Why Does Mitt Romney Pay Lower Taxes Than His Secretary?

[SteamKing]

In Kelo it wasn't a public project. It was private. The government mandated a sale from poor owners to rich buyers, under the argument that this would increase tax revenues. Had the government instead made this a public area - say a park, or even a sewage treatment plant - the case would never have gone to court.

It was never clear to me that by condemning the Fort Trumbull property through eminent domain, the City of New London was required to offer compensation to the owners for their property, or what amount was offered if there was indeed an offer of compensation by the City.

There is an old saying in America that "A man's home is his castle". In his dissent to the Kelo opinion, Justice Thomas pithily observed, "Something has gone seriously awry with this Court's interpretation of the Constitution. Though citizens are safe from the government in their homes, the homes themselves are not."

 

[SteamKing]

Yes, I've read wiki. And don't see a special problem here, except that in such cases, where public interest is vague, to make the previous owner compensation let's say 120% of the market value.

Never going to happen.

If the public interest is that vague, then the "public" has no business on my property. The "public" can get its own damn property.

 

[Czcibor]

Never going to happen.

If the public interest is that vague, then the "public" has no business on my property. The "public" can get its own damn property.

Anyway - how are you able to build a mine in the US? It's a private business... Only in the middle of nowhere?

 

[SteamKing]

Anyway - how are you able to build a mine in the US? It's a private business... Only in the middle of nowhere?

Private businesses purchase, lease, or rent land all the time in the US: to build factories, open stores, dig mines, or whatever.

Property owners, in most cases, also own the mineral rights to fossil fuels, ores, or whatever lies on or beneath their property. Oil and gas companies, for example, can lease the rights to explore for these minerals if the owner doesn't want to sell the property and pay the owner a royalty on the amount of any minerals ultimately found and extracted. That's how Jed Clampett made his fortune:

http://en.wikipedia.org/wiki/The_Beverly_Hillbillies

It's when private business decides to go into business with government that things can get weird. A private business can't force you to give up your property because it wants to, but government has more resources available at its disposal to condemn and take property from its owner. A government, unlike a business, can afford to stay in court a lot longer if the situation warrants. Unlike a private business, a government does not have to show a profit; it can coerce the payment of taxes to keep funding its operations if need be.

Also, as an aside, mines and oil wells are sometimes not conveniently located in the middle of nowhere. There is an active oil field located beneath Beverly Hills, California, a very expensive suburb of Los Angeles. Architects and engineers got creative at disguising the machinery of oil extraction in the heart of a very tony residential district:

http://en.wikipedia.org/wiki/Beverly_Hills_Oil_Field

 

[Czcibor]

SK:
In Sweden they are moving whole town to make place for their iron ore mine:
http://www.bbc.com/news/magazine-26447507
(I should be able to find some similar cases with Polish coal mines, but I'm not sure whether in English)So your point is that such crucial, but private investment, each land owner should have a right to extort some exorbitant price / sabotage whole project?

 

[Vanadium 50]

So your point is that such crucial, but private investment, each land owner should have a right to extort some exorbitant price / sabotage whole project?

See http://en.wikipedia.org/wiki/Holdout_(real_estate) for examples (not just in the US).

Usually an agreement is reached, as a house surrounded by (say) a shopping mall would be an unpleasant place to live. And I would say that for a private project, yes, if the developer wants something I have, we should negotiate.

 

[Czcibor]

See http://en.wikipedia.org/wiki/Holdout_(real_estate) for examples (not just in the US).

Usually an agreement is reached, as a house surrounded by (say) a shopping mall would be an unpleasant place to live. And I would say that for a private project, yes, if the developer wants something I have, we should negotiate.

I have such resistant tiny restaurant with fried chickens in the center of my city, so I fully get the idea.

I checked law in country. Technically "public purpose", but it is understood very widely, and it involve private business in mining, dams, infrastructure, power lines, pipelines, etc.

