Sunday, October 19, 2008

Redistribution

There's been a lot of talk on the airwaves and on the TV about an upcoming "redistribution of wealth." When pressed, certain folks will spin some yarn about "punishing successful people." And yes, all this has to do with taxes.

Some things I think about this:

1. All taxation is a redistribution of wealth. It takes wealth out of someone's hands and puts it in someone elses' hands.

2. All taxation reminds me of racketeering.

3. Despite paying a large percentage of my income every year in taxes, I get a pretty good return on my investment, considering. That return isn't where I want it to be, but its a small price to pay (imho) compared to the alternative of having Soviets rolling tanks through my backyard. I could use some better levees, some better schools, some better roads and some better healthcare, but we're not arguing about actually paying taxes - we're talking about how they're spent.

4. If I get a tax break, I will still be paying taxes. I will just be paying less.

5. The additional money in my pocket will probably still end up benefiting someone who's making more than $250,000+ a year. It will just pass through the hands of many more people making under $250,000+ a year on the way up.

5A. The additional money in the pocket of someone who makes $250,000+ a year doesn't make it into my hands near as often on the way down.

6. I know many, many successful people who make under $250,000 a year. As a matter of fact, the only people I've met who make more than $250,000 a year are university presidents, congressmen, governors, high end restaruanteurs, rock stars, and a few others who were even close to that.

7. As a matter of damn fact, I just realized that, unless I win the lottery or hit it big with rock and roll (stop laughing, people), I will never make more than $250,000 a year.

8. If someone makes $250,000 per year, and pays 40% taxes, they net $150,000 a year.

9. If someone makes $48,000 per year, and pays 25% taxes, they net $36,000 a year.

10. I relate to #9 far more emphatically than #8.

.

6 comments:

patsbrother said...

Pat, even assuming all taxes are schemes of wealth distribution, the problem with Obama's version of wealth distribution is that it involves directly handing people money instead of requiring those who receive federal funds to work on a road or in a school first.

For you who pays federal income tax, a tax credit is a tax credit. For those individuals who pay little or no federal income tax (which appears to include a large number of people), not all tax credits are the same.

A regular tax credit would just lower the taxes that such an individual pays or, in the case of a worker who does not pay federal income taxes, would not affect finances at all. A refundable tax credit would mean that the government would OWE such individuals money, money that Obama proposes taking from high-earners and regular schmoes like you.

This isn't your philosophical I-suppose-paying-taxes-to-fund-armies-and-build-interstates-is-wealth-distribution; this IS wealth distribution in one of its most direct and pure forms. You take if from this person and give it to this one. Because it's "fair."

This sort of ludicrousness is one of the chief reasons I voted for a Republican presidential nominee for the first time in my life. I won't make more than $250,000 a year either and I know a lot of people who fit under your #9 scenario. However, I am unwilling to become part of a tyranny of the majority against those who make more than me. I cannot claim that much wealth envy.

Here is another reason I think Obama's "fairness" crap is just that: crap. What follows is an excerpt of reportage from a Democratic debate.

--

Charlie Gibson reminded Obama of a March 27th statement he made to Maria Bartiromo on CNBC's Closing Bell that he'd return the rate to the 28 percent it was under Bill Clinton. Said Gibson: [emphasis added throughout]


"It's now 15 percent. That's almost a doubling if you went to 28 percent. But actually Bill Clinton in 1997 signed legislation that dropped the capital gains tax to 20 percent .... And George Bush has taken it down to 15 percent.

"And in each instance, when the rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected? "

And Obama's remarkable response:

"Well, Charlie, what I've said is that I would look at raising the capital gains tax FOR PURPOSES OF FAIRNESS. We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year -- $29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That's not fair."

--

Essentially, I don't like that some people are rich, so I'll adversely affect a lot of people and take in less tax revenues just because I don't like the idea of people with money making even more money (even though they do it through job creation and investment).

Senator Obama is about wealth distribution. From his responses to questions like this one, it appears clear to me that Obama is less concerned with simply funding important programs and more concerned with reordering government and society in such a way that - far from making the SYSTEM fairer - forces OUTCOMES based on his own peculiar sense of what is "fair."

