Friday, September 23, 2011

Ah, the Taxes

Everybody seems to have an opinion on taxes these days, and since no one seems to know what the hell they're talking about then I suppose I'm equally qualified to offer my thoughts on this. As we stand now, taxes will figure prominently in the 2012 election. My advice is to not listen to any campaign blather on the subject and instead hit your head into a rock because it'll at least be less painful and more likely to teach you something about taxes. A few thoughts:

1) All this crap about the rich paying their "fair share"--first, no one can really define "fair share". It is a fact that the rich pay the vast majority of the income taxes--that is not in dispute. (If you disagree, please spend more time introducing your head to the rock, because the rock might be smarter than you on this subject) It is also a fact that this is because the rich have the vast majority of the income--to tax everyone "equally"--that is, each taxpayer paying an equal dollar amount--would mean sending most people to debtor's prison or the federal government taking in about as much as the country of Equitorial Guinea. (This latter might please some Ayn Rand types) But determining how much more a rich person should pay than a poor person is not a simple matter of "fair"--everyone will have a different definition. For the left, "fair" is "a hell of a lot more than they're paying now". For the right, "fair" is "shut up and get a job". But cut the crap about "fairness" because taxes aren't about fair--they're about revenue.

2) That said, it is often pointed out that rich people often pay very low tax rates on their income by taking it in capital gains or tax exempt bonds or carried-over losses. (John Kerry's wife, Zsa Zsa Kerry, paid something like 14% on her multimillion dollar income for 2004) Tax simplification is a good idea, but keep in mind that each of those "loopholes" was put there for a reason. The government wants to encourage capital investing, so cap gains are taxed at a lower level. Unfair? Then maybe try telling your government to stop trying to social engineer through the tax code. Maybe when these clowns can stop themselves from Twittering photos of their penises to young women they can get around to fixing the tax code, but for now that's the way it is.

3) Warren Buffet can wax empathetic about how wrong it is that he pays a lower tax rate than his secretary. However, I will bet a Coke that the day his accountants fail to take advantage of some tax benefit that helps to lower his overall burden, he fires their asses faster than you can say "Berkshire Hathaway Hypocrite". This is illustrative--the rich will take advantage of the complicated tax code to lower their burdens--at high enough income levels, it is worth it to do this and pay good money for it, because the tax savings become significant. Don't like it? Then push to replace the Code with something far more simple.

4) At some point, taxes are going up. Sure, we can put this off a few more years. Just like Greece and Italy did.

5) If we don't want our economy to collapse, though, it'll mean everyone paying at least a bit more, soon. Yes, even the "poor"--if it means cutting out a pack of menthols a month, or cancelling your cable service, tough turkey. All I hear is "shared sacrifice"--well, everyone has to take a hit. The rich will obviously get the biggest hit--since that's where the most income is--but no one's getting spared. And any complaints can be directed towards the past several decades of spending on all these programs and wars and such that we as a society insisted on. And these things may be great--Iraq wasn't going to invade itself, you know!--but they all have a price. Maybe if we all started to feel it a bit more we'd think a bit more about whether it's worth having all this stuff. If so, great. If not, change.

6) Anyone who is just fine with putting the burden on some "other"--whether only wanting tax hikes for those richer than themselves, or only wanting spending cuts on those programs they themselves don't use--has removed themselves from intelligent discussion on this. They're really no different from the guy in the traffic jam who thinks a great solution to the traffic problem is for everyone else to stay home. And sadly, this seems to encompass everyone in Congress.

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