Desrtopa comments on On Walmart, And Who Bears Responsibility For the Poor - LessWrong

13 Post author: ChrisHallquist 27 November 2013 05:08AM

You are viewing a comment permalink. View the original post to see all comments and the full post content.

Article Navigation

Comments (510)

CC Licenced

Comments (510)

Sort By: Best

Show:

You are viewing a single comment's thread. Show more comments above.

Comment author: Desrtopa 01 December 2013 08:57:57PM * 0 points [-]

Ialdabaoth already raised this point, but to put some numbers to it, while the the top 1 percent pays 36 of income taxes, people in that percentile make less than 40% of their income through salary and wages; most of the remainder comes from investments, which are not covered under the income tax and are taxed at a lower rate.

Comment author: Eugine_Nier comment score below threshold [+] (11 children)

Comment author: Desrtopa 03 December 2013 02:18:12AM 0 points [-]

But generally at a lower rate. Also, money received as income and then spent, becomes someone else's income, which is also taxed, and so on.

Comment author: Lumifer 03 December 2013 02:29:09AM -2 points [-]

So let's do a little exercise.

Mr.Moneybags invests $1000 and in a year his share of gross profits is $100.

The Federal corporation tax rate is 35%. The state rate varies but let's take something like 8% on the average. So after corporate taxes there is $57 left.

If this were short-term capital gains they would be treated as plain income. But let's say these are long-term capital gains or maybe they were distributed as dividends. Then they would be taxed at 15% (unless it's dividends and Mr.Moneybags is rich -- in that case they'd be taxed at 20%). What's left is $57 * 0.85 = $48.45. And there are state taxes as well.

So it does seem like investments are effectively taxed at somewhat over 50% rate.

Comment author: Desrtopa 03 December 2013 02:38:39AM * -2 points [-]

Long term investments would effectively be taxed at that rate, but in the same period, non-invested money will tend to be spent and respent to the point that it's effectively taxed at an even higher level.

(Note; as the link within that article notes, the while the nominal corporation tax is 35%, in general corporations are able to receive deductions which markedly reduce this.)

Comment author: Lumifer 03 December 2013 03:12:39AM -1 points [-]

Long term investments would effectively be taxed at that rate, but in the same period, non-invested money will tend to be spent and respent to the point that it's effectively taxed at an even higher level.

And...? I admit I don't see your point.

Comment author: Desrtopa 03 December 2013 03:23:02AM 0 points [-]

The fact that long term investments may be effectively taxed at a rate over 50% (although in practice corporations usually get tax deductions that reduce it below this rate) doesn't mean much, because over that time horizon, nearly all income will be taxed over and over again. Depending on the channels it travels through, that money could pass in and out of the government's hands in its entirety multiple times.

Comment author: Lumifer 03 December 2013 03:26:44AM 0 points [-]

I still don't see your point. So what?

Also please note that in the Mr.Moneybags example his profit of $100 came from investing $1000. In highly simplified terms, his company spent $1000 to create value worth $1100. That $1000 spent is, as you say, someone's income and so gets taxed again.

Comment author: Desrtopa 03 December 2013 03:46:36AM 0 points [-]

In this case, I'd have to ask what your point is, since I'm no longer clear on what it is I'm supposed to be responding to.

Comment author: Lumifer 03 December 2013 03:54:25AM * 1 point [-]

:-)

I think the original issue discussed was same old, same old -- the assertion that the wealthy don't pay their share in taxes because the tax on capital gains is lower than the tax on income and it's precisely from capital gains that the super-wealthy get their cash flow.

There was an objection that this argument doesn't account for corporate taxation (the corporate tax rates in the US are among the highest in the world, by the way).

You countered by handwaving that it doesn't matter much. You also said "Also, money received as income and then spent, becomes someone else's income, which is also taxed, and so on." and it's precisely the point this statement that I do not understand.

I contributed some numbers showing that it does matter and soon thereafter we ended up here.

continue this thread »

Desrtopa comments on On Walmart, And Who Bears Responsibility For the Poor - LessWrong

Article Navigation

Comments (510)

Nearest Meetups

Virtual Study Room

Recent Comments

Recent Posts

Recent Rationality Quotes

Recent Wiki Edits

Top Contributors, 30 Days

Recent Karma Awards

Comments (510)

Top Contributors, 30 Days

You'll need to login or register to do that

(Don't worry, it only takes a few seconds)

Create

Login