[mikemike]

In today's economy, a million isn't all that much.

In terms of wealth, if you have a positive net worth you are richer than 25-30% of american households who don't have a nickel to their name because they spend everything they earn and then some. Even some households with very high incomes fall into that category of no or negative net worth and some households with very low income fall into the high wealth category (retirees with a substantial nest egg, negligible expenses, and modest lifestyle who only take minimum withdrawals).

Income taxes preserve the wealth and status of "old money" families by preventing "new money" people from ever becoming rich. The anger in this country is because there is a sense that something is unfair about the system. I think it is severely misdirected at people who are working and earning money now as opposed to those who are resting on their grandfather's laurels.

[Nesster]

Income taxes preserve the wealth and status of "old money" families by preventing "new money" people from ever becoming rich.

Explain Jobs, Gates, Buffet, Bloomberg, and any number of others.

Explain the Koch brothers, as a counter argument.

[shooz]

And here I thought off shore accounts preserved "old money", and conserved "new money".
Yes mikenike, please explain.

[redrockcoulee]

If you want to make a millionaires tax to penalize the accumulation of wealth, tax millionaires (people who have a networth of more than $1MM). Instead of basing the income tax rates solely on income, consider the net worth to so that someone who is retired and has no debts and lives off a $50,000/year annuity is taxed more than someone who is just out of school earning $50,000/year with a student loan, a car note, a house note, a 6.2% FICA liability, and needs to contribute to a 401k.

Redrock, We pay property taxes here in the US at the state and/or municipal level so it would be fairly easy to gather the assessment information from the relevant assessor.

My point was here the federal government CANNOT tax your property as the constitution states that property taxes are the rights of municipalities. Does the US not have some sort of distribution on who can tax what? Cities cannot tax incomes but federal and provinicial can, as both can sales tax.

But regardless if the federal government needs more money and cannot do it all by cutting spending, especially if the interest payments and military budgets are off the table then raising income taxes AS WELL is the solution and the best way is to tax those who can affford it instead of an extra amount on those making little money. This is complety different than taxing your existing property.

It is interesting how some complain about those who pay no income taxes being thieves or lazy etc and should also pay the same or similiar amount as everyone else. So some one who works say as a teacher and pays say for example ten grand a year should pay no more taxes than an education student attending university and working weekends and the summer and makes 6 thousand a year. That student after paying their tutition and books and living expenses (me and many I know did not get ours paid for us by parents) and now has to pay $8,000 income tax, 2 grand more than they even made in order for a Bill Gates not to have to pay as much in taxes as he would have under Clinton or Reagan and certainly under Nikon. That makes no sense. And an added 5% on top of an historic low in tax rates is far from 90% unless your math is only to protect the super rich from sharing the burden that the middle class and working poor as well as the real poor have to as well.

If everyone needs to pay taxes perhaps the rich should only be able to fund politics the same amount as the poor can afford, everyone is equal after all

[GeneV]

I
Income taxes preserve the wealth and status of "old money" families by preventing "new money" people from ever becoming rich. The anger in this country is because there is a sense that something is unfair about the system. I think it is severely misdirected at people who are working and earning money now as opposed to those who are resting on their grandfather's laurels.

I would agree with the second and third sentences as a reason for taxing inheritance more than income. The first sentence is way off the mark, especially at the tax rates we have had in the last 30 years. Income taxes would be way down the list of factors which might preserve old wealth.

[mikemike]

My point was here the federal government CANNOT tax your property as the constitution states that property taxes are the rights of municipalities.

I am not suggesting that they level an ad velorum tax against property, I am suggesting that they consider your wealth in determining your income tax rate. So that two people with $50,000 in income and vast differences in wealth do not pay the same amount of taxes.

Explain Jobs, Gates, Buffet, Bloomberg, and any number of others.

Explain the Koch brothers, as a counter argument.

