Let's Tax The Rich!!!

[kombat]

So they pay more to be in a highly-rated school district and thus, not only get a bigger mortgage but higher property taxes. Then they may send kinds to private schools on top of that.

Right. But that's their choice.

The jurisdiction has provided perfectly good public schools, which the resident is already paying for via their property taxes, but the parent wishes to send their child to a private school of their own choosing.

So the government says, "Oh, OK, if you're not going to be using the schools we've provided, then you can deduct the money you're spending in private tuition and get some of it refunded. No reason to charge you for schools you're not using."

But that same "perk" is not extended to child-free couples, even though the same logic applies (that is, property taxes paying for schools the couple has no intention of using). Just seems really unfair to me. Maybe I'm crazy.

 

[Independent]

Re: Public vs. Private Schools

Here's what gets my goat. In my jurisdiction (Ontario, Canada), parents who opt to send their kids to private schooling get to deduct the tuition from their taxes. The reasoning being that since they're not burdening the public school system with their children, they get back a portion of their tax money spent to educate their child, so they can spend it in the private system instead.

But child-free taxpayers are not afforded a way to recoup the same portion of their taxes that are collected to educate their (non-existent) children in the public system.

Why the double-standard? Private-school parents are refunded their public school tax dollars because they're not using the public schools. But neither are child-free couples, yet they don't get any of their money back. Hypocrisy, or fair?

It depends on whether I consider "having children and educating them" an activity with a positive externality. If I think that people who do those two things are creating the productive citizens who will pay taxes and later will provide all the economic goods when my generation (both parents and childless) retires, then I probably conclude it's okay for the childless to pay taxes for educating other people's children.

If I believe that the childless would do just fine even if nobody has children, or they have children but don't educate them, then I am likely to conclude that it's unfair for the childless to pay school taxes.

Even if I take the first position, there is still a question of how much of the total cost should be borne by parents and how much to others. i.e. even if there is a positive externality, there is clearly also a private benefit, so it seems there should be some unequal sharing of costs. (But note that "cost" includes all the costs of raising children, not just education.)

 

[Texas Proud]

I'm not surprised that a lot of people hold appreciated assets to death - that's the rational response to an irrational system.

But I think we should change the system.

I agree... taxing cap gains like labor is irrational... it does not get capital to the places of best use... most other countries I have read about do not tax cap gain at all.... why do we

Maybe I am remembering wrong on your thoughts... but I remember you were advocating cap gain tax to be the same as ordinary income...

 

[Texas Proud]

Well politicians, even those who advocate cutting taxes, use property and local taxes as a way to offset whatever cuts to state income taxes they push through.

We've had Republican governors here in CA do that as well as push through increases in various fees on the sly.

So of course they're not going to give back your property taxes. But people buy real estate based on the school district, which at least out here has a big effect on prices. So they pay more to be in a highly-rated school district and thus, not only get a bigger mortgage but higher property taxes. Then they may send kinds to private schools on top of that.

But when they sell the property, it's going to fetch more because of the school district.

Absolutly.... When I was looking at houses I saw a few 'great' deals in a neighborhood just south of where I was looking... we are talking about a 10 to 15% lower price... then my sister (the retired school teacher) pointed out that they were in a worse school district... so as long as I was single it was not an issue... but now that I have kids... not worth the 'savings'....

It is funny... she said that the one rich neighborhood had tried to get moved from the 'bad' district to the 'good' district... but failed to get it done even though there was a good number wanting to do it....

 

[haha]

But when they sell the property, it's going to fetch more because of the school district.

When my brother died, he left his house in pretty bad shape, as he had been ill for several years. But it sold quickly, even after the bust, because the school district is likely best in the state. He even was willing to buy there even though he had no children, because he felt it would get him a neighborhood of higher social quality. He was a teacher, so very familiar with the differences from district to district. What parents are willing to give up for their kids is often reflected in how well behaved their children are, and lots of suburban crime is lousy kids roaming around instead of being home studying violin like they shoud be.

Ha

 

[kombat]

Even if I take the first position, there is still a question of how much of the total cost should be borne by parents and how much to others.

I guess what bugs me about is that the parents putting their kids through private school get their tax money back, even though it's a choice. If they want to send their kids to private school, then that's fine, let them pay for it. But why should they be refunded their contribution to the public system, when I'm not? If they want to pay extra, when there's a paid-for option available, that's fine. It's the refund that gets me.

The big problem I have with this whole "greater good of society" argument when it comes to having kids, is the idea that as a child-free individual, I'm better off because other people are having kids, so I should be made to pay more for it. Morever, since I don't have kids and we're DINKs, we have all this extra money, so we shouldn't complain if they take a bigger chunk from us.

