The Wealthiest 1%

[LIBERTYorDEATH]

hmm jmm uses the word comrades, and speaks very socialsiticly to say the least..i think we found where chairman mao is buried. As for my argument, my argument holds because IT IS NOT THE GOVERNMENTS JOB to encourage private money into one area or the next. If the heirs hold on to it and live off interest, fine..if they reinvest in the company, fine, if they blow it all on strippers and booze, FINE!!!! It is their money left to them by their loved one, it in no way belongs to government and no pissant little welfare recipient(personal or corporate) deserves one dime from it, nor do those whores in DC. No individual should ever be forced to support other individuals thru taxation , that are not in their immediate family.

If we brought Washington or Jefferson back to life and showed them our presnt democratic socialism state of the union, their first words would be."Where is my gun". The imperial federal government of the United states is more tyrranical and tax crazy than king George was in his wettest dreams.

 

[Jmman]

Yeah, I know, I am just sounding off with simple platitudes since I know nothing of taxation. I guess the fact that I probably paid as much tax last year as everyone in this thread put together has no bearing on the issue. As far as a national sales tax, maybe some of you should actually read a little bit about it before you slam it......link...

 

[Orbius]

Mister T, thats a heartwarming story. But your conclusion is a little, well heartless. So you're basically saying that since everyone has the theoretical opportunity to make an awesome wage, that the poor basically are stupid and deserve what they get. Very Christian of you there.

I seem to recall a similar thought process to 'undesireables' in Nazi Germany.

 

[Mister T]

jjm, adjusted formatting.

 

[jjm]

Liberty - Good one. You lost the point so now you're trying diversion tactics. Cute.

Jmman - Um, actually, at least in my case, you are almost certainly not correct.

 

[jjm]

Mister T: "jjm, I think your principles would be far more compatible with those of a socialist country. Democracy, Capitalism, and the notion of a private corporation make this nation the most powerful in the world."

Since I am advocating only minor changes (actually liberalizing them) to the existing tax structure, and that structure by your definition is Socialistic, I guess the only logical conclusion is that this country is great because of this "Socialist" society that we have had for most of the last century. That's it, yeah, I see your point.

 

[Orbius]

Liberty,

Putting intellectual notions about how things 'should be', over the realities of what will actually happen when things are done, is the hallmark of a short-sighted mind.

Tell me what will happen to middle class people if this inheritance tax is passed, and then agree or disagree with the plan based on that, then I'll take you seriously. Until then you're just spouting rhetoric.

 

[Mister T]

Orbius:

Mister T, thats a heartwarming story. But your conclusion is a little, well heartless. So you're basically saying that since everyone has the theoretical opportunity to make an awesome wage, that the poor basically are stupid and deserve what they get.

What I was trying to illustrate is that I have probably had to work harder to get where I am today than most socialists in this thread. Even more so I really wanted to show you that - LIFE IS WHAT YOU MAKE OF IT. You are right when you say I am harsh - but life is harsh. The underlying principles that define who we are are harsh: Capitalism, Darwinism, Natural Selection, etc. I do not agree that all poor people are stupid. Some may have ZERO ambition. My father is a prime example. He loves Math. He works as much as he needs to. He is content to come home and enlighten himself without making a profit. I on the other hand detest the thought of being poor. I want to have the best, and be able to provide my family with the best.

My point was the government should not reward laziness. The more productive and fruitful its citizens are, the more powerful this country will become.

Very Christian of you there.

The most Christian thing to do is to help yourself before you start demanding help from others.


I seem to recall a similar thought process to 'undesireables' in Nazi Germany.

1 Difference: I am not advocating the systematic slaughter of anyone.

 

[LIBERTYorDEATH]

Orbius, I am not short sighted. I simply do not believe in destroying individual liberty(in thise case individual economic liberty) for ANY goal, even if it is a goal that most everyone would agree is worth the cost. Yes, it is ideology, but I have always felt it is better to be the hungry stray dog who can at least say he is free, than to be a well fed well cared for family pet on a leash .That influences every thought I have every minute of every day.

 

[Gandalf511]

Liberty in the late 1800's through early 1900's, living conditions for the poor were atrocious. The rich survived spledidly which is I'm sure your main focus, but to say that things were hunky dory is a bald faced lie. Child labor robbed the poor of any means of education and self promotion, and the low wages paid to blue collar immigrants forced this child labor upon them. Read Steffens, Riis, or Sinclair and tell me that all was well at the turn of the century.

