"Guilt" for being able to get a Model S?!

[strider]

If this is your concern, then no goverment in the history of mankind can help you.

I never asked for the government to help me. I'm asking for it to STOP helping itself and the rest of the elites against me. Give everyone a level playing field and see what happens.

 

[strider]

At 14% Mitt is paying Capitol Gains tax. This has already been taxed at 35% corporate tax before the dividend was passed on to Mitt. The net rate was 49% to the government.

How do you figure? Cap gains can be from stock appreciation (no corp tax paid on that if I buy a stock for $10 and sell if for $20 366 days later), dividends (GE pays a dividend but they pay ZERO corp tax), or carried interest (much of this is written off by the company as management fee and so no corp tax is paid on it).

 

[qwk]

But this is the entire premise of my original argument. When you "set up your own business" the income you earn is NOT at "zero to low tax rates". It is ordinary income and taxed at the full rate. And the more money you make the higher your tax rate. Only once your company is public or has grown to a significant size do you get to start using all of those accounting tricks to reclassify your money from wages into investment income. THAT transition is extremely hard to reach because the tax structure is stacked against you - the closer you get the higher the taxes rise to keep slowing you down. Ask your local gas station owner or mechanic what tax rate they pay - it's a heck of a lot more than 15%.

I learned that it's useless arguing with this crowd, as they have no clue when it comes to business accounting. Being a small business owner myself, I know what the tax rates are and they are anything but low. Most tax perks are also being taken away slowly and it's slowly killing small business in this country.

 

[qwk]

How do you figure? Cap gains can be from stock appreciation (no corp tax paid on that if I buy a stock for $10 and sell if for $20 366 days later), dividends (GE pays a dividend but they pay ZERO corp tax), or carried interest (much of this is written off by the company as management fee and so no corp tax is paid on it).

Yes, and to add to the fire, many elites like Romney have offshore accounts. Now, if you aren't trying to hide anything and are proud to be an American, why have a Swiss bank account? It doesn't take much sense to put the pieces together.

 

[NigelM]

At 14% Mitt is paying Capitol Gains tax. This has already been taxed at 35% corporate tax before the dividend was passed on to Mitt. The net rate was 49% to the government.

Math fail. With a 35% deduction followed by a 14% deduction, you would have a net tax rate of 44.1%.

 

[NigelM]

I recognize most American's are allergic to taxes, and it's good like that, but I also just wanted to say that we moved to the U.S. because we can have a great life here and the taxes are so low....

That said, there's little excuse for some of the crazy anomalies that exist in the tax system. I'm nowhere near the 1%/Romney level but I will freely admit that if my taxes went up a point it wouldn't make any difference to our lifestyle or my investment behavior. I am much more concerned about how our government (regardless of political hue) manages to waste so much and be so ineffective, when there's so much that needs to be done.


P.S. Back OT....I've never felt guilty about owning my Roadster (and won't feel guilty about the Model S) and the only thing I discovered was how many friends I have who wanted to go for test drives......

 

[woof]

You can download development tools for any platform out there and write the next Angry Birds.

I'm trying! Really! (Help me out guys, buy some games...and leave some reviews) But there's more to App store success then hacking some code. And if you expect to make a living off it, good luck. The median app grosses $1,100 per year (Results: iOS Game Revenue Survey Streaming Colour Studios). So while it is cheap to get into the app biz, making significant money off it (where significant is enough to live off of--Model S purchases aside), is not so easy.

And to stay on topic, yes I feel a tad guilty. But I'll get over it.

 

[Lloyd]

Simple flat tax as I talked about earlier. If everyone (people, corps, etc) paid ~12% on every dollar they made then the budget would be balanced and it would be fair. No exemptions on anything for anyone. If you bumped the rate to ~15% (working from memory here) you could exempt the first $30k or so of income to help the poor and still come out ahead.

Now if you're asking how to get it done.... well if I knew that I wouldn't be sitting here complaining about it

I believe we are better off taxing spending ie VAT. Have a national sales tax. No corporate exemtions. I would be in favor of exempting health care and basic food items to help the poor. Determine the VAT rate by the spending from the previous year to keep the budget balanced. This would be a direct deterrent to the continued spending.

