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Thread: Should The Rich Pay More Taxes?

  1. #71
    Senior Member luvmylabs23139's Avatar
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    Quote Originally Posted by hotel4dogs View Post
    yeah, me too...unfortunately, it was in another country that I saw it. That in itself says something.
    Bummer! It could be taken 2 ways. One would not even be highly political.
    Might have been one I wouldn't get crap for with the liberals at the OB club.
    Hihope Hiland Heathen of Perth CD, RE, CGC, TDI

  2. #72
    Senior Member YardleyLabs's Avatar
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    Quote Originally Posted by Granddaddy View Post
    the federal government has two constitutional mandates, 1) to provide for a common defense & 2) to regulate interstate commerce.
    The purpose of the Constitution, and therefore the Federal government, is sated succintly in the preamble as follows: "...in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity.." These are repeated throughout the Constitution, where promoting the general welfare is normally on equal footing with defense and ahead of regulating commerce.

    Quote Originally Posted by Granddaddy View Post
    Also above, you included capital gains & inheritance as categories of income while neither is income.
    If there is no income, there are no taxes. If you are gaining money that you didn't have before, it is income. I'm not sure where your definitions are coming from, but it is not economics or the dictionary. If you buy something for $100 and sell it for $100, there is a revenue, but no income. If I give you something and you sell it for $100, there is income of $100.

    Quote Originally Posted by Granddaddy View Post
    Then while implying the wealthiest 1-2% don't pay enough tax, you then say eliminate corporate taxes. Since the wealthiest persons own & direct the wealthiest multi-national corporations this would provide them a means of no income tax consequences at any level in the US???
    Many people benefit from corporate profits when they are distributed in the form of dividends and capital gains to shareholders (who may or may not be wealthy). Investment is fed from undistributed profits. Eliminating corporate taxes will stimulate increased dividends, higher stock prices, and greater investment. More importantly, however, it will eliinate a major incentive causing corporations to move businesses to other countries to obtain more favorable tax treatment.

    Quote Originally Posted by Granddaddy View Post
    I'm assuming instead of companies paying for employee health insurance, you'd have everyone on the government health rationing system that will surely result.
    Almost no individuals pay for their health insurance now. Access to care is rationed by insurance companies, employers, and governments. However, the greatest rationing of all is in denial of non-critical services to the 34 million people without insurance. I am not crazy about any of these approaches. However, from a purely business perspective, having care primarily financed by employers as it is now has very negative consequences as our businesses try to compete globally since no other advanced country in the world imposes this cost on business. I believe that employer payment of health insurance costs is one of the biggest job killers in our economy. Paying those same costs through general taxes would not have as negative an effect.

    Quote Originally Posted by Granddaddy View Post
    Demand for goods and services come from people being gainfully employed. Therefore, jobs create demand for goods and services. The question is who creates these jobs, it's small businesses in the US (small business employs over 70% of all employed in the US). It's time our government understands this & provides small businesses with lower taxes (meaning lower income taxes on small business owners who are currently labeled as the rich - making over $200K per yr). Instead our government bales out large inefficient businesses, provides these large inefficient businesses with tax breaks all the while advocating higher taxes on the small business owner through raising his income tax rate.
    I agree with the first part of your statement -- demand for goods depends on people being gainfully employed. One of the cause of the economic stagnation in the US is that the income of the majority of Americans hes not been growing at a rate consistent with the economy as a whole leaving less income to fuel consumption. This has contributed to a migration of capital and jobs to other countries where consumption income is growing faster.

    The elimination of corporate taxes does not benefit large businesses at the expense of small businesses. Instead, it places all businesses on an equal footing with respect to taxes. Schedule C corporations use sub-s and LLC structures to avoid paying corporate taxes on top of personal income taxes. However, this also eliminates their ability to shield retained earnings from taxation and thereby reduces the funds they have available for reinvestment. By eliminating corporate taxes, more of the companies will elect structures that make it easier to accumulate investment savings.

  3. #73
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    The preamble to the US Constitution is not unlike the preamble to any contract, it has no legal power. Rather it is the actual articles of the document that have legal standing, where it is commonly recognized that wording is provided for the common defense, regulating interstate commerce & provide a legal justice system to facilitate those intents. The establishment of same is understood to "insure domestic tranquility", "promote the general welfare", "secure the blessing of liberty", etc, not provide a mandate for government social programs & intrusion into the lives of its citizens as is practice today.

