More on Tax Cuts

[elNastioBananaHando]

Thoughts? Waits for people like Merritt and Zcwilly to say something.

Whether it makes sense to tax the output of expertise and hard work at more than twice the rate of investment returns is debatable. But, for better or worse, that's the way it is.

Except, that is, when it isn't. Owners of companies, ranging from small real estate partnerships to multibillion dollar hedge funds and private equity firms, have devised a way to erase this distinction. Their managers pay 15% on their income by dressing it up as investment returns — even though they bear no investment risk or put none of their own money in play.

Nice work if you can get it. But in this case it constitutes a frontal assault on fairness. Why should such people pay only 15% when senior corporate executives pay 35% for making many of the same types of business decisions? More to the point, it's hard to see the logic (or the justice) in a school teacher or bus driver with taxable annual family income as low as $63,700 paying 25% when someone like Blackstone Group CEO Stephen Schwarzman can make nearly $700 million on the day his firm went public and pay at most 15%.

Congress is rightfully re-examining the issue. Reps. Sandy Levin, D-Mich., and Charles Rangel, D-N.Y., have a proposal. In the Senate, Max Baucus, D-Mont., and Chuck Grassley, R-Iowa, have a useful, if narrower, bill.

The practice they are seeking to ban or limit is a transparent ruse. Here's how it works using the example of a private equity firm: The partners raise capital from banks, pension funds and other large investors, which they use to buy companies and resell them. Their investors give them some direct compensation, which is taxable as income.

But most of the compensation comes in the form of an investment vehicle known as "carried interest," which gives them a right to a portion of the profits they generate (typically 20%). That portion of the profit is taxed 15%, just as if they supplied 20% of the capital at the outset.

It's a creative practice, but with a result that says the rich get to write their own rules. That's not a new problem in the American tax system, but it is nevertheless repulsive. Income is income, or so you'd think.

Supporters of this scam argue that these money managers actually are risking their own investments. It's just not money, in their case, but their "sweat equity," their time, their expertise. But the same could be said of the lawyer who takes a case on a contingency fee, the movie actor who negotiates a cut of the box office receipts, the financier who chooses to work for a firm known for paying enormous bonuses during good years. In most, if not all, of such cases, these people pay income taxes.

And so should partners in these exotic investment firms. More so because the tax they avoid paying is money that has to be made up by people of lesser means — or borrowed from later generations by adding to the budget deficit.

These schemes add insult to injury at a time of increasing wealth concentration. It is time to end them.

[PETA]

the more one makes the more tax one pays - pure and simple - this article looks like it addresses a form of compensation. One thing it doesn't mention is that if compensation is a result of investment returns it has already been taxed at the corporate level... and then will be again at the individual level. So, the author seems pissed that sufficient $$ wasn't taken from the tax payer and ignoring the fact that the gov't got two bites at that apple.

the notion that the rich escape taxes and place the burden on everyone else is bullshit...


http://www.ntu.org/main/page.php?PageID=6

Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid



Top 1% $328,049 36.89

Top 5% $137,056 57.13

Top 10% $99,112 68.19

Top 25% $60,041 84.86

Top 50% $30,122 96.70

Bottom 50% <$30,122 3.30



http://www.taxfoundation.org/blog/show/341.html
http://www.allegromedia.com/sugi/taxes/
http://usgovinfo.about.com/od/income...hopaysmost.htm

[elNastioBananaHando]

I want my fucking money Xian! Thats all I'm saying!

[PETA]

Originally Posted by House Bitch

I want my fucking money Xian! Thats all I'm saying!

what do you mean? you want the gov't to take less of it?

then don't vote for a fucking democrat

[jaesun]

I always thought that tax cuts for owners of companies has been proven to give them extra money to hire more people (lowering unemployment rates) and put more back into the economy (company owners spend a lot which contributes to the greater economy). I might be wrong but it makes sense to me. Tax cuts for the upper percentile may seem like the little guy is being F’d over but it does help the economy in the end.

Xian or someone else that might know more about the subject and might be able to clarify or discredit this thought so I’m willing to learn. Someone post some more numbers or proof to help me out here.

…AND GO!!

[PETA]

Originally Posted by jaesun

I always thought that tax cuts for owners of companies has been proven to give them extra money to hire more people (lowering unemployment rates) and put more back into the economy (company owners spend a lot which contributes to the greater economy). I might be wrong but it makes sense to me. Tax cuts for the upper percentile may seem like the little guy is being F’d over but it does help the economy in the end.

Xian or someone else that might know more about the subject and might be able to clarify or discredit this thought so I’m willing to learn. Someone post some more numbers or proof to help me out here.

…AND GO!!

"Voodoo economics" as GHWB called it or supply side economics kinda won the tax debate. Lots of people here will argue Nuh-uh... but the fact is that when those people who disaparage supply side economics are asked about tax rates they invariably disavow any of the rates that opponenets of supply side economics previously defended. Which means those former oppoenents are now within the fold of supply side - they just don't know it or admit it and are instead of arguing tax policy they're simply arguing now where that lower tax rate should be set.

take a look at the top tax rates from 1913-2003

http://www.truthandpolitics.org/top-rates.php

it'll prolly shock many of you but at one point the top rate was 91%

Since Reagan we've grabbed a bit of sanity and oddly enough GHWB who slammed the policy actually had the lowest top rate ever.

So anyway - unless some one is advocating top tax rates over 50% then they are a supply sider in denial

Our economy continues to grow and more money in people's hands to spend (whether reinvested in infrastrucure, businesses or a shiney new car) helps keep the economy flowing.

