How much Tax is too much?

[KCCubano]

1 hour ago, teamrandr said:

We all agree they need our tax money.   We are unable to come to an agreement on what it should be spent on.

You hit the nail on the head!

[PuroDiario]

20 hours ago, BrightonCorgi said:

The government does go for the middle class as their main source of income. Messing with billionaires are smoke & mirrors, political theater. 

Sounds great to "take from the rich", but the rich are their source of election finance and anything underhanded that politicians do. 

In the US at least, a fair amount of Congressperson's time is spent calling donors for contributions. The more you can bring in for your party, the more the party gives you for your re-election campaign.

Yes, but the rich class, which comes in many flavors and scales and subject the generalization I’m about to make, employs individually through their holdings dozens to hundreds of thousands of people directly, and create further more indirect jobs and economic activity around it to many degrees of separation. So there is a flaw in the argument that the rich should pay. More so, capital compounds faster than labor that’s physics, and the rich class took another basic economic principle to heart “time preference” meaning they built a boat with all the risks, investment and deferral of gratification it implies to go fish with nets and by many instead of go with the rod by the shore. Why should that be punished or their children should be paying for that. Same logic of you don’t chose where you are born applies not only to unfavorable circumstances but also to favorable ones. Your point on Congresspersons and the political system I see eye to eye with you, but again points to the flawed system that gives birth to the excessive taxation and the mismanagement of the public budgets more than the evilness of “the rich”. I’ll quote Von Misses again, and say sorry for the pedantry:

“Nothing is more calculated to make a demagogue popular than a constantly reiterated demand for heavy taxes on the rich. Capital levies and high income taxes on the larger incomes are extraordinarily popular with the masses, who do not have to pay them.”

[Fireball]

For me - I have found that the more money I have made, the more ways I find to minimize what I pay in taxes. 

I find it interesting that here in the US, people always talk about the greatest times for the middle class being in the 1950s-1960s. Same time as some of the highest taxes on upper earners in the nations history. 

[Li Bai]

7 hours ago, PuroDiario said:

"Nothing is more calculated to make a demagogue popular than a constantly reiterated demand for heavy taxes on the rich. Capital levies and high income taxes on the larger incomes are extraordinarily popular with the masses, who do not have to pay them.”

Of course that's right, I don't believe in heavy taxes on the rich, I would even agree with a lower tax rate as it would mean a lot of money anyway. 

But them avoiding paying their fair share is unacceptable. Now I don't think we would all agree on what that "fair share" part is.

[BettyHumpder]

Some pretty loose interpretations of the American revolution in this thread. Yeeesh. It had less to do with taxes, in principle, than it did with colonists having no say in the laws and economic policies in the colonies. The vast majority did not want war and revolution. They wanted to be treated as equals.

The anti-tax movement in America, as we know it today, is not centuries old. It's decades old. I would recommend for further reading: The Permanent Tax Revolt

The long and short of it is that people in the 1970s began a widespread, grassroots movement to protest their property taxes. During the great depression and the years following, many jurisdictions limited or exempted properties from taxes because of economic hardship or preferred class (war veterans, especially). Eventually politicians realized that "I'm going to cut your taxes" was a cheat code to get people to vote for them. So they grabbed onto that and held on for dear life for the last 40 years.

How much is too much tax? Hell if I know. I pay my bill and move on with my life. If I see a problem with services that I rely on or observe, I send an email to my city councillor and let them know how I feel. Then I vote. Not much else to be done and whining about, it doesn't help anyone.

[Nevrknow]

14 hours ago, Chibearsv said:

Or the care that should be taken before spending it.  Those of us in business realize how precious our capital is and we take great care on creating efficiencies to utilize it effectively.  Otherwise, we're just pissing it away.

Like this? 😂

https://www.realclearpolicy.com/articles/2021/09/30/1_million_study_by_university_of_kentucky_japanese_quail_did_coke_had_risky_sex_796060.html#!

