Time to tax capital gains as ordinary inc [W167]

[Tigger]

If our tax burden is shifted from those with the lowest propensity to spend the marginal dollar of income to those with the highest propensity, then demand would increase, businesses would expand to meet demand, more jobs would be created, more wealth would be created, and business profits would increase. As an added bonus there would be a lower need for welfare, unemployment benefits and guberment freebees.

Why shouldn't that tax burden be spread proportionally among the entire population. Pick a percentage and take that from everyone's income? 10%, or wherever other number you come up with from everyone. No exemptions. No deductions.

 

[imagep]

It is taxed as income unless you are in the lowest brackets. Regardless, this is a horrible idea that will lock up wealth in dynastic trusts.

How so?

[/quote] The far better route would be to require businesses to convert to cash accounting method for income tax purposes.[/QUOTE]

Why would one accounting method have a better effect on our macro economy than any others?

 

[imagep]

Great idea if you want to see people Stop investing, selling property, etc....

The Government is only allowed one shot to prosecute a suspect, why should they be allowed to get multiple shots to tax the return on monies which have already been taxed?

When people have excess money, they will always seek to obtain a rent on that money, regardless of the tax rate. surely you don't think that Warren Buffet would just sell all of his productive assets and toss all that money into a private vault or burry it do you?

 

[Tigger]

My position is that shifting the tax burden to those who are most able to afford it will improve the economy for everyone, including the rich, offsetting the net cost of their higher tax burden.

In which case what incentive would there be for those people to invest their money or otherwise open themselves to these additional taxes?

 

[Gipper]

My position is that shifting the tax burden to those who are most able to afford it will improve the economy for everyone, including the rich, offsetting the net cost of their higher tax burden.

Look at it like this, if I force you to give me $100, and the end result is that I give you back $110, are you any worse off because I made you give me $100? It's all about having a system that keeps money rapidly circulating so that it optimizes the creation of new goods and services (wealth).

If I thought for a second that the government was that efficient, that fiscally responsible, and that benevolent, they wouldn't have to "force" it. I'd gladly give it over.

As my hero Reagan once said: The best minds are not in government. If any were, business would hire them away.

 

[imagep]

That's not even what I'm talking about.... My paycheck gets taxed. Once I have that money, and level of Government which has had their "bite at that apple" should not be allowed to tax whatever I use that money for. ONE bite only.

The only way that we could ever do that is if we had only one form of tax. If we only had one form of tax, the tax rate would be so high that it is exceptionally punitive on that one thing and that one thing would either become non-existent or would become a black market thing. Either way, tax revenues from that one thing would be nearly nothing, and thus we would have to find other sources of revenue, which would mean taxing more than just one thing.

So from a standpoint of practicality, what you are suggesting is not viable.

 

[imagep]

Why tax capital gains at all? That certainly wasn't always the case. I think taxing capital gains only began in the 1950's. Let's go back to the good old days.

Why tax income from work at all? That certainly wasn't always the case.

Yet conservatives often complain about the 47% who don't pay the tax on work, as if everyone should have to pay it, even if they don't have much income (many of that 47% are students or retired folk).

 

[Tigger]

When people have excess money, they will always seek to obtain a rent on that money, regardless of the tax rate. surely you don't think that Warren Buffet would just sell all of his productive assets and toss all that money into a private vault or burry it do you?

The Buffet's and Gates' probably not. However, for every one of them there are three dozen people who aren't making those sort of margins who would probably be looking to do just that.

 

[imagep]

True. But you want to encourage investment (cap gains) over income, so tipping the scales to incentivize more investment makes sense. But it's clear 15% is unnecessarily low.

Remember- these types of things can be fluid- people can structure compensation to be taken in either cap gains or ordinary income.

Why would anyone want to encourage passive investment over actual productive work that creates true wealth (goods and services) from the act of active participation?

 

[imagep]

It just boggles my mind that people don't realize how many different bites the government takes at the apple of our income. Dozens of small bites that add up very quickly.

Yet none of them are so large that they shut down that economically vital activity. Try limiting taxation to just one very specific product, let's say the sale of bananas, and see how many people grow or consumer bananas.

 

[Tigger]

The only way that we could ever do that is if we had only one form of tax. If we only had one form of tax, the tax rate would be so high that it is exceptionally punitive on that one thing and that one thing would either become non-existent or would become a black market thing. Either way, tax revenues from that one thing would be nearly nothing, and thus we would have to find other sources of revenue, which would mean taxing more than just one thing.

So from a standpoint of practicality, what you are suggesting is not viable.

Yes it would be punitive. That's the point. People would then get to see exactly how big that steel rod the Government is stuffing up their ass actually is. Maybe that would finally wake people up about the lunacy of the size of our government and what all it's involved in.

 

[Tigger]

Yet none of them are so large that they shut down that economically vital activity. Try limiting taxation to just one very specific product, let's say the sale of bananas, and see how many people grow or consumer bananas.

That's why you make it income. Something that people can't do without.

 

[imagep]

Why shouldn't that tax burden be spread proportionally among the entire population. Pick a percentage and take that from everyone's income? 10%, or wherever other number you come up with from everyone. No exemptions. No deductions.

That would still result in different people paying different quantities of taxes, thus it would still be "unfair". After all, most of you guys are only objecting to the progressive tax system because it is somehow deemed as "unfair". The only true fair tax would be a head tax, where everyone pays the exact same amount of tax. I believe I once read that it would be around $12,000 per citizen, including infants and the infirm. But since that isn't practical, you guys like to make up a new definition of "fair" and claim that a flat tax on income is somehow fair.

