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Old 08-18-2008, 10:02 PM   #121
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Me. I don't mind being selfish. I admit it. I'm much better able to decide how to spend my time and my money than the government.
Yes, I am selfish too, and I will admit it. In fact, I strongly suspect all fellow forum members to be selfish also. I have read some time ago about one man who voluntarily wrote an extra check to the IRS as a donation. Has anyone here done that?

The fact is what we want is "enlightened selfishness", a concept first set forth by Alexis de Tocqueville, I believe. My interpretation is that selfish as we are, we do not want to live in a third world country, where the differences between the haves and the havenots are so great. We do not want to be rich in a decayed and lawless society, where the rich have to hire personal bodyguards to protect against kidnappers. I do not think any would disagree with me here.

To keep this thread in the "FIRE and money" forum, I would say how I saw both Shawn and Laurence were justified in their actions. Laurence saw that the services provided in CA justified the higher taxes, while Shawn did not. In an earlier post, Firedreamer preferred AL for its lower taxes and cost of living, and did not see that he missed any services. One has to act in his own interests, and I respect your choices. I am grateful to live in the US, a country with the most mobility in the world. Vote with your feet. It is still your right to exercise.

But, if taxes are a necessity for society to function, how should it be levied? That brings me up to my next rant.

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Confusing, and opaque--that's our present tax code.
...
- A flat(er) tax that covers virtually all income (almost no deductions) and provides a healthy standard deduction.
An emphatic YES. Our tax code is so complicated that each time I discovered or read about a "special treatment", it raised my blood pressure. I'd rather we, as a nation, spend more time finding cure for cancer, alternative energy, or just fishing, then to confer with accountants and tax attorneys to play the shell game with the IRS.

In our more pedestrian middle-class world, we spend time figuring out these little tax savings in munis, Roth conversion, etc... and pat ourselves on the back if we get ahead by a few thousand bucks. Hah! As the middle class tax payers, I think we have been fooling ourselves with the mortgage interest deductions, thinking that we got ourselves a break. Hah! How do you know if the other guys haven't got some other much juicier special tax treatments you wouldn't dream about?

I suspect a simpler flatter tax with no special treatments may bring in more tax revenues from the uber-rich than the current system.

From a Web site:

"But at the top, the tax system has already become regressive. The super-rich pay proportionately less in federal income tax than the merely rich. In 2000, the nation's 400 richest taxpayers, making an average $173 million, paid an effective tax rate more than 5 percentage points lower than those making $1.5 million to $5 million, notes economist Martin Sullivan in Tax Notes magazine."

I think that the rich do not want a flat tax system because they would pay more, the middle class are still clinging to their "placebo" mortgage deduction, and the poor probably do not care. A simple and fair system that goes nowhere, because of "unenlightened selfishness".
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Old 08-18-2008, 10:15 PM   #122
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Progressive taxation, regressive taxation, whatever ... - but to think outside the box for a moment, consider for a moment the (radical?) philosophical argument that a rich person should pay no more tax in actual dollars (not percentages) than a middle class person. (as to the poor, well you can't get blood out of a turnip!)

It's not like a rich man's vote counts for more than a poor man's & does the government not belong to the poor man just as much as the rich? (or at least it's supposed to).

If I share an apartment with roommate who makes half as much as I do, am I obliged to more of the electric bill?
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Old 08-18-2008, 10:27 PM   #123
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No one can exist in a vacuum. The rich have more possessions to be protected by a well-functioned society. Therefore, they should pay more.

In fact, I have read that some countries have a tax levied as a small percentage of wealth, not income. That makes sense to me, but I have not got the time, nor inclination to research further. I am no economist, just a guy trying to reach FIRE to have time to BS on this forum.

About the vote, I have read proposals to weight it as a function of various things... Arghh, I do not want to go there, even philosophically here. Forget it...
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Old 08-18-2008, 10:32 PM   #124
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No one can exist in a vacuum. The rich have more possessions to be protected by a well-functioned society. Therefore, they should pay more.
.....
That's an unsubstantiated and poor man's argument IMO. (not saying you personally are a "poor man" of course)

Do the possessions of the rich officially receive (or are they legally entitled to receive) any more protections than the rest of us?

Following your argument, since they pay more taxes should the police then not be officially/legally required to respond to a crime at their house with greater priority than at a poor man's house - or to double the amount of officers patrolling their neighborhoods.
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Old 08-18-2008, 10:39 PM   #125
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Well, in my simple thinking, if society breaks down and reduces the value of everything, the rich have more to lose than the poor...
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Old 08-18-2008, 10:43 PM   #126
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Few people argue that tax dollars shouldn't be used for emergency services such as 911. But how high should my taxes be to pay for these essential services?

As an analogy, how much should I pay a mutual fund company to provide essential services such as account maintenance and the purchase/selling of equities. Some companies charge a 2.5% annual fee and a 5% load (even for index funds). For the most part, companies selling these products are wasting my money. I can get a better overall product if I go with a company that has a 0.2% annual fee and no load. The government is like a mutual fund company. Unfortunately, their is no Vanguard equivalent when it comes to the government. Yes, the government provides essential services but it also wastes far more than it provides.

