Do The Rich Owe the Poor?

[Ankesh]

While I agree with a lot of the things you say Michael - I think the notion of no government and no taxation is not practical.

Because history shows us that in absence of a stable government or power, there is total chaos. And warlords emerge. Anarchy is bad for the people.

And it requires just one person to be power-hungry to disrupt the way of living of people in absence of a government.

Say there is no government. And no taxes. Your more powerful neighbour comes and tells you that he owns your land. What do you do?

In absence of a government, there will always be more violence.

A government is needed for delivering justice. And to run the government - taxes are needed.

When there is a government, there is always the risk of the government coming and saying that the land you stay on is theirs. But thats the risk I think people have to take to prevent against anarchy. Who will govern the government will always be a problem. But having a government democratically elected as opposed to having anarchy - thats the lesser of 2 evils.

Ankesh,

Thanks for your thoughts.

In my post I did not say to Not have a govt nor did I say to Abolish all tax. I was specifically talking about Income Tax. A tax on your effort. Taxing that which you have earned from the sweat of your brow.

There are other ways a govt can generate revenue without needing to Tax effort - to steal the fruits of our labor. With the most simple one being a single 10% flat tax on Goods and Non Essential Foods (chocolate, for example). This way, tax is voluntary - if you don't want to pay tax you don't buy the item you don't Need. Don't want to pay $100 tax, don't by the $1,100 LCD/plasma big screen TV. Simple.

Also, a government can operate just like a company does in the private sector - user pays, in other words. And there is no reason it cannot be that way.

And, having money to Run a govt and having money to give away to anyone with a handout are two different things. That later is, as I said, where all the problems stem from.

Michael Ross

"With the most simple one being a single 10% flat tax on Goods and Non Essential Foods (chocolate, for example). This way, tax is voluntary - if you don't want to pay tax you don't buy the item you don't Need. Don't want to pay $100 tax, don't by the $1,100 LCD/plasma big screen TV. Simple."

I already pay that tax, Michael.

Here in the U.S. it's called "sales tax". While it may be higher or lower state to state, I'm paying 10% where I live. And it doesn't matter if I'm buying a gallon of milk, or a pound of candy. It's STILL the same.

Pete

Pete,

Thanks for adding.

We pay it too. We used to have Sales Tax and Wholesale Tax. The wholesaler pays wholesale tax and the retailer pays retail tax on top of the wholesale tax already paid - sometimes, sales tax was around 30% but usually it was 22%.

BUT, what people didn't know was, the Sales Tax was calculated on the Wholesale Price after the wholesaler had paid his wholesale tax for bringing it into the country, and Not the selling price. And this Sales Tax was paid To the wholesaler.

So the wholesaler might buy an item for $5 and pay 11% tax taking the item to a wholesale price of $5.55. This had the sales tax added on - let's use 22% for example - for a total wholesale price of $6.77 ($1.77 in total tax). This could then be sold in the shop at whatever price. Let's say it was a T shirt with print and has a retail price of $30.

Under our New system a 10% flat tax based on Sales Price. So a $30 item would then sell for $33 ($30 + 10% tax). Thus the $30 shirt would now bring tax revenue of $2.72 ($1 more than previous) - $30 divided by 11.

This tax was applied at each stage and credited at each stage of purchase...

Wholesaler sells $5 shirt for $5.50 to retailer. And thus owes $.50 to tax man.

Retailer sells shirt for $30 and has $2.72 tax owing. but as .50 has already been paid when the shirt was bought, only owes tax man $2.22. Either way, tax man then gets 10% of Sales Prices as tax. And has turned each and every business in the country into tax collectors.

Result = coffers become flooded with tax dollars.

Essential Food items are exempt. No separate state taxes. Just one tax. Simple.

Of course, a flat 10% on all goods and foods would be far simpler as well.

Michael Ross

OK, taxes aside, I agree with Michael:
No one owes anyone else.

I think the whole idea behind the article is that Americans have a notion of "the wealthy owe me".

