[Rhodes22-list] Taxes - Timely Article

Thu Jan 18 18:28:12 EST 2007

Bill,

I generally try to stay out of these "discussions" but I felt that I must
make one point at this time.  The billions that Buffet "donated" were never
"earned income" but rather gains on holdings that were never realized
(financial meaning.)  He never had possession of the fortune, for had he
"cashed out," he would have had to pay substantial taxes.  In addition,
these holdings were most likely held by an entity that he controlled, rather
than by Mr. Buffet personally.  The real problem is not what he gave away
but rather what he kept.  Even if he kept only 1% of his fortune ($300 mil)
and paid the taxes, it would still be a HUGE amount of money.  If anyone has
trouble spending that kind of moola in their lifetime, they need to ask me
for assistance.

Mike
s/v Shanghai'd Summer ('81)

From: "Bill Effros" <bill at effros.com> Thursday, January 18, 2007 4:07 PM
> Brad,
>
> I keep telling you the secret.  To avoid income tax, don't earn income.
> There are plenty of other ways to earn money that are not classified as
> "income".  Mr. Bush has lowered the capital gains tax to 0% for some
people.
>
> When you hear that some executive earned $100,000,000 last year, you
> don't think he paid $30,000,000 in income taxes, do you?
>
> Warren Buffet just gave away $30 Billion dollars--yet he never had an
> income of more than $100,000 a year.  He probably has paid less income
> tax over the course of his life than you have paid over the course of
> your life.  How did he do that?
>
> No taxes were ever paid on the $30 Billion dollars he earned, and now,
> because he is giving it to a non-profit foundation, none will ever be
> paid on it.
>
> A "flat-tax" doesn't change that--it's still just a tax on income, and
> those who earn incomes can't avoid paying it.
>
> You and Rik can't avoid earning incomes in your chosen professions, but
> don't think that by jiggering around the rates on which you pay you can
> substantially alter the percentage of your income that will go to the
> government to pay for things the majority of your countrymen have
> decided to spend your money on.
>
> The Wall Street Journal is happy to distract you with tax plans that
> benefit the majority of their readers whose principal income does not
> come from "income" as defined in "flat-tax" schemes.
>
> Bill Effros
>
> Brad Haslett wrote:
> > Rik,
> >
> > I've kept my eye one the ball as close as anyone.  The IRS has you by
the
> > nads, except for BillE. I wish he would share his secrets.  I doubt he
> > has
> > any secrets,  just smoke and mirrors.  We'll see.
> >
> > Brad
> >
> >
> > On 1/18/07, Rik Sandberg <sanderico at earthlink.net> wrote:
> >>
> >> Brad,
> >>
> >> Well, I finished reading her article ...... She's still scary ....
Wrong
> >> headed thinking....
> >>
> >> But, you are right. A clean slate is in order and IMO the only
> >> worthwhile way to go.
> >>
> >> Rik
> >>
> >>
> >> Rik Sandberg wrote:
> >>
> >> > Brad,
> >> >
> >> > I have to admit, I came unglued right away and didn't read the whole
> >> > article. Maybe I should go back now that I've settled down and finish
> >> > it :)
> >> >
> >> > Yes, I AM in favor of a new sheet of paper. I still like the sales
tax
> >> > idea
> >> >
> >> > www.fairtax.org
> >> >
> >> > With this program, one could literally choose whether he'd like to
pay
> >> > taxes like a rich guy or pay very little. 'Course one's standard of
> >> > living is going to have to reflect that choice. But for the
> >> > conservative spender, saving for retirement might actually be a
> >> > possibility.
> >> >
> >> > And Philip ..... there is a provision in this to repeal ..... uh,
> >> > whatever the hell amendment it is, that allows income taxes.
> >> >
> >> > Rik
> >> >
> >> >
> >> > Brad Haslett wrote:
> >> >
> >> >> Rik,
> >> >>
> >> >> I understand your point.  However, comma, the bottom 50% pay very
> >> >> little,
