Wealth, What is it?
 

Lets talk weath.. I would appreciate it if you all commented in an effort to refocus the discussion and take advantage of an interesting bit of thread drift from the Hillary/McCain thread.

Let's start with individual income. Leave big corps out of this but you can include CEO's or anyone who has income and pays taxes.

So what is wealth? How do you define it?

Is it:
anyone who makes more than you?
anyone who makes $XXXX, and what is that amount?
should people who make more than you pay for those who make less, if yes how much more do they have to make than you make before they start to pay more?
should the gobberment assign a number to divide out and heavily tax those who make more?
if people make more and worked real hard all of their lives to get to that point should they pay for those who do not?
should wealthy people get more breaks on taxes?
how much in dollars do wealthy people pay vs. those who make less than them, I mean in real dollars, do they actually contribute more or about the same?

what burden should a person with wealth, say a person who at one time was poor making 20k, built up a family business and now owns a community farm and 5 stores, who now gets about 300k per year in income for his family, how much should he pay in taxes? Compare that to a person of your choice, highschool drop out who works at Burger King, or college kid who got a great education but now works at Starbucks because his degree got him no where and daddy cut off his gravy train? What is this persons role? Should the guy who owns the farm pay for the other people? He already employs people on his farm and in his stores.

The answers, in order, are:
up, up, down, down, left, right, left, right, a, b, select, start

Edit: But, seriously. I'm busting my ass right now to support my family while going to school and helping to raise two little babies. I've been up until 2am every day for the last month. I'm busting my ass to get more money for my family. Someday, when I get there, I don't think I will self-impose a salary cap. And whatever money I am making at that point will be built on the foundation of the ass-busting I'm doing today. I think I'll be wanting to keep that money, thank you.

Last week the Congressional Budget Office joined the IRS in releasing tax numbers for 2005, and part of the news is that the richest 1% paid about 39% of all income taxes that year. The richest 5% paid a tad less than 60%, and the richest 10% paid 70%. These tax shares are all up substantially since 1990, and even somewhat since 2000. Meanwhile, Americans with an income below the median -- half of all households -- paid a mere 3% of all income taxes in 2005. The richest 1.3 million tax-filers -- those Americans with adjusted gross incomes of more than $365,000 in 2005 -- paid more income tax than all of the 66 million American tax filers below the median in income. Ten times more.

For the political left and most of the media, this means only that the rich are getting richer, so of course they're paying more taxes. And it is true that the top earners have increased their share of total income. Yet, as the nearby table shows, the rich showed more rapid gains in reported income shares in the 1990s than in the first half of this decade. The share of the richest 1% jumped to 20.8% of total income in 2000, from 14% in 1990, but increased only slightly to 21.2% in 2005. This makes it hard to pin their claim of "rising inequality" on the Bush tax cuts, though the income redistributionists are trying. By this measure, the Clinton years were far worse for "inequality."

continues:
http://online.wsj.com/article/SB119786208643933077.html

Wealth, IMO, is not a dollar amount but a situation of sustainability. If a person could quit their job today and live off their investments for the next five years without changing their lifestyle I consider them wealthy. Good for them.

I don't believe their tax rate should be any higher than any other person's just because they have attained financial independence. Yep, I'm one of those people that strongly supports a flat tax. Say everyone in the US gets their first $35,000 tax free. (Just a random number that seems like it would allow for a living wage beneath that.) Every dollar over that is taxed at the same percentage without regard to their total income. I don't know the percentage that it would require - 7%, 10%? I really don't know, but I'm certain that if there were no loopholes, no tax shelters for money to hide then the actual required percentage would be relatively low.

Here's the kicker. Those making $70,000/year would be paying significantly less than they do now. Those making $200,000 would be paying less than they do now. Those making $1,000,000 + annually would quite often pay MORE than they do now, because the loopholes and shelters would be gone. Many of those high earners would still support the plan though because they would no longer have to pay expensive lawyers and accountants to avoid big tax bills.

