The Midnight Hour

Are you thinking of applying? I don’t think they would let me mop the floors at Harvard. My wife, on the other hand, actually went to a school many thing is superior. And that is the University of Chicago. She did not apply to Harvard, because at the time they did not accept women. She grew up in Mass. and does not think highly of Harvard. She says it has the reputation of being a place where the rich get their children in because of who they are and not their abilities. The best examples are the Kennedys and Bush. But I guess that is changing. It became too embarrassing to the school to let all those legacies in.

Neuville, I am not thinking of applying. I am content with the MBA program I’m pursuing at UAH. The info is mostly aimed at recent high school graduates. Most single-income military families would qualify for this as well, assuming Harvard only counts base pay as your income. By a quick look at a 2008 pay chart almost all enlisted members would qualify , CWO2 and down qualifies, and O2 and down qualify.

Midnight,

I just heard that Stanford has followed Harvard and declared that any student with a family income of under $100,000 per year will not pay tuition. It made me wonder if this is fair. Why should someone making $90,000 pay nothing and someone making $120,000 or $200,000 have to subsidizie other students? It would cost them much less if everyone paid. How is this fair? And, broadening the thought, how does this differ from taxing the wealthy at a higher rate? It seems to me to be very similar.

It’s not fair. Fair comes to town once a year. A private institution can set its own policies with no justification other than “it wants to.” If you don’t like its policies you are welcome to not patron or donate to that institution. If someone making $120k doesn’t wish to subsidize someone else’s education then they should attend an institution that doesn’t use that policy.

Nobody is required to go to Harvard. Nobody is entitled to an Ivy League education. We are required to pay taxes to our government. That is what separates the issues.

But Midnight. You are the one who wanted to be fair by having a flat tax. So you want the once a year fairness only for the rich? That is the thing. Every school in the country gives discounts based upon income. It is an accepted practice based upon fairness and benefit to society. And the same applies to a progressive income tax. It has long been accepted that lower incomes should be taxed at a lower rate because of the necessity of assuring a minimal level of existence for the lowest earning citizens. But instead in this country, since Ronald Reagan, we tax the rich at a lower rate than the working class. Very twisted piorities. Not only that, we are financing a trillion plus dollar war through debt sold to the rich in the form of bonds and paid off by the working class who are often taxed at a higher rate than the rich. This is in the long run highly damaging to democarcy.

Neuville,

Not only are you applying a free market example to government, which is totally incompatible, but you are going off on a tangent that isn’t supported by fact.

Harvard offers a service for sale, just like a plumber. If a local plumber decides not to charge people for his services if they make less than $60k then that is his decision. I don’t think he’s going to maximize profits that way, but I’m not concerned with his profits. That’s his responsibility.

The federal government requires me to pay taxes or they will imprison me. The government our Constitution established is indeed supposed to offer equal protection of liberty to every citizen. It is indeed supposed to be “fair.” We have required government to be fair by our own rules which we established for it. No such fairness is required of the free market.

We require government to provide equal opportunity to each citizen. Unfortunately, many of you take that to mean that equal results should be achieved by each citizen, and if that doesn’t happen then the government should force it.

Furthermore, I do not care that progressive taxation “has long been accepted.” I do not accept it. I do not accept your moral code because it is in fact immoral and punishes citizens for being productive. Your code is subjective- based on circumstances and emotion. My code is objective and based in principled logic. I only ask that government protect the liberty of every citizen and let every citizen make his own way. You insist that the government monitor how well each citizen makes his own way and then try to equalize the performance of each citizen.

God made me responsible for myself and my family. I have accepted responsibility for no other person. I give to charity and support causes that I and I alone deem worthy. My money should not be redistributed by government to those who do not have it by simple virtue of the fact that I have it and they do not. Progressive taxation is indeed redistribution of wealth, because the wealthy pay a disproportionate part of the total bill. The recent “economic stimulus” package is more redistribution of wealth, because checks are being sent to people that paid no taxes. Hardworking people had to pay tax dollars that were deposited into the treasury. Now the treasury writes checks to some who made no deposit. Redistribution of wealth at best—thievery at worst.

At least a thief puts on a mask and tries to rob me in the night. At least a thief acknowledges he is a criminal. Unjust government taxation asks me to smile and nod and help the government rob me, in the name of “public welfare.” It asks for my sanction in robbing me, but I will give it no such sanction!

How can you claim the working class is taxed at a lower rate than the rich? The upper two income tax brackets are 33% and 35%. The “middle class” falls within 15% and 25% tax brackets. Your claim is simply not true.

You claim about Reagan’s tax cuts are also untrue. Reagan did cut taxes on the upper brackets. He cut taxes on the lower brackets too. The highest bracket was 70% before Reagan. Reagan eventually cut the top bracket to 38.5%. Before Reagan the lowest bracket was 14%. He eventually cut it to 11%.

Bush 43 cut the lowest bracket even further to 10% after it had gone back up to 15%. He cut the highest bracket to 35% after it had gone up to 39.6%. Bush cut the lowest income tax bracket by .4% more than the highest income tax bracket! He gave the poor a bigger break than the wealthy.

