From: mike@fionn.lbl.gov (Michael Helm)
Newsgroups: ba.politics,ca.politics
Subject: Re: HERSCHENSOHN: Flat Rate Tax (Q&A)
Summary: tanstaafl
Date: 15 Sep 92 17:11:52 GMT
Reply-To: mike@fionn.lbl.gov (Michael Helm)
Organization: N.I.C.E.
NNTP-Posting-Host: 128.3.128.60

I apologize for the length of this -- if I'd had more time I'd have
written a shorter response.

In article <-rynwld.phil@netcom.com>,
Phil Ronzone writes:

>    >using some propaganda-like rhetoric & probably some special
>    >pleading... ... ... now I have to support the idle rich
>    >too?!?!
>
>Talk about propaganda!!! How about taxing me to support the idle poor?

Sure -- I thot I said so in the posting, but perhaps you didn't read
it carefully enuf or I wasn't sufficiently clear: if someone wants to
trot out stuff like "stealing" or "my father worked hard all his life"
&c, it was no problem at all to find at least equally good quality
rhetoric to fire back in return.  After all, I could be one of those
libertarians who think ALL taxation is theft but isn't willing to be
the only victim; it just could be the case that I work hard too &
don't see why someone else gets special dispensation.  And so on.
Understand?  I don't think propaganda is going to help us much in
deciding whether H's tax ideas are good or not; they certainly don't
help his cause a bit.

Incidentally, many people with large amounts of money to invest
(I'm not sure they would be called rich ... middling maybe) did
put their money into banks -- they were after safety.

In article <1992Sep14.203813.9445@CSD-NewsHost.Stanford.EDU>,
Andy Freeman writes:

>A tax policy should never try to do something it can't do.

???

>Parents have lots of opportunities to pass things on to their
>children/grandchildren.  Obstacles that only apply at death can, and

Look, don't be coy, if you have something to say, say it, instead of
this hemming & hawing about whatever.  If you know of some _legal_ way
that income is not being taxed, (eg gifts), you should bring it to
attention; since we seem to be overhauling how income is treated we
should have it all on the table.  Or if you know of some income that
you think is overtaxed, same.

In article <1992Sep14.172206.5747@oracle.us.oracle.com>,
Michael Friedman writes:
>mike> [ A stock split does not change your net worth]
>Yup.  But the same applies to a dividend.

We have a serious disagreement about what a dividend is.
Do investors share your definition of it?
Stock prices are largely based on earnings expectations & performance,
or so I have been told.

>mike>Wait a minute -- I think you're confusing something here -- a stock's
>mike>trade price is based on how much income it produces, its dividend
>mike>rate, among other things, no?  You're not pumping value out of the 
>mike>stock by taking a dividend, not directly.  

>Sure you are.  If the company kept that money then the stock would be
>worth that much more.  For example, when a stock pays a dividend of
>$10.00 its value automatically decreases by $10.00.

Suppose you buy a stock for $10/share.  Each quarterly
dividend for the next year is $2.50.  What is the market price of
that stock at the end of that year?  If we are to believe you,
the stock price would be $0 -- it wasn't stock, it was a bond.

You mite also want to follow the history of a few stocks in the
newspaper, & tell us what happens to price when a dividend is not
paid, or is lower than expected, what happens to the price when
a dividend is paid, & when it is greater than expected.

>that has nothing to do with my argument.  What I am claiming is that a
>dividend is no different from splitting the company into two separate
>companies, one of which is composed of nothing but a bank account and
>then liquidating the bank account.

So what?  Even if this above is rite, what does this have to do with
the question of whether or not the money you receive as a result is,
or is not, income?   I feel you're drifting off the subject into
something else.

>Only to those who don't understnad the financial facts behind it.  Hae

Amen to that

>you ever heard the term "double taxation of dividends"?  Did you ever
>wonder what was behind it?

This "double taxation" seems to bother you, & maybe you can make a
case that it is unfair or unwise; but I'm not yet moved to agree with
you.  Lots of things are doubly taxed; the huge amount I spend in
sales taxes & gas taxes are doubly taxed.  I just paid a guy thousands
of dollars to renovate some property; should he say on his tax return,
"This money I received from Mike Helm was already taxed, so I should
be able to keep all this profit & not pay any of it in tax."

For that matter, my salary comes from the taxpayers, so I guess I
should get it free & clear, yes?

You are also ignoring (refer to my $10 hypothetical stock above)
the increase in equity that the stock enjoys.  I expect you probably
want that to be free from taxation at sale as well.

>>some trick definition of income
>What you don;t seem to get is that it isn't a trick any more than

When you say things like "Because income is not income."
(<1992Sep12.235353.6948@oracle.us.oracle.com>)
all I see is someone trying to play some kind of trick with
words.

In article <athos-140992094102@kip2-36.apple.com>,
Rick Eames writes:

>1) I don't owe you anything.

We can agree on this -- I don't owe you anything either.
So when you come along & tell me I should pay your share of taxes
for you, you should be able to understand why I would object to it.

>2) To me, my parents money is *my* money, just as my money belongs to my
>children.  So, it's in the family.

Ok, we have a problem here.  If it's your money, then how can you
inherit it?  If you inherit it, how can it have been your money?
Maybe your family is unusual; I know if I went over to my mother's
house & took some of "my" assets (like her car) she wouldn't be
too happy with me; if I pillaged her bank account, she'd probably
have me tossed in jail.  I expect most extended families are more
like mine than yours -- the assets are NOT shared.

>3) I work.  I pay taxes.  I pay more in money than I get in services.

We can agree on this

>4) The amount of "idle rich" out there is sooooo small that it makes lousy
>argument fodder.

Well, look, there's only one of me, so taxing me makes lousy argument
fodder, after all I only pay in a few thousand a year in taxes, nobody
will miss it.  Tax that other guy over there who gets a few million
in dividends & capital gains a year.

I don't care how many of them there are.  We all pay, or nobody pays.

One thing you are not considering is how tax policy affects the
way people use their money.  If you tax wages but don't tax capital
gains & dividends, people will do their best to move all their income
into tax-avoidance areas, like dividends & interest, & out of
heavily-taxed ares, like wages.  You'll create more idle people
this way, & force more of a burden on the working person; sort
of a demographic catastrophe like Social Security.

>5) This tax plan helps one group of people in particluar: the senior
>citizens.

How?  Sounds like it's more of a benefit to their heirs.
The ones who are still working are going to have to pay that
much extra because the plan's excluded so much from taxation.

>> What's this "my money" stuff?  I thot you were _inheriting_ it?  Or
>> are you talking about something else?
>
>What, if I inherit money it's not really mine? 

Either it is, or it isn't.  If it's yours, how could you inherit it? &c.

>> want big government then you should work on getting it cut down.  What
>> you're saying above is you don't want to PAY for big government --

>I don't use government services.  I am saving my money right now,

Maybe -- you don't use the roads, the SEC, the FDIC, the FTC,
federal currency, the internet, your company doesn't sell to
the government (& thus pay your salary)?  You don't enjoy the
safety that our large national defense budget has brot us
(which, if I understand Herschensohn correctly, he wants to
increase)?  It's pretty hard to find someone who isn't up to
their eyeballs in government services.  I don't say that's desirable,
but that's the way things are now.  If you want it done differently,
then you should work to change that & not try to steal from
me instead (tit for tat rhetoric again).