Why are you cowards so scared to discuss the HONESTY of Rand Paul?

[Texas Contrarian]

(CaptainMidnight's original statements in black; Lustylad's replies in blue; and CaptainMidnight's follw-up observations in red.)

Hot damn!

A chance to discuss policy with someone who won't start attacking and insulting me if I criticize someone's pet tax system!

My only pet requirement for any tax system is that once it is implemented, the government can't come back for more later. The leeching bastards have to STFU and live within their allowance, barring an emergency.

That would be nice, but preventing big-spending politicians from coming back later and ratcheting up tax rates would require some mighty tightened-up legislation. I wouldn't wait with bated breath for all these "profiles in courage" to come up with anything like that!

1) If presented honestly, the tax rate is actually about 30%, not 23%. The reason is that, in order to make it sound better, FairTax promoters decided to pitch the plan by disingenuously presenting the tax-inclusive rate, unlike the manner in which sales taxes are normally described. Let's say that something with no sales tax would cost you $100. The FairTax is designed to make it the case that AFTER you add the sales tax, the percentage of the after-tax price is 23%. Adding about $30 to the $100 pretax price does just that. To anyone else, that sounds like a 30% tax. But to a FairTax advocate, it's 23%!

Yeah, that's definitely a 30% sales tax. If anyone calls it 23%, they're just fucking around with reciprocals and being totally dishonest. Implementing such a huge mark-up all at once would be a giant jolt – like forcing the US economy to take the “ice bucket challenge”. My quick and dirty revenue calculation goes up to $3.8 trillion (versus only $2.9 trillion for a 23% tax) - but of course that's before deducting for exempt sales and “leakage”. I don't have a reliable way to estimate the latter (which you refer to as transactions “making a detour around the cash register”). But the incentive to cheat is obviously greater at 30% than at 23%. I suspect that, due to this leakage problem, the extra revenues generated by each percentage point increase in the tax diminish at higher rates.

See additional commentary below, but it certainly is the case that with this sort of tax it's very unrealistic (to say the least!) to expect revenues to be a linear function of the rate. The incentive to evade is just too high with a 30% sales tax rate. And, as you say, presenting this as a "23% tax" is just patently dishonest. Supporters don't do themselves or their credibility any favors by utilizing this sort of sleight of hand.

2) All of the studies I've seen on broad-based consumption taxes seem to suggest that revenue expectations fall far short of the back-of-the-envelope number you get if you simply figure the product of what is purported to be personal consumption expenditures and the tax rate applied to that base. I recall, for instance, that the aforementioned Robert Barro has written several times that a well-designed, broad-based consumption tax in the US could be expected to raise 0.5% of GDP for each percentage point of the tax rate. European experience with the portion of the VAT that's not exempted for necessities indicates the same thing after adjusting, of course, for Europe's lower levels of consumer spending relative to the US.

Then the Barro rule of thumb (assuming the 0.5% applies to the entire GDP, not just the consumption component) would suggest revenues of only $2.7 trillion from a 30% levy. But given the propensity for more leakage at higher rates, I don't think the relationship is a linear one. And I would question how instructive the European experience is, given the differences between VAT and sales taxes. The last time I checked, most European VAT rates were “only” 20% - or one-third less than the proposed FairTax.

Again, I don't think the relationship would be a linear one at all. Note additionally that in every case, European nations have chosen the VAT structure rather than a simple point-of-sale tax with a high rate. That's obviously because the VAT's design makes it risky to evade, since there is an electronic trail subject to audit should any business or service provider come under suspicion of under- or non-reporting.

Also, when the Bush Treasury Department hired some consultants to look into this idea and similar consumption tax plans back around 2005 (at more or less the same time they tried to promote Social Security privatization), they gave up on it after concluding that the tax-exclusive rate would have to be a little more than 30% just to replace the income tax, and to make it revenue-neutral, you would have to leave the payroll tax in place. The only economists I've seen dispute analyses such as these are people like Laurence Kotlikoff (a Boston University professor who moonlights as a well-paid shill for the FairTax).

The Treasury consultant studies sound credible, since their conclusions were probably not what the Bushies were hoping to hear. If going to 30% only lets us replace the income tax (and not eliminate the payroll tax), what's the point? We end up taxing BOTH income and consumption, instead of switching entirely to a levy on consumption only. And of course, the liberals wouldn't stand for it, since we would wind up with two “regressive” taxes and eliminate the one that soaks the rich.

Another point, even though I haven't examined either Barro's or the Bush Treasury studies in detail: Current federal tax revenues are $3.2 trillion a year. The Barro rule of thumb suggests a 30% broad-based consumption tax would raise only $2.7 trillion, thereby widening the budget deficit by $500 billion. The Bush Treasury studies suggest such a tax would raise even less – around $2.2 trillion (since payroll taxes currently make up 1/3 of federal revenues).

Yes, that certainly does make one wonder where these people come up with the sort of magic supporting claims of "revenue-neutrality!"

3) Although one must always consider the dynamic effects of any tax policy change, I have serious concerns about major disruption of certain key industries. What would happen, for instance, if you suddenly slapped a new 30% sales tax on new cars and light trucks? Obviously, the market for vehicles would be hyperstimulated in the run-up period before the tax was implemented, but would be depressed for quite some time thereafter. Same thing for the housing industry, as the FairTax would apply to new homes (but not pre-owned ones).

