On Federal Taxation in the United States

Jul 1, 2014 0:32:49 GMT pjohns1873 said:

No, my position does not at all demand the existence of a "welfare state."

Your fundamental view appears to be that government welfare acts as a mere supplement to private charities; whereas I would argue that it has gone a very long way toward replacing private charities, thereby resulting in little (if any) net increase in total help to the truly deserving.  That is because major donors can easily see that much of their tax money is going toward welfare assistance; so they tend to be inclined to donate much less to private charities. 

In truth the need for government welfare assistance was because private charities were grossly incapable of meeting the needs of those living in poverty.

I'm personally a supporter of Northwest Harvest, the key private food bank for Washington, and I've been down at the local distribution center. It doesn't have enough food to even provide for those that come in and it has to ration what it hands out. No one could survive on the food that they can obtain from Northwest Harvest and it barely makes a dent in what a person actually requires. That is not to imply it's not a worthy charity but it can't even come close to meeting the needs of the hungry that walk through the doors. SNAP provides about $80 billion in food assistance to 40 million American households as I recall and that is far more than all of the charitable giving for food banks in America.

By way of comparison the top US charities raise about $160 billion/yr while the federal government alone spends about $500 billion/yr plus about an equal amount from the state welfare programs for a total financial burden of well over $1 trillion/yr and we're still not meeting the needs of those living in poverty and that doesn't include spending on medical services for the poor.

I can agree with the fact that large contributors might believe that they don't have to give more, even though they often have tens or even hundreds of millions of dollars they could easily give to charity, because of our government welfare programs. They simply say, "Why should I give more?" but that is an excuse and not a reason. I seriously doubt that they would give more even if we had no government welfare because they didn't give more historically before we had government welfare. History has shown that the wealthy are far more concerned about increasing their personal wealth to far beyond what they could ever conceivably need than they are about helping out those in need.

Of course I don't mind those that advocate for private charities but the fact remains that the "financial burden" is still being placed upon the American People one way or the other. If we require over $1 trillion/yr just to provide food and housing assistance it really doesn't matter where that money comes from because it's still over $1 trillion/yr that's required. History has shown that private charities will not provide for the need so claiming that they will is a false argument and it still doesn't address the problem which is the "need for assistance" caused by poverty at all.  

Ultimately, based upon the Republican economic policies, the "welfare state" still exists regardless of whether that financial need is met by the government, private charity, or a combination of both (which is what we have today).

Our goal has to be to reduce the "need" as opposed to simply trying to figure out who's going to provide the financial assistance (welfare) that is required.          

Jul 2, 2014 0:46:22 GMT pjohns1873 said:

I think you are distorting my point--whether intentionally or otherwise.

I never suggested that major donors to private charities will simply not give "more" because of government-sponsored welfare assistance; but that they are very likely to make the calculated decision to give less, thereby resulting in no net increase in revenues to the truly needy. 

And to me, it really does matter whether the assistance is mandatory (i.e. created by government's confiscation of individuals' money, and the redistribution thereof) or is voluntary (i.e. through private charities).  This is a matter of principle.     

I can certainly understand the principle as well because I truly wish that private charities could met the need. The problem is that there are other princples at play as well.

 As a compassionate and moral person I can't accept letting people go hungry, be forced into homelessness, or go without medical services they need either. What's the point of a country built on poverty when so many have so much while others go hungry, are homeless, or can't see a doctor when they need one? It's not like our nation doesn't produce enough wealth so that no one needs to go hungry, live on the streets, or not have medical services access. Throughout my lifetime I've paid a lot of taxes and the one place I've never resented those taxes being spent is to help other Americans.  "America First" is a great expression and that means placing Americans First over all other considerations and welfare assistance, public or private, is about putting Americans first.   

The next principle that bothers me is that enterprises can afford to provide adequate compensation and still earn a profit but far too many don't. The owners don't seem to give a damn about the welfare of their own employees and instead rely on me caring about them. Why is it that the primary place they cut expenditures is in employee compensation? They argue it's so they can compete but I know better than that. Why should any enterprise rely on the American taxpayer or private charities to provide for the needs of their employees? That just isn't right by any standard. How "sick" was it when last year around Thanksgiving one Walmart store had a food drive for their own employees so that they would have enough food to eat? That was sort of the straw that broke the camel's back for me. If Walmart has to raise it's retail prices by 5% so that it can pay a living wage then it should have done that on it's own years ago. I really won't notice that at the checkout stand and you wouldn't either.

So yes, I understand the "principles" but there isn't just one but instead several that must all be balanced.

Jul 2, 2014 23:14:25 GMT pjohns1873 said:

That is because, once the government becomes involved, private giving to charities is almost certain to diminish substantially.

So the fundamental question is this:  Why would you support a system that does not result in greater total assistance to the truly needy than existed in pre-War on Poverty days?

And I do find rather irritating the moral preening of the left:  Why, its belief in the efficacy of The Welfare State is evidence that it is just more "compassionate" than the rest of us are.  Or so it claims, anyway. 

