Posts tagged taxes
Posts tagged taxes
Does anyone remember in the GOP debates when Ron Paul said something about walls built to keep people in?
“Every time you think about this toughness on the border and ID cards and REAL IDs, think it’s a penalty against the American people too. I think this fence business is designed and may well be used against us and keep us in. In economic turmoil, the people want to leave with their capital and there’s capital controls and there’s people controls. Every time you think about the fence, think about the fences being used against us, keeping us in.”
Everyone thought, “who is this crazy old man who thinks the government is going to try and keep people from leaving the country?”
Is Ron Paul really that crazy? It seems to me that Senator Schumer and Casey’s Ex-PATRIOT Act is doing what Ron Paul predicted.
“This is a great American success story gone wrong,” Schumer said. “Mr. Saverin wants to de-friend the United States just to avoid paying taxes, and we’re not going to let him get away with it.”
Schumer and Casey’s bill is called the Expatriation Prevention by Abolishing the Tax-Related Incentives for Offshore Tenancy Act, a name designed to produce the acronym Ex-PATRIOT Act.
Anyone who renounces U.S. citizenship and has a net worth of at least $2 million or an average income-tax liability of at least $148,000 over the previous five years would be presumed by the Internal Revenue Service to have done so to avoid paying taxes.
People who could not prove another reason for renouncing citizenship would face a 30% tax on future capital gains on U.S. investments — twice the current 15% rate — and be barred from receiving a visa to enter the country.
“Under current law, Mr. Saverin would get away for free. But Sen. Casey and I have a status upgrade for him — Pay your taxes in full or don’t ever try to visit the U.S. again,” Schumer said. “The despicable trend that Saverin exhibits must be stopped dead in its tracks.”
Only in a society where the people serve the government, instead of the government serving the people, does the government have a claim on an individuals wealth. And I’m not just talking about taxes. Saverin is in fact paying all of the taxes required of him by law. I am talking about Schumer and Casey’s greed and their insatiable demand for more.
If man is born free, if it is a Right given by his Creator as our Declaration of Independence so eloquently surmises, then what claim does government have on anything that is his?
“I’m going to lower rates across the board for all Americans by 20%,” he told a crowd of about 500 gathered in a gymnasium at a Christian academy in Chandler, near Phoenix, Arizona.
As Milton Friedman would say, to spend is to tax. Cutting taxes without an equal cut in spending is not a tax cut, it’s a tax deferment.
Zuckerberg will be paying $2 billion in taxes this year, making him one of the most highly taxed individuals in history.
Now, if we could only find about 500 to 600 more Zuckerbergs every year, we would have a balanced budget!
BTW, the article I linked to is ridiculous. The author essentially wants people to pay taxes on income that they haven’t yet realized. How can you pay taxes on income you haven’t received? What do you pay it with? Sigh.
That’s right, we already have a more progressive tax system than most other countries. The rich actually pay more of their “fair share” than their counterparts in say, France. This is one of the most interesting things I’ve learned in a while and I think it’s something more people need to understand. And don’t just take my word for it:
Contrary to common belief, the United States already has a more progressive tax system than do the most industrialized democracies worldwide. The nearby chart uses data from a recent report by the Organization for Economic Cooperation and Development on the share of taxes (both personal income and payroll taxes combined) paid by the richest 10 percent of households in 24 industrialized countries. The bars represent the share of the total taxes collected that are paid by top earners in these 24 countries.
For instance, progressive public finance experts like Peter Lindert have shown that most European tax regimes are able to collect more revenue than ours (as a share of gross domestic product, not in total) by having a more regressive — not progressive — tax system.
How can this be you ask? Tax rates in other countries are higher for the rich, so thus the many welfare states of Europe (which all have worse debt problems than we do btw - which is a difficult thing to do) are obviously more progressive, correct? No. The reason we have a more progressive tax system is because of exemptions.
Any system that exempts some taxpayers—the poor, for instance—or some income—personal exemption—from the income tax creates de facto progressivity independently of the rate structure.
The United States channels a lot of its spending to lower-income people through our tax code while European countries are more likely to do it through direct spending. It explains why almost 50 percent of tax units in the U.S. do not pay the income tax. That alone increases the actual progressivity of the U.S. tax code.
The OECD data shows that other countries tend to have much higher tax rates than the U.S. does but the threshold of income at which the top rate in applied is much lower.
For instance, it takes almost 3.4 times less income in France than in the U.S. to be taxed at the highest French rate. It means that other countries have higher rates but also more regressive systems.
By contrast, the United States has lower top lower rate but these lower rates kick at a much higher level—meaning that it take much more income to face the highest rates—hence the steeper progressivity.
So next time someone says people who earn more need to pay their fair share, tell them that compared to the rest of the world, they already are. And perhaps, in the United States anyway, it’s the people in the lower income brackets who aren’t.
On a side note, I hate talking about the “fairness” of taxes. I don’t know what is fair and what isn’t. I would prefer that government spending and debt levels were low enough that the amount of taxes people pay was more or less irrelevant to their daily lives. Instead, the middle of April is something most people dread.
Here’s a letter to the New York Times:
You assert that because Mitt Romney pays a top rate of 15 percent on his investment earnings – a rate below the top rate at which ordinary income is taxed – that “the tax code has been tilted in his favor” (“The 1% and That 15%,” Jan. 19). Matters, however, are not so simple.
