Taxation and wealth

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

  1. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    In one sense this is true but realize that the wealthy don't have their wealth stored in "money" but instead in assets (wealth) that that doesn't lose value with the expansion of the money supply.

    For exampe up through the 1960's you could freely exchange a $100 bill (currency) for 100 silver dollars (money). The silver dollars were "money" because silver is a commodity while currency is nothing more than a promise of payment. The "currency supply" is expanded but not the "money supply" because money is an actual commodity that has a value related to other commodities. We refer to "expanding the money supply" but in reality this is an expansion of the "currency supply" by the Federal Reserve.

    A person that put a $100 bill (currency) in their drawer in 1965 and saved it until today would only have the relative purchasing power of $13.28 today because the "currency supply" has expanded since then while the person with the 100 silver dollars (money) would have the same purchasing power because silver has a relative value to other commodities.

    Low and middle income households have a far greater amount of their wealth stored in "currency" as opposed to storing it as an asset such as "money" (silver and gold coins) or stocks (partial ownership of a company) when compared to the wealthy so the low and middle income household is adversely affected more by the expansion of the "currency" supply created by the Federal Reserve.
     
  2. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    There would be a huge difference if it was. For example expanding the money supply would be used to fund government while that is not the case today. Today the bankers and wealthy benefit from the expansion of the money supply while the government doesn't directly benefit at all. The only indirect benefit is that expansion of the money supply, that creates inflation, devalues the debt of the government but that's only a benefit based upon deficit spending that creates debt. If it wasn't for Republicans and Democrats refusing to fund the authorized expenditures of Congress with adequate taxation there would be no benefit to the federal government at all.
     
  3. Taxpayer

    Taxpayer Well-Known Member Past Donor

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    Wealth is value.



     
  4. danielpalos

    danielpalos Banned

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    How would we be worse off with equal protection of the law regarding the concept of employment at will? ​

    If you have no answer, then why object?
     
  5. danielpalos

    danielpalos Banned

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    some on the left believe we should merely request that the wealthiest insist their public servants simply purchase the finest solutions money can buy, with an official Mint at their disposal, and consider it a job well done.

    - - - Updated - - -

    division of labor is a necessary and proper function under any form of capitalism. it is why we have politicians.
     
  6. CourtJester

    CourtJester Well-Known Member

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    Now you have to define value in measurable terms. Touchy feely not accepted.
     
  7. Taxpayer

    Taxpayer Well-Known Member Past Donor

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    I don't agree that I have to. But I guess I can humor you. Importance, significance.



     
  8. Ndividual

    Ndividual Well-Known Member

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    Ones Wealth can only be defined as the sum total of value of ones property at a given time. The value of something may decrease or increase over time, and the current value can only be determined relative to what another or others may be willing to give in exchange for it. A persons knowledge or physical skills may have value, but wealth accumulation can only be gotten by putting to use that knowledge or physical skills, and that usually requires finding someone who is willing to purchase that which one mentally or physically possesses.
     
  9. CourtJester

    CourtJester Well-Known Member

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    So your definition of value is essentually wealth which is just current monetary value.
     
  10. danielpalos

    danielpalos Banned

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    I believe unemployment compensation should be simplified and funding should come from general taxes on Firms due to their wealth and function as job creators in our economy.
     
  11. Ndividual

    Ndividual Well-Known Member

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    Would pounds of chicken or tons of flour be more acceptable? While the currency in ones possession or bank account can be accurately counted, the value of many other items such as stock, home, cars, boats, land, etc. can only be estimated as their value to their owner can only be determined when they are exchanged for currency, and the value then might be affected by the owners immediate need for currency.
     
  12. danielpalos

    danielpalos Banned

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    I believe we should simply use socialism to bailout capitalism, like usual, and solve for a natural rate of unemployment at the rock bottom cost of a form of minimum wage that can be applied for on an at-will basis.
     
  13. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    One of the problems I see is a misunderstanding of what "wealth" really is.

    Wealth is actually financal assets in excess of financial obligations and it's always a positive number. If the individual has more financial obligations than assets they're wealth is ZERO but not a negative number. There is no such thing as a "minus-dollar" that would reflect liabilities in excess of assets. All that situation represents is a "lack of wealth" for the person. We can measure how much positive assets would be required to reach zero but until zero is reached no wealth exists. So how does this relate to wealth and taxation becomes the issue.

    If we compare the federal minimum wage, about $15,000/yr for full time employment, with the minimum annual cost of living, about $20,000/yr for a single adult based upon the MIT Living Wage Calulator, then that person requires at least $5,000/yr more in income before they can have any wealth at all. At best government (welfare) funded with taxation provides that $5,000/yr but that just gets the person to ZERO so there isn't wealth redistribution because the person still has zero wealth at the end of the year.

    We fund basic expenditures with government welfare assistance but we don't transfer wealth from those with wealth to those without wealth based upon taxation because those without wealth still have no wealth even though they receive welfare assistance. They're just getting closer to having wealth without ever achieving wealth through welfare assistance funded by taxation.

    Of course there's also an underlying problem because taxation is not based upon government expenditures. It doesn't matter if the US government spends $200 billion or $1 trillion on welfare assistance because no one's taxes are changed based upon the spending. The person with $10 million in income doesn't have their wealth taken from them to fund government welfare because they pay the same tax with or without the welfare expenditure.
     