I've pondered this a little and I don't believe that there is a difference between the compassion of the left and the compassion of the right. I believe there is general compassion of the American People that they express through their charitable giving.

With that said I believe we all give to charities based upon our compassion for others and that our giving to charities is not affected by the fact that government provides welfare assistance.

I believe that the claim that donations to charities are substantially diminished because of government welfare assistance is false. I don't have any studies to support this (perhaps to your satisfaction) but I know it has never diminished what I give to charities. Would you state that you give less to charities because of government welfare programs?

I would be surprised if you say that you give less to charities because of government provide assistance because I don't believe your personal commitment to help others is affected by our government's actions. So if I don't give less and you don't give less (my assumption) then how can we possibly assume that others give less?

Jul 3, 2014 17:56:04 GMT pjohns1873 said:

I would imagine that major donors--which is to say, truly wealthy people (whose donations dwarf what the rest of Americans may give, just as the investments of major stockholders dwarf the combined investments in GM by the various owners of 401(k) plans, IRAs, and through direct stock ownership)--would give substantially less, due to government's assumed role as The Benefactor State. 

Like you, I have no statistical evidence with which to prove this.  But it just seems to me like common sense.   

I don't think that's the case at all with the super-wealthy. They have so much more wealth than they could ever reasonably spend the money has little real meaning for them. Even their profits from investments are little more than score-keeping in a real "Monopoly" game because they simply don't need the money. They know there is a huge need out there that isn't being met by government and I simply don't think they stop being caring and compassionate anymore than you or I do. I've known many relatively wealthy people and they have always been very giving but then again that's probably because I hang around with very giving people. 

So I guess I really don't know but I just don't think human nature changes for the very wealthy. If they're giving people they will give to help others without ever thinking about what the government may or may not be doing. I don't think that caring people really consider what the government is doing.

Jul 7, 2014 23:18:58 GMT pjohns1873 said:

Well, I cannot argue with you on the basis of statistical evidence, as I really have none to offer. I have just heard reports that many of the uber-rich do give less to charity, because of the existence of the modern Benefactor State.

I do, however, agree with your assessment that it amounts to little more than "score-keeping" for those with vast fortunes--more than they could ever spend in a lifetime (unless they plan on buying a small island or two).

Nonetheless, this is precisely what animates many of the uber-wealthy, in my view:  They simply wish to acquire more and more--perhaps due to a Type A personality--irrespective of the fact that, beyond a certain point, more money will do very little (if anything at all) to enhance their respective lifestyles. 

We probably don't know really whether they would give more or not. Perhaps some say they give less as an excuse but, in truth, would just find another excuse for not giving if we didn't have a benefactor state. The anecdotal evidence I have is limited. Bill Gates gives about $500 million annually to charity but that is primarily related to education charities and Mitt Romney gave about 20% of his income in 2011 but that was to the church and I don't actually consider a church to be a charitable organization. Both are in the top 0.1% (1/1000th) income group with Gates at the top and Romney near the bottom of that group.

I cracked up reading your island purchasing comment. Having been checking tropical island real estate prices for the last several years even purchasing a couple islands wouldn't even set them back financially. Prices for entire islands run between a couple million to perhaps $30 million and would only average out to be about a $1 million/yr expenditure for them. It's not like they'd be buying new islands every year so it's a long term "purchase" for accounting purposes.

Personally I don't think the uber-wealthy even know how much they're worth and ultimately don't really care. They do keep track but only based upon success/failure and not in actual dollars. I was watching a documentary on JP Morgan and his involvement with Edison and "electricity" and for Morgan it was "all about winning" when it came to providing electricity for the nation (to replace Rockefeller's kerosene energy empire that was lighting America). When "DC" current promoted by Edison lost out to "AC" that Tesla (a former Edison employee) and Westinghouse were promoting won out then Morgan just dumped Edison and used economic coercion to "steal" AC current from Westinghouse. It was never really about the "money" but instead it was all about winning and the power.

From my "tax" perspective what bothered me when I did my research is that the top 0.1% average only paying about 17% in federal taxation and because their investments are very rarely involved in "primary investments" (i.e. direct stock issues from corporations that provide capitalization to enterprise) they do virtually nothing to help the economy. Secondary investments do not increased the GDP or create jobs so why the hell do we tax them at less than 1/2 the tax rates of workers? That simply didn't make any sense to me. If Bill Gates sells $50 million in stock to Mitt Romney from his personal stock portfolio is does zero for the US economy because it produces no wealth and creates no jobs. Gates could net $25 million on that sale but it did zero for Microsoft or any other business. I was just never able to rationalize the Capital Gains tax rates because the arguments for them are basically false.

