Do rich people pay taxes?

Two simple examples from the city here:

If you are poor and unable to afford a car, you are (mostly) limited to jobs that are along the bus routes or within walking distance of the lower income neighborhoods.  The bus routes are not extensive and tend to only run in lower income areas to begin with.  So basically you get trapped.

From an education standpoint... there is a system here where you can apply and get accepted to any school in the county.  Your child can attend, but no transportation is provided.  Guess who has the time/job flexibility/money/transportation to take their child to the school with the best educational opportunity?  The wealthy.

GameboyRMH said:

Robbie said:

But then you have to figure out what 'this' is. And you have to answer the big question: that if you make a lower bound, have you really done anything at all?

You could make a lower bound that ensures that people working full-time jobs can support themselves decently, that would be a nice improvement to many people's lives. This would also be great for the economy since legal sub-livable wages amount to a massive, unorganized and unaccountable corporate welfare scheme for every company that hires people who still need government/community assistance to support themselves.

Ok, I can agree to that. Problem is we still have large variations between countries. So if costs for an employer go up in one spot, they tend to move away. And that works the reverse for all the now-unemployed people and the government that was supporting a percentage that is now supporting the whole. Back to a balancing act.

Robbie said:

GameboyRMH said:

Robbie said:

But then you have to figure out what 'this' is. And you have to answer the big question: that if you make a lower bound, have you really done anything at all?

You could make a lower bound that ensures that people working full-time jobs can support themselves decently, that would be a nice improvement to many people's lives. This would also be great for the economy since legal sub-livable wages amount to a massive, unorganized and unaccountable corporate welfare scheme for every company that hires people who still need government/community assistance to support themselves.

Ok, I can agree to that. Problem is we still have large variations between countries. So if costs for an employer go up in one spot, they tend to move away. And that works the reverse for all the now-unemployed people and the government that was supporting a percentage that is now supporting the whole. Back to a balancing act.

Or you could find ways to discourage jurisdiction-shopping...which admittedly is a tricky thing to do while avoiding trade wars. Perhaps by having countries coordinate raising their lower bounds. It won't be easy, the system we're trying to fix is a hideous mess of positive feedback loops and coffin corners all raring to cause a catastrophic failure.

GameboyRMH said:

Enyar said:

In reply to ProDarwin :

I agree with this. Try to level the playing field so that your life doesn't depend on which va jay jay you happen to pop out of. If you chose to squander those opportunities then that's your problem. There will be certain safety nets but no redistribution of wealth just because one guy made out like a bandit

OK, making progress toward defining equality of opportunity. So I think first of all it means we have to eliminate any kind of birth defects or hereditary disease. A tall order but an easy one to define on paper. Next, how do we equalize the effects of the wealth of the vajayjay you came out of? If you're born to a single mother in Da Hood you'll obviously have less opportunity than being born to the housewife of some rich guy who's made sizable donations to an Ivy League university, can hire all the private tutors you'd ever need, and has a cushy office job at his firm for you if that doesn't work out, for example. How can that be addressed without redistributing wealth or income?

By taxing income and not giving beneficial treatment to those that work compared to those that produce. I personally believe that we can solve most of our problems by just dumping money into education.

We are in the same boat. Equal access to education and safety nets for those that have limitations due to poor genes.

Cotton said:

In reply to dculberson :

Okay, being rich to you means, among other things, nice house,  nice schools,  nice cars.  Hell,  maybe you’re right.  I just see it differently,  that’s all.   Based on this thread alone it obviously means different  things to different people.

Well, not quite. Keeping in mind of course I'm speaking financially only, not as in "a rich life" but as in a financially rich person. Those things (house, schools, etc) are not necessary for someone to be rich, but you can't have them unless you're rich. So a subset of rich people have nice house, send their kids to nice schools, and drive nice cars. But there are rich people that don't do that. Warren Buffet doesn't live in a palace and his car is an old Lincoln Town Car. (Or was, I don't know right now.) He's obviously rich.

To me, "rich" just means someone has access to far more money than the average person. Be that through a trust fund, inheritance, high wage job, gradual savings over decades, whatever. More money than 97 out of 100 people qualifies, to me. That means you've got more money than 320 million of your fellow Americans. I just don't see how that could possibly be considered "middle class."

To some people, I see that having to work for a wage means you're not rich. I just don't have quite that strict of an understanding of it.

In reply to dculberson :

Yes. There are a number of folks who have all of the appearances of being "rich" - house, cars, schools, etc. but have not really paid for it and are far from rich.  And then you have the Buffet types who get yelled at by their financial advisor they need to spend more so they pay less in taxes...  although I'm still not sure how that's supposed to work.

dculberson said:

Cotton said:

In reply to dculberson :

Okay, being rich to you means, among other things, nice house,  nice schools,  nice cars.  Hell,  maybe you’re right.  I just see it differently,  that’s all.   Based on this thread alone it obviously means different  things to different people.

