Hi guys,
With all of these arguments about how the government is unfairly subsidizing the poor, I thought it might be fun to list ways in which the government fairly subsidizes the non-poor! This would include tax breaks, loopholes, investment options, etc. which are generally unavailable to the bottom 50% (since they don’t have significant savings or economic flexibility). We could include local/state/federal governments. How about it?
An old co-worker used to tell me that government contracting is welfare for the middle class…
thought it might be fun to list ways in which the government fairly subsidizes the non-poor!
Subsidies, ranging from farm to oil to “Green technology”.
Tax breaks. One of my favorites recently happened here in IL. Capital Gains and income tx were both raised ~66%. This of course made someone what of a “Rush for the door” by several companies. Turns out however if you were “Big enough” all you had to do was go tot he governors office, take him out to lunch and you got a special “Tax deal” of some sort.
“Contracts” - …endless possibilities here.
“Favorable law” - See above.
~Matt
High speed rail. Full employment act for unions!
Okay, here are a few:
Tax breaks for “Green” improvements. I get to increase the value of my house (tax free)!
Local zoning ordinances. I buy a house in a “good” area with restrictive zoning (no high density housing, no industry), with an almost absolute guarantee that the area will be even more desirable for several decades!
Stock options. Amazing opportunities for individuals and companies (tax loophole, deferred income, crazy auditing standards). A favorite of everyone in Silicon Valley (where I live).
This is fun!
Mortgage deduction - This helps the rich buy more of a house than they can afford. Oh, wait, the mortgage deduction caps at $1M (and the talk is to drop that to $500K). Maybe that’s not really for the rich …
Capital Gains - if you risk capital and hold it for more than a year, you get taxed at 15%. This actually is a benefit, in order to incent investors to invest. It’s also available and used by pension funds (electricians, teachers, firefighters, police, and all those other rich bas^&rds).
Deductions on losses - If you lose money on an investment, you can subtract it from subsequent years gains. Oh, wait, except it has to be the same class of investment (you can’t deduct stock losses from real estate losses), and the period is limited, so if you don’t use them in a relatively short period of time, they are gone. You just get losses …
Adoption Tax Credit - If you make over $150K, you don’t get the $10K Adoption Tax Credit, like you would if you made less than $150K (at least that’s the way it was 6 years ago when we adopted).
Accrual based accounting - If you are a small business owner (the most rottenest of the rotten), and you are successful enough to operate under accrual vs. cash, you get to pay taxes on money you’ve never seen, and may never see, if your customers don’t pay their bills. The Feds get their cut before anybody else, even you…
Tax Rates - You get to pay at a higher marginal tax rate (again, I must be misunderstanding what you mean by a loophole/benefit).
Estate Tax - If you die and have a significant estate, it get’s taxed (confiscated is probably more accurate, since the money they are taking has already been taxed) in excess of 50%.
Them hits just keep on coming! How 'bout them loopholes!
I’ve looked at “tax loopholes” until I’m blue in the face to be able to pay what the esteemed (or less than truthful) Warren Buffet pays, but I’m just not seeing them. Can one of you rocket surgeons give me a hint where to same mega-millions in taxes (other than to not work)?
BTW - I’m not complaining - I’ve worked hard, been successful, and enjoy my life. I just get really tired of the ignorant “rich don’t pay their fair share” class warfare crap out there. If the 47% just said “thanks” once in a while to those who are carrying the load, it would be a lot less tiresome.
dan
Stadiums for professional sports teams.
Government jobs.
Child tax credit? Helps the poor and the wealthy.
SS available to all of all incomes.
~Matt
Estate Tax - If you die and have a significant estate, it get’s taxed (confiscated is probably more accurate, since the money they are taking has already been taxed) in excess of 50%
That’s funny, let’s talk “real world.” Everyone who has a major estate knows how to get around/minimize/eliminate the estate tax. Just start setting up those trusts! Of course, the trust exemptions are only a welfare break for only the super-wealthy…
SS available to all of all incomes.
But the SS rate is capped!! (advantage, upper-middle and higher). Oh come on, you’re just not trying very hard! I am astounded that we can’t take off our blinders to see the ANY of the advantages that we have (and I include myself). Here go some more:
Mortgage guarantee moved up to 719K (solely to support housing market for middle and upper-income home owners).Personally save me over 1K/month.
State per pupil spending (in California, http://justschools.gseis.ucla.edu/...s/funding/index.html). Still strongly in favor of wealthier students.
But the SS rate is capped!! (advantage, upper-middle and higher).
I don’t see the “Cap” as much of an advantage as getting it in the first place. Getting it is “Welfare for everyone” including the rich.
State per pupil spending
Aren’t “Wealthy” pupils going to private schools? Hell all of mine have gone to a private school and I’m FARRRRR from wealthy.
~Matt
Estate Tax - If you die and have a significant estate, it get’s taxed (confiscated is probably more accurate, since the money they are taking has already been taxed) in excess of 50%
That’s funny, let’s talk “real world.” Everyone who has a major estate knows how to get around/minimize/eliminate the estate tax. Just start setting up those trusts! Of course, the trust exemptions are only a welfare break for only the super-wealthy…
Trusts - which cost tens of thousands of dollars to set up, maintain, and administer. Dollars which would/could be spent on productive uses, if not for the confiscatory policies of the US government. You get hit either way - taxed directly (again), or costs incurred in setting up an otherwise purposeless entity.
