[Rhodes22-list] Flat Tax Anyone? What is fair Dave(political rant)
Bill Effros
bill at effros.com
Mon Jan 15 12:23:53 EST 2007
My, my.
Testy today, are we?
Bill Effros
Brad Haslett wrote:
> Bill,
>
> Congratulations, you win the prize for being cute and witty! What we
> have
> now is the real "chump tax". If you are a high-end wage earner or small
> businessman, you pay through the nose. There is a point (well above
> my pay
> grade) where the wealthy hire expensive but efficient tax counselors to
> cut their effective rate.
>
> But why waste time on this discussion? I'd explain why your analysis is
> wrong but you don't appear to be in the mood to learn today. Yesterday
> you
> ask for an explanation of how a flat tax would work and in less than 24
> hours you're expert enough on the subject to call it a "fraud". My
> default
> position with you Bill is to not discuss economic issues and it is
> obviously time to honor that position.
>
> Brad
>
>
>
>
> On 1/15/07, Bill Effros <bill at effros.com> wrote:
>>
>> Ah,
>>
>> So the "flat tax" can also be described as a "chump tax". It only
>> really applies to wage earners. The rich never have to pay it at all,
>> as they don't earn their income in the form of "wages" and their
>> accountants can still cast their "profits" as "losses".
>>
>> This makes it very easy for the government to raise taxes whenever it
>> wants--just change the 17% to 18% or 19%. That's fair. All the wage
>> earners pay the same rate, while the truly rich try not to laugh in
>> public.
>>
>> Teresa Heinz, by the way, was not a "rich person" until she married
>> Henry John Heinz III of the inherited wealth "Heinz 57 Sauce" family.
>> He subsequently became a Republican United States Senator, and died in
>> an airplane crash, transferring much of his wealth to his wife--tax
>> free, with provisions to insure that their children would eventually
>> inherit great wealth--also tax free; and that it would not be
>> transferred, instead, to any other Senator she might marry. Especially
>> Democratic Senators.
>>
>> The flat tax would not apply to her, either, as she would simply shift
>> her money into non-profit corporations, and withdraw her money from
>> tax-free bonds (causing municipalities to raise property taxes on wage
>> earners) and, in all likelihood, pay even less in taxes than she does
>> now.
>>
>> What a fraud!
>>
>> But, if you and the other wage earners really want to shift more of the
>> tax burden onto yourselves, and away from people like me who don't earn
>> their money from wages...you've got my vote!
>>
>> Bill Effros
>>
>>
>>
>> Brad Haslett wrote:
>> > Bill,
>> >
>> > Lucky you! My company is a not-for-profit entity as well. That
>> > wasn't our
>> > goal when we started but we've discovered some hidden benefits.
>> >
>> > The WSJ article referred to mid-career, two wage earner couples -
>> > that's Fan
>> > and myself. We live modestly (small mortgage), save aggressively, and
>> > don't
>> > get involved in exotic tax schemes. As a result, our effective
>> > federal tax
>> > rate has always been around 25%, much higher than the average truly
>> > rich person like Teresa Heinz. The garden variety small craftsman,
>> say
>> a
>> > plumber or an electrician, who owns his own business is in the same
>> boat.
>> >
>> > "Fairness" is in the eye of the beholder.
>> >
>> > Brad
>> >
>> >
>> > On 1/14/07, Bill Effros <bill at effros.com> wrote:
>> >>
>> >> Brad,
>> >>
>> >> I'm not a wage earner, and my company is a non-profit--just like
>> Stan.
>> >> We pay no taxes under this "flat-tax" system?
>> >>
>> >> Bill Effros
>> >>
>> >> Brad Haslett wrote:
>> >> > Bill,
>> >> >
>> >> > How is "income" defined here?
>> >> >
>> >> >
>> >> >
>> >> > If you are a wage earner, income would be the amount on your W-2
>> less
>> >> > what
>> >> > you put in savings, (assuming the savings aspect survived
>> Congress).
>> >> > If you
>> >> > are self-employed, nothing would change; your net profit for the
>> >> > year-end is
>> >> > your income.
>> >> >
>> >> > Does the "flat tax" replace all other taxes.
>> >> >
>> >> >
>> >> >
>> >> > No.
>> >> >
>> >> > Is the gasoline tax gone?