Well, not quite. Keeping in mind of course I'm speaking financially only, not as in "a rich life" but as in a financially rich person. Those things (house, schools, etc) are not necessary for someone to be rich, but you can't have them unless you're rich. So a subset of rich people have nice house, send their kids to nice schools, and drive nice cars. But there are rich people that don't do that. Warren Buffet doesn't live in a palace and his car is an old Lincoln Town Car. (Or was, I don't know right now.) He's obviously rich.

To me, "rich" just means someone has access to far more money than the average person. Be that through a trust fund, inheritance, high wage job, gradual savings over decades, whatever. More money than 97 out of 100 people qualifies, to me. That means you've got more money than 320 million of your fellow Americans. I just don't see how that could possibly be considered "middle class."

To some people, I see that having to work for a wage means you're not rich. I just don't have quite that strict of an understanding of it.

This reminds me of something I learned when dealing with the Mercedes dealer. Nobody cares how much money you have if you're not willing to spend it. I'm worth less to the dealer than ANYONE who is willing to drop a down payment. 
People don't treat you differently because you have money, but because you spend it, and they want some of it. 

Ian F said:

In reply to dculberson :

Yes. There are a number of folks who have all of the appearances of being "rich" - house, cars, schools, etc. but have not really paid for it and are far from rich.  And then you have the Buffet types who get yelled at by their financial advisor they need to spend more so they pay less in taxes...  although I'm still not sure how that's supposed to work.

I completely understand the spend to keep your money part. 

It’s really simple to understand, tough as heck to actually do. However if you do it well you will wind up way ahead of those who try to save for it. 

Robbie said:

One practical way to consider 'equality of opportunity' is to make a lower bound. Everyone gets at least 'this'. If you happen to win the lottery and be above 'this' then nice. If not, we are taxing folks in order to bring you up.

But then you have to figure out what 'this' is. And you have to answer the big question: that if you make a lower bound, have you really done anything at all?

Unfortunately as much as I like discussing these ideals, probably the more relevant and likely to help work is in discussing small incremental changes that can actually be implemented. And I'm generally pisspoor at that.

I think we are talking along the same line.  How to implement big changes? Start small. Give both sides something they want more than the don’t want the other side to “win” 

My national Sales tax.  A small 2% on everything sold without exception. Paid at time of sale.  

In exchange for elimination of income tax below $50,000 a year.  And limit it to say 3 categories. 

$50,000 - $250,000 5% 

$250,000-$1 million 10% 

$1,000,000 +.           15% 

no deductions. Wipe out all 77,000 pages of the tax code.  

In reply to frenchyd :

Unfortunately a seriously simplified tax code wipes out millions of accountant jobs... American-based, hard -to-offshore, white collar, well-paying jobs at that.

Maybe a long term improvement so I'm not necessarily logically against it, but it will be hard to pass a job killing bill.

In reply to Robbie :

Take their skills and apply them to finding and eliminating tax evasion schemes 

In reply to Robbie :

Screw the accountants! If they aren't needed the money could be spent elsewhere. But I wouldn't worry about that, I would worry about the massive deficit from that plan. You think the widening wealth gap is bad now, you should see it after a plan like that. 

Enyar said:

In reply to Robbie :

Screw the accountants! If they aren't needed the money could be spent elsewhere. But I wouldn't worry about that, I would worry about the massive deficit from that plan. You think the widening wealth gap is bad now, you should see it after a plan like that. 

You underestimate the trillion dollars a 2% sales tax on everything would generate.  When Ford Motor buys a roll of steel to stamp doors out of they pay a 2% tax ( no tax paid now) when General Motors buys General Mills they’d pay a 2% sales tax ( no tax paid now)  when Warren Buffet buys a million shares of stock he’d pay 2% ( no tax paid now)   When your church buys some wine they’d pay a 2% sales tax. ( on top of the FET they already pay) 

Everything would have a 2% sales tax. No exceptions!  

Well, just for fun let's do the math.

Current revenue 3.2T. that's our bogey. Do we keep payroll taxes? because that is a solid 1T of the 3.2. Anyway, based on this:

http://www.pewresearch.org/fact-tank/2015/03/24/high-income-americans-pay-most-income-taxes-but-enough-to-be-fair/ft_15-03-23_taxesind/

The 250+ income bucket currently pays about half of the 2T income taxes (at a 40% rate). So they currently pay 1T. At 15% instead, they would pay about .3T. 50k-100k is 15% of 2T or .3T, at a current rate about 25%. 100k-200k is 20% of 2T or .4, at a current rate about 30%. 200k-250k pays 5% of 2T or .1T at a current rate about 33%. So total that is about .8T that would fall to about .2T at 5% instead.

