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Aren’t you glad most of your income comes from investments?

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Yes, for those who live on unearned income, these are flush times. Thank you, George Bush and the Republican Party.

Cash Flow in ’04 Found Its Way Into Dividends
By FLOYD NORRIS

Published: January 4, 2005

American companies stepped up their dividend increases in 2004, buoyed by strong cash flows and by a changed tax law that made dividends more attractive to shareholders.

But the really good news for shareholders on the dividend front was that the number of negative dividend actions hit a record low of just 64. Of those, 35 were announcements of dividend cuts and 29 were decisions to omit dividends entirely.

Oh, you work for a living?

Never mind.

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About Prometheus 6

  • http://www.templestark.com/blog Temple Stark

    That’ s pretty simplistic. Plenty of working people own stocks.

  • Eric Olsen

    exactly, and plenty more do indirectly through pension funds, etc. I would also call into question the characterization of “unearned” income: who says? I entirely agree with the basic concept that the system is set up to help the well-off get more so, but it seems to me the point is to find a way to grab on to the train, not to derail it in the name of class warfare

  • http://selfaudit.blogspot.com Aaman

    So you were not a fan of the market increases in the 1990s, I take it?

    One effective way of investing, and perhaps suitable for a full length post, if appropriate for bc (eric?) is investing in ETFs or Exchange Traded Funds – one of my favorites is DVY, that focuses on high dividend yield stocks. Makes more sense than stock picking for the amateur

  • http://www.prometheus6.org/ P6

    Temple Stark:

    That’ s pretty simplistic. Plenty of working people own stocks.

    You want deep analysis in three sentances? Sheesh. Tough audience…

    I would also call into question the characterization of “unearned” income: who says?

    The Federal Government.

    Check the definition of the unearned income tax code.

    Aaman:

    So you were not a fan of the market increases in the 1990s, I take it?

    Don’t be ridiculous. I’m not a fan of untaxed dividends.

    Know why?

    Arguments for eliminating the double taxation of dividends apply only to dividends paid by corporations to individuals. The double (and multiple) taxation of dividends paid by one firm to another intercorporate dividends – was explicitly included in the 1930s to eliminate pyramidal corporate groups. These structures exist elsewhere, and are associated with corporate governance problems, corporate tax avoidance, and a greater concentration of economic power than is currently possible in the United States. Current US tax reform proposals do not distinguish dividends paid to individuals from intercorporate dividends and, by eliminating double taxation on both sorts of dividends, may allow pyramidal groups in the US again for the first time since the 1930s.

  • http://selfaudit.blogspot.com Aaman

    Excellent citation – care to explain how pyramidal, interlocking corporations formed since the 1930s despite laws such as the above? Case in point – Enron. There are many more.

  • http://www.prometheus6.org/ P6

    care to explain how pyramidal, interlocking corporations formed since the 1930s despite laws such as the above?

    I think it sufficient to point out continued creative manipulations of the eonomy. Speaks volumes about intent.

  • http://www.templestark.com/blog Temple Stark

    >>You want deep analysis in three sentances?

    No, clearly I want more sentences because from your previous posts I know you’re smarter than those three sentences and I was looking froward to reading your pov.

    Speaking as a reader.

  • http://www.prometheus6.org/ P6

    Speaking as a reader.

    Well, I guess that calls for an explanation of tactics.

    As Eric says, we need no class wars, but we have one…and it’s being waged in way gross and subtle. The subtle stuff depends a LOT on people assuming they will actually receiving the benefits of all these wealth transfers.

    Now, reporting that folks on one side of the economic gap are getting all the goods is straightforward. PROOVING it is straightforward, but will make most folks eyes glaze over.

    So you bring the initial concept as simply as possible: “Here’s the good news. Now did you benefit?” And explore from there.

  • Eric Olsen

    okay, you are correct about the technical meaning of “unearned income” – I interpreted it as a value judgment

  • http://www.prometheus6.org/ P6

    I will confess to taking advantage of the reflexive reaction most Americans have to the term “unearned.”

    But I will also point out that one benefits from Republican fiscal decisions in direct proportion to the percentage one’s income is unearned.

    In the technical sense.

  • http://www.prometheus6.org/ P6

    Total aside, but that even technical terms like “unearned income” immediately are vested with ethical/moral implications should be noted. It explains why folks who complain about “political correctness” are usually assumed to have ethical problems by folks on the receiving end of the slurs that are being defended.

