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Taxing the Hell Out of the Rich Isn’t the Answer
By JLP | June 23, 2009
Read this comment left by AFM reader and commenter, LOL:
The middle class is under a massive squeeze: they can’t afford medical care, college for kids, housing, etc. The only reason we have not been in recession since 2000 is due to availability of cheap debt to absorb the rising costs — while at the same time, having a reduction in wages and offshoring of their jobs.
My crystal ball tells me that we will not have a sustained economic recovery without a middle-class, and the best way to bring the middle-class back is to drastically reduce taxes on them, and increase the taxes on the rich to rates that are at least equal, if not above, the middle-class tax rates.
This means: remove the income cap on Social Security and Medicare taxes, and eliminate the 15% dividend tax [and tax them at regular income tax rates]. The rich get the majority of their income through dividends, yet they are taxed at the 15% poverty level.
LOL comes across as almost hateful towards the rich, the vast majority of which worked their butts off and made great sacrifices to get where they are. I get the feeling that LOL thinks that most rich people woke up rich.
Personally, I think the middle class’ struggle has much more to do with their inability to prioritize. I would suggest that LOL read The Millionaire Next Door
For example, I was dropping my daughter off at daycare one day and this young woman pulled up in a BMW 740. For those of you not familiar with cars, the BMW 740 is around $80,000 brand new (I could have purchased THREE of my cars for the price of her BMW). No, I do not know this woman’s situation—she could be wealthy and can afford a BMW 740 without harming her finances. But, going on the averages, I would have to say that by driving that car she is forsaking some other important area of her finances.
I think the middle class suffers from the “I deserve it” syndrome.
Take a look at the houses being built these days. They are freaking huge (and freaking expensive)! I grew up in a 900 square foot house (plus a basement) and we were a family of five! We had one bathroom. Yes, times have changed but these bigger homes cost more money and they cost more to maintain. All of this means that they are requiring resources that could be allocated elsewhere (like savings, retirement planning, college funding,…).
Instead of removing the cap on Social Security taxes (there is no cap on Medicare taxes), I think we should cut benefits. We are creating a monster in Social Security because we keep promising way more than we can deliver. Social Security is a cancer on our society. Instead of looking for ways to feed the monster, we need to put the monster on a diet.
Finally, I want to gag when I hear people say stuff like, “The rich get the majority of their income through dividends, yet they are taxed at the 15% poverty level.” First off, those dividends have already been taxed at the corporate level. Secondly, 15% is a tax rate, and should not be equated with any economic level. The more you make, the more you pay. It’s pretty easy to understand.
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Topics: Taxes | 65 Comments »
June 23rd, 2009 at 4:48 pm
You forgot that I want the high marginal tax rates back also:
http://www.truthandpolitics.com/top-rates.php
NOTE: those number are not adjusted for inflation — so a 63% tax bracket on income over $15 million (today's dollars) would be about right to me, just like we had during the recovery of the Great Depression. The last time the rich had taxes so low it was during the lead-up to the Great Depression (go figure).
And don't take my word for it — Warren Buffet himself says he only pays a 19% effective tax rate…
June 23rd, 2009 at 5:00 pm
Do you know WHY Buffett pays 19% effective tax rate? It's because he only has $100,000 in income. Berkshire doesn't pay dividends so there's no income there. Yes, Buffett is one of the wealthiest people in the world, but he doesn't live like one. You could raise marginal rates as high as you wanted and Buffett would STILL have a low effective rate due to his reported income.
All I can say is THANK GOD that you are not in the position to direct tax policy in this country!
June 23rd, 2009 at 5:27 pm
Hmm…
Whether you agree with LOL's proposed tax policy or not, his statement hardly comes across as "hateful."
June 23rd, 2009 at 5:34 pm
Oblivious,
It's the sum total of LOL's comments that helped me come to that conclusion.
June 23rd, 2009 at 5:37 pm
http://www.washingtonpost.com/wp-dyn/content/arti...
says his 'income' was $46 million — maybe you need to get your facts straight (or is Warren Buffet and the Washington Post wrong) ?
June 23rd, 2009 at 5:52 pm
LOL,
What income / networth would qualify as rich for you ? I am seeing wide abuse of welfare in this country. Being a 1st generation immigrant myself all I see is lack of effort, creativity and drive to succeed. You can tax the rich as much as you want you will not be improving life of middle class or the rich. The more taxes rich do not have much incentive to work either. I see the whole system crumbling.