So income taxes go down from about 2T to .5T. the sales tax would have to make up the difference (1.5T if we keep payroll, 2.5T if we don't). That means at 2% we need 75T-125T in annual sales to tax. Since our GDP is 'only' 20T (and I'm not sure all of the GDP could actually be taxed with a sales tax), looks like we fall far far short, as Enyar pointed out.

In reply to Robbie :

For any tax to work it has to have 4 basic things. 

Be simple

Be fair

Be immediate

Be trivial 

2% is very simple, for those math challenged use the calculator on every phone. 

2% is a flat tax. And while it doesn’t have the progressive feature so many like ( including myself ) in order to get a progressive feature we would need to accept exceptions. For this reason or that blah blah blah and we wind up with 77,000+ pages of tax code 

2% is immediate, a simple line on a deposit slip. Paid within 24 hours of receipt.  

2% is as trivial as it can get   Gross domestic  product does not count all the trades especially the ultra rapid trades on the stock/ futures markets.  

Nor does it count the cash market.  Say you sell a lawn mower to your neighbor for $100 Your deposit slip shows $98. To your account and $2.00 to the government.  

Im sure  you won’t risk the trouble evading taxes will cause for a lousy $2.00  especially since all those tax accountants and $1000 an hour lawyers will be looking over your shoulder. 

In reply to Robbie :

And that assumes spending in the US stays flat. Every other country just got a 2% headstart on us so there would be a lot more purchasing offshore.

In reply to Enyar :Import duty?  And we lower and simplify taxes  to get the 2%  

This should be revenue and spending neutral  

frenchyd said:

In reply to Robbie :

For any tax to work it has to have 4 basic things. 

Be simple

Be fair

Be immediate

Be trivial 

Crap! How could I forget the first chapter in my "how to design a good country from the ground up" textbook from high school?

I'm being facetious but I really don't know where you got those 'rules' (as good as they may sound). You also keep saying that your plan is revenue neutral, but you have no numbers to back it up. Worse, the numbers posted do not help your case. Finally, I have no idea how you believe that we can actually tax and police small cash transactions... You'd really pay a $1000/hr lawyer to make sure I paid my $2 from selling my lawnmower?

Sales tax on stock trades is a really good idea I think (at first glance, before I have really understood and thoroughly examined the idea). It should actually work like a giant damper on the stock market (slow the change of price, since volume should go down), and eliminate any trade where the gain was going to be less than the tax. However, you could do the same thing by upping the short and long term capital gains tax, which I would in no way be opposed to.

Robbie said:

Crap! How could I forget the first chapter in my "how to design a good country from the ground up" textbook from high school?

I'm being facetious but I really don't know where you got those 'rules' (as good as they may sound). You also keep saying that your plan is revenue neutral, but you have no numbers to back it up. Worse, the numbers posted do not help your case. Finally, I have no idea how you believe that we can actually tax and police small cash transactions... You'd really pay a $1000/hr lawyer to make sure I paid my $2 from selling my lawnmower?

If you look at real-world examples of jurisdictions that have omnipresent sales taxes (of which I have personal experience with 2), it's an open secret that the sales taxes are widely ignored in small cash transactions. By me even some businesses don't pay them - most very small "backyard" businesses and even a few small-to-medium-sized ones.

Robbie said:

frenchyd said:

In reply to Robbie :

For any tax to work it has to have 4 basic things. 

Be simple

Be fair

Be immediate

Be trivial 

Crap! How could I forget the first chapter in my "how to design a good country from the ground up" textbook from high school?

I'm being facetious but I really don't know where you got those 'rules' (as good as they may sound). You also keep saying that your plan is revenue neutral, but you have no numbers to back it up. Worse, the numbers posted do not help your case. Finally, I have no idea how you believe that we can actually tax and police small cash transactions... You'd really pay a $1000/hr lawyer to make sure I paid my $2 from selling my lawnmower?

Sales tax on stock trades is a really good idea I think (at first glance, before I have really understood and thoroughly examined the idea). It should actually work like a giant damper on the stock market (slow the change of price, since volume should go down), and eliminate any trade where the gain was going to be less than the tax. However, you could do the same thing by upping the short and long term capital gains tax, which I would in no way be opposed to.

The principle of enforcement of any rule is you expect most people to obey. Make the potential “price” of failure to obey high enough to make most of the rest of of the scofflaws obey and use a few high visibility arrests to seal the deal.  

So those $1000 hr attorneys do what they do in court. 

frenchyd said:

Robbie said:

frenchyd said:

In reply to Robbie :

For any tax to work it has to have 4 basic things. 