Agreed. Again, it's like asking the US economy to take the ice bucket challenge. I'm not sure how we might cushion the shock either. And I have serious concerns about putting a permanent crimp into consumer spending, which has always been our leading growth engine since it accounts for 70% of GDP.

Indeed. And can you imagine what sort of effect would arise from immediately adding almost 30% to the cost of a new house? Lobbyists for the homebuilding industry and real estate agents would go apoplectic! The same obviously goes for the auto industry, as well as many others.

4) I think one reason the negative impact on revenues would be very high is that evasion would be at least as large a problem as it is today. Note that income tax collections fall well short of what analyses of effective tax rates, brackets, and US personal income as estimated by most economists would suggest. Although an aggregate estimate of unreported income is anybody's guess, I don't think many people doubt that it's several hundred billion dollars per year. And there's no reason to expect that it would be any less under the FairTax. Large portions of the incomes of small business owners and service providers would no doubt take a detour around the cash register if you imposed a 30% sales tax.

We already have a huge underground economy. The fact that so much under- and unreported income never gets taxed is one of the arguments for switching to the FairTax (or something like it). Supposedly all the income that currently escapes the tax net would be nicked when the earners spend it. But if you are right about leakage not being any less under a FairTax than it is under our existing tax system, there is little compliance advantage to switching. The IRS wouldn't be abolished - it would just need to be retrained to audit differently.

I don't see how it could possibly be any more difficult to evade taxation under the FairTax than under our present system. Indeed, it would generally be done in the same way -- by not reporting or underreporting sales or service fees. And since a lot of lower-income people pay marginal tax rates of less than 30%, the incentive to cheat under the FairTax might be even more tempting for many than it is today.

And, yes, there would still be the need for a revenue collection and enforcement regime, but I think it's fair to say that its operation would be less cumbersome and could be streamlined with any simpler tax system.

5) FairTax supporters are loathe to release any data supporting their claims involving "embedded taxes," and I think it's pretty easy to see why.

For starters, although this may in some instances, of course, depend on elasticity of certain labor markets, economists seem to be in virtually full agreement that the incidence of the employer portion of the payroll tax falls wholly, or at least almost wholly, on the employee, not the employer. If that's true, and I believe that it is, one may expect that in the event the payroll tax were completely eliminated, most workers' paychecks would settle at an amount approximately equal to their current gross pay, less both the employee's and employer's "side" of the former payroll tax. Thus the employer's cost of hiring a worker would remain constant across the transition.

You were doing fine until the last sentence. Rather than staying constant, don't you mean the employer's cost of hiring would go DOWN by the combined amount (15.3%) of the former payroll tax? If so, the next question is - would employers pass along the full amount of such savings in the form of lower prices, thereby cushioning the shock of the FairTax.

That is a very interesting question.

To start with, oops! Looks like I "misspoke." My statement to which you alluded does not make sense. In any event, I think this issue is a bit unclear, since I've always been very skeptical of a lot of tax incidence analyses. My understanding is that many who have written theses and dissertations covering this issue claim that the worker, not the employer, wholly or almost wholly bears the burden of the employer side of the tax. (But is this like some of those old neo-Keynesian macro models, which worked great on blackboards in economics classrooms of the 1960s and '70s, but not so well in the real world?) No one really knows. I think people who have looked at this examined changes in the rate, not the entire elimination of the payroll tax. What sort of shift would occur if the payroll tax were disappeared?

In any event, I think that after the smoke clears and some new equilibrium is reached, employers' costs of hiring would tend toward the status quo ante after employees and employers battle over the employers' side of the tax. The "truth" may be in the middle somewhere, I suspect.

Concerning possible effects on prices, it should be expected that market forces should exert some slight downward effect on prices in the event that some of the savings here accrue to employers. As stated earlier, "embedded taxes," although obviously a very small fraction of what FairTax aficionados claim, are not a flat zero.

Although it's been a while since I was involved with VC and private equity deals, I believe the average taxable profit margin across a broad range of industries is more like 6% rather than 10%. Of course, it's higher in a few industries and much lower in others. As a very rough guess, and assuming a 17% average corporate effective tax rate, I doubt seriously that "embedded" corporate income taxes amount to more than about 1% of gross sales. And that doesn't take into account the obvious fact that costs attributable to "embedded taxes" borne by many service providers are little, if any, greater than zero.

Your numbers are anecdotal. I think we could extract more accurate percentages by looking at national income and actual corporate tax data. I'm too lazy to attempt this but I think it is easily doable and would yield a more reliable estimate. I do agree that the savings from eliminating these “embedded” corporate income taxes would be small.

If there are significant savings to be reaped (and potentially passed along in terms of lower prices), they would come from eliminating: 1) payroll taxes 2) personal income taxes and 3) the high costs of complying with our existing Rube Goldberg tax code. Arguably these benefits could percolate through the entire economy. A business would save not only on its own reduced costs but also on lower costs for parts and materials it purchases from other firms enjoying similar savings. Trying to predict and quantify all of this with any degree of accuracy looks like a dubious undertaking, however.

