Gyroscopic Investing

I was pondering this today for items that track the CPI or inflation over the short or long term.

For the short term, I bonds track inflation (since I bonds now do not pay a fixed rate, only whatever the CPI is for those 6 months)
For the long term, gold reasonably can track inflation.

Both of which though you will be taxed on the gains of either of these investing instruments. You're taxed on the nominal growth but really you are taxed on the real price, or a wealth tax almost (since currency during inflation erodes in value over time).

I guess I'm just wrestling with the fact that having I bonds that you really are still losing out in the real but doing well nominally perhaps.

With gold, I realize that if you purchase physical gold and you then sell it later for more money, that you need to pay tax on those gains. It's hard for me to think that this seems right, especially since there is very little oversight so government wouldn't even be expecting taxes on it because for all they know you don't have gold in the first place.

The ethics of taxation are that the government has a professional force of armed men (and women) who will rob, assault, kidnap, and/or murder you if you resist its tax demands, and you will submit to those demands because you lack the power to physically resist without certainly losing your own life. If you choose to evade those demands, you are gambling on the hope that you are not discovered, because the armed men will eventually be called in should your evasion be discovered and you do not immediately acquiesce to the demands.

Not exactly a very defensible ethical principle, but it's the plain truth.

Very understandable PointedStick. I guess in my mind I just don't like the idea of being taxed on gold if it doesn't actually have a positive real rate of return. You're just taxed on your inflation gains which is fictitious.

Also I was even thinking about, I have old comic book in my room. One I bought maybe 15 years ago at around $25 (not positive exactly what I paid) and it sells on eBay for around $100. If I could get that, I believe I'd have to report that as a collectible and pay capital gains on that sell. Not sure how many people actually do this though or even know that they need to pay collectibles tax.

I think a perfect example of what you are saying is the law about taxing social security benefits passed in 1984 and signed by Saint Ronald Reagan.

The law stipulated that if your joint income was > $44,000 then 85% of your social security benefits would now be taxable income. No adjustment for inflation was provided. Call me cynical but I tend to think the intention all along was to tax nearly ALL social security benefits which is going to be the result in the not-too-distant future if we aren't there already.

Or the new wealth tax on people making more than $250k/year in investment income, that isn't pegged to inflation. Or AMT.

I guess I just don't like the idea of taxing the physical asset. If I buy a rock (doesn't even have to be gold) and I sell that rock later for twice what I paid for it, wouldn't I then have to pay collectibles tax on that? Can anything be considered as a collectible? I'm also thinking of so many people on eBay selling items, and that I would think very few of them would know that a lot of what they are selling they would need to report if they made a profit on it over what they bought it for.

It's the law so you should pay your taxes on gold (even if there is a very low chance of being caught if you wouldn't pay it I would think for physical gold). That being said, I hate the idea that I am taxed on "inflation" gains.

I don't like being taxed on anything! Is a tax on the private sale of physical assets or inflation gains any more offensive than taxing the products of labor? Or the rewards of investment? Or giving a gift to your child? Or dying with assets worth passing on? Or transporting certain firearms across state lines? Or not purchasing health insurance??? It's all pretty messed up if you ask me.

Taxation is theft.

The only reason we go along with it is people have the perception that they are receiving more back from the government than they are paying in taxes, plus the fact that the government mostly has a monopoly on the legal use of force in society, and thus there is an implicit threat of violence against those who don't pay their taxes, much like mugger implicitly threatens his victims when he demands their money.

There is really no ethical or moral dimension to taxation.  It is simply a larger and more powerful entity engaging in a coercive act against individual members of a society.

Contrast taxation with what corporations do, which is to provide a similar type of service to their customers that governments provide to their citizens, except there is the key difference in that corporations must persuade their customers to buy their products and services, while governments simply coerce their "customers" into paying for the products and services provided by the government.

