The Shrine

<div style='font: 10pt "EngraversGothic BT", "Copperplate Gothic Light", "Century Gothic"; text-align: left; '><i>In another forum, we were having a rather long discussion on a flat tax system. I am against a standard flat tax (income-based) system, but I realized that there's a better way with a wealth-based system. This is sort of a continuation of Flip's tax/wealth discussion, and I used the same figures here:</i>

Okay, let's get into a wealth-based flat tax. I still don't agree that it's as fair as a wealth-based bracket system, but it should be much better than the current one. First, the current tax/wealth figures from my first post:

Top 1% (above $ 292,913) - 33.9% / 38.1% (1998 figure from WR)
Top 5% (above $ 127,904) - 53.3% / 59.4% (1998 figure from WR)
Top 10% (above $ 92,754) - 64.9% / 67.4% (2001 figure from FR)
Top 25% (above $ 56,085) - 82.9% / 89.7% (2001 figure from FR)
Top 50% (above $ 28,528) - 96.1% / 97.8% (2001 figure from FR)
Middle 25/75-50% (between $ 28,528 and $ 56,085) - 13.1% / 8.1% (2001 figure from FR)
Bottom 50% (below $ 28,528) - 3.9% / 2.2% (2001 figure from FR)

Okay, let's get the "wealth tax rate", based on the amount of taxes collected and current wealth: $887,682,000,000 (887 billion) divided by $27,000,000,000,000 (27 trillion) is 3.2%. A 3.2% wealth tax rate. (Notice how much lower than is to the 14-16% flat income rate, because there is sooooo much wealth around.)

Now, combine the two, using billion dollar figures to analyze it better (old taxes paid / new taxes):

Top 1% (above $ 292,913) - B$300.898 / B$329.184
Top 5% (above $ 127,904) - B$472.823 / B$513.216
Top 10% (above $ 92,754) - B$576.163 / B$582.336
Top 25% (above $ 56,085) - B$736.053 / B$775.008
Top 50% (above $ 28,528) - B$852.642 / B$844.992
Middle 25/75-50% (between $ 28,528 and $ 56,085) - B$116.286 / B$69.984
Bottom 50% (below $ 28,528) - B$35.040 / B$19.008
<i>(Note, those are dots, not commas...billions of dollars, not trillions.)</i>

Hey, I might actually like this system. I dunno. Taxes for the poor/middle-class get cut in half, and taxes only go up in marginal amount for the rich.

This is my definition of "fair". If you're going to put up a "fair" flat tax, you tax everything, not just income. The poor/middle class live off of income. The rich don't. They can take or leave their income and still be wealthy. Hell, we've had a few presidents forego their usual income as a courtesy, but really they don't need it anyway. They weren't poor. They had plenty of money in stocks, houses, businesses, etc.

Now, let's go into an individual point-of-view, and look at potential downsides. For one, not only do rich have more wealth than income, but so does everybody else. Most reports have been measuring wealth by adding up all of the assets and subtracting all of the debts. Therefore, you can actually get money from the government for the debts, if you're really deep in debt (like a house). Let's look at a few test cases:

<b>Poor, but no real debt</b>
Income: $15,000
Credit Card Debt: $500
Car: Blue Book of $1000, but owes $2000
House: none (rents apt)
Stocks: none
Total Wealth: $13,500
Total Taxes Paid: $432 (2.88% of income)

<b>Middle-class with good house, no stocks</b>
Income: $25,000 x 2 (married)
Credit Card Debt: $2000
Car: Blue Book of $8000, but owes $10,000
House: $120,000 (owes in full; just got it; joint ownership)
Stocks: none
Total Wealth: $-99,000
Total Taxes <u>Earned</u> (not paid): $2,368 (total for couple)

<b>Higher Middle-class with no debts, some stocks</b>
Income: $35,000 x 2 (married)
Credit Card Debt: none
Car: Blue Book of $10,000, plus truck with BB of $5,000
House: $175,000 (paid in full; joint ownership)
Stocks: $5,000
Total Wealth: $265,000
Total Taxes Paid: $8,480 ($4,240 each; 12.11% of income per)
<i>Hmmm...a lot less scary than I thought. That's actually still under what we pay now.</i>

<b>CEO with plenty of stocks</b>
Income: $250,000
Credit Card Debt: none
Car: BB of $25,000 x 3
House: $500,000
Stocks: $500,000
Total Wealth: $1,325,000
Total Taxes Paid: $42,400 (16.96% of income)

Hmmm...the more I analyze this system, the more I like it. Even a CEO with a fair amount of stocks, cars, etc. pays his fair share of taxes. The only ones penalized are the bastards that horde money like crazy.