We do not like in a homogenous society like certain European countries where socialistic ideas work well. With a country this large and this diverse we have to be different.
Warren buffet is a smart and respectable man. But you just cannot take his word for itself. He is not as altruistic as his words might seem. He is a business man with his own priorities. Look at his actions and decisions carefully.
June 23rd, 2009 at 6:01 pm
I would be interested to see how his income taxes were calculated (notice he doesn't give us any details?). We already have marginal tax rates so it doesn't make sense to me that he could pay a lower effect rate than a secretary.
Think about it:
The marginal rate in 2006 was 35% for taxable income over $336,550 so how was Buffett only paying 17.7%? Someone's misleading us somewhere.
My guess is that he is included social security taxes, which are capped.
I was getting my number from his Berkshire income.
LOL, I like you as a person but I think your thoughts on taxes are dangerous.
June 23rd, 2009 at 6:08 pm
Unless Buffett's income comes from dividends, which are already taxed at the corporate level before they are even paid out.
That's why I'm an advocate of a flat tax. The same rate for everyone. They all pay the same rate the AMOUNT depends on the INCOME. The more you make, the more you pay. It works for tithing, why couldn't it work for taxes?
June 23rd, 2009 at 6:43 pm
JLP: I like you as well, and if we meet, I'd buy you a beer.
As for his low effective rate, he points specifically to the 15% dividend tax rate as the reason it is lower than it should be — though I don't have his 1040 to confirm.
I'd like to comment on your Social Security remarks. Without the massive surplus in social security tax receipts, the government would be in far more debt today — it has been that 12.4% tax on the poor and middle-class that has supported this ride so far.
We could argue the virtues (and pitfalls) of Social Security, but that is not the point. The point is that the rich do not pay the same tax rate as everyone else — topping it off with Larry Ellison paying 0.0003%. If everyone paid social security tax for all income, then we'd all be equally at (I'm guessing) a 3% or 4% FICA tax rate.
Yes the rich would pay more (than they do today), but it would be no more than anyone else. Just doing that one thing would be a far larger stimulus to this economy that any spending bill dreamed up by either party. It would bring the middle-class back to life.
June 23rd, 2009 at 6:50 pm
I am not a corporate tax expert — but I don't understand what a corporation pays in taxes has anything to do with me receiving my income in either paycheck form or a dividend check form. In the former I pay income tax rates (28%, 35%, etc) — in the latter it's 15%.
Of course the rich (ultra-rich) have positioned themselves to get virtually all of their income in dividend payment form because of this tax change under the Bush administration.
June 23rd, 2009 at 7:31 pm
@LOL
If you were receiving a divided check from a corporation that money has already been taxed once at the corporate level, therefore, you are receiving less than you would have otherwise if there was no tax on that income. Then, you are taxed AGAIN on that divided. That is the logic behind a 15% tax rate on dividends. The 5% – 20% tax discount you are getting is to offset the tax at the corporate level. Double taxation is a huge issue.
June 23rd, 2009 at 7:36 pm
LOL, dividends are paid out after the corporation pays tax on it income so the dividends have essentially been taxed twice. Of course, there is an argument that corporations pay no taxes at all. You increase taxes on corporations, all it does is increase the cost of goods sold and is passed on to the consumer.
Taxing the "rich" is just class warfare. The problem is ususally how the "Wealthy" is defined. Democrats usually gloss over that definition. Obama seems to think $250k a year is wealthy. Being in that tax bracket and living in a large high cost of living city, I can assure you I am far from wealthy. We ain't starving, but it ain't like I am hopping in a G4 with Jay-Z flying off to St. Tropez and the Hamptons. Basically make just enough to save for retirement, pay massive student loans, modest home (which is about $500k in my neck of the woods), and spend a few dollars here and there on the town.
June 23rd, 2009 at 8:11 pm
One more thing…
I’m getting a little tired of the whole “…rich do not pay any taxes” argument. If anyone would just look at the numbers they are extremely clear. The top 3% (i.e. $200K+ AGI) of wage earners in this country support over half of the individual income tax burden. If everything should be “fair”, why is that the case? Additionally, that was an average of 25.9% tax rate on taxable income; no where close to the 15% dividend rate. The truth is that the ultra-wealthy have many more income sources than just dividends and they are being tax plenty. Tax the “rich” too much and they’ll loose the incentive to produce those incomes and/or shift those incomes into tax havens. Let’s see what happens when the top 3% don’t exist in this country and our government’s budget is cut in half.
