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Simon

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On 8/9/2018 at 1:11 PM, Vondy said:

 

In the US "income tax" is generally a reference to personal income, such as salaries, dividends, and profits from private sales. Corporate taxes, while they may technically be income taxes on a business' revenues, are treated as separate. We do not have Federal sales or property taxes so they aren't directly relevant to a discussion of our federal tax

code, though a discussion of fees would be germane.  

 

Why not discuss taxes that are not presently part of the Federal landscape?   If I were undertaking a full tax reform exercise, I certainly would want to assess all possibilities.  I don’t think we are, though, nor do I propose to.

 

Regardless of the nomenclature one may attach, however, what we presently have are a personal income tax and a corporate income tax. Given that corporate income (or wealth) ultimately flows through to individual owners, I believe that the corporate and personal tax systems are appropriately integrated.  Much economic discussion has gone into the desirability of ensuring choices such as appropriate business structure are not warped by tax considerations.

 

On 8/9/2018 at 1:11 PM, Vondy said:

While some small businesses, mostly sole proprietors, follow the flow-through model, most people who run businesses, own rental properties, or even one-man shows to which assets are attached do take advantage of more complex corporate structures. This is because the tax benefits, such as deductive your salary from business expenses, are too great not to. Most people I know who run a business, and even many consultants, incorporate or form partnerships, etc. I have clients who have incorporated their new construction personal home projects to take advantage of tax benefits. I kid you not.  Its not an expensive or onerous thing to do. 

 

Incorporation is quite easy.  It is often done for liability protection, not for tax reasons.  The US is on the cusp of change as corporate tax rates are being lowered, but prior to the late 2017 changes, pretty much every small business/investment I saw from the US was structured to flow all income out to the individual owners.  This might have been by not incorporating at all, but that carries liability issues.  Often, limited partnerships and LLCs were used to benefit from corporate liability protection while still flowing all income out to be taxed once, as the personal income of the individual owners.  Where only US owners are involved, the S-corporation was another means of having corporate liability protection without corporate taxation.  Some few Canadian jurisdictions created "Unlimited Liability Corporations" to have the ability to offer a corporate form which would be able to be classified as a flow through entity for US tax purposes.

 

With the US dropping its corporate tax rates, more planning opportunities with entities taxed as corporations are viable.  In the past, getting flow through status was crucial tax planning for most owner-managed businesses.

 

On 8/9/2018 at 1:11 PM, Vondy said:

First, there is more than one partnership structure. Some are pass through and some aren't. With that said, the goal is to tax the wealth generated after expenses are paid, including salaries. To understand the underlying theory I suggest reading Capital in the 21st Century by Thomas Picketty. His analysis is rigorous and he conclusively shows (IMO) that we have come to a point where the income earned by working people is increasingly dwarfed by the self-generating income of those who possess sufficient capital that they don't have to. This is happening at an ever accelerating pace. Hence our contemporary discourse about income inequality and the concentration of increasing wealth in the hands of the few. The old assumptions we have about where wealth comes from and how capital perpetuates itself are increasingly "out of date."

 

First off, based on my limited understanding of the US tax model, most partnership models. from the Limited Partnership to the LLP and LLLP or even the LLC , can choose whether to be treated as a flow through entity or a separate taxable corporation.  In the past, they generally chose flow through due to the high corporate tax rate.  Now, that is changing.

 

Moving down to Picketty, this is the question of wealth redistribution.  To some extent, it comes back to leaving homes to your daughters, whether we should have some form of estate/inheritance tax, etc.  Why do we work hard to build wealth?  Often, to build a better life for our children.  Imagine if we were told that we could not fund our children's educations, assist them in buying a home or starting a business, etc.  It would be a non-starter.

 

Then we get to that estate tax.  It's not taking money from me - when I am dead, I have no need for money.  Rather, it is taking away my choice of who will benefit from my efforts after I am gone.  Typically, it can all go to my spouse and the tax gets paid last to die.  But should I not be able to leave my wealth to the next generation?  Well, if I can, they get an advantage not shared by those whose parents were less successful.  But I worked hard to earn that money, and I should get to decide who benefits from it, shouldn't I?