John Stuart Mill (no one’s idea of an apologist for the rich) argued that, in a country with income taxation, taxation of capital gains at any rate tilts the tax code against people who earn investment income.
When Romney earned the income that he invested, and on which he now enjoys returns, he was taxed on that income at ordinary (higher) income-tax rates. Had he spent that income on fast cars and Alpine vacations, he would not have been further taxed on the satisfactions he enjoyed from such consumption. But in fact he deferred consumption by saving and investing those after-tax dollars. Mill argued that, because the present value today of the larger consumption that a saver expects to enjoy tomorrow equals the value of the smaller consumption that that person could enjoy today were he not to save, taxing capital gains puts an additional burden on savers – a burden not borne by non-savers. In effect, capital-gains taxes cause consumption opportunities deferred into the future to be taxed more heavily than are the same quanta of consumption opportunities seized today.
Mill’s argument is intricate, and not above challenge as a guide for tax policy. But it does reveal that taxation of capital gains at rates lower than rates on ordinary income is not, contrary to your conclusion, necessarily evidence of unjust favoritism for ‘the rich.’
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030
Warren Buffett claims that he pays a lower overall tax rate than his secretary. Therefore, he wants the government to tax all millionaires more. And now for some facts:
This year, households making more than $1 million will pay an average 29.1% of their income in federal taxes, including income taxes, payroll taxes and other taxes, according to the Tax Policy Center, a Washington think tank.
Households making between $50,000 and $75,000 will pay an average of 15% of their income in federal taxes.
Yesterday, the President graciously offered to take more money from the rich in order to tackle our deficit problems. Let’s assume that this money will actually go towards the deficit and not to political crony’s such as the CEO of Solyndra. Is it a good plan?
1. This is not class warfare; It’s math.
I want to believe the President. I want to believe that he is not trying to garner votes by blaming the rich for not “paying their fair share” and that he actually wants to balance the budget. I can hardly say that with a straight face. But let’s assume the first part of his “This is not class warfare; It’s math” statement is sincere, and take a look at the second part Does Obama’s math add up?
According to the NPR story I heard this morning, Does Buffett Rule Add Up For Obama Deficit Plan?, it doesn’t sound like it. According to Roberton Williams, a senior fellow at the nonpartisan Tax Policy Center, around 433,000 people will earn $1 million from all sources of income this year. He estimates that if you tax all sources of income over $1 million at 50% - an unlikely number - it would only account for 10% of what is needed to tackle the deficit.
While the president may claim we can’t “cut our way to prosperity”, we’re obviously going to need to do a lot more cutting than taxing.
2. Buffett Rule Taxes Capital Gains
Warren Buffett is now famous, thanks to President Obama, for wanting to increase taxes on people such as himself. It’s quite magnanimous of him actually, speaking for all those like him. I’m sure he feels very guilty. Regardless, he rightly concludes that because he earns the majority of his income through capital gains, his overall tax rate is lower than his secretary’s.
The question I have is what does Warren Buffett do with his capital gains? I’m betting he doesn’t store it under his bed (he would need to dig a pretty deep hole to fit it all under there). Most likely he invests it in the economy. This raises a fundamental question, who will spend money more wisely - individuals or the government?
The half billion dollar loan to the Solyndra company, who went bankrupt the other day, should be a good indicator. Fannie and Freddie, and the collapse of the housing market should also be a good indicator. When you tax capital gains, you take investment capital out of the economy and let the government spend it. Who do you think will spend that money more wisely? The private sector does it better.
3. Who’s Money Is it?
Finally, who owns the income you produce? The income tax was supposed to be a temporary tax to pay for the civil war. We supposedly live in a free society, which means the government does not own us. Why then do we accept that the government has a right to what we produce? If you come up with a brilliant idea for a new business that makes you wealthy, and you build that business yourself, does the government own your idea? No. So it shouldn’t own part of the income you gain from the implementation of that idea.
Ron Paul seems to be the only GOP candidate to question our love of foreign wars (read Why Can’t We Talk About All Our Wars?). When he mentions that there may be reasons other than the 5th grade argument, “Muslims hate freedom and prosperity,” he gets booed and attacked by the other candidates.
This is from Nazi Germany’s Hermann Goering on how to take a country to war…
Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked, and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same in any country.”
It’s time people start thinking for themselves. Conservatives need to realize that constantly being at war contradicts so many of their supposed core values. War is extraordinarily expensive, increases debt and therefore taxes, is paid for in large part though the printing press which causes inflation, increases the size of government, is highly destructive, is certainly not Christian, and is the greatest danger to our freedom that we face.
Billionaire investor Warren Buffett triggered a major debate over taxes recently when he wrote in The New York Times that he should be paying more to the federal government. He called on Washington lawmakers to up tax rates on the rich.
But it turns out that Buffett’s own company, Berkshire Hathaway, has had every opportunity to pay more taxes over the last decade. Instead, it’s been mired in a protracted legal battle with the Internal Revenue Service over a bill that one analyst estimates may total $1 billion.
The IRS really needs to stop coddling the rich.
This was just sent to me via IM by my co-worker…
AAPL - Mkt cap 361.56B
XOM - Mkt cap 359.36B
In English, this tells me that Apple (APPL) is worth $2.2 billion more then Exxon Mobile (XOM).
So where are the calls for a windfall profit tax?