Anyway - your view - should private land owner have a right to make a hold out or not? (or just be forced to accept a minor ransom)

You know... paradoxically in such case it seems that I'm more business friendly... funny, isn't it?

 

[SteamKing]

SK:
In Sweden they are moving whole town to make place for their iron ore mine:
http://www.bbc.com/news/magazine-26447507
(I should be able to find some similar cases with Polish coal mines, but I'm not sure whether in English)So your point is that such crucial, but private investment, each land owner should have a right to extort some exorbitant price / sabotage whole project?

Just as a company has a right to try to build a mine, so does a property owner have a right to preserve his property, if he so chooses. There is nothing inevitable about building a mine. In fact, often many other people than the property owners immediately affected by the mine might protest its construction in the first place, because of environmental concerns, displacement of people who live there, whatever. It is better to negotiate an understanding, than that one side have a preponderance of power with which to get its way unfettered.

The property holdout is somewhat famous for frustrating the plans of larger, wealthier entities:

http://untappedcities.com/2015/04/1...e-world-that-stood-in-the-way-of-development/

(In the link above, pay particular attention to what some property holdouts had to say when Rockefellers came calling for their homes.)

This is the essential difference between having liberty and living in a society ruled solely by coercion from the state.

Sure, the Swedes can move a whole town to dig an iron ore mine, but I don't have to live there if I choose not to. If the Swedes choose to submit supinely to their alleged betters, that's their business.

The Soviets could requisition entire towns, and even whole regions, for state purposes, but they had to build walls to keep their people in, not the rest of the world out.

 

[Czcibor]

The property holdout is somewhat famous for frustrating the plans of larger, wealthier entities:

http://untappedcities.com/2015/04/1...e-world-that-stood-in-the-way-of-development/

(In the link above, pay particular attention to what some property holdouts had to say when Rockefellers came calling for their homes.)

Funny...
Anyway - why are you posting link to show how dysfunctional results leads the law that you support?

This is the essential difference between having liberty and living in a society ruled solely by coercion from the state.

As already V50 pointed out, this law can often be made de facto void by buying everything around and remodel all your surroundings and making the living there unbearable...
...but in this case its surprisingly 100% OK.

Sure, the Swedes can move a whole town to dig an iron ore mine, but I don't have to live there if I choose not to. If the Swedes choose to submit supinely to their alleged betters, that's their business.

The Soviets could requisition entire towns, and even whole regions, for state purposes, but they had to build walls to keep their people in, not the rest of the world out.

Actually that town lives from iron ore. If someone was able to block this investment he would turn this town in long run to something... Detroit-like.
I'm just pointing out that the regulation that you support is harmful for development.

You know, rather not compare USA to Sweden... In Heritage Economic Freedom Rating, USA beats them in underwhelming way - both countries are counted as mostly free (13rd vs. 23rd).

 

[SteamKing]

Funny...
Anyway - why are you posting link to show how dysfunctional results leads the law that you support?

It's not clear what results you consider "dysfunctional".

The owners of these properties (not all of which were located in the USA, by the way) chose their homes over offers of fantastic amounts of money from project developers. The developers had to adjust their plans somewhat, but they were not left entirely empty-handed. Rockefeller Center got built; it's just got a few extra corners that didn't show up on the original plans. The Rockefellers made some more money to go with the pile they already had amassed in the oil bidness.

I'm not against development, I'm against developers getting an unfair advantage by promising politicians something in return for removing any recalcitrant property owners who get in the developer's way. It's a slippery slope which can easily lead to graft and corruption, something which is not in short supply already.

As already V50 pointed out, this law can often be made de facto void by buying everything around and remodel all your surroundings and making the living there unbearable...
...but in this case its surprisingly 100% OK.

If I want to sell my property, then that ought to be my business and mine alone. I don't need some government official to make up my mind for me, and especially not one who is acting as a de facto agent for a developer, using the power of a government office to gain an unfair advantage.

