Re: [Mpls] Progressive taxes: Income vs Wealth
Carol Becker wrote: We talk about the progressively of taxes based on income because the government has a system of measuring income while it doesn't really have a system measuring wealth. If own say a diamond mine, the government doesn't have a system for valuing that diamond mine to determine your wealth. All it can really measure is the income that you derive from that asset. That is why progressivity of taxes is usually related to income. I would agree with Mark about being able to talk about taxation in relationship to wealth as a much better approach. How progressive a tax is should be discussed in terms of wealth if it is at all possible. The problem comes about from getting data. So, you would advocate taxing *potential* earnings first, then tax the actual earnings, and then tax the earnings again as wealth when you put it in the bank, or buy somthing with your earnings (never mind sales and luxury taxes)? OK. Let's look at this. I have $12,500,000 (I wish). I spend $10,000,000 on a diamond mine. Now, I own a $10,000,000 mine. I also still have 2.5 million dollars. It's all wealth. I pay a tax on the wealth, on a progressive scale, of course. Since it's a bunch of wealth, it will be a BIG percentage. Say, 25%. Well, 25% of my 10 million dollar mine is 2.5 million. Lucky I set that money aside... except, that 2.5 million I set aside is wealth, and taxed too!!! Oh no! I'm short $625,000 to pay my taxes. OK. Well, maybe I earned $625,000 that year. Taxed at roughly 50% as income, that leaves me $312,500. Oops. Not enough to pay my wealth tax. Now that's in the bank, and oh no! It's wealth! 25% of that goes too! Alright. So, maybe I earned double that. That makes more sense, right? Millionaires have to make at least a million dollars a year, don't they? OK. So I earned $1,250,000 that year (becasue it's just that easy to increase your income when your taxes go up). Let's see. Half goes to income tax, leaves me $625,000 in the bank. Wealth tax... CRAP! I'm still short to pay my wealth tax on the other wealth I have. Man. I probably have a house too. CRAP! If I'm making 1.6 million a year, I probably bought a nice mansion by lake Calhoun for about $3 million. My house payment is $212,000 for the year. My tax on the house comes in at $750,000 (next year it will be more)! My total wealth is now 16,125,000. 25% wealth tax = $4,031,250 I have $3,125,000 cash. Alright. I'm still in the hole $1,118,250. I better start mining some diamonds quick! A really good investment will double your money in 10 years, I'm told. So, I hope that diamond mine I bought in Eden Prairie pays off! I need the dough! Let's see here... Ten million dollars becomes 20 million in ten years. I should make about $2 million a year from the diamond mine. Good. Now we're talking. I pay income tax (50%) on my mine income, leaves me $1 million there. Hmmm. This isn't looking so good after all. I pay my wealth tax on the cash I banked from the mine. Leaves me $750,000. Dang it! I'm still in the hole $368,250. Oh well. I'm rich. The bank will extend me a loan to float that. I've got a diamond mine that's earning 2 million a year now. Next year should be looking better. My tax on the diamond mine will only be... uh... 3.75 million??? Um. Does anybody here know how to set up an off-shore corporation? Dan McGrath Longfellow REMINDERS: 1. Be civil! Please read the NEW RULES at http://www.e-democracy.org/rules. If you think a member is in violation, contact the list manager at [EMAIL PROTECTED] before continuing it on the list. 2. Don't feed the troll! Ignore obvious flame-bait. For state and national discussions see: http://e-democracy.org/discuss.html For external forums, see: http://e-democracy.org/mninteract Minneapolis Issues Forum - A Civil City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:mpls@mnforum.org Subscribe, Un-subscribe, etc. at: http://e-democracy.org/mpls
Re: [Mpls] Progressive taxes: Income vs Wealth
Forbes Magazine reports that Carl Pohlad has $2.8 billion. I'm willing to take that figure. 2.8 billion is 2800 million. I propose the state take 10% of that, or 280 million, every year, until poor Carl is down to 100 million. Then we cut back to $10 million a year, until he is down to 5 million, which should be more than enough to keep him in razor blades and breakfast food. In addition, we revive and strengthen estate taxes. The value of the estate is known or comes to be known, and clearly can be taxed. Rather than passing billions down to descendents who never earned a dime of it, each could have a few million, and the rest go for schools, parks, libraries, etc. The main problem with huge piles of money it that the never-satisfied owner usually invests some of it in buying government out from under the people, and then getting public resources at bargain basement prices (a real steal). Enough of this, and democracy is bought out, and we're back with a few fabulously wealthy parasites, and everyone else better off dead. The way to stop the rich from buying government is to take away all the surplus money they might have to buy it. Let them have the money, and some will buy, and some officials will sell, and soon we're back with the obscene class structure we have today. Big money is the root of all big evil. -David Shove Roseville On Tue, 6 Dec 2005, Carol Becker wrote: Mark Anderson wrote: The tax incidence report only discusses income. That is one of the problems with the constant focus on income; it doesn't take wealth into account at all. I think that a major benefit of a progressive tax is it reduces the wealth gap between people. Mark Anderson brings up some good points about the tax system. We talk about the progressively of taxes based on income because the government has a system of measuring income while it doesn't really have a system measuring wealth. If own say a diamond