5 ms·

Sanders would also seek to double the capital gains rate for the richest 2%, and close various loopholes.

pluckytree 11y ago
Then it will shift somewhere else. Or being invested in countries where savings and investment are rewarded rather than punished.
chris_va 11y ago
That complicates it more, and high net worth individuals will just leave their money in captive corporations/trusts instead. This is not a route to saner tax policy, just something that sounds great to the average voter.
- toomuchtodo 11y ago
  Can the law not be modified to collect from corporations and trusts? That's my concern with this line of reasoning: Money, which is just a transfer mechanism of wealth, is a human creation, just as the rules around its taxation are. People seem to think that "If you change the rules, people will just find other ways!". Well, the rules can change at any time. > This is not a route to saner tax policy A saner tax policy taxes the wealthy at a higher rate than the middle and lower classes. Trickle down has proven not to work.
  - netcan 11y ago
    Not easily. This is a problem everywhere. Capital is just more mobile than labour income. To take a big example, someone can just pick up and move somewhere for 180 days of the year. For more realistic examples, they just put their assets in a foreign corporation. The loopholes are sometimes intentional. But more often, they are just there because money is global and tax law is local.
  - chris_va 11y ago
    > Can the law not be modified to collect from corporations and trusts? I would hope so too, but functionally the only way to do this efficiently would be to tax them all at the same rate (meaning no marginal brackets). Any time you introduce different brackets, you leave yourself open to gaming the system. People will gravitate towards solutions that maximize their wealth. Flat rate tax systems are not politically popular, since everyone paying the same rate has been portrayed as regressive (and arguably so, given the reduced marginal value of more money), so I find it unlikely for a political solution to be tenable. > Well, the rules can change at any time. Yes, well, starting a business in such a climate is sketchy. Just look at countries like Venezuela. You don't want things to change, you want certainty and stability for long term economic growth. > Trickle down has proven not to work. Really? Are the middle class living in poorer conditions than they were 100 years ago? Wealth inequality is obviously destabilizing over a long period, and I agree that it would be better to live in a system that is inherently more stable and equal. However, if you look at inflation adjusted income or purchasing power, it's been getting better and better for the middle class for most of our country's history (flat the last 5 years, though).
    - sharemywin 11y ago
      you could have a progressive tax system in which corp, capital gains and income were all taxed at the same rate.
    - dragonwriter 11y ago
      > I would hope so too, but functionally the only way to do this efficiently would be to tax them all at the same rate (meaning no marginal brackets). I've always thought that ideally corporate tax rates should be flat, and should be at the maximum marginal rate for personal income tax, but that all corporations (not just those which currently do this) should be able to take advantage of the lower personal marginal tax rates of their shareholders, essentially having the option to be taxed at a rate as if its taxable income were additional income to its shareholders, distributed in proportion to the ownership share, except for the income share of shareholders that aren't individual taxpayers (e.g., nonresident foreigners.) However, I don't think that we're at the point where this would be administratively feasible. OTOH, given that there are options for corporations to distribute tax liability to shareholders, they just take special up-front decisions and impose some limits, I'd be happy to settle with corporate income tax fixed at the top marginal personal rate.
  - prostoalex 11y ago
    US tax system is based around tax events, i.e. triggers, which require a transaction to take place. Unlike other economic systems, money sitting quietly will not be taxed until it kicks off a dividend, pays interest or changes hands thereby triggering capital gains. Outside of municipal property taxes there's currently no framework for taxing wealth. An extreme theoretical case would be a billionaire with nothing but a savings account earning 0%. Under current system, he could while away indefinitely, making small withdrawals here and there to cover the lifestyle, while generating 0% tax burden. Which is why discussing income taxes is a red herring - at this point people generating eight-digit incomes choose to work, and have a rather nice and comfortable way out if/when they decide to "spend more time with the family". Wealth tax is a third-rail for either party, as majority of donors on both side are wealthy, but not necessarily high-income individuals.
ck2 11y ago
By what freaking magic is Congress going to pass ANY of this??? Has no-one been paying attention the past eight years? You think he can do any of these changes with an executive order?
- msbarnett 11y ago
  Yeah, change is hard, so we should just elect someone who isn't pursuing any.
  - netcan 11y ago
    I'm not american, so I may be missing the point. But isn't ck2's point that this a President doesn't have the authority for this? Are't these supposed to be congressional authorities? IE, to get these policies people should elect legislators with these views.
    - dllthomas 11y ago
      Technically? Sort of. Practically? Also sort of, but a little less so. Technically speaking these bills originate in Congress. For financial matters, specifically the House. But the President does have veto power, so has a voice in the process. Practically speaking, the President does a lot to set the tone. It's the only nationally elected position (even if elected a little weirdly). See "bully pulpit".
    - deleted 11y ago
      [deleted]
    - msbarnett 11y ago
      It's not an either-or thing -- you need to elect both local representatives AND a president who is interested in change. A president cannot single handedly pass these changes, but he or she DOES exercise considerable influence on the kinds of things congress passes via the ability to refuse to sign things that congress does pass, so a president interested in change is a vital part of the process. Consider that Barrack Obama campaigned on health care reform, and a health care reform package was passed during his first term. It's not a coincidence that that happened, even though the package had to be introduced by congress -- the electoral mandate handed to a president necessarily informs the legislative pressures congressional members feel, be it to support such a mandate, or to obstruct it, depending on the political inclinations of their base.
aioprisan 11y ago
How would he seek to do that without having a majority in Congress? The last 6 years haven't taught us anything?
- dragonwriter 11y ago
  > How would he seek to do that without having a majority in Congress? Why would he be the first Presidential candidate in history to not seek to have a Congressional majority supporting his policy objectives elected alongside himself? (Sure, he probably won't get that, and he'll probably have to compromise with the Congress he actually has. But that shouldn't stop him from trying to build as much support as possible for his actual policy goals.)
  - aioprisan 11y ago
    Again, I think there's a real disconnect from reality and who actually votes in Congressional races. While he personally can try to build as much support as he wants for his policies, there is no indication that given the current Congressional battle lines will give way for someone even more far left than Obama.
netcan 11y ago
(A) The real issue is not setting tax rates after some national soul searching, compromise and a moral-philosophical discussion about greed, wealth, liberty and so forth. It's not about economic theories. It's about practicalities. It is increasingly hard to tax the wealthy and large corporations. This is for reasons that are not easy to remedy, and may not be remediable. The reality in all developed countries is that (1) total budget/gdp is %35 - %45 and (2) the middle class pay disproportionately high taxes. This is effectively what you are working with as a leader in a 2016 developed country. If you think you can get significantly more (ie percentage points of GPD) out of the wealthy... well... that's the significant part. Tell us about that. Lets debate that. Personally, I doubt it. I think we need to acknowledge that these are the parameters of our nameless, global political-economic system. It carries some parts of the capitalism, welfare state theories, labour unionism theories, but it's pretty far from those on paper. (B) There are examples in the US and elsewhere of high marginal taxes. This is not a venture into some unknown. I'm not American, so no real dog in this race. That said, when I here someone talk in this way, as if from a sketchbook of political ideas, I kind of think it's naive.

