Let's Tax The Rich!!!

[Midpack]

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Originally Posted by GregLee That is not a reasonable conclusion.

What would you conclude so far?

[Midpack]

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Originally Posted by SunsetSail The problem with the premise of the question (not Midpack’s question, but the issue in general) is that in the context of an income tax ‘rich’ means high income. I can have a portfolio of $100 million in CA muni bonds with no other income and pay virtually nothing in tax so I wouldn’t be ‘rich’ according to the income tax system. My point is that if you have a high income you will be considered rich for income tax purposes. This definition includes the individual that grew up dirt poor but went on to make a large income through hard work and adversity by putting themselves through an undergraduate university and graduate school only to emerge with $250,000 in student loans. However, it doesn’t include the holder of the $100 million muni bond portfolio.

If you have a portfolio of $100M in muni bonds, I suspect you'd have had high income along the way and would have been taxed then. I think the original question stands...

[scrabbler1]

Muni bond holders are paying a "tax" by accepting a lower yield (than corporate bonds) in return for buying the bonds (i.e. lending money to the government) and saving the government interest costs.

[Texas Proud]

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Originally Posted by sheehs1 Lightningdawg...Nurses with many years of experience and in the right speciality can make over $125,000K easily. Nursing Practioners absolutely can make over that. Then you have the Physicians Assistants that make extremely good money. Add in some investment income ...etc. and with 2 of these in one family you are over the $250,000 without a problem. I'm not talking about an LPN right out of school...with no specialty.

I will also say.... not here.... my sister has been a nurse for over 30 years... and is not even close to the pay you have... if she could make that kind of money I am sure she would be going that way....

[SunsetSail]

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Originally Posted by scrabbler1 Muni bond holders are paying a "tax" by accepting a lower yield (than corporate bonds) in return for buying the bonds (i.e. lending money to the government) and saving the government interest costs.

You missed the point. Call it $100 million in equities that don't pay dividends, or some other tax deferred vehicle. The point is that income doesn't necessarily mean wealth.

[Midpack]

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Originally Posted by SunsetSail You missed the point. Call it $100 million in equities that don't pay dividends, or some other tax deferred vehicle. The point is that income doesn't necessarily mean wealth.

Again, where did the $100M in whatever asset come from. Presumably preceded by income, lots of it. Wealth necessarily means income in most cases...

[SunsetSail]

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Originally Posted by Midpack [/FONT][/COLOR]If you have a portfolio of $100M in muni bonds, I suspect you'd have had high income along the way and would have been taxed then. I think the original question stands...

As I mentioned previously my point was that income doesn't equal wealth so the fairness argument loses much meaning to me in this context the large portfolio is just an extreme example.
But I'll bite on the rate part of your question:
0% rates accross the board
Implement a national consumption tax with exemptions for unprocessed food items and clothing items <$25 per article. I would put the rate at about 17.5%, but it would realistically need to be set as revenue neutral for what the federal income tax brings in now.

[SunsetSail]

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Originally Posted by Midpack Again, where did the $100M in whatever asset come from. Presumably preceded by income, lots of it. Wealth necessarily means income in most cases...

I'll restate this another way: high income doesn't necessarily indicate someone is most able to shoulder a higher burden of taxes than wealth. LLarge student loans, supporting a large family six or seven kids, supporting the medical costs of a special needs child, etc.

I am only disagreeing with the premise that income means most able to pay. Regardless of how one ends up on the issue of whether higher taxes should be imposed on the rich, it seems that people operate on the assumption that income always is a correct indicator that they are able to shoulder more of the tax burden.

[sheehs1]

"As per the family business/family farm thing ? Isn't there a $3-5M no-tax exclusion ? We can debate the exclusion amount, but how much is enough $10M, $100M ?"

The 5 million was just implemented. In 2001 it was $600,000. In 2002 it was 1 million, in 2006 it was 3 million...so on and so forth. A huge number of family businesses were affect during and before those years and had to be liquidated.
Who did that help? The government mostly. Employees lost their jobs and stakeholders were affected.
TexasProud: "BUT, in your example it would seem that the business has grown in value over that long amount of time... and the father did not pay any cap gains on that growth... why should the business be given to the children and no cap gain paid And the kids would not have to pay it since there is a step up in basis..."

Part of the answer to that is this. The kids don't necessarily have it. The first generations estates may not have it either. Consider a situation where most of their wealth is tied up in the business. So....the business would have to be liquidated to pay the tax.
Tell me ...how does one pay the government? They want cash.

