[Morgoth]

Brujah, on 26 November 2012 - 02:26 PM, said:

Morgoth, on 26 November 2012 - 02:02 PM, said:

I'm not diving deeper into this than to point out that if you have come across only a few people opposing flat tax, Brujah, you might benefit from expanding your reading some. A flat tax rate is not something given serious consideration in the world of politics, and it's hardly a popular idea in the world of economics either.

Additionally, considering your comments on entitlements you might like to have a peek at the benefits thread.

No, I wasn't saying it was odd to have people oppose a flat tax system. I was saying that most of the people who have opposed it seemed to represent the more wealthy side. What surprised me was that so many people from this forum were opposed to it, as for the most part, my views on many to most things on this forum usually coincide with the general, or more popular views of this thread. I was just surprised. I believe the flat tax when implemented correctly, actually draws a larger portion of total tax income from the wealthy, usually starting around $250k/yr, and up. I will admit that the $100k to $200k range will also see a small increase, yet those under $100k, $75 to $80k to be safe, would experience some tax relief.

One of the bigger reasons why I personally am for a 'pre' flat tax, is that it makes it much harder for large corporations and the wealthy to find ways to pay less.

I admit that we'll never see a flat tax, because the republicans would never go for it for one, but it really irritates me that they're pushing so hard to renew these Bush Tax Cuts that they're willing to risk further economic turmoil to achieve their goals. They're like, well we're rich. We'll be ok. Too bad for those poor 'victims,' er, people.

That's not an effect of the flat rate system though. That's an effect of eliminating loopholes, or at least reducing deductions. Why should the rich be any less capable of dodging taxes if their rate is set at 26% across the board? Unless you remove all the loopholes then nothing changes. If you remove all the loopholes, what is the need of a flat tax?

In Norway the highest taxt rate for income is just in excess of 47%. Explain to me how the rich would pay more if the rate was flattened at 47% or lower. I've seen the argument that a flat tax rate is necessary to simplify the tax code and streamline the process of paying taxes but I'm not entirely sure what qualities you argue.

[Brujah]

Why can't we have both? We could have a flat tax percent across the board, with the same percent covering all wage income tiers, and eliminate tax loop holes and other manipulations found inherent in our current mess of a tax code.

As for 47%. Yikes. That's horrible. That's horrible for any wage tier. No wonder people were seeking loop holes for that bracket.

I just find it could benefit us through just its simplicity in many ways, especially outside the box. A cleaner, clearer, more concise code in itself would save us money by requiring a smaller IRS department, as well as decreasing man hours needed at all levels of state and federal government. A clearer tax code actually , imo, would help combat many of the attempts we get at subterfuge. I believe it would settle lengthy, hot debates in congress, allowing the parties to work together more often, and easier, thus hopefully getting more achieved on behalf of the people. It would help do away with the basis for many arguments on both sides of the Rich vs Poor tax burden debate.

I just believe no system can be predicated with exact accuracy, but I would be willing to give this one a chance to see the end result. I think it would pleasantly surprise many economist. And you're right, its not popular in politics, because politicians for the most part have been in the pockets of big business and wouldn't like to see it, ever. Most citizens never even heard of it. But I disagree about its popularity among economists. It was by and large one of the most discussed monetary policies when I was in college by professors and students, and it was probably one of our most modeled programs. We ran global scenarios for mostly 18% to 24%, with many, many different changing elements, and yes, there was still many who opposed the results. I just happened to always be on board.

I can understand not preferring the flat tax, but would you really prefer our current settup over it? I could see an argument for a new, different model possibly being better long term for the economy, but not our current system, even if and when we get the tax loop holes under control.

[LinearPhilosopher]

Just adopt our canadian tax system and problem fixed. Well mostly... we're still doing feasibility studies as to the implementation of consolidated income reporting. But one thing we don't have is people in higher brackets paying a smaller effective rate of income. Also donations aren't really an issue. If your an individual you get a tax credit as opposed to a deduction, (15% of first 200, 29% on any amount above to a max of 75% of "income").This credit will likely change as the CRA has caught a lot of people abusing this credit.