> >> >> and a huge hunk of that percentage don't participate anyway.  Let's
> >> >> make it
> >> >> official.  The top 20% pay most of the taxes, in fact, the top 5%
pay
> >> >> most
> >> >> of them, but everyone get's one vote.  I say we start with a new
> >> >> sheet of
> >> >> paper.
> >> >>
> >> >> Brad
> >> >>
> >> >>
> >> >> On 1/18/07, Rik Sandberg <sanderico at earthlink.net> wrote:
> >> >>
> >> >>>
> >> >>> Brad,
> >> >>>
> >> >>> Yikes!!! this woman is scary. I wonder if she isn't into the
> >> >>> Guinness......
> >> >>>
> >> >>> Subsidy, does she understand what that word means? How is taking
> >> >>> less of
> >> >>> a persons money a subsidy? By her way of thinking ALL of our money
> >> >>> belongs to the government and nice guys that they are, sometimes
> >> they
> >> >>> let us keep a little of it.
> >> >>>
> >> >>> This little blurb is really precious
> >> >>>
> >> >>> "They are also extremely regressive. A particular
> >> >>> tax exemption might be worth 35 cents on the dollar to a wealthy
> >> >>> individual
> >> >>> and only 10 cents to someone on the other end of the income scale
> >> who
> >> >>> faces
> >> >>> a lower tax rate."
> >> >>>
> >> >>> Excuse me ....... how can you give a tax break to people who
> >> don't pay
> >> >>> any???
> >> >>>
> >> >>> I think I'm going to read Ayn Rand again and see if I can figure
out
> >> >>> where all those guys went. It's starting to seem like a helluva
good
> >> >>> idea. This next thing has been around before, but maybe some need
> >> >>> reminding. here's a link
> >> >>>
> >> >>> http://www.julianpistorius.com/journal/?postid=45
> >> >>>
> >> >>> Rik
> >> >>>
> >> >>>
> >> >>>
> >> >>>
> >> >>>
> >> >>>
> >> >>> Brad Haslett wrote:
> >> >>>
> >> >>> > Here's an article from today's WaPo that dovetails neatly with
our
> >> >>> recent
> >> >>> > discussion.  Care to make a bet about the home interest
> >> >>> deduction?  No
> >> >>> > one
> >> >>> > in the Congress has the guts to take on that sacred cow!
> >> >>> >
> >> >>> > Brad
> >> >>> >
> >> >>> > -----------
> >> >>> >
> >> >>> > *The $800 Billion Tax Loophole
> >> >>> > *
> >> >>> >
> >> >>> > By Maya MacGuineas
> >> >>> > Special to washingtonpost.com's Think Tank Town
> >> >>> > Thursday, January 18, 2007; 12:00 AM
> >> >>> >
> >> >>> > Democrats are in a bind when it comes to their domestic economic
> >> >>> agenda.
> >> >>> > They have promised a number of new and costly initiatives such as
> >> >>> > fixing the
> >> >>> > Alternative Minimum Tax, providing middle-class tax relief, and
> >> >>> > increasing
> >> >>> > spending on homeland security and education. But they have also
> >> >>> made a
> >> >>> > commitment to fiscal responsibility. So how can they deliver on
> >> their
> >> >>> > promises without opening themselves up to the old "tax and spend"
> >> >>> label?
> >> >>> > Reforming tax entitlements -- a large, mostly under-the-radar
part
> >> of
> >> >>> the
> >> >>> > federal budget -- might just give them a way out of their
> >> >>> predicament.
> >> >>> >
> >> >>> > As a result of the 1986 bipartisan tax reforms, the tax base was
> >> >>> > broadened
> >> >>> > and the tax code was greatly simplified. But these reforms have
> >> been
> >> >>> > gradually undone as Congress has created scores of new tax breaks
> >> and
> >> >>> > loopholes. Want to preserve historic buildings, encourage
> >> alternative
> >> >>> > energy
> >> >>> > sources, help working families, or give certain industries a
boost
> >> >>> > without
> >> >>> > appearing to increase spending? Voil? -- a new targeted tax
> >> break is
> >> >>> > born.
> >> >>> >
> >> >>> > Most tax expenditures are really spending programs designed to
> >> look
> >> >>> > like tax
> >> >>> > cuts. Picture them as vouchers for healthcare, mortgage payments,
> >> >>> > daycare,
> >> >>> > transportation -- name the tax break. Dressing these programs
> >> up as
> >> >>> > tax cuts
