Friday, April 13, 2012

Taxes and Fairness

Today is Friday the 13th and I have just finished my tax return and mailed it in, 2 or 3 days early, or whatever. The deadline is not Titanic Day this year, but the 17th for some reason.

It occurs to me that I may have paid more taxes than a few multimillionaires might have paid. As long as they didn't cheat or break the law, why should I care? I KNOW I paid more federal taxes than about 50% of Americans, because about 50% of Americans pay no federal taxes at all.

This is not about somebody's idea of what "fair" means. It is about following the tax code and getting on with your life for the rest of the year. If it is not fair, then it is not the fault of the rich but of our congressional tax code authors and President Obama's tax code enforcers.

Some people speak of "tax avoidance" as if it were a dirty cheating thing; that people who pay a lot of taxes should pay even more. There's nothing illegal or wrong about avoiding taxes. All Americans have the legal right to arrange their financial affairs in such a manner as will allow them to pay the least tax. The government uses, and has always used, the federal tax code to direct its social agenda. No problem. If the government wants low-income housing built, it gives tax breaks to those willing to build low-income housing. If it wants to promote green energy, then it gives tax breaks to people who put those odd solar panels on their roof. If the government wants investors to search for natural gas deposits, it gives tax breaks for those who take those risks. If the government wants to subsidize mortgages for low-income people who shouldn't have mortgages at all, then it gives tax breaks to rich folks who invest (put their capital at risk) in mortgages and derivatives and bonds and maybe let them play the hedge fund game or artificially inflate the spot-price of crude oil. Cool. Always has it been thus. Those who don't do it, angrily call these things "tax loopholes." But they are angry at the wrong people.

"Tax evasion" on the other hand is a crime and should land the evader in prison. Tax evasion is cheating and lying. Tax evasion includes such things as saying you earned $12 last year when you really earned $2 million.

A lot of the non-wealthy in the USA (those who take in a lot of welfare money and other entitlement monies, but who don't pay any income taxes at all, per the above) think that the rich should pay even more taxes so (I assume) the non-producers and actual needy can receive a higher dole. I mean "entitlement". Of course. Beats the hell out of actually paying some taxes yourself, right? President Obama has made a political career out of playing the two against each other, taking donations from fat cat corporations while telling the tax recipients, his political base, that he is fighting for the "working man" (meaning them, even though they don't work) and promoting class warfare against the rich. Cool. That's the American way. At least it seems to be the NEW American way. Occupy Wall Street, right? After all, it is the fault of the people who educated themselves, worked hard, played by the government's tax rules, and got rich, who are at fault for YOU not educating yourself, working hard, following the tax rules, and getting rich. Who could argue with that logic?

In the U.S., the tax code (rules) for the federal income tax rates are written by Congress. It is possible that this is true in other countries as well; perhaps their Parliaments write the tax laws rather than, say, their Chancellor of the Exchequer.

If you don't like what rich people pay in taxes, or if you don't like the way the government directs the economy (by offering tax deductions in the tax code for for various things) then it seems to me the thing for you to do would be to attack Congress and the President to make tax code changes and enforcement standards, and stop bitching at the people who follow the legal tax code. Do YOU want to volunteer to pay taxes you don't owe? Neither do the rich.

If you think the rich should pay 60% off the top of everything they take in, then you should force Congress to change the tax code so that's what the law says. Don't bitch at the producers or go occupy some little park near Wall Street. Personally, I don't get offended when I see some investor pay 15% capital gains tax instead of 100%. I get offended when I see the unemployed wink on camera and say, "I've never worked in my life, and I don't intend to start working now."

How offended would you be if someone suggested you get down off the wagon and maybe helped the rest of us pull it?


  1. Since I pay taxes, does that mean I can or can't bitch. Not entirely clear from a somewhat rambling diatribe.

    Is our government responsible for the fact those with the most money can come out relatively unscathed by taxes? Yes. Is the government responsible for the fact that, despite the lessons of the past century, rich people can rig the market for their own benefit and the pain of millions of others? Yes. That when wealthy people gamble, they aren't the ones suffering from the results. Yes.

    And it's a problem worth complaining about, because our system (same government) allows it's politicians to be shamelessly and legally bribed to preserve those interests. And have rigged the system so that the people, who are supposed to be represented, can't fix it, almost short of revolution.

    And, despite your use of him numerous times as if he had instigated this little situation all alone, this is much older than Obama.

    Just sayin'.

  2. You really like that word a lot, don't you? Diatribe. You use it whenever you can't quite rebut the premise of a post with which you disagree so very much. Demean the messenger.

    Again I invite you to look the word up in the dictionary. I do have strong opinions. My arguments are forceful and often not PC. But never bitter. Which is what a diatribe requires.

    Why don't you attack the content instead of the style? Is it because you hate the law-abiding rich so much? Don't you just HATE it when they are allowed to keep their money when there are so MANY people who are more DESERVING of it? Wouldn't YOU like to be the one in charge of the redistribution?

