Tax Discrimination - It's that time again

[cpp214]

Like him or not, Warren Buffet is one of the greatest philanthropists of all time.
He puts his money where his mouth is, and has committed an incredible amount of money to charity...and still no love from Libertarians?
And his point that the wealthy pay a lower portion of their income in taxes is still valid.

Look at it this way. The money he saved on taxes by virtue of being wealthy is going to a very worthy cause.
The Gates Foundation is actually a reputable charity which focuses on--among many other things--ending
easily-treatable diseases in 3rd world/underdeveloped countries.

 

[Danoff]

He's the charity poster-child. But lying about taxes does not get good marks (for anyone). That being said, he could have contributed MORE to charity if he contributed a little less and made a little more. People who are good at making money employ people. One could argue that he should spend a little more money creating jobs and less money creating handouts.

 

[FoolKiller]

Like him or not, Warren Buffet is one of the greatest philanthropists of all time.
He puts his money where his mouth is, and has committed an incredible amount of money to charity...and still no love from Libertarians?

Is he proposing that others be forced to give up their money? Yes. So, I will commend him on his charitable givings, but he political philosophy and policy ideas are the opposite of libertarian.

You don't see me saying that I gave X amount to charities so everyone in my pay range should be forced to pay it in taxes, do you?

And his point that the wealthy pay a lower portion of their income in taxes is still valid.

Only if their income is primarily through investments. A person making a $200,000 salary would pay 35%. The problem his comparison ignores is that many people in the workforce fall into that top percentage range in salary by making a household income over $200,000, but living in a market where a starter home is $1 million or more. When people discuss raising taxes they talk about income tax brackets, and nothing from Buffett's speech there has him proposing creating parity between capital gains and income tax. So, if politicians listen to him and act as they typically do the man bringing in $46 million will still only pay 15% or so, while the family living in a high-cost region will be taking on a huge burden as their rate goes up above 35%.

His comparison was on two different forms of taxation, and I would guess he did it on purpose in order to make his point. However, he needs to make sure he talks about simplifying the tax code to prevent these kinds of loopholes and not just go on a "we should pay more" rant that will easily be misused by politicians.

And if you look at current tax plans the Obama administration and Congressional Democrats have taken it the wrong way. The health care plan is raising taxes on salary income over $200,000, not closing the capital gains loophole. Warren Buffet will not pay a single cent more in taxes toward health care, but the family with two lawyers will.




And I just saw this interesting video discussing benefits of a flat tax.

Please excuse Blinky McBignose.

 

[YSSMAN]

And everyone, stop being hypocrites. If you were in that magical $200,000 bracket, you'd have a very different opinion about being taxed at 33%.

I'm not certain if you understand completely how our tax system works, but you do realize that you are not paying an entire 33% of your income, right? It is a system broken up by your income levels, so for the first $8350 you make you only pay 10% on that. Between that and $33,950, you pay 15% on that. All tabulated, you're only paying 25.57%, or about $51K out of your total $200,000 (of course, I have left our state and local taxes). A lot of people tend to miss this.


Otherwise, I entirely disagree with your point and your assumption that a flat tax would be best. A fair tax (ie consumption tax), however, I can support.

 

[Omnis]

And I just saw this interesting video discussing benefits of a flat tax.

Please excuse Blinky McBignose.

I would Service her Internal Revenue. Chicks against taxes and bureaucrats = hot.

 

[DK]

Anyone can get by with one - many people do without even realising it.

My baby brother has one kidney and he's okay. I guess that's proof you can live with one kidney. He had one weak kidney and one strong kidney, so the weak kidney was as useless as my great-aunties Kia Rio in a F1 race.

 

[Kylehnat]

All tabulated, you're only paying 25.57%, or about $51K out of your total $200,000.