If you are going to invent a new definition of fair, why not base that fairness on practicality, in otherwords, devise fair to be whatever would create the best economy in a practical manner. However, flat taxers really don't like that idea, because it's ultimate conclusion would be to have a fairly large income tax personal deduction, probably something in the neighborhood if $100k-$400k, with only people making above that amount paying any federal income tax, and that would bring us back to your kneejerk/emotionaly based definition of "unfair".

 

[Fisher]

How so?

The far better route would be to require businesses to convert to cash accounting method for income tax purposes.[/QUOTE]

Why would one accounting method have a better effect on our macro economy than any others?[/QUOTE]

You are the one who wants more taxes. Cash accounting prevents corporations from cooking the books to up dividends by deducting future expenses. The reason the government needed an army of forensic accountants when Enron collapsed was to figure out their books they had them so convoluted to hide their worthlessness.

 

[imagep]

In which case what incentive would there be for those people to invest their money or otherwise open themselves to these additional taxes?

Because when people have excess wealth, they will always seek to obtain a rent on that wealth. So being able to keep 50% of a profit from passive investments is a heck of a lot better than keeping 100% of no profit.

 

[imagep]

The Buffet's and Gates' probably not. However, for every one of them there are three dozen people who aren't making those sort of margins who would probably be looking to do just that.

So....?

 

[imagep]

Yes it would be punitive. That's the point. People would then get to see exactly how big that steel rod the Government is stuffing up their ass actually is. Maybe that would finally wake people up about the lunacy of the size of our government and what all it's involved in.

The tax on income derived from personal productive work is punitive, yet at least some of us continue to work. Every tax is punitive, there is a point where when the tax rate is so high that the punitive aspect of a tax shuts down that activity, and where the rate is so low and insignificant that the punitive aspect is basically ignored. What you are suggesting is that we tax income from a particular single activity at a rate that is so punitive that we will no longer engage in it, thus we will have no revenue from it, which of course would be counter productive.

You are familiar with the Laffer Curve concept aren't you?

 

[Tigger]

That would still result in different people paying different quantities of taxes, thus it would still be "unfair". After all, most of you guys are only objecting to the progressive tax system because it is somehow deemed as "unfair". The only true fair tax would be a head tax, where everyone pays the exact same amount of tax. I believe I once read that it would be around $12,000 per citizen, including infants and the infirm. But since that isn't practical, you guys like to make up a new definition of "fair" and claim that a flat tax on income is somehow fair.

A "fair tax" based on percentages, with no deductions and a requirement to record all quasi-income (stock options, car service, government support monies, etc....) as income would be a fair idea so far as I'm concerned.

If you are going to invent a new definition of fair, why not base that fairness on practicality, in otherwords, devise fair to be whatever would create the best economy in a practical manner. However, flat taxers really don't like that idea, because it's ultimate conclusion would be to have a fairly large income tax personal deduction, probably something in the neighborhood if $100k-$400k, with only people making above that amount paying any federal income tax, and that would bring us back to your kneejerk/emotionaly based definition of "unfair".

You would never get an agreement on what the best economy was. You and I couldn't agree on that, never mind the entire country.

 

[imagep]

That's why you make it income. Something that people can't do without.

So we eliminate taxes on everything other than income from productive work, and just tax the piss out of work. Then what would be my incentive to have more income from work that a very minimum subsistance level?

Now I perfectly get that your religious view may be that everyone should live like a miser or a caveman and be self sufficient, but you do understand that would involve us not having things like computers, or the internet forums that you frequent so often?

 

[Tigger]

Because when people have excess wealth, they will always seek to obtain a rent on that wealth. So being able to keep 50% of a profit from passive investments is a heck of a lot better than keeping 100% of no profit.

Not for everyone. Keeping that 50% in taxes out of the hands of the Government would be a much bigger incentive for me than making that 50% profit.

 

[imagep]

The far better route would be to require businesses to convert to cash accounting method for income tax purposes.

Why would one accounting method have a better effect on our macro economy than any others?[/QUOTE]

You are the one who wants more taxes. Cash accounting prevents corporations from cooking the books to up dividends by deducting future expenses. The reason the government needed an army of forensic accountants when Enron collapsed was to figure out their books they had them so convoluted to hide their worthlessness.[/QUOte]

Actually I don't want more taxes (in terms of dollar revenue), I prefer that we do have multiple sources of taxes for practical reasons. I also believe that making our overall tax scheme more progressive would result in a better economy, with more wealth creation.

 

[Tigger]

So we eliminate taxes on everything other than income from productive work, and just tax the piss out of work. Then what would be my incentive to have more income from work that a very minimum subsistance level?

Now I perfectly get that your religious view may be that everyone should live like a miser or a caveman and be self sufficient, but you do understand that would involve us not having things like computers, or the internet forums that you frequent so often?

The only incentive would be personal pride. I've got. I issue with subsistence living, even when it means a much less technological world.

 

[Fisher]

Actually I don't want more taxes (in terms of dollar revenue), I prefer that we do have multiple sources of taxes for practical reasons. I also believe that making our overall tax scheme more progressive would result in a better economy, with more wealth creation.

What would be more progressive than requiring evil corporations to pay more than 6% taxes.

 

[imagep]

You would never get an agreement on what the best economy was. You and I couldn't agree on that, never mind the entire country.

No, not the entire country, certainly not. Most people are morons.

however, there are lots of economists who would agree with me. If I had it my way, I would put one of them in charge of our tax scheme. but since I can't have it my way, we have to live with the current system, which really isn't all that horrible or off base from my ideal.

 

[imagep]

Not for everyone. Keeping that 50% in taxes out of the hands of the Government would be a much bigger incentive for me than making that 50% profit.

that would be fine with me, it gives me more opportunity to make that profit, even if I have to pay more to the government.

I would love it if I had to pay a million dollars a year in income taxes, because that would mean that I was making a boat load of money.