 

But that means that the most successful get to provide greater advantages to their kids, perhaps grandkids and down through the generations as that capital stays in the family.  Often, it seems like we want to say "well, what I have is the product of hard work, so only those with more than me should be restricted in the ability to direct their wealth to the next generation".  Seems we are all in favour of higher taxes for the other guys, just not for ourselves.  Which comes back to our prior closing comment - we all want a system which gives us more than it asks from us.  We cannot all have that, though.  The math does not work.

 

I want to come back to "leave it to the experts", but I need some time to spend on that item,.  I don't think I have a lot to add to your other points, other than the reality that "simple" and "fair" tend to pull in opposite directions, resulting in added complexity for enhanced (perceived) fairness.

 

 

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“I leave it to the experts.”

 

I had a colleague send me a number of articles on tax reforms a couple of years back. One came from the UK, which was well along a reform strategy.  In amongst the usual motherhood statements was a comment that the tax system had become so complex that only experts in the tax system could grasp it. 

 

That meant only two groups could really understand any proposed changes.  One were the government treasury experts.  The other was the public practitioners.  The latter tended to be dismissed as advocating for their wealthy clients if they disputed any proposals.  That left the senior bureaucrats in charge of the tax system.

 

In theory, they were overseen by Parliament, but in practice the MPs could not read the tax law, as it was or as it was proposed, any better than anyone else, so how could they oversee the tax system?  The reality was that they could not, so tax matters were not governed by democratically elected representatives, but by the senior civil servants.  Is that democracy?

 

That was, frankly, a pretty scary read.  I see it in Canada when our MPs and Senators clearly do not understand the detail of the legislation they are asked to vote on.  The US has it in reverse, I think, where Congress and the Senate write the broad strokes, but the IRS is left to fill in the detailed regulations.

 

I don’t know the answer, but maybe it starts with a refusal to pass any legislation that the government member cannot read and understand.  Not be told what the bureaucrats say it means, in a view from 30,0000 feet, but actually read and comprehend the detailed legislation.

 

But even if that is the answer, getting there from here will be a major challenge.

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1 hour ago, Hugh Neilson said:

I don’t know the answer, but maybe it starts with a refusal to pass any legislation that the government member cannot read and understand. 

 

This would be a vast improvement. Its agree its a bit of a Gordian Knot. But, that is what made Alexander great.

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3 hours ago, Hugh Neilson said:

 

Why not discuss taxes that are not presently part of the Federal landscape?  

 

 

A fair question!

 

For two parallel reasons: participation and practicability.

  • Federal taxes are relevant to board members from all over the US. We share a stake and context in them. To a much lesser degree, board members outside the US do to. 
  • In the in the US context we have "dual sovereignty." Each individual state, determines its own tax structures. That would devolve into a discussion of fifty-one (!) separate tax codes and reform processes.

I would be happy to discuss Washington State taxes with you, as well as some problems and reforms related to it, but...

  • How many posters even care about my state's tax structures?
  • Wouldn't it prove incredibly tangential?

 

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11 hours ago, Vondy said:

 

I think where we differ here is the implied premise that we can simply decide that an admittedly plausible prognostication of violence is sufficient to shut down protected speech. I'm not entirely comfortable with that. We don't do this when we know Antifa or the Black Block leaders are involved in planning the counter-protests. Rather, police meet with leaders, ban items that can be used as weapons, and very strictly enforce order. Should potentially violent right-wing protesters be treated differently than potentially violent left-wing counter-protesters?

 

 

No argument here. This follows the basic reasoning of the Washington State Supreme Court on carry that I mentioned above. You can carry a gun on your hip, but that gun will become a major factor in interpreting your intent and behavior. So, bringing them to a political protest and then being confrontational would likely cross the line into assault, menace, or a number of other crimes.

 

 

I obviously don't disagree that it is reasonable to interpret it that way and, quite frankly, it makes my vigilante bone itch. I'm very hard pressed, however, to to say a culturally disagreeable symbolic act in the public square as a part of a political rally would not be protected. On the other hand, I would suggest that a cross burning at a public rally allows authorities to interpret everything you do and say with a very critical eye (just as wearing a gun on your hip does) and prosecute you for any missteps accordingly. 

 

 

I think my concern is that this is a form of preemptive enforcement and calls to mind Minority Report. We don't have a trio of precogs who have foreseen a riot. Even if we did, until one erupts no crime has been committed. I'm not trying to sound cliche, but liberty entails some risk. Sometimes we do suck in our collective breath and hope for the best. 