Although I think it's fair to say that we can establish a reasonable range of estimates, I certainly agree that quantifying all this with any degree of precision would be a very nebulous undertaking, to say the least. But I do think it should be abundantly clear that the elimination of "embedded taxes" could not possibly balance more than a very small percentage of the 30% FairTax rate.

Another thing to remember here is that the FairTax features a "prebate," which FairTax supporters describe as a payment to every household designed to reimburse lower-income families for the tax levied on basic necessities such as food and clothing. (I suppose we're supposed to forget the obvious fact that they also claim that prices won't go up after the 30% tax is added on, since all those "embedded taxes" now disappear, and that the "prebate" should therefore be completely unnecessary!)

I'm too lazy to go look it up in one of their tables, but I think the annual "prebate" averages something like $6K for a typical family, and varies according to the number in your household. That suggests that the prebate alone would run somewhere around 3.5% or 4% of GDP.

So the “prebate” would be tantamount to rebating between ¼ and 1/3 of the estimated FairTax gross revenue intake. It also means employers would still have the burden of filing payroll information with the IRS so the feds would know who qualifies for it.

Yes, the authorities would have to compile and maintain all sorts of data. Another point I would make here is that since the "prebate" is adjusted for family size, lower-income households would receive at least a modicum of additional incentive to irresponsibly have more kids they can't afford.

Assuming that the estimates offered by Robert Barro and others are in the ballpark, one may reasonably expect that the FairTax, as presented by its supporters, would raise about 15% of GDP, and perhaps 11 or 11.5% after subtracting the "prebate."

For an $18 trillion economy, that translates into $2.7 trillion gross and at best $2.1 trillion after deducting the prebate.

Doesn't sound very "revenue-neutral" to me!

Nope. Methinks it would blow up the deficit. Even more so if its implementation tipped us into a recession.

Aside from the fact that it's a very long way from revenue-neutral, the most obvious feature of the FairTax is that it would deliver far and away the greatest portion of tax savings to wealthy households and high-income earners. In these days of growing inequality and wealth envy, that alone makes it as much a political non-starter as could be imagined.

Originally Posted by lustylad

Hey, that's a lot of bandwidth wasted on dissecting something that's never going to happen!

Next!

Yup! Rather a lot of bandwidth for something that's never going to happen.

However, the FiirTax still rears its head from time to time when some obscure congressperson wants to create a splash and attract some attention. At first blush, it sounds good to people who haven't thought through the issues.

Although I would love to see real tax reform, I think it's helpful for promoters of various plans to refrain from pitching their ideas in manifestly dishonest fashion. It's high time for people to recognize ridiculous nonsense such as that peddled by the FairTax books and websites.

"Next!," you say?

Well, I don't think we've heard the last from Rand Paul. He will likely remain active in the political arena for some time to come, and no doubt will be tossing out a few ideas -- whether good, bad, or ugly -- that are worthy of discussion.

[lustylad]

Originally Posted by CaptainMidnight

Yup! Rather a lot of bandwidth for something that's never going to happen.

However, the FairTax still rears its head from time to time when some obscure congressperson wants to create a splash and attract some attention. At first blush, it sounds good to people who haven't thought through the issues.

Although I would love to see real tax reform, I think it's helpful for promoters of various plans to refrain from pitching their ideas in manifestly dishonest fashion. It's high time for people to recognize ridiculous nonsense such as that peddled by the FairTax books and websites.

"Next!," you say?

Well, I don't think we've heard the last from Rand Paul. He will likely remain active in the political arena for some time to come, and no doubt will be tossing out a few ideas -- whether good, bad, or ugly -- that are worthy of discussion.

Well, speaking of "Next!" ---

What did you think of Obama's news conference today where he ranted about the need to "reform" the tax rules to stop corporate inversions? What a lying demagogue he is! Trying to look and sound like a Bernie Sanders populist. If he sincerely wanted to discourage companies from moving their head offices to places like Ireland and get them to repatriate their overseas profits back to the US, then all he needs to do is lower the fucking US corporate tax rate of 35% which is the highest in the industrialized world!

Here is a CNBC video (along with a column) where two smart and honest people - economist Larry Kudlow and former Texas Senator Kay Bailey Hutchison - explain the simple facts.

http://www.cnbc.com/2016/04/05/this-...ommentary.html

[CuteOldGuy]

The wealthy will always find a way around the system we have now. The income tax is too complex and fraught with loopholes, which are paid for by the 0.01% for just this purpose. The more complex it becomes, the easier it is to avoid. And there's more room to hide company and industry specific loopholes. The US tax system is corrupt beyond repair. Take my idea completely off the table. What should we do?

[lustylad]

Originally Posted by CuteOldGuy

The wealthy will always find a way around the system we have now. The income tax is too complex and fraught with loopholes, which are paid for by the 0.01% for just this purpose. The more complex it becomes, the easier it is to avoid....

If the wealthy are so adept at gaming the system, then why do the top 1% of all US income earners pay 39% of total federal income taxes?

And how come the top 10% of all earners pay a whopping 70% of these same taxes?

It looks to me like they're doing a piss-poor job of avoiding the tax collector's net!!


http://www.ntu.org/foundation/page/w...s-income-taxes

[CuteOldGuy]

That's why they hide so much money off shore. And the top 1% do pay more, but the top 0.1% do even better. You're looking at their percentage of the total tax collection. What's their marginal rate? How much of their income is actually taxed? How is it taxed? What's their average tax rate?

