moda0306 wrote: ↑
Thu Oct 17, 2019 9:35 am
I see what you're saying with all of this, but I'd add a few points to consider...
Keep in mind, I'm going to set aside all state/local taxes AND payroll taxes as that's what you've also done... we can bring them back in but we can't just pick and choose when convenient to include them in a taxpayer's tax load...
Right. I'm just talking about the federal government.
1) Some of this debate is "income level x vs y and their tax load," but to me this is also very, very much a discussion of capital vs labor (not to go all Marxy on you guys). For instance, while a doctor may retire somewhat wealthy, he starts out earning from income, can't deduct his education expenses against his future income (as "basis," similar to a business owner or investor can). So if I have $300k of wages as a doctor, it's much more heavily taxed than, say, $300k of capital stock value increase, income, appreciation, etc. I'll highlight details on this more in my further points.
I like the idea of taking income tax off the table.
2) If we're going to strip out FICA/Medicare taxes, you also have to cut out a massive, massive portion of government spending.
Yes! Social Security and Medicare/aid amount to 60% of federal spending.
What is left-over is vastly taken up by a combination of military and interest on the debt (the latter of which mostly driven from the former, as, once-again, the biggest form of the under-funded general fund spending has been military... the "welfary-side" of the government that we're ignoring has been remarkably over-funded or PAYGO-funded depending on the decade). So the question is WHO should pay for the military.. and to me it is entirely appropriate that the wealth owners of international western capital interests (either through the publicly traded stock market or through direct ownership) should be the ones paying for the military, as its main function in reality is to defend Western capital interests.
I'm with you until you argue that wealth owners should be the ones (only ones?) paying for the military. I think we should increase the amount funded with tariffs (currently $72 billion
), and excise/VAT/sales taxes. The US collected $84 billion
in excise taxes 2017. That's $256/US citizen, but again, I'd assume wealthier people pay more in excise taxes, and also non-citizens buying stuff here. Relatedly, I still think Trump was on to something when he said that NATO members should pay the US if they don't meet their military contributions. Since we're spending $1.9 trillion
for "discretionary" spending ($989 billion on the military, $437 billion on everything else) and the debt ($479 billion), it's clear that we need to cut down on our military operations for it to be possible to pay for those aspects of the federal government with tariffs and sales taxes.
Now, if we are using the military to benefit our country's corporations (depending on how you're defining that), then I'm seeing that is a benefit for a lot of other people besides the owners. You don't have to own stocks to benefit from protected shipping lanes. The federal government should also be protecting citizens from bad guys through intelligence services, federal law enforcement, the State Dept, etc. Those are textbook examples of common goods that should be paid for by everyone. If you're talking about something like what Trump was talking about (requisitioning the Iraqi oil), that seems like it would definitely benefit American corporations and
citizens (at the expense of Iraqis and whoever they would have sold it to), but I don't think that's what you were talking about (?).
And in the end, rich people only have as many votes per capita as poor people do. And if they keep returning people to office who are fucking them, then they can't really complain about a perma-war surveillance state.
2a) This gets into what I see to be a bit of an injustice that takes us back to capital vs labor. I think the tax on capital (an inheritor or even proprietor owning $10 million of net worth producing $500k of annual taxable income owes FAR more to the perma-war surveillance state than a doctor earning $500k per year. This is before adjusting for the fact that wages are a far-less forgiving way to express income than return on capital, to begin with. This is why I'm in favor of some combination of higher taxes on capital-income, a wealth tax, corporate income tax and a rich tax on inheritances, even if we just use the income tax regime to do it.
I'm wondering whether the federal government should tax income. I like the ideas behind the consumption taxes.
The wealth tax and inheritance taxes I still don't like. The main aspect I don't like is the government taking a slice of the value of something that isn't "taxy." Like I said before, when you inherit a rental property, you inherit something taxy. Your parents had to pay real estate taxes and income taxes on it: rentals are a service industry. So since you're going to inherit the taxes, that's less of a stretch. But inheriting a nice painting, or your mom's jewelry, or some silverware that's been owned by your family for generations... Once your ancestor bought it (and paid sales tax, say), they aren't paying any more taxes on it. It's your stuff! Giving non-taxy stuff like that to someone when you die and can't use it anymore should be free from the government trying to use it as an excuse for a money grab. More on this below.
2b) One thing I find unfortunate and upside-down is that the corporations whose bottom lines are most-benefitted by the military (ones with lots of overseas investment and resource-flow interests) are the ones most-likely to be able to skirt the Corporate income tax through location/accounting-meddling. I don't know this for sure but it's my impression.
I agree that some problems with globalism and corporatism are coming into focus. It's a tough problem to get your head around. I think it's a Prisoner's Dilemma wrapped inside an Ultimatum Game.
3) While you can manipulate your "true wages" through certain deductions from income, it's pretty limited. When you earn income from capital, there's a whole host of benefits (beyond lower rates of taxation) that help you...
3a) Certain income doesn't even show up. Capital gains aren't taxed until recognized. Life insurance and annuity gains aren't recognized until collected upon, if-ever. Retirement account assets (admittedly, not a huge portion of the capital class' wealth position, often) is allowed to grow tax-deferred until retirement. Further, businesses and property owners are allowed to take huge deductions agains their basis while the value of their assets actually go-up, and often this is never captured, as these folks get a massive step-up in basis for their kids when they inherit the rental/business... a basis that they can now take as depreciation. Keep in mind, this exists in the same world and at the same time as 1) these folks are the main beneficiaries of military protections and freebies from military to police, as opposed to doctors and first-year entrepreneurs/earners, and 2) these people, unlike people who throw tens/hundreds of thousands into education, get to deduct their basis (investment) against their income.
Regarding capital gains not being taxed until recognized, that's how it should it, IMO. I will have to look more into depreciation, because it doesn't make sense to me. Regarding 2) people who throw money into educations "get" the education, they don't lose it. But people who sell their investments at a loss lost something. I don't get the comparison you're making. But again, if there was no income tax, there'd be nothing for a capital loss to offset, right?
So I take a bit of an alternate opinion on this. I think the ongoing tax-load that (through its main expense of military spending and interest on past military spending) largely goes to pay for protection of their capital interests of folks who earn $500k from capital, either through higher taxes on capital income or a straight-up wealth tax, should be far-higher than a doctor earning $500k from a career forged through decades of hard-study and gobs of (currently) non-deductible dollar investment.
I think we're pretty close to the same page. I'd rather see the tax-load paid for by tariffs and excise/VAT taxes. Coming back to the inheritance thing, if people had to pay a hefty tax when they bought something, they'd probably want to buy something that lasts. That's better for the environment. When something is really good and it lasts a long time, you can leave it to your kids. So the combination of a VAT and no inheritance tax on non-taxy items is good for the environment because it incentivizes the "right" behaviors.
I'm less on board with someone in a $70k per year household lecturing a doctor as-to why they should pay 5x what they pay... but I'm totally game for capital interests getting soaked for the cost of our military.
I'm not. If the politicians who vote for (or abdicate their responsibility for) military operations aren't voted out by non-capital interests, why should the capital interests have to foot the bill? If they keep voting those politicians in, they deserve some of the bill. You and I are already for decreasing military operations, and as shekels mentioned, if people see how much they're paying for it, they might become averse to it too.