The only ones who have anything to lose by this plan are the lawyers, accountants, and IRS agents who live off the confusion surrounding our current tax code. Oh, and let's not forget the politicians who would lose a lot of the sting from their class warfare arguments. I personally feel nothing could be more transparent, fair, and healthy for the future of our country than a flat tax with a floor.

Without googling the charts, I'd say you'll find while the uber-wealthy pay less in percentage points they pay vastly more in dollars into our current tax system.

Let's put tax cuts in terms everyone can understand.
Suppose that every
day, ten men go out for dinner. The bill for all ten
comes to $100. If
they paid their bill the way we pay our taxes, it
would go something like
this:

* The first four men (the poorest) would pay
nothing.
* The fifth would pay $1.
* The sixth would pay $3.
* The seventh $7.
* The eighth $12.
* The ninth $18.
* The tenth man (the richest) would pay $59.

So, that's what they decided to do. The ten men ate
dinner in the restaurant
every day and seemed quite happy with the
arrangement, until one day, the
owner threw them a curve.

"Since you are all such good customers," he said,
"I'm going to reduce the
cost of your daily meal by $20."

So, now dinner for the ten only cost $80. The group
still wanted to pay
their bill the way we pay our taxes.

So, the first four men were unaffected. They would
still eat for free.
But what about the other six, the paying customers?
How could they divvy up
the $20 windfall so that everyone would get his
'fair share'?

The six men realized that $20 divided by six is
$3.33. But if they
subtracted that from everybody's share, then the
fifth man and the sixth man
would each end up being 'PAID' to eat their meal.

So, the restaurant owner suggested that it would be
fair to reduce each
man's bill by roughly the same amount, and he
proceeded to work out the
amounts each should pay.

And so:

* The fifth man, like the first four, now paid
nothing (100% savings).
* The sixth now paid $2 instead of $3 (33% savings).
* The seventh now paid $5 instead of $7 (28%
savings).
* The eighth now paid $9 instead of $12 (25%
savings).
* The ninth now paid $14 instead of $18 (22%
savings).
* The tenth now paid $49 instead of $59 (16%
savings).

Each of the six was better off than before. And the
first four continued to
eat for free. But once outside the restaurant, the
men began to compare
their savings.

"I only got a dollar out of the $20," declared the
sixth man. He pointed to
the tenth man "but he got $10!"

"Yeah, that's right," exclaimed the fifth man. "I
only saved a dollar, too.
It's unfair that he got ten times more than me!"

"That's true!!" shouted the seventh man. "Why should
he get $10 back when I
got only $2? The wealthy get all the breaks!"


"Wait a minute," yelled the first four men in
unison. "We didn't get
anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for
dinner, so the nine sat down
and ate without him. But when it came time to pay
the bill, they discovered
something important. They didn't have enough money
between all of them for
even half of the bill!

And that, boys and girls, journalists and college
professors, is how our tax
system works. The people who pay the highest taxes
get the most benefit from
a tax reduction. Tax them too much, attack them for
being wealthy, and they
just may not show up at the table anymore. There are
lots of good
restaurants in Europe and the Caribbean.

David R. Kamerschen, Ph.D.
Distinguished Professor of Economics
536 Brooks Hall
University of Georgia

heh, I like that one Merc.

That is taxes only on declared (taxable) income. With tax shelters and numerous other money games, reality is the wealthiest pay less than 20% in taxes.

That was the point bluntly made by Warren Buffet on Ted Koppel some years ago. Buffet pays a smaller percentage of his income than even his receptionist. Less than 20%. And Buffet's taxes are also in agreement with the political spin posted by TheMercenary. TheMercenary forgot to mention that vast amout of wealth that gets exempted from any taxes whatsoever - and still ends up in the pockets of the richest income earners. Tax exempt incomes never appear in TheMercenary's numbers. TheMercenary forgot to mention that part? No. He simply was told how to think by the party extremists. Also called lying by telling a half truth.

Or to rephrase it in TheMercenary type of logic: TheMercenary does not have a sufficient sized brain to understand it. Did we mention he also lied about his miltary carrer?

What's a carrer??

What lie was supposedly told?

I served 20+ years of continual active duty in the U.S. Army and retired in 2002. I don't beleive that I lied about my service. If so please subport your statement or shut the fuck up. What is your service record?

