Is there anything wrong with investing money, and then living off the investment returns?

I seem to recall that the left was all up in arms over Mitt Romney's taxes two years ago.  They seemed to feel that he should have been paying more than the long term capital gains tax rate that he was legally paying.

Posted by tecwrg on 6/10/2014 10:29:00 AM (view original):

Posted by bad_luck on 6/10/2014 10:20:00 AM (view original):

Posted by tecwrg on 6/10/2014 10:07:00 AM (view original):
"That's a dodge. You didn't answer. The tax burden will be shifted somewhere. If the current system is so unfair because the rich pay a lot of taxes, should we assume that you want to see some of the burden shifted to the middle and lower classes?"

The current system is unfair because the rich are being asked to pay a higher rate of taxes than the middle and lower classes.  "Because they're rich and they can afford it".

I've given you my proposal, and I threw out an example with some made up numbers.  I don't know what actual numbers would be needed to make this feasible.

Did that example result in "some of the burden shifted to the middle and lower classes"?

I know you're just dying for me to say "Yes, I want the middle and lower class to pay more taxes".  But I'm not going to say that.  Because that's not my goal.

My goal is to prevent morons like you from saying "Tax the rich at a higher rate.  They can afford it.  **** 'em".  Because "they can afford it" is not a valid justification.

I don't know how to say that more simply than I have.

So the current system is unfair because dollars earned after x amount are taxed differently than dollars earned before x. That's what you're saying?

If you think that's what I said, then you're dumber that I thought.

Let me know if/when you figure it out.  I'm tired of doing the "Stupid Dance" with you.

Ok, so what's unfair about the current system?

Posted by burnsy483 on 6/10/2014 10:40:00 AM (view original):

Posted by moy23 on 6/10/2014 10:38:00 AM (view original):

Posted by burnsy483 on 6/10/2014 10:16:00 AM (view original):

Posted by MikeT23 on 6/10/2014 10:12:00 AM (view original):

Posted by burnsy483 on 6/10/2014 10:09:00 AM (view original):

Posted by MikeT23 on 6/10/2014 10:03:00 AM (view original):
I'm sure he spends a lower % of his salary.  Nonetheless, for that money to have any value, it has to be spent at some point.   10k today will be worth less than 10k next year. 

There's always X amount of money in the bank, and it's usually owned by the rich. Right?

I'm not sure I get your point.    How much value does your bank money have?    I say "None" because it's collecting interest at a rate lower than inflation.   It's the bank's money until you take it out and use it.   

Kevin Garnett has 10m in the bank.   It's worth 10m today.    In 2018, it's worth 8m.    He's simply passed the tax burden down to his children.  Because, at some point, that 10m will get spent. 

If you're rich, you generally save more money.  If you die rich, and pass the money on to your children, nothing changes.  If they're also rich, they'll save money like their parents did.  If they actually need the money, they'll spend it.  But that's money being spent by someone with a low salary.  So they're not rich.  Yes, at some point, the 10m will get spent.  But there will be another 10m from the next Kevin Garnett in the bank.  The rich are more likely to save their money.

Rich people are rich because they value saving $. Poor people are poor because they value spending $.

Why is it so wrong to save money? I've always been taught you can never save enough money because inevitably something will go wrong. I wish more people thought this way instead of only thinking about SPENDING rich people's hard earned $.

Rich people are rich because they make $.  Poor people are often poor because they don't make much $.  Sometimes it's also people who spend like morons, yes.  But I'm sure there are people who are poor, who value saving money, and can't.

There's nothing wrong with saving money.

Rich people who value spending money end up like Allen Iverson or Elton John or most lottery winners.

I'm in retail banking and I've seen families that make $40,000 a year with 4 children save $500,000 dollars. It takes time. It takes discipline. It takes sacrifice.... But it CAN be done. Most low earners like to believe they can't save money because they don't make enough money. Its an easy trap to fall into but when you dig deeper they usually do things like smoke, go to bars, drive a newer car, have apple products, etc. I promise you they don't NEED those things.

