We Need to Get Rid of the Death Tax

Off Topic Politics & World Issues
121

One more thing I remember about my old company. It sold some of its CNC machines to our sister company. They then leased them to an outside company.

That outside company leased them back to us.

Our machinists had to use a different time code when using this equipment.

When I asked why one of our accountants tried to explain how we got a tax break for this. I did not understand but as far as I could gather our sister company was able to take depreciation on these machines.

They were long paid for and depreciated by us so it was our sister companies turn.

122

[quote]hspder wrote:
… and for those who are completely missing my point:

I am not advocating that we go out and shoot all business owners. I am not a Bolshevik. I understand they have their role in a capitalist system, and that capitalism is the least bad system we have.

What pisses me off to no end is this retarded philosophy that they are MORE important than workers and they actually are worth the orders of magnitude more that they earn in comparison to the people that work for them.

I read conservatives complaining about all the lazy people who live on Social Security, and can only but laugh at the hypocrisy.

About 90% of my net income comes from capital gains and dividends. What did I do to make so much money? I take calculated risks. I was fortunate enough to be able to go to college, get educated, and learn how the market works. I was also fortunate enough to find and marry a beautiful, intelligent lady who also went to college and helps me with statistical models and allows us to have hugely favorable risk-reward ratios.

That 90% of my income uses up about 1 hour of my day. I pay 15% tax on the gross.

I could just sit back, work 5 hours a week, and retain 90% of my net income – again, paying only 15% of tax.

It is my LIBERAL conscience that prevents me from doing so. It is my liberal conscience that makes me want to help others and takes me out of bed each morning, and work 10 to 12 hours a day on creating classes, delivering them, doing research and writing papers.

… and pay twice as much tax on that work.

Anyone else see a problem with that?

Do you really think that the time I spend playing in the stock, options and futures market is worth 100x more (per hour) than my work as a professor, and that in fact should be taxed less?

The conservative rationale is that reducing taxes gives people an incentive to invest more.

That is a profoundly retarded rationale.

The only thing that reducing taxes does long term is to drive up inflation Nothing more, nothing less. My capital gains income almost doubled after Bush reduced taxes the first time. Did I increase my investments because of that? No. I just sat back and got a “bonus” anyway, without changing anything. I didn?t have to.

If I had made the mistake of increasing my investments, that would help drive up inflation further – if you don’t understand why, try using your brain and think what happens a while after a bunch of money suddenly shows up in the economy without an increase in (worker) productivity. That’s right: inflation.

Clearly, Bush slept through Econ-101, but apparently so did everybody that voted for him.

The only safe way to grow an economy, without fear of inflation, is to increase productivity. Productivity depends, mostly, on worker output. And how do you increase worker output in a developed country? You keep the best and brightest around. You treat them well. You keep them happy. You give them benefits, flexible work hours, and all kinds of lifestyle improvements – they will respond back with commitment and a sense of duty to the company, which translates into increased productivity.

Because if you don’t, they will move elsewhere – and moving to other companies costs everybody a boatload of money. On high-expertise jobs (the ones that allow us to compete with the likes of China), having a worker change companies costs a lot of wasted time (ramping up a replacement in the old company, and ramping up the new hire in the new company), and, hence, productivity. So employee retention is critical for the health of our economy.

This is not China, where you can keep people working 14 hours a week under the promise of a new TV for the family.

We need to treat our working force with ALL the respect they deserve.

That’s my point.
[/quote]

One of the most profound things written on this topic yet. However, I sense that someone will do the usual and argue this and spin it to death simply because of the messenger.

123

[quote]ZEB wrote:
Zap Branigan wrote:
It is very simple. The rich get their money through things other than a tradional paycheck.

They don’t pay as high a percentage tax on these various things as the average working man does.

When I take a trip I pay for it with my income that has already been taxed. When a wealthy guy does it he pays for it through his corporation that deducts it from their corporate income by declaring it a business expense.

We are back to a legitimate business expense. This doesn’t lower their tax bite one iota. That is really not “hiding their money” as you suggested.

There is an army of accountants that help their clients take advantage of the tax code.

Yes, I’m sure they do. But what specific advantages do they get relative to their income? How does Mr. Rich executive pay less in taxes? What are the loopholes?
…

[/quote]

To your first point, the owner of my last company would take ski trips and take one day to visit the closest customer to the slopes. The company would pay for the private jet. It would write these off as business expenses.