When you think about it in this light, you see how capitalism and free enterprise are much purer version of democracy than any kind of elections for the selection of political leaders.  In a capitalist economy, there is an election every minute of every day as consumers decide which firms will prosper and which firms will go under through their spending decisions.

Taxation nothing more than a form of tribute to legitimize a currency. A king borrows gold from various goldsmiths and he stamps his head on the gold coins and hands them out to people to build up his castle and army. The army pays the gold to merchants for supplies and the king demands that everyone pay a tax (including fines and fees) back to the king with those same coins he handed out. The tax was collected by the weight of the coins — since the earliest coins did not have a numerical nominal value stamped on them. So, the king could either reduce the metallic content of the coins (often causing inflation in the process) or, paradoxically, declare the coins were worth less and simply demand more weight in coins when taxes/fines were paid to him. The king pays the goldsmiths back the interest for borrowing the gold (causing the goldsmiths to get richer and richer over time). Whenever the king would fall behind the curve, he could simply declare that the coins were worth less than they previously were by demanding more weight (again, no nominal value was stamped on the earliest coins).

You can read more about this historical process here...

http://neweconomicperspectives.org/2011 ... coins.html
http://neweconomicperspectives.org/2011 ... coins.html

So, the idea of using taxation as a form of tribute and and to legitimize a kingdom and its currency is nothing new. It's been happening for a very long time.

MT and PointedStick have made excellent points (points, by the way, that I very much enjoyed reading.)

The only thing that I would add about this specific form of taxation is how obnoxious it is.  Government causes inflation and all of the misery that it brings.  When instruments like gold react to this inflation by increasing in value, you owe tax if you ever cash in on this capital appreciation.

And to whom do you owe this tax?  The very entity that caused the inflation in the first place!  It's annoying and unfair almost to the point of being amusing.  (Almost.)

TripleB wrote: Or the new wealth tax on people making more than $250k/year in investment income, that isn't pegged to inflation. Or AMT.

Yep.  This new "rich people tax" isn't going to be a "rich people tax" for all that long.  "Forgetting" to index all these fun new taxes to inflation is no accident.

jackh wrote:I think a perfect example of what you are saying is the law about taxing social security benefits passed in 1984 and signed by Saint Ronald Reagan.

Well, "they" would argue that you didn't pay income tax on half of your SS "contribution", so it is only fair that you do so when you withdraw benefits.

What we need is a constitutional amendment that all matters financial with the government must be indexed to inflation, or that taxes on dividends and interest need to be based on real gains, not nominal gains.  That way, if you are holding T-Bills now, the government would owe you money!

If all taxation is theft, then I see no other logical conclusion that any form of government whatsoever is illegitimate (even if we'll acknowledge degrees of illegitimacy).

If that's the case, which in some ways I can actually agree with (individual sovereignty being something that is amazingly logically sound), then every government-lead recognition and defense of private property is also illegitimate (arguably less so, but that's a value judgement on coercion I don't get to make), especially when it recognizes privacy of property where it does not exist (land & natural resources).  This is where full anarchistic logic is tight, though it's hard, on a functional basis, to argue that full anarchism is really the best route... however, it points out a gaping flaw in the traditional (non-anarchistic, private-property based) libertarian mindset. Trying to claim the government to be illegitimate while lamenting about the importance of private property & the tragedy of commons is a bit of an oxymoron when applied to things that aren't inherantly private without government activism.  Deeding land to prevent the tragedy of commons is simply social engineering.  Full stop.  Probably, though, in its finest form.  But it still is what it is.  I'm not giving "credit" to government for private innovation or anything, simply pointing out a pretty undeniable truth about the logic of govt vs private activity.

