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"Why don't you just write a check to the IRS?"

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fountainhead posted on Tue, Nov 13 2012 8:19 PM

In your typical "soak the rich" debate with people like Warren Buffett, someone will almost always ask those rich who say they should be paying more taxes why they don't simply write a check to the IRS with their voluntary contribution. The usual response is that a handful of voluntary donations to the IRS wouldn't solve the problem they're trying to address by calling for higher taxes on the rich. ALL rich would need to pay more in order to put a meaningful dent in the deficit.

Just curious how you guys would respond to this? From what I've seen, even taking all the wealth of the so-called "1%" would barely dent the deficit. But, playing devil's advocate here, wouldn't it 'help' with the deficit at least? Personally, I find the write-a-check-to-the-IRS argument to be a weak one on this issue.

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Prime replied on Tue, Nov 13 2012 8:24 PM

Mathematically, the proposals to raise taxes on the wealthiest would increase funds to the government by roughly 40-50 billion per year. This sum is irrelevant when facing 1.5 trillioin dollar deficits, and most advocates of the tax increase will admit as much. They make it about the "right" thing to do.

You can easily twist the "right thing to do" argument back on them. If something is right, if something is just, it should not require forcing others to do the same. Doing the right thing should be done even if you are the only person doing it. Therefore, the "why don't you just write a check to the IRS" argument is valid.

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Prime replied on Tue, Nov 13 2012 8:30 PM

Another tactic I heard Schiff use today, if the person you are debating is actually rich enough to be effected by the taxes, then ask them if they hire an accountant and take deductions. If they do, not are they avoiding doing the "right" thing, they are in fact paying someone, an accountant, to find ways to minimize doing the "right" thing.

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Which rich people are doing that then? Serious question, btw. I'm not trying to be antagonistic.

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Prime replied on Tue, Nov 13 2012 8:47 PM

Doing what? There are plenty of rich people arguing for congress to raise taxes on them. Warren Buffet, for one. Is that what you are asking?

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lol, it was actually hearing Schiff's debate with that "patriotic millionaire" that made me think of this issue. I do agree that if they present it as a matter of morality, it's quite easy to catch them being hypocrites for not leading by example and donating to the the IRS. I think they make a stronger case when they use the "shared burden" argument that the rich have to help shoulder the tax burden to cut the deficit. Doesn't mean I think they're right. Just that it's a more effective argument on their part.

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Which rich people are doing that then? Serious question, btw. I'm not trying to be antagonistic.

>>Look up Patriotic Millionaires.

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The EPJ has a few nice comments on this: http://www.economicpolicyjournal.com/2012/11/a-couple-of-challenges-to-patriotic.html#comment-form

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Prime replied on Tue, Nov 13 2012 9:02 PM

fountainhead:

 I think they make a stronger case when they use the "shared burden" argument that the rich have to help shoulder the tax burden to cut the deficit.

Don't let them make this case, becasue what they are advocating is a 2% reduction in the yearly deficit. Bring the math to the forefront. At the end of the day, all they have left is the moral argument. Don't let them off the hook.

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Don't forget about diminishing returns. When you take capital out of the private sector, assuming all things are equal, it shrinks. So, that leads to less revenue in absolute terms. A static analysis does not accurately represent economic reality.

However, raising taxes never reduces the deficit. Cutting spending is free and costs no one anything. Why aren't politicians pushing for that? wink

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Does the fact that everyone needs to donate to charity to make the largest impact mean that you yourself should not donate? No...

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Kakugo replied on Wed, Nov 14 2012 2:15 AM

"Soak the rich" really means "target the middle class". Really rich people have no big problems with high taxation. If everything fails they can always move their wealth to another country: differently from middle class their assets are very liquid and don't need to be liquidated to be moved around. Ingvar Kamprad (the IKEA owner) simply moved to Switzerland when taxes in Sweden became too high for his liking. Hundreds of Frenchmen are following in his footsteps now that the Socialists are back in power and angrier than ever. Short of closing the borders there's nothing governments can do. Oh, and don't worry: they'll get to that point eventually.

Now for the big shocker: even "soaking the whole population, from billionaires to beggars" doesn't work. Italy has raised pretty much every single tax and slashed deductions. Their deficit is still soaring, raising taxes has done nothing to solve their problems. As even Roubini had to admit last year "There's not enough money in the world to save Italy". Imagine the US, which owes much more money than Italy.

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Some who advocate for higher taxes, but then don't do it don't do it because they aren't forced to.  They want a central power to force them to do it... they can't do it on their own.

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What about they organize a company that forces them to do it? Something like a BDSM club, you know.

The Voluntaryist Reader - read, comment, post your own.
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@Andris:  I think that the system will crash before they can organize enough to do that.  Warren Buffet is smart, but I think that his self control isn't high enough to do what he needs to do.

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