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Subject: So...the "Buffet Rule" rss

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Xander Fulton
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Pretty much no point discussing it, as it's DOA as far as Republicans are concerned, but...*

...I love that he called the tax on the $1 million+ crowd the "Buffet Rule" after Warren Buffet.

Nice.

Too bad, too. This would have been useful to pass. While I do appreciate the value of having capital-investors as a class (a changed opinion, largely due to discussion in RSP), they are disproportionately advantaged in our current structure. They are getting more out of the system - in protection of their significant assets by the national military, robust infrastructure maintenance that is critical for their businesses, etc - than what they pay in would imply.

* Curiously, the Republican opposition to this is rather disingenuous. The argument Paul Ryan is making against it is that "If we tax investment in job creation more, you will get less of it". However, the way this is being discussed is that it's an increase in capital gains tax. IE., an increase in the amount of money the individual takes home from sale of non-inventory assets. That is, if you invest your money in growing jobs and leave it invested in those companies (just taking home dividends or salary), uhhh...no tax increase? It's removing your investment from a company that would face increased tax, here, so...it appears this tax would do what they want? Encourage investment?
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Paul Sauberer
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This is a stupid idea that is nothing more than playing into class warfare.

The tax rate for high incomes is already higher than that for low incomes.

If the effective tax rate for high income earners is lower than that for low income earners, it's because they are disposing of their money in ways that the government has declared to be "good" and incentivized by making tax free.

If the government is now going to say, "we no longer are going to incentivize you to spend in certain ways- we are going to get the same dollars from you whether you do what we'd like you to do or not" then they will get less of what they have previously subsidized.
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Xander Fulton
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While technically true, the question would be - is this method of making money (capital gains) something the government incentive-ized because it was good for the country, or because that's how most of the wealthy [campaign donors] make their money...and they didn't feel like paying for the running of the country so much as putting the burden on the lower- and middle- class?

(As in: that is a question. How is the country benefited by a capital gains tax lower than any other form of tax, including regular income taxes?)
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Psauberer wrote:
This is a stupid idea that is nothing more than playing into class warfare.

The tax rate for high incomes is already higher than that for low incomes.

If the effective tax rate for high income earners is lower than that for low income earners, it's because they are disposing of their money in ways that the government has declared to be "good" and incentivized by making tax free.

If the government is now going to say, "we no longer are going to incentivize you to spend in certain ways- we are going to get the same dollars from you whether you do what we'd like you to do or not" then they will get less of what they have previously subsidized.


But as Warren Bufffet has said, and I paraphrase, there is a class warfare going on in the US and his (Buffet's) class is winning.

It is my understanding that through decades of lobbying efforts and contributions to politicians, the wealthy in the US, either corporate or individual, have rewritten the rules and 'incentives' to benefit themselves. There is no longer a level playing field. Therefore, taxing those who make over one million makes sense if the current tax regime is not fair.

But then I live in a country where "peace, order, and good government" are written right into our constitution.
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If taxing the rich is class warfare, then where do I enlist in the army of the wealthy? Shoot 50% tax rate on the rich is still 150% better off than I am doing down here in the middle upper lower class.
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Psauberer wrote:
This is a stupid idea that is nothing more than playing into class warfare.


Lately I keep hearing Republicans allude to "class warfare" as a dirty word, as if bringing up the alarming fact that our current levels of income inequality put us in the same league as third world countries is taboo. Of course there's class warfare being waged by the corporations who have all four branches of government (including the media) in their pockets and have been steadily destroying the middle class for decades. Somehow the corporate-backed propaganda machine has ordinary people convinced to vote against their own interests by alluding to the American ideals of "rugged individualism" and "the free market". What a sick and tragic joke.
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Dwayne Hendrickson
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I thought the "Buffet rule" referred to saying that the rich should pay more in taxes but then ignoring the fact that rich folks can actually voluntarily pay more in taxes.
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Chad Ellis
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Psauberer wrote:
This is a stupid idea that is nothing more than playing into class warfare.

The tax rate for high incomes is already higher than that for low incomes.

If the effective tax rate for high income earners is lower than that for low income earners, it's because they are disposing of their money in ways that the government has declared to be "good" and incentivized by making tax free.

If the government is now going to say, "we no longer are going to incentivize you to spend in certain ways- we are going to get the same dollars from you whether you do what we'd like you to do or not" then they will get less of what they have previously subsidized.


