Do the rich pay taxes?

[awake]

That's still class envy. The better idea is to have a flat tax and a cap on spending. Then as we address the problem of spending, and reduce the size of government we can reduce the flat tax rate.

The rich will always be rich, not matter what kind of system is in place. There is a reason for that. Those who are rich are, in large part, innovative and inventive. We desire to make money and we find ways that we are able to do so. I started with very little and built for myself a multi million dollar business that lasted until the day I decided to retire and sell off everything that I owned. In good times and in bad times, high taxes and low taxes, I always succeeded and always had expensive cars, 5 star vacations and plenty of money to burn. The reason was because I knew what it took to make money and I did it.

I don't envy the parasitical class...

I'm all for staged removal of taxation, but you're dealing with infantile minds(politicians). They will never follow through on any promise to lower or truly reform taxes. They will say they will do it in 10 or 20 years which is really thier way of saying never. This is why I'm thinking a complete worldwide financial meltdown might actually be a good thing. The curtain will fall for all to see the grand wizards.

[CaptLouAlbano]

I don't envy the parasitical class...

I'm all for staged removal of taxation, but you're dealing with infantile minds(politicians). They will never follow through on any promise to lower or truly reform taxes. They will say they will do it in 10 or 20 years which is really thier way of saying never. This is why I'm thinking a complete worldwide financial meltdown might actually be a good thing. The curtain will fall for all to see the grand wizards.

But who will suffer with a meltdown? The poor and middle class will. We are in the worst economy since the Depression right? We were at the four seasons in Maui last winter - suites there are over 2 grand a night, they were filled. We ate at high end restaurants where a table of 2 spends at least $300 not including wine - they were packed. All this with 8% unemployment and millions of working folks being "under employed".

My concern, or better stated fear, is that if we do have a meltdown it won't be the conservatives and libertarians who the people will turn to for solutions - it will be the socialists who will provide the freebies when people are starving. This happened in the depression and it is happening today in countries like Greece. Look who came to power in Greece after their collapse - the Nazis and Commies.

[awake]

But who will suffer with a meltdown? The poor and middle class will. We are in the worst economy since the Depression right? We were at the four seasons in Maui last winter - suites there are over 2 grand a night, they were filled. We ate at high end restaurants where a table of 2 spends at least $300 not including wine - they were packed. All this with 8% unemployment and millions of working folks being "under employed".

My concern, or better stated fear, is that if we do have a meltdown it won't be the conservatives and libertarians who the people will turn to for solutions - it will be the socialists who will provide the freebies when people are starving. This happened in the depression and it is happening today in countries like Greece. Look who came to power in Greece after their collapse - the Nazis and Commies.

Who suffered when Bernie Madoff went under? That was a financial meltdown on a smaller scale. The people caught in his crime were told the truth the hard way. The crooks should get their day in the sunlight. And the foolish should rightfully get the lesson of the ages: don't believe that criminals can protect you.

People should stop apologizing for the state, let them get whats coming to them.

[CaptLouAlbano]

Who suffered when Bernie Madoff went under? That was a financial meltdown on a smaller scale. The people caught is his crime were told the truth the hard way. The crooks should get their day in the sunlight. And the foolish should rightfully get the lesson of the ages: don't believe that criminals can protect you.

People should stop apologizing for the state, let the get whats coming to them.

It's nice in theory, but in reality if we have a meltdown the people will turn to the government to fix it. They won't be saying, ” that Ron Paul guy was right”, instead they will support New Deal round 2. And when it is all said and done we will have bigger government and less freedom. The poor will still be poor and the middle class will suffer even more, all the while folks like myself will still be able to order $1000 bottles of wine while we enjoy our Kobe beef.

[awake]

It's nice in theory, but in reality if we have a meltdown the people will turn to the government to fix it. They won't be saying, ” that Ron Paul guy was right”, instead they will support New Deal round 2. And when it is all said and done we will have bigger government and less freedom. The poor will still be poor and the middle class will suffer even more, all the while folks like myself will still be able to order $1000 bottles of wine while we enjoy our Kobe beef.

