Why cut taxes?

[cowboy]

It's not just the republicans who are in the pockets of the rich.

This excellent article from the WSJ explains how the super rich avoid taxes, especially estate taxes. This is why I'm opposed to the estate tax: Unless you are so rich that you can dump most of your wealth into a tax-free entity, you get dinged. Estate taxes thus hit the new money, and family money that has been managed for the next generation but is nowhere near the level of the rich elite. These are the families whose wealth is tied up in a working small business, and who are hurt the most by estate taxes, all while the uber-rich that people are trying to get to with estate tax laws skate away untouched.

Some notable excerpts.

Congress is still scrambling to find ways to pay for its tax cut, so perhaps it should pay closer attention to last month’s news that George Soros had transferred $18 billion of his fortune to a private charity that he controls. There it will be sheltered from the Internal Revenue Service forever. This may be the single biggest tax dodge in U.S. history, yet no one on the right or left seems to have raised an eyebrow.

True tax reform is predicated on the principle that all income should be taxed at a low rate once, and only once. But much of the wealth that Mr. Soros spent years moving into his Open Society Foundations will never be taxed. A gift of billions of dollars of appreciated stock escapes any capital gains tax, and the estate tax as well. So Mr. Soros can donate appreciated stock that Open Society Foundations can liquidate without the government ever taking a cut.

Congress should stop ignoring this tax-avoidance scheme. The super rich have already poured hundreds of billions into private foundations, but the figure could soon be in the trillions. Mark Zuckerberg has pledged to give away 99% of his Facebook shares, currently estimated to be worth somewhere around $70 billion, and much of it will go to a foundation his family controls. Bill Gates and Warren Buffett have each put roughly $30 billion tax-free into the Bill and Melinda Gates Foundation. This has left the foundation so flush that it spent $500 million on a 12-acre, 900,000-square-foot office complex in Seattle for its 1,500 employees. This is philanthropy?

I don’t question these billionaires’ right to do with their money as they wish. I’m simply arguing that Congress shouldn’t let the rich and politically powerful use private foundations to escape taxation. This loophole is one reason for an anomaly in our otherwise progressive tax code: The top 1% of earners pay an effective tax rate of 23%, but the top 0.001% pay only 18%.

[Jeff Lebowski]

It's not just the republicans who are in the pockets of the rich.

This excellent article from the WSJ explains how the super rich avoid taxes, especially estate taxes. This is why I'm opposed to the estate tax: Unless you are so rich that you can dump most of your wealth into a tax-free entity, you get dinged. Estate taxes thus hit the new money, and family money that has been managed for the next generation but is nowhere near the level of the rich elite. These are the families whose wealth is tied up in a working small business, and who are hurt the most by estate taxes, all while the uber-rich that people are trying to get to with estate tax laws skate away untouched.

Some notable excerpts.

Sounds like a great argument to close some loopholes, not eliminate the tax.

[cowboy]

Sounds like a great argument to close some loopholes, not eliminate the tax.

I guess that depends on your intent. If you are just looking at revenue, and don't want kids to be able to live the easy life as a result of the work of their parents, you are right. If you want to provide people with further incentive to be productive and grow the economy, I think eliminating it entirely makes sense. If you recognize that the estate tax is relatively insignificant as a revenue source, but want to stick it to the rich kids, then you raise the allowable limit to $20 million in 2017 dollars and close loopholes. Even though the foundations are created partially or completely for tax purposes, I would bet that they create more benefit for the buck than any government agency tasked with the same purpose, so I don't know that closing loopholes is an effective move, either. That's why I come back around to eliminating the estate tax altogether, but closing some of the loopholes that provide stepped up basis, etc., while keeping the basic non-profit foundation incentive in place. I do think that none of the sheltered money should be used for political purposes or lobbying for causes, even though that would probably have negative (to me) unintended consequences.

[Moliere]

Embedded Tweet

I only skimmed this article, but the graphs and analysis was very interesting. Figured some here would also like it.


Sent from my iPhone using Tapatalk

[BlueK]

Embedded Tweet

I only skimmed this article, but the graphs and analysis was very interesting. Figured some here would also like it.


Sent from my iPhone using Tapatalk

It's extremely frustrating that a tax bill that would explode the deficit beyond its already obscene level would still make this many more middle class Americans pay thousands of dollars more in taxes. This is the most idiotic thing the GOP has ever tried to do on taxes. Even if only 40% of middle America has to pay more, that's more than enough angry voters to vote people out at the ballot box. I don't get it.