That's the problem, LL. There are many more questions to be asked to determine the real effect of the current system. You can't accept at face value what the government tells you. There is always more to the story.

[gnadfly]

Originally Posted by lustylad

Well, speaking of "Next!" ---

What did you think of Obama's news conference today where he ranted about the need to "reform" the tax rules to stop corporate inversions? What a lying demagogue he is! Trying to look and sound like a Bernie Sanders populist. If he sincerely wanted to discourage companies from moving their head offices to places like Ireland and get them to repatriate their overseas profits back to the US, then all he needs to do is lower the fucking US corporate tax rate of 35% which is the highest in the industrialized world!

Here is a CNBC video (along with a column) where two smart and honest people - economist Larry Kudlow and former Texas Senator Kay Bailey Hutchison - explain the simple facts.

http://www.cnbc.com/2016/04/05/this-...ommentary.html

Obama is a bald faced liar. He bitched about shipping jobs overseas during his campaign and early Presidency and then he appoints Jeffery Immelt as his "Jobs Council's Chairman" who was shipping jobs overseas in bulk. Then Obama bitched about companies moving their headquarters over to Qatar and other places. When a FB founder and other rich people renounced their American Citizenship to avoid taxes he and the left were almost giddy about it.

He had all the power in the world. What did he do? Wasted it on Obama care which is going to cost Americans jobs and a huge amount of taxes.

Crocodile tears. That's Obama's legacy.

[Yssup Rider]

Well that went well.

[southtown4488]

Originally Posted by gnadfly

Obama is a bald faced liar. He bitched about shipping jobs overseas during his campaign and early Presidency and then he appoints Jeffery Immelt as his "Jobs Council's Chairman" who was shipping jobs overseas in bulk. Then Obama bitched about companies moving their headquarters over to Qatar and other places. When a FB founder and other rich people renounced their American Citizenship to avoid taxes he and the left were almost giddy about it.

He had all the power in the world. What did he do? Wasted it on Obama care which is going to cost Americans jobs and a huge amount of taxes.

Crocodile tears. That's Obama's legacy.

hahaha, so anyone without facial hair is a BALD faced liar? hahahaha

[lustylad]

Originally Posted by Yssup Rider

Well that went well.

Go post somewhere else, oinkboy. This thread isn't for bush leaguers like you.

By the way, did you determine how many unemployment data series the BLS track and measure yet?

(BLS=Bureau of Labor Statistics, not what you do with the Bulgarian cocksucker.)

[Texas Contrarian]

Sorry for the delayed response. I am just now getting back to normal after returning from a nice little 6-day vacation, financed by conspiring with my tax counsel to fuck the U.S. Treasury out of a little bit of its hard-earned cash. (Just kidding, NSA. Just kidding!!)

Scattershooting while wondering what happened to the legacy of J. M. Keynes:
(Apologies to the great Blackie Sherrod!)

Originally Posted by lustylad

Well, speaking of "Next!" ---

What did you think of Obama's news conference today where he ranted about the need to "reform" the tax rules to stop corporate inversions? What a lying demagogue he is! Trying to look and sound like a Bernie Sanders populist. If he sincerely wanted to discourage companies from moving their head offices to places like Ireland and get them to repatriate their overseas profits back to the US, then all he needs to do is lower the fucking US corporate tax rate of 35% which is the highest in the industrialized world!

Here is a CNBC video (along with a column) where two smart and honest people - economist Larry Kudlow and former Texas Senator Kay Bailey Hutchison - explain the simple facts.

http://www.cnbc.com/2016/04/05/this-...ommentary.html

Kudlow is spot on.

It's clear that Obama has no interest in fixing the problem; only in keeping it (and tax policy in general) around to demagogue. The problem, as I see it, is that progressives have no incentive to address this and similar issues, since in their world the main problem with public policy today is the failure to adequately tax the "rich" (however they may define "rich" at the moment).

This is especially disgraceful, since Jason Furman can hardly be ignorant of the obvious fact that the corporate tax code is an impediment to economic growth.

To wit:

http://www.washingtonpost.com/wp-dyn...102601860.html

And he wrote that back in 2007, although after he became Obama's CEA chair, we've heard nary a word on this from the administration! (Of course, he didn't go far enough on rate reduction and simplification, but he at least did point up the essential problem.)

Post #139:

Originally Posted by lustylad

If the wealthy are so adept at gaming the system, then why do the top 1% of all US income earners pay 39% of total federal income taxes?

And how come the top 10% of all earners pay a whopping 70% of these same taxes?

It looks to me like they're doing a piss-poor job of avoiding the tax collector's net!!


http://www.ntu.org/foundation/page/w...s-income-taxes

Reply thereto (post #140);

Originally Posted by CuteOldGuy

That's why they hide so much money off shore. And the top 1% do pay more, but the top 0.1% do even better. You're looking at their percentage of the total tax collection. What's their marginal rate? How much of their income is actually taxed? How is it taxed? What's their average tax rate?

That's the problem, LL. There are many more questions to be asked to determine the real effect of the current system. You can't accept at face value what the government tells you. There is always more to the story.