One of the owners of the first company I worked went on safari in South Africa. He visited one customer while he was there and the company paid airfare etc. They wrote his travelling expenses off.

People used to be able to write greens fees off because they claimed their golfing buddies were potential clients.

Same with restaraunt dinners. The IRS has recently lowered the amount people are able to deduct for these “business expenses”.

This stuff just happens all the time.

As hspder pointed out he gets taxed at a lower rate on some of his investments than he does on his tradional income.

Our whole tax system is skewed.

The very rich end up paying a lower tax rate than the rest of us.

They certainly pay most of the taxes because they have most of the money but they still pay at a lower rate.

I explained how business owners can depreciate their assets to pay less taxes. If they are big enough they play this game endlessly by tranferring things around.

Some of it is legitimate and some of it is not. The fact is it happens all the time because or tax code allows and even encourages it.

124

[quote]Zap Branigan wrote:
Do you actually believe that the students are fed balanced arguments by their liberal professors?[/quote]

We’ve had that discussion before. And yes, I do believe we feed them balanced arguments.

If we didn’t, do you really think Stanford, Harvard and Princeton would be as prestigious as they are with employers? Or is it that you are making the argument that employers are also liberals?

[quote]Zap Branigan wrote:
You just admitted it is a liberal institution and now you want to pretend that the liberalism does not penetrate the classroom?[/quote]

If it did, we wouldn’t be as highly regarded as we are.

It is my obligation as a scientist and as a professional to present all sides impartially. For example, I may be a Keynesian, but I still explain Monetarism – and I will not give a good grade to any student that is not able to understand and explain Monetarism as well as Keynesian Economics, much like a paper of mine that makes a similar mistake will not get published.

If I could just vent on my students, I wouldn’t need to come here… :slight_smile:

125

[quote]hspder wrote:
… and for those who are completely missing my point:

I am not advocating that we go out and shoot all business owners. I am not a Bolshevik. I understand they have their role in a capitalist system, and that capitalism is the least bad system we have.

What pisses me off to no end is this retarded philosophy that they are MORE important than workers and they actually are worth the orders of magnitude more that they earn in comparison to the people that work for them.

I read conservatives complaining about all the lazy people who live on Social Security, and can only but laugh at the hypocrisy.

About 90% of my net income comes from capital gains and dividends. What did I do to make so much money? I take calculated risks. I was fortunate enough to be able to go to college, get educated, and learn how the market works. I was also fortunate enough to find and marry a beautiful, intelligent lady who also went to college and helps me with statistical models and allows us to have hugely favorable risk-reward ratios.

That 90% of my income uses up about 1 hour of my day. I pay 15% tax on the gross.

I could just sit back, work 5 hours a week, and retain 90% of my net income – again, paying only 15% of tax.

It is my LIBERAL conscience that prevents me from doing so. It is my liberal conscience that makes me want to help others and takes me out of bed each morning, and work 10 to 12 hours a day on creating classes, delivering them, doing research and writing papers.

… and pay twice as much tax on that work.

Anyone else see a problem with that?

Do you really think that the time I spend playing in the stock, options and futures market is worth 100x more (per hour) than my work as a professor, and that in fact should be taxed less?

The conservative rationale is that reducing taxes gives people an incentive to invest more.

That is a profoundly retarded rationale.

The only thing that reducing taxes does long term is to drive up inflation Nothing more, nothing less. My capital gains income almost doubled after Bush reduced taxes the first time. Did I increase my investments because of that? No. I just sat back and got a “bonus” anyway, without changing anything. I didn?t have to.

If I had made the mistake of increasing my investments, that would help drive up inflation further – if you don’t understand why, try using your brain and think what happens a while after a bunch of money suddenly shows up in the economy without an increase in (worker) productivity. That’s right: inflation.

Clearly, Bush slept through Econ-101, but apparently so did everybody that voted for him.

The only safe way to grow an economy, without fear of inflation, is to increase productivity. Productivity depends, mostly, on worker output. And how do you increase worker output in a developed country? You keep the best and brightest around. You treat them well. You keep them happy. You give them benefits, flexible work hours, and all kinds of lifestyle improvements – they will respond back with commitment and a sense of duty to the company, which translates into increased productivity.

