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Thread: The Tax Thread

  1. #92
    BamaNation Hall of Fame Tidewater's Avatar
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    Re: The Tax Thread

    Quote Originally Posted by CharminTide View Post
    I am not opposed in principle (although I think it would cause massive international capital flight), but it is only constitutional insofar as we already ignore the provisions of the Constitution as it is.

    Honestly interpreted, it most certainly is unconstitutional.
    "Direct Taxes shall be apportioned among the several States which may be included within this Union." Taxes can be raised on incomes (not wealth)

    The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
    or they must be apportioned among the states in accordance with the Federal ratio ("the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.") A tax on wealth has to be apportioned among the states by the federal ratio.
    Last edited by Tidewater; January 26th, 2019 at 02:05 PM.

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  3. #93
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    Re: The Tax Thread

    Quote Originally Posted by Tidewater View Post
    I am not opposed in principle (although I think it would cause massive international capital flight), but it is only constitutional insofar as we already ignore the provisions of the Constitution as it is.

    Honestly interpreted, it most certainly is unconstitutional.
    "Direct Taxes shall be apportioned among the several States which may be included within this Union." Taxes can be raised on incomes (not wealth)



    or they must be apportioned among the states in accordance with the Federal ratio ("the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.") A tax on wealth has to be apportioned among the states by the federal ratio.
    By that logic property tax is unconstitutional because it is certainly a form of wealth.

  4. #94
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    Re: The Tax Thread

    Quote Originally Posted by uafanataum View Post
    By that logic property tax is unconstitutional because it is certainly a form of wealth.
    A state property tax is completely constitutional because states can do whatever they want, other than those powers that the people of that state denied the state in ratifying the federal constitution (Art. I, Section 10) or in their respective state constitutions.

  5. #95
    BamaNation Hall of Fame CharminTide's Avatar
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    Re: The Tax Thread

    Quote Originally Posted by Tidewater View Post
    I am not opposed in principle (although I think it would cause massive international capital flight), but it is only constitutional insofar as we already ignore the provisions of the Constitution as it is.

    Honestly interpreted, it most certainly is unconstitutional.
    "Direct Taxes shall be apportioned among the several States which may be included within this Union." Taxes can be raised on incomes (not wealth)

    or they must be apportioned among the states in accordance with the Federal ratio ("the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.") A tax on wealth has to be apportioned among the states by the federal ratio.
    Quote Originally Posted by Tidewater View Post
    A state property tax is completely constitutional because states can do whatever they want, other than those powers that the people of that state denied the state in ratifying the federal constitution (Art. I, Section 10) or in their respective state constitutions.
    I tend to agree. Even if this is ultimately deemed constitutional, it will take years in the courts that could span beyond one presidential term.

    Unfortunately, the alternatives listed in the article (such as higher capital gains taxes) are much more of a blunt instrument than the scalpel Warren is proposing here. I do think the idea of taxing net wealth and strengthening the estate/gift tax are good methods of combating the generational entrenchment of wealth and worsening of overall wealth disparity, but this specific proposal seems fraught with legal issues that may not make it a practical war to wage.

    Still, it may be worth a try. She shouldn't make this specific proposal the central plank in her platform given its legal tenuousness, but it doesn't seem like she is.

  6. #96
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    Re: The Tax Thread

    Quote Originally Posted by CharminTide View Post
    I tend to agree. Even if this is ultimately deemed constitutional, it will take years in the courts that could span beyond one presidential term.

    Unfortunately, the alternatives listed in the article (such as higher capital gains taxes) are much more of a blunt instrument than the scalpel Warren is proposing here. I do think the idea of taxing net wealth and strengthening the estate/gift tax are good methods of combating the generational entrenchment of wealth and worsening of overall wealth disparity, but this specific proposal seems fraught with legal issues that may not make it a practical war to wage.
    The late Roman Republic had enormous wealth inequality issues. They tried anti-sumptuary laws. Then the Gracchi brothers suggested land redistribution, so the Optimates murdered them.

    An empire is corrosive in a republic.
    Last edited by Tidewater; January 27th, 2019 at 07:57 AM. Reason: typo.

  7. #97
    BamaNation Hall of Fame CharminTide's Avatar
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    Re: The Tax Thread

    Quote Originally Posted by Tidewater View Post
    Then the Gracchi brothers suggest land redistribution, so the Optimates murdered them.
    You propose a bold solution, good sir.

  8. #98
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    Re: The Tax Thread

    Quote Originally Posted by CharminTide View Post
    You propose a bold solution, good sir.
    The Roman Republic collapsed for a number of ad hoc reasons, but one of them was a lack of respect for the provisions of the Constitution. It was illegal to even lay hands on person of the Tribune of Plebs (and all plebs were sworn to avenge anyone who violated that), but Optimates murdered the Gracchi, in both cases when they were in the office of Tribune. Another reason I am in favor of the most stringent compliance with the provisions of our Constitution. It is not perfect, but it's compromises do have the peoples' stamp of approval.

    On the other hand, a republic requires independent yeomen for stability, Roman yeomen would fight when the state needed them to, and then go back to farming once the war was won. The late republic saw more and more wars, and more and more yeoman farmers losing their lands, and wealthy generals increasing hiring their soldiers, so soldiers came to have more allegiance to the wealthy generals than to the republic itself. The Gracchian reforms, had they been adopted, might have slowed the process of decay of the republic.

  9. #99
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    Re: The Tax Thread

    Quote Originally Posted by CharminTide View Post
    I tend to agree. Even if this is ultimately deemed constitutional, it will take years in the courts that could span beyond one presidential term.