Then it will shift somewhere else. Or being invested in countries where savings and investment are rewarded rather than punished.

chris_va 11y ago

That complicates it more, and high net worth individuals will just leave their money in captive corporations/trusts instead. This is not a route to saner tax policy, just something that sounds great to the average voter.

toomuchtodo 11y ago
Can the law not be modified to collect from corporations and trusts? That's my concern with this line of reasoning: Money, which is just a transfer mechanism of wealth, is a human creation, just as the rules around its taxation are. People seem to think that "If you change the rules, people will just find other ways!". Well, the rules can change at any time. > This is not a route to saner tax policy A saner tax policy taxes the wealthy at a higher rate than the middle and lower classes. Trickle down has proven not to work.
- netcan 11y ago
  Not easily. This is a problem everywhere. Capital is just more mobile than labour income. To take a big example, someone can just pick up and move somewhere for 180 days of the year. For more realistic examples, they just put their assets in a foreign corporation. The loopholes are sometimes intentional. But more often, they are just there because money is global and tax law is local.
- chris_va 11y ago
  > Can the law not be modified to collect from corporations and trusts? I would hope so too, but functionally the only way to do this efficiently would be to tax them all at the same rate (meaning no marginal brackets). Any time you introduce different brackets, you leave yourself open to gaming the system. People will gravitate towards solutions that maximize their wealth. Flat rate tax systems are not politically popular, since everyone paying the same rate has been portrayed as regressive (and arguably so, given the reduced marginal value of more money), so I find it unlikely for a political solution to be tenable. > Well, the rules can change at any time. Yes, well, starting a business in such a climate is sketchy. Just look at countries like Venezuela. You don't want things to change, you want certainty and stability for long term economic growth. > Trickle down has proven not to work. Really? Are the middle class living in poorer conditions than they were 100 years ago? Wealth inequality is obviously destabilizing over a long period, and I agree that it would be better to live in a system that is inherently more stable and equal. However, if you look at inflation adjusted income or purchasing power, it's been getting better and better for the middle class for most of our country's history (flat the last 5 years, though).
  - sharemywin 11y ago
    you could have a progressive tax system in which corp, capital gains and income were all taxed at the same rate.
  - dragonwriter 11y ago
    > I would hope so too, but functionally the only way to do this efficiently would be to tax them all at the same rate (meaning no marginal brackets). I've always thought that ideally corporate tax rates should be flat, and should be at the maximum marginal rate for personal income tax, but that all corporations (not just those which currently do this) should be able to take advantage of the lower personal marginal tax rates of their shareholders, essentially having the option to be taxed at a rate as if its taxable income were additional income to its shareholders, distributed in proportion to the ownership share, except for the income share of shareholders that aren't individual taxpayers (e.g., nonresident foreigners.) However, I don't think that we're at the point where this would be administratively feasible. OTOH, given that there are options for corporations to distribute tax liability to shareholders, they just take special up-front decisions and impose some limits, I'd be happy to settle with corporate income tax fixed at the top marginal personal rate.
- prostoalex 11y ago
  US tax system is based around tax events, i.e. triggers, which require a transaction to take place. Unlike other economic systems, money sitting quietly will not be taxed until it kicks off a dividend, pays interest or changes hands thereby triggering capital gains. Outside of municipal property taxes there's currently no framework for taxing wealth. An extreme theoretical case would be a billionaire with nothing but a savings account earning 0%. Under current system, he could while away indefinitely, making small withdrawals here and there to cover the lifestyle, while generating 0% tax burden. Which is why discussing income taxes is a red herring - at this point people generating eight-digit incomes choose to work, and have a rather nice and comfortable way out if/when they decide to "spend more time with the family". Wealth tax is a third-rail for either party, as majority of donors on both side are wealthy, but not necessarily high-income individuals.