So if taxation is theft, which is logically sound on an individual sovereignty basis, so is all government... so is deeding land and guaranteeing natural resource rights.  So, simply, through the use of organized force the government can do phenominal good by assigning assets to people for them to then be able to trade for other assets and labor, or use to their (hopefully) maximum long-term productive potential and avoid the tragedy of commons... the tragedy then is the fact that some people have been left out of this process and have had to trade their labors for resources that other people never had to earn for themselves.  If we maintain this extremely important social engineering tool, maybe it's not the end of the world that we tax production to provide a social safety net to those that have been completely cut out of the process.  I'll take that bargain.  I don't like politicians as much as the next guy, but I don't like the idea of us getting into a self-fulfilling plutocracy either.

Specifically, though, regarding taxes on inflated assets, I think the first step, if you can recognize that to have SOME level of government they need to procure funds, is to decide what a taxable event should be.  Income or consumption are both common ones, though the latter can get into some tricky definition problems that are a bit less difficult with "income."

If we can establish that income is a good measure of a taxable event, then the next question is whether that should be nominal or real.  I think REAL, not nominal, returns are more logically sound in terms of the "morality" of whether they should be taxed.  That said, capital gains are not only taxed at preferred rates, but are deferred and not subjec to payroll taxes.

However, I would classify transfers from parents and children to be income at some point.  Think of it this way... if it makes Daddy Warbucks happier to see his kids get money, and the kids' expense in making him happy is $0, that could be considered taxable income to the full value of what they got.  Similarly, Daddy Warbucks could have bought a Ferarri with that money, and the owner of the Ferarri dealer, after subtracting his expenses in earning that money, he'll have to pay taxes on it.  Why should Preston Pendleton Trustfundbaby get it tax free?  .  Obviously this isn't how the estate tax works, but the principal is there.

WildAboutHarry wrote:

jackh wrote:I think a perfect example of what you are saying is the law about taxing social security benefits passed in 1984 and signed by Saint Ronald Reagan.

Well, "they" would argue that you didn't pay income tax on half of your SS "contribution", so it is only fair that you do so when you withdraw benefits.

You're saying that you didn't pay income tax on the FICA tax when it was withheld from your earnings?

moda, I think we can all acknowledge that deeding land is a convenient social construction, but I don't think that the deeding of land by a monopolistic government that claims ownership of all the land is the only way to prevent the tragedy of the commons. It's what we have now, but I think property ownership--up to and including land ownership--is fundamentally compatible with the human mind. If the government didn't act as the monopoly arbitrator, we clever humans would come up with some other convenient social institution to serve that goal.

As an example, I've lived in a society that had private land with no central government, no land deeds, and no courts of law. Now granted, this was an African village with a fairly low level of technology and prosperity, but it functioned well within the constraints of the environment, and land disputes were settled privately by the parties making their cases in front of the village elders whose decision was mutually respected, not enforced by threats and guns. Sometimes the parties even chose representatives to argue for them! I think it illustrates that the social construction of land deeds is in no way necessary to prevent the tragedy of the commons or sort out who owns what patch of ground. We humans are clever creatures. Central monopolistic government is one approach, but I think it's only one approach among many.

moda0306 wrote: If all taxation is theft, then I see no other logical conclusion that any form of government whatsoever is illegitimate (even if we'll acknowledge degrees of illegitimacy).

"Legitimacy" is a matter of perspective.

If that's the case, which in some ways I can actually agree with (individual sovereignty being something that is amazingly logically sound), then every government-led recognition and defense of private property is also illegitimate (arguably less so, but that's a value judgement on coercion I don't get to make), especially when it recognizes privacy of property where it does not exist (land & natural resources).

I don't agree that governmental action designed to protect individual property rights is illegitimate.  If we assume that property rights are an extension of human rights, then the purest and most appropriate function of government would be to protect those rights.

The government should function to secure and promote individual rights, which are often manifested in the form of property rights.  The right to the fruit of one's own labor is the only difference between a slave and a free person, and I don't have a problem with the government assisting in the protection of those rights against thieves, looters and thugs.

