So why aren't we...

Post #324,206 by beepster 4/7/10 5:48:14 PM Reply	So why aren't we... worried more about that than penalizing/vilifying the 200k crowd? I will choose a path that's clear. I will choose freewill.
Post #324,210 by Another Scott 4/7/10 6:34:48 PM Reply	Who's we? Since when is paying taxes "penalizing/vilifying"? We've been through a lot of this before, so I'll be brief: The top 1-5% of the income distribution made huge gains over the last 30 years. The rest, not so much. Why shouldn't they, and corporations, pay taxes at rates that were in place during times of growth of the middle class? Why shouldn't most individuals earning around the median or less pay no federal income tax? They haven't benefited from the "growth" in the last 30 years. If anyone is getting a "free ride", it's those who have paid historically low percentages of income in federal taxes and greatly increased their share of the nation's wealth. From 1950 to 1970, the top marginal income tax rate was at least 70%: http://en.wikipedia....inalIncomeTax.svg From 1950 to 1970, the top marginal corporate tax rate was mostly above 50%: http://3.bp.blogspot...600-h/corptax.bmp The wealthy are not over-taxed in the US. (And families making over $200k in the US are wealthy (even if they're not uber-rich) - they're in the top ~2-3%. http://en.wikipedia....the_United_States ) Cheers, Scott.
Post #324,216 by boxley 4/7/10 7:44:48 PM Reply	@00k peanuts depending on where you live rich it aint If we torture the data long enough, it will confess. (Ronald Coase, Nobel Prize for Economic Sciences, 1991)
Post #324,222 by Another Scott 4/7/10 9:26:34 PM Reply	Top 2-3% says otherwise. Tell people who are living on $25k a year that $200k is peanuts. I'm sure you'll get lots of support. ;-) Cheers, Scott.
Post #324,226 by beepster 4/8/10 12:12:12 AM Reply	Tell them to pay some then they can complain ;-) The point was that the impact of closing the offshoring (through lowering our tax rates making it more costly to hide the money than to pay taxes) or adding taxes to foreign earned monies for just one of those top companies would probably outstrip all the taxes on income earners between 200k and 1M. If you want to take the top marginal on income over 1M to 50 points, thats alot easier to swallow than claiming someone in NYC with husband and wife working and pulling in 200k is "rich"...cause they aren't. I will choose a path that's clear. I will choose freewill.
Post #324,232 by Another Scott 4/8/10 7:57:25 AM Reply	If you're in the top 2-3%, what are you? "Middle class"??? Median household income in NYC was $55,500 in 2008 - http://factfinder.ce...yword=&_industry= I wasn't aware that we decided that the rich shouldn't pay more in taxes because more money could, in principle, be raised some other way. The Reagan and Bush tax cuts were sold as a way to grow the economy and help everyone. They didn't. They skewed the nation's wealth to the rich, while the majority saw little or no benefit. "The rich get richer, the poor get the picture ..." HTH. Cheers, Scott.
Post #324,236 by folkert 4/8/10 9:10:48 AM Reply	Re: If you're in the top 2-3%, what are you? "Middle class" "The rich get richer, the poor get the picture ..." And they get to pay for the photography paper and developing.
Post #324,247 by beepster 4/8/10 12:03:52 PM Reply	In NYC...pretty much. what version of "middle class" are you referring...the traditional wife, 2 kids and a small home to call your own that would be the 60s-70s definition? 200k may add one extra bedroom to that home in NY metro. I will choose a path that's clear. I will choose freewill.
Post #324,249 by jbrabeck 4/8/10 12:23:14 PM Reply	WOT we first speed reading I read "the traditional 2 wives, kids..." had to reread.
Post #324,251 by Another Scott 4/8/10 12:29:10 PM Reply	:-)
Post #324,252 by beepster 4/8/10 12:29:13 PM Reply	NYC, not SLC ;-) I will choose a path that's clear. I will choose freewill.
Post #324,250 by Another Scott 4/8/10 12:28:51 PM Reply	Only if you twist the words to mean something else. To me, around the median is about as close to "middle" as one is going to get. 3.6x median is upper class AKA "rich" by any sensible definition. If being in the upper 2-3% of incomes doesn't make one rich, then the word doesn't have any meaning. Comparing someone who has a 3 BR ranch on a 0.5 acre lot with a 2 car garage in rural Indiana with someone who lives in a CoOp in NYC is a distraction from the issue of median income and taxes. The statistics say most families in NYC live on $56k or less a year. Should we feel sorry for the person who lives in a high-rise in Tokyo and "only" earns $300k a year? "He can't afford a yard!!!111" :-/ Cheers, Scott.