First, the issue of "hiding money offshore" is rather complex. I'm not sure whether you're referring to the aforementioned practice of inversions (in which case nothing is really "hidden," it's done in plain sight), or to wealthy individuals attempting to illegally evade taxation by spiriting large sums of money out of the country. Doing the latter is fraught with risks, since the penalties for failure to file an FBAR are rather severe. The feds love to nail a high-profile scalp to the wall any chance they get.

Like Sam Wyly, for instance: http://www.bloomberg.com/news/articl...her-heartburn-

(In fairness, note that there are myriad lawful reasons for certain types of entities and high-net worth individuals to transfer money offshore that have nothing to do with illegal tax evasion.)

The above statement that, generally speaking, taxpayers in the top 0.1% "do even better" than those in the broader 1% is certainly true. Many people assume that's because they can afford more and batter tax advisors. Although that's certainly part of the reason, the main reason is simpler and more prosaic. A far larger percentage of the total income of those in the top 0.1% (as opposed to the broader "top 1%") comes from capital gains and qualified dividends, which are taxed at a marginal rate of 23.8%, while salary and fee income is taxed at 39.6%.

And many people have choices. For anyone wondering why a good portion of the revenue anticipated following a large tax increase always seems to pull a disappearing act, here's a good place to look.

For instance, I was advised years ago (after the 1990s tax increase taking the rate to 39.6%) that since I was under no compulsion, legal or otherwise, to take salary income from any entity I owned, I should avoid doing so to the greatest extent practicable.

Two additional major "breaks," if you will, are available to investors in commercial real estate, which helps quite a bit, since net cash flow therefrom is taxed at 43.4% (not the "standard" 39.6%).

First, you get to deduct depreciation on the buildings (even while they are actually appreciating in market value), so it's pretty easy to get your effective tax rate on such investments down to somewhere in the 15-25% range. Actually, if you load a property up with enough mezzanine and other secondary financing, you can get it much lower than that, although then you might end up paying significantly higher interest rates -- so tax minimization has costs in some instances. So many areas of the investment world involve trade-offs, of course.

And it gets even better! You need never pay capital gains tax on a real estate investment, since when you want to "upgrade" to a newer and better property, you just do a 1031 "like-kind" exchange and defer the tax for as long as you want.

I don't think anyone is taking "at face value," as you put it, what the government is telling us. But I do hope that I at least filled in a few blanks in the collection of stuff classifiable as "more to the story."

In any case, I don't think many people would disagree with the notion that our tax code is a national embarrassment and a horrific clusterfuck. It's about 76,000 of crap that no one could possibly suffer slogging all the way through. Among other things, it includes statements such as, "...except all natural persons born [insert birth date of specific favored constituent]. Yes, seriously! How can there be an excuse for that sort of crap?

Being that it's April 15th, the traditional "tax day," I suppose it's an appropriate time to muse (and complain) about this stuff.

But, hey, we do get a slight delay this year -- "tax day" is actually Monday, not today. That's because D.C. celebrates Emancipation Day as an official holiday.

Isn't that kind of the friendly folks at the IRS?

.

[The_Waco_Kid]

Originally Posted by CaptainMidnight

Sorry for the delayed response. I am just now getting back to normal after returning from a nice little 6-day vacation, financed by conspiring with my tax counsel to fuck the U.S. Treasury out of a little bit of its hard-earned cash. (Just kidding, NSA. Just kidding!!)

Scattershooting while wondering what happened to the legacy of J. M. Keynes:
(Apologies to the great Blackie Sherrod!)



Kudlow is spot on.

It's clear that Obama has no interest in fixing the problem; only in keeping it (and tax policy in general) around to demagogue. The problem, as I see it, is that progressives have no incentive to address this and similar issues, since in their world the main problem with public policy today is the failure to adequately tax the "rich" (however they may define "rich" at the moment).

This is especially disgraceful, since Jason Furman can hardly be ignorant of the obvious fact that the corporate tax code is an impediment to economic growth.

To wit:

http://www.washingtonpost.com/wp-dyn...102601860.html

And he wrote that back in 2007, although after he became Obama's CEA chair, we've heard nary a word on this from the administration! (Of course, he didn't go far enough on rate reduction and simplification, but he at least did point up the essential problem.)

Post #139:


Reply thereto (post #140);


First, the issue of "hiding money offshore" is rather complex. I'm not sure whether you're referring to the aforementioned practice of inversions (in which case nothing is really "hidden," it's done in plain sight), or to wealthy individuals attempting to illegally evade taxation by spiriting large sums of money out of the country. Doing the latter is fraught with risks, since the penalties for failure to file an FBAR are rather severe. The feds love to nail a high-profile scalp to the wall any chance they get.

Like Sam Wyly, for instance: http://www.bloomberg.com/news/articl...her-heartburn-

(In fairness, note that there are myriad lawful reasons for certain types of entities and high-net worth individuals to transfer money offshore that have nothing to do with illegal tax evasion.)

The above statement that, generally speaking, taxpayers in the top 0.1% "do even better" than those in the broader 1% is certainly true. Many people assume that's because they can afford more and batter tax advisors. Although that's certainly part of the reason, the main reason is simpler and more prosaic. A far larger percentage of the total income of those in the top 0.1% (as opposed to the broader "top 1%") comes from capital gains and qualified dividends, which are taxed at a marginal rate of 23.8%, while salary and fee income is taxed at 39.6%.

