Thanks for posting this.Here's a better way^ to generate tax revenue for the bandits in Washington.
Posted on 04/14/2003 10:18:34 PM PDT by xsysmgr
Now that you have paid your income taxes, calculate how much you own of your own labor. You can do this by dividing the federal, state and local income taxes you paid (including Social Security and Medicare) by your taxable income.
Generally speaking, the higher your income, the less you own of yourself. A person with $300,000 in taxable income will discover that government in the year 2002 has a claim to about one-third of his labor -- the maximum tax that could be levied on a medieval serf.
If you have a low income or work primarily off the books, you will be rewarded with an "earned income tax credit" -- that is, you will receive a tax "refund" even though you paid no tax. You not only own all your own labor, but also have legal claims to the incomes of higher-income persons.
Democracy produces the opposite results of feudalism. Instead of an upper class living off the sweat of a lower class, the lower class lives off the sweat of an upper class. Philosophers such as John Rawls created a philosophy to justify the latter as "moral" and the former as "immoral," but it all comes down to the same thing: Some people live off other people's activities.
Income taxes are not the only taxes. There are property taxes, wealth taxes, excise taxes and sales taxes. If you add together all the taxes you paid, you might find that you own no more of your own income than a 19th century slave. (A slave owed his master about half his work product, the rest being necessary for his own maintenance.)
Some of the taxes we must pay are not really taxes. Capital gains and estate taxes are confiscations. A capital gains tax is a tax on the rise in the price of an asset. A home or land rises in value because of inflation and supply and demand. A person who sells his home or land has no real gain, because he cannot repurchase the home or land at a lower price. A capital gain tax simply confiscates a percentage of the asset.
If the asset is a commercial asset such as plant and equipment or stock shares, a rise in value reflects a rise in projected earnings. The increased earnings from the assets will be taxed as business and personal income. To tax the assets themselves is a confiscation. For example, if you sell 100 shares of stock and pay a capital gains tax of 20 percent, you are left with the replacement cost of 80 shares of stock. Where is your gain?
Capital gains can produce 100 percent tax rates and higher for investors in some circumstances. In the year 2000, stocks peaked early in the year and then collapsed. Investors in mutual funds and investment partnerships ended up paying large taxes on losses, otherwise known as "phantom profits."
The Internal Revenue Service created phantom profits by pretending that investors in mutual funds and investment partnerships realize capital gains every time a fund manager sells stock at a higher price than the fund paid, even though the "earnings" are ploughed back into the fund and are not realized by the investor unless he cashes out.
Early in 2000, funds managers, expecting the stock market's decline, sold shares to protect the values of their funds. The "capital gains" realized by the funds on the sales are attributed to the funds' investors by tax law. However, no investor realized the "gains" unless he cashed out of the mutual fund or investment partnership when the fund manager sold the shares.
Few did. By definition, such investors rely on professional management and are less attuned to adverse developments. Moreover, exit from investment partnerships is only permitted on a quarterly basis with 30 days notice. Otherwise, the investment partnership would have to keep large cash reserves to meet withdrawals and, thereby, produce a poor return on overall investment.
By the end of the tax year, the vast majority of investors had large unrealized capital losses in their mutual fund and investment partnership holdings. However, the IRS forced individual investors to pay personal income taxes on the "gains" that occurred within the funds early in the year prior to the collapse of the stock market.
In other words, in a year when people suffered a large decline in wealth, they were forced to pay large taxes on phantom gains that they did not realize.
Capital gains should not be taxes at all, as they are not real. If they are to be taxed, however, they should be taxed only when the investor himself realizes a gain by cashing out of a mutual fund or investment partnership. The way the IRS imposes capital gains taxation is nothing but robber barony.
Thanks for posting this.Here's a better way^ to generate tax revenue for the bandits in Washington.
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For example, if you sell 100 shares of stock and pay a capital gains tax of 20 percent, you are left with the replacement cost of 80 shares of stock. Where is your gain?
If I purchase 100 shares of stock for $5 a share, and I sell them for $10 a share, I have made $500. A 20% capital gains tax would be $100, not "the replacement cost of 80 shares of stock" which would be (at the new cost of $10/share) $800. So my gain is exactly $400 after taxes. To answer your question, there is my gain.
That's exactly right and a TRUE accounting of taxes would also have to cover taxes that businesses and corporations pay, all of which is passed on to the consumer in the form of higher prices. And let's not forget the myriad of Death Taxes, User Taxes (anyone enjoying federal property), End User Taxes (the gas tax for example) and indirect Federally MANDATED Taxes (welfare cost for illegal aliens, affirmative action, etc) that all of us have to pay one way or another.
When it’s all added up the average American Taxpayer is paying well over a third of their income in taxes and the high-income taxpayer is departing with at least half of what they earn. It’s no wonder the economy is limping along. Our government is hell bent on destroying the American Dream.
And if there is any “Dream” these days that our so-called elected officials are working on it is the "Dream Act" which would allow Illegal Aliens “In State” tuition rates for college. Remember that when you are cutting a check for your kid’s education. Never mind that these Leeches by their very presence in America are “Illegal” and BY LAW should be deported. Nice to know where our elected officials are coming from though.
We are losing it as a country. I can better understand what the more sane people of Rome were thinking when their empire was going down in flames.
Bull Pucky! If you are unlucky enough to live in a high-tax state, the number is a lot more like %50. No fooling. State income tax of %10, alternative minimum tax, losing personal exemption because you made "too much", property taxes, license fees etc. Oh, they have lots of great ways to shaft you.
Then, if you really want to go raving starkers, consider all of the hidden taxes buried in the price of everything you buy.
But don't ponder it too long, or you'll end up as one of those people who mutters to themselves in public making other people nervous.
I didn't write the article; I posted it for comment and discussion. I always keep my reasoning, questions, comments, etc. quite separate from those of the author. If you wish to ask questions of the author (as opposed to commenting on his reasoning), I suggest you Contact Paul Craig Roberts .
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