According to my professor, tax laws are written by the rich, for the rich.

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aidanjm

Lifer
Aug 9, 2004
12,411
2
0
Originally posted by: krunchykrome
Originally posted by: DVK916
Originally posted by: krunchykrome
I think your professor should omit his personal opinions from the curriculum.

This is a tax class, and we were talking about how and why tax laws are passed.

Whether there's truth to it or not, it's still a personal opinion. I don't think there is any room for opinion in a taxation class.

professors have earned the right to give their personal interpretations on their areas of interest/ research.
 

Bowfinger

Lifer
Nov 17, 2002
15,776
392
126
Originally posted by: Whoozyerdaddy
Originally posted by: ZeroIQ
Originally posted by: XMan
Corporations don't pay taxes. They increase the prices of their goods and services and pass their tax burden onto their customers.
You don't know what you're talking about. Increased revenue means increased taxes. It's all percentages. You charge more, you make more, you pay more.
Umm... Taxes are a cost of doing business. If you want to make more you calculate that cost into your price. It's not about revenues and taxes... it's about how much you want to make as a business owner.

When you run a business you'll understand.
That's a common misperception, but it misses a fundamental principle of economics. First, understand that business income taxes are a tax on its profits. A competent business will price goods and services to produce the greatest possible profit. Raising or lowings its prices will reduce profits. Therefore, a business makes even less profit if it tries to pass on increased income (profit) taxes. In general. increasing income taxes will reduce business profits, but increasing prices only makes it worse.

The main effect of increasing business income (profit) taxes is that the owners make less money, i.e., they get a lower return on their investment. This can affect investment behavior. If some businesses are taxed at greater rates than others, it makes them less attractive to investors. If all businesses are taxed comparably and rates increase, some investors may look for alternative investments, something that yields (or may yield) higher returns.
 

Bowfinger

Lifer
Nov 17, 2002
15,776
392
126
Originally posted by: blackangst1
Originally posted by: mfs378
Its tough to define fair, but I'm pretty sure that we can agree that if you earn more, the fraction you pay in (overall) taxes shouldn't be less. That can happen (and happens often) under the current tax system. Hence, the conclusion that tax code is biased toward the wealthy.
Wait...doesnt the percentage of taxes increase as your income does?

Thought so.
No, not really. It depends on the source of income and the tax shelters available. For example, capital gains are taxed at a much lower rate than ordinary income. Guess where most of the very wealthy's income comes from? Capital gains.

It also ignores the effect of the Social Security contribution which is flat for everyone, even poor people ... until ~$93K, at which point it stops entirely. The guy who "earns" $100 million pays, at best, exactly as many dollars as the guy making $100K. In other words, the rich guy pays at one-thousandth the rate of the upper-middle class guy.

The bottom line: effective tax rates peak on the upper middle class and then begin to fall. A typical person making millions per year actually pays at a lower effective rate than much of the middle class.
 

EagleKeeper

Discussion Club Moderator<br>Elite Member
Staff member
Oct 30, 2000
42,589
5
0
Capital gains are also the result of investment.

The investment funds were also taxed originally.
 

Bowfinger

Lifer
Nov 17, 2002
15,776
392
126
Originally posted by: EagleKeeper
Capital gains are also the result of investment.

The investment funds were also taxed originally.
What's your point exactly? In general, money is taxed whenever it changes hands. You don't pay additional taxes on your base investment. You do pay it on your "profits", be they interest, dividends, or capital gains.
 

imported_Shivetya

Platinum Member
Jul 7, 2005
2,978
1
0
Originally posted by: DVK916
He said the government is in the pockets of the rich and big corps, and tax laws are passed to take from the poor to give to the rich. That when they do a tax cut for the rich, they raise taxes on the poor.

What do you think of this.

your professor is both an idiot and class warfare supporter?

Lets try and make this simple.

NO CORPORATION, NOT A SINGLE ONE, PAYS ANY TAXES.


Got it?


They COLLECT taxes for the Government.
 

piasabird

Lifer
Feb 6, 2002
17,168
60
91
What about charges that are assessed by federal agencies like the FCC against our phones?