[VivaLosFatman]

17 hours ago, Chibearsv said:

My issue with this entire subject is the ridiculous inefficiencies and corruption involved in government management of tax allocation.  If government was rated similar to charities, based on percentage of revenue dollars that reach entitlement targets, what would that number be?  For charities, I pass if less than 80% of my donation reaches the target.  I'd guess government entitlement money is closer to 25% or maybe much less... if I wasn't forced to, I certainly wouldn't donate.  That's the worst part.  I agree there are people in need that should be helped, but there are too many snoots in the trough, even before the hungry get to eat.

 

That info is out in various ways. For instance, in the US, Social Security in 2023 was 1.4 trillion, with an estimated 1.1 trillion in primary beneficiary payments. That doesn't include child payments, SSSI, and a few others, and is already about 78,5%, near your charity mark of 80%. Government inefficiency comes from politics, the voters, and the politicians, not the direct management.

[Chibearsv]

5 hours ago, VivaLosFatman said:

That info is out in various ways. For instance, in the US, Social Security in 2023 was 1.4 trillion, with an estimated 1.1 trillion in primary beneficiary payments. That doesn't include child payments, SSSI, and a few others, and is already about 78,5%, near your charity mark of 80%. Government inefficiency comes from politics, the voters, and the politicians, not the direct management.

If those numbers are accurate for entitlements to beneficiaries, that's not nearly as bad as I imagined.  

[PuroDiario]

On 6/27/2024 at 11:28 AM, Fireball said:

For me - I have found that the more money I have made, the more ways I find to minimize what I pay in taxes. 

I find it interesting that here in the US, people always talk about the greatest times for the middle class being in the 1950s-1960s. Same time as some of the highest taxes on upper earners in the nations history. 

Making more money to minimize taxes, is a sufficient condition but not necessary. So while the point is valid is rather incomplete, there is plenty of tax sheltering / optimization opportunities for lower income earners in the US away from expensive advisors and financial engineering. The argument would be if the lower earners should have the right to access the guidance to effect it, and while there is merit in it, the information is widely accessible in a google search or even in the TurboTax FAQs. All said, is clearly a fact that higher resources and wider capital base allow for better planning. But I would challenge that nominal $s wise, high earners dont pay massive amount of taxes.

On the second point, I think taking the highest marginal tax rate as a guide for what the majority of americans paid in taxes is misguiding.

Just some background that is illustrative of the rhetoric vs historical data: https://taxfoundation.org/data/all/federal/taxes-on-the-rich-1950s-not-high/

Link to article and quote from study cited: "However, as Phil Gramm, Robert Ekelund, and John Early show in their book The Myth of American Inequality, “The top income tax in 1962 was 91 percent. After deductions and credits, only 447 tax filers out of 71 million paid any taxes at the top rate. The top 1 percent of income earners on average paid 16.1 percent of their income in federal and payroll taxes while the top 10 percent paid 14.4 percent and the bottom 50 percent paid 7.0 percent.”"

My summary is as follows:

Firstly, the highest tax bracket in the mid 50s kicked in at around $400k/year. In real income terms and adjusting for inflation we are talking of about $4mm for a single filer or $10mm/year income equivalent today for the 90% to kick in. (note my numbers are greater than some public information because i am adjusting to purchasing power/cost of living on top of inflation)

Secondly, middle class earners at ~24-28k would pay 40% taxes, astronomical indeed. But in today terms that is close to $300k, there was no medicare and SS payments were less than a 1/3 of where they stand today and capped in the first ~3k of income as opposed to today. Also many states had not rolled out state taxes, etc. And, defense expenditures were not even close to today.

Thirdly, the 50s into the early 60s saw several depression periods and GDP growth was average in historical terms. A key difference? Lower regulation that spurred development, private investment, and economic activity overall. And frankly, there was massively less oversight to the point that loopholes allowed for dime a dozen breaks and/or shell entities were used by the middle class to shelter earnings (corporate taxes were lower than individuals). There was also a lot shenanigans that 1986 regulation started to curtail.  Here is a study on how higher % rate decreases the # of tax payers: correlation not causation. But informative. https://www.nber.org/system/files/working_papers/w15012/w15012.pdf

Fourthly, US was rebuilding the Western World back then post war. Total dominance. Not like today, partially due to neoliberalism and the delocalization of supply chains in the endless pursuit of (profits? / lower consumer prices?) optimization. Partially because the world keeps spinning and evolves. And growing a lot from a small base feels a lot and growing little from a large base feels not a lot.