Finally we tax corporations at a low rate, while individuals are taxed at a higher rate since income ultimately flow down into individuals (or NPOs, but NPOS aren't subject to tax since they're not worried about making money). Corporations don't have their models overly affected while the income is taxed at a higher rate when received by individuals.

Also flat tax is one of those things that even on paper looks completely and utterly asinine. It penalises those with lower incomes and rewards those with higher incomes, further increasing wealth gaps.

This post has been edited by BalrogLord: 26 November 2012 - 05:35 PM

[Brujah]

Well, I definitely would not like to penalize the poor, nor reward the rich, and especially wouldn't want to implement any system that increases the wealth gap. I think it's possible to achieve the opposite, though.

[LinearPhilosopher]

Brujah, on 26 November 2012 - 05:58 PM, said:

Well, I definitely would not like to penalize the poor, nor reward the rich, and especially wouldn't want to implement any system that increases the wealth gap. I think it's possible to achieve the opposite, though.

How would such be possible? By it's very definition a flat tax rate rewards the rich and penalises the poor. By flat tax rate i am reffering to a basic amount of tax all persons (under canadian tax law we have 3, individuals, corps and trusts)must pay regardless of income level. Suppose a flat tax of 1000$, person a has income of 100k$/year, person b 10k$/year. Person a is giving away 1% of his income in taxes. Person B is giving 10% of his income away. Person A has 99% of his income left, Person b 90% of his income left. This system by it's very nature rewards individuals who earn more.

Then when we bring in the costs of living. This further increases the disparity as there is a bare minimum cost of living. The individual who is earning 100k a year has 99000 left over to cover living expenses. Person B has 9000$ left over to cover his living expense. Now how someone can live on 10k$/year i don't know, (27$/day for food/lodging,clothing/transport to work). This bare minimum is likely a much higher figure. Therefore mathematically speaking, since there is a bare minimum level cost of living a flat tax would only worsen the situation as those on the low end would be hard pressed if not incapable of meeting this bare minimal cost. Those on the higher end would be able to meet this effortlessly, leaving room for a growing of a wealth gap.

You're going to have one hell of time to logically justify how a flat tax rate does not penalize lower income earning, reward higher ones, which by logical extension worsen income inequality.

Disclaimer: I would like to specify that i do not believe wealth gaps should not exist, rather there are acceptable and unacceptable level of wealth gaps. In canada and the US i find that the current level of wealth gap to be counterproductive to the benefit of the state.

This post has been edited by BalrogLord: 26 November 2012 - 09:39 PM

[Illuyankas]

I'm pretty sure he's using flat tax as everyone pays the same percentage of their income, rather than a set figure. So $9k and $90k instead.

It did remind me of all those terrible articles about people on £100k+ complaining that they don't feel rich after 'having' to spend so much of their cash on private schools for their kids, two holidays a year and three or more cars, etc, why are our taxes so high and so on when the median income for the country is £26k and I want to throw them all into a skip.

[Terez]

The rich generally say the same sorts of things about the poor spending money on TVs and cigarettes and drugs. To which I have to say:

1. Luxuries like TVs are one-offs, and can sometimes be bought at a discount, or used. I know lots of poor people who have TVs but can't afford cable. Luxuries like cars are sometimes necessary to maintain a job, especially in the US.

2. When you're poor, your life sucks pretty much every day, which makes it much easier to develop addictions. Having low-fulfillment, horrible jobs that don't make you enough money to live on can be very, very stressful. A lot of those addictions are passed off generationally, making it more difficult for children raised in poverty to rise out of it as adults.

[LinearPhilosopher]

Illuyankas, on 26 November 2012 - 10:34 PM, said:

I'm pretty sure he's using flat tax as everyone pays the same percentage of their income, rather than a set figure. So $9k and $90k instead.

If so, then the statement about the minimal cost of living still stands.That's why we have marginal tax brackets and tax credits that are applied to the lowest tax %(with few epceptions, donations being one such)

This post has been edited by BalrogLord: 26 November 2012 - 11:03 PM

[King Lear]

Terez, on 26 November 2012 - 10:50 PM, said:

2. When you're poor, your life sucks pretty much every day, which makes it much easier to develop addictions. Having low-fulfillment, horrible jobs that don't make you enough money to live on can be very, very stressful. A lot of those addictions are passed off generationally, making it more difficult for children raised in poverty to rise out of it as adults.