I'm not too worried about the actual numbers...my point is that everyone seems to have the attitude that the rich should pay more, simply because they can, but if they themselves were "rich", they'd have a different opinion. It's not about what amount of tax people can and can't afford to pay, it's about an unbalanced system. Why not just come to my apartment, start taking the stuff I "don't need", and giving it to folks on the other side of town? Our tax "refund" system does the same thing, only with money. It is supposed to compensate people for taxes they have "overpaid" in the previous year. But, how can someone get a refund bigger than what they put in? If I return a $200 iPod to the store, do I get $200 back from the clerk, and $100 from the guy in line behind me?

 

[Biggles]

It may be that Mr. Buffet was indulging in a little hyperbole when talking about his cleaning lady (a little like Famine talking about being obliged to give up his kidney). It’s also possible that the quote was taken out of a context in which he elaborated in more detail on the subject. In any case, given the high-powered audience on the occasion, I’m pretty sure the listeners would have understood his meaning, which I take to be this:

Everyone, including billionaires, get the same basic deductions from their income taxes. After those deductions the tax rates kick in. Capital gains & dividends are taxed at a significantly lower rate than earned income, which tends to favor the rich (especially the super-rich) whose income is often disproportionately based on those sources of income. So, although his cleaning lady may not be the most appropriate example, middle-class people with predominantly earned income will wind up paying a much higher proportion of their income in taxes. The point he made that I emphasized was that this

"tax policy accentuated a disparity of wealth that hurt the economy by stifling opportunity and motivation".

I take that to mean that small business owners, entrepreneurs (like myself) who are actually responsible for a lot of growth in the economy & job creation are put at a disadvantage.

The thing I find disturbing is that the libertarians here feel obliged to dismiss Warren Buffet, one of the most successful capitalists of the last hundred years, & someone who knows a great deal about making money & what it actually means to be extremely wealthy (& also one of the world’s leading philanthropists to boot), because he voices an opinion that diverges from pure libertarian dogma. This just reinforces the impression that some libertarians are more interested in fanatically promoting their ideology, than honestly evaluating practical policy.

 

[Dotini]

The thing I find disturbing is that the libertarians here feel obliged to dismiss Warren Buffet, one of the most successful capitalists of the last hundred years, & someone who knows a great deal about making money & what it actually means to be extremely wealthy (& also one of the world’s leading philanthropists to boot), because he voices an opinion that diverges from pure libertarian dogma. This just reinforces the impression that some libertarians are more interested in fanatically promoting their ideology, than honestly evaluating practical policy.

Oh, c'mon, Biggles, you don't find it disturbing, you find it pleasurable.

 

[Biggles]

OK, not disturbing exactly, but not really pleasurable either. More along the lines of:

 

[Famine]

It may be that Mr. Buffet was indulging in a little hyperbole when talking about his cleaning lady (a little like Famine talking about being obliged to give up his kidney).

Mr. Buffett fabricated his secretary's rate of income tax. He also misrepresented capital gains tax as income tax. That's not "hyperbole". That's lying.

I haven't said I'm obliged to give up a kidney. I've asked those who'd justify stealing part of me to give to others because I don't need it and they do to justify stealing part of me to give to others because I don't need it and they do. That's not "hyperbole". That's an analogous exemplar - and as yet this question has not been answered (and we all know why).

The thing I find disturbing is that the libertarians here feel obliged to dismiss Warren Buffet, one of the most successful capitalists of the last hundred years, & someone who knows a great deal about making money & what it actually means to be extremely wealthy (& also one of the world’s leading philanthropists to boot), because he voices an opinion that diverges from pure libertarian dogma.

Obviously his ideas are dismissed as non-libertarian because, get this, they're non-libertarian!

He's a socialist. He's a socialist that has an income of $100k a year and earns $46m a year in capital increase. That doesn't make him a Libertarian - it makes him a very rich socialist, and his philathropic bent seems to be further enhanced by him lobbying politicians to force everyone to give money to the same causes to which he gives money.

Libertarianism has nothing to do with being wealthy. Want to know what my income is so far this year? It's £0. Want to know what it was last year? It was £0. I'm unemployed and have been since June 2008 - my income puts me well below the US poverty line. I get no state assistance because I don't want money stolen from other people. I'm exactly the sort of person socialism would help. Like Mr. Buffett, I know a great deal about not making money and what it means to have none - and yet you dismiss me because my opinion diverges from pure socialist dogma...

