# Tax Takers vs Tax Payers **URL:** \ **Category:** Great Debates\ **Created:** [March 2, 2012, 9:01am UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530 "2012-03-02T09:01:24Z")\ **Posts on this page:** 20\ **Page:** 7
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 8, 2012, 6:50pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/121 "2012-03-08T18:50:22Z")
> [@ABraut](#): > > We’re talking about income tax, not a non-existent, unconstitutional wealth tax. Why is a wealth tax unconstitutional? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 8, 2012, 6:52pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/122 "2012-03-08T18:52:23Z")
> [@ABraut](#): > > Because ‘wealth’ has already been taxed, at least once. Really? So the people who inherited George Steinbernner’s estate. When was the value of the NY Yankees taxed at least once? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 8, 2012, 6:54pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/123 "2012-03-08T18:54:46Z")
> [@Qin\_Shi\_Huangdi](#): > > They’re on the whole probably the most liberal and tolerant and cosmopolitan people in America and the world (if you count the one percent of the world). They’re partially responsible for the current crisis but so are the millions of people who borrowed irresponsibily and bought houses they could not afford. In a capitalistic society it is not the role of the borrower or capital seeker to allocate capital, it is the role of the capital owner to do so. Blaming a bad credit for borrowing the money rather than the loose credit policies of those who were lending the money to bad credits is putting history and market principles on their heads. ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [March 8, 2012, 6:57pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/124 "2012-03-08T18:57:37Z")
> [@Damuri\_Ajashi](#): > > In a capitalistic society it is not the role of the borrower or capital seeker to allocate capital, it is the role of the capital owner to do so. Blaming a bad credit for borrowing the money rather than the loose credit policies of those who were lending the money to bad credits is putting history and market principles on their heads. The deeper implications of lemon socialism raise their ugly heads. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 8, 2012, 7:02pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/125 "2012-03-08T19:02:08Z")
> [@ABraut](#): > > I don’t believe in double taxation. Dividends are after tax profit distribution. I think _most_ other capital gains should be taxed at the regular rate, though. Do you know how easy it is to convert capital gains into dividends (its tougher the other way around but a corporation can almost always dividend out earnings and profits)? Some conservativers these days have been trying to convince us taht capital gains taxes are also a form of double taxation so we should be grateful for the 15% we are currently getting. > [@](#): > > i.e. “…, to each according to his need.”? To some extent yes. Your kids get to go to public school whether you have a dozen kids or no kids at all and we all pay for it in a way that approximates our ability to pay. EVERY government is “socialist” as conservatives these days seem to define it. Heck, fire insurance is socialst the way conservatives these days seem to define the term. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 8, 2012, 7:04pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/126 "2012-03-08T19:04:41Z")
> [@Jas09](#): > > Agreed, minus the whole “double taxation” part. I really don’t care about double taxation - I think tax policy should be evaluated based on it’s effects not ideology.To some extent, sure. Why not? That’s what welfare and Medicaid and needs-based student loans and all sorts of programs are for. Corporations are a separate juridical entity not a proxy for the shareholder. They are separate entities subject to their own level of taxation. > [@](#): > > Although you left out the more relevant half - “From each according to his abilities”. That’s the part I’m talking about here. We have a decided that we want to provide certain government services and it only makes sense to fund them in the way that causes the least negative economic impact. The conservative argument is taht if you raise taxes, even a little bit, you will no longer get “from each according to his abilities” because the job creators will go on strike and live in a city under the sea with john galt. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 8, 2012, 7:11pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/127 "2012-03-08T19:11:07Z")
