50 percent of your pay
Michael Vilkin
> Actually, various taxation schemes have been analyzed for their efficiency.
> Consumption taxes (e.g. sales taxes) are the most efficient.
> False. It is known that land value taxation is more efficient. A
> consumption tax resolves to a variable cost of production, just like
> income tax, and therefore produces economic results inferior to those of
> an asset tax, which resolves to a fixed cost of production.
Roy, I agree that income tax in it's present form is the worst.
I'd gradually replace a big part of it with a combination of
a wealth tax and consumption tax.
In the USSR income tax was very small.
Consumption tax was very big. There was no land value taxation.
In a socialist system consumption tax is most reliable.
Prices were many times higher than production costs.
No other tax can extract so much, for better or worse.
It's very unlikely that we will ever approach that level
of taxation here in the US. But taxes are steadily going up.
If we decide to fund more programs with higher taxes, we will
need a big consumption tax or value added tax, like in Europe.
What mix of taxes would be the best?
Say, we have 10 trillion GDP, for example.
I'd tax, roughly:
1 T as a flat income tax;
1 T as VAT;
1 T as a wealth tax.
Which taxes would you increase or decrease?
-- Michael Vilkin.
winte...@rkymtnhi.com
Wrong debate!
Your taxes (as your personal credit card balance) only reflects what we
choose to buy. Once something is bought, it doesn't really matter how we
juggle the books, it still needs to be paid for.
Instead, lets review our spending. Do we really need all this crap?
Did the city of Denver really need a new football stadium?
Did we really need to lob $1 billion worth of missles into Iraq?
Obviously, this list can go on and on. Perhaps it should.
Bottom line - YOU BUY IT; YOU'VE GOT TO PAY FOR IT.
Gary Forbis
>Did we really need to lob $1 billion worth of missles into Iraq?
There's something really strange going on in technology. I'm on my
third motherboard in about 5 years. When I upgraded to a VLB
motherboard I thought I was set for the future and would only have
to upgrade processors. My 486/66 just didn't cut it any more so
when I upgraded to win98 I also upgraded to an AMD 233. I knew
the 100mhz bus systems were just starting to be produced but I
could get this motherboard, processor, and memory for about two
fifty. My sister bought a 300mhz system this last weekend, not just
a motherboard, processor, and memory, for five hundred.
Now we may have lobbed a billion bucks worth of missiles into Iraq
recently but we may have lobbed missiles worth a lot less than that
but which cost us that much to produce. I wonder how long missiles
can sit on the shelf before they are technologically scrap metal.
One might throw five or six missiles to test effectiveness of new technology
but throwing hundreds means it's time for an upgrade.
Military accounting is pretty strange. I'm not sure if missiles are
assets or consumables. When I was in the service mechanical
calculators and early electronic calculators were kept on the books
at purchase price. This meant one department was stuck with a
desk-sized calculator valued at $25,000 which ate up their office
budget when a $10 hand held item would be more effective and
perform more functions.
Military readiness is a strange thing. Being ready for war on two
fronts today means carrying around white elephants tomorrow.
I wish we used "just in time" manufacturing of weapons but I don't
see how to make such a plan viable.
C Post
>
> In the USSR income tax was very small.
> Consumption tax was very big.
In a country with such a small import/export sector, the effective
difference between these two is correspondingly small, as long as the
consumption tax is general.
> There was no land value taxation.
Well, the presumption was that the land rents created by government and
the community were being captured through state ownership, but the
reality was that those who contrived to get land under private control
pocketed the land rents. This practice is now rampant, of course, with
predictable consequences for the economy.
> In a socialist system consumption tax is most reliable.
> Prices were many times higher than production costs.
> No other tax can extract so much, for better or worse.
Not strictly true. An asset tax can in principle extract more, but only
temporarily (as was done in Japan after the war).
> What mix of taxes would be the best?
> Say, we have 10 trillion GDP, for example.
> I'd tax, roughly:
> 1 T as a flat income tax;
> 1 T as VAT;
> 1 T as a wealth tax.
>
> Which taxes would you increase or decrease?
Income tax and VAT both do huge economic damage. A wealth tax is
better, but not nearly as good as an asset tax designed to recover the
bulk of the value added to privately owned assets by government and the
community.
C Post
>
> Your taxes (as your personal credit card balance) only reflects what we
> choose to buy.
Problem is, the "we" who pay the taxes are not the same "we" that
chooses what to buy. The latter "we," in turn, are controlled by the
"we" that pockets the benefits.
> Once something is bought, it doesn't really matter how we
> juggle the books, it still needs to be paid for.
But please, let it be paid for, where possible, by those who get the
benefit from it!
> Did the city of Denver really need a new football stadium?
The team owners did, of course. Like most stadiums in most cities, it's
built for their benefit.
> Did we really need to lob $1 billion worth of missles into Iraq?
The owners of the companies that made the missiles say Yes.
> Bottom line - YOU BUY IT; YOU'VE GOT TO PAY FOR IT.
Reality check: the elected buy it; the rich pocket it; the productive
pay for it.
Bill Mechlenburg
For discussion of Education, Political & Tax Reform
http://home.att.net/~wmech
Michael Vilkin wrote in message <368AA4...@hotmail.com>...
>C Post wrote:
>
>> Actually, various taxation schemes have been analyzed for their
efficiency.
>> Consumption taxes (e.g. sales taxes) are the most efficient.
>
>> False. It is known that land value taxation is more efficient.
It is "known" by whom? This is just your not so humble opinion.
Care to explain exactly how "Land Value" taxation is more efficient than a
"consumed Income Tax"? where is the evidence?
A
>> consumption tax resolves to a variable cost of production, just like
>> income tax, and therefore produces economic results inferior to those of
>> an asset tax, which resolves to a fixed cost of production.
>
>Roy, I agree that income tax in it's present form is the worst.
>I'd gradually replace a big part of it with a combination of
> a wealth tax and consumption tax.
>
>In the USSR income tax was very small.
>Consumption tax was very big. There was no land value taxation.
>
>In a socialist system consumption tax is most reliable.
>Prices were many times higher than production costs.
>No other tax can extract so much, for better or worse.
>
>It's very unlikely that we will ever approach that level
>of taxation here in the US. But taxes are steadily going up.
>If we decide to fund more programs with higher taxes, we will
>need a big consumption tax or value added tax, like in Europe.
>
>What mix of taxes would be the best?
>Say, we have 10 trillion GDP, for example.
>I'd tax, roughly:
> 1 T as a flat income tax;
> 1 T as VAT;
> 1 T as a wealth tax.
>
>Which taxes would you increase or decrease?
>
>-- Michael Vilkin.
Shawn A. Wilson
Michael Vilkin wrote in message <368AA4...@hotmail.com>...
>C Post wrote:
>
>> Actually, various taxation schemes have been analyzed for their
efficiency.
>> Consumption taxes (e.g. sales taxes) are the most efficient.
>
>> consumption tax resolves to a variable cost of production, just like
>> income tax, and therefore produces economic results inferior to those of
>> an asset tax, which resolves to a fixed cost of production.
>
>Roy, I agree that income tax in it's present form is the worst.
>I'd gradually replace a big part of it with a combination of
> a wealth tax and consumption tax.
I wrote the following as a response to an e-mail, but I keep getting
rejected by Michael's server, so...
>> Michael L. Coburn wrote in message <7638cr$qvv$1...@news-1.news.gte.net>...
>>
>> >Bill Gates and Microsoft are very good examples of why income is the
wrong
>> thing
>> >to tax, and why we should be taxing assets instead.
>>
>> Actually, various taxation schemes have been analyzed for their
efficiency.
>> Consumption taxes (e.g. sales taxes) are the most efficient, income taxes
>> second, and investment and asset taxes are the worst (by a lot). Taxing
>> assets and/or investment causes people invest less. Less investment
means
>> less capital for people to work with. Less capital means lower
productivity
>> per worker. Lower productivity means lower wages.
>
>As usual, Shawn, you are correct. The analysis has been done by those who
wish
>to continue the current rip off and the findings are exactly what one would
>anticipate under such circumstances.
No. The analysis has been done by people who want to better understand how
the economy works, not by people with ulterior motives. I'm one of those
people. The models used do not involve any unreasonable assumptions that
force the results. All they assume is that people want to maximize their
welfare, that they value the future less than the present, and that both
utility and output are subject to declining marginal products.
> The idea that people will save or invest
>less if assets are taxed is pure fantasy.
Wrong, national cross-section data clearly shows that people do save/invest
less when assets are taxed.
> If I have a hundred bucks left after
>I have paid for my daily bread then you propose that I will simply spend
it.
Yep, either by consuming something else or by acquiring some asset.
>But that just transfers the money to someone else.
So does investing. What matters is what is bought with the money.
What you are saying is that
>if assets are taxed then money will become worth less (two words) as its
>velocity will increase.
Not at all.
> But real value, Shawn, must go somewhere.
What happens is that industries that used to manufacture capital goods now
manufacture consumption goods. 'Real value' is basically just services
received.
> Land and
>gold and water and trees and labor and skill and genius are still worth
just as
>much as they were.
Yep, but some of those assets are now used to produce consumption rather
than capital.
> Real value does not just evaporate and people will continue
>to save some of the fruits of current production against the demands of
>tomorrow.
Some, but less than without asset taxes.
> People will still take risks and attempt to develop better productive
>techniques.
Except now those productive techniques will be better TV shows rather than
better factories.
> There is nothing wrong with the accumulation of capital and it will
>continue even if those who accumulate it must pay for the government that
makes
>such accumulation possible. The idea that my savings necessarily has
anything
>to do with investment is pure economic poop.
To you, maybe. All income is ultimately personal income. Even retained
corporate profits. People can either consume it or they can invest it.
Those are their only two choices.
> The Federal Reserve can create or
>allow the banks to create new money to finance new enterprises regardless
of
>whether people who save like it or not.
But they can't create resources by fiat, like they do money. When they
create new money they just make the existing resources more expensive.
> All that matters is that such moneys
>are employed to improve productivity and if that is the case then inflation
will
>not result. The idea that lower productivity means lower wages is also
poop.
No, it is not 'poop'. It's another fact with a very strong empirical
foundation.
>That is not NECESSARILY so, and it is only so under a given set of
assumptions.
>Let us assume that we cut all the executives salaries and don't pay the
>stockholders as much, and then we can probably have lower productivity and
>constant wages.
Executive salaries ARE wages. They can't be cut by fiat because they are
paid what they're worth (companies pay the minimum they can to get the
desired level of quality).
> We would certainly have more jobs and less downsizing.
Unemployment is the lowest it's been in 30 years, what would we do with more
jobs? There wouldn't be anyone to fill them.
> I do
>not advocate or support less productivity, but the idea that asset taxation
will
>hurt productivity is completely false.
No, it isn't.
> Asset taxation allows those without
>assets to be productive as they are not hindered by income and wage taxes.
Taxes on wages don't affect productivity very much. People pretty much work
40 hours/week regardless. People do respond to taxes on savings/investment
though.
> And
>THAT, Shawn, is what scares hell out of all the current asset owners.
The vast majority of Americans are asset owners. Or did you forget that
houses are assets?
>The chain of trash you present in your "analysis", Shawn, is like a self
>fulfilling prophecy.
Now you're getting nasty. I've been polite up to now because I thought you
would be as well.
> If we assume that natural resource and capital are the
>same thing (which they most certainly are not), then we can prove that the
>fruits of labor are dependent upon capital (i.e. that capital had to exist
>before labor could produce anything).
Actually, natural resources play very little part in this kind of analysis.
Raw materials are a very small part of the economy.
> We can then infer that capital is money
>and say that everything depends on money (i.e. that all forms of production
rely
>upon dollars being invested).
NO! Capital is NOT money.
> And then, to top it all off we can say that
money
>comes from savings (when money is actually created by the state) and really
rip
>our shorts. That's right, Shawn. If we assume that money is king we can
prove
>that money is king.
The basic versions of these models don't even have money.
> When we look at the facts, of course, we find that it is
>all a house of cards which rests upon the original malfeasance concerning
the
>presumption that capital and natural resource are the same thing.
The facts are data obtained from international observations. The
relationships between savings and investment, and between capital and
productivity are very easy to see.
>> >What must be taxed is the value of
>> >Microsoft itself (i.e. asset taxation is proposed as 2% per annum of the
>> value
>> >of all outstanding shares of all corporations). Those who enjoy no such
>> >privileges would then not have to pay for Microsoft's protection and
those
>> of us
>> >who use Microsoft products would pay these taxes as we purchased
Microsoft
>> >products.
>>
>> You're confusing a national sales tax with an asset tax. Unlike a sales
>> tax, Microsoft can't pass on a tax on its net worth, since that worth is
>> based largely on its total sales.
>>
>
>The worth of Microsoft is defined exactly as the total amount of dollars at
>which the total amount of outstanding stock is valued. This MAY reflect
the
>value of its sales or it may reflect the stupidity of the stockholders or
the
>quadrant of the moon. If it were a private company then it would be the
amount
>for which the company IS offered for sale, and all companies are always for
>sale. This tax will be passed to the consumers of whatever the company
produces
>to the extent that it can be.
It CAN'T be passed on. If Microsoft charges more for their goods while
having the same cost of production, then the company becomes more valuable
(the value of a company being simply the discounted present value of its
expected future profits). The cost of production won't change, revenues
will increase, etc.
> That is to say that if the customers of Microsoft
>respect Microsoft's products enough to pay higher prices for such products
(and
>that should be the case if these products are worth more because of
Microsoft's
>commitment and backing, and the claims to economies of scale and all the
other
>big business tripe) then these excess funds can and will be employed to
reward
>the shareholders of Microsoft in such a way as to offset the tax bite.
It doesn't work like that.
> In any
>case the value of Microsoft will, under asset taxation, find whatever
price
>level it should after paying for the government services which protect its
logo,
>trademarks, patents, copyrights, etc.
Microsoft ALREADY pays for government services through the taxes on its
profits.
> Microsoft *MUST* derive the revenue to
>pay these taxes from its sales.
How? If it sells more, the value of the company increases and its tax bite
also increases. Microsoft may continue to exist under such a regime, but
many other companies will go under.
> Asset taxation separates the real producing
>companies from the "financial" ones. "Financial Industry" is a
contradiction in
>terms.
To you maybe, but the clients they provide services to certainly value those
services enough to pay for them.
>> This would provide a more equitable playing field in which those who
>> >do not need such government protections would have the financial
strength
>> to
>> >develop and deliver competitive products or to pursue other interests.
>>
>> What government protection does Microsoft get that every other company
>> doesn't also get?
>>
>
>Not all companies have patents, and copyrights which require constant
government
>interdiction.
The only government interdiction Microsoft has is the Justice department
trying to break them up as an monopoly.
> Red Hat (the company that produces a good system based on Linux)
>will allow you to download the software from the internet. They actually
>perform a meaningful service in that they publish CD's with all the good
stuff
>and lots of helpful documents and the source code. They also combine a lot
of
>technical knowledge in "sewing" all the software together, and as long as
they
>continue to provide this worthwhile service they do not need a bunch of
lawyers
>and holier than thou managers to remain viable.
Funny how Windows is THE standard operating system, while Linux (in all its
incarnations) has what, 1% of the market?
> In the hands of competent
>people, free software can produce better solutions than copyrighted
software.
But who pays the people who write the software? The money has to come from
somewhere.
>> We protect Microsoft's interests because it's in our interest to do so.
>>
>
>It is in YOUR interest to do so. Not mine.
Are you using any Microsoft product right now? Would you rather be using
the kind of software available 20 years ago? Don't you value the
improvements Microsoft has made?
>> Patent and copyright protection make research into new ideas feasible by
>> protecting those who devote the resources toward creating new ideas from
>> those who would just steal them. Without patent and copyright protection
>> much research would never happen.
>
>There is NOTHING wrong with these protections, Shawn. But those who
receive the
>protections should pay for the services.
They pay taxes on the profits they make selling their products.
> To say that the assets being protected
>by these services will be worthless because such assets must produce enough
to
>pay the tax is only saying that the assets were worthless in the first
place.
Not at all. Copyright protection makes valuable products marketable, it
doesn't make them valuable. The most valuable product in the world is as
subject to piracy as the least.
>You infer that assets which are taxed would be worthless and then complain
about
>a 2% tax on worth.
No, I don't.
> You can't have it both ways, Shawn. Either the tax will
>destroy the value and, hence, there will be no tax, (2% of 0 = 0), or the
tax
>will not destroy the value and therefore assets will still be worth
acquiring,
I never said no assets would be acquired, I said fewer assets would be
acquired.
>or the government will go out of business because nobody wants their assets
>protected. What really happens is that everything finds its proper level
>without you and a bunch of other people screwing with everything all the
time.
And yet, YOU are the one proposing 'screwing' with a system that works well
already. I mean, the US is the richest nation on the face of the Earth, and
times in the US are better now than they have ever been. 'If it ain't
broke,
don't fix it'.
Michael Vilkin
(...)
> > What mix of taxes would be the best?
> > Say, we have 10 trillion GDP, for example.
> > I'd tax, roughly:
> > 1 T as a flat income tax;
> > 1 T as VAT;
> > 1 T as a wealth tax.
> > Which taxes would you increase or decrease?
> Income tax and VAT both do huge economic damage. A wealth tax is
> better, but not nearly as good as an asset tax designed to recover the
> bulk of the value added to privately owned assets by government and the
> community.
Then I have a question.
Say, I own an asset. Market price $100,000.
There is $90,000 mortgage. Net worth $10,000.
My wealth in this asset is only $10,000.
Asset tax is to be paid on $100,000.
Isn't wealth tax more fair then asset tax on
an asset I don't really own until I pay it off?
The real problem is a mix of taxes.
If we have $10 trillion GDP and collect 3 trillion
in taxes, is it possible to collect 3 T in asset taxes?
30% of GDP?
-- Michael Vilkin.
winte...@rkymtnhi.com
> chooses what to buy. The latter "we," in turn, are controlled by the
> "we" that pockets the benefits.
Stop playing the victim.
We ARE the ones who choose what to buy.
We do so by continuing to elect the same people term after term, knowing
darn well their beliefs and spending habits. We do so by allowing
ourselves to be brainwashed every night by the fear mongering, car
selling, talking heads on TV. We do so by being to lazy to consider what
we are being told and what are the actual common sense applications of
our "from the heart" rather than "from the head" choices.
I know that you may personally choose to thump your chest and say that
these comments don't apply to you. Whether they do or not is irrelevant.
They obviously apply to the bulk of the American public.
Don't blame it on the "big corporations" either. They do not create the
situations from which they prosper. They merely observe the wants of the
public and put themselves in the situation to profit from it. I didn't
say they are altruistic. But they are not the instigators either.
Raytheon and its stock holders would be just as happy building schools
as building bombs if that's what its board of directors thought the
people wanted.
Politicians do exactly what they are told by their constituency. Why?
Because the only thing they give a crap about is the next election.
Bottom line: If you want real solutions, look towards yourself, not
towards others.
Andy
"the problem with evolution, is that it takes too damn long"
Gary Forbis
>Say, I own an asset. Market price $100,000.
>There is $90,000 mortgage. Net worth $10,000.
>
>My wealth in this asset is only $10,000.
>Asset tax is to be paid on $100,000.
>
>Isn't wealth tax more fair then asset tax on
>an asset I don't really own until I pay it off?
I guess you could get the person loaning you to pay
the tax on the other $90,000 since she "owns" it.
I see this as strange since even if the asset is lost
the lender does not assume the loss. You own
the asset and owe a debt. You do not loose 90%
of the use of the asset just because you owe 90% of
its value.
>The real problem is a mix of taxes.
>If we have $10 trillion GDP and collect 3 trillion
>in taxes, is it possible to collect 3 T in asset taxes?
>30% of GDP?
This is an interesting question but it may be misplaced.
Is there some reason to believe a switch from income taxes
to asset taxes will not affect revenue requirements?
Here's a problem for you. Suppose we continue to collect
income tax as before but we reallocate ownership (but not
control) of assets that would have been taxed in proportion
with income tax paid. Since the only thing changed between
this situation and our current system is that "ownership" is
reallocated and we are currently able to collect the three
trillion bucks it is easily shown the three trillion bucks can be
collected under asset taxation. Maybe the new asset owners
would start demanding rent or ask the squatters to relinquish
control. Imagine a world where the productive actually saw
increased benefit for their production. I wonder if that would
stimulate production.
C Post
>
> Say, I own an asset. Market price $100,000.
> There is $90,000 mortgage. Net worth $10,000.
There is no fundamental difference between this situation and owning the
asset clear title but having a $90,000 credit card debt.
> My wealth in this asset is only $10,000.
> Asset tax is to be paid on $100,000.
Right. An asset tax is exactly like a property tax, but levied on all
sorts of assets rather than just real estate. The mortgage on your
house does not reduce your property taxes one cent, because the benefits
you get from government by virtue of owning the house are not reduced by
the outstanding mortgage balance.
> Isn't wealth tax more fair then asset tax on
> an asset I don't really own until I pay it off?
For a number of reasons, no. For one thing, if a change in price
eliminates your equity, that does not mean you are suddenly getting no
services from government.
> If we have $10 trillion GDP and collect 3 trillion
> in taxes, is it possible to collect 3 T in asset taxes?
> 30% of GDP?
Easily. Japan collected more than that from its temporary asset tax
after the war. Taxation of land value alone could raise about 15% of
GDP (would require privatizing a lot of government-owned land to get the
last 2%-3%).
winte...@rkymtnhi.com
> There is $90,000 mortgage. Net worth $10,000.
>
> Asset tax is to be paid on $100,000.
Fine, so if you (and everyone else in this situation, which is most of
us) are only taxed on the $10,000, then we'll just need to increase the
percentage of that amount on which you are billed. Net result is that
you pay the same.
As I said before, the country needs a given amount of money to run
itself because of all the things you directed it to buy.
If you want lower taxes, then stop spending. Its as simple as that.
Your arguments about about how and whom to tax seem very selfish. You
want to continue benefiting from the services, but you want someone else
to pay the bill.
Andy
C Post
>
> The models used do not involve any unreasonable assumptions that
> force the results.
ROTFLMAO! I showed _exactly_ how the obviously unreasonable assumptions
of the Ramsey model force the result, in at least half a dozen different
ways.
> All they assume is that people want to maximize their
> welfare, that they value the future less than the present, and that both
> utility and output are subject to declining marginal products.
False. Go look at Dejanews where I demolished your Ramsey-based
"analysis."
> > The idea that people will save or invest
> >less if assets are taxed is pure fantasy.
>
> Wrong, national cross-section data clearly shows that people do save/invest
> less when assets are taxed.
Lie. There has never been a comprehensive asset tax, so such data
cannot exist. Where limited asset tax data do exist, such as on
property taxes, they clearly show that higher is better (as long as the
tax rate on improvements is not too high relative to depreciation -- the
land value tax rate is not subject to this restriction).
> >But that just transfers the money to someone else.
>
> So does investing. What matters is what is bought with the money.
You understand this much, but can't see any farther. Too bad.
> > But real value, Shawn, must go somewhere.
>
> What happens is that industries that used to manufacture capital goods now
> manufacture consumption goods.
Nope. Money that used to be invested in assets other than capital goods
is now invested in capital goods.
> > Land and
> >gold and water and trees and labor and skill and genius are still worth
> just as
> >much as they were.
>
> Yep, but some of those assets are now used to produce consumption rather
> than capital.
Nope. Under asset taxation, some of those assets would be used to
produce capital goods for the productive to use rather than consumption
goods for idle asset owners to consume.
> > Real value does not just evaporate and people will continue
> >to save some of the fruits of current production against the demands of
> >tomorrow.
>
> Some, but less than without asset taxes.
True. But because what _is_ saved would go preferentially to capital
goods rather than speculation and trading in privileges, _more_ capital
goods would be produced than under income taxation, and they would be
used more productively.
> > People will still take risks and attempt to develop better productive
> >techniques.
>
> Except now those productive techniques will be better TV shows rather than
> better factories.
Nope. Better factories rather than better ways to avoid income taxes,
get corrupt officials to upgrade land-use designations, enforce dubious
copyrights, etc., etc.
> People can either consume it or they can invest it.
> Those are their only two choices.
Correct. Now, try to think: if someone "invests" money in land, does it
increase production? If they "invest" in stock other than an IPO, does
it increase production? If they "invest" in gold bullion, does it
increase production (other than, microscopically, production of more
gold bullion)?
> Executive salaries ARE wages. They can't be cut by fiat because they are
> paid what they're worth (companies pay the minimum they can to get the
> desired level of quality).
ROTFL!! This certainly does not apply at the top, where CEOs are
generally paid according to how much Alan Greenspan has done for the
stock market recently...
