to raise wages other than to push for higher minimum wages or decrease incentives for Corporations to use profits more for Execs and shareholders than to improve employee wages and benefits. Don't have the answers, but if none are found higher taxes will be the solution.

Or, here in California, we could stop spending billions of dollars for things like a high speed train to nowhere. But please tell me why taxes HAVE to be raised anywhere? To do what?

California has to bring down costs for businesses and citizens where they can. Don't see a solution on housing costs, but energy policies need to be addressed to help businesses and citizens. Newsom has finally seen the light in this regard.

Tax burden California ranks them 4th at 11% but when you consider Louisiana is 21st at 8.94% it's not outrageously higher.

Have no defense to give regarding bullet train. It's been a boondoggle.

 

[RetiredAtLast]

Yes, but the thing about the rich is they like won't let a little thing like not getting precisely what they wanted get in the way of a decent return. So as long as their ROI makes sense they will continue to invest. Regardless of it not being precisely what they wanted.

I think we agree, then, that the wealthy will continue the present uses of their money, but that if another place or use becomes more profitable or less troublesome, they will move that money to that place or use. Right? And I don't know at what point they begin to make an alternative decision.

 

[RetiredAtLast]

Well, the complaint on fair share is the bottom half doesn’t pay their fair share compared to top half correct?

Nope. My complaint about it is that the left keeps demanding that the wealthy pay their "fair share," but no one can say what share of government expenses they ought to pay.

Right, very limited solutions to raise wages other than to push for higher minimum wages or decrease incentives for Corporations to use profits more for Execs and shareholders than to improve employee wages and benefits. Don't have the answers, but if none are found higher taxes will be the solution.

My favorite answer is to make the labor of the middle and lower income groups more valuable through education. Even at the factory level, people who can contribute more to the company profits are paid more. In the labor market in general, people who have more skills are paid more. But our public education system is getting worse. In some places a quarter of High School 12th graders can't read at even 12th grade level. For folks for whom college isn't the answer, let's re-open all those closed vocational schools. Let's send kids out the High School door with a marketable skill besides flipping burgers.

California has to bring down costs for businesses and citizens where they can. Don't see a solution on housing costs, but energy policies need to be addressed to help businesses and citizens. Newsom has finally seen the light in this regard.

Newsome doesn't know there IS a light.

 

[CimpleMan]

Nope. My complaint about it is that the left keeps demanding that the wealthy pay their "fair share," but no one can say what share of government expenses they ought to pay.

Ok, gave my answer to fair share. Will leave it there.

My favorite answer is to make the labor of the middle and lower income groups more valuable through education. Even at the factory level, people who can contribute more to the company profits are paid more. In the labor market in general, people who have more skills are paid more. But our public education system is getting worse. In some places a quarter of High School 12th graders can't read at even 12th grade level. For folks for whom college isn't the answer, let's re-open all those closed vocational schools. Let's send kids out the High School door with a marketable skill besides flipping burgers.

There's simply not enough jobs that pay middle class wages for people to upgrade to.

Upward pressure on wages for the bottom and making investing in employees more attractive than just to park profits elsewhere is needed as well as Education reforms.

 

[RetiredAtLast]

There's simply not enough jobs that pay middle class wages for people to upgrade to.

And there aren't enough people - today - to "upgrade" and move up. But a better educated work force will mean better products, better manufacturing methods, new tools, a better economy in general. It's a much better answer than just taking money from the wealthy and sending checks or continuing to raise the minimum wage. It's like somebody said, "Pretty soon you'll run out of other people's money." Again in California, the minimum wage for fast food workers was raised to $20 per hour.
"A new academic working paper finds that the hike boosted wages for fast-food workers by about 8 percent—but it also reduced fast-food employment in California by roughly 3 percent, or 18,000 jobs."

California’s $20 Fast-Food Minimum Wage Costs Jobs

The pay hikes may be politically popular, but new research confirms they come at a price for workers.

www.city-journal.org

Upward pressure on wages for the bottom and making investing in employees more attractive

Investing in employees can take other forms than just raising wages. For example, training that improves worker productivity (real workers doing real things better or faster). Paying for the costs of outside education or apprentice or master training in a variety of trades. As the above article shows, just taking profits and turning them into wages doesn't work for very long.

 

[CimpleMan]

And there aren't enough people - today - to "upgrade" and move up. But a better educated work force will mean better products, better manufacturing methods, new tools, a better economy in general. It's a much better answer than just taking money from the wealthy and sending checks or continuing to raise the minimum wage. It's like somebody said, "Pretty soon you'll run out of other people's money." Again in California, the minimum wage for fast food workers was raised to $20 per hour.
"A new academic working paper finds that the hike boosted wages for fast-food workers by about 8 percent—but it also reduced fast-food employment in California by roughly 3 percent, or 18,000 jobs."

California’s $20 Fast-Food Minimum Wage Costs Jobs

The pay hikes may be politically popular, but new research confirms they come at a price for workers.

www.city-journal.org

Raising minimum wages can result in some job loss initially, but always works out for the best long term. Benefits outweigh any short term pain

Don't think you realize how many live paycheck to paycheck. The problem is increasing and you're solutions through education and training aren't enough.