It is questionable whether they have a legal right to assess these charges when in acutality it is taxation without representation.

If it looks like a tax and feels like a tax, it must be a tax.

The Gas tax is another thorn in our side. Then there are supposed Pipeline fees and taxes that show up on our Gas and Power Bill. They quote one fee for the gas then they add these fees onto the citizen after the normal fee. I think this should be illegal. It is not that it might be a legal fee, it is that the extras should be included in the standard fee with full disclosure before a deal is signed. This last part may not have much to do with actual taxes.
 

rchiu

Diamond Member
Jun 8, 2002
3,846
0
0
Originally posted by: DVK916
He said the government is in the pockets of the rich and big corps, and tax laws are passed to take from the poor to give to the rich. That when they do a tax cut for the rich, they raise taxes on the poor.

What do you think of this.

Unfortunately, your professor is pretty accurate in describing the American tax system. But keep this in mind, while it is true that big corp and the rich have the biggest say in American tax law, they are also the ones contributing the most into the government treasury. Yes the amount they pay relative to their income is smaller than the middle/lower class, and yes when we have a tax cut, they pocket the most. But there is no debate that American economy needs the big corp and the rich to keep it going. So you cannot just have a tax system tailor to the poor and make it unfriendly to the big business and the rich. If you do that, you will just end up slowing down the economy and hurt everyone in the process.
 

blackangst1

Lifer
Feb 23, 2005
22,902
2,359
126
Originally posted by: Bowfinger
Originally posted by: EagleKeeper
Capital gains are also the result of investment.

The investment funds were also taxed originally.
What's your point exactly? In general, money is taxed whenever it changes hands. You don't pay additional taxes on your base investment. You do pay it on your "profits", be they interest, dividends, or capital gains.

The point is, investments in general are taxed twice. Once as income earned, and again the profit resulting from investment. And lets not even get into estate taxes. That, my friend, is where the rich get ass raped.

And as a side note, why is it so evil if the ultra wealthy want to find ways to keep their wealth? WTF? It's THEIR MONEY.
 

1EZduzit

Lifer
Feb 4, 2002
11,833
1
0
Originally posted by: blackangst1
Originally posted by: Bowfinger
Originally posted by: EagleKeeper
Capital gains are also the result of investment.

The investment funds were also taxed originally.
What's your point exactly? In general, money is taxed whenever it changes hands. You don't pay additional taxes on your base investment. You do pay it on your "profits", be they interest, dividends, or capital gains.

The point is, investments in general are taxed twice. Once as income earned, and again the profit resulting from investment. And lets not even get into estate taxes. That, my friend, is where the rich get ass raped.

And as a side note, why is it so evil if the ultra wealthy want to find ways to keep their wealth? WTF? It's THEIR MONEY.

What? They are taxes the NEW INCOME, not the old income.
 

blackangst1

Lifer
Feb 23, 2005
22,902
2,359
126
Originally posted by: 1EZduzit
Originally posted by: blackangst1
Originally posted by: Bowfinger
Originally posted by: EagleKeeper
Capital gains are also the result of investment.

The investment funds were also taxed originally.
What's your point exactly? In general, money is taxed whenever it changes hands. You don't pay additional taxes on your base investment. You do pay it on your "profits", be they interest, dividends, or capital gains.

The point is, investments in general are taxed twice. Once as income earned, and again the profit resulting from investment. And lets not even get into estate taxes. That, my friend, is where the rich get ass raped.

And as a side note, why is it so evil if the ultra wealthy want to find ways to keep their wealth? WTF? It's THEIR MONEY.

What? They are taxes the NEW INCOME, not the old income.

Let me expand what I said. Depending on the tax shelter invested in, the money is taxed twice. I'll break it down for middle class to understand: If you withdraw money form your 401k or IRA for example, you are charged a "penalty", which is, in fact, a tax. Thats just one example.

And you havent even acknowledge my stement: why is it so evil if the ultra wealthy want to find ways to keep their wealth? WTF? It's THEIR MONEY.

Do you disagree?
 

