"Tax the Super Rich Now or Face a Revolution"

[MasterBlaster]

The taxing rate should be fair and consistent at what ever rate it is. it shouldn't be determined by GE having a better battery of tax lawyers. I would suggest most people believe they are breaking the spirit of the law. Not that I'm a big tax increase guy, but wasn't the whole purpose of the Bush tax cuts having a 10 year sunset provision to help make sure they revert back to prior rates if needed?

GE got a bad rap here.

GE made a lot of money but it was all overseas. They lost gobs of money money in the US mainly due to their mortgage lending operation.

So please tell me why they should pay anything at all to the US ?

Funny how you don't hear that vital little tidbit when the soundbites come out.

 

[FinanceDude]

Not that I'm a big tax increase guy, but wasn't the whole purpose of the Bush tax cuts having a 10 year sunset provision to help make sure they revert back to prior rates if needed?

Actually, it was the only way to get Congress to go along with it. In recent history, the Republican majority House tried to make the tax cuts permanent, but the Senate agreed to 2 years only.

 

[Mulligan]

GE got a bad rap here.

GE made a lot of money but it was all overseas. They lost gobs of money money in the US mainly due to their mortgage lending operation.

So please tell me why they should pay anything at all to the US ?

Funny how you don't hear that vital little tidbit when the soundbites come out.

Just me personally, that is why I said at whatever rate it should be because GE isn't the only one not bringing their money back home because of the high corporate tax rate. If rate wasn't as high, more might be brought back, maybe not. Concerning profits,I remember in a graduate accounting class I took, the professor gave us the finances and spreadsheet of 2 companies. One made a million dollars, the other lost a million, and of course he asked which one do we want to own. We like sheep all said the one that actually made a million. He then went on to show it was the exact same company just using 2 different, but both legally correct, accounting practices.

 

[sheehs1]

Everyone has more than valid points. I saw someone on CNBC...that said..."the problem is regardless of what tax law Congress passes, the corporate tax gurus get around it. He said "you can't make a law they won't find a way around."

I suppose part of my point is that instead of carte blanche...increasing tax rates....we should tweak what we have to get rid of the major loop holes. Hamlet...I agree re-characterizing bonuses is ridiculous. It is THIS type of detail that needs to be changed. I also agree the corporate tax rate needs to be reduced so our companies will stay here and move back. FinanceDude...I saw the 60 minutes segment on CSCO too...with so many companies denouncing their US citizenship and moving to Ireland and Zug and Geneva.. Switzerland.

I think my problem with increasing taxes....is that much of the rhetoric..seems to be on how it will affect the working citizen....and not so much about the ones that sham the system and the larger fish...like the investment Wall Street people.

Or put another way....if Congress actually does change the tax laws....trying to snag...the ones that are shaming the system.....everyone gets caught up in it...and only those with the tax lawyers and accountants will manueuver their way out of it. The rest have to pay up. I don't think it is right for a couple making say 100K or $250K to have to pay the price...if those making the millions can continue to find a way around it. I'm afraid that is what will happen if any change is simply carte blanche. I'd rather the tax code be specific....

On a side note: The current code is very complex...and I just got caught short...and am teed off about it. I paid my daughters tuition for spring of 2010. It was due by Jan 2nd 2010, the bill came in November 2009...and being the avid bill payer that I am..I paid it Dec 27th, 2009 (never late Nellie) . Because I was not specifically thinking ...we have lost the education credit for 2010..since I paid the bill 3 days early. I'm still trying to find a way to get the credit...even calling the school asking them if they could repost it. (of course they said no). My point is...we all have to think about everything we do. Sorry...just rambling about it because I am teed off. It shouldn't be so darn difficult.