  • http://squaringtheglobe.blogspot.com Harry Forbes

    The government’s title is pejorative, and designed to be so. It is less judgemental to say “dividend income” or “income besides wages salaries, and tips”.

    Does P6 believe that people at Fidelity Investments “work for a living”?

    What about people with a 401K managed by an intermediary like Fidelity? All such people likely receive some amount of dividend income, whether taxed or sheltered from tax in 401Ks.

    For the vast majority of individuals, these investments represent a nest egg in development, rather than assets of sufficient size to generate all the income that one requires. Most folks probably receive BOTH dividend and wage/salary income, but P6 paints this situation as a dichotomy. It isn’t.

  • http://www.prometheus6.org/ P6

    Does P6 believe that people at Fidelity Investments “work for a living”?

    What bearing does that have on the discussion?

    Most folks probably receive BOTH dividend and wage/salary income, but P6 paints this situation as a dichotomy.

    P6 does NOT paint this as a dichotomy.

    P6 says, a mere two comments above the one in which Harry Forbes incorrectly says P6 paints this as a dichotomy:

    one benefits from Republican fiscal decisions in direct proportion to the percentage one’s income is unearned.

    i.e.; a continuum.

    P6 does, however, suggest on’s treatment depends on one’s position on that continuum.

  • http://www.morethings.com/senate Al Barger

    The label “unearned income” is real convenient for socialists. The implicit argument is that people don’t deserve that income, so “society” ie the socialists should be able to take that money and spend it as they wish.

    Besides the fact that an increasingly large share of stocks are owned by pension funds for middle and working class Americans, the individual traders and speculators are in fact contributing very significantly to the economy and the creation of wealth.

    They are analyzing and directing money to where it will be best invested. This is an absolutely critical, basic function in the economy. They provide the money for new businesses. They direct it away from companies that are sucking. It was primarily the market, not government intervention, that put a stop to Tyco and Enron.

  • Maurice

    All of these comments are twiddling while Rome burns. We could also complain about the ‘Earned Income Credit’ which enables certain people who qualify to receive a greater refund than the amount they actually paid in. The real solution IMHO is to reduce the size of government and go to a VAT. Otherwise the quibbling over who is getting preferencial treatment will never end.

  • http://www.prometheus6.org/ P6

    The label “unearned income” is real convenient for socialists. The implicit argument is that people don’t deserve that income, so “society” ie the socialists should be able to take that money and spend it as they wish.

    Unearned income isn’t a label, it’s a name, and it’s been used since long before socialists had any impact on the political scene.

    Socialists must scare the shit out of you. Bet there’s some under your bed…

    But I’m a reasonable man. If calling unearned income unearned income makes you uncomfortable, I can show some flexibility for the sake of discussion. Let’s call it “privileged income.” I think it fits: it’s taxed at a lower rate than earned income already, and yet all anyone is concerned about is lowering the rates even further.

    priv·i·leged adj 1. enjoying special advantages: enjoying privileges, especially the resources and advantages associated with the upper classes or the rich
    2. honored or fortunate: fortunate in having a special advantage or opportunity to do something
    I feel privileged to be here today.
    3. available only to a select group: restricted to a particular group of people

    npl people enjoying special advantages: a class of people, especially the rich or the upper classes, that benefits from special rights or resources (takes a plural verb)

    Microsoft® Encarta® Reference Library 2002. © 1993-2001 Microsoft Corporation. All rights reserved.

    Now that the absurdity is out of the way…

    Besides the fact that an increasingly large share of stocks are owned by pension funds for middle and working class Americans, the individual traders and speculators are in fact contributing very significantly to the economy and the creation of wealth.

    I guess it’s not.

    PLEASE tell me what point you’re trying to make.

  • http://www.prometheus6.org/ P6

    Hey, Eric:

    See how they’re still flipping over the word “unearned,” even when I openly said I was playing them thereby?

    Meanwhile, had I called it “torklebury income” it would be the same damn thing.

  • http://www.prometheus6.org/ P6

    The real solution IMHO is to reduce the size of government and go to a VAT.

    And what are the assumptions about the nature of people, government and society that make this so clear to you and the very, very few non-economists that agree with you?