In the words of Willy Shatner: I can't get behind that.

Cousin Pat from Georgia said...

So, when the Bush administration cut me a straight up check for $600 this year, WTF was that? At that point, it was called 'economic stimulus.' But it wasn't considered distribution, and it was explained very rationally that the money was expected to be made back by the government at some later time. Which is what this is.

As for the folks "not paying taxes" - of the people who work jobs, very few of them fall into the "make so little they pay no taxes" category. Because, first of all, to get a refundable tax credit in the first place, you'd have to file taxes, which means you'd have to be holding down some sort of employment.

Far, far, far greater is the bracket of folks who pay taxes every year and earn under $250,000+. I benefit far more under Obama's plan and here's why: we've been under the tax cuts for the upper crust plan for 8 years. I've never seen my taxes go down, and I've not seen the supposed job growth that comes along with my supporting those cuts up at the top. I've seen a lot of reinvestment in small businesses from folks under the $250K+ ceiling, and I've seen the folks over that ceiling buy very expensive vehicles and second and third homes.

Folks over the ceiling are going to have their investments - their money - making money for them regardless of tax bracket. They ain't the population who hides cash in the mattress.

Taxing the upper percentages is not a "punishment;" it is pay to play. Roads, electricity, phones, radio, cable, internet, levees, hospitals, schools, and all the things taxes pay for make my life more convenient. The same infrastructure - that my taxes helped pay for - makes money for those who earn over $250,000 a year. That's the difference.

Dante said...

"I benefit far more under Obama's plan and here's why"

Because Obama is going to take money that isn't yours and give it to you. How can you not benefit more under that plan? I agree that those making more money should pay more in taxes. That's why taxes are generally paid as percentages instead of fixed amounts. It makes no sense to me to raise the actual percentage of income that goes into taxes. Then again, I don't go around planning out how much better our world could be if I seized money from a group I'm pretty safe from ever being in. If you're getting such a good deal from the government, then why aren't you willing to pay more right along with those making over $250K?

As an aside, I'm pretty happy with the money I pay vs. what I get from the federal government. What burns me up is that I pay almost as much to the state of Georgia and get far far far less in return.

DADvocate said...

Not all taxation if redistribution of wealth. Your point 3 is not redistribution of wealth unless you push the definition of redistribution of wealth past its reasonable limits.

Roads, national defense, schools, basic healthcare all serve the common good. I pretty much agree with the rest of your points.

But, I question the wisdom of raising taxes on the "rich" and corporations. By doing so we are increasing the cost of doing business.

S.A.W.B. said...

I wish I could believe that you weren't getting caught up in this 'plan' of His Holiness Barack Obama's, but, I figured you would. Lemme tackle your 'points' one at a time...

"So, when the Bush administration cut me a straight up check for $600 this year..."

You mean when the Democrat controlled Congress and Senate passed legislation handing you $600 this year, and President Bush signed it...yeah...that wasn't exactly a Republican plan, but, keep beating that 'Bush Policy' drum for another 9 days...

"As for the folks "not paying taxes" - of the people who work jobs, very few of them fall into the "make so little they pay no taxes" category. Because, first of all, to get a refundable tax credit in the first place, you'd have to file taxes, which means you'd have to be holding down some sort of employment. "

Entirely false. Many a welfare-lifestyler files a return every year to prove to the government exactly how little they earn in the legitimate, above-table economy. You, sir, with so many years yourself in the shadowy world of tip-wages, should have an idea of how waiters making $2.13 an hour, and reporting just their credit card tips, drive shiny new Mustangs...and we know that all these waiters aren't buying these cars with cash 'tips'...

"I benefit far more under Obama's plan and here's why: we've been under the tax cuts for the upper crust plan for 8 years. I've never seen my taxes go down, and I've not seen the supposed job growth that comes along with my supporting those cuts up at the top."

As far as you benefiting more, I defer to Dante when I say, Duh. Of course you'll benefit more by garnering a handful or three of someone else's dough. As for seeing your taxes go down, how many years out of the last 10 can you legitimately say you earned above the poverty-line in REPORTED income?

