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  1. gojeda's Avatar
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    #41  
    Quote Originally Posted by BARYE View Post
    I think there's been a misunderstanding of what Buffett said -- (though its in the original post I think)

    Though he makes a TON of money, for "doing" little -- his workers are burdened with a much larger percentage of taxes.
    I fail to see what "doing little" or "doing alot" has anything to do with how taxes are levied.

    Could you please explain how this is salient?

    This despite the fact that Buffett makes no special effort to avoid or lessen his obligations using common mechanisms available to the rich like tax shelters, overseas tax havens etc.
    It seems like you are assuming a lot here, but feel free to support these arguments.

    Steve Balmer pays much less in percentage terms than most of you.
    I think we all know that those on your side of the aisle would like nothing more than to tax more and penalize success.

    But since it has been established that the wealthy few pay the overwhelming portion of the tax burden as it is, I would like to know what is the solution here?
  2. gojeda's Avatar
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    #42  
    Quote Originally Posted by lifes2short View Post
    Don't forget to include the Founders of the "ownership society".
    Well damn, here I thought the notion of "The American Dream" which, above all else, is about ownership - was a *good* thing.
  3. gojeda's Avatar
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    #43  
    There are problems with the flat tax. As a matter of fact, the current system actually 'penalizes' the wealthy more than a flat tax would.

    If the crux of the problem for those who feel that the wealthy are not hurt shouldering the tax burden in the same way the everyone does, then I would say the last thing they want is a switch over to a flat tax system.
  4. gojeda's Avatar
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    #44  
    Quote Originally Posted by lifes2short View Post
    Though I'm not one of those to make the suggestion, somehow, I knew someone would make this claim. However, it assumes much more than can be legitimately qualified. It is a choice, I agree. However unless Mr. Buffet has made such a statement, the assumption is out on a limb by itself. Mr. Buffet is able to strike a deal with the Gates Foundation as to what his funds will be allocated for, whereas Mr. Buffet is unable to have any say in how the Treasury utilizes his donation. In fact, I would reserve judgment that an extra bonus check written by Mr. Buffet to the Treasury would be subject to the same treatment as income tax revenues. That's a particular area I'd like to see further discussed.
    It seems some of us need to be reminded of what the premise of the thread is: a certain billionaire who says he does not pay enough in taxes.

    I am not sure what his involvement in the Gates foundation has to do with anything (aside from within the context of tax sheltering), but I think it is safe to say that Buffett or Mr. Smith in Peoria has little to say in the manner in which their taxes are spent.

    If we want to have a discussion as to how Mr. Buffett wants his tax or a contribution spent, that is a discussion outside the scope of the thread it seems.

    The IRS does not play favorites (as some high profile recent arrests illustrate).
  5. #45  
    Quote Originally Posted by gojeda View Post
    There are problems with the flat tax. As a matter of fact, the current system actually 'penalizes' the wealthy more than a flat tax would.

    If the crux of the problem for those who feel that the wealthy are not hurt shouldering the tax burden in the same way the everyone does, then I would say the last thing they want is a switch over to a flat tax system.
    The flat tax is not a system to penalize the super rich, but rather to lessen the average burden on the households that earn $120,000 or less which is the vast, vast majority of Americans.....while still maintaining or even increasing the tax revenues.
  6. #46  
    Quote Originally Posted by lifes2short
    As a matter of principle and considering the manner in which taxes and duties were originally intended to be carried out at the Federal level, what right does the federal government have to one's personal (non-property) income, thereby reducing one's personal economy before income is even received.
    I am not sure what your point is.

    Do you subscribe to the camp that since the federal income tax was originally set up on a tempory (and voluntary?) basis to help pay for WWII and then stuck that we are not legally obligated to pay our Income Tax?

    When the founding fathers first established the country (hence the original tax codes) they had a very limited and extremely small army, No navy, no airforce, no intelligence agencies, ect... They had very few federal services like the USPS. They did not have the infrastructure demands like public works, etc...