They are already doing this...'Government is the solution' is almost as common as "good morning". I say let every eye see it. Trying to rehabilitate the state or soften the blow is simply not doing anyone any good, and helping the State be even more totalitarian. Everyman that tries to "fix" the state simply grows its strength.

[Madison320]

Well a 99% tax rate would be absurd, so that is not worth considering. But let's look at the situation we are currently dealing with instead. If the Bush tax cuts expire ad return to Clinton era rates the 33% bracket goes to 36% and the 35% bracket to 39.6% - for me, I am looking at about 15,000 more per year in taxes (rough estimate from my accountant).

So, I have a choice to make. I can either make 15K less next year, or I can increase my rental prices to make up for the difference. Taxes are a cost, just like utilities and maintenance are costs. When costs go up, I can either eat the costs or raise my prices. I own 24 commercial units, 8 residential units and 6 vacation units that I rent out. If and when my taxes go up, I will sit down with my accountant and go over all the costs associated with my properties (maintenance, utilities, projected improvements, fees, taxes, etc) and I will make adjustments to the rental fees accordingly.

Now let's say hypothetically that if I raise rents in my apartment building, it prices me above the market, and I can no longer rent those properties out. What do I do? Well I can eat the loss, which would be silly. Or I can sell the building (which in this case I can get close to $1 million for the building) and put that million dollars into another property (or properties) where I can make the expected rate of return on my costs.

So at the end of the day, if the Bush tax cuts expire and my rates go up, I will still make the same amount of money at the end of the year. It doesn't effect me on bit at all. However, I am fundamentally opposed to this of course since I don't want to see rents go up for my tenants, nor do I wish to see the Federal gov't get more money to spend.

I used 99% to demonstrate the principle. The same thing happens at a lower rate, it's just not as obvious. I'll concede that rental property is a special case because demand is inelastic. But in a lot of cases the business owner pays ALL the taxes. Suppose you manufacture TVs. Now you are in competition with foreign companies. If they have a lower tax rate and everything else is equal they will have an advantage. The consumer will still pay the same low amount but to stay in business the owner will have to reduce his profits. So in that case the tax falls entirely on the business owner.

[Madison320]

You are correct. Higher taxes means higher gross prices, which means less profit for the seller (even with a "fair tax" for all transactions) and fewer goods for the buyer.

Whether the consumer or the producer has to transfer the actual tax to the government doesn't matter at all.

http://en.wikipedia.org/wiki/Tax_incidence

Thanks for that link.

I agree it that a higher tax rate on the "rich" sucks for everybody. But I'm not sure I agree that whoever pays the tax doesn't matter AT ALL. Suppose you had a 30% tax on people with incomes over 1 million but 0% for everyone else and the net tax revenue was 100 billion. Now also suppose you have a flat 1% tax that also collected 100 billion in tax revenue. According to your statement would these 2 situations be identical in terms of fairness? I still think raising taxes on the "rich" hurts the "rich" more in general.

[CaptLouAlbano]

I used 99% to demonstrate the principle. The same thing happens at a lower rate, it's just not as obvious. I'll concede that rental property is a special case because demand is inelastic. But in a lot of cases the business owner pays ALL the taxes. Suppose you manufacture TVs. Now you are in competition with foreign companies. If they have a lower tax rate and everything else is equal they will have an advantage. The consumer will still pay the same low amount but to stay in business the owner will have to reduce his profits. So in that case the tax falls entirely on the business owner.

Yes, but the issue is that most smart businessmen will not lower their profits to a point which is foolish.

When I ran retail businesses I had a pretty simple formula. When you add up all the costs of doing business (rent, labor, insurance, supplies, utilities and taxes) I wanted to triple my investment at minimum. If I had a ice cream stand and I was able to triple my money, it stayed open. But once any of those costs grew to the point where I could no longer make the rate of return I wanted, then I would shut it down and sell water ice instead.

I think you are making the assumption that if I manufactured TV's that I have no other options but to keep making TV's. That is not the case in business. Businessmen like myself can morph into other businesses at will. We put our money where it will make the highest level of return. If that is making TV's then great, but once it becomes too costly to make TV's we'll make radios instead.