 

[dizzy]

I think its disingenuous to portray taxes as "wealth transfer". Taxes exist as a means to fund the government. The government exists to keep our society safe, free, and lawful, and to provide a safety net for it citizens for events beyond their control. (hurricanes, terrorist attacks, financial crises, economic dislocation). (Although at times this safety net seems to be applied more to our corporate citizens, than individual citizens.). Those citizens who say "I've never taken a dime from the government" are wrong. Arguably, every citizen benefits every day from the physical, legal, and economic infrastructure maintained by our government.

You can argue all you want about whether the government does a particularly good job at providing this societal framework at a reasonable cost, but the essentialness of the role of government to provide a stable society should not be questioned IMHO.

I think the most dangerous threat to a stable society is when the citizens believe that 1) the government cannot be trusted and/or is ineffective (these days, this sentiment seems pretty mainstream, universally shared by the left and right), and 2) the government is only effective ( or perhaps intentionally ineffective) when dealing with the wealthiest members of society. This perception is growing. There are definitely strains of it both in the tea party rhetoric, as well as the left's criticism of the current administration.

On the left, here is an interesting article by Stiglitz in Vanity Fair:

Of the 1%, by the 1%, for the 1%


On the right we have these sentiments in the New American:

Ron Paul: Obama Is Another Corporatist, Not a Socialist

 

[Texas Proud]

On a side note: The current code is very complex...and I just got caught short...and am teed off about it. I paid my daughters tuition for spring of 2010. It was due by Jan 2nd 2010, the bill came in November 2009...and being the avid bill payer that I am..I paid it Dec 27th, 2009 (never late Nellie) . Because I was not specifically thinking ...we have lost the education credit for 2010..since I paid the bill 3 days early. I'm still trying to find a way to get the credit...even calling the school asking them if they could repost it. (of course they said no). My point is...we all have to think about everything we do. Sorry...just rambling about it because I am teed off. It shouldn't be so darn difficult.

Just a note.... yes, the laws are complex... but they are specific... we bought our house a few months prior to them having the purchase a used house credit (there was the new house credit at the time, but who knew they were going to do it for any house)... Sure, I lost a lot of money on that... but I did not qualify... I win some and I lose some (I did get the clunker credit)

 

[samclem]

Because I was not specifically thinking ...we have lost the education credit for 2010..since I paid the bill 3 days early.

I'm in a similar situation. And this is a huge part of the problem--a complex tax code with targeted credits, deductions, phaseouts, penalties, etc (e.g. for tuition, at least two special credit methods plus the deduction--each targeted to a particular type of education, various caps, etc). It takes a tremendous amount of effort to look at the various options and make a good choice based on all the interdependencies (e.g. these education credits/deductions impacted how much I needed to put in my Solo 401K, which further impacted the tax rate on cap gains I had. Three interdependent nonlinear variables). Individuals can't figure it out, and just feel like chumps if they don't try to play the big game. Corporations can pay lawyers and accountants (overhead--none of them working to produce better products at lower costs) to help get the best tax deal, but even then the tax code assures capital will be put to non-optimum use.

We could simplify the code, lower the rates, and still bring in higher tax revenues through elimination of deductions/credits/giveaways.

 

[haha]

I think its disingenuous to portray taxes as "wealth transfer". Taxes exist as a means to fund the government. The government exists to keep our society safe, free, and lawful,

Doing a poor to middling job on all of these, at considerable expense. The question is not "do taxes have to exist"- most will grant that they do. The form and amount and what needs to be funded is where the conflict is and always will be.

Ha

 

[Mulligan]

I think its disingenuous to portray taxes as "wealth transfer". Taxes exist as a means to fund the government. The government exists to keep our society safe, free, and lawful, and to provide a safety net for it citizens for events beyond their control. (hurricanes, terrorist attacks, financial crises, economic dislocation). (Although at times this safety net seems to be applied more to our corporate citizens, than individual citizens.). Those citizens who say "I've never taken a dime from the government" are wrong. Arguably, every citizen benefits every day from the physical, legal, and economic infrastructure maintained by our government.

