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Proposed SS fix

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  • ENT Doc ENT Doc 
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    I’d be all for corporations not having so many loopholes and paying little taxes and sheltering overseas, etc…theyve really made out over the last several decades.

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    They did this because of a tax law that allows for overseas subsidiaries to perpetually hold profits and not bring them back to be taxed, as well as due to the worldwide system of taxation that the US has.  This is the reason Apple has so much money overseas.  It’s why Medtronic did a corporate inversion.  When the world around you is taxing at far lower rates and at a country level of course corporations are going to respond in the ways they have.  I don’t know why the US government is owed tax dollars for Apple selling to an Austrian 20-something.  Corporate rates should be as low as possible, as previously mentioned in other posts.

    #188933 Reply
    Zaphod Zaphod 
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    I’d be all for corporations not having so many loopholes and paying little taxes and sheltering overseas, etc…theyve really made out over the last several decades. 

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    They did this because of a tax law that allows for overseas subsidiaries to perpetually hold profits and not bring them back to be taxed, as well as due to the worldwide system of taxation that the US has.  This is the reason Apple has so much money overseas.  It’s why Medtronic did a corporate inversion.  When the world around you is taxing at far lower rates and at a country level of course corporations are going to respond in the ways they have.  I don’t know why the US government is owed tax dollars for Apple selling to an Austrian 20-something.  Corporate rates should be as low as possible, as previously mentioned in other posts.

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    But we know there is a lot of cheating and those profits arent necessarily generated in those regions.

    Thats a great premise, but we dont know if that is actually higher or lower than where we are today. People that are ideologically opposed to taxes say those kinds of things but it seems their answer is always lower.

    #188936 Reply
    Avatar ITEngineer 
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    Like one of the posters here who has a 12M land but until it is sold and money obtained it is a money sucker as property taxes have to be paid
    What should be done about assets that are not income producing? I think this is an excellent question to ask. I personally don’t feel sorry for them. They can always sell it and buy some income producing assets. Or decide to hold it (and let the trees grow to harvest for timber….wait for the right developer……start farming….). But it’s their choice. And if our wealth threshold for reduced benefits was $5M, I wouldn’t want land to become a tax avoidance haven or increased benefits haven in this case.
    I hate Warren Buffet’s smug attitude about how the rich should pay more taxes when he pays less than many because he pays capitals gains tax and I pay as ordinary income taxes.

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    Would you feel any better if I told you that Berkshire Hathaway corporate tax rate was between 27-32% the last 5 years, before the corporate tax cut of 2017? Buffet then paid capital gains taxes on anything that he sold from his holding, which, might have been $0 (what would force him to sell some of his personal stock?) His personal tax liability is not clear to me (I’m guessing Buffet is paying 23.8% for LTCG though, the highest rate), but you ask another good question. What rate should we tax capital vs labor? Right now, our tax code favors capital over labor. Hence the SS discussion…..(we have come full circle!)

    #188939 Reply
    ENT Doc ENT Doc 
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    To me, it seems morally wrong to take money from someone making less than $130k/year (it could be someone making $40k/year and trying to support their family) and give it to someone worth almost $100B.

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    That’s not what is happening here.  The money from the lower earner is being pooled with money from the higher earner and distributed by a prescribed formula to people who are worse off than they are as well as people who are better off than they are.  It’s not like the government is taking from poor Joe with $40k a year and 3 kids to directly hand it to Buffett.  You know this, but I think to frame it in the way that you did misstates things a bit.

    What about the person who is worth $5M?  Is it morally wrong to apply FICA to the $125k/yr earner to give to them?  What if someone is worth $11M but it’s all in their farm?  Should they be forced to sell it?  What if the $125k/yr earner has more in the bank than someone who earned $500k a year and spent it all, leaving nothing to their name?

    #188940 Reply
    Liked by Kamban
    ENT Doc ENT Doc 
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    I’d be all for corporations not having so many loopholes and paying little taxes and sheltering overseas, etc…theyve really made out over the last several decades. 

    Click to expand…

    They did this because of a tax law that allows for overseas subsidiaries to perpetually hold profits and not bring them back to be taxed, as well as due to the worldwide system of taxation that the US has.  This is the reason Apple has so much money overseas.  It’s why Medtronic did a corporate inversion.  When the world around you is taxing at far lower rates and at a country level of course corporations are going to respond in the ways they have.  I don’t know why the US government is owed tax dollars for Apple selling to an Austrian 20-something.  Corporate rates should be as low as possible, as previously mentioned in other posts.

    Click to expand…

    But we know there is a lot of cheating and those profits arent necessarily generated in those regions.

    Thats a great premise, but we dont know if that is actually higher or lower than where we are today. People that are ideologically opposed to taxes say those kinds of things but it seems their answer is always lower.

