Hurrah for Bernie Sanders finally outlying some of his tax ideas. It’s nothing too out there, just some lifting, but he’d been putting that one off. At least he understands taxes must be raised on everyone for what he wants, that there simply aren’t enough rich people to pay for everything, especially if increasing the federal budget some trillion dollars is required.
Hillary Clinton in the debate last night said her tax plan was outlined in depth on her website. She says that every debate. I checked her website once again and it’s still not there, just the same worthlessly vague handful of words about raising taxes but not for most people.
Martin O’Malley’s tax plan I haven’t really looked in to. Sorry, O’Malley. Jill Stein and others’ tax plans I haven’t really looked into either. Sorry, others.
On the Republican field, the only tax plans that don’t completely self-deal are Jeb Bush’s and Marco Rubio’s.
Ultimately it doesn’t matter either way since Congress writes laws, not Presidents. Presidents don’t fulfill their campaign promises because all they have are orders, proclamations, vetos, and influence. That’s the biggest irony of Presidential election cycles. Presidents don’t really write laws.
But why do we pay taxes?
According to a book I’m reading, admittedly dated since it was published in the 1970s, Americans voluntarily pay more taxes than anyone else. The IRS pays less for enforcement and has a higher return than other nations.
Is it that Americans believe in helping others, or that they feel indebted to the services they use? Is it patriotism? Or is it that they’re more scared by the repercussions of not paying than those from other nations are, so Americans quickly pay their protection money?
About three fourths of the federal budget is spent on benefits — Medicare, Social Security, Veterans Affairs… After that, half of the remaining is spent on the military, and the rest on everything else.
Things are a little different on a state level, but typically the largest expenses are health, education, and infrastructure.
The funniest part of all this is that the United States is a tax haven, just not for its citizens. There’s always talk about Americans running their companies out of British Overseas Territories like the Cayman Islands or Bermuda, where there are few to no taxes, and keeping foreign-earned income outside the United States, as if the United States is entitled to a slice of another country’s action. But until Chinese nationals started buying up all the high-value real estate in major cities, no one cared about the United States’ own status as an international tax haven.
Let’s not forget our tax haven states, either. There’s a reason so many companies exist as Delaware, Nevada, or Wyoming corporations, or people move to low-tax states with proportionally lower standards of living, where budget deficits are papered over by the taxpayers of less-deficient states.
That same self-interest is what drives people to support the repeal of the estate tax, the tax that keeps select estates from surpassing the federal government in capital, power, and authority, all so lucky kids can inherit a little more of the amazing wealth they’re already inheriting.
It’s trivial to open up shop overseas in a world where most money exists on a computer and not in a bank vault. The only problem is you need to find a bank that doesn’t have offices in the United States. The United States requires foreign banks with American clients to withhold the funds of Americans, so many banks comply by just not servicing Americans.
It’s also hard to use that offshore money if the United States is your nexus. You need to bring it onshore to spend it.
But a high net-worth individual can easily buy residency to any nation. For the European Union, the price is €250,000. For the United States, the price is $500,000. For some micro-states, the price is $1. Money goes where money’s wanted.
Perhaps the United States is the only nation that taxes its citizens on their global income because it knows all about tax havens from its own history of being one for foreigners.
Even within the United States, Puerto Rico has some favorable tax law, but they’re having some economic troubles and might soon gain statehood, so maybe the time to take advantage of that has passed.
For me, I went to public school. I drink public water cleaned by people who went to public school. I live in a stable city with a stable body of law and the protections those afford.
My food is grown on public-subsidized farms, arriving in my home by way of public roads. My garbage is taken away by city workers using those same public roads. My power comes by way of a public utility. I make my money with the help of the Internet, a military communications platform created to survive global thermonuclear war, built upon decades of further government-funded research.
Government benefits have also directly helped me and my immediate family.
I recognize the benefits of taxation.
But I wish the public roads that deliver my food didn’t also deliver defense contractors to their jobs building bombs. I wish the public power I use wasn’t also used in the manufacture of murder weapons.
And if those bombs weren’t made, would my city be stable enough for me to have the free time to care about people building bombs in it? If the United States didn’t oppress and murder, would me or my city exist?
Why can’t I legally build a bomb in my garage while a defense contractor legally builds one in their factory?
If an armed society is a polite society, why does the world discourage Iran and North Korea from building nuclear weapons?
Why did gun laws only become a thing in California after then-governor Ronald Reagan became disgusted by blacks exercising their then-legal right to open carry?
Why is equality only good when a select few have it?
The collecting of taxes both helps and hurts people. The poor may lose a well-needed slice of their pay, but for each dollar they give, they get eight back in benefits. The rich may not get many direct benefits, but their giving placates the poor.
Discovering new and exciting ways to murder has raised the standard of living for those left alive, and taxes are a great way to fund such discoveries.
The Vice President says paying taxes is patriotic. The Supreme Court says paying taxes is not patriotic. The Supreme Court goes on to say that using any and all legal methods to minimize your taxes is fine. That makes sense. You can’t break laws you follow.
So not paying taxes is only illegal if you’re lazy. Got it.
But if too many people minimize their taxes, taxes must be raised to make up the lost revenue. The result is ignorant people being hurt. One out of three people already neglect to claim the standard deduction.
Cutting military spending would only slightly reduce taxes, and increasing taxes on the rich would only slightly reduce taxes on the poor.
If you want something, you have to pay for it. And the bigger that thing you want, the more everyone needs to pay. A one percent tax increase on the poor funds substantially more than a ten percent tax increase on the rich.
California has a problem with wanting things they don’t want to pay for. It takes a majority vote to create a project, but a super-majority vote to fund it. Luckily California has a budget surplus. Thanks, Edmund.
Feel free to point towards other nations and their universal healthcare setup, how you think it’s much better than our mandatory health insurance scheme. But unlike the United States, their politicians haven’t been affraid to raise taxes on the poor.
But why don’t the rich just pay their fair share of taxes?
Well, they probably do. It’s just that most of their wealth is on paper.
If you buy a broken car and fix it, you have become wealthier on paper. That wealth is only realized and taxed when or if the car is sold.
If unrealized gains were taxed, your ownership of that car and everything else may well be a subscription.
If you want to live like that, you can. There are plenty of ways to be a debtor in this world. Go grab a credit card, buy some consumer product, and work tomorrow for the money you’ve already spent.
Selling something for more than you bought it for is a capital gain. In the United States, long-term capital gains, defined by ownership of over a year, are taxed at essentially half your income tax rate.
Should long-term capital gains be taxed as income? Well, taxes are designed to encourage or discourage things. Taxing long-term capital gains as income provides no encouragement for taking a long-term view.
The result would be money in the market when times are good, and money out of the market when times are bad. With the distinction between investment and trading destroyed, booms and busts are exacerbated, increasing volatility and uncertainty.
Some assets, like stocks, also provide dividends. Dividends are subject to double taxation, first as corporate profits, then as personal income. Their reduced tax rate comes from their already being taxed. It’s a bit like how employers pay some of their employee’s taxes.
And the reason self-employment taxes are higher is that a self-employed person is both their employer and employee, essentially subjecting them to both payroll and income taxes instead of just one or the other.
Further assets like government bonds provide a tax-free coupon. If you give your money to the government, the government sends regular tax-free interest payments as thanks.
The rich primarily derive their money from some combination of the above.
Maybe they’ll have a family office where they manage their wealth as a company, and perhaps they derive a regular taxable salary from themselves through that, as well as subjecting their wealth to corporate taxes, but they’re probably not deriving all of their income from working at a retail store for someone else.
And when they die, 35% of their estate goes to the government.