[Rhodes22-list] Taxes & Politics

Fri, 17 Jan 2003 15:18:15 -0500 (EST)

 Ron, I want to thank you for your thoughts about the current tax "reform" and the value of sailing. I agree.

Ken Wise
Awaken
Trail Creek Marina
Michigan City, IN --- On Wed 01/15, ronald  wrote:From: ronald [mailto: lipton@fnal.gov]To: rhodes22-list@rhodes22.orgDate: Wed, 15 Jan 2003 18:52:30 -0600Subject: Re: [Rhodes22-list] Taxes & PoliticsOne of the reasons I like sailing (and the list) is that it distractsme from worrying about politics, which usually leaves me confusedand depressed.  In addition discussions of this type on the web tend toget too heated and overblown with people either talking past each other,generating personal attacks, or having their feelings hurt.  Politics shouldonly be discussed AFTER several strong drinks.  This is more difficultto do on line.Nevertheless I have become so upset about the direction of things that Iwill, for the first time online,  indulge myself.   The tax code has along political history of use for social and business engineering.  There were timeswhen the highest rates were 70%, which nobody paid due to the hugenumbers of loopholes built into the code to assuage various interests.The heart of  the current proposal, which would eliminate the tax ondividends, clearly favors the rich.  It was tuned to level out benefitsfor the lower and middle income folks by increasing the dependentdeduction and reducing the marrage penalty, both politically popularand easy to defend. It can then be argued that the % reduction isflat, whereas the bulk of the $$ savings go to the rich.Given the level of government spending it is necessary to havea progressive tax code, the poor and middle income simply don't haveenough money.  How progressive it should be should be a function ofthe imbalance income and the ability to pay. The US currently has ahuge imbalance between the richest 10-20% and the rst. The lower incomesegment pays a larger fraction of their income in salestaxes and fees, as well as payroll deductions for social security.Calculating the total tax burden fraction should take this into account.The not-so hidden agenda in the tax cut is, of course, a reduction inspending, especially for social services. This is particularly unfortunatenow, with high unemployment and a sagging economy, when people need it most.The reduced tax on dividends may have unfortunate effects on the waybusinesses allocate profits to fund R&D and capital investment.In any case the situation is not as simple as our ND professor wouldhave us believe.  I think this kind of example is counterproductive.One should be think about these things carefully, not chuckleover simplistic arguements.Ron LiptonOn Wednesday, January 15, 2003, at 11:56 AM, General Boats wrote:> With the same caveat that Paul posted, here is a reply from the left.  > Don't> read it if it moves you to leave the list.>> Would it only be so simple as the professor from SD makes it.>> Just three minor complications -  many more can be contributed by musch > wiser> economists..>> a)   50,000,000 of us do not make enough to pay taxes no matter how > hard we> work - we are just not that smart. So Tax cuts are not a neutral > issue.  Tax> cuts invariably mean tax increases for us. With less revenues, services > are> diminished.  Cost of education rises. (That is a very costly error - > the free> GI educational bill of WW 2 got the US economy roaring).  States find> themselves in financial holes and have to make up the shortfalls with > all sorts> of increases like higher sales taxes (which have the same rate no > matter what> your income), higher real estate taxes - perhaps gas taxes -anything to > raise> moneys the income tax cuts have taken from them. So tax cuts are a > double edge> sword that not only help those who need help the least, but at the same > time> hurt those who need help the most. I know some of you chafe at the idea > of> someone getting something for nothing.  But those who take advantage of > any> good nature the government shows are in the minority of good Americans > and good> policing can wean the freeloaders out. Overkill sooner or later leads to> overthrow.   The funny thing about tax cuts is that the very wealthy > think they> are a mistake.>> b)   If you step back and see how the rich got rich, with the exception > of> those who stole it and then bought their way in and those who > contributed> nothing but happen to be born in the right circle, the majority made it > the> hard way, they worked for it.  But they were only able to succeed > because they> had the invaluable assistance of the police man and fireman and milkman > (and in> my day the iceman) and hosts of others that were needed to create the> environment that made the accumulation of wealth possible in the first > place.> Part of any money due back the high end is really to be shared with > their> silent partners.  President Roosevelt understood this and pulled the > country> out of a depression most of you have no inkling of.>> c)   The Baltimore Sun ran an editorial pointing out that while our > current> leader says we should cut taxes because it is their own money we are > giving> back to them, he skips saying it is also their debt.  Yet it was and is > the> very creating of the debt that paved the way for the accumulation of > wealth.> But somehow when it comes to who should pay for the debt, that becomes > a non> progressive burden.  