    As for income, even the IRS (based upon congressional laws) doesn't consider capital gains & inheritance as ordinary income (as you infer) and capital gains are taxed at a different rate (either 15% or 5% based upon ordinary income level), inheritance are not even reportable as part of the 1040 return. It has long been thought that keeping capital gains taxes low provided an incentive for capital investment, to fund development & compensate for inflation & corporate taxes - so capital gains are clearly not considered the same as ordinary income. In the case of the inheritance tax, it is so far from any inclusion as income that it is not filed as part of a 1040 income tax return, rather on a form 706. Further there was no inheritance taxes in 2010, there is now a progressive tax up to 35% of the inheritiance based upon the estate value. So no, there is no legal inclusion of an inheritance as a form of income (all income being reported on the form 1040).

    But, as is typical, arguments digress from the topic. The topic being that the vast majority of small businesses are organized as sole proprietorships, partnerships, LLCs or s-corps. These businesses have/represent the following:
    • Represent 99.7 percent of all employer firms.
    • Employ just over half of all private sector employees.
    • Have generated 64 percent of net new jobs over the past 15 years.
    • Create more than half of the nonfarm private gross domestic product (GDP).
    • Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).
    • Are 52 percent home-based and 2 percent franchises.
    • Made up 97.3 percent of all identified exporters and produced 30.2 percent of the known export value in FY 2007.
    • Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.
    Yet these small business owers have NO means under current IRS rules of protecting retained earning from taxation because ALL income flows for reporting purposes to the stockholder/owners and these stockholder owners are taxed as if they received the income (being included as someone with income over $200K or the top 1-2%).

    So please, either respond to this thread topic or go elsewhere to debate your other diversions and promotion of large business that shouldn't have its income taxed. But why not campaign against the bailout of large businesses too, since the government also seems to be in the business of propping-up & protecting inefficiency.
    Last edited by Granddaddy; 01-30-2011 at 03:32 PM.
    David Didier, GA

  4. #74
    Senior Member YardleyLabs's Avatar
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    Quote Originally Posted by Granddaddy View Post
    The preamble to the US Constitution is not unlike the preamble to any contract, it has no legal power. Rather it is the actual articles of the document that have legal standing, where it is commonly recognized that wording is provided for the common defense, regulating interstate commerce & provide a legal justice system to facilitate those intents. The establishment of same is understood to "insure domestic tranquility", "promote the general welfare", "secure the blessing of liberty", etc, not provide a mandate for government social programs & intrusion into the lives of its citizens as is practice today.
    Actually, section 8, defining the powers of Congress, states:

    "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States".
    I'd say it is pretty clear that providing for the general welfare was a core responsibility of the government from day 1.

    Quote Originally Posted by Granddaddy View Post
    As for income, even the IRS (based upon congressional laws) doesn't consider capital gains & inheritance as ordinary income (as you infer) and capital gains are taxed at a different rate (either 15% or 5% based upon ordinary income level), inheritance are not even reportable as part of the 1040 return. It has long been thought that keeping capital gains taxes low provided an incentive for capital investment, to fund development & compensate for inflation & corporate taxes - so capital gains are clearly not considered the same as ordinary income. In the case of the inheritance tax, it is so far from any inclusion as income that it is not filed as part of a 1040 income tax return, rather on a form 706. Further there was no inheritance taxes in 2010, there is now a progressive tax up to 35% of the inheritiance based upon the estate value. So no, there is no legal inclusion of an inheritance as a form of income (all income being reported on the form 1040).
    Thus, my point, that our tax laws give preferential treatment of some types of income by allowing it to be taxed at a lower rate than other types of income. That does not mean that those items are not income, as you stated, but that they may or may not be part of taxable income. The distinction made by the tax laws, however, is between "salaries and wages", "interest", "dividends", etc. All are part of income, even though they may be treated differently.

    Quote Originally Posted by Granddaddy View Post
    But, as is typical, arguments digress from the topic. The topic being that the vast majority of small businesses are organized as sole proprietorships, partnerships, LLCs or s-corps. These businesses have/represent the following:
    • Represent 99.7 percent of all employer firms.
    • Employ just over half of all private sector employees.
    • Have generated 64 percent of net new jobs over the past 15 years.
    • Create more than half of the nonfarm private gross domestic product (GDP).
    • Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).
    • Are 52 percent home-based and 2 percent franchises.
    • Made up 97.3 percent of all identified exporters and produced 30.2 percent of the known export value in FY 2007.
    • Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.
    Yet these small business owers have NO means under current IRS rules of protecting retained earning from taxation because ALL income flows for reporting purposes to the stockholder/owners and these stockholder owners are taxed as if they received the income (being included as someone with income over $200K or the top 1-2%).
    That is exactly the point I made in my last post. If you eliminate corporation taxes, as I recommended, there is no tax reason for small business owners to elect a business structure that treats all business revenue and expenses as items of personal income. By restructuring as normal corporations, which would require maintaining business and personal assets separately, they would be able to retain earnings within the company for future investment. Those funds would only become taxable as income when withdrawn from the company as income.