Because if you don’t, they will move elsewhere – and moving to other companies costs everybody a boatload of money. On high-expertise jobs (the ones that allow us to compete with the likes of China), having a worker change companies costs a lot of wasted time (ramping up a replacement in the old company, and ramping up the new hire in the new company), and, hence, productivity. So employee retention is critical for the health of our economy.

This is not China, where you can keep people working 14 hours a week under the promise of a new TV for the family.

We need to treat our working force with ALL the respect they deserve.

That’s my point.
[/quote]

Very nice,

It’s becoming more clear.

So the influx of money is not mirrored by reinvestment, it is simply spent by the people who need it and saved by those that don’t. The influx of money means freer spending which allows for price increases? The escalating prices cause the price indecies to rise which fuels inflation fears which in turn is causing the Feds to continue to raise the rates. Close?

At some point (now) that continual raising causes the market to notice and the bear returns.

So money is just money if there is no corresponding increase in productivity and output. It is really just flooding the system and the system needs to correct that?

Exactly how does productivity and output offset increased disposable income?

I know I’m a tactless beast, but this does interest me and if you have 1 minute to teach me your econ 101 I’d appreciate it.

126

[quote]ZEB wrote:
FightinIrish26 wrote:
ZEB wrote:
FightinIrish26 wrote:

I would be a complete libertarian if I didn’t think that anyone except the owners and bosses would benefit from it, and the rest of us would get the shaft.

GASP! Heaven forbid that the owner of a small business get a tax break from big government.

Especially when all he does is abuse those poor workers…

Who for some reason continue to work for the guy when they could just go out and get anothe job.

Irish…you really have to rethink some things.

No, I don’t. I know the things I’ve seen, and I know the course of history. You cannot leave businesses alone without setting standards and laws for them to abide by. When you don’t, you have fifteen hour workdays, no minimum wage, and all the other shit that has already happened in this country and forced the government to step in.

I’m not for throwing out laws that curtail abuse of employees.

Where did I say that?
[/quote]

You act like business is the end all cure all for everything, and that if you can’t trust the bosses, then who can you trust. You’ve done this many, many times before.

Well, you can’t trust them. This is proven. Busninesses are out for the bottom line, which, though its understandable, has not historically been good for their workers.

Either way, that isn’t what the thread is about.

Again, tax cuts for the rich and pissing on the poor is not just in my eyes. The fact that there a million ways around the estate tax for those with enough money is proof of this.

I ask again, how many heirs to fortunes are broken by the estate tax? I wonder how many even pay it at all.

You guys like to talk about things like “self determination” and “senses of entitlement”. Who has a bigger sense of entitlement than people like Paris Hilton or any of the Kennedys? Passing this wealth down without any kind of tax is ridiculous. They’ve never had to work a day in their lives, and never will, and you want to reward that?

127

Zap:

You have basically given me more legitimate business deductions. If you are making a new case that business gets certain deductions that private individuals do not, I agree.

But are those deductions actually illigitimate?

I think not!

Your original complaint was “the rich are able to hide income.”

You have not demonstrated all of the loopholes that you talked about. You have not even given me one.

Don’t feel badly I could not find one either. And I looked probably much harder than you are in this thread.

Also, if you want to list all of the ways that people try to cheat the IRS, I’m sure that we will be here for many days. But that’s not really the topic.

While we are attacking the rich for cheating, and I’m sure some do. We can also list the ways that the working class cheats the IRS.

How many waiters and waitresses do you know that declare all of their tips?

How many times has a carpenter or handyman worked for someone “under the table?”

Okay…people both rich and poor unfortunately cheat the IRS.

Now let’s move back to our original point.

Actually, the reverse is true!

You have not proven the above claim. And actually the reverse of that claim seems to be proving itself. Posting further about legitimate business deductions will not get you any further down the road in demonstrating how (my example from the beginning) a rich executive making 1 million per year “hides” income! Or, in proving your original assertion that “the rich have many ways to hide income.”

The fact is this country is being pulled along by those very people (and other high income earners).

In 2002 for example the top 5% of taxpayers paid almost 54% of all individual income taxes. But reported 30.6% of income!

If they were hiding the income then why are they paying more in taxes than everyone else?

Unless you have something entirely new to bring to the debate we are both just going to have to face up to the reality that rich executives making 1 mil per year are in fact paying their fair share!