  • Maurice

    And what are the assumptions about the nature of people, government and society that make this so clear to you…

    Huh? I thought I was clear. As long as there are tax breaks for rich and poor there will be no end to the whinning about certain segments of tax payers getting a raw deal from the feds. For example:

    I lead a humble life so I can afford to only buy stocks that pay a dividend. I can’t afford to send my daughter to college and get the college credit to take off my taxes. Thats not fair!

    Here is another example:

    My sister makes just enough to qualify for the Earned Income Credit allowing her to get a larger refund that what she paid in. That’s not fair!

    If you are taking exception to the idea of a VAT…ok I’m kind of there with you but I would say that a VAT would not be allowed unless you abolish the IRS.

  • http://selfaudit.blogspot.com Aaman

    People will always whine about taxes – it’s the nature of things – ref GBShaw. All over the world, taxes are a pain, and tax avoidance (not evasion) a much sought after art, VAT or not

  • http://www.morethings.com/senate Al Barger

    Objecting to government robbing you is “whining.” Complaining about the government not taking enough of other people’s money at gunpoint, however, is just trying to show civic concern.

  • http://www.prometheus6.org/ P6

    BWAAAAHAHAHAHAAhahahahaahha!

    *sniff*

    Go on. Please.

  • http://www.prometheus6.org/ P6

    Hoping to avoid more bumper stikers posing as arguments, let me make a serious suggestion.

    What I’m saying here, so it’s not obscured by reflexive resistance to a know progressive, is there’s a kind of income that is privileged over earned income. Call it what you will, it’s taxed at a lower rate than earned income.

    Now, there are a couple of ways to react to this. The way I would suggest is that rework upcoming tax reductions so that they all apply to earned income. Resolve that earn and unearned income will be taxed on the same progressive schedule.

    Why should a business that earns a dollar get to keep more of it than a man supporting his family would?

  • http://www.prometheus6.org/ P6

    Think about it, guys. Would you benefit more by a tax cut on your earned income or on your 401K…which is already untaxed?

  • http://www.diablog.us Dave Nalle

    >>okay, you are correct about the technical meaning of “unearned income” – I interpreted it as a value judgment<<

    Strangely, that’s the way I read it too, despite my painful familiarity with the tax code.

    Calling income earned from stocks ‘unearned’ is a great example of prejudicial terminology, where someone – in this case presumably in Congress – picked the term which would be applied to income earned from investments to make it sound more ‘fair’ to tax that income by making it sound like some sort of undeserved windfall.

    I know that I worked hard to earn the money that bought the stocks that now make some additional profit for me, so long as I do additional work to pay attention to the market and put the money in good funds and individual equities and monitor my portfolio and move the occasional investment around to keep it ‘tuned’. That takes time and thought and that makes it work, and as far as I’m concerned that means I earned the income.

    Dave

  • http://www.prometheus6.org/ P6

    I know that I worked hard to earn the money that bought the stocks that now make some additional profit for me, so long as I do additional work to pay attention to the market and put the money in good funds and individual equities and monitor my portfolio and move the occasional investment around to keep it ‘tuned’. That takes time and thought and that makes it work, and as far as I’m concerned that means I earned the income.

    Then it should be taxed at the same rate as other earned income, right?

  • http://www.kolehardfacts.blogspot.com Mike Kole

    I’m going back to the original post on this. I want to see a defense of the assertion that dividend income is unearned.

    The mentality that the only kind of work that is respectable is the kind that requires you to throw your back into the job is about as backward as it gets. Why is brain work such as wise investing so loathsome to so many?

  • http://www.bhwblog.com bhw

    Maybe better terms are employment income vs. investment income?

    I think the “unearned” part does probably come from the notion that the Kennedys and Bushes and Rockefellers aren’t generating most of their income from their salaries. I doubt that someone like Ted Kennedy works as hard at managing his many investments as the average person does managing his/her relatively few investments. Kennedy pays someone to do it for him. He’s not earning the income by even so much as using his brain.

    I’m curious to know how long the term has been used in this context. It wasn’t always true that the average man or woman invested in the stock market; for a loooong time, the stock market was a very exclusive “place.” So the term “unearned income” has a class context for me.

  • http://www.prometheus6.org/ P6

    Hey, Eric, watch this.

    I’m going back to the original post on this. I want to see a defense of the assertion that dividend income is unearned.

    Okay.

    In the United States Tax Code, they divide income into two broad categories. Income from wages, tips and such is called “earned income.” Income from dividends, capital gains and such is called “unearned income.”