Post #324,253 by beepster 4/8/10 12:31:16 PM Reply	These terms define a standard of living and the standard of living available to someone making 50k in NYC versus someone making 50k in rural Indiana are VASTLY different. I will choose a path that's clear. I will choose freewill.
Post #324,255 by crazy 4/8/10 12:59:55 PM 4/8/10 1:02:12 PM Reply	And so are the opportunities That NYC person has a huge array of entertainment, restaurants, bars, shopping sources, culture, arts, job possibilities, social interactions, etc, all for the taking. A walk, or subway, or bus or a cheap cap ride away. People PAY for this. There is a baseline of what it costs to live in the city, and is NOT cheap. It is a choice to allocate a large portion of your income for the easy access to all a real city has to offer. You want isolation? Cool, it's cheap. You want everything else? You gotta pay. Edited by crazy April 8, 2010, 01:02:12 PM EDT Expand All History
Post #324,262 by beepster 4/8/10 1:37:30 PM Reply	So you think the folks in Brooklyn or the Bronx are making.. that by choice? No, most are trying to get isolated, going to LI or north jersey...where 3br on .15 acre will run you half a million for a fixer. I will choose a path that's clear. I will choose freewill.
Post #324,263 by crazy 4/8/10 1:58:46 PM Reply	Huh? One more time (for the peanut gallery, since you are obviously ignoring my point). #1 - How many people are getting "screwed" based on your premise? #2 - How many other people are not getting screwed (since you feel it is an area based income threshold issue)? There are ALWAYS a portion of ANY tax who are going to get squeezed. Taxes suck. You are going to pull touchy feely isolated examples, go ahead. There are many touchy feely counter stories. So what? Get back to the numbers. How many people in each group, and is it worth it? Or do you feel I've totally missed your point? Please state your real issue.
Post #324,268 by beepster 4/8/10 3:59:26 PM Reply	What I'm saying is that "rich" is a relative term that can mean different things to different people. When you get to the >real< top end, it becomes a little easier...say, those over $1M. And also, why do you have to penalize >people< at the margin when getting the corp tax code right could make up the entire difference when just 1 major multinational brings that overseas sheltering back inside. Additionally, why is it that the left seems to enjoy and tactically use class warfare as part of their strategy and talking points without regard to those cost of living variances. Certainly "rich" is a completely different standard for those in LA, SF or NYC versus someone in middle america. I will choose a path that's clear. I will choose freewill.
Post #324,272 by Another Scott 4/8/10 5:02:37 PM Reply	The tax in question is an income tax. Nobody is disputing that some areas cost more to live in that others. Nobody is disputing that $xxk goes farther in West Overshoe, NE than in Tokyo. That doesn't change the fact that income taxes are based on income, a person with an income of $200k is in the top 2-3% of incomes in the US, those people are paying lower tax rates than the top 2-3% were paying 3 decades ago, and the people making around median income or less (who you claim are getting a "free ride") hardly improved economically since the 1980s while those at the top did *very* well. Changing the subject to costs of living is a distraction. Obviously there are *benefits* to living in areas with high costs of living, too. The top 2-3% again paying taxes at rates that were in place during the time when the US middle class had decades of increasing incomes and wealth is not a "penalty". HTH. Cheers, Scott.
Post #324,285 by drook 4/9/10 1:08:12 AM Reply	Curious When anyone else suggests raising corporate taxes, you reply that corporations will just pass the entire cost on to customers, so the tax will actually hurt the poor disproportionately. Now, when someone suggests raising taxes on individuals in the top 2-3% of incomes, you say that it would make more sense to tax the corporations. -- Drew
Post #324,291 by crazy 4/9/10 7:16:43 AM Reply	Yup Sorry Beep, you have a STRONG history of fighting ANY realistic revenue gathering of the moment. And you really hate talk of taxing the corps. So maybe now you'd give a little spiel about how you'd go about taxing them. In some fair way, that you are sure is really simple and might (not that you'd be silly enough to say will) fix (or help) the current situation. And damn, it would read well, and I'd nod my head, and say, maybe this guy has something here. And then I realize it is unlikely anyone will ever implement them, and you'd prefer to fight against most of what is offered anyway.