> > We would certainly have more jobs and less downsizing.
>
> Unemployment is the lowest it's been in 30 years,
??? Thirty income taxing years, of course. You're comparing green
apples to rotten apples to prove oranges don't make good pie. Well,
doh...
> what would we do with more jobs? There wouldn't be anyone to fill them.
Check out any inner-city area near you: unemployment satatistics only
count those who haven't given up looking yet. And more jobs would also
mean higher pay for those already working.
> > I do
> >not advocate or support less productivity, but the idea that asset taxation
> will
> >hurt productivity is completely false.
>
> No, it isn't.
Yes, it is, and that fact has been demonstrated empirically. The states
with the highest property taxes have better economies in all sorts of
ways -- including productivity --- than the states with the lowest
property taxes. Now granted, a property tax is not the same as a
comprehensive asset tax, but it's the closest thing we have for
comparison.
> > Asset taxation allows those without
> >assets to be productive as they are not hindered by income and wage taxes.
>
> Taxes on wages don't affect productivity very much.
No. Because taxes on wages increase the cost of labor, they actually
_increase_ productivity, but _decrease_ production and standard of
living.
> People pretty much work 40 hours/week regardless.
Idiocy. There are _laws_ that make it much more expensive to employ
people more than about 40 hours/week. Please note that work weeks tend
to be longer in countries with low income taxes, like Japan and HK, and
shorter in higher income tax countries like France. Also, if people get
a good income from their assets, income tax on any money they actually
get out and earn by producing something will be worth much less to
them. Such people often choose not to work at all in an income-taxing
environment, with the result that those who have few assets have more
opportunities to work 40-hour weeks. (That doesn't mean paying people
to do nothing increases production, BTW.)
> People do respond to taxes on savings/investment though.
People respond to all kinds of taxes. Your claim to the contrary is
simply false.
> > And
> >THAT, Shawn, is what scares hell out of all the current asset owners.
>
> The vast majority of Americans are asset owners. Or did you forget that
> houses are assets?
Grow up. He meant _large_ asset owners, of course: the people who would
pay more tax under asset taxation than they do under income taxation
(i.e., almost no working person with less than several hundred thousand
dollars in assets _including_ their house). That would be at most a few
percent of the working-age population.
> >The chain of trash you present in your "analysis", Shawn, is like a self
> >fulfilling prophecy.
>
> Now you're getting nasty. I've been polite up to now because I thought you
> would be as well.
>
> > If we assume that natural resource and capital are the
> >same thing (which they most certainly are not), then we can prove that the
> >fruits of labor are dependent upon capital (i.e. that capital had to exist
> >before labor could produce anything).
>
> Actually, natural resources play very little part in this kind of analysis.
> Raw materials are a very small part of the economy.
This is the kind of trash Michael was referring to above. Land is a
natural resource, and plays a _huge_ role in the economy. But it is not
a raw material. When you try the kind of dishonest bait-and-switch we
see immediately above, Shawn, you reveal that your argument is based on
nothing but intellectual fraud.
> > We can then infer that capital is money
> >and say that everything depends on money (i.e. that all forms of production
> rely
> >upon dollars being invested).
>
> NO! Capital is NOT money.
I've asked you before to define capital, Shawn. How about it?
Money is certainly an asset. And you've claimed (falsely, as it
happens) that an asset tax is a tax on capital. Now you say capital is
not money. Can it be that an asset tax would fall on money, more than
on capital? Gadzooks! We need an explanation of your position, here,
Shawn. Inquiring minds want to know.
> The
> relationships between savings and investment, and between capital and
> productivity are very easy to see.
Oh, but what about the relationship between _assets_ and productivity,
hmmm? Japan's productivity has been completely unaffected by a 50%+
decline in assets.
Reality calling Shawn Wilson...
> >This tax will be passed to the consumers of whatever the company
> produces
> >to the extent that it can be.
>
> It CAN'T be passed on.
The degree of passing on depends on the elasticities. In the case of
Microsoft's copyrights, there is zero elasticity of supply, so the tax
would not be passed on. In the case of actual software packages there
is ample elasticity, so the tax would be passed on.
> If Microsoft charges more for their goods while
> having the same cost of production, then the company becomes more valuable
> (the value of a company being simply the discounted present value of its
> expected future profits). The cost of production won't change, revenues
> will increase, etc.
??? The absence of income tax will cause the cost of production to
_decrease_ of course, and the contrary cost of not producing to
increase.
> Microsoft ALREADY pays for government services through the taxes on its
> profits.
??? Nope. A company that has no profits pays no tax, no matter how
much service it gets from government. So Microsoft is paying taxes for
being profitable, not for getting services from government.
> > Microsoft *MUST* derive the revenue to
> >pay these taxes from its sales.
>
> How? If it sells more, the value of the company increases and its tax bite
> also increases. Microsoft may continue to exist under such a regime, but
> many other companies will go under.
??? How can they, unless they are using their assets unproductively?
Reduced corporate value results in a lower asset tax on the stock. And
if they are using their assets unproductively, we will all be better off
when they _do_ go under, and their assets pass into more productive
hands. That's how capitalism is _supposed_ to work.
> > Asset taxation separates the real producing
> >companies from the "financial" ones. "Financial Industry" is a
> contradiction in terms.
>
> To you maybe, but the clients they provide services to certainly value those
> services enough to pay for them.
Do you therefore believe that political lobbying is also an industry?
What is its product?
And Shawn, I've _worked_ for the financial "industry," so I know
_exactly_ how much value its services (aside from facilitation of income
tax avoidance) _really_ have...
> The only government interdiction Microsoft has is the Justice department
> trying to break them up as an monopoly.
Sheer silliness. Microsoft would cease to exist tomorrow if government
stopped enforcing its copyrights for it.
> Funny how Windows is THE standard operating system, while Linux (in all its
> incarnations) has what, 1% of the market?
It's not _funny_ in the least, to those of us stuck with Windoze...
> > In the hands of competent
> >people, free software can produce better solutions than copyrighted
> software.
>
> But who pays the people who write the software? The money has to come from
> somewhere.
True. But does it _have_ to come from a monopolistic system that
reduces total utility almost by definition? If there were no copyrights
on software, software would still get written by people hired by people
who needed it -- mainly computer makers, academics and corporate users,
is my guess. So?
> >> We protect Microsoft's interests because it's in our interest to do so.
> >>
> >
> >It is in YOUR interest to do so. Not mine.
>
> Are you using any Microsoft product right now? Would you rather be using
> the kind of software available 20 years ago? Don't you value the
> improvements Microsoft has made?
??? The improvements came _despite_ the monopoly, of course. Not
_because_ of it. Surely you know enough about the economics of
monopolies to understand that much.
> >There is NOTHING wrong with these protections, Shawn. But those who
> receive the
> >protections should pay for the services.
>
> They pay taxes on the profits they make selling their products.
??? True but totally irrelevant. They get the service whether they pay
any tax or not, and the productive pay tax whether they get any such
services or not. Hello?
> > To say that the assets being protected
> >by these services will be worthless because such assets must produce enough
> to
> >pay the tax is only saying that the assets were worthless in the first
> place.
>
> Not at all. Copyright protection makes valuable products marketable, it
> doesn't make them valuable.
<sigh> Equivocating again, I see...
Copyright protection makes products valuable _to_the_copyright_owner_,
of course.
> The most valuable product in the world is as
> subject to piracy as the least.
Tell me, Shawn: is Bach's music, or any other valuable work in the
public domain less available to the public than it would be if it were
under copyright? Think hard.
> And yet, YOU are the one proposing 'screwing' with a system that works well
> already.
Income tax seems to "work" best where the rates are lowest...
> I mean, the US is the richest nation on the face of the Earth, and
> times in the US are better now than they have ever been. 'If it ain't
> broke, don't fix it'.
IOW, because times are good in the good ol' USA, it must therefore be
_perfect_?
Michael Vilkin
(...)
> > Say, I own an asset. Market price $100,000.
> > There is $90,000 mortgage. Net worth $10,000.
> > My wealth in this asset is only $10,000.
> > Asset tax is to be paid on $100,000.
> > Isn't wealth tax more fair then asset tax on
> > an asset I don't really own until I pay it off?
> I guess you could get the person loaning you to pay
> the tax on the other $90,000 since she "owns" it.
OK. I own a $100,000 house and I owe $90,000 mortgage.
Since my net worth in this asset is only $10,000
it would be fair to pay wealth tax on $10,000.
Asset tax on $100,000 asset seems to be unfair to me,
at a first glance. And again, if at the end I pay
the same amount as income tax, and 10,000 pages of evil
income tax are abolished, - what the hell?
I'd agree, especially, as you propose, the bank
will pay tax on $90,000 mortgage. Will it?
> > The real problem is a mix of taxes.
> > If we have $10 trillion GDP and collect 3 trillion
> > in taxes, is it possible to collect 3 T in asset taxes?
> > 30% of GDP?
> This is an interesting question but it may be misplaced.
> Is there some reason to believe a switch from income taxes
> to asset taxes will not affect revenue requirements?
> Here's a problem for you. Suppose we continue to collect
> income tax as before but we reallocate ownership (but not
> control) of assets that would have been taxed in proportion
> with income tax paid. Since the only thing changed between
> this situation and our current system is that "ownership" is
> reallocated and we are currently able to collect the three
> trillion bucks it is easily shown the three trillion bucks can be
> collected under asset taxation. Maybe the new asset owners
> would start demanding rent or ask the squatters to relinquish
> control. Imagine a world where the productive actually saw
> increased benefit for their production. I wonder if that would
> stimulate production.
My fault. I did not formulate the question correctly.
Sure, if I pay $10,000 in income taxes, I can pay the same
amount in asset taxes. My landlord will pass the tax on me,
or I will pay taxes for my own house.
I have no problem with this.
The question is wether asset taxes create any problems.
Like what? Here is an example.
Suppose, I own a business which needs some real estate.
A child care center with a big garden for children to play.
My competitor owns a jail-type child care center.
With assets tax I will pay too much for that garden.
Child care jails will gain competitive advantage,
unless a law either states certain requirements for gardens,
or child care centers will be exempt from high asset taxes.
Of course, parents will pay more for the garden.
How much more? It's very much debatable.
That's why I'd support only _gradual_ increase
in asset taxes. To protect gardens, if you will.
Every time I go to a supermarket I wonder why aisles are
so narrow. My understanding is that real estate is too
expensive, and that's why store owners are hard pressed
to sell more goods in small places.
With assets taxes it will become worse.
Yes, the store owner will pay the same amount
of assets taxes as he paid income taxes before.
They should just relax and do nothing.
On average, that is true.
But most spacious stores will pay most assets taxes.
OK, I remember that with higher assets taxes idle land
will be sold for nothing, and price of land will go down.
I agree before you guys kick me.
I will be able to buy 10 acres of land for $1,000.
Somewhere in Nevada or Arisona. Maybe, in Alaska.
Maybe, even cheaper.
How much idle land is in New York?
How much pressure will be created to create prison-type
child care centers?
Just answer this liberal question.
And, yes, 10,000 pages of income tax is by far
the worst.
-- Michael Vilkin.
C Post
>
> wm...@worldnet.att.net
> For discussion of Education, Political & Tax Reform
> http://home.att.net/~wmech
>
> >C Post wrote:
> >
> >> Actually, various taxation schemes have been analyzed for their
> efficiency.
> >> Consumption taxes (e.g. sales taxes) are the most efficient.
> >
> >> False. It is known that land value taxation is more efficient.
>
Most land economists are aware of this fact, as are the dozens of
eminent international economists (including four Nobel laureates) who
signed Nicolaus Tideman's letter to Mikhail Gorbachev advising him to
use land rents (amounts to the same thing as a land value tax) to
finance the Soviet government when things started to go off the rails
there in the early 90s. I can post the letter, if you like. You can
see how many of the Nobel laureates you know, and how little of their
reasoning you can understand...
> This is just your not so humble opinion.
No, it is not.
> Care to explain exactly how "Land Value" taxation is more efficient than a
> "consumed Income Tax"?
A consumed income tax resolves to a variable cost of production, and
therefore results in less production. A land value tax is known to
carry no such excess burden, because the tax is the same no matter what
the level of production. It thus results in _no_ loss of production.
The Pennsylvania towns that are currently shifting to land value
taxation -- including Allentown, once a symbol of Rust Belt stagnation
-- are _all_ experiencing booms that nearby towns on the old property
tax system can only envy.
> where is the evidence?
Everywhere land value taxation has been fairly, honestly and
conscientiously applied.
Michael Vilkin
> > Then I have a question.
> > Say, I own an asset. Market price $100,000.
> > There is $90,000 mortgage. Net worth $10,000.
> > My wealth in this asset is only $10,000.
> > Asset tax is to be paid on $100,000.
> Fine, so if you (and everyone else in this situation, which is most of
> us) are only taxed on the $10,000, then we'll just need to increase the
> percentage of that amount on which you are billed. Net result is that
> you pay the same.
Just a small problem.
With wealth tax, I pay for a portion of my wealth, $10,000.
Someone who paid the mortgage off, will pay for $100,000.
With assets tax, millions of people may not be able to pay
both mortgage and assets tax. Wealth tax will be smaller.
Some people buy houses with zero down.
> As I said before, the country needs a given amount of money to run
> itself because of all the things you directed it to buy.
> If you want lower taxes, then stop spending. Its as simple as that.
> Your arguments about about how and whom to tax seem very selfish. You
> want to continue benefiting from the services, but you want someone else
> to pay the bill.
No, all of us here want to pay fair taxes.
We just can't agree what is fair.
-- Michael Vilkin.
Michael Vilkin
(...)
> > My wealth in this asset is only $10,000.
> > Asset tax is to be paid on $100,000.
> Right. An asset tax is exactly like a property tax, but levied on all
> sorts of assets rather than just real estate. The mortgage on your
> house does not reduce your property taxes one cent, because the benefits
> you get from government by virtue of owning the house are not reduced by
> the outstanding mortgage balance.
Maybe, that's just fair.
But I have another question.
We can calculate the cost of government services.
Defense, FBI, CIA, police, firefighters, - we can calculate all that.
Does it mean that assets owners should pay only for protection?
Does it mean that assets owners should not pay for social cervices
like Medicaid, Social Security and the like?
I remember something like this in your post.
-- Michael Vilkin.
Gary Forbis
>Gary Forbis wrote:
>
> (...)
>
>> > Say, I own an asset. Market price $100,000.
>> > There is $90,000 mortgage. Net worth $10,000.
>
>> > Asset tax is to be paid on $100,000.
>
>> > an asset I don't really own until I pay it off?
>
>> I guess you could get the person loaning you to pay
>> the tax on the other $90,000 since she "owns" it.
>
>OK. I own a $100,000 house and I owe $90,000 mortgage.
>Since my net worth in this asset is only $10,000
>it would be fair to pay wealth tax on $10,000.
>Asset tax on $100,000 asset seems to be unfair to me,
>at a first glance. And again, if at the end I pay
>the same amount as income tax, and 10,000 pages of evil
>income tax are abolished, - what the hell?
>I'd agree, especially, as you propose, the bank
>will pay tax on $90,000 mortgage. Will it?
The bank will raise interest rates so the net effect is you will
pay it. Why not just simplify the process and have the owner
of record pay the tax on the asset directly?
I prefer a gradual increase in asset tax and an offseting
decrease in income tax so as to reduce economic disruption.
I'm not so interested in protecting gardens in private hands,
heck, I'm not so interested in protecting gardens in public hands.
I prefer assets be put to best economic use. I don't want government's
making unnecessary laws, especially to give competitive advantage
to one industry over another except when doing so for some
social reason as identified by some supermajority.
>Every time I go to a supermarket I wonder why aisles are
>so narrow. My understanding is that real estate is too
>expensive, and that's why store owners are hard pressed
>to sell more goods in small places.
I don't shop in stores whose aisles I judge as too narrow.
I use my purse strings to achieve my ends. Real estate is
so expensive because others think they can achieve sufficient
revenue streams from the property to justify the price. Why
should people, like me, who prefer wide aisles be subsidized
by those who don't care?
>With assets taxes it will become worse.
>Yes, the store owner will pay the same amount
>of assets taxes as he paid income taxes before.
>They should just relax and do nothing.
>On average, that is true.
>But most spacious stores will pay most assets taxes.
As they should. The use of assets for one purpose denies
its use for other purposes. Why shouldn't people be able
to choose between spacious stores and spacious homes?
Why shouldn't people making such choices have to pay
in accordance with their choices?
>OK, I remember that with higher assets taxes idle land
>will be sold for nothing, and price of land will go down.
>I agree before you guys kick me.
>I will be able to buy 10 acres of land for $1,000.
>Somewhere in Nevada or Arisona. Maybe, in Alaska.
>Maybe, even cheaper.
>
>How much idle land is in New York?
I don't know. I wonder how much is underutilized (as indicated
by comparative revenue streams from current use and
uses to which the land could be put.)
>How much pressure will be created to create prison-type
>child care centers?
Only as much as parents place based upon their willingness
to forgo other consumption. Would you have parents unable
to decide between garden type child care centers and supermarkets
with spacious aisles?
>Just answer this liberal question.
>And, yes, 10,000 pages of income tax is by far
>the worst.
I thought I was the liberal and you were the conservative.
Michael L. Coburn
Michael Vilkin wrote:
> Gary Forbis wrote:
>
> (...)
>
> > > Say, I own an asset. Market price $100,000.
> > > There is $90,000 mortgage. Net worth $10,000.
>
> > > My wealth in this asset is only $10,000.
> > > Asset tax is to be paid on $100,000.
>
> > > Isn't wealth tax more fair then asset tax on
> > > an asset I don't really own until I pay it off?
>
> > I guess you could get the person loaning you to pay
> > the tax on the other $90,000 since she "owns" it.
>
> OK. I own a $100,000 house and I owe $90,000 mortgage.
> Since my net worth in this asset is only $10,000
> it would be fair to pay wealth tax on $10,000.
> Asset tax on $100,000 asset seems to be unfair to me,
> at a first glance. And again, if at the end I pay
> the same amount as income tax, and 10,000 pages of evil
> income tax are abolished, - what the hell?
> I'd agree, especially, as you propose, the bank
> will pay tax on $90,000 mortgage. Will it?
>
The bank has an asset worth some amount more than $90000. The net
present value or the value at which that note can be traded is the
actual value and that is what the tax is paid on. The short answer is
YES. Banks will have to pay tax on money created from thin air.
There is nothing wrong here: You get what you pay for and pay for what
you get. If we wish to preserve nature then such nature canl be owned
by ALL of us and no tax would be due. The land adjoining such a
preserve will be worth more because of the preserve. There is no room
in this for emotional tripe.
>
> Every time I go to a supermarket I wonder why aisles are
> so narrow. My understanding is that real estate is too
> expensive, and that's why store owners are hard pressed
> to sell more goods in small places.
>
> With assets taxes it will become worse.
> Yes, the store owner will pay the same amount
> of assets taxes as he paid income taxes before.
> They should just relax and do nothing.
> On average, that is true.
> But most spacious stores will pay most assets taxes.
>
And they will receive more income because of their spaciousness (more
customers) and they may be able to charge more. If I am interested in
spaciousness I will pay more, if not I will pay less at the cramped
store. In either case this is a marketing decision made by the
proprietor.
>
> OK, I remember that with higher assets taxes idle land
> will be sold for nothing, and price of land will go down.
> I agree before you guys kick me.
> I will be able to buy 10 acres of land for $1,000.
> Somewhere in Nevada or Arisona. Maybe, in Alaska.
> Maybe, even cheaper.
>
> How much idle land is in New York?
>
Probably very little.
> How much pressure will be created to create prison-type
> child care centers?
None. Your selection of a child care center is based on how good it is
for your child and what you can afford. The value of the land is not
effected by how good a job the people do of caring for children.
Therefore, they will be profitable on this basis and not on the basis of
how well they avoid taxes.
>
> Just answer this liberal question.
> And, yes, 10,000 pages of income tax is by far
> the worst.
>
> -- Michael Vilkin.
Michael L. Coburn
Michael Vilkin wrote:
> C Post wrote:
>
> (...)
>
> > > My wealth in this asset is only $10,000.
> > > Asset tax is to be paid on $100,000.
>
> > Right. An asset tax is exactly like a property tax, but levied on all
> > sorts of assets rather than just real estate. The mortgage on your
> > house does not reduce your property taxes one cent, because the benefits
> > you get from government by virtue of owning the house are not reduced by
> > the outstanding mortgage balance.
>
> Maybe, that's just fair.
> But I have another question.
> We can calculate the cost of government services.
> Defense, FBI, CIA, police, firefighters, - we can calculate all that.
> Does it mean that assets owners should pay only for protection?
> Does it mean that assets owners should not pay for social cervices
> like Medicaid, Social Security and the like?
> I remember something like this in your post.
>
> -- Michael Vilkin.
This is where I diverge with the Georgists, and somewhat with C. POST. I
think we all agree on the basic principles but there is a temptation to employ
RAW LAND taxation, as opposed to asset taxation for financing the social
programs of government. I don't think that most Greens, and/or most
Georgists/Geoists, would find a problem with taxing pollution to cover the
costs of social services, instead of taxing assets (including land). But, the
argument goes that raw land can never be owned by any individual or group
because it was never earned (i.e. it was here before any of us got here and
nobody "made" it like you would make a building or a car). Hence, land is not
the output of labor (nor is air and water and oil and gold), and it is not the
excess of production over cost and cannot be referred to as capital. If this
line of reasoning is taken, then only the tenure (right to use the land or to
extract minerals therefrom) can be taxed as an asset. The gold or oil belongs
to the community at large. Since nobody can ever OWN the land then your
rights to tenure are based upon your USE of the land in paying the tax.
Taxing such tenure in due regard for the perceived "best use" of the land and
using the proceeds for social purposes is then thought to be OK because nobody
really owns the land and because no matter how much you tax the land it will
not go away, the supply is inelastic. And because the tax does not vary
regardless of how the land is used.
It has been my position that such taxation would give way to all kinds of
boondoggles and left handed liberal tripe because there is no controlling
feedback. IMHO excise taxes and consumption taxes should be used to fund
social programs to the extent that such programs exist. IN this way the
liberals must pay a fair share for the programs they would support. Such
taxes are regressive, but, providing that the proceeds are used for SS,
medical care, and other social needs then these taxes are imminently fair.
Taxing assets to pay for social stuff is no less an outrage than taxing
consumption to pay for government support of ownership rights.
Michael L. Coburn
Gary Forbis wrote:
> Michael Vilkin wrote in message <368DB1...@hotmail.com>...
> >Gary Forbis wrote:
> >
> > (...)
> >
> >> > Say, I own an asset. Market price $100,000.
> >> > There is $90,000 mortgage. Net worth $10,000.
> >
> >> > My wealth in this asset is only $10,000.
> >> > Asset tax is to be paid on $100,000.
> >
> >> > Isn't wealth tax more fair then asset tax on
> >> > an asset I don't really own until I pay it off?
> >
> >> I guess you could get the person loaning you to pay
> >> the tax on the other $90,000 since she "owns" it.
> >
> >OK. I own a $100,000 house and I owe $90,000 mortgage.
> >Since my net worth in this asset is only $10,000
> >it would be fair to pay wealth tax on $10,000.
> >Asset tax on $100,000 asset seems to be unfair to me,
> >at a first glance. And again, if at the end I pay
> >the same amount as income tax, and 10,000 pages of evil
> >income tax are abolished, - what the hell?
> >I'd agree, especially, as you propose, the bank
> >will pay tax on $90,000 mortgage. Will it?
>
> The bank will raise interest rates so the net effect is you will
> pay it. Why not just simplify the process and have the owner
> of record pay the tax on the asset directly?
>
I see NOTHING wrong with the bank attempting to raise its interest rate in
order to pay the tax on the asset (the note). Such a move will have an
economic effect and the Fed will either raise of lower the rates. I
*THINK* that it *MAY* be more disadvantageious to borrow money. This is
not necessarily a bad thing. Such an increase will devalue the asset (the
house). I can't afford the interest, so the seller will simply have to
decrease the price or keep the house. Speculators get hurt by this. Not
real people.
Gary Forbis
>
>Michael Vilkin wrote:
>
>> Gary Forbis wrote:
>>
>> (...)
>>
>> > > Say, I own an asset. Market price $100,000.
>> > > There is $90,000 mortgage. Net worth $10,000.
>>
>> > > My wealth in this asset is only $10,000.
>> > > Asset tax is to be paid on $100,000.
>>
>> > > Isn't wealth tax more fair then asset tax on
>> > > an asset I don't really own until I pay it off?