    That’s why I call it “unearned income.” Because that’s it’s official name from time immemorial.

    I’m not making an assertion. I’m pointing out that unearned income is taxed at a lesser rate than earned income. The favorable tax treatment of dividends is mentioned in the quote from the NY Times and I spelled out what I was talking about in my first comment to make sure we knew what the topic is.

    I’m saying, no matter what you call it, businesses get to keep more of each dollar they earn than a person supporting a family does.

    And I’ve pointed out how people are going to keep reacting to that word “unearned.” Publicly. And you will keep doing it.

  • http://www.prometheus6.org/ P6

    bhw:

    You are exactly right aboutthe class context. The highest mark of success, from feudal times until, oh, fifteen minutes ago, is you do nothing and have everything.

  • JR

    Al Barger: Objecting to government robbing you is “whining.” Complaining about the government not taking enough of other people’s money at gunpoint, however, is just trying to show civic concern.

    Hey, has anybody here ever actually had a gun pointed at them?

  • Shark

    Al Barger: “…Objecting to government robbing you is “whining.” Complaining about the government not taking enough of other people’s money at gunpoint, however, is just trying to show civic concern…”

    The Bad News: pinko socialist liberals will continue to take as much of your hard-earned and ‘unearned’ money as they possibly can.

    The Good News: they’re also going to try and outlaw guns — so it won’t be at gunpoint.

    ===========

    “Eat the Rich!” — Shark

  • http://www.prometheus6.org/ P6

    Shark:

    The Bad News: pinko socialist liberals will continue to take as much of your hard-earned and ‘unearned’ money as they possibly can.

    C’mon, man. They already see socialists in every shadow and around every corner. You really want to feed into that?

  • http://selfaudit.blogspot.com Aaman

    Don’t mail me any more proxies, please.
    Tell me, incorporated tease,
    Why don’t you save the stamps and send,
    Once in a while, a dividend?”
    — Margaret Fishback

    The best-performing stocks in Russell 3000 don’t pay dividends.
    Company Symbol YTD Return DivYield
    Travelzoo TZOO 920% 0%
    W.R. Grace GRA 424% 0%
    Cheniere Energy LNG 356% 0%
    Jupitermedia JUPM 338% 0%
    Kmart Holding KMRT 330% 0%
    Danielson Holding DHC 309% 0%
    Taser Intl TASR 297% 0%
    Hansen Natural HANS 294% 0%
    PalmOne PLMO 279% 0%
    Overstock.com OSTK 277% 0%
    (Realmoney/Bloomberg)

    Of course, most of these are pure volatility plays, not mom-and-pop or widow-friendly investments.

  • http://www.prometheus6.org/ P6

    The best-performing stocks in Russell 3000 don’t pay dividends.

    True. The income is capital gain, long or short term…also classified as unearned income and therefore taxed at a rate lower than a working person’s salary.

  • http://www.prometheus6.org/ P6

    Be clear, people. I’m not arguing one shouldn’t invest, nor that there’s no work involved in it.

    I’m saying there’s no real justification for taxing unearned income on a different schedule than earned income. You can list all the market statistics you like. You can talk about who owns what. But it’s a fact.

    Meanwhile, we’ve learned a few other things as well:
    1- People think changing a thing’s name changes it’s nature. It doesn’t.
    2- People want to defend the special treatment their unearned income receives but can’t find a way to just SAY it without sounding bad.

  • http://selfaudit.blogspot.com Aaman

    There are differences between taxation models between both forms of income all over the world. The reasons would fill a book, but hearken back to British parliamentary reform after the Domesday Book, Oliver Cromwell’s reforms and then the Puritans carrying over distrust of ‘unearned income’ and landowners’ privileges

    In India, for example, another country that built it’s business lawa upon British models, the duration for long term capital gains is 3 years. Long-term capital gains are taxed at a flat rate of 20 per cent for individuals and foreign companies, and 30 per cent for domestic companies. Short Term is taxed at normal interest rates (about 33.33 percent).

    Dividend from shares and equity-based mutual funds is exempt in the hands of the recipient. Corporates are taxed for dividends. This avoids double taxation.