Liberal politicians talk about the recent “tax cuts for the wealthy” when indeed they were tax cuts for everyone, and the wealthy still pay an incredibly larger portion of the bill. This class warfare trick is nothing other than a ploy to get votes because there are more middle and lower income families than wealthy families.

Furthermore, if you want to engage me in debate about taxes then jump into my post about the budget where we are debating taxes, not in an article about a private institution and its policies. Just like how Mr. Triche voiced his opposition to my post about bicyclists by inserting random smart-ass comments into other more serious threads, you just wish to toss pebbles at me whenever you can because you disagree with me.

The funniest thing about all of this is that I don’t really pay a lot of taxes. I didn’t crack the 15% bracket during 2007. I may for 2008, but only by a smidgen. Do not make the mistake of thinking that I am selfishly constructing an ideology that supports my personal interests. If I wanted to selfishly support my own interests I would advocate progressive taxation that taxes the wealthy at 40-70% and cuts everyone else to around 10%. Wait, that sounds like…

Whoa Midnight, quite a response. I can tell you feel strongly about this. Did you read that article I sent you from the Times? It clearly shows how many wealthy people are taxed at a lower rate. Anyhow, I am coming from a different place.

1. Most colleges in this country are government institutions. They almost all charge on the basis of need to a great extent and most people think that is good. It enables poorer talented students to be on a more equal playing field. Without it many would never be able to go to school. Some might complain that they do not want to pay higher colleges fees to benefit the less fortunate. Because, just as with taxes ,it redistributes income from the wealthy to the less wealthy.

2. Taxes are a similar situation. Progressive taxes are deemed fair by most. There is a certain level of income that is thought to be minimal and necessary. I know of nobody, not even you I suspect, who thinks that the first $10,000 of income should be taxed! I mean some people think that there should be no child tax credit. They say, “It was there choice to have kids. No body forced them. Why should I subsidize their kids.” I don’t know if you feel this way, but I have met people who do. And, I guess, using the same logic you use, they to have a point. The Question is will it make a more healthy democratic society. I think not.

My reason for combining these two topics is that both progressive taxation and the pricing of education based upon income produce societal benefits. They are examples of improving the society as a whole for the benefit of all.
I came to realize how important this is as a school teacher in New Orleans in a very poor school. The school had been starved of resources and did little to offer an opportunity for the students. They call New Orleans the City that care forgot. And I think it is true. Centers of poverty like New Orleans become a burden to the entire country. In the long run it would be better to pay higher taxes and fix these centers of poverty than to let them get worse and cost more in the long run. I am in now way saying we should go to marginal tax rates of 70%. but a ceiling bit higher would not hurt most wealthy people. I say this as a person who is in the top bracket, not someone whould would’nt be dinged by higher taxes.
It is no coincedence that, for the most part, high tax states are more productive and innovative. I just moved to Calif. from Louisiana. It is like moveing from a third world country. Better schools, roads, everything. And your state of Alabamba. I recently read it had the most regressive tax system in the country. I am sure it is a fine state and I enjoyed my visit to Birmingham last summer, although the hot dogs at Pete’s I did not find very good, but he Barber motor cycle museum was really cool. However, Alabama does not have the educational system and infrastructure that could have created silicon valley and the high tech. revolution.

Neuville, you make some interesting points. I still contend that Harvard being a private institution makes it exempt from logic we must apply to government. The issue of state sponsored institutions is another matter. I think education for low-income Americans is the single best way to make them mid to upper income Americans, so I agree that subsidized education has benefits. However, I am unsure how far to take those benefits at the cost of personal liberty and prosperity. I know that many scholarships come from philanthropy. I think that is great. How many more charitable scholarships would be offered by corporations and individuals if Uncle Sam stopped robbing them with high compulsory taxes?

On the second issue I am looking for the crux of the argument where our fundamental reasoning differs, but I cannot find it. I agree Alabama as a whole has a long way to go. The city where I live, Huntsville, is really an island of technology and education in the southeast. I wouldn’t choose to live anywhere else in the state. I will read the NYT article you linked to the next time I have a spare moment.

Neuville, please tell me that this is not the article you are talking about. It does not “clearly show” anything. It is a profile of some gentleman named Peter Peterson and it starts with a reporter formerly of the Clinton whitehouse asserting ““Where is it ordained that private equity pays only a 15 percent tax?” The article does nothing to explain the tax system and show me the disparity of which you speak.

I certainly hope I am mistaken about the link and you haven’t built an opinion on our tax system based on what is “clearly shown” in that article. It may still be true (I’ll give you the benefit of the doubt), but that article does nothing to prove it.

Midnight,
So, let me get this straight. Pete Peterson pays 15% tax on $1.8 billion dollars and lives in luxury in a $37 million dollar apartment You and I working our butts off and pay more than twice that and you see no disparity. WTF do you call it then?

Neuville, by all means, please get it straight: The article you are referencing is only anecdotal. It speaks of one man and one lump sum of money. In order to declare that our tax system unfairly favors the wealthy I’ll need to see an explanation of what income is taxed at this lower 15% rate and what separates that income from normal labor income subject to the brackets I’m familiar with.