>> >> >
>> >> >
>> >> >
>> >> > No. My personal opinion is that we should be paying about $4 per
>> >> > gallon for
>> >> > fuel, with a floating tax implemented over time to bridge the gap
>> >> between
>> >> > the market price of gasoline and the $4 target. I know this sounds
>> >> > strange
>> >> > coming from a free market disciple but this is a matter of national
>> >> > security.
>> >> >
>> >> > Are tobacco and liquor taxes gone?
>> >> >
>> >> >
>> >> >
>> >> > No. Those are local taxes and here in the Bible Belt a big fund
>> >> raiser.
>> >> >
>> >> > Can cities and states tack on other taxes over and above the "flat
>> >> tax"?
>> >> >
>> >> >
>> >> >
>> >> > Yes. Each state is still responsible for their own spending and
>> >> revenue
>> >> > raising schemes.
>> >> >
>> >> > Are property taxes gone?
>> >> >
>> >> >
>> >> >
>> >> > No. Property taxes will still be used locally to fund schools and
>> >> local
>> >> > government, as they should be.
>> >> >
>> >> > What about taxes on the sale of securities and real estate?
>> >> >
>> >> >
>> >> >
>> >> > Some flat tax advocates suggest eliminating capital gains. I
>> >> personally
>> >> > think we shouldn't tax the gain on assets held over two years.
>> This
>> >> > encourages long term investment and throttles real estate
>> speculation.
>> >> >
>> >> > What about fees charged by the government? Why should the
>> government
>> >> > charge for entry to parks? Or postage? Or fees for passports?
>> >> Aren't
>> >> > these all just hidden taxes?
>> >> >
>> >> >
>> >> >
>> >> > These are user fees and they wouldn't change. Airlines will still
>> pay
>> >> > landing fees to support the airspace infrastructure, etc.
>> >> >
>> >> > Please fill in some more blanks on how the "flat tax" actually
>> >> > works--how everything becomes so simple and fair.
>> >> >
>> >> >
>> >> >
>> >> > The fair and simple is that the lowest income earners ($40K or
>> less)
>> >> > don't
>> >> > have to fool with federal income taxes at all. The top 1% (read
>> Bill
>> >> > Gates)
>> >> > actually pays the same marginal rate as everyone else. The 2%
>> to 5%,
>> >> > that's
>> >> > you and me kid, probably won't see much difference except that our
>> >> > friends
>> >> > who borrowed a million dollars for a house may rethink their
>> >> > decision. For
>> >> > the 6% to 50%, life gets a lot simpler, and for the bottom 50% the
>> tax
>> >> > burden decreases.
>> >> >
>> >> >
>> >> >
>> >> > Brad
>> >> >
>> >> >
>> >> >
>> >> >
>> >> > On 1/14/07, Bill Effros <bill at effros.com> wrote:
>> >> >>
>> >> >> Brad,
>> >> >>
>> >> >> How is "income" defined here?
>> >> >>
>> >> >> Does the "flat tax" replace all other taxes?
>> >> >>
>> >> >> Is the gasoline tax gone?
>> >> >>
>> >> >> Are tobacco and liquor taxes gone?
>> >> >>
>> >> >> Can cities and states tack on other taxes over and above the "flat
>> >> tax"?
>> >> >>
>> >> >> Are property taxes gone?
>> >> >>
>> >> >> What about taxes on the sale of securities and real estate?
>> >> >>
>> >> >> What about fees charged by the government? Why should the
>> government
>> >> >> charge for entry to parks? Or postage? Or fees for passports?
>> >> Aren't
>> >> >> these all just hidden taxes?
>> >> >>
>> >> >> Please fill in some more blanks on how the "flat tax" actually
>> >> >> works--how everything becomes so simple and fair.
>> >> >>
>> >> >> Bill Effros
>> >> >>
>> >> >> Brad Haslett wrote:
>> >> >> > Bill,
>> >> >> >
>> >> >> > There are a gazillion different versions out there, including
>> the
>> >> ones
>> >> >> > currently being used in Eastern Bloc countries. The one I like
>> >> best
>> >> >> > is the
>> >> >> > one proposed by Steve Forbes. Basically, the first $40,000 or
>> >> so of
>> >> >> > household income would be tax free with adjustments for family
>> size
>> >> >> > and type
>> >> >> > (single v married). After the threshold, consumption, meaning
>> >> income
>> >> >> > minus
>> >> >> > savings, would be taxed at a flat rate, 17% in Forbes proposal.