I would prefer to be able to choose who to pay my "protection" money to, but if I must pay the government a portion of my property, I would like to at least receive in return access to a court system in which I can enforce my property rights against others.

So if taxation is theft, which is logically sound on an individual sovereignty basis, so is all government... so is deeding land and guaranteeing natural resource rights.

Without the recognition and protection of such rights, how does economic development ever occur?  Withouth economic development, how does the lot of humanity ever improve?

So, simply, through the use of organized force the government can do phenominal good by assigning assets to people for them to then be able to trade for other assets and labor, or use to their (hopefully) maximum long-term productive potential and avoid the tragedy of commons... the tragedy then is the fact that some people have been left out of this process and have had to trade their labors for resources that other people never had to earn for themselves.  If we maintain this extremely important social engineering tool, maybe it's not the end of the world that we tax production to provide a social safety net to those that have been completely cut out of the process.  I'll take that bargain.  I don't like politicians as much as the next guy, but I don't like the idea of us getting into a self-fulfilling plutocracy either.

It sounds like you are describing feudalism.  Today, I don't know of anyone who got their land as a gift from the government.  As far as the land that the government "owns", I would expect that any sovereign entity would claim ownership of lands within its borders that are not otherwise privately owned and whose ownership is recognized within the legal system of that society.

In no respect does government recognition of private property confer unearned value on the owner.  Even in feudal societies, lands were granted in recognition of past or future service to the state (e.g. in payment for military service, or in the form of Ottoman Empire style "iltizam" tax farming, or in anticipation of future material improvements which would enhance value and therefore taxability.)  More recently, individuals and corporations have obtained land in return for agricultural development (homesteading), railroad-building (Union Pacific and Southern Pacific), or university development (state land-grant colleges).  Most people, however, obtain property rights through purchase, not grant.  The buyer exchanges his earned wealth for an equivalent value in property.  No gift is involved.  

The real enhancement of the value of property is achieved by making ownership secure through legal title.  This is at the heart of intellectual property development, technological innovation, business investment and commerce of all kinds.  Without property rights, the state is the master of nothing more than barren land, unexploited resources and a population living on the edge of subsistence.  With it, the state sits atop a vibrant system of wealth creation.  No gift is involved.  Quite the contrary.

Once property rights become the plaything of statist elites, the stewardship element disappears as title holders spend more time maneuvering at court rather than innovating at home.  Witness the difference in behavior between land holders in 18th century America and their counterparts in France under the ancien regime.  Given the inherent corrupting influence the state has on property relations over time, one can only conclude that there is an inverse relationship between true property rights and the power of the state.  This was an essential principle behind both the American Revolution (which championed such rights) and the French Revolution (which, in the final analysis, didn't.)  The current debate, in which the statists are demanding ever-more in tribute, is further confirmation of this fact.

I think there are a few issues getting muddied up here.  Starting from individual sovereignty, I'd say that there are definitely some rights attached to that, mainly being our right to be free from harm from others... but I hesitate to consider different forms of property fundamentally attached to that basic human right of liberty.  I would argue that the more personal & self-created an asset is, the more sovereign it is to you (a symphony or work of art).  While it is "natural" for people to try to claim natural resources as their own, I don't consider claims on vast swaths of natural resources to be in any way connected to our natural rights as human entities.  We are not nebulous entities floating through space providing others with the products of our pure creation, we're all sharing a big ball of natural resources and I see no natural claim on those resources by anyone as being a natural right... simply because there's no way to determine ownership in a "natural" way IMO.  You can't just look at something and claim it to be your own.  Since there is no natural right there (IMO), these resources can either be rushed after in a massive tragedy of commons, managed purely by some central entity, or some combination of the two... which is what we have, where the government issues property that isn't its own to people for them to practice their trades on safely.  This is tremendously beneficial for the most part, but it's surely not a natural extension of our rights as human entities to simply take claim to natural resources that were here long before we were at the detriment of others.  This is a social engineering tool of government.

