GolfHos

http://www.sun-sentinel.com/news/local/southflorida/sfl-flbsuperrich0120brjan20,0,6663197.story?coll=sofla_tab01_layout

Somethin' must be cloggin' up the trickle.

I stopped reading after I got to this:



 :punchballs:

that's right!  and we can't afford to tax them anymore.  ::)  [sm_devil]

(http://www.classicmedia.tv/harvey/characters/logos/richie.gif)

Well, sure we can.

But you're living in a dream world if you think it will make a real difference.



EDIT:
Incidentally, if there was some governmental glass ceiling that prevented me from buying a big ass yacht and new breasts for my wife (or get a new wife for that matter  [sm_devil] ;) ) - whats my motivation to start that business and succeed?

The problem is how better to share that success with the employees that helped make it happen.  Some have done admirable jobs of sharing stock and other bonuses - others have been shameful in their tactics.

have to agree to flat out disagree with you on that one.

I'm probably close to your thinking on economic matters and I'm not advocating a glass ceiling. It's just that I have a hard time understanding anyone who thinks only having $50M equates to "poor".

Cuz it will still suck far worse to be unsuccessful and poor.

Extremely few people that start businesses are poor (although some have been previously unsuccessful).  Either way, unsuccessful and poor is not the demographic here.  What would motivate the middle class to risk it all to start a business if the rewards were governmentally limited?

Not working for the man.  8)

The point was that they didn't consider themselves 'rich' - they never said they were 'poor'.  Its a difference kind of insanity  ;)

I'm pretty sure we're on the same page but the article used the word poor. In any case it's a sad commentary and I guess proves that money can't buy happiness and is indeed a different kind of insanity.

But you can rent one hell of a good time.  ;D

What kind of limit are you talking about? The reward of being your own boss is enough for a lot of people that start businesses even if they don't get super rich.

 [sm_thumbsup2] [sm_headbang]

I checked, and perhaps there is room for argument.  Guess it all depends upon what constitutes a 'difference maker'.

Looking at 2005 tax data (the most recent available, to the public anyway) I ran some numbers....

Per the article, I used $500,000 and above to constitute 'pretty wealthy to uber rich' - anyone below that as not-rich.  So yes, even the guy making $450,000/year didn't make the cut in the exercise - but the point was the truly wealthy and uber rich.  Also, this is all based upon taxable income - there may be games that people play to reduce this number I'm sure - but we have no numbers on that.  Gotta use whats truly known and available.

Anyway - effective tax rate for the RICH = 23.25%, the Not-RICH is 11.22%.  In real money per capita/return, the RICH pay just over 56 times as much in taxes as the Not-RICH.  So much for the loophole theory I guess.

In order to maintain our tax base, the tax rate of the RICH needs to be increased at much steeper rate than a Non-RICH reduction.  I did find that increasing the RICH rate to an effective 30% would allow for a reduction in Not-RICH rates to ~9.6%.  Per capita/return that averages to about $986 less per return for the Not-RICH category.  So, yeah - thats real money.  However, remember that the $200,000 to $499,000 folks are in this category and would get back a larger percentage - so don't go thinking everyone gets $1000 less in taxes every year - it may turn out to be $200-$300 for many.

In the mean time we've increased the RICH taxes by a per capita/return of $112,527 and they now pay 85 times as much tax as the Not-RICH.  I could live with that even if the RICH bitched, but much more started to look punitive.

So, does $200-$300 less in taxes per year for the middle class make a real change?  That is the question.

Guess it would mean a new driver, assuming SWMBO does not use it for something more 'useful'  [sm_devil] ;)

The RICH pay 56x as much as the NOT-RICH after loopholes are exploited.

True enough, but if you listen to the rhetoric about loopholes you would be led to believe they don't pay anymore taxes than the 'rest of us'.  I found 56 times as much to be refreshing given such tales.

I don't have an aggressive dog in this fight.  Generally speaking, though, I'd tend to think if Uber-Wealthy Dude makes 100x my income and pays 56x my tax load, there's something "not fair" about it.


To answer your other question: the government-imposed "punishment" for starting one's own business and being wildly successful with it isn't particularly punitive.  Average Joe can keep plodding along at what, $55k per household?  Or he can become a successful business owner making ten times that?  Even with the increased overall tax debt, I'd take the latter scenario.

Thats extreme - the returns in the $500,000-$1M range are prevalent in this scenario (roughly 60% of the group) - if they're making 100x your salary you must be making $10,000/year.  Its a good bet that the guys that are truly making 100x your salary are paying closer to 100x your taxes.