And as far as the jobs question goes, perhaps you're looking in the WRONG PLACE FOR JOBS. You know, with how cities with actual infrastructure in place tend to have actual, really-real employers, with really-real jobby-jobs they need filled, and all. But, far be it from me to let the facts get in the way of your cute little talking point...let's just say that there's a reason the wife and I are driving 125 miles a day round trip on average to go to work...and it's certainly not because we enjoy the ride...

I've seen a lot of reinvestment in small businesses from folks under the $250K+ ceiling, and I've seen the folks over that ceiling buy very expensive vehicles and second and third homes.

"Folks over the ceiling are going to have their investments - their money - making money for them regardless of tax bracket. They ain't the population who hides cash in the mattress."

Wealth-envy much? If you're 'hiding money in the mattress', you are failing at life. That is all. The FDIC exists to get the money out of the mattress, and into the economy, where it can do some good for the economy as a whole, and for the SAVER who understands the principle of compound interest.

I'm taking an absolute beating in my 401k right now. The silver lining? I can't touch that money for 30+ years, by which time, the market will have rebounded, as it always does, so i'm just soaking up cheap shares right now.

"Taxing the upper percentages is not a "punishment;" it is pay to play. Roads, electricity, phones, radio, cable, internet, levees, hospitals, schools, and all the things taxes pay for make my life more convenient. The same infrastructure - that my taxes helped pay for - makes money for those who earn over $250,000 a year. That's the difference."

Pay to play, eh? Ok then. Let's start levying taxes on the basis of who uses government services the most then. The more you use, the more you pay, since, obviously, you're getting the most use out of them, right?

I've got a helpful link for you here, complete with Adjusted Gross Income (AGI) thresholds, which are based on tax returns, and not per-taxpayer. For the record, the wife and I are in the top 10%, and not all that far off of the top 5%. You know good and well our lifestyle, and where our money goes.

Now, granted, kicking ourselves into the top 5% bracket would probably solve a few things, but, if as under the Obama plan, we get into that magical '5%' of taxpayers who WILL be affected by his tax-hike, do you think it will be all that 'fair' to 'redistribute' what we've worked and fought for to someone who hasn't?

By the way, if you answer 'yes' to that last question, I'll go ahead and get the boy started making your
Christmas and Birthday presents...

Cousin Pat from Georgia said...

I wish I could believe that you weren't getting caught up in this 'plan' of His Holiness Barack Obama's, but, I figured you would.

I'm less getting caught up in Obama's plans than I am getting caught up watching the the GOP become more disingenuous and more unhinged in discussing them.

Many a welfare-lifestyler files a return every year to prove to the government exactly how little they earn in the legitimate, above-table economy.

Perhaps you've been exposed to more savvy welfare-lifestylers than I have. I'm sure the revenue lost to this sort of shenanigan pales in comparison to those welfare-lifestylers who have the means to move assets to tax shelters in the Carribbean.

You, sir, with so many years yourself in the shadowy world of tip-wages, should have an idea of how waiters making $2.13 an hour, and reporting just their credit card tips, drive shiny new Mustangs

While I know plenty who have been able to make a pretty fine life for themselves in the service industry, not many were driving shiny new Mustangs. And plenty were getting killed on taxes every year.

Of course you'll benefit more by garnering a handful or three of someone else's dough. As for seeing your taxes go down, how many years out of the last 10 can you legitimately say you earned above the poverty-line in REPORTED income

2004 - Present. But, wait, when we were cutting taxes for the top dogs, does this mean they were getting a handful or three dozen of someone else's dough, like - mine? Even with Obama's plans, I'm still going to be paying taxes. The same way I've been paying taxes for the last 13 years, poverty line or not. But maybe I won't be paying as much.

And even then, the extra cash in pocket is still going to the top 5%, as they do better when I do better because I buy the stuff they make money selling. Investing in roads and bridges and schools and military projects - none of that is redistribution!!!

And even when you and the wife start making a combined $500K per year, I'll still be paying taxes for the same stuff you'll still be paying taxes for. It won't be redistribution then, either.