June 23rd, 2009 at 8:13 pm
LOL doesn't understand that shareholders (those receiving dividends) are OWNERS of the company. It would be like getting taxed on his income at work, then being taxed again for taking it out of the bank.
Take 100% of all the rich/ultra-rich income, ALL of it, and it wouldn't be enough to make a dent in the debt we're racking up in the US (which is nothing more than buying votes).
June 23rd, 2009 at 8:33 pm
LOL is misguided on several issues. First, the top tax rates from the 30s through the 70s were high, but no one paid those rates. There were so many tax shelters that the high income earners were paying less than the middle class. This is why Reagan and Congress changed the tax structure in 1986.
Second, the tax we pay on social security is essentially a retirement plan. The reason it is capped is because each individual gets a benefit based on the amount of social security they pay. Bill Gates will get the same benefit as someone who just reached the cap of $102K because they paid into the system at the same rate. So, if you demolished the cap, then the benefit for the wealthy will have to go up. Or, they will have to completely revamp the social security system to make it purely a tax, not a retirement benefit.
I wish they would go back to the plan as Roosevelt established it. It only provided for the destitute. Not everyone got it. And, the tax was less than 3% to pay for it. Congress kept adding recipients to garner votes and now we face a real calamity in the years to come due to the unfunded liabilities.
I also agree with JLP's idea to read the Millionaire Next Door. If you did, then you might think differently about taxing the rich. Most of the millionaires are people who deferred gratification to build a nest egg. These are the same middle class that LOL says can't make ends meet. Obviously, some of these folks can and become wealthy due to their efforts. Now LOL wants to take their money to pay for those who fail to manage their money effectively.
It isn't right and it is un-American. We are a nation that provides equal opportunity to all citizens. The future is up to you. We were founded to specifically keep the government from intervening in each person's manifest destiny. I think we should keep it that way.
June 23rd, 2009 at 8:40 pm
C-CPA & Russ: I'm just middle-america, and I have my money in a 401k, I don't receive that dividend tax break — I'm going to be charged income tax on it all. Any way you slice it, the recipients of the dividend tax-break is the rich, especially CEOs of mega-corporations — and for someone to get a break, means everyone else pays for it.
If you are concerned about 'double-taxation' — wouldn't it be better to eliminate the tax on the corporation side instead? Give the break to the corporations so ALL the shareholders benefit equally?
It is class warfare, and it's not healthy for morale in general. Every tax break that we have helps one class at the expense of the others and causes all kinds of problems.
BTW, when I say 'rich', I'm normally talking about the top 1% of the population (income above $1 million or so).
June 23rd, 2009 at 8:57 pm
LOL,
According to the TaxFoundation, the top 1% had taxable incomes of $388,000 or more (2006 numbers). That's a far cry from $1 million even after you consder deductions.
http://www.taxfoundation.org/news/show/250.html
June 23rd, 2009 at 8:59 pm
Also…
Like Russ mentions above, "rich" is a relative term. My wife and I paid $89,000 for a house that would have easily cost $500,000+ in other parts of the country.
June 23rd, 2009 at 9:06 pm
From various articles (linked below) it can be deduced that the top 1% of households own/control about 50% of the wealth in the united states, yet they pay only 40% of the taxes.
I never said they don't pay any taxes, I'm just arguing that I don't think they pay enough. To make everything 'fair', the group that owns 50% of the wealth should pay 50% of the taxes.
Now looking at the same articles, it appears that the lowest chunk of the population don't pay enough taxes either (relative to their combined wealth) — hence my belief that the middle-class is being squeezed. Of course everything is made complicated because the definition of 'income' is up in the air.
http://www.taxfoundation.org/news/show/250.html
http://en.wikipedia.org/wiki/Wealth_in_the_United...
June 23rd, 2009 at 9:14 pm
Kirk: good answer on the reasons why the historical marginal rates where higher — thank you.
Social Security stopped being a retirement plan the instant the government started "barrowing" (stealing) from it to pay current obligations — the day that started, the tax rate should've been applied to all income levels. I agree with you that it should go back to it's original intentions though.
My background is very similar to JLPs, growing up in a poor household, large family, small house (dirt floor basement for us). I was able to sacrifice and pay my own way through college through a lot of work. But now, with the costs of education as it is, I don't think I could do it today. That is what I have a real problem with.