ck2 11y ago

By what freaking magic is Congress going to pass ANY of this??? Has no-one been paying attention the past eight years? You think he can do any of these changes with an executive order?

msbarnett 11y ago
Yeah, change is hard, so we should just elect someone who isn't pursuing any.
- netcan 11y ago
  I'm not american, so I may be missing the point. But isn't ck2's point that this a President doesn't have the authority for this? Are't these supposed to be congressional authorities? IE, to get these policies people should elect legislators with these views.
  - dllthomas 11y ago
    Technically? Sort of. Practically? Also sort of, but a little less so. Technically speaking these bills originate in Congress. For financial matters, specifically the House. But the President does have veto power, so has a voice in the process. Practically speaking, the President does a lot to set the tone. It's the only nationally elected position (even if elected a little weirdly). See "bully pulpit".
  - deleted 11y ago
    [deleted]
  - msbarnett 11y ago
    It's not an either-or thing -- you need to elect both local representatives AND a president who is interested in change. A president cannot single handedly pass these changes, but he or she DOES exercise considerable influence on the kinds of things congress passes via the ability to refuse to sign things that congress does pass, so a president interested in change is a vital part of the process. Consider that Barrack Obama campaigned on health care reform, and a health care reform package was passed during his first term. It's not a coincidence that that happened, even though the package had to be introduced by congress -- the electoral mandate handed to a president necessarily informs the legislative pressures congressional members feel, be it to support such a mandate, or to obstruct it, depending on the political inclinations of their base.

aioprisan 11y ago

How would he seek to do that without having a majority in Congress? The last 6 years haven't taught us anything?

dragonwriter 11y ago
> How would he seek to do that without having a majority in Congress? Why would he be the first Presidential candidate in history to not seek to have a Congressional majority supporting his policy objectives elected alongside himself? (Sure, he probably won't get that, and he'll probably have to compromise with the Congress he actually has. But that shouldn't stop him from trying to build as much support as possible for his actual policy goals.)
- aioprisan 11y ago
  Again, I think there's a real disconnect from reality and who actually votes in Congressional races. While he personally can try to build as much support as he wants for his policies, there is no indication that given the current Congressional battle lines will give way for someone even more far left than Obama.

netcan 11y ago

(A) The real issue is not setting tax rates after some national soul searching, compromise and a moral-philosophical discussion about greed, wealth, liberty and so forth. It's not about economic theories. It's about practicalities. It is increasingly hard to tax the wealthy and large corporations. This is for reasons that are not easy to remedy, and may not be remediable. The reality in all developed countries is that (1) total budget/gdp is %35 - %45 and (2) the middle class pay disproportionately high taxes. This is effectively what you are working with as a leader in a 2016 developed country. If you think you can get significantly more (ie percentage points of GPD) out of the wealthy... well... that's the significant part. Tell us about that. Lets debate that. Personally, I doubt it. I think we need to acknowledge that these are the parameters of our nameless, global political-economic system. It carries some parts of the capitalism, welfare state theories, labour unionism theories, but it's pretty far from those on paper. (B) There are examples in the US and elsewhere of high marginal taxes. This is not a venture into some unknown. I'm not American, so no real dog in this race. That said, when I here someone talk in this way, as if from a sketchbook of political ideas, I kind of think it's naive.