    Also, in other ‘nice’ aspects of taxation in India, there is a high standard deduction, additional deduction for women, deduction for insurance premiums, government bond purchases, etc., thus encouraging basic saving and somewhat leveling the playing field between high net worth individuals and PLUs (People Like Us)

  • http://selfaudit.blogspot.com Aaman

    ‘Interest rates’ in paragraph 2 above should be replaced with ‘income tax rates’

  • http://www.prometheus6.org/ P6

    The reasons would fill a book

    Two books, in fact. I linked them to the post.

    So what would be the reason that here, in the USofA, unearned income is taxed at a lower rate than earned income?

    Can you justify it at all?

  • http://www.bigtimepatriot.com Big Time Patriot

    Here is a way of looking at what is “unearned income” and “earned income”. If all taxes are cut from so-called “unearned income” then the sole support of the tax system will be on people who actually work and receive a salary or wages.

    In a country that professes to want to reward hard work, how come we are working so hard to shift the tax burden directly onto hard workers. I am frankly mystified that America should be developing a tax system optimized for the gentry of old times England, where it was sometimes unfashionable for rich people to actually have jobs.

    If a person is rich now, should they invest in a company and become its CEO and pay taxes on his own salary? Or should they invest in someone elses country and laze around the country club? If George Bush gets his way, the tax system will be set up to discourage actual work.

    I don’t think “earned” income is such a hard thing to figure out. If you perform services and labor you “earn” income. If you inherit wealth, you don’t “earn” it. There are some grey areas about the savings income you recieve from money you earned through work, but other areas, such as the “free money for being born to rich parents” tax break now in place have no justification in promoting productivity in any way..

  • http://selfaudit.blogspot.com Aaman

    So what would be the reason that here, in the USofA, unearned income is taxed at a lower rate than earned income?Can you justify it at all?

    Possible reasons, IANAE (I am not an economist):

    Currently, in the US, dividends are taxed twice – once in the hands of the corporates and once in the hands of the recipients. Lowering the tax rate on dividends minimizes this double taxation

    Also, from the University of Toledo,

    Capital gains tax rates have varied over time, but they have generally been lower
    than rates on ordinary income. The reason is simple—Congress wants the economy
    to grow, for growth we need investment in productive assets, and low capital gains tax
    rates encourage investment. To see why, suppose you owned a company that earned $1
    million after corporate taxes. Because it is your company, you could have it pay out the
    entire $1 million profit as dividends, or you could have it retain and reinvest all or part
    of the income to expand the business. If it paid dividends, they would be taxable to you
    at a rate of 38.6 percent. However, if the company reinvests its income, that reinvestment
    should cause the company’s earnings and stock price to increase. Then, if you
    wait for one year and then sell some of your stock at a now-higher price, you will have
    earned capital gains, but they will be taxed at only 20 percent. Further, you can postpone
    the capital gains tax indefinitely by simply not selling the stock.
    It should be clear that a lower tax rate on capital gains will encourage investment.
    The owners of small businesses will want to reinvest income to get capital gains, as
    will stockholders in large corporations. Individuals with money to invest will understand
    the tax advantages associated with investing in newly formed companies versus
    buying bonds, so new ventures will have an easier time attracting equity capital. All
    in all, lower capital gains tax rates stimulate capital formation and investment

    There are many objections to the above model, of course, the most significant revolve around the ‘elasticity’ of changes in the tax rate and tax revenue collections.

    The bigger question is the graduated or progressive taxation system – a single tax rate would make it simpler to levy the same rate on all kinds of income, dividend, earned, etc.

    In practice the actual tax treatment of capital gains in industrial countries varies widely. Most countries tax capital gains much more lightly than the United States.

  • http://www.prometheus6.org/ P6

    Marvelous theory Aaman. Now, in practice there’s a far more powerful stimulus at work. I quote a source I’m sure you trust implicitly:

    Excellent citation – care to explain how pyramidal, interlocking corporations formed since the 1930s despite laws such as the above? Case in point – Enron. There are many more.

    It’s often said capitalism is the ideal economic system because ittakes advantage of human greed. And incorporation is the only way to become wealthy in this economy other than by accident (like gee, you lucked into the Amazon.com initial offering).

    You need to understand humans are not point particles moving frictionlessly in Euclidean space. Wikipedia has a nice layman’s introduction to Behavioral Economics that will give you an idea why the predictions of in your extensive quotation have never quite panned out.