You can argue all you want about whether the government does a particularly good job at providing this societal framework at a reasonable cost, but the essentialness of the role of government to provide a stable society should not be questioned IMHO.

I think the most dangerous threat to a stable society is when the citizens believe that 1) the government cannot be trusted and/or is ineffective (this sentiment seems pretty mainstream, universally shared by the left and right), and 2) the government is only effective ( or perhaps intentionally ineffective) when dealing with the wealthiest members of society. This perception is growing. There are definitely strains of it both in the tea party rhetoric, as well as the left's criticism of the current administration.

On the left, here is an interesting article by Stiglitz in Vanity Fair:

Of the 1%, by the 1%, for the 1%


On the right we have these sentiments in the New American:

Ron Paul: Obama Is Another Corporatist, Not a Socialist

While I agree with your statements, I believe it would help the if the government would just use taxes as what you said in your second sentence. To fund the government. They also use the tax code for various economic reasons which causes the problems as perceived unfairness to how much is "fairly paid". I admit I do not know what the fair level is.

 

[M Paquette]

Everyone has more than valid points. I saw someone on CNBC...that said..."the problem is regardless of what tax law Congress passes, the corporate tax gurus get around it. He said "you can't make a law they won't find a way around."

Bah! Bring back the window tax! I'm ready...



(I always loved the name of that law. "Act of Making Good the Deficiency of the Clipped Money." Money clippings...)

 

[Thormole]

It seems the idea of a flat tax died with the Steve Forbes presidential hopes. It would certainly simplify the tax code, but I wonder how the public would accept it?

 

[Independent]

I suppose part of my point is that instead of carte blanche...increasing tax rates....we should tweak what we have to get rid of the major loop holes. Hamlet...I agree re-characterizing bonuses is ridiculous. It is THIS type of detail that needs to be changed. I also agree the corporate tax rate needs to be reduced so our companies will stay here and move back. FinanceDude...I saw the 60 minutes segment on CSCO too...with so many companies denouncing their US citizenship and moving to Ireland and Zug and Geneva.. Switzerland.

It appears that we agree on a lot. The Simpson/Bowles proposal lowers all the tax rates, with the max rate at 27% instead of 35%. It does that by eliminating all the special deals. No more mortgage deduction, state income tax deduction, tax-free munis, special rates for dividends, etc.

The lawyers and accountants take the well-intentioned (at least sometimes well-intentioned) holes in the law and discover new ways to run more stuff through them. So we get the multi-million dollar hedge fund manager paying 15% instead of 35%. But the solution to that is to make both rates 27%, not to further complicate the law by writing more rules.

Note that your tuition deduction would be replaced with lower rates. It may feel less satisfying to spend just a few minutes doing your taxes, but you wouldn't kick yourself for paying on the wrong day, either.

 

[samclem]

Note that your tuition deduction would be replaced with lower rates. It may feel less satisfying to spend just a few minutes doing your taxes, but you wouldn't kick yourself for paying on the wrong day, either.

It will be tough to sell these tax simplification measures, since a lot of folks believe they are really getting a great deal based on their own special deductions/credits/etc. One way to market these types of changes is to allow people, for a phase-in period, to compute their taxes using either the old rules or the new rules. This was a feature of a tax reform proposal made by Fred Thompson during the '08 campaign. While no one wants to figure their taxes twice, the "pick your method" approach might be an effective way to reduce fear among voters of the short-term impact of a new tax system.

 

[sheehs1]

It seems the idea of a flat tax died with the Steve Forbes presidential hopes. It would certainly simplify the tax code, but I wonder how the public would accept it?

It's probably because of things like "earned income tax credits"...where people who don't pay tax....file anyway...so the government pays them money instead of them paying tax.

Don't know what would happen with all the give aways...if we went to a flat tax system...nor do I believe it is possible for it to be "simple".