You also keep ignoring who has benefitted the most from tax legislation the last 40 to 45 years. The money/wealth created is there, it's just not going where it's needed the most. Stop with the cliches like "running out of other people's money"

I don't have the answers, but tax burden will increase to deal with shortfalls in keeping society functioning. Haven't even mentioned dealing with AI and how taxes will be used to compensate disruptions in employment.

What's a fair share doesn't really matter in the end.

 

[ModernDiogenes]

I think we agree, then, that the wealthy will continue the present uses of their money, but that if another place or use becomes more profitable or less troublesome, they will move that money to that place or use. Right? And I don't know at what point they begin to make an alternative decision.

At the point they no longer see a return they deem worthy. However, if that return is based on consuming there are no places in the world more profitable than the U.S. market. China is making in roads, so is India, but neither is there yet.

 

[RetiredAtLast]

Raising minimum wages can result in some job loss initially, but always works out for the best long term.

For who? Jobs are lost, prices are raised, and the people who just got a slightly bigger paycheck have to pay the higher prices. It's an inflationary spiral in which nobody wins.

Don't think you realize how many live paycheck to paycheck. The problem is increasing and you're solutions through education and training aren't enough.

I have lived worse off than paycheck to paycheck when I was young, so I'm very familiar with it. So I gained education and worked diligently for my employer. (NOTE: A study released today shows that only 2.4% of Gen Z want to have a diligent and "workcentric" job.) Education and training will take a while, but that's a far better solution than handing out more of OPM.

You also keep ignoring who has benefitted the most from tax legislation the last 40 to 45 years.

Who benefited the most? Real wages are up 50% and welfare programs have grown. What we're seeing now, though, is that too much of that increased tax revenue has been badly used by agencies like USAID, where billions of dollars went for useless, ideological programs in this and other countries.

I don't have the answers, but tax burden will increase to deal with shortfalls in keeping society functioning.

Taxes may have to rise, but that shouldn't be the first answer to every problem.

What's a fair share doesn't really matter in the end.

Then let's stop hearing about it. And let's spend our time working out solutions that build the country rather than those that drain it.

 

[CimpleMan]

For who? Jobs are lost, prices are raised, and the people who just got a slightly bigger paycheck have to pay the higher prices. It's an inflationary spiral in which nobody wins.

I'm afraid to ask what sources you used to come to your conclusions on minimum wage increases. I'm not saying there can't be negative aspects, but plenty of research has been done and has concluded to be a net positive.

I have lived worse off than paycheck to paycheck when I was young, so I'm very familiar with it. So I gained education and worked diligently for my employer. (NOTE: A study released today shows that only 2.4% of Gen Z want to have a diligent and "workcentric" job.) Education and training will take a while, but that's a far better solution than handing out more of OPM.

Your personal story of pulled yourself up by the bootstraps isn't relevant to my broader point of how common it's become to live paycheck to paycheck and what needs to happen. There's plenty of data of a shrinking middle class and your simplistic idea of training and education won't result in more middle class wages jobs, which are needed.

Who benefited the most? Real wages are up 50% and welfare programs have grown. What we're seeing now, though, is that too much of that increased tax revenue has been badly used by agencies like USAID, where billions of dollars went for useless, ideological programs in this and other countries.

Plenty of data showing correlation of tax policies since the 80's and rising concentration of wealth here in US. Again you're ignoring everything I've presented as evidence supporting my beliefs.

With that, i'm done. You can have the last word.

 

[RetiredAtLast]

I'm afraid to ask what sources you used to come to your conclusions on minimum wage increases. I'm not saying there can't be negative aspects, but plenty of research has been done and has concluded to be a net positive.

I suppose it depends on the size of the increase and the population that gets it. I didn't use a source, and I don't contend that all minimum wage increases are net losers. But it figures that if McDonald's gives everyone a raise to $20 per hour, jobs will be cut and/or prices will go up. If prices go up the people that just got the raise will have to pay more to take their families to McDonald's (assuming they eat there).

There's plenty of data of a shrinking middle class

I'd like to see that data. I'm curious as to how many of those who left the middle class did it by moving up. I just skimmed a report that blamed things like race, the type of job held and other factors for a lack of upward mobility in some areas of employment, and it's easy to see that education (which isn't mentioned) bears on almost all of the limitations. Would people move up if they were better educated? Some would, if the jobs exist. Will they move up if they aren't better educated? Nope.

your simplistic idea of training and education won't result in more middle class wages jobs, which are needed.

Sure it will. Training to be an electrician or a welder or a draftsman will open up middle class jobs. People who can read better can learn more complex subjects if they choose to while still in school, and that will open up to them jobs better than sweeping the factory floor. It'll take more than just that, but experience says that's the key for very many people.

Plenty of data showing correlation of tax policies since the 80's and rising concentration of wealth here in US.

Maybe so. But I'll say it again: More tax shouldn't be the first answer.