  • http://www.diablog.us Dave Nalle

    >>Then it should be taxed at the same rate as other earned income, right?<<

    As I read my tax form there are two ways I make money from investments, dividends and any profit I make on the sale of stock which has increased in value. Dividends are already taxed at the same rate as other earned income. Profit from the increase in value of the stock is taxed at the Capital Gains rate which is indeed lower than my general tax rate. But those capital gains are after taxes already paid by the coroporation whose stock I sold, and in addition, if I take a loss I don’t get to take full loss value on the stock beyond a limit of $3000, so I have a lot more at risk if I lose money on my investments. In addition, since I’m self-employed the stock in question was bought with money that I kept after paying the most rapacious of all taxes the self-employment tax, so I deserve any breaks I can get.

    That being said, I’d still be willing to have my entire income taxed at the capital gains rate. That would be just fine with me.

    Dave

  • http://www.prometheus6.org/ P6

    Meanwhile, I still question the morality of letting something that isn’t even human keep more of every dollar it earns than a hard-working (or even a stank, lazy-ass faking) person with everyday responsibilities can keep.

  • http://www.morethings.com/senate Al Barger

    Meanwhile, I still question the morality of presuming to take people’s money at gunpoint. And make no mistakes, corporations are just a bunch of people.

    Of course, the truly moral thing would be to do away with income taxes and repeal the 16th Amendment.

  • http://www.prometheus6.org/ P6

    Here comes the Libertarian delusion.

  • http://www.prometheus6.org/ P6

    But those capital gains are after taxes already paid by the coroporation whose stock I sold,

    Etc.

    And the tax I pay on shoes is paid with money I paid taxes on already, and on up the line.

    If you want single taxation, then those who create the wealth must pay enough taxes to support the society…and no one else would pay any taxes at all.

  • http://www.prometheus6.org/ P6

    That’s what I call the Libertarian delusion, by the way…that if you got your way you’d wind up paying ALL the taxes.

  • http://www.morethings.com/senate Al Barger

    You seem to be a little slow on the uptake of what Libertarians propose. It’s that there would be far less taxes to be paid by anyone. We propose to eliminate the income tax, and replace it with NOTHING.

    P6, you’re arguing about who to screw how hard. I’m saying we shouldn’t be screwing anybody.

  • http://adamantsun.blogspot.com Steve S

    We propose to eliminate the income tax, and replace it with NOTHING.

    America is the most generous nation on the planet. If we scaled the gov. back so much, imagine if a tsunami hit us. Who would be there for us?

    While I don’t care for the 78% tax rate of European nations, at the same time, I take comfort in the fact that we as a nation have made our government capable of being the one to step in, during such times of crisis. Some point in the middle.

    It’s like insurance, we pay premiums with the hope of never having to use the money, but it’s there when we need it. Should something as big as that tsunami hit, our insurance companies couldn’t handle it all. Most could be wiped out themselves. I take comfort in knowing the scope of our government right now, and can only hope the rest of the country does too.

    P6, you’re arguing about who to screw how hard. I’m saying we shouldn’t be screwing anybody.

    one tsunami, one earthquake, one hurricane, one terrorist attack of nuclear proportions and we’d all be screwed.

  • http://www.prometheus6.org/ P6

    You seem to be a little slow on the uptake of what Libertarians propose. It’s that there would be far less taxes to be paid by anyone. We propose to eliminate the income tax, and replace it with NOTHING.

    I know.

    P6, you’re arguing about who to screw how hard. I’m saying we shouldn’t be screwing anybody.

    No, I’m arguing about being fair since we must pay our bills and can’t repudiate our international debt. You’re saying we should do something that will leave us in no position to do anythng else for anyone, including ourselves, ever again.

    No serious economist takes it seriously.

    I don’t take it seriously. It would only work is EVERYONE bought in, and given that capital-L Libertarians are a small enough fraction of the population to be written off as a statistical anomaly, that ain’t gonna happen.

    We’re sitting on the a HUGE disaster in Asia, HUGH outpourings of good will from around the world…and mother fuckers get up in there and sell children.

    Humans are an unstable mixture of great good and great evil. Your politics and “economics” requires everyone to be unalloyed good. It’s proof capital-L Libertarians have NO understanding of human nature and the history and development of societies, no interest in participating in them, …or their bullshitting. In no case to I see any need to hear them out anymore.

  • Shark

    P6: “..C’mon, man. They already see socialists in every shadow and around every corner. You really want to feed into that?”