 

[Keef]

Otherwise, I entirely disagree with your point and your assumption that a flat tax would be best. A fair tax (ie consumption tax), however, I can support.

The only way a tax will ever be fair is if it's a flat percentage rate applied to every person, regardless of whether or not it's a consumption tax. A consumption tax has the added benefit of being voluntary, but the important part is that it would be apportioned at an equal percentage rate to everyone like the Constitution originally intended.

 

[Biggles]

Mr. Buffett fabricated his secretary's rate of income tax. He also misrepresented capital gains tax as income tax. That's not "hyperbole". That's lying.

I haven't said I'm obliged to give up a kidney. I've asked those who'd justify stealing part of me to give to others because I don't need it and they do to justify stealing part of me to give to others because I don't need it and they do. That's not "hyperbole". That's an analogous exemplar - and as yet this question has not been answered (and we all know why).

Biggles
The thing I find disturbing is that the libertarians here feel obliged to dismiss Warren Buffet, one of the most successful capitalists of the last hundred years, & someone who knows a great deal about making money & what it actually means to be extremely wealthy (& also one of the world’s leading philanthropists to boot), because he voices an opinion that diverges from pure libertarian dogma.
Obviously his ideas are dismissed as non-libertarian because, get this, they're non-libertarian!

He's a socialist. He's a socialist that has an income of $100k a year and earns $46m a year in capital increase. That doesn't make him a Libertarian - it makes him a very rich socialist, and his philathropic bent seems to be further enhanced by him lobbying politicians to force everyone to give money to the same causes to which he gives money.

Libertarianism has nothing to do with being wealthy. Want to know what my income is so far this year? It's £0. Want to know what it was last year? It was £0. I'm unemployed and have been since June 2008 - my income puts me well below the US poverty line. I get no state assistance because I don't want money stolen from other people. I'm exactly the sort of person socialism would help. Like Mr. Buffett, I know a great deal about not making money and what it means to have none - and yet you dismiss me because my opinion diverges from pure socialist dogma...

THAT"S THE WHOLE POINT!

I never said Warren Buffet is a libertarian (although he's certainly not a socialist either). It's not that "his opinions are dismissed AS non-libertarian" that's a problem, it's that his opinions are dismissed BECAUSE they're non-libertarian.

Call me crazy, but I have this idea that the world's richest man (or third richest, whatever you will) just might have a perspective on capitalism, wealth-creation, tax policy etc. that is worth listening to - that it might offer a more hands-on perspective than that offered by a handful of dogmatic libertarian GTPlanet bloggers.

I am not, & most definitely Warren Buffet is not, putting forward anything remotely approaching "pure socialist dogma", nor, my dear Famine, am I dismissing your opinion, I'm vigorously disputing the viewpoint, repeatedly stated here, that pure libertarianism is the ONLY POSSIBLE, RATIONAL WAY OF LOOKING AT THE WORLD!

To paraphrase, the position constantly advanced here is: "IF IT'S NOT (100%) LIBERTARIAN IT'S CRAP!"

 

[FoolKiller]

Call me crazy, but I have this idea that the world's richest man (or third richest, whatever you will) just might have a perspective on capitalism, wealth-creation, tax policy etc. that is worth listening to - that it might offer a more hands-on perspective than that offered by a handful of dogmatic libertarian GTPlanet bloggers.

You listed three things that you believe he might have an experience-based view on: Capitalism, wealth creation, and tax policy. One of these is not like the other two, and all of us have only criticized his opinions on that one. Two of them involve personal career choices while one of them involves forcing others to do things his way.

And one could argue that a man who has $46 million come in simply because he placed money in the correct place, and approximately $20 billion already in the bank, may have a skewed view on certain things, like tax policy. For him 35% might not seem like a lot, but his proposals would also affect every individual making between (depending on marital situation) $200,000 and $375,000 (rounded) without more than a couple of thousand in assets. It is fine and dandy that he can look at 400 of the richest people in the country and tell them that they should give more, but it is completely different for him to force them to do it and clump in lower-upper class families as he goes.