 

[target2019]

On the left, here is an interesting article by Stiglitz in Vanity Fair:

Of the 1%, by the 1%, for the 1%


On the right we have these sentiments in the New American:

Ron Paul: Obama Is Another Corporatist, Not a Socialist

Great discussion points in these two articles. Unfortunately the nation continues down the slope of self-destruction. Such a large percentage of voters consider themselves in one camp or the other, and will never read articles such as these, just continue to shout at the talking heads. This is a fundamental that leads to non-change, and the 1% will continue to drive everything. The gap will continue to widen, and the end game, I feel, will be comparable to what you see playing out elsewhere.

 

[sheehs1]

It will be tough to sell these tax simplification measures, since a lot of folks believe they are really getting a great deal based on their own special deductions/credits/etc. One way to market these types of changes is to allow people, for a phase-in period, to compute their taxes using either the old rules or the new rules. This was a feature of a tax reform proposal made by Fred Thompson during the '08 campaign. While no one wants to figure their taxes twice, the "pick your method" approach might be an effective way to reduce fear among voters of the short-term impact of a new tax system.

I tend to think those of us who are "tuned in" are in the minority. Education on these matters is left up to the individual...and some refuse to discuss politics or finances...much less taxes.

Anyone know if bonuses were reclassified as ordinary income how much that would bring in? Anyone know if we allowed our corporations to bring the money back to the states at 15% how much that would bring in?
Seems to me these 2 things would generate a fair amount of tax dollars without changing the rest of the tax code.

So...why doesn't Congress make these 2 changes?
What is stopping them Their common sense?? Or are there consequences we have not thought about?

 

[chinaco]

It seems the idea of a flat tax died with the Steve Forbes presidential hopes. It would certainly simplify the tax code, but I wonder how the public would accept it?

It seems like a common sense approach.

Our convoluted tax code is the results of years of attempting to have a progressive tax system that closed loopholes and gives certain groups a break (deserved or not).


Unfortunately people will figure out how to game that system. And if they cannot figure it out, they will spend large amounts of money on congress to get the rules altered to their benefit.


I believe any attempt to simplify would likely result in the same convoluted mess.

That is not a reason to not try to simplify it... but it is the likely outcome.

Everyone thinks that they are being taken advantage of and the other guy should pay. Some have the where with all to not pay and shift the expense onto the rest of us.

The fact is: The middle class is the group caught in the squeeze between the very liberal politicians that want more socialism... and the wealthy that do not want to pay a progressive tax or inheritance tax.

Put that on top of a govt that won't change some of our outdated and unworkable systems (like the current style of US healthcare) and we just stuck!

 

[samclem]

Anyone know if bonuses were reclassified as ordinary income how much that would bring in? Anyone know if we allowed our corporations to bring the money back to the states at 15% how much that would bring in?
Seems to me these 2 things would generate a fair amount of tax dollars without changing the rest of the tax code.

It's probably very hard to say how much the changes would bring in. It would be easy to do a static calculation, but that would mean nothing since changes to the tax code cause changes in behavior. The bonuses would morph into some type of new stock-option-like product that isn't technically a stock option, or shares in a foreign charitable remainder trust sheltered inside a "green energy" holding company or some other creative thing.

I'm not interested in making changes simply to maximize the government "take" of the existing total economy. I think we'd be better off to bring simplicity and transparency to our system of taxation so that people can put their time and money into making products, services, and investments rather than trying to find a way to "work" the tax code. A more efficient use of time, effort, and capital will grow the economy and also government revenue. As a byproduct, folks will also feel like they aren't being played for patsies by those who write the tax code.

 

[photoguy]

Anyone know if bonuses were reclassified as ordinary income how much that would bring in?

I don't understand your question as year end cash bonuses to employees are treated as ordinary income. Or are we thinking of different kind of bonuses?