    P6, despite the futility of your garrulous pissing in the wind, I do admire your efforts to illuminate right-wing blowhards with your ‘golden shower’ of words and essays.

    I love you, maaaaan. (ditto, BigTimePatriot!)

    ============

    Just for the record, Shark (being anti-delusional) lives by the following rule when it comes to logic and debate:

    “Philosophy is the question: from which side shall we look at life, God, the idea or other phenomena. Everything one looks at is false. I do not consider the relative result more important than the choice between cake and cherries after dinner. The system of quickly looking at the other side of a thing in order to impose your opinion indirectly is called dialectics, in other words, haggling over the spirit of french fries while dancing the method around it.” –Tzara

    =======

    Oh, and did I mention: “Storm the Gated Communities & EAT THE RICH!”–?

  • Maurice

    First I want to say how fun this site is. Second I want to say to those that just discovered the term ‘Unearned’ – why don’t you do your own taxes this year and learn a little about what your government thinks about you? Third I think it is important to have a balanced point of view. In this case the complaint is about the Unearned income tax rate. If we allow that this is a valid bitch then we must also be upset about its mirror image which is the ‘Earned Income Credit’. The EIC is a tax break for the ‘poor’. At the rish of boring everyone here is a quote:

    A single filer’s adjusted gross income must be less than $11,490 if he or she has no children; $30,338 with one child; and $34,458 with two or more kids.

    Here is the website:http://www.bankrate.com/brm/itax/tips/20010130a.asp

    This is worse than the Unearned tax rate because it gives people money they never earned.

    Wealth redistribution is Socialism!

  • Eric Olsen

    thanks Maurice, from a “conservative” perspective, the EIC could be viewed as a really hardcore form of tax reduction

  • http://www.prometheus6.org/ P6

    If we allow that this is a valid bitch then we must also be upset about its mirror image which is the ‘Earned Income Credit’.

    Why?

    Frankly, the EIC is not a mirror image. It’s a necessary component of the American economy…otherwise all the people (waitstaff, migrant workers, the upcoming visiting workers) that work at below surviavl rates to keep prices where you like them would starve to death.

  • Maurice

    “Frankly, the EIC is not a mirror image”

    They are not a perfect mirror image. One is a tax break for the rich (over 30K) the other is a wealth redistribution scheme for the poor (less than 30K). Both manipulate the tax code for the benefit of a select group of society. Both are wrong. Which is more wrong depends on your point of view.

  • http://adamantsun.blogspot.com Steve S

    In regards to comment 53, about the mirror image of unearned income (and the link provided):

    The link points out that to take advantage of the EIC is difficult and usually requires a tax accountant. I cannot imagine someone who lives below poverty affording a trip to H&R Block.

    While it might give a ‘refund’ to someone who payed no taxes, just by reading the link, it’s pretty obvious that it would be on a MUCH smaller scale than the ‘unearned income’ is, only a handful of people would even know how to use it.

    for the benefit of a select group of society

    This is another thread that is using key phrases like ‘redistribution of wealth’, ‘socialism’, etc. What is ultimately the key point in these debates is exactly how much help do we want the government to give the poor. I mean if someone earned 10k in one year and paid NO taxes but got a refund, how much could that refund be? Worth one trip to the grocery store? And we are bitching about a redistribution of wealth? Geez.

    People on the conservative/libertarian side just need to come out and say it, ‘we don’t want to help just anybody who needs it, except only voluntarily (by private donation, no goverment). We should get to choose who we help and if that means millions will suffer and go hungry, so be it. That’s the American Dream.’

  • Maurice

    “Frankly, the EIC is not a mirror image. It’s a necessary component of the American economy”

    This is wrong. It does not help the American economy. I am not saying that helping the poor is wrong. I am saying if you complain about tax code that benefits one group you have to acknowledge the tax breaks/benefits to another group. To sum it up, Welfare should take care of poor people not the tax code.

  • http://www.prometheus6.org/ P6

    I am saying if you complain about tax code that benefits one group you have to acknowledge the tax breaks/benefits to another group.

    The only group I’ve complained about is corporations, because they are not human. Other than that, I’m saying unearn income is taxed at a different rate than earned income, which privileges it in the tax code. The privilege is unearned.

    Go back, read what I’m saying.