In the 1870's after slavery, most African Americans worked as tenant farmers, without enough money to move to a city, and barely sustaining life. Life wasn't much better for the Asiatic immigrants in the west used as wage-slaves on the rail roads, or the European immigrants fighting for 10 cent an hour jobs.

Going back further, during the days of the Articals of Confederation, the main means of income for the government was tarrifs. Again the econmoy was in shambles as riots and uprisings by freedmen and farmers were an almost annual problem.

At no point in history, has this nation ever functioned well without an income tax. There is no reason to believe that one would be effective now. Also a flat rate tax of 20% would hurt the poor that currently pay more like 10%, and the only true benefit would be to the upper middle class and elite (so yes the poor would be hurt).

 

[Jmman]

Obviously, some of our more vocal people in this thread don't even understand some of these tax plans they are criticizing. JJM's analysis of the flat tax implications is, how should I say, wrong!! Everyone receives a personal exemption to cover basic living expenses, and the extra income is taxed at a flat rate. No how does that penalize the poor? Oh, I get it, they are penalized because they don't have as high an income....ok......look at the flat tax proposal before you slam it...link

 

[Mister T]

Alright let me step on the other side of the fence now,
I do not advocate a flat tax, or national sales tax either.

I just think that we need a tax cut and that the estate tax should be eliminated.

Bush proposed 10,15,25,33.

I propose 10,15,25,35 instead. That would be the only concession I would be willing to make.
The Estate Tax is complete garbage. I have personally worked in the Insurance Industry, and have
seen how much profit is derived from "Estate Plannning." It is total garbage. Liberals point out
that alot of rich people like Buffet are against repealing the Estate tax... Ok, did you also know
that Buffet OWNS Insurance and Financial Service companies that make over 30% of their profits
from the existance of the estate tax. Whatever way you look at it, you are getting taxed on the
money you earned twice. The only way to get around it to store all your money that subject to estate
tax buried in your back yard for your kids.

 

[jjm]

Liberty - You need to get out more, man. I hire lots of young, hard-charging professionals in my department, but the sentiments you put forth are really a bit over the edge. I have seen plenty of folks attempt to stick dogmatically to an ideal to the exclusion of practicality. Those who learn to be pragmatic flourish. Those who can't learn usually grow even more bitter with age as they try to defend their ideals with no success "to the bitter end."

 

[HomeBrewerDude]

Jmman Ok i just read that article. it was well written and a thoughtful analysis. Thanks for citing it. However, the author conclusions contradict your position. First he says that a sales tax is more REGRESSIVE, unless some rebate strategy is used to releive tax burden on the poorer segments of the population. Even then, using the method he proposes its slightly more regressive. So I don't see how you can use this article to support the arguement that you seemed to be making. The author does seem to demostrate that calculating tax rates based on lifetime earnings rather than yearly earnings mitigates a regressive bias. However, I don't know if that is an appropriate method b/c our current rates aren't based on lifetime earnings, rather they change every year.

 

[Jmman]

I am not really advocating any one stategy, but a need for a change. The national sales tax can be regressive, but I was pointing out that it is an option and it can be adjusted to correct that regressive element.....

 

[HomeBrewerDude]

Well you won't get me to argue that the current system perfect. Clearly there are problems.

 

[jjm]

Jmman - You are advocating a modified flat tax. By definition, due to the first level of income exclusion and other features, it is progressive. I would suggest it's a simple rehash of today's code, with tighter controls on deductions and fewer brackets. The basic premise remains the same: As income goes up the tax kicks in. It just flattens sooner than today's structure.

Mister T - By your position, then, I assume that it's okay with you that someone who builds a fortune might excape all taxes.

How about this one, which comes straight from a tax attorney I work with. Bill Gates has stock worth a bazillion dollars. He can sell it now, or will it to his heirs. Either way a tax is paid. Capital gains tax today, or estate tax later. Note that Bill would not pay taxes twice on the same money. That is a simplistic argument that bears no basis in reality. The shares he leaves to his heirs are subject to estate tax, but they are not subject to capital gains taxes because the cost basis is stepped up to the date of death for the heirs.

GWB eliminates the estate and gift taxes. (They are currently unified for calculation limits and both are proposed for the chopping block.) Bill's 88-year old father has 6 months to live. Bill "gifts" his father the stock. There is no gift tax anymore. Father dies and Bill inherits his stock back. The cost basis is stepped up, so now Bill can sell the shares tax-free. No captial gains tax, no income tax, no estate tax. It's a beautiful thing! And Bill didn't even have to wait to pass the shares to his heirs. And the tax avoidance industry is still in business!

