Wealth Tax

rono

Howdy folks,

I disagree with a punitive tax on the wealthy. Their tax rate is already sufficiently high. It's not their tax rate, it's their incident of taxation (i.e. how much they really pay) which is the problem.

So, as a modest proposal, why not eliminate all deductions for income over $1,000,000 and tax it at a flat 15% - pay at the window.

Hell, for that matter, why not eliminate all deductions for every man, woman, child and corporation and have everyone pay 15%. 15% tax on all forms of income. No deductions. And give everyone a one time exemption of $25,000. That would mean that a family of four wouldn't state paying tax until $100K.

early Saturday morning and so it goes,

peace,

rono

Mark

Works for me but probably too easy to ever make it out of the gate.

rono

go gophers

Mark

Thanks and so they did. It was a fun game to watch.

johnN

Remembered the 9 9 9 rules should change to 19 19 19 rule everyone pays 19% (lower middle high income and corporate -fairness for everyone)..

davidrmoran

wanh wanh
https://www.washingtonpost.com/us-policy/2019/11/09/americas-billionaires-take-center-stage-national-politics-colliding-with-populist-democrats/

dryflower

I actually think a wealth tax is a great idea. An annual tax of maybe about 3%. But it needs to be coupled with the complete elimination of the inheritance
tax. Much less onerous and disruptive to the taxees, and probably would raise more revenue over their lifetimes.

catch22

@dryflower
You stated: "the complete elimination of the inheritance."

What about a circumstance, such as a generational family farm or other family business? Might one suppose other tax codes would allow the next generation to inherit the farm without going into massive debt or actually having to sell the farm operation?

What say you?

Thank you.
Catch

LewisBraham

If we get rid of the inheritance tax and now believe that children and grandchildren and great grandchildren, etc. should inherit massive sums of wealth they never earned or worked for themselves but simply possess because of their lucky genetics, can we also bring back debtors' prisons and make it so children and grandchildren and great grandchildren, etc. can inherit their ancestors' debts simply because of poor genetics, even though they also did nothing to incur the debt? Why don't we go full biblical and let the sins of the indebted father visit themselves upon the sons so that they should just be born in prison and toil there for the rest of their lives or until the debt is paid off? It makes as much sense as creating a class of kings and queens who inherit wealth in perpetuity and will never cease to rule America for every generation, no matter how poorly educated, lazy or vicious their offspring might be. After all, we now have two recent presidents one could argue that have benefited our nation immensely from receiving significant inheritances.

dryflower

@catch22 the line broke at an unfortunate place in the sentence, and I think you missed seeing the word "tax".

@LewisBraham Remember, under the annual wealth tax system I am proposing, society would be constantly calling that wealth back in. We could raise the rate if you think that would be better. How about 4%.......or 6% ?

Why is the current system of a Draconian tax rate imposed at death better, in your opinion?

LewisBraham

@dryflower
The "draconian" estate tax affects less than 0.1% of the population and allows for an $11 million exemption from the tax per person: https://cbpp.org/research/federal-tax/policy-basics-the-federal-estate-tax

Taxable estates will owe 16.5 percent of their value in tax in 2018, on average (see chart). This “effective rate” is much less than the top marginal rate of 40 percent for three reasons:
The tax applies only to the value of the estate that exceeds the exemption level. For example, at the current exemption level, an estate worth $12 million would owe taxes on $800,000 at most, for a maximum effective tax rate of less than 3 percent.
The tax contains a number of provisions that reduce estates’ tax liability, many of them originally designed to protect farmers and small businesses.
Many wealthy estates use complex estate planning methods to exploit loopholes that reduce their tax liability and allow them to pass on significant portions of their estates tax-free.

It is by no means draconian in any shape or form.
Moreover, it is a philosophical problem in a nation that ostensibly believes in "personal repsonsibility" and being "self-made" to allow children who've done no work at all for the money they receive to inherit wealth in perpetuity. It also will lead to the death of our democracy as it creates an entrenched power base that never changes. And let's be honest, money always matters more in the U.S. than votes. Letting Jeff Bezos' and the Kochs' heirs run the nation forever is a bad idea. We fought a Revolutionary War to put an end to the notion of royalty and inherited titles. We don't need to allow it here today.