Let’s talk about the SS cap. If a “rich dude” paid SS tax (or, if he was a business owner, both halves of the SS tax) for his entire income, would he be entitled to more benefit when he retires (assuming it’s there?). Didn’t think so. The tax is already progressive. The more you make, the more you pay (it’s a percentage, up to the limit). The limit simply recognizes that the benefit is capped.
I’d bet my left one that by the time I ever get to SS, you get excluded from benefits if you have more than (fill in amount here to define rich bas&*rd) in assets for retirement. Anyone wanna bet?
Anyone know what the tax is if you get sick of the socialist BS here and decide to move out of the US and take your earned assets somewhere else? Anybody?
Dan
Okay, here are a few:
Tax breaks for “Green” improvements. I get to increase the value of my house (tax free)!
Pitch that stuff. That’s mostly driven by the left anyway, and it’s hardly a “rich” giveaway, unless you count all of the government hangers-on in the reneweables industry, which are predominately Obama-ites anyway.
Local zoning ordinances. I buy a house in a “good” area with restrictive zoning (no high density housing, no industry), with an almost absolute guarantee that the area will be even more desirable for several decades!
That’s land use/planning, and has nothing to do with “tax breaks” or loopholes, but you keep trying.
Stock options. Amazing opportunities for individuals and companies (tax loophole, deferred income, crazy auditing standards). A favorite of everyone in Silicon Valley (where I live).
You better research this one again. They closed up most of the option loopholes ten years ago. In fact, when most companies that issue stock or options now, the recipient has to declare the benefit when received (and pay the tax at the time of receipt), unless he wants to declare the benefit at maturity, in which case he has to declare the actual value (presumed increased value) when they mature. In short, if you want to benefit of appreciation, you have to take the risk of paying tax, in advance, on something that you will never see. Another great benefit for the “rich”. BTW, in our company, most of these “rich bast&*ds” that get stock options/stock are employee owners, kinda the “guy on the street” types. Pretty hard to demonize if you know them.
This is why I love these discussions - most of the “loopholes” were closed with Reagan/Bradley in '86, and what few there were, are going away fast, especially if you are “rich”. The crap you hear (and repeat) is mostly just wrong.
dan
Aren’t “Wealthy” pupils going to private schools?
If you read the OP, it was mostly referring to the poor and the non-poor. Most “non-poor” go to public schools which are much better than the schools that the “poor” are relegated to. Anyway, here are some more:
Copyright law (presently 75 years after death of the composer/writer). Skews earnings vastly in favor of a small handful of successful creators (and their grandchildren), as well as large publisher/recording companies. Copyright used to be 14 years, extendable to 28 years.
401K’s/Ira’s/etc.: The poor are seldom able to take advantage of these. They are enormously advantageous for middle and upper-middle class earners.
OK, here’s one that may vary state to state and it’s not really for the rich, per se, but you’ll see . . .
The Sate Insurance Guaranty Fund. In my state, when an insurance company goes broke and cannot pay claims, the other insurance companies have to pay it’s claims. Wow, how about that: a business community that cleans up the mess of it’s constituent members! Wait . . . not so fast.
For every dollar they pay to this fund, they get a dollar off of their premium tax. Not on the amount that is taxed, but on the actual tax owed. So who really foots the bill? The citizens; either in increased taxes to make up for lost premium taxes or in a reduction of services. The only “good” it does is to mitigate cash flow issues.
457(b) and (f) plans. Similar to a 401k/403b - but can withdraw prior to retirement. Essentially deferment of income during high income years to “low” income years. Limited to “highly compensated individuals”.
Copyright law
I think patent law falls into this as well. Not sure exactly what to do about that either. On one hand you have the “Property rights” idea OTOH you have a conflict with the “Competition of production” aspect.
401K’s/Ira’s/etc.: The poor are seldom able to take advantage of these. They are enormously advantageous for middle and upper-middle class earners.
They likely would be of no advantage anyway, cause they aren’t paying any taxes in the first place and the tax advantage doesn’t apply to SS.
~Matt
Copyright law (presently 75 years after death of the composer/writer). Skews earnings vastly in.
I think you’re confusing copyright and patent.
Copyright, when registered, and marked, historically was in the 70-120 year range. 70 was the default value, still kinda is.
Patents are usually 20 years from claim, 17 years from issue. Utility patents are significantly less - on the 7-10 year range.
I tend to agree that the copyright law is a little long in the tooth, but it certainly isn’t a tax/loophole favoring the rich. Besides, if Intellectual property was created by someone, why shouldn’t they (or who they choose, be it a worthless trust fun offspring or a charitable cause) derive the benefits of their creation, rather than taken away by those who had nothing to do with its creation?
On patents, my personal bias (and it is a personal bias - I’ve been there, done that), 17 years is too short. The cycle from creation to commercialization is often much longer than people think (there’s a article in this months WIRED magazine that discusses the creation cycle).
Why do you hate people who create the things we need? 
Dan
“Contracts” - …endless possibilities here.
This, I think, is the big one. Especially regarding defense spending, there is way to few controls on government contracts. Fifteen (maybe it’s twenty) years ago when the $20,000 toilet seats were all the rage, there was a big crackdown on the revolving door working for the government, then becoming a contractor. From my limited contact with federal government contracts, it appears that specific prohibition is not as strong as it should be.
See - I’m not always disagreeable.
dan
In Colorado, I get to deduct my entire annual contribution to my kids’ 529 plans on my state tax return. The State of Colorado is essentially subsidizing my ability to send my kids to a fancy private school (although I think that max total contribution is $280,000, so it probably wouldn’t pay for four years of a fancy private school, but it would make a big dent).