I never said that a company shouldn't buy all the land it desires, as long as the previous owners are willing to sell. What I object to is a company attempting to use the power of the state to compel the separation of owners from their property, which is subtly different.

Actually that town lives from iron ore. If someone was able to block this investment he would turn this town in long run to something... Detroit-like.
I'm just pointing out that the regulation that you support is harmful for development.

And the Swedish town (just like Detroit), being a one-industry town, will probably suffer the same fate: when the iron ore runs out, this town will probably dry up and blow away. It's happened to countless other towns in the US, which staked their future on this mine or that industry, only to see everything lost when circumstances changed (the mine runs out of ore, the oil field runs dry, the car industry moves overseas, etc.)

Spain is home to some modern ghost towns, built in a speculative frenzy with the connivance of local politicians and real-estate developers:

http://fortune.com/2013/11/15/the-road-to-demolition-inside-a-spanish-ghost-town/

Not everyone agrees that unfettered development is desirable. Shocking perhaps, but true.

It's one reason we set aside land for national parks and such. We choose to forgo whatever economic benefits could be derived from harvesting a forest for timber or strip mining a mountain for coal or iron ore because the unspoiled land is considered more valuable. It's a hard concept to grasp.

When was the last time anyone visited a Soviet national park?

 

[SW VandeCarr]

I

I would argue that amounts to a "Bill of attainder." It singles out an identifiable group for seizure of property without compensation . Founders anticipated this sort of thinking and forbade it to both congress and the states.

You'd have to tax everybody's wealth (horizontal equity) at a graduated rate (vertical equity).

Since when is taxation a "seizure of property"? That sounds pretty exteme. The original constitution gave Congress the power to levy to taxes and the 16th amendment gave Congress the right to levy an income tax. US local governments have been taxing real property, often at gross asset value, for I don't know how long. The 16th amendment is specific to income, so any wealth tax would require an another amendment. Show me where even the original constitution or any law implies everyone should be taxed at a graduated rate?

http://www.nytimes.com/2012/11/19/opinion/to-reduce-inequality-tax-wealth-not-income.html?_r=0

http://www.washingtontimes.com/news/2015/mar/1/stephen-moore-do-the-rich-pay-their-fair-share-of-/

Displays like this make a big point of showing the wealthy overall pay more income taxes. They have higher incomes. That would be true even with flat rate income taxes. Do you have to convince people that the working class or poor pay less income tax? Do you want them to pay more tax? BTW, there's a hole in this chart. Where's the missing 8.9%?

 

[SteamKing]

The top US rate is 28.6%. In California, it's 41.9%, which would make it #2 in the OECD, just under Denmark's 42.0%.

Actually, these tax rates are out of date. The top US income tax rate is now a whopping 39.6%, and it can be assessed on income for married couples filing separately who have income above $228,800.00 (and at higher income threshholds for other filing statuses). There are a total of seven income tax brackets now in the Internal Revenue Code, which number of brackets has grown since the tax reform back in

 

[SteamKing]

Since when is taxation a "seizure of property"? That sounds pretty exteme. The original constitution gave Congress the power to levy to taxes and the 16th amendment gave Congress the right to levy an income tax. US local governments have been taxing real property, often at gross asset value, for I don't know how long. The 16th amendment is specific to income, so any wealth tax would require an another amendment. Show me where even the original constitution or any law implies everyone should be taxed at a graduated rate?

http://www.nytimes.com/2012/11/19/opinion/to-reduce-inequality-tax-wealth-not-income.html?_r=0

It's simple: if you don't pay your taxes, the state or the federal government can put a lien on your real property and seize and sell your personal property if the tax bill isn't paid. This applies to unpaid income tax as well as unpaid property tax.

