### Author Topic: Targeting the Wealthy: MMM Meets Politics  (Read 65613 times)

#### starguru

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #200 on: January 21, 2015, 03:03:50 PM »
Math for taxes/fees for people earning >\$500k from example (parents, married filing jointly, from actual prior return, but rounded for simplicity):

Gross wages - \$530k
Federal Tax - \$127k
State Tax - \$25k
SS + Medicare - \$22k
Real Estate - \$4k
Sales Tax (Approx, 7%) - \$15k

Total tax rate: 36%

This is using only common itemized deductions (mortgage, charity, state tax) & aggressive contributions to 401k. As others have pointed out, if more income came from investments, total tax rate would be lower.

So, at this point maybe not that much chance of a response, but I'm a little confused on the math.

SS & Medicare: SS is capped at \$7,254 for 2014. Assuming Medicare on \$500k (since you said some is investments, and presumably some is health insurance premiums, etc.), that'd be 0.0145*500,000+0.009*(500,000-200,000) = \$9,950. So, yeah, \$17,204 isn't a ton lower than \$22,000, but it's enough to drop your estimated total taxes to 35.5%.

\$15,000 in sales tax at 7% means over \$200,000 in spending subject to sales tax. WHAT IS THIS? How can anyone possibly spend that much when they already have a house? Vice taxes on cigarettes/alcohol? Are you somehow including fuel taxes that are included in your gas price?

The higher the income, the more the effective tax rate approaches the marginal tax rate.  So for significantly high incomes, we can say the effective tax rate is the marginal rate.  So the max federal rate is 39.6, the max state rate is 12.3, and the medicare tax is 3.8.  The sum of those 3 is ~54%.  That's before any property tax, sales tax, etc.  Any standard deductions at that point really have no way to significantly reduce that tax rate.

So you might say that this only applies for extremely high wage earners, i.e.  those making +\$10MM.  I'm sure there will be a "they can afford it" argument.

But, to my mind, the fact that anyone should be expected to pay >50% of their earnings to taxes is just ludicrous.  The "they can afford it" argument and appeals to "fair share" fall completely flat.  Repeating my argument from before, that "fair" to people really only means "not me", I propose to tax all savings over \$250k at .5% back to the first dollar, and savings over \$750k at .75% back to the first dollar.  By all reckoning of fair, people with that much money are richer than most americans, and certainly most everyone else in the world.  They can afford it, to help all those who havent managed to save anything at all.

#### dragoncar

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #201 on: January 21, 2015, 03:46:37 PM »
OK, this was really long but I'll just say that:

1) I don't make anywhere near \$500k
2) I've recently cut back hours at least in part due to the marginal tax rate (meaning I'd work more if taxes were lower.  Marriage penalty was high for me)
3) That's not necessarily a bad thing, and is probably good for my health
4) I can "afford" to be taxed at 70% or more because I'm a mustachian and don't spend much, but that's not a good reason to do so.

#### tomsang

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #202 on: January 21, 2015, 07:04:26 PM »
OK, this was really long but I'll just say that:

1) I don't make anywhere near \$500k
2) I've recently cut back hours at least in part due to the marginal tax rate (meaning I'd work more if taxes were lower.  Marriage penalty was high for me)
3) That's not necessarily a bad thing, and is probably good for my health
4) I can "afford" to be taxed at 70% or more because I'm a mustachian and don't spend much, but that's not a good reason to do so.

So you are saying the high marginal tax rates are a good thing. They convinced you to stop working providing you more time off and others a job. I make over the numbers that are thrown out and feel like the taxes are a bargain. My total tax rate is less than 30%, but I max out my 401k, deferred comp, and other deductions to minimize my taxes. If I was taxed under the tax structure under Reagan I would be paying \$80k to \$100k more in taxes.

#### chasesfish

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #203 on: January 21, 2015, 07:42:53 PM »
I believe in a fair tax rate/system.

Take total government expenditures and divide them by the adult population (over 18), then send each citizen a bill for the pro-rata share of expenditure.  If the amount is too high, then people can question the expenses and if they're necessary.