I wonder if anybody else has thought of this idea.</div>

<div style='font: 11pt ; text-align: left; '>Why punish the rich?</div>

<div style='font: 11pt Dominion; text-align: left; '>...I had something to say...but I can't stop staring at your sig...damn you eric!!</div>

<div style='font: 12pt ; text-align: left; '>"The poor/middle class live off of income. The rich don't." That essentially is the largest problem with the NA economy. Give a rich guy $5K, you can be sure he's going to shove it away in his bank account. Give a poor guy $5K, you can be damn sure he's going to spend it, thus boosting the economy.</div>

<div style='font: 12pt ; text-align: left; '>I wouldn't say it's punishement, it is essentially saying "spend the money you have, or we'll spend it for you." It would actually go a long way to stimulate the economy, in teory. There are some unanticipated problems that the system might have.</div>

<div style='font: 12pt ; text-align: left; '>He ripped it off of an ad on Newgrounds =P</div>

<div style='font: 10pt Arial; text-align: left; '>So, essentially, it's a punishment for not spending money.</div>

<div style='font: 10pt "EngraversGothic BT", "Copperplate Gothic Light", "Century Gothic"; text-align: left; '>If you're not spending your money, you're not stimulating the economy.</div>

<div style='font: 10pt "EngraversGothic BT", "Copperplate Gothic Light", "Century Gothic"; text-align: left; '>I wouldn't call it a punishment. It's just making sure that your income:wealth ratio is not way out of preportion. You can't be storing away your money like a little squirrel if you're not going to be using it. Keep in mind, this system would replace all other taxes: no estate taxes, no property taxes, no standard income tax, no taxes on 401K, no taxes on stocks, etc. You would not be taxed on what you make, but what you own.</div>

<div style='font: 10pt "EngraversGothic BT", "Copperplate Gothic Light", "Century Gothic"; text-align: left; '>Why does 50% of the population own 96% of the wealth?</div>

<div style='font: 10pt Arial; text-align: left; '>Spoken like a true consumerist.</div>

<div style='font: 10pt "EngraversGothic BT", "Copperplate Gothic Light", "Century Gothic"; text-align: left; '>What? No other comments than that?</div>

<div style='font: 12pt ; text-align: left; '>Because they are of superior genetics =)</div>

<div style='font: 11pt ; text-align: left; '>Because people are inherently lazy and only a small portion are ambitious enough to work for that kind of wealth maybe? I dunno. My parents make over 200k a year, my brother's finishing up school, he'll have a 100k+ salary, his wife is finishing up law school, I have dreams to be a 100k+ man....</div>

<div style='font: 10pt "EngraversGothic BT", "Copperplate Gothic Light", "Century Gothic"; text-align: left; '>Bullshit. It's a system of using the rich to benefit the rich. The wealth balance structure is totally broken, shifted way too much against both extreme.</div>

<div style='font: 10pt Tahoma; text-align: left; '>First things first, the tax system is as confusing as it is for a reason, it is an attempt to be more fair. Some of the odd deductions are there to relieve people and allow them to pay less tax than a person in the similar income bracket. Any 'easy' to apply tax system will not work because different people circumstances are too different. That is where out tax system is at today, i'm sure way back in the day it was simple, too, but year after year with change after change we have the beast that it is.

Example:
a couple making 50k collectively where one is working full time and going back to school and they have 3 kids will pay less in our current system than a couple simply making 50k and rolling through life. A flat-tax no nonsense system would not take any of that into consideration.