I assume you're okay with that. After all, it's Bill's money, right? Let everyone else who has to sell stock in his lifetime to pay the bills pay taxes.

 

[LIBERTYorDEATH]

Jjm, I get out all i need to. I would not fit in your department any more than i ever fit in the departments i used to work in. That is why i strted my own firm. The billable client is always right, but I am always boss. I was never happy working for others because their beaurocracy stiffled my drive for more profit flow. I know there were 70% or so of the people in 1776 america, saying how imprudent and foolish it was to expect that we could defeat england and become free. What pie in the sky lunatics our founders were. That 30% disregarded the sheepish 70% and we won our freedom as a nation because of it. Their succeeding generations have slowly but surely instilled far more power into our own government to intrude into our lives and steal our money than our foudners ever dreamed king george was capable of. That is why we will never see eye to eye on this, jjm. I am one of the revolutionary 30%, your a 70% status quo type. Nothing personal.

 

[jjm]

Liberty - Last I checked, we weren't looking to fight a revolution today. Your references are a bit on the extreme side. I admit, there are those who like to hunker down in their own homemade bunkers, but I really think they are the fringe rather than the mainstream.

The drive for profits is okay, but to do so above all else is hollow. I admit, we are getting way off topic here, so I'll let it go at that.

 

[Mister T]

jjm,

your example where Bill can either pay capital or pay estate is wrong.

Option 1: He does not cash in stock. Heirs get stepped up basis, but they pay estate tax.
--------> Taxed once
Option 2: Bill sells some stock during his retirement years. Then he dies. Heirs pay estate
tax on of of Bill's money, whether is it qualified or not, capitalized or not.
-------> Taxed Twice

So which option is more practical? Never cashing in one's investments, or cashing in at one point.

Next issue: Your Gifting example.

In a case like that, there has to be a look back period law. If
you are familiar with A-B trusts and/or gifting to avoid nursing home costs
draining you estate, you will know that it is common for there to be a
5 year look-back period.

If Bill wanted to be really sly(which meant he came to me for advice) he would engage in an equity swap
(a derivatived contract) with an investment bank for MSFT and pay about 2% comission. Then move his
money to cash and spread it around in foreign bank accounts like the caymans and swiss accounts that
are outside the jurisdiction of the US and the IRS. Even with Estate Taxes, he (his heirs) would not
pay a penny.

Perfectly legal - yes, ethical? maybe not

Equity Swaps are a huge loop hole in the current tax system.

 

[ElFenix]

Mister T - you had to work hard. i applaud you for that. my main position on education is that kids should all get the same access to quality education. rich, poor, black, white, recent immigrant or been around since the mayflower. theres nothing socialist about it. whether they choose to accept education or not is their prerogative.

liberty - people had the most freedoms before entering into society. but they lived in such fear that they couldn't enjoy those freedoms. it took the state to protect them, in turn giving up some freedoms to the government in order that they might enjor the remaining freedoms. read some rousseau.

 

[jjm]

Mister T - There is no doubt Bill would sell some of his holdings, but the vast majority would escape taxation.

I did not see anything in GWB's plan about any other restrictions, just abolition.

The IRS is cracking down on equity swaps, same as they did on the contribution of appreciated shares usually acquired via options into a pool for diversification. They are invoking the "sham" argument; the transaction has no other business purpose other than tax avoidance.

 

[ElFenix]

theres quite a few more wealthy people than buffet who want to keep the estate taxes. something else that was pointed out: whats $40 billion to bill gates? he'd still have $40 billion to leave to his heirs and foundation (he has stated hes leaving "only" a few million each heir, rather like carnegie in that regard).

 

[Mister T]

Elfenix, I understand where you are coming from and agree that everyone should at least have an opportunity.

JJM,

Mister T - There is no doubt Bill would sell some of his holdings, but the vast majority would escape taxation

Vast Majority? For someone in Bill's shoes, he is going to be walloped at upwards of 60% ESTATE TAX. Whether or not he capitalizes some of the gains or not, he is still going to get slammed. By not capitalizing he just avoids the 20% capital gains. The bottom line is, the money you made from income is definitely getting taxed by income taxes, then once again by estate. Investment income can be exempt from capital gains only if you die... Either way, all your wealth is subject to the ludicrous 60% death tax.

 

[jjm]

I meant he would escape taxation under GWB's plan. I agree that he would pay some sort of tax (capital gain or estate) under today's code.