Yes. I think someone who makes $400 a week paying $40 and someone making $40,000 paying $4,000 in taxes is fair. We ALL should contribute to the operation of the country. If someone makes ten times more than someone else, paying ten times more in taxes is the very definition of fair. Now, I do think we can make it easier on someone who values his pennies more, say someone making under $25,000 a year, by allowing him to make up what he owes by doing volunteer work. If I were in that position, I would WANT the opportunity to feel like I’m doing my part, like I’m a positive contributor to the country and not a freeloader. There is honor in work and in paying your own way. Maybe you feel differently. [Shrug.]
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Nice sleight of hand there, but I’m not asking for an equal payment, am I? (Though that would be ideal.) I’m not asking for the two guys I mentioned above to make the same payment, just to have their contribution be commensurate with their income. 10%, 20%, 30%, pick a number.
If I have 10 million dollars and I have 3 kids and each kid will be allowed to inherit 1 million when I die, I have no reason to bother with any investing. All I have to do is ensure that my estate is worth 3 million (plus some change for the lawyers) when I die. So instead of investing the extra 7 million it makes more sense to blow it on hookers and beer because a) investing takes serious thought and time and b) no one in my family is going to profit from my time spent investing over the 3 million.
Second, a million dollars ain’t all that much. If you get 10% return on the million you have $100,000 per year. To keep up with inflation you take out about 4% (40,000) and plow that back into the principle. That leaves 60,000. Taxes already take out another 15,000 if I recall correctly. So that 100,000 turns into 45,000. That happens to be about the average wage in Las Vegas, where I live. A million will get you a decent life, but you certainly won’t be driving around in a Lamborghini.
Oh, and about the family home: I imagine that most people don’t want to live in their parents old house with their siblings. I certainly wouldn’t want to. So it’d probably get sold off and then the proceeds would be taxed.
So, you really think that $1 for Bill Gates is worth the same as $1 for a minimum wage worker? Or that Gates would even notice writing a check for ten years of this guy’s earnings?
No, you’re complaining about the redistribution of wealth. If millionaire A and working poor person B get roughly the same benefits from the government, while the millionaire is paying more absolutely, there is going to be redistribution to the poorer person. No way around it, except forcing all incomes, and thus payments and benefits, to be the same.
I’ll look for some studies on the relative value of money over income levels. I’m pretty sure it is non-linear. 20% of income from someone just barely keeping up the rent and feeding his family is a lot more painful than me paying 20% of my income. Do you deny that?
But it’s not a 100% rate. At the very tippy-tippy top it’s 45%. So, if you had 7 million extra (and that assumes rather dumb lawyers, smart ones could reduce the tax a LOT, and if you have 7M you’d think you could hire smart lawyers) the kids would get 3 mill + around 4 mil= 7 mil, you estate only lost 3 mil$. And what’s wrong with paying some income tax on stuff never taxed? Most of the wealth will be in gains never taxed, not cash in a Scrooge McDuck Money Vault.
And sure, the kids may want to sell the house, but the gain will be figured on the Adjusted Basis which is the FMV at the time of death. So if the home is worth 1 Million and they sell it for 1,100,000 (assumes a damn good RE market) they pay taxes on the $100K and at their personal rates of about 28% or so, or something around 30K. On a million dollar house.
The point is that there are different ways to receive money. For most people the money they receive is in the form of income from their job. Income is taxed.
But as others have pointed out, wealthy people often receive money by means other than income. And often these alternative forms of payment are taxed at a lower rate than income is. For example income tax rates vary from 10% up to 35%. Tax rates on long-term capital gains max out at 15%. So you are probably paying a higher rate of taxes on the money you receive than than somebody who is making twenty times as much. Because your money is income and his is capital gains.
Inheritance tax is a similar case. If somebody paid you a salary of $250,000 in 2007, you’d pay 33% tax on it. But if somebody gave you $250,000 as an inheritance in 2007, you’d pay 28% tax on it.
As I said before, are you willing to pay more taxes so Bill Gates can pay less?