>>
>> > I guess you could get the person loaning you to pay
>> > the tax on the other $90,000 since she "owns" it.
>> I'd agree, especially, as you propose, the bank
>> will pay tax on $90,000 mortgage. Will it?
>
>The bank has an asset worth some amount more than $90000. The net
>present value or the value at which that note can be traded is the
>actual value and that is what the tax is paid on. The short answer is
>YES. Banks will have to pay tax on money created from thin air.
I'm trying to get Michael Vilkin to move off wealth tax right now.
While I agree with you I'm willing to give a bit at this time for some
movement away from wealth tax to real estate tax. If I can get
him to agree there is no real difference between having him pay
the entire tax directly and having him pay the entire tax by paying
some directly and some through his lender then I'll be willing to
discuss taxes on financial assets.
Shawn A. Wilson
C Post wrote in message <368D77...@istar.ca>...
>Shawn A. Wilson wrote:
>>
>> The models used do not involve any unreasonable assumptions that
>> force the results.
>
>ROTFLMAO! I showed _exactly_ how the obviously unreasonable assumptions
>of the Ramsey model force the result, in at least half a dozen different
>ways.
No, you didn't. But feel free to restate your objections.
>> All they assume is that people want to maximize their
>> welfare, that they value the future less than the present, and that both
>> utility and output are subject to declining marginal products.
>
>False. Go look at Dejanews where I demolished your Ramsey-based
>"analysis."
Only in your delusions.
>> > The idea that people will save or invest
>> >less if assets are taxed is pure fantasy.
>>
>> Wrong, national cross-section data clearly shows that people do
save/invest
>> less when assets are taxed.
>
>Lie. There has never been a comprehensive asset tax, so such data
>cannot exist.
I keep forgetting what a deluded fool you are. Sweden is well known for its
tax structure. Nearly every country has some sort of wealth/asset/propery
tax.
> Where limited asset tax data do exist, such as on
>property taxes, they clearly show that higher is better (as long as the
>tax rate on improvements is not too high relative to depreciation -- the
>land value tax rate is not subject to this restriction).
Ah, your favorite example of high taxes, California. I like the way you're
incapable of comprehending the idea that there are other forces that should
be taken into account.
>> What happens is that industries that used to manufacture capital goods
now
>> manufacture consumption goods.
>
>Nope. Money that used to be invested in assets other than capital goods
>is now invested in capital goods.
Why? Capital goods are now more expensive relative to consumption goods
than they were before (capital goods have to pay asset taxes, non-durable
consumption goods don't). It's basic economics, people buy less when the
price goes up.
>> > Land and
>> >gold and water and trees and labor and skill and genius are still worth
>> just as
>> >much as they were.
>>
>> Yep, but some of those assets are now used to produce consumption rather
>> than capital.
>
>Nope. Under asset taxation, some of those assets would be used to
>produce capital goods for the productive to use rather than consumption
>goods for idle asset owners to consume.
No, they wouldn't. Capital goods have been made more expensive and less
desirable by your asset tax.
>> > Real value does not just evaporate and people will continue
>> >to save some of the fruits of current production against the demands of
>> >tomorrow.
>>
>> Some, but less than without asset taxes.
>
>True. But because what _is_ saved would go preferentially to capital
>goods rather than speculation and trading in privileges, _more_ capital
>goods would be produced than under income taxation, and they would be
>used more productively.
As always, the profit motive ensures that resources are used as productively
as possible (you have never ONCE addressed that point). So, more productive
investments are not going to becaome available by magic. You've always
wanted to play David Copperfield with the set of available investments.
Those investments that pay less than 2% before the tax will now pay less
than 0% and will not be made. So income will fall. Unambiguously. The
average post-tax rate of return on all investments will also fall
unambiguously, since all investments will pay 2% less. The average pre-tax
rate of return on investments will rise slightly though.
>
>> > People will still take risks and attempt to develop better productive
>> >techniques.
>>
>> Except now those productive techniques will be better TV shows rather
than
>> better factories.
>
>Nope. Better factories rather than better ways to avoid income taxes,
Better factories beome more valuable, and the tax burden increases. In
fact, the increase in output from an improved factory is the return to the
investment of the improvements. Say you have a factory that produces
$500,000 in profits each period. The market will value the factory at
$5,000,000 (assuming a 10% interest rate). Suppose you can make
improvements for $4,500,000 that will double the profits produced by the
factory. Under an income tax scheme you'll make the improvements
($4,500,000 would only get you $450,000 per period in the open market rather
than $500,000). Under an asset tax, that extra $500,000 per period would
increase the value of the factory by $5,000,000 and thus would increase the
taxes due by 0.02 * $5,000,000 = $100,000 each period. However, $50,000 <
$100,000, so the improvements won't be made. QED
>> > We would certainly have more jobs and less downsizing.
>>
>> Unemployment is the lowest it's been in 30 years,
>
>??? Thirty income taxing years, of course. You're comparing green
>apples to rotten apples to prove oranges don't make good pie. Well,
>doh...
Ah, are you saying that unemployment can be reduced beloew the 4-5% level?
>
>> what would we do with more jobs? There wouldn't be anyone to fill them.
>
>Check out any inner-city area near you: unemployment satatistics only
>count those who haven't given up looking yet. And more jobs would also
>mean higher pay for those already working.
But not more output. So prices would just rise to soak up all the
additional money floating around.
>
>> > I do
>> >not advocate or support less productivity, but the idea that asset
taxation
>> will
>> >hurt productivity is completely false.
>>
>> No, it isn't.
>
>Yes, it is, and that fact has been demonstrated empirically.
Only in your mind. But, I'll give you the benefit of the doubt, cite a
journal article.
> The states
>with the highest property taxes have better economies in all sorts of
>ways -- including productivity --- than the states with the lowest
>property taxes.
You're implying cause and effect. You know that's not how it works, PROVE
that the relationship is causal rather than merely coincidence.
> Now granted, a property tax is not the same as a
>comprehensive asset tax, but it's the closest thing we have for
>comparison.
Funny how it isn't at all acceptable when it's used against your position.
Are you just a floundering hypocrite? (we actually all know you are, but
it's entertaining to watch you dig yourself deeper into your delusion)
What did you say above...
(me) "Wrong, national cross-section data clearly shows that people do
save/invest less when assets are taxed."
(you) "Lie. There has never been a comprehensive asset tax, so such data
cannot exist."
So, which is it? Can we make a comparison or not? If we can, then I get to
introduce the evidence of every country in the world, and the very definite
correlation between higher 'asset' taxes and lower accumulation of capital
and lower wages. If the answer is no, then you don't get your badly done
examples without control variables.
>> > Asset taxation allows those without
>> >assets to be productive as they are not hindered by income and wage
taxes.
>>
>> Taxes on wages don't affect productivity very much.
>
>No. Because taxes on wages increase the cost of labor, they actually
>_increase_ productivity, but _decrease_ production and standard of
>living.
More ignorance from you, not in the least surprising. When IBM is hiring,
do you think they care whether they have to pay $100,000 to get some
employee, rather than $70,000 to the employee and $30,000 to the government?
Income taxes affect the supply of labor, not its cost.
>
>> People pretty much work 40 hours/week regardless.
>
>Idiocy. There are _laws_ that make it much more expensive to employ
>people more than about 40 hours/week.
Yes, there are. There aren't laws preventing them from working second jobs
though. There also aren't any laws forbidding them to work less. I guess
your limited mental ability didn't consider the fact that people can work
LESS too.
Also, if people get
>a good income from their assets, income tax on any money they actually
>get out and earn by producing something will be worth much less to
>them. Such people often choose not to work at all in an income-taxing
>environment, with the result that those who have few assets have more
>opportunities to work 40-hour weeks.
Interest and profits get taxed just like income.
>> > And
>> >THAT, Shawn, is what scares hell out of all the current asset owners.
>>
>> The vast majority of Americans are asset owners. Or did you forget that
>> houses are assets?
>
>Grow up. He meant _large_ asset owners, of course: the people who would
>pay more tax under asset taxation than they do under income taxation
>(i.e., almost no working person with less than several hundred thousand
>dollars in assets _including_ their house). That would be at most a few
>percent of the working-age population.
Ah, and you think that farmers won't increase the cost of their goods to pay
their asset taxes? That landlords won't increase their rents? Farming and
housing are the two big land users. Food and housing are the two big
expenses the poor face. It seems your asset tax will hit the poor worst of
all.
>> NO! Capital is NOT money.
>
>I've asked you before to define capital, Shawn. How about it?
I take it you're incapable of understanding the econ 101 definition, I can't
give you anything else.
>Money is certainly an asset.
Ah, you're using the 'Hitler was a man, I am a man, therefore I am Hitler'
brand of 'logic'.
>> The
>> relationships between savings and investment, and between capital and
>> productivity are very easy to see.
>
>Oh, but what about the relationship between _assets_ and productivity,
>hmmm? Japan's productivity has been completely unaffected by a 50%+
>decline in assets.
The only time I can think of that Japan faced anything like a 50% decline in
its assets was WWII, and its productivity most definitely did decline. But
let me guess, you don't know the difference between an asset and the price
of said asset?
>> >This tax will be passed to the consumers of whatever the company
>> produces
>> >to the extent that it can be.
>>
>> It CAN'T be passed on.
>
>The degree of passing on depends on the elasticities.
Not for an asset tax. More sales = more profits = more valuable company =
higher taxes.
>??? The absence of income tax will cause the cost of production to
>_decrease_ of course, and the contrary cost of not producing to
>increase.
Ah, apparently your employer pays your taxes. If so, you're the only one.
>
>> Microsoft ALREADY pays for government services through the taxes on its
>> profits.
>
>??? Nope. A company that has no profits pays no tax, no matter how
>much service it gets from government.
And if they have no profits, the value of any services receivedfrom he
government is about zero.
> So Microsoft is paying taxes for
>being profitable, not for getting services from government.
Funny how your previous argument was that Microsoft is profitable BECAUSE of
the services it receives from the government.
>
>> > Microsoft *MUST* derive the revenue to
>> >pay these taxes from its sales.
>>
>> How? If it sells more, the value of the company increases and its tax
bite
>> also increases. Microsoft may continue to exist under such a regime, but
>> many other companies will go under.
>
>??? How can they, unless they are using their assets unproductively?
Well, for one, all those firms with 1 and 2% profit margins will go under.
1% is productive use when it's the highest return available. But I forgot,
you're assuming that new profitable investments will appear by magic.
>And Shawn, I've _worked_ for the financial "industry," so I know
>_exactly_ how much value its services (aside from facilitation of income
>tax avoidance) _really_ have...
Judging by your intellectual capacity I would guess you cleaned the toilets
for some accountant. That isn't really working in the financial industry.
>It's not _funny_ in the least, to those of us stuck with Windoze...
Linux is FREE, moron.
>True. But does it _have_ to come from a monopolistic system that
>reduces total utility almost by definition? If there were no copyrights
>on software, software would still get written by people hired by people
>who needed it -- mainly computer makers, academics and corporate users,
>is my guess. So?
And who 'needs' linux, java, streaming media, etc? How about Starcraft?
Who 'needs' a game?
>> Not at all. Copyright protection makes valuable products marketable, it
>> doesn't make them valuable.
>
><sigh> Equivocating again, I see...
>
>Copyright protection makes products valuable _to_the_copyright_owner_,
>of course.
I just can't believe how incredibly STUPID you are. Do you think copyright
protection makes the slightest bit of difference in how useful someone finds
a particular program?
C Post
Shawn A. Wilson wrote in message <76pop9$1na2$3...@piglet.cc.uic.edu>...
>
>C Post wrote in message <368D77...@istar.ca>...
>>Shawn A. Wilson wrote:
>>>
>>> The models used do not involve any unreasonable assumptions that
>>> force the results.
>>
>>ROTFLMAO! I showed _exactly_ how the obviously unreasonable assumptions
>>of the Ramsey model force the result, in at least half a dozen different
>>ways.
>
>No, you didn't.
Lie. The thread was called "Asset Taxes (Was: Debit Tax)" and I posted my
refutation of your misapplication of the Ramsey model around the end of
July. Look it up in Dejanews. I have tried to paste it into this reply
twice, and Netscape crashed both times.
But here are just three of the unreasonable and tendentious assumptions, for
those who don't want to bother looking it up in Dejanews: 1) the model Shawn
posted assumes complete utilization of labor, so abolishing the tax on labor
(i.e., income tax)could not cause lower unemployment or resulting higher
production; 2) the great bulk of all assets -- land, claims, and
intellectual properties -- which would account for the overwhelming
majority of asset tax revenues (indeed, the tax could easily be designed to
tax _only_ those items), do not even _exist_ in the model. So of course, 3)
Shawn _defined_ an asset tax as falling on _capital_goods_ and _consumption_
(!?!?!?!). In fact, an asset tax would derive less than 10% of its revenues
from capital goods (could easily be reduced to about 1% or even 0%) and
_none_ from consumption.
>>> Wrong, national cross-section data clearly shows that people do
>save/invest
>>> less when assets are taxed.
>>
>>Lie. There has never been a comprehensive asset tax, so such data
>>cannot exist.
>
>I keep forgetting what a deluded fool you are. Sweden is well known for
its
>tax structure. Nearly every country has some sort of wealth/asset/propery
>tax.
The fact that you use these three interchangeably, when they are very, very
different, proves you either understand nothing about them, or are
deliberately lying about them.
>> Where limited asset tax data do exist, such as on
>>property taxes, they clearly show that higher is better (as long as the
>>tax rate on improvements is not too high relative to depreciation -- the
>>land value tax rate is not subject to this restriction).
>
>Ah, your favorite example of high taxes, California.
Let's be clear, shall we? When California's property taxes were high, it
prospered mightily. After Prop 13 sent them steadily downward, California
crashed. The same scenario has been repeated over and over and over, most
recently in East Asia.
>I like the way you're
>incapable of comprehending the idea that there are other forces that should
>be taken into account.
There are always other forces. No matter how many examples I give, you can
always say that.
>>> What happens is that industries that used to manufacture capital goods
>now
>>> manufacture consumption goods.
>>
>>Nope. Money that used to be invested in assets other than capital goods
>>is now invested in capital goods.
>
>Why? Capital goods are now more expensive relative to consumption goods
>than they were before (capital goods have to pay asset taxes, non-durable
>consumption goods don't).
But they are also more profitable to own, with the abolition of income tax.
Because asset taxation falls on the _unearned_ return to assets, people will
turn their investment dollars to assets that can earn the best returns.
> It's basic economics, people buy less when the price goes up.
Nope. Real after-tax return counts far more than price. One look at the
stock market would show you that.
> Capital goods have been made more expensive and less
>desirable by your asset tax.
Nope. Capital goods have become more desirable than other assets, because
the after-tax return on them is so much better.
>>True. But because what _is_ saved would go preferentially to capital
>>goods rather than speculation and trading in privileges, _more_ capital
>>goods would be produced than under income taxation, and they would be
>>used more productively.
>
>As always, the profit motive ensures that resources are used as
productively
>as possible (you have never ONCE addressed that point).
Lie. I have shown why, depending on the definitions used, it is either
tautological and therefore vacuous, or false.
> So, more productive investments are not going to becaome available by
magic.
True. It will only _seem_ like magic...
>You've always
>wanted to play David Copperfield with the set of available investments.
>Those investments that pay less than 2% before the tax will now pay less
>than 0% and will not be made. So income will fall. Unambiguously.
No. You are assuming abolition of income tax will have no effect on the
profitability of investments. That is, quite precisely, an unreasonable
assumption that forces the result.
> The average post-tax rate of return on all investments will also fall
>unambiguously, since all investments will pay 2% less.
Sheer silliness. People who formerly wanted $100,000 a year for their labor
will now work for $70,000. Are you telling me that will have no effect on
the profitability of investments that use labor? I still can't believe you
understand so little about how taxes affect production costs.
> The average pre-tax
>rate of return on investments will rise slightly though.
"Investments" meaning what, exactly?
>>Nope. Better factories rather than better ways to avoid income taxes,
>
>Better factories beome more valuable, and the tax burden increases.
??? So? The tax burden can't increase faster than the value.
>In fact, the increase in output from an improved factory is the return to
the
>investment of the improvements.
No. The return is the additional profit realized through the increase in
output. If the increase in output does not result in an increase in profit,
the investment does not earn a return.
> Say you have a factory that produces
>$500,000 in profits each period. The market will value the factory at
>$5,000,000 (assuming a 10% interest rate). Suppose you can make
>improvements for $4,500,000 that will double the profits produced by the
>factory. Under an income tax scheme you'll make the improvements
>($4,500,000 would only get you $450,000 per period in the open market
rather
>than $500,000). Under an asset tax, that extra $500,000 per period would
>increase the value of the factory by $5,000,000 and thus would increase the
>taxes due by 0.02 * $5,000,000 = $100,000 each period. However, $50,000 <
>$100,000, so the improvements won't be made. QED
Huh?? What is the _income_ tax rate?
The 2% asset tax on the uninvested $4.5 million is going to be $90K.
Investing in the factory improvements will increase the tax bill by $10K,
and the profits by $50K. So, tell me again why the improvements would not
be made? Or are you still assuming the alternative to an asset tax is no
tax?
>>??? Thirty income taxing years, of course. You're comparing green
>>apples to rotten apples to prove oranges don't make good pie. Well,
>>doh...
>
>Ah, are you saying that unemployment can be reduced beloew the 4-5% level?
Yes, and has been in the past. But more significantly, discouraged workers
who have left (or never entered) the workforce can be brought back in.
>>> what would we do with more jobs? There wouldn't be anyone to fill them.
>>
>>Check out any inner-city area near you: unemployment satatistics only
>>count those who haven't given up looking yet. And more jobs would also
>>mean higher pay for those already working.
>
>But not more output.
Of course there would be more output. More consumption, more output, more
investment in capital goods. More money to the productive for producing and
less money to the idle rich for doing nothing.
> So prices would just rise to soak up all the
>additional money floating around.
??? The threat with asset taxation is _deflation_. The money supply would
have to be increased quite a bit during the transition period to keep asset
prices from collapsing. This would just mean that real asset prices and
labor costs would decline, while real returns to labor would rise.
>> The states
>>with the highest property taxes have better economies in all sorts of
>>ways -- including productivity --- than the states with the lowest
>>property taxes.
>
>You're implying cause and effect. You know that's not how it works, PROVE
>that the relationship is causal rather than merely coincidence.
Don't be such an ignoramus. Can you PROVE that _any_ observed economic
relationship is causal rather than merely coincidence?
>> Now granted, a property tax is not the same as a
>>comprehensive asset tax, but it's the closest thing we have for
>>comparison.
>
>Funny how it isn't at all acceptable when it's used against your position.
It depends on the validity of the comparison. Here, I'll explain it for
you...
> What did you say above...
>
>(me) "Wrong, national cross-section data clearly shows that people do
>save/invest less when assets are taxed."
>
>(you) "Lie. There has never been a comprehensive asset tax, so such data
>cannot exist."
A comparison of investment patterns under partial asset taxation is not
valid, because if the asset tax is not comprehensive, investment will seek
out untaxed forms of assets and ownership, skewing the figures. In
addition, because asset taxation reduces asset prices, comparisons based on
calling asset value "saving" or "investment" are completely worthless.
>So, which is it? Can we make a comparison or not?
Depends on what the comparison data actually consist of.
>If we can, then I get to
>introduce the evidence of every country in the world, and the very definite
>correlation between higher 'asset' taxes and lower accumulation of capital
>and lower wages.
Go ahead. The countries with the highest fraction of all government
revenues derived from property taxes (the USA is one of them) tend to have
the best economic performance. And make sure your data don't confuse higher
taxes with higher asset taxes (i.e., don't try calling a low income tax
country a high asset tax country).
>>No. Because taxes on wages increase the cost of labor, they actually
>>_increase_ productivity, but _decrease_ production and standard of
>>living.
>
>More ignorance from you, not in the least surprising. When IBM is hiring,
>do you think they care whether they have to pay $100,000 to get some
>employee, rather than $70,000 to the employee and $30,000 to the
government?
Do you think that question is somehow relevant to the issue??
>Income taxes affect the supply of labor, not its cost.
Unbelievable. It affects both, profoundly. How could income tax reduce the
supply of labor without increasing the cost? That's _really_ basic
economics.
>>> People pretty much work 40 hours/week regardless.
>>
>>Idiocy. There are _laws_ that make it much more expensive to employ
>>people more than about 40 hours/week.
>
>Yes, there are. There aren't laws preventing them from working second jobs
>though.
??? Working a second job would generally involve a very inconvenient second
commute.
>There also aren't any laws forbidding them to work less. I guess
>your limited mental ability didn't consider the fact that people can work
>LESS too.
The fixed cost of commuting makes short workdays very unappealing. However,
short work weeks and long vacations are getting more common, especially in
response to high income taxes.
>Interest and profits get taxed just like income.
No. The fraction of income paid in income tax is inversely related to the
fraction that is investment income. The very rich often pay almost no
income tax (see "The Millionaire Next Door").
>Ah, and you think that farmers won't increase the cost of their goods to
pay
>their asset taxes?
Why would they? They'd be saving their farmhands' (as well as their own)
income taxes.
> That landlords won't increase their rents?
The theory of rents is well enough understood to answer that one....
> Farming and
>housing are the two big land users. Food and housing are the two big
>expenses the poor face. It seems your asset tax will hit the poor worst of
>all.
A miracle of non sequitur. It is known that a tax on land value, at least,
cannot be passed on at all because the supply is perfectly inelastic.
>>> NO! Capital is NOT money.
>>
>>I've asked you before to define capital, Shawn. How about it?
>
>I take it you're incapable of understanding the econ 101 definition, I
can't
>give you anything else.
I've seen half a dozen Econ 101 definitions, some reasonable, others
outrageous. I want to know which one _you_ are using.
>>Money is certainly an asset.
>
>Ah, you're using the 'Hitler was a man, I am a man, therefore I am Hitler'
>brand of 'logic'.
ROTFL! First mention of Hitler. You lose...
I noticed you carefully snipped the part where people could check my logic
against yours for themselves...
>>Oh, but what about the relationship between _assets_ and productivity,
>>hmmm? Japan's productivity has been completely unaffected by a 50%+
>>decline in assets.
>
>The only time I can think of that Japan faced anything like a 50% decline
in
>its assets was WWII, and its productivity most definitely did decline.
Real estate is down nearly 80% and stocks 60%-70% since 1990. Debt
instruments are up a bit, but that doesn't count all the bad debts the banks
are hiding. Total assets are down well over 50%.
> But
>let me guess, you don't know the difference between an asset and the price
>of said asset?
Oh, I do indeed. That's why I don't get sidetracked by arguments about
amounts of "capital" measured in money.
>>The degree of passing on depends on the elasticities.
>
>Not for an asset tax. More sales = more profits = more valuable company =
>higher taxes.
??? At no point do you offer any reason to think this higher tax cannot be
passed on, at least in part.
>>??? The absence of income tax will cause the cost of production to
>>_decrease_ of course, and the contrary cost of not producing to
>>increase.
>
>Ah, apparently your employer pays your taxes. If so, you're the only one.
My employers certainly do pay my income taxes. I'd charge them less if I
didn't have to give so much of it to the government. Almost everyone who
works for a living is in the same boat.
>>> Microsoft ALREADY pays for government services through the taxes on its
>>> profits.
>>
>>??? Nope. A company that has no profits pays no tax, no matter how
>>much service it gets from government.
>
>And if they have no profits, the value of any services receivedfrom he
>government is about zero.
Garbage. Without the government services, there'd be big _negative_
profits. You think a company that stopped getting government services
wouldn't scream to high heaven, profits or no, taxes or no?
>> So Microsoft is paying taxes for
>>being profitable, not for getting services from government.
>
>Funny how your previous argument was that Microsoft is profitable BECAUSE
of
>the services it receives from the government.
Very true. But it gets those services whether or not it is profitable, and
whether or not it pays any tax. Therefore, the tax is not a payment for the
services.
>>??? How can they, unless they are using their assets unproductively?
>
>Well, for one, all those firms with 1 and 2% profit margins will go under.
>1% is productive use when it's the highest return available.
If it's the highest return available on those assets, then the market price
of the assets will fall to the point where the tax becomes affordable. It
_has_ to.
> But I forgot,
>you're assuming that new profitable investments will appear by magic.
Abolition of income tax would _seem_ like magic, but that's just a function
of how accustomed we have become to its iniquities.
>Judging by your intellectual capacity I would guess you cleaned the toilets
>for some accountant.
Look in the mirror, Einstein.
>>It's not _funny_ in the least, to those of us stuck with Windoze...
>
>Linux is FREE, moron.
And that's the extent of your understanding of the software market, I
suppose...