June 23rd, 2009 at 9:18 pm
From your article: top 1% AGI (in millions): $1,791,886. Number of returns in the top 1%: 1,357,192.
Dividing it out gives an average income of about $1.3 million….
June 23rd, 2009 at 9:19 pm
Class warfare is a figment of the imaginations of those who are unwilling to put forth the effort to achieve their financial potential.
Ultimately, LOL, it is your choice if you want to take advantage of those tax breaks or not. No one can force you to invest/save more of your income.
Go get some stock and take advantage of those tax breaks!
June 23rd, 2009 at 9:28 pm
C-CPA: so do you agree with me that only a subset of the shareholders of a corporation get the benefit of the dividend tax break — and by subset, I mean the ultra-rich? That, my friend, is not a figment of my imagination.
JLP: I'll amend my original proposal to say: that when eliminating the 15% tax on dividend (and taxing dividends as income), double-taxation should be removed on the corporation side for the benefit of all shareholders.
June 23rd, 2009 at 9:28 pm
Taxation doesn't exist in a vacuum. Let's say you raise taxes on the "rich". Where does that money come from?
Not all, but many of the wealthiest people in the US are small business owners. Much of their wealth comes from the fact that they were willing to takes risks that paid off. They're also the ones that employ most of the nation and produce most of the jobs. If their tax bill goes up all of a sudden, and assuming they own a business with employees, they have a few choices:
a. They can lower the wages and/or benefits they pay to their employees. This can include reducing or eliminating a 401k matching program or shifting more of the cost of health insurance to employees.
b. They can raise the cost of goods and services their company produces. Now all the clients and customers of their company are paying for your proposed tax increase.
c. They can reduce their workforce by laying off employees.
d. They can negotiate lower costs with their suppliers and vendors which will ultimately impact other businesses and their employees.
Further, tax increases don't stimulate the economy and actually cause people to become more fiscally conservative, regardless of your level of wealth.
Think about every time the government increases the minimum wage or passes tax increases on businesses. That already amounts to a tax increase on many of the wealthiest in this country. These are the same people that produce many of the jobs that employ the majority of workers.
I don't agree with you assertion, LOL, and suggest you think about the trickle down effect and full ramifications of your proposed tax increase.
While you may be under the impression that the "rich" have piles of money laying around and can easily pay more in taxes without making any other changes in their financial situation, I doubt that is actually the case.
Do you think the government should have bailed out Citigroup and GM or should they have been allowed to fail? By bailing out these companies because they were "too big to fail", the government has instead penalized more successful and more prudently managed companies, and you and I paid the bill. They've made it their doctrine to reward failure, and it sounds like you want to perpetuate a different flavor of the same thing.
Now you're proposing a "bail out" of the middle class to be paid for by the people that are the economic engine of this country. Again, let's penalize the successful? Doesn't make sense to me.
Sorry for rambling.
June 23rd, 2009 at 9:32 pm
"Work the system" is never good advice. Change the system that you believe to be unfair.
And JLP, you may think taxing "the hell out" of the rich is a bad idea, but it's spurious of you to go off on a tangent about the middle class wasting their money on BMWs. Besides being a tangent, your rant ironically uses the same mind-set that the government does when it increases tax rates: you think if you controlled the BMW owner's money, you'd spend it better than she did. Taxes work off of the same underlying assumption.
June 23rd, 2009 at 4:34 pm
LOL, that’s not what those numbers say. I’m not at my computer right now so I can’t see the chart but my point was that it only took an AGI of $388,000 to be in the top 1%.
June 23rd, 2009 at 9:46 pm
Russ: When you raise taxes on the rich, the money comes from the rich
Kidding aside, I not sure I'm in agreement that only the rich are efficient at creating jobs. Raising taxes on the rich, while simultaneously lower taxes on the middle class should have a tremendous boom in small business creation. Also taxing social security on all wages should effectively lower the tax rate to 3-4% (guessing), which is a massive savings to companies that employ people under $100k (since corps pay half the tax).
I am no longer a believer in the trickle down effect — tax breaks on the rich only made the rich richer — as seen by a widening of the rich-poor gap.
June 23rd, 2009 at 9:53 pm
@LOL:
"so do you agree with me that only a subset of the shareholders of a corporation get the benefit of the dividend tax break — and by subset, I mean the ultra-rich? That, my friend, is not a figment of my imagination."