  • JR

    Still waiting for gunpoint stories. I’m really disappointed; we’ve all paid taxes, right? So who’s had a gun pulled on them? Do tell.

  • Eric Olsen

    I think Willie Nelson got roughed up a bit

  • http://www.bigtimepatriot.com Big Time Patriot

    I pay income tax on my income. Then if I buy something in Washington State I pay sales tax. So my income is being “double taxed”. Why should dividend owners NOT get double taxed? Money gets taxed all around the economy, it’s pretty much a question of semantics at what points the money gets double or triple taxed.

    The biggest thing I have trouble with is the loss of the estate tax. Which American value are we saving by allowing wealth to accumulate over generations? It just seems more like a feudal value system. After all, this is America, if someone only inherits half of the 100 Million dollars their parents owned, surely they could pick up their shattered lives and create a new fortune with their money? (This reminds me of the story of how George Bush, Sr. became a millionaire in the Texas Oil Business, his parents started him out with an 800,000 dollar investment, that helps.)

    Particularly this irks me because George Bush has such an obvious conflict of interest in his own situation. George is willing to bust the budget to make this inheritance tax break permanent that will pay HIMSELF a bundle when his folks die. But there is just not enough money available to fully fund home security, and college grants have to be cut. Now George Bush sure knows what HIS values are, doesn’t he?

  • http://www.bhwblog.com bhw

    While I think we should retain some form of an inheritance tax, I think that the current exemption should be raised even higher. Right now, only the first $1.5 million is tax exempt. Believe it or not, that’s not that much money when you’re talking about an entire estate that was “grown” over a lifetime: house, insurance policies, savings/investments, autos, and other typical assets. Middle class families — not mine, mind you — can accumulate that amount of value in their estates fairly easily without inheriting a dime, particularly if the parents die and their life insurance policies are cashed in. Why should a hard working family be taxed on money that was a) already taxed a few times and b) that was saved and invested expressly for the purpose of providing security for the family down the road and/or in case of a tragedy?

    Right now, the inheritance tax hurts working families more than it hurts people like George Bush.

  • http://www.bigtimepatriot.com Big Time Patriot

    “Right now, the inheritance tax hurts working families more than it hurts people like George Bush.”

    I think that the rates on which inheritance are taxed might be ready to be adjusted, inflation affects all set rates after all. I would argue that if George Bush paid 25% taxes on a 50 million dollar inheritance (minus the first 1.5 million or so), that would add up to a lot more money than a 25% tax on a 1.75 million dollar house (probably not even as much as the value of a waterfront house in the Seattle area) after you take out the 1.5 million. I have read (sorry I can’t find the reference right off) that the Republicans have a had a hard time actually finding a single family that had to sell their farm due to the inheritance tax. But anecdotes sure beat statistics any day. And the fact that George Bush, Jr. is pushing at the top of his domestic agenda some tax issues that will put money in his OWN pocket, and letting other things like Head Start and college grants slide, I think that says pretty loudly just what values George has.

    If Bill Clinton had pushed such self serving policies, it would all be pretty obvious wouldn’t it?

  • http://www.bhwblog.com bhw

    would argue that if George Bush paid 25% taxes on a 50 million dollar inheritance (minus the first 1.5 million or so), that would add up to a lot more money than a 25% tax on a 1.75 million dollar house (probably not even as much as the value of a waterfront house in the Seattle area) after you take out the 1.5 million.

    I think what you’re saying is that George would pay more in total tax dollars than the family with the house. That’s true. But since that family has less money to play with, it hurts them far more. George could live quite well on the $35 million he’d have left over in your scenario.

    I don’t disagree that Bush’s priorities are mixed up. He’s spending money at a breakneck pace while giving tax breaks that largely benefit more wealthy people. But I still think the inheritance tax exemption needed to be increased, which it has, and that it should continue to be increased. Let Bush leave his kids $5 or $6 million tax-free, and then tax the rest of his estate at a reasonable rate. In 2002, the highest estate tax rate was 50%. It’s been decreasing and will decrease to 45% in a few years until it’s phased out in 2010 [if that actually happens].

    I don’t think 45-50% is a reasonable rate, no matter how valuable the estate.

  • JR

    If Bill Clinton had pushed such self serving policies, it would all be pretty obvious wouldn’t it?

    That’s because we all expected him to understand the consequences of his policies. Bush can plead ignorance and he will always get away with it.