One clarification: Burning a cross in the woods or an open field somewhere is not a directed, implicit threat, and is protected speech.  Burning a cross on someone's front lawn uninvited, however, is impossible to interpret in good faith as anything else than a threat of violence.

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3 hours ago, megaplayboy said:

One clarification: Burning a cross in the woods or an open field somewhere is not a directed, implicit threat, and is protected speech.  Burning a cross on someone's front lawn uninvited, however, is impossible to interpret in good faith as anything else than a threat of violence.

 

No disagreement. However, we seem to be discussing the same act in three distinct contexts. 

  • A political rally in a central urban public square or on "main street."
  • A private gathering on private lands removed from the public square.
  • A clear case of direct intimidation in a residential neighborhood (or someone's front lawn).

I would suggest the following:

 

A rally in a central urban public square (especially at the center-stage of our democracy) is contextually different than a rally in a field, the woods, or a residential neighborhood. There may be an implicit threat inherent in the symbolic act, but in this context it is indirect, and intent is hard to prove. We would need supplementary circumstances (e.g., concurrent speech or action) to make a cogent case for that. They could, after all, explain their own intent and meaning as something else entirely. Without something beyond the act itself to hang our hat on, we can't really disprove their explanations. We may find their explanations self-serving and disingenuous, but legally and empirically, intent is a monkey-wrench in our interpretive works. 

 

I would add the size of the city may also be relevant to context. For instance, thousands of hooded KKK members showing up to march down the street of a small town could much more easily be interpreted as a direct threat or intentional menace to the local community than those same people rallying in Times Square, The National Mall, or Lafayette Park. This is especially amplified if the number of KKK marchers outnumbers the number of black, Jewish, or catholic residents where the rally or march is taking place. Now, in DC, the black population is 49%, but that cuts both ways. It does make this kind of gathering intentionally provocative

 

However, the black community in DC, not to mention other minorities and right-thinking supporters, vastly outnumbers the reprobates holding this rally, and has a capacity for counter-protest that smaller communities do not. As a result, the viability of the implied threat, even if hateful, intentional, and reprehensible, is much curtailed. I would, under this set of circumstances, rather the nation see them dwarfed by the counter-rally. That, in of itself, is a powerful symbolic argument for what I believe we both agree the right values are.

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16 hours ago, megaplayboy said:

I think they're right around the edge of incitement and fighting words, based upon the history of violent confrontation and conflict associated with these public protests, especially recently.  The case gets even stronger if they are openly carrying/brandishing weapons, since then there's an element of terroristic intimidation and even tortious assault(creating the apprehension of an imminent physical threat).  A cross burning is roughly equivalent to pointing a loaded gun at someone and saying "I'm going to kill you one of these days."  Is that protected speech?  Depends upon which SC Justice you read.  

On the one hand, your argument has merit. OTOH, I feel like every time there's one of these "rallies" everyone holds their breath, figuratively rolls 3d6 and hopes a critical failure doesn't happen.

 

The current alt-right has shown that they fully intend for their "protests" to break out into melee combat, given the wide dissemination of plans for "flagpoles" that are fully intended to be used as batons and "signs" that are functionally medium shields. They also seem to attract more than their fair share of open-carry types, openly carrying in what can only be either a threat or a fervent desire that they'll actually get to shoot someone.

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8 hours ago, Hugh Neilson said:

I had a colleague send me a number of articles on tax reforms a couple of years back. One came from the UK, which was well along a reform strategy.  In amongst the usual motherhood statements was a comment that the tax system had become so complex that only experts in the tax system could grasp it. 

 

That meant only two groups could really understand any proposed changes.  One were the government treasury experts.  The other was the public practitioners.  The latter tended to be dismissed as advocating for their wealthy clients if they disputed any proposals.  That left the senior bureaucrats in charge of the tax system.

 

In theory, they were overseen by Parliament, but in practice the MPs could not read the tax law, as it was or as it was proposed, any better than anyone else, so how could they oversee the tax system?  The reality was that they could not, so tax matters were not governed by democratically elected representatives, but by the senior civil servants.  Is that democracy?

 

I just thought I would weigh in here.  I am not going to argue that the UK tax system should be simpler but I disagree that complexity essentially renders a subject incapable of democratic oversight.  It is not just tax that is complex, general economic theory, social science, real science, diplomacy, everything gets complicated.