If I wanted my money to be spent raising kids, I would have had my own!

 

[haha]

would have had my own!

Well, unless you want your dentist and doctors and plumbers to be as old and cranky as you when you are 85, better think this through a bit more carefully.

Ha

 

[snodog]

Taxes should never be raised for anyone under any circumstances and spending should be permanently increased. Run up the debt and claim bankruptcy and all our troubles go away. We could call it the "have a blast while you last budget plan".

 

[kombat]

Well, unless you want your dentist and doctors and plumbers to be as old and cranky as you when you are 85, better think this through a bit more carefully.

Ha

I understand your point. But the last time I checked, neither of our countries (I'm in Canada, I'm assuming you're in the US) had a problem with shrinking population. We're both still growing quite comfortably. Yes, a bigger chunk of it is immigration nowadays, but nevertheless, we're not hurting for a young labour base.

If the population were shrinking, then I'd agree that a case could be made that those contributing to the problem (choosing to remain child-free) should chip in a little more. But it's not.

So the argument that child-free couples should pay more because those having kids are making some sort of sacrifice for the good of society doesn't hold any water. People are having kids anyway - there's no need to incentivize it with tax regulations that result in child-free couples shouldering more of the tax burden of society (by way of all the child-related deductions available to parents).

 

[Independent]

I agree... taxing cap gains like labor is irrational... it does not get capital to the places of best use... most other countries I have read about do not tax cap gain at all.... why do we

Maybe I am remembering wrong on your thoughts... but I remember you were advocating cap gain tax to be the same as ordinary income...

First, IMO the step-up at death is inefficient if we have any tax on capital gains. It's better to reduce the cap gain tax rates for the living (assuming we want to be revenue neutral) but apply the same rate at death (or carry the original basis forward to the heirs) so people aren't incented to hold onto inefficient positions just to avoid the tax.

But, I also said that I would tax cap gains at the same rate as ordinary income. No matter what we tax, we create a disincentive for that activity. If we tax labor, we're creating a disincentive to work. If we tax capital, we're creating a disincentive to save/invest. I don't see any evidence that the future market generated pre-tax benefits of these two activities are so "wrong" that the gov't should get in and tax them differently to "correct" the market error. The advantages of simplifying and rationalizing taxes far outweigh any supposed market failure here.

 

[Independent]

I understand your point. But the last time I checked, neither of our countries (I'm in Canada, I'm assuming you're in the US) had a problem with shrinking population. We're both still growing quite comfortably. Yes, a bigger chunk of it is immigration nowadays, but nevertheless, we're not hurting for a young labour base.

If the population were shrinking, then I'd agree that a case could be made that those contributing to the problem (choosing to remain child-free) should chip in a little more. But it's not.

So the argument that child-free couples should pay more because those having kids are making some sort of sacrifice for the good of society doesn't hold any water. People are having kids anyway - there's no need to incentivize it with tax regulations that result in child-free couples shouldering more of the tax burden of society (by way of all the child-related deductions available to parents).

This is a good point. You're not claiming that you don't get a benefit from other people having kids and educating them, just that they will do this anyway without any help from you. Some people might see a moral issue here, but I don't want to go there.

That's fine as long as the other parents are middle class and can "afford" to educate their kids. But some parents are poor. We either tell poor people they can't have kids, or let them fend for themselves, or step in and try to help those kids become productive citizens.

I've thought that we could significantly reduce the size of gov't if we told middle and upper income parents they get no help from the gov't with education, but had a program of graded vouchers for poor people. I'm surprised that the libertarians I meet never suggest that.

 

[MasterBlaster]

This isn't so Hard to Understand

This isn't so Hard to Understand...

You Breed em'

You Feed em'

 

[Westernskies]

This may come as a complete surprise to many here on the board, but I don't feel any major anxiety about paying taxes for public schools, even thought we didn't have any kids. The last generation built schools and educated teachers for me, I feel the responsibility to do the same for the next generation. I do wish we had better accountabilty for results vs dollars spent, but that's a whole 'nother subject.

Other feel-good social engineering programs, not so much...

 

[Westernskies]

340 responses so far, the discussion has been spirited, yet has remained mostly on-topic and amazingly civil.
Great thread, Midpack!

 

[Midpack]

340 responses so far, the discussion has been spirited, yet has remained mostly on-topic and amazingly civil.
Great thread, Midpack!

My most successful in terms of quantity at least, though there have been a lot of tangent discussions, not unusual here...

 

[Alan]

The thread has a good run but we think it is time for closure.

YouTube - Porky Pig Cartoon Ending "That's All Folks!"