>>True. But does it _have_ to come from a monopolistic system that
>>reduces total utility almost by definition? If there were no copyrights
>>on software, software would still get written by people hired by people
>>who needed it -- mainly computer makers, academics and corporate users,
>>is my guess. So?
>
>And who 'needs' linux, java, streaming media, etc? How about Starcraft?
>Who 'needs' a game?
Those willing to pay for it. Go to a music store, Shawn. Look at the
number and prices of classical CDs. Then explain to us again why copyright
monopolies are necessary.
>>> Not at all. Copyright protection makes valuable products marketable, it
>>> doesn't make them valuable.
>>
>><sigh> Equivocating again, I see...
>>
>>Copyright protection makes products valuable _to_the_copyright_owner_,
>>of course.
>
>I just can't believe how incredibly STUPID you are. Do you think copyright
>protection makes the slightest bit of difference in how useful someone
finds
>a particular program?
It certainly does. Like when you can't use a program on two separate
machines because the license is only for one. Copyright is good for the
copyright owner, not for the customer.
Shawn A. Wilson
C Post wrote in message <91552709...@neptune.uniserve.ca>...
>
>Shawn A. Wilson wrote in message <76pop9$1na2$3...@piglet.cc.uic.edu>...
>>
>>C Post wrote in message <368D77...@istar.ca>...
>>>Shawn A. Wilson wrote:
>>>>
>>>> The models used do not involve any unreasonable assumptions that
>>>> force the results.
>>>
>>>ROTFLMAO! I showed _exactly_ how the obviously unreasonable assumptions
>>>of the Ramsey model force the result, in at least half a dozen different
>>>ways.
>>
>>No, you didn't.
>
>Lie. The thread was called "Asset Taxes (Was: Debit Tax)" and I posted my
>refutation of your misapplication of the Ramsey model around the end of
>July. Look it up in Dejanews. I have tried to paste it into this reply
>twice, and Netscape crashed both times.
I remember the thread, your pathetic response was nothing near a refutation.
>But here are just three of the unreasonable and tendentious assumptions,
for
>those who don't want to bother looking it up in Dejanews: 1) the model
Shawn
>posted assumes complete utilization of labor, so abolishing the tax on
labor
>(i.e., income tax)could not cause lower unemployment or resulting higher
>production;
No, it didn't. It assumed a constant supply of labor, which is a different
thing. Given the very small changes observed in the work week in the US
over the last 50 years as real wages have risen dramatically, it is hardly
an unreasonable assumption.
2) the great bulk of all assets -- land, claims, and
>intellectual properties -- which would account for the overwhelming
>majority of asset tax revenues (indeed, the tax could easily be designed to
>tax _only_ those items), do not even _exist_ in the model.
Sure they do, they're all lumped together as part of the capital stock. Raw
land doesn't account for so much of the US capital stock that it needs to be
treated differently than any other part. The same goes for intellectual
properties.
So of course, 3)
>Shawn _defined_ an asset tax as falling on _capital_goods_ and
_consumption_
>(!?!?!?!).
Apparently you think the number one asset in the US, private housing,
provides something other than consumption services.
> In fact, an asset tax would derive less than 10% of its revenues
>from capital goods (could easily be reduced to about 1% or even 0%) and
>_none_ from consumption.
Ah, obviously you have zero idea (no real surprise) of how the breakdown
between capital goods, structures, intellectual properties, etc, looks in
real life. You're proposing to tax a set of assets at several hundred
percent of their value annually. It just ain't gonna work.
>>I keep forgetting what a deluded fool you are. Sweden is well known for
>its
>>tax structure. Nearly every country has some sort of wealth/asset/propery
>>tax.
>
>
>The fact that you use these three interchangeably, when they are very, very
>different, proves you either understand nothing about them, or are
>deliberately lying about them.
No, it just shows that you don't have the slightest idea what your talking
about.
>>> Where limited asset tax data do exist, such as on
>>>property taxes, they clearly show that higher is better (as long as the
>>>tax rate on improvements is not too high relative to depreciation -- the
>>>land value tax rate is not subject to this restriction).
>>
>>Ah, your favorite example of high taxes, California.
>
>Let's be clear, shall we? When California's property taxes were high, it
>prospered mightily. After Prop 13 sent them steadily downward, California
>crashed. The same scenario has been repeated over and over and over, most
>recently in East Asia.
And you're making the childish assumption that the changes in California's
condition is solely a function of changes in its property tax regulations.
What about the enormous loss of defense dollars after the cold war ended?
An intelligent person would realize that that would have a strong effect on
California's economy.
>>I like the way you're
>>incapable of comprehending the idea that there are other forces that
should
>>be taken into account.
>
>
>There are always other forces. No matter how many examples I give, you can
>always say that.
And still I can't get it through your invulnerable ignorance that those
forces are much more powerful than your favorite force.
>>>> What happens is that industries that used to manufacture capital goods
>>now
>>>> manufacture consumption goods.
>>>
>>>Nope. Money that used to be invested in assets other than capital goods
>>>is now invested in capital goods.
>>
>>Why? Capital goods are now more expensive relative to consumption goods
>>than they were before (capital goods have to pay asset taxes, non-durable
>>consumption goods don't).
>
>But they are also more profitable to own, with the abolition of income tax.
With the income tax some of the tax burden is placed on labor, and some on
capital. With an asset tax, ALL of the burden is placed on capital.
Capital is thus MORE expensive than it was previously. Is that concept so
difficult for your limited intellect to understand?
>Because asset taxation falls on the _unearned_ return to assets, people
will
>turn their investment dollars to assets that can earn the best returns.
They do that now, like I've told you abot a million times already.
>> It's basic economics, people buy less when the price goes up.
>
>
>Nope. Real after-tax return counts far more than price. One look at the
>stock market would show you that.
The returns to investment will FALL because of your asset tax. A 6% return
(common on CDs), under a 25% income tax, will actually pay 4.5%. Under a 2%
asset tax the return will be 4%. Which is greater, 4.5 or 4? Let me
guress, you're going to resort to the 'higher return investments will become
available through magic' argument again.
>
>> Capital goods have been made more expensive and less
>>desirable by your asset tax.
>
>
>Nope. Capital goods have become more desirable than other assets, because
>the after-tax return on them is so much better.
Ah, so you think 4 is greater than 4.5.
>>As always, the profit motive ensures that resources are used as
>productively
>>as possible (you have never ONCE addressed that point).
>
>Lie. I have shown why, depending on the definitions used, it is either
>tautological and therefore vacuous, or false.
And, yet again, you don't address the point.
>
>> So, more productive investments are not going to becaome available by
>magic.
>
>True. It will only _seem_ like magic...
There you go again.
>
>>You've always
>>wanted to play David Copperfield with the set of available investments.
>>Those investments that pay less than 2% before the tax will now pay less
>>than 0% and will not be made. So income will fall. Unambiguously.
>
>No. You are assuming abolition of income tax will have no effect on the
>profitability of investments. That is, quite precisely, an unreasonable
>assumption that forces the result.
Then explain why these new investments are not available NOW.
>> The average post-tax rate of return on all investments will also fall
>>unambiguously, since all investments will pay 2% less.
>
>Sheer silliness. People who formerly wanted $100,000 a year for their
labor
>will now work for $70,000.
No, they won't. They'll need that extra $30,000 they aren't paying in
income taxes to pay their now higher rent and food bills.
> Are you telling me that will have no effect on
>the profitability of investments that use labor? I still can't believe you
>understand so little about how taxes affect production costs.
Ah, you live in Bizzarro world, where 4 is greater than 4.5 and knowledge is
ignorance.
>>>Nope. Better factories rather than better ways to avoid income taxes,
>>
>>Better factories beome more valuable, and the tax burden increases.
>
>??? So? The tax burden can't increase faster than the value.
Improving the factories won't increase profits, the higher taxes woluld
prevent that.
>> Say you have a factory that produces
>>$500,000 in profits each period. The market will value the factory at
>>$5,000,000 (assuming a 10% interest rate). Suppose you can make
>>improvements for $4,500,000 that will double the profits produced by the
>>factory. Under an income tax scheme you'll make the improvements
>>($4,500,000 would only get you $450,000 per period in the open market
>rather
>>than $500,000). Under an asset tax, that extra $500,000 per period would
>>increase the value of the factory by $5,000,000 and thus would increase
the
>>taxes due by 0.02 * $5,000,000 = $100,000 each period. However, $50,000 <
>>$100,000, so the improvements won't be made. QED
>
>
>Huh?? What is the _income_ tax rate?
It doesn't matter. Since the income tax would affect both the return on
improvements and the return on other investment equally, it just washes out.
>The 2% asset tax on the uninvested $4.5 million is going to be $90K.
Invest the money overseas and the tax is zero. A lot of capital will leave
the country under your scheme. I didn't even take that into account.
>Investing in the factory improvements will increase the tax bill by $10K,
>and the profits by $50K.
Damn, you can't even do simple math right.
5,000,000 * 0.02 = 100,000
> So, tell me again why the improvements would not
>be made? Or are you still assuming the alternative to an asset tax is no
>tax?
Well, make the improvements on a factory in this county and you have to pay
the government $100,000/year for the rest of eternity. Invest the money
oversears, and damn, no tax bill.
>> So prices would just rise to soak up all the
>>additional money floating around.
>
>
>??? The threat with asset taxation is _deflation_. The money supply would
>have to be increased quite a bit during the transition period to keep asset
>prices from collapsing.
The real prices would collapse regardless. Jacking up the money supply
would only affect the nominal prices. It would also inject considerable
uncertainty in interest rates, which would reduce investment by itself.
> This would just mean that real asset prices and
>labor costs would decline, while real returns to labor would rise.
Fall, less capital for workers to work with will LOWER wages.
>>> The states
>>>with the highest property taxes have better economies in all sorts of
>>>ways -- including productivity --- than the states with the lowest
>>>property taxes.
>>
>>You're implying cause and effect. You know that's not how it works, PROVE
>>that the relationship is causal rather than merely coincidence.
>
>
>Don't be such an ignoramus. Can you PROVE that _any_ observed economic
>relationship is causal rather than merely coincidence?
Yes, I can show that one comes before the other. You can't even do that.
>>> Now granted, a property tax is not the same as a
>>>comprehensive asset tax, but it's the closest thing we have for
>>>comparison.
>>
>>Funny how it isn't at all acceptable when it's used against your position.
>
>
>It depends on the validity of the comparison. Here, I'll explain it for
>you...
Yawn, hypocrisy is hypocrisy, no matter how you try to dress it up.
>>>No. Because taxes on wages increase the cost of labor, they actually
>>>_increase_ productivity, but _decrease_ production and standard of
>>>living.
>>
>>More ignorance from you, not in the least surprising. When IBM is hiring,
>>do you think they care whether they have to pay $100,000 to get some
>>employee, rather than $70,000 to the employee and $30,000 to the
>government?
>
>Do you think that question is somehow relevant to the issue??
Only in that it demonstrates your ignorance.
>>There also aren't any laws forbidding them to work less. I guess
>>your limited mental ability didn't consider the fact that people can work
>>LESS too.
>
>
>The fixed cost of commuting makes short workdays very unappealing.
Ah, apparently you think people make their living and working decisions in
total isolation to each other.
>>Interest and profits get taxed just like income.
>
>
>No. The fraction of income paid in income tax is inversely related to the
>fraction that is investment income. The very rich often pay almost no
>income tax (see "The Millionaire Next Door").
Actually, the very rich pay more dollars and a higher percentage than
everyone else does.
>
>>Ah, and you think that farmers won't increase the cost of their goods to
>pay
>>their asset taxes?
>
>Why would they? They'd be saving their farmhands' (as well as their own)
>income taxes.
Ah, yet another thing you don;t know about the real world, labor costs are
much less than land/capital costs for farmers.
>> That landlords won't increase their rents?
>
>The theory of rents is well enough understood to answer that one....
Obviously not understood by you. Existing prices are partially a function
of the existing tax structure. Existing rents are a function of prices and
the tax structure. Instituting a change in the tax structure will change
prices only for those who buy or sell their units. An existing property
with a tax burden of $X divided among all its rental units, when faced will
an increase in its tax burden of $Y, will divide the additional tax burden
among the units as well. Rents will rise. Since ALL properties are being
similarly affected, there will be no competitive pressure to ameliorate any
increase.
>> Farming and
>>housing are the two big land users. Food and housing are the two big
>>expenses the poor face. It seems your asset tax will hit the poor worst
of
>>all.
>
>
>A miracle of non sequitur. It is known that a tax on land value, at least,
>cannot be passed on at all because the supply is perfectly inelastic.
No, it cannot be passed on. You obviously don't understand what that means.
It sure as hell DOESN'T mean 'will have no effect'. What it means is that
the entire impact will be felt by the owner at the time the tax is imposed.
>>>> NO! Capital is NOT money.
>>>
>>>I've asked you before to define capital, Shawn. How about it?
>>
>>I take it you're incapable of understanding the econ 101 definition, I
>can't
>>give you anything else.
>
>
>I've seen half a dozen Econ 101 definitions, some reasonable, others
>outrageous. I want to know which one _you_ are using.
All those factors of production apart from human labor.
>>>Money is certainly an asset.
>>
>>Ah, you're using the 'Hitler was a man, I am a man, therefore I am Hitler'
>>brand of 'logic'.
>
>
>ROTFL! First mention of Hitler. You lose...
I wasn't comparing you to Hitler, he was just the first person to come to
mind.
>>>Oh, but what about the relationship between _assets_ and productivity,
>>>hmmm? Japan's productivity has been completely unaffected by a 50%+
>>>decline in assets.
>>
>>The only time I can think of that Japan faced anything like a 50% decline
>in
>>its assets was WWII, and its productivity most definitely did decline.
>
>Real estate is down nearly 80% and stocks 60%-70% since 1990. Debt
>instruments are up a bit, but that doesn't count all the bad debts the
banks
>are hiding. Total assets are down well over 50%.
Assets have changed liitle, if any. The value of those assets is what has
changed.
(Rest cut from fatigue)
Michael L. Coburn
"Shawn A. Wilson" wrote:
> C Post wrote in message <91552709...@neptune.uniserve.ca>...
> deletes......
> 2) the great bulk of all assets -- land, claims, and
> >intellectual properties -- which would account for the overwhelming
> >majority of asset tax revenues (indeed, the tax could easily be designed to
> >tax _only_ those items), do not even _exist_ in the model.
>
> Sure they do, they're all lumped together as part of the capital stock. Raw
> land doesn't account for so much of the US capital stock that it needs to be
> treated differently than any other part. The same goes for intellectual
> properties.
>
This is where the real problem lies and it is time to sort it out. Shawn claims
that raw land, oil, gold, water, air and everything else is "capital stock". He
then uses the term in discussions about how taxing "capital stock" will decrease
the amount of "capital stock" and, hence, decrease the amount of jobs and
wages. Taxing a piece of land is not going to make it shrink, and taxing a
gallon of crude is not going to turn it into a quart. In niether case will the
tax have ANY effect on wages other than to make such wages rise in proportion to
the value of land and oil. This same claim cannot be made in regard to patents,
trademarks, and markets, but it is still quite difficult to see how a tax on
these items could reduce actual realio trulio "capital stock" such as machinery,
and structures. So when we take the gains from taxing things that will not be
adversely effected by taxation into account then the actual decrease that
*MIGHT* have been seen in real "capital stock" is more than offset by the
increased purchasing power of the investor and the consumer (i.e. the producers
and consumers have more funds to dispose of and these funds came form those who
were not producing).
C Post
>
> C Post wrote in message <91552709...@neptune.uniserve.ca>...
> >
> >Shawn A. Wilson wrote in message <76pop9$1na2$3...@piglet.cc.uic.edu>...
> >>
> >>C Post wrote in message <368D77...@istar.ca>...
> >>>Shawn A. Wilson wrote:
> >>>>
> >>>> The models used do not involve any unreasonable assumptions that
> >>>> force the results.
> >>>
> >>>ROTFLMAO! I showed _exactly_ how the obviously unreasonable assumptions
> >>>of the Ramsey model force the result, in at least half a dozen different
> >>>ways.
> >>
> >>No, you didn't.
> >
> >Lie. The thread was called "Asset Taxes (Was: Debit Tax)" and I posted my
> >refutation of your misapplication of the Ramsey model around the end of
> >July. Look it up in Dejanews. I have tried to paste it into this reply
> >twice, and Netscape crashed both times.
>
> I remember the thread, your pathetic response was nothing near a refutation.
I refer readers to Dejanews.
> >But here are just three of the unreasonable and tendentious assumptions,
> for
> >those who don't want to bother looking it up in Dejanews: 1) the model
> Shawn
> >posted assumes complete utilization of labor, so abolishing the tax on
> labor
> >(i.e., income tax)could not cause lower unemployment or resulting higher
> >production;
>
> No, it didn't. It assumed a constant supply of labor, which is a different
> thing.
Same effect.
> Given the very small changes observed in the work week in the US
> over the last 50 years as real wages have risen dramatically, it is hardly
> an unreasonable assumption.
It is both unreasonable and tendentious. How has the number of
discouraged workers changed over 50 years, as income tax has risen as a
fraction of GDP and government revenue? How has non-wage income such as
welfare, pensions and investment income affected the work week? Your
see-no-effect, hear-no-effect speak-no-effect routine is beneath
refutation.
> 2) the great bulk of all assets -- land, claims, and
> >intellectual properties -- which would account for the overwhelming
> >majority of asset tax revenues (indeed, the tax could easily be designed to
> >tax _only_ those items), do not even _exist_ in the model.
>
> Sure they do, they're all lumped together as part of the capital stock.
IOW, they are treated, in the model, as if they were machinery or
buildings. Right. Like I said, unreasonable and tendentious.
> Raw
> land doesn't account for so much of the US capital stock that it needs to be
> treated differently than any other part.
FYI, land value accounts for roughly 1/4 of all US assets....
> The same goes for intellectual properties.
IOW, the model treats a monopoly created by government the same as a
machine created by private industry. Unreasonable and tendentious.
> So of course, 3)
> >Shawn _defined_ an asset tax as falling on _capital_goods_ and
> _consumption_
> >(!?!?!?!).
>
> Apparently you think the number one asset in the US, private housing,
> provides something other than consumption services.
Oh, but your model doesn't talk about consumption _services_. It talks
about _consumption_. Don't know the difference, do you? Your model
would have taxed a restaurant meal as an asset. Like I said,
unreasonable and tendentious (and in this case, dishonest).
> You're proposing to tax a set of assets at several hundred
> percent of their value annually.
You never get tired of uttering stupid and easily refuted lies, do you?
Come on, Shawn, let's see _any_ kind of justification for this claim.
> >>I keep forgetting what a deluded fool you are. Sweden is well known for
> >its
> >>tax structure. Nearly every country has some sort of wealth/asset/propery
> >>tax.
> >
> >
> >The fact that you use these three interchangeably, when they are very, very
> >different, proves you either understand nothing about them, or are
> >deliberately lying about them.
>
> No, it just shows that you don't have the slightest idea what your talking
> about.
I still don't know if you are ignorant or lying. But I'll bet you can't
even accurately _define_ those three taxes.
> >>> Where limited asset tax data do exist, such as on
> >>>property taxes, they clearly show that higher is better (as long as the
> >>>tax rate on improvements is not too high relative to depreciation -- the
> >>>land value tax rate is not subject to this restriction).
> >>
> >>Ah, your favorite example of high taxes, California.
> >
> >Let's be clear, shall we? When California's property taxes were high, it
> >prospered mightily. After Prop 13 sent them steadily downward, California
> >crashed. The same scenario has been repeated over and over and over, most
> >recently in East Asia.
>
> And you're making the childish assumption that the changes in California's
> condition is solely a function of changes in its property tax regulations.
You can _see_ why it has to be that way, if you are willing to look.
Lower property taxes lead to property price inflation, which leads to
increased costs for housing, labor, etc. and then financial
strangulation as investment funds are diverted into land speculation.
Same thing happens every time it's tried. Massachusetts, Japan, South
Korea, and on and on.
> What about the enormous loss of defense dollars after the cold war ended?
Far less, proportionally, than after WW II ended. CA prospered after WW
II, when it still had high property taxes. We've been over this before,
but you apparently learned nothing.
> An intelligent person would realize that that would have a strong effect on
> California's economy.
The decline in CA defense spending was far smaller proportionally than
other such declines after cessation of hostilities, e.g., in Canada
after WW II. And you have not addressed the fact that this relationship
is seen consistently. Not just in California, but in Massachusetts,
Japan, Thailand, South Korea, and on and on.
> >There are always other forces. No matter how many examples I give, you can
> >always say that.
>
> And still I can't get it through your invulnerable ignorance that those
> forces are much more powerful than your favorite force.
Wrong. You might try informing yourself a little on a subject before
mouthing off. There's a good book called (IIRC) "For Good and Evil: the
effects of taxation on the course of civilization." Good rule of thumb:
Everything happens for tax reasons.
> >>>Nope. Money that used to be invested in assets other than capital goods
> >>>is now invested in capital goods.
> >>
> >>Why? Capital goods are now more expensive relative to consumption goods
> >>than they were before (capital goods have to pay asset taxes, non-durable
> >>consumption goods don't).
> >
> >But they are also more profitable to own, with the abolition of income tax.
>
> With the income tax some of the tax burden is placed on labor, and some on
> capital. With an asset tax, ALL of the burden is placed on capital.
Here again, we see your inability to distinguish between capital goods
and other assets. Below, you define capital _exclusively_ as production
factors other than labor. Do you believe there can be no such thing as
an asset that is not a production factor? Yes or no?
> Capital is thus MORE expensive than it was previously. Is that concept so
> difficult for your limited intellect to understand?
Do you know the difference between capital and assets or not? Yes or
no?
> >Because asset taxation falls on the _unearned_ return to assets, people
> will
> >turn their investment dollars to assets that can earn the best returns.
>
> They do that now, like I've told you abot a million times already.
Meaningless. If income tax took _every_cent_ of investment income above
the rate paid on government bonds, that claim would still be true, but
would anyone bother investing in anything but government bonds?
Will you _think_ for once?
> >> It's basic economics, people buy less when the price goes up.
> >
> >Nope. Real after-tax return counts far more than price. One look at the
> >stock market would show you that.
>
> The returns to investment will FALL because of your asset tax.
Gracious! You finally made a claim about asset taxation that is
actually _true_ (_if_ by "investment" you mean purchase and ownership of
_assets_, as distinct from creation and use of _capital_goods_ that
actually increase production).
> A 6% return
> (common on CDs), under a 25% income tax, will actually pay 4.5%. Under a 2%
> asset tax the return will be 4%. Which is greater, 4.5 or 4? Let me
> guress, you're going to resort to the 'higher return investments will become
> available through magic' argument again.
No. Money will be diverted from CDs to capital goods that have higher
returns.
> >> Capital goods have been made more expensive and less
> >>desirable by your asset tax.
> >
> >
> >Nope. Capital goods have become more desirable than other assets, because
> >the after-tax return on them is so much better.
>
> Ah, so you think 4 is greater than 4.5.
No, but you obviously think a CD is a capital good. See how your
stupidity and dishonesty catch up with you? You stand refuted, Shawn.
Again.
> >>As always, the profit motive ensures that resources are used as
> >productively
> >>as possible (you have never ONCE addressed that point).
> >
> >Lie. I have shown why, depending on the definitions used, it is either
> >tautological and therefore vacuous, or false.
>
> And, yet again, you don't address the point.
There _is_ no point. Not one that means anything, anyway. _That's_ the
point.
> >>You've always
> >>wanted to play David Copperfield with the set of available investments.
> >>Those investments that pay less than 2% before the tax will now pay less
> >>than 0% and will not be made. So income will fall. Unambiguously.
> >
> >No. You are assuming abolition of income tax will have no effect on the
> >profitability of investments. That is, quite precisely, an unreasonable
> >assumption that forces the result.
>
> Then explain why these new investments are not available NOW.
Income tax makes labor too expensive and higher risk for higher returns
too unattractive.
> >> The average post-tax rate of return on all investments will also fall
> >>unambiguously, since all investments will pay 2% less.
> >
> >Sheer silliness. People who formerly wanted $100,000 a year for their
> labor
> >will now work for $70,000.
>
> No, they won't. They'll need that extra $30,000 they aren't paying in
> income taxes to pay their now higher rent and food bills.
Nope. The degree of passing on of the asset tax will vary for different
types of assets, but the bulk of it will _not_ be and _cannot_ be passed
on. In fact, real prices of things like food will fall as the absence
of income tax cost works its way through the economy.
> >>>Nope. Better factories rather than better ways to avoid income taxes,
> >>
> >>Better factories beome more valuable, and the tax burden increases.