While the 1st generation may not have paid cap gains....they paid income taxes all along the way. In the case of a C corp...if dividends are declared they pay double tax. The corporation pays a tax on the profit and the people receiving the dividend pay a tax. The government gets their share all along the way.
If cap gains for a business could be calculated the way it is ...say for a house...which is when you invest back....it raises your basis...then I daresay there would be no cap gains in a small family business.

[youbet]

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Originally Posted by Midpack Wealth necessarily means income in most cases...

Not really, especially for folks on this board. There seem to be a number of folks here who through LBYM living and solid investing habits accumulated substantial FIRE portfolios on very average incomes. We have relatives, two teachers - a DINK couple, who are multi-millionaires and in retirement live a swanky life reflective of that portfolio level. Yet they never earned a "wealthy person's" income.

OTOH, the year I retired from MegaCorp I received almost 3 yrs pay in one year due to severance, bonus, exercising options, etc. I was taxed like a wealthy person that year, yet my net worth is a fraction of our relatives mentioned above.

Wealth and income can certainly be related but are indeed two different things.

If we're going to climb out from under the mountain of debt we're in, the gov't is certainly going to have to invent new ways to tax wealth as well as income. I think we all know it's coming and I'm really curious to know what creative mechanism they come up with. Will they shoot me in the knee cap? Kick me in the balls? Hold my hand in a flame? Pull out my finger nails with rusty pliers? You know they're going to do something. But what will it be? Pulling the plow like a Georgia mule for 40 years, leading a responsible, LBYM life and trying to be a good citizen has to be punished in some way!

[Mulligan]

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Originally Posted by haha Only 50% of tax return filers pay income tax, and the lowest strata may not even file. So how could you cut taxes for these people who pay no tax anyway? In fact, many of them get payments. We have a situation where 50% of the population is all for raising taxes, since they will never pay them. And the another large % is all for raising taxes, as they work for governments and will get more in salary and benefits than they will ever pay in increased taxes. If you earn good money, and are not a government worker, best to emigrate because the die is cast for us here in the land of the free. Ha

HaHa, your second paragraph reminded me of a famous qoute from the 18th century. I hope it isnt true!
"A democracy cannot exist as a permanent form of government. It can only exist until the
voters discover that they can vote themselves largesse from the public treasury. From that
moment on, the majority always votes for the candidates promising the most benefits from
the public treasury with the result that a democracy always collapses over loose fiscal policy......." Alexander Tytler from "The Decline and Fall of the Athenian Republic" 1776. Disclosure... I did not read the book!

[sheehs1]

Nursing Practioner Salaries
San Diego, California (CA)
Nurse Practitioner (NP)
Salary Range:
$66,000 - $103,447
Baltimore, Maryland (MD)
Nurse Practitioner (NP)
Salary Range:
$78,438 - $96,145

Boston, Massachusetts (MA)
Nurse Practitioner (NP)
Salary Range:
$73,775 - $100,520

Physicians Assistant Salaries

Popular Employers
Salary Range
U.S. Army $48,834 - $85,794
Kaiser Permanente $85,000 - $126,403
U.S. Air Force (USAF) $84,725 - $108,387
University of Florida (UF) $71,500 - $84,545
New York Presbyterian Hospital $92,494 - $130,365

[MasterBlaster]

Sheesh1:

Was there a point you wanted to make by posting those salary ranges ?

Or am I just missing something here ?

[Mulligan]

Quote:

Originally Posted by Texas Proud I will also say.... not here.... my sister has been a nurse for over 30 years... and is not even close to the pay you have... if she could make that kind of money I am sure she would be going that way....

Location may definitely come into play on this. I have a friend who as a nurse knocked down over $110,000 last year. She was also willing, however, to work weekends, the overnight shift, and overtime to get it, though.

[clifp]

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Originally Posted by sheehs1 "As per the family business/family farm thing ? Isn't there a $3-5M no-tax exclusion ? We can debate the exclusion amount, but how much is enough $10M, $100M ?" ... The 5 million was just implemented. In 2001 it was $600,000. In 2002 it was 1 million, in 2006 it was 3 million...so on and so forth. A huge number of family businesses were affect during and before those years and had to be liquidated. .

A huge number?? Link please. During that time family farms were granted a double exemption and since husband and wife each had an exclusion, you needed to have a pretty large farm to pay any capital gains. Furthermore farms and I believe small business were granted something like 5+ years to pay the estate taxes.

The bottom line is that in numerous studies showed, that over a 10 year period only a couple of dozen farms (several of which were celebrity ranches) were sold due to estate taxes. The number of family business that were sold because of estate taxes was larger but still around a hundred over ten years. It seems crazy to make public policy costing tens of billions based on preserving a handful of family businesses.