And many people have choices. For anyone wondering why a good portion of the revenue anticipated following a large tax increase always seems to pull a disappearing act, here's a good place to look.

For instance, I was advised years ago (after the 1990s tax increase taking the rate to 39.6%) that since I was under no compulsion, legal or otherwise, to take salary income from any entity I owned, I should avoid doing so to the greatest extent practicable.

Two additional major "breaks," if you will, are available to investors in commercial real estate, which helps quite a bit, since net cash flow therefrom is taxed at 43.4% (not the "standard" 39.6%).

First, you get to deduct depreciation on the buildings (even while they are actually appreciating in market value), so it's pretty easy to get your effective tax rate on such investments down to somewhere in the 15-25% range. Actually, if you load a property up with enough mezzanine and other secondary financing, you can get it much lower than that, although then you might end up paying significantly higher interest rates -- so tax minimization has costs in some instances. So many areas of the investment world involve trade-offs, of course.

And it gets even better! You need never pay capital gains tax on a real estate investment, since when you want to "upgrade" to a newer and better property, you just do a 1031 "like-kind" exchange and defer the tax for as long as you want.

I don't think anyone is taking "at face value," as you put it, what the government is telling us. But I do hope that I at least filled in a few blanks in the collection of stuff classifiable as "more to the story."

In any case, I don't think many people would disagree with the notion that our tax code is a national embarrassment and a horrific clusterfuck. It's about 76,000 of crap that no one could possibly suffer slogging all the way through. Among other things, it includes statements such as, "...except all natural persons born [insert birth date of specific favored constituent]. Yes, seriously! How can there be an excuse for that sort of crap?

Being that it's April 15th, the traditional "tax day," I suppose it's an appropriate time to muse (and complain) about this stuff.

But, hey, we do get a slight delay this year -- "tax day" is actually Monday, not today. That's because D.C. celebrates Emancipation Day as an official holiday.

Isn't that kind of the friendly folks at the IRS?

.

Blackie Sherrod. now there's a true Texas legend in a state full of sports legends!

gotdam i miss that guy!



The Best Sportswriter in Texas

http://www.texasmonthly.com/articles...iter-in-texas/

when i used to subscribe to the Dallas Morning News, i read the comics first, the sports section next and always read the great one's article. after that it was all down hill lol

[Texas Contrarian]

Originally Posted by The_Waco_Kid

Blackie Sherrod. now there's a true Texas legend in a state full of sports legends!

gotdam i miss that guy!



The Best Sportswriter in Texas

http://www.texasmonthly.com/articles...iter-in-texas/

when i used to subscribe to the Dallas Morning News, i read the comics first, the sports section next and always read the great one's article. after that it was all down hill lol

Good article, Waco Kid! I, too, would often read Blackie's column right off the bat, and am reminded of that famous quote attributed to Supreme Court Justice Earl Warren. He noted that the sports pages chronicle people's accomplishments, while the rest of the paper mostly describes their failures.

With "tax day" drawing nigh, it will be surprising if we don't get served another dose of Warren Buffett's hypocrisy within the next day or two. Hillary and congressional progressives are making noises again about the so-called "Buffett Rule," a proposal supposedly designed to be sure everyone pulling down a 7-figure income pays at least a 30% tax rate (it's unclear whether most supporters intend for that to cover capital gains as well, although I assume that's likely the intent).

The great irony is that Warren ("tax the rich more") Buffett arranges his holdings in such fashion that tax hike proposals made under the guise of the "Buffett Rule" would have such a minuscule effect on his total tax bill as to scarcely rise to the level of being classifiable as a "rounding error!"
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[The_Waco_Kid]

Originally Posted by gnadfly

Obama is a bald faced liar. He bitched about shipping jobs overseas during his campaign and early Presidency and then he appoints Jeffery Immelt as his "Jobs Council's Chairman" who was shipping jobs overseas in bulk. Then Obama bitched about companies moving their headquarters over to Qatar and other places. When a FB founder and other rich people renounced their American Citizenship to avoid taxes he and the left were almost giddy about it.

He had all the power in the world. What did he do? Wasted it on Obama care which is going to cost Americans jobs and a huge amount of taxes.

Crocodile tears. That's Obama's legacy.

it will and in fact is bankrupting american health care providers. this of course was the devil Obama's plan all along. once all american health care providers exit the ACA, it will leave exactly what Obama intended .. a government controlled single payer system.

if Canadian style system is so great, why do many Canadians go to America for health care? it's pretty obvious .. they want to avoid the "slow death" of the wait for treatment.
this is a "death panel" without having to call it a death panel. just wait them out, let them die. wonderful system!

does suckclown think i'm wrong? let's see ..

More than 52,000 Canadians travelled abroad for health care last year, study finds

http://news.nationalpost.com/news/ca...25-study-finds

UnitedHealth warns it may exit Obamacare plans


http://www.usatoday.com/story/money/...-act/76040322/

Originally Posted by southtown4488

hahaha, so anyone without facial hair is a BALD faced liar? hahahaha

so suckclown read my post on how to "like" your own post twice. big deal. now show me anyone else not named suckclown who likes your post?

[lustylad]

Originally Posted by CaptainMidnight

Kudlow is spot on.