> >
> >??? So? The tax burden can't increase faster than the value.
>
> Improving the factories won't increase profits, the higher taxes woluld
> prevent that.
??? How _could_ they, unless the tax rate was infinite? You're not
making any sense ("He who refuses to do arithmetic condemns himself to
talk nonsense.").
> >> Say you have a factory that produces
> >>$500,000 in profits each period. The market will value the factory at
> >>$5,000,000 (assuming a 10% interest rate). Suppose you can make
> >>improvements for $4,500,000 that will double the profits produced by the
> >>factory. Under an income tax scheme you'll make the improvements
> >>($4,500,000 would only get you $450,000 per period in the open market
> >rather
> >>than $500,000). Under an asset tax, that extra $500,000 per period would
> >>increase the value of the factory by $5,000,000 and thus would increase
> the
> >>taxes due by 0.02 * $5,000,000 = $100,000 each period. However, $50,000 <
> >>$100,000, so the improvements won't be made. QED
> >
> >
> >Huh?? What is the _income_ tax rate?
>
> It doesn't matter. Since the income tax would affect both the return on
> improvements and the return on other investment equally, it just washes out.
Wrong. We've been over this before. Income tax favors asset uses that
don't produce _taxable_ income (like luxurious mansions and yachts) over
investments that do produce taxable income, like factory improvements.
Income tax also favors a low-risk "investment" like a government bond
over riskier investments like factory improvements.
So you stand refuted. Again.
> >The 2% asset tax on the uninvested $4.5 million is going to be $90K.
>
> Invest the money overseas and the tax is zero.
Wrong. I have explained to you many times why "investing" overseas
cannot reduce the tax, but only change the identity of the payer.
> A lot of capital will leave the country under your scheme.
Yes. The lazy and stupid capital that expects something for nothing
will leave. The smart and industrious capital that wants to get rich by
_producing_ will flood in to more than replace it.
> I didn't even take that into account.
You didn't take _anything_ into account...
> >Investing in the factory improvements will increase the tax bill by $10K,
> >and the profits by $50K.
>
> Damn, you can't even do simple math right.
>
> 5,000,000 * 0.02 = 100,000
Damn, you can't even do simple math _at_all_.
4,500,000 * 0.02 = 90,000
> > So, tell me again why the improvements would not
> >be made? Or are you still assuming the alternative to an asset tax is no
> >tax?
>
> Well, make the improvements on a factory in this county and you have to pay
> the government $100,000/year for the rest of eternity. Invest the money
> oversears, and damn, no tax bill.
Nothing but the other country's income taxes. Meanwhile, because the
money being moved has already been discounted by the asset tax, the
genius who's trying to avoid the tax only ends up effectively paying it
in advance, buying himself the worst of both worlds. Somehow, I thought
that might be what you'd advocate....
> >> So prices would just rise to soak up all the
> >>additional money floating around.
> >
> >
> >??? The threat with asset taxation is _deflation_. The money supply would
> >have to be increased quite a bit during the transition period to keep asset
> >prices from collapsing.
>
> The real prices would collapse regardless. Jacking up the money supply
> would only affect the nominal prices.
True. That's the point.
> It would also inject considerable
> uncertainty in interest rates, which would reduce investment by itself.
If by "investment" you mean the stupid and lazy kind that wants
something for nothing, yes.
> > This would just mean that real asset prices and
> >labor costs would decline, while real returns to labor would rise.
>
> Fall, less capital for workers to work with will LOWER wages.
Do you or do you not know the difference between capital and assets?
See your own definition below for details.
> >>> The states
> >>>with the highest property taxes have better economies in all sorts of
> >>>ways -- including productivity --- than the states with the lowest
> >>>property taxes.
> >>
> >>You're implying cause and effect. You know that's not how it works, PROVE
> >>that the relationship is causal rather than merely coincidence.
> >
> >
> >Don't be such an ignoramus. Can you PROVE that _any_ observed economic
> >relationship is causal rather than merely coincidence?
>
> Yes, I can show that one comes before the other.
That's not a proof, that's the post hoc fallacy.
> You can't even do that.
Wrong. California prospered under high property taxes, then stagnated
after Prop 13. Same thing happened in Massachusetts. Lower property
taxes came before economic stagnation. Same thing has happened here
where I live. Same in Japan, etc.
Arkansas, which has the second lowest property taxes in the country, is
now considering abolishing them altogether, to go one better than that
well-known economic powerhouse, Alabama, which has the lowest.
Meanwhile, in 15 Pennsylvania cities and towns that have begun a
long-term shift from property taxes to land value taxes, economies and
construction are booming, while neighboring jurisdictions that cling to
property taxes stagnate. Everywhere, we can see neighboring states with
similar geography but different property tax rates, and the results
thereof: Arizona and New Mexico are perhaps the clearest example.
You stand refuted. Again.
> >>>No. Because taxes on wages increase the cost of labor, they actually
> >>>_increase_ productivity, but _decrease_ production and standard of
> >>>living.
> >>
> >>More ignorance from you, not in the least surprising. When IBM is hiring,
> >>do you think they care whether they have to pay $100,000 to get some
> >>employee, rather than $70,000 to the employee and $30,000 to the
> >government?
> >
> >Do you think that question is somehow relevant to the issue??
>
> Only in that it demonstrates your ignorance.
<yawn> Show why you imagine it's relevant, so I can humiliate you for
the shallowness of your thinking. Again.
> >>There also aren't any laws forbidding them to work less. I guess
> >>your limited mental ability didn't consider the fact that people can work
> >>LESS too.
> >
> >
> >The fixed cost of commuting makes short workdays very unappealing.
>
> Ah, apparently you think people make their living and working decisions in
> total isolation to each other.
Ah, apparently you think someone reading this might consider that a
devastating (or even relevant) comeback...
> >>Interest and profits get taxed just like income.
> >
> >
> >No. The fraction of income paid in income tax is inversely related to the
> >fraction that is investment income. The very rich often pay almost no
> >income tax (see "The Millionaire Next Door").
>
> Actually, the very rich pay more dollars and a higher percentage than
> everyone else does.
False. Those with high _taxable_incomes_ (i.e., the productive, not the
rich) pay more dollars than everyone else does, and those with the least
assets relative to their incomes pay the highest percentage. The very
rich only pay more dollars than the average taxpayer when they are _so_
rich that a tax bill of less than $10,000 means nothing to them -- i.e.,
when reducing their income taxes below the average is not worth the
bother.
> >>Ah, and you think that farmers won't increase the cost of their goods to
> >pay
> >>their asset taxes?
> >
> >Why would they? They'd be saving their farmhands' (as well as their own)
> >income taxes.
>
> Ah, yet another thing you don;t know about the real world, labor costs are
> much less than land/capital costs for farmers.
Ah, yet another thing you don't know about taxation: a tax on land
_cannot_ affect the total cost of land to the user. Any land rent not
taken in tax is pocketed by the owner. The higher the tax, the less the
land costs to acquire.
OTOH, a tax on labor _does_ increase the farmer's costs.
> >> That landlords won't increase their rents?
> >
> >The theory of rents is well enough understood to answer that one....
>
> Obviously not understood by you. Existing prices are partially a function
> of the existing tax structure. Existing rents are a function of prices and
> the tax structure. Instituting a change in the tax structure will change
> prices only for those who buy or sell their units.
But everyone else has to _compete_ with those who buy and sell their
units.
> An existing property
> with a tax burden of $X divided among all its rental units, when faced will
> an increase in its tax burden of $Y, will divide the additional tax burden
> among the units as well. Rents will rise.
Wrong. The maximum rent is already being charged.
> Since ALL properties are being similarly affected,
No, they are not. Those who buy properties at the lower post-tax price
will have lower carrying costs.
> there will be no competitive pressure to ameliorate any increase.
Refuted above. Again.
> >A miracle of non sequitur. It is known that a tax on land value, at least,
> >cannot be passed on at all because the supply is perfectly inelastic.
>
> No, it cannot be passed on. You obviously don't understand what that means.
> It sure as hell DOESN'T mean 'will have no effect'. What it means is that
> the entire impact will be felt by the owner at the time the tax is imposed.
Correct. Just as the entire impact of the abolition of slavery was felt
by those who owned slaves at the time. There were lots of people back
then ready to defend the interests of the beneficiaries of injustice.
Just as you now so eagerly do.
> >>>> NO! Capital is NOT money.
> >>>
> >>>I've asked you before to define capital, Shawn. How about it?
> >>
> >>I take it you're incapable of understanding the econ 101 definition, I
> >can't
> >>give you anything else.
> >
> >
> >I've seen half a dozen Econ 101 definitions, some reasonable, others
> >outrageous. I want to know which one _you_ are using.
>
> All those factors of production apart from human labor.
So, contrary to so many of your earlier statements, if an asset is not a
production factor, it cannot be capital. Is a government bond a factor
of production? How about a bank balance? Stock? A patent (not the
underlying invention, but the actual government-granted monopoly)?
> >Real estate is down nearly 80% and stocks 60%-70% since 1990. Debt
> >instruments are up a bit, but that doesn't count all the bad debts the
> banks
> >are hiding. Total assets are down well over 50%.
>
> Assets have changed liitle, if any.
Please look up "assets" in a good dictionary.
> The value of those assets is what has changed.
You can see this far, but no farther. Pity.
kenfran
Over the past 20 years yeal wages have not
changed that much, for a large part of the
population. The work week FOR THOSE WORKING
stays around 40 hours a week. Big surprise.
The unemployment rate has fluctuated quite a
bit, which is far more relevant to assessing
the supply of labor.
>
> 2) the great bulk of all assets -- land, claims, and
> >intellectual properties -- which would account for the overwhelming
> >majority of asset tax revenues (indeed, the tax could easily be designed to
> >tax _only_ those items), do not even _exist_ in the model.
>
> Sure they do, they're all lumped together as part of the capital stock. Raw
> land doesn't account for so much of the US capital stock that it needs to be
> treated differently than any other part. The same goes for intellectual
> properties.
Microsoft patents and copyrights, as well as
drug patents, are a small part of the
economy?
>
> So of course, 3)
> >Shawn _defined_ an asset tax as falling on _capital_goods_ and
> _consumption_
> >(!?!?!?!).
>
> Apparently you think the number one asset in the US, private housing,
> provides something other than consumption services.
An asset tax should not fall (as far as I am
concerned) on the private homes of
individuals, below an average valuation. Say
houses worth less than 200K. One house per
person.
No. Unproductive capital is made more
expensive to hold. Productive capital yields
a return. Thus, for example, it would cost a
lot to buy up patents on competing
technologies to keep them out of production,
since the patents would be taxed, rather than
providing a tax deduction when they were
bought. Keeping a factory would be more
expensive. It amounts to an increase in fixed
costs, and a decrease in variable costs. When
variable costs are low, and fixed costs are
high, this usually results in more
production.
>
> >Because asset taxation falls on the _unearned_ return to assets, people
> will
> >turn their investment dollars to assets that can earn the best returns.
>
> They do that now, like I've told you abot a million times already.
Not really. This is one of the unwarranted
assumptions of free market capitalists.
>
> >> It's basic economics, people buy less when the price goes up.
> >
> >
> >Nope. Real after-tax return counts far more than price. One look at the
> >stock market would show you that.
>
> The returns to investment will FALL because of your asset tax. A 6% return
> (common on CDs), under a 25% income tax, will actually pay 4.5%. Under a 2%
> asset tax the return will be 4%. Which is greater, 4.5 or 4? Let me
> guress, you're going to resort to the 'higher return investments will become
> available through magic' argument again.
You still haven't told us why people buy more
of a stock that is rising in price, and less
of one that is falling in price.
By the way, companies like Amazon.com, which
has a high stock price while it is losing
money, will mo longer be very attractive, if
people have to pay asset taxes to hold the
stock. On the other hand, stocks of companies
that are actually profitable, and paying
dividends, will become more valuable. This
causes a better allocation of resources,
since being profitable is rewarded. Under the
present system, hype is rewarded.
>
> >
> >> Capital goods have been made more expensive and less
> >>desirable by your asset tax.
> >
> >
> >Nope. Capital goods have become more desirable than other assets, because
> >the after-tax return on them is so much better.
>
> Ah, so you think 4 is greater than 4.5.
Dummy. Look at what he actually said. You are
comparing apples pre-asset tax to apples
post-asset tax. He is comparing apples and
oranges post-asset tax. He is asking whether
apples or oranges will be more valuable to
hold after such a tax is implemented, while
you are trying to divert the question to
whether the tax would be higher on apples
before or after the tax change.
>
> >>As always, the profit motive ensures that resources are used as
> >productively
> >>as possible (you have never ONCE addressed that point).
> >
> >Lie. I have shown why, depending on the definitions used, it is either
> >tautological and therefore vacuous, or false.
>
> And, yet again, you don't address the point.
If a drug company owns the only two patents
on drugs to treat Disease A, and one is a
more effective medicine, that produces a
complete cure with one dose, while the other
requires long-term treatment, and merely
suppresses symptoms rather than curing the
disease, which will the company produce? Most
CEOs will opt for the long-term medicine,
since it would yield more profits. Is this
productive use of resources? No. It is
profitable for the company, but not for
society.
>
> >
> >> So, more productive investments are not going to becaome available by
> >magic.
> >
> >True. It will only _seem_ like magic...
>
> There you go again.
Free market advocates are always proclaiming
thet the market will produce all that is
needed or wanted. As if by magic.
>
> >
> >>You've always
> >>wanted to play David Copperfield with the set of available investments.
> >>Those investments that pay less than 2% before the tax will now pay less
> >>than 0% and will not be made. So income will fall. Unambiguously.
> >
> >No. You are assuming abolition of income tax will have no effect on the
> >profitability of investments. That is, quite precisely, an unreasonable
> >assumption that forces the result.
>
> Then explain why these new investments are not available NOW.
Because market economics produces lousy
results.
>
> >> The average post-tax rate of return on all investments will also fall
> >>unambiguously, since all investments will pay 2% less.
> >
> >Sheer silliness. People who formerly wanted $100,000 a year for their
> labor
> >will now work for $70,000.
>
> No, they won't. They'll need that extra $30,000 they aren't paying in
> income taxes to pay their now higher rent and food bills.
I advocated an exemption for the value of an
average house in the asset taxes, making it a
progressive tax. Thus owning a house will be
a good way to spend one's money, and being a
landlord will be less profitable. This should
cause a large shift to owning homes, since
the landlords would want to sell cheap to get
rid of the less-profitable investment, and
people would want to buy. This means a
reduction in housing costs. Agricultural land
that is being held out of production to
increase profits would be put into production
to lessen the burden of the asset tax, making
food more plentiful. Remember, if fixed costs
are high (asset tax) and variable costs are
low (labor, seed, etc) then higher production
will result, since only the variable costs
have to be covered to make it rational to
produce. This takes care of the short term,
while over the long term, unprofitable farms
will be less valuable, and will be sold at
low prices, making the land also cheaper.
>
> > Are you telling me that will have no effect on
> >the profitability of investments that use labor? I still can't believe you
> >understand so little about how taxes affect production costs.
>
> Ah, you live in Bizzarro world, where 4 is greater than 4.5 and knowledge is
> ignorance.
Still pushing that false analogy. You assume
that all else is constant after changing the
taxes, when everything has changed.
>
> >>>Nope. Better factories rather than better ways to avoid income taxes,
> >>
> >>Better factories beome more valuable, and the tax burden increases.
> >
> >??? So? The tax burden can't increase faster than the value.
>
> Improving the factories won't increase profits, the higher taxes woluld
> prevent that.
Your ignorance is astounding. First, once
again, who cares about the relative
profitability before and after the tax
chgange? What counts is maximizing profit
given the situation that exists. Given a
(say) 2% tax on assets, improving the factory
would improve profitability over its previous
condition, with the tax being 2% in both
cases.
>
> >> Say you have a factory that produces
> >>$500,000 in profits each period. The market will value the factory at
> >>$5,000,000 (assuming a 10% interest rate). Suppose you can make
> >>improvements for $4,500,000 that will double the profits produced by the
> >>factory. Under an income tax scheme you'll make the improvements
> >>($4,500,000 would only get you $450,000 per period in the open market
> >rather
> >>than $500,000). Under an asset tax, that extra $500,000 per period would
> >>increase the value of the factory by $5,000,000 and thus would increase
> the
> >>taxes due by 0.02 * $5,000,000 = $100,000 each period. However, $50,000 <
> >>$100,000, so the improvements won't be made. QED
> >
> >
> >Huh?? What is the _income_ tax rate?
>
> It doesn't matter. Since the income tax would affect both the return on
> improvements and the return on other investment equally, it just washes out.
I sure wouldn't hire you as a CEO. Note that
you assumed that it would cost $450K to make
the improvements in both cases. Unwarranted
assumption. For example, if part of the cost
of expansion was buying idle land next to the
factory, that land would be cheaper to buy
under an asset tax, since the owner would not
want to pay asset taxes on land not producing
any return. If a large part of the cost was
labor to build the plant, the labor would be
cheaper, sine there would not be taxes paid
on the labor. Concrete would be cheaper,
since people owning land capable of producing
sand and gravel would want to put it into
production to lessen the burden of taxes.
Also, you assumed that the profits were fixed
at $500K both before and after asset tax.
That is also unwarranted. If the factory
required little capital (say a garment
factory) then the savings on paying no income
taxes more than offsets the higher taxes on
the assets. Thus the factory would become
more profitable.
I, for one, will not let you get away with
stacking the deck by making starting
assumptions that are not valid.
>
> >The 2% asset tax on the uninvested $4.5 million is going to be $90K.
>
> Invest the money overseas and the tax is zero. A lot of capital will leave
> the country under your scheme. I didn't even take that into account.
It depends on whether the capital is allowed
to leave the country. It also depends on your
definition of capital. If you mean the means
of production, such as land, factories, and
equipment, it is hard to export land.
Building are almost as hard to export.
Equipment can be made difficult to export.
Even cash flow can be controlled. Especially
if the reccomendations by George Soros are
followed, and regulation of international
capital is implemented.
>
> >Investing in the factory improvements will increase the tax bill by $10K,
> >and the profits by $50K.
>
> Damn, you can't even do simple math right.
>
> 5,000,000 * 0.02 = 100,000
>
> > So, tell me again why the improvements would not
> >be made? Or are you still assuming the alternative to an asset tax is no
> >tax?
>
> Well, make the improvements on a factory in this county and you have to pay
> the government $100,000/year for the rest of eternity. Invest the money
> oversears, and damn, no tax bill.
Who said you were going to be allowed to
export capital?
>
> >> So prices would just rise to soak up all the
> >>additional money floating around.
> >
> >
> >??? The threat with asset taxation is _deflation_. The money supply would
> >have to be increased quite a bit during the transition period to keep asset
> >prices from collapsing.
>
> The real prices would collapse regardless. Jacking up the money supply
> would only affect the nominal prices. It would also inject considerable
> uncertainty in interest rates, which would reduce investment by itself.
Before you claimed that rent and food prices
would go up, making it impossible to lower
workers' nominal pay to equal their previous
take-home pay. You sure play fast and loose
with your assumptions.
>
> > This would just mean that real asset prices and
> >labor costs would decline, while real returns to labor would rise.
>
> Fall, less capital for workers to work with will LOWER wages.
You say real prices would go down (meaning
real wages go up). You said real prices go
down, and that means cheaper capital, which
translates to more productive workers, which
SHOULD mean higher real wages, as long as
workers get part of the increrased
production.
You contradict yourself constantly.
>
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
Politics is the gentle art of getting votes
from the poor and campaign funds from the
rich by promising to protect each from the
other.
-- Oscar Ameringer (from Politicians and
Other Scoundrels by Ferdinand Lundberg)
Economics is war pursued by other means.
-- Raymond F. DeVoe Jr.
Stocks have reached what looks like a
permanently high plateau.
--Irving Fisher, Professor of Economics, Yale
University, 1929.
In economics, the majority is always wrong.
-- John Kenneth Galbraith (b. 1908)
... the ideas of economists and political
philosophers,
both when they are right and when they are
wrong, are
more powerful than is commonly understood.
Indeed the
world is ruled by little else. Practical
men, who believe
themselves to be quite exempt from any
intellectual
influences, are usually the slaves of some
defunct economist.
Madmen in authority, who hear voices from the
air, are
distilling their frenzy from some academic
scribbler of a
few years back.
-- John Maynard Keynes, 1935
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Shawn A. Wilson
kenfran wrote in message <3698517F...@arkansas.net>...
Why am I not surprised that kenfran (hey, are you ever going to apologize
for lying about your academic backgroud?) sides with C Post. Im going to
address some of the more outrageously stupid things he said.
>> With the income tax some of the tax burden is placed on labor, and some
on
>> capital. With an asset tax, ALL of the burden is placed on capital.
>> Capital is thus MORE expensive than it was previously. Is that concept
so
>> difficult for your limited intellect to understand?
>
>No. Unproductive capital is made more
>expensive to hold.
And what, The productive capital won't be taxed at all? All the capital is
being taxed, so ALL the capital will be more expensive to hold.
> Productive capital yields
>a return. Thus, for example, it would cost a
>lot to buy up patents on competing
>technologies to keep them out of production,
>since the patents would be taxed, rather than
>providing a tax deduction when they were
>bought. Keeping a factory would be more
>expensive. It amounts to an increase in fixed
>costs, and a decrease in variable costs. When
>variable costs are low, and fixed costs are
>high, this usually results in more
>production.
So less productive factories will be taken out of production. Outputs then
FALLS. Or are you like C Post, and think that better investments than are
available now will appear by magic?
>> >Because asset taxation falls on the _unearned_ return to assets, people
>> will
>> >turn their investment dollars to assets that can earn the best returns.
>>
>> They do that now, like I've told you abot a million times already.
>
>Not really. This is one of the unwarranted
>assumptions of free market capitalists.
Now that's just too stupid to be worth responding to.
>> >> It's basic economics, people buy less when the price goes up.
>> >
>> >
>> >Nope. Real after-tax return counts far more than price. One look at
the
>> >stock market would show you that.
>>
>> The returns to investment will FALL because of your asset tax. A 6%
return
>> (common on CDs), under a 25% income tax, will actually pay 4.5%. Under a
2%
>> asset tax the return will be 4%. Which is greater, 4.5 or 4? Let me
>> guress, you're going to resort to the 'higher return investments will
become
>> available through magic' argument again.
>
>You still haven't told us why people buy more
>of a stock that is rising in price, and less
>of one that is falling in price.
They are hoping to ride the wave of the increase and get out before it
stops. As an investment strategy, it pays about the same return as any
other investment strategy.
>By the way, companies like Amazon.com, which
>has a high stock price while it is losing
>money, will mo longer be very attractive, if
>people have to pay asset taxes to hold the
>stock.
Amazon.com has a high stock price because people believe it will have high
profits in the future. Since it provides a valuable service, they're
probably right. An asset tax would prevent Amazon.com from acquiring the
capital necessary to expand and provide thier services at the most efficient
scale. Yet another mark against an asset tax.
> On the other hand, stocks of companies
>that are actually profitable, and paying
>dividends, will become more valuable. This
>causes a better allocation of resources,
>since being profitable is rewarded. Under the
>present system, hype is rewarded.
Under the present system, emerging companies can sell stock to finance their
expansion, an asset tax will prevent that. Only existing companies will be
viable, not start-ups.
>> >> Capital goods have been made more expensive and less
>> >>desirable by your asset tax.
>> >
>> >
>> >Nope. Capital goods have become more desirable than other assets,
because
>> >the after-tax return on them is so much better.
>>
>> Ah, so you think 4 is greater than 4.5.
>
>Dummy.
Are you referring to yourself or C Post?
> Look at what he actually said. You are
>comparing apples pre-asset tax to apples
>post-asset tax. He is comparing apples and
>oranges post-asset tax. He is asking whether
>apples or oranges will be more valuable to
>hold after such a tax is implemented, while
>you are trying to divert the question to
>whether the tax would be higher on apples
>before or after the tax change.
I showed how the existence of an asset tax would prevent an investment that
would have been made under an income tax. I'm sorry you didn't understand
that simple concept. Lets's try a different story.
Suppose there are ten investments available to society and each investment
costs $1. Oh, and each investment can only be made once. The investments
return 1%, 2%, 3%, etc, up to 10%. if the average rate of time preference
is 0%, all ten investments will be made. Now take society to have an
average rate of time preference of 3.1%. The 4% through 10% investments
will be made and the 1%, 2%, and 3% investments won't. Suppose a 20% income
tax is introduced. The investments then have an adjusted return 0.8%, 1.6%,
2.4%, 3.2%, 4%, etc, up to 8%. The same seven investments will still be
made. At 25%, the 4% investment will no longer be made. Now instead of an
income tax, suppose we have a 2% asset tax. The adjusted returns now go
from -1% to 8%. The -1% through 3% investments won't be made, so only the
4% through 8% investments will be made (half the original ten, and less than
even the six investments made under the 25% income tax ). With less
investments made, output FALLS.