You are correct about the Constitution giving Congress the power to tax. However, the Constitution originally treated direct taxation differently from indirect taxation.

http://en.wikipedia.org/wiki/Direct_tax#U.S._constitutional_law_sense

http://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_United_States_Constitution

A direct tax is a tax levied on someone or something merely because it exists. A property tax is an example of a direct tax: the owner of record for a certain piece of property on a certain date during the year accrues a liability for paying the tax (it doesn't matter how the tax is calculated). Another example of a direct tax is a capitation tax, sometimes called a poll tax. It is levied on a person merely for being alive and drawing breath.

Direct taxes were controversial when the Constitution was drafted, because some of the delegates feared that direct taxation led the way to tyranny from the government levying the tax. As one group said at the time when the document had been sent to the states for ratification,

"The power of direct taxation applies to every individual ... it cannot be evaded like the objects of imposts or excise, and will be paid, because all that a man hath will he give for his head. This tax is so congenial to the nature of despotism, that it has ever been a favorite under such governments. ... The power of direct taxation will further apply to every individual ... however oppressive, the people will have but this alternative, either to pay the tax, or let their property be taken for all resistance will be vain."

To stop the possibility of abuse, the original Constitution mandated that direct taxes had to be apportioned among the states, that is, by population.

OTOH, an indirect tax is a tax on a transaction of some sort, like the sale of goods. Sales taxes and VATs are examples of indirect taxes. If no sale takes place, no taxes are due.

Income taxes had been levied during the Civil War by the federal government, before the 16th Amendment was ratified. These proved to be a lucrative source of revenue for the government, which had been funded primarily by excise taxes and customs duties. The Civil War income taxes expired in 1872, but politicians have long memories when it comes to devising ways to increase government revenue.

At various times after 1872, various proposals and party platforms called for reviving the income tax, but all went nowhere until an amendment was made to a tariff bill which passed in 1894. The income tax provision was not popular in all parts of the country and suit was filed to get it struck down. As the country grew, various court cases had added to the list of direct taxes: income taxes on rents, dividends, and interest were ruled to be direct taxes based on the tariff case decided by the Supreme Court in 1895, which meant these taxes had to be apportioned among the states based on population. Taxes on wages, which are indirect under the law, were not initially affected, but the ruling of the Court established the principle that the source of the income had an immediate effect on determining whether a tax on such income was to be considered direct or indirect.

After the dust settled from this ruling, things bubbled along until W.H. Taft was elected president and took office in 1909. Taft proposed that the congress levy an excise tax on corporations for the privilege of doing business. This excise tax was in reality an income tax, but Taft also recommended that congress draft a constitutional amendment which would overturn one of the key aspects of tax law which arose out of the 1895 Supreme Court decision in the tariff case: abolishing the distinction between direct and indirect taxes when levied by the federal government.

A number of factors made the reception to the idea of a federal income tax more palatable across a wide spectrum of private and political groups. The amendment which Taft had proposed was drafted and passed by congress and sent to the states for ratification, ultimately being adopted in 1913, allowing the federal government to levy an income tax without apportionment.

The passage and ratification of the 16th Amendment did not stop all litigation involving federal income taxes. A court case decided in 1916 ruled that the federal income tax statutes do not violate the Fifth Amendment guarantees against the government taking property (i.e. income) without due process of law.

As far as the mechanics of the collection of the federal income tax, that is not properly a function of constitutional law, but of the various congressional statutes which created the Internal Revenue Code and established the Internal Revenue Service to administer and enforce that Code. The Revenue Act of 1913 was passed in the wake of the ratification of the 16th Amendment and established a graduated income tax from the get-go:

http://en.wikipedia.org/wiki/Revenue_Act_of_1913

The top rate was 7% in 1913, and the amount of income which could be excluded essentially meant that most wage earners were not liable for paying any federal income taxes.

With the approach of World War I, the tax code rapidly became more complex and the number of income brackets multiplied significantly, until the top rate in 1918 was 77% and there were almost as many different income brackets.

http://taxfoundation.org/sites/taxfoundation.org/files/docs/fed_individual_rate_history_nominal.pdf

 

[SW VandeCarr]

Amazing to see tax rates such as in 1958: 50% marginal rate for married filing jointly at $32,000 and a top marginal rate of 94%. I think a typical middle class suburban house would have cost about $15,000 at that time, maybe a bit more in the northeasterm US. and less in southern California.

