Sunday, January 31, 2010

Taxes and free rides

Any successful person really hates taxes. Why do we hate them so much? Because they are not levied in a fair and just manner. If everybody had to pay x% of their income in taxes, that is fair. But instead we have a progressive tax system where the more successful you are, the more you have to pay. Why should I get punished for being successful when some freeloader out there doesn't pay anything? Did they chip into my costs, time, effort, and hardships so that I could go get graduate degrees to pave my road to success? No. So why should I have to pay for them?

This is redistributive socialism at its best. And the U.S. is at the top of the pack with the most progressive tax system for OECD countries.

And how is it not discrimination? Change income to some other category such as race where different ethnicities get charged different tax rates, and you'd have a firestorm in this country.
But yet it is easy to discriminate against 'wealthy' people because they are a minority (by definition) and make up a small percentage of the population. The majority throughout history has always discriminated against its minority population for their benefit.

And here's another thing. They get labeled 'wealthy.' There are two parts to wealth: stock and flow. People who are wealthy have a large stock of assets. Either they built up that stock over a lifetime or they inherited a large bundle. The other part of wealth is flow. This is the income that you make each year. A large flow of income grants you the potential to become wealthy, but that doesn't mean that everybody earning well is in fact wealthy. And one also must consider where many of these high earners live: New York, San Francisco, Chicago, etc.: all places that are much more expensive (and also with high state tax rates) that other areas of the country. Someone making more than 100k a year is by no means wealthy in one of these cities, but they treated as such by the tax code.

On another note, Inter-generational distribution of wealth is probably not fair. Warren buffet calls it the 'womb lottery.' Capitalism is survival of the fittest for economies where those who have good ideas or work harder than others get rewarded for it. Inheritance throws a kink into the system because it allows those who contributed nothing to society to be rewarded for it (Think: Paris Hilton). Some do turn their inheritance into successful businesses, but then that is another issue if it were fair for them to get a leg-up on everybody else.

There is a good story that exemplifies the tax burden, and while fictitious, it has a good message.

Also, recently the new york times published an updated table related to who pays taxes in this country. I couldn't find the original article for the new figures, but I found a copy of the table that shows who pays taxes in this country. Essentially, the bottom 50% of Americans don't pay income taxes. Those making more than 70k a year pay about 90% of all federal income taxes. So, by being successful we get punished and leeches gets a free ride.

Saturday, January 16, 2010

American Taxes

Have you ever noticed how a politician's answer to everything is to raise taxes? They just keep blowing more money on pork and when the coffers run dry -"let's raise taxes again." Really, when will it ever stop? We have come a long way from the 16th amendment income tax rate of 2%. Now, total tax rates approach 50% in some states. And at least if I felt my money was going to something good I wouldn't feel so bad about it. But no, it goes to other countries, it goes into an overbuilt military, it goes to politician's porky pet projects that benefit a small minority, it goes to farm subsidies, and it goes to supporting people who have no desire to actually do anything with their lives. The U.S. is going in the direction of socialism.


Whenever a tragic news story comes around, it draws you in to find out more information. The earthquake tradegy aside, why in the hell has the US pumping money into this country for over two decades? According to Reuter's Alertnet, the US has provided over $1.5 billion to this country. Other countries have chipped in as well. It just reminds you of all the pork this country has stuffed into it. The U.S. should be taking care of its own problems instead of raising taxes to help other countries. It is not our duty to be the world's chaperon! And if the money stops flowing, they aren't going to like us anymore anyway, so why even bother?
And what the hell: Why is it that this country cannot pull it together? It's neighbor on the same damn island, the Dominican Republic, pulls in a GDP 6.5 times as much per capita. This is a natural social experiment that probably has a lot of answers somewhere.