How rich are hiding income and not paying taxes

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<p>Barrons, I don’t “decry” anyone - and I haven’t seen anyone else here “decrying” anyone either. That’s just your own straw man which you trot out to support what I have to assume is your position: raise taxes on the middle class (since you feel the wealthy pay too much, and there is no viable alternative source of government revenue, at least in the real world.)</p>

<p>Pmlrcomm:

I’m sorry, but to assume that governmental policies (not just taxes) haven’t played a primary role in increasing the disparity between economic strata is naive. Government policies have driven the widening of the gulf. Recognizing that fact is central to understanding what I suspect will become the greatest socio-political issues of the coming decades.

That statement is true with regard to federal income tax. I never said it wasn’t. It’s not true as to percentage of income with regard to most other taxes. What is also not true is the assertion that the middle class benefited more from the recent deficit building tax cuts than the wealthy, which was the assertion I was responding to.</p>

<p>I see you’ve jumped on Barron’s straw man bandwagon. I’ll address that straw man in a later post.</p>

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<p>You are constantly bringing out the old data that the rich are getting richer. I say SO. Who arer these people and what did they do to get rich. Not many are the old rich as that money is constantly getting diluted and spread to more people. It is the entreprenuers and wealth creators. Do you want to stop that creation of new firms and new jobs along with the new wealth it brings? Talk about a straw man–you have dragged that poor old man around here 1000 times but never gone beyond the raw data to see WHO these people are and how they got rich. No government policy would have prevented the founder of Google, Microsoft, Amazon or scores of other companies from getting very rich. It is that shot at wealth that attracts many people to work at startups with little pay and crazy hours for a shot at the brass ring. </p>

<p>I did not say lower taxes on the rich. I think they do pay plenty and people who
shrug off the millions in taxes that the rich typically pay are just not giving them their due. They carry the load for most of us.</p>

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<p>Because they can? Who cares? Don’t you have bigger things to worry about than where Google parks its planes?</p>

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<p>To the contrary. I think innovators should be taxed less. I probably have more respect for technical innovators & entrepreneurs than anyone on this forum.</p>

<p>I have virtually zero respect for high finance types, C-level executives, lawyers, heirs, etc. Basically the parasite class. Interestingly enough the rise in pay for all these types corresponded with the decline in pay with the middle class.</p>

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<p>Okay, on to the straw men. First, I don’t hate rich people. I’m pretty affluent myself, and I have lots of friends who could honestly be described as wealthy. But I don’t idealize rich people, either, as Barrons seems to do. </p>

<p>I don’t think everyone’s net income should be the same, any more than I support the opposite extreme - one person owning everything and everyone else nothing. Making those accusations is just a way of avoiding the facts, and being forced to consider the consequences of the things that are happening in the real world.</p>

<p>What I do support is this: Rather than absolute equality - everyone with the same wealth, or absolute inequality - one person with all the wealth, I think a healthy society is somewhere in the middle - with people enjoying a range of wealth - poor to rich, with most people in a comfortable middle class. (Ooh! How radical!) In fact, that’s pretty much what the society I grew up in looked like.</p>

<p>But things have been changing, and they have been changing as a result of conscious decisions made by us and implemented by our government, which have set in motion the increasing stratification of our nation - dividing us gradually into separate groups of haves who are immune from economic failure, and the rest of the nation, who face an ever-steeper road to improving their lot in life. Mobility between economic classes is declining along with the growing gap between the wealthy and everyone else. Tax policy is a very minor part of the governmental action which has been taken which accelerates that trend, but it is a part of it. I don’t think that’s good for America, and if the trend continues I think it augurs some potentially very nasty social dislocations during our children’s lifetimes.</p>

<p>The question is: How much economic stratification is a good thing; at what point does it become a bad thing? In 1980 the top 1% of taxpayers had 8.5% of the nation’s income. We had investment, innovation, job creation and economic growth then, just like we do now. Currently the top 1% has 21.2% of the nation’s income. Have we seen an explosion of wealth building? A rising tide lifting all boats? So much demand to fill all the new jobs that wages have risen? No. just the opposite. Our economy is growing slower now than it did when we had less economic stratification. And what increase in wealth we are seeing is all shooting straight to the top. The “rising tide” is only lifting the yachts. All the wonderful things that are supposed to accompany having really, really rich people aren’t actually happening.</p>

<p>I think we’ve gone too far. I think the level of economic diversity we had back in the 80’s (which was about the same as we had in the 70’s, 60’s, 50’s and back to the early part of the 20th Century) was healthy, socially and economically. I think the regulatory and legal changes which we have seen since the late 70’s have steered us into a state of increasing economic stratification and ossification that will haunt the nation, just as the accumulated national debt will. </p>