    If the Federal gov has "no right" to taxing it's citizens to pay for these services, that I would hope you would appreciate having serve you, how would you have them exist without a federal tax?
  7. gojeda's Avatar
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    #47  
    Quote Originally Posted by HobbesIsReal View Post
    The flat tax is not a system to penalize the super rich, but rather to lessen the average burden on the households that earn $120,000 or less which is the vast, vast majority of Americans.....while still maintaining or even increasing the tax revenues.
    However, the fact of the matter is that a tax of 17% is still felt more acutely by a family who makes that $120,000 than the family who earned $1.2 million dollars....or the billionaire who earned commensurately more.

    Not taking into account filing status....

    The family who earns $120000 is in the 33% bracket. Anyone above $175000 is hitting the 35% bracket.

    The family earning $60,000 is in 25% bracket.

    So I fail to see how a flat tax helps anyone. The flat taxes might reduce for the lower income folk, but it also reduces it for those who pay most of the nation's tax bill as well. The net effect would be less revenues, which seems to me to not be particularly constructive.
  8. #48  
    Quote Originally Posted by HobbesIsReal View Post
    Do you subscribe to the camp that since the federal income tax was originally set up on a tempory (and voluntary?) basis to help pay for WWII and then stuck that we are not legally obligated to pay our Income Tax?
    You'd have to go back another 130 years to find the origin to (non-property) income taxation, but it's utility was primarily the same. How it was implemented out to the public was always highly in question, however. Legally, we are obligated to pay what is owed. Morally, and in the spirit of the independence this country was to represent, it's more regressive and punitive to the public and addictive to our government. Our country will kick the habit of oil before it becomes income taxation wise.

    To address the remainder of your post, it would be more concise for me to respond singularly that my post was solely regarding income tax and no others.

    When the founding fathers first established the country (hence the original tax codes) they had a very limited and extremely small army, No navy, no airforce, no intelligence agencies, ect... They had very few federal services like the USPS. They did not have the infrastructure demands like public works, etc...

    If the Federal gov has "no right" to taxing it's citizens to pay for these services, that I would hope you would appreciate having serve you, how would you have them exist without a federal tax?
  9. gojeda's Avatar
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    #49  
    Does anyone else see the irony here? I find it interesting the same person who characterizes our taxation system as punitive has nothing but positive things to say about socialist Europe (and, by extension, one would think - their taxation system).

    If our taxation system is punitive, I would hate to see what adjectives would be ascibe to the systems in place across the pond?

    Coercive perhaps?
  10. #50  
    Quote Originally Posted by gojeda View Post
    However, the fact of the matter is that a tax of 17% is still felt more acutely by a family who makes that $120,000 than the family who earned $1.2 million dollars....or the billionaire who earned commensurately more.

    Not taking into account filing status....

    The family who earns $120000 is in the 33% bracket. Anyone above $175000 is hitting the 35% bracket.

    The family earning $60,000 is in 25% bracket.

    So I fail to see how a flat tax helps anyone. The flat taxes might reduce for the lower income folk, but it also reduces it for those who pay most of the nation's tax bill as well. The net effect would be less revenues, which seems to me to not be particularly constructive.
    Most of the flat tax proposals are not anywhere near 25%. Most are in the rang of 8-12%. Big difference. A $60,000 family paying 10% is certainly going feel the benefits instead of paying 25%. A $120,000 family now paying 35% plus a good chance of paying AMT tax is certainly going feel its benefits.

    A lot of studies that I have seen show that a flat tax will increase the revenue. Currently there are lot of loop holes, exceptions, etc... that brings down the amount of the actual taxes paid. There is also a HUGE cost in the infrastructure and man power needed to maintain the current tax system. The savings have to factored in as well.