Would you and I take it?  Sure.  So why haven't we?  Because of the associated risk I'll bet.  In order to take such risks many people need to see a pot of gold.

Again, I'm for increasing the progressiveness of the taxes, as I've already laid out - but to make the difference many people 'believe' it will, we would likely reach a punitive level of taxation.  <insert Laffer curve here>.

I think indicators are pointing towards another Ben Stein picture posting to self-fulfill the prophecy hobbit eluded to.

Ben Stein is (nearly) a *goshdarn* genius!

Stupid Investors, Rejoice! (http://money.cnn.com/galleries/2007/fortune/0708/gallery.crisiscounsel.fortune/13.html)

 ;D

Is it merely a coincidence that Ben Stein is a Baby Boomer who'd like to keep the market buoyed long enough for him to cash out of his stocks?

His main argument for his sanguine view of the market is that the consumer will continue to spend despite the so-called "sub-prime mess", citing the increased consumer spending even after the tech-bubble burst. What he's forgotten is that the tech bubble was immediately followed by the real estate bubble. People continued to spend because they felt wealthier than they really were as their home values went up. IMHO, much of this spending was financed either through equity loans or credit cards. Consumer debt is now at an all-time high. At some point, this economy has to pay the Piper.

Whether his argument for the short term proves true or not, this is the crux of the article I came away with....

I have no idea what the S&P will be ten days from now, but I am confident it will be a lot higher ten years from now, and for most Americans, that's what we need to think about.

Oh, you get my point: I meant "my" in the Everyman sense.  Wiki says the median household income in 2006 was ~$48k.  So substitute "me" making $48,000 and Uber-Wealthy-Dude making $4.8 million -- is he really paying 100x as much in taxes as "me"?

And personally, I'd wager the guy really making 100 times MY income is NOT paying 100 times what I pay.  I can't afford to cover charge for most significant income shelters, can't afford the advice to find shelters, and/or the cost-benefit to discover them doesn't pan out compared to savings.

If I could increase my current total income 10x AND my current tax debt 20x, I'd take it and run.  Hell, I'd take 10x and 40x.  I haven't struck out on my own because the risks are too high -- I have a mortgage, a family to feed, retirement to plan for and a college fund to build.  If I were single or childless and with a wife who worked, though, ...

And you may need to buy body parts.  I hear Canadian penises don't come cheap.

Interestingly enough - I just ran the math  :)

Not able to get granular enough, but taking the $40k-$50k range and comparing it to the $2M-$5M range (The example is at the high end of both ranges, pretty fair IMO).... they paid 110 times more in taxes on average.

Sure thats post tax shelter - 'true' 100x earnings (what ever that is) may fall short of 100x taxes.  We know there are ways to hide some income, I do not know of many myself, have no data on how effective it is, have no idea how much can be sheltered, etc.  Its all assumptions and conjecture.  With no knowledge of the extent of its usage, assuming its significant, I don't think can we make definitive statements.




I guess you're kinda proving my point to some extent.  With all that incentive, you choose to 'work for the man' and be subject to this wage gap.  (and I'm not casting stones, as I work for the man and have been unwilling to take such risks as well).  Those that take big risks and make it work, deserve the rewards.  But again, I think we're arguing minutia.  I'm for an increase in the progressiveness - I am just cautioning against going too far just because its 'not us' - mob rule and all.  Besides, you reach a point of diminishing returns - hence my Laffer curve reference.

Well, then I'll leave it alone.

My general point was that even if you doubled the effective tax rate for the ultra-rich, I'd still want to be ultra-rich.  I didn't pick wealthy parents, though, and I care too much about my family to put them through the hell of my starting and failing at my own business(es) in an attempt to be ultra-rich.

I had an argument with a coworker once about winning the lottery. He insisted that it wouldn't be worth it because the government takes such a big bite. I said that even if the gov't took 80% of lottery winnings, a $200 million jackpot leaves me $40 Million richer than I was before.

I don't believe a higher tax rate would specifically disincetivize (I think I heard that word at a seminar once, so I'm going with it) someone from trying to attain more wealth. Maybe I'm wrong.