TBV... I'm hardly claiming the entity we call government has any more a "natural" right over our natural resources as we as individuals do... your examples of governments buying services with land they don't own is a perfect example of government activism, not natural rights as sovereign human beings being exercised.  Since when is a government that drafts the poor into war, enslaves masses, and only lets a small elite decide the role of government "sovereign enough to have the right to divy up land they have no natural right to (anymore than you or I) for certain services they deem to be sufficient payment?
I'd say, though, that while resource-based private property allocation/protection seems clearly within the realm of government engineering and is not inherantly "natural" as an extension of our rights as sovereign entities, the government protecting our rights as individuals (our lives and creative property) appears to be moreso, to me.  This is the government protecting what is purely and naturally ours as sovereign entities, not allocating what isn't ours nor theirs to citizens they choose.

Let me be clear, though, of course without resources being SOMEONE's for the most part, we'd have no modern economy... it might resemble that African villiage.  In fact, that's my point... the organization, property allocation & defense that government does for individuals in society is immensely valuable, and not without complication, and to constantly trash gov't as an inept entity that private citizens get little value from is asinine, because without some final decision maker economic activity simply couldn't take place anywhere near the degree it has, and those who've benefitted from massive amounts of economic activity might want to realize that they just might have benefitted from certain social structures that are almost impossible without government in any recognizable manner today.

"America touts itself as the land of the free, but the number one freedom that you and I have is the freedom to enter into a subservient role in the workplace. Once you exercise this freedom you’ve lost all control over what you do, what is produced, and how it is produced. And in the end, the product doesn’t belong to you. The only way you can avoid bosses and jobs is if you don’t care about making a living. Which leads to the second freedom: the freedom to starve."

- Tom Morello

Moda:  I wrote a fairly lengthy reply, but decided against posting it.  Instead, let me be so bold as to say that all public goods (be they highways, schools, police, defense, etc.) are a gift to society (though not quite as voluntary as the word gift might imply) by the relatively few among us who pay most of the income taxes.  Let's not forget the other benefactors, foreign and domestic, who finance what taxes do not cover.  That they have graciously left such goods in the custody of assorted intermediaries (government officials) should not be confused with the idea that those officials created them or somehow offer them up to the general public as if such things originated with them.  We, as the source of all sovereignty, need not be grateful to others for enjoying what we ourselves paid for, and if we didn't personally pay for it we should avoid the mistake of feeling beholden to the wrong people (e.g. our government) who didn't either.

And one more thing....the Marxist alienation of labor argument which lies at the heart of the Morello quote is more than a bit shop worn.  It represents a lament for lost freedom from folks who don't much care for it in the first place.  Reminds me of the late singer and left-wing activist Dean Reed, who used to wax poetic about the "collective freedoms" available in his adopted home, East Germany.  Alienation is the alpha of a progression whose omega is supposedly (but never actually) the withering away of the state.  At least the founders of the Marxist school had the honesty to acknowledge (if only nominally) that true liberation is a process which affirms that the state is not at all indispensable.  While that will probably remain a far-off dream, in the meantime there's the danger we might instead preside over the withering away of our property rights.  The surest way to do that is to anoint the state as the ultimate arbiter, regulator and dispenser of essential resources, be that air, water, land, carbon or whatever else comes to mind.  The great "hydraulic societies" of antiquity were paragons of such thinking, as well as being utterly despotic.  There's a lesson in that.

TBV wrote:Instead, let me be so bold as to say that all public goods (be they highways, schools, police, defense, etc.) are a gift to society (though not quite as voluntary as the word gift might imply) by the relatively few among us who pay most of the income taxes.  Let's not forget the other benefactors, foreign and domestic, who finance what taxes do not cover.  That they have graciously left such goods in the custody of assorted intermediaries (government officials) should not be confused with the idea that those officials created them or somehow offer them up to the general public as if such things originated with them.  We, as the source of all sovereignty, need not be grateful to others for enjoying what we ourselves paid for, and if we didn't personally pay for it we should avoid the mistake of feeling beholden to the wrong people (e.g. our government) who didn't either.