>> >> >> Corporate
>> >> >> > income would be taxed at the same 17%. Going back to the old
>> 80/20
>> >> >> rule,
>> >> >> > the 20% of taxpayers who pay 80% of the taxes still would. Much
>> of
>> >> >> > the 80%
>> >> >> > who pay little taxes anyway would be exempt, and what they
>> did owe
>> >> >> > could be
>> >> >> > calculated on a postcard. Gone would be the deduction for home
>> >> >> > mortgage interest and other itemized deduction. The idea is
>> that
>> a
>> >> >> > flat tax
>> >> >> > encourages savings while discouraging subsidized spending on
>> >> oversized
>> >> >> > houses, etc. The original income tax in the US was a flat tax of
>> >> 1%.
>> >> >> > We had
>> >> >> > a lot fewer accountants and tax attorneys back then.
>> >> >> >
>> >> >> > Brad
>> >> >> >
>> >> >> >
>> >> >> > On 1/14/07, Bill Effros <bill at effros.com> wrote:
>> >> >> >>
>> >> >> >> Same question, Brad: How does the flat tax work?
>> >> >> >>
>> >> >> >> Bill Effros
>> >> >> >>
>> >> >> >> Brad Haslett wrote:
>> >> >> >> > Chris wrote:
>> >> >> >> >
>> >> >> >> > "If the system steals all their wealth then I guess those
>> guys
>> >> >> won't
>> >> >> >> > bother
>> >> >> >> > to earn their
>> >> >> >> > vast sums of money."
>> >> >> >> >
>> >> >> >> > Precisely! That is exactly what happened when marginal tax
>> >> rates
>> >> >> were
>> >> >> >> in
>> >> >> >> > the 70 to 90 per cent range. That, and people got
>> involved in
>> >> >> >> > sophisticated
>> >> >> >> > tax dodging schemes. Our current code is far more
>> complicated
>> >> than
>> >> >> >> > necessary because of all the tinkering done over the years to
>> >> >> achieve
>> >> >> >> > various social aims. Under a flat tax, the top 20% of
>> earners
>> >> will
>> >> >> >> still
>> >> >> >> > pay over 80% of the total tax collected. Those 10,000 square
>> >> foot
>> >> >> >> > McMansions
>> >> >> >> > won't be subsidized and driving a leased Hummer to work won't
>> >> make
>> >> >> >> much
>> >> >> >> > sense either. JFK said it best when he explained why he was
>> >> >> cutting
>> >> >> >> > marginal rates, "a rising tide raises all boats."
>> >> >> >> >
>> >> >> >> > If the ultimate goal of a nations tax system is to achieve
>> equal
>> >> >> >> > incomes for
>> >> >> >> > all, you get Cuba, North Korea, and a few other third world
>> >> >> >> countries.
>> >> >> >> > Every other industrialized nation interested in growing their
>> >> >> economy
>> >> >> >> has
>> >> >> >> > given-up on such foolishness.
>> >> >> >> >
>> >> >> >> > Brad
>> >> >> >> >
>> >> >> >> >
>> >> >> >> > On 1/14/07, Geankoplis <napoli68 at charter.net> wrote:
>> >> >> >> >>
>> >> >> >> >> Dave,
>> >> >> >> >> There seems too much hand wringing about the unfair
>> >> taxes,
>> >> >> the
>> >> >> >> >> crushing burden of those taxes on the wealthy. I agree with
>> >> you,
>> >> >> >> isn't
>> >> >> >> >> wealth the reward? Didn't the system benefit those wealthy
>> >> >> >> people? If
>> >> >> >> >> that
>> >> >> >> >> system exist to reward these people then why shouldn't they
>> pay
>> >> >> >> more to
>> >> >> >> >> support it? They have more to loose than the little guy.
>> >> If the
>> >> >> >> system
>> >> >> >> >> steals all their wealth then I guess those guys won't bother
>> to
>> >> >> earn
>> >> >> >> >> their
>> >> >> >> >> vast sums of money. People can complain all they want but
>> >> their
>> >> >> >> actions
>> >> >> >> >> speak louder than words. If the amount of taxes someone
>> >> pays is
>> >> >> more
>> >> >> >> >> important than what they make, let them work minimum
>> wage, an
>> >> >> obvious
>> >> >> >> >> luxurious level of existence that should be suppressed as it
>> is
>> >> >> more
>> >> >> >> >> money
>> >> >> >> >> than someone really needs.