> [@Jas09](#): > > I have also advocated for pushing a larger share on the burden on the upper middle class (largely by eliminating the home mortgage interest deduction). The upper middle class pays the highest effective tax rates. Most of their money is earned so it is tax at ordinary rates rather thanc apital rates and they earn enough to hit the top marginal rates. > [@](#): > > I’d also like to have some variant of the Buffett rule whereby all income over a certain level regardless of source is taxed at the top marginal rate (which it seems you might agree with). Personally I’d be OK with returning all rates to Clinton-era levels, to be quite honest, but the economic shock of that makes it less attractive until economic growth seems more robust. We could do it at the top of the scale without affecting consumption very much at all, we could certainly do it at the $1 million plus level. I mean seriously, paying an extra 36K on your second million dollars of income in a year simply isn’t going to make a single bit of difference in your spending or investing habits. > [@](#): > > On the “tax takers” side, I think it’s imperative that we reduce the scope of our social safety net to those that truly need it. Means-testing part or all of Social Security retirement benefits could be a step in this direction. Better to eliminate the cap and let people keep their benefits. Means testing social security changes the nature of social security from an entitlement to a welfare program. You don’t want to do that. > [@](#): > > And I truly despise arguments that the poor aren’t paying enough in taxes (the old “lucky duckies” argument), as if you can get blood from a stone or that they wouldn’t gladly trade their lot in life with anybody at the top of the income scale, tax liabilities included. “Poor people are so lucky, they don’t have to pay taxes” is about the lamest rallying cry I have ever heard. ---
**Author:** ![ABraut](https://avatars.discourse-cdn.com/v4/letter/a/258eb7/32.png) [@ABraut](https://boards.straightdope.com/u/ABraut)\ **Post date:** [March 8, 2012, 7:13pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/128 "2012-03-08T19:13:38Z")
> [@Damuri\_Ajashi](#): > > Why is a wealth tax unconstitutional? A better question is how is it Constitutional? > [@](#): > > Amendment 16 - Status of Income Tax Clarified. > > The Congress shall have power to lay and collect taxes on **incomes** , from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration. > [@](#): > > Amendment 5 - Trial and Punishment, Compensation for Takings. > > No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, \*\*nor be deprived of \*\*life, liberty, **or property** , without due process of law; **nor shall private property be taken for public use, without just compensation.** ---
**Author:** ![ABraut](https://avatars.discourse-cdn.com/v4/letter/a/258eb7/32.png) [@ABraut](https://boards.straightdope.com/u/ABraut)\ **Post date:** [March 8, 2012, 7:18pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/129 "2012-03-08T19:18:23Z")
> [@Damuri\_Ajashi](#): > > Really? So the people who inherited George Steinbernner’s estate. When was the value of the NY Yankees taxed at least once? You think it was originally bought with untaxed money? The profits have been taxed, and taxed again as dividends, and the increase in value will be taxed, if/when it’s sold. ---
**Author:** ![ABraut](https://avatars.discourse-cdn.com/v4/letter/a/258eb7/32.png) [@ABraut](https://boards.straightdope.com/u/ABraut)\ **Post date:** [March 8, 2012, 7:24pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/130 "2012-03-08T19:24:57Z")
> [@Damuri\_Ajashi](#): > > Do you know how easy it is to convert capital gains into dividends (its tougher the other way around but a corporation can almost always dividend out earnings and profits)? Some conservativers these days have been trying to convince us taht capital gains taxes are also a form of double taxation so we should be grateful for the 15% we are currently getting. No, why don’t you explain how easy that is and why anyone would want to do that, and get taxed twice for it? Qualified dividends are taxed twice. > [@Damuri\_Ajashi](#): > > EVERY government is “socialist” as conservatives these days seem to define it. Heck, fire insurance is socialst the way conservatives these days seem to define the term. Almost every government is “socialist”, to some extent, as defined by every political science professor, whose class I’ve been in. ---
**Author:** ![Great\_Antibob](https://avatars.discourse-cdn.com/v4/letter/g/e47c2d/32.png) [@Great\_Antibob](https://boards.straightdope.com/u/Great_Antibob)\ **Post date:** [March 8, 2012, 7:27pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/131 "2012-03-08T19:27:35Z")
> [@ABraut](#): > > A better question is how is it Constitutional? Your citation of Amendment 5 doesn’t really work. Notice the “due process of law” bit. Taxes, in general, are legal and generally passed via a due process of law. And a levy on the value of your property (aggregate wealth, in this case) is not illegal. Otherwise, property taxes would be illegal as would personal property taxes. You seem to be arguing that most taxes are illegal, rather than just wealth taxes. Congress has been given the power to levy taxes. Whether a wealth tax is a good idea or not is questionable, but I’m not seeing how there’s a serious argument it doesn’t pass Constitutional muster. ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [March 8, 2012, 7:42pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/132 "2012-03-08T19:42:37Z")