1EZduzit

Lifer
Feb 4, 2002
11,833
1
0
Originally posted by: blackangst1
Originally posted by: 1EZduzit
Originally posted by: blackangst1
Originally posted by: Bowfinger
Originally posted by: EagleKeeper
Capital gains are also the result of investment.

The investment funds were also taxed originally.
What's your point exactly? In general, money is taxed whenever it changes hands. You don't pay additional taxes on your base investment. You do pay it on your "profits", be they interest, dividends, or capital gains.

The point is, investments in general are taxed twice. Once as income earned, and again the profit resulting from investment. And lets not even get into estate taxes. That, my friend, is where the rich get ass raped.

And as a side note, why is it so evil if the ultra wealthy want to find ways to keep their wealth? WTF? It's THEIR MONEY.

What? They are taxes the NEW INCOME, not the old income.

Let me expand what I said. Depending on the tax shelter invested in, the money is taxed twice. I'll break it down for middle class to understand: If you withdraw money form your 401k or IRA for example, you are charged a "penalty", which is, in fact, a tax. Thats just one example.

And you havent even acknowledge my stement: why is it so evil if the ultra wealthy want to find ways to keep their wealth? WTF? It's THEIR MONEY.

Do you disagree?

The money in an IRA or 401k grows without being taxed. They did that on purpose to encourage people to invest long term for their retirement. If you take it out early it has to be penalized otherwise what's the point of it being a retirement fund?

And leave your stupid "evil ultra wealthy" crap out of the argument. They aren't evil in the sense your trying to imply, for the most part they're just greedy beyond what most of us regular people can even imagine. And yes, sometimes that greed makes some of them do evil things, but so do the rest of us. Were not any different.
 

Craig234

Lifer
May 1, 2006
38,548
350
126
Originally posted by: Pacfanweb
Originally posted by: DVK916
Personally I support a hyper progressive tax, one in which your tax rate increases at faster than a linear rate. Something alone the lines of, for each 1000 dollars of income over 30,000 the tax rate on that thousand dollar increases by 1%, until you reach around 65%.
You must not like a thriving economy, then. Check out how bad things were last time we had taxes like that. (hint: think Jimmy Carter)

More idiocy from the right.

What was the top tax rate the last time before GWB we had an all-republican congress, under Eisehnower?

The professor is exactly right, and the ignorant right-wing goes around spreading lies.
 

HombrePequeno

Diamond Member
Mar 7, 2001
4,657
0
0
Originally posted by: XMan
Originally posted by: ZeroIQ
Originally posted by: Whoozyerdaddy
Originally posted by: ZeroIQ
Originally posted by: XMan
Corporations don't pay taxes. They increase the prices of their goods and services and pass their tax burden onto their customers.

You don't know what you're talking about. Increased revenue means increased taxes. It's all percentages. You charge more, you make more, you pay more.
Umm... Taxes are a cost of doing business. If you want to make more you calculate that cost into your price. It's not about revenues and taxes... it's about how much you want to make as a business owner.

When you run a business you'll understand.

I do run a business, I do understand. If you make enough to get out of your current tax bracket, you pay more -- it's not a hard concept. To say that a corp doesn't pay taxes is ridiculous.

So if your tax burden increases, you'll absorb the extra cost out of your pocket and continue to charge your customers the same amount of money?

It really depends on what sort of taxes we're talking about. If its a tax on corporate profit, then no they don't increase the cost of their products. That wouldn't make any sense to do so because the cost of their input isn't changing. Its similar to the income tax. If your income tax is raised, you can't just go to your employer and demand a raise by the exact amount you have to pay in taxes.

It also depends on how elastic the goods are. If it's a highly elastic good, a tax on that good would be mostly on the firm and not on the individual. Generally highly elastic goods aren't taxed though. A tax would cause many people to substitute away from that good.
 

blackangst1

Lifer
Feb 23, 2005
22,902
2,359
126
Originally posted by: 1EZduzit
Originally posted by: blackangst1
Originally posted by: 1EZduzit
Originally posted by: blackangst1
Originally posted by: Bowfinger
Originally posted by: EagleKeeper
Capital gains are also the result of investment.

