"Why the rich don't give to charity"

The Big Ragu · Mar 24, 2013

LanceyHoward said:

The Big Ragu said:

LanceyHoward said:

The Big Ragu said:

I think most of us would agree that your money is your money and nobody should have any say in telling you what you can and can't do with it -- whether you are Warren Buffett or the lowest-paid employee at Berkshire Hathaway.

So my question is, why has our tax code gotten so complicated with trying to incentivize people to do things that were given special tax status in the first place for politicized reasons? Most tax incentives don't seem to do a great job of incentivizing the things they were put in the code to encourage (this being an example), and even when they seemingly do, they inevitably create all kinds of skewed economic consequences that reward one group of people at the expense of another -- and create unlevel playing fields.

I wish we had a simplified tax code that got rid of all this BS, as much as I wish people would stop trying to manage other people's bank accounts.

It would have so many positive benefits that I think we all agree about.

1) Isn't it messed up when the typical person has to invest days time and effort to simply file a tax return to comply with the law, and we have a money-sucking accounting industry that diverts money from more potentially productive uses of that money, if it stayed in our pockets and we could decide what to do with it ourselves?

2) And if we had a straightforward tax code that didn't fill a room with reams of paper, wouldn't we have less complaining about who is getting preferential treatment? Just something straightforward, no "loopholes," and make it progressive in a way most people agree it should be. ...

3) If we just took out all of the loopholes, and had a simple, straightforward progressive taxation system, couldn't we then devote the resources we devote to taxation to things that could actually drive revenue to the government that we would probably all agree make sense? For example, there is a huge cash economy that doesn't pay taxes, and there is no enforcement of trying to bring those people into compliance, even as everyone sits around arguing about how much the people who actually do pay taxes should be paying and what incentives the tax code should be giving them.
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Do you really support capital gains and dividends being taxed at the same level as wages?
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Where did I say anything close to that?

Capital gains and dividend taxes are a form of double taxation. Personally, I feel we have gotten out of control on how much we tax people's incomes. I certainly don't favor taxing their savings (in the cases of capital gains appreciation and dividends), as well. The taxes you mentioned come on top of the tax on earnings (income tax) the asset already earned.

If you were asking my opinion, I don't think capital gains or dividends should be taxed at all. Take your pick. Tax the value of an asset or tax its yield. But taxing both is hitting the person twice. Appreciation on an asset reflects the increase in the after-tax rate return on the asset. Dividends are paid on income that has already been taxed. Those after-tax earnings were already taxed once -- income tax. When you tax capital gains and dividends, you are taxing them all over again.

Capital gains taxes were a pretty hard sell in the first place, for that reason. The arguments now that your appreciation (and it's a form of savings) or dividends, which are paid on AFTER-TAX income, should be taxed all over again at the same exact rate you tax income is always predicated on an argument that ignores the fact that you have taxed the hell out of the person already.
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I thought you implied that in point two when you argued for a straight forward tax code. Which surprised me. Which is why I asked the question.

If you tax dividends and capital gains at much lower rates, be it 15% or zero, you will invariably have a more complex tax code as people hire lawyers to try to figure out how to convert earned income into income that the tax code recognizes as capital gains or dividends.
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You should take the tax it one way or the other. But not both ways. Again, this is just me. I would happily agree to tax a capital gain or dividends as income if the idea is to REALLY want to simplify the world -- and to tax income equitably in a straightforward way. But simplifying the income tax code would mean that income just gets taxed once. Don't tell me we are going to tax business income as the money is made, and then tell me that you are going to tax it all over again when the owner of that business cashes out what they own or benefits from appreciation in their business.

Pick one or the other, and I'd be reluctantly be on board. Get rid of the idea that you are going to tax businesses as a separate entity from the PEOPLE who own those businesses and really do simplify thing. Take it at the personal level, and sure, you can certainly call business appreciation or a dividend income and then tax it.

Azrael · Mar 24, 2013

It'd be nice to keep this discussion going. So let's please do what we can to keep it from becoming political. Thanks.

Azrael · Mar 24, 2013

I'll also note an interesting dissonance.

Lots of folks on this thread object to judging the rich. But it's always OK to judge the poor.

Boom_70 · Mar 24, 2013

Azrael said:

It'd be nice to keep this discussion going. So let's please do what we can to keep it from becoming political. Thanks.
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Sorry but Obama made the entire discussion political when he ran a campaign based on class warfare, Impossible to have a complete discussion on said topic and leave out the politics.

Azrael · Mar 24, 2013

All national politicians run all national campaigns on the fictions of "class warfare."

Doesn't change the rules of this message board.

Moderator1 · Mar 24, 2013

Azrael said:

It'd be nice to keep this discussion going. So let's please do what we can to keep it from becoming political. Thanks.
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Too late. You can carry on in the political thread.

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"Why the rich don't give to charity"

The Big Ragu Moderator Staff Member

Azrael Well-Known Member

Azrael Well-Known Member

Boom_70 Well-Known Member

Azrael Well-Known Member

Moderator1 Moderator Staff Member

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"Why the rich don't give to charity"

The Big Ragu Moderator Staff Member

Azrael Well-Known Member

Azrael Well-Known Member

Boom_70 Well-Known Member

Azrael Well-Known Member

Moderator1 Moderator Staff Member

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