Re: how to compare living standards


"tonyp" <tonyp@xxxxxxxxxxxxx> wrote in message
news:1-qdnegQFdfJbdvZnZ2dnUVZ_sCdnZ2d@xxxxxxxxxx

"Jim Blair" <jeb@xxxxxxxx> wrote

My foundation for example (if I were a billionaire)
would be to promote economic education.
But you might think it was a supply side
propaganda mill.

Or my foundation for biomedical research
on human stem cells would be seen by some
as a factory to murder tiny single cell unborn children.

Either way, I might decide to offer my children and grandchildren
good paying jobs with my foundation.


Jim, you probably give money to various "charitable organizations" now.
You
probably take a deduction on your income tax returns for such donations.
So
the following is probably already obvious to you:

Hi,

Actually, no. I have used the standard deduction since both me an my wife
turned 65.


1) The IRS does not define _every_ donation-soliciting outfit as a
"charity". There are rules. If you want to set up your own charitable
foundation, and give money to _it_ instead of the United Way, that's fine.
All you have to do is design your foundation so that it conforms to those
rules. If Bob Jones can do it, so can you :-)

Yes. I could hire the same lawyers Bob Jones did.

2) The tax code lets you "avoid" some income tax by giving to charity. If
you're in the top tax bracket, giving $100 to the United Way (or Jim Blair
U.) saves you $35 in taxes. But note that your contribution _decreases_
your net worth (which is what your estate is called, pre-mortem) by $65.
Your heirs get $65 _less_ of an inheritance than they would had you not
cleverly "avoided" $35 of income tax.

Not if they work for Jim Blair U.


3) Jim Blair U. can no doubt give tenured professorships to your
grandchildren, and hire your children to sit on its board of trustees, and
so on. But if it tries to pay them each a few million bucks a year, the
IRS
will want to know the reason why.

CEO pay can be pretty good by middle class standards. As can be some
professors pay, even here at the UW which is not even a private university.
But wages (taxable income) are not the only benefits that CEO's or
professors receive. Besides such obvious perks as health care and paid
vacations (excuse me, attendence at professional conferences ;-) even the UW
gives some employees a rent and tax free house and free parking on campus.

In simple words, Jim: the notion that you (billionaire or not) can "avoid
taxes" on your estate but still pass it on to your heirs is analogous to,
and as silly as, the notion that you can increase your net worth by taking
a
big deduction for charitable contributions on your income tax.

Er, not MY net worth, but my family estate's net worth.

If you're dishonest, of course, you can just plain cheat.

Why should I do that when I can hire a good lawyer and get a simialr result
legally?

...If you think that
"the rich" _evade_ tax (by cheating) rather than _avoid_ tax (by more or
less giving their money to charity) then perhaps you can get your mind
around this proposition: the people they are cheating are those "near
rich"
who do play by the rules.

I doubt that many rich "cheat". The rules are complicated enough that they
don't need to.


Question: what do you consider to be a "regressive tax"?
If the actual collection rate is inversely correlated to income or
wealth,
is the tax regressive even if that is an accidental or unintended
consequence?
For example, is the cigarette tax regressive? The gasoline tax?
The estate tax?


You're very determined in your point of view, Jim. You're pitching the
notion that the estate tax is "regressive" because, in practice, it is
more
likely to collect $3 million from a $10 million estate than to collect $3
billion from a $10 billion estate.

Has it ever collected anything from a $10 billion estate?

But yes, it is regressive if it collects more from "small" estates than from
"large" ones. It would be regressive even if it collected more DOLLARS but a
lower percent.

I am in favor of some regressive taxes (gasoline and maybe even cigarettes).
But many people have a "fairness" problem with regressive taxes. I don't
object to the estate tax because it is regressive. I object because it is a
jobs program for lawyers who are already well above the average in income
and wealth, and probably reduced the federal governments income.



,,,,,,,
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jim blair (jeblair@xxxxxxxx) Madison Wisconsin USA.
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