The Rich actually are getting Richer...

[Baldy]

Semantics I guess, but loopholes to me are unintended consequences of certain provisions which are taken advantage of and subject to closing (amendment) upon realization by the Treasury/Congress. A prime example: credits claimed by paper industry for use of black liquor. That was not the intent nor was it anticiapted when the particular provision of the code (IRC §40) was passed. . Some smart tax attorneys and accountants in the paper industry exploited that hole in the legislation and Congress closed it in the healthcare bill.

Preferential treatment for capital gains and qualified dividends was the specific purpose of the particular legislation. Not sure how that is a "loophole".

You're right, its all semantics.

My purpose of the Buffett example was to emphasize the stupidity of taxing someone's income.
Punishing success is the epitome of idiocy.

[danefan]

Its not hypocrisy. He's not taking advantage of any "loopholes". He structures his personal finances in a way that the takes advantage of tax benefits specifically provided for people like him. Take away preferential tax treatment of capital gains and qualified dividends and Buffet's effective tax rate would go through the roof. That is what he is referring to and that is why his secretary's effective tax rate is much higher than his. His income is 99% dividends/capital gains and 1% salary. Her's is 99% salary and 1% dividends/capital gains.

Loopholes = mistakes or ommissions

Preferential capital gains and dividends treatment are not loopholes.

Interesting question (probably deserves a thread) should earnings from capital investments be taxed at ordinary rates. (or at least higher than at present). I have mixed thoughts on it and might would say yes if the top marginal rate was lower.

This preferential tax treatment is one of the biggest reasons the wealth gap is getting bigger and bigger in this country.

Differentiation in types of income is one of the great complexities in the current tax code. If income=income=income the code would be greatly simplified and would be much more fair, IMO.

[AZGrizFan]

You just described me. I got HAMMERED on my taxes this year. FUCKING HAMMERED.

Wahhhh................

And you still live a more comfortable life than the vast majority of people in the world.

And I worked my ass off to get here, and am in no mood to part with my money so some fat fuck can sit on his/her big fat ass and live off of my hard work.

[danefan]

Semantics I guess, but loopholes to me are unintended consequences of certain provisions which are taken advantage of and subject to closing (amendment) upon realization by the Treasury/Congress. A prime example: credits claimed by paper industry for use of black liquor. That was not the intent nor was it anticiapted when the particular provision of the code (IRC §40) was passed. . Some smart tax attorneys and accountants in the paper industry exploited that hole in the legislation and Congress closed it in the healthcare bill.

Preferential treatment for capital gains and qualified dividends was the specific purpose of the particular legislation. Not sure how that is a "loophole".

You're right, its all semantics.

My purpose of the Buffett example was to emphasize the stupidity of taxing someone's income.
Punishing success is the epitome of idiocy.

You characterize it as a punishment. I tend to look at it as a duty of living in a civilized society. But, I am a believer in a flat tax. The more you make the more you should pay, but the percentage of your income paid to the "dues" of living in the US should be the same % as the guy who lives on the other side of the tracks.

[danefan]

Wahhhh................

And you still live a more comfortable life than the vast majority of people in the world.

And I worked my ass off to get here, and am in no mood to part with my money so some fat fuck can sit on his/her big fat ass and live off of my hard work.

That's not necessarily a taxation problem. That's a spending problem, IMO, which our gov't undoutedly has right now. I guess they wouldn't need to tax as much if they didn't spend, but would you be all that upset about paying over the same amount of taxes if you felt they were spending the money more responsibly?

[AZGrizFan]

And I worked my ass off to get here, and am in no mood to part with my money so some fat fuck can sit on his/her big fat ass and live off of my hard work.

That's not necessarily a taxation problem. That's a spending problem, IMO, which our gov't undoutedly has right now. I guess they wouldn't need to tax as much if they didn't spend, but would you be all that upset about paying over the same amount of taxes if you felt they were spending the money more responsibly?

Nope. But we've got about as much chance of that happening as sending a manned mission to Mars in my lifetime (which, FYI, I feel would be a BETTER use of my money).

