Re: Wealth and the Art of Avoiding Taxes

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> In terms of fairness, there is a better way to look at things, from a
> higher altitude.  Instead of focusing on how much someone pays in taxes,
> focus on "what does this person produce" vs. "what does this person get in
> return".  What does the person provide to society, and what does this
> person take.

 
  Hmm... I have problems with that model. Let's say I give you $100 million 
dollars (yeah, I'm a giving kind of guy!)... now you have done nothing to 
earn that money. Does that make it any less yours that you should do what you 
would like with?

  Now, let's consider someone who, through skill or the ability to fake such, 
landed a some nice cushy exec jobs, got a few golden parachutes and comes out 
with $100 million. He probably hasn't given much to society, but does he 
really owe "society" a huge hunk of the money he has earned?

  What about the brilliant inventor who patents a tool that fixes anything 
around the house. Through blood, sweat, and tears the inventor makes $100 
million. Does the inventor owe society the same hunk of money? If not, 
because he did something useful, how should we judge what is useful and what 
is not?

  The big investor may not give a lot to society, but actually he does in less 
obvious ways. Let's say you buy into a mutual fund. If not for the big 
investors, stocks probably wouldn't go up nearly as much and thus funds 
wouldn't go up as much. For that matter, without investors there would be no 
mutual funds, since someone must invest the money! Should the investor get to 
keep the money he has earned?

  Let's consider this in another light: I believe you were against the 
censorship of offensive material on EU broadcasts, right? Now, why is it that 
we shouldn't legislate morality of this type but we ought to legislate 
morality concerning money? If each individual should choose whether to watch 
or listen to or read potentially immoral material, why should we not grant 
them the right to choose to act morally or immorally with their money as 
well? 

  Furthermore, taxation doesn't just get the upper 1%. Yes, it gets them, and 
tax cuts are more dramatic on them - *because*they*pay*more*. You may not 
like the richest 1%, but why should our feelings toward them mean that they 
should be expected to carry a heavier load of the Government's costs?

> So looked at that way you find a lot of people who do absolutely nothing,
> or actually quite harmful things, and get back tremendous amounts of
> things.

  "Get back" makes it sound like society is forced to give them lots while 
they do nothing. This is generally not the cause, they have done or continue 
to do something to make that money. They have taken initiative for the most 
part.

> Indeed if you look at it this way you wonder what great thing anyone can be
> doing to get the amount of cash in the top 400 list.

  Yeah, well, that's true.

> So if you want to look at fairness, look at the *overall* picture - looking
> at only one aspect of the individual / society transaction (the payment of
> taxes) is very arbitrary and does not help you set up a fair system of
> social resource allocation.

  I'm not concerned with "fairness" to a collective whole, I'm concerned with 
what is fair to the individual. It isn't fair to place uncalled for levels of 
taxation of the rich simply because they are rich, just because things aren't 
always fair for those who have less money.

   Life isn't fair, I don't think the government should try to make it fair by 
trying to level out opportunity to give most everyone the same opportunities.

> [ ... ]
>
> >   Down with unfair taxes! Down with the estate tax (double taxing
> > everyone, as the saying goes, death should not be a taxable event)!
>
> Unfair taxes are taxes on earned income.  I think the Sixteenth Amendment,
> which first empowered Congress to lay taxes, was meant to tax passive
> income - i.e., income from stocks, capital gains and interest income -
> rather than income from sweat and blood.  Let them not tax the latter, and
> only the former, and the fairness quotient will have been greatly increased
> already.

  It certainly doesn't sound that way:

     The Congress shall have power to lay and collect taxes on incomes, from
     whatever source derived, without apportionment among the several States, 
     and without regard to any census or enumeration. 
  
  If that where the case, why would it ever say "whatever source derived"?

  At any rate, I think I take issue at yoru definition of earned income. 
Income from stocks isn't necessarily passive, it can take a lot of work to 
earn. Capital gains tax is far too high, and IMO, encourages people not to 
make serious long term investiments.

  Personally I don't see the difference in types of income. If I go and work 
some place and earn "sweat and blood" income, you are saying it shouldn't be 
taxed, but if I then take that income and place it in a bank... it should be 
taxed?

> As to inheritance tax, the problem you have to address is the inherent
> unfairness in people being billionaires - and hence having great social

  How is that unfair? Personally, I can live with billionaires being 
billionaires even though I know I'll never be one, at least to the best of my 
knowledge. They've done whatever it is that has gotten them there, and I say 
"good for them." I choose not to worry so much if some people are better off 
than I am.

> control and the ability to control and exploit others - simply by virtue of
> birth.  If you turn to the traditional "coconut island" example used in
> Economics 101 classes, I posit an island with 3 coconut trees and 2
> inhabitants.  At first, the islands are shared equally by all, and all have
> access to the cocunut trees.  Then one day one of the two inhabitants gets
[...]
> owner to get food.  This is fairness to you?  This to me is
> institutionalized unfairness, where ownership of the worlds' resources,
> which the Creator provided to all, is generationally kept in the hands of a
> few.

  This is a very very closed model (coconut island) and not even beginning to 
show a real economic model like the one that exists in Real Life. (tm) 
Personally I see the control of business and government by a few powerful 
people decreasing.

  At any rate, I  didn't think you believed in a Creator?


> > Down with requiring
> > the wealthy to subsidize a larger and larger portion of an overly fat
> > government...
>
> If only it were the "wealthy" subsidizing.  Look at how much wealth these
> people create with their own doings.  This is why I pointed to the labor
> theory of value in Marx's "Capital", unless you really understand that (and
> it is *NOT AT ALL* a commmunist principle, it is simply an analysis of
> capitalism and how wealth is generated, but then, Marx has been
> sufficiently demonized that nobody will understand that point - victory to
> the demonizers) you will not see how this comment makes little sense.  The
> rich are rich b/c others are subsidizing *them*; it is impossible for them
> to be subsidizing others, at best the others take back some of the
> subsidies earlier provided.

  How are others subsidizing the rich? If I inherit a billion dollars, no one 
is subsidizing me. Nor are people subsidizing me if I start a business and 
make a billion dollars, just because I have a bunch of employees. That's 
simply free market activity.
 
  Again, I'm not concerned with fairness of people getting "what they deserve" 
(only a very small minority can't, as in are unable to and not just lacking 
initiative, earn at least enough to live), I'm concerned with the unfairness 
of expecting to take the money (or other property) that someone has away 
because the Government determines the poor/middle class/everyone needs more 
of this or that. 

  All this does is force honest wealthy people to pay a "lawyer tax" to avoid 
seeing their money taxed away or, worse, resorting to illegal means to keep 
their money. Maybe instead of taking more and more money as forced charity, 
we ought to concentrate more on deductions for those who give more.

  -Tim

- -- 
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Timothy R. Butler       Universal Networks      www.uninet.info
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