 

[Retire Soon]

I think its disingenuous to portray taxes as "wealth transfer". Taxes exist as a means to fund the government. The government exists to keep our society safe, free, and lawful, and to provide a safety net for it citizens for events beyond their control. (hurricanes, terrorist attacks, financial crises, economic dislocation). (Although at times this safety net seems to be applied more to our corporate citizens, than individual citizens.). Those citizens who say "I've never taken a dime from the government" are wrong. Arguably, every citizen benefits every day from the physical, legal, and economic infrastructure maintained by our government.

You can argue all you want about whether the government does a particularly good job at providing this societal framework at a reasonable cost, but the essentialness of the role of government to provide a stable society should not be questioned IMHO.

I think the most dangerous threat to a stable society is when the citizens believe that 1) the government cannot be trusted and/or is ineffective (these days, this sentiment seems pretty mainstream, universally shared by the left and right), and 2) the government is only effective ( or perhaps intentionally ineffective) when dealing with the wealthiest members of society. This perception is growing. There are definitely strains of it both in the tea party rhetoric, as well as the left's criticism of the current administration.

On the left, here is an interesting article by Stiglitz in Vanity Fair:

Of the 1%, by the 1%, for the 1%


On the right we have these sentiments in the New American:

Ron Paul: Obama Is Another Corporatist, Not a Socialist

An interesting point that Stiglitz made in Vanity Fair was:

"Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office."

With this in mind, it's easy to understand how the top 1% have managed to receive nearly 1/4 of the nation's income. With very little taxes being paid on such a staggering share of national income, it's no wonder that our roads, bridges, sewer system and highways are in such a state of disrepair.

 

[haha]

Anyone know if bonuses were reclassified as ordinary income how much that would bring in?

Bonuses are ordinary income. Perhaps you are referring to GPs "carried interest"?

Ha

 

[pletal]

The super rich

Oh, the wealthy got it coming. When the food stamps and welfare checks run out, the rich will be on the menu. Not that it is right, but the taxpayers have been paying for food and shelter and the system has been abused to the point of breaking. I think the rich will be anyone who has more than the person doing the taking, going to be interesting in the next few years. The middle east is just a preview. The rich there ride around in the fancy cars while others are broke and starving. Youth gone wild.

 

[Independent]

Bonuses are ordinary income. Perhaps you are referring to GPs "carried interest"?

Ha

I think the issue is re-labeling bonuses as a way to reduce taxes. The difference between 35% and 15% is pretty big.

For hedge fund managers, it's pretty clear that they are being compensated for running the fund, just like insurance company investment managers. But the hedge fund managers use the complexity of current tax laws to claim that there income isn't really compensation. (It's not a "bonus", it's "carried interest".)

IMO, the obvious solution is to eliminate the difference in the tax rates. That removes the incentive to re-label.

 

[haha]

IMO, the obvious solution is to eliminate the difference in the tax rates. That removes the incentive to re-label.

Isn't that a bit like shooting your wife so the incentive for other men to be attracted to her will be removed? BTW, I understand carried interest. What I do not understand and would like you to help me with is this:

I think the issue is re-labeling bonuses as a way to reduce taxes. The difference between 35% and 15% is pretty big.

Could you give some real life examples of relabeling bonuses so that they will qualify for capital gains treatment?

I won't try to debate your populist zeal to tax capital gains as if they were ordinary income. Every capitalist country has found out that does not work. One of many reasons is that much of capital gain is illusory nominal income.

Ha

 

[FinanceDude]

Oh, the wealthy got it coming. When the food stamps and welfare checks run out, the rich will be on the menu. Not that it is right, but the taxpayers have been paying for food and shelter and the system has been abused to the point of breaking. I think the rich will be anyone who has more than the person doing the taking, going to be interesting in the next few years. The middle east is just a preview. The rich there ride around in the fancy cars while others are broke and starving. Youth gone wild.

Within 5 years, it will make more sense not to work and then just collect from govt programs than to work.........