I think you're missing the point. The Buffet Rule isn't about re-penalizing people who got deductions for their spending. It's about the fact that, for example, a hedge fund manager treats his compensation as capital gains (which it simply isn't) and thus pays a much lower "income" tax than an average earner.
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Instead of singling out a specific group (e.g., millionaires), wouldn't just be easier to eliminate the distinction between capital gains and "regular" income. Tax it all at the same rate -- that seems more intellectually honest to me.
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Chad Ellis
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Agreed, but this is a political move. Obama knows he can't get anything passed through the House, so he's using legislative proposals as a political tool. In this case he puts forward the idea that IF someone is making over a million dollars a year and is still paying a lower rate of income tax than an "average" American then that should be stopped. Republicans then have to vote against that. In 2012 we will presumably hear, "You have a clear choice. I think that if someone is making over a million dollars a year and is paying a lower tax rate than the average American, they aren't paying their share. Republicans think it's just fine if millionaires pay less than middle class Americans."

Saying, "Let's tax capital gains as though it were income" doesn't have such an obvious appeal to fairness and doesn't translate well to political speeches.
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Xander Fulton
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Chad_Ellis wrote:
Agreed, but this is a political move. Obama knows he can't get anything passed through the House, so he's using legislative proposals as a political tool. In this case he puts forward the idea that IF someone is making over a million dollars a year and is still paying a lower rate of income tax than an "average" American then that should be stopped. Republicans then have to vote against that.


Unfortunately, the Democrats could finally prove beyond a shadow of a doubt that global warming is real, and that every single scientist who ever questioned it was in fact being paid off by wealthy and embittered upper-class Scrooges in an effort to destroy the entire world; that most other millionaires were secretly withdrawing all the untaxed money into vast deposits in the Chinese economy; and that a massive asteroid was directly on its way to smack the exact middle of Texas and the only way it could be prevented is a billion-dollar crunch program at NASA...

...and the Republicans would STILL vote down any tax increase on the wealthy.

The party has - as a position of faith - given up reason for madness in refusal to budge on that issue 'no matter what'.
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Xander Fulton
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Chad_Ellis wrote:
In 2012 we will presumably hear, "You have a clear choice. I think that if someone is making over a million dollars a year and is paying a lower tax rate than the average American, they aren't paying their share. Republicans think it's just fine if millionaires pay less than middle class Americans."

Saying, "Let's tax capital gains as though it were income" doesn't have such an obvious appeal to fairness and doesn't translate well to political speeches.


And that may be true - I can easily see Obama's campaign thinking exactly that. But it's a suckers game...they won't win over any votes with the argument. The extreme right has been well trained to 'worship their masters', and they really don't see a problem with the wealthy being taxed less than the rest of America...even if it provides no net economic gain.

I think there is an unspoken hope that 'if I just work hard enough, I could be just like them, so why would I want their taxes increased?' or something?
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XanderF wrote:
And that may be true - I can easily see Obama's campaign thinking exactly that. But it's a suckers game...they won't win over any votes with the argument. The extreme right has been well trained to 'worship their masters', and they really don't see a problem with the wealthy being taxed less than the rest of America...even if it provides no net economic gain.


It isn't about the extreme right - they are a lost cause. It is about the middle, where elections are won and lost.

A debate about relative tax burdens is one I've wanted to see for a long time. There's no sane reason to have different tax rates for different types of income. It just allows manipulation by those with the resources to do so. If we have to go through this "Buffet Rule" stuff on the way to a more equitable tax system, so be it.
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Xander Fulton
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rshipley wrote:
There's no sane reason to have different tax rates for different types of income.


Well, there is a practical reason, but it tends to go in the other direction. As noted by Adam Smith (in "The Wealth of Nations")

Mr. Invisible-Hand-of-Capitalism, himself wrote:
The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion


Wikipedia also makes the point:

Quote:
In a market economy, the larger an investment is, the higher its rate of return. This is due to both economies of scale and the increased range of investment opportunities. In addition to these economic forces, those who control greater amounts of capital within a society are able to participate more directly in shaping government policy, often in ways that further maximize their wealth. Thus, due to both economic and political realities within a market economy, it is a natural process for the wealthiest individuals and firms in a society to become disproportionately wealthier over time


...which leads to stratification of society with its resulting political instability.

That said...

rshipley wrote:
It just allows manipulation by those with the resources to do so.