    Quote Originally Posted by Granddaddy View Post
    So please, either respond to this thread topic or go elsewhere to debate your other diversions and promotion of large business that shouldn't have its income taxed. But why not campaign against the bailout of large businesses too, since the government also seems to be in the business of propping-up & protecting inefficiency.
    And here I thought my responses were directly responding to your original post and all that followed. By the way, in your original post you noted that you were taxed each year based on total company distributions of $8-10 million among all partners even though your salary was only $150k. You go on to say that when the company was sold that you paid 45% capital gains (or income) tax on the profit, inferring that you were being double taxed. In fact, you would not have been double taxed. Any profits earned on which you were taxed at the time would have added to your investment base in the company to the extent that they were not paid out to you as an individual. Capital gains (or income) taxes would only have been payable on any excess of the sale price over your investment basis. Thus, you were only paying tax on the incremental portion of the sale price that represented new, and previously untaxed income. Been there and done that.

  5. #75
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    When a poor man gives something, that is a sacrifice indeed. When a rich man gives something, it hardly rises to the same level.
    Quote from David Baldacci.
    This is what he was all about!:
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  6. #76
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    Quote "Almost no individuals pay for their health insurance now. Access to care is rationed by insurance companies, employers, and governments. However, the greatest rationing of all is in denial of non-critical services to the 34 million people without insurance. I am not crazy about any of these approaches. However, from a purely business perspective, having care primarily financed by employers as it is now has very negative consequences as our businesses try to compete globally since no other advanced country in the world imposes this cost on business. I believe that employer payment of health insurance costs is one of the biggest job killers in our economy. Paying those same costs through general taxes would not have as negative an effect."

    My 13 years of management for Coors Brewery and 10 years of cost benefit date analyzed by the HR department of the university of Orgeon toataly supports your statement. Coors health insurance was self funded, self adminstered and self managed. The cost benefit of their Wellness process were: An employee with no health risks who used the wellness programs for every $1 spent by Coors the company got a return of $2.26; for every employee with health risks the retun was $8.08. The four factors measured were Health care cost, Productivity, absenteesim and turn over.
    Health care was the smallest cost benefit at that time. 1989 dollars.
    Last edited by sinner; 01-30-2011 at 04:47 PM. Reason: sp
    This is what he was all about!:
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    Lasting memories Vinny was 13+ years old!

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    Quote Originally Posted by YardleyLabs View Post
    Actually, section 8, defining the powers of Congress, states:

    "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States".
    I'd say it is pretty clear that providing for the general welfare was a core responsibility of the government from day 1.


    Thus, my point, that our tax laws give preferential treatment of some types of income by allowing it to be taxed at a lower rate than other types of income. That does not mean that those items are not income, as you stated, but that they may or may not be part of taxable income. The distinction made by the tax laws, however, is between "salaries and wages", "interest", "dividends", etc. All are part of income, even though they may be treated differently.


    That is exactly the point I made in my last post. If you eliminate corporation taxes, as I recommended, there is no tax reason for small business owners to elect a business structure that treats all business revenue and expenses as items of personal income. By restructuring as normal corporations, which would require maintaining business and personal assets separately, they would be able to retain earnings within the company for future investment. Those funds would only become taxable as income when withdrawn from the company as income.

    And here I thought my responses were directly responding to your original post and all that followed. By the way, in your original post you noted that you were taxed each year based on total company distributions of $8-10 million among all partners even though your salary was only $150k. You go on to say that when the company was sold that you paid 45% capital gains (or income) tax on the profit, inferring that you were being double taxed. In fact, you would not have been double taxed. Any profits earned on which you were taxed at the time would have added to your investment base in the company to the extent that they were not paid out to you as an individual. Capital gains (or income) taxes would only have been payable on any excess of the sale price over your investment basis. Thus, you were only paying tax on the incremental portion of the sale price that represented new, and previously untaxed income. Been there and done that.
    Wrong again in several respects. First, most small business already keep business records and reporting separate from personal data with their business interests reported on a K-1 form. 2nd, the vast majority of small businesses would have a significant IRS reporting burden to report as a c-corp that they couldn't afford. Next, why should small businesses that don't have the qualifications to or are financially unable to take advantage of current government incentives to large businesses under the current stimulus legislation (i.e., welfare to large business) be required to compete as if they are large corporations? Further small businesses have been virtually shutout from bank loans in the current business environment to finance growth, while large corps have been provided direct government assistence or guaranted loans.