The investment funds were also taxed originally.
What's your point exactly? In general, money is taxed whenever it changes hands. You don't pay additional taxes on your base investment. You do pay it on your "profits", be they interest, dividends, or capital gains.

The point is, investments in general are taxed twice. Once as income earned, and again the profit resulting from investment. And lets not even get into estate taxes. That, my friend, is where the rich get ass raped.

And as a side note, why is it so evil if the ultra wealthy want to find ways to keep their wealth? WTF? It's THEIR MONEY.

What? They are taxes the NEW INCOME, not the old income.

Let me expand what I said. Depending on the tax shelter invested in, the money is taxed twice. I'll break it down for middle class to understand: If you withdraw money form your 401k or IRA for example, you are charged a "penalty", which is, in fact, a tax. Thats just one example.

And you havent even acknowledge my stement: why is it so evil if the ultra wealthy want to find ways to keep their wealth? WTF? It's THEIR MONEY.

Do you disagree?

The money in an IRA or 401k grows without being taxed. They did that on purpose to encourage people to invest long term for their retirement. If you take it out early it has to be penalized otherwise what's the point of it being a retirement fund?

And leave your stupid "evil ultra wealthy" crap out of the argument. They aren't evil in the sense your trying to imply, for the most part they're just greedy beyond what most of us regular people can even imagine. And yes, sometimes that greed makes some of them do evil things, but so do the rest of us. Were not any different.

1st bolded: Call it a penalty if you want, it's a friggin tax. IMHO money collected that goes to the government is a tax.

2nd bolded: Check your meter, sir ;)

3rd bolded: Maybe based on your experience, but mine has been different. And I have family and friends who are multi millionaires. YMMV of course.
 

blackangst1

Lifer
Feb 23, 2005
22,902
2,359
126
Originally posted by: Craig234
Originally posted by: Pacfanweb
Originally posted by: DVK916
Personally I support a hyper progressive tax, one in which your tax rate increases at faster than a linear rate. Something alone the lines of, for each 1000 dollars of income over 30,000 the tax rate on that thousand dollar increases by 1%, until you reach around 65%.
You must not like a thriving economy, then. Check out how bad things were last time we had taxes like that. (hint: think Jimmy Carter)

More idiocy from the right.

What was the top tax rate the last time before GWB we had an all-republican congress, under Eisehnower?

The professor is exactly right, and the ignorant right-wing goes around spreading lies.


Did you live in the USA when Carter was in office? Either you didnt, or you were too young to pay attention.
 

Craig234

Lifer
May 1, 2006
38,548
350
126
Originally posted by: blackangst1

Did you live in the USA when Carter was in office? Either you didnt, or you were too young to pay attention.

You're wrong on the issue here, and the larger issue of tax policy.

I was well aware of Carter, living in the US.

What your post really shows is that you don't understand the policy issues, as you try to evaluate decades of tax rates based on one 4-year presidency, and for that presidency, you ignore the real factors affecting the economy such as the effects by his predecessor's policies and the oil embargo and other things and instead look at the income tac rates which were no higher than they had been in decades, and were actually lower.

I see you did not answer the question I asked, where I tried to lead you to water, but you did not drink - what was the top rate under the all-republican government in the 50's?
 

1EZduzit

Lifer
Feb 4, 2002
11,833
1
0
Originally posted by: blackangst1
Originally posted by: 1EZduzit
Originally posted by: blackangst1
Originally posted by: 1EZduzit
Originally posted by: blackangst1
Originally posted by: Bowfinger
Originally posted by: EagleKeeper
Capital gains are also the result of investment.

The investment funds were also taxed originally.
What's your point exactly? In general, money is taxed whenever it changes hands. You don't pay additional taxes on your base investment. You do pay it on your "profits", be they interest, dividends, or capital gains.

The point is, investments in general are taxed twice. Once as income earned, and again the profit resulting from investment. And lets not even get into estate taxes. That, my friend, is where the rich get ass raped.

And as a side note, why is it so evil if the ultra wealthy want to find ways to keep their wealth? WTF? It's THEIR MONEY.

What? They are taxes the NEW INCOME, not the old income.