[AZGrizFan]

You're right, its all semantics.

My purpose of the Buffett example was to emphasize the stupidity of taxing someone's income.
Punishing success is the epitome of idiocy.

You characterize it as a punishment. I tend to look at it as a duty of living in a civilized society. But, I am a believer in a flat tax. The more you make the more you should pay, but the percentage of your income paid to the "dues" of living in the US should be the same % as the guy who lives on the other side of the tracks.

Agreed 1000000000%.

[DSUrocks07]

Yes. I forgot to add one thought to my post in that very realm. I don't know if it's by design (probably is), but even within that top bracket there is built-in inequity. Let's say you're a top 10%'er, but not in the elite top couple of percent. You are hammered by the tax code, but you don't have the unlimited resources to hire the accountants, attorneys, and money men to move your stash all over the world, hide it under exotic shelters, and so forth. You're so close to the glass ceiling you're tapping on it, and the 90% looking up at you can't tell you're not in there smoking cigars with Warren Buffett and Oprah, but they can still see you and they want you to pay up - and you do. That's the group that is rightfully angry: the almost elite. The angry old white men of CS.com.

Sounds about right. I don't make the money I used to and didn't make a large sum but about five years or so ( or at least large to me). A low six figure salary doesn't add up to what you think it would after paying $50,000 in fed taxes, $7000 in FiCA taxes, $15,000 in state tax and add on top it of the $40,000 in child support (I realize that ain't the federal government's fault). But add on the fact that I didn't get the dependant deductions after paying $40,000 in child support while the ex got earned income credit tax refund from the government (because child support isn't a taxable item) while receiving $40,000 in child support simply made me shake my head.

*smh*

Democracy at work...and I'm sure that there are plenty of people who agree with this "tax law".

[93henfan]

Sounds about right. I don't make the money I used to and didn't make a large sum but about five years or so ( or at least large to me). A low six figure salary doesn't add up to what you think it would after paying $50,000 in fed taxes, $7000 in FiCA taxes, $15,000 in state tax and add on top it of the $40,000 in child support (I realize that ain't the federal government's fault). But add on the fact that I didn't get the dependant deductions after paying $40,000 in child support while the ex got earned income credit tax refund from the government (because child support isn't a taxable item) while receiving $40,000 in child support simply made me shake my head.

*smh*

Democracy at work...and I'm sure that there are plenty of people who agree with this "tax law".

^
This is why I would declare an open marriage and build a wall down the center of my house before ever getting a divorce.

[oldsloguy]

And when has an increasing wealth gap eve led to anything good?

Thank you Reaganomics.

Calm down Kalm,

Pencil it out. A combination of illegal immigration and the mid-1960’s immigration reform which significantly lowered the bar for legal immigration meant that over the last 3 decades of 20th century most new immigrants had very low level skill sets and education. These people almost invariably compete with the bottom 20% of the native US population for employment. Today in CA over one-forth of the population is foreign born. So, just look at the numbers.

Pop. of CA =30 million
Number of immigrants = 0.25 * 30 million = 7.5 million
Bottom 20% of native population = (30-7.5) million * 0.2 = 4.5 million

So you can see the bottom 20% of the population is just swamped with job competition from migrants. In CA almost all private construction jobs, restaurant cooks, landscaping etc. are done by illegals.

These immigrants’ usually are good people, work hard, and are just trying to make a better life for themselves. We would probably be doing the same thing in their place. No one denies any of that! However, this does not repeal the law of supply and demand. Period.

These types of large scale migrations have occurred through out history, some with good results, some with bad. But, they have effects. For a particularly bad effect one only has to look back to Goths, Visigoths, Burgandys’ and Vandals.

I lived through Reaganomics. Before Reaganomics inflation was pushing 15% and unemployment over 12%. Hard money turned that around and caused the economy to boom for the next several decades. In a way this contributed to immigration since it created a great deal of growth and jobs that attracted the immigrants. BTW, if you will recall, although Reagan had long pushed for hard currency following Friedman, it was Carter that finally threw in the towel on the Phillips Curve and appointed a hard money FED chairman, Paul Volker. The rest is history!