> [@Damuri\_Ajashi](#): > > The upper middle class pays the highest effective tax rates. Most of their money is earned so it is tax at ordinary rates rather thanc apital rates and they earn enough to hit the top marginal rates. I don’t believe that is true. [http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=456](http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=456) [QUOTE=Damuri Ajashi] Better to eliminate the cap and let people keep their benefits. Means testing social security changes the nature of social security from an entitlement to a welfare program. You don’t want to do that. [/QUOTE] Well, maybe I don’t want to do that. And maybe I do. If you eliminate the cap on contributions but keep the cap on benefits then you have done the same thing as if you means-test the benefits. [QUOTE=ABraut] The profits have been taxed, and taxed again as dividends, and the increase in value will be taxed, if/when it’s sold. [/QUOTE] The increase in value will not be taxed fully, because of the step-up in cost basis, as I understand it. ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [March 8, 2012, 7:42pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/133 "2012-03-08T19:42:54Z")
> [@Damuri\_Ajashi](#): > > The conservative argument is taht if you raise taxes, even a little bit, you will no longer get “from each according to his abilities” because the job creators will go on strike and live in a city under the sea with john galt. **Who is John Galt?** 😃 oh man, too perfect ---
**Author:** ![ABraut](https://avatars.discourse-cdn.com/v4/letter/a/258eb7/32.png) [@ABraut](https://boards.straightdope.com/u/ABraut)\ **Post date:** [March 8, 2012, 7:45pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/134 "2012-03-08T19:45:47Z")
> [@Damuri\_Ajashi](#): > > The upper middle class pays the highest effective tax rates. Most of their money is earned so it is tax at ordinary rates rather thanc apital rates and they earn enough to hit the top marginal rates. Only if you consider people in the 99.5 through 99.9 percentiles ($1.2 million) “the upper middle class.” That’s most of the top 0.5%, in the real world. > [@](#): > > Capital income grows in importance at the very top of the distribution. Interest, dividends, and realized capital gains accounted for 29.8 percent of pretax household income for people in the 99.5 through 99.9 percentiles, 42.6 percent of income for people in the 99.9 through 99.99 percentiles, and 55.9 percent of income for the 0.01 percent of the population with the very highest income. Other business income—which includes partnership income, income from S corporations, and rental income and is thus a mix of labor and capital income—was 3 percent or less of total pretax income for people in all income groups up through the 95th percentile in 2005. In contrast, other business income accounted for 15 percent to 20 percent of total income for groups at or above the 99th percentile in 2005. [Income / Effective Income Tax Rate / Effective Federal Tax rate](http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/98xx/doc9884/12-23-effectivetaxrates_letter.pdf) Percentiles 96-99 269,800 / 15.2 / 25.7 Percentiles 99.0 - 99.5 588,100 / 19.4 / 29.7 Percentiles 99.5 - 99.9 1,207,200 / **20.7** / 31.2 Percentiles 99.9 - 99.99 4,699,500 / 19.9 / **32.1** Top 0.01 Percentile 35,473,200 / 17.0 / 31.5 ---
**Author:** ![ABraut](https://avatars.discourse-cdn.com/v4/letter/a/258eb7/32.png) [@ABraut](https://boards.straightdope.com/u/ABraut)\ **Post date:** [March 8, 2012, 7:48pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/135 "2012-03-08T19:48:09Z")
> [@Great\_Antibob](#): > > And a levy on the value of your property (aggregate wealth, in this case) is not illegal. Otherwise, property taxes would be illegal as would personal property taxes. States can tax property, but the Federal Government cannot. ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [March 8, 2012, 8:01pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/136 "2012-03-08T20:01:30Z")
> [@ABraut](#): > > States can tax property, but the Federal Government cannot. Could you explain why you think that this is the case but that the estate tax is acceptable? Is it because the estate tax involves an economic transfer and is thus _indirect_? I would stipulate that, at best, the constitutionality of a wealth tax is unsettled. ---