I don't think I could disagree more. You are assuming that everyone who takes advantage of this tax break is "ultra-rich." I'm nowhere near "ultra-rich" status, but I take advantage of the tax break. I'm technically "middle-America" but my dividends were only taxed at 5% in 2007 & 0% in 2008/2009. Why? I'm in the 15% marginal tax bracket. If anyone should be upset it should be the "ultra-rich" since the middle class do not get taxed on dividend income.
The rich-poor gap is widening because some people in the middle made good choices, for which they were rewarded and some people made poor choices, for which they will miss the rewards. Welcome to capitalism… or what is left of it.
June 23rd, 2009 at 10:19 pm
So you are saying that it is fair for only the shareholders who do not have their money in retirement accounts (401k, IRAs, etc) to get the tax break? That still is not a reason why the 'double-tax' is not removed on the corporation side for the benefit for ALL shareholders.
Anyhow, it is widely known that the $674 billion dividend tax break goes to the people who own the majority of stocks, which are the rich / ultra-rich (top 1% and 0.1%) — how can you even make a claim otherwise?
You are also saying that the rich-poor gap is widening because the middle class is disappearing? Well I agree with you there.
June 23rd, 2009 at 10:25 pm
Personally, I would love to see the FairTax implemented (though I'm not holding my breath) as that would level the playing field for everyone by making taxes based on consumption.
Beyond a consumption-based tax, no system of taxation will ever be fair to all participants. However, since the wealth currently pay a disproportionate share of the overall tax receipts, I think it's tough to argue that they should pay even more on top of it.
June 24th, 2009 at 12:12 am
Russ: I think the FairTax is a complicated mess. Tax consumption at a 30% sales tax rate, and pay a 'rebate' to everyone for consumption at the poverty level. You don't think that there will be tax avoidance on a massive scale by making purchases outside the US? Mexico and Canada will love us.
Since the proponents think this will tax wealth, then why don't we skip to the chase and just have a 'wealth tax' ?
http://en.wikipedia.org/wiki/Wealth_tax
I disagree that the wealthy pay a disproportionate share of taxes — again I have to point to Warren Buffet who claims to pay at a 17.7% rate while everyone who directly works for him is at a 30% rate. Maybe it is only a tenth of one percent that can pull this off, but it is unfair.
June 24th, 2009 at 1:16 am
1) Why should people get two tax breaks?
2) Dollar for dollar it is a large "break", but you aren't looking at the entire picture. Even with this break the top 1% are paying more in taxes every year than I will probably make in my entire lifetime. And as a percentage of their income it is slightly more than 25% on average. (FYI: The middle class only pays about 13% – SOI Tax Stats – 2006)
3) I agree that the middle class is disappearing, but it is no one's fault but their own. Entitlement is going to be our ultimate downfall.
June 24th, 2009 at 1:33 am
Sorry, JLP, but the really hateful post from where I sit was yours. There's venom in those words. Call it passion if you will.
I can go either way on taxing the rich. One thing I won't agree with you on is that taxing the rich is the same as taxing those who work hard to become rich (although that subset will of course be taxed). If you haven't read it yet, I sort of recommend "The Black Swan" by Nassim Nicholas Taleb.
The book covers a great range of topics, but one strikes me as relevant to today's discussion. He makes good arguments that we way overestimate the role of work in success and underestimate the role of luck. The route to riches and to poverty of often very similar; both routes often entail an elevated amount of risk and luck chooses the fortunate.
If we admit that luck plays a greater part in riches that is generally admitted, then a higher tax rate doesn't sound so unfair.
Now personally I see a lot of merit in the idea of consumption taxes as well. It certainly does discourage work to tax a person's income. I would agree that we should encourage work, especially the kind of work that creates wealth (true wealth like an economist would talk about, not necessarily the same thing as money).
June 24th, 2009 at 3:11 am
I remembered reading a WSJ article about the effects of increasing the tax rates on the "wealthy" and I would encourage everyone to read this as well.
http://online.wsj.com/article/SB12426006721482829...
Enjoy!
June 24th, 2009 at 8:37 am
I think people want to feel better about their money situation, and putting people into classes and people down helps people accept. I am conscious of different levels but where does this put people that work from home.
June 24th, 2009 at 1:09 pm
Great read sir, thanks for the link. I love Texas.