Four years ago, the State of California, with your tax-dollars, paid for the smog repairs for my car. I make over $180K/yr and my total net worth officially makes me a multimillionaire. Your tax dollars at work. I've owned two cars in my lifetime. I purchased one in 1982 and the other in 1985. In part, I purchased both cars using federally subsidized student loans. This was during the Reagan administration and its "war" against the educational system - students were forced onto the streets due to his evil administration. Thanks for the cars, Ron. Your tax dollars at work. Almost half of all college students in public colleges/university don't know the name of the vice president. Your tax dollars at work.

My marginal tax rate (all taxes) is almost 50%. If I get a raise, half of it goes to government. I paid about $70K in income-related taxes last year, compared to my own expenses of less than $30K. I gave more than twice what I spend on myself to the government. What incentive do I have to work hard and/or increase my productivity? In fact, the government gives me every incentive to decrease my productivity.

My plan is to early retire in less than 2 years when I'm eligible for lifetime medical benefits at 50. The cost-benefit isn't worth it. When I retire, my tax contributions will be reduced by more than a factor of 10. The government will get substantially less than it gets from me today. This is government incentives in action.

I don't buy your statement that you and your DW are trying to pay back the government for everything that the government has given to you. While yours is a feel good statement, your intentions suggest otherwise. A benevolent person wouldn't be a major contributor to an early retirement message forum. An able-bodied person who truly cares about all those essential tax-funded services provided by the government would insist on working until they're 67 and beyond. (And I'll wait until action before believing any claim about donating one's life to charitable work after retirement.)

Early retirement *is* selfish. Early retirement means less revenue for the government and is no different than those in the higher tax brackets wanting their taxes to be reduced (or wanting lower marginal tax rates). Perhaps the government should pass a law forbidding early retirement, or at least impute the incomes of those that do. The argument will be that if you early retire, you're not paying "your fair share." In fact, maybe the government should enforce a progressive retirement system. Those who squander their money or are otherwise financially dependent should be allowed to retire in their 50's. Those who are financially independent through hard work and life choices must work into their late 70's.

Me. I don't mind being selfish. I admit it. I'm much better able to decide how to spend my time and my money than the government.
Best thing Ive read. Someone admitting they are selfish. I am too!
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Old 08-18-2008, 10:52 PM   #127
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Well, in my simple thinking, if society breaks down and reduces the value of everything, the rich have more to lose than the poor...
If society breaks down the poor will lose their social safety net.

Then it may come down to who has more guns, better tactics, & is a better shot! (or can hire same)

If you lose everything it doesn't matter how much or little you had before.
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Old 08-18-2008, 11:38 PM   #128
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I will get back to my earlier post about "enlightened selfishness". I am no historian, but suspect that lack of the above attribute by the upperclass had a part in the French Revolution and the Russian Revolution. Some lost more than their possession, meaning their lives too.
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Old 08-19-2008, 12:06 AM   #129
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I will get back to my earlier post about "enlightened selfishness". I am no historian, but suspect that lack of the above attribute by the upperclass had a part in the French Revolution and the Russian Revolution. Some lost more than their possession, meaning their lives too.
Let them eat cake.

I would say let them eat pie. However pie is for the elite.
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Old 08-19-2008, 12:41 AM   #130
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If I share an apartment with roommate who makes half as much as I do, am I obliged to more of the electric bill?
I don't know. Does she sleep with you?

Ha
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Old 08-19-2008, 12:46 AM   #131
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Following your argument, since they pay more taxes should the police then not be officially/legally required to respond to a crime at their house with greater priority than at a poor man's house - or to double the amount of officers patrolling their neighborhoods.
Have you ever lived in Beverly Hills? This is in fact the way it works. I have a black friend who was dating a white woman in Beverly Hills. He rarely managed to get her out of town and into LA without being pulled over.

Ha
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Old 08-19-2008, 01:26 AM   #132
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Let them eat cake.
I missed a recent miniseries on the History channel on the French Revolution. Someone who watched it told me about how the French peasant women with pitch forks were able to overcome the elite palatial guards.

Much atrocity followed in following events, so that the guillotine was invented as a humane way of execution, instead of torturing and butchering the elite in the streets. If you are curious and read more about it, you would agree that facing the guillotine would be preferable to the fate at the hands of the street mobs.
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Old 08-19-2008, 07:10 AM   #133
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Have you ever lived in Beverly Hills? This is in fact the way it works. I have a black friend who was dating a white woman in Beverly Hills. He rarely managed to get her out of town and into LA without being pulled over.

Ha
You can find anecdotal instances that this is "in fact" the way things work out in selected locales - but that argument's a non-starter IMO also - because it's not a matter of intentional and official public policy/law/regulation as is progressive taxation.

It's more an unintended inequity of our system. Do two wrongs make a right?