Post #324,304 by beepster 4/9/10 11:10:48 AM Reply	Missing point of the article, aren't you. It details WHY these tax havens exist, which is all about channeling the profits to places with lower corporate tax rates...so the fix to raise revenue is to lower the rate so that there isn't a reason to undergo the expense of that infrastructure. In other words, change the rules, lower the rates, increase the revenue...then you can focus on the 1M+ crowd individually, where there is much less debate about where in the country you live and what that means. Its a pretty common sense approach if you ask me...but since it doesn't fit with the "beat down the rich people and crush the evil companies" mantra...I guess its no good. I will choose a path that's clear. I will choose freewill.
Post #324,311 by Another Scott 4/9/10 12:46:17 PM Reply	AKA - "The way to Utopia is via a race to the bottom." :-/
Post #324,312 by beepster 4/9/10 1:22:16 PM Reply	Hardly more akin to the RK "why can't we all just get along" mantra... seems that the "us vs them" approach appeals too much for most. I will choose a path that's clear. I will choose freewill.
Post #324,322 by drook 4/9/10 3:52:12 PM Reply	You argue tactics while assaulting our motives * Raising corporate taxes won't work, because they'll just pass it along to (poor) customers. * Lowering corporate taxes will increase revenues, because corporations will stop offshoring their income. (Let's ignore for the moment why they'll stop offshoring revenue. We'll just wave our hands, say "more costly to hide the money", and assume it's true.) * Raising taxes on the richest 2-3% won't bring in as much as recovering more from corporations bringing their income back onshore, so we shouldn't bother. (And we'll continue ignoring the fact that there's no evidence lowering corporate taxes actually would bring any of that income back, so that we can keep putting off raising income taxes.) Those are all tactical arguments why raising taxes won't bring in any more tax money from corporations, or from the richest 2-3% of the population. (Lots of overlap there, by the way.) But they all assume the goal is, in fact, to obtain more tax revenue from those people and corporations. Then you claim that supporters of raising taxes don't care about increasing tax revenues, but merely "beating down the rich". I don't know if that's just a rhetorical tactic, but assuming it's not, I'll try to explain: We don't believe you. We think you are wrong. Lowering corporate taxes won't bring in more tax revenue. The wealthiest 2-3% of the population are rich, and they are not overtaxed. There is historical evidence that higher tax rates in the top brackets were good for the economy overall. Those of us who support raising the top tax rates and corporate tax rates know that the entire economy would benefit. -- Drew
Post #324,332 by beepster 4/9/10 5:47:28 PM Reply	How is it that you "know" this.. ...while at the same time dismiss how someone else may "know" otherwise? Wouldn't you say thats a bit arrogant. Those off shoring strategies exist SPECIFICALLY because of higher tax rates. Thats why they are designed and located where they are. They cost money to maintain. Raising taxes further just makes it more profitable to keep those strategies in place. Its a pretty standard course in B school nowadays. There is equally as much evidence supporting Laffer as government revenues increased after Kennedy and Reagan tax >cuts>. And this is not an argument of over-under taxation. If it were, I could easily say that the 47% of filers paying nothing are certainly UNDERtaxed...and that no one should turn a net profit from the federal income tax system. (thats going to be some 15% of filers IIRC). Your historical evidence of better times under different tax structure also happened under a completely different structure of business/demand. Attributing all of the growth of middle class and bettering of wealth distribution simply to tax code is entirely too simplistic an argument. I will choose a path that's clear. I will choose freewill.
Post #324,346 by drook 4/9/10 9:27:39 PM Reply	That's not the argument I'm making Attributing all of the growth of middle class and bettering of wealth distribution simply to tax code is entirely too simplistic an argument. Which is why it seems to be the only argument you're willing to have. I didn't say all growth was due to any one factor, did I? And if offshoring profit to hide it from taxation is a problem, reducing the taxes is solving the wrong problem. What ideas do you have to make offshoring profit unappealing? (Other than lowering taxes, of course.) -- Drew
Post #324,356 by mhuber 4/10/10 4:05:14 AM Reply	The Laffer curve is not linear Contrary to current Republican dogma. --------------------------------------- Why, yes, I did give up something for lent. I gave up making sense.
