Taxation and wealth

Discussion in 'Budget & Taxes' started by ARDY, Jun 19, 2015.

  1. ARDY

    ARDY Well-Known Member Past Donor

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    so we often hear about what a large percentage of total tax is paid by the wealthy

    So, lets do a thought experiment
    Drive things to an unrealistic extreme in order to test the validity of the above form iof analysis

    Suppose that a single individual was so enormously successful that he controlled 99% of the wealth of the country. And obviously also employed a similar percentage of the work force. And maybe pays 60% of all taxes


    He could complain that his unfair tax burden was impairing his ability to create jobs.... Correct?
     
  2. Taxpayer

    Taxpayer Well-Known Member Past Donor

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    You are not talking about the wealth of a country, you're talking about the wealth of a person who lives in that country. The only way that one person would have wealth and no one else would, is if no one else created any.

    And yes, it would be unfair to ask a single person to pay for a country shared by others. Even if, especially if, those others produced nothing.




     
  3. Mr_Truth

    Mr_Truth Well-Known Member

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    Wealthy elites have over $30 trillion sheltered in overseas tax free accounts - a matter I have documented several times on this forum.
     
  4. ARDY

    ARDY Well-Known Member Past Donor

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    I am assuming an impossible extreme concentratin of wealth
    But we have seen that wealth is being increasingly concentrated
    So i am just assuming trends continue... Nothing more

    And if you follow my assumption... How is it that implies that everyone else in the economy priduces nothin?
    The wealth in this country is concentrating
    But the workers are not less productive
    So that concentration is not based on a lack of people working and being productive
     
  5. Taxpayer

    Taxpayer Well-Known Member Past Donor

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    Productivity is the production of wealth. If there is no new wealth, no one is producing it.




     
  6. ARDY

    ARDY Well-Known Member Past Donor

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    Ok
    You have slaves on a plantation
    Someone is getting rich
    But who is producing?

    Today you have hedge fund manager getting rich
    What are they producing?

    Imo the idea that money corresponds to production is just stupid
    It can have some relationship,
     
  7. Taxpayer

    Taxpayer Well-Known Member Past Donor

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    You have a bull turning a millers stone. The bull isn't producing flour.

    Hedge fund managers produce (and utilize) investment strategies.




     
  8. ARDY

    ARDY Well-Known Member Past Donor

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    That is sooooooooo weak lol
     
  9. Rafichi

    Rafichi New Member

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    I would say that wealthy people should not pay such income tax, I'm follower of VAT. And if such a person buy 60% of goods, it's fine for me. I'm talking here about consumption. Obviously one person doesn't utilize all medical care or all children of country are not its, but IMO a country thanks to ensuring free and safe trade should charge this. Other question is it that such a situation would affect slavery due to possibilities to induce enormously monopoly but i believe it's not possible in the normal political and economic system (where for instance nobody can buy entire potable water in a country or all roads etc.), i think that your intention was different.
    And directly to your question. State should not give tax relief for wealthy people even if they are more productive and could use that money smarter and more efficient than other, but at the same moment state should not force the wealthy to pay more percent of their expenditures than others.

    Greetings.
     
  10. Poor Debater

    Poor Debater New Member

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    Sure he could make that complaint. But that wouldn't mean he was right.
     
  11. Longshot

    Longshot Well-Known Member

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    The more money taken in taxes, the less a person has to spend on other things, including employees.
     
  12. Poor Debater

    Poor Debater New Member

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    1. People don't spend money on employees. Only corporations do.

    2. When you and I are taxed, we pay for that by reducing our spending. The government will (mostly) spend what we would have, but not all of it, because of debt service. And that's bad for the economy, because spending is GDP. But when a wealthy person is taxed, they pay for that by reducing their savings (which includes stocks, bonds, derivatives, hedge funds, etc.). And that's good for the economy, because the government will spend what the rich person would have saved. So when we tax the rich, spending goes up and GDP goes up.

    Keynesian economics 101. Tax the people who have the money. (And: Go, Bernie!)
     
  13. Longshot

    Longshot Well-Known Member

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    Corporations are not the only only employers. You are forgetting proprietorships and partnerships.

    But nevertheless, the more money taken in taxes the less can be spent on other things, including employees.

    I agree that when an entity is taxed it has less money to spend, and this includes spending money on employees.

     
  14. Poor Debater

    Poor Debater New Member

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    Even proprietorships and partnerships are separate legal entities, not taxed at the personal rate. A sole proprietor has enormous discretion as to how to use the profits from his company to reduce his total tax rate, and generally retaining the earnings within the company -- and and using it for more hiring -- is better for him than taking it as personal salary.