    I would like to see the smart, hard-working wealthy keep MORE of the money they've been smart enough and hard working enough to generate. I would like to see the capital gains tax lowered to ZERO! Done away with. In fact I would like the Republicans to abolish the income tax completely tomorrow. No. Tonight. Let only people who buy things pay taxes.

    I mention Obama, not because all the previous bastards haven't done just as badly, but simply because he is currently in charge of making things better and he only blames instead of acts. You think I liked Bush? This has been going on forever and Obama is only the current in a long line of soul-sellers who won't put their country first.

    I'll tell you what, though. If the Republicans get control of the Senate this fall, Obama is going to have to start working with people, like it or not. Compromise. Ouch. Else he will spend his second term as a do-nothing President.

    You know in your heart it is congress' fault and not the rich that the tax code is not correct or fair. And that is the same thing as admitting I am right.

    Try to come up with something more helpful and responsive instead of attacking a messenger whose message you can't bear.

  3. PS - Yes you can bitch. Anyone can bitch if they pay taxes or if they don't pay taxes. Be my guest. Unless you are one of those mindless Teabaggers whose opinions are so stupid. Then just be quiet.

  4. Adullamite? Hang the rich? Then what would you do to survive? Please give this further thought. :)

  5. I do agree that we can't complain that people can take advantage of tax loopholes to avoid paying much tax. It's up to the government to sort that out, and they should.

    Just one thing I'd point out. I don't believe all those rich tax avoiders all know how to avoid taxes. I feel sure that they employ smart accountants and lawyers to set it all up for them. Of course, you could say they are putting money back into the economy by paying those people.

    I wouldn't be surprised, though, if there are many people who could take advantage of similar loopholes but don't earn enough to make it worthwhile paying someone to find out how and/or to set it up.

    1. The rich can afford accountants and financial planners. This is not unfair, this using of planners. And the poor who can't do the loopholes (the legal opportunities afforded in the tax code)? Well, the poor don't pay taxes anyway. Usually it is the loophole complainers who choose not to be bothered with arranging their financial affairs to not owe as much tax. I don't know about the British tax system. Probably the rich should pay a lot more taxes there. Thank you for being so agreeable.

      I wouldn't say the rich are putting money back into the economy by paying tax advisors. I would say they are putting money back into the economy by paying for the entitlements of poor people who buy food and drink with it. Especially drink.

      I am so astounded that you made a comment on this controversial subject that I am not able to adequately respond to your logical points. That's why I cam bouncing from wall to wall. :)

    2. Just so you have some perspective because I know you think we're all lefties, in France they are about to hold presidential elections and one of the candidates is suggesting a 100% tax on earnings over 300,000 euros. Yes, take ALL you earn over that amount.

      So you see, we could be worse.

    3. That will be a way to get all the French rich to leave France. I wonder who will pay this idiot politician's followers then.

  6. Merriam Webster on line has three definitions for diatribe, only one requiring bitterness:

    1 archaic : a prolonged discourse
    2: a bitter and abusive speech or piece of writing
    3: ironic or satirical criticism

    I was thinking 3; however, I think one could make an argument that your discourse sounded bitter (as in, again from MW, "distasteful or distressing to the mind : galling") but I would not consider it abusive. So, I'll stick with 3, which is how I meant it.

    Note also, that, of the 160 words I used, six at most attacked the tone of the piece ("Not entirely clear" and "somewhat rambling diatribe"). The rest of the 154 addressed content.

    And, ironically, I largely agreed with you. Again. Even if I didn't sound like it (with the exception of thinking it was all Obama's doing alone). I sometimes wonder if you ever read past the first sentence or two of my comments.

    1. If your first sentence contains the word "diatribe" then I tend to get closed-minded. Especially if it is about a post as well thought out and helpful as this one was.

    2. I forgive you. And Obama is not alone in blame. All of them are.

  7. Replies
    1. If you were to keep quiet long enough you might find that they have. :)

  8. We are partially in agreement. I despise the spongers who feel they can just take handouts without ever contributing toward the funds they abuse.
    I believe it makes sense to pay no more than the taxes you really must pay. To have advice as to what limits and exemptions you can claim makes sense.

    I also believe in simple, fair, transparent taxes, a thing I'm pretty sure I'll never see in my lifetime. Here in Britain, anyway, it's almost impossible to figure out what I end up paying in taxes, I mean, I pay a chunk out of my wages before I even get them, that's called P.A.Y.E., (pay as you earn), but on top of that I pay National Insurance, which is mandatory, and therefore a tax, but on top of that, pretty much everything I buy has a form of purchase tax, called v.a.t. levied on top of it. V.A.T.. is a complex minefield, payable on goods and services, but at several different rates, food and some other things are exempt, except for some foods which are not...
    I pay tax to have my car on the highway, I pay tax on the fuel I buy for it, and I pay tax on top of tax for that fuel... I mean, I pay a heap of my wage as tax already, then the fuel has a tax called fuel-duty upon it, then the fuel+fuel-duty has a tax called v.a.t. on top of it too.
    I do feel I pay my share.
    It pisses me off no end that my government squanders money in myriad ways that I have no say in. Overseas aid to countries that are so corrupt my tax money goes into rich men's swiss bank accounts. India and Pakistan get large lumps of aid from my government, yet both can afford nuclear missile programmes. As far as I'm concerned, I don't see why I'm expected to buy rice for their populations whilst their governments are buying titanium for missile airframes. If they've got the money for that, then they should use it instead of mine.