Supply siders point out the growing the economy through lower taxation provides a larger tax base which results in greater tax revenue.

blah blah blah

[Keith P]

Originally Posted by xian

what do you mean? you want the gov't to take less of it?

then don't vote for a fucking democrat

Or vote for a republican that has no concept of fiscal spending, spends billions of your dollars in an ill prepared war, and gives the populace measly tax cuts while driving down the value of the dollar.

Let me show you what conversion rates look like:

http://www.x-rates.com/

[zcwilly]

Life ain't fair.

[zcwilly]

Originally Posted by Keith P

Or vote for a republican that has no concept of fiscal spending, spends billions of your dollars in an ill prepared war, and gives the populace measly tax cuts while driving down the value of the dollar.

Let me show you what conversion rates look like:

http://www.x-rates.com/

Or you can vote for a Democrat who thinks they know how to spend Americans' money better than we do, asks the world for permission to defend ourselves, and bring the world's largest economy to a grinding halt because investors run overseas with their tails between their legs to get away from the drastic redistribution of wealth, driving unemployment rates through the roof. What do you think that is going to do to the value of the dollar?

[PETA]

Originally Posted by Keith P

Or vote for a republican that has no concept of fiscal spending, spends billions of your dollars in an ill prepared war, and gives the populace measly tax cuts while driving down the value of the dollar.

Let me show you what conversion rates look like:

http://www.x-rates.com/

There is every reason (and room) to be very pissed at the Republicans for their irresponsible spending and still be pissed at the Dems for raising taxes.

You're conflating issues Keith.

Those tax cuts are anything but measely to people who are earning in their career years. Students have a very different perspective from parents paying mortgages, student loans, car payments, saving for the kids college etc. You have any of those bills coming in your mailbox every month?

And... the conversaion rate effects balance of trade issues but that's not pegged to income tax rates. Nor does the exchange rate effect, greatly, the purchasing power of americans... unless you're here to tell me that you paying a lot more for goods today than you did yesterday.

[PETA]

Originally Posted by Edwin Watson

well, lets be a bit more fair than that. your statements do not really reflect the reality of the current situation.

Under this Republican President...

1. Trade Deficits are worse than they have ever been

2. The national debt is higher than it has ever been

3. We are rapidly moving into the SECOND economic slump of his term (to be fair, the first was not necessarily his fault.)

4. International investment in the US is down and going down fast. Proof of this can be seen in the international exchange rates posted earlier. Investments are moving to the safer and more traditional spots like the British Pound and the European Market (Euro). Translation: Investors are not only running, but are hauling ass right now.


Under the previous Democratic President...

1. Trade deficits were shrinking
2. Nation Debt was down
3. The economy was motoring right along and doing well.
4. International investment in the US was HUGE and the dollar was strong

The Clinton economy was a sight to behold.

I don't think increasing income tax rates will lower the trade deficit, lower the national debt, increase foreign investment etc. (Not suggesting you were saying that) Clinton's ratification of supply side economics is in part responsible for that boom but the fact is that the 90s floated on a world oil glut - I could run our economy when gas is $.90 per gallon. Clinton didn't create the glut nor did American economic or tax policies.

Originally Posted by Edwin Watson

Now, to address the taxation issue...

The tax system has always been designed to allow business owners work around. The fact is that small business is THE largest sector of the economy and THE largest employment sector of the economy and THE largest contributer to the overall tax base.

One of the ways this country promotes small business is the huge amount of tax breaks available to the small business owners. This feature of the tax code, in my opinion, is essential to fostering the growth of the most important sector of the economy.

Are there gonna be a few that take advantage of the system. Yes. Is it unfair? Maybe. Don't forget that alot of these "self-employed" people pay taxes twice, both coporate and personal.

Does it balance out? i think so.

If you factor in the overall contribution to the economy and the larger tax base... absolutely.

Could we do better? yes, but we could always do better, right? and that's kinda the point of having a democracy, right?

The fact is that the rich pay most of the taxes in this country and that business owners are the largest employers in this country. 1 + 1 = 2.

I'd still like to see a consumption tax plan offered... the proposal I heard was everyone would get a check for $X to offset the poorer Americans purchases of necessities (I heard proposals of X at $20k) while the remainder would have a defacto progressive tax based on spending.


btw - big businesses pay shitloads too - point this out only because I find the number so huge

While they were recording record profits last year, they were also writing checks to Uncle Sam to the tune of $100.7 billion -- two and a half times what they made in net profit.

http://www.taxfoundation.org/blog/show/2195.html

[Keith P]

Originally Posted by xian

Those tax cuts are anything but measely to people who are earning in their career years. Students have a very different perspective from parents paying mortgages, student loans, car payments, saving for the kids college etc. You have any of those bills coming in your mailbox every month?

My father laughed when he got his check after the tax cuts. I assure you he makes enough $ to join the country club.

[PETA]

Originally Posted by Keith P

My father laughed when he got his check after the tax cuts. I assure you he makes enough $ to join the country club.

My wife and I didn't. Glad your father's well enough heeled that he doesn't need them. Perhaps he can pick up our tax increase with his laughable measly cut?

And... since when did your father's reaction become a reasonable standard of the value of the tax cuts to those who benefitted? He may be able to guffaw at them but there are many many people who were grateful for the extra dollars.

[Keith P]

Originally Posted by xian

My wife and I didn't. Glad your father's well enough heeled that he doesn't need them. Perhaps he can pick up our tax increase with his laughable measly cut?

And... since when did your father's reaction become a reasonable standard of the value of the tax cuts to those who benefitted? He may be able to guffaw at them but there are many many people who were grateful for the extra dollars.

I didn't say it did and that's fantastic but do you really think it's benefitted us enough to say anything about the state of the economy?

[PETA]

Originally Posted by Keith P

I didn't say it did and that's fantastic but do you really think it's benefitted us enough to say anything about the state of the economy?

Yes, I do think putting those dollars back into the hands of the people helped the economy.