[Chugalug] Did you hear? The IRS wants your Bitcoins!

William Roush william.roush at roushtech.net
Wed Mar 26 16:23:03 UTC 2014


// On 3/26/2014 11:49 AM, DaWorm wrote:
> But, of what use has the remaining $200,000 been put?  If it wasn't 
> spent, it did you no good.  It wasn't used to consume any resources. 
>  Let's further say that you invest that money, which contributes to 
> the economy.  And even further, you make a nice 10% return on that 
> $200,000 so that now you have $220,000.
/
Very/ few people that have hundreds of millions of dollars plan to spend 
it all out by the time they die, most of them continue to pass it on and 
reinvest it, the wealth is never put towards taxable items at the rate 
it'll be created. Inflate your example by about a thousand times and 
we'll start talking about the realism of making Fair Tax a progressive 
tax via mental gymnastics and not by observation of how people treat 
their money.

On 3/26/2014 11:49 AM, DaWorm wrote:
> Of course this assumes that you will eventually spend all that you've 
> earned.  For an individual, that may not be true, but that money will 
> be left to heirs (assuming estate taxes don't give most of it to the 
> government), and they will spend it, or their heirs, and so on. 
>  That's what makes governments (and business) different than 
> individuals, they last much longer than a lifetime.  In the long run, 
> the government will get its money.

You think a government can run on a bunch of "IOUs" to be paid out when 
someone in the family line botches their inheritance?

It's why a flat tax _requires_ such a high rate, is because it _is_ 
regressive, there have been much more rigorous studies into the approach 
than making up stories to fit a dialog to promote.


On 3/26/2014 11:49 AM, DaWorm wrote:
> For your initial $500,000 in earnings, you have now paid $55,000 in 
> taxes, which is an 11% tax rate.  Not regressive, but progressive!

You invested it for an additional $20k in earnings, you have _$520k_ in 
earnings, you can't ignore that, you also paid $52k in taxes, not $55k 
($30k from original $200k, and $22k from spending the $220k you got from 
$200k income + $20k investment). You're still at a 10% tax rate. :|

Effective rate is always 10% on whatever you spend in your example 
(though realistically you're looking at 32% in TN).

William Roush
william.roush at roushtech.net
423-463-0592

http://www.roushtech.net/blog/


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