Let me expand what I said. Depending on the tax shelter invested in, the money is taxed twice. I'll break it down for middle class to understand: If you withdraw money form your 401k or IRA for example, you are charged a "penalty", which is, in fact, a tax. Thats just one example.

And you havent even acknowledge my stement: why is it so evil if the ultra wealthy want to find ways to keep their wealth? WTF? It's THEIR MONEY.

Do you disagree?

The money in an IRA or 401k grows without being taxed. They did that on purpose to encourage people to invest long term for their retirement. If you take it out early it has to be penalized otherwise what's the point of it being a retirement fund?

And leave your stupid "evil ultra wealthy" crap out of the argument. They aren't evil in the sense your trying to imply, for the most part they're just greedy beyond what most of us regular people can even imagine. And yes, sometimes that greed makes some of them do evil things, but so do the rest of us. Were not any different.

1st bolded: Call it a penalty if you want, it's a friggin tax. IMHO money collected that goes to the government is a tax.

2nd bolded: Check your meter, sir ;)

3rd bolded: Maybe based on your experience, but mine has been different. And I have family and friends who are multi millionaires. YMMV of course.

I personally wouldn't call a multi-millionare "ultra wealthy" unless he has way in excess of 50 million, then mabe he would squeak in on the low end of that definition.

On point 1. Obviously you can't let people take money out of a 401k or IRA before retirement age without taxing it. If you did all investmnents possible would be in such instruments and that isn't what they were intended for.

That would be like putting your money in a CD and then taking it out early just because the interest rates when up. They are giving you a deal to lock it in for a specified term and if you don't fullfill the contract then you pay the penalty.
 

blackangst1

Lifer
Feb 23, 2005
22,902
2,359
126
Originally posted by: Craig234
Originally posted by: blackangst1

Did you live in the USA when Carter was in office? Either you didnt, or you were too young to pay attention.

You're wrong on the issue here, and the larger issue of tax policy.

I was well aware of Carter, living in the US.

What your post really shows is that you don't understand the policy issues, as you try to evaluate decades of tax rates based on one 4-year presidency, and for that presidency, you ignore the real factors affecting the economy such as the effects by his predecessor's policies and the oil embargo and other things and instead look at the income tac rates which were no higher than they had been in decades, and were actually lower.

I see you did not answer the question I asked, where I tried to lead you to water, but you did not drink - what was the top rate under the all-republican government in the 50's?

Yep: 91% :) On incomes over 400k.

As far as me missing the point about tax law, my main point is SO WHAT if the rich make tax law? They pay the bulk of money the IRS collects, they SHOULD write tax law to protect their income.
 

Takemaru

Member
Oct 16, 2006
184
0
0
Originally posted by: Pacfanweb
The rich pay the VAST majority of the taxes.

Poor people don't pay much, if any income tax.

I will agree with the principle, to a point, that tax law is made by rich people, and mostly for rich people....but I differ from your prof, given the FACT that rich people actually are the ones paying most of the taxes....so if anyone is going to get a tax break, it's going to be the rich...you can't give a tax break to someone who is paying basically no tax to begin with.

And no, they don't lower the rich folk's taxes and raise them on the poor. That's BS.


If that is truely the case then why are the rich richer now than they have been since 1929? why is it the financial gap between the rich and middle class hasn't been larger since the great depression? why do the top 1% of america hold over 30% of the countries wealth. Our current taxation policy is flawed, thats why, equal percentage of taxes should be paid by all just because you pay more by volume doesn't mean you should be exempt from the mandatory percentage that everyone else pays, our system has been purposefully geared so that the rich get insanely richer while everyone else is stuck under the weight of escalating costs of energy, food, rent, and everything else that is a nessecity, while their wages go nowhere.

this is mainly the fault of our broken campaign system which forces politicians to accept money from the rich and corporate lobbys to run for office, while remaining in their debt when elected giving these outside influences an extraordinary amount of influence in our government and on our legislation.
 

1EZduzit

Lifer
Feb 4, 2002
11,833
1
0
Originally posted by: blackangst1
Originally posted by: Craig234
Originally posted by: blackangst1

Did you live in the USA when Carter was in office? Either you didnt, or you were too young to pay attention.