How's that for fair but radical?  :)

#### dragoncar

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #204 on: January 21, 2015, 09:17:57 PM »
OK, this was really long but I'll just say that:

1) I don't make anywhere near \$500k
2) I've recently cut back hours at least in part due to the marginal tax rate (meaning I'd work more if taxes were lower.  Marriage penalty was high for me)
3) That's not necessarily a bad thing, and is probably good for my health
4) I can "afford" to be taxed at 70% or more because I'm a mustachian and don't spend much, but that's not a good reason to do so.

So you are saying the high marginal tax rates are a good thing. They convinced you to stop working providing you more time off and others a job. I make over the numbers that are thrown out and feel like the taxes are a bargain. My total tax rate is less than 30%, but I max out my 401k, deferred comp, and other deductions to minimize my taxes. If I was taxed under the tax structure under Reagan I would be paying \$80k to \$100k more in taxes.

Probably, if the goal is to go towards say a 30 hour week.  I think my total tax rate is fine, but looking at the marginal rate for an extra hour worked vs. the marginal decrease in my personal wellbeing, the net compensation just isn't enough to work full time.

#### FastStache

• Bristles
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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #205 on: January 21, 2015, 10:42:04 PM »
I believe in a fair tax rate/system.

Take total government expenditures and divide them by the adult population (over 18), then send each citizen a bill for the pro-rata share of expenditure.  If the amount is too high, then people can question the expenses and if they're necessary.

How's that for fair but radical?  :)
This is what I said a few posts earlier.

#### capital

• Bristles
• Posts: 454
##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #206 on: January 22, 2015, 12:37:49 AM »
I believe in a fair tax rate/system.

Take total government expenditures and divide them by the adult population (over 18), then send each citizen a bill for the pro-rata share of expenditure.  If the amount is too high, then people can question the expenses and if they're necessary.

How's that for fair but radical?  :)
It's not like money has declining marginal utility or anything.

#### dragoncar

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #207 on: January 22, 2015, 12:40:16 AM »
I believe in a fair tax rate/system.

Take total government expenditures and divide them by the adult population (over 18), then send each citizen a bill for the pro-rata share of expenditure.  If the amount is too high, then people can question the expenses and if they're necessary.

How's that for fair but radical?  :)
It's not like money has declining marginal utility or anything.

I propose we base minimum wage law on minimum utility.  I'm a billionaire, so mcdonalds should pay me \$10,000 per hour.  Otherwise the poor guy next to me is getting more utility for the same hour worked!!

#### Norioch

• Bristles
• Posts: 328
##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #208 on: January 22, 2015, 12:50:33 AM »
I believe in a fair tax rate/system.

Take total government expenditures and divide them by the adult population (over 18), then send each citizen a bill for the pro-rata share of expenditure.  If the amount is too high, then people can question the expenses and if they're necessary.

How's that for fair but radical?  :)

That's hardly fair even if you don't believe in a progressive tax system, since not all people use government services equally. And if you think the poor use more government services per capita than the rich, then remember that one of the government's largest services and associated expenditures is the military, which exists in large part to protect the property of US citizens. Rich (high net worth) people have much more property per capita to protect than poor people. So, as a "fair" tax, how about a tax on net worth?

In the US we currently mostly tax income rather than net worth, and nobody in the political mainstream is seriously proposing a net worth tax, but it wouldn't be such a radical idea. There are already local and state property taxes which tax real estate assets, and inflation is functionally similar to a tax on net cash. The hardest part (other than political palatability) would be implementation. It's much easier to hide or expatriate net worth than to hide income. For the foreseeable future I think a progressive income tax is the best we can do, and until the budget is at least balanced I wish the income tax were both more progressive and higher in general.

#### Schaefer Light

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #209 on: January 22, 2015, 06:24:43 AM »
I believe in the FairTax plan.  In other words, a national sales tax that replaces federal income taxes.  The rich would still be taxed a lot more than the poor as they clearly spend more.  Plus, people would see exactly how much is going to the federal government each time they make a purchase.  This would surely be an eye opening experience for most folks.

#### tomsang

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #210 on: January 22, 2015, 07:00:34 AM »
I believe in the FairTax plan.  In other words, a national sales tax that replaces federal income taxes.  The rich would still be taxed a lot more than the poor as they clearly spend more.  Plus, people would see exactly how much is going to the federal government each time they make a purchase.  This would surely be an eye opening experience for most folks.