I would say that those people prove your point about exploiting the tax code's loopholes. The people on the first list pay low taxes because their income comes in the form of capital gains from selling the stock they own in their companies on the stock market. Warren Buffets salary is only $100K so he is in the 28% tax bracket and every time he sells a share of berkshire he collects ~100K in long term capital gains which are taxed at 15%. Contrast that with the Kochs who own a privately held company and don't sell any shares, they don't have to and therefore don't disclose what Charles Koch's salary is but I am sure it is probably much higher than Warrens and he doesn't exploit the loophole in the tax code to cash out huge capital gains in Koch Industries I think it would be safe to say that Charles Koch pays more taxes than his secretaries because they don't play the wall street games of avoiding taxes.

The Koch brothers have been running Koch Industries about as long as Warren Buffet has been running Berkshire and both companies have experienced annualized growth of a little more than 20% during the tenure of these managers. Both were the sons of wealthy libertarians and followed in their fathers' footsteps (Buffet investing and Kochs engineering) and both are very generous philanthropists today, the parallels in their lives are uncanny. Even though they come from old money, I think it is safe to say that in both cases they have succeeded in their own rights by building on their fathers' success not resting on their laurels and living off the dividends of a trustfund.

[shooz]

I am not suggesting that they level an ad velorum tax against property, I am suggesting that they consider your wealth in determining your income tax rate. So that two people with $50,000 in income and vast differences in wealth do not pay the same amount of taxes.

Still a FAIL!
How would you determine wealth kept in offshore accounts and investments?
That is unavailable to a secretary, or much of anyone else for that matter.
For this to work, that would have to stop. How would you deal with that?

[shooz]

Nor have you addressed any of the documented malfeasance practiced by Koch Industries. Not one.
Here's an Xtra one for you to ponder.

Political Ruminations: Corporate Malfeasance

Can you demonstrate the same for Buffet?

[redrockcoulee]

Mike: income tax is still a tax on income and not on wealth. A wealth tax would be counter prodcutive for several reasons but mostly it would encourage people to spend rather than save, secondly do you pay income on an increase in the value of your house or farm but what about when property values go down do you then get a tax deduction? Also anyone who worked for at least a couple of years would pay more taxes than some one just entering the work force. Would you also suggest that you pay income tax on the number of cats you have or anything else that has nothing to do with income? It is called INCOME tax because it taxes income, whether that be employment earnings, profits in a business or from flipping houses or flapjacks. I pay income tax on the income I make on the rental houses I own, not on the rents but the net income and I already pay property taxes including school taxes on each and every one of those houses so would now paying taxes on the value of the houses as if it was income make any sense? I only pay income tax on any dollar I earn and only in the year I earn it but if I paid income tax on the value of my house I would pay it each and every year, does not seem to make sense except in some attempt to attack a government for trying to raise income tax for the wealthy.

One example I will give you on why you system would be more unfair than the current one: my brother in law has a nice size farm, maybe 4 or 5 sections some in my area run to 30 or more sections without the owners being rich. On years with good crops and good cattle prices he makes a good living and pays his bills and his taxes. But years of poor cattle prices and bad weather he makes much less money and some years will actually lose money however the value of his farm stays about the same so even the years he loses money he would end up paying income tax so what does he have to do, sell land or more cattle at a bad price or borrow money just to pay for his equilty that he already does pay some property tax. His farm value did not make him income that year to why should he not just pay on his income?

[Gooshin]

Still a FAIL!
How would you determine wealth kept in offshore accounts and investments?
That is unavailable to a secretary, or much of anyone else for that matter.
For this to work, that would have to stop. How would you deal with that?

as someone that works in the industry... the only way to deal with that is to either ban US citizens from having offshore bank accounts, or forcing the foreign banks to close all US owned bank accounts.

good luck with either

ohh and, owning a swiss bank account most definitely does not hide you from people who REALLY want to find out..

[reeftool]

In terms of wealth, if you have a positive net worth you are richer than 25-30% of american households who don't have a nickel to their name because they spend everything they earn and then some. Even some households with very high incomes fall into that category of no or negative net worth and some households with very low income fall into the high wealth category (retirees with a substantial nest egg, negligible expenses, and modest lifestyle who only take minimum withdrawals).

