I'd rather see a new top bracket of 70% starting at $1 million and an elimination of the "long term" captial gains rate.
Your idea would lead to the same affect as the OP - wealth and people that produce it would leave the country. It's a terrible idea.
But I'm all for eliminating capital gains tax altogether.
I'm completely opposed to eliminating the capital gains tax. I see no reason to give the wealthy a further free ride. Capital gains should be taxed at the normal income rate.
So you think people are going to leave the country because their income above $1 million is taxed at 70%? I guess some people would really be pissed off that they can't bleed their company dry for exorbitant salaries, but we don't need those types anyway.
Your concept of wealth is off. If I have $10 million, it doesn't mean I have a wad of cash in my bed that no one else can use now. Most likely it means I have a company that I founded (or my parents or grandparents founded) that employs a hundred people and I own most of the stock or however that works for a private company. By capping the total wealth any one person could own, you'd be limiting the size of every private company that exists. Look up Dale Carnegie, for an example off the top of my head, or perhaps Bill Gates. They could not have existed under the proposed wealth cap.
K1052
Elite Member
- Aug 21, 2003
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Everyone will just shelter inside corporations to avoid the high rate. Tax accountants and lawyers rejoice.
Of course you could raise the corp tax level to match but you'd just end up with the unimaginably vast capital flight of the OP's scenario.
That's exactly the idea. They're not just going to hoard the money in the company. They're going to invest it in the company which means jobs, R&D, and everything else.
Offshoring and cutting R&D becomes a lot less enticing when you can't pocket the difference in the form of a 9 digit compensation package.
blackangst1
Lifer
- Feb 23, 2005
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Care to add anything else? You think the corporate practice of offshoring and massive executive salaries and rock bottom tax rates has brought prosperity to Americans or made our companies better?
K1052
Elite Member
- Aug 21, 2003
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Lol....you misunderstood. People will form corporations to get the lower tax rate on their income. A lot of those people will also begin shifting money to other countries out of the US government's reach through them.
Your proposal will affect scores of private business owners who aren't going to be all that interested in handing over 70% of their income to the gov. We will find a way around it or we'll get what money we can outside the country.
HardcoreRobot
Lifer
- Nov 7, 2000
- 16,404
- 3
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So how would a executive, an employee of a corporation, form yet another corporation to achieve a lower tax rate? Would the executive's services be contracted through this company? That seems like a lot of shady bullshit when it would make more sense to simply hold stock options over the long term and make sound business decisions to grow the company over the long term. Executives would still be compensated handsomely, but would have to be effective over the long term as opposed to over 2 quarters.
Why would a private business owner hand over 70% of their income to the Government? I think you're confusing revenue with profit and ignoring marginal tax rates. A sole proprietorship pays taxes on profits only and would only pay the 70% tax rate on profits above $1 million, per my suggestion in a previous post. In any case, if a private business owner is netting that kind of revenue, they really should incorporate for liability protection and tax advantages.
I dont think its fair in our society to put any limits on what we can achieve, and that includes how much money or 'wealth' a person can accumulate.
there will always be those that take advantage of whatever system we have, all we can do is police it as best we can without stepping in the way of those wishing to work for it.
I understand the premise, that cutting off the level of wealth would spread more wealth around to those below it, but I just dont see why that can only be done be trampling on the ideals of prosperity. Our society (across the world, not just here) is based around a monetary system, so properity means money, wether you like it or not. I dont feel like I have any right to tell you how much prosperity you should be allowed to amass. If you work for it and do it in a 'legal' way, then Im going to appauld your efforts and use it as motivation in my own efforts.
I dont think its greedy to strive for great wealth. People do alot of great things with wealth, things no one talks about becuase talking about the few bad apples is more entertaining. Yes, greed is a dangerous thing that can make people do things they wouldnt otherwise do, but thats true for all of the vices in our society. If the goal here is to curb greed's impact on society, I dont see that changing at all just by capping wealth.
Until the world eliminates the need for money and bartering, greed will always be a force for those without any moral fiber. A cap does nothing but hurt those playing the game by the book, while those skirting the law still find their way around the system.
giving 70% of their profit doesnt sound that much better to me then 70% of their revenue, its still the government taking a large part of the reward for your effort so to speak.
i dont think of this as a question of wether to tax or not, but of how much. tax is a neccesary evil, but I find it tough to just let the government get such a huge chunk of anyone's earnings. Yes, the idealolgy behind it is fine, I just dont see how taking more out of anyone's pocket for the benefit of me or anyone else is going to result in a stronger country. Stronger government perhaps, and maybe some people want that, but it doesnt sit well with me.
Do yourself a favor and Google marginal tax rates. There is a severe lack of knowledge about marginal, progressive taxation... especially among Republicans and "fair"/flat tax proponents.
When you get done, here's a quiz.
A person has a yearly income of $1.5 million. There is a marginal tax rate of 70% on income above $1 million. On how much of his income would he pay the 70% tax?
a. $1.5 million
b. $500,000
K1052
Elite Member
- Aug 21, 2003
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High level execs will just become contractors and avoid the 70% tax level and get paid more cash instead.
I meant to say profit not income in my second paragraph. Even if they incorporate the rules on how they pay themselves become more complicated since they'd have to declare dividends in order to work around the law. You know the government would be just itching to raise that tax too since all that money would be slipping by at a far lower rate.
blackangst1
Lifer
- Feb 23, 2005
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I dont have a problem with offshoring. Reason is, we arent an island. If a company is a global one, it should be able to have global operations. And, more importantly, we import work as well. Is it a perfect 50/50 ratio? No. But I promise you if we start capping income, the ratio will spread farther. Its very regressive.
No, but the system that created huge salaries and rock bottom tax rates do.
do yourself a favor and try not be quite so 'smart' on the internet. Oh yes, my comments are only relevent becuase I was ignorant of the facts...
next time just ask if someone understands the question.
I know that under your idea, the government is taking 70% of what they 'profit' over the limit you set. this doesnt make my comment any less revelent. Of course that means someone making 1.1 million is paying less in taxes then the guy making 1.5 million, I just dont agree with the number. I dont think the answer is to bleed more money from the private sector into the public sector. Im not saying have zero taxes, Im just saying I dont agree with the numbers you chose.
beyond that, this whole idea should be clarified. How would other taxation be affected? It would seem to me that making a change like this would warrant changes in other areas as well.
QuantumPion
Diamond Member
- Jun 27, 2005
- 6,010
- 1
- 76
Is your motivation for limiting people's wealth based on the notion that doing so would somehow enrich the poor?
Or do you just feel that being rich is in and of itself evil?
Or do you just feel that being rich is in and of itself evil?
Its probably already illegal for the CEO and the executive board to be independent contractors, but that would be an easy fix to make. The executive teams of companies should have a vested, long term interest in the health of their companies. I think the opposite is true right now. The game is to jack up the stock price by offshoring, gutting quality, and R&D and move on before the company collapses.
Higher taxes can be an incentive to invest. If a "'small" business is going to lose so much of their profit over $1 million to taxes, why not replace aging equipment? Why not hire more people? Why not give raises? Why not improve an existing product line? In many cases, profit is simply money not properly invested in growing the business.
This is exactly like the overpaid execs above. They can generate excellent profits at the expense of the business's long term health. That's obviously bad. The ideal is smaller, constant profits over the long term, not massive short term profits followed by long term loses.
blackangst1
Lifer
- Feb 23, 2005
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I am willing to bet you dont even have second hand knowledge of how a Fortune 500 company is run, do you.
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