    In reference to double taxation, I didn't infer it. Instead I stated we paid an effective rate of 39% of our income in the form of taxes whether it was invested in the company or not. Small business invested funds do not receive a dollar for dollar exclusion/protection from taxes . Assets are depreciated (used up) based upon an IRS schedule, therefore the basis increase is not equal to what is invested. There are both year to year income taxes and capital gains taxes levied against what has previous been taxed as income but has been retained to purchase assets that remain at the time of sale. Since income taxes have been paid upon the income invested, then captial gains taxes collected on the value of what remains (which was previous taxed), you may call it what you like but its effect is an oppressive level of taxation. And under current IRS rules, electing c-corp status is no less oppressive for most small businesses(actually more oppressive by approx 5% in most states), just a different formula, different elections which can't be changed without penalty etc.

    But you seem intent on looking at the trees rather than seeing the forest. Point being, small businesses, who employ most of the US, are today, were yesterday & will be for the forseeable future, adversely affected by their owner/stockholders being included in the top 1-2% (i.e., income over 200K) of incomes even though their reported income is primarily reinvested in the company. Such adverse effect is a direct deterrent to hiring employees in a growing small business.

    The bolded portion is the thesis statement, my company's actual experience the proof. All to say, if our government really wants to increase jobs, it should start where most jobs are created, with small businesses by eliminating K-1 taxation obligations for funds reinvested in growing small businesses. This would immediately translate to increased employment.

    Instead, the government protects failing large corporations. Elected government officials would rather continue to take large business political contributions, spend $billions to prop-up inefficiency & corruption, protect unions, etc than solve the jobs problem.
    David Didier, GA

  8. #78
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    Quote Originally Posted by Granddaddy View Post
    Wrong again in several respects. First, most small business already keep business records and reporting separate from personal data with their business interests reported on a K-1 form. 2nd, the vast majority of small businesses would have a significant IRS reporting burden to report as a c-corp that they couldn't afford. Next, why should small businesses that don't have the qualifications to or are financially unable to take advantage of current government incentives to large businesses under the current stimulus legislation (i.e., welfare to large business) be required to compete as if they are large corporations? Further small businesses have been virtually shutout from bank loans in the current business environment to finance growth, while large corps have been provided direct government assistence or guaranted loans.

    In reference to double taxation, I didn't infer it. Instead I stated we paid an effective rate of 39% of our income in the form of taxes whether it was invested in the company or not. Small business invested funds do not receive a dollar for dollar exclusion/protection from taxes . Assets are depreciated (used up) based upon an IRS schedule, therefore the basis increase is not equal to what is invested. There are both year to year income taxes and capital gains taxes levied against what has previous been taxed as income but has been retained to purchase assets that remain at the time of sale. Since income taxes have been paid upon the income invested, then captial gains taxes collected on the value of what remains (which was previous taxed), you may call it what you like but its effect is an oppressive level of taxation. And under current IRS rules, electing c-corp status is no less oppressive for most small businesses(actually more oppressive by approx 5% in most states), just a different formula, different elections which can't be changed without penalty etc.

    But you seem intent on looking at the trees rather than seeing the forest. Point being, small businesses, who employ most of the US, are today, were yesterday & will be for the forseeable future, adversely affected by their owner/stockholders being included in the top 1-2% (i.e., income over 200K) of incomes even though their reported income is primarily reinvested in the company. Such adverse effect is a direct deterrent to hiring employees in a growing small business.

    The bolded portion is the thesis statement, my company's actual experience the proof. All to say, if our government really wants to increase jobs, it should start where most jobs are created, with small businesses by eliminating K-1 taxation obligations for funds reinvested in growing small businesses. This would immediately translate to increased employment.

    Instead, the government protects failing large corporations. Elected government officials would rather continue to take large business political contributions, spend $billions to prop-up inefficiency & corruption, protect unions, etc than solve the jobs problem.
    I agree totaly with the last statement. The last supreme court decision did not support your position.
    The pannel to look into the last finanical colapse certain found both the banks, wall street and the Fed at fault.
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    Lasting memories Vinny was 13+ years old!

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    Sinner, if you & YardleyLabs want to to discuss health care or who's at fault in the last financial collapse, I've an opinion which is likely different but let's discuss those on another thread or two. Just state your thesis on that new thread & invite discussion.
    David Didier, GA

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    You knowledge on the tax is very broad but your basis is very clear. Nothing anyone presents or says will change that. Therefore I will not bother to read your posts (or listen to Rush)
    When a poor man gives something, that is a sacrifice indeed. When a rich man gives something, it hardly rises to the same level.
    This is what he was all about!:
    Vinny last hunting year
    53 pheasants in South Dakota 200 + ducks in Idaho
    Lasting memories Vinny was 13+ years old!

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