It is wonderful that he is successful and chooses to share that success. It is theft for him (or someone following his advice) to force someone completely equal to him financially to share the same equivalent against their will. The situation is compounded when the arbitrary line for who gets clumped into the same class as him is drawn at someone making a fraction of a fraction of his wealth and having almost zero percent of his assets.

But of course, all of this ignores that Mr. Buffett was clearly not telling a full and factual story. It is hard to take his opinion seriously when he has to fudge the facts to make his point have more impact. Sadly, an honest, or factual, description would have still made his point.

 

[Danoff]

Sadly, an honest, or factual, description would have still made his point.

But not with the same punch. Because he can't say "I paid a lower rate than my cleaning lady who makes $60,000 per year", because he doesn't. What he can say is that he paid a lower rate than someone who makes $250,000/year because of the fact that his income was gained by investing in businesses rather than by an exchange of services for goods.

That's his real point, and you're right, he could have made if it he'd made it factually, but nobody would listen. He has to lie to get people to listen, and that underscores just how useful his point is.

 

[FoolKiller]

But not with the same punch. Because he can't say "I paid a lower rate than my cleaning lady who makes $60,000 per year", because he doesn't. What he can say is that he paid a lower rate than someone who makes $250,000/year because of the fact that his income was gained by investing in businesses rather than by an exchange of services for goods.

That's his real point, and you're right, he could have made if it he'd made it factually, but nobody would listen. He has to lie to get people to listen, and that underscores just how useful his point is.

Depends on what his point is. If his point was about income tax rates, then no he doesn't have a point. If his point was that he can use a tax shelter loophole (allowing him to pay 17.7% vs what should have been a ~25% rate for her, assuming she has no further deductions) then being factual would have given him a point and he appears to just be exaggerating to make it look better.

But I can't assume to fully understand what his point was. All I know is that his statements aren't adding up to factual representations of any of the possibilities.

 

[Joel]

ONLY POSSIBLE, RATIONAL WAY OF LOOKING AT THE WORLD!

Wrong. We're saying it's the only fair way.

 

[Famine]

I'm vigorously disputing the viewpoint, repeatedly stated here, that pure libertarianism is the ONLY POSSIBLE, RATIONAL WAY OF LOOKING AT THE WORLD!

Then do so using logic and rationality - as those who advance the viewpoint do.

Don't reject all exercises in logic as "libertarian dogma" or "hyperbole". Follow them to their logical conclusion - or propose logical reasons as to why they are incorrect. Don't pin your flag to the mast of a liar like Mr. Buffett either.

 

[Biggles]

Want to know what my income is so far this year? It's £0. Want to know what it was last year? It was £0. I'm unemployed and have been since June 2008 - my income puts me well below the US poverty line. I get no state assistance because I don't want money stolen from other people.

I'm sorry to hear about your lack of income. I assume, as you don't want "money stolen from other people" that you've never paid into any kind of unemployment insurance scheme.

As you get no "state assistance" can I assume that your children are not going to school, that you would refuse treatment from the national health system if you or your family were sick or injured, that you would refuse assistance from the police or emergency services, never use the public library, walk on the pavement, drive on the roads, catch subsidized public transport, visit public parks, museums etc. etc.? Can I assume that you are scrupulously keeping a ledger for assistance received so that you can pay it back at some future, more prosperous period?

As a (moderately successful) entrepreneur I have paid, for many years, many times (based on the figures suggested here, somewhere between 10 & 20 times) my "fair share" into the taxation system. Just out of curiosity, is there a single libertarian "purist" on this forum who has, in actuality, consistently paid more than their fair share?

Wrong. We're saying it's the only fair way.

noon616: as a fellow Canadian & as a possible beneficiary of portion of my largesse, perhaps you would like to jump in & give us an idea of the unfair tax burden you are having to shoulder?