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    Can you be specific in regards to this rampant cheating and money shifting?  Are you saying that the money was actually generated in the US but being held overseas?  Surely some cheat, but the broad strategy is driven by the aforementioned tax framework of the United States.  The effective rates were always lower, but were highly dependent on how much a given company had overseas.  Financial statements of companies mostly operating in the US will reflect a much higher effective tax rate than, say, Apple.  We are so incredibly behind the rest of the world on this – that is objective, not from an ideologically held position.  I believe we are the only country that still taxes on a worldwide level.  And prior to last year we had the highest corporate rate of any developed country.  It makes little sense to me to tax corporations beyond the cost they create in society.  I’m not opposed to taxes – in fact, I think we need a lot of tax increases on things.  But taxing business the way we do is silly, especially in a global economy where alternative locations exist.

    #188943 Reply
    Avatar Anne 
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    Fun? Fantastic? Fabulous? I’m not sure what “F” word you are referring too 

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    I guess you’ll have to re-read my post to figure it out. I use that word very rarely, even though I think it would probably be allowed in WCI’s living room.

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    Haha Johanna, that was what I knew to be the f word when I was growing up too.  My mom did not allow it in her living room, you still don’t say it around her.  Was I in for a surprise when I finally learned what the real f word was sometime in middle school.

    #188944 Reply
    Liked by jfoxcpacfp
    Avatar Anne 
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    Disability Insurance

    Yes, we wait until they’re 75. Why isn’t that sustainable? People are living longer now than in 1935 when FDR signed it into law, so why should people be getting benefits at the same age?

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    I was about to type this response.  But what’s different in 1935 is that more able bodied people were dying of heart disease and colon cancer in their 50’s.  Now a lot of those people are getting laid off or retiring in their 60’s, and even if they have the energy to keep working until 75, age discrimination makes that unrealistic.

    I realize that these people need to be saving in their 401k’s and Roth IRA’s and withdrawing 4% until SS kicks in.  Good luck making that happen.

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    Maybe there could be a tiered system, with different retirement ages for different job classes.  If someone works in heavy manual labor all their life making 50k, it is difficult to expect them to work to 75 and save enough to make it without some sort of help.  I  guess you can say they should have gotten jobs that weren’t so hard on the body or saved more, but I don’t think that’s fair or reasonable to expect for everyone.  And someone has to do those jobs.

    If someone works an office job making 100k, I think it’s much more reasonable to expect them to work until 75 OR save up enough to be self-supporting for the time period before 75 if they want to retire earlier.

    Obviously there are too many situations to simplify, and whenever you try to make a system work for everyone there are going to be a lot of people who think it’s unfair.   There will also always be people who try to game the system.  I personally am not counting on SS at all and am not worried about it, but I do worry about my patients who are 60, really struggling in heavy manual labor jobs, who are really just trying to make it to SS age.  If that’s bumped up to 75 for them they aren’t going to make it.

     

    #188949 Reply
    Liked by Vagabond MD
    Avatar Tim 
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    it seems their answer is always lower

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    Philosophically, thats how 401k and IRA’s work as well. Taxation is used to modify behaviors of businesses as well as individuals. Ethics an criminal behavior are committed by people, incorporated or not.

    #188961 Reply
    Zaphod Zaphod 
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    Some of the loopholes allow for there to be essentially a po box in Ireland where nothing of value is created or sold but profits are domiciled there. I wont pretend to have some clean cut answer as the tax code is an intricate nebulous mess of insanity that no one fully gets. Which is a lot of the problem. I prefer a much simpler more pass through style of taxation as much as that makes sense.

    Whats crazy are record sales and profits yet tax receipts from corporations being stable to down over a long period. Someone has to make up that shortfall so its either us the taxpayer or deficits.  I dont know the right ‘amount’ for each corporate and taxpayer. Lets face it, this is the economy where the majority of profits and consumer bases are, most are captive to some extent so that should be utilized.

    I’ve heard low/mid 20% being a budgetary level, so it seems theres a lot of room to get it right. I also dont think we’re incentivizing the right stuff. We shouldnt be incentivizing mega corp inversions and tax code bs while punishing little guys. Apple and the like dont need any help compared to making starting a business by mom/pop/average joe/drs/etc…and seeing what they can do. Codes and costs are onerous to prohibitive for them. Tax code was weighted opposite of the way to produce maximum economic gains to majority of america. Im not saying drs/such should have just been given a tax break, but those starting businesses should have been favored over already world dominating firms which didnt happen. That would produce benefits for real people and possible future jobs/innovation/industries as opposed to essentially handing cash to current winners.

