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Why? If you make more money than me, why should you pay more for your police & fire protection than I do? Why should you pay more for your share of the federal government than I do? The only fair things is for both of us to pay the same amount, just as we each would pay the same amount for a gallon of milk or loaf of bread.
Because I have the ability to pay more and contribute to and support a modern society. If we all paid the same then payments would be based on the lowest of the earners, funding for everything would disappear. Everyone should pay the same is not only unrealistic but shortsighted. 500.00 means far less to me earning 220k a year than the person earning 20k
If there is a "sales" tax on milk or bread, you pay the same.
If the police and fire are paid for via property tax ( and it usually is ) then the weathy have bigger properties to protect which costs more in taxes as it costs more to police or fight fires.
That's a good reason to move some taxation from income to consumption so if the rich person isn't investing back into the economy and buying yachts and private planes and .... they pay more.
If they start businesses or invest in existing businesses, that's a better use of the money than handing it over to the government to "invest" in stuff ( ie. Solyndra starting democracy in Iraq and other stuff ... )
Taxing based on consumption taxes the lower earners on 100% of their income and that percentage drops as income grows. A regressive system is no good
In the above example, the executive's wife's airplane ticket would (probably) be taxable compensation. But his own airfare is not.
Actually, in my example, I had them taking a corporate jet, so there is no airfare. In the corporate jet example, typically what would happen is someone would calculate that the price of a commercial ticket from point A to point B is, say, $500, and then calculate the cost to the company of that corporate jet taking the two of them from point A to point B at, say, $8,000. In my example, $7500 would be considered income to the executive and it would show up in his W2, and he would have to pay tax on it.
Quote:
Originally Posted by ohio_peasant
...There's no requirement that he spend 100% of his time on the business-trip conducting company business. He can play golf or go sailing. The greens' fees aren't compensated (or deductible), but the cost of travel, and the cost of the hotel aren't passed on to him. And the per diem that he receives is tax-free.
This holds not only for executives, but even for the most junior employees on official travel. In fact one of the perks of working for a major concern, in a field like sales or research, is "free" travel to conferences and the like.
Ah, the myth of the luxury of business travel. When I was working, I would regularly log 250,000 miles per year in business travel. The reality is more grueling than luxurious. You don't really have time to go golfing or sailing - because you have already been booked to another location for another purpose. The reality of business travel is more like this: on Sunday, fly from one coast to the other, conduct business all day Monday, then Monday night fly from point B to point C, and again on Tuesday night fly from point C to point D... etc, frequently arriving in mid-sized cities around 10 or 11 pm and there are no restaurants open so you pretty much eat from a vending machine or the food court at the airport... and repeat.
Rarely I could tack on a weekend someplace. I'm not aware of any executive who works less than about 70 hours per week, and is always on call. Execs just don't have time for such working vacations.
Quote:
Originally Posted by ohio_peasant
...There are lots of considerably affluent people (with well over $1M in liquid assets) with not the least interest in owning a business or having any direct connection with businesses. In fact they might find the very idea of business to be outright distasteful. Instead, the aim is passive income, which is to say passive investment in somebody else's business...
I agree - in which case there are few deductions available to you, and nothing to write-off.
Quote:
Originally Posted by ohio_peasant
...But it's next to impossible to generate 8% annual returns for such an approach, without incurring considerable volatility or risk (which BTW aren't identical things).
In fact the great challenge of wealth-management is how to a more modest return - say, 5% annually - from a large portfolio (many $M), with minimal volatility, risk or taxes.
I agree completely. And of course, what happens when there is a "black swan" time period of, say, 20 years where the return from investing in the market is 0%; such a black swan event at one point in time was considered so remote as to be impossible. A more modern understanding of financial markets indicates it is far from impossible, although still thankfully very unlikely. But then again, I am not a lucky person.
If there is a "sales" tax on milk or bread, you pay the same.
If the police and fire are paid for via property tax ( and it usually is ) then the weathy have bigger properties to protect which costs more in taxes as it costs more to police or fight fires.