    It is kind of like in retail....do you charge higher amount for fewer sales or a lower price point for more sales and more money collectively.
  11. gojeda's Avatar
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    #51  
    Quote Originally Posted by HobbesIsReal View Post
    Most of the flat tax proposals are not anywhere near 25%. Most are in the rang of 8-12%. Big difference. A $60,000 family paying 10% is certainly going feel the benefits instead of paying 25%. A $120,000 family now paying 35% plus a good chance of paying AMT tax is certainly going feel its benefits.

    A lot of studies that I have seen show that a flat tax will increase the revenue. Currently there are lot of loop holes, exceptions, etc... that brings down the amount of the actual taxes paid. There is also a HUGE cost in the infrastructure and man power needed to maintain the current tax system. The savings have to factored in as well.

    It is kind of like in retail....do you charge higher amount for fewer sales or a lower price point for more sales and more money collectively.
    Of course people are going to feel a positive effect if they pay reduced taxes...

    That isn't the point here. The point is to fulfill the tax bills (as best we can anyway) in such a way so that taxes are fair, but represent less of a burden for who who earn less.

    If you are going to reduce the tax bill for Alex Rodriguez to 12% from whatever he is paying now, that is going to affect the bottom line (government revenues) more than reducing Mrs. Jones of Peoria to the same 12%.

    Mrs. Jones will certainly enjoy her new taxbill in a tangible way. ARod will like the changes as well. The one who is left holding the short end of the stick is the federal government.

    Alex Rodriguez earned $27,708,525 this past season. If he filed separately from his wife, he will be paying $9,684,087 in taxes come April.

    His tax bill represents the same tax bill for 2189 people who earn 32,000/year (who are just barely in the 32 percent bracket).

    Cutting tax bills all around in a huge way helps everyone except the government. And that is fine, really, if you are willing to put up with less money for things like highways, airport improvements, and a shoddy military.
    Last edited by gojeda; 11/03/2007 at 07:52 PM.
  12. #52  
    The flat tax is very simple. The more you make, the more you keep.

    A very good motivator to make more money.

    AMT is broken, as are many other tax laws.

    But we will never see a flat tax for one reason: There is an entire industry around keeping taxes as complex as possible. Probably drains the economy to the tune of trillions..

    Ain't no way that lobby (lawyers, tax accountants, consulting firms) would ever let it happen.

    Being in the "tax" business is a good business - it only gets more complicated.
  13. #53  
    Quote Originally Posted by HobbesIsReal View Post
    Most of the flat tax proposals are not anywhere near 25%. Most are in the rang of 8-12%. Big difference. A $60,000 family paying 10% is certainly going feel the benefits instead of paying 25%. A $120,000 family now paying 35% plus a good chance of paying AMT tax is certainly going feel its benefits.

    A lot of studies that I have seen show that a flat tax will increase the revenue. Currently there are lot of loop holes, exceptions, etc... that brings down the amount of the actual taxes paid. There is also a HUGE cost in the infrastructure and man power needed to maintain the current tax system. The savings have to factored in as well.

    It is kind of like in retail....do you charge higher amount for fewer sales or a lower price point for more sales and more money collectively.
    Actually I thought most hovered around 17%? In any event, my concerns with a flat income tax are more in the area of reality - the reality that congress would never pass it! I do wonder if a consumption tax could pass though along side a simplified tax code law?
  14. #54  
    Yes....you are right. Most of the recent proposals in the last 2 years have been ranging now between 15-18%. In fact here is a Flat Tax calculator for a 17% flat tax rate.... http://www.cse.org/flattax/index.php
  15. #55  
    Quote Originally Posted by gojeda View Post
    Cutting tax bills all around in a huge way helps everyone except the government. And that is fine, really, if you are willing to put up with less money for things like highways, airport improvements, and a shoddy military.
    This is not necesarily true. There are already working economies with a Flat Tax that have seen large jumps in economic & tax revenue growth after it was initiated. Here is a summary of some of them:

    Yet in Russia, President Vladimir Putin -- the former head of the Soviet KGB -- implemented a flat tax in 2001. Not only a flat tax, but a flat tax with a 13 percent rate.........In Russia, by contrast, the flat tax has been in place for more than two years now...........