Fifthly, and my opinion overall, supply/demand dynamics ensure that overtime even if the initial incremental tax is burdened by the "rich" as long as there is elasticity on the supply side, ultimately this will be passed on to the customers of that service. So in other words, if you tax middle to high earners excessively, you will ultimately see that decreased profits on their end will be increased cost to you....

I pulled data from here: https://taxfoundation.org/data/all/federal/historical-income-tax-rates-brackets/ and few other sources, happy to share.

And here is the official IRS taxation resources: https://www.irs.gov/privacy-disclosure/the-truth-about-frivolous-tax-arguments-section-i-d-to-e

[Lunettesman]

Dubai works great with zero taxes. One might say they have oil. True. Venezuela has the most oil reserve in the world and it's a mess country.

I find it insane some people are taxed 50%, 60%, ECT. Countries need regularly audit to know where the money is going. They need to have strong rules for people spending other people s money with strong penalty for those who spend irresponsibly. 

I hate punishing success. And it's what we are seeing. 

[BrightonCorgi]

15 hours ago, Lunettesman said:

Dubai works great with zero taxes. One might say they have oil. True. Venezuela has the most oil reserve in the world and it's a mess country.

I find it insane some people are taxed 50%, 60%, ECT. Countries need regularly audit to know where the money is going. They need to have strong rules for people spending other people s money with strong penalty for those who spend irresponsibly. 

I hate punishing success. And it's what we are seeing. 

Marxists destroy everything they touch. The Emirates vs.Venezuela is a prime example.

[NSXCIGAR]

On 6/26/2024 at 9:27 AM, 99call said:

Approximately 30% of UK's children are growing up in poverty and that figure is growing.  These maybe better stats than a country like India, but that's hardly anything to be proud about. 

Is there any non-western country with better stats? 

And again, the poverty threshold keeps moving. And of course this doesn't take into account actual standards of living. Most people in "poverty" in the west have big-screen TVs, washers & dryers and top of the line smartphones.

As far as the reason for people remaining in the "lower class" I think you have several factors. Fatherless households and lack of values in success and education seem to be the number one predictor. Asians are the most economically successful group in the US for a reason. And many of them came here post-WW2 with nothing and couldn't even speak the language. 

And yes, the public education systems in the west are absolute garbage particularly in the urban areas. These kids can barely read or write and their parents are just happy to have them out of the house for 8 hours. The government has been in charge of education in the west for 100 years and it's gone directly into the toilet in a straight line. The teacher's unions are typically the most powerful interest groups in any country. Hasn't worked out too well. 

Another factor is minimum wage laws and onerous regulations for businesses. Many young people are locked out of the first jobs that their parents and grandparents were able to get easily. This is where young teenagers would learn basic job skills and get experience. It wasn't uncommon 30 or 40 years ago to see 4 or 5 kids stocking shelves or cleaning up at the local corner store or gas station. Now these stores can't afford to hire that many employees. So many of these kids have no choice but to go to college and get a worthless degree from a lousy school. 

And despite all that the west is still the place one is least likely to find poverty of any kind. 

[JohnnyO]

Isle of Man. Besides, your trips to Cuba will be shorter now that you have another passport. John

[Arabian]

On 7/2/2024 at 4:00 PM, Lunettesman said:

Dubai works great with zero taxes. One might say they have oil. True. Venezuela has the most oil reserve in the world and it's a mess country.

Yes and No, Dubai positioned itself as a commerce hub, import and export industry along with tourism...etc, they aren't oil rich or heavily reliant on oil like Abu Dhabi (which they came in rescue in 2015). It must be nice to have big daddy safety net while focusing on diversification. 