<p>That’s what I actually think.</p>

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<p>I hardly idolize the rich. In a city overrun with them actually find them a bit annoying because they made some of my favorite hobbies no longer affordable. But I don’t lose any sleep over the fact that the area is overrun with them either and I don’t see any unfairness in the way they got that way or how they are taxed. The money they spend has made lots of less fortunate people able to earn a nice living.
Now tell me about exactly what decisions the government made to create the 1000’s of Microsoft millionaires and Amazon and f5 Networks and Starbucks and probably a dozen other companies? Most of these people came to Seattle with little more than a degree and a dream. In the old days companies did not spread the wealth around like the tech and other new companies do today. We have multiples of the numbers of multi-millionaires than we did prior to the tech and related booms. That’s what has created the stratification. Not taxes or government policies to any extent. </p>

<p>And we have seen an explosion in total wealth in the US.</p>

<p>[Image:US</a> household and nonproft net worth 1945-2007.gif - Wikipedia, the free encyclopedia](<a href=“http://en.wikipedia.org/wiki/Image:US_household_and_nonproft_net_worth_1945-2007.gif]Image:US”>http://en.wikipedia.org/wiki/Image:US_household_and_nonproft_net_worth_1945-2007.gif)</p>

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<p>I read something about the Google deal a few months ago. I still don’t see what everyone is worked up about. Maybe they are doing some super secret work for the military. I just can’t find that much to get worked up about.</p>

<p><a href=“http://www.nytimes.com/2007/09/13/technology/13google.html[/url]”>http://www.nytimes.com/2007/09/13/technology/13google.html&lt;/a&gt;&lt;/p&gt;

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<p>In the week that DS has been home and before he heads off the the State above us, he has been doing his 2007 taxes, reconfiguring 2006 (CPA error), and forecasting 2008 liabilities. I sincerely hopes that he begins to understand the differences between wages vs business income, dividends vs qualified dividends, interest vs interest, capital gains on short term vs long term, and capital losses. He and I are wondering how this new internship will be classified, whether a wage job or a consulting position. The wage job projection will cost him money, The consulting classification will allow him to keep more of his earnings and enable him to make further investments that will hopefully grow faster and at a lower tax rate. </p>

<p>I will stress emphatically, that the ability for him to be on the favored tax side, is a very fine line thats virtually invisible and initially started because of a chance decision. Being able to understand that there is a line is more important than recognizing where that line lies.</p>

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<p>I thought this was interesting…</p>

<p>[FactCheck.org:</a> What percent of taxes does the top 1 percent pay and what percent of the income do they make?](<a href=“http://www.factcheck.org/askfactcheck/what_percent_of_taxes_does_the_top.html]FactCheck.org:”>http://www.factcheck.org/askfactcheck/what_percent_of_taxes_does_the_top.html)</p>

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<p>Good post pmrlcomm. It appears that those terrible rich people are taking on even more of the burden of the cost of our federal government that so many other Americans get for free.</p>

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<p>Eh. They can afford it, right?</p>

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<p>You know, you guys are right. Think of how hard it will be for them when the top 1% are forced to pay 100% of the nation’s income taxes …</p>

<p>… and also have 100% of the nation’s income.</p>

<p>Poor babies! What a terrible thing for the rich to have to suffer!!</p>

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<p>Actually that article, if you bothered to read it, talked about all federal taxes, not just income. This is exactly the kind of mindset that is screwing the joint up.</p>

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<p>Too bad the data made Kluge sniff in contempt. Another of his pet rants up in smoke.</p>

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<p>Anyone have a study on how personal behaviors, i.e. divorce, children out of wedlock, not getting a high school education, drug and criminal offenses, etc, impact one’s employability and ability to acquire wealth? With those numbers as abysmal as they have been, should we be as surprised by some of the disparities? I would guess personal behaviors, impact one’s socioeconomic prospects far more than government interventions or the lack thereof.</p>

<p>I’m not saying free market strategies and policies should run amok, but much of the stratification is due to personal choices and those either too ignorant or unwilling to adapt to market, job and labor forces.</p>

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<p>The way the very rich such as Bill Gates and Buffet hide/not pay taxes is by starting a Non-Profit run by friends and family. This way they can pass on the wealth through high salaries to whoever they chose. It also makes them look like “do gooders” when really it’s just a way to not pay taxes and pass on their wealth to their family or friends.</p>

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<p>You obviously know nothing about the work of the Gates Foundation. They are funding millions of dollars out to projects every month.</p>

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<p>The Gates Foundation is just one of many that use the guise of “Non-Profit” to not pay taxes and pass on wealth.</p>

<p>Look at how much a year a Non-Profit gives out vs how much they bring in through investments and donations. Many will not publish the salaries of the people running the “Non-Profit”.</p>

<p>I know someone who retired from a “Non-Profit” with an 8 figure bonus when he left.</p>

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<p>I think the point is, pick your examples more carefully…</p>

<p>[Giving</a> Away Billions, Gates Foundation Gives A Billion Dollars Away Each Year - CBS News](<a href=“http://www.cbsnews.com/stories/2000/12/04/60II/main254621.shtml]Giving”>http://www.cbsnews.com/stories/2000/12/04/60II/main254621.shtml)</p>

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<p>^ So how much money does the “Non-Profit” bring in every year vs how much they make every year in investments and donations? Your link did not give these details.</p>