Nice.:rolleyes:

I've been thinking about consumtion taxes lately. I think UT addressed the idea in a global warming thread since it can address CO^2 as well. It should improve savings. It should help get us out of the class warfare game which the parties love so much. What positives and negatives do you guys see? As far as who is wealthy, I don't care unless they are passing what should be their costs, whether we're talking gov programs or pollution, onto the rest of society.

Griff, I think an elimination of all deductions and going to the proposed Flat Tax would be a good start. Of course many people who feed off the system of taxes, the IRS, etc would be out of a job, overall our income as a nation should improve. No one has the balls to take a chance on it and make it happen. The biggest negative would be in the transition period.

I agree with the flat tax idea although it does create some economic issues elsewhere, in the long run it appears it would be a net positive for the country.

I've mentioned before that Texas state taxes are run this way, and I love it. It works very well here.

Well I guess I will not be voting for him.

Obama: Payroll tax on incomes above $250,000

Jun 13 12:24 PM US/Eastern
By CHARLES BABINGTON

COLUMBUS, Ohio (AP) - Democrat Barack Obama would apply the Social Security payroll tax to all annual incomes above $250,000, which he says would affect the wealthiest 3 percent of Americans.
The presidential candidate told senior citizens in Ohio on Friday that it is unfair for middle-class earners to pay the Social Security tax "on every dime they make, while millionaires and billionaires are only paying it on a very small percentage of their income."

The payroll tax is now applied to all income up to $102,000 a year, which covers the entire amount for most Americans. Under Obama's plan, the tax would not apply to incomes between that amount and $250,000. But all annual income above the quarter-million-dollar amount would be taxed under his plan.

http://www.breitbart.com/article.php...show_article=1

Cite.

Opps, sorry about that! Fixed.

Now that I think about it, what the hell kind of plan is that? The Donut Hole Tax Plan, aka the Medicare Donut Hole? That is stupid. Isn't the problem that everyone is being treated differently? Treat everyone the same regardless of income and make it fair? How about people who are self-employed and already have to pay more tax? How about the damm AMT?

Thanks for the cite.

So, now I'm confused. What are you outraged about? Setting aside for the moment your donuts and amts.... The change proposed by the Senator, what's your opinion of it?

:cool:

Everyone should pay the exact same percentage on every dollar. problem solved.

I interpreted it as every dollar up to $102,000 (which is currently already taxed), then your dollars above that are (still) tax-free, until $250,000.

So if you make $103 thousand a year, $102 will be taxed and $1 will be tax free. If you make $252 K, you will be taxed on $102, plus $2.

read incorrectly, Clod squared me away.

We already have this problem. Some people make $1 too much to qualify for food stamps.

They don't, dude. The guy who makes $250,000+ is taxed only on the dollars above $250,000, not all the money in between 102 and 250.

I'm not saying I agree with the policy at all, I'm just saying the guy who makes $250 K is not monumentally screwed while the guy who makes $249 gets a free ride.

I guess I read it all wrong. I still don't agree with it. Everybody should pay the same amount of tax regardless of how much we make.

I guess I would just have to contract with the employer for all income to a Corp for services. Pay myself out of my Corp 100k as income, bury the rest in expenses.

I don't mind a different tax % based upon the amount of income, just make it the same for everyone. Thereby eliminating any bias.

actually you'd probably want to pay yourself a professional fee of around $40K, then take the rest of the $100K as dividend (don't want to pay self employment tax on more than necessary) then expense everything right down to turn signal replacement bulbs to the corporation. or so i've heard.

So, I have a question for you, mercy, and the rest of you. Why do we have the current situation, full amount of Social Security income tax on income up to $102k, and then no Social Security income tax on income above $102k, in the first place??!!

It seems to me that the 3% of earners above that line had enough political clout to make the exemption happen. I can easily see the advantage for someone in that position. But why would the 97% of earners below that line support such a plan? What would be the motivation for those people?