Post #324,382 by beepster 4/10/10 2:36:41 PM Reply	No duh thats why its called a curve. And there is impact at both ends..where overtaxation AND undertaxation are at issue. So why is it that the continued focus is on one side of the equation (those that pay alot) and not at all on the other side (the half that pay nothing). Or are we saying that a family of 4 making 60k is "poor". Too poor to pay? I will choose a path that's clear. I will choose freewill.
Post #324,386 by drook 4/10/10 2:55:39 PM Reply	Look at your own argument You've said we shouldn't look at raising taxes on the richest individuals because having one large corporation bring its income back onshore would generate more revenue. That's why there's no focus on a family of 4 making $60k and paying nothing. If you make me spell it out more explicitly I'll know even you don't believe what you're saying. -- Drew
Post #324,389 by beepster 4/10/10 3:12:20 PM Reply	each person posting here is posting around a different subject. That was on laffer... I will choose a path that's clear. I will choose freewill.
Post #324,392 by drook 4/10/10 3:34:22 PM Reply	What was your point then? Laffer describes voluntary behavior in response to higher or lower costs. Your example family of 4 making $60k doesn't have the option to offshore their income to hide it from taxation. So why should we be looking at them? You asked the question: Why aren't we? My answer is, because it doesn't apply. After you show why Laffer is meaningful at the bottom end of the income scale, then you can show how much tax revenue we could expect to gain from changes there. Then you can compare that to the amount that could be gained from returning the top tax rates to historical averages. If you can do all of that, then I'll believe you honestly think tax rates at the bottom end are a meaningful part of this discussion. I'm convinced they're not. And I'm pretty sure you know that too. -- Drew
Post #324,358 by mhuber 4/10/10 4:24:29 AM Reply	So, is the strategy reducing the tax rates to match the havens? Because that just won't work. There have to be countries with infrastructures. Tax havens are typically little places that can't actually support those who live there on paper. Maybe they can support the individual robber baron, but they can't support the workforce that makes the robber baron's wealth possible, and they certainly can't support the consumer base that makes the robber baron's company viable. The perfect tax haven would be something like what CyberYugoslavia will be if they ever get their 20 square meters and UN recognition. No expenses but server space. There is no way a non-virtual country can compete. --------------------------------------- Why, yes, I did give up something for lent. I gave up making sense.
Post #324,381 by beepster 4/10/10 2:33:36 PM Reply	No, the strategy should be.. ..to back off on tax rate combined with a more comprehensive set of regulation regarding transfer pricing. For example, the MS tactic of licensing their own software from oversees entities should be taxed differently. So it should be a combination of disincenting the creation of more havens and being as creative with the tax code as they accountants are creative in building these schemes in the first place. I will choose a path that's clear. I will choose freewill.
Post #324,388 by drook 4/10/10 2:58:55 PM Reply	"Creativity" is always the wrong answer Tax law and its application should be simplified. If someone gets "creative" to circumvent the intent of the law, they should be punished accordingly. You have noticed that it's all the "creative" stuff that has crashed, right? PS: I left "punished" in there as a freebie. -- Drew
Post #324,363 by Another Scott 4/10/10 7:15:04 AM Reply	1.5% sound about right? From 2007: http://www.nytimes.c...?pagewanted=print What two of the other three Rolling Stones apparently learned, including Mick Jagger and Charlie Watts, was that Mr. RichardsÂs near-death experience meant that it was time to think about their heirs. For that, the aging rockers turned to a reclusive Dutch accountant, Johannes Favie, whose company, Promogroup, has helped them minimize their tax bills for more than 30 years. (The fourth Rolling Stone, Ron Wood, handles his finances apart from Promogroup.) And so, last August, according to details disclosed in documents maintained by the Handelsregister, the trade registry of the Netherlands, Promogroup helped the three performers set up a pair of private Dutch foundations that will allow them to transfer assets tax-free to heirs when they die. Other Dutch shelters that Promogroup has arranged for the three have already paid off handsomely; over the last 20 years, according to Dutch documents, the three musicians have paid just $7.2 million in taxes on earnings of $450 million that they have channeled through Amsterdam Â a tax rate of about 1.5 percent, well below the British rate of 40 percent. [...] According to documents from the Dutch trade registry, PromogroupÂs Mr. Favie, the principal director of the StonesÂ holdings in the Netherlands, is now also the main director of U2 Ltd., the Dutch-based entity that holds the lucrative master tapes to U2Âs song library. Song catalogs typically account