Taxes do not really "pay" for the things you speak of. A king collects taxes so that he can retrieve the previously spent physical currency in order to pay people to obey more orders. It's the same currency he borrowed into existence, from goldsmiths. The taxpayers were not benefactors. The money a king spent was forcebly removed from people's hands to maintain his currency and power. Today the money is conjured out of binary code and "borrowed" into existence by converting previously spent money into highly liquid risk free bonds to allow new digital money to be spent. The binary code and bonds are a creation of the government. The more money a government spends the more money that will exist to convert into risk free bonds to enable the creation of new digital money. Taxes merely give the illusion that someone "paid" for a few feet of asphalt or a cruise missile or ten. But, the reality is that "taxes" only give the illusion of "paying" for a small percentage of overall government spending and the money to pay for taxes must be borrowed into existence in the first place (since all money comes from public or private debt). The point being that "money" is nothing more than a government (or bank) IOU. So, to say that the wealthiest individuals "pay" for everything is false when you understand that all money is debt-based in the first place. The currency is a conjured creation of the government. Even during medieval times the largest taxpayers were, in reality, forced to return a king's gold (that a king borrowed from goldsmiths) back to the king so he could decide what to spend it on next. Taxpayers didn't really finance a king's kingdom when you consider that he was forcibly retrieving the very currency he borrowed into existence in the first place. If anything the goldsmiths financed the kingdom. Today, the banks have replaced the goldsmiths and the government creates the currency in conjunction with the banks.

Gumby wrote:

TBV wrote:Instead, let me be so bold as to say that all public goods (be they highways, schools, police, defense, etc.) are a gift to society (though not quite as voluntary as the word gift might imply) by the relatively few among us who pay most of the income taxes.  Let's not forget the other benefactors, foreign and domestic, who finance what taxes do not cover.  That they have graciously left such goods in the custody of assorted intermediaries (government officials) should not be confused with the idea that those officials created them or somehow offer them up to the general public as if such things originated with them.  We, as the source of all sovereignty, need not be grateful to others for enjoying what we ourselves paid for, and if we didn't personally pay for it we should avoid the mistake of feeling beholden to the wrong people (e.g. our government) who didn't either.

Taxes do not really "pay" for the things you speak of. A king collects taxes so that he can retrieve the previously spent physical currency in order to pay people to obey more orders. It's the same currency he borrowed into existence, from goldsmiths. The taxpayers were not benefactors. The money a king spent was forcebly removed from people's hands to maintain his currency and power. Today the money is conjured out of binary code and "borrowed" into existence by converting previously spent money into highly liquid risk free bonds to allow new digital money to be spent. The binary code and bonds are a creation of the government. The more money a government spends the more money that will exist to convert into risk free bonds to enable the creation of new digital money. Taxes merely give the illusion that someone "paid" for a few feet of asphalt or a cruise missile or ten. But, the reality is that "taxes" only give the illusion of "paying" for a small percentage of overall government spending and the money to pay for taxes must be borrowed into existence in the first place (since all money comes from public or private debt). The point being that "money" is nothing more than a government (or bank) IOU. So, to say that the wealthiest individuals "pay" for everything is false when you understand that all money is debt-based in the first place. The currency is a conjured creation of the government. Even during medieval times the largest taxpayers were, in reality, forced to return a king's gold (that a king borrowed from goldsmiths) back to the king so he could decide what to spend it on next. Taxpayers didn't really finance a king's kingdom when you consider that he was forcibly retrieving the very currency he borrowed into existence in the first place. If anything the goldsmiths financed the kingdom. Today, the banks have replaced the goldsmiths and the government creates the currency in conjunction with the banks.