You're wrong on the issue here, and the larger issue of tax policy.

I was well aware of Carter, living in the US.

What your post really shows is that you don't understand the policy issues, as you try to evaluate decades of tax rates based on one 4-year presidency, and for that presidency, you ignore the real factors affecting the economy such as the effects by his predecessor's policies and the oil embargo and other things and instead look at the income tac rates which were no higher than they had been in decades, and were actually lower.

I see you did not answer the question I asked, where I tried to lead you to water, but you did not drink - what was the top rate under the all-republican government in the 50's?

Yep: 91% :) On incomes over 400k.

As far as me missing the point about tax law, my main point is SO WHAT if the rich make tax law? They pay the bulk of money the IRS collects, they SHOULD write tax law to protect their income.

Out here in the sticks we call that "putting the fox in charge of the chicken coop".
 

blackangst1

Lifer
Feb 23, 2005
22,902
2,359
126
Originally posted by: 1EZduzit
Originally posted by: blackangst1
Originally posted by: Craig234
Originally posted by: blackangst1

Did you live in the USA when Carter was in office? Either you didnt, or you were too young to pay attention.

You're wrong on the issue here, and the larger issue of tax policy.

I was well aware of Carter, living in the US.

What your post really shows is that you don't understand the policy issues, as you try to evaluate decades of tax rates based on one 4-year presidency, and for that presidency, you ignore the real factors affecting the economy such as the effects by his predecessor's policies and the oil embargo and other things and instead look at the income tac rates which were no higher than they had been in decades, and were actually lower.

I see you did not answer the question I asked, where I tried to lead you to water, but you did not drink - what was the top rate under the all-republican government in the 50's?

Yep: 91% :) On incomes over 400k.

As far as me missing the point about tax law, my main point is SO WHAT if the rich make tax law? They pay the bulk of money the IRS collects, they SHOULD write tax law to protect their income.

Out here in the sticks we call that "putting the fox in charge of the chicken coop".

Maybe out in the sticks you think people who contribute the least should have the most say-so. Here in the city we disagree :)
 

1EZduzit

Lifer
Feb 4, 2002
11,833
1
0
Originally posted by: blackangst1
Originally posted by: 1EZduzit
Originally posted by: blackangst1
Originally posted by: Craig234
Originally posted by: blackangst1

Did you live in the USA when Carter was in office? Either you didnt, or you were too young to pay attention.

You're wrong on the issue here, and the larger issue of tax policy.

I was well aware of Carter, living in the US.

What your post really shows is that you don't understand the policy issues, as you try to evaluate decades of tax rates based on one 4-year presidency, and for that presidency, you ignore the real factors affecting the economy such as the effects by his predecessor's policies and the oil embargo and other things and instead look at the income tac rates which were no higher than they had been in decades, and were actually lower.

I see you did not answer the question I asked, where I tried to lead you to water, but you did not drink - what was the top rate under the all-republican government in the 50's?

Yep: 91% :) On incomes over 400k.

As far as me missing the point about tax law, my main point is SO WHAT if the rich make tax law? They pay the bulk of money the IRS collects, they SHOULD write tax law to protect their income.

Out here in the sticks we call that "putting the fox in charge of the chicken coop".

Maybe out in the sticks you think people who contribute the least should have the most say-so. Here in the city we disagree :)

I'll remember that the next time some city slicker stops by my farm and wants permission to hunt. :p

Besides, we have this new thing they invented in this country. It's called majority rules.
 

Fern

Elite Member
Sep 30, 2003
26,907
173
106
According to my professor, tax laws are written by the rich, for the rich. Poor and middle class pay to much taxes, while rich and big corps don't pay enough.

This is an incrediably simplistic statement for a serious student of tax theory, I mean your prof.

On a very superficial level, yes tax law is written by the rich. Tax law is written & passed by Congress, most of whom are rich, so umm yeah.

