Care to comment on the thread? Did everyone disappoint you by not wanting to take your hypothetical money?
And what have you been learning from the exercise?
And neutral or good means can be used for good or evil purposes.
I’d disagree with Terr that incentivizing activity by tax policy is inherently evil.
As far as I could tell, there was just surprise that you were using the ends (society is improved) to justify the means used (various tax laws).
Please allow me to restate for clarity:
“Succinct, but overly simplistic.”
Thank you.
The first theory - you pay taxes on money as you earn it If you had to pay taxes on money under the mattress - then you keep paying taxes over and over on the same money. The incentive, then is to spend rather than save. It is in the interest of the state to have cisitzens with a cmfortable level of savings, rather than spendthrifts who throw themselves onto welfare (or resort to crime) when their money runs out and they can’t replenish.
So if you tax assets too, then you have people who throw away their money potlach style, on big parties and celebrations rather than on fixed goods… and people who hide their assets.
The danger of an asset tax is that nobody will accumulate an asset that could come home to bite them - buy a big house or fancy car and if you fall on hard times you will have to sell it… Or towards the end of your life, you need to sell the hose because the taxes are too high to keep paying. This is a common problem with property taxes, a very regressive form of tax. Occasionally there are calls for property taxes for school taxes to be abolished, since it not only punishes property owners, but tying quality of education to local property values is also regressive.
Cycnics may say otherwise, but paying for government is a “greater good”. Considering some of the alternatives - anarchy Lebanon style or ak47cracy, or some sort of kleptocracy, where the government basically pays fo what it does by helping itself however it likes. It seems a regimented system where everyone pays a share according to their ability is one of the better systems. If we’re looking for ideal systems, the Saudi method of paying for government seems best; except even they have budget problems.
What utter nonsense. It’s being taxed again because it’s being transferred again, unless you and your parents are some sort of gestalt entity.
Nope, that was exactly what I was getting at, the tax system is a mess. And in no way are taxes “something you pay for something you bought.” Everyone pays something different, and gets something different, and the two components are in no way related.
My wag is that when you consider a lot of the bullshit rationalization used on this message board to justify various taxation schemes, none of them quite work when looking at the OP. We are supposed to have a higher tax rate for people with more money, and a lower tax rate for people with less money. There is supposed to diminishing marginal utility on money. And people that are rich are supposedly benefiting more from the system than people that are poor, hence are expected to pay more than people that are poor.
Next year, Bricker will pay zero income taxes, could potentially avoid a lot of additional taxes depending on his consumption behavior and where he lives. Places in Louisiana have property tax rates as low as 0.18%. Several states have littler or no sales tax. Then it’s just a matter of avoiding gas, alcohol and tobacco.
Meanwhile, he gets to freeload off a very expensive system. He no longer has to contribute to the most expensive military in the world, or pay into Medicare or SS. Drive on roads, eat safe foods, use safe drugs, and receive protection from the police.
The rest of us, however, will continue to be taxed even though we’ll never come close to the amount of moneyBricker has in his closet. It’s hard not to see that has messed up. And it’s hard not to look for ways to go after that.
But it’s that mentality that causes “ends justify the means” type rationalization, and use of expressions like “it wasn’t earned.” One example that keeps coming up is the estate tax, which again is a bullshit concept, based on wanting to stick it to rich people because they’re rich.
So my advice to Bricker, buy a farm, preferably outside a medium sized but growing metropolis. Transfer this “farm” to your kids when you die, and let them cash in big when the farm is turned into another government subsidized suburb.
I mean, that’s kind of true, but this is really an edge case and not the kind of thing I think anyone wants to waste a lot of time dealing with. The problem with taxes is that they can be avoided—that’s true. That’s why taxation in general depresses economic activity. But I’m not concerned about the odd lottery winner that takes a cash payment, literally converts it into cash, and then stuffs it in a mattress. Might as well force people into labor who voluntarily leave the market, if you think people are really this upset over things. (They’re not.)
I’m not sure why would have such a picture of estate taxes, but it seems beside the point.
Is this really an edge issue though? Right now there is rabid obsession with how a very small group in the US is taxed, specifically those that make money off of long term capital gains. My completely uninformed guess is that there could be more lottery-winning-millionaires than guys like Romney paying 15% on his long term capital gains.
So the gutcha here is that certain people are eager to find rationalizations to go after Romney and Buffett’s money, but can’t quite figure out how to get Bricker’s.
As to people being upset, right now it’s simply easier to go after evil bankers than it is to target lottery winners. but I can point to a few people that would like tax lottery winners more.