Nicely put. Yet money is nothing if not an intermediary for the exchange of items possessing intrinsic value, such as gold or consumable/durable goods.  All such items initially come from "us", not the state.  To the extent that tokens can reliably be exchanged for items of value, the state can issue them and continue the cycle ad infinitum.  But there must always be a reasonable expectation of payment in something other than another token.  If the state abandons any pretense of value-for-value exchange (e.g. via runaway inflation), then the process becomes little more than armed theft.  Picture a remote island with one barren coconut tree and a ruler with a large printing press.  The ruler can act as vigorously as he wishes, but there will be no increase in wealth nor in the value of the tokens he issues since there will never be any new coconuts to consume.  For that to happen, there must be real investment which, as I see it, cannot begin with the state.

I think that at the end of the day, with regards to private property, the determining factor is whether or not one can defend his or her claim to the property.  It really comes down to the use of force.  If there were no government, we would all be required to defend the property that we claim as our own.  Or we could hire someone to defend our property for us, and hope that that entity didn't take over the property for themselves.  If this property were engaged in some sort of trade, the person in control of the property would provide more value to the defenders through wages than the defenders could garner by taking the property for themselves.

When we have a government as the defender of property claims, as opposed to private entities, it makes sense to me that a certain level of taxation on property would be warranted to provide the protective and legal services that are needed to defend those property claims.  In that regard, I feel that the property tax is a more legitimate form of taxation than the income tax.

hoost,

I tend to agree with that, but wouldn't we have to tax all property equally, not just Real Estate, which is the vast majority of property tax today?  What about financial assets we own?  Does that count as property?  It's very much-so enforced by our legal system, especially publicly traded securities.

TBV,

I agree with you that fiat money is not true wealth in a vacuum, though I'd argue (probably to your disagreement) that properly managed fiat currency vastly aids in the facilitation of real wealth creation and a stable economy.  No, you can't print money to make the coconut more valuable, but you can create conditions that make investing in real wealth more inticing than hoarding paper wealth in a real economy.

To your assertion that public goods are a forced gift from the taxpayers to society, I can agree to an extent.  I'd also argue, though, that natural resources allocated to individuals as "private property" is a gift from "society" to individuals, though, especially when only white, male landowners have a say in the political process, was definitely not as voluntary as the world gift may imply.

Freedom can mean different things to different people.  It probably means something a lot different to a son of a slave than a son of a land-baron.  I don't think I have the perfect definition of what counts as "legitimate" government or what exactly our status as sovereign individual entities affords us, but I hardly think the traditional libertarian mindset, in spite of some wonderful philisophical contributions, has given a fair analysis on the matter.  There are too many holes in their logic, IMO.

moda0306 wrote: hoost,

I tend to agree with that, but wouldn't we have to tax all property equally, not just Real Estate, which is the vast majority of property tax today?  What about financial assets we own?  Does that count as property?  It's very much-so enforced by our legal system, especially publicly traded securities.

That's a good point.  I believe there is a legal difference between real estate (I believe it's considered "real property") and other property.  I think a similar argument might be made for taxing businesses, or most things other than personal income that is earned from the fruits of one's labor.  For instance, there are a few states that do not have a personal income tax but do tax business income and capital gains.  It seems to me that a reasonable argument could be made defending those methods of taxation as being "just".

MediumTex wrote:You're saying that you didn't pay income tax on the FICA tax when it was withheld from your earnings?

You did not pay taxes on the employer-paid portion of FICA et al.  Not the case for self-employed folks, though, I think.

WildAboutHarry wrote:

MediumTex wrote:You're saying that you didn't pay income tax on the FICA tax when it was withheld from your earnings?

You did not pay taxes on the employer-paid portion of FICA et al.  Not the case for self-employed folks, though, I think.

Actually, half of your SE tax, as a self-employed individual, is a tax-deductible item for income tax.