 

[Lloyd]

How do you figure? Cap gains can be from stock appreciation (no corp tax paid on that if I buy a stock for $10 and sell if for $20 366 days later), dividends (GE pays a dividend but they pay ZERO corp tax), or carried interest (much of this is written off by the company as management fee and so no corp tax is paid on it).

Strider, the corporation that paid the dividend paid corporate tax first, at a rate of 35% If GE pays zero it is because the government has allowed them other deductions as depreciation on investment in plant and equipment to further job growth. Management fees would be earned income and taxed at the regular rate. I'm not a tax expert, but I don't believe your statement is completely correct.

 

[neroden]

I learned that it's useless arguing with this crowd, as they have no clue when it comes to business accounting. Being a small business owner myself, I know what the tax rates are and they are anything but low. Most tax perks are also being taken away slowly and it's slowly killing small business in this country.

It's absolutely true that the very low tax rates in this country are very specifically designed for rich executives of large corporations, and heirs.

Small business owners get hosed. Well, of course they do -- the policies are written by the people who control *big* businesses, and small businesses constitute competition, so of course big businesses would like to stifle the competition.

Anyway, the capital gains tax rate discounts are obscene. The people who claim that the corporation has paid taxes on this are simply misinformed (or lying), given the nature of capital gains, which can simply be from speculative action (gambling at Vegas, in contrast, is taxed at full rates).

Regarding dividends, there is a real case to be made for allowing companies to deduct dividends from the corporate profits before corporate-level taxes are assessed (this would give companies an incentive to return money to stockholders rather than "reinvesting" it in questionable ventures). There is *no* case for allowing dividends to have a lower *personal* tax rate to the recipient -- none at all. Unless you just want to make sure rich people pay lower tax rates, which is frankly the goal of the people who put these rules in place.

The thing which makes it obvious that the rules are designed solely to help the very rich is this: all of these tax breaks for the rich are designed to lower the top-bracket rate, which matters only to the very rich. They never leave the top bracket rate the same and provide a "discount" for everyone; I believe some European countries have had a something approximating a "first $100 in dividends tax free" rule in the past, which helps the poor with dividends as much as it helps the rich with dividends. But the US tax breaks on capital gains and dividends are designed quite specifically as tax breaks for the rich.

 

[neroden]

At 14% Mitt is paying Capitol Gains tax. This has already been taxed at 35% corporate tax before the dividend was passed on to Mitt. The net rate was 49% to the government.

Apart from the fact that this simply isn't true (capital gains are not the same as dividends, most capital gains have never been taxed at the corporate level, and Mitt is using the Carried Interest loophole) --
I think it's time to explain why this line of argument is nonsense even for dividends.

When I pay someone to do work on my house, why, that money has already been taxed when I received it! Why should the carpenter pay income taxes on it too? Why should I pay sales tax, too? Isn't this triple taxation?

Does this sound stupid? If so, then you will understand why "double taxation" arguments are stupid. Income tax is a transfer tax -- there is *always* double (triple, quadruple) taxation. Corporations receive a large number of privileges for incorporating (personal immunity from liability for corporate actions is the biggest), and in exchange they have to pay taxes as separate entities. The so-called "double taxation"of dividends is the price the stockholders pay for limited liability (and well worth it too).

 

[neroden]

I only asked what part of the tax code you thought was more constraining on an entrepreneur today than 30 years ago, which is what you stated earlier. The facts are that the marginal tax rate on earned personal income, unearned personal income, and corporate income are lower today the 30 years ago. Marginal rates are not the entire tax code, though, so I wanted to understand specifically what changes in the federal tax code in the past 30 years you believe hurt the entrepreneurial endeavors.

\

Not sure about qwk, but I've observed that "fees" have proliferated, and state&local property and sales taxes have exploded, to make up for what the federal and state governments *aren''t* collecting in income tax. In the last 40 years, payroll tax is up too (which hurts anyone who employs people). In the federal income tax code, home office deductions got eviscerated, as did deductions for anything with shared personal/business use.

So we have a mass of regressive taxation and rules which hurt startups but don't bother big businesses at all.