Take smoking in Chicago. Its $11a pack. If this low earner quit smoking a pack a day (it takes discipline) they would save $4000 a year. ($11 a pack * 7 packs a week * 52 weeks) .... Now add that up over 5 years (it takes time) and its $20,000 dollars. Now imagine their spouse did the same. 5 year from now would $40,000 in the bank be helpful for these low income earners?

I could do the same for eating out, going to bars, and shopping habits (it takes sacrifice).

Posted by bad_luck on 6/10/2014 11:03:00 AM (view original):

Posted by tecwrg on 6/10/2014 10:29:00 AM (view original):

Posted by bad_luck on 6/10/2014 10:20:00 AM (view original):

Posted by tecwrg on 6/10/2014 10:07:00 AM (view original):
"That's a dodge. You didn't answer. The tax burden will be shifted somewhere. If the current system is so unfair because the rich pay a lot of taxes, should we assume that you want to see some of the burden shifted to the middle and lower classes?"

The current system is unfair because the rich are being asked to pay a higher rate of taxes than the middle and lower classes.  "Because they're rich and they can afford it".

I've given you my proposal, and I threw out an example with some made up numbers.  I don't know what actual numbers would be needed to make this feasible.

Did that example result in "some of the burden shifted to the middle and lower classes"?

I know you're just dying for me to say "Yes, I want the middle and lower class to pay more taxes".  But I'm not going to say that.  Because that's not my goal.

My goal is to prevent morons like you from saying "Tax the rich at a higher rate.  They can afford it.  **** 'em".  Because "they can afford it" is not a valid justification.

I don't know how to say that more simply than I have.

So the current system is unfair because dollars earned after x amount are taxed differently than dollars earned before x. That's what you're saying?

If you think that's what I said, then you're dumber that I thought.

Let me know if/when you figure it out.  I'm tired of doing the "Stupid Dance" with you.

Ok, so what's unfair about the current system?

Because this is what you said before:

                              What is unfair about the current system?

                    A progressive tax rate.  The more you make, the higher rate you pay. 

But then you suggested a progressive tax rate, just with two brackets/rates instead of seven. The first bracket 0-75k is taxed at a 0% rate. The second bracket 75k-infinity is taxed at 60%. Isn't that unfair by your own definition?

Spending money can be like a disease.

My former neighbors lost everything they had because they (specifically, the husband) could not control their spending.  They lost the two businesses he owned (two gas stations, one with a garage that supposedly did decent business), along with their house.

Things like: he went to Walmart one day to buy toilet paper.  Came with an large HDTV for his teenage son's room for him to play X-Box on.  Even though he already had a (smaller) HDTV in his room.  Oh, and he forgot the toilet paper.

Another time, he heard that somebody was coming to their house to serve papers on a debt that he owed to the state.  Something about the lottery machine in the gas station.  He called his wife, told her to "hide" in the basement and not answer the door if somebody came (the house was a deck house, tons of windows, that's why they had to hide).  The 10 year old daughter got upset about this.  Of course, the only way to make her feel better was do get her an iPhone and data plan.  Because what's another monthly bill to pay when you're hiding in the basement from creditors?

The bank started foreclosure proceedings on them three times over a 15 month period.  The first two times, they borrowed money from family (which I'm sure will never be paid back) to stop the proceedings.  The third time, they ended up selling the house (at a discount) to get the bank off their back.

They're now living in a small rented house on the other side of town.  They're already behind on the rent, but family kicked in again to help.  He worked briefly at one of the local grocery stores, working in the deli department, until he was let go after calling in "sick" around 50% of the time after he was hired.

They're now getting state assistance, and he's gone from being Mr. Moneybags (he was well known for his "generosity" before the house of cards collapsed) to being a welfare king.

Posted by bad_luck on 6/10/2014 11:20:00 AM (view original):

Posted by bad_luck on 6/10/2014 11:03:00 AM (view original):

Posted by tecwrg on 6/10/2014 10:29:00 AM (view original):

Posted by bad_luck on 6/10/2014 10:20:00 AM (view original):

Posted by tecwrg on 6/10/2014 10:07:00 AM (view original):
"That's a dodge. You didn't answer. The tax burden will be shifted somewhere. If the current system is so unfair because the rich pay a lot of taxes, should we assume that you want to see some of the burden shifted to the middle and lower classes?"