mine, the government doesn't have a system for valuing that diamond mine to determine your wealth. All it can really measure is the income that you derive from that asset. That is why progressivity of taxes is usually related to income. I would agree with Mark about being able to talk about taxation in relationship to wealth as a much better approach. How progressive a tax is should be discussed in terms of wealth if it is at all possible. The problem comes about from getting data. Carol Becker Longfellow Geek Future Member, Board of Estimate and Taxation REMINDERS: 1. Be civil! Please read the NEW RULES at http://www.e-democracy.org/rules. If you think a member is in violation, contact the list manager at [EMAIL PROTECTED] before continuing it on the list. 2. Don't feed the troll! Ignore obvious flame-bait. For state and national discussions see: http://e-democracy.org/discuss.html For external forums, see: http://e-democracy.org/mninteract Minneapolis Issues Forum - A Civil City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:mpls@mnforum.org Subscribe, Un-subscribe, etc. at: http://e-democracy.org/mpls REMINDERS: 1. Be civil! Please read the NEW RULES at http://www.e-democracy.org/rules. If you think a member is in violation, contact the list manager at [EMAIL PROTECTED] before continuing it on the list. 2. Don't feed the troll! Ignore obvious flame-bait. For state and national discussions see: http://e-democracy.org/discuss.html For external forums, see: http://e-democracy.org/mninteract Minneapolis Issues Forum - A Civil City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:mpls@mnforum.org Subscribe, Un-subscribe, etc. at: http://e-democracy.org/mpls
Re: [Mpls] Progressive taxes: Income vs Wealth
Last Sunday, Greg Cavanagh had an opinion piece, Why punish the rich for good choices? in the Star Tribune. I was outraged at the way he ascribed all good attributes to the wealthy and all negative ones to the poor. I wrote the following piece in response, which was not published. It bears on the discussion of income vs. wealth, so I thought I would share it here: Mr. Cavanagh's Counterpoint Why punish the rich for good choices? is a simplistic piece of writing that divides society into two categories: (1) wealthy, well-educated, generous, hard-working people, and (2) poor, lazy, uneducated people on welfare. It has some major errors. Mr. Cavanagh says that wealthy people are less likely to take up the time of police officers, prosecutors, public defenders, judges and prison guards. Yet when wealthy people commit crimes or take advantage of the system, the magnitude and impact tends to be far greater than what the poor can accomplish. Think, for example, about Enron, WorldCom, Haliburton and others who have bilked citizens of billions of dollars in savings and retirement investments. The guy on the corner dealing drugs can't compare. The wealthy can indeed accomplish great things with their wealth, and society often benefits. At the same time, they frequently take from the very poorest for their own gain. As reported in Business Week about the 365 largest companies in the U.S.: The ratio of CEO pay to factory worker pay was 44 to 1 in 1965. In 1997, it was 326 to 1. The magnitude of this is hard to see in percentages, so let's look at real numbers: In 1965, minimum wage was $1.25 per hour and average CEO pay at these companies averaged $55 an hour. In 1997, minimum wage was up to $5.15 per hour and CEO pay at these companies averaged $1,679 an hour. In other words, the worker at the low end of the pay scale today is making a little more than 4 times what he would have made in 1965 while the CEO is making more than 30 times the salary he would have made in 1965. We have seen a huge increase in American jobs being sent overseas. We are told that it is because wage costs are lower overseas. Here's an interesting tidbit: If the pay proportion from 1965 had remained the same, today's CEO would be earning $227 an hour and the extra $1,452 per hour of CEO pay could have funded another 282 jobs at the low end of the scale. Multiply that by the 365 companies in the study, and that money would have kept almost 103,000 jobs here in the U.S. Yes, 103,000 jobs saved by just 365 CEOs getting no more than 44 times the increase in pay given to the lowest paid workers in their companies. In truth, the job savings would have been far larger because all of the jobs in between the lowest paid and the CEO have also gone up faster than the minimum wage increases. When CEO salaries climb so disproportionately to what the average worker gets, then yes, I believe taxing the wealthy at a higher level is warranted. After all, their income is going up at a much faster rate; why shouldn't their taxes? Today, the wealthy pay a much smaller percentage of their income in taxes than those at the lower end of the economic scale. Paying 10% of a $50,000,000 income is far less painful than paying 10% of $20,000 for the person trying to hang on to a home and keep up with rising property taxes (8-24% rise per year), rising fuel costs (30-50% per year) and all the new fees that have been implemented in the past few years. But then, only those of us in the middle or low end of the scale actually pay 10% of their income in taxes. For the wealthy, it is substantially less. Dottie Titus, Jordan REMINDERS: 1. Be civil! Please read the NEW RULES at http://www.e-democracy.org/rules. If you think a member is in violation, contact the list manager at [EMAIL PROTECTED] before continuing it on the list. 2. Don't feed the troll! Ignore obvious flame-bait. For state and national discussions see: http://e-democracy.org/discuss.html For external forums, see: http://e-democracy.org/mninteract Minneapolis Issues Forum - A Civil City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:mpls@mnforum.org Subscribe, Un-subscribe, etc. at: http://e-democracy.org/mpls
