oh wait nope, this seems like exactly what any reasonable person would do.
I don't understand your issue here.
Any reasonable person would continue to collect and use foodstamps after winning the lottery? If the government mistakenly sends me food stamps or a welfare check in the mail, should I just keep and use them (and not tell the government to stop sending them)?
Im comfortable asserting that if you're in the top 1% of either income or wealth then you're rich. I just don't think there are many people that have high wrealth without high income, and I don't think there's any need for OWS to alter their rhetoric to separate the two.
I think that's interesting, because there are a lot more high income people than there are high wealth people, and if OWS was more focused on wealth disparity than income disparity, you might get more sympathy from members of your hated 99%.
Uhhhhh... I'm gonna go ahead and say that there are exactly as many high income people as there are high wealth people. I'm pretty confident in that assertion.
If you're looking at simple percentiles, then yes clearly there are exactly as many people with wealth in the 99th percentile as there are people with income in the 99th percentile, because that's what "percentile" means.
But that's not really a good way of looking at it.
How much income do you have to make to be in the 1%? $250k-$500k/yr depending on what estimates you're looking at.
How much wealth? About $19m.
Think about that for a minute. If you're in the top 1% of income ($500k/yr), and you're putting away 80% of your income into savings every single year ($400k/yr), and if 100% of your savings was untaxed, it would take you 48 years to break into the top 1% of net worth.
It's entirely possible for somebody who was born poor, got into a good college, and got a decent professional position to end up in (or close to) the 1% of income just from their salary.
It takes a bolt of financial lightning to make it to the 1% of net worth.
So, these numbers don't work out at all.
If you have $19 million, and you put it into low-yield bonds, you're making over $500,000 a year. And the investments that people with $19,000,000 have access to are way better than low-yield bonds. So, this only works if you don't consider capital gains as income. Which is stupid.
oh wait nope, this seems like exactly what any reasonable person would do.
I don't understand your issue here.
He assumes the left hate her for being rich and the right hates her for being a moocher by collected food stamps.
I saw on CNN that she lost her benefits, btw.
So in a year or so when she burns through that money she can just get back on them. I don't understand why we allow the lottery to exist, it doesn't fund the shit it says it funds and it just destroys people's lives.
The companies who make the lotteries get very wealthy from the ticket buyers. The higher the prize the more people buy it, so basically it's the company who really wins the lotto.
Yeah, no. the investments that people are sitting on can be realized into capital gains but until then they are just assets sitting around appreciating or depreciating in value. You only consider capital gains as income when the gains are realized. At least, for individuals.
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spacekungfumanPoor and minority-filledRegistered User, __BANNED USERSregular
Yeah, no. the investments that people are sitting on can be realized into capital gains but until then they are just assets sitting around appreciating or depreciating in value. You only consider capital gains as income when the gains are realized. At least, for individuals.
Exactly. You can't count appreciation in income, unless you want to start claiming that everyone's yearly income should also account for the increase in the value of their home and other assets.
Edit: Here is a very interesting article on defining the "rich"
It is pretty much a poor tax, and also, it gives a lot of money to the schools and creates jobs because people enjoy playing it. Pretty much the same reason casinos exist, except instead of making some people rich, it gives back to the government/state.
not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
Yeah, no. the investments that people are sitting on can be realized into capital gains but until then they are just assets sitting around appreciating or depreciating in value. You only consider capital gains as income when the gains are realized. At least, for individuals.
Exactly. You can't count appreciation in income, unless you want to start claiming that everyone's yearly income should also account for the increase in the value of their home and other assets.
Edit: Here is a very interesting article on defining the "rich"
There should be some happy middle ground between "oh, my house went up in value by $10,000 this year, that's $10,000 in income," versus "oh, the value of my stocks went up by $15 million this year, but that's not income..."
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AManFromEarthLet's get to twerk!The King in the SwampRegistered Userregular
oh wait nope, this seems like exactly what any reasonable person would do.
I don't understand your issue here.
Any reasonable person would continue to collect and use foodstamps after winning the lottery? If the government mistakenly sends me food stamps or a welfare check in the mail, should I just keep and use them (and not tell the government to stop sending them)?
What's the law on food stamps? I feel like its on an income and not a total wealth level.
Now I think that if you can afford to not take food stamps, you shouldn't. But if there's no law against taking them, 500k doesn't really last all that long, and it's not like the woman was going to get 500k a year until she died, then while maybe there's a moral argument there, there's no legal one.
I don't know what the rules governing food stamps are though.
This is also one incident out of millions, so if I start seeing WELFARE QUEEN spreading her tentacles across the political world again I'm going to lose my mind.
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spacekungfumanPoor and minority-filledRegistered User, __BANNED USERSregular
Yeah, no. the investments that people are sitting on can be realized into capital gains but until then they are just assets sitting around appreciating or depreciating in value. You only consider capital gains as income when the gains are realized. At least, for individuals.
Exactly. You can't count appreciation in income, unless you want to start claiming that everyone's yearly income should also account for the increase in the value of their home and other assets.
Edit: Here is a very interesting article on defining the "rich"
There should be some happy middle ground between "oh, my house went up in value by $10,000 this year, that's $10,000 in income," versus "oh, the value of my stocks went up by $15 million this year, but that's not income..."
The reason there is no middle ground is that by including unrealized appreciation in income, you force people to sell their assets to cover the taxes on them. Since one of the goals of any well designed tax system to is avoid influencing behavior (unless you are intending to do so with a credit, which is a whole other topic) marking assets to market is generally viewed as a bad idea. It would also create huge volatility in stock prices, as people are forced to sell off their stock in any year that it goes up to pay their taxes on the income.