The idea that libertarianism represents a "fair way" is based on the principle of defined "property rights". As the entire continent of North America was obtained from the "first users" by actual (as opposed to hypothetical) force of arms, by human rights violations on a monumental scale, compounded by the further monumental violations of slavery, unfairness is endemic to the entire "property rights" status quo.

 

[Famine]

I'm sorry to hear about your lack of income.

I'm not.

I assume, as you don't want "money stolen from other people" that you've never paid into any kind of unemployment insurance scheme.

Wouldn't know what one of those is.

As you get no "state assistance" can I assume that your children are not going to school, that you would refuse treatment from the national health system if you or your family were sick or injured, that you would refuse assistance from the police or emergency services, never use the public library, walk on the pavement, drive on the roads, catch subsidized public transport, visit public parks, museums etc. etc.? Can I assume that you are scrupulously keeping a ledger for assistance received so that you can pay it back at some future, more prosperous period?

You may assume whatever you wish. Bear in mind, however, that I may pay no income tax but I am far from being untaxed.

Just out of curiosity, is there a single libertarian "purist" on this forum who has, in actuality, consistently paid more than their fair share?

Yep. Right here. I didn't even attend a public school, which is the usual high-earner for the "in receipt" column.

As the entire continent of North America was obtained from the "first users" by actual (as opposed to hypothetical) force of arms, by human rights violations on a monumental scale, compounded by the further monumental violations of slavery, unfairness is endemic to the entire "property rights" status quo.

And yet when slavery was abolished, their white captors (and their progeny) were not imprisoned for 246 years.

A line must be drawn before any such huge step can be taken. Unfairness stops here.

 

[Dotini]

is there a single libertarian "purist" on this forum...?

Slam! POW!! Biff! Ouch!!
Oh please let up Biggles, you win!? There are no purists here, only damaged, limping stragglers. If you want serious opposition, take it up with the real pros and write a letter to the editor of The American Conservative, the flagship rag of proper libertarian thought today.

I claim to be the closest thing to a proper purist libertarian, and I deny the primacy of property rights and taxation as the basis for my purity. It is in the opposition to war, empire, debt and the fealty to Constitutional rule that purity flourishes.

Assured that they are fair and legal, I have always paid my taxes without whimpering, bleating or cheating.

Many of your points are wonderfully interesting. It would be nice if we could discuss them without hemorrhaging blood at the same time.

Best wishes,
Dotini

 

[Omnis]

Call me crazy, but I have this idea that the world's richest man (or third richest, whatever you will) just might have a perspective on capitalism, wealth-creation, tax policy etc. that is worth listening to - that it might offer a more hands-on perspective than that offered by a handful of dogmatic libertarian GTPlanet bloggers.

Fidel Castro is a pretty rich guy too. Maybe he might have some perspective?

 

[Danoff]

Just out of curiosity, is there a single libertarian "purist" on this forum who has, in actuality, consistently paid more than their fair share?

Based on my calculations, my wife and I pay for at least 3 people in addition to our own share of the national budget (including the deficit) every year (it was more when the deficit was lower). We've paid more than our fair share for most of our adult lives. Only during college (when I was making ~minimum wage) did the tax code charge me less.

Since you might be interested, I was a libertarian when I was making minimum wage too.

Edit: And that's just federal income tax. Don't get me started on state income tax or property tax. Those are absurd.

 

[Duke]

Just out of curiosity, is there a single libertarian "purist" on this forum who has, in actuality, consistently paid more than their fair share?

Define "fair". My wife and I each pay more than the per capita amounts listed in the recent revival post up there. And that's not even mentioning the stuff that I think it is completely wrong and unconstitutional for the government to be spending taxpayer dollars on.

 

[Famine]

Define "fair".

I'm pretty sure in this instance, he's doing it balance-sheet style - have you paid in more money than services you have received?

Since I didn't attend a public school (though the British definition of this needs clarifying - "public" and "private" school are used interchangeably and both refer to schools outside the state system, or "state schools". The school I attended was not a state school, in receipt of funding from taxation), haven't interacted with the emergency services at any point and have never troubled the in-patient system of the National Health Service, I'm well down.