Not to mention that smoking while working in the service industry means you get breaks. Even here, where you're legally obliged to give your employees regular breaks, most service industry places don't. Often management rely on you not wanting to screw over your workmates by demanding breaks, so they understaff cinemas/restaurants/bar/cafes or whatever But managers will allow people to sit out the back for five minutes for a cigarette for some reason. Even at my place where I do get my breaks, I get an extra break or two on long days when it goes quiet if I'm smoking.

It's kinda weird that it's not really seen as acceptable to go outside for a walk or sit down for 10 minutes but it's okay to lurk around inhaling "luxuries".

[Obdigore]

Aaaand back to the Elections, telling us what we all knew but the GOP was afraid to say.

http://www.palmbeach...wer-play/nTFDy/

Quote

A new Florida law that contributed to long voter lines and caused some to abandon voting altogether was intentionally designed by Florida GOP staff and consultants to inhibit Democratic voters, former GOP officials and current GOP consultants have told The Palm Beach Post.

Republican leaders said in proposing the law that it was meant to save money and fight voter fraud. But a former GOP chairman and former Gov. Charlie Crist, both of whom have been ousted from the party, now say that fraud concerns were advanced only as subterfuge for the law’s main purpose: GOP victory.

[LinearPhilosopher]

King Lear, on 26 November 2012 - 11:35 PM, said:

Terez, on 26 November 2012 - 10:50 PM, said:

2. When you're poor, your life sucks pretty much every day, which makes it much easier to develop addictions. Having low-fulfillment, horrible jobs that don't make you enough money to live on can be very, very stressful. A lot of those addictions are passed off generationally, making it more difficult for children raised in poverty to rise out of it as adults.

Not to mention that smoking while working in the service industry means you get breaks. Even here, where you're legally obliged to give your employees regular breaks, most service industry places don't. Often management rely on you not wanting to screw over your workmates by demanding breaks, so they understaff cinemas/restaurants/bar/cafes or whatever But managers will allow people to sit out the back for five minutes for a cigarette for some reason. Even at my place where I do get my breaks, I get an extra break or two on long days when it goes quiet if I'm smoking.

It's kinda weird that it's not really seen as acceptable to go outside for a walk or sit down for 10 minutes but it's okay to lurk around inhaling "luxuries".

Because smokers are victims of the greateast advertising campaign ever with the most addicting product ever made. Smokers need to have a smoke every so often to remain functional. Non smokers on the other hand don't possess the same handicap. That's the perception, im sure some smokers are able to handle short-term nicotine withdrawal better then others.

This post has been edited by BalrogLord: 27 November 2012 - 04:44 AM

[Obdigore]

BalrogLord, on 27 November 2012 - 04:44 AM, said:

King Lear, on 26 November 2012 - 11:35 PM, said:

Terez, on 26 November 2012 - 10:50 PM, said:

2. When you're poor, your life sucks pretty much every day, which makes it much easier to develop addictions. Having low-fulfillment, horrible jobs that don't make you enough money to live on can be very, very stressful. A lot of those addictions are passed off generationally, making it more difficult for children raised in poverty to rise out of it as adults.

Not to mention that smoking while working in the service industry means you get breaks. Even here, where you're legally obliged to give your employees regular breaks, most service industry places don't. Often management rely on you not wanting to screw over your workmates by demanding breaks, so they understaff cinemas/restaurants/bar/cafes or whatever But managers will allow people to sit out the back for five minutes for a cigarette for some reason. Even at my place where I do get my breaks, I get an extra break or two on long days when it goes quiet if I'm smoking.

It's kinda weird that it's not really seen as acceptable to go outside for a walk or sit down for 10 minutes but it's okay to lurk around inhaling "luxuries".