So x % of a number 2-4 million higher than the other results in a much higher number.  Well I'll be a son of a bitch   ::)    ;D

Well, your co-corker either mispoke or is an idiot  ;)

But, there's a big difference between something for nothing and risking it all for possible success.  And no, raising the tax rate significantly will not remove all incentives to succeed - but it will have an affect when moving into the next income catergory starts costing you 40-50% of your income.  If we're skeptical of income sheltering now - imagine the lengths people would goto then.  They could either stop growing their income (as it would be taken anyway) or find new ways to hide it.  The result is less creation of wealth, less tax receipts, and the point of diminishing returns predicted by Laffer curves (raise tax rates too much and you'll actually collect less taxes over time).

I thought my suggestion that an increase from 23% to 30% for the 'RICH' was palatable - seems many of you want to take more, and I honestly think thats starting to look punitive.

I wish I could address your question, but my simple mind does not follow you here.  Sorry.  :-[

You think that looks punitive?

30% (effective rate, comapred to 23% today)???  Uh, no obviously.  But continue heading north from there - yes.

I was just trolling and the way that read didn't make sense I know.  I was just sayin' that of course the rich pay more in taxes.  20% of 50k < 20% (granted they pay more than this) of 5 million all things being equal. 

I too have a problem with the gov't taking much more than a 1/3 of anyone's salary cause I hopes to be rich some day.

Would your desire to become rich be tempered if the tax rate were higher?

Of course not, and that suggestion is retarded at best. 

Exactly.  ;D

Ah - but they don't both pay 20% - thats the dig.  Specifically, the $40-$50K range paid an effective rate of 6.9%, while the $2-$5M range paid 24.3%.  I.e., the progressive tax rates are working as they should, and I do not think that its currently 'unfair'.

Net after taxes: $37K-$46.5K vs. $1.5M-$3.8M

I'll gladly pay the 24.3% tax rate.

To become rich, no.  To step into that next income bracket that would take even more of my income, yes.  Not to mention, assuming more of my income inhibits me from re-investing as much in my business, giving my employees as large of a raise, etc.  These are all just a few of the things that affect the creation of wealth over the long term.

The second guy should get 3.52 x voting power and a HOV lane permit. 

But only the portion earned above the threshold for the next income bracket is taxed at the higher rate. I don't see how there's ever an incentive to earn less money.

Plenty of wealth was being created even when the income tax rates were much, much higher.

The Beatles didn't too bad for themselves even when they were singing, "There's one for you, nineteen for me."

As would I.  Again, I think its fair - I also think 30% would be fair.

But if I risked all my savings, lived in near poverty for 5 or more years, busted my ass, and finally achieved success after 10 or more years - I would certainly have a problem with the government taking 46% (as was suggested) of my income.

Its really easy to say 'I'd take it!' - but its much different after risking and giving it your all to do it.  Did I not earn my success?  Did I not sacrifice everything to achieve it?  Now you want to take almost half to give the guys that didn't do nearly what I did (or nothing at all) a break?  Let us not pretend to be so altruistic - am I the only one willing to admit he'd have a problem with that?

And again, it does start having an affect on wealth creation.  Less money to re-invest, etc. inhibits growth.  I guess everbody here are Laffer curve sketics though.

Looking solely at earnings, you're right, there's no disincentive.  But often that kick up into the next tax bracket (or two) requires you lay something on the line - bust your ass 60-70 hours a week, take a sales job that has you on the road 20 days a month, hire employees, live off your savings, expend capital, open yourself up to liability, etc.  Still might be worth it.  Millions of entrepreneurs (such as yourself) think it is.  But others might not.  I've been there, done that.  With no more than two decades (and hopefully not much more than one) left in my 'career' I'm content to work for the man making a good but not fantastic salary, enjoy my insurance and benefits, delight in three weeks of vacation per year and just ride it out.  Shooting for the stars is a young man's game.

I don't believe a progressive tax system is best for our country but I can live with it.  Mostly because I'm confident there's *fudge* all I can do about it.

This is precisely why I'd rather have a lower tax burden when I'm living in poverty for 10 years and gladly pay the higher rate later when I'm wealthy. Not having enough money through the lean years and possibility of failure due to lack of funds are what dissuades people from starting businesses--not the potential higher tax burden in the event of success.

Just to clarify, I've been using effective rates all this time.  Regardless of what money is taxed at what rate, under the calls made in this thread - you would be getting 46% of your income taken in taxes.  If you think I've overstated a reduction in incentives, ok.  But the arguments about wealth creation, finding (but not breaching) that Laffer curve apex, and 'fairness' still apply.

If you're talking about effective rates, there isn't a "stepping into the next bracket" like you mentioned then.

It's only seems "unfair" if you're born into a high tax rate and never had the benefit of being taxed at a lower rate as you earn your way into a higher tax rate.