IIRC it had something to do with an expectation of return from the social security system and how many dollars per person were needed to make it a sustainable over the long term. At least that was the rationale. It, like all taxes, is just a politicians' game. Charge everyone the same percentage on every dollar earned and everyone will see a lower percentage of their pay taken, while the top earners still pay more dollars.

First let me state that a number of very good ideas have emerged to maintain the solvency of the SS system, among them all were to raise the cap. I will have to find the proposal that was most attractive, I think it was a Dem House or Senate member that proposed it. But anyway they showed that raising the cap to something like 120k ensured another 50 to 100 years of solvency. So why didn't they just do it and why was there no overwhelming support? The way I understand it, it was all politics, go figure huh...
anyway, by the time the bill made it through committee there was so much pork attached it was unpassable. Not only that, any time you have excess monies, even if they are potential monies that may exist in the future, politco's see that as a personal sump and a way to fund unfunded other stuff with a weak promise to pay it back before it is needed, but that never happens. The problem, as usual lies with Congress.

Ok, I'll buy that, l123. The plan's designers nobly attempted to take only what they expected to need to finance the program. Occam Razor says yes, and overrides Tinfoil Hat. Thanks.

So, here we are, decades later, and the estimations made by the designers and the changes have brought us to this point. The program's not sustainable, and some more changes need to be made. A list of changes has been suggested: deferring the start date, increasing the contribution rate, increasing the income ceiling on qualifying income, means testing recipients, and others, I'm sure, since these were just off the top of my head.

What should be done then? And, more importantly, HOW can it/they be done? All I see is a tragic game of political hot potato, passing the buck, "I don't want to be the one to __________" where __________ is increase taxes, take money from seniors, upset the apple cart, ....

It shows a weakness of political character to fail to discuss this. I don't hold any individual responsible for *solving* it, but ffs, somebody's got to start and encourage the conversation.

The bully pulpit is a magnificent megaphone for such a purpose, but not the only one. We have people whose *job* is to make this stuff work, our Congressmen and Congresswomen. And I should think that there are experts in this field, commonly and disparagingly known as bureaucrats, who have much to offer.

Why must we wait? What is more important than fixing this? Now!

Previous proposals have included:
1. Increase the payroll tax rate
2. Raise the taxable wage cap
3. Raise the retirement age
4. Create mandatory investment accounts

http://money.cnn.com/2006/06/19/reti.../lms_proposal/

And then there is this from fact check during the debates:

http://www.ontheissues.org/Economic/...l_Security.htm

It will be discussed when the hot potato is not hot anymore. When no one cares if the apple cart is upset. It is a big deal to "take money from seniors" because the seniors care. But a lot of people your age, and all of the people my age, don't expect to ever see any money. They can't take my SS money away from me, because I don't ever expect to have any. So in another 20 years or so, we can genuinely look at changing the system without setting off the populace. Until then, there are people who will get mad at any changes, with enough political clout to drown any serious movement in any direction. But you won't be able to make me mad about any changes, because it doesn't matter to me whether I get $0 at 65, or 75, or 85; or whether I get $0 because I make a little too much, or too much, or way too much money; or whether I get $0 because I have my own personal investments, or other government-mandated ones.

The biggest and most influential voting block is the baby boom generation and will be for some time to come. It will be easy to terrify them into doing nothing by simply presenting any proposed changes as a take away.

I firmly believe that the best thing for the country would be to just step up and say "Social Security will cease to exist in its current form for anyone who has not yet reached their 35th birthday on X date. Those between 35 and 55 will have the option between the current social security system and the new program. Anyone under 35 is automatically enrolled in the new program."

The new program is, of course, individual accounts. An established percentage of personal income will go into the individual's account where it will be invested according to their wishes. They will not be directly invested into the markets but rather time horizon funds similar to what the government has in place for the military, etc. (essentially a series of index funds) None of those funds are designed for outstanding growth, but over a 20-40 year period, all will vastly outperform what we are currently getting from the social security system. Individuals will receive what they have in their accounts at retirement age just as they do from their IRA's. Some will have more, some will have less based on their choices for their funds.

This won't happen of course because the politicians like having the "you're gonna be poor and eat dog food" boogeyman to point at. They are supported by the tinfoil lunatics like tw that see a conspiracy behind every bush or a bush behind every idea. The idea will be shot down by a vigorous campaign of misinformation and scare tactics.

but it would work.