To say that they are written for the rich? Does this imply that Congress writes tax law to benefit the rich? If so, can't agree. Tax laws are writen for the benefit of the government and polititions. Much of what is in tax law is insert by Congress in an overt attempt to influence behavior, some intended for benefit of the country, others for political benefit to members of Congress.

It would be politically stupid to write & pass tax law "for the rich" as your prof puts it (or you). There simply aren't enough rich people "votes" to make this plausible. Pursuing a tax policy that alienates poor voters in order to garner rich peoples' votes would be political suicide and therefore is not done, period.

As regards corporations: Most students of tax theory do not believe corporations should be subject to tax for at least two reasons:

1. It has a regressive tax effect. Prior to the reduction in dividend rates, a regresive effect resulted from the double taxation of traditional ("C" corps) corporations. To first tax a corps profits at 35%, then pass along the remaining profit to shareholders averages the combined (corp + shareholder) effective tax rate resulting in a detriment to poorer taxpayer/shareholder. If the corp is taxed at 35%, then the remianing dividend goes to a taxpayer/shareholder in the 10% bracket (s)he is really paying a rate of 22.5%. The result is reversed for a higher bracket (rich) taxpayer/shareholder. But again, for the time being the effect has been all but eliminated by the new lower tax rates on dividends.

2. Encourages waste. If there were tax benefit (via deduction) would the shareholders tolerate outragiously high compensation for officiers? Or frivolous expenditures for lavish "parties" and things like corporate jets? Most think not.

3. A good third reason would be cost of tax compliance. Corps spend a ton of money to comply with tax laws and the various filings. The government (IRS) also spends a lot of $ on this too. All of which is unecessary and therefore wastefull.

--------------------------------------

Originally posted by: Bowfinger
It also ignores the effect of the Social Security contribution which is flat for everyone, even poor people ... until ~$93K, at which point it stops entirely. The guy who "earns" $100 million pays, at best, exactly as many dollars as the guy making $100K. In other words, the rich guy pays at one-thousandth the rate of the upper-middle class guy.

Not quite. The Medicare portion of SS has had no ceiling for some time now. I.e., The guy earning $100M would continue to pay the (approx) 3% of the medicare part on his entire earnings. (Note: the total employer & employee rate is about 3%., so he may just pay about 1.5% on the entire $100M if he was an employee, the employer would also pay 1.5% on his earnings).

-------------------------------------------

Originally posted by: blackangst1

The point is, investments in general are taxed twice. Once as income earned, and again the profit resulting from investment. And lets not even get into estate taxes. That, my friend, is where the rich get ass raped.

No taxation twice. Once the income earned is taxed you receive what we in the tax profession call "basis". The concept of "basis" is considered the most important in all of tax theory.

After you invest that "aready taxed" income you can liquidate your investment and the "already taxed" income is received by you free of tax. The only possible arguement against this is when inflation is injected into the equation.

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Originally posted by: blackangst1
Let me expand what I said. Depending on the tax shelter invested in, the money is taxed twice. I'll break it down for middle class to understand: If you withdraw money form your 401k or IRA for example, you are charged a "penalty", which is, in fact, a tax. Thats just one example.

No. The money you put into a 401(k) has never been taxed, it is only taxed once upon withdrawl.

Same for IRA. While it is possible to put money into an IRA that was already taxed (i.e., you couldn't take a deduction for your IRA contribution), and if that happens you are allowed to withdrawl that money tax-free. No double taxation here.

The penalty for early withdrawl (if that is what you are referring to) is for two reasons:

1. The government has a strong desire to encourage poeple to invest suffieciently for their retirement. It does not want people drawing down their retirement accounts prematurely (i.e., before retirement).

2. While the money is in a 401(k) or IRA type account the investment earnings remain untaxed, thereby generating even greater investment return. The 10% penalty is intended to remove that benefit when funds are withdrawn and used for non-retirement purposes (other than those authorized by statute)

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Finally, I believe it worthwhile in pointing out that fed & state income taxes account for merely half of the tax we pay according to our (CPA) national professional organizations. The other half is hidden in the cost of products and is in the form of excise and other taxes we pay without knowing it. The government prefers it that way - voters don't complain about things they don't see or are unaware of.

Fern