Brought to you by the 1%ers. It blows me away how brilliant the GOP is in framing these issues. Something like this would be a huge windfall for the 1%ers and mostly the .01%ers at the detriment of the middle class. With sound bites they convince those that it is going to screw to believe that it is a great idea.

The government needs to collect more revenue if they are going to support the military complex that they created. So anything that lowers the tax bill of the 1%ers needs to be made up by the middle class. The slave poor can't make a dent as they are just surviving. Something like the "fair tax" would be an accelerator of creating wealth inequality, yet it sounds fair.

If you make less than \$500k a year this would increase your tax bill.

They are brilliant.

#### Gin1984

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #211 on: January 22, 2015, 07:12:12 AM »
I believe in the FairTax plan.  In other words, a national sales tax that replaces federal income taxes.  The rich would still be taxed a lot more than the poor as they clearly spend more.  Plus, people would see exactly how much is going to the federal government each time they make a purchase.  This would surely be an eye opening experience for most folks.

Brought to you by the 1%ers. It blows me away how brilliant the GOP is in framing these issues. Something like this would be a huge windfall for the 1%ers and mostly the .01%ers at the detriment of the middle class. With sound bites they convince those that it is going to screw to believe that it is a great idea.

The government needs to collect more revenue if they are going to support the military complex that they created. So anything that lowers the tax bill of the 1%ers needs to be made up by the middle class. The slave poor can't make a dent as they are just surviving. Something like the "fair tax" would be an accelerator of creating wealth inequality, yet it sounds fair.

If you make less than \$500k a year this would increase your tax bill.

They are brilliant.
This is what I don't get.  On average, people on here are obviously intelligent, do the math to determine the best places to invest, etc, but then when it comes to looking at which political party benefits you, many people lean towards the GOP even though you are correct that their plans would increase our tax bill.  In addition, ACA has been a boon to many early retiries that otherwise could not get insurance (not could not afford, could not get).  Increasing 401k and other middle class breaks actually help the middle class get better off, while trickle down economics only makes in harder to grow (as evidenced by our past).  Why is it that people who are not well off vote that way?  Even if you think you may get up that high, why make getting there harder?

#### chasesfish

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #212 on: January 22, 2015, 07:13:10 AM »
I believe in the FairTax plan.  In other words, a national sales tax that replaces federal income taxes.  The rich would still be taxed a lot more than the poor as they clearly spend more.  Plus, people would see exactly how much is going to the federal government each time they make a purchase.  This would surely be an eye opening experience for most folks.

Brought to you by the 1%ers. It blows me away how brilliant the GOP is in framing these issues. Something like this would be a huge windfall for the 1%ers and mostly the .01%ers at the detriment of the middle class. With sound bites they convince those that it is going to screw to believe that it is a great idea.

The government needs to collect more revenue if they are going to support the military complex that they created. So anything that lowers the tax bill of the 1%ers needs to be made up by the middle class. The slave poor can't make a dent as they are just surviving. Something like the "fair tax" would be an accelerator of creating wealth inequality, yet it sounds fair.

If you make less than \$500k a year this would increase your tax bill.

They are brilliant.

The income tax actually avoids taxing one wealthy class:  Individuals spending down inheritances/trusts that are already post-tax funds.  Its very interesting progressive tax folks point to "Paris Hilton" as wealthy, when the reality is she'd pay more under the fair tax because she is consuming down an inheritance.  Yeah, there's an "estate tax", but with a substantial amount of loopholes supported by both sides to protect inherited wealth.

There is math provided on how the FairTax works, but you can choose to ignore that if you wish.

#### Gin1984

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #213 on: January 22, 2015, 07:25:22 AM »
I believe in the FairTax plan.  In other words, a national sales tax that replaces federal income taxes.  The rich would still be taxed a lot more than the poor as they clearly spend more.  Plus, people would see exactly how much is going to the federal government each time they make a purchase.  This would surely be an eye opening experience for most folks.

Brought to you by the 1%ers. It blows me away how brilliant the GOP is in framing these issues. Something like this would be a huge windfall for the 1%ers and mostly the .01%ers at the detriment of the middle class. With sound bites they convince those that it is going to screw to believe that it is a great idea.

The government needs to collect more revenue if they are going to support the military complex that they created. So anything that lowers the tax bill of the 1%ers needs to be made up by the middle class. The slave poor can't make a dent as they are just surviving. Something like the "fair tax" would be an accelerator of creating wealth inequality, yet it sounds fair.