...is generally why such systems go foul. Once you accept that it makes sense to have different tax brackets for different income levels, and miles of exceptions within that to 'encourage specific social behavior', it becomes a trivial thing to - over time - completely reverse the original intent of adopting such a tax system so that it actively works to OPPRESS the working classes it was specifically implemented to aid.
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Dane Peacock
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I thought the Buffet Rule is that you couldn't ask for a To Go box.
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SpaceGhost wrote:
Instead of singling out a specific group (e.g., millionaires), wouldn't just be easier to eliminate the distinction between capital gains and "regular" income. Tax it all at the same rate -- that seems more intellectually honest to me.


The Republicans would make such a practical, logical, and useful maneuver appear to be an assault on capitalism and the stock market. And that would almost certainly be an attack that got a massive amount of traction.

I would support such a measure, but a whole bunch of the public would behave like a cat that had just had a really good bathing session and was now sitting on your new couch.
 
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Psauberer wrote:
This is a stupid idea that is nothing more than playing into class warfare.

The tax rate for high incomes is already higher than that for low incomes.

If the effective tax rate for high income earners is lower than that for low income earners, it's because they are disposing of their money in ways that the government has declared to be "good" and incentivized by making tax free.

If the government is now going to say, "we no longer are going to incentivize you to spend in certain ways- we are going to get the same dollars from you whether you do what we'd like you to do or not" then they will get less of what they have previously subsidized.


It is much lower. between 17% and 23% while the rest of us pay about 40% down to about 30% for the poor. If this goes on, it's going to end badly.

There are some signs it's already causing the wealthy to lose profits (and safe investing spots) because the poor and middle class can no longer afford to buy things and borrow money.

Add in robotics and it looks pretty grim.
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Class warfare? I'd love to see the casualties of this supposed war.
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quozl wrote:
Class warfare? I'd love to see the casualties of this supposed war.


Yeah? Try London, last month.
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okiedokie wrote:
I thought the "Buffet rule" referred to saying that the rich should pay more in taxes but then ignoring the fact that rich folks can actually voluntarily pay more in taxes.


This is such a tired argument. Imagine a conservative play-tester dealing with a rules suggestion:

"I think this game would play better if everyone had to do X."

"Well, you can do X voluntarily, so your position has no merit."

"Um, yeah, but the point is that it only works if everyone has to do X."

"Why do you ignore the fact that you can do X voluntarily? And don't you sell estate planning or something?"
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You're completely correct. Imagine a scene like this in a cafe where a man drops to the floor with a heart attack.

"Is anyone a doctor or know CPR?"

"I'm a doctor, however, this will only work if we all compress his chest at the same time."


Yeah, I know. It's over the top & silly, but I believe that an individual has the power to make a change. Crazy goofy me. Don't try to change me, just ignore me.
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okiedokie wrote:

"I'm a doctor, however, this will only work if we all compress his chest at the same time."


Yeah... but... you understand that for your analogy to work... the doctor would be right?

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Chad Ellis
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okiedokie wrote:
You're completely correct. Imagine a scene like this in a cafe where a man drops to the floor with a heart attack.

"Is anyone a doctor or know CPR?"

"I'm a doctor, however, this will only work if we all compress his chest at the same time."


Yeah, I know. It's over the top & silly, but I believe that an individual has the power to make a change. Crazy goofy me. Don't try to change me, just ignore me.


I also believe an individual has the power to make a change. The anti-Buffet argument, however, seems to be that if someone advocates a change in the rules their position is inherently suspect unless they behave as though the change is already in place.

"I think we'd get more players at our weekly poker game if we stopped treating deuces as wild cards."

"When deuces are wild you're able to call them as themselves, so why don't you just do that?"
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Psauberer wrote:
This is a stupid idea that is nothing more than playing into class warfare.

The tax rate for high incomes is already higher than that for low incomes.

If the effective tax rate for high income earners is lower than that for low income earners, it's because they are disposing of their money in ways that the government has declared to be "good" and incentivized by making tax free.

If the government is now going to say, "we no longer are going to incentivize you to spend in certain ways- we are going to get the same dollars from you whether you do what we'd like you to do or not" then they will get less of what they have previously subsidized.


That is all great, except the ACTUAL tax rate for the top .1% is lower than the middle class... Buffett himself paid less percentage wise than his 50k salaried secretary. Good job repeating republican talking points though!

The top .1% need suckers like you to help push their propaganda.
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SpaceGhost wrote:
Instead of singling out a specific group (e.g., millionaires), wouldn't just be easier to eliminate the distinction between capital gains and "regular" income. Tax it all at the same rate -- that seems more intellectually honest to me.


I disagree. Singling out a capital gains tax gives you more control over the market. So if you ever need to make any adjustments to the capital gains tax based on economic research you can make a small isolated manipulation rather than trying to refinagle the entire tax system.
 
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