Crash

The very term, "wealth tax" is a red herring. All sorts of stuff, including tax code provisions everywhere--- not just in the USA--- are allowed, though they are highly unethical. There will always be wealthy ones and poor ones. Some of the responsibility for the poor being poor may very well be their own, but not all. And life is not a level playing-field. Doesn't society as a whole have a collective responsibility to itself not to let wealth become obscene wealth? .... And from another angle: my nephew told me something that surprised me, the other day: in high school, they actually WERE taught about economics, the way money works, etc. But he just didn't CARE and didn't pay attention. "Youth is wasted on the young." ... But as long as there are people struggling to provide the basics for their families, NO ONE deserves to be a billionaire. And maybe a millionaire.

dryflower

I thought we were all millionaires here

Anyway, accepting the premise that we want to pull truly obscene wealth back away from individuals for the good of society: Wouldn't it make more sense to do it on an annual basis at whatever rate is deemed appropriate as opposed to a very large tax upon death?

@LewisBraham I accept that the effective rate is usually far less than the marginal rate, but for someone like Bezos, the true effective rate would be quite close to the marginal rate.

rono

Howdy,

I don't have that much of a problem with the inheritance tax or any other marginal tax rates SO LONG THAT THEY ARE REASONABLE. They must be or you'll stifle innovation, etc.

I still see the problem is with the incidence of taxation (and Trump's tax cuts). Not enough revenue, debt going insane . . . rono does not like it. No he doesn't.

So I'll stick with 15% for all forms of income and a $25K personal exemption.

and so it goes,

peace,

rono

LewisBraham

@Rono Though I disagree with it, I understand the logic behind the argument that income taxes stifle innovation, but the notion that inheritance taxes stifle innovation seems utter hogwash to me. How is a trust fund kid incentivized to innovate? If anything, the opposite is the case and has proven so throughout history. Those born into wealth generally accomplish much less with their lives and for society than those who had to work for it. The income tax issue is more controversial as you could argue above a certain rate, people might say "It's not worth it to me to work harder." Still, I think if someone told a poor person they could work hard and earn a billion dollars but the government would take 70% and they would be left with $300 million, they'd still be OK with that. The income tax rate in the U.S. was once as high as 90% and it did not stifle innovation.

Here is one article on the subject:https://theatlantic.com/ideas/archive/2019/01/higher-taxes-rich-wont-suffocate-innovation/580642/

The two most important hubs of innovation in the United States are the Bay Area and New York City. But according to the Tax Foundation, California and New York have the 48th and the 49th most favorable business-tax climates in the country. Sky-high tax rates in Mountain View and Manhattan haven’t blunted their advantage.
Average tax rates on most income groups have been declining since the early 1980s, which you’d think would supercharge start-ups, but the official entrepreneurship rate in the United States has been falling over that entire period.
The United States has lower marginal tax rates on income than much of the Organization for Economic Cooperation and Development does, but the U.S. entrepreneurship rate is lower than those of many Western and Central European countries.
When the top marginal tax rates were about 90 percent in the 1950s and ’60s, the U.S. productivity rate was higher, men landed on the moon, and scientists invented the internet, satellites, and the transistor, planting the seeds of the entire computer revolution that now defines innovation.

rono

Hi Lewis,

I'm good with the inheritance taxes but feel the 'exemption' should be somewhere between $1M-5M. Above that, tax it for sure, but again, don't go overboard. Damnit, the gov't always overshoots - both parties, etc. Hell, look at California and pot. They got so damn greedy for tax revenues, that they made the red tape and fees so large, the black market is still thriving and decimating their projected revenues. Idiots.

And that's what I fear most with all this talk about wealth taxes. Idiots will overshoot.

That said, the very rich are going to have to start paying their fair share or they are going to have to die. All of them. Sorry but that's a fact.

and so it goes,

peace,

rono

davidrmoran

or?

Derf

Thinking rono meant: You can pay me now or pay me later as per Arnold Palmer & his oil ad.
Derf

Crash

Broader view: in a country/society in which medical care is provided to all, and GROCERIES are not taxed, I could feel more generous toward the obscenely wealthy, at least a bit. Re: some of the remarks above: The deceased Canadian singer, Leonard Cohen, was provided with guaranteed income, from something like a trust, from his father or his uncle. He traveled and wrote poems and music. (And in case you didn't know it, Leonard Cohen was GAWD. Frikkin' GENIUS.) He did all the stuff our parents warned us about. But in adulthood and beyond death, his legacy is huge. Before he died, the woman he trusted to babysit his money screwed him. So he embarked on what turned out to be a final world tour of performances. What did his kids inherit? I dunno, but I suspect it was taxed. Not sure if the inheritance tax-stuff was done in the USA or in Canada. He lived in L.A., but is buried in Montreal.