 

As such you have your experts informed commentators and interested commentators.  Everyone is seeking to influence Government policy.  Ministers in the UK set policy direction.  They do so with the advice of career civil servants and politically appointed advisors, each of these will be producing extensive briefing designed to inform the Minister.  The Opposition has its own advisors but no access to the civil service. Parliament has its research Library and the select committees that allow it to scrutinise Government policy in a more detailed fashion than any individual MP might manage.  These Committees have the power to send for people and papers as part of their inquiries.  I think that there is indeed a decently supported system of scrutiny that allows MPs to properly engage with the most complex of subjects, if they want to.

 

It is indeed democratic to expect any one of us to be able to stand for election and subsequently engage with any topic necessary in scrutinising government or passing legislation.  The desire to do so harks back to the political structure of our political parties and is thus more of an issue of culture than ability.

 

Doc

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16 hours ago, Vondy said:

 

A fair question!

 

For two parallel reasons: participation and practicability.

  • Federal taxes are relevant to board members from all over the US. We share a stake and context in them. To a much lesser degree, board members outside the US do to. 
  • In the in the US context we have "dual sovereignty." Each individual state, determines its own tax structures. That would devolve into a discussion of fifty-one (!) separate tax codes and reform processes.

I would be happy to discuss Washington State taxes with you, as well as some problems and reforms related to it, but...

  • How many posters even care about my state's tax structures?
  • Wouldn't it prove incredibly tangential?

 

 

I don't know that I would drop down to specific state details.  However, if one is looking at a reform of the tax system, I think there is a need to consider all of the options, and a need to consider the impact of tax systems in sub-jurisdictions.  It is amazing that the US has over 12,000 state and local sales taxes.  Would one Federal sales tax be that much added complexity?  Should the governments be looking to harmonize their sales tax rules to make life easier for businesses and consumers?  These seem like very relevant questions.

 

Many states are now grappling with the loss of deductibility of State income taxes for Federal tax purposes.  This imposes a larger Federal tax burden on residents of those States, in which the individual states have no say.  This is without any consideration of county/city income taxes, or any change in the types of tax either jurisdiction historically imposes.

 

9 hours ago, Doc Democracy said:

 

I just thought I would weigh in here.  I am not going to argue that the UK tax system should be simpler but I disagree that complexity essentially renders a subject incapable of democratic oversight.  It is not just tax that is complex, general economic theory, social science, real science, diplomacy, everything gets complicated.

 

As such you have your experts informed commentators and interested commentators.  Everyone is seeking to influence Government policy.  Ministers in the UK set policy direction.  They do so with the advice of career civil servants and politically appointed advisors, each of these will be producing extensive briefing designed to inform the Minister.  The Opposition has its own advisors but no access to the civil service. Parliament has its research Library and the select committees that allow it to scrutinise Government policy in a more detailed fashion than any individual MP might manage.  These Committees have the power to send for people and papers as part of their inquiries.  I think that there is indeed a decently supported system of scrutiny that allows MPs to properly engage with the most complex of subjects, if they want to.

 

It is indeed democratic to expect any one of us to be able to stand for election and subsequently engage with any topic necessary in scrutinising government or passing legislation.  The desire to do so harks back to the political structure of our political parties and is thus more of an issue of culture than ability.

Doc

 

Having discussed tax proposals with MPs and Senators in Canada, my experience is that they are not knowledgable of what a given tax proposal (or existing tax rule) achieves.  Rather, members of the Department of Finance paint the issue with broad strokes, and any private sector disagreement is clearly only the opposition of those who were unfairly benefiting from the existing rules.

 

That's not to say all complexity can be eliminated, but it should be possible to phrase tax legislation in more plain language, and reduce uncertainties.  The Canadian department of finance assures our MPs that there is minimal uncertainty in their proposals, and the government believes them.  Apparently, the drafters of the legislation lack any bias, and their assessment of the complexity is more informed than those of current Chief Justice of the Tax Court of Canada, or his immediate predecessor, both of whom have very publicly stated that the legislation is so complex and uncertain that it will create decades of costly litigation.  They gain nothing from making any misleading statement in this regard.  Who is in a better position to assess the impact on the Courts?  Yet their concerns fall on deaf ears.

 

That said, I also chafe when my MP refers a question or concern to the Minister in charge of that portfolio.  I did not vote for the Minister.  I voted for an MP whose job is to represent me, and my fellow constituents.  Unfortunately, as you note, we do not really elect our own representatives any more - we vote for a party.