Jul 9, 2014 0:15:22 GMT pjohns1873 said:

In answer to your question concerning why some income-producing mechanisms (e.g. investments) are taxed at a lower rate than earned income is taxed:  I would suggest that it probably is not amenable to an explanation rooted in "fairness."  Rather, it is much more likely that the large-investor class is able to pressure politicians in a way that working-class Americans are unable to do, since the former may threaten (tacitly, if not directly) to withhold funding for the politicians' upcoming campaigns, if they do not vote the "right" way. 

I remember watching a similar documentary recently about the (somewhat unfriendly) rivalry between Edison and Westinghouse (was it on the History Channel?), and the way that alternating current superseded direct current, as the former was simply more efficient.   

What? Our politicians are being "bought" by wealthy investers? You've got to be kidding me!!! <<<Facetious exclamation of surprise>>>

Here's the question that really comes up. It's the politicians that spread the BS wide and deep that investors fund enterprises creating jobs when, in fact, the vast majority of investments for the expansion of enterprise come from the profits generated by consumption so why do so many voter believe them? I discuss taxes with a lot of "tea party conservatives" and almost all of them support the Capital Gains tax using the argument that external investment funds enterprise. Are they really so uninformed that they're swollowing the politicians BS hook, line, and sinker? 

In my tax proposal I eliminate the "capital gains" tax loophole which reduces the tax rate by 25% (from 39.6% to 29% based upon 2013) to balance the budget. That isn't the only thing I do but it does contribute significantly to the reason the income tax rates decline under my proposal. Rand Paul, a tea party favorite, made a tax proposal similar to mine but retained the Capital Gains tax loophole. Did he sell-out to the wealthy investors as well? Has he no integrity either?  

I have been fairly good at putting forward the arguments to convince individuals on political forums that the Capital Gains tax loophole is unfair and based upon political BS as opposed to providing an actual economic benefit but I haven't seen a single politician come out on the national stage and point out exactly what we're boht basically saying. I didn't even hear it coming from the far left when they complained of unfair taxation and it is the most unfair tax loophole in the United States.

BTW Did you realize that by eliminating the Capital Gains tax loophole it also closes the off-shore tax havens that exist because of treaty agreements that treat "capital gains" differently than earned income? I don't have an overall statistic but suspect that trillions of dollars in personal income are being exempted from any taxation because the income is funneled through off-shore paper corporations in tax havens. Taxing that income doesn't even show up in my calculations because it's unaccounted for income in many cases from what I've read.  

Jul 10, 2014 0:10:47 GMT pjohns1873 said:

I am not especially outraged by offshore "tax havens," since I am very much in favor of aggressive tax avoidance (which is not to be confused with tax evasion--which is a felony). 

I believe it is fair--more importantly, that it is accurate--to assert that investors fund enterprises, thereby creating jobs.  (In the current uncertain environment--and what with ObamaCare and other mischevous regulations hanging over the heads of entrepreneurs--it should be altogether unsurprising that so many businesspeople are just sitting on their cash, rather than expanding or starting new businesses.) 

And I am not at all certain that Rand Paul has sold out.  (I should probably note here that I am not a "Paulbot"--as regarding either Rand or his father, Ron--but I do generally respect Rand Paul's integrity.  I sometimes disagree with his policy positions; especially what was known in the 1930s as isolationism, and which today's disciples of these 1930s-era isolationists prefer to term, both euphemistically and somewhat verbosely, "non-interventionism"--but I do consider Rand Paul to be that rarest of political creatures:  a conviction politician.)

In theory, a 25 percent (flat) marginal tax rate sounds pretty good.  But it is those in a higher tax bracket who would actually benefit from it.  For those of us who are currently in the 10 percent tax bracket (and who do not itemize deductions), it would amount to substantially more in federal taxes.   

As we're both aware there a special tax loopholes designed exclusively for the very wealthy that provide them with huge tax savings not pragmatically available for anyone else. Off shore tax havens based upon the Capital Gains tax in one of those allowing them to have hundreds of billions of dollars of untaxed income. No, it's not tax evasion because it's legal but it does result in the wealthy having a lower tax burden relative to income than the average taxpayer and that's just not right.

While I don't have an exact breaddown of types of investements we know that only direct stock issuance by a corporation (e.g. an IPO) results in any of the proceeds from a stock sale going to the enterprise. Those account for fewer than 1% of all stock sales. I would hazard the guess that this accounts for less then 0.1% of all investments and over 99% of all enterprise expansion (that creates jobs) is funded by the enterprise from profits (including borrowing against future projected profits). We also know that no matter how much is invested without consumption (sales of good or services) the enterprise ultimately fails so the "investment" is fundamentally lost creating no net new jobs that can only be supported by consumption. Basically the belief that external investments fund enterprise and create jobs is  myth.

There is a difference between isolationism and non-interventionism (military). No one today advocates isolationism.

I stated a 25% tax reduction from 39.6% to 29% based upon 2013 while fully funding all federal expenditures. It was not a 25% flat tax rate and the tax rate cannot be fixed if we want to prevent deficit spending. The single tax rate is set by the authorized expenditures.