We are taught that when we have money we should > pay off> our debts and instead our leaders cut taxes - all the interest that > could have> been saved could have paid for the next war.  What a shame.>> Since no one is reading this I'll stop here.  But for the simplistic > logic of> our good professor, there are many other avenues of challenge.>> stan/gbi>> Rik Sandberg wrote:>>> Paul,>>>> Yeah, I printed that one out. Think I'll frame it and hang it on the >> wall>> in my office. We had that happen in Minnesota the last couple of years >> when>> they did a sales tax rebate. People that were living off welfare or >> other>> gov't programs were all bitching 'cause they didn't get any money back.>> It's amazing how they can translate paying nothing into less of a >> benefit>> to them than paying less is to someone else. To top it off, it seem >> there>> really is a fool born every minute, so there's a lot of them out >> there. :-)>>>> Rik>>>> At 08:00 AM 1/15/2003 -0500, you wrote:>>> Before you read this, it is a commentary on taxes & politics.  It is >>> just>>> one guy's opinion (not even necessarily mine) so don't go crazy with >>> this>>> & start a war.  If you don't like this kind of stuff, delete it now >>> and>>> don't read it. - Paul>>>>>>>>> A VERY simple way to understand the tax laws. Read on -- it does>>>>>> make you think!!>>>>>>>>>>>> Let's put tax cuts in terms everyone can understand. Suppose that >>> every>>> day,>>>>>> ten men go out for dinner. The bill for all ten comes to $100. If they>>> paid>>>>>> their bill the way we pay our taxes, it would go something like this:>>>>>>>>>>>> The first four men -- the poorest -- would pay nothing; the fifth >>> would>>> pay>>>>>> $1, the sixth would pay $3, the seventh $7, the eighth $12, the ninth>>> $18,>>>>>> and the tenth man -- the richest -- would pay $59.>>>>>>>>>>>> That's what they decided to do. The ten men ate dinner in the >>> restaurant>>>>>> every day and seemed quite happy with the arrangement -- until one >>> day,>>> the>>>>>> owner threw them a curve (in tax language a tax cut).>>>>>>>>>>>> "Since you are all such good customers," he said, "I'm going to reduce>>> the>>>>>> cost of your daily meal by $20." So now dinner for the ten only cost>>> $80.00.>>>>>>>>>>>> The group still wanted to pay their bill the way we pay our taxes. So >>> the>>>>>> first four men were unaffected. They would still eat for free. But >>> what>>>>>> about the other six -- the paying customers? How could they divvy up >>> the>>> $20>>>>>> windfall so that everyone would get his "fair share?">>>>>>>>>>>> The six men realized that $20 divided by six is $3.33. But if they>>>>>> subtracted that from everybody's share, Then the fifth man and the >>> sixth>>> man>>>>>> would end up being PAID to eat their meal. So the restaurant owner>>> suggested>>>>>> that it>>>>>> would be fair to reduce each man's bill by roughly the same amount, >>> and>>> he>>>>>> proceeded to work out the amounts each should pay. And so the fifth >>> man>>> paid>>>>>> nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid>>> $9,>>>>>> the ninth paid $12, leaving the tenth man with a bill of $52 instead >>> of>>> his>>>>>> earlier $59.>>>>>>>>>>>> Each of the six was better off than before. And the first four >>> continued>>> to>>>>>> eat for free. But once outside the restaurant, the men began to >>> compare>>>>>> their savings. "I only got a dollar out of the $20," declared the >>> sixth>>> man,>>>>>> but he, (pointing to the tenth) got $7!". "Yeah, that's right," >>> exclaimed>>>>>> the fifth man, "I only saved a dollar, too, ........It's unfair that >>> he>>> got>>>>>> seven times more than me!". That's true!" shouted the seventh man, why>>>>>> should he get $7 back when I got only $2?" The wealthy get all the>>> breaks!".>>>>>> Wait a minute," yelled the first four men in unison, "We didn't get>>> anything>>>>>> at all.  The system exploits the poor!">>>>>>>>>>>> The nine men surrounded the tenth and beat him up. The next night he>>> didn't>>>>>> show up for dinner, so the nine sat down and ate without him. But >>> when it>>>>>> came time to pay the bill, they discovered, a little late what was >>> very>>>>>> important. They were FIFTY TWO DOLLARS short of paying the bill!>>>>>>>>>>>> Imagine that!>>>>>>>>>>>> And that, boys and girls, journalists and college instructors, is how >>> the>>>>>> tax system works. The people who pay the highest taxes get the most>>> benefit>>>>>> from a tax reduction. Tax them too much, attack them for being >>> wealthy,>>> and>>>>>> they just may not show up at the table anymore. Where would that leave>>> the>>>>>> rest?>>>>>>>>>>>> Unfortunately, most taxing authorities anywhere cannot seem to grasp >>> this>>>>>> rather straight-forward logic!>>>>>>>>>>>> T. Davies>>>>>> Professor of Accounting &Chair,>>>>>> Division of Accounting and Business Law>>>>>> The University of South Dakota>>>>>> School of Business>>>>>>>>>>>>>>>>>> ========================>>> Paul Grandholm>>> C&H Technology>>> GrandPower Components Div.>>> ========================>>> _________________________________________________>>> Use Rhodes22-list@rhodes22.org, Help? www.rhodes22.org/list>>>> _________________________________________________>> Use Rhodes22-list@rhodes22.org, Help? www.rhodes22.org/list>> _________________________________________________> Use Rhodes22-list@rhodes22.org, Help? www.rhodes22.org/list>_________________________________________________Use Rhodes22-list@rhodes22.org, Help? www.rhodes22.org/list

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