Yeah, no. the investments that people are sitting on can be realized into capital gains but until then they are just assets sitting around appreciating or depreciating in value. You only consider capital gains as income when the gains are realized. At least, for individuals.
Exactly. You can't count appreciation in income, unless you want to start claiming that everyone's yearly income should also account for the increase in the value of their home and other assets.
Edit: Here is a very interesting article on defining the "rich"
There should be some happy middle ground between "oh, my house went up in value by $10,000 this year, that's $10,000 in income," versus "oh, the value of my stocks went up by $15 million this year, but that's not income..."
Kind of reiterating what SKFM said, but anyways, the increase in value will eventually get taxed when the stocks are sold. If they're never sold (ever), there's no reason to tax the appreciation as there's no benefit to just having a piece of paper. You can't buy groceries or a car with those stocks.
Sir Landshark on
Please consider the environment before printing this post.
So, this only works if you don't consider capital gains as income. Which is stupid.
You're right. It was a sloppy post. But I started with the remarkably charitable presumptions that your income is tax-free and you save 80% of it, as well as using the higher estimate of 99th percentile income, and not considering any kind of student loan debt. I figured people would cut me a little slack about not including compound interest.
My post was not meant to be rigorous, but illustrative. It takes decades to translate high income into high wealth.
We could run through any number of real-world scenarios that would demonstrate similar principles.
Feral on
every person who doesn't like an acquired taste always seems to think everyone who likes it is faking it. it should be an official fallacy.
Yeah, no. the investments that people are sitting on can be realized into capital gains but until then they are just assets sitting around appreciating or depreciating in value. You only consider capital gains as income when the gains are realized. At least, for individuals.
Exactly. You can't count appreciation in income, unless you want to start claiming that everyone's yearly income should also account for the increase in the value of their home and other assets.
Edit: Here is a very interesting article on defining the "rich"
There should be some happy middle ground between "oh, my house went up in value by $10,000 this year, that's $10,000 in income," versus "oh, the value of my stocks went up by $15 million this year, but that's not income..."
The reason there is no middle ground is that by including unrealized appreciation in income, you force people to sell their assets to cover the taxes on them. Since one of the goals of any well designed tax system to is avoid influencing behavior (unless you are intending to do so with a credit, which is a whole other topic) marking assets to market is generally viewed as a bad idea. It would also create huge volatility in stock prices, as people are forced to sell off their stock in any year that it goes up to pay their taxes on the income.
According to whom...?
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AManFromEarthLet's get to twerk!The King in the SwampRegistered Userregular
edited March 2012
There are several taxes which were designed to influence behavior. There's a reason cigarettes cost so much. And booze in Scotland, thank-you-very-much-SNfuckingP.
AManFromEarth on
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spacekungfumanPoor and minority-filledRegistered User, __BANNED USERSregular
Yeah, no. the investments that people are sitting on can be realized into capital gains but until then they are just assets sitting around appreciating or depreciating in value. You only consider capital gains as income when the gains are realized. At least, for individuals.
Exactly. You can't count appreciation in income, unless you want to start claiming that everyone's yearly income should also account for the increase in the value of their home and other assets.
Edit: Here is a very interesting article on defining the "rich"
There should be some happy middle ground between "oh, my house went up in value by $10,000 this year, that's $10,000 in income," versus "oh, the value of my stocks went up by $15 million this year, but that's not income..."
The reason there is no middle ground is that by including unrealized appreciation in income, you force people to sell their assets to cover the taxes on them. Since one of the goals of any well designed tax system to is avoid influencing behavior (unless you are intending to do so with a credit, which is a whole other topic) marking assets to market is generally viewed as a bad idea. It would also create huge volatility in stock prices, as people are forced to sell off their stock in any year that it goes up to pay their taxes on the income.
According to whom...?
The entire tax policy community. The idea that in designing a tax system, we generally seek to raise revenue without distorting behavioris such a basic and widely accepted principle of tax policy that I can't really provide a definitive cite. You can just literally pick up any mainstream textbook on tax policy, or talk to any tax professor at a law school and they will tell you that this is an accepted, bedrock principle of tax policy.
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spacekungfumanPoor and minority-filledRegistered User, __BANNED USERSregular
There are several taxes which were designed to influence behavior. There's a reason cigarettes cost so much. And booze in Scotland, thank-you-very-much-SNfuckingP.
These types of taxes are generally one offs that are instituted because (1) legislatures are scared of transparency, and people have more trouble determing the effect of a tax provision than a general law or (2) because budgetary rules can make passing social reforms through the tax system easier as a mechanical matter. If you were designing a tax on cigarettes that was designed to raise revenue (not a social reform masquerading as a tax) then you would only tax to the point where you would not expect a decrease in consumption.
Edit: To be clear, if this is the line of argument you want to pursue in endorsing marking assets to market, then you are saying that as a policy matter, we don't want to raise extra money off of stock gains, we just want people to have to sell their stocks once they go up. What would be the policy basis for designing our tax system to encourage more frequent sales of stock?
spacekungfuman on
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AManFromEarthLet's get to twerk!The King in the SwampRegistered Userregular
There are several taxes which were designed to influence behavior. There's a reason cigarettes cost so much. And booze in Scotland, thank-you-very-much-SNfuckingP.
These types of taxes are generally one offs that are instituted because (1) legislatures are scared of transparency, and people have more trouble determing the effect of a tax provision than a general law or (2) because budgetary rules can make passing social reforms through the tax system easier as a mechanical matter. If you were designing a tax on cigarettes that was designed to raise revenue (not a social reform masquerading as a tax) then you would only tax to the point where you would not expect a decrease in consumption.