[Uncle Ted]

It's extremely frustrating that a tax bill that would explode the deficit beyond its already obscene level would still make this many more middle class Americans pay thousands of dollars more in taxes. This is the most idiotic thing the GOP has ever tried to do on taxes. Even if only 40% of middle America has to pay more, that's more than enough angry voters to vote people out at the ballot box. I don't get it.

Yeah, the government should be raising the corporate tax rate to 75%+ to lower the deficit instead! All those stink'n corporations have all the money. They need to pay up!

Consider yourselves warned you evil corporations!

[BlueK]

Yeah, the government should be raising the corporate tax rate to 75%+ to lower the deficit instead! All those stink'n corporations have all the money. They need to pay up!

Consider yourselves warned you evil corporations!

I didn't say raise the corporate rate. But I don't want my taxes which are already ridiculously high to go up even more.

[Uncle Ted]

I didn't say raise the corporate rate. But I don't want my taxes which are already ridiculously high to go up even more.

What? You think all those wars are going to pay for themselves? I don't want my taxes raised either that is why we need to raise the corporate tax rate to 75%+. Of course, those corporate talking heads are saying that lowering the corporate rate is going to magically generate tax revenue out of thin air.

[Moliere]

I didn't say raise the corporate rate. But I don't want my taxes which are already ridiculously high to go up even more.

So who’s taxes should be raised?


Sent from my iPhone using Tapatalk

[cowboy]

It's extremely frustrating that a tax bill that would explode the deficit beyond its already obscene level would still make this many more middle class Americans pay thousands of dollars more in taxes. This is the most idiotic thing the GOP has ever tried to do on taxes. Even if only 40% of middle America has to pay more, that's more than enough angry voters to vote people out at the ballot box. I don't get it.

Two things: First, tax rates have very little correlation to tax reciepts, and the idea that this will affect the deficit is at least questionable, and probably false. The CBO has an incredibly screwed up scoring system that is skewed toward Keynsian policies, and this bill is a good example. I think it's an awful bill, don't get me wrong, but I don't think it will affect the deficit in the long run.

Second: Since nearly half of all workers pay nearly zero in income taxes, it is probably a good thing that more people are paying taxes and have some skin in the game. As an offset, however, tax law needs to be structured to provide incentive for people to invest, which this law doesn't do. Unfortunately, this law does the opposite, and gives incentive for corporations to pay less in dividends, and for investors to keep money in mediocre investments over higher earning investments. I really don't like the bill as I understand it.

[BlueK]

Two things: First, tax rates have very little correlation to tax reciepts, and the idea that this will affect the deficit is at least questionable, and probably false. The CBO has an incredibly screwed up scoring system that is skewed toward Keynsian policies, and this bill is a good example. I think it's an awful bill, don't get me wrong, but I don't think it will affect the deficit in the long run.

Second: Since nearly half of all workers pay nearly zero in income taxes, it is probably a good thing that more people are paying taxes and have some skin in the game. As an offset, however, tax law needs to be structured to provide incentive for people to invest, which this law doesn't do. Unfortunately, this law does the opposite, and gives incentive for corporations to pay less in dividends, and for investors to keep money in mediocre investments over higher earning investments. I really don't like the bill as I understand it.

From what I've been reading, I'm pretty much resigned to the idea that mine are going up even though my household of four already pays more than $20,000 a year in federal taxes. That doesn't exactly sound to me like nearly zero.

[BlueK]

So who’s taxes should be raised?


Sent from my iPhone using Tapatalk

Even if someone's taxes have to be raised, the structure of this bill is absurd.

[Moliere]

Even if someone's taxes have to be raised, the structure of this bill is absurd.

The current tax structure is absurd. Any proposed tax structure would probably be absurd. The only thing that could make it less absurd is if the two parties could work together to pass something permanent so the didn’t have to use reconciliation. But that won’t ever happen so we are stuck in this never ending cycle of absurd tax “reform”


Sent from my iPhone using Tapatalk

[BlueK]

The current tax structure is absurd. Any proposed tax structure would probably be absurd. The only thing that could make it less absurd is if the two parties could work together to pass something permanent so the didn’t have to use reconciliation. But that won’t ever happen so we are stuck in this never ending cycle of absurd tax “reform”


Sent from my iPhone using Tapatalk

It's also frustrating that the current Congress seems to think working with the other side is evil, and that everything should be passed ONLY with same-party votes or it's of the devil.

[Moliere]

It's also frustrating that the current Congress seems to think working with the other side is evil, and that everything should be passed ONLY with same-party votes or it's of the devil.

Definitely frustrating.

At some point on this board (a number of years ago) I posted my tax plan. I need to go back and find it and see if I still agree with myself. IIRC, my tax plan was not only fair but it would also cure cancer.


Sent from my iPhone using Tapatalk