    The good side? Well, I get a safety net. We all do. It's not perfect, but if things go really bad, I'll have food, a roof over my head, and a small income.

    Yes, people exploit it. And I would like to see the loopholes closed, just as I'd like to see the exploiters closed out at the other end of the spectrum. Rich people who set up dummy offshore corporations, in order to legally avoid paying taxes. There are bad people at both ends, and one billionaire gaming the system is as abhorrent to me as thousands of poor folk doing the same.

    Your "wealth creators", let's be honest, are not always the machine that drives prosperity for all. They're concerned about their wealth, not yours or mine. If screwing us makes them richer, they'll do it in the blink of an eye. If they can close down a manufacturing plant which keeps a couple of towns alive, and get a grant to build in Poland, or Cambodia, then manufacture there for 20% of the cost, they'll do it in a heartbeat.

    Your philosophy seems to laud and admire the greedy, who'll trample over the backs of others to achieve their goal.
    And above a certain point, the rich tend to gamble other people's moneys and livelihoods, with little risk to their own. Financial sector bonuses are obscene. Especially when companies that make losses still pay multi-million bonuses to the people who've lost other people's livelihoods, "too big to fail" and other nonsense.

    I'm all for investment, and shared venture, but I'm not for bands of armed pirates and asset-strippers.
    G.M., for instance is "rationalising" its global business. Part of that includes closing a U.K. plant and opening an eastern european one. Yes, to G.M. it's a good idea, because eastern europeans will work for turnips. You can imagine the people in Britain, who'll be unemployed, won't feel the same way.
    Still, the good old shareholders, the creators of wealth, will approve. And, twenty years from now, when everything we buy comes from slave labour in china, and chinese billionaires own all those tall buildings in your U.S. cities, I wonder how good the deals of today will look then?

  9. I watched the video, and I agree with you about the people in it. Sadly, I'd admit that I'd like to take all those people on a long trip to their own little island or wilderness, and say, there you are. there's shelter if you build it, wells if you dig them, and food if you cultivate it. Goodbye.

    But I'm sure even you don't imagine that all people on welfare are the same as these drug riddled vermin? And you're aware that it was carefully edited to give only the most extreme message?

    I suspect Joe the doorman of being a mob enforcer.

    1. No, even I don't imagine all welfare recipients are scammers. As for the video, the whole sarcastic point is that it was made by Nancy Pelosi's daughter. Nancy Pelosi, former Speaker of the House, who did the lion's share of getting our country into this financial mess.

      Was it Joe the doorman? I thought it was Moe. Moe is better. :)

  10. Wealth creators are the man and woman at the corner store who have 4 employees. The widow lady down the street who owns a laundry and dry cleaning store who employs 4 people full time and 2 people part time plus two delivery drivers. These are the people I know, not the stock brokers with bonuses. Maybe I should call them job creators instead of wealth creators. Anyway, they both have tax accountants. Most small businesses do. The accountant picks up the records every two weeks and does their taxes at the end of the year and tells them when to buy new fixtures and trucks. Like that. It is not dishonorable to arrange your affairs (rich or not so rich) to pay the lowest allowable tax. That's all I was saying. Maybe I am taking offense at the word "loophole" as if it were something sneaky. Anyway, it is still up to the government to write tax law and enforce tax law. Obama can stick his class warfare. He can get to work and cut off the bankers at the knees instead of yapping and whining about it.

  11. Okay. We agree on more points then. Small to medium size business, where everybody knows everybody else's name, where there's a sense of responsibility, of common cause, indeed, of cause and effect.
    And arranging your affairs, your purchasing and capital assets, your borrowing, your charitable giving, your whole cashflow to minimise the tax you pay, that's just good sense.
    And it's not a loophole.
    It's a matter of making yourself aware of the legislation regarding tax and not doing things that give you extra liabilities.
    If I could figure out a way to pay less of my earnings to the government, believe me, I would.

    As for your president, well, as I've said before, your electoral mechanism makes it virtually impossible for you to get as president any person who should be trusted with the job. Nobody's going to reach the White-House without compromising their ideals to the multi-billion funders, to the people who can make or ruin you with a twitch of their financial muscles.
    Obama might be a disappointment, but hey, look on the bright side, so far he doesn't seem too keen to invade anywhere new.



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