Eventually the government will have to step up and say, "the money is gone folks" and pull funds from somewhere. Better sooner rather than later as time will only make the shortfall greater.

No politician will let the program fail. We have repeatedly demonstrated how such programs get protected and sustained. Government plays games with money (bonds, deficit spending, print money, lower interest rates, etc) that make the problem appear solved. Then economics takes revenge numerous years later in dollar depreciation, inflation, etc so that everyone suffers to pay for that program. That way, irresponsible actions by one administration get imposed on everyone years later. The problem is solved by simply mortgaging it. Then popular opinion blames the current administration and Congress.

SS was never at risk. At risk is this nation's future standards of living. Just another example of mortgaging their future to pay for our mistakes.

Damm, I could almost read that one tw. I missed where you tried to blame Bush for all of our ill wills, maybe you forgot. Or just maybe you came to your senses and realized the trouble started a long time ago.

must you poke?

I agree, good post, but I don't agree with the opening point: that no politician will let it fail. It's failing now--it just hasn't ground to a halt yet.

l123's post is excellent, and contains the best clearest point yet:
sooner is better.

I can't disagree with you, I think it is in the grinding to a halt stages as well. One day we are going to wake up and a bunch of hard working folk will not be covered. I think it is important to find a way to infuse more into it sooner than later.

TheMercenary can't grasp anything longer than a sound byte. Bird's of a feather ... George Jr and TheMercenary - mental midgets - people who knew Saddam had WMDs because a sound byte proved it. People so brainwashed as to even fear a simplest question: When do we go after bin Laden?

Another post duplicating what TheMercenary has been posting routinely. When too dumb to understand a simple concept, TheMercenary attacks the messenger. Mental midgets do that - TheMercenary and George Jr's wacko extremists.

Again TheMercenary ignores posted facts - instead attacks the messenger. Classic Rush Limbaugh (wacko extremist) tactics.

What chu talking bout Willis. I said it almost made sense, I mean for a wacko. But hey it really did have a beginning, a middle, and an end with out all the talk like you just broke out of the local mental hospital and were low on your meds. Now the other posts, I really can't vouch for them.:3eye:

And again TheMercenary cannot stick to facts. Well it was simplifed down to a sound byte. So TheMercenary

Come tw. Post your answer for all to see. You stated it now show us the facts.:rolleyes:

It is failing only if rules of accounting are applied. Ross Perot was quite clear about this decades ago. Government routinely perverts responsible spending by numerous (previously cited) techniques. One reason why: government investment instruments always have a highest credit rating. If government defaults (goes the theory), then the entire economy fails. Therefore government can print as much money, investment grade bonds, and emergency spending bills as necessary. Any attempt to require responsible budgets are now subverted by Presidential signings (Cheney has the dictatorship he wanted). As bad as SS looks using accepted accounting standards, the reality is that attitude: "Reagan proved that deficits don't matter".

Such irresponsible spending (spending the SS fund, FAA Trust fund, Highway Trust fund, etc without leaving any IOUs) has depreciated the dollar to 60%. No problem, says this administration. This administration claimed a lower dollar is good for the economy. Recently, a change of heart. A lower dollar has radically increased cost of living (without a corresponding increase in core inflation). Techniques and symptoms that can protect the SS fund at the expense of other things now considered less important (including the nation's standards of living).

Money will never be gone (even though technically it was gone long ago). SS is the third rail that nobody will touch. Moreso, too many Americans don't have the necessary knowledge, responsibility, and desire to do as lookout123 has suggested. There is no viable replacement for SS for too many reasons. A program so necessary in America that we will undermine the entire economy to maintain that legacy system.

Greatest threat to SS and other national programs is wild spending even outside the budget. The $3trillion for "Mission Accomplished" does not appear in a budget. But we will run up those bills anyway using the same accounting techniques that also preserve SS. We can do this because nobody in government or the public seriously worries about massive deficits and creative accounting. Same games that also permitted Enron and current financial market meltdown.