I've contributed approximately £56,000 in direct income taxation, and another £2k in National Insurance contributions. My exact contribution in VAT (purchase tax, varying from 15% to 17.5% during my lifetime) and usage taxes is slightly harder to quantify, but fag packet calculations say £35k in VAT, £14k in motoring taxes and £10k in property taxes (£1,214 of which I paid today - unemployed I may be, tax exempt I am not), which comes to £117k - with, no doubt, something I've forgotten. Most of this has been contributed over a six year period, though I've been eligible for parts of it for 15 years.

The biggest "income" from the state for most people is a state school. Currently this is a value of about £5k per pupil per year, compulsory from year 1 through 13 (£65k). Even if I'd gone to one, this doesn't touch my contributions - particularly if you take into account average spends were £2.5k during my school years and compulsory only from years 1-11 (£27.5k; though I did attend my school until year 13, so the equivalent would be £32.5k).

 

[Danoff]

I'm pretty sure in this instance, he's doing it balance-sheet style - have you paid in more money than services you have received?

That's a better definition than the one I used. I could figure that one out too, but it would take me longer. The bottom line of course would be that I overpaid by EVEN MORE if you only look at what I got in return for my taxes. My earlier post was assuming that I used exactly my share of each service that existed - in which case my wife and I paid for ourselves and 3 other people.

I use almost nothing that our government spends money on. For example:

Medicare $462B
Social Security $724B
Income Security $629B
Medicaid $386B

There's tons of other stuff I don't use, but that's those are the big easy items to prune out. That's a total of $2.2 Trillion off of the $3.6 Trillion budget. If you break that out the same way I did earlier, I'd have to cut that $8500 per person down to $3,307 per person.

So if you assumed I used my fair share of all federal services (a very conservative assumption) outside of Medicare, SS, Income Security, and Medicaid - none of which I use or will use - then my wife and I overpay to the tune of $64,000 per year (which includes what we paid in SS tax). Keep in mind that this is federal only, there are still CONSIDERABLE state and local taxes to consider.

The federal number up there covers at least 7 people who are using all government services including medicare, medicaid, SS, and unemployment (which isn't even possible), and still covers our "fair share".

 

[Joel]

noon616: as a fellow Canadian & as a possible beneficiary of portion of my largesse, perhaps you would like to jump in & give us an idea of the unfair tax burden you are having to shoulder?

My burden I'm having to shoulder? 0$. I am in High School, and I make 4 figures at a summer job. I think the Canada Revenue Agency took all of 43 dollars for EI last year (off roughly 2500). I don't think that you should be supporting me, and to be honest, I feel guilty during some of my classes at school. When I'm sitting in careers class, listening to my hippie teacher make us pray to "God's fires of love", I feel guilty. I feel guilty that you, as well as every other tax payer are paying for me to be in that class, wasting time and money that could be spent elsewhere.

 

[Northstar]

My burden I'm having to shoulder? 0$. I am in High School, and I make 4 figures at a summer job. I think the Canada Revenue Agency took all of 43 dollars for EI last year (off roughly 2500). I don't think that you should be supporting me, and to be honest, I feel guilty during some of my classes at school. When I'm sitting in careers class, listening to my hippie teacher make us pray to "God's fires of love", I feel guilty. I feel guilty that you, as well as every other tax payer are paying for me to be in that class, wasting time and money that could be spent elsewhere.

Actually education is one of the best places to put tax dollars since smarter people=higher paying jobs which means more tax dollars.

 

[Danoff]

That's the theory, which ignores what happens when you socialize education. Private schools = better schools = smarter people = higher paying jobs = more tax dollars (plus you spent fewer tax dollars to begin with). Fewer tax dollars spent = reinvestment in the economy = more tax dollars.

 

[Dotini]

That's the theory, which ignores what happens when you socialize education. Private schools = better schools = smarter people = higher paying jobs = more tax dollars (plus you spent fewer tax dollars to begin with). Fewer tax dollars spent = reinvestment in the economy = more tax dollars.

It also ignores globalization of jobs: a race to the bottom in which well educated people become paupers and pay no taxes.