    The Russian flat tax has been so successful that even American politicians might learn the right lessons. Let's look at the evidence: Russia's economy has expanded by about 10 percent since it adopted a flat tax. That may not be spectacular, but it's better than the United StatesIt also appears, conventional wisdom aside, that a low tax rate doesn't mean less money for government. Over the last two years, inflation-adjusted income tax revenue in Russia has grown 50 percent. Why? Because people are willing to produce more and pay their taxes when the system if fair and tax rates are low..............

    Interestingly, the flat tax is just one of several positive reforms enacted by President Putin. Russia also has reduced the corporate rate of tax from 35 percent to 24 percent. (U.S.-based companies still pay 35 percent, the second-highest corporate tax among industrialized nations). Small businesses also get better treatment. The old system with high tax rates has been replaced by a new system where companies can choose either a 6 percent tax on gross revenue or a 15 percent tax on profits.............

    The success of Russia's flat tax shouldn't surprise anyone. Hong Kong has had a flat tax for a long time, and it's been the world's fastest-growing economy over some 50 years.

    http://www.heritage.org/Press/Commentary/ed032403.cfm
  16. #56  
    The example of Russia doesn't apply to US. In Russia (and other developing countries :-) there is a HUGE underground "black market" economy. A flat tax brings a lot of it in the open and increases the tax base.

    While there is some fraud in US, it is not even on the same planet as in Russia.

    As Gojeda says, (with his example of ARod), if you bring everyone's rate down to, say 17% and want to keep the overall tax collection to be revenue neutral, then the overall taxable base has to go up. We'll lose our child credits, mortgage deduction, the ultra rich will lose their various tax shelters.

    I, too, think this will never happen, given the fact that these very special interests controls our electoral process. And I support flat taxes.
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  17. #57  
    A problem with taxing income is that one then gets less of it.

    Another problem with taxing income is that it discourages savings and investment, and therefore, encourages consumption.

    A problem with taxing (our) labor is that it makes makes foreign (untaxed) labor more competitive, and encourages the substitution of capital for labor.

    The problem with progressive taxation is that, by definition, it involves high marginal rates.

    The problem with high marginal rates is that they discourage enterprise and depress revenues.

    The problem with flat taxes and consumption taxes is that they are regressive.

    The primary purpose of taxes is to raise the revenues necessary for government. When they are also used to incent some behaviors and punish others, that reduces revenues and distorts the market.

    As a society, we borrowing to consume and passing the cost of that consumption on to our children and grandchildren. We are also consuming, using up, and failing to maintain our infrastructure.

    In order to finance our consumption, we are borrowing from other nations. This means that an increasing portion of our future production will flow to those nations as service on that debt.

    I favor the "fair tax," a flat consumption tax that overcomes the regressiveness by paying a cash stipend to low income tax payers.
    Up the next election, my citizens; always the next election.
  18. #58  
    Quote Originally Posted by HobbesIsReal View Post
    I open to all views on this. Why would you not support a flat tax?
    I hope all will accept that I choose to try replying to all the various post with a single response (to lessen the sheer number of posts folks must troll through).

    Essentially I see the differences between a "flat tax" and the "Fair Tax Act" as these:

    - A Flat Tax requires individuals to report, and the government to track, income whereas the Fair Tax does not.

    - A Flat Tax does not encourage people to save more. The Fair Tax does encourag people to save more since taxes are only collected when a good or service is ultimately "consumed".

    - A Flat Tax retains the nature of the current tax system with all its bizarre deductions and rules - and more importantly "gaming" the tax code as is the norm with lobbyists and politicians. The Fair Tax removes all these rules and ability of Congress to reinstate special "favors" with new laws since any changes will (AIUI) require a Constitutional Admendment - a much higher hurdle that exists today.