June 24th, 2009 at 1:22 pm
Bobby: Great article, but I think it is a race to the bottom (states stealing citizens from one another based on tax codes). That WSJ article praises the Texas economic model, but let me give you some draw backs to the Texas model:
http://www.window.state.tx.us/comptrol/wwstand/ww...
massive cuts in education spending inside Texas is financing this 'tax haven' for the rich.
June 24th, 2009 at 2:24 pm
C-CPA: Here's a funny story — a friend of mine fled Texas because he thought his taxes were too high: there are no income taxes, a 3% or so property tax on houses, and an 8% sales tax. He makes ~$250k a year, and owned a $200k house.
He 'fled' to Tennessee where there are no income taxes, a 0.6% or so property tax on houses, and an 8% sales tax (of which he buys anything expensive online to avoid that) — and telecommutes for his work.
When it comes to the "wealthy" — any taxes are too much for them. He has finally found a place where he can pay virtually no taxes — and I bet if he finds a cheaper place he'd be there tomorrow. These people just don't think they need to pay for police, schools, prisons, roads, anything — yet get all the benefit from those services.
June 24th, 2009 at 2:54 pm
LOL said:
"When it comes to the "wealthy" — any taxes are too much for them. He has finally found a place where he can pay virtually no taxes — and I bet if he finds a cheaper place he'd be there tomorrow. These people just don't think they need to pay for police, schools, prisons, roads, anything — yet get all the benefit from those services."
Yes, but do the wealthy get MORE of a benefit from these services than everyone else does?
The cost of providing most of the above-mentioned services is pretty much the same for everyone so why should the wealthy have to pay more than everyone else?
June 24th, 2009 at 2:55 pm
Although I haven't done it, I must say that with the Texas situation you need to make a more fair comparison with other states. How close are the various states to this level? Which states are worse? Those that are better, is it directly related to more money spent? Increasing spending on education is not the answer when the system itself is broken. Public education is a different discussion entirely. Which is worse, having a poor education system or having an education system that is slightly better and a state that is going bankrupt? I can't think of a better tax policy then what Texas has. Public education is not the only place they save money. Look at wasteful spending in CA, TX doesn't do that.
June 24th, 2009 at 3:07 pm
Hmmm…for some reason LOL's comment that I was referencing hasn't shown up.
June 24th, 2009 at 3:50 pm
i read this blog for its harsh tone and occasionally dubious logic.
maybe the woman paid cash for her BMW. they hold their value well. perhaps her priorities are doing great.
Buffett's rich due to capital appreciation and it's remarkable that you attribute his low taxation to his lifestyle. His lifestyle could be extravagant on his capital assets without any change in his taxation.
You'll say anything. I'm glad you've come to the internet and put your views out there so you can hopefully experience some diametric views and learn to embrace them as sensible and not hateful, even when you disagree.
June 24th, 2009 at 4:02 pm
John,
I thought I left room for reasons why the BMW was an okay purchase when I said, "No, I do not know this woman’s situation—she could be wealthy and can afford a BMW 740 without harming her finances."
I think it's clear that you only read what you want to read.
Thanks for your dubious comment.
June 24th, 2009 at 4:46 pm
JLP: who is being the leech here? Jumping from one state to another (like TN) to avoid taxes is going to increase infrastructure and spending and everything else in that state — he is just taking an advantage of the tax discrepancy that exists today — because not many wealthy people are there now.
Once a large enough part of the population moves to TN and starts demanding museums, libraries, football stadiums, art galleries, light-rail and everything else the wealthy wants the state to pay for (like what is happening in TX now), taxes will go up there, which is when he will jump to the next cheapest place, leaving a wake of destruction behind — much like I expect CA and NY are running into.
http://www.texaspolicy.com/press_releases_single….
June 24th, 2009 at 5:00 pm
You still didn't answer my question:
Do the wealthy put an increased strain on city/state budgets so as to require them to pay more in taxes?
June 24th, 2009 at 5:30 pm
Wow so much anger on both sides of the fence. I don't believe increasing the taxes on the rich is the answer that we are looking for. That won't help sustain growth in our country and the higher the taxes then the more likely the wealthy will just leave. Rather, I think it's better for the middle class to procure the knowledge and the tax breaks that the rich use to their own benefit.