 

[jim hardy]

Art. I, §9, cl. 4: “No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.”

Read more at: http://www.nationalreview.com/bench-memos/333660/constitutional-fiasco-wealth-tax-matthew-j-franck

 

[SW VandeCarr]

h://http://www.nationalreview.com/bench-memos/333660/constitutional-fiasco-wealth-tax-matthew-j-franckttp/www.nationalreview.com/bench-memos/333660/constitutional-fiasco-wealth-tax-matthew-j-franck

Art. I, §9, cl. 4: “No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.”

Read more at: http://www.nationalreview.com/bench-memos/333660/constitutional-fiasco-wealth-tax-matthew-j-franck

If you're saying that a wealth tax (probably) isn't covered by the 16th Amendment, I agree and have been saying that since post 22. Any wealth tax would require a constitutional amendment.

BTW, have you tried the link? It cuts off after 10 seconds or so, at least for me. I'm using a Mac Pro (Safari).

 

[jim hardy]

This one works on my Win7/Firefox, no timeout
http://www.nationalreview.com/bench-memos/333660/constitutional-fiasco-wealth-tax-matthew-j-franck

I'm just saying a wealth tax is an awful idea.
"Eat the rich" appeals to our basest instinct - anything big needs to be killed and eaten. While that may have got mankind through the ice age, these days it's a mob response.

Do you have to convince people that the working class or poor pay less income tax? Do you want them to pay more tax?

some of the rich pay a LOT of tax, that was the point.
I favor a flat edit: uniform expenditure tax of less than 10%, and restraining government to live within that means. If that's a tax increase on the poor, well at least we know the rich are paying it too.Now - if you want to eat the insurance/financial industry I'm with you.
Have you seen the comments at http://blogs.wsj.com/economics/2015/06/02/grand-central-a-letter-to-stingy-american-consumers/ ?

 

[SteamKing]

It's intellectually lazy to think that taxing wealth gets you anywhere in terms of restoring fiscal prudence to government: if anything, it makes government's appetite for money even more voracious.

Every year, Forbes Magazine releases a list of the 400 wealthiest Americans, the so-called Forbes 400. The latest list, from 2014, is here:

http://www.forbes.com/sites/kerryad...-facts-and-figures-about-americas-wealthiest/

The combined wealth of all these worthies (Bill Gates was No. 1 on the list) was a tad under $2.3 trillion.

For FY 2014, the Federal Government collected a shade over $3 trillion in taxes and fees of all sorts, including personal income taxes. However, it spent approximately $3.5 trillion in the same period, leaving a deficit (for just that year) of a tad under $500 billion, or $0.5 trillion.

http://en.wikipedia.org/wiki/2014_United_States_federal_budget

In other words, you could seize the entire net worth of the Forbes 400 and you couldn't keep the federal government running for even 8 months of the fiscal year. What do you do in FY 2015? All the money from the Forbes 400 is gone, and Bill Gates and his former cohorts on the Forbes 400 list are living under an overpass somewhere.

Maybe the Federal Government should start a foundation to help it with its revenue worries. I know a certain couple of someones who could advise on how to set it up ...

 

[gleem]

Bill Gates has some ideas too.

http://fortune.com/2014/10/15/bill-gates-income-inequality/

 

[SW VandeCarr]

I'm just saying a wealth tax is an awful idea.
"Eat the rich" appeals to our basest instinct - anything big needs to be killed and eaten. While that may have got mankind through the ice age, these days it's a mob response.Now - if you want to eat the insurance/financial industry I'm with you.

OK. How about this?

http://www.apttax.com

 

[jim hardy]

OK. How about this?