That's a good reason to move some taxation from income to consumption so if the rich person isn't investing back into the economy and buying yachts and private planes and .... they pay more.
If they start businesses or invest in existing businesses, that's a better use of the money than handing it over to the government to "invest" in stuff ( ie. Solyndra starting democracy in Iraq and other stuff ... )
Personally, I think criminals should pay for almost all of it, with the rest of us paying a nominal amount.
In our current economic environment, 1 mil doesn't go nearly as far as it used to. When I was growing up, (early-mid 80's) if you had a million dollars liquid in the bank, you could earn interest at rates of 8-10%. So, you'd be pulling in 80-100k just by having your money sit in the bank. Now, interest rates are laughable, that million isn't earning you much of anything, so you have to invest in riskier things to achieve a return like that.
If interest rates rise to that level again, with less rise in inflation, it might seem like more money to have again.
I saw a post somewhere that the Republicans are pushing the FEDs to raise interest rates. This makes sense because they can't make real money on their money without risk and the one tenth of one percent would like to induce another recession because the economic health of Americans is unimportant to them.
In the corporate jet example, typically what would happen is someone would calculate that the price of a commercial ticket from point A to point B is, say, $500, and then calculate the cost to the company of that corporate jet taking the two of them from point A to point B at, say, $8,000. In my example, $7500 would be considered income to the executive and it would show up in his W2, and he would have to pay tax on it.
I've never flown on a corporate jet (though I did occasionally fly as a passenger for a business trip on a general-aviation prop-job, with my coworker as pilot), so I'm ignorant of the accounting rules for corporate jets. Intuitively however, it would be odd if executives were personally liable for taxes on the difference between their jet-tickets and a commercial ticket. What about corporate travelers who receive business-class tickets? Are they liable for taxes on the difference between their ticket fees and the price of coach-class? What about business-travelers who need a short-notice ticket on commercial coach class, paying $2000 for a ticket for which the leisure-traveler in the adjacent seat paid $200? Are they liable for $1800 as taxable income?
Quote:
Originally Posted by SportyandMisty
Ah, the myth of the luxury of business travel. When I was working, I would regularly log 250,000 miles per year in business travel. The reality is more grueling than luxurious. ...
The irony is that I typed my original posting (as well as this response) while on an overseas business trip. Yes, I flew back-to-back 12 hour flights, in coach-class. Yes, I worked on the plane, and was expected to work over the weekend. Yes, my sleep is deficient and my circadian rhythms are all discombobulated. I answer e-mails throughout the day, including when I'm on the bus, or lounging on a park-bench, or eating dinner. I participate in telecons which in my present time-zone are in the middle of the night. Even when back home, I regularly work >70-hour weeks, which I can afford to pursue because I have no wife or children, and my main remaining hobbies are reading and lifting weights (resembles a prison, doesn't it). But on this trip I also had time to visit world-class museums. I toured an ancient city. I had some scrumptious meals, which given the presently strong dollar were all within per diem. I went to the beach. And when I finally return home after literally weeks of travel, and file my travel-expense voucher, then barring some calamity or misunderstanding, I'm actually going to turn a net profit – which is not taxable.
Business-travel isn't luxurious, and indeed it's grueling. But that wasn't the point. My point is that business-travel generates all sorts of expenses, none of which are taxable events for the traveler.
Of course, being single, without children and without a mortgage, the various income-tax exemptions/deductions indeed phase out, and one's effective marginal tax rate becomes high indeed. So the travel-freebees are a paltry compensation for the overall burden.
I saw a post somewhere that the Republicans are pushing the FEDs to raise interest rates. This makes sense because they can't make real money on their money without risk and the one tenth of one percent would like to induce another recession because the economic health of Americans is unimportant to them.
You need to get a different source of information or come to a different conclusion. There is lots of money being made with low interest rates. Have you seen the stock market? investors are making money and when their is a threat of interest rates rising the stock market goes down.
I don't care what anyone says... Having a million bucks socked away is significant...
The first million was the hardest.
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