Be simple

Be fair

Be immediate

Be trivial 

Crap! How could I forget the first chapter in my "how to design a good country from the ground up" textbook from high school?

I'm being facetious but I really don't know where you got those 'rules' (as good as they may sound). You also keep saying that your plan is revenue neutral, but you have no numbers to back it up. Worse, the numbers posted do not help your case. Finally, I have no idea how you believe that we can actually tax and police small cash transactions... You'd really pay a $1000/hr lawyer to make sure I paid my $2 from selling my lawnmower?

Sales tax on stock trades is a really good idea I think (at first glance, before I have really understood and thoroughly examined the idea). It should actually work like a giant damper on the stock market (slow the change of price, since volume should go down), and eliminate any trade where the gain was going to be less than the tax. However, you could do the same thing by upping the short and long term capital gains tax, which I would in no way be opposed to.

The principle of enforcement of any rule is you expect most people to obey. Make the potential “price” of failure to obey high enough to make most of the rest of of the scofflaws obey and use a few high visibility arrests to seal the deal.  

So those $1000 hr attorneys do what they do in court. 

Yes, the death penalty prevents murders and heinous crimes.

Let's move on.

Robbie said:

Well, just for fun let's do the math.

Current revenue 3.2T. that's our bogey. Do we keep payroll taxes? because that is a solid 1T of the 3.2. Anyway, based on this:

http://www.pewresearch.org/fact-tank/2015/03/24/high-income-americans-pay-most-income-taxes-but-enough-to-be-fair/ft_15-03-23_taxesind/

The 250+ income bucket currently pays about half of the 2T income taxes (at a 40% rate). So they currently pay 1T. At 15% instead, they would pay about .3T. 50k-100k is 15% of 2T or .3T, at a current rate about 25%. 100k-200k is 20% of 2T or .4, at a current rate about 30%. 200k-250k pays 5% of 2T or .1T at a current rate about 33%. So total that is about .8T that would fall to about .2T at 5% instead.

So income taxes go down from about 2T to .5T. the sales tax would have to make up the difference (1.5T if we keep payroll, 2.5T if we don't). That means at 2% we need 75T-125T in annual sales to tax. Since our GDP is 'only' 20T (and I'm not sure all of the GDP could actually be taxed with a sales tax), looks like we fall far far short, as Enyar pointed out.

 

I'd even argue that since we're currently running a massive deficit, any future tax plan should try to not only match current revenue, but exceed it (making the case for 2% sales tax even more dubious). Or, it should be coupled with reduced spending, but lets be real.

In reply to GameboyRMH :

Most state and local taxes are nearing 10%  which some people will risk failure to pay.  However if the penalty is serious enough and enforcement is persistent enough few will risk prison for a few dollars

STM317 said:

Robbie said:

Well, just for fun let's do the math.

Current revenue 3.2T. that's our bogey. Do we keep payroll taxes? because that is a solid 1T of the 3.2. Anyway, based on this:

http://www.pewresearch.org/fact-tank/2015/03/24/high-income-americans-pay-most-income-taxes-but-enough-to-be-fair/ft_15-03-23_taxesind/

The 250+ income bucket currently pays about half of the 2T income taxes (at a 40% rate). So they currently pay 1T. At 15% instead, they would pay about .3T. 50k-100k is 15% of 2T or .3T, at a current rate about 25%. 100k-200k is 20% of 2T or .4, at a current rate about 30%. 200k-250k pays 5% of 2T or .1T at a current rate about 33%. So total that is about .8T that would fall to about .2T at 5% instead.

So income taxes go down from about 2T to .5T. the sales tax would have to make up the difference (1.5T if we keep payroll, 2.5T if we don't). That means at 2% we need 75T-125T in annual sales to tax. Since our GDP is 'only' 20T (and I'm not sure all of the GDP could actually be taxed with a sales tax), looks like we fall far far short, as Enyar pointed out.

 

I'd even argue that since we're currently running a massive deficit, any future tax plan should try to not only match current revenue, but exceed it (making the case for 2% sales tax even more dubious). Or, it should be coupled with reduced spending, but lets be real.

77,000+ pages of the tax code plus all those legal precedents  is your idea of a good tax system then you and I will have to respectfully disagree.  

On the other hand if you agree there should be changes made please make your case.  I’m the first one to admit I don’t have perfect answers.  

So if we need to make number changes for a simple plan to work what numbers are called for?  

To be fair no one knows how much taxing everything with no exceptions would generate. It’s never been done. But do those exceptions outweigh the benefits of a simple, fair,  trivial, 

77,000 pages and $1,000/hour lawyers. Tax pages go up, lawyer fees go up. Can't explain that.