 

[neroden]

The top individual income tax rate now is half of what it was in 1972, the corporate income rate is 10 percentage points lower, and dividends and capital gains are treated much more favorably now then 30 years ago. Those are simple facts that don't rely on inflation adjustment. If we're talking about entrepreneurial spirit, it's these top rates that matter, not the tax rate on wage earners.

See, this is where you're wrong. The top rates are interesting only for those who have "already made it". For entrepeneurs, the key question is the rates which apply during the startup phase... and the situation there is a lot tougher than it used to be for various reasons. The crippling cost of private health insurance is actually the worst, probably; this can't be blamed on tax policy alone, but the unwillingness of certain elected officials to do 'Medicare for all', such as is done in the majority of industrialized countries, plays a large part.

 

[Trnsl8r]

\

Not sure about qwk, but I've observed that "fees" have proliferated, and state&local property and sales taxes have exploded, to make up for what the federal and state governments *aren''t* collecting in income tax. In the last 40 years, payroll tax is up too (which hurts anyone who employs people). In the federal income tax code, home office deductions got eviscerated, as did deductions for anything with shared personal/business use.

So we have a mass of regressive taxation and rules which hurt startups but don't bother big businesses at all.

I have made similar observations. The cause is probably that raising income tax is equivalent to black death for most politicians, instead they get elected on promises to lower them. But the lack of revenue has to be made up for somehow, so they raise money using fees and other taxes, such as payroll, which work the same but has less visibility. And hit harder on the startups and individuals with low income.

(Since we're so far OT anyway, am I, as a foreigner in this country, the only one surprised with how presidential candidates make lofty promises about laws and tax codes that they're going to change? If I remember correctly, they are vying for job in the executive branch, whose only job is to enforce the laws the legislative branch tells them to. To me it's a bit like a sheriff running for election by promising to raise speed limits...)

 

[Trnsl8r]

... The crippling cost of private health insurance is actually the worst, probably; this can't be blamed on tax policy alone, but the unwillingness of certain elected officials to do 'Medicare for all', such as is done in the majority of industrialized countries, plays a large part.

Having lived in both types of societies, with public healthcare and without, I can tell you first-hand that public makes more sense for both employers and employees (I could go on, but we're OT as it is). Unfortunately that would hurt the insurance industry, and they won't go down without a fight... and have a lot of money to fight/lobby with.

 

[Lloyd]

Unsustainable expendatures!!

 

[Lloyd]

Also consider a recent interview with Bernanke:

One Congressman said that he wanted Bernanke to assume hypothetically that the wishes of both parties were allowed to come true. He wanted Bernanke to assume that the increased taxation of the rich took place as proposed by President Obama. He also wanted Bernanke to assume that all the spending cuts being proposed by Republicans also went into law. He then asked Bernanke whether these suggested changes would address the debt problem.

...... His answer was NO! He said that these changes would cause only "slight" or "insignificant" changes in the debt problem. He said that any impact on the coming debt crisis will have to be connected to changes in health care and entitlements! The escalating cost of medical care is the main cause of the crisis.

 

[strider]

Lloyd,

I agree w/ your last posts regarding the state of our finances (and taking us even further off-topc . In contrast to what you might think I am staunchly fiscally conservative. I don't think the government should ever be allowed to run a deficit. During good times they should build up a surplus of money that they could then give out in unemployment insurance, other stimulus, etc. when times are bad. Americans (and most of the world really) have been getting more government than they've been willing to pay for for decades now but we need to face the music that we're in the hole and we need to decide what amount of government we're willing to pay for. But politicians (all of them, regardless of party, except maybe Ron Paul) have been unwilling to even start the conversation with the public.

 

[Lloyd]

Strider,

I applaud you for your fiscal conservatism. Perhaps all parties can come together and protect the future of this country.

I have to ask you however as I have wondered for a long time. What is your avatar? I hope it is not a burned flag!

Sorry Doug for being OT!

 

[PV4EV]

Strider,

I applaud you for your fiscal conservatism. Perhaps all parties can come together and protect the future of this country.

I have to ask you however as I have wondered for a long time. What is your avatar? I hope it is not a burned flag!

Sorry Doug for being OT!

Looks like a top down photo of a bloke on a motorbike ..