Because smokers are victims of the greateast advertising campaign ever with the most addicting product ever made. Smokers need to have a smoke every so often to remain functional. Non smokers on the other hand don't possess the same handicap. That's the perception, im sure some smokers are able to handle short-term nicotine withdrawal better then others.

I know people who smoke American Spirits (read: no nicotine added) just to get smoke breaks at work. Well I did, when I worked at a retail place. They didn't smoke outside of work, at all.

This post has been edited by Obdigore: 27 November 2012 - 04:45 AM

[worry]

Are smoke breaks public policy or do they tend to be perks/incentives built into contracts? Interesting stuff.

[Obdigore]

worrywort, on 27 November 2012 - 04:57 AM, said:

Are smoke breaks public policy or do they tend to be perks/incentives built into contracts? Interesting stuff.

I'm honestly not sure if it is government or state mandated or just 'business as usual', but I've not had any experience where smokers dont get more breaks than non-smokers. That was one of the hardest things about quitting smoking, you miss that 10-15 break every 2 hours.

This post has been edited by Obdigore: 27 November 2012 - 05:14 AM

[Shinrei]

Speaking of taxes, this doesn't seem to bode well, for me included. My portfolio has been rather crap this year, and dividends have been the only way I've really made any money recently.


"Seldom has there been a clearer example of a policy that is supposed to soak the rich but will drench almost all American families."


http://online.wsj.co...3025537660.html

Quote

President Obama's 2013 budget is the gift that keeps on giving—to government. One buried surprise is his proposal to triple the tax rate on corporate dividends, which believe it or not is higher than in his previous budgets.

Mr. Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%. Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8%—nearly three times today's 15% rate.

Keep in mind that dividends are paid to shareholders only after the corporation pays taxes on its profits. So assuming a maximum 35% corporate tax rate and a 44.8% dividend tax, the total tax on corporate earnings passed through as dividends would be 64.1%.

In previous budgets, Mr. Obama proposed an increase to 23.8% on both dividends and capital gains. That's roughly a 60% increase in the tax on investments, but at least it would maintain parity between taxes on capital gains and dividends, a principle established as part of George W. Bush's 2003 tax cut.

With the same rate on both forms of income, the tax code doesn't bias corporate decisions on whether to retain and reinvest profits (and allow the earnings to be capitalized into the stock price), or distribute the money as dividends at the time they are earned.

Of course, the White House wants everyone to know that this new rate would apply only to those filthy rich individuals who make $200,000 a year, or $250,000 if you're a greedy couple. We're all supposed to believe that no one would be hurt other than rich folks who can afford it.

The truth is that the plan gives new meaning to the term collateral damage, because shareholders of all incomes will share the pain. Here's why. Historical experience indicates that corporate dividend payouts are highly sensitive to the dividend tax. Dividends fell out of favor in the 1990s when the dividend tax rate was roughly twice the rate of capital gains.

When the rate fell to 15% on January 1, 2003, dividends reported on tax returns nearly doubled to $196 billion from $103 billion the year before the tax cut. By 2006 dividend income had grown to nearly $337 billion, more than three times the pre-tax cut level. The nearby chart shows the trend.

Shortly after the rate cut, Microsoft, which had never paid a dividend, distributed $32 billion of its retained earnings in a special dividend of $3 per share. According to a Cato Institute study, 22 S&P 500 companies that didn't pay dividends before the tax cut began paying them in 2003 and 2004.

As former Citigroup CEO Sandy Weill explained at the time: "The recent change in the tax law levels the playing field between dividends and share repurchases as a means to return capital to shareholders. This substantial increase in our dividend will be part of our effort to reallocate capital to dividends and reduce share repurchases."

And that's what happened. An American Economic Association study by University of California at Berkeley economists Raj Chetty and Emmanuel Saez examined dividend payouts by firms and concluded that "the tax reform played a significant role in the [2003 and 2004] increase in dividend payouts." They also found that the incentive for firms to pay dividends rather than sit on cash helped "reshuffle" capital from lower growth firms to "ventures with greater expected value," thus increasing capital-market efficiency.

If you reverse the policy, you reverse the incentives. The tripling of the dividend tax will have a dampening effect on these payments.