    Whether people realize or like it or not, whenever you set up some kind of policy you are favoring one kind of activity/person/class/business/etc…over another. Theres no way to fully mitigate it. I just think we chose the wrong side of the spectrum for max future gains.

    #188973 Reply
    ENT Doc ENT Doc 
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    Some of the loopholes allow for there to be essentially a po box in Ireland where nothing of value is created or sold but profits are domiciled there.

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    They do have actual buildings there with people and functionality.  Second, this is pervasive in the tech sector so to lump all corporations into any kind of corporate attack isn’t fair.  Lastly, profits are being domiciled there for one reason – tax deferred treatment of subsidiary profits.  That loophole, if you want to call it that, doesn’t exist if the US doesn’t have a worldwide system of taxation and the highest rate in the developed world.  So the terrible US tax situation created those problems, not the other way around.  The effective taxes are low now for those internationals, but if you brought back that income it would go right up to the regular corporate rate (less other legal deductions like state tax, which is absurd IMO).

    Whats crazy are record sales and profits yet tax receipts from corporations being stable to down over a long period. Someone has to make up that shortfall so its either us the taxpayer or deficits.

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    Sales don’t matter.  But when corporations are growing internationally and storing profits overseas (again, due to poor US policy) then sure you’ll see flat-ish tax receipts.  We also allow for carry forward losses of 20 years.  So Amazon can take all those years of losses and pay next to nothing in tax now even though they’re finally turning profits.  If you want to get rid of carry forward losses that’s a different argument entirely.  But all benefit from that – large corporations who make it or small corporations that don’t make it big.

    I’ve heard low/mid 20% being a budgetary level

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    I’m not sure what this means.  You mean to keep our budget neutral?  That would probably take a 50% rate with our level of spending.  I’m talking about a rate that actually incentivizes growth.  I’m not sure why a 40%+ effective tax rate on corporate profits is sane (double taxation).

    We shouldnt be incentivizing mega corp inversions and tax code bs while punishing little guys. Apple and the like dont need any help compared to making starting a business by mom/pop/average joe/drs/etc…and seeing what they can do.

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    We incentivize the inversions and punish the little guy who can’t/doesn’t spread their wings beyond the US because of our tax code.

    those starting businesses should have been favored over already world dominating firms which didnt happen

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    They got a 20% business income deduction, and can carry forward losses.  The ACA probably puts more of a constraint on small business growth than anything with its 50 employee health coverage limit.  What the government needs to do is incentivize competition – that maximizes value for the consumer.  You don’t do that by paying off the likes of Amazon to bring their corporate HQ somewhere and other such nonsensical corporate favoritism.

    #188986 Reply
    Zaphod Zaphod 
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    I agree that it is largely wonky code, sorry I thought  I made that clear. Thats what really needs to be fixed, wonky tax code that incentivizing non economic things to game the tax situation. Just make it simple so capital allocation can be more efficient.

    #188993 Reply
    Liked by ENT Doc
    ENT Doc ENT Doc 
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    I agree that it is largely wonky code, sorry I thought  I made that clear. Thats what really needs to be fixed, wonky tax code that incentivizing non economic things to game the tax situation. Just make it simple so capital allocation can be more efficient.

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    Couldn’t agree/wish for more.  Unfortunately the tax code is reflective of the nuanced nature of our economy, who certain politicians have wanted to reward over time, and a sense of equity – in other words, it’s reflective of human nature.

    #188998 Reply
    Liked by Zaphod
    MPMD MPMD 
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    Interesting thread.

    I don’t have super strong opinions so am kind of just following along.

    I have a hard time not being in favor of significant means testing, but I think that needs to be more complex than “how much money do you have?” Like maybe you are means tested based on some calculation of your annual salaries while working rather than simply on your wealth. I’d be worried about perverse incentives for reasonably high earners who might suddenly feel like it was dumb to continue funding retirement b/c it was just cutting into their figure SS. Wouldn’t be hard with a Excel sheet to find a bend point at which further saving hurt you more than helped you. I have no idea how to do any of this well.

    Raising the age for SS seems like an absolute no-brainer to me in terms of a workable solution. The problem is that it’s political toxic waste.

    #189016 Reply
    Liked by ITEngineer, Zaphod
    Avatar Tim 
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    Why does Medicare not have a salary cap but social security does?

    What is the same percentages were use $0-50K then a break to like $500k per year?

    Why isn’t the salary cap and rate calculated to reach a fully funded balance for incomes and a debt component for current beneficiaries?

    Why is it not ok to just dump it on future generations?

    Because the unborn to 100 yr olds would be impacted differently. No one wants to hurt the future generations up to those that had been retired for years.

    Someone’s bend point is also another’s breaking point.

    #189081 Reply

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