[kalm]

And when has an increasing wealth gap eve led to anything good?

Thank you Reaganomics.

Calm down Kalm,

Pencil it out. A combination of illegal immigration and the mid-1960’s immigration reform which significantly lowered the bar for legal immigration meant that over the last 3 decades of 20th century most new immigrants had very low level skill sets and education. These people almost invariably compete with the bottom 20% of the native US population for employment. Today in CA over one-forth of the population is foreign born. So, just look at the numbers.

Pop. of CA =30 million
Number of immigrants = 0.25 * 30 million = 7.5 million
Bottom 20% of native population = (30-7.5) million * 0.2 = 4.5 million

So you can see the bottom 20% of the population is just swamped with job competition from migrants. In CA almost all private construction jobs, restaurant cooks, landscaping etc. are done by illegals.

These immigrants’ usually are good people, work hard, and are just trying to make a better life for themselves. We would probably be doing the same thing in their place. No one denies any of that! However, this does not repeal the law of supply and demand. Period.

These types of large scale migrations have occurred through out history, some with good results, some with bad. But, they have effects. For a particularly bad effect one only has to look back to Goths, Visigoths, Burgandys’ and Vandals.

I lived through Reaganomics. Before Reaganomics inflation was pushing 15% and unemployment over 12%. Hard money turned that around and caused the economy to boom for the next several decades. In a way this contributed to immigration since it created a great deal of growth and jobs that attracted the immigrants. BTW, if you will recall, although Reagan had long pushed for hard currency following Friedman, it was Carter that finally threw in the towel on the Phillips Curve and appointed a hard money FED chairman, Paul Volker. The rest is history!

Low taxes for the mega rich and corporations, deregulation of financial markets, privatization of the commons, massive deficit spending...

Your example of immigration is just further proof that supply side theory is a failure. The economy should be re-built from the bottom up through domestic manufacturing which leads to good paying jobs and a strong middle class.

We are still living through Reaganomics.

(But I liked what Volker did, and as always, I'm remaining Kalm.)

[travelinman67]

...The economy should be re-built from the bottom up through domestic manufacturing which leads to good paying jobs and a strong middle class.

Whew!!!

It took a while, but you finally got from A to B.

NOW...

...how do we re-stimulate domestic manufacturing.

Through high labor costs (unionization)?

Through reduced consumerism?

Through government controlled markets (social-engineering/allowing only production that creates so-called "green"products)?

Through isolationism (ie, resulting in higher consumer costs/shareholder losses)?

By throwing tax dollars back into the economy in an attempt to jump-start growth (which, in a trade imbalanced economy, in effect is shipping tax dollars overseas)?

Or by removing as many government controlled COGS factors to induce investors/industrialists to re-invest in domestic manufacturing (return profitabilty/competitiveness to American industry)?










(pm from dback to Kalm in 5-4-3-2....."Kalm! Don't answer him! It's a trap!")

[kalm]

...The economy should be re-built from the bottom up through domestic manufacturing which leads to good paying jobs and a strong middle class.

Whew!!!

It took a while, but you finally got from A to B.

NOW...

...how do we re-stimulate domestic manufacturing.

Through high labor costs (unionization)?

Through reduced consumerism?

Through government controlled markets (social-engineering/allowing only production that creates so-called "green"products)?

Through isolationism (ie, resulting in higher consumer costs/shareholder losses)?

By throwing tax dollars back into the economy in an attempt to jump-start growth (which, in a trade imbalanced economy, in effect is shipping tax dollars overseas)?

Or by removing as many government controlled COGS factors to induce investors/industrialists to re-invest in domestic manufacturing (return profitabilty/competitiveness to American industry)?










(pm from dback to Kalm in 5-4-3-2....."Kalm! Don't answer him! It's a trap!")

Kick out the illegal immigrants and illegal employers, reduce our military presence overseas, charge strong tariffs on all foreign goods that could be manufactured here.