  14. danielpalos

    danielpalos Banned

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    Isn't wealth sort of like leverage? It works both ways, financially.
     
  15. CourtJester

    CourtJester Well-Known Member

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    Yes it's called comperable sales and works remarkably well at estimating value. So we are back one again to weath as the measure of value.
     
  16. Ndividual

    Ndividual Well-Known Member

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    'We' are not. Metaphorically speaking, your train appears to have not left the station, or is running in a circle.
     
  17. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    the problem remains that "wealth" is "assets minus liabilities" and can only be a positive number and it's measured in dollars.

    When we address "real property" is that the value has to be measured in "dollars" and the estimated value is an opinion often unrelated to the real value of the item.

    For example a person could own a diamond neckless that is "appraised" at $5,000 but if the financial situation for the person requires a "forced sale" they might only be able to sell that neckless for $2,500 to a pawn shop. The "appraised value" and the "real value" in dollars is completely different. The "real value" can only be determined by the actual sale of the property where a dollar amount is actually determined.

    We can also note that the only agreed to value of real property, in dollars, is the price paid for that property. A person that purchases a $200,000 home only agrees to that "value" of the property in dollars. The fact that the Federal Reserve engages in inflationary monetary policies does not change that value of $200,000 that the homeowner agreed to. The homeowner is not a member of the Federal Reserve and did not agree to the inflation. They only agreed to the $200,000 price and if inflation increases the "dollar value" to $500,000 it's not something they agreed to and the home continues to be only worth $200,000 to them. Arguably they wouldn't have purchased the home for $500,000 because they probably couldn't afford that price.

    Bottom line the only time a value can be placed on real property is if and when it's sold.
     
  18. danielpalos

    danielpalos Banned

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    isn't "debt" a form of "negative" wealth?
     
  19. Taxpayer

    Taxpayer Well-Known Member Past Donor

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    Not by the definition he's using. He's saying wealth is excess resources. If you owe more than you have, you have zero excess. Not negative excess.



     
  20. OldManOnFire

    OldManOnFire Well-Known Member

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    You can't sell a property without first establishing it's perceived value and this is done every day. For many valid reasons other than final sale we do place a value on stuff, and since nothing is static, the value one day will differ the next day. But there are usually valid and general reasons to establish value although it cannot be precise to the dollar. Your example of the person selling the necklace could also have been several people in a bidding war at an auction and the necklace sells for $7500.

    A property owner living in a tax district must comply with local tax laws and this has nothing to do with 'rights' or 'agreements'. The 'value' of property is determined by market prices and other factors and property owners can challenge these assessments if they wish. I don't know anyone who would not be happy to buy a property for $200K and sell it for $500K...
     
  21. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    The "market value" of real property generally establishes what the "retail value" could be and not what it actually is. Yes, a woman with a neckless appraised at $5,000 might be able to get that at an auction, and perhaps even a few dollars more, but it takes time to get the item into an auction and there are commissions to be paid. The woman could also be in a situation where she doesn't have any time to wait on an auction. Her child may go without any food today if she doesn't sell the neckless this afternoon and the only person that will purchase it is the pawnshop owner that has to mark up their purchase price by 100% so they'll only pay $2,500 for it so they can sell it for $5,000.

    Yes, a person would be willing to purchase a home they could resell for $500,000 for only $200,000 but that could leave the original owner homeless. The original homeowner probably has a mortgage and could end up with zero dollars left over after the sale. We've seen in some states where the "appraised value" of real estate has increased so much that the homeowner that purchased the property years ago and was on a fixed income couldn't afford to pay the tax which had increased to more than what the homeowner paid for the property. The taxes literally forced them into the street because they couldn't pay a tax that was greater than the price they paid for the property.

    Additionally you can't tax "real property" because the property cannot be used to pay the tax. A person that owns a piece of land can't send part of the land to the government to pay a tax imposed upon the value of the land. The woman can't send a few of the diamonds out of the diamond neckless to the government to pay the tax imposed upon the value of the neckless. Only "money" can be taxed and not real property because all taxes are paid for with "money" and not with the real property being taxed.

    If we want to tax real property then it must be done as a "sales tax" at the time of purchase. Then it's an agreed to tax by they buyer. Of course a sales tax can only be imposed under state law because the federal government is not authorized by the Constitution to collect a tax on sales.
     
  22. CourtJester

    CourtJester Well-Known Member

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    You haven't, to stretch your analogy even gotten on or even imagined the train. So far all your arguement postulates still is that value is wealth. All you discuss is the measurement methods. No value is favor with God or man. Or value is meaning in the development of human culture. Or value is relevance in the progression of art. Or value is purpose in species advancement.

    Try again.
     
  23. CourtJester

    CourtJester Well-Known Member

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    Actually you still haven't bothered to define value.
     
  24. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    The value of the item is what it can be traded for at the time of trade. It is not an estimated value but instead a real value established by the trade of the item. It's not based upon what someone else can get for a similar item because the individual can only trade it for what they can get and not for what someone else might have been able to get in trade for a similar item.

    I don't know if you've ever been to an auction but many auctions include the "appraised value" of the items being sold. Some sell for more and many sell for far less than the "appraised" value and the actual value is what the item sells for at the auction. The value can only be accurately established by the sale of the item. Everything else is pure guesswork and not an accurate determination of value.
     
  25. danielpalos

    danielpalos Banned

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    i simply assume that capital is wealth under our form of Capitalism.
     

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