Since this debate is devolving into a general discussion of tax policy, I’d like to point out that there is a significant structural problem in a democracy when the tax system is too progressive - it magnifies the tyranny of the majority. If the taxation burden is placed disproportionately on a small proportion of people, the majority has no incentive to curb government spending. There’s no downside.
And that’s exactly where we’re heading. According to the Tax Foundation, 1/3 of people who filed a tax return in 2004 paid no income tax. Add in the 15 million people who earned some income but not enough to have to file a return, and youv’e got 57.5 million people who do not pay income tax. If you add in dependents (non-working spouses, retirees with no income, etc), you have 120 million Americans who do not pay income tax.
What incentive do these people have to curb government spending? Why would they ever vote against an expansion of a government program, other than if it took money away from some other program they want? Where is the fiscal discipline supposed to come from?
A democracy where the majority of voters do not pay for the programs they vote for is unstable.
I agree that a tax system with confiscatory rates for the rich is not good. However, might the increasing amount of taxes the rich are paying now be a function of the increased spread between the top 10% and everyone else? We could take money away from the rich, but I’d think a better way is increasing the income at the bottom and middle, which would make them pay more taxes. I kind of suspect they’d be happy to do so.
I don’t know how it works in Canada, but here counting non-working spouses in the pool of those not paying taxes is invalid. The purpose of filing jointly is that income of two spouses is merged, and thus the tax burden is merged also. That probably takes a big chunk out of your numbers right there.
Most rich people have financial advisors and CPAs. Financial advisors and CPAs for the most part practice good tax planning and strive to achieve a high level of tax-efficiency for their clients.
Taxing the rich more is not as easy as it sounds because of this.
What you mostly end up taxing is the middle and upper middle class, or those who ignore the possibilities for sheltering assets.
I misread, my apologies, though the underlying point still stands.
Please, tell me where I suggested that people should stop working. I never said that. I just pointed out that trying to live on *one million dollars * isn’t exactly a lavish lifestyle. A million in investments (returning 10% a year) gets you about the same amount as the average working person, at least where I live. Second, if people have enough money and choose to invest (which, by the way, is work) and live off the proceeds, more power to them.
It has nothing to do with financial advisors and CPAs. The law is not some arbitrary phenomena that just appears.
The reason tax laws favor the wealthy is because they pay advocates to ensure that those laws get passed. Part of this effort is spend directly on influencing politicians. But a lot of it is also spend on media campaigns in order to convince a significant portion of the middle class that it makes sense for them to sacrifice their self-interest on behalf of the interests of the wealthy. And as this thread demonstrates, that effort wasn’t wasted.
Sure, I have no problem with people living off the proceeds if it is enough, but it isn’t a right. As for investing being work, investing is like mowing your lawn. It’s work, but you can pay someone to do it, and they may do it better than you do. My neighbor, who is retired, spends a chunk of time on investments. I don’t. I’m not sure his return is better than mine. There are all sorts of hangups an individual has in managing investments for himself which a professional doesn’t have.
But I agree that a million buck ain’t what it used to be.
Of course it’s not a right. Read the Constitution. Amendment 16: “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.” Congress has the right to take money that you earned. If this is actually news to you, you might want to consult a lawyer on the subject of delinquent taxes.
That is immaterial. Me buying car hurts a lit more than gates buying a car, but unless you want to move to a communist society where everyone has the same everything, people will have varying levels of pain when it comes to parting with money for anything—whether it be cars, food, or taxes.
As in a communist state. I agree. I also stipulated, which you seemed to ignore, that having everyone pay the same dollar amount would be ideal. But at least having everyone pay the same percent has maintains a degree of fairness. I can accept that i order to run the country I should tithe, so to speak, a percent of my income. And I should expect me neighbors to do the same.
Of course not. I just don’t think we should do anything to alter it. It is also true that someone making a million dollars a year would fell it more than Gates to pay, say, 20% of his income. Big deal. The more money you have the more you can pay out and not have it affect you. Sounds kinda like a law of the universe to me.