June 24th, 2009 at 5:39 pm
JLP: I believe that the presence of the 'wealthy' in a town will eventually lead to an increases in taxes had they never shown up. I don't think it is the poor asking city councils to take out bonds to build Art Museums….
retireby35: It's not anger, we just are not using enough smileys
As for "it's better for the middle class to procure…" — I disagree. I think the people of the USA should use it's collective knowledge / might / talent to produce something of value, instead of that effort being spent to find ways to avoid taxes (at the eventual expense of others) <– that is not value.
June 24th, 2009 at 5:42 pm
They are under the reply to Bobby on page 1.
June 24th, 2009 at 8:14 pm
taxing the crap out of the rich is just one step closer to communism
June 24th, 2009 at 9:12 pm
have you checked out http://www.fatbank.com – they give out some pretty good low tax products
June 24th, 2009 at 10:09 pm
Yeah, you're right — it only takes $388k to be in the top 1%, but the average income in the top 1% makes $1.3million.
June 25th, 2009 at 12:30 am
@LOL: I'm right there with you on creating wealth vs. avoiding taxes. Better to focus on (real) wealth.
June 25th, 2009 at 1:48 am
Ah, fair enough. I was unaware that there was any background.
June 25th, 2009 at 3:11 am
JLP, next time you see her, please ask her what kind of LEASE deal she got on her BMW b/c you have a friend in the market. Then we'll at least have one question unequivocally answered!
I think it's time to sing and hold hands, fellas. Needing public transportation increases taxes, desiring museums and such increases taxes. Let's face it: to have a thriving community, which includes all socioeconomic spectrums, you need to have taxes to build and sustain it. IT IS WHAT IT IS. Suck it up or move to Costa Rica!
Kitty, where are you? We need your thoughtful and carefully weighed opinion!!
June 25th, 2009 at 5:38 am
passive aggression is even more delicious.
June 25th, 2009 at 2:58 pm
As for the 'wealthy' having a direct impact on taxes, I have a personal example. The house behind mine was bought a few years ago. The buyer, some yahoo in Vegas, bought the house "site-unseen" because he saw it on the internet and thought the place was cheap. Well, of course the place was cheap had it been located in Vegas, but he bought the place for 30% over market value where the house was actually located. He moved in, and within 2 years (last year) he was foreclosed on.
You may think that only he was affected — wrong! Myself and all my neighbors collectively have had to pay thousands extra in property taxes because of that one jackass. The appraisal district decided to use that house as the baseline for everyone's appraisal.
I don't have anything against the rich or wealthy, but I just want them to stay in their own areas. Someone making $250k a year (probably not rich by CA or NY standards) moving into an area where the average income is $30k is going to negatively affect everyone that lives there before they showed up. It upsets the natural balance of prices that were established.
If I had a millionaire move in next door to me, I'd move.
June 25th, 2009 at 9:14 pm
I'm not going to tax the hell out of the rich, but I dispute the idea that the vast majority have worked their butts off.
I've read a number of Robert Kiyosaki (Rich Dad Poor Dad) books, and Kiyosaki clearly prefers to have his money work for him than to work for his money.
T Harv Eker (Secrets of the Millionaire Mind) says that the wealthy work hard temporarily, while the poor work hard for a lifetime.
The work ethic we hear about is either a myth or not what it used to be.
June 26th, 2009 at 1:35 am
LOL,
I found this comment of yours very interesting based on the way one of the high school age daughters of a coworker has been treated because, she is a "rich outsider." Without getting into the details of what I do. I work for in a very specialized area and you basically have be employed by my company in another location before you move GA where I live now, you work there for 3-4 years and then move up by moving away again. (there are less than 50 people at my work site but over 6000 at the company)
Now none of us would consider ourselves rich but based on the Wikipedia demographics I just looked up we make at least 2.5 and close the 3 times the median income. But like I said we are specialized and many in the area feel they have it made if they land a job at the local Miller Brewing plant.
But back to my friends daughter, once the "regular kids" find out where she lives, in lets say the "rich ghetto" section of the county its as if it she is scum. Her family came in and took a good job from one of the local. (never mind that most of the locals wouldn't qualify for the job.)
Now as for your site unseen buyer, I would ask if you would have viewed myself and my coworkers any better. I got 10 days (including the weekend) paid for by my company to find a house. In total I got 4 months to transfer more than 1000 miles away. If I had more time I may have paid a lot less for a house than I did, b/c quite frankly I picked the first house that worked for me and paid what I felt was an OK but not great price. Now if I had more time I probably could have found something that worked just as well for about 10-15% less.
