Let's Tax The Rich!!!

[FIREd]

It looks like I will soon be kicked off the "Rich" bandwagon. I was growing tired of people knocking me for not paying "my fair share" anyways. Now I can join the pity party.

[braumeister]

I've long been in favor of a flat 15% tax, with no exemptions, no deductions, no loopholes of any kind.

The problem is how to get there from where we are now.

[GregLee]

Quote:

Originally Posted by braumeister I've long been in favor of a flat 15% tax, with no exemptions, no deductions, no loopholes of any kind. The problem is how to get there from where we are now.

No way.

[Meadbh]

Quote:

Originally Posted by BigNick +1. The UK abolished mortgage interest deduction 20 years ago, and the housing market did not disappear because of it. And this in a country where people making over $70K/year are on a 40% marginal income tax rate.

There is no mortgage interest rate deduction on one's primary residence in Canada either. The payback is that you don't pay any capital gains tax on the sale of your home. Investment property mortgage interest payments are tax deductible. The housing market here is in good shape. Below are the Canadian federal and provincial income tax rates for 2011.

What are the income tax rates in Canada?

[nvestysly]

I really like the Zero Plan shown on page 23 of the Simpson-Bowles proposal. The marginal tax rates for individuals are 8%, 14% and 23% and the corporate tax rate is 26%. All are significant reductions compared to current tax rates.

The S-B proposal dramatically simplifies the tax code by eliminating many common incentives/tax breaks and the Zero Plan increases taxes on some items - gasoline for instance.

Some elected officials are giving consideration to versions of the S-B Zero Plan but the house bills that are circulating quickly get dilluted by adding back popular incentives such as the mortgage deduction, and other "expected" give-aways.

[Midpack]

Some interesting discussion on Fair Tax, deductions, etc., but over 300 views and 25 replies into it, I wonder where the 'first we should increase taxes on the rich folks' are? No way they could miss this thread given the title. Unless I missed it, no one (and some have stated it plainly in other recent threads) who agrees with the premise has answered the question posed - except Katsmeow, and I applaud you.

[retireme]

First of all, you are probably considered rich to most people. Second of all, if you worked your a__ off to be successful, would you want to hear "tax the rich"? Third, I don't want the government to decide what to do with my excess money! They waste too much! I'll decide which worthy programs to give my excess money to!

[photoguy]

Quote:

Originally Posted by Meadbh ] Below are the Canadian federal and provincial income tax rates for 2011. What are the income tax rates in Canada?

So that would put the top rate in Canada/Ont at 29% + 11% = 40%. That's lower than the us with CA at 35% + 10% = 45%.

I always thought canada was higher by about 5-10%. Did tax rates change in the past decade (haven't lived in canada since late 90s)?

[lets-retire]

Quote:

Originally Posted by sheehs1 Regarding the estate tax and continuation and increase of this......I don't think a lot of people in America realize that the 5 million dollar level was probably put in to protect family or small business owners and generational farms. Many had to liquidate just to pay the estate tax when it was at the $600K , 1 million and even 3.5 million dollar level. Should these businesses and farms fail due to federal tax requirements, more jobs are lost. If one looks at it from the individual level...yes it appears excessive but when one looks at all those affected and the possible ramifications it isn't. Disclosure: My family owns a small 2nd and third generation family business. We employ a seasonal high of 50 plus employees. Had estate tax levels not been where they were when the first generation passed we would have had to liquidate to pay the tax. it seems to be an effort to preserve the jobs that small businesses and generational farmers have created. Does it also preserve the wealth of these families? Certainly. But which is the lesser of two evils? One maintains the wealth of small business owners such that they can continue to contribute to society. The alternative is to destroy that mechanism.

My family (cousins/uncles/aunts) used to own a decent sized farm in New York several decades ago. As the farm passed from generation to generation the farm grew smaller and smaller. They never made enough money to be considered rich, but they made a decent living. The problem was the inheritance tax was figured on the value of the farm and the land. As with many farmers they were land rich but money poor. At one time they grew all of the produce they sold. The last time I visited the farm, much of the produce was grown by other farmers and sold in my family's market. The small plot of land they still owned was used for growing food, but they could not grow enough to support the market. The last I heard none of the next generation want to run the farm and if it is not closed it will be sold off when the current owners die.

Personally I think what needs to be increased is the fees charged to carriers when they bring cargo into the country. Currently they are charged a total of about 15k per year per ship to the US government (assuming they come in 15 times per year) to bring in as much cargo as they can. Granted this does not include the tax for the weight, but that is only $.02 or $.06 per ton of goods and even that is limited to a few times per year. I don't recall the exact amount per year, and I'm too lazy to look it up, but I think it is only collected on the first five entries to the US per year.

[Meadbh]

Quote:

Originally Posted by photoguy So that would put the top rate in Canada/Ont at 29% + 11% = 40%. That's lower than the us with CA at 35% + 10% = 45%. I always thought canada was higher by about 5-10%. Did tax rates change in the past decade (haven't lived in canada since late 90s)?

Both personal and corporate taxes in Canada have fallen in the past decade. You can see the decreases in corporate tax rates here:
Corporation tax rates
Currently there is a debate in Parliament about whether corporate taxes should fall further. The government wants to drop them and the opposition wants to spend more / pay down the deficit. If the federal budget is defeated there will be an election.

Most of my income comes from a Canadian controlled private corporation claiming the small business deduction. Corporate federal tax is 11% and the provincial tax (in Manitoba) is 0%. I pay personal tax on dividends or salary that I take from the Corporation, and since I LBYM that is under my control. Given that healthcare is paid for, I think this is quite reasonable.

[Martha]

Quote:

Originally Posted by Midpack Some interesting discussion on Fair Tax, deductions, etc., but over 300 views and 25 replies into it, I wonder where the 'first we should increase taxes on the rich folks' are? No way they could miss this thread given the title. Unless I missed it, no one (and some have stated it plainly in other recent threads) who agrees with the premise has answered the question posed - except Katsmeow, and I applaud you.

There is only so many times that I will have the flat tax discussion. I'm passing on this one.

[clifp]

Quote:

Originally Posted by Martha There is only so many times that I will have the flat tax discussion. I'm passing on this one.

Gosh Martha where is your sense of competition, I think retirement has dulled your legal fighting spirit.

[winger]

It appears the rich are doing just fine. They don't need my approval.

I'll leave that to others.

[steelyman]

Apologies if this has been asked (or answered) before.

Have there been any legitimate studies done that compare taxes actually paid vs. (true) net worth?

[veremchuka]

the vat sounds like the fair tax as both are a tax on consumption.

i prefer the flat tax. you can use a form the size of a post card, throw away 66,000+ pages of tax code and put the irs out of business in 30 seconds. i remember hearing many debates about the flat tax vs the fair tax and the flat tax always made more sense. since so many politicians are trying to turn the us into europe i'm sure a vat is coming along with high speed rail, both a terrible idea.

the estate tax is beyond cruel and should be immediately abolished. imagine having to pay 40% to 55% of your estate to the government because you died! this is nothing short of confiscation of wealth and causes many businesses to fold just to pay this tax. i am not ever going to have to worry about having enough assets to be hurt by the estate tax but i think it is far and away a dreadful thing.

the mortgage deduction is a real carrot held over the heads of the american public. it does not even come into play unless you have enough to exceed the standard deduction and is not a dollar for dollar reduction in your taxes. telling people they can't deduct mortgage interest tho i fear would crater the housing market as people seem to think this is the greatest thing since sliced bread.

[missionfinder]

Quote:

Originally Posted by veremchuka the vat sounds like the fair tax as both are a tax on consumption.

Completely different. For one thing VAT is in addition to normal income, ssn, and other payroll taxes. The Fair Tax eliminates income and all payroll taxes.

The VAT taxes every step of the process between the supplier and the consumer (ie, every time a link in the chain adds "value"). Supplier sells to manufacturer and its taxed. Manufacturer assembles a part from it, its taxed. Manufacturer sells it to an assembler who builds a product from it, its taxed. All the way down to the consumer its taxed, and there is overhead along each step as the rates varies, there are deductions of the tax you paid verses the tax you add, etc.

Fair Tax taxes only the end consumer for new goods and services only. All payroll taxes are eliminated so you bring home your entire paycheck. In order to spare the poor from the burden on taxes of necessities, (food, shelter, etc.) the cost of the basics is re-rated each year based on the inflation rate of these. The IRS's main job becomes that of a pre-bate distribution service. Each month every household in America gets a "prebate" check equal to the cost of taxes for the base necessities. In essence, the poor pay no taxes, hence the term "Fair." The Fair Tax rate is 23%. Sounds like a lot, but the average cost of compliance with the income tax code raises prices 22%. Competitive forces drop the price by 22% so the actual real price increase is 1%.... but you're getting your entire paycheck so you actually have much, much more spending power.

Its huge advantage over a flat tax is that since investment does not get taxed, and corporate taxes disappear, the US becomes a tax haven for the rest of the world. The trillions from US citizens which have fled this country come flooding back. Since foreign investors and corporations aren't taxed for money invested here, it encourages investment in the US economy. It encourages personal savings and investment, providing money to US industry for economic growth, R&D, etc. Its the only tax which does this.

Additionally, the problem with a flat tax or other simplified system is it still leaves power in the hands of politicians. Reagan greatly simplied the tax system but look what's happened since... more loopholes, thousands of clauses, exemptions, etc. Any income tax this country has tends to complicate over years due to special interests.

I used to prefer a flat tax until I really studied the Fair Tax. Its got over 20 years and millions of dollars of research put into it by economists much smarter than me. It would make our economy boom.

Fairtax.org

The problem with the Fair Tax as noted elsewhere, is its simple, but not easy to explain. People can't get past the 23% rate, and that requires explaining the prebates, the 22% cost of compliance with the current system, and the fact that all payroll taxes are eliminated.

[glippy]

Warren Buffet has argued we ought to tax the rich more than the middle class and poor.

I'm for allowing the bush tax cuts to expire for the top earners, increasing revenue by $100B/year. There ought to be no cap on SS taxes but there ought to be a means test for collecting SS, if you're income is greater than $250,000/year the government shouldn't be sending you entitlement checks.

I'm also for cutting the defense budget by about $400B. Other adjustments to SS to keep it solvent, either increasing the retirement age or decreasing benefits. Reducing farm subsidies. Abolishing the Department of Education, Drug Enforcement Agency, TSA, FBI, CIA, Department of Homeland Security. And I like ALL the cuts recommended by the Simpson Bowles fiscal commission, particularly about medicaid reform.

After all those costs are reduced, I support a strongly progressive tax. What you are required to contribute in taxes ought to be dependent upon your ability to pay. Flat taxes I can live with, so long as there is a floor, like, everyone pays 15% on all money they earn over $20,000/year. Someone who's struggling to live on $10,000/year shouldn't have to pay $1,500 in taxes.

[obgyn65]

Hello Midpack

Sorry I do not have much time to answer. I said in another tread that "I would have no problem being more taxed / more means tested ONLY IF it means the creation of more meaningful, concrete social programs for the ones in need. I would have no problem either paying 10%-20% more in income tax if it helps the creation of a true universal healthcare program."

IMO, it is neither fair nor right for people like me to be able to retire age 45 while at the same time there are 40+ million people without healthcare coverage and tens of millions being on food stamps. Social unfairness, in the long term, does not augur well for any society.

So, to answer your question, assuming someone makes $250,000 (tax rate = 33%), and is single, an increase of 10 to 20% = 36.3% or 39.6%.

Still a small price to pay - in my view only.

Have a good day

Quote:

Originally Posted by Midpack So most here are very good with numbers, just exactly what would YOU propose for marginal rates for the top income level, or as many income levels as you care to modify?

[lets-retire]

Quote:

Originally Posted by glippy Abolishing the Department of Education, Drug Enforcement Agency, TSA, FBI, CIA, Department of Homeland Security.

You do realize there are functions performed by DHS that are specifcally listed and required by the Constitution, right?

[Midpack]

Quote:

Originally Posted by Martha There is only so many times that I will have the flat tax discussion. I'm passing on this one.

I understand. Clearly I wasn't looking for a flat/fair tax discussion to begin with.

Almost 700 views now, and 2 people said they should have let the Bush tax cuts expire and 1 said increase the top two levels by 10%-20%. Therefore I take it most of this audience believes the rich are being taxed enough with the top 20% of income earners paying 68.7% of all federal income tax revenues and the other 80% of the population paying 31.3% per the CBO. Seems reasonable...