(why inject racial profiling into the argument anyway?)
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Old 08-19-2008, 07:14 AM   #134
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I will get back to my earlier post about "enlightened selfishness". I am no historian, but suspect that lack of the above attribute by the upperclass had a part in the French Revolution and the Russian Revolution. Some lost more than their possession, meaning their lives too.
I have no data, but I rather suspect more of the poor & middle class lost their lives in the French & Russian revolutions than did members of the "upperclass"
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Old 08-19-2008, 07:17 AM   #135
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If I share an apartment with roommate who makes half as much as I do, am I obliged to more of the electric bill?
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I don't know. Does she sleep with you?

Ha
Am I obliged to pay more if she does and is she legally required to do so in order to receive the benefit?

Hmmm, how should we relate that analogy to the rich, middle class, & poor in society?
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Old 08-19-2008, 08:33 AM   #136
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I think Texarkandy should at least be paying tax on the imputed income (the market value of services rendered).

--
Large businesses of course consume more public resources than an individual or small business.. beyond mere defense: roads for trucking goods, courts to handle their patents and enforce their contracts, oversight of the financial markets that float their shares.. special deals on mining, grazing, timber and water rights. They get special infrastructure like off-ramps and sports stadiums. They have expropriational powers (Kelo vs. City of New London).

Texarkandy, the point is that police are more 'responsive' to issues real or percieved in wealthy areas. Ambulances and cops are on the scene a lot quicker in Central Park West than in the Bronx.
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Old 08-19-2008, 09:53 AM   #137
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Texarkandy, the point is that police are more 'responsive' to issues real or percieved in wealthy areas. Ambulances and cops are on the scene a lot quicker in Central Park West than in the Bronx.
Many times that is due to a lower crime rate in the more affluent areas. Lower crime means the officers are not tied up on other things so they are free to respond. A city I used to work had a very low crime rate. This gave us the opportunity to go to all calls quickly. If we took longer than 5 minutes to respond any where in the city it was because we were busy. We did have rich and poor areas in our city, but response times were in fact quicker in the poorer areas. The reason for this was the way our city was laid out each officer had richer and poorer areas to patrol. The crime patterns in our city showed more crimes of opportunity in the poorer areas while we had more domestics in the richer areas. Due to this we spent more time patrolling in the poorer areas and our response times were much faster there than any place else in the city.

I can't talk about ambulances, because that is not my area of knowledge.
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Old 08-19-2008, 09:56 AM   #138
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It seems to me that the same pros and cons show up every time someone says “progressive taxes”. Here’s my list of “pros”, with numbers for easy reference.
Note that the items are not necessarily independent or consistent, and the list probably isn't complete – these are just arguments that I’ve heard that seem plausible.
I’ll let someone else take the “cons”.

Practical arguments
1) Can’t get blood from a turnip
2) Got to go where the money is
3) Some gov’t spending explicitly supports the poor. It’s silly to tax the poor or lower middle for this spending

Incentive arguments
4) High earners make more per hour, consequently higher tax rates on them leave more level incentive to work
5) It’s better to tax dumb luck than hard work (this may be identical to (4), or may be a “fairness” argument)

Utility arguments
6) High income/high wealth have more to protect, hence should/would pay more for protective services
7) Same as (6), but expanded to entire social structure
8.) Low income get more utility from marginal income, hence we increase total utility by shifting taxes to higher income

Social structure arguments
9 ) Prefer more uniform distribution of income/wealth – don’t like societies with extremes of rich and poor
10) Concentration of wealth gives excessive power to a few (this also supports wealth taxes)

Fairness argument
11) Our system generates large (unfair) differences in opportunity, progressive taxes somewhat offset this
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Old 08-19-2008, 10:02 AM   #139
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I think Texarkandy should at least be paying tax on the imputed income (the market value of services rendered).
Texarkandy was just tossing this "head tax" (constant dollar amount per person) out for a lively discussion. Note his word "radical". I hope he is not serious.

I mentioned earlier that I read that some countries have taxes on assets, not just income. By assets, I think they mean stock equities, because real-estate taxes are already universally proportional to the valuation.

The one tax based on valuation that I do not understand is vehicle license tax. An expensive car does not tear up the road more than a cheap car. Why shouldn't it be based on weight?

Finally, it is true that more peasants died during any Revolution than the elite; there were just more of them. I'd rather it did not come to a head like that.
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Old 08-19-2008, 10:17 AM   #140
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NWB, it was a joking reference to the roommate.

good list, Independent. I'm sure some people are ready to come up with their own list of "cons".. BUT we should all take into account the parallel systems of existing REgressive taxation (see one of my prior posts here with a link to a discussion of this symbiosis). Maybe the 'fairest' system will always be a blend similar to what we have now, and the issue needs to be focused on attacking unnecessary spending rather than squabbling over the bill that's already way past due. Seems like neither citizens nor politicians of either persuasion have any serious appetite for that, though. For example, Democrats might like to see social spending.. then Republicans just change the frame by funneling money to "faith-based" groups or establishing un-funded Federal mandates.. neither truly wants to see the spending total cut back (but one group is slightly more straightforward about it). I guess it is just human.. who wants to see their project cancelled, their job eliminated, their power diminished.. even in private enterprise?
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