The current system is unfair because the rich are being asked to pay a higher rate of taxes than the middle and lower classes.  "Because they're rich and they can afford it".

I've given you my proposal, and I threw out an example with some made up numbers.  I don't know what actual numbers would be needed to make this feasible.

Did that example result in "some of the burden shifted to the middle and lower classes"?

I know you're just dying for me to say "Yes, I want the middle and lower class to pay more taxes".  But I'm not going to say that.  Because that's not my goal.

My goal is to prevent morons like you from saying "Tax the rich at a higher rate.  They can afford it.  **** 'em".  Because "they can afford it" is not a valid justification.

I don't know how to say that more simply than I have.

So the current system is unfair because dollars earned after x amount are taxed differently than dollars earned before x. That's what you're saying?

If you think that's what I said, then you're dumber that I thought.

Let me know if/when you figure it out.  I'm tired of doing the "Stupid Dance" with you.

Ok, so what's unfair about the current system?

Because this is what you said before:

                              What is unfair about the current system?

                    A progressive tax rate.  The more you make, the higher rate you pay. 

But then you suggested a progressive tax rate, just with two brackets/rates instead of seven. The first bracket 0-75k is taxed at a 0% rate. The second bracket 75k-infinity is taxed at 60%. Isn't that unfair by your own definition?

So what you're saying is, you don't understand what a progressive tax rate is.

Why don't you run off, figure it out, and don't comment until you know what you're talking about.

Actually, I'm not sure you understand.

Definition of 'Progressive Tax' A tax that takes a larger percentage from the income of high-income earners than it does from low-income individuals.

 

Under your example, low income earners are taxed at 0%. Middle class and upper class earners are taxed at 60% (on income earned above the first bracket). That is, by definition, a progressive tax.

Posted by burnsy483 on 6/10/2014 10:34:00 AM (view original):

Posted by MikeT23 on 6/10/2014 10:27:00 AM (view original):

Posted by burnsy483 on 6/10/2014 10:16:00 AM (view original):

Posted by MikeT23 on 6/10/2014 10:12:00 AM (view original):

Posted by burnsy483 on 6/10/2014 10:09:00 AM (view original):

Posted by MikeT23 on 6/10/2014 10:03:00 AM (view original):
I'm sure he spends a lower % of his salary.  Nonetheless, for that money to have any value, it has to be spent at some point.   10k today will be worth less than 10k next year. 

There's always X amount of money in the bank, and it's usually owned by the rich. Right?

I'm not sure I get your point.    How much value does your bank money have?    I say "None" because it's collecting interest at a rate lower than inflation.   It's the bank's money until you take it out and use it.   

Kevin Garnett has 10m in the bank.   It's worth 10m today.    In 2018, it's worth 8m.    He's simply passed the tax burden down to his children.  Because, at some point, that 10m will get spent. 

If you're rich, you generally save more money.  If you die rich, and pass the money on to your children, nothing changes.  If they're also rich, they'll save money like their parents did.  If they actually need the money, they'll spend it.  But that's money being spent by someone with a low salary.  So they're not rich.  Yes, at some point, the 10m will get spent.  But there will be another 10m from the next Kevin Garnett in the bank.  The rich are more likely to save their money.

And the tax rate would be set on consumer dollars spent the previous year.    If the rich want to hoard their money, it's just going to increase the tax rate for when it does get spent.  Making it worth even less.

And by increasing the tax rate, you make it less likely people will spend money.

I disagree.   People stop spending when they're out of money not because something costs more than they want to spend.

Posted by bad_luck on 6/10/2014 11:50:00 AM (view original):
Actually, I'm not sure you understand.

Definition of 'Progressive Tax' A tax that takes a larger percentage from the income of high-income earners than it does from low-income individuals.

 

Under your example, low income earners are taxed at 0%. Middle class and upper class earners are taxed at 60% (on income earned above the first bracket). That is, by definition, a progressive tax.