>> >> >> >> >>
>> >> >> >> >> Chris the tax payer
>> >> >> >> >>
>> >> >> >> >> -----Original Message-----
>> >> >> >> >> From: rhodes22-list-bounces at rhodes22.org
>> >> >> >> >> [mailto:rhodes22-list-bounces at rhodes22.org] On Behalf Of
>> >> >> >> >> DCLewis1 at aol.com
>> >> >> >> >> Sent: Friday, January 12, 2007 8:29 PM
>> >> >> >> >> To: rhodes22-list at rhodes22.org
>> >> >> >> >> Subject: Re: [Rhodes22-list] Flat Tax Anyone? Tossing ball
>> back
>> >> to
>> >> >> >> >> Slim(political rant)
>> >> >> >> >>
>> >> >> >> >>
>> >> >> >> >> Interesting that Ed thinks 36% tax is an oppressive tax rate
>> >> (and
>> >> >> >> that's
>> >> >> >> >> the
>> >> >> >> >> max rate, not on your gross, its after deductions). Look at
>> >> the
>> >> >> >> >> roads you
>> >> >> >> >> travel, the ATC, national security, public health, the
>> commerce
>> >> >> >> >> infrastructure, etc - seems like a one time good deal to me.
>> >> >> >> >>
>> >> >> >> >> For those of you who worry that you're paying school
>> taxes for
>> >> >> other
>> >> >> >> >> peoples
>> >> >> >> >> kids, ask yourself who is going to be paying into the Social
>> >> >> >> >> Security fund
>> >> >> >> >> on your behalf 10 years from now - it's those kids. You
>> better
>> >> >> hope
>> >> >> >> >> they're
>> >> >> >> >> educated and have good jobs, their Soc Security deposits are
>> >> >> >> >> going straight
>> >> >> >> >>
>> >> >> >> >> to you.
>> >> >> >> >>
>> >> >> >> >> Further, while Ed makes a good point regarding founders that
>> >> begin
>> >> >> >> and
>> >> >> >> >> develop companies, I suggest they are likely a small
>> >> fraction of
>> >> >> >> the 1%
>> >> >> >> >> under
>> >> >> >> >> discussion. I would encourage you to consider the real 1% -
>> >> >> consider
>> >> >> >> >> the
>> >> >> >> >> Grasso'
>> >> >> >> >> s, who didn't start, found, begin or develop anything he
>> >> just got
>> >> >> >> >> the NYSE
>> >> >> >> >> to
>> >> >> >> >> give him an egregious pay package. Or Nardelli of Home
>> Depot,
>> >> >> >> >> or Skilling
>> >> >> >> >> of Enron, or Conrad Black accused of looting the Tribune, or
>> >> the
>> >> >> >> >> guys that
>> >> >> >> >> looted Tyco, or McKinnel of Pfizer, or Immelt of GE, or
>> >> >> Waggoner of
>> >> >> >> >> GM,
>> >> >> >> >> or
>> >> >> >> >> Ford
>> >> >> >> >> of Ford...... Lets cut out the mythology and deal with
>> cases,
>> >> >> and
>> >> >> >> >> there
>> >> >> >> >> are
>> >> >> >> >> a ton of cases, and in all those cases the MBAs that won the
>> >> water
>> >> >> >> >> cooler
>> >> >> >> >> wars stepped up to run major corporations and made out like
>> >> >> bandits
>> >> >> -
>> >> >> >> >> that's
>> >> >> >> >> the real story and that's the real 1%. I can't think of a
>> >> single
>> >> >> >> >> S&P 500
>> >> >> >> >> corporation that's run by it founder. And I
>> >> respectfully suggest
>> >> >> >> that
>> >> >> >> >> the
>> >> >> >> >> MBAs
>> >> >> >> >> that win the water cooler wars are no more entitled
>> to special
>> >> >> tax
>> >> >> >> >> consideration by society than anyone else - they are not
>> >> >> >> founders, they
>> >> >> >> >> are
>> >> >> >> >> watch
>> >> >> >> >> standers, and there is a difference.
