Warren Buffet speaks common sense; alarms most Republicans

[Ogie Oglethorpe]

Then please provide me the vote counts. In that way we can assure ourselves that the rank partisanship of the GOP is the issue at hand here. Compared to the case for ARRA where you could truly say it was GOP vs. Dem.

[giblets]

I'm guessing that request is addressed to MrFun, the one who made the claim that Republicans are opposed to the legislation.

[Ogie Oglethorpe]

Well he did indicate it was a past tense opposition to a jobs act. Given the only past tense jobs act is ARRA (It likewise had a payroll tax relief for employees, and a bunch of stuff the GOP didn't want and had almost complete unified opposition from the GOP)...

If Republicans love tax breaks so much, why did they oppose payroll tax relief extension for the working class?

Bolding mine.

[Fake Boris]

The bar I'm placing on "interesting" is quite low, btw; it is the ability to make an argument which demonstrates you understand what NPV is.

OK before I begin.

1. What's your point, that Warren Buffet's real tax rate is much more than income %, or that Warren Buffet shouldn't be paying more taxes?

In case you haven't noticed, it's absolutely not clear what you're trying to say.

[Kuciwalker]

Warren Buffet's marginal rate is much, much higher than the numbers stated; it's in the high 90%s. Therefore we should not raise his taxes.

[KrazyHorse]

OK before I begin.

1. What's your point, that Warren Buffet's real tax rate is much more than income %, or that Warren Buffet shouldn't be paying more taxes?

In case you haven't noticed, it's absolutely not clear what you're trying to say.

The tax wedge placed between Warren Buffet's production and his (or his descendents') consumption is something well above 90%. "Income" is a meaningless measure, because it consists of both real production as well as the nominal change in a variable which leads to 0 change in risk-adjusted NPV. The fact that you had to ask demonstrates how fundamentally illiterate you are on this subject. The vast majority of Buffet's "income" has already been triple-taxed before it gets to him (at the earned income tax level, at the corporate tax level and at the unearned income tax level).

[Jon Miller]

KH,

You are instrumental for me changing my mind about corporate taxes in the past. You convinced me that corporate taxes are passed on to the consumers. So now, when I look at the tax situation for Buffet and others like him, I don't think that corporate taxes are taxes on him but on the consumers. How are you now claiming that he is taxed based on corporate taxes?

You, for the most part, base your ideas on consumption being what is taxed. How do we tax non-material consumption, in your framework? Taxing insurance? Wealth plays an insurance role. Taxing power? A straight consumption tax would tax paying 100k a year to go to Harvard, but would not tax a "this is the son of a wealthy man who has influence in politics/sits on our board/etc/etc/etc". How can you justify taxing only material consumption when other places where wealth plays such a significant role would be untaxed?

JM

[Kuciwalker]

Jon, we've been over this before. Insurance is deferred consumption. A tax on consumption directly reduces the insurance value of wealth. If you needed $X to self-insure against some outcome before a consumption tax, you would need $X/0.8 after the imposition of a 20% consumption tax.

[Kuciwalker]

Taxing power? A straight consumption tax would tax paying 100k a year to go to Harvard, but would not tax a "this is the son of a wealthy man who has influence in politics/sits on our board/etc/etc/etc".

You want to levy a tax on social status? Is that even a fully coherent idea? The total amount of status is fixed...

[Jon Miller]

Power is a good. It can be bought by wealth (often not even with the wealth being consumed) and provides material goods (often ones that would not otherwise be available).

And it does increase with time, there is more 'power' available in the world today than 2000 years ago, primarily because there are more people today than 2000 years ago.

It is difficult to tax, but that doesn't mean it shouldn't be. And I fail to see how some sort of tax on wealth/unearned income/etc is not the best mechanism to tax it in a capitalist society.

I guess you don't think that I should be taxed when I buy an insurance policy then?

JM

[Kuciwalker]

I guess you don't think that I should be taxed when I buy an insurance policy then?

You would pay a consumption tax when (if) the insurance policy paid out a claim and you used that money to buy a replacement good.

And insurance policy is just an OTC derivative tailored specifically to some future states of the world that are relevant to you.

[Jon Miller]

So what defines things that are consumption and should be taxed and what are not consumption and should not be taxed.

Apparently peace of mind from insurance should not be taxed. How about having a lawyer on retainer? Or hiring an accountant?

And what about the economies that are heavily service based? How will they acquire enough money via taxation to pay for policemen/etc?

JM

[Kuciwalker]

Apparently peace of mind from insurance should not be taxed.

IT IS TAXED.

Jon. I have a car that (absent taxes) would cost $10,000. An insurance policy on my car that paid out exactly $10,000 if I wrecked my car (so I could replace it) would cost $500. (These numbers are obviously made up.)

Now the government levies a 20% consumption tax, so the car now costs $12,500. I now have to take out an insurance policy that pays out that amount, not $10,000, in order to be able to replace my car if it is wrecked. This policy would cost $625.

The price of an insurance policy that provides the same 'peace of mind' rises directly with the consumption tax.

[Jon Miller]

I understand what you are saying, but you are wrong.

In your world, the government gets not taxes from insurance at all, there is no way to differentiate someone getting a car with insurance money and someone getting a new car because they want one. If you don't tax the insurance, you are not taxing the 'peace of mind' but only the 'purchase of a new vehicle'. It does not get get taxes on 'peace of mind', because there is no increase of taxes beyond that which it would get for the new car.

But let's ignore that part. The primary reason to have car insurance is not to purchase yourself a new car, but to pay for other costs that are associated with driving a car.

Note that this is no different than having wealth, to pay for other costs that are associated with living (like a liver transplant).

JM

[Kuciwalker]

I understand what you are saying, but you are wrong.

In your world, the government gets not taxes from insurance at all, there is no way to differentiate someone getting a car with insurance money and someone getting a new car because they want one. If you don't tax the insurance, you are not taxing the 'peace of mind' but only the 'purchase of a new vehicle'. It does not get get taxes on 'peace of mind', because there is no increase of taxes beyond that which it would get for the new car.

asdf;klajflk;asdfasfd

Pre-tax, a certain quantity of "peace of mind" cost $500. Post-tax, it cost $625. That is the beginning and end of it.

Also: the "peace of mind" IS ABILITY TO PURCHASE A NEW VEHICLE.