In other words, protectionism/isolationism. Yes, the shareholders take a hit, but their earnings have been based on screwing foreign workers and foreign environments anyway. The shareholders will survive. The smart ones will invest in domestic production and green. And yes, consumer prices go up, but then, workers can afford more when they are creating real wealth through manufacturing rather than living off wal-mart wages.

Haven't received a pm from dback yet. What do you think he'll say?

[blueballs]

Somewhere along the way our culture has changed from one that honors achievement, productivity, education, innnovation, morality, family, spirituality to one that honors immorality, lack of achievement (don't confuse fame with accomplishment), lack of family, and offers excuses for non productive behavior.

Many conservatives feel like those who don't "do right" which is to say they have children out of wedlock, don't maximize educational opportunity, mismanage their finances, don't give 100% in their careers, engage in crime and substance abuse, etc. have developed a sense of entitlement and have absolutely no problem in using the government as an instrument of plunder to take money and resources from those to have "done right" to give with no strings attached- other than a vote for the correct politician- as a reward for their poor choices.

In many cases the worst among us are rewarded- not just through government entitlement- but by culture... look at all the reality shows, TMZ, tabloids, etc. People are becoming famous for achieving absolutely nothing and in many cases by thumbing their noses at what used to be commonly accepted societal norms.

The achievers have been demonized as ruthless, greedy, non-compassionate for protesting this when in fact the opposite is true; that it is those who are the non-achievers, abusers, criminals, drug addicts, slackers, etc. who are greedy, ruthless, non-compassionate for the desire to basically use the government to take what is not theirs and give to them for nothing other than a vote.

When you combine this new mentality with politicians who want "social justice" a very dangerous situation develops that bodes poorly for the future of our country. I used to think at my age (currently 50) I wouldn't live to see the consequences of this societal shift play out but now I am positive I will. The "american dream" as my dad and the greatest generation saw it has been replaced by the entitlement society which will eventually collapse upon itself- which BTW is exactly what our enemies want.

My rant isn't about GOP/Dem so I don't want to hear the partisan crap about, it is about a what is now becoming a prevailing attitude in our society from the ground up and is a ticking time bomb.

[mainejeff]

No, the poor are not getting lazier. Reagonomics are turning the country third world.

[native]

i.e. loopholes

Loopholes are exceptions....purposeful omissions if you will. Regarding taxes, loopholes are put there intentionally and definitely aren't 'mistakes'.

Semantics I guess, but loopholes to me are unintended consequences of certain provisions which are taken advantage of and subject to closing (amendment) upon realization by the Treasury/Congress. A prime example: credits claimed by paper industry for use of black liquor. That was not the intent nor was it anticiapted when the particular provision of the code (IRC §40) was passed. . Some smart tax attorneys and accountants in the paper industry exploited that hole in the legislation and Congress closed it in the healthcare bill.

Preferential treatment for capital gains and qualified dividends was the specific purpose of the particular legislation. Not sure how that is a "loophole".

Exemptions and specific deductions are not equal to loopholes in my book.

There are plenty of bad results from the "bad" loopholes, as you say danefan, but even the "good" exemptions often have bad unintended consequences. Your excellent post reflects just the tip of the iceberg of the massive unfairness, injustice, churn and inefficiencies we get from the entire state/federal income tax complex.

[mainejeff]

Republicans have embraced religion because they know that is the way to control much of the lower and middle classes. They have realized that many people will embrace religion to ease the pain and hopelessness of their financial situations which in turn helps the fat cats get richer and maintain control. Of course, the marriage of Big Business and religion also serves as the perfect one-two punch to win elections.

[AZGrizFan]

No, the poor are not getting lazier. Reagonomics are turning the country third world.

The poor in this country get a little bit lazier with each entitlement program that's invented. If you don't see taht then you two are beyond any hope.

[travelinman67]

Republicans have embraced religion because they know that is the way to control much of the lower and middle classes. They have realized that many people will embrace religion to ease the pain and hopelessness of their financial situations which in turn helps the fat cats get richer and maintain control. Of course, the marriage of Big Business and religion also serves as the perfect one-two punch to win elections.

So, the Dems use of entitlements ISN'T used to indebt the lower and middle class to Big Government/Liberal policies?