 

[99call]

12 hours ago, NSXCIGAR said:

lack of values in success and education seem to be the number one predictor.

I think we will have to agree to disagree, as a lot of what you have to say sounds borderline sociopathic to me and no doubt what I have to say also sounds deranged to you, which is fine. But neither of us are having any impact on each others outlook, as we just view the world completely differently.

[Chitmo]

This thread is turning into Terrance Howard on JRE; different topic, same denial! 😆 

[Lunettesman]

21 hours ago, Arabian said:

Yes and No, Dubai positioned itself as a commerce hub, import and export industry along with tourism...etc, they aren't oil rich or heavily reliant on oil like Abu Dhabi (which they came in rescue in 2015). It must be nice to have big daddy safety net while focusing on diversification.

Agreed. All their debts are own by Abu Dhabi. My example was just what people usually answers when you tell them Dubai has no tax.

[gillmiller]

No matter how much I pay, it always seems like too much—maybe it’s just my tendency to be a bit frugal. In the next couple of months, I plan to channel my thoughts about taxes into a comprehensive paper. I’m aiming to delve into this topic more deeply and with the support of https://academized.com/write-my-thesis, I hope to produce my first research on the subject. Their assistance will be invaluable in organizing my ideas and crafting a well-structured and insightful analysis. It’s an exciting challenge to tackle, and I’m looking forward to seeing where this research journey takes me.

[Namisgr11]

Those who argue that the wealthiest shouldn't help subsidize through a higher tax burden the society and nation that supported them to become the wealthiest don't seem to be considering how profoundly the disparity in wealth and wages between the richest and ordinary Americans has exploded over the past twenty plus years. For instance, the wealthiest 1% now control nearly 20 times as many dollars as the bottom 50%, and the magnitude of the gap is still growing exponentially.

Without the productivity and consumerism of the bottom 50% or the bottom 90%, the wealthiest Americans would be in no position to accrue such obscene wealth. 

[El Presidente]

1 hour ago, Namisgr11 said:

 that the wealthiest shouldn't help subsidize through a higher tax burden the society and nation that supported them

It is a two way street.

You would need to add taxation paid by top 5% (as a % of total tax pool), + corporate tax (federal + state) to present a fair synopsis as to who is actually subsidising who (if anyone). 

 

 

[Namisgr11]

9 hours ago, El Presidente said:

It is a two way street.

You would need to add taxation paid by top 5% (as a % of total tax pool), + corporate tax (federal + state) to present a fair synopsis as to who is actually subsidising who (if anyone). 

It's simpler than that. Tesla ownership has made Elon Musk one of the two or three richest people in the world (or whatever his standing may be on a given day). The company germinated and survived in its early days from US government subsidies, taxpayer dollars that all working Americans contributed. There's still to this day a question about how much Tesla can earn in profit margin once US buyers for their vehicles no longer receive any of the rebate enacted to help stimulate and grow the EV business in the country and speed the reduction in its dependence on fossil fuels.

While every taxpaying American was supporting Musk's company, there's one person alone who is poised to receive a $56 billion pay package on top of the whatever billions of dollars worth of Tesla he already owns, at a share price built off the backs of taxpaying working Americans who helped subsidize it.

[El Presidente]

8 hours ago, Namisgr11 said:

It's simpler than that. Tesla ownership has made Elon Musk one of the two or three richest people in the world

How many people does he employ both directly and indirectly? (Associated suppliers/industries.)

How much tax do those people contribute to treasury? 

Unless I am mistaken, his shareholders just reapproved his bonus. 

The way I see it, US govt via subsidies invested in Musk and it paid off in spades for the Govt/taxpayer. It continues to pay off and will do so for years to come. 

 

[Namisgr11]

12 hours ago, El Presidente said:

How many people does he employ both directly and indirectly? (Associated suppliers/industries.)

How much tax do those people contribute to treasury? 

Unless I am mistaken, his shareholders just reapproved his bonus. 