Even though it’s popular for folks like us to bash them…it just doesn’t add up when you get beyond the liberal rhetoric and look at the facts.

128

[quote]hspder wrote:
ZEB wrote:
You supplied a study that showed that in three major universities more students considered themselves liberal than conservative!

Not just “three major universities”. We’re talking about the best universities on the PLANET. And it’s not just “more” students. It’s overwhelmingly more, hands-down.

What’s the problem, reality hurts you somehow? Are you complaining that reality has a liberal bias?

My challenge still stands: show me a study that shows that Stanford, Harvard and Princeton alumni change their political inclination from conservative to liberal over the course of their lives. I’m sure that if that’s true, some “conservative think-tank” has performed and publicized such study.

I can’t find it myself, but surely it’s because I’m just a dumb biased liberal.
[/quote]

I don’t think you are a dumb biased liberal.

I think you are a hate filled baised liberal.

:slight_smile:

And I never made the claim “that Stanford, Harvard and Princeton alumni change their political inclination from conservative to liberal over the course of their lives.”

Why would I make such a claim?

They are liberal when they leave college. I think they grow more conservate over time, most people do.

But that is merely my belief.

129

[quote]hspder wrote:

If I could just vent on my students, I wouldn’t need to come here… :slight_smile:
[/quote]

Oh…Okay, that explains the attitude and the ego.

Thank you.

130

[quote]sasquatch wrote:
So the influx of money is not mirrored by reinvestment, it is simply spent by the people who need it and saved by those that don’t. The influx of money means freer spending which allows for price increases? The escalating prices cause the price indices to rise which fuels inflation fears which in turn is causing the Feds to continue to raise the rates. Close?[/quote]

Bingo!

[quote]sasquatch wrote:
At some point (now) that continual raising causes the market to notice and the bear returns.

So money is just money if there is no corresponding increase in productivity and output. It is really just flooding the system and the system needs to correct that?[/quote]

Exactly!

[quote]sasquatch wrote:
Exactly how does productivity and output offset increased disposable income?[/quote]

Increased disposable income drives an increase in demand.

Productivity and output drive supply.

They do not drive each other – i.e., a change in supply does not automatically imply a change in demand and vice-versa – but their ratio is very important.

If demand (income) increases more than supply (productivity), we have inflation.

If they increase at the same rate, we have stability with growth.

If supply (productivity) increases more than demand (disposable income), we have deflation.

[quote]sasquatch wrote:
I know I’m a tactless beast, but this does interest me and if you have 1 minute to teach me your econ 101 I’d appreciate it.[/quote]

I’m more than happy to answer any questions you have. It’s my day job and I love it…

131

Those evil rich people!

I can’t believe it,the top 1% of income earners are only paying 33% of all taxes in the US!

Seems to me they should be paying it all…After all they are rich you know.

That’s just sooooo unfair…

:slight_smile:

132

Let’s expand this:

The top 20% of income earners pays 78% of all federal income taxes.

And that means the other 22% are paid by the bottom 80%!

It seems to me that those who are making money in this country are also paying up to the tax man.

The Death Tax is simply an insult which should not be tolerated any longer!

133

Do we then always have a delayed deflationary period that adjusts for the inflation? Thereby explaing the market cycles.

And this doesn’t seem to explain the rsing prices in the oil and gas markets.
The supply is as high as it has been since the price was 2.25 /gal. If this is not supply driven, may the Fed and the market be ‘correcting’ something that is not truly in need of correcting?

134

[quote]ZEB wrote:
If they were hiding the income then why are they paying more in taxes than everyone else?[/quote]

Because they can afford to! In fact, they could afford to pay much more, without making a dent on their lifestyle!

[quote]ZEB wrote:
Unless you have something entirely new to bring to the debate we are both just going to have to face up to the reality that rich executives making 1 mil per year are in fact paying their fair share![/quote]

Fair share? Based on what standard of fairness? The one you just came up with?

[quote]ZEB wrote:
Even though it’s popular for folks like us to bash them…it just doesn’t add up when you get beyond the liberal rhetoric and look at the facts.
[/quote]

Which facts? The ones about how a capitalist economy works, that I presented and you completely ignored? The fact that income inequality is skyrocketing – the rich are getting richer and poor are getting poorer? The fact that the tax breaks are doing nothing more than drive up inflation?