Edit: To be clear, if this is the line of argument you want to pursue in endorsing marking assets to market, then you are saying that as a policy matter, we don't want to raise extra money off of stock gains, we just want people to have to sell their stocks once they go up. What would be the policy basis for designing our tax system to encourage more frequent sales of stock?
And yet the stated purpose of these types of laws is to change behavior. Same thing with proposed increases in gas taxes back in 07. I'm not defending the practice, but it exists in the political discourse.
There are several taxes which were designed to influence behavior. There's a reason cigarettes cost so much. And booze in Scotland, thank-you-very-much-SNfuckingP.
These types of taxes are generally one offs that are instituted because (1) legislatures are scared of transparency, and people have more trouble determing the effect of a tax provision than a general law or (2) because budgetary rules can make passing social reforms through the tax system easier as a mechanical matter. If you were designing a tax on cigarettes that was designed to raise revenue (not a social reform masquerading as a tax) then you would only tax to the point where you would not expect a decrease in consumption.
Edit: To be clear, if this is the line of argument you want to pursue in endorsing marking assets to market, then you are saying that as a policy matter, we don't want to raise extra money off of stock gains, we just want people to have to sell their stocks once they go up. What would be the policy basis for designing our tax system to encourage more frequent sales of stock?
Because right now, we have people just sitting on tremendous piles of cash reserves, that they could be using to actually do things, but aren't.
I'm betting a .5% tax on wealth would change that.
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AManFromEarthLet's get to twerk!The King in the SwampRegistered Userregular
You know, I don't even really want to raise taxes all that much. I just want the Bush Tax Cuts to go to hell. Let's do that, then we can figure out the rest.
There are several taxes which were designed to influence behavior. There's a reason cigarettes cost so much. And booze in Scotland, thank-you-very-much-SNfuckingP.
These types of taxes are generally one offs that are instituted because (1) legislatures are scared of transparency, and people have more trouble determing the effect of a tax provision than a general law or (2) because budgetary rules can make passing social reforms through the tax system easier as a mechanical matter. If you were designing a tax on cigarettes that was designed to raise revenue (not a social reform masquerading as a tax) then you would only tax to the point where you would not expect a decrease in consumption.
Edit: To be clear, if this is the line of argument you want to pursue in endorsing marking assets to market, then you are saying that as a policy matter, we don't want to raise extra money off of stock gains, we just want people to have to sell their stocks once they go up. What would be the policy basis for designing our tax system to encourage more frequent sales of stock?
And yet the stated purpose of these types of laws is to change behavior. Same thing with proposed increases in gas taxes back in 07. I'm not defending the practice, but it exists in the political discourse.
They are really more properly thought of as fines or penalties on behavior than as true taxes. A tax designed to curb behaviour is by definition self defeating, since over time the revenue it raises will decrease if it is doing its job. Just because we cram something into the tax code for procedural reasons does not mean that we should really think of it as a tax. In fact, one of the issues that was debated heavily in the lower court cases on healthcare reform was whether the individual mandate (which is enforced through the tax code) is really a tax.
There are several taxes which were designed to influence behavior. There's a reason cigarettes cost so much. And booze in Scotland, thank-you-very-much-SNfuckingP.
These types of taxes are generally one offs that are instituted because (1) legislatures are scared of transparency, and people have more trouble determing the effect of a tax provision than a general law or (2) because budgetary rules can make passing social reforms through the tax system easier as a mechanical matter. If you were designing a tax on cigarettes that was designed to raise revenue (not a social reform masquerading as a tax) then you would only tax to the point where you would not expect a decrease in consumption.
Edit: To be clear, if this is the line of argument you want to pursue in endorsing marking assets to market, then you are saying that as a policy matter, we don't want to raise extra money off of stock gains, we just want people to have to sell their stocks once they go up. What would be the policy basis for designing our tax system to encourage more frequent sales of stock?
Because right now, we have people just sitting on tremendous piles of cash reserves, that they could be using to actually do things, but aren't.
I'm betting a .5% tax on wealth would change that.
Or it could force people to sell their houses or family businesses. I just don't see a justification for making the profound step of moving to a system in which we tax unrealized gains. It is so distortionary of behavior, and does not even guarantee your intended outcome, since any capital investment people who are currently invested in equities made would also be subject to the tax. Is your intention to force people to buy new capital assets and then sell them every year?
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Sir Landsharkresting shark faceRegistered Userregular
I have my doubts that they have that money in bags stuffed under the CEOs mattress, so even as cash it's flowing through the economy through banks or other "cash" assets.
Please consider the environment before printing this post.
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AManFromEarthLet's get to twerk!The King in the SwampRegistered Userregular
There are several taxes which were designed to influence behavior. There's a reason cigarettes cost so much. And booze in Scotland, thank-you-very-much-SNfuckingP.
These types of taxes are generally one offs that are instituted because (1) legislatures are scared of transparency, and people have more trouble determing the effect of a tax provision than a general law or (2) because budgetary rules can make passing social reforms through the tax system easier as a mechanical matter. If you were designing a tax on cigarettes that was designed to raise revenue (not a social reform masquerading as a tax) then you would only tax to the point where you would not expect a decrease in consumption.
Edit: To be clear, if this is the line of argument you want to pursue in endorsing marking assets to market, then you are saying that as a policy matter, we don't want to raise extra money off of stock gains, we just want people to have to sell their stocks once they go up. What would be the policy basis for designing our tax system to encourage more frequent sales of stock?