I remember an Obama speech during his campaign where he wanted to give another round of "stimulus checks" out, and to pay for it he would simply tax the "excessive income" of oil companies. The whole premise was 'they make way more money than they need, so we'll take it and give it to the masses'. This speech garnered a thunderous applause from his supporters.

Michael also brought up a good point - who defines "rich" and "poor"?
Today the oil companies are too rich while anyone who Obama defines as 'middle class' is poor enough to get a handout from the government - paid for by oil company income! Who is rich tomorrow - anyone making $250k/year, $100k/year, 50k/year? How much extra should the government take from them to give to those who make below said amount?

I think the whole concept of "redistribution of wealth" is flat out stealing and based on flawed thinking. Sure, the more you make the more you can afford to pay in taxes, but the fact that you have wealth or that you make a certain income per year doesn't entitle the government to come in and take more so that it can be given away to others who didn't work as hard, or take as many risks, or spend a lifetime building a business, or whatever the case may be. The attitude of the masses seems to be "Whoa, that company made how much? That's just wrong, we should take some of it back!"

If oil companies make a 3% profit margin, but that 3% ends up being billions of dollars a quarter, it just seems like more than any company should make, so let's steal some back. What about Nike, they pay some Indonesian kid $10 a day to make shoes and sell them for $150 each. That's way too much markup, we should take money from them too. And diamond companies, they sell rocks for what 1,000% more than they cost to mine. Let's raid their bank accounts too. If we keep digging, we could probably scrape up a pretty sweet stimulus check for all the middle class families from all the companies that make 'too much' profit!

I'm surprised at how many disagreed with that article. I'm far from rich right now (actually struggling more than I'm willing to say), but I don't feel that anyone who has made themselves rich owes me anything. If I'm in debt, I owe - if I accumulate wealth, I don't owe. Hopefully someday I can be rich - and not have to be punished for it.

Wow. I read this thread before I went to go read the article. I finally read the article and I also can't believe how many people here disagreed with that article. Unbelievable. Especially on a small business forum. I had to stop reading the comments under the article because the lack of logical thinking was making me ill.

Originally Posted by Todd

OK, taxes aside, I agree with Michael:
No one owes anyone else.

I think the whole idea behind the article is that Americans have a notion of "the wealthy owe me".

I remember an Obama speech during his campaign where he wanted to give another round of "stimulus checks" out, and to pay for it he would simply tax the "excessive income" of oil companies. The whole premise was 'they make way more money than they need, so we'll take it and give it to the masses'. This speech garnered a thunderous applause from his supporters.

Michael also brought up a good point - who defines "rich" and "poor"?
Today the oil companies are too rich while anyone who Obama defines as 'middle class' is poor enough to get a handout from the government - paid for by oil company income! Who is rich tomorrow - anyone making $250k/year, $100k/year, 50k/year? How much extra should the government take from them to give to those who make below said amount?

I think the whole concept of "redistribution of wealth" is flat out stealing and based on flawed thinking. Sure, the more you make the more you can afford to pay in taxes, but the fact that you have wealth or that you make a certain income per year doesn't entitle the government to come in and take more so that it can be given away to others who didn't work as hard, or take as many risks, or spend a lifetime building a business, or whatever the case may be. The attitude of the masses seems to be "Whoa, that company made how much? That's just wrong, we should take some of it back!"

If oil companies make a 3% profit margin, but that 3% ends up being billions of dollars a quarter, it just seems like more than any company should make, so let's steal some back. What about Nike, they pay some Indonesian kid $10 a day to make shoes and sell them for $150 each. That's way too much markup, we should take money from them too. And diamond companies, they sell rocks for what 1,000% more than they cost to mine. Let's raid their bank accounts too. If we keep digging, we could probably scrape up a pretty sweet stimulus check for all the middle class families from all the companies that make 'too much' profit!

I'm surprised at how many disagreed with that article. I'm far from rich right now (actually struggling more than I'm willing to say), but I don't feel that anyone who has made themselves rich owes me anything. If I'm in debt, I owe - if I accumulate wealth, I don't owe. Hopefully someday I can be rich - and not have to be punished for it.