Re: Obama's Remarks on Retirement Security

On Sat, 21 Jun 2008 07:47:12 -0700 (PDT), allan.sanger@xxxxxxxxx
wrote:

On Jun 20, 4:14 pm, Rumpelstiltskin
<PleaseDoNotReplyByEm...@xxxxxxxxxxx> wrote:
On Fri, 20 Jun 2008 09:42:54 -0700 (PDT), allan.san...@xxxxxxxxx
wrote:

On Jun 20, 9:00 am, Rumpelstiltskin

<snip>

The audit itself for me would be a nightmare, like doing
taxes in the first place, but longer.

The first one was a piece of cake - it was earlier in my career and it
wasn't too onerous to come up with the documentation. The second one
had to do with the rental properties and it was a bit more complicated
in that in the mid 90's the IRS took a slightly different view on what
constitutes a business and what constitutes investment.

After watching my 90-year-old landlady trying for months
to get rent from a renter who didn't pay her for six months
until she finally got him out, and who always hid from her,
there's no way I'd want to get involved in rental property
unless I had people to completely handle the renting for
me.

<snip>

One big problem with initiating a consumption tax of course
is that people who have already saved money have already
paid non-consumption taxes on that money, so with
consumption taxes they'd be paying again, whereas new
money would only be taxed when it was spent, not when it
was earned. I guess that's all peanuts compared to the
collapse of the dollar, though.

Thats a problem that can be solved. I don't think it involves a
tremendous amount of money relatively speaking and asking for a refund
wouldn't be any more difficult than filing a tax return.

That would be fair, but it's quite a lot of money nationwide.
I'm not so sure the government would, or reasonably could,
go for it.

Most of the money I haven't used since I retired is deferred
compensation, on which haven't yet paid taxes, so that would
be no problem for anybody if I cashed it in after income taxes
were eliminated and consumption taxes initiated.

There's still plenty that I have paid taxes on though, and
I definitely would want to file something to get the tax money
on that paid back, even if I had to hire somebody to do it.

I was more inclined to propose a method by which you file for a refund
on the consumption tax paid with after tax income.



That seems to me to introduce complications that would
make it impractical, and a colossal nuisance as well.

People can easily find out and report how much money
they have that has been taxed, at the moment the switch
to consumption tax is made. The government has records
of what proportion of their saved income had gone to taxes.
It could apply a formula based on those records to make a
fair shot at how much paid taxes to rebate on the unspent
income. Everything would be done at one stroke.

Your proposal would require that people keep an account
containing their untaxed money (impractical), or gradually
apply receipts for stuff they bought until the receipts added
up to how much money they had at the time the switch was
made until the receipts add up to how much they had before
the switch was made (more practical). In my case, the
dribbling annual rebates would even extend to my heirs,
because I'm not going to spend all the money I already have
before I die, unless bread starts costing $50 a loaf which is
no longer an inconceivable soon-to-arrive scenario, thanx to
Republican fiscal incompetence. People would have to
submit receipts of their purchases and send them to the
government to get a rebate year after year until all the
"old money" was theoretically (fictionally) gone. The
government would still have to compute by a formula how
much tax had already been paid on the old money. It's
an accounting monster, and yet another damned tax
nuisance, as if taxes weren't enough of a damned
nuisance already.

None of this could have happened of course if paper
money still was backed up by and could be exchanged
by the government for something of corresponding real
value. In the Hamilton bio I'm reading, I ran into another
gem yesterday:

For political and legal reasons, Hamilton had to
address the loaded question of paper money by
states; everybody remembered the worthless
Continentals printed by Congress during the
Revolution. Should the federal government now
issue paper money? Fearing an inflationary
peril, Hamilton scotched the idea: "The stamping
of paper is an operation so much easier than the
laying of taxes that a government in the practice
of paper emissions would rarely fail in any such
emergency to indulge itself too far." As an
alternative, Hamilton touted a central bank that
could issue paper currency in the form of
banknotes redeemable for coins. [my note - of
course coins are also not worth the value
stamped on them anymore.] This would set in
motion a self-correcting system. If the bank
issued too much paper, holders would question
the value and exchange it for gold and silver;
this would then force the bank to curtail the
supply of paper, restoring its value.
-- from Chernow, Alexander Hamilton, ch. 18

Maybe along with Robespierre, we should also
dig up Hamilton and clone him. He'd be able to
come up with some way of gradually getting us
out of the horrible debacle created by vastly
inferior minds lately. America, and the world,
have completely forgotten the danger noted by
Hamilton, which echoes Voltaire's "Louis XIV
was a magician who could make people believe
that paper was money."



My per-capita liability for the National Debt is $30,000, and
I'd be asking more than that back in taxes I've paid on
money that I haven't spent yet. I don't think that's a terribly
unusual a situation to be in. If hypothetically everyone were
in the same position, we'd more than double the National
Debt if we refunded taxes paid on unspent money to
everybody.

Not if you did it through the consumption tax rebate. The after tax
money you have today has already done its fair share in supporting the
government so there's no net loss to the tax base.


But the government does have to pay me back the taxes
I already paid. They can do it as you suggested, by rebating
me bit by bit every year, which of course is a nuisance to
me and a big expense to the government who will have to
employ accountants to monitor the bits. Or they can do it all
at once, which would cut down on expenses to them and the
annoyance to me, but would hit them with rebating all the
money all at once. Either way, or any intermediate way, the
government pays back the money, whether slowly or at once.



Another problem is that consumption tax does nothing to
tamp down what I have called the "parasitic" effect on
society of great and of inherited wealth. England has rid
herself of most of her parasitic "aristocracy". She did that
with inheritance taxes ("Death taxes" as they are called
under some propaganda constructs). England would still
have those worthless parasites drinking everybody else's
blood, if there were only income and consumption taxes.

Inherited money does mean much until you spend it.

Then give it to me! I'll say "Thank you" and even send
candy to everybody who gives me some of their
inheritance money.

Maybe I wasn't clear. Assets in and by themselves are just zeros on
paper. But, when you use those assets for their intended purpose
(consumption) you extract the true value. I never quite understood
the rationale of the pauper who dies with a million in cash under the
mattress.

I always thought I really should have been born rich,
since I'm so much better suited to the carefree life of the
obscene voluptuary (Vonnegut's phrase), than I ever
was to working for a living. One of my old roommates
got kicked out of his prior roommate's place because
he was, in the words of his Marxist roommate, a
"bourgeois parasite". I thought that was an ideally
harmonious roommate arrangement, a bourgeois
parasite and an obscene voluptuary.

<snip>

The piddling interest I lose thereby isn't
worth having to plan for and remember the quarterly
payments.

Another job for my tax guy.

Yes, but I don't have a tax guy, and it would
probably be more trouble (and annoyance) than
it's worth for me to have one.

A number of our leaders are of the silver spoon variety.


You don't have to be silver-spoon to need a tax guy,
of course. It seems to me that most people who own
their own home might need a tax guy. I'm unusual in
deliberately thinking about avoiding tax complications
when I get into anything financial, since as I
mentioned tax day is the worst day of most years for
me. It's a source to me of some gradually increasing
discomfort for months beforehand, since I'm thinking
I have to do my taxes and I repeatedly check,
especially in January and February when stuff is
trickling in, to make sure have all the stuff ready that
I'll need when I do the taxes.



.

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