**Author:** ![ABraut](https://avatars.discourse-cdn.com/v4/letter/a/258eb7/32.png) [@ABraut](https://boards.straightdope.com/u/ABraut)\ **Post date:** [March 8, 2012, 8:36pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/137 "2012-03-08T20:36:48Z")
> [@Jas09](#): > > Could you explain why you think that this is the case but that the estate tax is acceptable? Is it because the estate tax involves an economic transfer and is thus _indirect_? [Yes](http://www.usconstitution.net/constamnotes.html#Am16), property taxes have been determined by SCOTUS to be a “direct tax” and direct taxes are subject to apportionment, except for income tax. > [@Jas09](#): > > I would stipulate that, at best, the constitutionality of a wealth tax is unsettled. Only if you can find a way to get a wealth tax to be considered an “indirect tax.” ---
**Author:** ![A\_clever\_user\_name](https://avatars.discourse-cdn.com/v4/letter/a/9fc348/32.png) [@A\_clever\_user\_name](https://boards.straightdope.com/u/A_clever_user_name)\ **Post date:** [March 9, 2012, 12:39pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/138 "2012-03-09T12:39:48Z")
One aspect of the fairness argument that I rarely see expressed requires one to ask a slightly broader question about living in our society: Who benefits the most from our current system of government, laws, and society? This question is followed by: Shouldn’t those that benefit the most pay the most to maintain it? It seems sometimes to be taken for a given that it’s the shiftless poor sipping beer on the front porch in between cashing welfare checks who “get the most” from the government, but I’d argue it is precisely the richest who actually benefit the most - as evidenced by their increasing wealth. The wealthy’s overseas investments and trade routes are protected by our enormous military expenditures. Their personal property is kept safe by our Federal, State and local law enforcement agencies. Their intellectual property is protected by government agencies here and abroad. The output of their factories travels across our state and interstate highways. Their workers (at least the ones they haven’t off-shored) are educated in public schools. And on, and on, and on. The structure of our society is such that a relative few are able to best capitalize on it and become wealthy. That’s a good thing. But to believe that all wealth is created by individual effort without being enabled by the structure of our society is silly, and to shirk the responsibility to pay for the structure that enables generation and preservation of wealth is not merely stingy, but ultimately self-defeating. ---
**Author:** ![Norse](https://avatars.discourse-cdn.com/v4/letter/n/a9adbd/32.png) [@Norse](https://boards.straightdope.com/u/Norse)\ **Post date:** [March 9, 2012, 4:50pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/139 "2012-03-09T16:50:02Z")
> [@A\_clever\_user\_name](#): > > The structure of our society is such that a relative few are able to best capitalize on it and become wealthy. That’s a good thing. But to believe that all wealth is created by individual effort without being enabled by the structure of our society is silly, and to shirk the responsibility to pay for the structure that enables generation and preservation of wealth is not merely stingy, but ultimately self-defeating. I think I somewhat touched on this already in the last paragraph of [post #68](http://boards.straightdope.com/sdmb/showpost.php?p=14831879&postcount=68), albeit not as detailed as you did here. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 9, 2012, 7:05pm UTC](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530/140 "2012-03-09T19:05:49Z")
> [@ABraut](#): > > A better question is how is it Constitutional? Congress has the power to tax. > [@](#): > > Section 8 > The Congress shall have Power To lay and collect Taxes, Duties, Imposts and > Excises, to pay the Debts and provide for the common Defence and general > Welfare of the United States; but all Duties, Imposts and Excises shall be > uniform throughout the United States Are you talking about the apportionment requirement? [http://www.taxhistory.org/thp/readings.nsf/ArtWeb/736DB4705B4EE21D85256F2B00548FA3?OpenDocument](http://www.taxhistory.org/thp/readings.nsf/ArtWeb/736DB4705B4EE21D85256F2B00548FA3?OpenDocument) [http://www.taxhistory.org/thp/readings.nsf/ArtWeb/7CFC6F1046AFB37A85256F2B0054C3CC?OpenDocument](http://www.taxhistory.org/thp/readings.nsf/ArtWeb/7CFC6F1046AFB37A85256F2B0054C3CC?OpenDocument) I would argue that Jensen is reading the law too narrowly while a wealth tax is an excise tax under current law. In fact the estate tax (a form of welath tax) is considered an excise tax. Heck, the Corporate icnome tax was considered an estate tax and didn no require apportionment. Then you must also think that a consumption tax or a VAT are also unconstitutional? You would also be relying on caselaw that is over 100 years old and has been steadily eroded almost since the case was decided. Good luck with that. [Previous page](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530.md?page=6) [Next page](https://boards.straightdope.com/t/tax-takers-vs-tax-payers/614530.md?page=8)