I am cautiously optimistic that I will leave an estate to my nephew and niece (along with charities) that will be subject to the estate tax. Like everybody I hate paying taxes and do I damn fine job of avoiding them (legally). However, of all the taxes I have paid or will pay the estate taxes is the one that bothers me the least.

#1 I'll be dead so I won't miss the money
#2 More than likely my estate will contain shares of Intel that I purchased at $<1, I haven't paid on dime of taxes on those shares and I don't think is fair that my heirs should inherit them without somebody paying taxes.
#3 My heirs don't have the money now, so they won't miss it. If my nephew gets $2 million with a 35% tax or $3 million without it it is still a pretty nice windfall for him.

In the abstract on I don't like the estate tax, but compared to imposing a VAT, raising the FICA taxes, raising capital gains tax, or corporate taxes I like it plenty. If you want to kill the estate tax, then you need to propose an offsetting tax to make up for the lost revenue.

[LightningDawg]

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Originally Posted by sheehs1 Lightningdawg...Nurses with many years of experience and in the right speciality can make over $125,000K easily. Nursing Practioners absolutely can make over that. Then you have the Physicians Assistants that make extremely good money. Add in some investment income ...etc. and with 2 of these in one family you are over the $250,000 without a problem. I'm not talking about an LPN right out of school...with no specialty.

Advanced Nurse practitioners (nurse practitioner, nurse anesthetist) can certainly make more than 100k/year. PA is not relevant as the couple being discussed included two nurses. RN's (ie "regular" nurses) in our area do NOT come close to making over 125k, no matter how many years experience or specialty.

[LightningDawg]

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Originally Posted by sheehs1 Nursing Practioner Salaries San Diego, California (CA) Nurse Practitioner (NP) Salary Range: $66,000 - $103,447 Baltimore, Maryland (MD) Nurse Practitioner (NP) Salary Range: $78,438 - $96,145 Boston, Massachusetts (MA) Nurse Practitioner (NP) Salary Range: $73,775 - $100,520 Physicians Assistant Salaries Popular Employers Salary Range U.S. Army $48,834 - $85,794 Kaiser Permanente $85,000 - $126,403 U.S. Air Force (USAF) $84,725 - $108,387 University of Florida (UF) $71,500 - $84,545 New York Presbyterian Hospital $92,494 - $130,365

Not relevant to this discussion as the couple being discussed consisted of two nurses. Not nurse practitioner and certainly not a PA.

[lets-retire]

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Originally Posted by kombat But the DHS didn't even exist until after 9/11? So who was performing those functions prior to the genesis of the DHS? Why can't those constitutionally-mandated functions just revert back to whoever was doign them before DHS was created?

Those same agencies are still doing them. Instead of falling under several departments they were consolidated under DHS. This allows for better information sharing, and a more cohesive organization. The consolidation also allowed for cost savings due to the elimination of similar jobs. For example, before 9/11 if you came to the US you saw two people, a customs inspector and an immigration officer. One worked for justice the other treasury. Both were GS-9. Now you see one officer who does both customs and immigration. Now instead of two GS-9's you will see one GS-12. The pay went up as did the responsibility, but the total number of employees went down. The end result was a cost savings and since one organization is doing what two were doing the information sharing is 1000x better.

The only new organization I can think of in DHS is elements of TSA. The rest of them were simply relocated from other departments.

[youbet]

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Originally Posted by clifp If you want to kill the estate tax, then you need to propose an offsetting tax to make up for the lost revenue.

Don't have time to look it up now but as I recall revenue from estate taxes is small. Estate taxes aren't revenue generators so much as "get even" taxes where the non-payers feel better seeing the "rich" dole out chunks of their residual wealth at death.

I don't think it would take much of an alternative tax to replace estate taxes in terms of revenue. Giving the public that pleasant feeling of revenge without the estate tax might be more challenging. Perhaps the elderly "rich" could be forced to watch their grandchildren being tortured?

The real issue would be replacing the revenue lost to the estate planning industry. Tens of thousands out of work....... Desks with no paper to shuffle...... It would be a nightmare!

[youbet]

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Originally Posted by clifp If my nephew gets $2 million with a 35% tax or $3 million without it it is still a pretty nice windfall for him.

Just curious, since you seem to be in favor of the estate tax, why did you choose such a gentle tax level? I would have thought you would have gone for something closer to 100%. You die and will $3 mil to your fortunate nephew. After taxes, the gov't gets the $3 mil and distributes it to the less fortunate through the usual outlets. Your nephew gets a certificate of appreciation. Everyone's happy!