    Unfortunately, the alternatives listed in the article (such as higher capital gains taxes) are much more of a blunt instrument than the scalpel Warren is proposing here. I do think the idea of taxing net wealth and strengthening the estate/gift tax are good methods of combating the generational entrenchment of wealth and worsening of overall wealth disparity, but this specific proposal seems fraught with legal issues that may not make it a practical war to wage.

    Still, it may be worth a try. She shouldn't make this specific proposal the central plank in her platform given its legal tenuousness, but it doesn't seem like she is.
    I suppose everyone who's been here more than a few days knows that I have a master's of law in taxation from NYU. When I started practicing in 1963, the amount of property exempt from estate taxation was $600K and the personal income tax exemption was $600. Adjusted for inflation, that $600K would equate to right at 5 million today. Until last year, that's approximately was the unified credit was. Of course, a married couple always got to add theirs together. Last year, the credit was increased by approximately double to $11.2 million per person. (22 million for a couple.)

    When I started to practice, I'd say that there was a general majority opinion that concentration of wealth was bad, per se. I think it came out of the abuses of the late 19th century and was bolstered by the Great Depression. Over a period of time, the public, a majority I think, has been sold on the proposition that accumulation of wealth is a good thing. The sources of the propaganda range all the way from the super-rich, who don't want to turn loose of what they have, to the preachers of the "prosperity gospel" on the right. Of course, for the great majority, this conviction is contra self-interest, but it's been bought, lock, stock and barrel. Naming the estate tax a "death tax" was a stroke of genius.

    All this said, my observation over a period of decades, is that sentiment for taxing wealth concentration has declined sharply and I don't think the general opinion supports Warren's idea...
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  10. #100
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    Re: The Tax Thread

    Quote Originally Posted by TIDE-HSV View Post
    All this said, my observation over a period of decades, is that sentiment for taxing wealth concentration has declined sharply and I don't think the general opinion supports Warren's idea...
    I'm not so sure. I think it will be a tough slog in the federal courts (of course, the Constitution of the United States means whatever a federal judge wants it to mean, so who knows?), but if you were to confront the average citizen with the proposition, I'd bet a lot would support it.
    There is a qualitative difference between someone with $100k/year in income with $500k in assets (including one's house) and someone earning $10 million dollars/year in income and $50 million in assets. Those are two different beasts.

    The problem with Warren's policy would be capital flight. Rich people would not stand pat and be shorn like sheep. They would invest in London real estate (that's what Russian oligarchs do to protect their money) or find some other overseas asset in which to invest. If the CBO bases their analysis on the wealthy holding their money within reach if the U.S. tax collector, then that analysis is fundamentally flawed. Money would fly out of the U.S. until the cost of leaving and the risk premiums balanced.

  11. #101
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    Re: The Tax Thread

    Quote Originally Posted by Tidewater View Post
    I'm not so sure. I think it will be a tough slog in the federal courts (of course, the Constitution of the United States means whatever a federal judge wants it to mean, so who knows?), but if you were to confront the average citizen with the proposition, I'd bet a lot would support it.
    There is a qualitative difference between someone with $100k/year in income with $500k in assets (including one's house) and someone earning $10 million dollars/year in income and $50 million in assets. Those are two different beasts.

    The problem with Warren's policy would be capital flight. Rich people would not stand pat and be shorn like sheep. They would invest in London real estate (that's what Russian oligarchs do to protect their money) or find some other overseas asset in which to invest. If the CBO bases their analysis on the wealthy holding their money within reach if the U.S. tax collector, then that analysis is fundamentally flawed. Money would fly out of the U.S. until the cost of leaving and the risk premiums balanced.
    This was one of my first thoughts as well. The world has changed from the world of the 1930's. Yes, some things are eternal, but (although I'm not an expert) it seems simpler these days to move your money is such a way as to shield it to some degree - more so the richer one gets. That means that once again the somewhat wealthy get hosed while the uber rich escape intact.
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    Re: The Tax Thread

    Quote Originally Posted by Tidewater View Post
    I'm not so sure. I think it will be a tough slog in the federal courts (of course, the Constitution of the United States means whatever a federal judge wants it to mean, so who knows?), but if you were to confront the average citizen with the proposition, I'd bet a lot would support it.
    There is a qualitative difference between someone with $100k/year in income with $500k in assets (including one's house) and someone earning $10 million dollars/year in income and $50 million in assets. Those are two different beasts.

    The problem with Warren's policy would be capital flight. Rich people would not stand pat and be shorn like sheep. They would invest in London real estate (that's what Russian oligarchs do to protect their money) or find some other overseas asset in which to invest. If the CBO bases their analysis on the wealthy holding their money within reach if the U.S. tax collector, then that analysis is fundamentally flawed. Money would fly out of the U.S. until the cost of leaving and the risk premiums balanced.
    Much easier to just tax their income instead of wealth. Why do we not want people to spend their money in America acquiring wealth instead of blowing it on other stuff?

  13. #103
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    Re: The Tax Thread

    Quote Originally Posted by uafanataum View Post
    Much easier to just tax their income instead of wealth. Why do we not want people to spend their money in America acquiring wealth instead of blowing it on other stuff?
    And reduce GNP? Are you kidding?

    IOW, our government has interest in promoting a consumerist society and little interest in promoting a wealthy society.
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    Re: The Tax Thread

    Quote Originally Posted by NationalTitles17 View Post
    And reduce GNP? Are you kidding?

    IOW, our government has interest in promoting a consumerist society and little interest in promoting a wealthy society.
    I think that is a mistake. The more wealthy people there are, the less people we have living off the government teet when they no longer have income coming in (whether they are retired or we get another huge jump in unemployment). I wonder if we had less of a consumerism society how many less federal workers would have been upset about being furloughed for a month?

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