Spare me, Maojeff.

[kalm]

Republicans have embraced religion because they know that is the way to control much of the lower and middle classes. They have realized that many people will embrace religion to ease the pain and hopelessness of their financial situations which in turn helps the fat cats get richer and maintain control. Of course, the marriage of Big Business and religion also serves as the perfect one-two punch to win elections.

So, the Dems use of entitlements ISN'T used to indebt the lower and middle class to Big Government/Liberal policies?






Spare me, Maojeff.

Both sides rationalize their ideology and are equally ignorant when it comes to greed and unintended consequences.

[houndawg]

The poor in this country get a little bit lazier with each entitlement program that's invented. If you don't see taht then you two are beyond any hope.

Hark! A banker has arrived to tell us all about poor.

[AZGrizFan]

The poor in this country get a little bit lazier with each entitlement program that's invented. If you don't see taht then you two are beyond any hope.

Hark! A banker has arrived to tell us all about poor.

You're Exhibit A for my argument, Myron.

[JohnStOnge]

It depends on what those inflation-adjusted dollars buy, John. Costs go up too.

I think the whole point of putting the numbers in inflation adjusted dollars is to account for costs going up. The idea is that, in general, $10 as an inflation adjusted figure to express what 1975 dollars are in terms of 2007 dollars means that quantity has the same overall purchasing power as $10 in 2007 did. There are some things that have increased in price faster than inflation and some things that have increased in price slower than the rate of inflation. And there are some things that exist in 2007 that didn't exist in 2005. But I don't think there's any doubt that, if an indivdiual or group median (or average) income rose by 10% after accounting for inflation between 1975 and 2007 that individual or group had more overall purchasing power in 2007 than it had in 1975.

[kalm]

It depends on what those inflation-adjusted dollars buy, John. Costs go up too.

I think the whole point of putting the numbers in inflation adjusted dollars is to account for costs going up. The idea is that, in general, $10 as an inflation adjusted figure to express what 1975 dollars are in terms of 2007 dollars means that quantity has the same overall purchasing power as $10 in 2007 did. There are some things that have increased in price faster than inflation and some things that have increased in price slower than the rate of inflation. And there are some things that exist in 2007 that didn't exist in 2005. But I don't think there's any doubt that, if an indivdiual or group median (or average) income rose by 10% after accounting for inflation between 1975 and 2007 that individual or group had more overall purchasing power in 2007 than it had in 1975.

But as you note, it depends on the product, and certain products are far more important than others. Wages, adjusted for inflation have been basically stagnant since 1975, yet things like the cost of healthcare and college tuition which are important for sustaining a large and productive middle class have risen dramatically.

Regardless, the title of the thread is still accurate and the wealth gap is still rising. And as I've said before that's not a good thing for country as a whole.

[JohnStOnge]

History.

BTW, you can drop the class envy and just deserved riches memes. For one, I have very little reason for envy, and two monopolies and dynastic wealth destroy the notion of a self regulated free market.

Simply sayinig "History" is not an argument supporting the view that a wealth gap is necessarily bad. Suppose you have a community of 100 people where 80 people have a median income of $50,000 with a range of $15,000 to $85,000. The other 20 have a median income of $200,000 with a range of $165,000 to $235,000. The next year both groups do better. Adjusted for inflation, the 80 people have a median income of $60,000 with a range of $25,000 to $95,000. The other 20 did really well and now have a median income of $1,000,000 with a range of $500,000 to $10,000,000.

No question the group of 20 made more progress. But what is "bad" about that scenario? How can one possibly argue that the group of 80 is worse off than it was a year ago by virtue of the group of 20 making more progress than they did?

The argument about whether or not a self regulated free market can work does not really bear upon the argument about an income gap being bad per se. Monopolies have been illegal throughout the period we're talking about. Whatever trends in regulation there have been, the lower income group had more buying power at the end of the period than at the beginning. The fact that the upper end income group made more progress in terms of buying power than the bottom group did self-evidently did not make the lower income group worse off. Not if the estimates are reasonably accurate.