And yet the stated purpose of these types of laws is to change behavior. Same thing with proposed increases in gas taxes back in 07. I'm not defending the practice, but it exists in the political discourse.
They are really more properly thought of as fines or penalties on behavior than as true taxes. A tax designed to curb behaviour is by definition self defeating, since over time the revenue it raises will decrease if it is doing its job. Just because we cram something into the tax code for procedural reasons does not mean that we should really think of it as a tax. In fact, one of the issues that was debated heavily in the lower court cases on healthcare reform was whether the individual mandate (which is enforced through the tax code) is really a tax.
Uh, that seems like a fairly insane way to view cigarette taxes. It's an added fee to a product levied by the government to be used by the government. Does not a tax by any other name not charge as sweet? Honestly, I don't think most people (and that includes lawmakers) can be bothered by what the financial sector thinks of these things, they are in fact taxes.
I mean, it can be viewed as a fine or penalty until the cows come home, but it is in actuality a tax.
On the ACA thing, by this definition it wouldn't be a tax because you're not paying the government, you're paying an insurance company.
There are several taxes which were designed to influence behavior. There's a reason cigarettes cost so much. And booze in Scotland, thank-you-very-much-SNfuckingP.
These types of taxes are generally one offs that are instituted because (1) legislatures are scared of transparency, and people have more trouble determing the effect of a tax provision than a general law or (2) because budgetary rules can make passing social reforms through the tax system easier as a mechanical matter. If you were designing a tax on cigarettes that was designed to raise revenue (not a social reform masquerading as a tax) then you would only tax to the point where you would not expect a decrease in consumption.
Edit: To be clear, if this is the line of argument you want to pursue in endorsing marking assets to market, then you are saying that as a policy matter, we don't want to raise extra money off of stock gains, we just want people to have to sell their stocks once they go up. What would be the policy basis for designing our tax system to encourage more frequent sales of stock?
Because right now, we have people just sitting on tremendous piles of cash reserves, that they could be using to actually do things, but aren't.
I'm betting a .5% tax on wealth would change that.
Or it could force people to sell their houses or family businesses. I just don't see a justification for making the profound step of moving to a system in which we tax unrealized gains. It is so distortionary of behavior, and does not even guarantee your intended outcome, since any capital investment people who are currently invested in equities made would also be subject to the tax. Is your intention to force people to buy new capital assets and then sell them every year?
You could have a "standard deduction" there, a certain amount of wealth excluded from the tax. Hell, make it a standard deduction of two million dollars. That would protect most small businesses, even.
See, this wouldn't be a tax, either; it would be a fine. So, it would even follow your rules of good tax policy.
There are several taxes which were designed to influence behavior. There's a reason cigarettes cost so much. And booze in Scotland, thank-you-very-much-SNfuckingP.
These types of taxes are generally one offs that are instituted because (1) legislatures are scared of transparency, and people have more trouble determing the effect of a tax provision than a general law or (2) because budgetary rules can make passing social reforms through the tax system easier as a mechanical matter. If you were designing a tax on cigarettes that was designed to raise revenue (not a social reform masquerading as a tax) then you would only tax to the point where you would not expect a decrease in consumption.
Edit: To be clear, if this is the line of argument you want to pursue in endorsing marking assets to market, then you are saying that as a policy matter, we don't want to raise extra money off of stock gains, we just want people to have to sell their stocks once they go up. What would be the policy basis for designing our tax system to encourage more frequent sales of stock?
And yet the stated purpose of these types of laws is to change behavior. Same thing with proposed increases in gas taxes back in 07. I'm not defending the practice, but it exists in the political discourse.
They are really more properly thought of as fines or penalties on behavior than as true taxes. A tax designed to curb behaviour is by definition self defeating, since over time the revenue it raises will decrease if it is doing its job. Just because we cram something into the tax code for procedural reasons does not mean that we should really think of it as a tax. In fact, one of the issues that was debated heavily in the lower court cases on healthcare reform was whether the individual mandate (which is enforced through the tax code) is really a tax.
Uh, that seems like a fairly insane way to view cigarette taxes. It's an added fee to a product levied by the government to be used by the government. Does not a tax by any other name not charge as sweet? Honestly, I don't think most people (and that includes lawmakers) can be bothered by what the financial sector thinks of these things, they are in fact taxes.
I mean, it can be viewed as a fine or penalty until the cows come home, but it is in actuality a tax.
On the ACA thing, by this definition it wouldn't be a tax because you're not paying the government, you're paying an insurance company.
Taxes are designed to raise revenue. If during the lifetime of the tax, through the operation of the tax alone people would abandon the behavior subject to the tax causing revenue raised by the tax to drop, then it is an extremely poorly designed tax. It may be a well designed civil monetary penalty, but not a well designed tax. If the legislature was being honest, they would just say "We think smoking is bad and want you to stop, so we are assessing a fine against everyone who smokes in the amount of $x per pack."
If you do not buy insurance, then, unless you meet an income test, you have to pay the government, not the insurance companies. This is a tax designed to curb a behavior (being uninsured) not to raise revenue.
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spacekungfumanPoor and minority-filledRegistered User, __BANNED USERSregular
There are several taxes which were designed to influence behavior. There's a reason cigarettes cost so much. And booze in Scotland, thank-you-very-much-SNfuckingP.
These types of taxes are generally one offs that are instituted because (1) legislatures are scared of transparency, and people have more trouble determing the effect of a tax provision than a general law or (2) because budgetary rules can make passing social reforms through the tax system easier as a mechanical matter. If you were designing a tax on cigarettes that was designed to raise revenue (not a social reform masquerading as a tax) then you would only tax to the point where you would not expect a decrease in consumption.