Don’t take MY word for it; I stand with most economists on this matter:

(from marketwatch.com:slight_smile:
"
WASHINGTON (MarketWatch) –
Some lawmakers have indicated that the surge in tax receipts, which still remain well below pre-tax cut levels as a share of the overall economy, shows that lower taxes virtually pay for themselves by boosting the economy and generating higher revenues – an argument rejected by most economists.
"

135

[quote]ZEB wrote:
Let’s expand this:

The top 20% of income earners pays 78% of all federal income taxes.

And that means the other 22% are paid by the bottom 80%!

It seems to me that those who are making money in this country are also paying up to the tax man.

The Death Tax is simply an insult which should not be tolerated any longer![/quote]

ZEB

I really don’t know what’s driving you here. You–YOU have stated that you are sure there are loopholes you just can’t find them.

And you continue to use the number of tax payers as your standard. Those same 20% of the population who pay 80% of the taxes represent 90-95% of the money in this economy. If you use this standard 80% seems reasonable.

I am not anti-rich. Many people have worked hard and smart and are quite deserving of their money. Some haven’t. I don’t think that’s arguable. My contention is not to tax the estate into the poor house. There has to be a middle ground. I don’t claim to know the answer, but your hard line is knawing at me.

Have some flexibility. You’ve acknowleged the loopholes. We need a good/dirty CPA to fill us in on the ways.

136

hspder,

When was the last time you were completely out of the academic setting–meaning not going to classes, not employed by a university, not receiving money from a university? Just you working in the private sector like an average American?

137

[quote]ZEB wrote:
But that is merely my belief.[/quote]

I’m glad we can agree at least on that…

138

[quote]ZEB wrote:
That’s just sooooo unfair…[/quote]

Stop whining and smell the coffee. The undisputable fact is that rich people having a higher net income does not translate into higher productivity, but it actually hurts our economy through inflation. Period. We need to invest money into helping increase the productivity of the workforce – namely, through implementing Universal Healthcare – rather than let it float around and allow it to come back to bite us in the form of inflation.

139

[quote]hspder wrote:
ZEB wrote:
If they were hiding the income then why are they paying more in taxes than everyone else?

Because they can afford to! In fact, they could afford to pay much more, without making a dent on their lifestyle![/quote]

Well now isn’t that a cozy little definition! “They can afford to.”

LOL…Nevermind they are paying WAY more than anyone else.

They can “afford to” so that makes it right!

I’ll give you an “F” on that logic.

[quote]ZEB wrote:
Unless you have something entirely new to bring to the debate we are both just going to have to face up to the reality that rich executives making 1 mil per year are in fact paying their fair share!

Fair share? Based on what standard of fairness? The one you just came up with?[/quote]

You think your standard is better: “They can afford to.”

[quote]ZEB wrote:
Even though it’s popular for folks like us to bash them…it just doesn’t add up when you get beyond the liberal rhetoric and look at the facts.

Which facts? The ones about how a capitalist economy works, that I presented and you completely ignored? The fact that income inequality is skyrocketing – the rich are getting richer and poor are getting poorer? The fact that the tax breaks are doing nothing more than drive up inflation?[/quote]

And that’s why we have such a healthy robust economy.

Do you read the newspapers and actually keep in touch with the facts between classes?

[quote]Don’t take MY word for it; I stand with most economists on this matter:

(from marketwatch.com:slight_smile:
"
WASHINGTON (MarketWatch) –
Some lawmakers have indicated that the surge in tax receipts, which still remain well below pre-tax cut levels as a share of the overall economy, shows that lower taxes virtually pay for themselves by boosting the economy and generating higher revenues – an argument rejected by most economists.
"
[/quote]

And the message board thing to do would be for me to find an economist that agrees with me and post it here.

You know as well as I do that if you get 10 economists in a room they will not agree on which day it is!

The fact is that the rich are indeed pulling this country along by paying a very high rate of taxes and the United States Treasury statistics have proven my point.

You just failed “taxation.”

140

[quote]doogie wrote:
When was the last time you were completely out of the academic setting–meaning not going to classes, not employed by a university, not receiving money from a university? Just you working in the private sector like an average American?[/quote]

I was a full time consultant at McKinsey about 10 years ago. After I left full-time to pursue my PhD, I’ve still done part-time consultancy work – freelance and for McKinsey, where I hold SEM (Senior Engagement Manager) status – off and on. My latest engagement was about 3 months ago.