The economic impact of a 2% asset tax in this scenario is similar to that of
a 40% income tax, only the revenue raised is half as much.
>If a drug company owns the only two patents
>on drugs to treat Disease A, and one is a
>more effective medicine, that produces a
>complete cure with one dose, while the other
>requires long-term treatment, and merely
>suppresses symptoms rather than curing the
>disease, which will the company produce? Most
>CEOs will opt for the long-term medicine,
>since it would yield more profits. Is this
>productive use of resources? No. It is
>profitable for the company, but not for
>society.
Funny how you didn't adddress at all how the company came to hold these two
patents. Either they bought them, or they were awarded them. Either way,
they had to invest money in the cure. Maybe, owning both, they would only
sell the treatment. But when the patent expired on the cure, all the money
spent on it would be wasted. That isn't profit maximizing behavior. If
people are willing to spend $X for treatment, they will spend $X+$Y for a
cure. Assuming similar production costs, rthe company would simply switch
the treatment production lines to cure production lines, and increase their
profits in the process.
Let's take a more reasonable scenario. Dupont and Monsanto both have a
treatment for some disease. They need to make a decision as to whether to
invest in developing a cure for the disease. What do they do? Well, the
cure will make the treatment worthless. The company that patents the cure
first will take all the treatment business away from the other. So both
companies will research the cure. One company will get it first. It will
immediately market it and get the business that used to go to the treatment
the other offered.
>> >No. You are assuming abolition of income tax will have no effect on the
>> >profitability of investments. That is, quite precisely, an unreasonable
>> >assumption that forces the result.
>>
>> Then explain why these new investments are not available NOW.
>
>Because market economics produces lousy
>results.
Funny how the most market oriented country in the world is also the richest.
Try again.
>I advocated an exemption for the value of an
>average house in the asset taxes, making it a
>progressive tax.
When you start exempting things, the tax rate on the taxed things has to go
up. The negatives of asset taxes increase.
Thus owning a house will be
>a good way to spend one's money, and being a
>landlord will be less profitable. This should
>cause a large shift to owning homes, since
>the landlords would want to sell cheap to get
>rid of the less-profitable investment, and
>people would want to buy.
Ah, so it isn't fairness you want. What you want is to finance government
spending by picking one group that you don't like, and taking everything
they own from them.
This means a
>reduction in housing costs.
What a joke it was for you to claim to be an economist. Costs won't go
down, they'll just be distributed over time differently. Instead of paying
100% of some real price for a good, you'll pay 80% now and 2%/year for the
rest of eternity.
(rest cut out of fatigue)
Michael Vilkin
(...)
> Over the past 20 years yeal wages have not
> changed that much, for a large part of the
> population. The work week FOR THOSE WORKING
> stays around 40 hours a week. Big surprise.
> The unemployment rate has fluctuated quite a
> bit, which is far more relevant to assessing
> the supply of labor.
Insane Kenny strikes again...
Kenny, "yeal wages" depend on productivity of the system.
If we print more paper, it will not increase real wages.
You can not eat two chickens if you raise only one.
I explained it one thousand times, and you still didn't get it.
You never offered a reasonable way to improve standard of living.
You stated it was a distribution problem, not production problem.
OK, how can you distribute two chickens, if you raised only one?
Kenny, I really, really want to learn the trick.
-- Michael Vilkin.
kenfran
>
> kenfran wrote in message <3698517F...@arkansas.net>...
>
> Why am I not surprised that kenfran (hey, are you ever going to apologize
> for lying about your academic backgroud?) sides with C Post. Im going to
> address some of the more outrageously stupid things he said.
Your ignorance in blindly accepting market
economics as the only way, or the the most
efficient way, of doing things, speaks for
itself. Your ad hominem attacks demonstrate
your inability to defend your ideas.
>
> >> With the income tax some of the tax burden is placed on labor, and some
> on
> >> capital. With an asset tax, ALL of the burden is placed on capital.
> >> Capital is thus MORE expensive than it was previously. Is that concept
> so
> >> difficult for your limited intellect to understand?
> >
> >No. Unproductive capital is made more
> >expensive to hold.
>
> And what, The productive capital won't be taxed at all? All the capital is
> being taxed, so ALL the capital will be more expensive to hold.
Why is it so difficult for you to understand
the concept that if I have two pieces of
land, both worth $1000, and taxed at $100 a
year, then it is expensive to keep the one
that returns nothing, but attractive to keep
the one that returns $200 a year? People will
tend to try to sell the unproductive asset,
or make it productive, and keep the
productive one. Most fifth-graders can
understand this concept.
>
> > Productive capital yields
> >a return. Thus, for example, it would cost a
> >lot to buy up patents on competing
> >technologies to keep them out of production,
> >since the patents would be taxed, rather than
> >providing a tax deduction when they were
> >bought. Keeping a factory would be more
> >expensive. It amounts to an increase in fixed
> >costs, and a decrease in variable costs. When
> >variable costs are low, and fixed costs are
> >high, this usually results in more
> >production.
>
> So less productive factories will be taken out of production. Outputs then
> FALLS. Or are you like C Post, and think that better investments than are
> available now will appear by magic?
Less productive factories are taken out of
production, OR are made more productive, and
the more efficient factories get more orders
for their products. Since the more efficient
production means that the supply curve
shifts, more goods should be produced. Output
RISES.
Your reliance on the concept of magic is
necessary only because you don't understand
economics enough to grasp the mechanisms
involved.
>
> >> >Because asset taxation falls on the _unearned_ return to assets, people
> >> will
> >> >turn their investment dollars to assets that can earn the best returns.
> >>
> >> They do that now, like I've told you abot a million times already.
> >
> >Not really. This is one of the unwarranted
> >assumptions of free market capitalists.
>
> Now that's just too stupid to be worth responding to.
LOL. I see you have no answer.
>
> >> >> It's basic economics, people buy less when the price goes up.
> >> >
> >> >
> >> >Nope. Real after-tax return counts far more than price. One look at
> the
> >> >stock market would show you that.
> >>
> >> The returns to investment will FALL because of your asset tax. A 6%
> return
> >> (common on CDs), under a 25% income tax, will actually pay 4.5%. Under a
> 2%
> >> asset tax the return will be 4%. Which is greater, 4.5 or 4? Let me
> >> guress, you're going to resort to the 'higher return investments will
> become
> >> available through magic' argument again.
> >
> >You still haven't told us why people buy more
> >of a stock that is rising in price, and less
> >of one that is falling in price.
>
> They are hoping to ride the wave of the increase and get out before it
> stops. As an investment strategy, it pays about the same return as any
> other investment strategy.
First, it is not investment. Investment
consists of increasing the means of
production. The stock market is like a
blackjack game. If you are good at counting
cards, you MAY win money. But the money you
bet is NOT an investment.
And secondly, according to a strict analysis
of supply and demand, when the price of a
stock goes down, people should buy more of
them. When the price goes up, people should
buy less. Stock prices are irrational. The
market value of Yahoo! is the same as Boeing
and Texaco combined. Yahoo! has never made a
profit. Are you going to tell me that is
rational?
>
> >By the way, companies like Amazon.com, which
> >has a high stock price while it is losing
> >money, will mo longer be very attractive, if
> >people have to pay asset taxes to hold the
> >stock.
>
> Amazon.com has a high stock price because people believe it will have high
> profits in the future. Since it provides a valuable service, they're
> probably right. An asset tax would prevent Amazon.com from acquiring the
> capital necessary to expand and provide thier services at the most efficient
> scale. Yet another mark against an asset tax.
An asset tax would prevent only the
inefficient conpanies from getting funding.
And sooner or later, you are going to realize
that when the stock price of Amazon.com goes
up 500%, it doesn't raise a penny of capital
for expansion for Amazon.com. It puts money
in the pockets of a few people who bought low
and sold when the stock went up. It makes no
money for the corporation.
>
> > On the other hand, stocks of companies
> >that are actually profitable, and paying
> >dividends, will become more valuable. This
> >causes a better allocation of resources,
> >since being profitable is rewarded. Under the
> >present system, hype is rewarded.
>
> Under the present system, emerging companies can sell stock to finance their
> expansion, an asset tax will prevent that. Only existing companies will be
> viable, not start-ups.
And why would an asset tax prevent start-up
companies from selling stock? If they can
convince stock buyers that they have some
good ideas, or good patents, whatever, they
will get investment. Why is that different
from now? Existing companies that are losing
money will not be viable. This is rational
distribution of resources.
>
> >> >> Capital goods have been made more expensive and less
> >> >>desirable by your asset tax.
> >> >
> >> >
> >> >Nope. Capital goods have become more desirable than other assets,
> because
> >> >the after-tax return on them is so much better.
> >>
> >> Ah, so you think 4 is greater than 4.5.
> >
> >Dummy.
>
> Are you referring to yourself or C Post?
>
> > Look at what he actually said. You are
> >comparing apples pre-asset tax to apples
> >post-asset tax. He is comparing apples and
> >oranges post-asset tax. He is asking whether
> >apples or oranges will be more valuable to
> >hold after such a tax is implemented, while
> >you are trying to divert the question to
> >whether the tax would be higher on apples
> >before or after the tax change.
>
> I showed how the existence of an asset tax would prevent an investment that
> would have been made under an income tax. I'm sorry you didn't understand
> that simple concept. Lets's try a different story.
You don't understand that the investment that
is rational under an income tax may not be a
rational allocation of resources. A real
estate investment that is made to show a
loss, in order to reduce taxes, will not be
bought under an asset tax, since it would
increase taxes. So? Why would a rational
person want to encourage investment in
unproductive assets?
>
> Suppose there are ten investments available to society and each investment
> costs $1. Oh, and each investment can only be made once. The investments
> return 1%, 2%, 3%, etc, up to 10%. if the average rate of time preference
> is 0%, all ten investments will be made. Now take society to have an
> average rate of time preference of 3.1%. The 4% through 10% investments
> will be made and the 1%, 2%, and 3% investments won't. Suppose a 20% income
> tax is introduced. The investments then have an adjusted return 0.8%, 1.6%,
> 2.4%, 3.2%, 4%, etc, up to 8%. The same seven investments will still be
> made. At 25%, the 4% investment will no longer be made. Now instead of an
> income tax, suppose we have a 2% asset tax. The adjusted returns now go
> from -1% to 8%. The -1% through 3% investments won't be made, so only the
> 4% through 8% investments will be made (half the original ten, and less than
> even the six investments made under the 25% income tax ). With less
> investments made, output FALLS.
Only under your assumptions. Your assumptions
do not, however, correspond to the real
world. Does it occur to you that your
assumptions encourage unproductive
investments? And that if an asset tax makes
some investments unprofitable, people are
going to find other investments that ARE
profitable, and that efficient factories are
going to expand their business? (Your model
assumes away this possibility.) Only people
like you are stupid enough to think that you
can prove anything by making the original
assumptions force the result you want.
>
> The economic impact of a 2% asset tax in this scenario is similar to that of
> a 40% income tax, only the revenue raised is half as much.
Only if you narrowly restrict your thinking
and make assumptions that force this result.
>
> >If a drug company owns the only two patents
> >on drugs to treat Disease A, and one is a
> >more effective medicine, that produces a
> >complete cure with one dose, while the other
> >requires long-term treatment, and merely
> >suppresses symptoms rather than curing the
> >disease, which will the company produce? Most
> >CEOs will opt for the long-term medicine,
> >since it would yield more profits. Is this
> >productive use of resources? No. It is
> >profitable for the company, but not for
> >society.
>
> Funny how you didn't adddress at all how the company came to hold these two
> patents. Either they bought them, or they were awarded them. Either way,
> they had to invest money in the cure. Maybe, owning both, they would only
> sell the treatment. But when the patent expired on the cure, all the money
> spent on it would be wasted. That isn't profit maximizing behavior. If
> people are willing to spend $X for treatment, they will spend $X+$Y for a
> cure. Assuming similar production costs, rthe company would simply switch
> the treatment production lines to cure production lines, and increase their
> profits in the process.
What a real company in the real world would
do is bribe a few congressman with some
campaign contributions, and get their patent
extended. This "investment" in congressmen
would yield a high return.
>
> Let's take a more reasonable scenario. Dupont and Monsanto both have a
> treatment for some disease. They need to make a decision as to whether to
> invest in developing a cure for the disease. What do they do? Well, the
> cure will make the treatment worthless. The company that patents the cure
> first will take all the treatment business away from the other. So both
> companies will research the cure. One company will get it first. It will
> immediately market it and get the business that used to go to the treatment
> the other offered.
More probably, they will both get together
and decide not to spend the money on a cure,
and both will keep on collecting the high
profits from the treatment.
>
> >> >No. You are assuming abolition of income tax will have no effect on the
> >> >profitability of investments. That is, quite precisely, an unreasonable
> >> >assumption that forces the result.
> >>
> >> Then explain why these new investments are not available NOW.
> >
> >Because market economics produces lousy
> >results.
>
> Funny how the most market oriented country in the world is also the richest.
> Try again.
The U.S. is neither the most market-oriented
nor the richest. Which country were you
thinking of?
>
> >I advocated an exemption for the value of an
> >average house in the asset taxes, making it a
> >progressive tax.
>
> When you start exempting things, the tax rate on the taxed things has to go
> up. The negatives of asset taxes increase.
Only negatives for the owners of big
unproductive assets.
>
> Thus owning a house will be
> >a good way to spend one's money, and being a
> >landlord will be less profitable. This should
> >cause a large shift to owning homes, since
> >the landlords would want to sell cheap to get
> >rid of the less-profitable investment, and
> >people would want to buy.
>
> Ah, so it isn't fairness you want. What you want is to finance government
> spending by picking one group that you don't like, and taking everything
> they own from them.
Why isn't it fair? What is fair about people
paying more money for an apartment than they
would for a house, just so some landlord can
live without working? Why do you regard a
system where people with a lot of money are
highly rewarded for not doing any work, and
the hardest workers get the least money, as
fair?
>
> This means a
> >reduction in housing costs.
>
> What a joke it was for you to claim to be an economist. Costs won't go
> down, they'll just be distributed over time differently. Instead of paying
> 100% of some real price for a good, you'll pay 80% now and 2%/year for the
> rest of eternity.
>
> (rest cut out of fatigue)
(actually, the rest was cut because you
didn't like being made a fool)
Your stupidity is showing again. First, I
mentioned that I advocated an exemption for
the price of an average home, so most people
will pay little or no taxes on their home.
(They now do pay property taxes, so their
taxes on their homes would go down, as well
as the purchase price.)
--
Shawn A. Wilson
kenfran wrote in message <369B6711...@arkansas.net>...
>Shawn A. Wilson wrote:
>>
>> kenfran wrote in message <3698517F...@arkansas.net>...
>>
>> Why am I not surprised that kenfran (hey, are you ever going to apologize
>> for lying about your academic backgroud?) sides with C Post. Im going to
>> address some of the more outrageously stupid things he said.
>
>Your ignorance in blindly accepting market
>economics as the only way, or the the most
>efficient way, of doing things, speaks for
>itself. Your ad hominem attacks demonstrate
>your inability to defend your ideas.
And what does your lying about your qualifications demonstrate? Ignorance?
A desire to convince, but an inability to reason?
>> >> With the income tax some of the tax burden is placed on labor, and
some
>> on
>> >> capital. With an asset tax, ALL of the burden is placed on capital.
>> >> Capital is thus MORE expensive than it was previously. Is that
concept
>> so
>> >> difficult for your limited intellect to understand?
>> >
>> >No. Unproductive capital is made more
>> >expensive to hold.
>>
>> And what, The productive capital won't be taxed at all? All the capital
is
>> being taxed, so ALL the capital will be more expensive to hold.
>
>Why is it so difficult for you to understand
>the concept that if I have two pieces of
>land, both worth $1000, and taxed at $100 a
>year, then it is expensive to keep the one
>that returns nothing, but attractive to keep
>the one that returns $200 a year? People will
>tend to try to sell the unproductive asset,
>or make it productive, and keep the
>productive one. Most fifth-graders can
>understand this concept.
Apparently you failed reading comprehension in fifth grade. let's refresh
your memory:
YOU: "Unproductive capital is made more expensive to hold."
ME: "ALL the capital will be more expensive to hold."
Your example (above). Lo and behold, ALL the capital is made more expensive
to hold. Not SOME of the capital, ALL of the capital.
>> So less productive factories will be taken out of production. Outputs
then
>> FALLS. Or are you like C Post, and think that better investments than
are
>> available now will appear by magic?
>
>Less productive factories are taken out of
>production,
And output falls.
> OR are made more productive,
If they could be made more productive, they would already have been made so.
You may think a factory earning a 1% profit is bad, but it is still
producing more than it consumes. If it shuts down, output falls. If it
could be made mode efficient, the profit motive would ensure that it would
be.
> and
>the more efficient factories get more orders
>for their products.
Nonsense. Factories that produce more valuabe things get more orders. More
efficient factories just generate higher profits.
> Since the more efficient
>production means that the supply curve
>shifts, more goods should be produced. Output
>RISES.
Nope, falls. You get more efficiency taking the less efficient factories
out of production, but not more output. It's a simple declining marginal
returns situation (if there are two factories, one returning $1 and the
other returning $11, the average return is $6, take the $1 factory off line
and the average return climbs to $11, but total output has fallen)
>Your reliance on the concept of magic is
>necessary only because you don't understand
>economics enough to grasp the mechanisms
>involved.
And YOU do? Now that's REALLY funny!!! If you 'understand' so well, why
did you lie about you qualifications?
>> >> >Because asset taxation falls on the _unearned_ return to assets,
people
>> >> will
>> >> >turn their investment dollars to assets that can earn the best
returns.
>> >>
>> >> They do that now, like I've told you abot a million times already.
>> >
>> >Not really. This is one of the unwarranted
>> >assumptions of free market capitalists.
>>
>> Now that's just too stupid to be worth responding to.
>
>LOL. I see you have no answer.
How strange, you're wrong AGAIN. Show me the accounting entry for the
'unearned' return to an asset.
>> They are hoping to ride the wave of the increase and get out before it
>> stops. As an investment strategy, it pays about the same return as any
>> other investment strategy.
>
>First, it is not investment. Investment
>consists of increasing the means of
>production. The stock market is like a
>blackjack game. If you are good at counting
>cards, you MAY win money. But the money you
>bet is NOT an investment.
it is to me, I'm hoping to get a good return on it. Itis to IBM too, they
can sell shares to finance whatever they need to finance. You seem to think
that all the people in between buying and selling are a bad thing, but even
they do the hard work of making sure IBM's shares are as correctly valued as
possible.
>And secondly, according to a strict analysis
>of supply and demand, when the price of a
>stock goes down, people should buy more of
>them.
You forgot the magic words 'ceterus paribus', 'all other things being
equal'. They aren't equal, because the very change in the privce conveys
information about how things are changing.
> When the price goes up, people should
>buy less. Stock prices are irrational.
Not at all, you just son't understand enough basc economics to see the
reason behind things.
> The
>market value of Yahoo! is the same as Boeing
>and Texaco combined. Yahoo! has never made a
>profit. Are you going to tell me that is
>rational?
Yep.
>> Amazon.com has a high stock price because people believe it will have
high
>> profits in the future. Since it provides a valuable service, they're
>> probably right. An asset tax would prevent Amazon.com from acquiring the
>> capital necessary to expand and provide thier services at the most
efficient
>> scale. Yet another mark against an asset tax.
>
>An asset tax would prevent only the
>inefficient conpanies from getting funding.
Which is pretty much every start up in the world. Every firm has an optimal
size, but every firm starts out small. As a rule, every firm operates at an
inefficient size in the beginning. When people see a firm like Amazon.com
they bid up its stocks in expectation of future profits, and the proceeds
from the stock sales allow the firm to expand to its efficient size. Simple
enough for you?
>> I showed how the existence of an asset tax would prevent an investment
that
>> would have been made under an income tax. I'm sorry you didn't
understand
>> that simple concept. Lets's try a different story.
>
>You don't understand that the investment that
>is rational under an income tax may not be a
>rational allocation of resources. A real
>estate investment that is made to show a
>loss, in order to reduce taxes, will not be
>bought under an asset tax, since it would
>increase taxes. So? Why would a rational
>person want to encourage investment in
>unproductive assets?
Damn, you are really incompetent as an economist. That isn't a problem with
the income tax as a principle, it's a problem with a specific tax code.
>>
>> Suppose there are ten investments available to society and each
investment
>> costs $1. Oh, and each investment can only be made once. The
investments
>> return 1%, 2%, 3%, etc, up to 10%. if the average rate of time
preference
>> is 0%, all ten investments will be made. Now take society to have an
>> average rate of time preference of 3.1%. The 4% through 10% investments
>> will be made and the 1%, 2%, and 3% investments won't. Suppose a 20%
income
>> tax is introduced. The investments then have an adjusted return 0.8%,
1.6%,
>> 2.4%, 3.2%, 4%, etc, up to 8%. The same seven investments will still be
>> made. At 25%, the 4% investment will no longer be made. Now instead of
an
>> income tax, suppose we have a 2% asset tax. The adjusted returns now go
>> from -1% to 8%. The -1% through 3% investments won't be made, so only
the
>> 4% through 8% investments will be made (half the original ten, and less
than
>> even the six investments made under the 25% income tax ). With less
>> investments made, output FALLS.
>
>Only under your assumptions.
Actually, it works with any distribution of returns, and with expected
rather than actual returns. It's really quite versatile. I gave you the
kindergarten version so you could understand.
Your assumptions
>do not, however, correspond to the real
>world.
They are a simplification, but adding complexity doesn't change the results.
Investment opportunities are exploited to the extent possible. Some of
those opportunities will have low (but positive) returns. An asset tax
would prevent investments that an income taxes wouldn't. it won't create
any new investments though.
? Does it occur to you that your
>assumptions encourage unproductive
>investments?
Which inverstments were unproductive? There were only 10. You should be
able to specify. From what I saw, every investment consistent with the rate
of time preference was made.
> And that if an asset tax makes
>some investments unprofitable, people are
>going to find other investments that ARE
>profitable, and that efficient factories are
>going to expand their business?
And yet again you assume that new investment opportunities will appear by
magic.
> (Your model
>assumes away this possibility.)
No, it doesn't. My model didn't say one word about those investments beyond
their returns. They could be the expansion of existing factories as well as
new factories. They could even be ten different possible scales for a
proposed factory. Yet again your incredibly poor reasoning ability
manifests itself.
> Only people
>like you are stupid enough to think that you
>can prove anything by making the original
>assumptions force the result you want.
And where, exactly, did that happen? Pick any set of available investments,
it'll work there too.
>> The economic impact of a 2% asset tax in this scenario is similar to that
of
>> a 40% income tax, only the revenue raised is half as much.
>
>Only if you narrowly restrict your thinking
>and make assumptions that force this result.
Or if you know anything about economics. Raise the price of a good and
people will buy less of it. How simple can you get?
>What a real company in the real world would
>do is bribe a few congressman with some
>campaign contributions, and get their patent
>extended. This "investment" in congressmen
>would yield a high return.
And when has a patent ever been extended by an act of congress?
>>
>> Let's take a more reasonable scenario. Dupont and Monsanto both have a
>> treatment for some disease. They need to make a decision as to whether
to
>> invest in developing a cure for the disease. What do they do? Well, the
>> cure will make the treatment worthless. The company that patents the
cure
>> first will take all the treatment business away from the other. So both
>> companies will research the cure. One company will get it first. It
will
>> immediately market it and get the business that used to go to the
treatment
>> the other offered.
>
>More probably, they will both get together
>and decide not to spend the money on a cure,
>and both will keep on collecting the high
>profits from the treatment.
Nope, if the collude, they get only their half of the profits. If they
compete, the winner gets ALL the profits. Cartels always fail for a reason.
>> Ah, so it isn't fairness you want. What you want is to finance
government
>> spending by picking one group that you don't like, and taking everything
>> they own from them.
>
>Why isn't it fair?
OK, I vote we take everything from YOU. Sounds fair to me...
What is fair about people
>paying more money for an apartment than they
>would for a house, just so some landlord can
>live without working?
Well, if they'r paying more, then they should save money by buying. Simple
enough.
Why do you regard a
>system where people with a lot of money are
>highly rewarded for not doing any work, and
>the hardest workers get the least money, as
>fair?