Edit: To be clear, if this is the line of argument you want to pursue in endorsing marking assets to market, then you are saying that as a policy matter, we don't want to raise extra money off of stock gains, we just want people to have to sell their stocks once they go up. What would be the policy basis for designing our tax system to encourage more frequent sales of stock?
Because right now, we have people just sitting on tremendous piles of cash reserves, that they could be using to actually do things, but aren't.
I'm betting a .5% tax on wealth would change that.
Or it could force people to sell their houses or family businesses. I just don't see a justification for making the profound step of moving to a system in which we tax unrealized gains. It is so distortionary of behavior, and does not even guarantee your intended outcome, since any capital investment people who are currently invested in equities made would also be subject to the tax. Is your intention to force people to buy new capital assets and then sell them every year?
You could have a "standard deduction" there, a certain amount of wealth excluded from the tax. Hell, make it a standard deduction of two million dollars. That would protect most small businesses, even.
See, this wouldn't be a tax, either; it would be a fine. So, it would even follow your rules of good tax policy.
To be clear, you want to fine people for having more than $2 million? To what end? Making people stop having more than $2 million? What is the policy rational here?
There are several taxes which were designed to influence behavior. There's a reason cigarettes cost so much. And booze in Scotland, thank-you-very-much-SNfuckingP.
These types of taxes are generally one offs that are instituted because (1) legislatures are scared of transparency, and people have more trouble determing the effect of a tax provision than a general law or (2) because budgetary rules can make passing social reforms through the tax system easier as a mechanical matter. If you were designing a tax on cigarettes that was designed to raise revenue (not a social reform masquerading as a tax) then you would only tax to the point where you would not expect a decrease in consumption.
Edit: To be clear, if this is the line of argument you want to pursue in endorsing marking assets to market, then you are saying that as a policy matter, we don't want to raise extra money off of stock gains, we just want people to have to sell their stocks once they go up. What would be the policy basis for designing our tax system to encourage more frequent sales of stock?
Because right now, we have people just sitting on tremendous piles of cash reserves, that they could be using to actually do things, but aren't.
I'm betting a .5% tax on wealth would change that.
Or it could force people to sell their houses or family businesses. I just don't see a justification for making the profound step of moving to a system in which we tax unrealized gains. It is so distortionary of behavior, and does not even guarantee your intended outcome, since any capital investment people who are currently invested in equities made would also be subject to the tax. Is your intention to force people to buy new capital assets and then sell them every year?
You could have a "standard deduction" there, a certain amount of wealth excluded from the tax. Hell, make it a standard deduction of two million dollars. That would protect most small businesses, even.
See, this wouldn't be a tax, either; it would be a fine. So, it would even follow your rules of good tax policy.
To be clear, you want to fine people for having more than $2 million?
There are several taxes which were designed to influence behavior. There's a reason cigarettes cost so much. And booze in Scotland, thank-you-very-much-SNfuckingP.
These types of taxes are generally one offs that are instituted because (1) legislatures are scared of transparency, and people have more trouble determing the effect of a tax provision than a general law or (2) because budgetary rules can make passing social reforms through the tax system easier as a mechanical matter. If you were designing a tax on cigarettes that was designed to raise revenue (not a social reform masquerading as a tax) then you would only tax to the point where you would not expect a decrease in consumption.
I agree with this. You can't rely on a vice tax as a form of revenue because a vice tax is self-extinguishing. If it works, it suppresses the very behavior that is taxed.
It may be feasible to rely on such a tax in the short term as a form of social influence. For instance, tax gasoline, and then take the gas taxes and turn it into subsidies or tax writeoffs for energy efficient cars. But you have to terminate the tax writeoffs before you reach a tipping point where the tax no longer pays for the progressive policy, which can be politically problematic. You'd be sunsetting a tax writeoff for an emerging technology (or behavior) just as the writeoff gets popular. That's not going to make you very popular.
That said, I don't think we give enough respect in general to the use of taxes as soft influences - reducing certain behaviors that are fine in small amounts but bad in large amounts. For instance, instead of a smoking ban in bars, I'd be okay with a smoking tax on bars. Just enough to ensure that there's a mix of smoking and nonsmoking bars in an area. We already do things like this through permits.
Feral on
every person who doesn't like an acquired taste always seems to think everyone who likes it is faking it. it should be an official fallacy.
The entire tax policy community. The idea that in designing a tax system, we generally seek to raise revenue without distorting behavioris such a basic and widely accepted principle of tax policy that I can't really provide a definitive cite. You can just literally pick up any mainstream textbook on tax policy, or talk to any tax professor at a law school and they will tell you that this is an accepted, bedrock principle of tax policy.
Maybe it isn't now, but it probably should. At this point I think we need to look at tax policy as a direct redistributive mechanism. We need some form of system that prevents excessive capital/resource accumulation in the hands of small groups of individuals or corporate oligarchies. Nothing overly draconian but significant changes to tax policy to provide strong disincentives for hoarding resources (and not using them) as well as to prevent unsustainable methods of driving up profits (such as cutting/stagnating worker wages/compensation, or polluting excessively, or shopping for cooperative foreign governments with weak labor laws).
Considering excise taxes tend to operate on things like alcohol/tobacco which form compulsive individual behaviors and companies are considerably more rational I think using taxes as a stick rather than a carrot for motivating businesses would actually be a great idea. Because outside of operating to motivate the private sector, taxes structured that way would still provide needed revenue to fund government projects even if the private sector didn't respond. So it seems like it'd be a win-win when combined with direct spending measures funded from those new taxes which could be used to jump-start the economy.