The way I see it, US govt via subsidies invested in Musk and it paid off in spades for the Govt/taxpayer. It continues to pay off and will do so for years to come. 

 

Doesn't negate that Musk pays proportionately less in taxes than those who are directly employed by Tesla or indirectly so from the company business.  It's not just the taxpayers and the customers but all of the aforementioned on whose backs Musk climbed to the tippy top of the wealth and compensation ladders.

As to his bonus, it wasn't approved by an independent board compensation committee (one of his former lawyers was committee chair, his brother serves on the board, etc) and so may well be found in violation of securities law.  The insular nature of how top executive compensation is calculated and awarded is an even broader and more insidious problem.

Finally, the exponential expansion of the wealth disparity between the top 1% and the bottom 90% of Americans cannot continue consistent with democracy.  The strains generated from the quickly widening gaps between the haves and the have less and have nots will only continue to worsen, and in so doing damage our society.  

[JoeyBones777]

2 hours ago, Namisgr11 said:

Finally, the exponential expansion of the wealth disparity between the top 1% and the bottom 90% of Americans cannot continue consistent with democracy.  The strains generated from the quickly widening gaps between the haves and the have less and have nots will only continue to worsen, and in so doing damage our society.  

Is this a solvable problem given the pareto principle? It seems a metaphysical reality or law. You are also ignoring the obvious and constant shift in those included in the top 1% and bottom 90%. Economic mobility still exists. You never heard of Elon Musk 15 years ago. Most billionaires and multi-millionaires have gone bankrupt numerous times. Most millionaires made their money through productivity, it wasn't given to them through inheritance.

Inflation(the silent tax) seems a bigger driver of the wealth disparity than anything else, given that most wealth is locked up in appreciable assets that greatly out pace inflation. Those in the 90% should invest their big screen TV money or newest iPhone money or alcohol money or new car money... I know I wish I had. A wrong I am working hard to right.

[El Presidente]

 

 

5 hours ago, Namisgr11 said:

As to his bonus, it wasn't approved by an independent board compensation committee (one of his former lawyers was committee chair, his brother serves on the board, etc) and so may well be found in violation of securities law.  

14th June 2024

MONEYWATCH Tesla shareholders approve $46 billion pay package for CEO Elon Musk

Other side of the coin. Musk was guilty of meeting all requirements under the deal, ie, increasing company value by over 10X during the period of the contract.  He was obstructed by a Delaware bureaucrat judge (running political interference?) and so the package was sent to the shareholder vote again this June. 

 "Tesla disclosed that shareholders voted for Musk's pay package by 1,760,780,650 to 528,908,419, with about 77% of all votes in favor"

It is still possible (incredibly) that the Judge not recognize the result. 

5 hours ago, Namisgr11 said:

Doesn't negate that Musk pays proportionately less in taxes than those who are directly employed by Tesla or indirectly so from the company business.  It's not just the taxpayers and the customers but all of the aforementioned on whose backs Musk climbed to the tippy top of the wealth and compensation ladders.

I assume that is because Musk (and everyone else) has accessed the capitalist system. 

If people want a flat tax, vote for it. It has worked wonders for Romania, Hungary, Georgia, Lithuania. 

5 hours ago, Namisgr11 said:

Finally, the exponential expansion of the wealth disparity between the top 1% and the bottom 90% of Americans cannot continue consistent with democracy.  The strains generated from the quickly widening gaps between the haves and the have less and have nots will only continue to worsen, and in so doing damage our society.  

I don't disagree and it is a global issue in Western democracies. However, there is an anti capitalist cult well and truly underway with an apparent catch cry of "Take the risk, build something from nothing,  work your arse off..... but we reserve the right to determine your reward"

There needs to be balance and much of that needs to be targetted at the remuneration of executive(corporate) and bureaucrat buffoons. Founders? not so much. We need founders in our system be they painters, restauranters or EV/rocket makers. 

I am no Musk fanboy who can be rightfully challenged on many fronts. Being a successful capitalist in a capitalist system shouln't be one. If the system needs to be changed, let someone lead the change at the vote.