Who would get hurt? IRS data show that retirees and near-retirees who depend on dividend income would be hit especially hard. Almost three of four dividend payments go to those over the age of 55, and more than half go to those older than 65, according to IRS data.

But all American shareholders would lose. Higher dividend and capital gains taxes make stocks less valuable. A share of stock is worth the discounted present value of the future earnings stream after taxes. Stock prices would fall over time to adjust to the new after-tax rate of return. And if investors become convinced later this year that dividend and capital gains taxes are going way up on January 1, some investors are likely to sell shares ahead of paying these higher rates.

The question is how this helps anyone. According to the Investment Company Institute, about 51% of adults own stock directly or through mutual funds, which is more than 100 million shareholders. Tens of millions more own stocks through pension funds. Why would the White House endorse a policy that will make these households poorer?

Seldom has there been a clearer example of a policy that is supposed to soak the rich but will drench almost all American families.

This post has been edited by Shinrei: 27 November 2012 - 05:26 AM

[Obdigore]

You make money off Dividends? Really? That is a rather odd thing to count on. I've made a little bit of money off dividends, but most of what I make in that area comes from currency fluctuations and buying/selling stock, not the dividends itself. This article is lying, however. You aren't going to be taxed on the stock you own, but rather lose part of the dividends the companies can choose to pay (or not) to its shareholders. Implying that an increase on dividend tax is somehow going to make middle class families poorer (when they don't touch that money for years, and you shouldn't be relying on dividends for retirement anyway) is pretty much bullshit.

Edit -> It also implies that Obama is going to increase the capital gains tax, which although I would applaud, I've not seen anywhere beyond pipe dreams.

This post has been edited by Obdigore: 27 November 2012 - 05:33 AM

[Terez]

Before Obama gets anything done, this needs to happen (and now, apparently will happen):

http://www.washingto...a0ab3_blog.html

[Shinrei]

Obdigore, on 27 November 2012 - 05:29 AM, said:

You make money off Dividends? Really? That is a rather odd thing to count on. I've made a little bit of money off dividends, but most of what I make in that area comes from currency fluctuations and buying/selling stock, not the dividends itself. This article is lying, however. You aren't going to be taxed on the stock you own, but rather lose part of the dividends the companies can choose to pay (or not) to its shareholders. Implying that an increase on dividend tax is somehow going to make middle class families poorer (when they don't touch that money for years, and you shouldn't be relying on dividends for retirement anyway) is pretty much bullshit.

Edit -> It also implies that Obama is going to increase the capital gains tax, which although I would applaud, I've not seen anywhere beyond pipe dreams.

I'm not relying on dividends, but they are part of my overall investment portfolio. Generally I just reinvest them in something else. I'm not sure what you're on about though, dividends are a way investors (especially the buy and hold types) earn money. If that suddenly dries up due to the tax, it will certainly effect the bottom line for many people. To say that they are not taxing something you own directly is just semantics, since the result is the same.

I like your response though. From now on when people post an article I don't agree with, I'll just say "the article is lying".

[Brujah]

Filibustering is serious business.

http://www.mcsweeney...-his-filibuster

[LinearPhilosopher]

@obdi. No idea those existed. Employers need to be vigiliant for this it seems.
Raising the dividend tax from an integration perspective make sense provided they don't raise it beyond a certain point otherwise it'll create issues of dual taxation. I'll provide an explanation for those who need it.

Spoiler

Corporation a

income :1000$
less tax @ 20%:-200$
Net earnings available for dividends:800$

Individual shareholder
Dividend from corporation:800
add: dividend gross up( 25%):200$
taxable dividend: 1000$
tax @45%: -450$
less dividend tax credit :-200$
Net personal tax:250$

Total tax paid by corporation :200$
by individual: 250%
total taxation=450$ (45%).

If the gross up was any smaller, insufficient tax would have been paid, gross up any larger, double taxation occurs. This is combined with the dividend tax credit. Downside to this is that since provincial rates vary it doesn't always work. An area to improve upon but a good system nonetheless.

This post has been edited by BalrogLord: 27 November 2012 - 05:53 AM