Because some people are just more productive than others? Do you thinks
it's fair that Michael Jorden makes 10 times what a benchwarmer makes,
despite the fact that they sweat the same?
>Your stupidity is showing again. First, I
>mentioned that I advocated an exemption for
>the price of an average home, so most people
>will pay little or no taxes on their home.
So the tax on every other asset will be that much higher, discouraging
investment even more.
Michael L. Coburn
"Shawn A. Wilson" wrote:
> >Why is it so difficult for you to understand
> >the concept that if I have two pieces of
> >land, both worth $1000, and taxed at $100 a
> >year, then it is expensive to keep the one
> >that returns nothing, but attractive to keep
> >the one that returns $200 a year? People will
> >tend to try to sell the unproductive asset,
> >or make it productive, and keep the
> >productive one. Most fifth-graders can
> >understand this concept.
>
> Apparently you failed reading comprehension in fifth grade. let's refresh
> your memory:
>
> YOU: "Unproductive capital is made more expensive to hold."
>
> ME: "ALL the capital will be more expensive to hold."
>
> Your example (above). Lo and behold, ALL the capital is made more expensive
> to hold. Not SOME of the capital, ALL of the capital.
>
I WISH TO POINT OUT FOR ABOUT THE 10th TIME, Mr, Wilson: LAND IS NOT CAPITAL.
Land is a naturally occurring resource which is not effected one twit by
taxation. LAND OWNERSHIP, on the other hand, is. The taxation of land has to
with the claim of ownership and the EXCLUSION from use by others in producing
something of value. Perhaps you need to brush up on your comprehension skills.
As I said, this has been brought to your attention (limited as it may be), many
times.
>
> >> So less productive factories will be taken out of production. Outputs
> then
> >> FALLS. Or are you like C Post, and think that better investments than
> are
> >> available now will appear by magic?
> >
> >Less productive factories are taken out of
> >production,
>
> And output falls.
>
Nope. Better factories are built, which can pay the tax and produce a profit.
>
> > OR are made more productive,
>
> If they could be made more productive, they would already have been made so.
> You may think a factory earning a 1% profit is bad, but it is still
> producing more than it consumes. If it shuts down, output falls. If it
> could be made mode efficient, the profit motive would ensure that it would
> be.
>
Nope. There is no reason to produce more if the owner(s) are satisfied with
their current control of the serfs.
>
> > and
> >the more efficient factories get more orders
> >for their products.
>
> Nonsense. Factories that produce more valuabe things get more orders. More
> efficient factories just generate higher profits.
>
> > Since the more efficient
> >production means that the supply curve
> >shifts, more goods should be produced. Output
> >RISES.
>
> Nope, falls. You get more efficiency taking the less efficient factories
> out of production, but not more output. It's a simple declining marginal
> returns situation (if there are two factories, one returning $1 and the
> other returning $11, the average return is $6, take the $1 factory off line
> and the average return climbs to $11, but total output has fallen)
>
Not for long, sir.
>
> >Your reliance on the concept of magic is
> >necessary only because you don't understand
> >economics enough to grasp the mechanisms
> >involved.
>
> And YOU do? Now that's REALLY funny!!! If you 'understand' so well, why
> did you lie about you qualifications?
>
I'm not lying about MY qualifications, Shawn. I'm just obviously a lot smarter
than you are.
Michael Vilkin
(...)
> Less productive factories are taken out of
> production, OR are made more productive, and
> the more efficient factories get more orders
> for their products.
Kenny, I'm glad to see you advocating productivity and
efficiency. Now support a free market, and I'll seek
your friendship.
> Since the more efficient
> production means that the supply curve
> shifts, more goods should be produced. Output
> RISES.
How so? Why total output will rise?
Say, there are two factories producing clothing, A and B.
People work from 9 AM to 5 PM.
Now income tax is replaced with assets tax.
Factory A does buisness as before.
Factory B decides to do business more efficiently.
Now people work in three shifts: 8 AM to 4 PM,
4 PM to Midnight, and Midnight to 8 AM.
Now I see, you are right.
Company A will go out of business, because it does not
fully utilize it's assets.
When assets are costly to carry, dogs will fail.
Companies which force workers to work three shifts, -
those companies will prosper.
The question is this.
Should those workers organise a labor union
in order to avoid working three shifts?
Now another example.
A store owner rents his store for $2,500 a month.
His net income before taxes is also $2,500 a month.
He pays income taxes $500 a month.
His landlord pays income taxes also $500 a month.
Now income taxes are replaced by assets taxes.
His landlord pays the same $500 as assets taxes.
Store owner pays... zero.
Government is losing here.
In this case assets taxes should be $1,000 a month
to replace two income taxes, $500 each.
OK, now assets taxes are $1,000.
Landlord will increase rent by $500 to restore justice.
Now the store owner pays $3,000 a month.
Landlord is collecting tax for the government.
So far so good.
But now doctors, lawyers, accountants, Hollywood stars
and basketball players don't pay income taxes.
They will pay taxes for their own houses, but those taxes
will be much smaller than income taxes they paid before.
How the government will cover this shortfall?
My guess is that our landlord will pay $1,500 in assets
taxes. Landlord will increase rent by $1,000.
Now the store owner pays rent $3,500 a month.
He will increase prices to make up for those $500.
If he sells 500 shoes a week, it's $1 more per a pair.
One more dollar here or there - it's not much, but
I don't think American people will let Hollywood
liberal millionaires off the income tax hook.
Otherwise, I'd have no doubts to abolish income tax.
-- Michael Vilkin.
Michael Vilkin
(...)
> Land is a naturally occurring resource which is not effected one twit by
> taxation. LAND OWNERSHIP, on the other hand, is. The taxation of land has to
> with the claim of ownership and the EXCLUSION from use by others in producing
> something of value. Perhaps you need to brush up on your comprehension skills.
> As I said, this has been brought to your attention (limited as it may be), many
> times.
"Land is not taxed. Land OWNERSHIP is".
Michael, I admire you.
> ... Better factories are built, which can pay the tax and produce a profit.
> Nope. There is no reason to produce more if the owner(s) are satisfied with
> their current control of the serfs.
I asked you once if child care centers will have gardens.
You said parents would pay more for gardens. OK, I agree.
Now I have another question.
Will those better factories have child care centers at all?
Now many companies provide child care.
Will hospitals have parking lots?
If land ownership is taxed, ownership of a parking lot
will become a tax liability.
It's not that I like 10,000 pages of income tax code...
-- Michael Vilkin.
Michael L. Coburn
Michael Vilkin wrote:
> Michael L. Coburn wrote:
>
> (...)
>
> > Land is a naturally occurring resource which is not effected one twit by
> > taxation. LAND OWNERSHIP, on the other hand, is. The taxation of land has to
> > with the claim of ownership and the EXCLUSION from use by others in producing
> > something of value. Perhaps you need to brush up on your comprehension skills.
> > As I said, this has been brought to your attention (limited as it may be), many
> > times.
>
> "Land is not taxed. Land OWNERSHIP is".
> Michael, I admire you.
>
> > ... Better factories are built, which can pay the tax and produce a profit.
> > Nope. There is no reason to produce more if the owner(s) are satisfied with
> > their current control of the serfs.
>
> I asked you once if child care centers will have gardens.
> You said parents would pay more for gardens. OK, I agree.
>
> Now I have another question.
> Will those better factories have child care centers at all?
> Now many companies provide child care.
>
It's about time I made MY position clear on this:
1. We may be running short of oil, earth, water, and trees, but we have no lack of
people.
2. Most of us want to have children, but do we have the right to bring children into
the world and then look to someone else for assistance?
3. Child care is a problem to be reckoned with BEFORE the child is born, not after.
4. Childbirth is a choice, not a necessity.
5. If we limit the number of children then the ones that remain can be provided for
quite well.
6. Why do you expect ME to pay to for YOUR choices.
You have constantly berated all liberals and "DemocRats" for their use of the public
purse.. Perhaps it is time to examine your own social agenda.
>
> Will hospitals have parking lots?
> If land ownership is taxed, ownership of a parking lot
> will become a tax liability.
>
Not if the parking lot is supported by a hospital. But your point is valid. There
will be more buildings one next to the other and fewer parking lots. That is NOT a
bad thing, and mass transit beams much more reasonable. The buildings will be
surrounded by the parking lots and the shuttles instead of the checkerboard affair we
have now.
Inside the city there will be moving sidewalks and other conveyances which make more
sense than a bunch of private cars.
Michael L. Coburn
Michael Vilkin wrote:
> kenfran wrote:
>
> (...)
>
> > Less productive factories are taken out of
> > production, OR are made more productive, and
> > the more efficient factories get more orders
> > for their products.
>
> Kenny, I'm glad to see you advocating productivity and
> efficiency. Now support a free market, and I'll seek
> your friendship.
>
> > Since the more efficient
> > production means that the supply curve
> > shifts, more goods should be produced. Output
> > RISES.
>
> How so? Why total output will rise?
>
> Say, there are two factories producing clothing, A and B.
> People work from 9 AM to 5 PM.
>
> Now income tax is replaced with assets tax.
>
> Factory A does buisness as before.
> Factory B decides to do business more efficiently.
> Now people work in three shifts: 8 AM to 4 PM,
> 4 PM to Midnight, and Midnight to 8 AM.
>
> Now I see, you are right.
> Company A will go out of business, because it does not
> fully utilize it's assets.
>
> When assets are costly to carry, dogs will fail.
> Companies which force workers to work three shifts, -
> those companies will prosper.
>
> The question is this.
> Should those workers organise a labor union
> in order to avoid working three shifts?
>
I don't mind working a non-standard shift, and most places pay a premium
to those that will work a non-standard shift. I don't see this as any
kind of threat.
>
> Now another example.
> A store owner rents his store for $2,500 a month.
> His net income before taxes is also $2,500 a month.
> He pays income taxes $500 a month.
> His landlord pays income taxes also $500 a month.
>
> Now income taxes are replaced by assets taxes.
> His landlord pays the same $500 as assets taxes.
> Store owner pays... zero.
> Government is losing here.
>
> In this case assets taxes should be $1,000 a month
> to replace two income taxes, $500 each.
>
> OK, now assets taxes are $1,000.
> Landlord will increase rent by $500 to restore justice.
> Now the store owner pays $3,000 a month.
> Landlord is collecting tax for the government.
> So far so good.
>
> But now doctors, lawyers, accountants, Hollywood stars
> and basketball players don't pay income taxes.
> They will pay taxes for their own houses, but those taxes
> will be much smaller than income taxes they paid before.
> How the government will cover this shortfall?
>
So what did these people do with all this dough? Their homes took some
of it but their homes are assets. They either spent the rest on stuff
that was made by the people in the factories thereby sending this income
along the line to the guys working the 3 shifts, or they saved the money
in the bank (where the bank will invest it and pay an asset tax), or
they will buy stocks and bonds or farms or something else which will
then attract an assets tax. There is no shortfall.
>
> My guess is that our landlord will pay $1,500 in assets
> taxes. Landlord will increase rent by $1,000.
> Now the store owner pays rent $3,500 a month.
> He will increase prices to make up for those $500.
>
Again, the store owner can only increase prices to the extent that you
have more money AND are willing to pay it. He will do this whether or
not there is an income tax or an assets tax or a tax on fingernails, or
even if there is no tax at all. He is a profit maximizing entity.
Michael L. Coburn
Michael Vilkin wrote:
> kenfran wrote:
>
> (...)
>
> > Less productive factories are taken out of
> > production, OR are made more productive, and
> > the more efficient factories get more orders
> > for their products.
>
> Kenny, I'm glad to see you advocating productivity and
> efficiency. Now support a free market, and I'll seek
> your friendship.
>
> > Since the more efficient
> > production means that the supply curve
> > shifts, more goods should be produced. Output
> > RISES.
>
Shawn A. Wilson
Michael L. Coburn wrote in message <77hc13$pag$1...@news-1.news.gte.net>...
>
>
>"Shawn A. Wilson" wrote:
>I WISH TO POINT OUT FOR ABOUT THE 10th TIME, Mr, Wilson: LAND IS NOT
CAPITAL.
And for the tenth time, yes it is.
>> >Less productive factories are taken out of
>> >production,
>>
>> And output falls.
>>
>
>Nope. Better factories are built, which can pay the tax and produce a
profit.
Again with the 'superior investments will appear by magic' argument. Why
aren't these investments made NOW? If they are in the available investment
pool, why are they left there?
>> You may think a factory earning a 1% profit is bad, but it is still
>> producing more than it consumes. If it shuts down, output falls. If it
>> could be made mode efficient, the profit motive would ensure that it
would
>> be.
>>
>
>Nope. There is no reason to produce more if the owner(s) are satisfied
with
>their current control of the serfs.
Ah, so you are operating under the hypothesis that not one person in
corporate America is greedy...
>> Nope, falls. You get more efficiency taking the less efficient factories
>> out of production, but not more output. It's a simple declining marginal
>> returns situation (if there are two factories, one returning $1 and the
>> other returning $11, the average return is $6, take the $1 factory off
line
>> and the average return climbs to $11, but total output has fallen)
>>
>
>Not for long, sir.
So, in addition to having zero understand of simple supply and demand
analysis (people buy less of more expensive things), you don't understand
the concept of declining marginal returns.
>> And YOU do? Now that's REALLY funny!!! If you 'understand' so well, why
>> did you lie about you qualifications?
>>
>
>I'm not lying about MY qualifications, Shawn. I'm just obviously a lot
smarter
>than you are.
Then why don't you understand such basic economic concepts as the fact that
demand curves slope DOWN, and that marginal productivity FALLS?
Michael Vilkin
(...)
> It's about time I made MY position clear on this:
> 1. We may be running short of oil, earth, water, and trees, but we have
> no lack of people.
> 2. Most of us want to have children, but do we have the right to bring
> children into the world and then look to someone else for assistance?
> 3. Child care is a problem to be reckoned with BEFORE the child is born,
> not after.
> 4. Childbirth is a choice, not a necessity.
> 5. If we limit the number of children then the ones that remain can be
> provided for quite well.
> 6. Why do you expect ME to pay to for YOUR choices.
> You have constantly berated all liberals and "DemocRats" for their use
> of the public purse..
> Perhaps it is time to examine your own social agenda.
Michael, take it easy. I'm just asking questions.
You know I'm supporting the idea to _gradually_ increase assets
taxation, because I really, truly hate 10,000 pages of the tax code.
Maybe, just maybe, if we introduce 0.5% assets tax, then
big business will finally start cleaning up this income tax mess.
-- Michael Vilkin.
Michael Vilkin
(...)
> > But now doctors, lawyers, accountants, Hollywood stars
> > and basketball players don't pay income taxes.
> > They will pay taxes for their own houses, but those taxes
> > will be much smaller than income taxes they paid before.
> > How the government will cover this shortfall?
> So what did these people do with all this dough? Their homes took some
> of it but their homes are assets. They either spent the rest on stuff
> that was made by the people in the factories thereby sending this income
> along the line to the guys working the 3 shifts, or they saved the money
> in the bank (where the bank will invest it and pay an asset tax), or
> they will buy stocks and bonds or farms or something else which will
> then attract an assets tax. There is no shortfall.
My fault. I did not use an example. Here is one.
A litigation lawyer makes $1 million a year.
With the present system he pays a few hundred thousand dollars
in taxes, unless he finds tax shelters.
The first step should be to eliminate those tax shelters.
Let's guesstimate assets taxes of this lawyer.
Even 10% of 1 M is just $100,000.
Low income people pay higher percentage.
Is there a shortfall here? If not, why not?
They will invest and buy stuff? Yes, they will.
But shortfall is still there. A big shortfall.
I'd say the high income people will pay less
than 50% of their old amount.
How will we cover for it?
> > My guess is that our landlord will pay $1,500 in assets
> > taxes. Landlord will increase rent by $1,000.
> > Now the store owner pays rent $3,500 a month.
> > He will increase prices to make up for those $500.
> Again, the store owner can only increase prices to the extent that you
> have more money AND are willing to pay it. He will do this whether or
> not there is an income tax or an assets tax or a tax on fingernails, or
> even if there is no tax at all. He is a profit maximizing entity.
Let's discuss this at extent. Let's use examples.
For now let me only say this.
Gross income - Costs = Profit
Do we agree that there will be shortfall, and assets taxes
will be increased to cover that?
Then our store owner will have higher rent and higher costs.
He must increase Gross income with higher prices to keep
his level of profit.
Why he did not increase it before?
I'll explain it later.
-- Michael Vilkin.
Michael Vilkin
> Michael Vilkin wrote:
(...)
> > My guess is that our landlord will pay $1,500 in assets
> > taxes. Landlord will increase rent by $1,000.
> > Now the store owner pays rent $3,500 a month.
> > He will increase prices to make up for those $500.
> Again, the store owner can only increase prices to the extent that you
> have more money AND are willing to pay it. He will do this whether or
> not there is an income tax or an assets tax or a tax on fingernails, or
> even if there is no tax at all. He is a profit maximizing entity.
I believe that the store owner will increase prices by close to 100%
of his increased rent costs.
Suppose, I opened a candy store.
My profit equals my gross income minus costs.
Other candy stores have very similar costs.
We all have slightly different prices.
Suppose now, hurricane destroyed a lot of sugar crop.
Price of sugar goes up. Price of wholesale candies goes up.
Price of candies in _all_ stores goes up.
Why the stores did not increase prices before?
Because they want to maximize profit.
Any one store could not increase prices too much because
it would price itself out of the market.
Increase in wholesale price of candies will show up
on a retail level.
The same story is with rent costs.
If rent for _all_ candy stores goes up, it will show up
in retail prices of candies.
I hope you will agree with me on this subject,
and we will discuss if there will be any shortfall
in assets tax revenues.
-- Michael Vilkin.
Michael L. Coburn
"Shawn A. Wilson" wrote:
> Michael L. Coburn wrote in message <77hc13$pag$1...@news-1.news.gte.net>...
> >
> >
> >"Shawn A. Wilson" wrote:
> >I WISH TO POINT OUT FOR ABOUT THE 10th TIME, Mr, Wilson: LAND IS NOT
> CAPITAL.
>
> And for the tenth time, yes it is.
>
The rest is deleted until we get this point cleared up:
Merriam-Webster dictionary:
capital 1. a letter larger than the ordinary small letter and often
different in form.
2. the capital city of a state, or country; also a city
preeminent in some capacity.
3. accumulated wealth esp. as used to produce more wealth.
4. the total face value of shares of stock issued by a company.
5. capitalists as considered as a group.
6. ADVANTAGE, GAIN
Random House
capital 1.the city or town which is the official seat of government in a
county or state, etc.
2. a capital letter.
3.the wealth, whether in money or property, accumulated by or
employed in business.
4. the net worth of a business.
5. an advantage or asset.
6. capitalists as a group or class.
7. pertaining to financial capital.
8. highly important.
9. chief, esp. as the seat of government.
10. excellent or first rate
11. alphabetic letter of a firm different from and higher than
its corresponding lower-case letter.
12 punishable by death.
Now in all of these definitions there are two that MIGHT come close if we REALLY
stretch them. Of the two the one most likely to make you happy is Random House
3. So lets just concentrate on that one first. Please note that for something
to be "capital" it must be accumulated by or employed in business. Land is a
natural resource. It is not "accumulated" because it is not earned or produced
and there is no more or less of it now than when we first started working and
building and doing all the economic things we do. And unless and until land is
employed in business it cannot even be confused in any way with capital. It is
this confusion which economists tend to use to their advantage in treating land
in the same fashion as a claim on current production based on savings or
accumulation of wealth. The distinction between land (including all naturally
occurring substances) and capital (that which is in excess of one's labor and
consumption) is that land is not something that was produced and saved so as to
stake a claim on current and future production. Land claims are claims of
privilege based solely upon sovereignty
(i.e. the supreme political power of the state). Land was awarded to those that
royalty saw fit to award it to, and land was "claimed" by many. Land was never
earned and/or accumulated because it was never produced. Therefore it is NOT
capital.
This is why land does not fit into the same economic class as a machine, or an
accumulation of cash, or shares of stock. Land is extremely resilient to
taxation. Land can be heavily taxed (as compared to the current tax rates), an
it is not going to go anywhere or disappear. No matter how much we want to
avoid taxation we can only avoid such taxation by renouncing our "ownership" of
the land. If we cannot escape the tax then we must produce in order to pay it
or cede our "ownership" to someone who will. THIS MAKES MORE PRODUCTION NOT
LESS. And again land cannot be classed as capital because the more you tax it
(as based on the free market value of the land) the more productive it becomes.
So you can either decide that all assets produce more when taxed or that land is
different. I know that all assets do produce more when taxed that but that land
is simply the best example. Maybe you would like to differentiate capital and
assets for us.
Michael L. Coburn
Michael Vilkin wrote:
What do you think these people have been doing with all this dough? Why do
you think that they spent it ALL on cocaine, and cigars? People who make a
bunch of money normally invest most of it, even if they invest it silly things
like expensive houses, yachts, ranches, expensive autos, and all kinds of
other supposed "assets".
>
>
> > > My guess is that our landlord will pay $1,500 in assets
> > > taxes. Landlord will increase rent by $1,000.
> > > Now the store owner pays rent $3,500 a month.
> > > He will increase prices to make up for those $500.
>
> > Again, the store owner can only increase prices to the extent that you
> > have more money AND are willing to pay it. He will do this whether or
> > not there is an income tax or an assets tax or a tax on fingernails, or
> > even if there is no tax at all. He is a profit maximizing entity.
>
> Let's discuss this at extent. Let's use examples.
> For now let me only say this.
>
> Gross income - Costs = Profit
>
> Do we agree that there will be shortfall, and assets taxes
> will be increased to cover that?
>
> Then our store owner will have higher rent and higher costs.
> He must increase Gross income with higher prices to keep
> his level of profit.
> Why he did not increase it before?
>
> I'll explain it later.
>
> -- Michael Vilkin.
And I'll be waiting to hear it. Hint: You did not have any extra money to
pay these higher prices with.
Michael L. Coburn
Michael Vilkin wrote:
> Michael L. Coburn wrote:
>
> > Michael Vilkin wrote:
>
> (...)
>
> > > My guess is that our landlord will pay $1,500 in assets
> > > taxes. Landlord will increase rent by $1,000.
> > > Now the store owner pays rent $3,500 a month.
> > > He will increase prices to make up for those $500.
>
> > Again, the store owner can only increase prices to the extent that you
> > have more money AND are willing to pay it. He will do this whether or
> > not there is an income tax or an assets tax or a tax on fingernails, or
> > even if there is no tax at all. He is a profit maximizing entity.
>
> I believe that the store owner will increase prices by close to 100%
> of his increased rent costs.
>
He may try to do exactly that. He may try to raise prices even more. But he
can only raise prices to the extent that you can and will pay them.
>
> Suppose, I opened a candy store.
> My profit equals my gross income minus costs.
> Other candy stores have very similar costs.
> We all have slightly different prices.
>
> Suppose now, hurricane destroyed a lot of sugar crop.
> Price of sugar goes up. Price of wholesale candies goes up.
> Price of candies in _all_ stores goes up.
>
> Why the stores did not increase prices before?
> Because they want to maximize profit.
>
> Any one store could not increase prices too much because
> it would price itself out of the market.
>
> Increase in wholesale price of candies will show up
> on a retail level.
>
> The same story is with rent costs.
> If rent for _all_ candy stores goes up, it will show up
> in retail prices of candies.
>
> I hope you will agree with me on this subject,
> and we will discuss if there will be any shortfall
> in assets tax revenues.
>
> -- Michael Vilkin.
I do agree with you but you are OVERSTATING the case. It may be that there
will be less candy stores and that we, as a nation, might consume less candy,
but this is extremely unlikely. The tax has been shifted from individuals as
a group (whether such individuals were asset owners or not) to asset owners.
You as a candy eating non asset owning but productive (earning) individual
will have more money to spend and whether you buy candy or something else is
up to you. The candy man must compete with everyone else for your disposable
income which is now significantly more than it was. You as an candy eating
asset owning (but productive asset owning) individual will have more money
too because your profit is not taxed. The people who get less candy are the
NON productive people whether they own assets or not.
Shawn A. Wilson
Michael L. Coburn wrote in message <77mnk2$e68$1...@news-1.news.gte.net>...
>
>
>"Shawn A. Wilson" wrote:
>
>> Michael L. Coburn wrote in message <77hc13$pag$1...@news-1.news.gte.net>...
>> >
>> >
>> >"Shawn A. Wilson" wrote:
>> >I WISH TO POINT OUT FOR ABOUT THE 10th TIME, Mr, Wilson: LAND IS NOT
>> CAPITAL.
>>
>> And for the tenth time, yes it is.