At first glance it seems a step in the right direction. It taxes expenditure. It'd bring some reason to Wall Street "High Frequency Trading" which IMHO is an abusive practice.

What about cash transactions ? I don't favor "cashless economy" .

 

[SW VandeCarr]

At first glance it seems a step in the right direction. It taxes expenditure. It'd bring some reason to Wall Street "High Frequency Trading" which IMHO is an abusive practice.

What about cash transactions ? I don't favor "cashless economy" .

Cash is a small part of the money supply even now, and the trend is toward an essentially cashless economy. However, for a tax like this, cash transactions hardly matter unless you're talking about organized crime levels of transactions. If you're stopped by police with a wad of hundred dollar bills, they can legally confiscate it without a warrant or charges. The Fed will reduce currency in favor of M2, etc. Banks will charge extra for cash transactions. Besides, the APTT will be a federal tax. The states will still have their taxes, including retail sales taxes which dwarf the APTT.

The APTT lightly touches the middle class. For a family with a $60,000 income, it's hard to see how they could be taxed more than a $1000 in a year unless they're raiding their savings or taking out big loans. The APTT is highly skewed toward the wealthy, but I have a hard time seeing how it could produce the revenue claimed. A 0.35% tax on securities transactions (stocks, bonds) is huge. Talk about capital flight! Switzerland barely gets away with a 0.01% tax on securities transactions alone. Theoretically speaking , the base for the APTT is said to be 50-100 times GDP depending on the size of the financial industry realtive to the whole economy. Taking the US GDP at $18T multiplied by 50 you get 900T and this is based on old data. Fully evalutaing the current level of securities and bank transactions might be as high as $3 quadrillion (Qd)! Reading about it, I get the idea no one really knows. It's surely true that 0.35% is not feasible unless securities transactions are exluded, let alone HFT (which will be eliminated by any APTT), and without the stock and bond markets I have no idea where all this potential is.

IMHO I think some kind of an APTT may have a place, and it can reduce other taxes. It's a consumption tax, although a progressive one, and IMO needs to be balanced by an income tax, albeit at lower rates. I wouldn't object to a flat income tax, say 13-15% tax paired with some kind of APTT. There would need to be deductions for federal and state antipoverty programs. (I just thought I'd throw that in).

www.researchgate.net/']www.researchgate.net/...Taxation...(APT)_tax/.../0912f50572c3690e8e0.[/PLAIN]

There doesn't seem to be any links for this, but it's the best discussion I've found. There are plenty of other APT tax URLs of lower quality.

 

[jim hardy]

If you're stopped by police with a wad of hundred dollar bills, they can legally confiscate it without a warrant or charges.

Has that been to supreme court yet ?

 

[SW VandeCarr]

Has that been to supreme court yet ?

Jeez! I wrote that whole thing and that's what you picked up on? I don't know, but RICO has past muster and I think this stuff has been justified by the RICO statutes. I really don't want to go off topic with this but it's a license to steal. Many innocent people have been victimized. Here, you're guilty until proven innocent. Start another thread if you want and I'll contribute. Please no more posts about this in this thread.

 

[jim hardy]

Well i'd like to see something like the APTT replace the personal income tax, not accompany it.

 

[SW VandeCarr]

Well i'd like to see something like the APTT replace the personal income tax, not accompany it.

So would I. It has many good attributes. It has a broad base and a low rate. It can be fully automated and easily administered. It's progressive, and largely painless unless you're heavily involved in securies trading or doing very large transactions. We could do away with the IRS, although Treasury agents would need be on the lookout for large cash transactions. However, what is the optimal rate that doesn't disrupt the markets but still brings enough revenue? The boosters of this tax say it can replace the income tax, estate tax and others. They say the optimal rate is 0.35%, but if you read their literature, they talk about a decline in trading volume from 25 to 50%. No one knows the potential of this tax. The few transaction taxes that have been used are an order of magnitude smaller, and 0.01% will not bring enough revenue.