Income taxes preserve the wealth and status of "old money" families by preventing "new money" people from ever becoming rich. The anger in this country is because there is a sense that something is unfair about the system. I think it is severely misdirected at people who are working and earning money now as opposed to those who are resting on their grandfather's laurels.

One of the problems we have in this country is way too many people spend too much of their income on stupid crap which they consider essential but are not. $20 a week into a 401k with matching contribution will turn into a good chunk of change but most people would rather waste it on cable TV, convenience store coffee, etc and then complain that the folks who managed their money better ought to be taxed more. I've been as guilty as anyone at times but as I got older I began with the few bucks a week and was able to pay off a lot of debt at age 60 and be debt free except for a car payment and mortgage and still have some left. Much of that debt involved sending my kid to college and covering my income after a few months of disability recovering from surgery. Giving up coffee, movies, and a few extras became over $20K in 8 years. If I did that starting at age 20 or so, I would be a very rich man today. I suppose by some standards, I would be considered rich because I have more than I owe but I have worked all my life as a mechanic and my biggest years in income were around $50K, mostly in the last few as my skills have been in demand. The biggest WTF I ever encountered was a friend who said he was behind on his mortgage and he was spending over $300 a month on cable and cellphones. That's more important than your home?

[redrockcoulee]

Reeftool

There is no doubt that people generally are poor managers of their money and if you look at the stats there are many go belly up even during the booms. When the economy goes down it becomes worse. But the reasons for the boom and bust and for the magnitude of those cycles does not rest with the individual. When even average money managers run into difficulties than one should look beyond the individual to see where the problem is

We could be considered cheap as spend very little on things like eating out or on coffee (tea actually as my coffee consumtion used to be a cup a year but I cut way back) but do spend it on things we like like photo gear, art or it used to be at the vets.

[GeneV]

Saving is a good thing, though you'd be hard pressed to get to $20k in your 401k in eight years at $20 per week now. You aren't going to be very wealthy at that rate, either.

[reeftool]

The company I worked for matched my contributions 100% so I doubled my money right from the get go. I started it in 1996. I borrowed $5K from it in 2000 for the down payment on my house. I stopped paying in when I broke my leg skiing in 2004 and I needed that extra 20 bucks. When I stopped working that job 2 years later, it's value was a little over $18K. I just left it rather than rolling it over because the investments were doing good. It was at $21K in the summer of 08 when the crash happened. It dropped to a little over $15K by mid 2009. My cutoff point was 15. If it went below that I was going to roll it over into a bank IRA. It went back up rather quickly and when I closed it out a year ago, It was $22K+. Nothing special, just appox $20 a week. It was actually a percentage of my gross, I forget but I think 2 or 3%. When I made a lot of overtime, I paid more in.

Yeah, it's tough right at the moment but from mid 2009 to 2010, it made 40%. All those funds go up and down and right now they're in the toilet. What I contribute now in this job is actually buying more shares so when thing turn around, and they will, it have even more value. I also unplugged my cable TV. I have DSL from Frontier Telephone and I watch what I want online. The best single investment I ever made was $1600 for a new furnace. I went from 3 tanks of oil a season to 1. I have the skills to do the job myself so I saved there. I'm not perfect. I have a little LBA too and do activities like skiing that aren't cheap. I'm not going to retire rich but I won't be eating dog food either. I'm 61 and looking retirement right in the eye. If I stay healthy enough to work until 66, the house will almost be paid off. If I retire next year, it will be tough but doable.

[GeneV]

I had done a quick calculation, and it would require double digit returns to get to $20k with that contribution and that quickly. A 401k does not solve all problems, but it is a good thing. I started a simple one for myself and my employees this year, and thought I might be the only one who made contributions. I was gratified that one of my employees, who is the sole earner in her family, signed up to have $25 per paycheck taken out.