>>
>
>The rest is deleted until we get this point cleared up:
>
>Merriam-Webster dictionary:
> capital 1. a letter larger than the ordinary small letter and often
>different in form.
> 2. the capital city of a state, or country; also a city
>preeminent in some capacity.
> 3. accumulated wealth esp. as used to produce more wealth.
> 4. the total face value of shares of stock issued by a
company.
> 5. capitalists as considered as a group.
> 6. ADVANTAGE, GAIN
Definition 3. includes land and what is iften called physical capital.
Point for me.
>Random House
> capital 1.the city or town which is the official seat of government
in a
>county or state, etc.
> 2. a capital letter.
> 3.the wealth, whether in money or property, accumulated by
or
>employed in business.
> 4. the net worth of a business.
> 5. an advantage or asset.
> 6. capitalists as a group or class.
> 7. pertaining to financial capital.
> 8. highly important.
> 9. chief, esp. as the seat of government.
> 10. excellent or first rate
> 11. alphabetic letter of a firm different from and higher
than
>its corresponding lower-case letter.
> 12 punishable by death.
Again, definition 3, which this time specificaly enumerates property as a
form of capital. Also definition 4. could be used, and it also includes
land.
>Now in all of these definitions there are two that MIGHT come close if we
REALLY
>stretch them.
'MIGHT'?, 'REALLY stretch'? The Random house definition SPECIFICALLY
enumerates property as a form of capital.
Of the two the one most likely to make you happy is Random House
>3. So lets just concentrate on that one first. Please note that for
something
>to be "capital" it must be accumulated by or employed in business. Land is
a
>natural resource. It is not "accumulated" because it is not earned or
produced
So? Just because something isn't produced doesn't mean it is not acquired,
or that resources were not necessary for that acquisition.
(snippage)
Gary Forbis
>
>Michael L. Coburn wrote in message <77mnk2$e68$1...@news-1.news.gte.net>...
>>"Shawn A. Wilson" wrote:
>>> Michael L. Coburn wrote in message <77hc13$pag$1...@news-1.news.gte.net>...
>>> >
>>> >
>>> >"Shawn A. Wilson" wrote:
>>> >I WISH TO POINT OUT FOR ABOUT THE 10th TIME, Mr, Wilson: LAND IS NOT
>>> CAPITAL.
>>>
>>> And for the tenth time, yes it is.
>>>
>>
>>The rest is deleted until we get this point cleared up:
>>
>>Merriam-Webster dictionary:
>> capital 1. a letter larger than the ordinary small letter and often
>>different in form.
>> 2. the capital city of a state, or country; also a city
>>preeminent in some capacity.
>> 3. accumulated wealth esp. as used to produce more wealth.
>> 4. the total face value of shares of stock issued by a
>company.
>> 5. capitalists as considered as a group.
>> 6. ADVANTAGE, GAIN
>
>
>Definition 3. includes land and what is iften called physical capital.
>Point for me.
While definition three may support you to a limited extent one has
to put it as an exception in the "esp. as used to produce more wealth"
clause since you wish to include those cases where it is not. Further
the land existed before so you have to include in "accumulate" not only
the production of new but the restricted holding of that which already
exists. Consider Merriam Webster's Collegiate Dictionary 10th ed.
where accumulate is defined as "CUMULATE ... to gather or pile up
esp. little by little : AMASS ... to increase gradually in qunatity or
number."
>>Random House
>> capital 1.the city or town which is the official seat of government
>in a
>>county or state, etc.
>> 2. a capital letter.
>> 3.the wealth, whether in money or property, accumulated by
>or
>>employed in business.
>> 4. the net worth of a business.
>> 5. an advantage or asset.
>> 6. capitalists as a group or class.
>> 7. pertaining to financial capital.
>> 8. highly important.
>> 9. chief, esp. as the seat of government.
>> 10. excellent or first rate
>> 11. alphabetic letter of a firm different from and higher
>than
>>its corresponding lower-case letter.
>> 12 punishable by death.
>
>
>Again, definition 3, which this time specificaly enumerates property as a
>form of capital.
This use is restricted to business.
> Also definition 4. could be used, and it also includes
>land.
Also as applied to business.
>>Now in all of these definitions there are two that MIGHT come close if we
>REALLY
>>stretch them.
>
>'MIGHT'?, 'REALLY stretch'? The Random house definition SPECIFICALLY
>enumerates property as a form of capital.
This is "property" as opposed to "land" Property requires ownership
while land does not.
> Of the two the one most likely to make you happy is Random House
>>3. So lets just concentrate on that one first. Please note that for
>something
>>to be "capital" it must be accumulated by or employed in business. Land
is
>a
>>natural resource. It is not "accumulated" because it is not earned or
>produced
>
>So? Just because something isn't produced doesn't mean it is not acquired,
>or that resources were not necessary for that acquisition.
It said "accumulated" not "acquired" and this difference is subtle but
substantial. While there are times our nation has acquired new land
for the most part this discussion is not about the acquisition of new
land but rather the shuffling of ownership among various people and
over which the government retains sovereignty.
C Post
>
> Now I see, you are right.
> Company A will go out of business, because it does not
> fully utilize it's assets.
>
> When assets are costly to carry, dogs will fail.
> Companies which force workers to work three shifts, -
> those companies will prosper.
Uh, Michael: it won't be the _same_workers_ working all three shifts,
you know.... Hello?
> A store owner rents his store for $2,500 a month.
> His net income before taxes is also $2,500 a month.
> He pays income taxes $500 a month.
> His landlord pays income taxes also $500 a month.
>
> Now income taxes are replaced by assets taxes.
> His landlord pays the same $500 as assets taxes.
No. As a rule, passive owners of assets will pay more under asset
taxation than they currently do under income taxation.
> Store owner pays... zero. Government is losing here.
Nah. Phase it in, and adjust the rates up a little every year to keep
revenues stable until income tax is reduced to 0.
> In this case assets taxes should be $1,000 a month
> to replace two income taxes, $500 each.
>
> OK, now assets taxes are $1,000.
> Landlord will increase rent by $500 to restore justice.
He can't. If he could have charged a higher rent, he would have before
the tax change. (Actually, the fact that the renter has more after-tax
income _would_ allow the landlord to increase the rent, but not by the
full amount of the asset tax. It depends on the elasticities.)
> But now doctors, lawyers, accountants, Hollywood stars
> and basketball players don't pay income taxes.
> They will pay taxes for their own houses, but those taxes
> will be much smaller than income taxes they paid before.
> How the government will cover this shortfall?
Those with lots of asset but little income (i.e., who are not currently
using their assets very productively) will pay more.
> My guess is that our landlord will pay $1,500 in assets
> taxes. Landlord will increase rent by $1,000.
He _can't_. If he tries it, his tenants will just move to a building
owned by a recent purchaser, who got it at the low post-asset-tax price.
C Post
>
> A litigation lawyer makes $1 million a year.
> With the present system he pays a few hundred thousand dollars
> in taxes, unless he finds tax shelters.
> The first step should be to eliminate those tax shelters.
>
> Let's guesstimate assets taxes of this lawyer.
> Even 10% of 1 M is just $100,000.
??? But how long has been making $1M/yr? He saves none of it?
> Low income people pay higher percentage.
??? Percentage of _what_?
> Is there a shortfall here? If not, why not?
No. We _know_ the asset rents can support the budget.
> They will invest and buy stuff? Yes, they will.
> But shortfall is still there. A big shortfall.
> I'd say the high income people will pay less
> than 50% of their old amount.
> How will we cover for it?
The high-income low-asset people will indeed pay less. Sometimes 90%
less. The low-income high-asset people and corporations (i.e., the
unproductive rich) will pay more.
> Gross income - Costs = Profit
>
> Do we agree that there will be shortfall, and assets taxes
> will be increased to cover that?
??? What do you mean?
-- ro...@not.this.partistar.ca
C Post
>
> Michael L. Coburn wrote in message <77hc13$pag$1...@news-1.news.gte.net>...
> >
> >
> >"Shawn A. Wilson" wrote:
> >I WISH TO POINT OUT FOR ABOUT THE 10th TIME, Mr, Wilson: LAND IS NOT
> CAPITAL.
>
> And for the tenth time, yes it is.
Here we have the Great Equivocation at the heart of neo-classical
economics. How far would chemistry have progressed if chemists had
persisted in defining the elements as earth, air, fire and water?
That's how far economics will progress as long as capital is defined as
"anything used for production, other than labor," and there is no
recognition of the fundamentally different economic characteristics of
capital goods, natural resources, claims, privileges, etc.
> >Nope. Better factories are built, which can pay the tax and produce a
> profit.
>
> Again with the 'superior investments will appear by magic' argument. Why
> aren't these investments made NOW?
Income tax.
> Ah, so you are operating under the hypothesis that not one person in
> corporate America is greedy...
Oh, they are greedy, all right. About as often as those in
non-corporate America...
When will you figure out that the profit motive depends on how much of
the profit you get to keep?
> >> You get more efficiency taking the less efficient factories
> >> out of production, but not more output.
The more output comes when the less efficient factories are bought up
and made more efficient by the most efficient producers, who now don't
have to pay any income tax for being productive.
Michael Vilkin
(...)
> > "Shawn A. Wilson" wrote:
> > > I WISH TO POINT OUT FOR ABOUT THE 10th TIME, Mr, Wilson:
> > > LAND IS NOT CAPITAL.
> > And for the tenth time, yes it is.
> The rest is deleted until we get this point cleared up:
> Merriam-Webster dictionary:
(...)
Michael, the word "capital" has a special meaning.
Marx counted all assets, including land, as capital.
I think he was right on this particular point.
(...)
> ...Please note that for something to be "capital"
> it must be accumulated by or employed in business.
Fine. Land is employed in agriculture.
Land may be accumulated if accepted as a payment for labor.
You may work a year for a struggling farmer and accept
as payment a few acres of land. Marx was right.
> Land is a natural resource. It is not "accumulated"
> because it is not earned or produced and there is no more
> or less of it now than when we first started working and
> building and doing all the economic things we do.
Land is earned, if accepted as a payment.
Not produced? So what? One day all diamonds will be unearthed,
and we will not produce them anymore. Will diamonds qualify
as assets? No doubt. Diamonds are forever assets.
Now, should we discuss what is the difference between
assets and capital? Let me say this.
Land may be an asset. All assets are capital.
Land is a capital asset.
> ... land is not something that was produced and saved so as to
> stake a claim on current and future production.
Let me ask you something.
A farmer bought a piece of jungle in Brasil.
He hired a contructor to clear that piece of jungle
for agricultural use.
The farmer gave the contractor half of that jungle
as payment for labor.
The questions are these.
Was value added? If not, what the payment for?
If yes, then part of the value was _produced_.
A piece of jungle land has value different from
agricultural land.
Let's see if we can agree on this piece of Marxism.
-- Michael Vilkin.
Michael Vilkin
(...)
> > My fault. I did not use an example. Here is one.
> > A litigation lawyer makes $1 million a year.
> > With the present system he pays a few hundred thousand dollars
> > in taxes, unless he finds tax shelters.
> > The first step should be to eliminate those tax shelters.
> > Let's guesstimate assets taxes of this lawyer.
> > Even 10% of 1 M is just $100,000.
> > Low income people pay higher percentage.
> > Is there a shortfall here? If not, why not?
> > They will invest and buy stuff? Yes, they will.
> > But shortfall is still there. A big shortfall.
> > I'd say the high income people will pay less
> > than 50% of their old amount.
> > How will we cover for it?
> What do you think these people have been doing with all this dough?
> Why do you think that they spent it ALL on cocaine, and cigars?
> People who make a bunch of money normally invest most of it, even
> if they invest it silly things like expensive houses, yachts,
> ranches, expensive autos, and all kinds of other supposed "assets".
I gladly agree with you.
Let's calculate how much less this litigation lawyer will pay.
My guesstimate is that he will pay 50% of what he used to pay.
With $100,000 saved he will buy one of those silly things.
Maybe, a yacht. Maybe, a ranch. Maybe, a Ferrari.
Can we agree on this?
If yes, does it mean that the rich may get richer,
and the poor may get poorer?
It's not that I'm against the rich.
I would not mind if owner of a construction company gets
richer, and he invests his money to build more housing.
There are too many high income people who don't deserve it.
Life insurance, advertisement, lawyers...you name it.
I don't want them to buy Ferrary at my expense.
Michael, you agree that those high income folks will pay
only 50% of what they used to pay in income taxes, don't you?
-- Michael Vilkin.
Michael Vilkin
> Michael Vilkin wrote:
> > Suppose, I opened a candy store.
> > My profit equals my gross income minus costs.
> > Other candy stores have very similar costs.
> > We all have slightly different prices.
> > Suppose now, hurricane destroyed a lot of sugar crop.
> > Price of sugar goes up. Price of wholesale candies goes up.
> > Price of candies in _all_ stores goes up.
> > Why the stores did not increase prices before?
> > Because they want to maximize profit.
> > Any one store could not increase prices too much because
> > it would price itself out of the market.
> > Increase in wholesale price of candies will show up
> > on a retail level.
> > The same story is with rent costs.
> > If rent for _all_ candy stores goes up, it will show up
> > in retail prices of candies.
> > I hope you will agree with me on this subject,
> > and we will discuss if there will be any shortfall
> > in assets tax revenues.
> I do agree with you but you are OVERSTATING the case. It may be that there
> will be less candy stores and that we, as a nation, might consume less candy,
> but this is extremely unlikely.
Yes, economics teach that prices and demand go in different
directions. They will eat fewer candies.
> The tax has been shifted from individuals as
> a group (whether such individuals were asset owners or not) to asset owners.
> You as a candy eating non asset owning but productive (earning) individual
> will have more money to spend and whether you buy candy or something else is
> up to you. The candy man must compete with everyone else for your disposable
> income which is now significantly more than it was. You as an candy eating
> asset owning (but productive asset owning) individual will have more money
> too because your profit is not taxed. The people who get less candy are the
> NON productive people whether they own assets or not.
Michael, we are discussing a different problem.
The problem under discussion is this.
I say that there will be a shortfall of taxes,
because those high income people will pay much less.
Do you agree will this?
If yes,
the government will have to collect the shortfall
with higher assets taxes.
Higher assets taxes will increase rent in candy stores,
in chicken stores, in bread stores, in all stores.
Consumers will pay more for everything.
Can we agree on this?
Yes, we all have to pay taxes. We have to pay for protection.
The problem is that asset taxes will collect less taxes
from high income people, and more taxes from lower income
people. Can we agree on this?
I'm not a left-handed liberal, screaming loudly
"Poor, poor!" - and looting the taxpayers money.
But this assets tax will make high income people much richer,
and lower income people much poorer.
Simply put, the tax burden will be shifted to the poor.
Now you have a chance to explain why it will be better.
And I will post an explanation why this assets tax
would work very well in a fascist economy, but not
in this economy. Some time later.
-- Michael Vilkin.
Michael L. Coburn
"Shawn A. Wilson" wrote:
> Michael L. Coburn wrote in message <77mnk2$e68$1...@news-1.news.gte.net>...
> >
> >
> >"Shawn A. Wilson" wrote:
> >
> >> Michael L. Coburn wrote in message <77hc13$pag$1...@news-1.news.gte.net>...
> >> >
> >> >
> >> >"Shawn A. Wilson" wrote:
> >> >I WISH TO POINT OUT FOR ABOUT THE 10th TIME, Mr, Wilson: LAND IS NOT
> >> CAPITAL.
> >>
> >> And for the tenth time, yes it is.
> >>
> >
> >The rest is deleted until we get this point cleared up:
> >
> >Merriam-Webster dictionary:
> > capital 1. a letter larger than the ordinary small letter and often
> >different in form.
> > 2. the capital city of a state, or country; also a city
> >preeminent in some capacity.
> > 3. accumulated wealth esp. as used to produce more wealth.
> > 4. the total face value of shares of stock issued by a
> company.
> > 5. capitalists as considered as a group.
> > 6. ADVANTAGE, GAIN
>
> Definition 3. includes land and what is iften called physical capital.
> Point for me.
OH.... I don't read it that way. I don't see land in that sentence.
>
>
> >Random House
> > capital 1.the city or town which is the official seat of government
> in a
> >county or state, etc.
> > 2. a capital letter.
> > 3.the wealth, whether in money or property, accumulated by
> or
> >employed in business.
> > 4. the net worth of a business.
> > 5. an advantage or asset.
> > 6. capitalists as a group or class.
> > 7. pertaining to financial capital.
> > 8. highly important.
> > 9. chief, esp. as the seat of government.
> > 10. excellent or first rate
> > 11. alphabetic letter of a firm different from and higher
> than
> >its corresponding lower-case letter.
> > 12 punishable by death.
>
> Again, definition 3, which this time specificaly enumerates property as a
> form of capital. Also definition 4. could be used, and it also includes
> land.
>
Perhaps you should look up "property". You will find that it is NOT
specifically land.
>
> >Now in all of these definitions there are two that MIGHT come close if we
> REALLY
> >stretch them.
>
> 'MIGHT'?, 'REALLY stretch'? The Random house definition SPECIFICALLY
> enumerates property as a form of capital.
>
> Of the two the one most likely to make you happy is Random House
> >3. So lets just concentrate on that one first. Please note that for
> something
> >to be "capital" it must be accumulated by or employed in business. Land is
> a
> >natural resource. It is not "accumulated" because it is not earned or
> produced
>
> So? Just because something isn't produced doesn't mean it is not acquired,
> or that resources were not necessary for that acquisition.
>
> (snippage)
There are no *capital* resources *neccessary* for the use of land in producing
actual wealth and real capital. Too be sure capital can be used to improve the
productivity of land. But your models say that as capital is taxed there is
less of it and therefore there are less jobs. Your models say that if what you
call "capital" (your definition includes land) is taxed across the board then
less productivity and less jobs will be the result. It is shown, however, that
a moderate tax on land (one which does not confiscate more than the economic
rent therefrom) actually increases the amount of land being used for production
in that land speculation becomes much more expensive and much less rewarding.
If capital is taxed across the board then you claim there will be lass machinery
(machinery is capital and on this we can agree) and therefore it will take more
PEOPLE to produce whatever is produced from the land, and again your model
fails. i.e. less capital and more jobs.
I would conclude that land is not capital or your models need an overhaul.
Maybe BOTH are true. Your models MAY be relevant if natural resources are NOT
considered. But, then, of course, that ain't the real world.
Michael L. Coburn
Michael Vilkin wrote:
NO.
>
> If yes,
> the government will have to collect the shortfall
> with higher assets taxes.
>
> Higher assets taxes will increase rent in candy stores,
> in chicken stores, in bread stores, in all stores.
> Consumers will pay more for everything.
> Can we agree on this?
>
As I have said: The rent will be raised to the extent that the renter can and will
pay it. Prices will be raised to the extent that buyers can and will pay them.
These two statements are true regardless of what is done with taxes.
>
> Yes, we all have to pay taxes. We have to pay for protection.
> The problem is that asset taxes will collect less taxes
> from high income people, and more taxes from lower income
> people. Can we agree on this?
>
NO. And I mean absolutely NO. If land that can be made to produce is free, why
are you going to live in New York city? What do you think that these high income
people are going to do with all this income? Maybe you think that they are just
going to burn it in an incinerator. They must spend it - and that means they must
consume, and as they do you get the dough - or they must invest it or save it and
it then becomes an asset. You say that I will lose at first because the high
income people will get such an income tax break. Again, you must believe that
these people have been throwing all their money away and have no assets which
reflect their incomes. How many poor people do you know that own their homes, sir.
>
> I'm not a left-handed liberal, screaming loudly
> "Poor, poor!" - and looting the taxpayers money.
>
I'm not a "left-handed liberal" either. But remember that my position is that
asset tax proceeds are not to be spent on social programs such as SS, medicare,
Medicaid, free lunches, or anything else I would associate with "looting" the
taxpayers.
>
> But this assets tax will make high income people much richer,
> and lower income people much poorer.
> Simply put, the tax burden will be shifted to the poor.
>
That is absolutely incorrect by definition, sir. Poor is defined as having
nothing. If you have nothing and you must live from hand to mouth and accumulate
no assets then you do not pay any asset taxes.
>
> Now you have a chance to explain why it will be better.
>
> And I will post an explanation why this assets tax
> would work very well in a fascist economy, but not
> in this economy. Some time later.
>
> -- Michael Vilkin.
I've already explained why it is better: Primarily, asset owners must _EARN_ the
money they use to pay the asset tax, and the only way they can do that is to
produce something with their assets that other people want, and the more they
produce the more _UNTAXED_ profit they will have . As far as your thesis about
asset tax not working, I wish you a lot of luck. Your gonna need it.
C Post
>
>
> Michael, the word "capital" has a special meaning.
> Marx counted all assets, including land, as capital.
Same mistake Wilson makes. How.... _revealing_...
> I think he was right on this particular point.
I don't know what you think "right" means in this context, but lumping
land with capital goods leads into a morass of fallacious economic
reasoning. Not surprising that Marx went there...
> > ...Please note that for something to be "capital"
> > it must be accumulated by or employed in business.
In economics, it must be used or capable of being used for production of
goods and services.
> Fine. Land is employed in agriculture.
> Land may be accumulated if accepted as a payment for labor.
> You may work a year for a struggling farmer and accept
> as payment a few acres of land. Marx was right.
Land may certainly be an asset, if the law supports its private
ownership. But it does not behave, economically, like capital goods or
other types of assets.
> Land is earned, if accepted as a payment.
_Title_ to land may be thus earned, but only if the title has previously
been granted. Unlike capital goods, land cannot be earned by creating
it.
> Not produced? So what? One day all diamonds will be unearthed,
> and we will not produce them anymore.
??? We are _already_ producing them artificially...
> Now, should we discuss what is the difference between
> assets and capital? Let me say this.
> Land may be an asset.
True.
> All assets are capital.
Definitely false: to be capital even in the uninformative sense used in
neo-classical economics, an asset would have to be used (or at least
capable of being used) for production.
> A farmer bought a piece of jungle in Brasil.
> He hired a contructor to clear that piece of jungle
> for agricultural use.
> The farmer gave the contractor half of that jungle
> as payment for labor.
>
> The questions are these.
>
> Was value added?
Yes.
> If yes, then part of the value was _produced_.
Property values are divided into land value and improvement value. What
the contractor did was improvements. The defining characteristic of
improvements is that left to themselves they will depreciate. Left to
itself, the newly cleared land will revert to jungle.
> Let's see if we can agree on this piece of Marxism.
Let's see if we can agree that Marx was catastrophically wrong-headed...
C Post
>
> I gladly agree with you.
> Let's calculate how much less this litigation lawyer will pay.
> My guesstimate is that he will pay 50% of what he used to pay.
> With $100,000 saved he will buy one of those silly things.
> Maybe, a yacht. Maybe, a ranch. Maybe, a Ferrari.
>
> and the poor may get poorer?
The productive, rich and poor alike, will get richer; the unproductive,
rich and poor alike, will get poorer.
> There are too many high income people who don't deserve it.
> Life insurance, advertisement,
Hey, steady on, there... ;^)
> Michael, you agree that those high income folks will pay
> only 50% of what they used to pay in income taxes, don't you?
Maybe even less. The problem of arranging the economy so that people
get paid to the extent that they produce something of value certainly
doesn't _end_ with the shift from income taxation to asset taxation....
C Post
>
> The problem under discussion is this.
>
> I say that there will be a shortfall of taxes,
> because those high income people will pay much less.
> Do you agree will this?
No. It will be made up by the high-asset people, of course.
> Higher assets taxes will increase rent in candy stores,
> in chicken stores, in bread stores, in all stores.
But the rent increase will be less than the cost decrease resulting from
abolition of income tax. How much less will depend on the elasticities
of the assets.
> Consumers will pay more for everything.
> Can we agree on this?
No. Consumers will pay less, because less will go to the unproductive
rich for doing nothing.
> The problem is that asset taxes will collect less taxes
> from high income people, and more taxes from lower income
> people. Can we agree on this?
Yes, to the extent that their high and low incomes are not accompanied
by, respectively, high and low assets.
> But this assets tax will make high income people much richer,
> and lower income people much poorer.
Yes, to the extent that their high incomes and low incomes are not
accompanied by, respectively, high and low assets.
> Simply put, the tax burden will be shifted to the poor.
No. The poor are those with few _assets_, not low _incomes_. The rich
are those with lots of _assets_, not lots of income. A billionaire may
have no income at all in a given year. Does that make him poor? Should
it exempt him from taxes, as it exempts him from income taxes? A highly
paid individual who has a lot of expenses, like legal bills ( ;^) may
have no assets. Is he still rich? Until you understand this
distinction, you will not understand asset taxation. Period.