It's clear that Obama has no interest in fixing the problem; only in keeping it (and tax policy in general) around to demagogue. The problem, as I see it, is that progressives have no incentive to address this and similar issues, since in their world the main problem with public policy today is the failure to adequately tax the "rich" (however they may define "rich" at the moment).

This is especially disgraceful, since Jason Furman can hardly be ignorant of the obvious fact that the corporate tax code is an impediment to economic growth.

To wit:

http://www.washingtonpost.com/wp-dyn...102601860.html

And he wrote that back in 2007, although after he became Obama's CEA chair, we've heard nary a word on this from the administration! (Of course, he didn't go far enough on rate reduction and simplification, but he at least did point up the essential problem.)

Obama has been very adept at filling key economic and Cabinet posts with seemingly reassuring people who have reputations for being competent, reasonable and moderate. It's all for cover. Once on board, they are forced to toe the rigid ideological agenda of the POTUS. Business tax cuts are a non-starter. Figuring out how to tax corporate profits not being repatriated as a direct result of the sky-high US tax rate will earn you plaudits, however. It's fair to say Jason Furman values adding the CEA title to his resume more than he cares about his integrity as an economist.


First, the issue of "hiding money offshore" is rather complex. I'm not sure whether you're referring to the aforementioned practice of inversions (in which case nothing is really "hidden," it's done in plain sight), or to wealthy individuals attempting to illegally evade taxation by spiriting large sums of money out of the country. Doing the latter is fraught with risks, since the penalties for failure to file an FBAR are rather severe. The feds love to nail a high-profile scalp to the wall any chance they get.

Like Sam Wyly, for instance: http://www.bloomberg.com/news/articl...her-heartburn-

(In fairness, note that there are myriad lawful reasons for certain types of entities and high-net worth individuals to transfer money offshore that have nothing to do with illegal tax evasion.)

The above statement that, generally speaking, taxpayers in the top 0.1% "do even better" than those in the broader 1% is certainly true. Many people assume that's because they can afford more and batter tax advisors. Although that's certainly part of the reason, the main reason is simpler and more prosaic. A far larger percentage of the total income of those in the top 0.1% (as opposed to the broader "top 1%") comes from capital gains and qualified dividends, which are taxed at a marginal rate of 23.8%, while salary and fee income is taxed at 39.6%.

And many people have choices. For anyone wondering why a good portion of the revenue anticipated following a large tax increase always seems to pull a disappearing act, here's a good place to look.

For instance, I was advised years ago (after the 1990s tax increase taking the rate to 39.6%) that since I was under no compulsion, legal or otherwise, to take salary income from any entity I owned, I should avoid doing so to the greatest extent practicable.

Two additional major "breaks," if you will, are available to investors in commercial real estate, which helps quite a bit, since net cash flow therefrom is taxed at 43.4% (not the "standard" 39.6%).

First, you get to deduct depreciation on the buildings (even while they are actually appreciating in market value), so it's pretty easy to get your effective tax rate on such investments down to somewhere in the 15-25% range. Actually, if you load a property up with enough mezzanine and other secondary financing, you can get it much lower than that, although then you might end up paying significantly higher interest rates -- so tax minimization has costs in some instances. So many areas of the investment world involve trade-offs, of course.

And it gets even better! You need never pay capital gains tax on a real estate investment, since when you want to "upgrade" to a newer and better property, you just do a 1031 "like-kind" exchange and defer the tax for as long as you want.

That 1031 provision is a good example of what ignorant libtards would call a “loophole”. Allowing such like-kind exchanges is highly beneficial to the economy since it allows real estate developers to reallocate resources into upgrading new properties, instead of leaving all of their equity trapped in old projects to avoid a sizable tax hit. But libtards refuse to recognize such obvious economic benefits. They see only lost tax revenues and a “loophole” they can rail against in their populist diatribes.

Remember a few years ago when Odumbo was carping about that "corporate jet loophole" for business owners? I kept scratching my head wondering what the fuck is he talking about? Turns out there is no such loophole. Corporate jets are depreciable for tax purposes over 5 years - a schedule that has been in place for decades. Question - When did that become a fucking "loophole"? Answer - When the Demagogue-in-Chief decided he needed a new faux populist campaign slogan with a nice class-warfare ring to it! Meanwhile, the corporations and others who buy the jets didn't even lobby for the 5-year depreciation treatment in the first place. Nope, it was the companies that make and sell the planes. You know, good old American firms with names like Cessna and Beechcraft. Companies that employ skilled workers and pay nice wages in places like Wichita, KS. But hey, why let all those little details get in the way of the Demagogue-in-Chief's need for a new class warfare slogan? Even the HuffPost noted how the libtards ignored reality:

http://www.huffingtonpost.com/2013/0...n_2912781.html


I don't think anyone is taking "at face value," as you put it, what the government is telling us. But I do hope that I at least filled in a few blanks in the collection of stuff classifiable as "more to the story."

In any case, I don't think many people would disagree with the notion that our tax code is a national embarrassment and a horrific clusterfuck. It's about 76,000 pages of crap that no one could possibly suffer slogging all the way through. Among other things, it includes statements such as, "...except all natural persons born [insert birth date of specific favored constituent]. Yes, seriously! How can there be an excuse for that sort of crap?