Also, I just discovered I do have a Millionaire next door, of course he's a retired farmer (his son works the land now) with over 5000 acres under cultivation.
June 26th, 2009 at 4:25 am
I read a friend's copy of Eker's Secrets of the Millionaire Mind a few years ago and thought it was quite good. So good in fact, that I had jotted down some of his key thoughts in a MS Word doc to always go back to for motivation (yeah…yeah..until now I never had, but it sure came in handy tonight!)
I loved these quotes from the book:
"Rich people believe “you can have your cake and eat it too.” Middle-class people believe “Cake is too rich, so I’ll only have a little piece.” Poor people don’t believe they deserve cake, so they order a doughnut, focus on the hole, and wonder why they have nothing."
That one summarizes my belief and most likely our blogging host's as well!
I like these, too:
"When you are complaining, you become a living, breathing “crap magnet.”
There is no such thing as a really rich victim!
If your goal is to be comfortable, chances are you’ll never get rich. But if your goal is to be rich, chances are you’ll end up might comfortable"
Go read the book–it's great!
June 26th, 2009 at 4:48 pm
Neverrow: Perhaps the locals would be more friendly if your company would hire more of them — if your company already has hired a bunch of the locals, then I don't see what the problem is. Two to three times income difference is not that big a deal, at least you are still in the same "order of magnitude". Sounds like you have the typical "wrong side of the tracks" kinda thing going on in your town — that stuff is fixed by having annual July 4th parades, and neighborhood cookouts, or any other cheap "get to know the neighbors" type of events that towns should be doing.
As for you purchasing the house — sounds like you actually worked with a realtor and paid the normal / fair market value. There is nothing wrong with buying a cheap house or an expensive house, as long as the price you pay is the true market price. In my example, the guy just simply overpaid because he didn't work with a local realtor (other than the sellers realtor).
And, as for living next door to a self-made farmer millionaire — he is probably going to be one of the best neighbors you could find. He didn't amass that much acreage by overpaying for it — but if you ask him, he'd probably tell you that you overpaid for your place
Before I bought my current house, I met the neighbors and got their opinions on what they thought the place was worth….it kept me from overpaying, and it kept their property taxes level.
Farmers are some of the wisest people you will ever meet…
June 29th, 2009 at 6:49 am
Some Tax Myths that People Continue to Believe In
People believe that if they have already been filing for their taxes for a long time, they become experts in filing guidelines and requirements. However, unless you are a tax professional, it will be difficult for you to stay updated with all the changes because the tax code is undergoing revisions nearly annually and there are hundreds of different codes for almost all situations.
http://mgbfinance.blogspot.com/2009/06/some-tax-m...
June 29th, 2009 at 10:23 pm
If you dont know, which you probably dont by your words, people that own business have an array of income covered by the business regardless of how much they report making. Thats common knowledge. If i want to take a trip and bring my family all i have to do is find a convention or cheap training school and the business pays for everything. So he might drive some cheap car for show…but its only for show. Get real. There is a customer of mine who owns 2 homes. Continued ……
June 29th, 2009 at 10:24 pm
Continued…
Both are huge and in the millions of dollars a piece. She comes to me and says she wants to pay $25.00 a month because they are having it hard. HAHAHHAHAHAHAHHA What a stupid idiot. Im living on 22 thousand a year and she wants to cut back on paying me so she and her husband can still play golf and continue to have their million dollars House(s). Yeah. If LOL has an issue with the rich…well in my opinion i think LOL has a right to do it. What is so funny is that when the rich dont pay OUT then the middle class and poor cant pay at all which means they cant purchase as much which means the rich will begin to lose their money anyway because they are not willing to give it up so the middle class and poor can spend…its a circle…if you dont know how a circle works go back to school. The rich needs to be taxed equvilant to that of the middle class. Continued
June 29th, 2009 at 10:24 pm
continued
Let them eat cake…and pay for it just like the middle class. As far as some lady driving in an expensive car…you dont know her situation or who she is. What i know is those that live In Kiawah SC in those million dollar homes with the regime fee of over $10,000 just to live there per year not including the mortague…well seems to me they have more than enough to pay taxes equivalent to the middle class. BTW, they brag about how much they are NOT paying to the Government. If they didnt brag so much they would not be in the spot light.
June 30th, 2009 at 4:17 am
Not true on the expenses of the entire trip being deductible. Brush up on your tax code.