    - A Flat Tax continues to double or triple (or more) income as occurs today. The Fair Tax only taxes once based on final consumption of a good or service.

    - A Flat Tax continues to place the preponderence of power and control over individual citizen's finances in the hands of polititicans. The Fair Tax reverses that equation and returns the preponderence of control back in the hands of the people.

    I engourage you to check out the fairtax.org web site for details on the bill. Lord knows I am subject to misstatements and would prefer anyone to get the facts direct from the source. These are only my impressions and understanding of the material.

    As to folks like Mr. Buffet and his comments, I still cry "BS".

    First, the existing tax system applies to all citizens equally. By its very nature this precludes calling it inequitable.

    Second, if his conscience weighs heavily on his regarding his individual tax burden vs that of his employees, he has at least two possible approaches at his immediate disposal: Voluntary payments to the treasury to increase his taxes paid, or increase the income of his employees. If he is concerned with the populace at large, work, lobby, wheedle, cajole or whatever else he can do to reduce governmental spending/budget, run for office, get elected and change things from the inside and/or get behind the Fair Tax.

    I should make it clear that I am not one of the starry eyed idealists who thinks that we should not have any taxes at all. Taxes are a necessary part of life. That said, I abhor waste and greed. In my opionion these two factors account for the greatest part of most governmental budgets.

    Finally, the name "Fair Tax" not withstanding, I loathe the cry of "fair" as it has come to be used in this society. Life is not fair. Never has been, never will be. Folks need to get over that notion. They need to spend more time working to better themselves and their individual situation and less time worrying about what other people have accomplished.

    Being a Sci-Fi fan, I often quote a bit from the series "Babylon 5" regarding fairness, "You know, I used to think it was awful that life was so unfair. Then I thought, wouldn't it be much worse if life were fair, and all the terrible things that happen to us come because we actually deserve them? So now I take great comfort in the general hostility and unfairness of the universe." - Marcus, Ranger

    We can only work towards a system and society where people are not limited by artifical barriers and where the laws are equitably applied. Beyond that it should be up to the individual to achieve as much and their individual talents and drive permits.

    I see the Fair Tax being a good first step in that direction.
  19. #59  
    Quote Originally Posted by mgriffith View Post
    We can only work towards a system and society where people are not limited by artifical barriers and where the laws are equitably applied. Beyond that it should be up to the individual to achieve as much and their individual talents and drive permits.

    I see the Fair Tax being a good first step in that direction.
    Agreed. It is amazing the extent to which our society is determined by our tax system. Our present tax system is a mess, indefensible on any criteria except that it exists, and so is our society.

    Almost every law, no matter how bad, creates a constituency that resists its reform. Our tax system must be the best example. Imagine a law so clever that it creates an affinity between lawyers, accountants, bureaucrats, and home owners. One could not accomplish that by design and intent and we did it by accident.
    Up the next election, my citizens; always the next election.
  20. #60  
    Quote Originally Posted by whmurray View Post
    .......Imagine a law so clever that it creates an affinity between lawyers, accountants, bureaucrats, and home owners. One could not accomplish that by design and intent and we did it by accident.
    Social Security is often called the "third rail" of American politics, so dangerous that one may not even discuss it, much less propose changes to it. However, I argue that the homeowner tax exemption rivals it. We have this crazy, indefensible, destructive tax system, in large part, because we cannot reform it. We can not reform it because any discussion of it makes homeowners fearful that they will lose that deduction. The higher the marginal rate, the greater the fear. The fear is exacerbated by demagogic rhetoric from those who have a vested interest in the present system.

    The effect of this exemption has been a high level of home ownership, a major contributor to our collective prosperity. Surely there is a more efficient and equitable way to achieve this result.
    Up the next election, my citizens; always the next election.
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