There is no excuse. But there are plenty of excuses for tax-and-spend liberals not to fix the problem. First, why clean up the tax code if those penny-pinching Republicans won't let you turn any reform effort into a giant revenue grab? Second, the longer you can demagogue about “loopholes” and the rich not paying their “fair share” - the more it helps faux-populist libtards get elected. Think Bernie Sanders.


Being that it's April 15th, the traditional "tax day," I suppose it's an appropriate time to muse (and complain) about this stuff.

But, hey, we do get a slight delay this year -- "tax day" is actually Monday, not today. That's because D.C. celebrates Emancipation Day as an official holiday.

Isn't that kind of the friendly folks at the IRS?

My biggest concern about Odumbo's new anti-inversion campaign is that it is being waged not by having Congress change the tax code, but simply by having the Treasury promulgate new rules. So it's equivalent to issuing another executive order! And part of the new rules involve tinkering with the definition of debt versus equity to curb so-called “earnings stripping.” Am I the only person who is uncomfortable with the idea of Jackass Lew arbitrarily telling us debt is equity and equity is debt? I would sooner believe the Cheshire Cat in Alice in Wonderland telling me up is down and down is up!
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[Texas Contrarian]

Originally Posted by lustylad

Obama has been very adept at filling key economic and Cabinet posts with seemingly reassuring people who have reputations for being competent, reasonable and moderate. It's all for cover. Once on board, they are forced to toe the rigid ideological agenda of the POTUS. Business tax cuts are a non-starter. Figuring out how to tax corporate profits not being repatriated as a direct result of the sky-high US tax rate will earn you plaudits, however. It's fair to say Jason Furman values adding the CEA title to his resume more than he cares about his integrity as an economist.
.

Indeed. These people don't give a rat's ass about properly reforming or fixing anything if instead they can simply keep an issue remotely describable as blocking tax cuts for the "rich" around for continuing episodes of demagoguery. I think another good example is the carried interest "loophole," which liberals have used as a whipping post for many years. They love to say they're doing all they can to end it, but back in 2007 two prominent Senators worked behind the scenes to make that effort quietly go away. (If you immediately guessed that the names of those two Senators are Clinton and Schumer, you understand this issue!)

Originally Posted by lustylad

That 1031 provision is a good example of what ignorant libtards would call a “loophole”. Allowing such like-kind exchanges is highly beneficial to the economy since it allows real estate developers to reallocate resources into upgrading new properties, instead of leaving all of their equity trapped in old projects to avoid a sizable tax hit. But libtards refuse to recognize such obvious economic benefits. They see only lost tax revenues and a “loophole” they can rail against in their populist diatribes.
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I strongly agree, and would further emphasize that the provision serves to improve the housing stock for millions of lower-income households, since apartment owners are incentivized thereby to rehab and maintain portfolios of multi-family properties on a sustaining basis.

Originally Posted by lustylad

Remember a few years ago when Odumbo was carping about that "corporate jet loophole" for business owners? I kept scratching my head wondering what the fuck is he talking about? Turns out there is no such loophole. Corporate jets are depreciable for tax purposes over 5 years - a schedule that has been in place for decades. Question - When did that become a fucking "loophole"? Answer - When the Demagogue-in-Chief decided he needed a new faux populist campaign slogan with a nice class-warfare ring to it! Meanwhile, the corporations and others who buy the jets didn't even lobby for the 5-year depreciation treatment in the first place. Nope, it was the companies that make and sell the planes. You know, good old American firms with names like Cessna and Beechcraft. Companies that employ skilled workers and pay nice wages in places like Wichita, KS. But hey, why let all those little details get in the way of the Demagogue-in-Chief's need for a new class warfare slogan? Even the HuffPost noted how the libtards ignored reality:

http://www.huffingtonpost.com/2013/0...n_2912781.html
.

When that little slice of demagoguery was first reported, I followed it with interest, since I am very interested in aviation and over the years have had a stake in a couple of aviation-related ventures. The depreciation schedules here, as far as I can see, and with respect to what is customary for various types of equipment and capital investment, aren't and weren't "non-standard" in any way. But I suppose it's easy to see why cheap demagogues feel they can get away with stuff like this, since a lot of people see "private jets" and think "rich guy's toys," even though most are used primarily for business travel or are managed by FBOs and owned by investors who do not travel in them on a frequent basis.

The HuffPost piece fairly details the key issues, but its creator committed a little "fingerfehler" --misspelling "Wichita" in the fuckin' TITLE of the article, no less! (Looks like they caught a proofreader sleeping.)

Originally Posted by lustylad

My biggest concern about Odumbo's new anti-inversion campaign is that it is being waged not by having Congress change the tax code, but simply by having the Treasury promulgate new rules. So it's equivalent to issuing another executive order! And part of the new rules involve tinkering with the definition of debt versus equity to curb so-called “earnings stripping.” Am I the only person who is uncomfortable with the idea of Jackass Lew arbitrarily telling us debt is equity and equity is debt? I would sooner believe the Cheshire Cat in Alice in Wonderland telling me up is down and down is up!
.

Using a crude, blunt force instrument to force the "fix" of a problem that should be handled by cleaning up the tax code has little chance of working out well, in my view.

In any case, blunt-force government "fixes" have a long history of failing or backfiring. Remember the wage-price rules handed down during the Nixon years?

"Got a problem with inflation? No worries. We'll just outlaw it!"
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