    And since corporate income tax rates are (a) lower than top personal income tax rates; and (b) infinitely adjustable by the company by choosing to SPEND profits instead of retaining them: you've got nothing to complain about.
     
  15. Longshot

    Longshot Well-Known Member

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    A proprietor's business income is included in his personal tax return.

    I'm not complaining at all. I'm merely pointing out that when the government collects taxes it leaves the taxpayer with less money to spend on other things, including employees.
     
  16. Deckel

    Deckel Well-Known Member Past Donor

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    I'd hold him hostage and then split the ransom with a ton of other people anonymously by leaving the cash on their front porch so that could not prove I was the hostage taker.
     
  17. Poor Debater

    Poor Debater New Member

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    Doesn't have to be. It depends on how he incorporates the business.

    Yes, and I'm pointing out that you're wrong. Because the way a corporation reduces its tax to ZERO is to spend ALL it's profits on new employees, leaving no earnings.
     
  18. Longshot

    Longshot Well-Known Member

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    Yes, it does have to be. A sole proprietorship is completely different than a corporation. A proprietor's income is ALWAYS included in his personal tax return.

    You're disputing the fact that when the government collects taxes it leaves the taxpayer with less money to spend? Are you familiar with basic arithmetic?
     
  19. Poor Debater

    Poor Debater New Member

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    A distinction without a difference. A proprietor can always choose how much of the profit to leave in retained earnings and how much to take out as salary. Hence he always has the ability to control his own tax bill to any extent he wants, including reducing it to flat zero by investing or expensing all the profits.

    Yup. Not only that, I'm familiar with advanced arithmetic that they don't teach on Fox News. Like negative numbers. And with tax law. A corporation doesn't have to pay any income tax whatever if it has no income. And a corporation can always arrange to have zero income, by hiring more people or by investing more in the business.
     
  20. Longshot

    Longshot Well-Known Member

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    Retained earnings only applies to corporations, not sole proprietorships.

    And how does any of that apply to my initial statement: the more money taken in taxes, the less a person has to spend on other things, including employees.
     
  21. drj90210

    drj90210 Active Member

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    The problem with your extreme and unrealistic example is that it is an extreme and unrealistic example. It would be like asking someone who believes in universal healthcare, "If 99% of doctors were suddenly abducted by aliens and 99% of all hospitals were magically destroyed by a wizard, would you still believe that people have a universal right to healthcare?" Such outlandish examples do not help one's argument, and you should at least ground your argument in reality, rather than propose an impossible scenario.
     
  22. OldManOnFire

    OldManOnFire Well-Known Member

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    Whether you have 1 or 10 million businesses makes no difference...all of them pay applicable taxes. If those taxes create a financial situation for any business which makes it difficult for them to compete and grow, none of them will produce any jobs. And IMO even if you eliminated the corporate tax this does not necessarily equate to lots more jobs but instead some spending on research and technology, etc. which 'might' some day create more jobs, and, paying out more profits to shareholders. The only way to create lots more jobs is for Americans to satisfy a boat-load more demand. Where will this demand come from? We are not going to suddenly start producing in the USA all the imports we currently bring in because the USA cannot compete on these types of products. The US can greatly increase their exports, but again, in order to do this the US must be able to compete in the global markets...sometimes we can and sometimes we cannot. I just don't see any private sector impetus in our future to greatly increase GDP...maybe some steady low growth barely able to keep up with population growth but no huge spikes. Of course the government can spend another $5 trillion in debt money on infrastructure, etc. which will energize the economy but it will be a false economy...
     
  23. Poor Debater

    Poor Debater New Member

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    What nonsense. If a sole proprietorship has earnings, they are taxed as individual income. But the business doesn't have to earn a penny if the owner invests the profits back into the business. And that includes by hiring. Thus the business owner has just as much tax incentive as a corporation to hire, because of the income tax. And for exactly the same reason.

    Because income tax on business provides an incentive to hire, not a disincentive to hire. Hiring reduces the company's income tax burden. So your initial point was invalid, and remains invalid.
     
  24. Longshot

    Longshot Well-Known Member

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    You seem to be forgetting what I said:The more money taken in taxes, the less a person has to spend on other things, including employees. The key part is "taken in taxes".
     
  25. Poor Debater

    Poor Debater New Member

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    And you've got it exactly backwards. The more money spent on employees, the less is taken in taxes. I've never met a business owner yet who hired one more person because they got a tax break. I've met plenty who hire because the business is profitable.
     

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