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25 minutes ago, Hugh Neilson said:

Having discussed tax proposals with MPs and Senators in Canada, my experience is that they are not knowledgable of what a given tax proposal (or existing tax rule) achieves.  Rather, members of the Department of Finance paint the issue with broad strokes, and any private sector disagreement is clearly only the opposition of those who were unfairly benefiting from the existing rules.

 

It is a rubbish job and, in the UK, a pretty intense one.  They are expected to be informed about everything which is obviously impossible.  They also get huge numbers of people coming to them with all kinds of requests.  The key part of their job seems, to me, to consist of deciding which issues they want to become informed about.  They CAN become informed about anything they want, they CAN choose to believe whichever information source satisfies or suits them to believe. In many cases they choose sources that are politically convenient rather than spending time becoming informed as many issues will not interest them personally.

 

30 minutes ago, Hugh Neilson said:

Unfortunately, as you note, we do not really elect our own representatives any more - we vote for a party.

 

Well, that might be describing our behaviour and politicians behavioural response to that behaviour.  It is not yet the system we operate under.  The UK definitely elects a person rather than a party as shown by the lack of any requirement for an MP to seek re-election if they choose to change party.  

 

For most OST things I blame the press rather than MPs for many things, the way they are reported drives a lot of their behaviour.

 

Doc

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While we technically elect individuals, practically we end up voting for the party.  I have been tempted to ask my MP whether I might better vote for someone likely to be in the Opposition, who might represent my interests rather than shrugging them off to the Minister of Whatever for whom I did not receive a vote.

 

I think the reality is an MP should be prepared to sufficiently educate himself as to any issue he is voting on to cast an informed ballot.  But that would hold them to a much higher standard  than those by whom they are elected get judged.

 

I would not want the job, but I did not run for the job, collect a cheque for doing the job or accumulate a pension for doing the job.  If you are not prepared to do the work required, you should not apply for the job - whether that's MP or street sweeper.

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Dunno about Canada but in the UK there is no job description for being an MP.  Each Member decides what is needed in a particular constituency.  Having thought a lot about it, I think that is a practical situation for one of the most unusual ways of making a living.

 

As I said, there are too many things to become informed on, so Members will seek sources they trust.  If we, the electorate allow it, that source, most often will be their party and they will follow the party whip on all policies except for those they have a particular interest in.

 

I think that Members often refer questions for information on an issue to a Minister because it is a way to engage the resources of the civil service.  It also ties the Government to a position.  I can understand why Members do this (especially having seen the size of their mailbags).  I think that Members are sometimes less sensitive to whether you are asking for information or asking for their opinion.  

 

Doc

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Possibly of interest to the people discussing tax policy: The cover story for the August 11, 2018 issue of The Economist is on this very topic. I haven't had time yet to read the article, but the subheader for the lead article goes, "Countries must overhaul their tax systems to make them fit for the 21st century."

 

Dean Shomshak

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Well, the Unite the Reich Right 2 "rally" took place in DC today, with 24 participants, who were provided their own train car(sans their weaponizable flagpoles, of course).  They were vastly outnumbered both by cops and counterprotesters, and left without major incident.  Wait, though...I was told that punching Nazis only makes them stronger.  I am SO confused right now.  Weird that all these Aryan culture warriors all had to get their hair done, babysit or reorganize their historical war memorabilia collections this weekend(more likely, Mom said they couldn't go).  

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One article that I saw stated that the Unite the Reich Right rally attendants had fewer than 20 people make it to Washington (out of a "few dozen" that boarded the train in Virginia), and that they decided to depart early when it began to rain.

 

Maybe Nazis are like the aliens in Signs, and are water-soluble.

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7 hours ago, Ternaugh said:

One article that I saw stated that the Unite the Reich Right rally attendants had fewer than 20 people make it to Washington (out of a "few dozen" that boarded the train in Virginia), and that they decided to depart early when it began to rain.

 

 

A metaphor for our times:

 

Hundreds of furious reporters seeking to whip up widespread moral panic descend on a lackluster protest by a score of wet asshats with no staying power.

 

The irony is so deep it aches and makes me want to reach for an aspirin bottle.

 

Yes, the alt-right exists and beating them is a kind of hot kinky-fetish for many of us.

 

But... unless you have a paintbrush the size of the Titanic, they aren't as dedicated, influential, numerous, or relevant as their opponents seem to want them to be. 

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