If the best you can come up with against someone who's patently ignorant is to yell back at him, "Yeah? Well there's BOOKS, and they say you're WRONG!"
Then honestly you're not coming out of this looking great either.
Uh, that seems like a fairly insane way to view cigarette taxes. It's an added fee to a product levied by the government to be used by the government. Does not a tax by any other name not charge as sweet? Honestly, I don't think most people (and that includes lawmakers) can be bothered by what the financial sector thinks of these things, they are in fact taxes
Nope. Spaceman is exactly right on the money on this one.
You can have vice taxes, but you have to recognize that they serve a different purpose and function differently from revenue-raising taxes, and they operate (like spaceman says) more like fines.
Feral on
every person who doesn't like an acquired taste always seems to think everyone who likes it is faking it. it should be an official fallacy.
the "no true scotch man" fallacy.
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SixCaches Tweets in the mainframe cyberhexRegistered Userregular
Yeah, no. the investments that people are sitting on can be realized into capital gains but until then they are just assets sitting around appreciating or depreciating in value. You only consider capital gains as income when the gains are realized. At least, for individuals.
Exactly. You can't count appreciation in income, unless you want to start claiming that everyone's yearly income should also account for the increase in the value of their home and other assets.
Edit: Here is a very interesting article on defining the "rich"
There should be some happy middle ground between "oh, my house went up in value by $10,000 this year, that's $10,000 in income," versus "oh, the value of my stocks went up by $15 million this year, but that's not income..."
Kind of reiterating what SKFM said, but anyways, the increase in value will eventually get taxed when the stocks are sold. If they're never sold (ever), there's no reason to tax the appreciation as there's no benefit to just having a piece of paper. You can't buy groceries or a car with those stocks.
Except you can. You can use unsold stock as collateral to borrow against, effectively using it as untaxed income. Steve Jobs is famous for this:
There are several taxes which were designed to influence behavior. There's a reason cigarettes cost so much. And booze in Scotland, thank-you-very-much-SNfuckingP.
These types of taxes are generally one offs that are instituted because (1) legislatures are scared of transparency, and people have more trouble determing the effect of a tax provision than a general law or (2) because budgetary rules can make passing social reforms through the tax system easier as a mechanical matter. If you were designing a tax on cigarettes that was designed to raise revenue (not a social reform masquerading as a tax) then you would only tax to the point where you would not expect a decrease in consumption.
Edit: To be clear, if this is the line of argument you want to pursue in endorsing marking assets to market, then you are saying that as a policy matter, we don't want to raise extra money off of stock gains, we just want people to have to sell their stocks once they go up. What would be the policy basis for designing our tax system to encourage more frequent sales of stock?
And yet the stated purpose of these types of laws is to change behavior. Same thing with proposed increases in gas taxes back in 07. I'm not defending the practice, but it exists in the political discourse.
They are really more properly thought of as fines or penalties on behavior than as true taxes. A tax designed to curb behaviour is by definition self defeating, since over time the revenue it raises will decrease if it is doing its job. Just because we cram something into the tax code for procedural reasons does not mean that we should really think of it as a tax. In fact, one of the issues that was debated heavily in the lower court cases on healthcare reform was whether the individual mandate (which is enforced through the tax code) is really a tax.
Uh, that seems like a fairly insane way to view cigarette taxes. It's an added fee to a product levied by the government to be used by the government. Does not a tax by any other name not charge as sweet? Honestly, I don't think most people (and that includes lawmakers) can be bothered by what the financial sector thinks of these things, they are in fact taxes.
I mean, it can be viewed as a fine or penalty until the cows come home, but it is in actuality a tax.
On the ACA thing, by this definition it wouldn't be a tax because you're not paying the government, you're paying an insurance company.
Taxes are designed to raise revenue. If during the lifetime of the tax, through the operation of the tax alone people would abandon the behavior subject to the tax causing revenue raised by the tax to drop, then it is an extremely poorly designed tax. It may be a well designed civil monetary penalty, but not a well designed tax. If the legislature was being honest, they would just say "We think smoking is bad and want you to stop, so we are assessing a fine against everyone who smokes in the amount of $x per pack."
If you do not buy insurance, then, unless you meet an income test, you have to pay the government, not the insurance companies. This is a tax designed to curb a behavior (being uninsured) not to raise revenue.
So then you admit that yes, some taxes are designed to change behavior? Because that was my only point. We seem to be arguing with the same facts here.
Yeah, no. the investments that people are sitting on can be realized into capital gains but until then they are just assets sitting around appreciating or depreciating in value. You only consider capital gains as income when the gains are realized. At least, for individuals.
Exactly. You can't count appreciation in income, unless you want to start claiming that everyone's yearly income should also account for the increase in the value of their home and other assets.
Edit: Here is a very interesting article on defining the "rich"
There should be some happy middle ground between "oh, my house went up in value by $10,000 this year, that's $10,000 in income," versus "oh, the value of my stocks went up by $15 million this year, but that's not income..."
Kind of reiterating what SKFM said, but anyways, the increase in value will eventually get taxed when the stocks are sold. If they're never sold (ever), there's no reason to tax the appreciation as there's no benefit to just having a piece of paper. You can't buy groceries or a car with those stocks.
Except you can. You can use unsold stock as collateral to borrow against, effectively using it as untaxed income. Steve Jobs is famous for this:
Nope. Spaceman is exactly right on the money on this one.