There is no 0% tax rate in my example.

There is only one rate, 60%, that is applied to all income above the standard exemption.

One bracket.  One tax rate.  Not progressive.

You really don't understand this?

Posted by tecwrg on 6/10/2014 12:34:00 PM (view original):

Posted by bad_luck on 6/10/2014 11:50:00 AM (view original):
Actually, I'm not sure you understand.

Definition of 'Progressive Tax' A tax that takes a larger percentage from the income of high-income earners than it does from low-income individuals.

 

Under your example, low income earners are taxed at 0%. Middle class and upper class earners are taxed at 60% (on income earned above the first bracket). That is, by definition, a progressive tax.

There is no 0% tax rate in my example.

There is only one rate, 60%, that is applied to all income above the standard exemption.

One bracket.  One tax rate.  Not progressive.

You really don't understand this?

Um, yes there is. You can dress it up however you like, but the first bracket (0-75k) is taxed at 0%. 

I think the question bad_luck is asking is fair.

If the goal is to get more money from the people who spend tons of money, it would stand to reason that these are the same people who also earn tons of money and you could accomplish the same goal by adding a few more brackets at the top and raising the rates on those earners. 400K is a good bit of money but to lump those guys with the ones making 1M or 10M or 100M is silly.

tec's example where anyone making less than 75K doesn't pay any taxes, I like the idea, but again by necessity you'd have to raise the rate on those making over 75K to make up the difference.

It seems like a no-brainer that the people making less than 75K a year would benefit greatly by paying less in taxes, while making up the difference by adding more brackets at the top and taxing that income accordingly. That would allow for the people under 75K to be much more active in the economy which would stimulate the economy. The super wealthy business execs would actually gain more wealth due to the increase in consumption of their goods and services.

As recently as 1986 the top tax rate was 50%. From 1965 until 1982 it was 70+%. Looking back through history, immediately following WWI they jumped the high side from 15% to 67% (presumably to help pay for the war effort?). It climbed to 77% in 1918, and stayed pretty high until 1925 when it dropped down to 25%. In 1932 it jumped back up to 63% and stayed at least that high (reaching a peak of 94%) until 1982 when it was dropped back to 50%. Bush 1 dropped it all the way to 28% and Clinton came back up to 39.6%, which is where we are now. 

So it's not as overly socialist as the Tea Party wants to pretend it is. 

For 50 years this country's richest people paid at least 63% and most of that time it was 70%+. 

What Reagan did was smart at the time because it helped a sluggish economy and people did, in fact, go out and become entrepreneurs and created a sh!t ton of jobs and people started to recover from the recession of the 70s. 

However, just because this is true, it is not a reason to point at the 70's and say "see high tax rates are bad and Reagan fixed that problem". It was a necessary and great fix at the time, but in no way reflects that it is a superior way to structure the tax code infinitely. 

We should definitely have more brackets at the top and get AT LEAST 50% from the guys at the very top. None of it is about F***ing the rich because they can afford it", it's about getting back to what we did successfully for a really, really long time.

Two words. Fair. Tax.

Look it up.

Posted by MikeT23 on 6/10/2014 10:03:00 AM (view original):
I'm sure he spends a lower % of his salary.  Nonetheless, for that money to have any value, it has to be spent at some point.   10k today will be worth less than 10k next year. 

Really? Your telling me the super rich dude that has a salary of 100 million a year is going to spend all that money eventually? I'd say not, most of that money is going to be invested in stocks. Or some other derivative. A teeny tiny percentage of that will be spent on goods. So, no, IMHO this sales tax only thing isn't fair in the least. Unless there was some sort of rebate that poor and middle class qualify for that the rich do not. That's what we get up here in Canada, we get quarterly gst rebates - gst is our federal sales tax -

Do you have a personal plane?  No?   Rich dudes do.    If he makes 100m a year, how much do you think he spends?    Surely you don't think he caps it out around 10m, do you?

The fair tax as it has been proposed would do exactly that greeny.

Everyone making below a certain threshold would get "prebates" as they are called.