Hobbit, if you're getting that 46% tax rate on the rich from one of my posts, I was just tossing out numbers (e.g. 10x my income and 40x my tax debt) to compare the 10 and 40.  Didn't mean to imply I thought taxes on the super-rich should be nearly 50%.

And Laffer curve this, Laffer curve that -- if you like your Laffer curve so much, why don't you marry it?

How come every time we talk about the tax code some midget has to pull the Lafer curve out his ass.  Lafer curve, lafer curve, it ain't *feces*.  I mean it's okay for supply siders I suppose but unless you know where we are on the curve it don't mean *feces*.  The Neo-Laffer curve could kick the Laffer curve's ass.

(http://bradlaidman.com/wp-content/uploads/2007/08/bbdance10.jpg)

just for my own clarification...

and what is the incentive for the highly* successful business owner to NOT accept a higher tax burden when times dictate that if he does not, the majority of his clientel will evaporate as they no longer have spendable income?

 [sm_laughatyou]

But there is - all of the steps in the tax rate average out to be your effective rate.  Add larger rates, get a larger effective rate - there is a stepping pattern to it.

Henry & Richard Bloch surrender.

I did take it from your post, and I understand you were just tossing numbers - but no one else stepped up to offer one, and only one other person than me (and now you too) has yet said its too much  :o.

I offered an increase from 23% to 30% and am being cast a guy that is not in favor of progressive tax rates  [sm_dontknow].  Without any alternative offer of what 'fair' is, I went with 'double it'.  Apparently 30% is too soft for the 'mob' - they want more  [sm_mob] (over the top characterization - I know).  I'm trying to understand why, and it seems there are vastly different views on what generates wealth and a healthy economy.  I thought socialistic/communistic methods were already proved to be ineffective.

Reading that phrase is like opening a small box and finding seventeen strings of Christmas lights tangled in a ball.

There's always been some aspect of "from each according to his ability, to each according to his need" in US social programs.  How that gets to "socialist/communist" probably even MFAWG couldn't fathom.

How much extra revenue would a 30% effective rate generate?

And anyway, I'm a fiscal conservative -- I'd much rather see the federal government pull back on spending before jacking anyone's taxes.

I'm definitely for pulling back on spending, but we also have that $1 trillion boondoggle to pay for.

Would anybody cry about fairness if these fat cats were taxed at even a 50% tax rate?

http://articles.moneycentral.msn.com/Investing/CompanyFocus/WarMeansAWindfallForCEOs.aspx?page=1

How did I get there?  See above post.

Anyway, moving from ~23% to 30% is an average of $112,500 more per return in taxes each year from the RICH, for a total of about $93B (all 2005 tax data as posted before).  Real money in other words.

What affect would that have on business investments/re-investments?  Wage increases for employees of affected owners?  Some I'm sure, tolerable maybe - take even larger chunks out, and it would surely start to have a real affect.  Everyone thinks we're just taking their yacht, but we're also affecting business - how well/effectively it grows (or doesn't).  'Its growth, stupid' to paraphrase Carville.

Sure, we can cherry pick people we don't like.  See him over there?  He's a greedy *bunghole*, its ok to take half his chit.  Hell, that felt so good, lets take half that other guys chit too - he didn't give big enough raises to his employees.  Doesn't sound all bad.  But what about the people that are not *bunghole*s, or did give decent raises?  They make just as much money, take half their chit too?  (I'd submit that if you answered yes, you are a closet socialist - just one guy's opinion).



You kept me up too late doing math - my drowsy head tomorrow morning curses you already.  I'm out.

Oh, wait - spending.  Yes, yes, yes - reduce it.  Imagine not having that desert boondoggle to fund...  We'd likely (Not sure, but I'm not doing anymore math tonight) have enough tax receipts to balance our budget (if prudent) - no tax increases necessary.  That means exactly *8==>* - but it makes people feel better nonetheless.

The progressive tax scheme is by its nature socialist to some extent.  But it's at least blindly so: the tax brackets don't care whether you're Mother Theresa or Charles Manson, whether you're a quadriplegic who boot-strapped himself up from Hell's Kitchen or a silver spoon who inherited it all and can't find his financial-sense ass with both hands -- the same AGI has the same effective tax rate applied.  And that's how I want it to be.

I know - I was just responding to the prior post about taxing people at 50% because we don't like them (said with fecetious intent I hope).  Was just too lazy to start a new post.

But they love 'merka.