You can have vice taxes, but you have to recognize that they serve a different purpose and function differently from revenue-raising taxes, and they operate (like spaceman says) more like fines.
Why can't you combine the two? A Vice-taxe on corporate behaviors that do not result in them paying workers more or hiring more workers? If you could write the law in a way so as to say that companies cannot raise their fees to cover the taxes and need to do certain things (such as say, raising worker pay consumerate with profit growth) then use that money to pay for government programs which would pay people good wages? If companies change behavior the tax does extinguish itself but the program it paid for was meant to cover the lack of the private sector providing adequate compensation and work-opportunities so the program self-extinguishing wouldn't seem at least in theory to be a tragedy if that were the case.
If the best you can come up with against someone who's patently ignorant is to yell back at him, "Yeah? Well there's BOOKS, and they say you're WRONG!"
Then honestly you're not coming out of this looking great either.
That said, I don't think we give enough respect in general to the use of taxes as soft influences - reducing certain behaviors that are fine in small amounts but bad in large amounts. For instance, instead of a smoking ban in bars, I'd be okay with a smoking tax on bars. Just enough to ensure that there's a mix of smoking and nonsmoking bars in an area. We already do things like this through permits.
There was a study done a long-ass time ago about smoking bans in bars, and what they found was that if there are smoking and non-smoking bars, no one will go to the non-smoking bars. However, if all bars are non-smoking, more people go out to bars overall.
It's a weird thing, probably affected primarily by the fact that people who go to bars go with their friends, mostly, and there's usually at least one person who smokes in a group of friends.
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AManFromEarthLet's get to twerk!The King in the SwampRegistered Userregular
edited March 2012
How'd we get on the topic of vice taxes anyway?
I'll concede that they act as fees, but that doesn't really change the fact that they are taxes. They may not be good taxes or the way taxes should work, but they still exist.
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Any reasonable person would continue to collect and use foodstamps after winning the lottery? If the government mistakenly sends me food stamps or a welfare check in the mail, should I just keep and use them (and not tell the government to stop sending them)?
If you have $19 million, and you put it into low-yield bonds, you're making over $500,000 a year. And the investments that people with $19,000,000 have access to are way better than low-yield bonds. So, this only works if you don't consider capital gains as income. Which is stupid.
The companies who make the lotteries get very wealthy from the ticket buyers. The higher the prize the more people buy it, so basically it's the company who really wins the lotto.
Exactly. You can't count appreciation in income, unless you want to start claiming that everyone's yearly income should also account for the increase in the value of their home and other assets.
Edit: Here is a very interesting article on defining the "rich"
http://economix.blogs.nytimes.com/2011/12/13/who-counts-as-rich-continued/
What's the law on food stamps? I feel like its on an income and not a total wealth level.
Now I think that if you can afford to not take food stamps, you shouldn't. But if there's no law against taking them, 500k doesn't really last all that long, and it's not like the woman was going to get 500k a year until she died, then while maybe there's a moral argument there, there's no legal one.
I don't know what the rules governing food stamps are though.
This is also one incident out of millions, so if I start seeing WELFARE QUEEN spreading her tentacles across the political world again I'm going to lose my mind.
The reason there is no middle ground is that by including unrealized appreciation in income, you force people to sell their assets to cover the taxes on them. Since one of the goals of any well designed tax system to is avoid influencing behavior (unless you are intending to do so with a credit, which is a whole other topic) marking assets to market is generally viewed as a bad idea. It would also create huge volatility in stock prices, as people are forced to sell off their stock in any year that it goes up to pay their taxes on the income.
muahahaah
Kind of reiterating what SKFM said, but anyways, the increase in value will eventually get taxed when the stocks are sold. If they're never sold (ever), there's no reason to tax the appreciation as there's no benefit to just having a piece of paper. You can't buy groceries or a car with those stocks.
You're right. It was a sloppy post. But I started with the remarkably charitable presumptions that your income is tax-free and you save 80% of it, as well as using the higher estimate of 99th percentile income, and not considering any kind of student loan debt. I figured people would cut me a little slack about not including compound interest.
My post was not meant to be rigorous, but illustrative. It takes decades to translate high income into high wealth.
We could run through any number of real-world scenarios that would demonstrate similar principles.
the "no true scotch man" fallacy.
The entire tax policy community. The idea that in designing a tax system, we generally seek to raise revenue without distorting behavioris such a basic and widely accepted principle of tax policy that I can't really provide a definitive cite. You can just literally pick up any mainstream textbook on tax policy, or talk to any tax professor at a law school and they will tell you that this is an accepted, bedrock principle of tax policy.
These types of taxes are generally one offs that are instituted because (1) legislatures are scared of transparency, and people have more trouble determing the effect of a tax provision than a general law or (2) because budgetary rules can make passing social reforms through the tax system easier as a mechanical matter. If you were designing a tax on cigarettes that was designed to raise revenue (not a social reform masquerading as a tax) then you would only tax to the point where you would not expect a decrease in consumption.
Edit: To be clear, if this is the line of argument you want to pursue in endorsing marking assets to market, then you are saying that as a policy matter, we don't want to raise extra money off of stock gains, we just want people to have to sell their stocks once they go up. What would be the policy basis for designing our tax system to encourage more frequent sales of stock?
And yet the stated purpose of these types of laws is to change behavior. Same thing with proposed increases in gas taxes back in 07. I'm not defending the practice, but it exists in the political discourse.