If you make less than \$500k a year this would increase your tax bill.

They are brilliant.

The income tax actually avoids taxing one wealthy class:  Individuals spending down inheritances/trusts that are already post-tax funds.  Its very interesting progressive tax folks point to "Paris Hilton" as wealthy, when the reality is she'd pay more under the fair tax because she is consuming down an inheritance.  Yeah, there's an "estate tax", but with a substantial amount of loopholes supported by both sides to protect inherited wealth.

There is math provided on how the FairTax works, but you can choose to ignore that if you wish.
Then explain it to me, because I know of no country that does it and for it to work, we need someone to pay more.  The rich would not be harping on this if this did not say them money.  And btw, Hilton has earned money and she pays capital gains on her inheritance.  Granted it is stepped up money but she is paying.  If we fixed that loop hole and increased capital gains to a progressive tax 5-10% below the earn income brackets, stopped paying interest to other countries and instead paid our own people higher, cut a little bit out of every where (I do have some ideas on those) plus increased the minimum wage and add another top tax bracket or two, we could have our deficit fixed within ten years but that would require everyone cooperating for ten years and that is not going to happen.

#### tomsang

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #214 on: January 22, 2015, 07:38:16 AM »
Article that lists the pros and cons. If you are a 1%er convince as many of the middle class to vote for this because the deadbeats are not paying their fair share. Fail to mention that when we say deadbeats we mean those making less than \$500k.

http://www.moneycrashers.com/fair-tax-act-explained-pros-cons/

#### dragoncar

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #215 on: January 22, 2015, 09:44:49 AM »
Article that lists the pros and cons. If you are a 1%er convince as many of the middle class to vote for this because the deadbeats are not paying their fair share. Fail to mention that when we say deadbeats we mean those making less than \$500k.

http://www.moneycrashers.com/fair-tax-act-explained-pros-cons/

That doesn't say anything about \$500k, and I actually like the fair tax quite a bit (compared to, say a "flat tax").  First off, the Fair Tax(TM)  is not an income tax, so your income is irrelevant.  It's a consumption tax, which benefits us as Mustachians.   I like that it includes a prebate.

I don't like that consumption taxes are regressive.  Selfishly, I don't like giving up my mortgage interest deduction.  I don't like that my Roth IRA would get double taxed.  I'd be pissed that I paid relatively high income taxes during my working years and then get regressively taxed in retirement (vs. typical Mustchian plan to incur no Federal tax).

Reduced consumption might be good for the world, but it's bad for the economy.

#### Gin1984

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #216 on: January 22, 2015, 09:48:01 AM »
Article that lists the pros and cons. If you are a 1%er convince as many of the middle class to vote for this because the deadbeats are not paying their fair share. Fail to mention that when we say deadbeats we mean those making less than \$500k.

http://www.moneycrashers.com/fair-tax-act-explained-pros-cons/

That doesn't say anything about \$500k, and I actually like the fair tax quite a bit (compared to, say a "flat tax").  First off, the Fair Tax(TM)  is not an income tax, so your income is irrelevant.  It's a consumption tax, which benefits us as Mustachians.   I like that it includes a prebate.

I don't like that consumption taxes are regressive.  Selfishly, I don't like giving up my mortgage interest deduction.  I don't like that my Roth IRA would get double taxed.  I'd be pissed that I paid relatively high income taxes during my working years and then get regressively taxed in retirement (vs. typical Mustchian plan to incur no Federal tax).

Reduced consumption might be good for the world, but it's bad for the economy.

Good point.

#### Eric

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #217 on: January 22, 2015, 10:25:52 AM »
I believe in a fair tax rate/system.

Take total government expenditures and divide them by the adult population (over 18), then send each citizen a bill for the pro-rata share of expenditure.  If the amount is too high, then people can question the expenses and if they're necessary.

How's that for fair but radical?  :)
This is what I said a few posts earlier.

You should come up with a catchy name for this plan.  If you want it to take hold, people need to be able to remember it.  I propose the "Let Them Eat Cake" tax plan.

#### TrulyStashin

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #218 on: January 22, 2015, 12:01:36 PM »

http://www.economist.com/blogs/americasview/2014/07/british-columbias-carbon-tax

Implemented on July 1, 2008, B.C.’s tax covers most types of fuel use and carbon emissions. It started out low (C\$10 per tonne of carbon dioxide), then rose by C\$5 each year, reaching C\$30 per tonne at present (about 7 cents per litre of gas). "Revenue neutral" by law, the policy requires equivalent cuts to other taxes.  In practice, the province has cut \$760 million more in income and other taxes than needed to offset carbon tax revenue.

The result: taxpayers have come out ahead. B.C. now has the lowest personal income tax rate in Canada (with additional cuts benefiting low-income and rural residents) and one of the lowest corporate rates in the OECD. You don’t need an economist and a mining entrepreneur to tell you that’s good for business and jobs.

At the same time, it’s been extraordinarily effective in tackling the root cause of carbon pollution: the burning of fossil fuels. Since the tax came in, fuel use in B.C. has dropped by a whopping 16 percent (counting all fuels covered by the tax).

http://blogs.worldbank.org/climatechange/british-columbia-s-carbon-tax-shift-environmental-and-economic-success

#### Schaefer Light

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #219 on: January 22, 2015, 02:29:16 PM »
Article that lists the pros and cons. If you are a 1%er convince as many of the middle class to vote for this because the deadbeats are not paying their fair share. Fail to mention that when we say deadbeats we mean those making less than \$500k.

http://www.moneycrashers.com/fair-tax-act-explained-pros-cons/

That doesn't say anything about \$500k, and I actually like the fair tax quite a bit (compared to, say a "flat tax").  First off, the Fair Tax(TM)  is not an income tax, so your income is irrelevant.  It's a consumption tax, which benefits us as Mustachians.

That's what I like about the FairTax.  Want to lower your taxes?  Then reduce your spending.  That's exactly what this website is about.

#### RapmasterD

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #220 on: January 22, 2015, 05:39:09 PM »
FastStache, I agree with you that that would be conceptually fair, but as you probably realise, the flat fee would be significantly larger than most people's total annual income. Currently, high income people pay a grossly disproportionate ratio of all tax collected in the USA, so if that were going to be averaged evenly among each person, it would be too high for most people to pay. So even though that would be the most fair, it's also not a practical system.

Not flat fee, but flatter percentage income tax...not necessarily completely flat, but flatter -- with fewer brackets and everybody paying some narrower range percentage of income tax, and ALL deductions eliminated. Estate, mortgage interest, educational expense, yadda yadda -- GONE.

For a myriad of reasons, this will never happen.

OMG! There's a dude with a flaming torch banging on my front door -- crap!! I shouldn't have even SUGGESTED this.

I stand by what I wrote here as an income tax proposal.

I do not believe in a so-called consumption tax...I really really don't.

Now, on the lighter side, how about an "Uber Sin Tax" tax category, and none of the proceeds can go toward defense spending.

a) Gas Tax: Eliminate all existing state and federal gas taxes. Replace with a 100% federal tax on gas, all proceeds of which must be only spent on highway and public transportation infrastructure at a ratio of 30% highways/70% public transportation..

b) Liquor Tax: 100%. This one hurts. I'd still pay up. I'm dependent on this shit.

c) Criminal Tax: That's right. If you go to jail, the government confiscates all of your assets and re-sells them, including your wardrobe. Hope y'alls enjoy the orange suit. That's all you'll have when you leave San Quentin.

d) Divorce Tax: Goverment takes an upfront 25% cut on all liquid assets. I'm sorry, that's for a first divorce. Second divorce from either side = a 50% cut on all liquid assets for the government.

#### dragoncar

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #221 on: January 22, 2015, 05:46:35 PM »
FastStache, I agree with you that that would be conceptually fair, but as you probably realise, the flat fee would be significantly larger than most people's total annual income. Currently, high income people pay a grossly disproportionate ratio of all tax collected in the USA, so if that were going to be averaged evenly among each person, it would be too high for most people to pay. So even though that would be the most fair, it's also not a practical system.

Not flat fee, but flatter percentage income tax...not necessarily completely flat, but flatter -- with fewer brackets and everybody paying some narrower range percentage of income tax, and ALL deductions eliminated. Estate, mortgage interest, educational expense, yadda yadda -- GONE.

For a myriad of reasons, this will never happen.

OMG! There's a dude with a flaming torch banging on my front door -- crap!! I shouldn't have even SUGGESTED this.

I stand by what I wrote here as an income tax proposal.

I do not believe in a so-called consumption tax...I really really don't.

Now, on the lighter side, how about an "Uber Sin Tax" tax category, and none of the proceeds can go toward defense spending.

a) Gas Tax: Eliminate all existing state and federal gas taxes. Replace with a 100% federal tax on gas, all proceeds of which must be only spent on highway and public transportation infrastructure at a ratio of 30% highways/70% public transportation..

b) Liquor Tax: 100%. This one hurts. I'd still pay up. I'm dependent on this shit.

c) Criminal Tax: That's right. If you go to jail, the government confiscates all of your assets and re-sells them, including your wardrobe. Hope y'alls enjoy the orange suit. That's all you'll have when you leave San Quentin.

d) Divorce Tax: Goverment takes an upfront 25% cut on all liquid assets. I'm sorry, that's for a first divorce. Second divorce from either side = a 50% cut on all liquid assets for the government.

Don't forget all Uber rides are taxed 200%

#### RapmasterD

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #222 on: January 22, 2015, 06:34:20 PM »
That would suck.

But sure.

Texting While Driving: Immediate confiscation of automobile and subsequent resale at a Government auction presided over by angry and drunk auctioneer. This would be so awesome for the used car market.

#### dragoncar

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #223 on: January 22, 2015, 07:03:19 PM »
That would suck.

But sure.

Texting While Driving: Immediate confiscation of automobile and subsequent resale at a Government auction presided over by angry and drunk auctioneer. This would be so awesome for the used car market.

Well you're the one who called it an "uber sin tax"

#### Future Lazy

• Bristles
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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #224 on: January 23, 2015, 07:31:58 AM »
FastStache, I agree with you that that would be conceptually fair, but as you probably realise, the flat fee would be significantly larger than most people's total annual income. Currently, high income people pay a grossly disproportionate ratio of all tax collected in the USA, so if that were going to be averaged evenly among each person, it would be too high for most people to pay. So even though that would be the most fair, it's also not a practical system.

Not flat fee, but flatter percentage income tax...not necessarily completely flat, but flatter -- with fewer brackets and everybody paying some narrower range percentage of income tax, and ALL deductions eliminated. Estate, mortgage interest, educational expense, yadda yadda -- GONE.

For a myriad of reasons, this will never happen.

OMG! There's a dude with a flaming torch banging on my front door -- crap!! I shouldn't have even SUGGESTED this.

I stand by what I wrote here as an income tax proposal.

I do not believe in a so-called consumption tax...I really really don't.

Now, on the lighter side, how about an "Uber Sin Tax" tax category, and none of the proceeds can go toward defense spending.

a) Gas Tax: Eliminate all existing state and federal gas taxes. Replace with a 100% federal tax on gas, all proceeds of which must be only spent on highway and public transportation infrastructure at a ratio of 30% highways/70% public transportation..

b) Liquor Tax: 100%. This one hurts. I'd still pay up. I'm dependent on this shit.

c) Criminal Tax: That's right. If you go to jail, the government confiscates all of your assets and re-sells them, including your wardrobe. Hope y'alls enjoy the orange suit. That's all you'll have when you leave San Quentin.

d) Divorce Tax: Goverment takes an upfront 25% cut on all liquid assets. I'm sorry, that's for a first divorce. Second divorce from either side = a 50% cut on all liquid assets for the government.

This sounds like how I play Democracy 3. :)

#### ryanthequark

• Posts: 60
• Location: Seattle
##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #225 on: January 23, 2015, 06:24:15 PM »
At least we can all agree on some things. For example: kittens be cute.

#### mozar

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #226 on: January 24, 2015, 12:06:26 PM »
I prefers puppies.

#### Unique User

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #227 on: January 24, 2015, 04:06:53 PM »
By the time the government gets done with high wage earners those people are paying >50% of their income to taxes and fees.

I would like to see your math on this.

Seriously? Between a mid to high 30s federal income tax, medicare tax, ss tax, state tax, property tax, personal property tax, gas tax, sales tax, etc you can't see how its possible?

I'd like to see the math also.  I haven't read the whole thread, but hopefully someone else pointed out the difference between marginal tax rates and effective tax rates.  No one actually pays 30+% of their income in income taxes.

#### MDM

• Senior Mustachian
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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #228 on: January 24, 2015, 04:40:50 PM »
I'd like to see the math also.  I haven't read the whole thread, but hopefully someone else pointed out the difference between marginal tax rates and effective tax rates.  No one actually pays 30+% of their income in income taxes.
Never say never.

Numbers below are what a single earner making \$450K salary and paying 5% state tax would pay.  Many other scenarios are possible, but this one results in an overall (fed + state + SS + Med) tax rate of 36.9%.  Of course, no true Scotsman would earn/pay this much....

 Category Monthly Comments Annual Salary/Wages \$37,500 \$450,000 Federal Adj. Gross Inc. \$37,500 \$450,000 Federal tax \$10,610 2015 rates, item. ded., 1 exempt. \$127,323 State/City tax \$1,875 Guess, using 5.00% * Fed. AGI \$22,500 Soc. Sec. \$612 Assumes 1 earner paying \$7,347 Medicare \$731 \$8,775 Total income taxes \$13,829 \$165,948

#### Unique User

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #229 on: January 25, 2015, 09:17:17 AM »
I'd like to see the math also.  I haven't read the whole thread, but hopefully someone else pointed out the difference between marginal tax rates and effective tax rates.  No one actually pays 30+% of their income in income taxes.
Never say never.

Numbers below are what a single earner making \$450K salary and paying 5% state tax would pay.  Many other scenarios are possible, but this one results in an overall (fed + state + SS + Med) tax rate of 36.9%.  Of course, no true Scotsman would earn/pay this much....

 Category Monthly Comments Annual Salary/Wages \$37,500 \$450,000 Federal Adj. Gross Inc. \$37,500 \$450,000 Federal tax \$10,610 2015 rates, item. ded., 1 exempt. \$127,323 State/City tax \$1,875 Guess, using 5.00% * Fed. AGI \$22,500 Soc. Sec. \$612 Assumes 1 earner paying \$7,347 Medicare \$731 \$8,775 Total income taxes \$13,829 \$165,948

I stand corrected.  The one year we earned around \$500k was a complete fluke and I was unprepared for taxes. I still only paid 20% in income tax and FICA, but I was married and in a low tax state.

#### retired?

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #230 on: January 25, 2015, 01:53:51 PM »
I think it will help us get wealthy, if it passes, which I doubt it will.  All of the proposals seem reasonable, including increasing the capital gains.  The middle class is the reason out country is so great and we need to stop harming our middle class if we want to get ahead.  The best time for our country was at the same time as extremely high rate rates on the wealthy.

Is the middle class the reason the country is so great?  It is the general values embodied by the Founding Fathers and the Constitution.  It is the idea that individual freedom, family, and hard work are important.  This applies to all class levels.

But, the wealth creators (which create wealth for the entire society) are not middle class, at least for long.  It is a very small part of society that has a significant impact.  The rest of us (regardless of wealth) are just riding along.

I am a reasonably successful, law-abiding citizen, father of two, married.  Typical nice family, with one dog and a (recently passed) guinea pig.  But, I readily admit that my individual existence has done very little to nothing to impact society aside from my family and close friends.  That is how it is for most of society, again, regardless of wealth.

#### waltworks

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #231 on: January 25, 2015, 02:46:04 PM »
Businesses don't exist without customers, and employees. Everyone involved in the economy is a "job creator" to one extent or another (ie, I would not have a job if someone else didn't buy my company's products, and THEY wouldn't have a job if someone didn't buy theirs, and so on).

Having a positive economic impact on the overall economy in no way requires having lots of accumulated wealth. I could spend every penny I earn and benefit all sorts of businesses and individuals (who would then have more to spend themselves). I could also do volunteer work and generate no direct income at all but have numerous positive impacts that would lead to jobs for others. Obviously savings and hence investment are necessary for a modern economy but you also need spending and consumption.

Imagine, just for a moment, if everyone with less than \$1,000,000 in the bank disappeared from the USA. How F'd would all the millionaires be? Nobody to buy things from their businesses, nobody to do tasks (someone's gotta drive the garbage truck!) for them.

I wonder if this will eventually turn into a Piketty discussion.

-W

Is the middle class the reason the country is so great?  It is the general values embodied by the Founding Fathers and the Constitution.  It is the idea that individual freedom, family, and hard work are important.  This applies to all class levels.

But, the wealth creators (which create wealth for the entire society) are not middle class, at least for long.  It is a very small part of society that has a significant impact.  The rest of us (regardless of wealth) are just riding along.

I am a reasonably successful, law-abiding citizen, father of two, married.  Typical nice family, with one dog and a (recently passed) guinea pig.  But, I readily admit that my individual existence has done very little to nothing to impact society aside from my family and close friends.  That is how it is for most of society, again, regardless of wealth.

#### highlow65

• Posts: 6
##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #232 on: January 25, 2015, 05:24:57 PM »
I run a business in Massachusetts and pay my employees  well over the minimum wage, but and its a big but I have to screen potential employees extremely close because most of my early hires really didn't want to work, I had a soft touch and now my wife does the hiring and things have improved greatly. There are a lot of unemployed people but not so many who have that drive like fellow mustachians.

#### Future Lazy

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##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #233 on: January 26, 2015, 11:03:20 AM »
I run a business in Massachusetts and pay my employees  well over the minimum wage, but and its a big but I have to screen potential employees extremely close because most of my early hires really didn't want to work, I had a soft touch and now my wife does the hiring and things have improved greatly. There are a lot of unemployed people but not so many who have that drive like fellow mustachians.

From a youth's perspective, this is 100% true. I'm 22 with a high school diploma, and most of my peers are 19-25 with the same. The majority of them only work as much as they have to, and none of them do anything that gives them passion. It's a J O B to pay for alcohol, weed and a place to live (in that order) - if they don't live at home. Even still, I watched my mother sit on extended unemployment for almost two years before I moved out (stopped paying rent) and gave her a reason to get a job. She's over 50 years old.

In Feb 2013, it took me 3 weeks to find a good position with decent pay and heath benefits. I interviewed 3 places.
In the same month, it took my DH 4 weeks to find a part time job. He also interviewed 3 places.
Recently, DH took up the job hunt again and had 4 interviews inside of 3 weeks, and 1 job offer.

DH and I have essentially no marketable skills other than being sober, on time and literate.

My landlady, whom was recently laid off in the summer of 2014, found a new position in her field in less than 2 weeks.
My mother, after I moved out, found a position in her field in less than 3 weeks.

That being said, of my college educated peers, 100% of them have a job and long term financial goals, and most of them have a job in their field.

If you're healthy and capable, there's absolutely no reason not to have a job opportunity in the USA, period.

#### Scandium

• Handlebar Stache
• Posts: 2475
• Location: EastCoast
##### Re: Targeting the Wealthy: MMM Meets Politics
« Reply #234 on: January 26, 2015, 01:08:33 PM »
Article that lists the pros and cons. If you are a 1%er convince as many of the middle class to vote for this because the deadbeats are not paying their fair share. Fail to mention that when we say deadbeats we mean those making less than \$500k.

http://www.moneycrashers.com/fair-tax-act-explained-pros-cons/

That doesn't say anything about \$500k, and I actually like the fair tax quite a bit (compared to, say a "flat tax").  First off, the Fair Tax(TM)  is not an income tax, so your income is irrelevant.  It's a consumption tax, which benefits us as Mustachians.   I like that it includes a prebate.

I don't like that consumption taxes are regressive.  Selfishly, I don't like giving up my mortgage interest deduction.  I don't like that my Roth IRA would get double taxed.  I'd be pissed that I paid relatively high income taxes during my working years and then get regressively taxed in retirement (vs. typical Mustchian plan to incur no Federal tax).

Reduced consumption might be good for the world, but it's bad for the economy.

So it's like a VAT?
The scandianivan countries have those, up to 25% on most items. And then they collect 40-50% income tax on middle class incomes. More if you're rich. Oh and did I mention 27% capital gains tax? And about 100% gas tax. And ~100% on car sales. And a few percent of value for every real estate transaction. And 1% "wealth tax" on your net worth, every year. And...

The VAT started as a "emergency tax" of a few percent that would be removed after the crisis was over. That was in 1935...

I think taxes in the US are low (and complicated!), but at some point it gets too ridiculous again.
« Last Edit: January 26, 2015, 01:13:48 PM by Scandium »