>> >> >> >> >>
>> >> >> >> >> Regarding founders: If you do found and develop a public
>> >> company,
>> >> >> you
>> >> >> >> >> make
>> >> >> >> >> out like a bandit even with the current tax code - and I
>> don't
>> >> >> >> begrudge
>> >> >> >> >> that
>> >> >> >> >>
>> >> >> >> >> one bit. But you reasonably make out so incredibly well
>> that
>> >> >> even
>> >> >> >> >> after
>> >> >> >> >> taxes
>> >> >> >> >> you are incredibly well off. Consider Phil Knight, the guy
>> who
>> >> >> >> founded
>> >> >> >> >> Nike
>> >> >> >> >> - I think he's the 48th richest guy in the US even after the
>> >> >> current
>> >> >> >> >> taxes,
>> >> >> >> >>
>> >> >> >> >> and that's fine but he doesn't need a change in the tax code
>> to
>> >> >> help
>> >> >> >> him
>> >> >> >> >> out
>> >> >> >> >>
>> >> >> >> >> he's doing very well thank you. Consider Bill Gates, I
>> >> think the
>> >> >> >> >> richest
>> >> >> >> >> guy in the US, money up the gazoo - under the current tax
>> >> >> >> code. Michael
>> >> >> >> >> Dell,
>> >> >> >> >> absolutely not suffering at all - under the present tax
>> code.
>> >> >> >> None of
>> >> >> >> >> the
>> >> >> >> >> founder types I've mentioned need special consideration from
>> >> the
>> >> >> >> >> tax code,
>> >> >> >> >> they
>> >> >> >> >> are all doing very very well by any standard - and I don't
>> >> >> begrudge
>> >> >> >> >> their
>> >> >> >> >> doing well, but neither do I feel sympathy for the tax they
>> >> pay.
>> >> >> >> >> They've
>> >> >> >> >> got
>> >> >> >> >> it made and some of the reasons they have it made is the
>> >> >> >> larger society
>> >> >> >> >> respects and enforces their intellectual property rights
>> - at
>> a
>> >> >> real
>> >> >> >> >> cost
>> >> >> >> >> to the
>> >> >> >> >> larger society - the larger society facilitates their
>> >> production
>> >> >> >> >> efforts
>> >> >> >> >> with
>> >> >> >> >> roads, power, terminals and infrastructure and security
>> of all
>> >> >> >> >> sorts, and
>> >> >> >> >> generally enables the commerce that they profit from so
>> >> greatly -
>> >> >> >> >> so maybe
>> >> >> >> >> they
>> >> >> >> >> should pay more for that increased support. If that
>> increased
>> >> >> >> support
>> >> >> >> >> weren't
>> >> >> >> >> there, they'd have nothing or very much less. The
>> >> >> customs inspector
>> >> >> >> >> standing on the dock looking for counterfeit Nikes is not
>> >> paid by
>> >> >> >> Phil
>> >> >> >> >> Knight, but
>> >> >> >> >> Phil Knight benefits directly from that customs
>> >> >> >> inspector's activities,
>> >> >> >> >> maybe
>> >> >> >> >> Phil Knight should pay more tax than the rest of us. Maybe
>> >> Bill
>> >> >> >> Gates
>> >> >> >> >> should
>> >> >> >> >> pay more taxes, the US Government is investing time and
>> >> manpower
>> >> >> >> trying
>> >> >> >> >> to
>> >> >> >> >> mitigate software pirating efforts in Asia and around the
>> >> >> world, a
>> >> >> >> >> direct
>> >> >> >> >> significant beneficiary is - Bill Gates. I don't
>> begrudge any
>> >> of
>> >> >> >> these
>> >> >> >> >> guys
>> >> >> >> >> their wealth, but I also think they, more than some day
>> >> worker in
>> >> >> >> South
>> >> >> >> >> Carolina,
>> >> >> >> >> are constructively exploiting, using, and benefiting from
>> the
>> >> >> full
>> >> >> >> >> range
>> >> >> >> >> of
>> >> >> >> >>
>> >> >> >> >> government services and in consideration they should pay
>> >> >> more taxes.
>> >> >> >> >>
>> >> >> >> >> Dave
>> >> >> >> >>
>> >> >> >> >> __________________________________________________
>> >> >> >> >> Use Rhodes22-list at rhodes22.org, Help? www.rhodes22.org/list
>> >> >> >> >>
>> >> >> >> >>
>> >> >> >> >> __________________________________________________
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>> >> >> >> > __________________________________________________
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