I'm betting a .5% tax on wealth would change that.
that's dumb unless you're getting a better rate
They are really more properly thought of as fines or penalties on behavior than as true taxes. A tax designed to curb behaviour is by definition self defeating, since over time the revenue it raises will decrease if it is doing its job. Just because we cram something into the tax code for procedural reasons does not mean that we should really think of it as a tax. In fact, one of the issues that was debated heavily in the lower court cases on healthcare reform was whether the individual mandate (which is enforced through the tax code) is really a tax.
Or it could force people to sell their houses or family businesses. I just don't see a justification for making the profound step of moving to a system in which we tax unrealized gains. It is so distortionary of behavior, and does not even guarantee your intended outcome, since any capital investment people who are currently invested in equities made would also be subject to the tax. Is your intention to force people to buy new capital assets and then sell them every year?
Because corporations are people.
I have my doubts that they have that money in bags stuffed under the CEOs mattress, so even as cash it's flowing through the economy through banks or other "cash" assets.
Uh, that seems like a fairly insane way to view cigarette taxes. It's an added fee to a product levied by the government to be used by the government. Does not a tax by any other name not charge as sweet? Honestly, I don't think most people (and that includes lawmakers) can be bothered by what the financial sector thinks of these things, they are in fact taxes.
I mean, it can be viewed as a fine or penalty until the cows come home, but it is in actuality a tax.
On the ACA thing, by this definition it wouldn't be a tax because you're not paying the government, you're paying an insurance company.
See, this wouldn't be a tax, either; it would be a fine. So, it would even follow your rules of good tax policy.
also that's pretty much punishing companies for not being heavily in debt, because that's how wealth is calculated. assets - liabilities = net wealth
Taxes are designed to raise revenue. If during the lifetime of the tax, through the operation of the tax alone people would abandon the behavior subject to the tax causing revenue raised by the tax to drop, then it is an extremely poorly designed tax. It may be a well designed civil monetary penalty, but not a well designed tax. If the legislature was being honest, they would just say "We think smoking is bad and want you to stop, so we are assessing a fine against everyone who smokes in the amount of $x per pack."
If you do not buy insurance, then, unless you meet an income test, you have to pay the government, not the insurance companies. This is a tax designed to curb a behavior (being uninsured) not to raise revenue.
To be clear, you want to fine people for having more than $2 million? To what end? Making people stop having more than $2 million? What is the policy rational here?
I agree with this. You can't rely on a vice tax as a form of revenue because a vice tax is self-extinguishing. If it works, it suppresses the very behavior that is taxed.
It may be feasible to rely on such a tax in the short term as a form of social influence. For instance, tax gasoline, and then take the gas taxes and turn it into subsidies or tax writeoffs for energy efficient cars. But you have to terminate the tax writeoffs before you reach a tipping point where the tax no longer pays for the progressive policy, which can be politically problematic. You'd be sunsetting a tax writeoff for an emerging technology (or behavior) just as the writeoff gets popular. That's not going to make you very popular.
That said, I don't think we give enough respect in general to the use of taxes as soft influences - reducing certain behaviors that are fine in small amounts but bad in large amounts. For instance, instead of a smoking ban in bars, I'd be okay with a smoking tax on bars. Just enough to ensure that there's a mix of smoking and nonsmoking bars in an area. We already do things like this through permits.
the "no true scotch man" fallacy.
Check it out.
http://www.state.nj.us/treasury/taxation/pdf/other_forms/misc/10lf5.pdf
Maybe it isn't now, but it probably should. At this point I think we need to look at tax policy as a direct redistributive mechanism. We need some form of system that prevents excessive capital/resource accumulation in the hands of small groups of individuals or corporate oligarchies. Nothing overly draconian but significant changes to tax policy to provide strong disincentives for hoarding resources (and not using them) as well as to prevent unsustainable methods of driving up profits (such as cutting/stagnating worker wages/compensation, or polluting excessively, or shopping for cooperative foreign governments with weak labor laws).
Considering excise taxes tend to operate on things like alcohol/tobacco which form compulsive individual behaviors and companies are considerably more rational I think using taxes as a stick rather than a carrot for motivating businesses would actually be a great idea. Because outside of operating to motivate the private sector, taxes structured that way would still provide needed revenue to fund government projects even if the private sector didn't respond. So it seems like it'd be a win-win when combined with direct spending measures funded from those new taxes which could be used to jump-start the economy.
Nope. Spaceman is exactly right on the money on this one.
You can have vice taxes, but you have to recognize that they serve a different purpose and function differently from revenue-raising taxes, and they operate (like spaceman says) more like fines.
the "no true scotch man" fallacy.
Except you can. You can use unsold stock as collateral to borrow against, effectively using it as untaxed income. Steve Jobs is famous for this:
http://www.nytimes.com/2012/02/08/opinion/the-zuckerberg-tax.html
So then you admit that yes, some taxes are designed to change behavior? Because that was my only point. We seem to be arguing with the same facts here.
Why can't you combine the two? A Vice-taxe on corporate behaviors that do not result in them paying workers more or hiring more workers? If you could write the law in a way so as to say that companies cannot raise their fees to cover the taxes and need to do certain things (such as say, raising worker pay consumerate with profit growth) then use that money to pay for government programs which would pay people good wages? If companies change behavior the tax does extinguish itself but the program it paid for was meant to cover the lack of the private sector providing adequate compensation and work-opportunities so the program self-extinguishing wouldn't seem at least in theory to be a tragedy if that were the case.
It's a weird thing, probably affected primarily by the fact that people who go to bars go with their friends, mostly, and there's usually at least one person who smokes in a group of friends.
I'll concede that they act as fees, but that doesn't really change the fact that they are taxes. They may not be good taxes or the way taxes should work, but they still exist.