I find it telling that you can find the time to pop back into thread to contradict one post, yet haven’t found the time to respond to the numerous requests for your own opinion on the OP and its purpose.
Your basis for thinking this isn’t an edge issue is to select an example which differs on the one crucial point people have mentioned?
Rationalizations, eh?
Yes, rationalizations. The convoluted reasons people come up with to justify why they tax some people in one way, and others in another way. But then fail to tax similar groups in similar ways.
In this case, Bricker had a lot of earnings in year one, and was taxed on it. In year two he still has a lot of money, but technically no earnings. He has way more money than I ever will, and yet won’t pay any more tax. If you ask people on this board how they justify taxing him in year one they will give you a nice long list. Problem is, all of those reasons still exist in year two. He’s still using public resources, still benefiting from the system, and most importantly he still has lots of money.
He has essentially turned his savings into an annuity he can draw on as a salary of $2mil for the next 40 years, tax free. The rest of us will continue to work, be taxed, and have much less than $2mil per year. Doesn’t really seem fair now does it?
It’s not a far leap to go from here and look at capital gains taxes. If Bricker only had $1million he could invest it at 3% and have a nice $30k salary to live on, but that would be taxed. Alternatively, he could draw $30k each year and hope he dies within 33 years.
When you consider all the bitching about Romney’s tax rate, he’s making his income off the capital gains from money he was already taxed on. Would we as a society be better off if he just piled in a closet? Would we as a society be better off his Bricker was encouraged to put that $80mil to use? He could refinance 400 x 30 year mortgages at 3%, but then he’d be taxed on the $2.4mil he makes every year.
I think fundamentally this highlights how we can’t seem to separate wealth vs income, where the latter is much easier to tax, but the former is much more important. People like to assume having lots of one means lots of the other, so they tax high income as a way to go after high wealth.
But he didn’t just pay a little, he paid almost $70 million dollars in taxes. He paid, by my thought, his full share of the money when he received it. It’s not like he got $70 million dollars use of the public works in just one year, but rather over the life of the payment. The fact he chose to pay his “fair share” in year one rather than a smaller amount every year after doesn’t make it “unfair” in the least.
But, again, not many people are calling for, nor is there much chance, of the US enacting a wealth tax rather than the income tax.
And this is where I think the gotcha comes in. We don’t have a lifetime max on taxation. If he won another $100mil he’d pay another $70mil in taxes. To say he paid his full share gives the impression that he’s done, and that he really shouldn’t have to keep paying into the future, regardless of what he does. If he goes back to being a lawyer the government will go back to taxing him as if nothing had happened. He wouldn’t get to say, “seriously, I paid you $70mil last year, do you really need me to pay another $20k?” If instead he turns around and puts that money into a savings account, is it “fair” to tax the 1% interest he makes every year?
And you said “use of the public works in year one.” It’s this concept that prompted me to start [url=An Income Tax Question - Great Debates - Straight Dope Message Board] this thread. The tax code is set up to say he used $70mil worth of public works in year one, but then somehow used $0 in years 2 -> 40. Did he some how make use of the military or FDA more the year he won but less every year after that?
ETA Googling “the US needs a wealth tax” gets plenty of responses.
Not at all. He should pay taxes on what he earns in the future, whether through the lottery or investments, but once he paid his “fair share” on the money he made winning the lottery, he shouldn’t have to be taxed on it again.
If he went back to work as a lawyer, he would be taxed only on the money he earned as a lawyer, not on the lottery winnings. Once you pay a tax on some money doesn’t mean you don’t have to pay on all the other money you earn.
No, he just paid for the use in year one, rather than a lesser bit each additional year. His use may not change, but rather only when he paid for it.
So does “US needs an enema”, but I don’t see that as a legitimate cry with a realistic chance of being enacted.
Surely you’re not afraid that the US is on the verge of enacting a wealth tax are you? With the European countries dropping it like a hot potato, I’d be shocked, SHOCKED to see either party actually calling for a wealth tax.
Huh? Do you understand how the probate process works after a person dies with no heirs? I assure you that property taxes are not required in the least to dispose of a house where there are no clear heirs in a state with no property taxes. Do you have a citation that property taxes are necessary in such a case?
If I had $80 million after taxes, I’d put them into tax-free municipal bonds at 4%, earn $3.2 million a year tax-free, and enjoy life. I’d still have to fill out a 1040 long form, but I’d have no taxes owed, not even Obama’s new 1.9% investment tax for his health care reform.
Then again, some of the “bearded sages” of this message board have argued that tax-free municipal bonds are “immoral”, so I guess I’d go to hell anyhow. :rolleyes: