Why Double Taxation Must Cease

Economic growth and rising living standards depend on saving and investment.

One of the tax changes in the just-passed bill to avert the so-called fiscal cliff is a rise in the long-term capital gains tax for upper-income people (over $400,000 for single filers). During the George W. Bush years, the tax on capital gains (and dividends) dropped to 15 percent. Under the new law the tax will rise to 20 percent for those wealthier taxpayers. During the recent controversy over taxes, some people wondered why capital gains should be taxed at a lower rate than ordinary wages and salaries, the top rate on which is now 39.6 percent. Is this a favor to the rich or does the difference have a basis in sound economics? 

On the face of it, the difference looks suspicious, indeed. Why should "unearned income," which is what investment income is called in the tax code, be less subject to taxation than "earned income," wages and salaries? But such a framing of the question prejudices the matter. In fact, there is a sensible reason—if income is going to be taxed at all—to hit capital gains at a lower rate, or better yet, not at all. It's time people put aside their emotions and looked at the matter with clear heads.

Capital gains is of course not ordinary income. It results from an investment decision, that is, a decision to forgo consumption in the present, perhaps for greater consumption in the future. Someone buys an asset, say, shares in a company today with hopes to sell it at a higher price later. The difference between the purchase and sale prices is a capital gain (assuming inflation hasn't made the gain illusory.) But note that in order to buy the asset, the investor had to put off consumption. The gain consists at least partly in the reward for waiting while others use his capital in a productive purpose. (This is most clear if the person lends the money and reaps interest.) Time is valuable, and other things equal, people prefer present goods to future goods. That's why the present value of future goods is discounted. This is known in economics as "time preference." In the market one is normally rewarded for letting others use one's capital for production rather than devoting it to immediate consumption. The person who invests $1,000 in hopes of having 10 percent more in a year demonstrates that he prefers $1,100 a year from now to $1,000 today.  

Income taxation introduces a complication. Obviously, a tax on income reduces the money at one's disposal by transferring it to the government. If the tax were intended simply to raise money, it would have to be designed so that it neither rewarded nor penalized some kinds of activities over others. That rule might seem to suggest that there be a single rate on all types of incomes, but that is where the analysis often goes wrong. Ironically, a rate that does not distinguish among types of income is in fact biased against investment income, and hence investment itself. A more neutral tax would treat income from investment differently.

Imagine receiving a paycheck not subject to income tax. The full amount is yours, and you are free to divide it between consumption and investment according to your subjective preferences. But if your wages are subject to tax, you receive less than 100 percent of your pay. The taxman takes the rest. If you spend your take-home pay on consumption goods, that's the last you'll see of the income-tax authorities with respect to that money. (Sales taxes are another matter.)  

What if you choose to invest the money so that you can consume more in the future? Because of the tax, you have less to invest than if the tax did not exist. In that respect the tax is "neutral" between consumption and investment.  

But that's not the end of the story. When you reap your reward for investing, that money is also subject to income taxation. Thus while consumption activities are taxed but once by the income-tax system, investment activities are hit twice: once when the income along with the potential investment return is reduced and again when the (already reduced) capital gain is taxed later.

Look at a concrete example. You're paid $1,000 for work. Without an income tax, you could spend the $1,000 on consumption or you could invest the $1,000. If you invest the money at 10 percent, you could look forward to having $1,100 a year from now.  

Now add a flat 10 percent income tax to the picture. Instead of receiving a check for $1,000, you get one for only $900. Your ability to consume is reduced by $100. At the same time, your ability to invest has also been reduced by $100. You can invest only $900 and therefore look forward to only $90 a year from now, rather than $100. Because of the tax, the return on investment is lower than it would have been.  

But here's the rub: You will have to pay the 10 percent tax on the $90 gain, leaving a real gain only $81.  

Investment is thus taxed twice, while consumption is taxed only once. "The tax on interest or other returns to investment, including dividends and capital gains, biases decisions against saving, investment, entrepreneurship, and business expansion, and in favor of consumption spending," economist Roy Cordato of the John Locke Foundation writes.  

Things are even worse, however, for as Cordato points out, "In addition the government, at both the federal and state levels, further punishes investors with a separate corporate income tax. The corporate tax, which at the federal level is 35 percent, adds a third layer of tax on both dividends and capital gains."  

In light of all this, it should be clear that if income must be taxed, it should be taxed no more than once. "The most straightforward way to remove the bias is to exempt from taxation all returns from saving... An alternative way of removing this bias is by eliminating all saved income in the current time period from the tax base, taxing it only when it is withdrawn for consumption purposes," Cordato writes.  

Regardless of what one thinks of the inherent fairness or unfairness of the income tax, double (and triple) taxation should offend everyone. It simply is not the business of government to reward and punish the different ways in which people may use their incomes. A basic principle of a free society is that people may go about their peaceful business unmolested by government.  

Moreover, it's patently ridiculous for the government to penalize investment, because economic growth and rising living standards depend on saving and investment—that is, deferred consumption—despite what the Keynesians say. (John Maynard Keynes believed that saving can harm an economy because reduced consumption causes unemployment and discourages investment. He thereby showed his ignorance of an industrial economy's multistage capital structure, as elaborated by his rival in the 1930s, F. A. Hayek.) When people put off consumption, their money isn't stuffed in mattresses; it's made available to investors, who extend and improve the capital structure. This in turn makes possible higher productivity; new, improved, and cheaper products; higher wages, and other forms of progress.  

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  • ||

    This is not about revenue, not about the economy, it is a fairness issue. What else needs to be said?

    Get off of your ass T o n y and come explain it to us rubes.

  • sandy_jones||

    my best friend's step-aunt makes $64 every hour on the computer. She has been out of work for 6 months but last month her payment was $16518 just working on the computer for a few hours. Read more here. http://google.com.qr.net/j4qT

  • sonofloud||

    Whining about double taxation??? Try being gay and see how much in taxes you have to pay for the honor of being a second class citizen.

  • sloopyinca||

    Two things that have little or nothing to do with each other. Double taxation is bullshit. As is the arbitrary and selective way marriage is treated by the government.

    Here are two solutions (since there are two separate problems):
    1: eliminate all income taxes and tax only consumption.
    2: eliminate all government sanctioning of marriage and allow any civil union between consenting parties to exist.

  • ||

    2: eliminate all government sanctioning of marriage and allow any civil union between consenting parties to exist.

    The first eliminates any discrete need for the second. Otherwise, delineating special snowflakes will cause a surge in brandishing +2 Axes of Perpetual Dullness.

  • sloopyinca||

    Well, I put the second part in there to head off any legislation that would result in probate cases where the deceased had formed a "civil union" and his family came and said they were entitled to all of his property. Allowing civil unions would also help facilitate end of life decisions by a declared partner and would would establish a relationship that would clarify contracts with "families" and insurance companies, banks and myriad other institutions that would benefit from a formalized legal framework so contracts could be enforced properly.

  • ||

    It's not necessary, as attys. and your physician can draw up any contract you wish WRT medical care proxy, DPOA, and advanced directive wishes (I have professional experience with this very sitution and EOL). Same with inheritance and trust execution, naming beneficiaries/survival benefits, fiduciary duties WRT estate planning, and other relevant issues of a declared coupling (or whatever). Most medical insurance companies already recognize partnerships for significant others (and they should not be forced to do so). May I remind you that Leona Hemsley willed her fortune to her pet?

    In fact, and RC Dean has made this argument over and over, that aside from social considerations, there is really little need for legal marriage at all, though I fully support and firmly intend to be legally married.

  • sloopyinca||

    Yeah, I guess you're right. I just thought it would be a good idea to streamline the judicial process by eliminating all of those contracts and limiting the ways a judge could "interpret" them to fit the needs of the state.

  • robc||

    The problem is, as with current marriage laws, the states trump actual contracts people have.

    No fault divorce laws, for example, trumped peoples previous clearly fault based oral contracts.

  • robc||

    I fully support and firmly intend to be legally married.

    If I could find a woman and minister who were willing to do it outside the legal framework, I would get unlegally married.

    Barring that, I suppose I would go thru the stupid legal process.

  • Hollywood||

    Sloopy/Dr. Groovus 2016

  • ||

    Barring that, I suppose I would go thru the stupid legal process.

    The legal process grants one thing that no one has yet mentioned, absent "no fault" (a bullshit term):

    Legal enforced marriage vows.

    Specifically, and I will say right now that anyone who enters a committed, marital-type relationship with no intention of tying the knot is a liar, a fraud, and not to be trusted. So-called "oral arrangements" are for connivers who have no intention of either staying for the long haul or giving a reason if they bolt, and "because I feel like it" doesn't cut it. If I am willing to spend my life with you, be faithful, and never leave you in your time of need (medical or financial), or hell even promise to keep in contact and you ultimately leave, I want an explanation.

    A divorce decree grants a public, concrete reason why the relationship failed.

  • robc||

    Legal enforced marriage vows.

    That can be done by courts doing their damn jobs, just like with any other contract.

    No need to have a marriage license (which is what I was referring to with "legal process"). And you cant just say "absent no fault" as that is an example of them specifically refusing to enforce contracts.

    No need for any kind of licensing if the court would treat wedding vows as contacts. And people might choose to specifically right up the terms of the deal if the state stopped putting default rules in place.

    I would bet in many cases, those contracts would turn out to be 3 party contracts -- husband, wife and church.

  • ||

    I will also add that legal marriage gives your spouse a very high degree of confidence that you will see the marriage through, regardless of reason. You are putting your name on that dotted line. Anything else is springloading an premeditated escape cause.

    We all know that "Gentleman's Agreements" are worth the paper they are printed upon. Bupkis. Even if an electronic promise is made, it can be broken at any time (such as "othering", like on FB) by only one person with no explanation given.

    A tangible, legal, concrete piece of paper, even issued by the state, to enforce that legally binding contract is not for you, it's for your spouse, in sickness, health, rich, poor, whatever.

    I have only one chance to be married for the first time (and only time), and I am not going to waste it.

  • robc||

    A tangible, legal, concrete piece of paper, even issued by the state

    The problem is the state has prevented the creation of a tangible, legal, concrete piece of paper.

    The one issued by the state doesnt even count. No-fault divorce guarantees that.

    Of course, the state involement beyond the couples contract in the pre-no-fault days went beyond contract enforcement in the other direction.

    But that is the problem with state licensing.

    Im in agreement with you, Im just in favor of that tangible document being issued by my church, not by the state. But I consider marriage to be a 100% religious issue and any state involvement being a 1st Amendment violation.

  • ||

    No-fault divorce guarantees that.

    I agree with you, robc, with all the other things you mentioned, and though I am not religious (I do believe in God), I do want a church wedding. (The woman downthread is Russian Orthodox).

    My overall point is:

    You cannot put a price on loyalty, regardless of what an atty says.

    Statistically, my future wife is going to outlive me. It is my responsibility to ensure she is well-provided upon my demise. I want a high level of certainty that my wife will be by my side on my deathbed. My mother was with my father, and rarely left his side while he was dying.

    Even in a so-called "no-fault divorce", finality, or to use an old-timey term, "closure" is granted, either by the state or another agent to enforce the terms of the contract.

    My future wife is guaranteed three things:

    1) Total and complete honouring of the marriage vow till I become worm food.

    2) A carat rock on her ring finger, and the reasonable expectation of a comfortable life.

    3) Her own girl-cave separate bathroom (H/T to whoever suggested that, I think it was Zeb.)

  • RBS||

    I suggested the separate bathroom thing. My wife and I live in a pretty small apartment with our 6 month old so privacy/personal space is at a premium right now and separate bathrooms provide that. We also take care of our own bathrooms, so I don't tell her to stop splashing water all over the place when she's washing her face and she doesn't tell me when to clean out the beard trimmings from my sink.

    "I do want a church wedding. (The woman downthread is Russian Orthodox)."

    That's not a church wedding. It's a CHURCH WEDDING. Half my family is Greek Orthdox.

  • Raven Nation||

    Hmm, are the Russian Orthodox as generous & festival oriented as the Greek Orthodox?

  • ||

    My future wife is guaranteed three things:

    1) Total and complete honouring of the marriage vow till I become worm food.

    You saying that really vehemently doesn't mean you won't change your mind later. Or her.

    Sorry to break out a can of reality whoopass.

  • Paul.||

    You cannot put a price on loyalty, regardless of what an atty says.

    No-Fault divorce doesn't put a price on loyalty, but it sure does become a kick ass reward system for disloyalty. Walking away from a marriage in a no-fault, community property state is the fastest way to increased wealth and decreased debt for the poorer party.

    "I'm not really feeling the marriage anymore, Bob!"

    *poof* Half of Bob's stuff just became Mary's.

  • ||

    As someone who is separated from the person he is legally married to and living with someone else, I find your reliance on a government-issued piece of paper kind of charming and naive.

    There's no damn guarantee with a relationship, married or not. Either you both choose day after day to be together, or you don't.

  • Generic Stranger||

    I will also add that legal marriage gives your spouse a very high degree of confidence that you will see the marriage through, regardless of reason. You are putting your name on that dotted line. Anything else is springloading an premeditated escape cause.

    Given that 50% or so of marriages fall through, I fail to see how that is actually the case.

  • yonemoto||

    double taxation is no more or no less bullshit than single taxation. If the government is going to take your money, it's bullshit. There is no particular reason why it doing it twice is any worse, other than the fact that it's doing it more.

  • Contrarian P||

    I disagree. Although I find the income tax to be repugnant, taxing the person again after they have to pay it is like kicking someone when they're down. It not only disincentivises earning income, it also does the same for saving and investing. There is going to be some taxation to pay for government, particularly since we now have one that's this massive, but until we can substantially reduce the size of the government, the least we can do is not repeatedly penalize people for being productive.

  • yonemoto||

    1) How is it that the first event of taxation doesn't "penalize people from being productive"?

    2) Are sales taxes "double taxation"? You pay your income tax, then when you go to spend it, it gets taxed again.

    3) Obviously a VAT is "multiple taxation" but to avoid this, you need some sort of exemption voucher. Is that actually any better, it leads to more avenues of abuse and bigger bureaucracy to handle it.

    What I'm saying is that the idea that double taxation is *categorically different* from "single taxation", if there is even such a thing, is bullshit.

  • yonemoto||

    if we're being nit-picky, most taxes are structured in such a way to not "penalize people for being productive". Politicians and bureaucrats are dumb, but not necessarily unintelligent. Tax increases and bracketing are done -on the marginal dollar- so, while you're paying a higher percentage, you still have the incentive to make more, so that "making" the next dollar only nets you 40 cents, but it doesn't LOSE you money.

  • ||

    if we're being nit-picky, most taxes are structured in such a way to not "penalize people for being productive".

    You obviously haven't been listening to the rhetoric of Democratic politicians hating on productive people, or googled what the top marginal tax rate was when Kennedy took office (hint: over 90%. And then state and local taxes kicked in, for an effective top rate of about 100%).

  • sonofloud||

    Actually, it's twice as much bullshit.

  • AuH2O||

    One question sloop: How do we deal with spousal immunity?

    With no marriage, there are no legal spouses per se... so can you be compelled to testify against your partner(s) or what?

  • ||

    Examining why there should be any such thing as spousal immunity would be a good idea - we could have that debate at the same time. Personally, I think it's horse shit.

  • sonofloud||

    What they have to do with each other is both paying a higher percentage of taxes than most other people.

  • JeremyR||

    While I don't think government should be in the marriage business, at the same time, if a culture doesn't have enough kids then it's simply not going to survive.

    Incentivizing marriage between men & women makes sense if you want your culture to survive, as you should have more kids (and kids in stable households)

    We're reached that point in the West where we don't want to survive, so anything goes. Who cares about children or families?

  • Anonymous Coward||

    Whining about double taxation??? Try being gay and see how much in taxes you have to pay for the honor of being a second class citizen.

    Yeah, yeah, which has fuck-all to do with the matter at hand. Go find a sympathetic crotch to cry on.

  • sonofloud||

    What it has to do with each other is certain groups paying a higher percentage of taxes than other groups. We don't live in a vacuum though that is certainly where your head seems to exist.

  • Anonymous Coward||

    What it has to do with each other is certain groups paying a higher percentage of taxes than other groups.

    Whoo-hoo, empty platitudes,free of thesis, evidence, conclusion, or even humor.

    As to thematter of that friendly crotch and your stream of tears, have you met our resident sockpuppet, Tony w/spaces?

  • sonofloud||

    It's quite clear you are obsessed with crotches so you should get laid and let the adults deal with other matters.

  • Anonymous Coward||

    It's quite clear you are obsessed with crotches so you should get laid and let the adults deal with other matters.

    I'm sorry, didn't the WAAAAHHHH-mbulance pick up your little gay marriage screed? Why are you opposed to paying your fair share? Why do you hate single people?

  • sonofloud||

    Xmas vacation is over, back to jr. high you go with the rest of the delinquents.

  • Anonymous Coward||

    So you like to monitor school vacation dates? How long have you been on the sex offender registry?

  • Adam330||

    Gays pay a higher percentage of taxes than other groups? I doubt that. My wife and I actually pay higher taxes because we're married.

  • C. S. P. Schofield||

    So, you loath all taxes, and this makes double taxing people (including YOU, if you ever make a capitol gain) OK? If that thinking is typical for Gay persons (and it isn't, thank the gods) you DESERVE to be second class citizens.

  • sonofloud||

    You make so many assumptions, you'll never understand anyone's point but your own.

  • sonofloud||

    Same-sex spouses are paying as much as $6,000 a year in extra taxes because the federal government doesn't recognize gay marriage, according to an analysis conducted for CNNMoney by tax specialists.

    While marriage provides tax benefits for many heterosexual couples, same-sex families don't enjoy the same perks because they are not allowed to file their federal returns jointly. http://money.cnn.com/2011/12/2...../index.htm

  • Anonymous Coward||

    Do away with state-sponsored marriage. Problem solved, shut up and pay your fair fuckin' share.

  • sonofloud||

    lol how very profound

  • Anonymous Coward||

    Why do you hate teh singles, oh gay gadfly?

  • sonofloud||

    I don't hate single people, I hate morons who can't spell.

  • Anonymous Coward||

    I don't hate single people, I hate morons

    That's no way to talk about your mother.

  • Adam330||

    This is only the case if you have one earner, and one stay at home. If both people are earners, taxes are higher if you're married (except in the lowest tax brackets, where they are equal).

  • Fist of Etiquette||

    WE CAN'T SIMPLY CUT OUR WAY TO PROSPERITY. The president said so, and he's a genius.

  • C. S. P. Schofield||

    "The president said so, and he's a genius."

    Who says so? Based on what evidence? Have his IQ test results been published, and I didn't notice? How about his college grades?

    I mean, based on his policies, I'd peg him at low grade moron.

  • ||

    High IQ people are actually usually the worst kinda fucking statists. They assume that because they are smart that they deserve to tell other people how to live their lives because they obviously know better than the dunce. I'd MUCH rather have a humble idiot for a president than a genius.

  • ||

    And his subjects accept this without question. I was trolling at CNN the other day and you wouldn't believe the number of idiots using this as an actual argument.

    Until you ask them why not, at which point they cannot (or will not) explain their position.

  • Fist of Etiquette||

    It's not their fault if you're too much of an idealogue to feel that everything the president tries to do is genius.

  • Lord Peter Wimsey||

    Honestly, trying to explain this to the average American (with a college degree) is the most frustrating thing I've ever experienced. "But the rich don't pay any taxes." It's one thing to brazenly want other people's money, but even educated Americans continually insist that wealthier Americans ("Fat cats") are scamming the rest of us by not paying "their fare share."

    Half of America thinks the sun and planets revolve around the earth. Can these people ever understand anything? I doubt it. It is increasingly difficult to believe that the masses of this once great nation deserve liberty.

    More and more you want to say to America's rich (those who aren't feeding at the public trough), "Stand up and fight, bitches!" But I guess if you are accustomed to being mugged once every payday, having your mugger come back and take a little more mid-month is just something you learn to live with.

  • Lord Peter Wimsey||

    I meant "fair" share. No attempt to be linguistically clever.

  • ||

    More and more you want to say to America's rich (those who aren't feeding at the public trough), "Stand up and fight, bitches!"

    Or vote with your feet.-)

  • sloopyinca||

    We can't all do what you did, Doc. Some of us are trapped in one way or another.*

    *In my case, it's my ex-wife that won't let me take the kids offshore and won't split them 1/2 of the year at a time.

  • ||

    We can't all do what you did, Doc.

    You may not want to. It's no panacea, I assure you. There are all sorts of negatives as well as positives (Hello, FATCA. Now there's some unfair taxation). I was able to do so for one reason: American medical license. All the others buttress it.

    My other saving graces are when the new tax rates are applied and when the medical device tax hit. If they went into effect last year, then I would have been hit with the new increases in taxes (and a resounding FUCK YOU! to Hazel Meade for wanting to raise my taxes).

    Even expats still are subject to ObamneyCare regs, and my medical insurance policy is OCare compliant and quite pricey, since most countries in Euro-landia don't accept most policies. You either pay a private clnic (me), you get some type of citizenship recognition, or Protip: check your health insurance policy to make sure it will cover health and medical when overseas. To travel to UKR, USA (and some other countries) citizens don't need a VISA, but valid, current medical insurance is required to enter the country (verified at the country of departure).

    Also, I am extremely pissed off at you and Banjos.

  • sloopyinca||

    I used to live in Fajardo, Puerto Rico, but came back about 14 years ago. That was heaven for Americans. While there, I went over to the BVI and opened a numbered bank account where I transferred ample sums of money without it being traced, as I carried the cash on a boat. I operated mostly tax-free, as federal income taxes do not apply. And I owned several firearms, some legal and some not. I only came back because my wife at the time got pregnant and refused to stay down there. I even had multiple job offers on American and foreign islands alike, but she still said no.

    Why are you pissed off at us?

  • ||

    Why are you pissed off at us?

    Baby Reason. When I was evaluating your last pictures, my (female) colleague was sitting next to me and found the picture of her at the laptop so adorable (her specialty is reproductive/urology) that she mentioned, "I am ready to have children." And then kinda looked at me.

    Backstory: When I was planning this, I traveled here in Feb to scope it out. That's when I first met her, and struck up a friendship. Strictly platonic. After a few Biden level language gaffes with another person here, she teased me mercilessly, but I added her to my Skype. Over the prep time doing this project, she helped me with language and culture stuff, but strictly friends.

    Since I have been here, we eat lunch together often, and I was her escort for a New Year's Dance (Protip: Learn how to classically dance gentlemen; I was forced to take dance lessons as a kid. Best money Mama Maximus spent.) Again, strictly platonic.

    I get a Skype call this morn and she is REALLY pissed off I have not asked her out on a date this weekend, and has informed me of two things:

    1) I will be traveling with her to Odessa for Christmas, and expects an answer soon (today).

    2) She said she wants me to meet her father, in particular.

    I have been Sadie Hawkins'ed and I have no idea what to do.

  • Ted S.||

    Drink a lot with her father. I'm sure he can commiserate on your woman trouble.

  • ||

    Drink a lot with her father. I'm sure he can commiserate on your woman trouble.

    He's a Lt. Col. (ret) in the Red Army/UKR militia. From what I understand, he's the Russian version of R. Lee Ermy and can eat Putin for breakfast.

  • ||

    "...just friends....platonic....strictly platonic...."

    Geez Doc, you dont understand women at all. AT. ALL.

    *shaking head slowly*

    I looked at the pic....what the hell are you doing sitting here talking to us shitheads?

  • ||

    Geez Doc, you dont understand women at all. AT. ALL.

    Actually, I do. Quite well. They teach us about wimminz in doctor school and use my doc-mind-reading-powers well. My problem is I have always been approached, I am old-fashioned (door opener, kind to little old ladies, a real PATRIARCHY type), and in past relationships, inevitably, I start treating them as a patient and not a partner. Relationship killer. Every. Single. Time.

    Also, I have found that all the good ones are taken. Perhaps not this time.

  • ||

    Also, Ted, she speaks almost no English (but she know all the American curse words! HA!).

  • robc||

    Im trying to figure out at exactly what point you were officially a moron for thinking it was STILL a platonic relationship.

    Im thinking at "Since I have been here, we eat lunch together often".

  • RBS||

    Earlier than that rob:

    "she teased me mercilessly, but I added her to my Skype. Over the prep time doing this project, she helped me with language and culture stuff, but strictly friends."

  • sloopyinca||

    Oh, that's not good. All you need to do is find another woman in the next few weeks. I suggest spending a lot of time in strip clubs flashing a big Yankee roll of singles. That always worked for me when I was overseas.

    Using a phony medical excuse, which has also used in the past to get a woman off my back, is out since she's a doc.

    Yeah, you're pretty well fucked. So I guess the next question is, how does she look?

  • ||

    So I guess the next question is, how does she look?

    My favourite picture, uploaded with permission.

  • sloopyinca||

    Are you a homosexual or is she a psychopath?

  • ||

    Are you a homosexual or is she a psychopath?

    Negative on both.-) I also hate strip clubs (read up on sunken costs) and absolutely detest them. I am also kinda terrible with women (I need a neon sign and Gallagher's Sleg-O-Matic I am so oblivious to cues), though I can attract a gold-digger like no one's business.

    I have only dated one person in medical, and swore on a stack of Bibles, Torahs, and Blessed Lasagnes of the FSM that I would never date, let alone marry, someone in the medical profession.

  • robc||

    I need a neon sign and Gallagher's Sleg-O-Matic I am so oblivious to cues

    Apparently she has finally figured this out about you so she has moved on to obvious.

    You have exactly two options, I think:

    1. You accept you are deep into a serious relationship already.

    2. You call it off.

    Anything else and you make America look bad.

  • Voros McCracken||

    Groovus's patriotism must be questioned at this point.

  • ||

    You aren't deep into a serious relationship until you've been deep inside her.

    Just sayin.

  • robc||

    I need a neon sign and Gallagher's Sleg-O-Matic I am so oblivious to cues

    Speaking of this, 43 year old robc would like to go back in time and kick 18 year old robc in the nuts for being so fucking stupid.

  • Voros McCracken||

    "Speaking of this, 43 year old robc would like to go back in time and kick 18 year old robc in the nuts for being so fucking stupid."

    There is much truth written here. As I remember those days, I often recoil in horror what I moron I was.

  • ||

    I hear you on that Doc (the neon sign and the Gallagher sledge-o-magic in particular, lol). Odessa is pretty nice if I remember correctly.

    Good luck with the dad thing :-)

  • kinnath||

    I'm sure she'll take good care of you Doc.

  • ||

    You have a 'favorite' picture of her? You didnt say here is a nice one of her....but it is your favorite.

    It would be very presumptuous of me to try and guess what is going on half way around the world with two people I have never met but that really jumps out at me.

  • ||

    You have a 'favorite' picture of her? You didnt say here is a nice one of her....but it is your favorite.

    Well, yeah, I keep a few pictures of all my Skype buddies. She is a pretty woman, no? And very wicked sense of humour. Smart too.

    It would be very presumptuous of me to try and guess what is going on half way around the world with two people I have never met but that really jumps out at me.

    Apparently you need to revise the word "platonic" (meaning, at the risk of TMI, nothing physical yet).

    I have decided I am going to Odessa.-D I guess I had better pack.

  • ||

    Doc...

    You are smitten.

  • Almanian.||

    Groovus and Svetlana
    Sittin' in a tree.
    K-I-S-S-I-N-G
    First comes love
    then comes marriage.
    Then comes trouble
    in a baby carriage!

    Best wishes to you and your sweetie, Doctor! Enjoy it.

  • ||

    "Doc...

    You are smitten."

    Who wouldnt be? I just got back and read the 'smart and wicked sense of humor'...plus those looks.

  • ||

    I'd say he he's found a winner, but he's playing it up to us as how this fantastic woman "duped" him out of his manhood.

    I'd bet he is a more than willing participant in said dupage. And furthermore, he has the gall to blame it on baby Reason. :-)

  • ||

    I swear FdA, I was duped! Also, Merry Christmas!

  • ||

    Same to you my friend.

  • Calidissident||

    You definitely made the right choice Groovus

  • alittlesense||

    Mother of Pearl! Gorgeous and smart (the doctor part), and it seems a great sense of humor. What are you waiting for?

  • RBS||

    Good luck with all that Doc. The female mind is... something...

  • ||

    I get a Skype call this morn and she is REALLY pissed off I have not asked her out on a date this weekend, and has informed me of two things:

    1) I will be traveling with her to Odessa for Christmas, and expects an answer soon (today).

    You've been on multiple dates, she still hasn't let you put your penis in her vagina, and she's giving you this bullshit ultimatum, instead of sweetly asking if that is what you want?

    Sounds like trouble. Unless she is really beautiful and charming, you might want to find someone else to date.

  • Night Elf Mohawk||

    Even expats still are subject to ObamneyCare regs...

    For a year, more or less. Not ideal, but not an ongoing burden, either.

  • sloopyinca||

    The whole "fair share" argument is class warfare at its best. Hell I heard a guest (a Columbia economics professor!) on Hannity* say all income over $1M should be taxed at 70%. When pressed for a reason, he said "because it's fair." Hannity asked for a definition of fair and the guest couldn't articulate one, but was sure the rich deserved to be taxed that high because it, again, "was fair." When pressed one last time that this could cause those people to invest less, the guest said no decent person would work less hard or invest less just because the government took 70% of their income. In fact, he said it would cause them to work even harder to make up for the "additional revenue" they were providing by paying their fair share.

    *Hannity is a fool but my local talk station was on a commercial break and he's on my fallback channel.

  • ||

    Someone with whom I discuss these topics regularly thinks exactly like that professor. It is maddening. I am convinced that she is mentally ill.

    Sloopy, did you get my last email giving you an approximate arrival day of your winnings courtesy of Groovus?

  • Palin's Buttplug||

    See, my tax plan is absolutely fair (and you endorsed it).

    If you missed my brilliant tax plan here it is:

    A 25% tax on all income with a single $25,000 deduction for all households. End.

  • sloopyinca||

    It's certainly more fair than what we have.

    But one question: once that money is taxed, is it subject to being retaxed if the person goes to Vegas and wins? And if so, why is that fair if he's already paid taxes on it.

  • ||

    Why not? Income is income.
    You should get taxed at the same rate on all income, whether it comes from lottery winnings or wages.

  • ||

    You and Proprietist both need to read this article, then read the current tax code, then rinse and repeat until it starts making sense. I've never seen two people so passionately devoted to maintaining their ignorance.

  • Rasilio||

    You do realize that this would be a massive tax increase on the lower middle class, eliminate the tax welfare that most of the poor benefit from, and be a moderate increase in taxes on the very rich (but one they would likely be happy to take since it would simplify their accounting and tax preparation so much) right?

  • VG Zaytsev||

    You do realize that this would be a massive tax increase on the lower middle class

    I don't think that it would be since people are already paying 15% payroll taxes on the 1st dollar of income.

    Any logical tax reform (yeah not gonna happen) would start by admitting that we have 2 parallel income taxes and combine them into 1 income tax.

  • Rasilio||

    Well PB's plan as posted does not discuss whether it is intended to replace all Federal Taxes or merely the income tax. I read it as a replacement for just the income tax which for the lower middle class ranges from an effective rate of 4 - 10%.

    Under this plan it would go up to 10 - 15%

    If this is intended to replace both income and payroll taxes effective tax rates would go down for pretty much everybody and so this plan could never work because it would not raise enough revenue to match what we collect today.

  • VG Zaytsev||

    If this is intended to replace both income and payroll taxes effective tax rates would go down for pretty much everybody and so this plan could never work because it would not raise enough revenue to match what we collect today.

    So here's a rough calculation.

    Total personal income in the US in 2011 was $13Tn

    122 million households x $25,000 household deduction = 3.125 Tn deductions

    13Tn - 3.125Tn = 9.875Tn taxable income X .25 (25% tax rate) = 2.465 Tn Revenue.

    2011 Actual Revenue was as follows.
    1.09 Tn Personal Income Tax
    0.82 Tn Social Security Tax
    0.18 Tn Corporate Income Tax
    0.21 Tn Other Taxes
    2.30 Tn Total

    So replace every tax with that flat tax proposal would yeild 5% more revenue.

    Replacing only the personal and SS tax with the flat tax would yeild 550Bn a year in more revenue - more than the "Bush tax cuts".

    So I'd say that it raises too much revenue, not that it fails to raise enough. Which could be fixed by changing the deduction to a per person one and/or lowering the tax rate.

  • Taggart||

    I didn't realize your plan eliminated the social security tax. In that case...it would dramatically lower the effective tax rate for everyone. But you'd have to eliminate social security payments too.

  • Taggart||

    My current EFFECTIVE tax rate (after deductions) is about 17%. Under your plan, it would be about 18.5%. I am in the middle class. I would speculate your plan would raise the effective tax rate on 75% of the tax-paying population. So while it may be fair, it would not be popular. Try a higher standard deduction as well as deductions for dependants, and you may get traction.

  • ||

    That is the classic libertarian solution to the problem, yes.

    I'd actually make the standard deduction higher.

  • ||

    Not exactly. Most libertarian tax schemes are on the consumption side, not the income side.

  • Paul.||


    A 25% tax on all income with a single $25,000 deduction for all households. End.

    Define "income".

  • ||

    "Any increase in the nominal-dollar value of anything you own" is the only possible standard consistent with the rest of HazelMeade's rhetoric.

  • RBS||

    I'm confused, why would that person work even harder to make up for the lost revenue when that will also be subject to increased taxation?

  • sloopyinca||

    They'd work even harder because the tax fairy would have sprinkled "social contract awareness dust" on him, causing him to do his part, duh!

  • RBS||

    I always forget about the tax fairy.

  • Ted S.||

    Because fuck you, that's why?

    (Of course it doesn't make sense. But people are emoting, not thinking, when it comes to tax policy.)

  • Mensan||

    Because, if that person has the ability to work harder, but not the need for the additional income then something something Marxist platitude.

  • VG Zaytsev||

    I'm confused, why would that person work even harder to make up for the lost revenue when that will also be subject to increased taxation?

    The theory is that people work for after tax income and would increase their effort to maintain the same after tax income.

    Which is just stupid on a number of levels. One of which is that most people with that type of income are earning it from investments and not labor.

  • MJGreen||

    the guest said no decent person would work less hard or invest less just because the government took 70% of their income.

    But we all know that anyone making over $1M isn't a decent person.

  • ||

    "Half of America thinks the sun and planets revolve around the earth."

    Thanks Lord Wimsey, I had forgotten about that. You just brought me to tears.

  • sloopyinca||

    Hey, thanks for the booze man. It's not here yet, but I've been swamped since Thursday and haven't had a chance to properly thank you. As an added bonus, Doc Groovus is here today, so he knows your debt to him is cleared off the books.

  • sloopyinca||

    Not here as in here-here, but here as in online-here.

  • ||

    Dont thank me Sir, the pleasure is mine. Thank Groovus.

  • ||

    Pozhalujsta vsjo.-)

  • RBS||

    What did he end up giving you?

  • sloopyinca||

    Not sure. I am getting ready to leave for PHX and it should be here when I get back in 2 days.

  • RBS||

    Nice, it's like christmas in january.

  • sloopyinca||

    It'll be my very own Epiphany!

  • alittlesense||

    Or Orthodox Christmas, since Groovus seems to be out on the inscrutable steppes of the East....

  • ||

    But I guess if you are accustomed to being mugged once every payday, having your mugger come back and take a little more mid-month is just something you learn to live with.

    Was arguing with a (self proclaimed) successful businessman (I got the impression he was corporate) the other day (at CNN). This is a direct quote:

    Obama is a great President for our time. I remember him in my prayers every night. Every night.
    Higher tax rates mean more reinvestment for smaller businesses because the owners choose to reinvest before there are (more highly taxed) profits. This is what we saw when the rates were much, much higher, but it probably has some effects even at the low rates we are talking about now. For larger corporations it might mean smaller dividends, but it doesn't affect reinvestment. DIrectors and shareholders decide that.

    All I can come up with is..."corporate guilt" or he was given a pony.

  • Michael S. Langston||

    It's not true though - business people surely use the tax rate to decide what to do with their money, but if reinvesting simply creates more income to be taxed at the higher level, they would be remiss to not look at alternatives. Such as growing overseas instead of locally.

    Irregardless, the issue is the tax rate, depending upon how set, contain incentives for both work and play.

    Studies & reality have shown low tax rates breed more work, high tax rates breed vacation time.

    Check France for proof.

  • Michael S. Langston||

    *contains

  • Taggart||

    The problem with checking France for proof is that France is populated by French people, and America is populated by Americans.

    It is true that taxes discourage work, but at what *point* in the *U.S.* do they discourage work? You can inspire more work by cutting taxes, but only up to a point. Say I've already worked 40 hours this week. I COULD work another 10. Under one tax regime, I'd make $400 for my 10 hours. Under a higher tax regime, I'd make only $350 for my 10 hours. Under a still higher tax regime, I'd make unly $250 for my 10 hours. Will I work the 10 hours? Well, if all my needs are supplied and I don't like my job, I'm not working the 10 hours under ANY of those tax regimes. If my needs are not supplied and I have to feed my children, I'm working the 10 hours no matter which of those tax regimes is in effect. If I want the money to buy something I want but don't NEED the money, I might work under the regime where I net $350 or $400 but not under the regime where I net $250. So it's not an easy equation of - raise taxes reduce work. You may reduce work. Or you may not. It depends on the needs of the workers, and it depends on how high the taxes are.

  • ||

    You're using "needs" when you probably ought to use "wants".

    ANY level of taxation reduces the amount of work people do on the books in aggregate (some people are economic ignoramuses). The higher the level, the more vacation time people will take, and the more they will seek work that can't be taxed.

  • ||

    What about someone who earns all of their income from capital gains? If taxation is legitimate, as a necessary evil, a matter of fairness, or the "price we pay for a civilized society" then that person should pay something.

  • sloopyinca||

    Um, how is it even possible to earn all of one's income from capital gains? You'd literally have to find the money after it fell out of a US Treasury truck for that to be possible.

    Please give me a scenario where your theory is even possible (except for the one I posited above).

  • Palin's Buttplug||

    Hedge fund managers do (called "carried interest").

  • sloopyinca||

    Apples and oranges. Besides, what a hedge fund manager makes in that scenario is his income, not a capital gain.

  • Palin's Buttplug||

    But it is currently taxed as a capital gain at 15%.

  • sloopyinca||

    And under the current tax scheme, I disagree with that assessment. It's entering a new revenue stream and should be taxed as income, IMO.

  • bmp1701||

    Easy. You own a huge pile of assets, which appreciate in value. If you have enough assets, you can realize enough capital gains to avoid the necessity of working, which would normally generate ordinary income. That's one of the reasons why the most heavily taxed people are those below the very wealthiest; The wealthiest pull in millions entirely through gains on their capital assets, and thus pay tax on most of their income at the capital gains rate.

    "Income" being defined as money earned in a year, in a clearly realized form.

  • sloopyinca||

    Did the pile of assets come from the Tooth Fairy or the Easter Bunny, because that matters.

  • bmp1701||

    Sure, the initial investment was probably made with money that had already been income taxed. The IRS has never given a rat's ass, and more importantly, SCOTUS has long allowed capital gains to be taxed. SCOTUS basically allows the income tax to target any clear appreciation in a taxpayer's wealth, whether that results from a payment by somebody else or through appreciating asset values.

  • bmp1701||

    Income, in a nutshell, is usually anything that makes you richer. And Uncle Sam wants a slice. Pakistani toddlers' bodies don't vaporize all by themselves. Also, SOMALIA!

  • sloopyinca||

    Sure, the initial investment was probably made with money that had already been income taxed.

    Which pretty much demolishes his hypothetical.

  • bmp1701||

    If, for example, an entrepreneur invests $100,000 in his starting corporation, gets stock in exchange, and sells the stock 10 years later for $50 million. The initial $100,000 probably is not "double-taxed", since the capital gain that is taxable is ($50 million MINUS $100,000).

  • sloopyinca||

    But where that $100k came from is important. Santa Claus? Easter Bunny? Tooth Fairy? It's important.

  • ||

    It's not important. You're making an arbitrary distinction as to when the money was first taxed.

    Say I have $100k that I already paid taxes on, start a business with it, and hire employees. Why should their paychecks be taxed when I already paid taxes on the $100k investment that provides their salaries?

    You have to wipe the slate clean somewhere.

  • Contrarian P||

    What if he invests the 100k and the corporation goes bankrupt? Does he get all of the taxes back that he paid on the 100k? It would seem that would be fair, as you're going to tax him on any appreciation.

  • ||

    Oh, well, THAT'S different. Your gains belong to the government. Your losses you can keep all for yourself!

  • Rasilio||

    Not that hard actually.

    You inherit an initial stake of money, or it is gifted to you by a relative, you proceed to invest that and live off of the interest.

    Realistically taxing the gift or inheritance would also be double taxation as that money was taxed when it was initially earned as income and so most trust fund babies would find themselves in this sort of situation.

  • VG Zaytsev||

    Realistically taxing the gift or inheritance would also be double taxation as that money was taxed when it was initially earned as income...

    As is taxing the recipient of money that is considered consumption.

    The double taxation argument is just lame, except in the specific case of the double taxation of corporate income. Which is easily fixed by making dividend distributions deducible from corporate taxable income.

  • robc||

    I think the easier fix is to get rid of corporate income tax and then tax cap gains and dividends as regular income at the full rate.

    It delays taxation, in that income retained by the company and then capital gains not cashed in go untaxed for long periods of time. There are ways around this, but they probably complicate things too much.

    This is simple, eliminates double taxation and is a strong inducement to keep companies from moving overseas. In fact, it creates the opposite effect.

  • VG Zaytsev||

    That solution would work too, but I don't think it's realistic in anything like today's political environment because the corporate income tax gives government the ability to influence corporate behavior - which is arguably the real point of corporate income taxes.

    And there is a legitimate problem with allowing corporations to retain earnings untaxed but not allowing the same thing for individuals.

  • robc||

    And there is a legitimate problem with allowing corporations to retain earnings untaxed but not allowing the same thing for individuals.

    I dont disagree, but the much more complicated solution is to eliminate the corporate income tax and make all corporations pass-thru entities. To do that would require extreme simplification of the tax code, or it would be virtually impossible.

    I prefer solutions that simplify instead of complicate, so eliminating cap gains and tax on dividends while keeping the corporate tax would be the most simple. Your idea of making dividends a deduction for the company complicates the tax code up a bit. Also, your idea doesnt fix the cap gains problem, although if dividends were deductible, they would become the preferred solution. Which isnt all bad, I think companies retain too much now. Instead they "distribute" the money thru things like doing stock buyback to drive up stock price and funnel the profits into cap gains.

    Which is to say that while it isnt my preferred choice, your suggest is better than status quo.

  • robc||

    To do that would require extreme simplification of the tax code, or it would be virtually impossible.

    Adding on to my point, if we are doing that, there are a lot more important things to try to get done.

  • VG Zaytsev||

    Most capital gains aren't related to stock ownership. So the only way to make the tax on them 'fair' would be to index the basis by the cpi so that people are not being taxed on illusory inflation gains. Which as you noted on expensing dividend would make the tax code and tax calculation more complicated, a problem in itself.

  • ||

    "If...then that person should pay something."

    I am not sure if you are being sarcastic or not, but the conclusion does not follow from any of the premises you listed. A premise that you did not list is that taxation's sole purpose is to raise revenue. If you include it the opposite conclusion is reached.

    The only justification for the conclusion you posted is personal feeling. Specifically Envy. Feelings are important. Feelings tell us what is right and good, what is fair. Feelings are unfailing in leading us to make correct decisions. ( yeah, I am being sarcastic with this last paragraph )

  • ||

    the conclusion does not follow from any of the premises you listed.

    Fairness is a very subjective notion, but in most peoples' minds it would require everyone paying at least something.

    A premise that you did not list is that taxation's sole purpose is to raise revenue. If you include it the opposite conclusion is reached

    This sounds like a Laffer curve type justification, which is correct only if we're on the falling side of the curve.

  • ||

    "... in most peoples' minds..."

    As Lord Peter Wimsey already mentioned in a substantial number of people's minds the sun revolves around the earth.

    As things are everyone does not pay at least something. In fact nearly half do not. I think there is some willful cognitive dissonance going on to justify their indulgence in envy.

  • Mickey Rat||

    "Fairness is a very subjective notion,..."

    Subjective notions are a very unjust thing to base law or policy upon.

  • ||

    It seems a little disingenuous to argue on the one hand that people are too stupid know the Earth revolves around the Sun, and on the other to argue that they're too smart to overlook their cognitive dissonance.

  • ||

    "...on the one hand that people are too stupid know the Earth revolves around the Sun..."

    Intelligence has nothing to do with it. The problem is ignorance.

    "too smart to overlook their cognitive dissonance."

    Dont underestimate people's ability to fool themselves to indulge in their impulses, avoid responsibility or to avoid facing ugly truths.

  • ||

    Subjective notions are a very unjust thing to base law or policy upon.

    Agreed.

  • Mickey Rat||

    So appeals to "fairness" in taxation should be ignored, right?

  • ||

    Right. But what other basis is there?

  • Mickey Rat||

    Well, there's economic efficiency, like Richman was arguing in the article. There's justice, equality under law. if you think "fairness" is the only standard, you have very little imagination.

  • ||

    All you need is an initial investment, which would in most circumstances be taxed. But not necessarily. It could be a gift below the gift tax threshold.

  • sloopyinca||

    So you came by the money that iwould have already been taxed at some point, right? If not by the gift tax, then as income for whoever gave it to you. That's still double-taxation.

  • RBS||

    Making all your income from capital gains based on an investment from a gift below the gift tax threshold is absurd on its face.

  • ||

    Making all your income from capital gains based on an investment from a gift below the gift tax threshold is absurd on its face.

    Not really. I'm not talking about someone pulling in 1M/year in capital gains.

    Plus, I'm simply arguing a hypothetical here. Note the bold in my initial post.

  • sloopyinca||

    Plus, I'm simply arguing a hypothetical here. Note the bold in my initial post.

    OK, then here's a hypothetical for you: There are 7 people in front of a speeding train
    1. 10 y/o female upper-class
    2. 22 y/o male homeless person
    3. 24 y/o female ned school student
    4. 78 y/o male Alzheimers patient
    5. 54 y/o male slumlord
    6. 3 day old female baby with Down Syndrome
    7. 18 y/o male engineering prodigy
    and you get to pick the 6 that will survive. Who do you pick to die?

  • ||

    Who do you pick to die?

    Depends on how I got into the situation and what exactly you mean by "pick".

    But, if refusing to choose results in anyone surviving then I'd refuse. If refusing to choose results everyone dying then I'd probably choose randomly.

  • sloopyinca||

    You still don't understand.

  • ||

    I admit that the I didn't know where you were going with the train thing, so I figured I'd just answer honestly.

    The only thing I can think is that you were you trying to make the point that the initial conditions of the hypothetical situation are important, which I accepted when writing that it "Depends on how I got into the situation.."

    And that's true. See my post above about the $100k.

  • RBS||

    "and you get to pick the 6 that will survive. Who do you pick to die?"

    Which one is Tulpa?

  • ||

    and you get to pick the 6 that will survive. Who do you pick to die?

    Does my choice need to be moral?

  • ||

    OK, then here's a hypothetical for you: There are 7 people in front of a speeding train
    1. 10 y/o female upper-class
    2. 22 y/o male homeless person
    3. 24 y/o female ned school student
    4. 78 y/o male Alzheimers patient
    5. 54 y/o male slumlord
    6. 3 day old female baby with Down Syndrome
    7. 18 y/o male engineering prodigy
    and you get to pick the 6 that will survive. Who do you pick to die?

    The 78 year old has the lowest expected remaining lifespan, so saving everyone else maximizes the number of years of life left to live.

  • Tulpa (LAOL-PA)||

    If the med student is hot, I'd save her and let everyone else die because I don't want competition.

  • iggy||

    Yeah, I can't tell you how many hot chicks I've lost to 3 year old girls with Down Syndrome.

  • sloopyinca||

    It should be called a "Dividendd Tax," with two D's for the double-dose of taxes they put on you.

  • Ted S.||

    I figured the two D's were for the bra you hide the money in.

  • ||

    Upgrayedd!

  • Palin's Buttplug||

    As defined in common law a corporation is a person and subject to tax. Then a different person may realize income from this corporation and is subject to tax as well. This is not double taxation. It is a single tax on each person just as an employee is taxed just once (not twice as in Richman's claim).

    Shareholders benefit from this arrangement by putting the liability onto the corporate person.

  • sloopyinca||

    According to current law when the money is transferred from the first party to the second (in your scenario), the transfer should either be taxed as wages or a gift, and the cap gains/dividend tax would actually be the third time the money is taxed.

    Don't you understand that once income is taxed, it should never be taxed again? If I choose to give it to my friend as a gift why should he pay taxes again if I already have? And why should he pay taxes if he invests it and makes money on that investment? I've already paid the taxes on that transfer.

    Sorry but income taxes are immoral )and should be replaced by a single onsumption tax), but dividend/cap gains/inheritance/gift taxes are doubly so.

  • Ted S.||

    But but but... MULTIPLIER!

  • SIV||

    Don't you understand that once income is taxed, it should never be taxed again?

    Yet you propose:

    1: eliminate all income taxes and tax only consumption.

    In which savings get taxed a second or third time.

  • ||

    Actually, even a consumption tax is immoral, as the person who buys more expensive shit pays more for his fixed set of govenment services.

    The only moral tax is where each individual pays and equal dollar amount for the equal services provided to them by the government.

  • VG Zaytsev||

    If I choose to give it to my friend as a gift why should he pay taxes again if I already have?

    For the same reason that it's taxed if it's not a gift but a payment for his service of cutting your grass.

  • ||

    IOW, because fuck you, that's why? "Because the government already fucks you once" isn't a good reason for "...so they ought to be able to fuck you again any time they like"

  • ||

    Actually the correct solution is to let corporation deduct dividends paid to investors from earnings.

    The investor pays income tax on the dividend, the corporation pays income tax on the profits that go back to the company after paying dividends. Everyone only gets taxed once.

    Just treat dividends as an expense. You're paying investors for the service of them lending you capital. It's not that different from paying interest on a bank load.

  • ||

    So you don't know the difference between equity and debt. That's cute.

  • robc||

    single onsumption tax

    You misspelled single land tax.

    And consumption, if that is what you were wrongly going for.

  • Ted S.||

    If we tax consumption, what's next? A tax on typhus?

  • Palin's Buttplug||

    Don't you understand that once income is taxed, it should never be taxed again?

    Although taxation is immoral income is and should be taxed over and over again just as a profit is realized every time a component moves through the supply chain on its way to a consumer. The idea of taxation is to distribute the burden - as immoral as that is.

  • sloopyinca||

    As a product moves through the supply chain, income for all of the employees at the various supplying factories/shops is taxed, so a VAT just increases the price the end user pays, which decreases everyone's buying power at the expense of putting more money in the government coffers. Not only that, but it's been a failure everywhere its been tried and decreases the standard of living for poor people, as they are priced out of the market on many items.

    Why do you hate poor people?

  • Jerry on the road||

    Distribute the burden?

  • ||

    A VAT is a consumption tax and ends up being horribly regressive. Personally I like the flat income tax with a high standard deduction solution best.

    Anyway the only reason Democrats want a VAT is so they can mooch more money out of the economy. All they see is a gravy train.
    It's not like they're going to add it an eliminate the income tax. They'll just add it and spend it. Andv then add a shit ton of loopholes for favored industries.

  • Mickey Rat||

    "It simply is not the business of government to reward and punish the different ways in which people may use their incomes."

    And that, Mr. Richman is where you part ways with the "fair share" lefties and why your argument will fall on deaf ears.

  • waaminn||

    Dude is making all kinds of sense man. Wow.

    www.Privacy-Mix.tk

  • sloopyinca||

    I'm off for PHX. Have a great day, all.

  • Incredulous||

    The article makes a valid point in comparing the difference in tax treatment for investment and consumption. But it errs in stating that consumption is not taxed. It is taxed - with a sales tax. Of course, this tax is much lower than current taxes on dividends or capital gains.

    The article also misses or glosses over a couple key points. The article does mention the corporate income tax which is typically regarded as the "first tax" in the double taxation of dividends. If one considers this tax, the effective tax on dividends is much higher than the direct tax, say 35% + 15%. So the effective tax is actually at the highest income tax rate or higher. The article should also have mentioned the impact of inflation on any investment income. Current tax policy does not account for inflation. This results in an extremely high effective tax rate on investment - greater than 100% in some cases!

    And then there's the unequal treatment of capital gains and losses. Under current tax policy, you can only deduct $3,000 of losses annually but must pay taxes on all capital gains. This diminishes the importance of risk in investment - it essentially creates a "tails I win, heads you lose" scenario. In order to reduce unfairness, all capital losses should be deductible immediately and retroactively.

    All in all, current taxation of investment gains is grossly unfair, not because it is too low but quite the opposite.

  • ||

    There is no federal sales tax - I assume the article was referring exclusively to federal taxes since it also didn't mention state-level income taxation of individuals or corporations.

    It also mentions the corporate income tax in paragraph 12.

  • robc||

    It is taxed - with a sales tax.

    Many items also have an excise tax, which is another form of consumption tax.

  • VG Zaytsev||

    But note that in order to buy the asset, the investor had to put off consumption.

    That ignores the fact that the tax code has been intentionally incentivizing consumption over investment since the 1930s.

  • ||

    I pine to live in a world where I can afford to give a shit about the capital gains tax rate. It just doesn't matter. The only thing that matters anymore is debt. Tax whatever you want, at any rate you want, you're never gonna cover what we're shelling out, year after year after decade. We need riot-inducing slashes in spending and we need them five years ago. We are so doomed, and worrying about the capital gains tax is like cleaning out the gutters when your house is on fire.

  • ||

    +1

  • VG Zaytsev||

    Maybe, we should just end the debt charade and openly admit that we are funding X% of the government through seigniorage.

  • Hollywood||

    Why this isn't already obvious to everyone I find confounding (and that % is high).

  • ||

    And with that I am off to drive the wife to the yarn store. Y'all have fun.

  • np||

    "will rise to 20 percent"

    technically, 23.8%

    and like already mentioned by sloopy et.al, it's not even double taxation, it's really taxation ad-infinitum.

  • Sevo||

    OT:
    Lefty ignoramus proves to be, well, lefty ignoramus:
    "California man says he can drive in carpool lane with corporation papers"
    See, if corporations are treated as a collection of individuals under A-1, well, a bunch of papers lying on a car seat....
    Yes, CA truly does have some of the dimmest bulbs in the US
    http://usnews.nbcnews.com/_new.....ion-papers

  • RBS||

    I'm sure he thought that was some brilliant piece of Daily Show level comedy too.

  • BMFPitt||

    He imagined what he might say: “Your honor, according to the vehicle code definition and legal sources, I did have a ‘person’ in my car. But Officer so-and-so believes I did NOT have another person in my car. If you rule in his favor, you are saying that corporations are not persons. I hope you do rule in his favor. I hope you do overturn 125 years of settled law.”

    At which point the judge will say, "Papers are not corporations any more than birth certificates are people."

  • Sevo||

    The judge could also ask that he get the people who constitute the corporation in his car, in which case, he wouldn't have been pulled over.
    The willful ignorance of the left is constantly amusing; see shithead below.

  • T o n y||

    Here's a little comic to illustrate the bullshit canard that is double taxation.

  • ||

    At the risk of sounding like a wealth apologist T o n y, go fuck yourself.

    God, you are an awful troll.

  • RBS||

    Who knew only wealthy people owned stocks? My grandparents will be excited to find out they are now "wealthy."

  • ||

    So will the public union pension funds.

  • ||

    T o n y's little cartoon isn't that far off. It contains essentially the same point I've been trying to make up thread. Where you set the starting point is arbitrary.

    Unfortunately, when I say there's no starting point then T o n y will want to tax as much as possible, the rest of you will object to my premise, and I'll sit here and wonder why no one is stating the obvious conclusion.

  • ||

    Your point is not lost on me and it is a valid one. Unfortunately it is completely lost on the author of that cartoon and our own beloved shithead.

    This is why a consumption tax would be the best fix.

    You should get a better name.

  • ||

    If I had to agree to a system of taxation, consumption it would be. But that's a big if.

    You should get a better name.


    I think my parents would be hurt.

  • Sevo||

    T o n y| 1.6.13 @ 12:41PM |#
    'Here's a pile of lefty propaganda to prove I'm an ignoramus'

    We got it, shithead.

  • OldMexican||

    Re: Tony,

    Here's a little comic to illustrate the bullshit canard that is double taxation.


    The cartoon to which you so triumphantly link confirms what Richman is saying, Tony. The only difference is that it treats dividends as misbegotten income, that is the cartoon is infused with the usual envy-based politics found in kindergarten thinking. That in itself does NOT make the argument, that there exists double taxation, a canard.

  • T o n y||

    Nobody is saying dividends are "misbegotten income." Just that they're income. Anti-tax advocates mysteriously seem to care most about so-called double taxation on forms of income that go mostly to the wealthy.

  • Tulpa (LAOL-PA)||

    Right. We're always shamelessly stumping for increases in payroll taxes and sales taxes.

    Or maybe you have us confused with your VAT-loving friends on the left?

  • OldMexican||

    Re: Tony,

    Nobody is saying dividends are "misbegotten income." Just that they're income.


    Ok, income that holds a lesser moral weight than income from toil. In the cartoon, dividends are not only lumped together with income from exchange, they are singled out as "income" for the wealthy as if receiving dividends is less deserving.

    Anti-tax advocates mysteriously seem to care most about so-called double taxation on forms of income that go mostly to the wealthy.


    Even if that were true (which would ignore pensioners and small investors), why would thieving from the rich be any more moral than thieving from everybody else?

  • T o n y||

    Uh it's treating it as equally deserving, as income just like all the other forms that are taxed. Not that you support income taxes, but if you stipulate an income tax and then complain about "double taxation," the notion is absurd on its face (since all income was someone else's income before) and can only be in the service of wealth-coddling.

  • ||

    It's treating income received after its been taxed as income as additional income to be taxed again as income. Again, the only way this cartoon illustrates what you think it does is if you have absolutely no idea what equity is and pretend that the corporate income tax gets paid by someone other than the equity holders (the actual owners of the corporation).

  • ||

    The double taxation argument properly construed doesn't refer to capital gains.

    It's actually about taxing profits at the corporate level and then taxing them again when they are distributed as dividends.

    In between paying corporate tax and paying dividend tax NO profit is realized. The only thing that happened is that the money got transferred from one bank account to another.

  • ||

    That only really demonstrates your point if you're too ignorant, stupid, or both to understand what equity is. So it's perfectly understandable how you were taken in.

  • T o n y||

    On the other hand, I find it completely mystifying how so many of you are taken in by such obvious bullshit buzzwords as "double taxation" whose only purpose is to convince stupid people to vote for welfare for the rich.

  • ||

    In other words, you have no retort for the rather obvious fact that you do not understand how equity works, so you're going to go ahead and substitute vacuous name calling for an actual point? Well color me shocked.

  • BMFPitt||

    Dividends are double taxed. That is wrong, and the remedy is to remove the tax on the corporate side, by treating dividends as an expense.

    Capital gains are not double taxed. They are new income.

  • np||

    I agree on treating dividends as an expense. But capital gains are double taxed. I take my income--which is already taxed--and invest it. The seller of that equity who I bought it from is also taxed. And another buyer saves his income--which is already taxed--and buys the equity (or whatever investment vehicle taxed as capgain) from me. Heck, it's really quadruple taxed and more. Regular interest is double-taxed.

  • BMFPitt||

    Yes, I get it. You really, really, want to consider the new income from your investment to be considered the same income you earned to buy it. Really wanting something to be true doesn't make it true.

  • ||

    Really wanting something to be true doesn't make it true.

    You mean like, say, referring to income derived from a dollar that's already been taxed as super-special "new" income that must also be taxed?

    I suppose you support sales tax on a used items that appreciate in value as well?

  • BMFPitt||

    You mean like, say, referring to income derived from a dollar that's already been taxed as super-special "new" income that must also be taxed?

    What's super-special about it? It's income that you didn't have before. That's what "new" means.

    I suppose you support sales tax on a used items that appreciate in value as well?

    If there's going to be a sales tax, then yes. I do not see the purpose of favoring used-item sales over new-item sales.

  • johnl||

    This would tax dividends the same as interest. Which is the right thing to do. Tax policy now favors using debt for capital formation instead of equity. But there is no public benefit to this favoritism.

  • ||

    Correct.

  • OldMexican||

    It's time people put aside their emotions and looked at the matter with clear heads.


    You're asking too much of Tony... I-I mean, people, Sheldon.

  • Taggart||

    I don't see that capital gains is "double taxation." You are not taxing the PRINCIPAL, you are ONLY taxing the GAIN. That $100 you earned the FIRST time around? It's not subject to capital gains tax, ONLY to income tax. It's the ADDITIONAL $20 you earn by investing it that is subject to capital gains tax, but that same $20 is NOT subject to income tax, so that extra $20 is taxed only ONCE,as a capital gain. And currently, it is taxed at a lower rate than if you had mopped floors instead of buying a stock to get it. I really don't buy that capital gains tax is "unfair" because it is "double taxation." It may be unwise because it makes investment less valuable and thereby discourages investment, but that's not the same things as unfair, and even that is up for argument. Capital gains tax may have a slight influence on motivating people to consume rather than invest, but at a rate of only 20% or lower, the infleunce is slight indeed. If I can invest $100, get $20, and pay $4, I still have $116 instead of $100. Am I really going to say - nah, since I'm only going to have $116 instead of $120, might as well blow it all on a $100 bottle of wine instead? Now, there would be a point at which I might say this, say, if I only netted $102 instead of $100 and I really want the wine NOW.

  • OldMexican||

    Re: Taggart,

    I don't see that capital gains is "double taxation." You are not taxing the PRINCIPAL, you are ONLY taxing the GAIN.


    The gain came from the principal, it is not free money. As Richman mentioned, the investor is delaying present consumption, which means time. The gain is simply the result of his patience with his already taxed income, so how can the gain thus be construed as different income?

    Capital gains tax may have a slight influence on motivating people to consume rather than invest, but at a rate of only 20% or lower, the infleunce is slight indeed.


    It may be slight for YOU, but value is still subjective, and people still make decisions at the margin, so while for you a 20% expropriation may still entice you to RISK your own money, it would be too much for others.

  • VG Zaytsev||

    The gain came from the principal, it is not free money. As Richman mentioned, the investor is delaying present consumption, which means time.

    If the investor had instead made loan with that money, the interest that he earned would be taxed.

    Is it your position that investment income should never be taxed but that labor income should be?

  • OldMexican||

    Re: VG Zaytsev,

    Is it your position that investment income should never be taxed but that labor income should be?


    Neither. Where do you think you're posting? The Huffington Post?

  • VG Zaytsev||

    Well yes, I prefer no income tax at all.

    But since we have one and there is no chance of eliminating it, the best bet is to make it as equitable ("fair") as possible. Which involves taxing all real* income at the same rate.

    *real meaning not a value that has been increased by inflation.

  • Hollywood||

    Why do we call it tax revenue? That is misleading. Tax costs or confiscated taxes are more accurate names.

  • The Late P Brooks||

    Working backwards from your conclusion can be a tough uphill climb through heavy underbrush.

  • ||

    I'm not sure if I buy this argument.
    First of all, you could eliminate the problem by allowing people to deduct investments from their wage income.
    We already do this to an extent by deducting 401(k) plan contributions from income. We just don't so it for all investment. If we did, then we could only tax income once and at the same rate for all income.

    The thing is that there is a genuine fairness problem with the fact that some people who earn their living entirely off of investment get taxed at a lower rate. You have to resolve that fairness problem somehow, not just say that it makes economic sense to incentive investment. Why incentivize anything? The government should be as neutral as possible in the market, it shouldn't be artificially incentivizing or disincentivizing anything.

    Moreover, while investment involves deferred gratification so does ALL work. I'd rather sit on my ass and eat cookies tomorrow, but I know that making the "investment" in showing up for work on time will pay off in terms of wages later. Why is investing money in a mutual fund to be loaned to others treated preferentially to spending it on taking a skill-enhancing programming class for myself? Both are investments that I hope will pay off for myself in future rewards. Yet, when I increase my wage income, I will get taxed at the full 35% rate (or whatever my current bracket is), but if I sell stock I only pay 15-20%.

  • robc||

    Yet, when I increase my wage income, I will get taxed at the full 35% rate (or whatever my current bracket is), but if I sell stock I only pay 15-20%.

    False on the bolded part. You, as owner of the company, are also paying the corporate rate of ~35% percent on that money. As the owner of a corporation (pass thru), I know exactly what I was dodging.

    S-Corps only have to pay the individual rate, as the profit is passed thru to the owner. The fact that when I invest in a C corp it behaves different than when I invest in an S corp is the ultimate example of unfairness.

    And the solution isnt to tax the hell out of S corps.

    As an example, lets say Im in the 33% tax bracket. Lets take two examples:

    First, assume I have, after deductions and everything, $178650 I earn from my regular job, that fills up thru the bottom of the 28% bracket so everything below is in the 33% bracket.

    Example 1: I invest money in an S Corp. It earns 100k for me, pretax. I would pay 33% on that 100k or 33.33k.

    Example 2: I invest money in an C Corp. Its a megacorp and earns 100k for me, pretax. They pay 35% in tax, or 35k. Then, via cap gains, I get the other 65k. Of which I pay 15% or 9.75k.

    Total tax paid in 1: 33.33k
    Total tax paid in 2: 44.75k

    If anyone thinks there is something "unfair" about the cap gains tax rate, I will agree...it is totally screwing C corp investors.

  • ||

    You, as owner of the company, are also paying the corporate rate of ~35% percent on that money.

    That has nothing to do with capital gains. Only dividends.

    If I sell stock I pay 15% on the increase in the stock price value (the capital gain). The dividends on the other hand are paid out of corporate profits which are previously taxed at the 35% corporate tax rate.

    This is a big reason why corporations moved away from paying people dividends. They will get taxed less if they reinvest the money in the corporation, grow the company, and then do a stock split or let the price rise.

    But the fact remains, if I "invest" in my own self-employment business, I end up paying the income tax rate for myself. If I invest the money in someone else's business and get a stock certificate for it, then sell it later. I only pay 15% on the earnings. This is a discrepancy.

    All income is income. The distinction between "wage" earnings and "investment" earnings is arbitrary. There's no reason why lending someone else your money should be treated differently than spending it on yourself.

  • ||

    You only pay the reduced cap gains rate on investments held for more than 1 year, meaning the asset has already been subject to taxation. I've explained this to you repeatedly. Day traders aren't paying 15% on their gains. The rationale for taxing long-term cap gains at the reduced rate is illustrated by Richman's article.

  • ||

    I don't see where the asset is getting taxed already if you hold onto it more than one year. Capital gains is just a change in the value of the stock, and the stock price varies dpeending on all sorts of factors that have little to do with taxation. So the money you make off the asset is only vaguely (if at all) related to the taxes the company pays. The biggest factor is probably your own skill in timing the sale of the stock to when the price is higher.

  • ||

    Presumably the corporation in which you own an equity stake paid corporate income tax, which is reflected in either the diminished dividend or reduced value of the stock.

  • ||

    Dividends are definitely affected in a direct way, but stock value .... questionable whether the money you make on capital gains is substantially diminished by the corporate tax rate.
    As I said, stock prices fluctuate based on so many other factors, and your not just averaging over time. As a trader, youre using your own skill to time when to buy and sell. Much more goes into capital gains than just corporate profits minus taxes.

  • robc||

    That has nothing to do with capital gains.

    That has everything to do with capital gains. The change in stock valuation has EVERYTHING to do with the amount of retained earnings.

    In an S Corp, for example, you pay the pass thru tax whether you retain the earnings or pay it out as dividends. In a C Corp the retained earnings drive up the stock price, because cash on hand has value. Or its used to buy up stock to drive the price up (this is commonly used whenever the cap gains rate is lower than the dividends rate).

    You are showing a lot of ignorance with your response.

  • robc||

    If I invest the money in someone else's business and get a stock certificate for it, then sell it later. I only pay 15% on the earnings.

    The increase in stock value is decreased by the amount of tax paid. Thus you are "paying" that part of the tax too.

    Who is paying the tax, if not the owners (or the consumers in the form of higher prices, but that is tomato/tomahto)?

  • Tulpa (LAOL-PA)||

    I thought the corporate income tax was payed by the customers?

    Are we changing our party lion?

  • robc||

    I thought the corporate income tax was payed by the customers?

    Bullshit, that has never been the party lion.

    The slope of the supply/demand curves determines how much of that tax is paid by the owner vs the customer. And for my argument, it makes no difference.

    Basic microeconomics, you should pop over to that department during down time during your last semester.

  • ||

    "The thing is that there is a genuine fairness problem with the fact that some people who earn their living entirely off of investment get taxed at a lower rate."

    Hazel, let me just say this; FUCK FAIRNESS. Fairness is a fairy tale. Little kids whine about fairness when they dont get what they want or another kid has a bigger ice cream cone because little kids are envious and emotion driven. Grow the fuck up.

    " You have to resolve that fairness problem somehow...", - No, we dont.

    "..not just say that it makes economic sense to incentive investment."
    Making economic sense is slightly important when making economic policy, so yeah, that is all that is required.

    "Why incentivize anything? The government should be as neutral as possible in the market, it shouldn't be artificially incentivizing or disincentivizing anything."
    Uh....if government shouldnt be incentivizing anything then why should it be the arbiter of fairness? Incentivizing can be a fairly straightforward affair. Fairness is a fuzzy platitude devoid of meaning. You think government bean counters should be the arbiters of fairness? Hooooly Shit.

  • ||

    OK, maybe I knee-jerked there....a little.

    Unlike Brooks, it does not make me cringe, but it does make me grind my teeth and ball up my fists.

  • ||

    Yeah, see, I think the term "fairness" has kind of been poisoned by progressives. So I understand the knee jerk.

    But I also think that libertarians fundamentally ARE motived by fairness. We just have a different (IMO better) idea what what counts as fair.

    For instance, most libertarians do support peroperty rights and courts and contract law. And part of that is inherently implies that the courts are going to treat everyone equally. Property rights don't mean dick all if the courts are biased against some parties and won't enforce them.
    And why do we have property rights in the first place? Because we've deemed that the more FAIR way of determining ownership of limited resources. Property rights extend directly from self-ownership and the non-aggression principle. It's the only FAIR way to decide who gets what. The alternative is "majority rule" which is really nothing other than "might makes right".

    The entire reason we're concerned with rights and liberties is becuase they are about questions of fairness. And in fact they are better and more sophisticated answers to those questions than anything the left had ever regurgitated.

  • VG Zaytsev||

    Yeah, see, I think the term "fairness" has kind of been poisoned by progressives.

    Agreed.

    I think it's because they have made fair synonymous with equality of outcome; instead of equitable.

    The former requires treating people differently to produce the desired outcome while the means treating everyone the same regardless of the outcome.

  • VG Zaytsev||

    while the latter means treating everyone the same regardless of the outcome.

  • ||

    The libertarian position is what is called "rule fairness" or "procedural fairness" by moral philosophers.

    Under "procedural fairness" you establish what is considered a fair set of rule by all parties - generally rules that are uniform for all participants and equally enforced - and then you allow outcomes to fall where they may. As long as the rules are the same for everyone, then the outcome is deemed fair.

    This is part of what infuriates me about Obama's bullshit about everyone "playing by the same set of rules". Because his policies are the exact opposite of that. Everything the Democrats advocate biolates that principle. They DON'T want large corporations and small corporations to play by the same rules. They DON'T want rich and poor to play by the same rules. They want to tweak the fucking shit out of every rule to give an advantage to their favored constituencies. Every time that bullshit comes out of his mouth I want to throw something at the TV.

  • The Late P Brooks||

    The thing is that there is a genuine fairness problem with the fact that some people who earn their living entirely off of investment get taxed at a lower rate.

    The word "fairness" makes me cringe.

    But why should buying and selling pieces of paper be treated differently than buying and selling canned dog food? The object is to make a profit.

  • ||

    But why should buying and selling pieces of paper be treated differently than buying and selling canned dog food? The object is to make a profit.

    Right. It would be unfair to treat buying and selling canned dog food different than buying and selling pieces of paper.
    All income should be treated qually.

    Also, the word fairness shouldn't make you cringe. At a basic level libertarianism is a philosophy about rule fairness, as opposed to outcome equity. We shouldn't let progressives seize the word "fairness", and pretend it only means "everyone gets an equal share". Becuase there are many more sophisticated conceptions of fairness than that. I.e. the market should not be interfered with because it is *unfair* for the government to pick winners and losers or create biases against some players.

  • ||

    I don't buy a can of dog food with my after-tax income with the intention of holding it and then selling it later for a higher price, or with the expectation that the dog food's productivity will pay me a dividend for the rather obvious reason that dog food is a consumable item with no utility besides feeding a dog. Pieces of paper are the same way, until they get stained with a whole bunch of ink that grants me an equity stake in a profit-seeking venture.

  • ||

    Maybe, but suppose the dog food is for your seeing eye dog, which is what helps you get to work, so you can earn money.

    Feeding the dog therefore is an "investment" in your own earning potential that gives you a return on that investment. You feed the dog, the dog takes you to work, and you make more money than the cost of a can of dog food.

    What should THAT return on investment be taxed at a higher rate than holding on to the can of dog food and selling it later at a higher price ?

  • ||

    Are you actually being serious in that comparison, or are you just trying to make a theoretical argument?

    Buying food for myself, my dog, putting gas in my car, or any other expense of being alive and participating in the economy is still not even tangentially comparable to an equity investment. Try to imagine that instead of food for the seeing eye dog, the "investment" is in a monocle polisher so I can more easily oversee my all-child labor petroleum corporation and it should be down to a level you can more easily understand.

  • ||

    It's a serious theoretical argument.

    What happens when you make an equity investment? You give the money to a private company which then spends it on dog food, gas, or whatever else it needs to run it's business so that it can make a profit, so that it can pay you dividends or whatever.

    The only difference between scenario A and B is that in A, you are buying the monocole polisher for your own use, and in scenario B, you are giving someone else money to buy a monocole polisher and expecting them to give you a share of the profits.

    Why should those two things be taxed differently?

  • The Late P Brooks||

    the investor is delaying present consumption, which means time.

    So what? He can bury hundred dollar bills in a strongbox in his backyard for use at a later time, if he wants to. The decision is his.

  • OldMexican||

    Re: The Late P Brooks,

    So what?


    The point is that the money he has to invest was already taxed as income after the production and trade phase, so why should it be taxed again only because he decided to delay consuming it while his money gathers dividends?

    What I am pointing out to Taggart is that the money for investment is still the same money that was already taxed by the government, merely not consumed at that very time.

  • ||

    So then the buried money should be taxed when retrieved from the ground? Why not? It's the same thing, right? He failed to consume it within the tax period when it was acquired, so it's "new" money when it comes back into circulation, isn't it?

  • Joao||

    This I don't get. It is an "income tax" no matter how you made the money. After one has done his/her taxes for a few years, one comes to realize this is the principle (excepting tax exempt or deferred stuff)

    Yes, making an exception is not the gov's business. Without it, the yield is less, but non-taxable (or more correctly, outside of the gov's purvue).

    I feel the author is nit-picking on double-taxation. (But not so on triple-taxation). The tax is on "new" money. The real crime is the inflation, whether visible or no, and whether at present or upon our children.

    "Limited Government" is best, not "NO government."

  • buybuydandavis||

    " Time is valuable, and other things equal, people prefer present goods to future goods."

    If that were true, no one would own a refrigerator. The ability to postpone consumption is valuable too.

    How horrible it is to discourage investment. But who sweats discouraging labor?

    I'm a libertarian, but find most libertarians unserious about tax fairness, and biased in favor of those who own over those who work.

  • Hollywood||

    You're not a libertarian.

  • Tulpa (LAOL-PA)||

    The stuff you put in the fridge is not a future good. You have the option of consuming it at any time you wish to do so. A future good is one which you can't get any earlier (and in the real world, one that you may not get at all).

  • ||

    The stuff you put in the fridge is not a future good. You have the option of consuming it at any time you wish to do so.

    Nope. If I buy an industrial-strength sized carton of, say, 50 packages of Ramen at CostCo, then the cost difference between that carton versus a single package of Ramen bought at 7-11 for immediate consumption represents an investment of money toward goods for future consumption, with a significant discount in the price per Ramen package.

    Buying a fridge is an investment, meant to lower the acquisition costs of buying tiny packages of food just sufficient for each meal with nothing left over.

  • OldMexican||

    Re: buybuydandavis,

    If that were true, no one would own a refrigerator.


    Putting stuff in a refrigerator is not the same as postponing consumption - i.e. saving.

    The ability to postpone consumption is valuable too.


    What Sheldon is saying is that there has to be an incentive to save, otherwise ceteris paribus people prefer present goods [that you can obtain now] to future goods [that you may want to obtain later.] The incentive to save is called the interest rate, which is the market price for people's patience.

    I'm a libertarian, but find most libertarians unserious about tax fairness, and biased in favor of those who own over those who work.


    Everybody owns and almost everybody works, b. That makes the notion of "tax fairness," as you understand it, a fallacy.

  • buybuydandavis||

    There is an incentive to save - the desire to consume tomorrow.

    "Everybody owns and almost everybody works, b. That makes the notion of "tax fairness," as you understand it, a fallacy."

    Not everyone own and works to the same degree, which makes your comment an *evasion*.

  • The Late P Brooks||

    I invest money in an C Corp. Its a megacorp and earns 100k for me, pretax.

    I understand the theory of what you are saying, but I, as a shareholder of General Electric, do not bother to expend any energy whatsoever pretending anything in the corporate cash box other than the declared dividend per share is "mine". With luck, the share price will rise, and I will be able to sell my stock certificates for more than i paid for them.

    For an active owner/manager, the situation is obviously different.

  • robc||

    It isnt pretending, you own a share of those assets.

    The example I gave was for a passive investment in both the S and C Corp, so it was apples to apples. Corporate structure was the only difference.

    For active owners/managers, it gets interesting because then you have to consider the differences between S Corps and LLCs, for example. And that gets into differences in FICA taxes and other stuff which is insanely situation dependent.

  • Libertarius||

    What the ghost of Christmas future actually saw:

    "Mummy, do you think Bernanke will monetize a ham for us, or will the meaniehead Republicans ruin christmas?"

  • Libertarius||

    Modern mainstream economists act like there is no such thing as production, and that there is no need for time, savings and investment to facilitate production; that all you have to do is spend and everything is cool, and whatever comes before consumption is a Kochtopusian conspiracy of the 1%.

    On earth you have to produce before you have money to spend (because production comes before consumption), but in the ivory tower you can print paper and call it production.

  • ||

    Proprietist, meet Sheldon Richman. Mr. Richman...

  • The Late P Brooks||

    I don't buy a can of dog food with my after-tax income with the intention of holding it and then selling it later for a higher price

    Okay. You're not a store owner. You're just obtuse.

  • ||

    Yeah, must be a deficiency in the recipient. Couldn't be that you made a shitty analogy and articulate yourself like a 5 year old.

  • ||

    I actually am a "store owner" in a sense, by the way. It's not a physical store though. I'm not sure where that puts me in a universe composed exclusively of dog food cans and pieces of paper.

  • Nicholas D. Rosen||

    Mr. Richman has some good points about real investments, but not all capital gains are from productive investments. Cutting the capital gains taxes encourages people to invest in the next Microsoft, or at least in a useful corner shop, but it also increases the rewards for land speculation. Someone who buys a vacant lot, makes people waste time and gasoline commuting past it, and then sells it at a profit, should not get a tax cut.

    Instead of taxing income, whether from labor or investments, we should tax the rental value of land. Then worse than useless speculation would be unprofitable, and people could keep what they earned by their own efforts.

  • ||

    Thank God for Top Men like our friend Nicholas D. Rosen here to tell us what is and is not "productive" investment, and abusively tax us accordingly.

  • trshmnstr||

    Someone who buys a vacant lot, makes people waste time and gasoline commuting past it, and then sells it at a profit, should not get a tax cut.

    That sucks for the guy who bought a parcel of land, and was holding it until he could raise enough capital to build a heart hospital on it. Stupid worthless land speculator.

  • Optimist||

    Everyone here is debating as if maintaining progressivity and avoiding double taxation on savings are mutually exclusive. There is a system that allows for both: David F. Bradford's 'X Tax'.

    http://www.aei.org/article/eco.....ica-needs/

  • Adam330||

    This article (and the double-taxation argument generally) acts as if there is some logic to proper taxation. There isn't. It's an entirely arbitary set of rules, with no basis in logic.

  • ||

    The concept of double taxation is stupid, because it assumes single taxation is great.

    Debating the goodness or fairness of this tax over that tax is, again, another exercise in determing which exact flavor of shit you like eating the most. I don't concede that I should be forced to eat shit in the first place. Then again, if you know you're going be force fed shit in this life, maybe it's better to pretend it's delicious. It reminds me of stockholm syndrome.

    I hope we all enjoy our payroll "tax increase for the rich."

  • LibertariansRLiars||

    First off, it isn't your money. It is the property of the federal reserve. If you want your own money, you will have to back and print it yourself instead of freeloading off a system you don't want to pay for like the parasites you hate. Secondly, when the invested money earns income the income is taxed because it is income. It isn't taxed twice, the income which didn't exist before does. If it takes three pages to explain it, you are twisting logic.

    Also, words like penalize and reward have no basis in reality. That is your perception, but most rich people I know made money when taxes were higher not lower, so under you deluded logic that shouldn't have happened but it did. You treat people like they are mindless automatons who can only act in response to the government. It is irresponsible at best, deluded at worst. Shut up and pay your taxes like the rest of us and stop being so lazy.

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