LewisBraham

@Crash Sure, but for every Leonard Cohen there are many more trust fund kids who behave like this: https://theguardian.com/us-news/2018/oct/19/billionaires-wealth-richest-income-inequality
And lest we forget, the Beatles and Jimi Hendrix came from humbler backgrounds. And how many more geniuses would we have if we taxed the wealthiest appropriately and used the revenues to educate and foster students from poor backgrounds?
https://famousscientists.org/scientists-harsh-begin/

Old_Skeet

The wealth tax.

I'm thinking a good number of the most wealthly would be shielded from this tax through the use of a trust. In this way, they really don't own the assets but recieve benefit from them as beneficiary of the trust.

I've never heard Elizabeth Warren (and others) say that they would tax the wealthy along with their trust funds, etc.

I'm for a flat tax (or even a step tax) with no deductions, writedowns or writeoffs allowed. All trust would be taxed the same with a flat tax.

In this way everybody pays the same. Those that make more pay more including their trust. I'm not for taxing pent up wealth in the form of an income or wealth tax as Ms. Warren and Mr. Sanders purpose as real estate is already taxed and unrealized capital gains usually get tax at the time the asset is sold.

It is pretty simple some politicians want to increase taxation so they can expand Federal governemnt social programs thus moving the Country more towards a socalist republic.

davidrmoran

or maybe they want to pay for what is already committed, including all those wars.

social program expansion would be good for all, though; higher taxes would be good for all, also; you need to read the literature on this.

as for your socialist republic,

... what the rest of the world calls social democracy: A market economy, but with extreme hardship limited by a strong social safety net and extreme inequality limited by progressive taxation.

https://www.nytimes.com/2019/02/07/opinion/trump-socialism-state-of-the-union.html

but I suspect you know this in your heart and are just trollling.

BenWP

@davidmoran suggests, rightly, that the terms "socialism" and "communism" are red herrings and have been used incorrectly in the current political environment. No candidate for the Democratic nomination has spoken of nationalization of any means of production or even a hybrid joint public/private ownership of any company or service. European countries do demonstrate some state-owned sectors such as nationalized rail systems or utilities and there are jointly-owned companies as well, such as Nissan-Renault in France. Even if the US were to adopt a Medicare for All healthcare system, all means of delivering services to patients would remain private and would still operate as part of the for-profit sector. That is not socialism.

LewisBraham

@Benwp The interesting thing is there are many "non-profit" hospitals that operate in the U.S., rake in tons of cash but pay no taxes because of their non-profit status. All for-profit means is you have shareholders, public or private ones, who get to keep or own the difference between revenues and operational costs. You can still have extraordinarily highly paid doctors, surgeons and administrators working for a non-profit hospital.

STB65

I'll probably regret joining this thread, and I agree with a lot of the comments, especially those that question the contributions of those who inherit wealth to providing benefit to the nation ( I know some Rockefellers have served, but I don't recall any Carnegies or Vanderbilts.) (One of my Arkansas informants swore that Governor Rockefeller was a drunk, so maybe he had some issues, but at least he was a Republican.)
I have no objection to a "wealth tax" that starts at a reasonable level, which may be difficult to define, but I agree that there's little evidence that higher taxes stifle invention and ingenuity. Thomas Edison is remembered far more for his inventions than he is for Con Ed, and Steve Jobs will be remembered for the I pod and I phone, not just for Apple, regardless of how much tax his heirs pay.
When we have an increasing deficit in the face of high employment and a stable economy, there is little doubt that the deficit will bloom during a recession. We really need to raise taxes when times are (relatively) good). I felt the best about the US when the deficit was actually decreasing during Clinton's second term, and I never voted for him, so I assumed the Republican Congress was responsible, but that was OK with me.
Then Bush gets, elected, cuts taxes, takes the Iran war off the books, and we now seem to be living on Chinese largesse, as they and others buy our bonds. (While I think we must protect our intellectual property, I'm not sure antagonizing the Chinese government in other areas is wise.)
I'm seriously concerned that the oligarchs are already in power and that the rest of us are not their concern.
Perhaps the horse is out of the barn (boy, that's a comment from a distant time), but we need to try to provide rational voices amid this time of division.