for a large portion of successful bandÂs royalty income, so U2 Ltd. is likely to be the recipient of a major piece of U2Âs income, analysts say. Likewise, U2Âs financial move to the Netherlands is likely to save it substantial sums it might otherwise have paid in royalty taxes. Not everyone has access to Dutch shelters. Dutch tax benefits are typically available only to artists who are not citizens of the United States. While the Netherlands does not tax royalties going in or out of a Dutch company, the Treasury Department in the United States typically levies its standard corporate income tax rate of 35 percent on royalties coming into America from a Dutch entity. Dutch holding companies set up to protect royalties often work in tandem with offshore Caribbean companies, shuffling money around to escape taxes, analysts say. For example, part of the Rolling StonesÂ Dutch-run assets are funneled through the Netherlands Antilles, a Dutch protectorate and a classic Caribbean tax haven, according to company registration documents. So, what's your answer, Beep? Should we cut income tax rates to 1.5% to match the Dutch tax shelters? If not, then what's the point of your proposal? They'll keep their money in their "expensive" post office boxes anyway - right? How is this not a "race to the bottom" if all that matters is the top marginal rate? :-/ As Mike says, in the real world, it's impossible for a real country to compete with a post office box - tax-wise. The US recognizes this, and that's why we (and the UK and others) are cracking down on tax shelters, not trying to match them (even if it were a good idea - and it's not). http://www.nytimes.c...iness/28gret.html Now, Congress is attacking some of these schemes, courtesy of interesting provisions aimed at curbing tax avoidance that legislators wrote into the new jobs bill, known as the Hiring Incentives to Restore Employment Act. The most substantive section of the bill states that foreign financial institutions will face a 30 percent tax on their United States investments if they refuse to disclose information about accounts they have opened for American citizens in offshore jurisdictions. Another aspect of the bill eliminates a clever derivatives strategy used by investors to make their tax bills on dividends disappear. Cheers, Scott.
Post #324,383 by beepster 4/10/10 2:40:59 PM Reply	Apples and Oranges its an >personal< income tax strategy. and if you didn't notice, that strategy wouldn't work for a US citizen..so stated in the article itself. I will choose a path that's clear. I will choose freewill.
Post #324,394 by Another Scott 4/10/10 3:47:13 PM Reply	That's just one example. I'm sure you realize that many "businesses" are created to shelter income from personal income taxes. E.g. http://articles.mone...rOwnBusiness.aspx Isn't your basic argument that people are going to do whatever it takes to reduce their taxes? Many people who hate taxes (and think they contribute too much to society as it is) find ways to do so. I'm sure you'd agree that at least a few are bending or breaking the rules in the process. All people with AGI above $200k pay federal income tax, right? Not so: http://www.irs.ustre...sprbulinhitax.pdf (49 page .pdf): For 2006, of the 4,064,883 income tax returns with AGI of $200,000 or more, 8,252 (0.203 percent) showed no U.S. income tax liability; and 4,123 (0.101 percent) showed no worldwide income tax liability (the top panel of Figure C). If tax shelters exist for corporations, individuals will form corporations to try to take advantage of them. If rates are lower as an individual than as a corporation, they'll file as an individual. The answer to the problem of the rich and corporations sheltering income from tax isn't to lower the rates, it's to crack down on the shelters. HTH. Cheers, Scott.
Post #324,254 by crazy 4/8/10 12:55:04 PM Reply	I've used the same example Then I realized, it is too easy. NYC and close commute areas (unless dangerous) are incredibly expensive areas to live in. And yes, that means $200K is not a lot. Cost of housing and living drops the further away, and I assume people balance their income with where they choose to live (when they make that much), which in turn means they probably live on the edge of what they can afford, at least during the ramp up years. But I doubt the majority of people that are affected by this are that particular population. Choose your primary metro areas, those that cost more than $200K to live in. Get a population breakdown, and then figure out the portion of the approx $200K people you feel are getting screwed. Then figure out how many people in the entire population live in an area that $200K is a VERY good living. That would be everyone else who makes that much, since we've just counted the major expensive areas out. $200K is REAL money for the vast majority of us, those who make it and those who don't. You want to use outliers for the examples? You really open yourself up for the return barrage, at least from those who feel like doing the research.
Post #324,259 by jake123 4/8/10 1:24:11 PM Reply	That's the problem beep they may not think they're rich, but they actually are.

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