Your examples are cute, but very un-real world. I know a guy who lives in the city, DC, and doesnt own a car or his own place, but has 2 plasma tv's, a sound system that probably cost as much as the both of them, and leather furniture that is the bomb. My point is, who is going to determine an average persons 'wealth'? Everyone having to hire an actuary is rediculous, plus, having dealt with them before, they take forever and charge too much.

If you are going to subtract out debt, then there would be no reason why people would not finance their purchases or lease their cars. My place in under a mortgage and my payments right now are almost all ineterest, thus not decreasing the principle very fast. If i ever got to the point to where my payments were mostly principle, i would most likely refinance because the benefit of having that debt is too good. In todays world, paying off your house is a huge financial release, based on this wealth system it would suck to own your own house, something isnt right with that.

One of the determinates of a good tax system is that is should not influence how people do their business and conduct their daily lives. Of course, our current system doesnt fall completely under this, but it sure as hell is better than a wealth based system. There is plenty of ways for someone to bypass what they are worth, especially if liabilities are subtracted out.

Another point, it isnt fair to tax people on wealth in general because they are continually getting taxed on the same items. Their house and cars and assets get that 3.2% every year. A retired person with little to no income who owns all of their assets is in a good position in todays tax system, as they should be, but in the wealth based system they would still be forced to pay a tax that they now cant afford because they have no income.

I know you read your articles all the time on how the rich dodge taxes, but you dont even know how they do it. In fact, it is probably not dodging at all, but legitimate rules that were set up for the reason to be more fair. The IRS is aware when someone abuses a rule that it was not meant to be used for that purpose and they make changes every sinlge year to try and fix it. The IRS is not just sitting on their thumbs while rich people laugh laugh laugh and dont pay tax.

Ugh, i'm sure there are a ton more examples i could some up with on why this the most horribly unintelligent idea i have ever heard, but i dont feel like getting any deeper than a small list:

-Retirement funds, are they taxable assets in this wealth system? I could own a whole shitload in an IRA money market instead of stocks.
-How are charitable contributions taken into consideration?
-We pay income tax on our house and personal property tax in this system?
-What about a debt that i am a guarentee (co-signer) for? Is that my debt?
-Who is going to verify the amount of assets i claim? In the current system our employer sends the IRS a W-2 and what we report as our income has to match. In this wealth based, i could claim 1 car and have 3 and noone would know.
-Someone could have a rare coin collection valued at 1 million dollars but are hardly rich, their tax would bankrupt them.
-I have an old baseball collection that may be worth something material, but may not, now i have to hire someone to look at it?
-Life insurance, is that added to my wealth? It is a potential wealth for my wife.

The book of rules for this system would be just as long and stupid as our current one and we would still need CPA's to figure it out. What a waste of time and effort implementing this would be for our country.</div>

<div style='font: 10pt Tahoma; text-align: left; '>oops, i just read the rest of the thread and some of my points have been addressed, but i still think it is a bad idea.</div>

<div style='font: 10pt Arial; text-align: left; '>Okay. The statement "If you're not spending money, you're not stimulating the economy" reveals a remarkable ignorance about economics (ever hear of savings and interest?). And your whole tax argument sounds suspiciously like coerced consumption.</div>

<div style='font: 12pt Arial; text-align: left; '>Very true. I think that all Sine is saying is that he'd like there to be a level playing field. He thinks that the rich aren't paying their fair share of taxes.</div>

<div style='font: 12pt ; text-align: left; '>Law School and med school are a lot easier than breaking your back working in a factory 12 hours a day just so you have enough money to survive.</div>

<div style='font: 10pt Tahoma; text-align: left; '>By the way, i'd love a link to that thread just for the sake of reading why people are so in favor of a flat or wealth tax.</div>

<div style='font: 10pt Tahoma; text-align: left; '>... dont fault someone for buying something that appreciated in value.</div>

<div style='font: 10pt "EngraversGothic BT", "Copperplate Gothic Light", "Century Gothic"; text-align: left; '>Savings and interest are letting the banks decide where to put the money, and they always put it in the tried-and-true wealthy corporations, who then put their money into savings and wealthy stocks. Again, the rich benefitting the rich. That, in my book, isn't stimulating anything.</div>