> >> >>> > makes them a much easier sell for politicians who fear the "big
> >> >>> spender"
> >> >>> > label. But call them what you will, they drain the money from the
> >> >>> > Treasury
> >> >>> > and extend the scope of government. All told, this portion of the
> >> >>> budget
> >> >>> > represents $800 billion in lost government revenues annually.
> >> >>> >
> >> >>> > Not only do these tax breaks mask the true size of the
government,
> >> >>> > they are
> >> >>> > a terrible way to make policy. They regularly pay people and
> >> >>> > businesses to
> >> >>> > do what they would do anyway, making them both poorly targeted
and
> >> >>> > unnecessarily expensive. They are also extremely regressive. A
> >> >>> particular
> >> >>> > tax exemption might be worth 35 cents on the dollar to a wealthy
> >> >>> > individual
> >> >>> > and only 10 cents to someone on the other end of the income scale
> >> who
> >> >>> > faces
> >> >>> > a lower tax rate. It would be hard to justify a housing policy
> >> >>> that does
> >> >>> > more to subsidize the rich than the poor, yet that is exactly
what
> >> >>> the
> >> >>> > $80
> >> >>> > billion a year home mortgage interest deduction does.
> >> >>> >
> >> >>> > Moreover, tax expenditures do not get nearly the level of
scrutiny
> >> >>> they
> >> >>> > should. (If they did, would we really have a government program
> >> that
> >> >>> > subsidizes millionaires who buy vacation homes?) New government
> >> >>> programs
> >> >>> > should only be created following vigorous debate over whether a
> >> >>> proposed
> >> >>> > policy is important enough to warrant government intervention,
and
> >> if
> >> >>> > it is,
> >> >>> > whether it will be effective. Discussions about new tax programs
> >> >>> however,
> >> >>> > tend to focus almost exclusively on the cost. Billions of
> >> dollars of
> >> >>> > targeted tax cuts have been passed in the past few years with
> >> little
> >> >>> > or no
> >> >>> > discussion about the worthiness of their goals. And unlike
> >> spending
> >> >>> > programs, which are subject to congressional review, tax
> >> expenditure
> >> >>> > programs are pretty much on automatic pilot.
> >> >>> >
> >> >>> > Reforming this area of the budget would not only be a critical
> >> >>> step in
> >> >>> > improving the tax code (and probably the closest thing we will
see
> >> to
> >> >>> > fundamental tax reform in the next two years) it could also
> >> generate
> >> >>> > tens --
> >> >>> > if not hundreds -- of billions of dollars in savings.
> >> >>> >
> >> >>> > The first step should be capping a number of existing tax breaks.
> >> >>> Capping
> >> >>> > two of the largest breaks -- the home mortgage interest deduction
> >> and
> >> >>> the
> >> >>> > exclusion for employer-provided healthcare, would easily provide
> >> over
> >> >>> $50
> >> >>> > billion a year in savings. Both of these changes would reduce the
> >> >>> large
> >> >>> > subsidies that go to the highest earners while freeing up
> >> resources.
> >> >>> > Getting
> >> >>> > rid of a host of other tax breaks that subsidize certain
> >> >>> businesses or
> >> >>> > industries could easily generate another $25 billion. A thorough
> >> >>> > review of
> >> >>> > the over 150 existing tax expenditures to determine which ones
> >> have
> >> >>> > outlived
> >> >>> > their usefulness would yield still more in savings. As Democrats
> >> >>> > search for
> >> >>> > ways to offset the costs of their new agenda, reducing the $800
> >> >>> > billion tax
> >> >>> > loophole would be an excellent place to start.
> >> >>> >
> >> >>> > *Maya MacGuineas is the Director of the Fiscal Policy Program at
> >> >>> the New
> >> >>> > America Foundation.*
> >> >>> > __________________________________________________
> >> >>> > Use Rhodes22-list at rhodes22.org, Help? www.rhodes22.org/list
> >> >>> >
> >> >>>
> >> >>> __________________________________________________
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