In essence, you have claimed that since the statement appears in one NYT article that it must be true. It may indeed be true, but the NYT article is not proof of that.

Tell me about what income is taxed at a lower rate than the standard income brackets and we’ll talk. Let’s examine the rules–tax code–not anecdotes. I suspect it will be “income” derived from investments made with income that has already been taxed when it was earned as labor.

Sir, It is not at all anecdotal. It is in the tax code. Certain investment available only to multimillionairs are taxed at 15%. Do you recall reading this:

“It is a quandary that has plagued Mr. Peterson for years. And while he supports increased taxes on the wealthy (along with broad-based benefit reductions), he remains firm in his defense of the special provision for private equity partnerships despite the view of many on Wall Street, including the billionaire investor Warren E. Buffett, that the rate is too low.”

They are called “private equity partnerships”. This flies in the face of your desire to have a flat tax. When you add in payroll taxed you and I pay a rate nearly four times higher than billionaires in private equity partnerships.

We’re almost getting somewhere now. OK, it’s in the tax code. That’s great. Where? What are the rules surrounding it? What defines a “private equity partnership?” What makes it only available to billionaires?

I was taught to use examples to understand underlying principles. You can’t just examine examples and claim to understand the principle. What are the specifics of this “private equity partnership.” Again, I suspect that the money in question has already been taxed once, and now since a billionaire has put it to good use that all of America deserves a cut because he made a wise investment (so sayeth the left). I could certainly be wrong. Please help me understand.

Come on Midnight,

Be fair. Ask me for all the specific dots and dashes of the tax code and then you base your conclusion on what you “suspect”. I suspect you have already made up your mind and do not care about the details. However, consider this. As it states in the article, and I think you know this as well, investment income is taxed at a lower rate than earned income. You do realize that? Ok, Private equity partnerships were set up to allow the very wealthy set up what amounts to a mutual fund managed by a professional manager. They differ in that the earnings are taxed at the investment rate. They usually have a large minimum investment of at least a million dollars and many much higher. In addition they are given access to IPOs that the general public is prevented from participating in. The bottom line is partidipants are in these partnerships have rules that favor them greatly over the general public. As to if their money has already been taxed, there is a corporate tax, but to call this a double tax is a not accurate. It is a tax on corporate profits before profits are distributed. It is not really a tax on the investor, but on the activity of the corporation. To some extent it encouraged the corp. to reinvest in itself.

If I say I “suspect” something then that means exactly what it says: “I don’t know for sure, but if I had to guess…” Don’t assume illogical bias on my part when I’ve told you up front that I don’t know, but “suspect.”

If you provide me factual information then I’ll throw out what I suspect in favor of what you prove to be true. Did you read the next sentence after I espoused my suspicion: “I certainly could be wrong.”

Then you state “As it states in the article, and I think you know this as well, investment income is taxed at a lower rate than earned income. You do realize that?” No, I don’t realize that because I don’t know it to be true from past experience and the only evidence you will provide that it is true is your word and that of the NYT article that is an article on Peter Peterson and not tax policies. Yes, the article mentions taxes–fleetingly– but the article is not about taxes. If you don’t see that the NYT article on Peter Peterson is not proof of your point then we are not going to be able to debate anything, because that will mean we do not share a common logical definition of proof. Please read this carefully: I don’t dispute that it may be true, but you haven’t provided any substantial information on it that will help me or anyone else understand that it is true or why this is so. All tax policies have an underlying reason, even if the reason is flawed.

The issue is not that I disagree with you. The issue is that I’m making you prove your point to me. So far you haven’t proven anything with credibility beyond what the registered commenter “Neuville” says on The Midnight Hour blog. I could probably google a few terms and have the answer in minutes. I won’t. I’m tired of doing the research for both sides of these arguments.

I am challenging you: can you, as a liberal, logically prove your claim that the wealthy are taxed at an overall lower rate than middle class Americans? I’m just asking for a couple links to a reliable and unbiased source(s) that discusses the point in detail, and a short synopsis of what the source says. To your credit, the info on private equity partnerships is helpful, but only one piece of the puzzle.

Midnight,
I have sent you link on your gmail to an interview with David Cay Johnston author of “Free Lunch”. This books illustrates exactly the point we are discussing. However, as a teacher of research methods and an LMT, I asure you there is no such thing and and unbiased source. There are degrees of accuracy. I cannot pull out a few sentences to convice you, but if you read the entire book I think you will be persuaded to give my assertions a second thought. If the link does not work, you can find the interview on the Book TV website.

@ Neuville

To be fair, I think there IS a difference between income, and interest off of investments. To put it in simple terms, any wealth one accumulates has already been taxed once. It was taxed when it was earned, or when it was earned by whoever entrusted it to another. Once that money, which has already been taxed the first time around, gets invested and starts to generate income in the form of interest, it gets taxed AGAIN. If Mr. Peterson has found a means to have that money taxed at a lower rate, I don’t blame him. If I ever attain enough wealth to have my money work for me, I wouldn’t wish my tax rates on that return.

Reading further down the comments, I see that Midnight has already briefly addressed this, but it deserves a second mention.